10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2017

 OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-22874

Viavi Solutions Inc.

(Exact name of Registrant as specified in its charter)

Delaware	94-2579683
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

430 North McCarthy Boulevard, Milpitas, California 95035

(Address of principal executive offices including Zip code)

(408) 404-3600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,

smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	o	Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	o	Emerging growth company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.									o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

As of April 29, 2017 the Registrant had 226,977,290shares of common stock outstanding.

TABLE OF CONTENTS			Page
PART I - FINANCIAL INFORMATION			2
	Item 1.	Financial Statements (Unaudited)	2
		Consolidated Statements of Operations for the Three and Nine Months Ended April 1, 2017 and April 2, 2016	2
		Consolidated Statements of Comprehensive Income for the Three and Nine Months ended April 1, 2017 and April 2, 2016	3
		Consolidated Balance Sheets as of April 1, 2017 and July 2, 2016	4
		Consolidated Statements of Cash Flows for the Nine Months Ended April 1, 2017 and April 2, 2016	5
		Notes to Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	Item 3.	Quantitative and Qualitative Disclosure About Market Risks	43
	Item 4.	Controls and Procedures	44
PART II - OTHER INFORMATION			44
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 3.	Defaults Upon Senior Securities	45
	Item 4.	Mine Safety Disclosures	45
	Item 5.	Other Information	45
	Item 6.	Exhibits	46
SIGNATURES			47

1

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

VIAVI SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Revenues:
Product revenue	$	176.0		$	198.5		$	548.5		$	607.1
Service revenue	20.0			21.9			64.8			75.1
Total net revenues	196.0			220.4			613.3			682.2
Cost of revenues:
Product cost of revenues	63.3			70.5			196.6			209.6
Service cost of revenues	12.1			14.5			38.8			46.0
Amortization of acquired technologies	3.6			4.1			11.1			13.0
Total cost of revenues	79.0			89.1			246.5			268.6
Gross profit	117.0			131.3			366.8			413.6
Operating expenses:
Research and development	34.1			40.0			106.1			126.0
Selling, general and administrative	76.2			80.6			228.5			261.3
Amortization of other intangibles	3.5			3.6			10.4			11.1
Restructuring and related charges	18.4			(0.1		)	20.2			1.7
Total operating expenses	132.2			124.1			365.2			400.1
(Loss) income from operations	(15.2		)	7.2			1.6			13.5
Interest and other income (expense), net	5.0			0.8			10.1			1.4
Gain on sale of investments	51.2			39.8			186.6			39.8
Interest expense	(10.7		)	(9.1		)	(29.3		)	(26.7		)
Income from continuing operations before taxes	30.3			38.7			169.0			28.0
Provision for income taxes	4.3			9.9			15.8			13.9
Income from continuing operations, net of taxes	26.0			28.8			153.2			14.1
Income (loss) from discontinued operations, net of taxes	—			5.0			—			(45.4		)
Net income (loss)	$	26.0		$	33.8		$	153.2		$	(31.3	)
Net income (loss) per share from - basic:
Continuing operations	$	0.11		$	0.13		$	0.66		$	0.06
Discontinued operations	—			0.02			—			(0.19		)
Net income (loss)	$	0.11		$	0.15		$	0.66		$	(0.13	)
Net income (loss) per share from - diluted:
Continuing operations	$	0.11		$	0.12		0.65			0.06
Discontinued operations	—			0.02			—			(0.19		)
Net income (loss)	$	0.11		$	0.14		$	0.65		$	(0.13	)
Shares used in per-share calculation - basic	229.4			232.0			230.8			234.4
Shares used in per-share calculation - diluted	234.6			234.6			235.9			237.4

See accompanying notes to consolidated financial statements.

2

VIAVI SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Net income (loss)	$	26.0		$	33.8		$	153.2		$	(31.3	)
Other comprehensive (loss) income:
Net change in cumulative translation adjustment, net of tax	9.1			3.4			(13.1		)	(18.4		)
Net change in available-for-sale investments, net of tax:
Unrealized holding gain arising during period	18.8			48.5			93.0			201.6
Less: reclassification adjustments included in net income (loss)	(51.2		)	(38.8		)	(185.4		)	(38.8		)
Net change in defined benefit obligation, net of tax:
Amortization of actuarial losses	0.5			0.2			1.4			0.5
Net change in Accumulated other comprehensive (loss) income	(22.8		)	13.3			(104.1		)	144.9
Comprehensive income	$	3.2		$	47.1		$	49.1		$	113.6

See accompanying notes to consolidated financial statements.

3

VIAVI SOLUTIONS INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share and par value data)(unaudited) 

	April 1, 2017			July 2, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	964.2		$	482.9
Short-term investments	478.6			484.7
Restricted cash	11.8			12.2
Accounts receivable, net	142.6			148.4
Inventories, net	46.8			51.4
Prepayments and other current assets	53.5			32.1
Total current assets	1,697.5			1,211.7
Property, plant and equipment, net	134.6			133.0
Goodwill	150.7			152.1
Intangibles, net	37.6			59.9
Deferred income taxes	108.0			108.8
Other non-current assets	12.3			12.6
Total assets	$	2,140.7		$	1,678.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	34.7		$	47.0
Accrued payroll and related expenses	47.5			44.9
Deferred revenue	67.3			78.6
Accrued expenses	27.7			24.9
Other current liabilities	69.8			31.0
Total current liabilities	247.0			226.4
Long-term debt	958.1			583.3
Other non-current liabilities	164.4			179.1
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred Stock, $0.001 par value; 1 million shares authorized; 1 share at April 1, 2017 and July 2, 2016, issued and outstanding	—			—
Common Stock, $0.001 par value; 1 billion shares authorized; 227 million shares at April 1, 2017 and 232 million shares at July 2, 2016, issued and outstanding	0.2			0.2
Additional paid-in capital	70,184.2			70,059.8
Accumulated deficit	(69,319.1		)	(69,380.7		)
Accumulated other comprehensive (loss) income	(94.1		)	10.0
Total stockholders’ equity	771.2			689.3
Total liabilities and stockholders’ equity	$	2,140.7		$	1,678.1

See accompanying notes to consolidated financial statements.

4

VIAVI SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Nine Months Ended
	April 1, 2017			April 2, 2016
OPERATING ACTIVITIES:
Net income (loss)	$	153.2		$	(31.3	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense	22.2			29.8
Amortization of acquired technologies and other intangibles	21.5			24.7
Stock-based compensation	25.9			35.6
Amortization of debt issuance costs and accretion of debt discount	23.6			21.4
Amortization of discount and premium on investments, net	0.8			0.9
Gain on sale of investments	(186.6		)	(39.8		)
Loss on disposal of assets	4.5			0.9
Other	1.3			0.4
Changes in operating assets and liabilities, net of impact of Lumentum distribution:
Accounts receivable	3.0			22.6
Inventories	(0.6		)	(2.2		)
Other current and non-currents assets	(17.3		)	3.7
Accounts payable	(10.7		)	(8.4		)
Income taxes payable	4.5			11.3
Deferred revenue, current and non-current	(17.3		)	8.1
Deferred taxes, net	(2.7		)	7.6
Accrued payroll and related expenses	(8.3		)	(22.0		)
Accrued expenses and other current and non-current liabilities	29.2			(28.3		)
Net cash provided by operating activities	46.2			35.0
INVESTING ACTIVITIES:
Purchases of available-for-sale investments	(542.0		)	(334.1		)
Maturities of available-for-sale investments	321.3			330.1
Sales of available-for-sale investments	321.4			217.3
Changes in restricted cash	0.2			14.1
Capital expenditures	(30.4		)	(26.6		)
Proceeds from the sale of assets	4.4			5.0
Acquisition of a business	—			(0.9		)
Net cash provided by investing activities	74.9			204.9
FINANCING ACTIVITIES:
Proceeds from issuance of 1.00% senior convertible debt	460.0			—
Payment of debt issuance costs	(9.0		)	—
Proceeds from sale of Lumentum Holdings Inc. Series A Preferred Stock	—			35.8
Cash contribution to Lumentum Holdings Inc.	—			(137.0		)
Repurchase and retirement of common stock	(91.6		)	(40.0		)
Payment of financing obligations	(0.6		)	(5.7		)
Proceeds from exercise of employee stock options and employee stock purchase plan	10.2			3.0
Net cash provided by (used in) financing activities	369.0			(143.9		)
Effect of exchange rates on cash and cash equivalents	(8.8		)	(6.8		)
Net increase in cash and cash equivalents	481.3			89.2
Cash and cash equivalents at the beginning of the period	482.9			347.9		*
Cash and cash equivalents at the end of the period	$	964.2		$	437.1

*Cash and cash equivalents at June 27, 2015 included $13.4 million in current assets of the discontinued operations of Lumentum Holdings Inc.

See accompanying notes to consolidated financial statements.

5

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The financial information for Viavi Solutions Inc. (“Viavi” also referred to as “the Company”, “we”, “our” and “us”) as of April 1, 2017 and for the three and nine months endedApril 1, 2017 and April 2, 2016 is unaudited, and includes all normal and recurring adjustments Company management (“Management”) considers necessary for a fair statement of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual consolidated financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 2, 2016.

The balance sheet as of July 2, 2016 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results for the three and nine months endedApril 1, 2017 and April 2, 2016 may not be indicative of results for the fiscal year ending July 1, 2017 or any future periods.

Fiscal Years

The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company’s fiscal 2017 is a 52-week year ending on July 1, 2017. The Company’s fiscal 2016 was a 53-week year ending on July 2, 2016.

Lumentum Separation

On August 1, 2015 (the “Separation Date”), Viavi completed the distribution of approximately 80.1% of the outstanding shares of Lumentum Holdings Inc. (“Lumentum”) common stock (the “Distribution”). Concurrent with the Distribution, JDSU was renamed Viavi Solutions Inc. and, at the time of the Distribution, retained ownership of approximately 19.9% of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s communications and commercial optical products business segment (“CCOP”) and the WaveReady product line and, as a result of the Distribution, is now an independent public company trading under the symbol “LITE” on The Nasdaq Stock Market (“NASDAQ”). The Distribution was made to Viavi’s stockholders of record as of the close of business on July 27, 2015 (the “Record Date”), who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on the Record Date and not sold prior to August 4, 2015, the ex-dividend date. The historical results of operations and the financial position have been recasted to present the Lumentum business as discontinued operations as described in “Note 3. Discontinued Operations.” Unless noted otherwise, discussion in the Notes to Consolidated Financial Statements pertain to continuing operations.

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods. The Company bases estimates on historical experience and on various assumptions about the future believed to be reasonable based on available information. The Company’s reported financial position or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more current information.

6

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Recently Issued Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the service cost component of net periodic benefit cost to be presented in the same line item(s) as other compensation costs arising from services rendered during the period, with other components of net periodic benefit cost to be presented separately from the service cost component. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In February 2017, the FASB issued guidance that clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset,” defines the term “in-substance nonfinancial asset,” and adds guidance for partial sales of nonfinancial assets. This guidance will be effective at the same time the new authoritative guidance related to revenue recognition is effective. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In January 2017, the FASB issued guidance that will eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, impairment charge will be based on the excess of a reporting unit's carrying amount over its fair value. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company plans to early adopt this standard for the next goodwill testing date and does not anticipate the adoption to have a material impact on its consolidated financial statements, absent any goodwill impairment.

In November 2016, the FASB issued guidance that will require that the amounts generally described as restricted cash and restricted cash equivalents would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new guidance also requires certain disclosures to supplement the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In October 2016, the FASB issued guidance that requires entities to recognize at the transaction date the income tax consequences of intra-entity transfer of an asset other than inventory. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB issued guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The guidance is effective for the Company in the first quarter of fiscal 2021 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In March 2016, the FASB issued guidance which simplifies several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2018 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued guidance related to how an entity should recognize lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for the Company in the first quarter of fiscal 2020. While the Company is not yet in a position to assess the full impact of the application of the new guidance, the Company expects that the impact of recording lease liabilities and the corresponding right-to-use assets may have a significant impact on its total assets and total liabilities on the consolidated balance sheets.

In May 2014, the FASB issued new authoritative guidance related to revenue recognition. This guidance will replace current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance allows for either full retrospective adoption or modified retrospective adoption. The FASB deferred the effective date for this guidance by one year to December 15, 2017 for annual

7

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

reporting periods beginning after such date. Earlier application of this guidance is permitted. In accordance with the deferred effective date, the Company is required to adopt the new guidance in the first quarter of fiscal 2019. The Company does not intend to adopt the new guidance early and is continuing to evaluate the impact of this new accounting guidance and the transition alternatives on its consolidated financial statements and related disclosures.

Note 3. Discontinued Operations

Lumentum Separation

On August 1, 2015, the Company completed the separation of the Lumentum business (the “Separation”) and made a tax-free distribution of approximately 80.1% of the outstanding shares of Lumentum common stock to Viavi shareholders who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on July 27, 2015 (the “Record Date”) and not sold prior to August 4, 2015 (the “ex-dividend date”). In connection with the Separation Viavi agreed to contribute $137.6 million all of which was contributed during fiscal 2016. As of the Distribution, Viavi retained ownership of approximately 19.9%, or 11.7 million shares, of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s CCOP business and the WaveReady product line. As a result of the Distribution, Lumentum is now an independent public company. The Company agreed not to liquidate the retained shares during the first six months following the Distribution. However, in connection with a private letter ruling from the Internal Revenue Service, the Company committed to liquidate these shares within three years from the Distribution. As of April 1, 2017, the Company owns approximately 0.4 million shares, of Lumentum’s common stock. Refer to “Note 7. Investments, Forward Contracts and Fair Value Measurements” for more information.

As the separation of the Lumentum business represented a strategic shift that had and will have a major effect on the Company’s operations and financial results, the results of operations of the Lumentum business are presented separately as discontinued operations for the three and nine months endedApril 2, 2016 in accordance with the authoritative guidance.

As of the Separation Date, Lumentum became a stand-alone public company that separately reports its financial results. Due to the difference between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of Lumentum included within discontinued operations for the Company may not be indicative of actual financial results of Lumentum as a stand-alone company.

The removal of Lumentum’s net assets and equity related adjustments upon the Separation are presented as an increase of Viavi's accumulated deficit and represents a non-cash financing activity, excluding the cash transferred. Refer to “Note 14. Stock-Based Compensation” for information on modifications to stock-based compensation awards as a result of the Distribution.

The following table summarizes results from discontinued operations of the Lumentum business included in the condensed Consolidated Statement of Operations (in millions):

	Nine Months Ended (1)
	April 2, 2016
Net revenues	$	66.5
Cost of revenues	49.8
Amortization of acquired technologies	0.6
Gross profit	16.1
Operating expenses:
Research and development	12.5
Selling, general and administrative	24.7
Restructuring charges	0.1
Total operating expenses	37.3
Loss from operations	(21.2		)
Interest and other income (expense), net	—
Loss before income taxes	(21.2		)
Provision for income taxes	24.4
Net loss from discontinued operations	$	(45.6	)

8

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Net income from discontinued operations for the three months ended April 2, 2016 was $5.0 million comprised of costs to complete the separation offset by a benefit from income taxes from discontinued operations of $6.1 million. No income or expense has been recorded relating to the Lumentum business after the separation from Viavi on August 1, 2015.

During the nine months endedApril 2, 2016, the income tax provision for discontinued operations of $24.4 million, included approximately $7.6 million cash taxes that were due to federal and state authorities as a result of the Separation. In addition, approximately $17.1 million of the income tax provision for discontinued operations related to the income tax intraperiod tax allocation rules in relation to continuing operations and other comprehensive income.

Net income (loss) from discontinued operations also includes other costs incurred by the Company to separate Lumentum. These costs include transaction charges, advisory and consulting fees. Net income (loss) from discontinued operations includes transaction, advisory and other costs to effect the separation of $1.1 million and $16.5 million for the three and nine months ended April 2, 2016, respectively.

The following table presents supplemental cash flow information: depreciation expense, amortization expense, stock based compensation expense and capital expenditures of the Lumentum business (in millions):

	Nine Months Ended (1)
	April 2, 2016
Operating activities:
Depreciation expense	$	3.7
Amortization expense	0.6
Stock-based compensation expense	1.6
Investing activities:
Capital expenditures	$	5.8

(1) No depreciation expense, amortization expense, stock based compensation expense and capital expenditures relating to the Lumentum business are presented after the Separation Date.

9

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4. Earnings Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Numerator:
Income from continuing operations, net of taxes	$	26.0	$	28.8	$	153.2	$	14.1
Income (loss) from discontinued operations, net of taxes	—		5.0		—		(45.4		)
Net income (loss)	$	26.0	$	33.8	$	153.2	$	(31.3	)
Denominator:
Weighted-average number of common shares outstanding
Basic	229.4		232.0		230.8		234.4
Effect of dilutive securities from stock-based benefit plans	5.2		2.6		5.1		3.0
Diluted	234.6		234.6		235.9		237.4
Net income (loss) per share - basic:
Continuing operations	$	0.11	$	0.13	$	0.66	$	0.06
Discontinued operations	—		0.02		—		(0.19		)
Net income (loss) per share	$	0.11	$	0.15	$	0.66	$	(0.13	)
Net income (loss) per share - diluted:
Continuing operations	$	0.11	$	0.12	$	0.65	$	0.06
Discontinued operations	—		0.02		$	—	$	(0.19	)
Net income (loss) per share	$	0.11	$	0.14	$	0.65	$	(0.13	)

The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income (loss) per share because their effect would have been anti-dilutive (in millions):

	Three Months Ended		Nine Months Ended
	April 1, 2017 (1) (2)	April 2, 2016 (1)	April 1, 2017 (1) (2)	April 2, 2016 (1)
Stock options and ESPP	0.3	1.2	0.3	1.0
Restricted Stock Units	—	3.0	—	2.3
Total potentially dilutive securities	0.3	4.2	0.3	3.3

(1)  The Company’s 0.625% Senior Convertible 2033 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $11.28 per share is payable in cash, shares of the Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

(2)  The Company’s 1.00% Senior Convertible 2024 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $13.22 per share is payable in cash, shares of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

Note 5. Accumulated Other Comprehensive (Loss) Income

The Company’s accumulated other comprehensive (loss) income consists of the accumulated net unrealized gains and losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations.

For the nine months endedApril 1, 2017 the changes in accumulated other comprehensive (loss) income by component net of tax were as follows (in millions):

	Unrealized gains (losses) on available-for sale investments (1)			Foreign  currency translation adjustments			Change in unrealized components of defined benefit obligations, net of tax (2)			Total
Beginning balance as of July 2, 2016	$	104.5		$	(70.1	)	$	(24.4	)	$	10.0
Other comprehensive income (loss) before reclassification	93.0			(13.1		)	—			79.9
Amounts reclassified from accumulated other comprehensive income	(185.4		)	—			1.4			(184.0		)
Net current-period other comprehensive (loss) income	(92.4		)	(13.1		)	1.4			(104.1		)
Ending balance as of April 1, 2017	$	12.1		$	(83.2	)	$	(23.0	)	$	(94.1	)

(1) Activity before reclassifications to the Consolidated Statements of Operations during the nine months endedApril 1, 2017 relates to the unrealized gain on the marketable equity securities of Lumentum held by Viavi. The amount reclassified out of accumulated other comprehensive (loss) income relates to the realized gain from the sale of the marketable equity securities of Lumentum. There was notax impact for the nine months endedApril 1, 2017.

(2) The amount reclassified out of accumulated other comprehensive income represents the amortization of actuarial losses included as a component of cost of revenues, research and development (“R&D”) and selling, general and administrative expense (“SG&A”) in the Consolidated Statement of Operations for the nine months endedApril 1, 2017. There was no tax impact for the nine months endedApril 1, 2017. Refer to “Note 15. Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.

Note 6. Balance Sheet and Other Details

Accounts receivable reserves and allowances

The components of accounts receivable reserves and allowances were as follows (in millions):

	April 1, 2017		July 2, 2016
Allowance for doubtful accounts	$	1.7	$	2.2
Allowance for sales returns	1.0		2.5
Total accounts receivable reserves	$	2.7	$	4.7

The activities and balances for allowance for doubtful accounts are as follows (in millions):

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	July 2, 2016		Charged to Costs and Expenses		Adjustments (1)			April 1, 2017
Allowance for doubtful accounts	$	2.2	$	0.1	$	(0.6	)	$	1.7

 (1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.

Inventories, net

The components of Inventories, net were as follows (in millions):

	April 1, 2017		July 2, 2016
Finished goods	$	25.2	$	29.1
Work in process	8.9		7.5
Raw materials	12.7		14.8
Inventories, net	$	46.8	$	51.4

Prepayments and other current assets

The components of Prepayments and other current assets were as follows (in millions):

	April 1, 2017		July 2, 2016
Prepayments	$	11.4	$	10.4
Other current assets	42.1		21.7
Prepayments and other current assets	$	53.5	$	32.1

Other current liabilities

The components of Other current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Customer prepayments	35.8		0.4
Restructuring accrual	13.1		13.3
Income tax payable	6.9		3.3
Warranty accrual	2.9		2.6
VAT liabilities	2.5		2.3
Foreign exchange forward contract	2.6		—
Deferred compensation plan	2.0		2.4
Other	4.0		6.7
Other current liabilities	$	69.8	$	31.0

Other non-current liabilities

The components of Other non-current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Pension and post-employment benefits	$	98.0	$	103.0
Financing obligation	27.8		28.7
Long-term deferred revenue	16.0		22.7
Other	22.6		24.7
Other non-current liabilities	$	164.4	$	179.1

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7. Investments, Forward Contracts and Fair Value Measurements

The Company’s investments in marketable debt and equity securities were primarily classified as available-for-sale securities. As of April 1, 2017, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	69.6	$	—	$	(0.1	)	$	69.5
U.S. agencies	35.2		—		(0.1		)	35.1
Municipal bonds and sovereign debt instruments	4.0		—		—			4.0
Asset-backed securities	68.0		—		(0.3		)	67.7
Corporate securities	324.2		0.1		(0.3		)	324.0
Certificates of deposit	6.0		—		—			6.0
Total debt securities	507.0		0.1		(0.8		)	506.3
Marketable equity securities	3.3		17.5		—			20.8
Total available-for-sale securities	$	510.3	$	17.6	$	(0.8	)	$	527.1

The Company generally classifies debt securities as cash equivalents, short-term investments or other non-current assets based on the stated maturities; however, certain securities with stated maturities of longer than twelve months which are highly liquid and available to support current operations are also classified as short-term investments. As of April 1, 2017, of the total fair value of debt securities, $49.9 million was classified as cash equivalents, $455.8 million was classified as short-term investments and $0.6 million was classified as other non-current assets.

Marketable equity securities consist of the Company’s ownership of 0.4 million shares of Lumentum common stock remaining as of April 1, 2017 in connection with the August 1, 2015 separation. Refer to “Note 3. Discontinued Operations” for more information. These securities are stated at fair value, with unrealized gains and losses reported in other comprehensive (loss) income, net of tax and are classified as short-term investments on the Consolidated Balance Sheet as of April 1, 2017 at $20.8 million. The Company sold 1.3 million and 6.9 million shares during the three and nine months ended April 1, 2017, respectively and recognized gross realized gains of $51.2 million and $186.5 million, reflected in "Gain on sale of investments" in the Company’s Consolidated Statements of Operations. The sale resulted innotax effect. The realized gain is also reflected as a reconciling item to net income in the operating activities section of the Consolidated Statements of Cash Flows, while the cash proceeds received are reflected in “Sales of available-for-sale investments” within the investing activities section.

 In addition to the amounts presented above, as of April 1, 2017, the Company’s short-term investments classified as trading securities related to the deferred compensation plan were $2.0 million, of which $0.5 million was invested in debt securities, $0.5 million was invested in money market instruments and funds and $1.0 million was invested in equity securities. Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in Interest and other income (expense), net.

During the three and nine months endedApril 1, 2017 and April 2, 2016, the Company recorded no other-than-temporary impairment charges in each respective period.

As of April 1, 2017, contractual maturities of the Company’s debt securities classified as available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Estimated Fair Value
Amounts maturing in less than 1 year	$	363.2	$	363.1
Amounts maturing in 1 - 5 years	141.8		141.5
Amounts maturing in more than 5 years	2.0		1.7
Total debt available-for-sale securities	$	507.0	$	506.3

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 As of July 2, 2016, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	46.1	$	—	$	—		$	46.1
U.S. agencies	24.9		—		—			24.9
Municipal bonds and sovereign debt instruments	2.0		—		—			2.0
Asset-backed securities	50.4		0.1		(0.3		)	50.2
Corporate securities	224.5		0.2		(0.1		)	224.6
Total debt securities	347.9		0.3		(0.4		)	347.8
Marketable equity securities	62.1		109.2		—			171.3
Total debt available-for-sale securities	$	410.0	$	109.5	$	(0.4	)	$	519.1

As of July 2, 2016, of the total fair value of debt securities, $36.1 million was classified as cash equivalents, $311.1 million was classified as short-term investments and $0.6 million was classified as other non-current assets.

Marketable equity securities consist of the Company’s ownership of 7.2 million shares of Lumentum common stock remaining as of July 2, 2016 in connection with the Separation. These securities are stated at fair value, with change in unrealized gains and losses reported in other comprehensive income, net of tax and are classified as short-term investments on the Consolidated Balance Sheet as of July 2, 2016 at $171.3 million.

In addition to the amounts presented above, as of July 2, 2016, the Company’s short-term investments classified as trading securities, related to the deferred compensation plan, were $2.4 million, of which $0.3 million was invested in debt securities, $0.8 million was invested in money market instruments and funds and $1.3 million was invested in equity securities. Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in Interest and other income (expense), net.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

Assets measured at fair value as of April 1, 2017 and July 2, 2016 are summarized below (in millions):

	Fair value measurement as of						Fair value measurement as of
	April 1, 2017						July 2, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Debt available-for-sale securities
U.S. treasuries	$	69.5	$	69.5	$	—	$	46.1	$	46.1	$	—
U.S. agencies	35.1		—		35.1		24.9		—		24.9
Municipal bonds and sovereign debt instruments	4.0		—		4.0		2.0		—		2.0
Asset-backed securities	67.7		—		67.7		50.2		—		50.2
Corporate securities	324.0		—		324.0		224.6		—		224.6
Certificate of deposits	6.0		—		6.0		—		—		—
Total debt available-for-sale securities	506.3		69.5		436.8		347.8		46.1		301.7
Marketable equity securities	20.8		20.8		—		171.3		171.3		—
Money market funds	720.3		720.3		—		274.4		274.4		—
Trading securities	2.0		2.0		—		2.4		2.4		—
Foreign currency forward contracts	5.2		—		5.2		—		—		—
Total assets (1)	$	1,254.6	$	812.6	$	442.0	$	795.9	$	494.2	$	301.7
Liability:
Foreign currency forward contracts	2.6		—		2.6		—		—		—
Total liabilities (2)	$	2.6	$	—	$	2.6	$	—	$	—	$	—

(1) $754.6 million in cash and cash equivalents, $478.6 million in short-term investments, $11.7 million in restricted cash, $5.2 million in prepayments and other current assets, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of April 1, 2017. $295.4 million in cash and cash equivalents, $484.7 million in short-term investments, $11.3 million in restricted cash, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of July 2, 2016.

(2) $2.6 million in other current liabilities on the Company’s Consolidated Balance Sheets as of April 1, 2017.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions about the factors that market participants would use in valuing the asset or liability.

The Company’s cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy based on quoted prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

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• Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets. Level 1 assets of the Company include money market funds, U.S. Treasury securities and marketable equity securities as they are traded with sufficient volume and frequency of transactions. 

• Level 2 includes financial instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 2 instruments of the Company generally include certain U.S. and foreign government and agency securities, commercial paper, corporate and municipal bonds and notes, asset-backed securities, and foreign currency forward contracts. To estimate their fair value, the Company utilizes pricing models based on market data. The significant inputs for the valuation model usually include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, and industry and economic events. 

• Level 3 includes financial instruments for which fair value is derived from valuation based on inputs that are unobservable and significant to the overall fair value measurement. As of April 1, 2017 and July 2, 2016, the Company did not hold any Level 3 investment securities.

Non-Designated Foreign Currency Forward Contracts

The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to foreign exchange risks. The Company utilizes foreign exchange forward contracts and other instruments to manage foreign currency risk associated with foreign currency denominated monetary assets and liabilities, primarily certain short-term intercompany receivables and payables, and to reduce the volatility of earnings and cash flows related to foreign-currency transactions. The Company does not use these foreign currency forward contracts for trading purposes.

As of April 1, 2017 and July 2, 2016, the notional amounts of the forward contracts the Company held to purchase foreign currencies were $133.6 million and $110.0 million, respectively, and the notional amounts of forward contracts the Company held to sell foreign currencies were $31.8 million and $55.2 million, respectively. The fair values of the Company’s outstanding foreign currency forward contracts were not material as of July 2, 2016.

As of April 1, 2017, the Company had forward contracts that were effectively closed but not settled with the counterparties by quarter end; therefore, the fair value of these contracts of $5.2 million and $2.6 million is reflected as prepayments and other current assets and other current liabilities in the Consolidated Balance Sheets as of April 1, 2017, respectively.

The change in the fair value of foreign currency forward contracts is recorded as gain or loss in the Company’s Consolidated Statements of Operations as a component of Interest and other income (expense), net. The cash flows related to the settlement of foreign currency forward contracts are classified as operating activities.

The foreign exchange forward contracts incurred a gain of $2.6 million and a loss of $2.7 million for the three and nine months ended April 1, 2017, respectively. The losses on foreign exchange forward contracts were $5.6 million and $4.9 million for the three and nine months ended April 2, 2016, respectively.

Note 8. Goodwill

The following table presents the changes in goodwill allocated to the Company’s reportable segments (in millions):

	Network Enablement			Optical Security and Performance Products		Total
Balance as of July 2, 2016	$	143.8		$	8.3	$	152.1
Currency translation adjustments	(1.4		)	—		(1.4		)
Balance as of April 1, 2017	$	142.4		$	8.3	$	150.7

The Company reviews goodwill for impairment during the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that an impairment loss may have occurred. In the fourth quarter of fiscal 2016, the Company completed the annual impairment test of goodwill with no goodwill impairments for the NE and OSP reporting units, and recorded a goodwill impairment charge for the full amount of SE’s goodwill balance of $91.4 million.

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VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There were no events or changes in circumstances which triggered an impairment review during the three and nine months ended April 1, 2017.

Note 9. Acquired Developed Technology and Other Intangibles

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles (in millions):

As of April 1, 2017	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	366.9	$	(346.5	)	$	20.4
Customer relationships	94.8		(77.8		)	17.0
Other	10.8		(10.6		)	0.2
Total intangibles	$	472.5	$	(434.9	)	$	37.6

As of July 2, 2016	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	369.3	$	(337.3	)	$	32.0
Customer relationships	95.6		(68.0		)	27.6
Other	10.8		(10.5		)	0.3
Total intangibles	$	475.7	$	(415.8	)	$	59.9

The following table presents the amortization recorded relating to acquired developed technology, customer relationships and other intangibles (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Amortization of acquired developed technologies	$	3.6	$	4.1	$	11.1	$	13.0
Amortization of other intangibles	3.5		3.6		10.4		11.1
Total amortization of intangible assets	$	7.1	$	7.7	$	21.5	$	24.1

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of April 1, 2017, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows (in millions):

Fiscal Years
Remainder of 2017	$	6.7
2018	19.9
2019	9.3
2020	1.4
2021	0.3
Thereafter	—
Total amortization	$	37.6

The acquired developed technology, customer relationships and other intangibles balance are adjusted quarterly to record the effect of currency translation adjustments.

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VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10. Debts and Letters of Credit

As of April 1, 2017 and July 2, 2016, the Company’s long-term debt on the Consolidated Balance Sheets represented the carrying amount of the liability component, net of unamortized debt discounts and issuance cost, of the Senior Convertible Notes as discussed below. The following table presents the carrying amounts of the liability and equity components (in millions):

	April 1, 2017			July 2, 2016
Principal amount of 0.625% Senior Convertible Notes	$	650.0		$	650.0
Principal amount of 1.00% Senior Convertible Notes	460.0			—
Unamortized discount of liability component	(141.7		)	(61.7		)
Unamortized debt issuance cost (1)	$	(10.2	)	$	(5.0	)
Carrying amount of liability component	$	958.1		$	583.3
Carrying amount of equity component (2)	$	236.3		$	134.4

(1) In April 2015, the Financial Accounting Standards Board ("FASB") issued new authoritative guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts or premiums. This guidance was effective for the Company in the first quarter of fiscal 2017 for its convertible debt, and was applied retrospectively for all periods reported.

(2) Included in Additional paid-in-capital on the Consolidated Balance Sheets.

The Company was in compliance with all debt covenants and held no short term debt as of April 1, 2017 and July 2, 2016.

1.00% Senior Convertible Notes (“2024 Notes”)

On March 3, 2017, the Company issued $400 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 (the “2024 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs. The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased.

Under certain circumstances and during certain periods, the 2024 Notes may be converted at the option of the holders into cash up to the principal amount, with the remaining amount converted into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock at the Company’s election. The initial conversion price is $13.22 per share, representing a 32.5% premium to the closing sale price of the Company’s common stock on the pricing date, February 27, 2017, which will be subject to customary anti-dilution adjustments.

The 2024 Notes may be converted at any time on or prior to the close of business on the business day immediately preceding December 1, 2023, in multiples of $1,000 principal amount, at the option of the holder only under the following circumstances: (i) on any date during any calendar quarter beginning after June 30, 2017 (and only during such calendar quarter) if the closing price of Viavi’s common stock was more than 130% of the then current conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading-day period ending on the last trading day of the previous calendar quarter, (ii)if the Company distributes to all or substantially all holders of our common stock rights or warrants (other than pursuant to a stockholder rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price of our common stock for the ten trading days preceding the declaration date for such distribution, (iii)if the Company distributes to all or substantially all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a stockholder rights plan), at a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution, (iv) if the Company is party to a specified transaction, a fundamental change or a make-whole fundamental change (each as defined in the Indenture), or (v) during the five consecutive business-day period immediately following any 10 consecutive trading-day period in which the trading price per $1,000 principal amount of the Notes for each day during such 10 consecutive trading-day period was less than 98% of the product of the closing sale price of Viavi’s common stock and the applicable conversion rate on such date. During the periods from, and including, December 1, 2023 until the close of business on the business day immediately

18

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

preceding the maturity date, holders of the Notes may convert the Notes regardless of the circumstances described in the immediately preceding sentence.

Holders of the 2024 Notes may require Viavi to repurchase for cash all or a portion of the Notes upon the occurrence of a fundamental change (as defined in the Indenture) at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase.

The Indenture provides for customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2024 Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable, subject to certain conditions set forth in the Indenture. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.

In accordance with the authoritative accounting guidance, the Company separated the 2024 Notes into liability and equity components. The carrying value of the liability component at issuance was calculated as the present value of its cash flows using a discount rate of 4.8% based on the 7-year swap rate plus credit spread as of the issuance date. The credit spread for the Company is based on the historical average “yield to worst” rate for BB rated issuers. The difference between the 2024 Notes principal and the carrying value of the liability component, representing the value of conversion premium assigned to the equity component, was recorded as a debt discount on the issuance date and is being accreted using the effective interest rate of 4.8% over the period from the issuance date through March 1, 2024 as a non-cash charge to interest expense. The carrying value of the liability component was determined to be $358.1 million, and the equity component, or debt discount, of the 2024 Notes was determined to be $101.9 million. As of April 1, 2017, the expected remaining term of the 2024 Notes is 6.9 years.

In connection with the issuance of the 2024 Notes, the Company incurred $8.9 million of issuance costs, which were bifurcated into the debt issuance costs (attributable to the liability component) of $6.9 million and the equity issuance costs (attributable to the equity component) of $2.0 million based on their relative values. The debt issuance costs were capitalized and are being amortized to interest expense using the effective interest rate method from issuance date through March 1, 2024. The equity issuance costs were netted against the equity component in additional paid-in capital at the issuance date.

Based on quoted market prices as of April 1, 2017, the fair value of the 2024 Notes was approximately $483.5 million. The 2024 Notes are classified within Level 2 as they are not actively traded in markets.

0.625% Senior Convertible Notes (“2033 Notes”)

On August 21, 2013, the Company issued $650.0 million aggregate principal amount of 0.625% Senior Convertible Notes due 2033 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The proceeds from the 2033 Notes amounted to $636.3 million after issuance costs. The 2033 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 0.625% payable in cash semi-annually in arrears on February 15 and August 15 of each year. The 2033 Notes mature on August 15, 2033 unless earlier converted, redeemed or repurchased.

Following the Separation on August 1, 2015, the conversion price per share was adjusted pursuant to the terms of the 2033 Notes relating to the occurrence of the Separation. Effective as of the end of the business day on August 17, 2015, the initial conversion price per share was adjusted to $11.28 per share of the Company’s common stock traded on NASDAQ under the ticker symbol “VIAV.” The 2033 Notes and its terms are described in “Note 11. Debts and Letters of Credit” of the Company’s Annual Report on Form 10-K for the year ended July 2, 2016.

Based on quoted market prices as of April 1, 2017 and July 2, 2016, the fair value of the 2033 Notes was approximately $726.4 million and $633.0 million. The 2033 Notes are classified within Level 2 as they are not actively traded in markets.

Interest Expense

19

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the effective interest rate and the interest expense for the contractual interest and the accretion of debt discount (in millions, except for the effective interest rate):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Effective interest rate	5.3		%	5.4		%	5.3		%	5.4		%
Interest expense-contractual interest	$	1.3		$	1.0		$	3.4		$	3.0
Accretion of debt discount	7.9			6.7			21.9			19.9

Outstanding Letters of Credit

As of April 1, 2017, the Company had 14 standby letters of credit totaling $15.6 million.

Note 11. Restructuring and Related Charges

The Company has initiated various strategic restructuring events primarily intended to reduce its costs, consolidate its operations, rationalize the manufacturing of its products and align its businesses in response to market conditions. As of April 1, 2017 and July 2, 2016, the Company’s total restructuring accrual was $15.8 million and $18.0 million, respectively. During the three and nine months endedApril 1, 2017 the Company recorded restructuring and related charges of $18.4 million and $20.2 million, respectively. During the three and nine months endedApril 2, 2016 the Company recorded restructuring and related (benefits) charges of $(0.1) million and $1.7 million, respectively. The Company’s restructuring charges can include severance and benefit costs to eliminate a specified number of positions, facilities and equipment costs to vacate facilities and consolidate operations, and lease termination costs. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over multiple periods.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the three and nine months endedApril 1, 2017 were as follows (in millions):

	Balance July 2, 2016		Nine Months Ended April 1, 2017 Charges (Benefits)			Cash Settlements			Non-cash Settlements and Other Adjustments			Balance April 1, 2017		Three Months Ended April 1, 2017 Charges (Benefits)
Fiscal 2017 Plan
Focused NSE Restructuring Plan (1) (2)	$	—	$	20.7		$	(11.0	)	$	—		$	9.7	$	19.3
Other Plan (2)	—		0.4			(0.4		)	—			—		—
Fiscal 2016 Plan
NE, SE and Shared Services Agile Restructuring Plan (1) (2)	8.6		(0.7		)	(7.5		)	—			0.4		(0.8		)
NE and SE Agile Restructuring Plan (1)	0.8		(0.1		)	(0.3		)	—			0.4		(0.1		)
Fiscal 2015 Plan
NE, SE and Shared Service Separation Restructuring Plan (1)(2)	1.4		(0.2		)	(1.1		)	—			0.1		—
Plans Prior to Fiscal 2015
NE Product Strategy Restructuring Plan (1)	1.5		—			(0.4		)	(0.1		)	1.0		—
NE Lease Restructuring Plan (2)	4.0		0.1			(1.1		)	—			3.0		—
Other Plans (1)(2)	1.7		—			(0.5		)	—			1.2		—
Total	$	18.0	$	20.2		$	(22.3	)	$	(0.1	)	$	15.8	$	18.4

(1) Plan type includes workforce reduction cost.

(2) Plan type includes lease exit cost.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of April 1, 2017 and July 2, 2016, $2.7 million and $4.7 million, respectively, of our restructuring liability was long-term in nature and included as a component of Other non-current liabilities, with the remaining short-term portion included as a component of Other current liabilities on the Consolidated Balance Sheets.

Fiscal 2017 Plans

Focused NSE Restructuring Plan

During the third and second quarters of fiscal 2017, Management approved a plan within the NE and SE business segments as part of Viavi’s continued strategy to improve profitability in the Company’s Network and Service Enablement (NSE) business by narrowing the scope of the Service Enablement business and reducing costs by streamlining NSE operations.  As a result, a restructuring charge of $20.6 million was recorded for severance and employee benefits for approximately 300 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia. Payments related to the severance and benefits accrual are expected to be paid in the second quarter of fiscal 2018.

Fiscal 2016 Plans

NE, SE and Shared Service Agile Restructuring Plan

During the fourth quarter of fiscal 2016, Management approved a plan within the NE and SE business segments and Shared Services function for organizational alignment and consolidation as part of Viavi’s continued commitment for a more cost effective organization. As a result approximately 170 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2018.

NE and SE Agile Restructuring Plan

During the second quarter of fiscal 2016, Management approved a plan primarily impacting the NE and SE business segments as part of Viavi’s ongoing commitment for an agile and more efficient operating structure. As a result approximately 40 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2018.

Fiscal 2015 Plans

NE, SE and Shared Service Separation Restructuring Plan

During the second, third and fourth quarters of fiscal 2015, Management approved a plan to eliminate certain positions in its shared services functions in connection with the Company’s plan to split into two separate public companies. Further, Management consolidated its operations, sales and R&D organizations and eliminated positions within the NE and SE segments to align to the Company’s product market strategy and lower manufacturing costs in connection with the separation. As a result, approximately 330 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2018. During the fourth quarter of fiscal 2015, Management also approved a plan in the NE and SE segment to exit the space in Roanoke, Virginia. As of July 2, 2016, the Company exited the workspace in Roanoke under the plan. Payments related to the Roanoke lease costs are expected to be paid by the end of the fourth quarter of fiscal 2017.

Plans Prior to Fiscal 2015

NE Product Strategy Restructuring Plan

During the third quarter of fiscal 2014, Management approved a NE plan to realign its services, support and product resources in response to market conditions in the mobile assurance market and to increase focus on software products and next generation solutions through acquisitions and R&D. As a result, approximately 60 employees primarily in SG&A and manufacturing functions located in North America, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2020.

NE Lease Restructuring Plan

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the second quarter of fiscal 2014, Management approved a NE plan to exit the remaining space in Germantown, Maryland. As of June 28, 2014, the Company exited the space in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income, as of April 1, 2017 was $3.0 million. Payments related to the Germantown lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

As of April 1, 2017, the restructuring accrual for other plans that commenced prior to fiscal year 2015 was $1.2 million, which consists of immaterial accruals from various restructuring plans.

Note 12. Income Taxes

The Company recorded income tax expense of $4.3 million and $15.8 million related to income from continuing operations for the three and nine months endedApril 1, 2017, respectively. The Company recorded income tax expense of $9.9 million and $13.9 million related to income from continuing operations for the three and nine months endedApril 2, 2016, respectively.

The income tax expense related to income from continuing operations recorded for the three and nine months endedApril 1, 2017 and April 2, 2016 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss for the respective year. In addition, for the three and nine months endedApril 2, 2016, the Company’s income tax provision included a tax benefit of $7.6 million and $14.6 million, respectively, related to the income tax intraperiod tax allocation rules for discontinued operations and other comprehensive income. The income tax provision for the nine months endedApril 2, 2016 included a tax expense of $8.9 million related to a one-time increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the Separation.

The income tax expense related to income from continuing operations recorded differs from the expected tax expense that would be calculated by applying the federal statutory rate to the Company’s income from continuing operations before taxes primarily due to the changes in valuation allowance for deferred tax assets attributable to the Company’s domestic and foreign income (loss) from continuing operations, the income tax benefit recorded in continuing operations under the income tax intraperiod tax allocation rules, and the increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the separation.

As of April 1, 2017 and July 2, 2016, the Company’s unrecognized tax benefits totaled $42.1 million and $41.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net. The Company had $2.3 million accrued for the payment of interest and penalties at April 1, 2017. The unrecognized tax benefits that may be recognized during the next twelve months are approximately $1.0 million.

Note 13. Stockholders' Equity

Repurchase of Common Stock

In September 2016, the Board of Directors increased the Company’s previously authorized stock repurchase program from $100 million to $150 million. Under the revised repurchase authorization, the Company may repurchase up to $150 million of the Company’s common stock from time to time at the discretion of the Company’s management. This stock repurchase authorization expires on December 31, 2017.

During the three months endedApril 1, 2017, the Company repurchased approximately 5.2 million shares of its common stock for $51.9 million. As of April 1, 2017, the Company had remaining authorization of $53.9 million for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including business and financial market conditions.

All common shares repurchased under this program have been canceled and retired.

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VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14. Stock-Based Compensation

Overview

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and nine months endedApril 1, 2017 and April 2, 2016 was as follows (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Cost of sales	$	0.7	$	1.1	$	2.7	$	3.7
Research and development	1.3		2.0		4.6		6.7
Selling, general and administrative	6.1		6.0		18.6		23.6
Stock-based compensation	$	8.1	$	9.1	$	25.9	$	34.0

Approximately $0.7 million and $0.9 million of stock-based compensation was capitalized to inventory at April 1, 2017 and April 2, 2016 respectively.

Full Value Awards

Full Value Awards refer to RSUs and Performance Units that are granted with the exercise price equal to zero and are converted to shares immediately upon vesting. These Full Value Awards are performance-based, time-based or a combination of both and expected to vest over one to four years. The fair value of the time-based Full Value Awards is based on the closing market price of the Company’s common stock on the date of award.

During the nine months endedApril 1, 2017 and April 2, 2016, the Company granted 3.9 million and 6.1 million RSUs, of which 0.4 million and 0.6 million, respectively, are performance-based RSUs with market conditions (“MSUs”). These MSU shares represent the target amount of grants, and the actual number of shares awarded upon vesting of the MSUs may be higher or lower depending upon the achievement of the relevant market conditions. The majority of MSUs vest in equal annual installments over three years based on the attainment of certain total shareholder return performance measures and the employee’s continued service through the vest date. The aggregate grant-date fair value of MSUs granted during the nine months endedApril 1, 2017 and April 2, 2016 were estimated to be $3.3 million and $3.7 million, respectively, and was calculated using a Monte Carlo simulation. The remaining 3.5 million and 5.5 million granted during the nine months endedApril 1, 2017 and April 2, 2016, respectively, are time-based RSUs. The majority of these time-based RSUs vest over three years, with 33% vesting after one year and the balance vesting quarterly over the remaining two years.

As of April 1, 2017, $38.2 million of unrecognized stock-based compensation cost related to Full Value Awards remains to be amortized. That cost is expected to be recognized over an estimated amortization period of 1.9 years.

Full Value Awards are converted into shares upon vesting. Shares equivalent in value to the minimum withholding tax liability on the vested shares are withheld by the Company for the payment of such taxes. During the nine months endedApril 1, 2017 and April 2, 2016, the Company paid $11.6 million and $9.8 million, respectively, and classified the payments as operating cash outflows in the Consolidated Statement of Cash Flows.

Impact on Stock-based Compensation Due to Separation

In connection with the separation of the Lumentum business on August 1, 2015 and in accordance with the Employee Matters Agreement, the Company made certain adjustments to the exercise price and number of shares underlying stock-based compensation awards with the intention of preserving the economic value of the awards for Viavi employees. These adjustments resulted in a modification of equity awards with total incremental stock-based compensation of $13.6 million, to be amortized over the remaining requisite service period from Separation Date to the end of the vesting term. As of April 1, 2017, $1.9 million of unrecognized stock-based compensation cost remains to be amortized.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Valuation Assumptions

The Company estimates the fair value of the new MSUs granted using a Monte Carlo simulation based on the assumptions described below for the following periods:

	Nine Months Ended
	April 1, 2017		April 2, 2016
Volatility of common stock	35.0	%	33.6	%
Average volatility of peer companies	54.7	%	52.8	%
Average correlation coefficient of peer companies	0.1856		0.1047
Risk-free interest rate	0.8	%	0.8	%

24

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15. Employee Pension and Other Benefit Plans

The Company sponsors significant qualified and non-qualified pension plans for certain past and present employees in the United Kingdom (“U.K.”) and Germany. The Company also is responsible for the non-pension post-retirement benefit obligation assumed from a past acquisition. All of the plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with acquisitions during fiscal 2010. Benefits are generally based upon years of service and compensation or stated amounts for each year of service.

As of April 1, 2017 the U.K. plan was partially funded while the other plans were unfunded. The Company’s policy for funded plans is to make contributions equal to or greater than the requirements prescribed by law or regulation. For unfunded plans, the Company pays the post-retirement benefits when due. During the nine months endedApril 1, 2017, the Company contributed $0.6 million to the U.K. plan. The funded plan assets consist primarily of managed investments.

The following table presents the components of the net periodic cost for the pension and benefits plans (in millions):

	Three Months Ended						Nine Months Ended
Pension Benefits	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Service cost	$	0.1		$	0.1		$	0.3		$	0.3
Interest cost	0.6			0.7			1.6			2.2
Expected return on plan assets	(0.3		)	(0.4		)	(0.8		)	(1.2		)
Amortization of net actuarial losses	0.5			0.2			1.4			0.5
Net periodic benefit cost	$	0.9		$	0.6		$	2.5		$	1.8

Both the calculation of the projected benefit obligation and net periodic cost are based upon actuarial valuations. These valuations use participant-specific information such as salary, age, years of service, and assumptions about interest rates, pension increases and other factors. At a minimum, the Company evaluates these assumptions annually and makes changes as necessary.

The Company expects to incur cash outlays of approximately $6.0 million related to its defined benefit pension plans during fiscal 2017 to make current benefit payments and fund future obligations. As of April 1, 2017, approximately $3.2 million had been incurred. These payments have been estimated based on the same assumptions used to measure the Company’s projected benefit obligation at July 2, 2016.

Note 16. Commitments and Contingencies

Legal Proceedings

In June 2016, the Company received a court decision regarding the validity of an amendment to a pension deed of trust related to one of its foreign subsidiaries which the Company contends contained an error requiring the Company to increase the pension plan’s benefit. The Company had subsequently further amended the deed to rectify the error. The court ruled that the amendment increasing the pension plan benefit was valid until the subsequent amendment. The Company determined that the likelihood of loss to be probable as of July 2, 2016 and accrued GBP 5.7 million, in accordance with authoritative guidance on contingencies. The Company is pursuing an appeal of the court decision and is also pursuing a claim against the U.K. law firm responsible for the error.

The Company is subject to a variety of claims and suits that arise from time to time in the ordinary course of our business. While management currently believes that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact on its financial position, results of operations or statement of cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations or cash flows for the period in which the effect becomes reasonably estimable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Guarantees

In accordance with authoritative guidance which requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. In addition, disclosures about the guarantees that an entity has issued, including a tabular reconciliation of the changes of the entity’s product warranty liabilities, are required.

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship.

The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on the consolidated balance sheet as of April 1, 2017 and July 2, 2016.

Product Warranties

In general, the Company offers a three-year warranty for most of its products. The Company provides reserves for the estimated costs of product warranties at the time revenue is recognized. The Company estimates the costs of its warranty obligations based on its historical experience of known product failure rates, use of materials to repair or replace defective products and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise with specific products. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

The following table presents the changes in the Company’s warranty reserve during fiscal 2017 and fiscal 2016 (in millions):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Balance as of beginning of period	$	5.3		$	4.3		$	4.9		$	3.7
Provision for warranty	1.3			0.8			4.5			2.5
Utilization of reserve	(0.8		)	(0.8		)	(2.8		)	(2.3		)
Adjustments related to pre-existing warranties (including changes in estimates)	(0.3		)	0.2			(1.1		)	0.6
Balance as of end of period	$	5.5		$	4.5		$	5.5		$	4.5

Note 17. Operating Segments and Geographic Information

The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting. The Company’s Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”) pursuant to the guidance. The CODM allocates resources to the segments based on their business prospects, competitive factors, net revenue and operating results.

The Company is a leading provider of software and hardware platforms and instruments that deliver end-to-end visibility across physical, virtual and hybrid networks. Our solutions provide precise intelligence and actionable insight from across the network ecosystem to optimize networks and support more profitable, higher-performing networks and quicker transition to next-generation technologies for our customers. Viavi is also a leader in anti-counterfeiting solutions for currency authentication and high-value optical components and instruments for diverse government and commercial applications.

26

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s reportable segments are:

(i) Network Enablement (“NE”):

NE provides testing solutions that access the network to perform build-out and maintenance tasks. These solutions include instruments, software and services to design, build, activate, certify, troubleshoot and optimize networks. The company also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for our products.

(ii) Service Enablement (“SE”):

SE solutions are embedded systems that yield network, service and application performance data. These solutions—including microprobes and software—monitor, collect and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization.

(iii) Optical Security and Performance Products (“OSP”):

OSP provides innovative optical security solutions, with a strategic focus on serving the anti-counterfeiting market through advanced security pigments, thread substrates and printed features for the currency, pharmaceutical and consumer electronic segments. OSP also provides thin-film coating solutions for 3D sensing applications.

The CODM manages the Company in two broad business categories: Network and Service Enablement ("NSE") and OSP. NSE operates in two segments, NE and SE, whereas OSP operates as a single segment. The CODM evaluates segment performance of the NSE business based on NE and SE segment gross margin and NSE operating margin as a whole. Operating expenses associated with the NSE business are not allocated to the NE and SE segments within NSE, as they are managed centrally at the business unit level. The CODM evaluates segment performance of the OSP business based on OSP segment operating margin.

The Company does not allocate stock-based compensation, acquisition-related charges, amortization of intangibles, restructuring and related charges, impairment of goodwill, non-operating income and expenses, or other non-core operating and non-recurring charges to its segments because Management does not include this information in its measurement of the performance of the operating segments. These items are presented as “Reconciling Items” in the table below. Additionally, the Company does not specifically identify and allocate all assets by operating segment.

The segment information for all periods presented has been revised to be comparable with the changes in the Company’s segment reporting measures.

27

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Information on reportable segments is as follows (in millions):

	Three Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	103.4		$	28.7		$	132.1		$	63.9		$	196.0		$	—		$	196.0
Gross profit	67.5			17.7			85.2			36.7			121.9			(4.9		)	117.0
Gross margin	65.3		%	61.7		%	64.5		%	57.4		%	62.2		%				59.7		%
Operating (loss)income							(4.4		)	27.8			23.4			(38.6		)	(15.2		)
Operating margin							(3.3		)%	43.5		%	11.9		%				(7.8		)%

	Three Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	123.1		$	35.2		$	158.3		$	62.1		$	220.4		$	—		$	220.4
Gross profit	80.7			19.8			100.5			35.9			136.4			(5.1		)	131.3
Gross margin	65.6		%	56.3		%	63.5		%	57.8		%	61.9		%				59.6		%
Operating (loss)income							(0.1		)	26.3			26.2			(19.0		)	7.2
Operating margin							(0.1		)%	42.4		%	11.9		%				3.3		%

	Three Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	121.9		$	136.4
Stock-based compensation	(0.7		)	(1.1		)
Amortization of intangibles	(3.6		)	(4.1		)
Other charges unrelated to core operating performance (1)	(0.6		)	0.1
GAAP gross profit	$	117.0		$	131.3
Corporate reconciling items impacting operating income:
Total segment operating income	$	23.4		$	26.2
Stock-based compensation	(8.1		)	(9.1		)
Amortization of intangibles	(7.1		)	(7.7		)
Other charges unrelated to core operating performance (1)	(5.0		)	(2.3		)
Restructuring and related charges	(18.4		)	0.1
GAAP operating (loss)income from continuing operations	$	(15.2	)	$	7.2

(1) During the three months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes and the insourcing or outsourcing of activities.

28

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	339.0		$	105.7		$	444.7		$	168.6		$	613.3		$	—		$	613.3
Gross profit	219.5			66.1			285.6			96.5			382.1			(15.3		)	366.8
Gross margin	64.7		%	62.5		%	64.2		%	57.2		%	62.3		%				59.8		%
Operating (loss)income							5.7			72.1			77.8			(76.2		)	1.6
Operating margin							1.3		%	42.8		%	12.7		%				0.3		%

	Nine Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	377.1		$	120.0		$	497.1		$	185.1		$	682.2		$	—		$	682.2
Gross profit	247.0			77.7			324.7			105.7			430.4			(16.8		)	413.6
Gross margin	65.5		%	64.8		%	65.3		%	57.1		%	63.1		%				60.6		%
Operating (loss)income							10.3			75.1			85.4			(71.9		)	13.5
Operating margin							2.1		%	40.6		%	12.5		%				2.0		%

	Nine Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	382.1		$	430.4
Stock-based compensation	(2.7		)	(3.7		)
Amortization of intangibles	(11.1		)	(13.0		)
Other charges unrelated to core operating performance (1)	(1.5		)	(0.1		)
GAAP gross profit	$	366.8		$	413.6
Corporate reconciling items impacting operating income:
Total segment operating income	$	77.8		$	85.4
Stock-based compensation	(25.9		)	(34.0		)
Amortization of intangibles	(21.5		)	(24.1		)
Other charges unrelated to core operating performance (1)	(8.6		)	(12.1		)
Restructuring and related charges	(20.2		)	(1.7		)
GAAP operating income from continuing operations	$	1.6		$	13.5

(1) During the nine months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes, the insourcing or outsourcing of activities and Viavi-specific incremental charges for professional fees and additional personnel costs to complete the separation.

29

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18. Subsequent Events

Subsequent to the third quarter ended April 1, 2017, the Company sold 0.2 million of Lumentum common shares generating gross proceeds of $10.1 million and a gross realized gain of $8.4 million, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Statements contained in this Quarterly report on Form 10-Q which are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. A forward-looking statement may contain words such as “anticipates,” “believes,” “can,” “can impact,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “ongoing,” “plans,” “potential,” “projects,” “should,” “will,” “will continue to be,” “would,” or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. Forward-looking statements include statements such as:

• Our expectations regarding demand for our products, including industry trends and technological advancements that may drive such demand, the role we will play in those advancements and our ability to benefit from such advancements;

• Our plans for growth and innovation opportunities;

• Financial projections and expectations, including profitability of certain business units, plans to reduce costs and improve efficiencies, the effects of seasonality on certain business units, continued reliance on key customers for a significant portion of our revenue, future sources of revenue, competition and pricing pressures, the future impact of certain accounting pronouncements and our estimation of the potential impact and materiality of litigation;

• Our plans for continued development, use and protection of our intellectual property;

• Our strategies for achieving our current business objectives, including related risks and uncertainties;

• Our plans or expectations relating to investments, acquisitions, partnerships and other strategic opportunities;

• Our strategies for reducing our dependence on sole suppliers or otherwise mitigating the risk of supply chain interruptions;

• Our research and development plans and the expected impact of such plans on our financial performance; and

• Our expectations related to our products, including costs associated with the development of new products, product yields, quality and other issues.

Management cautions that forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements. These forward-looking statements are only predictions and are subject to risks and uncertainties including those set forth in Part II, Item 1A “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in other documents we file with the Securities and Exchange Commission. Moreover, neither we assume nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Forward-looking statements are made only as of the date of this Report and subsequent facts or circumstances may contradict, obviate, undermine or otherwise fail to support or substantiate such statements. We are under no duty to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results or to changes in our expectations.

In addition, Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 2, 2016.

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OUR INDUSTRIES AND QUARTERLY DEVELOPMENTS

Viavi Solutions Inc. (“Viavi,” also referred to as “the Company,” “we,” “our,” and “us”) is a global provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems, supported by a worldwide channel community. We deliver end-to-end visibility across physical, virtual and hybrid networks, enabling customers to optimize connectivity, quality of experience and profitability. Viavi is also a leader in high performance thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer electronics, automotive, defense and instrumentation markets. 

On August 1, 2015, we completed the distribution of approximately 80.1% of the outstanding shares of Lumentum Holdings Inc. (“Lumentum”) common stock to our stockholders (the “Separation”). We were renamed Viavi and, at the time of the distribution, retained ownership of approximately 19.9% of Lumentum’s outstanding shares. See “Note 1. Basis of Presentation” for additional information. Following the Separation in the first quarter of fiscal 2016, we made changes to our segment measures to reflect how the CODM manages the business post-separation as described in “Note 17. Operating Segments and Geographic Information.”

To serve our markets we operate in the following business segments:

• Network Enablement (“NE”)

• Service Enablement (“SE”)

• Optical Security and Performance Products (“OSP”)

Network Enablement

NE provides an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks. These solutions include instruments, software and services to design, build, turn-up, certify, troubleshoot, and optimize networks. They also support more profitable, higher-performing networks and help speed time-to-revenue.

Our solutions address lab and production environments, field deployment and service assurance for wireless and wireline networks, including storage networks. Our test instrument portfolio is one of the largest in the industry, with hundreds of thousands of units in active use by major NEMs, operators and services providers worldwide. Designed to be mobile, these products include instruments and software that access the network to perform installation and maintenance tasks that help service provider technicians assess the performance of network elements and segments and verify the integrity of the information being transmitted across the network. These instruments are highly intelligent and have user interfaces that are designed to simplify operations and minimize the training required to operate them. Our NE solutions are also used by NEMs in the design and production of next-generation network equipment.

Viavi also offers a range of product support and professional services designed to comprehensively address our customers’ requirements. These services include repair, calibration, software support and technical assistance for our products. We offer product and technology training as well as consulting services. Our professional services, provided in conjunction with system integration projects, include project management, installation and implementation.

NE customers include wireless and fixed services providers, NEMs, government organizations and large corporate customers, such as major telecom, mobility and cable operators, chip and infrastructure vendors, storage-device manufacturers, storage-network and switch vendors, and deployed private enterprise customers. Our customers include AT&T Inc., Charter Communications, Comcast Corporation, Nokia Solutions and Networks and Verizon Communications Inc..

During the first quarter of fiscal 2017, we re-grouped our NE products and associated services from three product groupings to two as described below:

Field Instruments: Primarily consisting of (a) Access and Cable products; (b) Fiber Instrument products; (c) Metro products; and (d) RF Test products (formerly called out separately).

Lab Instruments: Primarily consisting of (a) Capacity Advisor products; (b) Fiber Optic Production Lab Test; (c) Optical Transport products; and (d) Storage Network Test products.

Additionally, following the Separation we no longer sell products or services from the WaveReady product line. We also moved our Video Assurance products (formerly a component of Media, Access and Content) to our SE segment. For the purposes of providing year-over-year variance analysis in the Results of Operations section below we have reflected these changes for all prior periods presented so that they are comparable with our current groupings.

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Service Enablement

SE provides embedded systems and enterprise performance management solutions that give global service providers, enterprises and cloud operator’s visibility into network, service and application data. These solutions - which primarily consist of instruments, microprobes and software - monitor, collect and analyze network data to reveal the actual customer experience and identify opportunities for new revenue streams and network optimization.

Our portfolio of SE solutions address the same lab and production environments, field deployment and service assurance for wireless and fixed communications networks, including storage networks, as our NE portfolio. Our solutions let carriers remotely monitor performance and quality of network, service and applications performance throughout the entire network. This provides our customers with enhanced network management, control, and optimization that allow network operators to initiate service to new customers faster, decrease the need for technicians to make on-site service calls, help to make necessary repairs faster and, as a result, lower costs while providing higher quality and more reliable services. Remote monitoring decreases operating expenses, while early detection helps increase uptime, preserve revenue, and helps operators better monetize their networks.

SE customers include the same wireless and fixed services providers, NEMs, government organizations, large corporate customers, and storage-segment customers that are served by our NE segment.

During the first quarter of fiscal 2017, we re-grouped our SE products and associated services from three product groupings to two as described below:

Data Center:Consisting of our Network Instruments products.

Assurance: Primarily consisting of our (a) Mature Products (Legacy Assurance, Legacy Wireline, Protocol Test, Video Assurance products and RAN (formerly component of Wireless)) (b) Growth Products (xSIGHT, Packet Portal products, Location Intelligence (formerly components of Wireless)).

For the purposes of providing year-over-year variance analysis in the Results of Operations section below we have reflected these changes for all prior periods presented so that they are comparable with our current groupings.

Optical Security and Performance Products

OSP leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell products targeting anti-counterfeiting, consumer and industrial, government, healthcare and other markets.

OSP’s security offerings for the currency market include OVP®, OVMP® and banknote thread substrates. OVP® enables a color-shifting effect used by banknote issuers and security printers worldwide for anti-counterfeiting applications on currency and other high-value documents and products. OVP® protects the currencies of more than 120 countries today. OSP also develops and delivers overt and covert anti-counterfeiting products that utilize its proprietary printing platform and are targeted primarily at the pharmaceutical and consumer-electronics markets.

Leveraging its expertise in spectral management and its unique high-precision coating capabilities, OSP provides a range of products and technologies for the consumer-electronics market, including, for example, optical filters for 3D sensing devices designed for gaming and other platforms.

OSP value-added solutions meet the stringent requirements of commercial and government customers in aerospace and defense. Viavi products are used in a variety of aerospace and defense applications, including optics for guidance systems, laser eye protection and night vision systems. These products, including coatings and optical filters, are optimized for each specific application.

OSP serves customers such as FLIR Systems, Integrated Device Technologies, Lockheed Martin, Pfizer, SICPA and STMicro Electronics.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Refer to “Note 2. Recently Issued Accounting Pronouncements” regarding the effect of certain recent accounting pronouncements on our consolidated financial statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For a description of the critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements, refer to Item 7 on Management Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”).

RESULTS OF OPERATIONS

The results of operations for the current period are not necessarily indicative of results to be expected for future periods. As fiscal 2017 is a 52-week year compared to a 53-week year in fiscal 2016, the nine months endedApril 1, 2017 contains one less week of activity compared to the nine months endedApril 2, 2016.

The following table summarizes selected Consolidated Statements of Operations items (in millions, except for percentages):

	Three Months Ended											Nine Months Ended
	April 1, 2017			April 2, 2016			Change			Percent Change		April 1, 2017			April 2, 2016			Change			Percent Change
Segment net revenue:
NE	$	103.4		$	123.1		$	(19.7	)	(16.0	)%	$	339.0		$	377.1		$	(38.1	)	(10.1	)%
SE	28.7			35.2			(6.5		)	(18.5	)%	105.7			120.0			(14.3		)	(11.9	)%
OSP	63.9			62.1			1.8			2.9	%	168.6			185.1			(16.5		)	(8.9	)%
Total net revenue	$	196.0		$	220.4		$	(24.4	)	(11.1	)%	$	613.3		$	682.2		$	(68.9	)	(10.1	)%
Gross profit	$	117.0		$	131.3		$	(14.3	)	(10.9	)%	$	366.8		$	413.6		$	(46.8	)	(11.3	)%
Gross margin	59.7		%	59.6		%						59.8		%	60.6		%
Research and development	$	34.1		$	40.0		$	(5.9	)	(14.8	)%	$	106.1		$	126.0		$	(19.9	)	(15.8	)%
Percentage of net revenue	17.4		%	18.1		%						17.3		%	18.5		%
Selling, general and administrative	$	76.2		$	80.6		$	(4.4	)	(5.5	)%	$	228.5		$	261.3		$	(32.8	)	(12.6	)%
Percentage of net revenue	38.9		%	36.6		%						37.3		%	38.3		%
Restructuring and related charges (benefits)	$	18.4		$	(0.1	)	$	18.5		(18,500.0	)%	$	20.2		$	1.7		$	18.5		1,088.2	%
Percentage of net revenue	9.4		%	—		%						3.3		%	0.2		%
Interest and other income (expense), net	5.0			0.8			4.2			525.0	%	10.1			1.4			8.7			621.4	%
Percentage of net revenue	2.6		%	0.4		%						1.6		%	0.2		%
Gain on sale of investments	$	51.2		$	39.8		$	11.4		28.6	%	$	186.6		$	39.8		$	146.8		368.8	%
Percentage of net revenue	26.1		%	18.1		%						30.4		%	5.8		%
Provision for income taxes	$	4.3		$	9.9		$	(5.6	)	(56.6	)%	15.8			13.9			1.9			13.7	%
Percentage of net revenue	2.2		%	4.5		%						2.6		%	2.0		%
Income (loss) from discontinued operations, net of taxes	$	—		$	5.0		$	(5.0	)	(100.0	)%	$	—		$	(45.4	)	$	45.4		100.0	%
Percentage of net revenue	—		%	2.3		%						—		%	(6.7		)%

Net Revenue

Following the Separation, revenue from our service offerings exceeds 10% of our total consolidated net revenue and is presented separately in our Consolidated Statements of Operations. Service revenue primarily consists of maintenance and support, extended warranty, professional services and post-contract support in addition to other services such as rentals, loaners and repair services. When evaluating the performance of our segments, Management focuses on total net revenue, gross profit and operating

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income and not the product or service categories. Consequently, the following discussion of business segment performance focuses on total net revenue, gross profit, and operating income consistent with our approach for managing the business.

Three months endedApril 1, 2017 and April 2, 2016

Net revenue decreased by $24.4 million, or 11.1%, during the three months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily due to decreases in our NE and SE segments, partially offset by an increase in our OSP segment as discussed below.

Product revenues decreased $22.5 million, or 11.3%, during the three months endedApril 1, 2017 compared to the same period a year ago, primarily due to decrease in NE product revenue as described below. Service revenues decreased $1.9 million, or 8.7%, during the three months endedApril 1, 2017 compared to the same period a year ago primarily due to a decline in our NE segment.

NE net revenue decreased by $19.7 million, or 16.0%, during the three months endedApril 1, 2017 compared to the same period a year ago. This decrease was driven by a $21.9 million net decrease in Field Instruments offerings. Most of the Field Instruments product offerings experienced decreases due to weaker demand in North America from communication service providers, except for Cable products which experienced increases due to upgrade demand from customers. Additionally, Lab Instruments increased $2.3 million.

SE net revenue decreased by $6.5 million, or 18.5%, during the three months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by $2.8 million of net revenue decrease in the Data Center business due to deal push outs and delayed spending from enterprise customers in the current period and continuing decline of $4.3 million from our Mature Assurance offerings.

OSP net revenue increased by $1.8 million, or 2.9%, during the three months endedApril 1, 2017 compared to the same period a year ago. This increase was primarily driven by a better than expected recovery in our anti-counterfeiting business.

Nine Months EndedApril 1, 2017 and April 2, 2016

Net revenue decreased by $68.9 million, or 10.1%, during the nine months endedApril 1, 2017 compared to the same period a year ago due to decreases in all of our segments as discussed below.

Product revenues decreased $58.6 million, or 9.7%, during the nine months endedApril 1, 2017 compared to the same period a year ago, primarily due to lower demand for our Anti-Counterfeiting product line in our OSP segment driven by decreased bank-note volume and a decrease in NE and SE product revenue as described below. Service revenues decreased $10.3 million, or 13.7%, during the nine months endedApril 1, 2017 compared to the same period a year ago primarily due to a decline in support contract renewals for our more mature assurance portfolio solutions in our SE segment.

NE net revenue decreased by $38.1 million, or 10.1%, during the nine months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by a $40.9 million net decrease in Field Instruments offerings. Most of the Field Instruments product offerings experienced decreases due to weaker demand in North America from communication service providers, except for Cable products and Fiber Instrument products which increased due to upgrade demand from customers and high demand for 100G optical products, respectively. Additionally, Lab Instruments increased $3.3 million.

SE net revenue decreased by $14.3 million, or 11.9%, during the nine months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by $8.6 million of net revenue decreases from our Assurance offerings primarily driven by a decline in our more mature solutions as service maintenance contracts expired and $5.7 million of net revenue decreases from our Data Center primarily relating to prior large deals that did not recur in the current period and delayed spending from enterprise customers.

OSP net revenue decreased by $16.5 million, or 8.9%, during the nine months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by net revenue decreases from our Anti-Counterfeiting product line. The Company expects the anti-counterfeiting business to continue to follow its historical pattern of cyclicality as currency customers continually rebalance their inventories relative to market demand. The decrease was partially offset by net revenue growth in our Consumer and Industrial product lines.

Going forward, we expect to continue to encounter a number of industry and market risks and uncertainties that may limit our visibility, and consequently, our ability to predict future revenue, profitability and general financial performance, and that could create quarter over quarter variability in our financial measures. For example, while the majority of our net revenue and expenses are denominated in U.S. dollars, a portion of our international operations are denominated in foreign currencies. The strengthening of the U.S. dollar relative to foreign currencies could negatively impact reported revenue and expenses. Additionally,

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we have seen demand for our NE and SE products affected by macroeconomic uncertainty. We cannot predict when or to what extent these uncertainties will be resolved. Our revenues, profitability, and general financial performance may also be affected by: (a) strong pricing pressures due to, among other things, a highly concentrated customer base, increasing competition, particularly from Asia-based competitors, and a general commoditization trend for certain products; (b) high product mix variability in our NE and SE markets, which affects revenue and gross margin; (c) fluctuations in customer buying patterns, which cause demand, revenue and profitability volatility; and (d) the current trend of communication industry consolidation, which is expected to continue, that directly affects our NE and SE customer bases and adds additional risk and uncertainty to our financial and business projections. Additionally, we expect to continue to see a decline in net revenue from our more mature Assurance products within our SE segment and could see revenues in our SE segment further decline as a result of our recently announced reduction in workforce.

Revenue by Region and Significant Customers

We operate in three geographic regions: Americas, Asia-Pacific and Europe Middle East and Africa (“EMEA”). Net revenue is assigned to the geographic region and country where our product is initially shipped. For example, certain customers may request shipment of our product to a contract manufacturer in one country, which may differ from the location of their end customers. The following table presents net revenue by geographic regions we operate in and net revenue from countries that exceeded 10% of our total net revenue (dollars in millions):

	Three Months Ended								Nine Months Ended
	April 1, 2017				April 2, 2016				April 1, 2017				April 2, 2016
Americas
United States	$	68.2	34.8	%	$	96.4	43.7	%	$	229.6	37.5	%	$	303.3	44.5	%
Other Americas	17.7		9.0	%	15.4		7.0	%	59.1		9.6	%	49.1		7.2	%
Total Americas	85.9		43.8	%	111.8		50.7	%	288.7		47.1	%	352.4		51.7	%
Asia-Pacific
Greater China	$	22.5	11.5	%	$	23.6	10.7	%	$	76.8	12.5	%	$	79.8	11.7	%
Other Asia	17.8		9.1	%	17.6		8.0	%	55.6		9.1	%	49.4		7.2	%
Total Asia-Pacific	40.3		20.6	%	41.2		18.7	%	132.4		21.6	%	129.2		18.9	%
EMEA
Switzerland	37.9		19.3	%	32.3		14.7	%	88.4		14.4	%	97.8		14.3	%
Other EMEA	31.9		16.3	%	35.1		15.9	%	103.8		16.9	%	102.8		15.1	%
Total EMEA	69.8		35.6	%	67.4		30.6	%	192.2		31.3	%	200.6		29.4	%
Total	$	196.0	100.0	%	$	220.4	100.0	%	$	613.3	100.0	%	$	682.2	100.0	%

Net revenue from customers outside the Americas during the three months ended April 1, 2017 and April 2, 2016 represented 56.2% and 49.3% of net revenue, respectively. Net revenue from customers outside the Americas during the nine months ended April 1, 2017 and April 2, 2016 represented 52.9% and 48.3% of net revenue, respectively. We expect revenue from customers outside of North America to continue to be an important part of our overall net revenue and an increasing focus for net revenue growth opportunities.

Gross Margin

Gross margin remained relatively flat during the three months endedApril 1, 2017 from 59.6% in the same period a year ago to 59.7% in the current period. This was primarily due to gross margin improvement in our SE segment as discussed below, partially offset by reduction in NE gross margin and an unfavorable segment mix.

Gross margin decreased by 0.8 percentage points during the nine months endedApril 1, 2017 from 60.6% in the same period a year ago to 59.8% in the current period. This decrease was primarily driven by gross margin reduction in our NE and SE segments as discussed below.

As discussed in more detail under “Net Revenue” above, we sell products in certain markets that are consolidating, undergoing product, architectural and business model transitions, have high customer concentrations, are highly competitive (increasingly due

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to Asia-Pacific-based competition), are price sensitive and/or are affected by customer seasonal and mix variant buying patterns. We expect these factors to continue to result in variability of our gross margin.

Research and Development

R&D expense decreased by $5.9 million, or 14.8%, during the three months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by net cost savings realized from our strategic restructuring activities related to site consolidations and internal reorganizations to align our investment strategy following the Separation. As a percentage of net revenue R&D decreased by 0.7 percentage points during the three months endedApril 1, 2017 compared to the same period a year ago as the Company continued to execute targeted cost savings initiatives.

R&D expense decreased by $19.9 million or 15.8%, during the nine months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily driven by net cost savings realized from our strategic restructuring activities related to site consolidations and internal reorganizations to align our investment strategy following the Separation, coupled with a $2.1 million net reduction in stock-based compensation primarily due to modification of equity awards in connection with the Separation that did not recur this period. As a percentage of net revenue R&D decreased by 1.2 percentage points during the nine months endedApril 1, 2017 compared to the same period a year ago as the Company continued to execute targeted cost savings initiatives.

We believe that continuing our investments in R&D is critical to attaining our strategic objectives. While we plan to continue to invest in R&D and new products that will further differentiate us in the marketplace, the restructuring and global workforce reduction plan we announced in January 2017 is expected to result in some near-term reductions to R&D investments in our NSE operations.

Selling, General and Administrative

SG&A expense decreased by $4.4 million, or 5.5%, during the three months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily due to reduction in labor and facilities expenses driven by lower headcount and site consolidations associated with our strategic restructuring activities and ongoing cost reduction efforts. As a percentage of net revenue SG&A increased during the three months endedApril 1, 2017 compared to the same period a year ago, driven by decreased revenue as discussed above.

SG&A expense decreased by 32.8 million, or 12.6%, during the nine months endedApril 1, 2017 compared to the same period a year ago. This decrease was primarily due to (a) a $12.0 million reduction in labor and facilities expenses driven by lower headcount and site consolidations associated with our strategic restructuring activities and ongoing cost reduction efforts, (b) a $5.0 million net reduction in stock-based compensation primarily due to the impact of Separation related activities on equity awards that did not recur this year and (c) a $4.4 million reduction in costs related to Viavi-specific activities to complete the Separation. As a percentage of net revenue SG&A decreased 1.0 percentage points during the nine months endedApril 1, 2017 compared to the same period a year ago, driven by our strategic cost reduction efforts to optimize our expense structure.

We intend to continue to focus on reducing our SG&A expense as a percentage of net revenue. Specifically, in January 2017 we announced a restructuring and global workforce reduction plan designed to improve profitability and reduce costs by streamlining NSE operations. However, we have in the past experienced, and may continue to experience in the future, certain non-core expenses, such as mergers and acquisitions-related expenses and litigation expenses, which could increase our SG&A expenses and potentially impact our profitability expectations in any particular quarter.

Restructuring and Related Charges

From time to time we have initiated strategic restructuring events primarily intended to reduce costs, consolidate our operations, rationalize the manufacturing of our products and align our businesses in response to market conditions. We estimate annualized gross cost savings of approximately $51.0 million excluding any one-time charges as a result of the restructuring activities initiated in the past year. Refer to “Note 11. Restructuring and Related Charges” for more information.

During the three and nine months ended April 1, 2017, we incurred restructuring and related charges of $18.4 million and $20.2 million, respectively, due to new and previously announced restructuring plans. During the same period a year ago, we incurred restructuring and related (benefits) charges of $(0.1) million and $1.7 million, respectively.

During the third quarter of fiscal 2017, we incurred restructuring and related charges of $18.4 million. These charges are primarily the result of the following:

Management approved a plan within the NE and SE business segments as part of Viavi’s continued strategy to improve profitability in the Company’s Network and Service Enablement (NSE) business by narrowing the scope of the Service Enablement

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business and reducing costs by streamlining NSE operations. As a result, a restructuring charge of $19.2 million was recorded for severance and employee benefits for approximately 300 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the second quarter of fiscal 2018. This charge was offset by a $0.8 million benefit primarily related to a reduction in the number of employees impacted by previously announced restructuring plans.

During the third quarter of fiscal 2016, we incurred restructuring and related benefits of $0.1 million. There were no new restructuring plans or significant additions to already existing plans during the third quarter of fiscal 2016. The benefits primarily relate to a reduction in the number of employees impacted by previously announced restructuring plans.

During the nine months ended April 1, 2017 we recorded $20.2 million in restructuring and related charges. The charges are a combination of new and previously announced restructuring plans and are primarily the result of the following:

Management approved a plan within the NE and SE business segment as part of Viavi’s continued strategy to improve profitability in the Company’s Network and Service Enablement (NSE) business by narrowing the scope of the Service Enablement business and reducing costs by streamlining NSE operation. As a result, a restructuring charge of $20.6 million was recorded for severance and employee benefits for approximately 300 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the second quarter of fiscal 2018.

During the nine months ended April 2, 2016 we recorded $1.7 million in restructuring and related charges. The charges are a combination of new and previously announced restructuring plans and are primarily the result of the following:

We incurred a restructuring charge of $3.0 million primarily for severance and benefits for the NE and SE Agile Restructuring Plan announced in the second quarter of fiscal 2016. This charge was offset by a $1.3 million benefit primarily related to a reduction in the number of employees impacted by previously announced restructuring plans.

Our restructuring and other lease exit cost obligations are net of sublease income or lease settlement estimates of approximately $2.2 million. Our ability to generate sublease income, as well as our ability to terminate lease obligations and recognize the anticipated related savings, is highly dependent upon the economic conditions, particularly commercial real estate market conditions in certain geographies, at the time we negotiate the lease termination and sublease arrangements with third parties as well as the performances by such third parties of their respective obligations. While the amount we have accrued represents the best estimate of the remaining obligations we expect to incur in connection with these plans, estimates are subject to change. Routine adjustments are required and may be required in the future as conditions and facts change through the implementation period. If adverse macroeconomic conditions continue, particularly as they pertain to the commercial real estate market, or if, for any reason, tenants under subleases fail to perform their obligations, we may be required to reduce estimated future sublease income and adjust the estimated amounts of future settlement agreements, and accordingly, increase estimated costs to exit certain facilities. Amounts related to the lease expense, net of anticipated sublease proceeds, will be paid over the respective lease terms through fiscal 2019.

Interest and Other Income (Expense), Net

Interest and other income (expense), net was $5.0 million during the three months endedApril 1, 2017 compared to $0.8 million the same period a year ago. This $4.2 million increase was primarily driven by $1.2 million gain on sale of other assets, increase in interest income of $1.2 million and a $1.8 million more favorable foreign exchange impact.

Interest and other income (expense), net was $10.1 million during the nine months endedApril 1, 2017 compared to $1.4 million the same period a year ago. This $8.7 million increase was primarily driven by a $3.0 million gain on sale of other assets, a $2.7 million increase in interest income and a $2.9 million more favorable foreign exchange impact.

Gain on Sale of Investments

We sold 1.3 million and 6.9 million shares of Lumentum common stock during three and nine months ended April 1, 2017 and recognized a gross realized gain of approximately $51.2 million and $186.5 million, respectively, reflected in "Gain on sale of investments" in our Consolidated Statements of Operations and within the operating activities section of the Consolidated Statements of Cash Flows, while the cash proceeds received are reflected in “Sales of available-for-sale investments” within the investing activities section. As of April 1, 2017, we owned approximately 0.4 million shares of Lumentum’s common stock with

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an approximate value of $20.8 million. Refer to “Note 7. Investments, Forward Contracts and Fair Value Measurements” for more information.

Provision for Income Taxes

We recorded income tax expense of $4.3 million and $15.8 million related to income from continuing operations for the three and nine months ended April 1, 2017, respectively. We recorded income tax expense of $9.9 million and $13.9 million related to income from continuing operations for the three and nine months ended April 2, 2016, respectively.

The income tax expense related to income from continuing operations recorded for the three and nine months ended April 1, 2017 and April 2, 2016 primarily relates to income tax in certain foreign and state jurisdictions based on our forecasted pre-tax income or loss for the respective year. In addition, for three and nine months endedApril 2, 2016, the Company’s income tax provision included a tax benefit of $7.6 million and $14.6 million, respectively, related to the income tax intraperiod tax allocation rules for discontinued operations and other comprehensive income. The income tax provision for the nine months endedApril 2, 2016 included a tax expense of $8.9 million related to a one-time increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the Separation.

The income tax expense related to income from continuing operations recorded differs from the expected tax expense that would be calculated by applying the federal statutory rate to our income from continuing operations before taxes primarily due to the changes in valuation allowance for deferred tax assets attributable to our domestic and foreign income (loss) from continuing operations, the income tax benefit recorded in continuing operations under the income tax intraperiod tax allocation rules, and the increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the Separation.

As of April 1, 2017 and July 2, 2016, the Company’s unrecognized tax benefits totaled $42.1 million and $41.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net. The Company had $2.3 million accrued for the payment of interest and penalties at April 1, 2017. The unrecognized tax benefits that may be recognized during the next twelve months are approximately $1.0 million.

Discontinued Operations

Our discontinued operations activities during the three and nine months ended April 1, 2017 related to the separation of the Lumentum business on August 1, 2015 and earn out adjustment related to the 2013 sale of the hologram business (“Hologram Business”).

Lumentum Separation

As a result of the Separation, the financial results of Lumentum are presented as discontinued operations for all periods presented. Net income (loss) attributable to the Lumentum discontinued operations was $5.0 million and $(45.6) million during the three and nine months ended April 2, 2016.

Hologram Disposition

During the nine months ended April 2, 2016, the Company recorded $0.3 million of net income from discontinued operations related to the Hologram Business related to proceeds received following a favorable arbitration ruling to resolve a dispute regarding the amount we were owed under an earn out clause in connection with the sale in 2013.

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Operating Segment Information (in millions):

	Three Months Ended											Nine Months Ended
	April 1, 2017			April 2, 2016			Change			Percentage Change		April 1, 2017			April 2, 2016			Change			Percentage Change
Network Enablement
Net revenue	$	103.4		$	123.1		$	(19.7	)	(16.0	)%	$	339.0		$	377.1		$	(38.1	)	(10.1	)%
Gross profit	67.5			80.7			(13.2		)	(16.4	)%	219.5			247.0			(27.5		)	(11.1	)%
Gross margin	65.3		%	65.6		%						64.7		%	65.5		%
Service Enablement
Net revenue	28.7			35.2			(6.5		)	(18.5	)%	105.7			120.0			(14.3		)	(11.9	)%
Gross profit	17.7			19.8			(2.1		)	(10.6	)%	66.1			77.7			(11.6		)	(14.9	)%
Gross margin	61.7		%	56.3		%						62.5		%	64.8		%
Network and Service Enablement
Net revenue	132.1			158.3			(26.2		)	(16.6	)%	444.7			497.1			(52.4		)	(10.5	)%
Operating income (loss)	(4.4		)	(0.1		)	(4.3		)	(4,300.0	)%	5.7			10.3			(4.6		)	(44.7	)%
Operating margin	(3.3		)%	(0.1		)%						1.3		%	2.1		%
OSP
Net revenue	$	63.9		$	62.1		$	1.8		2.9	%	$	168.6		$	185.1		$	(16.5	)	(8.9	)%
Operating income	27.8			26.3			1.5			5.7	%	72.1			75.1			(3.0		)	(4.0	)%
Operating margin	43.5		%	42.4		%						42.8		%	40.6		%

Network Enablement

During the three months endedApril 1, 2017, NE gross margin decreased 0.3 percentage points from 65.6% in the same period a year ago to 65.3% in the current period. This decrease was primarily due to an unfavorable product mix coupled with a decline in net revenue as discussed above, partially offset by favorable manufacturing costs.

During the nine months endedApril 1, 2017, NE gross margin decreased 0.8 percentage point from 65.5% in the same period a year ago to 64.7% in the current period. This decrease was primarily due to an unfavorable product mix coupled with a decline in net revenue as discussed above, partially offset by favorable manufacturing costs.

Service Enablement

During the three months endedApril 1, 2017, SE gross margin increased 5.4 percentage points from 56.3% in the same period a year ago to 61.7% in the current period. This increase was due to favorable product mix driven by lower margin pass-through hardware revenue mix in our Growth Assurance offerings in the same period a year ago, resulting in a favorable comparison in the current period.

During the nine months endedApril 1, 2017, SE gross margin decreased 2.3 percentage points from 64.8% in the same period a year ago to 62.5% in the current period. This gross margin decrease was primarily due to unfavorable product mix driven by decline of revenue in higher margin Mature Assurance offerings and Data Center business.

Network and Service Enablement (“NSE”)

During the three months endedApril 1, 2017, NSE operating margin decreased 3.2 percentage points from (0.1)% in the same period a year ago to (3.3)% in the current period. This decrease in operating margin was primarily driven by higher operating expense as a percentage of revenue due to the decline in revenue as discussed above, partially offset by reduction in NSE operating expense and SE gross margin improvement as discussed above.

During the nine months endedApril 1, 2017, NSE operating margin decreased 0.8 percentage points from 2.1% in the same period a year ago to 1.3% in the current period. The change in operating margin was primarily due to decline in NE and SE revenue and gross margin as discussed above, partially offset by decrease in operating expenses as a percentage of net revenue driven by lower headcount as a result of strategic restructuring plans initiated in prior and current years and our ongoing cost reduction initiatives.

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Optical Security and Performance Products

OSP operating margin increased 1.1 percentage points during the three months endedApril 1, 2017 from 42.4% in the same period a year ago to 43.5% in the current period. The increase in operating margin was primarily due to reductions in operating expenses as a percentage of net revenue as a result of good management of operating expense.

OSP operating margin increased 2.2 percentage points during the nine months endedApril 1, 2017 from 40.6% in the same period a year ago to 42.8% in the current period. The increase in operating margin was primarily due to reductions in operating expenses as a percentage of net revenue as a result of good management of operating expense.

Liquidity and Capital Resources

Our cash investments are made in accordance with an investment policy approved by the Audit Committee of our Board of Directors and has not changed from that disclosed in our 10-K. Substantially all debt securities held were of investment grade (at least BBB-/Baa3). As of April 1, 2017, U.S. entities owned approximately 77.0% of our cash and cash equivalents, short-term investments and restricted cash.

As of April 1, 2017, the majority of our cash investments have maturities of 90 days or less and are of high credit quality. Although we intend to hold these investments to maturity, in the event that we are required to sell any of these securities under adverse market conditions, losses could be recognized on such sales. During the nine months endedApril 1, 2017, we have not realized material investment losses but can provide no assurance that the value or the liquidity of our investments will not be impacted by adverse conditions in the financial markets. In addition, we maintain cash balances in operating accounts that are with third party financial institutions. These balances in the U.S. may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. While we monitor the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail.

On March 3, 2017, the Company issued $400 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 (the “2024 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs. The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased. Refer to “Note 10. Debt and Letters of Credit” for more information.

Nine Months EndedApril 1, 2017

As of April 1, 2017 our combined balance of cash and cash equivalents, short-term investments, including marketable equity securities, and restricted cash increased by $474.8 million to $1,454.6 million from $979.8 million as of July 2, 2016.

During the nine months endedApril 1, 2017, cash provided by operating activities was $46.2 million, consisted of net income of $153.2 million adjusted for non-cash charges (e.g., depreciation, amortization and stock-based compensation) which totaled $97.1 million, including changes in deferred tax balance less gain on sale of investment of $186.6 million, offset by net decrease in operating assets and liabilities of $17.5 million. Net decreases in our operating assets and liabilities related primarily to a decrease in accrued payroll and related expenses of $8.3 million due to the timing of salary and bonus payments, a decrease in accounts payable of $10.7 million driven by the timing of payments, an increase in other current and non-current assets of $17.3 million due to prepaid inventory and a decrease in deferred revenue of $17.3 million due to amortization of support agreements and the release of revenue upon customer acceptance. This was offset by an increase in accrued expenses and other current and non-current liabilities of $29.2 million due to a customer prepayment offset by restructuring payments, a decrease in accounts receivable of $3.0 million primarily driven by timing of collections, and an increase in income taxes payable of $4.5 million.

During the nine months endedApril 1, 2017, cash provided by investing activities was $74.9 million, primarily from the sale of 6.9 million shares of marketable equity securities relating to Lumentum stock which generated $245.3 million of cash proceeds offset by $140.2 million of net purchase, sales and maturities of available-for-sale debt securities and other assets and $30.4 million of cash used for capital expenditures.

During the nine months endedApril 1, 2017, cash provided by financing activities was $369.0 million, primarily resulting from $451.0 million net proceeds from issuance of the 1% Senior Convertible Notes and $10.2 million in proceeds from the exercise of stock options and the issuance of common stock under our employee stock purchase plan, offset by $91.6 million in repurchase of our common stock.

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Nine Months EndedApril 2, 2016

As of April 2, 2016 our combined balance of cash and cash equivalents, short-term investments, including marketable equity securities, and restricted cash increased by $179.4 million to $1,005.0 million from $825.6 million as of June 27, 2015 including cash and cash equivalents and short term investments of $13.8 million transferred to Lumentum. Additionally, the cash provided by and used in operating, investing and financing activities below contains activities related to Lumentum through the separation date.

During the nine months ended April 2, 2016 cash provided by operating activities was $35.0 million, consisted of net loss of $31.3 million adjusted for non-cash charges (e.g., depreciation, amortization and stock-based compensation) which totaled $53.0 million, including changes in our deferred tax and other tax liabilities balances, offset by changes in operating assets and liabilities that used $18.0 million. Cash generated by operating activities was also impacted by our separation related activities. Changes in our operating assets and liabilities related primarily to a decrease in accrued expenses and other current and non-current liabilities of $28.3 million primarily due to separation related liabilities paid post Separation, a decrease in accrued payroll and related expenses of $22.0 million due to the timing of salary and bonus payments, a decrease in accounts payable of $8.4 million driven by the timing of payments and an increase in inventories of $2.2 million. This was partially offset by cash inflows from a decrease in accounts receivable of $22.6 million primarily driven by timing of collections of Lumentum-related accounts receivable prior to the Separation, an increase in deferred revenue of $8.1 million from our SE segment solution offerings and an increase in income taxes payable of $8.3 million.

During the nine months ended April 2, 2016 cash provided by investing activities was $204.9 million, primarily resulting from $552.4 million of proceeds from the sales and maturities of available-for-sale investments and other assets (including proceeds of $62.1 million from the sale of 2.5 million shares of Lumentum common stock during the third quarter of fiscal 2016) and a $14.1 million cash inflow from a decrease in restricted cash, partially offset by $334.1 million of purchases of available-for-sale investments and $26.6 million of cash used for capital expenditures.

During the nine months ended April 2, 2016 cash used in financing activities was $143.9 million, primarily resulting from activities related to the Separation during the first quarter of fiscal 2016 and a $40.0 million share repurchase program entered into during the second quarter of fiscal 2016. In accordance with the Contribution Agreement, the Company made cash contributions of $137.0 million to Lumentum, which was partially offset by proceeds of $35.8 million from the sale of Lumentum Series A Preferred Stock to Amada Holdings Co., Ltd. (“Amada”) pursuant to a binding commitment under the Securities Purchase Agreement.

We believe that our existing cash balances and investments will be sufficient to meet our liquidity and capital spending requirements over the next twelve months. However, there are a number of factors that could positively or negatively impact our liquidity position, including:

• global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers;

• changes in accounts receivable, inventory or other operating assets and liabilities which affect our working capital;

• increase in capital expenditure to support the revenue growth opportunity of our business;

• changes in customer payment terms and patterns, which typically results in customers delaying payments or negotiating favorable payment terms to manage their own liquidity positions;

• timing of payments to our suppliers;

• factoring or sale of accounts receivable;

• volatility in fixed income and credit market which impact the liquidity and valuation of our investment portfolios;

• volatility in foreign exchange market which impacts our financial results;

• possible investments or acquisitions of complementary businesses, products or technologies;

• issuance or repurchase of debt or equity securities, which may include open market purchases of our 2033 Notes prior to their maturity or of our common stock;

• potential funding of pension liabilities either voluntarily or as required by law or regulation; and

• compliance with covenants and other terms and conditions related to our financing arrangements.

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Contractual Obligations

On March 3, 2017, the Company issued $400 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 (the “2024 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs. The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased. Refer to “Note 10. Debt and Letters of Credit” for more information.

There were no material changes to our existing contractual commitments during the third quarter of fiscal 2017, except for those occurring in the normal course of business and the issuance of Senior Convertible Notes as discussed above.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, other than the guarantees discussed in “Note 16. Commitments and Contingencies.”

Employee Equity Incentive Plan

Our stock-based benefit plans are a broad-based, long-term retention program that is intended to attract and retain employees and align stockholder and employee interests. There were no material changes to our existing stock-based benefit plans. Refer to “Note 14. Stock-Based Compensation” for more details.

Pension and Other Post-retirement Benefits

We sponsor significant pension plans for certain past and present employees in the United Kingdom (“U.K.”) and Germany. We are also responsible for the non-pension post-retirement benefit obligation or PBO assumed from a past acquisition. All of these plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with acquisitions during fiscal 2010. The U.K. plan is partially funded and the Germany plans, which were initially established as “pay-as-you-go” plans, are unfunded. As of April 1, 2017, our pension plans were under funded by $101.3 million since the PBO exceeded the fair value of its plan assets. Similarly, we had a liability of $1.2 million related to our non-pension post-retirement benefit plan. Pension plan assets are managed by external third parties and we monitor the performance of our investment managers. As of April 1, 2017, the fair value of plan assets had increased approximately 7.0% since July 2, 2016, our most recent fiscal year end.

A key actuarial assumption in calculating the net periodic cost and the PBO is the discount rate. Changes in the discount rate impact the interest cost component of the net periodic benefit cost calculation and PBO due to the fact that the PBO is calculated on a net present value basis. Decreases in the discount rate will generally increase pre-tax cost, recognized expense and the PBO. Increases in the discount rate tend to have the opposite effect. We estimate a 50 basis point (“BPS”) decrease or increase in the discount rate would cause a corresponding increase or decrease, respectively, in the PBO of approximately $8.6 million based upon data as of July 2, 2016.

In estimating the expected return on plan assets, we consider historical returns on plan assets, adjusted for forward-looking considerations, inflation assumptions and the impact of active management of the plan’s invested assets. While it is not possible to accurately predict future rate movements, we believe our current assumptions are appropriate. Refer to “Note 15. Employee Pension and Other Benefit Plans” for more details.

Item 3. Quantitative and Qualitative Disclosure About Market Risks

The Company’s market risk has not changed materially from the foreign exchange and interest rate risks disclosed in Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2016 except as noted below.

The fair value of our 2024 and 2033 Notes is subject to interest rate and market price risk due to the convertible feature of the Notes and other factors. Generally, the fair value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The fair value of the Notes may also increase as the market price of Viavi stock rises and decrease as the market price of our stock falls. Changes in interest rates and Viavi stock price affect the fair value of the Notes but does not impact our

43

financial position, cash flows or results of operations. Based on quoted market prices as of April 1, 2017, the fair value of the 2024 Notes was approximately $483.5 million and the fair value of the 2033 Notes was approximately $726.4 million. Refer to “Note 10. Debts and Letters of Credit” for more information.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), which are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO concluded that, as a result of the material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of April 1, 2017.

Changes in Internal Control Over Financial Reporting

As described in Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended July 2, 2016, we identified a material weakness related to the design of certain internal controls related to the accounting for the interim income tax provision.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. During the preparation of the Company’s fiscal 2016 Annual Report on Form 10-K, the Company’s management identified a material weakness in our internal controls over financial reporting. Specifically, the internal controls with respect to the determination of the interim income tax provision were not designed at a precision level to identify the use of an inaccurate tax rate. This control deficiency could result in a misstatement of the related account balances or disclosures that would result in a material misstatement to the interim consolidated financial statements that would not be prevented or detected. For the quarters ended October 3, 2015, January 2, 2016 and April 2, 2016, this control deficiency did result in misstatements of our income tax expense and income taxes payable.

Management's Remediation Initiatives

Management has evaluated the design and operation of internal controls related to the interim income tax provision and has implemented additional controls related to the preparation and review of the interim income tax provision designed to ensure the use of accurate tax rates.

Management has tested the design of the internal controls related to the remediation of the material weakness described above. We anticipate such controls will have been operating for a sufficient period to complete the full remediation of the material weakness by the end of the fourth quarter of fiscal 2017.

Other than the above changes, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter ended April 1, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

We are subject to a variety of claims and suits that arise from time to time in the ordinary course of our business. While management currently believes that resolving claims against us, individually or in aggregate, will not have a material adverse impact on its financial position, results of operations or statement of cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on our financial position, results of operations or cash flows for the period in which the effect becomes reasonably estimable.

Item 1A. Risk Factors

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There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report for the fiscal year ended July 2, 2016 except as noted below.

In August 2013, we issued $650.0 million of 0.625% Senior Convertible Notes due 2033, and in March 2017, we issued $460 million of 1.00% Senior Convertible Notes due 2024 (collectively, the “Notes”). The issuance of the Notes could dilute our existing stockholders and lower our reported earnings per share.

We issued $650.0 million of indebtedness in August 2013 in the form of 0.625% Senior Convertible Notes due 2033 and $460 million of indebtedness in March 2017 in the form of 1.00% Senior Convertible Notes due 2024 (collectively, the “Notes”). The issuance of the Notes substantially increased our principal payment obligations. Additionally, in fiscal 2016 we contributed $137.6 million in cash to Lumentum in connection with the Separation, subject to the requirements as set forth in the Contribution Agreement between the Company and Lumentum Operations LLC. Following the Separation we have substantially lower cash flow which increased our leverage. The degree to which we are leveraged could materially and adversely affect our ability to successfully obtain financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. In addition, the holders of the Notes are entitled to convert the Notes into shares of our common stock or a combination of cash and shares of common stock under certain circumstances which would dilute our existing stockholders and lower our reported per share earnings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share repurchase activity during the three months endedApril 1, 2017 was as follows:

Period	Total Number of Shares Purchased	Average Price Paid per share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs  (in millions)
January 1, 2017 to January 28, 2017	218,289	$8.37	218,289	$	104
January 29, 2017 to February 25, 2017	700	$8.49	700	104
February 26, 2017 to March 31, 2017	5,010,020	$9.98	5,010,020	54
	5,229,009	$9.91	5,229,009	$	54

In September 2016, the Board of Directors increased the Company’s previously authorized stock repurchase program from $100 million to $150 million. Under the revised repurchase authorization, the Company may repurchase up to $150 million of the Company’s common stock from time to time at the discretion of the Company’s management. This stock repurchase authorization expires on December 31, 2017.

Item 3. Defaults Upon Senior Securities

 None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None. 

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Item 6. Exhibits

The following documents are filed as Exhibits to this report:

		Incorporated by Reference			Filed
Exhibit No.	Exhibit Description	Form	Exhibit	Filing Date	Herewith
4.1	Indenture, dated as of March 3, 2017	8-K	4.1	3/6/17
4.2	Form of 1.00% Senior Convertible Notes due 2024	8-K	4.2	3/6/17
31.1	Certification of the Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of the Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	XBRL Instance				X
101.SCH	XBRL Taxonomy Extension Schema				X
101.CAL	XBRL Taxonomy Extension Calculation				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase				X
101.PRE	XBRL Taxonomy Extension Presentation				X

46

SIGNATURES

 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 9, 2017	VIAVI SOLUTIONS INC.
	(Registrant)
	By:	/s/ AMAR MALETIRA
	Name:	Amar Maletira
	Title:	Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

47

EX-31.1

Exhibit 31.1

VIAVI SOLUTIONS INC.

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Oleg Khaykin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Viavi Solutions Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 9, 2017

/s/ OLEG KHAYKIN

Oleg Khaykin

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

VIAVI SOLUTIONS INC.

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Amar Maletira, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Viavi Solutions Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 9, 2017

/s/ AMAR MALETIRA

Amar Maletira

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

VIAVI SOLUTIONS INC.

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Viavi Solutions Inc. (the “Company”) on Form 10-Q for the quarter ended April 1, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Oleg Khaykin, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: May 9, 2017

/s/ OLEG KHAYKIN

Oleg Khaykin

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

VIAVI SOLUTIONS INC.

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Viavi Solutions Inc. (the “Company”) on Form 10-Q for the quarter ended April 1, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Amar Maletira, Executive Vice President and Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: May 9, 2017

/s/ AMAR MALETIRA

Amar Maletira

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Apr. 01, 2017	Apr. 29, 2017
Document and Entity Information
Entity Registrant Name	VIAVI SOLUTIONS INC.
Entity Central Index Key	0000912093
Document Type	10-Q
Document Period End Date	Apr. 01, 2017
Amendment Flag	false
Current Fiscal Year End Date	--07-01
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		226,977,290
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Revenues:
Product revenue	$ 176.0	$ 198.5	$ 548.5	$ 607.1
Service revenue	20.0	21.9	64.8	75.1
Total net revenues	196.0	220.4	613.3	682.2
Cost of revenues:
Product cost of revenues	63.3	70.5	196.6	209.6
Service cost of revenues	12.1	14.5	38.8	46.0
Amortization of acquired technologies	3.6	4.1	11.1	13.0
Total cost of revenues	79.0	89.1	246.5	268.6
Gross profit	117.0	131.3	366.8	413.6
Operating expenses:
Research and development	34.1	40.0	106.1	126.0
Selling, general and administrative	76.2	80.6	228.5	261.3
Amortization of other intangibles	3.5	3.6	10.4	11.1
Restructuring and related charges	18.4	(0.1)	20.2	1.7
Total operating expenses	132.2	124.1	365.2	400.1
(Loss) income from operations	(15.2)	7.2	1.6	13.5
Interest and other income (expense), net	5.0	0.8	10.1	1.4
Gain on sale of investments	51.2	39.8	186.6	39.8
Interest expense	(10.7)	(9.1)	(29.3)	(26.7)
Income from continuing operations before taxes	30.3	38.7	169.0	28.0
Provision for income taxes	4.3	9.9	15.8	13.9
Income from continuing operations, net of taxes	26.0	28.8	153.2	14.1
Income (loss) from discontinued operations, net of taxes	0.0	5.0	0.0	(45.4)
Net income (loss)	$ 26.0	$ 33.8	$ 153.2	$ (31.3)
Net income (loss) per share from - basic:
Continuing operations (in dollars per share)	$ 0.11	$ 0.13	$ 0.66	$ 0.06
Discontinued operations (in dollars per share)	0.00	0.02	0.00	(0.19)
Net (loss) income per share (in dollars per share)	0.11	0.15	0.66	(0.13)
Net income (loss) per share from - diluted:
Continuing operations (in dollars per share)	0.11	0.12	0.65	0.06
Discontinued operations (in dollars per share)	0.00	0.02	0.00	(0.19)
Net income (loss) per share (in dollars per share)	$ 0.11	$ 0.14	$ 0.65	$ (0.13)
Shares used in per share calculation - basic (in shares)	229.4	232.0	230.8	234.4
Shares used in per share calculation - diluted (in shares)	234.6	234.6	235.9	237.4

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 26.0	$ 33.8	$ 153.2	$ (31.3)
Other comprehensive (loss) income:
Net change in cumulative translation adjustment, net of tax	9.1	3.4	(13.1)	(18.4)
Net change in available-for-sale investments, net of tax:
Unrealized holding gain arising during period	18.8	48.5	93.0	201.6
Less: reclassification adjustments included in net income (loss)	(51.2)	(38.8)	(185.4)	(38.8)
Net change in defined benefit obligation, net of tax:
Amortization of actuarial losses	0.5	0.2	1.4	0.5
Net change in Accumulated other comprehensive (loss) income	(22.8)	13.3	(104.1)	144.9
Comprehensive income	$ 3.2	$ 47.1	$ 49.1	$ 113.6

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Current assets:
Cash and cash equivalents	$ 964.2	$ 482.9
Short-term investments	478.6	484.7
Restricted cash	11.8	12.2
Accounts receivable, net	142.6	148.4
Inventories, net	46.8	51.4
Prepayments and other current assets	53.5	32.1
Total current assets	1,697.5	1,211.7
Property, plant and equipment, net	134.6	133.0
Goodwill	150.7	152.1
Intangibles, net	37.6	59.9
Deferred income taxes	108.0	108.8
Other non-current assets	12.3	12.6
Total assets	2,140.7	1,678.1
Current liabilities:
Accounts payable	34.7	47.0
Accrued payroll and related expenses	47.5	44.9
Deferred revenue	67.3	78.6
Accrued expenses	27.7	24.9
Other current liabilities	69.8	31.0
Total current liabilities	247.0	226.4
Long-term debt	958.1	583.3
Other non-current liabilities	164.4	179.1
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred Stock, $0.001 par value; 1 million shares authorized; 1 share at April 1, 2017 and July 2, 2016, issued and outstanding	0.0	0.0
Common Stock, $0.001 par value; 1 billion shares authorized; 227 million shares at April 1, 2017 and 232 million shares at July 2, 2016, issued and outstanding	0.2	0.2
Additional paid-in capital	70,184.2	70,059.8
Accumulated deficit	(69,319.1)	(69,380.7)
Accumulated other comprehensive (loss) income	(94.1)	10.0
Total stockholders’ equity	771.2	689.3
Total liabilities and stockholders’ equity	$ 2,140.7	$ 1,678.1

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Apr. 01, 2017	Jul. 02, 2016
Statement of Financial Position [Abstract]
Preferred Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	1,000,000	1,000,000
Preferred Stock, shares issued	1	1
Preferred Stock, shares outstanding	1	1
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	1,000,000,000	1,000,000,000
Common Stock, shares issued	227,000,000	232,000,000
Common Stock, shares outstanding	227,000,000	232,000,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
OPERATING ACTIVITIES:
Net income (loss)	$ 153.2	$ (31.3)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense	22.2	29.8
Amortization of acquired technologies and other intangibles	21.5	24.7
Stock-based compensation	25.9	35.6
Amortization of debt issuance costs and accretion of debt discount	23.6	21.4
Amortization of discount and premium on investments, net	0.8	0.9
Gain on sale of investments	(186.6)	(39.8)
Loss on disposal of assets	4.5	0.9
Other	1.3	0.4
Changes in operating assets and liabilities, net of impact of Lumentum distribution:
Accounts receivable	3.0	22.6
Inventories	(0.6)	(2.2)
Other current and non-currents assets	(17.3)	3.7
Accounts payable	(10.7)	(8.4)
Income taxes payable	4.5	11.3
Deferred revenue, current and non-current	(17.3)	8.1
Deferred taxes, net	(2.7)	7.6
Accrued payroll and related expenses	(8.3)	(22.0)
Accrued expenses and other current and non-current liabilities	29.2	(28.3)
Net cash provided by operating activities	46.2	35.0
INVESTING ACTIVITIES:
Purchases of available-for-sale investments	(542.0)	(334.1)
Maturities of available-for-sale investments	321.3	330.1
Sales of available-for-sale investments	321.4	217.3
Changes in restricted cash	0.2	14.1
Capital expenditures	(30.4)	(26.6)
Proceeds from the sale of assets	4.4	5.0
Acquisition of a business	0.0	(0.9)
Net cash provided by investing activities	74.9	204.9
FINANCING ACTIVITIES:
Proceeds from issuance of 1.00% senior convertible debt	460.0	0.0
Payment of debt issuance costs	(9.0)	0.0
Proceeds from sale of Lumentum Holdings Inc. Series A Preferred Stock	0.0	35.8
Cash contribution to Lumentum Holdings Inc.	0.0	(137.0)
Repurchase and retirement of common stock	(91.6)	(40.0)
Payment of financing obligations	(0.6)	(5.7)
Proceeds from exercise of employee stock options and employee stock purchase plan	10.2	3.0
Net cash provided by (used in) financing activities	369.0	(143.9)
Effect of exchange rates on cash and cash equivalents	(8.8)	(6.8)
Net increase in cash and cash equivalents	481.3	89.2
Cash and cash equivalents at the beginning of the period	482.9	347.9	[1]
Cash and cash equivalents at the end of the period	$ 964.2	$ 437.1

[1] Cash and cash equivalents at June 27, 2015 included $13.4 million in current assets of the discontinued operations of Lumentum Holdings Inc.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions	Jun. 27, 2015 USD ($)
Spinoff | Lumentum
Cash and cash equivalents included in discontinued operations	$ 13.4

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Basis of Presentation

9 Months Ended

Apr. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

The financial information for Viavi Solutions Inc. (“Viavi” also referred to as “the Company”, “we”, “our” and “us”) as of April 1, 2017 and for the three and nine months endedApril 1, 2017 and April 2, 2016 is unaudited, and includes all normal and recurring adjustments Company management (“Management”) considers necessary for a fair statement of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual consolidated financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 2, 2016.

The balance sheet as of July 2, 2016 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results for the three and nine months endedApril 1, 2017 and April 2, 2016 may not be indicative of results for the fiscal year ending July 1, 2017 or any future periods.

Fiscal Years

The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company’s fiscal 2017 is a 52-week year ending on July 1, 2017. The Company’s fiscal 2016 was a 53-week year ending on July 2, 2016.

Lumentum Separation

On August 1, 2015 (the “Separation Date”), Viavi completed the distribution of approximately 80.1% of the outstanding shares of Lumentum Holdings Inc. (“Lumentum”) common stock (the “Distribution”). Concurrent with the Distribution, JDSU was renamed Viavi Solutions Inc. and, at the time of the Distribution, retained ownership of approximately 19.9% of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s communications and commercial optical products business segment (“CCOP”) and the WaveReady product line and, as a result of the Distribution, is now an independent public company trading under the symbol “LITE” on The Nasdaq Stock Market (“NASDAQ”). The Distribution was made to Viavi’s stockholders of record as of the close of business on July 27, 2015 (the “Record Date”), who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on the Record Date and not sold prior to August 4, 2015, the ex-dividend date. The historical results of operations and the financial position have been recasted to present the Lumentum business as discontinued operations as described in “Note 3. Discontinued Operations.” Unless noted otherwise, discussion in the Notes to Consolidated Financial Statements pertain to continuing operations.

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods. The Company bases estimates on historical experience and on various assumptions about the future believed to be reasonable based on available information. The Company’s reported financial position or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more current information.

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Recently Issued Accounting Pronouncements

9 Months Ended

Apr. 01, 2017

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Issued Accounting Pronouncements

Note 2. Recently Issued Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the service cost component of net periodic benefit cost to be presented in the same line item(s) as other compensation costs arising from services rendered during the period, with other components of net periodic benefit cost to be presented separately from the service cost component. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In February 2017, the FASB issued guidance that clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset,” defines the term “in-substance nonfinancial asset,” and adds guidance for partial sales of nonfinancial assets. This guidance will be effective at the same time the new authoritative guidance related to revenue recognition is effective. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In January 2017, the FASB issued guidance that will eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, impairment charge will be based on the excess of a reporting unit's carrying amount over its fair value. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company plans to early adopt this standard for the next goodwill testing date and does not anticipate the adoption to have a material impact on its consolidated financial statements, absent any goodwill impairment.

In November 2016, the FASB issued guidance that will require that the amounts generally described as restricted cash and restricted cash equivalents would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new guidance also requires certain disclosures to supplement the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In October 2016, the FASB issued guidance that requires entities to recognize at the transaction date the income tax consequences of intra-entity transfer of an asset other than inventory. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB issued guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The guidance is effective for the Company in the first quarter of fiscal 2021 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In March 2016, the FASB issued guidance which simplifies several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2018 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued guidance related to how an entity should recognize lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for the Company in the first quarter of fiscal 2020. While the Company is not yet in a position to assess the full impact of the application of the new guidance, the Company expects that the impact of recording lease liabilities and the corresponding right-to-use assets may have a significant impact on its total assets and total liabilities on the consolidated balance sheets.

In May 2014, the FASB issued new authoritative guidance related to revenue recognition. This guidance will replace current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance allows for either full retrospective adoption or modified retrospective adoption. The FASB deferred the effective date for this guidance by one year to December 15, 2017 for annual reporting periods beginning after such date. Earlier application of this guidance is permitted. In accordance with the deferred effective date, the Company is required to adopt the new guidance in the first quarter of fiscal 2019. The Company does not intend to adopt the new guidance early and is continuing to evaluate the impact of this new accounting guidance and the transition alternatives on its consolidated financial statements and related disclosures.

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Discontinued Operations

9 Months Ended

Apr. 01, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 3. Discontinued Operations

Lumentum Separation

On August 1, 2015, the Company completed the separation of the Lumentum business (the “Separation”) and made a tax-free distribution of approximately 80.1% of the outstanding shares of Lumentum common stock to Viavi shareholders who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on July 27, 2015 (the “Record Date”) and not sold prior to August 4, 2015 (the “ex-dividend date”). In connection with the Separation Viavi agreed to contribute $137.6 million all of which was contributed during fiscal 2016. As of the Distribution, Viavi retained ownership of approximately 19.9%, or 11.7 million shares, of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s CCOP business and the WaveReady product line. As a result of the Distribution, Lumentum is now an independent public company. The Company agreed not to liquidate the retained shares during the first six months following the Distribution. However, in connection with a private letter ruling from the Internal Revenue Service, the Company committed to liquidate these shares within three years from the Distribution. As of April 1, 2017, the Company owns approximately 0.4 million shares, of Lumentum’s common stock. Refer to “Note 7. Investments, Forward Contracts and Fair Value Measurements” for more information.

As the separation of the Lumentum business represented a strategic shift that had and will have a major effect on the Company’s operations and financial results, the results of operations of the Lumentum business are presented separately as discontinued operations for the three and nine months endedApril 2, 2016 in accordance with the authoritative guidance.

As of the Separation Date, Lumentum became a stand-alone public company that separately reports its financial results. Due to the difference between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of Lumentum included within discontinued operations for the Company may not be indicative of actual financial results of Lumentum as a stand-alone company.

The removal of Lumentum’s net assets and equity related adjustments upon the Separation are presented as an increase of Viavi's accumulated deficit and represents a non-cash financing activity, excluding the cash transferred. Refer to “Note 14. Stock-Based Compensation” for information on modifications to stock-based compensation awards as a result of the Distribution.

The following table summarizes results from discontinued operations of the Lumentum business included in the condensed Consolidated Statement of Operations (in millions):

	Nine Months Ended (1)
	April 2, 2016
Net revenues	$	66.5
Cost of revenues	49.8
Amortization of acquired technologies	0.6
Gross profit	16.1
Operating expenses:
Research and development	12.5
Selling, general and administrative	24.7
Restructuring charges	0.1
Total operating expenses	37.3
Loss from operations	(21.2		)
Interest and other income (expense), net	—
Loss before income taxes	(21.2		)
Provision for income taxes	24.4
Net loss from discontinued operations	$	(45.6	)

(1) Net income from discontinued operations for the three months ended April 2, 2016 was $5.0 million comprised of costs to complete the separation offset by a benefit from income taxes from discontinued operations of $6.1 million. No income or expense has been recorded relating to the Lumentum business after the separation from Viavi on August 1, 2015.

During the nine months endedApril 2, 2016, the income tax provision for discontinued operations of $24.4 million, included approximately $7.6 million cash taxes that were due to federal and state authorities as a result of the Separation. In addition, approximately $17.1 million of the income tax provision for discontinued operations related to the income tax intraperiod tax allocation rules in relation to continuing operations and other comprehensive income.

Net income (loss) from discontinued operations also includes other costs incurred by the Company to separate Lumentum. These costs include transaction charges, advisory and consulting fees. Net income (loss) from discontinued operations includes transaction, advisory and other costs to effect the separation of $1.1 million and $16.5 million for the three and nine months ended April 2, 2016, respectively.

The following table presents supplemental cash flow information: depreciation expense, amortization expense, stock based compensation expense and capital expenditures of the Lumentum business (in millions):

	Nine Months Ended (1)
	April 2, 2016
Operating activities:
Depreciation expense	$	3.7
Amortization expense	0.6
Stock-based compensation expense	1.6
Investing activities:
Capital expenditures	$	5.8

(1) No depreciation expense, amortization expense, stock based compensation expense and capital expenditures relating to the Lumentum business are presented after the Separation Date.

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Earnings Per Share

9 Months Ended

Apr. 01, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note 4. Earnings Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Numerator:
Income from continuing operations, net of taxes	$	26.0	$	28.8	$	153.2	$	14.1
Income (loss) from discontinued operations, net of taxes	—		5.0		—		(45.4		)
Net income (loss)	$	26.0	$	33.8	$	153.2	$	(31.3	)
Denominator:
Weighted-average number of common shares outstanding
Basic	229.4		232.0		230.8		234.4
Effect of dilutive securities from stock-based benefit plans	5.2		2.6		5.1		3.0
Diluted	234.6		234.6		235.9		237.4
Net income (loss) per share - basic:
Continuing operations	$	0.11	$	0.13	$	0.66	$	0.06
Discontinued operations	—		0.02		—		(0.19		)
Net income (loss) per share	$	0.11	$	0.15	$	0.66	$	(0.13	)
Net income (loss) per share - diluted:
Continuing operations	$	0.11	$	0.12	$	0.65	$	0.06
Discontinued operations	—		0.02		$	—	$	(0.19	)
Net income (loss) per share	$	0.11	$	0.14	$	0.65	$	(0.13	)

The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income (loss) per share because their effect would have been anti-dilutive (in millions):

	Three Months Ended		Nine Months Ended
	April 1, 2017 (1) (2)	April 2, 2016 (1)	April 1, 2017 (1) (2)	April 2, 2016 (1)
Stock options and ESPP	0.3	1.2	0.3	1.0
Restricted Stock Units	—	3.0	—	2.3
Total potentially dilutive securities	0.3	4.2	0.3	3.3

(1)  The Company’s 0.625% Senior Convertible 2033 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $11.28 per share is payable in cash, shares of the Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

(2)  The Company’s 1.00% Senior Convertible 2024 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $13.22 per share is payable in cash, shares of the Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

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Accumulated Other Comprehensive (Loss) Income

9 Months Ended

Apr. 01, 2017

Equity [Abstract]

Accumulated Other Comprehensive (Loss) Income

Note 5. Accumulated Other Comprehensive (Loss) Income

The Company’s accumulated other comprehensive (loss) income consists of the accumulated net unrealized gains and losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations.

For the nine months endedApril 1, 2017 the changes in accumulated other comprehensive (loss) income by component net of tax were as follows (in millions):

	Unrealized gains (losses) on available-for sale investments (1)			Foreign  currency translation adjustments			Change in unrealized components of defined benefit obligations, net of tax (2)			Total
Beginning balance as of July 2, 2016	$	104.5		$	(70.1	)	$	(24.4	)	$	10.0
Other comprehensive income (loss) before reclassification	93.0			(13.1		)	—			79.9
Amounts reclassified from accumulated other comprehensive income	(185.4		)	—			1.4			(184.0		)
Net current-period other comprehensive (loss) income	(92.4		)	(13.1		)	1.4			(104.1		)
Ending balance as of April 1, 2017	$	12.1		$	(83.2	)	$	(23.0	)	$	(94.1	)

(1) Activity before reclassifications to the Consolidated Statements of Operations during the nine months endedApril 1, 2017 relates to the unrealized gain on the marketable equity securities of Lumentum held by Viavi. The amount reclassified out of accumulated other comprehensive (loss) income relates to the realized gain from the sale of the marketable equity securities of Lumentum. There was notax impact for the nine months endedApril 1, 2017.

(2) The amount reclassified out of accumulated other comprehensive income represents the amortization of actuarial losses included as a component of cost of revenues, research and development (“R&D”) and selling, general and administrative expense (“SG&A”) in the Consolidated Statement of Operations for the nine months endedApril 1, 2017. There was no tax impact for the nine months endedApril 1, 2017. Refer to “Note 15. Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.

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Balance Sheet and Other Details

9 Months Ended

Apr. 01, 2017

Balance Sheet and Other Details [Abstract]

Balance Sheet and Other Details

Note 6. Balance Sheet and Other Details

Accounts receivable reserves and allowances

The components of accounts receivable reserves and allowances were as follows (in millions):

	April 1, 2017		July 2, 2016
Allowance for doubtful accounts	$	1.7	$	2.2
Allowance for sales returns	1.0		2.5
Total accounts receivable reserves	$	2.7	$	4.7

The activities and balances for allowance for doubtful accounts are as follows (in millions):

	July 2, 2016		Charged to Costs and Expenses		Adjustments (1)			April 1, 2017
Allowance for doubtful accounts	$	2.2	$	0.1	$	(0.6	)	$	1.7

 (1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.

Inventories, net

The components of Inventories, net were as follows (in millions):

	April 1, 2017		July 2, 2016
Finished goods	$	25.2	$	29.1
Work in process	8.9		7.5
Raw materials	12.7		14.8
Inventories, net	$	46.8	$	51.4

Prepayments and other current assets

The components of Prepayments and other current assets were as follows (in millions):

	April 1, 2017		July 2, 2016
Prepayments	$	11.4	$	10.4
Other current assets	42.1		21.7
Prepayments and other current assets	$	53.5	$	32.1

Other current liabilities

The components of Other current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Customer prepayments	35.8		0.4
Restructuring accrual	13.1		13.3
Income tax payable	6.9		3.3
Warranty accrual	2.9		2.6
VAT liabilities	2.5		2.3
Foreign exchange forward contract	2.6		—
Deferred compensation plan	2.0		2.4
Other	4.0		6.7
Other current liabilities	$	69.8	$	31.0

Other non-current liabilities

The components of Other non-current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Pension and post-employment benefits	$	98.0	$	103.0
Financing obligation	27.8		28.7
Long-term deferred revenue	16.0		22.7
Other	22.6		24.7
Other non-current liabilities	$	164.4	$	179.1

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Investments, Forward Contracts and Fair Value Measurements

9 Months Ended

Apr. 01, 2017

Investments and Fair Value Measurements [Abstract]

Investments, Forward Contracts and Fair Value Measurements

Note 7. Investments, Forward Contracts and Fair Value Measurements

The Company’s investments in marketable debt and equity securities were primarily classified as available-for-sale securities. As of April 1, 2017, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	69.6	$	—	$	(0.1	)	$	69.5
U.S. agencies	35.2		—		(0.1		)	35.1
Municipal bonds and sovereign debt instruments	4.0		—		—			4.0
Asset-backed securities	68.0		—		(0.3		)	67.7
Corporate securities	324.2		0.1		(0.3		)	324.0
Certificates of deposit	6.0		—		—			6.0
Total debt securities	507.0		0.1		(0.8		)	506.3
Marketable equity securities	3.3		17.5		—			20.8
Total available-for-sale securities	$	510.3	$	17.6	$	(0.8	)	$	527.1

The Company generally classifies debt securities as cash equivalents, short-term investments or other non-current assets based on the stated maturities; however, certain securities with stated maturities of longer than twelve months which are highly liquid and available to support current operations are also classified as short-term investments. As of April 1, 2017, of the total fair value of debt securities, $49.9 million was classified as cash equivalents, $455.8 million was classified as short-term investments and $0.6 million was classified as other non-current assets.

Marketable equity securities consist of the Company’s ownership of 0.4 million shares of Lumentum common stock remaining as of April 1, 2017 in connection with the August 1, 2015 separation. Refer to “Note 3. Discontinued Operations” for more information. These securities are stated at fair value, with unrealized gains and losses reported in other comprehensive (loss) income, net of tax and are classified as short-term investments on the Consolidated Balance Sheet as of April 1, 2017 at $20.8 million. The Company sold 1.3 million and 6.9 million shares during the three and nine months ended April 1, 2017, respectively and recognized gross realized gains of $51.2 million and $186.5 million, reflected in "Gain on sale of investments" in the Company’s Consolidated Statements of Operations. The sale resulted innotax effect. The realized gain is also reflected as a reconciling item to net income in the operating activities section of the Consolidated Statements of Cash Flows, while the cash proceeds received are reflected in “Sales of available-for-sale investments” within the investing activities section.

 In addition to the amounts presented above, as of April 1, 2017, the Company’s short-term investments classified as trading securities related to the deferred compensation plan were $2.0 million, of which $0.5 million was invested in debt securities, $0.5 million was invested in money market instruments and funds and $1.0 million was invested in equity securities. Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in Interest and other income (expense), net.

During the three and nine months endedApril 1, 2017 and April 2, 2016, the Company recorded no other-than-temporary impairment charges in each respective period.

As of April 1, 2017, contractual maturities of the Company’s debt securities classified as available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Estimated Fair Value
Amounts maturing in less than 1 year	$	363.2	$	363.1
Amounts maturing in 1 - 5 years	141.8		141.5
Amounts maturing in more than 5 years	2.0		1.7
Total debt available-for-sale securities	$	507.0	$	506.3

 As of July 2, 2016, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	46.1	$	—	$	—		$	46.1
U.S. agencies	24.9		—		—			24.9
Municipal bonds and sovereign debt instruments	2.0		—		—			2.0
Asset-backed securities	50.4		0.1		(0.3		)	50.2
Corporate securities	224.5		0.2		(0.1		)	224.6
Total debt securities	347.9		0.3		(0.4		)	347.8
Marketable equity securities	62.1		109.2		—			171.3
Total debt available-for-sale securities	$	410.0	$	109.5	$	(0.4	)	$	519.1

As of July 2, 2016, of the total fair value of debt securities, $36.1 million was classified as cash equivalents, $311.1 million was classified as short-term investments and $0.6 million was classified as other non-current assets.

Marketable equity securities consist of the Company’s ownership of 7.2 million shares of Lumentum common stock remaining as of July 2, 2016 in connection with the Separation. These securities are stated at fair value, with change in unrealized gains and losses reported in other comprehensive income, net of tax and are classified as short-term investments on the Consolidated Balance Sheet as of July 2, 2016 at $171.3 million.

In addition to the amounts presented above, as of July 2, 2016, the Company’s short-term investments classified as trading securities, related to the deferred compensation plan, were $2.4 million, of which $0.3 million was invested in debt securities, $0.8 million was invested in money market instruments and funds and $1.3 million was invested in equity securities. Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in Interest and other income (expense), net.

Fair Value Measurements

Assets measured at fair value as of April 1, 2017 and July 2, 2016 are summarized below (in millions):

	Fair value measurement as of						Fair value measurement as of
	April 1, 2017						July 2, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Debt available-for-sale securities
U.S. treasuries	$	69.5	$	69.5	$	—	$	46.1	$	46.1	$	—
U.S. agencies	35.1		—		35.1		24.9		—		24.9
Municipal bonds and sovereign debt instruments	4.0		—		4.0		2.0		—		2.0
Asset-backed securities	67.7		—		67.7		50.2		—		50.2
Corporate securities	324.0		—		324.0		224.6		—		224.6
Certificate of deposits	6.0		—		6.0		—		—		—
Total debt available-for-sale securities	506.3		69.5		436.8		347.8		46.1		301.7
Marketable equity securities	20.8		20.8		—		171.3		171.3		—
Money market funds	720.3		720.3		—		274.4		274.4		—
Trading securities	2.0		2.0		—		2.4		2.4		—
Foreign currency forward contracts	5.2		—		5.2		—		—		—
Total assets (1)	$	1,254.6	$	812.6	$	442.0	$	795.9	$	494.2	$	301.7
Liability:
Foreign currency forward contracts	2.6		—		2.6		—		—		—
Total liabilities (2)	$	2.6	$	—	$	2.6	$	—	$	—	$	—

(1) $754.6 million in cash and cash equivalents, $478.6 million in short-term investments, $11.7 million in restricted cash, $5.2 million in prepayments and other current assets, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of April 1, 2017. $295.4 million in cash and cash equivalents, $484.7 million in short-term investments, $11.3 million in restricted cash, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of July 2, 2016.

(2) $2.6 million in other current liabilities on the Company’s Consolidated Balance Sheets as of April 1, 2017.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions about the factors that market participants would use in valuing the asset or liability.

The Company’s cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy based on quoted prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

• Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets. Level 1 assets of the Company include money market funds, U.S. Treasury securities and marketable equity securities as they are traded with sufficient volume and frequency of transactions. 

• Level 2 includes financial instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 2 instruments of the Company generally include certain U.S. and foreign government and agency securities, commercial paper, corporate and municipal bonds and notes, asset-backed securities, and foreign currency forward contracts. To estimate their fair value, the Company utilizes pricing models based on market data. The significant inputs for the valuation model usually include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, and industry and economic events. 

• Level 3 includes financial instruments for which fair value is derived from valuation based on inputs that are unobservable and significant to the overall fair value measurement. As of April 1, 2017 and July 2, 2016, the Company did not hold any Level 3 investment securities.

Non-Designated Foreign Currency Forward Contracts

The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to foreign exchange risks. The Company utilizes foreign exchange forward contracts and other instruments to manage foreign currency risk associated with foreign currency denominated monetary assets and liabilities, primarily certain short-term intercompany receivables and payables, and to reduce the volatility of earnings and cash flows related to foreign-currency transactions. The Company does not use these foreign currency forward contracts for trading purposes.

As of April 1, 2017 and July 2, 2016, the notional amounts of the forward contracts the Company held to purchase foreign currencies were $133.6 million and $110.0 million, respectively, and the notional amounts of forward contracts the Company held to sell foreign currencies were $31.8 million and $55.2 million, respectively. The fair values of the Company’s outstanding foreign currency forward contracts were not material as of July 2, 2016.

As of April 1, 2017, the Company had forward contracts that were effectively closed but not settled with the counterparties by quarter end; therefore, the fair value of these contracts of $5.2 million and $2.6 million is reflected as prepayments and other current assets and other current liabilities in the Consolidated Balance Sheets as of April 1, 2017, respectively.

The change in the fair value of foreign currency forward contracts is recorded as gain or loss in the Company’s Consolidated Statements of Operations as a component of Interest and other income (expense), net. The cash flows related to the settlement of foreign currency forward contracts are classified as operating activities.

The foreign exchange forward contracts incurred a gain of $2.6 million and a loss of $2.7 million for the three and nine months ended April 1, 2017, respectively. The losses on foreign exchange forward contracts were $5.6 million and $4.9 million for the three and nine months ended April 2, 2016, respectively.

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Goodwill

9 Months Ended

Apr. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note 8. Goodwill

The following table presents the changes in goodwill allocated to the Company’s reportable segments (in millions):

	Network Enablement			Optical Security and Performance Products		Total
Balance as of July 2, 2016	$	143.8		$	8.3	$	152.1
Currency translation adjustments	(1.4		)	—		(1.4		)
Balance as of April 1, 2017	$	142.4		$	8.3	$	150.7

The Company reviews goodwill for impairment during the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that an impairment loss may have occurred. In the fourth quarter of fiscal 2016, the Company completed the annual impairment test of goodwill with no goodwill impairments for the NE and OSP reporting units, and recorded a goodwill impairment charge for the full amount of SE’s goodwill balance of $91.4 million.

There were no events or changes in circumstances which triggered an impairment review during the three and nine months ended April 1, 2017.

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Acquired Developed Technology and Other Intangibles

9 Months Ended

Apr. 01, 2017

Acquired Developed Technology and Other Intangibles

Acquired Developed Technology and Other Intangibles

Note 9. Acquired Developed Technology and Other Intangibles

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles (in millions):

As of April 1, 2017	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	366.9	$	(346.5	)	$	20.4
Customer relationships	94.8		(77.8		)	17.0
Other	10.8		(10.6		)	0.2
Total intangibles	$	472.5	$	(434.9	)	$	37.6

As of July 2, 2016	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	369.3	$	(337.3	)	$	32.0
Customer relationships	95.6		(68.0		)	27.6
Other	10.8		(10.5		)	0.3
Total intangibles	$	475.7	$	(415.8	)	$	59.9

The following table presents the amortization recorded relating to acquired developed technology, customer relationships and other intangibles (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Amortization of acquired developed technologies	$	3.6	$	4.1	$	11.1	$	13.0
Amortization of other intangibles	3.5		3.6		10.4		11.1
Total amortization of intangible assets	$	7.1	$	7.7	$	21.5	$	24.1

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of April 1, 2017, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows (in millions):

Fiscal Years
Remainder of 2017	$	6.7
2018	19.9
2019	9.3
2020	1.4
2021	0.3
Thereafter	—
Total amortization	$	37.6

The acquired developed technology, customer relationships and other intangibles balance are adjusted quarterly to record the effect of currency translation adjustments.

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Debts and Letters of Credit

9 Months Ended

Apr. 01, 2017

Debt Disclosure [Abstract]

Debts and Letters of Credit

Note 10. Debts and Letters of Credit

As of April 1, 2017 and July 2, 2016, the Company’s long-term debt on the Consolidated Balance Sheets represented the carrying amount of the liability component, net of unamortized debt discounts and issuance cost, of the Senior Convertible Notes as discussed below. The following table presents the carrying amounts of the liability and equity components (in millions):

	April 1, 2017			July 2, 2016
Principal amount of 0.625% Senior Convertible Notes	$	650.0		$	650.0
Principal amount of 1.00% Senior Convertible Notes	460.0			—
Unamortized discount of liability component	(141.7		)	(61.7		)
Unamortized debt issuance cost (1)	$	(10.2	)	$	(5.0	)
Carrying amount of liability component	$	958.1		$	583.3
Carrying amount of equity component (2)	$	236.3		$	134.4

(1) In April 2015, the Financial Accounting Standards Board ("FASB") issued new authoritative guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts or premiums. This guidance was effective for the Company in the first quarter of fiscal 2017 for its convertible debt, and was applied retrospectively for all periods reported.

(2) Included in Additional paid-in-capital on the Consolidated Balance Sheets.

The Company was in compliance with all debt covenants and held no short term debt as of April 1, 2017 and July 2, 2016.

1.00% Senior Convertible Notes (“2024 Notes”)

On March 3, 2017, the Company issued $400 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 (the “2024 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs. The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased.

Under certain circumstances and during certain periods, the 2024 Notes may be converted at the option of the holders into cash up to the principal amount, with the remaining amount converted into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock at the Company’s election. The initial conversion price is $13.22 per share, representing a 32.5% premium to the closing sale price of the Company’s common stock on the pricing date, February 27, 2017, which will be subject to customary anti-dilution adjustments.

The 2024 Notes may be converted at any time on or prior to the close of business on the business day immediately preceding December 1, 2023, in multiples of $1,000 principal amount, at the option of the holder only under the following circumstances: (i) on any date during any calendar quarter beginning after June 30, 2017 (and only during such calendar quarter) if the closing price of Viavi’s common stock was more than 130% of the then current conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading-day period ending on the last trading day of the previous calendar quarter, (ii)if the Company distributes to all or substantially all holders of our common stock rights or warrants (other than pursuant to a stockholder rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price of our common stock for the ten trading days preceding the declaration date for such distribution, (iii)if the Company distributes to all or substantially all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a stockholder rights plan), at a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution, (iv) if the Company is party to a specified transaction, a fundamental change or a make-whole fundamental change (each as defined in the Indenture), or (v) during the five consecutive business-day period immediately following any 10 consecutive trading-day period in which the trading price per $1,000 principal amount of the Notes for each day during such 10 consecutive trading-day period was less than 98% of the product of the closing sale price of Viavi’s common stock and the applicable conversion rate on such date. During the periods from, and including, December 1, 2023 until the close of business on the business day immediately preceding the maturity date, holders of the Notes may convert the Notes regardless of the circumstances described in the immediately preceding sentence.

Holders of the 2024 Notes may require Viavi to repurchase for cash all or a portion of the Notes upon the occurrence of a fundamental change (as defined in the Indenture) at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase.

The Indenture provides for customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2024 Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable, subject to certain conditions set forth in the Indenture. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.

In accordance with the authoritative accounting guidance, the Company separated the 2024 Notes into liability and equity components. The carrying value of the liability component at issuance was calculated as the present value of its cash flows using a discount rate of 4.8% based on the 7-year swap rate plus credit spread as of the issuance date. The credit spread for the Company is based on the historical average “yield to worst” rate for BB rated issuers. The difference between the 2024 Notes principal and the carrying value of the liability component, representing the value of conversion premium assigned to the equity component, was recorded as a debt discount on the issuance date and is being accreted using the effective interest rate of 4.8% over the period from the issuance date through March 1, 2024 as a non-cash charge to interest expense. The carrying value of the liability component was determined to be $358.1 million, and the equity component, or debt discount, of the 2024 Notes was determined to be $101.9 million. As of April 1, 2017, the expected remaining term of the 2024 Notes is 6.9 years.

In connection with the issuance of the 2024 Notes, the Company incurred $8.9 million of issuance costs, which were bifurcated into the debt issuance costs (attributable to the liability component) of $6.9 million and the equity issuance costs (attributable to the equity component) of $2.0 million based on their relative values. The debt issuance costs were capitalized and are being amortized to interest expense using the effective interest rate method from issuance date through March 1, 2024. The equity issuance costs were netted against the equity component in additional paid-in capital at the issuance date.

Based on quoted market prices as of April 1, 2017, the fair value of the 2024 Notes was approximately $483.5 million. The 2024 Notes are classified within Level 2 as they are not actively traded in markets.

0.625% Senior Convertible Notes (“2033 Notes”)

On August 21, 2013, the Company issued $650.0 million aggregate principal amount of 0.625% Senior Convertible Notes due 2033 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The proceeds from the 2033 Notes amounted to $636.3 million after issuance costs. The 2033 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 0.625% payable in cash semi-annually in arrears on February 15 and August 15 of each year. The 2033 Notes mature on August 15, 2033 unless earlier converted, redeemed or repurchased.

Following the Separation on August 1, 2015, the conversion price per share was adjusted pursuant to the terms of the 2033 Notes relating to the occurrence of the Separation. Effective as of the end of the business day on August 17, 2015, the initial conversion price per share was adjusted to $11.28 per share of the Company’s common stock traded on NASDAQ under the ticker symbol “VIAV.” The 2033 Notes and its terms are described in “Note 11. Debts and Letters of Credit” of the Company’s Annual Report on Form 10-K for the year ended July 2, 2016.

Based on quoted market prices as of April 1, 2017 and July 2, 2016, the fair value of the 2033 Notes was approximately $726.4 million and $633.0 million. The 2033 Notes are classified within Level 2 as they are not actively traded in markets.

Interest Expense

The following table presents the effective interest rate and the interest expense for the contractual interest and the accretion of debt discount (in millions, except for the effective interest rate):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Effective interest rate	5.3		%	5.4		%	5.3		%	5.4		%
Interest expense-contractual interest	$	1.3		$	1.0		$	3.4		$	3.0
Accretion of debt discount	7.9			6.7			21.9			19.9

Outstanding Letters of Credit

As of April 1, 2017, the Company had 14 standby letters of credit totaling $15.6 million.

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Restructuring and Related Charges

9 Months Ended

Apr. 01, 2017

Restructuring and Related Activities [Abstract]

Restructuring and Related Charges

Note 11. Restructuring and Related Charges

The Company has initiated various strategic restructuring events primarily intended to reduce its costs, consolidate its operations, rationalize the manufacturing of its products and align its businesses in response to market conditions. As of April 1, 2017 and July 2, 2016, the Company’s total restructuring accrual was $15.8 million and $18.0 million, respectively. During the three and nine months endedApril 1, 2017 the Company recorded restructuring and related charges of $18.4 million and $20.2 million, respectively. During the three and nine months endedApril 2, 2016 the Company recorded restructuring and related (benefits) charges of $(0.1) million and $1.7 million, respectively. The Company’s restructuring charges can include severance and benefit costs to eliminate a specified number of positions, facilities and equipment costs to vacate facilities and consolidate operations, and lease termination costs. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over multiple periods.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the three and nine months endedApril 1, 2017 were as follows (in millions):

	Balance July 2, 2016		Nine Months Ended April 1, 2017 Charges (Benefits)			Cash Settlements			Non-cash Settlements and Other Adjustments			Balance April 1, 2017		Three Months Ended April 1, 2017 Charges (Benefits)
Fiscal 2017 Plan
Focused NSE Restructuring Plan (1) (2)	$	—	$	20.7		$	(11.0	)	$	—		$	9.7	$	19.3
Other Plan (2)	—		0.4			(0.4		)	—			—		—
Fiscal 2016 Plan
NE, SE and Shared Services Agile Restructuring Plan (1) (2)	8.6		(0.7		)	(7.5		)	—			0.4		(0.8		)
NE and SE Agile Restructuring Plan (1)	0.8		(0.1		)	(0.3		)	—			0.4		(0.1		)
Fiscal 2015 Plan
NE, SE and Shared Service Separation Restructuring Plan (1)(2)	1.4		(0.2		)	(1.1		)	—			0.1		—
Plans Prior to Fiscal 2015
NE Product Strategy Restructuring Plan (1)	1.5		—			(0.4		)	(0.1		)	1.0		—
NE Lease Restructuring Plan (2)	4.0		0.1			(1.1		)	—			3.0		—
Other Plans (1)(2)	1.7		—			(0.5		)	—			1.2		—
Total	$	18.0	$	20.2		$	(22.3	)	$	(0.1	)	$	15.8	$	18.4

(1) Plan type includes workforce reduction cost.

(2) Plan type includes lease exit cost.

As of April 1, 2017 and July 2, 2016, $2.7 million and $4.7 million, respectively, of our restructuring liability was long-term in nature and included as a component of Other non-current liabilities, with the remaining short-term portion included as a component of Other current liabilities on the Consolidated Balance Sheets.

Fiscal 2017 Plans

Focused NSE Restructuring Plan

During the third and second quarters of fiscal 2017, Management approved a plan within the NE and SE business segments as part of Viavi’s continued strategy to improve profitability in the Company’s Network and Service Enablement (NSE) business by narrowing the scope of the Service Enablement business and reducing costs by streamlining NSE operations.  As a result, a restructuring charge of $20.6 million was recorded for severance and employee benefits for approximately 300 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia. Payments related to the severance and benefits accrual are expected to be paid in the second quarter of fiscal 2018.

Fiscal 2016 Plans

NE, SE and Shared Service Agile Restructuring Plan

During the fourth quarter of fiscal 2016, Management approved a plan within the NE and SE business segments and Shared Services function for organizational alignment and consolidation as part of Viavi’s continued commitment for a more cost effective organization. As a result approximately 170 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2018.

NE and SE Agile Restructuring Plan

During the second quarter of fiscal 2016, Management approved a plan primarily impacting the NE and SE business segments as part of Viavi’s ongoing commitment for an agile and more efficient operating structure. As a result approximately 40 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2018.

Fiscal 2015 Plans

NE, SE and Shared Service Separation Restructuring Plan

During the second, third and fourth quarters of fiscal 2015, Management approved a plan to eliminate certain positions in its shared services functions in connection with the Company’s plan to split into two separate public companies. Further, Management consolidated its operations, sales and R&D organizations and eliminated positions within the NE and SE segments to align to the Company’s product market strategy and lower manufacturing costs in connection with the separation. As a result, approximately 330 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2018. During the fourth quarter of fiscal 2015, Management also approved a plan in the NE and SE segment to exit the space in Roanoke, Virginia. As of July 2, 2016, the Company exited the workspace in Roanoke under the plan. Payments related to the Roanoke lease costs are expected to be paid by the end of the fourth quarter of fiscal 2017.

Plans Prior to Fiscal 2015

NE Product Strategy Restructuring Plan

During the third quarter of fiscal 2014, Management approved a NE plan to realign its services, support and product resources in response to market conditions in the mobile assurance market and to increase focus on software products and next generation solutions through acquisitions and R&D. As a result, approximately 60 employees primarily in SG&A and manufacturing functions located in North America, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2020.

NE Lease Restructuring Plan

During the second quarter of fiscal 2014, Management approved a NE plan to exit the remaining space in Germantown, Maryland. As of June 28, 2014, the Company exited the space in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income, as of April 1, 2017 was $3.0 million. Payments related to the Germantown lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

As of April 1, 2017, the restructuring accrual for other plans that commenced prior to fiscal year 2015 was $1.2 million, which consists of immaterial accruals from various restructuring plans.

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Income Taxes

9 Months Ended

Apr. 01, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

The Company recorded income tax expense of $4.3 million and $15.8 million related to income from continuing operations for the three and nine months endedApril 1, 2017, respectively. The Company recorded income tax expense of $9.9 million and $13.9 million related to income from continuing operations for the three and nine months endedApril 2, 2016, respectively.

The income tax expense related to income from continuing operations recorded for the three and nine months endedApril 1, 2017 and April 2, 2016 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss for the respective year. In addition, for the three and nine months endedApril 2, 2016, the Company’s income tax provision included a tax benefit of $7.6 million and $14.6 million, respectively, related to the income tax intraperiod tax allocation rules for discontinued operations and other comprehensive income. The income tax provision for the nine months endedApril 2, 2016 included a tax expense of $8.9 million related to a one-time increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the Separation.

The income tax expense related to income from continuing operations recorded differs from the expected tax expense that would be calculated by applying the federal statutory rate to the Company’s income from continuing operations before taxes primarily due to the changes in valuation allowance for deferred tax assets attributable to the Company’s domestic and foreign income (loss) from continuing operations, the income tax benefit recorded in continuing operations under the income tax intraperiod tax allocation rules, and the increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the separation.

As of April 1, 2017 and July 2, 2016, the Company’s unrecognized tax benefits totaled $42.1 million and $41.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net. The Company had $2.3 million accrued for the payment of interest and penalties at April 1, 2017. The unrecognized tax benefits that may be recognized during the next twelve months are approximately $1.0 million.

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Stockholders' Equity

9 Months Ended

Apr. 01, 2017

Equity [Abstract]

Stockholders' Equity

Note 13. Stockholders' Equity

Repurchase of Common Stock

In September 2016, the Board of Directors increased the Company’s previously authorized stock repurchase program from $100 million to $150 million. Under the revised repurchase authorization, the Company may repurchase up to $150 million of the Company’s common stock from time to time at the discretion of the Company’s management. This stock repurchase authorization expires on December 31, 2017.

During the three months endedApril 1, 2017, the Company repurchased approximately 5.2 million shares of its common stock for $51.9 million. As of April 1, 2017, the Company had remaining authorization of $53.9 million for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including business and financial market conditions.

All common shares repurchased under this program have been canceled and retired.

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Stock-Based Compensation

9 Months Ended

Apr. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 14. Stock-Based Compensation

Overview

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and nine months endedApril 1, 2017 and April 2, 2016 was as follows (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Cost of sales	$	0.7	$	1.1	$	2.7	$	3.7
Research and development	1.3		2.0		4.6		6.7
Selling, general and administrative	6.1		6.0		18.6		23.6
Stock-based compensation	$	8.1	$	9.1	$	25.9	$	34.0

Approximately $0.7 million and $0.9 million of stock-based compensation was capitalized to inventory at April 1, 2017 and April 2, 2016 respectively.

Full Value Awards

Full Value Awards refer to RSUs and Performance Units that are granted with the exercise price equal to zero and are converted to shares immediately upon vesting. These Full Value Awards are performance-based, time-based or a combination of both and expected to vest over one to four years. The fair value of the time-based Full Value Awards is based on the closing market price of the Company’s common stock on the date of award.

During the nine months endedApril 1, 2017 and April 2, 2016, the Company granted 3.9 million and 6.1 million RSUs, of which 0.4 million and 0.6 million, respectively, are performance-based RSUs with market conditions (“MSUs”). These MSU shares represent the target amount of grants, and the actual number of shares awarded upon vesting of the MSUs may be higher or lower depending upon the achievement of the relevant market conditions. The majority of MSUs vest in equal annual installments over three years based on the attainment of certain total shareholder return performance measures and the employee’s continued service through the vest date. The aggregate grant-date fair value of MSUs granted during the nine months endedApril 1, 2017 and April 2, 2016 were estimated to be $3.3 million and $3.7 million, respectively, and was calculated using a Monte Carlo simulation. The remaining 3.5 million and 5.5 million granted during the nine months endedApril 1, 2017 and April 2, 2016, respectively, are time-based RSUs. The majority of these time-based RSUs vest over three years, with 33% vesting after one year and the balance vesting quarterly over the remaining two years.

As of April 1, 2017, $38.2 million of unrecognized stock-based compensation cost related to Full Value Awards remains to be amortized. That cost is expected to be recognized over an estimated amortization period of 1.9 years.

Full Value Awards are converted into shares upon vesting. Shares equivalent in value to the minimum withholding tax liability on the vested shares are withheld by the Company for the payment of such taxes. During the nine months endedApril 1, 2017 and April 2, 2016, the Company paid $11.6 million and $9.8 million, respectively, and classified the payments as operating cash outflows in the Consolidated Statement of Cash Flows.

Impact on Stock-based Compensation Due to Separation

In connection with the separation of the Lumentum business on August 1, 2015 and in accordance with the Employee Matters Agreement, the Company made certain adjustments to the exercise price and number of shares underlying stock-based compensation awards with the intention of preserving the economic value of the awards for Viavi employees. These adjustments resulted in a modification of equity awards with total incremental stock-based compensation of $13.6 million, to be amortized over the remaining requisite service period from Separation Date to the end of the vesting term. As of April 1, 2017, $1.9 million of unrecognized stock-based compensation cost remains to be amortized.

Valuation Assumptions

The Company estimates the fair value of the new MSUs granted using a Monte Carlo simulation based on the assumptions described below for the following periods:

	Nine Months Ended
	April 1, 2017		April 2, 2016
Volatility of common stock	35.0	%	33.6	%
Average volatility of peer companies	54.7	%	52.8	%
Average correlation coefficient of peer companies	0.1856		0.1047
Risk-free interest rate	0.8	%	0.8	%

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Employee Pension and Other Benefit Plans

9 Months Ended

Apr. 01, 2017

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Employee Pension and Other Benefit Plans

Note 15. Employee Pension and Other Benefit Plans

The Company sponsors significant qualified and non-qualified pension plans for certain past and present employees in the United Kingdom (“U.K.”) and Germany. The Company also is responsible for the non-pension post-retirement benefit obligation assumed from a past acquisition. All of the plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with acquisitions during fiscal 2010. Benefits are generally based upon years of service and compensation or stated amounts for each year of service.

As of April 1, 2017 the U.K. plan was partially funded while the other plans were unfunded. The Company’s policy for funded plans is to make contributions equal to or greater than the requirements prescribed by law or regulation. For unfunded plans, the Company pays the post-retirement benefits when due. During the nine months endedApril 1, 2017, the Company contributed $0.6 million to the U.K. plan. The funded plan assets consist primarily of managed investments.

The following table presents the components of the net periodic cost for the pension and benefits plans (in millions):

	Three Months Ended						Nine Months Ended
Pension Benefits	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Service cost	$	0.1		$	0.1		$	0.3		$	0.3
Interest cost	0.6			0.7			1.6			2.2
Expected return on plan assets	(0.3		)	(0.4		)	(0.8		)	(1.2		)
Amortization of net actuarial losses	0.5			0.2			1.4			0.5
Net periodic benefit cost	$	0.9		$	0.6		$	2.5		$	1.8

Both the calculation of the projected benefit obligation and net periodic cost are based upon actuarial valuations. These valuations use participant-specific information such as salary, age, years of service, and assumptions about interest rates, pension increases and other factors. At a minimum, the Company evaluates these assumptions annually and makes changes as necessary.

The Company expects to incur cash outlays of approximately $6.0 million related to its defined benefit pension plans during fiscal 2017 to make current benefit payments and fund future obligations. As of April 1, 2017, approximately $3.2 million had been incurred. These payments have been estimated based on the same assumptions used to measure the Company’s projected benefit obligation at July 2, 2016.

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Commitments and Contingencies

9 Months Ended

Apr. 01, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 16. Commitments and Contingencies

Legal Proceedings

In June 2016, the Company received a court decision regarding the validity of an amendment to a pension deed of trust related to one of its foreign subsidiaries which the Company contends contained an error requiring the Company to increase the pension plan’s benefit. The Company had subsequently further amended the deed to rectify the error. The court ruled that the amendment increasing the pension plan benefit was valid until the subsequent amendment. The Company determined that the likelihood of loss to be probable as of July 2, 2016 and accrued GBP 5.7 million, in accordance with authoritative guidance on contingencies. The Company is pursuing an appeal of the court decision and is also pursuing a claim against the U.K. law firm responsible for the error.

The Company is subject to a variety of claims and suits that arise from time to time in the ordinary course of our business. While management currently believes that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact on its financial position, results of operations or statement of cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations or cash flows for the period in which the effect becomes reasonably estimable.

Guarantees

In accordance with authoritative guidance which requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. In addition, disclosures about the guarantees that an entity has issued, including a tabular reconciliation of the changes of the entity’s product warranty liabilities, are required.

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship.

The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on the consolidated balance sheet as of April 1, 2017 and July 2, 2016.

Product Warranties

In general, the Company offers a three-year warranty for most of its products. The Company provides reserves for the estimated costs of product warranties at the time revenue is recognized. The Company estimates the costs of its warranty obligations based on its historical experience of known product failure rates, use of materials to repair or replace defective products and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise with specific products. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

The following table presents the changes in the Company’s warranty reserve during fiscal 2017 and fiscal 2016 (in millions):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Balance as of beginning of period	$	5.3		$	4.3		$	4.9		$	3.7
Provision for warranty	1.3			0.8			4.5			2.5
Utilization of reserve	(0.8		)	(0.8		)	(2.8		)	(2.3		)
Adjustments related to pre-existing warranties (including changes in estimates)	(0.3		)	0.2			(1.1		)	0.6
Balance as of end of period	$	5.5		$	4.5		$	5.5		$	4.5

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Operating Segments and Geographic Information

9 Months Ended

Apr. 01, 2017

Segment Reporting [Abstract]

Operating Segments and Geographic Information

Note 17. Operating Segments and Geographic Information

The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting. The Company’s Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”) pursuant to the guidance. The CODM allocates resources to the segments based on their business prospects, competitive factors, net revenue and operating results.

The Company is a leading provider of software and hardware platforms and instruments that deliver end-to-end visibility across physical, virtual and hybrid networks. Our solutions provide precise intelligence and actionable insight from across the network ecosystem to optimize networks and support more profitable, higher-performing networks and quicker transition to next-generation technologies for our customers. Viavi is also a leader in anti-counterfeiting solutions for currency authentication and high-value optical components and instruments for diverse government and commercial applications.

The Company’s reportable segments are:

(i) Network Enablement (“NE”):

NE provides testing solutions that access the network to perform build-out and maintenance tasks. These solutions include instruments, software and services to design, build, activate, certify, troubleshoot and optimize networks. The company also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for our products.

(ii) Service Enablement (“SE”):

SE solutions are embedded systems that yield network, service and application performance data. These solutions—including microprobes and software—monitor, collect and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization.

(iii) Optical Security and Performance Products (“OSP”):

OSP provides innovative optical security solutions, with a strategic focus on serving the anti-counterfeiting market through advanced security pigments, thread substrates and printed features for the currency, pharmaceutical and consumer electronic segments. OSP also provides thin-film coating solutions for 3D sensing applications.

The CODM manages the Company in two broad business categories: Network and Service Enablement ("NSE") and OSP. NSE operates in two segments, NE and SE, whereas OSP operates as a single segment. The CODM evaluates segment performance of the NSE business based on NE and SE segment gross margin and NSE operating margin as a whole. Operating expenses associated with the NSE business are not allocated to the NE and SE segments within NSE, as they are managed centrally at the business unit level. The CODM evaluates segment performance of the OSP business based on OSP segment operating margin.

The Company does not allocate stock-based compensation, acquisition-related charges, amortization of intangibles, restructuring and related charges, impairment of goodwill, non-operating income and expenses, or other non-core operating and non-recurring charges to its segments because Management does not include this information in its measurement of the performance of the operating segments. These items are presented as “Reconciling Items” in the table below. Additionally, the Company does not specifically identify and allocate all assets by operating segment.

The segment information for all periods presented has been revised to be comparable with the changes in the Company’s segment reporting measures.

Information on reportable segments is as follows (in millions):

	Three Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	103.4		$	28.7		$	132.1		$	63.9		$	196.0		$	—		$	196.0
Gross profit	67.5			17.7			85.2			36.7			121.9			(4.9		)	117.0
Gross margin	65.3		%	61.7		%	64.5		%	57.4		%	62.2		%				59.7		%
Operating (loss)income							(4.4		)	27.8			23.4			(38.6		)	(15.2		)
Operating margin							(3.3		)%	43.5		%	11.9		%				(7.8		)%

	Three Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	123.1		$	35.2		$	158.3		$	62.1		$	220.4		$	—		$	220.4
Gross profit	80.7			19.8			100.5			35.9			136.4			(5.1		)	131.3
Gross margin	65.6		%	56.3		%	63.5		%	57.8		%	61.9		%				59.6		%
Operating (loss)income							(0.1		)	26.3			26.2			(19.0		)	7.2
Operating margin							(0.1		)%	42.4		%	11.9		%				3.3		%

	Three Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	121.9		$	136.4
Stock-based compensation	(0.7		)	(1.1		)
Amortization of intangibles	(3.6		)	(4.1		)
Other charges unrelated to core operating performance (1)	(0.6		)	0.1
GAAP gross profit	$	117.0		$	131.3
Corporate reconciling items impacting operating income:
Total segment operating income	$	23.4		$	26.2
Stock-based compensation	(8.1		)	(9.1		)
Amortization of intangibles	(7.1		)	(7.7		)
Other charges unrelated to core operating performance (1)	(5.0		)	(2.3		)
Restructuring and related charges	(18.4		)	0.1
GAAP operating (loss)income from continuing operations	$	(15.2	)	$	7.2

(1) During the three months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes and the insourcing or outsourcing of activities.

	Nine Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	339.0		$	105.7		$	444.7		$	168.6		$	613.3		$	—		$	613.3
Gross profit	219.5			66.1			285.6			96.5			382.1			(15.3		)	366.8
Gross margin	64.7		%	62.5		%	64.2		%	57.2		%	62.3		%				59.8		%
Operating (loss)income							5.7			72.1			77.8			(76.2		)	1.6
Operating margin							1.3		%	42.8		%	12.7		%				0.3		%

	Nine Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	377.1		$	120.0		$	497.1		$	185.1		$	682.2		$	—		$	682.2
Gross profit	247.0			77.7			324.7			105.7			430.4			(16.8		)	413.6
Gross margin	65.5		%	64.8		%	65.3		%	57.1		%	63.1		%				60.6		%
Operating (loss)income							10.3			75.1			85.4			(71.9		)	13.5
Operating margin							2.1		%	40.6		%	12.5		%				2.0		%

	Nine Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	382.1		$	430.4
Stock-based compensation	(2.7		)	(3.7		)
Amortization of intangibles	(11.1		)	(13.0		)
Other charges unrelated to core operating performance (1)	(1.5		)	(0.1		)
GAAP gross profit	$	366.8		$	413.6
Corporate reconciling items impacting operating income:
Total segment operating income	$	77.8		$	85.4
Stock-based compensation	(25.9		)	(34.0		)
Amortization of intangibles	(21.5		)	(24.1		)
Other charges unrelated to core operating performance (1)	(8.6		)	(12.1		)
Restructuring and related charges	(20.2		)	(1.7		)
GAAP operating income from continuing operations	$	1.6		$	13.5

(1) During the nine months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes, the insourcing or outsourcing of activities and Viavi-specific incremental charges for professional fees and additional personnel costs to complete the separation.

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Subsequent Events

9 Months Ended

Apr. 01, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Subsequent to the third quarter ended April 1, 2017, the Company sold 0.2 million of Lumentum common shares generating gross proceeds of $10.1 million and a gross realized gain of $8.4 million, respectively.

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Basis of Presentation (Policies)

9 Months Ended

Apr. 01, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fiscal Years

Fiscal Years

The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company’s fiscal 2017 is a 52-week year ending on July 1, 2017. The Company’s fiscal 2016 was a 53-week year ending on July 2, 2016.

Lumentum Separation

Lumentum Separation

On August 1, 2015 (the “Separation Date”), Viavi completed the distribution of approximately 80.1% of the outstanding shares of Lumentum Holdings Inc. (“Lumentum”) common stock (the “Distribution”). Concurrent with the Distribution, JDSU was renamed Viavi Solutions Inc. and, at the time of the Distribution, retained ownership of approximately 19.9% of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s communications and commercial optical products business segment (“CCOP”) and the WaveReady product line and, as a result of the Distribution, is now an independent public company trading under the symbol “LITE” on The Nasdaq Stock Market (“NASDAQ”). The Distribution was made to Viavi’s stockholders of record as of the close of business on July 27, 2015 (the “Record Date”), who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on the Record Date and not sold prior to August 4, 2015, the ex-dividend date. The historical results of operations and the financial position have been recasted to present the Lumentum business as discontinued operations as described in “Note 3. Discontinued Operations.” Unless noted otherwise, discussion in the Notes to Consolidated Financial Statements pertain to continuing operations.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods. The Company bases estimates on historical experience and on various assumptions about the future believed to be reasonable based on available information. The Company’s reported financial position or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more current information.

Recently Issued Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the service cost component of net periodic benefit cost to be presented in the same line item(s) as other compensation costs arising from services rendered during the period, with other components of net periodic benefit cost to be presented separately from the service cost component. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In February 2017, the FASB issued guidance that clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset,” defines the term “in-substance nonfinancial asset,” and adds guidance for partial sales of nonfinancial assets. This guidance will be effective at the same time the new authoritative guidance related to revenue recognition is effective. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In January 2017, the FASB issued guidance that will eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, impairment charge will be based on the excess of a reporting unit's carrying amount over its fair value. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company plans to early adopt this standard for the next goodwill testing date and does not anticipate the adoption to have a material impact on its consolidated financial statements, absent any goodwill impairment.

In November 2016, the FASB issued guidance that will require that the amounts generally described as restricted cash and restricted cash equivalents would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new guidance also requires certain disclosures to supplement the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In October 2016, the FASB issued guidance that requires entities to recognize at the transaction date the income tax consequences of intra-entity transfer of an asset other than inventory. The guidance is effective for the Company in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB issued guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The guidance is effective for the Company in the first quarter of fiscal 2021 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In March 2016, the FASB issued guidance which simplifies several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the Company in the first quarter of fiscal 2018 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued guidance related to how an entity should recognize lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for the Company in the first quarter of fiscal 2020. While the Company is not yet in a position to assess the full impact of the application of the new guidance, the Company expects that the impact of recording lease liabilities and the corresponding right-to-use assets may have a significant impact on its total assets and total liabilities on the consolidated balance sheets.

In May 2014, the FASB issued new authoritative guidance related to revenue recognition. This guidance will replace current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance allows for either full retrospective adoption or modified retrospective adoption. The FASB deferred the effective date for this guidance by one year to December 15, 2017 for annual reporting periods beginning after such date. Earlier application of this guidance is permitted. In accordance with the deferred effective date, the Company is required to adopt the new guidance in the first quarter of fiscal 2019. The Company does not intend to adopt the new guidance early and is continuing to evaluate the impact of this new accounting guidance and the transition alternatives on its consolidated financial statements and related disclosures.

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Discontinued Operations (Tables)

9 Months Ended

Apr. 01, 2017

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations

The following table presents supplemental cash flow information: depreciation expense, amortization expense, stock based compensation expense and capital expenditures of the Lumentum business (in millions):

	Nine Months Ended (1)
	April 2, 2016
Operating activities:
Depreciation expense	$	3.7
Amortization expense	0.6
Stock-based compensation expense	1.6
Investing activities:
Capital expenditures	$	5.8

(1) No depreciation expense, amortization expense, stock based compensation expense and capital expenditures relating to the Lumentum business are presented after the Separation Date.

The following table summarizes results from discontinued operations of the Lumentum business included in the condensed Consolidated Statement of Operations (in millions):

	Nine Months Ended (1)
	April 2, 2016
Net revenues	$	66.5
Cost of revenues	49.8
Amortization of acquired technologies	0.6
Gross profit	16.1
Operating expenses:
Research and development	12.5
Selling, general and administrative	24.7
Restructuring charges	0.1
Total operating expenses	37.3
Loss from operations	(21.2		)
Interest and other income (expense), net	—
Loss before income taxes	(21.2		)
Provision for income taxes	24.4
Net loss from discontinued operations	$	(45.6	)

(1) Net income from discontinued operations for the three months ended April 2, 2016 was $5.0 million comprised of costs to complete the separation offset by a benefit from income taxes from discontinued operations of $6.1 million. No income or expense has been recorded relating to the Lumentum business after the separation from Viavi on August 1, 2015.

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Earnings Per Share (Tables)

9 Months Ended

Apr. 01, 2017

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted net (loss) income per share

The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Numerator:
Income from continuing operations, net of taxes	$	26.0	$	28.8	$	153.2	$	14.1
Income (loss) from discontinued operations, net of taxes	—		5.0		—		(45.4		)
Net income (loss)	$	26.0	$	33.8	$	153.2	$	(31.3	)
Denominator:
Weighted-average number of common shares outstanding
Basic	229.4		232.0		230.8		234.4
Effect of dilutive securities from stock-based benefit plans	5.2		2.6		5.1		3.0
Diluted	234.6		234.6		235.9		237.4
Net income (loss) per share - basic:
Continuing operations	$	0.11	$	0.13	$	0.66	$	0.06
Discontinued operations	—		0.02		—		(0.19		)
Net income (loss) per share	$	0.11	$	0.15	$	0.66	$	(0.13	)
Net income (loss) per share - diluted:
Continuing operations	$	0.11	$	0.12	$	0.65	$	0.06
Discontinued operations	—		0.02		$	—	$	(0.19	)
Net income (loss) per share	$	0.11	$	0.14	$	0.65	$	(0.13	)

Schedule of weighted average potentially dilutive securities excluded from the computation because their effect would have been anti-dilutive

The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income (loss) per share because their effect would have been anti-dilutive (in millions):

	Three Months Ended		Nine Months Ended
	April 1, 2017 (1) (2)	April 2, 2016 (1)	April 1, 2017 (1) (2)	April 2, 2016 (1)
Stock options and ESPP	0.3	1.2	0.3	1.0
Restricted Stock Units	—	3.0	—	2.3
Total potentially dilutive securities	0.3	4.2	0.3	3.3

(1)  The Company’s 0.625% Senior Convertible 2033 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $11.28 per share is payable in cash, shares of the Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

(2)  The Company’s 1.00% Senior Convertible 2024 Notes are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $13.22 per share is payable in cash, shares of the Company’s common stock or a combination of both at the Company’s election. Refer to “Note 10. Debts and Letters of Credit” for more details.

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Accumulated Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Apr. 01, 2017

Equity [Abstract]

Schedule of components of Accumulated other comprehensive income

For the nine months endedApril 1, 2017 the changes in accumulated other comprehensive (loss) income by component net of tax were as follows (in millions):

	Unrealized gains (losses) on available-for sale investments (1)			Foreign  currency translation adjustments			Change in unrealized components of defined benefit obligations, net of tax (2)			Total
Beginning balance as of July 2, 2016	$	104.5		$	(70.1	)	$	(24.4	)	$	10.0
Other comprehensive income (loss) before reclassification	93.0			(13.1		)	—			79.9
Amounts reclassified from accumulated other comprehensive income	(185.4		)	—			1.4			(184.0		)
Net current-period other comprehensive (loss) income	(92.4		)	(13.1		)	1.4			(104.1		)
Ending balance as of April 1, 2017	$	12.1		$	(83.2	)	$	(23.0	)	$	(94.1	)

(1) Activity before reclassifications to the Consolidated Statements of Operations during the nine months endedApril 1, 2017 relates to the unrealized gain on the marketable equity securities of Lumentum held by Viavi. The amount reclassified out of accumulated other comprehensive (loss) income relates to the realized gain from the sale of the marketable equity securities of Lumentum. There was notax impact for the nine months endedApril 1, 2017.

(2) The amount reclassified out of accumulated other comprehensive income represents the amortization of actuarial losses included as a component of cost of revenues, research and development (“R&D”) and selling, general and administrative expense (“SG&A”) in the Consolidated Statement of Operations for the nine months endedApril 1, 2017. There was no tax impact for the nine months endedApril 1, 2017. Refer to “Note 15. Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.

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Balance Sheet and Other Details (Tables)

9 Months Ended

Apr. 01, 2017

Balance Sheet and Other Details [Abstract]

Schedule of components of accounts receivable reserves and allowances

The components of accounts receivable reserves and allowances were as follows (in millions):

	April 1, 2017		July 2, 2016
Allowance for doubtful accounts	$	1.7	$	2.2
Allowance for sales returns	1.0		2.5
Total accounts receivable reserves	$	2.7	$	4.7

The activities and balances for allowance for doubtful accounts are as follows (in millions):

	July 2, 2016		Charged to Costs and Expenses		Adjustments (1)			April 1, 2017
Allowance for doubtful accounts	$	2.2	$	0.1	$	(0.6	)	$	1.7

 (1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.

Schedule of components of Inventories

The components of Inventories, net were as follows (in millions):

	April 1, 2017		July 2, 2016
Finished goods	$	25.2	$	29.1
Work in process	8.9		7.5
Raw materials	12.7		14.8
Inventories, net	$	46.8	$	51.4

Schedule of components of Prepayments and other current assets

The components of Prepayments and other current assets were as follows (in millions):

	April 1, 2017		July 2, 2016
Prepayments	$	11.4	$	10.4
Other current assets	42.1		21.7
Prepayments and other current assets	$	53.5	$	32.1

Schedule of components of Other current liabilities

The components of Other current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Customer prepayments	35.8		0.4
Restructuring accrual	13.1		13.3
Income tax payable	6.9		3.3
Warranty accrual	2.9		2.6
VAT liabilities	2.5		2.3
Foreign exchange forward contract	2.6		—
Deferred compensation plan	2.0		2.4
Other	4.0		6.7
Other current liabilities	$	69.8	$	31.0

Schedule of components of Other non-current liabilities

The components of Other non-current liabilities were as follows (in millions):

	April 1, 2017		July 2, 2016
Pension and post-employment benefits	$	98.0	$	103.0
Financing obligation	27.8		28.7
Long-term deferred revenue	16.0		22.7
Other	22.6		24.7
Other non-current liabilities	$	164.4	$	179.1

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Investments, Forward Contracts and Fair Value Measurements (Tables)

9 Months Ended

Apr. 01, 2017

Investments and Fair Value Measurements [Abstract]

Schedule of available-for-sale securities

 As of July 2, 2016, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	46.1	$	—	$	—		$	46.1
U.S. agencies	24.9		—		—			24.9
Municipal bonds and sovereign debt instruments	2.0		—		—			2.0
Asset-backed securities	50.4		0.1		(0.3		)	50.2
Corporate securities	224.5		0.2		(0.1		)	224.6
Total debt securities	347.9		0.3		(0.4		)	347.8
Marketable equity securities	62.1		109.2		—			171.3
Total debt available-for-sale securities	$	410.0	$	109.5	$	(0.4	)	$	519.1

As of April 1, 2017, the Company’s available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
U.S. treasuries	$	69.6	$	—	$	(0.1	)	$	69.5
U.S. agencies	35.2		—		(0.1		)	35.1
Municipal bonds and sovereign debt instruments	4.0		—		—			4.0
Asset-backed securities	68.0		—		(0.3		)	67.7
Corporate securities	324.2		0.1		(0.3		)	324.0
Certificates of deposit	6.0		—		—			6.0
Total debt securities	507.0		0.1		(0.8		)	506.3
Marketable equity securities	3.3		17.5		—			20.8
Total available-for-sale securities	$	510.3	$	17.6	$	(0.8	)	$	527.1

Schedule of contractual maturities of available-for-sale securities

As of April 1, 2017, contractual maturities of the Company’s debt securities classified as available-for-sale securities were as follows (in millions):

	Amortized Cost/ Carrying Cost		Estimated Fair Value
Amounts maturing in less than 1 year	$	363.2	$	363.1
Amounts maturing in 1 - 5 years	141.8		141.5
Amounts maturing in more than 5 years	2.0		1.7
Total debt available-for-sale securities	$	507.0	$	506.3

Schedule of assets measured at fair value

Assets measured at fair value as of April 1, 2017 and July 2, 2016 are summarized below (in millions):

	Fair value measurement as of						Fair value measurement as of
	April 1, 2017						July 2, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Debt available-for-sale securities
U.S. treasuries	$	69.5	$	69.5	$	—	$	46.1	$	46.1	$	—
U.S. agencies	35.1		—		35.1		24.9		—		24.9
Municipal bonds and sovereign debt instruments	4.0		—		4.0		2.0		—		2.0
Asset-backed securities	67.7		—		67.7		50.2		—		50.2
Corporate securities	324.0		—		324.0		224.6		—		224.6
Certificate of deposits	6.0		—		6.0		—		—		—
Total debt available-for-sale securities	506.3		69.5		436.8		347.8		46.1		301.7
Marketable equity securities	20.8		20.8		—		171.3		171.3		—
Money market funds	720.3		720.3		—		274.4		274.4		—
Trading securities	2.0		2.0		—		2.4		2.4		—
Foreign currency forward contracts	5.2		—		5.2		—		—		—
Total assets (1)	$	1,254.6	$	812.6	$	442.0	$	795.9	$	494.2	$	301.7
Liability:
Foreign currency forward contracts	2.6		—		2.6		—		—		—
Total liabilities (2)	$	2.6	$	—	$	2.6	$	—	$	—	$	—

(1) $754.6 million in cash and cash equivalents, $478.6 million in short-term investments, $11.7 million in restricted cash, $5.2 million in prepayments and other current assets, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of April 1, 2017. $295.4 million in cash and cash equivalents, $484.7 million in short-term investments, $11.3 million in restricted cash, and $4.5 million in other non-current assets on the Company’s Consolidated Balance Sheets as of July 2, 2016.

(2) $2.6 million in other current liabilities on the Company’s Consolidated Balance Sheets as of April 1, 2017.

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Goodwill (Tables)

9 Months Ended

Apr. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in goodwill

The following table presents the changes in goodwill allocated to the Company’s reportable segments (in millions):

	Network Enablement			Optical Security and Performance Products		Total
Balance as of July 2, 2016	$	143.8		$	8.3	$	152.1
Currency translation adjustments	(1.4		)	—		(1.4		)
Balance as of April 1, 2017	$	142.4		$	8.3	$	150.7

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Acquired Developed Technology and Other Intangibles (Tables)

9 Months Ended

Apr. 01, 2017

Acquired Developed Technology and Other Intangibles

Schedule of acquired developed technology and other intangibles

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles (in millions):

As of April 1, 2017	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	366.9	$	(346.5	)	$	20.4
Customer relationships	94.8		(77.8		)	17.0
Other	10.8		(10.6		)	0.2
Total intangibles	$	472.5	$	(434.9	)	$	37.6

As of July 2, 2016	Gross Carrying Amount		Accumulated Amortization			Net
Acquired developed technology	$	369.3	$	(337.3	)	$	32.0
Customer relationships	95.6		(68.0		)	27.6
Other	10.8		(10.5		)	0.3
Total intangibles	$	475.7	$	(415.8	)	$	59.9

Finite-lived intangible assets amortization expense

The following table presents the amortization recorded relating to acquired developed technology, customer relationships and other intangibles (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Amortization of acquired developed technologies	$	3.6	$	4.1	$	11.1	$	13.0
Amortization of other intangibles	3.5		3.6		10.4		11.1
Total amortization of intangible assets	$	7.1	$	7.7	$	21.5	$	24.1

Schedule of estimated future amortization

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of April 1, 2017, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows (in millions):

Fiscal Years
Remainder of 2017	$	6.7
2018	19.9
2019	9.3
2020	1.4
2021	0.3
Thereafter	—
Total amortization	$	37.6

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Debts and Letters of Credit (Tables)

9 Months Ended

Apr. 01, 2017

Debt Disclosure [Abstract]

Schedule of carrying amounts of the liability and equity components of convertible debt

The following table presents the carrying amounts of the liability and equity components (in millions):

	April 1, 2017			July 2, 2016
Principal amount of 0.625% Senior Convertible Notes	$	650.0		$	650.0
Principal amount of 1.00% Senior Convertible Notes	460.0			—
Unamortized discount of liability component	(141.7		)	(61.7		)
Unamortized debt issuance cost (1)	$	(10.2	)	$	(5.0	)
Carrying amount of liability component	$	958.1		$	583.3
Carrying amount of equity component (2)	$	236.3		$	134.4

(1) In April 2015, the Financial Accounting Standards Board ("FASB") issued new authoritative guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts or premiums. This guidance was effective for the Company in the first quarter of fiscal 2017 for its convertible debt, and was applied retrospectively for all periods reported.

(2) Included in Additional paid-in-capital on the Consolidated Balance Sheets.

Summary of effective interest rate and the interest expense for the contractual interest and the accretion of debt discount

The following table presents the effective interest rate and the interest expense for the contractual interest and the accretion of debt discount (in millions, except for the effective interest rate):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Effective interest rate	5.3		%	5.4		%	5.3		%	5.4		%
Interest expense-contractual interest	$	1.3		$	1.0		$	3.4		$	3.0
Accretion of debt discount	7.9			6.7			21.9			19.9

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Restructuring and Related Charges (Tables)

9 Months Ended

Apr. 01, 2017

Restructuring and Related Activities [Abstract]

Schedule of various restructuring plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the three and nine months endedApril 1, 2017 were as follows (in millions):

	Balance July 2, 2016		Nine Months Ended April 1, 2017 Charges (Benefits)			Cash Settlements			Non-cash Settlements and Other Adjustments			Balance April 1, 2017		Three Months Ended April 1, 2017 Charges (Benefits)
Fiscal 2017 Plan
Focused NSE Restructuring Plan (1) (2)	$	—	$	20.7		$	(11.0	)	$	—		$	9.7	$	19.3
Other Plan (2)	—		0.4			(0.4		)	—			—		—
Fiscal 2016 Plan
NE, SE and Shared Services Agile Restructuring Plan (1) (2)	8.6		(0.7		)	(7.5		)	—			0.4		(0.8		)
NE and SE Agile Restructuring Plan (1)	0.8		(0.1		)	(0.3		)	—			0.4		(0.1		)
Fiscal 2015 Plan
NE, SE and Shared Service Separation Restructuring Plan (1)(2)	1.4		(0.2		)	(1.1		)	—			0.1		—
Plans Prior to Fiscal 2015
NE Product Strategy Restructuring Plan (1)	1.5		—			(0.4		)	(0.1		)	1.0		—
NE Lease Restructuring Plan (2)	4.0		0.1			(1.1		)	—			3.0		—
Other Plans (1)(2)	1.7		—			(0.5		)	—			1.2		—
Total	$	18.0	$	20.2		$	(22.3	)	$	(0.1	)	$	15.8	$	18.4

(1) Plan type includes workforce reduction cost.

(2) Plan type includes lease exit cost.

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Stock-Based Compensation (Tables)

9 Months Ended

Apr. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of the impact on the entity's results of operations of recording stock-based compensation by function

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and nine months endedApril 1, 2017 and April 2, 2016 was as follows (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2017		April 2, 2016		April 1, 2017		April 2, 2016
Cost of sales	$	0.7	$	1.1	$	2.7	$	3.7
Research and development	1.3		2.0		4.6		6.7
Selling, general and administrative	6.1		6.0		18.6		23.6
Stock-based compensation	$	8.1	$	9.1	$	25.9	$	34.0

Schedule of assumptions used to estimate the fair value of new MSU awards on the date of grant

The Company estimates the fair value of the new MSUs granted using a Monte Carlo simulation based on the assumptions described below for the following periods:

	Nine Months Ended
	April 1, 2017		April 2, 2016
Volatility of common stock	35.0	%	33.6	%
Average volatility of peer companies	54.7	%	52.8	%
Average correlation coefficient of peer companies	0.1856		0.1047
Risk-free interest rate	0.8	%	0.8	%

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Employee Pension and Other Benefit Plans (Tables)

9 Months Ended

Apr. 01, 2017

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule of net periodic cost for the pension and benefits plans

The following table presents the components of the net periodic cost for the pension and benefits plans (in millions):

	Three Months Ended						Nine Months Ended
Pension Benefits	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Service cost	$	0.1		$	0.1		$	0.3		$	0.3
Interest cost	0.6			0.7			1.6			2.2
Expected return on plan assets	(0.3		)	(0.4		)	(0.8		)	(1.2		)
Amortization of net actuarial losses	0.5			0.2			1.4			0.5
Net periodic benefit cost	$	0.9		$	0.6		$	2.5		$	1.8

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Commitments and Contingencies (Tables)

9 Months Ended

Apr. 01, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of changes in the entity's warranty reserve

The following table presents the changes in the Company’s warranty reserve during fiscal 2017 and fiscal 2016 (in millions):

	Three Months Ended						Nine Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Balance as of beginning of period	$	5.3		$	4.3		$	4.9		$	3.7
Provision for warranty	1.3			0.8			4.5			2.5
Utilization of reserve	(0.8		)	(0.8		)	(2.8		)	(2.3		)
Adjustments related to pre-existing warranties (including changes in estimates)	(0.3		)	0.2			(1.1		)	0.6
Balance as of end of period	$	5.5		$	4.5		$	5.5		$	4.5

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Operating Segments and Geographic Information (Tables)

9 Months Ended

Apr. 01, 2017

Segment Reporting [Abstract]

Schedule of information on reportable segments

Information on reportable segments is as follows (in millions):

	Three Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	103.4		$	28.7		$	132.1		$	63.9		$	196.0		$	—		$	196.0
Gross profit	67.5			17.7			85.2			36.7			121.9			(4.9		)	117.0
Gross margin	65.3		%	61.7		%	64.5		%	57.4		%	62.2		%				59.7		%
Operating (loss)income							(4.4		)	27.8			23.4			(38.6		)	(15.2		)
Operating margin							(3.3		)%	43.5		%	11.9		%				(7.8		)%

	Three Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	123.1		$	35.2		$	158.3		$	62.1		$	220.4		$	—		$	220.4
Gross profit	80.7			19.8			100.5			35.9			136.4			(5.1		)	131.3
Gross margin	65.6		%	56.3		%	63.5		%	57.8		%	61.9		%				59.6		%
Operating (loss)income							(0.1		)	26.3			26.2			(19.0		)	7.2
Operating margin							(0.1		)%	42.4		%	11.9		%				3.3		%

	Three Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	121.9		$	136.4
Stock-based compensation	(0.7		)	(1.1		)
Amortization of intangibles	(3.6		)	(4.1		)
Other charges unrelated to core operating performance (1)	(0.6		)	0.1
GAAP gross profit	$	117.0		$	131.3
Corporate reconciling items impacting operating income:
Total segment operating income	$	23.4		$	26.2
Stock-based compensation	(8.1		)	(9.1		)
Amortization of intangibles	(7.1		)	(7.7		)
Other charges unrelated to core operating performance (1)	(5.0		)	(2.3		)
Restructuring and related charges	(18.4		)	0.1
GAAP operating (loss)income from continuing operations	$	(15.2	)	$	7.2

(1) During the three months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes and the insourcing or outsourcing of activities.

	Nine Months Ended April 1, 2017
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	339.0		$	105.7		$	444.7		$	168.6		$	613.3		$	—		$	613.3
Gross profit	219.5			66.1			285.6			96.5			382.1			(15.3		)	366.8
Gross margin	64.7		%	62.5		%	64.2		%	57.2		%	62.3		%				59.8		%
Operating (loss)income							5.7			72.1			77.8			(76.2		)	1.6
Operating margin							1.3		%	42.8		%	12.7		%				0.3		%

	Nine Months Ended April 2, 2016
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Total Segment Measures			Reconciling Items			Consolidated GAAP Measures
Net revenue	$	377.1		$	120.0		$	497.1		$	185.1		$	682.2		$	—		$	682.2
Gross profit	247.0			77.7			324.7			105.7			430.4			(16.8		)	413.6
Gross margin	65.5		%	64.8		%	65.3		%	57.1		%	63.1		%				60.6		%
Operating (loss)income							10.3			75.1			85.4			(71.9		)	13.5
Operating margin							2.1		%	40.6		%	12.5		%				2.0		%

	Nine Months Ended
	April 1, 2017			April 2, 2016
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	382.1		$	430.4
Stock-based compensation	(2.7		)	(3.7		)
Amortization of intangibles	(11.1		)	(13.0		)
Other charges unrelated to core operating performance (1)	(1.5		)	(0.1		)
GAAP gross profit	$	366.8		$	413.6
Corporate reconciling items impacting operating income:
Total segment operating income	$	77.8		$	85.4
Stock-based compensation	(25.9		)	(34.0		)
Amortization of intangibles	(21.5		)	(24.1		)
Other charges unrelated to core operating performance (1)	(8.6		)	(12.1		)
Restructuring and related charges	(20.2		)	(1.7		)
GAAP operating income from continuing operations	$	1.6		$	13.5

(1) During the nine months endedApril 1, 2017 and April 2, 2016, other charges unrelated to core operating performance primarily consisted of write-down of fixed assets, site consolidations, reorganizations, transformational initiatives such as the implementation of simplified automated processes, the insourcing or outsourcing of activities and Viavi-specific incremental charges for professional fees and additional personnel costs to complete the separation.

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Basis of Presentation (Details) - Lumentum	Aug. 01, 2015
Organization, Consolidation And Presentation Of Financial Statement [Line Items]
Percentage of outstanding shares distributed	80.10%
Ownership percentage	19.90%
Stock conversion ratio in distribution	0.2

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Discontinued Operations - Additional Information (Details) - USD ($) shares in Millions, $ in Millions		3 Months Ended	9 Months Ended
	Aug. 01, 2015	Apr. 02, 2016	Apr. 02, 2016	Apr. 01, 2017
Discontinued Operations
Net income tax provision (benefit) for discontinued operations		$ (6.1)
Spinoff | Lumentum
Discontinued Operations
Net income tax provision (benefit) for discontinued operations			$ 24.4
Transaction, advisory and other costs to effect the separation		$ 1.1	16.5
Spinoff | Lumentum | Discontinued Operations
Discontinued Operations
Net income tax provision			17.1
Spinoff | Lumentum | Federal and State
Discontinued Operations
Net income tax provision (benefit) for discontinued operations			$ 7.6
Lumentum
Discontinued Operations
Percentage of outstanding shares distributed	80.10%
Stock conversion ratio in distribution	0.2
Cash contributions agreed to in spin-off	$ 137.6
Retained ownership percentage	19.90%
Shares held in investment (in shares)	11.7			0.4
Minimum holding period for retained interest	6 months
Maximum holding period for retained interest	3 years

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Discontinued Operations - Statement of Operations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Operating expenses:
Provision for income taxes		$ (6.1)
Income (loss) from discontinued operations, net of taxes	$ 0.0	$ 5.0	$ 0.0	$ (45.4)
Spinoff | Lumentum
Discontinued Operations
Net revenues				66.5
Cost of revenues				49.8
Amortization of acquired technologies				0.6
Gross profit				16.1
Operating expenses:
Research and development				12.5
Selling, general and administrative				24.7
Restructuring charges				0.1
Total operating expenses				37.3
Loss from operations				(21.2)
Interest and other income (expense), net				0.0
Loss before income taxes				(21.2)
Provision for income taxes				24.4
Net loss from discontinued operations				$ (45.6)

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Discontinued Operations - Supplemental Cash Flow and Other Disclosures (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Operating activities:
Depreciation expense			$ 22.2	$ 29.8
Amortization of other intangibles	$ 3.5	$ 3.6	10.4	11.1
Stock-based compensation expense	$ 8.1	$ 9.1	$ 25.9	34.0
Spinoff | Discontinued Operations | Lumentum
Operating activities:
Depreciation expense				3.7
Amortization of other intangibles				0.6
Stock-based compensation expense				1.6
Investing activities:
Capital expenditures				$ 5.8

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions		3 Months Ended		9 Months Ended
	Aug. 17, 2015	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016	Mar. 03, 2017	Aug. 21, 2013
Numerator:
Income from continuing operations, net of taxes		$ 26.0	$ 28.8	$ 153.2	$ 14.1
Income (loss) from discontinued operations, net of taxes		0.0	5.0	0.0	(45.4)
Net income (loss)		$ 26.0	$ 33.8	$ 153.2	$ (31.3)
Denominator:
Weighted-average number of common shares outstanding - basic (in shares)		229.4	232.0	230.8	234.4
Effect of dilutive securities from stock-based benefit plans (in shares)		5.2	2.6	5.1	3.0
Shares used in per share calculation - diluted (in shares)		234.6	234.6	235.9	237.4
Net income (loss) per share from - basic:
Continuing operations (in dollars per share)		$ 0.11	$ 0.13	$ 0.66	$ 0.06
Discontinued operations (in dollars per share)		0.00	0.02	0.00	(0.19)
Net (loss) income per share (in dollars per share)		0.11	0.15	0.66	(0.13)
Net income (loss) per share from - diluted:
Continuing operations (in dollars per share)		0.11	0.12	0.65	0.06
Discontinued operations (in dollars per share)		0.00	0.02	0.00	(0.19)
Net income (loss) per share (in dollars per share)		$ 0.11	$ 0.14	$ 0.65	$ (0.13)
Anti-dilutive securities excluded from computation of earnings per share
Total potentially dilutive securities (in shares)		0.3	4.2	0.3	3.3
2033 Notes
Convertible notes
Interest rate on senior convertible notes		0.625%		0.625%			0.625%
Conversion price of debt (in dollars per share)	$ 11.28			$ 11.28
2024 Notes | Convertible Notes
Convertible notes
Interest rate on senior convertible notes		1.00%		1.00%		1.00%
Conversion price of debt (in dollars per share)				$ 13.22
Stock options and ESPP
Anti-dilutive securities excluded from computation of earnings per share
Total potentially dilutive securities (in shares)		0.3	1.2	0.3	1.0
Restricted Stock Units
Anti-dilutive securities excluded from computation of earnings per share
Total potentially dilutive securities (in shares)		0.0	3.0	0.0	2.3

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Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Changes in accumulated other comprehensive income (loss) by component
Balance at the beginning of the period			$ 689.3
Other comprehensive income (loss) before reclassification			79.9
Amounts reclassified from accumulated other comprehensive income			(184.0)
Net change in Accumulated other comprehensive (loss) income	$ (22.8)	$ 13.3	(104.1)	$ 144.9
Balance at the end of the period	771.2		771.2
Income tax expense impact from realized gain on sale of marketable equity securities			0.0
Tax impact of amortization of actuarial gains (losses)			0.0
Total
Changes in accumulated other comprehensive income (loss) by component
Balance at the beginning of the period			10.0
Balance at the end of the period	(94.1)		(94.1)
Unrealized gains (losses) on available-for-sale investments
Changes in accumulated other comprehensive income (loss) by component
Balance at the beginning of the period			104.5
Other comprehensive income (loss) before reclassification			93.0
Amounts reclassified from accumulated other comprehensive income			(185.4)
Net change in Accumulated other comprehensive (loss) income			(92.4)
Balance at the end of the period	12.1		12.1
Foreign currency translation adjustments
Changes in accumulated other comprehensive income (loss) by component
Balance at the beginning of the period			(70.1)
Other comprehensive income (loss) before reclassification			(13.1)
Amounts reclassified from accumulated other comprehensive income			0.0
Net change in Accumulated other comprehensive (loss) income			(13.1)
Balance at the end of the period	(83.2)		(83.2)
Change in unrealized components of defined benefit obligations, net of tax
Changes in accumulated other comprehensive income (loss) by component
Balance at the beginning of the period			(24.4)
Other comprehensive income (loss) before reclassification			0.0
Amounts reclassified from accumulated other comprehensive income			1.4
Net change in Accumulated other comprehensive (loss) income			1.4
Balance at the end of the period	$ (23.0)		$ (23.0)

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Balance Sheet and Other Details - Accounts Receivable Reserves and Allowances (Details) $ in Millions	9 Months Ended
	Apr. 01, 2017 USD ($)
Allowance for doubtful accounts
Components of accounts receivable reserves and allowances
Beginning balance	$ 2.2
Charged to Costs and Expenses	0.1
Adjustments	(0.6)
Ending balance	1.7
Allowance for sales returns
Components of accounts receivable reserves and allowances
Beginning balance	2.5
Ending balance	1.0
Total accounts receivable reserves
Components of accounts receivable reserves and allowances
Beginning balance	4.7
Ending balance	$ 2.7

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Balance Sheet and Other Details - Inventories (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Inventories, net
Finished goods	$ 25.2	$ 29.1
Work in process	8.9	7.5
Raw materials	12.7	14.8
Inventories, net	$ 46.8	$ 51.4

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Balance Sheet and Other Details - Prepayments and Other Current Assets (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Prepayments and other current assets
Prepayments	$ 11.4	$ 10.4
Other current assets	42.1	21.7
Prepayments and other current assets	$ 53.5	$ 32.1

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Balance Sheet and Other Details - Other Current Liabilities (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Other current liabilities
Customer prepayments	$ 35.8	$ 0.4
Restructuring accrual	13.1	13.3
Income taxes payable	6.9	3.3
Warranty accrual	2.9	2.6
VAT liabilities	2.5	2.3
Foreign exchange forward contract	2.6	0.0
Deferred compensation plan	2.0	2.4
Other	4.0	6.7
Other current liabilities	$ 69.8	$ 31.0

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Balance Sheet and Other Details - Other Non-Current Liabilities (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Other non-current liabilities
Pension and post-employment benefits	$ 98.0	$ 103.0
Financing obligation	27.8	28.7
Long-term deferred revenue	16.0	22.7
Other	22.6	24.7
Other non-current liabilities	$ 164.4	$ 179.1

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Investments, Forward Contracts and Fair Value Measurements - Amortized Cost to Fair Value Reconciliation (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	$ 510.3	$ 410.0
Gross Unrealized Gains	17.6	109.5
Gross Unrealized Losses	(0.8)	(0.4)
Fair Value	527.1	519.1
Total debt securities
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	507.0	347.9
Gross Unrealized Gains	0.1	0.3
Gross Unrealized Losses	(0.8)	(0.4)
Fair Value	506.3	347.8
U.S. treasuries
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	69.6	46.1
Gross Unrealized Gains	0.0	0.0
Gross Unrealized Losses	(0.1)	0.0
Fair Value	69.5	46.1
U.S. agencies
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	35.2	24.9
Gross Unrealized Gains	0.0	0.0
Gross Unrealized Losses	(0.1)	0.0
Fair Value	35.1	24.9
Municipal bonds and sovereign debt instruments
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	4.0	2.0
Gross Unrealized Gains	0.0	0.0
Gross Unrealized Losses	0.0	0.0
Fair Value	4.0	2.0
Asset-backed securities
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	68.0	50.4
Gross Unrealized Gains	0.0	0.1
Gross Unrealized Losses	(0.3)	(0.3)
Fair Value	67.7	50.2
Corporate securities
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	324.2	224.5
Gross Unrealized Gains	0.1	0.2
Gross Unrealized Losses	(0.3)	(0.1)
Fair Value	324.0	224.6
Certificates of deposit
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	6.0
Gross Unrealized Gains	0.0
Gross Unrealized Losses	0.0
Fair Value	6.0
Marketable equity securities
Available-For-Sale Investments
Amortized Cost/ Carrying Cost	3.3	62.1
Gross Unrealized Gains	17.5	109.2
Gross Unrealized Losses	0.0	0.0
Fair Value	$ 20.8	$ 171.3

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Investments, Forward Contracts and Fair Value Measurements - Additional Information (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016	Jul. 02, 2016	Aug. 01, 2015
Investments, Forward Contracts and Fair Value Measurements
Term of maturities of securities classified as current assets included in short-term investments			12 months
Fair Value	$ 527.1		$ 527.1		$ 519.1
Other-than-temporary impairment loss	0.0	$ 0.0	0.0	$ 0.0
Not designated | Foreign exchange forward contracts
Foreign Currency Forward Contracts
Derivative asset, fair value	5.2		5.2
Derivative liability, fair value	2.6		2.6
Gains (losses) on derivatives	2.6	$ (5.6)	(2.7)	$ (4.9)
Not designated | Foreign exchange forward contracts | Held to purchase
Foreign Currency Forward Contracts
Notional amount of forward contracts	133.6		133.6		110.0
Not designated | Foreign exchange forward contracts | Held to sell
Foreign Currency Forward Contracts
Notional amount of forward contracts	$ 31.8		$ 31.8		55.2
Lumentum
Investments, Forward Contracts and Fair Value Measurements
Shares held in investment (in shares)	0.4		0.4			11.7
Marketable equity investments
Investments, Forward Contracts and Fair Value Measurements
Fair Value	$ 20.8		$ 20.8		$ 171.3
Realized gain on sale of marketable equity securities	51.2		$ 186.5
Income tax effect related to gain on sale of marketable security	$ 0.0
Marketable equity investments | Lumentum
Investments, Forward Contracts and Fair Value Measurements
Shares held in investment (in shares)	0.4		0.4		7.2
Number of shares sold (in shares)	1.3		6.9
Cash equivalents
Investments, Forward Contracts and Fair Value Measurements
Fair Value	$ 49.9		$ 49.9		$ 36.1
Short-term investments
Investments, Forward Contracts and Fair Value Measurements
Fair Value	455.8		455.8		311.1
Short-term investments | Marketable equity investments
Investments, Forward Contracts and Fair Value Measurements
Fair Value	20.8		20.8		171.3
Other non-current assets
Investments, Forward Contracts and Fair Value Measurements
Fair Value	0.6		0.6		0.6
Trading securities | Short-term investments
Investments, Forward Contracts and Fair Value Measurements
Deferred compensation plan assets	2.0		2.0		2.4
Trading securities | Short-term investments | Debt securities
Investments, Forward Contracts and Fair Value Measurements
Deferred compensation plan assets	0.5		0.5		0.3
Trading securities | Short-term investments | Money market instruments and funds
Investments, Forward Contracts and Fair Value Measurements
Deferred compensation plan assets	0.5		0.5		0.8
Trading securities | Short-term investments | Marketable equity investments
Investments, Forward Contracts and Fair Value Measurements
Deferred compensation plan assets	$ 1.0		$ 1.0		$ 1.3

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Investments, Forward Contracts and Fair Value Measurements - Contractual Maturities (Details) - Total debt securities $ in Millions	Apr. 01, 2017 USD ($)
Amortized Cost/ Carrying Cost
Amounts maturing in less than 1 year	$ 363.2
Amounts maturing in 1 - 5 years	141.8
Amounts maturing in more than 5 years	2.0
Total debt available-for-sale securities	507.0
Estimated Fair Value
Amounts maturing in less than 1 year	363.1
Amounts maturing in 1 - 5 years	141.5
Amounts maturing in more than 5 years	1.7
Total debt available-for-sale securities	$ 506.3

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Investments, Forward Contracts and Fair Value Measurements - Measured at Fair Value (Details) - USD ($) $ in Millions	Apr. 01, 2017	Jul. 02, 2016
Other current liabilities
Liability:
Total liabilities	$ 2.6
Recurring basis | Cash and cash equivalents
Assets:
Total assets	754.6	$ 295.4
Recurring basis | Short-term investments
Assets:
Total assets	478.6	484.7
Recurring basis | Restricted cash
Assets:
Total assets	11.7	11.3
Recurring basis | Prepayments and other current assets
Assets:
Total assets	5.2
Recurring basis | Other non-current assets
Assets:
Total assets	4.5	4.5
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Total debt available-for-sale securities	69.5	46.1
Marketable equity securities	20.8	171.3
Money market funds	720.3	274.4
Trading securities	2.0	2.4
Foreign currency forward contracts	0.0	0.0
Total assets	812.6	494.2
Liability:
Foreign currency forward contracts	0.0	0.0
Total liabilities	0.0	0.0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. treasuries
Assets:
Total debt available-for-sale securities	69.5	46.1
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. agencies
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal bonds and sovereign debt instruments
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate securities
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of deposit
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Significant Other Observable Inputs (Level 2)
Assets:
Total debt available-for-sale securities	436.8	301.7
Marketable equity securities	0.0	0.0
Money market funds	0.0	0.0
Trading securities	0.0	0.0
Foreign currency forward contracts	5.2	0.0
Total assets	442.0	301.7
Liability:
Foreign currency forward contracts	2.6	0.0
Total liabilities	2.6	0.0
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. treasuries
Assets:
Total debt available-for-sale securities	0.0	0.0
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. agencies
Assets:
Total debt available-for-sale securities	35.1	24.9
Recurring basis | Significant Other Observable Inputs (Level 2) | Municipal bonds and sovereign debt instruments
Assets:
Total debt available-for-sale securities	4.0	2.0
Recurring basis | Significant Other Observable Inputs (Level 2) | Asset-backed securities
Assets:
Total debt available-for-sale securities	67.7	50.2
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate securities
Assets:
Total debt available-for-sale securities	324.0	224.6
Recurring basis | Significant Other Observable Inputs (Level 2) | Certificates of deposit
Assets:
Total debt available-for-sale securities	6.0	0.0
Recurring basis | Total
Assets:
Total debt available-for-sale securities	506.3	347.8
Marketable equity securities	20.8	171.3
Money market funds	720.3	274.4
Trading securities	2.0	2.4
Foreign currency forward contracts	5.2	0.0
Total assets	1,254.6	795.9
Liability:
Foreign currency forward contracts	2.6	0.0
Total liabilities	2.6	0.0
Recurring basis | Total | U.S. treasuries
Assets:
Total debt available-for-sale securities	69.5	46.1
Recurring basis | Total | U.S. agencies
Assets:
Total debt available-for-sale securities	35.1	24.9
Recurring basis | Total | Municipal bonds and sovereign debt instruments
Assets:
Total debt available-for-sale securities	4.0	2.0
Recurring basis | Total | Asset-backed securities
Assets:
Total debt available-for-sale securities	67.7	50.2
Recurring basis | Total | Corporate securities
Assets:
Total debt available-for-sale securities	324.0	224.6
Recurring basis | Total | Certificates of deposit
Assets:
Total debt available-for-sale securities	$ 6.0	$ 0.0

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Goodwill (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Jul. 02, 2016	Apr. 01, 2017
Changes in goodwill
Balance at the beginning of the period		$ 152.1
Currency translation adjustments		(1.4)
Balance at the end of the period	$ 152.1	150.7
Network Enablement
Changes in goodwill
Balance at the beginning of the period		143.8
Currency translation adjustments		(1.4)
Balance at the end of the period	143.8	142.4
Goodwill impairment	0.0
Optical Security and Performance Products
Changes in goodwill
Balance at the beginning of the period		8.3
Currency translation adjustments		0.0
Balance at the end of the period	8.3	$ 8.3
Goodwill impairment	0.0
Service Enablement
Changes in goodwill
Goodwill impairment	$ 91.4

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Acquired Developed Technology and Other Intangibles (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016	Jul. 02, 2016
Acquired developed technology, customer relationships and other intangibles
Gross Carrying Amount	$ 472.5		$ 472.5		$ 475.7
Accumulated Amortization	(434.9)		(434.9)		(415.8)
Net	37.6		37.6		59.9
Amortization of acquired developed technologies	3.6	$ 4.1	11.1	$ 13.0
Amortization of other intangibles	3.5	3.6	10.4	11.1
Total amortization of intangible assets	7.1	$ 7.7	21.5	$ 24.1
Estimated future amortization expense
Remainder of 2017	6.7		6.7
2018	19.9		19.9
2019	9.3		9.3
2020	1.4		1.4
2021	0.3		0.3
Thereafter	0.0		0.0
Total amortization	37.6		37.6
Acquired developed technology
Acquired developed technology, customer relationships and other intangibles
Gross Carrying Amount	366.9		366.9		369.3
Accumulated Amortization	(346.5)		(346.5)		(337.3)
Net	20.4		20.4		32.0
Customer relationships
Acquired developed technology, customer relationships and other intangibles
Gross Carrying Amount	94.8		94.8		95.6
Accumulated Amortization	(77.8)		(77.8)		(68.0)
Net	17.0		17.0		27.6
Other
Acquired developed technology, customer relationships and other intangibles
Gross Carrying Amount	10.8		10.8		10.8
Accumulated Amortization	(10.6)		(10.6)		(10.5)
Net	$ 0.2		$ 0.2		$ 0.3

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Debts and Letters of Credit - Carrying Amounts of the Liability and Equity Components (Details) - USD ($) $ in Millions	Apr. 01, 2017	Mar. 03, 2017	Jul. 02, 2016	Aug. 21, 2013
0.625% Senior Convertible Notes
Carrying amounts of the liability and equity components:
Interest rate on senior convertible notes	0.625%			0.625%
Convertible Notes
Carrying amounts of the liability and equity components:
Unamortized discount of liability component	$ (141.7)		$ (61.7)
Unamortized debt issuance costs	(10.2)		(5.0)
Carrying value of the liability component	958.1		583.3
Carrying amount of equity component	236.3		134.4
Convertible Notes | 0.625% Senior Convertible Notes
Carrying amounts of the liability and equity components:
Principal amount of notes	650.0		650.0
Convertible Notes | 1.00% Senior Convertible Notes
Carrying amounts of the liability and equity components:
Principal amount of notes	460.0		$ 0.0
Carrying value of the liability component	$ 358.1
Interest rate on senior convertible notes	1.00%	1.00%

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Debts and Letters of Credit - Additional Information (Details)			1 Months Ended	9 Months Ended
	Aug. 17, 2015 $ / shares	Aug. 21, 2013 USD ($)	Mar. 31, 2017 USD ($)	Apr. 01, 2017 USD ($) letter_of_credit d day $ / shares	Mar. 22, 2017 USD ($)	Mar. 03, 2017 USD ($)	Jul. 02, 2016 USD ($)
Debt details
Short-term debt				$ 0			$ 0
Outstanding Letters of Credit
Number of standby letters of credit | letter_of_credit				14
Letters of credit outstanding				$ 15,600,000
Convertible Notes
Debt details
Carrying value of the liability component				$ 958,100,000			583,300,000
1.00% Senior Convertible Notes | Convertible Notes
Debt details
Aggregate principal amount of convertible debt					$ 60,000,000	$ 400,000,000
Proceeds from debt, net of issuance costs			$ 451,100,000
Interest rate on senior convertible notes				1.00%		1.00%
Conversion price of debt (in dollars per share) | $ / shares				$ 13.22
Premium on closing sale price of the Company's common stock for initial conversion				32.50%
Repurchase price percentage				100.00%
Effective interest rate				4.80%
Term of swap rate				7 years
Carrying value of the liability component				$ 358,100,000
Carrying value of the equity component				$ 101,900,000
Remaining debt term				6 years 10 months 24 days
Debt issuance costs					8,900,000
Fair market value of convertible debt				$ 483,500,000
1.00% Senior Convertible Notes | Convertible Notes | Conversion criteria one
Debt details
Conversion threshold stock price trigger				130.00%
Threshold trading days for conversion (in day) | day				20
Threshold consecutive trading days for conversion				30 days
1.00% Senior Convertible Notes | Convertible Notes | Conversion criteria two
Debt details
Threshold trading days for conversion (in day) | d				45
Number of trading days used to calculate the stock price trigger (in day) | d				10
1.00% Senior Convertible Notes | Convertible Notes | Conversion criteria three
Debt details
Percentage premium on closing stock price for stock price trigger				10.00%
1.00% Senior Convertible Notes | Convertible Notes | Conversion criteria five
Debt details
Conversion threshold stock price trigger				98.00%
Number of consecutive business days following consecutive trading day period				5 days
Threshold consecutive trading days for conversion				10 days
1.00% Senior Convertible Notes, liability component | Convertible Notes
Debt details
Debt issuance costs					6,900,000
1.00% Senior Convertible Notes, equity component | Convertible Notes
Debt details
Debt issuance costs					$ 2,000,000
0.625% Senior Convertible Notes
Debt details
Aggregate principal amount of convertible debt		$ 650,000,000.0
Proceeds from debt, net of issuance costs		$ 636,300,000
Interest rate on senior convertible notes		0.625%		0.625%
Conversion price of debt (in dollars per share) | $ / shares	$ 11.28			$ 11.28
Fair market value of convertible debt				$ 726,400,000			$ 633,000,000

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Debts and Letters of Credit - Interest Expense (Details) - 0.625% Senior Convertible Notes - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Interest expense for the contractual interest and the amortization of debt discount
Effective interest rate (as a percent)	5.30%	5.40%	5.30%	5.40%
Interest expense-contractual interest	$ 1.3	$ 1.0	$ 3.4	$ 3.0
Accretion of debt discount	$ 7.9	$ 6.7	$ 21.9	$ 19.9

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Restructuring and Related Charges (Details) $ in Millions	3 Months Ended					6 Months Ended	9 Months Ended		18 Months Ended
	Apr. 01, 2017 USD ($)	Jul. 02, 2016 USD ($) employee	Apr. 02, 2016 USD ($)	Jan. 02, 2016 employee	Mar. 29, 2014 employee	Apr. 01, 2017 USD ($)	Apr. 01, 2017 USD ($) employee	Apr. 02, 2016 USD ($)	Apr. 02, 2016 employee	Sep. 27, 2014 company
Summary of various restructuring plans
Accrual balance at the beginning of the period							$ 18.0
Restructuring Charges (Benefits)	$ 18.4		$ (0.1)				20.2	$ 1.7
Cash Settlements							(22.3)
Non-cash Settlements and Other Adjustments							(0.1)
Accrual balance at the end of the period	15.8	$ 18.0				$ 15.8	15.8
Long-term restructuring accrual	2.7	4.7				2.7	2.7
Number of new public entities (in company) | company										2
Focused NSE Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							0.0
Restructuring Charges (Benefits)	19.3					20.6	20.7
Cash Settlements							(11.0)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	9.7	0.0				9.7	$ 9.7
Number of employees impacted (employee) | employee							300
Other Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							$ 0.0
Restructuring Charges (Benefits)	0.0						0.4
Cash Settlements							(0.4)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	0.0	0.0				0.0	0.0
NE, SE and Shared Services Agile Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							8.6
Restructuring Charges (Benefits)	(0.8)						(0.7)
Cash Settlements							(7.5)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	0.4	$ 8.6				0.4	0.4
Number of employees impacted (employee) | employee		170
NE and SE Agile Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							0.8
Restructuring Charges (Benefits)	(0.1)						(0.1)
Cash Settlements							(0.3)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	0.4	$ 0.8				0.4	0.4
Number of employees impacted (employee) | employee				40
NE, SE, and Shared Separation Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							1.4
Restructuring Charges (Benefits)	0.0						(0.2)
Cash Settlements							(1.1)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	0.1	1.4				0.1	0.1
Number of employees impacted (employee) | employee									330
Plans Prior to Fiscal 2015
Summary of various restructuring plans
Accrual balance at the end of the period	1.2					1.2	1.2
NE Product Strategy Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							1.5
Restructuring Charges (Benefits)	0.0						0.0
Cash Settlements							(0.4)
Non-cash Settlements and Other Adjustments							(0.1)
Accrual balance at the end of the period	1.0	1.5				1.0	1.0
Number of employees impacted (employee) | employee					60
NE Lease Restructuring Plan
Summary of various restructuring plans
Accrual balance at the beginning of the period							4.0
Restructuring Charges (Benefits)	0.0						0.1
Cash Settlements							(1.1)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	3.0	4.0				3.0	3.0
Contractual obligations under the operating lease, net of sublease income, fair value	3.0					3.0	3.0
Other Plans
Summary of various restructuring plans
Accrual balance at the beginning of the period							1.7
Restructuring Charges (Benefits)	0.0						0.0
Cash Settlements							(0.5)
Non-cash Settlements and Other Adjustments							0.0
Accrual balance at the end of the period	$ 1.2	$ 1.7				$ 1.2	$ 1.2

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016	Jul. 02, 2016
Income Tax Disclosure [Abstract]
(Benefit from) provision for income taxes	$ 4.3	$ 9.9	$ 15.8	$ 13.9
Valuation Allowance [Line Items]
Increase in valuation allowance due to Separation				8.9
Unrecognized tax benefits	42.1		42.1		$ 41.7
Interest and penalties accrued	2.3		2.3
Unrecognized tax benefits that may be recognized during the next twelve months	$ 1.0		$ 1.0
Continuing operations
Valuation Allowance [Line Items]
Tax benefit from discontinued operations		$ 7.6		$ 14.6

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Stockholders' Equity (Details) - USD ($) shares in Millions	3 Months Ended	9 Months Ended
	Apr. 01, 2017	Apr. 01, 2017	Apr. 02, 2016	Sep. 30, 2016	Jul. 02, 2016
Class of Stock [Line Items]
Authorized amount under stock repurchase program				$ 150,000,000	$ 100,000,000
Payment for share repurchase	$ 51,900,000	$ 91,600,000	$ 40,000,000
Common stock
Class of Stock [Line Items]
Shares delivered and retired (in shares)	5.2
Remaining authorization for future share repurchases	$ 53,900,000	$ 53,900,000

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Stock-Based Compensation - Compensation by Function (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 8.1	$ 9.1	$ 25.9	$ 34.0
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	0.7	1.1	2.7	3.7
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	1.3	2.0	4.6	6.7
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 6.1	$ 6.0	$ 18.6	$ 23.6

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Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Aug. 01, 2015
Stock-Based Compensation
Stock-based compensation capitalized to inventory	$ 0.7	$ 0.9
Total incremental stock-based compensation related to plan modification			$ 13.6
Full Value Awards - Total
Stock-Based Compensation
Exercise price (in dollars per share)	$ 0
Unrecognized stock-based compensation	$ 38.2
Estimated amortization period for unrecognized compensation	1 year 11 months 4 days
Withholding taxes liability paid	$ 11.6	$ 9.8
Remaining incremental expense to be recognized from plan modification	$ 1.9
Full Value Awards - Total | Minimum
Stock-Based Compensation
Vesting period	1 year
Full Value Awards - Total | Maximum
Stock-Based Compensation
Vesting period	4 years
RSUs
Stock-Based Compensation
Granted (in shares)	3.9	6.1
Restricted Stock Units with Market Conditions (MSU)
Stock-Based Compensation
Vesting period	3 years
Granted (in shares)	0.4	0.6
Aggregate grant-date fair value	$ 3.3	$ 3.7
Restricted Stock Units with Time Based Conditions
Stock-Based Compensation
Vesting period	3 years
Granted (in shares)	3.5	5.5
Percentage of first tranche vested	33.00%
Initial vesting period	1 year
Subsequent vesting period	2 years

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Stock-Based Compensation - Assumptions Used for Valuation (Details) - MSUs - Monte Carlo simulation	9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Valuation Assumptions
Volatility of common stock (as a percent)	35.00%	33.60%
Average volatility of peer companies (as a percent)	54.70%	52.80%
Average correlation coefficient of peer companies	0.1856	0.1047
Risk-free interest rate (as a percent)	0.80%	0.80%

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Employee Pension and Other Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Employee Defined Benefit Plans
Employer contributions			$ 3.2
Components of the net periodic cost for the pension and benefits plans
Cash outlays expected during fiscal 2017			6.0
Pension Benefit Plans
Components of the net periodic cost for the pension and benefits plans
Service cost	$ 0.1	$ 0.1	0.3	$ 0.3
Interest cost	0.6	0.7	1.6	2.2
Expected return on plan assets	(0.3)	(0.4)	(0.8)	(1.2)
Amortization of net actuarial losses	0.5	0.2	1.4	0.5
Net periodic benefit cost	$ 0.9	$ 0.6	2.5	$ 1.8
U.K. | Foreign Pension Plan
Employee Defined Benefit Plans
Employer contributions			$ 0.6

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Commitments and Contingencies (Details) £ in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017 USD ($)	Apr. 02, 2016 USD ($)	Apr. 01, 2017 USD ($)	Apr. 02, 2016 USD ($)	Jul. 02, 2016 USD ($)	Jul. 02, 2016 GBP (£)
Loss Contingencies [Line Items]
Guarantee liabilities	$ 0.0		$ 0.0		$ 0.0
Product Warranties
Warranty Term for most products			3 years
Changes in warranty reserve
Balance as of beginning of period	5.3	$ 4.3	$ 4.9	$ 3.7
Provision for warranty	1.3	0.8	4.5	2.5
Utilization of reserve	(0.8)	(0.8)	(2.8)	(2.3)
Adjustments related to pre-existing warranties (including changes in estimates)	(0.3)	0.2	(1.1)	0.6
Balance as of end of period	$ 5.5	$ 4.5	$ 5.5	$ 4.5
Judicial ruling | Case related to amendment of pension for foreign subsidiary
Loss Contingencies [Line Items]
Loss contingency accrual | £						£ 5.7

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Operating Segments and Geographic Information - Information on Reportable Segments (Details) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017 USD ($)	Apr. 02, 2016 USD ($)	Apr. 01, 2017 USD ($) subsegment segment	Apr. 02, 2016 USD ($)
Information on reportable segments
Number of broad business categories (in segment) | segment			2
Net revenue	$ 196.0	$ 220.4	$ 613.3	$ 682.2
Gross profit	$ 117.0	$ 131.3	$ 366.8	$ 413.6
Gross margin (as a percent)	59.70%	59.60%	59.80%	60.60%
Operating income	$ (15.2)	$ 7.2	$ 1.6	$ 13.5
Operating margin (as a percent)	(7.80%)	3.30%	0.30%	2.00%
Segment Measures
Information on reportable segments
Net revenue	$ 196.0	$ 220.4	$ 613.3	$ 682.2
Gross profit	$ 121.9	$ 136.4	$ 382.1	$ 430.4
Gross margin (as a percent)	62.20%	61.90%	62.30%	63.10%
Operating income	$ 23.4	$ 26.2	$ 77.8	$ 85.4
Operating margin (as a percent)	11.90%	11.90%	12.70%	12.50%
Reconciling Items
Information on reportable segments
Net revenue	$ 0.0	$ 0.0	$ 0.0	$ 0.0
Gross profit	(4.9)	(5.1)	(15.3)	(16.8)
Operating income	(38.6)	(19.0)	$ (76.2)	(71.9)
Network and Service Enablement
Information on reportable segments
Number of subsegment (in subsegment) | subsegment			2
Network and Service Enablement | Segment Measures
Information on reportable segments
Net revenue	132.1	158.3	$ 444.7	497.1
Gross profit	$ 85.2	$ 100.5	$ 285.6	$ 324.7
Gross margin (as a percent)	64.50%	63.50%	64.20%	65.30%
Operating income	$ (4.4)	$ (0.1)	$ 5.7	$ 10.3
Operating margin (as a percent)	(3.30%)	(0.10%)	1.30%	2.10%
Network and Service Enablement | Network Enablement | Segment Measures
Information on reportable segments
Net revenue	$ 103.4	$ 123.1	$ 339.0	$ 377.1
Gross profit	$ 67.5	$ 80.7	$ 219.5	$ 247.0
Gross margin (as a percent)	65.30%	65.60%	64.70%	65.50%
Network and Service Enablement | Service Enablement | Segment Measures
Information on reportable segments
Net revenue	$ 28.7	$ 35.2	$ 105.7	$ 120.0
Gross profit	$ 17.7	$ 19.8	$ 66.1	$ 77.7
Gross margin (as a percent)	61.70%	56.30%	62.50%	64.80%
Optical Security and Performance Products | Segment Measures
Information on reportable segments
Net revenue	$ 63.9	$ 62.1	$ 168.6	$ 185.1
Gross profit	$ 36.7	$ 35.9	$ 96.5	$ 105.7
Gross margin (as a percent)	57.40%	57.80%	57.20%	57.10%
Operating income	$ 27.8	$ 26.3	$ 72.1	$ 75.1
Operating margin (as a percent)	43.50%	42.40%	42.80%	40.60%

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Operating Segments and Geographic Information - Segment Reconciling Items (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Apr. 02, 2016
Information on reportable segments
Amortization of intangibles	$ (3.6)	$ (4.1)	$ (11.1)	$ (13.0)
Gross profit	117.0	131.3	366.8	413.6
Operating income	(15.2)	7.2	1.6	13.5
Stock-based compensation	(8.1)	(9.1)	(25.9)	(34.0)
Amortization of intangibles	(3.5)	(3.6)	(10.4)	(11.1)
Restructuring and related charges	(18.4)	0.1	(20.2)	(1.7)
Segment Measures
Information on reportable segments
Gross profit	121.9	136.4	382.1	430.4
Operating income	23.4	26.2	77.8	85.4
Reconciling Items
Information on reportable segments
Stock-based compensation	(0.7)	(1.1)	(2.7)	(3.7)
Amortization of intangibles	(3.6)	(4.1)	(11.1)	(13.0)
Other charges related to non-recurring activities	(0.6)	0.1	(1.5)	(0.1)
Gross profit	(4.9)	(5.1)	(15.3)	(16.8)
Operating income	(38.6)	(19.0)	(76.2)	(71.9)
Stock-based compensation	(8.1)	(9.1)	(25.9)	(34.0)
Amortization of intangibles	(7.1)	(7.7)	(21.5)	(24.1)
Other charges related to non-recurring activities	(5.0)	(2.3)	(8.6)	(12.1)
Restructuring and related charges	$ (18.4)	$ 0.1	$ (20.2)	$ (1.7)

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Subsequent Events (Details) - Marketable equity securities - USD ($) shares in Millions, $ in Millions	1 Months Ended	3 Months Ended	9 Months Ended
	May 08, 2017	Apr. 01, 2017	Apr. 01, 2017
Subsequent Event [Line Items]
Gross realized gain on sale of marketable equity securities		$ 51.2	$ 186.5
Lumentum
Subsequent Event [Line Items]
Number of shares sold (in shares)		1.3	6.9
Subsequent Event | Lumentum
Subsequent Event [Line Items]
Number of shares sold (in shares)	0.2
Gross proceeds from sale of securities	$ 10.1
Gross realized gain on sale of marketable equity securities	$ 8.4