10-K/APeriod: FY2017

Lumentum Holdings Inc. Annual Report (Amendment), Year Ended Jul 1, 2017

Filed March 29, 2018For Securities:LITE

Summary

Lumentum Holdings Inc. operates as a leading provider of optical and photonic products, serving the telecommunications (Telecom), data communications (Datacom), and commercial laser markets. The company's business is structured into two main segments: Optical Communications (OpComms) and Commercial Lasers. For the fiscal year ended July 1, 2017, Lumentum reported net revenue of $1,001.6 million, a 10.9% increase from the previous year, driven primarily by its OpComms segment, which saw growth in both Telecom and Datacom product lines. Despite revenue growth, Lumentum reported a net loss of $102.5 million for fiscal year 2017, a significant shift from the previous year's net income of $9.3 million. This loss was substantially impacted by a $104.2 million unrealized loss on derivative liabilities related to its Series A Preferred Stock and Convertible Senior Notes, as well as a $42.7 million provision for income taxes. The company's balance sheet shows a healthy cash position of $272.9 million, bolstered by the issuance of $450 million in Convertible Senior Notes in March 2017.

Financial Statements
Beta

Key Highlights

  • 1Net revenue increased by 10.9% to $1,001.6 million in fiscal year 2017, primarily driven by the Optical Communications segment.
  • 2The company reported a net loss of $102.5 million for fiscal year 2017, compared to a net income of $9.3 million in fiscal year 2016.
  • 3A significant factor in the net loss was a $104.2 million unrealized loss on derivative liabilities associated with the Series A Preferred Stock and Convertible Senior Notes.
  • 4Cash and cash equivalents increased to $272.9 million as of July 1, 2017, largely due to the proceeds from the issuance of $450 million in Convertible Senior Notes.
  • 5The Optical Communications segment represented 85.6% of net revenue, with Telecom being the largest sub-segment at 61.0%.
  • 6The Commercial Lasers segment saw a slight revenue increase of 1.5% but experienced a decrease in gross margin.
  • 7The company experienced significant customer concentration, with three customers accounting for a substantial portion of net revenue in fiscal year 2017.

Frequently Asked Questions

For the fiscal year ended July 1, 2017, Lumentum reported net revenue of $1,001.6 million, an increase of 10.9% year-over-year. However, the company incurred a net loss of $102.5 million, impacted by significant unrealized losses on derivative liabilities and income tax provisions.

Lumentum's revenue growth is primarily driven by its Optical Communications (OpComms) segment, which supplies products for telecommunications and data communications networks. Growth in these areas, particularly for Telecom and 100G Datacom products, fueled the overall revenue increase.

The net loss in fiscal year 2017 was primarily due to a substantial unrealized loss on derivative liabilities related to its Series A Preferred Stock and Convertible Senior Notes ($104.2 million) and a provision for income taxes ($42.7 million). These items significantly offset the gross profit generated from operations.

Since its separation from JDSU in August 2015, Lumentum has become an independent publicly-traded company. Its cash and cash equivalents have significantly increased, reaching $272.9 million by July 1, 2017, partly due to the successful issuance of Convertible Senior Notes. The company continues to invest in R&D and expand its manufacturing capabilities.