10-QPeriod: Q2 FY2016

Lumentum Holdings Inc. Quarterly Report for Q2 Ended Dec 26, 2015

Filed February 4, 2016For Securities:LITE

Summary

This Form 10-Q filing for Lumentum Holdings Inc. (LITE) on February 4, 2016, provides insights into its status as an "emerging growth company" under the JOBS Act. Lumentum is leveraging certain exemptions from regulatory requirements, which could impact investor perception and stock liquidity. A key point for investors is the potential for significant stock sales from Viavi, which retained a 19.9% stake post-spin-off and is required to dispose of these shares within three years. This could lead to increased stock price volatility. Furthermore, the filing highlights the potential dilutive effect of Series A Preferred Stock held by Amada, which can be converted into common stock under certain conditions. The company also currently does not expect to pay dividends and is dependent on its operating subsidiaries for any future dividend payments. Several corporate governance provisions are in place, including those under Delaware law and Lumentum's charter and bylaws, which could deter takeover attempts and potentially influence the stock price and control of the company.

Financial Highlights

47 data points
Beta

Revenue

$218.30M

31.2% Gross Margin

Net Income

$2.80M

1.3% Net Margin

EPS (Diluted)

$0.05

Total Assets

$682.00M

Cash & Equivalents

$161.90M

Free Cash Flow

$20.60M

Financial Statements
Beta
Revenue$218.30M
Cost of Revenue$148.50M
Gross Profit$68.10M
R&D Expenses$35.00M
SG&A Expenses$25.80M
Operating Expenses$61.90M
Operating Income$6.20M
Net Income$2.80M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)59.00M
Shares Outstanding (Diluted)59.20M

Key Highlights

  • 1Lumentum is operating as an 'emerging growth company' under the JOBS Act, utilizing exemptions from certain reporting requirements.
  • 2Viavi retains a 19.9% stake in Lumentum and is contractually obligated to sell these shares within three years, which could impact stock price volatility.
  • 3The company has elected not to delay adoption of new accounting standards, despite being an emerging growth company.
  • 4The market price of Lumentum's common stock is subject to significant volatility due to various factors, including potential large sales of shares.
  • 5Lumentum currently does not anticipate paying dividends on its common stock.
  • 6Series A Preferred Stock, held by Amada, can be converted into common stock, potentially diluting existing shareholders.
  • 7Corporate governance provisions, including Delaware Section 203, are in place that may hinder takeover attempts and affect stock value.

Frequently Asked Questions

As an 'emerging growth company,' Lumentum is exempt from certain reporting requirements, such as an auditor's attestation on internal controls and enhanced executive compensation disclosures. While this reduces compliance burdens, it may make Lumentum's filings differ from those of larger public companies, potentially affecting investor perception and market liquidity.

Viavi retains a significant minority stake (19.9%) and is required to sell these shares within three years to maintain the tax-free status of a distribution. The sale of a substantial number of shares by Viavi in the open market, or even the perception that such sales might occur, could materially increase the volatility of Lumentum's stock price and potentially cause it to decline.

The company currently does not expect to pay dividends on its common stock. Any future dividend payments are at the discretion of the board of directors and depend on various factors including financial condition, earnings, capital requirements, and regulatory constraints. Furthermore, Lumentum is a holding company and relies on its operating subsidiaries for funds to pay dividends, which are also subject to their own operational and financial health.

The Series A Preferred Stock, sold to Amada, may be converted into shares of Lumentum's common stock under certain conditions. This conversion could dilute the ownership stake of existing common stockholders. Additionally, cumulative senior dividends on this preferred stock, if declared, could reduce cash available for distribution to common stockholders or for other corporate purposes, and arrears on these dividends could restrict Lumentum's ability to pay dividends on or repurchase its common stock.