Financial Data and Key Metrics Changes - Viavi Solutions reported Q2 revenue of $314.8 million, a 5% increase year-over-year, exceeding guidance of $296 million to $310 million [7] - The operating profit margin reached a record 23.3%, expanding 100 basis points year-over-year and exceeding the guidance range of 20% to 21% [8] - EPS was $0.24, a quarterly record high, up 4.3% year-over-year, surpassing the guidance range of $0.18 to $0.20 [8] Business Segment Data and Key Metrics Changes - The NSE segment achieved record revenue of $244.2 million, up 18.1% year-over-year, exceeding guidance of $230 million to $240 million [9] - Within NSE, NE revenue increased 18.5% to $214.4 million, driven by fiber and wireless products, while SE revenue was $29.8 million, up 15.5% year-over-year [10] - OSP segment revenue was $70.6 million, down 24.2% year-over-year, but slightly above the high end of guidance [13] Market Data and Key Metrics Changes - The demand for fiber and wireless products in the NE segment showed double-digit growth, with fiber field products achieving a new revenue record [25] - The company noted a strong demand for 5G field instruments and expects continued momentum throughout 2022 [26][44] - The OSP business segment's anti-counterfeiting products revenue decreased due to moderated demand from central banks [31] Company Strategy and Development Direction - The company plans to continue improving its capital structure and financial flexibility to execute growth objectives, including a share repurchase program of up to $190 million [19] - Viavi expects to maintain a strong performance in the SE segment, targeting growth at double the rate of the NSE business [60] - The company anticipates a shift towards fiber and wireless technology in the long term, with strong demand for 400-gig optical transport [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record revenue and non-GAAP profitability for the first half of fiscal 2022 [24] - The company expects a favorable supply chain situation by mid-calendar 2022, which could enhance revenue potential [29] - Management acknowledged challenges in labor and supply chain as potential constraints but sees opportunities in automation and software solutions [85] Other Important Information - The company reported total cash and short-term investments of $738.5 million, up $89.7 million year-over-year [15] - Operating cash flow for the quarter was $22.2 million, a decrease due to non-recurring tax payments and increased inventory levels [16] - The company redeemed approximately 40% of its convertible notes, reducing the outstanding balance significantly [17] Q&A Session Summary Question: Insights on OSP business and 5G adoption - Management indicated that the anti-counterfeiting business is expected to stabilize at a higher run rate than pre-pandemic levels, with a new normal in the high 50s [39] - Regarding 5G, there is increasing demand for both wireless and fiber products, with expectations for continued growth [44] Question: Impact of supply chain disruptions - Management noted that without supply chain challenges, gross margins could improve by 1-2 percentage points, and revenue could increase by $5 million to $10 million [49] Question: Future revenue targets and growth rates - Management anticipates that NSE growth could move into the higher single digits, with a focus on fiber and wireless segments [68] Question: 5G field instruments and market share - Management sees a potential market of $300 million for 5G field instruments, targeting a market share of 25% to 33% [74] Question: Maintaining share gains amid supply chain normalization - Management believes that once share is gained, it becomes a new normal due to training and integration of their equipment into customer operations [83]

| --- | --- | --- | --- | |------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | Fiscal 2Q 2022 Earnings Call Supplementary Slides | | | | | February 3, 2022 | | | | Cautionary Language Concerning Forward-Looking Statements This presentation contains forward-looking statements under Section 27A of the Securities Act of 1934. Forward-looking statements are all statements we make other than those dealing specifically with historical matters. These forw ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 02, 2021 OR ☐ 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 000-22874 Viavi Solutions Inc. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporatio ...

Viavi Solutions Inc. (NASDAQ:VIAV) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Bill Ong - Head, Investor Relations Oleg Khaykin - President and CEO Henk Derksen - Chief Financial Officer Conference Call Participants Samik Chatterjee - JPMorgan Alex Henderson - Needham Tim Savageaux - Northland Capital Michael Genovese - WestPark Capital Meta Marshall - Morgan Stanley Mehdi Hosseini - SFG Richard Shannon - Craig-Hallum Operator Ladies and gentlemen, thank you so much for ...

| --- | --- | --- | --- | --- | |----------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | Fiscal 1Q 2022 Earnings Call Supplementary Slides | | | | | | November 4, 2021 | | | | | Cautionary Language Concerning Forward-Looking Statements This presentation contains forward-looking statements under Section 27A of the Securities Act of 1934. Forward-looking statements are all statements we make other than those dealing specifically with historical matters. ...

PART I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) VIAVI provides global network test, monitoring, and assurance solutions, and is a leader in optical applications for 3D sensing and anti-counterfeiting - VIAVI is a global provider of network test, monitoring, and assurance solutions, and a leader in management solutions for 3D sensing, anti-counterfeiting, consumer electronics, industrial, aerospace, automotive, and medical applications[14](index=14&type=chunk) - The company operates in three business segments: Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP)[17](index=17&type=chunk) - VIAVI's near-term strategy focuses on growth, both organic and inorganic, by leveraging major secular growth trends in **5G Wireless, Fiber, and 3D Sensing** to achieve higher revenue and profitability[28](index=28&type=chunk) - The company invests heavily in R&D to develop new and enhanced products across its segments, focusing on portable test instruments, network operations software, and innovative optical technologies for anti-counterfeiting, 3D sensing, and smart phone sensors[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - As of July 3, 2021, VIAVI had approximately **3,600 employees worldwide**, representing over 30 nationalities across 30 countries, with a commitment to diversity, equity, and inclusion, talent development, and competitive talent rewards[82](index=82&type=chunk)[85](index=85&type=chunk)[90](index=90&type=chunk) [General](index=5&type=section&id=General) This section provides an overview of Viavi Solutions Inc.'s business, market position, and strategic focus [Network Enablement](index=8&type=section&id=Network%20Enablement) This section details the Network Enablement segment's offerings and market focus [Service Enablement](index=10&type=section&id=Service%20Enablement) This section describes the Service Enablement segment's solutions and target customers [Optical Security and Performance Products](index=11&type=section&id=Optical%20Security%20and%20Performance%20Products) This section outlines the Optical Security and Performance Products segment's technologies and applications [Acquisitions](index=12&type=section&id=Acquisitions) This section discusses the company's strategy and activities related to business acquisitions [Restructuring Programs](index=13&type=section&id=Restructuring%20Programs) This section provides information on the company's restructuring initiatives and their impact [Research and Development](index=13&type=section&id=Research%20and%20Development) This section highlights the company's investment in research and development for product innovation [Manufacturing](index=13&type=section&id=Manufacturing) This section describes the company's manufacturing operations and processes [Sources and Availability of Raw Materials](index=13&type=section&id=Sources%20and%20Availability%20of%20Raw%20Materials) This section addresses the company's supply chain for raw materials and their availability [Patents and Proprietary Rights](index=13&type=section&id=Patents%20and%20Proprietary%20Rights) This section covers the company's intellectual property, including patents and proprietary rights [Backlog](index=13&type=section&id=Backlog) This section provides information on the company's order backlog [Seasonality](index=13&type=section&id=Seasonality) This section discusses the seasonal trends affecting the company's business operations [Human Capital Management](index=14&type=section&id=Human%20Capital%20Management) This section details the company's approach to managing its human resources and talent [ITEM 1A. RISK FACTORS](index=16&type=section&id=ITEM%201A.%2E%20RISK%20FACTORS) VIAVI faces significant risks including the ongoing impact of the COVID-19 pandemic, rapid technological change, and reliance on a limited customer base - The COVID-19 pandemic has significantly affected VIAVI's business, financial condition, results of operations, and liquidity, causing disruptions in facilities, suppliers, contract manufacturers, and shipping logistics, with ongoing uncertainty due to new variants and vaccine rollout challenges[97](index=97&type=chunk)[99](index=99&type=chunk)[103](index=103&type=chunk) - Rapid technological change in the industry, including the transition to 5G and virtualized networks, presents risks if VIAVI cannot deliver new products on time and at acceptable costs, potentially leading to lower demand for legacy hardware and increased competition[108](index=108&type=chunk)[112](index=112&type=chunk)[117](index=117&type=chunk) - VIAVI relies on a limited number of customers for a significant portion of its revenues, which exposes the company to risks of order reductions and increased pressure on pricing and contract terms, especially with industry consolidation[115](index=115&type=chunk) - International operations expose VIAVI to risks such as foreign exchange rate fluctuations, compliance with diverse laws and regulations, difficulties in enforcing intellectual property rights, tariffs, political instability, and challenges in staffing and management[121](index=121&type=chunk) - The company faces risks related to information security, including cyber-attacks and system failures, and compliance with evolving data privacy laws like GDPR and CCPA, which could result in financial losses, regulatory fines, and reputational damage[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - VIAVI's ability to use its net operating loss (NOL) carryforwards to offset future taxable income may be limited by ownership changes and the uncertainty of generating sufficient taxable income before expiration[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=31&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - No unresolved staff comments were reported[164](index=164&type=chunk) [ITEM 2. PROPERTIES](index=31&type=section&id=ITEM%202.%20PROPERTIES) This item is not applicable to the report - The item regarding properties is not applicable[165](index=165&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=31&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Information on legal proceedings is incorporated by reference from Note 18. Commitments and Contingencies in the Notes to Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 18. Commitments and Contingencies in the Notes to Consolidated Financial Statements[166](index=166&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=31&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the report - The item regarding mine safety disclosure is not applicable[167](index=167&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=32&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) VIAVI's common stock trades on the Nasdaq Global Select Market, with no anticipated cash dividends, and the company has a stock repurchase program - VIAVI's common stock is traded on the Nasdaq Global Select Market under the symbol VIAV[169](index=169&type=chunk) - As of July 31, 2021, the closing price was **$16.69**, with **228,472,709 shares** of common stock outstanding and **2,072 holders of record**[4](index=4&type=chunk)[169](index=169&type=chunk) - The company has not paid cash dividends and does not anticipate doing so in the foreseeable future[169](index=169&type=chunk) - During fiscal 2021, VIAVI repurchased and retired shares of its common stock under a Board-authorized program[170](index=170&type=chunk) Cumulative Total Return ($100 invested on 6/30/16) | | 6/2016 | 6/2017 | 6/2018 | 6/2019 | 6/2020 | 6/2021 | |:---|:---|:---|:---|:---|:---|:---| | VIAVI | $ 100.00 | $ 158.82 | $ 154.45 | $ 200.45 | $ 188.54 | $ 263.50 | | S&P 500 | $ 100.00 | $ 115.46 | $ 129.52 | $ 140.16 | $ 143.37 | $ 207.37 | | Nasdaq Composite | $ 100.00 | $ 126.80 | $ 155.09 | $ 165.33 | $ 201.48 | $ 302.30 | | Nasdaq Telecommunications | $ 100.00 | $ 113.80 | $ 134.59 | $ 158.43 | $ 161.18 | $ 205.28 | [ITEM 6. SELECTED FINANCIAL DATA](index=34&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) Selected historical financial data for the last five fiscal years has been omitted in accordance with amendments to Item 301 of Regulation S-K - Selected historical financial data for the last five fiscal years has been omitted due to amendments to Item 301 of Regulation S-K[177](index=177&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=35&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes VIAVI's financial condition and operational results, detailing revenue, gross margin, and operating expenses, alongside liquidity and capital resources - Net revenue increased by **$62.6 million**, or **5.5%**, during fiscal 2021 compared to fiscal 2020, primarily driven by strength in the OSP segment, partially offset by a decrease in the SE segment[220](index=220&type=chunk) - Gross margin increased by **1.1%** to **59.6%** in fiscal 2021 from 58.5% in fiscal 2020, mainly due to higher revenue volume, favorable product mix, and improved factory utilization within the OSP segment[228](index=228&type=chunk) - Operating income for fiscal 2021 was **$142.2 million**, up from $118.1 million in fiscal 2020, reflecting improved gross profit and managed operating expenses[213](index=213&type=chunk)[215](index=215&type=chunk) - Cash provided by operating activities was **$243.3 million** in fiscal 2021, an increase from $135.6 million in fiscal 2020, indicating strong liquidity[255](index=255&type=chunk)[301](index=301&type=chunk) - The company's principal growth drivers, **5G Wireless, Fiber, and 3D Sensing**, are expected to continue driving growth and profitability in fiscal 2022[188](index=188&type=chunk) [Our Industries and Developments](index=35&type=section&id=Our%20Industries%20and%20Developments) This section discusses the industry landscape and recent developments impacting the company [COVID-19 Pandemic Update](index=35&type=section&id=COVID-19%20Pandemic%20Update) This section provides an update on the impact of the COVID-19 pandemic on the company's operations [Recently Issued Accounting Pronouncements](index=36&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section outlines recently issued accounting pronouncements relevant to the company's financial reporting [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section details the critical accounting policies and estimates used in preparing the financial statements [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and profitability [Operating Segment Information](index=47&type=section&id=Operating%20Segment%20Information) This section provides financial information broken down by the company's operating segments [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows, financial resources, and capital management [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=52&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) VIAVI is exposed to foreign exchange risk, which it mitigates using foreign exchange forward contracts, and also faces interest rate and market price risk on its debt - VIAVI uses foreign exchange forward contracts to hedge foreign currency risk associated with foreign currency denominated monetary assets and liabilities, primarily short-term intercompany receivables and payables[269](index=269&type=chunk) - As of July 3, 2021, the notional amounts of forward contracts to purchase foreign currencies were **$114.0 million**, and to sell foreign currencies were **$27.8 million**[271](index=271&type=chunk) - The majority of investments have maturities of **90 days or less**, limiting exposure to interest rate changes, and are held in high-quality, investment-grade debt instruments to mitigate credit risk[273](index=273&type=chunk)[274](index=274&type=chunk) - The fair values of the 2023 and 2024 Senior Convertible Notes are subject to interest rate and market price risk. The 2024 Notes were reclassified to short-term debt as of July 3, 2021, due to the common stock price exceeding **130%** of the conversion price for a specified period[275](index=275&type=chunk)[276](index=276&type=chunk) - The elimination of LIBOR after June 2023 may affect financial results, potentially leading to higher interest costs if LIBOR-based borrowings convert to replacement rates like SOFR[251](index=251&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=53&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents VIAVI's audited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with the independent auditor's report and detailed notes - PricewaterhouseCoopers LLP provided an unqualified opinion on VIAVI's consolidated financial statements and the effectiveness of its internal control over financial reporting as of July 3, 2021[281](index=281&type=chunk) Consolidated Statements of Operations (in millions) | Years Ended | July 3, 2021 | June 27, 2020 | June 29, 2019 | |:---|:---|:---|:---| | Total net revenue | $ 1,198.9 | $ 1,136.3 | $ 1,130.3 | | Gross profit | $ 714.4 | $ 665.3 | $ 651.4 | | Income from operations | $ 142.2 | $ 118.1 | $ 67.4 | | Income from continuing operations before income taxes | $ 109.4 | $ 94.0 | $ 39.3 | | Net income | $ 46.1 | $ 28.7 | $ 5.4 | | Net income per share - diluted | $ 0.20 | $ 0.12 | $ 0.02 | Consolidated Balance Sheets (in millions) | As of | July 3, 2021 | June 27, 2020 | |:---|:---|:---| | Total assets | $ 1,961.4 | $ 1,776.3 | | Total current liabilities | $ 705.0 | $ 232.8 | | Long-term debt | $ 209.8 | $ 600.9 | | Total stockholders' equity | $ 774.8 | $ 711.4 | Consolidated Statements of Cash Flows (in millions) | Years Ended | July 3, 2021 | June 27, 2020 | June 29, 2019 | |:---|:---|:---|:---| | Net cash provided by operating activities | $ 243.3 | $ 135.6 | $ 138.8 | | Net cash (used in) provided by investing activities | $ (48.7) | $ (29.8) | $ 80.6 | | Net cash used in financing activities | $ (58.8) | $ (71.7) | $ (300.4) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $ 161.0 | $ 17.0 | $ (93.9) | [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](index=53&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) This section contains the independent auditor's opinion on the company's financial statements and internal control over financial reporting [VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF OPERATIONS](index=56&type=section&id=VIAVI%20SOLUTIONS%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's consolidated statements of operations for the reported fiscal periods [VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)](index=57&type=section&id=VIAVI%20SOLUTIONS%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20%28LOSS%29) This section presents the company's consolidated statements of comprehensive income (loss) [VIAVI SOLUTIONS INC. CONSOLIDATED BALANCE SHEETS](index=59&type=section&id=VIAVI%20SOLUTIONS%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's consolidated balance sheets as of the reported fiscal year-ends [VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS](index=60&type=section&id=VIAVI%20SOLUTIONS%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the company's consolidated statements of cash flows for the reported fiscal periods [VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY](index=61&type=section&id=VIAVI%20SOLUTIONS%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) This section presents the company's consolidated statements of stockholders' equity for the reported fiscal periods [Note 1. Basis of Presentation](index=62&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the basis of presentation for the consolidated financial statements [Note 2. Recently Issued Accounting Pronouncements](index=72&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Pronouncements) This note details recently issued accounting pronouncements and their impact on the company [Note 3. Earnings Per Share](index=73&type=section&id=Note%203.%20Earnings%20Per%20Share) This note provides information on the calculation of earnings per share [Note 4. Accumulated Other Comprehensive Loss](index=74&type=section&id=Note%204.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components of accumulated other comprehensive loss [Note 5. Acquisitions](index=75&type=section&id=Note%205.%20Acquisitions) This note provides information on the company's business acquisitions [Note 6. Balance Sheet and Other Details](index=78&type=section&id=Note%206.%20Balance%20Sheet%20and%20Other%20Details) This note provides additional details on various balance sheet accounts [Note 7. Investments and Forward Contracts](index=81&type=section&id=Note%207.%20Investments%20and%20Forward%20Contracts) This note describes the company's investments and foreign exchange forward contracts [Note 8. Fair Value Measurements](index=82&type=section&id=Note%208.%20Fair%20Value%20Measurements) This note provides information on fair value measurements of financial instruments [Note 9. Goodwill](index=83&type=section&id=Note%209.%20Goodwill) This note details the company's goodwill and related impairment testing [Note 10. Acquired Developed Technology and Other Intangibles](index=84&type=section&id=Note%2010.%20Acquired%20Developed%20Technology%20and%20Other%20Intangibles) This note provides information on acquired developed technology and other intangible assets [Note 11. Debt](index=85&type=section&id=Note%2011.%20Debt) This note details the company's debt obligations, including convertible notes [Note 12. Leases](index=89&type=section&id=Note%2012.%20Leases) This note provides information on the company's lease arrangements [Note 13. Restructuring and Related Charges](index=91&type=section&id=Note%2013.%20Restructuring%20and%20Related%20Charges) This note details the costs and activities associated with restructuring programs [Note 14. Income Taxes](index=91&type=section&id=Note%2014.%20Income%20Taxes) This note provides information on the company's income tax expense and related balances [Note 15. Stockholders' Equity](index=96&type=section&id=Note%2015.%20Stockholders%27%20Equity) This note details changes in the company's stockholders' equity [Note 16. Stock-Based Compensation](index=97&type=section&id=Note%2016.%20Stock-Based%20Compensation) This note provides information on the company's stock-based compensation plans [Note 17. Employee Pension and Other Benefit Plans](index=100&type=section&id=Note%2017.%20Employee%20Pension%20and%20Other%20Benefit%20Plans) This note details the company's employee pension and other post-retirement benefit plans [Note 18. Commitments and Contingencies](index=105&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) This note describes the company's commitments and contingent liabilities [Note 19. Operating Segments and Geographic Information](index=107&type=section&id=Note%2019.%20Operating%20Segments%20and%20Geographic%20Information) This note provides financial information by operating segment and geographic region [Note 20. Selected Quarterly Financial Information (unaudited)](index=112&type=section&id=Note%2020.%20Selected%20Quarterly%20Financial%20Information%20%28unaudited%29) This note presents unaudited selected quarterly financial data [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=112&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There were no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported[594](index=594&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=112&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that VIAVI's disclosure controls and procedures and internal control over financial reporting were effective as of July 3, 2021 - The CEO and CFO concluded that VIAVI's disclosure controls and procedures were effective at the reasonable assurance level as of July 3, 2021[595](index=595&type=chunk) - Management concluded that the internal control over financial reporting was effective as of July 3, 2021, based on the COSO framework[597](index=597&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended July 3, 2021[598](index=598&type=chunk) [ITEM 9B. OTHER INFORMATION](index=113&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The Board of Directors extended the stock repurchase program of up to $200 million until September 30, 2022 - The Board of Directors extended the stock repurchase program of up to **$200 million** until September 30, 2022[600](index=600&type=chunk) - As of July 3, 2021, approximately **$112.9 million** remained under the stock repurchase program[600](index=600&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=113&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the report - The item regarding disclosure about foreign jurisdictions that prevent inspections is not applicable[601](index=601&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=113&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding directors, executive officers, corporate governance, and compliance with Section 16(a) of the Exchange Act is incorporated by reference from the Company's Definitive Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement[603](index=603&type=chunk)[604](index=604&type=chunk) - VIAVI has adopted the 'VIAVI Code of Business Conduct' as its code of ethics, applicable to all employees, officers, and directors, and available on its website[606](index=606&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=115&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation, director compensation, and compensation program risk assessment is incorporated by reference from the Proxy Statement - Executive compensation information is incorporated by reference from the Proxy Statement[609](index=609&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=115&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership of certain beneficial owners and management, as well as equity compensation plans, is incorporated by reference from the Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the Proxy Statement[610](index=610&type=chunk)[611](index=611&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE](index=115&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships and related person transactions, and director independence, is incorporated by reference from the Proxy Statement - Information on certain relationships, related person transactions, and director independence is incorporated by reference from the Proxy Statement[612](index=612&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=115&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from the Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the Proxy Statement[613](index=613&type=chunk) PART IV [ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES](index=116&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENTS%20SCHEDULES) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - The section includes the Report of Independent Registered Public Accounting Firm and the Consolidated Financial Statements (Operations, Comprehensive Income (Loss), Balance Sheets, Cash Flows, Stockholders' Equity, and Notes)[615](index=615&type=chunk) - Financial statement schedules have been omitted as the required information is either not present in sufficient amounts, not applicable, or included within the Consolidated Financial Statements or Notes[618](index=618&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents, debt agreements, employment contracts, and certifications, many of which are incorporated by reference from prior SEC filings[616](index=616&type=chunk)[617](index=617&type=chunk) [ITEM 16. 10-K SUMMARY](index=118&type=section&id=ITEM%2016.%2010-K%20SUMMARY) This section indicates that there is no 10-K summary provided - No 10-K summary is provided in this report[620](index=620&type=chunk) [SIGNATURES](index=119&type=section&id=SIGNATURES) The report is duly signed on behalf of Viavi Solutions Inc. by its authorized officers and Board of Directors, confirming compliance with the Securities Exchange Act of 1934 - The report is signed by the President and Chief Executive Officer, Oleg Khaykin, and the Executive Vice President and Chief Financial Officer, Henk Derksen, on August 23, 2021[623](index=623&type=chunk)[626](index=626&type=chunk) - The signatures confirm that the report complies with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[622](index=622&type=chunk)[625](index=625&type=chunk)

| --- | --- | --- | --- | |------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | Fiscal 4Q 2021 Earnings Call Supplementary Slides | | | | | August 12, 2021 | | | | Cautionary Language Concerning Forward-Looking Statements This presentation contains forward-looking statements under Section 27A of the Securities Act of 1934. Forward-looking statements are all statements we make other than those dealing specifically with historical matters. These forwa ...

Viavi Solutions Inc. (NASDAQ:VIAV) Q4 2021 Earnings Conference Call August 12, 2021 4:30 PM ET Company Participants Bill Ong - Head, Investor Relations Oleg Khaykin - President and CEO Henk Derksen - Chief Financial Officer Conference Call Participants Samik Chatterjee - JPMorgan Alex Henderson - Needham John Marchetti - Stifel Tim Savageaux - Northland Capital Michael Genovese - WestPark Capital Meta Marshall - Morgan Stanley Dave Kang - B. Riley Fahad Najam - MKM Partners Operator Good day and thank you f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 2021 OR ☐ 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 000-22874 Viavi Solutions Inc. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation o ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Viavi Solutions Inc. for the three and six months ended January 2, 2021, and December 28, 2019, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides the consolidated statements of operations, detailing revenue, gross profit, operating income, and net income for the specified periods Consolidated Statements of Operations (in millions, except per share data) | Metric | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Product revenue | $262.1 | $281.9 | $510.0 | $546.7 | | Service revenue | $37.8 | $31.8 | $74.6 | $66.8 | | Total net revenue | $299.9 | $313.7 | $584.6 | $613.5 | | Gross profit | $180.1 | $189.5 | $349.5 | $363.9 | | Income from operations | $42.3 | $45.0 | $73.6 | $65.7 | | Net income | $21.9 | $28.0 | $36.2 | $34.8 | | Basic Net income per share | $0.10 | $0.12 | $0.16 | $0.15 | | Diluted Net income per share | $0.09 | $0.12 | $0.16 | $0.15 | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the consolidated statements of comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income (in millions) | Metric | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net income | $21.9 | $28.0 | $36.2 | $34.8 | | Net change in cumulative translation | $34.4 | $28.0 | $62.0 | $0 | | Amortization of actuarial income | $0.7 | $0.8 | $1.5 | $1 | | Net change in accumulated other | $35.1 | $28.8 | $63.5 | $2 | | Comprehensive income | $57.0 | $56.8 | $99.7 | $36 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides the consolidated balance sheets, detailing assets, liabilities, and stockholders' equity at specific dates Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | January 2, 2021 | June 27, 2020 | | :-------------------------------- | :-------------- | :------------ | | Cash and cash equivalents | $644.2 | $539.0 | | Total current assets | $1,046.4 | $913.6 | | Total assets | $1,915.2 | $1,776.3 | | Total current liabilities | $263.6 | $232.8 | | Long-term debt | $612.4 | $600.9 | | Total stockholders' equity | $801.0 | $711.4 | | Total liabilities and stockholders' equity | $1,915.2 | $1,776.3 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the consolidated statements of cash flows, categorizing cash activities into operating, investing, and financing for the reported periods Consolidated Statements of Cash Flows (in millions) | Activity | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $132.6 | $69.3 | | Net cash used in investing activities | $(18.0) | $(10.7) | | Net cash used in financing activities | $(35.6) | $(25.3) | | Net increase in cash, cash equivalents and restricted cash | $105.3 | $29.8 | | Cash, cash equivalents and restricted cash at end of period | $652.7 | $560.2 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including net income, other comprehensive income, and stock transactions for the specified period Changes in Stockholders' Equity (in millions) - Six Months Ended January 2, 2021 | Metric | Balance at June 27, 2020 | Net Income | Other Comprehensive Income | Shares Issued (net of tax) | Stock-based Compensation | Repurchase of Common Stock | Balance at January 2, 2021 | | :----------------------- | :----------------------- | :--------- | :------------------------- | :------------------------- | :----------------------- | :------------------------- | :------------------------- | | Common Stock (Amount) | $0.2 | — | — | — | — | — | $0.2 | | Additional Paid-In Capital | $70,274.3 | — | — | $(8.6) | $22.3 | — | $70,288.0 | | Accumulated Deficit | $(69,397.2) | $36.2 | — | — | — | $(23.8) | $(69,384.8) | | Accumulated Other Comprehensive Loss | $(165.9) | — | $63.5 | — | — | — | $(102.4) | | Total | $711 | $36 | $63 | $(8) | $22 | $(23) | $801 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, estimates, and specific financial line items [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note outlines the basis for the unaudited interim financial statements, confirming adherence to U.S. GAAP and SEC rules, and noting no material changes to accounting policies - The financial information for the three and six months ended January 2, 2021, and December 28, 2019, is unaudited and includes all normal and recurring adjustments deemed necessary by management for a fair statement[29](index=29&type=chunk) - The Company utilizes a **52-53 week fiscal year** ending on the Saturday closest to June 30th; fiscal 2021 is a 53-week year ending July 3, 2021, with the first quarter being 14 weeks[32](index=32&type=chunk) - The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity, which is likely to continue to impact demand and disrupt sales channels, potentially having a negative impact on sales and results of operations[35](index=35&type=chunk) [Note 2. Recently Issued Accounting Pronouncements](index=10&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Pronouncements) This note details the adoption of new accounting guidance for recognizing impairments of financial assets in Q1 fiscal 2021, which had no material impact - In the first quarter of fiscal 2021, the Company adopted new guidance for recognizing impairments of financial assets, which did not have a material impact on its consolidated financial statements[38](index=38&type=chunk) - The Company is evaluating the impact of new FASB guidance on defined benefit pension plans (effective Q1 fiscal 2022), income taxes (effective Q1 fiscal 2022), and financial instruments with liability and equity characteristics (effective Q1 fiscal 2023)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 3. Earnings Per Share](index=11&type=section&id=Note%203.%20Earnings%20Per%20Share) This note provides the computation of basic and diluted net income per share, detailing the net income and weighted-average shares outstanding used in the calculations for both three and six-month periods Earnings Per Share Computation (in millions, except per share data) | Metric | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net income | $21.9 | $28.0 | $36.2 | $34.8 | | Weighted-average shares outstanding: Basic | 228.8 | 230.0 | 228.8 | 229.7 | | Weighted-average shares outstanding: Diluted | 231.1 | 238.3 | 231.3 | 237.4 | | Net income per share: Basic | $0.10 | $0.12 | $0.16 | $0.15 | | Net income per share: Diluted | $0.09 | $0.12 | $0.16 | $0.15 | - Potentially dilutive securities, such as restricted stock units, were excluded from diluted EPS calculations if their effect would have been anti-dilutive[44](index=44&type=chunk) [Note 4. Accumulated Other Comprehensive Loss](index=11&type=section&id=Note%204.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components of the Company's accumulated other comprehensive loss, which includes unrealized gains/losses on available-for-sale investments, foreign currency translation adjustments, and changes in defined benefit obligations - Accumulated other comprehensive loss comprises unrealized gains/losses on available-for-sale investments, foreign currency translation adjustments, and changes in unrealized components of defined benefit obligations[45](index=45&type=chunk) Changes in Accumulated Other Comprehensive Loss (in millions) - Six Months Ended January 2, 2021 | Component | Beginning Balance (June 27, 2020) | Other Comprehensive Income before Reclassification | Amounts Reclassified | Net Current-Period OCI | Ending Balance (Jan 2, 2021) | | :-------------------------------- | :-------------------------------- | :--------------------------------------- | :------------------- | :--------------------- | :--------------------------- | | Unrealized losses on available-for-sale investments | $(5.1) | — | — | — | $(5.1) | | Foreign currency translation adjustments | $(129.6) | $62.0 | — | $62.0 | $(67.6) | | Change in unrealized components of defined benefit obligations | $(31.2) | — | $1.5 | $1.5 | $(29.7) | | Total | $(165) | $62 | $1 | $63 | $(102) | [Note 5. Acquisitions](index=12&type=section&id=Note%205.%20Acquisitions) This note details the Company's acquisitions, including 3Z Telecom (May 2019) to expand Field Instrument offerings, RPC Photonics (October 2018) to expand 3D Sensing offerings, and another business acquisition in fiscal 2020 - On May 31, 2019, the Company acquired 3Z Telecom, Inc. for approximately **$23.2 million in cash** and up to **$7.0 million in contingent consideration**, expanding its Field Instrument offerings[49](index=49&type=chunk) - On October 30, 2018, the Company acquired RPC Photonics, Inc. for approximately **$33.4 million in cash** and up to **$53.0 million in earn-out**, expanding its 3D Sensing offerings[50](index=50&type=chunk) - During fiscal 2020, another business acquisition was completed for **$5.2 million in cash** and up to **$5.5 million in contingent consideration**, resulting in **$6.2 million of developed technology** and customer relationships and **$1.4 million of deferred tax liability**[51](index=51&type=chunk) [Note 6. Balance Sheet and Other Details](index=13&type=section&id=Note%206.%20Balance%20Sheet%20and%20Other%20Details) This note provides detailed information on various balance sheet accounts, including contract balances, accounts receivable allowance, inventories, and other current and non-current liabilities - Total unbilled receivables increased from **$3.8 million** at June 27, 2020, to **$5.5 million** at January 2, 2021[57](index=57&type=chunk) Deferred Revenue Activity (in millions) | Metric | Three Months Ended Jan 2, 2021 | Six Months Ended Jan 2, 2021 | | :-------------------------------- | :----------------------------- | :--------------------------- | | Balance at beginning of period | $80.1 | $74 | | Revenue deferrals for new contracts | $31.8 | $61 | | Revenue recognized during the period | $(29.9) | $(54) | | Balance at end of period | $82.0 | $82 | Inventories, net (in millions) | Component | January 2, 2021 | June 27, 2020 | | :---------------- | :-------------- | :------------ | | Finished goods | $37.2 | $30 | | Work in process | $13.6 | $22 | | Raw materials | $37.4 | $30 | | Inventories, net | $88.2 | $83 | Other Current Liabilities (in millions) | Component | January 2, 2021 | June 27, 2020 | | :------------------------ | :-------------- | :------------ | | Income tax payable | $20.8 | $10 | | Operating lease liabilities | $12.1 | $11 | | Other current liabilities | $56.4 | $48 | Other Non-Current Liabilities (in millions) | Component | January 2, 2021 | June 27, 2020 | | :-------------------------------- | :-------------- | :------------ | | Pension and post-employment benefits | $110.9 | $102.7 | | Fair value of contingent consideration | $6.9 | $9.4 | | Other non-current liabilities | $238.2 | $231.2 | [Note 7. Investments and Forward Contracts](index=15&type=section&id=Note%207.%20Investments%20and%20Forward%20Contracts) This note details the Company's available-for-sale debt securities and non-designated foreign currency forward contracts, including fair value measurements and recognized gains Available-for-Sale Debt Securities (in millions) - January 2, 2021 | Metric | Amortized Cost/Carrying Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | | :-------------------------- | :--------------------------- | :--------------------- | :---------------------- | :------------------- | | Asset-backed securities | $0.9 | — | $(0.4) | $0 | | Total debt securities | $0.9 | — | $(0.4) | $0 | - The Company uses foreign exchange forward contracts to manage foreign currency risk, recording gains of **$6.9 million** and **$13.3 million** for the three and six months ended January 2, 2021, respectively[76](index=76&type=chunk)[79](index=79&type=chunk) - As of January 2, 2021, the notional amounts of forward contracts to purchase foreign currencies were **$142.4 million**, and to sell foreign currencies were **$19.0 million**[78](index=78&type=chunk) [Note 8. Fair Value Measurements](index=17&type=section&id=Note%208.%20Fair%20Value%20Measurements) This note defines the fair value hierarchy and presents the Company's assets and liabilities measured at fair value, highlighting Level 3 contingent consideration liabilities - Fair value measurements are categorized into Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs). The Company did not hold any Level 3 investment securities as of January 2, 2021, and June 27, 2020[83](index=83&type=chunk) Fair Value Measurements (in millions) - January 2, 2021 | Category | Total | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :---- | :------ | :------ | :------ | | **Assets:** | | | | | | Debt available-for-sale securities | $0.5 | — | $0.5 | — | | Money market funds | $387.2| $387.2 | — | — | | Trading securities | $1.6 | $1.6 | — | — | | Foreign currency forward contracts | $8.4 | — | $8.4 | — | | **Liabilities:** | | | | | | Foreign currency forward contracts | $1.5 | — | $1.5 | — | | Contingent consideration | $8.9 | — | — | $8.9 | Reconciliation of Level 3 Contingent Consideration Liabilities (in millions) | Metric | Three Months Ended Jan 2, 2021 | Six Months Ended Jan 2, 2021 | | :-------------------------------- | :----------------------------- | :--------------------------- | | Beginning period balance | $9.9 | $9.9 | | Fair value adjustment | $(1.5) | $(1.5) | | Currency translation adjustment | $0.5 | $0.5 | | Balance at end of period | $8.9 | $8.9 | [Note 9. Goodwill](index=19&type=section&id=Note%209.%20Goodwill) This note presents changes in goodwill by reportable segment, primarily due to currency translation adjustments, and confirms annual impairment testing with no impairment indicated Goodwill by Reportable Segment (in millions) | Segment | Balance as of June 27, 2020 | Currency Translation Adjustments | Balance as of January 2, 2021 | | :-------------------------------- | :-------------------------- | :----------------------------- | :-------------------------- | | Network Enablement | $334.9 | $13.6 | $348.5 | | Service Enablement | $4.3 | $0.4 | $4.7 | | Optical Security and Performance Products | $42.2 | — | $42.2 | | Total | $381 | $14 | $395 | - The Company tests goodwill for impairment annually and concluded in fiscal 2020 that no impairment existed. No events triggered an impairment review during the three and six months ended January 2, 2021[88](index=88&type=chunk)[89](index=89&type=chunk) [Note 10. Acquired Developed Technology and Other Intangibles](index=19&type=section&id=Note%2010.%20Acquired%20Developed%20Technology%20and%20Other%20Intangibles) This note details the Company's acquired developed technology, customer relationships, and other intangible assets, including their gross carrying amounts, accumulated amortization, and estimated future amortization Acquired Developed Technology and Other Intangibles (in millions) - January 2, 2021 | Intangible Asset | Gross Carrying Amount | Accumulated Amortization | Net | | :-------------------------------- | :-------------------- | :----------------------- | :---- | | Acquired developed technology | $447.8 | $(364.9) | $82 | | Customer relationships | $200.4 | $(172.1) | $28 | | Other intangibles | $37.6 | $(28.0) | $9 | | Total intangibles | $685.8 | $(565.0) | $120 | Amortization of Intangible Assets (in millions) | Category | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Cost of revenues | $8.4 | $8.4 | $16.6 | $16.8 | | Operating expenses | $8.1 | $8.8 | $16.6 | $17.5 | | Total amortization | $16.5 | $17.2 | $33.2 | $34.3 | Estimated Future Amortization (in millions) | Fiscal Years | Amount | | :------------- | :----- | | Remainder of 2021 | $32.9 | | 2022 | $39.5 | | 2023 | $25.4 | | 2024 | $10.3 | | 2025 | $5.7 | | Thereafter | $7.0 | | Total | $120.8 | [Note 11. Debt](index=20&type=section&id=Note%2011.%20Debt) This note details the Company's long-term debt, primarily convertible notes, and describes its revolving credit facility and interest expense components Carrying Amounts of Debt Components (in millions) | Debt Component | January 2, 2021 | June 27, 2020 | | :-------------------------------- | :-------------- | :------------ | | Principal amount of 1.00% Senior Convertible Notes | $460.0 | $460.0 | | Principal amount of 1.75% Senior Convertible Notes | $225.0 | $225.0 | | Unamortized discount of liability component | $(68.2) | $(79.1) | | Unamortized debt issuance cost | $(4.4) | $(5.0) | | Carrying amount of liability component | $612.4 | $600.9 | | Carrying amount of equity component | $136.8 | $136.8 | - The Company has a **$300 million** senior secured revolving credit facility maturing on March 1, 2023, with no outstanding amounts as of January 2, 2021, and June 27, 2020[96](index=96&type=chunk)[97](index=97&type=chunk) Interest Expense (in millions) | Component | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Contractual interest | $2.4 | $2.2 | $4.7 | $4.3 | | Amortization of debt issuance cost | $0.5 | $0.4 | $1.0 | $0.7 | | Accretion of debt discount | $5.5 | $5.2 | $10.8 | $10.3 | [Note 12. Leases](index=22&type=section&id=Note%2012.%20Leases) This note details the Company's operating leases, primarily for real estate facilities, explaining the recognition of ROU assets and lease liabilities, and providing future payment schedules - The Company's operating lease costs were **$3.4 million** and **$6.8 million** for the three and six months ended January 2, 2021, respectively[108](index=108&type=chunk) - As of January 2, 2021, the weighted-average remaining lease term was **5.0 years**, and the weighted-average discount rate was **4.7%**[109](index=109&type=chunk) Operating Lease Balance Sheet Information (in millions) - January 2, 2021 | Metric | Amount | | :------------------------ | :----- | | Total operating ROU assets | $39 | | Other current liabilities | $12 | | Other non-current liabilities | $25 | | Total operating lease liabilities | $37 | Future Minimum Operating Lease Payments (in millions) - January 2, 2021 | Fiscal Years | Operating Leases | | :------------- | :--------------- | | Remainder of 2021 | $6 | | 2022 | $11 | | 2023 | $7 | | 2024 | $5 | | 2025 | $4 | | Thereafter | $7 | | Total lease payments | $42 | | Less: Interest | $(4) | | Present value of lease liabilities | $37 | [Note 13. Restructuring and Related Charges](index=23&type=section&id=Note%2013.%20Restructuring%20and%20Related%20Charges) This note outlines the Company's restructuring activities for cost reduction and operational streamlining, detailing accruals and charges for the reported periods - The Company's total restructuring accrual was **$3.6 million** as of January 2, 2021, down from **$6.5 million** at June 27, 2020[116](index=116&type=chunk) - Restructuring and related charges (benefits) were **$0.2 million** for the three months ended January 2, 2021, and **$(0.4) million** for the six months ended January 2, 2021[116](index=116&type=chunk) Adjustments to Accrued Restructuring Expenses (in millions) - Six Months Ended January 2, 2021 | Plan Type | Balance June 27, 2020 | Benefits | Cash Settlements | Non-cash Settlements and Other Adjustments | Balance January 2, 2021 | | :---------------- | :-------------------- | :------- | :--------------- | :----------------------------------------- | :---------------------- | | Fiscal 2019 Plan | $6.5 | $(0.4) | $(2.5) | — | $3 | [Note 14. Income Taxes](index=24&type=section&id=Note%2014.%20Income%20Taxes) This note reports income tax expense, primarily from foreign and state jurisdictions, and discusses differences from the federal statutory rate due to valuation allowances and unrecognized tax benefits - Income tax expense was **$12.5 million** and **$21.1 million** for the three and six months ended January 2, 2021, respectively[120](index=120&type=chunk) - The Company's unrecognized tax benefits totaled **$48.4 million** as of January 2, 2021, with **$3.9 million** accrued for interest and penalties[123](index=123&type=chunk) [Note 15. Stockholders' Equity](index=25&type=section&id=Note%2015.%20Stockholders'%20Equity) This note details the Company's stock repurchase program, including authorized amounts, shares repurchased, and remaining authorization as of January 2, 2021 - The Board of Directors authorized a stock repurchase program of up to **$200 million** through September 30, 2021[125](index=125&type=chunk) - During the three and six months ended January 2, 2021, the Company repurchased **1.3 million** and **1.9 million shares** for **$17.1 million** and **$23.8 million**, respectively[126](index=126&type=chunk) - As of January 2, 2021, the Company had **$131.8 million** remaining authorization for future share repurchases[126](index=126&type=chunk) [Note 16. Stock-Based Compensation](index=25&type=section&id=Note%2016.%20Stock-Based%20Compensation) This note provides an overview of the Company's stock-based compensation expense by function and details the granting of full value awards, including time-based and performance-based restricted stock units Stock-Based Compensation Expense by Function (in millions) | Function | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Cost of revenues | $1.2 | $1.0 | $2.4 | $2.0 | | Research and development | $2.3 | $2.0 | $4.5 | $3.7 | | Selling, general and administrative | $6.4 | $8.3 | $15.5 | $15.9 | | Total stock-based compensation expense | $9.9 | $11.3 | $22.4 | $21.6 | - During the six months ended January 2, 2021, the Company granted **2.7 million time-based Full Value Awards** and **0.6 million performance-based awards**, with an additional **0.1 million shares** granted due to performance over target[129](index=129&type=chunk)[130](index=130&type=chunk) - As of January 2, 2021, **$63.9 million** of unrecognized stock-based compensation cost related to Full Value Awards remains to be amortized[132](index=132&type=chunk) [Note 17. Employee Pension and Other Benefit Plans](index=26&type=section&id=Note%2017.%20Employee%20Pension%20and%20Other%20Benefit%20Plans) This note describes the Company's qualified and non-qualified pension plans and post-retirement benefit obligations, detailing funding status, contributions, and net periodic cost components - The Company sponsors significant pension plans in the U.K. and Germany; the U.K. plan is partially funded, while other plans are unfunded[133](index=133&type=chunk)[135](index=135&type=chunk) - During the six months ended January 2, 2021, the Company contributed **$1.3 million** to the U.K. plan and **$1.8 million** to other plans[135](index=135&type=chunk) Components of Net Periodic Cost for Pension and Benefit Plans (in millions) | Component | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Service cost | $0.1 | $0.1 | $0.2 | $0.2 | | Interest cost | $0.3 | $0.5 | $0.6 | $0.9 | | Expected return on plan assets | $(0.4) | $(0.4) | $(0.8) | $(0.8) | | Amortization of net actuarial losses | $0.7 | $0.8 | $1.5 | $1.5 | | Net periodic benefit cost | $0.7 | $1.0 | $1.5 | $1.8 | [Note 18. Commitments and Contingencies](index=26&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) This note details the Company's legal proceedings, including a U.K. pension dispute, and covers guarantees, letters of credit, performance bonds, and product warranties - As of January 2, 2021, the accrued pension liability related to a U.K. legal proceeding was **£6.5 million** or **$8.8 million**[140](index=140&type=chunk) - The Company had standby letters of credit of **$7.6 million** and performance bonds of **$0.9 million** collateralized by restricted cash as of January 2, 2021[145](index=145&type=chunk) Changes in Warranty Reserve (in millions) | Metric | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Balance as of beginning of period | $9.6 | $8.8 | $9.4 | $8 | | Provision for warranty | $1.6 | $0.9 | $2.0 | $1 | | Utilization of reserve | $(1.2) | $(0.8) | $(1.4) | $(1) | | Adjustments to pre-existing warranties | $(0.4) | $0.3 | $(0.4) | $1 | | Balance as of end of period | $9.6 | $9.2 | $9.6 | $9 | [Note 19. Operating Segments and Geographic Information](index=28&type=section&id=Note%2019.%20Operating%20Segments%20and%20Geographic%20Information) This note describes the Company's three reportable segments and provides detailed financial information for each, including net revenue, gross profit, operating income, and disaggregated revenue by geographic region - The Company operates in three reportable segments: Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP)[150](index=150&type=chunk)[151](index=151&type=chunk) Segment Net Revenue (in millions) | Segment | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Network Enablement | $180.9 | $203.0 | $343.0 | $401.9 | | Service Enablement | $25.8 | $31.2 | $47.2 | $52.1 | | Optical Security and Performance Products | $93.2 | $79.5 | $194.4 | $159.5 | | Total net revenue | $299.9 | $313.7 | $584.6 | $613.5 | Segment Operating Income (in millions) | Segment | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Network and Service Enablement | $22.2 | $37.5 | $35.5 | $59.8 | | Optical Security and Performance Products | $44.6 | $30.4 | $91.9 | $60.8 | Net Revenue by Geographic Region (in millions) | Region | Three Months Ended Jan 2, 2021 | Three Months Ended Dec 28, 2019 | Six Months Ended Jan 2, 2021 | Six Months Ended Dec 28, 2019 | | :---------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Americas | $108.4 | $116.8 | $203.8 | $222.5 | | Asia-Pacific | $96.4 | $113.0 | $204.6 | $220.2 | | EMEA | $95.1 | $83.9 | $176.2 | $170.8 | | Total net revenue | $299.9 | $313.7 | $584.6 | $613.5 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including an overview of its business segments, the impact of the COVID-19 pandemic, and a detailed analysis of revenue, expenses, and profitability for the reported periods [Forward-Looking Statements](index=33&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements based on current expectations and assumptions, subject to risks and uncertainties that could cause actual results to differ materially[167](index=167&type=chunk) - Forward-looking statements cover expectations regarding COVID-19 impact, product demand, growth plans, financial projections, intellectual property, strategic opportunities, supply chain, R&D, and product-related expectations[168](index=168&type=chunk) [Our Industries and Quarterly Developments](index=34&type=section&id=Our%20Industries%20and%20Quarterly%20Developments) This section describes Viavi Solutions Inc. as a global provider of network test, monitoring, and assurance solutions, and a leader in light management solutions, operating through three key business segments - Viavi Solutions Inc. is a global provider of network test, monitoring, and assurance solutions, and a leader in light management solutions for 3D Sensing, anti-counterfeiting, and other markets[170](index=170&type=chunk) - The Company operates through three business segments: Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP)[175](index=175&type=chunk) - NE provides integrated testing solutions for network build-out and maintenance, including instruments, software, and services for wireless and fixed communications networks[171](index=171&type=chunk)[172](index=172&type=chunk) - SE offers embedded systems and enterprise performance management solutions for CSPs, enterprises, and cloud operators, providing visibility into network, service, and application data[176](index=176&type=chunk) - OSP leverages optical coating technologies for anti-counterfeiting (OVP®, OVMP®), consumer/industrial (3D Sensing optical filters), government, automotive, and defense applications[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) [COVID-19 Pandemic Update](index=35&type=section&id=COVID-19%20Pandemic%20Update) This section discusses the global economic slowdown caused by the COVID-19 pandemic, its impact on demand and sales channels, and the Company's measures for employee safety and supply chain resilience - The COVID-19 pandemic has led to global economic slowdown, travel bans, quarantines, and temporary business closures, impacting demand and disrupting sales channels[184](index=184&type=chunk) - The Company's priority is employee health and safety, implementing measures like limited gathering sizes, masks, and screenings, while also experiencing disruptions to facilities, suppliers, and customer demand, particularly for Field Instruments in the NE segment[185](index=185&type=chunk)[187](index=187&type=chunk) - Despite challenges, the Company maintains a robust and adaptable supply chain with risk mitigation plans, and its liquidity position has not been substantially impacted, though a prolonged recession could pose future liquidity challenges[186](index=186&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Recently Issued Accounting Pronouncements](index=36&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 2 for details regarding the effect of recent accounting pronouncements on the consolidated financial statements - Refer to Note 2 for details regarding the effect of certain recent accounting pronouncements on the consolidated financial statements[191](index=191&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that the consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management judgments and estimates, with no material changes to critical accounting policies since the last annual report - The consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management to make judgments, estimates, and assumptions that affect reported amounts[192](index=192&type=chunk) - There have been no material changes to the Company's critical accounting policies and estimates since the Fiscal 2020 Annual Report on Form 10-K[194](index=194&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance, including trends in revenue, gross profit, operating expenses, and net income for the reported periods Selected Consolidated Statements of Operations Items (in millions, except percentages) | Metric | Three Months Ended Jan 2, 2021 | Change (%) | Six Months Ended Jan 2, 2021 | Change (%) | | :-------------------------------- | :----------------------------- | :--------- | :--------------------------- | :--------- | | Total net revenue | $299.9 | (4.4)% | $584.6 | (4.7)% | | Gross profit | $180.1 | (5.0)% | $349.5 | (4.0)% | | Gross margin | 60.1% | (0.3) pp | 59.8% | 0.5 pp | | Research and development | $50.0 | (0.6)% | $98.8 | (2.9)% | | Selling, general and administrative | $79.5 | (7.9)% | $160.9 | (10.4)% | | Net income | $21.9 | (21.8)% | $36.2 | 4.0% | - Net revenue decreased by **4.4%** for the three months and **4.7%** for the six months ended January 2, 2021, primarily due to declines in NE and SE segments, partially offset by OSP growth[199](index=199&type=chunk)[204](index=204&type=chunk) - OSP net revenue increased by **17.2%** for the three months and **21.9%** for the six months ended January 2, 2021, driven by growth in Anti-Counterfeiting and 3D Sensing products[203](index=203&type=chunk)[207](index=207&type=chunk) - Gross margin decreased by **0.3 percentage points** for the three months but increased by **0.5 percentage points** for the six months ended January 2, 2021, influenced by revenue volume, product mix, and factory utilization across segments[213](index=213&type=chunk)[214](index=214&type=chunk) - R&D expense decreased by **0.6%** for the three months and **2.9%** for the six months, driven by variable expense reductions and cost efficiencies[216](index=216&type=chunk)[217](index=217&type=chunk) - SG&A expense decreased by **7.9%** for the three months and **10.4%** for the six months, primarily due to lower sales commissions and travel/entertainment expenses[219](index=219&type=chunk)[220](index=220&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the Company's liquidity position, including cash balances, operating, investing, and financing cash flows, and its ability to meet future capital spending needs - As of January 2, 2021, cash and cash equivalents, short-term investments, and short-term restricted cash totaled **$648.8 million**, an increase from **$544.0 million** at June 27, 2020[243](index=243&type=chunk) - Cash provided by operating activities was **$132.6 million** for the six months ended January 2, 2021, significantly higher than **$69.3 million** in the prior year period[249](index=249&type=chunk)[253](index=253&type=chunk) - Cash used in investing activities was **$18.0 million**, primarily for capital expenditures and acquisitions, while cash used in financing activities was **$35.6 million**, mainly for stock repurchases and withholding tax payments[250](index=250&type=chunk)[251](index=251&type=chunk) - The Company believes existing cash balances and investments will be sufficient for liquidity and capital spending over the next twelve months, despite potential impacts from global economic conditions and the COVID-19 pandemic[256](index=256&type=chunk) [Contractual Obligations](index=45&type=section&id=Contractual%20Obligations) This section states that there were no material changes to the Company's existing contractual commitments during the second quarter of fiscal 2021 - There were no material changes to the Company's existing contractual commitments during the second quarter of fiscal 2021[258](index=258&type=chunk) [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) This section states that the Company does not have any material off-balance sheet arrangements, other than the guarantees discussed in Note 18 - The Company does not have any material off-balance sheet arrangements, other than the guarantees discussed in Note 18[259](index=259&type=chunk) [Employee Equity Incentive Plan](index=45&type=section&id=Employee%20Equity%20Incentive%20Plan) This section describes the Company's stock-based benefit plans as a broad-based, long-term retention program designed to attract and retain employees and align stockholder and employee interests - The Company's stock-based benefit plans are a broad-based, long-term retention program designed to attract and retain employees and align stockholder and employee interests. Refer to Note 16 for more details[260](index=260&type=chunk) [Pension and Other Post-Retirement Benefits](index=45&type=section&id=Pension%20and%20Other%20Post-Retirement%20Benefits) This section reports the underfunded status of the Company's pension plans and the liability for non-pension post-retirement benefits, along with the sensitivity of the projected benefit obligation to discount rate changes - As of January 2, 2021, the Company's pension plans were underfunded by **$117.6 million**, and there was a **$0.4 million** liability for non-pension post-retirement benefits[261](index=261&type=chunk) - A **50-basis point decrease or increase** in the discount rate would cause an approximate **$9.2 million increase or decrease**, respectively, in the projected benefit obligation (PBO)[262](index=262&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risks](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risks) This section states that the Company's market risk, specifically foreign exchange and interest rate risks, has not materially changed from what was disclosed in its Annual Report on Form 10-K for the fiscal year ended June 27, 2020 - The Company's market risk, including foreign exchange and interest rate risks, has not materially changed from the disclosures in its Annual Report on Form 10-K for fiscal year ended June 27, 2020[264](index=264&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of January 2, 2021, and states no material changes in internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of January 2, 2021[265](index=265&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[266](index=266&type=chunk) - Management acknowledges that control systems provide only reasonable, not absolute, assurance and cannot prevent all errors and fraud[267](index=267&type=chunk) [PART II - OTHER INFORMATION](index=47&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is subject to various legal claims in the ordinary course of business, with management believing they will not have a material adverse impact, though outcomes are uncertain - The Company is subject to various legal claims and suits in the ordinary course of business, which management believes will not have a material adverse impact, though outcomes are uncertain[269](index=269&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks facing the Company, including the uncertain and adverse impacts of the COVID-19 pandemic, challenges to future profitability, rapid technological change, and international operational risks - The COVID-19 pandemic has significantly impacted operations, supply chains, and customer demand, with ongoing uncertainty regarding its future effects on financial results[270](index=270&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - The Company faces risks to future profitability due to uncertain telecom spending, adverse product mix changes, pricing pressures, component availability, and increasing commoditization[279](index=279&type=chunk) - Rapid technological change, challenges in 5G transition, and the shift towards virtualized networks and software solutions pose significant risks to product demand and competitive landscape[283](index=283&type=chunk)[289](index=289&type=chunk)[291](index=291&type=chunk) - International operations expose the Company to risks from foreign exchange fluctuations, diverse regulatory environments, geopolitical instability (e.g., US-China trade actions, Brexit), and difficulties in enforcing intellectual property rights[301](index=301&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[306](index=306&type=chunk) - The issuance of convertible notes increases leverage and could dilute existing stockholders, while changes in LIBOR may adversely affect interest rates on future indebtedness[319](index=319&type=chunk)[320](index=320&type=chunk) - Dependence on a limited number of customers, including a strategic alliance with SICPA for anti-counterfeiting pigments, creates risks from order reductions or failure to meet contractual obligations[325](index=325&type=chunk)[326](index=326&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities to report for the period [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there were no mine safety disclosures to report for the period [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section states that there was no other information to report for the period [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists the documents filed as exhibits to the report, including consulting agreements, certifications from the CEO and CFO, and Inline XBRL Taxonomy Extension documents [SIGNATURES](index=63&type=section&id=SIGNATURES) This section confirms the report was duly signed on February 9, 2021, by Pam Avent, Interim Chief Financial and Accounting Officer - The report was duly signed on February 9, 2021, by Pam Avent, Interim Chief Financial and Accounting Officer[355](index=355&type=chunk)