Lumentum Holdings LITE · USD

Note 17. Operating Segments and Geographic InformationOur Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). We have two operating segments, Cloud & Networking and Industrial Tech, which also represent our two reportable segments. The CODM allocates resources to the segments based on their business prospects, competitive factors, segment net revenue and segment profit. Segment profit includes operating expenses directly managed by operating segments, including research and development, and direct sales and marketing expenses. The CODM regularly reviews operating results to make decisions about resources to be allocated to the segments and to assess their performance.Cloud & Networking Our Cloud & Networking products comprise a comprehensive portfolio of optical and photonic chips, components, modules, and subsystems supplied to cloud data center operators, AI/ML infrastructure providers, and network equipment manufacturer customers who are building cloud data center and network infrastructures. Our products enable high-capacity optical links for cloud computing, AI/ML workloads, and data center interconnect (“DCI”) applications, as well as for communications service provider networks. Our offerings support access (local), metro (intracity), long-haul (intercity and global), and submarine (undersea) network infrastructure. Additionally, our Cloud & Networking products serve enterprise network infrastructure needs, including storage area networks (“SANs”), local area networks (“LANs”), and wide area networks (“WANs”). Demand for our products is fueled by the ongoing expansion of network capacity required to support cloud and services, AI/ML processing, streaming video, video conferencing, wireless and mobile connectivity, and the internet of things (“IoT”).Industrial TechOur Industrial Tech products include short-pulse solid-state lasers, kilowatt-class fiber lasers, diode lasers, and gas lasers, serving a wide range of end-markets applications. In the consumer market, our laser light sources are integrated into customers’ 3D sensing cameras, primarily used in mobile devices. In the industrial manufacturing market, our lasers are embedded in machine tools used for precision material processing across diverse industries, including semiconductor and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing.

Note 18. Revenue RecognitionDisaggregation of RevenueWe disaggregate revenue by segment and by geography. We do not present other levels of disaggregation, such as by type of products, customer, markets, contracts, duration of contracts, timing of transfer of control and sales channels, as this information is not used by our CODM to manage the business. The table below discloses our total net revenue attributable to each of our two reportable segments (in millions, except percentage data): Years Ended June 28, 2025June 29, 2024July 1, 2023Amount% to TotalAmount% to TotalAmount% to TotalCloud & Networking$1,410.8 85.8 %$1,084.9 79.8 %$1,322.5 74.8 %Industrial Tech234.2 14.2 %274.3 20.2 %444.5 25.2 %Net revenue$1,645.0 100.0 %$1,359.2 100.0 %$1,767.0 100.0 %Contract BalancesThe following table reflects the changes in contract balances for the periods presented (in millions, except percentages):Contract balancesBalance sheet locationJune 28, 2025June 29, 2024ChangePercentage ChangeAccounts receivable, net Accounts receivable, net $250.0 $194.7 $55.3 28.4%Deferred revenue and customer depositsOther current liabilities$0.7 $0.6 $0.1 16.

Note 16. Commitments and Contingencies Purchase ObligationsPurchase obligations of $837.6 million as of June 28, 2025 represent legally-binding commitments to purchase inventory and other commitments made in the normal course of business to meet operational requirements. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the option to cancel, reschedule and adjust the requirements based on our business needs prior to the delivery of goods or performance of services. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year.We depend on a limited number of contract manufacturers, subcontractors and suppliers for raw materials, packages and standard components. We generally purchase these single or limited source products through standard purchase orders or one-year supply agreements and have no significant long-term guaranteed supply agreements with these vendors. While we seek to maintain a sufficient safety stock of such products and maintain on-going communications with our suppliers to guard against interruptions or cessation of supply, our business and results of operations could be adversely affected by a stoppage or delay of supply, substitution of more expensive or less reliable products, receipt of defective parts or contaminated materials, increases in the price of such supplies, or our inability to obtain reduced pricing from our suppliers in response to competitive pressures.Product WarrantiesWe provide reserves for the estimated costs of product warranties at the time revenue is recognized. We typically offer a twelve-month warranty for most of our products. However, in some instances depending on the product, product components or application of our products by the end customer, our warranties can vary and generally range from six months to five years. We estimate the costs of our warranty obligations on an annualized basis based on our 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. We assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary.

Note 10. Debt Our debt consists of the following:June 28, 2025June 29, 2024Short-termLong-termTotalShort-termLong-termTotalConvertible notes$— $2,506.2 $2,506.2 $— $2,503.2 $2,503.2 Term loans10.6 56.4 67.0 — — — Total$10.6 $2,562.6 $2,573.2 $— $2,503.2 $2,503.2 Convertible Notes2029 NotesOn June 16, 2023, we issued $603.7 million in aggregate principal amount of 2029 Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2029 Notes are governed by an indenture between the Company and U.S. Bank Trust Company National Association, (as successor in interest to U.S. Bank National Association), as a trustee (the “2029 Indenture”). The 2029 Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by us.The net proceeds from the sale of the 2029 Notes was $599.4 million, after deducting $4.3 million of net issuance costs. In addition, we incurred $0.8 million of professional fees directly related to this transaction. Concurrent with the issuance of the 2029 Notes, we used $132.8 million of the net proceeds to repurchase $125.0 million aggregate principal amount of the 2024 Notes and $125.0 million of the net proceeds to repurchase our common stock in privately negotiated transactions. We intend to use the remaining net proceeds for general corporate purposes, which may include the repayment of our indebtedness, including any of our existing convertible notes, capital expenditures, working capital and potential acquisitions.The 2029 Notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The 2029 Notes will mature on December 15, 2029, unless earlier redeemed, repurchased by us, or converted pursuant to their terms.The initial conversion rate is 14.3808 shares of common stock per $1,000 principal amount of the 2029 Notes (which is equivalent to an initial conversion price of approximately $69.54 per share). The conversion rate is subject to adjustment upon the occurrence of certain events specified in the 2029 Indenture, but will not be adjusted for accrued and unpaid interest.

Note 13. Income TaxesOur loss before income taxes consisted of the following (in millions):Years EndedJune 28, 2025June 29, 2024July 1, 2023Domestic$(174.4)$(219.6)$(44.3)Foreign2.3 (186.1)(58.1)Loss before income taxes$(172.1)$(405.7)$(102.4)Our income tax (benefit) provision consisted of the following (in millions):Years EndedJune 28, 2025June 29, 2024July 1, 2023Federal: Current$(8.4)$(10.6)$12.9 Deferred— 124.0 (22.5)(8.4)113.4 (9.6)State: Current1.8 1.3 0.9 Deferred— (8.0)(0.5)1.8 (6.7)0.4 Foreign: Current55.5 52.1 55.3 Deferred(246.9)(18.0)(16.9)(191.4)34.1 38.4 Total income tax (benefit) provision$(198.0)$140.8 $29.2 The provision for income taxes differs from the amount computed by applying the U.S. Federal statutory income tax rate to our income before provision for income taxes as follows (in millions):Years EndedJune 28, 2025June 29, 2024July 1, 2023Income tax provision computed at federal statutory rate$(36.1)$(85.2)$(21.5)Foreign rate differential(49.9)58.9 33.6 Change in valuation allowance(161.5)150.1 (4.8)Tax credits(2.2)(1.8)(46.5)Stock-based compensation22.3 17.8 19.1 Permanent items0.3 (3.2)2.9 Transaction costs— 1.3 2.4 Subpart F and GILTI22.4 0.2 44.2 Unrecognized tax benefits8.5 11.7 8.6 Change in Tax Rates0.5 (9.9)— BEAT— — (8.0)Audit settlement(4.4)— — State taxes1.9 — — Other0.2 0.9 (0.8)Total income tax (benefit) provision$(198.0)$140.8 $29.2 Effective tax rate115.04 %(34.71)%(28.52)%Our provision for income taxes for fiscal year 2025 differs from the 21% U.S. statutory rate primarily due to the income tax benefit associated with the release of a valuation allowance on our UK deferred tax assets, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate, partially offset by the income tax expense from U.S. income inclusions from Subpart F and GILTI, non-deductible stock-based compensation and changes in unrecognized tax benefits.Our provision for income taxes for fiscal year 2024 differs from the 21% U.S. statutory rate primarily due to the income tax expense associated with the recognition of a valuation allowance on our U.S. federal and state deferred tax assets, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate and non-deductible stock-based compensation.

Note 8. Leases We lease certain real and personal property from unrelated third parties under non-cancellable operating leases that expire at various dates through fiscal year 2033. These operating leases are primarily for administrative offices, research and development and manufacturing facilities, as well as sales offices in various countries around the world. Certain leases require us to pay property taxes, insurance and routine maintenance, and include escalation clauses. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.As of June 28, 2025, we sublease a portion of our offices in the United States, Canada, the United Kingdom and China. These subleases will expire at various dates through fiscal year 2029. We anticipate receiving approximately $0.9 million in sublease income over the next fiscal year. The components of lease costs, lease term, and discount rate are as follows (in millions, except for weighted average data):June 28, 2025June 29, 2024July 1, 2023Operating lease cost$13.3 $16.8 $14.4 Short-term and variable lease cost3.5 4.6 2.7 Sublease income(0.8)(2.0)(2.6)Total lease cost$16.0 $19.4 $14.5 Weighted average remaining lease term (in years):Operating leases3.35.25.8Weighted average discount rate (in percentages):Operating leases 3.8 %3.5 %3.1 %As of June 28, 2025, maturities of our operating lease liabilities, which do not include short-term leases and variable lease payments, were as follows (in millions):Fiscal YearsOperating Leases (1)2026$12.7 202711.7 20287.5 20294.4 20301.0 Thereafter0.3 Total minimum lease payments37.6 Less: amount representing interest(2.6)Present value of total lease liabilities$35.0 (1) Non-cancellable sublease proceeds for fiscal year 2025 of $0.9 million are not included in the table above.

Note 4. Business Combination Cloud Light AcquisitionOn October 29, 2023, we entered into a definitive merger agreement (the “Merger Agreement”) with Cloud Light. On November 7, 2023, we completed the acquisition of Cloud Light (the “Cloud Light Closing Date”). Cloud Light designs, markets, and manufactures advanced optical modules for data center applications. This acquisition enabled us to be well-positioned to serve the growing needs of Cloud & Networking customers, particularly those customers focused on optimizing their data center infrastructure for the demands of AI/ML. We have applied the acquisition method of accounting in accordance with ASC 805 Business Combinations, with respect to the fair value of purchase price consideration and the identifiable assets and liabilities of Cloud Light, which have been measured at estimated fair value as of the Cloud Light Closing date. The following table summarizes the purchase price consideration (in millions):Fair ValueCash consideration (1)$705.0 Share-based consideration (2)23.5 Total purchase price consideration$728.5 (1) Under the terms of the Merger Agreement, Cloud Light stockholders received $1.69 per share after adjusting for applicable withholding taxes, escrow fund and expense fund contributions, for each of the 409.4 million of shares outstanding at the Cloud Light Closing date. As a result, we transferred $691.7 million of cash consideration on the Cloud Light Closing date. Additionally, each of Cloud Light’s outstanding options was exchanged for a combination of up-front cash consideration and newly issued options (the “replacement options”). As a result, we transferred $13.3 million of cash consideration on the Cloud Light Closing date.(2) The replacement options have a total fair value of $38.9 million as of the Cloud Light Closing date, of which $23.5 million attributable to pre-acquisition service is recorded as part of the purchase price consideration and the remaining $15.4 million is recorded as post-acquisition stock-based compensation expense over the vesting period of three years from the Cloud Light Closing date. In general, these options expire within 10 years from the Cloud Light Closing date. Refer to “Note 14. Equity”.The cash consideration of $705.0 million, which was funded by the cash balances of Lumentum, includes $75.

Cybersecurity risk management is an important part of and is integrated into our overall enterprise risk management framework, with cybersecurity risks being among the core enterprise risks identified for oversight by our Board of Directors (the “Board”) through our annual enterprise risk assessment. We maintain an enterprise-wide cybersecurity risk assessment program and framework that is designed to identify, assess, and manage cybersecurity risk, vulnerabilities, and threats. The foundation of our cybersecurity program is based on the International Organization for Standardization (“ISO”) and the National Institute of Standards and Technology ("NIST") Cybersecurity Framework. In alignment with the concepts and principles articulated in these standards, we have implemented controls related to cybersecurity threats and incidents including monitoring, log collection and analysis, threat hunting and intelligence surveillance, and regular vulnerability scans/penetration tests. Additionally, in furtherance of assessing, identifying, and managing material cybersecurity risks, we:•Leverage technology solutions designed to provide protection for our assets and detect threats in our environment;•Regular vulnerability assessments and penetration testing in efforts to identify, assess, and remediate weaknesses;•Maintain an enterprise-wide disaster recovery governance program, which includes cybersecurity-related disaster recovery policies and procedures related thereto;•Regularly perform cybersecurity-related disaster recovery testing designed to ensure that the Company’s mission-critical systems are recoverable, in support of our business continuity needs; and•Work with each of our business and corporate groups with our internal cybersecurity program to integrate cybersecurity requirements into operating environments as appropriate, which drives business strategies, budgeting, and similar processes. In addition, executive management, as well as our Board, regularly review our financial planning processes for these areas, inclusive of our cybersecurity programs.Changes or additions to our cybersecurity risk assessment program and related practices and procedures described above in response to cybersecurity needs are reviewed by our Cybersecurity Steering Committee (“CSC”), an executive management-level cross-functional group.We regularly engage independent third parties to assess our cybersecurity program and practices and to assist with risk mitigation.