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INDEX TO FINANCIAL STATEMENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

JDS Uniphase Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

LOGO

JDS UNIPHASE CORPORATION
430 North McCarthy Boulevard
Milpitas, California 95035
(408) 546-5000

Notice of Annual Meeting of Stockholders
and Proxy Statement
2012 Annual Report

         
    YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, WE ENCOURAGE YOU TO READ THIS PROXY STATEMENT AND SUBMIT
YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. FOR SPECIFIC
INSTRUCTIONS ON HOW TO VOTE YOUR SHARES, PLEASE REFER TO INSTRUCTIONS
(A) OR (B) BELOW, AS APPLICABLE.
   

 

 

(A) IF YOU ARE A HOLDER OF COMMON STOCK, PLEASE REFER TO (I) THE
INSTRUCTIONS OF THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
YOU RECEIVED IN THE MAIL, (II) THE SECTION ENTITLED GENERAL INFORMATION
BEGINNING ON PAGE 1 OF THIS PROXY STATEMENT, OR (III) IF YOU REQUESTED TO
RECEIVE PRINTED PROXY MATERIALS, YOUR ENCLOSED PROXY CARD.

 

 

 

 

(B) IF YOU ARE A HOLDER OF EXCHANGEABLE SHARES, PLEASE REFER TO (I) THE
SECTION ENTITLED GENERAL INFORMATION BEGINNING ON PAGE 1 OF THIS PROXY
STATEMENT OR (II) YOUR ENCLOSED PROXY CARD.

 

 
         


CONSIDERING REGISTERING ELECTRONICALLY FOR STOCKHOLDER MATERIALS?

        JDS Uniphase Corporation is pleased to take advantage of the Securities and Exchange Commission (the "SEC") rule allowing companies to furnish this Proxy Statement and Annual Report over the Internet to our Stockholders who hold Common Stock. We believe that this e-proxy process, also known as "Notice and Access" will expedite the receipt of proxy materials by our Stockholders, reduce our printing and mailing expenses and reduce the environmental impact of producing the materials required for our Annual Meeting.

        Holders of Common Stock should refer to the "General Information" portion of the following Proxy Statement (beginning on page 1) or contact our Investor Relations hotline at 408-546-4445 for assistance regarding instructions on how to register for and thereafter access our Proxy Statement and Annual Report online.

        Holders of Exchangeable Shares remain unaffected by the SEC rule and will continue to receive paper copies of the Proxy Statement and Annual Report.


Dear Stockholders,

In fiscal 2012, JDSU delivered solid results and its second best financial performance in more than a decade, following the even stronger performance in fiscal 2011. Net revenue was $1.68 billion, gross margin was 46.1%, operating margin was 9.1% and EPS was $0.59, each on a non-GAAP basis.1 Four quarters of positive cash from operations totaled $119.1 million, or 7.1% of non-GAAP net revenue, increasing our cash, restricted cash and short-term investments by $24 million from 2011 to $752.7 million.

Key to our performance was our robust innovation pipeline and successful introduction of differentiated products. New, network-related product revenue significantly exceeded our target of 50% of total revenue. We strengthened our leadership in our core markets: network enablement and anti-counterfeiting.

NETWORK ENABLEMENT

Communications Test and Measurement (CommTest)

CommTest is a market leader in testing for all field service, optical fiber, wireless and storage area network applications. CommTest contributed $755.4 million, or 44.9%, of JDSU's total non-GAAP revenue in fiscal 2012.

To complement our market leadership in test instruments, we continue to expand our software and solutions offerings. In fiscal 2012, we unveiled PacketPortal and PacketInsight, two ground-breaking products that provide carriers greater intelligence and visibility into their networks and allow them to analyze and troubleshoot network issues in real-time.

We also enhanced our portfolio of wireless test products with two acquisitions. Dyaptive Systems, acquired in January, provides subscriber emulation systems for wireless technologies, including emerging long term evolution (LTE)/4G being deployed by service providers worldwide. And shortly after our fiscal year end, we acquired Seoul-based GenComm , a provider of test solutions for wireless base stations and repeaters. Both acquisitions address high-growth areas of the communications test market.

Communications & Commercial Optical Products (CCOP)

CCOP provides network building blocks and sub-systems, supplying every major network equipment manufacturer (NEM) with the optical products and solutions necessary to deploy, maintain and upgrade communication networks. CCOP also provides fiber, solid-state, direct-diode and gas lasers for a broad range of commercial applications. CCOP contributed $701.6 million, or 41.7%, of JDSU's total non-GAAP revenue in fiscal 2012.

Our strong focus on optical R&D and vertical integration continued to translate into several innovative and compelling new products this year. Building on the success of our Tunable XFP product for telecom networks, we developed the world's first Tunable SFP+ transceiver to help customers more efficiently manage their enterprise and metro networks. We are also developing a full suite of new

   


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See Appendix C to the accompanying proxy statement for a reconciliation to the Company's most comparable GAAP numbers. JDSU's management uses these non-GAAP measures to evaluate and forecast JDSU's performance before gains, losses, or other charges that are considered by management to be outside of JDSU's core business segment operating results. JDSU believes that presenting these non-GAAP measures provides investors with greater transparency to the information used by management in its financial and operational decision making. JDSU further believes that providing this non-GAAP information helps investors understand JDSU's operating performance and evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. This non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP measures. Please see our Annual Report on Form 10-K, which is attached as Appendix A to the accompanying proxy statement, for the comparable GAAP results.

products that provide maximum flexibility in anticipation of high speed, next-generation networks that can support rates beyond 100G. Our TrueFlex product suite will provide NEMs with increased flexibility, improved spectral efficiency and lower overall component costs.

In lasers, we successfully partnered with Amada to launch a high-power kilowatt fiber laser, our entry in the fast-growing fiber laser market for materials processing applications. We are building on our initial success in fiscal 2013, working with Amada on a next generation fiber laser engine, focusing on improved cost, reduced size and enhanced beam quality.

ANTI-COUNTERFEITING

Advanced Optical Technologies (AOT)

AOT provides optical security solutions including anti-counterfeiting for currencies, brand protection, custom optics for aerospace and defense, and innovative custom color solutions for helping manufacturers differentiate their products. AOT contributed $225.7 million, or 13.4%, of JDSU's total non-GAAP revenue in fiscal 2012.

Over the past year, we completed several initiatives to better position AOT to meet the critical and fast-growing need for next-generation security features, including security thread substrates and optical variable magnetic security pigments. AOT will sharpen its focus on our core activity of providing anti-counterfeiting solutions for currency and pharmaceuticals in fiscal 2013.

LOOKING AHEAD

        We are excited about our momentum from differentiated products in both our core and adjacent markets. We look forward to advancing our target business model in the new fiscal year based on collaborative innovation with our customers as well as the strong drivers we see in our core and adjacent markets. We believe JDSU is well-positioned to take advantage of these market opportunities despite macroeconomic uncertainty and limited visibility in some regions.

As we enter a new fiscal year, our priorities continue to center on the following:

    Enable our customers through collaborative innovation
    Build a lean and scalable business
    Expand our global market presence
    Encourage a high level of employee engagement and commitment

All of JDSU's accomplishments are made possible because of the in-depth knowledge, extensive skill set, dedication and global teamwork of our employees. I would like to thank our employees whose focused commitment and tremendous efforts continue to advance JDSU's success. I would also like to thank our customers, partners, vendors and long-term shareholders for their continued support of JDSU.

We look forward to the opportunity to speak with you at the 2012 Annual Meeting of Stockholders in November.

Sincerely,

GRAPHIC

Thomas H. Waechter
President and Chief Executive Officer

To learn more about JDSU, please visit us at www.jdsu.com/investors or contact our Investor Relations team at investor.relations@jdsu.com or +1 (408) 546-4445.


GRAPHIC


JDS UNIPHASE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 14, 2012


 

DATE AND
TIME

 

9:00 a.m., Pacific Time, on November 14, 2012
LOCATION   690 North McCarthy Boulevard
Milpitas, California 95035
(408) 546-5000
PROPOSALS   1.   To elect two Class II directors to serve until the 2015 annual meeting of Stockholders and until their successors are elected and qualified.
    2.   To ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending June 29, 2013.
    3.   To consider a non-binding advisory vote on the compensation of our named executive officers.
    4.   To approve an amendment to the Company's Certificate of Incorporation to eliminate the classified structure of the board of directors.
    5.   To approve amendments to the Company's Amended and Restated 2003 Equity Incentive Plan.
    6.   To consider such other business as may properly come before the annual meeting and any adjournment or postponement thereof.
    These items of business are more fully described in the Proxy Statement which is attached and made a part hereof.
RECORD DATE   You are entitled to vote at the 2012 Annual Meeting of Stockholders (the "Annual Meeting") and any adjournment or postponement thereof if you were a Stockholder at the close of business on September 17, 2012.
VOTING   YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO VOTE PROMPTLY TO ENSURE YOUR PRESENCE AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. For specific instructions on how to vote your shares, and if you are a holder of Common Stock, please refer to (i) the Notice of Internet Availability of Proxy Materials (the "Notice") you received in the mail, (ii) the section entitled General Information beginning on page 1 of this Proxy Statement, or (iii) if you requested to receive printed proxy materials, your enclosed Proxy Card. If you are a holder of Exchangeable Shares, please refer to (i) the section entitled General Information beginning on page 1 of this Proxy Statement or (ii) your enclosed Proxy Card. As specified in the Notice, holders of Common Stock may vote their respective shares by using the Internet or the telephone. All Stockholders (whether you hold Common Stock or Exchangeable Shares) may also vote shares by marking, signing, dating and returning the Proxy Card in the enclosed postage-prepaid envelope. If you send in your Proxy Card and then decide to attend the Annual Meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement.

    By Order of the Board of Directors,

 

 


GRAPHIC
    Thomas Waechter
Chief Executive Officer and President

Milpitas, California
October 2, 2012


JDS UNIPHASE CORPORATION
430 North McCarthy Boulevard
Milpitas, California 95035
(408) 546-5000



PROXY STATEMENT



GENERAL INFORMATION

Why am I receiving these proxy materials?

        The Board of Directors (the "Board" or "Board of Directors") of JDS Uniphase Corporation, a Delaware corporation (the "Company"), is furnishing these proxy materials to you in connection with the Company's 2012 Annual Meeting of Stockholders (the "Annual Meeting"). The Annual Meeting will be held at 690 North McCarthy Boulevard, Milpitas, California 95035, on November 14, 2012 at 9:00 a.m., Pacific Time. You are invited to attend the Annual Meeting and are entitled and requested to vote on the proposals outlined in this proxy statement ("Proxy Statement"). This Proxy Statement and the accompanying proxy were first sent by mail to the Trustee for the Special Voting Share and holders of Exchangeable Shares on or about October 2, 2012. The Company has also sent printed copies of the proxy materials by mail to holders of Common Stock to each holder of Common Stock who has requested such copy.

What is "Notice and Access"?

        The Securities and Exchange Commission adopted amendments to the proxy rules that change how companies must provide proxy materials. These rules are often referred to as "Notice and Access." Under the Notice and Access model, a company may select either of the following two options for making proxy materials available to stockholders:

    The full set delivery option; or

    The notice only option.

        A company may use a single method for all its stockholders, or use full set delivery for some while adopting the notice only option for others.

        This process reduces the amount of time it takes for stockholders to obtain the materials, reduces the printing and mailing expenses paid by the Company, and reduces the environmental impact of producing the materials. The Company is required to comply with these "Notice and Access" rules in connection with its Annual Meeting.

        Other than holders of Exchangeable Shares, who will continue to receive printed copies of the proxy materials, most of our Stockholders who hold Common Stock will not receive printed copies of the proxy materials unless they request them. Instead, the "Notice of Internet Availability of Proxy Materials" (the "Notice"), which was mailed to our Stockholders who hold Common Stock on or about October 2, 2012, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or e-mail copy of our proxy materials, you should follow the instructions in the Notice for requesting such materials.

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If I am a holder of Exchangeable Shares, do the "Notice and Access" rules apply to me?

        No. The "Notice and Access" rules apply only to Stockholders of the Company who hold Common Stock. Accordingly, as a holder of Exchangeable Shares, you will continue to receive printed copies of the proxy materials.

What is the Full Set Delivery Option?

        Under the full set delivery option, a company delivers all proxy materials to its stockholders as it would have done prior to the change in the rules. This can be by mail or, if a stockholder has previously agreed, by e-mail. In addition to delivering proxy materials to stockholders, a company must post all proxy materials on a publicly-accessible website and provide information to stockholders about how to access that website.

What is the Notice Only Option?

        Under the notice only option, instead of delivering its proxy materials to stockholders, the company instead delivers a Notice to its stockholders directing them to the publicly accessible website on which the company has posted all of its proxy materials. This Notice includes, among other matters:

    information regarding the date and time of the meeting of stockholders as well as the items to be considered at the meeting and the company's recommendations regarding those items;

    information regarding the website where the proxy materials are posted; and

    various means by which a stockholder can request paper or e-mail copies of the proxy materials.

        If a stockholder requests paper copies of the proxy materials, these materials must be sent to the stockholder within three business days. Additionally, paper copies must be sent via first class mail.

        In connection with its Annual Meeting, the Company has elected to use the notice only delivery option with respect to the Company's holders of Common Stock. Accordingly, if you are a holder of Common Stock, you should have received the Notice, which provides instructions on how to access the proxy materials on-line.

Will the Company use the Notice Only option in the future?

        The Company may choose to continue to use the notice only option in the future as a delivery option of its proxy materials with respect to its holders of Common Stock. By reducing the amount of materials that the Company is required to print and mail, the notice only option provides an opportunity for cost savings as well as conservation of natural resources. The Company plans to evaluate the possible cost savings as well as the possible impact on Stockholder participation as it considers future use of the notice only option.

As a Holder of Common Stock, what do I need to do?

        If you would prefer to continue receiving paper copies of proxy materials, please mark the "Paper Copies" box on your Proxy Card (or provide this information when you vote telephonically or via the internet).

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        As noted above, the Company must provide paper copies via first class mail to any Stockholder who, after receiving the Notice, nevertheless requests paper copies. Accordingly, even if you do not check the "Paper Copies" box now, you will still have the right to request delivery of a free set of proxy materials upon receipt of any Notice in the future. Because first class postage is significantly costlier than bulk mail rates and because each such request must be processed on a stockholder-by-stockholder basis, the cost of responding to a single request for paper copies is likely to be significantly greater than the per stockholder cost the Company currently incurs in delivering proxy materials in bulk. Therefore, requests for paper copies could significantly undermine or eliminate expected cost savings associated with the notice only option.

        By developing in advance a database of Common Stock holders who would prefer to continue receiving paper copies of proxy materials, the Company would be able to use the full set delivery option for these Stockholders — using bulk mail to deliver the paper copies — while using the notice only option for other Common Stock holders. We believe this would significantly reduce the number of requests for paper copies that the Company would need to process on a stockholder-by-stockholder basis and would position the Company to better capture cost savings should it continue to use the notice only option in the future. We appreciate your assistance in helping us develop this database through the Proxy Card, telephonic and internet voting processes.

If I am a holder of Common Stock, how do I obtain electronic access to the proxy materials?

        The Notice will provide you with instructions regarding how to:

    View our proxy materials for the Annual Meeting on the Internet; and

    Instruct us to send our future proxy materials to you electronically by e-mail.

        Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of printing and mailing these materials on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

What if I prefer to receive paper copies of the materials?

        If you are a holder of Exchangeable Shares, you will continue to receive printed copies of the proxy materials. If you are a holder of Common Shares and if you prefer to receive paper copies of the materials, you can still do so. You may request a paper copy of the materials by (i) calling 1-800-579-1639; (ii) sending an e-mail to sendmaterial@proxyvote.com; or (iii) logging onto www.ProxyVote.com. There is no charge to receive the materials by mail. If requesting material by e-mail, please send a blank e-mail with the 12 digit "Control Number" (located on the second page of the Notice) in the subject line.

What proposals will be voted on at the Annual Meeting?

        There are four proposals scheduled to be voted on at the Annual Meeting:

            1.     To elect two Class II directors to serve until the 2015 annual meeting of Stockholders and until their successors are elected and qualified.

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            2.     To ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm (hereinafter referred to as "independent auditors") for the fiscal year ending June 29, 2013.

            3.     To consider a non-binding advisory vote on the compensation of our named executive officers ("NEOs").

            4.     To approve an amendment to the Company's Certificate of Incorporation to eliminate the classified structure of the board of directors.

            5.     To approve amendments to the Company's Amended and Restated 2003 Equity Incentive Plan.

            6.     To consider such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

        As to any other business which may properly come before the Annual Meeting, the persons named on the enclosed proxy card will vote according to their best judgment. The Company does not know now of any other matters to be presented or acted upon at the Annual Meeting.

What are the recommendations of the Company's Board of Directors?

        The Board recommends that you vote "FOR" each of the six proposals presented in this Proxy Statement.

        Specifically, the Board recommends you vote:

    "FOR" the election of the two Class II directors,

    "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending June 30, 2012,

    "FOR" the approval of the Company's executive compensation programs,

    "FOR" the approval of the amendment to the Company's Certification of Incorporation, and

    "FOR" the approval of the amendments to the Company's Amended and Restated 2003 Equity Incentive Plan.

What is the record date and what does it mean?

        The record date for the Annual Meeting is September 17, 2012. The record date is established by the Board of Directors as required by Delaware law. Holders of shares of the Company's Common Stock and holders of Exchangeable Shares of JDS Uniphase Canada Ltd., a subsidiary of the Company, at the close of business on the record date are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting and any adjournments or postponements thereof.

What shares can I vote?

        Each Stockholder of the Company's common stock, par value $.001 per share ("Common Stock"), is entitled to one vote for each share of Common Stock owned as of the record date, and CIBC Mellon Trust Company (the "Trustee"), the holder of the Company's special voting share

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("Special Voting Share"), is entitled to one vote for each exchangeable share of JDS Uniphase Canada Ltd., a subsidiary of the Company ("Exchangeable Shares"), outstanding as of the record date (other than Exchangeable Shares owned by the Company and its affiliates). Holders of Common Stock and Exchangeable Shares are collectively referred to as "Stockholders." Votes cast with respect to Exchangeable Shares will be voted through the Special Voting Share by the Trustee as directed by the holders of Exchangeable Shares, except votes cast with respect to Exchangeable Shares whose holders request to vote directly in person as proxy for the Trustee at the Annual Meeting.

        At the record date, 229,806,271 shares of Common Stock were issued and outstanding, one Special Voting Share was issued and outstanding, and 3,937,789 Exchangeable Shares were issued and outstanding (excluding Exchangeable Shares owned by the Company and its affiliates which are not voted). Each Exchangeable Share is exchangeable at any time, at the option of its holder, for one share of the Company's Common Stock.

What constitutes a quorum?

        The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares of Common Stock and Exchangeable Shares outstanding and entitled to vote on the record date will constitute a quorum permitting the Annual Meeting to conduct its business.

How are abstentions and broker non-votes treated?

        Under the General Corporation Law of the State of Delaware, an abstaining vote and a broker non-vote are counted as present and are, therefore, included for purposes of determining whether a quorum of shares is present at the Annual Meeting.

        Broker non-votes are not included in the tabulation of the voting results on the election of directors or issues requiring approval of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting and, therefore, do not have an effect on Proposals 1, 2, 3 or 5. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting authority with respect to that item and has not received instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held by them as nominee, brokers have the discretion to vote such shares only on routine matters. Where a matter is not considered routine, shares held by your broker will not be voted absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote. None of the matters to be voted on at the Annual Meeting are considered routine, except for the ratification of the Company's independent auditors.

        For the purpose of determining whether the Stockholders have approved matters, other than the election of directors, abstentions will have the same effect as a vote against the proposal.

What is the voting requirement to approve each of the proposals?

        Proposal 1. Each director must be elected by the affirmative vote of a majority of the shares of Common Stock and the votes represented by the Special Voting Share (all taken together as one class, collectively, the "Voting Shares") cast with respect to such director by the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal. This means that the number of votes cast "FOR" a director must exceed the number of votes cast "AGAINST" that director, with abstentions and broker non-votes not counted as votes cast as either "FOR" or "AGAINST" such director's election.

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        Proposal 2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors requires the affirmative vote of a majority of the Voting Shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against the proposal. Broker non-votes will have no effect on the outcome of this vote.

        Proposal 3. Approval of the non-binding advisory vote on the Company's executive compensation programs requires the affirmative vote of a majority of the Voting Shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against the proposal. Broker non-votes will have no effect on the outcome of this vote.

        Proposal 4. Approval of the amendment to the Company's Certificate of Incorporation to eliminate the classified structure of the board of directors requires the affirmative vote of a majority of all outstanding Voting Shares. As a result, abstentions and broker non-votes will have the same effect as votes against the proposal.

        Proposal 5: Approval of the amendments to the Company's Amended and Restated 2003 Equity Incentive Plan requires the affirmative vote of a majority of the Voting Shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against the proposal. Broker non-votes will have no effect on the outcome of this vote.

        All shares of Common Stock and the Special Voting Share represented by valid proxies will be voted in accordance with the instructions contained therein. Votes with respect to Exchangeable Shares represented by valid voting instructions received by the Trustee will be cast by the Trustee in accordance with those instructions. In the absence of instructions, proxies from holders of Common Stock will be voted in accordance with the recommendations set forth in the Proxy Statement. If no instructions are received by the Trustee from a holder of Exchangeable Shares, the votes to which such holder is entitled will not be exercised.

How do I vote my shares?

        If you are a record holder of Common Stock, you can either attend the Annual Meeting and vote in person or give a proxy to be voted at the Annual Meeting:

    by mailing the enclosed proxy card;

    over the telephone by calling a toll-free number; or

    electronically, using the Internet and following the instructions provided in the Notice you received by mail.

        The Internet and telephone voting procedures have been set up for your convenience and are designed to authenticate the Common Stock holders' identities, to allow the holders of Common Stock to provide their voting instructions, and to confirm that their instructions have been recorded properly. The Company believes the procedures which have been put in place are consistent with the requirements of applicable law. Specific instructions for record holders of Common Stock who wish to use the Internet or telephone voting procedures are set forth on the enclosed proxy card or in the Notice you received by mail.

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        If you are a record holder of Exchangeable Shares, you can either attend the Annual Meeting and vote in person or give a proxy to be voted at the Annual Meeting by mailing the enclosed voting instruction card to the Trustee.

        If a holder of Exchangeable Shares does not provide the Trustee with voting instructions, your Exchangeable Shares will not be voted.

Who will tabulate the votes?

        An automated system administered by Broadridge Financial Services, Inc. ("Broadridge") will tabulate votes cast by proxy at the Annual Meeting and a representative of the Company will tabulate votes cast in person at the Annual Meeting.

Is my vote confidential?

        Proxy instructions, ballots and voting tabulations that identify individual Stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except (i) as necessary to meet applicable legal requirements, or (ii) to allow for the tabulation and/or certification of the vote.

Can I change my vote after submitting my proxy?

        You may revoke your proxy at any time before the final vote at the Annual Meeting. You may do so by one of the following four ways:

    submitting another proxy card bearing a later date;

    sending a written notice of revocation to the Company's Corporate Secretary at 430 North McCarthy Boulevard, Milpitas, California, 95035;

    submitting new voting instructions via telephone or the Internet; or

    attending AND voting in person at the Annual Meeting.

        If you hold Exchangeable Shares and you wish to direct the Trustee to change the vote attached to the Special Voting Share on your behalf, you should follow carefully the instructions provided by the Trustee, which accompany this Proxy Statement. The procedure for instructing the Trustee differs in certain respects from the procedure for delivering a proxy, including the place for depositing the instructions and the manner for revoking the proxy.

Who is paying for this proxy solicitation?

        This solicitation is made by the Company. The Company will bear the cost of soliciting proxies, including preparation, assembly, printing and mailing of the Proxy Statement. If you are a holder of Common Stock and if you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. The Company has retained the services of MacKenzie Partners as its proxy solicitor for this year for a fee of approximately $12,500 plus reasonable out-of-pocket costs and expenses. In addition, the Company will reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Proxies may be solicited by certain of the Company's directors, officers and

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regular employees, without additional compensation, either personally, by telephone, facsimile, or telegram.

How can I find out the voting results?

        The Company will announce the preliminary results at the Annual Meeting and publish the final results in a Current Report on Form 8-K within four business days after the Annual Meeting. Stockholders may also find out the final results by calling the Company's Investor Relations Department at (408) 546-4445.

How do I receive electronic access to proxy materials for the current and future annual meetings?

        Stockholders who have previously elected to receive the Proxy Statement and Annual Report over the Internet will be receiving an e-mail on or about October 2, 2012 with information on how to access Stockholder information and instructions for voting over the Internet. Stockholders of record may vote via the Internet until 11:59 p.m. Eastern Time, November 13, 2012.

        If your shares are registered in the name of a brokerage firm and you have not elected to receive your Proxy Statement and Annual Report over the Internet, you still may be eligible to vote your shares electronically over the Internet. A large number of brokerage firms are participating in the ADP online program, which provides eligible Stockholders who receive a paper copy of this Proxy Statement the opportunity to vote via the Internet. If your brokerage firm is participating in ADP's program, your proxy card will provide instructions for voting online.

        Stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies, which results in cost savings for the Company. If you are a Stockholder of record and would like to receive future Stockholder materials electronically, you can elect this option by following the instructions provided when you vote your proxy over the Internet at www.ProxyVote.com.

        If you chose to view future proxy statements and annual reports over the Internet, you will receive an e-mail notification next year with instructions containing the Internet address of those materials. Your choice to view future proxy statements and annual reports over the Internet will remain in effect until you contact either your broker or the Company to rescind your instructions. You do not have to elect Internet access each year.

        If you elected to receive this Proxy Statement electronically over the Internet and would now like to receive a paper copy of this Proxy Statement so that you may submit a paper proxy in lieu of an electronic proxy, you should contact your broker or the Company.

How can I avoid having duplicate copies of the Proxy Statement sent to my household?

        Some brokers and other nominee record holders may be participating in the practice of "householding" proxy statements and annual reports, which results in cost savings for the Company. The practice of "householding" means that only one copy of the Proxy Statement and Annual Report,or notice of internet availability of proxy materials will be sent to multiple Stockholders who share an address. The Company will promptly deliver a separate copy of either document to any Stockholder who contacts the Company's Investor Relations Department at (408) 546-4445 requesting such copies. If a Stockholder is receiving multiple copies of the Proxy Statement and Annual Report at the Stockholder's household and would like to receive a single copy of those documents for a Stockholder's household in the future, that Stockholder should contact their broker, other nominee

8


record holder, or the Company's Investor Relations Department to request mailing of a single copy of the Proxy Statement and Annual Report.

When are Stockholder proposals due for next year's annual meeting?

        In order for Stockholder proposals to be considered properly brought before an annual meeting by a Stockholder, the Stockholder must have given timely notice in writing to the Secretary of the Company. To be timely for the 2013 annual meeting of Stockholders (the "2013 Annual Meeting"), a Stockholder's notice must be received by the Company at its principal executive offices not less than 30 days nor more than 60 days prior to the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to Stockholders, notice by the Stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A Stockholder's notice to the Secretary must set forth as to each matter the Stockholder proposes to bring before the 2013 Annual Meeting: (i) a brief description of the business desired to be brought before the 2013 Annual Meeting and the text of the proposal or business; (ii) the name and record address of the Stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is being made; (iii) a representation that the Stockholder is a holder of record of the Company's stock, is entitled to vote at the meeting and intends to appear in person or by proxy to propose the business specified in the notice; (iv) any material interest of the Stockholder or any proposing person in such business; (v) the number of shares owned beneficially and of record by the Stockholder or proposing person, including derivative interests, contracts or other agreements related to ownership or rights to vote the Company's shares and other economic interests in the Company's securities; and (vi) any other information required pursuant to Section 14 of the Exchange Act. Our Bylaws specify in greater detail the requirements as to the form and content of a Stockholder's notice. We recommend that any Stockholder wishing to bring any item before an annual meeting review a copy of our Bylaws, as amended and restated to date, which can be found at www.jdsu.com. Subject to applicable laws and regulations, the Company has discretion over what Stockholder proposals will be included in the agenda for the 2013 Annual Meeting and/or in the related proxy materials.

        Subject to applicable laws and regulations, the Company will also have discretionary authority to vote all shares for which it has proxies regarding a Stockholder proposal if the Company fails to receive notice of the Stockholder proposal for next year's annual meeting at least 45 days before the date in 2012 on which the Company filed this Proxy Statement (specifically, assuming the Company files this fiscal year 2012 proxy on October 2, 2012, the Company will have this discretionary authority if notice of a Stockholder proposal for the 2013 Annual Meeting is not received by the Company by August 17, 2013).

9



PROPOSAL 1

ELECTION OF CLASS I DIRECTORS

        The Board is divided into three classes as nearly equal in number as possible. The members of each class of directors serve staggered three-year terms. As of October 2, 2012, the Board is composed of the following seven members:

Class
  Directors   Term Expiration
I   Martin A. Kaplan and Keith Barnes   2013 Annual Meeting of Stockholders

II

 

Richard E. Belluzzo and Harold L. Covert

 

2012 Annual Meeting of Stockholders

III

 

Penelope A. Herscher, Masood Jabbar and Thomas Waechter

 

2014 Annual Meeting of Stockholders

        At this Annual Meeting, the Stockholders will elect two Class II directors recommended by the Corporate Governance Committee (which serves as the Company's Nominating Committee) and nominated by the Board, each to serve a three year term until the 2015 Annual Meeting of Stockholders and until a qualified successor is elected and qualified or until the director's earlier resignation or removal. If stockholders approve Proposal No. 4 below to amend the Company's Amended and Restated Certificate of Incorporation to declassify the Board, directors elected at any meeting beginning in 2013 will be elected for only one year. The Board has no reason to believe that the nominees named below will be unable or unwilling to serve as a director if elected.

Considerations in Director Selection

        The Company's Governance Committee is responsible for reviewing, evaluating and nominating individuals for election to the Company's Board. The Committee selects nominees from a broad base of potential candidates. The Committee's charter instructs it to seek qualified candidates regardless of race, color, religion, ancestry, national origin, gender, sexual orientation, etc. It is the Committee's goal to nominate candidates with diverse backgrounds and capabilities, to reflect the diverse nature of the Company's stakeholders (security holders, employees, customers and suppliers), while emphasizing core excellence in areas pertinent to the Company's long term business and strategic objectives.

        The Board of Directors believes that it is necessary for each of the Company's directors to possess many qualities and skills. When searching for new candidates, the Committee seeks individuals of the highest ethical and professional character who will exercise sound business judgment. The Committee also seeks people who are accomplished in their respective field, with superior credentials and recognition. In selecting nominees, the Committee generally seeks active and former leaders of major complex organizations. The Committee seeks individuals who can work effectively together to further the interests of the Corporation, while preserving their ability to differ with each other on particular issues. A candidate's specific background and qualifications are also reviewed in light of the particular needs of the Board at the time of an opening.

        Each candidate must have an employment and professional record which demonstrates, in the judgment of the Committee, that the candidate has sufficient and relevant experience and background, taking into account positions held and industries, markets and geographical locations served, to serve on the Board in the proposed capacity. In particular, the Committee seeks candidates with at least two years of experience serving as the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, or a Director, or the equivalent of such positions, of a well-respected publicly traded company.

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        Certain individual qualifications and skills of our directors that contribute to the Board's effectiveness as a whole are described in the following paragraphs.

        Certain information about the Board of Directors nominees is furnished below.

Class II Directors — Nominees For Three Year Terms That Will Expire in 2015

Richard E. Belluzzo
Age 58
  Mr. Belluzzo joined the Company's Board in February 2005. He currently serves as managing partner of Corso Partners LLC. From April 2011 to August 2012, he served as Executive Chairman of Quantum Corporation, a provider of backup, recovery and archive products and services. From 2002 to 2011, he was Chairman and Chief Executive Officer of Quantum Corporation. Prior to that, Mr. Belluzzo was President and Chief Operating Officer of Microsoft Corporation ("Microsoft"). Prior to becoming its President and Chief Operating Officer, Mr. Belluzzo served as Microsoft's group Vice President of the Personal Services and Devices Group, and was Group Vice President for the Consumer Group. Prior to Microsoft, Mr. Belluzzo was Chief Executive Officer of Silicon Graphics Inc. ("SGI"). Before SGI, Mr. Belluzzo held a series of increasingly senior roles at Hewlett Packard Company, culminating in his service as Executive Vice President of the Computer Products Organization. Mr. Belluzzo is currently a member of the board of directors and audit committee of PMC-Sierra (Vancouver, Canada).

 

 

The Board determined that Mr. Belluzzo's background and experience as the Chief Executive Officer of public companies, as well as his deep knowledge of the technology industry, senior leadership roles and service on the boards of other prominent public companies allow him to contribute significantly to the Board and to its Compensation and Governance Committees.

11


Harold L. Covert
Age 65
  Mr. Covert joined the Company's Board in January 2006. He currently serves as Executive Vice President and Chief Financial Officer of Lumos Networks Corporation, a fiber-based service provider. Since October 2010, Mr. Covert has been an independent business consultant and private investor. From 2007-2010, Mr. Covert was President, Chief Financial Officer and Chief Operating Officer of Silicon Image, Inc., a provider of semiconductors for storage, distribution and presentation of high-definition content. Prior to joining Silicon Image, Mr. Covert was Executive Vice President and Chief Financial Officer at Openwave Systems, Inc., a software and services company, from 2005 to 2007. From 2003 to 2005, Mr. Covert was Chief Financial Officer of Fortinet Inc., a worldwide provider of network security appliances. Mr. Covert served on Openwave's Board from 2003-2005 and as chairman of its audit committee. Prior to Openwave, Mr. Covert was Chief Financial Officer of Extreme Networks, a network infrastructure company, from 2001-2003 and Silicon Graphics, Inc., a computer systems company, from 2000-2001. Prior to Silicon Graphics, he held a variety of financial and accounting positions over the course of over 20 years in the high-technology industry including Chief Financial Officer of Adobe Systems, Inc. Mr. Covert is a member of the board of directors of Harmonic, Inc., and Solta Medical, Inc., and is the Chairman of each of their Audit Committees.

 

 

The Board determined that Mr. Covert has significant experience and service in leadership roles in finance and accounting obtained through his tenure as Chief Financial Officer of five publicly traded technology companies. The compliance, financial reporting and audit experience Mr. Covert gained in these positions in particular allows him to significantly contribute to the Company's Audit Committee as its chairman.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
TO THE BOARD OF EACH OF THE NOMINEES NAMED ABOVE.

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        The Company's directors listed below will continue in office for the remainder of their terms or earlier in accordance with the Company's Bylaws. Information regarding the business experience of each such director is provided below.

Class I Directors Whose Terms Will Expire in 2013

Martin A. Kaplan
Age 75
  Mr. Kaplan joined the Company's Board in October 1997. Mr. Kaplan has served as the Chairman of the Board since May 2000. From May 1998 until his retirement in May 2000 after 40 years in the technology industry, Mr. Kaplan was Executive Vice President of Pacific Telesis, responsible for integration following the merger of SBC Communications, Inc. and Pacific Telesis Group, followed by the same role for other SBC mergers. From 1986 to 1997, he was Executive Vice President of Pacific Bell and President of Network Services. Mr. Kaplan also is a Director and member of the audit committee of Superconductor Technologies. Earlier in his career he was the Finance Director for Pacific Bell. Within the past five years, Mr. Kaplan also served on the board of directors of Tekelek and Redback Networks.

 

 

The Board determined that Mr. Kaplan has extensive business leadership, operational and technical experience in the telecommunications industry, including substantial experience in mergers and acquisitions. The Board also determined that his tenure as the Chairman of the Board gives him substantial insights into the workings of the Board and the operations of the Company. Finally, his experience on the Boards of Tekelek and Redback Networks, and as a member of the Governance and Nominating and Compensation Committee at Superconductor Technologies, the Compensation and Governance Committees of Tekelec and the Audit and Compensation Committee of Redback is useful in his service on the Company's Governance, Corporate Development and Compensation Committees.

Keith Barnes
Age 61

 

Mr. Barnes joined the Company's Board in October 2011. Mr. Barnes served as Chief Executive Officer of Verigy Ltd, a semiconductor automatic test equipment company, from 2006 through 2010 and Chairman of the Board from 2008 through June 2011. Prior to that he was Chairman and Chief Executive Officer of Electroglas, Inc. from 2003 through 2006. Mr. Barnes is currently a member of the board of directors of Spansion, Inc., Intermec,  Inc. and Mentor Graphics.

 

 

The Board determined that Mr. Barnes' extensive management experience as chief executive officer of several technology companies, test and measurement industry background, and international sales and marketing knowledge, along with his experience as a board member for several public technology companies, will bring important perspective and expertise to the Board and its Audit and Corporate Development Committees.

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Class III Directors Whose Terms Will Expire in 2014

Penelope A. Herscher
Age 52
  Ms. Herscher joined the Company's Board in July 2008. She currently holds the position of President and Chief Executive Officer of FirstRain, a search-driven research firm. Prior to joining FirstRain, Ms. Herscher held the position of Executive Vice President and Chief Marketing Officer at Cadence Design Systems. From 1996 to 2002, Ms. Herscher was President and Chief Executive Officer of Simplex Solutions, which was acquired by Cadence in 2002. Before Simplex, she was an executive at Synopsys for eight years and started her career as an R&D engineer with Texas Instruments. Ms. Herscher serves on the board of directors of Rambus (where she is the Chair of the Compensation Committee) and FirstRain.

 

 

The Board determined that Ms. Herscher's experience as chief executive officer of several technology companies, her extensive marketing and technical background and her position on the Board and compensation committee at Rambus enables her to significantly contribute as a member of the Company's Board and in its Compensation and Governance Committees.

Masood Jabbar
Age 62

 

Mr. Jabbar joined the Company's Board in March 2006. Mr. Jabbar worked at Sun Microsystems Inc. from 1986 to 2003, where he served in a series of progressively responsible roles including President of the Computer Systems Division, Chief Financial Officer of the $10 billion Sun Microsystems Computer Corporation, and Executive Vice President of Global Sales Operations. Mr. Jabbar's career at Sun culminated as Executive Vice President and Advisor to the Chief Executive Officer, where he was responsible for advising the CEO on critical strategic issues. Prior to joining Sun, Mr. Jabbar spent ten years in finance and accounting at Xerox Corporation, and two years at IBM Corporation. Mr. Jabbar is currently on the board of directors of Silicon Image, Inc. (where he is on the Audit and Compensation Committees) and RF Micro Devices, Inc. (where he is on the Audit and Corporate Development Committees). Within the past five years, Mr. Jabbar also served on the board of directors of MSC Software Corporation and Openwave Systems.

 

 

The Board determined that Mr. Jabbar brings significant mergers and acquisitions, global sales and marketing and operational expertise gained from his experience in executive roles at Sun Microsystems, Inc. In addition, Mr. Jabbar's experiences at Xerox and IBM and as a senior executive of Sun Microsystems provide the Board with valuable accounting and financial reporting expertise particular relevant to his service on the Company's Audit Committee. Finally, Mr. Jabbar's service on the Board's of several other technology companies provides valuable perspective in his role as a director and chair of the Company's Corporate Development Committee and member of the Audit Committee.

14


Thomas Waechter
Age 59
  Thomas Waechter became Chief Executive Officer and President of the Company and joined the Company's Board in January 2009, prior to which he was Executive Vice President and President of the Communications Test & Measurement Group. Before joining the Company, Mr. Waechter was the chief operating officer of Harris Stratex Networks, an independent supplier of wireless transmission systems. As president and chief executive officer of Stratex Networks, he was instrumental in the merging of Stratex and Harris, while growing revenues substantially and improving profitability. Prior to that, Mr. Waechter was the president and chief executive officer of REMEC Corporation and has also served as president and chief executive officer of Spectrian Corporation. Additionally, he held a number of executive level positions during his 14-year career with multinational Schlumberger Limited. He holds a Bachelor of Business Administration from The College of William and Mary. Within the past five years, Mr. Waechter served on the board of directors of Stratex Networks and currently serves on the board of directors of Altera Corporation.

 

 

The Board determined that Mr. Waechter's day-to-day leadership of the Company provides him with intimate knowledge of the Company's operations. The Board also determined that Mr. Waechter's extensive operational and senior executive and Chief Executive Officer experience at other technology companies add substantial value to the Board and the Company.

15



CORPORATE GOVERNANCE

Code of Ethics

        The Board and management of the Company believe that good corporate governance is an important component in enhancing investor confidence in the Company and increasing Stockholder value. The imperative to continue to develop and implement best practices throughout our corporate governance structure is fundamental to our strategy to enhance performance by creating an environment that increases operational efficiency and ensures long-term productivity growth. Good corporate governance practices also ensure alignment with Stockholder interests by promoting fairness, transparency and accountability in business activities among employees, management and the Board.

        Our corporate governance practices represent our firm commitment to the highest standards of corporate ethics, compliance with laws, financial transparency and reporting with objectivity and the highest degree of integrity. Representative steps we have taken to fulfill this commitment include, among others:

    All members of the Board are independent with the exception of the Company's Chief Executive Officer.

    All members of our Board committees are independent.

    The charters of the Board committees clearly establish their respective roles and responsibilities.

    All employees and members of the Board are responsible for complying with our Code of Business Conduct and our Insider Trading Policy.

    We have an anonymous hotline to encourage employees to report questionable activities to our Internal Audit and Legal Departments, and Audit Committee.

    Our independent public accountants report directly to the Audit Committee.

    Our internal audit control function maintains critical supervision over the key areas of our business and financial controls and reports directly to our Audit Committee.

    We have established procedures for Stockholders to communicate with the Board by contacting the Investor Relations Department.

    The independent members of our Board and Board committees meet regularly without the presence of management.

        The Company has adopted a Code of Ethics (known as the Code of Business Conduct) for its directors, officers and other employees. The Company will post on its website any amendments to, or waivers from, any provision of its Code of Business Conduct. A copy of the Code of Business Conduct is available on the Company's website at www.jdsu.com.

Director Independence

        In accordance with current NASDAQ listing standards, the Board, on an annual basis, affirmatively determines the independence of each director and nominee for election as a director. Our director independence standards include all elements of independence set forth in the NASDAQ listing

16


standards, which can be found in the "Corporate Governance" section of our website at www.jdsu.com. The Board has determined that each of its directors, except for Mr. Waechter, was "independent" as determined by the relevant NASDAQ listing standard for board independence and for any committee on which such director served during fiscal year 2012.

Board Leadership

        The Board has determined that it is in the best interests of the Company to maintain the Board chairperson and chief executive officer positions separately. The Board believes that having an outside, independent director serve as chairperson is the most appropriate leadership structure, as this enhances its independent oversight of management and the Company's strategic planning, reinforces the Board's ability to exercise its independent judgment to represent Stockholder interests, and strengthens the objectivity and integrity of the Board. Moreover, an independent chairperson can more effectively lead the Board in objectively evaluating the performance of management, including the chief executive officer, and guide it through appropriate Board governance processes.

Board Oversight of Risk

        The Company takes a comprehensive approach to risk management. We believe risk can arise in every decision and action taken by the Company, whether strategic or operational. The Company, therefore, seeks to include risk management principles in all of its management processes and in the responsibilities of its employees at every level. Our comprehensive approach is reflected in the reporting processes by which our management provides timely and comprehensive information to the Board to support the Board's role in oversight, approval and decision-making.

        Management is responsible for the day-to-day supervision of risks the Company faces, while the Board, as a whole and through its committees, has the ultimate responsibility for the oversight of risk management. Senior management attends Board meetings, provides presentations on operations including significant risks, and is available to address any questions or concerns raised by the Board. Additionally, our committees assist the Board in fulfilling its oversight responsibilities in certain areas. Generally, the committee with subject matter expertise in a particular area is responsible for overseeing the management of risk in that area. For example, the Audit Committee coordinates the Board's oversight of the Company's internal control over financial reporting and disclosure controls and procedures. Management regularly reports to the Audit Committee on these areas. Also, the Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs as well as succession planning for senior executives. The Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, and corporate governance topics. When any of the committees receives a report related to material risk oversight, the Chairman of the relevant committee reports on the discussion to the full Board.

17


Board Committees and Meetings

        During fiscal year 2012, the Board held five meetings. The Board has four committees: an Audit Committee, Compensation Committee, Corporate Governance Committee, and Corporate Development Committee. The members of the committees during fiscal year 2012 are identified in the following table:

 
 
  DIRECTOR    
  AUDIT    
  COMPENSATION    
  CORPORATE
DEVELOPMENT
   
  GOVERNANCE    

 

  Keith Barnes       X               X            

 

  Richard E. Belluzzo               X               CHAIR    

 

  Harold L. Covert       CHAIR                            

 

  Penelope A. Herscher               CHAIR               X    

 

  Masood A. Jabbar       X               CHAIR            

 

  Martin A. Kaplan               X       X       X    

 

  Kevin J. Kennedy1                       X            

 

  Richard T. Liebhaber2                       X       X    

 

  Casimir S. Skrzypczak3       X       X                    

 

  Thomas Waechter                                    

        Each director attended at least 75% of the aggregate of all meetings of the Board and any committees on which he or she served during fiscal year 2012 after becoming a member of the Board or after being appointed to a particular committee. The Company encourages, but does not require, its Board members to attend the annual Stockholders meeting. All then-current directors attended the 2011 Annual Meeting.

        The Audit Committee met nine times in fiscal year 2012. The Audit Committee is responsible for assisting the full Board in fulfilling its oversight responsibilities relative to the Company's financial statements, financial reporting practices, systems of internal accounting and financial control, the internal audit function, annual independent audits of the Company's financial statements, and such legal and ethics programs as may established from time to time by the Board. The Audit Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and may retain external consultants at its sole discretion. In addition, the Audit Committee considers whether the Company's independent auditors' provision of non-audit services is compatible with maintaining the independence of the independent auditors. The Board has determined that all members of the Audit Committee are "independent" as defined in the applicable rules and regulations of the SEC and NASDAQ. The Board has further determined that Harold L. Covert and Masood A. Jabbar are "audit committee financial expert(s)" as defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A copy of the Audit Committee charter can be viewed at the Company's website at www.jdsu.com.

   


1
Mr. Kennedy resigned from the Board, effective August 16, 2012. Attendance only includes meetings for the period in which he was a director.
2
Mr. Liebhaber did not stand for re-election at the 2011 annual meeting. Therefore, his term expired on November 16, 2011. Attendance only includes meetings for the period in which he was a director.
3
Mr. Skrzypczak did not stand for re-election at the 2011 annual meeting. Therefore, his term expired on November 16, 2011. Attendance only includes meetings for the period in which he was a director.

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        The Compensation Committee met five times in fiscal year 2012. The Compensation Committee is responsible for ensuring that the Company adopts and maintains responsible and responsive compensation programs for its employees, officers and directors consistent with the long-range interests of Stockholders. The Compensation Committee also has the exclusive responsibility for the administration of the Company's employee stock purchase plans and equity incentive plans. The chair of the Compensation Committee reports on the Compensation Committee's actions and recommendations at Board meetings. In addition, the Compensation Committee has the authority to engage the services of outside advisors, experts and others to provide assistance as needed. During fiscal year 2012, the Compensation Committee engaged Compensia, Inc. ("Compensia"), a national compensation consulting firm, to assist with the Committee's analysis and review of the compensation of our executive officers. Compensia attends all Compensation Committee meetings, works directly with the Committee Chair and Committee members, and sends all invoices, including descriptions of services rendered, to the Committee Chair for review and payment approval. Compensia performed no work for the Company that was not in support of the Committee's charter nor authorized by the Committee Chair during fiscal year 2012. All members of the Compensation Committee are "independent" as that term is defined in the applicable NASDAQ rules and regulations. A copy of the Compensation Committee charter can be viewed at the Company's website at www.jdsu.com. Additional information on the Compensation Committee's processes and procedures for consideration of executive compensation are addressed in the "Compensation Discussion and Analysis" below.

        The Corporate Development Committee met four times in fiscal year 2012. The Corporate Development Committee oversees the Company's strategic acquisition and investment activities. The Corporate Development Committee reviews and approves certain strategic transactions for which approval of the full Board is not required and makes recommendations to the Board regarding those transactions for which the consideration of the full Board is appropriate. A copy of the Corporate Development Committee charter can be viewed at the Company's website at www.jdsu.com.

        The Corporate Governance Committee met four times in fiscal year 2012. The Corporate Governance Committee, which serves as the Company's nominating committee, reviews current trends and practices in corporate governance and recommends to the Board the adoption of programs pertinent to the Company. As provided in the charter of the Corporate Governance Committee, nominations for director may be made by the Corporate Governance Committee or by a Stockholder of record entitled to vote. The Corporate Governance Committee will consider and make recommendations to the Board regarding any Stockholder recommendations for candidates to serve on the Board. Stockholders wishing to recommend candidates for consideration by the Corporate Governance Committee may do so by writing to the Company's Investor Relations Department-Attention Corporate Governance Committee at 430 North McCarthy Boulevard, Milpitas, California 95035 providing the candidate's name, biographical data and qualifications, a document indicating the candidate's willingness to act if elected, and evidence of the nominating Stockholder's ownership of Company's stock not less than 30 days nor more than 60 days prior to the next annual meeting to assure time for meaningful consideration by the Corporate Governance Committee. There are no differences in the manner in which the Corporate Governance Committee evaluates nominees for director based on whether the nominee is recommended by a Stockholder. All members of the Corporate Governance Committee are "independent" as that term is defined in the applicable NASDAQ rules and regulations.

        In reviewing potential candidates for the Board, the Corporate Governance Committee considers the individual's experience in the Company's industry, the general business or other experience of the candidate, the needs of the Company for an additional or replacement director, the personality of the candidate, the candidate's interest in the business of the Company, as well as numerous other subjective criteria. Of greatest importance is the individual's integrity, willingness to be involved and ability to bring to the Company experience and knowledge in areas that are most beneficial to the

19


Company. The Corporate Governance Committee intends to continue to evaluate candidates for election to the Board on the basis of the foregoing criteria. A detailed description of the criteria used by the Corporate Governance Committee in evaluating potential candidates may be found in the charter of the Corporate Governance Committee.

        The Corporate Governance Committee operates under a written charter setting forth the functions and responsibilities of the committee. A copy of the charter can be viewed at the Company's website at www.jdsu.com.

Compensation Committee Interlocks and Insider Participation

        No interlocking relationship exists between any member of the Company's Board or Compensation Committee and any member of the board of directors or compensation committee of any other companies, nor has such interlocking relationship existed in the past. None of Messrs. Belluzzo, Kaplan and Skrzypczak or Ms. Herscher, who served on the Company's Compensation Committee during fiscal year 2012, were at any time an officer or employee of JDSU. In addition, none of our executive officers serves as a member of the board of directors or compensation committee of any company that has one or more of its executive officers serving as a member of our Board or Compensation Committee.

Communication between Stockholders and Directors

        Stockholders may communicate with the Company's Board through the Company's Secretary by sending an email to bod@jdsu.com, or by writing to the following address: Chairman of the Board, c/o Company Secretary, JDSU, 430 North McCarthy Boulevard, Milpitas, California 95035. The Company's Secretary will forward all correspondence to the Board, except for spam, junk mail, mass mailings, product complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. The Company's Secretary may forward certain correspondence, such as product-related inquiries, elsewhere within the Company for review and possible response.

Director Compensation

        Each non-employee director of the Company is entitled to receive an annual cash retainer of $60,000 which is paid in quarterly installments of $15,000. During fiscal year 2012, each non-employee director received an annual grant of restricted stock units having a value on the date of grant of $150,000. The restricted stock units are subject to a grant agreement which provides for annual vesting over a three year period. Upon vesting each restricted stock unit is converted into one share of the Company's Common Stock. Upon retirement of a non-employee director, all unvested options and restricted shares of the Company's Common Stock will automatically become fully vested, and the exercise period for any such options will be extended to expire on the expiration date of such options, which is eight years from the date of grant.

        Upon initial appointment to the Board, each non-employee director will receive a grant of restricted stock units having a value on the date of grant of $200,000.

        In addition, each non-employee director serving on the Audit Committee receives an annual cash retainer of $15,000, whereas the director serving as the Audit Committee chair receives an annual cash retainer of $30,000. Each non-employee director serving on the Compensation Committee receives an annual cash retainer of $10,000, whereas the director serving as the Compensation Committee chair receives an annual cash retainer of $20,000. Each non-employee director serving on the Governance or Corporate Development Committees receives an annual cash retainer of $7,500, whereas the directors serving as the Governance or Corporate Development Committee chairs receive an annual cash retainer of $15,000.

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        In addition to the compensation described above, Mr. Kaplan, who serves as Chairman of the Board, receives an additional annual cash retainer of $100,000 as compensation for his services which is paid in quarterly installments of $25,000.

        Directors who are also employed by the Company do not receive any compensation for their services as directors. All directors are reimbursed for expenses incurred in connection with attending Board and committee meetings.

        All director compensation described above is summarized in the following table in the column titled "Board Compensation":

 
 
  Compensation Element for Role
  Board Compensation
   
    General Board Service — Cash                    
   

Retainer

 

$60,000

   
   

Meeting Fees

 

Not applicable ("NA")

   
    General Board Service — Equity                    
   

Number of Options (Initial/Annual)

 

NA/NA

   
   

RSU Value (Initial/Annual)

 

$200,000/$150,000

   
   

Vesting Schedule

 

Initial and annual grant vest annually over 3 years

   

 
     

Number of shares determined using 30 calendar day average stock price prior to date of grant

 
    Committee Service                    
    (No meeting fees)       Chair     Member      
        Audit   $ 30,000   $ 15,000    
        Compensation   $ 20,000   $ 10,000    
        Governance/Corporate Development   $ 15,000   $ 7,500    
    Non-Employee Board Chair                    
   

Additional Board Retainer

 

$100,000

   
   

Additional Board Meeting Fee

 

NA

   
   

Additional Equity

 

NA

   
                         

Compensation Program Risk Assessment

        Consistent with SEC disclosure requirements, in fiscal year 2012 a team composed of senior members of our human resources, finance and legal departments inventoried and reviewed elements of our compensation policies and practices. This team then reviewed these policies and practices with Company's management in an effort to assess whether any of our policies or practices create risks that are reasonably likely to have a material adverse effect on the Company. This assessment included a review of the primary design features of the Company's compensation policies and practices, the process for determining executive and employee compensation and consideration of features of our compensation program that help to mitigate risk. Management reviewed and discussed the results of this assessment with the Compensation Committee, which consulted with Compensia. Based on this review, we believe that our compensation policies and practices, individually and in the aggregate, do not create risks that are reasonably likely to have a material adverse effect on the Company.

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Non-Management Directors' Compensation for Fiscal Year 2012

        The director compensation policies summarized above resulted in the following total compensation for our non-management directors in fiscal year 2012:


DIRECTOR COMPENSATION TABLE

Name (1)
  Fees Earned or
Paid in Cash
($)
  Stock Awards
($) (2)
  Option Awards
($)
  Total
($)
 

Keith Barnes (3)

    75,403     343,185     0     418,588  

Richard E. Belluzzo (4)

    85,000     147,143     0     232,143  

Harold L. Covert (5)

    90,000     147,143     0     237,143  

Penelope A. Herscher (6)

    87,500     147,143     0     234,643  

Masood A. Jabbar (7)

    90,000     147,143     0     237,143  

Martin A. Kaplan (8)

    185,000     147,143     0     332,143  

Kevin J. Kennedy (9)

    67,500     147,143     0     214,643  

Richard T. Liebhaber (10)

    15,000     0     0     15,000  

Casimir S. Skrzypczak (11)

    15,000     0     0     15,000  

                         

(1)
Thomas Waechter, the Company's Chief Executive Officer and President, is not included in this table as he is an employee of the Company and as such receives no compensation for his services as a director. Mr. Waechter's compensation is disclosed in the Summary Compensation Table.
(2)
The amounts shown in this column are the grant date fair value in the period presented as determined pursuant to stock-based compensation accounting rule FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to calculate these amounts are set forth under Note 15 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for fiscal year 2012 filed with the SEC on August 24, 2012. Each non-employee director's annual grant was calculated by using the 30 calendar day average stock price prior to the date of grant. The intended value of the annual grant is then divided by this average in order to determine the number of restricted stock units granted.
(3)
Mr. Barnes (who joined the Board effective November 16, 2011) had no options and 30,956 restricted stock units outstanding at the end of fiscal year 2012.
(4)
Mr. Belluzzo had 9,875 options and 23,907 restricted stock units outstanding at the end of fiscal year 2012.
(5)
Mr. Covert had 8,250 options and 23,907 restricted stock units outstanding at the end of fiscal year 2012.
(6)
Ms. Herscher had no options and 23,907 restricted stock units outstanding at the end of fiscal year 2012.
(7)
Mr. Jabbar had 7,500 options and 23,907 restricted stock units outstanding at the end of fiscal year 2012.
(8)
Mr. Kaplan had 17,500 options and 23,907 restricted stock units outstanding at the end of fiscal year 2012.
(9)
Mr. Kennedy had 23,907 restricted stock units outstanding at the end of fiscal year 2012 from his duties as a director.
(10)
Mr. Liebhaber (who retired from the Board effective November 16, 2011) had 6,500 options outstanding at the end of fiscal year 2012.
(11)
Mr. Skrzypczak (who retired from the Board effective November 16, 2011) had 6,500 options outstanding at the end of fiscal year 2012.

22


Relationships Among Directors or Executive Officers

        There are no family relationships among any of the Company's directors or executive officers.

Certain Relationships and Related Person Transactions

    Review and Approval of Related Person Transactions

        We review all relationships and transaction in which the Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. The Company's legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether the Company or a related person has a direct or indirect material interest in the transaction. On an annual basis, all directors and executive officers must respond to a questionnaire requiring disclosure about any related person transactions, arrangements or relationships (including indebtedness). As required under SEC rules, any transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in the Company's Proxy Statement. In addition, the Audit Committee reviews and approves or ratifies any related person transaction that is required to be disclosed.

    Related Person Transactions

        The Company has entered into an employment agreement with Thomas Waechter (see "Employment Contracts, Termination of Employment and Change in Control Arrangements" below).

Executive Officers

        The following sets forth certain information regarding the Company's executive officers as of October 2, 2012:

Executive Officer
  Age   Position

Thomas Waechter

    59   Chief Executive Officer and President

Rex Jackson

    52   Senior Vice President, Business Services and Acting Chief Financial Officer

Alan Lowe

    50   Executive Vice President and President, Communications & Commercial Optical Products

David Heard

    44   Executive Vice President and President, Communications Tests & Measurement

Luke Scrivanich

    50   Senior Vice President and General Manager, Optical Security & Performance Products

Andrew Pollack

    47   Senior Vice President, General Counsel and Secretary

        Thomas Waechter became Chief Executive Officer and President of the Company in January 2009, prior to which he was Executive Vice President and President of the Communications Test & Measurement Group. Before joining the Company, Mr. Waechter was the chief operating officer of Harris Stratex Networks, an independent supplier of wireless transmission systems. Prior to that, Mr. Waechter was the president and chief executive officer of REMEC Corporation and has also served as president and chief executive officer of Spectrian Corporation. Additionally, he held a number of executive level positions during his 14-year career with multinational Schlumberger Limited. He holds a Bachelor of Business Administration from The College of William and Mary. Mr. Waechter serves as a member of the board of Altera Corporation.

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        Rex Jackson became Senior Vice President, Business Services and Acting Chief Financial Officer in August 2012, prior to which he was Senior Vice President, Business Services. Prior to joining the Company in January 2011, Mr. Jackson served as executive vice president and chief financial officer at Symyx Technologies from 2007 to 2010 where he had responsibility for finance, legal, IT and other corporate functions. From 2006 to 2007, Mr. Jackson served as senior vice president and general counsel for Avago Technologies. Prior to that, he held senior executive positions with Synopsys, Inc., AdForce, Inc. and Read-Rite Corporation. Mr. Jackson holds a B.A. from Duke University and a J.D. from Stanford University Law School.

        Alan Lowe joined the Company in September 2007 as Senior Vice President of the Commercial Lasers business, and he became Executive Vice President and President, Communications & Commercial Optical Products in October 2008. Prior to joining the Company, Mr. Lowe was senior vice president, Customer Solutions Group at Asyst Technologies, Inc. a leader in automating semiconductor and flat panel display fabs. From 2000 to 2003, he was president and chief executive officer of Read-Rite Corporation, a manufacturer of thin-film recording heads for disk and tape drives. From 1989 to 2000, Mr. Lowe served in roles of increasing responsibility at Read-Rite, including president and chief operating officer, and senior vice president, customer business units. Prior to joining Read-Rite, he served in various sales positions with Microcom Corporation and IBM Corporation. Mr. Lowe holds bachelors degrees in computer science and business economics from the University of California, Santa Barbara, and also completed the Stanford Executive Program in 1994.

        Luke Scrivanich became the Vice President and General Manager of Optical Security and Performance Products (OSP) in June 2012 and became Senior Vice President and General Manager of OSP in August 2012. Mr. Scrivanich joined the Company in April 2008 as Vice President and General Manager of Flex Products. Prior to joining the Company in 2008, Mr. Scrivanich was with PPG Industries where he served in general management, marketing and strategic planning positions for various divisions, including fine chemicals, optical products and coatings. He previously held senior marketing positions at AGR International, Inc., a manufacturer of packaging inspection equipment. Mr. Scrivanich holds a B.S. in Chemical Engineering from Cornell University and an M.B.A. from the Harvard Graduate School of Business Administration.

        David Heard joined the Company in October 2010 as Executive Vice President and President of the Communications Test & Measurement business. Prior to joining the Company, Mr. Heard was chief operating officer from 2007 to 2010 at BigBand Networks, Inc., a leading provider of digital video networking solutions. From 2004 to 2006, Mr. Heard served as president and chief executive officer of Somera Communications. From 2000 to 2004 Mr. Heard was president of the Systems Switching division at Tekelek/Santera, a leading VoIP gateway supplier. Prior to this role, Mr. Heard served for 10 years in broadband access and wireless networking, including VP/GM of Access Networks and various international posts at AT&T/Lucent. Mr. Heard was a Sloan Fellow and holds a M.S. in management from Stanford University, an MBA from the University of Dayton, Ohio, and B.A. in production and operations management from The Ohio State University.

        Andrew Pollack became Senior Vice President, General Counsel and Secretary in April 2012, prior to which he served as Vice President, General Counsel and Secretary from August 2010 to April 2012. Before assuming the General Counsel role, Mr. Pollack held increasingly senior roles within the Company's legal department since joining the Company in 2000. Before joining the Company, Mr. Pollack was in private practice in the San Francisco Bay Area, focusing on general litigation, corporate and labor and employment maters. Mr. Pollack holds a B.A. in History from the University of California, Santa Barbara and a J.D. from Santa Clara University School of Law.

24



PROPOSAL 2

RATIFICATION OF INDEPENDENT AUDITORS

        The Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending June 29, 2013, and the Board has directed that the selection of the independent auditors be submitted for ratification by the Stockholders at the Annual Meeting.

        Although the Company is not required to seek Stockholder approval of its selection of the independent auditors, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Board will investigate the reasons for Stockholder rejection and will reconsider its selection of the independent auditors. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the fiscal year if the Audit Committee determines that such a change would be in the Company's and its Stockholders' best interests.

        Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Audit and Non-Audit Fees

        The following table presents fees billed for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of the Company's annual financial statements for the years ended June 30, 2012 and June 30, 2011, respectively, and fees billed for other services rendered by PricewaterhouseCoopers LLP and during those periods.

 
  Fiscal 2012   Fiscal 2011  

Audit Fees (1)

  $ 3,840,504   $ 3,968,990  

Audit-Related Fees (2)

    140,000     86,056  

Tax Fees (3)

    470,236     383,337  

All Other Fees (4)

    86,860     88,000  
           

Total

  $ 4,537,600   $ 4,526,383  
           

(1)
Audit Fees related to professional services rendered in connection with the audit of the Company's annual financial statements, the audit of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, reviews of financial statements included in the Company's Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.
(2)
Audit-Related Fees include professional services related to the audit of the Company's financial statements and consultation on accounting standards or corporate transactions.
(3)
Tax Fees for fiscal 2012 include $90,926 for professional services rendered in connection with transfer pricing tax consulting and compliance, and $379,310 for tax audits, planning services and other tax consulting.
(4)
All Other Fees in fiscal 2012 are related to certain software subscriptions and the annual Workforce Engagement Survey.

        For fiscal year 2012, the Audit Committee considered whether audit-related services and services other than audit-related services provided by PricewaterhouseCoopers LLP are compatible with

25


maintaining the independence of PricewaterhouseCoopers LLP and concluded that the independence of PricewaterhouseCoopers LLP was maintained.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

        The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors. Under the policy, pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis. For each proposed service, the independent auditors are required to provide detailed back-up documentation at the time of approval. Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the table above were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING JUNE 29, 2013.

26



PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

        The Company's goal for its executive compensation program is to attract, motivate and retain the executive talent necessary to achieve its business objectives. The Company believes that it can best drive long-term Stockholder value by establishing a strong pay for performance system, which provides the opportunity to earn above average compensation in return for achieving aggressive strategic and financial goals.

        At the Company's 2011 annual meeting of stockholders, 88% of the votes cast were voted in favor of approving the compensation of the Company's Named Executive Officers ("NEOs"). The Company believes this affirms Stockholders' support of the Company's approach to executive compensation.

        The Compensation Discussion and Analysis ("CD&A") section of this Proxy Statement includes a detailed description of the Company's compensation philosophy, as well as an analysis of how the compensation of its NEOs in fiscal year 2012 aligned with that philosophy. Highlights of the Company's compensation practices include:

    The Company annually benchmarks each of the base salary, incentive payment and equity award components of its NEO compensation against a peer group to ensure that its compensation remains competitive.

    Approximately 50% of each executive's total target compensation is performance-based, consisting of cash incentive compensation and options, as described below.

    The Company emphasizes pay for performance. All cash incentive compensation paid to its NEOs is paid pursuant to the Company's Variable Pay Plan (the "VPP"). The VPP is generally available to all employees, and payments under the VPP are closely tied to actual Company performance.

    The Company aims to strike a balance in setting equity compensation targets. While 50% of the RSUs awarded to its NEOs have time-based vesting requirements, the other 50% have vesting requirements tied to the performance of the Company's stock as compared to the NASDAQ telecommunications index (the "Index"), and could vest at a higher or lower rate or not at all, based on such relative performance. We refer to these performance-based RSUs as market stock units, or "MSUs."

    The Company has stock ownership requirements which are designed to align the interest of its NEOs with those of its Stockholders and regularly monitors compliance with these requirements.

    The Company does not generally provide perquisites or other benefits to its NEOs that are not available to all employees.

    We regularly evaluate our compensation practices and modify our programs as appropriate to address evolving best practices. For example, in fiscal year 2012 we moved from performance-based stock options to MSUs, which are designed to be a more accurate indicator of the Company's performance than stock appreciation alone.

27


        We urge Stockholders to read the CD&A section of this Proxy Statement beginning on page 42 which describes in more detail how our executive compensation practices operate and are designed to achieve our compensation objectives.

        In accordance with section 14A of the Securities Exchange Act, Stockholders will have the opportunity to cast a non-binding, advisory vote on the compensation of our NEOs. You are encouraged to read the Executive Compensation section of this Proxy Statement, including the CD&A, along with the accompanying tables and narrative disclosure. Accordingly, we are asking you to approve, on an advisory basis, the compensation of the Company's NEOs, as described in the CD&A, the accompanying tables and the related narrative disclosure contained therein.

        The following resolution will be submitted for Stockholder vote at the Annual Meeting:

        "RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company's named executive officers, as disclosed in the Company's proxy statement for the 2012 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion."

        Although the advisory vote is non-binding, the Compensation Committee and the Board will review the results of the vote and the Compensation Committee will consider the results of the vote when making future compensation decisions. Unless the Board of Directors modifies its determination on the frequency of future advisory votes, the next advisory vote on the compensation of the Company's NEOs will be held at the fiscal 2013 annual meeting of stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE, ON AN ADVISORY BASIS,
"FOR" THE APPROVAL OF THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS,
AS DESCRIBED IN THE CD&A, THE COMPENSATION TABLES
AND THE RELATED NARRATIVE DISCUSSION IN THIS PROXY STATEMENT.

28



PROPOSAL 4

APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO ELIMINATE THE
CLASSIFIED STRUCTURE OF THE BOARD OF DIRECTORS

        Our Certificate of Incorporation currently provides that the Board is to be divided into three classes of directors, with each class elected every three years. The Board has approved, and recommends to our Stockholders for approval, an amendment to the Certificate of Incorporation to eliminate the classified structure of the Board and to provide for the annual election of directors beginning with the 2013 Annual Meeting of Stockholders. As described below, the elimination of the classified structure will be phased in over a three-year period beginning with the 2013 Annual Meeting of Stockholders.

        If approved by our Stockholders, this proposal will become effective upon the filing of the Certificate of Amendment to the Restated Certificate of Incorporation (the "Certificate of Amendment") with the Secretary of State of the State of Delaware, which the Company intends to file promptly after the required Stockholder approval is obtained. Following the filing and effectiveness of the Certificate of Amendment, the Class II members of the Board elected at the Annual Meeting will serve their three-year terms expiring at the 2015 Annual Meeting of Stockholders, the Class I members of the Board elected at the 2010 Annual Meeting of Stockholders will serve the remainder of their three-year terms expiring at the 2013 Annual Meeting of Stockholders and the Class III members of the Board elected at the 2011 Annual Meeting of Stockholders will serve the remainder of their three-year terms expiring at the 2014 Annual Meeting of Stockholders. Beginning with the 2013 Annual Meeting of Stockholders, directors will be elected to one-year terms. As described above, all directors currently in office will serve the remainder of the terms to which they were elected, and any individual appointed to fill any vacancy will have the same remaining term as that of his or her predecessor.

Background

        The Board recognizes that a classified structure may offer several advantages, such as promoting Board continuity and stability, encouraging directors to take a long-term perspective, and reducing a company's vulnerability to coercive takeover tactics. However, a classified structure may also appear to reduce directors' accountability to stockholders since it does not enable shareholders to express a view on each director's performance annually. Declassifying the Board will enable stockholders to evaluate and elect all directors on an annual basis. The Board also believes that implementing annual elections for all directors would support our ongoing effort to adopt certain "best practices" in corporate governance as the Board noted that many U.S. public companies have eliminated their classified Board structures in recent years.

Proposed Amendment to the Certificate of Incorporation

        The amendment to the Certificate of Incorporation approved by the Board, and recommended for Stockholder approval, proposes to eliminate the division of the Board into three classes and provide that, commencing with the 2013 Annual Meeting of Stockholders, directors shall be elected at each annual meeting of Stockholders to hold office until the next annual meeting. The Certificate of Amendment, including the amendments described in this proposal, is attached to this Proxy Statement as Exhibit A. To illustrate the proposed amendments to the Certificate of Incorporation, the language that is struck through on Exhibit A is proposed to be deleted from the Certificate of Incorporation by the Certificate of Amendment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO
THE CERTIFICATE OF INCORPORATION TO ELIMINATE THE CLASSIFIED STRUCTURE OF THE
BOARD OF DIRECTORS

29



PROPOSAL 5

AMENDMENT AND REAPPROVAL OF THE AMENDED AND RESTATED 2003 EQUITY INCENTIVE PLAN

General

        The Company's Stockholders are being asked to approve an amendment to the Company's Amended and Restated 2003 Equity Incentive Plan (the "2003 Plan") to (i) increase the number of shares of our Common Stock that may be issued under the 2003 Plan, and (ii) extend the term of the 2003 Plan for an additional ten (10) years after the date of approval of the amendment. In addition, the Stockholders are being asked to reapprove the material terms of the 2003 Plan for purposes of Section 162(m) of the Internal Revenue Code (the "Code"), including, but not limited to the performance goals and share limitations set forth in the 2003 Plan.

        The 2003 Plan was originally approved by our Stockholders on November 6, 2003 (the "Original Effective Date"), and was last amended with Stockholder approval in November 2010.

        The purpose of the 2003 Plan is to help us attract, motivate and retain the employees, directors and consultants whose contributions are important to our success. The use of broad-based equity incentive programs such as those made available through the 2003 Plan has long been an important component of our compensation and incentive philosophy. This philosophy emphasizes the alignment of compensation and incentives with Stockholder interests. Additionally, the Company uses long-term equity incentives to increase the proportion of individual compensation that is dependent upon Company performance, particularly at the more senior executive levels. As further discussed below, we believe that the proposed amendment and reapproval of the 2003 Plan is necessary to enable us to continue to provide these incentives.

        On August 22, 2012, following a review of the 2003 Plan and the Company's compensation policies with the assistance of the Compensation Committee's compensation consultant and management, the Compensation Committee decided to recommend, and the Board adopted, the proposed amendment subject to the approval of the Stockholders, to increase the number of shares of Common Stock that may be issued under the 2003 Plan by 10,000,000 shares to enable the Company to continue utilizing the long-term equity incentive component of our compensation program beyond the Company's fiscal year 2012. In addition, because, in accordance with its terms, the 2003 Plan would expire and terminate on the ten (10) year anniversary of the Original Effective Date, the amendment also extends the 2003 Plan's terms for an additional ten (10) year period which ends on the date the amendment is approved by the stockholders. Further, stockholders are being asked to reapprove the material terms of the performance goals and share limitations under the 2003 Plan to help the Company fully deduct for federal income tax purposes performance-based compensation provided to certain employees pursuant to the 2003 Plan. See "Shares Authorized for Issuance Under the 2003 Plan" below for additional details.

Summary of Proposal

        The proposed amendment to the 2003 Plan would increase by 10,000,000 the maximum number of shares of our Common Stock that may be issued under the 2003 Plan, subject to proportionate adjustment in the event of a stock split or other change in the Common Stock or capital structure of the Company (the "Additional Shares") and would extend the term of the 2003 Plan for an additional ten (10) years after the date of approval of the amendment.

        Finally, the 2003 Plan is designed to preserve the Company's ability to deduct in full for federal income tax purposes the compensation recognized by certain employees in connection with certain awards granted under the Plan. Section 162(m) of the Code generally denies a corporate tax deduction

30


for annual compensation exceeding $1 million paid to a "covered employee" of a publicly held company. Generally, covered employees are the chief executive officer and the three highest compensated officers other than the chief executive and chief financial officers. However, certain types of compensation, including performance-based compensation, are generally excluded from this limitation on deductibility. To enable compensation in connection with stock options, stock appreciation rights, certain restricted stock and restricted stock unit awards, performance shares and performance units granted under the 2003 Plan to qualify as "performance-based" within the meaning of Section 162(m) of the Code, the stockholders must approve the material terms of the performance goals that may be established in conjunction with performance-based compensation awarded under the Plan. In addition, regulations issued under Section 162(m) of the Code generally require reapproval by the stockholders every five years of the material terms of these performance goals if the 2003 Plan permits the compensation committee of the Board of Directors to select the specific target levels of performance to be achieved under these awards. Because the 2003 Plan authorizes the compensation committee to select the appropriate target levels of performance to be achieved, stockholder reapproval of the material terms of the performance goals is required at this Annual Meeting if the Company is to continue to be able to deduct certain compensation under the 2003 Plan. Accordingly, by approving this proposal, the stockholders will be reapproving the following specific provisions of the 2003 Plan:

    the eligibility requirements for participation in the 2003 Plan;

    the maximum numbers of shares for which awards may be granted to an employee in any fiscal year; and

    the business criteria upon which the vesting of awards of performance shares, performance units and certain awards of restricted stock and restricted stock units may be based.

        Currently, a maximum of 54,200,000 shares of Common Stock has been authorized for issuance under the 2003 Plan. As of August 31, 2012, there were 4,477,811 shares of our Common Stock remaining available for future grants under the 2003 Plan.4 We believe that these remaining shares may be insufficient to continue operating the 2003 Plan beyond the Company's fiscal year 2013, after taking into account the charge of 1.5 shares against the available Plan share reserve for each share made subject to a "full value award," such as a restricted stock unit ("RSUs") awards. We believe that the Additional Shares will allow us to remain consistent with our intent to limit annual potential incremental dilution attributable to equity incentive awards to at or below a long-term average of 3% while continuing to have the ability to utilize awards under the 2003 Plan to compete for, attract and retain talent necessary to the Company's future success and align employee interests with those of the Company's Stockholders. Consistent with this intent, average annual net dilution resulting from grants under the 2003 Plan over the Company's 2010, 2011 and 2012 fiscal years has been 1.4%.5

        As of August 31, 2012, there were 7,968,982 shares of our Common Stock subject to outstanding options, with a weighted average exercise price per share equal to $10.0471 and a weighted average term remaining of 4.6541 years, and 10,305,406 restricted stock units that were issued and outstanding, but not yet vested, under all of our equity plans.

   


4
As of August 31, 2012 there were also 1,005,897 shares of our Common Stock remaining available for future grants under the 2005 Acquisition Equity Incentive Plan, which we utilize for grants made in connection with acquisitions.
5
Excludes shares underlying equity granted under the Company's 2005 Acquisition Equity Incentive Plan.

31


Summary of the 2003 Plan

        The following description of the 2003 Plan is only a summary of certain provisions thereof and is qualified in its entirety by reference to its full text, a copy of which, as proposed in its amended and restated form, is attached hereto as Exhibit B.

Purpose of the 2003 Plan

        The purpose of the 2003 Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company by offering them an opportunity to participate in the Company's future performance.

Plan Administrator

        The 2003 Plan is administered by the Board or a committee of the Board, either of which we refer to in this proposal as the "Administrator." The Board has delegated to its Compensation Committee the authority generally to administer the 2003 Plan. In the case of awards granted to officers and members of the Board or which are intended to qualify as "performance-based" for purposes of Section 162(m) of the Code, the 2003 Plan requires that the Administrator be constituted in a manner that complies with applicable law. Subject to applicable laws and the terms of the 2003 Plan, the Administrator has the authority, in its discretion, to:

    select the employees, directors and consultants to whom awards are to be granted;

    determine the type of award granted;

    determine the number of shares or the amount of other consideration to be covered by each award;

    approve award agreements for use under the 2003 Plan;

    determine the terms and conditions of each award;

    construe and interpret the terms of the 2003 Plan and the awards granted;

    establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable non-U.S. jurisdictions; and

    take such other action not inconsistent with the terms of the 2003 Plan as the Administrator deems appropriate.

        As of August 31, 2012, the Company had approximately 4,985 employees, including five Named Executive Officers, and six independent directors who were eligible to participate in the 2003 Plan. As of August 31, 2012, the closing price per share of the Company's Common Stock was $11.19.

Shares Authorized for Issuance Under the 2003 Plan

        As of August 31, 2012, there were 7,968,982 shares of our Common Stock subject to outstanding options, with a weighted average exercise price per share equal to $10.0471 and a weighted average term remaining of 4.6541 years, and 10,305,406 RSUs that were issued and outstanding, but not yet vested, under all of our equity plans. As of that date, there were 4,477,811 shares of our Common Stock remaining available for future grants under the 2003 Plan (and 1,005,897 shares of our Common

32


Stock remaining available for future grants under the 2005 Acquisition Equity Incentive Plan). If this amendment is approved by the Stockholders, the aggregate number of shares of Common Stock that may be issued under the 2003 Plan will be increased from 54,200,000 shares to 64,200,000 shares, subject to proportionate adjustment in the event of stock splits or other changes in the Common Stock or capital structure of the Company.

        The number of shares charged against the 2003 Plan's limit when an award is granted differs depending on whether the award is a "full value award" or another award, such as a stock option. Full value awards are awards, such as Restricted Stock, RSUs, performance shares, and performance units, which do not require payment of a purchase price per share at least equal to the fair market value of a share of Common Stock on the date of grant. The 2003 Plan's share reserve is reduced by 1.5 shares for each one share made subject to a full value award. Accordingly, 1.5 shares are returned to the share reserve for each share subject to a full value award that is forfeited, cancelled, expired, or repurchased by the Company at the lower of its original purchase price or its fair market value at the time of repurchase. For each share made subject to an award that is not a full value award, the 2003 Plan's share reserve is reduced by one share, and one share is returned to the share reserve for each share subject to a non-full value award that is forfeited, cancelled, expired, or repurchased by the Company at the lower of its original purchase price or its fair market value at the time of repurchase. The number of shares available under the 2003 Plan will be reduced upon the exercise of a stock appreciation right by the gross number of shares for which the award is exercised, rather than by the net number of shares actually issued. Except as described above, shares that have been issued under the 2003 Plan cannot be returned to the 2003 Plan's share reserve to again become available for future grant.

        The maximum number of shares for which awards may be granted to any participant during a fiscal year is 1,000,000 shares, provided that a participant may be granted awards for up to an additional 1,000,000 shares in connection with the participant's initial commencement of service or first promotion in any fiscal year. These award limits will be adjusted proportionately in the event of a stock split or other change in the Common Stock or capital structure of the Company.

Prohibition of Repricing without Stockholder Approval

        The 2003 Plan expressly provides that, without the approval of the Company's Stockholders, the Company may not reduce the exercise price of any option or stock appreciation right granted under the 2003 Plan or cancel an outstanding option or stock appreciation right having an exercise price that exceeds the fair market value of the underlying shares in exchange for cash, another option, stock appreciation right, restricted stock, RSUs or other award, unless the exchange occurs in connection with a corporate transaction, as described below. In accordance with these provisions, in November 2009, the Company's Stockholders approved a stock option exchange program which occurred in October 2010.

Terms and Conditions of Awards

        The 2003 Plan provides for the grant of awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, and dividend equivalent rights. Stock options granted under the 2003 Plan may be either incentive stock options complying with Section 422 of the Code or nonqualified stock options. Incentive stock options may be granted only to employees. All other awards may be granted to employees, directors and consultants. Please see the section entitled "Compensation Discussion and Analysis — Elements of Executive Compensation — Long Term Incentive Compensation" for details about the awards granted under the 2003 Plan during fiscal year 2012.

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        Each award must be evidenced by an award agreement designating the type of award granted. Stock options must be designated as either incentive stock options or nonqualified stock options. However, to the extent that the aggregate fair market value of shares of Common Stock subject to options designated as incentive stock options which become exercisable by an employee for the first time during any calendar year exceeds $100,000, such excess options are treated as nonqualified stock options. The term of any award granted under the 2003 Plan may not exceed eight years, provided that the term of an incentive stock option granted to an employee who owns stock representing more than 10% of the combined voting power of the Company or any parent or subsidiary of the Company may not exceed five years.

        Awards may be granted with such vesting conditions, including satisfaction of performance criteria, as are determined by the Administrator. Compensation realized by a covered employee pursuant to a stock-based award other than a stock option or stock appreciation right will qualify as performance-based for purposes of Section 162(m) of the Code only if it is payable only upon the achievement of one or more performance goals established by the Administrator not later than 90 days (or other period required by Section 162(m) of the Code) after the commencement of the services to which the goal relates and while the outcome is substantially uncertain. The 2003 Plan establishes the following business criteria upon which the Administrator may base such performance goals for purposes of qualifying the Award as performance-based for purposes of Section 162(m) of the Code: (i) increase in share price, (ii) earnings per share, (iii) total Stockholder return, (iv) operating margin, (v) gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added, and (xvii) market share.

        Stock options and stock appreciation rights must have an exercise price per share that is not less than 100% of the fair market value of a share of Common Stock on the date the option is granted, except that in the case of incentive stock options granted to an employee who owns stock representing more than 10% of the combined voting power of the Company or any parent or subsidiary of the Company such exercise price may not be less than 110% of the fair market value of a share of Common Stock on the date the option is granted. The exercise price is generally payable in cash, by check, through the surrender of shares of Common Stock or, in the case of options, by means of a broker-assisted sale and remittance procedure.

        Under the 2003 Plan, the Administrator may establish one or more programs to permit selected participants the opportunity to elect to defer receipt of consideration payable under an award. The Administrator also may establish separate programs for the grant of particular forms of awards to one or more classes of participants.

Termination of Service

        A participant in the 2003 Plan whose service with the Company terminates may exercise an award only to the extent and only within the time period provided in the award agreement. Any award designated as an incentive stock option not exercised within the time permitted by Section 422 of the Code following the participant's termination of employment will be treated as a nonqualified stock option.

Transferability of Awards

        Incentive stock options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the participant only by the participant. Other awards may be transferred only by will or by the laws of descent and distribution, or by gift or domestic relations order to the participant's

34


immediate family in a manner determined by the Administrator. The 2003 Plan permits the designation of beneficiaries by holders of awards.

Change in Capitalization

        Subject to any required action by the Stockholders of the Company, the number of shares of Common Stock covered by outstanding awards, the number of shares of Common Stock that have been authorized for issuance under the 2003 Plan, the exercise or purchase price of each outstanding award, the maximum number of shares of Common Stock that may be granted subject to awards to any participant in a fiscal year, and the like, will be proportionally adjusted in the event of (i) any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, stock dividend, combination or reclassification or similar event affecting the Common Stock, or (ii) any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company. In addition, the Administrator is authorized to provide for such adjustments in connection with any other transaction with respect to Common Stock, including a merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction.

Corporate Transactions

        Outstanding awards will terminate upon the consummation of a corporate transaction (as described below) except to the extent that they are continued by the Company or assumed by the successor entity or its parent. Except as otherwise provided by the award agreement, the vesting of an outstanding award will be accelerated in full if it is not continued by the Company or assumed or replaced by the successor entity or its parent in connection with a corporate transaction. The 2003 Plan provides that a corporate transaction includes (i) the sale of all or substantially all of the Company's assets, (ii) the complete dissolution or liquidation of the Company, (iii) a merger or consolidation in which the Company is not the surviving entity, (iv) any reverse merger in which the Company is the surviving entity but in which securities possessing more than 40% of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger, or (v) the acquisition in a single or series of related transactions by any person or related group of persons of beneficial ownership of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities.

Amendment, Suspension or Termination of the 2003 Plan

        The Board of Directors may at any time amend, suspend or terminate the 2003 Plan. The 2003 Plan will terminate automatically ten (10) years after the date the Original Effective Date by the Company's Stockholders unless the Stockholders approve the extension proposed by this amendment. To the extent necessary to comply with applicable law, the Company will obtain Stockholder approval of any amendment to the 2003 Plan. The Board of Directors may unilaterally amend the 2003 Plan or any award agreement, retroactively or otherwise, in order to conform the 2003 Plan or award agreement to any present or future law, regulation or rule applicable to the 2003 Plan, including Section 409A of the Code. Section 409A establishes certain requirements applicable to nonqualified deferred compensation and imposes tax penalties on such deferred compensation that does not satisfy these requirements. Certain awards granted under the 2003 Plan may be deemed to constitute deferred compensation and will be required to comply with the requirements of Section 409A.

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Certain U.S. Federal Income Tax Consequences

        The following summary of the United States federal income tax consequences in connection with awards granted under the 2003 Plan is based upon federal income tax laws in effect on the date of this proxy statement. This summary does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences.

Nonqualified Stock Options

        The grant of a nonqualified stock option under the 2003 Plan will not result in any federal income tax consequences to the participant or to the Company. Upon exercise of a nonqualified stock option, the participant is subject to income tax at the rate applicable to ordinary compensation income on the excess of the fair market value on the date of exercise of the shares acquired over the exercise price paid. If the participant is an employee, this income will be subject to withholding of federal income and employment taxes. The Company generally will be entitled to an income tax deduction in the amount of the income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code. Any gain or loss realized by the participant upon a subsequent disposition of the shares will be a long- or short-term capital gain or loss, depending on whether the shares are held for more than one year following exercise of the option. The Company does not receive a tax deduction for any such gain.

Incentive Stock Options

        The grant of an incentive stock option under the 2003 Plan will not result in any federal income tax consequences to the participant or to the Company. A participant recognizes no taxable income for regular tax purposes upon exercising an incentive stock option (subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise. In the event of a disposition of stock acquired upon exercise of an incentive stock option, the tax consequences depend upon how long the participant has held the shares. If the participant does not dispose of the shares within two years after the incentive stock option was granted or within one year after the incentive stock option was exercised, the participant will recognize a long-term capital gain (or loss) equal to the difference between the sale price of the shares and the exercise price paid. The Company is not entitled to any deduction under these circumstances.

        If the participant fails to satisfy either of the foregoing holding periods, he or she must recognize ordinary income in the year of the disposition (referred to as a "disqualifying disposition"). The amount of such ordinary income generally is the lesser of (i) the difference between the amount realized on the disposition and the exercise price paid, or (ii) the difference between the fair market value of the stock on the exercise date and the exercise price paid. Any gain in excess of the amount taxed as ordinary income will be treated as a long- or short-term capital gain, depending on whether the shares were held for more than one year. The Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code.

        In general, the difference between the exercise price paid and the fair market value of the shares on the date when an incentive stock option is exercised is treated as an adjustment in computing income that may be subject to the alternative minimum tax, which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax.

36



Stock Appreciation Rights

        A participant recognizes no taxable income upon the receipt of a stock appreciation right. Upon the exercise of a stock appreciation right, the participant generally will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the award's base price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Code. Any gain or loss on participant's subsequent disposition of the shares will be a long- or short-term capital gain or loss, depending on whether the shares have been held for more than one year following exercise of the stock appreciation right. The Company does not receive a tax deduction for any such gain.

Restricted Stock

        A participant who acquires shares under a restricted stock award will generally recognize ordinary income on the difference between the amount paid for the shares, if anything, and their fair market value on the date that the restrictions lapse. If the participant is an employee, this income will be subject to withholding of federal income and employment taxes. The Company is entitled to an income tax deduction in the amount of the ordinary income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code. Any gain or loss on the recipient's subsequent disposition of the shares will be a long- or short-term capital gain or loss, depending on whether the shares have been held for more than one year since the restrictions lapsed. The Company does not receive a tax deduction for any such gain.

        Recipients of restricted stock awards may make an election under Section 83(b) of the Code to recognize as ordinary income in the year that such shares are granted an the amount equal to the excess of the fair market value on the date of their issuance over the price paid for such shares, if any. If this election is made, the participant will recognize no additional compensation income when the restrictions on the shares lapse. Any gain or loss on the subsequent disposition of the shares will be a long- or short-term capital gain or loss, depending on whether the shares have been held for more than one year since they were acquired by the participant. An election under Section 83(b) of the Code must be made, if at all, within thirty days following the date on which the shares of restricted stock were issued to the participant.

Restricted Stock Units, Performance Shares and Performance Units

        A participant generally will recognize no income upon the receipt of a Restricted Stock Unit, performance share or performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any unrestricted shares of stock received. If the participant is an employee, such ordinary income generally is subject to withholding of federal income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under "Restricted Stock." Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of unrestricted shares on the date they were issued, will be taxed as a long- or short-term capital gain or loss, depending on whether the shares have been held for more than one year since they were acquired by the participant. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code.

37


Dividends and Dividend Equivalents

        Because Restricted Stock Units and performance unit awards are not actual, issued shares of our Common Stock, recipients do not have the rights of a Stockholder, but these awards may provide for the payment of dividend equivalents. Recipients of stock-based awards that earn dividends or dividend equivalents will recognize taxable ordinary income on any dividend payments received with respect to such awards. If the participant is an employee, such income is subject to withholding of federal income and employment taxes. The Company is entitled to an income tax deduction in the amount of the income recognized by a participant, except to the extent such deduction is limited by applicable provisions of the Code. No dividends or dividend equivalents have been paid to recipients of unvested performance stock-based awards.

New 2003 Plan Benefits

        Please see the "Grants of Plan-Based Awards Table" for details on the awards made under the 2003 Plan to our named executive officers during fiscal year 2012.

        Because it is within the Compensation Committee's discretion to determine which directors, employees and consultants receive awards under the 2003 Plan, and the types and amounts of those awards, it is not possible at present to specify the persons to whom awards will be granted in the future or the amounts and types of individual grants. However, it is anticipated that, among others, all of our current executive officers, including our named executive officers, will receive stock options and/or Restricted Stock Units under the 2003 Plan.

Options Granted to Certain Persons

        The following table shows the number of shares subject to options issued under the 2003 Plan since its inception to our named executive officers, all current executive officers as a group, all current directors who are not executive officers and all employees as a group (excluding executive officers).


2003 Equity Incentive Plan

Name and Position   Number of Shares6  
Thomas Waechter
Chief Executive Officer and President
    1,270,000  
David Vellequette7
Executive Vice President and Chief Financial Officer
    620,000  
Alan Lowe
Executive Vice President and President,
Communications and Commercial Optical Products
    191,250  
David Heard
Executive Vice President and President,
Communications Test & Measurement
    141,000  
Roy Bie
Senior Vice President, Holograms
    383,680  
All current executive officers as a group (6 persons)     1,951,844  
All current directors who are not executive officers, as a group (6 persons)     61,875  
All employees as a group (excluding current executive officers)     13,284,846  

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENTS TO THE 2003 PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER THE 2003 PLAN AND EXTEND THE TERM OF THE 2003 PLAN

   


6
As of August 31, 2012
7
Mr. Vellequette resigned as Chief Financial Officer, effective August 31, 2012.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth certain information known to the Company with respect to the beneficial ownership as of August 14, 2012, by (i) all persons who are beneficial owners of five percent (5%) or more of the Company's Common Stock including Exchangeable Shares, (ii) each director and nominee, (iii) the Company's executive officers, and (iv) all current directors and executive officers as a group.

        As of August 14, 2012, 232,429,430 shares of the Company's Common Stock were outstanding, including 3,937,789 Exchangeable Shares. The amounts and percentages of Common Stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission ("SEC") governing the determination of beneficial ownership of securities. Under the SEC rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of securities as to which such person has no economic interest.

 
  Number of Shares
Beneficially Owned
Name   Number   Percentage

5% or more Stockholders (1)

         

T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202

    28,981,641   12.50%

The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355-2331

    15,042,134   6.49%

Directors and Executive Officers

         

Kevin Kennedy (2)

    157,287   *

Thomas Waechter (3)

    513,260   *

Richard E. Belluzzo (4)

    36,283   *

Harold L. Covert (5)

    46,567   *

Andrew Pollack (6)

    65,164   *

Penny Herscher (7)

    23,434   *

Masood Jabbar (8)

    45,305   *

Martin A. Kaplan (9)

    46,639   *

Roy Bie (10)

    274,508   *

Keith Barnes (11)

    0   *

David W. Heard (12)

    82,102   *

Rex S. Jackson (13)

    62,372   *

Alan Lowe (14)

    282,381   *

David Vellequette (15)

    381,790   *

All directors and executive officers as a group (14 persons) (16)

    2,017,092   *

*
Less than 1%.
(1)
Based on information set forth in various Schedule 13 filings with the SEC current as of June 29, 2012 and the Company's outstanding common stock data contained in its 2012 Annual Report on Form 10-K.
(2)
Includes 31,250 shares subject to stock options and RSUs currently exercisable or exercisable within 60 days of August 14, 2012.

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(3)
Includes (i) 372,834 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 140,426 RSUs which vest within 60 days of August 14, 2012, of which 51,282 are restricted stock unit awards, which we refer to as market stock units ("MSUs"). MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(4)
Includes 9,875 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012.
(5)
Includes 8,250 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012.
(6)
Includes (i) 51,505 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 13,659 RSUs which vest within 60 days of August 14, 2012.
(7)
Includes zero shares subject to stock options and RSUs currently exercisable or exercisable within 60 days of August 14, 2012.
(8)
Includes 7,500 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012.
(9)
Includes 17,500 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012.
(10)
Includes (i) 242,109 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 29,277 RSUs which vest within 60 days of August 14, 2012, of which 7,692 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(11)
Includes zero shares subject to stock options and RSUs currently exercisable or exercisable within 60 days of August 14, 2012.
(12)
Includes (i) 61,687 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 20,415 RSUs which vest within 60 days of August 14, 2012, of which 10,259 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(13)
Includes (i) 42,187 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 14,670 RSUs which vest within 60 days of August 14, 2012, of which 7,372 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(14)
Includes (i) 127,319 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 50,473 RSUs which vest within 60 days of August 14, 2012, of which 19,231 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(15)
Includes (i) 252,528 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 40,224 RSUs which vest within 60 days of August 14, 2012, of which 12,825 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.

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(16)
Includes (i) 1,224,544 shares subject to stock options currently exercisable or exercisable within 60 days of August 14, 2012 and (ii) 309,144 RSUs which vest within 60 days of August 14, 2012, of which 108,661 are MSUs. MSUs are reported at 100% of the target number of shares scheduled to vest within 60 days of August 14, 2012. The actual number of shares that vest will range from 0% to 150% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.

41



EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Compensation Philosophy

        We believe that the quality, experience, skills, engagement and dedication of our executive officers are critical factors affecting the Company's performance and our ability to drive long-term growth of Stockholder value. These factors guide our primary executive compensation philosophy: that total compensation should be established at a competitive level to attract, motivate and retain the superior executive talent necessary to achieve our business objectives, thereby increasing long-term value and driving stockholder returns. Our compensation philosophy recognizes that retention of superior executive talent is enabled through reinforcement of a strong pay for performance compensation system which provides the opportunity to earn above average compensation in return for achieving business and financial success, and the sustained delivery of the results, leadership and innovation necessary to drive long-term growth of Stockholder value. Additionally, our compensation philosophy continues to evolve to align compensation with recognized best practices and to address current market realities. We recognize that we compete for executive talent in a highly competitive market not only within our industry, but also with companies outside our immediate product and geographic markets. Therefore, our compensation philosophy includes consideration of role-specific factors when determining executive compensation. Because we strive to maintain an egalitarian work environment, we do not normally provide perquisites or other benefits to our executive officers that are not generally available to all eligible employees.

        In support of this compensation philosophy, the Compensation Committee of the Board (the "Committee") utilizes three primary compensation elements: (1) base salary, to attract and retain highly qualified executive talent; (2) the opportunity to earn semi-annual and other cash incentive bonuses to incentivize and reward delivery of financial and business results; and (3) equity grants, including performance-based and time-based restricted stock units ("RSUs") to reinforce longer-term retention and consistent performance. These are intended to align our executives' interests with those of our Stockholders by providing opportunities to derive compensation through equity ownership and the relative performance of our stock against the composite companies of the NASDAQ telecommunications index. Each of these compensation elements are discussed in detail below.

        Throughout this proxy statement, the individuals who served as the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") during the fiscal year 2012, as well as the other individuals included in the Summary Compensation Table, are referred to as the "named executive officers" (or "NEOs").

Advisory Vote on Executive Compensation

        We conducted a stockholder advisory vote on executive compensation at our 2011 Annual Meeting of Stockholders. While this vote was not binding on the Company, we believe that it is important for our Stockholders to have an opportunity to have an advisory vote on executive compensation on an annual basis as a means to express their views regarding our executive compensation philospohy, our compensation policies and programs, and our decisions regarding executive compensation, all as disclosed in this Proxy Statement. The Board and the Committee value the opinions of our Stockholders and, to the extent that there is any significant vote against the compensation of the NEOs as disclosed in this Proxy Statement, we will endeavor to identify the specific concerns driving any votes against the NEOs compensation, take into account those concerns, and the Committee will evaluate whether any actions are necessary to address those concerns.

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        At the 2011 Annual Meeting of Stockholders, approximately 88% of the votes cast were in favor of the NEOs' compensation as disclosed in the 2011 Proxy Statement. The Committee reviewed the final vote results and, in part based on this level of support, determined that no significant changes to our executive compensation policies were necessary at this time.

Determining Executive Compensation

        The Committee sets target cash and equity compensation amounts, relative to market data utilized for benchmarking purposes (as discussed below). The following table sets forth a summary of the Committee's cash and equity compensation targets utilized for all NEO compensation decisions for fiscal year 2012. A detailed discussion of the Committee's objectives for each compensation element, the principles underlying the compensation targets relative to applicable benchmarks and the basis for actual compensation paid can be found in the paragraphs below.

 
   
   
  Base Salary
   
  Cash Incentive
Compensation

   
  Total Target
Cash
Compensation

   
  Long-Term
Incentive
Compensation
(Equity)

   
  Total
Direct
Compensation

   

 

 

Target Percentile

      60th       60th       60th       65th       60th – 65th    

 

 

Range

      50th – 75th       50th – 75th       50th – 75th       60th – 75th       50th – 75th    

        The Committee believes that these percentile levels and targets are necessary and appropriate to achieve the Committee's primary executive compensation goals in the highly competitive market for quality executive talent. The Committee views these targets as a continuum, and recognizes that NEOs may be compensated below, at or above these targets depending upon relevant Company business objectives, the particular mix of skills and attributes the particular NEO can contribute to achieving those objectives and the Company's current evolution and business cycles. The Committee therefore has the discretion to adjust the above targets for the components of compensation in order to achieve the Committee's overall target of the 60th to 65th percentiles for total direct compensation (the "TDC Target") relative to the peer group discussed below.

        To assist the Committee in its review of executive compensation, the Company's Human Resources Department and the Committee's primary external compensation consultant, Compensia, Inc., provide compensation data compiled both from executive compensation surveys (including proprietary surveys conducted by Radford Surveys + Consulting, Inc., and Compensia, Inc.), and annual reports and proxy statements from companies that the Committee selects as a "peer group" of technology companies for executive compensation analysis purposes. The peer group utilized for this benchmarking purpose is determined based upon annual revenue (with peer companies generally ranging from approximately 50% to 180% of the Company's annual revenue) market capitalization (with peer companies generally ranging from approximately 50% to 450%), and other financial performance metrics. The peer group includes technology companies, such as customers, competitors or other similar companies with which the Company may compete in recruiting executive talent and that have one or more attributes significantly similar to JDSU, including markets, manufacturing profile, level of integration and enterprises with global operations. The peer group is reviewed annually by the Committee and may be amended from time to time based on the criteria stated above. The list of peer group companies (the "Peer List") for fiscal year 2012 is as follows:

    Altera Corp., ARRIS Group, Inc., Avago Technologies Limited, AVX Corporation, Bio-Rad Laboratories, Inc., Brocade Communications Systems, Inc., Ciena Corporation, F5 Networks, Inc., Finisar Corp., KLA-Tencor Corporation, LSI Corporation, Novellus Systems, Inc., PerkinElmer, Inc., Polycom, Inc., Tellabs, Inc., Teradyne, Inc., Trimble Navigation Limited and Xilinx Inc.

43


        In determining appropriate levels of executive compensation for fiscal year 2012, the Committee considered the Company's financial performance in fiscal year 2011 relative to the 2011 Peer List, as well as significant operational improvements and new product development. Financial and other performance metrics considered by the Committee included (all numbers except stock performance and segment information are non-GAAP — see Appendix B for a reconciliation to the most comparable GAAP numbers):

    operating income increased from 7.1% in fiscal year 2010 to 12.7% in fiscal year 2011;

    net income more than doubled to $216.7M or 93 cents per share, up from $91.9M or 41 cents a share in fiscal year 2010;

    net revenue grew 32% during fiscal year 2011, which was in the 85th percentile of the 2011 Peer List;

    net revenue in the fourth fiscal quarter of fiscal year 2011 was $472.3M, an increase of 18.6% over the fourth fiscal quarter of fiscal year 2010, indicating continued growth despite challenging global macroeconomic pressures;

    net revenue for the CommTest segment increased $160.3M and operating income for CommTest increased $37.9M during the fiscal year 2011;

    net revenue for the CCOP segment increased $271.5M and operating income for CCOP increased $96.6M during fiscal year 2011; and

    our stock price increased 83% during fiscal year 2011, which was in the 90th percentile of the 2011 Peer List.

        Total NEO compensation is determined as a result of both the Company's performance as discussed above and each NEO's performance against their individual objectives. To enable alignment of compensation decisions with actual individual performance the CEO periodically apprises the Committee of his personal assessment of each executive officer's performance. In assessing each executive officer, the CEO reviews and documents each executive officer's performance during the relevant year or portion thereof, including accomplishments, areas of strength, areas for development and long-term potential. The CEO bases this evaluation on his personal knowledge of each executive officer's performance, actual results achieved and feedback provided by others. In addition, the independent members of the Committee have periodic formal and informal interactions with each NEO multiple times during the year, including discussions relative to the functions and/or business units for which such NEO is responsible. Prior to any Committee decision on compensation for NEOs, the CEO, working with the Senior Vice President of Human Resources, the Compensation and Benefits group within the Human Resources Department, and Compensia, reviews the compensation benchmarking data along with budgetary data obtained from the Company's Finance Department, and provides a recommendation to the Committee for each NEO's compensation, except for himself. The Committee ultimately is responsible for the final determination of all compensation for NEOs other than the CEO.

        The CEO's annual performance is reviewed periodically by the Committee and the independent members of the full Board using performance criteria developed by the Committee and approved by the full Board's independent directors. The CEO's performance criteria established for fiscal year 2012 and methodology used for their determination are discussed below. In assessing CEO performance, the Committee and independent members of the Board review Company business, operational and financial performance and other factors that may be included in the CEO performance criteria and feedback that may be obtained from the CEO's direct reports and other employees. The Committee also engages in discussions with the CEO regarding his performance against objectives set by the

44


Board. The Committee recommends all elements of compensation for the CEO to the independent members of the Board, including salary and incentive-based and equity-based compensation, for the Board's review, consideration and approval.

        NEOs are not present for, nor do they participate in, Committee or Board discussions or approvals regarding their own compensation.

Elements of Executive Compensation

        The fundamental policy of the Committee is to provide NEOs with competitive compensation opportunities based upon the overall financial and operational performance of the Company and the Company's individual operating segments, their specific current and anticipated future contributions to the financial success of the Company and their personal performance relative to associated business performance objectives. It is the Committee's objective to have a significant portion of each NEO's compensation contingent upon the Company's performance, and as applicable, individual operating segment performance, as well as upon his or her own individual contributions to the achievement of business objectives. The compensation package for NEOs is, and in fiscal year 2012 was, comprised of (i) base salary; (ii) the opportunity to earn semi-annual variable cash incentive payments; and (iii) long-term equity-based incentive awards with vesting tied to both the passage of time and performance conditions. As an executive officer's level of responsibility increases, a greater proportion of such executive's total target compensation is comprised of cash incentive bonuses and equity compensation vehicles in order to align total target compensation with the actual achievement of Company and operating segment business and financial performance objectives.

        The factors which the Committee considered in establishing the individual components of each NEO's compensation package for fiscal year 2012 are summarized below. The Committee may in its discretion apply different factors, particularly different measures of financial and business performance, in setting future NEO compensation.

        Base Salary. The Company provides NEOs and other executives with a fixed base salary set at a level to allow the Company to attract, motivate and retain qualified executives. The base salary for each NEO is determined on the basis of the following factors: scope of responsibilities, experience, skill level, personal performance, and salary levels in effect for comparable positions within and outside the industry against which the Company competes for executive talent. The Committee also compares the compensation of NEOs with the compensation of other executive officers for internal pay equity purposes. The weight given to each of these factors differs from individual to individual as the Committee deems appropriate and necessary to support the Company's business objectives. In fiscal year 2012 the Committee targeted setting each NEO's base salary in the 60th percentile when compared to market data, which such targeted levels may be reached over time depending upon the various factors described above and the performance of the individual NEO. Salary levels generally are considered annually as part of the Company's performance review process as well as upon a promotion or other change of position or level of responsibility. Merit based increases to salaries of the Company's NEOs other than the CEO are recommended by the CEO to the Committee, and all increases are based on the Committee's (and in the case of the CEO, the independent directors of the full Board) review and assessment of the individual's performance, skill set and competitive market factors.

        The Committee reviewed all NEO base salaries in August and October 2011 and determined that each of the NEOs merited an increase in base salary for the remainder of fiscal year 2012. This determination was based upon a number of factors, including the Company's continued improvements in year over year financial and operational performance and total stockholder return as described above, the individual contributions of the NEOs, and the fact that the base salaries for each of the

45


NEOs except for Mr. Lowe would have been substantially below the market 60th percentile if not adjusted. The Committee approved the following increases in the base salary for Mr. Vellequette, Mr. Lowe, Mr. Heard and Mr. Bie, in each case, effective as of October 9, 2011. In the case of Mr. Waechter, the Committee recommended and the Board approved the following increase, also effective as of October 9, 2011.

Named Executive Officer
  FY 2011
Base Salary
  FY 2012
Base Salary
 

Thomas Waechter

  $ 750,000   $ 800,000  

David Vellequette

  $ 415,000   $ 440,000  

Alan Lowe

  $ 475,000   $ 520,000  

David Heard

  $ 400,000   $ 425,000  

Roy Bie

  $ 325,000   $ 340,000  

        In conducting its review of base salaries, the Committee determined that each of the base salaries approved for fiscal year 2012 were consistent with the compensation philosophy discussed above. The Committee further determined that Mr. Bie's and Mr. Heard's fiscal year 2012 base salaries were below the 60th percentile, while Mr. Waechter's and Mr. Vellequette's base salaries were brought to approximately the 60th percentile. Mr. Lowe's base salary was determined to be above the 75th percentile, but the Committee felt that Mr. Lowe's base salary increase was warranted due to his level of experience, growth potential and ongoing significant contributions supported by the actual results delivered by the Commercial and Consumer Optics Products segment ("CCOP") under Mr. Lowe's leadership. The Committee also considered the fact that the CCOP business led by Mr. Lowe is generally larger, on an annual revenue basis, than the business divisions led by individuals at other companies in the Peer List from whom market data was derived.

        Cash Incentive Compensation. The Company utilizes a single cash incentive program for the significant majority of its employees globally, including all NEOs, known as the Variable Pay Plan ("VPP"). Under the VPP, semi-annual incentive bonuses, designed to reward short-term performance and achievement of designated results, may be earned by each participating employee. The Committee believes that having NEOs participate in the same incentive program as all other eligible employees promotes a common sense of purpose, alignment, and fairness while reducing the complexity of the Company's compensation programs. The goals used to determine whether payments are made are determined in a manner designed to align executives', other employees and Stockholders' interests by making such payments under the VPP contingent on business performance objectives consistent with growing profitability and sustainable, long-term appreciation in Stockholder value.

        Each participant in the VPP is assigned a target incentive opportunity ("TIO") of a percentage of his or her base salary, based upon the individual's grade level within the Company's standard leveling structure for all Company employees. Each NEO's TIO is annually reviewed by the Committee and benchmarked against the market data, including the Peer List and survey data, provided by Compensia. For fiscal year 2012 the assigned TIOs for each of Mr. Vellequette, Mr. Lowe, Mr. Heard and Mr. Bie remained at 75%, which was at or slightly below the market 60th percentile. Mr. Waechter's TIO was increased from 100% to 120%, to align his TIO with the market 60th percentile.

        The actual cash incentive payments earned by each employee annually under the VPP may be either less or greater than these target incentive percentages depending on whether and the extent to which the objectives of the Company operating segment to which they are assigned, and Company performance goals (as discussed below) are achieved in the fiscal year, and may range from 0% to 200% of each employee's assigned target cash incentive. Additionally, the actual incentive payment earned by all employees within any individual operating segment participating in the VPP may be

46


adjusted lower or higher by a factor of 15% based upon the discretion of the CEO to adjust payments to under and over-performing segments or corporate functions, although any adjustment that would affect the CEO must be approved by the independent members of the Board. Mr. Waechter did not exercise this discretion to recommend discretionary adjustments to incentive payments earned by any operating segment in fiscal year 2012. Actual incentive payments earned by our NEOs in fiscal year 2012 are indicated in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

        Actual payments under the VPP are subject to two factors, specifically achievement of each of (a) a threshold level of company and operating segment financial performance (known as "Funding"), and (b) operating income targets, as follows:

        Funding: In order to align the VPP with the Company's portfolio structure, in fiscal year 2012 Funding of the VPP required satisfaction of the following minimum funding objectives measured on a quarterly basis: (a) for employees in the Company's shared services and other central functions ("Corporate" employees), the achievement of a minimum of 85% of the Company's shared services operating expense as a percentage of revenue target, and (b) for employees assigned to a specific operating segment, achievement of a minimum of 85% of the Company's Annual Operating Plan ("AOP") Contribution Margin target for their respective segment. In February 2012, due to global macroeconomic conditions that were not specifically related to the Company but contributed to lower-than-forecast operating income, and in recognition of individual employee performance, the Committee adjusted the threshold targets for the fourth quarter of fiscal year 2012 to align with the Company's then-current fourth quarter forecasts. Consistent with the broad-based applicability of the VPP, the adjusted targets were applied equally to all employees, including NEOs.

        Although the Funding requirement percentages were unchanged from the previous fiscal year, the absolute dollar value of the targets for most employees increased in fiscal year 2012 due to an increase in the absolute dollar value of the AOP targets. Accordingly, for CommTest, CCOP and Corporate employees, the Funding objectives were intended to be, and were, more challenging than the corresponding actual results achieved in the previous fiscal year in order to align VPP incentive payments with the Company's objective of continuously driving operating performance improvements. The Funding objective for the Advanced Optical Technologies segment ("AOT") was set at approximately the same level as the previous fiscal year, since it was determined to be performing within its targeted operating model. For fiscal year 2012, Mr. Waechter and Mr. Vellequette were treated as Corporate employees, Mr. Lowe as an employee of CCOP, Mr. Heard as an employee of the

47


Communications Test & Measurement segment ("CommTest") and Mr. Bie as an employee of the AOT segment.8

        Operating Income: Subject to achieving the minimum Funding thresholds, actual payments under the VPP in fiscal year 2012 were determined based upon full Company non-GAAP operating income as a percentage of revenue. As reflected in the chart below, in order for NEOs to receive their target cash incentives for the full fiscal year, and subject to the application of CEO's and independent members of the Board's discretion as discussed above, the Company was required to deliver at least 95% of the operating income actually achieved by the Company in fiscal year 2011. The Committee anticipated that the incentive compensation which would be earned by NEOs for achieving the fiscal year 2012 AOP operating income objective would result in incentive payments of approximately 125% of target incentive payments due to the fact that the AOP set a Company-wide operating income target approximately 13% higher than that actually achieved in fiscal year 2011. The Committee determined that this structure was warranted given the performance metrics achieved during fiscal year 2011, as noted above, and the fact that the Company's operating income target for fiscal year 2012, if achieved, would represent a 500% increase in operating income over a 3-year period.

        In order to determine actual payments under the VPP in fiscal year 2012 for any given level of operating income, the Company utilized an approximately linear scale of full Company operating income, measured on a quarterly basis, where the operating income as a percentage of revenue level shown on the horizontal axis would yield the corresponding percentage of each individual's TIO on the vertical axis (as illustrated in the below graph). Participation also was separated into two tiers throughout the Company based upon employee grade level. Employees at the director level and above, representing the approximately 225 most senior managers in the Company, received VPP compensation at a reduced rate relative to achievement of operating income objectives than was required for VPP compensation received by those employees below the director level for all operating income levels below 12% of revenue.

   


8
The methods for determination of the VPP Funding threshold are recommended by management and reviewed and approved by the Committee (and the independent members of the Board relative to the CEO's participation in the VPP) prior to the start of the fiscal year. The contribution margin and operating expense targets utilized for purposes of determining Funding under the VPP reflect the actual financial and business performance objectives, projections and estimates approved by the Board upon the start of the fiscal year and reviewed mid-year which are used by management and the Board for purposes of annual financial and business planning and analysis. As such, these targets reflect the Company's confidential and commercially sensitive analysis, expectations and objectives for its financial, operating and overall business performance, taking into consideration then current forecasted economic conditions, the outlook for the industry and the Company's businesses, technology and new product development, and strategic objectives intended to drive growth in long-term Stockholder value, among other factors. Due to the confidential and commercially sensitive nature of these analyses, expectations and objectives and elements of the corresponding VPP Funding objectives thresholds (as described above), their specific disclosure would result in competitive harm to the Company. It is for this reason that some elements of the Company's specific financial performance objectives and estimates used for purposes of determination of VPP Funding, while frequently referenced in this document, are not disclosed. The use of financial metrics and defined operating objectives for the establishment of the Company's incentive bonus (and for equity compensation as discussed below) performance criteria is intended to set challenging but reasonably achievable goals and is designed to ensure that all participants, including our NEOs, are focused on operating the Company in a disciplined manner in accordance with the Committee's and Board's compensation objectives discussed above. In August 2012, the Committee approved revisions to the Company's VPP, including removal of the funding threshold for determining eligibility for VPP payments. It is expected that the removal of the funding threshold will improve Shareholder transparency and improve employee collaboration.

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        The fiscal year 2012 scale is as follows:

         
   
GRAPHIC
   
         

        The actual semi-annual VPP payment to each participant thus was calculated based upon the following formula (assuming Funding and excluding CEO and Board discretion):

    Quarterly Base Pay Earnings (for the employee) × TIO % × Achievement % (based upon Company operating income)

        Actual achievement for the Company for each fiscal quarter 2012 was as follows:

 
 
   
   
  H1 FY12 VPP
Achievement

   
  H2 FY12 VPP
Achievement

   
 
   
   
  Q1'12
   
  Q2'12
   
  Q3'12
   
  Q4'12
   

  

 

Participating Segments

      All       Corporate,
AOT
      AOT       All    

  

 

Senior Manager & below

      89%       52.5%       6.0%       57.5%    

  

 

Director & above

      74%       42.5%       5.25%       45.5%    

        Long-Term Incentive Compensation. Long-term incentives can be provided through RSUs and stock option grants. In fiscal year 2012, the Committee transitioned from a policy of granting both RSUs and stock option grants to granting only RSUs. The Committee believes that stock-based compensation aligns the interests of employees with long-term Stockholder value creation, providing each NEO with an incentive to manage the Company from the perspective of an owner driving long-term Stockholder value. The Committee also believes stock-based compensation provides the Company with an important long-term retention tool in a highly competitive market for executive talent. The Committee sets equity grant levels to executive officers based on a variety of factors, including the individual performance of the executive officer, an assessment of the value of the individual's current and anticipated future

49


services to the Company, relative business criticality of the position held, the awards given to other executives, and the desire to keep the Company's overall compensation competitive. The number of shares of Common Stock subject to each grant is set at a level intended to create a meaningful opportunity for stock ownership and resulting compensation opportunity based on the executive officer's current position with the Company, the average size and potential returns of comparable awards made to executive officers in similar positions within the industry, the executive officer's potential for increased responsibility and promotion over the grant term, and the executive officer's personal performance in recent periods. The Committee also takes into account the value of vested and unvested equity incentives held by the executive officer in order to maintain an appropriate level of equity incentives for that executive officer. Additionally, the Committee generally grants equity awards to executive officers upon commencement of their employment with the Company or their promotion, with the level of award based on factors similar to those considered in connection with awards to existing executive officers. Finally, the Committee considers the number of shares of Common Stock which would be subject to proposed equity incentive awards to individual NEOs for consistency with the Committee's objective to limit actual net dilution attributable to equity awards to all Company employees to at or below a long-term average of 3% per annum.

        RSUs are granted with vesting requirements related to (a) the passage of time, to encourage continued service and retention, or (b) the satisfaction of performance or financial goals or other conditions that are aligned with the Company's business and financial objectives and designed to support growth in long-term Stockholder value. In all cases, vesting of RSUs is contingent upon the executive officer's continued service with the Company.

        In order to ensure equity compensation awards are aligned with the Committee's commitment to pay-for-performance, it is the Committee's practice that:

    at least 50% of the number of shares of all such equity awards to the Company's NEOs are performance-based and are earned or otherwise vest based on the achievement of reasonable performance targets; and

    performance criteria applicable to such performance-based equity awards and the difficulty of achievement of such criteria are disclosed in the proxy statement for each applicable fiscal year.

        All equity compensation awards issued to the Company's NEOs in fiscal year 2012 complied with this practice which is illustrated below.


Equity Compensation

GRAPHIC

50


        In August 2011, upon the recommendation of the Committee, the Board approved the use of performance-based RSUs, also known as market stock units ("MSUs") for certain executive officers in place of performance-based stock options. The Board believed that MSUs provide a more accurate measurement of the Company's relative performance and support the Company's pay-for-performance philosophy. When granting MSUs, the Committee assigns a target award for each grant. The MSUs vest over three years, and the number of shares actually earned on each vesting date is determined by comparing the Company's total stockholder return ("TSR") for the relevant period against the TSR of the component companies of the NASDAQ Telecom Index (the "Index") on a straight-line scale from 0% to 150% as described in the following table.

Relative Performance
  Percent of Target
Award Vesting
 

Company TSR below 25th percentile

    0 %

Company TSR at 25th percentile

    50 %

Company TSR at 50th percentile

    100 %

Company TSR at or above 75th percentile

    150 %

        TSR is initially calculated for a baseline period, which for grants made in fiscal year 2012, was July 15, 2011 through September 15, 2011 (the "Initial Measurement Period"). Vesting is then determined by comparing the TSR during each subsequent July 15 through September 15 of each year during the vesting period (the "Measurement Period") against the Initial Measurement Period.9

        All of the Company's NEOs were awarded RSUs in August 2011 as an element of the Company's fiscal year 2012 equity award and review process. Management recommended and the Committee determined target award levels for each grade level of senior management consistent with the 60th-75th percentile level of market data based upon grant value. Actual recommended awards for each of the Company's NEOs were then adjusted based upon an analysis of each NEO's positioning relative to the TDC Target, individual performance and position assessments as discussed above. Consistent with the Company's commitment discussed above to ensure that at least 50% of the number of shares subject to equity awards to NEOs are performance-based, each NEO was then awarded 50% of the target award level shares in the form of MSUs.10 The remaining 50% of the shares subject to award were time-based RSUs (the "2012 Time Based Awards"). The 2012 Time Based Awards were subject to a vesting schedule providing that one third of the award will vest on the first anniversary of the grant date, with the remaining two thirds of the award vesting in eight equal quarterly installments thereafter. Actual awards to NEOs are shown in the Grants of Plan-Based Awards Table.

        The Committee determined that when all components of compensation were considered for purposes of determining total direct compensation relative to the TDC Target, Mr. Heard and Mr. Bie were at or about the 60th percentile, Mr. Vellequette was slightly above the 70th percentile, Mr. Waechter was at the 75th percentile, and Mr. Lowe was significantly above the 75th percentile. The Committee determined that all actual annual equity awards to NEOs in fiscal year 2012 were consistent with or below the 60th-75th percentile level equity target discussed in the preceding paragraph, with the

   


9
For purposes of calculating TSR, (a) dividends are assumed to have been reinvested, (b) share prices are rounded to the nearest $0.01 and dividends are rounded to the nearest $0.001, and (c) companies without a stock price history for the entire performance or averaging period are excluded.

10
When evaluating each NEO's performance-based target in comparison to the relevant market data, the Committee assumes for comparison purposes that MSUs will vest at 100% of the MSU target. Actual MSU grant awards are made at the 150% achievement level to ensure a sufficient number of shares will have been granted if the maximum TSR is achieved. However, actual vesting of the individual MSU award will range anywhere from 0% to 150%, as described above.

51


exception of Mr. Lowe, who received a higher award in recognition of his level of experience, growth potential and ongoing significant contributions supported by the actual results delivered by the CCOP segment under his leadership.

        Perquisites and Other Personal Benefits. We believe that it is critical that the Company maintain an egalitarian culture, and that our executive officers should not operate under different standards than other employees. Accordingly, the Company's healthcare, insurance, and other welfare and employee benefit programs are the same for all eligible employees, including executive officers. The Company generally does not have programs for providing personal benefit perquisites to NEOs, such as defraying the cost of financial or legal advice, personal entertainment, recreational club memberships or family travel. The Company has no outstanding loans of any kind to any of its executive officers, and it expects its officers to be role models under its Code of Business Conduct, which applies equally to all employees.

Compensation Recovery Policy

        The Committee adopted the "JDSU Compensation Clawback Policy" (the "Policy") in February 2010. The Policy applies to cash incentive payments and equity compensation awards provided to Section 16 officers and directors under any applicable Company incentive plan. In the event of fraud or intentional misconduct of Section 16 officers or directors, the Committee may seek:

    repayment of any cash incentive payment,

    cancellation of unvested or unexercised equity incentive awards, and

    repayment of any compensation earned on previously exercised equity incentive awards,

where such payments, equity incentive awards and/or compensation earned on previously exercised equity incentive awards was predicated on results that were augmented by such fraud or intentional misconduct ("Excess Compensation"), whether or not such activity resulted in a financial restatement. The Committee will have sole discretion under the Policy, consistent with any applicable statutory requirements, to seek reimbursement of Excess Compensation.

        Further, following a restatement of the Company's financial statements, the Company will recover any compensation received by the Chief Executive Officer and Chief Financial Officer that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002.

        For purposes of the Policy, Excess Compensation will be measured as the positive difference, if any, between the compensation earned by an Executive Officer and the compensation that would have been earned by the Executive Officer had the fraud or misconduct not occurred.

Executive Stock Ownership Policy

        The Committee recommended and the full Board approved formal stock ownership requirements for non-employee directors and executive officers of the Company in fiscal year 2005 and amended this policy in August 2010. Under the policy in effect during fiscal year 2011, each non-employee director of the Company was required to have a minimum equity interest in the Company's stock at least equal to three times that non-employee director's annual cash retainer by the later to occur of the fifth anniversary of his or her first election to the Board or June 30, 2012. Likewise, each executive officer of the Company (except for the CEO) was required to have a minimum equity interest in the Company's stock at least equal to that executive officer's annual base salary by the later to occur of the fifth anniversary of his or her hire date (or, if later, promotion to executive officer) or June 30, 2010, and the CEO was required to have a minimum equity interest in the Company's stock at least equal to three times the CEO's then current annual base salary by the later to occur of the fifth anniversary of

52


his or her promotion date or January 1, 2014. The shares that count towards this Company policy include stock owned outright, unvested and vested restricted stock and RSUs, and any stock options exercisable within 60 days of the valuation date. The equity incentive awards granted in fiscal year 2012 to each of the current named executive officers are listed in the Outstanding Equity At Fiscal Year End Table. Each of the non-employee directors and executive officers of the Company were in compliance with this policy during fiscal year 2012.

 
 
   
   
  Ownership Requirement
   
  Deadline for Compliance
(the later of)

   
     Non-Employee Directors       3x annual cash retainer       5th anniversary of
election to the Board
        June 30, 2012    
     Chief Executive Officer       3x annual base salary       5th anniversary of
hire or promotion date
        January 1, 2014    
     Executive Officers
(excluding CEO)
      1x annual base salary       5th anniversary of
hire or promotion date
        June 30, 2010    

Equity Grant Practices

        All stock option awards made to our NEOs, as well as all other Company employees, have an exercise price equal to the fair market value of our common stock on the date of grant (though as noted above the MSUs only vest upon the achievement of certain conditions related to the performance of the Company's common stock). Fair market value is defined under our equity compensation plans as the closing market price of one share of our common stock on the NASDAQ Stock Market on the date of grant. The Committee generally makes grants to our NEOs and other senior management on a once-a-fiscal year basis, but the Committee retains the discretion to make additional awards to NEOs at other times in connection with the initial hiring of a new officer, for retention purposes, or otherwise. New hire equity incentive awards are generally granted on the 15th day of the month immediately following the first day of employment of such new employee.

        The Company does not have any program, plan or practice to time equity compensation grants to its executives in coordination with the release of material nonpublic information. The Company has not timed, nor does it plan to time, the release of material nonpublic information for the purpose of affecting the value of executive compensation, nor are equity compensation grants timed with regard to current share price or factors which may affect future share price.

Tax Considerations

        The Committee endeavors to maximize deductibility of compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") to the extent practicable while maintaining a competitive, performance-based compensation program. Based on the amount of deductions the Company can take each year, the actual impact of the loss of deduction for compensation paid to any NEO over the $1 million limitation is extremely small and has a de minimus impact on the Company's overall tax position. For the foregoing reasons, the Committee, while considering tax deductibility as one of the factors in determining compensation, will not limit compensation to those levels or types of compensation that will be deductible. The Committee will, of course, consider alternative forms of compensation that, consistent with its compensation goals, preserve deductibility.

        The Company's 2003 Equity Incentive Plan (the "2003 Plan") is structured such that compensation deemed paid to an executive officer when he or she exercises an outstanding option under the 2003 Plan, with an exercise price equal to the fair market value of the option shares on the grant date, will qualify as performance-based compensation which will not be subject to the $1 million limitation. In addition, other stock based awards issued under the 2003 Plan may be exempt from the $1 million limitation if such awards are subject to performance criteria and administered in accordance with

53


Section 162(m) of the Code. The Company has discretion to issue other stock based awards which are intended to be exempt from the $1 million limitation as well as other stock based awards that are not intended to be exempt from the $1 million limitation.

Payments Upon a Termination or Change of Control

        In August 2008, the Committee adopted a Change of Control Benefits Plan, which was amended in August 2011. Pursuant to the plan, eligible executives, including the NEOs (except for the CEO), will receive payments and accelerated vesting of options and other securities in the event of a qualifying termination within 12 months after a change of control of the Company. If the eligible executive has received an MSU award, the vesting will accelerate at 100% of the target amount of the award. In addition, pursuant to the employment agreement between the Company and Mr. Waechter, Mr. Waechter will receive payments and, in certain circumstances, acceleration of options and other securities, in the event he is terminated without Cause or resigns for Good Reason in connection with a change of control of the Company.

        The Committee believes these agreements are beneficial to our stockholders because they minimize the uncertainty presented to our valuable workforce in the case of a change of control.

        See "Potential Payments Made Upon Termination or Change of Control" below for a more complete summary of the terms of the Change of Control Benefits Plan and the employment agreement with Mr. Waechter, including estimates of the compensation that would have been payable to the NEOs had they been triggered on June 30, 2012, the final day of fiscal year 2012.

54



COMPENSATION COMMITTEE REPORT

        The information contained in the following report shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, except to the extent that the Company specifically requests that the information be treated as soliciting material or incorporates it by reference into a document filed under the Securities Act or the Exchange Act. The information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

        The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

  COMPENSATION COMMITTEE

 

Penelope A. Herscher, Chair
Richard E. Belluzzo
Martin A. Kaplan

55



SUMMARY COMPENSATION TABLE

        The following table summarizes the total compensation of our chief executive officer, chief financial officer, and the three other most highly-paid executive officers (collectively, the "NEOs") in fiscal years 2012, 2011 and 2010.

Name and Principal Position
  Year   Salary
($)
  Bonus
($)
  Stock
Awards
($)(1)
  Option
Awards
($)(1)
  Non-Equity
Incentive Plan
Compensation
($)(2)
  All Other
Compensation
($)(3)
  Total
($)
 
Thomas Waechter     2012     784,615     0     4,614,052     0     373,281     4,000     5,775,948  
Chief Executive Officer and     2011     734,615     0     1,027,000     1,555,000     985,385     4,000     4,306,000  
President     2010     686,539     0     528,300     764,100     331,962     6,762     2,317,663  
David Vellequette     2012     432,308     0     1,153,918     0     128,719     4,000     1,718,945  
Executive Vice President and     2011     411,923     0     372,287     563,688     414,133     4,000     1,766,031  
Chief Financial Officer     2010     397,211     0     205,450     297,150     144,048     6,667     1,050,526  
Alan Lowe     2012     506,154     0     1,730,352     0     111,926     4,000     2,352,432  
Executive Vice President and     2011     459,615     0     1,329,133     563,688     462,663     4,000     2,819,099  
President, Communications
and Commercial Optical
Products
    2010     416,827     0     1,189,972     233,475     151,161     6,826     1,998,261  
David Heard     2012     417,308     0     923,075     0     93,238     4,000     1,437,621  
Executive Vice President and
President, Communications
Test & Measurement
    2011     269,231     0     548,020     817,330     89,827     116,422     1,840,830  
Roy Bie
Senior Vice President,
Holograms
    2012     335,385     0     692,141     0     103,767     4,000     1,135,293  

(1)
Amounts shown do not reflect compensation actually received by the NEO. Instead, the amounts shown are the grant date fair value in the period presented as determined pursuant to stock-based compensation accounting rule FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to calculate these amounts are set forth under Note 15 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for fiscal year 2012 filed with the SEC on August 24, 2012.
(2)
Non-equity incentive plan compensation paid to each NEO include the following:
All non-equity incentive plan compensation for fiscal year 2012 was paid pursuant to the Variable Pay Plan.
(3)
All amounts represent 401(k) matching or 401(k) contributions by the Company other than the following:
The Company paid $115,125 in relocation expenses to Mr. Heard during fiscal year 2011 to assist with his relocation to Germantown, Maryland.

56


Employment Contracts, Termination of Employment and Change in Control Arrangements

        On December 17, 2008, the Company and Mr. Waechter entered into an employment agreement (the "Waechter Agreement"), pursuant to which Mr. Waechter became the Chief Executive Officer and President of the Company, effective January 1, 2009. Mr. Waechter's base salary under the Waechter Agreement was initially set at $700,000. In addition, Mr. Waechter is eligible to earn a cash incentive under the Company's established incentive plan(s) for senior executives with a target bonus of 100% of his annual base salary, based upon achievement of objectives determined by the Company from time to time, commencing in the second half of the Company's fiscal year 2009. Mr. Waechter's base salary was increased by the Board in October 2010 and October 2011. Effective as of October 2011, Mr. Waechter's base salary was $800,000. In addition, in August 2011, the Board approved an increase in Mr. Waechter's target bonus for fiscal year 2012, from 100% to 120%. The Waechter Agreement was not amended in connection with these increases.

        Mr. Waechter also received the following equity incentive awards pursuant to the Waechter Agreement, each granted on January 1, 2009:

    An award of 450,000 Performance Stock Options (the "Performance Options"), which will vest in three equal installments on the first, second and third anniversaries of the grant date. The Performance options will become exercisable upon the latter to occur of (i) the vesting schedule mentioned in the prior sentence and (ii) the appreciation of the price of the Company's common stock such that it will have traded at a minimum of a 25% premium to the exercise price of the Performance Options for at least 30 consecutive trading days;

    An award of 250,000 time-based stock options, which will vest in three equal installments on the first, second and third anniversaries of the grant date (the "Time Based Options"); and

    An award of 200,000 restricted stock units ("RSUs"), which will vest in three equal installments on the first, second and third anniversaries of the grant date (the "Time Based RSUs").

        For a complete summary of the termination and change of control provisions of the above agreement, please see the section "Potential Payments Made Upon Termination or Change of Control" below. A complete summary of the 2008 Change of Control Benefits Plan that the Company adopted on August 29, 2008, as amended on August 9, 2011, which explains the termination benefits available to the NEOs other than Mr. Waechter, can also be found under that section heading below.

57



GRANTS OF PLAN-BASED AWARDS TABLE

        The following table provides information about equity and non-equity awards granted to the NEOs in fiscal year 2012:

 
   
   
  Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)   Estimated Future Payouts Under Equity Incentive Plan Awards    
   
   
 
 
   
   
   
   
  Grant Date Fair Value of Stock and Option Awards ($)(4)  
Name
  Grant
Date
  Approval
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  All Other Stock Awards: Number of Shares of Stock or Units
(#)
  Exercise or Base Price Of Option Awards
($/Sh)
 

Thomas Waechter

    8/15/2011     8/10/2011                       76,923 (2)   153,846 (2)   230,769 (2)               2,715,592  

    8/15/2011     8/10/2011                                         153,846 (3)         1,898,460  

    N/A     N/A     33,600     960,000     1,920,000                                   N/A  

David Vellequette

    8/15/2011     8/9/2011                       19,238 (2)   38,475 (2)   57,713 (2)               679,136  

    8/15/2011     8/9/2011                                         38,475 (3)         474,782  

    N/A     N/A     11,550     330,000     660,000                                   N/A  

Alan Lowe

    8/15/2011     8/9/2011                       28,848 (2)   57,695 (2)   86,543 (2)               1,018,396  

    8/15/2011     8/9/2011                                         57,695 (3)         711,956  

    N/A     N/A     13,650     390,000     780,000                                   N/A  

David Heard

    8/15/2011     8/9/2011                       15,389 (2)   30,778 (2)   46,167 (2)               543,274  

    8/15/2011     8/9/2011                                         30,778 (3)         379,801  

    N/A     N/A     11,156     318,750     637,500                                   N/A  

Roy Bie

    8/15/2011     8/9/2011                       11,539 (2)   23,078 (2)   34,617 (2)               407,359  

    8/15/2011     8/9/2011                                         23,078 (3)         284,783  

    N/A     N/A     8,925     255,000     510,000                                   N/A  

(1)
These columns show the potential cash value of the payout for each NEO under the Company's Variable Pay Plan ("VPP"), as described in the Compensation Discussion and Analysis above. The potential payouts are performance-driven and therefore completely at risk. The amounts actually earned by each NEO in fiscal year 2012 are summarized in the Summary Compensation Table above.
(2)
These grants are restricted stock unit awards, which we refer to as market stock units ("MSUs"). The MSUs are performance-based stock units which will vest in three annual tranches based upon the Company's total stockholder return ("TSR") relative to the performance of the component companies of the NASDAQ Telecommunications Index over the three-year period. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(3)
These grants are time-based RSUs that vest 1/3 of the shares on the first anniversary of the grant date and the remainder of the shares in equal quarterly installments for two years thereafter.
(4)
The amounts shown in this column are the grant date fair value in the period presented as determined pursuant to stock-based compensation accounting rule FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to calculate these amounts are set forth under Note 15 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for fiscal year 2012 filed with the SEC on August 24, 2012. The NASDAQ closing price of our Common Stock was $12.34 on August 15, 2011.

58



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

        The following table provides information regarding outstanding equity awards and applicable market values at the end of fiscal year 2012.

 
  Option Awards   Stock Awards  
 
   
   
   
   
   
   
   
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(1)
 
 
  Number of
Securities
Underlying
Unexercised
Options
(#)
  Number of
Securities
Underlying
Unexercised
Options
(#)
   
   
   
   
  Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
(#)
 
 
   
   
   
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
 
 
   
   
  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
 
 
  Option
Exercise
Price
($)
   
 
 
  Option
Expiration
Date
 
Name
  Exercisable   Unexercisable  

Thomas Waechter

    83,334 (2)   0     3.65     1/1/2017                          

    0 (3)   30,000     5.87     8/15/2017                          

    0 (4)   60,000     5.87     8/15/2017                          

    58,125 (5)   41,875     10.27     8/15/2018                          

    116,250 (6)   83,750     10.27     8/15/2018                          

                            30,000 (7)   330,000              

                            41,875 (8)   460,625              

                            153,846 (8)   1,692,306              

                                        153,846 (9)   1,692,306  

David Vellequette

    21,875 (2)   0     24.96     7/18/2012                          

    16,875 (2)   0     22.80     5/16/2014                          

    40,834 (2)   0     3.56     2/15/2017                          

    52,500 (2)   0     3.56     2/15/2017                          

    11,667 (3)   11,667     5.87     8/15/2017                          

    23,333 (4)   23,334     5.87     8/15/2017                          

    21,070 (5)   15,180     10.27     8/15/2018                          

    42,140 (6)   30,360     10.27     8/15/2018                          

                            11,667 (7)   128,337              

                            15,180 (8)   166,980              

                            38,475 (8)   423,225              

                                        38,475 (9)   423,225  

Alan Lowe

    9,167 (3)   9,167     5.87     8/15/2017                          

    18,333 (4)   18,334     5.87     8/15/2017                          

    21,070 (5)   15,180     10.27     8/15/2018                          

    42,140 (6)   30,360     10.27     8/15/2018                          

                            57,695 (8)   634,645              

                            9,167 (7)   100,837              

                            15,180 (8)   166,980              

                                        57,695 (9)   634,645  

David Heard

    17,625 (10)   29,375     11.66     11/15/2018                          

    35,250 (11)   58,750     11.66     11/15/2018                          

                            35,250 (12)   387,750              

                            30,778 (8)   338,558              

                                        30,778 (9)   338,558  

Roy Bie

    21,875 (2)   0     12.88     5/27/2013                          

    40,000 (2)   0     22.80     5/16/2014                          

    33,704 (2)   0     3.56     2/15/2017                          

    21,667 (2)   0     3.56     2/15/2017                          

    11,667 (3)   11,667     5.87     8/15/2017                          

    23,333 (4)   23,334     5.87     8/15/2017                          

    15,984 (5)   11,516     10.27     8/15/2018                          

    31,968 (6)   23,032     10.27     8/15/2018                          

                            11,667 (7)   128,337              

                            11,516 (8)   126,676              

                            23,078 (8)   253,858              

                                        23,078 (9)   253,858  

(1)
Amounts reflecting market value of RSUs are based on the price of $11.00 per share, which was the closing price of our common stock as reported on NASDAQ on June 29, 2012.
(2)
Fully vested stock option.
(3)
Time-based stock option with 1/3 of the grant vesting on the first three anniversaries of the grant date.

59


(4)
Performance-based stock options which vest in three equal annual installments. The options become exercisable upon the latter to occur of (i) the vesting schedule noted in the previous sentence and (ii) the appreciation of the price of the Company's common stock such that it will have traded at a minimum of a 25% premium to the exercise price of the options for at least 30 consecutive trading days.
(5)
Time-based stock options that vest 1/3 of the awarded options on the first anniversary of the grant date and the remainder of the options in equal quarterly installments for two years thereafter.
(6)
Performance-based stock options which vest 1/3 of the awarded options on the first anniversary of the grant date and the remainder of the awarded options in equal quarterly installments for two years thereafter. The options become exercisable upon the latter to occur of (i) the vesting schedule noted in the previous sentence and (ii) the appreciation of the price of the Company's common stock such that it will have traded at a minimum of a 25% premium to the exercise price of the options for at least 30 consecutive trading days.
(7)
Time-based RSUs with 1/3 of the units vesting on each of the first three anniversaries of the grant date.
(8)
Time-based RSUs that vest 1/3 of the awarded units on the first anniversary of the grant date and the remainder of the units in equal quarterly installments for two years thereafter.
(9)
MSUs that vest in three annual tranches based upon the Company's total stockholder return ("TSR") relative to the performance of the component companies of the NASDAQ Telecommunications Index over the three-year period. The actual number of shares that vest range from 0% to 150% of the target amount for each vesting tranche. The number of MSUs disclosed in the table above reflects vesting at 100% of the target amount. Details of the conditions and terms under which the MSUs will vest are described on page 51 of this Proxy Statement.
(10)
Time-based stock options that vest 1/4 of the awarded options on the first anniversary of the grant date and the remainder of the awarded options in equal quarterly installments for three years thereafter.
(11)
Performance-based stock options which vest 1/4 of the awarded options on the first anniversary of the grant date and the remainder of the awarded options in equal quarterly installments for three years thereafter. The options become exercisable upon the latter to occur of (i) the vesting schedule noted in the previous sentence and (ii) the appreciation of the price of the Company's common stock such that it will have traded at a minimum of a 25% premium to the exercise price of the options for at least 30 consecutive trading days.
(12)
Time-based RSUs with 1/4 of the units vesting on each of the first four anniversaries of the grant date.

60



OPTION EXERCISES AND STOCK VESTED TABLE

        The following Option Exercises and Stock Vested Table provides additional information about the value realized by the NEOs due to the vesting of restricted stock units during fiscal year 2012.

 
  Option Awards   Stock Awards  
Name
  Number of Shares
Acquired on Exercise
(#)
  Value Realized
on Exercise
($) (1)
  Number of Shares
Acquired on Vesting
(#)
  Value Realized
on Vesting
($) (2)
 

Thomas Waechter

    240,000     2,310,180     182,903     2,117,999  

David Vellequette

    0     0     44,404     570,322  

Alan Lowe

    0     0     173,048     2,131,310  

David Heard

    0     0     11,750     140,530  

Roy Bie

    0     0     32,466     409,655  

(1)
Represents the amounts realized based on the difference between the market price of our Common Stock on NASDAQ on the date of exercise and the exercise price.
(2)
Represents the amounts realized based on the product of the number of units vested and the closing price of our Common Stock on NASDAQ on the vesting day.

Potential Payments Made Upon Termination or Change of Control

        The descriptions and table below reflect the amount of compensation to each of the NEOs of the Company in the event of termination of such executive's employment. The amounts of compensation shown below are payable to each NEO upon termination without cause or for good reason, following a change of control, for non-renewal of an employment contract and in the event of death or disability of the executive. The figures shown below assume that such termination was effective as of June 30, 2012 (and therefore use the closing price of our Common Stock on NASDAQ as of June 29, 2012 for all equity-based calculations), and thus include amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts that would be paid can only be determined at the time of such executive's separation from the Company.

        For a complete summary of the salary and bonus provisions of the employment agreement between the Company and Thomas Waechter, our Chief Executive Officer and President (the "Waechter Agreement"), please see the section "Employment Contracts, Termination of Employment and Change in Control Arrangements" following the Summary Compensation Table above. What follows below summarizes only the termination and change of control provisions of the Waechter Agreement.

        The Waechter Agreement provides that in the event that Mr. Waechter's employment is terminated by the Company for reasons other than for Cause prior to any Change of Control (as both terms are defined in the Waechter Agreement) of the Company, subject to execution of a separation agreement and release of claims reasonably acceptable to the Company, Mr. Waechter will be entitled to receive: (i) a cash payment equivalent to two times his annual base salary as of the date of termination of employment; and (ii) Company paid COBRA benefits continuation for a period of the lesser of the maximum allowable COBRA period or 24 months.

        The Waechter Agreement further provides that in the event that Mr. Waechter's employment is terminated by the Company for reasons other than for Cause or by Mr. Waechter for Good Reason upon or following any change of control (as these terms are defined in the Waechter Agreement) of the Company, subject to execution of a separation agreement and release of claims reasonably acceptable to the Company, Mr. Waechter will be entitled to receive: (i) a cash payment equivalent to three times his annual base salary as of the date of termination of employment; (ii) right, title and

61


entitlement to any unvested options, restricted stock units, or any other securities or similar incentives which have been granted or issued as of the date of termination of his employment, shall immediately vest; and (iii) Company paid COBRA benefits continuation for a period of the lesser of the maximum allowable COBRA period or 24 months.

        The other NEOs are subject to the 2008 Change of Control Benefits Plan (the "Change of Control Plan"). The Change of Control Plan provides that in the event of a qualifying termination, and conditioned upon execution and delivery of an effective release of claims against the Company and related parties, each of the eligible executives will be entitled to receive (i) accelerated vesting of any unvested stock options and other securities or similar incentives held at the time of termination (including accelerated vesting of any performance-based awards at 100% of the target achievement level), (ii) a lump sum payment equal to eighteen months' base salary (less applicable tax and other withholdings), and (iii) reimbursement of COBRA premiums for up to one year. A qualifying termination under the Change of Control Plan is any involuntary termination without cause, any voluntary termination for good reason, or any termination due to disability or death, in each case occurring upon or within twelve months following a change of control of the Company, as such terms are defined in the Change of Control Plan.


POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE

Name
  Benefit   Before Change
in Control
Termination
w/o Cause ($)(1)
  Within Twelve
Months
After Change
in Control
Termination
w/o Cause or
for Good
Reason($)(2)
  Non-Renewal of
Employment
Contract($)
  Death or
Disability($)(3)
 

Thomas Waechter

  Salary     1,600,000     2,400,000     0     0  

  Securities     0     4,728,643     0     0  

  COBRA     26,206     26,206     0     0  

David Vellequette

  Salary     0     660,000     0     660,000  

  Securities     0     1,354,566     0     1,354,566  

  COBRA     0     20     0     20  

Alan Lowe

  Salary     0     780,000     0     780,000  

  Securities     0     1,711,431     0     1,711,431  

  COBRA     0     19,024     0     19,024  

David Heard

  Salary     0     637,500     0     637,500  

  Securities     0     1,064,866     0     1,064,866  

  COBRA     0     19,024     0     19,024  

Roy Bie

  Salary     0     510,000     0     510,000  

  Securities     0     967,504     0     967,504  

  COBRA     0     19,024     0     19,024  

(1)
Mr. Waechter's benefits in the column represent (a) a cash payment equivalent to two times his annual base salary as of the date of termination of employment; and (b) Company-paid COBRA benefits continuation for a period of the lesser of the maximum allowable COBRA period or 24 months. The other NEOs do not receive any potential payments in the event of their termination without cause before a change of control.

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(2)
All benefits in this column except for Mr. Waechter's represent (a) accelerated vesting of any unvested stock options and other securities or similar incentives held at the time of termination (including accelerated vesting of any performance-based awards at 100% of the target achievement level), (b) a lump sum payment equal to eighteen months' base salary (less applicable tax and other withholdings), and (c) reimbursement of COBRA premiums for up to one year. Mr. Waechter's benefits in this column represent (x) a cash payment equivalent to three times his annual base salary as of the date of termination of employment; (y) right, title and entitlement to any unvested options, restricted stock units, or any other securities or similar incentives which have been granted or issued as of the date of termination of his employment, shall immediately vest; and (z) Company paid COBRA benefits continuation for a period of the lesser of the maximum allowable COBRA period or 24 months.
(3)
The 2008 Change of Control Benefits Plan, which covers all the NEOs other than Mr. Waechter, only provides benefits if a termination due to death or disability occurs within twelve months following a change of control. All benefits in this column therefore presume that the termination due to death or disability occurs within twelve months following a change of control and represent (a) accelerated vesting of any unvested stock options and other securities or similar incentives held at the time of termination, (including accelerated vesting of any performance-based awards at 100% of the target achievement level), (b) a lump sum payment equal to eighteen months' base salary (less applicable tax and other withholdings), and (c) reimbursement of COBRA premiums for up to one year.

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EQUITY COMPENSATION PLANS

        The following table sets forth information about shares of the Company's Common Stock and Exchangeable Shares that may be issued under the Company's equity compensation plans, including compensation plans that were approved by the Company's Stockholders as well as compensation plans that were not approved by the Company's Stockholders. Information in the table is as of June 30, 2012.

Plan Category   Number of
securities to
be issued upon
exercise
of outstanding
options, warrants
and rights (a)
  Weighted-average
exercise price
of outstanding
options,
warrants
and rights (b)
  Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (c)
 

Equity compensation plans
Approved by security holders

    14,678,723 (1) $ 5.35     17,856,412 (2)

Equity compensation plans
Not approved by security holders (3)

    634,367     5.54     1,969,382  
               

Total / Weighted Ave./ Total (4)

    15,313,090   $ 5.36     19,825,794  
               

(1)
Represents shares of the Company's Common Stock issuable upon exercise of options and restricted stock units outstanding under the Company's 2003 Equity Incentive Plan.
(2)
Represents shares of the Company's Common Stock authorized for future issuance under the following equity compensation plans: 2003 Equity Incentive Plan (under which 11,586,631 shares remain available for grant); Amended and Restated 1998 Employee Stock Purchase Plan (under which 6,269,781 shares remain available for grant).
(3)
Represents shares of the Company's Common Stock issuable upon exercise of options outstanding or authorized for future issuance under the following equity compensation plans: Amended and Restated 1993 Flexible Stock Incentive Plan, 1996 Non-Qualified Stock Option Plan and the 2005 Acquisition Equity Incentive Plan.
(4)
As of June 30, 2012, options and rights to purchase an aggregate of 32,587 shares of the Company's Common Stock at a weighted average exercise price of $6.24 were outstanding under the following equity compensation plans, which options and rights were assumed in connection with the following merger and acquisition transactions: SDL, Inc. 1995 Stock Option Plan; Photonic Power System 2002 Stock Option Plan; ABNH 2000 Stock Incentive Plan; and ABNH 2005 Stock Incentive Plan. No further grants or awards will be made under the assumed equity compensation plans, and the options outstanding under the assumed plans are not reflected in the table above.

        The following are descriptions of the material features of the Company's equity compensation plans that were not approved by the Company's Stockholders:

1996 Non-Qualified Stock Option Plan

        The Board of Directors adopted the 1996 Non-Qualified Stock Option Plan (the "1996 Plan") in November 1996. The 1996 Plan is administered by the Compensation Committee. Pursuant to the 1996 Plan, the Compensation Committee may grant nonqualified stock options only to employees, independent contractors and consultants of the Company or any parent or subsidiary corporation of the Company. Only nonqualified stock options may be issued under the 1996 Plan. Stock options may not be granted to officers and directors of the Company. The 1996 Plan will continue in effect until terminated by the Board of Directors. The Company last granted stock options under the 1996 Plan on

64


April 17, 1998. The Company presently does not intend to grant any additional options under the 1996 Plan.

        An aggregate of 2,392,000 shares has been reserved for the grant of stock options under the 1996 Plan. Shares underlying awards that are forfeited or canceled are not counted as having been issued under the 1996 Plan. Stock options issued under the 1996 Plan must have an exercise price of not less than 85% of the fair market value of the Company's Common Stock on the date of grant of the option. Options are generally non-transferable. The term of all options granted under the Plan shall not exceed eight years from the date of grant.

2005 Acquisition Equity Incentive Plan

        The Board of Directors adopted the 2005 Acquisition Equity Incentive Plan (the "2005 Plan") in August 2005. The 2005 Plan is administered by the Compensation Committee. Pursuant to the 2005 Plan, the Compensation Committee may grant stock options, SARs, Dividend Equivalent Rights, Restricted Stock, Restricted Stock Units and Performance Units to employees (including directors and officers) of the Company or any parent or subsidiary corporation of the Company, or any other such entity in which the Company holds a substantial ownership interest. Pursuant to NASDAQ listing rules regarding equity compensation plans not approved by security holders, the Company can and will only issue awards under the 2005 Plan to individuals joining the Company as a result of acquisitions or related strategic transactions, and not for new grants to continuing employees of the Company, nor to regular new hires. The 2005 Plan will continue in effect until terminated by the Board of Directors.

        An aggregate of 2,800,000 shares has been reserved for the grant of awards under the 2005 Plan. As of June 30, 2012, there were 993,753 shares remaining available for future grants under the 2005 Plan. Shares underlying awards that are forfeited, canceled or expired are not counted as having been issued under the 2005 Plan. Stock options and any awards intended to qualify as performance-based compensation issued under the 2005 Plan must have an exercise price of not less than 100% of the fair market value of the Company's Common Stock on the date of grant of the award. Awards are generally non-transferable. The term of all awards granted under the Plan shall not exceed eight years from the date of grant.

65



AUDIT COMMITTEE REPORT

        The information contained in the following report shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, except to the extent that the Company specifically requests that the information be treated as soliciting material or incorporates it by reference into a document filed under the Securities Act or the Exchange Act. The information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

        The Audit Committee of the Board of Directors is responsible for assisting the full Board of Directors in fulfilling its oversight responsibilities relative to the Company's financial statements, financial reporting practices, systems of internal accounting and financial control, the internal audit function, annual independent audits of the Company's financial statements, and such legal and ethics programs as may be established from time to time by the Board. The Audit Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and may retain external consultants at its sole discretion. The Audit Committee is composed solely of non-employee directors, as such term is defined in Rule 16b-3 under the Securities and Exchange Act of 1934, as amended, all of whom satisfy the independence, financial literacy and experience requirements of Section 10A of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002, rules applicable to NASDAQ-listed issuers, and any other regulatory requirements. All members of the Committee are required to have a working knowledge of basic finance and accounting, and at all times at least one member of the Committee qualifies as a "financial expert" as defined by the Sarbanes-Oxley Act of 2002.

        Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The independent registered public accounting firm is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. The Audit Committee has the general oversight responsibility with respect to the Company's financial reporting and reviews the scope of the independent audits, the results of the audits and other non-audit services provided by the Company's independent registered public accounting firm.

        The following is the Report of the Audit Committee with respect to the Company's audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2012, which includes the consolidated balance sheets of the Company as of June 30, 2012 and July 2, 2011, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended June 30, 2012, and the notes thereto.

Review with Management

        The Audit Committee has reviewed and discussed the Company's audited financial statements with management.

Review and Discussions with Independent Registered Public Accounting Firm

        The Audit Committee has discussed with PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), the Company's independent registered public accounting firm, the matters required to be discussed by Statement on Accounting Standards No. 61, "Communications with Audit Committees" which as amended (AICPA, Professional Standards, Vol. 1. section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, which includes, among other items, matters related to the conduct of the audit of the Company's financial statements, and both with and

66


without management present, discussed and reviewed the results of PricewaterhouseCoopers' examination of the financial statements.

        The Audit Committee has received the written disclosures letter from PricewaterhouseCoopers required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent public accountant's communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers the independent public accountant's independence.

        During the course of fiscal year 2012 management engaged in documentation, testing and evaluation of the Company's system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and PricewaterhouseCoopers at Audit Committee meetings. At the conclusion of the process, management provided the Audit Committee with, and the Audit Committee reviewed, a report on the effectiveness of the Company's internal control over financial reporting. The Audit Committee continues to oversee the Company's efforts related to its internal control over financial reporting and management's preparations for the evaluation for fiscal year 2013.

Conclusion

        Based on the review and discussions referred to above, the Audit Committee recommended to the Company's Board that the Company's audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

  AUDIT COMMITTEE

 

Harold L. Covert, Chair
Keith Barnes
Masood Jabbar

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BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and any persons who directly or indirectly hold more than 10 percent of the Company's Common Stock ("Reporting Persons") to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

        Based solely on its review of the copies of such forms received and written representations from certain Reporting Persons that no such forms were required, the Company believes that during fiscal year 2012 all Reporting Persons complied with the applicable filing requirements on a timely basis.


OTHER MATTERS

        The Company knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgments of the persons voting the proxies.


ANNUAL REPORT ON FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS

        THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON SOLICITED A COPY OF THE FISCAL YEAR 2012 ANNUAL REPORT, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES FILED THEREWITH UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, SENT TO:

JDS UNIPHASE CORPORATION
430 NORTH MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035.

  By Order of the Board of Directors,

 


SIGNATURE

 

Thomas Waechter
Chief Executive Officer and President

Milpitas, California
October 2, 2012

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Exhibit A

CERTIFICATE OF AMENDMENT TO
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
JDS UNIPHASE CORPORATION

a Delaware Corporation

Pursuant to § 242 of the General Corporation Law
of the State of Delaware

        It is hereby certified that the following amendment to the Second Restated Certificate of Incorporation of the corporation has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware:

            Section 5.1 of Article 5 of the Second Restated Certificate of Incorporation is hereby amended to read in its entirety as follows:

            "5.1    Election of Directors.    Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. At each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until the expiration of the term for which they are elected, and until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the Delaware General Corporation Law. Commencing with the 2013 annual meeting of stockholders, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting and until their respective successors have been duly elected and qualified. Directors elected at the 2010 annual meeting of stockholders shall hold office until the 2013 annual meeting of stockholders, directors elected at the 2011 annual meeting of stockholders shall hold office until the 2014 annual meeting of stockholders, and directors elected at the 2012 annual meeting of stockholders shall hold office until the 2015 annual meeting of stockholders. The directors of the Corporation shall be divided into three classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The term of office of the initial Class I directors shall expire at the next succeeding annual meeting of stockholders, the term of office of the initial Class II directors shall expire at the second succeeding annual meeting of stockholders and the term of office of the initial Class III directors shall expire at the third succeeding annual meeting of stockholders. At each annual meeting of stockholders, directors to replace those of a class whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting and until their respective successors shall have been duly elected and qualified. If the number of directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as is practicable."

        IN WITNESS WHEREOF, this Certificate is hereby executed by the undersigned on                        , 2012.

    JDS Uniphase Corporation

 

 

By:

 

 

Andrew R. Pollack
Senior Vice President, General Counsel and Corporate Secretary

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Exhibit B

JDS UNIPHASE CORPORATION

AMENDED AND RESTATED 2003 EQUITY INCENTIVE PLAN

(As Amended on November     , 2012)

        1.    Purpose of the Plan.    The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company by offering them an opportunity to participate in the Company's future performance.

        2.    Definitions.    As used herein, the following definitions shall apply:

            (a)   "Administrator" means the Board or any of the Committees appointed to administer the Plan.

            (b)   "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

            (c)   "Applicable Laws" means the legal requirements relating to the Plan and the Awards under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

            (d)   "Assumed" means that pursuant to a Corporate Transaction either (i) the Award is expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number and type of securities of the successor entity or its Parent subject to the Award and the exercise or purchase price thereof which preserves the compensation element of the Award existing at the time of the Corporate Transaction as determined in accordance with the instruments evidencing the agreement to assume the Award.

            (e)   "Award" means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit, Performance Unit, Performance Share, or other right or benefit under the Plan.

            (f)    "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto.

            (g)   "Board" means the Board of Directors of the Company.

            (h)   "Cause" means, with respect to the termination by the Company or a Related Entity of the Grantee's Continuous Active Service, that such termination is for "Cause" as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee's: (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii) dishonesty, intentional misconduct, material violation of any applicable Company or Related Entity policy, or material breach of any agreement with the Company or a Related Entity; or

70


    (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

            (i)    "Change in Control" means a change in ownership or control of the Company effected through either of the following transactions:

                (i)  the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or

               (ii)  a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors.

            (j)    "Code" means the Internal Revenue Code of 1986, as amended.

            (k)   "Committee" means any committee composed of members of the Board appointed by the Board to administer the Plan.

            (l)    "Common Stock" means the common stock of the Company.

            (m)  "Company" means JDS Uniphase Corporation, a Delaware corporation.

            (n)   "Consultant" means any person (other than an Employee or a Director, solely with respect to rendering services in such person's capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

            (o)   "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

            (p)   "Continuous Active Service" means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Active Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws. Continuous Active Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided

71


    in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90) days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the expiration of such ninety (90) day period.

            (q)   "Corporate Transaction" means any of the following transactions:

                (i)  a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;

               (ii)  the sale, transfer or other disposition of all or substantially all of the assets of the Company;

              (iii)  the complete liquidation or dissolution of the Company;

              (iv)  any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but in which securities possessing more than forty percent (40%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or

               (v)  acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.

            (r)   "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code.

            (s)   "Director" means a member of the Board or the board of directors of any Related Entity.

            (t)    "Disability" means as defined under the long-term disability policy of the Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related Entity to which the Grantee provides service does not have a long-term disability plan in place, "Disability" means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

            (u)   "Dividend Equivalent Right" means a right entitling the Grantee to compensation measured by dividends paid with respect to Common Stock.

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            (v)   "Employee" means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The payment of a director's fee by the Company or a Related Entity shall not be sufficient to constitute "employment" by the Company.

            (w)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

            (x)   "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:

                (i)  If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

               (ii)  If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

              (iii)  In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith.

            (y)   "Full Value Award" means the grant of Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares under the Plan with a per share or unit purchase price lower than 100% of Fair Market Value on the date of grant.

            (z)   "Grantee" means an Employee, Director or Consultant who receives an Award under the Plan.

            (aa) "Immediate Family" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee's household (other than a tenant or employee), a trust in which these persons (or the Grantee) have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than fifty percent (50%) of the voting interests.

            (bb) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code

            (cc) "Non-Qualified Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

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            (dd) "Officer" means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

            (ee) "Option" means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.

            (ff)  "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code.

            (gg) "Performance-Based Compensation" means compensation qualifying as "performance-based compensation" under Section 162(m) of the Code.

            (hh) "Performance Shares" means Shares or an Award denominated in Shares which may be earned in whole or in part upon attainment of performance criteria established by the Administrator.

            (ii)   "Performance Units" means an Award which may be earned in whole or in part based upon attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by the Administrator.

            (jj)   "Plan" means this 2003 Equity Incentive Plan.

            (kk) "Related Entity" means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or indirectly.

            (ll)   "Replaced" means that pursuant to a Corporate Transaction the Award is replaced with a comparable stock award or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the compensation element of such Award existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same (or a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall be made by the Administrator and its determination shall be final, binding and conclusive.

            (mm)  "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator.

            (nn) "Restricted Stock Unit" means a grant of a right to receive in cash or stock, as established by the Administrator, the market value of one Share.

            (oo) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.

            (pp) "SAR" means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock.

            (qq) "Share" means a share of the Common Stock.

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            (rr)  "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code.

        3.    Stock Subject to the Plan.    

        (a)   Subject to the provisions of Section 10 below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 64,200,000 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.

        (b)   Any Shares that are not subject to Full Value Awards will be counted against the numerical limits of this Section 3 as one Share for every Share subject thereto. Any Shares subject to Full Value Awards will be counted against the numerical limits of this Section 3 as 1.5 Shares for every one Share subject thereto. To the extent that a Share that was subject to an Award that counted as 1.5 Shares against the Plan reserve pursuant to the preceding sentence is recycled back into the Plan under the next paragraph of this Section 3, the Plan will be credited with 1.5 Shares.

        (c)   Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for future grant under the Plan. With respect to SARs, the gross number of Shares subject to a SAR will cease to be available under the Plan (whether or not the SAR is net settled for a lesser number of Shares).

        4.    Administration of the Plan.    

        (a)    Plan Administrator.    

            (i)    Administration with Respect to Directors and Officers.    With respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.

            (ii)    Administration With Respect to Consultants and Other Employees.    With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time.

            (iii)    Administration With Respect to Covered Employees.    Notwithstanding the foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to Covered

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    Employees, references to the "Administrator" or to a "Committee" shall be deemed to be references to such Committee or subcommittee.

            (iv)    Administration Errors.    In the event an Award is granted in a manner inconsistent with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

        (b)    Powers of the Administrator.    Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:

              (i)  to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;

             (ii)  to determine whether and to what extent Awards are granted hereunder;

            (iii)  to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;

            (iv)  to approve forms of Award Agreements for use under the Plan;

             (v)  to determine the terms and conditions of any Award granted hereunder;

            (vi)  to amend the terms of any outstanding Award granted under the Plan, provided that (A) any amendment that would adversely affect the Grantee's rights under an outstanding Award shall not be made without the Grantee's written consent, (B) the reduction of the exercise price of any Option or SAR awarded under the Plan shall be subject to stockholder approval and (C) canceling or "buying-out" an Option or SAR at a time when its exercise price exceeds the Fair Market Value of the underlying Shares, in exchange for cash, another Option, SAR, Restricted Stock, Restricted Stock Unit, or other Award shall be subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Corporate Transaction;

           (vii)  to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan;

          (viii)  to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable non-U.S. jurisdictions and to afford Grantees favorable treatment under such rules or laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; and

            (ix)  to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

        (c)    Indemnification.    In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the Administrator or the Company is delegated shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the

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Plan, or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company's expense to handle and defend the same.

        5.    Eligibility.    Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time to time.

        6.    Terms and Conditions of Awards.    

        (a)    Type of Awards.    The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs, Restricted Stock, Restricted Stock Units, Dividend Equivalent Rights, Performance Units or Performance Shares, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative.

        (b)    Designation of Award.    Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date of the relevant Option.

        (c)    Conditions of Award.    Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be based on any one of, or combination of, the following: (i) increase in share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v) gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added, (xvii) market share, (xviii) personal management objectives, and (xix) other measures of performance selected by the Administrator. Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement.

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        (d)    Acquisitions and Other Transactions.    The Administrator may issue Awards under the Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction.

        (e)    Deferral of Award Payment.    The Administrator may establish one or more programs under the Plan to permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.

        (f)    Separate Programs.    The Administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time.

        (g)    Individual Limitations on Awards.    The maximum number of Shares with respect to which Awards may be granted to any Grantee in any fiscal year of the Company shall be one million (1,000,000) Shares. In connection with a Grantee's (i) commencement of Continuous Active Service or (ii) first promotion in any fiscal year of the Company, a Grantee may be granted Awards for up to an additional one million (1,000,000) Shares which shall not count against the limit set forth in the preceding sentence. The foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if any Awards are canceled, the canceled Awards shall continue to count against the maximum number of Shares with respect to which Awards may be granted to the Grantee. For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR. If the vesting or receipt of Shares under the Award is deferred to a later date, any amount (whether denominated in Shares or cash) paid in addition to the original number of Shares subject to the Award will not be treated as an increase in the number of Shares subject to the Award if the additional amount is based either on a reasonable rate of interest or on one or more predetermined actual investments such that the amount payable by the Company at the later date will be based on the actual rate of return of a specific investment (including any decrease as well as any increase in the value of an investment).

        (h)    Early Exercise.    The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.

        (i)    Term of Award.    The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term of an Award shall be no more than eight (8) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the

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Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement.

        (j)    Transferability of Awards.    Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards shall be transferable by will and by the laws of descent and distribution, and during the lifetime of the Grantee, by gift or pursuant to a domestic relations order to members of the Grantee's Immediate Family to the extent and in the manner determined by the Administrator. Notwithstanding the foregoing, the Grantee may designate a beneficiary of the Grantee's Award in the event of the Grantee's death on a beneficiary designation form provided by the Administrator.

        (k)    Time of Granting Awards.    The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such later date as is determined by the Administrator.

        7.    Award Exercise or Purchase Price, Consideration and Taxes.    

        (a)    Exercise or Purchase Price.    The exercise or purchase price, if any, for an Award shall be as follows:

              (i)  In the case of an Incentive Stock Option:

              (A)  granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or

              (B)  granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

             (ii)  In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

            (iii)  In the case of a SAR, the base amount on which the stock appreciation is calculated shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

            (iv)  In the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

             (v)  In the case of other Awards, such price as is determined by the Administrator.

            (vi)  Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d) above, the exercise or purchase price for the Award shall be determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award.

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        (b)    Consideration.    Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following, provided that the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law:

              (i)  cash;

             (ii)  check;

            (iii)  surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised, provided, however, that Shares acquired under the Plan or any other equity compensation plan or agreement of the Company must have been held by the Grantee for a period of more than six (6) months;

            (iv)  with respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or

             (v)  any combination of the foregoing methods of payment.

        (c)    Taxes.    No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations.

        8.    Exercise of Award.    

        (a)    Procedure for Exercise; Rights as a Stockholder.    

              (i)  Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement.

             (ii)  An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(iv).

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        (b)    Exercise of Award Following Termination of Continuous Active Service.    

              (i)  An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee's Continuous Active Service only to the extent provided in the Award Agreement.

             (ii)  Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Active Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.

            (iii)  Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following the termination of a Grantee's Continuous Active Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified in the Award Agreement.

        9.    Conditions Upon Issuance of Shares.    

        (a)   Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

        (b)   As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

        10.    Adjustments Upon Changes in Capitalization.    Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Awards may be granted to any Grantee in any fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator and the Administrator's determination shall be final, binding and conclusive. Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.

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        11.    Corporate Transactions.    

        (a)    Termination of Award to Extent Not Assumed in Corporate Transaction.    Effective upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall not terminate to the extent they are Assumed in connection with the Corporate Transaction.

        (b)    Acceleration of Award Upon Corporate Transaction.    Except as provided otherwise in an individual Award Agreement, in the event of a Corporate Transaction, for the portion of each Award that is neither Assumed nor Replaced, such portion of the Award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified effective date of such Corporate Transaction.

        (c)    Effect of Acceleration on Incentive Stock Options.    Any Incentive Stock Option accelerated under this Section 11 in connection with a Corporate Transaction shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the excess Options shall be treated as Non-Qualified Stock Options.

        12.    Effective Date and Term of Plan.    The Plan originally became effective upon its approval by the stockholders of the Company. The Plan, as amended and restated, shall become effective upon its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years from the date of such approval unless sooner terminated. Subject to Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

        13.    Amendment, Suspension or Termination of the Plan.    

        (a)   The Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company's stockholders to the extent such approval is required by Applicable Laws, or if such amendment would change any of the provisions of Section 4(b)(vi) or this Section 13(a). Notwithstanding any other provision of the Plan to the contrary, the Board may, in its sole and absolute discretion and without the consent of any participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

        (b)   No Award may be granted during any suspension of the Plan or after termination of the Plan.

        (c)   No suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall adversely affect any rights under Awards already granted to a Grantee.

        14.    Reservation of Shares.    

        (a)   The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

        (b)   The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

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        15.    No Effect on Terms of Employment/Consulting Relationship.    The Plan shall not confer upon any Grantee any right with respect to the Grantee's Continuous Active Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Grantee's Continuous Active Service at any time, with or without Cause, and with or without notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee who is employed at will is in no way affected by its determination that the Grantee's Continuous Active Service has been terminated for Cause for the purposes of this Plan.

        16.    No Effect on Retirement and Other Benefit Plans.    Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

        17.    Unfunded Obligation.    Grantees shall have the status of general unsecured creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee's creditors in any assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.

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APPENDIX A

2012 Annual Report


Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 10-K

(Mark One)    

þ

 

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

 

 

For the fiscal year ended June 30, 2012

 

 

OR

o

 

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

 

 

For the transition period from                                    to                                   

Commission File Number 0-22874

JDS UNIPHASE CORPORATION
(Exact name of Registrant as specified in its charter)

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

430 North McCarthy Boulevard, Milpitas, California 95035
(Address of principal executive offices including Zip code)

(408) 546-5000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Name of exchange on which registered
Common Stock, par value of $0.001 per share   The NASDAQ Stock Market LLC
Preferred Stock Purchase Rights    

Securities registered pursuant to Section 12(g) of the Act:
None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o    No ý

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

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

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o

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

         As of December 31, 2011 the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was approximately $2.4 billion, based upon the closing sale prices of the common stock as reported on the NASDAQ Stock Market LLC. Shares of common stock held by executive officers and directors have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

         As of July 28, 2012, the Registrant had 231,916,378 shares of common stock outstanding, including 3,937,789 exchangeable shares of JDS Uniphase Canada Ltd. Each exchangeable share is exchangeable at any time into common stock on a one-for-one basis, entitles a holder to dividend and other rights economically equivalent to those of the common stock, and through a voting trust, votes at meetings of stockholders of the Registrant.

         Documents Incorporated by Reference: Portions of the Registrant's Notice of Annual Meeting of stockholders and Proxy Statement to be filed pursuant to Regulation 14A within 120 days after Registrant's fiscal year end of June 30, 2012 are incorporated by reference into Part III of this Report.


Table of Contents


TABLE OF CONTENTS

 
   
   
  PAGE
PART I    
    ITEM 1.   BUSINESS   4
    ITEM 1A.   RISK FACTORS   21
    ITEM 1B.   UNRESOLVED STAFF COMMENTS   29
    ITEM 2.   PROPERTIES   29
    ITEM 3.   LEGAL PROCEEDINGS   30
    ITEM 4.   MINE SAFETY DISCLOSURES   30
PART II    
    ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   31
    ITEM 6.   SELECTED FINANCIAL DATA   33
    ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   35
    ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   67
    ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA   69
    ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE   137
    ITEM 9A.   CONTROLS AND PROCEDURES   137
    ITEM 9B.   OTHER INFORMATION   137
PART III    
    ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   138
    ITEM 11.   EXECUTIVE COMPENSATION   138
    ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   138
    ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   138
    ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES   138
PART IV    
    ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES   139

SIGNATURES

 

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FORWARD-LOOKING STATEMENTS

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

    our expectations regarding demand for our products, including continued trends in end-user behavior and technological advancements that may drive such demand and the expected effects of overall market conditions on such demand;

    our belief that the Company is well positioned to benefit from certain industry trends and advancements, and our expectations of the role we will play in those advancements;

    our plans for growth and innovation opportunities;

    our plans to continue to operate as a Company comprised of a portfolio of businesses with a focus on optical and broadband innovation;

    financial projections and expectations, including profitability of certain business units, plans to reduce costs and improve efficiencies, the effects of seasonality on certain business units, continued reliance on key customers for a significant portion of our revenue, sources of revenue, sources of competition and pricing pressures, the future impact of certain accounting pronouncements and global economic conditions and our estimation of the potential impact and materiality of litigation that arises in the ordinary course of business;

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

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

    our plans relating to investments, acquisitions, partnerships and other strategic opportunities;

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

    our research and development plans; and

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

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

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PART I

ITEM 1.    BUSINESS

General

Overview

        JDS Uniphase Corporation ("JDSU," also referred to as "the Company," "we," "our," and "us") is a leading provider of communications test and measurement solutions and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers ("NEMs"), and enterprises. JDSU also is an established leader in providing anti-counterfeiting technologies for currencies and other high value documents and products. In addition, the Company is leveraging its core networking and optical technology expertise to deliver high-powered commercial lasers for manufacturing applications and expand into emerging markets, including gesture—recognition solutions for consumer electronics.

        To serve its markets, JDSU operates the following business segments: Communications Test and Measurement ("CommTest"), which accounted for approximately 44.9% of net revenue in fiscal 2012; Communications and Commercial Optical Products ("CCOP"), which accounted for approximately 41.7% of net revenue in fiscal 2012; and Advanced Optical Technologies ("AOT"), which accounted for approximately 13.4% of net revenue in fiscal 2012.

Industry Trends

        The trends that drive the broadband communications industry influence our CommTest and CCOP businesses. Adoption of smart mobile devices and demand for high-speed broadband access to support video and other high-bandwidth network traffic applications are straining networks and creating new challenges for JDSU's customers. The growing use of social networking and cloud computing also make network traffic more unpredictable, generating sudden spikes in volume and making it harder to deliver a quality end user experience. Meeting these challenges requires the deployment of advanced network and service enablement solutions and next generation network technologies such as LTE, 40/100G and FTTx. JDSU is well positioned to continue to benefit from these industry trends, and the network complexity they create, due to its leadership in broadband test and measurement and optical communications.

        Trends related to the increasing threat of counterfeiting impact our AOT business. Counterfeiting for currency, pharmaceuticals and other goods, is on the rise because, penalties are relatively light and technological advances, including cheaper, higher-quality printing technology, online marketing that enables counterfeiters to market their products cheaply and anonymously, and cheaper distribution means have made counterfeiting easier than ever. JDSU enjoys long-standing positions with government and leading commercial enterprises built on decades of anti-counterfeiting expertise. JDSU's optically variable pigment technologies protect the integrity of currency and other high value products and documents. We also provide critical optical components for safety, security and consumer markets.

        In addition to communications network and service enablement and anti-counterfeiting solutions, JDSU extends its technology expertise to solve complex problems and deliver unique solutions in other industries. For example, our high-precision lasers enable the trend toward smaller integrated circuits for use in today's compact consumer electronics, the classification and sorting of biological cells using induced fluorescence, and deoxyribonucleic acid ("DNA") sequencing through the appropriate application of monochromatic light. New concentrator photovoltaic ("CPV") cell technology from JDSU captures concentrated sunlight for electrical power generation. Precision optical coatings are

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used for emerging gesture-recognition and 3D applications as well as high-performance applications in aerospace, entertainment, and biomedical instrumentation.

Sales and Marketing

        JDSU markets its products to telecommunications and cable service providers, NEMs, original equipment manufacturers ("OEM"), enterprises, government organizations, distributors and strategic partners worldwide. Each business segment has a dedicated sales force that communicates directly with customers' executive, technical, manufacturing, and purchasing personnel as needed to determine design, performance, and cost requirements. In addition, all business segments are working to expand opportunities in emerging geographic markets directly and through alternate channels of distribution.

        A high level of support is necessary to develop and maintain long-term collaborative relationships with our customers. JDSU develops innovative products by engaging the customer at the initial design phase and continues to build the relationship as customer needs change and develop. Service and support are provided through JDSU offices and those of its partners worldwide.

Additional Information

        JDSU was incorporated in California in 1979 and reincorporated in Delaware in 1993. JDSU is the product of several significant mergers and acquisitions including, among others, the combination of Uniphase Corporation and JDS FITEL in 1999, and the acquisition of Acterna, Inc. in 2005. Our strategy is to operate as a company comprised of a portfolio of businesses with a focus on optical and broadband innovation.

        We are subject to the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, pursuant to which we file annual, quarterly and periodic reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC"). Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We also post all of our SEC filings on our website at www.jdsu.com/investors as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

Corporate Strategy

        Our objective is to continue to be a leading provider for all markets and industries we serve. In support of our business segments, we are pursuing a corporate strategy that we believe will best position us for future opportunities. The key elements of our corporate strategy include:

    Enable our customers through collaborative innovation

    We are committed to working closely with our customers from initial product design and manufacturing through to solution deployment and training. We strive to engage with our customers at the early stages of development to provide them with the most innovative and timely products and services and ensure that our focus remains aligned with their emerging requirements. Our sales, customer support, product marketing, and development efforts are organized to maximize effectiveness in our customer interactions.

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    Maintain and improve our financial flexibility

    We continue to take actions to maintain and improve our financial flexibility to support our global business operations and additional investments in growth and innovation. Key elements of this strategy include maintaining a healthy balance sheet with a strong liquidity position, continued generation of positive cash flow, diligent management of our cash conversion cycle, managing our capital structure to minimize cost of capital and preserve access to additional financing, managing capital market risk and refinancing risk with periodic debt issuance and/or maintenance of revolving credit facilities, and maintaining healthy bank relationships.

    Build a lean and scalable business

    We continue to streamline our manufacturing operations and reduce costs by using contract manufacturers where appropriate and consolidating to reduce our footprint and total fixed costs. In addition, our shared corporate functions model cost-effectively provides our business segments with the centralized strength and depth of a larger company, while allowing each segment to remain focused and responsive to its own market needs.

    Invest in profitable, market-based innovation

    Based on current and anticipated demand, we continue to invest in research and development ("R&D") and through acquisitions and partnerships in new technologies, products and services that offer our customers increased efficiency, higher performance, improved functionality, and/or higher levels of integration. In fiscal 2012, we continued to invest in product development in line with our profitability and growth objectives. The acquisition of Dyaptive Systems Inc. ("Dyaptive") expanded our mobile test product portfolio, supporting our customers' need for solutions that improve the reliability and quality of wireless communications. We also acquired product design, intellectual property and other assets from QuantaSol Limited ("QuantaSol"), a CPV provider based in the United Kingdom. The acquired technology allows more light to be converted to electrical power by raising the efficiency of CPV cells, the most important metric in the solar industry.

    Expand our global market presence

    Long term, we expect higher rates of growth in the Asia-Pacific, Latin America and Eastern Europe regions. Therefore, we are developing products, sales, marketing and customer support to meet the specific needs in these regions in order to serve these customers better.

        Although we expect to successfully implement our strategy, internal and/or external factors could impact our ability to meet any, or all, of our objectives. These factors are discussed under Item 1A—Risk Factors.

Business Segments

        JDSU operates in the following business segments: CommTest, CCOP and AOT. Each segment has its own engineering, manufacturing, sales, and marketing groups to better serve customers and respond quickly to the market needs. In addition, our business segments share common corporate services that provide capital, infrastructure, resources, and functional support, allowing them to focus on core technological strengths to compete and innovate in their markets.

Communications Test and Measurement

        The CommTest business provides instruments, software and services that enable the design, deployment, and maintenance of communication equipment and broadband networks and ensure the quality of services delivered to the end user. These solutions help accelerate the deployment of new

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services and lower operating expenses while improving performance and reliability. Included in the product portfolio are test tools, platforms, software, and services for wireless and wireline networks. CommTest products address the test requirements across and at all layers of the network and are used in all phases of the network lifecycle, from R&D in the lab and production line validation to field deployment and service assurance. JDSU also provides test solutions for private enterprise networks, including storage and storage-network technologies.

Markets

        JDSU provides instruments, software, service assurance systems, and services for communications network operators and equipment manufacturers that deliver and/or operate broadband/IP networks (fixed and mobile) that deliver voice, video, and data services. JDSU communications test solutions support the research, development, and manufacture of network equipment; field service test for fixed and wireless networks, including triple-play deployments for cable, telecom, FTTx, and home networking; and service assurance, which includes monitoring and maintaining quality of experience ("QoE") for cable, wireless and fixed/telecom networks. JDSU also provides protocol-test solutions for the development and field deployment of storage networks.

Customers

        JDSU customers for CommTest include the world's largest communications service providers, NEMs, government organizations, and large corporate customers. These include major telecom and cable operators such as AT&T, Bell Canada, Bharti Airtel Limited, British Telecom, China Mobile, China Telecom, Chunghwa Telecom, Comcast, CSL, Deutsche Telecom, France Telecom, TalkTalk, Telefónica, Telmex, TimeWarner Cable, and Verizon. JDSU test and measurement customers also include many of the NEMs served by our CCOP segment, including Alcatel-Lucent, Ciena, Cisco Systems, Fujitsu and Huawei. JDSU test and measurement customers also include chip and infrastructure vendors, storage-device manufacturers, storage-network and switch vendors, and deployed private enterprise customers. Storage-segment customers include Brocade, Cisco Systems, EMC, Hewlett-Packard and IBM.

Trends

        As content and application developer providers are developing new business models to expand their distribution capabilities, they are increasingly adopting on-line channels for rich broadband content such as music, gaming, video programming, and movies. Telecommunications and cable service providers are, in turn, planning to increase profitability and average revenue per subscriber ("ARPU") by expanding the capabilities of their packet-based networks to increase their network capacity and to deliver sophisticated, more reliable levels of service required to meet the requirements of content providers, application developers and end users.

        Telecommunications, cable television, satellite, and wireless service providers are competing with each other to offer content providers and consumers the ability to carry virtually any type of voice, data and video content to any device, including smart phones and tablets. With more applications and content available, potential benefits for service providers include increased ARPU and less customer turnover due to better service quality, thus increasing profitability and long-term competitive advantage. As a result, many providers are developing consolidated network architectures intended to enable integrated voice, data and video services from a single provider rather than three separate services from different providers. Integrating legacy and next generation network technology and services create new challenges for communications service providers and undermines service quality and reliability.

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        Additionally, growth in the number of worldwide mobile subscribers and the proliferation of new and higher bandwidth services, including video-based content such as news, movies, and gaming, is generating strong growth in demand for network capacity and faster transmission rates. These trends are driving disproportionate capital spending in network technologies related to next-generation wireless, including 3G and 4G/Long Term Evolution ("LTE") and Ethernet-based backhaul of mobile traffic from cell towers; higher-capacity transport solutions to support video communications (40G/100G); and software-driven network and service enablement systems.

        Increasing deployments of higher speed networks, the expansion of IP-based services, the need to reduce deployment time and cost, and the importance of increasing ARPU results in demand for communications test and measurement instruments, systems, software, and services. These solutions support the rapid deployment of new services and sources of revenue, increase customer satisfaction by helping technicians complete installation and repair work quickly and correctly, and lower operating expenses by automating and improving network installation, maintenance, and management processes. Our broad portfolio of test and measurement solutions positions us well to benefit from these developments.

Strategy

        The CommTest business segment plans to improve profitability and increase revenue by continuing to develop and offer higher-margin, software-based solutions that can remotely and more cost-effectively gather network intelligence our customers need to deliver a quality end user experience, increase ARPU, reduce customer churn and lower operating expenses.

Competition

        JDSU competes against various companies, including Agilent, Anritsu, Danaher (i.e. Fluke and Tektronix), Exfo, Ixia and Spirent. While JDSU faces multiple competitors for each of its product families, it continues to have one of the broadest portfolios of wireline and wireless products and solutions available in the communications test and measurement industry.

Offerings

        JDSU provides end-to-end communications test and measurement solutions for wireless and wireline communications networks, including the core, metro, access, and home networking environments. JDSU is a leader in the test and measurement market and has an installed base of hundreds of thousands of test instruments and systems deployed in communications networks around the world.

Instruments

        JDSU provides instruments that speed the deployment of network technologies and services, ensure reliability and reduce network expenses. Designed to be mobile, these products assist service provider technicians in assessing the performance of network elements and segments or verifying the integrity of the information being transmitted across the network. These instruments incorporate high levels of intelligence and have user interfaces that are designed to simplify operation and minimize training. JDSU test instruments also include those used by NEMs in the design and manufacture of next-generation network equipment. Thorough testing by NEMs plays a critical role in producing the components and equipment that are the building blocks of network infrastructure.

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Software

        JDSU provides software products and custom software development services to its customers. The Company recently introduced PacketPortal™, a software platform that uses microprobe technology to cost-effectively gather intelligence anywhere in the network for use with a suite of customer care, marketing and other applications. These software applications are created by JDSU as well as third-party application development partners. Another software-driven solution, PacketInsight™, was introduced this year and allows service providers to quickly pinpoint critical data in the core network. JDSU's software solutions are designed to help service providers profitably scale to unprecedented bandwidth demand while providing a high-quality subscriber experience.

Solutions

        JDSU solutions typically consist of integrated hardware and software components that reside in communication networks, such as service assurance solutions. Using an integrated test and measurement system, JDSU customers are able to analyze critical network elements, transmission technologies and protocols from a single console, simplifying the process of deploying, provisioning and managing network equipment and services. From a centralized location, technicians can access the test systems within the network and perform simultaneous test and monitoring functions on one or more elements, either manually or automatically. These capabilities allow network operators to initiate service to new customers faster, decrease the need for technicians to make on-site service calls, help to make necessary repairs faster and, as a result, lower costs while providing higher quality and more reliable services.

Services

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

Communications and Commercial Optical Products

        The CCOP business segment provides optical communications products used by NEMs for telecommunications and enterprise data communications. These products enable the transmission and transport of video, audio and text data over high-capacity fiber optic cables. Transmission products primarily consist of optical transceivers, optical transponders, and their supporting components such as modulators and source lasers, including innovative products such as the tunable XFP. Transport products primarily consist of amplifiers and reconfigurable optical add/drop multiplexers ("ROADMs") and their supporting components such as pump lasers, passive devices, and arrayed waveguides ("AWGs"). In fact, many of today's most advanced optical networks are built on our transport and transmission components, modules and subsystems.

        CCOP also provides lasers employed in a wide variety of OEM applications. JDSU laser products serve customers in markets and applications such as manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining such as drilling in printed circuit boards, wafer singulation, and solar cell scribing. These products include diode, direct-diode, diode-pumped solid-state, fiber, and gas lasers.

        In addition, our photovoltaics ("PV") products include CPV cells and receivers for generating energy from sunlight, as well as fiber optic-based systems for delivering and measuring electrical power.

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Markets

        The CCOP business segment participates in the optical communications, laser, and PV markets.

        JDSU optical communications products include a wide range of components, modules, and subsystems to support and maintain customers in our two market segments: telecommunications, including carrier networks for access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) networks; and enterprise data communications, including storage-access networks ("SANs"), local-area networks ("LANs"), and Ethernet wide-area networks ("WANs").

        JDSU's portfolio of laser products includes components and subsystems used in a wide variety of OEM applications that range in output power from milliwatts to kilowatts and include ultraviolet ("UV"), visible, and infrared ("IR") wavelengths. JDSU supports customer applications in the biotechnology, graphics and imaging, remote sensing, materials processing and other precision machining arenas.

        The PV business unit provides photonic power for a range of remote sensing applications, including those used by the electric power industry to measure power transmission and is also developing high efficiency concentrator PV cells for the generation of electric power from solar radiation.

Customers

        CCOP serves optical communications equipment manufacturers such as Adva, Alcatel-Lucent, Ciena, Cisco Systems, Ericsson, Fujitsu, Huawei, Infinera, Nokia Siemens Networks, and Tellabs. Customers for JDSU Commercial Lasers include Amada, ASML, Beckman Coulter, Becton Dickinson, Disco, Electro Scientific Industries, and KLA-Tencor. Customers for PV products include Amplifier Research, Beijing Bosin Industrial Technology, ETS-Lindgren, and Siemens.

Trends

        Long-term trends suggest growing opportunities for CCOP. These trends are discussed, by market, below:

        Optical Communications: To remain competitive, network operators worldwide must offer broader suites of digital services. To do this, they are migrating to Internet-protocol ("IP") networks, which effectively deliver triple-play services while lowering capital and operating costs of dense-wavelength-division multiplexing ("DWDM") networks. In data communications, demand for broadband is driven by the growing needs of intracompany LAN and intercompany WAN networks. The growing demand for capacity encourages the adoption of optical communications products across the telecom sector, including long-haul, metro (core and access), cable television ("CATV"), submarine, and FTTP or FTTx. It also increases demand for optical products in the storage and enterprise sectors, including LAN, SAN and WAN.

        New, bandwidth-intensive applications can result in sudden and severe changes in demand almost anywhere on the network. Increasing agility in optical networks by employing ROADMs, tunable transponders, and other agile optical products provides an effective way to respond to unpredictable bandwidth demands and manage expenses. With more agile optical networks, a service provider can add capacity by using remote management applications rather than by dispatching technicians to perform manual operations in the field.

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        In addition, the high-end routers, switches, and cross-connect equipment that must handle legacy and IP traffic are becoming increasingly complex in order to meet higher bandwidth, scalability, speed, and reliability needs. Products must provide higher levels of functionality and performance in compact designs that must also meet requirements for emissions, cost, and reduced power consumption.

        Deployment of fiber closer to the end user increases the availability of high-bandwidth services and should result in increased demand on the metro and long-haul networks into which these services feed. The dynamically reconfigurable nature of today's agile networks enables lower operating costs and other competitive advantages, allowing service providers to use and scale network capacity more flexibly, streamline service provisioning, accelerate rerouting around points of failure, and modify network topology through simple point-and-click network management systems.

        JDSU is a leading provider of the optical products mentioned above which support the trends in this market. JDSU innovation, particularly in the area of photonic integrated circuits, which can replace many discrete components with a single photonic chip, is resulting in products that have more functionality, are smaller, require less power, and are more cost-effective. For example, the tunable XFP transceiver is 85% smaller than previous tunable models. JDSU also developed the industry's first tunable SFP+ transceiver for enterprise and metro networks. Higher levels of integration have also led to development of the Super Transport Blade ("STB"), which delivers all transport functions in a single, integrated platform, essentially replacing three blades with one.

        JDSU, with its innovative optical communications and flexible, cost-effective transport portfolio, is positioned to be the supplier of choice for next-generation networks.

        Lasers: As technology advances, high-tech and other vital industries increasingly turn to lasers when they need more precision, higher productivity, and energy efficient or "green" alternatives for problems that cannot be solved by mechanical, electronic or other means. For example, lasers have been used for years to help achieve the scale and precision needed in semiconductor processing. In biotech applications, lasers have been instrumental for advances (and new standard procedures) in cytology, hematology, genome sequencing, and crime scene investigations, among others. The long term trends in these industries should lead to increased demand for lasers.

        In addition, demand continues for electronic products, as well as products and components in other industries, to offer greater functionality while becoming smaller, lighter, and less expensive. Product designs that achieve this are requiring precise micromachining and materials processing, such as micro bending, soldering and welding—especially for plastics. At the scale and processing speed needed, lasers are replacing mature mechanical tools such as drills for tiny holes, or "vias," in printed circuit boards and saws and scribes for singulating silicon wafers, resulting in greater precision and productivity. As these trends continue, we believe that manufacturers and industries will increase their reliance on lasers in order to maintain or increase their competitiveness.

        There is an increasing trend towards energy efficiency and "green" industry. Industries are using lasers to develop products that are smaller and lighter, and that increase productivity and yield, thereby lowering their energy consumption. More directly, this trend has provided for significant growth in the solar power market segment and applications for lasers used in the production of solar panels.

        JDSU is well-positioned with key OEM providers of laser solutions to these industries. We continue to develop our laser portfolio to offer smaller and more cost-effective products designed specifically for the performance, integration, reliability and support needs of our OEM customers.

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        Photonic Power and Photovoltaics: The trend toward lighter, cleaner, efficient solutions has led to opportunities for photonics in a variety of applications. The use of photonic power for remote sensors solves the problem of electromagnetic interference ("EMI"), radio frequency ("RF") and other interference associated with the use of electrical power. The need for clean energy is fueling an increase in demand for concentrated photovoltaic power. JDSU proprietary technology already in use for powering remote sensors has led to high efficiency products applicable to electric power generation from solar energy.

        On July 7, 2011, JDSU acquired product design, intellectual property and other assets from QuantaSol, a CPV provider based in the United Kingdom. The acquisition allows JDSU to leverage industry-leading multiple-quantum-well ("MQW") technology from QuantaSol for its CPV cell product platform. MQW technology allows more light to be converted to electrical power by raising the efficiency of CPV cells, the most important metric in the solar industry.

Strategy

        In optical communications, we are focused on technology leadership through collaborative innovation with our customers, cost leadership, and functional integration. We will continue to align the latest technologies with best-in-class, scalable manufacturing and operations to drive the next phase of optical communications with highly integrated technologies that are faster, more agile, and more reliable, making us a valuable business and technology partner for NEMs.

        JDSU leverages its long-term relationships with OEM customers to develop commercial laser innovation. Leveraging established manufacturing, engineering, telecommunications, and photonics expertise, JDSU delivers products that meet cost-of-ownership and reliability needs while delivering on volume production demands.

        In photonic power and PV, JDSU is developing best-in-class performance technology applicable to the growing solar power market.

Competition

        JDSU competes against various public and private companies in markets served by CCOP. A partial list of public company competitors providing optical communications includes Finisar, Fujitsu, Furukawa Electric, Oclaro, Oplink Communications, and Sumitomo Electric. JDSU competitors in the laser market include Coherent, IPG Photonics, Rofin-Sinar, CVI-Melles, and the Spectra-Physics division of Newport Corporation. JDSU competes against Spectrolab and Emcore in the PV market.

        In addition to these established companies, JDSU faces significant and focused competition from other companies and emerging startups. While each of its product families has multiple competitors, JDSU has a broad range of products and leading technologies that are aligned with industry trends and the needs of its customers.

Offerings

        CCOP serves the optical communications, laser and PV markets.

Optical Communications

        JDSU optical communications offerings address two market segments: telecommunications and enterprise data communications. In addition to a full selection of active and passive components, JDSU offers increasing levels of functionality and integration in modules, circuit packs, and subsystems for

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transmission, amplification, wavelength management, and more. Our optical communications product offerings are described below:

        In the telecommunications market segment, we offer transmission and transport solutions for the synchronous optical network ("SONET"), synchronous-digital-hierarchy ("SDH") and wavelength-division multiplexer ("WDM") applications. Transmission products, such as our tunable transponder, transceiver, and transmitter modules, transmit and receive signals. JDSU also offers transmission components for the previously mentioned products, which include active components such as tunable lasers, detectors/receivers, and modulators.

        JDSU transport products, such as ROADMs and other amplifiers, provide switching, routing and conditioning of signals. JDSU also provides components for transport, including passive components such as our attenuators, circulators, couplers/splitters/WDMs, gain flattening filters, hybrid interleavers, multiplexer/demultiplexers polarization components, switches, and wavelength lockers.

        Industry-leading innovation led to the STB, which integrates all major optical transport functions (wavelength switching, preamplification, postamplification, and monitoring) into a single-slot blade. This all-in-one solution reduces the size, cost, and power requirements of optical components, incorporates nano wavelength selective switch ("WSS") technology, and enables greater chassis density and a smaller footprint.

        In the enterprise data communications market segment, which relies on storing and moving vast amounts of data, JDSU offers transmission products, such as our optical transceivers for Fibre Channel and Gigabit Ethernet applications. JDSU transceivers are also used in Ethernet connections for servers, routers, hubs, and switches for Internet and e-mail services.

        JDSU integrated fiber optic transceivers provide a high-speed, serial electrical interface for connecting processors, switches, and peripherals. They are available in hot-pluggable or pin-through-hole versions with a small footprint for use in compact system designs. This allows manufacturers to double the density of transceivers on a board compared to conventional designs.

        For higher data transfer rates of 40 and 100G, JDSU offers VCSELs. VCSELs reduce power consumption, heat, EMI, and cost while increasing speed, reliability, and link distance. Our compact arrays offer an innovative solution for the LANs, SANs, broadband Internet, and metro-area network applications that currently depend on high-end routers, switches, and cross-connect equipment to handle legacy and IP traffic.

Lasers

        Our broad range of products includes diode-pumped solid-state, fiber, diode, direct-diode, and gas lasers such as argon-ion and helium-neon ("HeNe") lasers.

        Diode-pumped solid-state and fiber lasers that provide excellent beam quality, low noise, and exceptional reliability are used in biotechnology, graphics and imaging, remote sensing, materials processing, and precision machining applications.

        Diode and direct-diode lasers address a wide variety of applications, including laser pumping, thermal exposure, illumination, ophthalmology, image recording, printing, plastic welding, and selective soldering.

        Gas lasers such as argon-ion and helium-neon lasers provide a stable, low-cost and reliable solution over a wide range of operating conditions, making them well suited for complex, high-resolution OEM

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applications such as flow cytometry, DNA sequencing, graphics and imaging, and semiconductor inspection.

Photonic power and photovoltaics

        Photonic power is an innovative power-over-fiber delivery system that converts optical power to electrical power. Since it is delivered over nonconducting fiber optic cable, it is not affected by RF or EMI, is lighter, generates less heat, is spark-free, and can be used to drive sensors, gauges, actuators, low-power communications devices, and other electronic devices.

        JDSU capabilities in converting optical power to electrical power are now being applied to the solar energy market. Multijunction CPV cells generate power under concentrated sunlight. JDSU has developed CPV cells to be available both as chips and in receiver assemblies for generating solar power.

Advanced Optical Technologies

        The AOT business segment leverages its core technology strengths of optics and materials science to manage light and color effects. With decades of experience in optical coating and authentication technology, AOT develops innovative anti-counterfeiting solutions for the currency, pharmaceutical and other markets.

Markets

        Our AOT segment provides overt and covert product verification for protection against diversion, brand erosion, and lost revenue due to counterfeiting. These technologies safeguard currency and high security government documents as well as brands in the transaction card, pharmaceutical, consumer electronics, printing/imaging supplies, and fast-moving consumer goods industries through innovative optically variable pigment, holographic, and microtaggant technologies.

        AOT also produces precise, high-performance, optical thin-film coatings for a variety of applications in government and aerospace, biomedical, consumer electronics, telecommunications, office automation, and other markets. These applications include gesture-recognition, night-vision goggles, satellite solar covers, medical instrumentation, computer-driven projectors, 3D cinema and event lighting.

        In addition, we offer, custom color solutions for product finishes and decorative packaging that can be applied to a wide variety of substrates. These include innovative optically-based color-shifting and other solutions that provide product enhancement for brands in the pharmaceutical, automotive, consumer electronics, sports apparel, and fast-moving consumer goods industries.

Customers

        The AOT business segment serves customers such as 3M, Kingston, Lockheed Martin, Northrop Grumman, Pan Pacific, Seiko Epson and SICPA. JDSU technology is used to protect the currencies of China, the European Union, the United States, and other governments around the world. Leading pharmaceutical companies worldwide also use JDSU solutions to protect their brands, as do major issuers of transaction cards such as MasterCard and American Express. JDSU custom color product differentiation and brand enhancement solutions are used by customers such as DuPont.

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Trends

        Product integrity is a worldwide, multi-billion dollar issue that poses consumer health and safety risks as well as issues such as, corporate liability, devaluation of brand image, weakening of brand loyalty, and lost revenues. Favored targets include currency, pharmaceuticals, imaging supplies, apparel, automotive parts, consumer electronics, and electronic media. Other issues, such as product diversion where distributors divert products intended for lower-priced markets to higher-priced markets, increasingly require brand protection. The spread of counterfeiting can be attributed to several factors, including using the Internet to facilitate distribution, a ready availability of low-cost, high-quality printing equipment to reproduce product packaging, the elimination of international trade barriers, and an increasingly mobile global society.

        JDSU technology has become a worldwide standard for currency protection. Additionally, the need to protect high-value documents and offer solutions for authenticating personal, identification, and financial documents also is growing. Our authentication products can be combined to offer multilayer solutions for creating effective security programs that combine secure authentication, flexible aesthetics, and ease of application.

        Demand for optical solutions to solve complex problems extends to the aerospace, defense and medical/environmental instrumentation markets, which require customized, high-precision coated products and optical components that selectively absorb, transmit, or reflect light to meet the performance requirements of sophisticated systems. Our custom optics products offer an array of advanced technologies and precision optics—from the UV to the far IR portion of the light spectrum. Most products are custom optical filters, on either a simple or complex irregular shape, that require from one to several hundred layers to create the coating.

        Another challenge is the need to differentiate products in order to build brands. Global competition and an increasing range of product offerings are driving designers to look for innovative ways to increase the aesthetic value of their products and make them stand out. Our custom color solutions are used in coatings and packaging to create unique and striking visual effects.

Strategy

        The AOT business segment develops technologies that differentiate and effectively protect valuable brands via a secure, flexible, aesthetically striking optical platform. It also strives to supply the highest-quality, best-in-class optical components and assemblies with innovative thin-film coating processes that help customers protect and/or differentiate their products. JDSU will continue to leverage its intellectual property and leading expertise in optics, light management and material technology to develop solutions that provide a unique advantage to customers.

Competition

        JDSU's competitors in the markets addressed by AOT include providers of special-effect pigments like Merck KGA and from manufacturers of security holograms including Kurz, De La Rue and OpSec; from coating companies such as Nidek, Toppan, and Toray; from display-component companies such as Asahi, Fuji Photo-Optical, Nikon, and Nitto Optical; and from optics companies such as Barr Associates and Deposition Sciences.

Offerings

        AOT consists of the Authentication Solutions Group ("ASG"), which has offerings for brand protection and document authentication; the Custom Optics Product Group ("COPG"), which offers

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optical thin-film coatings for a range of markets; and the Flex Products Group ("Flex"), which offers currency protection, custom color solutions, and printing services.

Currency Protection

        JDSU's optically variable pigment technology overt security technology has become a standard used by governments worldwide for currency protection. This technology provides a color-shifting effect that enables positive, easy visual verification and deters counterfeiting. In fiscal 2012, we completed most of the expansion of our capacity for optically variable pigment anti-counterfeiting production capabilities in Beijing, China.

Brand Protection

        To strengthen brand integrity, many corporate brand owners are introducing overt protective measures in packaging that provide consumers and/or inspection personnel with the ability to quickly determine product authenticity by visually detecting a color effect on the package. Covert solutions provide an additional layer of protection that cannot be seen or detected without a visual aid.

        JDSU offers both overt and covert solutions for security, including SecureShift® light-interference technology (which allows inks or plastics to exhibit different colors and visual effects from different viewing angles), holographic technology, and Charms™ microstructured taggants. Applications include transaction cards, pharmaceuticals, imaging supplies, electronics, computer, and other consumer goods. JDSU offers these solutions in a wide range of choices by incorporating them into printing inks, product labels, and product packaging.

Document authentication

        JDSU optically variable pigment technology, which produces color-shifting and other optical effects, and other authentication technologies are used to combat forgery and counterfeiting, protect against alteration of data, and allow for immediate verification of high-value documents. JDSU works closely with its customers to design these solutions to meet their specific needs for passports, personal identification, and other government and secure documents.

Custom Optics

        Optical thin-film coatings are submicroscopic (nanometer to micrometer) layers of materials, such as silicon and magnesium fluoride, that are applied to the surface of a substrate, including glass, plastic or metal. Thin-film coatings control the behavior of light to produce effects such as reflection, refraction, absorption, abrasion resistance, antiglare, oxygen and/or moisture transmission, and electrical conductivity for a variety of applications.

        Aerospace and defense: JDSU provides customized optics for solar-cell coverglass, thermal-control mirror technology, and optical sensors for aerospace applications. JDSU thin-film optics products can be found on spacecraft and satellites. In addition, JDSU supplies filters used in military applications such as infrared night-vision goggles and electronic countermeasures.

        Consumer and commercial electronics: JDSU manufactures and sells coated optics for use in home and business display systems and 3D entertainment systems. These products include bandpass filters, mirrors, polarization compensators, heater panels and other coated optics, and assemblies. Products for the automation market include photo receptors and mirrors for photocopiers, scanners, computer-driven projectors, and facsimile machines.

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        Instrumentation and lighting: JDSU provides multicavity and linear variable optical filters on a variety of substrates for applications including gas monitoring and analysis, thermal imaging, smart munitions, fire detection, spectroscopy, and pollution monitoring. These filters are also used in biomedical applications, semiconductor test systems, and test and measurement equipment. JDSU also provides advanced optical filters used to create dramatic lighting effects and rich, saturated color in intelligent lighting systems for entertainment and architectural lighting.

Custom Color Solutions

        For product differentiation and brand enhancement, JDSU provides custom color solutions for a variety of applications using our ChromaFlair® and SpectraFlair® pigments to create color effects that emphasize body contours, create dynamic environments, or enhance products in motion. These pigments are added to paints, plastics, or textiles for products and packaging.

        Our line of custom color products uses proprietary manufacturing processes and light interference or diffractive technology to provide specific color characteristics that can be designed to meet the needs of individual products, brands or markets. The products create a durable finish with striking color properties for automotive, consumer electronics, and other applications.

        The design process is critical to delivering custom color solutions that meet the needs of specific customers, markets and brands. JDSU color specialists, Color Lab, and prototyping capabilities help customers overcome color design challenges during the design stage.

Printing Services

        Proprietary printing processes and a current good manufacturing practices ("cGMP") compliant environment deliver solutions for labels, closures, hang tags, and flexible packaging for authentication and custom color solutions. In addition, JDSU provides high quality flexographic and gravure printing for labels for retail and apparel, healthcare, food and beverage, automotive, consumer goods and personal care.

Acquisitions

        As part of our strategy, we are committed to the ongoing evaluation of strategic opportunities and, where appropriate, the acquisition of additional products, technologies or businesses that are complementary to, or broaden the markets for our products. We believe we have strengthened our business model by expanding our addressable markets, customer base, and expertise, diversifying our product portfolio, and fortifying our core businesses through acquisition as well as through organic initiatives.

        In January 2012, we completed the acquisition of Dyaptive based in Vancouver, Canada. The Company acquired tangible and intangible assets and assumed liabilities of Dyaptive for a total purchase price of approximately CAD 15.0 million in cash, including a holdback payment of approximately CAD 2.1 million which is due in December 2012.

        In July 2011, we completed the acquisition of critical product design, patented intellectual property and other assets from QuantaSol, for a cash purchase price consideration of approximately $3.7 million.

        In May 2010, we completed the acquisition of the Network Solutions Division ("NSD") of Agilent Technologies, Inc. ("Agilent"), where we acquired certain assets and assumed certain liabilities of NSD for a total cash purchase price consideration of approximately $163.8 million.

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        In July 2009, we completed the acquisition of the Storage Network Tools business ("SNT") from Finisar Corporation ("Finisar"), where we acquired certain assets and assumed certain liabilities of SNT for a total cash purchase price consideration of approximately $40.7 million.

        Please refer to "Note 5. Mergers and Acquisitions" of Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for further discussion of the acquisitions completed during fiscal 2012, 2011 and 2010.

Restructuring Programs

        We continue to consolidate the manufacturing of our products based on core competencies, cost efficiency, and alternative manufacturers, where appropriate. Among other things, we continue to strengthen our partnerships with contract manufacturers. We completed the process of outsourcing a portion of manufacturing in our AOT segment in North America during fiscal 2012. In the last three fiscal years, we restructured and reorganized our CommTest segment to improve the efficiency of the manufacturing operations, R&D and sales organization by reducing/rationalizing headcount, consolidating the number of contract manufacturer locations worldwide and moving them to lower cost regions, and consolidating and centralizing similar functions to fewer sites designed to improve leverage. In the current fiscal year, we initiated the transition of moving the repair organization to an outsourced partner. Additionally, we continue to centralize many administrative functions such as information technology, human resources, and finance to take advantage of common processes and controls, and economies of scale.

        Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations under Item 7 and the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for further discussion on these charges.

Research and Development

        During fiscal 2012, 2011, and 2010, we incurred R&D expenses of $246.0 million, $239.9 million, and $174.9 million, respectively. The number of employees engaged in R&D was approximately 1,400 as of June 30, 2012, 1,450 as of July 2, 2011, and 1,350 as of July 3, 2010.

        We devote substantial resources to R&D to develop new and enhanced products to serve our markets. Once the design of a product is complete, our engineering efforts shift to enhancing both the performance of that product and our ability to manufacture it in greater volume and at lower cost.

        In our CommTest segment, we develop portable test instruments for field service technicians, systems and software used in Network Operations Centers, and instruments used in the development, testing and production of communications network components, modules and equipment. We are increasing our focus on IP-based service assurance and customer experience management, and test instruments for wireless networks and services, while continuing to develop tools for fiber optic, optical transport, Ethernet, broadband access, video test and storage network testing. We have centers of excellence for product marketing and development in Asia, Europe and North America.

        In our CCOP segment, we are increasing our focus on the most promising markets while maintaining our capability to provide products throughout the network. We are increasing our emphasis on self-aware network components and modules, such as ROADMs and tunable devices needed for long-haul and metro market segments, as well as expanding our transmission transceiver portfolio to support telecom, local area network, storage area network, and enterprise market segments. We are also responding to our customers' requests for higher levels of integration, including the integration of optics, electronics and software in our modules, subsystems, and circuit packs. We are providing optical

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technology for gesture-recognition systems that enable the control of technology by natural body gestures instead of using a remote, mouse, or other device. Emerging gesture recognition systems simplify the way that people interact with technology, and are initially being used in applications for home entertainment and computing. In addition, our CCOP and AOT segments have been working together to develop CPV cells for the solar market aimed at large commercial and utility scale installations. We continue to develop new product offerings in both solid-state and fiber lasers that take advantage of technologies and components developed within our CCOP segment. All these developments are targeted at serving customers engaging in biotechnology, graphics and imaging, remote sensing, and materials processing and precision micromachining markets.

        In our AOT segment, our R&D efforts concentrate on developing more innovative solutions from our core anti-counterfeiting technology expertise. Our strong participation in the currency security market is being augmented with new advances in optically variable pigment technology. We are also developing anti-counterfeiting solutions for the pharmaceutical and consumer electronic markets. AOT leverages its optical coating technology expertise to develop applications for the government and defense markets. AOT has also developed new products in the growing spectrometer market, introducing an innovative handheld solution with applications in the law enforcement, pharmaceutical, food and agriculture, and defense and security markets.

Manufacturing

        As of June 30, 2012 our significant manufacturing facilities were located in the United States, China, France, and Germany. Additionally, our significant contract manufacturing partners were located in China, Malaysia, Mexico, and Thailand.

Sources and Availability of Raw Materials

        JDSU uses various suppliers and contract manufacturers to supply parts and components for the manufacture and support of multiple product lines. Although our intention is to establish at least two sources of supply for materials whenever possible, for certain components we have sole or limited source supply arrangements. We may not be able to procure these components from alternative sources at acceptable prices within a reasonable time or at all; therefore the loss or interruption of such arrangements could have an impact on our ability to deliver certain products on a timely basis.

Patents and Proprietary Rights

        Intellectual property rights that apply to our various products include patents, trade secrets, and trademarks. We do not intend to broadly license our intellectual property rights unless we can obtain adequate consideration or enter into acceptable patent cross-license agreements. As of June 30, 2012, we owned approximately 1,550 U.S. patents and approximately 800 foreign patents, and we have approximately 740 patent applications pending throughout the world.

Backlog

        Backlog consists of purchase orders for products for which we have assigned shipment dates within the following 12 months. As of June 30, 2012 our backlog was approximately $417 million as compared to $398 million at July 2, 2011. Because of possible changes in product delivery schedules and cancellation of product orders and because our sales often reflect orders shipped in the same quarter in which they are received, our backlog at any particular date is not necessarily indicative of actual revenue or the level of orders for any succeeding period.

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Employees

        We employed approximately 4,950 employees as of June 30, 2012, compared to approximately 5,000 and 4,700 as of July 2, 2011 and July 3, 2010, respectively. Our workforce as of June 30, 2012 included approximately 1,950 employees in manufacturing, 1,400 employees in R&D, 600 employees in general and administration, and 1,000 employees in sales and marketing, respectively.

        Similar to other technology companies, we rely upon our ability to use stock options, "Full Value Awards", and other forms of stock-based compensation as key components of our executive and employee compensation structure. Full Value Awards include Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares that are granted with the exercise price equal to zero and are converted to shares immediately upon vesting. Historically, these components have been critical to our ability to retain important personnel and offer competitive compensation packages. Without these components, we would be required to significantly increase cash compensation levels or develop alternative compensation structures to retain our key employees.

        Outside of the United Sates, our businesses are subject to labor laws that differ from those in the United States. The Company follows statutory requirements and in certain European countries, it is common for a works council, consisting of elected employees, to represent the sites when discussing matters such as compensation, benefits or terminations of employment. We consider our employee relations to be very good.

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ITEM 1A.    RISK FACTORS

We have a history of net losses, and our future profitability is not assured.

        Although we had net profits of $71.6 million in fiscal 2011, we incurred net losses of $55.6 million and $61.8 million in fiscal years 2012 and 2010, respectively. As a portfolio company, comprised of many product lines, with diverse operating metrics and markets, our profit performance in a particular period is generally a function of both revenue and product mix factors. For example, our product portfolio has a broad gross margin range. Moreover, the profit contribution of each of our business segments currently varies materially. Additionally, for the last several years, we have undergone multiple manufacturing, facility, organizational and product line transitions. We expect some of these activities to continue for the foreseeable future. These activities are costly and impair our profitability objectives while ongoing. Specific factors that may undermine our financial objectives include, among others:

    uncertain future telecom carrier and cable operator capital and R&D spending levels, which particularly affects our CCOP and CommTest segments;

    adverse changes to our product mix, both fundamentally (resulting from new product transitions, the declining profitability of certain legacy products and the termination of certain products with declining margins, among other things) and due to quarterly demand fluctuations;

    intense pricing pressure across our product lines due to competitive forces, increasingly from Asia, and to a highly concentrated customer base for many of our product lines, which continues to offset many of the cost improvements we are realizing quarter over quarter;

    availability and cost of components for our products, particularly in our CCOP segment;

    increasing commoditization of previously differentiated products, and the attendant negative effect on average selling prices and profit margins, particularly in our CCOP segment;

    execution challenges, which limit revenue opportunities and harm profitability, market opportunities and customer relations;

    revenue declines periodically associated with terminated or divested product lines;

    redundant costs related to periodic transitioning of manufacturing to low-cost locations;

    ongoing costs associated with organizational transitions, consolidations and restructurings, which are expected to continue in the nearer term;

    continuing high levels of selling, general and administrative, ("SG&A") expenses; and

    seasonal fluctuations in revenue from our CommTest segment.

        Taken together, these factors limit our ability to predict future profitability levels and to achieve our long-term profitability objectives. While some of these factors may diminish over time as we improve our cost structure and focus on enhancing our product mix, several factors, such as continuous pricing pressure, increasing Asia-based competition, increasing commoditization of previously-differentiated products, a highly concentrated customer base for many of our product lines and seasonal CommTest segment revenue fluctuations, are likely to remain endemic to our businesses. If we fail to achieve profitability expectations, the price of our debt and equity securities, as well as our business and financial condition, may be materially adversely impacted.

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Our operating results may be adversely affected by unfavorable economic and market conditions.

        Economic conditions worldwide have from time to time contributed to slowdowns in the technology industry at large, as well as to the specific segments and markets in which we operate. When combined with ongoing customer consolidation activity and periodic manufacturing and inventory initiatives, the recent worldwide economic downturn and uncertain recovery, including but not limited to the effects of deteriorating credit markets, could lead to reduced demand from our customers and increased price competition for our products, increased risk of excess and obsolete inventories and higher overhead costs as a percentage of revenue. The worldwide economic downturn may further negatively impact our operations by affecting the solvency of our customers, the solvency of our key suppliers or the ability of our customers to obtain credit to finance purchases of our products. If the global economy and credit markets deteriorate and our future sales decline, our financial condition and results of operations would likely be materially adversely impacted.

        In particular, recent economic uncertainty in Europe has led to reduced demand in our optical communications product portfolios. If economic conditions in Europe do not recover or continue to deteriorate this may further adversely affect our operations. Actual or perceived currency or budget crises could increase economic uncertainty in Europe, and globally, which could have an adverse effect on our customers' operations, which could reduce demand for our products.

        In addition, we have significant long-lived assets recorded on our balance sheet. We will continue to evaluate the recoverability of the carrying amount of our goodwill and long-lived assets on an ongoing basis, and we may incur substantial impairment charges, which would adversely affect our financial results. There can be no assurance that the outcome of such reviews in the future will not result in substantial impairment charges. Impairment assessment inherently involves judgment as to assumptions about expected future cash flows and the impact of market conditions on those assumptions. Future events and changing market conditions may impact our assumptions as to prices, costs, holding periods or other factors that may result in changes in our estimates of future cash flows. Although we believe the assumptions we used in testing for impairment are reasonable, significant changes in any one of our assumptions could produce a significantly different result. If, in any period, our stock price decreases to the point where the fair value of the Company, as determined by our market capitalization, is less than our book value, this too could indicate a potential impairment and we may be required to record an impairment charge in that period.

The manufacture, quality and distribution of our products, as well as our customer relations, may be affected by several factors, including the rapidly changing market for our products, supply issues and internal restructuring efforts. We expect the impact of these issues will become more pronounced as we continue to introduce new product offerings and when overall demand increases.

        Our success depends upon our ability to deliver both our current product offerings and new products and technologies on time and at acceptable cost to our customers. The markets for our products are characterized by rapid technological change, frequent new product introductions, substantial capital investment, changes in customer requirements and a constantly evolving industry. Our future performance will depend on the successful development, introduction and market acceptance of new and enhanced products that address these issues and provide solutions that meet our customers' current and future needs. As a technology company, we also constantly encounter quality, volume and cost concerns such as:

    Our continuing cost reduction programs, which include site and organization consolidations, asset divestitures, outsourcing the manufacture of certain products to contract manufacturers and reductions in employee headcount, require the re-establishment and re-qualification by our customers of complex manufacturing lines, as well as modifications to systems, planning and operational infrastructure. During this process, we have experienced, and continue to

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      experience additional costs, delays in re-establishing volume production levels, planning difficulties, inventory issues, factory absorption concerns, and systems integration problems.

    We have experienced increases in demand for certain of our products, in the midst of our cost reduction programs, which have strained our execution abilities as well as those of our suppliers. Because of this, we at times experience periodic and varying capacity, workforce and materials constraints, enhanced by the impact of our ongoing product and operational transfers.

    We have experienced variability of manufacturing yields caused by difficulties in the manufacturing process, the effects from a shift in product mix, changes in product specifications and the introduction of new product lines. These difficulties can reduce yields or disrupt production and thereby increase our manufacturing costs and adversely affect our margin.

    We may incur significant costs to correct defective products (despite rigorous testing for quality both by our customers and by us), which could include lost future sales of the affected product and other products, and potentially severe customer relations problems, litigation and damage to our reputation.

    We are dependent on a limited number of vendors, who are often small and specialized, for raw materials, packages and standard components. We also rely on contract manufacturers around the world to manufacture certain of our products. Our business and results of operations have been, and could continue to be adversely affected by this dependency. Specific concerns we periodically encounter with our suppliers include stoppages or delays of supply, insufficient vendor resources to supply our requirements, substitution of more expensive or less reliable products, receipt of defective parts or contaminated materials, increases in the price of supplies, and an inability to obtain reduced pricing from our suppliers in response to competitive pressures. Additionally, the ability of our contract manufacturers to fulfill their obligations may be affected by economic, political or other forces that are beyond our control. Any such failure could have a material impact on our ability to meet customers' expectations and may materially impact our operating results.

    New product programs and introductions involve changing product specifications and customer requirements, unanticipated engineering complexities, difficulties in reallocating resources and overcoming resource limitations and with their increased complexity, which expose us to yield and product risk internally and with our suppliers.

        These factors have caused considerable strain on our execution capabilities and customer relations. We have and could continue to see (a) periodic difficulty responding to customer delivery expectations for some of our products, (b) yield and quality problems, particularly with some of our new products and higher volume products, and (c) additional funds and other resources to respond to these execution challenges. From time to time, we have had to divert resources from new product research and development and other functions to assist with resolving these matters. If we do not improve our performance in all of these areas, our operating results will be harmed, the commercial viability of new products may be challenged and our customers may choose to reduce or terminate their purchases of our products and purchase additional products from our competitors.

We rely on a limited number of customers for a significant portion of our sales.

        We believe that we will continue to rely upon a limited number of customers for a significant portion of our revenues for the foreseeable future. Any failure by us to continue capturing a significant share of these customers could materially harm our business. Dependence on a limited number of customers exposes us to the risk that order reductions from any one customer can have a material

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adverse effect on periodic revenue. Further, to the extent that there is consolidation between our direct communications equipment manufacturer customer base and their customer base, the service providers, we will have increased dependence on fewer customers who may be able to exert increased pressure on our prices and contractual terms in general. Customer consolidation activity and periodic manufacturing and inventory initiatives could also create the potential for disruptions in demand for our products as a consequence of such customers streamlining, reducing or delaying purchasing decisions.

        We have a strategic alliance with SICPA, our principal customer for our light interference microflakes that are used to, among other things, provide security features in currency. Under a license and supply agreement, we rely exclusively on SICPA to market and sell one of these product lines, optically variable pigment, for document authentication applications worldwide. The agreement requires SICPA to purchase minimum quantities of these pigments over the term of the agreement. If SICPA fails to purchase these quantities, as and when required by the agreement, our business and operating results (including, among other things, our revenue and gross margin) will be harmed as we may be unable to find a substitute marketing and sales partner or develop these capabilities ourselves.

We face a number of risks related to our strategic transactions.

        Our strategy continues to include periodic acquisitions and divestitures of businesses and technologies. Strategic transactions of this nature involve numerous risks, including the following:

    difficulties and costs in integrating or disintegrating the operations, technologies, products, IT and other systems, facilities, and personnel of the affected businesses;

    inadequate internal control procedures and disclosure controls to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or poor integration of a target company's or business's procedures and controls;

    diversion of management's attention from normal daily operations of the business;

    potential difficulties in completing projects associated with in-process research and development;

    difficulties in entering markets in which we have no or limited prior experience and where competitors have stronger market positions;

    difficulties in obtaining or providing sufficient transition services and accurately projecting the time and cost associated with providing these services;

    an acquisition may not further our business strategy as we expected or we may overpay for, or otherwise not realize the expected return on, our investments;

    insufficient net revenue to offset increased expenses associated with acquisitions;

    potential loss of key employees of the acquired companies; and

    difficulty in forecasting revenues and margins.

        Acquisitions may also cause us to:

    issue common stock that would dilute our current shareholders' percentage ownership and may decrease earnings per share;

    assume liabilities, some of which may be unknown at the time of such acquisitions;

    record goodwill and non-amortizable intangible assets that will be subject to impairment testing and potential periodic impairment charges;

    incur additional debt to finance such acquisitions;

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    incur amortization expenses related to certain intangible assets; or

    acquire, assume, or become subject to litigation related to the acquired businesses or assets.

Certain of our products are subject to governmental and industry regulations, certifications and approvals.

        The commercialization of certain of the products we design, manufacture and distribute through our AOT and CCOP segments may be more costly due to required government approval and industry acceptance processes. Development of applications for our light interference and diffractive microflakes may require significant testing that could delay our sales. For example, certain uses in cosmetics may be regulated by the U.S. Food and Drug Administration, which has extensive and lengthy approval processes. Durability testing by the automobile industry of our decorative microflakes used with automotive paints can take up to three years. If we change a product for any reason, including technological changes or changes in the manufacturing process, prior approvals or certifications may be invalid and we may need to go through the approval process again. If we are unable to obtain these or other government or industry certifications in a timely manner, or at all, our operating results could be adversely affected.

We face risks related to our international operations and revenue.

        Our customers are located throughout the world. In addition, we have significant offshore operations and operations outside North America, including product development, manufacturing, sales and customer support operations.

        In particular, as a result of our efforts to reduce costs, we have expanded our use of contract manufacturers in Shenzhen, China, and we expect to expand our research and development activities there. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations, such as those relating to taxation, import and export tariffs, environmental regulations, land use rights, intellectual property and other matters, which laws and regulations remain highly underdeveloped and subject to change, with little or no prior notice, for political or other reasons.

        Our international presence exposes us to certain risks, including the following:

    currency fluctuations;

    our ability to comply with customs, import/export and other regulations of the countries in which we do business, together with any unexpected changes in such regulations;

    difficulties in establishing and enforcing our intellectual property rights;

    tariffs and other trade barriers;

    political, legal and economic instability in foreign markets, particularly in those markets in which we maintain manufacturing and product development facilities;

    difficulties in staffing and management;

    language and cultural barriers;

    seasonal reductions in business activities in the countries where our international customers are located;

    integration of foreign operations;

    longer payment cycles;

    difficulties in management of foreign distributors; and

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    potential adverse tax consequences.

        Net revenue from customers outside the Americas accounted for 49.6%, 51.4% and 51.5% of our total net revenue for fiscal 2012, 2011 and 2010, respectively. We expect that net revenue from customers outside North America will continue to account for a significant portion of our total net revenue. Lower sales levels that typically occur during the summer months in Europe and some other overseas markets may materially and adversely affect our business. In addition, the revenues we derive from many of our customers depend on international sales and consequently further expose us to the risks associated with such international sales.

Our business and operations would be adversely impacted in the event of a failure of our information technology infrastructure.

        We rely upon the capacity, reliability and security of our information technology infrastructure and our ability to expand and continually update this infrastructure in response to our changing needs. For example, we recently implemented a global Oracle system rollout to improve system integration and performance. In addition, we rely upon certain third party hosting and support services. Any failure to manage, expand and update our information technology infrastructure, any failure in the extension or operation of this infrastructure, or any failure by our hosting and support partners in certain sites in the performance of their services could materially and adversely harm our business.

        Despite our implementation of security measures, our systems are vulnerable to damages from computer viruses, natural disasters, unauthorized access and other similar disruptions. Any system failure, accident or security breach could result in disruptions to our operations. To the extent that any disruptions or security breach results in a loss or damage to our data, or in inappropriate disclosure of confidential information, it could cause significant damage to our reputation and affect our relationships with our customers and ultimately harm our business. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Failure to maintain effective internal controls may adversely affect our stock price.

        Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. The SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public companies to include a report by management on the effectiveness of the Company's internal control over financial reporting in their annual reports on Form 10-K. In addition, our independent registered public accounting firm must report on the effectiveness of our internal control over financial reporting. Although we review our internal control over financial reporting in order to ensure compliance with these requirements, if we or our independent registered public accounting firm is not satisfied with our internal control over financial reporting or the level at which these controls are documented, designed, operated or reviewed, or if our independent registered public accounting firm interprets the requirements, rules and/or regulations differently from our interpretation, then they may issue a qualified report . This could result in a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively impact our stock price.

In 2006 we issued $425 million of 1% Senior Convertible Notes due 2026, which could cause dilution to our existing stockholders and lower our reported per share earnings.

        We issued $425 million of indebtedness in May and June 2006 in the form of 1% Senior Convertible Notes due 2026. As of June 30, 2012, the principal amount of these notes which remained outstanding is $311.0 million. The issuance of these notes substantially increased our principal payment obligations. The degree to which we are leveraged could materially and adversely affect our ability to

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successfully obtain financing for working capital, acquisitions, or other purposes and could make us more vulnerable to industry downturns and competitive pressures. In addition, the holders of those notes are entitled to convert those notes into shares of our common stock or a combination of cash and shares of common stock under certain circumstances which would cause dilution to our existing stockholders and lower our reported per share earnings.

If we have insufficient proprietary rights or if we fail to protect those we have, our business would be materially harmed.

Our intellectual property rights may not be adequate to protect our products or product roadmaps.

        We seek to protect our products and our product roadmaps in part by developing and/or securing proprietary rights relating to those products, including patents, trade secrets, know-how and continuing technological innovation. The steps taken by us to protect our intellectual property may not adequately prevent misappropriation or ensure that others will not develop competitive technologies or products. Other companies may be investigating or developing other technologies that are similar to our own. It is possible that patents may not be issued from any of our pending applications or those we may file in the future and, if patents are issued, the claims allowed may not be sufficiently broad to deter or prohibit others from making, using or selling products that are similar to ours. We do not own patents in every country in which we sell or distribute our products, and thus others may be able to offer identical products in countries where we do not have intellectual property protection. In addition, the laws of some territories in which our products are or may be developed, manufactured or sold, including Europe, Asia-Pacific or Latin America, may not protect our products and intellectual property rights to the same extent as the laws of the United States.

        Any patents issued to us may be challenged, invalidated or circumvented. Additionally, we are currently a licensee in all of our operating segments for a number of third-party technologies, software and intellectual property rights from academic institutions, our competitors and others, and are required to pay royalties to these licensors for the use thereof. Unless we are able to obtain such licenses on commercially reasonable terms, patents or other intellectual property held by others could inhibit our development of new products, impede the sale of some of our current products, substantially increase the cost to provide these products to our customers, and could have a significant adverse impact on our operating results. In the past, licenses generally have been available to us where third-party technology was necessary or useful for the development or production of our products. In the future licenses to third-party technology may not be available on commercially reasonable terms, if at all.

Our products may be subject to claims that they infringe the intellectual property rights of others.

        Lawsuits and allegations of patent infringement and violation of other intellectual property rights occur in our industry on a regular basis. We have received in the past, and anticipate that we will receive in the future, notices from third parties claiming that our products infringe their proprietary rights. Over the past few years there has been a marked increase in the number and potential severity of third-party patent infringement claims, primarily from two distinct sources. First, large technology companies, including some of our customers and competitors, are seeking to monetize their patent portfolios and have developed large internal organizations that have approached us with demands to enter into license agreements. Second, numerous patent-holding companies, entities that do not make or sell products (often referred to as "patent trolls"), have claimed that our products infringe upon their proprietary rights. We will continue to respond to these claims in the course of our business operations. In the past, the settlement and disposition of these disputes has not had a material adverse impact on our business or financial condition, however this may not be the case in the future. Further, the litigation or settlement of these matters, regardless of the merit of the claims, could result in

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significant expense to us and divert the efforts of our technical and management personnel, whether or not we are successful. If we are unsuccessful, we could be required to expend significant resources to develop non-infringing technology or to obtain licenses to the technology that is the subject of the litigation. We may not be successful in such development, or such licenses may not be available on terms acceptable to us, if at all. Without such a license, we could be enjoined from future sales of the infringing product or products, which could adversely affect our revenues and operating results.

The use of open source software in our products, as well as those of our suppliers, manufacturers and customers, may expose us to additional risks and harm our intellectual property position.

        Certain of the software and/or firmware that we use and distribute (as well as that of our suppliers, manufacturers and customers) may be, be derived from, or contain, "open source" software, which is software that is generally made available to the public by its authors and/or other third parties. Such open source software is often made available under licenses which impose obligations in the event the software or derivative works thereof are distributed or re-distributed. These obligations may require us to make source code for the derivative works available to the public, and/or license such derivative works under a particular type of license, rather than the forms of license customarily used to protect our own software products. While we believe we have complied with our obligations under the various applicable licenses for open source software, in the event that a court rules that these licenses are unenforceable, or in the event the copyright holder of any open source software were to successfully establish in court that we had not complied with the terms of a license for a particular work, we could be required to release the source code of that work to the public and/or stop distribution of that work. Additionally, open source licenses are subject to occasional revision. In the event future iterations of open source software are made available under a revised license, such license revisions may adversely affect our ability to use such future iterations.

We face certain litigation risks that could harm our business.

        We are and may become subject to various legal proceedings and claims that arise in or outside the ordinary course of business. The results of complex legal proceedings are difficult to predict. Moreover, many of the complaints filed against us do not specify the amount of damages that plaintiffs seek, and we therefore are unable to estimate the possible range of damages that might be incurred should these lawsuits be resolved against us. While we are unable to estimate the potential damages arising from such lawsuits, certain of them assert types of claims that, if resolved against us, could give rise to substantial damages. Thus, an unfavorable outcome or settlement of one or more of these lawsuits could have a material adverse effect on our financial condition, liquidity and results of operations. Even if these lawsuits are not resolved against us, the uncertainty and expense associated with unresolved lawsuits could seriously harm our business, financial condition and reputation. Litigation is costly, time-consuming and disruptive to normal business operations. The costs of defending these lawsuits, particularly the securities class actions and stockholder derivative actions, have been significant, will continue to be costly and may not be covered by our insurance policies. The defense of these lawsuits could also result in continued diversion of our management's time and attention away from business operations, which could harm our business. For additional discussion regarding litigation, see the "Legal Proceedings" portion of this Annual Report.

We may be subject to environmental liabilities which could increase our expenses and harm our operating results.

        We are subject to various federal, state and foreign laws and regulations governing the environment, including those governing pollution and protection of human health and the environment and, recently, those restricting the presence of certain substances in electronic products and holding producers of those products financially responsible for the collection, treatment, recycling and disposal

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of certain products. Such laws and regulations have been passed in several jurisdictions in which we operate. We will need to ensure that we comply with such laws and regulations as they are enacted, as well as all environmental laws and regulations, and as appropriate or required, that our component suppliers also comply with such laws and regulations. If we fail to comply with such laws, we could face sanctions for such noncompliance, and our customers may refuse to purchase our products, which would have a materially adverse effect on our business, financial condition and results of operations.

        With respect to compliance with environmental laws and regulations in general, we have incurred and in the future could incur substantial costs for the cleanup of contaminated properties, either those we own or operate or to which we have sent wastes in the past, or to comply with such environmental laws and regulations. Additionally, we could be subject to disruptions to our operations and logistics as a result of such clean-up or compliance obligations. If we were found to be in violation of these laws, we could be subject to governmental fines and liability for damages resulting from such violations. If we have to make significant capital expenditures to comply with environmental laws, or if we are subject to significant expenditures in connection with a violation of these laws, our financial condition or operating results could be materially adversely impacted.

Our rights plan and certain provisions in our charter and under Delaware laws could hinder a takeover attempt.

        In February 2003, we amended and restated our Stockholder Rights Agreement, which contains provisions that may have the effect of discouraging a third party from making an acquisition proposal for us and may thereby inhibit a change in control. We are also subject to the provisions of Section 203 of the Delaware General Corporation Law prohibiting, under some circumstances, publicly-held Delaware corporations from engaging in business combinations with some stockholders for a specified period of time without the approval of the holders of substantially all of our outstanding voting stock. Such provisions could delay or impede the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving us, even if such events could be beneficial, in the short-term, to the interests of the stockholders. In addition, such provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock. Our certificate of incorporation and bylaws contain provisions providing for the limitations of liability and indemnification of our directors and officers, dividing our board of directors into three classes of directors serving staggered, three-year terms, allowing vacancies on our board of directors to be filled by the vote of a majority of the remaining directors, granting our board of directors the authority to establish additional series of preferred stock and to designate the rights, preferences and privileges of such shares (commonly known as "blank check preferred") and providing that our stockholders can take action only at a duly called annual or special meeting of stockholders, which may only be called by the Chairman of the board, the Chief Executive Officer or the board of directors. These provisions also may have the effect of deterring hostile takeovers or delaying changes in control or management of us.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

        We own and lease various properties in the United States and in 23 other countries around the world. We use the properties for executive and administrative offices, data centers, product development offices, customer service offices, and manufacturing facilities. Our corporate headquarters of approximately 163,000 square feet is located in Milpitas, California. As of June 30, 2012, our leased and owned properties in total provided us with aggregate square footage of approximately 2.1 million, of which less than 15,000 square feet is owned. Larger leased sites include properties located in China,

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Canada, France, Germany, Singapore, and the United States. We believe that our existing properties, including both owned and leased sites, are in good condition and suitable for the conduct of our business.

        From time to time we consider various alternatives related to our long-term facilities' needs. While we believe our existing facilities are adequate to meet our immediate needs, it may become necessary to lease, acquire, or sell additional or alternative space to accommodate future business needs.

ITEM 3.    LEGAL PROCEEDINGS

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

ITEM 4.    MINE SAFETY DISCLOSURES

        None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Our common stock is traded on the NASDAQ Global Select Market under the symbol "JDSU" and our exchangeable shares of JDS Uniphase Canada Ltd. are traded on the Toronto Stock Exchange under the symbol "JDU." Holders of exchangeable shares may tender their holdings for common stock on a one-for-one basis at any time. As of July 28, 2012, we had 231,916,378 shares of common stock outstanding, including 3,937,789 exchangeable shares. The closing price on July 27, 2012 was $9.95 for the common stock and Canadian $10.07 for the exchangeable shares. The following table summarizes the high and low closing sales prices for our common stock as reported on the NASDAQ Global Select Market during fiscal 2012 and 2011.

 
  High   Low  

Fiscal 2012:

             

Fourth Quarter

  $ 14.59   $ 9.45  

Third Quarter

    14.93     10.68  

Second Quarter

    12.64     8.99  

First Quarter

    16.70     9.85  

Fiscal 2011:

             

Fourth Quarter

  $ 22.06   $ 15.51  

Third Quarter

    28.16     14.78  

Second Quarter

    14.63     10.24  

First Quarter

    12.82     9.19  

        As of July 28, 2012, we had 5,562 holders of record of our common stock and exchangeable shares. We have not paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.

        In May 2012, we repurchased $14.0 million aggregate principal amount of the 1% Senior Convertible Notes for $13.9 million in cash.

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STOCK PERFORMANCE GRAPH

        The information contained in the following graph shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.

        The following graph and table set forth the Company's total cumulative stockholder return, assuming reinvestment of dividends, of an investment of $100 in June 2007 and ending June 2012 in: (i) the Company's Common Stock, (ii) the S&P 500 Index, (iii) the NASDAQ Stock Market (U.S.) Index and, (iv) the NASDAQ Telecommunications Index. Historical stock price performance is not necessarily indicative of future stock price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among JDS Uniphase Corporation

GRAPHIC

          *$100 invested on 6/30/07 in stock or index.

 
  6/07   6/08   6/09   6/10   6/11   6/12  

JDS Uniphase Corporation

    100.00     84.59     42.59     73.27     124.05     81.91  

S&P 500

    100.00     85.14     61.15     68.56     87.85     90.61  

NASDAQ Composite

    100.00     88.08     70.49     81.02     106.54     112.75  

NASDAQ Telecommunications

    100.00     89.12     72.12     71.84     81.44     70.79  

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ITEM 6.    SELECTED FINANCIAL DATA

        This table sets forth selected financial data of JDSU, in millions, except share and per share amounts, for the periods indicated. This data should be read in conjunction with and is qualified by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of this Annual Report on Form 10-K and our audited consolidated financial statements, including the notes thereto and our independent registered public accounting firm's report thereon and the other financial information included in Item 8 of this Form 10-K. The selected data in this section are not intended to replace the consolidated financial statements included in this report.

 
  Years Ended  
 
  June 30,
2012
  July 2,
2011(4)
  July 3,
2010(1)(2)(3)
  June 27,
2009(1)(2)
  June 28,
2008(1)(2)
 

Consolidated Statement of Operations Data:

                               

Net revenue

  $ 1,682.1   $ 1,804.5   $ 1,363.9   $ 1,283.3   $ 1,512.0  

Gross profit

    710.0     790.9     547.1     486.6     579.6  

Amortization of other intangibles

    28.9     32.2     27.8     27.0     30.0  

Impairment of goodwill

                741.7     37.0  

Loss (gain) on disposal and impairment of long-lived assets

    22.7     1.5     (2.0 )   13.2     6.7  

Restructuring and related charges

    12.5     14.8     17.7     38.5     6.7  

Total operating expense

    739.1     725.5     601.3     1,386.5     713.8  

(Loss) income from operations

    (29.1 )   65.4     (54.2 )   (899.9 )   (134.2 )

(Loss) income from continuing operations, net of tax

    (55.6 )