Business Combinations (Tables)

9 Months Ended

Apr. 01, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Business Acquisitions

The following tables summarize the total purchase price consideration (in millions):

	Fair Value
Cash consideration for outstanding NeoPhotonics common stock (1)	$	867.3
Settlement of pre-existing relationship (loan to NeoPhotonics) (2)	50.0
Stock-based compensation (3)	17.1
Total purchase price consideration	$	934.4

(1) Under the terms of the Merger Agreement, NeoPhotonics stockholders received $16.00 per share for each of the 54.2 million NeoPhotonics common stock outstanding at the Closing date. As a result, we paid $867.3 million of cash consideration to shareholders of NeoPhotonics on the Closing date.

(2) As contemplated by the Merger Agreement, on January 14, 2022, Lumentum and NeoPhotonics entered into a credit agreement where Lumentum agreed to make term loans (“loans”) to NeoPhotonics in an aggregate principal amount not to exceed $50.0 million to help fund capital expenditures and increase working capital associated with NeoPhotonics’ growth plans. During fiscal 2022, the Company funded a $30.0 million loan to NeoPhotonics. On August 1, 2022, we funded an additional $20.0 million loan to NeoPhotonics. The interest was payable monthly in arrears on the first day of each month. The loans would have matured on January 14, 2024 unless earlier repaid or accelerated. The $50.0 million loans in aggregate were included as part of the total purchase price consideration.

(3) We paid $22.6 million cash consideration to holders of vested NeoPhotonics equity awards as of closing, of which $13.6 million was allocated to the purchase price consideration and $9.0 million was expensed immediately after the Closing date. Additionally, we issued replacement equity awards (the “Replacement Awards”) in settlement of certain NeoPhotonics equity awards that did not become vested at the Closing date, with the total fair value of $40.2 million based on our closing stock price on the Closing date. The portion of Replacement Awards attributed to pre-merger service was recorded as part of the consideration transferred, which was $3.5 million.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

Our preliminary allocation of the purchase price consideration to the assets acquired and liabilities assumed as of the Closing date is as follows (in millions):

	Fair Value
Total purchase price consideration	$	934.4
Assets acquired
Cash and cash equivalents	$	92.9
Accounts receivable, net	66.8
Inventories	84.3
Prepayments and other current assets	24.2
Property, plant and equipment, net	106.1
Operating lease right-of-use assets, net	16.9
Other intangible assets, net (1)	412.5
Other non-current assets	1.9
Total assets	805.6
Liabilities assumed
Accounts payable	79.6
Accrued payroll and related expenses	11.1
Accrued expenses	3.8
Other current liabilities	10.6
Operating lease liabilities, current	2.8
Operating lease liabilities, non-current	13.2
Deferred tax liability	38.3
Other non-current liabilities	28.2
Total liabilities	187.6
Goodwill	$	316.4

(1) Other intangible assets include customer relationship of $144.5 million, developed technology of $220.0 million, and in-process research and development (“IPR&D”) of $48.0 million. Refer to “Note 8. Goodwill and Other Intangible Assets” for more information.

Schedule of Pro Forma Financial Information

The supplemental pro forma financial information for the periods presented is as follows (in millions):

	Three Months Ended				Nine Months Ended
	April 1, 2023		April 2, 2022		April 1, 2023		April 2, 2022
Net revenue	$	383.4	$	484.7	$	1,420.1	$	1,544.1
Net income (loss)	(35.9)		3.6		(29.3)		48.6