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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 2021
 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto

Commission File Number 000-22874
Viavi Solutions Inc.
(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)

7047 E Greenway Pkwy Suite 250, Scottsdale, Arizona 85254
(Address of principal executive offices including Zip code)

(408) 404-3600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of the exchange on which registered
Common Stock, par value of $0.001 per share
VIAV
The Nasdaq Stock Market LLC

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   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

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

Large accelerated filerAccelerated filerNon-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

As of May 1, 2021, the Registrant had 228,638,873 shares of common stock outstanding.


TABLE OF CONTENTSPage

1

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
 Three Months EndedNine Months Ended
 April 3, 2021March 28, 2020April 3, 2021March 28, 2020
Revenues:
Product revenue$266.6 $223.8 $776.6 $770.5 
Service revenue36.8 32.4 111.4 99.2 
Total net revenue303.4 256.2 888.0 869.7 
Cost of revenues:
Product cost of revenue98.1 89.2 287.8 297.2 
Service cost of revenue15.0 12.2 43.8 37.0 
Amortization of acquired technologies8.3 8.0 24.9 24.8 
Total cost of revenues121.4 109.4 356.5 359.0 
Gross profit182.0 146.8 531.5 510.7 
Operating expenses:
Research and development52.1 46.8 150.9 148.6 
Selling, general and administrative86.1 83.6 247.0 263.1 
Amortization of other intangibles8.3 8.9 24.9 26.4 
Restructuring and related benefits(0.4)(1.6)(0.8)(2.2)
Total operating expenses146.1 137.7 422.0 435.9 
Income from operations35.9 9.1 109.5 74.8 
Interest income and other (loss) income, net(0.9)5.3 0.8 9.3 
Interest expense(9.0)(8.4)(27.0)(25.1)
Income before taxes26.0 6.0 83.3 59.0 
Provision for income taxes14.2 38.8 35.3 57.0 
Net income (loss)$11.8 $(32.8)$48.0 $2.0 
Net income (loss) per share:
Basic$0.05 $(0.14)$0.21 $0.01 
Diluted$0.05 $(0.14)$0.21 $0.01 
Shares used in per-share calculations:
Basic228.7 230.0 228.8 229.8 
Diluted240.2 230.0 233.8 236.3 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
2

VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
(unaudited)
Three Months EndedNine Months Ended
April 3, 2021March 28, 2020April 3, 2021March 28, 2020
Net income (loss)$11.8 $(32.8)$48.0 $2.0 
Other comprehensive income (loss):
Net change in cumulative translation adjustment, net of tax(4.9)(33.7)57.1 (33.1)
Unrealized holding loss arising during period (0.1) (0.1)
Amortization of actuarial income (loss)0.8 0.7 2.3 2.2 
Net change in accumulated other comprehensive income (loss) (4.1)(33.1)59.4 (31.0)
Comprehensive income (loss)$7.7 $(65.9)$107.4 $(29.0)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

3

VIAVI SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and par value data)
(unaudited)
April 3, 2021June 27, 2020
ASSETS 
Current assets:  
Cash and cash equivalents$672.2 $539.0 
Short-term investments1.6 1.5 
Restricted cash4.3 3.5 
Accounts receivable, net262.7 235.5 
Inventories, net90.6 83.3 
Prepayments and other current assets48.6 50.8 
Total current assets1,080.0 913.6 
Property, plant and equipment, net180.0 172.5 
Goodwill, net396.4 381.4 
Intangibles, net104.6 148.1 
Deferred income taxes113.1 105.4 
Other non-current assets52.7 55.3 
Total assets$1,926.8 $1,776.3 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$54.8 $53.0 
Accrued payroll and related expenses61.3 51.4 
Deferred revenue65.9 54.6 
Accrued expenses27.4 22.6 
Current portion of long-term debt 2.8 
Other current liabilities63.7 48.4 
Total current liabilities273.1 232.8 
Long-term debt618.1 600.9 
Other non-current liabilities223.8 231.2 
Commitments and contingencies (Note 18)
Stockholders’ equity:
Common stock, $0.001 par value; 1 billion shares authorized; 229 million shares at April 3, 2021 and 228 million shares at June 27, 2020, issued and outstanding
0.2 0.2 
Additional paid-in capital70,299.0 70,274.3 
Accumulated deficit(69,380.9)(69,397.2)
Accumulated other comprehensive loss(106.5)(165.9)
Total stockholders’ equity811.8 711.4 
Total liabilities and stockholders’ equity$1,926.8 $1,776.3 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
4

VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Nine Months Ended
April 3, 2021March 28, 2020
OPERATING ACTIVITIES:
Net income$48.0 $2.0 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense26.8 30.0 
Amortization of acquired technologies and other intangibles49.8 51.2 
Stock-based compensation33.4 33.3 
Amortization of debt issuance costs and accretion of debt discount17.7 16.5 
Net change in fair value of contingent liabilities(3.8)(4.3)
Other2.2 4.9 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(21.0)(6.6)
Inventories(8.1)3.6 
Other current and non-currents assets16.2 1.9 
Accounts payable (16.0)
Income taxes payable13.9 8.6 
Deferred revenue, current and non-current8.8 7.4 
Deferred taxes, net(3.9)27.8 
Accrued payroll and related expenses8.6 (10.3)
Accrued expenses and other current and non-current liabilities(7.9)(41.6)
Net cash provided by operating activities$180.7 $108.4 
INVESTING ACTIVITIES:
Capital expenditures$(26.7)$(23.6)
Proceeds from the sale of assets2.6 4.0 
Acquisitions, net of cash acquired(0.7)(0.5)
Net cash used in investing activities$(24.8)$(20.1)
FINANCING ACTIVITIES:
Payment of debt issuance costs$(0.1)$ 
Repurchase and retirement of common stock(31.1)(43.8)
Withholding tax payment on vesting of restricted stock awards(14.8)(18.4)
Payment of financing obligations(1.0)(2.1)
Proceeds from employee stock purchase plan6.6 5.5 
Payment of debt(2.8) 
Net cash used in financing activities$(43.2)$(58.8)
Effect of exchange rates on cash, cash equivalents and restricted cash$21.9 $(19.0)
Net increase in cash, cash equivalents and restricted cash134.6 10.5 
Cash, cash equivalents and restricted cash at the beginning of the period (1)
547.4 530.4 
Cash, cash equivalents and restricted cash at the end of the period (2)
$682.0 $540.9 
(1) These amounts include both current and non-current balances of restricted cash totaling $8.4 million and $8.9 million as of June 27, 2020 and June 29, 2019, respectively.
(2) These amounts include both current and non-current balances of restricted cash totaling $9.8 million and $8.4 million as of April 3, 2021 and March 28, 2020, respectively.
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
5

VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Three Months Ended April 3, 2021
Common Stock
Shares
Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at January 2, 2021228.5 $0.2 $70,288.0 $(69,384.8)$(102.4)$801.0 
Net income— — — 11.8 — 11.8 
Other comprehensive loss— — — — (4.1)(4.1)
Shares issued under employee stock plans, net of tax0.6 —  — —  
Stock-based compensation— — 11.0 — — 11.0 
Repurchase of common stock(0.5)— — (7.9)— (7.9)
Balance at April 3, 2021228.6 $0.2 $70,299.0 $(69,380.9)$(106.5)$811.8 
Three Months Ended March 28, 2020
Common Stock
Shares
Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at December 28, 2019230.2 $0.2 $70,254.0 $(69,357.4)$(132.5)$764.3 
Net loss— — — (32.8)— (32.8)
Other comprehensive loss— — — — (33.1)(33.1)
Shares issued under employee stock plans, net of tax0.6 — (0.1)— — (0.1)
Stock-based compensation— — 11.6 — — 11.6 
Repurchase of common stock(2.8)— — (33.1)— (33.1)
Other— — — 0.1 — 0.1 
Balance at March 28, 2020228.0 $0.2 $70,265.5 $(69,423.2)$(165.6)$676.9 

Nine Months Ended April 3, 2021
Common Stock
Shares
Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at June 27, 2020228.3 $0.2 $70,274.3 $(69,397.2)$(165.9)$711.4 
Net income— — — 48.0 — 48.0 
Other comprehensive income— — — — 59.4 59.4 
Shares issued under employee stock plans, net of tax2.6 — (8.7)— — (8.7)
Stock-based compensation— — 33.4 — — 33.4 
Repurchase of common stock(2.3)— — (31.7)— (31.7)
Balance at April 3, 2021228.6 $0.2 $70,299.0 $(69,380.9)$(106.5)$811.8 

6

Nine Months Ended March 28, 2020
Common Stock
Shares
Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at June 29, 2019228.8 $0.2 $70,244.7 $(69,384.5)$(134.6)$725.8 
Cumulative adjustment for adoption of ASC 842
— — — 3.0 — 3.0 
Net income— — — 2.0 — 2.0 
Other comprehensive loss— — — — (31.0)(31.0)
Shares issued under employee stock plans, net of tax2.8 — (12.7)— — (12.7)
Stock-based compensation— — 33.5 — — 33.5 
Repurchase of common stock(3.6)— — (43.8)— (43.8)
Other— — — 0.1 — 0.1 
Balance at March 28, 2020228.0 $0.2 $70,265.5 $(69,423.2)$(165.6)$676.9 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
7


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The financial information for Viavi Solutions Inc. (VIAVI also referred to as the Company) for the three and nine months ended April 3, 2021 and March 28, 2020 is unaudited, and includes all normal and recurring adjustments Company’s management considers necessary for a fair statement of the financial information set forth herein. The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual consolidated financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, for the year ended June 27, 2020.
There have been no material changes to the Company’s accounting policies during the three and nine months ended April 3, 2021, as compared to the significant accounting policies presented in “Note 1. Basis of Presentation” of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report for the year ended June 27, 2020 on Form 10-K, filed with the SEC on August 24, 2020.
The Consolidated Balance Sheet as of June 27, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results for the three and nine months ended April 3, 2021 and March 28, 2020 may not be indicative of results for the fiscal year ending July 3, 2021 or any future periods.
Fiscal Years
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company’s fiscal 2021 is a 53-week year ending on July 3, 2021. The Company’s fiscal 2020 was a 52-week year ending on June 27, 2020. The Company’s first quarter of fiscal year 2021 was a 14 week quarter compared to the standard 13 week quarters.
Principles of Consolidation
The consolidated financial statements include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.
Use of Estimates
The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods. The Company bases estimates on historical experience and assumptions about future periods that are believed to be reasonable based on available information. The Company’s reported financial positions or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect readily available current information.
A novel strain of coronavirus (COVID-19) has been reported as first identified in Wuhan, China by the Chinese government in December 2019, and subsequently declared an international pandemic by the World Health Organization (WHO) in March 2020. The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity which is likely to continue to impact demand for a broad variety of goods and services, including from our customers, while also continuing to disrupt sales channels and marketing activities for an unknown period of time until the disease is contained. In late 2020, new and potentially more contagious variants of the virus emerged, along with a surge in cases in several regions across the globe, resulting in renewed shutdown and shelter in place orders. While rollout of several vaccines commenced in December 2020, the pace of the rollout has been slow and the demand for vaccine far outpaces available supply. While, the Company expects this could have a negative impact to our sales and our results of operations, the Company is not aware of any specific event or circumstances that would require an update to the estimates or judgments or a revision of the carrying value of assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change,
8


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
as new events occur and additional information becomes available. Actual results may differ materially from these estimates assumptions or conditions.
Note 2. Recently Issued Accounting Pronouncements
Recent Accounting Pronouncements Adopted
In June 2016, the FASB issued guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial assets will be estimated based on expected losses. In the first quarter of fiscal 2021 the Company adopted the accounting standard using the modified retrospective approach. The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In August 2018, the FASB issued guidance to amend the disclosure requirements related to defined benefit pension and other post-retirement plans. Some of the changes include adding a disclosure requirement for significant gains and losses related to changes in the benefit obligation for the period and removing the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year. This guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.
In December 2019, the FASB issued guidance which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The guidance is effective for the Company in the first quarter of fiscal year 2022 and early adoption is permitted. The Company is evaluating the effects that the adoption of this guidance will have on its consolidated financial statements.
In August 2020, the FASB issued guidance which simplifies the accounting for financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full retrospective adoption or modified retrospective adoption. The guidance is effective for the Company in the first quarter of fiscal year 2023 and early adoption is permitted. The Company is evaluating the effects that the adoption of this guidance will have on its consolidated financial statements.
9


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share (in millions, except per share data):
 Three Months EndedNine Months Ended
 April 3, 2021March 28, 2020April 3, 2021March 28, 2020
Numerator:  
Net income (loss)$11.8 $(32.8)$48.0 $2.0 
Denominator:
Weighted-average shares outstanding:
Basic 228.7 230.0 228.8 229.8 
Shares issuable assuming conversion of convertible notes (1)
8.5  2.3 3.0 
Effect of dilutive securities from stock-based compensation plans3.0  2.7 3.5 
Diluted240.2 230.0 233.8 236.3 
Net income (loss) per share:
Basic$0.05 $(0.14)$0.21 $0.01 
Diluted$0.05 $(0.14)$0.21 $0.01 
(1)    Represents the number of shares that would be issued if the Company’s 1.00% Senior Convertible Notes (2024 Notes) and 1.75% Senior Convertible Notes (2023 Notes) had been converted. The par amount of the Company’s convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest. The “in-the money” conversion benefit feature above the conversion price of the 2023 Notes and 2024 Notes of, $13.94 and $13.22 per share, respectively is payable in cash, shares of the Company’s common stock or a combination of both, at the Company’s election. Refer to “Note 11. Debt” for more details.
The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income per share because their effect would have been anti-dilutive (in millions):
 Three Months EndedNine Months Ended
 April 3, 2021March 28, 2020April 3, 2021March 28, 2020
(1) (2)
Restricted stock units0.3 7.3 0.4 0.2 
Stock options and ESPP 1.2   
Shares issuable from Convertible Notes 1.3   
Total potentially dilutive securities0.3 9.8 0.4 0.2 
(1)    As the Company incurred a loss from continuing operations in the period, potential securities from employee stock options, ESPP, restricted stock units (RSUs) and performance stock units (PSUs) have been excluded from the dilutive net loss per share computations as their effects were deemed anti-dilutive.
(2)    The Company’s 1.75% Senior Convertible Notes due 2023 are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the money” conversion benefit feature at the conversion price above $13.94 per share is payable in cash, shares of the Company’s common stock or a combination of both, at the Company’s election. The Company’s average stock price for the period presented did not exceed the conversion price of $13.94. Refer to “Note 11. Debt” for more details.

Note 4. Accumulated Other Comprehensive Loss
The Company’s accumulated other comprehensive loss consists of the accumulated net unrealized gains or losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations.
10


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the nine months ended April 3, 2021, the changes in accumulated other comprehensive loss, net of tax, by component were as follows (in millions):
Unrealized losses on available-for sale investmentsForeign 
currency translation adjustments, net of tax
Change in unrealized components of defined benefit obligations (1)
Total
Beginning balance as of June 27, 2020$(5.1)$(129.6)$(31.2)$(165.9)
Other comprehensive income before reclassification 57.1  57.1 
Amounts reclassified to accumulated other comprehensive loss  2.3 2.3 
Net current-period other comprehensive income 57.1 2.3 59.4 
Ending balance as of April 3, 2021$(5.1)$(72.5)$(28.9)$(106.5)
(1)  The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial losses included as a component of cost of revenues, research and development (R&D) and selling, general and administrative (SG&A) in the Consolidated Statement of Operations for the nine months ended April 3, 2021. There was no tax impact for the nine months ended April 3, 2021. Refer to “Note 17. Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.
Note 5. Acquisitions
3Z Telecom, Inc. Acquisition
On May 31, 2019 (3Z Close Date), the Company acquired all of the equity of 3Z Telecom, Inc. (3Z) for approximately $23.2 million in cash and contingent consideration (earn-out) liability of up to $7.0 million in cash based on the achievement of certain net revenue targets over approximately a two year period subsequent to the 3Z Close Date. The acquisition of 3Z expands the Company’s Field Instrument offerings.
RPC Photonics, Inc. Acquisition
On October 30, 2018 (RPC Close Date), the Company acquired all of the equity interest of RPC Photonics, Inc. (RPC) for approximately $33.4 million in cash and an additional earn-out of up to $53.0 million in cash to be paid based on the achievement of certain gross profit targets over approximately a four year period, subsequent to the RPC Close Date. The acquisition of RPC expands the Company’s 3D Sensing offerings.
Other Acquisition
During the twelve months ended June 27, 2020, the Company completed a business acquisition for total consideration of approximately $5.2 million in cash paid at close and an earn-out liability of up to $5.5 million in cash to be paid based on the occurrence or achievement of certain agreed upon targets. In connection with this acquisition, the Company recorded approximately $6.2 million of developed technology and customer relationships and $1.4 million of deferred tax liability resulting from the acquisitions. The acquired developed technology and customer relationship assets are being amortized over their estimated useful lives of six years.

11


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a reconciliation of changes in the fair value of the Company’s earn-out liabilities associated with Company’s acquisitions for the three and nine months ended April 3, 2021 and March 28, 2020 (in millions):
Three Months EndedNine Months Ended
April 3, 2021March 28, 2020April 3, 2021March 28, 2020
Beginning period balance$8.9 $34.1 $9.9 $38.4 
Fair value adjustment of earn-out liabilities(2.3) (3.8)(4.3)
Currency translation adjustment0.1  0.6  
Ending period balance$6.7 $34.1 $6.7 $34.1 
No payments were made in connection with the Company’s earn-out liabilities during the three and nine months ended April 3, 2021 and March 28, 2020.
Note 6. Balance Sheet and Other Details
Contract Balances
Unbilled Receivables: The Company records a receivable when an unconditional right to consideration exists and transfer of control has occurred, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of customer invoicing. Payment terms vary based on product or service offerings and payment is generally required within 30 to 90 days from date of invoicing. Certain performance obligations may require payment before delivery of the service to the customer.
Contract Assets: A Contract Asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract Assets include fixed fee professional services, where the transfer of services has occurred in advance of the Company's right to invoice. Contract Assets, included in accounts receivable, net, on the Consolidated Balance Sheets, are not material to the Consolidated Financial Statements. Contract asset balances will fluctuate based upon the timing of transfer of services, billings and customers’ acceptance of contractual milestones.
Gross receivables include both billed and unbilled receivables (Unbilled Receivables and Contract Assets). As of April 3, 2021, and June 27, 2020, the Company had total unbilled receivables of $5.9 million and $3.8 million, respectively.
Deferred Revenue: Deferred revenue consists of contract liabilities primarily related to support, solution deployment services, software maintenance, product, professional services, and training when the Company has a right to invoice or payments have been received and transfer of control has not occurred. Revenue is recognized on these items when the revenue recognition criteria are met, generally resulting in ratable recognition over the contract term. Contract liabilities are included in deferred revenue and non-current liabilities on the Consolidated Balance Sheets.
The Company also has short-term and long-term deferred revenues related to undelivered hardware and professional services, consisting of installations and consulting engagements, which are recognized as the Company's performance obligations under the contract are completed and accepted by the customer.
12


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables summarize the activity related to deferred revenue (in millions):
April 3, 2021
Three months endedNine Months Ended
Deferred revenue:
Balance at beginning of period$82.0 $74.6 
Revenue deferrals for new contracts (1)
32.1 93.5 
Revenue recognized during the period (2)
(28.1)(82.1)
Balance at end of period (3)
$86.0 $86.0 
(1) Included in these amounts is the impact from foreign currency exchange rate fluctuations.
(2) Revenue recognized during the period represents releases from the balance at the beginning of the period as well as releases from the following period quarter-end deferrals.
(3) The long-term portion of deferred revenue is included as a component of Other non-current liabilities.

Remaining Performance Obligations: Remaining performance obligations represent the aggregate amount of the transaction price allocated to performance obligations that are not delivered or incomplete. Remaining performance obligations include deferred revenue plus unbilled amounts not yet recorded. The aggregate amount of the transaction price allocated to remaining performance obligations does not include amounts owed under cancellable contracts where there is no substantive termination penalty.
Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, adjustments for revenue that have not materialized, and adjustments for currency.
The value of the transaction price allocated to remaining performance obligations as of April 3, 2021, was $239.7 million. The Company expects to recognize approximately 90% of remaining performance obligations as revenue within the next 12 months, and the remainder thereafter.
Disaggregation of revenue
The Company's revenue is presented on a disaggregated basis on the Consolidated Statements of Operations and in “Note 19. Operating Segments and Geographic Information”. This information includes revenue from reportable segments and a break-out of products and services for which the timing of the revenue is generally at a point in time and over time, respectively.
Accounts receivable allowance
The following table presents the activities and balances for allowance for credit losses (in millions):
June 27, 2020Charged to Costs and Expenses
Deductions (1)
April 3, 2021
Allowance for credit losses$3.0 $0.7 $(1.5)$2.2 
(1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.
Inventories, net
The following table presents the components of inventories, net (in millions):
April 3, 2021June 27, 2020
Finished goods$38.0 $30.0 
Work in process17.6 22.5 
Raw materials35.0 30.8 
Inventories, net$90.6 $83.3 
13


VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Prepayments and other current assets
The following table presents the components of prepayments and other current assets (in millions):
April 3, 2021June 27, 2020
Prepayments$11.1 $10.9 
Asset held for sale2.5 2.5 
Advances to contract manufacturers5.4 7.3 
Refundable income taxes11.0 10.8 
Transaction tax receivables10.8 10.6 
Other current assets7.8 8.7 
Prepayments and other current assets$48.6 $50.8 
Other current liabilities
The following table presents the components of other current liabilities (in millions):
April 3, 2021June 27, 2020
Customer prepayments$0.4 $0.5 
Restructuring accrual2.2 6.5 
Income tax payable24.3 10.7 
Warranty accrual4.4 4.6 
Transaction tax payable5.1 3.2 
Operating lease liabilities (Note 12)12.0 11.7 
Other15.3 11.2 
Other current liabilities$63.7 $48.4 
Other non-current liabilities
The following table presents components of other non-current liabilities (in millions):
April 3, 2021June 27, 2020
Pension and post-employment benefits$105.6 $102.7 
Financing obligation16.1 16.2 
Deferred tax liability23.4 23.9 
Long-term deferred revenue20.1 20.0 
Fair value of contingent consideration (Note 8)1.8 9.4 
Operating lease liabilities (Note 12)24.8 28.1 
Uncertain tax position12.4 11.6 
Other19.6