VIAVI SOLUTIONS INC.
For the period ended Dec 28, 2024. Filed Jan 31, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 28, 2024 · Filed Jan 31, 2025
VIAV$28.47+8.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-11-01.
0000912093-24-000093
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-28; filed 2025-01-31.
0000912093-25-000012
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 172 current paragraphs.
100 unchanged; 45 reworded; 25 added; 11 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
During the second quarter of fiscal 2025, the Network and Service Enablement (NSE) business environment began showing signs of stabilization and heading towards a gradual recovery in fiscal 2025, driven by recovering spend from service providers and enterprise customer markets. OSP performance was marginally impacted by slower demand for 3D sensing products. We continue to monitor the near-term demand for anti-counterfeiting products as the end customers work down their inventories.
Current report
•Net revenue of $270.8 million, up $16.3 million or 6.4% year-over-year.
Current report
•GAAP net income of $9.1 million, down $1.6 million or 15.0% year-over-year.
Current report
•Non-GAAP net income of $29.4 million, up $5.7 million or 24.1% year-over-year.
Current report
Three and Six Months Ended December 28, 2024 and December 30, 2023
Current report
Net revenue increased by $6.6 million, or 1.3%, during the six months ended December 28, 2024 compared to the same period a year ago. This increase reflects higher spend by NEMs and avionic customers, partially offset by lower consumer and industrial revenue.
Current report
Product revenues increased by $6.7 million, or 1.6%, during the six months ended December 28, 2024 compared to the same period a year ago, driven by revenue increases in our NE segment, partially offset by revenue decreases in our SE and OSP segments.
Current report
Service revenues remained relatively flat during the six months ended December 28, 2024 compared to the same period a year ago, driven by a revenue increase in our NE segment offset by a revenue decrease in our SE segment.
Current report
R&D expense increased by $2.1 million, or 2.1% during the six months ended December 28, 2024 compared to the same period a year ago. This increase was primarily due to higher variable expenses. As a percentage of net revenue, R&D expense increased by 0.1 percentage points during the six months ended December 28, 2024 compared to the same period a year ago.
Current report
SG&A expense increased by $6.4 million, or 4.2%, during the six months ended December 28, 2024 compared to the same period a year ago. This increase was primarily due to higher variable expenses and acquisition and integration related charges. As a percentage of net revenue, SG&A expense increased 0.8 percentage points during the six months ended December 28, 2024 compared to the same period a year ago.
Current report
Interest and other income, net, was $3.9 million during the three months ended December 28, 2024 compared to $3.8 million during the same period a year ago. The increase was primarily driven by foreign exchange impact as the balance sheet hedging program provided a more favorable offset to the remeasurement of underlying foreign exchange exposures in the current period offset by a decrease in interest income due to lower cash balances and lower yields compared to the prior period.
Current report
NE net revenue increased by $15.1 million, or 4.9% during the six months ended December 28, 2024 compared to the same period a year ago, primarily driven by higher volume in Lab and Production, AvComm and Fiber and Access.
Current report
NE gross margin increased by 2.0 percentage points during the three months ended December 28, 2024 to 64.5% from 62.5% in the same period a year ago primarily due to higher volume.
Current report
SE net revenue decreased by $3.2 million, or 13.3%, during the three months ended December 28, 2024 compared to the same period a year ago primarily due to lower Assurance revenue, partially offset by higher Wireless Enterprise Solutions revenue.
Current report
SE net revenue decreased by $5.8 million, or 13.0%, during the six months ended December 28, 2024 compared to the same period a year ago primarily due to lower Assurance revenue.
Current report
SE gross margin decreased by 1.4 percentage points during the three months ended December 28, 2024 to 67.5% from 68.9% in the same period a year ago primarily due to lower volume.
Current report
SE gross margin decreased by 3.8 percentage points during the six months ended December 28, 2024 to 64.3% from 68.1% in the same period a year ago primarily due to lower volume.
Current report
NSE operating margin increased by 5.1 percentage points during the three months ended December 28, 2024 to 8.7% from 3.6% in the same period a year ago primarily due to higher volume.
Current report
NSE operating margin increased by 0.5 percentage points during the six months ended December 28, 2024 to 2.8% from 2.3% in the same period a year ago primarily due to higher volume.
Current report
OSP net revenue decreased by $4.0 million, or 5.3%, during the three months ended December 28, 2024 compared to the same period a year ago. This decrease was primarily driven by lower consumer and industrial and government revenue offset in part by an increase in anti-counterfeiting revenue.
Current report
OSP net revenue decreased by $2.7 million, or 1.8%, during the six months ended December 28, 2024 compared to the same period a year ago. This decrease was primarily driven by lower consumer and industrial revenue offset in part by higher anti-counterfeiting revenue.
Current report
OSP gross margin decreased by 1.5 percentage points during the three months ended December 28, 2024 to 50.6% from 52.1% in the same period a year ago primarily due to lower volume.
Current report
OSP gross margin increased by 0.8 percentage points during the six months ended December 28, 2024 to 53.1% from 52.3% in the same period a year ago primarily due to favorable product mix.
Current report
OSP operating margin decreased by 4.0 percentage points during the three months ended December 28, 2024 to 32.4% from 36.4% in the same period a year ago primarily due to lower volume and higher operating expenses.
Current report
OSP operating margin decreased by 0.9 percentage points during the six months ended December 28, 2024 to 36.2% from 37.1% in the same period a year ago primarily due to lower volume and higher operating expenses.
Removed paragraphs (11)
Previous report
During the first quarter of fiscal 2025, the VIAVI business environment continued to be challenging, particularly in the North American service provider and enterprise customer markets. NE product demand continues to be impacted by reduced research and development (R&D) and production capital expenditure spend by major wireless network equipment manufacturers (NEMs), offset by OSP performance.
Previous report
•Net revenue of $238.2 million, down $9.7 million or 3.9% year-over-year.
Previous report
•GAAP net loss of $1.8 million, down $11.6 million or 118.4% year-over-year.
Previous report
•Non-GAAP net income of $12.4 million, down $7.1 million or 36.4% year-over-year.
Previous report
Net revenue decreased by $9.7 million, or 3.9%, during the three months ended September 28, 2024 compared to the same period a year ago. This decrease reflects the continuing weakness in service provider spending partially offset by higher consumer and industrial, government and anti-counterfeiting revenue.
Previous report
SE net revenue decreased by $2.6 million, or 12.7%, during the three months ended September 28, 2024 compared to the same period a year ago primarily due to lower Data Center and Assurance revenue.
Previous report
SE gross margin decreased by 6.5 percentage points during the three months ended September 28, 2024 to 60.7% from 67.2% in the same period a year ago primarily due to lower volume.
Previous report
NSE operating margin decreased by 5.5 percentage points during the three months ended September 28, 2024 to (4.6)% from 0.9% in the same period a year ago primarily due to lower volume.
Previous report
OSP net revenue increased by $1.3 million, or 1.7%, during the three months ended September 28, 2024 compared to the same period a year ago. This increase was primarily driven by higher consumer and industrial, government and anti-counterfeiting revenue.
Previous report
OSP gross margin increased by 2.8 percentage points during the three months ended September 28, 2024 to 55.3% from 52.5% in the same period a year ago primarily due to manufacturing volume.
Previous report
OSP operating margin increased by 1.8 percentage points during the three months ended September 28, 2024 to 39.6% from 37.8% in the same period a year ago primarily due to the aforementioned increase in gross margin.
Reworded paragraphs (45)
Previous wording
•Our expectations related to macro-economic conditions, including the impact of inflation, fiscal tightening at central banks, changes in foreign exchange rates, the risk of increased tensions and trade actions between China and the U.S., the ongoing conflict between Russia and Ukraine and the ongoing conflict between Israel and Hamas and the expansion of conflict in the Middle East, including in Lebanon and with Iran, on our business, operations and financial results.
Current wording
•Our expectations related to macro-economic conditions, including the impact of inflation, fiscal tightening at central banks, changes in foreign exchange rates, the risk of increased tensions and trade actions, including potential global tariffs, ongoing geopolitical tensions including the conflict between Russia and Ukraine, the instability in the Middle East and the sustainability of recent cease-fire agreements, on our business, operations and financial results.
Previous wording
As we look forward to the second quarter of fiscal 2025, we are seeing many of our end markets show signs of stabilization which we believe indicates the beginning of a gradual recovery and expect this to continue in the second half of fiscal 2025. Our long-term focus remains on executing against our strategic priorities to drive revenue and earnings growth, capture market share and continue to optimize our capital structure. We remain positive on our long-term growth drivers and will continue to focus on executing our strategic priorities over the long-term to:
Current wording
As we look forward to the third quarter of fiscal 2025, we are seeing many of our end markets stabilize, which we believe indicates the beginning of a gradual recovery and expect this to continue in the second half of fiscal 2025. Our long-term focus remains on executing against our strategic priorities to drive revenue and earnings growth, capture market share and continue to optimize our capital structure. We remain positive on our long-term growth drivers and will continue to focus on executing our strategic priorities over the long-term to:
Previous wording
•Continue productivity improvements in Operations, R&D and Selling, General and Administrative (SG&A).
Current wording
•Continue productivity improvements in Operations, Research and Development (R&D) and Selling, General and Administrative (SG&A).
Previous wording
First quarter fiscal 2025 results included the following notable items:
Current wording
Second quarter fiscal 2025 results included the following notable items:
Previous wording
•GAAP operating margin of 4.8%, down 170 bps year-over-year.
Current wording
•GAAP operating margin of 8.2%, down 60 bps year-over-year.
Previous wording
•Non-GAAP operating margin of 10.0%, down 240 bps year-over-year.
Current wording
•Non-GAAP operating margin of 14.9%, up 170 bps year-over-year.
Previous wording
•GAAP diluted EPS of $(0.01), down $0.05 or 125.0% year-over-year.
Current wording
•GAAP diluted EPS of $0.04, down $0.01 or 20.0% year-over-year.
Previous wording
•Non-GAAP diluted EPS of $0.06, down $0.03 or 33.3% year-over-year.
Current wording
•Non-GAAP diluted EPS of $0.13, up $0.02 or 18.2% year-over-year.
Previous wording
(1)Included in the three months ended September 28, 2024 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance of $0.4 million.
Current wording
(1)Included in the six months ended December 28, 2024 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance of $0.5 million.
Previous wording
The Company provides non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP EPS financial measures as supplemental information regarding the Company’s operational performance. The Company uses the measures disclosed in this Report to evaluate the Company’s historical and prospective financial performance, as well as its performance relative to its competitors. Specifically, management uses these items to further its own understanding of the Company’s core operating performance, which the Company believes represents its performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from core operating performance items such as those relating to certain purchase price accounting adjustments, amortization of acquisition-related intangibles, stock-based compensation, legal settlements, restructuring, changes in fair value of contingent consideration liabilities and certain investing and acquisition related expenses and other activities that management believes are not reflective of such ordinary, ongoing and core operating activities.
Current wording
The Company provides non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP EPS financial measures as supplemental information regarding the Company’s operational performance and believes providing this additional information allows investors to see Company results through the eyes of management, better understand its financial performance and evaluate the efficacy of the methodology used by management to measure such performance. The Company uses the measures disclosed in this Report to evaluate the Company’s historical and prospective financial performance, as well as its performance relative to its competitors. Specifically, management uses these items to further its own understanding of the Company’s core operating performance, which the Company believes represents its performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from core operating performance items such as those relating to certain purchase price accounting adjustments, amortization of acquisition-related intangibles, stock-based compensation, legal settlements, restructuring, changes in fair value of contingent consideration liabilities and certain investing and acquisition related expenses and other activities that management believes are not reflective of such ordinary, ongoing and core operating activities. The non-GAAP adjustments described in this Form 10-Q are excluded by the Company from its GAAP financial measures because the Company believes excluding these items enables investors to evaluate more clearly and consistently the Company’s core operational performance. The non-GAAP adjustments are outlined below.
Previous wording
Three Months Ended September 28, 2024 and September 30, 2023
Current wording
Net revenue increased by $16.3 million, or 6.4%, during the three months ended December 28, 2024 compared to the same period a year ago. This increase reflects higher spend by service providers and Network Equipment Manufacturers (NEMs), partially offset by lower anti-counterfeiting revenue.
Previous wording
Product revenues decreased by $8.1 million, or 3.9%, during the three months ended September 28, 2024 compared to the same period a year ago, driven by revenue decreases in our NE and SE segments partially offset by revenue increases in our OSP segment.
Current wording
Product revenues increased by $14.8 million, or 7.0%, during the three months ended December 28, 2024 compared to the same period a year ago, driven by revenue increases in our NE segment, partially offset by revenue decreases in our SE and OSP segments.
Previous wording
Service revenues decreased by $1.6 million, or 3.8% during the three months ended September 28, 2024, respectively, compared to the same periods a year ago. This was driven by revenue decreases from our NE and SE segments.
Current wording
Service revenues increased by $1.5 million, or 3.4% during the three months ended December 28, 2024, respectively, compared to the same periods a year ago. This was driven by a revenue increase in our NE segment, partially offset by a revenue decrease in our SE segment.
Previous wording
Net revenue from customers outside the Americas represented 62.8% and 59.5% of net revenue, respectively, during the three months ended September 28, 2024 and September 30, 2023.
Current wording
Net revenue from customers outside the Americas represented 57.1% and 59.8% of net revenue, respectively, during the three and six months ended December 28, 2024. Net revenue from customers outside the Americas represented 59.5% of net revenue during the three and six months ended December 30, 2023.
Previous wording
Amortization of acquired technologies within Cost of revenues decreased $0.2 million or 5.7% during the three months ended September 28, 2024 compared to the same period a year ago. This decrease is primarily due to certain intangible assets becoming fully amortized in fiscal 2024.
Current wording
Amortization of acquired technologies within Cost of revenues decreased $0.1 million or 2.9% and $0.3 million or 4.3% during the three and six months ended December 28, 2024, respectively, compared to the same periods a year ago. This decrease is primarily due to certain intangible assets becoming fully amortized in fiscal 2024.
Previous wording
Gross margin decreased by 1.1 percentage points during the three months ended September 28, 2024 from 58.2% in the same period a year ago to 57.1% in the current period. The decrease was primarily due to gross margin reduction in NE and SE, partially offset by gross margin increase in OSP, as discussed below in the Operating Segment Information section.
Current wording
Gross margin increased by 1.2 percentage points during the three months ended December 28, 2024 from 58.2% in the same period a year ago to 59.4% in the current period. The increase was primarily due to gross margin increase in NE, partially offset by gross margin decrease in SE and OSP, as discussed below in the Operating Segment Information section.
Previous wording
R&D expense decreased by $0.5 million, or 1.0% during the three months ended September 28, 2024 compared to the same period a year ago. This decrease was primarily due to benefits from our restructuring activities. As a percentage of net revenue, R&D expense increased by 0.6 percentage points during the three months ended September 28, 2024 compared to the same period a year ago.
Current wording
R&D expense increased by $2.6 million, or 5.3% during the three months ended December 28, 2024 compared to the same period a year ago. This increase was primarily due to higher variable expenses. As a percentage of net revenue, R&D expense decreased by 0.2 percentage points during the three months ended December 28, 2024 compared to the same period a year ago.
Previous wording
SG&A expense decreased by $3.1 million, or 4.0%, during the three months ended September 28, 2024 compared to the same period a year ago. This decrease was primarily due to the change in fair value of acquisition-related contingent consideration and the gain on litigation settlement partially offset by higher variable expenses. As a percentage of net revenue, SG&A was flat during the three months ended September 28, 2024 compared to the same period a year ago.
Current wording
SG&A expense increased by $9.5 million, or 12.7%, during the three months ended December 28, 2024 compared to the same period a year ago. This increase was primarily due to higher variable expenses, the change in fair value of acquisition-related contingent consideration and acquisition and integration related charges. As a percentage of net revenue, SG&A expense increased 1.7 percentage points during the three months ended December 28, 2024 compared to the same period a year ago.
Previous wording
Amortization of intangibles within Operating expenses decreased $1.0 million or 47.6% during the three months ended September 28, 2024 compared to the same period a year ago. This decrease is primarily due to certain intangible assets becoming fully amortized in fiscal 2024.
Current wording
Amortization of intangibles within Operating expenses decreased $0.4 million or 28.6% and $1.4 million or 40.0% during the three and six months ended December 28, 2024, respectively, compared to the same periods a year ago. These decreases are primarily due to certain intangible assets becoming fully amortized in fiscal 2024.
Previous wording
During the fourth quarter of fiscal 2024, management approved a restructuring and workforce reduction plan (the Fiscal 2024 Plan) across various functions intended to improve operational efficiencies and better align the Company’s workforce with current business needs. The Company expects approximately 6% of its global workforce to be affected, impacting all segments and corporate functions. We estimate annualized gross cost savings of approximately $25.0 million excluding any one-time charges as a result of the restructuring activities initiated under the Fiscal 2024 Plan. The Company anticipates the Fiscal 2024 Plan to be substantially complete by the end of fiscal 2025.
Current wording
During the fourth quarter of fiscal 2024, management approved a restructuring and workforce reduction plan (the Fiscal 2024 Plan) across various functions intended to improve operational efficiencies and better align the Company’s workforce with current business needs. During the second quarter of fiscal 2025, the headcount impacted by this plan increased by approximately 30 employees. The Company expects approximately 7% of its global workforce to be affected, impacting all segments and corporate functions. We estimate annualized gross cost savings of approximately $25.0 million excluding any one-time charges as a result of the restructuring activities initiated under the Fiscal 2024 Plan. The Company anticipates the Fiscal 2024 Plan to be substantially complete by the end of fiscal 2025.
Previous wording
As of September 28, 2024, our total restructuring accrual was $6.8 million.
Current wording
As of December 28, 2024, our total restructuring accrual was $5.7 million.
Previous wording
During the three months ended September 28, 2024, the Company recorded restructuring charges of $0.2 million related to the Fiscal 2024 Plan and benefits of $0.2 million related to the Fiscal 2023 Plan. During the three months ended September 30, 2023, the Company recorded benefits of $0.8 million related to the Fiscal 2023 Plan.
Current wording
During the three and six months ended December 28, 2024, the Company recorded restructuring charges of $1.2 million and $1.4 million, respectively, related to the Fiscal 2024 Plan. During the six months ended December 28, 2024, the Company recorded restructuring benefits of $0.2 million related to the Fiscal 2023 Plan. During the three and six months ended December 30, 2023, the Company recorded restructuring benefits of $0.1 million and $0.9 million, respectively, related to the Fiscal 2023 Plan.
Previous wording
We estimate future cash payments of $6.8 million under the Fiscal 2024 Plan, funded by operating cash flow.
Current wording
We estimate future cash payments of $5.7 million under the Fiscal 2024 Plan, funded by operating cash flow.
Previous wording
Interest and other income, net, was $3.2 million during the three months ended September 28, 2024 compared to $10.2 million during the same period a year ago. This $7.0 million decrease was primarily driven by a legal settlement in our favor in the amount of $7.3 million in the prior period.
Current wording
Interest and other income, net, was $7.1 million during the six months ended December 28, 2024 compared to $14.0 million during the same period a year ago. This $6.9 million decrease was primarily driven by a legal settlement in our favor in the amount of $7.3 million in the prior period.
Previous wording
Interest expense decreased by $0.3 million, or 3.8% during the three months ended September 28, 2024 compared to the same period a year ago. This decrease was primarily driven by lower outstanding debt when compared to the prior period.
Current wording
Interest expense decreased by $0.4 million, or 5.1% during the three months ended December 28, 2024 compared to the same period a year ago. This decrease was primarily driven by lower outstanding debt when compared to the prior period.
Previous wording
We recorded an income tax provision of $9.0 million and $8.6 million for the three months ended September 28, 2024 and September 30, 2023, respectively.
Current wording
We recorded an income tax provision of $9.5 million and $18.5 million for the three and six months ended December 28, 2024, respectively. We recorded an income tax provision of $7.6 million and $16.2 million for the three and six months ended December 30, 2023, respectively.
Previous wording
The income tax provision for the three months ended September 28, 2024 and September 30, 2023 primarily relates to income tax in certain foreign and state jurisdictions based on our forecasted pre-tax income or loss.
Current wording
The income tax provision for the three and six months ended December 28, 2024 and December 30, 2023 primarily relates to income tax in certain foreign and state jurisdictions based on our forecasted pre-tax income or loss.
Previous wording
Asof September 28, 2024, and June 29, 2024, our unrecognized tax benefits (net of Federal benefits) totaled $50.8 million and $50.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities. We had $4.0 million accrued for the payment of interest and penalties as of September 28, 2024. The timing and resolution of income tax examinations are uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities maydiffer from the amounts accrued for each year. Although we do not expect that our balance of gross unrecognized tax benefits will change materially in the next 12 months, given the uncertainty in the development of ongoing income tax examinations, we are unable to estimate the full range of possible adjustments to this balance.
Current wording
Asof December 28, 2024, and June 29, 2024, our unrecognized tax benefits (net of Federal benefits) totaled $51.1 million and $50.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities. We had $4.0 million accrued for the payment of interest and penalties as of December 28, 2024. The timing and resolution of income tax examinations are uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities maydiffer from the amounts accrued for each year. Although we do not expect that our balance of gross unrecognized tax benefits will change materially in the next 12 months, given the uncertainty in the development of ongoing income tax examinations, we are unable to estimate the full range of possible adjustments to this balance.
Previous wording
NE net revenue decreased by $8.4 million, or 5.6% during the three months ended September 28, 2024 compared to the same period a year ago, primarily driven by lower volume in Fiber and Access and Lab and Production and Wireless, partially offset by higher AvComm revenue.
Current wording
NE net revenue increased by $23.5 million, or 15.1% during the three months ended December 28, 2024 compared to the same period a year ago, primarily driven by higher volume in Lab and Production, Fiber and Access, AvComm and Wireless revenue.
Previous wording
NE gross margin decreased by 2.2 percentage points during the three months ended September 28, 2024 to 60.9% from 63.1% in the same period a year ago primarily due to lower volume and unfavorable product mix.
Current wording
NE gross margin increased by 0.1 percentage points during the six months ended December 28, 2024 to 62.9% from 62.8% in the same period a year ago primarily due to higher volume, partially offset by unfavorable product mix.
Previous wording
•Global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers;
Current wording
•Global economic conditions that affect demand for our products and services and impact the financial stability of our suppliers and customers;
Previous wording
•Changes in accounts receivable, inventory or other operating assets and liabilities which affect our working capital;
Current wording
•Changes in accounts receivable, inventory or other operating assets and liabilities that affect our working capital;
Previous wording
•Volatility in fixed income and credit markets which impact the liquidity and valuation of our investment portfolios;
Current wording
•Volatility in fixed income and credit markets that impact the liquidity and valuation of our investment portfolios;
Previous wording
•Volatility in credit markets which would impact our ability to obtain additional financing on favorable terms or at all;
Current wording
•Volatility in credit markets that impact our ability to obtain additional financing on favorable terms or at all;
Previous wording
Our cash and cash equivalents and short-term investments mainly consist of investments in institutional money market funds and short-term deposits at major global financial institutions. Our strategy is focused on capital preservation and supporting our liquidity requirements that meet high credit quality standards, as specified in our investment policy approved by the Audit Committee of our Board of Directors. Our investments in debt securities and marketable equity securities are primarily classified as available for sale or trading assets and are recorded at fair value. The cost of securities sold is based on the specific identification method. Unrealized gains and losses on available-for-sale investments are recorded as Other comprehensive (loss) income and reported as a separate component of stockholders’ equity. As of September 28, 2024, U.S. subsidiaries owned approximately 19.9% of our cash and cash equivalents, short-term investments and restricted cash.
Current wording
Our cash and cash equivalents and short-term investments mainly consist of investments in institutional money market funds and short-term deposits at major global financial institutions. Our strategy is focused on capital preservation and supporting our liquidity requirements that meet high credit quality standards, as specified in our investment policy approved by the Audit Committee of our Board of Directors. Our investments in debt securities and marketable equity securities are primarily classified as available for sale or trading assets and are recorded at fair value. The cost of securities sold is based on the specific identification method. Unrealized gains and losses on available-for-sale investments are recorded as Other comprehensive (loss) income and reported as a separate component of stockholders’ equity. As of December 28, 2024, U.S. subsidiaries owned approximately 49.1% of our cash and cash equivalents, short-term investments and restricted cash.
Previous wording
On December 30, 2021, we entered into a credit agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo) as administrative agent, and other lender-related parties. The Credit Agreement provides for a senior secured asset-based revolving credit facility in a maximum aggregate amount of $300.0 million, which matures on December 30, 2026. The Credit Agreement also provides that, under certain circumstances, we may increase the aggregate amount of revolving commitments thereunder by an aggregate amount of up to $100.0 million so long as certain conditions are met.
Current wording
On December 30, 2021, we entered into a credit agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo) as administrative agent, and other lender-related parties. The Credit Agreement provides for a senior secured asset-based revolving credit facility in a maximum aggregate amount of $300.0 million and matures on December 30, 2026. The Credit Agreement also provides that, under certain circumstances, we may increase the aggregate amount of revolving commitments thereunder by an aggregate amount of up to $100.0 million so long as certain conditions are met.
Previous wording
As of September 28, 2024, we had no borrowings under this facility and our available borrowing capacity was approximately $143.7 million, net of outstanding standby letters of credit of $4.2 million.
Current wording
As of December 28, 2024, we had no borrowings under this facility and our available borrowing capacity was approximately $153.5 million, net of outstanding standby letters of credit of $4.4 million.
Previous wording
Cash Flows for the Three Months Ended September 28, 2024
Current wording
Cash Flows for the Six Months Ended December 28, 2024
Previous wording
As of September 28, 2024, our combined balance of cash and cash equivalents and restricted cash decreased by $3.7 million to $478.1 million from $481.8 million as of June 29, 2024.
Current wording
As of December 28, 2024, our combined balance of cash and cash equivalents and restricted cash increased by $14.6 million to $496.4 million from $481.8 million as of June 29, 2024.
Previous wording
During the three months ended September 28, 2024, Cash provided by operating activities was $13.5 million, consisting of net loss of $1.8 million adjusted for non-cash charges (e.g., depreciation, amortization, stock-based compensation and other non-cash items) totaling $20.2 million, including changes in deferred tax balances, and changes in operating assets and liabilities that used $4.9 million. Changes in our operating assets and liabilities related primarily to a decrease in accounts receivable of $13.2 million due to collections outpacing billings, a decrease in inventory of $2.9 million and an increase in income taxes payable of $2.6 million. These were offset by a decrease in accrued expenses and other current and non-current liabilities of $7.5 million, a decrease in accrued payroll and related expenses of $5.1 million due primarily to timing of payroll, reduced headcount from restructuring activities and lower vacation accrual due to higher usage, a decrease in deferred revenue of $4.6 million primarily due to timing of support billings and project acceptances and a decrease in accounts payable of $4.0 million driven by timing of purchases and related payments.
Current wording
During the six months ended December 28, 2024, Cash provided by operating activities was $58.2 million, consisting of net income of $7.3 million adjusted for non-cash charges (e.g., depreciation, amortization, stock-based compensation and other non-cash items) totaling $44.1 million, including changes in deferred tax balances, and changes in operating assets and liabilities that provided $6.8 million. Changes in our operating assets and liabilities related to an increase in accrued payroll and related expenses of $10.6 million due primarily to variable pay accrual and timing of payroll, an increase in accounts payable of $5.9 million driven by timing of purchases and related payments, an increase in income taxes payable of $3.4 million and a decrease in other current and non-current assets of $1.9 million. These were offset by a decrease in deferred revenue of $6.9 million primarily due to timing of support billings and project acceptances, a decrease in accrued expenses and other current and non-current liabilities of $5.7 million, a decrease in accounts receivable of $2.3 million and a decrease in inventory of $0.1 million.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Gross margin increased by 0.1 percentage points during the six months ended December 28, 2024 from 58.2% in the same period a year ago to 58.3% in the current period. The increase was primarily due to gross margin increase in NE and OSP, partially offset by gross margin decrease in SE, as discussed below in the Operating Segment Information section.
Current report — wording carried from elsewhere
Interest expense decreased by $0.7 million, or 4.5% during the six months ended December 28, 2024 compared to the same period a year ago. This decrease was primarily driven by lower outstanding debt when compared to the prior period.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The Company believes providing this additional information allows investors to see Company results through the eyes of management. The Company further believes that providing this information allows investors to better understand the Company’s financial performance and, importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance.
Previous report — wording carried elsewhere
The non-GAAP adjustments described in this Form 10-Q are excluded by the Company from its GAAP financial measures because the Company believes excluding these items enables investors to evaluate more clearly and consistently the Company’s core operational performance. The non-GAAP adjustments are outlined below.