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Discontinued Operations
 3 Months Ended
Oct. 01, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
Note 3. Discontinued Operations
Lumentum Separation
On August 1, 2015, the Company completed the separation of the Lumentum business (the “Separation”) and made a tax-free distribution of approximately 80.1% of the outstanding shares of Lumentum common stock to Viavi shareholders who received one share of Lumentum common stock for every five shares of Viavi common stock held as of the close of business on July 27, 2015 (the “Record Date”) and not sold prior to August 4, 2015 (the “ex-dividend date”). In connection with the Separation Viavi agreed to contribute $137.6 million all of which was contributed during fiscal 2016. As of the Distribution, Viavi retained ownership of approximately 19.9%, or 11.7 million shares, of Lumentum’s outstanding shares. Lumentum was formed to hold Viavi’s CCOP business and the WaveReady product line. As a result of the Distribution, Lumentum is now an independent public company. The Company agreed not to liquidate the retained shares during the first six months following the Distribution. However, in connection with a private letter ruling from the Internal Revenue Service, the Company committed to liquidate these shares within three years from the Distribution. As of October 1, 2016, the Company owns approximately 3.4 million shares, of Lumentum’s common stock. Refer to Note 7. Investments, Forward Contracts and Fair Value Measurements for more information.
As the separation of the Lumentum business represented a strategic shift that had and will have a major effect on the Company’s operations and financial results, the results of operations and net assets of the Lumentum business are presented separately as discontinued operations for the three months ended October 3, 2015 and as of July 2, 2016, in accordance with the authoritative guidance.
As of the Separation Date, Lumentum became a stand-alone public company that separately reports its financial results. Due to the difference between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of Lumentum included within discontinued operations for the Company may not be indicative of actual financial results of Lumentum as a stand-alone company.
The removal of Lumentum’s net assets and equity related adjustments upon the Separation are presented as an increase of Viavi's accumulated deficit and represents a non-cash financing activity, excluding the cash transferred. Refer to “Note 14. Stock-Based Compensation” for information on modifications to stock-based compensation awards as a result of the Distribution.
The following table summarizes results from discontinued operations of the Lumentum business included in the condensed Consolidated Statement of Operations (in millions):
 
Three Months Ended
 
October 3, 2015
Net revenues
$
66.5

Cost of revenues
49.6

Amortization of acquired technologies
0.6

Gross profit
16.3

Operating expenses:
 
Research and development
12.5

Selling, general and administrative
22.4

Restructuring charges
0.1

Total operating expenses
35.0

Loss from operations
(18.7
)
Interest and other income (expense), net
—

Loss before income taxes
(18.7
)
Provision for income taxes
35.0

Net loss from discontinued operations (1)
$
(53.7
)

(1) No income or expense has been recorded relating to the Lumentum business after the separation from Viavi on August 1, 2015.
During the three months ended October 3, 2015, the income tax provision for discontinued operations of $35.0 million, included approximately $5.6 million cash taxes that were due to federal and state authorities as a result of the Separation. In addition, approximately $29.6 million of the income tax provision for discontinued operations related to the income tax intraperiod tax allocation rules in relation to continuing operations and other comprehensive income.
Discontinued operations also includes other costs incurred by the Company to separate Lumentum. These costs include transaction charges, advisory and consulting fees. Net income (loss) from discontinued operations includes transaction, advisory and other costs to effect the separation of $14.0 million for the three months ended October 3, 2015.
The following table presents supplemental cash flow information: depreciation expense, amortization expense, stock based compensation expense and capital expenditures of the Lumentum business (in millions):
 
Three Months Ended (1)
 
October 3, 2015
Operating activities:
 
Depreciation expense
$
3.7

Amortization expense
$
0.6

Stock-based compensation expense
$
1.6

Investing activities:
 
Capital expenditures
$
5.8


(1) No depreciation expense, amortization expense, stock based compensation expense and capital expenditures relating to the Lumentum business is presented after the Separation Date.