Stock-Based Compensation (Tables)

12 Months Ended

Jul. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of the impact on the entity's results of operations of recording stock-based compensation by function

The impact on the Company’s results of operations of recording stock-based compensation expense by function for fiscal 2017, 2016 and 2015 was as follows (in millions):



	Years Ended
	July 1, 2017		July 2, 2016		June 27, 2015
Cost of revenue	$	3.6	$	4.8	$	4.2
Research and development	5.7		8.4		8.1
Selling, general and administrative	23.9		29.2		35.2
Total stock-based compensation expense	$	33.2	$	42.4	$	47.5

Schedule of stock options activities

The following is a summary of stock option activities (amount in millions except per share amounts):



	Options Outstanding
	Number of Shares		Weighted-Average Exercise Price (1)
Balance as of June 28, 2014	3.5		$	10.13
Exercised	(0.9	)	7.58
Canceled	(0.1	)	14.54
Balance as of June 27, 2015	2.5		10.84
Granted	1.2		5.95
Exercised	(0.7	)	4.74
Canceled	(0.4	)	10.52
Net adjustment due to the separation	0.5
Balance as of July 2, 2016	3.1		5.91
Granted	—		—
Exercised	(1.6	)	5.66
Canceled	—		—
Balance as of July 1, 2017	1.5		$	6.16

Expected to vest	1.4		$	6.18

(1) Weighted average exercise price is calculated using exercise prices prior to the Separation and after the Separation.

Schedule of significant ranges of outstanding and exercisable options

The following table summarizes significant ranges of outstanding and exercisable options as of July 1, 2017, adjusted to reflect the impact of the Lumentum separation.



	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)		Number of Shares	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)
$3.28 - $3.28	104,352	0.12	$	3.28			104,352	0.12	$	3.28
$5.74 - $5.74	132,544	0.92	5.74				132,544	0.92	5.74
$5.95 - $5.95	1,180,257	6.62	5.95				295,065	6.62	5.95
$11.82 - $11.82	107,412	1.87	11.82				107,412	1.87	11.82
	1,524,565	5.35	$	6.16	$	6.8	639,373	3.58	$	6.46	$	2.7

Schedule of employee stock purchase plan activity

The following summarizes the shares issued and the fair market value at purchase date, pursuant to the Company’s ESPP during the year ended July 1, 2017:



Purchase date	July 29, 2016		January 31, 2017
Shares issued	410,737		269,102
Fair market value at purchase date	$	4.76	$	6.77

Schedule of changes in nonvested Full Value Awards

A summary of the status of the Company’s non-vested Full Value Awards as of July 1, 2017 and changes during the same period is presented below (amount in millions, except per share amounts):



	Full Value Awards
	Performance Shares (1)		Non-Performance Shares		Total Number of Shares		Weighted-average grant-dated fair value
Non-vested at June 28, 2014	1.1		8.3		9.4		$	13.19
Awards granted	0.7		5.3		6.0		11.78
Awards vested	(0.8	)	(4.4	)	(5.2	)	12.96
Awards forfeited	—		(1.4	)	(1.4	)	13.10
Non-vested at June 27, 2015	1.0		7.8		8.8		12.36
Awards granted	0.7		6.1		6.8		5.75
Awards vested	(0.7	)	(4.8	)	(5.5	)	6.01
Awards forfeited	(0.4	)	(1.8	)	(2.2	)	7.89
Net adjustment due to the separation	0.4		1.1		1.5
Non-vested at July 2, 2016	1.0		8.4		9.4		6.55
Awards granted	0.6		3.7		4.3		7.86
Awards vested	(0.6	)	(4.5	)	(5.1	)	6.66
Awards forfeited	—		(1.3	)	(1.3	)	6.83
Non-vested at July 1, 2017	1.0		6.3		7.3		$	7.17

(1)

Performance Shares refer to the Company’s MSU awards, where the actual number of shares awarded upon vesting may be higher or lower than the target amount depending on the achievement of the relevant market conditions. The majority of MSUs vest in equal annual installments over three to four years based on the attainment of certain total shareholder return performance measures and the employee’s continued service through the vest date. The aggregate grant-date fair value of MSUs granted during fiscal 2017, 2016 and 2015 were estimated to be $3.3 million, $3.7 million and $9.4 million respectively, and were calculated using a Monte Carlo simulation.

Schedule of assumptions used to estimate the fair value of awards on the date of grant

The Company estimates the fair value of the MSUs on the date of grant using a Monte Carlo simulation with the following assumptions:



	Years Ended
	July 1, 2017		July 2, 2016		June 27, 2015
Volatility of common stock	33.2	%	33.8	%	40.8	%
Average volatility of peer companies	36.9	%	52.9	%	53.4	%
Average correlation coefficient of peer companies	0.1856		0.1103		0.2156
Risk-free interest rate	0.7	%	0.8	%	0.6	%

The Company estimates the fair value of Stock Options and ESPP using a BSM valuation model. The fair value is estimated on the date of grant using the BSM option valuation model with the following weighted-average assumptions:



	Stock Options		Employee Stock Purchase Plans
	July 2, 2016		July 1, 2017		July 2, 2016		June 27, 2015
Expected term (in years)	5.2		0.5		0.5		0.5
Expected volatility	42.3	%	33.4	%	45.7	%	37.9	%
Risk-free interest rate	1.2	%	0.5	%	0.4	%	0.1	%