Stock-Based Compensation (Tables)

12 Months Ended

Jun. 30, 2018

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 2018, 2017 and 2016 was as follows (in millions):



	Years Ended
	June 30, 2018		July 1, 2017		July 2, 2016
Cost of revenue	$	3.3	$	3.6	$	4.8
Research and development	4.9		5.7		8.4
Selling, general and administrative	22.3		23.9		29.2
Total stock-based compensation expense	$	30.5	$	33.2	$	42.4

Schedule of stock options activities

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



	Options Outstanding
	Number of Shares		Weighted-Average Exercise Price (1)
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
Exercised	(1.6	)	5.66
Balance as of July 1, 2017	1.5		6.16
Exercised	(0.2	)	4.53
Balance as of June 30, 2018	1.3		$	6.42

Expected to vest	1.3		$	6.45

(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 outstanding and exercisable options as of June 30, 2018, adjusted to reflect the impact of the Lumentum separation.



	Options Outstanding						Options Exercisable
Exercise Price	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)
$5.74	28,602	0.13	$	5.74	$	0.1	28,602	0.13	$	5.74	$	0.1
$5.95	1,180,257	5.63	5.95		$	5.1	590,129	5.63	5.95		$	2.5
$11.82	107,412	0.87	11.82		$	—	107,412	0.87	11.82		$	—
	1,316,271	5.12	$	6.42	$	5.2	726,143	3.58	$	6.81	$	2.6

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 June 30, 2018:



Purchase date	July 31, 2017		January 31, 2018
Shares issued	219,586		246,237
Fair market value at purchase date	$	9.29	$	11.20

Schedule of changes in nonvested Full Value Awards

A summary of the status of the Company’s non-vested Full Value Awards as of June 30, 2018 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 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
Awards granted	0.8		3.3		4.1		10.01
Awards vested	(0.6	)	(3.6	)	(4.2	)	7.10
Awards forfeited	(0.1	)	(0.7	)	(0.8	)	8.01
Non-vested at June 30, 2018	1.1		5.3		6.4		8.93

(1)

Performance Shares refer to the Company’s MSU and PSU 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 and performance goal achievement. The majority of MSUs vest in equal annual installments over three to four years based on the attainment of certain total shareholder performance measures and the employee’s continued service through the vest date. The aggregate grant-date fair value of MSUs granted during fiscal 2018, 2017 and 2016 were estimated to be $4.7 million, $3.3 million and $3.7 million, respectively, and were calculated using a Monte Carlo simulation. The fair value of the PSUs granted in fiscal 2018 was $1.4 million and vest based on the attainment of certain performance measures and the employee’s continued service through the vest date.

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
	June 30, 2018		July 1, 2017		July 2, 2016
Volatility of common stock	30.1	%	33.2	%	33.8	%
Average volatility of peer companies	32.6	%	36.9	%	52.9	%
Average correlation coefficient of peer companies	.1618		.1856		.1103
Risk-free interest rate	1.4	%	0.7	%	0.8	%

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
	June 30, 2018		June 30, 2018		July 1, 2017		July 2, 2016
Expected term (in years)	5.2		0.5		0.5		0.5
Expected volatility	42.3	%	28.0	%	33.4	%	45.7	%
Risk-free interest rate	1.2	%	1.4	%	0.5	%	0.4	%