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Recently Issued Accounting Pronouncements | 12 Months Ended
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Jun. 29, 2019
Accounting Policies [Abstract] |
Recently Issued Accounting Pronouncements | Note 2. Recently Issued Accounting Pronouncements Recent Accounting Pronouncements Adopted In November 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) that requires a statement of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. In the first quarter of fiscal 2019, the Company adopted this ASU using a retrospective transition method. Accordingly, the Company’s consolidated statements of cash flows for the fiscal years ended June 29, 2019, June 30, 2018 and July 1, 2017 as presented herein, have been restated to comply with the new requirements. In May 2014, the FASB issued new authoritative guidance related to revenue recognition from contracts with customers, ASC 606 - Revenue from Contracts with Customers (the “revenue standard”). The new guidance provides a unified model to determine when and how revenue is recognized. The core principle of the new guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted the new standard effective in the first quarter of fiscal 2019 using the retrospective transition method, which required the Company to recast each prior period presented consistent with the new guidance. Refer to “Note 1. Basis of Presentation” of the Consolidated Financial Statements for a summary of significant policies related to the new accounting standards. As part of the adoption, certain prior period amounts have been adjusted or reclassified within the consolidated financial statements. The following table presents the impact of the revenue standard adoption, to select line items of the Company’s Consolidated Balance Sheet as of June 30, 2018, (in millions):
| June 30, 2018
| As Reported |  | Adjustment |  | As Adjusted
ASSETS |  |  |  |  |
Accounts receivable, net | $ | 217.5 |  |  | $ | 1.1 |  |  | $ | 218.6 |
Prepayments and other assets | 54.8 |  |  | 1.5 |  |  | 56.3 |
Deferred income taxes | 114.5 |  |  | (0.2 | ) |  | 114.3 |
Other non-current assets | 13.6 |  |  | 1.8 |  |  | 15.4 |
Total assets | $ | 2,022.6 |  |  | $ | 4.2 |  |  | $ | 2,026.8 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |
Deferred revenue | $ | 71.9 |  |  | $ | (11.3 | ) |  | $ | 60.6 |
Accrued payroll and related expenses | 51.4 |  |  | 1.4 |  |  | 52.8 |
Other current liabilities | 77.0 |  |  | 1.9 |  |  | 78.9 |
Other non-current liabilities | 182.8 |  |  | (2.0 | ) |  | 180.8 |
Total stockholders’ equity (1) | 720.7 |  |  | 14.2 |  |  | 734.9 |
Total liabilities and stockholders’ equity | $ | 2,022.6 |  |  | $ | 4.2 |  |  | $ | 2,026.8 |
(1) Reflects the cumulative impact of $23.8 million on total stockholders’ equity from the revenue standard adoption as of the beginning of fiscal 2017 The primary impacts to the previously issued amounts are as follows: Accounts receivable, net: Adoption of the new revenue standard resulted in an increase to accounts receivable, net, primarily due to the following two items: 1) The return rights provision, which represents a liability for expected customer returns, was previously presented as a reduction to accounts receivable and is now presented in other current liabilities; and, 2) Contract assets which are recorded when a conditional right to consideration exists and transfer of control has occurred in advance of the Company’s right to invoice. Upon adoption of ASC 606, contract assets, which were previously presented as a component of accounts receivable, net, are now presented as a component of prepayments and other current assets. Prepayments and other current assets: As noted above, contract assets, which are recognized when a conditional right to consideration exists and transfer of control has occurred in advance of the Company’s right to invoice. Upon adoption of ASC 606, contract assets are presented as a component of prepayments and other current assets. Other non-current assets: The costs of obtaining contracts where the amortization period for recognition of the expense is beyond a year, are capitalized and recognized over the revenue recognition period of the original contract. These costs are now classified as other non-current assets. Short-term and long-term deferred revenue: Adoption of the new revenue standard resulted in a decrease of deferred revenue primarily due to the net change in timing of software related revenue. Under the previous standard revenue for software license sales bundled with post-contract support and/or services where vendor-specific objective evidence of fair value had not been established was recognized ratably over the support period. Upon adoption of ASC 606 the revenue related to such software license sales will now be recognized when control transfers, which is usually at the time of billing. The actual revenue recognition treatment required under the standard will depend on contract-specific terms and in some instances, transfer of control and revenue recognition may differ from the time of billing. Long-term deferred revenue is presented under other non-current liabilities. Other current liabilities: The returns provision, which represents a liability for expected customer returns, was previously presented as a reduction of accounts receivable and is now presented as other current liabilities. Adoption of the revenue standard had no impact on net cash provided by or used in operating, investing or financing activities as presented on the Company’s Consolidated Statements of Cash Flows. The following table presents the impact of the revenue standard adoption to select line items of the Company’s previously reported Consolidated Statements of Operations for the twelve months ended June 30, 2018 and July 1, 2017 (in millions, except per share data):
| Twelve Months Ended June 30, 2018 |  | Twelve Months Ended July 1, 2017
| As Reported |  | Adjustment |  | As Adjusted |  | As Reported |  | Adjustment |  | As Adjusted
Revenues: |  |  |  |  |  |  |  |  |  |  |
Product revenue | $ | 783.1 |  |  | $ | (10.6 | ) |  | $ | 772.5 |  |  | $ | 726.4 |  |  | $ | (20.4 | ) |  | $ | 706.0 |
Service revenue | 97.3 |  |  | 5.9 |  |  | 103.2 |  |  | 85.0 |  |  | 14.0 |  |  | 99.0 |
Total net revenue | 880.4 |  |  | (4.7 | ) |  | 875.7 |  |  | 811.4 |  |  | (6.4 | ) |  | 805.0 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |
Product cost of revenue | 314.7 |  |  | (4.1 | ) |  | 310.6 |  |  | 260.9 |  |  | (1.3 | ) |  | 259.6 |
Service cost of revenue | 46.8 |  |  | 3.2 |  |  | 50.0 |  |  | 50.2 |  |  | 1.9 |  |  | 52.1 |
Amortization of acquired technologies | 26.7 |  |  | — |  |  | 26.7 |  |  | 14.3 |  |  | — |  |  | 14.3 |
Total cost of revenue | 388.2 |  |  | (0.9 | ) |  | 387.3 |  |  | 325.4 |  |  | 0.6 |  |  | 326.0 |
Gross profit | 492.2 |  |  | (3.8 | ) |  | 488.4 |  |  | 486.0 |  |  | (7.0 | ) |  | 479.0 |
Income from operations | 5.1 |  |  | (3.2 | ) |  | 1.9 |  |  | 13.6 |  |  | (6.6 | ) |  | 7.0 |
(Loss) income before taxes | (32.6 | ) |  | (3.1 | ) |  | (35.7 | ) |  | 186.6 |  |  | (6.6 | ) |  | 180.0 |
Provision for income taxes | 13.4 |  |  | (0.5 | ) |  | 12.9 |  |  | 21.3 |  |  | 0.1 |  |  | 21.4 |
Net (loss) income | $ | (46.0 | ) |  | $ | (2.6 | ) |  | $ | (48.6 | ) |  | $ | 166.9 |  |  | $ | (6.7 | ) |  | $ | 160.2 |
Net loss per common share: |  |  |  |  |  |  |  |  |  |  |
Basic | $ | (0.20 | ) |  | $ | (0.01 | ) |  | $ | (0.21 | ) |  | $ | 0.73 |  |  | $ | (0.03 | ) |  | $ | 0.70 |
Diluted | $ | (0.20 | ) |  | $ | (0.01 | ) |  | $ | (0.21 | ) |  | $ | 0.71 |  |  | $ | (0.03 | ) |  | $ | 0.68 |
Shares used in per share calculations: |  |  |  |  |  |  |  |  |  |  |
Basic | 227.1 |  |  |  |  | 227.1 |  |  | 229.9 |  |  |  |  | 229.9 |
Diluted | 227.1 |  |  |  |  | 227.1 |  |  | 234.5 |  |  |  |  | 234.5 |
The impacts to the previously reported amounts are summarized, as follows: Net revenue: Adoption of the revenue standard resulted in a change in the timing of revenue recognized primarily due to the treatment of software license revenue. Under the prior standard, if vendor-specific objective evidence had not been established for the post contract support and/or the services, software license revenue would have been recognized ratably over the support period. Upon adoption of ASC 606, revenue related to such software license sales will now be recognized when control transfers which is usually at the time of billing. The decrease in revenue for the period presented above is primarily the result of the elimination of ratable software license revenue. Such license revenue was previously amortized; however it is now recognized at a point in time under the new standard. In October 2016, the FASB issued guidance that requires entities to recognize at the transaction date the income tax consequences of intra-entity transfer of an asset other than inventory. In the first quarter of fiscal 2019, the Company adopted this ASU, which did not have a material impact to our 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 August 2018, the FASB issued guidance which changes the fair value measurement disclosure requirements of FASB ASC - Fair Value Measurement (Topic 820). The update includes new, eliminated and modified disclosure requirements. The guidance is effective for the Company in the first quarter of fiscal 2020 and early adoption is permitted for any eliminated or modified disclosures. The Company does not expect the adoption of this standard will have a material impact on its consolidated financial statements. 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 instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The guidance is effective for the Company in the first quarter of fiscal 2021 and earlier adoption is permitted. The Company does not expect the adoption of this standard will have a material impact on its consolidated financial statements. In February 2016, the FASB issued guidance regarding both operating and financing leases, including requiring lessees to recognize lease with a term greater than one year on their balance sheets as a right-of-use (“ROU”) assets and corresponding lease liabilities, measured on a discounted basis over the lease term. The guidance requires a modified retrospective transition approach for leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued an update, which provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. The guidance is effective for the Company in the first quarter of fiscal 2020 and the Company will elect the optional transition approach of not adjusting its comparative period financial statements for the impacts of adoption. The Company has chosen the package of practical expedients to not reassess whether a contract contains a lease, lease classification and accounting for initial direct costs. While the Company is currently finalizing its implementation of new policies, processes and internal controls to comply with the new rules, the Company expects the adoption of the standard will result in the recognition of ROU assets and lease liabilities for operating leases between $35 million and $40 million at the beginning of the first quarter of fiscal 2020, with the most significant impact from recognition of ROU assets and lease liabilities related to the Company’s real estate leases. In addition, the Company expects to record an adjustment to accumulated deficit, net of taxes, of approximately $3 million from the recognition of previously deferred profit under sale-leaseback arrangements and de-recognition of related real estate assets of approximately $7 million and financing obligation of approximately $10 million. The adoption of the new standard will not have a material impact on Consolidated Statements of Operations and Consolidated Statement of Cash Flows.

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