Lumentum Holdings Inc.LITE
Lumentum Holdings Inc. Fair Value Disclosure
Note 6. Fair Value Measurements
We determine fair value based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based on the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:
| Level 1: | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. | ||||
| Level 2: | Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | ||||
| Level 3: | Inputs are unobservable inputs based on our assumptions. | ||||
The fair value of our Level 1 financial instruments, such as money market funds and U.S. Treasury securities, which are traded in active markets, is based on quoted market prices for identical instruments. The fair value of our Level 2 fixed income securities is obtained from an independent pricing service, which may use quoted market prices for identical or comparable instruments or model driven valuations using observable market data or inputs corroborated by observable market data. Our marketable securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models. Our procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from our pricing service against fair values obtained from another independent source.
Our pension assets consist of multiple institutional funds (“pension funds”) of which the fair values are based on the quoted prices of the underlying funds. Pension funds are primarily classified as Level 2 assets since such funds are not directly traded in active markets. Refer to “Note 15. Employee Retirement Plans.”
Financial assets measured at fair value on a recurring basis are summarized below (in millions):
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
June 28, 2025 (1) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Commercial paper | $ | — | $ | 2.5 | $ | — | $ | 2.5 | |||||||||||||||
| Money market funds | 161.7 | — | — | 161.7 | |||||||||||||||||||
| U.S. Treasury securities | 7.0 | 7.0 | |||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| Certificates of deposit | — | — | — | — | |||||||||||||||||||
| Commercial paper | — | 2.7 | — | 2.7 | |||||||||||||||||||
| Corporate debt securities | — | 211.1 | — | 211.1 | |||||||||||||||||||
| U.S. Agency securities | — | 67.7 | — | 67.7 | |||||||||||||||||||
| U.S. Treasury securities | 74.9 | — | — | 74.9 | |||||||||||||||||||
| Total assets | $ | 243.6 | $ | 284.0 | $ | — | $ | 527.6 | |||||||||||||||
(1) Excludes $349.5 million in cash held in our bank accounts as of June 28, 2025.
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
June 29, 2024 (1) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Commercial paper | $ | — | $ | 15.9 | $ | — | $ | 15.9 | |||||||||||||||
| Money market funds | $ | 223.9 | $ | — | $ | — | 223.9 | ||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| Certificates of deposit | — | 0.8 | — | 0.8 | |||||||||||||||||||
| Commercial paper | — | 12.6 | — | 12.6 | |||||||||||||||||||
| Corporate debt securities | — | 243.9 | — | 243.9 | |||||||||||||||||||
| U.S. Agency securities | 80.9 | 80.9 | |||||||||||||||||||||
| U.S. Treasury securities | 112.1 | — | — | 112.1 | |||||||||||||||||||
| Total assets | $ | 336.0 | $ | 354.1 | $ | — | $ | 690.1 | |||||||||||||||
(1) Excludes $196.9 million in cash held in our bank accounts as of June 29, 2024.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
We report our financial instruments at fair value with the exception of the convertible notes and term loans, see “Note 10. Debt”. The estimated fair value of the convertible notes was determined based on the trading price of the convertible notes as of the last day of trading for the period. We consider the fair value of the convertible notes to be a Level 2 measurement as they are not actively traded in markets.
The carrying amounts and estimated fair values of our convertible notes are as follows for the periods presented (in millions):
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||
| 2029 Notes | $ | 600.2 | $ | 925.5 | $ | 599.4 | $ | 588.8 | |||||||||||||||
| 2028 Notes | 857.7 | 890.2 | 856.6 | 680.2 | |||||||||||||||||||
| 2026 Notes | 1,048.3 | 1,233.3 | 1,047.2 | 948.3 | |||||||||||||||||||
| $ | 2,506.2 | $ | 3,049.0 | $ | 2,503.2 | $ | 2,217.3 | ||||||||||||||||
As of June 28, 2025, the carrying amount of our term loans is not significantly different from its fair value.
Assets Measured at Fair Value on a Non-Recurring Basis
We periodically review our intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. If not recoverable, an impairment loss would be calculated based on the excess of the carrying amount over the fair value.
Management utilizes various valuation methods, including an income approach, a market approach and a cost approach, to estimate the fair value of intangibles and other long-lived assets. During the annual impairment testing performed in the fourth quarter of fiscal year 2025, we concluded that our intangible and other long-lived assets were not impaired. We review our intangible and other long-lived assets for impairment at least annually in the fourth quarter of each fiscal year, or any indicators of impairment exist.
Free Sentinel
Track for freeWant the next Lumentum Holdings Inc. fair value disclosure the moment it drops?
Set a Sentinel and we'll alert you the moment Lumentum Holdings Inc.'s next filing hits EDGAR. No credit card, your email never gets sold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 19, 2025 | Showing above |
| 2024 | Aug 21, 2024 | |
| 2023 | Aug 23, 2023 | |
| 2022 | Aug 24, 2022 | |
| 2021 | Aug 31, 2021 | |
| 2020 | Aug 25, 2020 | |
| 2019 | Aug 27, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Aug 29, 2017 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.