Lumentum Holdings (LITE) risk factors, FY2026 10-K

Risks Related to Our Business

1. 01Our operating results may be adversely affected by unfavorable changes in macroeconomics and market conditions and the uncertain geopolitical environment24% rewritten
2. 02Adverse changes in political, regulatory and economic policies, including the threats of increasing worldwide tariffs for goods imported into the United States and of escalating retaliatory measures, could adversely affect our business and results of operations87% rewritten
3. 03Any of the effects described in this risk factor could have an adverse effect on our business, results of operations, or financial conditionNew
4. 04We depend on a limited number of suppliers for raw materials, packages and components, and any failure or delay by these suppliers in meeting our requirements could have an adverse effect on our business and results of operations
5. 05Our financial results may be adversely affected due to changes in product demand impacted by recessions, increases in interest rates, stagflation and other economic conditions
6. 06Our ability to sell our products to a previously significant customer has been restricted30% rewritten
7. 07Inflation and increased borrowing costs could impact our cash flows and profitability
8. 08Our backlog may not be an accurate indicator of our level and timing of future revenues
9. 09We expect our gross margins and operating margins to vary over time
10. 10Challenges relating to supply chain constraints, including semiconductor components, could adversely impact our business, results of operations and financial condition
11. 11If we do not anticipate technological shifts, market needs and opportunities, we may not be able to compete effectively and our ability to generate revenues will suffer
12. 12Changing technology and intense competition require us to continuously innovate while controlling product costs, and our failure to do so may result in decreased revenues and profitability
13. 13We rely on a limited number of customers for a significant portion of our sales; and the majority of our customers do not have contractual purchase commitments
14. 14Intense competition in our markets may lead to an accelerated reduction in our prices, revenues, margins and market share
15. 15We are subject to risks arising from our international operations, which may adversely affect our business, financial condition, and results of operations25% rewritten
16. 16We are subject to the risks of owning real property79% rewritten
17. 17If we are unable to manufacture certain products in our manufacturing facilities or if we or our contract manufacturers and suppliers are unable or fail to meet our production requirements, our business may be adversely affected
18. 18Changes in demand and customer requirements for our products may reduce manufacturing yields, which could negatively impact our profitability
19. 19If our customers do not qualify our manufacturing lines or the manufacturing lines of our subcontractors for volume shipments, our operating results could suffer
20. 20We contract with a number of large OEM and end-user service providers and product companies that have considerable bargaining power, which may require us to agree to terms and conditions that could have an adverse effect on our business or ability to recognize revenues
21. 21Our products may contain defects that could cause us to incur significant costs, divert our attention from product development efforts and result in loss of customers
22. 22If we are unable to successfully identify, acquire and integrate suitable businesses, our operating results and prospects could be harmed, and any businesses we acquire may not perform as expected or be effectively integratedNew
23. 23If we are unable to successfully manage any of these risks in relation to any future acquisitions or divestitures, our business, financial condition and results of operations could be adversely impactedNew
24. 24Restructuring activities could disrupt our business and affect our results of operations
25. 25We may not be able to realize tax savings from our international structure, which could adversely affect our operating results
26. 26Changes in tax laws could have an adverse effect on our business, cash flow, results of operations or financial conditions25% rewritten
27. 27Our operating results may be subject to volatility due to fluctuations in foreign currency
28. 28We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all37% rewritten
29. 29If we fail to effectively manage our growth or, alternatively, our spending during downturns, our business could be disrupted, which could harm our operating results
30. 30Any failure, disruption or security breach or incident of or impacting our information technology infrastructure or information management systems could have an adverse impact on our business and operations22% rewritten
31. 31Our revenues, operating results, and cash flows may fluctuate from period to period due to a number of factors, which makes predicting financial results difficult
32. 32If we have insufficient proprietary rights or if we fail to protect our rights, our business could be harmed95% rewritten
33. 33Our products may be subject to claims that they infringe the intellectual property rights of others, the resolution of which may be time-consuming and expensive, as well as require a significant amount of resources to prosecute, defend, or make our products non-infringing97% rewritten
34. 34We face certain litigation risks that could harm our business
35. 35Our products incorporate and rely on licensed third-party technology, and if licenses of third-party technology do not continue to be available to us or are not available on terms acceptable to us, our revenues and ability to develop and introduce new products could be adversely affected
36. 36If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired

Risks Related to Our Indebtedness

1. 37Our current and future indebtedness may limit our operating flexibility or otherwise affect our businessNew

Risks Related to Human Capital

1. 38Our ability to develop, market and sell products could be harmed if we are unable to retain or hire key personnel
2. 39Our ability to hire and retain employees may be negatively impacted by changes in immigration laws, regulations and procedures

Risks Related to Legal, Regulatory and Compliance

1. 40Our sales may decline if we are unable to obtain government authorization to export certain of our products, and we may be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations
2. 41Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may make our supply chain more complex and may adversely affect our relationships with customers and investors20% rewritten
3. 42Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters
4. 43We may be adversely affected by climate change regulations
5. 44We are subject to laws and regulations worldwide including with respect to environmental matters, securities laws, privacy and data protection, compliance with which could increase our expenses and harm our operating results31% rewritten

Risks Related to Our Common Stock

1. 45Our stock price may be volatile and may decline regardless of our operating performance59% rewritten
2. 46Transactions relating to our convertible notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of our common stock23% rewritten
3. 47We do not expect to pay dividends on our common stock
4. 48Certain provisions in our charter and Delaware corporate law could hinder a takeover attempt
5. 49Our bylaws designate Delaware courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us or our directors and officers
6. 50The 2032 Capped Call Options may affect the value of our common stockNew
7. 51The 2032 Capped Call Counterparties are financial institutions, and we will be subject to the risk that one or more of the 2032 Capped Call Counterparties may default under the 2032 Capped Call Options. Our exposure to the credit risk of the 2032 Capped Call Counterparties will not be secured by any collateralNew