Balance sheet

Lumentum’s balance sheet underwent a structural transformation between September 2025 and March 2026. Three actions in sequence: a $1.1B 2032 convertible notes issuance (September 2025), a partial paydown of legacy 2026 notes plus exchange of older notes for common stock (October–December 2025), and a $2B Series A Convertible Preferred placement to NVIDIA (March 2026). Each piece is documented in primary-source 8-Ks and 10-Q disclosures. The post-NVDA capital structure is materially different from the pre-AI-cycle structure.

Cash and short-term investments

Date	Cash + STI ($M)	Source
End FY2025 (Jun 28, 2025)	$877.1M	FY2025 10-K
End Q1 FY2026 (Sep 27, 2025)	$1,121.8M	Q1 FY2026 release ✓
End Q2 FY2026 (Dec 27, 2025)	$1,155.3M	Q2 FY2026 release ✓
Post-NVDA placement (Mar 2026)	~$3.1B (pro forma)¹	Inferred from $2B injection ⚠

¹ Pro forma post-NVDA assumes $1,155.3M Dec 27, 2025 cash + $2.0B NVDA proceeds + Q3 FY2026 operating-cash-flow generation, less Q3 FY2026 capex and any debt repayments. The Q3 FY2026 10-Q (expected May 2026) will provide the actual figure.

The cash position ramped sharply in Q1 FY2026 (+$244.7M sequential) reflecting the September 2025 $1.1B convertible notes issuance net of the partial paydown of 2026 notes. The Q2 FY2026 cash level was held roughly flat as operating cash flow funded continuing capex.

Debt structure — convertible notes

Lumentum’s debt is dominated by four series of convertible senior notes, all classified as current portion of long-term debt as of December 27, 2025 because the underlying common stock price exceeded the conversion thresholds (per Q2 FY2026 10-Q disclosure).

Convertible series	Coupon	Maturity	Carrying value (Dec 27, 2025)	Notes
2026 Notes	0.50%	Mar 2026	~$63.1M (post-exchange residual)	Substantially repaid via 2032-notes proceeds
2028 Notes	0.50%	Dec 2028	included in $2,714.2M	Pre-existing
2029 Notes	1.50%	Dec 2029	included in $2,714.2M	Pre-existing
2032 Notes	0.375%	Sep 2032	$1,265.0M (face)	Issued September 2025; capped-call hedge attached
Total carrying value			$3,182.5M	Estimated fair value $10,670.1M

The estimated fair value of $10.67B (vs. $3.18B carrying value) reflects deep in-the-money conversion economics — the underlying LITE common stock price (~$862 as of April 29, 2026) is far above the conversion strikes for the 2026, 2028, 2029, and 2032 series. This implies that the ultimate share-settlement of the convertible structure will represent meaningful potential dilution, partially offset by the capped-call transactions Lumentum entered in conjunction with the 2032 notes (Nasdaq filing summary).

In addition to the 2032-notes paydown of 2026 notes, Lumentum executed privately-negotiated note-for-stock exchanges:

~$264.8M principal of 2026 notes
~$209.8M principal of 2029 notes
Total ~$474.6M principal exchanged for ~5.7M common shares
Incremental dilution of roughly 0.6M shares (most of the share count was already counted in diluted-share economics)

Source: Lumentum 8-K — note-for-stock exchanges ✓.

NVDA Series A Convertible Preferred Stock — March 2, 2026

Per Lumentum 8-K dated March 2, 2026 ✓:

Term	Value
Number of shares issued	2,876,415 shares of Series A Convertible Preferred Stock
Price per share	$695.31
Aggregate purchase price	$2,000,000,000 in cash
Conversion ratio	One-for-one into common (parity)
Conversion trigger (holder option)	After expiration / termination of HSR antitrust waiting period
Voting rights	Together with common holders on as-converted basis, EXCEPT director elections
Dividend rights	As-converted basis with common dividends
Redemption rights	None
Preemptive rights	None
Board seat rights	Not disclosed in 8-K excerpt (may exist in side agreements)
Transfer restrictions / lockups	Not disclosed in 8-K excerpt
Registration rights	Not disclosed in 8-K excerpt

Implied as-converted equivalent: 2,876,415 preferred shares × 1:1 = 2,876,415 common-equivalent shares. At pre-issuance ~71.4M common shares, NVDA’s as-converted ownership is ~3.9% of pro-forma common (post-conversion). The issued share count post-Q2-FY2026 was 71.4M common (Q2 FY2026 release diluted share count was 87.8M, which includes the dilution from in-the-money convertibles, employee equity, and other dilutives).

The $695.31 issuance price was set at a modest discount to the then-prevailing market price (~10–15% below the LITE close in early March 2026). NVDA is locking in capacity allocation and a multibillion-dollar purchase commitment in exchange for the equity exposure; the discount is the implicit cost to LITE of the strategic-supply commitment.

Working capital

Lumentum’s working capital base has expanded with the Cloud Light integration and the AI-cycle inventory build:

Inventory is up materially as Lumentum builds wafers-in-process for the 200G/lane EML ramp and finished-goods buffer for hyperscaler deliveries
Accounts receivable has grown with revenue but DSO has remained in a normalized range (mid-50-days)
Accounts payable has tracked vendor-payable cycles for fab consumables and contract-manufacturing deliveries

The exact working-capital build-up is documented in the Q2 FY2026 10-Q balance sheet (filing date approximately February 6, 2026); not surfaced verbatim in this initial pass — the Q3 FY2026 10-Q (expected May 2026) will be the next refresh data point.

Fab assets and PP&E

Lumentum’s PP&E is dominated by:

San Jose, CA InP fab + 3D-sensing facility — the legacy JDSU + Oclaro merger center of gravity
Towcester, UK InP fab — legacy Oclaro fab
Thailand transceiver assembly — Cloud Light heritage facility
Multiple China sites for backend assembly/packaging

The FY2025 10-K disclosed fab-asset book values; the post-NVDA San Jose new fab will materially expand the PP&E base over the next 18–24 months. Capex schedule detail is on capex cycle.

Pro-forma capital-structure summary (post-NVDA, mid-CY2026)

Element	Amount	Status
Cash + STI	~$3.0B+	Post-NVDA
Total debt (convertibles, carrying)	~$3.2B	Pre-conversion; share-settlement likely partly
NVDA Series A Convertible Preferred (face)	$2.0B	Equity instrument (not debt); converts to common 1:1 post-HSR
Total common shares outstanding	~73M (pre-conversion)	Will rise as convertibles + preferred convert
Diluted share count (already counted in EPS)	~88M (Q2 FY2026 reported)	Includes dilutive impact of convertibles + employee equity

The capital structure is broadly clean post-NVDA: net-cash positive on a carrying-value basis (cash > debt), heavy convertible burden but the convertibles are economic equity at current share prices, and a strategic-investor preferred layer that aligns capital allocation with NVDA’s purchase commitment.

Cross-link

Quarterly trend
Capex cycle — capacity-investment side
DCF assumptions — incorporates net-debt + diluted shares
Comps / valuation
04_market regulatory landscape — HSR clearance status