Impairment and Other Charges

12 Months Ended

Jul. 03, 2021

Restructuring and Related Activities [Abstract]

Impairment and Other Charges

Note 15. Impairment and Other Charges

Impairment Charges Associated with Exist of Product Lines

The following table summarizes the activity of impairment charges during the periods presented (in millions):

	Years Ended
	July 3, 2021		June 27, 2020		June 29, 2019
Impairment charges	$	—	$	4.3	$	30.7

In the third quarter of fiscal 2019, we announced our plan to discontinue the development and manufacturing of Datacom transceiver modules which impacted the California and China based Datacom module teams. As a result of these actions, we recorded impairment charges of $4.3 million and $30.7 million in fiscal 2020 and 2019, respectively, related to our long-lived assets that were not deemed to be useful. While we expect strong growth in Datacom volumes in the future, gross margins at the transceiver market level are lower due to extreme competition. Following the Oclaro acquisition, we have a differentiated leadership position across a range of photonic chips on which the Datacom, wireless, and access markets critically rely. 

In fiscal 2020 and 2019, we also recorded inventory and fixed asset write-down charges of $7.0 million and $20.8 million, respectively, related to the decision to exit the Datacom module and Lithium Niobate product lines in our cost of goods sold in

our Consolidated Statements of Operations. Refer to “Note 5. Assets Held For Sale and Related Dispositions” for details on the exit from these product lines.

These actions do not qualify as discontinued operations for disclosure purposes as they do not represent a strategic shift having a major effect on an entity’s operations and financial results.

Other Losses on Property, Plant and Equipment

We recorded fixed assets losses, mainly attributable to the retirement and disposal of fixed assets, net of proceed received, and not associated with the exit from product lines. The impact of such losses on our results of operations by function during the periods presented was as follows (in millions):

	Years Ended
	July 3, 2021		June 27, 2020		June 29, 2019
Cost of sales	$	9.3	$	16.1	$	2.2
Research and development	0.3		0.8		—
Selling, general and administrative (1)	(7.2)		0.6		—
	$	2.4	$	17.5	$	2.2

(1) In fiscal year 2021, we made a decision to cease manufacturing of certain products at a manufacturing facility that we owned in San Jose, California. During the fourth quarter of fiscal 2021, we shut down the manufacturing site and sold the related land and building for $23.0 million and recognized a gain of $8.3 million, which was recorded as an offset to operating expenses.