Restructuring and Synergy and Site Consolidation Plans

12 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring and Synergy and Site Consolidation Plans

Restructuring Plan

On May 23, 2023, the Board of Directors approved the Company’s Restructuring Plan which includes site consolidations, facilities moves and closures, as well as the relocation and requalification of certain manufacturing facilities. These restructuring actions are expected to be accompanied by other cost reductions and are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model. We evaluate restructuring charges in accordance with ASC 420, Exit or Disposal Cost Obligations, and ASC 712, Compensation-Nonretirement Post-Employment Benefits (ASC 712).

In the fourth quarter of fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect the restructuring actions to be substantially completed by the end of fiscal 2025. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material.

The following table presents our current and non-current liability as accrued for restructuring charges on our Consolidated Balance Sheet. The table sets forth an analysis of the components of the restructuring charges and payments and other deductions made against the accrual for fiscal 2023 (in thousands):


	Year Ended June 30, 2023
	Severance		Asset Write-Offs		Total Accrual
Balance-beginning of period	$	—	$	—	$	—
Restructuring accruals	76,944		107,157		184,101
Reimbursement arrangements	(9,247)		(55,753)		(65,000)
Reimbursement arrangement related accrual	9,247		—		9,247
Payments	(12,565)		—		(12,565)
Asset write-offs and other	—		(51,404)		(51,404)
Balance-end of period	$	64,379	$	—	$	64,379

At June 30, 2023, $27 million and $37 million of accrued severance related costs were included in other accrued liabilities and other liabilities, respectively, and are expected to result in cash expenditures through fiscal 2028. The current year severance related costs are primarily comprised of severance pay for employees being terminated due to the consolidation of certain manufacturing sites, with severance recorded in accordance with ASC 712. The current year asset write-offs are primarily comprised of specifically identified equipment write-offs due to the consolidation of certain manufacturing sites. At June 30, 2023, a $50 million receivable under a reimbursement arrangement is recorded in prepaid and other current assets.

By segment, $56 million, $60 million and $3 million of restructuring costs were incurred in the Networking, Materials and Lasers segments, respectively. Restructuring charges are recorded in Restructuring Charges in our Consolidated Statements of Earnings (Loss).

Synergy and Site Consolidation Plan

On May 20, 2023, the Company announced that it has accelerated some of the actions planned as part of its multi-year synergy and site consolidation efforts following the acquisition of Legacy Coherent, including site consolidations and relocations to lower cost sites. These relocations and other actions are expected to result in the Company achieving its previously announced $250 million synergy plan, which includes savings from supply chain management, internal supply of enabling materials and components, operational efficiencies in all functions due to scale, global functional model efficiencies and consolidation of corporate costs. We evaluate severance and other site consolidation costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and ASC 712, Compensation-Nonretirement Post-Employment Benefits. In the fourth quarter of fiscal 2023, the acceleration of these activities resulted in $20 million in charges primarily for employee termination, the write-off of inventory for products that are being exited and shut down costs.