SPECIAL CHARGES (RECOVERIES)

3 Months Ended

Sep. 30, 2023

Restructuring, Settlement and Impairment Provisions [Abstract]

Special charges (recoveries) include costs and recoveries that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition-related costs and other charges.


	Three Months Ended September 30,
	2023		2022
Micro Focus Acquisition Restructuring Plan	$	6,864	$	—
Fiscal 2022 Restructuring Plan	173		6,110
Other historical restructuring plans	(290)		(468)
Acquisition-related costs	1,070		4,585
Other charges (recoveries)	5,977		4,054
Total	$	13,794	$	14,281

Micro Focus Acquisition Restructuring Plan

During the third quarter of Fiscal 2023, as part of the Micro Focus Acquisition, we made a strategic decision to implement restructuring activities to reduce our overall workforce and further reduce our real estate footprint around the world (Micro Focus Acquisition Restructuring Plan). The Micro Focus Acquisition Restructuring Plan charges relate to facility costs and workforce reductions. Facility costs include the accelerated amortization associated with the abandonment of right of use assets, the write-off of fixed assets and other related variable lease and exit costs. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

During the three months ended September 30, 2023, we recognized costs of $5.5 million related to abandoned office spaces that have been early terminated or assigned to a third party, of which $4.1 million was related to the write-off of right of use assets, and $0.4 million in charges associated with the write off of fixed assets as part of the Micro Focus Acquisition Restructuring Plan.

As of September 30, 2023, we expect total costs to be incurred in connection with the Micro Focus Acquisition Restructuring Plan to be approximately $135.0 million to $150.0 million, of which $79.1 million has been recorded within “Special charges (recoveries)” to date.

A reconciliation of the beginning and ending restructuring liability, which is included within “Accounts payable and accrued liabilities” in our Condensed Consolidated Balance Sheets, for the three months ended September 30, 2023 is shown below.


Micro Focus Acquisition Restructuring Plan	Workforce reduction		Facility charges		Total
Balance payable as of June 30, 2023	$	25,816	$	7,276	$	33,092
Accruals and adjustments	1,407		1,367		2,774
Cash payments	(9,414)		(1,050)		(10,464)
Foreign exchange and other non-cash adjustments	(334)		(31)		(365)
Balance payable as of September 30, 2023	$	17,475	$	7,562	$	25,037

Fiscal 2022 Restructuring Plan

During the third quarter of Fiscal 2022, as part of our return to office planning, we made a strategic decision to implement restructuring activities to streamline our operations and further reduce our real estate footprint around the world (Fiscal 2022 Restructuring Plan). The Fiscal 2022 Restructuring Plan charges will relate to facility costs and workforce reductions. Facility costs will include the accelerated amortization associated with the abandonment of right of use assets, the write-off of fixed assets and other related variable lease and exit costs. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

During the three months ended September 30, 2023, we recognized costs of $0.2 million related to abandoned office space that have been early terminated or assigned to a third party.

Since the inception of the Fiscal 2022 Restructuring Plan, $32.7 million has been recorded within “Special charges (recoveries)” to date. We do not expect to incur any further significant charges relating to the Fiscal 2022 Restructuring Plan.


Fiscal 2022 Restructuring Plan	Workforce reduction		Facility charges		Total
Balance payable as of June 30, 2023	$	497	$	3,308	$	3,805
Accruals and adjustments	—		127		127
Cash payments	(118)		(274)		(392)
Foreign exchange and other non-cash adjustments	(8)		(88)		(96)
Balance payable as of September 30, 2023	$	371	$	3,073	$	3,444

Acquisition-related costs

Acquisition-related costs, recorded within “Special charges (recoveries)” include direct costs of potential and completed acquisitions. Acquisition-related costs for the three months ended September 30, 2023 were $1.1 million (three months ended September 30, 2022—$4.6 million).

Other charges (recoveries)

For the three months ended September 30, 2023, “Other charges (recoveries)” includes $2.9 million of Micro Focus compensation related charges, $1.6 million of miscellaneous professional advisory charges, $1.1 million of other miscellaneous charges and $0.4 million related to pre-acquisition equity incentives of Zix Corporation (Zix), which upon acquisition were replaced by equivalent value cash settlements.

For the three months ended September 30, 2022, “Other charges” includes $3.6 million related to Zix pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements and $0.5 million related to other miscellaneous charges.