SPECIAL CHARGES (RECOVERIES)

9 Months Ended

Mar. 31, 2024

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 March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Micro Focus Acquisition Restructuring Plan	$	9,597	$	11,173	$	61,221	$	11,173
Fiscal 2022 Restructuring Plan	(39)		(868)		35		7,233
Other historical restructuring plans	(113)		(455)		(570)		(1,545)
Divestiture-related costs	7,331		—		14,313		—
Acquisition-related costs	676		34,795		1,796		45,383
Other charges (recoveries)	2,109		29,705		10,726		36,693
Total	$	19,561	$	74,350	$	87,521	$	98,937

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 will include the accelerated amortization associated with the abandonment of right of use assets, the write-off of property and equipment 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 and nine months ended March 31, 2024, we recognized costs of $10.1 million and $27.8 million, respectively, related to abandoned office spaces that have been early terminated or assigned to a third party, of which $4.3 million and $14.5 million, respectively, were related to the write-off of right of use assets, and $1.0 million and $2.5 million, respectively, in charges associated with the write-off of property and equipment as part of the Micro Focus Acquisition Restructuring Plan.

As of March 31, 2024, we expect total costs to be incurred in connection with the Micro Focus Acquisition Restructuring Plan to be approximately $155.0 million to $170.0 million, of which $133.5 million has been recorded within Special charges (recoveries) within the Condensed Consolidated Statements of Income 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 nine months ended March 31, 2024 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	33,413		13,302		46,715
Cash payments	(44,680)		(3,079)		(47,759)
Foreign exchange and other non-cash adjustments	198		(2,860)		(2,662)
Balance payable as of March 31, 2024	$	14,747	$	14,639	$	29,386

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 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 property and equipment 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 and nine months ended March 31, 2024, we recognized costs of nil and $0.2 million, respectively, related to abandoned office spaces that have been early terminated or assigned to a third party, of which nil related to the write-off of right of use assets.

Since the inception of the Fiscal 2022 Restructuring Plan, $32.6 million has been recorded within Special charges (recoveries) in our Condensed Consolidated Financial Statements 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	(160)		131		(29)
Cash payments	(156)		(830)		(986)
Foreign exchange and other non-cash adjustments	(7)		(45)		(52)
Balance payable as of March 31, 2024	$	174	$	2,564	$	2,738

Divestiture-related costs

Divestiture-related costs, recorded within Special charges (recoveries), include the direct costs related to the AMC Divestiture. For the three and nine months ended March 31, 2024, divestiture-related costs were $7.3 million and $14.3 million, respectively (three and nine months ended March 31, 2023—nil).

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 and nine months ended March 31, 2024 were $0.7 million and $1.8 million, respectively (three and nine months ended March 31, 2023—$34.8 million and $45.4 million, respectively).

Other charges (recoveries)

For the three and nine months ended March 31, 2024, Other charges (recoveries) includes $0.1 million and $5.5 million, of compensation related charges and $1.7 million and $4.1 million of other miscellaneous charges, respectively, both associated with the Micro Focus Acquisition, along with $0.3 million and $1.2 million related to pre-acquisition equity incentives of Zix Corporation (Zix), which upon acquisition were replaced by equivalent value cash settlements (see Note 19 “Acquisitions and Divestitures”).

For the three and nine months ended March 31, 2023, Other charges (recoveries) includes $21.4 million of severance charges, $7.5 million of other miscellaneous charges, both associated with the Micro Focus Acquisition and $0.8 million and $8.0 million, respectively, related to Zix pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements, and nil and $(0.2) million, respectively, related to other Zix miscellaneous charges (recoveries).