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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
 OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto

Commission File Number 000-22874
Viavi Solutions Inc.
(Exact name of Registrant as specified in its charter)
 
Delaware 94-2579683
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification Number)

1445 South Spectrum Blvd, Suite 102, Chandler, Arizona 85286
(Address of principal executive offices including Zip code)

(408) 404-3600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of the exchange on which registered
Common Stock, par value of $0.001 per share
VIAV
The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer☒Accelerated filer☐Non-accelerated filer
(Do not check if a smaller reporting company)		☐Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒

As of October 28, 2023, the Registrant had 222,394,571 shares of common stock outstanding.

TABLE OF CONTENTSPage

1


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
 Three Months Ended
 September 30, 2023October 1, 2022
Revenues:
Product revenue$205.6 $267.7 
Service revenue42.3 42.5 
Total net revenue247.9 310.2 
Cost of revenues:
Product cost of revenue78.2 98.9 
Service cost of revenue21.8 19.4 
Amortization of acquired technologies3.5 7.1 
Total cost of revenues103.5 125.4 
Gross profit144.4 184.8 
Operating expenses:
Research and development49.9 52.6 
Selling, general and administrative77.2 80.2 
Amortization of other intangibles2.1 2.2 
Restructuring and related benefits(0.8)— 
Total operating expenses128.4 135.0 
Income from operations16.0 49.8 
Interest and other income, net10.2 1.1 
Interest expense(7.8)(6.1)
Income before income taxes18.4 44.8 
Provision for income taxes8.6 12.2 
Net income$9.8 $32.6 
Net income per share:
Basic$0.04 $0.14 
Diluted$0.04 $0.14 
Shares used in per share calculations:
Basic222.0 226.3 
Diluted224.2 230.4 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
2
VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(unaudited)
Three Months Ended
September 30, 2023October 1, 2022
Net income$9.8 $32.6 
Other comprehensive loss:
Net change in cumulative translation adjustment, net of tax(20.4)(42.6)
Amortization of net actuarial (gains) losses and other pension adjustments
(0.1)(0.3)
Net change in accumulated other comprehensive loss(20.5)(42.9)
Comprehensive loss$(10.7)$(10.3)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

3
VIAVI SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and par value data)
(unaudited)
September 30, 2023July 1, 2023
ASSETS 
Current assets:  
Cash and cash equivalents$520.6 $506.5 
Short-term investments20.5 14.6 
Restricted cash3.4 4.5 
Accounts receivable, net190.9 231.2 
Inventories, net113.5 116.1 
Prepayments and other current assets67.2 72.1 
Total current assets916.1 945.0 
Property, plant and equipment, net239.0 243.0 
Goodwill, net449.6 455.2 
Intangibles, net52.8 58.6 
Deferred income taxes86.1 87.0 
Other non-current assets58.5 61.7 
Total assets$1,802.1 $1,850.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$39.8 $47.2 
Accrued payroll and related expenses40.5 50.5 
Deferred revenue67.0 78.6 
Accrued expenses26.2 21.2 
Short-term debt 96.2 96.2 
Other current liabilities41.2 49.8 
Total current liabilities310.9 343.5 
Long-term debt631.1 629.5 
Other non-current liabilities184.9 186.7 
Stockholders’ equity:
Preferred stock, $0.001 par value; 1 million shares authorized,
no shares issued or outstanding at September 30, 2023 and July 1, 2023
— — 
Common stock, $0.001 par value; 1 billion shares authorized; 222 million shares at September 30, 2023 and July 1, 2023, issued and outstanding
0.2 0.2 
Additional paid-in capital70,432.4 70,427.3 
Accumulated deficit(69,600.9)(69,600.7)
Accumulated other comprehensive loss(156.5)(136.0)
Total stockholders’ equity675.2 690.8 
Total liabilities and stockholders’ equity$1,802.1 $1,850.5 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
4
VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
September 30, 2023October 1, 2022
OPERATING ACTIVITIES:
Net income$9.8 $32.6 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense9.8 8.5 
Amortization of acquired technologies and other intangibles5.6 9.3 
Stock-based compensation11.2 13.0 
Amortization of debt issuance costs1.9 0.6 
Net change in fair value of contingent liabilities(1.4)0.5 
Deferred taxes, net1.2 2.1 
Restructuring(0.8)— 
Gain on legal settlement— (6.7)
Other0.2 0.3 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable38.0 11.3 
Inventories(0.3)(6.6)
Other current and non-currents assets3.9 4.0 
Accounts payable(7.6)5.4 
Income taxes payable(0.6)(10.4)
Deferred revenue, current and non-current(10.1)(6.6)
Accrued payroll and related expenses(9.1)(25.7)
Accrued expenses and other current and non-current liabilities(1.4)(5.0)
Net cash provided by operating activities$50.3 $26.6 
INVESTING ACTIVITIES:
Purchases of short-term investments$(52.3)$— 
Maturities of short-term investments45.8 — 
Capital expenditures(6.7)(14.8)
Proceeds from the sale of assets0.6 0.6 
Acquisitions, net of cash hold back— (15.5)
Net cash used in investing activities$(12.6)$(29.7)
FINANCING ACTIVITIES:
Repurchase and retirement of common stock$(10.0)$(18.7)
Withholding tax payment on vesting of restricted stock and performance based-awards(9.1)(11.1)
Proceeds from employee stock purchase plan3.0 3.7 
Payment of acquisition related obligations— (0.7)
Net cash used in financing activities$(16.1)$(26.8)
Effect of exchange rates on cash, cash equivalents and restricted cash$(9.3)$(17.9)
Net increase (decrease) in cash, cash equivalents and restricted cash12.3 (47.8)
Cash, cash equivalents and restricted cash at the beginning of the period (1)
515.6 572.8 
Cash, cash equivalents and restricted cash at the end of the period (2)
$527.9 $525.0 
(1)    These amounts include both current and non-current balances of restricted cash totaling $9.1 million and $12.9 million as of July 1, 2023 and July 2, 2022, respectively.
(2)    These amounts include both current and non-current balances of restricted cash totaling $7.3 million and $12.4 million as of September 30, 2023 and October 1, 2022, respectively.
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
5
VIAVI SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Three Months Ended September 30, 2023
Common Stock
SharesAmountAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal
Balance at July 1, 2023221.5 $0.2 $70,427.3 $(69,600.7)$(136.0)$690.8 
Net income— — — 9.8 — 9.8 
Other comprehensive loss— — — — (20.5)(20.5)
Shares issued under employee stock plans, net of tax1.9 — (6.1)— — (6.1)
Stock-based compensation— — 11.2 — — 11.2 
Repurchase of common stock (1.0)— — (10.0)— (10.0)
Balance at September 30, 2023222.4 $0.2 $70,432.4 $(69,600.9)$(156.5)$675.2 
Three Months Ended October 1, 2022
Common Stock
Shares
Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at July 2, 2022226.4 $0.2 $70,370.2 $(69,542.3)$(156.4)$671.7 
Net income— — — 32.6 — 32.6 
Other comprehensive loss— — — — (42.9)(42.9)
Shares issued under employee stock plans, net of tax1.7 — (7.3)— — (7.3)
Stock-based compensation— — 13.0 — — 13.0 
Repurchase of common stock(1.3)— — (18.7)— (18.7)
Balance at October 1, 2022226.8 $0.2 $70,375.9 $(69,528.4)$(199.3)$648.4 
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.


6

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The financial information for Viavi Solutions Inc. (VIAVI, also referred to as the Company, we, our and us) for the three months ended September 30, 2023 and October 1, 2022 is unaudited, and includes all normal and recurring adjustments the Company’s management considers necessary for a fair statement of the financial information set forth herein. The accompanying Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual Consolidated Financial Statements. For further information, please refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, for the year ended July 1, 2023.
There have been no material changes to the Company’s accounting policies during the three months ended September 30, 2023 as compared to the significant accounting policies presented in “Note 1. Basis of Presentation” of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report for the year ended July 1, 2023 on Form 10-K, filed with the SEC on August 17, 2023.
The Consolidated Balance Sheet as of July 1, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results for the three months ended September 30, 2023 and October 1, 2022 may not be indicative of results for the fiscal year ending June 29, 2024 or any future periods.
Fiscal Years
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company’s fiscal 2024 is a 52-week year ending on June 29, 2024. The Company’s fiscal 2023 was a 52-week year ending on July 1, 2023.
Principles of Consolidation
The Consolidated Financial Statements include the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.
Reclassification of Prior Period Balances
Certain reclassifications of prior period balances have been made to conform to current presentation. Refer to “Note 19. Operating Segments and Geographic Information” for further information.
Use of Estimates
The preparation of the Company’s Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods. Estimates are based on historical factors, current circumstances and the experience and judgment of management. Under changed conditions the Company’s reported financial positions or results of operations may be materially impacted when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more readily available information.
7

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Recently Issued Accounting Pronouncements
Accounting Standards Issued But Not Yet Adopted
In October 2023, the FASB issued ASU 2023-06 to modify the disclosure or presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the SEC's requirements, and to align the requirements in the FASB accounting standard codification with the SEC's regulations. The effective date for each amendment will be the date on which the SEC removes that related disclosure from Regulation S-X or Regulation S-K. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

We reviewed all other accounting pronouncements issued during the three months ended September 30, 2023 and concluded that they were not applicable to the Company.
Note 3. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share (in millions, except per share data):
 Three Months Ended
 September 30, 2023October 1, 2022
Numerator:  
Net income$9.8 $32.6 
Denominator:
Weighted-average shares outstanding:
Basic 222.0 226.3 
Shares issuable assuming conversion of convertible notes (1)
— 1.4 
Effect of dilutive securities from stock-based compensation plans2.2 2.7 
Diluted224.2 230.4 
Net income per share:
Basic$0.04 $0.14 
Diluted$0.04 $0.14 
(1)    Represents the dilutive impact for the Company’s 1.75% Senior Convertible Notes due 2023 (2023 Notes), the 1.00% Senior Convertible Notes due 2024 (2024 Notes) and the 1.625% Senior Convertible Notes due 2026 (2026 Notes). As of September 30, 2023, the if-converted value is less than the outstanding principal of the 2024 and 2026 Notes, respectively, and are therefore anti-dilutive. Refer to “Note 11. Debt” for more details.

The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income per share because their effect would have been anti-dilutive (in millions):
 Three Months Ended
 September 30, 2023October 1, 2022
Restricted stock units0.5 1.4 

8

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Accumulated Other Comprehensive Loss
The Company’s accumulated other comprehensive loss consists of the accumulated net unrealized gains or losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations.
For the three months ended September 30, 2023, the changes in accumulated other comprehensive loss, net of tax, by component were as follows (in millions):
Unrealized losses on available-for sale investmentsForeign 
currency translation adjustments, net of tax
Change in unrealized components of defined benefit obligations (1)
Total
Beginning balance as of July 1, 2023$(5.3)$(125.4)$(5.3)$(136.0)
Other comprehensive loss before reclassification— (20.4)— (20.4)
Amounts reclassified out of accumulated other comprehensive loss— — (0.1)(0.1)
Net current-period other comprehensive loss— (20.4)(0.1)(20.5)
Ending balance as of September 30, 2023$(5.3)$(145.8)$(5.4)$(156.5)
(1)     The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial gains included as a component of Cost of revenues, Research and development (R&D) and Selling, general and administrative (SG&A) in the Consolidated Statements of Operations, net of reclassification adjustments, for the three months ended September 30, 2023. There was no tax impact for the three months ended September 30, 2023. Refer to “Note 17. Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.
9

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5. Acquisitions
On October 5, 2022, the Company acquired all of the equity of Jackson Labs Technologies, LLC (Jackson Labs), a privately held company which specializes in Position, Navigation and Timing (PNT) solutions for critical infrastructure serving both military and civilian applications. The acquisition enables the Company to broaden its solutions offering into the rapidly developing PNT landscape.
The total purchase consideration included approximately $49.9 million paid in cash at closing and additional contingent consideration of up to $117.0 million for which future cash payments are dependent on the achievement of certain operational and revenue targets over the course of a three-year period beginning in January 2023. The cash consideration paid at closing included escrow payments of $5.0 million for indemnity holdback and $2.0 million subject to final cash and net working capital adjustments. The acquisition met the definition of a business and has been accounted for in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date. Acquisition related costs incurred were approximately $0.8 million and have been recorded within SG&A in the Consolidated Statements of Operations. The Company has included the financial results of Jackson Labs in its Consolidated Financial Statements from the date of acquisition. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Consolidated Statements of Operations.
The total purchase consideration was allocated to tangible and intangible assets acquired and liabilities assumed based on the preliminary fair value on the acquisition date. The following table presents the allocation of the purchase price (in millions):
Amount
Cash and cash equivalents$1.1 
Accounts receivable, net2.3 
Inventory, net 3.2 
Goodwill (1)
48.3 
Identified intangible assets acquired30.6 
Other non-current assets0.1 
Accounts payable(0.6)
Accrued expenses(3.4)
Deferred revenue(2.1)
Other current liabilities(0.5)
  Total purchase consideration $79.0 
(1) Goodwill at acquisition date of $48.8 million reduced by measurement period adjustment of $0.5 million in the third quarter of fiscal 2023.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in millions, except useful life):
Estimated Useful LifeAmount
Developed technology6 years$25.0 
Customer relationship3 years2.7 
Tradename2 years0.5 
Backlog1 year2.4 
  Total identifiable assets acquired$30.6 

10

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Goodwill represents the excess of the preliminary estimated purchase consideration over the preliminary estimates of the fair value of the net tangible and intangible assets acquired and has been allocated to the Network Enablement segment. Goodwill is primarily attributable to expected synergies in the acquired technologies that may be leveraged by the Company in future PNT offerings. The goodwill is expected to be deductible for U.S. income tax purposes.

Other Acquisitions:

On March 29, 2023, April 21, 2023 and June 8, 2023, the Company completed acquisitions accounted for as asset purchases consisting of cash paid at closing of $2.9 million and $0.2 million of indemnity holdback. In connection with these acquisitions, the Company recorded developed technology intangibles of $2.5 million which will be amortized over their estimated useful life of five years.

On July 18, 2022, the Company completed an acquisition accounted for as a business combination consisting of cash paid at closing of $17.5 million and $2.0 million of indemnity holdback. In connection with this acquisition, the Company recorded approximately $11.2 million of goodwill, $5.1 million of developed technology and $1.8 million of deferred tax liability. The acquired developed technology asset is being amortized over its estimated useful life of four years.

On May 13, 2022 and May 20, 2022, the Company completed acquisitions accounted for as business combinations for cash paid at closing of $9.5 million, additional earn-outs of up to $3.3 million cash to be paid based on the occurrence or achievement of certain agreed upon targets and $2.0 million of indemnity holdback. In connection with these acquisitions, the Company recorded $10.0 million of goodwill, $7.3 million of developed technology and other intangibles and $1.6 million of deferred tax liability. The acquired developed technology and other intangible assets are being amortized over their estimated useful lives ranging from one to six years.

Acquisition-related Contingent Consideration

The following table provides a reconciliation of changes in the fair value of the Company’s earn-out liabilities associated with the Company’s acquisitions for the three months ended September 30, 2023 and October 1, 2022 (in millions):
Three Months Ended
September 30, 2023October 1, 2022
Beginning period balance$19.7 $2.5 
Fair value adjustment of earn-out liabilities(1.4)0.5 
Currency translation adjustment— (0.1)
Ending period balance $18.3 $2.9 

11

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Balance Sheet and Other Details
Contract Balances
Gross receivables include both billed and unbilled receivables (including Contract assets). As of September 30, 2023, and July 1, 2023, the Company had total unbilled receivables of $12.8 million and $13.7 million, respectively.
The Company also has short-term and long-term deferred revenues related to undelivered product and professional services, consisting of installations and consulting engagements, which are recognized as the Company's performance obligations under the contract are completed and accepted by the customer.
The following tables summarize the activity related to deferred revenue (in millions):
September 30, 2023
Three Months Ended
Deferred revenue:
Balance at beginning of period$102.0 
Revenue deferrals for new contracts (1)
20.2 
Revenue recognized during the period (2)
(31.7)
Balance at end of period $90.5 
(1)    Included in these amounts is the impact from foreign currency exchange rate fluctuations.
(2)    Revenue recognized during the period represents releases from the balance at the beginning of the period as well as releases from the current period deferrals.
Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, adjustments for revenue that have not materialized, and adjustments for currency.
The value of the transaction price allocated to remaining performance obligations as of September 30, 2023, was $226.6 million. The Company expects to recognize approximately 88% of remaining performance obligations as revenue within the next 12 months, and the remainder thereafter.
Accounts receivable allowances - Credit losses
The following table presents the activities and balances for allowance for credit losses (in millions):
July 1, 2023Charged to Costs and Expenses
Deductions (1)
September 30, 2023
Allowance for credit losses$1.0 $0.4 $(0.1)$1.3 
(1)     Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.
Inventories, net
The following table presents the components of inventories, net (in millions):
September 30, 2023July 1, 2023
Finished goods$51.7 $49.0 
Work in process15.2 17.7 
Raw materials46.6 49.4 
Inventories, net$113.5 $116.1 
12

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Prepayments and other current assets
The following table presents the components of prepayments and other current assets (in millions):
September 30, 2023July 1, 2023
Refundable income taxes$27.7 $27.6 
Prepayments15.2 16.5 
Advances to contract manufacturers10.2 9.8 
Transaction tax receivables3.9 5.1 
Asset held for sale2.5 2.5 
Fair value of forward contracts1.6 3.5 
Other current assets6.1 7.1 
Prepayments and other current assets$67.2 $72.1 
Other non-current assets
The following table presents the components of other non-current assets (in millions):
September 30, 2023July 1, 2023
Operating ROU assets (Note 12)$38.1 $40.4 
Long-term restricted cash4.0 4.6 
Deferred contract cost2.5 2.9 
Debt issuance cost - Revolving Credit Facility2.5 2.8 
Deposits2.1 2.3 
Other non-current assets9.3 8.7 
Other non-current assets$58.5 $61.7 
Other current liabilities
The following table presents the components of other current liabilities (in millions):
September 30, 2023July 1, 2023
Operating lease liabilities (Note 12)$10.0 $10.1 
Fair value of forward contracts5.2 2.4 
Income tax payable4.3 4.4 
Acquisition related holdback and related accruals4.4 4.1 
Warranty accrual4.1 4.2 
Transaction tax payable2.9 4.3 
Restructuring accrual (Note 13)1.5 5.8 
Fair value of contingent consideration (Note 5)0.9 1.1 
Interest payable0.4 5.5 
Other7.5 7.9 
Other current liabilities$41.2 $49.8 
13

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other non-current liabilities
The following table presents components of other non-current liabilities (in millions):
September 30, 2023July 1, 2023
Pension and post-employment benefits$52.0 $53.2 
Operating lease liabilities (Note 12)27.6 29.4 
Long-term deferred revenue23.5 23.4 
Fair value of contingent consideration (Note 5)17.4 18.6 
Deferred tax liability16.8 13.9 
Financing obligation15.7 15.8 
Uncertain tax position15.5 15.8 
Warranty accrual4.7 4.8 
Asset retirement obligations3.8 3.8 
Other7.9 8.0 
Other non-current liabilities$184.9 $186.7 
Note 7. Investments and Forward Contracts
Short-Term Investments
As of September 30, 2023, the Company’s short-term investments of $20.5 million were comprised of a 30-day term deposit of $19.0 million and trading securities related to the deferred compensation plan of $1.5 million, of which $1.2 million was invested in equity securities, $0.1 million was invested in debt securities and $0.2 million was invested in money market instruments.
As of July 1, 2023, the Company’s short-term investments of $14.6 million were comprised of a 30-day term deposit of $13.1 million and trading securities related to the deferred compensation plan of $1.5 million, of which $1.2 million was invested in equity securities, $0.1 million was invested in debt securities and $0.2 million was invested in money market instruments.
Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in the Consolidated Statements of Operations as a component of Interest and other income, net.
Non-Designated Foreign Currency Forward Contracts
The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to foreign exchange risks. The Company utilizes foreign exchange forward contracts to manage foreign currency risk associated with foreign currency denominated monetary assets and liabilities, primarily certain short-term intercompany receivables and payables, and to reduce the volatility of earnings and cash flows related to foreign-currency transactions. The Company does not use these foreign currency forward contracts for trading purposes.
As of September 30, 2023, the Company had forward contracts that were effectively closed but not settled with the counterparties as of the balance sheet date. Therefore, the fair value of these contracts of $1.6 million and $5.2 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively. As of July 1, 2023, the fair value of these contracts of $3.5 million and $2.4 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively.
The forward contracts outstanding and not effectively closed, with a term of less than 120 days, were transacted near quarter end; therefore, the fair value of the contracts is not significant. As of September 30, 2023 and July 1, 2023, the notional amounts of the forward contracts that the Company held to purchase foreign currencies were $101.2 million and $87.5 million, respectively, and the notional amounts of forward contracts that the Company held to sell foreign currencies were $15.2 million and $19.3 million, respectively.
14

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The change in the fair value of these foreign currency forward contracts is recorded as gain or loss in the Consolidated Statements of Operations as a component of Interest and other income, net. The cash flows related to the settlement of foreign currency forward contracts are classified as operating activities. The foreign exchange forward contracts incurred losses of $3.6 million and $6.7 million for the three months ended September 30, 2023 and October 1, 2022, respectively.
Note 8. Fair Value Measurements
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. Observable inputs are inputs which market participants would use in valuing an asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs which reflect the assumptions market participants would use in valuing an asset or liability.
The three levels of inputs that may be used to measure fair value are as follows:
•Level 1: includes financial instruments for which quoted market prices for identical instruments are available in active markets. Level 1 assets of the Company include money market funds, U.S. Treasury securities and marketable equity securities as they are traded with sufficient volume and frequency of transactions.
•Level 2: includes financial instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 2 instruments of the Company include asset-backed securities, foreign currency forward contracts and debt. To estimate their fair value, the Company utilizes pricing models based on market data. The significant inputs for the valuation model usually include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, and industry and economic events.
•Level 3: includes financial instruments for which fair value is derived from valuation-based inputs, that are unobservable and significant to the overall fair value measurement. As of September 30, 2023 and July 1, 2023, the Company did not hold any Level 3 investment securities. The Company’s Level 3 liabilities consist of contingent purchase consideration liabilities related to business acquisitions. The fair value of such earn-out liabilities are generally determined using a Monte Carlo Simulation that includes significant unobservable inputs such as the risk-adjusted discount rate, gross profit volatility, and projected financial forecast of acquired business over the earn-out period. The fair value of certain earn-out liabilities is derived using the estimated probability of success of achieving the earn-out milestones discounted to present value. The fair value of contingent consideration liabilities is remeasured at each reporting period at the estimated fair value based on the inputs on the date of remeasurement, with the change in fair value recognized in the Selling, general and administrative (SG&A) expense of the Consolidated Statements of Operations.
15

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements
The Company’s assets and liabilities measured at fair value for the periods presented are as follows (in millions):
September 30, 2023July 1, 2023
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:      
Debt available-for-sale securities:
Asset-backed securities(1)
$0.3 $— $0.3 $— $0.3 $— $0.3 $— 
Total debt available-for-sale securities0.3 — 0.3 — 0.3 — 0.3 — 
Money market funds(2)
379.3 379.3 — — 344.8 344.8 — — 
Trading securities(3)
1.5 1.5 — — 1.5 1.5 — — 
Foreign currency forward contracts(4)
1.6 — 1.6 — 3.5 — 3.5 — 
Total assets $382.7 $380.8 $1.9 $— $350.1 $346.3 $3.8 $— 
Liabilities:
Foreign currency forward contracts(5)
$5.2 $— $5.2 $— $2.4 $— $2.4 $— 
Contingent consideration (6)
18.3 — — 18.3 19.7 — — 19.7 
Total liabilities$23.5 $— $5.2 $18.3 $22.1 $— $2.4 $19.7 
(1)Included in Other non-current assets on the Consolidated Balance Sheets.
(2)Includes, as of September 30, 2023, $372.4 million in Cash and cash equivalents, $3.3 million in Restricted cash and $3.6 million in Other non-current assets on the Consolidated Balance Sheets. Includes, as of July 1, 2023, $336.5 million in Cash and cash equivalents, $4.3 million in Restricted cash and $4.0 million in Other non-current assets on the Consolidated Balance Sheets.
(3)Included in Short-term investments on the Consolidated Balance Sheets.
(4)Included in Other current assets on the Consolidated Balance Sheets.
(5)Included in Other current liabilities on the Consolidated Balance Sheets.
(6)    As of September 30, 2023 and July 1, 2023, includes certain amounts in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets.

Other Fair Value Measures
Fair Value of Debt: If measured at fair value on the Consolidated Balance Sheets, the Company’s 3.75% Senior Notes (2029 Notes), 1.625% Senior Convertible Notes (2026 Notes) and 1.00% Senior Convertible Notes (2024 Notes) would be classified in Level 2 of the fair value hierarchy as they are not actively traded in the markets. The Company’s debt measured at fair value for the periods presented are as follows (in millions):
September 30, 2023July 1, 2023
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Debt:
3.75% Senior Notes
$325.7 $— $325.7 $— $341.8 $— $341.8 $— 
1.625% Senior Convertible Notes
239.1 — 239.1 — 262.7 — 262.7 — 
1.00% Senior Convertible Notes
94.7 — 94.7 — 95.6 — 95.6 — 
   Total $659.5 $— $659.5 $— $700.1 $— $700.1 $— 
See “Note 11. Debt”, for further discussion of the Company’s debt.
16

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Goodwill
The following table presents changes in goodwill allocated to the Company’s reportable segments (in millions):
Network EnablementService Enablement
Optical Security
and Performance
Products
Total
Balance as of July 1, 2023$398.0 $15.0 $42.2 $455.2 
Currency translation and other adjustments (1)
(4.0)(1.6)— (5.6)
Balance as of September 30, 2023$394.0 $13.4 $42.2 $449.6 
(1) Other adjustments include a reclass of $1.3 million from Service Enablement to Network Enablement due to a product line movement. See Note 19. “Operating Segments and Geographic Information” for further details.
The Company tests goodwill for impairment at the reporting unit level annually during the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that the asset may be impaired. In the fourth quarter of fiscal 2023, the Company performed a quantitative assessment of goodwill impairment and concluded the fair value of each of the Company’s reporting units was at least two times the carrying value, and therefore no impairment was identified.
There were no events or changes in circumstances which triggered an impairment review during the three months ended September 30, 2023.
Note 10. Acquired Developed Technology and Other Intangibles
The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles (in millions):
As of September 30, 2023Gross Carrying AmountAccumulated AmortizationNet
Acquired developed technology $437.0 $(392.3)$44.7 
Customer relationships193.0 (185.2)7.8 
Other (1)
39.0 (38.7)0.3 
Total intangibles$669.0 $(616.2)$52.8 
As of July 1, 2023Gross Carrying AmountAccumulated AmortizationNet
Acquired developed technology$438.5 $(390.2)$48.3 
Customer relationships195.2 (185.9)9.3 
Other (1)
39.8 (38.8)1.0 
Total intangibles$673.5 $(614.9)$58.6 
(1)     Other intangibles consist of customer backlog, patents, proprietary know-how and trade secrets, trademarks and trade names.
17

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the amortization recorded relating to acquired developed technology, customer relationships and other intangibles (in millions):    
 Three Months Ended
 September 30, 2023October 1, 2022
Cost of revenues$3.5 $7.1 
Operating expenses2.1 2.2 
Total amortization of intangible assets$5.6 $9.3 
Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of September 30, 2023, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows (in millions):
Fiscal Years
Remainder of 2024$14.6 
202515.8 
202611.3 
20277.5 
20283.0 
Thereafter0.6 
Total amortization$52.8 
The acquired developed technology, customer relationships and other intangible balances are adjusted quarterly to record the effect of currency translation adjustments.
Note 11. Debt
As of September 30, 2023 and July 1, 2023, the Company’s debt on the Consolidated Balance Sheets represented the carrying amount of the Senior Convertible and Senior Notes, net of unamortized debt discount and issuance costs.
The following table presents the carrying amounts of the Company’s debt (in millions):
September 30, 2023July 1, 2023
Principal amount of 1.00% Senior Convertible Notes
$96.4 $96.4 
Unamortized 1.00% Senior Convertible Notes debt issuance cost
(0.2)(0.2)
Short-term debt$96.2 $96.2 
Principal amount of 3.75% Senior Notes
$400.0 $400.0 
Unamortized 3.75% Senior Notes debt issuance cost
(5.3)(5.5)
Principal amount of 1.625% Senior Convertible Notes
250.0 250.0 
Unamortized 1.625% Senior Convertible Notes debt discount
(11.7)(12.9)
Unamortized 1.625% Senior Convertible Notes debt issuance cost
(1.9)(2.1)
Long-term debt$631.1 $629.5 
The Company was in compliance with all debt covenants as of September 30, 2023 and July 1, 2023.
18

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.625% Senior Convertible Notes (2026 Notes)
On March 6, 2023, the Company issued $250.0 million aggregate principal amount of 1.625% Senior Convertible Notes due 2026 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company issued $132.0 million aggregate principal amount of the 2026 Notes to certain holders of the 1.00% Senior Convertible Notes due 2024 (2024 Notes) in exchange for $127.5 million principal amount of the 2024 Notes (the Exchange Transaction) and issued and sold $118.0 million aggregate principal amount of the 2026 Notes in a private placement to accredited institutional buyers (the Subscription Transactions).
The Exchange Transaction was accounted for as a modification. The $127.5 million principal of the 2024 Notes was reduced by $10.1 million, with offsetting increase to additional paid-in capital, to account for the increase in the fair value of the embedded conversion option in the modification. The increase in principal and coupon interest, along with the increased option value, totaled $14.6 million and is a direct reduction from the carrying amount of the debt on the Consolidated Balance Sheets. This amount will be accreted as an adjustment to interest expense on a straight-line basis and will accrete up to the full face value of the 2026 Notes at maturity.
The proceeds of the Subscription Transactions amounted to $113.8 million after issuance costs of $4.2 million. The exchange resulted in $2.2 million of the issuance costs to be recorded as Loss on convertible note modification in the Consolidated Statements of Operations. The remaining issuance costs of $2.0 million as well as $0.3 million of unamortized costs carried over from the 2024 Notes at the exchange date were capitalized within Long-term debt (as a contra-balance) on the Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis until maturity.
The 2026 Notes are an unsecured obligation of the Company and bear annual interest of 1.625%, payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2023. The 2026 Notes mature on March 15, 2026 unless earlier converted, redeemed or repurchased. As of September 30, 2023, the expected remaining term of the 2026 Notes is 2.5 years.
3.75% Senior Notes (2029 Notes)
On September 29, 2021, the Company issued $400.0 million aggregate principal amount of 3.75% Senior Notes due 2029 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Proceeds of the 2029 Notes amounted to $393.0 million after issuance costs. The 2029 Notes are an unsecured obligation of the Company and bear annual interest of 3.75%, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2022. The 2029 Notes mature on October 1, 2029 unless earlier redeemed or repurchased. As of September 30, 2023, the expected remaining term of the 2029 Notes is 6.0 years.
19

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.75% Senior Convertible Notes (2023 Notes)
On May 29, 2018, the Company issued $225.0 million aggregate principal amount of 1.75% Senior Convertible Notes due 2023 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company issued $155.5 million aggregate principal of the 2023 Notes to certain holders of the 2033 Notes in exchange for $151.5 million principal of the 2033 Notes and issued and sold $69.5 million aggregate principal amount of the 2023 Notes in a private placement to accredited institutional buyers (the Private Placement).
In connection with the issuance of the 2023 Notes, the Company incurred $2.2 million of issuance costs. The debt issuance costs were capitalized and amortized to interest expense using the effective interest rate method from issuance date through maturity on June 1, 2023.
See Senior Convertible Notes Settlement section below for details of the 2023 Notes exchange transactions during fiscal 2022. On June 1, 2023, the remaining 2023 Notes were retired upon maturity.
1.00% Senior Convertible Notes (2024 Notes)
On March 3, 2017, the Company issued $400.0 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60.0 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs.
The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. As of September 30, 2023, the expected remaining term of the 2024 Notes is 0.4 years. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased. See Senior Convertible Notes Settlement below.
Senior Convertible Notes Settlement
On September 2, 2021, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes. The Company settled $93.8 million principal amount of the 2023 Notes and $181.2 million principal amount of the 2024 Notes in exchange for an aggregate of 10.6 million shares of its common stock, par value $0.001 per share, and $196.5 million in cash. The Company recorded a loss of $85.9 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Company’s Consolidated Statements of Operations.
On November 17, 2021 and November 22, 2021, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes. The Company settled $20.6 million principal amount of the 2023 Notes and $25.0 million principal amount of the 2024 Notes in exchange for $59.0 million in cash. The Company recorded a loss of $6.4 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Company’s Consolidated Statements of Operations.
On March 2, 2022, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes. The Company settled $23.2 million principal amount of the 2023 Notes and $26.8 million principal amount of the 2024 Notes in exchange for $64.7 million in cash. The Company recorded a loss of $6.4 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Company’s Consolidated Statements of Operations.
On June 3, 2022, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes. The Company settled $19.3 million principal amount of the 2023 Notes and $3.1 million principal amount of the 2024 Notes in exchange for $27.1 million in cash. The Company recorded a loss of $3.1 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Company’s Consolidated Statements of Operations.
20

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Senior Secured Asset-Based Revolving Credit Facility
On December 30, 2021, we entered into a credit agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo) as administrative agent, and other lender related parties. The Credit Agreement provides for a senior secured asset-based revolving credit facility in a maximum aggregate amount of $300 million, which matures on December 30, 2026. The Credit Agreement also provides that, under certain circumstances, the Company may increase the aggregate amount of revolving commitments thereunder by an aggregate amount of up to $100 million so long as certain conditions are met. The proceeds from the credit facility established under the Credit Agreement will be used for working capital and other general corporate purposes. The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and those of its subsidiaries that are borrowers and guarantors under the Credit Agreement.
Amounts outstanding under the Credit Agreement accrue interest as follows: (i) if the amounts outstanding are denominated in US Dollars, at a per annum rate equal to either, at the Company’s election, Term Secured Overnight Financing Rate (SOFR) plus a margin of 1.35% to 1.85% per annum, or a specified base rate plus a margin of 0.25% to 0.75%, in each case, depending on the average excess availability under the facility, (ii) if the amounts outstanding are denominated in Sterling, at a per annum rate equal to the Sterling Overnight Interbank Average Rate (SONIA) plus a margin of 1.2825% to 1.7825%, depending on the average excess availability under the facility, (iii) if the amounts outstanding are denominated in Euros, at a per annum rate equal to the Euro Interbank Offered Rate plus a margin of 1.25% to 1.75%, depending on the average excess availability under the facility, or (iv) if the amounts outstanding are denominated in Canadian Dollars, at a per annum rate equal to either, at the Company’s election, the Canadian Dollar Offered Rate plus a margin of 1.25% to 1.75%, or a specified base rate plus a margin of 0.25% to 0.75%, in each case, depending on the average excess availability under the facility.

The covenants of the Credit Agreement include customary restrictive covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens and make certain acquisitions, investments, asset dispositions and restricted payments. In addition, the Credit Agreement contains certain financial covenants that require the Company to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 if excess availability under the facility is less than the greater of 10% of the lesser of maximum revolver amount and borrowing base and $20 million.
As of September 30, 2023, we had no borrowings under this facility and our available borrowing capacity was approximately $152.1 million, net of outstanding standby letters of credit of $4.1 million.
Revolving Credit Facility
On May 5, 2020, the Company entered into a credit agreement with Wells Fargo as administrative agent, and other lender related parties. The Company borrowed $150 million and repaid $150 million under this Credit Agreement during the first quarter of fiscal 2022. In connection with the entry into the Senior Secured Asset-Based Revolving Credit Facility noted above, the Company terminated this facility.
Interest Expense
The following table presents the interest expense for contractual interest, amortization of debt issuance costs and accretion of debt discount (in millions):
Three Months Ended
September 30, 2023October 1, 2022
Interest expense-contractual interest$5.0 $4.6 
Amortization of debt issuance cost0.7 0.6 
Accretion of debt discount1.2 — 
Other0.9 0.9 
  Total interest expense$7.8 $6.1 

21

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 12. Leases
The Company is a lessee in several operating leases, primarily real estate facilities for office space. The Company's lease arrangements are comprised of operating leases with various expiration dates through March 31, 2042. The Company's leases do not contain any material residual value guarantees.
Lease expense, cash flow and balance sheet information related to our operating leases are as follows (in millions):
September 30, 2023October 1, 2022
Operating lease costs(1)
$3.3 $3.3 
Cash paid for amounts included in the measurement of operating lease liabilities4.6 4.6 
Operating ROU assets obtained in exchange for operating lease obligations0.9 0.7 
Operating ROU assets (Other non-current assets)38.1 41.6 
Other current liabilities10.0 9.8 
Other non-current liabilities27.6 30.5 
Total operating lease liabilities$37.6 $40.3 
Weighted-average remaining lease term6.7 years7.0 years
Weighted-average discount rate4.8 %4.6 %
(1) Total variable lease costs were immaterial during the three months ended September 30, 2023 and October 1, 2022. The total operating costs were included in Cost of revenues, R&D, and SG&A in the Consolidated Statements of Operations.
Future minimum operating lease payments as of September 30, 2023 are as follows (in millions):
Operating Leases
Remainder of 2024$7.7 
Fiscal 20259.6 
Fiscal 20267.2 
Fiscal 20275.6 
Fiscal 20283.9 
Thereafter9.8 
Total lease payments43.8 
Less: Interest(6.2)
Present value of lease liabilities$37.6 


22

VIAVI SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13. Restructuring and Related Charges
The Company’s restructuring events are primarily intended to reduce costs, consolidate operations, integrate various acquisitions, streamline product manufacturing and address market conditions. Restructuring charges primarily include severance, benefits and outplacement costs to eliminate a specified number of positions. The timing of associated cash payments is dependent upon the jurisdiction of the affected employees and can extend over multiple periods.
Fiscal 2023 Plan
During the second quarter of fiscal 2023, Management approved a restructuring and workforce reduction plan (the Fiscal 2023 Plan) to better align the Company’s workforce with current business needs and strategic growth opportunities. The Company expects approximately 5% of its global workforce to be affected.
The first phase of the Fiscal 2023 Plan impacted our Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP) segments and Corporate (Corp) functions and was substantially complete as of September 30, 2023. The second phase of the Fiscal 2023 Plan is primarily focused on reducing costs in our Service Enablement (SE) segment and the Company anticipates this phase to be substantially complete by the end of the second quarter of fiscal 2024.
A summary of the activity in the restructuring accrual is outlined below (in millions):
Balance as of
 July 1, 2023		Restructuring and related benefitsCash SettlementsBalance as of September 30, 2023
Fiscal 2023 Plan
NSE/Corp$3.5 $(0.6)$(2.4)$0.5 
OSP0.6 — (0.6)— 
Fiscal 2023 Plan Phase I4.1 (0.6)(3.0)0.5 
NSE/Corp1.7