Restructuring and Other Charges

3 Months Ended

Mar. 31, 2024

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

On September 17, 2022, DZS signed an agreement with Fabrinet, a third-party provider of electromechanical and electronic manufacturing and distribution services, to transition the sourcing, procurement, order-fulfillment, manufacturing and return merchandise authorization activities in the Company's Seminole, Florida facility to Fabrinet. The transition to Fabrinet began in October 2022 and substantially completed in the beginning of 2023. Post transition, the DZS Seminole, Florida-based operations, supply chain and manufacturing workforce was reduced by approximately two-thirds and the remaining team was relocated to an appropriately sized facility. For the three months ended March 31, 2023, the Company recorded $3.5 million of restructuring related costs, consisting of freight and expedite fees of $1.0 million,

facility and labor costs of $0.8 million, accelerated depreciation of manufacturing related assets of $0.4 million, termination-related benefits of $0.3 million, inventory write-off of $0.5 million, and other costs of $0.5 million. The above expenses were included in restructuring and other charges on the unaudited condensed consolidated statement of comprehensive income (loss).

For the three months ended March 31, 2023, the Company also incurred certain maintenance costs related to impaired facilities and non-capitalizable implementation costs related to replacement of the Company’s legacy enterprise resource planning and reporting software. The Company included such costs in restructuring and other charges on the unaudited condensed consolidated statement of comprehensive income (loss).

For the three months ended March 31, 2024, the Company incurred $0.3 million of restructuring related costs primarily related to Fabrinet transition and certain maintenance costs related to impaired facilities. The Company included such costs in restructuring and other charges on the unaudited condensed consolidated statement of comprehensive income (loss).