RESTRUCTURING LIABILITIES

2014 Restructuring Plan

During the first quarter of fiscal year 2014, we initiated a restructuring plan to simplify our operating footprint, reduce our cost structure and focus our research and development investment in the optical communications market where we can leverage our core competencies. During the year ended June 28, 2014, we recorded restructuring charges of $13.2 million pursuant to this plan, consisting of $8.5 million related to workforce reductions, $2.9 million related to transferring production capabilities of our 10G InP products in-house from one of our contract manufacturers, $0.8 million related to a facility lease loss liability, $0.7 million related to the write-off of certain fixed assets in connection with our relocation of our manufacturing and research and development facilities from Totsuka, Japan, and $0.3 million in other lease cancellations and commitments. During the year ended June 28, 2014, we paid $8.5 million to settle a portion of these restructuring liabilities. As of June 28, 2014, we had $2.2 million in accrued restructuring liabilities related to this restructuring plan. We expect to incur an additional $2.5 million to $6.5 million in restructuring charges over the course of the next year in connection with the ongoing activities related to this restructuring plan.

Opnext Restructuring

In connection with the acquisition of Opnext, we initiated a restructuring plan to integrate the businesses in the first quarter of fiscal year 2013. In connection with the integration, we recorded $1.1 million and $12.1 million in restructuring charges during the year ended June 28, 2014 and June 29, 2013, respectively. The restructuring charges in fiscal year 2014 included $0.9 million related to external consulting charges and professional fees associated with reorganizing the infrastructure and $0.1 million related to revised estimates for lease cancellations and commitments. The restructuring charges in fiscal year 2013 included $10.5 million related to workforce reductions, $0.9 million related to the impairment of certain technology that is now considered redundant following the acquisition, $0.4 million related to the write-off of net book value inventory that supported this technology, and $0.3 million related to revised estimates for lease cancellations and commitments. Included in our restructuring charges during fiscal year 2013, we recorded $2.2 million relating to the separation agreement with our former Chief Executive Officer.

During the year ended June 28, 2014 and June 29, 2013, we made scheduled payments of $2.2 million and $8.0 million, respectively, to settle these restructuring liabilities. During the year ended June 28, 2014 and June 29, 2013, we also paid $1.8 million and $0.3 million, respectively, to settle the liability related to the separation agreement with our former Chief Executive Officer. As of June 28, 2014, we had no remaining accrued restructuring liabilities related to this restructuring plan.

Restructuring Plan related to our Manufacturing Operations in Shenzhen, China

During fiscal year 2012, we initiated a restructuring plan in connection with the transfer of a portion of our Shenzhen, China manufacturing operations to Venture Corporation Limited ("Venture"). This transition is scheduled to occur in a phased and gradual transfer of products over three years, which is scheduled to be completed in fiscal year 2015. In connection with this transition, we recorded restructuring charges of $3.5 million, $5.1 million and $6.0 million during the year ended June 28, 2014, June 29, 2013 and June 30, 2012, respectively. All of the restructuring charges in fiscal year 2014, 2013 and 2012 related to employee separation charges.

During fiscal year 2014, 2013 and 2012, we made scheduled payments of $7.1 million, $2.7 million and $3.9 million, respectively, to settle these restructuring liabilities. As of June 28, 2014, we had $0.6 million in accrued restructuring liabilities related to this restructuring plan. As of June 28, 2014, we expect to incur an additional $1.5 million to $2.5 million in restructuring costs as we complete the transfer of certain of our manufacturing operations to Venture in fiscal year 2015.

Earlier Restructuring Plans

During fiscal year 2012, we incurred $1.4 million in restructuring charges related to earlier plans of restructuring. During fiscal year 2012 we made scheduled payments and/or recorded reductions to our restructuring reserves of $1.2 million, reducing the related lease liabilities and employee severance and retention obligations. We do not expect to incur additional restructuring costs in connection with these previously announced restructuring plans.

For all periods presented, separation payments under the restructuring and cost reduction efforts were accrued and charged to restructuring in the period that the amounts were both determined and communicated to the affected employees.

The following table summarizes the activity related to our restructuring liability for the years ended June 28, 2014, June 29, 2013 and June 30, 2012:



	Lease Cancellations, Commitments and Other Charges			Termination Payments to Employees and Related Costs			Total Accrued Restructuring Charges
	(Thousands)
Balance at July 2, 2011	$	215		$	—		$	215
Charged to restructuring costs	—			7,418			7,418
Paid or written off	—			(5,112		)	(5,112		)
Adjustments	(215		)	—			(215		)
Balance at June 30, 2012	—			2,306			2,306
Charged to restructuring costs	1,555			15,619			17,174
Paid or written off	(1,325		)	(10,612		)	(11,937		)
Adjustments	—			(277		)	(277		)
Balance at June 29, 2013	230			7,036			7,266
Charged to restructuring costs	4,794			12,914			17,708
Paid or written off	(3,125		)	(19,047		)	(22,172		)
Adjustments	(18		)	59			41
Balance at June 28, 2014	$	1,881		$	962		$	2,843
Current portion	1,881			339			2,220
Non-current portion	—			623			623

During fiscal year 2012 we also incurred $3.9 million of expenses in external consulting charges associated with reorganizing the infrastructure associated with our past acquisitions. These costs are recorded in restructuring, acquisition and related (income) expense, net in our consolidated statement of operations for the fiscal year ended June 30, 2012.