Note 11. Restructuring and Related Charges

The Company has initiated various strategic restructuring events primarily intended to reduce its costs, consolidate its operations, rationalize the manufacturing of its products and align its businesses in response to market conditions. As of December 31, 2016 and July 2, 2016, the Company’s total restructuring accrual was $9.4 million and $18.0 million, respectively. During the three and six months ended December 31, 2016 the Company recorded restructuring and related charges of $1.8 million and $1.8 million, respectively. During the three and six months ended January 2, 2016 the Company recorded restructuring and related charges of $1.4 million and $1.8 million, respectively. The Company’s restructuring charges can include severance and benefit costs to eliminate a specified number of positions, facilities and equipment costs to vacate facilities and consolidate operations, and lease termination costs. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over multiple periods.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the three and six months ended December 31, 2016 were as follows (in millions):



	Balance July 2, 2016		Six Months Ended December 31, 2016 Charges (Benefits)			Cash Settlements			Non-cash Settlements and Other Adjustments			Balance December 31, 2016		Three Months Ended December 31, 2016 Charges (Benefits)
Fiscal 2017 Plan
Focused NSE Restructuring Plan (1)	$	—	$	1.4		$	—		$	—		$	1.4	$	1.4
Other Plan (2)	—		0.4			(0.4		)	—			—		0.4
Fiscal 2016 Plan
NE, SE and Shared Services Agile Restructuring Plan (1) (2)	8.6		0.1			(7.3		)	—			1.4		—
NE and SE Agile Restructuring Plan (1)	0.8		—			(0.3		)	—			0.5		—
Fiscal 2015 Plan
NE, SE and Shared Service Separation Restructuring Plan (1)(2)	1.4		(0.2		)	(0.9		)	—			0.3		—
Plans Prior to Fiscal 2015
NE Product Strategy Restructuring Plan (1)	1.5		—			(0.2		)	(0.1		)	1.2		—
NE Lease Restructuring Plan (2)	4.0		0.1			(0.8		)	—			3.3		—
Other Plans (1)(2)	1.7		—			(0.4		)	—			1.3		—
Total	$	18.0	$	1.8		$	(10.3	)	$	(0.1	)	$	9.4	$	1.8

(1) Plan type includes workforce reduction cost.

(2) Plan type includes lease exit cost.

As of December 31, 2016 and July 2, 2016, $3.3 million and $4.7 million, respectively, of our restructuring liability was long-term in nature and included as a component of Other non-current liabilities, with the remaining short-term portion included as a component of Other current liabilities on the Consolidated Balance Sheets.

Fiscal 2017 Plans

Focused NSE Restructuring Plan

During the second quarter of fiscal 2017, as part of the strategy to narrow the scope of the SE business and reducing cost by streamlining NSE operations, the Company entered into a separation agreement with two key executives and as a result, a restructuring charge of $1.4 million was recorded for severance and employee benefits. Payments related to the severance and benefits accrual are expected to be paid in the third quarter of fiscal 2017. Also refer to “Note 18. Subsequent Events” for the approval of the restructuring and global workforce reduction plan in the third quarter of fiscal 2017.

Fiscal 2016 Plans

NE, SE and Shared Service Agile Restructuring Plan

During the fourth quarter of fiscal 2016, Management approved a plan within the NE and SE business segment and Shared Services function for organizational alignment and consolidation as part of Viavi’s continued commitment for a more cost effective organization. As a result approximately 180 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2017.

NE and SE Agile Restructuring Plan

During the second quarter of fiscal 2016, Management approved a plan primarily impacting the NE and SE business segments as part of Viavi’s ongoing commitment for an agile and more efficient operating structure. As a result approximately 40 employees primarily in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2017.

Fiscal 2015 Plans

NE, SE and Shared Service Separation Restructuring Plan

During the second, third and fourth quarters of fiscal 2015, Management approved a plan to eliminate certain positions in its shared services functions in connection with the Company’s plan to split into two separate public companies. Further, Management consolidated its operations, sales and R&D organizations and eliminated positions within the NE and SE segments to align to the Company’s product market strategy and lower manufacturing costs in connection with the separation. As a result, approximately 330 employees in manufacturing, R&D and SG&A functions located in North America, Latin America, Europe and Asia were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2018. During the fourth quarter of fiscal 2015, Management also approved a plan in the NE and SE segment to exit the space in Roanoke, Virginia. As of July 2, 2016, the Company exited the workspace in Roanoke under the plan. The fair value of the remaining contractual obligations as of December 31, 2016 was $0.1 million. Payments related to the Roanoke lease costs are expected to be paid by the end of the fourth quarter of fiscal 2017.

Plans Prior to Fiscal 2015

NE Product Strategy Restructuring Plan

During the third quarter of fiscal 2014, Management approved a NE plan to realign its services, support and product resources in response to market conditions in the mobile assurance market and to increase focus on software products and next generation solutions through acquisitions and R&D. As a result, approximately 60 employees primarily in SG&A and manufacturing functions located in North America, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2020.

NE Lease Restructuring Plan

During the second quarter of fiscal 2014, Management approved a NE plan to exit the remaining space in Germantown, Maryland. As of June 28, 2014, the Company exited the space in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income, as of December 31, 2016 was $3.3 million. Payments related to the Germantown lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

As of December 31, 2016, the restructuring accrual for other plans that commenced prior to fiscal year 2015 was $1.3 million, which consists of immaterial accruals from various restructuring plans.