What changed in Coherent's 10-K for the fiscal year ended June 30, 2026

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

[removed] At any time on or after the ten-year anniversary of the applicable issuance date of the shares of our Series B Preferred Stock and subject to the procedures set forth in the terms of the Series B Preferred Stock, each holder of such shares will have the right to require us to redeem all of such holder's shares for cash at a price per share equal to the sum of the applicable stated value for such shares plus accrued or declared and unpaid dividends on such shares that had not previously been added to such stated value. This may have the effect of reducing funds available for working capital, capital expenditures, acquisitions and other general corporate purposes, thereby negatively affecting the interests of holders of our other capital stock, including our common stock.

Our Series B Preferred Stock has voting rights, allowing holders to vote as one class with our common stock on an as-converted basis, subject to limited exceptions. As a result, the holders of Series B Preferred Stock have the ability to significantly influence the outcome of any matter submitted for the vote of the holders of our common stock. Holders of Series B Preferred Stock are entitled to act separately in their own respective interests with respect to their ownership interests in us and have the [removed] ability to substantially influence all matters that require approval by our shareholders, including the approval of significant corporate transactions. Additionally, we may not undertake certain actions without the prior written approval of the holders of a majority of the issued and outstanding shares of Series B Preferred Stock, voting separately from our common stock. Subject to certain exceptions, we must not: (1) alter or change the rights, preferences or privileges of our Series B Preferred Stock or amend, modify or supplement any provision of our organizational documents in a manner that adversely affects the rights, powers, preferences or privileges of our Series B Preferred Stock; (2) authorize or issue any senior stock (or securities convertible into senior stock), or amend or alter our articles of incorporation to increase the number of authorized or issued shares of our Series B Preferred Stock; (3) decrease the number of authorized shares of our Series B Preferred Stock (other than as permitted pursuant to a conversion, redemption or repurchase by us thereof); (4) issue any shares of our Series B Preferred Stock (other than pursuant to the amended and restated invested agreement, entered into on March 30, 2021, by and between Bain Capital Private Equity, LP ("BCPE") and us (the "Investment Agreement")); and (5) effect any voluntary deregistration or delisting with the NYSE of our common stock.

[removed] On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the "Term A Facility"), with an aggregate principal amount of $850 million, a term loan B credit facility (the "Term B Facility" and, together with the Term A Facility, the "Term Facilities"), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the "Revolving Credit Facility" and, together with the Term Facilities, the "Senior Credit Facilities"), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. On March 31, 2023, Coherent entered into Amendment No. 1 to the Credit Agreement, which replaced the adjusted LIBOR-based rate of interest therein with an adjusted Secured Overnight Financing Rate ("SOFR") based rate of interest. As amended, the Term A Facility and the Revolving Credit Facility each bear interest at an adjusted SOFR rate subject to a 0.10% floor plus a range of 1.75% to 2.50%, based on the Company's total net leverage ratio. The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.85% as of June 30, 2025. On April 2, 2024, Coherent entered into Amendment No. 2 to the Credit Agreement, under which the principal amount of term B loans outstanding under the Credit Agreement (the "Existing Term B Loans") were replaced with an equal amount of new term loans (the "New Term B Loans") having substantially similar terms as the Existing Term B Loans, except with respect to the interest rate applicable to the New Term B Loans and certain other provisions.

On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the "Term A Facility"), with an aggregate principal amount of $850 [removed] million, a term loan B credit facility (the "Term B Facility" and, together with the Term A Facility, the "Term Facilities"), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the "Revolving Credit Facility" and, together with the Term Facilities, the "Senior Credit Facilities"), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. On March 31, 2023, Coherent entered into Amendment No. 1 to the Credit Agreement, which replaced the adjusted LIBOR-based rate of interest therein with an adjusted Secured Overnight Financing Rate ("SOFR") based rate of interest. As amended, the Term A Facility and the Revolving Credit Facility each bear interest at an adjusted SOFR rate subject to a 0.10% floor plus a range of 1.75% to 2.50%, based on the Company's total net leverage ratio. The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.85% as of June 30, 2025. On April 2, 2024, Coherent entered into Amendment No. 2 to the Credit Agreement, under which the principal amount of term B loans outstanding under the Credit Agreement (the "Existing Term B Loans") were replaced with an equal amount of new term loans (the "New Term B Loans") having substantially similar terms as the Existing Term B Loans, except with respect to the interest rate applicable to the New Term B Loans and certain other provisions. On January 2, 2025, Coherent entered into Amendment No. 3 to the Credit Agreement, under which the principal amount of the New Term B Loans were replaced with an equal amount of new term loans (the "New Term B-2 Loans") having substantially similar terms as the New Term B Loans, except with respect to the interest rate applicable to the New Term B-2 Loans and certain other provisions. As further amended, the New Term B-2 Loans bear interest at a SOFR rate (subject to a 0.50% floor) plus 2.00% as of June 30, 2025. The maturity of the New Term B-2 Loans and revolving credit facility remains unchanged. In relation to the Term Facilities, the Company incurred expense of $192 million for the fiscal year ended June 30, 2025, which is included in Interest expense in the Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which together with our interest rate swap (through September 30, 2024), reduced interest expense by $32 million during the fiscal year ended June 30, 2025.

In fiscal 2025, these activities resulted in $107 million of charges primarily for the write-off of property and equipment and ROU assets, employee and contract termination costs. We expect the restructuring actions to be substantially completed by the [removed] end of fiscal 2026. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material.

As of June 30, [removed] 2025, we had approximately [removed] $3.7 billion of outstanding indebtedness on a consolidated basis, including under (i) our [removed] $850 million senior secured [removed] term loan A facility (the "Term A Facility"), (ii) our [removed] $2.8 billion senior secured term loan B facility (the "Term Loan B Facility", and together with the Term A Facility, the "Senior Credit Facilities") and (iii) our $990 million 5.000% senior notes due 2029 (the "2029 Notes"). Additionally, we have [removed] $315 million of undrawn capacity under our senior secured revolving credit facility (the "Revolving Credit Facility"). We may also incur additional indebtedness in the future by entering into new financing arrangements. Our indebtedness could have important consequences for us, including:

In addition, the Term Loan A Facility and Revolving Credit Facility require that the Company maintain (i) a maximum total net leverage ratio, as defined in the [removed] New Credit Agreement, of [removed] 4.00 to 1.00 [removed] from December 31, 2023 through maturity and (ii) an interest coverage ratio, as defined in the Credit Agreement, of at least 2.50 to 1.00.

Research and development. R&D expenses for the fiscal year ended June 30, 2024 were $479 million, or 10% of revenues, compared to $500 million, or 10% of revenues, for fiscal 2023. The decrease of $21 million for fiscal 2024 is due to all three segments and was driven by lower costs due to the consolidation of sites and our efforts to control costs. The R&D expenses are [removed] primarily related to our continued investment in new products and platform technologies in an effort to accelerate our organic growth across all of our businesses, including significant investments in datacom transceivers for AI, indium phosphide and gallium arsenide semiconductor lasers, silicon carbide materials, and lasers for display processing, semiconductor capital equipment, and instrumentation.

As of June 30, [removed] 2025, in the ordinary course of business, we had total estimated purchase commitments from vendors of approximately [removed] $1,092 million. In addition, as of June 30, [removed] 2025, we had obligations under our operating leases of approximately [removed] $263 million, $58 million of which will be paid in the fiscal year [removed] 2026.

The Company believes existing cash, cash flow from operations, and available borrowing capacity from its [removed] Senior Credit Facilities will be sufficient to fund its needs for working capital, capital expenditures, repayment of scheduled long-term borrowings and lease obligations, investments in R&D, and internal and external growth objectives at least through [removed] fiscal year 2026.

On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the "Term A Facility"), with an aggregate principal amount of $850 million, a term loan B credit facility (the "Term B Facility" and, together with the Term A Facility, the "Term Facilities"), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the "Revolving Credit Facility" and, together with the Term Facilities, the "Senior Credit Facilities"), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. On March 31, 2023, Coherent entered into Amendment No. 1 to the Credit Agreement, which replaced the adjusted LIBOR-based rate of interest therein with an adjusted Secured Overnight Financing Rate ("SOFR") based rate of interest. As amended, the Term A Facility and the Revolving Credit Facility each bear interest at an adjusted SOFR rate subject to a 0.10% floor plus a range of 1.75% to 2.50%, based on the Company's total net leverage ratio. The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.85% as of June 30, 2025. On April 2, 2024, Coherent entered into Amendment No. 2 to the Credit Agreement, under which the principal amount of term B loans outstanding under the Credit Agreement (the "Existing Term B Loans") were replaced with an equal amount of new term loans (the "New Term B Loans") having substantially similar terms as the Existing Term B Loans, except with respect to the interest rate applicable to the New Term B Loans and certain other provisions. On [removed] January 2, 2025, Coherent entered into Amendment No. [removed] 3 to the Credit [removed] Agreement, under which the principal amount of the New Term B Loans were replaced with [removed] an equal amount of new term loans (the "New Term B-2 Loans") having substantially similar terms as the New Term B Loans, except with respect to the interest rate applicable to the New Term B-2 Loans and certain other provisions. As further amended, the New Term B-2 Loans bear interest at [removed] a SOFR rate [removed] (subject to a [removed] 0.50% floor) plus 2.00% as of June 30, [removed] 2025. The maturity of the New Term B-2 Loans and revolving credit facility remains unchanged. In relation to the [removed] Term Facilities, the Company incurred expense of $192 million for the fiscal year ended June 30, 2025, which is included in Interest expense in the Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which together with our interest rate [removed] swap (through September 30, 2024), reduced interest expense by $32 million during the fiscal year ended June 30, [removed] 2025.

Net cash provided by operating activities was [removed] $546 million and $634 million for the [removed] fiscal years ended June 30, [removed] 2024 and 2023, respectively. The decrease in cash flows provided by operating activities during the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was primarily due to lower non-cash adjustments partially offset by [removed] lower losses.

Revenues for the year ended June 30, [removed] 2024 for Networking decreased 2% to $2,296 million, compared to [removed] $2,341 million for [removed] fiscal year 2023. The decrease in revenues of $45 million during fiscal 2024 was primarily due to decreased volumes year-over-year in the telecom vertical as our communications service provider customers continue to work down their inventory levels with reduced capital spending, partially offset by increases in the datacom vertical driven by increased AI-related datacom transceivers shipments, both within the communications market.

[removed] Segment profit for the fiscal year ended June 30, 2024 for Lasers decreased 24%, with segment profit of $206.8 million in the current year, compared to segment profit of $270.6 million for fiscal 2023. The lower segment profit was driven by lower revenues and lower gross margin percentage, due to less favorable mix within the industrial and instrumentation markets, the unfavorable impact of fixed manufacturing costs with lower revenues and higher inventory provisions.

As a global company with a substantial and diversified manufacturing [removed] footprint our diverse manufacturing footprint provides us with some insulation against these tariffs, trade sanctions, and other geopolitical challenges. Our [removed] geographically diverse supply chain [removed] combined with the internal production [removed] of many of our most critical technology in-feeds provides adaptability and optionality that benefits our customers. As the tariff, trade sanctions, and export restrictions become more clear, we expect these attributes will enable us to find opportunities to moderate their impact. However, we are in a dynamic geopolitical environment, and we are not immune to any sustained disruption in global trade conditions [removed] which may create future headwinds for the Company and could result in revenue reduction, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, [removed] operational results and cash flows.

Net cash provided by financing activities was [removed] $758 million for the year ended June 30, [removed] 2024 compared to net cash [removed] provided by financing activities of $3,554 million for the [removed] year ended June 30, 2023. Financing inflows in fiscal 2024 included the $1.0 billion contribution from noncontrolling interests and proceeds from employee stock purchases, partially offset by payments on existing debt and equity issuance costs related to the [removed] contribution from noncontrolling interests. Cash inflows for fiscal 2023 were from borrowings under the New Term Facilities, defined below, as well the net proceeds from the issuance of Coherent's Series B-2 Convertible Preferred Stock. Financing outflows included payments to settle the Company's existing senior credit facilities.

Gross margin. Gross margin for the year ended June 30, [removed] 2024 was $1,456 million, or [removed] 31%, of total revenues, compared to [removed] $1,618 million, or [removed] 31% of total revenues, for [removed] fiscal 2023, a slight decrease of 43 basis points. [removed] During fiscal 2023, the Company recorded $158 million in Cost of goods sold related to the fair value adjustment on acquired inventory from the acquisition of Coherent, Inc. ("Merger"). Gross margin, excluding the fair value adjustment on acquired inventory, decreased 349 basis points for fiscal 2024 compared to fiscal 2023 primarily due to lower revenues, less favorable sales mix especially in the datacom vertical in the communications market, underutilized operating capacity in several plants, shut down costs related to site consolidations, lower yields in the datacom vertical, higher costs related to product lines that are being exited, higher inventory provisions and the unfavorable foreign exchange rates.

Revenues and segment profit for our reportable segments are discussed below. During the first quarter of fiscal 2025 as a result of a new CEO joining the Company in the fourth quarter of fiscal 2024, our Chief Operating Decision Maker ("CODM") implemented changes in the measure he uses to allocate resources and assess performance. Our CODM now evaluates each segment's performance and allocates resources based on segment revenue and segment profit, instead of operating income, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment. Segment profit includes operating expenses directly managed by operating segments, including research and development, direct sales, marketing and administrative expenses. Segment profit does not include share-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring charges, impairment charges on assets held-for-sale, and certain other charges. Additionally, effective the first quarter of fiscal 2025, we no longer allocate Corporate strategic research and development, strategic marketing and sales expenses and shared general and administrative expenses, as these expenses are not directly attributable to our operating segments. Management believes segment profit to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. [removed] See Note 14. Segment and Geographic Reporting to the Company's Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company's reportable segments and for the reconciliation of the Company's segment profit to earnings (loss) before income taxes, which is incorporated herein by reference.

[removed] Comparative prior year segment information has been recast to conform to the new segment profitability measure. The change in our operating [removed] segment measure had no impact on our previously reported consolidated results of operations, financial condition, or cash flows.

[removed] Throughout fiscal 2025, we experienced stronger demand in our Communications market. The increase in the number of hyperscale and other cloud customers building AI datacenters and in the number and size of their AI datacenter [removed] buildouts drove demand for our datacenter transceivers. [removed] Strong demand for our new ZR/ZR+ [removed] transceiver products along with growing demand for traditional telecom transport products drove [removed] increased volumes for our telecom and other communications solutions.

Revenues for the fiscal year ended June 30, [removed] 2024 for Materials decreased 25% to $1,017 million, compared to revenues of [removed] $1,350 million for fiscal year 2023. The decrease in revenues during [removed] fiscal 2024 was primarily [removed] related to a decrease of $265 million in the electronics market mostly due to lower volumes in our consumer electronics vertical largely due to a design change implemented by a significant electronics customer, partially offset by higher shipments in our automotive vertical driven by electric vehicles, as well as decreases in shipments to a lesser extent derived from macroeconomic conditions in our precision manufacturing and semiconductor capital equipment verticals in the industrial market.

Segment profit for the fiscal year ended June 30, [removed] 2024 for Materials decreased 24%, with segment profit of [removed] $297 million in fiscal 2023, compared to segment profit of $392 million for fiscal year 2023. The decrease in segment profit during fiscal 2024 was driven by $333 million lower revenues and higher costs for sites being shutdown.

[removed] From a segment perspective, Networking revenues increased $1,126 million year-over-year, due to strong AI datacenter demand in our communications market and the growth in telecom. Lasers revenue increased $40 million year-over-year reflecting higher volumes of annealing lasers in our display capital equipment market partially offset by continued soft demand in precision manufacturing. Materials decreased $63 million year-over-year, primarily due to [removed] softness in the Silicon Carbide business.

The Company reports its financial results in the following [removed] three designated segments: (i) [removed] Networking, (ii) Materials, and (iii) Lasers.

In early 2025, the United States implemented significant new tariffs [removed] on foreign imports impacting multiple countries, commodities and industries, and these new tariffs and export restrictions also prompted retaliatory [removed] tariffs and export restrictions from certain [removed] countries. As of June 2025, certain tariffs and [removed] retaliatory tariffs have been delayed, but a number of the new tariffs remain in effect, including significant tariffs and trade sanctions between the United States and China. China has also restricted the export of certain rare earth minerals which are used in our products.

Segment profit for the year ended June 30, [removed] 2024 for Networking decreased 24% to $354 million, compared to segment profit of [removed] $465 million for fiscal year 2023. The decrease in segment profit for fiscal [removed] 2024 was driven by [removed] $45 million lower revenues and lower margin percentage. The margin percentage was lower than fiscal 2023 due to less favorable sales mix in the datacom vertical, the impact of fixed manufacturing costs as a percentage of revenues on lower revenues in the telecom vertical, lower yields in the datacom vertical and higher inventory provisions related to products that are being exited.

Impairment of Assets Held-for-Sale

Segment profit for the fiscal year ended June 30, 2025 for [removed] Materials increased 19%, with segment profit of [removed] $355 million in [removed] the current year, compared to segment profit of [removed] $297 million last fiscal year. The increase in segment profit during [removed] the current fiscal year was primarily driven by favorable product mix, improvements in pricing [removed] optimization and lower [removed] manufacturing costs, partially offset by higher R&D investments in our product portfolio and higher variable compensation.

Research and development. [removed] R&D expenses for the [removed] fiscal year ended June 30, [removed] 2024 were $479 million, or 10% of revenues, compared to [removed] $500 million, or 10% of revenues, for [removed] fiscal 2023. The decrease of $21 million for fiscal 2024 is due to all three segments and was driven by lower costs due to the consolidation of sites and our efforts to control costs. The R&D expenses are primarily related to our continued investment in new products and platform technologies in an effort to accelerate our organic growth across all of our businesses, including significant investments in datacom transceivers for AI, indium phosphide and gallium arsenide semiconductor lasers, silicon carbide materials, and lasers for display processing, semiconductor capital equipment, and instrumentation.

Revenues for the fiscal year ended June 30, 2025 for [removed] Materials decreased 6% to $954 million, compared to revenues of [removed] $1,017 million last fiscal year. The decrease in revenues during [removed] the current fiscal year was primarily related to [removed] decreases of $71 million in the electronics market primarily due to weak automotive and Silicon Carbide end market demand and [removed] $29 million in the industrial [removed] market due to macroeconomic conditions, partially offset by [removed] $33 million higher [removed] volumes in the datacom vertical within the communications market.

Income taxes. Our effective income tax rate for fiscal [removed] 2024 was (8)%, compared to an effective tax rate of [removed] 27% for fiscal 2023. The difference between our effective tax rate and the U.S. statutory rate of 21% was [removed] due to the establishment of a valuation allowance related to [removed] certain US deferred tax assets.

In fiscal 2025, these activities resulted in $107 million of charges primarily for the write-off of property and equipment and ROU assets, employee and contract termination costs. [removed] We expect the restructuring actions to be substantially completed by the end of fiscal 2026. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material.

Segment profit for the year ended June 30, 2025 for [removed] Networking increased 82% to $644 million, compared to segment profit of [removed] $354 million last fiscal year. The increase in segment profit for fiscal 2025 was driven by [removed] $1,125 million higher revenues partially offset by higher R&D investments in our product portfolio.

Net cash used in investing activities was [removed] $0.4 billion and $5.9 billion for the [removed] fiscal years ended June 30, [removed] 2024 and 2023, respectively. In fiscal 2023, $5.5 billion was used to fund the Merger. Cash used to fund capital [removed] expenditures decreased by $89 million during the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023.

Revenues for the year ended June 30, [removed] 2025 for Networking increased 49% to $3,421 million, compared to [removed] $2,296 million for last fiscal year. The increase in revenues of [removed] $1,125 million during fiscal [removed] 2025 was primarily [removed] due to increased AI datacenter related revenue in our communications market resulting from increased volumes in the datacom vertical and growth in the telecom vertical due to increased demand [removed] in data center interconnect and the telecom transport market.

Revenues and segment profit for [removed] our reportable segments are discussed below. [removed] During the first quarter of fiscal 2025 as a result of a new CEO joining the Company in the fourth quarter of fiscal 2024, our Chief Operating Decision Maker ("CODM") implemented changes in the measure he uses to allocate resources and assess performance. Our CODM [removed] now evaluates each segment's [removed] performance and allocates resources based on segment revenue and segment profit, [removed] instead of operating income, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment. Segment profit includes operating expenses directly managed by operating segments, including research and development, direct sales, marketing and administrative expenses. Segment profit does not include share-based compensation, acquisition or integration related costs, amortization and impairment of [removed] acquisition-related intangible assets, restructuring charges, impairment charges on assets held-for-sale, and certain other charges. Additionally, [removed] effective the first quarter of fiscal 2025, we no longer allocate Corporate strategic research and development, strategic marketing and sales expenses and shared general and administrative expenses, as these expenses are not directly attributable to our operating segments. Management believes segment profit to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 14. Segment and Geographic Reporting to the Company's Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company's reportable segments and for the reconciliation of the Company's segment profit to earnings (loss) before income taxes, which is incorporated herein by reference.

[removed] Comparative prior year segment information has been recast to conform to the new segment profitability measure. The change in our operating [removed] segment measure had no impact on our previously reported consolidated results of operations, financial condition, or cash flows.

Revenues increased [removed] $1,162 million, or [removed] 51%, in the [removed] communications market, with increases in datacom driven primarily by ongoing strong AI datacenter demand and growth in our telecom revenue due to higher demand in the data center interconnect and the telecom transport [removed] markets. In our [removed] remaining markets, revenue decreased [removed] $60 million, or [removed] 2%. Within these markets, revenue growth in display capital equipment and in semiconductor capital equipment volumes was more than offset by soft demand due to [removed] the macroeconomic environment in broad-based industrial end markets, including decreases in demand in our Silicon Carbide business, which was consistent with softer end market demand in the automotive market.

Restructuring [removed] Charges. Restructuring charges [removed] related to our 2023 Plan for the year ended June 30, [removed] 2024 were $27 million, or 1% of revenues, and consist primarily of [removed] accelerated depreciation, equipment write-offs and move [removed] costs due to the consolidation of certain manufacturing sites. [removed] Restructuring charges related to our 2023 Plan for the year ended June 30, 2023 were $119 million, or 2% of revenues, and consisted of severance and equipment write-offs, net of reimbursements, due to the consolidation of certain manufacturing [removed] sites. See Note 20. Restructuring Plans to the Company's Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information.

Selling, general and administrative. Selling, general and administrative ("SG&A") expenses for the year ended June 30, [removed] 2024 were $854 million, or [removed] 18% of revenues, compared to [removed] $1,037 million, or [removed] 20% of revenues, for [removed] fiscal 2023. The decrease in SG&A as a percentage of revenue for fiscal 2024 compared to fiscal 2023 was primarily the result of lower amortization expense of $117 million resulting from (1) the Merger, as backlog intangibles were fully amortized in fiscal 2023, (2) lower amortization for tradenames impaired in the fourth quarter of fiscal 2023, and (3) $31 million charges for impairment of certain tradename and customer list intangibles assets in fiscal 2023. In addition, SG&A decreased due to lower charges related to the Merger, including $39 million lower transaction fees and financing, and lower one-time expense of $18 million related to share-based compensation resulting from the Merger, as well as lower costs due to the consolidation of sites and our efforts to control costs, partially offset by [removed] the impact of lower revenues.

In the fourth quarter of fiscal 2025, management entered into non-binding agreements to sell several entities. As a result of classifying these entities as held-for-sale, we recorded non-cash impairment charges of $85 million [removed] to Impairment of assets held-for-sale in our Consolidated Statements of Earnings (Loss) [removed] in the fourth quarter of fiscal 2025 to reduce [removed] our carrying value in these entities to fair value. [removed] See Note 21. Assets Held-for-Sale to the Company's Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information.

Interest and other, net. Interest and other, net for the year ended June 30, [removed] 2024 was expense of $244 million compared to expense of $318 million for fiscal 2023, a decrease of [removed] $75 million. Included in Interest and other, net, were interest expense on borrowings, [removed] Merger financing fees (fiscal 2023), foreign currency gains and losses, amortization of debt issuance costs, equity gains and losses from unconsolidated investments, and interest income on [removed] excess cash balances. The decrease [removed] of $75 million in comparison to fiscal 2023 was driven by driven by $39 million incremental interest and dividend income due to increases in interest and dividend rates earned on investments, as well as the increase in restricted cash balances and $35 million incurred in the prior year related to financing of the Merger. In addition, interest expense increased $2 million due to higher interest rates on our Term facilities, net of higher benefit from our interest rate cap and swap.

We test goodwill for impairment annually, and [removed] when events or changes in circumstances indicate that goodwill might be impaired. The [removed] determination of whether goodwill is impaired requires us to make judgments based on long-term projections of [removed] future performance. Estimates of fair value are based on our projection of revenues, operating costs and cash [removed] flows of each reporting unit, considering historical and anticipated results and general economic and market conditions and [removed] their projections. For fiscal year [removed] 2025, we performed a quantitative [removed] assessment. The fair values of the reporting units were determined using a discounted cash flow analysis [removed] with projected financial information based on [removed] our most recently completed long-term strategic [removed] planning processes and also considers the current financial performance compared to our prior projections of the reporting units, as well as a market analysis. Determination of the fair value requires discretion and the use of estimates by management. If actual results are not consistent with management's estimates and assumptions, a material goodwill impairment charge could occur, which could have a material adverse effect on our consolidated financial statements.

The OECD, a global policy forum, introduced a framework to implement a global minimum tax of 15% [removed] which would apply to multinational [removed] corporations, referred to as Pillar Two. Nearly all OECD member jurisdictions [removed] have agreed in principle to adopt these provisions and numerous jurisdictions [removed] have enacted legislation, including jurisdictions where the Company [removed] operates, with a subset of the rules becoming effective for our fiscal year beginning on July 1, 2024, and the remaining rules becoming effective for our fiscal year beginning on July 1, 2025, or in later periods. The Company [removed] is continuing to analyze the [removed] Pillar Two rules as countries implement additional legislation. Implementation of the OECD proposal may have a material impact on the Company's Consolidated Financial Statements in the future.

In fiscal 2025, these activities resulted in charges of $53 million, primarily for impairment losses associated with the sale of our Newton Aycliffe business, impairment of right-of-use ("ROU") assets, employee termination costs, site move costs and accelerated depreciation. In fiscal 2024, these activities resulted in [removed] charges of $27 million, primarily for [removed] accelerated depreciation, the write-off of property and equipment, and site move costs. [removed] In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. See Note [removed] 20. Restructuring Plans [removed] to the Company's Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information.

Gross margin. Gross margin for the year ended June 30, 2025 was $2,043 million, or 35%, of total revenues, compared to $1,456 million, or 31% of total revenues, for fiscal 2024, an increase of 424 basis points. The increase as a percent of revenue for fiscal 2025 was primarily due to higher revenue volume particularly in the communications market in the [removed] Networking segment, improvements in both pricing optimization and cost reductions, partially offset by unfavorable mix and foreign exchange impacts. Cost reductions included both lower manufacturing costs and improvements in manufacturing yields.