Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is set forth in our Consolidated Financial Statements contained in this Annual Report on Form 10-K. Specific financial statements can be found at the pages listed below:

			Page
Management’s Report on Internal Control Over Financial Reporting			64
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			65
Consolidated Balance Sheets			68
Consolidated Statements of Earnings (Loss)			69
Consolidated Statements of Comprehensive Income (Loss)			70
Consolidated Statements of Shareholders’ Equity and Mezzanine Equity			71
Consolidated Statements of Cash Flows			72
Notes to Consolidated Financial Statements			74

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s Responsibility for Preparation of the Financial Statements

Management is responsible for the preparation of the Consolidated Financial Statements included in this Annual Report on Form 10-K. The Consolidated Financial Statements were prepared in accordance with the accounting principles generally accepted in the United States of America and include amounts that are based on the best estimates and judgments of management. The other financial information contained in this Annual Report on Form 10-K is consistent with the Consolidated Financial Statements.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-159f) and 15(d)-15(f). The Company’s internal control system is designed to provide reasonable assurance concerning the reliability of the financial data used in the preparation of the Company’s Consolidated Financial Statements, as well as reasonable assurance with respect to safeguarding the Company’s assets from unauthorized use or disposition.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement presentation and other results of such systems.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2024. In making this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Management’s evaluation included reviewing the documentation of its controls, evaluating the design effectiveness of controls and testing their operating effectiveness. Based on the evaluation, management concluded that as of June 30, 2024, the Company’s internal controls over financial reporting were effective.

Ernst & Young LLP, an independent registered public accounting firm, has issued its report on the effectiveness of our internal control over financial reporting as of June 30, 2024, which report is included herein.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Coherent Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Coherent Corp. and subsidiaries (the Company) as of June 30, 2024 and 2023, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and mezzanine equity and cash flows for each of the three years in the period ended June 30, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated August 16, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - Lasers Reporting Unit
Description of the Matter			At June 30, 2024, the balance of the Company’s goodwill related to the Lasers reporting unit was $3.2 billion. As discussed in Note 1 to the consolidated financial statements, goodwill is reviewed annually for impairment, or more frequently if impairment indicators arise. The assessment of goodwill for impairment requires a comparison of the fair value of each reporting unit that has goodwill associated with its operations to its carrying amount, including goodwill. If the Company’s carrying amount of a reporting unit exceeds its fair value, an impairment loss would be measured as the excess of the carrying value over the calculated fair value. Auditing the Company’s annual goodwill impairment test for the Lasers reporting unit is complex because it involves making assumptions about the timing and amount of the forecasted future net cash flows of the reporting unit. The fair value estimate can be sensitive to significant assumptions such as revenue and the selected discount rate, which is based on a risk-adjusted weighted average cost of capital. These significant assumptions are forward looking and could be impacted by future economic conditions.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment evaluation process, including controls over management’s review of the assumptions described above. Our audit procedures to test management’s impairment evaluation of the Lasers reporting unit included, among others, assessing the valuation methodology and assumptions discussed above, and the underlying data used to develop such assumptions. For example, we compared certain assumptions to current industry, market and economic trends. Where appropriate, we evaluated whether changes to the Company’s business and other factors would affect the assumptions. We also assessed the historical accuracy of management’s estimates and performed independent sensitivity analyses. We involved our valuation specialists to assist us in evaluating the methodologies and auditing the assumptions used to calculate the estimated fair value of the Lasers reporting unit.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.

Pittsburgh, Pennsylvania

August 16, 2024

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Coherent Corp.

Opinion on Internal Control Over Financial Reporting

We have audited Coherent Corp. and subsidiaries’ internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Coherent Corp. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2024 and 2023, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and mezzanine equity and cash flows for each of the three years in the period ended June 30, 2024, and the related notes and schedule listed in the Index at Item 15(a)(2) and our report dated August 16, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

August 16, 2024

Coherent Corp. and Subsidiaries

Consolidated Balance Sheets

($000)

June 30,						2024						2023
Assets
Current Assets
Cash and cash equivalents						$	926,033					$	821,310
Restricted cash, current						174,008						12,023
Accounts receivable - less allowance for doubtful accounts of $9,511 and $8,005 at June 30, 2024 and June 30, 2023, respectively						848,542						901,531
Inventories						1,286,404						1,272,333
Prepaid and refundable income taxes						26,909						28,271
Prepaid and other current assets						398,203						216,530
Total Current Assets						3,660,099						3,251,998
Property, plant & equipment, net						1,817,259						1,782,035
Goodwill						4,464,329						4,512,700
Other intangible assets, net						3,503,247						3,814,684
Deferred income taxes						40,966						37,748
Restricted cash, non-current						689,645						4,233
Other assets						313,089						307,735
Total Assets						$	14,488,634					$	13,711,133
Liabilities. Mezzanine Equity and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt						$	73,770					$	74,836
Accounts payable						631,548						405,308
Accrued compensation and benefits						212,458						175,564
Operating lease current liabilities						40,580						38,271
Accrued income taxes payable						90,705						74,488
Other accrued liabilities						294,706						310,281
Total Current Liabilities						1,343,767						1,078,748
Long-term debt						4,026,448						4,234,962
Deferred income taxes						784,374						780,307
Operating lease liabilities						162,355						140,748
Other liabilities						225,411						247,402
Total Liabilities						6,542,355						6,482,167
Mezzanine Equity
Series B redeemable convertible preferred stock, no par value, 5% cumulative; issued - 215,000 shares at June 30, 2024 and June 30, 2023; redemption value - $2,427,860 and $2,309,966 as of June 30, 2024 and June 30, 2023, respectively						2,364,772						2,241,415
Shareholders’ Equity
Series A preferred stock, no par value, 6% cumulative; issued - 0 and 2,300,000 shares at June 30, 2024 and June 30, 2023, respectively						—						445,319
Common stock, no par value; authorized - 300,000,000 shares; issued - 168,406,323 shares at June 30, 2024; issued - 154,719,413 shares at June 30, 2023						4,857,657						3,781,211
Accumulated other comprehensive income (AOCI)						2,640						109,726
Retained earnings						664,940						944,416
						5,525,237						5,280,672
Treasury stock, at cost - 15,626,740 shares at June 30, 2024 and 15,135,711 shares at June 30, 2023						(315,122)						(293,121)
Total Coherent Corp. Shareholders’ Equity						5,210,115						4,987,551
Noncontrolling interests (NCI)						371,392						—
Total Equity						5,581,507						4,987,551
Total Liabilities, Mezzanine Equity and Equity						$	14,488,634					$	13,711,133

See Notes to Consolidated Financial Statements

Coherent Corp. and Subsidiaries

Consolidated Statements of Earnings (Loss)

Year Ended June 30,						2024						2023						2022
($000, except per share data)
Revenues						$	4,707,688					$	5,160,100					$	3,316,616
Costs, Expenses and Other Expense (Income)
Cost of goods sold						3,251,724						3,541,817						2,051,120
Internal research and development						478,788						499,603						377,106
Selling, general and administrative						854,001						1,036,699						474,096
Restructuring charges						27,054						119,101						—
Interest expense						288,475						286,872						121,254
Other (income) expense, net						(44,707)						31,566						11,233
Total Costs, Expenses and Other Expense						4,855,335						5,515,658						3,034,809
Earnings (Loss) Before Income Taxes						(147,647)						(355,558)						281,807
Income Tax Expense (Benefit)						11,117						(96,100)						47,048
Net Earnings (Loss)						(158,764)						(259,458)						234,759
Net Loss Attributable to Noncontrolling Interests						(2,610)						—						—
Net Earnings (Loss) Attributable to Coherent Corp.						(156,154)						(259,458)						234,759
Less: Dividends on Preferred Stock						123,357						144,212						68,225
Net Earnings (Loss) Available to the Common Shareholders						$	(279,511)					$	(403,670)					$	166,534
Basic Earnings (Loss) Per Share						$	(1.84)					$	(2.93)					$	1.57
Diluted Earnings (Loss) Per Share						$	(1.84)					$	(2.93)					$	1.45

See Notes to Consolidated Financial Statements

Coherent Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Year Ended June 30,						2024						2023						2022
($000)
Net Earnings (Loss)						$	(158,764)					$	(259,458)					$	234,759
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						(81,889)						87,927						(89,967)
Change in fair value of interest rate swap, net of taxes of ($6,268), $2,122, and $11,901 for the years ended June 30, 2024, 2023, and 2022, respectively						(22,885)						7,749						43,508
Change in fair value of interest rate cap, net of taxes of $800, $5,934 and $3,818 for the years ended June 30, 2024, 2023 and 2022, respectively						2,689						22,322						14,306
Pension adjustment, net of taxes of ($1,718), ($1,682) and $3,856 for the years ended June 30, 2024, 2023, and 2022, respectively						(7,443)						(6,105)						15,719
Other comprehensive income (loss)						(109,528)						111,893						(16,434)
Comprehensive Income (Loss)						(268,292)						(147,565)						218,325
Comprehensive Loss Attributable to Noncontrolling Interests						(2,610)						—						—
Foreign Currency Translation Adjustments Attributable to Noncontrolling Interests						429						—						—
Comprehensive Income (Loss) Attributable to Coherent Corp.						$	(266,111)					$	(147,565)					$	218,325

See Notes to Consolidated Financial Statements

Coherent Corp. and Subsidiaries

Consolidated Statements of Shareholders’ Equity and Mezzanine Equity

						Common Stock												Preferred Stock																								Treasury Stock																								Mezzanine Equity
						Shares						Amount						Shares						Amount						AOCI						Retained Earnings						Shares						Amount						NCI						Total						Preferred Shares						Amount
(000, including share amounts)
Balance - June 30, 2021						119,127						$	2,028,273					2,300						$	445,319					$	14,267					$	1,136,777					(13,640)						$	(218,466)					$	—					$	3,406,170					75						$	726,178
Share-based and deferred compensation activities						1,796						92,667						—						—						—						—						(333)						(20,888)						—						71,779						—						—
Net earnings						—						—						—						—						—						234,759						—						—						—						234,759						—						—
Foreign currency translation adjustments						—						—						—						—						(89,967)						—						—						—						—						(89,967)						—						—
Change in fair value of interest rate swap, net of taxes of $11,901						—						—						—						—						43,508						—						—						—						—						43,508						—						—
Change in fair value of interest rate cap, net of taxes of $3,818						—						—						—						—						14,306						—						—						—						—						14,306						—						—
Pension adjustment, net of taxes of $3,856						—						—						—						—						15,719						—						—						—						—						15,719						—						—
Dividends						—						—						—						—						—						(68,327)						—						—						—						(68,327)						—						40,625
Adjustments for ASU 2020-06						—						(56,388)						—						—						—						44,916						—						—						—						(11,472)						—						—
Balance - June 30, 2022						120,923						$	2,064,552					2,300						$	445,319					$	(2,167)					$	1,348,125					(13,973)						$	(239,354)					$	—					$	3,616,475					75						$	766,803
Share-based and deferred compensation activities						4,029						171,128						—						—						—						—						(1,164)						(53,767)						—						117,361						—						—
Coherent acquisition						22,588						1,207,591						—						—						—						—						—						—						—						1,207,591						—						—
Convertible debt conversions						7,181						337,940						—						—						—						—						—						—						—						337,940						—						—
Net loss						—						—						—						—						—						(259,458)						—						—						—						(259,458)						—						—
Foreign currency translation adjustments						—						—						—						—						87,927						—						—						—						—						87,927						—						—
Change in fair value of interest rate swap, net of taxes of $2,122						—						—						—						—						7,749						—						—						—						—						7,749						—						—
Change in fair value of interest rate cap, net of taxes of $5,934						—						—						—						—						22,322						—						—						—						—						22,322						—						—
Issuance of Series B shares						—						—						—						—						—						—						—						—						—						—						140						1,358,000
Pension adjustment, net of taxes of $(1,682)						—						—						—						—						(6,105)						—						—						—						—						(6,105)						—						—
Dividends						—						—						—						—						—						(144,251)						—						—						—						(144,251)						—						116,612
Balance - June 30, 2023						154,721						$	3,781,211					2,300						$	445,319					$	109,726					$	944,416					(15,137)						$	(293,121)					$	—					$	4,987,551					215						$	2,241,415
Share-based and deferred compensation activities						3,447						166,800						—						—						—						—						(492)						(22,001)						—						144,799						—						—
Conversion of Series A preferred stock						10,240						445,319						(2,300)						(445,319)						—						—						—						—						—						—						—						—
Net loss						—						—						—						—						—						(156,154)						—						—						(2,610)						(158,764)						—						—
Foreign currency translation adjustments						—						—						—						—						(82,318)						—						—						—						429						(81,889)						—						—
Change in fair value of interest rate swap, net of taxes of $(6,268)						—						—						—						—						(22,885)						—						—						—						—						(22,885)						—						—
Change in fair value of interest rate cap, net of taxes of $800						—						—						—						—						2,689						—						—						—						—						2,689						—						—
Pension adjustment, net of taxes of $(1,718)						—						—						—						—						(7,443)						—						—						—						—						(7,443)						—						—
Dividends						—						—						—						—						—						(123,322)						—						—						—						(123,322)						—						123,357
Sale of shares to noncontrolling interests, net of issuance costs of $31,840 and taxes of $127,389						—						464,327						—						—						2,871						—						—						—						373,573						840,771						—						—
Balance - June 30, 2024						168,408						$	4,857,657					—						$	—					$	2,640					$	664,940					(15,629)						$	(315,122)					$	371,392					$	5,581,507					215						$	2,364,772

See Notes to Consolidated Financial Statements

Coherent Corp. and Subsidiaries

Consolidated Statements of Cash Flows

Year Ended June 30,						2024						2023						2022
($000)
Cash Flows from Operating Activities
Net earnings (loss)						$	(158,764)					$	(259,458)					$	234,759
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation						271,601						267,562						207,132
Amortization						288,160						414,125						79,647
Share-based compensation expense						126,049						148,872						73,214
Non-cash restructuring charges						16,557						119,456						—
Amortization of discount on convertible debt and debt issuance costs						17,652						19,850						18,807
Losses on disposals of property, plant & equipment						758						2,440						617
Unrealized losses (gains) on foreign currency remeasurements and transactions						(10,556)						(3,549)						1,167
Loss (earnings) from equity investments						51						66						(2,190)
Deferred income taxes						(112,096)						(206,822)						(8,154)
Loss on debt extinguishment						1,978						6,855						—
Increase (decrease) in cash from changes in (net of effects of acquisitions):
Accounts receivable						60,581						68,315						(55,193)
Inventories						(23,196)						174,136						(230,882)
Accounts payable						205,044						(83,330)						97,053
Contract liabilities						(72,818)						(18,957)						26,614
Income taxes						12,251						28,651						17,961
Accrued compensation and benefits						36,894						(60,595)						(9,382)
Other operating net assets (liabilities)						(114,415)						16,408						(37,838)
Net cash provided by operating activities						545,731						634,025						413,332
Cash Flows from Investing Activities
Additions to property, plant & equipment						(346,816)						(436,060)						(314,332)
Purchases of businesses, net of cash acquired						—						(5,488,556)						—
Other investing activities						(3,897)						(4,010)						(5,750)
Net cash used in investing activities						(350,713)						(5,928,626)						(320,082)
Cash Flows from Financing Activities
Sale of shares to noncontrolling interests						1,000,000						—						—
Proceeds from borrowings of Term B Facility						—						2,800,000						—
Proceeds from issuance of Series B preferred shares						—						1,400,000						—
Proceeds from borrowings of Term A Facility						—						850,000						—
Proceeds from borrowings of revolving credit facilities						18,966						65,000						—
Proceeds from issuance of Senior Notes						—						—						990,000
Payments on existing debt						(228,802)						(1,265,175)						(62,050)
Payments on borrowings under Revolving Credit Facilities						(19,027)						(65,000)						—
Payments on convertible notes						—						(3,561)						—
Payment of Finisar Notes						—						—						(14,888)
Debt issuance costs						—						(126,516)						(10,197)
Equity issuance costs						(31,840)						(42,000)						—
Proceeds from exercises of stock options and purchases of stock under employee stock purchase plan						42,297						24,167						17,858
Payments in satisfaction of employees’ minimum tax obligations						(22,315)						(54,172)						(21,249)
Cash dividends paid						—						(27,600)						(34,508)
Other financing activities						(1,007)						(1,124)						(2,013)
Net cash provided by financing activities						758,272						3,554,019						862,953
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						(1,170)						(4,223)						34,276
Net increase (decrease) in cash and cash equivalents, and restricted cash						952,120						(1,744,805)						990,479
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period						837,566						2,582,371						1,591,892
Cash, Cash Equivalents, and Restricted Cash at End of Period						$	1,789,686					$	837,566					$	2,582,371

Supplemental Information
Cash paid for interest						$	312,879					$	282,835					$	57,314
Cash paid for income taxes						$	97,295					$	89,567					$	50,000
Non-Cash Investing and Financing Activities:
Additions to property, plant & equipment included in accounts payable						$	63,286					$	36,777					$	84,890
Conversion of Series A preferred stock to common stock						$	445,319					$	—					$	—

See Notes to Consolidated Financial Statements

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows. At June 30, 2024, we had $864 million of restricted cash.

Year Ended June 30,						2024						2023						2022
($000)
Cash and cash equivalents						$	926,033					$	821,310					$	2,582,371
Restricted cash, current						174,008						12,023						—
Restricted cash, non-current						689,645						4,233						—
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows						$	1,789,686					$	837,566					$	2,582,371

See Notes to Consolidated Financial Statements

Coherent Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business. Coherent Corp. (“Coherent,” the “Company,” “we,” “us” or “our”), a global leader in materials, networking, and lasers, is a vertically-integrated manufacturing company that develops, manufactures, and markets engineered materials, optoelectronic components and devices, and lasers for use in the industrial, communications, electronics and instrumentation markets. The Company markets its products through its direct sales force and through distributors and agents.

The Company uses certain uncommon materials and compounds to manufacture its products. Some of these materials are available from only one proven outside source. The continued high quality of these materials is critical to the stability of our manufacturing yields. We have not experienced material production delays due to a shortage of materials. However, we do occasionally experience problems associated with vendor-supplied materials not meeting specifications for quality or purity. A significant failure of our suppliers to deliver sufficient quantities of necessary high-quality materials on a timely basis could have a material adverse effect on our results of operations.

Consolidation. The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified for consistency with the current year presentation.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s best knowledge of current events and actions Coherent may undertake in the future, actual results may ultimately differ from the estimates.

Foreign Currency Translation. For all foreign subsidiaries whose functional currency is not the U.S. dollar, the functional currency is the local currency. Assets and liabilities of those operations are translated into U.S. dollars using period-end exchange rates while income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments are recorded as Accumulated other comprehensive income (loss) within Shareholders’ equity in the accompanying Consolidated Balance Sheets.

Cash, Cash Equivalents, and Restricted Cash. We consider highly liquid investment instruments with an original maturity of three months or less to be cash equivalents. As of June 30, 2024, we had restricted cash of $864 million that is restricted for a specific purpose, with $174 million and $690 million recorded in Restricted cash, current and Restricted cash, non-current, respectively, on our Consolidated Balance Sheet.

Allowance for Expected Credit Losses. We recognize expected credit losses resulting from the inability of our customers to make required payments through an allowance account that is measured each reporting date. We estimate credit losses over the life of our trade accounts receivable using a combination of historical loss data, current credit conditions, specific customer circumstances, and reasonable and supportable forecasts of future economic conditions.

Inventories. Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs include material, labor and manufacturing overhead. In evaluating the net realizable value of inventory, management also considers other factors, including known trends and market conditions. We generally record a reduction to the carrying value of inventory as a charge against earnings for all products on hand more than 12 to 24 months, depending on the nature of the products that have not been sold to customers or cannot be further manufactured for sale to alternative customers. An additional charge may be recorded for product on hand that is in excess of product sold to customers over the same periods noted above.

Property, Plant and Equipment. Property, plant and equipment are carried at cost or fair value upon acquisition. Major improvements are capitalized, while maintenance and repairs are generally expensed as incurred. We review our property, plant and equipment and other long-lived assets for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. Depreciation on property, plant and equipment and amortization on finance lease right-of-use assets for financial reporting purposes is computed primarily by the straight-line method over the estimated useful lives for building, building improvements and land improvements of 10 to 40 years and 3 to 20 years for machinery and equipment.

Leases. Leases are recognized under Accounting Standards Codification 842, Leases. The Company determines whether a contract contains a lease at contract inception. A contract contains a lease if there is an identified asset and the Company has the right to control the asset. Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the incremental borrowing rate in determining the present value of lease payments, unless the implicit rate is readily determinable. If lease terms include options to extend or terminate the lease, the ROU asset and lease liability are measured based on the reasonably certain decision. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component for all classes of leased assets for which the Company is the lessee. Additionally, for certain equipment leases, the portfolio approach is applied to account for the operating lease ROU assets and lease liabilities. In the Consolidated Statements of Earnings (Loss), lease expense for operating lease payments is recognized on a straight-line basis over the lease term. For finance leases, interest expense is recognized on the lease liability and the ROU asset is amortized over the lease term. Some leasing arrangements require variable payments that are dependent upon usage or output, or may vary for other reasons, such as insurance or tax payments. Variable lease payments are recognized as incurred, and are not presented as part of the ROU asset or lease liability. See Note 13. Leases for further information.

Business Combinations. The Company accounts for business combinations by establishing the acquisition-date fair value as the measurement for all assets acquired and liabilities assumed. Certain provisions of U.S. GAAP prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition-related restructuring costs from acquisition accounting.

On July 1, 2022, we acquired Coherent, Inc. The significant accounting policies of Coherent, Inc. have been aligned to conform to those of the Company, and the consolidated financial statements include the results of Coherent, Inc. as of its acquisition date. See Note 3. Coherent Acquisition for further information.

Goodwill. The excess purchase price over the fair value allocated to identifiable tangible and intangible net assets of businesses acquired is reported as goodwill in the accompanying Consolidated Balance Sheets. We test goodwill for impairment at least annually as of April 1, or when events or changes in circumstances indicate that goodwill might be impaired. The evaluation of impairment involves comparing the current fair value of our reporting units to the recorded value (including goodwill). We use a discounted cash flow (“DCF”) model and/or a market analysis to determine the fair value of our reporting units. A number of assumptions and estimates are involved in estimating the forecasted cash flows used in the DCF model, including markets and market shares, sales volume and pricing, costs to produce, working capital changes and income tax rates. Management considers historical experience and all available information at the time the fair values of the reporting units are estimated. Goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

We have the option to perform a qualitative assessment of goodwill prior to completing the quantitative assessment described above to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If we conclude that this is the case, we must perform the quantitative assessment. Otherwise, we will forego the quantitative assessment and do not need to perform any further testing. As of April 1 of fiscal years 2024 and 2023, we completed our annual impairment tests of our reporting units using the quantitative assessment. For fiscal year 2024, the fair values of the reporting units were determined using a discounted cash flow analysis with projected financial information based on our most recently completed long-term strategic planning processes and also considered the current financial performance compared to our prior projections of the reporting units, as well as a market analysis. As of April 1, 2024, the fair value of each of our reporting units exceeded their carrying values.

Due to the cyclical nature of our business, and the other factors described in the section on Risk Factors set forth in Item 1A of this Annual Report on Form 10-K, the profitability of our individual reporting units may periodically be affected by downturns in customer demand, operational challenges and other factors. If material adverse conditions occur that impact one or more of our reporting units, our determination of future fair value might not support the carrying amount of one or more of our reporting units, and the related goodwill would need to be impaired.

Intangibles. Intangible assets are initially recorded at their cost or fair value upon acquisition. Finite-lived intangible assets are amortized using the straight-line method over the estimated useful lives of the assets ranging from 1 to 20 years. Indefinite-lived intangible assets are not amortized but tested annually for impairment at April 1, or when events or changes in circumstances indicate that indefinite-lived intangible assets might be impaired. As of April 1 of fiscal 2024, the Company completed a quantitative impairment test of the Coherent trade name acquired in the Merger using the relief from royalty method and determined that its fair value is well in excess of its carrying value.

Series A Mandatory Convertible Preferred Stock. The Mandatory Convertible Preferred Stock was initially measured at fair value, less underwriting discounts and commissions and offering expenses paid by the Company. The Preferred Stock’s dividends were cumulative, at 6% per annum. All outstanding shares of Mandatory Convertible Preferred Stock were converted to 10,240,290 shares of Company Common Stock on July 3, 2023, at a conversion ratio of 4.4523, and no shares of Mandatory Convertible Preferred Stock are currently issued and outstanding. See Note 10. Equity and Redeemable Preferred Stock for further information.

Series B Convertible Preferred Stock. The Series B-1 Convertible Preferred Stock is initially measured at fair value less issuance costs, accreted to its redemption value over a ten-year period (using the effective interest method) with such accretion accounted for as deemed dividends and reductions to Net Earnings (Loss) Available to the Common Shareholders. The Series B-2 Convertible Preferred Stock is initially measured at fair value less issuance costs, accreted to its redemption value over a ten-year period (using the effective interest method) with such accretion accounted for as deemed dividends and reductions to Net Earnings (Loss) Available to the Common Shareholders. See Note 10. Equity and Redeemable Preferred Stock for further information.

Noncontrolling Interests. The Company accounts for noncontrolling interests in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate component of total shareholders’ equity on the Consolidated Balance Sheets and the consolidated net earnings (loss) attributable to its noncontrolling interests be clearly identified and presented on the face of the Consolidated Statements of Earnings (Loss) and Consolidated Statements of Comprehensive Income (Loss). See Note 12. Noncontrolling Interests for further information on the noncontrolling interests in our Silicon Carbide LLC subsidiary.

Commitments and Contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Such liabilities are adjusted as further information develops or circumstances change. Our customers may discover defects in our products after the products have been fully deployed and operated under peak stress conditions. If we are unable to correct defects or other problems, we could experience, among other things, loss of customers, increased costs of product returns and warranty expenses, damage to our brand reputation, failure to attract new customers or achieve market acceptance, diversion of development and engineering resources, or legal action by our customers. We had no material loss contingency liabilities at June 30, 2024 or 2023 related to commitments and contingencies.

Income Taxes. Deferred income tax assets and liabilities are determined based on the differences between the Consolidated Financial Statements and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount more likely than not to be realized. The Company’s accounting policy is to apply acquired deferred tax liabilities to pre-existing deferred tax assets before evaluating the need for a valuation allowance for acquired deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The amount of unrecognized tax benefits is adjusted for changes in facts and circumstances. For example, adjustments could result from significant amendments to existing tax law and the issuance of regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. The Company believes that its estimates for uncertain tax positions are appropriate and sufficient to pay assessments that may result from examinations of its tax returns. The Company recognizes both accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Revenue Recognition. Revenue is recognized under Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606), when or as obligations under the terms of a contract with our customer have been satisfied and control has transferred to the customer. We have elected the practical expedient to exclude all taxes from the measurement of the transaction price.

For contracts with commercial customers, which comprise the majority of our performance obligations, ownership of the goods and associated revenue are generally transferred to customers at a point in time, generally upon shipment of a product to the customer or delivery of the product to the customer and without significant judgments. The majority of contracts typically require payment within 30 to 90 days after transfer of ownership to the customer.

We periodically enter into contracts in which a customer may purchase a combination of goods and/or services, such as products with maintenance contracts or extended warranty. Maintenance contracts and extended warranties are sold separately from products, and represent a distinct performance obligation. Revenue related to the performance obligation for maintenance contracts and extended warranties is recognized over time as the customer simultaneously receives and consumes the benefits provided by us.

Service revenue includes repairs, tolling arrangements and installation. Repairs, tolling and installation activities are usually completed in a short period of time (normally less than one month) and therefore recorded at a point in time when the services are completed. The majority of contracts typically require payment within 30 to 90 days after performance of the service.

Non-recurring engineering arrangements are typically recognized as product revenue over time under either the time and material practical expedient, as the entity has a right to consideration from a customer, in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, or under the output and input method. The majority of contracts typically require payment within 30 to 90 days.

Our revenue recognition policy is consistently applied across our segments, product lines, services, and geographical locations. For the periods covered herein, we measure revenue based on the amount of consideration it expects to be entitled to in exchange for products or services, reduced by the amount of variable consideration related to products expected to be returned. We determine variable consideration, which primarily consists of product returns and distributor sales price reductions resulting from price protection agreements, by estimating the impact of such reductions based on historical analysis of such activity.

Under ASC 606, we expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses (“SG&A”). Costs for freight and shipping are generally recorded in cost of goods sold when control over products has transferred to the customer.

We offer an assurance-type limited warranty that products will be free from defects in materials and workmanship. We establish an accrual for estimated warranty expenses at the time revenue is recognized. The warranty is typically one year, although can be longer periods for certain products, and is typically limited to either (1) the replacement or repair of the product or (2) a credit against future purchases.

We believe that disaggregating revenue by end market provides the most relevant information regarding the nature, amount, timing, and uncertainty of revenues and cash flows. See Note 4. Revenue from Contracts with Customers for further information.

Internal Research and Development. Internal research and development (“IR&D”) expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities and other departmental expenses. The costs we incur with respect to internally developed technology, including allocations of our wafer fabrication and other manufacturing facilities and resources utilized to support R&D programs, are included in IR&D expenses as incurred.

Share-Based Compensation. Share-based compensation arrangements require the recognition in net earnings (loss) of the grant date fair value of share-based compensation (for equity-classified awards). We recognize the share-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period, net of forfeitures. The estimated annualized forfeitures are based on our historical experience of pre-vesting cancellations. We will record additional expense in future periods if the actual forfeiture rate is lower than estimated, and will adjust expense in future periods if the actual forfeitures are higher than estimated. See Note 14. Share-Based Compensation for a description of our share-based compensation plans and the assumptions we use to calculate the fair value of share-based compensation.

Earnings per Share. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to the common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing the diluted earnings (loss) available to the common shareholders by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. If there is a net loss for the period, diluted earnings per share is the same as basic earnings per share. See Note 11. Earnings Per Share for further information.

Accumulated Other Comprehensive Income (Loss). Accumulated other comprehensive income (loss) is a measure of all changes in shareholders’ equity that result from transactions and other economic events in the period other than transactions with owners. Accumulated other comprehensive income (loss) is a component of shareholders’ equity and consists of accumulated foreign currency translation adjustments, changes in the fair value of interest rate swap and cap derivative instruments, and pension adjustments.

Fair Value Measurements. We apply fair value accounting for all financial assets and liabilities that are required to be recognized or disclosed at fair value in the Consolidated Financial Statements. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, we consider the principal or most advantageous market in which we would transact, and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.

Note 2. Recently Issued and Adopted Financial Accounting Standards

SEC Final Rule: Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure

In July 2023, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-11216, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, requiring current reporting about material cybersecurity incidents and annual disclosures on management’s processes for assessing, identifying, and managing material cybersecurity risks, the material impacts of cybersecurity threats and previous cybersecurity incidents, the Board of Directors’ (the “Board”) oversight of cybersecurity risks, and management’s role and expertise in assessing and managing material cybersecurity risks. SEC Release No. 33-11216 did not have a material impact on the Company’s consolidated financial statements and disclosures.

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact this will have on the Company’s consolidated financial statements and disclosures.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on either a prospective or retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

SEC Final Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors

In March 2024, the SEC issued the final rule under SEC Release No. 33-11275 and 34-99678, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” requiring public companies to provide certain climate-related information in their registration statements and annual reports. The final rules will require information about a company’s climate-related risks that have materially impacted or are reasonably likely to have a material impact on its business strategy, results of operations, or financial condition, and the actual and potential material impacts of any identified climate-related risks on the company’s strategy, business model and outlook, as well as relating to assessment, management, oversight and mitigation of such material risks, material climate-related targets and goals, and material greenhouse gas emissions. Additionally, certain disclosures related to severe weather events and other natural conditions will be required in the audited financial statements. The first phase of the final rule is effective for fiscal years beginning in 2025. Disclosure for prior periods is only required if it was previously disclosed in an SEC filing. On April 4, 2024, the SEC voluntarily stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule. We are currently evaluating the impact on our disclosures of adopting this new pronouncement.

Supplier Finance Program Obligations (Subtopic 405-50): Disclosure of Supplier Financing Program Obligations

In September 2022, the FASB issued ASU No. 2022-04, requiring enhanced disclosures related to supplier financing programs. The ASU requires disclosure of the key terms of the program and a rollforward of the related obligation during the annual period, including the amount of obligations confirmed and obligations subsequently paid. The Company adopted this ASU as of July 1, 2023, other than the roll-forward disclosure requirement, which the Company will adopt in fiscal 2025. The adoption did not have a material impact on the Company's financial statements and related disclosures.

Note 3. Coherent Acquisition

On July 1, 2022 (the “Closing Date”), the Company completed its acquisition of Coherent, Inc. (the “Merger”), a global provider of lasers and laser-based technology for scientific, commercial, and industrial customers, in a combined cash and stock transaction in accordance with the Agreement and Plan of Merger dated March 25, 2021 (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, and subject to the conditions set forth therein, each share of common stock of Coherent, Inc., par value $0.01 per share (the “Coherent, Inc. Common Stock”), issued and outstanding immediately prior to July 1, 2022, was canceled and extinguished and automatically converted into the right to receive $220.00 in cash and 0.91 of a share of Coherent’s common stock, no par value (“Coherent Common Stock”).

Following the completion of the Coherent, Inc. acquisition, the Company announced a new brand identity, including a corporate name change to Coherent Corp. (NYSE: COHR) on September 8, 2022.

On the Closing Date, the Company entered into a Credit Agreement (the “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 billion, consisting of a new term loan A credit facility (the “Term A Facility”) in an aggregate principal amount of $850 million a new term loan B credit facility (the “Term B Facility”) (and, together with the Term A Facility, the “Term Facilities”) in an aggregate principal amount of $3 billion, and a new revolving credit facility (the “Revolving Credit Facility”) in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. For further information on the credit facility refer to Note 8. Debt.

In order to complete the funding of the Merger, we had a net cash outflow of $2.1 billion on July 1, 2022. We recorded $94 million of acquisition related costs in the year ended June 30, 2023 representing professional and other direct acquisition costs. These costs are recorded within SG&A expense in our Consolidated Statement of Earnings (Loss). Approximately 23 million shares of Coherent Common Stock in the aggregate were issued in conjunction with the closing of the Merger. Total Merger consideration was $7.1 billion, including replacement equity awards attributable to pre-combination service for certain Coherent, Inc. restricted stock units.

The total fair value of consideration paid in connection with the acquisition of Coherent, Inc. consisted of the following (in $000):

			Shares						Per Share						Total Consideration
Cash paid for merger consideration			—						—						$	5,460,808
Shares of COHR common stock issued to Coherent, Inc. stockholders			22,587,885						$49.83						1,125,554
Converted Coherent, Inc. RSUs attributable to pre-combination service			—						—						82,037
Payment of Coherent, Inc. debt			—						—						364,544
Payment of Coherent, Inc. transaction expenses			—						—						62,840
															$	7,095,783

The purchase price allocation set forth herein is final. We allocated the fair value of the purchase price consideration to the tangible assets, liabilities, and intangible assets acquired, generally based on estimated fair values. The excess purchase price over those fair values is recorded as goodwill. Our valuation assumptions of acquired assets and assumed liabilities require estimates, especially with respect to intangible assets, inventories, property, plant & equipment and deferred income taxes. In determining the fair value of intangible assets acquired, we must make assumptions about the future performance of the acquired business, including among other things, the forecasted revenue growth attributable to the asset group and projected operating expenses inclusive of expected synergies, future cost savings, and other benefits expected to be achieved by combining the Company and Coherent, Inc. Our intangible assets are comprised of trade names and trademarks, customer relationships, developed technology and backlog. We utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the purchase price allocation. The estimated fair value of the customer relationships and backlog are determined using the multi-period excess earnings method and the estimated fair value of the trade names and trademarks and developed technology are determined using the relief from royalty method. Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

Our final allocation of the purchase price of Coherent, Inc., based on the estimated fair value of the assets acquired and liabilities assumed as of the Closing Date, is as follows (in $000):

																								Final Purchase Price Allocation, As Adjusted
Assets
Current Assets
Cash, cash equivalents, and restricted cash																								$	393,324
Accounts receivable																								270,928
Inventories (i)																								562,884
Prepaid and refundable income taxes																								4,832
Prepaid and other current assets																								37,805
Total Current Assets																								1,269,773
Property, plant & equipment, net (ii)																								440,932
Deferred income taxes																								236
Other assets																								106,388
Other intangible assets, net (iii)																								3,505,000
Goodwill																								3,174,984
Total Assets																								$	8,497,313
Liabilities
Current Liabilities
Current portion of long-term debt																								$	4,504
Accounts payable																								116,754
Accrued compensation and benefits																								58,631
Operating lease current liabilities																								13,002
Accrued income taxes payable																								25,052
Other accrued liabilities																								138,924
Total Current Liabilities																								356,867
Long-term debt																								22,991
Deferred income taxes																								877,598
Operating lease liabilities																								43,313
Other liabilities																								100,761
Total Liabilities																								$	1,401,530
Final aggregate acquisition consideration																								$	7,095,783

(i) The Consolidated Balance Sheet has been adjusted to record Coherent Inc.’s inventories at a fair value of approximately $563 million. The Consolidated Statement of Earnings (Loss) for the year ended June 30, 2023 includes cost of goods sold of approximately $158 million related to the increased basis in the fair value compared to the carrying value. The costs were amortized over the expected period during which the acquired inventory was sold and thus did not affect the Consolidated Statements of Earnings (Loss) beyond twelve months after the Closing Date.

(ii) The Consolidated Balance Sheet has been adjusted to record Coherent Inc.’s property, plant and equipment (consisting of land, buildings and improvements, equipment, furniture and fixtures, and leasehold improvements) at a fair value of approximately $441 million. The Consolidated Statements of Earnings (Loss) have been adjusted to recognize additional depreciation expense related to the increased basis. The additional depreciation expense is computed with the assumption that the various categories of assets will be depreciated over their remaining useful lives on a straight-line basis.

(iii) Identifiable intangible assets consist of the following and are being amortized over their estimated useful lives in the Consolidated Statements of Earnings (Loss) (in $000):

						Fair Value			Estimated Useful Life
Trade names and trademarks						$	430,000		N/A
Customer relationships						$	1,830,000		15.0 years
Developed technology						$	1,157,500		13.5 years
Backlog						$	87,500		1.0 year
Intangible assets acquired						$	3,505,000

Operating results, including goodwill and intangibles, of Coherent, Inc. are reflected in the Company’s consolidated financial statements from the Closing Date, within the Lasers segment. Revenues and net loss for the Lasers segment for the year ended June 30, 2023 were $1,469 million and $412 million, respectively. Goodwill in the amount of $3.2 billion arising from the acquisition is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated by combining Coherent and Coherent, Inc. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the acquisition had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that we believe are reasonable under the circumstances.

The following supplemental pro forma information presents the combined results of operations for the years ended June 30, 2023 and June 30, 2022, as if Coherent, Inc. had been acquired as of July 1, 2021. The supplemental pro forma information includes adjustments to amortization and depreciation for acquired intangible assets, property, plant and equipment, adjustments to share-based compensation expense, fair value adjustments on the inventories acquired, transaction costs, interest expense and amortization of debt issuance costs related to the Senior Credit Facilities (as defined in Note 8. Debt).

The unaudited supplemental pro forma financial information for the periods presented is as follows (in $000):

			Year Ended June 30, 2023						Year Ended June 30, 2022
Revenue			$	5,160,100					$	4,837,103
Net Earnings (Loss)			105,849						(289,615)

Note 4. Revenue from Contracts with Customers

The following table summarizes disaggregated revenue by market ($000):

			Year Ended June 30, 2024
			Networking						Materials						Lasers						Total
Industrial			$	63,905					$	546,003					$	1,070,268					$	1,680,176
Communications			2,192,286						81,475						—						2,273,761
Electronics			6,655						349,250						—						355,905
Instrumentation			32,883						39,845						325,118						397,846
Total Revenues			$	2,295,729					$	1,016,573					$	1,395,386					$	4,707,688

			Year Ended June 30, 2023
			Networking						Materials						Lasers						Total
Industrial			$	70,076					$	603,664					$	1,087,881					$	1,761,621
Communications			2,219,677						73,703						—						2,293,380
Electronics			11,488						614,151						—						625,639
Instrumentation			39,689						58,240						381,531						479,460
Total Revenues			$	2,340,930					$	1,349,758					$	1,469,412					$	5,160,100

			Year Ended June 30, 2022
			Networking						Materials						Lasers						Total
Industrial			$	84,032					$	662,731					$	—					$	746,763
Communications			2,064,424						90,406						—						2,154,830
Electronics			12,218						298,156						—						310,374
Instrumentation			36,575						68,074						—						104,649
Total Revenues			$	2,197,249					$	1,119,367					$	—					$	3,316,616

Contract Liabilities

Contract liabilities generally relate to payments received in advance of performance under customer contracts. Payments received from customers are based on invoices or billing schedules as established in contracts with customers. Contract liabilities are recognized as revenue when performance obligations have been satisfied. During the year ended June 30, 2024, we recognized revenue of $100 million related to customer payments that were included in the Consolidated Balance Sheet as of June 30, 2023. As of June 30, 2024 and June 30, 2023, we had $76 million and $148 million, respectively, of contract liabilities recorded in the Consolidated Balance Sheets. As of June 30, 2024, $62 million of deferred revenue is included in other accrued liabilities, and $13 million is included within other liabilities on the Consolidated Balance Sheet. As of June 30, 2023, $104 million of deferred revenue is included other accrued liabilities, and $43 million is included within other liabilities on the Consolidated Balance Sheet.

Note 5. Inventories

The components of inventories were as follows ($000):

June 30,						2024						2023
Raw materials						$	429,888					$	462,436
Work in progress						620,575						549,992
Finished goods						235,941						259,905
Total Inventories						$	1,286,404					$	1,272,333

Note 6. Property, Plant & Equipment

Property, plant & equipment consists of the following ($000):

June 30,						2024						2023
Land and land improvements						$	66,156					$	69,639
Buildings and improvements						774,991						780,204
Machinery and equipment						2,034,310						1,879,136
Construction in progress						398,884						287,990
Finance lease right-of-use asset						25,000						25,000
						3,299,341						3,041,969
Less accumulated depreciation						(1,482,082)						(1,259,934)
Property, plant, and equipment, net						$	1,817,259					$	1,782,035

Included in the table above is a building acquired under a finance lease. As of June 30, 2024 and June 30, 2023, the accumulated depreciation of the finance lease ROU asset was $12 million and $11 million, respectively.

Note 7. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill were as follows ($000):

						Year Ended June 30, 2024
						Networking						Materials						Lasers						Total
Balance at beginning of period						$	1,036,204					$	247,695					$	3,228,801					$	4,512,700
Foreign currency translation and other						388						(1,712)						(47,047)						(48,371)
Balance-end of period						$	1,036,592					$	245,983					$	3,181,754					$	4,464,329

			Year Ended June 30, 2023
			Networking						Materials						Lasers						Total
Balance-beginning of period			$	1,013,277					$	272,482					$	—					$	1,285,759
Goodwill acquired			—						—						3,174,984						3,174,984
Foreign currency translation and other			22,927						(24,787)						53,817						51,957
Balance-end of period			$	1,036,204					$	247,695					$	3,228,801					$	4,512,700

The gross carrying amount and accumulated amortization of our intangible assets other than goodwill as of June 30, 2024 and 2023 were as follows ($000):

						June 30, 2024																		June 30, 2023
						Gross Carrying Amount						Accumulated Amortization						Net Book Value						Gross Carrying Amount						Accumulated Amortization						Net Book Value
Technology						$	1,653,289					$	(394,040)					$	1,259,249					$	1,661,263					$	(270,786)					$	1,390,477
Trade Names						438,470						(8,470)						430,000						438,470						(8,279)						430,191
Customer Lists						2,310,550						(498,252)						1,812,298						2,333,360						(339,344)						1,994,016
Backlog and Other						88,792						(87,092)						1,700						88,834						(88,834)						—
Total						$	4,491,101					$	(987,854)					$	3,503,247					$	4,521,927					$	(707,243)					$	3,814,684

Amortization expense recorded on the intangible assets for the fiscal years ended June 30, 2024, 2023 and 2022 was $288 million, $414 million, and $80 million, respectively. The technology intangible assets are being amortized over a range of 60 to 240 months with a weighted-average remaining life of approximately 155 months, and the amortization is recorded in Cost of goods sold in our Consolidated Statements of Earnings (Loss). The customer lists are being amortized over 72 to 192 months with a weighted-average remaining life of approximately 148 months, and the amortization is recorded in SG&A in our Consolidated Statements of Earnings (Loss).

Amortization expense in the fiscal year ended June 30, 2023 includes a total of $39 million of impairment charges, with $33 million in the Materials segment and $7 million in the Networking segment. $25 million of the impairment charges related to the abandonment of certain purchased technology and customer lists, with $8 million recorded in Cost of goods sold and $18 million recorded in SG&A in our Consolidated Statement of Earnings (Loss). $14 million of impairment charges, recorded in SG&A, related to the abandonment of indefinite-lived trade names primarily due to the fiscal 2023 rebranding of the Company as Coherent Corp. There were no impairment charges included in amortization expense in the fiscal years ended June 30, 2024 and 2022.

In the fourth quarter of fiscal year 2024, we completed our impairment test of our $430 million indefinite-lived Coherent trade name acquired in the Merger, concluding it was not impaired.

The estimated amortization expense for existing intangible assets for each of the five succeeding years is as follows ($000):

Year Ending June 30,
2025			$	270,150
2026			269,041
2027			267,928
2028			266,238
2029			260,394

Note 8. Debt

The components of debt were as follows ($000):

			June 30, 2024						June 30, 2023
Term A Facility, interest at adjusted SOFR, as defined, plus 2.000%			$	775,625					$	818,125
Revolving New Credit Facility, interest at LIBOR, as defined, plus 2.000%			—						—
Debt issuance costs, Term A Facility and Revolving Credit Facility			(13,586)						(18,149)
Term B Facility, interest at adjusted SOFR, as defined, plus 2.50%			2,384,536						2,566,625
Debt issuance costs, Term B Facility			(49,835)						(63,977)
5.00% Senior Notes			990,000						990,000
Debt Issuance costs, Senior Notes			(5,939)						(6,863)
1.3% Term loan			335						1,697
Facility construction loan in Germany			19,082						22,340
Total debt			4,100,218						4,309,798
Current portion of long-term debt			(73,770)						(74,836)
Long-term debt, less current portion			$	4,026,448					$	4,234,962

The required annual principal repayments for all indebtedness for the next five years and thereafter, as of June 30, 2024, is set forth in the following table ($000):

						Year Ending
						June 30,
2025						$	70,126
2026						85,730
2027						91,042
2028						638,230
2029						27,292
Thereafter						3,257,157
Total						$	4,169,577

Senior Credit Facilities

On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, as borrower (in such capacity, the “Borrower”), 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”), 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 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 New Term A Facility and the New Revolving Credit Facility bear interest at adjusted SOFR plus 2.00% as of June 30, 2024. 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. As further amended, the New Term B Loans bear interest at a SOFR rate (subject to a 0.50% floor) plus 2.50% as of June 30, 2024. The maturity of the New Term Loans and revolving credit facility remains unchanged. Debt extinguishment costs related to the replacement of the Existing Term B Loans of $2 million were expensed in Other expense (income), net in the Consolidated Statement of Earnings (Loss) during the year ended June 30, 2024.

In relation to the Term Facilities, the Company incurred interest expense, including amortization of debt issuance costs and the benefit of the interest rate cap and swap, of $237 million and $239 million in the years ended June 30, 2024 and June 30, 2023, respectively, 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, reduced interest expense by $45 million and $20 million in the years ended June 30, 2024 and June 30, 2023, respectively. Amortization of debt issuance costs related to the Term Facilities for the year ended June 30, 2024 and June 30, 2023 totaled $15 million and $18 million, respectively, and are included in Interest expense in the Consolidated Statements of Earnings (Loss). Debt issuance costs are presented as a reduction to debt within the Long-term debt caption in the Consolidated Balance Sheets.

On the Closing Date, the Borrower and certain of its direct and indirect subsidiaries, provided a guaranty of all obligations of the Borrower and the other loan parties under the Credit Agreement and the other loan documents, secured cash management agreements and secured hedge agreements with the lenders and/or their affiliates (subject to certain exceptions). The Borrower and the other guarantors have also granted a security interest in substantially of their assets to secure such obligations.

Proceeds of the loans borrowed under the Term Facilities on July 1, 2022, together with other financing sources (including the net proceeds from Coherent’s offer and sale of its 5.000% Senior Notes due 2029 (the “Senior Notes”) and cash on hand) were used to fund the cash portion of the Merger consideration, the repayment of certain indebtedness (including the repayment in full of all amounts outstanding under the Prior Credit Agreement as defined below), and certain fees and expenses in connection with the Merger and otherwise for general corporate purposes.

As of June 30, 2024, the Company was in compliance with all covenants under the Term Facilities.

Prior Senior Credit Facilities

Through June 30, 2022, the Company had senior credit facilities (the “Prior Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other lenders party thereto. On July 1, 2022, the Company terminated the Prior Credit Agreement and repaid all amounts outstanding thereunder. Debt extinguishment costs related to the termination of the Prior Credit Agreement of $17 million were expensed in Other expense (income), net in the Consolidated Statement of Earnings (Loss) during the year ended June 30, 2023.

Bridge Loan Commitment

Subject to the terms of an amended and restated commitment letter entered into in connection with Coherent entering into the Merger Agreement, the commitment parties thereto committed to provide, in addition to the Term Facilities and the Revolving Credit Facility, a senior unsecured bridge loan facility in an aggregate principal amount of $990 million (the “Bridge Loan Commitment”). As a result of the issuance of the Senior Notes, the Bridge Loan Commitment was terminated. During the year ended June 30, 2023, we incurred expenses of $18 million related to the Bridge Loan Commitment, which is included in Other expense (income) in the Consolidated Statements of Earnings (Loss). During the year ended June 30, 2022, we incurred expenses of $3 million related to the Bridge Loan Commitment, which is included in Interest expense in the Consolidated Statements of Earnings (Loss).

Debt Assumed through Acquisition

We assumed the remaining balances of three term loans with the closing of the Merger. The aggregate principal amount outstanding is $19 million as of June 30, 2024. The terms loans assumed consisted of the following: (i) 1.3% Term Loan due 2024, (ii) 1.0% State of Connecticut Term Loan due 2023 (and repaid prior to June 30, 2023), and (iii) Facility construction loan in Germany due 2030. For the Facility construction loan, on December 21, 2020, Coherent LaserSystems GmbH & Co. KG entered into a loan agreement with Commerzbank for borrowings of up to 24 million Euros, which were drawn down by October 29, 2021, to finance a portion of the construction of a new facility in Germany. The term of the loan is 10 years, and borrowings bear interest at 1.55% per annum. Payments are made quarterly.

5.000% Senior Notes due 2029

On December 10, 2021, the Company issued $990 million aggregate principal amount of Senior Notes pursuant to the indenture, dated as of December 10, 2021 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The Senior Notes are guaranteed by each of the Company’s domestic subsidiaries that guarantee its obligations under the Senior Credit Facilities. Interest on the Senior Notes is payable on December 15 and June 15 of each year, commencing on June 15, 2022, at a rate of 5.000% per annum. The Senior Notes will mature on December 15, 2029*.*

On or after December 15, 2024, the Company may redeem the Senior Notes, in whole at any time or in part from time to time, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to December 15, 2024, the Company may redeem the Senior Notes, at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed, plus a “make-whole” premium set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Notwithstanding the foregoing, at any time and from time to time prior to December 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Senior Notes using the proceeds of certain equity offerings as set forth in the Indenture, at a redemption price equal to 105.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In relation to the Senior Notes, we incurred interest expense of $50 million for both the years ended June 30, 2024 and June 30, 2023, which is included in Interest expense in the Consolidated Statements of Earnings (Loss).

The Indenture contains customary covenants and events of default, including default relating to among other things, payment default, failure to comply with covenants or agreements contained in the Indenture or the Senior Notes and certain provisions related to bankruptcy events. As of June 30, 2024, the Company was in compliance with all covenants under the Indenture.

Aggregate Availability

The Company had aggregate availability of $346 million under its Revolving Credit Facility as of June 30, 2024.

Weighted Average Interest Rate

The weighted average interest rate of total borrowings was 7% and 6% for the years ended June 30, 2024 and 2023, respectively.

Note 9. Income Taxes

The components of earnings (loss) before income taxes by jurisdiction were as follows ($000):

Year Ended June 30,						2024						2023						2022
U.S. loss						$	(540,048)					$	(450,370)					$	(62,721)
Non-U.S. income						392,401						94,812						344,528
Earnings (loss) before income taxes						$	(147,647)					$	(355,558)					$	281,807

The components of the income tax expense (benefit) were as follows ($000):

Year Ended June 30,						2024						2023						2022
Current:
Federal						$	10,119					$	5					$	1,569
State						181						3,867						768
Foreign						103,640						106,850						52,865
Total Current						113,940						110,722						55,202
Deferred:
Federal						(68,955)						(106,044)						(7,185)
State						(186)						(7,151)						(1,215)
Foreign						(33,682)						(93,627)						246
Total Deferred						(102,823)						(206,822)						(8,154)
Total Income Tax Expense (Benefit)						$	11,117					$	(96,100)					$	47,048

Principal items comprising deferred tax assets and liabilities were as follows ($000):

June 30,						2024						2023
Deferred income tax assets
Inventory capitalization						$	62,242					$	60,232
Non-deductible accruals						16,770						18,423
Accrued employee benefits						38,460						40,292
Net-operating loss and credit carryforwards						268,735						234,546
Share-based compensation expense						15,947						16,729
Other						1,346						9,256
Research and development capitalization						128,291						85,473
Deferred revenue						14,839						11,415
Right of use asset						47,712						42,688
Valuation allowances						(154,830)						(97,180)
Total deferred income tax assets						439,512						421,874
Deferred income tax liabilities
Tax over book accumulated depreciation						(29,065)						(56,742)
Intangible assets						(905,435)						(988,580)
Interest rate swap						(4,104)						(8,522)
Interest rate cap						(11,465)						(10,734)
Tax on unremitted earnings						(61,719)						(51,672)
Outside basis differences						(122,423)						—
Lease liability						(46,198)						(41,426)
Other						(2,511)						(6,757)
Total deferred income tax liabilities						(1,182,920)						(1,164,433)
Net deferred income taxes						$	(743,408)					$	(742,559)

The reconciliation of income tax expense at the statutory U.S. federal rate to the reported income tax expense (benefit) is as follows ($000):

Year Ended June 30,						2024						%						2023						%						2022						%
Taxes at statutory rate						$	(31,006)					21						$	(74,667)					21						$	59,179					21
Increase (decrease) in taxes resulting from:
State income taxes-net of federal benefit						(22)						—						(2,548)						1						(339)						—
Taxes on non U.S. earnings						16,601						(11)						191						—						(2,704)						(1)
Valuation allowance						43,866						(30)						3,836						(1)						(1,513)						(1)
U.S. Branch Income						3,226						(2)						2,037						(1)						1,230						1
Noncontrolling interest						1,002						(1)						—						—						—						—
Research and manufacturing incentive deductions and credits						(41,387)						28						(29,416)						8						(24,341)						(9)
Stock compensation						13,294						(9)						18,661						(5)						2,095						1
GILTI and FDII						(629)						—						(7,195)						2						4,866						2
Other						6,172						(4)						(6,999)						2						8,575						3
						$	11,117					(8)						$	(96,100)					27						$	47,048					17

The Company is partially permanently reinvested and will repatriate earnings for all non-U.S. subsidiaries with cash in excess of working capital needs. Such distributions could potentially be subject to U.S. state tax in certain states and foreign withholding taxes. Foreign currency gains (losses) related to the translation of previously taxed earnings from functional currency to U.S. dollars could also be subject to U.S. tax when distributed. The Company has estimated the associated withholding tax to be $62 million.

Additionally, the Company made a final accounting policy election to treat taxes due from future inclusions in U.S. taxable income related to global intangible low tax income (“GILTI”) as a current period expense when incurred.

During the fiscal years ended June 30, 2024, 2023, and 2022, cash paid by the Company for income taxes was $97 million, $90 million, and $50 million, respectively.

Our foreign subsidiaries in various tax jurisdictions operate under tax holiday arrangements. The impact of the tax holidays on our effective rate is a reduction in the rate of 5.6%, 2.3% and 1.6% for the fiscal years ended June 30, 2024, 2023 and 2022, respectively, and the impact of the tax holidays on diluted earnings per share is $0.05, $0.05, and $0.04 for the fiscal years ended June 30, 2024, 2023, and 2022, respectively. The tax holiday related to Coherent Malaysia Sdn. Bhd will end during the fiscal year ended June 30, 2026 for certain business lines, the tax holiday related to certain II-VI Laser Enterprise Philippines, Inc.’s business lines will end during the fiscal year ended June 30, 2026, the tax holiday related to certain II-VI Vietnam Co., Ltd business lines will end during the fiscal year ended June 30, 2024, and the tax holiday related to certain Coherent Singapore PTE Ltd business lines will end during the fiscal year ended June 30, 2027.

The Company has the following gross operating loss carryforwards and tax credit carryforwards as of June 30, 2024 ($000):

Type						Amount						Expiration Date
Tax credit carryforwards:
Federal research and development credits						$	138,723					June 2029-June 2044
Foreign tax credits						—
State tax credits						21,420						June 2025-June 2039
State tax credits (indefinite)						79,179						Indefinite
Operating loss carryforwards:
Loss carryforwards - federal						$	36,014					June 2025-June 2036
Loss carryforwards - federal (indefinite)						1,968						Indefinite
Loss carryforwards - state						324,702						June 2025-June 2044
Loss carryforwards - state (indefinite)						36,719						Indefinite
Loss carryforwards - foreign						70,666						June 2025-June 2033
Loss carryforwards - foreign (indefinite)						152,336						Indefinite

The Company has recorded a valuation allowance against the majority of the foreign and state loss and credit carryforwards, certain U.S. credit carryforwards and the majority of state credit carryfowards. The Company’s U.S. federal loss carryforwards, federal research and development credit carryforwards, foreign tax credits, and certain state tax credits resulting from the Company’s acquisitions are subject to various annual limitations under Section 382 of the U.S. Internal Revenue Code.

Changes in the liability for unrecognized tax benefits for the fiscal years ended June 30, 2024, 2023 and 2022 were as follows ($000):

Year Ended June 30,						2024						2023						2022
Beginning balance						$	115,180					$	37,411					$	38,025
Increases in current year tax positions						5,168						110						1,803
Acquired business						—						86,077						—
Settlements						(2,970)						—						—
Expiration of statute of limitations						(681)						(8,418)						(2,417)
Ending balance						$	116,697					$	115,180					$	37,411

The Company classifies all estimated and actual interest and penalties as income tax expense. During fiscal years 2024, 2023 and 2022, there was $2.3 million, $0.3 million and $0.4 million of interest and penalties within income tax expense, respectively. The Company had $7 million, $6 million and $3 million of interest and penalties accrued at June 30, 2024, 2023 and 2022, respectively. The Company has classified the uncertain tax positions as non-current income tax liabilities, as the amounts are not expected to be paid within one year. The majority of the liability can be offset by credit carryforwards and would not impact cash taxes. Including tax positions for which the Company determined that the tax position would not meet the more likely than not recognition threshold upon examination by the tax authorities based upon the technical merits of the position, the total estimated unrecognized tax benefit that, if recognized, would affect our effective tax rate, was approximately $19 million, $92 million and $25 million at June 30, 2024, 2023 and 2022, respectively. For the year ended June 30, 2024, due to the U.S. valuation allowance, a large portion of our unrecognized tax benefit will no longer impact the tax rate if recognized. The Company expects a decrease of $2 million of unrecognized tax benefits during the next 12 months due to the expiration of statutes of limitation.

Fiscal years 2018 and 2020 to 2023 remain open to examination by the Internal Revenue Service, fiscal years 2019 to 2023 remain open to examination by certain state jurisdictions, and fiscal years 2012 to 2023 remain open to examination by certain foreign taxing jurisdictions. The Company is currently under examination for certain subsidiary companies in Vietnam for the years ended June 30, 2017 through September 30, 2021; Singapore for the year ended September 30, 2020; Korea for the year ended September 30, 2021; Spain for the years ended September 30, 2020 through September 30, 2022; and Germany for the years ended June 30, 2012 through September 30, 2020. The Company believes its income tax reserves for these tax matters are adequate.

Note 10. Equity and Redeemable Preferred Stock

As of June 30, 2024, the Company’s amended and restated articles of incorporation authorize our board of directors, without the approval of our shareholders, to issue 5 million shares of our preferred stock. As of June 30, 2024, 2.3 million shares of mandatory preferred convertible shares have been authorized, none are outstanding; 75,000 shares of Series B-1 convertible preferred stock, no par value, have been issued and are outstanding; and 140,000 shares of Series B-2 convertible preferred stock, no par value, have been issued and are outstanding.

Mandatory Convertible Preferred Stock

In July 2020, we issued 2.3 million shares of Mandatory Convertible Preferred Stock.

All outstanding shares of Mandatory Convertible Preferred Stock were converted to 10,240,290 shares of Company Common Stock on July 3, 2023, at a conversion ratio of 4.4523, and no shares of Mandatory Convertible Preferred Stock are currently issued and outstanding.

Preferred dividends are presented as a reduction to Retained earnings on the Consolidated Balance Sheets.

The following table presents dividends per share and dividends recognized:

						Year Ended June 30, 2024						Year Ended June 30, 2023
Dividends per share						$	—					$	12
Series A Mandatory Convertible Preferred Stock dividends ($000)						—						27,600

Series B-1 Convertible Preferred Stock

In connection with entering into the Merger Agreement, Coherent entered into an Amended and Restated Investment Agreement, dated as of March 30, 2021 (the “Investment Agreement”), with BCPE Watson (DE) SPV, LP, an affiliate of Bain Capital Private Equity, LP (the “Investor”). Pursuant to the terms of the Investment Agreement, on March 31, 2021, Coherent issued, sold, and delivered to the Investor 75,000 shares of a new Series B-1 Convertible Preferred Stock of the Company, no par value per share (“Series B-1 Preferred Stock”), for $10,000 per share (the “Equity Per Share Price”), resulting in an aggregate purchase price of $750 million.

Following our provision of notice to the Investor of its election to offer the Upsize Shares, the Investor informed the Company on June 8, 2021, of its agreement to purchase the Upsize Shares from the Company immediately prior to the closing of the Coherent acquisition, increasing the Investor’s total equity commitment to Coherent pursuant to the Investment Agreement to $2.15 billion.

On July 1, 2022, the Company issued and sold 140,000 shares of Coherent Series B-2 Convertible Preferred Stock, for $10,000 per share and an aggregate purchase price of $1.4 billion.

The shares of Series B-1 Preferred Stock accrue dividends at 5.00% per annum, subject to increase if Coherent defaults on payment obligations with respect to the Series B-1 Preferred Stock, not to exceed 14% per annum. Until the fourth anniversary of March 31, 2021 (the “Initial Issue Date”), dividends are payable solely in-kind. After the fourth anniversary of the Initial Issue Date, dividends are payable on the applicable series, at the Company’s option, in cash, in-kind, or as a combination of both.

The shares of Series B-1 Preferred Stock are convertible into shares of Coherent Common Stock as follows:

• at the election of the holder, at a conversion price of $85 per share (as it may be adjusted from time to time, the “Conversion Price”), upon the delivery by Coherent to the holders of the Series B-1 Preferred Stock of an offer to repurchase the Series B-1 Preferred Stock upon the occurrence of a Fundamental Change (as defined in the Statement with Respect to Shares establishing the Series B Preferred Stock as defined below); and

• at the election of the Company, any time following March 31, 2024, at the then-applicable Conversion Price if the volume-weighted average price of Coherent Common Stock exceeds 150% of the then-applicable Conversion Price for 20 trading days out of any 30 consecutive trading days.

The issued shares of Series B-1 Preferred Stock currently have voting rights, voting as one class with the Coherent Common Stock and the Series B-2 Preferred Stock (as defined below), on an as-converted basis, subject to limited exceptions.

On or at any time after March 31, 2031:

• each holder has the right to require the Company to redeem all of their Series B-1 Preferred Stock, for cash, at a redemption price per share equal to the sum of the Stated Value (as defined in the Statement with Respect to Shares establishing the Series B Preferred Stock) for such shares plus an amount equal to all accrued or declared and unpaid dividends on such shares that had not previously been added to the Stated Value (such price the “Redemption Price,” and such right the “Put Right”), and

• the Company has the right to redeem, in whole or in part, on a pro rata basis from all holders based on the aggregate number of shares of Series B-1 Preferred Stock outstanding, for cash, at the Redemption Price.

In connection with any Fundamental Change (as defined in the Statement with Respect to Shares establishing the Series B Preferred Stock), and subject to the procedures set forth in the Statement with Respect to Shares establishing the Series B Preferred Stock, the Company must, or will cause the survivor of a Fundamental Change to, make an offer to repurchase, at the option and election of the holder thereof, each share of Series B-1 Preferred Stock then outstanding at a purchase price per share in cash equal to (i) the Stated Value for such shares plus an amount equal to all accrued or declared and unpaid dividends on such shares that had not previously been added to the Stated Value as of the date of repurchase plus (ii) if prior to March 31, 2026, the aggregate amount of all dividends that would have been paid (subject to certain exceptions), from the date of repurchase through March 31, 2026.

If the Company defaults on a payment obligation with respect to the Series B-1 Preferred Stock, and such default is not cured within 30 days, the dividend rate will increase to 8% per annum and will be increased by an additional 2% per annum each quarter the Company remains in default, not to exceed 14% per annum.

The Series B-1 Preferred Stock is redeemable for cash outside of the control of the Company upon the exercise of the Put Right, and upon a Fundamental Change, and is therefore classified as mezzanine equity.

The Series B-1 Preferred Stock is initially measured at fair value less issuance costs, accreted to its redemption value over a 10-year period (using the effective interest method) with such accretion accounted for as deemed dividends and reductions to Net Earnings (Loss) available to Common Shareholders.

We recognized $123 million and $117 million of preferred stock dividends during the fiscal years ended June 30, 2024, and June 30, 2023, respectively, which were presented as a reduction to retained earnings on the Consolidated Balance Sheet as of June 30, 2024.

The following table presents dividends per share and dividends recognized for the years ended June 30, 2024, and June 30, 2023:

						Year Ended June 30, 2024						Year Ended June 30, 2023
Dividends per share						$	574					$	542
Dividends ($000)						117,894						111,785
Deemed dividends ($000)						5,463						4,827

Note 11. Earnings Per Share

Basic earnings (loss) per common share is computed by dividing net earnings (loss) available to the common shareholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings (loss) per common share is computed by dividing the diluted earnings (loss) available to the common shareholders by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. The dilutive effect of equity awards is calculated based on the average stock price for each fiscal period, using the treasury stock method. The shares of Coherent Common Stock issuable upon conversion of the Series B Convertible Preferred Stock are calculated under the If-Converted method. For the years ended June 30, 2024 and June 30, 2023, diluted earnings (loss) per share excluded the potentially dilutive effect of the performance and restricted shares, as well as the shares of Coherent Common Stock issuable upon conversion of the Series B Convertible Preferred Stock as their effects were anti-dilutive. For the fiscal year ended June 30, 2022, diluted shares outstanding include the dilutive effect of the potential

shares of our common stock issuable from stock options, performance and restricted shares and the dilutive effect of the potential shares of our common stock issuable upon conversion of outstanding convertible debt.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share computations for the periods presented ($000, except per share):

Year Ended June 30,						2024						2023						2022
Numerator
Net earnings (loss) attributable to Coherent Corp.						$	(156,154)					$	(259,458)					$	234,759
Deduct Series A preferred stock dividends						—						(27,600)						(27,600)
Deduct Series B dividends and deemed dividends						(123,357)						(116,612)						(40,625)
Basic earnings (loss) available to the common shareholders						$	(279,511)					$	(403,670)					$	166,534
Effect of dilutive securities:
Add back interest on Convertible Notes (net of tax)						$	—					$	—					$	2,229
Diluted earnings (loss) available to the common shareholders						$	(279,511)					$	(403,670)					$	168,763
Denominator
Weighted average shares						151,642						137,578						106,189
Effect of dilutive securities
Common stock equivalents						—						—						3,012
Convertible Notes						—						—						7,312
Diluted weighted average common shares						151,642						137,578						116,513
Basic earnings (loss) per common share						$	(1.84)					$	(2.93)					$	1.57
Diluted earnings (loss) per common share						$	(1.84)					$	(2.93)					$	1.45

The following table presents potential shares of common stock excluded from the calculation of diluted net earnings (loss) per share, as their effect would have been antidilutive (in thousands of shares):

Year Ended June 30,						2024						2023						2022
Series A Mandatory Convertible Preferred Stock						—						10,423						8,915
Series B Convertible Preferred Stock						27,691						26,349						9,162
Common stock equivalents						2,940						2,271						9,611
Total anti-dilutive shares						30,631						39,043						27,688

Note 12. Noncontrolling Interests

On December 4, 2023, Silicon Carbide LLC (“Silicon Carbide”), one of the Company’s subsidiaries, completed (i) the sale of 16,666,667 Class A Common Units to Denso Corporation (“Denso”) for $500,000,000 pursuant to an Investment Agreement, dated as of October 10, 2023, by and between Silicon Carbide and Denso and (ii) the sale of 16,666,667 Class A Common Units to Mitsubishi Electric Corporation (“MELCO”) for $500,000,000 pursuant to an Investment Agreement, dated as of October 10, 2023, by and between Silicon Carbide and MELCO (collectively, the “Equity Investments”).

As a consequence of the Equity Investments, the Company’s ownership interest in the Class A Common Units of Silicon Carbide LLC was reduced to approximately 75%. Denso and MELCO each, individually, own approximately 12.5% of the Class A Common Units of Silicon Carbide LLC.

The Equity Investments in Silicon Carbide will enable Coherent to increase its available free cash flow to provide greater financial and operational flexibility to execute its capital allocation priorities, as the aggregate $1 billion investment, net of transaction costs, will be used to fund future capital expansion of Silicon Carbide.

The following table presents the activity in noncontrolling interests in Silicon Carbide ($000):

Year Ended June 30,			2024
Beginning balance			$	—
Sale of shares to noncontrolling interests			373,573
Share of foreign currency translation adjustments			429
Net loss			(2,610)
Ending balance			$	371,392

Note 13. Leases

The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Classification and initial measurement of the right-of-use asset and lease liability are determined at the lease commencement date. The Company elected the short-term lease measurement and recognition exemption; therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet.

Finance leases are generally those that allow us to substantially utilize or pay for the entire asset over its estimated useful life. Finance lease assets are recorded in Property, plant and equipment, net, and finance lease liabilities within Other accrued liabilities and Other liabilities on our Consolidated Balance Sheets. Finance lease assets are amortized in operating expenses on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term, with the interest component for lease liabilities included in interest expense and recognized using the effective interest method over the lease term.

Operating leases are recorded in Other assets and Operating lease liabilities, current and non-current on our Consolidated Balance Sheets. Operating lease assets are amortized on a straight-line basis in operating expenses over the lease term.

Our lease liabilities are recognized based on the present value of the remaining fixed lease payments, over the lease term, using a discount rate of similarly secured borrowings available to the Company. For the purpose of lease liability measurement, we consider only payments that are fixed and determinable at the time of commencement. Any variable payments that depend on an index or rate are expensed as incurred. We account for non-lease components, such as common area maintenance, as a component of the lease, and include it in the initial measurement of our lease assets and corresponding liabilities. Our lease terms and conditions may include options to extend or terminate. An option is recognized when it is reasonably certain that we will exercise that option.

Our lease assets also include any lease payments made, and exclude any lease incentives received prior to commencement. Our lease assets are tested for impairment in the same manner as long-lived assets used in operations.

The following table presents lease costs, which include leases for arrangements with an initial term of more than 12 months, lease term, and discount rates ($000):

Year Ended June 30,						2024						2023						2022
Finance Lease Cost
Amortization of right-of-use assets						$	1,667					$	1,667					$	1,671
Interest on lease liabilities						1,040						1,124						1,200
Total finance lease cost						2,707						2,791						2,871
Operating lease cost						52,909						53,127						36,716
Sublease income						—						—						507
Total lease cost						$	55,616					$	55,918					$	39,080
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases						1,040						1,124						1,200
Operating cash flows from operating leases						50,672						50,503						35,481
Financing cash flows from finance leases						1,584						1,430						1,290
Assets Obtained in Exchange for Lease Liabilities
Right-of-use assets obtained in acquisitions						—						56,315						—
Right-of-use assets obtained in exchange for new operating lease liabilities						64,385						27,720						18,161
Total assets obtained in exchange for new operating lease liabilities						64,385						84,035						18,161
Weighted-Average Remaining Lease Term (in Years)
Finance leases						7.5						8.5						9.5
Operating leases						6.6						6.9						6.6
Weighted-Average Discount Rate
Finance leases						5.6		%				5.6		%				5.6		%
Operating leases						6.8		%				5.5		%				5.7		%

The following table presents future minimum lease payments, which includes leases for arrangements with an initial term of more than 12 months ($000):

Future Years			Operating Leases						Finance Leases						Total
Year 1			$	52,461					$	2,697					$	55,158
Year 2			44,876						2,771						47,647
Year 3			34,923						2,847						37,770
Year 4			26,469						2,925						29,394
Year 5			23,833						3,006						26,839
Thereafter			75,033						7,757						82,790
Total minimum lease payments			$	257,595					$	22,003					$	279,598
Less: amounts representing interest			54,660						4,120						58,780
Present value of total lease liabilities			$	202,935					$	17,883					$	220,818

Note 14. Share-Based Compensation

The Company’s Board of Directors amended the Coherent Corp. 2018 Omnibus Incentive Plan, which originally was approved by the Company’s shareholders at the Annual Meeting in November 2018, as the Coherent Corp. Omnibus Incentive Plan (as amended and restated, the “Plan”). The Plan was approved at the Annual Meeting in November 2023. The Plan provides for the grant of stock options, stock appreciation rights, restricted shares, restricted share units, deferred shares, performance shares and performance share units to employees, officers and directors of the Company. The maximum number of shares of Coherent Common Stock authorized for issuance under the Plan is limited to 13,450,000 shares of Coherent Common Stock, not including any remaining shares forfeited under the predecessor plans that may be rolled into the Plan. Certain awards under the Plan have certain vesting provisions predicated upon the death, retirement or disability of the grantee.

On the Closing Date, the Company assumed the Coherent, Inc. Equity Incentive Plan (“Coherent, Inc. Plan”) and the Coherent, Inc. unvested restricted stock units (“Converted RSUs”) that are generally subject to the same terms and conditions that applied to the Converted RSUs immediately prior to the Closing Date. After the Closing Date, the Company granted restricted stock units under the Coherent, Inc. Plan through August 28, 2023. The Coherent, Inc. Plan was terminated upon adoption of the Plan in November 2023. No additional awards will be granted under the Coherent, Inc. Plan.

As of June 30, 2024, there were approximately 6 million shares available to be issued under the Plan, including forfeited shares from predecessor plans.

On June 3, 2024, the Board of Directors granted 147,214 restricted stock units vesting over three years from date of grant and 694,007 performance stock units vesting over the approximate three-year period ending June 30, 2027, to the new CEO. The grants were non-Plan “employment inducement awards” as contemplated by the New York Stock Exchange Listing Rule 303A.08 and therefore were not made pursuant to the Plan.

The Company has an Employee Stock Purchase Plan whereby eligible employees may authorize payroll deductions of up to 10%, or such other percentage up to 15% that the Company determines, of their regular base salary to purchase shares at the lower of 85% of the fair market value of the common stock on the date of commencement of the offering or on the last day of the six-month offering period.

We record share-based compensation expense for these awards, which requires the recognition of the grant-date fair value of share-based compensation in net earnings. We recognize the share-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. We account for cash-based stock appreciation rights, cash-based restricted share units and cash-based performance share units as liability awards.

Share-based compensation expense for the fiscal years ended June 30, 2024, 2023 and 2022 is as follows ($000):

Year Ended June 30,						2024						2023						2022
Stock Options and Cash-Based Stock Appreciation Rights						$	1,149					$	2,602					$	3,218
Restricted Share Awards and Cash-Based Restricted Share Unit Awards						92,634						124,212						56,365
Performance Share Awards and Cash-Based Performance Share Unit Awards						21,912						14,998						10,077
Employee Stock Purchase Plan						11,200						7,819						3,443
						$	126,895					$	149,631					$	73,103

Stock Options and Cash-Based Stock Appreciation Rights

We utilize the Black-Scholes valuation model for estimating the fair value of stock options and cash-based stock appreciation rights. During the fiscal years ended June 30, 2024, June 30, 2023 and June 30, 2022, no stock options were issued.

Stock option and cash-based stock appreciation rights activity during the fiscal year ended June 30, 2024 was as follows:

						Stock Options												Cash-Based Stock Appreciation Rights
						Number of Shares						Weighted Average Exercise Price						Number of Rights						Weighted Average Exercise Price
Outstanding - June 30, 2023						2,186,944						$	30.15					102,890						$	35.12
Exercised						(685,615)						$	24.64					(53,932)						$	34.90
Forfeited and Expired						(10,684)						$	39.74					(2,087)						$	32.70
Outstanding - June 30, 2024						1,490,645						$	32.62					46,871						$	35.48
Exercisable - June 30, 2024						1,490,645						$	32.62					46,871						$	35.48

As of June 30, 2024, 2023 and 2022, the aggregate intrinsic value of stock options and cash-based stock appreciation rights outstanding and exercisable was $61 million, $44 million and $48 million, respectively. Aggregate intrinsic value represents the total pretax intrinsic value (the difference between our closing stock price on the last trading day of the year ended June 30, and the option’s exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2024. This amount varies based on the fair market value of the Company’s stock. The total intrinsic value of stock options and cash-based stock appreciation rights exercised during the fiscal years ended June 30, 2024, 2023, and 2022 was $25 million, $5 million, and $8 million, respectively. As of June 30, 2024, there was no unrecognized compensation cost related to non-vested stock options and cash-based stock appreciation rights.

Outstanding and exercisable stock options at June 30, 2024 were as follows:

						Stock Options and Cash-Based Stock Appreciation Rights Outstanding																		Stock Options and Cash-Based Stock Appreciation Rights Exercisable
						Number of						Weighted Average Remaining						Weighted Average						Number of						Weighted Average Remaining						Weighted Average
Range of						Shares or						Contractual Term						Exercise						Shares or						Contractual Term						Exercise
Exercise Prices						Rights						(Years)						Price						Rights						(Years)						Price
$13.34 - $18.07						220,107						1.08						$	17.68					220,107						1.08						$	17.68
$18.07 - $24.35						294,425						2.08						$	21.52					294,425						2.08						$	21.52
$24.35 - $35.39						300,515						3.57						$	33.94					300,515						3.57						$	33.94
$35.39 - $36.90						420,798						5.22						$	36.45					420,798						5.22						$	36.45
$36.90 - $49.90						301,671						4.05						$	48.14					301,671						4.05						$	48.14
						1,537,516						3.47						$	32.71					1,537,516						3.47						$	32.71

Restricted Share Awards, Restricted Share Units, and Cash-Based Restricted Share Units

Restricted share awards, restricted share units, and cash-based restricted share units compensation expense was calculated based on the number of shares or units expected to be earned by the grantee multiplied by the stock price at the date of grant (for restricted share awards and restricted share units) or the stock price at the period end date (for cash-based restricted share units), and is being recognized over the vesting period. Generally, the restricted share awards, restricted share units, and cash-based restricted share units have a three-year tranche vesting provision. There were no restricted share awards issued in the fiscal years ending June 30, 2024 and June 30, 2023, and all previous restricted share awards have been amortized in full.

Restricted share unit and cash-based restricted share unit activity during the fiscal year ended June 30, 2024, was as follows:

						Restricted Share Units												Cash-Based Restricted Share Units
						Number of Units						Weighted Average Grant Date Fair Value						Number of Units						Weighted Average Grant Date Fair Value
Nonvested - June 30, 2023						3,521,954						$	53.33					5,975						$	53.12
Granted						2,740,565						$	39.95					6,876						$	38.04
Vested						(2,021,002)						$	50.89					(3,062)						$	52.02
Forfeited						(173,632)						$	45.94					(805)						$	41.45
Nonvested - June 30, 2024						4,067,885						$	45.84					8,984						$	43.00

As of June 30, 2024, total unrecognized compensation cost related to non-vested, restricted share units and cash-based restricted share units was $96 million. This cost is expected to be recognized over a weighted-average period of approximately two years. The restricted share unit compensation expense was calculated based on the number of shares expected to be earned, multiplied by the stock price at the date of grant, and is being recognized over the vesting period. The cash-based restricted share unit compensation expense was calculated based on the number of units expected to be earned, multiplied by the stock price at the period-end date, and is being recognized over the vesting period. The total fair value of the restricted share awards, restricted share units, and cash-based restricted share units granted during the years ended June 30, 2024, 2023 and 2022, was $110 million, $102 million and $54 million, respectively. The total fair value of restricted share awards, restricted share units and cash-based restricted share units vested was $74 million, $131 million and $67 million during fiscal years 2024, 2023 and 2022, respectively.

Performance Share Units

The Compensation Committee of the Board of Directors of the Company has granted certain executive officers and employees performance share units under the Plan. As of June 30, 2024, we had outstanding grants covering performance periods ranging from 12 to 36 months. These grants are intended to provide continuing emphasis on specified financial performance goals that the Company considers important contributors to the creation of long-term shareholder value. These grants are payable only if the Company achieves specified levels of financial performance during the performance periods.

For our relative Total Shareholder Return (“TSR”) performance-based units, which are based on market performance of our stock as compared to the S&P Composite 1500 – Electronic Equipment, Instruments & Components Index, the compensation cost is recognized over the performance period on a straight-line basis, because the grants vest only at the end of the measurement period, and the probability of actual shares expected to be earned is considered in the grant date valuation. As a result, the expense is not adjusted to reflect the actual shares earned. We estimate the fair value of the TSR performance-based units using the Monte-Carlo simulation model.

The performance share unit compensation expense was calculated based on the number of shares expected to be earned, multiplied by the stock price at the date of grant, and is being recognized over the vesting period.

Performance share unit activity relating to the Plan during the year ended June 30, 2024, was as follows:

						Performance Share Units
						Number of Units						Weighted Average Grant Date Fair Value
Nonvested - June 30, 2023						882,637						$	36.11
Granted						1,244,605						$	90.71
Vested						(86,984)						$	45.12
Forfeited						(337,517)						$	44.67
Nonvested - June 30, 2024						1,702,741						$	73.86

As of June 30, 2024, total unrecognized compensation cost related to non-vested performance share units was $102 million. This cost is expected to be recognized over a weighted-average period of approximately 2.24 years. The total fair value of the performance share units granted during the fiscal years ended June 30, 2024, 2023 and 2022 was $113 million, $27 million and $14 million, respectively. The total fair value of performance share units and cash-based performance share units vested during the fiscal years ended June 30, 2024, 2023 and 2022 was $14 million, $24 million and $11 million, respectively.

Note 15. Segment and Geographic Reporting

Our Chief Executive Officer has been identified as the chief operating decision maker (“CODM”) as he utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, which is used in the decision-making process to assess performance. We determine our reportable business segments based on the way the CODM organizes business segments within the Company for making operating decisions and assessing performance. Effective July 1, 2022, we report our financial results in the following three segments: (i) Networking, (ii) Materials, and (iii) Lasers.

The Networking segment has locations in the United States, Australia, China, Germany, Malaysia, South Korea, Thailand, the Philippines, the United Kingdom, and Vietnam. This segment address all of Coherent’s four end markets, namely: communications, industrial, electronics, and instrumentation, with a concentration in the communications market. This segment leverages Coherent’s compound semiconductor technology platforms and deep knowledge of end-user applications for our key end markets to deliver differentiated components and subsystems.

The Materials segment has locations in the United States, Belgium, China, Germany, Italy, Japan, Singapore, South Korea, Sweden, Switzerland, Taiwan, the Philippines, the United Kingdom, and Vietnam. This segment address all of Coherent’s four end markets, namely: communications, industrial, electronics, and instrumentation, with concentrations in the industrial and electronics markets. The Materials segment is a market leader in engineered materials and optoelectronic devices, such as those based on ZnSe, ZnS, GaAs, InP, GaSb, and SiC.

The Lasers segment has locations in the United States, Finland, Germany, Malaysia, Singapore, South Korea, Spain, Sweden, Switzerland, and the United Kingdom. The Lasers segment’s lasers and optics products serve industrial customers in semiconductor capital equipment, display capital equipment, precision manufacturing, and aerospace & defense, as well as instrumentation customers in life sciences and scientific research.

To the extent possible, our corporate expenses are allocated to the segments. The Company’s CODM evaluates the performance of its segments based upon reported segment operating income (loss), which is defined as earnings (loss) from operations before income taxes, interest and other income or expense. Unallocated and Other include eliminating inter-segment sales and transfers as well as transaction costs related to the Coherent acquisition, before its close, in the fiscal year ended June 30, 2022.

The following tables summarize selected financial information of our operations by segment ($000):

2024						Networking						Materials						Lasers												Unallocated & Other						Total
Revenues						$	2,295,729					$	1,016,573					$	1,395,386											$	—					$	4,707,688
Inter-segment revenues						45,767						457,623						5,212												(508,602)						—
Operating income (loss)						178,789						62,876						(145,544)												—						96,121
Interest expense						—						—						—												—						(288,475)
Other income (expense), net						—						—						—												—						44,707
Income taxes						—						—						—												—						(11,117)
Net loss						—						—						—												—						(158,764)
Net loss attributable to Coherent Corp.						—						—						—												—						(156,154)
Depreciation and amortization						161,499						108,979						289,283												—						559,761
Expenditures for property, plant & equipment						90,950						224,482						31,384												—						346,816
Segment assets						3,543,981						3,502,642						7,442,011												—						14,488,634
Goodwill						1,036,592						245,983						3,181,754												—						4,464,329

2023						Networking						Materials						Lasers						Unallocated & Other						Total
Revenues						$	2,340,930					$	1,349,758					$	1,469,412					$	—					$	5,160,100
Inter-segment revenues						70,120						362,179						1,517						(433,817)						—
Operating income (loss)						222,365						159,581						(419,066)						—						(37,120)
Interest expense						—						—						—						—						(286,872)
Other income (expense), net						—						—						—						—						(31,566)
Income taxes						—						—						—						—						96,100
Net loss attributable to Coherent Corp.						—						—						—						—						(259,458)
Depreciation and amortization						172,339						143,243						366,105						—						681,687
Expenditures for property, plant & equipment						98,192						274,434						63,434						—						436,060
Segment assets						3,316,555						2,561,156						7,833,422						—						13,711,133
Goodwill						1,036,204						247,695						3,228,801						—						4,512,700

2022						Networking						Materials						Lasers						Unallocated & Other						Total
Revenues						$	2,197,249					$	1,119,367					$	—					$	—					$	3,316,616
Inter-segment revenues						93,660						272,580						—						(366,240)						—
Operating income (loss)						231,563						218,601						—						(35,870)						414,294
Interest expense						—						—						—						—						(121,254)
Other income (expense), net						—						—						—						—						(11,233)
Income taxes						—						—						—						—						(47,048)
Net earnings attributable to Coherent Corp.						—						—						—						—						234,759
Depreciation and amortization						172,092						114,687						—						—						286,779
Expenditures for property, plant & equipment						89,616						224,716						—						—						314,332
Segment Assets						4,897,252						2,947,594						—						—						7,844,846
Goodwill						1,013,277						272,482						—						—						1,285,759

Geographic information for revenues by location of the customer’s headquarters, were as follows ($000):

						Revenues
Year Ended June 30,						2024						2023						2022
North America						$	2,622,569					$	2,745,891					$	1,771,385
Europe						714,282						979,911						623,157
China						621,918						577,180						614,393
Japan						340,863						392,479						196,512
Rest of World						408,056						464,639						111,169
Total						$	4,707,688					$	5,160,100					$	3,316,616

Major Customers

We had one major customer who accounted for 10% of consolidated revenue during fiscal 2024. The customer purchased primarily from our Networking segment. We had another major customer who accounted for 10% of consolidated revenue during fiscal 2023. The customer purchased primarily from our Networking segment.

Geographic information for long-lived assets by country, which include property, plant and equipment, net of related depreciation, and certain other long-term assets, were as follows ($000):

						Long-Lived Assets
June 30,						2024						2023
United States						$	1,226,359					$	1,069,012
Non-United States
China						349,195						365,331
Germany						209,593						216,336
United Kingdom						19,153						77,474
Malaysia						87,783						70,424
Switzerland						44,256						47,110
Sweden						44,733						38,981
Korea						17,862						20,869
Vietnam						20,707						17,739
Australia						8,611						8,641
Taiwan						6,705						7,883
Philippines						11,217						7,205
Other						23,166						24,853
Total Non-United States						842,981						902,846
						$	2,069,340					$	1,971,858

Note 16. Fair Value of Financial Instruments

The FASB defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous markets for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate fair value of our financial instruments utilizing an established three-level hierarchy in accordance with U.S. GAAP. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

• Level 1 – Valuation is based upon unadjusted quoted prices for identical assets or liabilities in active markets.

• Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.

• Level 3 – Valuation is based upon other unobservable inputs that are significant to the fair value measurements.

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement.

We entered into an interest rate swap with a notional amount of $1,075 million to limit the exposure to our variable interest rate debt by effectively converting it to a fixed interest rate. We receive payments based on the one-month LIBOR and make payments based on a fixed rate of 1.52%. We receive payments with a floor of 0.00%. The interest rate swap agreement had an effective date of November 24, 2019, with an expiration date of September 24, 2024. The initial notional amount of the interest rate swap decreased to $825 million in June 2022, and will remain at that amount through the expiration date. On March 20, 2023, we amended our $825 million interest rate swap (“Amended Swap”), effective as of February 28, 2023, to replace the current reference rate (LIBOR) with SOFR, to be consistent with Amendment no. 1 to the Credit Agreement. See Note 8. Debt for further information. Under the Amended Swap, we receive payments based on the one-month SOFR and make payments based on a fixed rate of 1.42%. We receive payments with a floor of 0.10%. We designated this instrument as a cash flow hedge, and deemed the hedge relationship effective at inception of the contract and the amended contract.

The fair value of the interest rate swap of $8 million and $37 million is recognized in the Consolidated Balance Sheets within Prepaid and other current assets and Other assets as of June 30, 2024 and June 30, 2023, respectively. Changes in fair value are recorded within Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and reclassified into the Consolidated Statements of Earnings (Loss) as interest expense in the period in which the underlying transaction affects earnings. Cash flows from hedging activities are reported in the Consolidated Statements of Cash Flows in the same classification as the hedged item, generally as a component of cash flows from operations. The fair value of the interest rate swap is determined using widely accepted valuation techniques and reflects the contractual terms of the interest rate swap including the period to maturity, and while there are no quoted prices in active markets, it uses observable market-based inputs, including interest rate curves. The fair value analysis also considers a credit valuation adjustment to reflect nonperformance risk of both the Company and the single counterparty. The interest rate swap is classified as a Level 2 item within the fair value hierarchy.

On February 23, 2022, we entered into an interest rate cap (“the Cap”) with an effective date of July 1, 2023. On March 20, 2023, we amended the Cap to replace the current reference rate (LIBOR) with SOFR, to be consistent with Amendment No. 1 to the Credit Agreement. See Note 8. Debt for further information. The Cap manages our exposure to interest rate movements on a portion of our floating rate debt. The Cap provides us with the right to receive payment if one-month SOFR exceeds 1.92%. Beginning in July 2023, we will begin to pay a fixed monthly premium based on an annual rate of 0.853% for the Cap. The Cap will carry a notional amount ranging from $500 million to $1,500 million. The fair value of the interest rate cap of $50 million and $46 million is recognized in the Consolidated Balance Sheets within prepaid and other current and other assets as of June 30, 2024 and June 30, 2023, respectively.

The Cap, as amended, is designed to mirror the terms of the Company’s Credit Agreement as amended on March 31, 2023. We designated the Cap as a cash flow hedge of the variability of the SOFR based interest payments on the Term Facilities. Every period over the life of the hedging relationship, the entire change in fair value related to the hedging instrument will first be recorded within Accumulated other comprehensive income (loss). Amounts accumulated in accumulated other comprehensive income (loss) will be reclassified into interest expense in the same period or periods in which interest expense is recognized on the Credit Agreement, or its direct replacement. The fair value of the Cap is determined using widely accepted valuation techniques and reflects the contractual terms of the Cap including the period to maturity, and while there are no quoted prices in active markets, it uses observable market-based inputs, including interest rate curves. The fair value analysis also considers a credit valuation adjustment to reflect nonperformance risk of both the Company and the single counterparty. The Cap is classified as a Level 2 item within the fair value hierarchy.

We estimated the fair value of the Senior Notes, Term A Facility and Term B Facility (“Debt Facilities”) based on quoted market prices as of the last trading day prior to June 30, 2024; however, the Debt Facilities have only a limited trading volume and as such this fair value estimate is not necessarily the value at which the Debt Facilities could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. The carrying values of the Debt Facilities are net of unamortized discount and issuance costs. See Note 8. Debt for further information on the Company’s debt facilities.

The fair value and carrying value of the Debt Facilities were as follows at June 30, 2024 ($000):

						Fair Value						Carrying Value
Senior Notes						$	938,193					$	984,061
Term A Facility						777,564						762,039
Term B Facility						2,390,497						2,334,701

Our borrowings, including our lease obligations and the Debt Facilities, are considered Level 2 among the fair value hierarchy.

Cash and cash equivalents are considered Level 1 among the fair value hierarchy and approximate fair value because of the short-term maturity of those instruments.

At June 30, 2024, total restricted cash of $864 million includes $858 million of cash in Silicon Carbide LLC that is restricted for use only by that subsidiary and $5 million of cash restricted for other purposes in other entities. At June 30, 2023, total restricted cash of $16 million consisted of cash restricted for other purposes in other entities. The restricted cash is invested in money market accounts and time deposits, with maturities of one year or less, that are held-to-maturity, are considered Level 1 among the fair value hierarchy and approximate fair value. Restricted cash that is expected to be spent and released from restriction after 12 months is classified as non-current on the Consolidated Balance Sheets.

We, from time to time, purchase foreign currency forward exchange contracts, that permit us to sell specified amounts of these foreign currencies for pre-established U.S. dollar amounts at specified dates that represent assets or liabilities on the balance sheets of certain subsidiaries. These contracts are entered into for the purposes of limiting translational exposure to changes in currency exchange rates and which otherwise would expose our earnings, on the revaluation of our aggregate net assets or liabilities in respective currencies, to foreign currency risk. At June 30, 2024, we had foreign currency forward contracts recorded at fair value. The fair values of these instruments were measured using valuations based upon quoted prices for similar assets and liabilities in active markets (Level 2) and are valued by reference to similar financial instruments, adjusted for credit risk and restrictions and other terms specific to the contracts. Realized losses related to these contracts for the year ended June 30, 2024 were $15 million and for June 30, 2023 and June 30, 2022 were gains of $0.2 million and losses of $27 million, respectively, and were included in Other expense (income), net in the Consolidated Statements of Earnings (Loss).

Our non-financial assets, such as goodwill, intangible assets, and property, plant and equipment, are assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

Note 17. Employee Benefit Plans

Eligible employees of the Company participate in an employee retirement plan. Under the Coherent Corp 401(k) Profit Sharing Plan (“Plan”), we match employee contributions to the plan equal to an amount of 50% of employee contributions up to a maximum of 8% of the employee’s individual earnings subject to IRS limitations. Employees become eligible for participation and Company matching contributions on their first day of employment. The Company’s matching contributions (net of forfeitures) during fiscal 2024, 2023 and 2022 were $18 million, $11 million, and $10 million, respectively. In addition, the Plan has a profit sharing retirement plan contribution for eligible U.S. employees of the Company. These contributions are made at the discretion of the Company’s Board of Directors and were $2 million for each of the years ended June 30, 2024, 2023 and 2022.

Under the Coherent, Inc. Employee Retirement and Investment Plan, we matched employee contributions through December 31, 2023 to the plan up to a maximum of 4% of the employee’s individual earnings subject to IRS limitations. Employees become eligible for participation and Company matching contributions on their first day of employment. The Company’s matching contributions (net of forfeitures) during fiscal 2024 and 2023 were $3 million and $7 million, respectively. Effective January 1, 2024, we merged the Coherent, Inc. Employee Retirement and Investment Plan into the Plan.

Switzerland Defined Benefit Plan

The Company maintains a pension plan covering employees of our Swiss subsidiary (the “Swiss Plan”). Employer and employee contributions are made to the Swiss Plan based on various percentages of salary and wages that vary according to employee age and other factors. Employer contributions to the Swiss Plan were $4 million for both years ended June 30, 2024 and 2023. Net periodic pension cost is not material for any year presented.

The underfunded pension liability was $17 million and $11 million as of June 30, 2024 and 2023, respectively. The pension adjustment amount recognized in accumulated other comprehensive income (loss) was a $7 million decrease for both fiscal years ended June 30, 2024 and 2023. The accumulated benefit obligation was $106 million as of June 30, 2024, compared to $97 million as of June 30, 2023.

Coherent, Inc. Defined Benefit Plans

As a result of the Coherent, Inc. acquisition on July 1, 2022, we assumed all assets and liabilities of defined benefit plans in the U.S., Germany, South Korea, Japan, Spain, and Italy (“acquired plans”). As is the customary practice with European and Asian companies, the plans are unfunded, with the exception of the Spanish plan which is partially funded. The U.S. qualified plan is also partially funded. Any new employees hired after January 1, 2007, are not eligible for the U.S. qualified and nonqualified plans. Effective August 31, 2018, both of the U.S. plans were amended to freeze all future compensation benefit accruals. Any new employees hired after 2000 are not eligible for the primary German pension plans. For two of the German plans and the U.S. qualified plan, unrealized gains and losses are recognized as a component of other comprehensive income (loss) within shareholders’ equity. For the other plans, we have elected to recognize all actuarial gains and losses on these plans immediately, as incurred.

Liabilities and expense for pension benefits are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated cash flows, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, retirement age, and mortality). All of these assumptions were based upon management’s judgment, considering all known trends and uncertainties. Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of our defined benefit plans.

For the acquired plans, employer contributions in the years ended June 30, 2024 and June 30, 2023 were $2 million and $1 million, respectively, and net periodic pension cost was not material in either year. The underfunded pension liability was $34 million and $32 million as of June 30, 2024 and June 30, 2023, respectively. The pension adjustment amount recognized in accumulated other comprehensive income (loss) was a $1 million decrease and a $1 million increase for the fiscal years ended June 30, 2024 and June 30, 2023, respectively. The accumulated benefit obligation was $44 million and $42 million as of June 30, 2024 and June 30, 2023, respectively.

Estimated future benefit payments under all plans are estimated to be as follows ($000):

Year Ending June 30,
2025			$	9,100
2026			7,800
2027			7,800
2028			8,500
2029			9,500
Next five years			53,000

Note 18. Other Accrued Liabilities

The components of other accrued liabilities were as follows ($000):

June 30,						2024						2023
Contract liabilities						$	62,123					$	104,477
Warranty reserves						44,193						47,563
Other accrued liabilities						188,390						158,241
						$	294,706					$	310,281

Note 19. Commitments and Contingencies

We have purchase commitments for materials and supplies as part of the ordinary conduct of business. A portion of the commitments are long-term and are based on minimum purchase requirements. Certain short-term raw material purchase commitments have a variable price component which is based on market pricing at the time of purchase. Due to the proprietary nature of some of our materials and processes, certain contracts may contain liquidated damage provisions for early termination. We do not believe that a significant amount of liquidated damages are reasonably likely to be incurred under these commitments, based upon historical experience and current expectations. Total future purchase commitments held by Coherent as of June 30, 2024 were $697 million in fiscal 2025 and $54 million thereafter.

Note 20. Share Repurchase Programs

In August 2014, the Company’s Board of Directors authorized the Company to purchase up to $50 million of its common stock through a share repurchase program (the “Program”) that calls for shares to be purchased in the open market or in private transactions from time to time. The Program has no expiration and may be suspended or discontinued at any time. Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. We did not repurchase any shares pursuant to this Program during the fiscal years ended June 30, 2024 or June 30, 2023. As of June 30, 2024, we have cumulatively purchased 1,416,587 shares of Coherent common stock pursuant to the Program for approximately $22 million. On February 21, 2024, the Company’s Board of Directors terminated the Program and any remaining amount authorized for the repurchase of shares.

Note 21. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the years ended June 30, 2024, 2023, and 2022 were as follows ($000):

						Foreign Currency Translation Adjustment						Interest Rate Swap						Interest Rate Cap						Defined Benefit Pension Plan						Total Accumulated Other Comprehensive Income (Loss)
AOCI - June 30, 2021						$	55,395					$	(31,773)					$	—					$	(9,355)					$	14,267
Other comprehensive income (loss) before reclassifications						(89,967)						29,711						14,306						15,300						(30,650)
Amounts reclassified from AOCI						—						13,797						—						419						14,216
Net current-period other comprehensive income (loss)						(89,967)						43,508						14,306						15,719						(16,434)
AOCI - June 30, 2022						$	(34,572)					$	11,735					$	14,306					$	6,364					$	(2,167)
Other comprehensive income (loss) before reclassifications						87,927						27,050						22,322						(5,326)						131,973
Amounts reclassified from AOCI						—						(19,301)						—						(779)						(20,080)
Net current-period other comprehensive income (loss)						87,927						7,749						22,322						(6,105)						111,893
AOCI - June 30, 2023						$	53,355					$	19,484					$	36,628					$	259					$	109,726
Other comprehensive income (loss) before reclassifications						(82,318)						9,529						15,420						(6,708)						(64,077)
Amounts reclassified from AOCI						—						(32,414)						(12,731)						(735)						(45,880)
Net current-period other comprehensive income (loss)						(82,318)						(22,885)						2,689						(7,443)						(109,957)
AOCI - Reclass related to sale of shares to noncontrolling interests						2,871						—						—						—						2,871
AOCI - June 30, 2024						$	(26,092)					$	(3,401)					$	39,317					$	(7,184)					$	2,640

Note 22. Restructuring Plan

Restructuring Plan

On May 23, 2023, the Board of Directors approved the Company’s May 2023 Restructuring Plan which includes site consolidations, facilities moves and closures, as well as the relocation and requalification of certain manufacturing facilities. These restructuring actions are expected to be accompanied by other cost reductions and are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model. We evaluate restructuring charges in accordance with ASC 420, Exit or Disposal Cost Obligations, and ASC 712, Compensation-Nonretirement Post-Employment Benefits (ASC 712).

In fiscal 2024, these activities resulted in $27 million of charges primarily for acceleration of depreciation, write-off of property and equipment, and site move costs. In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect the restructuring actions to be substantially completed by the end of fiscal 2025; 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.

Activity and accrual balances for the Restructuring Plan were as follows ($000):

			Severance						Asset Write-Offs						Other						Total Accrual
Balance - June 30, 2022			$	—					$	—					$	—					$	—
Restructuring charges			76,944						107,157						—						184,101
Reimbursement arrangements			(9,247)						(55,753)						—						(65,000)
Reimbursement arrangement related accrual			9,247						—						—						9,247
Payments			(12,565)						—						—						(12,565)
Asset write-offs and other			—						(51,404)						—						(51,404)
Balance - June 30, 2023			$	64,379					$	—					$	—					$	64,379
Restructuring charges (recoveries)			(129)						11,658						15,527						27,056
Payments			(13,189)						—						—						(13,189)
Asset write-offs and other			—						(11,658)						(15,527)						(27,185)
Balance - June 30, 2024			$	51,061					$	—					$	—					$	51,061

At June 30, 2024, $15 million and $37 million of accrued severance related costs were included in other accrued liabilities and other liabilities on our Consolidated Balance Sheet, respectively, and are expected to result in cash expenditures through fiscal 2028. The current year severance related recoveries are primarily comprised of adjustments to accruals for severance pay for employees being terminated due to the consolidation of certain manufacturing sites, with severance recorded in accordance with ASC 712. The current year asset write-offs are primarily comprised of specifically identified equipment write-offs due to the consolidation of certain manufacturing sites. The fiscal 2023 severance related costs are primarily comprised of severance pay for employees being terminated due to the consolidation of certain manufacturing sites, with severance recorded in accordance with ASC 712. The fiscal 2023 asset write-offs are primarily comprised of specifically identified equipment write-offs due to the consolidation of certain manufacturing sites. At June 30, 2023, a $50 million receivable under a reimbursement arrangement was recorded in Prepaid and other current assets; the receivable was received during fiscal 2024.

By segment in fiscal 2024, $(4) million, $28 million and $4 million of restructuring costs (recoveries) were incurred in the Networking, Materials and Lasers segments, respectively. By segment in fiscal 2023, $56 million, $60 million and $3 million of restructuring costs were incurred in the Networking, Materials and Lasers segments, respectively. Restructuring charges are recorded in Restructuring charges in our Consolidated Statements of Earnings (Loss).

SCHEDULE II

COHERENT CORP. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED JUNE 30, 2024, 2023, AND 2022

(IN THOUSANDS OF DOLLARS)

			Balance at Beginning of Year			Charged to Expense			Charged to Other Accounts						Deduction from Reserves						Balance at End of Year
YEAR ENDED JUNE 30, 2024:
Allowance for doubtful accounts			$	8,005		$	5,161		$	—					$	(3,655)		(3)			$	9,511
Warranty reserves			$	47,563		$	34,362		$	—					$	(37,732)					$	44,193
Deferred tax asset valuation allowance			$	97,180		$	57,968		$	(318)		(2)			$	—					$	154,830
YEAR ENDED JUNE 30, 2023:
Allowance for doubtful accounts			$	4,206		$	1,793		$	3,112		(1)			$	(1,106)		(3)			$	8,005
Warranty reserves			$	17,738		$	40,475		$	29,196		(1)			$	(39,846)					$	47,563
Deferred tax asset valuation allowance			$	55,420		$	4,035		$	37,725		(1,2)			$	—					$	97,180
YEAR ENDED JUNE 30, 2022:
Allowance for doubtful accounts			$	924		$	3,292		$	—					$	(10)		(3)			$	4,206
Warranty reserves			$	21,868		$	7,718		$	—					$	(11,848)					$	17,738
Deferred tax asset valuation allowance			$	53,765		$	2,157		$	(502)		(2)			$	—					$	55,420

(1) Related to amounts assumed from the Coherent, Inc. acquisition.

(2) Primarily related to currency translation adjustments.

(3) Primarily relates to write-offs of accounts receivable.