OSI SYSTEMS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (amounts in thousands, except share amounts and par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, ​ 2020 2021 ASSETS ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 76,102 ​ $ 92,465 Accounts receivable, net ​ 269,840 ​ 258,594 Inventories ​ 241,226 ​ 283,523 Prepaid expenses and other current assets ​ 30,541 ​ 26,828 Total current assets ​ 617,709 ​ 661,410 Property and equipment, net ​ 127,936 ​ 125,477 Goodwill ​ 310,627 ​ 319,211 Intangible assets, net ​ 128,279 ​ 130,058 Other assets ​ 83,990 ​ 89,804 Total assets ​ $ 1,268,541 ​ $ 1,325,960 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Bank lines of credit ​ $ 59,000 ​ $ — Current portion of long-term debt ​ 926 ​ 925 Accounts payable ​ 84,940 ​ 122,719 Accrued payroll and related expenses ​ 46,127 ​ 40,860 Advances from customers ​ 28,155 ​ 48,132 Other accrued expenses and current liabilities ​ 110,953 ​ 113,433 Total current liabilities ​ 330,101 ​ 326,069 Long-term debt ​ 267,072 ​ 273,997 Deferred income taxes ​ 5,846 ​ 1,507 Other long-term liabilities ​ 93,370 ​ 108,494 Total liabilities ​ 696,389 ​ 710,067 Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ STOCKHOLDERS' EQUITY: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value— 10,000,000 shares authorized; no shares issued or outstanding ​ — ​ — Common stock, $ 0.001 par value— 100,000,000 shares authorized; issued and outstanding , 18,011,982 shares at June 30, 2020 and 17,980,207 shares at March 31, 2021 ​ 122,553 ​ 110,744 Retained earnings ​ 474,793 ​ 522,948 Accumulated other comprehensive loss ​ ( 25,194 ) ​ ( 17,799 ) Total stockholders’ equity ​ 572,152 ​ 615,893 Total liabilities and stockholders’ equity ​ $ 1,268,541 ​ $ 1,325,960 ​ See accompanying notes to condensed consolidated financial statements. ​ 3 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (amounts in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Nine Months Ended March 31, ​ 2020 2021 2020 ​ 2021 Net revenues: ​ ​ ​ ​ ​ ​ ​ ​ Products ​ $ 213,257 ​ $ 217,124 ​ $ 646,790 ​ $ 608,238 Services ​ 79,626 ​ 66,663 ​ 242,287 ​ 206,466 Total net revenues ​ 292,883 ​ 283,787 ​ 889,077 ​ 814,704 Cost of goods sold: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ 141,069 ​ 144,958 ​ 436,120 ​ 409,692 Services ​ 42,707 ​ 34,810 ​ 133,866 ​ 103,161 Total cost of goods sold ​ 183,776 ​ 179,768 ​ 569,986 ​ 512,853 Gross profit ​ 109,107 ​ 104,019 ​ 319,091 ​ 301,851 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 65,576 ​ 57,906 ​ 191,655 ​ 172,624 Research and development ​ 15,358 ​ 13,932 ​ 44,485 ​ 39,798 Impairment, restructuring and other charges (benefit), net ​ 4,548 ​ ( 285 ) ​ 1,520 ​ 7,912 Total operating expenses ​ 85,482 ​ 71,553 ​ 237,660 ​ 220,334 Income from operations ​ 23,625 ​ 32,466 ​ 81,431 ​ 81,517 Interest and other expense, net ​ ( 4,706 ) ​ ( 4,167 ) ​ ( 14,286 ) ​ ( 12,589 ) Income before income taxes ​ 18,919 ​ 28,299 ​ 67,145 ​ 68,928 (Provision) benefit for income taxes ​ 639 ​ ( 9,526 ) ​ ( 5,858 ) ​ ( 20,773 ) Net income ​ $ 19,558 ​ $ 18,773 ​ $ 61,287 ​ $ 48,155 Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.08 ​ $ 1.04 ​ $ 3.36 ​ $ 2.68 Diluted ​ $ 1.06 ​ $ 1.03 ​ $ 3.28 ​ $ 2.63 Shares used in per share calculation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 18,182 ​ 17,969 ​ 18,251 ​ 17,981 Diluted ​ 18,513 ​ 18,298 ​ 18,693 ​ 18,278 ​ See accompanying notes to condensed consolidated financial statements. ​ 4 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED ) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Nine Months Ended March 31, ​ ​ 2020 2021 2020 2021 Net income ​ $ 19,558 ​ $ 18,773 ​ $ 61,287 ​ $ 48,155 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ ( 8,314 ) ​ ( 503 ) ​ ( 8,726 ) ​ 7,219 Other ​ ​ 10 ​ ​ 59 ​ ​ 29 ​ ​ 176 Other comprehensive income (loss) ​ ​ ( 8,304 ) ​ ​ ( 444 ) ​ ​ ( 8,697 ) ​ ​ 7,395 Comprehensive income ​ $ 11,254 ​ $ 18,329 ​ $ 52,590 ​ $ 55,550 ​ See accompanying notes to condensed consolidated financial statements. ​ 5 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (amounts in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ ​ Shares ​ Amount ​ Earnings ​ Loss ​ Total Balance—December 31, 2019 18,267,574 ​ $ 133,566 ​ $ 441,270 ​ $ ( 17,120 ) ​ $ 557,716 Exercise of stock options 1,041 ​ ​ 80 ​ ​ — ​ ​ — ​ ​ 80 Vesting of RSUs 1,671 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program 36,758 ​ ​ 2,221 ​ ​ — ​ ​ — ​ ​ 2,221 Stock-based compensation expense — ​ ​ 5,837 ​ ​ — ​ ​ — ​ ​ 5,837 Repurchase of common stock ​ ( 295,833 ) ​ ​ ( 24,781 ) ​ ​ — ​ ​ — ​ ​ ( 24,781 ) Taxes paid related to net share settlement of equity awards ( 586 ) ​ ​ ( 51 ) ​ ​ — ​ ​ — ​ ​ ( 51 ) Net income — ​ ​ — ​ ​ 19,558 ​ ​ — ​ ​ 19,558 Other comprehensive loss — ​ ​ — ​ ​ — ​ ​ ( 8,304 ) ​ ​ ( 8,304 ) Balance—March 31, 2020 ​ 18,010,625 ​ $ 116,872 ​ $ 460,828 ​ $ ( 25,424 ) ​ $ 552,276 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ ​ Shares ​ Amount ​ Earnings ​ Loss ​ Total Balance—December 31, 2020 ​ 17,933,256 ​ $ 100,816 ​ $ 504,175 ​ $ ( 17,355 ) ​ $ 587,636 Exercise of stock options ​ 9,703 ​ ​ 624 ​ ​ — ​ ​ — ​ ​ 624 Vesting of RSUs ​ 6,519 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program ​ 35,539 ​ ​ 2,193 ​ ​ — ​ ​ — ​ ​ 2,193 Stock-based compensation expense ​ — ​ ​ 7,565 ​ ​ — ​ ​ — ​ ​ 7,565 Repurchase of common stock ​ ( 2,452 ) ​ ​ ( 235 ) ​ ​ — ​ ​ — ​ ​ ( 235 ) Taxes paid related to net share settlement of equity awards ​ ( 2,358 ) ​ ​ ( 219 ) ​ ​ — ​ ​ — ​ ​ ( 219 ) Net income ​ — ​ ​ — ​ ​ 18,773 ​ ​ — ​ ​ 18,773 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ ( 444 ) ​ ​ ( 444 ) Balance—March 31, 2021 17,980,207 ​ $ 110,744 ​ $ 522,948 ​ $ ( 17,799 ) ​ $ 615,893 ​ ​ 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ ​ Shares ​ Amount ​ Earnings ​ Loss ​ Total Balance—June 30, 2019 18,167,020 ​ $ 168,913 ​ $ 399,541 ​ $ ( 16,727 ) ​ $ 551,727 Exercise of stock options 201,003 ​ 4,112 ​ — ​ — ​ 4,112 Vesting of RSUs 388,756 ​ — ​ — ​ — ​ — Shares issued under employee stock purchase program 71,595 ​ 4,286 ​ — ​ — ​ 4,286 Stock-based compensation expense — ​ 18,097 ​ — ​ — ​ 18,097 Repurchase of common stock ​ ( 562,707 ) ​ ​ ( 51,775 ) ​ ​ — ​ ​ — ​ ​ ( 51,775 ) Taxes paid related to net share settlement of equity awards ( 255,042 ) ​ ( 26,761 ) ​ — ​ — ​ ( 26,761 ) Net income — ​ — ​ 61,287 ​ — ​ 61,287 Other comprehensive loss — ​ — ​ — ​ ( 8,697 ) ​ ( 8,697 ) Balance—March 31, 2020 ​ 18,010,625 ​ $ 116,872 ​ $ 460,828 ​ $ ( 25,424 ) ​ $ 552,276 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ ​ Shares ​ Amount ​ Earnings ​ Loss ​ Total Balance—June 30, 2020 18,011,982 ​ $ 122,553 ​ $ 474,793 ​ $ ( 25,194 ) ​ $ 572,152 Exercise of stock options 87,235 ​ ​ 1,187 ​ ​ — ​ ​ — ​ ​ 1,187 Vesting of RSUs 310,939 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program 68,180 ​ ​ 4,215 ​ ​ — ​ ​ — ​ ​ 4,215 Stock-based compensation expense — ​ ​ 19,386 ​ ​ — ​ ​ — ​ ​ 19,386 Repurchase of common stock ​ ( 322,588 ) ​ ​ ( 25,051 ) ​ ​ — ​ ​ — ​ ​ ( 25,051 ) Taxes paid related to net share settlement of equity awards ( 175,541 ) ​ ​ ( 11,546 ) ​ ​ — ​ ​ — ​ ​ ( 11,546 ) Net income — ​ ​ — ​ ​ 48,155 ​ ​ — ​ ​ 48,155 Other comprehensive income — ​ ​ — ​ ​ — ​ ​ 7,395 ​ ​ 7,395 Balance—March 31, 2021 ​ 17,980,207 ​ $ 110,744 ​ $ 522,948 ​ $ ( 17,799 ) ​ $ 615,893 ​ ​ 7 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, ​ ​ 2020 ​ 2021 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ Net income ​ $ 61,287 ​ $ 48,155 Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 37,807 ​ 31,433 Stock-based compensation expense ​ 18,097 ​ 19,386 Provision for losses on accounts receivable ​ ​ 2,641 ​ ​ 6,176 Deferred income taxes ​ ​ ( 50 ) ​ ( 1,364 ) Amortization of debt discount and issuance costs ​ 6,984 ​ ​ 7,277 Impairment charges ​ ​ 3,258 ​ ​ 552 Other ​ 137 ​ ( 217 ) Changes in operating assets and liabilities—net of business acquisitions: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 23,945 ) ​ 6,714 Inventories ​ 28,871 ​ ( 43,162 ) Prepaid expenses and other assets ​ ( 18,127 ) ​ ( 4,263 ) Accounts payable ​ 10,243 ​ 37,113 Accrued payroll and related expenses ​ ​ ( 5,655 ) ​ ​ 363 Advances from customers ​ ( 9,846 ) ​ 19,468 Other ​ ( 6,149 ) ​ 3,422 Net cash provided by operating activities ​ 105,553 ​ 131,053 CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ( 16,062 ) ​ ( 11,155 ) Purchases of certificates of deposit ​ ​ — ​ ​ ( 4,820 ) Proceeds from maturities of certificates of deposit ​ ​ — ​ ​ 2,690 Acquisition of business, net of cash acquired ​ ( 3,521 ) ​ ( 3,000 ) Payments for intangible and other assets ​ ( 8,764 ) ​ ( 9,878 ) Net cash used in investing activities ​ ( 28,347 ) ​ ( 26,163 ) CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ Net borrowings (repayments) on bank lines of credit ​ 7,000 ​ ( 59,000 ) Proceeds from long-term debt ​ 592 ​ 413 Payments on long-term debt ​ ( 723 ) ​ ( 778 ) Proceeds from exercise of stock options and employee stock purchase plan ​ 8,398 ​ 5,402 Payments of contingent consideration ​ ​ ( 5,265 ) ​ ​ ( 854 ) Repurchases of common stock ​ ( 51,775 ) ​ ( 25,051 ) Taxes paid related to net share settlement of equity awards ​ ( 26,761 ) ​ ( 11,546 ) Net cash used in financing activities ​ ( 68,534 ) ​ ( 91,414 ) Effect of exchange rate changes on cash ​ ( 3,962 ) ​ 2,887 Net change in cash and cash equivalents ​ 4,710 ​ 16,363 Cash and cash equivalents—beginning of period ​ 96,316 ​ 76,102 Cash and cash equivalents—end of period ​ $ 101,026 ​ $ 92,465 Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid, net during the period for: ​ ​ ​ ​ ​ ​ Interest ​ $ 6,773 ​ $ 5,721 Income taxes ​ $ 16,141 ​ $ 8,074 ​ See accompanying notes to condensed consolidated financial statements. ​ 8 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 1. Basis of Presentation ​ The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations and GAAP applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited annual financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 filed with the SEC. The results of operations for the three and nine months ended March 31, 2021 are not necessarily indicative of the operating results to be expected for the full 2021 fiscal year or any future periods. ​ Use of Estimates ​ The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Due to the inherent uncertainty involved in making estimates, our actual amounts reported in future periods could differ materially from these estimates. ​ Earnings Per Share Computations ​ We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method. The underlying equity component of the 1.25 % convertible senior notes due 2022 (the “Notes”) discussed in Note 8 to the condensed consolidated financial statements will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $ 107.46 because the principal amount of the Notes is intended to be settled in cash upon conversion. There was no dilutive effect of the Notes for the three and nine months ended March 31, 2020 and 2021. ​ 9 Table of Contents The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Nine Months Ended March 31, ​ 2020 2021 2020 2021 Net income available to common stockholders ​ $ 19,558 ​ $ 18,773 ​ $ 61,287 ​ $ 48,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding—basic ​ 18,182 ​ 17,969 ​ 18,251 ​ 17,981 Dilutive effect of equity awards ​ 331 ​ 329 ​ 442 ​ 297 Weighted average shares outstanding—diluted ​ 18,513 ​ 18,298 ​ 18,693 ​ 18,278 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 1.08 ​ $ 1.04 ​ $ 3.36 ​ $ 2.68 Diluted earnings per share ​ $ 1.06 ​ $ 1.03 ​ $ 3.28 ​ $ 2.63 Shares excluded from diluted earnings per share due to their anti-dilutive effect ​ ​ 145 ​ ​ 51 ​ ​ 100 ​ ​ 64 ​ Cash and Cash Equivalents ​ We consider all highly liquid investments with maturities of three months or less as of the acquisition date to be cash equivalents. ​ Our cash and cash equivalents totaled $ 92.5 million at March 31, 2021. Of this amount, approximately 58 % was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in the United Kingdom, Malaysia, Canada, Singapore and India and to a lesser extent in Puerto Rico and Albania among other countries. We have cash holdings in financial institutions that exceed insured limits for such institutions; however, we mitigate this risk by utilizing international financial institutions of high credit quality. ​ Fair Value of Financial Instruments ​ Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments and foreign currency forward contracts. The carrying values of financial instruments, other than long-term debt instruments, are representative of their fair values due to their short-term maturities. The carrying values of our long-term debt instruments are considered to approximate their fair values, as the interest rates of these instruments are variable or comparable to current rates for financing available to us. The fair values of our foreign currency forward contracts were not significant as of March 31, 2021. ​ Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Level 1 category includes assets and liabilities measured at quoted prices in active markets for identical assets and liabilities. The Level 2 category includes assets and liabilities measured from observable inputs other than quoted market prices. The Level 3 category includes assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement. Our contingent payment obligations related to acquisitions, which are further discussed in Note 10 to the condensed consolidated financial statements, are in the Level 3 category for valuation purposes. ​ The fair values of our financial assets and liabilities are categorized as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 March 31, 2021 ​ Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Insurance company contracts ​ $ — ​ $ 37,155 ​ $ — ​ $ 37,155 ​ $ — ​ $ 45,015 ​ $ — ​ $ 45,015 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration ​ $ — ​ $ — ​ $ 13,867 ​ $ 13,867 ​ $ — ​ $ — ​ $ 19,337 ​ $ 19,337 ​ Derivative Instruments and Hedging Activity ​ Our use of derivatives consists of foreign currency forward contracts. These forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations. These contracts have original maturities of up to three months. We do not use hedging instruments for speculative purposes. ​ 10 Table of Contents The net investment hedge has been designated as a hedge instrument and accounted for under Accounting Standards Codification ("ASC”) 815 “Derivatives and Hedging”. Hedge effectiveness is assessed using the spot method, consistent with guidance in ASC 815 whereby the change in fair value of the forward contract is recorded in the same manner as the related currency translation adjustments, within other comprehensive income, as the hedging instrument is expected to be fully effective unless the amount hedged exceeds the net investment in the foreign operation, or the foreign operation is liquidated. We settled the net investment hedge in the second quarter of fiscal 2021, and the amount recorded in other comprehensive loss was not significant. There were no net investment hedges outstanding as of March 31, 2021. ​ The net gains or losses from the foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated income statement. We initiated these forward contracts in the first quarter of fiscal 2021 and the amounts reported in the consolidated income statement for the three and nine months ended March 31, 2021 were not significant. The fair value of our forward foreign exchange contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term. Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. As of March 31, 2021, we held foreign currency forward contracts with notional amounts totaling $ 23.5 million. Unrealized gains and losses from the forward currency forward contracts as of March 31, 2021 were not significant. There were no derivative instruments as of June 30, 2020. ​ Recently Adopted Accounting Pronouncements ​ In August 2018, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance under Accounting Standards Update (“ASU”) 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our disclosures in the consolidated financial statements. ​ In August 2018, the FASB issued authoritative guidance under ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our consolidated financial statements. ​ In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. Modifications to debt agreements for a change in the reference interest rate will be accounted for by prospectively adjusting the effective interest rate. The new standard was effective upon issuance and did not have a significant impact on our consolidated financial statements. ASU 2020-04 generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates; however the adoption of this new guidance for future modifications to contracts, if any, is not expected to have a significant impact on our consolidated financial statements. ​ Recently Issued Accounting Pronouncements Not Yet Adopted ​ In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. ASU 2020-06 also provides for certain disclosures with regard to convertible instruments and associated fair values. We are required to adopt this new guidance in the first quarter of fiscal 2023. Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. 11 Table of Contents ​ In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 removes certain exceptions to the general principles of ASC 740 and is intended to improve consistency and simplify GAAP by clarifying and amending existing guidance for income taxes and related topics. We are required to adopt this new guidance in the first quarter of fiscal 2022. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. ​ 2 . Business Combinations ​ Under ASC 805, Business Combinations, the acquisition method of accounting requires us to record assets acquired less liabilities assumed in an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase consideration over the estimated fair value of the assets acquired less liabilities assumed should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. We may record adjustments to the assets acquired and liabilities assumed, with corresponding adjustments to goodwill, during the one-year post-acquisition measurement period as additional information becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are reflected in reported earnings. ​ Fiscal Year 2021 Business Acquisition ​ In July 2020, we (through our Healthcare division) acquired a privately-held software development company for $ 3.0 million, plus up to $ 12.0 million in potential contingent consideration. The goodwill recognized for this business is deductible for income tax purposes. This acquisition was financed with available cash on hand. This business acquisition was not material to our consolidated financial statements. Accordingly, pro-forma historical results of operations and certain other disclosures related to this business have not been presented. ​ 12 Table of Contents 3. Balance Sheet Details ​ The following tables provide details of selected balance sheet accounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Accounts receivable, net 2020 2021 Accounts receivable ​ $ 287,488 $ 281,970 Less allowance for doubtful accounts ​ ( 17,648 ) ​ ( 23,376 ) Total ​ $ 269,840 ​ $ 258,594 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Inventories 2020 2021 Raw materials ​ $ 132,797 $ 144,043 Work-in-process ​ 50,023 ​ 68,853 Finished goods ​ 58,406 ​ 70,627 Total ​ $ 241,226 ​ $ 283,523 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Property and equipment, net ​ 2020 ​ 2021 Land $ 16,516 $ 16,345 Buildings, civil works and improvements ​ 57,709 ​ 57,645 Leasehold improvements ​ 9,052 ​ 8,654 Equipment, furniture and fixtures ​ 149,310 ​ 156,006 Computer software ​ 18,217 ​ 23,052 Computer software implementation in process ​ ​ 11,817 ​ ​ 10,615 Construction in process ​ 3,598 ​ 4,459 Total ​ 266,219 ​ 276,776 Less accumulated depreciation and amortization ​ ( 138,283 ) ​ ( 151,299 ) Property and equipment, net ​ $ 127,936 ​ $ 125,477 ​ Depreciation and amortization expense for property and equipment was $ 5.4 million and $ 5.5 million for the three months ended March 31, 2020 and 2021, respectively, and $ 15.9 million and $ 16.3 million for the nine months ended March 31, 2020 and 2021, respectively. ​ 4. Goodwill and Intangible Assets ​ The changes in the carrying value of goodwill by segment for the nine-month period ended March 31, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ ​ ​ ​ ​ Security ​ Healthcare ​ Manufacturing ​ ​ ​ ​ Division Division Division Consolidated Balance as of June 30, 2020 ​ $ 203,627 ​ $ 39,983 ​ $ 67,017 ​ $ 310,627 Goodwill acquired or adjusted during the period ​ 1,905 ​ 3,244 ​ — ​ 5,149 Foreign currency translation adjustment ​ 264 ​ 333 ​ 2,838 ​ 3,435 Balance as of March 31, 2021 ​ $ 205,796 ​ $ 43,560 ​ $ 69,855 ​ $ 319,211 ​ 13 Table of Contents Intangible assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ March 31, 2021 ​ ​ Weighted ​ Gross ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Carrying ​ Accumulated ​ Intangibles ​ Carrying ​ Accumulated ​ Intangibles ​ Lives Value Amortization Net Value Amortization Net Amortizable assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software development costs 8 years ​ $ 41,332 ​ $ ( 16,295 ) ​ $ 25,037 ​ $ 45,421 ​ $ ( 14,817 ) ​ $ 30,604 Patents 19 years ​ 9,962 ​ ( 2,584 ) ​ 7,378 ​ 9,890 ​ ( 2,790 ) ​ 7,100 Developed technology 10 years ​ 55,719 ​ ( 19,556 ) ​ 36,163 ​ 60,923 ​ ( 24,352 ) ​ 36,571 Customer relationships/backlog 7 years ​ 64,128 ​ ( 32,110 ) ​ 32,018 ​ 62,577 ​ ( 35,929 ) ​ 26,648 Total amortizable assets ​ ​ ​ 171,141 ​ ( 70,545 ) ​ 100,596 ​ 178,811 ​ ( 77,888 ) ​ 100,923 Non-amortizable assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In-process research and development ​ ​ ​ ​ 533 ​ ​ — ​ ​ 533 ​ ​ 533 ​ ​ — ​ ​ 533 Trademarks ​ ​ ​ 27,150 ​ — ​ 27,150 ​ 28,602 ​ — ​ 28,602 Total intangible assets ​ ​ ​ $ 198,824 ​ $ ( 70,545 ) ​ $ 128,279 ​ $ 207,946 ​ $ ( 77,888 ) ​ $ 130,058 ​ Amortization expense related to intangible assets was $ 4.9 million and $ 4.8 million for the three months ended March 31, 2020 and 2021, respectively. For the nine months ended March 31, 2020 and 2021, amortization expense related to intangible assets was $ 14.3 million and $ 15.1 million, respectively. ​ At March 31, 2021, the estimated future amortization expense for intangible assets was as follows (in thousands): ​ ​ ​ ​ ​ 2021 (remaining 3 months) ​ $ 4,660 2022 ​ 17,152 2023 ​ 17,377 2024 ​ 16,705 2025 ​ 13,986 Thereafter ​ 31,043 Total ​ $ 100,923 ​ Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product-by-product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight-line basis over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in Thereafter in the table above. For the three months ended March 31, 2020 and 2021, we capitalized software development costs in the amounts of $ 4.5 million and $ 2.6 million, respectively. For the nine months ended March 31, 2020 and 2021, we capitalized software development costs in the amounts of $ 7.7 million and $ 9.1 million, respectively. ​ 5. Contract Assets and Liabilities ​ We enter into contracts to sell products and provide services, and we recognize contract assets and liabilities that arise from these transactions. We recognize revenue and corresponding accounts receivable according to ASC 606. When we recognize revenue in advance of the point in time at which contracts give us the right to invoice a customer, we record this as unbilled revenue, which is included in accounts receivable, net, on the consolidated balance sheet. We may also receive consideration, per the terms of a contract, from customers prior to transferring goods to the customer. We record customer deposits as contract liabilities. Additionally, we may receive payments, most typically under service and warranty contracts, at the onset of the contract and before services have been performed. In such instances, we record a deferred revenue liability. We recognize these contract liabilities as sales after all revenue recognition criteria are met. ​ 14 Table of Contents Contract assets and liabilities were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, March 31, ​ ​ ​ Contract Assets: ​ 2020 ​ 2021 ​ $ Change ​ % Change Unbilled revenue ​ $ 43,011 ​ $ 46,866 ​ $ 3,855 9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract Liabilities: ​ ​ ​ ​ Advances from customers ​ $ 28,155 ​ $ 48,132 ​ $ 19,977 ​ 71 % Deferred revenue—current ​ 32,863 ​ 37,075 ​ 4,212 ​ 13 % Deferred revenue—long-term ​ 13,214 ​ 13,470 ​ 256 ​ 2 % ​ Contract assets increased during the nine months ended March 31, 2021 primarily due to satisfaction of performance obligations for aviation, cargo and vehicle inspection customers in our Security division which have not yet been billed. The increase in contract liabilities was primarily due to receipt of upfront deposits from customers in our Security division. ​ Remaining Performance Obligations . Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations under an original contract with a term greater than one year which are fully or partially unsatisfied at the end of the period. As of March 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 322.8 million. We expect to recognize revenue on approximately 67 % of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. During the nine months ended March 31, 2021, we recognized revenue of $ 45.0 million from contract liabilities existing at the beginning of the period. ​ Practical Expedients. In cases where we are responsible for shipping after the customer has obtained control of the goods, we have elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation. Additionally, we have elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. We only give consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. ​ 6. Leases ​ The components of operating lease expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Nine Months Ended March 31, ​ ​ 2020 2021 ​ 2020 2021 Operating lease cost ​ $ 2,525 ​ $ 2,216 ​ $ 7,771 ​ $ 7,120 Variable lease cost ​ 237 ​ 280 ​ 551 ​ 723 Short-term lease cost ​ 350 ​ 258 ​ 745 ​ 649 ​ ​ $ 3,112 ​ $ 2,754 ​ $ 9,067 ​ $ 8,492 ​ Supplemental disclosures related to operating leases were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet Category June 30, 2020 March 31, 2021 Operating lease ROU assets, net Other assets ​ $ 27,936 ​ $ 23,856 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities, current portion Other accrued expenses and current liabilities ​ $ 8,537 ​ $ 7,646 Operating lease liabilities, long-term Other long-term liabilities ​ 19,713 ​ 16,742 Total operating lease liabilities ​ ​ ​ $ 28,250 ​ $ 24,388 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ ​ ​ ​ ​ 4.2 years Weighted average discount rate ​ ​ ​ ​ ​ 4.2 % ​ 15 Table of Contents Supplemental cash flow information related to operating leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, ​ ​ 2020 2021 Cash paid for operating lease liabilities ​ $ 7,664 ​ $ 7,773 ROU assets obtained in exchange for new lease obligations ​ 3,718 ​ 1,810 ​ Maturities of operating lease liabilities at March 31, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ March 31, 2021 Less than one year ​ $ 8,475 1 – 2 years ​ 5,929 2 – 3 years ​ 4,866 3 – 4 years ​ 3,215 4 – 5 years ​ 2,060 Thereafter ​ 2,421 ​ ​ 26,966 Less: imputed interest ​ ( 2,578 ) Total lease liabilities ​ $ 24,388 ​ ​ 7. Impairment, Restructuring and Other Charges ​ We endeavor to align our global capacity and infrastructure with demand by our customers as well as fully integrate acquisitions and thereby improve operational efficiency. ​ During the three months ended March 31, 2021, we recognized a total net benefit of ($ 0.3 ) million which included a net benefit of ($ 0.7 ) million for reimbursements from our insurance carriers for covered legal charges. We also incurred charges of $ 0.2 million for employee terminations and $ 0.2 million for facility closure and operational efficiency activities. ​ During the nine months ended March 31, 2021, we incurred a total net expense of $ 7.9 million which included $ 7.2 million for exit activities associated with an expired turnkey contract in Mexico. Such exit costs include $ 2.8 million for employee terminations, $ 1.1 million for facility closure and other exit costs, direct transaction costs of $ 2.7 million, and $ 0.6 million for right-of-use asset impairment for a leased facility. We also incurred costs of $ 1.6 million for other employee terminations and facility closure costs for operational efficiency activities and $ 0.3 million for acquisition-related activities. We also recognized a net benefit of ($ 1.2 ) million for reimbursements from our insurance carriers for covered legal charges. ​ During the three and nine months ended March 31, 2020, we abandoned a non-core product line in our Healthcare division which resulted in the write-off of assets, including intangible and fixed assets, totaling $ 3.3 million as we determined that these assets had no value and were permanently impaired. In addition, we continued to recover certain legal costs related to class action litigation and government investigations through insurance reimbursement. We also incurred additional legal fees related to these matters as well as restructuring charges by the divisions as noted in the tables below. This resulted in a net expense of $ 4.5 million and $ 1.5 million during the three and nine months ended March 31, 2020, respectively. ​ 16 Table of Contents The following tables summarize impairment, restructuring and other charges (benefit), net for the periods set forth below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Impairment charges ​ $ — ​ $ 3,258 ​ $ — ​ $ — ​ $ 3,258 Acquisition-related costs ​ ​ 107 ​ ​ — ​ 41 ​ ​ 155 ​ ​ 303 Employee termination costs ​ ​ 328 ​ ​ 466 ​ ​ 259 ​ ​ 50 ​ ​ 1,103 Facility closures/consolidation ​ 30 ​ — ​ — ​ — ​ 30 Legal costs (recoveries), net ​ — ​ — ​ — ​ ( 146 ) ​ ( 146 ) Total expensed ​ $ 465 ​ $ 3,724 ​ $ 300 ​ $ 59 ​ $ 4,548 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Acquisition-related costs ​ $ 22 ​ $ — ​ $ — ​ $ — ​ $ 22 Employee termination costs ​ ​ 213 ​ ​ — ​ ​ — ​ ​ — ​ ​ 213 Facility closures/consolidation costs (benefit) ​ ​ 166 ​ ​ — ​ ​ — ​ ​ — ​ ​ 166 Legal costs (recoveries), net ​ — ​ — ​ — ​ ( 686 ) ​ ( 686 ) Total expensed (benefit), net ​ $ 401 ​ $ — ​ $ — ​ $ ( 686 ) ​ $ ( 285 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2020 ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ ​ Security Division ​ Division ​ Division ​ Corporate ​ Total Impairment charges ​ $ — ​ $ 3,258 ​ $ — ​ $ — ​ $ 3,258 Acquisition-related costs ​ 107 ​ — ​ 41 ​ 155 ​ ​ 303 Employee termination costs ​ ​ 734 ​ ​ 466 ​ ​ 277 ​ ​ 119 ​ ​ 1,596 Facility closures/consolidation ​ 30 ​ — ​ — ​ — ​ 30 Legal costs (recoveries), net ​ — ​ — ​ — ​ ( 3,667 ) ​ ( 3,667 ) Total expensed ​ $ 871 ​ $ 3,724 ​ $ 318 ​ $ ( 3,393 ) ​ $ 1,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2021 ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ ​ Security Division ​ Division ​ Division ​ Corporate ​ Total Impairment charges ​ $ 552 ​ $ — ​ $ — ​ $ — ​ $ 552 Acquisition-related costs ​ ​ 250 ​ ​ 27 ​ ​ — ​ ​ — ​ ​ 277 Employee termination costs ​ 4,010 ​ — ​ 146 ​ — ​ 4,156 Mexico transaction costs ​ ​ 2,691 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,691 Facility closures/consolidation costs ​ 1,420 ​ — ​ — ​ — ​ 1,420 Legal costs (recoveries), net ​ — ​ — ​ — ​ ( 1,184 ) ​ ( 1,184 ) Total expensed (benefit), net ​ $ 8,923 ​ $ 27 ​ $ 146 ​ $ ( 1,184 ) ​ $ 7,912 ​ The accrued liability for restructuring and other charges is included in other accrued expenses and current liabilities in the condensed consolidated balance sheet. The changes in the accrued liability for restructuring and other charges for the nine-month period ended March 31, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Facility ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee ​ Closure/ ​ ​ ​ ​ ​ ​ ​ ​ ​ Termination ​ Consolidation ​ Acquisition- ​ Legal Costs and ​ ​ ​ ​ Costs Cost Related Costs Settlements Total Balance as of June 30, 2020 ​ $ 545 ​ $ 201 ​ $ — ​ $ 1,882 ​ $ 2,628 Restructuring and other charges (benefit), net ​ 4,156 ​ 1,420 ​ 277 ​ ( 1,184 ) ​ 4,669 Payments, adjustments and reimbursements, net ​ ( 4,570 ) ​ ( 1,501 ) ​ ( 277 ) ​ 748 ​ ( 5,600 ) Balance as of March 31, 2021 ​ $ 131 ​ $ 120 ​ $ — ​ $ 1,446 ​ $ 1,697 ​ 17 Table of Contents ​ 8. Borrowings ​ Revolving Credit Facility ​ We have a revolving credit facility with an aggregate committed amount of up to $ 535 million which matures in April 2024. The credit facility includes a $ 300 million sub-limit for letters of credit. Under certain circumstances, we have the ability to increase the facility by the greater of $ 250 million or such amount as would not cause our secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR plus a margin of 1.0 % as of March 31, 2021 (which margin can range from 1.0 % to 1.75 % based on our consolidated net leverage ratio as defined in the credit facility). The LIBOR index is expected to be discontinued by the end of calendar year 2021. The terms of our credit facility allow for replacement if that occurs. Letters of credit reduce the amount available to borrow under the credit facility by their face value amount. The unused portion of the facility bears a commitment fee of 0.10 % as of March 31, 2021 (which fee can range from 0.10 % to 0.25 % based on our consolidated net leverage ratio as defined in the credit facility). Our borrowings under the credit agreement are guaranteed by certain of our U.S.-based subsidiaries and are secured by substantially all of our assets and substantially all the assets of certain of our subsidiaries. The credit facility contains various representations and warranties, affirmative, negative and financial covenants and events of default. As of March 31, 2021, there were no borrowings outstanding under the revolving credit facility and $ 66.7 million outstanding under the letters of credit sub facility. The amount available to borrow under the credit facility as of March 31, 2021 was $ 468.3 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term. The principal amount of each revolving loan is due and payable in full on the maturity date. We have the right to repay each revolving loan in whole or in part from time to time without penalty. It is our practice to routinely borrow and repay several times per year under this revolving facility and therefore, borrowings under the credit facility are included in current liabilities. As of March 31, 2021, we were in compliance with all covenants under this credit facility. ​ 1.25% Convertible Senior Notes (“Notes”) Due 2022 ​ In February 2017, we issued $ 287.5 million of the Notes in a private offering. The Notes are governed by an indenture dated February 22, 2017. The maturity for the payment of principal is September 1, 2022. The Notes bear interest at the rate of 1.25 % and are payable in cash semiannually in arrears on each March 1 and September 1. ​ Pursuant to ASC 470-20, we allocated the $ 287.5 million gross proceeds of the Notes between liability and equity components. The initial $ 242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The initial $ 45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $ 7.7 million were allocated between debt ($ 6.5 million) and equity ($ 1.2 million) components with the portion allocated to the debt presented as an offset against long-term debt in the consolidated balance sheet. The debt discount is amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.5 %. The debt issuance cost is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes. Total interest expense recognized for the three and nine months ended March 31, 2021 related to the Notes was $ 3.3 million and $ 10.0 million, respectively, which consisted of $ 0.9 million and $ 2.7 million of contractual interest expense, $ 2.2 million and $ 6.4 million of debt discount amortization and $ 0.3 million and $ 0.9 million of amortization of debt issuance costs. For the three and nine months ended March 31, 2020, total interest expense was $ 3.3 million and $ 9.7 million, respectively, which consisted of $ 0.9 million and $ 2.7 million of contractual interest expense, $ 2.1 million and $ 6.1 million of debt discount amortization and $ 0.3 million and $ 0.9 million of amortization of debt issuance costs. ​ Other Borrowings ​ Several of our foreign subsidiaries maintain bank lines-of-credit, denominated in local currencies and U.S. dollars, primarily for the issuance of letters-of-credit. As of March 31, 2021, $ 63.0 million was outstanding under these letter-of-credit facilities. As of March 31, 2021, the total amount available under these credit facilities was $ 12.9 million. ​ 18 Table of Contents Long-term debt consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, March 31, ​ ​ 2020 ​ 2021 1.25% convertible notes due September 1, 2022: ​ ​ ​ ​ ​ ​ Principal amount ​ $ 287,500 ​ $ 287,500 Unamortized discount ​ ​ ( 19,075 ) ​ ​ ( 12,680 ) Unamortized debt issuance costs ​ ​ ( 2,547 ) ​ ​ ( 1,665 ) ​ ​ ​ 265,878 ​ ​ 273,155 Other long-term debt ​ 2,120 ​ 1,767 ​ ​ 267,998 ​ 274,922 Less current portion of long-term debt ​ ( 926 ) ​ ( 925 ) Long-term portion of debt ​ $ 267,072 ​ $ 273,997 ​ ​ 9. Stockholders’ Equity ​ Stock-based Compensation ​ As of March 31, 2021, we maintained the Amended and Restated 2012 Incentive Award Plan (the "2012 Plan ") and the Amended and Restated 2006 Equity Participation Plan ("2006 Plan") as stock-based employee compensation plans. No further grants may be made under the 2006 Plan. The 2012 Plan and the 2006 Plan are collectively referred to as the "OSI Plans." ​ We recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Nine Months Ended March 31, ​ ​ 2020 2021 2020 2021 Cost of goods sold ​ $ 189 ​ $ 199 ​ $ 517 ​ $ 571 Selling, general and administrative ​ 5,520 ​ ​ 7,223 ​ 17,153 ​ 18,391 Research and development ​ 128 ​ ​ 143 ​ 427 ​ 424 Stock-based compensation expense ​ $ 5,837 ​ $ 7,565 ​ $ 18,097 ​ $ 19,386 ​ As of March 31, 2021, total unrecognized compensation cost related to share-based compensation grants under the OSI Plans were estimated at $ 0.5 million for stock options and $ 20.7 million for restricted stock units (“RSUs”). We expect to recognize these costs over a weighted average period of 2.1 years with respect to the stock options and 1.9 years for grants of RSUs. ​ The following summarizes stock option activity during the nine months ended March 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Weighted-Average ​ Aggregate ​ ​ Number of ​ Exercise ​ Remaining Contractual ​ Intrinsic Value ​ Options Price Term (in thousands) Outstanding at June 30, 2020 326,304 $ 44.41 ​ ​ ​ ​ Granted 22,171 ​ ​ 82.17 ​ ​ ​ ​ ​ Exercised ( 87,235 ) ​ ​ 34.44 ​ ​ ​ ​ ​ Expired or forfeited ( 2,710 ) ​ ​ 78.71 ​ ​ ​ ​ ​ Outstanding at March 31, 2021 258,530 ​ ​ 50.65 ​ 2.8 years ​ $ 11,818 Exercisable at March 31, 2021 ​ 222,512 ​ ​ 45.03 1.8 years ​ ​ 11,387 ​ 19 Table of Contents The following summarizes RSU award activity during the nine months ended March 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average ​ Shares Fair Value Nonvested at June 30, 2020 423,590 ​ $ 88.68 Granted 337,778 ​ ​ 80.32 Vested ( 310,939 ) ​ ​ 86.20 Forfeited ( 8,244 ) ​ ​ 84.47 Nonvested at March 31, 2021 442,185 ​ $ 84.12 ​ In December 2020, our shareholders authorized an increase of 1.65 million shares for the 2012 Plan resulting in a maximum pool of 7.1 million shares. As of March 31, 2021, there were approximately 2.1 million shares available for grant under the 2012 Plan. Under the terms of the 2012 Plan, RSUs and restricted stock granted from the pool of shares available for grant reduce the pool by 1.87 shares for each award granted. RSUs and restricted stock forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited. ​ We granted 81,621 and 136,242 performance-based RSUs during the nine months ended March 31, 2020 and 2021, respectively. These performance based RSU awards are contingent on the achievement of certain performance metrics. The payout related to these awards can range from zero to 400 % of the original number of shares or units awarded. Compensation cost associated with these performance based RSUs are recognized based on the estimated number of shares that we ultimately expect will vest. If the estimated number of shares to vest is revised in the future, then stock based compensation expense will be adjusted accordingly. ​ Stock Repurchase Program ​ In April 2020, the Board of Directors authorized a share repurchase program of up to 1,000,000 shares of common stock. In August 2020, the Board of Directors increased the maximum number of shares to 3,000,000 shares authorized under the stock repurchase program. This program does not expire unless our Board of Directors acts to terminate the program. The timing and actual numbers of shares purchased depends on a variety of factors, including stock price, general business and market conditions and other investment opportunities. Repurchases may be made from time to time under the program through open-market purchases or privately-negotiated transactions at our discretion. Upon repurchase, the shares are restored to the status of authorized but unissued shares and we record them in our consolidated financial statements as a reduction in the number of shares of common stock issued and outstanding. ​ During the nine months ended March 31, 2021, we repurchased 322,588 shares of our common stock. ​ Dividends ​ We have not paid any cash dividends since the consummation of our initial public offering in 1997 and we do not currently intend to pay any cash dividends in the foreseeable future. Our Board of Directors will determine the payment of future cash dividends, if any. Certain of our current bank credit facilities restrict the payment of cash dividends and future borrowings may contain similar restrictions. ​ 10. Commitments and Contingencies ​ Acquisition-Related Contingent Obligations ​ Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones through the acquired operations. For agreements that contain contingent consideration caps, the remaining maximum amount of such potential future payments is $ 30.2 million as of March 31, 2021. ​ We account for such contingent payments for acquisitions which occurred through the end of fiscal year 2009 as additions to the purchase price of the acquired business. We made contingent payments relating to such acquisitions of $ 0.2 million and $ 1.5 million, respectively, during the three and nine months ended March 31, 2020 and $ 0.2 million and $ 0.9 million, respectively, during the three and nine months ended March 31, 2021. ​ 20 Table of Contents For acquisitions completed after fiscal 2009, pursuant to Financial Accounting Standard 141R, which was codified into ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements. The estimated fair value measurements of contingent earnout obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income and the estimated probability of achieving the earnouts. ​ These projections and probabilities are used to estimate future contingent earnout payments, which are discounted back to present value to compute contingent earnout liabilities. The following table provides a roll-forward from June 30, 2020 to March 31, 2021 of the contingent consideration liability, which is included in other accrued expenses and current liabilities and other long-term liabilities in our consolidated balance sheets (in thousands): ​ ​ ​ ​ ​ Beginning fair value, June 30, 2020 ​ $ 13,867 Addition of contingent earnout obligations ​ ​ 7,304 Foreign currency translation adjustment ​ ​ 523 Changes in fair value for contingent earnout obligations ​ ( 2,357 ) Payments on contingent earnout obligations ​ — Ending fair value, March 31, 2021 ​ $ 19,337 ​ Environmental Contingencies ​ We are subject to various environmental laws. Our practice is to conduct environmental investigations at our manufacturing facilities in North America, Asia-Pacific and Europe, and, to the extent practicable, on all new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations. In certain cases, we have conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants. ​ We continue to investigate contamination of the soil and groundwater beneath the Hawthorne, California facility that resulted from unspecified on-and off-site releases occurring prior to our occupancy. We believe the releases are of a historical nature and not uncommon to the region in general. We continue to take voluntary actions, in cooperation with the local governing agency, to fully investigate the site and develop appropriate remedial actions. ​ We have not accrued for loss contingencies relating to the Hawthorne facility or any other environmental matters because we believe that, although unfavorable outcomes are possible, they are not considered by our management to be probable and reasonably estimable. If one or more of these environmental matters are resolved in a manner adverse to us, the impact on our business, financial condition, results of operations and cash flow could be material. ​ Indemnifications and Certain Employment-Related Contingencies ​ In the normal course of business, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from breaches of representations, warranties or covenants, or intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our directors and certain of our officers. It is not possible to determine the maximum potential liability amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. We have not recorded any liability for costs related to contingent indemnification obligations as of March 31, 2021. ​ On December 31, 2017, we and Deepak Chopra, our Chief Executive Officer, entered into an amendment to Mr. Chopra's employment agreement that, among other things, provides for a $ 13.5 million bonus payment to Mr. Chopra on or within 45 days of January 1, 2024 contingent upon Mr. Chopra's continued employment with us through that date, subject to accelerated payout terms in the event of Mr. Chopra's death or disability. The bonus is recorded in the financial statements over the remaining term of the employment agreement and is included in other long-term liabilities. ​ 21 Table of Contents Product Warranties ​ We offer our customers warranties on many of the products that we sell. These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. We periodically adjust this provision based on historical experience and anticipated expenses. We charge actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. The current obligation for warranty provision is included in other accrued expenses and current liabilities and the noncurrent portion is included in other long-term liabilities in the consolidated balance sheets. ​ The following table presents changes in warranty provisions (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, ​ 2020 2021 Balance at beginning of period ​ $ 21,724 ​ $ 20,825 Additions and adjustments ​ ​ 6,105 ​ ​ 3,759 Reductions for warranty repair costs ​ ( 6,557 ) ​ ( 4,975 ) Balance at end of period ​ $ 21,272 ​ $ 19,609 ​ Legal Proceedings ​ In December 2017, a short seller released a report regarding our compliance with the FCPA. Following that report, we and certain of our executive officers have been named as defendants in several lawsuits in the District Court that were filed in December 2017 and February 2018. Each of the complaints closely tracks the allegations set forth in the short seller's report. All of the actions, which were consolidated by the District Court in March 2018 in an action captioned Arkansas Teacher Retirement System et al. v. OSI Systems, Inc. et al. , No. 17 cv 08841, allege violations of Sections 10(b) and 20(a) of the Exchange Act, relating to certain of our public statements and filings with the SEC, and seek damages and other relief based upon the allegations in the complaints. In April 2018 and March 2019, two shareholder derivative complaints were filed purportedly on behalf of the Company against certain members of our Board of Directors (as individual defendants), a former member of our Board of Directors, and a member of management. The derivative actions, which were consolidated by the District Court in November 2019 in an action captioned Kocen and Riley v. Chopra, et al. No. 18 CV 03371, allege, among other things, breach of fiduciary duties relating to the allegations contained in the above-mentioned short seller report and seek damages, restitution, injunctive relief, attorneys' and experts' fees, costs, expenses, and other unspecified relief. We believe that the actions are without merit and intend to defend them vigorously, and we expect to incur costs associated with defending against these actions. At this early stage of the litigations, the ultimate outcomes are uncertain and we cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on our financial statements. ​ The SEC and the DOJ are conducting an investigation of trading in our securities and have each subpoenaed information regarding trading by executives, directors, and employees, as well as our operations and disclosures in and around the time of certain trades. With respect to these trading related matters, in fiscal year 2018, we took action with respect to a senior level employee. At this time, we are unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these trading related investigations, or any penalties or remedial measures these agencies may seek. We place a high priority on compliance with our anticorruption and securities trading policies and are cooperating with each of the government investigations. ​ We are involved in various other claims and legal proceedings arising in the ordinary course of business. In our opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on our business, financial condition, results of operations or cash flows. We have not accrued for loss contingencies relating to any such matters because we believe that, although unfavorable outcomes in the proceedings are possible, they are not considered by management to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to our company, the impact on our business, financial condition, results of operations and cash flows could be material. ​ 22 Table of Contents 11. Income Taxes ​ The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. ​ The effective tax rates for the three months ended March 31, 2021 and 2020 were 33.7 % and ( 3.4 )%, respectively. During the three months ended March 31, 2021, we recognized a net discrete tax expense of $ 2.2 million for return-to-provision true-up adjustments of $ 2.4 million, offset by a discrete tax benefit of ($ 0.2 ) million for equity-based compensation under ASU 2016-09. During the three months ended March 31, 2020, we recognized a discrete tax benefit of $ 5.1 million for a return to provision true-up adjustment. ​ The effective tax rate for the nine months ended March 31, 2021 and 2020 was 30.1 % and 8.7 %, respectively. During the nine months ended March 31, 2021, we recognized a net discrete tax expense of $ 2.3 million for return-to-provision true-up adjustments of $ 2.8 million, offset by a ($ 0.5 ) million tax benefit from equity-based compensation under ASU 2016-09. During the nine months ended March 31, 2020, we recognized a discrete tax benefit of $ 12.0 million for equity-based compensation under ASU 2016-09 of $ 6.8 million and a return to provision true-up adjustment of $ 5.2 million. ​ 12. Segment Information ​ We have determined that we operate in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring and diagnostic cardiology systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division). We also have a corporate segment (Corporate) that includes executive compensation and certain other general and administrative expenses; expenses related to stock issuances and legal, audit and other professional service fees not allocated to industry segments. Both the Security and Healthcare divisions comprise primarily end-product businesses, whereas the Optoelectronics and Manufacturing division primarily supplies components and subsystems to external OEM customers, as well as to the Security and Healthcare divisions. Sales between divisions are at transfer prices that approximate market values. All other accounting policies of the segments are the same as described in Note 1, Basis of Presentation. ​ 23 Table of Contents The following tables present our results of operations and identifiable assets by industry segment (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Nine Months Ended March 31, ​ 2020 2021 2020 2021 Revenues (1) —by Segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security division ​ $ 187,076 ​ $ 151,409 ​ $ 578,477 ​ $ 431,420 Healthcare division ​ ​ 45,662 ​ ​ 54,023 ​ 127,862 ​ 160,421 Optoelectronics and Manufacturing division, including intersegment revenues ​ ​ 70,240 ​ ​ 90,278 ​ 216,684 ​ 257,713 Intersegment revenues elimination ​ ​ ( 10,095 ) ​ ​ ( 11,923 ) ​ ( 33,946 ) ​ ( 34,850 ) Total ​ $ 292,883 ​ $ 283,787 ​ $ 889,077 ​ $ 814,704 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations —by Segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security division ​ $ 24,525 ​ $ 23,969 ​ $ 73,405 ​ $ 52,651 Healthcare division ​ ​ 1,682 ​ ​ 7,333 ​ 5,793 ​ 25,640 Optoelectronics and Manufacturing division ​ ​ 7,309 ​ ​ 10,484 ​ 25,096 ​ 29,638 Corporate ​ ​ ( 10,161 ) ​ ​ ( 9,078 ) ​ ( 23,578 ) ​ ( 25,895 ) Intersegment eliminations ​ ​ 270 ​ ​ ( 242 ) ​ 715 ​ ( 517 ) Total ​ $ 23,625 ​ $ 32,466 ​ $ 81,431 ​ $ 81,517 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, ​ 2020 2021 Assets (2) —by Segment: ​ ​ ​ ​ ​ ​ Security division ​ $ 758,054 ​ $ 751,008 Healthcare division ​ 208,857 ​ 211,226 Optoelectronics and Manufacturing division ​ 232,408 ​ 275,976 Corporate ​ 109,178 ​ 126,157 Eliminations (3) ​ ( 39,956 ) ​ ( 38,407 ) Total ​ $ 1,268,541 ​ $ 1,325,960 (1) For each of the three and nine month periods ended March 31, 2020 and March 31, 2021, no customer accounted for greater than 10 % of total net revenues. (2) One customer accounted for 13 % of accounts receivable, net as of June 30, 2020. A different customer accounted for 10 % of accounts receivable, net as of March 31, 2021. (3) Eliminations in assets reflect the amount of inter-segment profits in inventory and inter-segment ROU assets under ASC 842 as of the balance sheet date. Such inter-segment profit will be realized when inventory is shipped to the external customers of the Security and Healthcare divisions. ​ ​ 24 Table of Contents