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, ​ 2022 2023 ASSETS ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 64,202 ​ $ 65,622 Accounts receivable, net ​ 307,973 ​ 300,663 Inventories ​ 333,907 ​ 371,795 Prepaid expenses and other current assets ​ 40,062 ​ 40,454 Total current assets ​ 746,144 ​ 778,534 Property and equipment, net ​ 109,684 ​ 109,139 Goodwill ​ 336,357 ​ 346,716 Intangible assets, net ​ 138,370 ​ 140,192 Other assets ​ 112,595 ​ 108,722 Total assets ​ $ 1,443,150 ​ $ 1,483,303 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Bank lines of credit ​ $ 60,000 ​ $ 215,000 Current portion of long-term debt ​ 244,575 ​ 8,080 Accounts payable ​ 125,204 ​ 127,255 Accrued payroll and related expenses ​ 46,379 ​ 48,287 Advances from customers ​ 19,917 ​ 33,841 Other accrued expenses and current liabilities ​ 117,879 ​ 117,950 Total current liabilities ​ 613,954 ​ 550,413 Long-term debt ​ 48,668 ​ 138,190 Deferred income taxes ​ 11,112 ​ 11,794 Other long-term liabilities ​ 130,992 ​ 115,989 Total liabilities ​ 804,726 ​ 816,386 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 , 16,870,050 shares at June 30, 2022 and 16,727,121 shares at March 31, 2023 ​ 17 ​ 17 Retained earnings ​ 663,869 ​ 693,576 Accumulated other comprehensive loss ​ ( 25,462 ) ​ ( 26,676 ) Total stockholders’ equity ​ 638,424 ​ 666,917 Total liabilities and stockholders’ equity ​ $ 1,443,150 ​ $ 1,483,303 ​ 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, ​ 2022 2023 2022 2023 Net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ $ 221,857 ​ $ 223,724 ​ $ 634,446 ​ $ 637,563 Services ​ 68,620 ​ 79,165 ​ 211,969 ​ 228,994 Total net revenues ​ 290,477 ​ 302,889 ​ 846,415 ​ 866,557 Cost of goods sold: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ 150,311 ​ 156,534 ​ 432,277 ​ 458,197 Services ​ 37,308 ​ 42,569 ​ 112,177 ​ 120,870 Total cost of goods sold ​ 187,619 ​ 199,103 ​ 544,454 ​ 579,067 Gross profit ​ 102,858 ​ 103,786 ​ 301,961 ​ 287,490 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 57,813 ​ 53,707 ​ 170,015 ​ 161,148 Research and development ​ 15,150 ​ 14,852 ​ 44,944 ​ 43,848 Impairment, restructuring and other charges, net ​ 1,469 ​ 890 ​ 4,810 ​ 4,366 Total operating expenses ​ 74,432 ​ 69,449 ​ 219,769 ​ 209,362 Income from operations ​ 28,426 ​ 34,337 ​ 82,192 ​ 78,128 Interest and other expense, net ​ ( 2,301 ) ​ ( 5,727 ) ​ ( 6,534 ) ​ ( 14,339 ) Other income, net ​ ​ 27,373 ​ ​ — ​ ​ 27,373 ​ ​ — Income before income taxes ​ 53,498 ​ 28,610 ​ 103,031 ​ 63,789 Provision for income taxes ​ ( 10,763 ) ​ ( 6,802 ) ​ ( 21,447 ) ​ ( 14,392 ) Net income ​ $ 42,735 ​ $ 21,808 ​ $ 81,584 ​ $ 49,397 Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.45 ​ $ 1.30 ​ $ 4.60 ​ $ 2.93 Diluted ​ $ 2.41 ​ $ 1.27 ​ $ 4.52 ​ $ 2.88 Shares used in per share calculation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 17,417 ​ 16,809 ​ 17,734 ​ 16,858 Diluted ​ 17,709 ​ 17,184 ​ 18,036 ​ 17,151 ​ 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, ​ 2022 2023 2022 2023 Net income ​ $ 42,735 ​ $ 21,808 ​ $ 81,584 ​ $ 49,397 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment, net of tax ​ ( 1,981 ) ​ 1,569 ​ ( 4,907 ) ​ ( 3,309 ) Net unrealized gain (loss) on investments and derivatives, net of tax ​ ​ — ​ ​ ( 1,430 ) ​ ​ — ​ ​ 1,098 Other, net of tax ​ ​ 132 ​ ​ 332 ​ ​ 396 ​ ​ 997 Other comprehensive income (loss) ​ ​ ( 1,849 ) ​ ​ 471 ​ ​ ( 4,511 ) ​ ​ ( 1,214 ) Comprehensive income ​ $ 40,886 ​ $ 22,279 ​ $ 77,073 ​ $ 48,183 ​ 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, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ Shares Amount Earnings Loss Total Balance—December 31, 2021 17,643,903 ​ $ 30,909 ​ $ 606,647 ​ $ ( 17,408 ) ​ $ 620,148 Vesting of RSUs 6,027 ​ — ​ — ​ — ​ — Shares issued under employee stock purchase program ​ 32,105 ​ ​ 2,307 ​ ​ — ​ ​ — ​ ​ 2,307 Stock-based compensation expense — ​ 6,898 ​ — ​ — ​ 6,898 Repurchase of common stock ​ ( 635,962 ) ​ ​ ( 39,904 ) ​ ​ ( 11,648 ) ​ ​ — ​ ​ ( 51,552 ) Taxes paid related to net share settlement of equity awards ( 2,220 ) ​ ( 193 ) ​ — ​ — ​ ( 193 ) Net income — ​ — ​ 42,735 ​ — ​ 42,735 Other comprehensive loss — ​ — ​ — ​ ( 1,849 ) ​ ( 1,849 ) Balance—March 31, 2022 ​ 17,043,853 ​ $ 17 ​ $ 637,734 ​ $ ( 19,257 ) ​ $ 618,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ Shares Amount Earnings Loss Total Balance—December 31, 2022 16,819,609 ​ $ 2,530 ​ $ 672,371 ​ $ ( 27,147 ) ​ $ 647,754 Exercise of stock options 11,848 ​ ​ 891 ​ ​ — ​ ​ — ​ ​ 891 Vesting of RSUs 5,510 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program ​ 30,652 ​ ​ 2,072 ​ ​ — ​ ​ — ​ ​ 2,072 Stock-based compensation expense — ​ ​ 7,112 ​ ​ — ​ ​ — ​ ​ 7,112 Repurchase of common stock ​ ( 138,469 ) ​ ​ ( 12,362 ) ​ ​ ( 603 ) ​ ​ — ​ ​ ( 12,965 ) Taxes paid related to net share settlement of equity awards ( 2,029 ) ​ ​ ( 226 ) ​ ​ — ​ ​ — ​ ​ ( 226 ) Net income — ​ ​ — ​ ​ 21,808 ​ ​ — ​ ​ 21,808 Other comprehensive income — ​ ​ — ​ ​ — ​ ​ 471 ​ ​ 471 Balance—March 31, 2023 ​ 16,727,121 ​ $ 17 ​ $ 693,576 ​ $ ( 26,676 ) ​ $ 666,917 ​ ​ 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ Shares Amount Earnings Loss Total Balance—June 30, 2021 17,854,110 ​ $ 105,724 ​ $ 548,842 ​ $ ( 14,746 ) ​ $ 639,820 Exercise of stock options 164,612 ​ ​ 311 ​ ​ — ​ ​ — ​ ​ 311 Vesting of RSUs 335,099 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program 60,065 ​ ​ 4,297 ​ ​ — ​ ​ — ​ ​ 4,297 Stock-based compensation expense — ​ ​ 20,986 ​ ​ — ​ ​ — ​ ​ 20,986 Repurchase of common stock ​ ( 1,117,258 ) ​ ​ ( 85,184 ) ​ ​ ( 11,648 ) ​ ​ — ​ ​ ( 96,832 ) Taxes paid related to net share settlement of equity awards ( 252,775 ) ​ ​ ( 19,354 ) ​ ​ — ​ ​ — ​ ​ ( 19,354 ) Adoption of ASU 2020-06 for convertible notes ​ — ​ ​ ( 26,763 ) ​ ​ 18,956 ​ ​ — ​ ​ ( 7,807 ) Net income — ​ ​ — ​ ​ 81,584 ​ ​ — ​ ​ 81,584 Other comprehensive loss — ​ ​ — ​ ​ — ​ ​ ( 4,511 ) ​ ​ ( 4,511 ) Balance—March 31, 2022 ​ 17,043,853 ​ $ 17 ​ $ 637,734 ​ $ ( 19,257 ) ​ $ 618,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ ​ ​ ​ Number of ​ ​ Retained Comprehensive ​ ​ ​ Shares Amount Earnings Loss Total Balance—June 30, 2022 ​ 16,870,050 ​ $ 17 ​ $ 663,869 ​ $ ( 25,462 ) ​ $ 638,424 Exercise of stock options ​ 19,614 ​ ​ 1,330 ​ ​ — ​ ​ — ​ ​ 1,330 Vesting of RSUs ​ 312,038 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares issued under employee stock purchase program ​ 59,255 ​ ​ 4,041 ​ ​ — ​ ​ — ​ ​ 4,041 Stock-based compensation expense ​ — ​ ​ 21,528 ​ ​ — ​ ​ — ​ ​ 21,528 Repurchase of common stock ​ ( 400,230 ) ​ ​ ( 17,067 ) ​ ​ ( 17,682 ) ​ ​ — ​ ​ ( 34,749 ) Taxes paid related to net share settlement of equity awards ​ ( 133,606 ) ​ ​ ( 9,832 ) ​ ​ ( 2,008 ) ​ ​ — ​ ​ ( 11,840 ) Net income ​ — ​ ​ — ​ ​ 49,397 ​ ​ — ​ ​ 49,397 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ ( 1,214 ) ​ ​ ( 1,214 ) Balance—March 31, 2023 16,727,121 ​ $ 17 ​ $ 693,576 ​ $ ( 26,676 ) ​ $ 666,917 ​ ​ 7 Table of Contents OSI SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, ​ 2022 2023 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ Net income ​ $ 81,584 ​ $ 49,397 Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 28,980 ​ 28,819 Stock-based compensation expense ​ 20,986 ​ 21,528 Recovery of losses on accounts receivable ​ ​ ( 3,836 ) ​ ​ ( 4,890 ) Deferred income taxes ​ ​ 1,448 ​ 942 Amortization of debt discount and issuance costs ​ 1,045 ​ ​ 196 Gain on sale of property and equipment ​ ​ ( 27,373 ) ​ ​ — Other ​ ( 1,074 ) ​ ( 46 ) Changes in operating assets and liabilities—net of business acquisitions: ​ ​ ​ ​ ​ ​ Accounts receivable ​ 10,613 ​ 13,248 Inventories ​ ( 53,766 ) ​ ( 37,860 ) Prepaid expenses and other assets ​ 8,010 ​ ( 4,924 ) Accounts payable ​ ( 11,000 ) ​ 2,134 Accrued payroll and related expenses ​ ​ ( 9,837 ) ​ ​ 2,151 Advances from customers ​ 7,523 ​ 13,963 Other ​ ( 11,490 ) ​ ( 11,980 ) Net cash provided by operating activities ​ 41,813 ​ 72,678 CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ( 10,293 ) ​ ( 12,691 ) Proceeds from sale of property and equipment ​ ​ 32,304 ​ ​ 309 Purchases of certificates of deposit ​ ​ ( 2,201 ) ​ ​ ( 4,940 ) Proceeds from certificates of deposit ​ ​ 55 ​ ​ 3,827 Acquisition of businesses, net of cash acquired ​ ( 14,132 ) ​ ( 4,616 ) Payments for intangible and other assets ​ ( 12,320 ) ​ ( 12,275 ) Net cash used in investing activities ​ ( 6,587 ) ​ ( 30,386 ) CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ Net borrowings on bank lines of credit ​ 73,000 ​ 155,000 Proceeds from long-term debt ​ 50,285 ​ 100,654 Payments on long-term debt ​ ( 40,893 ) ​ ( 247,818 ) Proceeds from exercise of stock options and employee stock purchase plan ​ 4,608 ​ 5,371 Payments of contingent consideration ​ ​ ( 1,671 ) ​ ​ ( 3,668 ) Repurchases of common stock ​ ( 96,832 ) ​ ( 34,749 ) Taxes paid related to net share settlement of equity awards ​ ( 19,354 ) ​ ( 11,840 ) Net cash used in financing activities ​ ( 30,857 ) ​ ( 37,050 ) Effect of exchange rate changes on cash ​ ( 1,703 ) ​ ( 3,822 ) Net change in cash and cash equivalents ​ 2,666 ​ 1,420 Cash and cash equivalents—beginning of period ​ 80,613 ​ 64,202 Cash and cash equivalents—end of period ​ $ 83,279 ​ $ 65,622 Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid, net during the period for: ​ ​ ​ ​ ​ ​ Interest ​ $ 5,851 ​ $ 14,648 Income taxes ​ $ 9,964 ​ $ 15,769 ​ 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, 2022 filed with the SEC. There have been no material changes to our significant accounting policies from those disclosed therein. The accompanying condensed consolidated balance sheet as of June 30, 2022 was derived from the Company's audited consolidated financial statements at that date. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the operating results to be expected for the full 2023 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, costs of sales and expenses during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, 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 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, ​ ​ 2022 2023 2022 2023 Net income available to common stockholders ​ $ 42,735 ​ $ 21,808 ​ $ 81,584 ​ $ 49,397 Weighted average shares outstanding—basic ​ 17,417 ​ 16,809 ​ 17,734 ​ 16,858 Dilutive effect of equity awards ​ 292 ​ 375 ​ 302 ​ 293 Weighted average shares outstanding—diluted ​ 17,709 ​ 17,184 ​ 18,036 ​ 17,151 Basic earnings per share ​ $ 2.45 ​ $ 1.30 ​ $ 4.60 ​ $ 2.93 Diluted earnings per share ​ $ 2.41 ​ $ 1.27 ​ $ 4.52 ​ $ 2.88 Shares excluded from diluted earnings per share due to their anti-dilutive effect ​ ​ 211 ​ ​ 60 ​ ​ 62 ​ ​ 75 ​ 9 Table of Contents 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 $ 65.6 million at March 31, 2023. Of this amount, approximately 81 % 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, India, Singapore, Malaysia and Canada, and to a lesser extent in Mexico, Indonesia, Albania and Australia. We have cash holdings in financial institutions that exceed insured limits for such financial institutions; we mitigate this risk, however, 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, an interest rate swap contract and foreign currency forward contracts. The carrying values of financial instruments, other than long-term debt instruments and the interest rate swap contract, 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 because 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 June 30, 2022 and March 31, 2023. ​ 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, 2022 March 31, 2023 ​ Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets—Insurance company contracts ​ $ — ​ $ 40,284 ​ $ — ​ $ 40,284 ​ $ — ​ $ 43,471 ​ $ — ​ $ 43,471 Assets – Interest rate swap contract ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 1,641 ​ $ — ​ $ 1,641 Liabilities—Convertible debt ​ $ — ​ $ 242,302 ​ $ — ​ $ 242,302 ​ $ — ​ $ — ​ $ — ​ $ — Liabilities—Contingent consideration ​ $ — ​ $ — ​ $ 28,212 ​ $ 28,212 ​ $ — ​ $ — ​ $ 20,060 ​ $ 20,060 ​ Derivative Instruments and Hedging Activity ​ Our use of derivatives consists of foreign currency forward contracts and an interest rate swap agreement. The foreign currency 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 also manage our risk to changes in interest rates using derivative instruments. We use fixed interest rate swaps to effectively convert a portion of the variable interest rate payments to fixed interest rate payments. We do not use hedging instruments for speculative purposes. ​ The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations. The amounts reported in the consolidated statements of operations for the three and nine months ended March 31, 2022 and 2023 were not significant. The fair value of our foreign currency forward 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 June 30, 2022 and March 31, 2023, we held foreign currency forward contracts with notional amounts totaling $ 22.9 million and $ 19.8 million, respectively. Unrealized gains and losses from our foreign currency forward contracts as of March 31, 2022 and 2023 were not significant. 10 Table of Contents The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to our variable, Secured Overnight Financing Rate (“SOFR”) based debt. The interest rate swap matures in December 2026. The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective. As of June 30, 2022 and March 31, 2023, the notional amount of the derivative instruments designated as an interest rate swap hedge was $ 0 and $ 175 million, respectively. The fair value of the interest rate swap contract as of March 31, 2023 was $ 1.6 million and is recorded in Other assets within the condensed consolidated balance sheet. The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Nine Months Ended March 31, ​ ​ 2022 2023 ​ 2022 2023 Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded ​ $ ( 2,301 ) ​ $ ( 5,727 ) ​ $ ( 6,534 ) ​ $ ( 14,339 ) Gain (loss) recognized in other comprehensive income (loss) ​ — ​ ( 1,430 ) ​ — ​ 1,098 Amount reclassified from accumulated other comprehensive income (loss) to interest expense, net ​ — ​ ( 558 ) ​ — ​ ( 587 ) ​ Recently Adopted Accounting Pronouncement Contract Assets and Contract Liabilities from Revenue Contracts with Customers in a Business Combination In October 2021, the FASB issued Accounting Standards Update 2021-08, an accounting standard update to improve the accounting for contract assets and contract liabilities from revenue contracts with customers in a business combination (Topic 805). This amendment improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. We adopted the new guidance effective January 1, 2022 using the prospective approach and applied the amendments to the business combinations that occurred during the year ended June 30, 2022 and the nine months ended March 31, 2023. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements. ​ 2. Business Combinations Under Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), the acquisition method of accounting requires us to record assets acquired less liabilities assumed from an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase price over the estimated fair value of the net assets acquired 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 which are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is up to one year from the acquisition date, as additional information that existed at the acquisition date becomes available for preliminary estimates, we may record adjustments to the preliminary assets acquired and liabilities assumed. Any adjustments subsequent to the conclusion of such measurement period are reflected in reported earnings. Fiscal Year 2023 Business Acquisitions In February 2023, we (through our Healthcare division) acquired a privately held provider of software and solutions for approximately $ 2.1 million plus up to $ 5 million in potential contingent consideration. The acquisition was financed with cash on hand. Through our Security division, we acquired (i) in December 2022 certain assets of a provider of baggage and parcel inspection systems for approximately $ 1.6 million and (ii) in August 2022 a privately held provider of training software and solutions for approximately $ 1.9 million plus an immaterial amount of potential contingent consideration. These acquisitions were financed with cash on hand. 11 Table of Contents Fiscal Year 2022 Business Acquisitions In February 2022, we (through our Security division) acquired a privately held provider of intelligent inspection, sensory, and recognition solutions for approximately $ 14 million plus up to $ 25 million in potential contingent consideration. The acquisition was financed with cash on hand and borrowings under our revolving bank line of credit. ​ We (through our Security division) also acquired in February 2022 a privately held sales and services company for approximately $ 1.1 million, plus an immaterial amount of potential contingent consideration. The acquisition was financed with cash on hand. ​ These business acquisitions, individually and in aggregate, were not material to our consolidated financial statements. Accordingly, pro forma historical results of operations and other disclosures related to these businesses have not been presented. ​ 3. Balance Sheet Details ​ The following tables set forth details of selected balance sheet accounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Accounts receivable, net 2022 2023 Accounts receivable ​ $ 326,849 ​ $ 314,121 Less allowance for doubtful accounts ​ ( 18,876 ) ​ ( 13,458 ) Total ​ $ 307,973 ​ $ 300,663 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Inventories 2022 2023 Raw materials ​ $ 213,290 ​ $ 233,458 Work-in-process ​ 46,873 ​ 63,181 Finished goods ​ 73,744 ​ 75,156 Total ​ $ 333,907 ​ $ 371,795 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, Property and equipment, net 2022 2023 Land ​ $ 15,028 ​ $ 15,676 Buildings, civil works and improvements ​ 47,309 ​ 49,023 Leasehold improvements ​ 11,599 ​ 13,924 Equipment and tooling ​ 128,425 ​ 134,078 Furniture and fixtures ​ 3,592 ​ 3,543 Computer equipment ​ 21,208 ​ 23,061 Computer software ​ 25,153 ​ 26,757 Computer software implementation in process ​ ​ 9,422 ​ ​ 9,344 Construction in process ​ 5,283 ​ 3,894 Total ​ 267,019 ​ 279,300 Less accumulated depreciation and amortization ​ ( 157,335 ) ​ ( 170,161 ) Property and equipment, net ​ $ 109,684 ​ $ 109,139 ​ Depreciation and amortization expense for property and equipment was $ 5.4 million and $ 4.9 million for the three months ended March 31, 2022 and 2023, respectively, and $ 16.0 million and $ 14.6 million for the nine months ended March 31, 2022 and 2023, respectively. ​ 12 Table of Contents 4. Goodwill and Intangible Assets ​ The changes in the carrying value of goodwill by segment for the nine-month period ended March 31, 2023 were as follows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ And ​ ​ ​ ​ ​ Security ​ Healthcare ​ Manufacturing ​ ​ ​ ​ Division Division Division Consolidated Balance as of June 30, 2022 ​ $ 225,555 ​ $ 43,187 ​ $ 67,615 ​ $ 336,357 Goodwill acquired or adjusted during the period ​ 5,659 ​ 5,050 ​ — ​ 10,709 Foreign currency translation adjustment ​ 48 ​ 44 ​ ( 442 ) ​ ( 350 ) Balance as of March 31, 2023 ​ $ 231,262 ​ $ 48,281 ​ $ 67,173 ​ $ 346,716 ​ Intangible assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2022 ​ March 31, 2023 ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ Accumulated ​ Intangibles ​ Carrying ​ Accumulated ​ Intangibles ​ Value Amortization Net Value Amortization Net Amortizable assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software development costs ​ $ 64,096 ​ $ ( 18,934 ) ​ $ 45,162 ​ $ 73,826 ​ $ ( 19,289 ) ​ $ 54,537 Patents ​ 8,541 ​ ( 2,987 ) ​ 5,554 ​ 8,611 ​ ( 3,297 ) ​ 5,314 Developed technology ​ 66,901 ​ ( 31,071 ) ​ 35,830 ​ 68,411 ​ ( 36,487 ) ​ 31,924 Customer relationships ​ 53,736 ​ ( 32,785 ) ​ 20,951 ​ 54,109 ​ ( 37,114 ) ​ 16,995 Total amortizable assets ​ 193,274 ​ ( 85,777 ) ​ 107,497 ​ 204,957 ​ ( 96,187 ) ​ 108,770 Non-amortizable assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In-process R&D ​ ​ 533 ​ ​ — ​ ​ 533 ​ ​ 533 ​ ​ — ​ ​ 533 Trademarks ​ 30,340 ​ — ​ 30,340 ​ 30,889 ​ — ​ 30,889 Total intangible assets ​ $ 224,147 ​ $ ( 85,777 ) ​ $ 138,370 ​ $ 236,379 ​ $ ( 96,187 ) ​ $ 140,192 ​ Amortization expense related to intangible assets was $ 4.4 million and $ 4.8 million for the three months ended March 31, 2022 and 2023, respectively. For the nine months ended March 31, 2022 and 2023, amortization expense related to intangible assets was $ 13.0 million and $ 14.2 million, respectively. ​ At March 31, 2023, the estimated future amortization expense for intangible assets was as follows (in thousands): ​ Fiscal Year ​ ​ ​ ​ ​ 2023 (remaining 3 months) $ 4,820 2024 ​ 19,076 2025 ​ 15,950 2026 ​ 12,614 2027 ​ ​ 8,731 Thereafter ​ 47,579 Total ​ $ 108,770 ​ 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, 2022 and 2023, we capitalized software development costs in the amounts of $ 4.0 million and $ 4.1 million, respectively. For the nine months ended March 31, 2022 and 2023, we capitalized software development costs in the amounts of $ 11.7 million and $ 12.0 million, respectively. 13 Table of Contents 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 Topic 606, Revenue from Contracts with Customers (“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 sheets. We may also receive consideration, per the terms of a contract, from customers prior to transferring control of 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 in either Other accrued expenses and current liabilities or Other long-term liabilities. We recognize these contract liabilities as sales after all revenue recognition criteria are met. ​ The table below shows the balance of contract assets and liabilities as of June 30, 2022 and March 31, 2023, including the change between the periods. There were no substantial non-current contract assets for the periods presented. Contract Assets (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, March 31, ​ ​ ​ ​ 2022 2023 Change % Change Unbilled revenue (included in accounts receivable, net) ​ $ 43,287 ​ $ 67,769 ​ $ 24,482 57 % Contract Liabilities (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, March 31, ​ ​ ​ 2022 2023 Change % Change ​ Advances from customers ​ $ 19,917 ​ $ 33,841 ​ $ 13,924 ​ 70 % Deferred revenue—current ​ 31,396 ​ 44,447 ​ 13,051 ​ 42 % Deferred revenue—long-term ​ 20,476 ​ 21,928 ​ 1,452 ​ 7 % ​ Contract assets increased during the nine months ended March 31, 2023 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 overall increase in contract liabilities was primarily due to receipt of upfront deposits from customers and deferred revenue from receipt of payments under service and warranty contracts primarily in our Security division. ​ Remaining Performance Obligations . Remaining performance obligations related to ASC 606 represent the portion of the 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, 2023, the portion of the transaction price allocated to remaining performance obligations was approximately $ 329.5 million. We expect to recognize revenue on approximately 52 % 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, 2023, we recognized revenue of $ 49.4 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. ​ 14 Table of Contents 6. Leases ​ The components of operating lease expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Nine Months Ended March 31, ​ 2022 2023 ​ 2022 2023 Operating lease cost ​ $ 2,704 ​ $ 2,850 ​ $ 7,354 ​ $ 8,525 Variable lease cost ​ ​ 263 ​ ​ 328 ​ 650 ​ 1,055 Short-term lease cost ​ ​ 268 ​ ​ 261 ​ 854 ​ 685 ​ ​ $ 3,235 ​ $ 3,439 ​ $ 8,858 ​ $ 10,265 ​ Supplemental disclosures related to operating leases were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet Category June 30, 2022 March 31, 2023 ​ Operating lease ROU assets, net Other assets ​ $ 39,461 ​ $ 34,167 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities, current portion Other accrued expenses and current liabilities ​ $ 9,700 ​ $ 9,830 ​ Operating lease liabilities, long-term Other long-term liabilities ​ 30,363 ​ 25,097 ​ Total operating lease liabilities ​ ​ ​ $ 40,063 ​ $ 34,927 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ ​ ​ ​ ​ 4.7 years ​ Weighted average discount rate ​ ​ ​ ​ ​ 3.7 % ​ Supplemental cash flow information related to operating leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, ​ 2022 2023 Cash paid for operating lease liabilities ​ $ 7,549 ​ $ 8,631 ROU assets obtained in exchange for new lease obligations ​ 9,519 ​ 2,658 ​ Maturities of operating lease liabilities at March 31, 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ March 31, 2023 Less than one year ​ $ 11,039 1 – 2 years ​ 9,083 2 – 3 years ​ 7,184 3 – 4 years ​ 6,587 4 – 5 years ​ 3,118 Thereafter ​ 1,449 ​ ​ 38,460 Less: imputed interest ​ ( 3,533 ) Total lease liabilities ​ $ 34,927 ​ ​ 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, 2023, we recognized $ 0.9 million in restructuring and other charges, which included $ 0.5 million for employee terminations, $ 0.3 million in legal charges primarily related to government investigations, and $ 0.1 million in acquisition-related costs and facility closure costs. During the three months ended March 31, 2022, we recognized $ 1.5 million in restructuring and other charges, which included $ 0.8 million in legal charges primarily related to class action litigation and government investigations, $ 0.4 million for employee terminations , and $ 0.3 million in acquisition related costs. ​ 15 Table of Contents During the nine months ended March 31, 2023, we recognized $ 4.4 million in restructuring and other charges, which included $ 3.2 million in legal charges primarily related to class action litigation and government investigations, $ 1.0 million for employee terminations, and $ 0.2 million in acquisition-related costs and facility closure costs. During the nine months ended March 31, 2022, we recognized $ 4.8 million in restructuring and other charges, which included $ 3.5 million in legal charges primarily related to class action litigation and government investigations, $ 1.0 million in employee terminations and $ 0.3 million in acquisition related costs. The following tables summarize impairment, restructuring and other charges (benefits), net for the periods set forth below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Acquisition-related costs ​ $ 221 ​ $ — ​ $ — ​ $ 56 ​ $ 277 Employee termination costs ​ ​ 409 ​ ​ — ​ ​ — ​ ​ — ​ ​ 409 Facility closures/consolidation ​ ​ 3 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3 Legal costs, net ​ — ​ — ​ — ​ 780 ​ 780 Total ​ $ 633 ​ $ — ​ $ — ​ $ 836 ​ $ 1,469 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Acquisition-related costs ​ $ — ​ $ — ​ $ — ​ $ 50 ​ $ 50 Employee termination costs ​ ​ 413 ​ ​ 81 ​ ​ 32 ​ ​ — ​ ​ 526 Facility closures/consolidation ​ ​ 35 ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 Legal costs, net ​ 45 ​ 226 ​ — ​ 8 ​ 279 Total ​ $ 493 ​ $ 307 ​ $ 32 ​ $ 58 ​ $ 890 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Acquisition-related costs ​ $ 221 ​ $ — ​ $ — ​ $ 56 ​ $ 277 Employee termination costs ​ ​ 1,077 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,077 Facility closures/consolidation ​ ​ ( 37 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 37 ) Legal costs, net ​ — ​ — ​ — ​ 3,493 ​ 3,493 Total ​ $ 1,261 ​ $ — ​ $ — ​ $ 3,549 ​ $ 4,810 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended March 31, 2023 ​ ​ ​ ​ ​ Optoelectronics and ​ ​ ​ ​ ​ ​ ​ ​ ​ Healthcare ​ Manufacturing ​ ​ ​ ​ ​ ​ ​ Security Division Division Division Corporate Total Acquisition-related costs ​ $ 23 ​ $ — ​ $ — ​ $ 127 ​ $ 150 Employee termination costs ​ ​ 688 ​ ​ 291 ​ ​ 47 ​ ​ — ​ ​ 1,026 Facility closures/consolidation ​ ​ 35 ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 Legal costs, net ​ 613 ​ 2,462 ​ — ​ 80 ​ 3,155 Total ​ $ 1,359 ​ $ 2,753 ​ $ 47 ​ $ 207 ​ $ 4,366 ​ 16 Table of Contents The accrued liability for restructuring and other charges is included in other accrued expenses and current liabilities in the condensed consolidated balance sheets. The changes in the accrued liability for restructuring and other charges for the nine-month period ended March 31, 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Facility ​ ​ ​ ​ ​ ​ ​ Acquisition- ​ Employee ​ Closure/ ​ Legal ​ ​ ​ ​ ​ Related ​ Termination ​ Consolidation ​ Costs and ​ ​ ​ ​ Costs Costs Cost Settlements Total Balance as of June 30, 2022 ​ $ — ​ $ 181 ​ $ 23 ​ $ 1,780 ​ $ 1,984 Restructuring and other charges, net ​ 150 ​ 1,026 ​ 35 ​ 3,155 ​ 4,366 Payments, adjustments and reimbursements, net ​ ( 124 ) ​ ( 1,081 ) ​ 1 ​ ( 4,896 ) ​ ( 6,100 ) Balance as of March 31, 2023 ​ $ 26 ​ $ 126 ​ $ 59 ​ $ 39 ​ $ 250 ​ ​ 8. Borrowings ​ Revolving Credit Facility ​ In December 2021, we entered into an amendment to the senior secured credit facility that increased the aggregate amount available to borrow from $ 535 million to $ 750 million. The amended facility matures in December 2026 and is comprised of a $ 600 million revolving credit facility and a $ 150 million delayed draw term loan. The revolving credit facility includes a $ 300 million sub-limit for letters of credit. Under certain circumstances and subject to certain conditions, we can increase the revolving credit facility by $ 250 million plus such amount as would not cause our consolidated secured net leverage ratio to exceed a specified level. Borrowings under the amended facility bore interest at SOFR plus a margin of 1.25 % as of March 31, 2023 (which margin can range from 1.0 % to 1.75 % based on our consolidated net leverage ratio as defined in the credit facility). Letters of credit reduce the amount available to borrow under the credit facility by their face value amount. The unused portion of the facility bore a commitment fee of 0.15 % as of March 31, 2023 (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, 2023, there were $ 215 million of borrowings outstanding under the revolving credit facility, $ 61.3 million outstanding under the letters of credit sub-facility, and $ 145 million outstanding under the term loan. As of March 31, 2023, the amount available to borrow under the revolving credit facility was $ 323.7 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term. The principal amount of each loan is due and payable in full on the maturity date. We have the right to repay each 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 the revolving facility and therefore, borrowings under the revolving credit facility are included in current liabilities. As of March 31, 2023, we were in compliance with all financial covenants under this credit facility. In September 2022, we entered into an interest rate swap in order to mitigate the interest rate risk on a portion of the interest payments expected to be made on the borrowings outstanding under the revolving credit facility and term loan. Refer to Note 1 for details. 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 were governed by an indenture dated February 22, 2017. The maturity date for the payment of principal was September 1, 2022. The Notes bore interest at the rate of 1.25 % and were payable in cash semiannually in arrears on each March 1 and September 1. On September 1, 2022, we repurchased for cash and cancelled the then-remaining $ 242.3 million balance of the Notes utilizing proceeds from the senior secured credit facility. ​ 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 and was being amortized as interest expense over the life of the Notes using the effective interest method. Total interest expense recognized for the three and nine months ended March 31, 2022 related to the Notes was $ 1.2 and $ 3.7 million, respectively, which consisted of $ 0.9 million and $ 2.7 million of contractual interest expense and $ 0.3 million and $ 1.0 million of amortization of debt issuance costs. Total interest expense recognized for the three and nine months ended March 31, 2023 related to the Notes was nil and $ 0.7 million, respectively, which consisted of $ 0.5 million of contractual interest expense and $ 0.2 million of amortization of debt issuance costs. 17 Table of Contents 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, 2023, $ 50.1 million was outstanding under these letter-of-credit facilities. As of March 31, 2023, the total amount available under these credit facilities was $ 27.7 million. ​ Long-term debt consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, ​ 2022 2023 1.25% convertible notes due September 1, 2022: ​ ​ ​ ​ ​ ​ Principal amount ​ $ 242,302 ​ $ — Unamortized debt issuance costs ​ ​ ( 196 ) ​ ​ — ​ ​ ​ 242,106 ​ ​ — Term loan ​ ​ 50,000 ​ ​ 145,000 Other long-term debt ​ 1,137 ​ 1,270 ​ ​ 293,243 ​ 146,270 Less current portion of long-term debt ​ ( 244,575 ) ​ ( 8,080 ) Long-term portion of debt ​ $ 48,668 ​ $ 138,190 ​ ​ 9. Stockholders’ Equity ​ Stock-based Compensation ​ As of March 31, 2023, we maintained the Amended and Restated 2012 Incentive Award Plan (the “OSI Plan”) as a stock-based employee compensation plan. ​ 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, ​ 2022 2023 ​ 2022 2023 Cost of goods sold ​ $ 205 ​ $ 229 ​ $ 616 ​ $ 686 Selling, general and administrative ​ ​ 6,567 ​ ​ 6,757 ​ 19,977 ​ 20,467 Research and development ​ ​ 126 ​ ​ 126 ​ 393 ​ 375 Stock-based compensation expense ​ $ 6,898 ​ $ 7,112 ​ $ 20,986 ​ $ 21,528 ​ As of March 31, 2023, total unrecognized compensation costs related to share-based compensation grants under the OSI Plan were estimated at $ 0.8 million for stock options and $ 20.6 million for restricted stock units (“RSUs”). We expect to recognize these costs over a weighted average period of 2.2 years with respect to the stock options and 1.8 years with respect to the RSUs. ​ The following summarizes stock option activity during the nine months ended March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Weighted-Average ​ Aggregate ​ ​ Number of ​ Exercise ​ Remaining Contractual ​ Intrinsic Value ​ Options Price Term (in thousands) Outstanding at June 30, 2022 110,645 ​ 82.43 ​ ​ ​ ​ Granted 23,351 ​ ​ 87.90 ​ ​ ​ ​ ​ Exercised ( 19,614 ) ​ ​ 67.83 ​ ​ ​ ​ ​ Expired or forfeited ( 1,568 ) ​ ​ 81.60 ​ ​ ​ ​ ​ Outstanding at March 31, 2023 112,814 ​ ​ 86.11 ​ 6.8 years ​ $ 1,833 Exercisable at March 31, 2023 ​ 67,689 ​ ​ ​ 5.4 years ​ $ 1,274 ​ 18 Table of Contents The following summarizes RSU award activity during the nine months ended March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average ​ Shares Fair Value Nonvested at June 30, 2022 427,447 ​ $ 90.17 Granted 356,694 ​ ​ 89.11 Vested ( 312,038 ) ​ ​ 96.42 Forfeited ( 13,814 ) ​ ​ 88.82 Nonvested at March 31, 2023 458,289 ​ $ 85.13 ​ As of March 31, 2023, there were approximately 0.8 million shares available for grant under the OSI Plan. Under the terms of the OSI 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 96,620 and 110,811 performance-based RSUs during the nine months ended March 31, 2022 and 2023, 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 376 % 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. ​ Employee Stock Purchase Plan ​ We have an employee stock purchase plan under which eligible employees may purchase a limited number of shares of common stock at a discount of up to 15 % of the market value of such stock at pre-determined, plan-defined dates. During the nine months ended March 31, 2022 and 2023, employees purchased 60,605 and 59,255 shares, respectively. As of March 31, 2023, there were 417,972 shares of our common stock available for issuance under the plan. ​ Stock Repurchase Program ​ In September 2022, our Board of Directors increased the stock repurchase authorization to a total of 2 million shares. This program does not expire unless our Board of Directors acts to terminate the program. The timing and actual numbers of shares purchased depend 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, with the excess purchase price over par value recorded as a reduction of additional paid-in capital. If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings. ​ During the nine months ended March 31, 2022 and 2023, we repurchased 1,117,258 and 400,230 shares of our common stock, respectively. As of March 31, 2023, there were 1,721,870 shares remaining available for repurchase under the authorized repurchase program. ​ 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 19 Table of Contents contain contingent consideration obligations that are capped, the remaining maximum amount of such potential future payments is $ 54.4 million as of March 31, 2023. ​ 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 $ 0.3 million and $ 1.7 million, respectively, during the three and nine months ended March 31, 2022 and $ 1.2 million and $ 3.7 million, respectively, during the three and nine months ended March 31, 2023. For acquisitions completed after fiscal 2009, pursuant to 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, 2022 to March 31, 2023 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, 2022 $ 28,212 Addition of contingent earnout obligations ​ ​ 3,267 Foreign currency translation adjustment ​ ​ ( 25 ) Changes in fair value for contingent earnout obligations ​ ( 11,164 ) Payments on contingent earnout obligations ​ ( 230 ) Ending fair value, March 31, 2023 ​ $ 20,060 ​ Environmental Contingencies ​ We are subject to various environmental laws. We conduct environmental investigations at our manufacturing facilities in North America, Asia-Pacific, and Europe, and, to the extent practicable, on all new properties 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 have not accrued for loss contingencies relating to 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, 2023. ​ 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 included in accrued payroll and related expenses at March 31, 2023 and other long-term liabilities at June 30, 2022. ​ 20 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, ​ 2022 2023 Balance at beginning of period ​ $ 19,736 ​ $ 13,347 Additions ​ ​ 2,292 ​ ​ 2,622 Reductions for warranty repair costs and adjustments ​ ( 7,191 ) ​ ( 5,831 ) Balance at end of period ​ $ 14,837 ​ $ 10,138 ​ Legal Proceedings ​ We are involved in various 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. ​ 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, 2022 and 2023 were 20.1 % and 23.8 %, respectively. During the three-month period ended March 31, 2023, we recognized a net discrete tax expense of $ 0.2 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates. During the three-month period ended March 31, 2022, we recognized a net discrete tax benefit of $ 0.2 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates. The effective tax rate for the nine months ended March 31, 2022 and 2023 was 20.8 % and 22.6 %, respectively. During the nine months ended March 31, 2023, we recognized a net discrete tax benefit of $ 0.6 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates . During the nine months ended March 31, 2022, we recognized a net discrete tax benefit of $ 2.0 million related to equity-based compensation under ASU 2016-09. ​ 12. Segment Information ​ We have determined that we operate in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring 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 for the segments are the same as described in Note 1, Basis of Presentation. 21 Table of Contents ​ The following tables present our results of operations and identifiable assets by industry segment (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ March 31, ​ March 31, ​ 2022 2023 2022 2023 Revenues (1)—by Segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security division ​ $ 158,644 ​ $ 178,752 ​ $ 454,079 ​ $ 491,188 Healthcare division ​ ​ 52,178 ​ ​ 43,911 ​ ​ 155,191 ​ ​ 130,994 Optoelectronics and Manufacturing division, including intersegment revenues ​ ​ 92,122 ​ ​ 93,888 ​ ​ 275,917 ​ ​ 286,513 Intersegment revenues elimination ​ ​ ( 12,467 ) ​ ​ ( 13,662 ) ​ ​ ( 38,772 ) ​ ​ ( 42,138 ) Total ​ $ 290,477 ​ $ 302,889 ​ $ 846,415 ​ $ 866,557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations —by Segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security division ​ $ 20,559 ​ $ 29,496 ​ $ 60,323 ​ $ 66,014 Healthcare division ​ ​ 7,480 ​ ​ 1,787 ​ ​ 20,430 ​ ​ 4,819 Optoelectronics and Manufacturing division ​ ​ 11,177 ​ ​ 12,493 ​ ​ 34,342 ​ ​ 35,963 Corporate ​ ​ ( 10,729 ) ​ ​ ( 10,148 ) ​ ​ ( 32,855 ) ​ ​ ( 29,572 ) Intersegment eliminations ​ ​ ( 61 ) ​ ​ 709 ​ ​ ( 48 ) ​ ​ 904 Total ​ $ 28,426 ​ $ 34,337 ​ $ 82,192 ​ $ 78,128 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ March 31, ​ 2022 2023 Assets (2)—by Segment: ​ ​ ​ ​ ​ ​ Security division ​ $ 839,769 ​ $ 877,618 Healthcare division ​ 231,423 ​ 244,825 Optoelectronics and Manufacturing division ​ 301,483 ​ 310,851 Corporate ​ 104,834 ​ 94,428 Eliminations (3) ​ ( 34,359 ) ​ ( 44,419 ) Total ​ $ 1,443,150 ​ $ 1,483,303 (1) For the three-month period ended March 31, 2022 and the nine-month periods ended March 31, 2022 and 2023, no customer accounted for greater than 10 % of total net revenues. For the three-month period ended March 31, 2023, one customer accounted for 13 % of total net revenues. (2) As of June 30, 2022 and March 31, 2023, no customer accounted for greater than 10 % of accounts receivable. (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. ​ ​ ​ 22 Table of Contents