What changed in this filing

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Item 1. Business

2023-08-29 compared with 2022-08-19 · 122 added, 130 removed, 354 unchanged (42% of the section changed)

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(b) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories;

and (c) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for the Security and Healthcare divisions, as well as to third parties for applications in the defense and aerospace markets, among others.

The COVID-19 pandemic has dramatically impacted the global health and economic environment, with millions of confirmed cases, business slowdowns and shutdowns, and market volatility.

COVID-19 has caused, and is likely to continue to cause, significant economic disruption and is having widespread, rapidly evolving and unpredictable impacts on global society, financial markets and business practices.

Various governments around the world previously implemented measures in an effort to contain the virus, including

social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of non-essential businesses.

The COVID-19 pandemic has impacted, and is expected to continue to impact, our business operations and the operations of our suppliers and customers.

There is substantial uncertainty regarding the duration and degree of COVID-19’s continued effects over time.

The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic or recurrence thereof, deployment and administration of vaccines, governmental, business and individuals’ actions in response to the pandemic and impact on economic activity, including possible recession or financial market instability.

Refer to Risk Factors (Part I, Item 1A of this Form 10-K) and Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part II, Item 7 of this Form 10-K) for further discussion regarding potential risks to our business from the COVID-19 pandemic.

and (c) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for our Security and Healthcare divisions, as well as to third parties for applications in the defense and aerospace markets, among others.

Industry Overview

We sell our security and inspection systems and healthcare products primarily to end-users, while we design and manufacture our optoelectronic devices and value-added subsystems and provide electronics manufacturing services primarily for OEM customers.

A variety of technologies are currently used globally in security and inspection applications, including transmission and backscatter X-ray, 3-D and computed tomography, radiation detection, metal detection, radar, millimeter wave imaging, chemical explosive trace detection, and optical inspection.

We believe that the market for security and inspection products will continue to be affected by the threat of terrorist incidents, drug trafficking, gun violence, and by new government mandates and appropriations for security and inspection products in the United States and internationally.

As a result of terrorist attacks worldwide, security and inspection products are used at a wide range of facilities other than airports, such as border crossings, railways, seaports, cruise line terminals, freight forwarding operations, sporting venues, government and military installations, and nuclear facilities.

Department of Homeland Security has undertaken numerous initiatives to prevent terrorists from entering the country, hijacking airliners, and obtaining and trafficking in weapons of mass destruction and their components, to secure sensitive U.S.

technologies and to identify and screen high-risk cargo before it is loaded onto airlines and ships.

We sell our security and inspection solutions and healthcare products primarily to end‑users, while we design and manufacture our optoelectronic devices and value‑added subsystems and provide electronics manufacturing services primarily for original equipment manufacturer (OEM) customers.

A variety of technologies are currently used globally in security and inspection applications, including transmission and backscatter X-ray, and 3-D computed tomography, radiation detection, metal detection, millimeter wave imaging, explosive trace detection, and optical inspection.

We believe that the market for security and inspection products will continue to be affected by the threat of terrorist incidents, drug and human trafficking, gun violence, and by new government mandates and appropriations for security and inspection products in the United States and internationally.

Security and inspection products are used at a wide range of facilities in addition to airports, such as border crossings, seaports, freight forwarding operations, correctional facilities, government and military installations, sports and concert venues and other locations where the interdiction of criminal activities is paramount.

Department of Homeland Security has undertaken numerous initiatives to prevent terrorists from entering the country, hijacking airplanes, and obtaining and transporting weapons of mass destruction and their components, to secure sensitive U.S.

technologies, prevent human trafficking and to identify and screen cargo before it is loaded onto airplanes and ships.

These initiatives, such as the Customs‑Trade Partnership Against Terrorism, the U.S.

Transportation Security Administration’s Air Cargo Screening Mandate and the U.S.

Customs and Border Protection Container Security Initiative, have resulted in increased demand for security and inspection products.

Certain of these government sponsored initiatives in the United States have also stimulated security programs in other areas of the world in part because the U.S.

initiatives call on other nations to bolster their port security strategies, including acquiring or improving their security and inspection equipment and screening operations.

The international market for non-intrusive inspection equipment and related services, therefore, continues to expand as countries that ship goods directly to the United States participate in such programs and as they choose to procure and operate equipment in order to secure their own borders, transportation networks, facilities and other venues.

Department of Homeland Security and international air transportation security regulators around the world require the screening of air cargo.

Several of our screening systems have been approved by the U.S.

Department of Homeland Security’s Transportation Security Administration, as well as by various international regulatory bodies, for this purpose and are being procured and used by freight forwarders, airlines, airports, transportation companies and other businesses to fulfill their compliance requirements.

Customs and Border Protection Container Security Initiative, have resulted in increased demand for security and inspection products, as have similar programs undertaken by governments across the world.

Government sponsored initiatives in one nation often stimulate corresponding security programs by others in part because such initiatives frequently require that other nations bolster their security strategies, including acquiring or improving their security and inspection equipment and screening operations, in order to participate in international aviation and cross-border trade activities.

The international market for non‑intrusive inspection equipment and related services, therefore, continues to expand as countries satisfy the requirements of these initiatives in order to maintain direct airline connections and ship goods internationally and as they themselves choose to procure and operate equipment to secure their own borders, transportation networks, facilities and other venues.

Transportation Security Administration and other international air transportation security regulators around the world require the screening of passengers, carry-on bags and air cargo.

Several of our screening system models have been approved by the U.S.

Transportation Security Administration, as well as by various international regulatory bodies, for this purpose and are procured and used by government agencies, airlines, airports, freight forwarders, transportation companies and other businesses to fulfill their compliance requirements.

These and other regulations promulgated by international organizations have resulted in an ongoing global demand for airline, cargo, port and border security and inspection technologies.

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healthcare legislation.

The COVID-19 pandemic has strained healthcare provider resources, placing increased focus on the advantages of remote monitoring and products which can be deployed flexibly, enabling hospitals to quickly reconfigure and adapt to unexpected change.

The COVID-19 pandemic strained healthcare provider resources, placing increased focus on the advantages of remote monitoring and products which can be deployed flexibly, enabling hospitals to quickly reconfigure and adapt to unexpected changes.

Our customers expect clinical value, economic value, and clinical decision support.

Positioning our current healthcare products to demonstrate the competitive value in total cost of ownership is increasingly important in this environment.

At the same time, the widespread introduction of mobile devices into the healthcare environment is creating an

emerging demand for patient data acquisition and distribution.

At the same time, the widespread introduction of mobile devices into the healthcare environment is creating an emerging demand for patient data acquisition and distribution.

Our Healthcare division designs, manufactures and markets devices and software that respond to these factors, helping hospitals reduce costs, make better-informed clinical decisions, and more fully utilize resources.

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We believe that continued advances in technology and reductions in the cost of key components of optoelectronic systems, including computer processing power and memory, have broadened the optoelectronics market by enabling the use of optoelectronic devices in a greater number of applications.

In addition, we see a trend among OEMs to increasingly outsource the design and manufacture of optoelectronic devices as well as value-added subsystems to fully-integrated, independent manufacturers, like us, that may have greater specialization, broader expertise and more flexibility to respond to short cycle times and quicker market expectations.

In addition, we see a trend among OEMs to outsource the design and manufacture of optoelectronic devices as well as value-added subsystems to fully-integrated, independent manufacturers, like us, that may have greater specialization, broader expertise and more flexibility to respond to short cycle times and quicker market expectations.

Our optoelectronic devices are used in a wide variety of applications for diversified markets including aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction and homeland security.

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We offer full turnkey solutions as well as printed circuit board assembly, cable and harness assembly, liquid crystal displays and box build manufacturing services, in which we provide product design and development, supply chain management, and production manufacturing services.

Additionally, our flexible circuit businesses offer design expertise, manufacturing capabilities, and assembly of flexible and rigid circuit boards for applications in the industrial medical, military, and consumer markets.

Additionally, our flexible circuit businesses offer design expertise, fabrication capabilities, and assembly of flexible and rigid circuit boards for applications in the industrial medical, military, and consumer markets.

Growth Strategy

We believe that one of our primary competitive strengths is our expertise in the cost effective design and manufacture of specialized electronic systems and components for critical applications.

As a result, we have leveraged, and intend to continue to leverage, such expertise and capacity to gain price, performance and agility advantages over our competitors in the security, healthcare and optoelectronics fields, and to translate such advantages into profitable growth in those fields.

As a result, we will continue to leverage such expertise and capacity to gain price, performance and agility advantages over our competitors in the security, healthcare and optoelectronics fields, and to translate such advantages into profitable growth in those fields.

At the same time, we continually seek to identify new markets in which our core expertise and capacity will provide us with competitive advantages.

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We view our international operations as providing an important strategic advantage over competitors.

First, our international manufacturing facilities allow us to take advantage of competitive labor rates in order to be a low-cost producer.

First, our international manufacturing facilities allow us to take advantage of competitive labor rates in order to lower our manufacturing costs.

Second, our international offices strengthen our sales and marketing efforts and our ability to service and repair our systems by providing direct access to growing markets and to our existing international customer base.

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Our vertical integration provides several advantages in each of our divisions.

These advantages include reduced manufacturing and delivery times, lower costs due to our access to competitive international labor markets and direct sourcing of raw materials.

We also believe that we offer significant added value to our customers by providing a full range of vertically-integrated services, including component design and customization, subsystem concept design and application engineering, product development and prototyping, efficient pre-production and short-run manufacturing and competitive mass production capabilities.

These advantages include reduced manufacturing and delivery times, lower costs due to our access to competitive international labor markets and direct sourcing of raw materials and sub components.

We also believe that we offer significant added value to our customers by providing a full range of vertically-integrated services, including component design and customization, subsystem concept design and application engineering, product development and prototyping, efficient preproduction and short run manufacturing and competitive mass production capabilities.

We believe that our vertical integration differentiates us from many of our competitors and provides value to our customers who can rely on us to be an integrated supplier.

Capitalizing on the Market for Security and Inspection Systems.

The trend toward increased screening of goods entering and departing from ports and borders has resulted, and may continue to result in, the growth in the market for cargo inspection systems and turnkey security screening services that are capable of inspecting shipping containers for contraband and assisting customs officials in the verification of shipping manifests.

The trend toward increased screening of goods entering and departing from ports and crossing borders has resulted, and may continue to result in, the growth in the market for cargo inspection systems and turnkey security screening services that are capable of inspecting shipping containers for contraband and assisting customs officials in the verification of shipping manifests.

Package and cargo screening by freight forwarders, airlines and air cargo companies represents a growing sector, as regulations in the United States and Europe have continued to require screening of air cargo shipments.

We plan to capitalize on opportunities to replace, service and upgrade existing security installations, and to offer turnkey security screening solutions in which we may construct, staff and/or operate on a long-term basis security screening checkpoints for our customers.

We expect that a market for software-as-a-service (SaaS) platforms that are capable of integrating the data that our security inspection systems produce with related information derived from vehicle plates, cargo container numbers, drivers’ licenses, government databases, and other sources will also continue to develop, mature and grow, particularly as customers shift their operating procedures to take advantage of secure, cloud-based, networking technologies.

We are a leader in the development of integrating non-intrusive inspection with such sources and to transmit such data to operators working within secure, remote screening facilities.

Since 2011, our software has been used by customs and tax authorities in the United States, Europe and Latin America to screen over one million containers and vehicles.

In the future, we believe that government agencies and commercial customers may increasingly rely on such SaaS offerings to remotely review and adjudicate screening decisions over secure networks as well as to communicate with and monitor the performance of inspectors working on the ground at distant ports, border crossings and other checkpoints.

We expect that a market for software-as-a-service (SaaS) platforms that are capable of integrating the data that security inspection systems produce with related information derived from vehicle license plates, cargo container numbers, drivers’ licenses, government databases, and other sources will also continue to develop, mature and grow, particularly as customers shift their operating procedures to take advantage of secure, cloud-based, networking technologies.

We are a leader in the development of these platforms, including the transmission of such data to operators that may be working within secure, remote screening facilities hundreds or thousands of miles away from the security checkpoint.

Our software has been used by customs and tax authorities in the United States, Europe and Latin America to screen millions of containers and vehicles.

We believe that government agencies and commercial customers will increasingly rely on such SaaS offerings to review and adjudicate screening decisions remotely, over secure networks, as well as to communicate with and monitor the performance of their employees working on the ground at distant ports, border crossings and other checkpoints.

Finally, we also intend to continue to develop new security and inspection products and technologies, including software, and to enhance our current product and service offerings through internal research and development and selective acquisitions.

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Security and Inspection Systems.

We design, manufacture and market security and inspection systems globally to end users under the “Rapiscan Systems,” “AS&E,” and “Gatekeeper” trade names.

Our Security products are used to inspect baggage, parcels, cargo, people, vehicles and other objects for various contraband and prohibited items including weapons, explosives, drugs, and radioactive and nuclear materials.

We design, manufacture and market security and inspection systems globally to end users primarily under the “Rapiscan” trade name.

These systems are also used for the safe, accurate and efficient verification of cargo manifests for the purpose of assessing duties and monitoring the export and import of controlled materials.

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people screening;

radiation detection;

radiation monitoring;

explosive and narcotics trace detection;

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From time to time we form joint ventures to carry out our operations in certain geographies, including, for example, Albania.

As a result of terrorist attacks worldwide, security and inspection products have increasingly been used at a wide range of facilities other than airports, such as border crossings, railways, seaports, cruise line terminals, sporting venues, freight forwarding operations, government and military installations and nuclear facilities.

As a result of the use of security and inspection products at additional facilities, we have diversified our sales channels for security and inspection products.

Many of our security and inspection systems utilize dual-energy X-ray imaging technology with computer software enhanced imaging methods to facilitate the detection of materials and items such as explosives, weapons, narcotics, bulk currency or other contraband.

In addition, many of our systems use dual-view X-ray imaging, which allows operators to examine objects from two directions simultaneously, thereby reducing the need for re-scanning of objects and improving the operator’s ability to detect threats quickly and effectively.

Our baggage and parcel inspection, cargo and vehicle inspection and hold (checked) baggage screening inspection systems range in size from compact mobile systems to large systems comprising entire buildings in which trucks, shipping containers or pallets are inspected.

In recent years, security and inspection products have increasingly been used at a wide range of facilities in addition to airports, such as border crossings, railways, seaports, cruise line terminals, sporting venues, freight forwarding operations, government and military installations and nuclear facilities.

As a result of the use of security and inspection products at additional facilities, we have diversified our portfolio of security and inspection products and our sales channels.

Many of our security and inspection systems utilize dual-energy X-ray imaging technology, in combination with software enhanced imaging methods and algorithms to facilitate the detection of contraband materials and items such as explosives, weapons, narcotics, and bulk currency.

Dual energy imaging allows some material properties to be identified.

Additionally, dual-view X-ray imaging allows operators to view and examine objects from two directions simultaneously, thereby improving the operator’s ability to detect threats quickly and effectively.

Some of our systems also use different types or combinations of X-ray imaging in addition to dual-energy, such as multi-view and computed tomography.

Algorithms that process images and related data from these systems significantly enhance the overall probability of detection of a range of threat items and materials.

Typical threat items include explosives and weapons.

Our inspection systems range in size from compact, handheld and table-top products to large systems comprising entire buildings in which trucks, shipping containers or pallets are inspected.

Many of our inspection systems are also designed to be upgradeable to respond to new customer requirements as they emerge or change.

Our cargo and vehicle inspection applications, in which vehicles, cars, trucks, shipping containers, pallets and other large objects can be inspected, are designed in various configurations, including gantry, portal and mobile systems.

These products are primarily used to verify the contents of cars, trucks or cargo containers and to detect the presence of contraband, including narcotics, weapons, explosives, radioactive and nuclear materials and other smuggled items.

Most of our cargo and vehicle inspection systems employ X-ray imaging to non-intrusively inspect objects and present images to an inspector, showing shapes, sizes, locations and relative densities of the contents.

These systems utilize transmission imaging technology, backscatter imaging technology, or both technologies.

We also manufacture passive radiation detection devices for detecting nuclear threat material utilizing their gamma and neutron signatures.

Our customers use these products to verify the contents of cars, trucks, rail cars and cargo containers and to detect the presence of contraband, including narcotics, weapons, explosives, radioactive and nuclear materials and other smuggled items.

Most of our cargo and vehicle inspection systems employ X‑ray imaging to inspect objects and present images to an inspector, including shapes, sizes, locations and relative densities of the contents.

These systems utilize transmission imaging, backscatter imaging, or both technologies in combination.

We also manufacture passive radiation monitoring devices for detecting nuclear materials utilizing their gamma and neutron signatures.

Additionally, we have developed isotope‑specific identification algorithms.

Many of these systems have been built to meet specific customer inspection requirements.

We believe that we offer one of the broadest technology platforms in the baggage and parcel and cargo and vehicle inspection systems industry.

Our broad platform permits us to offer customers solutions, which optimize flexibility, performance and cost to meet the customers’ unique application requirements.

Our Security division offers a range of systems that use different types of x-ray imaging, for example dual-view, multi-view or computed tomography, to provide image data to detection algorithms that allow the automated detection of a range of threat items and materials.

Typical threat items include explosives, narcotics and weapons.

In many cases these systems are designed to meet the regulated detection requirements of relevant bodies such as the U.S.

Transportation Security Administration and the European Union.

Such automated detection systems are targeted towards applications such as hold baggage screening, cabin baggage screening and air cargo screening, and approvals from those bodies are recognized and used as de facto standards globally with few exceptions.

Our Security division also offers trace detection systems that are designed to detect trace amounts of explosives as well as narcotics.

We also offer people screening products, such as walk-through metal detector (WTMD) products for use at security checkpoints at airports, government buildings, sports arenas and other venues.

These systems are designed to be used in screening people, baggage and other items for illicit materials and weapons.

Many of these systems have been built to meet specific requirements of our government customers.

Our broad portfolio of non-intrusive inspection systems permits us to offer customers solutions that are tailored to their specific operational requirements, performance standards and budgets.

In many cases, we have designed our systems to meet the performance specifications of relevant regulators, including authorities located in the United States, United Kingdom and European Union.

This is particularly the case with respect to systems used (or approved for use) to perform screening of airline passenger carry-on items, hold (checked) baggage and air cargo.

Our Security division also offers trace detection systems that are designed to detect trace amounts of explosives or narcotics and people screening products, such as walk-through metal detectors for use at security checkpoints at airports, government buildings, sports arenas and other venues.

Patient Monitoring and Cardiology and Remote Monitoring.

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These tools help address top challenges facing hospitals today.

Spacelabs predictive analytics clinical decision support tools provide surveillance and deterioration alerting for patients in all levels of care in the hospital setting and includes FDA-cleared and regulated products featuring the Rothman Index, a proprietary patient condition score available through EMR-integrated, web-based, or mobile app interfaces.

For electrocardiograph monitoring or multiparameter monitoring of ambulatory patients, we offer a digital telemetry system.

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Spacelabs Intesys ® Clinical Suite (ICS) provides a software suite allowing hospitals to leverage their infrastructure to capture data from the bedside, compact and telemetry monitors.

Our PathfinderSL ® and Lifescreen™ Pro analysis tools provides clinicians the ability to save Holter analysis time and to do detailed analysis when needed inside or outside the hospital.

Our PathfinderSL ® and Lifescreen™ Pro analysis tools provide clinicians the ability to save Holter analysis time and to do detailed analysis when needed inside or outside the hospital.

Our Eclipse Pro Holter recorders provide up to 14 days of 3-channel recording or up to 72 hours of 12 lead with pacing.

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These products are manufactured in standard and customized configurations for specific applications and are offered either as components or as subsystems.

Our optoelectronic products and services are provided primarily under the “OSI Optoelectronics,” “OSI LaserDiode,” “OSI Laserscan,” “Semicoa,” and “Advanced Photonix” trade names.

Our optoelectronic products and services are provided primarily under the “OSI Optoelectronics,” “OSI LaserDiode,” “OSI Laserscan,” and “Advanced Photonix” trade names.

In addition to the manufacture of standard and OEM products, we also specialize in designing and manufacturing customized value-added subsystems for use in a wide range of products and equipment.

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We offer solid-state laser products for aerospace, defense, telecommunication and medical applications under the “OSI LaserDiode” trade name.

We also provide electronics design and manufacturing services in North America, the United Kingdom and in the Asia Pacific region with enhanced, RoHS-compliant, printed circuit board and cable and harness assembly and box-build manufacturing services utilizing state-of-the-art automated surface mount technology lines.

We also provide electronics design and manufacturing services in North America, the United Kingdom and in the Asia Pacific region with enhanced, Rohs compliant, printed circuit board and cable and harness assembly and box build manufacturing services utilizing automated surface mount technology lines.

We offer electronics manufacturing services to OEM customers and end users for medical, automotive, defense, aerospace, industrial and consumer applications that do not utilize optoelectronic devices.

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Security and Inspection Products.

Many security and inspection products were developed in response to civilian airline hijackings.

Many security and inspection products were developed originally in response to civilian airline hijackings.

Consequently, certain of our security and inspection products have been and continue to be sold for use at airports.

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Department of State, U.S.

Department of Commerce, and Federal Bureau of Prisons in the United States, as well as many premier international government agencies, including airports and other critical infrastructure agencies, DHL, and United Parcel Service.

Department of Commerce, and U.S.

Department of Justice, as well as many premier international government agencies, including airports and other critical infrastructure agencies.

Our contracts with the U.S.

Government are generally subject to renegotiation of profits and termination for convenience at the election of the Government.

For the fiscal year ended June 30, 2022, our Security division direct sales to the U.S.

Government are generally subject to termination for convenience at the election of the U.S.Government.

For the fiscal year ended June 30, 2023, our Security division’s direct sales to the U.S.

Government were approximately $235 million.

Additionally, certain of our contracts with foreign governments contain provisions allowing the government to terminate a contract for convenience.

Additionally, certain of our contracts with foreign governments also contain provisions allowing the government to terminate a contract for convenience.

For further discussion, please refer to Item 1A.

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We market and sell our security and inspection products and turnkey security screening solutions globally through a direct sales and marketing staff located in North America, South America, Europe, Middle East, Australia, and Asia, in addition to an expansive global network of independent distributors.

This sales staff is supported by a service organization located in the same regions, as well as a global network of independent, authorized service providers.

This sales organization is supported by a service organization located in the same regions, as well as a global network of independent, authorized service providers.

We market and sell our healthcare products globally through a direct sales and marketing staff located in North America, South America, Europe and Asia, in addition to a global network of independent distributors.

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After the expiration of our standard product warranty periods, we are often engaged by customers, either directly or through our network of authorized service providers, to provide maintenance services for our security and inspection products.

In addition, we provide a variety of service and support options for our healthcare customers, including hospital on-site repair and maintenance service and telephone support, parts exchange programs for customers with the internal expertise to perform a portion of their own service needs and a depot repair center at our division

headquarters.

We believe that our international maintenance service capabilities allow us to be competitive in selling our security and inspection systems as well as our patient monitoring, cardiology and remote monitoring, and connected care systems.

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Our security and inspection systems are primarily designed at our facilities in the United States and in the United Kingdom, Australia, Singapore, India, and Malaysia.

These products include mechanical, electrical, analog and digital electronics, software subsystems.

In addition to product design, we provide system integration services to integrate our products into turnkey systems at the customer site.

We support cooperative research projects with academia and government agencies and provide contract research for government agencies.

These products include mechanical, electrical, analog and digital electronics, and software components and subsystems.

In addition to product design, we provide civil works and system integration services to install and integrate our products with other systems, networks and facilities at the customer site.

We support cooperative and government-funded research projects with universities and directly with government agencies themselves.

Our healthcare products are primarily designed at our facilities in the United States and in the United Kingdom with sustaining engineering efforts in India.

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We are also currently involved, both in the United States and internationally, in research projects aimed at improving our medical systems and at expanding our current product lines.

We design and manufacture optoelectronic devices and we provide electronics manufacturing services primarily in our facilities in the United States and internationally in the United Kingdom, Canada, Mexico, India, Indonesia, Malaysia and Singapore.

We engineer and manufacture subsystems to solve the specific application needs of our OEM customers.

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We outsource manufacturing of certain of our supplies and accessories.

We currently manufacture our optoelectronic devices and provide electronics manufacturing services domestically in California and New Jersey, and internationally in Canada, Mexico, India, Indonesia, Malaysia, the United Kingdom and Singapore.

Most of our high-volume, labor-intensive manufacturing activities are performed at our facilities in India, Mexico, Indonesia and Malaysia.

We currently manufacture our optoelectronic devices and provide electronics manufacturing services domestically in California and New Jersey, and internationally in Canada, India, Indonesia, Malaysia, and the United Kingdom.

Most of our high-volume, labor-intensive manufacturing activities are performed at our facilities in India, Indonesia and Malaysia.

Our ability to manufacture products and provide follow-on service from offices located in these regions allows us to remain in close proximity to our customers, which is an important component of our global strategy.

Our global manufacturing organization has expertise in optoelectronic, microelectronic and integrated electronics for industrial and automation, medical, aerospace and defense industry applications.

Our manufacturing includes silicon wafer processing and fabrication, optoelectronic device assembly and screening, thin and thick film microelectronic hybrid assemblies, surface mounted and thru-hole printed circuit board electronic assemblies, cable and harness assemblies, box-build manufacturing, and flex circuitry on a complete turnkey basis.

Our manufacturing includes silicon wafer processing and fabrication, optoelectronic device assembly and screening, thin and thick film microelectronic hybrid assemblies, surface mounted and thru-hole printed circuit board electronic assemblies, cable and harness assemblies, LCD and TFT displays, box-build manufacturing, and flex circuitry on a complete turnkey basis.

To support our manufacturing operations, we outsource certain requirements, including sheet metal fabrication and plastic molding of components.

The principal raw materials and subcomponents used in producing our security and inspection systems consist of X-ray generators, linear accelerators, radioactive isotopes, detectors, data acquisition and computer systems, conveyance systems and miscellaneous mechanical and electrical components.

A large portion of the optoelectronic devices, subsystems and circuit card assemblies used in our inspection and detection systems are manufactured in-house.

A large proportion of our X-ray generators, linear accelerators, radioactive isotopes and conveyance systems used in our cargo and vehicle inspection systems are purchased from unaffiliated third-party providers.

The principal raw materials and subcomponents used in producing our security and inspection systems consist of X-ray generators, linear accelerators, detectors, data acquisition and computer systems, conveyance systems, vehicles, and miscellaneous mechanical and electrical components.

A large portion of the optoelectronic devices, subsystems and circuit card assemblies used in our inspection systems are manufactured in-house.

A large proportion of our X-ray generators, linear accelerators, computers and conveyance systems used in our cargo and vehicle inspection systems are purchased from unaffiliated third-party providers.

The principal raw materials and subcomponents used in producing our healthcare products consist of printed circuit boards, housings, mechanical assemblies, pneumatic devices, touch screens, medical grade displays, cables, filters, textiles, fabric, gauges, fittings, tubing and packaging materials.

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We purchase most materials, parts, and components pursuant to purchase orders placed from time to time in the ordinary course of business.

Due to the global COVID-19 pandemic, our divisions have experienced supply chain and labor availability challenges and travel restrictions that have impacted the price and availability of parts, components, consumables, freight, shipping, and third-party services, adversely impacting our gross margin as well as delayed product deliveries, installations, maintenance and repair work, and technical support, among other work and services.

Since the initial onset of the COVID-19 pandemic, our divisions have experienced supply chain and labor availability challenges that have impacted the price and availability of parts, components, consumables, freight, shipping, and third-party services, adversely impacting our gross margin as well as delayed product deliveries, installations, maintenance and repair work, and technical support, among other work and services.

Information Technology and Cybersecurity Risk Management

We rely on digital technology to conduct business operations and engage with our business partners.

As the complexity of our engagements grow, so do the threats from cyber intrusion, ransomware,denial of service attacks, manipulation and other cyber misconduct.

Utilizing a risk management approach that continually assesses and improves our information technology (IT) and cybersecurity risk deterrence capabilities, our information security and risk management teams provide oversight, detection and response to reduce cybersecurity risk.

Through a combination of governance, risk and compliance (GRC) resources, we (i) proactively monitor IT controls to better ensure compliance with legal and regulatory requirements, (ii) assess adherence of third parties with which we partner to appropriate risk management standards, (iii) ensure essential business functions remain available during a business disruption, (iv) develop and update response plans to address potential weaknesses, and (v) maintain cyber incident management and reporting procedures.

Our GRC resources are designed to prioritize IT and cybersecurity risk areas, identify solutions that minimize such risks, pursue optimal outcomes and maintain compliance with contractual obligations.

We also maintain an operational security function with a near real-time response capability that triages incident management and triggers impact mitigation protocols.

We rely extensively on digital technology to conduct operations and engage with our customers and business partners.

As the complexity of our engagements grows, so do the threats from cyber intrusion, ransomware, denial of service, phishing, account takeover, data manipulation and other cyber misconduct.

To counter these threats, we have implemented an information security management system (ISMS) focused on data confidentiality, integrity, and availability.

Our ISMS has been certified as ISO/IEC 27001 compliant and is re-evaluated annually by our external auditors.

Similarly, we conduct external cyber penetration testing annually to assess and improve our security posture and reduce cybersecurity risk.

No material information security breaches have occurred in the past three years.

Through a combination of governance, risk, and compliance (GRC) resources, we also (i) proactively monitor IT controls to ensure compliance with legal and regulatory requirements, (ii) perform third-party risk management assessments, (iii) ensure essential business functions remain available during business disruptions, (iv) develop and update incident response plans to address potential weaknesses, and (v) maintain cyber incident management and reporting procedures.

Our ISMS and GRC processes are designed to prioritize IT and cybersecurity risk areas, identify solutions that minimize such risks, pursue optimal outcomes, and maintain compliance with contractual obligations.

We also maintain a global security operations center with real-time capability to investigate and trigger impact mitigation protocols.

These capabilities allow us to reduce exposure should a security incident arise.

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The loss of some of our trademarks or patents might have a negative impact on our financial results and operations.

Nevertheless, with the exception of the loss of the Spacelabs ® , Rapiscan ® , or AS&E ® trademarks, the impact of the loss of any single trademark or patent would not likely have a material adverse effect on our business.

Nevertheless, with the exception of the loss of the, Rapiscan ® , AS&E ® or Spacelabs ® trademarks, the impact of the loss of any single trademark or patent would not likely have a material adverse effect on our business.

Government Regulation of Medical Devices

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United States FDA.

In the United States, the FDA has broad regulatory powers with respect to pre-clinical and clinical testing of new medical devices and the designing, manufacturing, labeling, storage, record keeping, marketing, advertising, promotion, distribution, post-approval monitoring and reporting and import and export of medical devices.

Unless an exemption applies, federal law and FDA regulations require that all new or significantly modified medical devices introduced into the market be preceded either by a pre-market notification clearance order under section 510(k) of the Federal Food, Drug and Cosmetic Act (FDCA), or an approved pre-market approval (PMA) application.

In the United States, the FDA has broad regulatory powers with respect to preclinical and clinical testing of new medical devices and the designing, manufacturing, labeling, storage, record keeping, marketing, advertising, promotion, distribution, post market monitoring and reporting and import and export of medical devices.

Unless an exemption applies, federal law and FDA regulations require that all new or significantly modified medical devices introduced into the market be preceded either by a premarket notification clearance under section 510(k) of the Federal Food, Drug and Cosmetic Act (FDCA), or an approved premarket approval (PMA) application.

Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Class I devices are those for which safety and effectiveness can be reasonably assured by adherence to a set of regulations, referred to as General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation (QSR) facility registration and product listing, reporting of adverse events and malfunctions and appropriate, truthful and non-misleading labeling, advertising and promotional materials.

Some Class I devices, also called Class I reserved devices, also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

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the Medical Device Reporting (MDR) regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to reoccur;

medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and removals (“recalls”) if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death;

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These laws impact the kinds of financial arrangements we may have with hospitals or other potential purchasers of our products.

They particularly impact how we structure our sales offerings, including discount practices, customer support, education and training programs, physician consulting, research grants and other service arrangements.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to material penalties, including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

They particularly impact how we structure our sales offerings, including pricing, customer support, education and training programs, physician consulting, research grants and other service arrangements.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to material penalties, including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, and the curtailment or restructuring of our operations, any of which could materially and adversely affect our ability to operate our business and our results of operations.

Additionally, there has been a trend towards increased federal and state regulation of payments and other transfers of value provided to healthcare professionals or entities.

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It is expected that more regulatory authorities will participate in MDSAP in the future.

We and other medical device manufacturers will soon be confronted with major changes in the EU’s decades-old regulatory framework which governs market access to the EU.

The Medical Devices Regulation (“MDR”) will replace the EU’s current Medical Device Directive (93/42/EEC) and the EU’s Directive on active implantable medical devices (90/385/EEC).

Manufacturers of currently approved medical devices will have a transition time to meet the requirements of the MDR.

The MDR differs in several important ways from the EU’s current directives for medical devices and active implantable medical devices.

The most significant changes in the regulation include:

● The definition of medical devices covered under the MDR will be significantly expanded to include devices that may not have a medical intended purpose, such as colored contact lenses.

We and other medical device manufacturers are being confronted with major changes in the EU’s decades-old regulatory framework governing market access to the EU.

The EU’s Medical Devices Regulation (“EU MDR”) is replacing the EU’s Medical Device Directive (93/42/EEC) and the EU’s Directive on active implantable medical devices (90/385/EEC).

The EU MDR imposes stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and post-market surveillance, than the medical device directives replaced by the EU MDR.

The EU MDR became effective as of May 26, 2021.

Manufacturers of currently approved medical devices will have a transition time to meet the requirements of the EU MDR.

The EU MDR differs in several important ways from the EU’s directives for medical devices and active implantable medical devices replaced thereby.

The most significant changes in the regulations include:

● The definition of medical devices covered under the EU MDR is significantly expanded to include devices that may not have a medical intended purpose, such as colored contact lenses.

Also included in the scope of the regulation are devices designed for the purpose of “prediction and prognosis” of a disease or other health condition.

● Device manufacturers will be required to identify at least one person within their organization who is ultimately responsible for all aspects of compliance with the requirements of the new MDR.

● Device manufacturers are being required to identify at least one person within their organization who is ultimately responsible for all aspects of compliance with the requirements of the new EU MDR.

The organization must document the specific qualifications of this individual relative to the required tasks.

● The MDR requires rigorous post-market oversight of medical devices.

● The MDR will allow the EU Commission or expert panels to publish “Common Specifications,” such as requirements for technical documentation, risk management, or clinical evaluation, which devices shall be required to meet.

● Devices will be reclassified according to risk, contact, duration, and invasiveness.

● Systematic clinical evaluation will be required for Class IIa and Class IIb medical devices.

● All currently approved devices must be recertified in accordance with the new MDR requirements.

We have a dedicated team updating and revising key systems, processes, and product technical documentation to meet the new MDR requirements and transition timeline.

● The EU MDR requires rigorous post-market oversight of medical devices.

● The EU MDR allows the EU Commission or expert panels to publish “Common Specifications,” such as requirements for technical documentation, risk management, or clinical evaluation.

● Devices are to be reclassified according to risk, contact, duration, and invasiveness.

● Systematic clinical evaluation is being required for Class IIa and Class IIb medical devices.

● All approved devices must be recertified in accordance with the new EU MDR requirements.

We have a team dedicated to updating and revising key systems, processes, and product technical documentation to meet the new EU MDR requirements.

Environmental Regulations

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Our manufacturing facilities conduct regular internal audits to ensure proper environmental permits and controls are in place to meet changes in operations.

Third-party investigations address matters related to current and former occupants and operations, historical land use, and regulatory oversight and status of associated properties and/or operations (including surrounding properties).

The purpose of these studies is to identify, as of the date of such report, potential areas of environmental concern related to past and present activities or from nearby operations.

The scope and extent of each investigation is dependent upon the size and complexity of the property and/or operation and on recommendations by independent environmental consultants.

The scope and extent of each investigation is dependent upon the size, complexity and operation of the property and on recommendations by independent environmental consultants.

The markets in which we operate are highly competitive and characterized by evolving customer needs and rapid technological change.

We compete with a number of other manufacturers, some of which have significantly greater financial, technical and marketing resources than we have.

In addition, these competitors may have the ability to respond quickly to new or emerging technologies, adapt more quickly to changes in customer requirements, have stronger customer relationships, have greater name recognition and devote greater resources to the development, promotion and sale of their products than we do.

We compete with other manufacturers, some of which have significantly greater financial, technical and marketing resources than we have.

In addition, some competitors may have the ability to respond quickly to new or emerging technologies, adapt more quickly to changes in customer requirements, have stronger customer relationships, have greater name recognition and devote greater resources to the development, promotion and sale of their products than we do.

As a result, we may not be able to compete successfully against designers and manufacturers of specialized electronic systems and components or within the markets for security and inspection systems, patient monitoring, cardiology and remote monitoring, or optoelectronic devices.

Future competitive pressures may materially and adversely affect our business, financial condition and results of operations.

In the security and inspection market, competition is based primarily on factors such as product performance, functionality and quality, government regulatory approvals and qualifications, the overall cost effectiveness of the system, prior customer relationships, technological capabilities of the products, price, local market presence, program execution capability, and breadth of sales and service organization.

In the security and inspection market, competition is based primarily on factors such as product performance specification standards, quality and reliability, government regulatory approvals and qualifications, the overall cost effectiveness of the system, prior customer relationships and reputation, technological capabilities of the products, price, local market presence, program execution capability, and breadth of sales and service organization.

Competition results in price reductions and reduced margins and could result in loss of market share.

Although our competitors offer products in competition with one or more of our products, we can supply a variety of system types and offer among the widest array of solutions available from a single supplier.

This variety of technologies also permits us to offer unique hybrid systems to our customers that utilize two or more of these technologies, thereby optimizing flexibility, performance and cost to meet the customer’s unique application requirements.

In the patient monitoring, cardiology and remote monitoring, and connected care markets, competition is also based on a variety of factors including product performance, functionality, value and breadth of sales and service organization.

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Competition in the extensive electronic manufacturing services market ranges from multinational corporations with sales in excess of several billion dollars, to large regional competitors and to small local assembly companies.

In our experience, the OEM customers to whom we provide such services prefer to engage companies that offer both local and lower-cost off-shore facilities.

In our experience, the OEM customers to whom we provide such services often prefer to engage companies that offer both local and lower-cost off-shore facilities.

Along with a number of domestic competitors for these services, our high-volume, low-cost contract manufacturing locations in Southeast Asia compete with other manufacturers in the same region.

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In instances where we are not able to estimate the value of a purchase order or contract, they are not included in backlog.

We ship most of our baggage and parcel inspection, people screening, patient monitoring and cardiology and remote monitoring systems and optoelectronic devices and value-added subsystems within one to several months after receiving an order.

We ship most of our baggage and parcel inspection, people screening, trace detection, patient monitoring and cardiology and remote monitoring systems and optoelectronic devices and value-added subsystems within one to several months after receiving an order.

However, such shipments may be delayed for a variety of reasons, including supply chain disruptions and any special design or requirements of the customer.

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(i) additional time necessary to coordinate and conduct factory inspections with the customer before shipment;

(ii) a customer’s need to engage in time-consuming site construction to accommodate the system, over which we have no control or responsibility;

(ii) a customer’s need to engage in time-consuming site construction projects to accommodate the system, over which we may have no control or responsibility;

(iii) additional fine tuning of such systems once they are installed;

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(v) time needed to obtain export licenses and/or letters of credit;

and (vi) delays originating from other contractors on the project.

The COVID-19 pandemic exacerbated these challenges and may continue to do so until supply chain delays and international travel restrictions and other protective measures subside.

As of June 30, 2022, our consolidated backlog totaled $1,232 million, compared to $1,076 million as of June 30, 2021.

Approximately $514 million of our backlog as of June 30, 2022 is not reasonably expected to be fulfilled in fiscal year 2023.

Sales orders underlying our backlog are firm orders;

although, from time to time we may agree to permit a customer to cancel an order, or an order may be cancelled for other reasons.

(vi) delays originating from other contractors on the project;

and (vii) supply chain constraints.

The COVID-19 pandemic exacerbated these challenges, and supply chain constraints that originated during the pandemic continue to affect our projects, even as international travel restrictions and other protective measures subside.

As of June 30, 2023, our consolidated backlog totaled approximately $1.8 billion, compared to $1.2 billion as of June 30, 2022.

Approximately $0.8 billion of our backlog as of June 30, 2023 is not reasonably expected to be fulfilled in fiscal year 2024.

Sales orders underlying our backlog are firm orders, although, from time to time we may agree to permit a customer to cancel an order, or an order may be cancelled for other reasons.

Variations in the size of orders, product mix, or delivery requirements, among other factors, may result in substantial fluctuations in backlog from period to period.

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Human Capital

The strength and talent of our workforce are critical to the success of our businesses, and we continually strive to attract, develop and retain personnel commensurate with the needs of our businesses.

The strength and talent of our workforce are critical to the success of our businesses, and we strive to attract, develop and retain personnel commensurate with the needs of our businesses.

Our human capital management priorities are designed to support the execution of our business strategy and improve organizational effectiveness.

We support our employees’ financial, health, and social well-being through competitive compensation structures, including a robust employee stock purchase program and retirement benefits, as well as innovative health and well-being programs focused on promoting the physical and mental health of our workforce.

In addition, in response to COVID-19, we implemented changes to protect our employees and to support health and safety protocols.

We contribute to our employees’ financial, health, and social well-being through competitive compensation structures, including a robust employee stock purchase program and retirement benefits, as well as health and well-being programs focused on promoting the physical and mental health of our workforce.

We also strive to create opportunities for career development and growth.

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We understand the importance of a diverse workforce, and we are committed to upholding a culture of diversity, equity, and inclusion.

We value the unique contributions of every person, and we hold firm to the ideals of fairness, equal opportunity and mutual respect for all forms of diversity and differing abilities.

We are committed to pay equity and protecting the rights of underrepresented

groups within our organization, including women, racial and ethnic minorities, and members of the LGBTQ+ community.

We value the unique contributions of our employees, and we hold firm to the ideals of fairness, equal opportunity and mutual respect for all forms of diversity and differing abilities.

We are committed to pay equity and protecting the rights of underrepresented groups within our organization, including women, racial and ethnic minorities, and members of the LGBTQ+ community.

Our broader diversity strategies include focus at all levels of our organization, including with senior management and our Board of Directors.

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We make available, free of charge through our internet website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and reports filed pursuant to Section 16 of the Exchange Act, as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC.

Also available on our website free of charge are our Corporate Governance Guidelines, the Charters of our Nominating and Governance, Audit, Compensation and Benefits, Technology, and Risk Management Committees of our Board of Directors and our Code of Ethics and Conduct (which applies to all Directors and employees, including our principal executive officer, principal financial officer and principal accounting officer).

Also available on our website free of charge are our Corporate Governance Guidelines, the Charters of our Nominating and Governance, Audit, Compensation and Benefits, Technology, and Risk Management Committees of our Board of Directors and our Code of Ethics and Conduct (which applies to all members of our Board of Directors and employees, including our principal executive officer, principal financial officer and principal accounting officer).

A copy of this annual report on Form 10-K is available without charge upon written request addressed to:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business