Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this report, “OSI”, the “Company”, “we”, “us”, “our” and similar terms refer to OSI Systems, Inc. together with our wholly-owned subsidiaries.
This management’s discussion and analysis of financial condition as of March 31, 2024 and results of operations for the three and nine months ended March 31, 2024 should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the SEC.
Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to our current expectations, beliefs, and projections concerning matters that are not historical facts. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “may,” “should,” “will,” “would,” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions and contingencies, many of which are outside our control. Assumptions upon which our forward-looking statements are based could prove to be inaccurate, and actual results may differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (including Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and other documents filed by us from time to time with the SEC. Such factors, of course, do not include all factors that might affect our business and financial condition. We could be exposed to a variety of negative consequences as a result of delays related to the award of domestic and international contracts; failure to secure the renewal of key customer contracts; delays in customer programs; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty; material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on our ability to execute business plans; unfavorable currency exchange rate fluctuations; effect of changes in tax legislation; market acceptance of our new and existing technologies, products and services; our ability to win new business and convert any orders received to sales within the fiscal year; contract and regulatory compliance matters, and actions, which if brought, could result in judgments, settlements, fines, injunctions, debarment or penalties; as well as other risks and uncertainties, including but not limited to those factors described in our other SEC filings, which could have a material and adverse impact on our business, financial condition and results of operation. All forward-looking statements contained in this report are qualified in their entirety by this Section. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation other than as may be required under securities laws to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Executive Summary
We are a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. We sell our products and provide related services in diversified markets, including homeland security, healthcare, defense and aerospace. We have three operating divisions: (a) Security, providing security and inspection systems and turnkey security screening solutions; (b) Optoelectronics and Manufacturing, providing specialized electronic components for our Security and Healthcare divisions, as well as to third parties for applications in the defense and aerospace markets, among others; and (c) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories.
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Security Division . Through our Security division, we provide security screening products and services globally, as well as turnkey security screening solutions. These products and services are used to inspect baggage, parcels, cargo, people, vehicles and other objects for weapons, explosives, drugs, radioactive and nuclear materials and other contraband. Revenues from our Security division accounted for 57% and 66% of our total consolidated revenues for the nine months ended March 31, 2023 and 2024, respectively.
Optoelectronics and Manufacturing Division . Through our Optoelectronics and Manufacturing division, we design, manufacture and market optoelectronic devices and flex circuits and provide electronics manufacturing services globally for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostics, telecommunications, office automation, computer peripherals, industrial automation and consumer products. We also provide our optoelectronic devices and electronics manufacturing services to OEM customers and to our own Security and Healthcare divisions. Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 28% and 22% of our total consolidated revenues for the nine months ended March 31, 2023 and 2024, respectively.
Healthcare Division . Through our Healthcare division, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems globally for sale primarily to hospitals and medical centers. Our products monitor patients in critical, emergency and perioperative care areas of the hospital and provide information, through wired and wireless networks, to physicians and nurses who may be at the patient’s bedside, in another area of the hospital or even outside the hospital. Revenues from our Healthcare division accounted for 15% and 12% of our total consolidated revenues for the nine months ended March 31, 2023 and 2024, respectively.
Trends and Uncertainties
The following is a discussion of certain trends and uncertainties that we believe have influenced, and may continue to influence, our results of operations.
Global Economic Considerations. Our products and services are sold in numerous countries worldwide, with a large percentage of our sales generated outside the United States. Therefore, we are exposed to and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, rising interest rates, and labor shortages. Increasing diplomatic and trade friction between the U.S. and China has also created significant uncertainty in the global economy. These global macroeconomic factors, coupled with the volatile U.S. political climate and political unrest internationally, have created uncertainty and impacted demand for certain of our products and services. Conflicts in Gaza and nearby regions have created political and economic uncertainty in the Middle East. Also, the continued conflict between Russia and Ukraine and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. While the impact of these factors remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition or results of operations. We do not know how long this uncertainty will continue. These factors could have a material negative effect on our business, results of operations and financial condition.
Global Trade. The current domestic and international political environment, including in relation to recent and further potential changes by the U.S. and other countries in policies on global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy and global trade. This uncertainty is exacerbated by sanctions imposed by the U.S. government against certain businesses and individuals in select countries. Continued or increased uncertainty regarding global trade due to these or other factors may require us to modify our current business practices and could have a material adverse effect on our business, results of operations and financial condition.
Healthcare Considerations. As described below, our Healthcare division experienced some increased demand for its patient monitoring products as a result of the COVID-19 pandemic during the earlier stages of the pandemic. Certain hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, higher interest rates make access to credit more expensive, and fiscal stimulus programs enacted during the COVID-19 pandemic wind down. To the extent macroeconomic conditions remain challenging, it is likely that hospitals’ spend on capital equipment will be adversely impacted.
Government Policies. Our results of operations and cash flows could be materially affected by changes in U.S. or foreign government legislative, regulatory or enforcement policies.
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Changes in Costs and Supply Chain Disruptions. Our costs are subject to fluctuations, particularly due to changes in raw material, component, and logistics costs. Our manufacturing and supply chain operations, including freight and shipping activities, have been and may continue to be impacted by increased vendor costs as well as the current global supply chain challenges. Specifically, we are impacted by the global shortage of electronic components and other materials needed for production and freight availability. We expect continued disruptions in obtaining material and freight availability as the world economies react to and recover from supply chain shortages. If we are unable to mitigate the impact of increased costs through pricing or other actions, there could be a negative impact on our business, results of operations, and financial condition.
Russia’s Invasion of Ukraine. The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. This has the potential to indirectly disrupt our supply chain and access to certain resources. While we have not experienced significant adverse impacts to date and will continue to monitor for any impacts and seek to mitigate disruption that may arise, we have certain research and development activities within Ukraine for our Healthcare division which have been somewhat impacted. The conflict also has increased the threat of malicious cyber activity from nation states and other actors.
Currency Exchange Rates. On a year-over-year basis, currency exchange rates positively impacted reported sales by approximately 2.2% for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023, primarily due to the weakening of the U.S. dollar against other foreign currencies in 2024. Any strengthening of the U.S. dollar against foreign currencies would adversely impact our sales for the remainder of the fiscal year, and any further weakening of the U.S. dollar against foreign currencies would positively impact our sales for the remainder of the fiscal year.
Coronavirus Pandemic. The coronavirus disease 2019 (“COVID-19”) pandemic dramatically impacted the global health and economic environment, with millions of confirmed cases, business slowdowns and shutdowns, and market volatility. The COVID-19 pandemic caused, and may continue to cause, significant economic disruptions and impacted, and may continue to impact, our operations and the operations of our suppliers, logistics providers and customers as a result of supply chain disruptions and delays, as well as labor challenges. During the early stages of the pandemic, our Healthcare division experienced increased demand for certain products as a result of COVID-19. In our Security division, throughout the pandemic, receipt of certain orders was delayed, most notably with respect to our aviation and cargo products, and our revenues were adversely impacted as a result of the pandemic.
Significant International Security Contracts. During fiscal years 2023 and 2024, our Security division was awarded three significant international contracts valued in aggregate greater than $800 million with expected revenues to be recognized over multiple years.
Results of Operations for the Three Months Ended March 31, 2023 (Q3 Fiscal 2023) Compared to the Three Months Ended March 31, 2024 (Q3 Fiscal 2024) (amounts in millions)
Net Revenues
The table below and the discussion that follows are based upon the way in which we analyze our business. See Note 12 to the condensed consolidated financial statements for additional information about our business segments.
Q3
% of
Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
$ Change
% Change
Security
$
178.8
59.0
%
$
286.0
70.6
%
$
107.2
60.0
%
Optoelectronics and Manufacturing
80.2
26.5
77.9
19.2
(2.3)
(2.9)
Healthcare
43.9
14.5
41.5
10.2
(2.4)
(5.5)
Total net revenues
$
302.9
100.0
%
$
405.4
100.0
%
$
102.5
33.8
%
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Revenues for the Security division during Q3 fiscal 2024 increased year-over-year due to an increase in product revenues. The increase in product revenue was primarily driven by growth in cargo and vehicle inspection systems sales associated with the two large international contracts received in fiscal 2023 and with growth in aviation and checkpoint system sales. Service revenue in Q3 fiscal 2024 was comparable with the same prior year period.
Revenues for the Optoelectronics and Manufacturing division during Q3 fiscal 2024 decreased year-over year as a result of a decrease in revenue in our optoelectronics business and contract manufacturing business of approximately $2.8 million and $0.5 million, respectively.
Revenues for the Healthcare division during Q3 fiscal 2024 decreased year-over-year due primarily to a reduction in patient monitoring sales of $1.9 million, cardiology sales of $0.7 million, and service revenue of $1.3 million.
Gross Profit
Q3
% of
Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
Gross profit
$
103.8
34.3
%
$
136.1
33.6
%
Gross profit is impacted by sales volume, productivity, and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics. Our cost of goods sold increased year-over-year primarily as a result of the increase in net revenues described above which was driven by our Security division. Gross profit as a percentage of net revenues (“gross margin”) during the quarter ended March 31, 2024 decreased on a year-over-year basis due to a decrease in the Optoelectronics and Manufacturing division gross margins due to a decrease in net revenues and less favorable sales mix, partially offset by an increase in gross margin in the Security division due to a more favorable sales mix and higher sales volume.
Operating Expenses
Q3
% of
Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
$ Change
% Change
Selling, general and administrative
$
53.7
17.7
%
$
66.6
16.4
%
$
12.9
24.0
%
Research and development
14.8
4.9
17.1
4.2
2.3
15.5
Restructuring and other charges, net
0.9
0.3
1.0
0.2
0.1
11.1
Total operating expenses
$
69.4
22.9
%
$
84.7
20.9
%
$
15.3
22.0
%
Selling, general and administrative . Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, changes in fair value of contingent earnout liabilities and depreciation and amortization expense. SG&A expense for Q3 fiscal 2024 increased on a year-over-year basis primarily due to increases in employee compensation, professional services, unfavorable impact of recovery of losses on accounts receivable, changes in fair value of certain contingent earnout liabilities, and an unfavorable impact of foreign currency exchange rates in Q3 fiscal 2024 compared to the same prior-year period.
Research and development. Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expense during Q3 fiscal 2024 was $2.3 million higher than the same prior-year period with investments to support new product development initiatives primarily in our Security division driven primarily by compensation costs.
Restructuring and other charges. Restructuring and other charges generally consist of charges relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During Q3 fiscal 2024, restructuring and other charges primarily consisted of $0.5 million for facility closure costs for operational efficiency activities, and $0.5 million for employee terminations. During Q3 fiscal 2023 restructuring and other charges primarily consisted of $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.
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Interest and Other Expense, Net
Q3
% of
Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
Interest and other expense, net
$
5.7
1.9
%
$
7.4
1.8
%
Interest and other expense, net . For Q3 fiscal 2024, interest and other expense, net was $7.4 million as compared to $5.7 million in the same prior-year period. This increase was driven by higher average interest rates and higher average levels of borrowing under our credit facility during Q3 fiscal 2024 in comparison with the same period in the prior year. Interest expense for Q3 fiscal 2024 and 2023 included a benefit of $0.9 million and $0.5 million, respectively, from the interest rate swap.
Income taxes . The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For Q3 fiscal 2024 and 2023, the provision for income taxes was $9.9 million and $6.8 million, respectively. The effective tax rates for Q3 fiscal 2024 and 2023 were 22.6% and 23.8%, respectively. During Q3 fiscal 2024, 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 estimates. During Q3 fiscal 2023, we recognized a net discrete tax expense of $0.2 million related to equity-based compensation under ASU 2016-09.
Results of Operations for the Nine Months Ended March 31, 2023 (YTD Q3 Fiscal 2023) Compared to the Nine Months Ended March 31, 2024 (YTD Q3 Fiscal 2024) (amounts in millions)
Net Revenues
The table below and the discussion that follows are based upon the way in which we analyze our business. See Note 12 to the condensed consolidated financial statements for additional information about our business segments.
YTD Q3
% of
YTD Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
$ Change
% Change
Security
$
491.2
56.7
%
$
700.6
66.2
%
$
209.4
42.6
%
Optoelectronics and Manufacturing
244.4
28.2
236.2
22.3
(8.2)
(3.4)
Healthcare
131.0
15.1
121.1
11.5
(9.9)
(7.6)
Total net revenues
$
866.6
100.0
%
$
1,057.9
100.0
%
$
191.3
22.1
%
Revenues for the Security division during the nine months ended March 31, 2024 increased year-over-year due to an increase in product and service revenues of approximately $200.6 million and $8.8 million, respectively. The increase in product revenue was primarily driven by growth in cargo and vehicle inspection systems sales. The increase in service revenue was due primarily to the increase in the installed base of products.
Revenues for the Optoelectronics and Manufacturing division during the nine months ended March 31, 2024 decreased year-over year as a result of a decrease in revenue in our optoelectronics business of approximately $9.8 million, partially offset by an increase in revenue of approximately $1.6 million in our contract manufacturing business.
Revenues for the Healthcare division during the nine months ended March 31, 2024 decreased year-over-year due primarily to a reduction in patient monitoring sales of $13.8 million, partially offset by increases in service revenue of $1.3 million, cardiology sales of $0.7 million and supplies and accessories revenue of $0.5 million.
Gross Profit
YTD Q3
% of
YTD Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
Gross profit
$
287.5
33.2
%
$
376.1
35.6
%
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Gross profit is impacted by sales volume, productivity, and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics. Our cost of goods sold increased year-over-year primarily as a result of the increase in net revenues described above which was driven by our Security division. Gross margin during the nine months ended March 31, 2024 increased on a year-over-year basis due to an increase in the Security division gross margins due to a more favorable sales mix and economies of scale associated with the increase in net revenues, partially offset by a reduction in the sales in the Optoelectronics and Manufacturing and Healthcare divisions.
Operating Expenses
YTD Q3
% of
YTD Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
$ Change
% Change
Selling, general and administrative
$
161.1
18.6
%
$
198.0
18.7
%
$
36.9
22.9
%
Research and development
43.9
5.1
49.4
4.7
5.5
12.5
Restructuring and other charges, net
4.4
0.5
2.5
0.2
(1.9)
(43.2)
Total operating expenses
$
209.4
24.2
%
$
249.9
23.6
%
$
40.5
19.3
%
Selling, general and administrative . Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, changes in fair value of contingent earnout liabilities and depreciation and amortization expense. SG&A expense for the first nine months of fiscal 2024 was $36.9 million higher than in the same prior-year period, primarily due to increases in employee compensation, professional services, provision for losses on accounts receivable, changes in fair value of certain contingent earnout liabilities, and an unfavorable impact of foreign currency exchange rates the first nine months of fiscal 2024 compared to the same prior-year period.
Research and development. Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expense during the nine months ended March 31, 2024 was $5.5 million higher than the same prior-year period driven primarily by compensation costs related to investments to support new product development initiatives, mainly in our Security division.
Restructuring and other charges. Restructuring and other charges generally consist of charges relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During the nine months ended March 31, 2024, restructuring and other charges consisted of $0.4 million in acquisition related costs, $0.4 million in legal charges, $0.8 million for facility closure costs for operational efficiency activities and $0.8 million for employee terminations. During the nine months ended March 31, 2023, restructuring and other charges primarily consisted of $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.
Interest and Other Expense, Net
YTD Q3
% of
YTD Q3
% of
Fiscal 2023
Net Revenues
Fiscal 2024
Net Revenues
Interest and other expense, net
$
14.3
1.7
%
$
19.7
1.9
%
Interest and other expense, net . During the nine months ended March 31, 2024, interest and other expense, net was $19.7 million as compared to $14.3 million in the same prior-year period. This increase was driven by higher average interest rates and higher average levels of borrowing under our credit facility during the nine months ended March 31, 2024 in comparison with the same period in the prior year. The 1.25% convertible notes were retired on September 1, 2022 using borrowings from our credit facility. Interest expense during the nine months ended March 31, 2024 and 2023 included a benefit of $2.7 million and $0.6 million, respectively, from the interest rate swap.
Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For the nine months ended March 31, 2024 and 2023, the provision for income taxes was $23.1 million and $14.4 million, respectively. The effective tax rates for the nine months ended March 31, 2024 and 2023 were 21.7% and 22.6%, respectively. For the nine months ended March 31, 2024, we recognized a discrete tax benefit of $0.8
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million related to equity-based compensation under ASU 2016-09 and a benefit of $2.3 million from changes in prior year estimates. For the nine months ended March 31, 2023, we recognized a discrete tax benefit of $0.6 million related to equity-based compensation under ASU 2016-09 and changes in prior year estimates.
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled $101.4 million at March 31, 2024, an increase of $24.6 million, or 32%, from $76.8 million at June 30, 2023. We currently anticipate that our available funds, credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and thereafter for the foreseeable future. In addition, we anticipate that cash generated from operations, without repatriating earnings from our non-U.S. subsidiaries, and our credit facilities will be sufficient to satisfy our obligations in the U.S.
Our senior secured credit facility comprises a term loan and a $600 million revolving credit facility which includes a $300 million sub-facility for letters of credit. As of March 31, 2024, there was $349.0 million outstanding under our revolving credit facility, $74.7 million of outstanding letters of credit and $137.5 million outstanding under the term loan.
Cash Provided by (Used in) Operating Activities. Cash flows from operating activities can fluctuate significantly from period to period, as net income, adjusted for non-cash items, and working capital fluctuations impact cash flows. For the nine months ended March 31, 2024, cash used in operations was $58.5 million compared to cash provided by operations of $72.7 million in the prior period. The net change in cash flows from operating activities was due primarily to a net increase in accounts receivable and inventories associated with certain international contracts in the Security division, partially offset by other changes in net working capital and the increase in net income for the nine months ended March 31, 2024 compared with the same period last year.
Cash Used in Investing Activities . Net cash used in investing activities was $24.9 million for the nine months ended March 31, 2024 as compared to $30.4 million in the same prior-year period. Cash used to acquire businesses was $9.0 million for the nine months ended March 31, 2024 compared to $4.6 million in the prior year. Capital expenditures for the nine months ended March 31, 2024 were $13.6 million compared to $12.7 million in the same prior-year period. Expenditures for intangible and other assets for the nine months ended March 31, 2024 were $12.9 million compared to $12.3 million in the same prior-year period.
Cash Provided by (Used in) Financing Activities . Net cash provided by financing activities was $110.7 million for the nine months ended March 31, 2024, compared to net cash used in financing activities of $37.1 million during the same prior-year period. The net change from the prior-year period was primarily due to (1) higher net borrowings for the nine months ended March 31, 2024 to fund working capital associated with international contracts in the Security division as discussed above and (2) no repurchases of common stock during the nine months ended March 31, 2024 compared to repurchases of common stock of $34.7 million in the same prior-year period, which were partially offset by higher taxes paid related to settlement of equity awards of $23.2 million during the nine months ended March 31, 2024 compared to $11.8 million in the same prior-year period.
Borrowings
See Note 8 to the condensed consolidated financial statements for a detailed discussion regarding our revolving credit facility and other borrowings.
Cash Held by Foreign Subsidiaries
Our cash and cash equivalents totaled $101.4 million at March 31, 2024. Of this amount, approximately 78% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in India, the United Kingdom, Malaysia, Singapore, Australia, and Canada and to a lesser extent in Mexico, Albania, Indonesia and Germany, among other countries. We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash in foreign countries to fund our U.S. operations. In the event we repatriate cash from certain foreign operations and if taxes have not previously been withheld on the related earnings, we would provide for withholding taxes at the time we change our intention with regard to the reinvestment of those earnings.
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Issuer Purchases of Equity Securities
We did not repurchase any shares of common stock during the third quarter of fiscal year 2024.
Contractual Obligations
During the nine months ended March 31, 2024, there were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed in the notes to condensed consolidated financial statements, management believes that the impact of recently issued standards, which are not yet effective for the Company, will not have a material impact on our Consolidated Financial Statements upon adoption. There were no new pronouncements adopted during the third quarter of fiscal year 2024.