What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-08-29 compared with 2023-08-29 · 233 added, 216 removed, 1165 unchanged (28% of the section changed)

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OTHER INFORMATION

On May 29, 2024 , Deepak Chopra , our Chairman, Chief Executive Officer, and President , adopted a Rule 10b5 - 1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5 - 1 (c) for the sale of up to 80,000 shares of our common stock until May 16, 2025 .

None of our other directors or officers informed us during the quarter ended June 30, 2024 of the adoption, modification or termination of a Rule 10b5 - 1 trading arrangement or non - Rule 10b5 - 1 trading arrangement, as those terms are defined in Regulation S - K, Item 408.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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The information required by Item 10 is incorporated by reference from our definitive proxy statement for our annual stockholders’ meeting, presently scheduled to be held in December 2024.

We have adopted a Code of Ethics and Conduct that applies to all directors, officers and employees.

The Code of Ethics and Conduct is available on our website at www.osi-systems.com under the Investor Relations - Corporate Governance section.

We have also adopted the OSI Systems, Inc.

Insider Trading Policy that governs the purchase and sale or other dispositions of the Company’s securities by directors, officers and employees that is designed to promote compliance with insider trading laws, rules and regulations and any listing standards applicable to the Company.

A copy of the OSI Systems, Inc.

Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report.

EXECUTIVE COMPENSATION

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of OSI Systems, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year ended June 30, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023, and the results of its operations and its cash flows for the year ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of OSI Systems, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity,and cash flows for each of the two years in the period ended June 30, 2024, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated August 29, 2024, expressed an unqualified opinion

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

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As described in Note 1 to the consolidated financial statements, the Company’s revenue contracts in the security segment may include multiple performance obligations, which are accounted for separately when they are distinct.

The Company derives revenues in the security segment mainly from sales of products, installation, project management and training services.

The Company derives revenues in the security segment mainly from sales of products, installation, civil works and training services.

The Company allocates the transaction price to the distinct performance obligations on a relative stand-alone selling price basis and recognizes revenue when control is transferred.

Product revenues are recognized at the point in time when product has been delivered.

Auditing the Company’s product revenue stand-alone selling price in the security segment was complex due to the subjectivity of the assumptions that were used in developing the stand-alone selling price of distinct performance obligations.

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We evaluated the Company’s analysis of stand-alone selling price, including inspecting a sample of executed contracts.

For the sample selected we evaluated the contracts to determine the appropriateness of the method used and the underlying data including cost details and margin percentages to estimate the stand-alone selling price.

For the sample selected we evaluated the contracts to determine the appropriateness of the method used and the underlying data including costs and margin percentages to estimate the stand-alone selling price.

/s/ GRANT THORNTON LLP

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/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2023.

Los Angeles, California

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Opinions on the Financial Statements

We have audited the accompanying consolidated balance sheet of OSI Systems, Inc.

and subsidiaries (the “Company”) as of June 30, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended June 30, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2022, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for its convertible notes as of July 1, 2021 due to the adoption of Accounting Standards Update No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

We have audited the accompanying consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows of OSI Systems, Inc.

and subsidiaries (the “Company”) for the year ended June 30, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of its operations and its cash flows for the year ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements.

The Company’s management is responsible for the consolidated financial statements.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Moss Adams LLP

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Total operating expenses

Income from operations

Income from operation

Interest and other expense, net

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Exercise of stock options

Vesting of restricted stock/RSUs

Shares issued under employee stock purchase program

Stock-based compensation

Repurchase of common stock

Taxes paid related to net share settlement of equity awards

Other comprehensive income

Balance-June 30, 2021

Exercise of stock options

Vesting of RSUs

Shares issued under employee stock purchase program

Shares issued under employee stock purchase plan

Stock-based compensation

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Vesting of RSUs

Shares issued under employee stock purchase program

Shares issued under employee stock purchase plan

Stock-based compensation

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Balance-June 30, 2023

Exercise of stock options

Vesting of RSUs

Shares issued under employee stock purchase plan

Stock-based compensation

Taxes paid related to net share settlement of equity awards

Other comprehensive loss

Balance-June 30, 2024

See accompanying notes to Consolidated Financial Statements .

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CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions:

Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects from acquisitions:

Depreciation and amortization

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Advances from customers

Net cash provided by operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

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CASH FLOWS FROM FINANCING ACTIVITIES

Net borrowings (repayments) on bank lines of credit

Net borrowings on bank lines of credit

Proceeds from long-term debt

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Taxes paid related to net share settlement of equity awards

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

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We also provide turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for our customers.

Through our Healthcare segment, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories globally.

These products are used by care providers in critical care, emergency and perioperative areas within 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.

Through our Optoelectronics and Manufacturing segment, 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.

This division provides products and services to OEM customers and to our own Security and Healthcare divisions.

Through our Healthcare segment, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories globally.

Consolidation —The consolidated financial statements include the accounts of OSI Systems, Inc.

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Investments in joint ventures over which we have significant influence but do not have voting control are accounted for using the equity method.

Investments over which we do not have significant influence or control are not material and are carried at cost as there is no readily determinable fair value for the equity interests.

Investments over which we do not have significant influence or control are not material and are carried at cost as there is no readily determinable fair value for equity interests.

Use of Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales,costs of sales and expenses during the reporting period.

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Of this amount, approximately 81 % was held by our foreign subsidiaries and subject to repatriation tax considerations.

These foreign funds were held primarily by our subsidiaries in the United Kingdom, Qatar, Singapore, India, Malaysia and Canada, and to a lesser extent in Indonesia, Australia, Germany and Mexico among other countries.

These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Singapore, Canada, and Australia, and to a lesser extent in Malaysia, Egypt, Albania, Indonesia and Germany, among other countries.

We have cash holdings in financial institutions that exceed insured limits for such financial institutions;

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If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required.

Inventories —Inventories are generally stated at the lower of cost or net realizable value.

Inventories — The majority of our inventories are valued using the average costing method with select subsidiaries using the standard costing method.

All methods of valuing inventory used by the Company approximate the first - in - first out basis for valuing inventory.

Inventories are generally stated at the lower of cost (first - in, first - out) or net realizable value.

We write down inventory for slow-moving and obsolete inventory based on historical usage, orders on hand, assessments of future demands, market conditions among other items.

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Goodwill is allocated to our reporting units based on the nature of the product line of the acquired business.

The carrying value of goodwill is not amortized but is annually tested for impairment as of the end of the second quarter and more frequently if there is an indicator of impairment.

We assess qualitative factors of each of our three reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

The assessments conducted as of December 31, 2022 indicated that it is not more likely than not that the fair values of our three reporting units are less than their carrying amounts, including goodwill.

There were no qualitative factors which would trigger impairment testing between measurement dates.

Thus, we have determined that there is no goodwill impairment for any of the three reporting units.

The carrying value of goodwill and indefinite life intangible assets are not amortized but are annually tested for impairment as of the end of the second quarter and more frequently if there is an indicator of impairment.

The assessments conducted as of December 31, 2023 indicated that it is not more likely than not that the fair values of our three reporting units are less than their carrying amounts, including goodwill and intangible assets.

There were no qualitative factors which would trigger impairment testing of goodwill and indefinite life intangible assets between measurement dates.

Thus, we have determined that there is no goodwill or indefinite life intangible assets impairment for any of the three reporting units.

We evaluate long-lived assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

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Our estimate of future cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Income Taxes —Deferred income taxes are provided for temporary differences between the financial statement and income tax basis of our assets and liabilities, based on enacted tax rates.

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See Note 10 for additional information.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

Fair Value of Financial Instruments —Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments, an interest rate swap contract and foreign currency forward contracts.

The carrying values of financial instruments, other than long-term debt instruments and the interest rate swap contract, are representative of their fair values due to their short-term maturities.

The carrying values of financial instruments, other than long-term debt instruments and our interest rate swap contract, are representative of their fair values due to their short-term maturities.

The carrying values of our long-term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates for financing available to us.

The fair values of our foreign currency forward contracts were not significant as of June 30, 2024.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The “Level 1” category includes assets and liabilities at quoted prices in active markets for identical assets and liabilities.

The “Level 2” category includes assets and liabilities from observable inputs other than quoted market prices.

The “Level 3” category includes assets and liabilities for which valuation techniques are unobservable and significant to the fair value measurement.

Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The “Level 1” category comprises assets and liabilities measured at quoted prices in active markets for identical assets and liabilities.

The “Level 2” category comprises assets and liabilities measured from observable inputs other than quoted market prices.

The “Level 3” category comprises assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement.

Our contingent payment obligations related to acquisitions, which are further discussed in Note 11 to the consolidated financial statements, are in the “Level 3” category for valuation purposes.

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Assets—Interest rate swap contract

Liabilities—Convertible debt

Liabilities—Contingent consideration

Derivative Instruments and Hedging Activity —Our use of derivatives consists of foreign currency forward contracts and an interest rate swap contract.

The foreign currency forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations.

Derivative Instruments and Hedging Activity —Our use of derivatives consists of foreign currency forward contracts and an interest rate swap agreement.

Our foreign currency forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations.

These contracts have original maturities of up to three months.

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We do not use hedging instruments for speculative purposes.

The net investment hedge has been designated as a hedge instrument and accounted for under Accounting Standards Codification (“ASC”) 815 Derivatives and Hedging.

Hedge effectiveness is assessed using the spot method, consistent with guidance in ASC 815 whereby the change in fair value of the forward contract is recorded in the same manner as the related currency translation adjustments, within other comprehensive income, as the hedging instrument is expected to be fully effective unless the amount hedged exceeds the net investment in the foreign operation, or the foreign operation is liquidated.

We settled the net investment hedge during fiscal 2021, and the amount recorded in other comprehensive loss was not significant.

There were no net investment hedges outstanding as of June 30, 2023.

The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations, and the amounts reported for the years ending June 30, 2022, 2023 and 2024 were not significant.

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The interest rate swap matures in December 2026.

The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income in the consolidated financial statements and are reclassified as net income when the underlying hedged interest expense impacts earnings.

A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective.

As of June 30, 2022 and 2023, the notional amount of the derivative instruments designated as an interest rate swap hedge was $ 0 and $ 175 million, respectively.

The fair value of the interest rate swap contract as of June 30, 2023 was $ 5.4 million and is recorded in Other assets within the consolidated balance sheet.

The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:

The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in our consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings.

A qualitative and quantitative assessment of the interest rate swap hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective.

As of June 30, 2023 and June 30, 2024, the notional amount of the interest rate swap hedge derivative instrument was $ 175 million.

The fair value of the interest rate swap contract as of June 30, 2023 and June 30, 2024 is recorded in Other assets within the consolidated balance sheet.

The effect of the cash flow hedge on other comprehensive income (loss) and earnings for the periods presented was as follows:

Fiscal Year Ended June 30,

Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded

Gain recognized in other comprehensive income

Gain (loss) recognized in other comprehensive income (loss), net of tax

Amount reclassified from accumulated other comprehensive income (loss) to interest expense, net

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We recognize revenue from sales of products upon shipment or delivery when control of the product transfers to the customer, depending on the terms of each sale, and when collection is probable.

In the circumstance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until we have achieved the customer acceptance criteria unless such acceptance criteria are perfunctory or inconsequential.

We generally offer customers payment terms of less than one year.

In cases when payment terms extend beyond one year, we consider whether the contract has a significant financing component.

On occasion, the Company receives requests from customers to delay physical transfers of products for the customers’ convenience under bill-and-hold arrangements.

We recognize revenue from these arrangements in accordance with ASC 606, which requires the transaction to meet the following criteria to determine that the customer has obtained control:

(a) the reason for the bill-and-hold is substantive, (b) the product has separately been identified as belonging to the customer, (c) the product is currently ready for physical transfer to the customer, and (d) the Company does not have the ability to use the product or direct it to another customer.

The Company recognized bill-and-hold revenues of $ 5.5 million and $ 38.5 million for fiscal years ended June 30, 2024, and 2023, respectively.

Service Revenue.

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Deferred revenue for such services arises from payments received from customers for services not yet performed.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Contract Revenue.

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We recognize contract liabilities and deferred revenue as net sales after all revenue recognition criteria are met.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

When determining revenue recognition for contracts, we make judgments based on our understanding of the obligations in each contract.

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Certain agreements with customers include the sale of capital equipment involving multiple elements that may include civil works to prepare a site for the installation of equipment, manufacture and delivery of equipment, installation and integration of equipment, training of customer personnel to operate the equipment and after-market service of the equipment.

We generally assign multiple elements in a contract into separate performance obligations if those elements are distinct, both individually and in the context of the contract.

We assign multiple elements in a contract into separate performance obligations if those elements are distinct, both individually and in the context of the contract.

If multiple promises comprise a series of distinct services which are substantially the same and have the same pattern of transfer, they are combined and accounted for as a single performance obligation.

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Refer to Note 14 for additional details of revenues by reporting segment.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Contract Assets and Liabilities.

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We recognize these contract liabilities as sales after all revenue recognition criteria are met.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

Practical Expedients.

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Credit risk on accounts receivable is minimized as a result of the large and diverse nature of our company’s worldwide customer base.

As of June 30, 2022 and 2023, no customer accounted for greater than 10% of accounts receivable.

In fiscal years 2021 and 2022, no customer accounted for greater than 10 % of revenues.

In fiscal year 2023, one customer accounted for 11 % of revenues.

As of June 30, 2023, no customer accounted for greater than 10 % of accounts receivable.

As of June 30, 2024 two customers in the Security division accounted for 39 % and 10 % of accounts receivable, net.

In fiscal year 2023, no customer accounted for greater than 10 % of revenues.

In fiscal year 2024, two Security division customers accounted for 16 % and 11 % of net revenues, respectively.

We perform ongoing credit evaluations of our customers’ financial condition and maintain allowances for potential credit losses.

Our cash and cash equivalents totaled $ 76.8 million and $ 95.4 million at June 30, 2023 and 2024, respectively.

Of these amounts, approximately 78 % and 97 % was held by our foreign subsidiaries at June 30, 2022 and 2023, respectively.

Of these amounts, approximately 97 % and 81 % were held by our foreign subsidiaries at June 30, 2023 and 2024, respectively.

For cost, quality control, technological, and efficiency reasons, we purchase certain materials, parts, and components only from single vendors with whom we have ongoing relationships.

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In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates.

The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets.

The effects of foreign currency translation adjustments are included in stockholders’ equity as a compone1nt of accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets.

We also have subsidiaries where the United States dollar has been designated as the functional currency based on individual facts and circumstances.

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We also have finance leases for fleet vehicles that are not material to the consolidated financial statements.

Subsequent Events — In accordance with ASC 855, our management evaluated material events after the balance sheet date through the date of the filing of this report with the SEC, and there are no disclosable subsequent events.

Subsequent Events — In accordance with ASC 855, our management evaluated material events after the balance sheet date through the date of the filing of this report with the SEC, which include (1) issuance of $ 350 million convertible senior notes in July 2024 as further described in Note 8, and (2) repurchase of 531,314 shares of common stock for $ 80 million in July 2024 as further described in Note 9.

Recent Accounting Guidance

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, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption.

Unless otherwise discussed below, 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 in fiscal year 2024.

OSI SYSTEMS, INC.

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FOR THE THREE YEARS ENDED JUNE 30, 2024

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets.

ASU 2023-07 is to be applied on a retrospective basis and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted.

We are evaluating the impact of ASU 2023-07 on disclosures in our Consolidated Financial Statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid.

ASU 2023-09 requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items, among others.

Disclosure of the reconciling items is subject to a quantitative threshold and disaggregation by nature and jurisdiction.

ASU 2023-09 also requires entities to disclose net income taxes paid or received to federal, state and foreign jurisdictions, as well as by individual jurisdiction, subject to a five percent quantitative threshold.

ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted.

We are evaluating the impact of ASU 2023-09 on disclosures in our Consolidated Financial Statements.

BUSINESS COMBINATIONS

Fiscal Year 2024 Business Acquisitions

In December 2023, we (through our Optoelectronics and Manufacturing division) acquired a privately held contract manufacturer for approximately $ 6.3 million.

The acquisition was financed with cash on hand.

The goodwill recognized for this business acquisition is deductible for income tax purposes.

In October 2023, we (through our Security division) acquired a privately held provider of radiation detection technology for approximately $ 2.8 million, plus up to $ 3.6 million in potential contingent consideration.

The acquisition was financed with cash on hand.

The goodwill recognized for this business acquisition is not deductible for income tax purposes.

Fiscal Year 2023 Business Acquisitions

In April 2023, we (through our Optoelectronics and Manufacturing division) acquired a privately held provider of engineering and contract manufacturing solutions for approximately $ 2.5 million, plus up to $ 2.5 million in potential contingent consideration.

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These acquisitions were financed with cash on hand.

The goodwill recognized for each of the fiscal year 2023 business acquisitions is not deductible for income tax purposes.

The goodwill we recognized for fiscal year 2023 business acquisitions are not deductible for income tax purposes.

Fiscal Year 2022 Business Acquisitions

In February 2022, we (through our Security division) acquired a privately held provider of intelligent inspection, sensory, and recognition solutions for approximately $ 14.0 million, plus up to $ 25.0 million in potential contingent consideration.

The acquisition was financed with cash on hand and borrowings under our revolving bank line of credit.

The goodwill recognized for this business is not deductible for income tax purposes.

In February 2022, we (through our Security division) acquired a privately held sales and services company for approximately $ 1.1 million, plus an immaterial amount of potential contingent consideration.

The acquisition was financed with cash on hand.

The goodwill recognized for this transaction is deductible for income tax purposes.

Fiscal Year 2021 Business Acquisition

In fiscal 2021, we (through our Healthcare division) acquired a privately-held software development company for $ 3.0 million, plus up to $ 12.0 million in potential contingent consideration.

This acquisition was financed with available cash on hand.

The goodwill recognized for this business is deductible for income tax purposes.

These business acquisitions in fiscal 2021, 2022 and 2023, individually and in the aggregate, were not material to our consolidated financial statements.

Accordingly, pro-forma historical results of operations and other disclosures related to these businesses have not been presented.

The acquisition

OSI SYSTEMS, INC.

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FOR THE THREE YEARS ENDED JUNE 30, 2024

was financed with cash on hand and borrowings under our revolving bank line of credit.

The goodwill recognized for this business is not deductible for income tax purposes.

This acquisition was financed with cash on hand.

The goodwill recognized for this transaction is deductible for income tax purposes.

The acquisitions we completed in fiscal 2022, 2023, and 2024, individually and in the aggregate, were not material to our consolidated financial statements.

Accordingly, pro-forma historical results of operations and other disclosures related to these businesses have not been presented.

BALANCE SHEET DETAILS

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Contract Assets.

Contract assets increased approximately $ 43.5 million as a result of unbilled revenue primarily from the timing and nature of milestones met in contracts for a number of customers in our Security Division, both within the United States and internationally, where we met the revenue recognition criteria under ASC 606 in advance of the time when contracts give us the right to invoice customers.

Contract assets increased by approximately $ 252.1 million as a result of unbilled revenue primarily from the timing and nature of milestones met in contracts for a number of customers in our Security Division, both within the United States and internationally, where we met the revenue recognition criteria under ASC 606 in advance of the time when contracts give us the right to invoice customers.

Remaining Performance Obligations .

47 unchanged sentences

We endeavor to align our global capacity and infrastructure with demand by our customers as well as fully integrate acquisitions and thereby improve operational efficiency.

During the fiscal year ended June 30, 2024, we recognized $ 6.4 million in restructuring and other charges, which included $ 3.2 million for facility closure costs for operational efficiency activities, $ 1.4 million for employee terminations, $ 1.0 million in acquisition related costs, and $ 0.8 million in legal charges.

During the fiscal year ended June 30, 2023, we recognized $ 7.6 million in impairment, restructuring and other charges, which included $ 3.9 million in legal charges primarily related to class action litigation and government investigations, $ 1.7 million for employee terminations, $ 1.5 million for other facility closure costs for operational efficiency activities, and $ 0.4 million in acquisition related costs.

During the fiscal year ended June 30, 2022, we recognized $ 7.5 million in impairment, restructuring and other charges, which included $ 5.1 million in legal charges primarily related to class action litigation and government investigations, $ 1.1 million for employee terminations, $ 1.0 million for impairment of software assets, $ 0.3 million in acquisition related costs, and a net benefit for facility closures activity of a nominal amount.

During the fiscal year ended June 30, 2021, we incurred $ 7.2 million for exit activities associated with an expired turnkey contract in Mexico.

Such exit costs include $ 2.8 million for employee terminations, $ 1.1 million for facility closure and other exit costs, direct transaction costs of $ 2.7 million, and $ 0.6 million for ROU asset impairment for a leased facility.

We also incurred costs of $ 1.6 million for other employee terminations and $ 0.5 million for other facility closure costs for operational efficiency activities, $ 0.3 million for acquisition-related activities, and $ 0.5 million for certain legal charges, net of insurance reimbursements.

The following tables summarize impairment, restructuring and other charges for the periods set forth below (in thousands):

1 unchanged sentence

Manufacturing

Impairment charges

Acquisition-related costs

Employee termination costs

Mexico transaction costs

Facility closures/consolidation

3 unchanged sentences

Manufacturing

Impairment charges

Acquisition-related costs

9 unchanged sentences

Manufacturing

Impairment charges

Acquisition-related costs

14 unchanged sentences

Revolving Credit Facility

In December 2021, we entered into an amendment to the senior secured credit facility that increased the aggregate amount available to borrow from $ 535 million to $ 750 million.

The amended facility matures in December 2026 and is comprised of a $ 600 million revolving credit facility and a $ 150 million delayed draw term loan.

Our senior secured credit facility comprises a term loan and a $ 600 million revolving credit facility which mature in December 2026.

The revolving credit facility includes a $ 300 million sub-limit for letters of credit.

Under certain circumstances and subject to certain conditions, we can increase the revolving credit facility by $ 250 million plus such amount as would not cause our consolidated secured net leverage ratio to exceed a specified level.

Under certain circumstances and subject to certain conditions, we have the ability to increase the revolving credit facility by an amount equal to the greater of $ 250 million or such amount as would not cause our secured leverage ratio to exceed a specified level.

Borrowings under the amended facility bore interest at SOFR plus a margin of 1.0 % as of June 30, 2024 (which margin can range from 1.0 % to 1.75 % based on our consolidated net leverage ratio as defined in the credit facility).

16 unchanged sentences

FOR THE THREE YEARS ENDED JUNE 30, 2024

1.25% Convertible Senior Notes Due 2022

In February 2017, we issued $ 287.5 million of the Notes in a private offering.

The Notes were governed by an indenture dated February 22, 2017.

The maturity date for the payment of principal was September 1, 2022.

The Notes bore interest at the rate of 1.25 % and were payable in cash semiannually in arrears on each March 1 and September 1.

On September 1, 2022, we repurchased and cancelled the then-remaining $ 242.3 million balance of the Notes utilizing proceeds from the senior secured credit facility.

Issuance costs of $ 7.7 million were allocated between debt ($ 6.5 million) and equity ($ 1.2 million) components with the portion allocated to the debt presented as an offset against long-term debt in the consolidated balance sheet and was being amortized as interest expense over the life of the Notes using the effective interest method.

Total interest expense recognized for the year ended June 30, 2021 related to the Notes was $ 13.4 million, which consisted of $ 3.6 million of contractual interest expense, $ 8.6 million of debt discount amortization, and $ 1.2 million of amortization of debt issuance costs.

Total interest expense for the year ended June 30, 2022 related to the Notes was $ 4.7 million, which consisted of $ 3.5 million of contractual interest expense and $ 1.2 million of amortization of debt issuance costs.

Total interest expense for the year ended June 30, 2023 related to the Notes was $ 0.7 million, which consisted of $ 0.5 million of contractual interest expense and $ 0.2 million of amortization of debt issuance costs.

Other Borrowings

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Long-term debt consisted of the following (in thousands):

1.25% convertible notes due September 1, 2022:

Principal amount

Unamortized debt issuance costs

Other long-term debt

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2029 and thereafter

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

In July 2024 we issued $ 350 million aggregate principal amount of our 2.25 % convertible senior notes (“Notes”) due August 2029.

The initial conversion rate is 5.2090 shares of the Company’s common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 191.98 per share of the Company’s common stock.

STOCKHOLDERS’ EQUITY

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Awards are granted in the form of incentive options, nonqualified options, restricted stock awards, stock appreciation rights, RSUs, performance shares and stock bonuses, amongst other forms of equity, to qualified employees, directors and consultants.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Under the OSI Plan, the exercise price of nonqualified options and incentive stock options may not be less than the fair market value of our common stock on the date of grant.

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We use historical stock option exercise data to estimate the expected holding period.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

Changes in assumptions can materially impact the estimated fair value of stock options.

4 unchanged sentences

Expected holding period (in years)

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

The following summarizes stock option activity for fiscal years 2022, 2023 and 2024:

18 unchanged sentences

Nonvested at June 30, 2024

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

The per-share weighted average grant-date fair value of RSUs granted under the OSI Plan was $ 90.31 , $ 87.90 , and $ 95.42 for fiscal 2022, 2023 and 2024, respectively.

The total fair value of shares vested during fiscal 2022, 2023 and 2024 was $ 27.9 million, $ 30.2 million, and $ 31.1 million, respectively.

In December 2020, our shareholders authorized an increase of 1.65 million shares for the OSI Plan resulting in a maximum pool of 7.1 million shares.

In December 2023, our shareholders approved an amendment to the OSI Plan, which increased the shares available under the OSI Plan by 2.4 million shares, resulting in a maximum pool of 9.5 million shares.

As of June 30, 2024, there were approximately 2.5 million shares available for grant under the OSI Plan.

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RSUs and restricted stock forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

We granted 96,620 , 110,811 , and 75,988 performance-based awards during fiscal 2022, 2023 and 2024, respectively.

5 unchanged sentences

We have an employee stock purchase plan under which eligible employees may purchase a limited number of shares of common stock at a discount of up to 15 % of the market value of such stock at pre-determined, plan-defined dates.

During the years ended June 30, 2021, 2022 and 2023, employees purchased 63,499 , 60,708 , and 60,465 shares, respectively.

During the years ended June 30, 2022, 2023 and 2024, employees purchased 60,708 , 60,465 , 63,111 shares, respectively.

As of June 30, 2024, there were 353,651 shares of our common stock available for issuance under the plan.

5 unchanged sentences

Upon repurchase, the shares are restored to the status of authorized but unissued shares and we record them in our consolidated financial statements as a reduction in the number of shares of common stock issued and outstanding.

During fiscal 2021, 2022 and 2023, we repurchased 452,005 shares, 1,294,594 shares and 400,230 shares, respectively, of common stock under our then current programs.

During fiscal 2022, 2023 and 2024, we repurchased 1,294,594 shares, 400,230 shares and none , respectively, of common stock under our then current programs.

As of June 30, 2024, there were 1,721,870 shares remaining available for repurchase under the authorized repurchase program.

Subsequent to June 30, 2024, in connection with the issuance of the Notes in July 2024, we repurchased 531,314 shares of common stock for an aggregate purchase price of $ 80 million.

We have not paid any dividends since the consummation of our initial public offering in 1997 and we do not currently intend to pay any dividends in the foreseeable future.

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Certain of our current bank credit facilities restrict the payment of dividends and future borrowings may contain similar restrictions.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

The following is a geographical breakdown of income before the provision for income taxes (in thousands):

2 unchanged sentences

Total pre-tax income

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Our provision (benefit) for income taxes consists of the following (in thousands):

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Net tax receivable (payable)

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

As of June 30, 2024, we had federal, state and foreign net operating losses carryforwards of approximately $ 0.8 million, $ 18.9 million and $ 7.4 million, respectively.

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Our credit carryforwards will begin to expire in the tax year ending June 30, 2031.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

We have established valuation allowances that relate to the net operating losses of certain subsidiaries, capital losses, and tax credits.

During the year ended June 30, 2023, we recorded a net aggregated decrease of $ 3.9 million to these valuation allowances.

During the year ended June 30, 2024, we recorded a net aggregated increase of $ 0.9 million to these valuation allowances.

We review the adequacy of individual valuation allowances and release such allowances when it is determined that it is more likely than not that the related benefits will be realized.

We recognized all excess tax benefits and tax deficiencies as income tax expense or benefit in the current year.

An income tax benefit of approximately $ 2.0 million and $ 0.6 million was recognized in fiscal 2022 and 2023, respectively.

An income tax benefit of approximately $ 0.6 and $ 0.8 million was recognized in fiscal 2023 and 2024, respectively.

The consolidated effective income tax rate differs from the federal statutory income tax rate due primarily to the following:

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Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

COMMITMENTS AND CONTINGENCIES

Acquisition-Related Contingent Obligations —Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones through the acquired operations.

For agreements that contain contingent consideration caps, the remaining maximum amount of such potential future payments is $ 55.3 million as of June 30, 2023.

For agreements that contain contingent consideration caps, the remaining maximum amount of such potential future payments was $ 32.9 million as of June 30, 2024.

We account for such contingent payments for acquisitions which occurred through the end of fiscal year 2009 as additions to the purchase price of the acquired business.

We made contingent payments relating to such acquisitions of $ 1.9 million, $ 3.4 million and $ 0.6 million, respectively, during the fiscal years ended June 30, 2022, 2023 and 2024, respectively.

For acquisitions completed after fiscal 2009, pursuant to ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements.

The estimated fair value measurements of contingent earnout obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income and the estimated probability of achieving the earnouts.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

These projections and probabilities are used to estimate future contingent earnout payments, which are discounted back to present value to compute contingent earnout liabilities.

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These advances are paid in cash by customers, and we account for these as liabilities until our contractual obligations are complete.

Guarantees— We are periodically required to provide performance bonds to do business with certain customers.

These arrangements are common in the industry and generally have terms ranging between one year and ten years .

The bonds are provided by various bonding agencies.

However, we are ultimately liable for claims that may occur against them.

As of June 30, 2023 and 2024, we had a maximum financial exposure related to performance bonds of approximately $ 64 million and $ 99 million, respectively.

As described in Note 8, we and several of our foreign subsidiaries have issued letters of credit under the revolving credit facility and international bank facilities.

These letters of credit are issued to protect various customers, suppliers and government agencies under contractual arrangements and regulatory requirements.

We have no history of significant claims and there are no pending matters that would require us to perform under any of these arrangements, and we believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the consolidated financial statements.

Accordingly, no liability for any of these arrangements has been recorded as of June 30, 2023 and 2024.

Environmental Contingencies —We are subject to various environmental laws.

We often conduct environmental investigations at our manufacturing facilities in North America, Asia-Pacific, and Europe, and, to the extent practicable, on all new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations.

We conduct environmental investigations at our manufacturing facilities in North America, Asia-Pacific, and Europe, and, to the extent practicable, on all new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations.

In certain cases, we have conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants.

We have not accrued for loss contingencies relating to environmental matters because we believe that, although unfavorable outcomes are possible, they are not considered by our management to be probable and reasonably estimable.

6 unchanged sentences

We have not recorded any liability for costs related to contingent indemnification obligations as of June 30, 2024.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

On December 31, 2017, we and Deepak Chopra, our Chief Executive Officer, entered into an amendment to Mr.

Chopra’s employment agreement that, among other things, provides for a $ 13.5 million bonus payment to Mr.

Chopra’s employment agreement that, among other things, provided for a $ 13.5 million bonus payment to Mr.

Chopra on or within 45 days of January 1, 2024 contingent upon Mr.

1 unchanged sentence

Chopra’s death or disability.

The bonus is recorded in the financial statements over the remaining term of the employment agreement and is included in accrued payroll and related expenses at June 30, 2023 and in other long-term liabilities at June 30, 2022.

Legal Proceedings — In February 2023, we received a subpoena from the U.S.

Department of Justice (“DoJ”) relating to a former employee of an OSI Systems subsidiary.

The DoJ is currently prosecuting the former employee for embezzlement and other conduct occurring before he was hired by our subsidiary and while he was employed by another company in the United States and Mexico.

The bonus was recorded in the financial statements over the remaining term of the employment agreement and was included in accrued payroll and related expenses at June 30, 2023 and subsequently paid in February 2024.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Legal Proceedings — In February 2023, one of our subsidiaries received a subpoena from the U.S.

Department of Justice (“DoJ”).

The subpoena was issued as part of a DoJ case against a former employee of an OSI Systems subsidiary for embezzlement and other conduct occurring before he was hired by our subsidiary and while he was employed by another company in the United States and Mexico.

The subpoena requests documents and records relating to, among other things, the former employee and the Company’s business dealings in Mexico since 2020.

We are working in coordination with the DoJ to identify and produce the relevant documents and records.

We are involved in various other claims and legal proceedings arising in the ordinary course of business.

In February 2024, we received a follow-up subpoena requesting the same categories of documents but extending the relevant time period through to the date of the second subpoena.

We have produced documents in response to these subpoenas and intend to cooperate with any further subpoenas or other requests in connection with this or any ensuing investigation.

We are involved in various other potential or actual claims and legal proceedings arising in the ordinary course of business.

In our opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on our business, financial condition, results of operations or cash flows.

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Some of our subsidiaries are suppliers to the joint venture partner, which in turn manufactures and sells the resulting products.

Sales to the joint venture partner for fiscal 2021, 2022 and 2023 were approximately $ 2.4 million, $ 2.3 million and $ 6.9 million, respectively.

Net sales to the joint venture partner for fiscal 2022, 2023 and 2024 were approximately $ 2.3 million, $ 6.9 million and $ 10.4 million, respectively.

Receivables from the joint venture were $ 1.9 million and $ 1.4 million as of June 30, 2023 and 2024, respectively.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

EMPLOYEE BENEFIT PLANS

3 unchanged sentences

We contributed approximately $ 6.9 million, $ 7.2 million and $ 7.4 million to the plans for the fiscal years ended June 30, 2022, 2023 and 2024, respectively.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Deferred Compensation Plan

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We measure our pension and postretirement benefit plans’ assets and benefit obligations as of June 30.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

The following provides a reconciliation of the changes in the plans’ benefit obligations and fair value of assets for fiscal years 2023 and 2024, and a statement of the funded status as of June 30, 2023 and 2024 (in thousands):

3 unchanged sentences

Interest costs

Actuarial gain

Actuarial (gain) loss

Benefits paid

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Actual return on plan assets

Company contributions

Benefits paid

Fair value of plan assets at end of year

Funded status and net amount recognized

Funded status and net benefit obligation amount recognized

Amount recognized in consolidated balance sheets consists of:

2 unchanged sentences

Net long term pension liability (included in other long-term liabilities)

Accumulated other comprehensive income

One of our defined benefit pension plans is considered a nonqualified plan, therefore we have funded a separate rabbi trust which comprises insurance company contracts with fair values of $ 11.9 million and $ 13.6 million as of June 30, 2022 and 2023, respectively.

These amounts are not included in the fair value of plan assets in the table above.

Accumulated other comprehensive income (loss)

One of our defined benefit pension plans is considered a nonqualified plan, therefore we have funded a separate rabbi trust which comprises insurance company contracts with fair values of $ 13.6 million and $ 9.0 million as of June 30, 2023 and 2024, respectively, included in Other Assets on the consolidated balance sheets.

These amounts are not included in the fair value of plan assets

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

in the table above.

In the fiscal year ending June 30, 2024, $ 6.0 million from the rabbi trust was used as a company contribution to the nonqualified plan and paid during the year.

The following table provides the net periodic benefit costs for the fiscal years ended June 30, (in thousands):

4 unchanged sentences

Amortization of prior service costs

Recognized actuarial loss

Recognized actuarial loss (gain)

Net periodic benefit cost

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There is no assumed rate of compensation increase as most of the plan participants are retirees or no longer employed by OSI.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

Plan Assets and Investment Policy

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The equity holdings are maintained in balanced funds under the control of investment managers.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Day-to-day equities selection decisions are delegated to investment managers, although these are monitored against performance and risk targets.

11 unchanged sentences

Company Contribution

There were no company contributions for the fiscal year ended June 30, 2023.

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

A contribution of $ 6.0 million during fiscal year 2024 for the nonqualified plan was provided by the rabbi trust as described above.

Future contributions for the nonqualified plan are expected to be provided by the rabbi trust.

SEGMENT INFORMATION

We have determined that we operate in three identifiable industry segments:

(a) security and inspection systems (Security division), (b) medical monitoring systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division).

We operate in three identifiable industry segments:

(a) security and inspection systems (Security division), (b) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division) and (c) medical monitoring systems (Healthcare division).

We also have a corporate segment (Corporate) that includes executive compensation and certain other general and administrative expenses;

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Depreciation and amortization

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

Optoelectronics

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Depreciation and amortization

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

Optoelectronics

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Other Europe, Middle East and Africa

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2024

tangible assets

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Other Europe, Middle East and Africa

OSI SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2023

tangible assets

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Form of Common Stock Certificate (1)

Indenture (including the form of Note) related to the 1.25% Convertible Senior Notes due 2022, dated as of February 22, 2017, between OSI Systems, Inc.

and Branch Banking and Trust Company, as trustee (13)

Form of 1.25% Convertible Senior Note due 2022 (included in Exhibit 4.2) (13)

Indenture, dated as of July 19, 2024, between OSI Systems, Inc.

Bank Trust Company, National Association, as trustee.

Form of certificate representing the 2.25% Convertible Senior Notes due 2029 (included as Exhibit A to Exhibit 4.2).

Description of Capital Stock

Amended and Restated OSI Systems, Inc.

Second Amended and Restated OSI Systems, Inc.

Deferred Compensation Plan (2)

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Second Amendment to Employment Agreement effective as of December 31, 2017 by and between Deepak Chopra and OSI Systems, Inc.

Employment Agreement effective as of January 1, 2012 between Alan Edrick and OSI Systems, Inc.

Amendment to Employment Agreement effective as of July 1, 2015 between Alan Edrick and OSI Systems, Inc.

Employment Agreement effective as of January 1, 2012 between Ajay Mehra and OSI Systems, Inc.

Amendment to Employment Agreement effective as of May 1, 2015 between Ajay Mehra and OSI Systems, Inc.

Second Amendment to Employment Agreement effective April 29, 2019 between Ajay Mehra and OSI Systems, Inc.

Employment Agreement effective as of January 1, 2012 between Victor Sze and OSI Systems, Inc.

Amendment to Employment Agreement effective as of July 1, 2015 between Victor Sze and OSI Systems, Inc.

Second Amendment to Employment Agreement effective April 29, 2019 between Victor Sze and OSI Systems, Inc.

Amended and Restated Employment Agreement dated April 29, 2024 between Alan Edrick and OSI Systems, Inc.

Amended and Restated Employment Agreement dated April 29, 2024 between Ajay Mehra and OSI Systems, Inc.

Amended and Restated Employment Agreement dated April 29, 2024 between Victor Sze and OSI Systems, Inc.

Employment Agreement effective as of January 1, 2012 between Manoocher Mansouri and OSI Systems, Inc.

Amendment to Employment Agreement effective as of July 1, 2015 between Manoocher Mansouri and OSI Systems, Inc.

Amended and Restated Retirement Benefit Award Agreement effective as of December 31, 2017 by and between Deepak Chopra and OSI Systems, Inc.

4 unchanged sentences

2012 Incentive Award Plan (8)

Amendment to Amended and Restated OSI Systems, Inc.

2012 Incentive Award Plan (19)

Form of Restricted Stock Award Agreement (9)

3 unchanged sentences

Code of Ethics and Conduct effective May 23, 2016 (10)

OSI Systems, Inc.

Insider Trading Policy

Subsidiaries of the Company

6 unchanged sentences

Certification Pursuant to Section 906

Policy for Recovery of Erroneously Awarded Compensation

The following financial information from the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2024 formatted in XBRL (eXtensible Business Reporting Language) as follows:

EXHIBIT DESCRIPTION

(i) the consolidated balance sheets

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(v) the consolidated statements of cash flows

EXHIBIT DESCRIPTION

(vi) the notes to the consolidated financial statements, tagged in summary and detail

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(1) Previously filed with our Current Report on Form 8-K filed on March 8, 2010.

(2) Previously filed with our Quarterly Report on Form 10-Q filed on May 2, 2014.

(2) Previously filed with our Quarterly Report on Form 10-Q filed on January 26, 2024.

(3) Previously filed with our Current Report on Form 8-K filed on October 10, 2008.

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(11) Previously filed with our Quarterly Report on Form 10-Q filed on January 28, 2016.

(12) Previously filed with our Quarterly Report on Form 10-Q filed on October 30, 2015.

(13) Previously filed with our Current Report on Form 8-K filed on February 22, 2017.

(12) Previously filed with our Quarterly Report on Form 10-Q filed on April 30, 2024.

(13) Previously filed with our Current Report on Form 8-K filed on July 19, 2024.

(14) Previously filed with our Proxy Statement on Schedule 14A filed on October 21, 2016.

(15) Previously filed with our Quarterly Report on Form 10-Q filed on May 2, 2019.

(15) Previously filed with our Annual Report on Form 10-K filed on August 21, 2020.

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(18) Previously filed with our Quarterly Report on Form 10-Q filed on January 27, 2023.

(19) Previously filed with our Proxy Statement on Schedule 14A filed on October 27, 2023.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Financial Officer (Principal

Financial and Accounting Officer)

Financial Officer)

August 29, 2024

/s/ CARY OKAWA.

Chief Accounting Officer (Principal

Accounting Officer)

August 29, 2024

/s/ WILLIAM F.

12 unchanged sentences

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 9A. Controls and Procedures