Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2014 | Oct. 23, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'OSI SYSTEMS INC | ' |
Entity Central Index Key | '0001039065 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 19,829,016 |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $37,274 | $38,831 |
Accounts receivable, net | 155,849 | 185,773 |
Inventories | 264,394 | 234,138 |
Deferred taxes | 73,362 | 73,510 |
Prepaid expenses and other current assets | 52,122 | 46,978 |
Total current assets | 583,001 | 579,230 |
Property and equipment, net | 250,193 | 260,479 |
Goodwill | 97,430 | 92,607 |
Intangible assets, net | 47,628 | 43,615 |
Other assets | 49,803 | 48,255 |
Total assets | 1,028,055 | 1,024,186 |
Current liabilities: | ' | ' |
Bank lines of credit | 30,000 | 24,000 |
Current portion of long-term debt | 2,820 | 2,819 |
Accounts payable | 80,552 | 74,460 |
Accrued payroll and related expenses | 29,481 | 32,997 |
Advances from customers | 43,873 | 38,493 |
Deferred revenue | 55,958 | 60,677 |
Income taxes payable | 24,956 | 20,556 |
Other accrued expenses and current liabilities | 53,994 | 55,977 |
Total current liabilities | 321,634 | 309,979 |
Long-term debt | 11,267 | 10,436 |
Advances from customers | 43,750 | 50,000 |
Deferred income taxes | 73,978 | 73,161 |
Other long-term liabilities | 55,257 | 48,397 |
Total liabilities | 505,886 | 491,973 |
Commitments and contingencies (Note 7) | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.001 par value - authorized, 10,000,000 shares; no shares issued or outstanding | ' | ' |
Common stock, $0.001 par value - authorized, 100,000,000 shares; issued and outstanding, 19,942,923 shares at June 30, 2014 and 19,802,749 shares at September 30, 2014 | 268,713 | 287,434 |
Retained earnings | 258,929 | 247,680 |
Accumulated other comprehensive loss | -5,473 | -2,901 |
Total stockholders' equity | 522,169 | 532,213 |
Total liabilities and stockholders' equity | $1,028,055 | $1,024,186 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, shares issued | 19,802,749 | 19,942,923 |
Common stock, shares outstanding | 19,802,749 | 19,942,923 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Net revenues: | ' | ' |
Products | $156,488 | $143,476 |
Services | 61,909 | 62,798 |
Total net revenues | 218,397 | 206,274 |
Cost of goods sold: | ' | ' |
Products | 107,424 | 103,593 |
Services | 36,731 | 34,735 |
Total cost of goods sold | 144,155 | 138,328 |
Gross profit | 74,242 | 67,946 |
Operating expenses: | ' | ' |
Selling, general and administrative | 44,182 | 42,214 |
Research and development | 12,670 | 11,020 |
Restructuring and other charges | 726 | 4,239 |
Total operating expenses | 57,578 | 57,473 |
Income from operations | 16,664 | 10,473 |
Interest and other expense, net | -864 | -1,470 |
Income before income taxes | 15,800 | 9,003 |
Provision for income taxes | 4,551 | 2,609 |
Net income | $11,249 | $6,394 |
Net income per share: | ' | ' |
Basic (in dollars per share) | $0.57 | $0.32 |
Diluted (in dollars per share) | $0.55 | $0.31 |
Shares used in per share calculation: | ' | ' |
Basic (in shares) | 19,820 | 19,971 |
Diluted (in shares) | 20,529 | 20,620 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' |
Net income | $11,249 | $6,394 |
Other comprehensive income (loss): | ' | ' |
Foreign currency translation adjustment | -2,698 | 1,308 |
Other | 126 | 92 |
Other comprehensive income (loss) | -2,572 | 1,400 |
Comprehensive income | $8,677 | $7,794 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $11,249 | $6,394 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 17,741 | 12,873 |
Stock based compensation expense | 5,995 | 5,638 |
Other | 69 | 193 |
Changes in operating assets and liabilities-net of business acquisitions: | ' | ' |
Accounts receivable | 30,159 | 6,305 |
Inventories | -29,381 | -16,092 |
Accounts payable | 2,933 | -3,151 |
Accrued payroll and related expenses | -4,008 | -2,308 |
Deferred revenue | -3,382 | -3,145 |
Other | 78 | -460 |
Net cash provided by operating activities | 31,453 | 6,247 |
Cash flows from investing activities: | ' | ' |
Acquisition of property and equipment | -3,136 | -7,971 |
Acquisition of businesses, net of cash acquired | -10,869 | -9,302 |
Acquisition of intangible and other assets | -1,063 | -1,756 |
Net cash used in investing activities | -15,068 | -19,029 |
Cash flows from financing activities: | ' | ' |
Net borrowings on bank lines of credit | 6,000 | 20,000 |
Proceeds from long-term debt | 516 | 2,769 |
Payments on long-term debt | -815 | -805 |
Proceeds from exercise of stock options and employee stock purchase plan | 209 | 1,501 |
Repurchase of common shares | -18,373 | -1,514 |
Taxes paid related to net share settlement of equity awards | -6,552 | -7,481 |
Net cash provided by (used in) financing activities | -19,015 | 14,470 |
Effect of exchange rate changes on cash | 1,073 | 801 |
Net increase (decrease) in cash and cash equivalents | -1,557 | 2,489 |
Cash and cash equivalents-beginning of period | 38,831 | 34,697 |
Cash and cash equivalents-end of period | 37,274 | 37,186 |
Cash paid, net during the period for: | ' | ' |
Interest | 696 | 1,174 |
Income taxes | $1,735 | $4,001 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||||
1. Basis of Presentation | ||||||||||||||||||||
Description of Business | ||||||||||||||||||||
OSI Systems, Inc., together with its subsidiaries (the “Company”), is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. The Company sells its products and provides related services in diversified markets, including homeland security, healthcare, defense and aerospace. | ||||||||||||||||||||
The Company has three reporting segments: (i) Security, providing security inspection systems, turnkey security screening solutions and related services; (ii) Healthcare, providing patient monitoring, cardiology and anesthesia systems, and related services and (iii) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for the Security and Healthcare divisions as well as to external original equipment manufacturing clients for applications in the defense, aerospace, medical and industrial markets, among others. | ||||||||||||||||||||
Through its Security division, the Company provides security screening, threat detection and non-intrusive inspection products and related services globally. These products fall into the following categories: baggage and parcel inspection systems; cargo and vehicle inspection systems; hold (checked) baggage screening systems; people screening; radiation detection; and trace detection. In addition to these products, the Company provides site design, installation, training and technical support services to its customers. The Company also provides turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for its customers. | ||||||||||||||||||||
Through its Healthcare division, the Company designs, manufactures, markets and services patient monitoring, cardiology and anesthesia delivery and ventilation systems, and related supplies and accessories worldwide. These products are used by care providers in critical care, emergency and perioperative areas within hospitals as well as physicians’ offices, medical clinics and ambulatory surgery centers amongst others. | ||||||||||||||||||||
Through its Optoelectronics and Manufacturing division, the Company designs, manufactures and markets optoelectronic devices and provides electronics manufacturing services worldwide for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostic products, telecommunications, computer peripherals, industrial automation systems, automotive diagnostic systems, gaming systems and consumer products. This division provides products and services to original equipment manufacturers and end users as well as to the Company’s own Security and Healthcare divisions. | ||||||||||||||||||||
Basis of Presentation | ||||||||||||||||||||
The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014. The results of operations for the three months ended September 30, 2014 are not necessarily indicative of the operating results to be expected for the full 2015 fiscal year or any future periods. | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for the Company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, stock-based employee compensation expense, income taxes, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates and could differ materially. | ||||||||||||||||||||
Per Share Computations | ||||||||||||||||||||
The Company computes basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The Company computes diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common and dilutive potential common shares outstanding. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock awards or units under the treasury stock method. Stock awards to purchase 0.1 million shares of common stock for the three months ended September 30, 2014 were excluded from the calculation of diluted earnings per share because to do so would have been antidilutive, while during the three months ended September 30, 2013 no stock awards were excluded from the calculation. | ||||||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||
Net income for diluted earnings per share calculation | $ | 6,394 | $ | 11,249 | ||||||||||||||||
Weighted average shares for basic earnings per share calculation | 19,971 | 19,820 | ||||||||||||||||||
Dilutive effect of stock awards | 649 | 709 | ||||||||||||||||||
Weighted average shares for diluted earnings per share calculation | 20,620 | 20,529 | ||||||||||||||||||
Basic net income per share | $ | 0.32 | $ | 0.57 | ||||||||||||||||
Diluted net income per share | $ | 0.31 | $ | 0.55 | ||||||||||||||||
Reclassifications | ||||||||||||||||||||
Certain reclassifications have been made to prior year amounts within the condensed consolidated balance sheet and condensed consolidated statement of cash flows to conform to the current year’s presentation. | ||||||||||||||||||||
Cash Equivalents | ||||||||||||||||||||
The Company considers all highly liquid investments purchased with maturities of approximately three months or less as of the acquisition date to be cash equivalents. | ||||||||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||||
The Company’s financial instruments consist primarily of cash, marketable securities, derivative instruments, accounts receivable, accounts payable and debt instruments. The carrying values of financial instruments, other than long-term debt instruments, are representative of their fair values due to their short-term maturities. The carrying values of the Company’s 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 offered to the Company. | ||||||||||||||||||||
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. “Level 1” category includes assets and liabilities at the quoted prices in active markets for identical assets and liabilities. “Level 2” category includes assets and liabilities from observable inputs other than quoted market prices. “Level 3” category includes assets and liabilities whose valuation techniques are unobservable and significant to the fair value measurement. There were no assets or liabilities where “Level 3” valuation techniques were used, and there were no assets and liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||
The following is a summary of the investments carried at fair value (in thousands): | ||||||||||||||||||||
Level 1 | Level 2 | June 30, | Level 1 | Level 2 | September 30, | |||||||||||||||
2014 | 2014 | |||||||||||||||||||
Equity securities | 414 | 500 | 914 | 385 | 1,600 | 1,985 | ||||||||||||||
Insurance company contracts | — | 17,383 | 17,383 | — | 18,077 | 18,077 | ||||||||||||||
Interest rate contract | — | 28 | 28 | — | 61 | 61 | ||||||||||||||
Total | $ | 414 | $ | 17,911 | $ | 18,325 | $ | 385 | $ | 19,738 | $ | 20,123 | ||||||||
Derivative Instruments and Hedging Activity | ||||||||||||||||||||
The Company’s use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to variable, LIBOR-based debt for the duration of the term loan. The interest rate swap matures in October 2019. The interest rate swap is considered an effective cash flow hedge, and, as a result, the net gains or losses on such instrument were reported as a component of Other comprehensive income in the condensed consolidated financial statements and are reclassified as net income when the hedge transaction settles. | ||||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
The Company recognizes revenue from sales of products upon shipment when title and risk of loss passes, and when terms are fixed and collection is probable. Revenue from services includes after-market services, installation and implementation of products, and turnkey security screening services. The portion of revenue for the sale attributable to installation is deferred and recognized when the installation service is provided. In an instance where terms of sale include subjective customer acceptance criteria, revenue is deferred until the Company has achieved the acceptance criteria. Concurrent with the shipment of the product, the Company accrues estimated product return reserves and warranty expenses. Critical judgments made by management related to revenue recognition include the determination of whether or not customer acceptance criteria are perfunctory or inconsequential. The determination of whether or not customer acceptance terms are perfunctory or inconsequential impacts the amount and timing of revenue recognized. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product under warranty. | ||||||||||||||||||||
Revenue from turnkey services agreements is included in revenue from services. In certain agreements, revenue is recognized based upon proportional performance, measured by the actual number of hours incurred divided by the total estimated number of hours for the project. The impact of changes in the estimated hours to service the agreement is reflected in the period during which the change becomes known. Deferred revenue for such agreements arises when payments from customers are received in advance of revenue recognition. | ||||||||||||||||||||
Revenues from out of warranty service maintenance contracts are recognized ratably over the term of such contract. For services not derived from specific maintenance contracts, revenues are recognized as the services are performed. Deferred revenue for such services arises from payments received from customers for services not yet performed. On occasion, the Company receives advances from customers that are amortized against future customer payments pursuant to the underlying agreements. Such advances are classified in the condensed consolidated balance sheets as either a current or long term liability dependent upon when the Company estimates the corresponding amortization to occur. | ||||||||||||||||||||
Business Combinations | ||||||||||||||||||||
During the normal course of business the Company makes acquisitions. In the event that an individual acquisition (or an aggregate of acquisitions) is material, appropriate disclosure of such acquisition activity is provided. During the three months ended September 30, 2014, the Company completed an acquisition that was not material. | ||||||||||||||||||||
Recent Accounting Updates Not Yet Adopted | ||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board issued an accounting standards update amending revenue recognition requirements for multiple deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The update is effective for annual reporting periods after December 15, 2016 and for interim reporting periods within that reporting period. Early adoption is not permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations. |
Balance_Sheet_Details
Balance Sheet Details | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Balance Sheet Details | ' | |||||||
Balance Sheet Details | ' | |||||||
2. Balance Sheet Details | ||||||||
The following tables provide details of selected balance sheet accounts (in thousands): | ||||||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Accounts receivable | ||||||||
Billed receivables | $ | 189,489 | $ | 160,202 | ||||
Unbilled receivables | 1,975 | 2,552 | ||||||
Less allowance for doubtful accounts | (5,691 | ) | (6,905 | ) | ||||
Total | $ | 185,773 | $ | 155,849 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Inventories | ||||||||
Raw materials | $ | 117,945 | $ | 146,525 | ||||
Work-in-process | 33,394 | 44,743 | ||||||
Finished goods | 82,799 | 73,126 | ||||||
Total | $ | 234,138 | $ | 264,394 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Property and equipment, net | ||||||||
Land | $ | 13,651 | $ | 13,651 | ||||
Buildings and improvements | 163,952 | 166,468 | ||||||
Leasehold improvements | 9,744 | 10,058 | ||||||
Equipment and tooling | 154,367 | 154,501 | ||||||
Furniture and fixtures | 4,017 | 4,052 | ||||||
Computer equipment | 17,466 | 17,810 | ||||||
Computer software | 15,670 | 15,968 | ||||||
Construction in process | 12,650 | 10,612 | ||||||
Total | 391,517 | 393,120 | ||||||
Less: accumulated depreciation and amortization | (131,038 | ) | (142,927 | ) | ||||
Property and equipment, net | $ | 260,479 | $ | 250,193 | ||||
During the three months ended September 30, 2013 and 2014, depreciation expense was approximately $11.5 million and $16.9 million, respectively. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | |||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
3. Goodwill and Intangible Assets | ||||||||||||||||||||||
The changes in the carrying value of goodwill for the three-month period ended September 30, 2014 are as follows (in thousands): | ||||||||||||||||||||||
Security | Healthcare | Optoelectronics | Consolidated | |||||||||||||||||||
Division | Division | and | ||||||||||||||||||||
Manufacturing | ||||||||||||||||||||||
Division | ||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 29,507 | $ | 37,237 | $ | 25,863 | $ | 92,607 | ||||||||||||||
Goodwill acquired or adjusted during the period | 19 | 5,655 | 37 | 5,711 | ||||||||||||||||||
Foreign currency translation adjustment | (281 | ) | (283 | ) | (324 | ) | (888 | ) | ||||||||||||||
Balance as of September 30, 2014 | $ | 29,245 | $ | 42,609 | $ | 25,576 | $ | 97,430 | ||||||||||||||
Intangible assets consisted of the following (in thousands): | ||||||||||||||||||||||
June 30, 2014 | September 30, 2014 | |||||||||||||||||||||
Weighted | Gross | Accumulated | Intangibles | Gross | Accumulated | Intangibles | ||||||||||||||||
Average | Carrying | Amortization | Net | Carrying | Amortization | Net | ||||||||||||||||
Lives | Value | Value | ||||||||||||||||||||
Amortizable assets: | ||||||||||||||||||||||
Software development costs | 9 years | $ | 21,165 | 6,716 | 14,449 | $ | 21,275 | $ | 6,855 | $ | 14,420 | |||||||||||
Patents | 20 years | 6,566 | 765 | 5,801 | 6,814 | 804 | 6,010 | |||||||||||||||
Core technology | 10 years | 2,289 | 2,150 | 139 | 2,187 | 2,109 | 78 | |||||||||||||||
Developed technology | 10 years | 18,308 | 11,559 | 6,749 | 20,369 | 11,853 | 8,516 | |||||||||||||||
Customer relationships/backlog | 7 years | 11,419 | 7,011 | 4,408 | 10,070 | 4,032 | 6,038 | |||||||||||||||
Total amortizable assets | 59,747 | 28,201 | 31,546 | 60,715 | 25,653 | 35,062 | ||||||||||||||||
Non-amortizable assets: | ||||||||||||||||||||||
Trademarks | 12,069 | — | 12,069 | 12,566 | — | 12,566 | ||||||||||||||||
Total intangible assets | $ | 71,816 | $ | 28,201 | $ | 43,615 | $ | 73,281 | $ | 25,653 | $ | 47,628 | ||||||||||
Amortization expense related to intangibles assets was $1.4 million and $0.8 million for the three months ended September 30, 2013 and 2014, respectively. At September 30, 2014, the estimated future amortization expense was as follows (in thousands): | ||||||||||||||||||||||
Fiscal Years | ||||||||||||||||||||||
2015 (remaining 9 months) | $ | 2,994 | ||||||||||||||||||||
2016 | 3,757 | |||||||||||||||||||||
2017 | 3,913 | |||||||||||||||||||||
2018 | 3,826 | |||||||||||||||||||||
2019 | 3,582 | |||||||||||||||||||||
2020 | 3,116 | |||||||||||||||||||||
2021 and thereafter, including assets that have not yet begun to be amortized | 13,874 | |||||||||||||||||||||
Total | $ | 35,062 | ||||||||||||||||||||
Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product by product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight line basis over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in thereafter in the table above. During the three months ended September 30, 2013 and 2014, the Company capitalized software development costs in the amount of $1.2 million and $0.6 million, respectively. |
Borrowings
Borrowings | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Borrowings | ' | |||||||
Borrowings | ' | |||||||
4. Borrowings | ||||||||
The Company has a $450 million credit agreement maturing in May 2019. The credit agreement consists of a $450 million revolving credit facility, including a $375 million sub-limit for letters of credit. The Company has the ability to increase the facility by $200 million under certain circumstances. Borrowings under this facility bear interest at the London Interbank Offered Rate (“LIBOR”) plus a margin of 1.25% as of September 30, 2014. This margin is determined by the Company’s consolidated leverage ratio and may range from 1.25% to 2.0%. Letters of credit reduce the amount available to borrow by their face value. As of September 30, 2014, the unused portion of the facility bears a commitment fee of 0.20%, but can range from 0.20% to 0.35% based on the Company’s consolidated leverage ratio. The Company’s borrowings under the credit agreement are guaranteed by the Company’s U.S.-based subsidiaries and are secured by substantially all of the Company’s and certain subsidiaries’ assets. The agreement contains various representations, warranties, affirmative, negative and financial covenants, and conditions of default customary for financing agreements of this type. As of September 30, 2014, there was $30.0 million outstanding under the revolving credit facility and $100.1 million outstanding under the letters-of-credit sub-facility. | ||||||||
Several of the Company’s foreign subsidiaries maintain bank lines-of- credit, denominated in local currencies and US dollars, to meet short-term working capital requirements and for the issuance of letters-of-credit. As of September 30, 2014, $11.6 million was outstanding under these letter-of-credit facilities, while no debt was outstanding. As of September 30, 2014, the total amount available under these credit facilities was $26.4 million, with a total cash borrowing sub-limit of $2.9 million. | ||||||||
In September 2012, the Company entered into a term loan agreement for $11.1 million to fund the acquisition of land and a building in the state of Washington. The loan, which bears interest at LIBOR plus 1.25%, is payable on a monthly basis over seven years. Concurrent with entering into the floating rate loan, the Company entered into an interest rate swap agreement that effectively locks the interest rate of the loan to 2.2% per annum for the term of the loan. | ||||||||
Long-term debt consisted of the following (in thousands): | ||||||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Term loans | $ | 10,921 | $ | 11,607 | ||||
Other long-term debt | 2,334 | 2,480 | ||||||
13,255 | 14,087 | |||||||
Less current portion of long-term debt | 2,819 | 2,820 | ||||||
Long-term portion of debt | $ | 10,436 | $ | 11,267 |
Stockbased_Compensation
Stock-based Compensation | 3 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Stock-based Compensation | ' | |||||||||||
Stock-based Compensation | ' | |||||||||||
5. Stock-based Compensation | ||||||||||||
As of September 30, 2014, the Company maintained two share-based employee compensation plans (the “OSI Plans”): the 2012 Incentive Award Plan (“2012 Plan”) and the Amended and Restated 2006 Equity Participation Plan (“2006 Plan”). Upon stockholder approval of the 2012 Plan, the Company ceased to make grants under the 2006 Plan. | ||||||||||||
The Company recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands): | ||||||||||||
Three Months Ended | ||||||||||||
September 30, | ||||||||||||
2013 | 2014 | |||||||||||
Cost of goods sold | $ | 269 | $ | 205 | ||||||||
Selling, general and administrative | 5,303 | 5,763 | ||||||||||
Research and development | 66 | 27 | ||||||||||
Stock-based compensation expense before taxes | $ | 5,638 | $ | 5,995 | ||||||||
Less: related income tax benefit | 2,174 | 2,406 | ||||||||||
Stock-based compensation expense, net of estimated taxes | $ | 3,464 | $ | 3,589 | ||||||||
As of September 30, 2014, total unrecognized compensation cost related to share-based compensation grants were estimated at $1.4 million for stock options and $30.5 million for restricted stock and restricted stock units (“RSUs”) under the OSI Plans. The Company expects to recognize these costs over a weighted-average period of 2.2 years with respect to the options and 1.9 years for grants of restricted stock and RSUs. | ||||||||||||
The following summarizes stock option activity during the three months ended September 30, 2014: | ||||||||||||
Number of | Weighted- | Weighted-Average | Aggregate | |||||||||
Options | Average Exercise | Remaining | Intrinsic Value | |||||||||
Price | Contractual Term | (in thousands) | ||||||||||
Outstanding at June 30, 2014 | 1,022,991 | $ | 26.6 | |||||||||
Granted | 42,476 | $ | 68.03 | |||||||||
Exercised | (4,154 | ) | $ | 50.27 | ||||||||
Expired or forfeited | (2,623 | ) | $ | 56.94 | ||||||||
Outstanding at September 30, 2014 | 1,058,690 | $ | 28.09 | 5.6 years | $ | 36,839 | ||||||
Exercisable at September 30, 2014 | 949,969 | $ | 24.35 | 5.2 years | $ | 36,297 | ||||||
A summary of restricted stock and RSU award activity during the three months ended September 30, 2014 is as follows: | ||||||||||||
Shares | Weighted- | |||||||||||
Average | ||||||||||||
Fair Value | ||||||||||||
Nonvested at June 30, 2014 | 661,400 | $ | 54.78 | |||||||||
Granted | 277,536 | 64.63 | ||||||||||
Vested | (233,945 | ) | 42.2 | |||||||||
Forfeited | (6,821 | ) | 37.39 | |||||||||
Nonvested at September 30, 2014 | 698,170 | 63.08 | ||||||||||
As of September 30, 2014, there were 2,973,477 shares available for grant under the 2012 Plan. Under the terms of that plan, restricted stock and RSUs granted from the pool of shares available for grant on or after December 12, 2012 reduce the pool by 1.87 shares for each share granted. Restricted stock and RSUs forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each share forfeited. | ||||||||||||
The Company granted 160,922 and 151,469 performance-based units during the three months ended September 30, 2013 and 2014, respectively. These performance-based restricted stock awards are contingent on the achievement of certain financial performance metrics. The payout can range from zero to 250% of the original number of shares or units awarded, which are converted into shares of the Company’s common stock. |
Retirement_Benefit_Plans
Retirement Benefit Plans | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Retirement Benefit Plans | ' | |||||||
Retirement Benefit Plans | ' | |||||||
6. Retirement Benefit Plans | ||||||||
The Company sponsors various retirement benefit plans including qualified and nonqualified defined benefit pension plans for its employees. The components of net periodic pension expense are as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Service cost | $ | 293 | $ | 264 | ||||
Amortization of prior service cost | 202 | 202 | ||||||
Net periodic pension expense | $ | 495 | $ | 466 | ||||
For the three months ended September 30, 2013 and 2014, the Company made contributions of $0.1 million and $1.0 million, respectively, to these defined benefit plans. | ||||||||
In addition, the Company maintains various defined contribution plans. For the three months ended September 30, 2013 and 2014, the Company made contributions of $1.0 million and $1.2 million, respectively, to these defined contribution plans. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies | ' | |||||||
Commitments and Contingencies | ' | |||||||
7. Commitments and Contingencies | ||||||||
Contingent Acquisition Obligations | ||||||||
Under the terms and conditions of the purchase agreements associated with certain acquisitions, the Company may be obligated to make additional payments based on the achievement by the acquired operations of certain sales or profitability milestones. The maximum amount of such future payments under arrangements with contingent consideration caps is $58 million as of September 30, 2014. In addition, one of the purchase agreements the Company entered into requires royalty payments through 2022 based on the license of, or sales of products containing the technology of CXR Limited, a company acquired in 2004. For acquisitions that occurred prior to fiscal year 2010, the Company accounts for such contingent payments as an addition to the purchase price of the acquired business. Otherwise, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition in the condensed consolidated balance sheets with subsequent revisions reflected in the condensed consolidated statements of operations. As of June 30, 2014 and September 30, 2014, $23.2 million and $24.4 million of contingent payment obligations, respectively, are included in Other long-term liabilities in the accompanying condensed consolidated balance sheets. | ||||||||
Advances from Customers | ||||||||
The Company receives advances from customers associated with certain projects. In fiscal 2012, the Company entered into an agreement with the Mexican government to provide a turnkey security screening solution along the country’s borders, and in its ports and airports. Associated with the agreement, the Company was provided an advance totaling $100 million. The Company is obligated to provide a guarantee until the advance has been fully amortized in fiscal 2017. As of September 30, 2014, $68.8 million of this advance remains outstanding. | ||||||||
Environmental Contingencies | ||||||||
The Company is subject to various environmental laws. The Company’s practice is to conduct appropriate environmental investigations at its 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 report, potential areas of environmental concern related to past and present activities or from nearby operations. In certain cases, the Company has conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants. | ||||||||
During one investigation at the Company’s Hawthorne, California facility, the Company discovered soil and groundwater contamination that it believes was the result of unspecified on- and off-site releases occurring prior to the Company’s occupancy. Historical usage of this site includes semiconductor and electronics manufacturing, dating back to the mid-1960s, as well as possible aircraft and related manufacturing dating to the early 1940s. Similar operations, including chemical manufacturing and storage, were conducted at neighboring sites throughout that period and into the 1990s. It is not presently known when the releases occurred or by whom they were caused, though Company records, in conjunction with data obtained from soil and groundwater surveys, support the Company’s assertion that these releases are historical in nature. Further, the groundwater contamination is a known regional issue, not limited to the Company’s premises or its immediate surroundings. The Company filed the requisite reports concerning this site with the appropriate environmental authorities upon discovery, and in cooperation with the local governing agency has provided additional historical information and conducted further site characterization studies. Recent soil and groundwater investigations, including the installation of groundwater monitoring wells, were completed in fiscal 2014. Results from these studies are being evaluated to determine the extent of the on-site releases and whether any soils remediation will be required. Periodic groundwater monitoring is expected to continue until such time as the governing authority requests further action. | ||||||||
The Company has not accrued for loss contingencies relating to the Hawthorne facility or any other environmental matters because it believes that, although unfavorable outcomes may be possible, they are not considered by the Company’s management to be probable and reasonably estimable. If one or more of environmental matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations, financial position and/or liquidity could be material. | ||||||||
Indemnifications | ||||||||
In the normal course of business, the Company has agreed to indemnify certain parties with respect to certain matters. The Company has agreed to hold certain parties harmless against losses arising from a breach of representations, warranties or covenants, or out of intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company has not recorded any liability for costs related to indemnification as of September 30, 2014. | ||||||||
Product Warranties | ||||||||
The Company offers its customers warranties on many of the products that it sells. These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, the Company records a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. The Company periodically adjusts this provision based on historical experience and anticipated expenses. The Company charges actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. | ||||||||
The following table presents changes in warranty provisions (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Balance at beginning of period | $ | 12,890 | $ | 11,923 | ||||
Additions and adjustments | 1,254 | 847 | ||||||
Reductions for warranty repair costs | (785 | ) | (870 | ) | ||||
Balance at end of period | $ | 13,359 | $ | 11,900 | ||||
Legal Proceedings | ||||||||
On December 12, 2013, a putative class action complaint was filed against the Company and certain of its officers in the United States District Court for the Central District of California (“Court”) captioned Roberti v. OSI Systems, Inc., et al., Case No. 2:13-cv-09174-MWF-VBK (the “Securities Class Action”). The Amended Complaint, filed on May 20, 2014, alleges that the Company and the individual defendants violated the Securities Exchange Act of 1934 by misrepresenting or failing to disclose facts concerning the status of Rapiscan’s efforts to develop Automated Threat Recognition software and the alleged use of unapproved parts in its baggage scanning systems in violation of its contract with the U.S. Transportation Security Administration (TSA). The Amended Complaint also asserts that the individual defendants allegedly sold stock based on material non-public information. Plaintiff demands a jury trial and seeks class certification, unspecified damages, an award of pre-judgment and post-judgment interest, attorneys’ and experts’ fees, costs, and other unspecified relief. On July 18, 2014, the Company filed a Motion to Dismiss the Amended Complaint. The Motion is scheduled to be heard on November 3, 2014. | ||||||||
On April 15, 2014, a shareholder derivative complaint was filed in the Court purportedly on behalf of the Company against the members of the Company’s Board of Directors (as individual defendants), captioned Hagan v. Chopra, et al., Case No. 2:14-cv-02910-ODW-PJW (the “Derivative Action”). The complaint generally asserts the same factual allegations as those at issue in the related Securities Class Action and purports to allege claims for breach of fiduciary duties and unjust enrichment against the individual defendants on behalf of the Company. The complaint seeks unspecified damages, restitution, injunctive relief, attorneys’ and experts’ fees, costs, expenses, and other unspecified relief. The Derivative Action is currently stayed pending the resolution of the Motion to Dismiss in the Securities Class Action. | ||||||||
While the Company believes that the Securities Class Action and the Derivative Action are without merit and intends to defend the litigation vigorously, it expects to incur costs associated with defending the Securities Class Action and the Derivative Action. At this early stage of litigation, the ultimate outcomes of the Securities Class Action and the Derivative Action are uncertain and the Company cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on its financial statements. | ||||||||
The Company is involved in various other claims and legal proceedings arising in the ordinary course of business. In the Company’s opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on its business, financial condition, results of operations or cash flows. The Company has not accrued for loss contingencies relating to such matters because the Company believes that, although unfavorable outcomes in the proceedings may be possible, they are not considered by management to be probable or reasonably estimable. If one or more of these matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations and/or liquidity could be material. | ||||||||
Other Matters | ||||||||
On December 5, 2013, the Company’s Security division was notified by the TSA that a delivery order that it had received on September 26, 2013, for baggage and handling inspection systems was being terminated for default. The termination resulted from the use of an upgraded X-ray generator component. While the component had been vetted by the Security division’s internal quality assurance, the Security division had not met the contractual requirement of obtaining the TSA’s approval in advance. The upgraded X-ray generator component has since been approved for use by the TSA. The termination for default could result in a claim by the Government for compensation. As of this date, no such claim has been made, and the Company does not know the likely amount of any such claim if it were to be made. Also, as a result of this termination for default, the Security division was referred to the U.S. Department of Homeland Security (DHS) for further review. As a result of this review, in October 2014 the Security division entered into an Addendum to its Administrative Agreement dated June 21, 2013 with DHS. Pursuant to the terms of the Addendum, the Security division has agreed, among other things, to extend the term of the Administrative Agreement by 24 months. |
Income_Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
8. Income Taxes | |
The provision for income taxes is determined using an effective tax rate that is subject to fluctuations during the year as new information is obtained. The assumptions used to estimate the annual effective tax rate include factors such as the mix of pre-tax earnings in the various tax jurisdictions in which the Company operates, valuation allowances against deferred tax assets, increases or decreases in uncertain tax positions, utilization of research and development tax credits, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business and certain tax elections. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities along with net operating loss and tax credit carryovers. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. |
Segment_Information
Segment Information | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Segment Information | ' | |||||||
Segment Information | ' | |||||||
9. Segment Information | ||||||||
The Company has determined that it operates in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring and anesthesia systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division). The Company also has a corporate segment (Corporate) that includes executive compensation and certain other general and administrative expenses, expenses related to stock issuances and legal and audit and other professional service fees not allocated to product segments. Both the Security and Healthcare divisions comprise primarily end-user businesses, while the Optoelectronics and Manufacturing division primarily supplies components and subsystems to original equipment manufacturers, including to the Security and Healthcare divisions. Sales between divisions are at transfer prices that approximate market values. All other accounting policies of the segments are the same as described in Note 1, Summary of Significant Accounting Policies of the Form 10-K for the fiscal year ended June 30, 2014. | ||||||||
The following tables present the operations and identifiable assets by industry segment (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Revenues(2) — by Segment: | ||||||||
Security division | $ | 97,153 | $ | 113,439 | ||||
Healthcare division | 45,787 | 47,834 | ||||||
Optoelectronics and Manufacturing division, including intersegment revenues | 71,311 | 69,086 | ||||||
Intersegment revenues elimination | (7,977 | ) | (11,962 | ) | ||||
Total | $ | 206,274 | $ | 218,397 | ||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Operating income (loss) — by Segment: | ||||||||
Security division | $ | 11,622 | 17,259 | |||||
Healthcare division | (1,998 | ) | 62 | |||||
Optoelectronics and Manufacturing division | 4,765 | 4,327 | ||||||
Corporate | (4,045 | ) | (4,517 | ) | ||||
Eliminations(1) | 129 | (467 | ) | |||||
Total | $ | 10,473 | $ | 16,664 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Assets — by Segment: | ||||||||
Security division | $ | 535,306 | $ | 525,293 | ||||
Healthcare division | 190,612 | 203,284 | ||||||
Optoelectronics and Manufacturing division | 169,084 | 165,407 | ||||||
Corporate | 133,836 | 139,189 | ||||||
Eliminations(1) | (4,652 | ) | (5,118 | ) | ||||
Total | $ | 1,024,186 | $ | 1,028,055 | ||||
(1) Eliminations within operating income primarily reflect the change in the elimination of intercompany profit in inventory not-yet-realized. Eliminations in assets reflect the amount of intercompany profits in inventory as of the balance sheet date. Such intercompany profit will be realized when inventory is shipped to the external customers of the Security and Healthcare divisions. | ||||||||
(2) One customer accounted for 15% of total net revenues for the three months ended September 30, 2013 and 2014. One customer accounted for 10% of the net receivables as of September 30, 2014. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||||
Description of Business | ' | |||||||||||||||||||
Description of Business | ||||||||||||||||||||
OSI Systems, Inc., together with its subsidiaries (the “Company”), is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. The Company sells its products and provides related services in diversified markets, including homeland security, healthcare, defense and aerospace. | ||||||||||||||||||||
The Company has three reporting segments: (i) Security, providing security inspection systems, turnkey security screening solutions and related services; (ii) Healthcare, providing patient monitoring, cardiology and anesthesia systems, and related services and (iii) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for the Security and Healthcare divisions as well as to external original equipment manufacturing clients for applications in the defense, aerospace, medical and industrial markets, among others. | ||||||||||||||||||||
Through its Security division, the Company provides security screening, threat detection and non-intrusive inspection products and related services globally. These products fall into the following categories: baggage and parcel inspection systems; cargo and vehicle inspection systems; hold (checked) baggage screening systems; people screening; radiation detection; and trace detection. In addition to these products, the Company provides site design, installation, training and technical support services to its customers. The Company also provides turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for its customers. | ||||||||||||||||||||
Through its Healthcare division, the Company designs, manufactures, markets and services patient monitoring, cardiology and anesthesia delivery and ventilation systems, and related supplies and accessories worldwide. These products are used by care providers in critical care, emergency and perioperative areas within hospitals as well as physicians’ offices, medical clinics and ambulatory surgery centers amongst others. | ||||||||||||||||||||
Through its Optoelectronics and Manufacturing division, the Company designs, manufactures and markets optoelectronic devices and provides electronics manufacturing services worldwide for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostic products, telecommunications, computer peripherals, industrial automation systems, automotive diagnostic systems, gaming systems and consumer products. This division provides products and services to original equipment manufacturers and end users as well as to the Company’s own Security and Healthcare divisions. | ||||||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||||
Basis of Presentation | ||||||||||||||||||||
The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014. The results of operations for the three months ended September 30, 2014 are not necessarily indicative of the operating results to be expected for the full 2015 fiscal year or any future periods. | ||||||||||||||||||||
Use of Estimates | ' | |||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for the Company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, stock-based employee compensation expense, income taxes, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates and could differ materially. | ||||||||||||||||||||
Per Share Computations | ' | |||||||||||||||||||
Per Share Computations | ||||||||||||||||||||
The Company computes basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The Company computes diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common and dilutive potential common shares outstanding. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock awards or units under the treasury stock method. Stock awards to purchase 0.1 million shares of common stock for the three months ended September 30, 2014 were excluded from the calculation of diluted earnings per share because to do so would have been antidilutive, while during the three months ended September 30, 2013 no stock awards were excluded from the calculation. | ||||||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||
Net income for diluted earnings per share calculation | $ | 6,394 | $ | 11,249 | ||||||||||||||||
Weighted average shares for basic earnings per share calculation | 19,971 | 19,820 | ||||||||||||||||||
Dilutive effect of stock awards | 649 | 709 | ||||||||||||||||||
Weighted average shares for diluted earnings per share calculation | 20,620 | 20,529 | ||||||||||||||||||
Basic net income per share | $ | 0.32 | $ | 0.57 | ||||||||||||||||
Diluted net income per share | $ | 0.31 | $ | 0.55 | ||||||||||||||||
Reclassifications | ' | |||||||||||||||||||
Reclassifications | ||||||||||||||||||||
Certain reclassifications have been made to prior year amounts within the condensed consolidated balance sheet and condensed consolidated statement of cash flows to conform to the current year’s presentation. | ||||||||||||||||||||
Cash Equivalents | ' | |||||||||||||||||||
Cash Equivalents | ||||||||||||||||||||
The Company considers all highly liquid investments purchased with maturities of approximately three months or less as of the acquisition date to be cash equivalents. | ||||||||||||||||||||
Fair Value of Financial Instruments | ' | |||||||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||||
The Company’s financial instruments consist primarily of cash, marketable securities, derivative instruments, accounts receivable, accounts payable and debt instruments. The carrying values of financial instruments, other than long-term debt instruments, are representative of their fair values due to their short-term maturities. The carrying values of the Company’s 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 offered to the Company. | ||||||||||||||||||||
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. “Level 1” category includes assets and liabilities at the quoted prices in active markets for identical assets and liabilities. “Level 2” category includes assets and liabilities from observable inputs other than quoted market prices. “Level 3” category includes assets and liabilities whose valuation techniques are unobservable and significant to the fair value measurement. There were no assets or liabilities where “Level 3” valuation techniques were used, and there were no assets and liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||
The following is a summary of the investments carried at fair value (in thousands): | ||||||||||||||||||||
Level 1 | Level 2 | June 30, | Level 1 | Level 2 | September 30, | |||||||||||||||
2014 | 2014 | |||||||||||||||||||
Equity securities | 414 | 500 | 914 | 385 | 1,600 | 1,985 | ||||||||||||||
Insurance company contracts | — | 17,383 | 17,383 | — | 18,077 | 18,077 | ||||||||||||||
Interest rate contract | — | 28 | 28 | — | 61 | 61 | ||||||||||||||
Total | $ | 414 | $ | 17,911 | $ | 18,325 | $ | 385 | $ | 19,738 | $ | 20,123 | ||||||||
Derivative Instruments and Hedging Activity | ' | |||||||||||||||||||
Derivative Instruments and Hedging Activity | ||||||||||||||||||||
The Company’s use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to variable, LIBOR-based debt for the duration of the term loan. The interest rate swap matures in October 2019. The interest rate swap is considered an effective cash flow hedge, and, as a result, the net gains or losses on such instrument were reported as a component of Other comprehensive income in the condensed consolidated financial statements and are reclassified as net income when the hedge transaction settles. | ||||||||||||||||||||
Revenue Recognition | ' | |||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
The Company recognizes revenue from sales of products upon shipment when title and risk of loss passes, and when terms are fixed and collection is probable. Revenue from services includes after-market services, installation and implementation of products, and turnkey security screening services. The portion of revenue for the sale attributable to installation is deferred and recognized when the installation service is provided. In an instance where terms of sale include subjective customer acceptance criteria, revenue is deferred until the Company has achieved the acceptance criteria. Concurrent with the shipment of the product, the Company accrues estimated product return reserves and warranty expenses. Critical judgments made by management related to revenue recognition include the determination of whether or not customer acceptance criteria are perfunctory or inconsequential. The determination of whether or not customer acceptance terms are perfunctory or inconsequential impacts the amount and timing of revenue recognized. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product under warranty. | ||||||||||||||||||||
Revenue from turnkey services agreements is included in revenue from services. In certain agreements, revenue is recognized based upon proportional performance, measured by the actual number of hours incurred divided by the total estimated number of hours for the project. The impact of changes in the estimated hours to service the agreement is reflected in the period during which the change becomes known. Deferred revenue for such agreements arises when payments from customers are received in advance of revenue recognition. | ||||||||||||||||||||
Revenues from out of warranty service maintenance contracts are recognized ratably over the term of such contract. For services not derived from specific maintenance contracts, revenues are recognized as the services are performed. Deferred revenue for such services arises from payments received from customers for services not yet performed. On occasion, the Company receives advances from customers that are amortized against future customer payments pursuant to the underlying agreements. Such advances are classified in the condensed consolidated balance sheets as either a current or long term liability dependent upon when the Company estimates the corresponding amortization to occur. | ||||||||||||||||||||
Business Combinations | ' | |||||||||||||||||||
Business Combinations | ||||||||||||||||||||
During the normal course of business the Company makes acquisitions. In the event that an individual acquisition (or an aggregate of acquisitions) is material, appropriate disclosure of such acquisition activity is provided. During the three months ended September 30, 2014, the Company completed an acquisition that was not material. | ||||||||||||||||||||
Recent Accounting Updates Not Yet Adopted | ' | |||||||||||||||||||
Recent Accounting Updates Not Yet Adopted | ||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board issued an accounting standards update amending revenue recognition requirements for multiple deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The update is effective for annual reporting periods after December 15, 2016 and for interim reporting periods within that reporting period. Early adoption is not permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations. |
Basis_of_Presentation_Tables
Basis of Presentation (Tables) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||||
Schedule of computation of basic and diluted earnings per share | ' | |||||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||
Net income for diluted earnings per share calculation | $ | 6,394 | $ | 11,249 | ||||||||||||||||
Weighted average shares for basic earnings per share calculation | 19,971 | 19,820 | ||||||||||||||||||
Dilutive effect of stock awards | 649 | 709 | ||||||||||||||||||
Weighted average shares for diluted earnings per share calculation | 20,620 | 20,529 | ||||||||||||||||||
Basic net income per share | $ | 0.32 | $ | 0.57 | ||||||||||||||||
Diluted net income per share | $ | 0.31 | $ | 0.55 | ||||||||||||||||
Summary of the investments carried at fair value | ' | |||||||||||||||||||
The following is a summary of the investments carried at fair value (in thousands): | ||||||||||||||||||||
Level 1 | Level 2 | June 30, | Level 1 | Level 2 | September 30, | |||||||||||||||
2014 | 2014 | |||||||||||||||||||
Equity securities | 414 | 500 | 914 | 385 | 1,600 | 1,985 | ||||||||||||||
Insurance company contracts | — | 17,383 | 17,383 | — | 18,077 | 18,077 | ||||||||||||||
Interest rate contract | — | 28 | 28 | — | 61 | 61 | ||||||||||||||
Total | $ | 414 | $ | 17,911 | $ | 18,325 | $ | 385 | $ | 19,738 | $ | 20,123 | ||||||||
Balance_Sheet_Details_Tables
Balance Sheet Details (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Balance Sheet Details | ' | |||||||
Schedule of selected balance sheet accounts | ' | |||||||
The following tables provide details of selected balance sheet accounts (in thousands): | ||||||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Accounts receivable | ||||||||
Billed receivables | $ | 189,489 | $ | 160,202 | ||||
Unbilled receivables | 1,975 | 2,552 | ||||||
Less allowance for doubtful accounts | (5,691 | ) | (6,905 | ) | ||||
Total | $ | 185,773 | $ | 155,849 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Inventories | ||||||||
Raw materials | $ | 117,945 | $ | 146,525 | ||||
Work-in-process | 33,394 | 44,743 | ||||||
Finished goods | 82,799 | 73,126 | ||||||
Total | $ | 234,138 | $ | 264,394 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Property and equipment, net | ||||||||
Land | $ | 13,651 | $ | 13,651 | ||||
Buildings and improvements | 163,952 | 166,468 | ||||||
Leasehold improvements | 9,744 | 10,058 | ||||||
Equipment and tooling | 154,367 | 154,501 | ||||||
Furniture and fixtures | 4,017 | 4,052 | ||||||
Computer equipment | 17,466 | 17,810 | ||||||
Computer software | 15,670 | 15,968 | ||||||
Construction in process | 12,650 | 10,612 | ||||||
Total | 391,517 | 393,120 | ||||||
Less: accumulated depreciation and amortization | (131,038 | ) | (142,927 | ) | ||||
Property and equipment, net | $ | 260,479 | $ | 250,193 |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
Schedule of carrying amount of goodwill | ' | |||||||||||||||||||||
The changes in the carrying value of goodwill for the three-month period ended September 30, 2014 are as follows (in thousands): | ||||||||||||||||||||||
Security | Healthcare | Optoelectronics | Consolidated | |||||||||||||||||||
Division | Division | and | ||||||||||||||||||||
Manufacturing | ||||||||||||||||||||||
Division | ||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 29,507 | $ | 37,237 | $ | 25,863 | $ | 92,607 | ||||||||||||||
Goodwill acquired or adjusted during the period | 19 | 5,655 | 37 | 5,711 | ||||||||||||||||||
Foreign currency translation adjustment | (281 | ) | (283 | ) | (324 | ) | (888 | ) | ||||||||||||||
Balance as of September 30, 2014 | $ | 29,245 | $ | 42,609 | $ | 25,576 | $ | 97,430 | ||||||||||||||
Schedule of intangible assets | ' | |||||||||||||||||||||
Intangible assets consisted of the following (in thousands): | ||||||||||||||||||||||
June 30, 2014 | September 30, 2014 | |||||||||||||||||||||
Weighted | Gross | Accumulated | Intangibles | Gross | Accumulated | Intangibles | ||||||||||||||||
Average | Carrying | Amortization | Net | Carrying | Amortization | Net | ||||||||||||||||
Lives | Value | Value | ||||||||||||||||||||
Amortizable assets: | ||||||||||||||||||||||
Software development costs | 9 years | $ | 21,165 | 6,716 | 14,449 | $ | 21,275 | $ | 6,855 | $ | 14,420 | |||||||||||
Patents | 20 years | 6,566 | 765 | 5,801 | 6,814 | 804 | 6,010 | |||||||||||||||
Core technology | 10 years | 2,289 | 2,150 | 139 | 2,187 | 2,109 | 78 | |||||||||||||||
Developed technology | 10 years | 18,308 | 11,559 | 6,749 | 20,369 | 11,853 | 8,516 | |||||||||||||||
Customer relationships/backlog | 7 years | 11,419 | 7,011 | 4,408 | 10,070 | 4,032 | 6,038 | |||||||||||||||
Total amortizable assets | 59,747 | 28,201 | 31,546 | 60,715 | 25,653 | 35,062 | ||||||||||||||||
Non-amortizable assets: | ||||||||||||||||||||||
Trademarks | 12,069 | — | 12,069 | 12,566 | — | 12,566 | ||||||||||||||||
Total intangible assets | $ | 71,816 | $ | 28,201 | $ | 43,615 | $ | 73,281 | $ | 25,653 | $ | 47,628 | ||||||||||
Schedule of estimated future amortization expense | ' | |||||||||||||||||||||
At September 30, 2014, the estimated future amortization expense was as follows (in thousands): | ||||||||||||||||||||||
Fiscal Years | ||||||||||||||||||||||
2015 (remaining 9 months) | $ | 2,994 | ||||||||||||||||||||
2016 | 3,757 | |||||||||||||||||||||
2017 | 3,913 | |||||||||||||||||||||
2018 | 3,826 | |||||||||||||||||||||
2019 | 3,582 | |||||||||||||||||||||
2020 | 3,116 | |||||||||||||||||||||
2021 and thereafter, including assets that have not yet begun to be amortized | 13,874 | |||||||||||||||||||||
Total | $ | 35,062 |
Borrowings_Tables
Borrowings (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Borrowings | ' | |||||||
Schedule of long-term debt | ' | |||||||
Long-term debt consisted of the following (in thousands): | ||||||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Term loans | $ | 10,921 | $ | 11,607 | ||||
Other long-term debt | 2,334 | 2,480 | ||||||
13,255 | 14,087 | |||||||
Less current portion of long-term debt | 2,819 | 2,820 | ||||||
Long-term portion of debt | $ | 10,436 | $ | 11,267 |
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 3 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Stock-based Compensation | ' | |||||||||||
Schedule of stock-based compensation expense recorded in the condensed consolidated statements of operations | ' | |||||||||||
The Company recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands): | ||||||||||||
Three Months Ended | ||||||||||||
September 30, | ||||||||||||
2013 | 2014 | |||||||||||
Cost of goods sold | $ | 269 | $ | 205 | ||||||||
Selling, general and administrative | 5,303 | 5,763 | ||||||||||
Research and development | 66 | 27 | ||||||||||
Stock-based compensation expense before taxes | $ | 5,638 | $ | 5,995 | ||||||||
Less: related income tax benefit | 2,174 | 2,406 | ||||||||||
Stock-based compensation expense, net of estimated taxes | $ | 3,464 | $ | 3,589 | ||||||||
Summary of stock option activity | ' | |||||||||||
Number of | Weighted- | Weighted-Average | Aggregate | |||||||||
Options | Average Exercise | Remaining | Intrinsic Value | |||||||||
Price | Contractual Term | (in thousands) | ||||||||||
Outstanding at June 30, 2014 | 1,022,991 | $ | 26.6 | |||||||||
Granted | 42,476 | $ | 68.03 | |||||||||
Exercised | (4,154 | ) | $ | 50.27 | ||||||||
Expired or forfeited | (2,623 | ) | $ | 56.94 | ||||||||
Outstanding at September 30, 2014 | 1,058,690 | $ | 28.09 | 5.6 years | $ | 36,839 | ||||||
Exercisable at September 30, 2014 | 949,969 | $ | 24.35 | 5.2 years | $ | 36,297 | ||||||
Summary of restricted stock award and RSU award activity | ' | |||||||||||
Shares | Weighted- | |||||||||||
Average | ||||||||||||
Fair Value | ||||||||||||
Nonvested at June 30, 2014 | 661,400 | $ | 54.78 | |||||||||
Granted | 277,536 | 64.63 | ||||||||||
Vested | (233,945 | ) | 42.2 | |||||||||
Forfeited | (6,821 | ) | 37.39 | |||||||||
Nonvested at September 30, 2014 | 698,170 | 63.08 | ||||||||||
Retirement_Benefit_Plans_Table
Retirement Benefit Plans (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Retirement Benefit Plans | ' | |||||||
Schedule of net periodic pension expense | ' | |||||||
The Company sponsors various retirement benefit plans including qualified and nonqualified defined benefit pension plans for its employees. The components of net periodic pension expense are as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Service cost | $ | 293 | $ | 264 | ||||
Amortization of prior service cost | 202 | 202 | ||||||
Net periodic pension expense | $ | 495 | $ | 466 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies | ' | |||||||
Schedule of changes in warranty provisions | ' | |||||||
The following table presents changes in warranty provisions (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Balance at beginning of period | $ | 12,890 | $ | 11,923 | ||||
Additions and adjustments | 1,254 | 847 | ||||||
Reductions for warranty repair costs | (785 | ) | (870 | ) | ||||
Balance at end of period | $ | 13,359 | $ | 11,900 |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Segment Information | ' | |||||||
Schedule of operations and identifiable assets by industry segment | ' | |||||||
The following tables present the operations and identifiable assets by industry segment (in thousands): | ||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Revenues(2) — by Segment: | ||||||||
Security division | $ | 97,153 | $ | 113,439 | ||||
Healthcare division | 45,787 | 47,834 | ||||||
Optoelectronics and Manufacturing division, including intersegment revenues | 71,311 | 69,086 | ||||||
Intersegment revenues elimination | (7,977 | ) | (11,962 | ) | ||||
Total | $ | 206,274 | $ | 218,397 | ||||
Three Months Ended | ||||||||
September 30, | ||||||||
2013 | 2014 | |||||||
Operating income (loss) — by Segment: | ||||||||
Security division | $ | 11,622 | 17,259 | |||||
Healthcare division | (1,998 | ) | 62 | |||||
Optoelectronics and Manufacturing division | 4,765 | 4,327 | ||||||
Corporate | (4,045 | ) | (4,517 | ) | ||||
Eliminations(1) | 129 | (467 | ) | |||||
Total | $ | 10,473 | $ | 16,664 | ||||
June 30, | September 30, | |||||||
2014 | 2014 | |||||||
Assets — by Segment: | ||||||||
Security division | $ | 535,306 | $ | 525,293 | ||||
Healthcare division | 190,612 | 203,284 | ||||||
Optoelectronics and Manufacturing division | 169,084 | 165,407 | ||||||
Corporate | 133,836 | 139,189 | ||||||
Eliminations(1) | (4,652 | ) | (5,118 | ) | ||||
Total | $ | 1,024,186 | $ | 1,028,055 | ||||
(1) Eliminations within operating income primarily reflect the change in the elimination of intercompany profit in inventory not-yet-realized. Eliminations in assets reflect the amount of intercompany profits in inventory as of the balance sheet date. Such intercompany profit will be realized when inventory is shipped to the external customers of the Security and Healthcare divisions. | ||||||||
(2) One customer accounted for 15% of total net revenues for the three months ended September 30, 2013 and 2014. One customer accounted for 10% of the net receivables as of September 30, 2014. |
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
item | ||
Description of Business | ' | ' |
Number of operating segments | 3 | ' |
Earnings per Share | ' | ' |
Antidilutive shares associated with stock awards | 100,000 | 0 |
Computation of basic and diluted earnings per share | ' | ' |
Net income for diluted earnings per share calculation | $11,249 | $6,394 |
Weighted average shares for basic earnings per share calculation | 19,820,000 | 19,971,000 |
Dilutive effect of stock awards (in shares) | 709,000 | 649,000 |
Weighted average shares for diluted earnings per share calculation | 20,529,000 | 20,620,000 |
Basic net income per share (in dollars per share) | $0.57 | $0.32 |
Diluted net income per share (in dollars per share) | $0.55 | $0.31 |
Basis_of_Presentation_Details_
Basis of Presentation (Details 2) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Level 3 | ' | ' |
Fair value of financial instruments | ' | ' |
Fair value of assets | $0 | $0 |
Fair value of liabilities | 0 | 0 |
Recurring | Level 1 | ' | ' |
Fair value of financial instruments | ' | ' |
Total | 385 | 414 |
Recurring | Level 1 | Equity securities | ' | ' |
Fair value of financial instruments | ' | ' |
Equity securities | 385 | 414 |
Recurring | Level 2 | ' | ' |
Fair value of financial instruments | ' | ' |
Insurance company contracts | 18,077 | 17,383 |
Interest rate contract | 61 | 28 |
Total | 19,738 | 17,911 |
Recurring | Level 2 | Equity securities | ' | ' |
Fair value of financial instruments | ' | ' |
Equity securities | 1,600 | 500 |
Recurring | Total | ' | ' |
Fair value of financial instruments | ' | ' |
Insurance company contracts | 18,077 | 17,383 |
Interest rate contract | 61 | 28 |
Total | 20,123 | 18,325 |
Recurring | Total | Equity securities | ' | ' |
Fair value of financial instruments | ' | ' |
Equity securities | 1,985 | 914 |
Non-recurring | ' | ' |
Fair value of financial instruments | ' | ' |
Fair value of assets | 0 | 0 |
Fair value of liabilities | $0 | $0 |
Balance_Sheet_Details_Details
Balance Sheet Details (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | |
Accounts receivable | ' | ' | ' |
Billed receivables | $160,202,000 | ' | $189,489,000 |
Unbilled receivables | 2,552,000 | ' | 1,975,000 |
Less allowance for doubtful accounts | -6,905,000 | ' | -5,691,000 |
Total | 155,849,000 | ' | 185,773,000 |
Inventories | ' | ' | ' |
Raw materials | 146,525,000 | ' | 117,945,000 |
Work-in-process | 44,743,000 | ' | 33,394,000 |
Finished goods | 73,126,000 | ' | 82,799,000 |
Total | 264,394,000 | ' | 234,138,000 |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 393,120,000 | ' | 391,517,000 |
Less: accumulated depreciation and amortization | -142,927,000 | ' | -131,038,000 |
Property and equipment, net | 250,193,000 | ' | 260,479,000 |
Depreciation expense | 16,900,000 | 11,500,000 | ' |
Land | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 13,651,000 | ' | 13,651,000 |
Buildings and improvements | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 166,468,000 | ' | 163,952,000 |
Leasehold improvements | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 10,058,000 | ' | 9,744,000 |
Equipment and tooling | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 154,501,000 | ' | 154,367,000 |
Furniture and fixtures | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 4,052,000 | ' | 4,017,000 |
Computer equipment | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 17,810,000 | ' | 17,466,000 |
Computer software | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 15,968,000 | ' | 15,670,000 |
Construction in process | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | $10,612,000 | ' | $12,650,000 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Changes in the carrying amount of goodwill | ' |
Balance at the beginning of the period | $92,607 |
Goodwill acquired or adjusted during the period | 5,711 |
Foreign currency translation adjustment | -888 |
Balance at the end of the period | 97,430 |
Security Division | ' |
Changes in the carrying amount of goodwill | ' |
Balance at the beginning of the period | 29,507 |
Goodwill acquired or adjusted during the period | 19 |
Foreign currency translation adjustment | -281 |
Balance at the end of the period | 29,245 |
Healthcare Division | ' |
Changes in the carrying amount of goodwill | ' |
Balance at the beginning of the period | 37,237 |
Goodwill acquired or adjusted during the period | 5,655 |
Foreign currency translation adjustment | -283 |
Balance at the end of the period | 42,609 |
Optoelectronics and Manufacturing Division | ' |
Changes in the carrying amount of goodwill | ' |
Balance at the beginning of the period | 25,863 |
Goodwill acquired or adjusted during the period | 37 |
Foreign currency translation adjustment | -324 |
Balance at the end of the period | $25,576 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details 2) (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | $60,715,000 | ' | $59,747,000 |
Accumulated Amortization | 25,653,000 | ' | 28,201,000 |
Intangibles Net | 35,062,000 | ' | 31,546,000 |
Total intangible assets | ' | ' | ' |
Gross Carrying Value | 73,281,000 | ' | 71,816,000 |
Intangibles Net | 47,628,000 | ' | 43,615,000 |
Amortization expense | 800,000 | 1,400,000 | ' |
Estimated future amortization expense | ' | ' | ' |
2015 (remaining 9 months) | 2,994,000 | ' | ' |
2016 | 3,757,000 | ' | ' |
2017 | 3,913,000 | ' | ' |
2018 | 3,826,000 | ' | ' |
2019 | 3,582,000 | ' | ' |
2020 | 3,116,000 | ' | ' |
2021 and thereafter, including assets that have not yet begun to be amortized | 13,874,000 | ' | ' |
Intangibles Net | 35,062,000 | ' | 31,546,000 |
Trademarks | ' | ' | ' |
Non-amortizable assets: | ' | ' | ' |
Gross Carrying Value | 12,566,000 | ' | 12,069,000 |
Software development costs | ' | ' | ' |
Intangible assets | ' | ' | ' |
Weighted Average Lives | '9 years | ' | ' |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | 21,275,000 | ' | 21,165,000 |
Accumulated Amortization | 6,855,000 | ' | 6,716,000 |
Intangibles Net | 14,420,000 | ' | 14,449,000 |
Estimated future amortization expense | ' | ' | ' |
Intangibles Net | 14,420,000 | ' | 14,449,000 |
Capitalized software development costs | 600,000 | 1,200,000 | ' |
Patents | ' | ' | ' |
Intangible assets | ' | ' | ' |
Weighted Average Lives | '20 years | ' | ' |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | 6,814,000 | ' | 6,566,000 |
Accumulated Amortization | 804,000 | ' | 765,000 |
Intangibles Net | 6,010,000 | ' | 5,801,000 |
Estimated future amortization expense | ' | ' | ' |
Intangibles Net | 6,010,000 | ' | 5,801,000 |
Core technology | ' | ' | ' |
Intangible assets | ' | ' | ' |
Weighted Average Lives | '10 years | ' | ' |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | 2,187,000 | ' | 2,289,000 |
Accumulated Amortization | 2,109,000 | ' | 2,150,000 |
Intangibles Net | 78,000 | ' | 139,000 |
Estimated future amortization expense | ' | ' | ' |
Intangibles Net | 78,000 | ' | 139,000 |
Developed technology | ' | ' | ' |
Intangible assets | ' | ' | ' |
Weighted Average Lives | '10 years | ' | ' |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | 20,369,000 | ' | 18,308,000 |
Accumulated Amortization | 11,853,000 | ' | 11,559,000 |
Intangibles Net | 8,516,000 | ' | 6,749,000 |
Estimated future amortization expense | ' | ' | ' |
Intangibles Net | 8,516,000 | ' | 6,749,000 |
Customer relationships/backlog | ' | ' | ' |
Intangible assets | ' | ' | ' |
Weighted Average Lives | '7 years | ' | ' |
Amortizable assets: | ' | ' | ' |
Gross Carrying Value | 10,070,000 | ' | 11,419,000 |
Accumulated Amortization | 4,032,000 | ' | 7,011,000 |
Intangibles Net | 6,038,000 | ' | 4,408,000 |
Estimated future amortization expense | ' | ' | ' |
Intangibles Net | $6,038,000 | ' | $4,408,000 |
Borrowings_Details
Borrowings (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2012 | Sep. 30, 2014 |
Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Bank lines-of-credit | Seven-year term loan due in fiscal 2020 | Seven-year term loan due in fiscal 2020 | Seven-year term loan due in fiscal 2020 | |||
Minimum | Maximum | LIBOR | LIBOR | LIBOR | LIBOR | |||||||
Minimum | Maximum | |||||||||||
Borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | $450,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sub-limit available for letters of credit | ' | ' | 375,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in the credit agreement's borrowing capacity available under certain circumstances | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable basis rate | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | 'LIBOR |
Interest rate margin (as a percent) | ' | ' | ' | ' | ' | 1.25% | 1.25% | 2.00% | ' | ' | ' | 1.25% |
Unused commitment fee (as a percent) | ' | ' | 0.20% | 0.20% | 0.35% | ' | ' | ' | ' | ' | ' | ' |
Amount outstanding | 30,000,000 | 24,000,000 | 30,000,000 | ' | ' | ' | ' | ' | 0 | ' | ' | ' |
Amount outstanding under lines-of-credit | ' | ' | 100,100,000 | ' | ' | ' | ' | ' | 11,600,000 | ' | ' | ' |
Available credit facility | ' | ' | ' | ' | ' | ' | ' | ' | 26,400,000 | ' | ' | ' |
Total cash borrowing sub-limit | ' | ' | ' | ' | ' | ' | ' | ' | 2,900,000 | ' | ' | ' |
Principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,100,000 | ' |
Term of loan | ' | ' | ' | ' | ' | ' | ' | ' | ' | '7 years | ' | ' |
Effective interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.20% | ' | ' |
Term loans | 11,607,000 | 10,921,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other long-term debt | 2,480,000 | 2,334,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | 14,087,000 | 13,255,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less current portion of long-term debt | 2,820,000 | 2,819,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term portion of debt | $11,267,000 | $10,436,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockbased_Compensation_Detail
Stock-based Compensation (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
item | ||
Stock-based Compensation | ' | ' |
Number of share-based employee compensation plans | 2 | ' |
Stock based compensation expense | ' | ' |
Stock-based compensation expense before taxes | $5,995,000 | $5,638,000 |
Less: related income tax benefit | 2,406,000 | 2,174,000 |
Stock-based compensation expense, net of estimated taxes | 3,589,000 | 3,464,000 |
Stock Options | ' | ' |
Stock-based compensation, other disclosures | ' | ' |
Unrecognized compensation cost | 1,400,000 | ' |
Weighted-average period | '2 years 2 months 12 days | ' |
Restricted stock and RSU | ' | ' |
Stock-based compensation, other disclosures | ' | ' |
Unrecognized compensation cost | 30,500,000 | ' |
Weighted-average period | '1 year 10 months 24 days | ' |
Cost of goods sold | ' | ' |
Stock based compensation expense | ' | ' |
Stock-based compensation expense before taxes | 205,000 | 269,000 |
Selling, general and administrative | ' | ' |
Stock based compensation expense | ' | ' |
Stock-based compensation expense before taxes | 5,763,000 | 5,303,000 |
Research and development | ' | ' |
Stock based compensation expense | ' | ' |
Stock-based compensation expense before taxes | $27,000 | $66,000 |
Stockbased_Compensation_Detail1
Stock-based Compensation (Details 2) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Performance-based restricted stock units | ' | ' |
Shares | ' | ' |
Granted (in shares) | 151,469 | 160,922 |
Performance-based restricted stock units | Minimum | ' | ' |
Weighted-Average Fair Value | ' | ' |
Payout as a percentage of the original number of shares awarded or units awarded, which are converted into shares of the Company's common stock | 0.00% | ' |
Performance-based restricted stock units | Maximum | ' | ' |
Weighted-Average Fair Value | ' | ' |
Payout as a percentage of the original number of shares awarded or units awarded, which are converted into shares of the Company's common stock | 250.00% | ' |
OSI Plans | Stock Options | ' | ' |
Number of Options | ' | ' |
Outstanding at the beginning of the period (in shares) | 1,022,991 | ' |
Granted (in shares) | 42,476 | ' |
Exercised (in shares) | -4,154 | ' |
Expired or forfeited (in shares) | -2,623 | ' |
Outstanding at the end of the period (in shares) | 1,058,690 | ' |
Exercisable at the end of the period (in shares) | 949,969 | ' |
Weighted-Average Exercise Price | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | 26.6 | ' |
Granted (in dollars per share) | 68.03 | ' |
Exercised (in dollars per share) | 50.27 | ' |
Expired or forfeited (in dollars per share) | 56.94 | ' |
Outstanding at the end of the period (in dollars per share) | 28.09 | ' |
Exercisable at the end of the period (in dollars per share) | 24.35 | ' |
Weighted-Average Remaining Contractual Term | ' | ' |
Outstanding at the end of the period | '5 years 7 months 6 days | ' |
Exercisable at the end of the period | '5 years 2 months 12 days | ' |
Aggregate Intrinsic Value | ' | ' |
Outstanding at the end of the period | 36,839 | ' |
Exercisable at the end of the period | 36,297 | ' |
OSI Plans | Restricted stock and RSU | ' | ' |
Shares | ' | ' |
Nonvested at the beginning of the period (in shares) | 661,400 | ' |
Granted (in shares) | 277,536 | ' |
Vested (in shares) | -233,945 | ' |
Forfeited (in shares) | -6,821 | ' |
Nonvested at the end of the period (in shares) | 698,170 | ' |
Weighted-Average Fair Value | ' | ' |
Nonvested at the beginning of the period (in dollars per share) | 54.78 | ' |
Granted (in dollars per share) | 64.63 | ' |
Vested (in dollars per share) | 42.2 | ' |
Forfeited (in dollars per share) | 37.39 | ' |
Nonvested at the end of the period (in dollars per share) | 63.08 | ' |
2012 Plan | ' | ' |
Weighted-Average Fair Value | ' | ' |
Securities available for grant | 2,973,477 | ' |
2012 Plan | Restricted stock and RSU | ' | ' |
Weighted-Average Fair Value | ' | ' |
Number of shares available for grant reduced for each award granted | 1.87 | ' |
Number of shares available for grant increased for each award forfeited and returned | 1.87 | ' |
Retirement_Benefit_Plans_Detai
Retirement Benefit Plans (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Net Periodic Benefit Costs | ' | ' |
Service costs | $264,000 | $293,000 |
Amortization of prior service costs | 202,000 | 202,000 |
Net periodic pension expense | 466,000 | 495,000 |
Contributions made by the entity to the defined benefit plans | 1,000,000 | 100,000 |
Contributions made by the entity to defined contribution plans | $1,200,000 | $1,000,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | 3 Months Ended | 3 Months Ended | |||||
Oct. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | |
item | Mexican government | Mexican government | Maximum | Royalty payments | ||||
item | ||||||||
Contingent Acquisition Obligations | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum amount of future payments under contingent consideration | ' | ' | ' | ' | ' | ' | $58,000,000 | ' |
Purchase agreements containing royalty payments, number | ' | ' | ' | ' | ' | ' | ' | 1 |
Fair value of contingent payment obligations | ' | 24,400,000 | ' | 23,200,000 | ' | ' | ' | ' |
Advances from Customers | ' | ' | ' | ' | ' | ' | ' | ' |
Advances from customers | ' | ' | ' | ' | 68,800,000 | 100,000,000 | ' | ' |
Environmental Contingencies | ' | ' | ' | ' | ' | ' | ' | ' |
Number of investigations discovering soil and groundwater contamination at Hawthorne, CA facility | ' | 1 | ' | ' | ' | ' | ' | ' |
Changes in provision for warranties | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | 11,900,000 | 11,923,000 | 12,890,000 | ' | ' | ' | ' | ' |
Additions and adjustments | ' | 847,000 | 1,254,000 | ' | ' | ' | ' | ' |
Reductions for warranty repair costs | ' | -870,000 | -785,000 | ' | ' | ' | ' | ' |
Balance at end of period | ' | 11,900,000 | 13,359,000 | ' | ' | ' | ' | ' |
Other Matters | ' | ' | ' | ' | ' | ' | ' | ' |
Claims by government for compensation due to termination for default | ' | $0 | ' | ' | ' | ' | ' | ' |
Period for which Company's Security division has agreed to extend the term of the Administrative Agreement | '24 months | ' | ' | ' | ' | ' | ' | ' |
Segment_Information_Details
Segment Information (Details) | 3 Months Ended |
Sep. 30, 2014 | |
item | |
Segment Information | ' |
Number of identifiable industry segments | 3 |
Segment_Information_Details_2
Segment Information (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 |
Operations and identifiable assets by industry segment | ' | ' | ' |
Total revenues | $218,397 | $206,274 | ' |
Income (loss) from operations | 16,664 | 10,473 | ' |
Segments assets | 1,028,055 | ' | 1,024,186 |
One customer | Revenues | Customer | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Percentage of benchmark derived from specified source | 15.00% | 15.00% | ' |
One customer | Accounts receivable | Customer | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Percentage of benchmark derived from specified source | 10.00% | ' | ' |
Corporate | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Income (loss) from operations | -4,517 | -4,045 | ' |
Segments assets | 139,189 | ' | 133,836 |
Operating Segments | Security Division | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Total revenues | 113,439 | 97,153 | ' |
Income (loss) from operations | 17,259 | 11,622 | ' |
Segments assets | 525,293 | ' | 535,306 |
Operating Segments | Healthcare Division | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Total revenues | 47,834 | 45,787 | ' |
Income (loss) from operations | 62 | -1,998 | ' |
Segments assets | 203,284 | ' | 190,612 |
Operating Segments | Optoelectronics and Manufacturing Division | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Total revenues | 69,086 | 71,311 | ' |
Income (loss) from operations | 4,327 | 4,765 | ' |
Segments assets | 165,407 | ' | 169,084 |
Eliminations | ' | ' | ' |
Operations and identifiable assets by industry segment | ' | ' | ' |
Total revenues | -11,962 | -7,977 | ' |
Income (loss) from operations | -467 | 129 | ' |
Segments assets | ($5,118) | ' | ($4,652) |