OSI Systems (OSIS) 10-Q 28 Jan 19 2019 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2018	Jan. 22, 2019
Document and Entity Information
Entity Registrant Name	OSI SYSTEMS INC
Entity Central Index Key	1,039,065
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		18,071,408
Document Fiscal Year Focus	2,019
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 95,967	$ 84,814
Accounts receivable, net	226,086	210,744
Inventories	315,200	313,552
Prepaid expenses and other current assets	43,949	41,587
Total current assets	681,202	650,697
Property and equipment, net	121,270	115,524
Goodwill	305,164	292,213
Intangible assets, net	140,202	142,001
Other assets	49,839	55,256
Total assets	1,297,677	1,255,691
CURRENT LIABILITIES:
Bank lines of credit	149,000	113,000
Current portion of long-term debt	2,107	2,262
Accounts payable	98,339	106,892
Accrued payroll and related expenses	36,324	40,171
Advances from customers	69,410	55,761
Other accrued expenses and current liabilities	114,734	125,236
Total current liabilities	469,914	443,322
Long-term debt	253,184	248,980
Deferred income taxes	14,807	15,002
Other long-term liabilities	63,576	58,951
Total liabilities	801,481	766,255
Commitments and contingencies (Note 9)
Stockholders' Equity:
Preferred stock, $0.001 par value -10,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value-100,000,000 shares authorized; issued and outstanding, 18,032,374 shares at June 30, 2018 and 18,020,907 shares at December 31, 2018	151,926	169,475
Retained earnings	363,254	334,745
Accumulated other comprehensive loss	(18,984)	(14,784)
Total stockholders' equity	496,196	489,436
Total liabilities and stockholders' equity	$ 1,297,677	$ 1,255,691

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Dec. 31, 2018	Jun. 30, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
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)	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, shares issued	18,032,374	18,020,907
Common stock, shares outstanding	18,032,374	18,020,907

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Net revenues:
Total net revenues	$ 303,205	$ 277,528	$ 569,454	$ 534,661
Cost of goods sold:
Total cost of goods sold	192,861	175,898	363,197	341,760
Gross profit	110,344	101,630	206,257	192,901
Operating expenses:
Selling, general and administrative	67,097	60,098	128,804	115,745
Research and development	12,805	15,088	26,558	30,188
Impairment, restructuring and other charges	(1,265)	8,297	2,931	9,427
Total operating expenses	78,637	83,483	158,293	155,360
Income from operations	31,707	18,147	47,964	37,541
Interest expense and other expense, net	(5,620)	(5,282)	(10,952)	(9,531)
Income before income taxes	26,087	12,865	37,012	28,010
Provision for income taxes	(6,980)	(59,816)	(8,503)	(64,804)
Net income (loss)	$ 19,107	$ (46,951)	$ 28,509	$ (36,794)
Earnings (loss) per share:
Basic (in dollars per share)	$ 1.06	$ (2.47)	$ 1.58	$ (1.95)
Diluted (in dollars per share)	$ 1.03	$ (2.47)	$ 1.53	$ (1.95)
Shares used in per share calculation:
Basic (in shares)	18,085	18,971	18,088	18,874
Diluted (in shares)	18,624	18,971	18,679	18,874
Products
Net revenues:
Total net revenues	$ 225,402	$ 181,393	$ 407,882	$ 347,046
Cost of goods sold:
Total cost of goods sold	150,131	122,464	275,502	236,644
Services
Net revenues:
Total net revenues	77,803	96,135	161,572	187,615
Cost of goods sold:
Total cost of goods sold	$ 42,730	$ 53,434	$ 87,695	$ 105,116

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Net income (loss)	$ 19,107	$ (46,951)	$ 28,509	$ (36,794)
Other comprehensive income (loss):
Foreign currency translation adjustment	(5,388)	326	(4,215)	1,906
Other	9	(93)	15	(65)
Other comprehensive income (loss)	(5,379)	233	(4,200)	1,841
Comprehensive income (loss)	$ 13,728	$ (46,718)	$ 24,309	$ (34,953)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Jun. 30, 2017	$ 222,529	$ 363,872	$ (17,188)	$ 569,213
Balance (in shares) at Jun. 30, 2017	18,689,568
Increase (Decrease) in Shareholders' Equity
Exercise of stock options	$ 1,757			1,757
Exercise of stock options (in shares)	80,101
Vesting of RSUs (in shares)	372,248
Shares issued under employee stock purchase program	$ 1,961			1,961
Shares issued under employee stock purchase program (in shares)	37,488
Stock based compensation expense	$ 5,487			5,487
Taxes paid related to net share settlement of equity awards	$ (18,803)			(18,803)
Taxes paid related to net share settlement of equity awards (in shares)	(220,571)
Net income (loss)		10,157		10,157
Other comprehensive income (loss)			1,608	1,608
Balance at Sep. 30, 2017	$ 212,931	374,029	(15,580)	571,380
Balance (in shares) at Sep. 30, 2017	18,958,834
Balance at Jun. 30, 2017	$ 222,529	363,872	(17,188)	569,213
Balance (in shares) at Jun. 30, 2017	18,689,568
Increase (Decrease) in Shareholders' Equity
Net income (loss)				(36,794)
Other comprehensive income (loss)				1,841
Balance at Dec. 31, 2017	$ 218,343	327,078	(15,347)	530,074
Balance (in shares) at Dec. 31, 2017	18,978,031
Balance at Sep. 30, 2017	$ 212,931	374,029	(15,580)	571,380
Balance (in shares) at Sep. 30, 2017	18,958,834
Increase (Decrease) in Shareholders' Equity
Exercise of stock options	$ 110			110
Exercise of stock options (in shares)	1,654
Vesting of RSUs (in shares)	28,090
Stock based compensation expense	$ 6,253			6,253
Taxes paid related to net share settlement of equity awards	$ (951)			(951)
Taxes paid related to net share settlement of equity awards (in shares)	(10,547)
Net income (loss)		(46,951)		(46,951)
Other comprehensive income (loss)			233	233
Balance at Dec. 31, 2017	$ 218,343	327,078	(15,347)	530,074
Balance (in shares) at Dec. 31, 2017	18,978,031
Balance at Jun. 30, 2018	$ 169,475	334,745	(14,784)	$ 489,436
Balance (in shares) at Jun. 30, 2018	18,032,374			18,020,907
Increase (Decrease) in Shareholders' Equity
Exercise of stock options	$ 269			$ 269
Exercise of stock options (in shares)	9,034
Vesting of RSUs (in shares)	340,082
Shares issued under employee stock purchase program	$ 2,020			2,020
Shares issued under employee stock purchase program (in shares)	39,293
Stock based compensation expense	$ 5,463			5,463
Repurchase of common stock	$ (7,844)			(7,844)
Repurchase of common stock (in shares)	(104,146)
Taxes paid related to net share settlement of equity awards	$ (12,623)			(12,623)
Taxes paid related to net share settlement of equity awards (in shares)	(163,514)
Net income (loss)		9,402		9,402
Other comprehensive income (loss)			1,179	1,179
Balance at Sep. 30, 2018	$ 156,760	344,147	(13,605)	487,302
Balance (in shares) at Sep. 30, 2018	18,153,123
Balance at Jun. 30, 2018	$ 169,475	334,745	(14,784)	$ 489,436
Balance (in shares) at Jun. 30, 2018	18,032,374			18,020,907
Increase (Decrease) in Shareholders' Equity
Net income (loss)				$ 28,509
Other comprehensive income (loss)				(4,200)
Balance at Dec. 31, 2018	$ 151,926	363,254	(18,984)	$ 496,196
Balance (in shares) at Dec. 31, 2018	18,020,907			18,032,374
Balance at Sep. 30, 2018	$ 156,760	344,147	(13,605)	$ 487,302
Balance (in shares) at Sep. 30, 2018	18,153,123
Increase (Decrease) in Shareholders' Equity
Exercise of stock options	$ 520			520
Exercise of stock options (in shares)	40,361
Vesting of RSUs (in shares)	16,623
Stock based compensation expense	$ 8,163			8,163
Repurchase of common stock	$ (13,185)			(13,185)
Repurchase of common stock (in shares)	(184,170)
Taxes paid related to net share settlement of equity awards	$ (332)			(332)
Taxes paid related to net share settlement of equity awards (in shares)	(5,030)
Net income (loss)		19,107		19,107
Other comprehensive income (loss)			(5,379)	(5,379)
Balance at Dec. 31, 2018	$ 151,926	$ 363,254	$ (18,984)	$ 496,196
Balance (in shares) at Dec. 31, 2018	18,020,907			18,032,374

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 28,509	$ (36,794)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	28,283	41,656
Stock based compensation expense	13,626	11,740
Deferred income taxes	(3,308)	50,696
Amortization of debt discount and issuance costs	4,469	4,262
Impairment charges		3,144
Other	1,015	885
Changes in operating assets and liabilities-net of business acquisitions:
Accounts receivable	(13,986)	12,054
Inventories	(2,265)	(21,700)
Prepaid expenses and other assets	(5,863)	(6,273)
Accounts payable	(9,166)	(6,647)
Advances from customers	13,676	26,405
Accrued payroll and related expenses	(3,760)	12
Other	(10,386)	5,261
Net cash provided by operating activities	40,844	84,701
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(12,640)	(32,009)
Acquisition of businesses, net of cash acquired	(18,259)	(83,632)
Acquisition of intangible and other assets	(611)	(1,068)
Net cash used in investing activities	(31,510)	(116,709)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank lines of credit	36,000	92,000
Proceeds from long-term debt	817	295
Payments on long-term debt	(1,233)	(1,249)
Proceeds from exercise of stock options and employee stock purchase plan	2,809	3,828
Payments of contingent consideration	(1,328)	(804)
Repurchase of common stock	(21,029)
Taxes paid related to net share settlement of equity awards	(12,955)	(19,754)
Net cash provided by financing activities	3,081	74,316
Effect of exchange rate changes on cash	(1,262)	15
Net increase in cash and cash equivalents	11,153	42,323
Cash and cash equivalents-beginning of period	95,967	211,973
Cash and cash equivalents-end of period	84,814	169,650
Cash paid, net during the period for:
Interest	6,318	3,783
Income taxes	$ 20,711	$ 11,929

Basis of Presentation

Basis of Presentation	6 Months Ended
	Dec. 31, 2018
Basis of Presentation
Basis of Presentation	1. Basis of Presentation Description of Business OSI Systems, Inc., together with our subsidiaries, is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. We sell our products in diversified markets, including homeland security, healthcare, defense and aerospace. We have three reporting segments: (i) Security, providing security inspection systems and related services, and turnkey security screening solutions; (ii) Healthcare, providing patient monitoring, diagnostic cardiology and related services and (iii) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for our Security and Healthcare divisions as well as to external original equipment manufacturer (“OEM”) customers and end users for applications in the defense, aerospace, medical and industrial markets, among others. Through our Security segment, we provide security screening products and related services globally. These products fall into the following categories: baggage and parcel inspection; cargo and vehicle inspection; hold (checked) baggage screening; people screening; radiation detection; and explosive and narcotics trace detection. In addition to these products, we also provide site design, installation, training and technical support services to our customers. We also provide turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for our customers. Through our Healthcare segment, we design, manufacture, market and service patient monitoring and diagnostic cardiology 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, among others. Through our Optoelectronics and Manufacturing segment, we design, manufacture and market optoelectronic devices and flex circuits and provide electronics manufacturing services worldwide for use in a broad range of applications, including aerospace and defense electronics, X-ray security and inspection systems and medical imaging, chemistry analysis and diagnostics instruments, telecommunications, scanners and industrial automations, automotive diagnostic systems, internet of things (IoT) and consumer wearable products. This division provides products and services to OEM customers and end users as well as to our Security and Healthcare divisions. Basis of Presentation The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018. The results of operations for the six months ended December 31, 2018 are not necessarily indicative of the operating results to be expected for the full 2019 fiscal year or any future periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill.Changes in estimates are reflected in the periods during which they become known. Actual amounts may differ from these estimates and could differ materially. Per Share Computations We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method. In periods where a net loss is reported, basic and diluted net loss per share are the same since the effect of potential common shares is antidilutive and therefore excluded. The underlying equity component of the 1.25% convertible senior notes due 2022 (the “Notes”) discussed in Note 6 to the condensed consolidated financial statements will have no impact on diluted earnings per share until the average price of our common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion. The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Net income (loss) available to common stockholders $ (46,951) $ 19,107 $ (36,794) $ 28,509 Weighted average shares outstanding—basic 18,971 18,085 18,874 18,088 Dilutive effect of equity awards — 539 — 591 Weighted average shares outstanding—diluted 18,971 18,624 18,874 18,679 Basic earnings (loss) per share $ (2.47) $ 1.06 $ (1.95) $ 1.58 Diluted earnings (loss) per share $ (2.47) $ 1.03 $ (1.95) $ 1.53 Weighted average shares excluded from diluted earnings (loss) per share due to their anti-dilutive effect (in thousands) 684 126 753 81 Cash Equivalents We consider all highly liquid investments with maturities of three months or less as of the acquisition date to be cash equivalents. Our cash and cash equivalents totaled $96.0 million at December 31, 2018. The majority of this amount was held by us and our subsidiaries in the United States, United Kingdom, Malaysia, India, and Mexico, and to a lesser extent in Canada, Singapore and Germany among others. We have cash holdings that exceed insured limits for financial institutions; however, we mitigate this risk by utilizing high credit quality financial institutions throughout the world. Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, 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 our long term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates available to us. 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 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 for which valuation techniques are unobservable and significant to the fair value measurement. As of June 30, 2018 and December 31, 2018, there were no assets where “Level 3” valuation techniques were used. Our contingent payment obligations related to acquisitions, which are further discussed in Note 9 to the condensed consolidated financial statements, are in the “Level 3” category for valuation purposes. The fair values of the our financial assets and liabilities as of June 30, 2018 and December 31, 2018 are categorized as follows (in thousands): June 30, 2018 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Insurance company contracts $ — $ 31,897 $ — $ 31,897 $ — $ 30,622 $ — $ 30,622 Interest rate contract — 18 — 18 — 9 — 9 Total assets $ — $ 31,915 $ — $ 31,915 $ — $ 30,631 $ — $ 30,631 Liabilities—contingent consideration $ — $ — $ 15,713 $ 15,713 $ — $ — $ 19,997 $ 19,997 Derivative Instruments and Hedging Activity Our 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 described in Note 6. 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 (loss) in the consolidated financial statements and are reclassified as net income when the hedge transaction settles. Goodwill Impairment Goodwill represents the excess purchase price over the estimated fair value of the assets acquired and liabilities assumed in a business combination. Goodwill is allocated to our segments based on the nature of the product line of the acquired business. The carrying value of goodwill is not amortized, but is annually tested for impairment during our second fiscal quarter and more frequently if there is an indicator of impairment. We assess qualitative factors of each of our three reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The assessments conducted as of December 31, 2018 indicated that it is not more likely than not that the fair values of two of our three reporting units are less than their carrying amounts, including goodwill. Thus, we have determined that there is no goodwill impairment for these two reporting units. For the third reporting unit, the results of our assessment of qualitative factors were not conclusive so we proceeded with a quantitative assessment to determine if the carrying amount of this reporting unit exceeds its fair value. The fair value of the reporting unit was calculated using the income approach. Under the income approach, the fair value of the reporting unit was calculated by estimating the present value of associated future cash flows. The analysis indicated that the estimated fair value of the third reporting unit substantially exceeded the carry amount, plus goodwill, of the reporting unit. We applied a hypothetical 10 percent decrease to the fair value of the reporting unit, which at December 31, 2018, would not have indicated impairment. Therefore, we have determined that there is no goodwill impairment for this reporting unit. Revenue Recognition ASU 2014-09, Revenue from Contracts with Customers (Topic 606). In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09 and related amendments (“ASC 606”), which superseded all prior revenue recognition methods and industry-specific guidance. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 1, 2018, we adopted ASC 606 using the modified retrospective method, whereby the adoption does not impact any prior periods. We have identified contracts not yet completed as of July 1, 2018 and applied the new guidance on a prospective basis. Product Sales. We recognize revenue from sales of products upon shipment or delivery when control of the product transfers to the customer, depending on the terms of each sale, and when collection is probable. In the circumstance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until we have achieved the acceptance criteria unless the customer acceptance criteria are perfunctory or inconsequential. We generally offer customers payment terms of less than one year. In cases when payment terms extend beyond one year, we consider whether the contract has a significant financing component. Service Revenue. Revenue from services includes after-market services, installation and implementation of products and turnkey security screening services. Generally, revenue from services is recognized over time as the services are performed. Revenues from out of warranty service maintenance contracts are recognized ratably over the respective terms of such contracts. Deferred revenue for such services arises from payments received from customers for services not yet performed. Contract Revenue. Sales agreements with customers can be project specific, cover a period of time, and can be renewable periodically. The contracts may contain terms and conditions with respect to payment, delivery, installation, services, warranty and other rights. In certain instances, we consider an accepted customer order, governed by a master sales agreement, to be the contract with the customer when legal rights and obligations exist. Contracts with customers may include the sale of products and services, as discussed in the paragraphs above. In certain instances, contracts can contain multiple performance obligations as discussed in the paragraph below. According to the terms of a sale contract, we may receive consideration from a customer prior to transferring goods to the customer, and we record these prepayments as a contract liability. We also record deferred revenue, typically related to service contacts, when consideration is received before the services have been performed. We recognize customer deposits and deferred revenue as net sales after all revenue recognition criteria is met. When determining revenue recognition for contracts, we use judgment based on our understanding of the obligations within each contract. We determine 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 recognition. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product under warranty. Multiple Performance Obligations. Certain agreements with customers include the sale of capital equipment involving multiple elements that may include civil works to prepare a site for the installation of equipment, manufacture and delivery of equipment, installation and integration of equipment, training of customer personnel to operate the equipment and after-market service of the equipment. We generally separate multiple elements in a contract into separate performance obligations if those elements are distinct, both individually and in the context of the contract. If multiple promises comprise a series of distinct services which are substantially the same and have the same pattern of transfer, they are combined and accounted for as a single performance obligation. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire sale value is attributed to that obligation. When a contract contains multiple performance obligations the transaction value is first allocated using the observable price, which is generally a list price net of applicable discount or the price used to sell in similar circumstances. In circumstances when a selling price is not directly observable, we will estimate the standalone selling price using information available to us including our market assessment and expected cost plus margin. The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods. The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of factory acceptance test, completion of site acceptance test, installation and connectivity of equipment, certification of training of personnel and, in the case of after-market service deliverables, the passage of time (typically evenly over the post-warranty period of the service deliverable). We often provide a guarantee to support our performance under multiple-deliverable arrangements. In the event that customers are permitted to terminate such arrangements, the underlying contract typicall 2,y requires payment for deliverables and reimbursement of costs incurred through the date of termination. Effect of Adopting ASC 606. Adopting ASC 606 did not require any cumulative effect adjustment to retained earnings as of July 1, 2018 because the impact on retained earnings was immaterial. The impact to our condensed consolidated statements of operations is shown below for the three and six month periods ended December 31, 2018 and for the balance sheet as of December 31, 2018. Statement of Operations (in thousands) Three Months Ended December 31, 2018 Six Months Ended December 31, 2018 Results Results without without Results Adoption of Effect of Results Adoption of Effect of as Reported ASC 606 Change as Reported ASC 606 Change Revenue $ 303,205 $ 288,376 $ 14,829 $ 569,454 $ 551,043 $ 18,411 Cost of goods sold 192,861 185,133 7,728 363,197 354,290 8,907 Operating expenses 78,637 74,690 3,947 158,293 152,118 6,175 Income from operations 31,707 28,553 3,154 47,964 44,635 3,329 Interest and other expense, net (5,620) (5,620) — (10,952) (10,952) — Income tax provision (6,980) (6,445) (535) (8,503) (7,920) (583) Net income $ 19,107 $ 16,488 $ 2,619 $ 28,509 $ 25,763 $ 2,746 Balance Sheet (in thousands) December 31, 2018 Balances without Balances Adoption of Effect of as Reported ASC 606 Change Assets Accounts receivable, net $ 226,086 $ 215,825 $ 10,261 Inventories 315,200 324,134 (8,934) Other assets 756,391 756,975 (584) Liabilities Current liabilities 469,914 471,917 (2,003) Other liabilities 331,567 331,567 — Stockholders’ Equity Retained earnings 363,254 360,508 2,746 We disaggregate revenue by reporting segment (Security, Optoelectronics and Manufacturing, and Healthcare) to depict the nature of revenue in a manner consistent with our business operations and to be consistent with other communications and public filings. Refer to Note 11 to our condensed consolidated financial statements for additional details of revenues by reporting segment. During the three and six months ended December 31, 2018, we recognized additional revenueas a result of adopting ASC 606. This is primarily due to sales within our Security division where we met certain contractual performance obligations. As a result, this increased net income and accounts receivable and reduced inventories. Contract Assets and Liabilities. We enter into contracts to sell products and provide services, and we recognize contract assets and liabilities that arise from these transactions. We recognize revenue and corresponding accounts receivable according to ASC 606 and, at times, recognize revenue in advance of the time when contracts give us the right to invoice a customer. We may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. We record customer deposits as a contract liability. Additionally, we may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, we record a deferred revenue liability. We recognize these contract liabilities as sales after all revenue recognition criteria are met. The table below shows the balance of contract assets and liabilities as of June 30, 2018 and December 31, 2018, including the change between the periods. Contract Assets (in thousands) June 30, December 31, 2018 2018 Change % Change Unbilled revenue $ 13,087 $ 19,997 $ 6,910 53 % Contract Liabilities (in thousands) June 30, December 31, 2018 2018 Change % Change Advances from customers $ 55,761 $ 69,410 $ 13,649 24 % Deferred revenue—current 28,899 32,516 3,617 13 % Deferred revenue—long-term 9,562 8,883 (679) (7) % Remaining Performance Obligations . Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations under an original contract with a term greater than one year which are fully or partially unsatisfied at the end of the period. As of December 31, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $162.3 million. We expect to recognize revenue on approximately 50.5% of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. Practical Expedients. In cases where we are responsible for shipping after the customer has obtained control of the goods, we have elected to treat these activities as fulfillment activities rather than as a separate performance obligation. Additionally, we have elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. We only give consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. We also utilize the "as invoiced" practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer. Recently Adopted Accounting Pronouncements Revenue Recognition In May 2014, the FASB issued ASU 2014-09 and related amendments Revenue from Contracts with Customers (Topic 606) , which superseded all prior revenue recognition methods and industry-specific guidance. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 1, 2018, we adopted ASC 606 using the modified retrospective method, whereby the adoption does not impact any prior periods. Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The update was issued with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230 and other topics. We adopted this ASU effective July 1, 2018 using the retrospective approach and the initial adoption had no effect on our financial position, results of operations or liquidity. Income Taxes In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory . The new guidance eliminates the exception for intra-entity transfers other than inventory and requires the recognition of current and deferred income taxes resulting from such a transfer when the transfer occurs. We adopted this ASU effective July 1, 2018 using the modified retrospective transition method resulting in a reclassification in the balance sheet of $3 million to decrease prepaid expenses and other assets and increase deferred tax assets. Recently Issued Accounting Pronouncements Not Yet Adopted Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases with terms of more than 12 months. The ASU also will require qualitative and quantitative disclosures designed to give financial statement readers information on the amount, timing, and uncertainty of cash flows arising from leases. This ASU is effective for us in the first quarter of fiscal 2020 with early adoption permitted. We have not yet adopted this ASU and are currently evaluating the impact it may have on our financial condition and results of operations. Retirement Benefit Plans In August 2018, the FASB issued authoritative guidance under ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General: Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans. We are required to adopt this new guidance in the first quarter of fiscal 2021. We are currently evaluating the potential impact of the adoption of this guidance on our consolidated financial statements. Intangibles In August 2018, the FASB issued authoritative guidance under ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. We are required to adopt this new guidance in the first quarter of fiscal 2021. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements.

Business Combinations

Business Combinations	6 Months Ended
	Dec. 31, 2018
Business Combinations
Business Combinations	2. Business Combinations Under ASU 805, Business Combinations the acquisition method of accounting requires us to record assets acquired less liabilities assumed in an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase price over the estimated fair value of the assets acquired less liabilities assumed should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with corresponding adjustments to goodwill, as additional information becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are reflected in reported earnings. Fiscal Year 2019 Business Acquisitions In July 2018, we (through our Optoelectronics and Manufacturing division) acquired an optoelectronics solutions business for $17.5 million, plus up to $1 million in potential contingent consideration, which may be earned over an 18-month period. The acquisition was financed with cash on hand and borrowings under our existing revolving bank line of credit. The goodwill recognized for this business is expected to be deductible for income tax purposes. In August 2018, we (through our Security division) completed an acquisition of a privately held services company for approximately $0.8 million, plus up to approximately $5 million in contingent consideration which may be earned over a five-year period. The acquisition was financed with cash on hand. The goodwill recognized for this business is not expected to be deductible for income tax purposes. These business acquisitions, individually and in the aggregate, were not material to our consolidated financial statements. Accordingly, pro-forma historical results of operations related to these businesses have not been presented. Fiscal Year 2018 Business Acquisitions Acquisition of Explosive Trace Detection Business On July 7, 2017, we acquired the global explosive trace detection business (“ETD”) from Smiths Group plc. This acquisition was a carve out from a larger entity. We financed the total purchase price of $80.5 million with a combination of cash on hand and borrowings under our revolving bank line of credit. Pro-forma results were not presented because, based on the date of the acquisition, there was not a material difference between pro-forma and actual results in the condensed consolidated financial statements of operations for the six months ended December 31, 2017 and 2018. The valuation of certain assets and liabilities of ETD were performed by a third party valuation specialist. The final allocation was as follows: Cash and cash equivalents $ 4 Accounts receivable 15,517 Inventories 11,678 Property and equipment 1,599 Intangible assets 30,370 Deferred tax asset 2,738 Other long-term assets 297 Accounts payable (4,784) Accrued payroll and related expenses (2,116) Deferred revenues—current (924) Accrued warranties (2,068) Advances from customers (670) Other accrued expenses and current liabilities (1,074) Deferred revenues —long term (232) Net assets acquired 50,335 Goodwill 30,132 Total consideration $ 80,467 The goodwill is largely attributable to expected growth, intellectual capital and the assembled workforce of the ETD business. Intangible assets were recorded at estimated fair value, as determined by management based on available information, with assistance from a third party. The fair value attributed to the intangible assets acquired was based on estimates, assumptions and other information compiled by management, and valuations that utilized established valuation techniques. The value attributed to goodwill and intangible assets is partially non-deductible for income tax purposes. The following table summarizes the fair value of acquired identifiable intangible assets as of the acquisition date (amounts in thousands): Weighted Average Fair Lives Value Developed technology 10 years $ 14,210 Customer relationships/backlog 7 years 16,070 In-process research and development (“IPR&D”) 90 Total intangible assets $ 30,370 Other Fiscal Year 2018 Business Acquisitions In July 2017, we (through our Security division) completed an acquisition of a privately held technology company. The acquisition was financed with cash on hand and was in an amount including potential earnout consideration determined to be insignificant by management. In January 2018, we (through our Optoelectronics and Manufacturing division) acquired an electronics component designer and manufacturer for approximately $22 million, plus up to $6 million in contingent consideration which may be earned over a three-year period. The goodwill recognized for this business is not expected to be deductible for income tax purposes. The acquisition was financed with cash on hand and borrowings under our revolving bank line of credit.

Balance Sheet Details

Balance Sheet Details	6 Months Ended
	Dec. 31, 2018
Balance Sheet Details
Balance Sheet Details	3. Balance Sheet Details The following tables provide details of selected balance sheet accounts (in thousands): June 30, December 31, 2018 2018 Accounts receivable $ 225,336 $ 240,749 Less allowance for doubtful accounts (14,592) (14,663) Total $ 210,744 $ 226,086 June 30, December 31, 2018 2018 Raw materials $ 156,612 $ 153,195 Work-in-process 89,468 86,582 Finished goods 67,472 75,423 Total $ 313,552 $ 315,200 June 30, December 31, 2018 2018 Land $ 16,569 $ 16,555 Buildings, civil works and improvements 56,585 55,083 Leasehold improvements 9,681 10,144 Equipment and tooling 117,294 125,099 Furniture and fixtures 3,331 3,175 Computer equipment 18,759 17,863 Computer software 19,509 19,555 Computer software implementation in process 4,318 6,640 Construction in process 790 2,428 Total 246,836 256,542 Less accumulated depreciation and amortization (131,312) (135,272) Property and equipment, net $ 115,524 $ 121,270 Depreciation expense was $16.8 million and $5.2 million for the three months ended December 31, 2017 and 2018, respectively, and approximately $33.0 million and $10.3 million for the six months ended December 31, 2017 and 2018, respectively. The decrease in depreciation is primarily related to a transfer of assets. In January 2018, we entered into a two-year agreement with the Mexican government to continue providing security screening services. Upon inception of the contract, we transferred certain fixed assets with a net book value of $29.5 million to the customer, and this remaining cost to obtain the contract is amortized on a straightline basis over the term of the contract as corresponding revenues are recognized. During the three and six months ended December 31, 2018, we recognized $3.7 million and $7.1 million, respectively, of amortization expense related to such assets. As of December 31, 2018, $13.7 million and $0.5 million, respectively, are recorded within Prepaid expenses and other current assets and Other assets.

Goodwill and Intangible Assets

Goodwill and Intangible Assets	6 Months Ended
	Dec. 31, 2018
Goodwill and Intangible Assets
Goodwill and Intangible Assets	4. Goodwill and Intangible Assets The changes in the carrying value of goodwill for the six month period ended December 31, 2018 are as follows (in thousands): Optoelectronics and Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2018 $ 191,810 $ 40,157 $ 60,246 $ 292,213 Goodwill acquired or adjusted during the period 6,541 — 7,415 13,956 Foreign currency translation adjustment (65) (102) (838) (1,005) Balance as of December 31, 2018 $ 198,286 $ 40,055 $ 66,823 $ 305,164 Intangible assets consisted of the following (in thousands): June 30, 2018 December 31, 2018 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 9 years $ 28,174 $ (9,423) $ 18,751 $ 29,215 $ (11,597) $ 17,618 Patents 19 years 8,401 (1,618) 6,783 8,243 (1,680) 6,563 Developed technology 10 years 52,780 (9,706) 43,074 54,582 (12,480) 42,102 Customer relationships/backlog 7 years 63,398 (17,891) 45,507 65,673 (20,494) 45,179 Total amortizable assets 152,753 (38,638) 114,115 157,713 (46,251) 111,462 Non-amortizable assets: Trademarks and trade names 25,596 — 25,596 26,450 — 26,450 IPR&D 2,290 — 2,290 2,290 — 2,290 Total intangible assets $ 180,639 $ (38,638) $ 142,001 $ 186,453 $ (46,251) $ 140,202 Amortization expense related to intangible assets was $4.5 million and $5.6 million for the three month periods ended December 31, 2017 and 2018, respectively. For the six months ended December 31, 2017 and 2018, amortization expense was $8.7 million and $10.9 million, respectively. .At December 31, 2018, the estimated future amortization expense was as follows (in thousands): 2019 (remaining 6 months) $ 9,960 2020 19,634 2021 19,281 2022 14,670 2023 13,448 Thereafter, including assets that have not yet begun to be amortized 34,469 Total $ 111,462 Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product-by-product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight line basis over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in Thereafter in the table above. For the three months ended December 31, 2017 and 2018, we capitalized software development costs in the amount of $0.2 million and $0.6 million, respectively. For the six month periods ended December 31, 2017 and 2018, we capitalized software development costs in the amount of $0.3 million and $1.0 million, respectively.

Impairment, restructuring and o

Impairment, restructuring and other charges	6 Months Ended
	Dec. 31, 2018
Impairment, restructuring and other charges
Impairment, restructuring and other charges	5. Impairment, restructuring and other charges Impairment During the three and six months ended December 31, 2018, there were no impairment charges. During the three and six months ended December 31, 2017, we (i) abandoned a product line in our Security division that became redundant as a result of the ETD acquisition, (ii) abandoned a non-core product line in our Healthcare division, and (iii) abandoned certain trademarks in our Optoelectronics and Manufacturing division that were no longer used. As a result, $3.1 million of assets, including intangible and fixed assets, were written off as we determined that these assets have no value and were permanently impaired. Restructuring and Other Charges We endeavor to align our global capacity and infrastructure with demand by our customers and also to fully integrate acquisitions, and thereby improve operational efficiency. We intiated a restructuring during fiscal 2019 in our Healthcare division in order to realign the organization and enable further investment in priority areas, and we have incurred associated charges of approximately $3.3 million and $3.5 million for the three and six months ended December 31, 2018, respectively. During the three and six months ended December 31, 2018, we recovered certain legal costs related to class action litigation and government investigations through insurance reimbursement. This resulted in a net credit to restructuring and other charges in our Corporate segment of $4.6 million and $1.0 million for the three and six months ended December 31, 2018, respectively. During the three and six months ended December 31, 2017, we incurred professional fees of $0.2 million and $0.9 million, respectively, to complete the ETD acquisition. During the three months ended December 31, 2017, we accrued $4.3 million of litigation and estimated settlement costs, $4.2 million of which was recorded in our Healthcare division. The following table summarizes impairment, restructuring and other charges for the periods set forth below (in thousands): Three Months Ended December 31, 2017 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 1,490 $ 579 $ 1,075 $ — $ 3,144 Acquisition-related costs — — — 361 361 Employee termination costs 90 — 146 — 236 Facility closures/consolidation 11 243 — — 254 Legal and accrued settlement costs, net — 4,200 — 102 4,302 Total expensed $ 1,591 $ 5,022 $ 1,221 $ 463 $ 8,297 Three Months Ended December 31, 2018 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ — $ — $ 20 $ — $ 20 Employee termination costs (46) 1,227 26 — 1,207 Facility closures/consolidation — 2,108 — — 2,108 Legal and accrued settlement costs, net — — — (4,600) (4,600) Total expensed $ (46) $ 3,335 $ 46 $ (4,600) $ (1,265) Six Months Ended December 31, 2017 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 1,490 $ 579 $ 1,075 $ — $ 3,144 Acquisition-related costs — — — 1,181 1,181 Employee termination costs 330 — 146 — 476 Facility closures/consolidation 81 243 — — 324 Legal and accrued settlement costs, net — 4,200 — 102 4,302 Total expensed $ 1,901 $ 5,022 $ 1,221 $ 1,283 $ 9,427 Six Months Ended December 31, 2018 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ — $ — $ 287 $ — $ 287 Employee termination costs — 1,418 133 — 1,551 Facility closures/consolidation — 2,108 — — 2,108 Legal and accrued settlement costs, net — — — (1,015) (1,015) Total expensed $ — $ 3,526 $ 420 $ (1,015) $ 2,931 The changes in the accrued liability for restructuring and other charges for the six month period ended December 31, 2018 were as follows (in thousands): Facility Employee Closure/ Acquisition- Termination Consolidation Legal related Costs Costs Cost Charges Total Balance as of June 30, 2018 $ — $ 837 $ 399 $ 14,065 $ 15,301 Restructuring and other charges,net 287 1,551 2,108 (1,015) 2,931 Payments and other adjustments (287) (1,589) (2,078) (861) (4,815) Balance as of December 31, 2018 $ — $ 799 $ 429 $ 12,189 $ 13,417

Borrowings

Borrowings	6 Months Ended
	Dec. 31, 2018
Borrowings
Borrowings	6. Borrowings Revolving Credit Facility In December 2016, we entered into an amendment to our revolving credit facility, which, among other things, increased the aggregate committed amount available to us from $450 million to $525 million and extended the maturity date to December 2021. The credit facility includes a $300 million sub limit for letters of credit. Under certain circumstances, we have the ability to increase the facility by the greater of $250 million or such amount as would not cause our secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR, or a comparable rate in accordance with the terms of the credit agreement, plus a margin of 1.50% as of December 31, 2018, but this margin can range from 1.25% to 2.0% based on our consolidated net leverage ratio as defined in the credit facility. Letters of credit reduce the amount available to borrow by their face value. The unused portion of the facility bears a commitment fee of 0.20% as of December 31, 2018, but this fee can range from 0.20% to 0.30% based on our consolidated net leverage ratio as defined in the credit facility. Our borrowings under the credit agreement are guaranteed by certain of our U.S. based subsidiaries and are secured by substantially all of our assets and the assets of certain of our subsidiaries. The credit agreement contains various representations and warranties, affirmative, negative and financial covenants and conditions of default. As of December 31, 2018, there was $149.0 million of borrowings outstanding under the revolving credit facility and $58.9 million outstanding under the letters of credit sub-facility. The amount available to borrow under the credit facility as of December 31, 2018 was $317.1 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re- borrowed during the term. Although the principal amount of each revolving loan is due and payable in full on the maturity date, we have the right to repay each revolving loan in whole or in part from time to time without penalty. It is our practice to routinely borrow and repay several times per year under this revolving credit facility. Therefore, borrowings under the credit facility are included in current liabilities. As of December 31, 2018, we are in compliance with all covenants under this credit facility. 1.25% Convertible Senior Notes Due 2022 In February 2017, we issued $287.5 million of the Notes in a private offering. The Notes are governed by an indenture dated February 22, 2017. The maturity for the payment of principal is September 1, 2022. The Notes bear interest at the rate of 1.25% payable in cash semiannually in arrears on each March 1 and September 1. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries, as well as any of our existing and future indebtedness that may be guaranteed by our subsidiaries to the extent of such guarantees (including the guarantees of certain of our subsidiaries under our existing revolving credit facility). The Notes are convertible prior to March 1, 2022 only upon specified events and during specified periods and are, thereafter convertible, at any time, in each case at an initial conversion rate of 9.3056 per $1,000 principal amount of the Notes, which is equal to an initial conversion price of approximately $107.46 per share or a 38.5% premium to our stock price at the time of the issuance. The conversion rate is subject to adjustment upon certain events. Upon conversion, the Notes may be settled, at our election, in shares of our common stock, cash or a combination of cash and shares of common stock. We have initially elected a combination settlement method to satisfy the conversion obligation, which allows us to settle the principal amount of the Notes in cash and to settle the excess conversion value, if any, in shares of common stock, and cash in lieu of fractional shares. We may not redeem the Notes prior to March 6, 2020. Thereafter, we may redeem the Notes if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days. If we undergo a fundamental change, as defined in the indenture for the Notes, subject to certain conditions, holders of the Notes may require us to repurchase all or part of the Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the Notes becoming immediately convertible. Pursuant to ASC 470-20, we allocated the $287.5 million gross proceeds of the Notes between liability and equity components. The initial $242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The initial $45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $7.7 million were allocated between debt ($6.5 million) and equity ($1.2 million) components with the portion allocated to the debt presented as an offset against long term debt in the consolidated balance sheet and is amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for the three months and six months ended December 31, 2018 was $3.2 million and $6.3 million, respectively, which consisted of $0.9 million and $1.8 million of contractual interest expense, $2.0 million and $3.9 million of debt discount amortization and $0.3 million and $0.6 million of amortization of debt issuance costs. The total interest expense recognized for the three months and six months ended December 31, 2017 was $3.1 million and $6.1 million, respectively, which consists of $0.9 million and $1.8 million of contractual interest expense, $1.9 million and $3.7 million of debt discount amortization and $0.3 million and $0.6 million of amortization of debt issuance costs. As of December 31, 2018, the unamortized debt discount was $31.3 million which is being amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.50%. The unamortized debt issuance cost of $4.3 million as of December 31, 2018 is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes. Based on our December 31, 2018 stock price of $73.30 per share, the “if-converted” value of the Notes did not exceed the principal amount. Other Borrowings Several of our foreign subsidiaries maintain bank lines of credit, denominated in local currencies and U.S. dollars, primarily for the issuance of letters of credit. As of December 31, 2018, $61.6 million was outstanding under these credit facilities. As of December 31, 2018, the total amount available under these credit facilities was $6.7 million. In September 2012, we entered into a seven year term loan agreement for $11.1 million to fund the acquisition of land and a building in the state of Washington. The principal on the loan, together with interest at LIBOR plus 1.25%, is payable on a monthly basis over seven years. The outstanding balance on this loan as of December 31, 2018 was $1.3 million compared to a balance of $2.1 million as of June 30, 2018. Concurrent with entering into the floating rate loan, we entered into an interest rate swap agreement that effectively locks the interest rate of the loan at 2.2% per annum for the term of the loan. Long-term debt consisted of the following (in thousands): June 30, December 31, 2018 2018 1.25% convertible notes due 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (35,133) (31,251) Unamortized debt issuance costs (4,897) (4,310) 1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs 247,470 251,939 Term loans 2,114 1,321 Other long-term debt 1,658 2,031 251,242 255,291 Less current portion of long-term debt (2,262) (2,107) Long-term portion of debt $ 248,980 $ 253,184

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Dec. 31, 2018
Stockholders' Equity
Stockholders' Equity	7. Stockholders’ Equity Stock-based Compensation As of December 31, 2018, we maintained the Amended and Restated 2012 Incentive Award Plan (the “2012 Plan”) and the Amended and Restated 2006 Equity Participation Plan (“2006 Plan”) as stock-based employee compensation plans. No further grants may be made under the 2006 Plan. In addition, pursuant to the acquisition of American Science and Engineering, Inc. (“AS&E”), we assumed two stock-based employee compensation plans: the AS&E 2005 Equity and Incentive Plan (“2005 AS&E Plan”) and the AS&E 2014 Equity and Incentive Plan (“2014 AS&E Plan”). No new equity grants will be made under the 2005 AS&E Plan or the 2014 AS&E Plan. The 2012 Plan, the 2006 Plan, the 2005 AS&E Plan and the 2014 AS&E Plan are collectively referred to as the “OSI Plans”. We recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Cost of goods sold $ 247 $ 150 $ 487 $ 356 Selling, general and administrative 5,849 7,833 10,960 12,945 Research and development 157 180 293 325 Stock-based compensation expense before taxes $ 6,253 $ 8,163 $ 11,740 $ 13,626 Less: related income tax benefit (1,935) (2,038) (3,627) (3,380) Stock-based compensation expense, net of estimated taxes $ 4,318 $ 6,125 $ 8,113 $ 10,246 As of December 31, 2018, total unrecognized compensation cost related to stock-based compensation grants under the OSI Plans were estimated at $0.7 million for stock options and $24.7 million for RSUs. We expect to recognize these costs over a weighted average period of 2.2 years with respect to the stock options and 1.8 years for grants of RSUs. The following summarizes stock option activity during the six months ended December 31, 2018: Weighted Average Weighted-Average Aggregate Number of Exercise Remaining Contractual Intrinsic Value Options Price Term (in thousands) Outstanding at June 30, 2018 677,525 $ 32.80 Granted 18,135 $ 72.39 Exercised (49,395) $ 18.09 Expired or forfeited (6,914) $ 69.47 Outstanding at December 31, 2018 639,351 $ 34.67 2.7 years $ 25,026 Exercisable at December 31, 2018 600,813 $ 31.92 2.3 years $ 25,001 The following summarizes RSU award activity during the six months ended December 31, 2018: Weighted- Average Shares Fair Value Nonvested at June 30, 2018 526,377 $ 71.56 Granted 358,213 73.64 Vested (356,705) 71.02 Forfeited (12,414) 73.54 Nonvested at December 31, 2018 515,471 $ 73.33 As of December 31, 2018, there were approximately 1.6 million shares available for grant under the 2012 Plan. Under the terms of the 2012 Plan, RSUs granted from the pool of shares available for grant reduce the pool by 1.87 shares for each award granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited. We granted 117,346 and 97,514 performance-based RSUs during the six months ended December 31, 2017 and 2018, respectively. These performance based RSU awards are contingent on the achievement of certain performance metrics. The payout related to these awards can range from zero to 280% of the original number of shares or units awarded. Share Repurchase Program In March 2018, our Board of Directors authorized a share repurchase program of up to 1,000,000 shares. This program does not expire unless our Board of Directors acts to terminate the program. The timing and actual number of shares purchased depend on a variety of factors, including stock price, general business and market conditions and other investment opportunities and may be purchased through the open market. Upon repurchase, the shares are restored to the status of authorized but unissued, and we record them as a reduction in the number of shares of common stock issued and outstanding in our consolidated financial statements. During the six months ended December 31, 2018, we repurchased 288,316 shares of our common stock, and as of December 31, 2018, there were 562,707 shares available to repurchase under the program.

Retirement Benefit Plans

Retirement Benefit Plans	6 Months Ended
	Dec. 31, 2018
Retirement Benefit Plans
Retirement Benefit Plans	8. Retirement Benefit Plans We sponsor various retirement benefit plans including qualified and nonqualified defined benefit pension plans for our employees. The components of net periodic pension expense are as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Service cost $ 216 $ 98 $ 432 $ 196 Interest cost 8 8 16 16 Amortization of prior service cost 70 14 140 28 Net periodic pension expense $ 294 $ 120 $ 588 $ 240 For the three months ended December 31, 2017, we made no contributions to these defined benefit plans. For the three months ended December 31, 2018, we made contributions of $1.0 million to these defined benefit plans. For each of the six months ended December 31, 2017 and 2018, we made contributions of $1.0 million to these defined benefit plans. We also maintain various defined contribution plans. For the three months ended December 31, 2017 and 2018, we made contributions of $1.4 million and $1.3 million , respectively, to these defined contribution plans. For the six months ended December 31, 2017 and 2018, we made contributions of $3.0 million and $3.1 million, respectively, to these defined contribution plans.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Dec. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	9. Commitments and Contingencies Contingent Acquisition Obligations Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones through the acquired operations. For agreements that contain contingent consideration caps, the maximum amount of such potential future payments is $35.0 million as of December 31, 2018. In addition, we are required to make royalty payments through 2022 based on the license of, or sales of products containing, the technology of CXR Limited, a company acquired in 2004. We account for such contingent payments for acquisitions which occurred through the end of fiscal year 2009 as additions to the purchase price of the acquired business; and we made $1.3 million of such payments during the three and six months ended December 31, 2018. For acquisitions completed after fiscal 2009, pursuant to Financial Accounting Standard 141R, which was codified into ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements. The estimated fair value measurements of contingent earn-out obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income, and the estimated probability of achieving the earn-outs. These projections and probabilities are used to estimate future contingent earnout payments, which are discounted back to present value to compute contingent earnout liabilities. The following table provides a roll-forward from June 30, 2018 to December 31, 2018 of the contingent consideration liability, which is included in Other accrued expenses and current liabilities, and Other long-term liabilities in our consolidated balance sheets: Beginning fair value, June 30, 2018 $ 15,713 Additions 5,173 Change in fair value (889) Payments — Ending fair value, December 31, 2018 $ 19,997 Environmental Contingencies We are subject to various environmental laws. Our practice is to conduct appropriate environmental investigations at our manufacturing facilities in North America, Asia Pacific, and Europe, and, to the extent practicable, on all new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations. In certain cases, we have conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants. We continue to investigate contamination of the soil and groundwater beneath our Hawthorne, California facility that resulted from unspecified on and off site releases occurring prior to our occupancy. We believe the releases are of a historical nature and not uncommon to the region in general. We continue to take voluntary actions, in cooperation with the local governing agency, to investigate the site in order to develop appropriate remedial actions. We have not accrued for loss contingencies relating to the Hawthorne facility or any other environmental matters because we believe that, although unfavorable outcomes are possible, they are not considered by our management to be probable and reasonably estimable. If one or more of these environmental matters are resolved in a manner adverse to us, the impact on our business, financial condition, results of operations and cash flow could be material. Indemnifications and Certain Employment-Related Contingencies In the normal course of business, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations and warranties or covenants, or intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our directors and certain of our officers. It is not possible to determine the maximum potential indemnification amount under these indemnification agreements due to a limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. We have not recorded any liability for costs related to contingent indemnification obligations as of December 31, 2018. On December 31, 2017, we and Deepak Chopra, our Chief Executive Officer, entered into an amendment to Mr. Chopra’s employment agreement that, among other things, provides for a $13.5 million bonus payment to Mr. Chopra on or within 45 days of January 1, 2024 contingent upon Mr. Chopra’s continued employment with us through that date, subject to accelerated payout terms in the event of Mr. Chopra’s death or disability. The bonus is recorded in the financial statements over the remaining term of the employment agreement and is included in Other long-term liabilities. Product Warranties We offer our customers warranties on many of the products that we sell. These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. We periodically adjust this provision based on historical experience and anticipated expenses. We charge actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. The warranty provision is included in Other accrued expenses and current liabilities in the consolidated balance sheets. The following table presents changes in warranty provisions (in thousands): Six Months Ended December 31, 2017 2018 Balance at beginning of period $ 15,178 $ 21,819 Additions 5,769 3,975 Acquisitions and adjustments 1,415 (581) Reductions for warranty repair costs (3,619) (3,261) Balance at end of period $ 18,743 $ 21,952 Legal Proceedings In December 2017, a short seller released a report regarding our compliance with the FCPA. Following that report, we and certain of our executive officers have been named as defendants in several lawsuits in the United States District Court for the Central District of California (the “District Court”) that were filed in December 2017 and February 2018. Each of the complaints closely tracks the allegations set forth in the short seller’s report. All of the actions, which were consolidated by the District Court in March 2018 in an action captioned Arkansas Teacher Retirement System et al. v. OSI Systems, Inc. et al. , No. 17 cv 08841, allege violations of Sections 10(b) and 20(a) of Exchange Act, relating to certain of our public statements and filings with the SEC, and seek damages and other relief based upon the allegations in the complaints. In April and May 2018, two shareholder derivative complaints were filed purportedly on behalf of the Company against the current members of our Board of Directors (as individual defendants), a former member of our Board of Directors, and our Chief Financial Officer. The first, captioned Riley v. Chopra et al. , No. 18 cv 03371, was filed in the District Court, and the second, captioned Genesee County Employees’ Retirement System v. Chopra, et al. , No. BC705958, was filed in the Superior Court of the State of California, County of Los Angeles. The complaints allege, among other things, breach of fiduciary duties relating to the allegations contained in the above mentioned short seller report. The complaints seek damages, restitution, injunctive relief, attorneys’ and experts’ fees, costs, expenses, and other unspecified relief. We believe that these actions are without merit and intend to defend them vigorously, and we expect to incur costs associated with defending against these actions. At this early stage of the litigations, the ultimate outcomes are uncertain and we cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on our financial statements. Following the short seller report, both the SEC and the DOJ commenced investigations into our compliance with the FCPA. The SEC has subpoenaed documents from the Company, and we are responding to that subpoena and providing the same documents to the DOJ. At this time, we are unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these FCPA related investigations, or any penalties or remedial measures these agencies may seek. In an unrelated matter, the SEC and DOJ are also conducting an investigation of trading in our securities and have each subpoenaed information regarding trading by executives, directors, and employees, as well as our operations and disclosures in and around the time of certain trades. With respect to these trading related matters, we have taken action with respect to a senior level employee. At this time, we are unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these trading related investigations, or any penalties or remedial measures these agencies may seek. We place a high priority on compliance with our anti corruption and securities trading policies and are cooperating with each of the government investigations. We are involved in various other claims and legal proceedings arising in the ordinary course of business. In our opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on our business, financial condition, results of operations or cash flows. We have not accrued for loss contingencies relating to any such matters because we believe that, although unfavorable outcomes in the proceedings are possible, they are not considered by management to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to our company, the impact on our business, financial condition, results of operations and cash flows could be material.

Income Taxes

Income Taxes	6 Months Ended
	Dec. 31, 2018
Income Taxes
Income Taxes	10. Income Taxes The Tax Cuts and Jobs Act (the “Tax Act”) enacted in 2017 resulted in the U.S. Federal income tax rate being reduced from 35% to 21% effective January 1, 2018. During the measurement period, which is one year from the date of enactment, or the completion of all estimates made in connection with the Tax Act, companies are permitted to make additional income tax adjustments and revisions of estimates related to the Tax Act. During the quarter ended December 31, 2018, we concluded our analysis of the impact of the Tax Act and made no adjustments to the provisional amounts previously recorded. The Tax Act subjects a U.S. corporation to tax on its GILTI (Global Intangible Low Income Tax), FDII (Foreign-Derived Tangible Income Taxes), and BEAT (Base Erosion Anti-abuse Tax). In the second quarter of fiscal 2019, we included the impact of these taxes in our forecast effective tax rate. Interpretive guidance on the accounting for GILTI states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. In the fiscal quarter ended December 31, 2018, we made the accounting policy election to recognize GILTI as a period expense. The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate, and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, our tax expense can be impacted by changes in tax rates or laws, such as the Tax Act, the finalization of tax audits and reviews, and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. Our effective tax rate for the three and six months ended December 31, 2018 was 26.8% and 23.0%, respectively. Excluding certain discrete tax items, the adjusted non-GAAP effective tax rate for the three and six months ended December 31, 2018 was 28.3% and 28.2%, respectively. During the three and six month periods ended December 31, 2018, we recognized tax benefits for equity-based compensation of $0.4 million and $1.9 million, respectively, under ASU 2016-09 . As a result of the enactment of the Tax Act in December 2017, we recognized a charge of $56 million , or $2.96 per share, in the second quarter of fiscal 2018. Our reported tax rate, which includes the charge, was 465.0% for the second quarter of fiscal 2018, and 231.4% for the first half of fiscal 2018. The adjusted non-GAAP effective tax rate, excluding the Tax Act related charge and certain discrete tax items, was 28.0% and 28.2% for the three and six months ended December 31, 2017.

Segment Information

Segment Information	6 Months Ended
	Dec. 31, 2018
Segment Information
Segment Information	11. Segment Information We have determined that we operate in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring and diagnostic cardiology systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division). We also have a corporate segment (Corporate) that includes executive compensation and certain other general and administrative expenses; expenses related to stock issuances and legal, audit and other professional service fees not allocated to industry segments. Both the Security and Healthcare divisions comprise primarily end-product businesses whereas the Optoelectronics and Manufacturing division primarily supplies components and subsystems to OEM customers, as well as 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, 2018. The following tables set forth the results of operations and identifiable assets by industry segment (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Revenues (1) — by Segment: Security division $ 172,269 $ 188,684 $ 334,514 $ 358,644 Healthcare division 52,506 51,559 98,035 89,832 Optoelectronics and Manufacturing division, including intersegment revenues 63,886 72,019 122,812 142,973 Intersegment revenues elimination (11,133) (9,057) (20,700) (21,995) Total $ 277,528 $ 303,205 $ 534,661 $ 569,454 Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Income (loss) from operations — by Segment: Security division $ 22,471 $ 26,063 $ 45,164 $ 49,113 Healthcare division 603 2,209 1,450 334 Optoelectronics and Manufacturing division 4,502 8,067 9,677 14,892 Corporate (9,118) (4,560) (17,871) (15,911) Eliminations (2) (311) (72) (879) (464) Total $ 18,147 $ 31,707 $ 37,541 $ 47,964 June 30, December 31, 2018 2018 Assets — by Segment: Security division $ 804,527 $ 804,390 Healthcare division 167,611 161,521 Optoelectronics and Manufacturing division 220,373 246,076 Corporate 66,453 89,220 Eliminations (2) (3,273) (3,530) Total $ 1,255,691 1,297,677 (1) For each of the three and six months ended December 31, 2017, one customer, Servicio de Administactión Tributaria (“SAT”) in Mexico, accounted for 12% of total net revenues. For the three and six months ended December 31, 2018, no customer accounted for greater than 10% of total net revenues. (2) 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.

Basis of Presentation (Policies

Basis of Presentation (Policies)	6 Months Ended
	Dec. 31, 2018
Basis of Presentation
Description of Business	Description of Business OSI Systems, Inc., together with our subsidiaries, is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. We sell our products in diversified markets, including homeland security, healthcare, defense and aerospace. We have three reporting segments: (i) Security, providing security inspection systems and related services, and turnkey security screening solutions; (ii) Healthcare, providing patient monitoring, diagnostic cardiology and related services and (iii) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for our Security and Healthcare divisions as well as to external original equipment manufacturer (“OEM”) customers and end users for applications in the defense, aerospace, medical and industrial markets, among others. Through our Security segment, we provide security screening products and related services globally. These products fall into the following categories: baggage and parcel inspection; cargo and vehicle inspection; hold (checked) baggage screening; people screening; radiation detection; and explosive and narcotics trace detection. In addition to these products, we also provide site design, installation, training and technical support services to our customers. We also provide turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for our customers. Through our Healthcare segment, we design, manufacture, market and service patient monitoring and diagnostic cardiology 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, among others. Through our Optoelectronics and Manufacturing segment, we design, manufacture and market optoelectronic devices and flex circuits and provide electronics manufacturing services worldwide for use in a broad range of applications, including aerospace and defense electronics, X-ray security and inspection systems and medical imaging, chemistry analysis and diagnostics instruments, telecommunications, scanners and industrial automations, automotive diagnostic systems, internet of things (IoT) and consumer wearable products. This division provides products and services to OEM customers and end users as well as to our Security and Healthcare divisions.
Basis of Presentation	Basis of Presentation The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018. The results of operations for the six months ended December 31, 2018 are not necessarily indicative of the operating results to be expected for the full 2019 fiscal year or any future periods.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill.Changes in estimates are reflected in the periods during which they become known. Actual amounts may differ from these estimates and could differ materially.
Per Share Computations	Per Share Computations We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method. In periods where a net loss is reported, basic and diluted net loss per share are the same since the effect of potential common shares is antidilutive and therefore excluded. The underlying equity component of the 1.25% convertible senior notes due 2022 (the “Notes”) discussed in Note 6 to the condensed consolidated financial statements will have no impact on diluted earnings per share until the average price of our common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion. The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Net income (loss) available to common stockholders $ (46,951) $ 19,107 $ (36,794) $ 28,509 Weighted average shares outstanding—basic 18,971 18,085 18,874 18,088 Dilutive effect of equity awards — 539 — 591 Weighted average shares outstanding—diluted 18,971 18,624 18,874 18,679 Basic earnings (loss) per share $ (2.47) $ 1.06 $ (1.95) $ 1.58 Diluted earnings (loss) per share $ (2.47) $ 1.03 $ (1.95) $ 1.53 Weighted average shares excluded from diluted earnings (loss) per share due to their anti-dilutive effect (in thousands) 684 126 753 81
Cash Equivalents	Cash Equivalents We consider all highly liquid investments with maturities of three months or less as of the acquisition date to be cash equivalents. Our cash and cash equivalents totaled $96.0 million at December 31, 2018. The majority of this amount was held by us and our subsidiaries in the United States, United Kingdom, Malaysia, India, and Mexico, and to a lesser extent in Canada, Singapore and Germany among others. We have cash holdings that exceed insured limits for financial institutions; however, we mitigate this risk by utilizing high credit quality financial institutions throughout the world.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, 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 our long term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates available to us. 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 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 for which valuation techniques are unobservable and significant to the fair value measurement. As of June 30, 2018 and December 31, 2018, there were no assets where “Level 3” valuation techniques were used. Our contingent payment obligations related to acquisitions, which are further discussed in Note 9 to the condensed consolidated financial statements, are in the “Level 3” category for valuation purposes. The fair values of the our financial assets and liabilities as of June 30, 2018 and December 31, 2018 are categorized as follows (in thousands): June 30, 2018 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Insurance company contracts $ — $ 31,897 $ — $ 31,897 $ — $ 30,622 $ — $ 30,622 Interest rate contract — 18 — 18 — 9 — 9 Total assets $ — $ 31,915 $ — $ 31,915 $ — $ 30,631 $ — $ 30,631 Liabilities—contingent consideration $ — $ — $ 15,713 $ 15,713 $ — $ — $ 19,997 $ 19,997
Derivative Instruments and Hedging Activity	Derivative Instruments and Hedging Activity Our 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 described in Note 6. 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 (loss) in the consolidated financial statements and are reclassified as net income when the hedge transaction settles.
Goodwill Impairment	Goodwill Impairment Goodwill represents the excess purchase price over the estimated fair value of the assets acquired and liabilities assumed in a business combination. Goodwill is allocated to our segments based on the nature of the product line of the acquired business. The carrying value of goodwill is not amortized, but is annually tested for impairment during our second fiscal quarter and more frequently if there is an indicator of impairment. We assess qualitative factors of each of our three reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The assessments conducted as of December 31, 2018 indicated that it is not more likely than not that the fair values of two of our three reporting units are less than their carrying amounts, including goodwill. Thus, we have determined that there is no goodwill impairment for these two reporting units. For the third reporting unit, the results of our assessment of qualitative factors were not conclusive so we proceeded with a quantitative assessment to determine if the carrying amount of this reporting unit exceeds its fair value. The fair value of the reporting unit was calculated using the income approach. Under the income approach, the fair value of the reporting unit was calculated by estimating the present value of associated future cash flows. The analysis indicated that the estimated fair value of the third reporting unit substantially exceeded the carry amount, plus goodwill, of the reporting unit. We applied a hypothetical 10 percent decrease to the fair value of the reporting unit, which at December 31, 2018, would not have indicated impairment. Therefore, we have determined that there is no goodwill impairment for this reporting unit.
Revenue Recognition	Revenue Recognition ASU 2014-09, Revenue from Contracts with Customers (Topic 606). In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09 and related amendments (“ASC 606”), which superseded all prior revenue recognition methods and industry-specific guidance. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 1, 2018, we adopted ASC 606 using the modified retrospective method, whereby the adoption does not impact any prior periods. We have identified contracts not yet completed as of July 1, 2018 and applied the new guidance on a prospective basis. Product Sales. We recognize revenue from sales of products upon shipment or delivery when control of the product transfers to the customer, depending on the terms of each sale, and when collection is probable. In the circumstance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until we have achieved the acceptance criteria unless the customer acceptance criteria are perfunctory or inconsequential. We generally offer customers payment terms of less than one year. In cases when payment terms extend beyond one year, we consider whether the contract has a significant financing component. Service Revenue. Revenue from services includes after-market services, installation and implementation of products and turnkey security screening services. Generally, revenue from services is recognized over time as the services are performed. Revenues from out of warranty service maintenance contracts are recognized ratably over the respective terms of such contracts. Deferred revenue for such services arises from payments received from customers for services not yet performed. Contract Revenue. Sales agreements with customers can be project specific, cover a period of time, and can be renewable periodically. The contracts may contain terms and conditions with respect to payment, delivery, installation, services, warranty and other rights. In certain instances, we consider an accepted customer order, governed by a master sales agreement, to be the contract with the customer when legal rights and obligations exist. Contracts with customers may include the sale of products and services, as discussed in the paragraphs above. In certain instances, contracts can contain multiple performance obligations as discussed in the paragraph below. According to the terms of a sale contract, we may receive consideration from a customer prior to transferring goods to the customer, and we record these prepayments as a contract liability. We also record deferred revenue, typically related to service contacts, when consideration is received before the services have been performed. We recognize customer deposits and deferred revenue as net sales after all revenue recognition criteria is met. When determining revenue recognition for contracts, we use judgment based on our understanding of the obligations within each contract. We determine 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 recognition. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product under warranty. Multiple Performance Obligations. Certain agreements with customers include the sale of capital equipment involving multiple elements that may include civil works to prepare a site for the installation of equipment, manufacture and delivery of equipment, installation and integration of equipment, training of customer personnel to operate the equipment and after-market service of the equipment. We generally separate multiple elements in a contract into separate performance obligations if those elements are distinct, both individually and in the context of the contract. If multiple promises comprise a series of distinct services which are substantially the same and have the same pattern of transfer, they are combined and accounted for as a single performance obligation. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire sale value is attributed to that obligation. When a contract contains multiple performance obligations the transaction value is first allocated using the observable price, which is generally a list price net of applicable discount or the price used to sell in similar circumstances. In circumstances when a selling price is not directly observable, we will estimate the standalone selling price using information available to us including our market assessment and expected cost plus margin. The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods. The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of factory acceptance test, completion of site acceptance test, installation and connectivity of equipment, certification of training of personnel and, in the case of after-market service deliverables, the passage of time (typically evenly over the post-warranty period of the service deliverable). We often provide a guarantee to support our performance under multiple-deliverable arrangements. In the event that customers are permitted to terminate such arrangements, the underlying contract typicall 2,y requires payment for deliverables and reimbursement of costs incurred through the date of termination. Effect of Adopting ASC 606. Adopting ASC 606 did not require any cumulative effect adjustment to retained earnings as of July 1, 2018 because the impact on retained earnings was immaterial. The impact to our condensed consolidated statements of operations is shown below for the three and six month periods ended December 31, 2018 and for the balance sheet as of December 31, 2018. Statement of Operations (in thousands) Three Months Ended December 31, 2018 Six Months Ended December 31, 2018 Results Results without without Results Adoption of Effect of Results Adoption of Effect of as Reported ASC 606 Change as Reported ASC 606 Change Revenue $ 303,205 $ 288,376 $ 14,829 $ 569,454 $ 551,043 $ 18,411 Cost of goods sold 192,861 185,133 7,728 363,197 354,290 8,907 Operating expenses 78,637 74,690 3,947 158,293 152,118 6,175 Income from operations 31,707 28,553 3,154 47,964 44,635 3,329 Interest and other expense, net (5,620) (5,620) — (10,952) (10,952) — Income tax provision (6,980) (6,445) (535) (8,503) (7,920) (583) Net income $ 19,107 $ 16,488 $ 2,619 $ 28,509 $ 25,763 $ 2,746 Balance Sheet (in thousands) December 31, 2018 Balances without Balances Adoption of Effect of as Reported ASC 606 Change Assets Accounts receivable, net $ 226,086 $ 215,825 $ 10,261 Inventories 315,200 324,134 (8,934) Other assets 756,391 756,975 (584) Liabilities Current liabilities 469,914 471,917 (2,003) Other liabilities 331,567 331,567 — Stockholders’ Equity Retained earnings 363,254 360,508 2,746 We disaggregate revenue by reporting segment (Security, Optoelectronics and Manufacturing, and Healthcare) to depict the nature of revenue in a manner consistent with our business operations and to be consistent with other communications and public filings. Refer to Note 11 to our condensed consolidated financial statements for additional details of revenues by reporting segment. During the three and six months ended December 31, 2018, we recognized additional revenueas a result of adopting ASC 606. This is primarily due to sales within our Security division where we met certain contractual performance obligations. As a result, this increased net income and accounts receivable and reduced inventories. Contract Assets and Liabilities. We enter into contracts to sell products and provide services, and we recognize contract assets and liabilities that arise from these transactions. We recognize revenue and corresponding accounts receivable according to ASC 606 and, at times, recognize revenue in advance of the time when contracts give us the right to invoice a customer. We may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. We record customer deposits as a contract liability. Additionally, we may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, we record a deferred revenue liability. We recognize these contract liabilities as sales after all revenue recognition criteria are met. The table below shows the balance of contract assets and liabilities as of June 30, 2018 and December 31, 2018, including the change between the periods. Contract Assets (in thousands) June 30, December 31, 2018 2018 Change % Change Unbilled revenue $ 13,087 $ 19,997 $ 6,910 53 % Contract Liabilities (in thousands) June 30, December 31, 2018 2018 Change % Change Advances from customers $ 55,761 $ 69,410 $ 13,649 24 % Deferred revenue—current 28,899 32,516 3,617 13 % Deferred revenue—long-term 9,562 8,883 (679) (7) % Remaining Performance Obligations . Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations under an original contract with a term greater than one year which are fully or partially unsatisfied at the end of the period. As of December 31, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $162.3 million. We expect to recognize revenue on approximately 50.5% of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. Practical Expedients. In cases where we are responsible for shipping after the customer has obtained control of the goods, we have elected to treat these activities as fulfillment activities rather than as a separate performance obligation. Additionally, we have elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. We only give consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. We also utilize the "as invoiced" practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Adopted Accounting Pronouncements Revenue Recognition In May 2014, the FASB issued ASU 2014-09 and related amendments Revenue from Contracts with Customers (Topic 606) , which superseded all prior revenue recognition methods and industry-specific guidance. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 1, 2018, we adopted ASC 606 using the modified retrospective method, whereby the adoption does not impact any prior periods. Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The update was issued with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230 and other topics. We adopted this ASU effective July 1, 2018 using the retrospective approach and the initial adoption had no effect on our financial position, results of operations or liquidity. Income Taxes In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory . The new guidance eliminates the exception for intra-entity transfers other than inventory and requires the recognition of current and deferred income taxes resulting from such a transfer when the transfer occurs. We adopted this ASU effective July 1, 2018 using the modified retrospective transition method resulting in a reclassification in the balance sheet of $3 million to decrease prepaid expenses and other assets and increase deferred tax assets. Recently Issued Accounting Pronouncements Not Yet Adopted Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases with terms of more than 12 months. The ASU also will require qualitative and quantitative disclosures designed to give financial statement readers information on the amount, timing, and uncertainty of cash flows arising from leases. This ASU is effective for us in the first quarter of fiscal 2020 with early adoption permitted. We have not yet adopted this ASU and are currently evaluating the impact it may have on our financial condition and results of operations. Retirement Benefit Plans In August 2018, the FASB issued authoritative guidance under ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General: Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans. We are required to adopt this new guidance in the first quarter of fiscal 2021. We are currently evaluating the potential impact of the adoption of this guidance on our consolidated financial statements. Intangibles In August 2018, the FASB issued authoritative guidance under ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. We are required to adopt this new guidance in the first quarter of fiscal 2021. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements.

Basis of Presentation (Tables)

Basis of Presentation (Tables)	6 Months Ended
	Dec. 31, 2018
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 (loss) per share (in thousands, except per share amounts): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Net income (loss) available to common stockholders $ (46,951) $ 19,107 $ (36,794) $ 28,509 Weighted average shares outstanding—basic 18,971 18,085 18,874 18,088 Dilutive effect of equity awards — 539 — 591 Weighted average shares outstanding—diluted 18,971 18,624 18,874 18,679 Basic earnings (loss) per share $ (2.47) $ 1.06 $ (1.95) $ 1.58 Diluted earnings (loss) per share $ (2.47) $ 1.03 $ (1.95) $ 1.53 Weighted average shares excluded from diluted earnings (loss) per share due to their anti-dilutive effect (in thousands) 684 126 753 81
Summary of fair values of financial assets and liabilities	The fair values of the our financial assets and liabilities as of June 30, 2018 and December 31, 2018 are categorized as follows (in thousands): June 30, 2018 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Insurance company contracts $ — $ 31,897 $ — $ 31,897 $ — $ 30,622 $ — $ 30,622 Interest rate contract — 18 — 18 — 9 — 9 Total assets $ — $ 31,915 $ — $ 31,915 $ — $ 30,631 $ — $ 30,631 Liabilities—contingent consideration $ — $ — $ 15,713 $ 15,713 $ — $ — $ 19,997 $ 19,997
Schedule of impact to condensed consolidated statements of operations and balance sheet	Statement of Operations (in thousands) Three Months Ended December 31, 2018 Six Months Ended December 31, 2018 Results Results without without Results Adoption of Effect of Results Adoption of Effect of as Reported ASC 606 Change as Reported ASC 606 Change Revenue $ 303,205 $ 288,376 $ 14,829 $ 569,454 $ 551,043 $ 18,411 Cost of goods sold 192,861 185,133 7,728 363,197 354,290 8,907 Operating expenses 78,637 74,690 3,947 158,293 152,118 6,175 Income from operations 31,707 28,553 3,154 47,964 44,635 3,329 Interest and other expense, net (5,620) (5,620) — (10,952) (10,952) — Income tax provision (6,980) (6,445) (535) (8,503) (7,920) (583) Net income $ 19,107 $ 16,488 $ 2,619 $ 28,509 $ 25,763 $ 2,746 Balance Sheet (in thousands) December 31, 2018 Balances without Balances Adoption of Effect of as Reported ASC 606 Change Assets Accounts receivable, net $ 226,086 $ 215,825 $ 10,261 Inventories 315,200 324,134 (8,934) Other assets 756,391 756,975 (584) Liabilities Current liabilities 469,914 471,917 (2,003) Other liabilities 331,567 331,567 — Stockholders’ Equity Retained earnings 363,254 360,508 2,746
Schedule of contract assets and contract liabilities	Contract Assets (in thousands) June 30, December 31, 2018 2018 Change % Change Unbilled revenue $ 13,087 $ 19,997 $ 6,910 53 % Contract Liabilities (in thousands) June 30, December 31, 2018 2018 Change % Change Advances from customers $ 55,761 $ 69,410 $ 13,649 24 % Deferred revenue—current 28,899 32,516 3,617 13 % Deferred revenue—long-term 9,562 8,883 (679) (7) %

Business Combinations (Tables)

Business Combinations (Tables) - ETD	6 Months Ended
	Dec. 31, 2018
Business Combinations
Schedule of assets acquired and liabilities assumed	Cash and cash equivalents $ 4 Accounts receivable 15,517 Inventories 11,678 Property and equipment 1,599 Intangible assets 30,370 Deferred tax asset 2,738 Other long-term assets 297 Accounts payable (4,784) Accrued payroll and related expenses (2,116) Deferred revenues—current (924) Accrued warranties (2,068) Advances from customers (670) Other accrued expenses and current liabilities (1,074) Deferred revenues —long term (232) Net assets acquired 50,335 Goodwill 30,132 Total consideration $ 80,467
Summary of the fair value of acquired identifiable intangible assets as of the acquisition date	The following table summarizes the fair value of acquired identifiable intangible assets as of the acquisition date (amounts in thousands): Weighted Average Fair Lives Value Developed technology 10 years $ 14,210 Customer relationships/backlog 7 years 16,070 In-process research and development (“IPR&D”) 90 Total intangible assets $ 30,370

Balance Sheet Details (Tables)

Balance Sheet Details (Tables)	6 Months Ended
	Dec. 31, 2018
Balance Sheet Details
Schedule of selected balance sheet accounts	The following tables provide details of selected balance sheet accounts (in thousands): June 30, December 31, 2018 2018 Accounts receivable $ 225,336 $ 240,749 Less allowance for doubtful accounts (14,592) (14,663) Total $ 210,744 $ 226,086 June 30, December 31, 2018 2018 Raw materials $ 156,612 $ 153,195 Work-in-process 89,468 86,582 Finished goods 67,472 75,423 Total $ 313,552 $ 315,200 June 30, December 31, 2018 2018 Land $ 16,569 $ 16,555 Buildings, civil works and improvements 56,585 55,083 Leasehold improvements 9,681 10,144 Equipment and tooling 117,294 125,099 Furniture and fixtures 3,331 3,175 Computer equipment 18,759 17,863 Computer software 19,509 19,555 Computer software implementation in process 4,318 6,640 Construction in process 790 2,428 Total 246,836 256,542 Less accumulated depreciation and amortization (131,312) (135,272) Property and equipment, net $ 115,524 $ 121,270

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	6 Months Ended
	Dec. 31, 2018
Goodwill and Intangible Assets
Schedule of changes in carrying amount of goodwill	The changes in the carrying value of goodwill for the six month period ended December 31, 2018 are as follows (in thousands): Optoelectronics and Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2018 $ 191,810 $ 40,157 $ 60,246 $ 292,213 Goodwill acquired or adjusted during the period 6,541 — 7,415 13,956 Foreign currency translation adjustment (65) (102) (838) (1,005) Balance as of December 31, 2018 $ 198,286 $ 40,055 $ 66,823 $ 305,164
Schedule of intangible assets	Intangible assets consisted of the following (in thousands): June 30, 2018 December 31, 2018 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 9 years $ 28,174 $ (9,423) $ 18,751 $ 29,215 $ (11,597) $ 17,618 Patents 19 years 8,401 (1,618) 6,783 8,243 (1,680) 6,563 Developed technology 10 years 52,780 (9,706) 43,074 54,582 (12,480) 42,102 Customer relationships/backlog 7 years 63,398 (17,891) 45,507 65,673 (20,494) 45,179 Total amortizable assets 152,753 (38,638) 114,115 157,713 (46,251) 111,462 Non-amortizable assets: Trademarks and trade names 25,596 — 25,596 26,450 — 26,450 IPR&D 2,290 — 2,290 2,290 — 2,290 Total intangible assets $ 180,639 $ (38,638) $ 142,001 $ 186,453 $ (46,251) $ 140,202
Schedule of estimated future amortization expense	At December 31, 2018, the estimated future amortization expense was as follows (in thousands): 2019 (remaining 6 months) $ 9,960 2020 19,634 2021 19,281 2022 14,670 2023 13,448 Thereafter, including assets that have not yet begun to be amortized 34,469 Total $ 111,462

Impairment, restructuring and_2

Impairment, restructuring and other charges (Tables)	6 Months Ended
	Dec. 31, 2018
Impairment, restructuring and other charges
Summary of impairment, restructuring and other charges	The following table summarizes impairment, restructuring and other charges for the periods set forth below (in thousands): Three Months Ended December 31, 2017 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 1,490 $ 579 $ 1,075 $ — $ 3,144 Acquisition-related costs — — — 361 361 Employee termination costs 90 — 146 — 236 Facility closures/consolidation 11 243 — — 254 Legal and accrued settlement costs, net — 4,200 — 102 4,302 Total expensed $ 1,591 $ 5,022 $ 1,221 $ 463 $ 8,297 Three Months Ended December 31, 2018 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ — $ — $ 20 $ — $ 20 Employee termination costs (46) 1,227 26 — 1,207 Facility closures/consolidation — 2,108 — — 2,108 Legal and accrued settlement costs, net — — — (4,600) (4,600) Total expensed $ (46) $ 3,335 $ 46 $ (4,600) $ (1,265) Six Months Ended December 31, 2017 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 1,490 $ 579 $ 1,075 $ — $ 3,144 Acquisition-related costs — — — 1,181 1,181 Employee termination costs 330 — 146 — 476 Facility closures/consolidation 81 243 — — 324 Legal and accrued settlement costs, net — 4,200 — 102 4,302 Total expensed $ 1,901 $ 5,022 $ 1,221 $ 1,283 $ 9,427 Six Months Ended December 31, 2018 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ — $ — $ 287 $ — $ 287 Employee termination costs — 1,418 133 — 1,551 Facility closures/consolidation — 2,108 — — 2,108 Legal and accrued settlement costs, net — — — (1,015) (1,015) Total expensed $ — $ 3,526 $ 420 $ (1,015) $ 2,931
Summary of changes in the accrued liability for restructuring and other charges	The changes in the accrued liability for restructuring and other charges for the six month period ended December 31, 2018 were as follows (in thousands): Facility Employee Closure/ Acquisition- Termination Consolidation Legal related Costs Costs Cost Charges Total Balance as of June 30, 2018 $ — $ 837 $ 399 $ 14,065 $ 15,301 Restructuring and other charges,net 287 1,551 2,108 (1,015) 2,931 Payments and other adjustments (287) (1,589) (2,078) (861) (4,815) Balance as of December 31, 2018 $ — $ 799 $ 429 $ 12,189 $ 13,417

Borrowings (Tables)

Borrowings (Tables)	6 Months Ended
	Dec. 31, 2018
Borrowings
Schedule of long-term debt	Long-term debt consisted of the following (in thousands): June 30, December 31, 2018 2018 1.25% convertible notes due 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (35,133) (31,251) Unamortized debt issuance costs (4,897) (4,310) 1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs 247,470 251,939 Term loans 2,114 1,321 Other long-term debt 1,658 2,031 251,242 255,291 Less current portion of long-term debt (2,262) (2,107) Long-term portion of debt $ 248,980 $ 253,184

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	6 Months Ended
	Dec. 31, 2018
Stockholders' Equity
Schedule of stock based compensation expense in the condensed consolidated statements of operations	We recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Cost of goods sold $ 247 $ 150 $ 487 $ 356 Selling, general and administrative 5,849 7,833 10,960 12,945 Research and development 157 180 293 325 Stock-based compensation expense before taxes $ 6,253 $ 8,163 $ 11,740 $ 13,626 Less: related income tax benefit (1,935) (2,038) (3,627) (3,380) Stock-based compensation expense, net of estimated taxes $ 4,318 $ 6,125 $ 8,113 $ 10,246
Summary of stock option activity	Weighted Average Weighted-Average Aggregate Number of Exercise Remaining Contractual Intrinsic Value Options Price Term (in thousands) Outstanding at June 30, 2018 677,525 $ 32.80 Granted 18,135 $ 72.39 Exercised (49,395) $ 18.09 Expired or forfeited (6,914) $ 69.47 Outstanding at December 31, 2018 639,351 $ 34.67 2.7 years $ 25,026 Exercisable at December 31, 2018 600,813 $ 31.92 2.3 years $ 25,001
Summary of RSU award activity	Weighted- Average Shares Fair Value Nonvested at June 30, 2018 526,377 $ 71.56 Granted 358,213 73.64 Vested (356,705) 71.02 Forfeited (12,414) 73.54 Nonvested at December 31, 2018 515,471 $ 73.33

Retirement Benefit Plans (Table

Retirement Benefit Plans (Tables)	6 Months Ended
	Dec. 31, 2018
Retirement Benefit Plans
Schedule of net periodic pension expense	The components of net periodic pension expense are as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Service cost $ 216 $ 98 $ 432 $ 196 Interest cost 8 8 16 16 Amortization of prior service cost 70 14 140 28 Net periodic pension expense $ 294 $ 120 $ 588 $ 240

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Dec. 31, 2018
Commitments and Contingencies
Schedule of roll-forward of the contingent consideration liability	Beginning fair value, June 30, 2018 $ 15,713 Additions 5,173 Change in fair value (889) Payments — Ending fair value, December 31, 2018 $ 19,997
Schedule of changes in warranty provisions	The following table presents changes in warranty provisions (in thousands): Six Months Ended December 31, 2017 2018 Balance at beginning of period $ 15,178 $ 21,819 Additions 5,769 3,975 Acquisitions and adjustments 1,415 (581) Reductions for warranty repair costs (3,619) (3,261) Balance at end of period $ 18,743 $ 21,952

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Dec. 31, 2018
Segment Information
Schedule of results of operations and identifiable assets by industry segment	The following tables set forth the results of operations and identifiable assets by industry segment (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Revenues (1) — by Segment: Security division $ 172,269 $ 188,684 $ 334,514 $ 358,644 Healthcare division 52,506 51,559 98,035 89,832 Optoelectronics and Manufacturing division, including intersegment revenues 63,886 72,019 122,812 142,973 Intersegment revenues elimination (11,133) (9,057) (20,700) (21,995) Total $ 277,528 $ 303,205 $ 534,661 $ 569,454 Three Months Ended December 31, Six Months Ended December 31, 2017 2018 2017 2018 Income (loss) from operations — by Segment: Security division $ 22,471 $ 26,063 $ 45,164 $ 49,113 Healthcare division 603 2,209 1,450 334 Optoelectronics and Manufacturing division 4,502 8,067 9,677 14,892 Corporate (9,118) (4,560) (17,871) (15,911) Eliminations (2) (311) (72) (879) (464) Total $ 18,147 $ 31,707 $ 37,541 $ 47,964 June 30, December 31, 2018 2018 Assets — by Segment: Security division $ 804,527 $ 804,390 Healthcare division 167,611 161,521 Optoelectronics and Manufacturing division 220,373 246,076 Corporate 66,453 89,220 Eliminations (2) (3,273) (3,530) Total $ 1,255,691 1,297,677 (1) For each of the three and six months ended December 31, 2017, one customer, Servicio de Administactión Tributaria (“SAT”) in Mexico, accounted for 12% of total net revenues. For the three and six months ended December 31, 2018, no customer accounted for greater than 10% of total net revenues. (2) 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.

Basis of Presentation - Descrip

Basis of Presentation - Description of Business (Details)	6 Months Ended
	Dec. 31, 2018segment
Description of Business
Number of reporting segments	3

Basis of Presentation - Per Sha

Basis of Presentation - Per Share Computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Feb. 28, 2017
Computation of basic and diluted earnings per share
Net income (loss) available to common stockholders	$ 19,107	$ (46,951)	$ 28,509	$ (36,794)
Weighted average shares outstanding-basic	18,085	18,971	18,088	18,874
Dilutive effect of equity awards	539		591
Weighted average shares outstanding-diluted	18,624	18,971	18,679	18,874
Basic earnings (loss) per share	$ 1.06	$ (2.47)	$ 1.58	$ (1.95)
Diluted earnings (loss) per share	$ 1.03	$ (2.47)	$ 1.53	$ (1.95)
Weighted average shares excluded from diluted earnings (loss) per share due to their anti-dilutive effect (in thousands)	126	684	81	753
1.25% Convertible Senior Notes Due 2022
Per Share Computations
Interest rate (as a percentage)	1.25%		1.25%		1.25%

Basis of Presentation - Cash Eq

Basis of Presentation - Cash Equivalents (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Cash Equivalents
Cash and cash equivalents	$ 95,967	$ 84,814

Basis of Presentation - Fair Va

Basis of Presentation - Fair Value (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2018USD ($)segmentitem	Jun. 30, 2018USD ($)
Fair Value of Financial Instruments
Liabilities - Contingent payment obligations	$ 19,997	$ 15,713
Goodwill and Other Intangible Assets and Valuation of Long Lived Assets
Number of reporting units | item	3
Two of the Company's three reporting units
Goodwill and Other Intangible Assets and Valuation of Long Lived Assets
Number of reporting units | segment	2
Goodwill impairment	$ 0
Third reporting unit
Goodwill and Other Intangible Assets and Valuation of Long Lived Assets
Goodwill impairment	0
Recurring
Fair Value of Financial Instruments
Insurance company contracts	30,622	31,897
Interest rate contract	9	18
Total assets	30,631	31,915
Liabilities - Contingent payment obligations	19,997	15,713
Recurring | Level 2
Fair Value of Financial Instruments
Insurance company contracts	30,622	31,897
Interest rate contract	9	18
Total assets	30,631	31,915
Recurring | Level 3
Fair Value of Financial Instruments
Total assets	0	0
Liabilities - Contingent payment obligations	$ 19,997	$ 15,713

Basis of Presentation - Revenue

Basis of Presentation - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Jul. 01, 2018	Jun. 30, 2018
Revenue Recognition
Revenues	$ 303,205		$ 277,528		$ 569,454	$ 534,661
Costs of goods sold	192,861		175,898		363,197	341,760
Operating expenses	78,637		83,483		158,293	155,360
Income from operations	31,707		18,147		47,964	37,541
Interest expense and other expense, net	(5,620)		(5,282)		(10,952)	(9,531)
Income tax provision	(6,980)		(59,816)		(8,503)	(64,804)
Net income (loss)	19,107	$ 9,402	$ (46,951)	$ 10,157	28,509	$ (36,794)
Assets
Accounts receivable, net	226,086				226,086			$ 210,744
Inventories	315,200				315,200			313,552
Other assets	756,391				756,391
Liabilities
Current liabilities	469,914				469,914			443,322
Other liabilities	331,567				331,567
Stockholders' Equity
Retained earnings	363,254				363,254			334,745
Contract Assets
Unbilled revenue	19,997				19,997			13,087
Contract Liabilities
Advances from customers	69,410				69,410			55,761
Deferred revenue - current	32,516				32,516			28,899
Deferred revenue - long-term	8,883				8,883			9,562
Remaining Performance Obligations
Revenue remaining performance obligation	162,300				$ 162,300
Revenue, Practical Expedient, Financing Component [true false]					true
Recently Adopted Accounting Pronouncements
Prepaid expenses and other assets	$ 43,949				$ 43,949			$ 41,587
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01
Remaining Performance Obligations
Remaining performance obligation expected timing of satisfaction period	12 months				12 months
Remaining performance obligation expected percentage recognized	50.50%				50.50%
ASU 2014-09 | Balances without Adoption of ASC 606
Revenue Recognition
Revenues	$ 288,376				$ 551,043
Costs of goods sold	185,133				354,290
Operating expenses	74,690				152,118
Income from operations	28,553				44,635
Interest expense and other expense, net	(5,620)				(10,952)
Income tax provision	(6,445)				(7,920)
Net income (loss)	16,488				25,763
Assets
Accounts receivable, net	215,825				215,825
Inventories	324,134				324,134
Other assets	756,975				756,975
Liabilities
Current liabilities	471,917				471,917
Other liabilities	331,567				331,567
Stockholders' Equity
Retained earnings	360,508				360,508
ASU 2014-09 | Effect of Change
Revenue Recognition
Revenues	14,829				18,411
Costs of goods sold	7,728				8,907
Operating expenses	3,947				6,175
Income from operations	3,154				3,329
Income tax provision	(535)				(583)
Net income (loss)	2,619				2,746
Assets
Accounts receivable, net	10,261				10,261
Inventories	(8,934)				(8,934)
Other assets	(584)				(584)
Liabilities
Current liabilities	(2,003)				(2,003)
Stockholders' Equity
Retained earnings	2,746				2,746
Contract Assets
Unbilled revenue	6,910				$ 6,910
Percentage of change in unbilled revenue					53.00%
Contract Liabilities
Advances from customers	13,649				$ 13,649
Deferred revenue - current	3,617				3,617
Deferred revenue - long-term	$ (679)				$ (679)
Percentage of of change in customer deposits and prepayments					24.00%
Percentage of change deferred revenue current					13.00%
Percentage of change deferred revenue noncurrent					(7.00%)
ASU 2016-16
Recently Adopted Accounting Pronouncements
Prepaid expenses and other assets							$ (3,000)
Deferred tax asset							$ 3,000

Business Combinations - Fiscal

Business Combinations - Fiscal Year 2019 Business Acquisitions (Details) - USD ($) $ in Millions	Jul. 31, 2018	Aug. 31, 2018
Optoelectronics solutions business
Business Combinations
Total purchase price	$ 17.5
Maximum potential earnout consideration	$ 1
A privately held services company
Business Combinations
Total purchase price		$ 0.8
Maximum potential earnout consideration		$ 5
Contingent consideration earnout period		5 years

Business Combinations - Explosi

Business Combinations - Explosive Trace Detection (Details) - USD ($) $ in Thousands	Jul. 07, 2017	Dec. 31, 2018	Jun. 30, 2018
Allocation of total consideration to assets acquired and liabilities assumed
Goodwill		$ 305,164	$ 292,213
ETD
Business Combinations
Total purchase price	$ 80,500
Allocation of total consideration to assets acquired and liabilities assumed
Cash and cash equivalents	4
Accounts receivable	15,517
Inventories	11,678
Property and equipment	1,599
Intangible assets	30,370
Deferred tax assets	2,738
Other long-term assets	297
Accounts payable	(4,784)
Accrued payroll and related expenses	(2,116)
Deferred revenues - current	(924)
Accrued warranties	(2,068)
Advances from customers	(670)
Other accrued expenses and current liabilities	(1,074)
Deferred revenues - long term	(232)
Net assets acquired	50,335
Goodwill	30,132
Total consideration	$ 80,467

Business Combinations - Intangi

Business Combinations - Intangible Assets (Details) - ETD $ in Thousands	Jul. 07, 2017USD ($)
Business Combinations
Total intangible assets	$ 30,370
IPR&D
Business Combinations
Non-amortizable asset	$ 90
Developed technology
Business Combinations
Weighted Lives Average (in years)	10 years
Amortizable assets	$ 14,210
Customer relationships/backlog
Business Combinations
Weighted Lives Average (in years)	7 years
Amortizable assets	$ 16,070

Business Combinations - Other B

Business Combinations - Other Business Acquisition (Details) - An electronics component designer and manufacturer $ in Millions	1 Months Ended
	Jan. 31, 2018USD ($)
Business Combinations
Total purchase price	$ 22
Maximum amount of contingent consideration	$ 6
Contingent consideration earnout period	3 years

Balance Sheet Details (Details)

Balance Sheet Details (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Accounts Receivable
Accounts receivable		$ 240,749		$ 240,749		$ 225,336
Less allowance for doubtful accounts		(14,663)		(14,663)		(14,592)
Total		226,086		226,086		210,744
Inventories
Raw materials		153,195		153,195		156,612
Work-in-process		86,582		86,582		89,468
Finished goods		75,423		75,423		67,472
Total		315,200		315,200		313,552
Property and Equipment
Property and equipment, gross		256,542		256,542		246,836
Less accumulated depreciation and amortization		(135,272)		(135,272)		(131,312)
Property and equipment, net		121,270		121,270		115,524
Depreciation expense		5,200	$ 16,800	10,300	$ 33,000
Mexican government
Contract with Mexican government
Term of agreement	2 years
Net book value of certain fixed assets transferred	$ 29,500
Recognized amortization expense		3,700		7,100
Prepaid expenses and other current assets | Mexican government
Contract with Mexican government
Remaining cost to obtain the contract		13,700		13,700
Other assets | Mexican government
Contract with Mexican government
Remaining cost to obtain the contract		500		500
Land
Property and Equipment
Property and equipment, gross		16,555		16,555		16,569
Buildings, civil works and improvements
Property and Equipment
Property and equipment, gross		55,083		55,083		56,585
Leasehold improvements
Property and Equipment
Property and equipment, gross		10,144		10,144		9,681
Equipment and tooling
Property and Equipment
Property and equipment, gross		125,099		125,099		117,294
Furniture and fixtures
Property and Equipment
Property and equipment, gross		3,175		3,175		3,331
Computer equipment
Property and Equipment
Property and equipment, gross		17,863		17,863		18,759
Computer software
Property and Equipment
Property and equipment, gross		19,555		19,555		19,509
Computer software implementation in process
Property and Equipment
Property and equipment, gross		6,640		6,640		4,318
Construction in process
Property and Equipment
Property and equipment, gross		$ 2,428		$ 2,428		$ 790

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2018USD ($)
Changes in the carrying value of goodwill
Balance at the beginning of the period	$ 292,213
Goodwill acquired or adjusted during the period	13,956
Foreign currency translation adjustment	(1,005)
Balance at the end of the period	305,164
Security Division
Changes in the carrying value of goodwill
Balance at the beginning of the period	191,810
Goodwill acquired or adjusted during the period	6,541
Foreign currency translation adjustment	(65)
Balance at the end of the period	198,286
Healthcare Division
Changes in the carrying value of goodwill
Balance at the beginning of the period	40,157
Foreign currency translation adjustment	(102)
Balance at the end of the period	40,055
Optoelectronics and Manufacturing Division
Changes in the carrying value of goodwill
Balance at the beginning of the period	60,246
Goodwill acquired or adjusted during the period	7,415
Foreign currency translation adjustment	(838)
Balance at the end of the period	$ 66,823

Goodwill and Intangible Asset_3

Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Amortizable assets:
Gross Carrying Value	$ 157,713		$ 157,713		$ 152,753
Accumulated Amortization	(46,251)		(46,251)		(38,638)
Total	111,462		111,462		114,115
Total intangible assets
Gross Carrying Value	186,453		186,453		180,639
Intangible assets, net	140,202		140,202		142,001
Amortization expense	5,600	$ 4,500	10,900	$ 8,700
Trademarks and trade names
Non-amortizable assets:
Gross Carrying Value	26,450		$ 26,450		25,596
Software development costs
Intangible assets
Weighted Average Lives (in Years)			9 years
Amortizable assets:
Gross Carrying Value	29,215		$ 29,215		28,174
Accumulated Amortization	(11,597)		(11,597)		(9,423)
Total	17,618		$ 17,618		18,751
Patents
Intangible assets
Weighted Average Lives (in Years)			19 years
Amortizable assets:
Gross Carrying Value	8,243		$ 8,243		8,401
Accumulated Amortization	(1,680)		(1,680)		(1,618)
Total	6,563		$ 6,563		6,783
Developed technology
Intangible assets
Weighted Average Lives (in Years)			10 years
Amortizable assets:
Gross Carrying Value	54,582		$ 54,582		52,780
Accumulated Amortization	(12,480)		(12,480)		(9,706)
Total	42,102		$ 42,102		43,074
Customer relationships/backlog
Intangible assets
Weighted Average Lives (in Years)			7 years
Amortizable assets:
Gross Carrying Value	65,673		$ 65,673		63,398
Accumulated Amortization	(20,494)		(20,494)		(17,891)
Total	45,179		45,179		45,507
IPR&D
Amortizable assets:
Gross Carrying Value	2,290		2,290		2,290
Total	$ 2,290		$ 2,290		$ 2,290

Goodwill and Intangible Asset_4

Goodwill and Intangible Assets - Intangible Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Estimated future amortization expense
2019 (remaining 6 months)	$ 9,960		$ 9,960
2,020	19,634		19,634
2,021	19,281		19,281
2,022	14,670		14,670
2,023	13,448		13,448
Thereafter, including assets that have not yet begun to be amortized	34,469		34,469
Total	111,462		111,462		$ 114,115
Software development costs
Estimated future amortization expense
Total	17,618		17,618		$ 18,751
Capitalized software development costs	$ 600	$ 200	$ 1,000	$ 300

Impairment, restructuring and_3

Impairment, restructuring and other charges - Impairment, restructuring and other charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Restructuring and other charges
Assets fully written off, including inventory and the intangible assets and fixed assets		$ 3,100		$ 3,144
Impairment charges	$ 0	3,144	$ 0	3,144
Acquisition-related costs	20	361	287	1,181
Employee termination costs	1,207	236	1,551	476
Facility closure / consolidations	2,108	254	2,108	324
Legal and accrued settlement costs, net	(4,600)	4,302	(1,015)	4,302
Total expensed	(1,265)	8,297	2,931	9,427
Accrued for legal and estimated settlement costs		4,300		4,300
ETD
Restructuring and other charges
Professional fees		200		900
Security Division
Restructuring and other charges
Impairment charges		1,490		1,490
Employee termination costs	(46)	90		330
Facility closure / consolidations		11		81
Total expensed	(46)	1,591		1,901
Healthcare Division
Restructuring and other charges
Impairment charges		579		579
Employee termination costs	1,227		1,418
Facility closure / consolidations	2,108	243	2,108	243
Legal and accrued settlement costs, net		4,200		4,200
Total expensed	3,335	5,022	3,526	5,022
Accrued for legal and estimated settlement costs		4,200		4,200
Healthcare Division | Restructuring Plan during fiscal 2019
Restructuring and other charges
Total expensed	3,300		3,500
Optoelectronics and Manufacturing Division
Restructuring and other charges
Impairment charges		1,075		1,075
Acquisition-related costs	20		287
Employee termination costs	26	146	133	146
Total expensed	46	1,221	420	1,221
Corporate
Restructuring and other charges
Acquisition-related costs		361		1,181
Legal and accrued settlement costs, net	(4,600)	102	(1,015)	102
Total expensed	$ (4,600)	$ 463	$ (1,015)	$ 1,283

Impairment, restructuring and_4

Impairment, restructuring and other charges - Changes in the accrued liability for restructuring and other charges (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2018USD ($)
Restructuring and other charges
Balance at the beginning of the period	$ 15,301
Restructuring and other charges, net	2,931
Payments and other adjustments	(4,815)
Balance at the end of the period	13,417
Acquisition-related Costs
Restructuring and other charges
Restructuring and other charges, net	287
Payments and other adjustments	(287)
Employee Termination Costs
Restructuring and other charges
Balance at the beginning of the period	837
Restructuring and other charges, net	1,551
Payments and other adjustments	(1,589)
Balance at the end of the period	799
Facility Closure / Consolidation Cost
Restructuring and other charges
Balance at the beginning of the period	399
Restructuring and other charges, net	2,108
Payments and other adjustments	(2,078)
Balance at the end of the period	429
Legal Costs and Settlements
Restructuring and other charges
Balance at the beginning of the period	14,065
Restructuring and other charges, net	(1,015)
Payments and other adjustments	(861)
Balance at the end of the period	$ 12,189

Borrowings (Details)

Borrowings (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 30, 2012USD ($)	Dec. 31, 2018USD ($)$ / shares	Dec. 31, 2017USD ($)	Dec. 31, 2018USD ($)item$ / shares	Dec. 31, 2017USD ($)	Jun. 30, 2018USD ($)	Feb. 28, 2017USD ($)	Dec. 31, 2016USD ($)	Nov. 30, 2016USD ($)
Borrowings
Borrowings outstanding		$ 149,000		$ 149,000		$ 113,000
Components of long-term debt
Term loans		1,321		1,321		2,114
Other long-term debt		2,031		2,031		1,658
Total		255,291		255,291		251,242
Less current portion of long-term debt		(2,107)		(2,107)		(2,262)
Long-term portion of debt		253,184		253,184		248,980
Revolving Credit Facility
Borrowings
Maximum borrowing capacity								$ 525,000	$ 450,000
Sub limit available for letters of credit		300,000		$ 300,000
Unused commitment fee (as a percent)				0.20%
Borrowings outstanding		149,000		$ 149,000
Amount outstanding under lines of credit facilities		58,900		58,900
Available credit facility		317,100		$ 317,100
Revolving Credit Facility | Minimum
Borrowings
Unused commitment fee (as a percent)				0.20%
Revolving Credit Facility | Maximum
Borrowings
Increase in the credit agreement's borrowing capacity available under certain circumstances		250,000		$ 250,000
Unused commitment fee (as a percent)				0.30%
Revolving Credit Facility | LIBOR
Borrowings
Interest rate margin (as a percent)				1.50%
Revolving Credit Facility | LIBOR | Minimum
Borrowings
Interest rate margin (as a percent)				1.25%
Revolving Credit Facility | LIBOR | Maximum
Borrowings
Interest rate margin (as a percent)				2.00%
1.25% Convertible Senior Notes Due 2022
Borrowings
Principal amount		$ 287,500		$ 287,500			$ 287,500
Interest rate (as a percentage)		1.25%		1.25%			1.25%
Conversion ratio				9.3056
Conversion price | $ / shares		$ 107.46		$ 107.46
Premium on stock price		38.50%		38.50%
Threshold percentage of stock price				130.00%
Number of trading days | item				20
Number of consecutive trading days | item				30
Principal amount of the notes to be repurchased (as a percentage)				100.00%
Liability component of convertible debt		$ 242,400		$ 242,400
Equity component of convertible debt		45,100		45,100
Debt issuance costs		7,700		7,700
Debt Component of debt issuance costs		6,500		6,500
Equity component of debt issuance costs		1,200		1,200
Total interest expense		3,200	$ 3,100	6,300	$ 6,100
Contractual interest expense		900	900	1,800	3,700
Amortization of debt discount		2,000	1,900	3,900	1,800
Amortization of debt issuance costs		300	$ 300	600	$ 600
Unamortized debt discount		$ 31,251		$ 31,251		35,133
Effective interest rate (as a percent)		4.50%		4.50%
Unamortized debt issuance costs		$ 4,310		$ 4,310		4,897
Stock price per share | $ / shares		$ 73.30		$ 73.30
Components of long-term debt
Principal amount		$ 287,500		$ 287,500		287,500
Unamortized discount		(31,251)		(31,251)		(35,133)
Unamortized debt issuance costs		(4,310)		(4,310)		(4,897)
Total		251,939		251,939		247,470
Bank lines of credit
Borrowings
Amount outstanding under lines of credit facilities		61,600		61,600
Available credit facility		6,700		6,700
Seven-year term loan due in fiscal 2020
Borrowings
Borrowings outstanding		$ 1,300		$ 1,300		$ 2,100
Principal amount	$ 11,100
Effective interest rate (as a percent)	2.20%
Term of loan	7 years
Seven-year term loan due in fiscal 2020 | LIBOR
Borrowings
Interest rate margin (as a percent)	1.25%

Stockholders' Equity - Stock-ba

Stockholders' Equity - Stock-based Compensation (Details) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended
	Dec. 31, 2018USD ($)$ / sharesshares	Sep. 30, 2018$ / sharesshares	Dec. 31, 2017USD ($)	Dec. 31, 2018USD ($)ShareBasedCompensationPlan$ / sharesshares	Dec. 31, 2017USD ($)shares
Stock-based Compensation
Stock-based compensation expense, before taxes | $	$ 8,163		$ 6,253	$ 13,626	$ 11,740
Less: related income tax benefit | $	(2,038)		(1,935)	(3,380)	(3,627)
Stock-based compensation expense, net of estimated taxes | $	6,125		4,318	10,246	$ 8,113
RSU
Stock-based Compensation
Unrecognized compensation cost | $	$ 24,700			$ 24,700
Weighted-average period				1 year 9 months 18 days
Shares
Nonvested at the beginning of the period (in shares)		526,377		526,377
Granted (in shares)				358,213
Vested (in shares)				(356,705)
Forfeited (in shares)				(12,414)
Nonvested at the end of the period (in shares)	515,471			515,471
Weighted-Average Fair Value
Nonvested at the beginning of the period (in dollars per share) | $ / shares		$ 71.56		$ 71.56
Granted (in dollars per share) | $ / shares				73.64
Vested (in dollars per share) | $ / shares				71.02
Forfeited (in dollars per share) | $ / shares				73.54
Nonvested at the end of the period (in dollars per share) | $ / shares	$ 73.33			$ 73.33
Stock options
Stock-based Compensation
Unrecognized compensation cost | $	$ 700			$ 700
Weighted-average period				2 years 2 months 12 days
Number of Options
Outstanding at the beginning of the period (in shares)		677,525		677,525
Granted (in shares)				18,135
Exercised (in shares)				(49,395)
Expired or forfeited (in shares)				(6,914)
Outstanding at the end of the period (in shares)	639,351			639,351
Exercisable at the end of the period (in shares)	600,813			600,813
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares		$ 32.80		$ 32.80
Granted (in dollars per share) | $ / shares				72.39
Exercised (in dollars per share) | $ / shares				18.09
Expired or forfeited (in dollars per share) | $ / shares				69.47
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 34.67			34.67
Exercisable at the end of the period (in dollars per share) | $ / shares	$ 31.92			$ 31.92
Weighted-Average Remaining Contractual Term
Outstanding at the end of the period		2 years 8 months 12 days
Exercisable at the end of the period		2 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding at the end of the period | $	$ 25,026			$ 25,026
Exercisable at the end of the period | $	$ 25,001			$ 25,001
Performance-based restricted stock units
Shares
Granted (in shares)				97,514	117,346
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				280.00%
2012 Plan
Weighted-Average Fair Value
Shares available for grant	1,600,000			1,600,000
2012 Plan | 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
2005 AS&E Plan and the 2014 AS&E Plan
Stock-based Compensation
Number of share-based employee compensation plans assumed | ShareBasedCompensationPlan				2
2005 AS&E Plan and the 2014 AS&E Plan | RSU
Shares
Granted (in shares)				0
2006 Plan
Number of Options
Granted (in shares)				0
Cost of goods sold
Stock-based Compensation
Stock-based compensation expense, before taxes | $	$ 150		247	$ 356	$ 487
Selling, general and administrative
Stock-based Compensation
Stock-based compensation expense, before taxes | $	7,833		5,849	12,945	10,960
Research and development
Stock-based Compensation
Stock-based compensation expense, before taxes | $	$ 180		$ 157	$ 325	$ 293

Stockholders' Equity - Share Re

Stockholders' Equity - Share Repurchase Program (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2018
Share Repurchase Program
Number of shares available for additional repurchase	562,707		562,707
Value of shares repurchased	$ 13,185	$ 7,844
Common stock
Share Repurchase Program
Number of shares repurchased			288,316
Common stock | Maximum
Share Repurchase Program
Number of repurchased shares authorized	1,000,000		1,000,000

Retirement Benefit Plans (Detai

Retirement Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Net Periodic Benefit Costs
Service costs	$ 98	$ 216	$ 196	$ 432
Interest costs	8	8	16	16
Amortization of prior service costs	14	70	28	140
Net periodic pension expense	120	294	240	588
Contributions made by the entity to the defined benefit plans	1,000	0	1,000	1,000
Contributions made by the entity to defined contribution plans	$ 1,300	$ 1,400	$ 3,100	$ 3,000

Commitments and Contingencies -

Commitments and Contingencies - Contingent Acquisition Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2018
Contingent Acquisition Obligations
Beginning fair value			$ 15,713
Additions			5,173
Change in fair value			(889)
Ending fair value		$ 19,997	19,997
Mr. Chopra, Chief Executive Officer | Deferred bonus
Indemnifications and Certain Employment-Related Contingencies
Bonus payment on or within 45 days of January 1, 2024 contingent upon continued employment through that date	$ 13,500
Maximum number of days after January 1, 2024, bonus payment due	45 days
CXR Limited
Commitments and Contingencies
Payments for contingent consideration		1,300	1,300
Contingent Acquisition Obligations
Maximum amount of contingent consideration		$ 35,000	$ 35,000

Commitments and Contingencies_2

Commitments and Contingencies - Product Warranties (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Changes in provision for warranties
Warranty provision at beginning of period	$ 21,819	$ 15,178
Additions	3,975	5,769
Acquisitions and adjustments	(581)	1,415
Reductions for warranty repair costs	(3,261)	(3,619)
Warranty provision at end of period	$ 21,952	$ 18,743

Income Taxes - (Details)

Income Taxes - (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended			6 Months Ended			12 Months Ended
	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
U.S. federal statutory tax rate (as a percent)							21.00%	35.00%
Effective income tax rate (as a percent)	26.80%	465.00%		23.00%	231.40%
Effective income tax rate excluding certain discrete tax items (as a percent)	28.30%		28.00%	28.20%		28.20%
Tax Cuts and Jobs Act of 2017, provisional net charge				$ 56
Tax Cuts and Jobs Act of 2017, provisional net charge (USD/Share)				$ 2.96
ASU 2016-09
Excess tax benefits from employee stock compensation benefit	$ 0.4			$ 1.9

Segment Information - Operation

Segment Information - Operations and Identifiable Assets (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018USD ($)	Dec. 31, 2017USD ($)customer	Dec. 31, 2018USD ($)segment	Dec. 31, 2017USD ($)customer	Jun. 30, 2018USD ($)
Operations and identifiable assets by industry segment
Number of identifiable industry segments | segment			3
Revenues	$ 303,205	$ 277,528	$ 569,454	$ 534,661
Income (Loss) from Operations	31,707	$ 18,147	47,964	$ 37,541
Assets	1,297,677		1,297,677		$ 1,255,691
Revenue | Customer Concentration Risk
Operations and identifiable assets by industry segment
Number of major customers | customer		1		1
Servicio de Administactin Tributaria ("SAT") in Mexico | Revenue | Customer Concentration Risk
Operations and identifiable assets by industry segment
Concentration (as a percent)		12.00%		12.00%
Operating Segments | Security Division
Operations and identifiable assets by industry segment
Revenues	188,684	$ 172,269	358,644	$ 334,514
Income (Loss) from Operations	26,063	22,471	49,113	45,164
Assets	804,390		804,390		804,527
Operating Segments | Healthcare Division
Operations and identifiable assets by industry segment
Revenues	51,559	52,506	89,832	98,035
Income (Loss) from Operations	2,209	603	334	1,450
Assets	161,521		161,521		167,611
Operating Segments | Optoelectronics and Manufacturing Division
Operations and identifiable assets by industry segment
Revenues	72,019	63,886	142,973	122,812
Income (Loss) from Operations	8,067	4,502	14,892	9,677
Assets	246,076		246,076		220,373
Corporate
Operations and identifiable assets by industry segment
Income (Loss) from Operations	(4,560)	(9,118)	(15,911)	(17,871)
Assets	89,220		89,220		66,453
Eliminations
Operations and identifiable assets by industry segment
Revenues	(9,057)	(11,133)	(21,995)	(20,700)
Income (Loss) from Operations	(72)	$ (311)	(464)	$ (879)
Assets	$ (3,530)		$ (3,530)		$ (3,273)