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) |