Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2021 | Oct. 25, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-23125 | |
Entity Registrant Name | OSI SYSTEMS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0238801 | |
Entity Address, Address Line One | 12525 Chadron Avenue | |
Entity Address, City or Town | Hawthorne | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90250 | |
City Area Code | 310 | |
Local Phone Number | 978-0516 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | OSIS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,942,081 | |
Entity Central Index Key | 0001039065 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 54,663 | $ 80,613 |
Accounts receivable, net | 292,004 | 290,653 |
Inventories | 320,673 | 294,208 |
Prepaid expenses and other current assets | 62,870 | 43,930 |
Total current assets | 730,210 | 709,404 |
Property and equipment, net | 116,814 | 118,004 |
Goodwill | 319,345 | 320,304 |
Intangible assets, net | 127,262 | 127,608 |
Other assets | 117,008 | 109,047 |
Total assets | 1,410,639 | 1,384,367 |
CURRENT LIABILITIES: | ||
Bank lines of credit | 26,000 | |
Current portion of long-term debt | 286,954 | 846 |
Accounts payable | 140,544 | 141,263 |
Accrued payroll and related expenses | 36,998 | 50,816 |
Advances from customers | 34,564 | 38,463 |
Other accrued expenses and current liabilities | 131,728 | 113,379 |
Total current liabilities | 656,788 | 344,767 |
Long-term debt | 692 | 276,421 |
Deferred income taxes | 4,685 | 7,157 |
Other long-term liabilities | 125,162 | 116,202 |
Total liabilities | 787,327 | 744,547 |
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, 17,854,110 shares at June 30, 2021 and 17,941,393 shares at September 30, 2021 | 53,377 | 105,724 |
Retained earnings | 586,850 | 548,842 |
Accumulated other comprehensive loss | (16,915) | (14,746) |
Total stockholders' equity | 623,312 | 639,820 |
Total liabilities and stockholders' equity | $ 1,410,639 | $ 1,384,367 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Sep. 30, 2021 | Jun. 30, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 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, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,941,393 | 17,854,110 |
Common stock, shares outstanding | 17,941,393 | 17,854,110 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Net revenues: | ||
Total net revenues | $ 279,257 | $ 254,908 |
Cost of goods sold: | ||
Total cost of goods sold | 179,927 | 159,157 |
Gross profit | 99,330 | 95,751 |
Operating expenses: | ||
Selling, general and administrative | 57,323 | 58,617 |
Research and development | 14,817 | 12,082 |
Impairment, restructuring and other charges, net | 2,510 | 8,359 |
Total operating expenses | 74,650 | 79,058 |
Income from operations | 24,680 | 16,693 |
Interest and other expense, net | (2,016) | (4,189) |
Income before income taxes | 22,664 | 12,504 |
Provision for income taxes | (3,612) | (3,160) |
Net income | $ 19,052 | $ 9,344 |
Earnings per share: | ||
Basic | $ 1.06 | $ 0.52 |
Diluted | $ 1.04 | $ 0.51 |
Shares used in per share calculation: | ||
Basic | 17,947 | 18,051 |
Diluted | 18,306 | 18,335 |
Products | ||
Net revenues: | ||
Total net revenues | $ 207,212 | $ 182,747 |
Cost of goods sold: | ||
Total cost of goods sold | 142,906 | 124,841 |
Services | ||
Net revenues: | ||
Total net revenues | 72,045 | 72,161 |
Cost of goods sold: | ||
Total cost of goods sold | $ 37,021 | $ 34,316 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||
Net income | $ 19,052 | $ 9,344 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (2,302) | 3,454 |
Other | 133 | 59 |
Other comprehensive income (loss) | (2,169) | 3,513 |
Comprehensive income | $ 16,883 | $ 12,857 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Common Stock. | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Jun. 30, 2020 | $ 122,553 | $ 474,793 | $ (25,194) | $ 572,152 |
Balance (in shares) at Jun. 30, 2020 | 18,011,982 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 80 | 80 | ||
Exercise of stock options (in shares) | 69,195 | |||
Vesting of RSUs (in shares) | 286,701 | |||
Shares issued under employee stock purchase program | $ 2,022 | 2,022 | ||
Shares issued under employee stock purchase program (in shares) | 32,641 | |||
Stock-based compensation expense | $ 6,109 | 6,109 | ||
Repurchase of common stock | $ (24,816) | (24,816) | ||
Repurchase of common stock (in shares) | (320,136) | |||
Taxes paid related to net share settlement of equity awards | $ (10,864) | (10,864) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (167,842) | |||
Net income | 9,344 | 9,344 | ||
Other comprehensive income (loss) | 3,513 | 3,513 | ||
Balance at Sep. 30, 2020 | $ 95,084 | 484,137 | (21,681) | 557,540 |
Balance (in shares) at Sep. 30, 2020 | 17,912,541 | |||
Balance at Jun. 30, 2021 | $ 105,724 | 548,842 | (14,746) | $ 639,820 |
Balance (in shares) at Jun. 30, 2021 | 17,854,110 | 17,854,110 | ||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 155 | $ 155 | ||
Exercise of stock options (in shares) | 162,393 | |||
Vesting of RSUs (in shares) | 310,077 | |||
Shares issued under employee stock purchase program | $ 1,990 | 1,990 | ||
Shares issued under employee stock purchase program (in shares) | 27,960 | |||
Stock-based compensation expense | $ 7,113 | 7,113 | ||
Repurchase of common stock | $ (16,231) | (16,231) | ||
Repurchase of common stock (in shares) | (168,506) | |||
Taxes paid related to net share settlement of equity awards | $ (18,611) | (18,611) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (244,641) | |||
Adoption of ASU 2020-06 for convertible notes | ASU 2020-06 | $ (26,763) | 18,956 | (7,807) | |
Net income | 19,052 | 19,052 | ||
Other comprehensive income (loss) | (2,169) | (2,169) | ||
Balance at Sep. 30, 2021 | $ 53,377 | $ 586,850 | $ (16,915) | $ 623,312 |
Balance (in shares) at Sep. 30, 2021 | 17,941,393 | 17,941,393 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 19,052 | $ 9,344 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects from acquisitions: | ||
Depreciation and amortization | 9,697 | 10,002 |
Stock-based compensation expense | 7,113 | 6,109 |
Provision (recoveries) for losses on accounts receivable | (1,365) | 2,916 |
Deferred income taxes | 82 | 96 |
Amortization of debt discount and issuance costs | 348 | 2,400 |
Impairment charges | 552 | |
Other | 68 | 16 |
Changes in operating assets and liabilities-net of business acquisitions: | ||
Accounts receivable | (850) | 14,356 |
Inventories | (27,764) | (14,278) |
Prepaid expenses and other assets | (17,611) | 3,377 |
Accounts payable | (408) | 7,358 |
Accrued payroll and related expenses | (13,579) | (9,469) |
Advances from customers | (3,813) | 12,773 |
Deferred revenue | 6,280 | 5,355 |
Other | 11,731 | 2,925 |
Net cash provided by (used in) operating activities | (11,019) | 53,832 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of property and equipment | (3,474) | (3,780) |
Purchases of certificates of deposit | (106) | (1,815) |
Proceeds from maturities of certificates of deposit | 700 | |
Acquisition of businesses, net of cash acquired | (3,000) | |
Payments for intangible and other assets | (4,254) | (4,446) |
Net cash used in investing activities | (7,834) | (12,341) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings (repayments) on bank lines of credit | 26,000 | (8,000) |
Proceeds from long-term debt | 82 | 156 |
Payments on long-term debt | (286) | (303) |
Proceeds from exercise of stock options and employee stock purchase plan | 2,145 | 2,102 |
Payments of contingent consideration | (304) | (121) |
Repurchases of common stock | (16,231) | (24,816) |
Taxes paid related to net share settlement of equity awards | (18,611) | (10,864) |
Net cash used in financing activities | (7,205) | (41,846) |
Effect of exchange rate changes on cash | 108 | 1,178 |
Net change in cash and cash equivalents | (25,950) | 823 |
Cash and cash equivalents-beginning of period | 80,613 | 76,102 |
Cash and cash equivalents-end of period | 54,663 | 76,925 |
Supplemental disclosure of cash flow information: | ||
Interest | 2,400 | 3,015 |
Income taxes | $ 4,800 | $ 1,735 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | 1. 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 and GAAP 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 annual 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 unaudited 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, 2021 filed with the SEC. The results of operations for the three months ended September 30, 2021 are not necessarily indicative of the operating results to be expected for the full 2022 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, 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, legal contingencies and recoveries, 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. Due to the inherent uncertainty involved in making estimates, our actual amounts reported in future periods could differ materially from these estimates. Earnings 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. The underlying equity component of the 1.25% convertible senior notes due 2022 (the “Notes”) discussed in Note 7 to the condensed consolidated financial statements will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $107.46 because the principal amount of the Notes is intended to be settled in cash upon conversion. There was no dilutive effect of the Notes for the three months ended September 30, 2020 and 2021. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended September 30, 2020 2021 Net income available to common stockholders $ 9,344 $ 19,052 Weighted average shares outstanding—basic 18,051 17,947 Dilutive effect of equity awards 284 359 Weighted average shares outstanding—diluted 18,335 18,306 Basic earnings per share $ 0.52 $ 1.06 Diluted earnings per share $ 0.51 $ 1.04 Shares excluded from diluted earnings per share due to their anti-dilutive effect 87 20 Cash and 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 $54.7 million at September 30, 2021. Of this amount, approximately 83% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Malaysia, Singapore and Canada, and to a lesser extent in Australia, Albania and Germany among other countries. We have cash holdings in financial institutions that exceed insured limits for such financial institutions; however, we mitigate this risk by utilizing international financial institutions of high credit quality. Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments and foreign currency forward contracts. 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 for financing available to us. The fair values of our foreign currency forward contracts were not significant as of September 30, 2021. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Level 1 category includes assets and liabilities measured at quoted prices in active markets for identical assets and liabilities. The Level 2 category includes assets and liabilities measured from observable inputs other than quoted market prices. The Level 3 category includes assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement. Our contingent payment obligations related to acquisitions, which are further discussed in Note 9 to the condensed consolidated financial statements, are in the Level 3 category for valuation purposes. The fair values of our financial assets and liabilities are categorized as follows (in thousands): June 30, 2021 September 30, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets—Insurance company contracts $ — $ 47,113 $ — $ 47,113 $ — $ 48,416 $ — $ 48,416 Liabilities—Contingent consideration $ — $ — $ 19,431 $ 19,431 $ — $ — $ 16,954 $ 16,954 Derivative Instruments and Hedging Activity Our use of derivatives consists of foreign currency forward contracts. These forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations. These contracts have original maturities of up to three months. We do not use hedging instruments for speculative purposes. The net investment hedge has been designated as a hedge instrument and accounted for under Accounting Standards Codification ("ASC”) 815 Derivatives and Hedging The net gains or losses from the foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated income statement. We initiated these forward contracts in the first quarter of fiscal 2021. The amounts reported in the consolidated income statement for the three months ended September 30, 2021 were not significant. The fair value of our forward foreign exchange contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term. Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. As of June 30, 2021 and September 30, 2021, we held foreign currency forward contracts with notional amounts totaling $26.1 million and $22.4 million, respectively. Unrealized gains and losses from the forward currency forward contracts as of September 30, 2021 were not significant. Business Combinations Under ASC 805, Business Combinations Recently Adopted Accounting Pronouncements Convertible Debt In August 2020, the FASB issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity Income Taxes In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Balance Sheet Details
Balance Sheet Details | 3 Months Ended |
Sep. 30, 2021 | |
Balance Sheet Details | |
Balance Sheet Details | 2. Balance Sheet Details The following tables provide details of selected balance sheet accounts (in thousands): June 30, September 30, Accounts receivable, net 2021 2021 Accounts receivable $ 315,926 $ 315,864 Less allowance for doubtful accounts (25,273) (23,860) Total $ 290,653 $ 292,004 June 30, September 30, Inventories 2021 2021 Raw materials $ 160,313 $ 179,445 Work-in-process 59,594 59,773 Finished goods 74,301 81,455 Total $ 294,208 $ 320,673 June 30, September 30, Property and equipment, net 2021 2021 Land $ 16,357 $ 16,349 Buildings, civil works and improvements 57,555 56,353 Leasehold improvements 8,874 9,083 Equipment and tooling 129,735 130,411 Furniture and fixtures 3,275 3,382 Computer equipment 19,349 20,108 Computer software 23,090 23,298 Computer software implementation in process 11,102 11,040 Construction in process 4,011 3,797 Total 273,348 273,821 Less accumulated depreciation and amortization (155,344) (157,007) Property and equipment, net $ 118,004 $ 116,814 Depreciation and amortization expense for property and equipment was $5.2 million and $5.3 million for the three months ended September 30, 2020 and 2021, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 3. Goodwill and Intangible Assets The changes in the carrying value of goodwill by segment for the three-month period ended September 30, 2021 were as follows (in thousands) Optoelectronics And Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2021 $ 206,426 $ 43,584 $ 70,294 $ 320,304 Goodwill acquired or adjusted during the period 212 — — 212 Foreign currency translation adjustment (150) (94) (927) (1,171) Balance as of September 30, 2021 $ 206,488 $ 43,490 $ 69,367 $ 319,345 Intangible assets consisted of the following (in thousands): June 30, 2021 September 30, 2021 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 8-9 years $ 49,183 $ (15,679) $ 33,504 $ 53,326 $ (16,436) $ 36,890 Patents 19 years 8,753 (2,597) 6,156 8,501 (2,697) 5,804 Developed technology 10 years 60,665 (25,923) 34,742 60,612 (27,505) 33,107 Customer relationships 7 years 50,676 (26,588) 24,088 50,099 (27,750) 22,349 Total amortizable assets 169,277 (70,787) 98,490 172,538 (74,388) 98,150 Non-amortizable assets: In-process R&D 533 — 533 533 — 533 Trademarks 28,585 — 28,585 28,579 — 28,579 Total intangible assets $ 198,395 $ (70,787) $ 127,608 $ 201,650 $ (74,388) $ 127,262 Amortization expense related to intangible assets was $4.8 million and $4.4 million for the three months ended September 30, 2020 and 2021, respectively. At September 30, 2021, the estimated future amortization expense for intangible assets was as follows (in thousands): Fiscal Year 2022 (remaining 9 months) $ 12,764 2023 19,482 2024 18,962 2025 15,668 2026 11,736 Thereafter 19,538 Total $ 98,150 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 each of the three months ended September 30, 2020 and 2021, we capitalized software development costs in the amount of $4.1 million. |
Contract Assets and Liabilities
Contract Assets and Liabilities | 3 Months Ended |
Sep. 30, 2021 | |
Contract Assets and Liabilities | |
Contract Assets and Liabilities | 4. 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. When we recognize revenue in advance of the point in time at which contracts give us the right to invoice a customer, we record this as unbilled revenue, which is included in accounts receivable, net, on the consolidated balance sheets. We may also receive consideration, per the terms of a contract, from customers prior to transferring control of goods to the customer. We record customer deposits as contract liabilities. Additionally, we may receive payments, most typically under service and warranty contracts, at the onset of the contract and before 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, 2021 and September 30, 2021, including the change between the periods. There were no substantial non-current contract assets for the periods presented. Contract Assets (in thousands) June 30, September 30, 2021 2021 Change % Change Unbilled revenue (included in accounts receivable, net) $ 40,853 $ 41,107 $ 254 1 % Contract Liabilities (in thousands) June 30, September 30, 2021 2021 Change % Change Advances from customers $ 38,463 $ 34,564 $ (3,899) (10) % Deferred revenue—current 32,689 35,615 2,926 9 % Deferred revenue—long-term 14,898 18,150 3,252 22 % Contract assets were comparable with the beginning of the fiscal year. The increase in contract liabilities was primarily due to deferred revenue from receipt of payments under service and warranty contracts primarily in our Security division. Remaining Performance Obligations Practical Expedients. |
Leases
Leases | 3 Months Ended |
Sep. 30, 2021 | |
Leases | |
Leases | 5. Leases The components of operating lease expense were as follows (in thousands): Three Months Ended September 30, 2020 2021 Operating lease cost $ 2,533 $ 2,275 Variable lease cost 258 184 Short-term lease cost 212 279 $ 3,003 $ 2,738 Supplemental disclosures related to operating leases were as follows (in thousands): Balance Sheet Category June 30, 2021 September 30, 2021 Operating lease ROU assets, net Other assets $ 23,439 $ 29,787 Operating lease liabilities, current portion Other accrued expenses and current liabilities $ 7,499 $ 7,591 Operating lease liabilities, long-term Other long-term liabilities 16,317 22,526 Total operating lease liabilities $ 23,816 $ 30,117 Weighted average remaining lease term 3.9 years Weighted average discount rate 4.1 % Supplemental cash flow information related to operating leases was as follows (in thousands): Three Months Ended September 30, 2020 2021 Cash paid for operating lease liabilities $ 2,580 $ 2,327 ROU assets obtained in exchange for new lease obligations 122 1,643 Maturities of operating lease liabilities at September 30, 2021 were as follows (in thousands): September 30, 2021 Less than one year $ 8,378 1 – 2 years 7,298 2 – 3 years 6,044 3 – 4 years 4,395 4 – 5 years 3,635 Thereafter 2,751 32,501 Less: imputed interest (2,384) Total lease liabilities $ 30,117 |
Impairment, Restructuring and O
Impairment, Restructuring and Other Charges | 3 Months Ended |
Sep. 30, 2021 | |
Impairment, Restructuring and Other Charges | |
Impairment, Restructuring and Other Charges | 6. Impairment, Restructuring and Other Charges We endeavor to align our global capacity and infrastructure with demand by our customers as well as fully integrate acquisitions and thereby improve operational efficiency. During the three months ended September 30, 2021, we recognized $2.5 million in restructuring and other charges which included $2.2 million in legal charges net of insurance recoveries, $0.3 million for employee terminations, and an insignificant net benefit for facility closure and operational efficiency activities. During the three months ended September 30, 2020, we commenced exit activities associated with an expired turnkey contract in Mexico whereby we incurred non-recurring charges totaling $6.9 million comprised of exit costs of $2.5 million for employee terminations, facility closure and other exit costs of $1.1 million, direct transaction costs of $2.7 million and impairment of a right-of-use asset of $0.6 million. We also conducted other operational efficiency activities which resulted in employee termination costs of $1.4 million and other costs of $0.1 million. The following tables summarize impairment, restructuring and other charges (benefits), net for the periods set forth below (in thousands): Three Months Ended September 30, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 552 $ — $ — $ — $ 552 Employee termination costs 3,737 — 146 — 3,883 Mexico transaction costs 2,692 — — — 2,692 Facility closures/consolidation 1,272 — — — 1,272 Legal costs (recoveries), net — — — (40) (40) Total expensed $ 8,253 $ — $ 146 $ (40) $ 8,359 Three Months Ended September 30, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Employee termination costs $ 336 $ — $ — $ — $ 336 Facility closures/consolidation (61) — — — (61) Legal costs (recoveries), net — — — 2,235 2,235 Total expensed $ 275 $ — $ — $ 2,235 $ 2,510 The accrued liability for restructuring and other charges is included in other accrued expenses and current liabilities in the condensed consolidated balance sheets. The changes in the accrued liability for restructuring and other charges for the three-month period ended September 30, 2021 were as follows (in thousands): Facility Employee Closure/ Legal Termination Consolidation Costs and Costs Cost Settlements Total Balance as of June 30, 2021 $ 250 $ 386 $ 2,772 $ 3,408 Restructuring and other charges (benefits), net 336 (61) 2,235 2,510 Payments, adjustments and reimbursements, net (275) (130) (812) (1,217) Balance as of September 30, 2021 $ 311 $ 195 $ 4,195 $ 4,701 |
Borrowings
Borrowings | 3 Months Ended |
Sep. 30, 2021 | |
Borrowings | |
Borrowings | 7. Borrowings Revolving Credit Facility We have a revolving credit facility with an aggregate committed amount of up to $535 million which matures in April 2024. 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 plus a margin of 1.0% as of September 30, 2021 (which margin can range from 1.0% to 1.75% based on our consolidated net leverage ratio as defined in the credit facility). The LIBOR index is expected to be discontinued by the end of calendar year 2021. The terms of our credit facility allow for replacement if that occurs. Letters of credit reduce the amount available to borrow under the credit facility by their face value amount. The unused portion of the facility bears a commitment fee of 0.10% as of September 30, 2021 (which fee can range from 0.10% to 0.25% 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 substantially all the assets of certain of our subsidiaries. The credit facility contains various representations and warranties, affirmative, negative and financial covenants and events of default. As of September 30, 2021, there was $26 million of borrowings outstanding under the revolving credit facility and $79.4 million outstanding under the letters of credit sub facility. The amount available to borrow under the credit facility as of September 30, 2021 was $429.6 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term. 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 facility and therefore, borrowings under the credit facility are included in current liabilities. As of September 30, 2021, we were in compliance with all financial covenants under this credit facility. 1.25% Convertible Senior Notes (“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% and are 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 original indenture provided that 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 irrevocably elected a combination settlement method to satisfy the conversion obligation, which provides for 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, as well as cash in lieu of fractional shares. 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. Since the last reported sales price of our Common Stock did not exceed 130% of the conversion price for at least 20 trading days within any applicable period of 30 consecutive trading days during fiscal year 2021, the Notes are not yet convertible. Pursuant to ASC 470-20, we originally 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 being amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for the three months ended September 30, 2020 related to the Notes was $3.3 million, which consisted of $0.9 million of contractual interest expense, $2.1 million of debt discount amortization and $0.3 million of amortization of debt issuance costs. For the three months ended September 30, 2021, the total interest expense was $1.2 million, which consisted of $0.9 million of contractual interest expense and $0.3 million of amortization of debt issuance costs. As of June 30, 2021, the unamortized debt discount of $10.5 In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments typically will be closer to the coupon interest rate. We early adopted the new guidance on July 1, 2021 using the modified retrospective approach and recorded a $19 million increase to retained earnings and a reduction of $27 million in common stock as if there had been no equity component. Additionally, we recorded an increase to the convertible notes balance by approximately $10 million. 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 September 30, 2021, $65.7 million was outstanding under these letter-of-credit facilities. As of September 30, 2021, the total amount available under these credit facilities was $9.4 million. Long-term debt consisted of the following (in thousands): June 30, 2021 September 30, 2021 1.25% convertible notes due September 1, 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (10,494) — Unamortized debt issuance costs (1,372) (1,278) 275,634 286,222 Other long-term debt 1,633 1,424 277,267 287,646 Less current portion of long-term debt (846) (286,954) Long-term portion of debt $ 276,421 $ 692 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 8. Stockholders’ Equity Stock-based Compensation As of September 30, 2021, 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. The 2012 Plan and the 2006 Plan are collectively referred to as the "OSI Plans." We recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): Three Months Ended September 30, 2020 2021 Cost of goods sold $ 179 $ 206 Selling, general and administrative 5,785 6,767 Research and development 145 140 Stock-based compensation expense $ 6,109 $ 7,113 As of September 30, 2021, total unrecognized compensation cost related to share-based compensation grants under the OSI Plans were estimated at $0.4 million for stock options and $31.8 million for restricted stock units (“RSUs”). We expect to recognize these costs over a weighted average period of 1.7 years with respect to the stock options and 1.6 years for grants of RSUs. The following summarizes stock option activity during the three months ended September 30, 2021: Weighted Average Weighted-Average Aggregate Number of Exercise Remaining Contractual Intrinsic Value Options Price Term (in thousands) Outstanding at June 30, 2021 255,220 $ 50.24 Granted — — Exercised (162,393) 34.08 Expired or forfeited (383) 78.14 Outstanding at September 30, 2021 92,444 78.51 6.1 years $ 1,590 Exercisable at September 30, 2021 58,840 74.44 4.6 years 1,226 The following summarizes RSU award activity during the three months ended September 30, 2021: Weighted- Average Shares Fair Value Nonvested at June 30, 2021 435,925 $ 84.16 Granted 306,349 89.92 Vested (310,077) 82.58 Forfeited (1,548) 82.43 Nonvested at September 30, 2021 430,649 $ 89.40 In December 2020, our shareholders authorized an increase of 1.65 million shares for the 2012 Plan resulting in a maximum pool of 7.1 million shares. As of September 30, 2021, there were approximately 1.5 million shares available for grant under the 2012 Plan. Under the terms of the 2012 Plan, RSUs and restricted stock granted from the pool of shares available for grant reduce the pool by 1.87 shares for each award granted. RSUs and restricted stock forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited. We granted 136,242 and 96,620 performance-based RSUs during the three months ended September 30, 2020 and 2021, 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 400% of the original number of shares or units awarded. Compensation cost associated with these performance based RSUs are recognized based on the estimated number of shares that we ultimately expect will vest. If the estimated number of shares to vest is revised in the future, then stock-based compensation expense will be adjusted accordingly. Stock Repurchase Program Our Board of Directors has authorized a share repurchase program of up to 3,000,000 shares of common stock. This program does not expire unless our Board of Directors acts to terminate the program. The timing and actual numbers of shares purchased depends on a variety of factors, including stock price, general business and market conditions and other investment opportunities. Repurchases may be made from time to time under the program through open-market purchases or privately-negotiated transactions at our discretion. Upon repurchase, the shares are restored to the status of authorized but unissued shares and we record them in our consolidated financial statements as a reduction in the number of shares of common stock issued and outstanding. During the three months ended September 30, 2021, we repurchased 168,506 shares of our common stock. Dividends We have not paid any cash dividends since the consummation of our initial public offering in 1997 and we do not currently intend to pay any cash dividends in the foreseeable future. Our Board of Directors will determine the payment of future cash dividends, if any. Certain of our current bank credit facilities restrict the payment of cash dividends and future borrowings may contain similar restrictions. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Acquisition-Related Contingent Obligations Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones through the acquired operations. For agreements that contain contingent consideration caps, the remaining maximum amount of such potential future payments is $32.4 million as of September 30, 2021. We account for such contingent payments for acquisitions which occurred through the end of fiscal year 2009 as additions to the purchase price of the acquired business. We made contingent payments relating to such acquisitions of $0.1 million and $0.3 million, respectively, during the three months ended September 30, 2020 and 2021, respectively. For acquisitions completed after fiscal 2009, pursuant to ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements. The estimated fair value measurements of contingent earnout obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income and the estimated probability of achieving the earnouts. 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, 2021 to September 30, 2021 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 (in thousands): Beginning fair value, June 30, 2021 $ 19,431 Addition of contingent earnout obligations 68 Foreign currency translation adjustment (119) Changes in fair value for contingent earnout obligations (2,426) Payments on contingent earnout obligations — Ending fair value, September 30, 2021 $ 16,954 Environmental Contingencies We are subject to various environmental laws. We often conduct environmental investigations at our manufacturing facilities in North America, Asia-Pacific, and Europe, and, to the extent practicable, on all new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations. 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 the 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 fully investigate the site and 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 breaches of representations, 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 liability amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. We have not recorded any liability for costs related to contingent indemnification obligations as of September 30, 2021. 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 current obligation for warranty provision is included in other accrued expenses and current liabilities and the noncurrent portion is included in other long-term liabilities in the consolidated balance sheets. The following table presents changes in warranty provisions (in thousands): Three Months Ended September 30, 2020 2021 Balance at beginning of period $ 20,825 $ 19,736 Additions and adjustments 930 1,004 Reductions for warranty repair costs (1,180) (2,376) Balance at end of period $ 20,575 $ 18,364 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 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. Arkansas Teacher Retirement Systems In April 2018 and March 2019, two shareholder derivative complaints were filed purportedly on behalf of the Company against certain members of our Board of Directors (as individual defendants), a former member of our Board of Directors, and a member of management. The derivative actions, which were consolidated by the District Court in November 2019 in an action captioned Riley v. Chopra, et al. 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 | 3 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Income Taxes | 10. Income Taxes 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, 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. The effective tax rates for the three months ended September 30, 2020 and 2021 were 25.3% and 15.9%, respectively. During the three months ended September 30, 2020 and 2021, we recognized net discrete tax benefit of $0.3 million and $2.1 million, respectively, for stock-based compensation under ASU 2016-09. |
Segment Information
Segment Information | 3 Months Ended |
Sep. 30, 2021 | |
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 external OEM customers, as well as to the Security and Healthcare divisions. Sales between divisions are at transfer prices that approximate market values. All other accounting policies of the segments are the same as described in Note 1, Basis of Presentation. The following tables present our results of operations and identifiable assets by industry segment (in thousands): Three Months Ended September 30, 2020 2021 Revenues (1) —by Segment: Security division $ 134,775 $ 149,517 Healthcare division 51,503 50,588 Optoelectronics and Manufacturing division, including intersegment revenues 79,914 92,305 Intersegment revenues elimination (11,284) (13,153) Total $ 254,908 $ 279,257 Income (loss) from operations —by Segment: Security division $ 8,906 $ 21,593 Healthcare division 8,984 5,920 Optoelectronics and Manufacturing division 8,740 9,783 Corporate (9,456) (12,463) Intersegment Eliminations (481) (153) Total $ 16,693 $ 24,680 June 30, September 30, 2021 2021 Assets (2) —by Segment: Security division $ 798,192 $ 806,025 Healthcare division 220,411 220,818 Optoelectronics and Manufacturing division 282,039 295,684 Corporate 121,293 125,102 Eliminations (3) (37,568) (36,990) Total $ 1,384,367 $ 1,410,639 (1) (2) (3) |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Sep. 30, 2021 | |
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 and GAAP 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 annual 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 unaudited 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, 2021 filed with the SEC. The results of operations for the three months ended September 30, 2021 are not necessarily indicative of the operating results to be expected for the full 2022 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, 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, legal contingencies and recoveries, 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. Due to the inherent uncertainty involved in making estimates, our actual amounts reported in future periods could differ materially from these estimates. |
Earnings Per Share Computations | Earnings 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. The underlying equity component of the 1.25% convertible senior notes due 2022 (the “Notes”) discussed in Note 7 to the condensed consolidated financial statements will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $107.46 because the principal amount of the Notes is intended to be settled in cash upon conversion. There was no dilutive effect of the Notes for the three months ended September 30, 2020 and 2021. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended September 30, 2020 2021 Net income available to common stockholders $ 9,344 $ 19,052 Weighted average shares outstanding—basic 18,051 17,947 Dilutive effect of equity awards 284 359 Weighted average shares outstanding—diluted 18,335 18,306 Basic earnings per share $ 0.52 $ 1.06 Diluted earnings per share $ 0.51 $ 1.04 Shares excluded from diluted earnings per share due to their anti-dilutive effect 87 20 |
Cash and Cash Equivalents | Cash and 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 $54.7 million at September 30, 2021. Of this amount, approximately 83% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Malaysia, Singapore and Canada, and to a lesser extent in Australia, Albania and Germany among other countries. We have cash holdings in financial institutions that exceed insured limits for such financial institutions; however, we mitigate this risk by utilizing international financial institutions of high credit quality. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments and foreign currency forward contracts. 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 for financing available to us. The fair values of our foreign currency forward contracts were not significant as of September 30, 2021. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Level 1 category includes assets and liabilities measured at quoted prices in active markets for identical assets and liabilities. The Level 2 category includes assets and liabilities measured from observable inputs other than quoted market prices. The Level 3 category includes assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement. Our contingent payment obligations related to acquisitions, which are further discussed in Note 9 to the condensed consolidated financial statements, are in the Level 3 category for valuation purposes. The fair values of our financial assets and liabilities are categorized as follows (in thousands): June 30, 2021 September 30, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets—Insurance company contracts $ — $ 47,113 $ — $ 47,113 $ — $ 48,416 $ — $ 48,416 Liabilities—Contingent consideration $ — $ — $ 19,431 $ 19,431 $ — $ — $ 16,954 $ 16,954 |
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity Our use of derivatives consists of foreign currency forward contracts. These forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations. These contracts have original maturities of up to three months. We do not use hedging instruments for speculative purposes. The net investment hedge has been designated as a hedge instrument and accounted for under Accounting Standards Codification ("ASC”) 815 Derivatives and Hedging The net gains or losses from the foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated income statement. We initiated these forward contracts in the first quarter of fiscal 2021. The amounts reported in the consolidated income statement for the three months ended September 30, 2021 were not significant. The fair value of our forward foreign exchange contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term. Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. As of June 30, 2021 and September 30, 2021, we held foreign currency forward contracts with notional amounts totaling $26.1 million and $22.4 million, respectively. Unrealized gains and losses from the forward currency forward contracts as of September 30, 2021 were not significant. Business Combinations Under ASC 805, Business Combinations |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Convertible Debt In August 2020, the FASB issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity Income Taxes In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation | |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended September 30, 2020 2021 Net income available to common stockholders $ 9,344 $ 19,052 Weighted average shares outstanding—basic 18,051 17,947 Dilutive effect of equity awards 284 359 Weighted average shares outstanding—diluted 18,335 18,306 Basic earnings per share $ 0.52 $ 1.06 Diluted earnings per share $ 0.51 $ 1.04 Shares excluded from diluted earnings per share due to their anti-dilutive effect 87 20 |
Schedule of fair values of financial assets and liabilities | The fair values of our financial assets and liabilities are categorized as follows (in thousands): June 30, 2021 September 30, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets—Insurance company contracts $ — $ 47,113 $ — $ 47,113 $ — $ 48,416 $ — $ 48,416 Liabilities—Contingent consideration $ — $ — $ 19,431 $ 19,431 $ — $ — $ 16,954 $ 16,954 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Balance Sheet Details | |
Schedule of selected balance sheet accounts | The following tables provide details of selected balance sheet accounts (in thousands): June 30, September 30, Accounts receivable, net 2021 2021 Accounts receivable $ 315,926 $ 315,864 Less allowance for doubtful accounts (25,273) (23,860) Total $ 290,653 $ 292,004 June 30, September 30, Inventories 2021 2021 Raw materials $ 160,313 $ 179,445 Work-in-process 59,594 59,773 Finished goods 74,301 81,455 Total $ 294,208 $ 320,673 June 30, September 30, Property and equipment, net 2021 2021 Land $ 16,357 $ 16,349 Buildings, civil works and improvements 57,555 56,353 Leasehold improvements 8,874 9,083 Equipment and tooling 129,735 130,411 Furniture and fixtures 3,275 3,382 Computer equipment 19,349 20,108 Computer software 23,090 23,298 Computer software implementation in process 11,102 11,040 Construction in process 4,011 3,797 Total 273,348 273,821 Less accumulated depreciation and amortization (155,344) (157,007) Property and equipment, net $ 118,004 $ 116,814 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying value of goodwill by segment | The changes in the carrying value of goodwill by segment for the three-month period ended September 30, 2021 were as follows (in thousands) Optoelectronics And Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2021 $ 206,426 $ 43,584 $ 70,294 $ 320,304 Goodwill acquired or adjusted during the period 212 — — 212 Foreign currency translation adjustment (150) (94) (927) (1,171) Balance as of September 30, 2021 $ 206,488 $ 43,490 $ 69,367 $ 319,345 |
Schedule of intangible assets | Intangible assets consisted of the following (in thousands): June 30, 2021 September 30, 2021 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 8-9 years $ 49,183 $ (15,679) $ 33,504 $ 53,326 $ (16,436) $ 36,890 Patents 19 years 8,753 (2,597) 6,156 8,501 (2,697) 5,804 Developed technology 10 years 60,665 (25,923) 34,742 60,612 (27,505) 33,107 Customer relationships 7 years 50,676 (26,588) 24,088 50,099 (27,750) 22,349 Total amortizable assets 169,277 (70,787) 98,490 172,538 (74,388) 98,150 Non-amortizable assets: In-process R&D 533 — 533 533 — 533 Trademarks 28,585 — 28,585 28,579 — 28,579 Total intangible assets $ 198,395 $ (70,787) $ 127,608 $ 201,650 $ (74,388) $ 127,262 |
Schedule of estimated future amortization expense for intangible assets | At September 30, 2021, the estimated future amortization expense for intangible assets was as follows (in thousands): Fiscal Year 2022 (remaining 9 months) $ 12,764 2023 19,482 2024 18,962 2025 15,668 2026 11,736 Thereafter 19,538 Total $ 98,150 |
Contract Assets and Liabiliti_2
Contract Assets and Liabilities (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Contract Assets and Liabilities | |
Schedule of contract assets and contract liabilities | Contract Assets (in thousands) June 30, September 30, 2021 2021 Change % Change Unbilled revenue (included in accounts receivable, net) $ 40,853 $ 41,107 $ 254 1 % Contract Liabilities (in thousands) June 30, September 30, 2021 2021 Change % Change Advances from customers $ 38,463 $ 34,564 $ (3,899) (10) % Deferred revenue—current 32,689 35,615 2,926 9 % Deferred revenue—long-term 14,898 18,150 3,252 22 % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Leases | |
Schedule of components of operating lease expense | The components of operating lease expense were as follows (in thousands): Three Months Ended September 30, 2020 2021 Operating lease cost $ 2,533 $ 2,275 Variable lease cost 258 184 Short-term lease cost 212 279 $ 3,003 $ 2,738 |
Schedule of supplemental disclosures related to operating leases | Supplemental disclosures related to operating leases were as follows (in thousands): Balance Sheet Category June 30, 2021 September 30, 2021 Operating lease ROU assets, net Other assets $ 23,439 $ 29,787 Operating lease liabilities, current portion Other accrued expenses and current liabilities $ 7,499 $ 7,591 Operating lease liabilities, long-term Other long-term liabilities 16,317 22,526 Total operating lease liabilities $ 23,816 $ 30,117 Weighted average remaining lease term 3.9 years Weighted average discount rate 4.1 % |
Schedule of supplemental cash flow information related to operating leases | Supplemental cash flow information related to operating leases was as follows (in thousands): Three Months Ended September 30, 2020 2021 Cash paid for operating lease liabilities $ 2,580 $ 2,327 ROU assets obtained in exchange for new lease obligations 122 1,643 |
Schedule of maturities of operating lease liabilities | Maturities of operating lease liabilities at September 30, 2021 were as follows (in thousands): September 30, 2021 Less than one year $ 8,378 1 – 2 years 7,298 2 – 3 years 6,044 3 – 4 years 4,395 4 – 5 years 3,635 Thereafter 2,751 32,501 Less: imputed interest (2,384) Total lease liabilities $ 30,117 |
Impairment, Restructuring and_2
Impairment, Restructuring and Other Charges (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Impairment, Restructuring and Other Charges | |
Summary of impairment, restructuring and other charges (benefit), net | The following tables summarize impairment, restructuring and other charges (benefits), net for the periods set forth below (in thousands): Three Months Ended September 30, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 552 $ — $ — $ — $ 552 Employee termination costs 3,737 — 146 — 3,883 Mexico transaction costs 2,692 — — — 2,692 Facility closures/consolidation 1,272 — — — 1,272 Legal costs (recoveries), net — — — (40) (40) Total expensed $ 8,253 $ — $ 146 $ (40) $ 8,359 Three Months Ended September 30, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Employee termination costs $ 336 $ — $ — $ — $ 336 Facility closures/consolidation (61) — — — (61) Legal costs (recoveries), net — — — 2,235 2,235 Total expensed $ 275 $ — $ — $ 2,235 $ 2,510 |
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 three-month period ended September 30, 2021 were as follows (in thousands): Facility Employee Closure/ Legal Termination Consolidation Costs and Costs Cost Settlements Total Balance as of June 30, 2021 $ 250 $ 386 $ 2,772 $ 3,408 Restructuring and other charges (benefits), net 336 (61) 2,235 2,510 Payments, adjustments and reimbursements, net (275) (130) (812) (1,217) Balance as of September 30, 2021 $ 311 $ 195 $ 4,195 $ 4,701 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Borrowings | |
Schedule of long-term debt | Long-term debt consisted of the following (in thousands): June 30, 2021 September 30, 2021 1.25% convertible notes due September 1, 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (10,494) — Unamortized debt issuance costs (1,372) (1,278) 275,634 286,222 Other long-term debt 1,633 1,424 277,267 287,646 Less current portion of long-term debt (846) (286,954) Long-term portion of debt $ 276,421 $ 692 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Schedule of stock-based compensation expense in the consolidated statements of operations | We recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): Three Months Ended September 30, 2020 2021 Cost of goods sold $ 179 $ 206 Selling, general and administrative 5,785 6,767 Research and development 145 140 Stock-based compensation expense $ 6,109 $ 7,113 |
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, 2021 255,220 $ 50.24 Granted — — Exercised (162,393) 34.08 Expired or forfeited (383) 78.14 Outstanding at September 30, 2021 92,444 78.51 6.1 years $ 1,590 Exercisable at September 30, 2021 58,840 74.44 4.6 years 1,226 |
Summary of RSU award activity | Weighted- Average Shares Fair Value Nonvested at June 30, 2021 435,925 $ 84.16 Granted 306,349 89.92 Vested (310,077) 82.58 Forfeited (1,548) 82.43 Nonvested at September 30, 2021 430,649 $ 89.40 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Schedule of roll-forward of the contingent consideration liability | The following table provides a roll-forward from June 30, 2021 to September 30, 2021 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 (in thousands): Beginning fair value, June 30, 2021 $ 19,431 Addition of contingent earnout obligations 68 Foreign currency translation adjustment (119) Changes in fair value for contingent earnout obligations (2,426) Payments on contingent earnout obligations — Ending fair value, September 30, 2021 $ 16,954 |
Schedule of changes in warranty provisions | The following table presents changes in warranty provisions (in thousands): Three Months Ended September 30, 2020 2021 Balance at beginning of period $ 20,825 $ 19,736 Additions and adjustments 930 1,004 Reductions for warranty repair costs (1,180) (2,376) Balance at end of period $ 20,575 $ 18,364 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Sep. 30, 2021 | |
Segment Information | |
Schedule of results of operations and identifiable assets by industry segment | The following tables present our results of operations and identifiable assets by industry segment (in thousands): Three Months Ended September 30, 2020 2021 Revenues (1) —by Segment: Security division $ 134,775 $ 149,517 Healthcare division 51,503 50,588 Optoelectronics and Manufacturing division, including intersegment revenues 79,914 92,305 Intersegment revenues elimination (11,284) (13,153) Total $ 254,908 $ 279,257 Income (loss) from operations —by Segment: Security division $ 8,906 $ 21,593 Healthcare division 8,984 5,920 Optoelectronics and Manufacturing division 8,740 9,783 Corporate (9,456) (12,463) Intersegment Eliminations (481) (153) Total $ 16,693 $ 24,680 June 30, September 30, 2021 2021 Assets (2) —by Segment: Security division $ 798,192 $ 806,025 Healthcare division 220,411 220,818 Optoelectronics and Manufacturing division 282,039 295,684 Corporate 121,293 125,102 Eliminations (3) (37,568) (36,990) Total $ 1,384,367 $ 1,410,639 (1) (2) (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 | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Computation of basic and diluted earnings per share | ||
Net income available to common stockholders | $ 19,052 | $ 9,344 |
Weighted average shares outstanding-basic | 17,947 | 18,051 |
Dilutive effect of equity awards | 359 | 284 |
Dilutive effect of the Notes | 0 | 0 |
Weighted average shares outstanding-diluted | 18,306 | 18,335 |
Basic earnings per share | $ 1.06 | $ 0.52 |
Diluted earnings per share | $ 1.04 | $ 0.51 |
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 20 | 87 |
1.25% Convertible Senior Notes Due 2022 | ||
Per Share Computations | ||
Interest rate (as a percentage) | 1.25% | |
Computation of basic and diluted earnings per share | ||
Conversion price | $ 107.46 |
Basis of Presentation - Cash Eq
Basis of Presentation - Cash Equivalents (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Jun. 30, 2021 | |
Cash Equivalents | ||
Cash and cash equivalents | $ 54,663 | $ 80,613 |
Cash, cash equivalents, and investments held by our foreign subsidiaries and subject to repatriation tax considerations(as a percentage) | 83.00% |
Basis of Presentation - Fair Va
Basis of Presentation - Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 |
Fair Value of Financial Instruments | ||
Liabilities-contingent consideration | $ 16,954 | $ 19,431 |
Recurring | ||
Fair Value of Financial Instruments | ||
Assets - Insurance company contracts | 48,416 | 47,113 |
Liabilities-contingent consideration | 16,954 | 19,431 |
Recurring | Level 2 | ||
Fair Value of Financial Instruments | ||
Assets - Insurance company contracts | 48,416 | 47,113 |
Recurring | Level 3 | ||
Fair Value of Financial Instruments | ||
Liabilities-contingent consideration | $ 16,954 | $ 19,431 |
Basis of Presentation - Derivat
Basis of Presentation - Derivative Instruments and Hedging Activity (Details) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 |
Derivative Instruments and Hedging Activity | ||
Derivative instruments and Hedges | $ 0 | |
Foreign currency forward contracts | ||
Derivative Instruments and Hedging Activity | ||
Notional amounts | $ 22,400,000 | $ 26,100,000 |
Basis of Presentation - Recentl
Basis of Presentation - Recently Adopted Accounting Pronouncements (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Jul. 01, 2021 | Jun. 30, 2021 |
Changes for the adoption of the new lease standard | |||
Increase to retained earnings | $ 586,850 | $ 548,842 | |
Reduction in common stock | $ 53,377 | $ 105,724 | |
Cumulative effect period of adoption, adjustment | ASU 2020-06 | |||
Changes for the adoption of the new lease standard | |||
Increase to retained earnings | $ 19,000 | ||
Reduction in common stock | 27,000 | ||
Increase to convertible loan balance | $ 10,000 |
Balance Sheet Details (Details)
Balance Sheet Details (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | |
Accounts receivable, net | |||
Accounts receivable | $ 315,864 | $ 315,926 | |
Less allowance for doubtful accounts | (23,860) | (25,273) | |
Total | 292,004 | 290,653 | |
Inventories | |||
Raw materials | 179,445 | 160,313 | |
Work-in-process | 59,773 | 59,594 | |
Finished goods | 81,455 | 74,301 | |
Total | 320,673 | 294,208 | |
Property and equipment, net | |||
Property and equipment, gross | 273,821 | 273,348 | |
Less accumulated depreciation and amortization | (157,007) | (155,344) | |
Property and equipment, net | 116,814 | 118,004 | |
Depreciation | 5,300 | $ 5,200 | |
Land | |||
Property and equipment, net | |||
Property and equipment, gross | 16,349 | 16,357 | |
Buildings, civil works and improvements | |||
Property and equipment, net | |||
Property and equipment, gross | 56,353 | 57,555 | |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment, gross | 9,083 | 8,874 | |
Equipment and tooling | |||
Property and equipment, net | |||
Property and equipment, gross | 130,411 | 129,735 | |
Furniture and fixtures | |||
Property and equipment, net | |||
Property and equipment, gross | 3,382 | 3,275 | |
Computer equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 20,108 | 19,349 | |
Computer software | |||
Property and equipment, net | |||
Property and equipment, gross | 23,298 | 23,090 | |
Computer software implementation in process | |||
Property and equipment, net | |||
Property and equipment, gross | 11,040 | 11,102 | |
Construction in process | |||
Property and equipment, net | |||
Property and equipment, gross | $ 3,797 | $ 4,011 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2021USD ($) | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 320,304 |
Goodwill acquired or adjusted during the period | 212 |
Foreign currency translation adjustment | (1,171) |
Balance at the end of the period | 319,345 |
Security Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 206,426 |
Goodwill acquired or adjusted during the period | 212 |
Foreign currency translation adjustment | (150) |
Balance at the end of the period | 206,488 |
Healthcare Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 43,584 |
Foreign currency translation adjustment | (94) |
Balance at the end of the period | 43,490 |
Optoelectronics and Manufacturing Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 70,294 |
Foreign currency translation adjustment | (927) |
Balance at the end of the period | $ 69,367 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | |
Amortizable assets: | |||
Gross Carrying Value | $ 172,538 | $ 169,277 | |
Accumulated Amortization | (74,388) | (70,787) | |
Total | 98,150 | 98,490 | |
Total intangible assets | |||
Gross Carrying Value | 201,650 | 198,395 | |
Intangible assets, net | 127,262 | 127,608 | |
Amortization expense | 4,400 | $ 4,800 | |
In-process R&D | |||
Non-amortizable assets: | |||
Gross Carrying Value | 533 | 533 | |
Trademarks | |||
Non-amortizable assets: | |||
Gross Carrying Value | 28,579 | 28,585 | |
Software development costs | |||
Amortizable assets: | |||
Gross Carrying Value | 53,326 | 49,183 | |
Accumulated Amortization | (16,436) | (15,679) | |
Total | $ 36,890 | 33,504 | |
Software development costs | Minimum | |||
Intangible assets | |||
Weighted Average Lives (in Years) | 8 years | ||
Software development costs | Maximum | |||
Intangible assets | |||
Weighted Average Lives (in Years) | 9 years | ||
Patents | |||
Intangible assets | |||
Weighted Average Lives (in Years) | 19 years | ||
Amortizable assets: | |||
Gross Carrying Value | $ 8,501 | 8,753 | |
Accumulated Amortization | (2,697) | (2,597) | |
Total | $ 5,804 | 6,156 | |
Developed technology | |||
Intangible assets | |||
Weighted Average Lives (in Years) | 10 years | ||
Amortizable assets: | |||
Gross Carrying Value | $ 60,612 | 60,665 | |
Accumulated Amortization | (27,505) | (25,923) | |
Total | $ 33,107 | 34,742 | |
Customer relationships/backlog | |||
Intangible assets | |||
Weighted Average Lives (in Years) | 7 years | ||
Amortizable assets: | |||
Gross Carrying Value | $ 50,099 | 50,676 | |
Accumulated Amortization | (27,750) | (26,588) | |
Total | $ 22,349 | $ 24,088 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Intangible Amortization (Details) - USD ($) $ in Thousands | 15 Months Ended | |
Sep. 30, 2021 | Jun. 30, 2021 | |
Estimated future amortization expense | ||
2022 (remaining 9 months) | $ 12,764 | |
2023 | 19,482 | |
2024 | 18,962 | |
2025 | 15,668 | |
2026 | 11,736 | |
Thereafter | 19,538 | |
Total | 98,150 | $ 98,490 |
Software development costs | ||
Estimated future amortization expense | ||
Total | 36,890 | $ 33,504 |
Capitalized software development costs | $ 4,100 |
Contract Assets and Liabiliti_3
Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Jun. 30, 2021 | |
Contract Assets | ||
Unbilled revenue | $ 41,107 | $ 40,853 |
Change in unbilled revenue | $ 254 | |
Percentage of change in unbilled revenue | 1.00% | |
Contract Liabilities | ||
Advances from customers | $ 34,564 | 38,463 |
Deferred revenue - current | 35,615 | 32,689 |
Deferred revenue - long-term | 18,150 | $ 14,898 |
Change in advances from customers | $ (3,899) | |
Percentage of change in advances from customers | (10.00%) | |
Change in deferred revenue - current | $ 2,926 | |
Percentage of change in deferred revenue - current | 9.00% | |
Change in deferred revenue - long-term | $ 3,252 | |
Percentage of change in deferred revenue - long-term | 22.00% | |
Remaining Performance Obligations | ||
Revenue remaining performance obligation | $ 414,100 | |
Remaining performance obligation expected percentage recognized | 34.00% | |
Recognized revenue from contract liabilities | $ 22,800 | |
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] | true | |
Revenue, Practical Expedient, Financing Component [true false] | true | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation expected timing of satisfaction period | 12 months |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | |
Operating lease expense | |||
Operating lease cost | $ 2,275 | $ 2,533 | |
Variable lease cost | 184 | 258 | |
Short-term lease cost | 279 | 212 | |
Operating lease expense | 2,738 | 3,003 | |
Balance sheet assets and liabilities related to operating leases | |||
Operating lease ROU assets, net | $ 29,787 | $ 23,439 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent. | ||
Operating lease liabilities, current portion | $ 7,591 | 7,499 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | ||
Operating lease liabilities, long-term | $ 22,526 | 16,317 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | ||
Total operating lease liabilities | $ 30,117 | $ 23,816 | |
Weighted average remaining lease term | 3 years 10 months 24 days | ||
Weighted average discount rate | 4.10% | ||
Cash flow information related to operating leases | |||
Cash paid for operating lease liabilities | $ 2,327 | 2,580 | |
ROU assets obtained in exchange for new lease obligations | $ 1,643 | $ 122 |
Leases - Maturities of operatin
Leases - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 |
Maturities of operating lease liabilities | ||
Less than one year | $ 8,378 | |
1 - 2 years | 7,298 | |
2 - 3 years | 6,044 | |
3 - 4 years | 4,395 | |
4 - 5 years | 3,635 | |
Thereafter | 2,751 | |
Total | 32,501 | |
Less: imputed interest | (2,384) | |
Total operating lease liabilities | $ 30,117 | $ 23,816 |
Impairment, Restructuring and_3
Impairment, Restructuring and Other Charges (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | |
Impairment, Restructuring and Other Charges | |||
Impairment charges | $ 552 | ||
Employee termination costs | $ 336 | 3,883 | |
Mexico transaction costs | 2,692 | ||
Facility closures/consolidation | (61) | 1,272 | |
Legal costs (recoveries), net | $ 12,500 | 2,235 | (40) |
Total expensed | 2,510 | 8,359 | |
Other operational efficiency activities | |||
Impairment, Restructuring and Other Charges | |||
Net benefit recognized related to reimbursement from insurance | (2,200) | ||
Employee termination costs | 300 | 1,400 | |
Total expensed | 2,500 | ||
Security Division | |||
Impairment, Restructuring and Other Charges | |||
Impairment charges | 552 | ||
Employee termination costs | 336 | 3,737 | |
Mexico transaction costs | 2,692 | ||
Facility closures/consolidation | (61) | 1,272 | |
Total expensed | 275 | 8,253 | |
Optoelectronics and Manufacturing Division | |||
Impairment, Restructuring and Other Charges | |||
Employee termination costs | 146 | ||
Total expensed | 146 | ||
Corporate. | |||
Impairment, Restructuring and Other Charges | |||
Legal costs (recoveries), net | 2,235 | (40) | |
Total expensed | $ 2,235 | (40) | |
Turnkey Screening Program | Other operational efficiency activities | |||
Impairment, Restructuring and Other Charges | |||
Other Restructuring charges | 100 | ||
Turnkey Screening Program | Security Division | |||
Impairment, Restructuring and Other Charges | |||
Restructuring Charges | (6,900) | ||
Employee termination costs | 2,500 | ||
Direct transaction costs | 2,700 | ||
Impairment of right-of-use asset | 600 | ||
Other Restructuring charges | $ 1,100 |
Impairment, Restructuring and_4
Impairment, Restructuring and Other Charges (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2021USD ($) | |
Restructuring and other charges | |
Balance at the beginning of the period | $ 3,408 |
Restructuring and other charges (benefit), net | 2,510 |
Payments, adjustments and reimbursements, net | (1,217) |
Balance at the end of the period | 4,701 |
Employee Termination Costs | |
Restructuring and other charges | |
Balance at the beginning of the period | 250 |
Restructuring and other charges (benefit), net | 336 |
Payments, adjustments and reimbursements, net | (275) |
Balance at the end of the period | 311 |
Facility Closure/ Consolidation Cost | |
Restructuring and other charges | |
Balance at the beginning of the period | 386 |
Restructuring and other charges (benefit), net | (61) |
Payments, adjustments and reimbursements, net | (130) |
Balance at the end of the period | 195 |
Legal Costs and Settlements | |
Restructuring and other charges | |
Balance at the beginning of the period | 2,772 |
Restructuring and other charges (benefit), net | 2,235 |
Payments, adjustments and reimbursements, net | (812) |
Balance at the end of the period | $ 4,195 |
Borrowings (Details)
Borrowings (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Sep. 30, 2021USD ($)D$ / shares | Sep. 30, 2020USD ($) | Jul. 01, 2021USD ($) | Jun. 30, 2021USD ($) | Feb. 28, 2017USD ($) | |
Borrowings | |||||
Borrowings outstanding | $ 26,000 | ||||
Increase to retained earnings | 586,850 | $ 548,842 | |||
Reduction in common stock | 53,377 | 105,724 | |||
Revolving Credit Facility | |||||
Borrowings | |||||
Maximum borrowing capacity | $ 535,000 | ||||
Unused commitment fee (as a percent) | 0.10% | ||||
Borrowings outstanding | $ 26,000 | ||||
Available credit facility | $ 429,600 | ||||
Revolving Credit Facility | Minimum | |||||
Borrowings | |||||
Unused commitment fee (as a percent) | 0.10% | ||||
Revolving Credit Facility | Maximum | |||||
Borrowings | |||||
Increase in the credit agreement's borrowing capacity available under certain circumstances | $ 250,000 | ||||
Unused commitment fee (as a percent) | 0.25% | ||||
Revolving Credit Facility | LIBOR | |||||
Borrowings | |||||
Interest rate margin (as a percent) | 1.00% | ||||
Revolving Credit Facility | LIBOR | Minimum | |||||
Borrowings | |||||
Interest rate margin (as a percent) | 1.00% | ||||
Revolving Credit Facility | LIBOR | Maximum | |||||
Borrowings | |||||
Interest rate margin (as a percent) | 1.75% | ||||
Letters of credit sub facility | |||||
Borrowings | |||||
Maximum borrowing capacity | $ 300,000 | ||||
Amount outstanding under letters of credit | 79,400 | ||||
1.25% Convertible Senior Notes Due 2022 | |||||
Borrowings | |||||
Principal amount | $ 287,500 | $ 287,500 | |||
Interest rate (as a percentage) | 1.25% | ||||
Conversion ratio | 9.3056 | ||||
Conversion price | $ / shares | $ 107.46 | ||||
Premium on stock price | 38.50% | ||||
Threshold percentage of stock price | 130.00% | ||||
Number of trading days | D | 20 | ||||
Number of consecutive trading days | D | 30 | ||||
Principal amount of the notes to be repurchased (as a percentage) | 100.00% | ||||
Liability component of convertible debt | $ 242,400 | ||||
Equity component of convertible debt | 45,100 | ||||
Debt issuance costs | 7,700 | ||||
Debt Component of debt issuance costs | 6,500 | ||||
Equity component of debt issuance costs | 1,200 | ||||
Total interest expense | 1,200 | $ 3,300 | |||
Contractual interest expense | 900 | 900 | |||
Amortization of debt discount | 2,100 | ||||
Amortization of debt issuance costs | 300 | $ 300 | |||
Unamortized discount | 10,494 | ||||
Unamortized debt issuance costs | 1,300 | $ 1,400 | |||
Bank lines of credit | |||||
Borrowings | |||||
Amount outstanding under letters of credit | 65,700 | ||||
Available credit facility | $ 9,400 | ||||
ASU 2020-06 | Cumulative effect period of adoption, adjustment | |||||
Borrowings | |||||
Liability component of convertible debt | $ 10,000 | ||||
Increase to retained earnings | 19,000 | ||||
Reduction in common stock | 27,000 | ||||
ASU 2020-06 | Cumulative effect period of adoption, adjustment | 1.25% Convertible Senior Notes Due 2022 | |||||
Borrowings | |||||
Liability component of convertible debt | 10,000 | ||||
Increase to retained earnings | 19,000 | ||||
Reduction in common stock | $ 27,000 |
Borrowings - Other borrowings (
Borrowings - Other borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 |
Components of long-term debt | ||
Convertible notes | $ 286,222 | $ 275,634 |
Other long-term debt | 1,424 | 1,633 |
Total | 287,646 | 277,267 |
Less current portion of long-term debt | (286,954) | (846) |
Long-term portion of debt | 692 | 276,421 |
1.25% Convertible Senior Notes Due 2022 | ||
Components of long-term debt | ||
Principal amount | 287,500 | 287,500 |
Unamortized discount | (10,494) | |
Unamortized debt issuance costs | $ (1,278) | $ (1,372) |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |
Dec. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Stock-based Compensation | |||
Stock-based compensation expense | $ 7,113 | $ 6,109 | |
RSU | |||
Stock-based Compensation | |||
Unrecognized compensation cost | $ 31,800 | ||
Weighted-average period | 1 year 7 months 6 days | ||
Shares | |||
Nonvested at the beginning of the period (in shares) | 435,925 | ||
Granted (in shares) | 306,349 | ||
Vested (in shares) | (310,077) | ||
Forfeited (in shares) | (1,548) | ||
Nonvested at the end of the period (in shares) | 430,649 | ||
Weighted-Average Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 84.16 | ||
Granted (in dollars per share) | 89.92 | ||
Vested (in dollars per share) | 82.58 | ||
Forfeited (in dollars per share) | 82.43 | ||
Nonvested at the end of the period (in dollars per share) | $ 89.40 | ||
Stock options | |||
Stock-based Compensation | |||
Unrecognized compensation cost | $ 400 | ||
Weighted-average period | 1 year 8 months 12 days | ||
Number of Options | |||
Outstanding at the beginning of the period (in shares) | 255,220 | ||
Exercised (in shares) | (162,393) | ||
Expired or forfeited (in shares) | (383) | ||
Outstanding at the end of the period (in shares) | 92,444 | ||
Exercisable at the end of the period (in shares) | 58,840 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 50.24 | ||
Exercised (in dollars per share) | 34.08 | ||
Expired or forfeited (in dollars per share) | 78.14 | ||
Outstanding at the end of the period (in dollars per share) | 78.51 | ||
Exercisable at the end of the period (in dollars per share) | $ 74.44 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding at the end of the period | 6 years 1 month 6 days | ||
Exercisable at the end of the period | 4 years 7 months 6 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 1,590 | ||
Exercisable at the end of the period | $ 1,226 | ||
Performance-based restricted stock units | |||
Shares | |||
Granted (in shares) | 96,620 | 136,242 | |
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 | 400.00% | ||
2012 Plan | |||
Stock-based Compensation | |||
Additional maximum number of shares of common stock which may be issued | 1,650,000 | ||
Increase in maximum number of shares authorized under share based compensation plan | 7,100,000 | ||
Shares available for grant | 1,500,000 | ||
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 | ||
2006 Plan | |||
Number of Options | |||
Granted (in shares) | 0 | ||
Cost of goods sold | |||
Stock-based Compensation | |||
Stock-based compensation expense | $ 206 | $ 179 | |
Selling, general and administrative | |||
Stock-based Compensation | |||
Stock-based compensation expense | 6,767 | 5,785 | |
Research and development | |||
Stock-based Compensation | |||
Stock-based compensation expense | $ 140 | $ 145 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchase Program (Details) - Common stock - shares | 3 Months Ended | |
Sep. 30, 2021 | Aug. 31, 2020 | |
Share Repurchase Program | ||
Number of repurchased shares authorized | 3,000,000 | |
Number of shares repurchased | 168,506 |
Commitments and Contingencies -
Commitments and Contingencies - Contingent Acquisition Obligations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | |
Contingent Acquisition Obligations | ||||
Beginning fair value | $ 19,431 | |||
Additions | 68 | |||
Foreign currency translation adjustment | (119) | |||
Change in fair value | (2,426) | |||
Ending fair value | 16,954 | |||
Legal Proceedings | ||||
Legal fees, settlements and related costs, net | $ 12,500 | 2,235 | $ (40) | |
Other accrued expenses and current liabilities | 12,500 | |||
Prepaid expenses and other assets | 62,870 | $ 43,930 | ||
Arkansas Teacher Retirement Systems | ||||
Legal Proceedings | ||||
Prepaid expenses and other assets | 12,500 | |||
Other business acquisitions | ||||
Contingent Acquisition Obligations | ||||
Remaining maximum amount of contingent consideration | 32,400 | |||
Payments for contingent consideration | $ 300 | $ 100 | ||
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 |
Commitments and Contingencies_2
Commitments and Contingencies - Product Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Changes in provision for warranties | ||
Warranty provision at beginning of period | $ 19,736 | $ 20,825 |
Additions and adjustments | 1,004 | 930 |
Reductions for warranty repair costs | (2,376) | (1,180) |
Warranty provision at end of period | $ 18,364 | $ 20,575 |
Income Taxes - (Details)
Income Taxes - (Details) - ASU 2016-09 - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Net discrete tax benefits for stock-based compensation | $ 2.1 | $ 0.3 |
Effective income tax rate (as a percent) | 15.90% | 25.30% |
Segment Information - Operation
Segment Information - Operations and Identifiable Assets (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | 15 Months Ended | |
Sep. 30, 2021USD ($)segmentcustomer | Sep. 30, 2020USD ($) | Jun. 30, 2021USD ($)customer | Sep. 30, 2021USD ($)customer | |
Operations and identifiable assets by industry segment | ||||
Number of identifiable industry segments | segment | 3 | |||
Total revenues | $ 279,257 | $ 254,908 | ||
Income (loss) from operations | 24,680 | 16,693 | ||
Segments assets | $ 1,410,639 | $ 1,384,367 | $ 1,410,639 | |
Number of major customers | customer | 0 | 0 | 0 | |
One customer | Accounts receivable | Customer Concentration Risk | ||||
Operations and identifiable assets by industry segment | ||||
Concentration (as a percent) | 10.00% | |||
International customers | Revenue | Customer Concentration Risk | ||||
Operations and identifiable assets by industry segment | ||||
Concentration (as a percent) | 10.00% | |||
Operating Segments | Security Division | ||||
Operations and identifiable assets by industry segment | ||||
Total revenues | $ 149,517 | 134,775 | ||
Income (loss) from operations | 21,593 | 8,906 | ||
Segments assets | 806,025 | $ 798,192 | $ 806,025 | |
Operating Segments | Healthcare Division | ||||
Operations and identifiable assets by industry segment | ||||
Total revenues | 50,588 | 51,503 | ||
Income (loss) from operations | 5,920 | 8,984 | ||
Segments assets | 220,818 | 220,411 | 220,818 | |
Operating Segments | Optoelectronics and Manufacturing Division | ||||
Operations and identifiable assets by industry segment | ||||
Total revenues | 92,305 | 79,914 | ||
Income (loss) from operations | 9,783 | 8,740 | ||
Segments assets | 295,684 | 282,039 | 295,684 | |
Corporate | ||||
Operations and identifiable assets by industry segment | ||||
Income (loss) from operations | (12,463) | (9,456) | ||
Segments assets | 125,102 | 121,293 | 125,102 | |
Eliminations | ||||
Operations and identifiable assets by industry segment | ||||
Total revenues | (13,153) | (11,284) | ||
Income (loss) from operations | (153) | $ (481) | ||
Segments assets | $ (36,990) | $ (37,568) | $ (36,990) |