UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON DC 20549
                                _______________

                                   FORM 10-Q
(Mark one)
             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 2001

                                      OR

             [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from ____ to ____

                        Commission File Number 0-23125
                      __________________________________

                               OSI SYSTEMS, INC.
            (Exact name of Registrant as specified in its charter)

                California                            33-0238801
     (State or other jurisdiction of    (I.R.S. Employer Identification Number)
     incorporation or organization)

                             12525 Chadron Avenue
                          Hawthorne, California 90250
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (310) 978-0516

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.

                                   YES X  N0__
                                       -

     As of November 5, 2001 there were 8,535,109 shares of common stock
outstanding.


                               OSI SYSTEMS, INC.

                                     INDEX




PART I - FINANCIAL INFORMATION                                       PAGE NUMBER
                                                                  
     Item 1 - Consolidated Financial Statements

              Consolidated Balance Sheets at September 30, 2001             3
              and June 30, 2001

              Consolidated Statements of Operations for the three months    4
              ended September 30, 2001 and September 30, 2000

              Consolidated Statements of Cash Flows for the three months    5
              ended September 30, 2001 and September 30, 2000

              Notes to Consolidated Financial Statements                    6

     Item 2 - Management's Discussion and Analysis of                      11
              Financial Condition and Results of Operations

PART II - OTHER INFORMATION

     Item 6 - Exhibits and Reports on Form 8-K                             15

     Signatures                                                            15


                                      -2-


                         PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                      OSI SYSTEMS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share amounts)



                                                                                                 September 30,            June 30,
                                                                                                      2001                  2001
                                                                                                 -------------          -----------
                                                                                                                  
                                 ASSETS
Current Assets:
     Cash and cash equivalents                                                                     $  4,936               $  4,467
     Investments                                                                                   $    603                    863
     Accounts receivable, net of allowance for doubtful accounts of $1,117 and $903
        at September 30, 2001 and June 30, 2001, respectively                                        29,920                 28,437
     Current portion of note receivable                                                                 650                    450
     Other receivables                                                                                1,332                  1,552
     Inventory                                                                                       30,096                 31,174
     Prepaids                                                                                         1,299                  1,009
     Deferred income taxes                                                                              827                    832
     Income taxes receivable                                                                            757                    310

                                                                                                   ---------              ---------
                   Total current assets                                                              70,420                 69,094

Property and Equipment, net                                                                          13,088                 13,405
Intangible and other assets, net                                                                      7,484                  7,371
Note receivable                                                                                         600                    800
Deferred income taxes                                                                                 1,726                  1,726

                                                                                                   ---------              ---------
                   Total                                                                           $ 93,318               $ 92,396
                                                                                                   =========              =========

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Bank lines of credit                                                                          $  1,352               $    100
     Current portion of long-term debt                                                                2,625                  2,625
     Accounts payable                                                                                10,027                 10,720
     Accrued payroll and related expenses                                                             2,510                  2,614
     Income taxes payable                                                                             1,449                  1,525
     Advances from customers                                                                            573                    924
     Accrued warranties                                                                               1,607                  1,687
     Other accrued expenses and current liabilities                                                   3,232                  2,585

                                                                                                   ---------              ---------
                   Total current liabilities                                                         23,375                 22,780

Long-term debt                                                                                        6,346                  7,003
Deferred income taxes                                                                                   132                    132

                                                                                                   ---------              ---------
                   Total liabilities                                                                 29,853                 29,915

Shareholders' Equity
     Preferred stock, no par value; authorized, 10,000,000 shares; none issued
        and outstanding at September 30, 2001 and June 30, 2001, respectively
     Common stock, no par value; authorized, 40,000,000 shares; issued and outstanding
        8,483,109 and 8,462,968 shares at September 30, 2001 and June 30, 2001, respectively         43,628                 43,567
     Retained earnings                                                                               22,701                 22,291
     Accumulated other comprehensive loss                                                            (2,864)                (3,377)

                                                                                                   ---------              ---------
                   Total shareholders' equity                                                        63,465                 62,481
                                                                                                   ---------              ---------

                   Total                                                                           $ 93,318               $ 92,396
                                                                                                   =========              =========


          See accompanying notes to consolidated financial statements

                                      -3-


                      OSI SYSTEMS, INC. AND SUBSIDIARIES
                    CONSOLIDATED  STATEMENTS OF OPERATIONS
              (in thousands, except share and per share amounts)



                                                                                          Three months ended September 30,
                                                                                -------------------------------------------------
                                                                                     2001                           2000
                                                                                -------------------         ---------------------
                                                                                                      
Revenues                                                                                $   26,455                    $   24,884
Cost of goods sold                                                                          19,449                        17,941
                                                                                -------------------         ---------------------

Gross profit                                                                                 7,006                         6,943
Operating expenses:
     Selling, general and administrative                                                     4,584                         5,617
     Research and development                                                                1,575                         1,715
     Goodwill amortization                                                                     101                           128

                                                                                -------------------         ---------------------
                   Total operating expenses                                                  6,260                         7,460
                                                                                -------------------         ---------------------

Income (loss) from operations                                                                  746                          (517)
Interest expense, net                                                                          159                           304

                                                                                -------------------         ---------------------
Income (loss) before provision for income taxes and minority interest                          587                          (821)
Provision (benefit) for income taxes                                                           177                          (170)

                                                                                -------------------         ---------------------
Income (loss) before minority interest in net loss of subsidiary                               410                          (651)

Minority interest in net loss of subsidiary                                                                                  146

                                                                                -------------------         ---------------------
Net income (loss)                                                                       $      410                         ($505)
                                                                                ===================         =====================


Income (loss) per common share                                                          $     0.05                        ($0.05)
                                                                                ===================         =====================

Income (loss) per common share -assuming dilution                                       $     0.05                        ($0.05)
                                                                                ===================         =====================

Weighted average shares outstanding -assuming dilution                                   8,606,834                     9,355,303
                                                                                ===================         =====================



          See accompanying notes to consolidated financial statements

                                      -4-


                                OSI SYSTEMS, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)



                                                                                             Three months ended September 30,
                                                                                        ------------------------------------------

                                                                                                2001                      2000
                                                                                        ------------------          --------------
                                                                                                              
Cash flows from operating activities:
          Net income (loss)                                                                    $   410                    ($505)
          Adjustments to reconcile net income (loss) to net cash provided by
             (used in) operating activities:
                  Provision for losses on accounts receivable                                      212                       (3)
                  Depreciation and amortization                                                    927                    1,008
                  Deferred income taxes                                                             90                      (24)
                  Loss on sale of property and equipment                                            34                      132
                  Minority interest in net loss of subsidiary                                                              (146)
                  Changes in operating assets and liabilities:
                       Accounts receivable                                                      (1,318)                   1,031
                       Other receivables                                                           252                      151
                       Inventory                                                                 1,262                   (2,698)
                       Prepaids                                                                   (249)                    (255)
                       Accounts payable                                                           (817)                  (2,124)
                       Accrued payroll and related expenses                                       (144)                     273
                       Income taxes payable                                                        (81)                   1,479
                       Income taxes receivable                                                    (401)                      75
                       Advances from customers                                                    (379)                     109
                       Accrued warranty                                                            (88)                     (86)
                       Other accrued expenses and current liabilities                              458                      404

                                                                                        ---------------             ------------
                                Net cash provided by (used in) operating activities                168                   (1,179)
                                                                                        ---------------             ------------

Cash flows from investing activities:
          Purchases of property and equipment                                                     (308)                    (574)
          Proceeds from sale of property and equipment                                              39                       17
          Cash paid for business acquisitions, net of cash acquired                                                        (441)
          Other assets                                                                             (44)                       2

                                                                                        ---------------             ------------
                                Net cash used in investing activities                             (313)                    (996)
                                                                                        ---------------             ------------

Cash flows from financing activities:
          Net proceeds from bank lines of credits                                                1,246                    3,135
          Payments on long-term debt                                                              (657)                    (531)
          Proceeds from exercise of stock options and warrants                                      61                       36

                                                                                        ---------------             ------------
                                Net cash provided by financing activities                          650                    2,640
                                                                                        ---------------             ------------

Effect of exchange rate changes on cash                                                            (36)                     115
                                                                                        ---------------             ------------

Net increase in cash and cash equivalents                                                          469                      580
Cash and cash equivalents, beginning of period                                                   4,467                   10,892
                                                                                        ---------------             ------------

Cash and cash equivalents, end of period                                                       $ 4,936                 $ 11,472
                                                                                        ===============             ============

Supplemental disclosures of cash flow information - Cash paid/(received) during
the period for:
          Interest, net                                                                        $   109                 $    163
          Income taxes                                                                         $   630                  ($1,714)



          See accompanying notes to consolidated financial statements

                                      -5-


                      OSI SYSTEMS, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General - OSI Systems, Inc. and its subsidiaries (collectively, the "Company")
is a vertically integrated worldwide provider of devices, value added subsystems
and end-products based on optoelectronic technology. The Company designs and
manufactures optoelectronic devices and value-added subsystems for original
equipment manufacturers for use in a broad range of applications, including
security, medical diagnostics, telecommunications, gigabit ethernet and fiber
channel systems, gaming, office automation, aerospace, computer peripherals and
industrial automation. In addition, the Company utilizes its optoelectronic
technology and design capabilities to manufacture security and inspection
products that it markets worldwide to end users under the "Rapiscan" and
"Secure" and "Metor" brand names. These products are used to inspect people,
baggage, cargo and other objects for weapons, explosives, drugs and other
contraband. In the medical field the Company manufactures and sells
densitometers which are used to provide bone loss measurements in the diagnosis
of osteoporosis. The Company also manufactures and sells saturation of arterial
hemoglobin ("SpO\2\") monitors and sensors under the trade names Digital
Dolphin(TM) and Dolphin 2000(TM). Digital Dolphin(TM) model 2100 SpO\2\ monitors
have received 510(k) approval for sale in the United States.

Consolidation - The consolidated financial statements include the accounts of
OSI Systems, Inc. and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The consolidated balance sheet as of September 30, 2001 and consolidated
statements of operations and cash flows for the three month period then ended
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission").
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. However, in the opinion of management all adjustments, consisting
of only normal and recurring adjustments, necessary for a fair presentation of
the financial position and the results of operations for the periods presented
have been included. These consolidated financial statements and the accompanying
notes should be read in conjunction with the audited consolidated financial
statements and accompanying notes for the fiscal year ended June 30, 2001
included in the Company's Annual Report on Form 10K as filed with the Commission
on September 28, 2001. The results of operations for the three months ended
September 30, 2001 are not necessarily indicative of the results to be expected
for the fiscal year ending June 30, 2002.

Subsequent Events - On November 13, 2001, the Company issued and sold an
aggregate of approximately 1.7 million shares of its common stock in a private
placement to 16

                                      -6-


institutional investors for an aggregate sales price of approximately
$20.0 million. After placement agents commissions and expenses, the net proceeds
to the company will be approximately $18.5 million. Roth Capital Partners and
William Blair & Company acted as placement agents in the transaction.

New Accounting Pronouncements - In July 2001, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations", which requires that all business combinations
initiated after June 30, 2001 be accounted for under the purchase method and
prohibits the use of the pooling-of-interests method. The Company does not
believe that the adoption of SFAS No. 141 will have any effect on its financial
position and results of operations.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which becomes effective for the Company beginning July 1, 2002. This
statement changes the method of accounting for goodwill to a test for impairment
and requires among other things, the discontinuance of goodwill amortization.
The Company is currently assessing the impact of the adoption of this statement
on its financial position and result of operations.

SFAS No. 143 "Accounting for Asset Retirement Obligations" which becomes
effective for the Company on July 1, 2002, addresses the obligations and asset
retirement costs associated with the retirement of tangible long-lived assets.
It requires that the fair value of the liability for an asset retirement
obligation be recorded when incurred instead of over the life of the asset. The
asset retirement costs must be capitalized as part of the carrying value of the
long-lived asset. If the liability is settled for an amount other than the
recorded balance, either a gain or loss will be recognized at settlement. The
Company is currently assessing the impact of the adoption of this statement on
its financial position and results of operations.

SFAS No. 144, "Impairment or Disposal of Long-Lived Assets", will become
effective for the Company on July 1, 2002. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
provides guidance on implementation issues related to SFAS No. "121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of", and addresses the accounting for a segment of a business accounted for as a
discontinued operation. The Company is currently assessing the impact of the
adoption of this statement on its financial position and results of operations.

Derivative Instruments - The Company's use of derivatives consists of the
purchase of foreign exchange contracts, in order to attempt to reduce foreign
exchange transaction gains and losses, along with a interest rate swaps on a
variable interest rate term loan. The Company purchases forward contracts to
hedge foreign exchange exposure related to commitments to acquire inventory for
sale and does not use the contracts for trading purposes. As of September 30,
2001 and June 30, 2001, notional amounts were approximately $0 and $1,451,000
for outstanding foreign exchange contracts,

                                      -7-


respectively. The estimated fair value of these contracts, based on quoted
market prices, approximated $0 and ($50,000) at September 30, 2001 and June 30,
2001 respectively. The foreign exchange contracts are effective foreign exchange
hedges and the difference in the fair value from the prior reporting period has
been recorded as other comprehensive income (loss). The Company also entered
into interest rate swaps. The terms of the swaps are to convert a portion of the
Company's variable interest rate debt into a fixed rate liability.

At September 30, 2001, and June 30, 2001 the notional amount of the swaps were
$8,602,700 and $ 5,042,000 respectively. The fair value of the swaps at
September 30, 2001 and June 30, 2001 were ($246,000) and ($50,000) respectively.
The decrease in the fair value from the previously reported period is recorded
in other comprehensive income (loss), due to the swaps meeting the criteria of
an effective cash flow hedge. All forward contracts, swaps, and underlying
transaction exposures are carried at fair value in other accrued expenses and
liabilities in the accompanying consolidated balance sheets.

Revenue Recognition - The Company generally recognizes revenue upon shipment of
its products. Concurrent with the shipment of the product, the Company accrues
estimated warranty expenses. The Company has undertaken projects which include
the development and construction of large complex cargo inspection systems
requiring installation and customization at the customer's site. Sales under
such long-term contracts are recorded under the percentage of completion method.
Costs and estimated revenues are recorded as work is performed based on the
percentage that incurred costs bear to estimated total costs utilizing the most
recent estimates of costs. If the current contract estimate indicates a loss,
provision is made for the total anticipated loss in the current period.

Inventory - Inventory is stated at the lower of cost or market; cost is
determined on the first-in, first-out method. Inventory at September 30, 2001
and June 30, 2001 consisted of the following (in thousands):

                                          September 30,         June 30,
                                              2001                2001
Raw Materials......................         $16,158             $16,442
Work-in-process....................           5,483               6,595
Finished goods.....................           8,455               8,137
                                            -------             -------
         Total.....................         $30,096             $31,174
                                            =======             =======

Accounts Receivable. Accounts receivable at September 30, 2001 and June 30, 2001
consisted of the following (in thousands):

                                              September 30,      June 30,
                                                  2001             2001
Trade receivables net....................        $28,298         $27,113
Receivables related to long term contracts
Unbilled costs and accrued profit on progress      1,622           1,324
                                                 -------         -------
completed
         Total...........................        $29,920         $28,437
                                                 =======         =======

The unbilled costs and accrued profits at September 30, 2001 are expected to be
entirely billed and collected during fiscal 2002.

                                      -8-


Earnings Per Share. Earnings per common share is computed using the weighted
average number of shares outstanding during the period. Earnings per common
share-assuming dilution, is computed using the weighted average number of shares
outstanding during the period and dilutive common stock equivalents from the
Company's stock option plans.

The following table reconciles the numerator and denominator used in calculating
earnings per common share and earnings per common share-assuming dilution.



                                                                  For the quarter ended September 30
                                             -----------------------------------------------------------------------------

                                                               2001                                   2000
                                             ----------------------------------------  -----------------------------------
                                             Income
                                             (Numerator)   Shares           Per-Share  Income      Shares        Per-Share
                                                           (Denominator)    Amount     (Numerator) (Denominator)   Amount
                                                                                                
Earnings per common share
Income (loss) available to
common stockholders                            $410,000      8,480,109       $0.05     ($505,000)    9,355,303    ($0.05)

Effect of Dilutive Securities
Options, treasury stock method                                 126,725
                                             ------------- -------------  -----------  ----------  ------------  ---------

Earnings per common share assuming dilution
Income (loss) available to common
stockholder, assuming dilution                 $410,000     $8,606,834       $0.05     ($505,000)   $9,355,303    ($0.05)
                                             ============= =============  ===========  ==========  ============  =========





Comprehensive    Comprehensive income (loss) is computed as follows (in thousands):
Income -



                                                            For the quarter ended September 30,
                                                               2001                      2000
                                                           -------------               ----------
                                                                                 
Net income (loss)                                              $410                     ($505)
                                                           -------------               ----------

Other comprehensive income, net of taxes:

Foreign currency translation adjustments                        852                      (581)

Unrealized loss on marketable securities available for sale    (193)

Change in fair value of derivative instruments                 (146)
                                                           -------------               ----------

Other comprehensive income (loss)                               513                      (581)

                                                           -------------               ----------
Comprehensive income (loss)                                    $923                     ($1,086)
                                                           =============               ==========


                                      -9-


The Company has adopted SFAS No. 131, "Segment Discloure." The Company has
reflected the provisions of SFAS No. 131 in the accompanying financial
statements for all periods presented. The Company believes that it operates in
two identifiable industry segments, a) optoelectronic devices and subsystems,
medical imaging systems, and b) security and inspection products. For the
periods ended September 30, 2001 and 2000, external revenues from optoelectronic
devices, subsystems, and medical imaging systems were $12,540 and $13,545
respectively. Revenues from security and inspection systems were $13,915 and
$11,339 for the periods ended September 30, 2001 and 2000, respectively.

Segment information is provided by geographic area. The Company is vertically
integrated and is sharing common resources and facilities. Therefore, with the
execption of external revenues, meaningful information is not available by
industry or product segment.

The company's operating locations include the North America (United States and
Canada), Europe (United Kingdom, Denmark, Finland and Norway) and Asia
(Singapore and Malaysia). The company's operations by geographical areas are as
follows (in thousands):



                                                                          Three months ended September 30, 2001
                                                         -------------------------------------------------------------------------

                                                             North
                                                            America      Europe        Asia      Eliminations      Consolidated
                                                         -------------------------------------------------------------------------
                                                                                                    
Revenues from external customers                             $ 17,681      $ 6,280     $ 2,494                           $ 26,455
Transfer between geographical areas                          $  1,296      $ 1,276     $ 7,398         $ (9,970)
                                                         -------------------------------------------------------------------------

Total revenues                                               $ 18,977      $ 7,556     $ 9,892         $ (9,970)         $ 26,455
                                                         =========================================================================

Income (loss) from operations                                $ (1,134)     $   518     $ 1,355         $      7          $    746
                                                         =========================================================================


                                                                          Three months ended September 30, 2000
                                                         -------------------------------------------------------------------------

                                                             North
                                                            America      Europe        Asia      Eliminations      Consolidated
                                                         -------------------------------------------------------------------------
                                                                                                    
Revenues from external customers                             $ 15,606      $ 7,269     $ 2,009                           $ 24,884
Transfer between geographical areas                          $  2,281      $ 1,439     $ 5,784         $ (9,504)
                                                         -------------------------------------------------------------------------

Total revenues                                               $ 17,887      $ 8,708     $ 7,793         $ (9,504)         $ 24,884
                                                         =========================================================================

Income (loss) from operations                                $ (1,623)     $   633     $   535         $    (62)         $   (517)
                                                         =========================================================================


                                      -10-


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

                              Cautionary Statement

Statements in this report that are forward-looking are based on current
expectations, and actual results may differ materially. Forward-looking
statements involve numerous risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, the possibilities
that the demand for the Company's products may decline as a result of possible
changes in general and industry specific economic conditions and the effects of
competitive pricing and such other risks and uncertainties as are described in
this report on Form 10-Q and other documents previously filed or hereafter filed
by the Company from time to time with the Securities and Exchange Commission.

Results of Operations

Revenues. Revenues consist of sales of optoelectronic devices and value added
subsystems, medical imaging systems and security and inspection products.
Revenues are recorded net of all inter-company transactions. Revenues increased
by 6.3% to $26.5 million for the three months ended September 30, 2001 compared
to $24.9 million for the comparable prior year period. Revenues for the three
months ended September 30, 2001 from optoelectronic devices, value added
subsystems and medical imaging systems net of intercompany eliminations
decreased by $1.0 million or 7.4% to $12.6 million, compared to $13.5 million
for the comparable prior year period and revenues from security and inspection
products increased by $2.6 million or 22% to $13.9 million, compared to $11.4
million for the comparable prior year period. The decrease in revenues from
sales of optoelectronics devices, value added subsystems and medical imaging
systems was primarily due to discontinued product line of portable data/video
projector systems and the exclusion of Silicon Microstructures, Inc. ("SMI")
revenues. SMI was sold in March 2001. The decrease in revenue was offset in part
by increased sales to the weapon simulation market. SMI's revenues and revenues
from the sale of data/video projector systems for the three months ended
September 30, 2000 and 2001 were $2.4 million and $0, respectively. The increase
in revenues from the sale of security and inspection products was due to
increased sales of X-ray screening machines in the United Sates and
international markets in response to the attacks on the World Trade Center and
the Pentagon on September 11, 2001.

Gross Profit. Cost of goods sold consists of material, labor and manufacturing
overhead. Gross profit increased by $63,000, or 0.9%, to $7.0 million for the
three months ended September 30, 2001 from $6.9 million for the three months
ended September 30, 2000. As a percentage of revenues, gross profit decreased to
26.5% for the three months ended September 30, 2001 from 27.9% for the three
months ended September 30, 2000. The change in gross profit was due to product
mix and certain research and development personnel working directly on specific
shipments and the costs of their services were charged to manufacturing
overhead.

                                      -11-


Selling, General and Administrative. Selling, general and administrative
expenses consisted primarily of compensation paid to sales, marketing, and
administrative personnel, professional service fees, and marketing expenses. For
the three months ended September 30, 2001, such expenses decreased by $1.0
million, or 18.4%, to $4.6 million from $5.6 million for the three months ended
September 30, 2000. As a percentage of revenues, selling, general and
administrative expenses decreased to 17.3% for the three months ended September
30, 2001 from 22.6% for the three months ended September 30, 2000. The decrease
in expenses was primarily due to decreased legal expenses and administrative
costs, exclusion of selling, general and administrative expenses of SMI and
certain temporary cost reduction measures.

Research and Development. Research and development expenses include research
related to new product development and product enhancement expenditures. For the
three months ended September 30, 2001, such expenses decreased by $140,000, or
8.2%, to $1.6 million from $1.7 million for the three months ended September 30,
2000. As a percentage of revenues, research and development expenses decreased
to 6.0% for the three months ended September 30, 2001 from 6.9% for the three
months ended September 30, 2000. The decrease was due primarily to certain
research and development personnel who worked directly on specific shipments and
the costs of their services were charged to manufacturing overhead and the
exclusion of research and development expenses of SMI.

Income (loss) from Operations. For the three months ended September 30, 2001,
income from operations was $746,000 compared to loss of $517,000 for the three
months ended September 30, 2000. Income from operations increased due to
decreased selling, general and administrative expenses, decreased research and
development expenses and an increase in gross profit.

Interest Expense. For the three months ended September 30, 2001, the Company
incurred net interest expense of $159,000 compared to $304,000 for the three
months ended September 30, 2000. The decrease in net interest expense for the
three months ended September 30, 2001, was due to reduced borrowing on the
Company's lines of credit.

Provision (benefit) for Income Taxes. For the three months ended September 30,
2001, the Company had an income tax provision of $177,000 compared to income tax
benefit of $170,000 for the three months ended September 30, 2000. As a
percentage of increase (loss) before provision for income taxes and minority
interest, provision for income taxes for the three months ended September 30,
2001 was 30.2% compared to benefit for income taxes of 20.7% for the three
months ended September 30, 2000. The Company's effective tax rate varies
primarily due to a mix in income from U.S. and foreign operations.

Net Income(loss). For the reasons outlined above, the net income for the three
months ended September 30, 2001 was $410,000 compared to the net loss of
$505,000 for the three months ended September 30, 2000.


                                      -12-


Liquidity and Capital Resources

The Company's operations provided net cash of $168,000 during the three months
ended September 30, 2001. The amount of net cash provided by operations reflects
a reduction in inventory, other receivables and an increase in other accrued
expenses and current liabilities. Net cash provided by operations was offset in
part by an increase in accounts receivables and a decrease in accounts payables,
accrued payroll and related expenses, income taxes payable, and prepaid income
taxes receivable. The reduction in inventory and increase in accounts
receivables was due to increased sales of security and inspection products in
the latter part of September 2001.

Net cash used in investing activities was $313,000 and $996,000 for the three
months ended September 30, 2001 and 2000, respectively. In the three months
ended September 30, 2001, the net cash used in investing activities reflects
primarily cash used in purchases of property and equipment and in the three
months ended September 30, 2000, the net cash used in investing activities
reflects primarily cash used in business acquisitions and purchase of property
and equipment.

Net cash provided by financing activities was $650,000 and $2.6 million for the
three months ended September 30, 2001 and 2000, respectively, in each case
primarily in the form of net borrowing from bank lines of credit.

In March 1999, the Company announced a stock repurchase program of up to
2,000,000 shares of its common stock. Through November 10, 2001, the Company
repurchased 1,404,500 shares at an average price of $4.37 per share. The stock
repurchase program did not have a material effect on the Company's liquidity and
is not expected to have a material effect on liquidity in subsequent quarters.

The Company anticipates that current cash balances, anticipated cash flows from
operations and current borrowing arrangements will be sufficient to meet its
working capital, stock repurchase program and capital expenditure needs for the
foreseeable future.

Market Risk - The Company is exposed to certain market risks which are inherent
in the Company's financial instruments and arise from transactions entered into
in the normal course of business. The Company may enter into derivative
financial instrument transactions in order to manage or reduce market risk in
connection with specific foreign currency-denominated transactions. The Company
does not enter into derivative financial instrument transactions for speculative
purposes.

Foreign Currency Translation. The accounts of the Company's operations in
Singapore, Malaysia, England, Denmark, Finland, Norway and Canada are maintained
in Singapore dollars, Malaysian ringgits, U.K. pounds sterling, Danish kroner,
Finnish markka, Norwegian kroner and Canadian dollars, respectively. Foreign
currency financial statements are translated into U.S. dollars at current rates,
with the exception of revenues,

                                      -13-


costs and expenses, which are translated at average rates during the reporting
period. Gains and losses resulting from foreign currency transactions are
included in income, while those resulting from translation of financial
statements are excluded from income and accumulated as a component of
shareholder's equity. Net foreign currency transaction losses of approximately
($77,000) and $152,000 were included in income for the three months ended
September 30, 2001 and 2000, respectively.

Importance of International Markets - International markets provide the Company
with significant growth opportunities. However, the following events, among
others, could adversely affect the Company's financial results in subsequent
periods: periodic economic downturns in different regions of the world, changes
in trade policies or tariffs, and political instability.

For the three months ended September 30, 2001, overall foreign currency
fluctuations relative to the U.S. dollar had an immaterial effect on the
Company's consolidated revenues and results of operations. As a result of
monetary policy in Malaysia, including the pegging of the Malaysian ringgit to
the U.S. dollar, the Company believes that its foreign currency exposure in
Malaysia will not be significant in the foreseeable future. The Company
continues to perform ongoing credit evaluations of its customers' financial
condition and, if deemed necessary, the Company requires advance payments for
sales. The Company is monitoring economic and currency conditions around the
world to evaluate whether there may be any significant effect on its
international sales in the future. Due to its overseas investments and the
necessity of dealing with local currencies in its foreign business transactions,
the Company is at risk with respect to foreign currency fluctuations.

Euro Conversion. On January 1, 1999, 11 of 15 member countries of the European
Union introduced a new currency, the "Euro". The conversion rates between the
Euro and the participating nations' existing legacy currencies were fixed
irrevocably as of December 31, 1998. Prior to full implementation of the new
currency on January 1, 2002, there will be a transition period during which
parties may, at their discretion, use either the legacy currencies or the Euro
for financial transactions.

We are not aware of any material operational issues or costs associated with
preparing internal systems for the Euro. While it is not possible to accurately
predict the impact the Euro will have on the Company's business or on the
economy in general, management does not anticipate that the Euro conversion will
have a material adverse impact on the Company's market risk with respect to
foreign exchange, its results of operations, or its financial condition.

Interest Rate Risk. All highly-liquid investments with a maturity of three
months or less are classified as cash equivalents and recorded in the balance
sheet at fair value. Short-term investments are comprised of high quality
marketable securities.We generally do not use derivatives to hedge our interest
rate risk with the exception of interest rate swaps to convert a portion of the
Company's variable-interest-rate debt to a fixed-rate liability. At

                                      -14-


September 30, 2001, the fair value of the swaps was ($246,000). The decrease in
the fair value of the swaps from the previous reported period is recorded in
other comprehensive income (loss) due to the swaps meeting the criteria of an
effective cash flow hedge.

Inflation. The Company does not believe that inflation has had a material impact
on its September 30, 2001 results of operations.

                           PART II OTHER INFORMATION


Item 6.           Exhibits and Reports on Form 8-K

a.       Exhibits
         None

b.       Reports on Form 8-K
         None


                                  Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Hawthorne, State of
California on the 14th day of November 2001.

                         OSI Systems, Inc.
                         -----------------


                         By: /s/ Deepak Chopra
                            ___________________________
                            Deepak Chopra
                            President and
                            Chief Executive Officer


                         By: /s/ Ajay Mehra
                            ____________________________
                            Ajay Mehra
                            Vice President and
                            Chief Financial Officer

                                      -15-