Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2021 | Apr. 22, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 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, $0.001 par value | |
Trading Symbol | OSIS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,980,207 | |
Entity Central Index Key | 0001039065 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 92,465 | $ 76,102 |
Accounts receivable, net | 258,594 | 269,840 |
Inventories | 283,523 | 241,226 |
Prepaid expenses and other current assets | 26,828 | 30,541 |
Total current assets | 661,410 | 617,709 |
Property and equipment, net | 125,477 | 127,936 |
Goodwill | 319,211 | 310,627 |
Intangible assets, net | 130,058 | 128,279 |
Other assets | 89,804 | 83,990 |
Total assets | 1,325,960 | 1,268,541 |
CURRENT LIABILITIES: | ||
Bank lines of credit | 0 | 59,000 |
Current portion of long-term debt | 925 | 926 |
Accounts payable | 122,719 | 84,940 |
Accrued payroll and related expenses | 40,860 | 46,127 |
Advances from customers | 48,132 | 28,155 |
Other accrued expenses and current liabilities | 113,433 | 110,953 |
Total current liabilities | 326,069 | 330,101 |
Long-term debt | 273,997 | 267,072 |
Deferred income taxes | 1,507 | 5,846 |
Other long-term liabilities | 108,494 | 93,370 |
Total liabilities | 710,067 | 696,389 |
Commitments and contingencies (Note 10) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value- 10,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value-100,000,000 shares authorized; issued and outstanding, 18,011,982 shares at June 30, 2020 and 17,980,207 shares at March 31, 2021 | 110,744 | 122,553 |
Retained earnings | 522,948 | 474,793 |
Accumulated other comprehensive loss | (17,799) | (25,194) |
Total stockholders' equity | 615,893 | 572,152 |
Total liabilities and stockholders' equity | $ 1,325,960 | $ 1,268,541 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2021 | Jun. 30, 2020 |
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 | 17,980,207 | 18,011,982 |
Common stock, shares outstanding | 17,980,207 | 18,011,982 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net revenues: | ||||
Total net revenues | $ 283,787 | $ 292,883 | $ 814,704 | $ 889,077 |
Cost of goods sold: | ||||
Total cost of goods sold | 179,768 | 183,776 | 512,853 | 569,986 |
Gross profit | 104,019 | 109,107 | 301,851 | 319,091 |
Operating expenses: | ||||
Selling, general and administrative | 57,906 | 65,576 | 172,624 | 191,655 |
Research and development | 13,932 | 15,358 | 39,798 | 44,485 |
Impairment, restructuring and other charges (benefit), net | (285) | 4,548 | 7,912 | 1,520 |
Total operating expenses | 71,553 | 85,482 | 220,334 | 237,660 |
Income from operations | 32,466 | 23,625 | 81,517 | 81,431 |
Interest and other expense, net | (4,167) | (4,706) | (12,589) | (14,286) |
Income before income taxes | 28,299 | 18,919 | 68,928 | 67,145 |
(Provision) benefit for income taxes | (9,526) | 639 | (20,773) | (5,858) |
Net income | $ 18,773 | $ 19,558 | $ 48,155 | $ 61,287 |
Earnings per share: | ||||
Basic | $ 1.04 | $ 1.08 | $ 2.68 | $ 3.36 |
Diluted | $ 1.03 | $ 1.06 | $ 2.63 | $ 3.28 |
Shares used in per share calculation: | ||||
Basic | 17,969 | 18,182 | 17,981 | 18,251 |
Diluted | 18,298 | 18,513 | 18,278 | 18,693 |
Products | ||||
Net revenues: | ||||
Total net revenues | $ 217,124 | $ 213,257 | $ 608,238 | $ 646,790 |
Cost of goods sold: | ||||
Total cost of goods sold | 144,958 | 141,069 | 409,692 | 436,120 |
Services | ||||
Net revenues: | ||||
Total net revenues | 66,663 | 79,626 | 206,466 | 242,287 |
Cost of goods sold: | ||||
Total cost of goods sold | $ 34,810 | $ 42,707 | $ 103,161 | $ 133,866 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||||
Net income | $ 18,773 | $ 19,558 | $ 48,155 | $ 61,287 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (503) | (8,314) | 7,219 | (8,726) |
Other | 59 | 10 | 176 | 29 |
Other comprehensive income (loss) | (444) | (8,304) | 7,395 | (8,697) |
Comprehensive income | $ 18,329 | $ 11,254 | $ 55,550 | $ 52,590 |
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, 2019 | $ 168,913 | $ 399,541 | $ (16,727) | $ 551,727 |
Balance (in shares) at Jun. 30, 2019 | 18,167,020 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 4,112 | 4,112 | ||
Exercise of stock options (in shares) | 201,003 | |||
Vesting of RSUs (in shares) | 388,756 | |||
Shares issued under employee stock purchase program | $ 4,286 | 4,286 | ||
Shares issued under employee stock purchase program (in shares) | 71,595 | |||
Stock-based compensation expense | $ 18,097 | 18,097 | ||
Repurchase of common stock | $ (51,775) | (51,775) | ||
Repurchase of common stock (in shares) | (562,707) | |||
Taxes paid related to net share settlement of equity awards | $ (26,761) | (26,761) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (255,042) | |||
Net income | 61,287 | 61,287 | ||
Other comprehensive income (loss) | (8,697) | (8,697) | ||
Balance at Mar. 31, 2020 | $ 116,872 | 460,828 | (25,424) | 552,276 |
Balance (in shares) at Mar. 31, 2020 | 18,010,625 | |||
Balance at Dec. 31, 2019 | $ 133,566 | 441,270 | (17,120) | 557,716 |
Balance (in shares) at Dec. 31, 2019 | 18,267,574 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 80 | 80 | ||
Exercise of stock options (in shares) | 1,041 | |||
Vesting of RSUs (in shares) | 1,671 | |||
Shares issued under employee stock purchase program | $ 2,221 | 2,221 | ||
Shares issued under employee stock purchase program (in shares) | 36,758 | |||
Stock-based compensation expense | $ 5,837 | 5,837 | ||
Repurchase of common stock | $ (24,781) | (24,781) | ||
Repurchase of common stock (in shares) | (295,833) | |||
Taxes paid related to net share settlement of equity awards | $ (51) | (51) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (586) | |||
Net income | 19,558 | 19,558 | ||
Other comprehensive income (loss) | (8,304) | (8,304) | ||
Balance at Mar. 31, 2020 | $ 116,872 | 460,828 | (25,424) | 552,276 |
Balance (in shares) at Mar. 31, 2020 | 18,010,625 | |||
Balance at Jun. 30, 2020 | $ 122,553 | 474,793 | (25,194) | $ 572,152 |
Balance (in shares) at Jun. 30, 2020 | 18,011,982 | 18,011,982 | ||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 1,187 | $ 1,187 | ||
Exercise of stock options (in shares) | 87,235 | |||
Vesting of RSUs (in shares) | 310,939 | |||
Shares issued under employee stock purchase program | $ 4,215 | 4,215 | ||
Shares issued under employee stock purchase program (in shares) | 68,180 | |||
Stock-based compensation expense | $ 19,386 | 19,386 | ||
Repurchase of common stock | $ (25,051) | (25,051) | ||
Repurchase of common stock (in shares) | (322,588) | |||
Taxes paid related to net share settlement of equity awards | $ (11,546) | (11,546) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (175,541) | |||
Net income | 48,155 | 48,155 | ||
Other comprehensive income (loss) | 7,395 | 7,395 | ||
Balance at Mar. 31, 2021 | $ 110,744 | 522,948 | (17,799) | $ 615,893 |
Balance (in shares) at Mar. 31, 2021 | 17,980,207 | 17,980,207 | ||
Balance at Dec. 31, 2020 | $ 100,816 | 504,175 | (17,355) | $ 587,636 |
Balance (in shares) at Dec. 31, 2020 | 17,933,256 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Exercise of stock options | $ 624 | 624 | ||
Exercise of stock options (in shares) | 9,703 | |||
Vesting of RSUs (in shares) | 6,519 | |||
Shares issued under employee stock purchase program | $ 2,193 | 2,193 | ||
Shares issued under employee stock purchase program (in shares) | 35,539 | |||
Stock-based compensation expense | $ 7,565 | 7,565 | ||
Repurchase of common stock | $ (235) | (235) | ||
Repurchase of common stock (in shares) | (2,452) | |||
Taxes paid related to net share settlement of equity awards | $ (219) | (219) | ||
Taxes paid related to net share settlement of equity awards (in shares) | (2,358) | |||
Net income | 18,773 | 18,773 | ||
Other comprehensive income (loss) | (444) | (444) | ||
Balance at Mar. 31, 2021 | $ 110,744 | $ 522,948 | $ (17,799) | $ 615,893 |
Balance (in shares) at Mar. 31, 2021 | 17,980,207 | 17,980,207 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 48,155 | $ 61,287 |
Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions: | ||
Depreciation and amortization | 31,433 | 37,807 |
Stock-based compensation expense | 19,386 | 18,097 |
Provision for losses on accounts receivable | 6,176 | 2,641 |
Deferred income taxes | (1,364) | (50) |
Amortization of debt discount and issuance costs | 7,277 | 6,984 |
Impairment charges | 552 | 3,258 |
Other | (217) | 137 |
Changes in operating assets and liabilities-net of business acquisitions: | ||
Accounts receivable | 6,714 | (23,945) |
Inventories | (43,162) | 28,871 |
Prepaid expenses and other assets | (4,263) | (18,127) |
Accounts payable | 37,113 | 10,243 |
Accrued payroll and related expenses | 363 | (5,655) |
Advances from customers | 19,468 | (9,846) |
Other | 3,422 | (6,149) |
Net cash provided by operating activities | 131,053 | 105,553 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of property and equipment | (11,155) | (16,062) |
Purchases of certificates of deposit | (4,820) | |
Proceeds from maturities of certificates of deposit | 2,690 | |
Acquisition of business, net of cash acquired | (3,000) | (3,521) |
Payments for intangible and other assets | (9,878) | (8,764) |
Net cash used in investing activities | (26,163) | (28,347) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings (repayments) on bank lines of credit | (59,000) | 7,000 |
Proceeds from long-term debt | 413 | 592 |
Payments on long-term debt | (778) | (723) |
Proceeds from exercise of stock options and employee stock purchase plan | 5,402 | 8,398 |
Payments of contingent consideration | (854) | (5,265) |
Repurchases of common stock | (25,051) | (51,775) |
Taxes paid related to net share settlement of equity awards | (11,546) | (26,761) |
Net cash used in financing activities | (91,414) | (68,534) |
Effect of exchange rate changes on cash | 2,887 | (3,962) |
Net change in cash and cash equivalents | 16,363 | 4,710 |
Cash and cash equivalents-beginning of period | 76,102 | 96,316 |
Cash and cash equivalents-end of period | 92,465 | 101,026 |
Cash paid, net during the period for: | ||
Interest | 5,721 | 6,773 |
Income taxes | $ 8,074 | $ 16,141 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Mar. 31, 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, 2020 filed with the SEC. The results of operations for the three and nine months ended March 31, 2021 are not necessarily indicative of the operating results to be expected for the full 2021 fiscal year or any future periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. 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 8 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 and nine months ended March 31, 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Net income available to common stockholders $ 19,558 $ 18,773 $ 61,287 $ 48,155 Weighted average shares outstanding—basic 18,182 17,969 18,251 17,981 Dilutive effect of equity awards 331 329 442 297 Weighted average shares outstanding—diluted 18,513 18,298 18,693 18,278 Basic earnings per share $ 1.08 $ 1.04 $ 3.36 $ 2.68 Diluted earnings per share $ 1.06 $ 1.03 $ 3.28 $ 2.63 Shares excluded from diluted earnings per share due to their anti-dilutive effect 145 51 100 64 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 $92.5 million at March 31, 2021. Of this amount, approximately 58% 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, Malaysia, Canada, Singapore and India and to a lesser extent in Puerto Rico and Albania among other countries. We have cash holdings in financial institutions that exceed insured limits for such 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, as 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 March 31, 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 10 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, 2020 March 31, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets : Insurance company contracts $ — $ 37,155 $ — $ 37,155 $ — $ 45,015 $ — $ 45,015 Liabilities: Contingent consideration $ — $ — $ 13,867 $ 13,867 $ — $ — $ 19,337 $ 19,337 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”. Hedge effectiveness is assessed using the spot method, consistent with guidance in ASC 815 whereby the change in fair value of the forward contract is recorded in the same manner as the related currency translation adjustments, within other comprehensive income, as the hedging instrument is expected to be fully effective unless the amount hedged exceeds the net investment in the foreign operation, or the foreign operation is liquidated. We settled the net investment hedge in the second quarter of fiscal 2021, and the amount recorded in other comprehensive loss was not significant. There were no net investment hedges outstanding as of March 31, 2021. 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 and the amounts reported in the consolidated income statement for the three and nine months ended March 31, 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 March 31, 2021, we held foreign currency forward contracts with notional amounts totaling $23.5 million. Unrealized gains and losses from the forward currency forward contracts as of March 31, 2021 were not significant. There were no derivative instruments as of June 30, 2020. Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance under Accounting Standards Update (“ASU”) 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our disclosures in the consolidated financial statements. In August 2018, the FASB issued authoritative guidance under ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. Modifications to debt agreements for a change in the reference interest rate will be accounted for by prospectively adjusting the effective interest rate. The new standard was effective upon issuance and did not have a significant impact on our consolidated financial statements. ASU 2020-04 generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates; however the adoption of this new guidance for future modifications to contracts, if any, is not expected to have a significant impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). 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 and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. ASU 2020-06 also provides for certain disclosures with regard to convertible instruments and associated fair values. We are required to adopt this new guidance in the first quarter of fiscal 2023. Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 removes certain exceptions to the general principles of ASC 740 and is intended to improve consistency and simplify GAAP by clarifying and amending existing guidance for income taxes and related topics. We are required to adopt this new guidance in the first quarter of fiscal 2022. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. |
Business Combinations
Business Combinations | 9 Months Ended |
Mar. 31, 2021 | |
Business Combinations | |
Business Combinations | 2 Business Combinations Under ASC 805, Business Combinations, the acquisition method of accounting requires us to record assets acquired less liabilities assumed in an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase consideration over the estimated fair value of the assets acquired less liabilities assumed should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. We may record adjustments to the assets acquired and liabilities assumed, with corresponding adjustments to goodwill, during the one-year post-acquisition measurement period as additional information becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are reflected in reported earnings. Fiscal Year 2021 Business Acquisition In July 2020, we (through our Healthcare division) acquired a privately-held software development company for $3.0 million, plus up to $12.0 million in potential contingent consideration. The goodwill recognized for this business is deductible for income tax purposes. This acquisition was financed with available cash on hand. This business acquisition was not material to our consolidated financial statements. Accordingly, pro-forma historical results of operations and certain other disclosures related to this business have not been presented. |
Balance Sheet Details
Balance Sheet Details | 9 Months Ended |
Mar. 31, 2021 | |
Balance Sheet Details | |
Balance Sheet Details | 3. Balance Sheet Details The following tables provide details of selected balance sheet accounts (in thousands): June 30, March 31, Accounts receivable, net 2020 2021 Accounts receivable $ 287,488 $ 281,970 Less allowance for doubtful accounts (17,648) (23,376) Total $ 269,840 $ 258,594 June 30, March 31, Inventories 2020 2021 Raw materials $ 132,797 $ 144,043 Work-in-process 50,023 68,853 Finished goods 58,406 70,627 Total $ 241,226 $ 283,523 June 30, March 31, Property and equipment, net 2020 2021 Land $ 16,516 $ 16,345 Buildings, civil works and improvements 57,709 57,645 Leasehold improvements 9,052 8,654 Equipment, furniture and fixtures 149,310 156,006 Computer software 18,217 23,052 Computer software implementation in process 11,817 10,615 Construction in process 3,598 4,459 Total 266,219 276,776 Less accumulated depreciation and amortization (138,283) (151,299) Property and equipment, net $ 127,936 $ 125,477 Depreciation and amortization expense for property and equipment was $5.4 million and $5.5 million for the three months ended March 31, 2020 and 2021, respectively, and $15.9 million and $16.3 million for the nine months ended March 31, 2020 and 2021, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets The changes in the carrying value of goodwill by segment for the nine-month period ended March 31, 2021 were as follows (in thousands): Optoelectronics and Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2020 $ 203,627 $ 39,983 $ 67,017 $ 310,627 Goodwill acquired or adjusted during the period 1,905 3,244 — 5,149 Foreign currency translation adjustment 264 333 2,838 3,435 Balance as of March 31, 2021 $ 205,796 $ 43,560 $ 69,855 $ 319,211 Intangible assets consisted of the following (in thousands): June 30, 2020 March 31, 2021 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 8 years $ 41,332 $ (16,295) $ 25,037 $ 45,421 $ (14,817) $ 30,604 Patents 19 years 9,962 (2,584) 7,378 9,890 (2,790) 7,100 Developed technology 10 years 55,719 (19,556) 36,163 60,923 (24,352) 36,571 Customer relationships/backlog 7 years 64,128 (32,110) 32,018 62,577 (35,929) 26,648 Total amortizable assets 171,141 (70,545) 100,596 178,811 (77,888) 100,923 Non-amortizable assets: In-process research and development 533 — 533 533 — 533 Trademarks 27,150 — 27,150 28,602 — 28,602 Total intangible assets $ 198,824 $ (70,545) $ 128,279 $ 207,946 $ (77,888) $ 130,058 Amortization expense related to intangible assets was $4.9 million and $4.8 million for the three months ended March 31, 2020 and 2021, respectively. For the nine months ended March 31, 2020 and 2021, amortization expense related to intangible assets was $14.3 million and $15.1 million, respectively. At March 31, 2021, the estimated future amortization expense for intangible assets was as follows (in thousands): 2021 (remaining 3 months) $ 4,660 2022 17,152 2023 17,377 2024 16,705 2025 13,986 Thereafter 31,043 Total $ 100,923 Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product-by-product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight-line basis over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in Thereafter in the table above. For the three months ended March 31, 2020 and 2021, we capitalized software development costs in the amounts of $4.5 million and $2.6 million, respectively. For the nine months ended March 31, 2020 and 2021, we capitalized software development costs in the amounts of $7.7 million and $9.1 million, respectively. |
Contract Assets and Liabilities
Contract Assets and Liabilities | 9 Months Ended |
Mar. 31, 2021 | |
Contract Assets and Liabilities | |
Contract Assets and Liabilities | 5. 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 sheet. We may also receive consideration, per the terms of a contract, from customers prior to transferring 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. Contract assets and liabilities were as follows (in thousands): June 30, March 31, Contract Assets: 2020 2021 $ Change % Change Unbilled revenue $ 43,011 $ 46,866 $ 3,855 9 % Contract Liabilities: Advances from customers $ 28,155 $ 48,132 $ 19,977 71 % Deferred revenue—current 32,863 37,075 4,212 13 % Deferred revenue—long-term 13,214 13,470 256 2 % Contract assets increased during the nine months ended March 31, 2021 primarily due to satisfaction of performance obligations for aviation, cargo and vehicle inspection customers in our Security division which have not yet been billed. The increase in contract liabilities was primarily due to receipt of upfront deposits from customers in our Security division. Remaining Performance Obligations Practical Expedients. |
Leases
Leases | 9 Months Ended |
Mar. 31, 2021 | |
Leases | |
Leases | 6. Leases The components of operating lease expense were as follows (in thousands): Three Months Ended March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Operating lease cost $ 2,525 $ 2,216 $ 7,771 $ 7,120 Variable lease cost 237 280 551 723 Short-term lease cost 350 258 745 649 $ 3,112 $ 2,754 $ 9,067 $ 8,492 Supplemental disclosures related to operating leases were as follows (in thousands): Balance Sheet Category June 30, 2020 March 31, 2021 Operating lease ROU assets, net Other assets $ 27,936 $ 23,856 Operating lease liabilities, current portion Other accrued expenses and current liabilities $ 8,537 $ 7,646 Operating lease liabilities, long-term Other long-term liabilities 19,713 16,742 Total operating lease liabilities $ 28,250 $ 24,388 Weighted average remaining lease term 4.2 years Weighted average discount rate 4.2 % Supplemental cash flow information related to operating leases was as follows (in thousands): Nine Months Ended March 31, 2020 2021 Cash paid for operating lease liabilities $ 7,664 $ 7,773 ROU assets obtained in exchange for new lease obligations 3,718 1,810 Maturities of operating lease liabilities at March 31, 2021 were as follows (in thousands): March 31, 2021 Less than one year $ 8,475 1 – 2 years 5,929 2 – 3 years 4,866 3 – 4 years 3,215 4 – 5 years 2,060 Thereafter 2,421 26,966 Less: imputed interest (2,578) Total lease liabilities $ 24,388 |
Impairment, Restructuring and O
Impairment, Restructuring and Other Charges | 9 Months Ended |
Mar. 31, 2021 | |
Impairment, Restructuring and Other Charges | |
Impairment, Restructuring and Other Charges | 7. 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 March 31, 2021, we recognized a total net benefit of ($0.3) million which included a net benefit of ($0.7) million for reimbursements from our insurance carriers for covered legal charges. We also incurred charges of $0.2 million for employee terminations and $0.2 million for facility closure and operational efficiency activities. During the nine months ended March 31, 2021, we incurred a total net expense of $7.9 million which included $7.2 million for exit activities associated with an expired turnkey contract in Mexico. Such exit costs include $2.8 million for employee terminations, $1.1 million for facility closure and other exit costs, direct transaction costs of $2.7 million, and $0.6 million for right-of-use asset impairment for a leased facility. We also incurred costs of $1.6 million for other employee terminations and facility closure costs for operational efficiency activities and $0.3 million for acquisition-related activities. We also recognized a net benefit of ($1.2) million for reimbursements from our insurance carriers for covered legal charges. During the three and nine months ended March 31, 2020, we abandoned a non-core product line in our Healthcare division which resulted in the write-off of assets, including intangible and fixed assets, totaling $3.3 million as we determined that these assets had no value and were permanently impaired. In addition, we continued to recover certain legal costs related to class action litigation and government investigations through insurance reimbursement. We also incurred additional legal fees related to these matters as well as restructuring charges by the divisions as noted in the tables below. This resulted in a net expense of $4.5 million and $1.5 million during the three and nine months ended March 31, 2020, respectively. The following tables summarize impairment, restructuring and other charges (benefit), net for the periods set forth below (in thousands): Three Months Ended March 31, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ — $ 3,258 $ — $ — $ 3,258 Acquisition-related costs 107 — 41 155 303 Employee termination costs 328 466 259 50 1,103 Facility closures/consolidation 30 — — — 30 Legal costs (recoveries), net — — — (146) (146) Total expensed $ 465 $ 3,724 $ 300 $ 59 $ 4,548 Three Months Ended March 31, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ 22 $ — $ — $ — $ 22 Employee termination costs 213 — — — 213 Facility closures/consolidation costs (benefit) 166 — — — 166 Legal costs (recoveries), net — — — (686) (686) Total expensed (benefit), net $ 401 $ — $ — $ (686) $ (285) Nine Months Ended March 31, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ — $ 3,258 $ — $ — $ 3,258 Acquisition-related costs 107 — 41 155 303 Employee termination costs 734 466 277 119 1,596 Facility closures/consolidation 30 — — — 30 Legal costs (recoveries), net — — — (3,667) (3,667) Total expensed $ 871 $ 3,724 $ 318 $ (3,393) $ 1,520 Nine Months Ended March 31, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 552 $ — $ — $ — $ 552 Acquisition-related costs 250 27 — — 277 Employee termination costs 4,010 — 146 — 4,156 Mexico transaction costs 2,691 — — — 2,691 Facility closures/consolidation costs 1,420 — — — 1,420 Legal costs (recoveries), net — — — (1,184) (1,184) Total expensed (benefit), net $ 8,923 $ 27 $ 146 $ (1,184) $ 7,912 The accrued liability for restructuring and other charges is included in other accrued expenses and current liabilities in the condensed consolidated balance sheet. The changes in the accrued liability for restructuring and other charges for the nine-month period ended March 31, 2021 were as follows (in thousands): Facility Employee Closure/ Termination Consolidation Acquisition- Legal Costs and Costs Cost Related Costs Settlements Total Balance as of June 30, 2020 $ 545 $ 201 $ — $ 1,882 $ 2,628 Restructuring and other charges (benefit), net 4,156 1,420 277 (1,184) 4,669 Payments, adjustments and reimbursements, net (4,570) (1,501) (277) 748 (5,600) Balance as of March 31, 2021 $ 131 $ 120 $ — $ 1,446 $ 1,697 |
Borrowings
Borrowings | 9 Months Ended |
Mar. 31, 2021 | |
Borrowings | |
Borrowings | 8. 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 March 31, 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 March 31, 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 March 31, 2021, there were no borrowings outstanding under the revolving credit facility and $66.7 million outstanding under the letters of credit sub facility. The amount available to borrow under the credit facility as of March 31, 2021 was $468.3 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 March 31, 2021, we were in compliance with all 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. Pursuant to ASC 470-20, we allocated the $287.5 million gross proceeds of the Notes between liability and equity components. The initial $242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The initial $45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $7.7 million were allocated between debt ($6.5 million) and equity ($1.2 million) components with the portion allocated to the debt presented as an offset against long-term debt in the consolidated balance sheet. The debt discount is amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.5%. The debt issuance cost is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes. Total interest expense recognized for the three and nine months ended March 31, 2021 related to the Notes was $3.3 million and $10.0 million, respectively, which consisted of $0.9 million and $2.7 million of contractual interest expense, $2.2 million and $6.4 million of debt discount amortization and $0.3 million and $0.9 million of amortization of debt issuance costs. For the three and nine months ended March 31, 2020, total interest expense was $3.3 million and $9.7 million, respectively, which consisted of $0.9 million and $2.7 million of contractual interest expense, $2.1 million and $6.1 million of debt discount amortization and $0.3 million and $0.9 million of amortization of debt issuance costs. 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 March 31, 2021, $63.0 million was outstanding under these letter-of-credit facilities. As of March 31, 2021, the total amount available under these credit facilities was $12.9 million. Long-term debt consisted of the following (in thousands): June 30, March 31, 2020 2021 1.25% convertible notes due September 1, 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (19,075) (12,680) Unamortized debt issuance costs (2,547) (1,665) 265,878 273,155 Other long-term debt 2,120 1,767 267,998 274,922 Less current portion of long-term debt (926) (925) Long-term portion of debt $ 267,072 $ 273,997 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity Stock-based Compensation As of March 31, 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Cost of goods sold $ 189 $ 199 $ 517 $ 571 Selling, general and administrative 5,520 7,223 17,153 18,391 Research and development 128 143 427 424 Stock-based compensation expense $ 5,837 $ 7,565 $ 18,097 $ 19,386 As of March 31, 2021, total unrecognized compensation cost related to share-based compensation grants under the OSI Plans were estimated at $0.5 million for stock options and $20.7 million for restricted stock units (“RSUs”). We expect to recognize these costs over a weighted average period of 2.1 years with respect to the stock options and 1.9 years for grants of RSUs. The following summarizes stock option activity during the nine months ended March 31, 2021: Weighted Average Weighted-Average Aggregate Number of Exercise Remaining Contractual Intrinsic Value Options Price Term (in thousands) Outstanding at June 30, 2020 326,304 $ 44.41 Granted 22,171 82.17 Exercised (87,235) 34.44 Expired or forfeited (2,710) 78.71 Outstanding at March 31, 2021 258,530 50.65 2.8 years $ 11,818 Exercisable at March 31, 2021 222,512 45.03 1.8 years 11,387 The following summarizes RSU award activity during the nine months ended March 31, 2021: Weighted- Average Shares Fair Value Nonvested at June 30, 2020 423,590 $ 88.68 Granted 337,778 80.32 Vested (310,939) 86.20 Forfeited (8,244) 84.47 Nonvested at March 31, 2021 442,185 $ 84.12 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 March 31, 2021, there were approximately 2.1 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 81,621 and 136,242 performance-based RSUs during the nine months ended March 31, 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 In April 2020, the Board of Directors authorized a share repurchase program of up to 1,000,000 shares of common stock. In August 2020, the Board of Directors increased the maximum number of shares to 3,000,000 shares authorized under the stock repurchase program. 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 nine months ended March 31, 2021, we repurchased 322,588 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 | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. 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 $30.2 million as of March 31, 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 $0.2 million and $1.5 million, respectively, during the three and nine months ended March 31, 2020 and $0.2 million and $0.9 million, respectively, during the three and nine months ended March 31, 2021. For acquisitions completed after fiscal 2009, pursuant to Financial Accounting Standard 141R, which was codified into ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements. The estimated fair value measurements of contingent 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, 2020 to March 31, 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, 2020 $ 13,867 Addition of contingent earnout obligations 7,304 Foreign currency translation adjustment 523 Changes in fair value for contingent earnout obligations (2,357) Payments on contingent earnout obligations — Ending fair value, March 31, 2021 $ 19,337 Environmental Contingencies We are subject to various environmental laws. Our practice is to 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 March 31, 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): Nine Months Ended March 31, 2020 2021 Balance at beginning of period $ 21,724 $ 20,825 Additions and adjustments 6,105 3,759 Reductions for warranty repair costs (6,557) (4,975) Balance at end of period $ 21,272 $ 19,609 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. Kocen and Riley v. Chopra, et al. The SEC and the DOJ are conducting an investigation of trading in our securities and have each subpoenaed information regarding trading by executives, directors, and employees, as well as our operations and disclosures in and around the time of certain trades. With respect to these trading related matters, in fiscal year 2018, we took action with respect to a senior level employee. At this time, we are unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these trading related investigations, or any penalties or remedial measures these agencies may seek. We place a high priority on compliance with our anticorruption and securities trading policies and are cooperating with each of the government investigations. We are involved in various other claims and legal proceedings arising in the ordinary course of business. In our opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on our business, financial condition, results of operations or cash flows. We have not accrued for loss contingencies relating to any such matters because we believe that, although unfavorable outcomes in the proceedings are possible, they are not considered by management to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to our company, the impact on our business, financial condition, results of operations and cash flows could be material. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | 11. 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 March 31, 2021 and 2020 were 33.7% and (3.4)%, respectively. During the three months ended March 31, 2021, we recognized a net discrete tax expense of $2.2 million for return-to-provision true-up adjustments of $2.4 million, offset by a discrete tax benefit of ($0.2) million for equity-based compensation under ASU 2016-09. During the three months ended March 31, 2020, we recognized a discrete tax benefit of $5.1 million for a return to provision true-up adjustment. The effective tax rate for the nine months ended March 31, 2021 and 2020 was 30.1% and 8.7%, respectively. During the nine months ended March 31, 2021, we recognized a net discrete tax expense of $2.3 million for return-to-provision true-up adjustments of $2.8 million, offset by a ($0.5) million tax benefit from equity-based compensation under ASU 2016-09. During the nine months ended March 31, 2020, we recognized a discrete tax benefit of $12.0 million for equity-based compensation under ASU 2016-09 of $6.8 million and a return to provision true-up adjustment of $5.2 million. |
Segment Information
Segment Information | 9 Months Ended |
Mar. 31, 2021 | |
Segment Information | |
Segment Information | 12. 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Revenues (1) —by Segment: Security division $ 187,076 $ 151,409 $ 578,477 $ 431,420 Healthcare division 45,662 54,023 127,862 160,421 Optoelectronics and Manufacturing division, including intersegment revenues 70,240 90,278 216,684 257,713 Intersegment revenues elimination (10,095) (11,923) (33,946) (34,850) Total $ 292,883 $ 283,787 $ 889,077 $ 814,704 Income (loss) from operations —by Segment: Security division $ 24,525 $ 23,969 $ 73,405 $ 52,651 Healthcare division 1,682 7,333 5,793 25,640 Optoelectronics and Manufacturing division 7,309 10,484 25,096 29,638 Corporate (10,161) (9,078) (23,578) (25,895) Intersegment eliminations 270 (242) 715 (517) Total $ 23,625 $ 32,466 $ 81,431 $ 81,517 June 30, March 31, 2020 2021 Assets (2) —by Segment: Security division $ 758,054 $ 751,008 Healthcare division 208,857 211,226 Optoelectronics and Manufacturing division 232,408 275,976 Corporate 109,178 126,157 Eliminations (3) (39,956) (38,407) Total $ 1,268,541 $ 1,325,960 (1) (2) (3) |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Mar. 31, 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, 2020 filed with the SEC. The results of operations for the three and nine months ended March 31, 2021 are not necessarily indicative of the operating results to be expected for the full 2021 fiscal year or any future periods. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. 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 8 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 and nine months ended March 31, 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Net income available to common stockholders $ 19,558 $ 18,773 $ 61,287 $ 48,155 Weighted average shares outstanding—basic 18,182 17,969 18,251 17,981 Dilutive effect of equity awards 331 329 442 297 Weighted average shares outstanding—diluted 18,513 18,298 18,693 18,278 Basic earnings per share $ 1.08 $ 1.04 $ 3.36 $ 2.68 Diluted earnings per share $ 1.06 $ 1.03 $ 3.28 $ 2.63 Shares excluded from diluted earnings per share due to their anti-dilutive effect 145 51 100 64 |
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 $92.5 million at March 31, 2021. Of this amount, approximately 58% 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, Malaysia, Canada, Singapore and India and to a lesser extent in Puerto Rico and Albania among other countries. We have cash holdings in financial institutions that exceed insured limits for such 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, as 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 March 31, 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 10 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, 2020 March 31, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets : Insurance company contracts $ — $ 37,155 $ — $ 37,155 $ — $ 45,015 $ — $ 45,015 Liabilities: Contingent consideration $ — $ — $ 13,867 $ 13,867 $ — $ — $ 19,337 $ 19,337 |
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”. Hedge effectiveness is assessed using the spot method, consistent with guidance in ASC 815 whereby the change in fair value of the forward contract is recorded in the same manner as the related currency translation adjustments, within other comprehensive income, as the hedging instrument is expected to be fully effective unless the amount hedged exceeds the net investment in the foreign operation, or the foreign operation is liquidated. We settled the net investment hedge in the second quarter of fiscal 2021, and the amount recorded in other comprehensive loss was not significant. There were no net investment hedges outstanding as of March 31, 2021. 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 and the amounts reported in the consolidated income statement for the three and nine months ended March 31, 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 March 31, 2021, we held foreign currency forward contracts with notional amounts totaling $23.5 million. Unrealized gains and losses from the forward currency forward contracts as of March 31, 2021 were not significant. There were no derivative instruments as of June 30, 2020. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance under Accounting Standards Update (“ASU”) 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our disclosures in the consolidated financial statements. In August 2018, the FASB issued authoritative guidance under ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. We adopted this new guidance in the first quarter of fiscal 2021, and it did not have a significant impact on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. Modifications to debt agreements for a change in the reference interest rate will be accounted for by prospectively adjusting the effective interest rate. The new standard was effective upon issuance and did not have a significant impact on our consolidated financial statements. ASU 2020-04 generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates; however the adoption of this new guidance for future modifications to contracts, if any, is not expected to have a significant impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). 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 and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. ASU 2020-06 also provides for certain disclosures with regard to convertible instruments and associated fair values. We are required to adopt this new guidance in the first quarter of fiscal 2023. Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 removes certain exceptions to the general principles of ASC 740 and is intended to improve consistency and simplify GAAP by clarifying and amending existing guidance for income taxes and related topics. We are required to adopt this new guidance in the first quarter of fiscal 2022. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Mar. 31, 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Net income available to common stockholders $ 19,558 $ 18,773 $ 61,287 $ 48,155 Weighted average shares outstanding—basic 18,182 17,969 18,251 17,981 Dilutive effect of equity awards 331 329 442 297 Weighted average shares outstanding—diluted 18,513 18,298 18,693 18,278 Basic earnings per share $ 1.08 $ 1.04 $ 3.36 $ 2.68 Diluted earnings per share $ 1.06 $ 1.03 $ 3.28 $ 2.63 Shares excluded from diluted earnings per share due to their anti-dilutive effect 145 51 100 64 |
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, 2020 March 31, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets : Insurance company contracts $ — $ 37,155 $ — $ 37,155 $ — $ 45,015 $ — $ 45,015 Liabilities: Contingent consideration $ — $ — $ 13,867 $ 13,867 $ — $ — $ 19,337 $ 19,337 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Balance Sheet Details | |
Schedule of selected balance sheet accounts | The following tables provide details of selected balance sheet accounts (in thousands): June 30, March 31, Accounts receivable, net 2020 2021 Accounts receivable $ 287,488 $ 281,970 Less allowance for doubtful accounts (17,648) (23,376) Total $ 269,840 $ 258,594 June 30, March 31, Inventories 2020 2021 Raw materials $ 132,797 $ 144,043 Work-in-process 50,023 68,853 Finished goods 58,406 70,627 Total $ 241,226 $ 283,523 June 30, March 31, Property and equipment, net 2020 2021 Land $ 16,516 $ 16,345 Buildings, civil works and improvements 57,709 57,645 Leasehold improvements 9,052 8,654 Equipment, furniture and fixtures 149,310 156,006 Computer software 18,217 23,052 Computer software implementation in process 11,817 10,615 Construction in process 3,598 4,459 Total 266,219 276,776 Less accumulated depreciation and amortization (138,283) (151,299) Property and equipment, net $ 127,936 $ 125,477 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 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 nine-month period ended March 31, 2021 were as follows (in thousands): Optoelectronics and Security Healthcare Manufacturing Division Division Division Consolidated Balance as of June 30, 2020 $ 203,627 $ 39,983 $ 67,017 $ 310,627 Goodwill acquired or adjusted during the period 1,905 3,244 — 5,149 Foreign currency translation adjustment 264 333 2,838 3,435 Balance as of March 31, 2021 $ 205,796 $ 43,560 $ 69,855 $ 319,211 |
Schedule of intangible assets | Intangible assets consisted of the following (in thousands): June 30, 2020 March 31, 2021 Weighted Gross Gross Average Carrying Accumulated Intangibles Carrying Accumulated Intangibles Lives Value Amortization Net Value Amortization Net Amortizable assets: Software development costs 8 years $ 41,332 $ (16,295) $ 25,037 $ 45,421 $ (14,817) $ 30,604 Patents 19 years 9,962 (2,584) 7,378 9,890 (2,790) 7,100 Developed technology 10 years 55,719 (19,556) 36,163 60,923 (24,352) 36,571 Customer relationships/backlog 7 years 64,128 (32,110) 32,018 62,577 (35,929) 26,648 Total amortizable assets 171,141 (70,545) 100,596 178,811 (77,888) 100,923 Non-amortizable assets: In-process research and development 533 — 533 533 — 533 Trademarks 27,150 — 27,150 28,602 — 28,602 Total intangible assets $ 198,824 $ (70,545) $ 128,279 $ 207,946 $ (77,888) $ 130,058 |
Schedule of estimated future amortization expense for intangible assets | At March 31, 2021, the estimated future amortization expense for intangible assets was as follows (in thousands): 2021 (remaining 3 months) $ 4,660 2022 17,152 2023 17,377 2024 16,705 2025 13,986 Thereafter 31,043 Total $ 100,923 |
Contract Assets and Liabiliti_2
Contract Assets and Liabilities (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Contract Assets and Liabilities | |
Schedule of contract assets and contract liabilities | Contract assets and liabilities were as follows (in thousands): June 30, March 31, Contract Assets: 2020 2021 $ Change % Change Unbilled revenue $ 43,011 $ 46,866 $ 3,855 9 % Contract Liabilities: Advances from customers $ 28,155 $ 48,132 $ 19,977 71 % Deferred revenue—current 32,863 37,075 4,212 13 % Deferred revenue—long-term 13,214 13,470 256 2 % |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Leases | |
Schedule of components of operating lease expense | The components of operating lease expense were as follows (in thousands): Three Months Ended March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Operating lease cost $ 2,525 $ 2,216 $ 7,771 $ 7,120 Variable lease cost 237 280 551 723 Short-term lease cost 350 258 745 649 $ 3,112 $ 2,754 $ 9,067 $ 8,492 |
Schedule of supplemental balance sheet assets and liabilities related to operating leases | Supplemental disclosures related to operating leases were as follows (in thousands): Balance Sheet Category June 30, 2020 March 31, 2021 Operating lease ROU assets, net Other assets $ 27,936 $ 23,856 Operating lease liabilities, current portion Other accrued expenses and current liabilities $ 8,537 $ 7,646 Operating lease liabilities, long-term Other long-term liabilities 19,713 16,742 Total operating lease liabilities $ 28,250 $ 24,388 Weighted average remaining lease term 4.2 years Weighted average discount rate 4.2 % |
Schedule of supplemental cash flow information related to operating leases | Supplemental cash flow information related to operating leases was as follows (in thousands): Nine Months Ended March 31, 2020 2021 Cash paid for operating lease liabilities $ 7,664 $ 7,773 ROU assets obtained in exchange for new lease obligations 3,718 1,810 |
Schedule of maturities of operating lease liabilities | Maturities of operating lease liabilities at March 31, 2021 were as follows (in thousands): March 31, 2021 Less than one year $ 8,475 1 – 2 years 5,929 2 – 3 years 4,866 3 – 4 years 3,215 4 – 5 years 2,060 Thereafter 2,421 26,966 Less: imputed interest (2,578) Total lease liabilities $ 24,388 |
Impairment, Restructuring and_2
Impairment, Restructuring and Other Charges (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Impairment, Restructuring and Other Charges | |
Summary of impairment, restructuring and other charges (benefit), net | Three Months Ended March 31, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ — $ 3,258 $ — $ — $ 3,258 Acquisition-related costs 107 — 41 155 303 Employee termination costs 328 466 259 50 1,103 Facility closures/consolidation 30 — — — 30 Legal costs (recoveries), net — — — (146) (146) Total expensed $ 465 $ 3,724 $ 300 $ 59 $ 4,548 Three Months Ended March 31, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Acquisition-related costs $ 22 $ — $ — $ — $ 22 Employee termination costs 213 — — — 213 Facility closures/consolidation costs (benefit) 166 — — — 166 Legal costs (recoveries), net — — — (686) (686) Total expensed (benefit), net $ 401 $ — $ — $ (686) $ (285) Nine Months Ended March 31, 2020 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ — $ 3,258 $ — $ — $ 3,258 Acquisition-related costs 107 — 41 155 303 Employee termination costs 734 466 277 119 1,596 Facility closures/consolidation 30 — — — 30 Legal costs (recoveries), net — — — (3,667) (3,667) Total expensed $ 871 $ 3,724 $ 318 $ (3,393) $ 1,520 Nine Months Ended March 31, 2021 Optoelectronics and Healthcare Manufacturing Security Division Division Division Corporate Total Impairment charges $ 552 $ — $ — $ — $ 552 Acquisition-related costs 250 27 — — 277 Employee termination costs 4,010 — 146 — 4,156 Mexico transaction costs 2,691 — — — 2,691 Facility closures/consolidation costs 1,420 — — — 1,420 Legal costs (recoveries), net — — — (1,184) (1,184) Total expensed (benefit), net $ 8,923 $ 27 $ 146 $ (1,184) $ 7,912 |
Summary of changes in the accrued liability for restructuring and other charges | Facility Employee Closure/ Termination Consolidation Acquisition- Legal Costs and Costs Cost Related Costs Settlements Total Balance as of June 30, 2020 $ 545 $ 201 $ — $ 1,882 $ 2,628 Restructuring and other charges (benefit), net 4,156 1,420 277 (1,184) 4,669 Payments, adjustments and reimbursements, net (4,570) (1,501) (277) 748 (5,600) Balance as of March 31, 2021 $ 131 $ 120 $ — $ 1,446 $ 1,697 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Borrowings | |
Schedule of long-term debt | Long-term debt consisted of the following (in thousands): June 30, March 31, 2020 2021 1.25% convertible notes due September 1, 2022: Principal amount $ 287,500 $ 287,500 Unamortized discount (19,075) (12,680) Unamortized debt issuance costs (2,547) (1,665) 265,878 273,155 Other long-term debt 2,120 1,767 267,998 274,922 Less current portion of long-term debt (926) (925) Long-term portion of debt $ 267,072 $ 273,997 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Mar. 31, 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 March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Cost of goods sold $ 189 $ 199 $ 517 $ 571 Selling, general and administrative 5,520 7,223 17,153 18,391 Research and development 128 143 427 424 Stock-based compensation expense $ 5,837 $ 7,565 $ 18,097 $ 19,386 |
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, 2020 326,304 $ 44.41 Granted 22,171 82.17 Exercised (87,235) 34.44 Expired or forfeited (2,710) 78.71 Outstanding at March 31, 2021 258,530 50.65 2.8 years $ 11,818 Exercisable at March 31, 2021 222,512 45.03 1.8 years 11,387 |
Summary of RSU award activity | Weighted- Average Shares Fair Value Nonvested at June 30, 2020 423,590 $ 88.68 Granted 337,778 80.32 Vested (310,939) 86.20 Forfeited (8,244) 84.47 Nonvested at March 31, 2021 442,185 $ 84.12 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Schedule of roll-forward of the contingent consideration liability | Beginning fair value, June 30, 2020 $ 13,867 Addition of contingent earnout obligations 7,304 Foreign currency translation adjustment 523 Changes in fair value for contingent earnout obligations (2,357) Payments on contingent earnout obligations — Ending fair value, March 31, 2021 $ 19,337 |
Schedule of changes in warranty provisions | The following table presents changes in warranty provisions (in thousands): Nine Months Ended March 31, 2020 2021 Balance at beginning of period $ 21,724 $ 20,825 Additions and adjustments 6,105 3,759 Reductions for warranty repair costs (6,557) (4,975) Balance at end of period $ 21,272 $ 19,609 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Segment Information | |
Schedule of results of operations and identifiable assets by industry segment | Three Months Ended March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Revenues (1) —by Segment: Security division $ 187,076 $ 151,409 $ 578,477 $ 431,420 Healthcare division 45,662 54,023 127,862 160,421 Optoelectronics and Manufacturing division, including intersegment revenues 70,240 90,278 216,684 257,713 Intersegment revenues elimination (10,095) (11,923) (33,946) (34,850) Total $ 292,883 $ 283,787 $ 889,077 $ 814,704 Income (loss) from operations —by Segment: Security division $ 24,525 $ 23,969 $ 73,405 $ 52,651 Healthcare division 1,682 7,333 5,793 25,640 Optoelectronics and Manufacturing division 7,309 10,484 25,096 29,638 Corporate (10,161) (9,078) (23,578) (25,895) Intersegment eliminations 270 (242) 715 (517) Total $ 23,625 $ 32,466 $ 81,431 $ 81,517 June 30, March 31, 2020 2021 Assets (2) —by Segment: Security division $ 758,054 $ 751,008 Healthcare division 208,857 211,226 Optoelectronics and Manufacturing division 232,408 275,976 Corporate 109,178 126,157 Eliminations (3) (39,956) (38,407) Total $ 1,268,541 $ 1,325,960 (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 | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Feb. 28, 2017 | |
Computation of basic and diluted earnings per share | |||||
Net income available to common stockholders | $ 18,773 | $ 19,558 | $ 48,155 | $ 61,287 | |
Weighted average shares outstanding-basic | 17,969 | 18,182 | 17,981 | 18,251 | |
Dilutive effect of equity awards | 329 | 331 | 297 | 442 | |
Dilutive effect of the Notes | 0 | 0 | 0 | 0 | |
Weighted average shares outstanding-diluted | 18,298 | 18,513 | 18,278 | 18,693 | |
Basic earnings per share | $ 1.04 | $ 1.08 | $ 2.68 | $ 3.36 | |
Diluted earnings per share | $ 1.03 | $ 1.06 | $ 2.63 | $ 3.28 | |
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 51 | 145 | 64 | 100 | |
1.25% Convertible Senior Notes Due 2022 | |||||
Per Share Computations | |||||
Interest rate (as a percentage) | 1.25% | 1.25% | 1.25% | ||
Computation of basic and diluted earnings per share | |||||
Conversion price | $ 107.46 | $ 107.46 |
Basis of Presentation - Cash Eq
Basis of Presentation - Cash Equivalents (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Cash Equivalents | ||
Cash and cash equivalents | $ 92,465 | $ 76,102 |
Cash, cash equivalents, and investments held by our foreign subsidiaries and subject to repatriation tax considerations(as a percentage) | 58.00% |
Basis of Presentation - Fair Va
Basis of Presentation - Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 |
Fair Value of Financial Instruments | |||
Liabilities-contingent consideration | $ 13,867 | $ 19,337 | |
Recurring | |||
Fair Value of Financial Instruments | |||
Assets - Insurance company contracts | 45,015 | $ 37,155 | |
Liabilities-contingent consideration | 19,337 | 13,867 | |
Recurring | Level 2 | |||
Fair Value of Financial Instruments | |||
Assets - Insurance company contracts | 45,015 | 37,155 | |
Recurring | Level 3 | |||
Fair Value of Financial Instruments | |||
Liabilities-contingent consideration | $ 19,337 | $ 13,867 |
Basis of Presentation - Derivat
Basis of Presentation - Derivative Instruments and Hedging Activity (Details) $ in Millions | Mar. 31, 2021USD ($) |
Foreign currency forward contracts | |
Derivative Instruments and Hedging Activity | |
Notional amounts | $ 23.5 |
Business Combinations (Details)
Business Combinations (Details) $ in Millions | 1 Months Ended |
Jul. 31, 2020USD ($) | |
Business Combinations | |
Total purchase price | $ 3 |
Maximum contingent consideration | $ 12 |
Balance Sheet Details (Details)
Balance Sheet Details (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Accounts receivable, net | |||||
Accounts receivable | $ 281,970 | $ 281,970 | $ 287,488 | ||
Less allowance for doubtful accounts | (23,376) | (23,376) | (17,648) | ||
Total | 258,594 | 258,594 | 269,840 | ||
Inventories | |||||
Raw materials | 144,043 | 144,043 | 132,797 | ||
Work-in-process | 68,853 | 68,853 | 50,023 | ||
Finished goods | 70,627 | 70,627 | 58,406 | ||
Total | 283,523 | 283,523 | 241,226 | ||
Property and equipment, net | |||||
Property and equipment, gross | 276,776 | 276,776 | 266,219 | ||
Less accumulated depreciation and amortization | (151,299) | (151,299) | (138,283) | ||
Property and equipment, net | 125,477 | 125,477 | 127,936 | ||
Depreciation and amortization expense for property and equipment | 5,500 | $ 5,400 | 16,300 | $ 15,900 | |
Land | |||||
Property and equipment, net | |||||
Property and equipment, gross | 16,345 | 16,345 | 16,516 | ||
Buildings, civil works and improvements | |||||
Property and equipment, net | |||||
Property and equipment, gross | 57,645 | 57,645 | 57,709 | ||
Leasehold improvements | |||||
Property and equipment, net | |||||
Property and equipment, gross | 8,654 | 8,654 | 9,052 | ||
Equipment, furniture and fixtures | |||||
Property and equipment, net | |||||
Property and equipment, gross | 156,006 | 156,006 | 149,310 | ||
Computer software | |||||
Property and equipment, net | |||||
Property and equipment, gross | 23,052 | 23,052 | 18,217 | ||
Computer software implementation in process | |||||
Property and equipment, net | |||||
Property and equipment, gross | 10,615 | 10,615 | 11,817 | ||
Construction in process | |||||
Property and equipment, net | |||||
Property and equipment, gross | $ 4,459 | $ 4,459 | $ 3,598 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Amortizable assets: | |||||
Gross Carrying Value | $ 178,811 | $ 178,811 | $ 171,141 | ||
Accumulated Amortization | (77,888) | (77,888) | (70,545) | ||
Total | 100,923 | 100,923 | 100,596 | ||
Total intangible assets | |||||
Gross Carrying Value | 207,946 | 207,946 | 198,824 | ||
Intangible assets, net | 130,058 | 130,058 | 128,279 | ||
Amortization expense | 4,800 | $ 4,900 | 15,100 | $ 14,300 | |
In-process research and development | |||||
Non-amortizable assets: | |||||
Gross Carrying Value | 533 | 533 | 533 | ||
Trademarks | |||||
Non-amortizable assets: | |||||
Gross Carrying Value | 28,602 | $ 28,602 | 27,150 | ||
Software development costs | |||||
Intangible assets | |||||
Weighted Average Lives (in Years) | 8 years | ||||
Amortizable assets: | |||||
Gross Carrying Value | 45,421 | $ 45,421 | 41,332 | ||
Accumulated Amortization | (14,817) | (14,817) | (16,295) | ||
Total | 30,604 | $ 30,604 | 25,037 | ||
Patents | |||||
Intangible assets | |||||
Weighted Average Lives (in Years) | 19 years | ||||
Amortizable assets: | |||||
Gross Carrying Value | 9,890 | $ 9,890 | 9,962 | ||
Accumulated Amortization | (2,790) | (2,790) | (2,584) | ||
Total | 7,100 | $ 7,100 | 7,378 | ||
Developed technology | |||||
Intangible assets | |||||
Weighted Average Lives (in Years) | 10 years | ||||
Amortizable assets: | |||||
Gross Carrying Value | 60,923 | $ 60,923 | 55,719 | ||
Accumulated Amortization | (24,352) | (24,352) | (19,556) | ||
Total | 36,571 | $ 36,571 | 36,163 | ||
Customer relationships/backlog | |||||
Intangible assets | |||||
Weighted Average Lives (in Years) | 7 years | ||||
Amortizable assets: | |||||
Gross Carrying Value | 62,577 | $ 62,577 | 64,128 | ||
Accumulated Amortization | (35,929) | (35,929) | (32,110) | ||
Total | $ 26,648 | $ 26,648 | $ 32,018 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2021USD ($) | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 310,627 |
Goodwill acquired or adjusted during the period | 5,149 |
Foreign currency translation adjustment | 3,435 |
Balance at the end of the period | 319,211 |
Security Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 203,627 |
Goodwill acquired or adjusted during the period | 1,905 |
Foreign currency translation adjustment | 264 |
Balance at the end of the period | 205,796 |
Healthcare Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 39,983 |
Goodwill acquired or adjusted during the period | 3,244 |
Foreign currency translation adjustment | 333 |
Balance at the end of the period | 43,560 |
Optoelectronics and Manufacturing Division | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 67,017 |
Foreign currency translation adjustment | 2,838 |
Balance at the end of the period | $ 69,855 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Intangible Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Estimated future amortization expense | |||||
2021 (remaining 3 months) | $ 4,660 | $ 4,660 | |||
2022 | 17,152 | 17,152 | |||
2023 | 17,377 | 17,377 | |||
2024 | 16,705 | 16,705 | |||
2025 | 13,986 | 13,986 | |||
Thereafter | 31,043 | 31,043 | |||
Total | 100,923 | 100,923 | $ 100,596 | ||
Software development costs | |||||
Estimated future amortization expense | |||||
Total | 30,604 | 30,604 | $ 25,037 | ||
Capitalized software development costs | $ 2,600 | $ 4,500 | $ 9,100 | $ 7,700 |
Contract Assets and Liabiliti_3
Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Contract Assets | ||
Unbilled revenue | $ 46,866 | $ 43,011 |
Change in unbilled revenue | $ 3,855 | |
Percentage of change in unbilled revenue | 9.00% | |
Contract Liabilities | ||
Advances from customers | $ 48,132 | 28,155 |
Deferred revenue - current | 37,075 | 32,863 |
Deferred revenue - long-term | 13,470 | $ 13,214 |
Change in advances from customers | $ 19,977 | |
Percentage of change in advances from customers | 71.00% | |
Change in deferred revenue - current | $ 4,212 | |
Percentage of change in deferred revenue - current | 13.00% | |
Change in deferred revenue - long-term | $ 256 | |
Percentage of change in deferred revenue - long-term | 2.00% | |
Remaining Performance Obligations | ||
Revenue remaining performance obligation | $ 322,800 | |
Remaining performance obligation expected percentage recognized | 67.00% | |
Recognized revenue from contract liabilities | $ 45,000 | |
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 | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Operating lease expense | |||||
Operating lease cost | $ 2,216 | $ 2,525 | $ 7,120 | $ 7,771 | |
Variable lease cost | 280 | 237 | 723 | 551 | |
Short-term lease cost | 258 | 350 | 649 | 745 | |
Operating lease expense | 2,754 | $ 3,112 | 8,492 | 9,067 | |
Balance sheet assets and liabilities related to operating leases | |||||
Operating lease ROU assets, net | $ 23,856 | $ 23,856 | $ 27,936 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent. | Other Assets, Noncurrent. | |||
Operating lease liabilities, current portion | $ 7,646 | $ 7,646 | 8,537 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current | |||
Operating lease liabilities, long-term | $ 16,742 | $ 16,742 | 19,713 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent | |||
Total operating lease liabilities | $ 24,388 | $ 24,388 | $ 28,250 | ||
Weighted average remaining lease term | 4 years 2 months 12 days | 4 years 2 months 12 days | |||
Weighted average discount rate | 4.20% | 4.20% | |||
Cash flow information related to operating leases | |||||
Cash paid for operating lease liabilities | $ 7,773 | 7,664 | |||
ROU assets obtained in exchange for new lease obligations | 1,810 | $ 3,718 | |||
Maturities of operating lease liabilities | |||||
Less than one year | $ 8,475 | 8,475 | |||
1 - 2 years | 5,929 | 5,929 | |||
2 - 3 years | 4,866 | 4,866 | |||
3 - 4 years | 3,215 | 3,215 | |||
4 - 5 years | 2,060 | 2,060 | |||
Thereafter | 2,421 | 2,421 | |||
Total | 26,966 | 26,966 | |||
Less: imputed interest | (2,578) | (2,578) | |||
Total lease liabilities | $ 24,388 | $ 24,388 |
Impairment, Restructuring and_3
Impairment, Restructuring and Other Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Impairment, Restructuring and Other Charges | ||||
Net benefit recognized related to reimbursement from insurance | $ 285 | $ (4,548) | $ (7,912) | $ (1,520) |
Impairment charges | 3,258 | 552 | 3,258 | |
Acquisition-related costs | 22 | 303 | 277 | 303 |
Employee termination costs | 213 | 1,103 | 4,156 | 1,596 |
Mexico transaction costs | 2,691 | |||
Facility closures/consolidation costs (benefit) | 166 | 30 | 1,420 | 30 |
Legal costs (recoveries), net | (686) | (146) | (1,184) | (3,667) |
Total expensed (benefit), net | (285) | 4,548 | 7,912 | 1,520 |
Other operational efficiency activities | ||||
Impairment, Restructuring and Other Charges | ||||
Net benefit recognized related to reimbursement from insurance | (700) | (1,200) | ||
Acquisition-related costs | 200 | 300 | ||
Employee termination costs | 200 | 1,600 | ||
Total expensed (benefit), net | 300 | |||
Security Division | ||||
Impairment, Restructuring and Other Charges | ||||
Impairment charges | 552 | |||
Acquisition-related costs | 22 | 107 | 250 | 107 |
Employee termination costs | 213 | 328 | 4,010 | 734 |
Mexico transaction costs | 2,691 | |||
Facility closures/consolidation costs (benefit) | 166 | 30 | 1,420 | 30 |
Total expensed (benefit), net | 401 | 465 | 8,923 | 871 |
Healthcare Division | ||||
Impairment, Restructuring and Other Charges | ||||
Net expenses | 4,500 | 1,500 | ||
Assets Impaired | 3,300 | 3,300 | ||
Impairment charges | 3,258 | 3,258 | ||
Acquisition-related costs | 27 | |||
Employee termination costs | 466 | 466 | ||
Total expensed (benefit), net | 3,724 | 27 | 3,724 | |
Optoelectronics and Manufacturing Division | ||||
Impairment, Restructuring and Other Charges | ||||
Acquisition-related costs | 41 | 41 | ||
Employee termination costs | 259 | 146 | 277 | |
Total expensed (benefit), net | 300 | 146 | 318 | |
Corporate | ||||
Impairment, Restructuring and Other Charges | ||||
Acquisition-related costs | 155 | 155 | ||
Employee termination costs | 50 | 119 | ||
Legal costs (recoveries), net | (686) | (146) | (1,184) | (3,667) |
Total expensed (benefit), net | $ (686) | $ 59 | (1,184) | $ (3,393) |
Turnkey Screening Program | Security Division | ||||
Impairment, Restructuring and Other Charges | ||||
Net benefit recognized related to reimbursement from insurance | 7,200 | |||
Impairment charges | 600 | |||
Employee termination costs | 2,800 | |||
Mexico transaction costs | 2,700 | |||
Facility closures/consolidation costs (benefit) | 1,100 | |||
Total expensed (benefit), net | $ 7,900 |
Impairment, Restructuring and_4
Impairment, Restructuring and Other Charges - Changes in the accrued liability (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2021USD ($) | |
Restructuring and other charges | |
Balance at the beginning of the period | $ 2,628 |
Restructuring and other charges (benefit), net | 4,669 |
Payments, adjustments and reimbursements, net | (5,600) |
Balance at the end of the period | 1,697 |
Employee Termination Costs | |
Restructuring and other charges | |
Balance at the beginning of the period | 545 |
Restructuring and other charges (benefit), net | 4,156 |
Payments, adjustments and reimbursements, net | (4,570) |
Balance at the end of the period | 131 |
Facility Closure/ Consolidation Cost | |
Restructuring and other charges | |
Balance at the beginning of the period | 201 |
Restructuring and other charges (benefit), net | 1,420 |
Payments, adjustments and reimbursements, net | (1,501) |
Balance at the end of the period | 120 |
Acquisition-related Costs | |
Restructuring and other charges | |
Restructuring and other charges (benefit), net | 277 |
Payments, adjustments and reimbursements, net | (277) |
Balance at the end of the period | 0 |
Legal Costs and Settlements | |
Restructuring and other charges | |
Balance at the beginning of the period | 1,882 |
Restructuring and other charges (benefit), net | (1,184) |
Payments, adjustments and reimbursements, net | 748 |
Balance at the end of the period | $ 1,446 |
Borrowings (Details)
Borrowings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | Apr. 30, 2019 | Feb. 28, 2017 | |
Borrowings | |||||||
Borrowings outstanding | $ 0 | $ 0 | $ 59,000 | ||||
Revolving Credit Facility | |||||||
Borrowings | |||||||
Maximum borrowing capacity | $ 535,000 | ||||||
Sub-limit available for letters of credit | 300,000 | ||||||
Unused commitment fee (as a percent) | 0.10% | ||||||
Amount outstanding under letters of credit | 66,700 | $ 66,700 | |||||
Available credit facility | 468,300 | $ 468,300 | |||||
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% | ||||||
1.25% Convertible Senior Notes Due 2022 | |||||||
Borrowings | |||||||
Principal amount | $ 287,500 | $ 287,500 | $ 287,500 | ||||
Interest rate (as a percentage) | 1.25% | 1.25% | 1.25% | ||||
Liability component of convertible debt | $ 242,400 | $ 242,400 | |||||
Equity component of convertible debt | 45,100 | 45,100 | |||||
Debt issuance costs | 7,700 | 7,700 | |||||
Debt Component of debt issuance costs | 6,500 | 6,500 | |||||
Equity component of debt issuance costs | 1,200 | 1,200 | |||||
Total interest expense | 3,300 | $ 3,300 | 10,000 | $ 9,700 | |||
Contractual interest expense | 900 | 900 | 2,700 | 2,700 | |||
Amortization of debt discount | 2,200 | 2,100 | 6,400 | 6,100 | |||
Amortization of debt issuance costs | 300 | $ 300 | 900 | $ 900 | |||
Unamortized discount | 12,680 | 12,680 | 19,075 | ||||
Unamortized debt issuance costs | $ 1,665 | $ 1,665 | $ 2,547 | ||||
Effective interest rate (as a percent) | 4.50% | 4.50% | |||||
Bank lines of credit | |||||||
Borrowings | |||||||
Amount outstanding under letters of credit | $ 63,000 | $ 63,000 | |||||
Available credit facility | $ 12,900 | $ 12,900 |
Borrowings - other borrowings (
Borrowings - other borrowings (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Components of long-term debt | ||
Convertible notes | $ 273,155 | $ 265,878 |
Other long-term debt | 1,767 | 2,120 |
Total | 274,922 | 267,998 |
Less current portion of long-term debt | (925) | (926) |
Long-term portion of debt | 273,997 | 267,072 |
1.25% Convertible Senior Notes Due 2022 | ||
Components of long-term debt | ||
Principal amount | 287,500 | 287,500 |
Unamortized discount | (12,680) | (19,075) |
Unamortized debt issuance costs | $ (1,665) | $ (2,547) |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Stock-based Compensation | |||||
Stock-based compensation expense | $ 7,565 | $ 5,837 | $ 19,386 | $ 18,097 | |
RSU | |||||
Stock-based Compensation | |||||
Unrecognized compensation cost | $ 20,700 | $ 20,700 | |||
Weighted-average period | 1 year 10 months 24 days | ||||
Shares | |||||
Nonvested at the beginning of the period (in shares) | 423,590 | ||||
Granted (in shares) | 337,778 | ||||
Vested (in shares) | (310,939) | ||||
Forfeited (in shares) | (8,244) | ||||
Nonvested at the end of the period (in shares) | 442,185 | 442,185 | |||
Weighted-Average Fair Value | |||||
Nonvested at the beginning of the period (in dollars per share) | $ 88.68 | ||||
Granted (in dollars per share) | 80.32 | ||||
Vested (in dollars per share) | 86.20 | ||||
Forfeited (in dollars per share) | 84.47 | ||||
Nonvested at the end of the period (in dollars per share) | $ 84.12 | $ 84.12 | |||
Stock options | |||||
Stock-based Compensation | |||||
Unrecognized compensation cost | $ 500 | $ 500 | |||
Weighted-average period | 2 years 1 month 6 days | ||||
Number of Options | |||||
Outstanding at the beginning of the period (in shares) | 326,304 | ||||
Granted (in shares) | 22,171 | ||||
Exercised (in shares) | (87,235) | ||||
Expired or forfeited (in shares) | (2,710) | ||||
Outstanding at the end of the period (in shares) | 258,530 | 258,530 | |||
Exercisable at the end of the period (in shares) | 222,512 | 222,512 | |||
Weighted Average Exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 44.41 | ||||
Granted (in dollars per share) | 82.17 | ||||
Exercised (in dollars per share) | 34.44 | ||||
Expired or forfeited (in dollars per share) | 78.71 | ||||
Outstanding at the end of the period (in dollars per share) | $ 50.65 | 50.65 | |||
Exercisable at the end of the period (in dollars per share) | $ 45.03 | $ 45.03 | |||
Weighted-Average Remaining Contractual Term | |||||
Outstanding at the end of the period | 2 years 9 months 18 days | ||||
Exercisable at the end of the period | 1 year 9 months 18 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding at the end of the period | $ 11,818 | $ 11,818 | |||
Exercisable at the end of the period | $ 11,387 | $ 11,387 | |||
Performance-based restricted stock units | |||||
Shares | |||||
Granted (in shares) | 136,242 | 81,621 | |||
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 | ||||
Weighted-Average Fair Value | |||||
Shares available for grant | 2,100,000 | 2,100,000 | |||
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 | $ 199 | 189 | $ 571 | $ 517 | |
Selling, general and administrative | |||||
Stock-based Compensation | |||||
Stock-based compensation expense | 7,223 | 5,520 | 18,391 | 17,153 | |
Research and development | |||||
Stock-based Compensation | |||||
Stock-based compensation expense | $ 143 | $ 128 | $ 424 | $ 427 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchase Program (Details) - Common stock - shares | 9 Months Ended | ||
Mar. 31, 2021 | Aug. 31, 2020 | Apr. 30, 2020 | |
Share Repurchase Program | |||
Number of repurchased shares authorized | 3,000,000 | 1,000,000 | |
Number of shares repurchased | 322,588 |
Commitments and Contingencies -
Commitments and Contingencies - Contingent Acquisition Obligations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2017 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jul. 31, 2020 | |
Contingent Acquisition Obligations | ||||||
Remaining maximum amount of contingent consideration | $ 12,000 | |||||
Addition of contingent earnout obligations | $ 7,304 | |||||
Foreign currency translation adjustment | 523 | |||||
Changes in fair value for contingent earnout obligations | (2,357) | |||||
Ending fair value | $ 19,337 | 19,337 | ||||
Certain acquisitions | ||||||
Contingent Acquisition Obligations | ||||||
Remaining maximum amount of contingent consideration | 30,200 | 30,200 | ||||
Contingent payment made | $ 1,500 | $ 200 | $ 900 | $ 200 | ||
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 | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Changes in provision for warranties | ||
Warranty provision at beginning of period | $ 20,825 | $ 21,724 |
Additions and adjustments | 3,759 | 6,105 |
Reductions for warranty repair costs | (4,975) | (6,557) |
Warranty provision at end of period | $ 19,609 | $ 21,272 |
Income Taxes - (Details)
Income Taxes - (Details) - ASU 2016-09 - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net discrete tax benefits (expenses) for equity-based compensation | $ (0.2) | $ (0.5) | $ 6.8 | |
Effective income tax rate (as a percent) | 30.10% | 8.70% | ||
Effective income tax rate excluding certain discrete tax items (as a percent) | 33.70% | 3.40% | ||
Return-to-provision true-up adjustments | $ 2.2 | $ 5.1 | $ 2.3 | $ 12 |
Provision true-up adjustment | $ 2.4 | $ 2.8 | $ 5.2 |
Segment Information - Operation
Segment Information - Operations and Identifiable Assets (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 21 Months Ended | |||
Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2021USD ($)segmentcustomer | Mar. 31, 2020USD ($) | Mar. 31, 2021USD ($)customer | Jun. 30, 2020USD ($) | |
Operations and identifiable assets by industry segment | ||||||
Number of identifiable industry segments | segment | 3 | |||||
Total revenues | $ 283,787 | $ 292,883 | $ 814,704 | $ 889,077 | ||
Income (loss) from operations | 32,466 | 23,625 | 81,517 | 81,431 | ||
Segments assets | 1,325,960 | $ 1,325,960 | $ 1,325,960 | $ 1,268,541 | ||
Number of major customers | customer | 0 | |||||
Concentration (as a percent) | 10.00% | |||||
Customer Concentration Risk | ||||||
Operations and identifiable assets by industry segment | ||||||
Concentration (as a percent) | 10.00% | |||||
Accounts receivable | Customer Concentration Risk | ||||||
Operations and identifiable assets by industry segment | ||||||
Number of major customers | customer | 1 | |||||
Concentration (as a percent) | 13.00% | |||||
Operating Segments | Security Division | ||||||
Operations and identifiable assets by industry segment | ||||||
Total revenues | 151,409 | 187,076 | $ 431,420 | 578,477 | ||
Income (loss) from operations | 23,969 | 24,525 | 52,651 | 73,405 | ||
Segments assets | 751,008 | 751,008 | $ 751,008 | 758,054 | ||
Operating Segments | Healthcare Division | ||||||
Operations and identifiable assets by industry segment | ||||||
Total revenues | 54,023 | 45,662 | 160,421 | 127,862 | ||
Income (loss) from operations | 7,333 | 1,682 | 25,640 | 5,793 | ||
Segments assets | 211,226 | 211,226 | 211,226 | 208,857 | ||
Operating Segments | Optoelectronics and Manufacturing Division | ||||||
Operations and identifiable assets by industry segment | ||||||
Total revenues | 90,278 | 70,240 | 257,713 | 216,684 | ||
Income (loss) from operations | 10,484 | 7,309 | 29,638 | 25,096 | ||
Segments assets | 275,976 | 275,976 | 275,976 | 232,408 | ||
Corporate | ||||||
Operations and identifiable assets by industry segment | ||||||
Income (loss) from operations | (9,078) | (10,161) | (25,895) | (23,578) | ||
Segments assets | 126,157 | 126,157 | 126,157 | 109,178 | ||
Eliminations | ||||||
Operations and identifiable assets by industry segment | ||||||
Total revenues | (11,923) | (10,095) | (34,850) | (33,946) | ||
Income (loss) from operations | (242) | $ 270 | (517) | $ 715 | ||
Segments assets | $ (38,407) | $ (38,407) | $ (38,407) | $ (39,956) |