Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Mar. 31, 2017	Apr. 25, 2017
Document and Entity Information
Entity Registrant Name	OSI SYSTEMS INC
Entity Central Index Key	0001039065
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		18,678,973
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Current Assets:
Cash and cash equivalents	$ 158,472	$ 104,370
Accounts receivable, net	183,838	141,716
Inventories	267,191	273,288
Prepaid expenses and other current assets	47,066	35,944
Total current assets	656,567	555,318
Property and equipment, net	161,081	183,114
Goodwill	241,727	122,819
Intangible assets, net	120,575	56,283
Deferred income taxes	16,975	43,474
Other assets	38,812	30,715
Total assets	1,235,737	991,723
Current Liabilities:
Bank lines of credit	93,000	125,000
Current portion of long-term debt	2,410	2,759
Accounts payable	80,279	69,490
Accrued payroll and related expenses	30,681	29,203
Advances from customers	44,064	55,408
Deferred revenue	25,472	29,978
Other accrued expenses and current liabilities	72,320	55,997
Total current liabilities	348,226	367,835
Long-term debt	240,018	6,054
Deferred income taxes	28,600	29,160
Other long-term liabilities	64,581	47,828
Total liabilities	681,425	450,877
Commitments and contingencies (Note 9)
Stockholders' Equity:
Preferred stock, $0.001 par value-authorized, 10,000,000 shares; no shares issued or outstanding
Common stock, $0.001 par value - authorized, 100,000,000 shares; issued and outstanding, 18,912,157 shares at June 30, 2016 and 18,676,162 shares at March 31, 2017	216,220	219,114
Retained earnings	358,517	338,988
Accumulated other comprehensive loss	(20,425)	(17,256)
Total stockholders' equity	554,312	540,846
Total liabilities and stockholders' equity	$ 1,235,737	$ 991,723

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Jun. 30, 2016
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, shares issued	18,676,162	18,912,157
Common stock, shares outstanding	18,676,162	18,912,157

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Net revenues:
Products	$ 168,238	$ 148,730	$ 488,285	$ 419,398
Services	76,908	62,074	220,264	188,795
Total net revenues	245,146	210,804	708,549	608,193
Cost of goods sold:
Products	116,862	102,929	348,500	290,036
Services	42,256	37,816	123,339	112,063
Total cost of goods sold	159,118	140,745	471,839	402,099
Gross profit	86,028	70,059	236,710	206,094
Operating expenses:
Selling, general and administrative	49,431	39,233	144,528	122,767
Research and development	14,395	12,945	39,811	37,871
Impairment, restructuring and other charges	2,508	4,537	21,885	15,634
Total operating expenses	66,334	56,715	206,224	176,272
Income from operations	19,694	13,344	30,486	29,822
Interest expense, net	(2,583)	(680)	(5,716)	(2,025)
Other income (expense), net	2,094	14	2,088	(58)
Income before income taxes	19,205	12,678	26,858	27,739
Provision for income taxes	5,186	3,335	7,329	7,483
Net income	$ 14,019	$ 9,343	$ 19,529	$ 20,256
Earnings per share:
Basic (in dollars per share)	$ 0.74	$ 0.48	$ 1.03	$ 1.03
Diluted (in dollars per share)	$ 0.72	$ 0.47	$ 1.00	$ 1.00
Shares used in per share calculation:
Basic (in shares)	18,913	19,336	18,964	19,604
Diluted (in shares)	19,515	19,941	19,585	20,261

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 14,019	$ 9,343	$ 19,529	$ 20,256
Other comprehensive income (loss):
Foreign currency translation adjustment	1,697	(599)	(3,303)	(3,263)
Other	15	79	134	188
Other comprehensive income (loss)	1,712	(520)	(3,169)	(3,075)
Comprehensive income	$ 15,731	$ 8,823	$ 16,360	$ 17,181

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 19,529	$ 20,256
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49,042	42,544
Stock based compensation expense	20,262	13,582
Amortization of debt discount and issuance costs	779
Impairment charges	5,418	8,741
Gain on sale of business	(2,110)
Other	1,186	1,571
Changes in operating assets and liabilities-net of business acquisitions:
Accounts receivable	(20,677)	21,442
Inventories	26,410	(53,974)
Prepaid expenses and other assets	(6,017)	(17,746)
Accounts payable	6,733	21,813
Advances from customers	(27,417)	(201)
Deferred revenue	(16,582)	(12,890)
Other	(4,385)	(4,902)
Net cash provided by operating activities	52,171	40,236
Cash flows from investing activities:
Acquisition of property and equipment	(11,979)	(8,965)
Acquisition of businesses, net of cash acquired	(191,238)	(19,565)
Net proceeds from sale of business	12,793
Acquisition of intangible and other assets	(4,034)	(4,256)
Net cash used in investing activities	(194,458)	(32,786)
Cash flows from financing activities:
Net borrowings (payments) on bank lines of credit	(32,000)	125,000
Proceeds from long-term debt	280,261	583
Payments on long-term debt	(2,716)	(2,209)
Proceeds from exercise of stock options and employee stock purchase plan	9,953	6,132
Repurchase of common shares	(48,453)	(73,368)
Taxes paid related to net share settlement of equity awards	(9,922)	(13,187)
Net cash provided by financing activities	197,123	42,951
Effect of exchange rate changes on cash	(734)	(569)
Net increase in cash and cash equivalents	54,102	49,832
Cash and cash equivalents-beginning of period	104,370	47,593
Cash and cash equivalents-end of period	158,472	97,425
Supplemental disclosure of cash flow information:
Interest	4,286	1,563
Income taxes	$ 16,108	$ 20,075

Basis of Presentation

9 Months Ended

Mar. 31, 2017

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

Description of Business

OSI Systems, Inc., together with its subsidiaries (the “Company”), is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. The Company sells its products in diversified markets, including homeland security, healthcare, defense and aerospace.

The Company has three reporting segments: (i) Security, providing security inspection systems, turnkey security screening solutions and related services; (ii) Healthcare, providing patient monitoring, diagnostic cardiology and anesthesia and ventilation systems, and related services; and (iii) Optoelectronics and Manufacturing, providing specialized electronic components and electronic manufacturing services for the Security and Healthcare divisions, as well as to external original equipment manufacturer (“OEM”) customers and end users for applications in the defense, aerospace, medical and industrial markets, among others.

Through its Security division, the Company provides security screening products and related services globally. These products fall into the following categories: baggage and parcel inspection; cargo and vehicle inspection; hold (checked) baggage screening; people screening; radiation detection; and explosive and narcotics trace detection. In addition to these products, the Company provides site design, installation, training and technical support services to its customers. The Company also provides turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for its customers.

Through its Healthcare division, the Company designs, manufactures, markets and services patient monitoring, diagnostic cardiology, and anesthesia delivery and ventilation systems and related supplies and accessories globally. These products are used by care providers in critical care, emergency and perioperative areas in hospitals as well as in physicians’ offices, medical clinics and ambulatory surgery centers, among others.

Through its Optoelectronics and Manufacturing division, the Company designs, manufactures and markets optoelectronic devices and provides electronics manufacturing services worldwide for use in a broad range of applications, including defense and aerospace, security and inspection systems, medical imaging and diagnostic products, telecommunications, computer peripherals, industrial automation systems, automotive diagnostic systems, gaming systems and consumer products. This division provides products and services to OEM customers and end users, as well as to the Company’s own Security and Healthcare divisions.

Basis of Presentation

The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016. The results of operations for the three and nine months ended March 31, 2017 are not necessarily indicative of the operating results to be expected for the full 2017 fiscal year or any future periods.

Use of Estimates

The preparation of financial statements in accordance 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 the Company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, stock-based compensation expense, income taxes, accrued product warranty costs, and the useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates, potentially by material amounts.

Per Share Computations

The Company computes basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The Company computes 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 or unit awards under the treasury stock method. The underlying equity component of the 1.25% convertible senior notes discussed in Note 6 to the condensed consolidated financial statements will have no impact to diluted earnings per share until the average price of the Company’s common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2017		2016		2017
Net income for diluted earnings per share calculation	$	9,343	$	14,019	$	20,256	$	19,529


Weighted average shares outstanding for basic earnings per share calculation	19,336		18,913		19,604		18,964
Dilutive effect of stock awards	605		602		657		621

Weighted average shares outstanding for diluted earnings per share calculation	19,941		19,515		20,261		19,585


Basic earnings per share	$	0.48	$	0.74	$	1.03	$	1.03

Diluted earnings per share	$	0.47	$	0.72	$	1.00	$	1.00


Stock options excluded from computation due to antidilutive effect	70		48		39		47

Cash Equivalents

The Company considers all highly liquid investments with maturities of approximately three months or less as of the acquisition date to be cash equivalents.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, marketable securities, derivative instruments, accounts receivable, accounts payable and debt instruments. The carrying values of financial instruments, other than long-term debt instruments, are representative of their fair values due to their short-term maturities. The carrying values of the Company’s long-term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates available to the Company.

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. “Level 1” category includes assets and liabilities at the quoted prices in active markets for identical assets and liabilities. “Level 2” category includes assets and liabilities from observable inputs other than quoted market prices. “Level 3” category includes assets and liabilities whose valuation techniques are unobservable and significant to the fair value measurement. There were no assets where “Level 3” valuation techniques were used. As further discussed in Note 9 to the condensed consolidated financial statements, the Company’s contingent payment obligations related to acquisitions are measured using “Level 3” valuation techniques. Such obligations are measured at fair value on a recurring basis.

The fair values of the Company’s financial assets and liabilities as of June 30, 2016 and March 31, 2017 are categorized as follows (in thousands):

	June 30, 2016										March 31, 2017
	Level 1		Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	354	$	—		$	—	$	354		$	266	$	—	—		$	266
Insurance company contracts	—		21,353			—		21,353			—		25,614		—		25,614
Interest rate contract	—		(31		)	—		(31		)	—		22		—		22

Total assets	$	354	$	21,322		$	—	$	21,676		$	266	$	25,636	$	—	$	25,902


Liabilities — Contingent payment obligations	$	—	$	—		$	17,117	$	17,117		$	—	$	—	$	14,347	$	14,347

Derivative Instruments and Hedging Activity

The Company’s use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to the Company’s variable, LIBOR-based term loan. The interest rate swap matures in October 2019, which aligns with the maturity of the term loan. The interest rate swap is considered an effective cash flow hedge and, as a result, the net gains or losses from the periodic fair market revaluation of such instrument were reported as a component of Other comprehensive income (loss) in the condensed consolidated financial statements and are reclassified to interest expense when the hedge transaction settles.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are charged while assets are used in service and are generally computed using the straight-line method over the estimated useful lives of the assets taking into consideration any estimated salvage value. Amortization of leasehold improvements is calculated on the straight-line method over the shorter of the useful life of the leasehold improvement asset or the lease term. Leased capital assets are included in property and equipment. Amortization of property and equipment under capital leases is included with depreciation expense. In the event that property and equipment are idle, as a result of excess capacity or the early termination, non-renewal or reduction in scope of a turnkey screening operation, such assets are assessed for impairment on a periodic basis. Certain fixed assets related to the Company’s turnkey security screening program in Mexico are not currently in use. As of March 31, 2017, the net value of these fixed assets not in use is approximately $15 million, which amount is included in property and equipment in the condensed consolidated balance sheet.

Goodwill Impairment

Goodwill represents the excess purchase price over the fair value of the net assets acquired in business combinations. Goodwill is allocated to the Company’s segments based on the nature of the product line of the acquired business. The carrying value of goodwill is not amortized, but is annually tested for impairment during the Company’s second quarter and more frequently if there is an indicator of impairment. The Company assesses qualitative factors of each its three reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

The assessments conducted as of December 31, 2016 indicated that it is not more likely than not that the fair values of two of the Company’s three reporting units are less than their carrying amounts, including goodwill. Thus, the Company determined that it is not necessary to proceed with the two-step goodwill impairment test and that there is no goodwill impairment for these two reporting units. For the third reporting unit, the results of the Company’s assessment of qualitative factors were not conclusive and, thus, the Company proceeded with the two-step goodwill impairment test. First, the Company determined if the carrying amount of this reporting unit exceeds its fair value. The fair value of the reporting unit was calculated using the income approach. Under the income approach, the fair value of the reporting unit was calculated by estimating the present value of associated future cash flows. Upon completion of step one of this test, the analysis indicated that the estimated fair value of the third reporting unit substantially exceeded the carry amounts, plus goodwill, of the reporting unit. The Company applied a hypothetical 10 percent decrease to the fair value of the reporting unit, which at December 31, 2016 would not have triggered additional impairment testing and analysis. There was no goodwill impairment for this reporting unit. Subsequent to the Company’s annual test for impairment during its second quarter, there have been no indications of impairment and, thus, no further assessments have been performed.

Revenue Recognition

Product Sales. The Company recognizes revenue from sales of products upon shipment when title and risk of loss passes and when terms are fixed and collection is probable. In an instance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until the Company has achieved the acceptance criteria unless customer acceptance terms are perfunctory or inconsequential.

Service Revenue. Revenue from services includes after-market services, installation and implementation of products and turnkey security screening services. Generally, revenue from services is recognized when the services are performed. Revenues from out-of-warranty service maintenance contracts are recognized ratably over the respective terms of such contracts. Deferred revenue for such services arises from payments received from customers for services not yet performed.

Multiple-Deliverable Arrangements. The Company enters into certain agreements with customers for the sale of capital equipment that contain multiple elements that may include civil works to prepare a site for the installation of equipment, manufacture and delivery of equipment, installation and integration of equipment, training of customer personnel to operate the equipment and after-market service of the equipment. The timing for each of these deliverables can range from a short amount of time and be completed entirely within a single reporting period to over several reporting periods. The general timing of revenue recognition for each deliverable may be dependent upon several milestones, including physical delivery of equipment, completion of factory acceptance test, completion of site acceptance test, installation and connectivity of equipment, certification of training of personnel and, in the case of after-market service deliverables, the passage of time (typically evenly over the post-warranty period of the service deliverable).

Multiple-deliverable arrangements require that the arrangement consideration be allocated to each deliverable based on its relative selling price and recognized as revenue when the revenue recognition criteria for each deliverable has been met. The arrangement is separated into more than one unit of accounting if both of the following criteria are met: (i) the delivered item has value to the customer on a stand-alone basis; and (ii) for an arrangement including a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially within the Company’s control. If these criteria are not met, the arrangement is accounted for as one unit of accounting and the recognition of revenue is deferred until delivery is complete or is recognized ratably over the contract period as appropriate. If these criteria are met, consideration is allocated at inception of the arrangement to all deliverables on the basis of the relative selling price. The Company has generally met these criteria for the multiple-deliverable arrangement as all of the deliverables in its arrangements have stand-alone value in that either the customer can resell that item or another vendor sells that item separately. The Company typically does not offer a general right of return in regards to its multiple-deliverable arrangements.

The selling price of each deliverable is determined by establishing vendor-specific objective evidence (“VSOE”), third party evidence (“TPE”) or best estimate of selling price (“BESP”) for each delivered item. Generally, either VSOE or TPE is determinable; however, in the few instances where neither VSOE nor TPE is determinable, the Company utilizes its BESP in order to allocate consideration to those deliverables. BESP for the Company’s product deliverables is determined by utilizing a weighted average price approach. BESP for the Company’s service deliverables is determined primarily by utilizing a cost-plus margin approach, though in some instances average price per hour is used.

The Company often provides a guarantee to support its performance under multiple-deliverable arrangements. In the event that customers are permitted to terminate such arrangements, the underlying contract typically requires payment for deliverables and reimbursement of costs incurred through the date of termination.

Proportional Performance. In connection with the agreement with the Servicio de Administración Tributaria (“SAT”) in Mexico, revenue is recognized based upon proportional performance, measured by the actual number of labor hours incurred divided by the total estimated number of labor hours for the project. The impact of changes in the estimated labor hours to service the agreement is reflected in the period during which the change becomes known. In the SAT agreement, customer billings may be submitted for several separate deliverables, including monthly services, activation of services, training of customer personnel and consultation on the design and location of security scanning operations, among others. In the event that payments received from the customer exceed revenue recognition, deferred revenue is recorded.

Critical judgments made by management related to revenue recognition include the determination of whether or not customer acceptance criteria are perfunctory or inconsequential. The determination of whether or not customer acceptance terms are perfunctory or inconsequential impacts the amount and timing of revenue recognition. Concurrent with revenue recognition, the Company accrues reserves for estimated product return and warranty costs. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge regarding the product under warranty.

Recent Accounting Updates Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) amending revenue recognition requirements for multiple-deliverable revenue arrangements. This update provides guidance on how revenue is recognized for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The ASU is effective for fiscal years beginning after December 15, 2017 and for interim reporting periods within such fiscal years. Earlier adoption is permitted only for fiscal years beginning after December 15, 2016, including interim reporting periods within such fiscal years. In May 2016, FASB issued a narrow scope improvement to this ASU, specifically to clarify two aspects - identifying performance obligations and licensing implementation guidance. The Company has not yet selected a transition method and its preliminary evaluation of the impact of this ASU indicates that it will not have a material adverse impact on its financial condition and results of operations.

In July 2015, FASB issued an ASU amending some of the guidance on subsequent measurement of inventory. This ASU affects companies that are using first-in, first-out or average cost or any other method besides last-in, first out or the retail inventory method. This ASU is effective for fiscal years beginning after December 15, 2016, including interim reporting periods within such fiscal years. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company has not yet adopted this ASU and its preliminary evaluation of the impact of this ASU indicates that it will not have a material adverse impact on its financial condition and results of operations.

In February 2016, FASB issued an ASU which affects the accounting for leases. The ASU requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The amendment also will require qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows arising from leases. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within such fiscal years. Early adoption is permitted. The Company has not yet adopted this ASU and is currently evaluating the impact it may have on its financial condition and results of operations.

In March 2016, FASB issued an ASU relating to employee share-based payment accounting. This ASU simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within such fiscal years. The Company has not yet adopted this ASU and is currently evaluating the impact it may have on its financial condition and results of operations. Under this ASU, the tax effects of stock awards are treated as discrete items in the reporting period in which they occur. The impact of this ASU on the Company’s income tax expense or benefit and related cash flows after adoption are dependent in part upon future grants and vesting of stock based compensation awards and other factors that are not fully controllable or predictable by the Company such as the future market price of the Company’s common stock, the timing of employee exercises of vested stock options, and the future achievement of performance criteria that affect performance-based awards. Although it is difficult to predict the impact of this ASU, it is expected that this ASU may have a volatile impact on the Company’s earnings upon adoption and in future periods.

In August 2016, FASB issued an ASU to address the diverse classifications being applied to cash receipts and payments in companies’ cash flow statements. This ASU addresses eight specific cash flow issues to reduce diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within such fiscal years. The Company has not yet adopted this ASU and is currently evaluating the impact it may have on its financial condition and results of operations.

Business Combinations

9 Months Ended

Mar. 31, 2017

Business Combinations

Business Combinations

2. Business Combinations

Under ASU 805, the acquisition method of accounting requires the Company to record assets acquired and liabilities assumed in an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase price over the estimated fair value of the net assets acquired should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with corresponding adjustments to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

AS&E Acquisition

On September 9, 2016, the Company acquired by merger 100 percent ownership interest of American Science and Engineering, Inc. (“AS&E”), a leading provider of detection solutions for advanced cargo, parcel and personnel inspection. AS&E’s operations are included in the Company’s Security division. The Company financed the total estimated purchase price of $266 million with a combination of cash on hand and borrowings under its existing revolving bank line of credit and also issued Company restricted stock units (“RSUs”) to replace RSUs previously issued by AS&E. The Company has estimated that $1.4 million of the fair value of these replacement Company RSU awards pertain to the precombination service period and, therefore, this amount has been included in the total estimated purchase price. Immediately following the close of the acquisition, the Company used $69 million of AS&E’s existing cash on hand to pay down the revolving bank line of credit.

The Company is in the process of finalizing its valuation of all the assets acquired and liabilities assumed in the AS&E transaction. As the amounts recorded for certain assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date. The final determination of fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date as permitted under GAAP. The AS&E acquisition could necessitate the use of the full one year measurement period to adequately analyze and assess a number of factors used in establishing fair values of the assets and liabilities as of the acquisition date, including values for intangible assets, other accrued expenses and current liabilities, other long-term liabilities, income tax obligations and certain reserves. Any potential adjustments made could be material in relation to preliminary values that have been recorded.

The following is a preliminary estimate of the assets acquired and the liabilities assumed by the Company in the acquisition, reconciled to total estimated purchase consideration (in thousands):

Cash and cash equivalents	$	79,195
Accounts receivable	25,048
Inventories	29,725
Other current assets	7,283
Property and equipment	5,722
Intangible assets	74,800
Other long-term assets	201
Accounts payable	(5,273		)
Accrued payroll and related expenses	(4,723		)
Deferred revenues — current	(11,281		)
Advances from customers	(13,785		)
Other accrued expenses and current liabilities	(7,416		)
Deferred revenues — long term	(3,225		)
Deferred income tax liability	(9,067		)
Other long-term liabilities	(17,966		)

Net assets acquired	149,238
Goodwill	116,765

Total consideration	$	266,003

The goodwill is largely attributable to expected synergies to be realized from the AS&E transaction, including in relation to the AS&E workforce.

Intangible assets are recorded at estimated fair value, as determined by management based on available information, which includes a preliminary valuation prepared by an independent third party. The fair value attributed to the intangible assets acquired was based on preliminary estimates, assumptions and other information compiled by management, including independent valuations that utilized established valuation techniques. The value attributed to goodwill and intangible assets is not deductible for income tax purposes. The following table summarizes the fair value of acquired identifiable intangible assets as of the acquisition date (dollar amounts in thousands):

	Weighted	Gross
	Average	Carrying
	Lives	Value
Amortizable assets:
Developed technology	10 years	$	31,750
Customer relationships/backlog	7 years	27,550

Total amortizable assets		59,300
Non-amortizable assets:
Trademarks and trade names		12,300
In-process research and development (“IPR&D”)		3,200

Total intangible assets		$	74,800

The Company’s condensed consolidated statements of operations include $70.9 million of revenue and $4.7 million of pre-tax income from AS&E for the period from September 10, 2016 to March 31, 2017 and $27.7 million of revenue and $4.9 million of pre-tax income from AS&E for the three months ended March 31, 2017.

The following unaudited pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the earliest period presented or the results which may occur in the future. The following unaudited pro forma results of operations assume the AS&E acquisition had occurred on July 1, 2015 (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2017		2016		2017
Revenues	$	235,038	$	245,146	$	607,645	$	726,304

Income before taxes	$	5,161	$	19,593	$	2,455	$	6,707

Significant pro forma adjustments incorporated into the pro forma results above for the AS&E acquisition include the recognition of additional amortization expense related to acquired intangible assets and additional interest expense related to debt incurred to finance the acquisition. In addition, significant non-recurring adjustments include the elimination and shift to comparable prior-year periods of non-recurring acquisition-related expenses and employee termination costs related to the integration of AS&E into the Company’s Security division. Total eliminations for these items during the three and nine months ended March 31, 2017 were $0.4 million and $13.6 million, respectively, and these have been added to the comparable prior-year periods.

Other Acquisitions

During the nine months ended March 31, 2017, the Company completed another acquisition in the Security division that was determined by management to be immaterial.

During the nine months ended March 31, 2016, the Company acquired all of the outstanding shares of capital stock of a distributor and manufacturer of electronic components in the United Kingdom, a distributor and manufacturer of flex circuit and touch panel design products in California and a security equipment service company in Brazil. The combined purchase prices consisted of cash payments of $19.6 million and $13.8 million for contingent consideration.

Divestitures

During the three months ended March 31, 2017, the Company’s Healthcare division completed a divestiture of a business that was determined by management to be immaterial. The sales price of $12.8 million was settled in cash and resulted in a gain of $2.1 million, which is included in Other income in the condensed consolidated statements of operations.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 4
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Balance Sheet Details

9 Months Ended

Mar. 31, 2017

Balance Sheet Details

Balance Sheet Details

3. Balance Sheet Details

The following tables provide details of selected balance sheet accounts (in thousands):

	June 30, 2016			March 31, 2017

Accounts receivable	$	148,767		$	192,071
Less allowance for doubtful accounts	(7,051		)	(8,233		)

Total	$	141,716		$	183,838

	June 30, 2016		March 31, 2017

Raw materials	$	133,540	$	132,922
Work-in-process	47,460		61,002
Finished goods	92,288		73,267

Total	$	273,288	$	267,191

	Estimated
	Useful	June 30,			March 31,
	Lives	2016			2017
Land	N/A	$	14,498		$	14,498
Buildings, civil works and improvements	5 - 40 years	170,232			171,187
Leasehold improvements	1 - 12 years	9,015			9,381
Equipment and tooling	3 - 10 years	154,309			157,885
Furniture and fixtures	3 - 13 years	3,314			3,389
Computer equipment	3 - 5 years	17,902			17,972
Computer software	3 - 10 years	17,769			19,022
Construction in process	N/A	4,978			7,329

Total		392,017			400,663
Less accumulated depreciation and amortization		(208,903		)	(239,582		)

Property and equipment, net		$	183,114		$	161,081

Depreciation expense was approximately $13.1 million and $13.3 million for the three months ended March 31, 2016 and 2017, respectively, and approximately $39.1 million and $39.9 million for the nine months ended March 31, 2016 and 2017, respectively.

Goodwill and Intangible Assets

9 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets

Goodwill and Intangible Assets

4. Goodwill and Intangible Assets

The changes in the carrying value of goodwill for the nine-month period ended March 31, 2017 were as follows (in thousands):

	Security		Healthcare			Optoelectronics and Manufacturing			Consolidated
Balance as of June 30, 2016	$	32,922	$	42,574		$	47,323		$	122,819
Goodwill acquired or adjusted during the period	122,478		—			—			122,478
Goodwill reduced as part of a divestiture	—		(2,200		)	—			(2,200		)
Foreign currency translation adjustment	12		(365		)	(1,017		)	(1,370		)

Balance as of March 31, 2017	$	155,412	$	40,009		$	46,306		$	241,727

Intangible assets as of June 30, 2016 and March 31, 2017 were as follows (in thousands):

		June 30, 2016						March 31, 2017
	Weighted Average Lives	Gross Carrying Value		Accumulated Amortization		Intangibles Net		Gross Carrying Value		Accumulated Amortization		Intangibles Net
Amortizable assets:
Software development costs	9 years	$	22,091	$	4,120	$	17,971	$	26,020	$	5,741	$	20,279
Patents	20 years	8,111		1,760		6,351		8,342		1,548		6,794
Developed technology	10 years	12,901		3,969		8,932		37,446		4,604		32,842
Customer relationships/backlog	7 years	14,223		4,862		9,361		38,690		6,695		31,995

Total amortizable assets		57,326		14,711		42,615		110,498		18,588		91,910
Non-amortizable assets:
Trademarks and trade names		13,668		—		13,668		25,465		—		25,465
IPR&D		—		—		—		3,200		—		3,200

Total intangible assets		$	70,994	$	14,711	$	56,283	$	139,163	$	18,588	$	120,575

Amortization expense related to intangible assets was $1.4 million and $3.6 million for the three month periods ended March 31, 2016 and 2017, respectively. For the nine months ended March 31, 2016 and 2017, amortization expense was $3.4 million and $9.1 million, respectively. At March 31, 2017, the estimated future amortization expense was as follows (in thousands):

Fiscal Years
2017 (remaining 3 months)	$	3,376
2018	14,438
2019	14,270
2020	12,652
2021	10,332
2022	8,409
2023 and thereafter (including assets that have not yet begun to be amortized)	28,433

Total	$	91,910

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 2023 and thereafter in the table above. For the three months ended March 31, 2017, the Company did not capitalize any software development costs; while for the three months ended March 31, 2016, the Company capitalized software development costs in the amount of $0.7 million. For the nine-month periods ended March 31, 2016 and 2017, the Company capitalized software development costs in the amount of $2.1 million and $2.0 million, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Impairment, restructuring and other charges

9 Months Ended

Mar. 31, 2017

Impairment, restructuring and other charges

Impairment, restructuring and other charges

5. Impairment, restructuring and other charges

Impairment

During the first quarter of fiscal 2017, the Company abandoned a product line in its Security division related to a technology the Company no longer supports. As a result, $5.4 million of assets, including the intangible and fixed assets associated with this product line, were fully written off as the Company determined that these assets have no value and were permanently impaired.

During the second quarter of fiscal 2016, the Company determined that fixed assets to be used for turnkey screening solutions programs totaling $5.9 million were not going to be utilized and that they had no value. As such, this amount was impaired within the Company’s Security division. In addition, the Company determined that its minority interest investment of $2.8 million within its Optoelectronics and Manufacturing division was not recoverable and permanently impaired.

Restructuring and Other Charges

The Company endeavors to align its global capacity and infrastructure with demand by its customers as well as fully integrate acquisitions, thereby improving operational efficiency. The significant initiatives undertaken by the Company are further discussed below and a summary of all such activity is included in the succeeding tables.

Acquisition and integration of AS&E. In conjunction with the acquisition of AS&E, beginning in fiscal 2016 the Company incurred financing costs and professional fees to complete the acquisition and employee separation costs and other costs related to the integration of AS&E into the Company’s Security division. Such costs accumulated to $14.4 million through March 31, 2017, including $8.0 million for the elimination of 50 employee positions. During the three months and nine months ended March 31, 2017, the Company incurred $0.4 million and $12.1 million, respectively, for these activities. Management is unable to estimate how much the total cost will be for these activities and what will be the total savings to the consolidated operations of OSI Systems. The integration of AS&E, including the merger of manufacturing facilities, employee terminations and streamlining of processes, is expected to be completed in fiscal 2019.

Facility consolidation / employee termination. During the second quarter of fiscal 2017, the Healthcare division began the process of consolidating one of its research and development facilities. As of March 31, 2017, 86 positions have been eliminated and the Company incurred $1.0 million in employee termination costs and $0.7 million of other costs for these activities. During the three months and nine months ended March 31, 2017, $0.8 million and $1.7 million, respectively, were incurred. Management estimates the total cost of this initiative to be approximately $2.0 million, and it is expected to be completed by the end of fiscal 2017.

The following table summarizes restructuring and other charges for the periods set forth below (in thousands):

	Three Months Ended March 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total
Acquisition-related costs	$	—	$	—	$	384		$	1,054		$	1,438
Employee termination costs	747		1,378			33		—			2,158
Legal settlement and related costs	—		—		125			—			125
Other charges	496		305		15			—			816

Total expensed	$	1,243	$	1,683	$	557		$	1,054		$	4,537


	Three Months Ended March 31, 2017

	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total

Acquisition-related costs	$	—	$	—	$	—		$	140		$	140
Employee termination costs	345		182		52			—			579
Facility closures/consolidation	650		634		194			—			1,478
Other charges (reversals)	—		297		19			(5		)	311


Total expensed	$	995	$	1,113	$	265		$	135		$	2,508



	Nine Months Ended March 31, 2016


	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total


Acquisition-related costs	$	—	$	—	$	384		$	1,054		$	1,438
Employee termination costs	1,083		1,378		239			—			2,700
Legal settlement and related costs	—		—		1,843			—			1,843
Other charges	572		305		35			—			912



Total expensed	$	1,655	$	1,683	$	2,501		$	1,054		$	6,893




	Nine Months Ended March 31, 2017



	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total



Acquisition-related costs	$	810	$	—	$	—		$	3,353		$	4,163
Employee termination costs	8,152		1,262		383			—			9,797
Facility closures/consolidation	829		703		218			—			1,750
Other charges (reversals)	7		297		(48		)	501			757




Total expensed	$	9,798	$	2,262	$	553		$	3,854		$	16,467

The changes in the accrual for restructuring and other charges for the nine-month period ended March 31, 2017 were as follows (in thousands):

	Acquisition- related Costs			Employee Termination Costs			Facility Closure/ Consolidation Cost			Other Costs			Total

Balance as of June 30, 2016	$	—		$	413		$	126		$	—		$	539
Restructuring and other charges	4,163			9,797			1,750			757			16,467
Payments and other adjustments	(4,163		)	(10,007		)	(1,531		)	(757		)	(16,458		)

Balance as of March 31, 2017	$	—		$	203		$	345		$	—		$	548

Borrowings

9 Months Ended

Mar. 31, 2017

Borrowings

Borrowings

6. Borrowings

Revolving Credit Facility

In December 2016, the Company entered into an amendment to its revolving credit facility, which, among other things, increased the aggregate committed amount available to the Company from $450 million to $525 million and extended the maturity date to December 2021. The credit facility includes a $300 million sub-limit for letters of credit. Under certain circumstances, the Company has the ability to increase the facility by the greater of $250 million or such amount as would not cause the Company’s secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR plus a margin of 1.5% as of March 31, 2017, but this margin can range from 1.25% to 2.0% based on the Company’s consolidated net leverage ratio as defined in the credit facility. Letters of credit reduce the amount available to borrow by their face value. The unused portion of the facility bears a commitment fee of 0.20% as of March 31, 2017, but this fee can range from 0.20% to 0.30% based on the Company’s consolidated net leverage ratio as defined in the credit facility. The Company’s borrowings under the credit agreement are guaranteed by certain of the Company’s U.S.-based subsidiaries and are secured by substantially all of the assets of the Company and certain subsidiaries. The agreement contains various representations and warranties, affirmative, negative and financial covenants and conditions of default customary for financing agreements of this type. As of March 31, 2017, there was $93.0 million of borrowings outstanding under the revolving credit facility and $20.7 million outstanding under the letters-of-credit sub-facility. Available borrowing under the credit facility as of March 31, 2017 was $411 million. Under the terms of the Company’s revolving credit facility, loans may be borrowed, repaid and re-borrowed during the term. Although the principal amount of all revolving loans are due and payable in full on the maturity date, the Company has the right to repay the revolving loans in whole or in part from time to time without penalty. It is the Company’s practice to routinely borrow and repay several times per year under this revolving facility as part of the Company’s overall treasury function. Therefore, borrowings under the credit facility are classified in current liabilities. As of March 31, 2017, the Company is in compliance with all covenants under this credit facility.

1.25% Convertible Senior Notes Due 2022

In February 2017, the Company issued $287.5 million of 1.25% convertible senior notes due 2022 (the “Notes”) in a private offering. The Notes are governed by an indenture dated February 22, 2017. The Notes will mature on September 1, 2022, unless earlier converted, redeemed or repurchased. Interest at the rate of 1.25% per year is payable in cash semi-annually in arrears on each March 1 and September 1, commencing on September 1, 2017. The Notes are senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated and effectively junior in right of payment to any of the Company’s secured indebtedness (including the Company’s credit facility), to the extent of the value of the assets securing such indebtedness and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries, as well as any of the existing and future indebtedness of the Company that may be guaranteed by the Company’s subsidiaries to the extent of such guarantee (including the guarantees of certain of the Company’s subsidiaries under the Company’s existing revolving credit facility). The proceeds from the issuance of the Notes, after deducting offering expenses and underwriting discounts of $7.7 million, were used as follows: (i) $35 million to repurchase 451,600 shares of the Company’s stock from the purchasers of the Notes in privately negotiated transactions concurrently with the Notes offering; and (ii) approximately $245 million to repay a portion of the amount outstanding under the Company’s revolving credit facility.

The Notes are convertible prior to March 1, 2022 only upon specified events and during specified periods and are thereafter convertible at any time, in each case at an initial conversion rate of 9.3056 per $1,000 principal amount of the Notes, which is equal to an initial conversion price of approximately $107.46 per share or a 38.5% premium to the Company’s stock price at the time of the issuance. The conversion rate is subject to adjustment upon certain events. Upon conversion, the Notes may be settled, at the Company’s election, in shares of the Company’s common stock, cash or a combination of cash and shares of common stock. The Company has initially elected a combination settlement method to satisfy the conversion obligation, which allows it to settle the principal amount of the Notes in cash and to settle the excess conversion value, if any, in shares, as well as cash in lieu of fractional shares.

The Company may not redeem the Notes prior to March 6, 2020. Thereafter, the Company may redeem the Notes if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days. If the Company undergoes a fundamental change, as defined in the indenture for the Notes, subject to certain conditions holders of the Notes may require the Company to repurchase all or part of the Notes for cash at a price generally equal to 100% of the principal amount of the Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the Notes becoming immediately convertible.

Pursuant to ASC 470-20, the Company 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 $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 the 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 condensed consolidated balance sheet and being amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for the three and nine months ended March 31, 2017 was $1.2 million, which consists of $0.4 million of contractual interest expense, $0.7 million of debt discount amortization and $0.1 million of amortization of debt issuance costs. As of March 31, 2017, the unamortized debt discount was $44.4 million and is being amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.50%. The unamortized debt issuance cost of $6.4 million as of March 31, 2017 is amortized on a straight-line basis over the life of the Notes. Based upon the Company’s March 31, 2017 stock price of $72.99 per share, the “if-converted” value of the Notes did not exceed the principal amount.

Other Borrowings

Several of the Company’s 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, 2017, $48.0 million was outstanding under these letter-of-credit facilities. As of March 31, 2017, the total amount available under these credit facilities was $10.3 million.

In September 2012, the Company entered into a term loan agreement for $11.1 million to fund the acquisition of land and a building in the state of Washington. The loan, which bears interest at LIBOR plus 1.25%, is payable on a monthly basis over seven years. Concurrent with entering into the floating rate loan, the Company entered into an interest rate swap agreement that effectively locks the interest rate of the loan to 2.2% per annum for the term of the loan.

Long-term debt consisted of the following (in thousands):

	June 30, 2016			March 31, 2017
1.25% convertible notes due 2022:
Principal amount	$	—		$	287,500
Unamortized discount	—			(44,373		)
Unamortized debt issuance costs	—			(6,367		)

1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs	—			236,760
Term loans	6,847			4,096
Other long-term debt	1,966			1,572

	8,813			242,428
Less current portion of long-term debt	(2,759		)	(2,410		)

Long-term portion of debt	$	6,054		$	240,018

Stockholders' Equity

9 Months Ended

Mar. 31, 2017

Stockholders' Equity

Stockholders' Equity

7. Stockholders’ Equity

Stock-based Compensation

As of March 31, 2017, the Company maintained the following share-based employee compensation plans: the 2012 Incentive Award Plan (“2012 Plan”) and the Amended and Restated 2006 Equity Participation Plan (“2006 Plan”). Upon stockholder approval of the 2012 Plan, the Company ceased to make grants under the 2006 Plan. In addition, pursuant to the acquisition of AS&E, the Company assumed two share-based employee compensation plans: the AS&E 2005 Equity and Incentive Plan (“2005 AS&E Plan”) and the AS&E 2014 Equity and Incentive Plan (“2014 AS&E Plan”). No new RSU grants will be made under the 2005 AS&E Plan or the 2014 AS&E Plan. The 2012 Plan, the 2006 Plan, the 2005 AS&E Plan and the 2014 AS&E Plan are collectively referred to as the “OSI Plans”.

The Company recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2017			2016			2017
Cost of goods sold	$	302		$	417		$	899		$	1,116
Selling, general and administrative	4,456			5,627			12,475			15,909
Research and development	70			159			208			335
Restructuring	—			—			—			2,902

Stock-based compensation expense before taxes	$	4,828		$	6,203		$	13,582		$	20,262
Less: related income tax benefit	(1,850		)	(2,378		)	(5,184		)	(7,828		)

Stock-based compensation expense, net of estimated taxes	$	2,978		$	3,825		$	8,398		$	12,434

As of March 31, 2017, total unrecognized compensation cost related to share-based compensation grants were estimated at $0.7 million for stock options and $20.3 million for restricted stock and restricted stock units (“RSUs”) under the OSI Plans. The Company expects to recognize these costs over a weighted-average period of 1.9 years.

The following summarizes stock option activity during the nine months ended March 31, 2017:

	Number of Options		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2016	934,112		$	28.67
Granted	17,344		$	73.69
Exercised	(159,278	)	$	24.88
Expired or forfeited	(3,725	)	$	68.91

Outstanding at March 31, 2017	788,453		$	30.24	3.6 years	$	33,775

Exercisable at March 31, 2017	739,020		$	27.44	3.2 years	$	33,678

The following summarizes restricted stock and RSU award activity during the nine months ended March 31, 2017:

	Shares		Weighted- Average Fair Value
Nonvested at June 30, 2016	530,498		$	67.94
Granted	377,610		64.50
Vested	(294,893	)	68.05
Net replacement RSUs (1)	24,606		67.76
Forfeited	(19,065	)	68.24

Nonvested at March 31, 2017	618,756		$	65.77

(1)

Pursuant to the acquisition of AS&E, the Company assumed unvested RSUs originally granted by AS&E and converted them into RSUs for the Company’s common stock.

As of March 31, 2017, there were approximately 1.3 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.

The Company granted 139,300 and 155,488 performance-based RSUs during the nine months ended March 31, 2016 and 2017, respectively. These performance-based RSUs are contingent on the achievement of certain performance metrics. The payout can range from zero to 250% of the original number of shares or units awarded.

Share Repurchase Program

In April 2016, the Board of Directors authorized a stock repurchase program totaling 1.0 million shares. During the three months ended March 31, 2017, 82,640 shares were repurchased under this program, which leaves available 872,481shares under this program. This program does not expire. Upon repurchase, the shares are restored to the status of authorized but unissued, and the Company records them as a reduction in the number of shares of common stock issued and outstanding in the consolidated financial statements.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Retirement Benefit Plans

9 Months Ended

Mar. 31, 2017

Retirement Benefit Plans

Retirement Benefit Plans

8. Retirement Benefit Plans

The Company sponsors various retirement benefit plans including qualified and nonqualified defined benefit pension plans for its employees. The components of net periodic pension expense are as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2017		2016		2017
Service cost	$	187	$	224	$	613	$	672
Interest cost	8		7		25		21
Amortization of prior service cost	105		70		315		210

Net periodic pension expense	$	300	$	301	$	953	$	903

For the three months ended March 31, 2016 and 2017, there were no contributions made to these defined benefit plans. For the nine months ended March 31, 2016 and 2017, the Company made contributions of $0.2 million and $1.0 million, respectively, to these defined benefit plans.

In addition, the Company maintains various defined contribution plans. For the three months ended March 31, 2016 and 2017, the Company made contributions of $1.1 million and $1.4 million, respectively, to these defined contribution plans. For the nine months ended March 31, 2016 and 2017, the Company made contributions of $3.4 million and $3.6 million, respectively, to these defined contribution plans.

Commitments and Contingencies

9 Months Ended

Mar. 31, 2017

Commitments and Contingencies

Commitments and Contingencies

9. Commitments and Contingencies

Contingent Acquisition Obligations

Under the terms and conditions of the agreements associated with certain acquisitions, the Company may be obligated to make additional payments based on the achievement by the acquired operations of certain sales or profitability milestones. The maximum amount of such future payments under arrangements with contingent consideration caps was $20.8 million as of March 31, 2017. In addition, one of the purchase agreements the Company entered into requires royalty payments through 2022 based on the license of, or sales of products containing, the technology of CXR Limited, a company acquired in 2004.

For acquisitions that occurred through the end of fiscal year 2009, the Company accounts for such contingent payments as an addition to the purchase price of the acquired business. For acquisitions after fiscal 2009, 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 condensed consolidated financial statements. The estimated fair value measurements of contingent earn-out obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income, estimated probability of achieving and the estimated probability of earn-out payments being made. These projections and probabilities are used to estimate future contingent earnout payments, which are discounted back to present value to compute the contingent earnout liability. The following table reconciles the contingent earnout liabilities, which are included in Other accrued expenses and current liabilities, and Other long-term liabilities in the accompanying condensed consolidated balance sheets, from June 30, 2016 to March 31, 2017:

Beginning fair value, June 30, 2016	$	17,117
Remeasurement of fair value for contingent earn-out obligations	(1,370		)
Payments on contingent earn-out obligations	(1,400		)

Ending fair value, March 31, 2017	$	14,347

Advances from Customers

The Company receives advances from customers associated with certain projects. In fiscal 2012, the Company entered into an agreement with the Mexican government to provide a turnkey security screening solution at various locations throughout the country. Associated with the agreement, the Company was provided an advance totaling $100 million. The Company is obligated to provide a guarantee until the advance has been amortized. As of June 30, 2016 and March 31, 2017, $25.0 million and $6.3 million, respectively, of this advance remains outstanding and is included in Advances from customers.

Environmental Contingencies

The Company is subject to various environmental laws. The Company’s practice is to conduct appropriate environmental investigations at its manufacturing facilities in North America, Asia-Pacific and Europe and, to the extent practicable, to conduct investigations 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, the Company has conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants.

During one investigation at the Company’s Hawthorne, California facility, the Company discovered soil and groundwater contamination that it believes was the result of unspecified on- and off-site releases occurring prior to the Company’s occupancy. Historical usage of this site includes semiconductor and electronics manufacturing, dating back to the mid-1960s, as well as possible aircraft and related manufacturing dating to the early 1940s. Similar operations, including chemical manufacturing and storage, were conducted at neighboring sites throughout that period and into the 1990s. It is not presently known when the releases occurred or by whom they were caused, though Company records, in conjunction with data obtained from soil and groundwater surveys, support the Company’s assertion that these releases are historical in nature, having occurred prior to the Company’s occupancy. Further, the groundwater contamination is a known regional issue, not limited to the Company’s premises or its immediate surroundings. The Company has filed all requisite reports with the appropriate environmental authorities and continues to cooperate with the local governing agency to develop a complete and accurate characterization of this site. Recent activities include the installation of groundwater monitoring wells, indoor air quality monitoring and additional soil and soil vapor studies. Results from these studies are being evaluated to determine the extent of the on-site releases as well as appropriate and cost-effective remedial action measures. Periodic groundwater monitoring is expected to continue until such time as governing authorities request further action.

The Company has not accrued for loss contingencies relating to the Hawthorne facility or any other environmental matters because it believes that, although unfavorable outcomes may be possible, they are not considered by the Company’s management to be probable and reasonably estimable. If one or more of these environmental matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations and cash flow could be material.

Indemnifications

In the normal course of business, the Company has agreed to indemnify certain parties with respect to specified matters. The Company has agreed to hold these parties harmless against losses arising from a breach of representations, warranties or covenants or intellectual property infringement or other claims made by third parties. These agreements sometimes limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers. It is not possible to determine the maximum potential liability exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company had not recorded any liability for costs related to contingent indemnification obligations as of March 31, 2017.

Product Warranties

The Company offers its customers warranties on many of the products that it sells. 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, the Company records a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. The Company periodically adjusts this provision based on historical experience and anticipated expenses. The Company charges actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. Outstanding warranty provisions are included in Other accrued expenses and current liabilities in the condensed consolidated balance sheets.

The following table presents changes in warranty provisions (in thousands):

	Nine Months Ended March 31,
	2016			2017
Balance at beginning of period	$	12,738		$	15,948
Additions and adjustments	8,596			6,514
Reductions for warranty repair costs	(7,361		)	(4,395		)

Balance at end of period	$	13,973		$	18,067

Legal Proceedings

Three shareholder derivative complaints (the “Derivative Actions”) have been filed purportedly on behalf of the Company against the members of the Company’s Board of Directors (as individual defendants). Hagan v. Chopra et al. was filed in the United States District Court for the Central District of California (the “Court”) on April 15, 2014, and was subsequently consolidated by the Court with City of Irving Benefit Plan v. Chopra et al., which was filed on December 29, 2014. Kocen v. Chopra et al. was filed in the Delaware Court of Chancery on July 14, 2015. The Derivative Actions generally assert claims for breach of fiduciary duties and unjust enrichment against the individual defendants on behalf of the Company. Plaintiffs in the Derivative Actions seek unspecified damages, restitution, injunctive relief, attorneys’ and experts’ fees, costs and expenses and other unspecified relief. Following mediation and post-mediation settlement discussions, the parties to the Derivative Actions reached a settlement, which would provide for the resolution of all pending claims in both the California and Delaware actions, subject to the Court’s approval. The settlement reached includes reimbursement of attorneys’ fees, which is expected to be covered by insurance. The Company and the other defendants agreed to the settlement to avoid further expense, inconvenience and the distraction and inherent risks of burdensome and protracted litigation. In the settlement, neither the Company nor the individual defendants conceded any wrongdoing or liability, and the Company continues to believe that they have meritorious defenses to all claims alleged in the Derivative Actions. On January 24, 2017, the Court granted preliminary approval of the settlement. Stockholders seeking information about the settlement are directed to the Company’s Investor Relations website, located at http://investors.osi-systems.com/. Information contained on or that can be accessed through the Company’s website is not incorporated herein by reference.

The Company’s recently acquired subsidiary, AS&E, has been the subject of an investigation by the Office of the Inspector General of the U.S. General Services Administration (“GSA”). The investigation relates to AS&E’s discount practices and compliance with the pricing provisions of AS&E’s GSA Schedule contract. The investigation could lead to claims or findings of violations of the False Claims Act in connection with AS&E’s GSA contracting activity. Violations of the False Claims Act could result in the imposition of damages (up to treble damages) plus civil penalties in some cases, and the Company expects to incur legal costs in connection with the investigation. The Company and AS&E continue to cooperate with the GSA investigation and management believes that an appropriate accrual for this uncertainty has been provided in the accompanying condensed consolidated financial statements.

The Company is involved in various other claims and legal proceedings arising in the ordinary course of business. In the Company’s opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on its business, financial condition, results of operations or cash flows. The Company has not accrued for loss contingencies relating to these various other claims because it believes that, although unfavorable outcomes in the proceedings may be 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 the Company, the impact on the Company’s business, financial condition, results of operations and cash flow could be material.

Income Taxes	9 Months Ended
Income Taxes	Mar. 31, 2017
Income Taxes
Income Taxes	10. Income Taxes The provision for income taxes is determined using an effective tax rate that is subject to fluctuations during the year as new information is obtained. The assumptions used to estimate the annual effective tax rate include factors such as the mix of pre-tax earnings in the various tax jurisdictions in which the Company operates, valuation allowances against deferred tax assets, increases or decreases in uncertain tax positions, utilization of research and development tax credits, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business and certain tax elections. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities along with net operating loss and tax credit carryovers. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease in the period such determination is made.

Segment Information

9 Months Ended

Mar. 31, 2017

Segment Information

Segment Information

11. Segment Information

The Company has determined that it operates in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring and anesthesia systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division). The Company also has 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 product segments. Both the Security and Healthcare divisions comprise primarily end-product businesses whereas the businesses of the Optoelectronics and Manufacturing division primarily supply components and subsystems to OEM customers, including 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, Summary of Significant Accounting Policies of the Form 10-K for the fiscal year ended June 30, 2016.

The following tables present the operations and identifiable assets by industry segment (in thousands):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2017			2016			2017
Revenues (1) — by Segment:
Security Division	$	110,550		$	144,824		$	300,680		$	408,037
Healthcare Division	49,113			49,667			156,126			146,427
Optoelectronics and Manufacturing Division, including intersegment revenues	61,306			58,309			184,414			175,864
Intersegment revenues elimination	(10,165		)	(7,654		)	(33,027		)	(21,779		)

Total	$	210,804		$	245,146		$	608,193		$	708,549


	Three Months Ended March 31,						Nine Months Ended March 31,

	2016			2017			2016			2017

Operating income (loss) — by Segment:
Security Division	$	14,554		$	18,287		$	29,723		$	36,767
Healthcare Division	(188		)	936			6,130			(1,527		)
Optoelectronics and Manufacturing Division	5,325			5,974			14,078			16,149
Corporate	(6,077		)	(6,067		)	(19,182		)	(21,882		)
Eliminations (2)	(270		)	564			(927		)	979


Total	$	13,344		$	19,694		$	29,822		$	30,486

	June 30, 2016			March 31, 2017
Assets — by Segment:
Security Division	$	519,068		$	818,058
Healthcare Division	200,067			177,562
Optoelectronics and Manufacturing Division	211,337			199,320
Corporate	64,970			43,536
Eliminations (2)	(3,719		)	(2,739		)

Total	$	991,723		1,235,737

(1)

For the three and nine months ended March 31, 2016 and 2017, one customer, SAT in Mexico, accounted for 14% and 12% of total net revenues, respectively.

(2)

Eliminations within operating income primarily reflect the change in the elimination of intercompany profit in inventory not-yet-realized. Eliminations in assets reflect the amount of intercompany profits in inventory as of the balance sheet date. Such intercompany profit will be realized when inventory is shipped to the external customers of the Security and Healthcare divisions.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Basis of Presentation (Policies)

9 Months Ended

Mar. 31, 2017

Basis of Presentation

Description of Business

Basis of Presentation

Use of Estimates

Per Share Computations

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,
	2016		2017		2016		2017
Net income for diluted earnings per share calculation	$	9,343	$	14,019	$	20,256	$	19,529


Weighted average shares outstanding for basic earnings per share calculation	19,336		18,913		19,604		18,964
Dilutive effect of stock awards	605		602		657		621

Weighted average shares outstanding for diluted earnings per share calculation	19,941		19,515		20,261		19,585


Basic earnings per share	$	0.48	$	0.74	$	1.03	$	1.03

Diluted earnings per share	$	0.47	$	0.72	$	1.00	$	1.00


Stock options excluded from computation due to antidilutive effect	70		48		39		47

Cash Equivalents

The Company considers all highly liquid investments with maturities of approximately three months or less as of the acquisition date to be cash equivalents.

Fair Value of Financial Instruments

The fair values of the Company’s financial assets and liabilities as of June 30, 2016 and March 31, 2017 are categorized as follows (in thousands):

	June 30, 2016										March 31, 2017
	Level 1		Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	354	$	—		$	—	$	354		$	266	$	—	—		$	266
Insurance company contracts	—		21,353			—		21,353			—		25,614		—		25,614
Interest rate contract	—		(31		)	—		(31		)	—		22		—		22

Total assets	$	354	$	21,322		$	—	$	21,676		$	266	$	25,636	$	—	$	25,902


Liabilities — Contingent payment obligations	$	—	$	—		$	17,117	$	17,117		$	—	$	—	$	14,347	$	14,347

Derivative Instruments and Hedging Activity

Property and Equipment

Goodwill Impairment

Revenue Recognition

Recent Accounting Updates Not Yet Adopted

Basis of Presentation (Tables)

9 Months Ended

Mar. 31, 2017

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,
	2016		2017		2016		2017
Net income for diluted earnings per share calculation	$	9,343	$	14,019	$	20,256	$	19,529


Weighted average shares outstanding for basic earnings per share calculation	19,336		18,913		19,604		18,964
Dilutive effect of stock awards	605		602		657		621

Weighted average shares outstanding for diluted earnings per share calculation	19,941		19,515		20,261		19,585


Basic earnings per share	$	0.48	$	0.74	$	1.03	$	1.03

Diluted earnings per share	$	0.47	$	0.72	$	1.00	$	1.00


Stock options excluded from computation due to antidilutive effect	70		48		39		47

Summary of fair values of financial assets and liabilities

The fair values of the Company’s financial assets and liabilities as of June 30, 2016 and March 31, 2017 are categorized as follows (in thousands):

	June 30, 2016										March 31, 2017
	Level 1		Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	354	$	—		$	—	$	354		$	266	$	—	—		$	266
Insurance company contracts	—		21,353			—		21,353			—		25,614		—		25,614
Interest rate contract	—		(31		)	—		(31		)	—		22		—		22

Total assets	$	354	$	21,322		$	—	$	21,676		$	266	$	25,636	$	—	$	25,902


Liabilities — Contingent payment obligations	$	—	$	—		$	17,117	$	17,117		$	—	$	—	$	14,347	$	14,347

Business Combinations (Tables)

9 Months Ended

Mar. 31, 2017

Business Combinations

Schedule of assets acquired and liabilities assumed

The following is a preliminary estimate of the assets acquired and the liabilities assumed by the Company in the acquisition, reconciled to total estimated purchase consideration (in thousands):

Cash and cash equivalents	$	79,195
Accounts receivable	25,048
Inventories	29,725
Other current assets	7,283
Property and equipment	5,722
Intangible assets	74,800
Other long-term assets	201
Accounts payable	(5,273		)
Accrued payroll and related expenses	(4,723		)
Deferred revenues — current	(11,281		)
Advances from customers	(13,785		)
Other accrued expenses and current liabilities	(7,416		)
Deferred revenues — long term	(3,225		)
Deferred income tax liability	(9,067		)
Other long-term liabilities	(17,966		)

Net assets acquired	149,238
Goodwill	116,765

Total consideration	$	266,003

Summary of the fair value of acquired identifiable intangible assets as of the acquisition date

The following table summarizes the fair value of acquired identifiable intangible assets as of the acquisition date (dollar amounts in thousands):

	Weighted	Gross
	Average	Carrying
	Lives	Value
Amortizable assets:
Developed technology	10 years	$	31,750
Customer relationships/backlog	7 years	27,550

Total amortizable assets		59,300
Non-amortizable assets:
Trademarks and trade names		12,300
In-process research and development (“IPR&D”)		3,200

Total intangible assets		$	74,800

Unaudited Pro forma results of operations assuming the AS&E acquisition had occurred on July 1, 2015

The following unaudited pro forma results of operations assume the AS&E acquisition had occurred on July 1, 2015 (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2017		2016		2017
Revenues	$	235,038	$	245,146	$	607,645	$	726,304

Income before taxes	$	5,161	$	19,593	$	2,455	$	6,707

Balance Sheet Details (Tables)

9 Months Ended

Mar. 31, 2017

Balance Sheet Details

Schedule of selected balance sheet accounts

The following tables provide details of selected balance sheet accounts (in thousands):

	June 30, 2016			March 31, 2017

Accounts receivable	$	148,767		$	192,071
Less allowance for doubtful accounts	(7,051		)	(8,233		)

Total	$	141,716		$	183,838

	June 30, 2016		March 31, 2017

Raw materials	$	133,540	$	132,922
Work-in-process	47,460		61,002
Finished goods	92,288		73,267

Total	$	273,288	$	267,191

	Estimated
	Useful	June 30,			March 31,
	Lives	2016			2017
Land	N/A	$	14,498		$	14,498
Buildings, civil works and improvements	5 - 40 years	170,232			171,187
Leasehold improvements	1 - 12 years	9,015			9,381
Equipment and tooling	3 - 10 years	154,309			157,885
Furniture and fixtures	3 - 13 years	3,314			3,389
Computer equipment	3 - 5 years	17,902			17,972
Computer software	3 - 10 years	17,769			19,022
Construction in process	N/A	4,978			7,329

Total		392,017			400,663
Less accumulated depreciation and amortization		(208,903		)	(239,582		)

Property and equipment, net		$	183,114		$	161,081

Goodwill and Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets

Schedule of carrying amount of goodwill

The changes in the carrying value of goodwill for the nine-month period ended March 31, 2017 were as follows (in thousands):

	Security		Healthcare			Optoelectronics and Manufacturing			Consolidated
Balance as of June 30, 2016	$	32,922	$	42,574		$	47,323		$	122,819
Goodwill acquired or adjusted during the period	122,478		—			—			122,478
Goodwill reduced as part of a divestiture	—		(2,200		)	—			(2,200		)
Foreign currency translation adjustment	12		(365		)	(1,017		)	(1,370		)

Balance as of March 31, 2017	$	155,412	$	40,009		$	46,306		$	241,727

Schedule of intangible assets

Intangible assets as of June 30, 2016 and March 31, 2017 were as follows (in thousands):

		June 30, 2016						March 31, 2017
	Weighted Average Lives	Gross Carrying Value		Accumulated Amortization		Intangibles Net		Gross Carrying Value		Accumulated Amortization		Intangibles Net
Amortizable assets:
Software development costs	9 years	$	22,091	$	4,120	$	17,971	$	26,020	$	5,741	$	20,279
Patents	20 years	8,111		1,760		6,351		8,342		1,548		6,794
Developed technology	10 years	12,901		3,969		8,932		37,446		4,604		32,842
Customer relationships/backlog	7 years	14,223		4,862		9,361		38,690		6,695		31,995

Total amortizable assets		57,326		14,711		42,615		110,498		18,588		91,910
Non-amortizable assets:
Trademarks and trade names		13,668		—		13,668		25,465		—		25,465
IPR&D		—		—		—		3,200		—		3,200

Total intangible assets		$	70,994	$	14,711	$	56,283	$	139,163	$	18,588	$	120,575

Schedule of estimated future amortization expense

At March 31, 2017, the estimated future amortization expense was as follows (in thousands):

Fiscal Years
2017 (remaining 3 months)	$	3,376
2018	14,438
2019	14,270
2020	12,652
2021	10,332
2022	8,409
2023 and thereafter (including assets that have not yet begun to be amortized)	28,433

Total	$	91,910

Impairment, restructuring and other charges (Tables)

9 Months Ended

Mar. 31, 2017

Impairment, restructuring and other charges

Summary of the restructuring and other charges

The following table summarizes restructuring and other charges for the periods set forth below (in thousands):

	Three Months Ended March 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total
Acquisition-related costs	$	—	$	—	$	384		$	1,054		$	1,438
Employee termination costs	747		1,378			33		—			2,158
Legal settlement and related costs	—		—		125			—			125
Other charges	496		305		15			—			816

Total expensed	$	1,243	$	1,683	$	557		$	1,054		$	4,537


	Three Months Ended March 31, 2017

	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total

Acquisition-related costs	$	—	$	—	$	—		$	140		$	140
Employee termination costs	345		182		52			—			579
Facility closures/consolidation	650		634		194			—			1,478
Other charges (reversals)	—		297		19			(5		)	311


Total expensed	$	995	$	1,113	$	265		$	135		$	2,508



	Nine Months Ended March 31, 2016


	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total


Acquisition-related costs	$	—	$	—	$	384		$	1,054		$	1,438
Employee termination costs	1,083		1,378		239			—			2,700
Legal settlement and related costs	—		—		1,843			—			1,843
Other charges	572		305		35			—			912



Total expensed	$	1,655	$	1,683	$	2,501		$	1,054		$	6,893




	Nine Months Ended March 31, 2017



	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate			Total



Acquisition-related costs	$	810	$	—	$	—		$	3,353		$	4,163
Employee termination costs	8,152		1,262		383			—			9,797
Facility closures/consolidation	829		703		218			—			1,750
Other charges (reversals)	7		297		(48		)	501			757




Total expensed	$	9,798	$	2,262	$	553		$	3,854		$	16,467

Schedule of changes in the accrual for restructuring and other charges

The changes in the accrual for restructuring and other charges for the nine-month period ended March 31, 2017 were as follows (in thousands):

	Acquisition- related Costs			Employee Termination Costs			Facility Closure/ Consolidation Cost			Other Costs			Total

Balance as of June 30, 2016	$	—		$	413		$	126		$	—		$	539
Restructuring and other charges	4,163			9,797			1,750			757			16,467
Payments and other adjustments	(4,163		)	(10,007		)	(1,531		)	(757		)	(16,458		)

Balance as of March 31, 2017	$	—		$	203		$	345		$	—		$	548

Borrowings (Tables)

9 Months Ended

Mar. 31, 2017

Borrowings

Schedule of long-term debt

Long-term debt consisted of the following (in thousands):

	June 30, 2016			March 31, 2017
1.25% convertible notes due 2022:
Principal amount	$	—		$	287,500
Unamortized discount	—			(44,373		)
Unamortized debt issuance costs	—			(6,367		)

1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs	—			236,760
Term loans	6,847			4,096
Other long-term debt	1,966			1,572

	8,813			242,428
Less current portion of long-term debt	(2,759		)	(2,410		)

Long-term portion of debt	$	6,054		$	240,018

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

+ Details

Stockholders' Equity (Tables)

9 Months Ended

Mar. 31, 2017

Stockholders' Equity

Schedule of stock-based compensation expense recorded in the condensed consolidated statements of operations

The Company recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2017			2016			2017
Cost of goods sold	$	302		$	417		$	899		$	1,116
Selling, general and administrative	4,456			5,627			12,475			15,909
Research and development	70			159			208			335
Restructuring	—			—			—			2,902

Stock-based compensation expense before taxes	$	4,828		$	6,203		$	13,582		$	20,262
Less: related income tax benefit	(1,850		)	(2,378		)	(5,184		)	(7,828		)

Stock-based compensation expense, net of estimated taxes	$	2,978		$	3,825		$	8,398		$	12,434

Summary of stock option activity

	Number of Options		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2016	934,112		$	28.67
Granted	17,344		$	73.69
Exercised	(159,278	)	$	24.88
Expired or forfeited	(3,725	)	$	68.91

Outstanding at March 31, 2017	788,453		$	30.24	3.6 years	$	33,775

Exercisable at March 31, 2017	739,020		$	27.44	3.2 years	$	33,678

Summary of restricted stock award and RSU award activity

	Shares		Weighted- Average Fair Value
Nonvested at June 30, 2016	530,498		$	67.94
Granted	377,610		64.50
Vested	(294,893	)	68.05
Net replacement RSUs (1)	24,606		67.76
Forfeited	(19,065	)	68.24

Nonvested at March 31, 2017	618,756		$	65.77

(1)

Pursuant to the acquisition of AS&E, the Company assumed unvested RSUs originally granted by AS&E and converted them into RSUs for the Company’s common stock.

Retirement Benefit Plans (Tables)

9 Months Ended

Mar. 31, 2017

Retirement Benefit Plans

Schedule of net periodic pension expense

The components of net periodic pension expense are as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2017		2016		2017
Service cost	$	187	$	224	$	613	$	672
Interest cost	8		7		25		21
Amortization of prior service cost	105		70		315		210

Net periodic pension expense	$	300	$	301	$	953	$	903

Commitments and Contingencies (Tables)

9 Months Ended

Mar. 31, 2017

Commitments and Contingencies

Schedule of reconciles the contingent earnout liabilities

Beginning fair value, June 30, 2016	$	17,117
Remeasurement of fair value for contingent earn-out obligations	(1,370		)
Payments on contingent earn-out obligations	(1,400		)

Ending fair value, March 31, 2017	$	14,347

Schedule of changes in warranty provisions

The following table presents changes in warranty provisions (in thousands):

	Nine Months Ended March 31,
	2016			2017
Balance at beginning of period	$	12,738		$	15,948
Additions and adjustments	8,596			6,514
Reductions for warranty repair costs	(7,361		)	(4,395		)

Balance at end of period	$	13,973		$	18,067

Segment Information (Tables)

9 Months Ended

Mar. 31, 2017

Segment Information

Schedule of operations and identifiable assets by industry segment

The following tables present the operations and identifiable assets by industry segment (in thousands):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2017			2016			2017
Revenues (1) — by Segment:
Security Division	$	110,550		$	144,824		$	300,680		$	408,037
Healthcare Division	49,113			49,667			156,126			146,427
Optoelectronics and Manufacturing Division, including intersegment revenues	61,306			58,309			184,414			175,864
Intersegment revenues elimination	(10,165		)	(7,654		)	(33,027		)	(21,779		)

Total	$	210,804		$	245,146		$	608,193		$	708,549


	Three Months Ended March 31,						Nine Months Ended March 31,

	2016			2017			2016			2017

Operating income (loss) — by Segment:
Security Division	$	14,554		$	18,287		$	29,723		$	36,767
Healthcare Division	(188		)	936			6,130			(1,527		)
Optoelectronics and Manufacturing Division	5,325			5,974			14,078			16,149
Corporate	(6,077		)	(6,067		)	(19,182		)	(21,882		)
Eliminations (2)	(270		)	564			(927		)	979


Total	$	13,344		$	19,694		$	29,822		$	30,486

	June 30, 2016			March 31, 2017
Assets — by Segment:
Security Division	$	519,068		$	818,058
Healthcare Division	200,067			177,562
Optoelectronics and Manufacturing Division	211,337			199,320
Corporate	64,970			43,536
Eliminations (2)	(3,719		)	(2,739		)

Total	$	991,723		1,235,737

(1)

For the three and nine months ended March 31, 2016 and 2017, one customer, SAT in Mexico, accounted for 14% and 12% of total net revenues, respectively.

(2)

Basis of Presentation (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($) $ / shares shares	Mar. 31, 2017 USD ($) segment $ / shares shares	Mar. 31, 2016 USD ($) $ / shares shares	Feb. 28, 2017
Description of Business
Number of reporting segments \| segment			3
Computation of basic and diluted earnings per share
Net income for diluted earnings per share calculation \| $	$ 14,019	$ 9,343	$ 19,529	$ 20,256
Weighted average shares outstanding for basic earnings per share calculation	18,913	19,336	18,964	19,604
Dilutive effect of stock awards (in shares)	602	605	621	657
Weighted average shares outstanding for diluted earnings per share calculation	19,515	19,941	19,585	20,261
Basic earnings per share (in dollars per share) \| $ / shares	$ 0.74	$ 0.48	$ 1.03	$ 1.03
Diluted earnings per share (in dollars per share) \| $ / shares	$ 0.72	$ 0.47	$ 1.00	$ 1.00
Stock options excluded from computation due to antidilutive effect (in shares)	48	70	47	39
Convertible Senior Notes Due 2022
Per Share Computations
Interest rate (as a percentage)	1.25%		1.25%		1.25%

Basis of Presentation - Fair Value (Details) $ in Thousands	6 Months Ended	9 Months Ended
Basis of Presentation - Fair Value (Details) $ in Thousands	Dec. 31, 2016 USD ($) item	Mar. 31, 2017 USD ($) item	Jun. 30, 2016 USD ($)
Fair Value of Financial Instruments
Liabilities - Contingent payment obligations		$ 14,347	$ 17,117
Property and Equipment
Net value of turnkey security screening program assets not in use at Mexico		$ 15,000
Goodwill Impairment
Total number of reporting units \| item		3
Number of reporting units that are not tested with two-step goodwill impairment \| item	2
Goodwill impairment without two-step impairment test	$ 0
Percentage of decrease hypothetically applied to the fair value	10.00%
Goodwill impairment after two-step goodwill impairment test	$ 0
Recurring
Fair Value of Financial Instruments
Equity securities		$ 266	354
Insurance company contracts		25,614	21,353
Interest rate contract		22	(31)
Total assets		25,902	21,676
Liabilities - Contingent payment obligations		14,347	17,117
Recurring \| Level 1
Fair Value of Financial Instruments
Equity securities		266	354
Total assets		266	354
Recurring \| Level 2
Fair Value of Financial Instruments
Insurance company contracts		25,614	21,353
Interest rate contract		22	(31)
Total assets		25,636	21,322
Recurring \| Level 3
Fair Value of Financial Instruments
Total assets		0
Liabilities - Contingent payment obligations		$ 14,347	$ 17,117

Business Combinations - Purchase Price and Allocation (Details) - USD ($) $ in Thousands	Sep. 09, 2016	Mar. 31, 2017	Jun. 30, 2016
Allocation of total consideration to assets acquired and liabilities assumed
Goodwill		$ 241,727	$ 122,819
AS&E
Business Combinations
Percentage of ownership interest acquired	100.00%
Total consideration	$ 266,000
Fair value of replacement RSUs and AS&E's RSU	1,400
Cash on hand to pay down the revolving bank line of credit	$ 69,000
Allocation of total consideration to assets acquired and liabilities assumed
Cash and cash equivalents		79,195
Accounts receivable		25,048
Inventories		29,725
Other current assets		7,283
Property and equipment		5,722
Intangible assets		74,800
Other long-term assets		201
Accounts payable		(5,273)
Accrued payroll and related expenses		(4,723)
Deferred revenues - current		(11,281)
Advances from customers		(13,785)
Other accrued expenses and current liabilities		(7,416)
Deferred revenues - long term		(3,225)
Deferred income tax liability		(9,067)
Other long-term liabilities		(17,966)
Net assets acquired		149,238
Goodwill		116,765
Total consideration		$ 266,003

Business Combinations - Intangible Assets (Details) - AS&E $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Business Combinations
Amortizable assets	$ 59,300
Total intangible assets	74,800
Trademarks and trade names
Business Combinations
Non-amortizable assets	12,300
In-process research and development ("IPR&D")
Business Combinations
Non-amortizable assets	$ 3,200
Developed technology
Business Combinations
Weighted Average Lives (in years)	10 years
Amortizable assets	$ 31,750
Customer relationships/backlog
Business Combinations
Weighted Average Lives (in years)	7 years
Amortizable assets	$ 27,550

Business Combinations - Revenue and Income (Details) - AS&E - USD ($) $ in Thousands	3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2017	Mar. 31, 2016
Business Combinations
Amount included in revenue	$ 27,700		$ 70,900
Amount included in operating income	4,900		$ 4,700
Pro forma results of operations assume the AS&E acquisition had occurred on July 1, 2015
Revenues	245,146	$ 235,038		$ 726,304	$ 607,645
Income before taxes	19,593	$ 5,161		6,707	$ 2,455
Non-recurring acquisition and employee termination costs	$ 400			$ 13,600

Business Combinations - Other Acquisitions (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2017	Jun. 30, 2016
Business Combinations
Contingent payment obligations		$ 14,347	$ 17,117
Other Acquisitions
Business Combinations
Payments to acquire business	$ 19,600
Contingent payment obligations	$ 13,800

Business Combinations - Divestitures (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
Divestitures
Sales price		$ 12,793
Gain on disposition of business		$ 2,110
Healthcare Division \| Other income
Divestitures
Sales price	$ 12,800
Gain on disposition of business	$ 2,100

Balance Sheet Details (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Balance Sheet Details (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Accounts Receivable
Accounts receivable	$ 192,071		$ 192,071		$ 148,767
Less allowance for doubtful accounts	(8,233)		(8,233)		(7,051)
Total	183,838		183,838		141,716
Inventories
Raw materials	132,922		132,922		133,540
Work-in-process	61,002		61,002		47,460
Finished goods	73,267		73,267		92,288
Total	267,191		267,191		273,288
Property and Equipment
Property and equipment, gross	400,663		400,663		392,017
Less accumulated depreciation and amortization	(239,582)		(239,582)		(208,903)
Property and equipment, net	161,081		161,081		183,114
Depreciation expense	13,300	$ 13,100	39,900	$ 39,100
Land
Property and Equipment
Property and equipment, gross	14,498		14,498		14,498
Buildings, civil works and improvements
Property and Equipment
Property and equipment, gross	171,187		$ 171,187		170,232
Buildings, civil works and improvements \| Minimum
Property and Equipment
Estimated Useful Lives			5 years
Buildings, civil works and improvements \| Maximum
Property and Equipment
Estimated Useful Lives			40 years
Leasehold improvements
Property and Equipment
Property and equipment, gross	9,381		$ 9,381		9,015
Leasehold improvements \| Minimum
Property and Equipment
Estimated Useful Lives			1 year
Leasehold improvements \| Maximum
Property and Equipment
Estimated Useful Lives			12 years
Equipment and tooling
Property and Equipment
Property and equipment, gross	157,885		$ 157,885		154,309
Equipment and tooling \| Minimum
Property and Equipment
Estimated Useful Lives			3 years
Equipment and tooling \| Maximum
Property and Equipment
Estimated Useful Lives			10 years
Furniture and fixtures
Property and Equipment
Property and equipment, gross	3,389		$ 3,389		3,314
Furniture and fixtures \| Minimum
Property and Equipment
Estimated Useful Lives			3 years
Furniture and fixtures \| Maximum
Property and Equipment
Estimated Useful Lives			13 years
Computer equipment
Property and Equipment
Property and equipment, gross	17,972		$ 17,972		17,902
Computer equipment \| Minimum
Property and Equipment
Estimated Useful Lives			3 years
Computer equipment \| Maximum
Property and Equipment
Estimated Useful Lives			5 years
Computer software
Property and Equipment
Property and equipment, gross	19,022		$ 19,022		17,769
Computer software \| Minimum
Property and Equipment
Estimated Useful Lives			3 years
Computer software \| Maximum
Property and Equipment
Estimated Useful Lives			10 years
Construction in process
Property and Equipment
Property and equipment, gross	$ 7,329		$ 7,329		$ 4,978

Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Changes in the carrying amount of goodwill
Balance at the beginning of the period	$ 122,819
Goodwill acquired or adjusted during the period	122,478
Goodwill reduced as part of a divestiture	(2,200)
Foreign currency translation adjustment	(1,370)
Balance at the end of the period	241,727
Security Division
Changes in the carrying amount of goodwill
Balance at the beginning of the period	32,922
Goodwill acquired or adjusted during the period	122,478
Foreign currency translation adjustment	12
Balance at the end of the period	155,412
Healthcare Division
Changes in the carrying amount of goodwill
Balance at the beginning of the period	42,574
Goodwill reduced as part of a divestiture	(2,200)
Foreign currency translation adjustment	(365)
Balance at the end of the period	40,009
Optoelectronics and Manufacturing Division
Changes in the carrying amount of goodwill
Balance at the beginning of the period	47,323
Foreign currency translation adjustment	(1,017)
Balance at the end of the period	$ 46,306

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Amortizable assets:
Gross Carrying Value	$ 110,498		$ 110,498		$ 57,326
Accumulated Amortization	18,588		18,588		14,711
Total	91,910		91,910		42,615
Total intangible assets
Gross Carrying Value	139,163		139,163		70,994
Total intangible assets	120,575		120,575		56,283
Amortization expense	3,600	$ 1,400	9,100	$ 3,400
Trademarks and trade names
Non-amortizable assets:
Gross Carrying Value	25,465		25,465		13,668
IPR&D
Non-amortizable assets:
Gross Carrying Value	3,200		$ 3,200
Software development costs
Intangible assets
Weighted Average Lives (in Years)			9 years
Amortizable assets:
Gross Carrying Value	26,020		$ 26,020		22,091
Accumulated Amortization	5,741		5,741		4,120
Total	20,279		$ 20,279		17,971
Patents
Intangible assets
Weighted Average Lives (in Years)			20 years
Amortizable assets:
Gross Carrying Value	8,342		$ 8,342		8,111
Accumulated Amortization	1,548		1,548		1,760
Total	6,794		$ 6,794		6,351
Developed technology
Intangible assets
Weighted Average Lives (in Years)			10 years
Amortizable assets:
Gross Carrying Value	37,446		$ 37,446		12,901
Accumulated Amortization	4,604		4,604		3,969
Total	32,842		$ 32,842		8,932
Customer relationships/backlog
Intangible assets
Weighted Average Lives (in Years)			7 years
Amortizable assets:
Gross Carrying Value	38,690		$ 38,690		14,223
Accumulated Amortization	6,695		6,695		4,862
Total	$ 31,995		$ 31,995		$ 9,361

Goodwill and Intangible Assets - Intangible Amortization (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Estimated future amortization expense
2017 (remaining 3 months)		$ 3,376
2018		14,438
2019		14,270
2020		12,652
2021		10,332
2022		8,409
2023 and thereafter (including assets that have not yet begun to be amortized)		28,433
Total		91,910		$ 42,615
Software development costs
Estimated future amortization expense
Total		20,279		$ 17,971
Capitalized software development costs	$ 700	$ 2,000	$ 2,100

Impairment, restructuring and other charges- Restructuring and other charges(Details) $ in Thousands	3 Months Ended				9 Months Ended
	Mar. 31, 2017 USD ($)	Sep. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Mar. 31, 2017 USD ($) employee	Mar. 31, 2016 USD ($)
Impairment, restructuring and other charges
Acquisition-related costs	$ 140		$ 1,438		$ 4,163	$ 1,438
Employee termination costs	579		2,158		9,797	2,700
Legal settlement and related costs			125			1,843
Facility closures/consolidation	1,478				1,750
Other charges			816			912
Other charges (reversals)	311				757
Total expensed	2,508		4,537		16,467	6,893
Security Division
Impairment, restructuring and other charges
Impairment of assets		$ 5,400		$ 5,900
Acquisition-related costs					810
Employee termination costs	345		747		8,152	1,083
Facility closures/consolidation	650				829
Other charges			496			572
Other charges (reversals)					7
Total expensed	995		1,243		$ 9,798	1,655
Security Division \| AS&E
Impairment, restructuring and other charges
Number of positions eliminated \| employee					50
Acquisition related and employee severance costs	400				$ 12,100
Acquisition-related costs					14,400
Employee termination costs					$ 8,000
Healthcare Division
Impairment, restructuring and other charges
Number of positions eliminated \| employee					86
Restructuring costs expected	2,000				$ 2,000
Facility consolidation and employee termination costs	800				1,700
Employee termination costs	182		1,378		1,262	1,378
Facility closures/consolidation	634				703
Other charges			305			305
Other charges (reversals)	297				297
Total expensed	1,113		1,683		2,262	1,683
Optoelectronics and Manufacturing Division
Impairment, restructuring and other charges
Impairment of minority interest investment				$ 2,800
Acquisition-related costs			384			384
Employee termination costs	52		33		383	239
Legal settlement and related costs			125			1,843
Facility closures/consolidation	194				218
Other charges			15			35
Other charges (reversals)	19				(48)
Total expensed	265		557		553	2,501
Corporate
Impairment, restructuring and other charges
Acquisition-related costs	140		1,054		3,353	1,054
Other charges (reversals)	(5)				501
Total expensed	$ 135		$ 1,054		$ 3,854	$ 1,054

Impairment, restructuring and other charges- Changes in the accrual for restructuring and other charges (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Restructuring and other charges
Balance at the beginning of the period			$ 539
Restructuring and other charges	$ 2,508	$ 4,537	16,467	$ 6,893
Payments and other adjustments			(16,458)
Balance at the end of the period	548		548
Acquisition-related Costs
Restructuring and other charges
Restructuring and other charges			4,163
Payments and other adjustments			(4,163)
Employee Termination Costs
Restructuring and other charges
Balance at the beginning of the period			413
Restructuring and other charges			9,797
Payments and other adjustments			(10,007)
Balance at the end of the period	203		203
Facility Closure / Consolidations Cost
Restructuring and other charges
Balance at the beginning of the period			126
Restructuring and other charges			1,750
Payments and other adjustments			(1,531)
Balance at the end of the period	$ 345		345
Other Costs
Restructuring and other charges
Restructuring and other charges			757
Payments and other adjustments			$ (757)

Borrowings (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
Borrowings (Details) $ / shares in Units, $ in Thousands	Sep. 30, 2012 USD ($)	Mar. 31, 2017 USD ($) item $ / shares shares	Mar. 31, 2017 USD ($) $ / shares	Mar. 31, 2016 USD ($)	Feb. 28, 2017 USD ($)	Dec. 31, 2016 USD ($)	Nov. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)
Borrowings
Borrowings outstanding		$ 93,000	$ 93,000					$ 125,000
Repurchase of common shares			48,453	$ 73,368
Repurchase of common stock (in shares) \| shares		82,640
Threshold percentage of stock price		130.00%
Number of trading days \| item		20
Number of consecutive trading days		30 days
Principal amount of the notes to be repurchased (as a percentage)		100.00%
Revolving Credit Facility
Borrowings
Maximum borrowing capacity						$ 525,000	$ 450,000
Sub-limit available for letters of credit						300,000
Unused commitment fee (as a percent)		0.20%
Borrowings outstanding		$ 93,000	93,000
Amount outstanding under letters-of-credit		20,700	20,700
Available credit facility		411,000	411,000
Repayments of Lines of Credit		$ 245,000
Revolving Credit Facility \| Minimum
Borrowings
Unused commitment fee (as a percent)		0.20%
Revolving Credit Facility \| Maximum
Borrowings
Increase in the credit agreement's borrowing capacity available under certain circumstances						$ 250,000
Unused commitment fee (as a percent)		0.30%
Revolving Credit Facility \| LIBOR
Borrowings
Interest rate margin (as a percent)		1.50%
Revolving Credit Facility \| LIBOR \| Minimum
Borrowings
Interest rate margin (as a percent)		1.25%
Revolving Credit Facility \| LIBOR \| Maximum
Borrowings
Interest rate margin (as a percent)		2.00%
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%
Repurchase of common shares		$ 35,000
Repurchase of common stock (in shares) \| shares		451,600
Conversion ratio		9.3056
Conversion price \| $ / shares		$ 107.46	$ 107.46
Premium on stock price		38.50%	38.50%
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		1,200	1,200
Contractual interest expense		400	400
Amortization of debt discount		700	700
Amortization of debt issuance costs		100	100
Unamortized debt discount		$ 44,373	$ 44,373
Effective interest rate (as a percent)		4.50%	4.50%
Stock price per share \| $ / shares		$ 72.99	$ 72.99
Bank lines-of-credit
Borrowings
Amount outstanding under letters-of-credit		$ 48,000	$ 48,000
Available credit facility		$ 10,300	$ 10,300
Seven-year term loan due in fiscal 2020
Borrowings
Principal amount	$ 11,100
Effective interest rate (as a percent)	2.20%
Term of loan	7 years
Seven-year term loan due in fiscal 2020 \| LIBOR
Borrowings
Interest rate margin (as a percent)	1.25%

Borrowings - Components of Long-term debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Long-term debt
Total	$ 242,428	$ 8,813
Term loans	4,096	6,847
Other long-term debt	1,572	1,966
Less current portion of long-term debt	(2,410)	(2,759)
Long-term portion of debt	240,018	$ 6,054
Convertible Senior Notes Due 2022
Long-term debt
Principal amount	287,500
Unamortized discount	(44,373)
Unamortized debt issuance	(6,367)
Total	$ 236,760

Stockholders' Equity - Stock-based Compensation (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($)	Mar. 31, 2017 USD ($) $ / shares item shares	Mar. 31, 2016 USD ($) shares
Stock-based Compensation
Number of share-based employee compensation plans assumed from the acquisition of AS&E \| item			2
Stock-based compensation expense before taxes \| $	$ 6,203	$ 4,828	$ 20,262	$ 13,582
Less: related income tax benefit \| $	(2,378)	(1,850)	(7,828)	(5,184)
Stock-based compensation expense, net of estimated taxes \| $	3,825	2,978	$ 12,434	$ 8,398
Weighted-average period			1 year 10 months 24 days
Stock Options
Stock-based Compensation
Unrecognized compensation cost \| $	$ 700		$ 700
Number of Options
Outstanding at the beginning of the period (in shares)			934,112
Granted (in shares)			17,344
Exercised (in shares)			(159,278)
Expired or forfeited (in shares)			(3,725)
Outstanding at the end of the period (in shares)	788,453		788,453
Exercisable at the end of the period (in shares)	739,020		739,020
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) \| $ / shares			$ 28.67
Granted (in dollars per share) \| $ / shares			73.69
Exercised (in dollars per share) \| $ / shares			24.88
Expired or forfeited (in dollars per share) \| $ / shares			68.91
Outstanding at the end of the period (in dollars per share) \| $ / shares	$ 30.24		30.24
Exercisable at the end of the period (in dollars per share) \| $ / shares	$ 27.44		$ 27.44
Weighted-Average Remaining Contractual Term
Outstanding at the end of the period			3 years 7 months 6 days
Exercisable at the end of the period			3 years 2 months 12 days
Aggregate Intrinsic Value
Outstanding at the end of the period \| $	$ 33,775		$ 33,775
Exercisable at the end of the period \| $	33,678		33,678
Restricted stock and RSU
Stock-based Compensation
Unrecognized compensation cost \| $	$ 20,300		$ 20,300
Shares
Nonvested at the beginning of the period (in shares)			530,498
Granted (in shares)			377,610
Vested (in shares)			(294,893)
Net replacement RSUs			24,606
Forfeited (in shares)			(19,065)
Nonvested at the end of the period (in shares)	618,756		618,756
Weighted-Average Fair Value
Nonvested at the beginning of the period (in dollars per share) \| $ / shares			$ 67.94
Granted (in dollars per share) \| $ / shares			64.50
Vested (in dollars per share) \| $ / shares			$ 68.05
Net replacement RSUs \| $ / shares			67.76
Forfeited (in dollars per share) \| $ / shares			$ 68.24
Nonvested at the end of the period (in dollars per share) \| $ / shares	$ 65.77		$ 65.77
Performance-based restricted stock units
Shares
Granted (in shares)			155,488	139,300
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			250.00%
2012 Plan
Weighted-Average Fair Value
Securities available for grant	1,300,000		1,300,000
2012 Plan \| Restricted stock and RSU
Weighted-Average Fair Value
Number of shares available for grant reduced for each award granted			1.87
Number of shares available for grant increased for each award forfeited and returned			1.87
2005 AS&E Plan and the 2014 AS&E Plan \| RSU
Number of Options
Granted (in shares)			0
Cost of goods sold
Stock-based Compensation
Stock-based compensation expense before taxes \| $	$ 417	302	$ 1,116	$ 899
Selling, general and administrative
Stock-based Compensation
Stock-based compensation expense before taxes \| $	5,627	4,456	15,909	12,475
Research and development
Stock-based Compensation
Stock-based compensation expense before taxes \| $	$ 159	$ 70	335	$ 208
Restructuring
Stock-based Compensation
Stock-based compensation expense before taxes \| $			$ 2,902

Stockholders' Equity - Share Repurchase Program (Details) - shares	3 Months Ended
	Mar. 31, 2017	Apr. 30, 2016
Share Repurchase Program
Number of repurchased shares authorized		1,000,000
Number of shares repurchased	82,640
Number of available shares may be repurchased	872,481

Retirement Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Retirement Benefit Plans (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Net periodic benefit costs
Service cost	$ 224	$ 187	$ 672	$ 613
Interest cost	7	8	21	25
Amortization of prior service cost	70	105	210	315
Net periodic pension expense	301	300	903	953
Contributions made by the entity to the defined benefit plans	0	0	1,000	200
Contributions made by the entity to defined contribution plans	$ 1,400	$ 1,100	$ 3,600	$ 3,400

Commitments and Contingencies (Details) $ in Thousands		9 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Apr. 16, 2014 complaint	Mar. 31, 2017 USD ($) item	Mar. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2012 USD ($)
Contingent Acquisition Obligations
Maximum amount of future payments under contingent consideration		$ 20,800
Beginning fair value		17,117
Remeasurement of fair value for contingent earn-out obligations		(1,370)
Payments on contingent earn-out obligations		(1,400)
Ending fair value		$ 14,347
Environmental Contingencies
Number of investigations discovering soil and groundwater contamination at Hawthorne, CA facility \| item		1
Changes in provision for warranties
Warranty provision at beginning of period		$ 15,948	$ 12,738
Additions and adjustments		6,514	8,596
Reductions for warranty repair costs		(4,395)	(7,361)
Warranty provision at end of period		18,067	$ 13,973
Legal Proceedings
Number of shareholders derivative complaints \| complaint	3
Mexican government
Advances from Customers
Advances from customers		$ 6,300		$ 25,000	$ 100,000
Royalty payments
Contingent Acquisition Obligations
Purchase agreements containing royalty payments, number \| item		1

Segment Information - Operations and Identifiable Assets (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017 USD ($) customer	Mar. 31, 2016 USD ($) customer	Mar. 31, 2017 USD ($) segment customer	Mar. 31, 2016 USD ($) customer	Jun. 30, 2016 USD ($)
Operations and identifiable assets by industry segment
Number of identifiable industry segments \| segment			3
Total revenues	$ 245,146	$ 210,804	$ 708,549	$ 608,193
Income (loss) from operations	19,694	$ 13,344	30,486	$ 29,822
Segments assets	$ 1,235,737		$ 1,235,737		$ 991,723
SAT in Mexico \| Revenue \| Customer
Operations and identifiable assets by industry segment
Number of major customers \| customer	1	1	1	1
Percentage of benchmark derived from specified source	12.00%	14.00%	12.00%	14.00%
Operating Segments \| Security Division
Operations and identifiable assets by industry segment
Total revenues	$ 144,824	$ 110,550	$ 408,037	$ 300,680
Income (loss) from operations	18,287	14,554	36,767	29,723
Segments assets	818,058		818,058		519,068
Operating Segments \| Healthcare Division
Operations and identifiable assets by industry segment
Total revenues	49,667	49,113	146,427	156,126
Income (loss) from operations	936	(188)	(1,527)	6,130
Segments assets	177,562		177,562		200,067
Operating Segments \| Optoelectronics and Manufacturing Division
Operations and identifiable assets by industry segment
Total revenues	58,309	61,306	175,864	184,414
Income (loss) from operations	5,974	5,325	16,149	14,078
Segments assets	199,320		199,320		211,337
Corporate
Operations and identifiable assets by industry segment
Income (loss) from operations	(6,067)	(6,077)	(21,882)	(19,182)
Segments assets	43,536		43,536		64,970
Eliminations
Operations and identifiable assets by industry segment
Total revenues	(7,654)	(10,165)	(21,779)	(33,027)
Income (loss) from operations	564	$ (270)	979	$ (927)
Segments assets	$ (2,739)		$ (2,739)		$ (3,719)