Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Dec. 31, 2017	Jan. 31, 2018
Document and Entity Information
Entity Registrant Name	OSI SYSTEMS INC
Entity Central Index Key	0001039065
Document Type	10-Q
Document Period End Date	Dec. 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		19,019,435
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Jun. 30, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 211,973	$ 169,650
Accounts receivable, net	208,454	206,526
Inventories	281,033	248,510
Prepaid expenses and other current assets	31,051	28,314
Total current assets	732,511	653,000
Property and equipment, net	143,270	141,539
Goodwill	285,880	242,129
Intangible assets, net	139,104	118,450
Deferred income taxes	2,410	34,897
Other assets	43,584	40,072
Total assets	1,346,759	1,230,087
CURRENT LIABILITIES:
Bank lines of credit	195,000	103,000
Current portion of long-term debt	2,279	2,396
Accounts payable	74,606	76,121
Accrued payroll and related expenses	36,641	34,621
Advances from customers	64,350	37,934
Other accrued expenses and current liabilities	98,304	92,062
Total current liabilities	471,180	346,134
Long-term debt	245,181	241,750
Deferred income taxes	38,381	20,681
Other long-term liabilities	61,943	52,309
Total liabilities	816,685	660,874
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, 18,689,568 shares at June 30, 2017 and 18,978,031 shares at December 31, 2017	218,343	222,529
Retained earnings	327,078	363,872
Accumulated other comprehensive loss	(15,347)	(17,188)
Total stockholders' equity	530,074	569,213
Total liabilities and stockholders' equity	$ 1,346,759	$ 1,230,087

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2017	Jun. 30, 2017
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	18,978,031	18,689,568
Common stock, shares outstanding	18,978,031	18,689,568

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Net revenues:
Products	$ 181,393	$ 166,590	$ 347,046	$ 320,047
Services	96,135	75,958	187,615	143,356
Total net revenues	277,528	242,548	534,661	463,403
Cost of goods sold:
Products	122,464	118,517	236,644	231,638
Services	53,434	41,436	105,116	81,083
Total cost of goods sold	175,898	159,953	341,760	312,721
Gross profit	101,630	82,595	192,901	150,682
Operating expenses:
Selling, general and administrative	60,098	51,544	115,745	95,097
Research and development	15,088	12,938	30,188	25,416
Impairment, restructuring and other charges	8,297	9,420	9,427	19,377
Total operating expenses	83,483	73,902	155,360	139,890
Income from operations	18,147	8,693	37,541	10,792
Interest and other expense, net	(5,282)	(1,981)	(9,531)	(3,139)
Income before income taxes	12,865	6,712	28,010	7,653
Provision for income taxes	59,816	1,879	64,804	2,143
Net income (loss)	$ (46,951)	$ 4,833	$ (36,794)	$ 5,510
Earnings per share:
Basic (in dollars per share)	$ (2.47)	$ 0.25	$ (1.95)	$ 0.29
Diluted (in dollars per share)	$ (2.47)	$ 0.25	$ (1.95)	$ 0.28
Shares used in per share calculation:
Basic (in shares)	18,971	19,036	18,874	18,989
Diluted (in shares)	18,971	19,653	18,874	19,620

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)	$ (46,951)	$ 4,833	$ (36,794)	$ 5,510
Other comprehensive income (loss):
Foreign currency translation adjustment	326	(4,199)	1,906	(5,000)
Other	(93)	40	(65)	119
Other comprehensive income (loss)	233	(4,159)	1,841	(4,881)
Comprehensive income (loss)	$ (46,718)	$ 674	$ (34,953)	$ 629

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ (36,794)	$ 5,510
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	41,656	32,175
Stock based compensation expense	11,740	14,059
Deferred income taxes	50,696	93
Amortization of debt discount and issuance costs	4,262
Impairment charges	3,144	5,418
Other	885	135
Changes in operating assets and liabilities-net of business acquisitions:
Accounts receivable	12,054	(12,550)
Inventories	(21,700)	14,216
Prepaid expenses and other current assets	(6,273)	(12,028)
Accounts payable	(6,647)	(966)
Accrued payroll and related expenses	12	1,716
Advances from customers	26,405	(20,055)
Other	5,261	(9,458)
Net cash provided by operating activities	84,701	18,265
Cash flows from investing activities:
Acquisition of property and equipment	(32,009)	(4,329)
Acquisition of businesses, net of cash acquired	(84,436)	(189,014)
Acquisition of intangible and other assets	(1,068)	(2,735)
Net cash used in investing activities	(117,513)	(196,078)
Cash flows from financing activities:
Net borrowings on bank lines of credit	92,000	224,000
Proceeds from long-term debt	295	240
Payments on long-term debt	(1,249)	(1,440)
Proceeds from exercise of stock options and employee stock purchase plan	3,828	6,457
Repurchase of common shares		(7,367)
Taxes paid related to net share settlements of equity awards	(19,754)	(9,015)
Net cash provided by financing activities	75,120	212,875
Effect of exchange rate changes on cash	15	(1,184)
Net increase in cash and cash equivalents	42,323	33,878
Cash and cash equivalents-beginning of period	169,650	104,370
Cash and cash equivalents-end of period	211,973	138,248
Supplemental disclosure of cash flow information:
Interest	3,783	2,918
Income taxes	$ 11,929	$ 12,665

Basis of Presentation

6 Months Ended

Dec. 31, 2017

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

Description of Business

OSI Systems, Inc., together with our subsidiaries, is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. We sell our products in diversified markets, including homeland security, healthcare, defense and aerospace.

We have three reporting segments: (i) Security, providing security inspection systems, turnkey security screening solutions and related services; (ii) Healthcare, providing patient monitoring, diagnostic cardiology, and anesthesia 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 our Security segment, we provide security screening products and related services globally. These products fall into the following categories: baggage and parcel inspection; cargo and vehicle inspection; hold (checked) baggage screening; people screening; radiation detection; and explosive and narcotics trace detection. In addition to these products, we also provide site design, installation, training and technical support services to our customers. We also provide turnkey security screening solutions, which can include the construction, staffing and long-term operation of security screening checkpoints for our customers.

Through our Healthcare segment, we design, manufacture, market and service patient monitoring, diagnostic cardiology, and anesthesia delivery and ventilation systems, and related supplies and accessories worldwide. These products are used by care providers in critical care, emergency and perioperative areas within hospitals as well as physicians’ offices, medical clinics and ambulatory surgery centers among other sites.

Through our Optoelectronics and Manufacturing segment, we design, manufacture and market optoelectronic components and provide electronics manufacturing services globally for use in a broad range of applications, including aerospace and defense electronics, security and inspection systems, medical imaging and diagnostic products, telecommunications, computer peripherals, industrial automation systems, automotive diagnostic systems, and consumer products. This division provides products and services to OEM customers and end users as well as to our Security and Healthcare divisions.

Basis of Presentation

The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and 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, 2017. The results of operations for the six months ended December 31, 2017 are not necessarily indicative of the operating results to be expected for the full 2018 fiscal year or any future periods.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or net realizable value, stock-based employee compensation expense, income taxes, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will likely differ from these estimates and could differ materially.

Per Share Computations

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method. Stock options and stock awards to purchase 0.1 million shares of common stock for each of the six months ended December 31, 2016 and December 31, 2017 and the three months ended December 31, 2017 were excluded from the calculation because to include such options and awards would have been antidilutive to include such options. During the three months ended December 31, 2016, the number of stock options and stock awards excluded from the calculation because they were antidilutive was de minimis. For each of the periods presented where we reported a net loss, the effect off all potentially dilutive securities would be antidilutive, and as a result, diluted net loss per common share is the same as basic net loss per common share. Prior to our adoption of ASU 2016-09 in the fourth quarter of fiscal 2017, we included tax benefits in assessing whether equity awards were dilutive and in our calculations of weighted average diluted shares 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 on diluted earnings per share until the average price of our common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion.

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

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2017			2016		2017
Net income (loss) available to common stockholders	$	4,833	$	(46,951	)	$	5,510	$	(36,794	)


Weighted average shares outstanding—basic	19,036		18,971			18,989		18,874
Dilutive effect of equity awards	617		—			631		—

Weighted average shares outstanding—diluted	19,653		18,971			19,620		18,874


Basic earnings (loss) per share	$	0.25	$	(2.47	)	$	0.29	$	(1.95	)

Diluted earnings (loss) per share	$	0.25	$	(2.47	)	$	0.28	$	(1.95	)

Cash Equivalents

We consider all highly liquid investments purchased with maturities of three months or less as of the acquisition date to be cash equivalents.

Our cash and cash equivalents totaled $212.0 million at December 31, 2017. Nearly all of this amount was held by our foreign subsidiaries located primarily in Mexico, Singapore, Malaysia and the United Kingdom, and to a lesser extent in India, Canada, Germany and China among others.

Fair Value of Financial Instruments

Our 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 our long term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates available to us.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. “Level 1” category includes assets and liabilities at 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 for which 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, our contingent payment obligations related to acquisitions are valued using “Level 3” valuation techniques. Such obligations are measured at fair value on a recurring basis. The fair values of our financial assets and liabilities as of June 30, 2017 and December 31, 2017 are categorized as follows (in thousands):

	June 30, 2017								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	254	$	—	$	—	$	254	$	284	$	—	$	—	$	284
Insurance company contracts	—		26,940		—		26,940		—		30,941		—		30,941
Interest rate swap agreement	—		20		—		20		—		21		—		21

Total assets	$	254	$	26,960	$	—	$	27,214	$	284	$	30,962	$	—	$	31,246

Liabilities—contingent payment obligations	$	—	$	—	$	11,840	$	11,840	$	—	$	—	$	14,721	$	14,721

Derivative Instruments and Hedging Activity

Our use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to variable, LIBOR based debt for the duration of the term loan described in Note 6. The interest rate swap matures in October 2019. The interest rate swap is considered an effective cash flow hedge and, as a result, the net gains or losses on such instrument were reported as a component of Other comprehensive income (loss) in the consolidated financial statements and will be reclassified to the statement of operations 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.

Goodwill Impairment

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

Revenue Recognition

Product Sales. We recognize 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 we have 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. We enter 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 duration to fulfill each of these deliverables can range from completion in a short amount of time and entirely within a single reporting period to completion 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 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 our 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. We have generally met these criteria for the multiple-deliverable arrangement as all of the deliverables in our arrangements have stand-alone value in that either the customer can resell that item or another vendor sells that item separately. We typically do not offer a general right of return in regards to our 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, we utilize our BESP in order to allocate consideration to those deliverables. BESP for our product deliverables is determined by utilizing a weighted average price approach. BESP for our service deliverables is determined primarily by utilizing a cost-plus margin approach, though in some instances average price per hour is used.

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

Proportional Performance. In connection with our agreement with the Servicio de Administración Tributaria (“SAT”) in Mexico, revenue has been 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. In January 2018, we entered into a new, two-year contract with SAT to continue providing security screening services. Revenue under the new contract is expected to be recognized as services are performed.

New Accounting Pronouncements and Policies

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 for fiscal years beginning after December 15, 2016, including interim reporting periods within such fiscal years. We are currently evaluating our business and contracts to determine any changes to accounting policies or processes necessary to adopt the requirements of the new standard and are in the process of selecting a transition method. Our preliminary evaluation of the impact of this ASU is that it will not have a material impact on our financial condition or results of operations. However, the adoption of this ASU will result in expanded disclosures.

In January 2016, FASB issued an ASU which affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient permitted by the guidance to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. This ASU is effective for fiscal years beginning after December 15, 2017, including interim reporting periods within such fiscal years. Early application is permitted. We have not yet adopted this ASU and are currently evaluating the impact it may have on our financial condition and results of operations.

In February 2016, the FASB issued an ASU which affects the accounting for leases. The guidance 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, including interim reporting periods within such fiscal years. Early application is permitted. We have not yet adopted this ASU and are currently evaluating the impact it may have on our financial condition and results of operations.

In August 2016, the FASB issued an ASU to address the diverse classifications being applied to cash receipts and payments in reporting 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, including interim reporting periods within such fiscal years. We have not yet adopted this ASU and are currently evaluating the impact it may have on our financial condition and results of operations.

In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates Step 2, the computation of the implied fair value of goodwill to determine the amount of impairment, from the goodwill impairment test. In computing the implied fair value of goodwill for Step 2 under current accounting standards, we calculate the fair value of our assets and liabilities as if acquired or assumed in a business combination. Under the amendments in this update, we will determine the amount of goodwill impairment by comparing the Step 1 fair value of a reporting unit with its carrying amount. To the extent the carrying value of a reporting unit exceeds its Step 1 fair value, a goodwill impairment charge is recognized. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We elected to early adopt the new standard effective October 1, 2017, because the ASU significantly simplifies the evaluation of goodwill for impairment. The adoption of this standard did not have an impact on our financial condition and results of operations.

U.S. Tax Reform

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). In connection with the enactment of the Tax Act, we recognized a charge of $56 million in the second quarter of fiscal 2018. The charge included our current estimate of the tax on accumulated overseas profits and the revaluation of deferred tax assets and liabilities. As we have a June 30 fiscal year end, the Tax Act’s lower corporate tax rate will be phased in, and is expected to result in a U. S. statutory federal tax rate of approximately 28% for the fiscal year ending June 30, 2018. The provisional estimates are based on our initial analysis of the Tax Act. The changes included in the Tax Act are broad and complex. The final impacts of the Tax Act may differ materially from the amounts estimated due to, among other things, changes in interpretation of the Tax Act, any legislative action that may be taken to address questions arising due to the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act or any updates or changes to estimates we have utilized to calculate the impacts, including impacts from changes to current year earnings estimates and foreign exchange rates. The Securities and Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. We currently anticipate finalizing and recording any resulting adjustments during the 2018 calendar year.

Business Combinations

6 Months Ended

Dec. 31, 2017

Business Combinations

Business Combinations

2. Business Combinations

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

Acquisition of Explosive Trace Detection Business

On July 7, 2017, we acquired the global explosive trace detection business (“ETD”) from Smiths Group plc. We financed the total purchase price of $80.5 million with a combination of cash on hand and borrowings under our existing revolving bank line of credit.

Due to the timing and complexity of the transaction, we are in the process of finalizing our valuation of the assets acquired and liabilities assumed. As of December 31, 2017, the valuation of certain assets and liabilities of ETD were preliminary in nature as we are awaiting the conclusion of the valuation of certain assets by a third party and resolution of accurately carving out certain assets and liabilities from the prior owners of the business. As a result, the ETD acquisition could necessitate the use of the full one year measurement period to establish the fair values of assets and liabilities as of the acquisition date, including intangible assets, goodwill, accounts receivable, inventory, deferred revenue, property and equipment, contractual obligations, income tax obligations, and certain reserves. Changes in the fair values of assets and liabilities from what was reported in our condensed consolidated financial statements for the three months ended September 30, 2017 are primarily a result of additional information that impacted our estimates of fair value and conformance to our accounting policies. During the quarter ended December 31, 2017, goodwill increased by $2.5 million, driven primarily by additional accounts payable and other current liabilities identified as of the acquisition date. Further potential adjustments made could be material in relation to these preliminary values below (amounts in thousands):

Cash and cash equivalents	$	4
Accounts receivable	12,113
Inventories	12,217
Property and equipment	1,599
Intangible assets	30,040
Other long-term assets	301
Accounts payable	(4,784		)
Accrued payroll and related expenses	(2,339		)
Deferred revenues — current	(2,011		)
Accrued warranties	(1,629		)
Other accrued expenses and current liabilities	(1,376		)

Net assets acquired	44,135
Goodwill	36,332

Total consideration	$	80,467

The goodwill is largely attributable to expected growth, intellectual capital and the assembled workforce of the ETD business.

Intangible assets are recorded at estimated fair value, as determined by management based on available information, which includes a preliminary valuation prepared by a third party. The fair value attributed to the intangible assets acquired was based on preliminary estimates, assumptions and other information compiled by management, including valuations that utilized established valuation techniques. The value attributed to goodwill and intangible assets is partially non-deductible for income tax purposes. The following table summarizes the fair value of acquired identifiable intangible assets as of the acquisition date (amounts in thousands):

	Weighted
	Average	Fair
	Lives	Value
Amortizable assets:
Developed technology	10 years	$	13,220
Customer relationships	8 years	12,920

Backlog	2 years	3,500
Total amortizable assets		29,640
Non-amortizable asset — IPR&D		400

Total intangible assets		$	30,040

The condensed consolidated statements of operations include $19.7 million of revenue and $2.6 million of income from operations from ETD for the three months ended December 31, 2017, and $41.4 million of revenue and $6.6 million of income from operations from ETD for the period from July 7, 2017 to December 31, 2017.

The following unaudited pro forma results 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 periods presented or the results which may occur in the future. The following unaudited pro forma results of operations assume the ETD acquisition had occurred on July 1, 2016 (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2017		2016		2017
Revenues	$	266,167	$	277,528	$	502,918	$	534,661

Income from operations	$	13,328	$	18,147	$	17,769	$	37,541

Significant pro forma adjustments incorporated into the pro forma results above include the recognition of additional amortization expense related to acquired intangible assets. In addition, the pro forma results for the three and six months ended December 31, 2016 were carved out from the operations of the business when it was owned by its former parent. As a result, these carve-out results have been prepared from the historical accounts of its former parent, and include revenues and expenses specifically identified to ETD, and allocations of certain overhead expenses.

Acquisition of American Science and Engineering

On September 9, 2016, we acquired by merger 100% ownership 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 our Security division. We financed the total cash merger consideration of $266 million with a combination of cash on hand and borrowing under our existing revolving bank line of credit, and also issued restricted stock units (“RSUs”) of the Company to replace RSUs previously issued by AS&E. Immediately following the close of the acquisition, we used $69 million of AS&E’s existing cash on hand to pay down the revolving bank line of credit. The valuation of the estimated fair value of the assets acquired and liabilities assumed as a result of this business combination has been finalized.

Other Acquisitions

In July 2017, we (through our Security division) completed an acquisition of a technology company. The acquisition purchase price was financed with cash on hand and was in an amount determined to be insignificant by management.

On January 12, 2018, we (through our Optoelectronics and Manufacturing division) acquired an electronics component designer and manufacturer for approximately $21 million plus up to $6 million in potential earnout consideration. The acquisition was financed with cash on hand and borrowing under our existing revolving bank line of credit. The final purchase price is subject to customary adjustments relating to working capital. We have not completed the preliminary purchase price allocation as not all information required for the analysis was available.

Balance Sheet Details

6 Months Ended

Dec. 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, 2017			December 31, 2017

Accounts receivable	$	216,089		$	219,462
Less allowance for doubtful accounts	(9,563		)	(11,008		)

Total	$	206,526		$	208,454

	June 30, 2017		December 31, 2017

Raw materials	$	129,645	$	140,275
Work-in-process	65,454		77,922
Finished goods	53,411		62,836

Total	$	248,510	$	281,033

	Estimated
	Useful	June 30,			December 31,
	Lives	2017			2017
Land	N/A	$	14,212		$	17,129
Buildings, civil works and improvements	5 - 40 years	157,123			179,643
Leasehold improvements	1 - 12 years	9,025			9,308
Equipment and tooling	3 - 10 years	166,991			170,372
Furniture and fixtures	3 - 13 years	3,371			3,427
Computer equipment	3 - 5 years	17,991			19,054
Computer software	3 - 10 years	17,303			17,844
Computer software implementation in process	N/A	2,590			3,676
Construction in process	N/A	1,049			699

Total		389,655			421,152
Less accumulated depreciation and amortization		(248,116		)	(277,882		)

Property and equipment, net		$	141,539		$	143,270

In September 2017, we purchased the AS&E facility in Billerica, MA for a purchase price of $19.8 million. Of this amount, $16.9 million was included in Buildings, civil works and improvements and $2.9 million was included in Land. Depreciation expense was approximately $13.4 million and $16.8 million for the three months ended December 31, 2016 and 2017, respectively, and approximately $26.7 million and $33.0 million for the six months ended December 31, 2016 and 2017, respectively.

Goodwill and Intangible Assets

6 Months Ended

Dec. 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 six month period ended December 31, 2017 were as follows (in thousands):

	Security		Healthcare		Optoelectronics and Manufacturing		Consolidated
Balance as of June 30, 2017	$	155,083	$	40,129	$	46,917	$	242,129
Goodwill acquired or adjusted during the period	42,893		—		50		42,943
Foreign currency translation adjustment	148		107		553		808

Balance as of December 31, 2017	$	198,124	$	40,236	$	47,520	$	285,880

Intangible assets consisted of the following (in thousands):

		June 30, 2017							December 31, 2017
	Weighted	Gross							Gross
	Average	Carrying		Accumulated			Intangibles		Carrying		Accumulated			Intangibles
	Lives	Value		Amortization			Net		Value		Amortization			Net
Amortizable assets:
Software development costs	9 years	$	26,753	$	(6,291	)	$	20,462	$	27,102	$	(7,674	)	$	19,428
Patents	20 years	8,386		(1,676		)	6,710		8,590		(1,518		)	7,072
Developed technology	10 years	37,446		(5,530		)	31,916		49,010		(7,431		)	41,579
Customer relationships/backlog	7 years	38,289		(7,667		)	30,622		54,554		(11,675		)	42,879

Total amortizable assets		110,874		(21,164		)	89,710		139,256		(28,298		)	110,958
Non-amortizable assets:
Trademarks and trade names		25,540		—			25,540		24,546		—			24,546
IPR&D		3,200		—			3,200		3,600		—			3,600

Total intangible assets		$	139,614	$	(21,164	)	$	118,450	$	167,402	$	(28,298	)	$	139,104

Amortization expense related to intangible assets was $3.4 million and $4.5 million for the three month periods ended December 31, 2016 and 2017, respectively. For the six months ended December 31, 2016 and 2017, amortization expense was $5.5 million and $8.7 million, respectively. At December 31, 2017, the estimated future amortization expense was as follows (in thousands):

2018 (remaining 6 months)	$	9,784
2019	19,577
2020	17,302
2021	16,756
2022	12,823
2023	11,745
2024 and thereafter, including assets that have not yet begun to be amortized	22,971

Total	$	110,958

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 2024 and thereafter in the table above. For the three months ended December 31, 2016 and 2017, we capitalized software development costs in the amount of $0.6 million and $0.2 million, respectively. For the six-month periods ended December 31, 2016 and 2017, we capitalized software development costs in the amount of $2.0 million and $0.3 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

6 Months Ended

Dec. 31, 2017

Impairment, restructuring and other charges

Impairment, restructuring and other charges

5. Impairment, restructuring and other charges

Impairment

During the three months ended September 30, 2016, we abandoned a product line in our Security division related to a technology we no longer support. As a result, $5.4 million of assets, including the intangible and fixed assets associated with this product line, were written off as we determined that these assets have no value and were permanently impaired.

During the three months ended December 31, 2017, we (i) abandoned a product line in our Security division that became redundant as a result of the ETD acquisition, (ii) abandoned a non-core product line in our Healthcare division, and (iii) abandoned certain trademarks in our Optoelectronics and Manufacturing division that are no longer used. As a result, $3.1 million of assets, including intangible and fixed assets, were written off as we determined that these assets have no value and were permanently impaired.

Restructuring and Other Charges

We endeavor to align our global capacity and infrastructure with demand by our customers as well as fully integrate acquisitions, thereby improving operational efficiency. A summary of such activity is included in the succeeding tables.

In conjunction with the acquisition of ETD, beginning in fiscal 2017 we incurred professional fees to complete the acquisition. Such costs totaled $1.9 million through the second quarter of fiscal 2018. This included $0.2 million and $0.9 million during the three and six months ended December 31, 2017, respectively. During the three months ended December 31, 2017, we accrued $4.3 million of litigation and estimated settlement costs, $4.2 million of which was recorded in our Healthcare division. For the three and six months ended December 31, 2017, we incurred charges of $0.5 million and $0.8 million, respectively, for facility consolidation and employee terminations.

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

	Three Months Ended December 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate		Total
Acquisition-related costs	$	85	$	—	$	—		$	64	$	149
Employee termination costs	7,657		824		266			—		8,747
Facility closures/consolidation	3		69		24			—		96
Other charges (reversals)	—		—		(67		)	495		428

Total expensed	$	7,745	$	893	$	223		$	559	$	9,420

	Three Months Ended December 31, 2017
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division		Corporate		Total
Impairment charges	$	1,490	$	579	$	1,075	$	—	$	3,144
Acquisition-related costs	—		—		—		361		361
Employee termination costs	90		—		146		—		236
Facility closures/consolidation	11		243		—		—		254
Litigation and accrued settlement costs	—		4,200		—		102		4,302

Total expensed	$	1,591	$	5,022	$	1,221	$	463	$	8,297

	Six Months Ended December 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate		Total
Impairment charges	$	5,332	$	86	$	—		$		$	5,418
Acquisition-related costs	810		—		—			3,213		4,023
Employee termination costs	7,807		1,080		331			—		9,218
Facility closures/consolidation	179		69		24			—		272
Other charges (reversals)	7		—		(67		)	506		446

Total expensed	$	14,135	$	1,235	$	288		$	3,719	$	19,377

	Six Months Ended December 31, 2017
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division		Corporate		Total
Impairment charges	$	1,490	$	579	$	1,075	$	—	$	3,144
Acquisition-related costs	—		—		—		1,181		1,181
Employee termination costs	330		—		146		—		476
Facility closures/consolidation	81		243		—		—		324
Litigation and accrued settlement costs	—		4,200		—		102		4,302

Total expensed	$	1,901	$	5,022	$	1,221	$	1,283	$	9,427

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

	Acquisition- related Costs			Employee Termination Costs			Facility Closure/ Consolidation Cost			Charges Related to Litigation			Total
Balance as of June 30, 2017	$	—		$	175		$	291		$	—		$	466
Restructuring and other charges	1,181			476			324			4,302			6,283
Payments and other adjustments	(1,181		)	(563		)	(300		)	(102		)	(2,146		)
Balance as of December 31, 2017	$	—		$	88		$	315		$	4,200		$	4,603

Borrowings

6 Months Ended

Dec. 31, 2017

Borrowings

Borrowings

6. Borrowings

Revolving Credit Facility

In December 2016, we entered into an amendment to our revolving credit facility, which, among other things, increased the aggregate committed amount available to us from $450 million to $525 million and extended the maturity date to December 2021. The credit facility includes a $300 million sub-limit for letters of credit. Under certain circumstances, we have the ability to increase the facility by the greater of $250 million or such amount as would not cause our secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR plus a margin of 1.50% as of December 31, 2017, but this margin can range from 1.25% to 2.0% based on our consolidated net leverage ratio as defined in the credit facility. Letters of credit reduce the amount available to borrow by their face value. The unused portion of the facility bears a commitment fee of 0.20% as of December 31, 2017, but this fee can range from 0.20% to 0.30% based on our consolidated net leverage ratio as defined in the credit facility. Our borrowings under the credit agreement are guaranteed by certain of our U.S. based subsidiaries and are secured by substantially all of our and certain subsidiaries’ assets. The agreement contains various representations and warranties, affirmative, negative and financial covenants and conditions of default. As of December 31, 2017, there was $195.0 million of borrowings outstanding under the revolving credit facility and $36.8 million outstanding under the letters of credit sub facility. The amount available to borrow under the credit facility as of December 31, 2017 was $293.2 million. Under the terms of the revolving credit facility, loan amounts may be borrowed, repaid and re-borrowed during the term. Although the principal amount of each revolving loan is due and payable in full on the maturity date, we have the right to repay each revolving loan in whole or in part from time to time without penalty. It is our practice to routinely borrow and repay several times per year under this revolving facility. Therefore, borrowings under the credit facility are included in current liabilities. As of December 31, 2017, we are in compliance with all covenants under this credit facility.

1.25% Convertible Senior Notes Due 2022

In February 2017, we issued $287.5 million of 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 maturity for the payment of principal is September 1, 2022. The Notes bear interest at the rate of 1.25% and are payable in cash semiannually in arrears on each March 1 and September 1. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries, as well as any of our existing and future indebtedness that may be guaranteed by our subsidiaries to the extent of such guarantee (including the guarantees of certain of our subsidiaries under our existing revolving credit facility).

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

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

Pursuant to ASC 470-20, we allocated the $287.5 million gross proceeds of the Notes between liability and equity components. The initial $242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The initial $45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $7.7 million were allocated between debt ($6.5 million) and equity ($1.2 million) components with the portion allocated to the debt presented as an offset against long term debt in the consolidated balance sheet and being amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for three and six months ended December 31, 2017 was $2.7 million and $6.1 million, respectively, which consists of $0.9 million and $1.8 million of contractual interest expense, $1.8 million and $3.7 million of debt discount amortization and $0.3 million and $0.6 million of amortization of debt issuance costs. As of December 31, 2017, the unamortized debt discount was $38.9 million, which is being amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.50%. The unamortized debt issuance cost of $5.5 million as of December 31, 2017 is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes. Based on our December 29, 2017 stock price of $64.38 per share, the “if-converted” value of the Notes did not exceed the principal amount.

Other Borrowings

Several of our foreign subsidiaries maintain bank lines-of-credit, denominated in local currencies and U.S. dollars, primarily for the issuance of letters-of-credit. As of December 31, 2017, $61.9 million was outstanding under these letter-of-credit facilities. As of Decmber 31, 2017, the total amount available under these credit facilities was $12.9 million.

In September 2012, we entered into a seven year term loan agreement for $11.1 million to fund the acquisition of land and a building in the state of Washington. The 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, we 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, 2017			December 31, 2017
1.25% convertible notes due 2022:
Principal amount	$	287,500		$	287,500
Unamortized discount	(42,602		)	(38,929		)
Unamortized debt issuance costs	(6,073		)	(5,485		)

1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs	238,825			243,086
Term loans	3,700			2,907
Other long-term debt	1,621			1,467

	244,146			247,460
Less current portion of long-term debt	(2,396		)	(2,279		)

Long-term portion of debt	$	241,750		$	245,181

Stockholders' Equity

6 Months Ended

Dec. 31, 2017

Stockholders' Equity

Stockholders' Equity

7. Stockholders’ Equity

Stock-based Compensation

On December 11, 2017, our stockholders approved our Amended and Restated 2012 Incentive Award Plan (the “2012 Plan”), which, among other things, increased the maximum number of shares of Common Stock which may be issued under such plan by 1.6 million shares. As of December 31, 2017, we maintained the following share based employee compensation plans: the 2012 Plan and the Amended and Restated 2006 Equity Participation Plan (“2006 Plan”). No further grants may be made under the 2006 Plan. In addition, pursuant to the acquisition of AS&E, we 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”.

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

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Cost of goods sold	$	404		$	247		$	699		$	487
Selling, general and administrative	5,222			5,849			10,282			10,960
Research and development	121			157			176			293
Restructuring	2,482			—			2,902			—

Stock-based compensation expense before taxes	$	8,229		$	6,253		$	14,059		$	11,740
Less: related income tax benefit	(3,206		)	(1,935		)	(5,450		)	(3,627		)

Stock-based compensation expense, net of estimated taxes	$	5,023		$	4,318		$	8,609		$	8,113

As of December 31, 2017, total unrecognized compensation cost related to share based compensation grants were estimated at $0.8 million for stock options and $25.9 million for RSUs under the OSI Plans. We expect to recognize these costs over a weighted average period of 2.2 years with respect to the stock options and 1.9 years for grants of RSUs.

The following summarizes stock option activity during the six months ended December 31, 2017:

	Number of Options		Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2017	780,671		$	30.00
Granted	25,379		$	85.83
Exercised	(81,755	)	$	22.84
Expired or forfeited	(1,904	)	$	63.33

Outstanding at December 31, 2017	722,391		$	32.68	3.3 years	$	23,985

Exercisable at December 31, 2017	674,129		$	29.30	2.9 years	$	23,983

The following summarizes RSU award activity during the six months ended December 31, 2017:

	Shares		Weighted- Average Fair Value
Nonvested at June 30, 2017	611,687		$	65.85
Granted	348,187		74.14
Vested	(400,338	)	65.26
Forfeited	(10,596	)	68.20

Nonvested at December 31, 2017	548,940		$	71.50

As of December 31, 2017, there were approximately 2.3 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.

We granted 155,488 and 117,346 performance-based RSUs during the six months ended December 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 of up to 1.0 million shares. During the six months ended December 31, 2017, no shares were repurchased under the program, which leaves available 872,481 shares under the program. This program does not expire unless our Board of Directors acts to terminate the program. Upon repurchase, the shares are restored to the status of authorized but unissued, and we record them as a reduction in the number of shares of Common Stock issued and outstanding in the consolidated financial statements.

Retirement Benefit Plans

6 Months Ended

Dec. 31, 2017

Retirement Benefit Plans

Retirement Benefit Plans

8. Retirement Benefit Plans

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

	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2017		2016		2017
Service cost	$	224	$	216	$	448	$	432
Interest cost	7		8		14		16
Amortization of prior service cost	70		70		140		140

Net periodic pension expense	$	301	$	294	$	602	$	588

For the three months ended December 31, 2016 and 2017, we made contributions of $1.0 million and $0.3 million, respectively, to these defined benefit plans. For each of the six months ended December 31, 2016 and 2017, we made contributions of $1.0 million to these defined benefit plans.

In addition, we maintain various defined contribution plans. For the three months ended December 31, 2016 and 2017, we made contributions of $1.0 million and $1.4 million, respectively, to these defined contribution plans. For the six months ended December 31, 2016 and 2017, we made contributions of $2.2 million and $3.0 million, respectively, to these defined contribution plans.

Commitments and Contingencies

6 Months Ended

Dec. 31, 2017

Commitments and Contingencies

Commitments and Contingencies

9. Commitments and Contingencies

Contingent Acquisition Obligations

Under the terms and conditions of the purchase agreements associated with certain acquisitions, we may be obligated to make additional payments based on the achievement of certain sales or profitability milestones by the acquired operations. The maximum amount of such future payments under arrangements with contingent consideration caps is $26.0 million as of December 31, 2017. In addition, we are required to make royalty payments through 2022 based on the license of, or sales of products containing, the technology of CXR Limited, a company acquired in 2004.

For acquisitions that occurred through the end of fiscal year 2009, we account for such contingent payments as an addition to the purchase price of the acquired business. For acquisitions after fiscal 2009, pursuant to Financial Accounting Standard 141R, which was codified into ASC 805, the estimated fair value of these obligations is recorded as a liability at the time of the acquisition with subsequent revisions recorded in Selling, general and administrative expense in the consolidated financial statements. The estimated fair value measurements of contingent earn-out obligations are primarily based on unobservable inputs, which may include projected revenues, gross margins, operating income, 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 provides a rollforward of the contingent consideration liability, which is included in Other accrued expenses and current liabilities, and Other long-term liabilities in the consolidated balance sheets:

Beginning fair value, June 30, 2017	$	11,840
Additions	3,519
Change in fair value	(156		)
Payments	(482		)

Ending fair value, December 31, 2017	$	14,721

Environmental Contingencies

We are subject to various environmental laws. Our practice is to conduct appropriate environmental investigations at our manufacturing facilities in North America, Asia Pacific, and Europe, and, to the extent practicable, on certain new properties in order to identify, as of the date of such investigation, potential areas of environmental concern related to past and present activities or from nearby operations. In certain cases, we have conducted further environmental assessments consisting of soil and groundwater testing and other investigations deemed appropriate by independent environmental consultants.

We continue to investigate contamination of the soil and groundwater beneath the Hawthorne, California facility that resulted from unspecified on and off site releases we believe occurred prior to our occupancy. We believe the releases are of a historical nature and not uncommon to the region in general. We continue to take voluntary actions, in cooperation with the local governing agency, to fully investigate the site in order to develop appropriate remedial actions.

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

Indemnifications and Certain Employment-Related Contingencies

In the normal course of business, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations, warranties or covenants, or intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our directors and certain of our officers. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances that may be involved in each particular claim. While we maintain directors and officers liability insurance coverage, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise. We have not recorded any liability for costs related to contingent indemnification obligations as of December 31, 2017.

On December 31, 2017, we and Deepak Chopra, our Chief Executive Officer, entered into an amendment to Mr. Chopra’s employment agreement that, among other things, provides for a $13.5 million bonus payment to Mr. Chopra on or within 45 days of January 1, 2024 contingent upon Mr. Chopra’s continued employment with us through that date, subject to accelerated payout terms in the event of Mr. Chopra’s death or disability after January 1, 2019. The bonus is recorded in the financial statements over the remaining term of the employment agreement.

Product Warranties

We offer our customers warranties on many of the products that we sell. These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. We periodically adjust this provision based on historical experience and anticipated expenses. We charge actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. The warranty provision is included in the Other accrued expenses and current liabilities in the consolidated balance sheets.

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

	Six Months Ended December 31,
	2016			2017
Balance at beginning of period	$	15,948		$	15,178
Additions and adjustments	5,077			7,184
Reductions for warranty repair costs	(2,752		)	(3,619		)

Balance at end of period	$	18,273		$	18,743

Legal Proceedings

In December 2017, a short seller released a report regarding our compliance with the Foreign Corrupt Practices Act (FCPA). Following that report, we and certain of our executive officers have been named as defendants in several lawsuits in the United States District Court for the Central District of California that were filed in December 2017. Each of the complaints closely tracks the allegations set forth in the short seller’s report. All of these actions allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, relating to certain of our filings with the SEC, and seek damages and other relief based upon the allegations in the complaints. The matters are captioned Longo v. OSI Systems, Inc. et al., No. 17-cv-08841, Doyel v. OSI Systems, Inc. et al., No. 17-cv-08855, and Kerbs v. OSI Systems, Inc. et al., No. 17-cv-08991. We believe that these actions are without merit and intend to defend them vigorously, and we expect to incur costs associated with defending against these actions. At this early stage of the litigations, the ultimate outcomes are uncertain and we cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on our financial statements.

Following the short seller report, the Securities and Exchange Commission (SEC) commenced an investigation into our compliance with the FCPA. The U.S. Attorney’s Office for the Central District of California (DOJ) has also said it intends to request information regarding FCPA compliance matters. The SEC and DOJ are also conducting an investigation of trading in our securities, and have subpoenaed information regarding trading by executives, directors and employees, as well as our operations and disclosures in and around the time of certain trades. In relation to the matters that are the subject of the trading-related investigation, we have taken action with respect to a senior-level employee. At this time, we are unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these investigations, or any penalties or remedial measures these agencies may seek.

Our 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 prior to the date of acquisition. 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 we have been incurring legal costs and expect to incur further legal costs in connection with the investigation. We 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.

We are involved in various other claims and legal proceedings arising in the ordinary course of business. In our opinion after consultation with legal counsel, the ultimate disposition of such proceedings is not likely to have a material adverse effect on our business, financial condition, results of operations or cash flows. We have not accrued for loss contingencies relating to such matters because we believe 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 our company, the impact on our business, financial condition, results of operations and cash flow could be material.

Income Taxes

6 Months Ended

Dec. 31, 2017

Income Taxes

Income Taxes

10. Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act included significant changes to existing tax law, including a reduction to the U.S. federal corporate income tax rate from 35% to 21%, a one-time repatriation tax on deferred foreign income (“Transition Tax”), deductions, credits and business-related exclusions.

The reduction to the U.S. federal corporate income tax rate from 35% to 21% is effective January 1, 2018. When a U.S. federal tax rate change occurs during a fiscal year, taxpayers are required to compute a weighted daily average rate for the fiscal year of enactment. As a result of the Tax Act, we calculated a U.S. federal statutory corporate income tax rate of 28.1% for the year ending June 30, 2018 and applied this rate in computing the second quarter of fiscal year 2018 income tax provision. We expect the U.S. federal statutory rate to be 21% for fiscal years beginning after June 30, 2018.

On December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”). SAB 118 expresses views of the SEC regarding application of ASC Topic 740, Income Taxes in the reporting period that includes the enactment date of the Tax Act. The SEC staff issuing SAB 118 recognized that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Tax Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year.

Accordingly, our income tax provision as of December 31, 2017 reflects the following discrete provisional items resulting directly from the enactment of the Tax Act.

	Three Months Ended December 31, 2017
Transition Tax	$	64,573
Net impact on U.S. deferred tax assets and liabilities	(8,361		)

Net discrete impacts of the enactment of the Tax Act	$	56,212

Given the Tax Act’s significant changes, we are in the process of evaluating our current assertions with respect to the indefinite reinvestment of foreign earnings. As a result of the Tax Act, we expect to repatriate certain earnings which will be subject to withholding taxes. These additional withholding taxes are being recorded as an additional $15 million deferred tax liability (included in the table above) associated with the basis difference in such jurisdictions. The uncertainty related to the taxation of such withholding taxes on distributions under the Tax Act and finalization of the cash repatriation plan makes the deferred tax liability a provisional amount. Available U.S. net operating loss, foreign tax credits, and research and experimentation credits are expected to significantly offset the Transition Tax on net foreign earnings, which is payable over eight years.

Within the calculation of our annual effective tax rate we have used assumptions and estimates. The changes included in the Tax Act are broad and complex. The final impacts of the Tax Act may differ materially from such estimates due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions arising because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act or any updates or changes to estimates we utilized to calculate such impacts. We will continue to analyze additional information and guidance related to certain aspects of the Tax Act, including the determination of the net deferred tax assets subject to the remeasurement and related impacts to the assessment of valuation allowance. For example, we anticipate that the state jurisdictions will continue to determine and announce their conformity to the Tax Act which could have an impact on the annual effective tax rate.

Our tax returns are subject to audits by U.S. federal, state, and foreign tax authorities, and these audits are at various stages of completion at any given time. Reviews of tax matters by authorities and lapses of the applicable statutes of limitations may result in changes to tax expense. Fiscal years remaining open to examination in significant foreign jurisdictions include 2008 and thereafter.

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate, and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, our tax expense can be impacted by changes in tax rates or laws, such as the Tax Act, the finalization of tax audits and reviews, and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

Segment Information

6 Months Ended

Dec. 31, 2017

Segment Information

Segment Information

11. Segment Information

We have determined that we operate in three identifiable industry segments: (a) security and inspection systems (Security division), (b) medical monitoring and anesthesia systems (Healthcare division) and (c) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division). We also have a corporate segment (Corporate) that includes executive compensation and certain other general and administrative expenses; expenses related to stock issuances and legal, audit and other professional service fees not allocated to 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, 2017.

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

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Revenues (1) — by Segment:
Security division	$	139,504		$	172,269		$	263,213		$	334,514
Healthcare division	51,110			52,506			96,760			98,035
Optoelectronics and Manufacturing division, including intersegment revenues	60,602			63,886			117,556			122,812
Intersegment revenues elimination	(8,668		)	(11,133		)	(14,126		)	(20,700		)

Total	$	242,548		$	277,528		$	463,403		$	534,661

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Operating income (loss) — by Segment:
Security division	$	9,130		$	22,471		$	18,480		$	45,164
Healthcare division	801			603			(2,463		)	1,450
Optoelectronics and Manufacturing division	5,525			4,502			10,175			9,677
Corporate	(6,802		)	(9,118		)	(15,815		)	(17,871		)
Eliminations (2)	39			(311		)	415			(879		)

Total	$	8,693		$	18,147		$	10,792		$	37,541

	June 30, 2017			December 31, 2017
Assets — by Segment:
Security division	$	785,230		$	917,953
Healthcare division	186,021			170,495
Optoelectronics and Manufacturing division	196,567			196,208
Corporate	64,959			65,672
Eliminations (2)	(2,690		)	(3,569		)

Total	$	1,230,087		1,346,759

(1)

For each of the three months ended December 31, 2016 and 2017, one customer, SAT in Mexico, accounted for 12% of total net revenues. For the six months ended December 31, 2016 and 2017, SAT accounted for 13% 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.

Basis of Presentation (Policies)

6 Months Ended

Dec. 31, 2017

Basis of Presentation

Description of Business

Basis of Presentation

Use of Estimates

Per Share Computations

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method. Stock options and stock awards to purchase 0.1 million shares of common stock for each of the six months ended December 31, 2016 and December 31, 2017, respectively, were excluded from the calculation because to include such options and awards would have been antidilutive. Stock options and stock awards to purchase 0.8 million shares of common stock for the three months ended December 31, 2017 were excluded from the calculation because to include such options and awards would be antidilutive. During the three months ended December 31, 2016, the number of stock options and stock awards excluded from the calculation because they were antidilutive was de minimis. For each of the periods presented where we reported a net loss, the effect off all potentially dilutive securities would be antidilutive, and as a result, diluted net loss per common share is the same as basic net loss per common share. Prior to our adoption of ASU 2016-09 in the fourth quarter of fiscal 2017, we included tax benefits in assessing whether equity awards were dilutive and in our calculations of weighted average diluted shares 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 on diluted earnings per share until the average price of our common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion.

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

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2017			2016		2017
Net income (loss) available to common stockholders	$	4,833	$	(46,951	)	$	5,510	$	(36,794	)


Weighted average shares outstanding—basic	19,036		18,971			18,989		18,874
Dilutive effect of equity awards	617		—			631		—

Weighted average shares outstanding—diluted	19,653		18,971			19,620		18,874


Basic earnings (loss) per share	$	0.25	$	(2.47	)	$	0.29	$	(1.95	)

Diluted earnings (loss) per share	$	0.25	$	(2.47	)	$	0.28	$	(1.95	)

Cash Equivalents

We consider all highly liquid investments purchased with maturities of three months or less as of the acquisition date to be cash equivalents.

Our cash and cash equivalents totaled $212.0 million at December 31, 2017. Nearly all of this amount was held by our foreign subsidiaries located primarily in Mexico,Singapore, Malaysia and the United Kingdom, and to a lesser extent in India, Canada, Germany and China among others.

Fair Value of Financial Instruments

	June 30, 2017								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	254	$	—	$	—	$	254	$	284	$	—	$	—	$	284
Insurance company contracts	—		26,940		—		26,940		—		30,941		—		30,941
Interest rate swap agreement	—		20		—		20		—		21		—		21

Total assets	$	254	$	26,960	$	—	$	27,214	$	284	$	30,962	$	—	$	31,246

Liabilities—contingent payment obligations	$	—	$	—	$	11,840	$	11,840	$	—	$	—	$	14,721	$	14,721

Derivative Instruments and Hedging Activity

Property and Equipment

Goodwill Impairment

Revenue Recognition

New Accounting Pronouncements and Policies

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) kthe 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 for fiscal years beginning after December 15, 2016, including interim reporting periods within such fiscal years. We are currently evaluating our business and contracts to determine any changes to accounting policies or processes necessary to adopt the requirements of the new standard and are in the process of selecting a transition method. Our preliminary evaluation of the impact of this ASU is that it will not have a material impact on our financial condition or results of operations. However, the adoption of this ASU will result in expanded disclosures.

U.S. Tax Reform

Basis of Presentation (Tables)

6 Months Ended

Dec. 31, 2017

Basis of Presentation

Schedule of computation of basic and diluted earnings (loss) per share

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

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2017			2016		2017
Net income (loss) available to common stockholders	$	4,833	$	(46,951	)	$	5,510	$	(36,794	)


Weighted average shares outstanding—basic	19,036		18,971			18,989		18,874
Dilutive effect of equity awards	617		—			631		—

Weighted average shares outstanding—diluted	19,653		18,971			19,620		18,874


Basic earnings (loss) per share	$	0.25	$	(2.47	)	$	0.29	$	(1.95	)

Diluted earnings per (loss) share	$	0.25	$	(2.47	)	$	0.28	$	(1.95	)

Summary of fair values of financial assets and liabilities

The fair values of our financial assets and liabilities as of June 30, 2017 and December 31, 2017 are categorized as follows (in thousands):

	June 30, 2017								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Equity securities	$	254	$	—	$	—	$	254	$	284	$	—	$	—	$	284
Insurance company contracts	—		26,940		—		26,940		—		30,941		—		30,941
Interest rate swap agreement	—		20		—		20		—		21		—		21

Total assets	$	254	$	26,960	$	—	$	27,214	$	284	$	30,962	$	—	$	31,246

Liabilities—contingent payment obligations	$	—	$	—	$	11,840	$	11,840	$	—	$	—	$	14,721	$	14,721

Business Combinations (Tables) - Explosive Trace Detection Business ("ETD")

6 Months Ended

Dec. 31, 2017

Business Combinations

Schedule of assets acquired and liabilities assumed

Further potential adjustments made could be material in relation to these preliminary values below (amounts in thousands):

Cash and cash equivalents	$	4
Accounts receivable	12,113
Inventories	12,217
Property and equipment	1,599
Intangible assets	30,040
Other long-term assets	301
Accounts payable	(4,784		)
Accrued payroll and related expenses	(2,339		)
Deferred revenues — current	(2,011		)
Accrued warranties	(1,629		)
Other accrued expenses and current liabilities	(1,376		)

Net assets acquired	44,135
Goodwill	36,332

Total consideration	$	80,467

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

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

	Weighted
	Average	Fair
	Lives	Value
Amortizable assets:
Developed technology	10 years	$	13,220
Customer relationships	8 years	12,920

Backlog	2 years	3,500
Total amortizable assets		29,640
Non-amortizable asset — IPR&D		400

Total intangible assets		$	30,040

Unaudited pro forma results of operations assuming the ETD acquisition had occurred on July 1, 2016

The following unaudited pro forma results of operations assume the ETD acquisition had occurred on July 1, 2016 (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2017		2016		2017
Revenues	$	266,167	$	277,528	$	502,918	$	534,661

Income from operations	$	13,328	$	18,147	$	17,769	$	37,541

Balance Sheet Details (Tables)

6 Months Ended

Dec. 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, 2017			December 31, 2017

Accounts receivable	$	216,089		$	219,462
Less allowance for doubtful accounts	(9,563		)	(11,008		)

Total	$	206,526		$	208,454

	June 30, 2017		December 31, 2017

Raw materials	$	129,645	$	140,275
Work-in-process	65,454		77,922
Finished goods	53,411		62,836

Total	$	248,510	$	281,033

	Estimated
	Useful	June 30,			December 31,
	Lives	2017			2017
Land	N/A	$	14,212		$	17,129
Buildings, civil works and improvements	5 - 40 years	157,123			179,643
Leasehold improvements	1 - 12 years	9,025			9,308
Equipment and tooling	3 - 10 years	166,991			170,372
Furniture and fixtures	3 - 13 years	3,371			3,427
Computer equipment	3 - 5 years	17,991			19,054
Computer software	3 - 10 years	17,303			17,844
Computer software implementation in process	N/A	2,590			3,676
Construction in process	N/A	1,049			699

Total		389,655			421,152
Less accumulated depreciation and amortization		(248,116		)	(277,882		)

Property and equipment, net		$	141,539		$	143,270

Goodwill and Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets

Schedule of changes in carrying value of goodwill

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

	Security		Healthcare		Optoelectronics and Manufacturing		Consolidated
Balance as of June 30, 2017	$	155,083	$	40,129	$	46,917	$	242,129
Goodwill acquired or adjusted during the period	42,893		—		50		42,943
Foreign currency translation adjustment	148		107		553		808

Balance as of December 31, 2017	$	198,124	$	40,236	$	47,520	$	285,880

Schedule of intangible assets

Intangible assets consisted of the following (in thousands):

		June 30, 2017							December 31, 2017
	Weighted	Gross							Gross
	Average	Carrying		Accumulated			Intangibles		Carrying		Accumulated			Intangibles
	Lives	Value		Amortization			Net		Value		Amortization			Net
Amortizable assets:
Software development costs	9 years	$	26,753	$	(6,291	)	$	20,462	$	27,102	$	(7,674	)	$	19,428
Patents	20 years	8,386		(1,676		)	6,710		8,590		(1,518		)	7,072
Developed technology	10 years	37,446		(5,530		)	31,916		49,010		(7,431		)	41,579
Customer relationships/backlog	7 years	38,289		(7,667		)	30,622		54,554		(11,675		)	42,879

Total amortizable assets		110,874		(21,164		)	89,710		139,256		(28,298		)	110,958
Non-amortizable assets:
Trademarks and trade names		25,540		—			25,540		24,546		—			24,546
IPR&D		3,200		—			3,200		3,600		—			3,600

Total intangible assets		$	139,614	$	(21,164	)	$	118,450	$	167,402	$	(28,298	)	$	139,104

Schedule of estimated future amortization expense

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

2018 (remaining 6 months)	$	9,784
2019	19,577
2020	17,302
2021	16,756
2022	12,823
2023	11,745
2024 and thereafter, including assets that have not yet begun to be amortized	22,971

Total	$	110,958

Impairment, restructuring and other charges (Tables)

6 Months Ended

Dec. 31, 2017

Impairment, restructuring and other charges

Summary of the impairment, restructuring and other charges

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

	Three Months Ended December 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate		Total
Acquisition-related costs	$	85	$	—	$	—		$	64	$	149
Employee termination costs	7,657		824		266			—		8,747
Facility closures/consolidation	3		69		24			—		96
Other charges (reversals)	—		—		(67		)	495		428

Total expensed	$	7,745	$	893	$	223		$	559	$	9,420

	Three Months Ended December 31, 2017
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division		Corporate		Total
Impairment charges	$	1,490	$	579	$	1,075	$	—	$	3,144
Acquisition-related costs	—		—		—		361		361
Employee termination costs	90		—		146		—		236
Facility closures/consolidation	11		243		—		—		254
Litigation and accrued settlement costs	—		4,200		—		102		4,302

Total expensed	$	1,591	$	5,022	$	1,221	$	463	$	8,297

	Six Months Ended December 31, 2016
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division			Corporate		Total
Impairment charges	$	5,332	$	86	$	—		$		$	5,418
Acquisition-related costs	810		—		—			3,213		4,023
Employee termination costs	7,807		1,080		331			—		9,218
Facility closures/consolidation	179		69		24			—		272
Other charges (reversals)	7		—		(67		)	506		446

Total expensed	$	14,135	$	1,235	$	288		$	3,719	$	19,377

	Six Months Ended December 31, 2017
	Security Division		Healthcare Division		Optoelectronics and Manufacturing Division		Corporate		Total
Impairment charges	$	1,490	$	579	$	1,075	$	—	$	3,144
Acquisition-related costs	—		—		—		1,181		1,181
Employee termination costs	330		—		146		—		476
Facility closures/consolidation	81		243		—		—		324
Litigation and accrued settlement costs	—		4,200		—		102		4,302

Total expensed	$	1,901	$	5,022	$	1,221	$	1,283	$	9,427

Schedule of changes in the accrual for restructuring and other charges

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

	Acquisition- related Costs			Employee Termination Costs			Facility Closure/ Consolidation Cost			Charges Related to Litigation			Total
Balance as of June 30, 2017	$	—		$	175		$	291		$	—		$	466
Restructuring and other charges	1,181			476			324			4,302			6,283
Payments and other adjustments	(1,181		)	(563		)	(300		)	(102		)	(2,146		)
Balance as of December 31, 2017	$	—		$	88		$	315		$	4,200		$	4,603

Borrowings (Tables)

6 Months Ended

Dec. 31, 2017

Borrowings

Schedule of long-term debt

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

	June 30, 2017			December 31, 2017
1.25% convertible notes due 2022:
Principal amount	$	287,500		$	287,500
Unamortized discount	(42,602		)	(38,929		)
Unamortized debt issuance costs	(6,073		)	(5,485		)

1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs	238,825			243,086
Term loans	3,700			2,907
Other long-term debt	1,621			1,467

	244,146			247,460
Less current portion of long-term debt	(2,396		)	(2,279		)

Long-term portion of debt	$	241,750		$	245,181

- 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=84159872&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=75038535&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=84159872&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=84159872&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=84159872&loc=d3e21521-112644

+ Details

Stockholders' Equity (Tables)

6 Months Ended

Dec. 31, 2017

Stockholders' Equity

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

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

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Cost of goods sold	$	404		$	247		$	699		$	487
Selling, general and administrative	5,222			5,849			10,282			10,960
Research and development	121			157			176			293
Restructuring	2,482			—			2,902			—

Stock-based compensation expense before taxes	$	8,229		$	6,253		$	14,059		$	11,740
Less: related income tax benefit	(3,206		)	(1,935		)	(5,450		)	(3,627		)

Stock-based compensation expense, net of estimated taxes	$	5,023		$	4,318		$	8,609		$	8,113

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, 2017	780,671		$	30.00
Granted	25,379		$	85.83
Exercised	(81,755	)	$	22.84
Expired or forfeited	(1,904	)	$	63.33

Outstanding at December 31, 2017	722,391		$	32.68	3.3 years	$	23,985

Exercisable at December 31, 2017	674,129		$	29.30	2.9 years	$	23,983

Summary of RSU award activity

	Shares		Weighted- Average Fair Value
Nonvested at June 30, 2017	611,687		$	65.85
Granted	348,187		74.14
Vested	(400,338	)	65.26
Forfeited	(10,596	)	68.20

Nonvested at December 31, 2017	548,940		$	71.50

Retirement Benefit Plans (Tables)

6 Months Ended

Dec. 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 December 31,				Six Months Ended December 31,
	2016		2017		2016		2017
Service cost	$	224	$	216	$	448	$	432
Interest cost	7		8		14		16
Amortization of prior service cost	70		70		140		140

Net periodic pension expense	$	301	$	294	$	602	$	588

Commitments and Contingencies (Tables)

6 Months Ended

Dec. 31, 2017

Commitments and Contingencies

Schedule of reconciles the contingent earnout liabilities

Beginning fair value, June 30, 2017	$	11,840
Additions	3,519
Changes in fair value	(156		)
Payments	(482		)

Ending fair value, December 31, 2017	$	14,721

Schedule of changes in warranty provisions

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

	Six Months Ended December 31,
	2016			2017
Balance at beginning of period	$	15,948		$	15,178
Additions and adjustments	5,077			7,184
Reductions for warranty repair costs	(2,752		)	(3,619		)

Balance at end of period	$	18,273		$	18,743

Income Taxes (Tables)

6 Months Ended

Dec. 31, 2017

Income Taxes

Schedule of discrete provisional items resulting directly from the enactment of the Tax Act

	Three Months Ended December 31, 2017
Transition Tax	$	64,573
Net impact on U.S. deferred tax assets and liabilities	(8,361		)

Net discrete impacts of the enactment of the Tax Act	$	56,212

Segment Information (Tables)

6 Months Ended

Dec. 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 December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Revenues (1) — by Segment:
Security division	$	139,504		$	172,269		$	263,213		$	334,514
Healthcare division	51,110			52,506			96,760			98,035
Optoelectronics and Manufacturing division, including intersegment revenues	60,602			63,886			117,556			122,812
Intersegment revenues elimination	(8,668		)	(11,133		)	(14,126		)	(20,700		)

Total	$	242,548		$	277,528		$	463,403		$	534,661

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2017			2016			2017
Operating income (loss) — by Segment:
Security division	$	9,130		$	22,471		$	18,480		$	45,164
Healthcare division	801			603			(2,463		)	1,450
Optoelectronics and Manufacturing division	5,525			4,502			10,175			9,677
Corporate	(6,802		)	(9,118		)	(15,815		)	(17,871		)
Eliminations (2)	39			(311		)	415			(879		)

Total	$	8,693		$	18,147		$	10,792		$	37,541

	June 30, 2017			December 31, 2017
Assets — by Segment:
Security division	$	785,230		$	917,953
Healthcare division	186,021			170,495
Optoelectronics and Manufacturing division	196,567			196,208
Corporate	64,959			65,672
Eliminations (2)	(2,690		)	(3,569		)

Total	$	1,230,087		1,346,759

(1)

(2)

Basis of Presentation - Description of Business (Details)	6 Months Ended
	Dec. 31, 2017 segment
Description of Business
Number of reporting segments	3

Basis of Presentation - Per Share Computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Feb. 28, 2017
Computation of basic and diluted earnings per share
Net income (loss) available to common stockholders	$ (46,951)	$ 4,833	$ (36,794)	$ 5,510
Weighted average shares outstanding-basic	18,971	19,036	18,874	18,989
Dilutive effect of equity awards		617		631
Weighted average shares outstanding-diluted	18,971	19,653	18,874	19,620
Basic earnings (loss) per share	$ (2.47)	$ 0.25	$ (1.95)	$ 0.29
Diluted earnings (loss) per share	$ (2.47)	$ 0.25	$ (1.95)	$ 0.28
Shares excluded from computation of diluted net income per share
Stock options excluded from computation due to antidilutive effect (in shares)	100			100
1.25% Convertible Senior Notes Due 2022
Per Share Computations
Interest rate (as a percentage)	1.25%		1.25%		1.25%

Basis of Presentation - Cash Equivalents (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Cash Equivalents
Cash, cash equivalents, and investments	$ 211,973	$ 169,650	$ 138,248	$ 104,370

Basis of Presentation - Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Jun. 30, 2017
Fair Value of Financial Instruments
Liabilities - contingent payment obligations	$ 14,721	$ 11,840
Recurring
Fair Value of Financial Instruments
Equity securities	284	254
Insurance company contracts	30,941	26,940
Interest rate swap agreement	21	20
Total assets	31,246	27,214
Liabilities - contingent payment obligations	14,721	11,840
Recurring \| Level 1
Fair Value of Financial Instruments
Equity securities	284	254
Total assets	284	254
Recurring \| Level 2
Fair Value of Financial Instruments
Insurance company contracts	30,941	26,940
Interest rate swap agreement	21	20
Total assets	30,962	26,960
Recurring \| Level 3
Fair Value of Financial Instruments
Total assets	0
Liabilities - contingent payment obligations	$ 14,721	$ 11,840

Basis of Presentation - Goodwill Impairment (Details)	6 Months Ended
Basis of Presentation - Goodwill Impairment (Details)	Dec. 31, 2017 segment
Description of Business
Number of reporting segments	3

Basis of Presentation - US Tax Reform (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended	12 Months Ended
	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2017	Jun. 30, 2018
Basis of Presentation
One-time charge effect of Tax Act		$ 56,212
Statutory tax rate (as a percent)	21.00%		35.00%	28.10%

Business Combinations - Explosive Trace Detection (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Allocation of total consideration to assets acquired and liabilities assumed
Goodwill	$ 285,880	$ 242,129
Explosive Trace Detection Business ("ETD")
Business Combinations
Increase in goodwill	2,500
Allocation of total consideration to assets acquired and liabilities assumed
Cash and cash equivalents	4
Accounts receivable	12,113
Inventories	12,217
Property and equipment	1,599
Intangible assets	30,040
Other long term assets	301
Accounts payable	(4,784)
Accrued payroll and related expenses	(2,339)
Deferred revenues - current	(2,011)
Accrued warranties	(1,629)
Other accrued expenses and current liabilities	(1,376)
Net assets acquired	44,135
Goodwill	36,332
Total consideration	$ 80,467

Business Combinations - Intangible Assets (Details) - Explosive Trace Detection Business ("ETD") $ in Thousands	6 Months Ended
	Dec. 31, 2017 USD ($)
Business Combinations
Amortizable assets	$ 29,640
Total intangible assets	30,040
IPR&D
Business Combinations
Non-amortizable asset	$ 400
Developed technology
Business Combinations
Weighted Average Lives (in years)	10 years
Amortizable assets	$ 13,220
Customer relationships
Business Combinations
Weighted Average Lives (in years)	8 years
Amortizable assets	$ 12,920
Backlog
Business Combinations
Weighted Average Lives (in years)	2 years
Amortizable assets	$ 3,500

Business Combinations - Revenue and Income (Details) - Explosive Trace Detection Business ("ETD") - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Business Combinations
Amount included in revenue	$ 19,700		$ 41,400
Amount included in pre-tax income	2,600		$ 6,600
Pro forma results of operations assume the AS&E acquisition had occurred on July 1, 2016
Revenues	277,528	$ 266,167		$ 534,661	$ 502,918
Income (loss) before taxes	$ 18,147	$ 13,328		$ 37,541	$ 17,769

Business Combinations - American Science and Engineering (Details) - AS&E $ in Millions	Sep. 09, 2016 USD ($)
Business Combinations
Percentage of ownership acquired	100.00%
Total cash merger consideration	$ 266
Cash on hand to pay down the revolving bank line of credit	$ 69

Business Combinations - Other Acquisition (Details) - USD ($) $ in Millions	Jan. 12, 2018	Dec. 31, 2017
Business Combinations
Maximum amount of future payments under contingent consideration		$ 26.0
An electronics component designer and manufacturer
Business Combinations
Total consideration	$ 21.0
Maximum amount of future payments under contingent consideration	$ 6.0

Balance Sheet Details (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
Balance Sheet Details (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Accounts Receivable
Accounts receivable		$ 219,462		$ 219,462		$ 216,089
Less allowance for doubtful accounts		(11,008)		(11,008)		(9,563)
Total		208,454		208,454		206,526
Inventories
Raw materials		140,275		140,275		129,645
Work-in-process		77,922		77,922		65,454
Finished goods		62,836		62,836		53,411
Total		281,033		281,033		248,510
Property and Equipment
Property and equipment, gross		421,152		421,152		389,655
Less accumulated depreciation and amortization		(277,882)		(277,882)		(248,116)
Property and equipment, net		143,270		143,270		141,539
Depreciation expense		16,800	$ 13,400	33,000	$ 26,700
AS&E facility in Billerica, MA
Property and Equipment
Purchase of property and equipment	$ 19,800
Land
Property and Equipment
Property and equipment, gross		17,129		17,129		14,212
Land \| AS&E facility in Billerica, MA
Property and Equipment
Purchase of property and equipment	2,900
Buildings, civil works and improvements
Property and Equipment
Property and equipment, gross		179,643		$ 179,643		157,123
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
Buildings, civil works and improvements \| AS&E facility in Billerica, MA
Property and Equipment
Purchase of property and equipment	$ 16,900
Leasehold improvements
Property and Equipment
Property and equipment, gross		9,308		$ 9,308		9,025
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		170,372		$ 170,372		166,991
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		3,427		$ 3,427		3,371
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		19,054		$ 19,054		17,991
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		17,844		$ 17,844		17,303
Computer Software \| Minimum
Property and Equipment
Estimated Useful Lives				3 years
Computer Software \| Maximum
Property and Equipment
Estimated Useful Lives				10 years
Computer software implementation in process
Property and Equipment
Property and equipment, gross		3,676		$ 3,676		2,590
Construction in process
Property and Equipment
Property and equipment, gross		$ 699		$ 699		$ 1,049

Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2017 USD ($)
Changes in the carrying value of goodwill
Balance at the beginning of the period	$ 242,129
Goodwill acquired or adjusted during the period	42,943
Foreign currency translation adjustment	808
Balance at the end of the period	285,880
Security Division
Changes in the carrying value of goodwill
Balance at the beginning of the period	155,083
Goodwill acquired or adjusted during the period	42,893
Foreign currency translation adjustment	148
Balance at the end of the period	198,124
Healthcare Division
Changes in the carrying value of goodwill
Balance at the beginning of the period	40,129
Foreign currency translation adjustment	107
Balance at the end of the period	40,236
Optoelectronics and Manufacturing division
Changes in the carrying value of goodwill
Balance at the beginning of the period	46,917
Goodwill acquired or adjusted during the period	50
Foreign currency translation adjustment	553
Balance at the end of the period	$ 47,520

Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Amortizable assets:
Gross Carrying Value	$ 139,256		$ 139,256		$ 110,874
Accumulated Amortization	(28,298)		(28,298)		(21,164)
Total	110,958		110,958		89,710
Total intangible assets
Gross Carrying Value	167,402		167,402		139,614
Total intangible assets	139,104		139,104		118,450
Amortization expense	4,500	$ 3,400	8,700	$ 5,500
Trademarks and trade names
Non-amortizable assets:
Gross Carrying Value	24,546		24,546		25,540
IPR&D
Non-amortizable assets:
Gross Carrying Value	3,600		$ 3,600		3,200
Computer Software
Intangible assets
Weighted Average Lives (in Years)			9 years
Amortizable assets:
Gross Carrying Value	27,102		$ 27,102		26,753
Accumulated Amortization	(7,674)		(7,674)		(6,291)
Total	19,428		$ 19,428		20,462
Patents
Intangible assets
Weighted Average Lives (in Years)			20 years
Amortizable assets:
Gross Carrying Value	8,590		$ 8,590		8,386
Accumulated Amortization	(1,518)		(1,518)		(1,676)
Total	7,072		$ 7,072		6,710
Developed technology
Intangible assets
Weighted Average Lives (in Years)			10 years
Amortizable assets:
Gross Carrying Value	49,010		$ 49,010		37,446
Accumulated Amortization	(7,431)		(7,431)		(5,530)
Total	41,579		$ 41,579		31,916
Customer relationships/backlog
Intangible assets
Weighted Average Lives (in Years)			7 years
Amortizable assets:
Gross Carrying Value	54,554		$ 54,554		38,289
Accumulated Amortization	(11,675)		(11,675)		(7,667)
Total	$ 42,879		$ 42,879		$ 30,622

Goodwill and Intangible Assets - Intangible Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Estimated future amortization expense
2018 (remaining 6 months)	$ 9,784		$ 9,784
2019	19,577		19,577
2020	17,302		17,302
2021	16,756		16,756
2022	12,823		12,823
2023	11,745		11,745
2024 and thereafter (including assets that have not yet begun to be amortized)	22,971		22,971
Total	110,958		110,958		$ 89,710
Computer Software
Estimated future amortization expense
Total	19,428		19,428		$ 20,462
Capitalized software development costs	$ 200	$ 600	$ 300	$ 2,000

Impairment, restructuring and other charges - Restructuring and other charges(Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		18 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017
Impairment, restructuring and other charges
Employee termination and facility consolidation costs	$ 500			$ 800
Impairment charges	3,144			3,144	$ 5,418
Acquisition-related costs	361	$ 149		1,181	4,023
Employee termination costs	236	8,747		476	9,218
Facility closures/consolidation	254	96		324	272
Litigation and accrued settlement costs	4,302			4,302
Other charges (reversals)		428			446
Total expensed	8,297	9,420		9,427	19,377
Explosive Trace Detection Business ("ETD")
Impairment, restructuring and other charges
Acquisition-related costs	200			900		$ 1,900
Security Division
Impairment, restructuring and other charges
Impairment charges	1,490		$ 5,400	1,490	5,332
Acquisition-related costs		85			810
Employee termination costs	90	7,657		330	7,807
Facility closures/consolidation	11	3		81	179
Other charges (reversals)					7
Total expensed	1,591	7,745		1,901	14,135
Healthcare Division
Impairment, restructuring and other charges
Impairment charges	579			579	86
Employee termination costs		824			1,080
Facility closures/consolidation	243	69		243	69
Litigation and accrued settlement costs	4,200			4,200
Total expensed	5,022	893		5,022	1,235
Optoelectronics and Manufacturing division
Impairment, restructuring and other charges
Impairment charges	1,075			1,075
Employee termination costs	146	266		146	331
Facility closures/consolidation		24			24
Other charges (reversals)		(67)			(67)
Total expensed	1,221	223		1,221	288
Corporate
Impairment, restructuring and other charges
Acquisition-related costs	361	64		1,181	3,213
Litigation and accrued settlement costs	102			102
Other charges (reversals)		495			506
Total expensed	$ 463	$ 559		$ 1,283	$ 3,719

Impairment, restructuring and other charges - Changes in the accrual for restructuring and other charges (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2017 USD ($)
Restructuring and other charges
Balance at the beginning of the period	$ 466
Restructuring and other charges	6,283
Payments and other adjustments	(2,146)
Balance at the end of the period	4,603
Acquisition-related Costs
Restructuring and other charges
Restructuring and other charges	1,181
Payments and other adjustments	(1,181)
Employee Termination Costs
Restructuring and other charges
Balance at the beginning of the period	175
Restructuring and other charges	476
Payments and other adjustments	(563)
Balance at the end of the period	88
Facility Closure / Consolidation Cost
Restructuring and other charges
Balance at the beginning of the period	291
Restructuring and other charges	324
Payments and other adjustments	(300)
Balance at the end of the period	315
Charges Related to Litigation
Restructuring and other charges
Restructuring and other charges	4,302
Payments and other adjustments	(102)
Balance at the end of the period	$ 4,200

Borrowings (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
Borrowings (Details) $ / shares in Units, $ in Thousands	Sep. 30, 2012 USD ($)	Dec. 31, 2017 USD ($) $ / shares	Dec. 31, 2017 USD ($) item $ / shares	Dec. 29, 2017 $ / shares	Jun. 30, 2017 USD ($)	Feb. 28, 2017 USD ($)	Dec. 31, 2016 USD ($)	Nov. 30, 2016 USD ($)
Borrowings
Borrowings outstanding		$ 195,000	$ 195,000		$ 103,000
Threshold percentage of stock price			130.00%
Number of trading days \| item			20
Number of consecutive trading days \| item			30
Principal amount of the notes to be repurchased (as a percentage)			100.00%
Components of long-term debt
Term loans		2,907	$ 2,907		3,700
Other long-term debt		1,467	1,467		1,621
Total		247,460	247,460		244,146
Less current portion of long-term debt		(2,279)	(2,279)		(2,396)
Long-term portion of debt		245,181	245,181		241,750
Revolving Credit Facility
Borrowings
Maximum borrowing capacity							$ 525,000	$ 450,000
Sub-limit available for letters of credit		300,000	$ 300,000
Unused commitment fee (as a percent)			0.20%
Borrowings outstanding		195,000	$ 195,000
Amount outstanding under letters-of-credit		36,800	36,800
Available credit facility		293,200	$ 293,200
Revolving Credit Facility \| Minimum
Borrowings
Unused commitment fee (as a percent)			0.20%
Revolving Credit Facility \| Maximum
Borrowings
Increase in the credit agreement's borrowing capacity available under certain circumstances		250,000	$ 250,000
Unused commitment fee (as a percent)			0.30%
Revolving Credit Facility \| LIBOR
Borrowings
Interest rate margin (as a percent)			1.50%
Revolving Credit Facility \| LIBOR \| Minimum
Borrowings
Interest rate margin (as a percent)			1.25%
Revolving Credit Facility \| LIBOR \| Maximum
Borrowings
Interest rate margin (as a percent)			2.00%
1.25% Convertible Senior Notes Due 2022
Borrowings
Principal amount		$ 287,500	$ 287,500			$ 287,500
Interest rate (as a percentage)		1.25%	1.25%			1.25%
Conversion ratio			9.3056
Conversion price \| $ / shares		$ 107.46	$ 107.46
Premium on stock price		38.50%	38.50%
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		2,700	6,100
Contractual interest expense		900	1,800
Amortization of debt discount		1,800	3,700
Amortization of debt issuance costs		300	600
Unamortized debt discount		$ 38,929	$ 38,929		42,602
Effective interest rate (as a percent)		4.50%	4.50%
Unamortized debt issuance costs		$ 5,485	$ 5,485		6,073
Stock price per share \| $ / shares				$ 64.38
Components of long-term debt
Principal amount		287,500	287,500		287,500
Unamortized discount		(38,929)	(38,929)		(42,602)
Unamortized debt issuance costs		(5,485)	(5,485)		(6,073)
Total		243,086	243,086		$ 238,825
Bank lines-of-credit
Borrowings
Amount outstanding under letters-of-credit		61,900	61,900
Available credit facility		$ 12,900	$ 12,900
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%

Stockholders' Equity - Stock-based Compensation (Details) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Dec. 11, 2017 shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($) ShareBasedCompensationPlan $ / shares shares	Dec. 31, 2016 USD ($) shares
Stock-based Compensation
Stock-based compensation expense before taxes \| $		$ 6,253	$ 8,229	$ 11,740	$ 14,059
Less: related income tax benefit \| $		(1,935)	(3,206)	(3,627)	(5,450)
Stock-based compensation expense, net of estimated taxes \| $		4,318	5,023	8,113	$ 8,609
RSU
Stock-based Compensation
Unrecognized compensation cost \| $		$ 25,900		$ 25,900
Weighted-average period				1 year 10 months 24 days
Shares
Nonvested at the beginning of the period (in shares)				611,687
Granted (in shares)				348,187
Vested (in shares)				(400,338)
Forfeited (in shares)				(10,596)
Nonvested at the end of the period (in shares)		548,940		548,940
Weighted-Average Fair Value
Nonvested at the beginning of the period (in dollars per share) \| $ / shares				$ 65.85
Granted (in dollars per share) \| $ / shares				74.14
Vested (in dollars per share) \| $ / shares				65.26
Forfeited (in dollars per share) \| $ / shares				68.20
Nonvested at the end of the period (in dollars per share) \| $ / shares		$ 71.50		$ 71.50
Stock Options
Stock-based Compensation
Unrecognized compensation cost \| $		$ 800		$ 800
Weighted-average period				2 years 2 months 12 days
Number of Options
Outstanding at the beginning of the period (in shares)				780,671
Granted (in shares)				25,379
Exercised (in shares)				(81,755)
Expired or forfeited (in shares)				(1,904)
Outstanding at the end of the period (in shares)		722,391		722,391
Exercisable at the end of the period (in shares)		674,129		674,129
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) \| $ / shares				$ 30.00
Granted (in dollars per share) \| $ / shares				85.83
Exercised (in dollars per share) \| $ / shares				22.84
Expired or forfeited (in dollars per share) \| $ / shares				63.33
Outstanding at the end of the period (in dollars per share) \| $ / shares		$ 32.68		32.68
Exercisable at the end of the period (in dollars per share) \| $ / shares		$ 29.30		$ 29.30
Weighted-Average Remaining Contractual Term
Outstanding at the end of the period				3 years 3 months 18 days
Exercisable at the end of the period				2 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding at the end of the period \| $		$ 23,985		$ 23,985
Exercisable at the end of the period \| $		$ 23,983		$ 23,983
Performance-based restricted stock units
Shares
Granted (in shares)				117,346	155,488
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
Stock-based Compensation
Maximum number of shares of Common Stock which may be issued increased	1,600,000
Weighted-Average Fair Value
Shares available for grant		2,300,000		2,300,000
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
Stock-based Compensation
Number of share-based employee compensation plans assumed \| ShareBasedCompensationPlan				2
2005 AS&E Plan and the 2014 AS&E Plan \| RSU
Shares
Granted (in shares)				0
2006 Plan
Number of Options
Granted (in shares)				0
Cost of goods sold
Stock-based Compensation
Stock-based compensation expense before taxes \| $		$ 247	404	$ 487	$ 699
Selling, general and administrative
Stock-based Compensation
Stock-based compensation expense before taxes \| $		5,849	5,222	10,960	10,282
Research and development
Stock-based Compensation
Stock-based compensation expense before taxes \| $		$ 157	121	$ 293	176
Restructuring
Stock-based Compensation
Stock-based compensation expense before taxes \| $			$ 2,482		$ 2,902

Stockholders' Equity - Share Repurchase Program (Details) - shares	6 Months Ended
	Dec. 31, 2017	Apr. 30, 2016
Share Repurchase Program
Number of repurchased shares authorized		1,000,000
Number of shares repurchased	0
Number of available shares may be repurchased	872,481

Retirement Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Retirement Benefit Plans (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Net Periodic Benefit Costs
Service cost	$ 216	$ 224	$ 432	$ 448
Interest cost	8	7	16	14
Amortization of prior service cost	70	70	140	140
Net periodic pension expense	294	301	588	602
Contributions made by the entity to the defined benefit plans	300	1,000	1,000	1,000
Contributions made by the entity to defined contribution plans	$ 1,400	$ 1,000	$ 3,000	$ 2,200

Commitments and Contingencies - Contingent Acquisition Obligations (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2017 USD ($)
Contingent Acquisition Obligations
Maximum amount of future payments under contingent consideration	$ 26,000
Beginning fair value	11,840
Addition of contingent earn-out obligations	3,519
Remeasurement of fair value for contingent earn-out obligations	(156)
Payments on contingent earn-out obligations	(482)
Ending fair value	14,721
Mr. Chopra \| Deferred bonus
Employment-Related Contingencies
Contingent bonus payment to Mr. Chopra	$ 13,500
Maximum number of days after January 1, 2024, bonus payment to Mr. Chopra	45 days

Commitments and Contingencies - Product Warranties (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Changes in provision for warranties
Warranty provision at beginning of period	$ 15,178	$ 15,948
Additions and adjustments	7,184	5,077
Reductions for warranty repair costs	(3,619)	(2,752)
Warranty provision at end of period	$ 18,743	$ 18,273

Income Taxes - (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended		12 Months Ended
Income Taxes - (Details) - USD ($) $ in Thousands	Jul. 01, 2018	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2018
Statutory tax rate (as a percent)		21.00%			35.00%		28.10%
Transition Tax			$ 64,573
Net impact on U.S. deferred tax assets and liabilities			(8,361)
Net discrete impacts of the enactment of the Tax Act			56,212
Foreign earnings expected to be repatriated deferred tax liability			15,000		$ 15,000
Payment period of transition tax liability					8 years
Income before income taxes			12,865	$ 6,712	$ 28,010	$ 7,653
Income tax expense			$ 59,816	$ 1,879	$ 64,804	$ 2,143
Forecast
Statutory tax rate (as a percent)	21.00%

Segment Information - Operations and Identifiable Assets (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017 USD ($) customer	Dec. 31, 2016 USD ($) customer	Dec. 31, 2017 USD ($) segment	Dec. 31, 2016 USD ($)	Jun. 30, 2017 USD ($)
Operations and identifiable assets by industry segment
Number of identifiable industry segments \| segment			3
Total revenues	$ 277,528	$ 242,548	$ 534,661	$ 463,403
Operating income (loss)	18,147	$ 8,693	37,541	$ 10,792
Segments assets	$ 1,346,759		$ 1,346,759		$ 1,230,087
SAT in Mexico \| Revenue \| Customer
Operations and identifiable assets by industry segment
Number of major customers \| customer	1	1
Percentage of benchmark derived from specified source	12.00%	12.00%	12.00%	13.00%
Operating Segments \| Security Division
Operations and identifiable assets by industry segment
Total revenues	$ 172,269	$ 139,504	$ 334,514	$ 263,213
Operating income (loss)	22,471	9,130	45,164	18,480
Segments assets	917,953		917,953		785,230
Operating Segments \| Healthcare Division
Operations and identifiable assets by industry segment
Total revenues	52,506	51,110	98,035	96,760
Operating income (loss)	603	801	1,450	(2,463)
Segments assets	170,495		170,495		186,021
Operating Segments \| Optoelectronics and Manufacturing division
Operations and identifiable assets by industry segment
Total revenues	63,886	60,602	122,812	117,556
Operating income (loss)	4,502	5,525	9,677	10,175
Segments assets	196,208		196,208		196,567
Corporate
Operations and identifiable assets by industry segment
Operating income (loss)	(9,118)	(6,802)	(17,871)	(15,815)
Segments assets	65,672		65,672		64,959
Eliminations
Operations and identifiable assets by industry segment
Total revenues	(11,133)	(8,668)	(20,700)	(14,126)
Operating income (loss)	(311)	$ 39	(879)	$ 415
Segments assets	$ (3,569)		$ (3,569)		$ (2,690)

Basis of Presentation - Revenue Recognition (Details)	6 Months Ended
Basis of Presentation - Revenue Recognition (Details)	Dec. 31, 2017
SAT
Revenue Recognition
Term of Contract	2 years