SEC Filing | OSI Systems, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-23125

OSI SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware		33-0238801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12525 Chadron Avenue

Hawthorne, California 90250

(Address of principal executive offices) (Zip Code)

(310) 978-0516

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		OSIS		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 24, 2023, there were 16,853,406 shares of the registrant’s common stock outstanding.

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OSI SYSTEMS, INC.

INDEX


		PAGE

PART I — FINANCIAL INFORMATION		3

Item 1 —	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2021 and 2022	4
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2021 and 2022	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2021 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2021 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4 —	Controls and Procedures	31

PART II — OTHER INFORMATION		32
Item 1 —	Legal Proceedings	32
Item 1A —	Risk Factors	32
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 —	Defaults Upon Senior Securities	32
Item 4 —	Mine Safety Disclosures	32
Item 5 —	Other Information	32
Item 6 —	Exhibits	34
Signatures		35

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except share amounts and par value)


	June 30,		December 31,
	2022		2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	64,202	$	45,600
Accounts receivable, net		307,973		322,756
Inventories		333,907		361,376
Prepaid expenses and other current assets		40,062		37,703
Total current assets		746,144		767,435
Property and equipment, net		109,684		107,763
Goodwill		336,357		339,185
Intangible assets, net		138,370		138,040
Other assets		112,595		113,807
Total assets	$	1,443,150	$	1,466,230
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Bank lines of credit	$	60,000	$	235,000
Current portion of long-term debt		244,575		8,100
Accounts payable		125,204		129,336
Accrued payroll and related expenses		46,379		29,557
Advances from customers		19,917		22,715
Other accrued expenses and current liabilities		117,879		113,534
Total current liabilities		613,954		538,242
Long-term debt		48,668		140,057
Deferred income taxes		11,112		12,214
Other long-term liabilities		130,992		127,963
Total liabilities		804,726		818,476
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value— 10,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value—100,000,000 shares authorized; issued and outstanding, 16,870,050 shares at June 30, 2022 and 16,819,609 shares at December 31, 2022		17		2,530
Retained earnings		663,869		672,371
Accumulated other comprehensive loss		(25,462)		(27,147)
Total stockholders’ equity		638,424		647,754
Total liabilities and stockholders’ equity	$	1,443,150	$	1,466,230

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2022		2021		2022
Net revenues:
Products	$	205,377	$	216,885	$	412,589	$	413,839
Services		71,304		78,712		143,349		149,829
Total net revenues		276,681		295,597		555,938		563,668
Cost of goods sold:
Products		139,060		158,294		281,966		301,663
Services		37,848		41,096		74,869		78,301
Total cost of goods sold		176,908		199,390		356,835		379,964
Gross profit		99,773		96,207		199,103		183,704
Operating expenses:
Selling, general and administrative		54,879		54,003		112,202		107,441
Research and development		14,977		14,456		29,794		28,996
Impairment, restructuring and other charges, net		831		2,257		3,341		3,476
Total operating expenses		70,687		70,716		145,337		139,913
Income from operations		29,086		25,491		53,766		43,791
Interest and other expense, net		(2,217)		(5,180)		(4,233)		(8,612)
Income before income taxes		26,869		20,311		49,533		35,179
Provision for income taxes		(7,072)		(3,957)		(10,684)		(7,590)
Net income	$	19,797	$	16,354	$	38,849	$	27,589
Earnings per share:
Basic	$	1.11	$	0.97	$	2.17	$	1.63
Diluted	$	1.09	$	0.96	$	2.13	$	1.61
Shares used in per share calculation:
Basic		17,838		16,841		17,892		16,882
Diluted		18,106		17,103		18,203		17,140

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2022		2021		2022
Net income	$	19,797	$	16,354	$	38,849	$	27,589
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax		(624)		4,914		(2,926)		(4,878)
Net unrealized gain (loss) on investments and derivatives, net of tax		—		(1,012)		—		2,528
Other, net of tax		131		332		264		665
Other comprehensive income (loss)		(493)		4,234		(2,662)		(1,685)
Comprehensive income	$	19,304	$	20,588	$	36,187	$	25,904

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands, except share data)


	Three Months Ended December 31, 2021
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—September 30, 2021	17,941,393	$	53,377	$	586,850	$	(16,915)	$	623,312
Exercise of stock options	2,219		156		—		—		156
Vesting of RSUs	18,995		—		—		—		—
Stock-based compensation expense	—		6,975		—		—		6,975
Repurchase of common stock	(312,790)		(29,049)		—		—		(29,049)
Taxes paid related to net share settlement of equity awards	(5,914)		(550)		—		—		(550)
Net income	—				19,797		—		19,797
Other comprehensive loss	—		—		—		(493)		(493)
Balance—December 31, 2021	17,643,903	$	30,909	$	606,647	$	(17,408)	$	620,148


	Three Months Ended December 31, 2022
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—September 30, 2022	16,854,153	$	17	$	656,017	$	(31,381)	$	624,653
Exercise of stock options	4,847		245		—		—		245
Vesting of RSUs	20,409		—		—		—		—
Stock-based compensation expense	—		7,239		—		—		7,239
Repurchase of common stock	(53,334)		(4,497)		—		—		(4,497)
Taxes paid related to net share settlement of equity awards	(6,466)		(474)		—		—		(474)
Net income	—		—		16,354		—		16,354
Other comprehensive income	—		—		—		4,234		4,234
Balance—December 31, 2022	16,819,609		2,530		672,371		(27,147)		647,754

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	Six Months Ended December 31, 2021
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2021	17,854,110	$	105,724	$	548,842	$	(14,746)	$	639,820
Exercise of stock options	164,612		311		—		—		311
Vesting of RSUs	329,072		—		—		—		—
Shares issued under employee stock purchase program	27,960		1,990		—		—		1,990
Stock-based compensation expense	—		14,088		—		—		14,088
Repurchase of common stock	(481,296)		(45,280)		—		—		(45,280)
Taxes paid related to net share settlement of equity awards	(250,555)		(19,161)		—		—		(19,161)
Adoption of ASU 2020-06 for convertible notes			(26,763)		18,956				(7,807)
Net income	—		—		38,849		—		38,849
Other comprehensive loss	—		—		—		(2,662)		(2,662)
Balance—December 31, 2021	17,643,903	$	30,909	$	606,647	$	(17,408)	$	620,148


	Six Months Ended December 31, 2022
						Accumulated
	Common Stock					Other
	Number of			Retained		Comprehensive
	Shares	Amount		Earnings		Loss		Total
Balance—June 30, 2022	16,870,050	$	17	$	663,869	$	(25,462)	$	638,424
Exercise of stock options	7,766		439		—		—		439
Vesting of RSUs	306,528		—		—		—		—
Shares issued under employee stock purchase program	28,603		1,969		—		—		1,969
Stock-based compensation expense	—		14,416		—		—		14,416
Repurchase of common stock	(261,761)		(4,705)		(17,079)		—		(21,784)
Taxes paid related to net share settlement of equity awards	(131,577)		(9,606)		(2,008)		—		(11,614)
Net income	—		—		27,589		—		27,589
Other comprehensive loss	—		—		—		(1,685)		(1,685)
Balance—December 31, 2022	16,819,609		2,530		672,371		(27,147)		647,754

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OSI SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)


	Six Months Ended December 31,
	2021		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	38,849	$	27,589
Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions:
Depreciation and amortization		19,190		19,143
Stock-based compensation expense		14,088		14,416
Recovery of losses on accounts receivable		(3,934)		(1,353)
Deferred income taxes		(9)		1,205
Amortization of debt discount and issuance costs		697		196
Other		111		(64)
Changes in operating assets and liabilities—net of business acquisitions:
Accounts receivable		5,547		(13,348)
Inventories		(42,247)		(27,317)
Prepaid expenses and other assets		(8,264)		(10,076)
Accounts payable		(12,775)		4,429
Accrued payroll and related expenses		(12,899)		(16,526)
Advances from customers		1,155		2,828
Deferred revenue		5,003		12,714
Other		(1,066)		(5,672)
Net cash provided by operating activities		3,446		8,164
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(7,401)		(6,982)
Proceeds from sale of property and equipment		258		235
Purchases of certificates of deposit		(126)		(674)
Acquisition of businesses, net of cash acquired		—		(3,477)
Payments for intangible and other assets		(8,122)		(8,002)
Net cash used in investing activities		(15,391)		(18,900)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank lines of credit		81,622		175,000
Proceeds from long-term debt		143		100,502
Payments on long-term debt		(491)		(245,777)
Proceeds from exercise of stock options and employee stock purchase plan		2,301		2,408
Payments of contingent consideration		(1,500)		(2,466)
Repurchases of common stock		(45,280)		(21,784)
Taxes paid related to net share settlement of equity awards		(19,161)		(11,614)
Net cash provided by (used in) financing activities		17,634		(3,731)
Effect of exchange rate changes on cash		30		(4,135)
Net change in cash and cash equivalents		5,719		(18,602)
Cash and cash equivalents—beginning of period		80,613		64,202
Cash and cash equivalents—end of period	$	86,332	$	45,600
Supplemental disclosure of cash flow information:
Cash paid, net during the period for:
Interest	$	3,501	$	8,978
Income taxes	$	7,787	$	11,935

See accompanying notes to condensed consolidated financial statements.

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OSI SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements include the accounts of OSI Systems, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded in accordance with SEC rules and regulations and GAAP applicable to interim unaudited financial statements. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for audited annual financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed with the SEC. The results of operations for the three and six months ended December 31, 2022 are not necessarily indicative of the operating results to be expected for the full 2023 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, costs of sales and expenses during the reporting period. The most significant of these estimates and assumptions for our company relate to contract revenue, fair values of assets acquired and liabilities assumed in business combinations, values for inventories reported at lower of cost or net realizable value, stock-based compensation expense, income taxes, accrued warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Due to the inherent uncertainty involved in making estimates, our actual amounts reported in future periods could differ materially from these estimates.

Earnings Per Share Computations

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. We compute diluted earnings per share by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares consist of the shares issuable upon the exercise of stock options and restricted stock unit awards under the treasury stock method.

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


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2022		2021		2022
Net income available to common stockholders	$	19,797	$	16,354	$	38,849	$	27,589
Weighted average shares outstanding—basic		17,838		16,841		17,892		16,882
Dilutive effect of equity awards		268		262		311		258
Weighted average shares outstanding—diluted		18,106		17,103		18,203		17,140
Basic earnings per share	$	1.11	$	0.97	$	2.17	$	1.63
Diluted earnings per share	$	1.09	$	0.96	$	2.13	$	1.61
Shares excluded from diluted earnings per share due to their anti-dilutive effect		62		101		25		79

Cash and Cash Equivalents

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

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Our cash and cash equivalents totaled $45.6 million at December 31, 2022. Of this amount, approximately 98% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in the United Kingdom, Singapore, Malaysia, Mexico, Canada and India, and to a lesser extent in Indonesia, Albania and Australia. We have cash holdings in financial institutions that exceed insured limits for such financial institutions; we mitigate this risk, however, by utilizing international financial institutions of high credit quality.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, insurance company contracts, accounts receivable, accounts payable, debt instruments, an interest rate swap contract and foreign currency forward contracts. The carrying values of financial instruments, other than long term debt instruments and the interest rate swap contract, are representative of their fair values due to their short-term maturities. The carrying values of our long-term debt instruments are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates for financing available to us. The fair values of our foreign currency forward contracts were not significant as of June 30, 2022 and December 31, 2022.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Level 1 category includes assets and liabilities measured at quoted prices in active markets for identical assets and liabilities. The Level 2 category includes assets and liabilities measured from observable inputs other than quoted market prices. The Level 3 category includes assets and liabilities for which valuation inputs are unobservable and significant to the fair value measurement. Our contingent payment obligations related to acquisitions, which are further discussed in Note 10 to the condensed consolidated financial statements, are in the Level 3 category for valuation purposes.

The fair values of our financial assets and liabilities are categorized as follows (in thousands):


	June 30, 2022								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets—Insurance company contracts	$	—	$	40,284	$	—	$	40,284	$	—	$	42,238	$	—	$	42,238
Assets – Interest rate swap contract	$	—	$	—	$	—	$	—	$	—	$	3,434	$	—	$	3,434
Liabilities—Convertible debt	$	—	$	242,302	$	—	$	242,302	$	—	$	—	$	—	$	—
Liabilities—Contingent consideration	$	—	$	—	$	28,212	$	28,212	$	—	$	—	$	22,654	$	22,654

Derivative Instruments and Hedging Activity

Our use of derivatives consists of foreign currency forward contracts and an interest rate swap agreement. The foreign currency forward contracts are utilized to partially mitigate certain balance sheet exposures or used as a net investment hedge to protect against potential changes resulting from short-term foreign currency fluctuations. These contracts have original maturities of up to three months. We also manage our risk to changes in interest rates through the use of derivative instruments. We use fixed interest rate swaps to effectively convert a portion of the variable interest rate payments to fixed interest rate payments. We do not use hedging instruments for speculative purposes.

The net gains or losses from our foreign currency forward contracts, which are not designated as hedge instruments, are reported in the consolidated statements of operations. The amounts reported in the consolidated statements of operations for the three and six months ended December 31, 2021 and 2022 were not significant. The fair value of our foreign currency forward contracts is estimated using a standard valuation model and market-based observable inputs over the contractual term. Unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. As of June 30, 2022 and December 31, 2022, we held foreign currency forward contracts with notional amounts totaling $22.9 million and $19.8 million, respectively. Unrealized gains and losses from our foreign currency forward contracts as of December 31, 2021 and 2022 were not significant.

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The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to our variable, Secured Overnight Financing Rate (“SOFR”) based debt. The interest rate swap matures in December 2026. The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate that the hedge may no longer be highly effective.

As of June 30, 2022 and December 31, 2022, the notional amount of the derivative instruments designated as an interest rate swap hedge was $0 and $175 million, respectively. The fair value of the interest rate swap contract as of December 31, 2022 was $3.3 million and is recorded in Other assets within the condensed consolidated balance sheet.

The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2022		2021		2022
Total interest and other expense, net presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(2,217)	$	(5,180)	$	(4,233)	$	(8,612)
Gain (loss) recognized in other comprehensive income (loss)		—		(1,012)		—		2,528
Amount reclassified from accumulated other comprehensive income (loss) to interest expense, net		—		(149)		—		(29)

Recently Adopted Accounting Pronouncements

Contract Assets and Contract Liabilities from Revenue Contracts with Customers in a Business Combination

In October 2021, the FASB issued Accounting Standards Update 2021-08, an accounting standard update to improve the accounting for contract assets and contract liabilities from revenue contracts with customers in a business combination (Topic 805). This amendment improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This authoritative guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We early adopted the new guidance effective January 1, 2022 using the prospective approach and applied the amendments to the business combinations that occurred during the year ended June 30, 2022 and the six months ended December 31, 2022. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements.

2. Business Combinations

Under Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), the acquisition method of accounting requires us to record assets acquired less liabilities assumed from an acquisition at their estimated fair values at the date of acquisition. Any excess of the total estimated purchase price over the estimated fair value of the net assets acquired should be recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions which are 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 up to one year from the acquisition date, as additional information that existed at the acquisition date becomes available for preliminary estimates, we may record adjustments to the preliminary assets acquired and liabilities assumed. Any adjustments subsequent to the conclusion of such measurement period are reflected in reported earnings.

Fiscal Year 2023 Business Acquisitions

In December 2022, we (through our Security division) acquired in a bankruptcy proceeding certain assets of a provider of baggage and parcel inspection systems for approximately $1.6 million. The acquisition was financed with cash on hand.

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In August 2022, we (through our Security division) acquired a privately held provider of training software and solutions for approximately $1.9 million plus an immaterial amount of potential contingent consideration. The acquisition was financed with cash on hand. The goodwill recognized for this business is not deductible for income tax purposes.

Fiscal Year 2022 Business Acquisitions

In February 2022, we (through our Security division) acquired a privately held provider of intelligent inspection, sensory, and recognition solutions for approximately $14 million plus up to $25 million in potential contingent consideration. The acquisition was financed with cash on hand and borrowings under our revolving bank line of credit. The goodwill recognized for this business is not deductible for income tax purposes.

We (through our Security division) also acquired in February 2022 a privately held sales and services company for approximately $1.1 million, plus an immaterial amount of potential contingent consideration. The acquisition was financed with cash on hand. The goodwill recognized for this transaction is deductible for income tax purposes.

These business acquisitions, individually and in the aggregate, were not material to our consolidated financial statements. Accordingly, pro forma historical results of operations and other disclosures related to these businesses have not been presented.

3. Balance Sheet Details

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


	June 30,		December 31,
Accounts receivable, net	2022		2022
Accounts receivable	$	326,849	$	340,097
Less allowance for doubtful accounts		(18,876)		(17,341)
Total	$	307,973	$	322,756


	June 30,		December 31,
Inventories	2022		2022
Raw materials	$	213,290	$	236,658
Work-in-process		46,873		56,847
Finished goods		73,744		67,871
Total	$	333,907	$	361,376


	June 30,		December 31,
Property and equipment, net	2022		2022
Land	$	15,028	$	15,036
Buildings, civil works and improvements		47,309		47,262
Leasehold improvements		11,599		13,146
Equipment and tooling		128,425		131,423
Furniture and fixtures		3,592		3,506
Computer equipment		21,208		22,090
Computer software		25,153		26,256
Computer software implementation in process		9,422		9,254
Construction in process		5,283		5,285
Total		267,019		273,258
Less accumulated depreciation and amortization		(157,335)		(165,495)
Property and equipment, net	$	109,684	$	107,763

Depreciation and amortization expense for property and equipment was $5.3 million and $4.8 million for the three months ended December 31, 2021 and 2022, respectively, and $10.6 million and $9.7 million for the six months ended December 31, 2021 and 2022, respectively.

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4. Goodwill and Intangible Assets

The changes in the carrying value of goodwill by segment for the six-month period ended December 31, 2022 were as follows (in thousands)


					Optoelectronics
					And
	Security		Healthcare		Manufacturing
	Division		Division		Division		Consolidated
Balance as of June 30, 2022	$	225,555	$	43,187	$	67,615	$	336,357
Goodwill acquired or adjusted during the period		3,702		—		—		3,702
Foreign currency translation adjustment		(4)		(26)		(844)		(874)
Balance as of December 31, 2022	$	229,253	$	43,161	$	66,771	$	339,185

Intangible assets consisted of the following (in thousands):

June 30, 2022

December 31, 2022

Gross

Carrying

Accumulated

Intangibles

Carrying

Accumulated