OSI SYSTEMS, INC. In this report, "OSI", the "Company", "we", "us", "our" and similar terms refer
to
This management's discussion and analysis of financial condition as ofDecember 31, 2022 and results of operations for the three and six months endedDecember 31, 2022 should be read in conjunction with management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year endedJune 30, 2022 filed with theSEC .
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements relate to our current expectations, beliefs, and projections concerning matters that are not historical facts. Words such as "project," "believe," "anticipate," "plan," "expect," "intend," "may," "should," "will," "would," and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements include, without limitation, information provided regarding impact of the COVID-19 pandemic and theRussia -Ukraine conflict. Forward-looking statements are not guarantees of future performance and involve uncertainties, risks, assumptions and contingencies, many of which are outside our control. Assumptions upon which our forward-looking statements are based could prove to be inaccurate, and actual results may differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year endedJune 30, 2022 (including Part I, Item 1, "Business," Part I, Item 1A, "Risk Factors" and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations") and other documents filed by us from time to time with theSEC . Such factors, of course, do not include all factors that might affect our business and financial condition. We could be exposed to a variety of negative consequences as a result of delays related to the award of domestic and international contracts; failure to secure the renewal of key customer contracts; delays in customer programs; delays in revenue recognition related to the timing of customer acceptance; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; the impact of theRussia -Ukraine conflict, including the potential for broad economic disruption; global economic uncertainty; impacts on our business related to or resulting from the COVID-19 pandemic such as material delays and cancellations of orders or deliveries thereon, supply chain disruptions, plant closures, or other adverse impacts on our ability to execute business plans; unfavorable currency exchange rate fluctuations; effect of changes in tax legislation; market acceptance of our new and existing technologies, products and services; our ability to win new business and convert any orders received to sales within the same fiscal year; enforcement actions in respect of any noncompliance with laws and regulations including export control and environmental regulations and the matters that are the subject of some or all of our investigations and compliance reviews, contract and regulatory compliance matters, and actions, which if brought, could result in judgments, settlements, fines, injunctions, debarment or penalties; and other risks and uncertainties, including but not limited to those detailed herein and from time to time in our otherSEC filings, which could have a material and adverse impact on our business, financial condition and results of operation. Many of the referenced risks could be amplified by the magnitude and duration of the COVID-19 pandemic. All forward-looking statements contained in this report are qualified in their entirety by this Section. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation other than as may be required under securities laws to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 23 Table of Contents Executive Summary We are a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications. We sell our products and provide related services in diversified markets, including homeland security, healthcare, defense and aerospace. We have three operating divisions: (a) Security, providing security and inspection systems and turnkey security screening solutions; (b) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories; and (c) Optoelectronics and Manufacturing, providing specialized electronic components for our Security and Healthcare divisions, as well as to third parties for applications in the defense and aerospace markets, among others. Security Division. Through our Security division, we provide security screening products and services globally, as well as turnkey security screening solutions. These products and services are used to inspect baggage, parcels, cargo, people, vehicles and other objects for weapons, explosives, drugs, radioactive and nuclear materials and other contraband. Revenues from our Security division accounted for 53% and 55% of our total consolidated revenues for the six months endedDecember 31, 2021 and 2022, respectively. Healthcare Division. Through our Healthcare division, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems globally for sale primarily to hospitals and medical centers. Our products monitor patients in critical, emergency and perioperative care areas of the hospital and provide information, through wired and wireless networks, to physicians and nurses who may be at the patient's bedside, in another area of the hospital or even outside the hospital. Revenues from our Healthcare division accounted for 19% and 16% of our total consolidated revenues for the six months endedDecember 31, 2021 and 2022, respectively. Optoelectronics and Manufacturing Division. Through our Optoelectronics and Manufacturing division, we design, manufacture and market optoelectronic devices and flex circuits 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 diagnostics, telecommunications, office automation, computer peripherals, industrial automation and consumer products. We provide our optoelectronic devices and electronics manufacturing services to OEM customers and to our own Security and Healthcare divisions. Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 28% and 29% of our total consolidated revenues for the six months endedDecember 31, 2021 and 2022, respectively.
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Trends and Uncertainties
The following is a discussion of certain trends and uncertainties that we believe have influenced, and may continue to influence, our results of operations.
Coronavirus Pandemic. The coronavirus disease 2019 ("COVID-19") pandemic,
including the emergence of new variants, has dramatically impacted the global
health and economic environment, with millions of confirmed cases, business
slowdowns and shutdowns, and market volatility. The COVID-19 pandemic has
caused, and is likely to continue to cause, significant economic disruptions and
has impacted, and is expected to continue to impact, our operations and the
operations of our suppliers, logistics providers and customers as a result of
supply chain disruptions and delays, as well as labor challenges associated with
employee absences, travel restrictions, site access, quarantine restrictions,
remote work, and adjusted work schedules. Our ability to continue to operate
without significant negative impacts will in part depend on our ability to
protect our employees and our supply chain and to keep our manufacturing
facilities open and operating effectively. We have endeavored to implement
government and health authority recommendations to protect our employees
worldwide including with respect to vaccine administration. There is substantial
uncertainty regarding the duration, scope, and ultimate impact of the COVID-19
pandemic. During the early stages of the pandemic, our Healthcare division
experienced increased demand for certain products as a result of COVID-19. In
our Security division, throughout the pandemic, receipt of certain orders has
been delayed, most notably with respect to our aviation and cargo products, and
our revenues have been adversely impacted as a result of the pandemic. As many
customers of our Security division continue to be impacted by the pandemic, we
have received and could receive further requests to delay deliveries of
equipment and modify service arrangements or the scheduling of factory or site
acceptance tests, which has impacted, and could further impact, timing of
revenue recognition. In addition, as a result of COVID-19 related government
regulations, certain of our global manufacturing facilities have had to limit
operations and might have to limit operations in the future. While we have been
able to broadly maintain our operations, we experienced some disruption in our
supply chain in certain markets due primarily to materials shortages, longer
lead times on deliveries and transportation constraints. If these business
interruptions resulting from COVID-19 were to be prolonged or expanded in scope,
our business, financial condition, results of operations and cash flows would be
materially and adversely impacted. We intend to continue to actively monitor the
situation and may take further actions that alter our business operations as may
be required by federal, state or local authorities or that we determine are in
our best interests and the best interests of our employees, suppliers and
customers. The ultimate impact of COVID-19 on our operations and financial
performance in future periods, including our ability to execute our programs in
the expected timeframe, remains uncertain and will depend on future
pandemic-related developments, including the duration of the pandemic, potential
subsequent waves of COVID-19 infection or potential new variants, the
effectiveness and adoption of COVID-19 vaccines and therapeutics, supplier
impacts and related government actions to prevent and manage disease spread,
including the implementation of any federal, state, local or foreign vaccine
mandates, all of which are uncertain and difficult to predict. The long-term
impacts of COVID-19 on government budgets and other funding priorities,
including international priorities, that impact demand for our products and
services are also difficult to predict, but could negatively affect our future
results and performance.
Global Economic Considerations. Our products and services are sold in numerous
countries worldwide, with a large percentage of our sales generated outside the
United States . Therefore, we are exposed to and impacted by global macroeconomic
factors, U.S. and foreign government policies and foreign exchange fluctuations.
There is uncertainty surrounding macroeconomic factors in the U.S. and globally
characterized by the supply chain environment, inflationary pressure, rising
interest rates, and labor shortages. Further, global economic conditions
continue to be highly volatile due to the COVID-19 pandemic, resulting in market
size contractions in certain countries due to economic slowdowns and government
restrictions on movement. In addition to the COVID-19 pandemic, these other
global macroeconomic factors, coupled with the U.S. political climate and
political unrest internationally, have created uncertainty and impacted demand
for certain of our products and services. Also, the invasion of Ukraine by
Russia and the sanctions imposed in response to this conflict have increased
global economic and political uncertainty. While the impact of these factors
remains uncertain, we will continue to evaluate the extent to which these
factors will impact our business, financial condition or results of operations.
We do not know how long this uncertainty will continue. These factors could have
a material negative effect on our business, results of operations and financial
condition.
Global Trade. In addition to the COVID-19 pandemic, the current domestic and
international political environment, including in relation to recent and further
potential changes by the U.S. and other countries in policies on global trade
and tariffs, have resulted in uncertainty surrounding the future state of the
global economy and global trade. This uncertainty is exacerbated by sanctions
imposed by the U.S. government against certain businesses and individuals in
select countries. Continued or increased uncertainty regarding global trade due
to these or other factors may require us to modify our current business
practices and could have a material adverse effect on our business, results of
operations and financial condition.
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Healthcare Considerations. As described above, our Healthcare division experienced some increased demand for its patient monitoring products as a result of the COVID-19 pandemic during the earlier stages of the pandemic. Increased healthcare capital purchases made in prior periods may result in fewer capital purchases in subsequent periods. The pandemic may also impact our ability to manufacture product needed to timely fill orders if we experience supply chain disruptions or need to close any manufacturing facility due to employee COVID-19 cases or local government regulations. European Union Threat Detection Standards.The EU has implemented regulations for all airports within the EU that use explosive detection systems to have hold baggage screening systems that are compliant with theEuropean Civil Aviation Conference (ECAC) Standard 3. The deadline for compliance with this mandate was initially set forSeptember 2020 . Given the uncertainty surrounding the COVID-19 pandemic, the EU revised the regulations, and the date by which airports using explosive detection systems for hold baggage screening must meet Standard 3 has been changed toMarch 2024 , with certain larger airports required to meet earlier installation dates. Our Security division's real time tomography (RTT) product has passed the ECAC explosive detection system Standard 3 threat detection requirement.
Government Policies. Our results of operations and cash flows could be
materially affected by changes in
Changes in Costs and Supply Chain Disruptions. Our costs are subject to fluctuations, particularly due to changes in raw material, component, and logistics costs. Our manufacturing and supply chain operations, including freight and shipping activities, have been and may continue to be impacted by increased vendor costs as well as the current global supply chain bottleneck. Specifically, we are impacted by the global shortage of electronic components and other materials needed for production and freight availability. We expect continued disruptions in obtaining material and freight availability as the world economies react to and recover from supply chain shortages. This increased cost environment has been exacerbated by the COVID-19 pandemic. If we are unable to mitigate the impact of increased costs through pricing or other actions, there could be a negative impact on our business, results of operations, and financial condition.Russia's Invasion ofUkraine . The invasion ofUkraine byRussia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. This has the potential to indirectly disrupt our supply chain and access to certain resources. While we have not experienced significant adverse impacts to date and will continue to monitor for any impacts and seek to mitigate disruption that may arise, we have certain research and development activities withinUkraine for our Healthcare division which have been somewhat impacted. The conflict also has increased the threat of malicious cyber activity from nation states and other actors. Currency Exchange Rates. On a year-over-year basis, currency exchange rates negatively impacted reported sales by approximately 1.7% for the six months endedDecember 31, 2022 compared to the six months endedDecember 31, 2021 , primarily due to the strengthening of theU.S. dollar against other foreign currencies in 2022. Any further strengthening of theU.S. dollar against foreign currencies would adversely impact our sales for the remainder of the year, and any weakening of theU.S. dollar against foreign currencies would positively impact our sales for the remainder of the year.
Results of Operations for the Three Months Ended
Net Revenues
The table below and the discussion that follows are based upon the way in which
we analyze our business. See Note 12 to the condensed consolidated financial
statements for additional information about our business segments.
Q2 % of Q2 % of
Fiscal 2022 Net Revenues Fiscal 2023 Net Revenues $ Change % Change
Security $ 145.9 53 % $ 167.4 57 % $ 21.5 15 %
Healthcare 52.4 19 43.5 15 (8.9) (17)Optoelectronics and Manufacturing 78.4 28
84.7 28 6.3 8 Total net revenues$ 276.7 100 %$ 295.6 100 %$ 18.9 7 % 26 Table of Contents Revenues for the Security division during the three months endedDecember 31, 2022 increased year-over-year due to increases in product and service revenues of approximately$13.8 million and$7.7 million , respectively. The increase in both product and service revenue was primarily driven by increased sales of cargo and vehicle inspection systems which was partially offset by a decrease in aviation related revenues. Revenues for the Healthcare division during the three months endedDecember 31, 2022 decreased year-over-year due to a reduction in patient monitoring sales of$7.3 million due in part to elevated demand related to COVID in the prior year period, a decrease in cardiology sales of$1.4 million and a decrease in service revenue of$0.2 million . Revenues for the Optoelectronics and Manufacturing division during the three months endedDecember 31, 2022 increased year-over year as a result of an increase in revenue in our optoelectronics business and contract manufacturing business of approximately$2.5 million and$3.8 million , respectively. Gross Profit Q2 % of Q2 % of Fiscal 2022 Net Revenues Fiscal 2023 Net Revenues Gross profit$ 99.8 36.1 %$ 96.2 32.5 % Gross profit is impacted by sales volume, productivity, and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics. Our cost of goods sold increased year-over-year primarily as a result of the increase in revenues and higher raw material costs. Gross profit as a percentage of net revenues during the quarter endedDecember 31, 2022 decreased on a year-over-year basis due to (i) a reduction in the Security division gross margins due to a decrease in margin from product sales driven by a less favorable product mix and increased component costs, (ii) a reduction in sales in the Healthcare division, which carries the highest gross margin of our three divisions, and (iii) an increase in sales in the Optoelectronics and Manufacturing division, which carries the lowest gross margin of our three divisions. Operating Expenses Q2 % of Q2 % of Fiscal 2022 Net Revenues Fiscal 2023 Net Revenues $ Change % Change Selling, general and 54.9 19.8 54.0 18 (0.9) (2) administrative $ % $ % $ % Research and development 15.0 5.4 14.5 5 (0.5) (3) Impairment, restructuring and 0.8 0.3
2.2 1 1.4 171 other charges, net Total operating expenses$ 70.7 25.5 %$ 70.7 24 %$ 0.0 0 % Selling, general and administrative. Our significant selling, general and administrative (SG&A) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, and depreciation and amortization expense. SG&A expense for the three months endedDecember 31, 2022 was$0.9 million lower than such expenses in the same prior-year period primarily due to reduced compensation costs offset primarily by a provision for bad debts compared to a bad debt recovery in the second quarter of fiscal 2022. Research and development. Research and development (R&D) expenses include research related to new product development and product enhancements. R&D expense during the three months endedDecember 31, 2022 was approximately$0.5 million lower than such expenses in the same prior-year period primarily due to a decrease in outside services incurred by our Security and Healthcare divisions partially offset by increases in compensation and professional fees. Impairment, restructuring and other charges. Impairment, restructuring and other charges generally consist of charges relating to reductions in our workforce, facilities consolidation, impairment of assets, costs related to acquisition activity, legal charges and other non-recurring charges. During the three months endedDecember 31, 2022 , impairment, restructuring and other charges primarily consisted of$1.9 million for legal charges and$0.2 million in charges for employee terminations. During the three months endedDecember 31, 2021 , impairment, restructuring and other charges primarily consisted of$0.5 million for legal charges and$0.3 million in charges for employee terminations. 27
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Interest and other expense, net. For the three months endedDecember 31, 2022 , interest and other expense, net was$5.2 million as compared to$2.2 million in the same prior-year period. This increase was driven by higher average interest rates and higher average levels of borrowing under our credit facility during the three months endedDecember 31, 2022 in comparison with the levels of borrowing during the same period in the prior year. The 1.25% convertible notes that were previously outstanding during the three month period endedDecember 31, 2021 were retired inSeptember 2022 using borrowings from our credit facility which carries a higher interest rate. Income taxes. The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections, (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items. For the three months endedDecember 31, 2022 , we recognized a provision for income taxes of$4.0 million compared to$7.1 million for the comparable prior-year period. The effective tax rates for the three months endedDecember 31, 2021 and 2022 were 26.3% and 19.5%, respectively. During the three months endedDecember 31, 2022 , we recognized a net discrete tax benefit of$0.4 million related to equity-based compensation under ASU 2016-09 and a benefit of$0.4 million from changes in prior year estimates. During the three-month periods endedDecember 31, 2021 , we recognized a net discrete tax provision of$0.3 million for changes in prior year tax estimates and equity-based compensation under ASU 2016-09. Results of Operations for the Six Months EndedDecember 31, 2021 (YTD Q2 Fiscal 2022) Compared to the Six Months EndedDecember 31, 2022 (YTD Q2 Fiscal 2023) (amounts in millions) Net Revenues The table below and the discussion that follows are based upon the way in which we analyze our business. See Note 12 to the condensed consolidated financial statements for additional information about our business segments. YTD Q2 % of YTD Q2 % of Fiscal 2022 Net Revenues Fiscal 2023 Net Revenues $ Change % Change Security$ 295.4 53 %$ 312.4 55 %$ 17.0 6 % Healthcare 103.0 19 87.2 16 (15.8) (15) Optoelectronics and Manufacturing 157.5 28
164.1 29 6.6 4
Total net revenues $ 555.9 100 % $ 563.7 100 % $ 7.8 1 %
Revenues for the Security division during the six months endedDecember 31, 2022 increased year-over-year due to an increase in product and service revenues of approximately$11.1 million and$5.9 million , respectively. The increase in both product and service revenue was primarily driven by increased sales of cargo and vehicle inspection systems which was partially offset by a decrease in aviation related revenues. Revenues for the Healthcare division during the six months endedDecember 31, 2022 decreased year-over-year due to a reduction in patient monitoring sales of$14.1 million due in part to elevated demand related to COVID in the prior year period, and a decrease in cardiology sales of$2.5 million , offset by an increase in service revenues of$0.8 million . Revenues for the Optoelectronics and Manufacturing division during the six months endedDecember 31, 2022 increased year-over year as a result of an increase in revenue in our optoelectronics business of approximately$6.6 million . Gross Profit YTD Q2 % of YTD Q2 % of Fiscal 2022 Net Revenues Fiscal 2023 Net Revenues Gross profit$ 199.1 35.8 %$ 183.7 32.6 % 28 Table of Contents Our cost of goods sold increased year-over-year primarily as a result of the increase in revenues and higher raw material costs. Gross profit as a percentage of net revenues during the six months endedDecember 31, 2022 decreased on a year-over-year basis due to (i) a reduction in the Security division gross margins due to a decrease in margin from product sales driven by a less favorable product mix and increased component costs, (ii) a reduction in sales in the Healthcare division, which carries the highest gross margin of our three divisions, and (iii) an increase in sales in the Optoelectronics and Manufacturing division, which carries the lowest gross margin of our three
divisions.
Operating Expenses
YTD Q2 % of YTD Q2 % of
Fiscal 2022 Net Revenues
Fiscal 2023 Net Revenues $ Change % Change
Selling, general and administrative
20 % $ 107.4 77 % $ (4.8) (4) %
Research and development 29.8 5 29.0 21 (0.8) (3)
Impairment, restructuring and other
charges, net 3.3 1 3.5 2 0.2 4
Total operating expenses $ 145.3 26 % $ 139.9 100 % $ (5.4) (4) %
Selling, general and administrative. SG&A expense for the six months ended
December 31, 2022 was $4.8 million lower than such expenses in the same
prior-year period primarily due to a reduction in compensation, professional
fees and favorable foreign exchange rates partially offset by a provision for
bad debts compared to a bad debt recovery in the prior period.
Research and development. R&D expense during the six months ended December 31,
2022 decreased as compared to the same prior-year period primarily due to a
decrease in outside services partially offset by increases in compensation and
travel in our Security and Healthcare divisions.
Impairment, restructuring and other charges. During the six months ended
December 31, 2022 , impairment, restructuring and other charges primarily
consisted of $2.9 million in legal charges primarily relating to government
investigations and $0.5 million for employee terminations. During the six months
ended December 31, 2021 , impairment, restructuring and other charges consisted
of $2.7 million for legal charges and $0.7 million in charges for employee
terminations.
Interest and other expense, net. For the six months ended December 31, 2022 ,
interest and other expense, net was $8.6 million as compared to $4.2 million in
the same prior-year period. This increase was driven by higher average interest
rates and higher average levels of borrowing under our credit facility during
the six months ended December 31, 2022 in comparison with the levels of
borrowing during the same period in the prior year. The 1.25% convertible notes
that were previously outstanding during the six-month period ended December 31,
2021 were retired in September 2022 using borrowings from our credit facility
which carries a higher interest rate.
Income taxes. For the six months ended December 31, 2022 , we recognized a
provision for income taxes of $7.6 million compared to $10.7 million for the
comparable prior-year period. The effective tax rates for the six months ended
December 31, 2021 and 2022 were 21.6% for both periods. During the six months
ended December 31, 2022 , we recognized discrete tax benefit of $0.5 million
related to equity-based compensation under ASU 2016-09 and $0.4 million from
changes in prior year estimates. During the six months ended December 31, 2021 ,
we recognized a net discrete tax benefit of $1.8 million , which was comprised of
$2.0 million related to equity-based compensation under ASU 2016-09 partially
offset by a discrete tax expense for prior year tax estimates of $0.2 million .
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled$45.6 million atDecember 31, 2022 , a decrease of$18.6 million , or 29.0%, from$64.2 million atJune 30, 2022 . We currently anticipate that our available funds, credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and the foreseeable future. In addition, we anticipate that cash generated from operations, without repatriating earnings from our non-U.S. subsidiaries, and our credit facilities will be sufficient to satisfy our obligations in theU.S. We have a$750 million credit facility that is comprised of a$600 million revolving credit facility, which includes a$300 million sub-facility for letters of credit, and a$150 million term loan. As ofDecember 31, 2022 , there was$235.0 million outstanding under our revolving credit facility,$146.9 million outstanding under the term loan and$66.8 million of outstanding letters of credit. As ofDecember 31, 2022 , the total amount available under these credit facilities was$298.2 million . 29
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Cash Provided by (Used in) Operating Activities. Cash flows from operating activities can fluctuate significantly from period to period, as net income, adjusted for non-cash items, and working capital fluctuations impact cash flows. During the six months endedDecember 31, 2022 , we generated cash from operations of$8.2 million compared to$3.4 million of cash generated in the same prior-year period. The increase was driven primarily by the positive impact in working capital changes. Cash Used in Investing Activities. Net cash used in investing activities was$18.9 million for the six months endedDecember 31, 2022 as compared to$15.4 million in the same prior-year period. Cash used to acquire businesses was$3.5 million during the six-month period endedDecember 31, 2022 compared to nil in the prior year. Capital expenditures in the six-month period endedDecember 31, 2022 were$7.0 million compared to$7.4 million in the same prior-year period. Expenditures for intangible and other assets in the six-month period endedDecember 31, 2022 were$8.0 million compared to$8.1 million in the same prior-year period. Cash Provided by (Used in) Financing Activities. Net cash used in financing activities was$3.7 million during the six months endedDecember 31, 2022 compared to net cash provided by financing activities of$17.6 million during the same prior-year period. The increase in cash used in financing activities was due to the increase in net payments on long-term debt by$145 million , of which$242.3 million pertains to the repurchase and cancellation of the 1.25% Convertible Senior Notes utilizing proceeds of the senior secured credit facility, that was partially offset by the increase in net borrowings on bank lines of credit by$93 million . Cash used to repurchase of common stock and taxes paid related to the net settlement of equity awards was$33.4 million in the six-months endedDecember 31, 2022 compared to$64.4 in the same prior-year period. Borrowings
See Note 8 to the condensed consolidated financial statements for a detailed discussion regarding our credit facility and our Notes.
Cash Held by Foreign Subsidiaries
Our cash and cash equivalents totaled$45.6 million atDecember 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 theUnited Kingdom ,Singapore ,Malaysia ,Mexico ,Canada andIndia and, to a lesser extent, inIndonesia ,Albania andAustralia . We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash in foreign countries to fund ourU.S. operations. In the event we repatriate cash from certain foreign operations and if taxes have not previously been withheld on the related earnings, we would provide for withholding taxes at the time we change our intention with regard to the reinvestment of those earnings.
Issuer Purchases of
The following table contains information about the shares of common stock we
purchased during the quarter ended
Maximum number (or
approximate dollar
value) of
Total number of shares (or
shares (or units) units)
purchased as that may
Total number of Average price part of publicly yet be purchased
shares (or units) paid per share (or announced plans or under the plans or
purchased unit) programs programs (1)
October 1 to October 31, 2022 7,500 $ 82.11 7,500 1,906,173
November 1 to November 30, 2022 18,730 $ 84.49 18,730 1,887,443
December 1 to December 31, 2022 27,104 $ 84.84 27,104 1,860,339
53,334 53,334
In
of up to 1,000,000 shares of common stock. In
Directors increased to 3,000,000 shares the maximum number of shares
authorized under the stock repurchase program. In
were 1,131,301 shares remaining authorized and yet to be repurchased under (1) the plan, the Board of Directors renewed the authorization and revised the
maximum number of shares to 2,000,000 shares authorized under the stock
repurchase program. Upon repurchase, the shares are restored to the status of
authorized but unissued shares, and we record them as a reduction in the
number of shares of common stock issued and outstanding in our consolidated
financial statements.
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Contractual Obligations
During the six months ended December 31, 2022 , there were no material changes
outside the ordinary course of business to the information regarding specified
contractual obligations contained in our Annual Report on Form 10-K for the
fiscal year ended June 30, 2022 . See Notes 1, 6, 8 and 10 to the condensed
consolidated financial statements for additional information regarding our
contractual obligations.
Recent Accounting Pronouncements
For information with respect to recent accounting pronouncements and the potential impact of those pronouncements on our condensed consolidated financial statements, see Note 1 to the condensed consolidated financial statements.
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