OSI SYSTEMS INC

Previous wording

This management’s discussion and analysis of financial condition as of December 31, 2025 and results of operations for the three and six months ended December 31, 2025 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 ended June 30, 2025 filed with the SEC.

Current wording

This management’s discussion and analysis of financial condition as of March 31, 2026 and results of operations for the three and nine months ended March 31, 2026 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 ended June 30, 2025 filed with the SEC.

Previous wording

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 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 ended June 30, 2025 (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 the SEC. 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; government shutdown; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending, budgetary, procurement, and trade policies adverse to our businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption; global economic uncertainty, including the impact of tariffs; 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; unfavorable interest rate fluctuations; effect of changes in tax legislation, guidance and interpretations; 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 fiscal year; 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 tho…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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 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 ended June 30, 2025 (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 the SEC. 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; government shutdown; delays in revenue recognition related to the timing of customer acceptance; the impact of potential information technology, cybersecurity or data security breaches; changes in domestic and foreign government spending, budgetary, procurement, and trade policies adverse to our businesses; the impact of the Russia-Ukraine conflict or conflicts in the Middle East, including the potential for broad economic disruption and increased global tensions; global economic uncertainty, including the impact of tariffs; 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; unfavorable interest rate fluctuations; effect of changes in tax legislation, guidance and interpretations; 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 fiscal year; 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, in…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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) 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; and (c) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories.

Current wording

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, turnkey security screening solutions and radio frequency equipment; (b) 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; and (c) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories.

Previous wording

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.

Current wording

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. We also advance the application of radio frequency broadcast transmission and scientific and industrial equipment for a global customer base across various sectors.

Previous wording

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, interest rates, and labor shortages. Increasing diplomatic and trade friction between the U.S. and China has also created significant uncertainty in the global economy. These global macroeconomic factors, coupled with political unrest internationally and the volatile U.S. political climate, have created uncertainty and impacted demand for certain of our products and services. The continued conflict between Russia and Ukraine 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 adverse effect on our business, results of operations and financial condition.

Current wording

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, interest rates, and labor shortages. Increasing diplomatic and trade friction between the U.S. and China has also created significant uncertainty in the global economy. These global macroeconomic factors, coupled with political unrest internationally and the volatile U.S. political climate, have created uncertainty and impacted demand for certain of our products and services. The continued conflict between Russia and Ukraine and in the Middle East 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 adverse effect on our business, results of operations and financial condition.

Previous wording

Government Policies. Our results of operations and cash flows could be materially affected by changes in U.S. or foreign government legislative, regulatory or enforcement policies, as well as potential U.S. government shutdowns.

Current wording

Government Policies. Our results of operations and cash flows could be materially affected by changes in U.S. or foreign government legislative, regulatory or enforcement policies, as well as potential or actual U.S. government shutdowns, including the impact on near-term bookings and revenues of the recent Department of Homeland Security shutdown.

Previous wording

Currency Exchange Rates. On a year-over-year basis, currency exchange rates positively impacted reported sales by approximately 0.6% for the six months ended December 31, 2025 compared to the six months ended December 31, 2024, primarily due to the weakening of the U.S. dollar against other foreign currencies in 2025. Any strengthening of the U.S. dollar against foreign currencies would adversely impact our sales for the remainder of the fiscal year, and any weakening of the U.S. dollar against foreign currencies would positively impact our sales for the remainder of the fiscal year.

Current wording

Currency Exchange Rates. On a year-over-year basis, currency exchange rates positively impacted reported sales by approximately 0.8% for the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025, primarily due to the weakening of the U.S. dollar against other foreign currencies in 2026. Any strengthening of the U.S. dollar against foreign currencies would adversely impact our sales for the remainder of the fiscal year, and any weakening of the U.S. dollar against foreign currencies would positively impact our sales for the remainder of the fiscal year.

Previous wording

Revenues for the Security division during Q2 fiscal 2026 increased year-over-year due to increases in product and service revenues of approximately $17.7 million and $27.0 million, respectively. The increase in product revenues was primarily driven by sales of aviation screening systems and radio frequency (RF) products. The increase in service revenue was due primarily to an increase in the installed base of products.

Current wording

Revenues for the Security division during Q3 fiscal 2026 increased year-over-year due primarily to increases in service revenues of approximately $6.1 million, offset by a slight decrease in product revenue of $1.7 million. The increase in service revenue was due primarily to an increase in the installed base of products.

Previous wording

Revenues for the Healthcare division during Q2 fiscal 2026 decreased year-over-year primarily due to a decrease in patient monitoring sales.

Current wording

Revenues for the Healthcare division during Q3 fiscal 2026 decreased year-over-year primarily due to a decrease in patient monitoring sales and service of $5.0 million and $1.0 million, respectively, partially offset by an increase in cardiology product sales of $3.0 million.

Previous wording

Gross profit is impacted by sales volume and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, tariffs, and logistics. Gross profit increased approximately $4.5 million in Q2 fiscal 2026 as compared to the prior year driven by the increase in sales. The gross margin decreased as compared to the prior year comparable period as the prior year period had a favorable mix of Security division product revenues.

Current wording

Gross profit is impacted by sales volume and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, tariffs, and logistics. Gross profit were comparable to the same period last year. The gross margin decreased as compared to the prior year comparable period as the prior year period had a more favorable mix of Security division product revenues.

Previous wording

Selling, general and administrative*.* Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, and depreciation and amortization expense. On an 11% year-over-year increase in revenues, our SG&A expenses for Q2 fiscal 2026 were comparable to the same period last year.

Current wording

Selling, general and administrative*.* Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, foreign currency translation, and depreciation and amortization expense. Our SG&A expenses for Q3 fiscal 2026 were $1.7 million lower than in the same prior-year period, primarily due to a favorable impact from foreign currency exchange rates, favorable settlement of a post-acquisition claim and lower professional fees, partially offset by an increase in bad debt expense.

Previous wording

Research and development*.* Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expenses increased $1.5 million in Q2 fiscal 2026 as compared to Q2 fiscal 2025 driven by increased compensation costs to support new product development initiatives in our Security and Healthcare divisions.

Current wording

Research and development. Research and development (“R&D”) expenses include research related to new product development and product enhancements. R&D expenses were higher than the same period last year primarily due to an increase in compensation costs to support new product development initiatives in our Security and Healthcare divisions.

Previous wording

Impairment, restructuring and other charges. Impairment, restructuring and other charges generally consist of costs relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During Q2 fiscal 2026, we recognized $2.9 million in impairment, restructuring and other charges, which included $1.0 million for impairment of assets, $0.7 million for employee terminations and $1.2 million for non-recurring business unit modifications in our Healthcare division. During Q2 fiscal 2025, we recognized $0.2 million primarily for acquisition activity.

Current wording

Impairment, restructuring and other charges. Impairment, restructuring and other charges generally consist of costs relating to reductions in our workforce, facilities consolidation, costs related to acquisition activity, and other non-recurring charges. During Q3 fiscal 2026, we recognized $6.2 million in impairment, restructuring and other charges, which included $0.2 million for impairment of assets, $1.7 million for employee terminations, $2.0 million for acquisition-related costs, $1.2 million for non-recurring business unit modifications and $1.1 million for a legal settlement, primarily in our Healthcare division. During Q3 fiscal 2025, we recognized $2.3 million in impairment, restructuring and other charges, which included $1.8 million for employee terminations and $0.5 million for facility closure costs.

Previous wording

Interest and other expense, net*.* Interest and other expense, net was $8.6 million and $10.7 million for Q2 fiscal 2025 and 2026, respectively. The increase was due to a charge included in other expense in Q2 fiscal 2026 of $4.4 million for prior service cost amortization due to a pension plan amendment in December 2025 for our former CEO. This increase was partially offset by a decrease in interest expense, net as a result of lower average interest rates on our borrowings due to new convertible notes and paydown of our revolving credit facility and higher interest income on increased levels of cash in Q2 fiscal 2026 compared to the same prior year period.

Current wording

Interest and other expense, net. Interest and other expense, net was $8.2 million and $4.0 million for Q3 fiscal 2025 and 2026, respectively. The decrease was due to lower average interest rates on our borrowings due to the paydown of our revolving credit facility using proceeds from the issuance of the 0.50% 2031 Notes in November 2025 and higher interest income on increased levels of cash in Q3 fiscal 2026 compared to the same prior year period.

Previous wording

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 Q2 fiscal 2025 and 2026, we recognized a provision for income taxes of $11.5 million and $9.4 million, respectively. The effective tax rates for Q2 fiscal 2025 and 2026 were 23.3% and 19.5%, respectively. During Q2 fiscal 2025, we recognized a net discrete tax benefit of $0.3 million related to equity-based compensation under ASU 2016-09. During Q2 fiscal 2026, we recognized a net discrete tax benefit of $0.8 million related to equity-based compensation under ASU 2016-09 and a benefit of $1.0 million from changes in prior year estimates.

Current wording

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 Q3 fiscal 2025 and 2026, we recognized a provision for income taxes was $6.9 million and $9.0 million, respectively. The effective tax rates for Q3 fiscal 2025 and 2026 were 14.3% and 18.3%, respectively. During Q3 fiscal 2026 we recognized net discrete tax benefits of $2.6 million related to equity-based compensation under ASU 2016- 09 and uncertain tax benefits. During Q3 fiscal 2025 we recognized net discrete tax benefits of $4.5 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates and uncertain tax benefits.

Previous wording

Results of Operations for the Six Months Ended December 31, 2024 (YTD Q2 Fiscal 2025) Compared to the Six Months Ended December 31, 2025 (YTD Q2 Fiscal 2026) (amounts in millions)

Current wording

Results of Operations for the Nine Months Ended March 31, 2025 (YTD Q3 Fiscal 2025) Compared to the Nine Months Ended March 31, 2026 (YTD Q3 Fiscal 2026) (amounts in millions)

Previous wording

Revenues for the Security division during YTD Q2 fiscal 2026 increased year-over-year due to an increase in product and service revenues of approximately $27.3 million and $47.4 million, respectively. The increase in product revenues was primarily driven by growth in aviation screening systems and RF products. The increase in service revenue was due primarily to an increase in the installed base of products.

Current wording

Revenues for the Security division during YTD Q3 fiscal 2026 increased year-over-year due to an increase in product and service revenues of approximately $25.5 million and $53.5 million, respectively. The increase in product revenues was primarily driven by growth in aviation screening systems and radio frequency products. The increase in service revenue was due primarily to an increase in the installed base of products.

Previous wording

Revenues for the Healthcare division during YTD Q2 fiscal 2026 decreased year-over-year primarily due to a decrease in patient monitoring sales.

Current wording

Revenues for the Healthcare division during YTD Q3 fiscal 2026 decreased year-over-year primarily due to a decrease in patient monitoring sales and service of $11.2 million and $1.2 million, respectively, partially offset by an increase in cardiology product sales of $4.7 million.

Previous wording

Gross profit increased approximately $6.1 million in YTD Q2 fiscal 2026 as compared to the prior year driven by the increase in sales. The gross margin decreased as compared to the prior year comparable period as the prior year period had a favorable mix of Security division product revenues.

Current wording

Gross profit increased approximately $6.2 million in YTD Q3 fiscal 2026 as compared to the prior year driven by the increase in sales. The gross margin decreased as compared to the prior year comparable period as the prior year period had a favorable mix of Security division product revenues.

Previous wording

Selling, general and administrative*.* SG&A expenses for YTD Q2 fiscal 2026 were $5.7 million lower than in the same prior-year period, primarily due to decreased employee compensation and a favorable impact of foreign currency exchange rates in YTD Q2 fiscal 2026 compared to the same prior-year period.

Current wording

Selling, general and administrative*.*SG&A expenses for YTD Q3 fiscal 2026 were $7.6 million lower than in the same prior-year period, primarily due to decreased employee compensation, favorable settlement of a post-acquisition claim and a favorable impact from foreign currency exchange rates, partially offset by higher bad debt expense in YTD Q3 fiscal 2026 compared to the same prior-year period.

Previous wording

Research and development*.* R&D expense for YTD Q2 fiscal 2026 increased $4.2 million over the same prior-year period driven by increased compensation costs to support new product development initiatives in our Security division and Healthcare division.

Current wording

Research and development. R&D expenses for YTD Q3 fiscal 2026 increased $5.0 million over the same prior-year period driven by increased compensation costs to support new product development initiatives in our Security division and Healthcare division.

Previous wording

Impairment, restructuring and other charges. Impairment, restructuring and other charges increased by $4.2 million over the same prior-year period. In YTD Q2 fiscal 2026, we recognized $5.6 million in impairment, restructuring and other charges, which included $1.0 million for impairment of assets, $1.1 million for employee terminations, $1.3 million for non-recurring business unit modifications in our Healthcare division, and $2.2 million of non-recurring charges in our Security division. In YTD Q2 fiscal 2025, we recognized $1.4 million in restructuring and other charges, which included $0.6 million in acquisition related costs, $0.2 million for facility closure costs for operational efficiency activities, and $0.6 million for employee terminations.

Current wording

Impairment, restructuring and other charges. In YTD Q3 fiscal 2026, we recognized $11.8 million in impairment, restructuring and other charges, which included $1.2 million for impairment of assets, $2.7 million for employee terminations, $2.0 million for acquisition-related costs, $2.6 million for non-recurring business unit modifications and $1.1 million for a legal settlement in our Healthcare division, and $2.2 million of non-recurring charges in our Security division. In YTD Q3 fiscal 2025, we recognized $3.6 million in restructuring and other charges, which included $0.6 million in acquisition-related costs, $0.8 million for facility closure costs for operational efficiency activities, and $2.3 million for employee terminations.

Previous wording

Interest and other expense, net*.* Interest and other expense, net was $16.0 million and $18.1 million for YTD Q2 fiscal 2025 and 2026, respectively. The increase was due to a charge included in other expense in Q2 fiscal 2026 of $4.4 million for prior service cost amortization due to a pension plan amendment in December 2025 for our former CEO. This increase was partially offset by a decrease in interest expense, net as a result of lower average interest rates on our borrowings due to new convertible notes and paydown of our revolving credit facility and higher interest income on increased levels of cash in YTD Q2 fiscal 2026 compared to the same prior year period.

Current wording

Interest and other expense, net*.* Interest and other expense, net was $24.2 million and $22.1 million for YTD Q3 fiscal 2025 and 2026, respectively. The decrease was a result of lower average interest rates on our borrowings due to the paydown of our revolving credit facility using proceeds from the new convertible notes and higher interest income on increased levels of cash in YTD Q3 fiscal 2026 compared to the same prior year period. This decrease was partially offset by an increase in other expense in fiscal 2026 of $4.4 million for prior service cost amortization due to a pension plan amendment in December 2025 for our former CEO.

Previous wording

Income taxes*.* For YTD Q2 fiscal 2025 and 2026, we recognized a provision for income taxes of $16.6 million and $14.5 million, respectively. The effective tax rates for YTD Q2 fiscal 2025 and 2026 were 22.9% and 19.7%, respectively. For YTD Q2 fiscal 2025, we recognized a discrete tax benefit of $0.8 million related to equity-based compensation under ASU 2016-09. For YTD Q2 fiscal 2026,

Current wording

Income taxes. For YTD Q3 fiscal 2025 and 2026, we recognized a provision for income taxes of $23.4 million and $23.5 million, respectively. The effective tax rates for YTD Q3 fiscal 2025 and 2026 were 19.5% and 19.1%, respectively. For YTD Q3 fiscal 2025, we recognized a discrete tax benefit of $1.3 million related to equity-based compensation under ASU 2016-09 and a discrete tax benefit of $4.1 for changes in prior year estimates and uncertain tax benefits. For YTD Q3 fiscal 2026, we recognized a discrete tax benefit of $2.1 million related to equity-based compensation under ASU 2016-09 and a benefit of $3.3 million for changes in prior year estimates and uncertain tax benefits.

Previous wording

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled $336.7 million at December 31, 2025 compared to $106.4 million at June 30, 2025. 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 beyond that. 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 current obligations in the U.S.

Current wording

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facilities. Cash and cash equivalents totaled $345.2 million at March 31, 2026 compared to $106.4 million at June 30, 2025. 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 beyond that. 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 current obligations in the U.S.

Previous wording

In November 2025, we issued an aggregate of $575.0 million principal amount of 0.5% convertible senior notes due in February 2031. In connection with the issuance of the 2031 Notes, we repurchased 546,945 shares of our common stock for approximately $146.1 million.

Current wording

In November 2025, we issued an aggregate of $575.0 million principal amount of 0.5% convertible senior notes due in February 2031. In connection with the issuance of the 2031 Notes, we repurchased 546,945 shares of our common stock for approximately $146.1 million. We also repaid $288.1 million of borrowings under our revolving credit facility.

Previous wording

In July 2025 we amended and extended our revolving credit facility to mature in July 2030, to increase the limit from $600 million to $725 million and replaced the $128.1 million term loan with a new $100.0 million term loan. The sub-limit for letters of credit was increased from $300 million to $350 million, which includes up to $300 million for borrowings in certain foreign currencies. As of December 31, 2025, there were no borrowings outstanding under the revolving credit facility, $113.6 million of outstanding letters of credit, and $97.5 million outstanding under the term loan. As of December 31, 2025, the total amount available under our revolving credit facility was $611.4 million. See Note 8 to the consolidated financial statements for further discussion.

Current wording

In July 2025 we amended and extended our credit facility to mature in July 2030, to increase the revolving limit from $600 million to $725 million and replaced the $128.1 million term loan with a new $100.0 million term loan. The sub-limit for letters of credit was increased from $300 million to $350 million, which includes up to $300 million for borrowings in certain foreign currencies. As of March 31, 2026, there were no borrowings outstanding under the revolving credit facility, $106.7 million of outstanding letters of credit, and $95.0 million outstanding under the term loan. As of March 31, 2026, the total amount available under our credit facility was $618.3 million. See Note 8 to the consolidated financial statements for further discussion.

Previous wording

*Cash Provided by 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. For YTD Q2 fiscal 2026, cash provided by operations was $79.3 million compared to $15.4 million in the comparable prior-year period. The net increase in cash flows from operating activities was due primarily to favorable improvements in net working capital compared to the prior-year comparable period which were largely attributable to changes in accounts receivable, prepaid expenses and other current assets, and accounts payable, partially offset by unfavorable changes in advances from customers, other liabilities and inventory to support future growth.

Current wording

*Cash Provided by 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. For YTD Q3 fiscal 2026, cash provided by operations was $93.8 million compared to $97.0 million in the comparable prior-year period. The net decrease in cash flows from operating activities was due primarily to unfavorable changes in net working capital, including lower advances from customers and lower impact of changes in deferred revenue compared to the same prior-year period. These unfavorable impacts were partially offset by favorable changes in accounts receivable, inventories, and accrued payroll and related expenses, as well as higher net income compared to the same prior-year period.

Previous wording

Cash Used in Investing Activities. Net cash used in investing activities was $21.4 million for YTD Q2 fiscal 2026 as compared to $97.6 million in the same prior year period. The decrease in cash used in investing activities was primarily due to cash paid for the acquisition of a business in YTD Q2 fiscal 2025 compared to a negligible amount in YTD Q2 fiscal 2026. Capital expenditures for YTD Q2 fiscal year 2026 were $13.7 million compared to $13.2 million in the same prior-year period.

Current wording

Cash Used in Investing Activities. Net cash used in investing activities was $28.5 million for YTD Q3 fiscal 2026 as compared to $106.4 million in the same prior year period. The decrease in cash used in investing activities was primarily due to cash paid for the acquisition of a business in YTD Q3 fiscal 2025 compared to a negligible amount in YTD Q3 fiscal 2026. Capital expenditures for YTD Q3 fiscal year 2026 were $21.3 million compared to $17.7 million in the same prior-year period. Proceeds from the sale of property and equipment for YTD Q3 fiscal 2026 were primarily due to the sale of a facility located in Dallas, Texas.

Previous wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $172.6 million for YTD Q2 fiscal 2026, compared to $89.2 million during the same prior-year period. The increase in cash flows from financing activities was primarily due net proceeds of $562.9 million from issuance of the 2031 Notes, partially offset by (1) net repayment of $178.0 million on our revolving credit facility and (2) the repurchase of common shares of $146.1 million. This is compared to net proceeds of $340.5 million from issuance of the 2029 Notes, partially offset by (1) net repayment of $148.0 million on our revolving credit facility and (2) repurchases of common shares for an aggregate of $80.4 million in the same prior-year period. In connection with the July 2025 amendment and extension of our revolving credit facility, we replaced the $128.1 million term loan with a new $100.0 million term loan. Taxes paid related to net share settlement of equity awards were $36.3 million during YTD Q2 fiscal 2026 compared to $22.6 million in the same prior-year period.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $174.1 million for YTD Q3 fiscal 2026, compared to $10.4 million during the same prior-year period. The increase in cash flows from financing activities was primarily due to net proceeds of $562.9 million from issuance of the 2031 Notes, partially offset by (1) net repayment of $178.0 million on our revolving credit facility and (2) the repurchase of our common shares for an aggregate of $146.1 million. This is compared to net proceeds of $340.6 million from issuance of the 2029 Notes, partially offset by (1) net repayment of $228.0 million on our revolving credit facility and (2) repurchases of common shares for an aggregate of $80.4 million in the same prior-year period. In connection with the July 2025 amendment and extension of our revolving credit facility, we replaced the $128.1 million term loan with a new $100.0 million term loan. Taxes paid related to net share settlement of equity awards were $36.3 million during YTD Q3 fiscal 2026 compared to $22.6 million in the same prior-year period.

Previous wording

Our cash and cash equivalents totaled $336.7 million at December 31, 2025. Of this amount, approximately 32% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were held primarily by our subsidiaries in United Kingdom, India, Singapore, Canada, and Mexico and to a lesser extent in Malaysia, Albania, and Germany, among other countries. We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash

Current wording

Our cash and cash equivalents totaled $345.2 million at March 31, 2026. Of this amount, approximately 25% 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, India, Singapore, Canada, and Malaysia and to a lesser extent in Albania, Australia, and Guatemala, among other countries. 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 our U.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.

Previous wording

During the six months ended December 31, 2025, other than the reduction of our term loan in July 2025 and issuance of the 2031 Notes in November 2025, 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, 2025. See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.

Current wording

During the nine months ended March 31, 2026, other than the replacement of the $128.1 million term loan with a $100.0 million term loan in July 2025 in connection with the expansion and extension of our credit facility and issuance of the 2031 Notes in November 2025, 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, 2025. See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.

Previous wording

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption. See Note 1 for further discussion. There were no new pronouncements adopted in the second quarter of fiscal year 2026.

Current wording

From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our Consolidated Financial Statements upon adoption. See Note 1 for further discussion. There were no new pronouncements adopted in the third quarter of fiscal year 2026.