ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (4) Includes $6.4 million of after tax costs related to the acquisition of Rofin, a $1.4 million after-tax loss on our hedge of our foreign exchange risk related to the commitment of our term loan to finance the acquisition of Rofin, $0.8 million after-tax interest expense on the commitment of our term loan to finance the acquisition of Rofin and a benefit of $1.2 million from the renewal of the R&D tax credit for fiscal 2015. (5) Includes a charge of $1.3 million after tax for the impairment of our investment in SiOnyx, a $1.3 million after-tax charge for an accrual related to an ongoing customs audit, a benefit of $1.1 million from the renewal of the R&D tax credit for fiscal 2014 and a $1.3 million gain on our purchase of Tinsley in the fourth quarter of fiscal 2015. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes included under Item 15 of this annual report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in Item 1A,"Risk Factors" and elsewhere in this annual report. Please see the discussion of forward-looking statements at the beginning of this annual report under "Special Note Regarding Forward-Looking Statements." We have applied the FAST Act Modernization and Simplification of Regulation S-K, which limits the discussion to the two most recent fiscal years. This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for fiscal 2019 and fiscal 2018. For the comparison of fiscal 2018 and fiscal 2017, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2018 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on November 27, 2018. KEY PERFORMANCE INDICATORS Below is a summary of some of the quantitative performance indicators (as defined below) that are evaluated by management to assess our financial performance. Some of the indicators are non-GAAP measures and should not be considered as an alternative to any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. Definitions and analysis of these performance indicators are as follows: Net sales include sales of lasers, laser systems, related accessories and service. Net sales for fiscal 2019 decreased 29.6% in our OLS segment and decreased 15.4% in our ILS segment from fiscal 2018. For a description of the reasons for changes in net sales refer to the "Results of Operations" section below. Gross profit as a percentage of net sales ("gross profit percentage") is calculated as gross profit for the period divided by net sales for the period. Gross profit percentage for OLS decreased to 47.3% in fiscal 2019 from 52.7% in fiscal 2018. Gross 43 Net Sales Gross Profit as a Percentage of Net Sales Fiscal 2019 2018 Net Sales—OEM Laser Sources $ 886,676 $ 1,259,477 Net Sales—Industrial Lasers & Systems $ 543,964 $ 643,096 Gross Profit as a Percentage of Net Sales—OEM Laser Sources 47.3 % 52.7 % Gross Profit as a Percentage of Net Sales—Industrial Lasers & Systems 13.3% 26.7% Research and Development Expenses as a Percentage of Net Sales 8.2 % 7.0 % Income From Continuing Operations Before Income Taxes $ 60,048 $ 361,555 Net Cash Provided by Operating Activities $ 181,401 $ 236,111 Days Sales Outstanding in Receivables 67 67 Annualized Fourth Quarter Inventory Turns 2.1 2.2 Net Income From Continuing Operations as a Percentage of Net Sales 3.8% 13.0% Adjusted EBITDA as a Percentage of Net Sales 18.1 % 28.9 %