What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-03 compared with 2020-05-04 · 100 added, 92 removed, 179 unchanged (52% of the section changed)

14 unchanged sentences

On March 11, 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a pandemic.

The recent outbreak of COVID-19 has resulted and will continue to result in significant economic disruption and has affected and will adversely affect our business in the future.

The outbreak of COVID-19 has resulted and will continue to result in significant economic disruption and has affected and will adversely affect our business in the future.

We have experienced and expect to continue to experience reductions in customer demand in several of our end-markets.

We expect that the social distancing measures, the reduced operational status of some of our suppliers and reductions in production at certain facilities will more meaningfully impact our operations in the second quarter, and general business uncertainty will continue to negatively impact demand in several of our end-markets in the second quarter, and possibly beyond.

We expect that the social distancing measures, the reduced operational status of some of our suppliers and reductions in production at certain facilities will continue to have an adverse impact on our operations, and general business uncertainty will continue to negatively impact demand in several of our end-markets in the near future.

Our foremost focus has been on the health and safety of our employees and customers.

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We are approaching our response to this outbreak with a recognition that we provide essential and important products and services upon which our customers rely upon daily to support critical functions.

Therefore, most of our U.S.

Therefore, most, but not all, of our U.S.

and global facilities have remained substantially operational during the outbreak while implementing enhanced safety protocols designed to protect the well-being of our employees.

Operations at the facilities in countries with broad-based mandated shutdowns (e.g., India and Brazil) were suspended for a portion of the first quarter.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

Unlike typical seasonal patterns in our business, we expect revenues to be down in the second quarter compared to the first quarter 2020.

Unlike typical seasonal patterns in our business, revenues were down in the second quarter compared to the first quarter 2020.

We will continue to proactively respond to the situation and may take further actions that alter our business operations as may be required by governmental authorities, or that we determine are in the best interests of our employees and customers.

7 unchanged sentences

dollar weakens against foreign currencies, our revenues and earnings are positively impacted.

During the three months ended March 29, 2020, approximately 45% of our consolidated revenues were to customers outside of the U.S.

For both the three and six months ended June 28, 2020, approximately 44% of our consolidated revenues were to customers outside of the U.S.

In addition to the translation impact described above, currency rate fluctuations have an economic impact on our financial results.

22 unchanged sentences

Earnout Consideration Payment

During the three months ended March 29, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $31.4 million in cash as per the purchase agreement.

During the six months ended June 28, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $31.4 million in cash as per the purchase agreement.

SAM was acquired on February 8, 2018 and is included in the Grass Valley disposal group.

Discontinued Operations Treatment of the Grass Valley Disposal Group and Impairment Charge

Grass Valley:

Discontinued Operations Treatment, Impairment Charges, and Subsequent Q3 Sale

During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale.

Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results.

As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, is now reported within discontinued operations.

As such, comparable prior period information has been recast to exclude the Grass Valley disposal group from continuing operations, with the exception of the Condensed Consolidated Cash Flow Statements.

The Grass Valley disposal group excludes certain Grass Valley pension plans that we will retain.

During the three months ended March 29, 2020, we wrote down the carrying value of the disposal group and recognized asset impairments totaling $23.2 million.

As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, has been reported within discontinued operations as of such time.

As a result, the comparable prior period information has been recast to exclude the Grass Valley disposal group from continuing operations, with the exception of the Condensed Consolidated Cash Flow Statements.

The Grass Valley disposal group excludes certain Grass Valley pension plans retained by Belden.

During the three and six months ended June 28, 2020, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $89.8 million and $113.0 million , respectively.

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 for gross cash consideration of $120.0 million, or approximately $67.0 million net of cash delivered with the business, plus various forms of deferred consideration.

The cash consideration is subject to certain working capital adjustments.

As part of the transaction, we also invested $3.0 million for a 9% equity interest in Grass Valley with the right to put the equity back to Black Dragon Capital at any time on or before October 31, 2020.

We deconsolidated Grass Valley as of July 2, 2020 accordingly.

Segment Transfer

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During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity.

We recognized an immaterial amount associated with this program during the three months ended March 29, 2020.

We recognized $3.5 million and $3.0 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively.

The cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis, of which $40.0 million is expected to be realized in 2020, with the full benefit materializing in 2021.

We expect to incur incremental costs of approximately $20.0 million for this program in 2020.

We expect to incur incremental costs of approximately $22.0 million for this program.

SPC, Opterna and FutureLink Integration Program

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The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions.

We recognized $2.2 million of severance and other restructuring costs for this program during the three months ended March 29, 2020.

We recognized $0.9 million and $3.1 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively.

These costs were incurred by the Enterprise Solutions segment.

We expect to incur incremental costs of approximately $2.5 million for this program in 2020.

We expect to incur incremental costs of approximately $1.5 million for this program.

Revolving Credit Agreement

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we drew down $190.0 million and subsequently repaid $100.0 million under our Revolving Credit Agreement during the second quarter.

O ur Revolving Credit Agreement provides a $400.0 million multi-currency asset-based revolving credit facility and matures on May 16, 2022.

Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position.

As of June 28, 2020, we had $177.8 million of available borrowing capacity on the Revolver.

Share Repurchase Program

1 unchanged sentence

This program is funded with cash on hand and cash flows from operating activities.

The program does not have an expiration date and may be suspended at any time at the discretion of the Company.

During the three months ended March 29, 2020, we repurchased 0.6 million shares of our common stock under the share repurchase program for an aggregate cost of $21.2 million and an average price per share of $35.85.

Subsequent Events

During the fiscal second quarter, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $13.8 million and an average price per share of $35.80.

Year-to-date, we have repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $35.0 million and an average price per share of $35.83.

See Notes 18 and 19.

Due to the uncertainties arising from the COVID-19 pandemic, out of an abundance of caution, at the beginning of the second quarter we borrowed $190.0 million under our Revolving Credit Agreement, which provides a $400.0 million multi-currency asset-based revolving credit facility.

The maturity date of the Revolver is May 16, 2022.

Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position.

See Notes 12 and 19.

During the three months ended June 28, 2020, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $13.8 million and an average price per share of $35.80.

During the six months ended June 28, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $35.0 million at an average price per share of $35.83.

Off-Balance Sheet Arrangements

1 unchanged sentence

Critical Accounting Policies

During the three months ended March 29, 2020:

During the six months ended June 28, 2020:

• We did not change any of our existing critical accounting policies from those listed in our 2019 Annual Report on Form 10-K other than updating our accounting policies for the adoption of ASU 2016-13;

3 unchanged sentences

Consolidated Income before Taxes

Three Months Ended

March 29, 2020 March 31, 2019 % Change

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 % Change June 28, 2020 June 30, 2019 % Change

(In thousands, except percentages)

8 unchanged sentences

Income from continuing operations before taxes 3,573 45,351 (92.1) % 20,656 79,456 (74.0) %

Revenues decreased $36.6 million in the three months ended March 29, 2020 from the comparable period of 2019 due to the following factor s:

• Lower sales volume due in part to changes in channel inventory levels resulted in a $45.4 million decrease in the three months ended March 29, 2020.

• Copper prices had a $4.4 million unfavorable impact on revenues in the three months ended March 29, 2020.

• Currency translation had a $3.8 million unfavorable impact on revenues in the three months ended March 29, 2020.

• Acquisitions contributed an estimated $17.0 million in the three months ended March 29, 2020.

Gross profit decreased $16.4 million in the three months ended March 29, 2020 from the comparable period of 2019 due to the decreases in revenues discussed above as well as unfavorable mix;

Revenues decreased $123.5 million and $160.2 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 due to the following factors:

• Lower sales volume due in part to changes in channel inventory levels resulted in a $119.2 million and $164.7 million decrease in revenues in the three and six months ended June 28, 2020, respectively.

• Copper prices had a $6.4 million and $10.8 million unfavorable impact on revenues in the three and six months ended June 28, 2020, respectively.

• Currency translation had a $4.8 million and $8.6 million unfavorable impact on revenues in the three and six months ended June 28, 2020, respectively.

• Acquisitions contributed an estimated $6.9 million and $23.9 million in revenues in the three and six months ended June 28, 2020, respectively.

Gross profit decreased $55.1 million and $71.5 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 due to the decreases in revenues discussed above as well as unfavorable mix;

partially offset by the impact of acquisitions.

Selling, general and administrative expenses increased $0.4 million in the three months ended March 29, 2020 from the comparable period of 2019.

Acquisitions and increases in restructuring costs each contributed $3.6 million to the increase in selling, general and administrative expenses over the year ago period.

These increases were partially offset by the benefits realized from our Cost Reduction Program, productivity improvement initiatives, and currency translations, which contributed to a decline in selling, general and administrative expenses of approximately $5.0 million, $1.3 million, and $0.5 million, respectively, as compared to the year ago period.

Research and development expenses increased $3.0 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily due to increased investments in R&D projects as well as acquisitions.

Amortization of intangibles decreased $2.0 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily due to certain intangible assets becoming fully amortized.

Operating income decreased $17.8 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily as a result of the $16.4 million decline in gross profit discussed above.

Net interest expense remained relatively flat year-over-year, with a decrease of $0.7 million, or 4.7%, in the three months ended March 29, 2020 from the comparable period of 2019 primarily as a result of currency translation.

Income from continuing operations before taxes decreased $17.0 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily due to the decline in operating income discussed above.

Three Months Ended

March 29, 2020 March 31, 2019 % Change

Selling, general and administrative expenses decreased $10.8 million and $10.3 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019.

For the three months ended June 28, 2020, benefits realized from our Cost Reduction Program as well as productivity improvement initiatives and currency translation contributed an estimated $13.7 million and $0.8 million decline in selling, general and administrative expenses, respectively;

partially offset by a $2.2 million and $1.5 million increase from restructuring charges and acquisitions, respectively.

For the six months ended June 28, 2020, benefits realized from our Cost Reduction Program as well as productivity improvement initiatives and currency translation contributed an estimated $19.9 million and $1.3 million decline in selling, general and administrative expenses, respectively;

partially offset by a $5.8 million and $5.1 million increase from restructuring charges and acquisitions, respectively.

Research and development expenses increased $0.3 million and $3.3 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily due to increased investments in R&D projects as well as acquisitions.

Amortization of intangibles decreased $3.1 million and $5.0 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily due to certain intangible assets becoming fully amortized.

Operating income decreased $41.6 million and $59.4 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decline in gross profit discussed above.

Net interest expense remained relatively flat year-over-year, with an increase of $0.3 million and a decrease of $0.4 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019.

The increase is the result of interest accrued on the Revolver borrowings during the second quarter of 2020, partially offset by currency translation.

During the second quarter, we borrowed $190.0 million and subsequently repaid $100.0 million on our Revolver.

Income from continuing operations before taxes decreased $41.8 million and $58.8 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily due to the decline in operating income discussed above.

Three Months Ended % Six Months Ended %

June 28, 2020 June 30, 2019 Change June 28, 2020 June 30, 2019 Change

(In thousands, except percentages)

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Effective tax rate 11.2 % 8.7 % 12.5 % 12.7 %

For the three months ended March 29, 2020, we recognized income tax expense of $2.2 million, representing an effective tax rate of 12.8%, which was impacted by a $1.1 million income tax benefit for certain foreign tax credits.

For the three months ended March 31, 2019, we recognized income tax expense of $6.2 million, representing an effective tax rate of 18.1%, which was impacted by an $0.8 million income tax benefit resulting from a change in our valuation allowance on foreign tax credits due to the restructuring of certain foreign operations.

For the three and six months ended June 28, 2020, we recognized income tax expense of $0.4 million and $2.6 million, respectively, representing an effective tax rate of 11.2% and 12.5%, respectively.

The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.1 million and $1.2 million in the three and six months ended June 28, 2020, respectively.

In March 2020, the Coronavirus Relief and Economic Security Act (CARES Act) was signed into law in the United States.

We are still analyzing the provisions of the CARES Act to determine if there will be any impact to our income tax provision for the year.

For the three and six months ended June 30, 2019, we recognized income tax expense of $4.0 million and $10.1 million, respectively, representing an effective tax rate of 8.7% and 12.7%, respectively.

The effective tax rates were impacted by an income tax benefit of $6.4 million as a result of changes in our estimated valuation allowance requirement related to foreign tax credits due to the restructuring of certain foreign operations.

These effective rates are also reflective of the impact of more favorable statutory tax rates applied to the earnings of these foreign operations due to the restructuring efforts.

Consolidated Adjusted Revenues and Adjusted EBITDA

Three Months Ended

March 29, 2020 March 31, 2019 % Change

Three Months Ended % Six Months Ended %

June 28, 2020 June 30, 2019 Change June 28, 2020 June 30, 2019 Change

(In thousands, except percentages)

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as a percent of adjusted revenues 11.6 % 16.7 % 12.4 % 16.0 %

Adjusted revenues decreased $36.6 million in the three months ended March 29, 2020 from the comparable periods of 2019 due to the following factor s:

• Lower sales volume due in part to changes in channel inventory levels resulted in a $45.4 million decrease in the three months ended March 29, 2020.

• Copper prices had a $4.4 million unfavorable impact on revenues in the three months ended March 29, 2020.

• Currency translation had a $3.8 million unfavorable impact on revenues in the three months ended March 29, 2020.

• Acquisitions contributed an estimated $17.0 million in the three months ended March 29, 2020.

Adjusted EBITDA decreased $15.6 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily as a result of the decrease in Adjusted Revenues discussed above.

Adjusted Revenues decreased $123.5 million and $160.2 million in the three and six months ended June 28, 2020 from the comparable periods of 2019 due to the following factors:

• Copper prices had a $6.4 million and $10.8 million unfavorable impact on revenues in the three and six months ended June 28, 2020, respectively.

• Currency translation had a $4.8 million and $8.6 million unfavorable impact on revenues in the three and six months ended June 28, 2020, respectively.

• Acquisitions contributed an estimated $6.9 million and $23.9 million in revenues in the three and six months ended June 28, 2020, respectively.

Adjusted EBITDA decreased $42.4 million and $58.0 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decrease in Adjusted Revenues discussed above.

Use of Non-GAAP Financial Information

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We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis.

As an example, we adjust for the purchase accounting effect of recording deferred revenue at fair value in order to reflect the revenues that would have otherwise been recorded by acquired businesses had they

remained as independent entities.

We believe this presentation is useful in evaluating the underlying performance of acquired companies.

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The following tables reconcile our GAAP results to our non-GAAP financial measures:

Three Months Ended

March 29, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands, except percentages)

1 unchanged sentence

GAAP net income (loss) $ (67,881) $ 42,290 $ (79,100) $ 67,468

Loss from discontinued operations, net of tax 26,110 2,757

Loss (income) from discontinued operations, net of tax 71,054 (895) 97,164 1,862

Amortization of intangible assets 16,017 19,068 32,202 37,232

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(1) See Note 11, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2) During the three months ended March 29, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

(2) During the three and six months ended June 28, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

During the three and six months ended June 30, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition as well as cost of sales for the adjustment of acquired inventory to fair value for the Opterna and FutureLink acquisitions.

Segment Results of Operations

1 unchanged sentence

Enterprise Solutions

Three Months Ended

March 29, 2020 March 31, 2019 % Change

Three Months Ended % Six Months Ended %

June 28, 2020 June 30, 2019 Change June 28, 2020 June 30, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

as a percent of segment revenues 10.9 % 14.5 % 11.3 % 12.6 %

Enterprise Solutions revenues increased $5.1 million in the three months ended March 29, 2020 from the comparable period of 2019 due to acquisitions, which attributed a $17.0 million increase in revenues.

This increase was partially offset by a decline in volume, lower copper prices, and unfavorable currency translation, which contributed an estimated $9.1 million, $2.0 million, and $0.8 million to the decline in revenues, respectively.

The decrease in volume was due in part to declines in the levels of inventory at our channel partners.

Enterprise Solutions EBITDA increased $3.1 million in the three months ended March 29, 2020 compared to the year ago period primarily as a result of the increase in revenues discussed above as well as improved productivity.

Enterprise Solutions revenues decreased $42.0 million and $36.8 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019.

As compared to the year ago period, for the three months ended June 28, 2020, decreases in volume, lower copper prices, and unfavorable currency translation contributed $45.2 million, $2.4 million, and $1.3 million, respectively, to the decline in revenues;

partially offset by acquisitions which grew revenues by $6.9 million.

For the six months ended June 28, 2020, decreases in volume, lower copper prices, and unfavorable currency translation contributed $54.2 million, $4.4 million, and $2.1 million, respectively, to the decline in revenues;

partially offset by acquisitions which grew revenues by $23.9 million over the year ago period.

Enterprise Solutions EBITDA decreased $13.3 million and $10.3 million in the three and six months ended June 28, 2020, respectively, compared to the year ago periods primarily as a result of the decrease in revenues discussed above.

Industrial Solutions

Three Months Ended

March 29, 2020 March 31, 2019 % Change

Three Months Ended % Six Months Ended %

June 28, 2020 June 30, 2019 Change June 28, 2020 June 30, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

as a percent of segment revenues 11.9 % 18.4 % 13.1 % 18.5 %

Industrial Solutions revenues decreased $41.7 million in the three months ended March 29, 2020 from the comparable period of 2019.

The decrease in revenues in the three months ended March 29, 2020 from the comparable period of 2019 was primarily due to decreases in volume, unfavorable currency translation, and lower copper prices, which had an estimated impact of $36.3 million, $3.0 million, and $2.4 million, respectively.

The decrease in volume was due in part to declines in the levels of inventory at our channel partners.

Industrial Solutions EBITDA decreased $19.1 million in the three months ended March 29, 2020 from the comparable period of 2019 primarily as a result of the changes in revenues discussed above.

Industrial Solutions revenues decreased $81.6 million and $123.3 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019.

The decrease in revenues in the three months ended June 28, 2020 from the comparable period of 2019 was primarily due to decreases in volume, lower copper prices, and unfavorable currency translation, which had an estimated impact of $74.1 million, $4.0 million, and $3.5 million, respectively.

The decrease in revenues in the six months ended June 28, 2020 from the comparable period of 2019 was primarily due to decreases in volume, unfavorable currency translation, and lower copper prices, which had an estimated impact of $110.4 million, $6.5 million, and $6.4 million, respectively.

The decrease in volume was due in part to declines in the levels of inventory at our channel partners during the six months ended June 28, 2020.

Industrial Solutions EBITDA decreased $29.3 million and $48.4 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decline in revenues discussed above.

Liquidity and Capital Resources

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economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product mix, and commodities pricing.

The following table is derived from our Condensed Consolidated Cash Flow Statements:

Three Months Ended

March 29, 2020 March 31, 2019

The following table is derived from our Condensed Consolidated Cash Flow Statements and includes the results and cash flow activity of Grass Valley consistent with the Condensed Consolidated Cash Flow Statements:

Six Months Ended

June 28, 2020 June 30, 2019

(In thousands)

Net cash used for:

Net cash provided by (used for):

Operating activities $ (12,130) $ 21,645

5 unchanged sentences

Cash and cash equivalents, end of period $ 393,040 $ 295,243

Operating cash flows were a use of cash of $52.1 million and $46.1 million in the first quarter of 2020 and 2019, respectively.

Operating cash flows declined $6.0 million compared to the prior year primarily due to the decrease in income.

Changes in operating assets and liabilities were a use of cash in the first quarter of 2020 and 2019, primarily as a result of the decline in accounts payable and accrued liabilities stemming from rebate payments to channel partners as well as incentive compensation to employees during the first quarter.

Inventories were a use of cash of $29.1 million in the first quarter of 2020 due in part to lower demand.

Net cash used for investing activities totaled $18.3 million in 2020, compared to $23.6 million for the comparable period of 2019.

Investing activities for the three months ended March 29, 2020 included capital expenditures of $20.9 million compared to $23.6 million in the comparable period of 2019.

The three months ended March 29, 2020 also included $2.1 million of proceeds from the sale of tangible property and the receipt of $0.6 million related to a working capital adjustment for the acquisition of SPC.

Net cash used for financing activities for the three months ended March 29, 2020 totaled $53.9 million, compared to $12.7 million for the comparable period of 2019.

Financing activities for the three months ended March 29, 2020 included a payment of earnout consideration of which $29.3 million is classified as a financing activity, payments under our share repurchase program of $21.2 million, cash dividend payments of $2.3 million, and net payments related to share based compensation activities of $1.0 million.

Financing activities for the three months ended March 31, 2019 included cash dividend payments of $10.7 million and net payments related to share based compensation activities of $1.9 million.

Our cash and cash equivalents balance, including discontinued operations, was $293.7 million as of March 29, 2020.

Operating cash flows were a use of cash of $12.1 million in the six months ended June 28, 2020 as compared to a source of cash of $21.6 million in the six months ended June 30, 2019.

Operating cash flows declined $33.8 million in the six months ended June 28, 2020 as compared to the year ago period primarily due to the decreases in revenues and income discussed above.

Net cash used for investing activities totaled $38.1 million in the six months ended June 28, 2020, compared to $101.3 million in the six months ended June 30, 2019.

Investing activities for the six months ended June 28, 2020 included capital expenditures of $41.7 million compared to $50.8 million in the comparable period of 2019.

The six months ended June 28, 2020 also included $3.1 million of proceeds from the sale of tangible property and the receipt of $0.6 million related to a working capital adjustment for the acquisition of SPC.

The six months ended June 30, 2019 included payments, net of cash acquired for acquisitions of $50.5 million primarily for the acquisition of Opterna.

Net cash provided by financing activities totaled $20.0 million for the six months ended June 28, 2020, compared to a use of cash of $46.4 million for the six months ended June 30, 2019.

Financing activities for the six months ended June 28, 2020 included borrowings on our revolver of $190.0 million, repayments of our revolver borrowings of $100.0 million, payments under our share repurchase program of $35.0 million, earnout consideration payments of $29.3 million, cash dividend payments of $4.6 million, and net payments related to share based compensation activities of $1.1 million.

Financing activities for the six months ended June 30, 2019 included payments under our share repurchase program of $22.8 million, cash dividend payments of $21.4 million, and net payments related to share based compensation activities of $2.0 million.

Our cash and cash equivalents balance, including discontinued operations, was $393.0 million as of June 28, 2020.

Of this amount, $195.0 million was held outside of the U.S.

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Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to withholding taxes payable to the respective foreign countries.

Our outstanding debt obligations as of March 29, 2020 consisted of $1,404.7 million of senior subordinated notes.

Our outstanding debt obligations as of June 28, 2020 consisted of $1,465.9 million of senior subordinated notes.

Furthermore, as of June 28, 2020, we also had borrowings of $90.0 million outstanding on our Revolver, with an additional $177.8 million of available borrowing capacity under our Revolver.

Additional discussion regarding our various borrowing arrangements is included in Note 12 to the Condensed Consolidated Financial Statements.

As of March 29, 2020, we had no borrowings and $303.4 million in available borrowing capacity under our Revolver.

At the beginning of the second quarter, we borrowed $190.0 million under our Revolver out of an abundance of caution due to the uncertainties arising from the COVID-19 pandemic.

See Notes 12 and 19.

Forward-Looking Statements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis