What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-02 compared with 2020-08-03 · 89 added, 90 removed, 189 unchanged (49% 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 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 the outbreak of COVID-19 will continue to result in significant economic disruption and will continue to adversely affect our business in the future.

As compared to the year ago period, we 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 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.

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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, 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.

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.

Approximately 43% of our consolidated revenues during the quarter ended September 27, 2020 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 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.

Grass Valley:

Discontinued Operations Treatment, Impairment Charges, and Subsequent Q3 Sale

During the nine months ended September 27, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $31.4 million in cash in accordance with the purchase agreement.

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

Grass Valley Disposal

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, 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.

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, and the comparable prior period information has been recast accordingly 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.

Prior to the divestiture, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million during the nine months ended September 27, 2020 .

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 and recognized a gain of $2.7 million, net of a $2.0 million income tax benefit.

The terms of the sale included gross cash consideration of $120.0 million, or approximately $59.5 million net of cash delivered with the business and certain preliminary working capital adjustments.

The sale also included deferred consideration consisting of a $175.0 million seller’s note that matures in 2025, up to $88 million in PIK interest on the seller’s note, and $178.0 million in potential earnout payments.

Based upon a third party valuation specialist, the estimated fair value of the seller’s note is $34.9 million, which we recorded in Other Long-Lived Assets.

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.

On October 23, 2020, we notified Black Dragon Capital that we are exercising our right to put the equity back to them.

We expect to finalize the sale of our equity interest during the fourth quarter of 2020.

We deconsolidated Grass Valley as of July 2, 2020 and are accounting for our equity interest under the cost method.

We are also performing certain services for Grass Valley under a transition services agreement, which totaled $1.0 million during the three months ended September 27, 2020.

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 $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.

We recognized $0.2 million and $3.2 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 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.

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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 $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.

We recognized $0.9 million and $4.0 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 2020, respectively.

These costs were incurred by the Enterprise Solutions segment.

1 unchanged sentence

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.

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we borrowed $190.0 million on our Revolver at the beginning of the second quarter.

As a result of improving and sufficient cash flow and liquidity throughout the year, we subsequently repaid $100.0 million and the remaining $90.0 million during the second and third quarter, respectively.

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.

A s of September 27, 2020, our available borrowing capacity was $265.2 million.

Share Repurchase Program

1 unchanged sentence

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

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.

During the nine months ended September 27, 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 six months ended June 28, 2020:

During the nine months ended September 27, 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;

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Consolidated Income before Taxes

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 27, 2020 September 29, 2019 % Change September 27, 2020 September 29, 2019 % Change

(In thousands, except percentages)

8 unchanged sentences

Income from continuing operations before taxes 21,200 44,084 (51.9) % 41,856 123,540 (66.1) %

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;

Revenues decreased $57.3 million and $217.4 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 due to the following factors:

• Lower sales volume resulted in a $67.4 million and $232.0 million decrease in revenues in the three and nine months ended September 27, 2020, respectively.

• Copper prices had a $3.9 million favorable and $6.9 million unfavorable impact on revenues in the three and nine months ended September 27, 2020, respectively.

• Currency translation had a $1.3 million favorable and $7.3 million unfavorable impact on revenues in the three and nine months ended September 27, 2020, respectively.

• Acquisitions contributed an estimated $4.9 million and $28.8 million in revenues in the three and nine months ended September 27, 2020, respectively.

Gross profit decreased $31.2 million and $102.7 million in the three and nine months ended September 27, 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 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

Selling, general and administrative expenses decreased $13.2 million and $23.5 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019.

For the three months ended September 27, 2020, benefits realized from our Cost Reduction Program coupled with productivity improvement initiatives and a decrease in restructuring charges contributed an estimated $13.4 million and $1.0 million decline in selling, general and administrative expenses, respectively;

partially offset by a $1.2 million increase from acquisitions.

For the nine months ended September 27, 2020, benefits realized from our Cost Reduction Program coupled with productivity improvement initiatives and currency translation contributed an estimated $33.3 million and $1.3 million decline in selling, general and administrative expenses, respectively;

partially offset by a $6.3 million and $4.8 million increase from acquisitions and restructuring charges, respectively.

Research and development expenses increased $6.3 million and $9.6 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.

Amortization of intangibles decreased $2.9 million and $8.0 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily due to certain intangible assets becoming fully amortized.

Operating income decreased $21.4 million and $80.8 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decline in gross profit discussed above.

Net interest expense increased $1.6 million and $1.2 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019.

The increase is primarily the result of interest accrued on the Revolver borrowings during the three and nine months ended September 27, 2020.

During the second quarter, we borrowed $190.0 million on our Revolver and then subsequently repaid $100.0 million and the remaining $90.0 million during the second and third quarter, respectively.

Income from continuing operations before taxes decreased $22.9 million and $81.7 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily due to the decline in operating income discussed above.

Three Months Ended % Nine Months Ended %

September 27, 2020 September 29, 2019 Change September 27, 2020 September 29, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

Effective tax rate 3.0 % 13.7 % 7.7 % 13.1 %

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.

For the three and nine months ended September 27, 2020, we recognized income tax expense of $0.6 million and $3.2 million, respectively, representing an effective tax rate of 3.0% and 7.7%, respectively.

The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.9 million and $2.1 million in the three and nine months ended September 27, 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.

For the three and nine months ended September 29, 2019, we recognized income tax expense of $6.1 million and $16.2 million, respectively, representing an effective tax rate of 13.7% and 13.1%, respectively.

The effective tax rates were impacted by an income tax benefit of $5.7 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.

These effective rates were 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 % Six Months Ended %

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

Three Months Ended % Nine Months Ended %

September 27, 2020 September 29, 2019 Change September 27, 2020 September 29, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

as a percent of adjusted revenues 13.7 % 16.9 % 12.8 % 16.3 %

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.

Adjusted Revenues decreased $57.3 million and $217.4 million in the three and nine months ended September 27, 2020 from the comparable periods of 2019 due to the following factors:

• Lower sales volume resulted in a $67.4 million and $232.0 million decrease in revenues in the three and nine months ended September 27, 2020, respectively.

• Copper prices had a $3.9 million favorable and $6.9 million unfavorable impact on revenues in the three and nine months ended September 27, 2020, respectively.

• Currency translation had a $1.3 million favorable and $7.3 million unfavorable impact on revenues in the three and nine months ended September 27, 2020, respectively.

• Acquisitions contributed an estimated $4.9 million and $28.8 million in revenues in the three and nine months ended September 27, 2020, respectively.

Adjusted EBITDA decreased $24.8 million and $82.8 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decrease in Adjusted Revenues discussed above, partially offset by the benefits realized from our SG&A Cost Reduction Program.

Use of Non-GAAP Financial Information

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019

(In thousands, except percentages)

1 unchanged sentence

GAAP net income (loss) $ 17,081 $ (297,015) $ (62,019) $ (229,547)

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

Loss from discontinued operations, net of tax 6,231 335,046 103,395 336,908

Gain on disposal of discontinued operations, net of tax (2,743) — (2,743) —

Amortization of intangible assets 16,104 19,026 48,306 56,258

9 unchanged sentences

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

(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.

(2) During the nine months ended September 27, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

During the nine months ended September 29, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition, and during the three and nine months ended September 29, 2019, we recognized 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 % Six Months Ended %

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

Three Months Ended % Nine Months Ended %

September 27, 2020 September 29, 2019 Change September 27, 2020 September 29, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

as a percent of segment revenues 11.5 % 14.5 % 11.4 % 13.3 %

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;

Enterprise Solutions revenues decreased $18.1 million and $55.0 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019.

The decrease in revenues in the three months ended September 27, 2020 was primarily due to decreases in volume of $24.9 million partially offset by acquisitions, higher copper prices, and favorable currency translation of $4.9 million, $1.4 million, and $0.5 million, respectively.

For the nine months ended September 27, 2020, decreases in volume, lower copper prices, and unfavorable currency translation contributed $79.2 million, $3.0 million, and $1.6 million, respectively, to the decline in revenues;

partially offset by acquisitions which grew revenues by $28.8 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.

Enterprise Solutions EBITDA decreased $9.6 million and $19.9 million in the three and nine months ended September 27, 2020, respectively, compared to the year ago periods primarily as a result of the decrease in revenues discussed above, partially offset by the benefits realized from our SG&A Cost Reduction Program.

Industrial Solutions

Three Months Ended % Six Months Ended %

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

Three Months Ended % Nine Months Ended %

September 27, 2020 September 29, 2019 Change September 27, 2020 September 29, 2019 Change

(In thousands, except percentages)

2 unchanged sentences

as a percent of segment revenues 15.6 % 19.2 % 13.9 % 18.7 %

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.

Industrial Solutions revenues decreased $39.1 million and $162.5 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019.

The decrease in revenues in the three months ended September 27, 2020 was primarily due to decreases in volume of $42.4 million partially offset by higher copper prices and favorable currency translation of $2.5 million and $0.8 million, respectively.

For the nine months ended September 27, 2020, decreases in volume, unfavorable currency translation, and lower copper prices contributed $152.9 million, $5.7 million, and $3.9 million, respectively, to the decline in revenues.

Industrial Solutions EBITDA decreased $16.5 million and $64.9 million in the three and nine months ended September 27, 2020, respectively, from the comparable periods of 2019 primarily as a result of the decline in revenues discussed above and increased investments in R&D projects as we continue our commitment to growth initiatives, partially offset by the benefits realized from our SG&A Cost Reduction Program.

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 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

The following table is derived from our Condensed Consolidated Cash Flow Statements and includes the results and cash flow activity of Grass Valley through the disposal date of July 2, 2020 consistent with the Condensed Consolidated Cash Flow Statements:

Nine Months Ended

September 27, 2020 September 29, 2019

(In thousands)

7 unchanged sentences

Cash and cash equivalents, end of period $ 391,497 $ 296,742

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.

Operating cash flows were a source of cash of $38.7 million and $89.5 million in the nine months ended September 27, 2020 and September 29, 2019, respectively.

Operating cash flows declined 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 $3.1 million in the nine months ended September 27, 2020, compared to $125.0 million in the nine months ended September 29, 2019.

Investing activities for the nine months ended September 27, 2020 included capital expenditures of $56.8 million compared to $74.1 million in the comparable period of 2019.

The nine months ended September 27, 2020 also included proceeds of $50.1 million, $3.1 million, and $0.6 million from the sale of the Grass Valley disposal group, the sale of tangible property, and a working capital adjustment related to the SPC acquisition.

The nine months ended September 29, 2019 also included payments, net of cash acquired of $51.0 million primarily for the acquisition of Opterna.

Net cash used for financing activities totaled $72.6 million for the nine months ended September 27, 2020, compared to $84.4 million for the nine months ended September 29, 2019.

Financing activities for the nine months ended September 27, 2020 included borrowings on our revolver of $190.0 million, repayments of our revolver borrowings of $190.0 million, payments under our share repurchase program of $35.0 million, earnout consideration payments of $29.3 million, cash dividend payments of $6.8 million, and net payments related to share based compensation activities of $1.3 million.

Financing activities for the nine months ended September 29, 2019 included payments under our share repurchase program of $50.0 million, cash dividend payments of $32.2 million, and net payments related to share based compensation activities of $2.1 million.

Our cash and cash equivalents balance was $391.5 million as of September 27, 2020.

Of this amount, $215.7 million was held outside of the U.S.

4 unchanged sentences

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 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.

Our outstanding debt obligations as of September 27, 2020 consisted of $1,518.5 million of senior subordinated notes.

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

7 unchanged sentences

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