What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-10 compared with 2020-11-02 · 103 added, 124 removed, 154 unchanged (60% 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.

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.

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

In response to the outbreak, we have modified practices at our manufacturing locations and offices to adhere to guidance from the WHO, the U.S.

Since the beginning of the pandemic, our foremost focus has been on the health and safety of our employees and customers.

In response to the outbreak, to protect the health and safety of our employees, we modified practices at our manufacturing locations and offices to adhere to guidance from the WHO, the U.S.

Centers for Disease Control and Prevention and other local health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and sanitization.

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, 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.

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.

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.

As vaccinations become more prevalent and more employees return to our offices, many of these safeguards will continue.

Our suppliers, distributors, and other partners have similarly had their operations disrupted, and in regions of the world where infection rates have remained high, human suffering and market disruptions continue.

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

Foreign currency

Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S.

dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Japanese yen, Mexican peso, Australian dollar, British pound, Indian rupee, and Brazilian real.

dollar and the Euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Brazilian real.

Generally, as the U.S.

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

Approximately 43% of our consolidated revenues during the quarter ended September 27, 2020 were to customers outside of the U.S.

Approximately 49% of our consolidated revenues during the quarter ended April 4, 2021 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.

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Selling prices of our products are affected by many factors, including end market demand, capacity utilization, overall economic conditions, and commodity prices.

D uring periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline.

We are mindful of ongoing inflationary pressures and as a result, proactively implement selling price increases and cost control measures.

Importantly, however, there is no exact measure of the effect of changing commodity prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the individual pricing decisions.

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To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.

Earnout Consideration Payment

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.

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.

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.

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

Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments.

We have recast the prior period segment information to conform to the change in the composition of reportable segments.

OTN acquisition

We acquired 100% of the shares of OTN on January 29, 2021 for a purchase price, net of cash acquired, of $73.3 million.

OTN, based in Olen, Belgium, is a leading provider of easy to use and highly-reliable network solutions tailored for specific ap plications in harsh, mission-critical environments.

The acquisition of OTN supports one of our key strategic priorities related to the growing demand for industrial automation by adding proprietary technology and mission-critical hardware and software products for more complete end-to-end solutions.

The results of OTN have been included in our Condensed Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment.

Long-lived asset impairment

During the first quarter of 2021, we committed to a plan to sell an oil and gas cable business and determined that we met all of the criteria to classify the assets and liabilities of this business as held for sale.

The business is part of the Industrial Solutions segment.

The carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $3.4 million.

Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the first quarter of 2021.

The impairment charge is excluded from Segment EBITDA of our Industrial Solutions segment.

During the first quarter of 2021, we also performed a recoverability test on certain held and used long-lived assets in our Industrial Solutions segment due to the presence of impairment indicators stemming from the increased probability of selling the assets.

We determined that the carrying values of the assets were not recoverable and recognized a $3.6 million impairment charge in Selling, General and Administrative Expenses to write them down to fair value.

This impairment charge is excluded from Segment EBITDA of our Industrial Solutions segment.

Opterna earn-out

Our acquisition of Opterna International Corp.

(Opterna) in 2019 included potential earn-out consideration.

As of the acquisition date, we estimated the fair value of the earn-out to be $5.8 million.

As of April 4, 2021, the financial targets tied to the earn-out were not expected to be achieved.

We reduced the earn-out liability to zero and recognized a $5.8 million benefit in Selling, General and Administrative Expenses in the three months ended April 4, 2021.

This benefit was excluded from Segment EBITDA of our Enterprise Solutions segment.

Cost Reduction Program

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 $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.

We expect to incur incremental costs of approximately $9.6 million for this program.

SPC, Opterna and FutureLink Integration Program

In 2019, we began a restructuring program to integrate SPC, Opterna and FutureLink with our existing businesses.

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 $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.

We recognized $2.3 million of severance and other restructuring costs for this program during the three months ended April 4, 2021.

The cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis.

We expect to incur incremental costs of approximately $6 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 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.

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

Share Repurchase Program

In 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions.

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

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.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN, SPC, and Opterna with our existing businesses.

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

We recognized $1.8 million of severance and other restructuring costs for this program during the three months ended April 4, 2021.

We expect to incur incremental costs of approximately $2.4 million for this program in 2021.

Off-Balance Sheet Arrangements

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Critical Accounting Policies

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;

During the three months ended April 4, 2021:

• We did not change any of our existing critical accounting policies from those listed in our 2020 Annual Report on Form 10-K;

• No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate;

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Consolidated Income before Taxes

Three Months Ended Nine Months Ended

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

Three Months Ended

April 4, 2021 March 29, 2020 % Change

(In thousands, except percentages)

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Income from continuing operations before taxes 36,621 17,083 114.4 %

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 $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

Revenues increased $72.9 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the following factors:

• Higher sales volume primarily from industrial automation and broadband and 5G products resulted in a $35.9 million increase in revenues.

• Copper prices had a $23.8 million favorable impact on revenues.

• Currency translation had a $9.1 million favorable impact on revenues.

• Acquisitions contributed an estimated $4.1 million in revenues.

Gross profit increased $20.8 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the increases in revenues discussed above.

Selling, general and administrative expenses increased $0.1 million in the three months ended April 4, 2021 from the comparable period of 2020.

The impact of currency translation;

acquisitions;

and increases in severance, restructuring and acquisition integration costs offset the benefits realized from our Cost Reduction Program.

Research and development expenses increased $5.3 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.

Amortization of intangibles decreased $6.2 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to certain intangible assets becoming fully amortized.

Operating income increased $21.7 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily as a result of the increase in gross profit discussed above.

Net interest expense increased $2.2 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to currency translation.

Income from continuing operations before taxes increased $19.5 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to the increase in operating income discussed above.

Three Months Ended %

April 4, 2021 March 29, 2020 Change

(In thousands, except percentages)

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Effective tax rate 21.5 % 12.8 %

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 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 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.

For the three months ended April 4, 2021, we recognized income tax expense of $7.9 million, representing an effective tax rate of 21.5%.

The effective tax rate was primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.

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%.

The effective tax rate was impacted by a $1.1 million income tax benefit for certain foreign tax credits in the three months ended March 29, 2020.

Consolidated Adjusted Revenues and Adjusted EBITDA

Three Months Ended % Nine Months Ended %

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

Three Months Ended %

April 4, 2021 March 29, 2020 Change

(In thousands, except percentages)

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as a percent of adjusted revenues 14.9 % 13.1 %

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.

Adjusted Revenues increased $72.9 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the following factors:

• Higher sales volume primarily from industrial automation and broadband and 5G products resulted in a $35.9 million increase in revenues.

• Copper prices had a $23.8 million favorable impact on revenues.

• Currency translation had a $9.1 million favorable impact on revenues.

• Acquisitions contributed an estimated $4.1 million in revenues.

Adjusted EBITDA increased $19.3 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to leverage on higher sales volume, as discussed above.

Accordingly, Adjusted EBITDA margin in the three months ended April 4, 2021 expanded to 14.9% from 13.1% in the comparable period of 2020.

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 Nine Months Ended

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

Three Months Ended

April 4, 2021 March 29, 2020

(In thousands, except percentages)

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Loss from discontinued operations, net of tax — 26,110

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

Amortization of intangible assets 9,947 16,185

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Amortization of software development intangible assets 689 330

Purchase accounting effects related to acquisitions (2) — (186) 125 532

Adjustments related to acquisitions and divestitures (2) 621 20

Adjusted EBITDA $ 80,120 $ 60,843

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(1) See Note 12, Severance, Restructuring, and Acquisition Integration Activities, for details.

(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.

(2) Dur ing the three months ended April 4, 2021, we reduced the Opterna earn-out liability by $5.8 million, recognized a $3.6 million impairment on assets held and used, recognized a $3.4 million impairment on assets held for sale, collected $1.4 million of receivables associated with the sale of Grass Valley that were previously written off, and recognized cost of sales of $0.8 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN acquisition.

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.

Segment Results of Operations

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Enterprise Solutions

Three Months Ended % Nine Months Ended %

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

Three Months Ended %

April 4, 2021 March 29, 2020 Change

(In thousands, except percentages)

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as a percent of segment revenues 12.4 % 11.6 %

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 $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.

Enterprise Solutions revenues increased $14.1 million in the three months ended April 4, 2021 from the comparable period of 2020.

The year-over-year increase in revenues was primarily due to higher copper prices, favorable currency translation, and increases in volume of $10.0 million, $2.5 million, and $1.6 million, respectively.

Enterprise Solutions EBITDA increased $3.4 million in the three months ended April 4, 2021 compared to the year ago period primarily as a result of the increase in revenues discussed above coupled with the benefits realized from our Cost Reduction Program.

Industrial Solutions

Three Months Ended % Nine Months Ended %

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

Three Months Ended %

April 4, 2021 March 29, 2020 Change

(In thousands, except percentages)

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as a percent of segment revenues 16.6 % 14.1 %

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.

Industrial Solutions revenues increased $58.7 million in the three months ended April 4, 2021 from the comparable period of 2020.

The increase in revenues in the three months ended April 4, 2021 was primarily due to increases in volume, higher copper prices, favorable currency translation, and acquisitions of $34.2 million, $13.8 million, $6.6 million, and $4.1 million, respectively.

Industrial Solutions EBITDA increased $15.8 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily as a result of the increase in revenues discussed above coupled with the benefits realized from our Cost Reduction Program and partially offset by increased investments in R&D projects as we continue our commitment to growth initiatives.

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 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

The following table is derived from our Condensed Consolidated Cash Flow Statements and includes the results and cash flow activity of Grass Valley for the period ended March 29, 2020 consistent with the Condensed Consolidated Cash Flow Statements:

Three Months Ended

April 4, 2021 March 29, 2020

(In thousands)

Net cash provided by (used for):

Net cash used for:

Operating activities $ (41,495) $ (52,052)

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Cash and cash equivalents, end of period $ 370,850 $ 293,735

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.

Operating cash flows were a use of cash of $41.5 million in the three months ended April 4, 2021.

Operating cash flow improved $10.6 million compared to the prior year primarily due to the increase in net income and a favorable change in accounts payable partially offset by an unfavorable change in receivables.

Accounts payable was a source of cash of $3.3 million compared to a use of cash of $50.8 million in the prior year and receivables were a use of cash of $50.2 million compared to a source of cash of $43.6 million in the prior year.

Receivables increased during the three months ended April 4, 2021 primarily due to an increase in revenues.

Net cash used for investing activities totaled $82.3 million in the three months ended April 4, 2021, compared to $18.3 million in the prior year.

Investing activities for the three months ended April 4, 2021 included capital expenditures of $11.2 million compared to $20.9 million in the comparable period of 2020.

The three months ended April 4, 2021 also included payments of $72.2 million for the acquisition of OTN, partially offset by cash receipts of $1.1 million associated with the sale of Grass Valley.

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 totaled $5.0 million for the three months ended April 4, 2021, compared to $53.9 million in the prior year.

Financing activities for the three months ended April 4, 2021 included cash dividend payments of $2.2 million, repayments of debt obligations of $1.8 million assumed as part of the OTN acquisition, and net payments related to share based compensation activities of $0.9 million.

Financing activities for the three months ended March 29, 2020 included a payment of earn-out 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.

Our cash and cash equivalents balance was $370.9 million as of April 4, 2021.

Of this amount, $157.4 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 September 27, 2020 consisted of $1,518.5 million of senior subordinated notes.

Our outstanding debt obligations as of April 4, 2021 consisted of $1,526.1 million of senior subordinated notes.

Additional discussion regarding our various borrowing arrangements is included in Note 13 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