What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 104 added, 91 removed, 166 unchanged (54% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(the Company, us, we, or our) is a global supplier of specialty networking solutions built around two global business platforms - Enterprise Solutions and Industrial Solutions.

(the Company, us, we, or our) is a global supplier of specialty networking solutions built around two global businesses - Enterprise Solutions and Industrial Solutions.

Our comprehensive portfolio of solutions enables customers to transmit and secure data, sound, and video for mission critical applications across complex enterprise and industrial environments.

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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.

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.

In light of variant mutations of the virus, even as vaccinations become more prevalent and more employees return to our offices, many of these safeguards will 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.

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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, 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, and Indian rupee.

Generally, as the U.S.

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

Approximately 49% of our consolidated revenues during the quarter ended April 4, 2021 were to customers outside of the U.S.

Approximately 49% of our consolidated revenues during the quarter ended July 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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To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.

Amended Revolving Credit Agreement

On June 2, 2021, we entered into an amended and restated Revolving Credit Agreement that provides a $300.0 million multi-currency asset-based revolving credit facility (the Revolver).

The maturity date of the Revolver is June 2, 2026.

The borrowing base under the Revolver includes eligible accounts receivable;

and property, plant and equipment of certain of our subsidiaries in the United States, Canada, Germany, the United Kingdom and the Netherlands.

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.

We paid approximately $1.7 million of fees associated with the amended Revolver, which will be amortized over its term using the effective interest method.

As of July 4, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $294.1 million.

OTN acquisition

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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.

We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $10.9 million, net of cash delivered with the business.

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

At such time, 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.

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

Long-lived asset impairment

During the six months ended July 4, 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.

This impairment charge was 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.

Our acquisition of Opterna in 2019 included potential earn-out consideration, which as of the acquisition date, had an estimated fair value of $5.8 million.

As the financial targets tied to the earn-out were not achieved within the contractual timeframe, we reduced the earn-out liability to zero and recognized a $5.8 million benefit in Selling, General and Administrative Expenses in the six months ended July 4, 2021.

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

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

We recognized $1.2 million and $3.5 million of severance and other restructuring costs for this program during the three and six months ended July 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.

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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 recognized $0.6 million and $2.4 million of severance and other restructuring costs for this program during the three and six months ended July 4, 2021, respectively.

We expect to incur incremental costs of approximately $2.0 million for this program in 2021.

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Critical Accounting Policies

During the three months ended April 4, 2021:

During the six months ended July 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;

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Consolidated Income before Taxes

Three Months Ended

April 4, 2021 March 29, 2020 % Change

Three Months Ended % Change Six Months Ended % Change

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

(In thousands, except percentages)

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Income from continuing operations before taxes 52,524 3,573 1,370.0 % 89,145 20,656 331.6 %

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

Revenues increased $177.2 million and $250.0 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 due to the following factors:

• Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $118.6 million and $154.4 million increase in revenues, respectively.

• Copper prices had a $37.0 million and $60.8 million favorable impact on revenues, respectively.

• Currency translation had a $13.8 million and $22.9 million favorable impact on revenues, respectively.

• Acquisitions contributed an estimated $8.9 million and $13.0 million in revenues, respectively.

• Divestitures had a $1.1 million unfavorable impact on revenues in both the three and six months ended July 4, 2021 as compared to the year ago period.

Gross profit increased $61.6 million and $82.4 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 due to the increases in revenues discussed above.

Selling, general and administrative expenses increased $13.9 million in both the three and six months ended July 4, 2021, respectively, from the comparable period of 2020.

The increase in selling, general and administrative expenses is primarily attributable to the increase in incentive compensation, acquisitions, and the impact of currency translation, partially offset by a decline in s everance, restructuring and acquisition integration costs and divestitures.

Research and development expenses increased $5.8 million and $11.1 million in the three and six months ended July 4, 2021, respectively, 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 $6.9 million and $13.2 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 primarily due to certain intangible assets becoming fully amortized.

Operating income increased $48.8 million and $70.6 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 primarily as a result of the increase in gross profit discussed above.

Net interest expense increased $0.6 million and $2.8 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 primarily due to currency translation.

Income from continuing operations before taxes increased $49.0 million and $68.5 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 primarily due to the increase in operating income discussed above.

Three Months Ended % Six Months Ended %

July 4, 2021 June 28, 2020 Change July 4, 2021 June 28, 2020 Change

(In thousands, except percentages)

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Effective tax rate 16.3 % 11.2 % 18.4 % 12.5 %

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%.

For the three and six months ended July 4, 2021, we recognized income tax expense of $8.6 million and $16.4 million, representing an effective tax rate of 16.3% and 18.4%, respectively.

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.

For the three and six months ended June 28, 2020, we recognized income tax expense of $0.4 million and $2.6 million, 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.

Consolidated Adjusted Revenues and Adjusted EBITDA

Three Months Ended %

April 4, 2021 March 29, 2020 Change

Three Months Ended % Six Months Ended %

July 4, 2021 June 28, 2020 Change July 4, 2021 June 28, 2020 Change

(In thousands, except percentages)

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as a percent of adjusted revenues 15.5 % 11.6 % 15.2 % 12.4 %

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.

Adjusted Revenues increased $178.0 million and $250.9 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 due to the following factors:

• Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $118.6 million and $154.4 million increase in revenues, respectively.

• Copper prices had a $37.0 million and $60.8 million favorable impact on revenues, respectively.

• Currency translation had a $13.8 million and $22.9 million favorable impact on revenues, respectively.

• Acquisitions contributed an estimated $9.7 million and $13.9 million in revenues, respectively.

• Divestitures had a $1.1 million unfavorable impact on revenues in both the three and six months ended July 4, 2021 as compared to the year ago period.

Adjusted EBITDA increased $44.3 million and $63.6 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020 primarily due to leverage on higher sales volume, as discussed above.

Accordingly, Adjusted EBITDA margins in the three and six months ended July 4, 2021 expanded to 15.5% from 11.6% and 15.2% from 12.4%, respectively, 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

April 4, 2021 March 29, 2020

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

(In thousands, except percentages)

GAAP and adjusted revenues $ 536,381 $ 463,526

GAAP net income (loss) $ 28,741 $ (11,219)

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

Amortization of intangible assets 9,947 16,185

GAAP revenues $ 601,974 $ 424,811 $ 1,138,355 $ 888,337

Adjustments related to acquisitions 849 — 849 —

Adjusted revenues $ 602,823 $ 424,811 $ 1,139,204 $ 888,337

GAAP income from continuing operations $ 43,972 $ 3,173 $ 72,713 $ 18,064

Interest expense, net 14,878 14,257 30,389 27,581

Depreciation expense 11,367 10,332 22,927 20,614

Severance, restructuring, and acquisition integration costs (1) 5,171 3,619

Income tax expense 8,552 400 16,432 2,592

Amortization of software development intangible assets 689 330

Amortization of intangible assets 9,102 16,017 19,049 32,202

Severance, restructuring, and acquisition integration costs (1) 3,040 4,472 8,211 8,091

Adjustments related to acquisitions and divestitures (2) 1,912 105 2,533 125

Amortization of software development intangible assets 607 386 1,296 716

Adjusted EBITDA $ 93,430 $ 49,142 $ 173,550 $ 109,985

GAAP net income (loss) margin 5.4 % (2.4) %

GAAP income from continuing operations margin 7.3 % 0.7 % 6.4 % 2.0 %

Adjusted EBITDA margin 15.5 % 11.6 % 15.2 % 12.4 %

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

(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.

(2) During the three months ended July 4, 2021, we collected $0.1 million of receivables associated with the sale of Grass Valley that were previously written off, recognized deferred revenues of $0.8 million for the purchase accounting effect of recording deferred revenue at fair value for the OTN acquisition, and recognized cost of sales of $1.2 million related to purchase accounting ad justments of acquired inventory to fair value for the OTN acquisition.

During the six months ended July 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 $1.5 million of receivables associated with the sale of Grass Valley that were previously written off, recognized cost of sales of $2.0 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN acquisition, and recognized deferred revenues of $0.8 million for the purchase accounting effect of recording deferred revenue at fair value for the OTN acquisition.

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.

Segment Results of Operations

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Enterprise Solutions

Three Months Ended %

April 4, 2021 March 29, 2020 Change

Three Months Ended % Six Months Ended %

July 4, 2021 June 28, 2020 Change July 4, 2021 June 28, 2020 Change

(In thousands, except percentages)

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as a percent of segment revenues 13.2 % 10.9 % 12.8 % 11.3 %

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.

Enterprise Solutions revenues increased $64.2 million and $78.3 million in the three and six months ended July 4, 2021, respectively, from the comparable period of 2020.

As compared to the year ago period, for the three months ended July 4, 2021, increases in volume, higher copper prices, and favorable currency translation contributed $47.3 million, $13.5 million, and $3.4 million, respectively.

As compared to the year ago period, for the six months ended July 4, 2021, increases in volume, higher copper prices, and favorable currency translation contributed $48.9 million, $23.5 million, and $5.9 million, respectively.

Enterprise Solutions EBITDA increased $13.0 million and $16.4 million in the three and six months ended July 4, 2021, respectively, compared to the year ago period primarily as a result of the increase in revenues discussed above.

Industrial Solutions

Three Months Ended %

April 4, 2021 March 29, 2020 Change

Three Months Ended % Six Months Ended %

July 4, 2021 June 28, 2020 Change July 4, 2021 June 28, 2020 Change

(In thousands, except percentages)

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as a percent of segment revenues 16.9 % 11.9 % 16.8 % 13.1 %

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.

Industrial Solutions revenues increased $113.9 million and $172.6 million in the three and six months ended July 4, 2021 from the comparable period of 2020.

The increase in revenues in the three months ended July 4, 2021 was primarily due to increases in volume, higher copper prices, favorable currency translation, and acquisitions, net of disposals of $71.3 million, $23.5 million, $10.4 million, and $8.7 million, respectively.

The increase in revenues in the six months ended July 4, 2021 was primarily due to increases in volume;

higher copper prices;

favorable currency translation;

and acquisitions, net of disposals of $105.5 million, $37.3 million, $17.0 million, and $12.8 million, respectively.

Industrial Solutions EBITDA increased $30.3 million and $46.1 million in the three and six months ended July 4, 2021 from the comparable period of 2020 primarily as a result of the increase in revenues discussed above, partially offset by an increase in incentive compensation and 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 for the period ended March 29, 2020 consistent with the Condensed Consolidated Cash Flow Statements:

Three Months Ended

April 4, 2021 March 29, 2020

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 June 28, 2020 consistent with the Condensed Consolidated Cash Flow Statements:

Six Months Ended

July 4, 2021 June 28, 2020

(In thousands)

Net cash used for:

Net cash provided by (used for):

Operating activities $ 26,654 $ (12,130)

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Cash and cash equivalents, end of period $ 423,291 $ 393,040

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.

Operating cash flows were a source of cash of $26.7 million in the six months ended July 4, 2021 as compared to a use of cash of $12.1 million in the six months ended June 28, 2020.

Operating cash flow improved $38.8 million compared to the prior year primarily due to an increase in earnings.

In 2021, changes in operating assets and liabilities included an unfavorable change in receivables offset by a favorable change in accounts payable.

For the six months ended July 4, 2021, receivables were a use of cash of $90.8 million compared to a source of cash of $52.6 million in the year ago period.

The increase in receivables was primarily due to the increase in revenues discussed above.

In the three months ended July 4, 2021, days sales outstanding improved to 53 days compared to 60 days for the three months ended June 28, 2020.

Accounts payable was a source of cash of $50.2 million in the six months ended July 4, 2021 compared to a use of cash of $86.4 million in the year ago period.

Net cash used for investing activities totaled $94.2 million in the six months ended July 4, 2021, compared to $38.1 million in the prior year.

Investing activities for the six months ended July 4, 2021 included capital expenditures of $30.9 million compared to $41.7 million in the comparable period of 2020.

The six months ended July 4, 2021 also included payments of $73.7 million primarily for the acquisition of OTN, partially offset by cash receipts of $10.8 million primarily for the sale of our oil and gas cable business in Brazil.

Net cash from financing activities was a use of cash of $10.1 million for the six months ended July 4, 2021, compared to a source of cash of $20.0 million in the prior year.

Financing activities for the six months ended July 4, 2021 included cash dividend payments of $4.5 million, net payments related to share based compensation activities of $2.0 million, repayments of debt obligations of $1.8 million assumed as part of the OTN acquisition, and debt issuance costs of $1.7 million for our Revolver refinancing.

Financing activities for the six months ended June 28, 2020 included borrowing on our Revolver of $190.0 million, payments under borrowing arrangements of $100.0 million, payments under our share repurchase program of $35.0 million, a payment of earn-out consideration of which $29.3 million is classified as a financing activity, cash dividend payments of $4.6 million, and net payments related to share based compensation activities of $1.1 million.

Our cash and cash equivalents balance was $423.3 million as of July 4, 2021.

Of this amount, $174.5 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 April 4, 2021 consisted of $1,526.1 million of senior subordinated notes.

Our outstanding debt obligations as of July 4, 2021 consisted of $1,542.7 million of senior subordinated notes.

Additional discussion regarding our various borrowing arrangements is included in Note 13 to the Condensed Consolidated Financial Statements.

Forward-Looking Statements

Statements in this report other than historical facts are “forward-looking statements” made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions.

Statements in this report other than historical facts are “forward-looking statements.” Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions.

These forward-looking statements reflect management’s current beliefs and expectations and are not guarantees of future performance.

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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