What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-08 compared with 2022-11-07 · 74 added, 129 removed, 138 unchanged (60% of the section changed)

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

We strive for operational excellence through the execution of our Belden Business System, which includes three areas of focus:

Lean enterprise initiatives, our Market Delivery System, and our Talent Management System.

Through operational excellence we generate free cash flow on an annual basis.

We utilize the cash flow generated by our business to fuel our continued transformation and generate shareholder value.

We believe our business system, balance across markets and geographies, systematic go-to-market approach, extensive portfolio of innovative solutions, commitment to Lean principles, and improving margins present a unique value proposition for shareholders.

We use a set of tools and processes that are designed to continuously improve business performance in the critical areas of quality, delivery, cost, and innovation.

We consider revenue growth, Adjusted EBITDA margin, free cash flows, and return on invested capital to be our key operating performance indicators.

We also seek to acquire businesses that we believe can help us achieve these objectives.

Our mission is to build the foundation for a digital world that makes the digital journey simpler, smarter and secure.

Belden is moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.

We are aligned with attractive secular growth markets, positioned to provide comprehensive solutions that drive customer outcomes, focused on new product innovation and technology leadership, and committed to sustainable ESG practices.

Our current business goals are to:

• Drive organic revenue growth in excess of GDP;

• Deliver incremental Adjusted EBITDA margins of approximately 30%;

• Generate free cash flow of approximately $1 billion cumulatively from 2022 through 2025;

• Execute a disciplined capital allocation strategy while maintaining net leverage of approximately 1.5x;

• Drive Adjusted EPS to $8.00 by 2025.

Trends and Events

The following trends and events during 2023 have had varying effects on our financial condition, results of operations, and cash flows.

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

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.

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.

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 have persisted.

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

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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 October 2, 2022 were to customers outside of the U.S.

Approximately 44% of our consolidated revenues during the quarter ended April 2, 2023 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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Furthermore, inflation may impact labor, energy, and other costs.

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

We monitor inflation pressures and proactively implement selling price increases or cost control measures as appropriate.

Commodity Prices

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Comparisons of our results between periods can be impacted by changes in the levels of channel inventory.

We use information provided to us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us and hold in their inventory.

We use information provided to

us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us and hold in their inventory.

As such, all references to the effect of channel inventory changes are estimates.

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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.

Tripwire Divestiture

During the nine months ended October 2, 2022, we sold Tripwire for gross cash consideration of $350 million and recognized a loss on disposal of discontinued operations, net of tax of $5.4 million and $9.9 million during the three and nine months ended October 2, 2022.

Debt Repurchase

During the nine months ended October 2, 2022, we repurchased all of the €200.0 million aggregate principal amount of 4.125% senior subordinated notes previously due 2026.

We recognized a $6.4 million loss on debt extinguishment for the premiums paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.

During the nine months ended October 2, 2022, we completed three acquisitions.

On January 17, 2022, we acquired Macmon for $41.9 million , net of cash acquired.

Macmon, based in Berlin, Germany, is a leading provider of products and services that secure network infrastructure in a variety of mission critical industries.

On March 3, 2022, we acquired NetModule for $23.5 million, net of cash acquired.

NetModule, based in Bern, Switzerland, is a leading provider of reliable, fast and secure wireless network infrastructures through advanced capabilities in 5G and WiFi6 technologies in a variety of mission critical industries with a strong focus on mass transit and intelligent traffic systems within the transportation vertical.

On April 15, 2022, we acquired CAI for $19.0 million , net of cash acquired.

CAI is headquartered in Anniston, Alabama and designs, manufactures, and sells a range of plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes.

The results of operations of each acquisition have been included in our results of operations from their respective acquisition dates.

The three acquisitions were not material to our results of operations.

Macmon and NetModule are included in the Industrial Automation Solutions segment, and CAI is included in the Enterprise Solutions segment.

All three acquisitions were funded with cash on hand.

Share Repurchase Program

During the three months ended October 2, 2022, we repurchased 1.2 million shares of our common stock for an aggregate cost of $69.8 million at an average price per share of $59.84.

During the nine months ended October 2, 2022, we repurchased 2.4 million shares of our common stock for an aggregate cost of $136.4 million at an average price per share of $57.50.

Gain on Sale of Asset

During the three and nine months ended October 2, 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale.

This gain on sale was excluded from Segment EBITDA of our Industrial Automation Solutions segment.

Equity Method Investment

During the nine months ended October 2, 2022, we invested $20.0 million in Litmus for a noncontrolling ownership interest.

Litmus provides critical data connectivity needed to monitor, visualize, analyze, and integrate industrial data.

We account for this investment using the equity method of accounting.

During the three months ended April 2, 2023, we repurchased 0.6 million shares of our common stock for an aggregate cost of $50.0 million at an average price per share of $84.18.

Off-Balance Sheet Arrangements

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Critical Accounting Policies

During the nine months ended October 2, 2022:

During the three months ended April 2, 2023:

• We did not change any of our existing critical accounting policies from those listed in our 2022 Annual Report on Form 10-K;

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Consolidated Income before Taxes

Three Months Ended % Change Nine Months Ended % Change

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended % Change

April 2, 2023 April 3, 2022

(In thousands, except percentages)

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Amortization of intangibles (9,610) (8,817) 9.0 %

Asset impairments — (2,288) (100.0) % — (9,283) (100.0) %

Gain on sale of asset 37,891 — n/a 37,891 — n/a

Operating income 85,537 73,521 16.3 %

Interest expense, net (8,201) (14,411) (43.1) %

Loss on debt extinguishment — (5,715) (100.0) % (6,392) (5,715) 11.8 %

Non-operating pension benefit 488 1,200 (59.3) %

Loss on debt extinguishment — (6,392) (100.0) %

Income from continuing operations before taxes 77,824 53,918 44.3 %

Revenues increased $65.7 million and $258.1 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 due to the following factors:

• Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $91.4 million and $292.5 million increase in revenues, respectively.

• Acquisitions contributed an estimated $9.0 million and $20.2 million in revenues, respectively.

• Copper pass-through pricing had a $12.7 million unfavorable and $1.4 million favorable impact on revenues, respectively.

• The divestiture of our oil and gas cable business in 2021 had a $0.0 million and $10.3 million unfavorable impact on revenues.

• Currency translation had a $22.0 million and $45.7 million unfavorable impact on revenues.

Gross profit increased $35.3 million and $105.9 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 due to the increases in revenues discussed above.

Accordingly, gross profit margins expanded 200 and 100 basis points, respectively, in the three and nine months ended October 2, 2022 from the comparable periods of 2021.

Selling, general and administrative expenses increased $15.1 million and $49.2 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021.

The increase in selling, general and administrative expenses is primarily attributable to strategic investments to enhance our solution selling capabilities as well as increases from incentive compensation and acquisitions.

Research and development expenses increased $3.1 million and $7.6 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily due to increased investments as we further strengthen our product offering and continue our commitment to growth initiatives.

Amortization of intangibles increased $2.3 million and $5.2 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily due to acquisitions.

Asset impairments decreased $2.3 million and $9.3 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 as a result of the impairments during 2021.

Gain on sale of asset increased $37.9 million in both the three and nine months ended October 2, 2022 from the comparable periods of 2021.

During the three and nine months ended October 2, 2022, we sold rea l estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale.

Operating income increased $54.9 million and $91.1 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily as a result of the increase in gross profit and gain on sale of asset discussed above.

Net interest expense decreased $6.4 million and $11.1 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily due to the repurchase of senior subordinated notes previously due 2026 and currency translation.

Loss on debt extinguishment decreased $5.7 million and $0.7 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021.

The loss on debt extinguishment in 2022 represents the premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.

The loss on debt extinguishment in 2021 represents the premium paid to the bond holders to retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off.

Income from continuing operations before taxes increased $66.0 million and $130.6 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily due to the increase in operating income discussed above.

Three Months Ended % Change Nine Months Ended % Change

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Revenues increased $31.4 million in the three months ended April 2, 2023, respectively, from the comparable period of 2022 due to the following factors:

• Higher sales volume and favorable pricing resulted in a $40.9 million increase in revenues.

• Acquisitions contributed an estimated $7.9 million in revenues.

• Copper pass-through pricing had a $8.6 million unfavorable impact on revenues.

• Currency translation had a $8.8 million unfavorable impact on revenues.

Gross profit increased $37.2 million in the three months ended April 2, 2023 from the comparable period of 2022 due to the increases in revenues discussed above and favorable product mix .

Gross profit margins were robust, expanding 410 basis points to 38.3% in the three months ended April 2, 2023 from 34.2% in the comparable period of 2022 .

Selling, general and administrative expenses increased $18.5 million in the three months ended April 2, 2023 from the comparable period of 2022.

The increase in selling, general and administrative expenses is primarily attributable to strategic investments to enhance our solution selling capabilities as well as increases from acquisitions.

Research and development expenses increased $5.9 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily due to increased investments as we further strengthen our product offering and continue our commitment to growth initiatives.

Amortization of intangibles increased $0.8 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily due to acquisitions.

Operating income increased $12.0 million in the three months ended April 2, 2023 from the comparable period of 2022 due to the increase in gross profit, partially offset by increases in operating expenses as discussed above.

Net interest expense decreased $6.2 million in the three months ended April 2, 2023 from the comparable period of 2022 due to the retirement of the 2026 Notes during 2022 and an increase in interest income.

See further discussion below.

The $6.4 million loss on debt extinguishment in the three months ended April 3, 2022 represents the premium paid to the bond holders to retire the 2026 Notes and the write-off of the unamortized debt issuance costs associated with the 2026 Notes.

Income from continuing operations before taxes increased $23.9 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily due to the increase in operating income and decrease in debt costs as discussed above.

Three Months Ended % Change

April 2, 2023 April 3, 2022

(In thousands, except percentages)

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Effective tax rate 19.1 % 18.2 %

For the three and nine months ended October 2, 2022, we recognized income tax expense of $16.1 million and $39.0 million, respectively, representing an effective tax rate of 13.4% and 15.9%, respectively.

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

For the three months ended April 2, 2023, we recognized income tax expense of $14.9 million, representing an effective tax rate of 19.1%.

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

Consolidated Adjusted EBITDA

Three Months Ended % Change Nine Months Ended % Change

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended % Change

April 2, 2023 April 3, 2022

(In thousands, except percentages)

Adjusted revenues $ 670,491 $ 605,263 10.8 % $ 1,947,413 $ 1,690,652 15.2 %

Revenues $ 641,789 $ 610,371 5.1 %

Adjusted EBITDA 111,451 99,494 12.0 %

as a percent of revenues 17.4 % 16.3 %

Adjusted revenues increased $65.2 million and $256.8 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 due to the following factors:

• Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $90.9 million and $291.2 million increase in revenues, respectively.

• Acquisitions contributed an estimated $9.0 million and $20.2 million in revenues, respectively.

• Copper pass-through pricing had a $12.7 million unfavorable and $1.4 million favorable impact on revenues, respectively.

• The divestiture of our oil and gas cable business in 2021 had a $0.0 million and $10.3 million unfavorable impact on revenues.

• Currency translation had a $22.0 million and $45.7 million unfavorable impact on revenues.

Adjusted EBITDA increased $16.8 million and $57.8 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021 primarily due to leverage on higher sales volume, as discussed above.

Accordingly, Adjusted EBITDA margins in the three and nine months ended October 2, 2022 expanded to 17.6% from 16.7% and to 16.9% from 16.0%, respectively, in the comparable periods of 2021.

Adjusted EBITDA increased $12.0 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily due to leverage on higher sales volume and favorable product mix , as discussed above.

Accordingly, Adjusted EBITDA margins in the three months ended April 2, 2023 expanded to 17.4% from 16.3% in the comparable period of 2022.

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

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended

April 2, 2023 April 3, 2022

(In thousands, except percentages)

GAAP revenues $ 670,491 $ 604,761 $ 1,947,413 $ 1,689,301

Adjustments related to acquisitions — 502 — 1,351

Adjusted revenues $ 670,491 $ 605,263 $ 1,947,413 $ 1,690,652

Revenues $ 641,789 $ 610,371

GAAP income from continuing operations $ 62,945 $ 44,096

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Severance, restructuring, and acquisition integration costs (1) 1,712 3,723

Non-operating pension settlement loss 954 — 954 —

Amortization of software development intangible assets 1,452 1,007

Loss on debt extinguishment — 5,715 6,392 5,715

Asset impairments (2) — 2,288 — 9,283

Adjustments related to acquisitions and divestitures (2) 298 —

Gain on sale of asset (37,891) — (37,891) —

Loss on debt extinguishment — 6,392

Adjusted EBITDA $ 111,451 $ 99,494

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Adjusted EBITDA margin 17.4 % 16.3 %

(1) Severance, restructuring, and acquisition integration costs for the three and nine months ended October 2, 2022 primarily related to our Manufacturing Footprint and Acquisition Integration programs.

Costs for the three and nine months ended October 3, 2021 primarily related to our Acquisition Integration and completed Cost Reduction programs.

(2) During the three months ended October 3, 2021, we recognized a $2.3 million impairment on assets held for sale.

During the nine months ended October 3, 2021, we recognized a $3.6 million impairment on assets held and used and a $5.7 million impairment on assets held for sale .

(3) During the three and nine months ended October 2, 2022, we recognized cost of sales of $0.5 million and $1.6 million related to purchase accounting adjustments of acquired inventory to fair value and recognized gains of $2.5 million and $3.0 million on collections from previously written off receivables associated with the sale of Grass Valley.

During the three months ended October 3, 2021, we recognized cost of sales of $0.4 million related to purchase accounting adjustments of acquired inventory to fair value, recognized $0.5 million for the purchase accounting effect of recording deferred revenue at fair value, and collected $0.7 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off.

During the nine months ended October 3, 2021, we reduced the Opterna earn-out liability by $5.8 million , recognized cost of sales of $2.4 million related to purchase accounting adjustments of acquired inventory to fair value, collected $2.1 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, and recognized $1.3 million for the purchase accounting effect of recording deferred revenue at fair value.

(1) Severance, restructuring, and acquisition integration costs for the three months ended April 2, 2023 and April 3, 2022 primarily related to our Acquisition Integration program.

(2) During the three months ended April 2, 2023, we incurred $0.3 million for fair value adjustments of acquired investments.

Segment Results of Operations

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Enterprise Solutions

Three Months Ended % Change Nine Months Ended % Change

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended % Change

April 2, 2023 April 3, 2022

(In thousands, except percentages)

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as a percent of segment revenues 13.5 % 11.5 %

Enterprise Solutions revenues increased $33.0 million and $115.0 million in the three and nine months ended October 2, 2022 from the comparable periods of 2021.

The increase in revenues in the three months ended October 2, 2022 was primarily due to increases in volume and favorable pricing of $39.1 million and acquisitions of $1.7 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $4.1 million and $3.7 million, respectively.

The increase in revenues in the nine months ended October 2, 2022 was primarily due to increases in volume and favorable pricing, acquisitions, and higher copper pass-through pricing of $117.2 million, $3.1 million, and $2.7 million, respectively, partially offset by unfavorable currency translation of $8.0 million.

Enterprise Solutions EBITDA increased $5.7 million and $14.1 million in the three and nine months ended October 2, 2022, respectively, compared to the year ago periods primarily as a result of the increase in revenues discussed above.

Enterprise Solutions revenues increased $6.9 million in the three months ended April 2, 2023 from the comparable period of 2022.

The increase in revenues in the three months ended April 2, 2023 was primarily due to increases in volume and favorable pricing of $8.8 million and acquisitions of $4.0 million, partially offset by unfavorable currency translation of $3.0 million and lower copper pass-through pricing of $2.9 million.

Enterprise Solutions EBITDA increased $6.4 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily as a result of the increase in revenues discussed above .

Accordingly, for the three months ended April 2, 2023, Segment EBITDA margins expanded 200 basis points to 13.5% from 11.5% over the year ago period.

Industrial Automation Solutions

Three Months Ended % Change Nine Months Ended % Change

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended % Change

April 2, 2023 April 3, 2022

(In thousands, except percentages)

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as a percent of segment revenues 20.1 % 19.7 %

Industrial Automation Solutions revenues increased $32.3 million and $141.8 million in the three and nine months ended October 2, 2022, respectively, from the comparable periods of 2021.

The increase in revenues in the three months ended October 2, 2022 was primarily due to increases in volume and favorable pricing of $52.0 million and acquisitions of $7.2 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $17.9 million and $9.0 million, respectively.

The increase in revenues in the nine months ended October 2, 2022 was primarily due to increases in volume and favorable pricing of $174.1 million and acquisitions of $17.0 million, partially offset by unfavorable currency translation, a divestiture, and lower copper pass-through pricing of $37.7 million, $10.3 million, and $1.3 million, respectively.

Industrial Automation Solutions EBITDA increased $11.1 million and $43.6 million in the three and nine months ended October 2, 2022 from the comparable periods of 2021 primarily due to leverage on higher sales volume, as discussed above.

Accordingly, for the three and nine months ended October 2, 2022, Adjusted EBITDA margins expanded from 18.8% to 20.2% and from 17.9% to 19.6%, respectively, over the year ago periods.

Industrial Automation Solutions revenues increased $24.5 million in the three months ended April 2, 2023 from the comparable period of 2022.

The increase in revenues in the three months ended April 2, 2023 was primarily due to increases in volume and favorable pricing of $32.1 million and acquisitions of $3.9 million, partially offset by unfavorable currency translation of $5.8 million and lower copper pass-through pricing of $5.7 million.

Industrial Automation Solutions EBITDA increased $6.3 million in the three months ended April 2, 2023 from the comparable period of 2022 primarily as a result of the increase in revenues discussed above, including solid operating leverage on volume growth and favorable pricing.

Accordingly, for the three months ended April 2, 2023, Segment EBITDA margins expanded to 20.1% from 19.7% over the year ago period.

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 discontinued operations up to the February 22, 2022 disposal date:

Nine Months Ended

October 2, 2022 October 3, 2021

The following table is derived from our Condensed Consolidated Cash Flow Statements and for the three months ended April 3, 2022, includes the results of discontinued operations up to the February 22, 2022 disposal date :

Three Months Ended

April 2, 2023 April 3, 2022

(In thousands)

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Cash and cash equivalents, end of period $ 589,045 $ 559,582

Net cash provided by operating activities totaled $78.8 million in the nine months ended October 2, 2022, compared to $101.9 million in the prior year.

Operating cash flows declined $23.1 million compared to the prior year primarily due to unfavorable changes in accounts payable and accrued liabilities.

The use of cash for accounts payable was due to the timing of payments primarily for purchases of raw materials and the use of cash for accrued liabilities was primarily attributable to higher incentive compensation payments and channel partner rebates, all of which were the direct result of improved company performance and increased demand.

Net cash from investing activities was a source of cash of $223.4 million in the nine months ended October 2, 2022, compared to a use of cash of $118.9 million in the prior year.

Investing activities for the nine months ended October 2, 2022 included cash receipts of $334.6 million primarily for the Tripwire disposal and $43.5 million for asset sales, partially offset by payments of $104.5 million for the investment in Litmus and acquisitions of Macmon, NetModule and CAI as well as capital expenditures of $50.3 million.

Investing activities for the nine months ended October 3, 2021 included cash payments of $73.7 million for the acquisition of OTN Systems and capital expenditures of $55.6 million, partially offset by cash receipts of $10.8 million primarily for the sale of our oil and gas cable business in Brazil.

Net cash used for financing activities totaled $376.7 million for the nine months ended October 2, 2022, compared to $24.0 million in the prior year.

Financing activities for the nine months ended October 2, 2022 included payments under borrowing arrangements of $230.6 million, payments under our share repurchase program of $136.3 million, cash dividend payments of $6.8 million, net payments related to share based compensation activities of $6.5 million, and proceeds from the issuance of common stock of $3.7 million.

Financing activities for the nine months ended October 3, 2021 included payments under borrowing arrangements of $360.3 million, debt issuance costs of $7.8 million, cash dividend payments of $6.7 million, finance lease payments of $3.1 million, and net payments related to share based compensation activities of $2.1 million, partially offset by borrowings under credit arrangements $356.0 million.

Our cash and cash equivalents balance was $547.5 million as of October 2, 2022.

Net cash used for operating activities totaled $31.9 million in the three months ended April 2, 2023, compared to $58.0 million in the prior year.

Operating cash flows improved $26.1 million compared to the prior year primarily due to a $27.1 million increase in net income.

Net cash from investing activities was a use of cash of $3.8 million in the three months ended April 2, 2023, compared to a source of cash of $261.8 million in the prior year.

Investing activities for the three months ended April 2, 2023 included $13.8 million for capital expenditures, partially offset by $10.0 million received from escrow for the disposal of a business.

Investing activities for the three months ended April 3, 2022 included cash receipts of $338.7 million for the Tripwire disposal, partially offset by payments of $65.9 million for the acquisitions of Macmon and NetModule and $11.0 million for capital expenditures.

Net cash used for financing activities totaled $63.8 million for the three months ended April 2, 2023, compared to $286.7 million in the prior year.

Financing activities for the three months ended April 2, 2023 included payments under our share repurchase program of $50.0 million, net payments related to share based compensation activities of $13.3 million, cash dividend payments of $2.1 million, and proceeds from the issuance of common stock of $1.6 million.

Financing activities for the three months ended April 3, 2022 included payments under borrowing arrangements of $230.6 million, payments under our share repurchase program of $50.0 million, net payments related to share based compensation activities of $3.7 million, and cash dividend payments of $2.3 million.

Our cash and cash equivalents balance was $589.0 million as of April 2, 2023.

Of this amount, $183.4 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 October 2, 2022 consisted of $1,058.9 million of senior subordinated notes.

Our outstanding debt obligations as of April 2, 2023 consisted of $1,191.4 million of senior subordinated notes.

Additional discussion regarding our various borrowing arrangements is included in Note 11 to the Condensed Consolidated Financial Statements.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis