What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-05 compared with 2020-05-06 · 137 added, 73 removed, 169 unchanged (55% of the section changed)

13 unchanged sentences

Forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to numerous risks and uncertainties, including but not limited to risks related to:

• the spread of highly infectious or contagious disease, such as COVID-19, could cause severe disruptions in the U.S.

and global economy, which could in turn disrupt the business activities and operations of our customers, as well as our businesses and operations;

• our ability to develop new and innovative products in our current end-markets;

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• the outcome of pending litigation;

• the spread of highly infectious or contagious disease, such as COVID-19, could cause severe disruptions in the U.S.

and global economy, which could in turn disrupt the business activities, and operations of our customers, as well as our businesses and operations;

• our ability to adapt to the impact of certain changes in tax laws;

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In connection with the acquisition, we also agreed to an additional $10.6 million of contingent retention incentives for key SCA management, to be held in escrow and payable over the next two years in a combination of cash and stock.

Additionally, we agreed to $1.8 million in transaction compensation to key SCA management paid concurrently with the closing.

Additionally, we paid $1.8 million in transaction compensation to key SCA management concurrently with the closing.

Secondary Stock Offering

In June 2020, we closed a secondary offering selling 2.8 million shares of common stock at a price of $76.00 per share for gross proceeds of $209.8 million.

The net proceeds to us after underwriters' discounts and commissions of $11.0 million and $0.5 million of offering costs was $198.2 million.

The total shares sold included 0.4 million shares that were sold in connection with the underwriters' option to purchase additional shares.

This offering was made pursuant to our registration statement on Form S-3.

Critical Accounting Policies and Estimates

5 unchanged sentences

To the extent such a valuation allowance is established or reduced in a period, we reflect the change with a corresponding increase or decrease of our income tax provision in our consolidated statements of income.

There have been no material changes in the valuation allowance for foreign tax credits for the three month periods ended April 3, 2020 or March 29, 2019.

There have been no material changes in the valuation allowance for foreign tax credits for the three and six month periods ended July 3, 2020 or June 28, 2019.

There have been no other changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended January 3, 2020, as filed with the SEC on March 3, 2020, that have had a material impact on our condensed consolidated financial statements and related notes.

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The table below summarizes our results of operations:

For the three months ended

(in thousands) April 3, 2020 March 29, 2019

For the three months ended For the six months ended

(in thousands) July 3, 2020 June 28, 2019 July 3, 2020 June 28, 2019

Sales $ 183,102 $ 192,122 $ 367,463 $ 353,822

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Interest expense 2,892 1,005 4,739 1,834

Other expense (income) 62 (13)

Other expense 71 582 133 569

Other expense, net 2,963 1,587 4,872 2,403

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The following table sets forth selected statement of income data as a percentage of sales for the periods indicated:

For the three months ended

April 3, 2020 March 29, 2019

For the three months ended For the six months ended

July 3, 2020 June 28, 2019 July 3, 2020 June 28, 2019

Sales 100.0 % 100.0 % 100.0 % 100.0 %

10 unchanged sentences

Interest expense 1.6 0.5 1.3 0.5

Other expense (income) — —

Other expense — 0.3 — 0.2

Other expense, net 1.6 0.8 1.3 0.7

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*Percentages may not foot due to rounding.

Three months ended April 3, 2020 compared to three months ended March 29, 2019

Three months ended July 3, 2020 compared to three months ended June 28, 2019

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Powered Vehicle products $ 98.5 $ 115.2 $ (16.7) (14.5) %

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Total sales $ 183.1 $ 192.1 $ (9.0) (4.7) %

Total sales for the three months ended April 3, 2020 increased approximately $22.6 million, or 14.0%, compared to the three months ended March 29, 2019.

Powered Vehicle product sales increased by $23.8 million, or 24.6%, due to the Ridetech and SCA acquisitions, and the continued success of its product lineup.

Additionally, Specialty Sports product sales decreased by $1.2 million, or 1.8%, primarily due to the timing of OEM orders.

Total sales for the three months ended July 3, 2020 decreased approximately $9.0 million, or 4.7%, compared to the three months ended June 28, 2019.

Powered Vehicle product sales decreased by $16.7 million, or 14.5%, primarily due to impacts of the COVID-19 pandemic, including production shutdowns at our OEM customers, partially offset by the impact of our SCA subsidiary, which was acquired in March 2020, and growth in aftermarket products.

Additionally, Specialty Sports product sales increased by $7.7 million, or 10.0%, primarily due to increased demand in both the OEM and aftermarket channels.

Cost of sales

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Cost of sales $ 123.1 $ 129.9 $ (6.8) (5.2) %

Cost of sales for the three months ended April 3, 2020 increased approximately $17.1 million, or 15.5%, compared to the three months ended March 29, 2019.

The increase in cost of sales was driven primarily by an increase in sales as well as certain business factors affecting gross margin, which are discussed below.

For the three months ended April 3, 2020, our gross margin decreased 90 basis points to 30.7% compared to 31.6% for the three months ended March 29, 2019.

The decrease in gross margin was primarily due to costs associated with COVID-19 mandated closures, including overhead inefficiencies and labor costs.

Cost of sales for the three months ended July 3, 2020 decreased approximately $6.8 million, or 5.2%, compared to the three months ended June 28, 2019.

The decrease in cost of sales was driven primarily by certain business factors affecting gross margin, which are discussed below.

For the three months ended July 3, 2020, our gross margin increased 40 basis points to 32.8% compared to 32.4% for the three months ended June 28, 2019.

The increase in gross margin was primarily due to the impact of the SCA acquisition, product and channel mix, and improvement in supply chain efficiencies, partially offset by higher factory related costs including incremental costs related to the COVID-19 pandemic.

Operating expenses

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Operating expenses:

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Total operating expenses $ 40.6 $ 32.7 $ 7.9 24.2 %

Total operating expenses for the three months ended April 3, 2020 were $45.0 million compared to $29.2 million for the three months ended March 29, 2019.

When expressed as a percentage of total sales, total operating expenses increased to 24.4% of total sales for the three months ended April 3, 2020 compared to 18.1% of total sales in the three months ended March 29, 2019.

The increase in operating expenses is primarily due to SCA related costs, including acquisition costs, operating costs and amortization expense, as well as higher facility-related costs and higher selling expenses, partially offset by lower patent litigation related costs.

Within operating expenses, our sales and marketing expenses increased approximately $2.8 million primarily due to costs associated with our Ridetech and SCA subsidiaries of $1.2 million, higher commission expense of $0.8 million and various others.

Research and development costs increased approximately $0.7 million primarily due to headcount investments as we continue to pursue product innovation.

General and administrative expenses increased by approximately $11.3 million resulting from various factors including SCA acquisition costs of approximately $10.6 million, SCA and Ridetech expenses of $0.9 million, and higher facility-related costs of $0.7 million.

These costs were partially offset by a decrease of $1.4 million in patent-related legal expenses.

Amortization of purchased intangibles for the three months ended April 3, 2020 increased by approximately $1.0 million as compared to the three months ended March 29, 2019.

Total operating expenses for the three months ended July 3, 2020 were $40.6 million compared to $32.7 million for the three months ended June 28, 2019.

When expressed as a percentage of total sales, total operating expenses increased to 22.2% of total sales for the three months ended July 3, 2020 compared to 17.0% of total sales in the three months ended June 28, 2019.

The increase in operating expenses is primarily due to SCA related costs, including acquisition costs, operating costs and amortization expense, partially offset by reductions in various other expenses.

Within operating expenses, our sales and marketing expenses increased approximately $1.4 million primarily due to $2.7 million of costs associated with our SCA subsidiary, partially offset by marketing and employee related expenses.

Research and development costs increased approximately $0.5 million primarily due to personnel investments to support future growth and product innovation.

General and administrative expenses increased by approximately $2.3 million resulting from various factors including SCA acquisition-related compensation costs of approximately $1.2 million and the inclusion of SCA operating costs of $1.8 million, partially offset by decreases in various other costs.

Amortization of purchased intangibles for the three months ended July 3, 2020 increased by approximately $3.7 million as compared to the three months ended June 28, 2019.

The increase is primarily due to the amortization of intangible assets obtained through our acquisition of SCA.

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For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Income from operations $ 19.4 $ 29.5 $ (10.1) (34.2) %

As a result of the factors discussed above, income from operations for the three months ended April 3, 2020 decreased approximately $10.2 million, or 46.8%, compared to income from operations for the three months ended March 29, 2019.

As a result of the factors discussed above, income from operations for the three months ended July 3, 2020 decreased approximately $10.1 million, or 34.2%, compared to income from operations for the three months ended June 28, 2019.

Other expense, net

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Other expense, net:

Interest expense $ 2.9 $ 1.0 $ 1.9 190.0 %

Other expense (income) 0.1 — 0.1 100.0

Other expense 0.1 0.6 (0.5) (83.3) %

Other expense, net $ 3.0 $ 1.6 $ 1.4 87.5 %

Other expense, net for the three months ended April 3, 2020 increased by $1.1 million to $1.9 million compared to $0.8 million for the three months ended March 29, 2019.

The increase in other expense, net is primarily due to additional interest expense incurred as a result of additional debt taken on in connection with the Company's acquisition of SCA during the three months ended April 3, 2020.

Other expense, net for the three months ended July 3, 2020 increased by $1.4 million to $3.0 million compared to $1.6 million for the three months ended June 28, 2019.

The increase in other expense, net is primarily due to interest expense on additional borrowings in connection with our March 2020 acquisition of SCA.

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Provision for income taxes $ 3.2 $ 4.5 $ (1.3) (28.9) %

The effective tax rates were 9.5% and 12.4% for the three months ended April 3, 2020 and March 29, 2019, respectively.

For the three months ended April 3, 2020, the difference between the Company's effective tax rate of 9.5% and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, research and development credits, and a reduction of Switzerland withholding tax.

These benefits were partially offset by state taxes, global low-tax intangible income and nondeductible expenses.

There was a $0.1 million benefit related to stock based compensation.

For the three months ended March 29, 2019, the difference between the Company's effective tax rate of 12.4% and the 21% federal statutory rate resulted primarily from lower foreign tax rates, lower effective federal rates on foreign derived intangible income, research and development credits, and $1.8 million from excess benefits related to the exercise of stock options.

These benefits were partially offset by state taxes, foreign withholding taxes and the impact of nondeductible expenses.

The effective tax rate for the three months ended April 3, 2020 decreased as compared to the same period in 2019 primarily as a result of foreign derived intangible income benefits and reduced withholding taxes, partially offset by global low-tax intangible income, state taxes, and nondeductible expenses.

The effective tax rates were 19.5% and 16.2% for the three months ended July 3, 2020 and June 28, 2019, respectively.

For the three months ended July 3, 2020, the difference between our effective tax rate of 19.5% and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, research and development credits, and $0.6 million of excess tax benefit related to stock based compensation.

These benefits were partially offset by state taxes, global low-tax intangible income and non-deductible expenses.

For the three months ended June 28, 2019, the difference between our effective tax rate of 16.2% and the 21% federal statutory rate resulted primarily from lower foreign tax rates, lower effective federal rates on foreign derived intangible income, research and development credits, and $1.8 million of excess tax benefits related to stock-based compensation.

These benefits were partially offset by state taxes, foreign withholding taxes and the impact of non-deductible expenses.

The effective tax rate for the three months ended July 3, 2020 increased as compared to the same period in 2019 primarily as a result of the reduction in pre-tax income, and an increase in non-deductible transaction expenses and state taxes related to our SCA acquisition.

For the three months ended

(in millions) April 3, 2020 March 29, 2019 Change ($) Change (%)

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Net income $ 13.2 $ 23.4 $ (10.2) (43.6) %

As a result of the factors described above, our net income decreased $9.7 million, or 52.7%, to $8.7 million in the three months ended April 3, 2020 from $18.4 million for the three months ended March 29, 2019.

As a result of the factors described above, our net income decreased $10.2 million, or 43.6%, to $13.2 million in the three months ended July 3, 2020 from $23.4 million for the three months ended June 28, 2019.

Six months ended July 3, 2020 compared to six months ended June 28, 2019

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Powered Vehicle products $ 219.1 $ 212.0 $ 7.1 3.3 %

Specialty Sports products 148.4 141.8 6.6 4.7

Total sales $ 367.5 $ 353.8 $ 13.7 3.9 %

Total sales for the six months ended July 3, 2020 increased approximately $13.7 million, or 3.9%, compared to the six months ended June 28, 2019.

Powered Vehicle product sales increased by $7.1 million, or 3.3%, primarily due to the SCA acquisition and aftermarket products, partially offset by impacts of the COVID-19 pandemic.

Additionally, Specialty Sports product sales increased by $6.6 million, or 4.7%, primarily due to increased demand in both the OEM and aftermarket channels.

Cost of sales

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Cost of sales $ 250.9 $ 240.5 $ 10.4 4.3 %

Cost of sales for the six months ended July 3, 2020 increased approximately $10.4 million, or 4.3%, compared to the six months ended June 28, 2019.

The increase in cost of sales was driven primarily by certain business factors affecting gross margin, which are discussed below.

For the six months ended July 3, 2020, our gross margin decreased 30 basis points to 31.7% compared to 32.0% for the six months ended June 28, 2019.

The decrease in gross margin was primarily due to factory costs incurred during the government mandated closures in response to the COVID-19 pandemic, partially offset by a change in product and channel mix and the impact of the SCA acquisition.

Operating expenses

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Operating expenses:

Sales and marketing $ 24.6 $ 20.5 $ 4.1 20.0 %

Research and development 16.3 15.1 1.2 7.9

General and administrative 37.0 23.3 13.7 58.8

Amortization of purchased intangibles 7.8 3.1 4.7 151.6

Total operating expenses $ 85.7 $ 62.0 $ 23.7 38.2 %

Total operating expenses for the six months ended July 3, 2020 were $85.7 million compared to $62.0 million for the six months ended June 28, 2019.

When expressed as a percentage of total sales, total operating expenses increased to 23.3% of total sales for the six months ended July 3, 2020 compared to 17.5% of total sales in the six months ended June 28, 2019.

The increase in operating expenses is primarily due to SCA related costs, including acquisition-related costs, operating costs and amortization expense, partially offset by reductions in various other expenses.

Within operating expenses, our sales and marketing expenses increased approximately $4.1 million primarily due to costs related to SCA of $3.4 million, higher payroll-related costs, increases in various other administrative expenses, partially offset by lower travel related costs.

Research and development costs increased approximately $1.2 million primarily due to personnel investments to support future growth and product innovation.

General and administrative expenses increased by approximately $13.7 million resulting from various factors including acquisition-related costs of approximately $11.6 million and the inclusion of SCA operating costs of $2.1 million.

Amortization of purchased intangibles for the six months ended July 3, 2020 increased by approximately $4.7 million as compared to the six months ended June 28, 2019.

The increase is primarily due to the amortization of intangible assets obtained through our acquisition of SCA.

Income from operations

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Income from operations $ 30.9 $ 51.3 $ (20.4) (39.8) %

As a result of the factors discussed above, income from operations for the six months ended July 3, 2020 decreased approximately $20.4 million, or 39.8%, compared to income from operations for the six months ended June 28, 2019.

Other expense, net

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Other expense, net:

Interest expense $ 4.7 $ 1.8 $ 2.9 161.1 %

Other expense 0.1 0.6 (0.5) (83.3)

Other expense, net $ 4.8 $ 2.4 $ 2.4 100.0 %

Other expense, net for the six months ended July 3, 2020 increased by $2.4 million to $4.8 million compared to $2.4 million for the six months ended June 28, 2019.

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Provision for income taxes $ 4.1 $ 7.1 $ (3.0) (42.3) %

The effective tax rates were 15.8% and 14.6% for the six months ended July 3, 2020 and June 28, 2019, respectively.

For the six months ended July 3, 2020, the difference between our effective tax rate of 15.8% and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, research and development credits, a negotiated reduction of Switzerland withholding tax on prior year earnings, and $0.7 million from excess tax benefits related to stock-based compensation.

These benefits were partially offset by state taxes, global low-tax intangible income and non-deductible expenses.

For the six months ended June 28, 2019, the difference between our effective tax rate of 14.6% and the 21% federal statutory rate resulted primarily from lower foreign tax rates, lower effective federal rates on foreign derived intangible income, research and development credits, and $3.6 million from excess tax benefits related to stock-based compensation.

These benefits were partially offset by state taxes, foreign withholding taxes and the impact of non-deductible expenses.

The effective tax rate for the six months ended July 3, 2020 increased as compared to the same period in 2019 primarily as a result of the reduction in pre-tax income, stock-based compensation deductions, an increase in non-deductible transaction expenses and state taxes related to our SCA acquisition, partially offset by foreign derived intangible income benefits and the reduction in Switzerland withholding taxes.

For the six months ended

(in millions) July 3, 2020 June 28, 2019 Change ($) Change (%)

Net income $ 21.9 $ 41.8 $ (19.9) (47.6) %

As a result of the factors described above, our net income decreased $19.9 million, or 47.6%, to $21.9 million in the six months ended July 3, 2020 from $41.8 million for the six months ended June 28, 2019.

Liquidity and Capital Resources

Our primary cash needs are to support working capital, capital expenditures, acquisitions, and debt repayments.

Historically, we have generally financed our liquidity needs with operating cash flows and borrowings under our credit facilities.

These sources of liquidity may be impacted by various factors, including demand for our products, impacts of mandated closures in response to COVID-19, investments made by us in acquired businesses, our plant and equipment and other capital expenditures, and expenditures on general infrastructure and information technology.

Historically, we have generally financed our liquidity needs with operating cash flows, borrowings under our credit facilities and the issuance of common stock.

These sources of liquidity may be impacted by various factors, including demand for our products, impacts of mandated closures in response to the COVID-19 pandemic, investments made by us in acquired businesses, our plant and equipment and other capital expenditures, and expenditures on general infrastructure and information technology.

A summary of our operating, investing and financing activities are shown in the following table:

For the three months ended

(in thousands) April 3, 2020 March 29, 2019

Net cash (used in) provided by operating activities $ (33,485) $ 8,745

For the six months ended

(in thousands) July 3, 2020 June 28, 2019

Net cash provided by operating activities $ 5,689 $ 20,424

Net cash used in investing activities (361,992) (23,181)

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Operating activities

Cash used in or provided by operating activities consists of net income, adjusted for certain non-cash items, primarily depreciation and amortization, stock-based compensation, changes in deferred income taxes and uncertain tax positions, and net cash invested in working capital.

In the three months ended April 3, 2020, net cash used in operating activities was $33.5 million and consisted of net income of $8.7 million, plus non-cash items totaling $0.5 million and less changes in operating assets and liabilities totaling $41.7 million.

Cash provided by operating activities consists of net income, adjusted for certain non-cash items, primarily depreciation and amortization, stock-based compensation, changes in deferred income taxes and uncertain tax positions, and net cash invested in working capital.

In the six months ended July 3, 2020, net cash provided by operating activities was $5.7 million and consisted of net income of $21.9 million, plus non-cash items totaling $12.5 million and less changes in operating assets and liabilities totaling $28.7 million.

Non-cash items and other adjustments consisted of depreciation and amortization of $15.0 million, stock-based compensation of $4.0 million, and amortization of loan fees of $0.7 million, offset by a $7.2 million change in deferred taxes and uncertain tax positions.

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The change in prepaids and other current assets is primarily due to deposits on chassis and acquisition-related compensation payments held in escrow, both related to our recently acquired SCA subsidiary.

The changes in inventory, accounts receivable, and accounts payable reflect the impact of mandated shutdowns in response to COVID-19 on our shipment, collection and payment cycles.

The changes in inventory, accounts receivable, and accounts payable reflect the impact of mandated shutdowns in response to COVID-19 on our shipment, collection and payment cycles, and normal seasonality.

The changes in accrued expenses and income taxes are primarily attributable to seasonality and the timing of tax payments.

In the three months ended March 29, 2019, net cash provided by operating activities was $8.7 million and consisted of net income of $18.4 million, plus non-cash items totaling $6.5 million and less changes in operating assets and liabilities totaling $16.2 million.

Non-cash items and other adjustments consisted of depreciation and amortization of $4.1 million, stock-based compensation of $1.7 million, offset by a $0.7 million change in deferred taxes and uncertain tax positions.

Our investment in operating assets and liabilities is a result of increases in accounts receivable of $4.9 million, inventory of $17.0 million, and prepaids and other assets of $7.3 million, and decreases in accrued expenses of $6.8 million and income taxes payable of $0.9 million, partially offset by an increase in accounts payable of $20.7 million.

In the six months ended June 28, 2019, net cash provided by operating activities was $20.4 million and consisted of net income of $41.8 million, plus non-cash items totaling $11.4 million and less changes in operating assets and liabilities totaling $32.8 million.

Non-cash items and other adjustments consisted of depreciation and amortization of $8.3 million, stock-based compensation of $3.4 million, and loss on the extinguishment of debt of $0.5 million, offset by a $0.8 million change in deferred taxes and uncertain tax positions.

Our investment in operating assets and liabilities is a result of increases in accounts receivable of $17.1 million, inventory of $25.0 million, and prepaids and other assets of $0.4 million, and decreases in accrued expenses of $2.5 million and income taxes of $3.4 million, partially offset by an increase in accounts payable of $15.6 million.

The changes in inventory, accounts payable, accrued expenses, accounts receivable and prepaids and other assets are primarily due to seasonal impacts on working capital.

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Cash used in investing activities primarily relates to strategic acquisitions of businesses and other assets and investments in our manufacturing and general infrastructure through the procurement of property and equipment.

In the three months ended April 3, 2020 and March 29, 2019, net cash used in investing activities was $342.1 million and $7.3 million, respectively.

Investing activities for the three months ended April 3, 2020 consisted of $329.2 million of cash consideration for our acquisition of SCA and $12.8 million of property and equipment additions.

Our investing activities for the three months ended March 29, 2019 consisted entirely of property and equipment additions.

In the six months ended July 3, 2020 and June 28, 2019, net cash used in investing activities was $362.0 million and $23.2 million, respectively.

Investing activities for the six months ended July 3, 2020 consisted of $329.2 million of cash consideration for our acquisition of SCA and $32.8 million of property and equipment additions.

Our investing activities for the six months ended June 28, 2019 consisted of $16.4 million of property and equipment additions and $6.8 million of cash consideration for our acquisition of Ridetech.

Financing activities

Cash provided by financing activities primarily relates to various forms of debt and equity instruments used to finance our business.

In the three months ended April 3, 2020, net cash provided by financing activities was $408.3 million, which consisted of $393.4 million in proceeds, net of issuance costs, from our new Credit Facility, which was amended and restated in connection with our acquisition of SCA, as well as net draws of $17.0 million from our line of credit.

In addition, we paid $2.1 million to repurchase shares of our common stock, as part of our stock-based compensation program.

In the three months ended March 29, 2019, net cash provided by financing activities was $9.0 million, which consisted of $26.0 million in proceeds from our line of credit, partially offset by $13.0 million paid on our line of credit and $2.8 million paid on our term debt.

In the six months ended July 3, 2020, net cash provided by financing activities was $530.8 million, which consisted of $392.4 million in proceeds, net of issuance costs, from our First Amended and Restated Credit Facility, which was amended and restated in connection with our acquisition of SCA, partially offset by net payments of $53.0 million on our line of credit and payments on our term debt of $2.5 million.

In addition, we received $198.2 million from our June 2020 issuance of common stock and paid $4.3 million to repurchase shares of our common stock, as part of our stock-based compensation program.

In the six months ended June 28, 2019, net cash provided by financing activities was $13.7 million, which consisted of $45.0 million in proceeds from our line of credit, partially offset by $25.0 million paid on our line of credit and $2.8 million paid on our term debt.

In addition, we paid $3.5 million to repurchase shares of our common stock, net of proceeds from the exercise of stock options, as part of our stock-based compensation program.

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("Bank of America").

Amended and Restated Credit Facility

In June 2019, the Company entered into a credit facility with Bank of America and other named lenders, which was later amended and restated on March 11, 2020 (the "Credit Facility").

The Credit Facility, which matures on March 11, 2025, provides a senior secured revolving line of credit with a borrowing capacity of $250.0 million and a maturing secured term loan of $400.0 million.

First Amended and Restated Credit Facility

In June 2019, the Company entered into a credit facility with Bank of America and other named lenders, which was amended and restated on March 11, 2020 and June 19, 2020 (as most recently amended and restated as the "First Amended and Restated Credit Facility").

The First Amended and Restated Credit Facility, which matures on March 11, 2025, provides a senior secured revolving line of credit with a borrowing capacity of $250.0 million and a maturing secured term loan of $400.0 million.

The term loan is subject to quarterly amortization payments.

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Additionally, the Company had $0.4 million of remaining unamortized debt issuance costs.

The Company expensed $0.3 million of the remaining unamortized debt issuance costs, which are included in other expense, net on the Condensed Consolidated Statements of Income for the three months ended April 3, 2020 and the remaining $0.2 million were allocated to the line of credit.

All loan fees allocated to the term debt will be amortized using the interest method and all loan fees allocated to the line of credit will be amortized on a straight-line basis over the term of the Credit Facility.

The Credit Facility provides for interest at a rate either based on the London Interbank Offered Rate, or LIBOR, plus a margin ranging from 1.00% to 1.75%, or based on the base rate offered by Bank of America plus a margin ranging from 0.00% to 0.75%.

At April 3, 2020, the one-month LIBOR and prime rates were 0.99% and 3.25%, respectively.

At April 3, 2020, our weighted average interest rate on outstanding borrowing was 2.33%.

The Credit Facility is secured by substantially all of the Company’s assets, restricts the Company's ability to make certain payments and engage in certain transactions, and requires that the Company satisfy customary financial ratios.

The Company was in compliance with the covenants as of April 3, 2020.

The Company expensed $0.3 million of the remaining unamortized debt issuance costs, which are included in other expense, net on the Condensed Consolidated Statements of Income for the six months ended July 3, 2020 and the remaining $0.2 million were allocated to the line of credit.

The First Amended and Restated Credit Facility provides for interest at a rate either based on the London Interbank Offered Rate, or LIBOR, plus a margin ranging from 1.00% to 2.25%, or based on the base rate offered by Bank of America plus a margin ranging from 0.00% to 1.25%.

At July 3, 2020, the one-month LIBOR and prime rates were 0.17% and 3.25%, respectively.

At July 3, 2020, our weighted-average interest rate on outstanding borrowing was 2.05%.

The First Amended and Restated Credit Facility is secured by substantially all of the Company’s assets, restricts the Company's ability to make certain payments and engage in certain transactions, and requires that the Company satisfy customary financial ratios.

The Company was in compliance with the covenants as of July 3, 2020.

Hall County, Georgia Project - Phase 1

1 unchanged sentence

The Company plans to invest approximately $50.0 million in capital expenditures and employ up to 800 personnel over the next five years, dependent on market and general economic conditions in Georgia.

The Company currently estimates that the first phase of the project will be completed in mid-2020.

The Company currently estimates that the first phase of the project will be completed in August 2020.

The amount of any such capital expenditures is subject to change depending on the circumstances and the scope of the project.

6 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