What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-08-23 compared with 2020-08-21 · 84 added, 96 removed, 250 unchanged (42% of the section changed)

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(a) Security, providing security and inspection systems and turnkey security screening solutions;

(b) Healthcare, providing patient monitoring, diagnostic cardiology, and connected care systems;

(b) Healthcare, providing patient monitoring, diagnostic cardiology, and connected care systems and associated accessories;

and (c) Optoelectronics and Manufacturing, providing specialized electronic components for our Security and Healthcare divisions, as well as to third parties for applications in the defense and aerospace markets, among others.

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We believe that the diversified product portfolio and international customer mix of our Security division position us well to withstand the impact of these uncertainties and even benefit from specific initiatives within various governments.

However, depending on how future sequestration cuts are implemented and how the U.S.

However, depending on how future budgetary reductions may be implemented and how the U.S.

federal government and our other international customers manage their fiscal challenges, including the impact of the COVID-19 pandemic, we believe that these actions could have a material, adverse effect on our business, financial condition and results of operations.

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During this period of uncertainty, sales of our healthcare products may be negatively impacted.

We cannot predict when the markets will fully recover or when the uncertainties related to the U.S.

federal government will be resolved and, therefore, when this period of delayed and diminished purchasing will end.

A prolonged delay could have a material adverse effect on our business, financial condition and results of operations.

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Fiscal 2021 Compared with Fiscal 2020.

We reported consolidated sales of $1,166.0 million in fiscal 2020, a 1.4% decrease over compared to the prior year, which drove a year-over-year decrease in gross profit of $10.0 million.

Our income from operations decreased by 3% from the prior year to $104.9 million in fiscal 2020.

This decrease in profitability was driven primarily by an increase in impairment, restructuring and other charges.

We reported consolidated sales of $1,146.9 million in fiscal 2021, a 1.6% decrease compared to the prior year, which drove a year-over-year decrease in gross profit of $0.7 million.

Our income from operations increased by 10% from the prior year to $115.4 million in fiscal 2021.

This increase in profitability was driven primarily by a decrease in operating expenses due to strong cost controls.

Acquisitions.

We acquired several small businesses during fiscal years 2020 and 2019 as described in Note 2 to the consolidated financial statements.

We acquired several businesses during fiscal years 2021 and 2020 as described in Note 2 to the consolidated financial statements, none of which were considered material.

Trends and Uncertainties

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Coronavirus Pandemic.

Coronavirus disease 2019 (“COVID-19”) was first reported in late 2019.

In March 2020, the World Health Organization characterized COVID-19 as a global pandemic, and President Trump declared a national emergency concerning the pandemic.

COVID-19 has dramatically impacted the global health and economic environment, with millions of confirmed cases, business slowdowns and shutdowns, and market volatility.

The COVID-19 outbreak has caused, and is likely to continue to cause, significant economic disruptions and has impacted, and is expected to continue to impact, our operations and the operations of our suppliers and customers as a result of quarantines, facility closures and travel and logistics restrictions.

While we do not expect these impacts to be long-term, there is uncertainty around the duration and ultimate impact of the COVID-19 outbreak.

Our Healthcare division has experienced increased demand for certain products as a result of COVID-19, but our other divisions have experienced adverse changes in the timing of demand for products and services.

In our Security division, order activity has been impacted most prominently with respect to our aviation and cargo products.

As many of our customers in both our Security and Optoelectronics and Manufacturing divisions are being impacted by the pandemic, we are also receiving requests to delay deliveries of equipment and modify service arrangements, and we are experiencing delays in the timing of orders.

In addition, as a result of COVID-19 related government regulations, certain of our global manufacturing facilities had to limit operations somewhat in the fourth quarter of fiscal 2020, and it is possible that our operations could be similarly impacted in the future.

The coronavirus disease 2019 (“COVID-19”) pandemic has dramatically impacted the global health and economic environment, with millions of confirmed cases, business slowdowns and shutdowns, and market volatility.

The COVID-19 pandemic has caused, and is likely to continue to cause, significant economic disruptions and has impacted, and is expected to continue to impact, our operations and the operations of our suppliers, logistics providers and customers as a result of quarantines, facility closures and travel and logistics restrictions.

Our ability to continue to operate without significant negative impacts will in part depend on our ability to protect our employees and our supply chain and to keep our manufacturing facilities open and operating effectively.

We have endeavored to implement government and health authority recommendations to protect our employees worldwide.

While we do not expect these pandemic-related impacts to be long-term, there is substantial uncertainty regarding the duration and ultimate impact of the COVID-19 pandemic.

Our Healthcare division has experienced increased demand for certain products as a result of COVID-19.

In our Security division, during the latter part of fiscal 2020 and in fiscal 2021, receipt of certain orders was delayed, most notably with respect to our aviation and cargo products, and our revenues were adversely impacted as a result of the pandemic.

During fiscal 2021, bookings accelerated, but as many customers of our Security division continue to be impacted by the pandemic, we have received and could receive further requests to delay deliveries of equipment and modify service arrangements or the scheduling of factory or site acceptance tests, which has impacted, and could further impact, timing of revenue recognition.

In addition, as a result of COVID-19 related government regulations, certain of our global manufacturing facilities have had to limit operations and might have to limit operations in the future.

If these business interruptions resulting from COVID-19 were to be prolonged or expanded in scope, our business, financial condition, results of operations and cash flows would be materially and adversely impacted.

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

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

For a further discussion of potential risks to our business from the COVID-19 pandemic, see Part I, Item 1A.

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Global Economic Considerations.

In addition to the COVID-19 pandemic, other global macroeconomic factors, coupled with the U.S.

Our products and services are sold in numerous countries worldwide, with a large percentage of our sales generated outside the United States.

Therefore, we are exposed to and impacted by global macroeconomic factors, U.S.

and foreign government policies and foreign exchange fluctuations.

In addition to the COVID-19 pandemic, these other global macroeconomic factors, coupled with the U.S.

political climate, have created uncertainty and impacted demand for certain of our products and services.

We do not know how long this uncertainty will continue.

Therefore, we expect that there may be a period of delayed or deferred purchasing by our customers.

These factors could have a material negative effect on our business, results of operations and financial condition.

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As described above, our Healthcare division has experienced some increased demand for its patient monitoring products as a result of the COVID-19 pandemic.

Increased healthcare capital purchases in 2020 may result in fewer capital purchases in following years as the market is flooded with product.

The pandemic may also impact our ability to manufacture product needed to timely fill orders if we need to close our manufacturing facility due to employee COVID-19 cases.

Increased healthcare capital purchases made in prior periods may result in fewer capital purchases in subsequent periods.

The pandemic may also impact our ability to manufacture product needed to timely fill orders if we experience supply chain disruptions or need to close any manufacturing facility due to employee COVID-19 cases or local government regulations.

European Union Threat Detection Standards.

The EU has implemented regulations for all airports within the EU that use explosive detection systems to have hold baggage screening systems that are compliant with the European Civil Aviation Conference (ECAC) Standard 3.

Upon issuance of the regulations, the deadline for compliance with this mandate was set for September 2020.

Given the current uncertainty surrounding the COVID-19 situation, the EU has revised the regulations, and the date whereby airports that use explosive detection systems for hold baggage screening have to meet Standard 3 has been changed to September 2021.

There is an ongoing discussion around whether this deadline should be further moved and whether a second deadline for previous generation explosive detection systems installed between 2011 and 2014 needing to be replaced with Standard 3 should be moved from 2022 to 2024.

The deadline for compliance with this mandate was initially set for September 2020.

Given the uncertainty surrounding the COVID-19 situation, the EU revised the regulations, and the date by which airports using explosive detection systems for hold baggage screening must meet Standard 3 has been changed to March 2024, with certain larger airports required to meet earlier installation dates.

Our Security division’s real time tomography (RTT) product has passed the ECAC explosive detection system Standard 3 threat detection requirement.

Government Policies.

Our net income could be affected by changes in U.S.

or foreign government policies.

For example, the LIBOR index will be discontinued by the end of calendar year 2021.

When the LIBOR index is discontinued, the terms of our revolving credit facility allow for a replacement rate to be determined in accordance with the credit agreement.

Changes in government policies could impact our financial condition and results of operations.

Mexico SAT Contract.

Our contract with the Mexican government to provide a turnkey security screening solution at various locations throughout the country expired in June 2020.

While we are engaged in discussions for the continuation of the program, we cannot provide any assurance that this program will be continued and, if the program is continued, upon what terms.

If the program is not continued or continued upon modified terms, our results of operations could be adversely affected.

Our results of operations and cash flows could be materially affected by changes in U.S.

or foreign government legislative, regulatory or enforcement policies, including U.S.

and foreign government policies to manage the COVID-19 pandemic, such as travel restrictions or site closures.

Changes in Costs.

Our costs are subject to fluctuations, particularly due to changes in raw material, component, and logistics costs.

Our manufacturing and supply chain operations, including freight and shipping activities, have been and may continue to be impacted by increased vendor costs.

This increased cost environment has been exacerbated by the COVID-19 pandemic.

Although we strive to implement, achieve, and sustain cost containment measures, including supply chain optimization and general overhead and workforce optimization, if we are unable to mitigate the impact of increased costs through pricing or other actions, there could be a negative impact on our business, results of operations, and financial condition.

Critical Accounting Policies and Estimates

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According to the terms of a sale contract, we may receive consideration from a customer prior to transferring goods to the customer, and we record these prepayments as a contract liability.

We also record deferred revenue, typically related to service contacts, when consideration is received before the services have been performed.

We also record deferred revenue, typically related to service contracts, when consideration is received before the services have been performed.

We recognize contract liabilities and deferred revenue as net sales after all revenue recognition criteria are met.

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We determine whether or not customer acceptance criteria are perfunctory or inconsequential.

The determination of whether or not customer acceptance terms are perfunctory or inconsequential impacts the amount and timing of revenue recognition.

Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product under warranty.

The determination of whether or not customer acceptance terms are perfunctory or inconsequential impacts the timing of revenue recognition.

Multiple Performance Obligations.

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In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price.

The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met.

The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct performance obligation has been met.

The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service.

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The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods.

The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of factory acceptance test, completion of site acceptance test, installation and connectivity of equipment, certification of training of personnel and, in the case of after-market service deliverables, the passage of time (typically evenly over the post-warranty period of the service deliverable).

We often provide a guarantee to support our performance under multiple performance obligations.

We often provide a guarantee to support our performance under multiple performance obligation contracts.

In the event that customers are permitted to terminate such arrangements, the underlying contract typically requires payment for deliverables and reimbursement of costs incurred through the date of termination.

We adopted new revenue recognition guidance issued by the FASB effective July 1, 2018 using the modified retrospective method.

See Note 1 to the consolidated financial statements.

Allowance for Doubtful Accounts.

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If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required.

Inventories are generally stated at the lower of cost (first-in, first-out) or net realizable value.

We write down inventory for slow-moving and obsolete inventory based on historical usage, orders on hand, assessments of future demands, market conditions among other items.

Inventories are stated at the lower of cost or net realizable value.

We write down inventory for slow-moving and obsolete inventory based on historical usage, orders on hand, assessments of future demands, and market conditions, among other items.

If these factors are less favorable than those projected, additional inventory write-downs may be required.

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Business Combinations.

In connection with the acquisition of a business, we allocate the fair value of purchase consideration to the tangible and intangible assets acquired, and liabilities assumed based on their estimated fair values.

In connection with the acquisition of a business, we record the fair value of purchase consideration for the tangible and intangible assets acquired, and liabilities assumed based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, and trade names, useful lives and discount rates.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired technology, trade names, useful lives and discount rates.

Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

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Impairment of Goodwill, Other Intangible Assets and Long-Lived Assets.

Goodwill represents the excess purchase price over the estimated fair value of the assets acquired and liabilities assumed in a business combination.

Goodwill represents the excess purchase consideration over the estimated fair value of the assets acquired and liabilities assumed in a business combination.

Goodwill is allocated to our segments based on the nature of the product line of the acquired business.

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Fiscal 2021 Compared with Fiscal 2020.

Revenues for the Security division decreased on a year-over-year basis primarily as a result of reduced service revenues partially offset by an increase in product sales driven primarily by strength in the sale of cargo and vehicle inspection systems.

We began to experience certain delays of equipment deliveries and installations and new orders near the end of the third quarter through the end of the fiscal year, most notably from our aviation and cargo customers as a result of the global COVID-19 pandemic.

Service revenues decreased primarily due to a reduction in revenue from the contract with the Servicio de Administración Tributaria (SAT) in Mexico, which expired in June 2020.

Revenues for the Healthcare division decreased on a year-over-year basis primarily as a result of lower sales of patient monitoring equipment and the exit of a product line during the year.

Revenues for the Optoelectronics and Manufacturing division decreased primarily due to lower sales in our contract manufacturing and commercial optoelectronics businesses which have been impacted by the global COVID-19 pandemic beginning towards the end of the third quarter through the end of the fiscal year, partially offset by the inclusion of revenues from a small business acquired in February 2020.

Revenues for the Security division during the fiscal year ended June 30, 2021 continued to be impacted by the COVID-19 pandemic most notably in our aviation and cargo businesses, as we experienced delays in the timing of delivery and installation of equipment and related services, as well as the timing of receipt of new orders.

Our product revenues decreased by approximately $66 million.

We also experienced a decrease in revenues of $60 million associated with the expiration of a contract in Mexico in June 2020.

Excluding revenues attributable to the Mexico contract, our service revenues increased approximately $18 million.

Revenues for the Healthcare division during the year ended June 30, 2021 increased year-over-year due to an increase in sales of $26 million attributable to patient monitoring systems, cardiology equipment, supplies and accessories and related service revenue.

Some of this increase was due to increased demand for our patient monitoring products as a result of the COVID-19 pandemic.

Revenues for the Optoelectronics and Manufacturing division during the year ended June 30, 2021 increased year-over year as a result of an increase in revenue in our contract manufacturing business of approximately $51 million and an increase in sales of approximately $11 million in our optoelectronics business, which includes a $7 million increase in revenues from a small business acquired in February 2020.

(Dollars in millions)

Fiscal 2021 Compared with Fiscal 2020.

Gross profit decreased as a result of the decline in net revenues.

Gross margin decreased on a year-over-year basis due primarily to an unfavorable mix of revenues driven by a decrease in service revenue.

Service revenues generally carry higher gross margins than equipment sales.

Gross profit is impacted by sales volume, productivity, and changes in overall manufacturing-related costs, such as raw materials and component costs, warranty expense, provision for inventory, freight, and logistics.

Our cost of goods sold decreased year-over-year primarily as a result of the change in revenues.

While certain raw material and component costs increased, these increases were mitigated by operational efficiencies.

Gross profit as a percentage of net revenues during the year ended June 30, 2021 increased on a year-over-year basis due to (i) an improved gross margin in our Healthcare division (which has the highest gross margin among our divisions) as a result of the benefit of economies of scale associated with increased sales, combined with operating efficiencies, (ii) increase in Healthcare revenue as a percentage of total net revenues, and (iii) an increase in gross margin in our Security division.

Our gross margin decreased within the Optoelectronics and Manufacturing division due to a less favorable sales mix.

Operating Expenses

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Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses consisted primarily of compensation paid to sales, marketing and administrative personnel, professional service fees and marketing expenses.

Our significant selling, general and administrative (“SG&A”) expenses include employee compensation, sales commissions, travel, professional services, marketing expenses, and depreciation and amortization expense.

Fiscal 2021 Compared with Fiscal 2020.

SG&A expenses decreased year-over-year due to cost containment measures and lower travel expenses due to restrictions arising from COVID-19 as well as lower selling commissions associated with the decrease in revenues.

SG&A expense for the year ended June 30, 2021 decreased as compared to the same prior-year period due to reduced travel and entertainment and marketing expenses of $6 million and $3 million, respectively, due to the COVID-19 pandemic, and decreased third-party sales commissions of $8 million.

These decreases were offset by an increase in the provision for losses on accounts receivable of $5 million.

Research and Development

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Fiscal 2021 Compared with Fiscal 2020.

R&D expenses increased year-over-year due to increased investment for new product development and product enhancements.

The decrease in R&D expense during the year ended June 30, 2021 from the same prior-year period reflected a decrease in materials and supplies consumed in research activities of $2 million and reduced travel expenses of $1 million due to the COVID-19 pandemic.

Impairment, Restructuring and Other Charges

Impairment, restructuring and other charges generally consist of charges relating to reductions in our workforce, facilities consolidation, impairment of assets, costs related to acquisition activity, legal charges and other non-recurring charges.

We have undertaken certain restructuring activities in an effort to align our global capacity and infrastructure with demand by our customers and fully integrate acquisitions, thereby improving our operational efficiency.

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Fiscal 2021 Compared with Fiscal 2020.

During the year ended June 30, 2021, we incurred $7.2 million for exit activities associated with an expired turnkey contract in Mexico.

Such exit costs include $2.8 million for employee terminations, $1.1 million for facility closure and other exit costs, direct transaction costs of $2.7 million, and $0.6 million for right-of-use asset impairment for a leased facility.

We also incurred costs of $2.1 million for other employee terminations and facility closure costs for operational efficiency activities, $0.3 million for acquisition-related activities, and $0.5 million for certain legal charges, net of insurance reimbursements.

Impairment, restructuring and other charges in fiscal 2020 included (i) $5.5 million for impairment of assets associated with the write-off of intangible and fixed assets due to abandonment of a non-core product line in our Healthcare division and a strategic shift in the intended use of an intangible asset in the Security division, (ii) $4.2 million for employee termination and facility closure costs and (iii) $0.4 million in acquisition-related costs.

These charges in fiscal 2020 were partially offset by a net $3.6 million recovery of certain legal costs as a result of insurance reimbursements.

During fiscal 2019, we incurred restructuring and other charges of $4.4 million related to employee termination and facility closure costs and $1.3 million in acquisition-related costs, which were partially offset by a net $1.9 million recovery of certain legal costs as a result of insurance reimbursements.

Interest and Other

Interest and Other Expense, Net

(Dollars in millions)

Interest expense, net

Other (income) expense, net

Interest and other expense, net

Fiscal 2021 Compared with Fiscal 2020.

In fiscal 2020, interest expense, net, was $18.8 million as compared to $21.6 million for the same prior-year period.

This decrease was driven by lower fiscal 2020 average debt balances and the impact of decreased interest rates under our revolving credit facility.

Interest expense included $8.8 million and $7.8 million in fiscal 2020 and 2019, respectively, of non-cash interest expense primarily related to the Notes (see Note 8 to the condensed consolidated financial statements for further discussion).

For the year ended June 30, 2021, interest and other expense, net was $16.7 million as compared to $18.8 million in the comparable prior-year period.

This decrease was driven by lower average levels of borrowing under our revolving credit facility as well as lower average interest rates during the fiscal year ended June 30, 2021 compared to the same period in the prior year.

Interest expense included $9.0 million and $8.8 million of non-cash interest expense during the years ended June 30, 2021 and 2020, respectively, mainly related to the Notes (see Note 8 to the condensed consolidated financial statements for further discussion).

Provision for Income Taxes

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Fiscal 2021 Compared with Fiscal 2020.

In fiscal 2020, our income tax provision was $10.9 million, compared to $21.4 million for the prior year.

The effective tax rate for fiscal 2020 was 12.6% compared to 24.8% for fiscal 2019.

We recognized discrete tax benefits of $12.6 million and $3.5 million in fiscal 2020 and 2019, respectively.

The discrete tax benefits in fiscal 2020 and 2019 include the effect of equity-based compensation under ASU 2016-09.

We also recognized a discrete tax benefit in fiscal 2020 for changes in prior year estimates and valuation allowances.

Excluding the impact of these discrete tax items, our effective tax rate for fiscal 2020 was 27.3%, compared to 28.9% in the prior year.

For the years ended June 30, 2021 and 2020, we recognized a provision for income taxes of $24.6 million and $10.9 million, respectively.

The effective tax rate for the years ended June 30, 2021 and 2020 was 24.9% and 12.6%, respectively.

During the year ended June 30, 2021, we recognized a net discrete tax benefit of $1.2 million for equity-based compensation under ASU 2016-09.

During the year ended June 30, 2020, we recognized a discrete tax benefit of $12.6 million, comprised of $6.8 million for equity-based compensation under ASU 2016-09 and $5.8 million for a return to provision true-up adjustment.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our credit facility.

Cash and cash equivalents totaled $76.1 million at June 30, 2020, a decrease of $20.2 million, or 21%, from $96.3 million at June 30, 2019.

Cash and cash equivalents totaled $80.6 million at June 30, 2021, an increase of $4.5 million, or 5.9%, from $76.1 million at June 30, 2020.

During fiscal 2021, we generated $139.1 million of cash flow from operations.

These proceeds were used for the following:

$20.4 million invested in capital expenditures, $8.9 million for the acquisition of businesses, $29.2 million for net repayment of bank borrowings and long-term debt and $76.3 million for share repurchases and taxes paid related to the net share settlement of equity awards.

$15.8 million invested in capital expenditures, $3.0 million for the acquisition of a business, $59.3 million for net repayment of bank borrowings and long-term debt and $49.0 million for share repurchases and taxes paid related to the net share settlement of equity awards.

If we continue to net settle equity awards, we will use additional cash to pay our tax withholding obligations in connection with such settlements.

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In addition, without repatriating earnings from non-U.S.

subsidiaries, we anticipate that cash generated from operations will be able to satisfy our obligations in the U.S., including our outstanding lines of credit.

subsidiaries, we anticipate that cash generated from operations will be able to satisfy our obligations in the United States.

We have a five-year revolving credit facility that allows us to borrow up to $535 million.

As of June 30, 2020, there was $59 million outstanding under the revolving credit facility and letters-of-credit outstanding totaled $ 46.5 million.

As of June 30, 2021, there were no outstanding borrowings under our revolving credit facility and letters-of-credit outstanding totaled $63.2 million.

See Note 8 to the consolidated financial statements for further discussion.

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During fiscal 2021, we generated cash from operations of $139.1 million compared to $129.2 million in the prior fiscal year.

This increase was driven by an increase in profits partially offset by investments in net working capital.

This increase was driven by change in net working capital.

Cash Used in Investing Activities.

Net cash used in investing activities was $34.7 million during fiscal 2021 as compared to $42.7 million used during the prior year.

During fiscal 2020, we used cash of $8.9 million for the acquisitions of businesses as compared to $18.3 million in the prior fiscal year.

Capital expenditures in fiscal 2020 were $20.4 million compared to $27.4 million in the prior year.

Expenditures for intangible and other assets in fiscal 2020 were $13.4 million compared to $2.8 million in the prior fiscal year primarily for development of software for internal use.

During fiscal 2021, we used cash of $3.0 million for the acquisition of businesses as compared to $8.9 million in the prior fiscal year.

Net capital expenditures in fiscal 2021 were $15.8 million compared to $20.4 million in the prior year.

Cash Used in Financing Activities.

Net cash used in financing activities was $103.9 million during fiscal 2021, compared to $104.7 million during the prior year.

The changes in cash flows from financing activities primarily relate to (i) net repayments of borrowings on bank lines of credit and debt totaling $29.2 million in fiscal 2020 compared to net payments of $26.7 million in fiscal 2019;

The changes in cash flows from financing activities primarily relate to (i) net repayments of borrowings on bank lines of credit and debt totaling $59.3 million in fiscal 2021 compared to $29.2 million in fiscal 2020;

and (ii) $49.1 million used for share repurchases and taxes paid related to the net share settlement of equity awards in fiscal 2021 compared to $76.3 million in the prior year.

Outstanding lines of credit and current and long-term debt totaled $277.3 million at June 30, 2021, a decrease of $49.7 million from $327.0 million at June 30, 2020.

As of June 30, 2020, we were in compliance with all covenants under our various borrowing agreements.

As of June 30, 2021, we were in compliance with all financial covenants under our various borrowing agreements.

See Note 8 to the consolidated financial statements for further discussion.

The following is a summary of our contractual obligations and commitments at June 30, 2020 (in thousands):

Payments Due by Period

Contractual Obligations

Operating leases (1)

Purchase obligations

Acquisition‑related obligations

Defined benefit plan obligation

Total contractual obligations

Other commercial commitments—letters of credit

(1) Represents future cash payments for operating leases which are presented on an undiscounted basis.

We anticipate that cash generated from our operations, in addition to existing cash borrowing arrangements and future access to capital markets should be sufficient to meet our cash requirements for at least the next 12 months.

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Of this amount, approximately 71% was held by our foreign subsidiaries and subject to repatriation tax considerations.

These foreign funds were held primarily in Singapore, Mexico, the United Kingdom, Malaysia, Australia and Canada and to a lesser extent in India and Germany among others.

These foreign funds were held primarily by our subsidiaries in the United Kingdom, India, Malaysia, Singapore, Canada, and Australia, and to a lesser extent in Albania and Germany among others.

We intend to permanently reinvest certain earnings from foreign operations, and we currently do not anticipate that we will need this cash in foreign countries to fund our U.S.

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Stock Repurchase Program

During fiscal 2020, we repurchased the remaining 562,707 shares authorized for repurchase under our prior share repurchase program.

In April 2020, the Board of Directors authorized a new share repurchase program of up to 1,000,000 shares, all of which remained available for repurchase as of June 30, 2020.

In August 2020, the Board of Directors increased the maximum number of shares to 3,000,000 shares authorized under the stock repurchase program.

In April 2020, the Board of Directors authorized a new share repurchase program of up to 1,000,000 shares, and in August 2020, the Board of Directors increased the maximum number of shares to 3,000,000 shares authorized under the stock repurchase program.

This program does not expire unless our Board of Directors acts to terminate the program.

During fiscal 2021, we repurchased 452,005 shares.

As of June 30, 2021, 2,547,995 shares remained available for repurchase.

The timing and actual numbers of shares purchased depends on a variety of factors, including stock price, general business and market conditions and other investment opportunities.

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Off-Balance Sheet Arrangements

As of June 30, 2020, we had no significant off balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K, other than those previously disclosed.

As of June 30, 2021, we had no significant off-balance sheet arrangements, as defined in Item 303 of Regulation S-K, other than those previously disclosed.

New Accounting Pronouncements

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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-K

Item 7. Management’s Discussion and Analysis