What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-10-28 compared with 2022-04-29 · 67 added, 103 removed, 144 unchanged (54% of the section changed)

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together with our wholly-owned subsidiaries.

This management’s discussion and analysis of financial condition as of March 31, 2022 and results of operations for the three and nine months ended March 31, 2022 should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 filed with the SEC.

This management’s discussion and analysis of financial condition as of September 30, 2022 and results of operations for the three months ended September 30, 2022 should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed with the SEC.

Forward-Looking Statements

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Assumptions upon which our forward-looking statements are based could prove to be inaccurate, and actual results may differ materially from those expressed in or implied by such forward-looking statements.

Important factors that could cause our actual results to differ materially from those expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (including Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and other documents filed by us from time to time with the SEC.

Important factors that could cause our actual results to differ materially from our expectations are disclosed in this report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (including Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and other documents filed by us from time to time with the SEC.

Such factors, of course, do not include all factors that might affect our business and financial condition.

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changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses;

the impact of the Russia-Ukraine conflict, including the potential for broader economic disruption;

the impact of the Russia-Ukraine conflict, including the potential for broad economic disruption;

global economic uncertainty;

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Many of the referenced risks could be amplified by the magnitude and duration of the COVID-19 pandemic.

All forward-looking statements contained in this report are qualified in their entirety by this statement.

Moreover, we operate in a very competitive and rapidly changing environment.

New risks emerge from time to time.

All forward-looking statements contained in this report are qualified in their entirety by this Section.

Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time.

It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

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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 and associated accessories;

(b) Healthcare, providing patient monitoring, cardiology and remote monitoring, 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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These products and services are used to inspect baggage, parcels, cargo, people, vehicles and other objects for weapons, explosives, drugs, radioactive and nuclear materials and other contraband.

Revenues from our Security division accounted for 53% and 54% of our total consolidated revenues for the nine months ended March 31, 2021 and 2022, respectively.

Revenues from our Security division accounted for 54% of our total consolidated revenues for the three months ended September 30, 2021 and 2022.

Healthcare Division .

Through our Healthcare division, we design, manufacture, market and service patient monitoring, diagnostic cardiology and connected care systems globally for sale primarily to hospitals and medical centers.

Through our Healthcare division, we design, manufacture, market and service patient monitoring, cardiology and remote monitoring, and connected care systems globally for sale primarily to hospitals and medical centers.

Our products monitor patients in critical, emergency and perioperative care areas of the hospital and provide information, through wired and wireless networks, to physicians and nurses who may be at the patient’s bedside, in another area of the hospital or even outside the hospital.

Revenues from our Healthcare division accounted for 20% and 18% of our total consolidated revenues for the nine months ended March 31, 2021 and 2022, respectively.

Revenues from our Healthcare division accounted for 18% and 16% of our total consolidated revenues for the three months ended September 30, 2021 and 2022, respectively.

Optoelectronics and Manufacturing Division .

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We provide our optoelectronic devices and electronics manufacturing services to OEM customers and to our own Security and Healthcare divisions.

Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 27% and 28% of our total consolidated revenues for the nine months ended March 31, 2021 and 2022, respectively.

Revenues from external customers in our Optoelectronics and Manufacturing division accounted for 28% and 30% of our total consolidated revenues for the three months ended September 30, 2021 and 2022, respectively.

Trends and Uncertainties

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The coronavirus disease 2019 (“COVID-19”) pandemic, including the emergence of new variants, 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.

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 supply chain disruptions and delays, as well as labor challenges associated with employee absences, travel restrictions, site access, quarantine restrictions, remote work, and adjusted work schedules.

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 including with respect to vaccine administration.

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

There is substantial uncertainty regarding the duration, scope, and ultimate impact of the COVID-19 pandemic.

During the early stages of the pandemic and continuing to a lesser extent throughout the duration of the pandemic, our Healthcare division experienced increased demand for certain products as a result of COVID-19.

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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.

The ultimate impact of COVID-19 on our operations and financial performance in future periods, including our ability to execute our programs in the expected timeframe, remains uncertain and will depend on future pandemic-related developments, including the duration of the pandemic, potential subsequent waves of COVID-19 infection or potential new variants, the effectiveness and adoption of COVID-19 vaccines and therapeutics, supplier impacts and related government actions to prevent and manage disease spread, including the implementation of any federal, state, local or foreign vaccine mandates, all of which are uncertain and difficult to predict.

The long-term impacts of COVID-19 on government budgets and other funding priorities, including international priorities, that impact demand for our products and services are also difficult to predict, but could negatively affect our future results and performance.

Global Economic Considerations.

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and foreign government policies and foreign exchange fluctuations.

Global economic conditions continue to be highly volatile due to the COVID-19 pandemic, resulting in market size contractions in certain countries due to economic slowdowns and government restrictions on movement.

There is uncertainty surrounding macroeconomic factors in the U.S.

and globally characterized by the supply chain environment, inflationary pressure, rising interest rates, and labor shortages.

Further, global economic conditions continue to be highly volatile due to the COVID-19 pandemic, resulting in market size contractions in certain countries due to economic slowdowns and government restrictions on movement.

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

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

Further, in February 2022, Russian forces invaded Ukraine, and in response, the member countries of NATO initiated a variety of sanctions and export controls targeting Russia and associated entities, which has also disrupted our ability to obtain material and freight availability.

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.

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.

Russia's Invasion of Ukraine.

The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty.

We have certain research and development activities within Ukraine for our Healthcare division which have been somewhat impacted.

Results of Operations for the Three Months Ended March 31, 2021 (Q3 Fiscal 2021) Compared to the Three Months Ended March 31, 2022 (Q3 Fiscal 2022) (amounts in millions)

This has the potential to indirectly disrupt our supply chain and access to certain resources.

While we have not experienced significant adverse impacts to date and will continue to monitor for any impacts and seek to mitigate disruption that may arise, we have certain research and development activities within Ukraine for our Healthcare division which have been somewhat impacted.

The conflict also has increased the threat of malicious cyber activity from nation states and other actors.

Currency Exchange Rates.

On a year-over-year basis, currency exchange rates negatively impacted reported sales by approximately 1.8% for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to the strengthening of the U.S.

dollar against other foreign currencies in 2022.

Any further strengthening of the U.S.

dollar against foreign currencies would adversely impact our sales for the remainder of the year, and any weakening of the U.S.

dollar against foreign currencies would positively impact our sales for the remainder of the year.

Results of Operations for the Three Months Ended September 30, 2021 (Q1 Fiscal 2022) Compared to the Three Months Ended September 30 , 2022 (Q1 Fiscal 2023) (amounts in millions)

The table below and the discussion that follows are based upon the way in which we analyze our business.

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Total net revenues

Revenues for the Security division during the three months ended March 31, 2022 increased year-over-year due to an increase in product and service revenues of approximately $5.4 million and $1.8 million, respectively.

Revenues for the Healthcare division during the three months ended March 31, 2022 decreased 3.3% year-over-year.

While cardiology sales increased by approximately $2.8 million and service, supplies and accessories sales increased by approximately $0.9 million, patient monitoring sales decreased by approximately $5.5 million.

Revenues for the Optoelectronics and Manufacturing division during the three months ended March 31, 2022 increased year-over year as a result of an increase in revenue in our optoelectronics business of approximately $2.3 million, offset by a reduction in revenue of approximately $1.0 million in our contract manufacturing business.

Revenues for the Security division during the three months ended September 30, 2022 decreased year-over-year due to a reduction in product and service revenues of approximately $2.7 million and $1.8 million, respectively.

Approximately $3 million of this decrease is due to the negative year-over-year impact of foreign currency exchange rates on sales.

Revenues for the Healthcare division during the three months ended September 30, 2022 decreased year-over-year due to a reduction in patient monitoring sales of $6.9 million and a decrease in cardiology sales of $1.1 million, offset by an increase in service revenues of $1.0 million.

Revenues for the Optoelectronics and Manufacturing division during the three months ended September 30, 2022 increased year-over year as a result of an increase in revenue in our optoelectronics business of approximately $4.1 million, offset by a reduction in revenue of approximately $3.8 million in our contract manufacturing business.

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 increased year-over-year primarily as a result of the mix of revenues and higher raw material and freight costs.

Gross profit as a percentage of net revenues during the quarter ended March 31, 2022 decreased on a year-over-year basis due to (i) a reduction in the Security division gross margins due to a less favorable sales mix and increased component, freight and travel costs, and (ii) reduced revenues in our Healthcare division, which carries the highest gross margin of our three divisions.

Gross profit as a percentage of net revenues during the quarter ended September 30, 2022 decreased on a year-over-year basis due to (i) a reduction in the Security division gross margins due to a less favorable sales mix and increased component, freight and travel costs, (ii) a reduction in sales in the Healthcare division, which carries the highest gross margin of our three divisions, and (iii) an increase in sales in the Optoelectronics and Manufacturing division, which carries the lowest gross margin of our three divisions.

Operating Expenses

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Research and development

Impairment, restructuring and other charges (benefit), net

Impairment, restructuring and other charges, net

Total operating expenses

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

SG&A expense for the three months ended March 31, 2022 was comparable to such expense in the same prior-year period and included increased marketing expenses of $2.3 million offset by decreases in compensation expense of $1.0 million and other miscellaneous expenses of $1.4 million.

SG&A expense for the three months ended September 30, 2022 was $3.9 million lower than such expenses in the same prior-year period primarily due to reduced professional service fees, less commissions on lower sales, and favorable foreign exchange rates.

Research and development .

Research and development (R&D) expenses include research related to new product development and product enhancements.

The increase in R&D expense during the three months ended March 31, 2022 compared to the same prior-year period was primarily due to increases in compensation expense of approximately $1.0 million to support new product development initiatives primarily in our Security and Healthcare divisions.

R&D expense during the three months ended September 30, 2022 remained comparable to the same prior-year period with investments to support new product development initiatives primarily in our Security and Healthcare divisions.

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.

During the three months ended March 31, 2022, impairment, restructuring and other charges primarily consisted of $0.8 million for legal charges, $0.4 million in charges for employee terminations, and $0.3 million in acquisition related costs.

The net benefit in the three months ended March 31, 2021 consisted of ($0.7) million benefit for net reimbursements from our insurance carriers for covered legal charges, a $0.2 million charge for employee terminations from operational efficiency activities, and a $0.2 million charge for facility closure and operational efficiency activities.

Other income.

For the three months ended March 31, 2022, other income was $27.4 million, driven by the gain on sale of property and equipment primarily from the sale of corporate owned real estate in a sale leaseback transaction of the Hawthorne Property in March 2022.

During the three months ended September 30, 2022, impairment, restructuring and other charges primarily consisted of $0.9 million for legal charges and $0.3 million in charges for employee terminations.

During the three months ended September 30, 2021, impairment, restructuring and other charges consisted of $2.2 million for legal charges net of insurance recoveries and $0.3 million in charges for employee terminations from operational efficiency activities.

Interest and other expense, net .

For the three months ended March 31, 2022, interest and other expense, net was $2.3 million as compared to $4.2 million in the same prior-year period.

This decrease was driven by our adoption of ASU 2020-06 (see Note 1 to the condensed consolidated financial statements for further discussion) and was partially offset by higher average interest rates and average levels of borrowing under our revolving credit facility during the three months ended March 31, 2022 in comparison with the levels of borrowing during the same period in the prior year.

Interest expense during the three months ended March 31, 2022 and 2021 included $0.2 and $2.2 million of non-cash interest expense, respectively, primarily related to the Notes.

For the three months ended September 30, 2022, interest and other expense, net was $3.4 million as compared to $2.0 million in the same prior-year period.

This increase was driven by higher average interest rates and higher average levels of borrowing under our credit facility during the three months ended September 30, 2022 in comparison with the levels of borrowing during the same period in the prior year.

The 1.25% convertible notes were outstanding for the first two months of the quarter and were retired on September 1, 2022 using borrowings from our credit facility.

Income taxes .

The effective tax rate for a particular period varies depending on a number of factors, including (i) the mix of income earned in various tax jurisdictions, each of which applies a unique range of income tax rates and income tax credits, (ii) changes in previously established valuation allowances for deferred tax assets (changes are based upon our current analysis of the likelihood that these deferred tax assets will be realized), (iii) the level of non-deductible expenses, (iv) certain tax elections (v) tax holidays granted to certain of our international subsidiaries and (vi) discrete tax items.

For the three months ended March 31, 2022, we recognized a provision for income taxes of $10.8 million compared to $9.5 million for the comparable prior-year period.

The effective tax rates for the three months ended March 31, 2022 and 2021 were 20.1% and 33.7%, respectively.

During the three month periods ended March 31, 2022, we recognized a net discrete tax benefit of $0.2 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates.

During the three months ended March 31, 2021, we recognized a net discrete tax expense of $2.2 million for changes in prior year tax estimates of $2.4 million, offset by a discrete tax benefit of ($0.2) million for equity-based compensation under ASU 2016-09.

Results of Operations for the Nine Months Ended March 31, 2021 (YTD Q3 Fiscal 2021) Compared to the Nine Months Ended March 31, 2022 (YTD Q3 Fiscal 2022) (amounts in millions)

The table below and the discussion that follows are based upon the way in which we analyze our business.

See Note 12 to the condensed consolidated financial statements for additional information about our business segments.

Optoelectronics and Manufacturing

Total net revenues

Revenues for the Security division during the nine months ended March 31, 2022 increased on a year-over-year basis.

Our product revenues increased by approximately $18.7 million, and our service revenues increased by approximately $4.0 million as compared to the prior year comparable period.

Revenues for the Healthcare division during the nine months ended March 31, 2022 decreased 3% year-over-year.

While cardiology sales increased by approximately $5.2 million and service, supplies and accessories sales increased by approximately $2.5 million, patient monitoring sales decreased by approximately $12.9 million.

Revenues for the Optoelectronics and Manufacturing division during the nine months ended March 31, 2022 increased year-over year as a result of an increase in revenue in our contract manufacturing business of approximately $6.8 million coupled with an increase in sales of approximately $7.4 million in our optoelectronics business.

Gross profit was comparable with the prior year on a 3.9% increase in sales as result of a reduced gross margin driven by the mix of sales and increased costs.

Our cost of goods sold increased year-over-year primarily as a result of the increase in revenues and higher raw material and freight costs.

Gross profit as a percentage of net revenues during the nine months ended March 31, 2022 decreased on a year-over-year basis due to (i) strong sales growth within our Optoelectronics and Manufacturing division (which has the lowest gross margin among our divisions), (ii) a reduction in revenues in our Healthcare division (which has the highest gross margin among our divisions), and (iii) a reduction in the Security division gross margins due to increased component and freight costs, a less favorable sales mix and a reduced service gross margin.

Operating Expenses

Selling, general and administrative

Research and development

Impairment, restructuring and other charges (benefit), net

Total operating expenses

Selling, general and administrative .

SG&A expense for the nine months ended March 31, 2022 was lower than such expense in the same prior-year period due to reduced provision for losses on accounts receivable coupled with certain bad debt recoveries totaling $10.0 million as well as a net benefit of $3.0 million for the change in contingent consideration and other miscellaneous reductions of approximately $1.2 million.

These decreases were partially offset by an increase in employee compensation expense of $6.7 million, increased travel and entertainment of $2.5 million and increased marketing expenses of $2.8 million.

Research and development .

The increase in R&D expense during the nine months ended March 31, 2022 from the same prior-year period was primarily due to higher employee compensation and outside services expenses of $5.2 million and $0.8 million, respectively, to support new product development initiatives primarily in our Security and Healthcare divisions.

This increase was partially offset by reductions in supplies and other expenses of approximately $0.9 million.

Impairment, restructuring and other charges (benefit).

During the nine months ended March 31, 2022, impairment, restructuring and other charges of $4.8 million consisted of $3.5 million for legal charges, $1.0 million in charges for employee terminations, $0.3 million in acquisition related costs.

During the nine months ended March 31, 2021, we incurred $7.2 million for exit activities associated with an expired turnkey contract in Mexico.

Such exit costs included $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 $1.6 million for other employee terminations and facility closure costs for operational efficiency activities and $0.3 million for acquisition-related activities.

This was offset by a net benefit of ($1.2) million for reimbursements from our insurance carriers for covered legal charges.

Other income.

For the nine months ended March 31, 2022, other income was $27.4 million, driven by the gain on sale of property and equipment primarily from the sale of corporate owned real estate in a sale leaseback transaction of the Hawthorne Property in March 2022.

Interest and other expense, net .

For the nine months ended March 31, 2022, interest and other expense, net was $6.5 million as compared to $12.6 million in the comparable prior-year period.

This decrease was driven by our adoption of ASU 2020-06 (see Note 1 to the condensed consolidated financial statements for further discussion) and was partially offset by higher average levels of borrowing under our revolving credit facility during the nine months ended March 31, 2022 compared to the same period in the prior year.

Interest expense during the nine months ended March 31, 2022 and 2021 included $0.3 million and $6.7 million, respectively, of non-cash interest expense, which was primarily related to the Notes.

Income taxes .

For the nine months ended March 31, 2022 and 2021, we recognized a provision for income taxes of $21.4 million and $20.8 million, respectively.

The effective tax rate for the nine months ended March 31, 2022 and 2021 was 20.8% and 30.1%, respectively.

During the nine months ended March 31, 2022, we recognized a net discrete tax benefit of $2.0 million related to equity-based compensation under ASU 2016-09.

During the nine months ended March 31, 2021, we recognized a net discrete tax expense of $2.3 million for changes in prior year tax estimates of $2.8 million, offset by a ($0.5) million tax benefit from equity-based compensation under ASU 2016-09.

For each of the three months ended September 30, 2021 and 2022, we recognized a provision for income taxes of $3.6 million.

The effective tax rates for the three months ended September 30, 2021 and 2022 were 15.9% and 24.4%, respectively.

During the three months ended September 30, 2021 and 2022, we recognized a net discrete tax benefit of $2.1 million and $0.1 million, respectively, related to equity-based compensation under ASU 2016-09.

Liquidity and Capital Resources

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

Cash and cash equivalents totaled $83.3 million at March 31, 2022, an increase of $2.7 million, or 3.3%, from $80.6 million at June 30, 2021.

Cash and cash equivalents totaled $54.0 million at September 30, 2022, a decrease of $10.2 million, or 15.9%, from $64.2 million at June 30, 2022.

We currently anticipate that our available funds, credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and the foreseeable future.

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subsidiaries, and our credit facilities will be sufficient to satisfy our obligations in the U.S.

We have a $750 million credit facility that is comprised of a $600 million revolving credit facility, which includes a $300 million subfacility for letters of credit, and a $150 million delayed draw term loan.

The term loan is available to us to draw through September 1, 2022.

As of March 31, 2022, there was $73.0 million outstanding under our revolving credit facility, $85.2 million of outstanding letters of credit, and $50 million outstanding under the term loan.

Cash Provided by Operating Activities.

We have a $750 million credit facility that is comprised of a $600 million revolving credit facility, which includes a $300 million sub-facility for letters of credit, and a $150 million delayed draw term loan.

The term loan was available to us to draw through September 1, 2022.

As of September 30, 2022, there was $215.0 million outstanding under our revolving credit facility, $150 million outstanding under the term loan and $67.2 million of outstanding letters of credit.

Cash Provided by (Used in) Operating Activities.

Cash flows from operating activities can fluctuate significantly from period to period, as net income, adjusted for non-cash items, and working capital fluctuations impact cash flows.

During the nine months ended March 31, 2022, we generated cash from operations of $41.8 million compared to $131.1 million in the same prior-year period.

This decrease was driven by increases in inventory, decreases in accounts payable and the amount of advance deposits received from customers and other changes in net working capital.

During the three months ended September 30, 2022, we generated cash from operations of $17.2 million compared to $11.0 million of cash used in the same prior-year period.

The increase was driven by increases from changes in accounts payable, advances from customers, deferred revenue and other changes in net working capital.

Cash Used in Investing Activities .

Net cash used in investing activities was $6.6 million for the nine months ended March 31, 2022 as compared to $26.2 million in the same prior-year period.

The decrease in cash used in investing activities was driven primarily by $32 million of proceeds for the sale of corporate owned real estate in a sale leaseback transaction of the Hawthorne Property.

Cash used to acquire businesses was $14.1 million during the nine-month period ended March 31, 2022 compared to $3.0 million in the prior year.

Capital expenditures in the nine-month period ended March 31, 2022 were $10.3 million compared to $11.2 million in the same prior-year period.

Expenditures for intangible and other assets in the nine-month period ended March 31, 2022 were $12.3 million compared to $9.9 million in the same prior-year period.

In addition, purchases of certificates of deposit in the nine-month period ended March 31, 2022 were $2.2 million compared to $4.8 million in the same prior-year period.

Net cash used in investing activities was $9.1 million for the three months ended September 30, 2022 as compared to $7.8 million in the same prior-year period.

Cash used to acquire businesses was $1.9 million during the three-month period ended September 30, 2022 compared to nil in the prior year.

Capital expenditures in the three-month period ended September 30, 2022 were $3.3 million compared to $3.5 million in the same prior-year period.

Expenditures for intangible and other assets in the three-month period ended September 30, 2022 were $3.9 million compared to $4.3 million in the same prior-year period.

Cash Used in Financing Activities .

Net cash used in financing activities was $30.9 million during the nine months ended March 31, 2022, compared to $91.4 million during the same prior-year period.

The changes in cash used in financing activities primarily relate to (i) net proceeds from borrowings on term loan of $50.0 million and bank lines of credit totaling $73.0 million in the nine month period ended March 31, 2022 compared to net repayments of borrowings of $59.0 million in the same prior-year period and (ii) $116.2 million used for share repurchases and taxes paid related to the net share settlement of equity awards in the nine month period ended March 31, 2022 compared to $36.6 million for the same prior-year period.

See Note 8 to the condensed consolidated financial statements for a detailed discussion regarding our revolving credit facility and our Notes.

Net cash used in financing activities was $13.9 million during the three months ended September 30, 2022, compared to $7.2 million during the same prior-year period.

The increase in cash used in financing activities was due to the increase in net payments on long-term debt by $142 million that was partially offset by the increase in net borrowings on bank lines of credit by $129 million.

Cash used to repurchase common stock and taxes paid related to the net share settlement of equity awards was $28.4 million in the three-month period ended September 30, 2022 compared to $34.8 million in the same prior-year period.

See Note 8 to the condensed consolidated financial statements for a detailed discussion regarding our credit facility and our Notes.

Cash Held by Foreign Subsidiaries

Our cash and cash equivalents totaled $83.3 million at March 31, 2022.

Our cash and cash equivalents totaled $54.0 million at September 30, 2022.

Of this amount, approximately 86% was held by our foreign subsidiaries and subject to repatriation tax considerations.

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

These foreign funds were held primarily by our subsidiaries in the United Kingdom, Singapore, Malaysia, Canada and India and, to a lesser extent, in Australia, Albania, Indonesia and Mexico 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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Issuer Purchases of Equity Securities

The following table contains information about the shares of common stock we purchased during the quarter ended March 31, 2022:

The following table contains information about the shares of common stock we purchased during the quarter ended September 30, 2022:

Maximum number (or

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under the plans or

January 1 to January 31, 2022

February 1 to February 28, 2022

March 1 to March 31, 2022

July 1 to July 31, 2022

August 1 to August 31, 2022

September 1 to September 30, 2022

(1) In April 2020, the Board of Directors authorized a share repurchase program of up to 1,000,000 shares of common stock.

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 September 2022, when there were 1,131,301 shares remaining authorized and yet to be repurchased under the plan, the Board of Directors renewed the authorization and revised the maximum number of shares to 2,000,000 shares authorized under the stock repurchase program.

Upon repurchase, the shares are restored to the status of authorized but unissued shares, and we record them as a reduction in the number of shares of common stock issued and outstanding in our consolidated financial statements.

Contractual Obligations

During the nine months ended March 31, 2022, there were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

During the three months ended September 30, 2022, there were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

See Notes 1, 6, 8 and 10 to the condensed consolidated financial statements for additional information regarding our contractual obligations.

Off-Balance Sheet Arrangements

As of March 31, 2022, we did not have any significant off-balance sheet arrangements, other than those previously disclosed.

Recent Accounting Pronouncements

1 unchanged sentence

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