What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-01 · 168 added, 84 removed, 149 unchanged (63% of the section changed)

19 unchanged sentences

Our PLP-USA segment is comprised of our U.S.

operations manufacturing our traditional products primarily supporting our domestic energy, telecommunications and solar products.

Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication and solar products in each respective geographical region.

operations manufacturing our traditional products primarily supporting our domestic energy, communications and special industries products.

Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, communications and special industries products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, who is the chief operating decision maker, and are accountable for the financial results and performance of their entire segment for which they are responsible.

4 unchanged sentences

Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our consolidated financial statements in the assessment of our performance and operating trends.

The following discussion describes our results of operations for the three months ended March 31, 2020.

The following discussion describes our results of operations for the three and six months ended June 30, 2020.

The first quarter of 2020 saw the global outbreak of a novel strain of coronavirus (“COVID-19”), which in the latter part of the quarter created significant global economic disruption.

While the recent outbreak did not have a material impact on our reported results for this three-month period, it created challenges for us in countries that were the earliest to be impacted by the pandemic, namely our Asia-Pacific business segment.

Due to restrictions on our operations, the operations of our customers and the global supply chain, and we are actively monitoring its impact on the second quarter and for future periods.

While the recent outbreak did not have a material impact on our reported results for the reported periods, it created challenges for us in countries that were the earliest to be impacted by the pandemic, namely our Asia-Pacific business segment.

Due to restrictions on our operations, the operations of our customers and the global supply chain, we are actively monitoring its impact on future periods.

As the virus spread, we took action to protect the health and safety of our employees while we maintained critical operations to protect our customers and suppliers.

Curren tly, many of our customers are considered “essential” and are open for business, although maybe in a limited capacity, which has slowed demand into the second quarter.

Nearly all of our North American plants have remained operational and only some of our i nternational plants have been closed temporarily.

Currently, many of our customers are considered “essential” and are open for business, although maybe in a limited capacity, which has slowed demand into the second quarter.

Nearly all of our North American plants have remained operational and only some of our international plants were closed temporarily.

While there are some restrictions to the supply of products globally and those restrictions may continue or expand to other regions, our global supply chain currently remains strong.

1 unchanged sentence

We are scaling back capital expenditures and reducing operating expenses and could experience lower variable SG&A, primarily through a decrease in employee-related expenses and reduced travel-related expenses incurred by our associates, due to travel restrictions in place.

While we expect the COVID-19 outbreak will continue to have an adverse impact on our business, we cannot predict the duration or scope of the COVID-19 pandemic or the magnitude of its impact on our business and results of operations.

The extent of any future impact is dependent upon several factors including those described below under Part II, Item 1A, Risk Factors, and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 6, 2020 other than as set forth below.

While we expect the COVID-19 outbreak will continue to have an adverse impact on our business, the businesses of our customers and the global economy, we cannot predict the duration or scope of the COVID-19 pandemic or the magnitude of its impact on our business and results of operations.

The extent of any future impact is dependent upon several factors including those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on March 6, 2020 and the Company’s Quarterly Report on Form 10-Q file with the SEC on May 1, 2020.

In addition, the impact of COVID-19 could potentially exacerbate other risks discussed, any of which could have a material adverse effect on the Company.

3 unchanged sentences

dollars, and, conversely, when foreign currencies weaken, our sales and costs decrease upon translation into U.S.

The fluctuations of foreign currencies during the three months ended March 31, 2020 had a $4.1 million unfavorable effect on net sales compared to the same period in 2019.

There was a $.1 million unfavorable effect on net income for the three-months ended March 31, 2020 as compared to the prior year.

On a reportable segment basis, the impact of foreign currency on net sales and net income for the three months ended March 31, 2020 was as follows:

The fluctuations of foreign currencies during the three and six months ended June 30, 2020 had a $7.1 million and $11.3 million unfavorable effect, respectively, on net sales compared to the same period in 2019.

There was a $.5 million and a $.7 million unfavorable effect, respectively, on net income for the three and six months ended June 30, 2020 as compared to the prior year.

On a reportable segment basis, the impact of foreign currency on net sales and net income for the three and six months ended June 30, 2020 was as follows:

Foreign Currency Translation Impact

(Thousands of dollars)

The operating results for the three months ended March 31, 2020 are compared to the same period in 2019.

Net sales for the three months ended March 31, 2020 of $102.9 million increased $5.7 million, or 6%, compared to 2019.

The operating results for the three months ended June 30, 2020 are compared to the same period in 2019.

Net sales for the three months ended June 30, 2020 of $117.6 million increased $2.8 million, or 2%, compared to 2019.

As a percentage of net sales, gross profit increased to 33.6% in 2020 from 32.9% in 2019.

Gross profit for the three-month periods ended March 31, 2020 and 2019 was $32.9 million and $27.3 million, respectively.

Gross profit for the three-month periods ended June 30, 2020 and 2019 was $39.6 million and $37.8 million, respectively.

Excluding the unfavorable impact of foreign currency translation, gross profit increased $4.0 million, or 11%, compared to 2019.

Costs and expenses of $27.8 million increased $2.5 million compared to 2019 and included a favorable impact from currency translation of $1.0 million.

Operating income for the three months ended March 31, 2020 was $5.2 million, an increase of $3.2 million compared to 2019.

Net income for the three months ended March 31, 2020 of $3.7 million increased $1.8 million compared to the three months ended March 31, 2019.

Costs and expenses of $24.8 million decreased $1.9 million compared to 2019 and included a favorable impact from currency translation of $1.4 million.

Operating income for the three months ended June 30, 2020 was $14.8 million, an increase of $3.7 million compared to 2019.

Net income for the three months ended June 30, 2020 of $10.5 million increased $2.6 million compared to the three months ended June 30, 2019.

The effect of currency translation had a $.9 million and a $.5 million negative impact on operating income and net income, respectively.

The following table reflects the impact of foreign currency fluctuations on operating income for the three months ended March 31, 2020 and 2019:

The operating results for the six months ended June 30, 2020 are compared to the same period in 2019.

Net sales for the six months ended June 30, 2020 of $220.5 million increased $8.5 million, or 4%, compared to 2019.

As a percentage of net sales, gross profit increased to 32.9% in 2020 from 30.7% in 2019.

Gross profit for the six-month periods ended June 30, 2020 and 2019 was $72.5 million and $65.1 million, respectively.

Excluding the unfavorable impact of foreign currency translation, gross profit increased $10.8 million, or 17%, compared to 2019.

Costs and expenses of $53.0 million increased $1.1 million compared to 2019 and included a favorable impact from currency translation of $2.4 million.

Operating income for the six months ended June 30, 2020 was $19.5 million, an increase of $6.3 million compared to 2019.

Net income for the six months ended June 30, 2020 of $14.2 million increased $4.5 million compared to the six months ended June 30, 2019.

The year-to-date effect of currency translation had a $1.1 million and a $.7 million negative impact on operating income and net income, respectively.

The following table reflects the impact of foreign currency fluctuations on operating income for the three and six- month periods ended June 30 , 2020 and 201 9 :

Foreign Currency Impact

Three Months Ended March 31

Three Months Ended June 30

Six Months Ended June 30

(Thousands of dollars)

2 unchanged sentences

Transaction loss (gain)

Net gain on forward currency contracts

Operating income excluding currency impact

Net loss (gain) on forward currency

Operating income excluding currency

Despite the constant changes in the current global economy, and aside from the uncertainty created by the COVID-19 outbreak, we believe our business fundamentals and our financial position are sound and that we are strategically well-positioned.

focused on assessing our business structure, global facilities and overall capacity in conjunction with th e requirements of local manufacturing in the markets that we serve.

We remain focused on assessing our business structure, global facilities and overall capacity in conjunction with the requirements of local manufacturing in the markets that we serve.

If necessary, we will modify redundant processes and utilize our global manufacturing network to manage costs, increase sales volumes and deliver value to our customers.

We have continued to invest in the business to expand into new markets for the Company, improve efficiency, develop new products, increase our capacity and become an even stronger supplier to our customers.

We currently have a bank debt to equity ratio of 2 8.

8 % and can borr ow needed funds at a competitive interest rate under our credit facility.

We currently have a bank debt to equity ratio of 27.6% and can borrow needed funds at a competitive interest rate under our credit facility.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2020 COMPARED TO THREE MONTHS ENDED MARCH 31, 2019

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended March 31, 2020 and 2019.

THREE MONTHS ENDED JUNE 30, 2020 COMPARED TO THREE MONTHS ENDED JUNE 30, 2019

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended June 30, 2020 and 2019.

The Company’s past operating results are not necessarily indicative of future operating results.

Three Months Ended March 31

Three Months Ended June 30

(Thousands of dollars)

5 unchanged sentences

Income tax expense

Net adjustment attributable to noncontrolling

NET INCOME ATTRIBUTABLE TO

PREFORMED LINE PRODUCTS COMPANY

Net sales were $1 17.6 million for the three months ended June 30 , 2020 , an increase of $ 2.8 million, or 2 %, from the three months ended June 30 , 201 9 .

Excluding the unfavorable effect of currency translation, net sales for the three months ended June 30, 2020 increased $ 9.9 million compared to the same period in 201 9 , or 9 %, as summarized in the following table:

Three Months Ended June 30

(Thousands of dollars)

The year-over-year increase in PLP-USA net sales of $7.6 million, or 16%, was primarily due to a volume increase in energy product sales.

International net sales for the three months ended June 30, 2020 experienced an unfavorable impact of $7.1 million when local currencies were converted to U.S.

The following discussion of net sales excludes the effect of currency translation.

The Americas net sales of $17.5 million increased $4.7 million, or 27%, primarily due to a volume increase in energy product sales.

EMEA net sales of $21.0 million decreased $.4 million, or 2%, primarily due to a volume decrease in energy and communications product sales within the region, slightly offset by additional incremental sales from a newly acquired business in the prior year.

In Asia-Pacific, net sales of $25.1 million decreased $2.0 million, or 7%, compared to 2019 primarily due to a combined volume decrease in communications and special industries products mostly as a result of the disruption to the global economy caused by the COVID-19 pandemic.

Gross profit.

Gross profit was $39.6 million and $37.8 million for the three-month periods ended June 30, 2020 and 2019, respectively.

Excluding the unfavorable effect of currency translation, gross profit increased $4.0 million, or 11%, as summarized in the following table:

Three Months Ended June 30

(Thousands of dollars)

PLP-USA gross profit of $20.4 million increased $1.8 million compared to the same period in 2019 as a result of increased sales volume combined with a product sales mix shift to higher margin product and continued cost containment within material, labor and manufacturing expense.

International gross profit for the three months ended June 30, 2020 was unfavorably impacted by $2.2 million when local currencies were translated to U.S.

The following discussion of gross profit excludes the effects of currency translation.

The Americas gross profit increase of $1.7 million was primarily the result of a $4.7 million increase in sales combined with a product margin improvement in the region due to sales product mix.

Despite a decrease in net sales, EMEA gross profit increased $1.7 million, mainly as a result of a shift to higher sales volume in higher margin products.

Asia-Pacific gross profit decreased $1.1 million primarily as a result of a year-over-year reduction in sales volume and the negative impact related to the COVID-19 pandemic.

C osts and expenses.

Costs and expenses of $ 2 5.8 million for the three months ended June 30 , 2020 de creased $ 1.9 million, or 7 %.

Excluding the favorable effect of currency translation, costs and expenses de creased $ .6 million, or 2 %, as summarized in the following table:

Three Months Ended June 30

(Thousands of dollars)

Costs and expenses

PLP-USA costs and expenses of $11.6 million for the three months ended June 30, 2020 decreased $.6 million compared to 2019 mainly due to $.6 million of lower travel and entertainment expenses and $.2 million of lower professional fees, which were partially offset by higher combined personnel-related costs and miscellaneous decreases of $.2 million.

On a consolidated basis, costs and expenses for the three months ended June 30, 2020 were favorably impacted by $1.4 million when local currencies were translated to U.S.

The following discussion of costs and expenses excludes the effect of currency translation.

The Americas costs and expenses of $3.2 million increased $.6 million for the three months ended June 30, 2020 compared to the same period in 2019 primarily due to a $.2 million increase in personnel-related expenses and an increase in foreign currency exchange losses of $.3 million, combined with higher commissions of $.1 million.

EMEA costs and expenses of $5.0 million decreased $.4 million mainly due to lower travel and entertainment expenses of $.2 million, lower professional fees of $.2 and decreased personnel-related expenses of $.1 million.

These decreases were offset by the remaining incremental costs incurred with our acquired businesses.

Asia-Pacific costs and expenses of $5.0 million decreased $.2 million.

This decrease was primarily due to a decrease in combined personnel-related and travel and entertainment expenses of $.2 million.

Other income (expense).

Other expense for the three-month periods ended June 30, 2020 and 2019 was $.9 million and $.3 million, respectively.

Income taxes.

Income taxes for the three months ending June 30, 2020 and 2019 were $3.4 million and $3.0 million, respectively, based on pre-tax income of $13.9 million and $10.9 million, respectively.

The effective tax rate for the three-month periods ending June 30, 2020 and 2019 was 25% and 28%, respectively, compared to the U.S.

federal statutory rate of 21%.

Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in those jurisdictions.

It is also affected by discrete items that may occur in any given year but are not consistent from year to year.

In addition to state and local income taxes, the following items had the most significant impact on the difference between our statutory U.S.

federal income tax rate of 21% and our effective tax rate :

A $.4 million, or 3%, net increase resulting from U.S.

permanent items, primarily related to limitations on the deductibility of executive compensation.

A $.1 million, or 1%, increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

A $.6 million, or 5%, net increase resulting from U.S.

permanent items, primarily related to limitations on the deductibility of executive compensation.

A $.2 million, or 2%, increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

As a result of the preceding items, net income for the three months ended June 30, 2020 was $ 10.5 million, compared to $ 7.9 million for the three months ended June 30 , 201 9 , a n in crease of $ 2.6 million as summarized in the following table:

Three Months Ended June 30

(Thousands of dollars)

PLP-USA’s net income for the three months ended June 30, 2020 increased $1.9 million compared to the same period in 2019, primarily due to an increase in operating income of $2.4, partially offset by a decrease in other income of $.2 million combined with an increase in income taxes of $.3 million.

The following discussion of net income excludes the effect of currency translation.

The Americas net income increased $.5 million as a result of a $1.0 million increase in operating income, partially offset by higher income taxes of $.2 million combined with an increase in other non-operating expense of $.3 million.

EMEA net income increased $1.5 million as a result of a $2.0 million increase in operating income, partially offset by a $.5 million year-over-year increase in income tax expense.

Asia-Pacific net income decreased $.8 million due to a $.8 million decrease in operating income and an increase in other expense of $.2 million, partially offset by a decrease in income tax expense of $.2 million.

PLP’s EMEA segment incurred a net adjustment attributable to noncontrolling interests of less than $.1 million, which when added back to net income, resulted in an immaterial change to net income attributable to PLP Shareholders.

SIX MONTHS ENDED JUNE 30, 2020 COMPARED TO SIX MONTHS ENDED JUNE 30, 2019

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the six months ended June 30, 2020 and 2019.

The Company’s past operating results are not necessarily indicative of future operating results.

Six Months Ended June 30

(Thousands of dollars)

Cost of products sold

Costs and expenses

OPERATING INCOME

Other expense—net

INCOME BEFORE INCOME TAXES

Income tax expense

Net adjustment attributable to noncontrolling interests

NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS

Net sales were $102.9 million for the three months ended March 31, 2020, an increase of $5.7 million, or 6%, from the three months ended March 31, 2019.

Excluding the unfavorable effect of currency translation, net sales for the three months ended March 31, 2020 increased $9.8 million compared to the same period in 2019, or 10%, as summarized in the following table:

Three Months Ended March 31

NET INCOME ATTRIBUTABLE TO

PREFORMED LINE PRODUCTS COMPANY

Net sales were $ 22 0.5 million for the six months ended June 30 , 2020, an increase of $ 8.5 million, or 4 %, from the six months ended June 30 , 2019.

Excluding the unfavorable effect of currency translation, net sales for the six months ended June 30 , 2020 increased $ 19.8 million compared to the same period in 2019, or 9 %, as summarized in the following table:

Six Months Ended June 30

(Thousands of dollars)

The year-over-year increase in PLP-USA net sales of $12.8 million, or 15%, was primarily due to a volume increase in energy product sales.

International net sales for the three months ended March 31, 2020 experienced an unfavorable impact of $4.1 million when local currencies were converted to U.S.

International net sales for the six months ended June 30, 2020 experienced an unfavorable impact of $11.3 million when local currencies were converted to U.S.

The following discussion of net sales excludes the effect of currency translation.

The Americas net sales of $17.2 million increased $5.9 million, or 43%, primarily due to a volume increase in energy and communications product sales.

EMEA net sales of $20.4 million increased $5.4 million, or 34%, primarily due to a volume increase in energy and communications product sales within the region, including incremental sales from the newly acquired businesses.

The Americas net sales of $34.7 million increased $10.6 million, or 34%, primarily due to a volume increase in energy product sales.

EMEA net sales of $41.4 million increased $5.1 million, or 13%, primarily due to a volume increase in energy and communications product sales within the region, including the remaining incremental sales from the newly acquired businesses.

In Asia-Pacific, net sales of $43.8 million decreased $8.7 million, or 16%, compared to 2019 primarily due to a combined volume decrease in the energy, communications and special industries products mostly as a result of the disruption to the global economy caused by the COVID-19 pandemic.

Gross profit.

Gross profit was $3 2.9 mi ll ion and $ 27.3 million for the three-month periods ended March 31, 2020 and 201 9 , respectively .

Gross profit was $72.5 million and $65.1 million for the six-month periods ended June 30, 2020 and 2019, respectively.

Excluding the unfavorable effect of currency translation, gross profit increased $10.8 million, or 17%, as summarized in the following table:

Three Months Ended March 31

Six Months Ended June 30

(Thousands of dollars)

PLP-USA gross profit of $17.4 million increased $5.4 million compared to the same period in 2019 as a result of increased sales volume combined with a product sales mix shift to higher margin product and cost containment within material, labor and manufacturing expense.

International gross profit for the three months ended March 31, 2020 was unfavorably impacted by $1.2 million when local currencies were translated to U.S.

PLP-USA gross profit of $37.8 million increased $7.2 million compared to the same period in 2019 as a result of increased sales volume of $12.8 million combined with a product sales mix shift to higher margin product and continued cost containment within material, labor and manufacturing expense.

International gross profit for the six months ended June 30, 2020 was unfavorably impacted by $3.4 million when local currencies were translated to U.S.

The following discussion of gross profit excludes the effects of currency translation.

2 unchanged sentences

Asia-Pacific gross profit decreased $3.2 million primarily as a result of a year-over-year reduction in sales volume and the negative impact related to the COVID-19 pandemic.

Costs and expenses.

Costs and expenses of $27.8 million for the three months ended March 31, 2020 increased $2.5 million, or 10%.

C osts and expenses.

Costs and expenses of $ 53.0 million for the six months ended June 30 , 2020 increased $ 1.

1 million, or 2 %.

Excluding the favorable effect of currency translation, costs and expenses increased $ 3.5 million, or 7 %, as summarized in the following table:

Three Months Ended March 31

Six Months Ended June 30

(Thousands of dollars)

Costs and expenses

PLP-USA costs and expenses of $13.2 million for the three months ended March 31, 2020 increased $.8 million compared to 2019 mainly due to $.9 million of higher personnel-related expenses which were partially offset by net combined miscellaneous decreases of $.1 million.

Foreign currency exchange gains and losses are primarily related to translating into U.S.

dollars its foreign denominated loans, trade and royalty receivables from its foreign subsidiaries at the March 31, 2020 exchange rates.

On a consolidated basis, costs and expenses for the three months ended March 31, 2020 were favorably impacted by $1.0 million when local currencies were translated to U.S.

PLP-USA costs and expenses of $25.3 million for the six months ended June 30, 2020 increased $.7 million compared to 2019 mainly due to $1.1 million of higher personnel-related expenses combined with an increase in miscellaneous net expense of $.1 million, partially offset by a decrease in professional fees of $.6 million.

On a consolidated basis, costs and expenses for the six months ended June 30, 2020 were favorably impacted by $2.4 million when local currencies were translated to U.S.

The following discussion of costs and expenses excludes the effect of currency translation.

The Americas costs and expenses of $3.5 million increased $1.1 million for the three months ended March 31, 2020 compared to the same period in 2019 primarily due to a $.5 million increase in personnel-related expenses and an increase in foreign currency exchange losses of $.7 million, partially offset by combined decreases in miscellaneous expenses of $.2 million.

The Americas costs and expenses of $6.7 million increased $1.7 million for the six months ended June 30, 2020 compared to the same period in 2019 primarily due to a $.7 million increase in personnel-related expenses and an increase in foreign currency exchange losses of $.8 million combined with net increases in miscellaneous expenses of $.2 million.

EMEA costs and expenses of $10.6 million increased $1.4 million mainly due to incremental costs incurred with our acquired businesses.

Asia-Pacific costs and expenses of $5.4 million decreased less than $.1 million.

This decrease was primarily due to a decrease in combined personnel-related, travel and entertainment and commission expenses.

Asia-Pacific costs and expenses of $10.4 million decreased $.3 million.

This decrease was primarily due to a decrease in combined personnel-related and travel and entertainment expenses.

Other income (expense).

Other expense for the three-month periods ended March 31, 2020 and 2019 was $.4 million and $.1 million, respectively.

Other expense for the six-month periods ended June 30, 2020 and 2019 was $.5 million and $.4 million, respectively.

Income taxes.

Income taxes for the three months ending March 31, 20 20 and 201 9 were $ 1 .

5 million and $.1 million, respectively, based on pre-tax income of $ 5.1 million and $ 1.9 million, respectively.

The effective tax rate for the three-month periods ending March 31, 20 20 and 201 9 was 28 % and 5 %, respectively, compared to the U.S.

Income taxes for the six months ending June 30, 2020 and 2019 were $4.8 million and $3.1 million, respectively, based on pre-tax income of $19.0 million and $12.8 million, respectively.

The effective tax rate for the six-month periods ending June 30, 2020 and 2019 was 26% and 24%, respectively, compared to the U.S.

federal statutory rate of 21%.

1 unchanged sentence

It is also affected by discrete items that may occur in any given year but are not consistent from year to year.

In addition to state and local income taxes, the follo wing items had the most significant impact on the difference between our statutory U.S.

federal income tax rate of 21% and our effective tax ra te :

In addition to state and local income taxes, the following items had the most significant impact on the difference between our statutory U.S.

federal income tax rate of 21% and our effective tax rate :

A $.5 million, or 3%, net increase resulting from U.S.

permanent items, primarily related to tax benefits related to stock-based compensation.

permanent items, primarily related to limitations on the deductibility of executive compensation.

A $.4 million, or 2%, increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

A $.4 million, or 21%, net decrease resulting from U.S.

permanent items, primarily related to tax benefits related to stock-based compensation.

A $.2 million, or 1%, net increase resulting from U.S.

permanent items, primarily related to limitations on the deductibility of executive compensation.

A $.3 million, or 2%, increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

As a result of the preceding items, net income for the three months ended March 31, 2020 was $3.7 million, compared to $1.8 million for the three months ended March 31, 2019, an increase of $1.9 million as summarized in the following table:

Three Months Ended March 31

federal statutory rate.

As a result of the preceding items, net income for the six months ended June 30 , 2020 was $ 14.2 million, compared to $ 9.7 million for the six months ended June 30 , 2019, an increase of $ 4.5 million as summarized in the following table:

Six Months Ended June 30

(Thousands of dollars)

NM – Not meaningful

PLP-USA’s net income for the three months ended March 31, 2020 increased $3.6 million compared to the same period in 2019, primarily due to an increase in operating income of $4.6 million combined with an increase in other income of $.4 million, partially offset by an increase in income taxes of $1.4 million.

PLP-USA’s net income for the six months ended June 30, 2020 increased $5.5 million compared to the same period in 2019, primarily due to an increase in operating income of $6.5 million combined with an increase in other income of $.6 million, partially offset by an increase in income taxes of $1.6 million.

The following discussion of net income excludes the effect of currency translation.

The Americas net income increased $.7 million as a result of a $1.9 million increase in operating income, partially offset by higher income taxes of $.7 million combined with an increase in other non-operating expense of $.5 million.

EMEA net income decreased $.2 million as a result of a $.3 million decrease in operating income, partially offset by a $.1 million year-over-year increase in income tax expense.

EMEA net income increased $1.4 million as a result of a $1.9 million increase in operating income, partially offset by a $.5 million year-over-year increase in income tax expense.

Asia-Pacific net income decreased $2.4 million due to a $2.8 million decrease in operating income and an increase in other expense of $.3 million, partially offset by a decrease in income tax expense of $.7 million.

7 unchanged sentences

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives.

During the first three months of 2020, we used cash of $6.0 million for capital expenditures.

We ended the first three months of 2020 with $34.1 million of cash, cash equivalents and restricted cash (“Cash”).

During the first six months of 2020, we used cash of $11.8 million for capital expenditures.

We ended the first six months of 2020 with $36.5 million of cash, cash equivalents and restricted cash (“Cash”).

Our Cash is held in various locations throughout the world.

At March 31, 2020, the majority of our Cash was held outside the United States (“U.S.”).

At June 30, 2020, the majority of our Cash was held outside the United States (“U.S.”).

We expect most accumulated non-U.S.

6 unchanged sentences

We currently have not identified any potential material impact on our liquidity from customer credit issues.

Total debt, including notes payable, at March 31, 2020 was $72.5 million.

At March 31, 2020, our unused availability under our line of credit was $26.5 million and our bank debt to equity percentage was 28.8%.

In 2018, we extended the term on our $65 million credit facility from June 30, 2019 to June 30, 2021, and, on April 17, 2020, we further extended the term to June 30, 2024.

Total debt, including notes payable, at June 30, 2020 was $72.8 million.

At June 30, 2020, our unused availability under our line of credit was $27.5 million and our bank debt to equity percentage was 27.6%.

On April 17, 2020, we further extended the term to June 30, 2024.

All other terms remain the same, including the interest rate at LIBOR plus 1.125% unless our funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 2.25 to 1, at which point the LIBOR spread becomes 1.500%.

1 unchanged sentence

The net worth and profitability requirements are calculated based on the line of credit agreement.

At March 31, 2020 and December 31, 2019, we were in compliance with these covenants.

At June 30, 2020 and December 31, 2019, we were in compliance with these covenants.

We expect that our major source of funding for 20 20 and beyond will be our operating cash flows and our existing Cash as well as our line of credit agreement.

We earn a significant amount of our operating income outside the U.S., which, except for current earnings in certain jurisdictions, is deemed to be indefinitely reinvested in foreign jurisdictions.

We earn a significant amount of our operating income outside the U .

, which, except for current earnings in certain jurisdictions, is deemed to be indefinitely reinvested in foreign jurisdictions.

As we cannot predict the duration or scope of the COVID-19 pandemic and its impact on our customers and suppliers, the negative financial impact to our financial results and liquidity cannot be reasonably estimated but could be material.

6 unchanged sentences

Cash decreased $5.1 million compared to the same period in 2019.

Net Cash used in operating activities was $3.1 million.

The most significant net investing and financing uses of Cash in the three months ended March 31, 2020 were payments of long-term debt of $17.7 million, capital expenditures of $6.0 million, share repurchases of $4.0 million and dividends paid of $1.2 million, partially offset by net debt and notes payable proceeds of $28.3 million.

Net Cash provided by operating activities was $9.2 million.

The most significant net investing and financing uses of Cash in the six months ended June 30, 2020 were payments of long-term debt of $36.7 million, capital expenditures of $11.8 million, share repurchases of $7.0 million and dividends paid of $2.2 million, partially offset by net debt and notes payable proceeds of $46.3 million.

Currency had a negative $.8 million impact on Cash when translating foreign denominated financial statements to U.S.

Net Cash from operating activities for the three months ended March 31, 2020 was a use of $3.1 million compared to $.5 million of cash generated in the prior year three-month period.

The $3.6 million decrease was primarily a result of an increase in Cash usage for operating assets (net of operating liabilities) of $6.8 million, partially offset by a decrease in usage for non-cash items of $1.4 million and an increase in net income of $1.8 million.

Net Cash used in investing activities of $6.0 million for the three months ended March 31, 2020 decreased $7.1 million when compared to Cash used in investing activities in the three months ended March 31, 2019 of $13.1 million.

The change was primarily related to Cash used in the prior year to fund the SubCon acquisition, net of Cash, of $10.2 million combined with cash used to purchase marketable securities of $.5 million during the three months ended March 31, 2019, partially offset by a year-over-year increase in capital expenditures of $3.6 million.

Cash provided by financing activities for the three months en ded March 31, 2020 was $ 5.7 million compared to $ 11.1 million for the three months ended March 31 , 201 9 .

The $ 5.4 million reduction was primarily the result of a net de crease in debt borrowings in 20 20 compared to 20 19 of $ 3.8 million and an increase in sh are repurchases of $1.4 million .

Net Cash provided from operating activities for the six months ended June 30, 2020 was $9.2 million compared to $5.8 million of cash generated in the comparable prior year six-month period.

The $3.4 million increase was primarily a result of an increase in in net income of $4.5 million combined with an increase in cash provided by non-cash items of $.8 million, partially offset by an increase in Cash usage for operating assets (net of operating liabilities) of $1.9 million.

Net Cash used in investing activities of $11.8 million for the six months ended June 30, 2020 decreased $19.6 million when compared to Cash used in investing activities in the six months ended June 30, 2019 of $31.5 million.

The change was primarily related to Cash used in the prior year to fund the SubCon and MICOS acquisitions, net of Cash, of $19.0 million combined with cash used to purchase marketable securities of $.5 million during the six months ended June 30, 2019 and a year-over-year decrease in capital expenditures of $.1 million.

Cash provided by financing activities for the six months ended June 30, 2020 was $.7 million compared to $24.7 million for the six months ended June 30, 2019.

The $24.0 million reduction was primarily the result of a net decrease in net debt borrowings and payments in 2020 compared to 2019 of $21.0 million and an increase in net share repurchases and issuances of $3.0 million.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

4 unchanged sentences

Cautionary Statement for “Safe Harbor” Purposes Under The Private Securities Litigation Reform Act of 1995

This Form 10-Q and other documents we file with the Securities and Exchange Commission (“SEC”) contain forward-looking statements regarding the Company’s and management’s beliefs and expectations.

This Form 10-Q and other documents we file with the SEC contain forward-looking statements regarding the Company’s and management’s beliefs and expectations.

As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature.

2 unchanged sentences

The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:

The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which has a slow growth rate in mature markets such as the United States (“U.S”), Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;

The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which has a slow growth rate in mature markets such as the U.S, Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;

The potential impact of global economic conditions on the Company’s ongoing profitability and future growth opportunities in the Company’s core markets in the U.S.

13 unchanged sentences

The cost, availability and quality of raw materials required for the manufacture of products and any tariffs that may be associated with the purchase of these products.

The Company’s supply chain could be disrupted by the COVID-19 pandemic which could have a material, adverse effect on the ability to secure raw materials and supplies;

The Company’s supply chain has and could continue to be disrupted by the COVID-19 pandemic which could have a material, adverse effect on the ability to secure raw materials and supplies;

Strikes, labor disruptions and other fluctuations in labor costs;

2 unchanged sentences

The telecommunication market’s continued deployment of Fiber-to-the-Premises;

Those factors described under the heading “Risk Factors” in Item 1A, on page 11, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 which was filed on March 6, 2020.

Those factors described under the heading “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 which was filed on March 6, 2020 and in Item 1A of Part II of the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 1, 2020.

The impact of COVID-19 could potentially exacerbate other risks discussed, any of which could have a material impact on the Company.

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