What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2021-02-05 · 132 added, 68 removed, 187 unchanged (52% of the section changed)

30 unchanged sentences

Impact of COVID-19

The unprecedented nature of the COVID-19 pandemic and its impact on the global economy has created a disruption to our business that includes increased uncertainty in demand for certain medical and industrial products, as well as increased variability in

our supply chain and manufacturing productivity.

The economic downturn triggered by COVID-19 has led to significantly lower demand from our customers and delays in equipment installations.

The COVID-19 pandemic has had a significant effect on hospitals, clinics and outpatient imaging centers as they have encountered declines in surgeries and other non-emergency procedures and have reallocated resources to combat the ongoing pandemic.

As a result of the ongoing uncertainty surrounding COVID-19 and a requirement to focus on immediate needs, many hospitals, clinics and outpatient imaging centers have reduced their capital purchases of imaging equipment from OEMs which has led to lower demand for X-ray imaging components.

In addition, reduced usage of certain X-ray equipment has resulted in less demand for replacement components that wear-out with use.

Additionally, equipment installations were delayed, due in part to efforts to limit non-essential visits to healthcare facilities.

Partially offsetting the general demand for X-ray imaging components has been increased demand for CT and certain radiographic diagnostic imaging equipment used to screen for or assist in the treatment of respiratory diseases (such as COVID-19).

While healthcare systems and economies around the world have begun to reopen, customer demand has not returned to pre-pandemic levels, and the adverse effects of COVID-19 on our financial statements and results of operations have been significant.

While we believe that the fundamentals driving long-term demand in both our Medical and Industrial segments remain intact, we believe that in the near-term, reduced demand in our Industrial segment and for certain higher-end medical products will continue to negatively impact our business potential and our results of operations.

While our manufacturing sites are currently up and running, COVID-19 and associated economic disruptions have had an adverse impact on our manufacturing capacity, supply chains and distribution systems, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking.

Supply chain logistics have also become more challenging and while we have had success in localizing our supply chain through our “local-for-local” initiative, supply chain logistics could remain challenging.

The actions taken to combat COVID-19 have had, and we believe will continue to have, a negative impact on our operating results, cash flows and financial condition.

We expect uncertainty related to the COVID-19 pandemic to continue into the middle of calendar year 2021.

While we have implemented safeguards and procedures and taken other measures to counter the impact of the COVID-19 pandemic, the full extent to which the COVID-19 pandemic has and will directly or indirectly impact us, including our business, financial condition, and results of operations, will depend on future developments that are highly uncertain and cannot be accurately predicted.

We will 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 the best interests of our employees, customers, suppliers, and stockholders.

Over the past year, the unprecedented nature of the COVID-19 pandemic and its effect on the global economy significantly disrupted our business by increasing uncertainty in demand for our products as well as increasing variability in our supply chain and manufacturing productivity.

The economic downturn triggered by COVID-19 also led to significantly lower demand from our customers and delays in equipment installations.

During the three months ended April 2, 2021, demand for many of our products continued to recover and our business continued to stabilize.

We believe that demand for our products has increased in part because end-users (such as hospitals) are making capital purchases that were previously deferred due to the uncertainty surrounding COVID-19.

It remains difficult to forecast future demand and there is no guarantee that the increase in demand will continue once the current backlog has been satisfied.

While we are encouraged by the recovery that we have seen, we remain cautious as many factors remain unpredictable.

In particular, the ongoing pandemic continues to create logistic, supply chain, and manufacturing challenges that we expect will continue into 2022.

As economies around the world begin to recover, shortages in raw materials have become more widespread.

While we have not experienced significant delays due to a shortage of materials, and while we have had success in localizing our supply chain through our “local-for-local” initiative, we have been required to dedicate more resources to managing and monitoring our supply chain.

Increased freight charges and shipping delays have also become more common over the last few months and are expected to continue.

During the three months ended April 2, 2021, our manufacturing facilities continued to operate with minimal disruption.

Our COVID-19 related precautions, including social distancing and mask requirements, remain in place.

In addition, we recently launched a program in the United States to incentivize employees to obtain a COVID-19 vaccine.

Notwithstanding the improvements we have seen during the three months ended April 2, 2021, the full extent to which the COVID-19 pandemic has and will directly or indirectly impact us, including our business, financial condition, and results of operations, will depend on future developments that are highly uncertain and cannot be accurately predicted.

We will continue to actively monitor the situation and may take further actions that alter our business operations or that we determine are in the best interests of our employees, customers, suppliers, and stockholders.

For additional information on risks related to the pandemic and other risks that could impact our results, see Part II, Item 1A - Risk Factors.

Operating Segments and Products

17 unchanged sentences

We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China.

We presently have multi-year pricing agreements for CT tubes with 8 medical X-ray imaging OEMs in China.

We presently have multi-year pricing agreements for CT tubes with a number of medical X-ray imaging OEMs in China.

Over the long-term, our objective is to become the partner of choice both for OEMs and in the replacement market as CT systems become more widely adopted throughout the Chinese market.

2 unchanged sentences

manufactured products into China has also become more difficult and more expensive.

To mitigate the impact of tariffs on materials imported from China, we have implemented changes to secure more non-China sources of materials used to manufacture our X-ray imaging products.

To mitigate the impact of tariffs on materials imported from China, we have implemented changes to secure more non-Chinese sources of materials used to manufacture our X-ray imaging products.

With respect to imports into China, the additional tariffs imposed by the Chinese government led to a decrease in sales of radiographic detectors manufactured outside of China.

13 unchanged sentences

We believe that the non-destructive testing market represents a significant growth opportunity for our business, and we are actively pursuing new potential applications for our products.

The economic downturn triggered by the COVID-19 pandemic has reduced the demand for X-ray imaging equipment utilized in the non-destructive testing market as manufacturers have focused on cash preservation and have reduced spending for capital equipment.

Additionally, the unprecedented decrease in passenger air traffic has led to decrease in demand in the security market.

The economic downturn triggered by the COVID-19 pandemic reduced the demand for X-ray imaging equipment utilized in the non-destructive testing market as manufacturers focused on cash preservation and reduced spending for capital equipment.

During the three months ended April 2, 2021, we began to see improved conditions in this modality.

Separately, the unprecedented decrease in passenger air traffic has led to a decrease in demand in the security market.

Critical Accounting Policies and Estimates

5 unchanged sentences

Our critical accounting policies that are affected by accounting estimates include valuation

of inventories, assessment of recoverability of goodwill and intangible assets, and taxes on earnings.

of inventories, assessment of recoverability of goodwill and intangible assets, and income taxes.

Such accounting policies require us to use judgments, often as a result of the need to make estimates and assumptions regarding matters that are inherently uncertain, and actual results could differ materially from these estimates.

3 unchanged sentences

Fiscal year 2020 was the 53-week period that ended on October 2, 2020.

The fiscal quarters ended January 1, 2021 and January 3, 2020 were 13-week and 14-week periods, respectively.

Discussion of Results of Operations for the Three Months Ended January 1, 2021 Compared to the Three Months Ended January 3, 2020

The fiscal quarters ended April 2, 2021 and April 3, 2020 were both 13-week periods.

The two fiscal quarters ended April 2, 2021 and April 3, 2020 were 26 weeks and 27 weeks, respectively.

Discussion of Results of Operations for the Three Months Ended April 2, 2021 Compared to the Three Months Ended April 3, 2020

Revenues, net

Three Months Ended

(In millions) January 1, 2021 January 3, 2020 $ Change % Change

(In millions) April 2, 2021 April 3, 2020 $ Change % Change

$ 156.6 $ 155.4 $ 1.2 0.8 %

3 unchanged sentences

Industrial as a percentage of total revenues 23.0 % 21.1 %

Medical revenues decreased by $16.4 million primarily due to decreased sales of digital detectors for dynamic imaging applications and the comparative prior year period including an additional week.

This was partially offset by increased sales of CT X-ray tubes and digital detectors for radiographic X-ray imaging applications.

Industrial revenues decreased $6.6 million primarily due to decreased sales of X-ray tubes, digital detectors and linear accelerators for security and non-destructive inspection applications and the comparative prior year period including an additional week.

Medical revenues increased by $1.2 million primarily due to increased sales of digital detectors for dynamic imaging applications, partially offset by lower sales of CT X-ray tubes.

Industrial revenues increased $5.3 million primarily due to increased sales of digital detectors and connectors for security and non-destructive inspection applications.

Three Months Ended

(In millions) January 1, 2021 January 3, 2020 $ Change % Change

(In millions) April 2, 2021 April 3, 2020 $ Change % Change

$ 45.7 $ 43.2 $ 2.5 5.8 %

4 unchanged sentences

Total gross margin 31.7 % 29.2 %

The decrease in total gross profit was due primarily to the decreases in the gross profit of our Industrial Segment.

The Industrial Segment gross profit was down as a result of decreased sales of X-ray tubes, digital detectors, and linear accelerators for security and non-destructive inspection applications.

The increase in medical gross margin was primarily due to the impacts of cost reduction measures taken by management in previous quarters and a favorable product mix in medical detectors.

The increase in total gross profit was due primarily to the increase in the gross profit of our Industrial segment.

The Industrial segment gross profit increased as a result of increased sales of digital detectors for security and non-destructive inspection applications.

The increase in Medical gross profit was primarily due to the increased sales of digital detectors for dynamic imaging applications, the impacts of cost reduction measures taken by management in previous quarters and a favorable product mix in medical detectors.

Operating Expenses

Three Months Ended

(In millions) January 1, 2021 January 3, 2020 $ Change

(In millions) April 2, 2021 April 3, 2020 $ Change

Research and development $ 18.2 $ 20.9 $ (2.7) (12.9) %

9 unchanged sentences

We are committed to investing in the business to support long-term growth and believe long-term research and development expenses of approximately 8% to 10% of annual revenues is the appropriate range that will allow us to innovate and bring new products to market for our global OEM customers.

Research and development costs decreased to 9.4% of revenues for the first quarter of 2021 primarily due to cost actions and improved material cost management.

Research and development costs decreased to 8.9% of revenues for the second quarter of 2021 primarily due to cost actions and improved material cost management.

Selling, General and Administrative

Selling, general and administrative expenses for the first quarter of 2021 decreased slightly in terms of dollars, but increased to 19.4% of total revenues primarily due to a lower sales base and higher audit fees during the three months ended January 1, 2021.

Selling, general and administrative expenses for the second quarter of 2021 decreased by $4.7 million and decreased to 15.0% of total revenues primarily due to lower external audit and consulting fees compared to the prior year quarter and cost reduction actions taken by management in prior quarters.

Interest and Other Expense, Net

1 unchanged sentence

Three Months Ended

(In millions) January 1, 2021 January 3, 2020 $ Change

(In millions) April 2, 2021 April 3, 2020 $ Change

Interest income

$ — $ 0.1 $ (0.1)

Interest expense

(10.4) (4.6) (5.8)

Other expense, net

Other (expense) income, net (2.2) 2.0 (4.2)

Interest and other expense, net

$ (12.6) $ (2.5) $ (10.1)

Interest and other expense, net increased during the three months ended April 2, 2021 compared to the prior year period, primarily due to higher interest expense, which resulted from the issuance of our Convertible Notes in June 2020 and the issuance of our Senior Secured Note in September 2020.

Other expense, net increased for the three months ended April 2, 2021 as compared to the three months ended April 3, 2020 due to increased losses from investments in privately-held companies.

Taxes on Income (Loss)

For the three months ended April 2, 2021, we recognized income tax expense of $0.0 million on a $3.2 million pre-tax income.

We are unable to recognize a tax benefit for pre-tax book losses in the U.S.

and certain foreign jurisdictions.

For the three months ended April 3, 2020, we recognized income tax expense of $0.7 million on $1.1 million of pre-tax loss.

Our tax expense for the three months ended April 2, 2021 decreased, compared to the prior year, primarily due to tax credits and benefits recorded in certain foreign jurisdictions.

Discussion of Results of Operations for the Six Months Ended April 2, 2021 Compared to the Six Months Ended April 3, 2020

Six Months Ended

(In millions) April 2, 2021 April 3, 2020 $ Change % Change

$ 295.8 $ 311.0 $ (15.2) (4.9) %

84.8 86.1 (1.3) (1.5) %

Total revenues $ 380.6 $ 397.1 $ (16.5) (4.2) %

Medical as a percentage of total revenues 77.7 % 78.3 %

Industrial as a percentage of total revenues 22.3 % 21.7 %

Medical revenues decreased by $15.2 million primarily due to decreased sales of CT X-ray tubes, digital detectors for dental applications and decreased sales of radiographic digital detectors.

Industrial revenues decreased $1.3 million due to decreased sales of linear accelerators for cargo inspection and other non-destructive inspection applications, which was mostly offset by an increase in sales of digital detectors for security and non-destructive inspection applications.

Six Months Ended

(In millions) April 2, 2021 April 3, 2020 $ Change % Change

$ 89.8 $ 87.2 $ 2.6 3.0 %

32.0 31.5 0.5 1.6 %

Total gross profit $ 121.8 $ 118.7 $ 3.1 2.6 %

Medical gross margin %

30.4 % 28.0 %

Industrial gross margin % 37.7 % 36.6 %

Total gross margin % 32.0 % 29.9 %

The increase in total gross profit was due to the increase in both Medical and Industrial gross profit.

The increase in Medical gross profit was primarily due to a favorable mix of higher margin products, somewhat offset by customer price decreases for digital detectors.

The Industrial gross profit increased due to a favorable mix of higher margin industrial detector products.

Operating Expenses

Six Months Ended

(In millions) April 2, 2021 April 3, 2020 $ Change

Research and development

$ 34.9 $ 42.6 $ (7.7) (18.1) %

As a percentage of total revenues

Selling, general and administrative

$ 65.0 $ 70.1 $ (5.1) (7.3) %

As a percentage of total revenues

17.1 % 17.7 %

Operating expenses

$ 99.9 $ 112.7 $ (12.8) (11.4) %

As a percentage of total revenues

26.2 % 28.4 %

Research and Development

Research and development costs decreased to 9.2% of revenues due to cost actions taken by management in previous quarters and improved material cost management.

Selling, General and Administrative

Selling, general and administrative expenses for the six months ended April 2, 2021, decreased to 17.1% primarily due to lower external audit and consulting fees and cost actions taken by management in previous quarters.

Interest and Other Income (Expense), Net

The following table summarizes the Company’s interest and other income (expense), net:

Six Months Ended

(In millions) April 2, 2021 April 3, 2020 $ Change

Interest income

$ — $ 0.1 $ (0.1)

Interest expense

(20.7) (10.0) (10.7)

Other (expense) income, net (2.7) 1.6 (4.3)

Interest and other expense, net

$ (23.4) $ (8.3) $ (15.1)

Interest and other expense, net increased during the three months ended January 1, 2021 as compared to the prior year period, primarily due to higher interest expense.

Interest expense increased primarily due to increased interest expense related the issuance of our Convertible Notes in June 2020 and the issuance of our Senior Secured Note in September 2020.

Other expense, net was basically flat for the three months ended January 1, 2021 as compared to the three months ended January 3, 2020.

Taxes on (Loss) Earnings

For the three months ended January 1, 2021, we recognized income tax expense of $1.6 million on a $4.7 million pre-tax loss.

Interest and other expense, net increased during the six months ended April 2, 2021.

Interest expense increased due to the interest related to our Convertible Notes issued during June 2020 and the issuance of our Senior Secured Notes in September 2020.

Other expense, net increased during the six months ended April 2, 2021 due to increased losses from investments in privately-held companies.

Taxes on Income (Loss)

For the six months ended April 2, 2021, we recognized an income tax expense of $1.6 million on $1.5 million of pre-tax loss.

We are unable to recognize a tax benefit for pre-tax book losses in the U.S.

and certain foreign jurisdictions but have recognized tax expense for profitable foreign jurisdictions.

For the three months ended January 3, 2020, we recognized income tax expense of zero on $1.2 million of pre-tax loss.

Our tax expense for the three months ended January 1, 2021 increased, compared to the prior year, primarily due to valuation allowance positions in the U.S.

For the six months ended April 3, 2020, the Company recognized income tax expense of $0.7 million on $2.3 million of pre-tax loss.

Our tax expense for the six months ended April 2, 2021 increased, compared to the prior year, primarily due to valuation allowances in the U.S.

on disallowed interest expense deductions and losses in the U.S.

2 unchanged sentences

We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities.

We continue to generate cash from operating activities and believe that our operating cash flow, cash on our balance sheet and availability under our ABL Facility will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions and manage our capital structure on a short and long-term basis, and are sufficient to meet our

anticipated operating cash need for at least the next 12 months.

The maximum availability under our ABL Facility was $100.0 million as of January 1, 2021, however, the borrowing base under the ABL Facility fluctuates from month-to-month depending on the amount of eligible accounts receivable and inventory.

We continue to generate cash from operating activities and believe that our operating cash flow, cash on our balance sheet and availability under our Asset-Based Loan ("ABL") Facility will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions and manage our capital structure on a short and long-term basis, and are sufficient to meet our anticipated operating cash need for at least the next 12 months.

The maximum availability under our ABL Facility was $100.0 million as of April 2, 2021;

however, the borrowing base under the ABL Facility fluctuates from month-to-month depending on the amount of eligible accounts receivable and inventory.

See Part II, Item 1A.

“Risk Factors” for a further discussion.

At January 1, 2021 we had $457.5 million in long-term debt and $2.6 million of current maturities of long-term debt, net of deferred issuance costs of $53.7 million.

At April 2, 2021 we had $458.0 million in long-term debt and $2.9 million of current maturities of long-term debt, net of deferred issuance costs of $51.4 million.

Borrowings, in the accompanying notes to our condensed consolidated financial statements for more information regarding our indebtedness.

1 unchanged sentence

The following table summarizes our cash and cash equivalents:

(In millions) January 1, 2021 October 2, 2020 $ Change

(In millions) April 2, 2021 October 2, 2020 $ Change

Cash and cash equivalents

1 unchanged sentence

The following table summarizes the changes in our debt outstanding:

January 1, 2021 October 2, 2020

April 2, 2021 October 2, 2020

(In millions, except for percentages) Amount Amount $ Change

15 unchanged sentences

Total debt outstanding, net $ 460.9 $ 455.3 $ 5.6

Three Months Ended

(In millions) January 1, 2021 January 3, 2020

Six Months Ended

(In millions) April 2, 2021 April 3, 2020

Net cash flow provided by (used in):

Operating activities

$ 19.9 $ 23.9

Investing activities

1 unchanged sentence

Effects of exchange rate changes on cash and cash equivalents and restricted cash

Net increase in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash $ 10.5 $ (5.7)

Net Cash Provided by Operating Activities.

Cash from operating activities consists primarily of the net loss adjusted for certain non-cash items, including share-based compensation, depreciation, amortization of intangible assets, deferred income taxes, income from equity investments and the effect of changes in operating assets and liabilities.

For the three months ended January 1, 2021, compared to the three months ended January 3, 2020, cash provided by operating activities were as follows:

For the six months ended April 2, 2021, compared to the six months ended April 3, 2020, cash provided by operating activities were as follows:

• Net losses were $3.1 million compared to $3.0 million

• Non-cash adjustments to net earnings of $17.9 million compared to $13.3 million

• Non-cash adjustments to net losses of $38.2 million compared to $29.2 million

• Operating assets and liabilities activity:

◦ Accounts receivable decreased by $2.2 million compared to $18.5 million,

◦ Accounts receivable increased by $6.2 million compared to a decrease $14.7 million,

◦ Inventories decreased by $20.4 million compared to an increase of $34.2 million,

◦ Prepaid expenses and other assets increased by $2.0 million compared to a decrease of $3.7 million,

◦ Accounts payable decreased by $4.2 million compared to a increase of $15.4 million, and

◦ Accrued liabilities and other current and long-term operating liabilities decreased by $2.7 million compared to $4.8 million.

◦ Prepaid expenses and other assets increased by $15.1 million compared to $5.9 million,

◦ Accounts payable decreased by $19.8 million compared to an increase of $21.0 million, and

◦ Accrued liabilities and other current and long-term operating liabilities increased by $5.2 million compared to $0.9 million.

Net Cash Used in Investing Activities.

Net cash used in investing activities was $4.4 million and $10.6 million for the three months ended January 1, 2021 and January 3, 2020, respectively.

The decrease in cash used in investing activities was primarily due to higher capital spending during the three months ended January 3, 2020.

Net Cash Provided by (Used in) Financing Activities.

Financing activities for the three months ended January 1, 2021 provided $2.2 million while during the three months ended January 3, 2020, we used $12.0 million primarily for repayments of borrowings of our legacy credit agreement.

Net cash used in investing activities was $8.4 million and $17.3 million for the six months ended April 2, 2021 and April 3, 2020, respectively.

The decrease in cash used in investing activities was primarily due to higher capital spending during the six months ended April 3, 2020.

Net Cash Used in Financing Activities.

Financing activities for the six months ended April 2, 2021 used $1.0 million while during the six months ended April 3, 2020, we used $12.1 million primarily for repayments of borrowings of our legacy credit agreement.

Days Sales Outstanding

Trade accounts receivable days sales outstanding (“DSO”) was 62 days at January 1, 2021 and 66 days at October 2, 2020.

Trade accounts receivable days sales outstanding (“DSO”) was 58 days at April 2, 2021 and 66 days at October 2, 2020.

Our accounts receivable and DSO are impacted by a number of factors, primarily including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.

3 unchanged sentences

In January 2021, the fixed cost commitment was determined and approved by the dpiX board of directors to be $11.6 million for calendar year 2021.

As of April 2, 2021, we estimate that we have fixed cost commitments of $8.7 million related to this amended agreement through the remainder of calendar year 2021.

The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

1 unchanged sentence

The annual net payment will continue for the life of the MeVis Agreement, which we anticipate will continue for as long as we remain as the controlling shareholder of MeVis.

As of January 1, 2021, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3% of the outstanding shares.

As of April 2, 2021, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3% of the outstanding shares.

During the third quarter of fiscal year 2020, we entered into a purchase agreement with a supplier to acquire certain equipment and intellectual property from the supplier that is utilized to manufacture X-ray cables utilized in our products.

As of January 1, 2021, there has been no transfer of control of the underlying equipment.

As of April 2, 2021, there has been no transfer of control of the underlying equipment.

This acquisition is expected to be completed during the 2021 fiscal year and the total consideration to be paid by us for the acquired assets is expected to be ¥1,084.7 million or approximately $9.8 million.

3 unchanged sentences

A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision.

The Company did not have any material contingent liabilities as of January 1, 2021 and October 2, 2020.

The Company did not have any material contingent liabilities as of April 2, 2021 and October 2, 2020.

Legal expenses are expensed as incurred.

3 unchanged sentences

Except for losses related to property damages, the maximum potential amount of future payments we could be required to make under these arrangements is unlimited.

As of January 1, 2021, we have not incurred any material costs to defend lawsuits or settle claims related to these indemnification arrangements.

As of April 2, 2021, we have not incurred any material costs to defend lawsuits or settle claims related to these indemnification arrangements.

As a result, we believe the estimated fair value of these arrangements is minimal.

4 unchanged sentences

Backlog also includes a small portion of billed service contracts that are included in deferred revenue.

Our total backlog at January 1, 2021 was $260.1 million.

Our total backlog at April 2, 2021 was $195.4 million.

The Company expects to recognize this backlog as revenue over the next 12 months, however, orders may be revised or canceled, either according to their terms or as customers’ needs change.

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