INTEGER HOLDINGS CORP, 10-Q filed on 8/11/2015
Quarterly Report
Document and Entity Information
6 Months Ended
Jul. 3, 2015
Aug. 11, 2015
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
GREATBATCH, INC. 
 
Entity Central Index Key
0001114483 
 
Document Type
10-Q 
 
Document Period End Date
Jul. 03, 2015 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q2 
 
Current Fiscal Year End Date
--01-01 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
25,555,554 
Condensed Consolidated Balance Sheets - Unaudited (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Current assets:
 
 
Cash and cash equivalents
$ 72,338 
$ 76,824 
Accounts receivable, net of allowance for doubtful accounts of $1.3 million in 2015 and $1.4 million in 2014
122,101 
124,953 
Inventories
140,093 
129,242 
Refundable income taxes
2,368 
1,716 
Deferred income taxes
6,227 
6,168 
Prepaid expenses and other current assets
12,279 
11,780 
Total current assets
355,406 
350,683 
Property, plant and equipment, net
152,713 
144,925 
Amortizing intangible assets, net
58,572 
65,337 
Indefinite-lived intangible assets
20,288 
20,288 
Goodwill
354,107 
354,393 
Deferred income taxes
2,654 
2,626 
Other assets
22,391 
17,757 
Total assets
966,131 
956,009 
Current liabilities:
 
 
Current portion of long-term debt
13,750 
11,250 
Accounts payable
44,858 
46,436 
Income taxes payable
1,761 
2,003 
Deferred income taxes
588 
588 
Accrued expenses
37,670 
48,384 
Total current liabilities
98,627 
108,661 
Long-term debt
168,750 
176,250 
Deferred income taxes
51,087 
53,195 
Other long-term liabilities
6,065 
4,541 
Total liabilities
324,529 
342,647 
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value, authorized 100,000,000 shares; no shares issued or outstanding in 2015 or 2014
Common stock, $0.001 par value, authorized 100,000,000 shares; 25,592,286 shares issued and 25,544,985 shares outstanding in 2015; 25,099,293 shares issued and 25,070,931 shares outstanding in 2014
26 
25 
Additional paid-in capital
380,293 
366,073 
Treasury stock, at cost, 47,301 shares in 2015 and 28,362 shares in 2014
(2,279)
(1,307)
Retained earnings
256,739 
239,448 
Accumulated other comprehensive income
6,823 
9,123 
Total stockholders’ equity
641,602 
613,362 
Total liabilities and stockholders’ equity
$ 966,131 
$ 956,009 
Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Current assets:
 
 
Allowance for doubtful accounts
$ 1.3 
$ 1.4 
Stockholders’ equity:
 
 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
100,000,000 
100,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
25,592,286 
25,099,293 
Common stock, shares outstanding
25,544,985 
25,070,931 
Treasury stock, shares
47,301 
28,362 
Condensed Consolidated Statements of Operations and Comprehensive Income - Unaudited (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Income Statement [Abstract]
 
 
 
 
Sales
$ 174,890 
$ 172,081 
$ 336,210 
$ 346,362 
Cost of sales
116,939 
113,611 
225,861 
230,296 
Gross profit
57,951 
58,470 
110,349 
116,066 
Operating expenses:
 
 
 
 
Selling, general and administrative expenses
24,104 
21,877 
46,713 
43,632 
Research, development and engineering costs, net
13,063 
12,793 
25,608 
26,324 
Other operating expenses, net
7,750 
4,261 
15,605 
4,047 
Total operating expenses
44,917 
38,931 
87,926 
74,003 
Operating income
13,034 
19,539 
22,423 
42,063 
Interest expense
1,206 
1,073 
2,326 
2,157 
Other (income) expense, net
(107)
334 
(1,658)
(287)
Income before provision for income taxes
11,935 
18,132 
21,755 
40,193 
Provision for income taxes
2,652 
5,784 
4,464 
12,923 
Net income
9,283 
12,348 
17,291 
27,270 
Earnings per share:
 
 
 
 
Basic
$ 0.36 
$ 0.50 
$ 0.68 
$ 1.10 
Diluted
$ 0.35 
$ 0.48 
$ 0.66 
$ 1.06 
Weighted average shares outstanding:
 
 
 
 
Basic
25,473 
24,838 
25,369 
24,726 
Diluted
26,313 
25,901 
26,264 
25,823 
Comprehensive Income
 
 
 
 
Net income
9,283 
12,348 
17,291 
27,270 
Foreign currency translation gain (loss)
214 
(393)
(1,611)
789 
Net change in cash flow hedges, net of tax
(89)
86 
(689)
163 
Other comprehensive income (loss)
125 
(307)
(2,300)
952 
Comprehensive income
$ 9,408 
$ 12,041 
$ 14,991 
$ 28,222 
Condensed Consolidated Statements of Cash Flows - Unaudited (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Cash flows from operating activities:
 
 
Net income
$ 17,291 
$ 27,270 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
18,194 
18,561 
Debt related amortization included in interest expense
387 
387 
Stock-based compensation
5,972 
6,729 
Other non-cash gains, net
(19)
(3,896)
Deferred income taxes
(1,916)
(1,655)
Changes in operating assets and liabilities:
 
 
Accounts receivable
3,691 
(10,741)
Inventories
(10,851)
(2,049)
Prepaid expenses and other current assets
(1,322)
(69)
Accounts payable
(848)
(2,106)
Accrued expenses
(7,239)
(8,967)
Income taxes
(846)
3,052 
Net cash provided by operating activities
22,494 
26,516 
Cash flows from investing activities:
 
 
Acquisition of property, plant and equipment
(22,174)
(11,972)
Proceeds from sale of orthopaedic product lines (Note 9)
2,655 
Purchase of cost method investments
(4,500)
(450)
Other investing activities
691 
Net cash used in investing activities
(25,983)
(9,767)
Cash flows from financing activities:
 
 
Principal payments of long-term debt
(5,000)
(5,000)
Issuance of common stock
5,056 
5,353 
Other financing activities
(571)
(1,129)
Net cash used in financing activities
(515)
(776)
Effect of foreign currency exchange rates on cash and cash equivalents
(482)
(245)
Net increase (decrease) in cash and cash equivalents
(4,486)
15,728 
Cash and cash equivalents, beginning of period
76,824 
35,465 
Cash and cash equivalents, end of period
$ 72,338 
$ 51,193 
Condensed Consolidated Statement of Stockholders' Equity - Unaudited (USD $)
In Thousands, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Jan. 02, 2015
$ 613,362 
$ 25 
$ 366,073 
$ (1,307)
$ 239,448 
$ 9,123 
Balance, shares at Jan. 02, 2015
 
25,099 
 
(28)
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
4,659 
 
4,659 
 
 
 
Net shares issued under stock incentive plans, shares
 
493 
 
(91)
 
 
Net shares issued under stock incentive plans
4,670 
9,109 
(4,440)
 
 
Shares contributed to 401(k), shares
 
 
 
72 
 
 
Shares contributed to 401(k) Plan
3,920 
 
452 
3,468 
 
 
Net income
17,291 
 
 
 
17,291 
 
Total other comprehensive loss, net
(2,300)
 
 
 
 
(2,300)
Balance at Jul. 03, 2015
$ 641,602 
$ 26 
$ 380,293 
$ (2,279)
$ 256,739 
$ 6,823 
Balance, shares at Jul. 03, 2015
 
25,592 
 
(47)
 
 
Basis of Presentation
BASIS OF PRESENTATION
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of Greatbatch, Inc. and its wholly-owned subsidiary, Greatbatch Ltd. (collectively “Greatbatch” or the “Company”), for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates. The January 2, 2015 condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2015. The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31. The second quarter and year-to-date periods of 2015 and 2014 each contained 13 weeks and 26 weeks, respectively, and ended on July 3, and July 4, respectively.
Acquisition
ACQUISITION
ACQUISITION
On August 12, 2014, the Company purchased all of the outstanding common stock of Centro de Construcción de Cardioestimuladores del Uruguay (“CCC”), headquartered in Montevideo, Uruguay. CCC is an active implantable neuromodulation medical device systems developer and manufacturer that produces a range of medical devices including implantable pulse generators, programmer systems, battery chargers, patient wands and leads. This acquisition allows the Company to more broadly partner with development stage medical device companies, complements the Company’s core discrete technology offerings and enhances the Company’s medical device innovation efforts. This transaction was accounted for under the acquisition method of accounting. Accordingly, the operating results of CCC have been included in the Company’s QiG Group (“QiG”) segment from the date of acquisition. Once the medical devices developed by CCC for development stage companies receives regulatory approval and reaches significant production levels, the responsibility for manufacturing these products may be transferred to Greatbatch Medical. The aggregate purchase price of $19.8 million was funded with cash on hand.
The cost of the acquisition was allocated to the assets acquired and liabilities assumed from CCC based on their fair values as of the closing date of the acquisition, with the amount exceeding the fair value of the net assets acquired being recorded as goodwill. The valuation of the assets acquired and liabilities assumed from CCC was finalized during the first quarter of 2015 and did not result in a material adjustment to the original valuation of net assets acquired, including goodwill.

    
The following table summarizes the allocation of the CCC purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Assets acquired
 
Current assets
$
10,670

Property, plant and equipment
1,131

Amortizing intangible assets
6,100

Goodwill
8,296

Total assets acquired
26,197

Liabilities assumed
 
Current liabilities
4,842

Deferred income taxes
1,590

Total liabilities assumed
6,432

Net assets acquired
$
19,765



The fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among other considerations.
The market approach estimates the value for a subject asset based on available market pricing for comparable assets. The income approach estimates the value for a subject asset based on the present value of cash flows projected to be generated by the asset. The projected cash flows were discounted at a required rate of return that reflects the relative risk of the asset and the time value of money. The projected cash flows for each asset considered multiple factors from the perspective of a marketplace participant including revenue projections from existing customers, attrition trends, technology life-cycle assumptions, marginal tax rates and expected profit margins giving consideration to historical and expected margins. The cost approach estimates the value for a subject asset based on the cost to replace the asset and reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation or obsolescence, with specific consideration given to economic obsolescence if indicated. These fair value measurement approaches are based on significant unobservable inputs, including management estimates and assumptions.
Current Assets and Liabilities – The fair value of current assets and liabilities, excluding inventory, was assumed to approximate their carrying value as of the acquisition date due to the short-term nature of these assets and liabilities.
The fair value of in-process and finished goods inventory acquired was estimated by applying a version of the market approach called the comparable sales method. This approach estimates the fair value of the assets by calculating the potential revenue generated from selling the inventory and subtracting from it the costs related to the completion and sale of that inventory and a reasonable profit allowance. Based upon this methodology, the Company recorded the inventory acquired at fair value resulting in an increase in inventory of $0.3 million.
Intangible Assets – The purchase price was allocated to intangible assets as follows (dollars in thousands):
Amortizing Intangible Assets
 
Fair
Value
Assigned
 
Weighted
Average
Amortization
Period (Years)
 
Weighted
Average
Discount
Rate
Technology
 
$
1,400

 
10
 
18%
Customer lists
 
4,600

 
10
 
18%
Trademarks and tradenames
 
100

 
2
 
18%
 
 
$
6,100

 
10
 
18%

Technology – Technology consists of technical processes, unpatented technology, manufacturing know-how, trade secrets and the understanding with respect to products or processes that have been developed by CCC and that will be leveraged in current and future products. The fair value of technology acquired was determined utilizing the relief from royalty method, a form of the income approach, with a royalty rate of 3%. The weighted average amortization period of the technology is based upon management’s estimate of the product life cycle associated with the technology before they will be replaced by new technologies.
 
Customer Lists – Customer lists represent the estimated fair value of non-contractual customer relationships CCC has as of the acquisition date. The primary customers of CCC include medical device companies in various geographic locations around the world. These relationships were valued separately from goodwill at the amount that an independent third party would be willing to pay for these relationships. The fair value of customer lists was determined using the multi-period excess-earnings method, a form of the income approach. The weighted average amortization period of the existing customer base was based upon the historical customer annual attrition rate of 15%, as well as management’s understanding of the industry and product life cycles.
Trademarks and Tradenames – Trademarks and tradenames represent the estimated fair value of corporate and product names acquired from CCC. These tradenames were valued separately from goodwill at the amount that an independent third party would be willing to pay for use of these names. The fair value of the trademarks and tradenames was determined by utilizing the relief from royalty method, a form of the income approach, with a 0.5% royalty rate.
Goodwill – The excess of the purchase price over the fair value of net tangible and intangible assets acquired and liabilities assumed was allocated to goodwill. Various factors contributed to the establishment of goodwill, including: the value of CCC’s highly trained assembled work force and management team; the incremental value that CCC’s technology will bring to QiG’s medical devices; and the expected revenue growth over time that is attributable to increased market penetration from future products and customers. The goodwill acquired in connection with the CCC acquisition was allocated to the QiG business segment and is not deductible for tax purposes.
Pro Forma Results
The following pro forma information presents the consolidated results of operations of the Company and CCC as if that acquisition occurred as of the beginning of fiscal year 2013 (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales
$
174,890

 
$
175,509

 
$
336,210

 
$
353,218

Net income
9,283

 
12,684

 
17,291

 
27,945

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
0.51

 
$
0.68

 
$
1.13

Diluted
$
0.35

 
$
0.49

 
$
0.66

 
$
1.08


The results prior to the acquisition date have been adjusted to include the pro forma impact of the amortization of acquired intangible assets based on the purchase price allocations and the impact of income taxes on the pro forma adjustments utilizing the applicable statutory tax rate. The pro forma consolidated basic and diluted earnings per share calculations are based on the consolidated basic and diluted weighted average shares of Greatbatch.
The pro forma results are presented for illustrative purposes only and do not reflect the realization of potential cost savings or any related integration costs. Certain cost savings may result from the acquisition; however, there can be no assurance that these cost savings will be achieved. These pro forma results do not purport to be indicative of the results that would have been obtained in the periods presented, or to be indicative of results that may be obtained in the future.
Supplemental Cash Flow Information
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
 
Six Months Ended
(in thousands)
July 3, 2015
 
July 4, 2014
Noncash investing and financing activities:
 
 
 
Common stock contributed to 401(k) Plan
$
3,920

 
$
4,341

Property, plant and equipment purchases included in accounts payable
1,446

 
1,486

Inventories
INVENTORIES
INVENTORIES
Inventories are comprised of the following (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
Raw materials
$
82,061

 
$
73,354

Work-in-process
43,478

 
38,930

Finished goods
14,554

 
16,958

Total
$
140,093

 
$
129,242

Intangible Assets
INTANGIBLE ASSETS
INTANGIBLE ASSETS
Amortizing intangible assets are comprised of the following (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
At July 3, 2015
 
 
 
 
 
 
 
Purchased technology and patents
$
95,776

 
$
(79,015
)
 
$
1,966

 
$
18,727

Customer lists
72,857

 
(34,974
)
 
1,374

 
39,257

Other
4,534

 
(4,749
)
 
803

 
588

Total amortizing intangible assets
$
173,167

 
$
(118,738
)
 
$
4,143

 
$
58,572

At January 2, 2015
 
 
 
 
 
 
 
Purchased technology and patents
$
95,776

 
$
(75,894
)
 
$
1,966

 
$
21,848

Customer lists
72,857

 
(31,460
)
 
1,374

 
42,771

Other
4,534

 
(4,619
)
 
803

 
718

Total amortizing intangible assets
$
173,167

 
$
(111,973
)
 
$
4,143

 
$
65,337


Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Cost of sales
$
1,445

 
$
1,566

 
$
2,916

 
$
3,129

Selling, general and administrative expenses
1,830

 
1,717

 
3,643

 
3,434

Research, development and engineering costs, net
103

 
200

 
206

 
401

Total intangible asset amortization expense
$
3,378

 
$
3,483

 
$
6,765

 
$
6,964


Estimated future intangible asset amortization expense based on the current carrying value is as follows (in thousands):
 
Estimated
Amortization
Expense
Remainder of 2015
$
6,222

2016
10,795

2017
9,520

2018
7,114

2019
5,431

Thereafter
19,490

Total estimated amortization expense
$
58,572


Indefinite-lived intangible assets are comprised of the following (in thousands):
 
Trademarks
and
Tradenames
At January 2, 2015
$
20,288

At July 3, 2015
$
20,288

The change in goodwill is as follows (in thousands):
 
Greatbatch Medical
 
QiG
 
Total
At January 2, 2015
$
304,297

 
$
50,096

 
$
354,393

Foreign currency translation
(286
)
 

 
(286
)
At July 3, 2015
$
304,011

 
$
50,096

 
$
354,107

Debt
DEBT
DEBT
Long-term debt is comprised of the following (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
Variable rate term loan
$
182,500

 
$
187,500

Revolving line of credit

 

Total debt
182,500

 
187,500

Less current portion of long-term debt
13,750

 
11,250

Total long-term debt
$
168,750

 
$
176,250


Credit Facility – The Company has a credit facility (the “Credit Facility”) that provides a $300 million revolving credit facility (the “Revolving Credit Facility”), a $182.5 million term loan (the “Term Loan”), a $15 million letter of credit subfacility, and a $15 million swingline subfacility. The Revolving Credit Facility can be increased by an additional $200 million upon the Company’s request and approval by the lenders. The Revolving Credit Facility has a maturity date of September 20, 2018 that may be extended to September 20, 2019 upon notice by the Company to the lenders and subject to satisfaction of certain conditions. The principal of the Term Loan is payable in quarterly installments as specified in the Credit Facility until its maturity date of September 20, 2019, when the unpaid balance is due in full.
The Credit Facility is secured by the Company’s non-realty assets including cash, accounts receivable and inventories. Interest rates on the Revolving Credit Facility and Term Loan are, at the Company’s option either at: (i) the prime rate plus the applicable margin, which ranges between 0.0% and 0.75%, based on the Company’s total leverage ratio or (ii) the applicable LIBOR rate plus the applicable margin, which ranges between 1.375% and 2.75%, based on the Company’s total leverage ratio. Loans under the swingline subfacility will bear interest at the prime rate plus the applicable margin, which ranges between 0.0% and 0.75%, based on the Company’s total leverage ratio. The Company is also required to pay a commitment fee, which varies between 0.175% and 0.25%, depending on the Company’s total leverage ratio.
The Credit Facility contains limitations on the incurrence of indebtedness, liens and licensing of intellectual property, investments, and certain payments. The Credit Facility permits the Company to engage in the following activities up to an aggregate amount of $300 million: 1) permitted acquisitions in the aggregate not to exceed $250 million; 2) other investments in the aggregate not to exceed $100 million; 3) stock repurchases and dividends not to exceed $150 million in the aggregate; and 4) investments in foreign subsidiaries not to exceed $20 million in the aggregate. At any time that the total leverage ratio of the Company for the two most recently ended fiscal quarters is less than 2.75 to 1.0, the Company may make an election to reset each of the amounts specified above. Additionally, these limitations can be waived upon the Company’s request and approval of a majority of the lenders. As of July 3, 2015, the Company had available to it 100% of the above limits except for the aggregate and other investments limits, which are now $293 million and $93 million, respectively.
The Credit Facility requires the Company to maintain a rolling four quarter ratio of adjusted EBITDA to interest expense of at least 3.0 to 1.0, and a total leverage ratio of not greater than 4.5 to 1.0 decreasing to not greater than 4.25 to 1.0 after January 2, 2016. The calculation of adjusted EBITDA and total leverage ratio excludes non-cash charges, extraordinary, unusual, or non-recurring expenses or losses, non-cash stock-based compensation, and non-recurring expenses or charges incurred in connection with permitted acquisitions. As of July 3, 2015, the Company was in compliance with all covenants under the Credit Facility.
The Credit Facility contains customary events of default. Upon the occurrence and during the continuance of an event of default, a majority of the lenders may declare the outstanding advances and all other obligations under the Credit Facility immediately due and payable.
As of July 3, 2015, the weighted average interest rate on borrowings under the Credit Facility, which does not take into account the impact of the Company’s interest rate swaps, was 1.56%. As of July 3, 2015, the Company had $300 million of borrowing capacity available under the Revolving Credit Facility. This borrowing capacity may vary from period to period based upon the debt and EBITDA levels of the Company, which impacts the covenant calculations described above.
Interest Rate SwapsFrom time to time, the Company enters into interest rate swap agreements in order to hedge against potential changes in cash flows on the outstanding borrowings on the Credit Facility. The variable rate received on the interest rate swaps and the variable rate paid on the debt have the same rate of interest, excluding the credit spread, indexed to the one-month LIBOR rate and reset and pay interest on the same date. During 2012, the Company entered into a three-year $150 million interest rate swap, which amortizes $50 million per year. During 2014, the Company entered into an additional interest rate swap. The first $45 million of notional amount of the swap was effective February 20, 2015, and the second $45 million of notional amount is effective February 22, 2016. The notional amount of the swap amortizes $10 million per year beginning on February 21, 2017, with the remaining settled on the termination date of the swap agreement on September 20, 2019. These swaps are being accounted for as cash flow hedges.
Information regarding the Company’s outstanding interest rate swaps as of July 3, 2015 is as follows (dollars in thousands):
Instrument
 
Type of
Hedge
 
Notional
Amount
 
Start
Date
 
End
Date
 
Pay
Fixed
Rate
 
Current
Receive
Floating
Rate
 
Fair Value
 
Balance
Sheet Location
Interest rate swap
 
Cash flow
 
$
50,000

 
Feb 2013
 
Feb 2016
 
0.573
%
 
0.187
%
 
$
(95
)
 
Accrued Expenses
Interest rate swap
 
Cash flow
 
$
90,000

 
Feb 2015
 
Sept 2019
 
1.921
%
 
0.187
%
 
$
(1,488
)
 
Other Long-Term Liabilities

The estimated fair value of the interest rate swap agreements represents the amount the Company expects to receive (pay) to terminate the contracts. No portion of the change in fair value of the Company’s interest rate swaps during the six months ended July 3, 2015 and July 4, 2014 was considered ineffective. The amount recorded as Interest Expense during the six months ended July 3, 2015 and July 4, 2014 related to the Company’s interest rate swaps was $0.5 million and $0.2 million, respectively.
The expected future minimum principal payments under the Term Loan as of July 3, 2015 are as follows (in thousands):
Remainder of 2015
$
6,250

2016
16,250

2017
20,000

2018
20,000

2019
120,000

Total
$
182,500

 
Deferred Financing Fees The change in deferred financing fees is as follows (in thousands):
At January 2, 2015
$
3,087

Amortization during the period
(387
)
At July 3, 2015
$
2,700

Benefit Plans
BENEFIT PLANS
BENEFIT PLANS
The Company is required to provide its employees located in Switzerland, Mexico, and France certain statutorily mandated defined benefits. Under these plans, benefits accrue to employees based upon years of service, position, age, and compensation. The defined benefit pension plan provided to the Company’s employees located in Switzerland is a funded contributory plan, while the plans that provide benefits to the Company’s employees located in Mexico and France are unfunded and noncontributory. The liability and corresponding expense related to these benefit plans is based on actuarial computations of current and future benefits for employees.
The change in net defined benefit plan liability is as follows (in thousands):
At January 2, 2015
$
2,406

Net defined benefit cost
207

Foreign currency translation
(164
)
At July 3, 2015
$
2,449


Net defined benefit cost is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Service cost
$
78

 
$
52

 
$
157

 
$
104

Interest cost
15

 
20

 
30

 
39

Amortization of net loss
12

 
5

 
26

 
11

Expected return on plan assets
(3
)
 

 
(6
)
 

Net defined benefit cost
$
102

 
$
77

 
$
207

 
$
154

Stock-Based Compensation
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Stock options
$
663

 
$
612

 
$
1,282

 
$
1,216

Restricted stock and restricted stock units
1,746

 
1,601

 
3,380

 
3,158

401(k) Plan stock contribution
1,310

 
1,339

 
1,310

 
2,355

Total stock-based compensation expense
$
3,719

 
$
3,552

 
$
5,972

 
$
6,729

 
 
 
 
 
 
 
 
Cost of sales
$
1,094

 
$
1,147

 
$
1,354

 
$
2,058

Selling, general and administrative expenses
2,148

 
1,998

 
3,909

 
3,921

Research, development and engineering costs, net
477

 
407

 
709

 
750

Total stock-based compensation expense
$
3,719

 
$
3,552

 
$
5,972

 
$
6,729


The weighted average fair value and assumptions used to value options granted are as follows:
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
Weighted average fair value
$
12.18

 
$
16.43

Risk-free interest rate
1.55
%
 
1.73
%
Expected volatility
26
%
 
39
%
Expected life (in years)
5

 
5

Expected dividend yield
%
 
%

The following table summarizes time-vested stock option activity:
 
Number of
Time-Vested
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 2, 2015
1,471,498

 
$
25.32

 
 
 
 
Granted
301,547

 
49.20

 
 
 
 
Exercised
(174,836
)
 
23.41

 
 
 
 
Forfeited or expired
(25,721
)
 
37.94

 
 
 
 
Outstanding at July 3, 2015
1,572,488

 
$
29.91

 
6.4
 
$
37.1

Exercisable at July 3, 2015
1,115,959

 
$
24.27

 
5.4
 
$
32.6

The following table summarizes performance-vested stock option activity:
 
Number of
Performance-
Vested Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 2, 2015
118,839

 
$
23.24

 
 
 
 
Exercised
(50,255
)
 
22.53

 
 
 
 
Outstanding at July 3, 2015
68,584

 
$
23.76

 
3.0
 
$
2.0

Exercisable at July 3, 2015
68,584

 
$
23.76

 
3.0
 
$
2.0


The following table summarizes time-vested restricted stock and restricted stock unit activity:
 
Time-Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 2, 2015
67,832

 
$
36.22

Granted
42,497

 
49.52

Vested
(8,831
)
 
49.54

Forfeited
(7,130
)
 
42.15

Nonvested at July 3, 2015
94,368

 
$
40.51

The following table summarizes performance-vested restricted stock and restricted stock unit activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 2, 2015
716,163

 
$
19.57

Granted
179,940

 
32.92

Vested
(270,198
)
 
15.30

Forfeited
(25,599
)
 
25.53

Nonvested at July 3, 2015
600,306

 
$
25.24

Other Operating Expenses, Net
OTHER OPERATING EXPENSES, NET
OTHER OPERATING EXPENSES, NET
Other Operating Expenses, Net is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
2014 investments in capacity and capabilities
$
6,051

 
$
2,166

 
$
12,738

 
$
2,218

Orthopaedic optimization costs
518

 
1,187

 
991

 
36

2013 operating unit realignment

 
32

 

 
1,035

Other consolidation and optimization income, net

 
(10
)
 

 
(71
)
Acquisition and integration costs (income)
98

 
47

 
164

 
(381
)
Asset dispositions, severance and other
1,083

 
839

 
1,712

 
1,210

 
$
7,750

 
$
4,261

 
$
15,605

 
$
4,047


2014 investments in capacity and capabilities. In 2014, the Company announced several initiatives to invest in capacity and capabilities and to better align its resources to meet its customers’ needs and drive organic growth and profitability. These included the following:
Functions performed at the Company’s facility in Plymouth, MN to manufacture catheters and introducers will transfer into the Company’s existing facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the first half of 2016 and is dependent upon our customers’ validation and qualification of the transferred products.
Functions performed at the Company’s facilities in Beaverton, OR and Raynham, MA to manufacture products for the portable medical market will transfer to a new facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the end of 2015 and is dependent upon our customers’ validation and qualification of the transferred products. Products currently manufactured at the Beaverton facility, which do not serve the portable medical market, are planned to transfer to the Company’s Raynham facility.
The design engineering responsibilities previously performed at the Company’s Cleveland, OH facility were transferred to the Company’s facilities in Minnesota in 2014.
Realignment of the Company’s commercial sales operations. This initiative built upon the investment the Company has made in its global sales and marketing function and is expected to be completed during 2015.
The total capital investment expected for these initiatives is between $25.0 million and $28.0 million, of which $17.0 million has been expended through July 3, 2015. Total restructuring charges expected to be incurred in connection with this realignment are between $29.0 million and $34.0 million, of which $21.7 million has been incurred through July 3, 2015. Expenses related to this initiative are recorded within the applicable segment and corporate cost centers that the expenditures relate to and include the following:
  
Severance and retention: $7.0 million - $9.0 million;
Accelerated depreciation and asset write-offs: $2.0 million - $3.0 million; and
Other: $20.0 million - $22.0 million
Other expenses primarily consist of costs to relocate certain equipment and personnel, duplicate personnel costs, disposal and travel expenditures. All expenses are cash expenditures, except accelerated depreciation and asset write-offs.
The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):
 
Severance and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 2, 2015
$
1,163

 
$

 
$
1,066

 
$
2,229

Restructuring charges
1,788

 
235

 
10,715

 
12,738

Write-offs

 
(235
)
 

 
(235
)
Cash payments
(949
)
 

 
(10,328
)
 
(11,277
)
At July 3, 2015
$
2,002


$

 
$
1,453

 
$
3,455


Orthopaedic optimization costs. In 2010, the Company began updating its Indianapolis, IN facility to streamline operations, consolidate two buildings, increase capacity, further expand capabilities and reduce dependence on outside suppliers. This initiative was completed in 2011.
In 2011, the Company began construction on an orthopaedic manufacturing facility in Fort Wayne, IN and transferred manufacturing operations being performed at its Columbia City, IN location into this new facility. This initiative was completed in 2012.
During 2012, the Company transferred manufacturing and development operations performed at its facilities in Orvin and Corgemont, Switzerland into existing facilities in Fort Wayne, IN and Tijuana, Mexico. In connection with this consolidation, in 2013, the Company sold assets related to certain non-core Swiss orthopaedic product lines to an independent third party. The purchase agreement provided the Company with an earn-out payment based upon the amount of inventory consumed by the purchaser within one year after the close of the transaction. As a result of this earn out, a gain of $2.7 million was recorded in Other Operating Expenses, Net in the first two quarters of 2014. During 2014, the Company transferred $2.1 million of assets relating to the Company’s Orvin, Switzerland property to held for sale and recognized a $0.4 million impairment charge in the fourth quarter of 2014. During the second quarter of 2015, the Company sold $0.6 million of these assets held for sale with no additional gain or loss recognized.
During 2013, the Company began a project to expand its Chaumont, France facility in order to enhance its capabilities and fulfill larger volume customer supply agreements. This initiative is expected to be completed over the next two years.
The total capital investment expected to be incurred for these initiatives is between $30 million and $35 million, of which $25.4 million has been expended through July 3, 2015. Total expense expected to be incurred for these initiatives is between $45 million and $48 million, of which $43.5 million has been incurred through July 3, 2015. All expenses have been and will be recorded within the Greatbatch Medical segment and are expected to include the following:
   
Severance and retention: approximately $11 million;
Accelerated depreciation and asset write-offs: approximately $13 million; and
Other: $21 million$24 million
Other expenses include production inefficiencies, moving, revalidation, personnel, training, consulting, and travel costs associated with these consolidation projects. All expenses are cash expenditures, except accelerated depreciation and asset write-offs.
The change in accrued liabilities related to the orthopaedic facility optimization is as follows (in thousands):
 
Severance
and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 2, 2015
$

 
$

 
$
287

 
$
287

Restructuring charges

 
88

 
903

 
991

Write-offs

 
(88
)
 

 
(88
)
Cash payments

 

 
(1,034
)
 
(1,034
)
At July 3, 2015
$

 
$

 
$
156

 
$
156


2013 operating unit realignment. In 2013, the Company initiated a plan to realign its operating structure in order to optimize its continued focus on profitable growth. As part of this initiative, the sales and marketing and operations groups of its former Implantable Medical and Electrochem Solutions reportable segments were combined into one sales and marketing group and one operations group each serving Greatbatch Medical. This initiative was completed during 2014. Total restructuring charges incurred in connection with this realignment were $6.6 million. Expenses related to this initiative were recorded within the applicable segment that the expenditures relate to and included the following:
  
Severance and retention: $5.0 million; and
Other: $1.6 million

Other expenses primarily consisted of relocation and travel expenditures. All expenses were cash expenditures.

Acquisition and integration costs (income). During 2015 and 2014, the Company incurred costs (income) related to the integration of CCC and NeuroNexus Technologies, Inc. (“NeuroNexus”). These expenses were primarily for travel costs in connection with integration efforts, consulting, training, and the change in fair value of the contingent consideration recorded in connection with the NeuroNexus acquisition, which resulted in a gain of $0.6 million during the first six months of 2014.
Asset dispositions, severance and other. During 2015 and 2014, the Company recorded losses in connection with various asset disposals. In addition, on July 30, 2015, Greatbatch announced a proposed spin-off of a portion of its QiG segment (the “Spin-off”), to be renamed Nuvectra Corporation (“Nuvectra”) upon completion of the Spin-off. Total legal and professional costs incurred in connection with the proposed Spin-off during the first six months of 2015 was $1.5 million. Expenses related to this initiative will be recorded within the applicable segment and corporate cost centers to which the expenditures relate. If this proposed transaction is completed in 2015, deal related costs for the Spin-off are estimated to be between $10 million to $12 million for 2015. Refer to Note 15 “Business Segment, Geographic and Concentration Risk Information” for additional information on the proposed Spin-off.
During 2014, the Company recorded $1.2 million of charges in connection with its business reorganization to align its contract manufacturing operations. Those costs primarily related to consulting and IT development projects, which were completed in the fourth quarter of 2014.
Income Taxes
INCOME TAXES
INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations. The 2015 GAAP effective tax rate for the first six months of 2015 was 20.5% compared to 32.2% for the same period of 2014. This decrease is primarily attributable to $1.0 million of favorable discrete tax items due to the settlement of tax audits in the first quarter of 2015, as well as higher income in lower tax rate jurisdictions.
As of July 3, 2015, the balance of unrecognized tax benefits is approximately $1.9 million. It is reasonably possible that a reduction of up to $0.5 million of the balance of unrecognized tax benefits may occur within the next twelve months as a result of potential audit settlements. Approximately $1.5 million of the balance of unrecognized tax benefits would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized.
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Litigation The Company is a party to various legal actions arising in the normal course of business. While the Company does not expect that the ultimate resolution of any of these pending actions will have a material effect on its consolidated results of operations, financial position, or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, does not become material in the future.
Product Warranties The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The change in product warranty liability was comprised of the following (in thousands):
At January 2, 2015
$
660

Additions to warranty reserve
798

Warranty claims paid
(102
)
At July 3, 2015
$
1,356


Purchase CommitmentsContractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. The Company’s purchase orders are normally based on its current manufacturing needs and are fulfilled by its vendors within short time horizons. The Company also enters into blanket orders with vendors that have preferred pricing and terms; however, these orders are normally cancelable without penalty. As of July 3, 2015, the total contractual obligation related to such expenditures is approximately $39.1 million and will primarily be financed by existing cash and cash equivalents, cash generated from operations, or the Credit Facility. The Company also enters into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.
Operating Leases – The Company is a party to various operating lease agreements for buildings, machinery, equipment, and software. The Company primarily leases buildings, which accounts for the majority of the future lease payments. Minimum future estimated operating lease expenses are as follows (in thousands):
Remainder of 2015
$
3,077

2016
5,981

2017
3,910

2018
3,488

2019
3,418

Thereafter
13,937

Total estimated operating lease expense
$
33,811


Workers’ Compensation Trust – The Company was a member of a group self-insurance trust that provided workers’ compensation benefits to employees of the Company in Western New York (the “Trust”). Under the Trust agreement, each participating organization has joint and several liability for Trust obligations if the assets of the Trust are not sufficient to cover those obligations. During 2011, the Company was notified by the Trust of its intentions to cease operations at the end of 2011 and was assessed a pro-rata share of future costs related to the Trust. Based on actual experience, the Company could receive a refund or be assessed additional contributions for workers’ compensation claims insured by the Trust. Since 2011, the Company has utilized a traditional insurance provider for workers’ compensation coverage.
Foreign Currency ContractsThe Company has entered into forward contracts to purchase Mexican pesos in order to hedge the risk of peso-denominated payments associated with operations at its Tijuana, Mexico facility. The impact to the Company’s results of operations from these forward contracts was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Addition (reduction) in cost of sales
$
420

 
$
8

 
$
664

 
$
(156
)
Ineffective portion of change in fair value

 

 

 


Information regarding outstanding foreign currency contracts as of July 3, 2015 is as follows (dollars in thousands):
Instrument
 
Type of
Hedge
 
Aggregate
Notional
Amount
 
Start
Date
 
End
Date
 
$/Peso
 
Fair
Value
 
Balance Sheet Location
FX Contract
 
Cash flow
 
$
8,440

 
Jan 2015
 
Dec 2015
 
0.0734

 
$
(1,094
)
 
Accrued Expenses
FX Contract
 
Cash flow
 
$
1,574

 
Mar 2015
 
Dec 2015
 
0.0656

 
$
(61
)
 
Accrued Expenses
FX Contract
 
Cash flow
 
$
15,081

 
Jan 2016
 
Dec 2016
 
0.0656

 
$
(881
)
 
Accrued Expenses/Other Long-Term Liabilities

Self-Insured Medical Plan The Company self-funds the medical insurance coverage provided to its U.S. based employees. The Company has specific stop loss coverage for claims incurred during 2015 exceeding $250 thousand per associate with no annual maximum aggregate stop loss coverage. As of July 3, 2015, the Company had $1.4 million accrued related to the self-insurance of its medical plan. This accrual is recorded in Accrued Expenses in the Condensed Consolidated Balance Sheet and is primarily based upon claim history.
Earnings Per Share (EPS)
EARNINGS PER SHARE (EPS)
EARNINGS PER SHARE (“EPS”)
The following table illustrates the calculation of Basic and Diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Numerator for basic and diluted EPS:
 
 
 
 
 
 
 
Net income
$
9,283

 
$
12,348

 
$
17,291

 
$
27,270

Denominator for basic EPS:
 
 
 
 
 
 
 
Weighted average shares outstanding
25,473

 
24,838

 
25,369

 
24,726

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options, restricted stock and restricted stock units
840

 
1,063

 
895

 
1,097

Denominator for diluted EPS
26,313

 
25,901

 
26,264

 
25,823

Basic EPS
$
0.36

 
$
0.50


$
0.68

 
$
1.10

Diluted EPS
$
0.35

 
$
0.48

 
$
0.66

 
$
1.06


The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met:
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Time-vested stock options, restricted stock and restricted stock units
276,000

 
179,000

 
297,000

 
179,000

Performance-vested restricted stock units
59,600

 

 
55,800

 

Accumulated Other Comprehensive Income
ACCUMULATED OTHER COMPREHENSIVE INCOME
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated Other Comprehensive Income is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 3, 2015
$
(1,181
)
 
$
(3,480
)
 
$
9,625

 
$
4,964

 
$
1,734

 
$
6,698

Unrealized loss on cash flow hedges

 
(840
)
 

 
(840
)
 
295

 
(545
)
Realized loss on foreign currency hedges

 
420

 

 
420

 
(147
)
 
273

Realized loss on interest rate swap hedges

 
281

 

 
281

 
(98
)
 
183

Foreign currency translation gain

 

 
214

 
214

 

 
214

At July 3, 2015
$
(1,181
)
 
$
(3,619
)
 
$
9,839

 
$
5,039

 
$
1,784

 
$
6,823

 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At January 2, 2015
$
(1,181
)
 
$
(2,558
)
 
$
11,450

 
$
7,711

 
$
1,412

 
$
9,123

Unrealized loss on cash flow hedges

 
(2,187
)
 

 
(2,187
)
 
766

 
(1,421
)
Realized loss on foreign currency hedges

 
664

 

 
664

 
(232
)
 
432

Realized loss on interest rate swap hedges

 
462

 

 
462

 
(162
)
 
300

Foreign currency translation loss

 

 
(1,611
)
 
(1,611
)
 

 
(1,611
)
At July 3, 2015
$
(1,181
)
 
$
(3,619
)
 
$
9,839

 
$
5,039

 
$
1,784

 
$
6,823


 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 4, 2014
$
(672
)
 
$
(350
)
 
$
16,134

 
$
15,112

 
$
505

 
$
15,617

Unrealized gain on cash flow hedges

 
18

 

 
18

 
(6
)
 
12

Realized loss on foreign currency hedges

 
8

 

 
8

 
(3
)
 
5

Realized loss on interest rate swap hedges

 
106

 

 
106

 
(37
)
 
69

Foreign currency translation loss

 

 
(393
)
 
(393
)
 

 
(393
)
At July 4, 2014
$
(672
)
 
$
(218
)
 
$
15,741

 
$
14,851

 
$
459

 
$
15,310

 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At January 3, 2014
$
(672
)
 
$
(468
)
 
$
14,952

 
$
13,812

 
$
546

 
$
14,358

Unrealized gain on cash flow hedges

 
168

 

 
168

 
(59
)
 
109

Realized gain on foreign currency hedges

 
(156
)
 

 
(156
)
 
55

 
(101
)
Realized loss on interest rate swap hedges

 
238

 

 
238

 
(83
)
 
155

Foreign currency translation gain

 

 
789

 
789

 

 
789

At July 4, 2014
$
(672
)
 
$
(218
)
 
$
15,741

 
$
14,851

 
$
459

 
$
15,310


The realized (gain) loss relating to the Company’s foreign currency and interest rate swap hedges were reclassified from Accumulated Other Comprehensive Income and included in Cost of Sales and Interest Expense, respectively, in the Condensed Consolidated Statements of Operations.
Fair Value Measurements
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). For the Company, these financial assets and liabilities include its derivative instruments. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.
Foreign Currency Contracts – The fair value of foreign currency contracts are determined through the use of cash flow models that utilize observable market data inputs to estimate fair value. These observable market data inputs include foreign exchange rate and credit spread curves. In addition, the Company received fair value estimates from the foreign currency contract counterparty to verify the reasonableness of the Company’s estimates. The Company’s foreign currency contracts are categorized in Level 2 of the fair value hierarchy. The fair value of the Company’s foreign currency contracts will be realized as Cost of Sales as the inventory, which the contracts are hedging the cash flows to produce, is sold, of which approximately $1.5 million is expected to be realized within the next twelve months.
Interest Rate Swaps – The fair value of the Company’s interest rate swaps outstanding at July 3, 2015 were determined through the use of a cash flow model that utilizes observable market data inputs. These observable market data inputs include LIBOR, swap rates, and credit spread curves. In addition, the Company received a fair value estimate from the interest rate swap counterparty to verify the reasonableness of the Company’s estimate. This fair value calculation was categorized in Level 2 of the fair value hierarchy. The fair value of the Company’s interest rate swaps will be realized as Interest Expense as interest on the Credit Facility is accrued.
The following table provides information regarding liabilities recorded at fair value on a recurring basis (in thousands):
 
 
Fair Value Measurements Using
 
 
At 
 July 3,
 
Quoted
Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
2015
 
(Level 1)
 
(Level 2)
 
(Level 3)
Liabilities
 
 
 
 
 
 
 
 
Foreign currency contracts (Note 11)
 
$
2,036

 
$

 
$
2,036

 
$

Interest rate swap (Note 6)
 
1,583

 

 
1,583

 


Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses, and current portion of long-term debt approximate fair value because of the short-term nature of these items. As of July 3, 2015, the fair value of the Company’s variable rate long-term debt approximates its carrying value and is categorized in Level 2 of the fair value hierarchy. A summary of the valuation methodologies for assets and liabilities measured on a nonrecurring basis is as follows:
Long-lived Assets – The Company reviews the carrying amount of its long-lived assets to be held and used, other than goodwill and indefinite-lived intangible assets, for potential impairment whenever certain indicators are present such as: a significant decrease in the market price of the asset or asset group; a significant change in the extent or manner in which the long-lived asset or asset group is being used or in its physical condition; a significant change in legal factors or in the business climate that could affect the value of the long-lived asset or asset group, including an action or assessment by a regulator; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction; a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset or asset group; or a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
Potential recoverability is measured by comparing the carrying amount of the asset or asset group to its related total future undiscounted cash flows. If the carrying value is not recoverable, the asset or asset group is considered to be impaired. Impairment is measured by comparing the asset or asset group’s carrying amount to its fair value. When it is determined that useful lives are shorter than originally estimated, and no impairment is present, the rate of depreciation is accelerated in order to fully depreciate the assets over their new shorter useful lives. The Company did not record any impairment charges related to its long-lived assets during the first six months of 2015 or 2014.
Goodwill and Indefinite-lived Intangible Assets – Goodwill and other indefinite lived intangible assets recorded are not amortized but are periodically tested for impairment. The Company assesses goodwill for impairment on the last day of each fiscal year, or more frequently if certain events occur as described above. Goodwill is evaluated for impairment through the comparison of the fair value of the reporting units to their carrying values. When evaluating goodwill for impairment, the Company may first perform an assessment of qualitative factors to determine if the fair value of the reporting unit is more-likely-than-not greater than its carrying amount. This qualitative assessment is referred to as a “step zero approach. If, based on the review of the qualitative factors, the Company determines it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying value, the required two-step impairment test can be bypassed. If the Company does not perform a step zero assessment or if the fair value of the reporting unit is more-likely-than-not less than its carrying value, the Company must perform a two-step impairment test, and calculate the estimated fair value of the reporting unit. If, based upon the two-step impairment test, it is determined that the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill within the reporting unit is less than its carrying value. Under the two-step approach, fair values for reporting units are determined based on discounted cash flows and market multiples.
Other indefinite lived intangible assets are assessed for impairment on the last day of each fiscal year, or more frequently if certain events occur as described above, by comparing the fair value of the intangible asset to its carrying value. The fair value is determined by using the income approach.
The Company did not record any impairment charges related to its indefinite-lived intangible assets, including goodwill, during the first six months of 2015 or 2014, respectively. See Note 5 “Intangible Assets” for additional information on the Company’s intangible assets.
Cost and Equity Method Investments – The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments, which are classified as Other Assets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments. Gains and losses realized on cost and equity method investments are recorded in Other (Income) Expense, Net, unless separately stated. The aggregate recorded amount of cost and equity method investments at July 3, 2015 and January 2, 2015 was $19.5 million and $14.5 million, respectively. The Company’s equity method investment is in a Chinese venture capital fund focused on investing in life sciences companies. This fund accounts for its investments at fair value with the unrealized change in fair value of these investments recorded as income or loss to the fund in the period of change. As of July 3, 2015, the Company owned 7.3% of this fund.
During the six month period ending July 3, 2015 and July 4, 2014, the Company did not recognize any impairment charges related to its cost method investments. The fair value of these investments is determined by reference to recent sales data of similar shares to independent parties in an inactive market. This fair calculation is categorized in Level 2 of the fair value hierarchy. During the six month period ending July 3, 2015 and July 4, 2014, the Company recognized a net gain on equity method investments of $0.5 million and $0.8 million, respectively.
Business Segment, Geographic and Concentration Risk Information
BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION
BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION
The Company has two reportable segments: Greatbatch Medical and QiG. Greatbatch Medical designs and manufactures medical devices and components where Greatbatch either owns the intellectual property or has unique manufacturing and assembly expertise. Greatbatch Medical provides medical devices and components to the following markets:
Cardiac/Neuromodulation: Products include complete implantable medical devices and components such as batteries, capacitors, filtered and unfiltered feed-throughs, engineered components, implantable stimulation leads, and enclosures.
Orthopaedic: Products include implants, instruments and delivery systems for large joint, spine, extremity and trauma procedures.
Portable Medical: Products include automated external defibrillators, portable oxygen concentrators, ventilators, and powered surgical tools.
Vascular: Products include introducers, steerable sheaths, and catheters that deliver therapies for various markets such as coronary and neurovascular disease, peripheral vascular disease, interventional radiology, vascular access, atrial fibrillation, and interventional cardiology, plus products for medical imaging and pharmaceutical delivery.
Energy, Military, and Environmental: Products include primary and rechargeable batteries and battery packs for demanding applications such as down hole drilling tools.
Greatbatch Medical also offers value-added assembly and design engineering services for medical devices that utilize its component products.
QiG is a medical device company formed in 2008 to develop and commercialize a neurostimulation technology platform for treatment of various disorders by stimulating tissues associated with the nervous system. QiG facilitates this development through the establishment of limited liability companies (“LLCs”). These LLCs do not own, but have the exclusive right to use the technology of Greatbatch in certain, specific fields of use and have an exclusive manufacturing agreement with Greatbatch Medical. QiG currently owns 89% of two LLCs - Algostim, LLC (“Algostim”) and PelviStim LLC (“PelviStim”). Minority interests in these LLCs are held by key opinion leaders and clinicians. Under the agreements governing these LLCs, QiG funds 100% of the expenses incurred by the LLC. No distributions are made to the minority holders until QiG is reimbursed for these expenses. Once QiG has been fully reimbursed, any potential future distributions will be applied first to return contributions made by minority partners and thereafter will be made pro rata based upon ownership percentages.
Algostim is focused on the development and commercialization of its Algovita spinal cord stimulation (“SCS”) system (“Algovita”), the first application of QiG’s neurostimulation technology platform. Algovita is indicated for the treatment of chronic pain of the trunk and limbs. Algovita was submitted for premarket approval (“PMA”) to the United States Food & Drug Administration (“FDA”) in December 2013 and in January 2014 documentation for European CE Mark was submitted to the notified body, TÜV SÜD America. CE Mark approval was obtained on June 17, 2014. In April 2015, the Company announced receipt of a letter from the FDA informing it that its PMA application for Algovita is approvable subject to completion of an FDA inspection that finds that the manufacturing facilities, methods and controls used in the production of Algovita comply with the applicable requirements of the FDA’s Quality System Regulation. QiG expects to obtain final approval of its PMA application for Algovita during the second half of 2015 and to launch Algovita commercially in the United States shortly thereafter.
QiG is also in the process of developing additional applications for its neurostimulation technology platform for other emerging indications such as sacral nerve stimulation (“SNS”), and deep brain stimulation (“DBS”), among others. QiG’s PelviStim subsidiary is focused on the commercialization of QiG’s neurostimulation technology platform for SNS.
QiG revenue includes sales of neural interface technology, components and systems to the neuroscience and clinical markets from NeuroNexus, and a limited release of Algovita in Europe. As further discussed in Note 2 “Acquisition,” in August 2014, the Company acquired CCC, a neuromodulation medical device developer and manufacturer for development stage companies. As a result of this transaction, QiG revenue for 2015 also includes sales of various medical device products such as implantable pulse generators, programmer systems, battery chargers, patient wands and leads to medical device companies. Once the medical devices developed by CCC for development stage companies receives regulatory approval and reaches significant production levels, the responsibility for manufacturing these products may be transferred to Greatbatch Medical.
On July 30, 2015, Greatbatch announced a proposed spin-off of a portion of its QiG segment through a tax-free distribution of all of the shares of its QiG Group LLC subsidiary to the stockholders of Greatbatch on a pro rata basis. Immediately prior to completion of the Spin-off, QiG Group LLC will be converted into a corporation organized under the laws of Delaware and change its name to Nuvectra. The portion of the QiG segment being spun-off is expected to be comprised of QiG Group LLC and its subsidiaries: (i) Algostim, (ii) PelviStim, and (iii) Greatbatch’s NeuroNexus subsidiary. Upon completion of the Spin-off, Nuvectra will be an independent, publicly-traded company and Greatbatch will not own any shares of Nuvectra common stock but will retain the operations of QiG not spun-off, which includes CCC. The total financial impact of the Spin-off on the Company’s Condensed Consolidated Financial Statements cannot be determined at this time. However, if completed, deal related costs for the Spin-off are estimated to be between $10 million to $12 million for 2015. Additionally, once completed, the Spin-off is expected to deliver Greatbatch improved financial performance through its long-term manufacturing agreement with Nuvectra for the supply of Algovita and lower operating expenses estimated in the range of $12 million to $16 million on an annualized basis.
An analysis and reconciliation of the Company’s business segment, product line and geographic information to the respective information in the Condensed Consolidated Financial Statements follows. Sales by geographic area are presented by allocating sales from external customers based on where the products are shipped to (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales:
 
 
 
 
 
 
 
Greatbatch Medical
 
 
 
 
 
 
 
Cardiac/Neuromodulation
$
90,153

 
$
80,005

 
$
166,426

 
$
166,785

Orthopaedic
35,481

 
37,865

 
74,452

 
74,296

Portable Medical
17,700

 
16,737

 
31,367

 
35,940

Vascular
12,907

 
15,257

 
23,263

 
28,307

Energy, Military, Environmental
16,545

 
21,352

 
34,255

 
39,483

Total Greatbatch Medical
172,786

 
171,216

 
329,763

 
344,811

QiG
2,741

 
865

 
7,788

 
1,551

Elimination of Intersegment Sales(a)
(637
)
 

 
(1,341
)
 

Total sales
$
174,890

 
$
172,081

 
$
336,210

 
$
346,362


(a)
Intersegment sales between Greatbatch Medical and QiG are eliminated in consolidation and are included in Greatbatch Medical’s cardiac and neuromodulation product line.
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Segment income (loss) from operations:
 
 
 
 
 
 
 
Greatbatch Medical
$
28,914

 
$
32,439

 
$
50,667

 
$
67,567

QiG
(7,002
)
 
(6,173
)
 
(12,452
)
 
(12,086
)
Total segment income from operations
21,912

 
26,266

 
38,215

 
55,481

Unallocated operating expenses
(8,878
)
 
(6,727
)
 
(15,792
)
 
(13,418
)
Operating income as reported
13,034

 
19,539

 
22,423

 
42,063

Unallocated other expense
(1,099
)
 
(1,407
)
 
(668
)
 
(1,870
)
Income before provision for income taxes
$
11,935

 
$
18,132

 
$
21,755

 
$
40,193


 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales by geographic area:
 
 
 
 
 
 
 
United States
$
75,041

 
$
77,761

 
$
145,557

 
$
158,873

Non-Domestic locations:
 
 
 
 
 
 
 
Puerto Rico
37,415

 
31,885

 
71,431

 
66,483

Belgium
16,018

 
17,650

 
33,385

 
33,629

Rest of world
46,416

 
44,785

 
85,837

 
87,377

Total sales
$
174,890

 
$
172,081

 
$
336,210

 
$
346,362


Three customers accounted for a significant portion of the Company’s sales as follows:
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Customer A
20
%
 
17
%
 
21
%
 
19
%
Customer B
18
%
 
17
%
 
18
%
 
16
%
Customer C
12
%
 
12
%
 
13
%
 
12
%
Total
50
%
 
46
%
 
52
%
 
47
%

Long-lived tangible assets by geographic area are as follows (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
United States
$
111,503

 
$
113,851

Rest of world
41,210

 
31,074

Total
$
152,713

 
$
144,925

Impact of Recently Issued Accounting Standards
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), Securities and Exchange Commission (“SEC”), Emerging Issues Task Force (“EITF”), or other authoritative accounting bodies to determine the potential impact they may have on the Company’s Condensed Consolidated Financial Statements. Based upon this review, except as noted below, management does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Condensed Consolidated Financial Statements.
In July 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting this ASU on its Condensed Consolidated Financial Statements.
In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which changes the presentation of debt issuance costs in the financial statements. Under this ASU, the Company will present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company will apply the new guidance retrospectively to all prior periods presented beginning in the first quarter of fiscal year 2016. As disclosed in Note 6 “Debt,” as of July 3, 2015, the Company had $2.7 million of debt related deferred financing costs recorded within Other Assets in the Condensed Consolidated Balance Sheet, which will be reclassified as a deduction from Long-Term Debt upon adoption of this ASU.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The core principle behind ASU 2014-09 is that an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the entity satisfies the performance obligations. This ASU will supersede existing revenue recognition guidance. In July 2015, the FASB deferred for one year the effective date of the new standard to be effective for annual reporting periods beginning after December 15, 2017. Early application is permitted for all entities, but not before the original public entity effective date. This ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where this ASU is applied to the most current period presented in the financial statements. The Company is currently assessing the financial impact of adopting the new standard and the methods of adoption; however, given the scope of the new standard, the company is currently unable to provide a reasonable estimate regarding the financial impact or which method of adoption will be elected.
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The revised guidance changes how entities identify and disclose information about disposal transactions under U.S. GAAP. This ASU is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014, with early adoption permitted. This ASU is applicable for disposal transactions, if any, that the Company enters into after January 2, 2015. This ASU did not materially impact the Company’s Condensed Consolidated Financial Statements.
Accounting Policies (Policies)
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of Greatbatch, Inc. and its wholly-owned subsidiary, Greatbatch Ltd. (collectively “Greatbatch” or the “Company”), for the periods presented.
The January 2, 2015 condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2015.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.
The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31. The second quarter and year-to-date periods of 2015 and 2014 each contained 13 weeks and 26 weeks, respectively, and ended on July 3, and July 4, respectively.
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations.
The Company reviews the carrying amount of its long-lived assets to be held and used, other than goodwill and indefinite-lived intangible assets, for potential impairment whenever certain indicators are present such as: a significant decrease in the market price of the asset or asset group; a significant change in the extent or manner in which the long-lived asset or asset group is being used or in its physical condition; a significant change in legal factors or in the business climate that could affect the value of the long-lived asset or asset group, including an action or assessment by a regulator; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction; a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset or asset group; or a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
Potential recoverability is measured by comparing the carrying amount of the asset or asset group to its related total future undiscounted cash flows. If the carrying value is not recoverable, the asset or asset group is considered to be impaired. Impairment is measured by comparing the asset or asset group’s carrying amount to its fair value. When it is determined that useful lives are shorter than originally estimated, and no impairment is present, the rate of depreciation is accelerated in order to fully depreciate the assets over their new shorter useful lives. The Company did not record any impairment charges related to its long-lived assets during the first six months of 2015 or 2014.
Goodwill and other indefinite lived intangible assets recorded are not amortized but are periodically tested for impairment. The Company assesses goodwill for impairment on the last day of each fiscal year, or more frequently if certain events occur as described above. Goodwill is evaluated for impairment through the comparison of the fair value of the reporting units to their carrying values. When evaluating goodwill for impairment, the Company may first perform an assessment of qualitative factors to determine if the fair value of the reporting unit is more-likely-than-not greater than its carrying amount. This qualitative assessment is referred to as a “step zero approach. If, based on the review of the qualitative factors, the Company determines it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying value, the required two-step impairment test can be bypassed. If the Company does not perform a step zero assessment or if the fair value of the reporting unit is more-likely-than-not less than its carrying value, the Company must perform a two-step impairment test, and calculate the estimated fair value of the reporting unit. If, based upon the two-step impairment test, it is determined that the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill within the reporting unit is less than its carrying value. Under the two-step approach, fair values for reporting units are determined based on discounted cash flows and market multiples.
Other indefinite lived intangible assets are assessed for impairment on the last day of each fiscal year, or more frequently if certain events occur as described above, by comparing the fair value of the intangible asset to its carrying value. The fair value is determined by using the income approach.
The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments, which are classified as Other Assets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments. Gains and losses realized on cost and equity method investments are recorded in Other (Income) Expense, Net, unless separately stated.
Acquisition (Tables)
The following table summarizes the allocation of the CCC purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Assets acquired
 
Current assets
$
10,670

Property, plant and equipment
1,131

Amortizing intangible assets
6,100

Goodwill
8,296

Total assets acquired
26,197

Liabilities assumed
 
Current liabilities
4,842

Deferred income taxes
1,590

Total liabilities assumed
6,432

Net assets acquired
$
19,765

The purchase price was allocated to intangible assets as follows (dollars in thousands):
Amortizing Intangible Assets
 
Fair
Value
Assigned
 
Weighted
Average
Amortization
Period (Years)
 
Weighted
Average
Discount
Rate
Technology
 
$
1,400

 
10
 
18%
Customer lists
 
4,600

 
10
 
18%
Trademarks and tradenames
 
100

 
2
 
18%
 
 
$
6,100

 
10
 
18%
The following pro forma information presents the consolidated results of operations of the Company and CCC as if that acquisition occurred as of the beginning of fiscal year 2013 (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales
$
174,890

 
$
175,509

 
$
336,210

 
$
353,218

Net income
9,283

 
12,684

 
17,291

 
27,945

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
0.51

 
$
0.68

 
$
1.13

Diluted
$
0.35

 
$
0.49

 
$
0.66

 
$
1.08

Supplemental Cash Flow Information (Tables)
Schedule of Cash Flow, Supplemental Disclosures
 
Six Months Ended
(in thousands)
July 3, 2015
 
July 4, 2014
Noncash investing and financing activities:
 
 
 
Common stock contributed to 401(k) Plan
$
3,920

 
$
4,341

Property, plant and equipment purchases included in accounts payable
1,446

 
1,486

Inventories (Tables)
Schedule of Inventory, Current
Inventories are comprised of the following (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
Raw materials
$
82,061

 
$
73,354

Work-in-process
43,478

 
38,930

Finished goods
14,554

 
16,958

Total
$
140,093

 
$
129,242

Intangible Assets (Tables)
Amortizing intangible assets are comprised of the following (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
At July 3, 2015
 
 
 
 
 
 
 
Purchased technology and patents
$
95,776

 
$
(79,015
)
 
$
1,966

 
$
18,727

Customer lists
72,857

 
(34,974
)
 
1,374

 
39,257

Other
4,534

 
(4,749
)
 
803

 
588

Total amortizing intangible assets
$
173,167

 
$
(118,738
)
 
$
4,143

 
$
58,572

At January 2, 2015
 
 
 
 
 
 
 
Purchased technology and patents
$
95,776

 
$
(75,894
)
 
$
1,966

 
$
21,848

Customer lists
72,857

 
(31,460
)
 
1,374

 
42,771

Other
4,534

 
(4,619
)
 
803

 
718

Total amortizing intangible assets
$
173,167

 
$
(111,973
)
 
$
4,143

 
$
65,337

Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Cost of sales
$
1,445

 
$
1,566

 
$
2,916

 
$
3,129

Selling, general and administrative expenses
1,830

 
1,717

 
3,643

 
3,434

Research, development and engineering costs, net
103

 
200

 
206

 
401

Total intangible asset amortization expense
$
3,378

 
$
3,483

 
$
6,765

 
$
6,964

Estimated future intangible asset amortization expense based on the current carrying value is as follows (in thousands):
 
Estimated
Amortization
Expense
Remainder of 2015
$
6,222

2016
10,795

2017
9,520

2018
7,114

2019
5,431

Thereafter
19,490

Total estimated amortization expense
$
58,572

Indefinite-lived intangible assets are comprised of the following (in thousands):
 
Trademarks
and
Tradenames
At January 2, 2015
$
20,288

At July 3, 2015
$
20,288

The change in goodwill is as follows (in thousands):
 
Greatbatch Medical
 
QiG
 
Total
At January 2, 2015
$
304,297

 
$
50,096

 
$
354,393

Foreign currency translation
(286
)
 

 
(286
)
At July 3, 2015
$
304,011

 
$
50,096

 
$
354,107

Debt (Tables)
Long-term debt is comprised of the following (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
Variable rate term loan
$
182,500

 
$
187,500

Revolving line of credit

 

Total debt
182,500

 
187,500

Less current portion of long-term debt
13,750

 
11,250

Total long-term debt
$
168,750

 
$
176,250

Information regarding the Company’s outstanding interest rate swaps as of July 3, 2015 is as follows (dollars in thousands):
Instrument
 
Type of
Hedge
 
Notional
Amount
 
Start
Date
 
End
Date
 
Pay
Fixed
Rate
 
Current
Receive
Floating
Rate
 
Fair Value
 
Balance
Sheet Location
Interest rate swap
 
Cash flow
 
$
50,000

 
Feb 2013
 
Feb 2016
 
0.573
%
 
0.187
%
 
$
(95
)
 
Accrued Expenses
Interest rate swap
 
Cash flow
 
$
90,000

 
Feb 2015
 
Sept 2019
 
1.921
%
 
0.187
%
 
$
(1,488
)
 
Other Long-Term Liabilities
The expected future minimum principal payments under the Term Loan as of July 3, 2015 are as follows (in thousands):
Remainder of 2015
$
6,250

2016
16,250

2017
20,000

2018
20,000

2019
120,000

Total
$
182,500

The change in deferred financing fees is as follows (in thousands):
At January 2, 2015
$
3,087

Amortization during the period
(387
)
At July 3, 2015
$
2,700

Benefit Plans (Tables)
The change in net defined benefit plan liability is as follows (in thousands):
At January 2, 2015
$
2,406

Net defined benefit cost
207

Foreign currency translation
(164
)
At July 3, 2015
$
2,449

Net defined benefit cost is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Service cost
$
78

 
$
52

 
$
157

 
$
104

Interest cost
15

 
20

 
30

 
39

Amortization of net loss
12

 
5

 
26

 
11

Expected return on plan assets
(3
)
 

 
(6
)
 

Net defined benefit cost
$
102

 
$
77

 
$
207

 
$
154

Stock-Based Compensation (Tables)
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Stock options
$
663

 
$
612

 
$
1,282

 
$
1,216

Restricted stock and restricted stock units
1,746

 
1,601

 
3,380

 
3,158

401(k) Plan stock contribution
1,310

 
1,339

 
1,310

 
2,355

Total stock-based compensation expense
$
3,719

 
$
3,552

 
$
5,972

 
$
6,729

 
 
 
 
 
 
 
 
Cost of sales
$
1,094

 
$
1,147

 
$
1,354

 
$
2,058

Selling, general and administrative expenses
2,148

 
1,998

 
3,909

 
3,921

Research, development and engineering costs, net
477

 
407

 
709

 
750

Total stock-based compensation expense
$
3,719

 
$
3,552

 
$
5,972

 
$
6,729

The weighted average fair value and assumptions used to value options granted are as follows:
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
Weighted average fair value
$
12.18

 
$
16.43

Risk-free interest rate
1.55
%
 
1.73
%
Expected volatility
26
%
 
39
%
Expected life (in years)
5

 
5

Expected dividend yield
%
 
%
The following table summarizes time-vested stock option activity:
 
Number of
Time-Vested
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 2, 2015
1,471,498

 
$
25.32

 
 
 
 
Granted
301,547

 
49.20

 
 
 
 
Exercised
(174,836
)
 
23.41

 
 
 
 
Forfeited or expired
(25,721
)
 
37.94

 
 
 
 
Outstanding at July 3, 2015
1,572,488

 
$
29.91

 
6.4
 
$
37.1

Exercisable at July 3, 2015
1,115,959

 
$
24.27

 
5.4
 
$
32.6

The following table summarizes performance-vested stock option activity:
 
Number of
Performance-
Vested Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 2, 2015
118,839

 
$
23.24

 
 
 
 
Exercised
(50,255
)
 
22.53

 
 
 
 
Outstanding at July 3, 2015
68,584

 
$
23.76

 
3.0
 
$
2.0

Exercisable at July 3, 2015
68,584

 
$
23.76

 
3.0
 
$
2.0

The following table summarizes time-vested restricted stock and restricted stock unit activity:
 
Time-Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 2, 2015
67,832

 
$
36.22

Granted
42,497

 
49.52

Vested
(8,831
)
 
49.54

Forfeited
(7,130
)
 
42.15

Nonvested at July 3, 2015
94,368

 
$
40.51

The following table summarizes performance-vested restricted stock and restricted stock unit activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 2, 2015
716,163

 
$
19.57

Granted
179,940

 
32.92

Vested
(270,198
)
 
15.30

Forfeited
(25,599
)
 
25.53

Nonvested at July 3, 2015
600,306

 
$
25.24

Other Operating Expenses, Net (Tables)
Other Operating Expenses, Net is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
2014 investments in capacity and capabilities
$
6,051

 
$
2,166

 
$
12,738

 
$
2,218

Orthopaedic optimization costs
518

 
1,187

 
991

 
36

2013 operating unit realignment

 
32

 

 
1,035

Other consolidation and optimization income, net

 
(10
)
 

 
(71
)
Acquisition and integration costs (income)
98

 
47

 
164

 
(381
)
Asset dispositions, severance and other
1,083

 
839

 
1,712

 
1,210

 
$
7,750

 
$
4,261

 
$
15,605

 
$
4,047

The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):
 
Severance and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 2, 2015
$
1,163

 
$

 
$
1,066

 
$
2,229

Restructuring charges
1,788

 
235

 
10,715

 
12,738

Write-offs

 
(235
)
 

 
(235
)
Cash payments
(949
)
 

 
(10,328
)
 
(11,277
)
At July 3, 2015
$
2,002


$

 
$
1,453

 
$
3,455

The change in accrued liabilities related to the orthopaedic facility optimization is as follows (in thousands):
 
Severance
and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 2, 2015
$

 
$

 
$
287

 
$
287

Restructuring charges

 
88

 
903

 
991

Write-offs

 
(88
)
 

 
(88
)
Cash payments

 

 
(1,034
)
 
(1,034
)
At July 3, 2015
$

 
$

 
$
156

 
$
156

Commitments and Contingencies (Tables)
The change in product warranty liability was comprised of the following (in thousands):
At January 2, 2015
$
660

Additions to warranty reserve
798

Warranty claims paid
(102
)
At July 3, 2015
$
1,356

Minimum future estimated operating lease expenses are as follows (in thousands):
Remainder of 2015
$
3,077

2016
5,981

2017
3,910

2018
3,488

2019
3,418

Thereafter
13,937

Total estimated operating lease expense
$
33,811

The impact to the Company’s results of operations from these forward contracts was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Addition (reduction) in cost of sales
$
420

 
$
8

 
$
664

 
$
(156
)
Ineffective portion of change in fair value

 

 

 

Information regarding outstanding foreign currency contracts as of July 3, 2015 is as follows (dollars in thousands):
Instrument
 
Type of
Hedge
 
Aggregate
Notional
Amount
 
Start
Date
 
End
Date
 
$/Peso
 
Fair
Value
 
Balance Sheet Location
FX Contract
 
Cash flow
 
$
8,440

 
Jan 2015
 
Dec 2015
 
0.0734

 
$
(1,094
)
 
Accrued Expenses
FX Contract
 
Cash flow
 
$
1,574

 
Mar 2015
 
Dec 2015
 
0.0656

 
$
(61
)
 
Accrued Expenses
FX Contract
 
Cash flow
 
$
15,081

 
Jan 2016
 
Dec 2016
 
0.0656

 
$
(881
)
 
Accrued Expenses/Other Long-Term Liabilities
Earnings Per Share (EPS) (Tables)
The following table illustrates the calculation of Basic and Diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Numerator for basic and diluted EPS:
 
 
 
 
 
 
 
Net income
$
9,283

 
$
12,348

 
$
17,291

 
$
27,270

Denominator for basic EPS:
 
 
 
 
 
 
 
Weighted average shares outstanding
25,473

 
24,838

 
25,369

 
24,726

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options, restricted stock and restricted stock units
840

 
1,063

 
895

 
1,097

Denominator for diluted EPS
26,313

 
25,901

 
26,264

 
25,823

Basic EPS
$
0.36

 
$
0.50


$
0.68

 
$
1.10

Diluted EPS
$
0.35

 
$
0.48

 
$
0.66

 
$
1.06

The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met:
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Time-vested stock options, restricted stock and restricted stock units
276,000

 
179,000

 
297,000

 
179,000

Performance-vested restricted stock units
59,600

 

 
55,800

 

Accumulated Other Comprehensive Income (Tables)
Schedule of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 3, 2015
$
(1,181
)
 
$
(3,480
)
 
$
9,625

 
$
4,964

 
$
1,734

 
$
6,698

Unrealized loss on cash flow hedges

 
(840
)
 

 
(840
)
 
295

 
(545
)
Realized loss on foreign currency hedges

 
420

 

 
420

 
(147
)
 
273

Realized loss on interest rate swap hedges

 
281

 

 
281

 
(98
)
 
183

Foreign currency translation gain

 

 
214

 
214

 

 
214

At July 3, 2015
$
(1,181
)
 
$
(3,619
)
 
$
9,839

 
$
5,039

 
$
1,784

 
$
6,823

 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At January 2, 2015
$
(1,181
)
 
$
(2,558
)
 
$
11,450

 
$
7,711

 
$
1,412

 
$
9,123

Unrealized loss on cash flow hedges

 
(2,187
)
 

 
(2,187
)
 
766

 
(1,421
)
Realized loss on foreign currency hedges

 
664

 

 
664

 
(232
)
 
432

Realized loss on interest rate swap hedges

 
462

 

 
462

 
(162
)
 
300

Foreign currency translation loss

 

 
(1,611
)
 
(1,611
)
 

 
(1,611
)
At July 3, 2015
$
(1,181
)
 
$
(3,619
)
 
$
9,839

 
$
5,039

 
$
1,784

 
$
6,823


 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 4, 2014
$
(672
)
 
$
(350
)
 
$
16,134

 
$
15,112

 
$
505

 
$
15,617

Unrealized gain on cash flow hedges

 
18

 

 
18

 
(6
)
 
12

Realized loss on foreign currency hedges

 
8

 

 
8

 
(3
)
 
5

Realized loss on interest rate swap hedges

 
106

 

 
106

 
(37
)
 
69

Foreign currency translation loss

 

 
(393
)
 
(393
)
 

 
(393
)
At July 4, 2014
$
(672
)
 
$
(218
)
 
$
15,741

 
$
14,851

 
$
459

 
$
15,310

 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At January 3, 2014
$
(672
)
 
$
(468
)
 
$
14,952

 
$
13,812

 
$
546

 
$
14,358

Unrealized gain on cash flow hedges

 
168

 

 
168

 
(59
)
 
109

Realized gain on foreign currency hedges

 
(156
)
 

 
(156
)
 
55

 
(101
)
Realized loss on interest rate swap hedges

 
238

 

 
238

 
(83
)
 
155

Foreign currency translation gain

 

 
789

 
789

 

 
789

At July 4, 2014
$
(672
)
 
$
(218
)
 
$
15,741

 
$
14,851

 
$
459

 
$
15,310

Fair Value Measurements (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table provides information regarding liabilities recorded at fair value on a recurring basis (in thousands):
 
 
Fair Value Measurements Using
 
 
At 
 July 3,
 
Quoted
Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
2015
 
(Level 1)
 
(Level 2)
 
(Level 3)
Liabilities
 
 
 
 
 
 
 
 
Foreign currency contracts (Note 11)
 
$
2,036

 
$

 
$
2,036

 
$

Interest rate swap (Note 6)
 
1,583

 

 
1,583

 

Business Segment, Geographic and Concentration Risk Information (Tables)
Sales by geographic area are presented by allocating sales from external customers based on where the products are shipped to (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales:
 
 
 
 
 
 
 
Greatbatch Medical
 
 
 
 
 
 
 
Cardiac/Neuromodulation
$
90,153

 
$
80,005

 
$
166,426

 
$
166,785

Orthopaedic
35,481

 
37,865

 
74,452

 
74,296

Portable Medical
17,700

 
16,737

 
31,367

 
35,940

Vascular
12,907

 
15,257

 
23,263

 
28,307

Energy, Military, Environmental
16,545

 
21,352

 
34,255

 
39,483

Total Greatbatch Medical
172,786

 
171,216

 
329,763

 
344,811

QiG
2,741

 
865

 
7,788

 
1,551

Elimination of Intersegment Sales(a)
(637
)
 

 
(1,341
)
 

Total sales
$
174,890

 
$
172,081

 
$
336,210

 
$
346,362


(a)
Intersegment sales between Greatbatch Medical and QiG are eliminated in consolidation and are included in Greatbatch Medical’s cardiac and neuromodulation product line.
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Segment income (loss) from operations:
 
 
 
 
 
 
 
Greatbatch Medical
$
28,914

 
$
32,439

 
$
50,667

 
$
67,567

QiG
(7,002
)
 
(6,173
)
 
(12,452
)
 
(12,086
)
Total segment income from operations
21,912

 
26,266

 
38,215

 
55,481

Unallocated operating expenses
(8,878
)
 
(6,727
)
 
(15,792
)
 
(13,418
)
Operating income as reported
13,034

 
19,539

 
22,423

 
42,063

Unallocated other expense
(1,099
)
 
(1,407
)
 
(668
)
 
(1,870
)
Income before provision for income taxes
$
11,935

 
$
18,132

 
$
21,755

 
$
40,193

Three customers accounted for a significant portion of the Company’s sales as follows:
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Customer A
20
%
 
17
%
 
21
%
 
19
%
Customer B
18
%
 
17
%
 
18
%
 
16
%
Customer C
12
%
 
12
%
 
13
%
 
12
%
Total
50
%
 
46
%
 
52
%
 
47
%
 
Three Months Ended
 
Six Months Ended
 
July 3, 2015
 
July 4, 2014
 
July 3, 2015
 
July 4, 2014
Sales by geographic area:
 
 
 
 
 
 
 
United States
$
75,041

 
$
77,761

 
$
145,557

 
$
158,873

Non-Domestic locations:
 
 
 
 
 
 
 
Puerto Rico
37,415

 
31,885

 
71,431

 
66,483

Belgium
16,018

 
17,650

 
33,385

 
33,629

Rest of world
46,416

 
44,785

 
85,837

 
87,377

Total sales
$
174,890

 
$
172,081

 
$
336,210

 
$
346,362

Long-lived tangible assets by geographic area are as follows (in thousands):
 
As of
 
July 3, 2015
 
January 2, 2015
United States
$
111,503

 
$
113,851

Rest of world
41,210

 
31,074

Total
$
152,713

 
$
144,925

Basis of Presentation (Details)
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Accounting Policies [Abstract]
 
 
 
 
Fiscal Period Duration
91 days 
91 days 
182 days 
182 days 
Acquisition (Summary of Assets Acquired and Liabilities Assumed) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Aug. 12, 2014
CCC [Member]
Assets acquired
 
 
 
Current assets
 
 
$ 10,670 
Property, plant and equipment
 
 
1,131 
Amortizing intangible assets
 
 
6,100 
Goodwill
354,107 
354,393 
8,296 
Total assets acquired
 
 
26,197 
Liabilities assumed
 
 
 
Current liabilities
 
 
4,842 
Deferred income taxes
 
 
1,590 
Total liabilities assumed
 
 
6,432 
Net assets acquired
 
 
$ 19,765 
Acquisition (Summary of Finite-Lived Intangible Assets Acquired) (Details) (CCC [Member], USD $)
In Thousands, unless otherwise specified
0 Months Ended
Aug. 12, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
 
Fair Value Assigned
$ 6,100 
Weighted Average Amortization Period (Years)
10 years 
Weighted Average Discount Rate
18.00% 
Technology And Patents [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Fair Value Assigned
1,400 
Weighted Average Amortization Period (Years)
10 years 
Weighted Average Discount Rate
18.00% 
Royalty Rate (Percent)
3.00% 
Customer Lists [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Fair Value Assigned
4,600 
Weighted Average Amortization Period (Years)
10 years 
Weighted Average Discount Rate
18.00% 
Customer Annual Attrition Rate
15.00% 
Trademarks And Tradenames [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Fair Value Assigned
$ 100 
Weighted Average Amortization Period (Years)
2 years 
Weighted Average Discount Rate
18.00% 
Royalty Rate (Percent)
0.50% 
Acquisition (Summary of Acquisition Pro Forma Results) (Details) (CCC [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
CCC [Member]
 
 
 
 
Business Acquisition [Line Items]
 
 
 
 
Sales
$ 174,890 
$ 175,509 
$ 336,210 
$ 353,218 
Net income
$ 9,283 
$ 12,684 
$ 17,291 
$ 27,945 
Earnings per share:
 
 
 
 
Basic (in dollars per share)
$ 0.36 
$ 0.51 
$ 0.68 
$ 1.13 
Diluted (in dollars per share)
$ 0.35 
$ 0.49 
$ 0.66 
$ 1.08 
Acquisition (Narrative) (Details) (CCC [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Aug. 12, 2014
Aug. 12, 2014
CCC [Member]
 
 
Business Acquisition [Line Items]
 
 
Effective Date of Acquisition
Aug. 12, 2014 
 
Name of Acquired Entity
Centro de Construcción de Cardioestimuladores del Uruguay (“CCC”) 
 
Description of Acquired Entity
CCC is an active implantable neuromodulation medical device systems developer and manufacturer that produces a range of medical devices including implantable pulse generators, programmer systems, battery chargers, patient wands and leads. 
 
Reason for Acquisition
This acquisition allows the Company to more broadly partner with development stage medical device companies, complements the Company’s core discrete technology offerings and enhances the Company’s medical device innovation efforts. 
 
Cash Paid
$ 19.8 
 
Increase in Inventory
 
$ 0.3 
Supplemental Cash Flow Information (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Noncash investing and financing activities:
 
 
Common stock contributed to 401(k) Plan
$ 3,920 
$ 4,341 
Property, plant and equipment purchases included in accounts payable
$ 1,446 
$ 1,486 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Inventory Disclosure [Abstract]
 
 
Inventory, Raw Materials
$ 82,061 
$ 73,354 
Inventory, Work in Process
43,478 
38,930 
Inventory, Finished Goods
14,554 
16,958 
Total Inventories
$ 140,093 
$ 129,242 
Intangible Assets (Schedule of Finite-Lived Intangible Assets, Major Class) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
$ 173,167 
$ 173,167 
Finite-Lived Intangible Assets, Accumulated Amortization
(118,738)
(111,973)
Foreign Currency Translation
4,143 
4,143 
Amortizing Intangible Assets, Net
58,572 
65,337 
Purchased Technology And Patents [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
95,776 
95,776 
Finite-Lived Intangible Assets, Accumulated Amortization
(79,015)
(75,894)
Foreign Currency Translation
1,966 
1,966 
Amortizing Intangible Assets, Net
18,727 
21,848 
Customer Lists [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
72,857 
72,857 
Finite-Lived Intangible Assets, Accumulated Amortization
(34,974)
(31,460)
Foreign Currency Translation
1,374 
1,374 
Amortizing Intangible Assets, Net
39,257 
42,771 
Other Intangible Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
4,534 
4,534 
Finite-Lived Intangible Assets, Accumulated Amortization
(4,749)
(4,619)
Foreign Currency Translation
803 
803 
Amortizing Intangible Assets, Net
$ 588 
$ 718 
Intangible Assets (Schedule of Finite-Lived Intangible Assets, Amortization Expense) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
$ 3,378 
$ 3,483 
$ 6,765 
$ 6,964 
Cost of Sales [Member]
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
1,445 
1,566 
2,916 
3,129 
Selling General And Administrative Expense [Member]
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
1,830 
1,717 
3,643 
3,434 
Research and Development Expense [Member]
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
$ 103 
$ 200 
$ 206 
$ 401 
Intangible Assets Intangible Assets (Schedule of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
Remainder of 2015
$ 6,222 
 
2016
10,795 
 
2017
9,520 
 
2018
7,114 
 
2019
5,431 
 
Thereafter
19,490 
 
Amortizing Intangible Assets, Net
$ 58,572 
$ 65,337 
Intangible Assets (Schedule of Indefinite-Lived Intangible Assets and Goodwill) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Jul. 3, 2015
Greatbatch Medical [Member]
Jul. 3, 2015
QiG [Member]
Jul. 3, 2015
Trademarks And Tradenames [Member]
Jan. 2, 2015
Trademarks And Tradenames [Member]
Indefinite-Lived Intangible Assets [Roll Forward]
 
 
 
 
 
Indefinite-Lived Intangible Assets (Excluding Goodwill), Beginning
$ 20,288 
 
 
$ 20,288 
$ 20,288 
Indefinite-Lived Intangible Assets (Excluding Goodwill), Ending
20,288 
 
 
20,288 
20,288 
Goodwill [Roll Forward]
 
 
 
 
 
Goodwill
354,393 
304,297 
50,096 
 
 
Foreign currency translation
(286)
(286)
 
 
Goodwill
$ 354,107 
$ 304,011 
$ 50,096 
 
 
Debt (Schedule of Long-Term Debt) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Debt Disclosure [Abstract]
 
 
Variable rate term loan
$ 182,500 
$ 187,500 
Revolving line of credit
Total debt
182,500 
187,500 
Less current portion of long-term debt
13,750 
11,250 
Total long-term debt
$ 168,750 
$ 176,250 
Debt (Credit Facility) (Details) (USD $)
6 Months Ended
Jul. 3, 2015
Jan. 2, 2015
Line of Credit Facility [Abstract]
 
 
Credit Facility Maximum Borrowing Capacity
$ 300,000,000 
 
Term Loan Maximum Borrowing Capacity
182,500,000 
187,500,000 
Letter of Credit Subfacility Maximum Borrowing Capacity
15,000,000 
 
Swingline Subfacility Maximum Borrowing Capacity
15,000,000 
 
Credit Facility Borrowing Capacity Increase
200,000,000 
 
Credit Facility Expiration Date
Sep. 20, 2018 
 
Line of Credit Expiration Date
Sep. 20, 2019 
 
Maturity Date
Sep. 20, 2019 
 
Collateral
The Credit Facility is secured by the Company’s non-realty assets including cash, accounts receivable and inventories. 
 
Credit Facility Interest Margin Above Prime Minimum
0.00% 
 
Credit Facility Interest Margin Above Prime Maximum
0.75% 
 
Credit Facility Interest Margin Above LIBOR Minimum
1.375% 
 
Credit Facility Interest Margin Above LIBOR Maximum
2.75% 
 
Swingline Interest Margin Above Prime Minimum
0.00% 
 
Swingline Interest Margin Above Prime Maximum
0.75% 
 
Line of Credit Facility Minimum Commitment Fee, Percentage
0.175% 
 
Line of Credit Facility Maximum Commitment Fee, Percentage
0.25% 
 
Credit Facility Aggregate Restricted Activities Limit
300,000,000 
 
Credit Facility Maximum Permitted Acquisitions
250,000,000 
 
Credit Facility Maximum Investment Purchases
100,000,000 
 
Credit Facility Maximum Stock Repurchase and Dividends Declared
150,000,000 
 
Credit Facility Maximum Foreign Subsidiary Investment
20,000,000 
 
Line of Credit Adjustment to Limitations to Maximum Leverage Ratio
2.75 
 
Credit Facility Available Restriction
100.00% 
 
Credit Facility Remaining Restricted Activities Limit
293,000,000 
 
Credit Facility Maximum Other Investment Purchases Remaining
93,000,000 
 
Line of Credit Covenant, Adjusted EBITDA to Interest Expense, Ratio Required
3.0 
 
Line of Credit Covenant, Leverage Ratio, Maximum
4.5 
 
Line of Credit Covenant, Leverage Ratio, Maximum, As of Covenant Restrictive Effective Date
4.25 
 
Total Leverage Covenant Restriction Effective Date
Jan. 02, 2016 
 
Debt Instrument, Covenant Compliance
As of July 3, 2015, the Company was in compliance with all covenants under the Credit Facility.  
 
Debt Weighted Average Interest Rate
1.56% 
 
Unused Borrowing Capacity
$ 300,000,000 
 
Debt (Schedule of Interest Rate Swaps and Details) (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Interest Rate Swap [Member]
Jul. 4, 2014
Interest Rate Swap [Member]
Jul. 3, 2015
Interest Rate Swap 1 [Member]
Dec. 28, 2012
Interest Rate Swap 1 [Member]
Jul. 3, 2015
Interest Rate Swap 1 [Member]
Accrued Expenses [Member]
Jul. 3, 2015
Interest Rate Swap 2 [Member]
Jul. 3, 2015
Interest Rate Swap 2 [Member]
Other Long-Term Liabilities [Member]
Jul. 3, 2015
Interest Rate Swap 2a [Member]
Jul. 3, 2015
Interest Rate Swap 2b [Member]
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Description Of Interest Rate Risk Exposure
 
 
 
 
From time to time, the Company enters into interest rate swap agreements in order to hedge against potential changes in cash flows on the outstanding borrowings on the Credit Facility.  
 
 
 
 
 
 
 
 
Derivative, Term of Contract
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
Notional Amount
 
 
 
 
 
 
$ 50,000,000 
$ 150,000,000 
 
$ 90,000,000 
 
$ 45,000,000 
$ 45,000,000 
Annual Notional Amortizing Amount
 
 
 
 
 
 
50,000,000 
 
 
10,000,000 
 
 
 
Start Date
 
 
 
 
 
 
 
 
 
 
 
Feb. 20, 2015 
Feb. 22, 2016 
Notional Amortizing Start Date
 
 
 
 
 
 
 
 
 
Feb. 21, 2017 
 
 
 
End Date
 
 
 
 
 
 
 
 
 
Sep. 20, 2019 
 
 
 
Description Of Interest Rate Cash Flow Hedge Accounting Method
 
 
 
 
These swaps are being accounted for as cash flow hedges. 
 
Cash flow 
 
 
Cash flow 
 
 
 
Type of Hedge
 
 
 
 
 
 
Interest rate swap 
 
 
Interest rate swap 
 
 
 
Pay Fixed Interest Rate
 
 
 
 
 
 
0.573% 
 
 
1.921% 
 
 
 
Current Receive Variable Interest Rate
 
 
 
 
 
 
0.187% 
 
 
0.187% 
 
 
 
Fair Value
 
 
 
 
 
 
 
 
(95,000)
 
(1,488,000)
 
 
Gain (Loss) Recognized In Income Ineffective Portion
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
$ 1,206,000 
$ 1,073,000 
$ 2,326,000 
$ 2,157,000 
$ 500,000 
$ 200,000 
 
 
 
 
 
 
 
Debt (Schedule of Maturities of Long-Term Debt) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Long-term Debt, Fiscal Year Maturity [Abstract]
 
 
Remainder of 2015
$ 6,250 
 
2016
16,250 
 
2017
20,000 
 
2018
20,000 
 
2019
120,000 
 
Total debt
$ 182,500 
$ 187,500 
Debt (Schedule of Deferred Financing Fees) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Deferred Finance Costs [Roll Forward]
 
Deferred Finance Costs, Net, Beginning Balance
$ 3,087 
Amortization during the period
(387)
Deferred Finance Costs, Net, Ending Balance
$ 2,700 
Benefit Plans (Schedule of Defined Benefit Plan, Change in Benefit Obligation) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
 
At January 2, 2015
 
 
$ 2,406 
 
Net defined benefit cost
102 
77 
207 
154 
Foreign currency translation
 
 
(164)
 
At July 3, 2015
$ 2,449 
 
$ 2,449 
 
Benefit Plans (Schedule of Net Defined Benefit Cost) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
 
 
 
 
Service cost
$ 78 
$ 52 
$ 157 
$ 104 
Interest cost
15 
20 
30 
39 
Amortization of net loss
12 
26 
11 
Defined Benefit Plan, Expected Return on Plan Assets
(3)
(6)
Net defined benefit cost
$ 102 
$ 77 
$ 207 
$ 154 
Stock-Based Compensation (Allocation of Recognized Period Costs) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
$ 3,719 
$ 3,552 
$ 5,972 
$ 6,729 
Stock Option [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
663 
612 
1,282 
1,216 
Restricted Stock And Unit Awards [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,746 
1,601 
3,380 
3,158 
Retirement Plan [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,310 
1,339 
1,310 
2,355 
Cost of Sales [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,094 
1,147 
1,354 
2,058 
Selling General And Administrative Expense [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
2,148 
1,998 
3,909 
3,921 
Research and Development Expense [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
$ 477 
$ 407 
$ 709 
$ 750 
Stock-Based Compensation (Valuation Assumptions) (Details)
6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
Weighted average fair value
$ 12.18 
$ 16.43 
Risk-free interest rate
1.55% 
1.73% 
Expected volatility
26.00% 
39.00% 
Expected life (in years)
5 years 0 months 0 days 
5 years 0 months 0 days 
Expected dividend yield
0.00% 
0.00% 
Stock-Based Compensation (Stock Options Activity) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Stock Options Time Based [Member]
 
Stock Option Activity (in shares)
 
Options Outstanding, Beginning
1,471,498 
Granted
301,547 
Exercised
(174,836)
Forfeited or expired
(25,721)
Options Outstanding, Ending
1,572,488 
Options Exercisable
1,115,959 
Weighted Average Exercise Price (in dollars per share)
 
Options Outstanding, Beginning
$ 25.32 
Granted
$ 49.20 
Exercised
$ 23.41 
Forfeited or expired
$ 37.94 
Options Outstanding, Ending
$ 29.91 
Options Exercisable
$ 24.27 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Options Outstanding, Weighted Average Remaining Contractual Term
6 years 5 months 8 days 
Options Exercisable, Weighted Average Remaining Contractual Term
5 years 4 months 20 days 
Options Outstanding, Intrinsic Value
$ 37.1 
Options Exercisable, Intrinsic Value
32.6 
Stock Options Performance Based [Member]
 
Stock Option Activity (in shares)
 
Options Outstanding, Beginning
118,839 
Exercised
(50,255)
Options Outstanding, Ending
68,584 
Options Exercisable
68,584 
Weighted Average Exercise Price (in dollars per share)
 
Options Outstanding, Beginning
$ 23.24 
Exercised
$ 22.53 
Options Outstanding, Ending
$ 23.76 
Options Exercisable
$ 23.76 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Options Outstanding, Weighted Average Remaining Contractual Term
3 years 0 months 0 days 
Options Exercisable, Weighted Average Remaining Contractual Term
3 years 0 months 0 days 
Options Outstanding, Intrinsic Value
2.0 
Options Exercisable, Intrinsic Value
$ 2.0 
Stock-Based Compensation (Restricted Stock and Restricted Stock Units Activity) (Details) (USD $)
6 Months Ended
Jul. 3, 2015
Restricted Stock And Restricted Stock Units Time Based [Member]
 
Restricted Stock and Restricted Stock Unit Activity (in shares)
 
Nonvested, Beginning
67,832 
Granted
42,497 
Vested
(8,831)
Forfeited
(7,130)
Nonvested, Ending
94,368 
Restricted Stock and Restricted Stock Unit Weighted Average Fair Value (in dollars per share)
 
Nonvested, Beginning
$ 36.22 
Granted
$ 49.52 
Vested
$ 49.54 
Forfeited
$ 42.15 
Nonvested, Ending
$ 40.51 
Restricted Stock And Restricted Stock Units Performance Based [Member]
 
Restricted Stock and Restricted Stock Unit Activity (in shares)
 
Nonvested, Beginning
716,163 
Granted
179,940 
Vested
(270,198)
Forfeited
(25,599)
Nonvested, Ending
600,306 
Restricted Stock and Restricted Stock Unit Weighted Average Fair Value (in dollars per share)
 
Nonvested, Beginning
$ 19.57 
Granted
$ 32.92 
Vested
$ 15.30 
Forfeited
$ 25.53 
Nonvested, Ending
$ 25.24 
Other Operating Expenses, Net (Schedule of Other Operating Cost and Expense By Component) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
$ 7,750 
$ 4,261 
$ 15,605 
$ 4,047 
Investments in Capacity and Capabilities [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
6,051 
2,166 
12,738 
2,218 
Orthopaedic Facility Optimization [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
518 
1,187 
991 
36 
Operating Unit Realignment [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
32 
1,035 
Other Restructuring [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
(10)
(71)
Acquisition And Integration Costs [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
98 
47 
164 
(381)
Asset Dispositions Severance And Other [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating Expenses (Income), Net
$ 1,083 
$ 839 
$ 1,712 
$ 1,210 
Other Operating Expenses, Net (Schedule of Restructuring Reserve By Type of Cost) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
$ 2,229 
Restructuring charges
12,738 
Write-offs
(235)
Cash payments
(11,277)
Restructuring Reserve, Ending Balance
3,455 
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
287 
Restructuring charges
991 
Write-offs
(88)
Cash payments
(1,034)
Restructuring Reserve, Ending Balance
156 
Severance And Retention [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
1,163 
Restructuring charges
1,788 
Write-offs
Cash payments
(949)
Restructuring Reserve, Ending Balance
2,002 
Severance And Retention [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
Write-offs
Cash payments
Restructuring Reserve, Ending Balance
Accelerated Depreciation And Asset Write Offs [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
235 
Write-offs
(235)
Cash payments
Restructuring Reserve, Ending Balance
Accelerated Depreciation And Asset Write Offs [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
88 
Write-offs
(88)
Cash payments
Restructuring Reserve, Ending Balance
Other Restructuring [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
1,066 
Restructuring charges
10,715 
Write-offs
Cash payments
(10,328)
Restructuring Reserve, Ending Balance
1,453 
Other Restructuring [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
287 
Restructuring charges
903 
Write-offs
Cash payments
(1,034)
Restructuring Reserve, Ending Balance
$ 156 
Other Operating Expenses, Net (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jul. 3, 2015
Apr. 3, 2015
Jan. 2, 2015
Jul. 3, 2015
building
Jul. 4, 2014
Jan. 2, 2015
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability
 
 
 
 
$ 0.6 
 
Greatbatch Medical [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Number of Sales and Marketing Groups
 
 
 
 
 
Number of Operations Groups
 
 
 
 
 
Nuvectra [Member] |
Spinoff [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Cost Incurred to Date
1.5 
 
 
1.5 
 
 
Nuvectra [Member] |
Minimum [Member] |
Spinoff [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
10.0 
 
 
10.0 
 
 
Nuvectra [Member] |
Maximum [Member] |
Spinoff [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
12.0 
 
 
12.0 
 
 
Investments in Capacity and Capabilities [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring Initiation Date
 
 
 
2014 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
17.0 
 
 
17.0 
 
 
Restructuring and Related Cost, Cost Incurred to Date
21.7 
 
 
21.7 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
25.0 
 
 
25.0 
 
 
Restructuring and Related Cost, Expected Cost
29.0 
 
 
29.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Severance And Retention [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
7.0 
 
 
7.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
2.0 
 
 
2.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Other Restructuring [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
20.0 
 
 
20.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
28.0 
 
 
28.0 
 
 
Restructuring and Related Cost, Expected Cost
34.0 
 
 
34.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Severance And Retention [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
9.0 
 
 
9.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
3.0 
 
 
3.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Other Restructuring [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
22.0 
 
 
22.0 
 
 
Orthopaedic Facility Optimization [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring Initiation Date
 
 
 
2010 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
25.4 
 
 
25.4 
 
 
Restructuring and Related Cost, Cost Incurred to Date
43.5 
 
 
43.5 
 
 
Restructuring and Related Costs, Facility Consolidations
 
 
 
 
 
Gain (Loss) on Disposition of Business
 
 
 
 
2.7 
 
Assets Transferred to Held for Sale
 
 
 
 
 
2.1 
Impairment of Long-Lived Assets to be Disposed of
 
 
0.4 
 
 
 
Proceeds from Sale of Property Held for Sale
0.6 
 
 
 
 
 
Gain (Loss) on Disposition of Assets Held for Sale
 
 
 
 
 
Initiatives, Expected Period of Completion
 
2 years 
 
 
 
 
Orthopaedic Facility Optimization [Member] |
Severance And Retention [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
11.0 
 
 
11.0 
 
 
Orthopaedic Facility Optimization [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
13.0 
 
 
13.0 
 
 
Orthopaedic Facility Optimization [Member] |
Minimum [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
30.0 
 
 
30.0 
 
 
Restructuring and Related Cost, Expected Cost
45.0 
 
 
45.0 
 
 
Orthopaedic Facility Optimization [Member] |
Minimum [Member] |
Other Restructuring [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
21.0 
 
 
21.0 
 
 
Orthopaedic Facility Optimization [Member] |
Maximum [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
35.0 
 
 
35.0 
 
 
Restructuring and Related Cost, Expected Cost
48.0 
 
 
48.0 
 
 
Orthopaedic Facility Optimization [Member] |
Maximum [Member] |
Other Restructuring [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Expected Cost
24.0 
 
 
24.0 
 
 
Operating Unit Realignment [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring Initiation Date
 
 
 
2013 
 
 
Restructuring and Related Cost, Cost Incurred to Date
6.6 
 
 
6.6 
 
 
Operating Unit Realignment [Member] |
Severance And Retention [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Cost Incurred to Date
5.0 
 
 
5.0 
 
 
Operating Unit Realignment [Member] |
Other Restructuring [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Restructuring and Related Cost, Cost Incurred to Date
1.6 
 
 
1.6 
 
 
Business Reorganization [Member]
 
 
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Other Cost and Expense, Operating
 
 
 
 
 
$ 1.2 
Income Taxes (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Income Tax Disclosure [Abstract]
 
 
Effective Income Tax Rate
20.50% 
32.20% 
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount
$ 1.0 
 
Unrecognized Tax Benefits
1.9 
 
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit
0.5 
 
Unrecognized Tax Benefits that Would Impact Effective Tax Rate
$ 1.5 
 
Commitments and Contingencies (Schedule of Product Warranty Liability) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Movement in Standard Product Warranty Accrual [Roll Forward]
 
At January 2, 2015
$ 660 
Additions to warranty reserve
798 
Warranty claims paid
(102)
At July 3, 2015
$ 1,356 
Commitments and Contingencies (Schedule of Future Minimum Rental Payments for Operating Leases) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
Remainder of 2015
$ 3,077 
2016
5,981 
2017
3,910 
2018
3,488 
2019
3,418 
Thereafter
13,937 
Total estimated operating lease expense
$ 33,811 
Commitments and Contingencies (Foreign Currency Contracts) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Foreign Currency Cash Flow Hedges [Abstract]
 
 
 
 
Addition (reduction) in cost of sales
$ 420 
$ 8 
$ 664 
$ (156)
Ineffective portion of change in fair value
FX Contract 1 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Instrument
 
 
FX Contract 
 
Aggregate Notional Amount
8,440 
 
8,440 
 
Start Date
 
 
Jan. 01, 2015 
 
End Date
 
 
Dec. 31, 2015 
 
$/Peso
0.0734 
 
0.0734 
 
FX Contract 2 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Instrument
 
 
FX Contract 
 
Aggregate Notional Amount
1,574 
 
1,574 
 
Start Date
 
 
Mar. 01, 2015 
 
End Date
 
 
Dec. 31, 2015 
 
$/Peso
0.0656 
 
0.0656 
 
FX Contract 3 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Instrument
 
 
FX Contract 
 
Aggregate Notional Amount
15,081 
 
15,081 
 
Start Date
 
 
Jan. 01, 2016 
 
End Date
 
 
Dec. 31, 2016 
 
$/Peso
0.0656 
 
0.0656 
 
Accrued Expenses [Member] |
FX Contract 1 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Fair Value
(1,094)
 
(1,094)
 
Accrued Expenses [Member] |
FX Contract 2 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Fair Value
(61)
 
(61)
 
Accrued Expenses and Other Long-Term Liabilities [Member] |
FX Contract 3 [Member]
 
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
 
Fair Value
$ (881)
 
$ (881)
 
Commitments and Contingencies (Narrative) (Details) (USD $)
6 Months Ended
Jul. 3, 2015
Commitments and Contingencies Disclosure [Abstract]
 
Product Warranty Description
The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. 
Purchase Commitments Description
Contractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. The Company’s purchase orders are normally based on its current manufacturing needs and are fulfilled by its vendors within short time horizons. The Company also enters into blanket orders with vendors that have preferred pricing and terms; however, these orders are normally cancelable without penalty. 
Remaining Minimum Amount Committed
$ 39,100,000 
Foreign Currency Contracts Description
The Company has entered into forward contracts to purchase Mexican pesos in order to hedge the risk of peso-denominated payments associated with operations at its Tijuana, Mexico facility. 
Maximum Aggregate Loss Under Medical Stop Loss Insurance Per Employee
250,000 
Self-Insurance Medical Liability
$ 1,400,000 
Earnings Per Share (EPS) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract]
 
 
 
 
Net income
$ 9,283 
$ 12,348 
$ 17,291 
$ 27,270 
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
 
 
 
 
Basic
25,473,000 
24,838,000 
25,369,000 
24,726,000 
Effect of dilutive securities stock options, restricted stock and restricted stock units
840,000 
1,063,000 
895,000 
1,097,000 
Denominator for diluted EPS
26,313,000 
25,901,000 
26,264,000 
25,823,000 
Basic EPS (in dollars per share)
$ 0.36 
$ 0.50 
$ 0.68 
$ 1.10 
Diluted EPS (in dollars per share)
$ 0.35 
$ 0.48 
$ 0.66 
$ 1.06 
Anitdilutive Securities Excluded From Earnings Per Share [Abstract]
 
 
 
 
Time-vested stock options, restricted stock and restricted stock units
276,000 
179,000 
297,000 
179,000 
Performance-vested stock options and restricted stock units
59,600 
55,800 
Accumulated Other Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Defined Benefit Plan Liability
 
 
 
 
Defined Benefit Plan Liability, Beginning
$ (1,181)
$ (672)
$ (1,181)
$ (672)
Defined Benefit Plan Liability, Ending
(1,181)
(672)
(1,181)
(672)
Cash Flow Hedges
 
 
 
 
Cash Flow Hedges, Beginning
(3,480)
(350)
(2,558)
(468)
Unrealized loss on cash flow hedges
(840)
18 
(2,187)
168 
Realized gain loss on foreign currency hedges - before tax
420 
664 
(156)
Realized gain loss on interest rate swaps - before tax
281 
106 
462 
238 
Cash Flow Hedges, End
(3,619)
(218)
(3,619)
(218)
Foreign Currency Translation Adjustment
 
 
 
 
Foreign Currency Translation Adjustment, Beginning
9,625 
16,134 
11,450 
14,952 
Net foreign currency translation gain (loss)
214 
(393)
(1,611)
789 
Foreign Currency Translation Adjustment, End
9,839 
15,741 
9,839 
15,741 
Total Pre-Tax Amount
 
 
 
 
Total Pre-Tax Amount, Beginning
4,964 
15,112 
7,711 
13,812 
Unrealized loss on cash flow hedges
(840)
18 
(2,187)
168 
Realized gain loss on foreign currency hedges - before tax
420 
664 
(156)
Realized gain loss on interest rate swaps - before tax
281 
106 
462 
238 
Net foreign currency translation gain (loss)
214 
(393)
(1,611)
789 
Total Pre-Tax Amount, End
5,039 
14,851 
5,039 
14,851 
Tax
 
 
 
 
Tax, Beginning
1,734 
505 
1,412 
546 
Unrealized gain (loss) on cash flow hedges
295 
(6)
766 
(59)
Realized gain loss on foreign currency contracts - tax
(147)
(3)
(232)
55 
Realized gain loss on interest rate swap hedges - tax
(98)
(37)
(162)
(83)
Net foreign currency translation gain (loss)
Tax, End
1,784 
459 
1,784 
459 
Net-of-Tax Amount
 
 
 
 
Total Net-of-Tax Amount, Beginning
6,698 
15,617 
9,123 
14,358 
Unrealized gain (loss) on cash flow hedges, net of tax
(545)
12 
(1,421)
109 
Realized gain loss on foreign currency hedges, net of tax
273 
432 
(101)
Realized gain loss on interest rate swap hedges, net of tax
183 
69 
300 
155 
Foreign currency translation gain (loss)
214 
(393)
(1,611)
789 
Total Net-of-Tax Amount, End
$ 6,823 
$ 15,310 
$ 6,823 
$ 15,310 
Fair Value Measurements Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Foreign currency contracts
$ 2,036 
Interest rate swap
1,583 
Fair Value, Inputs, Level 1 [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Foreign currency contracts
Interest rate swap
Fair Value, Inputs, Level 2 [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Foreign currency contracts
2,036 
Interest rate swap
1,583 
Fair Value, Inputs, Level 3 [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Foreign currency contracts
Interest rate swap
$ 0 
Fair Value Measurements Fair Value Measurements (Narrative) (Details) (USD $)
6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jan. 2, 2015
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Foreign currency cash flow hedge gain (loss) to be reclassified
$ 1,500,000 
 
 
Long-lived asset impairment loss
 
Goodwill impairment loss
 
Indefinite-lived intangible assets (excluding goodwill) impairment loss
 
Equity method investments, carrying value
19,500,000 
 
14,500,000 
Cost-method investment impairment loss
 
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Net gain on equity method investments
$ 500,000 
$ 800,000 
 
Chinese Venture Capital Fund [Member]
 
 
 
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Equity method investment ownership (percent)
7.30% 
 
 
Business Segment, Geographic And Concentration Risk Information (Reconciliation of Revenue from Segments to Consolidated) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
$ 174,890 
$ 172,081 
$ 336,210 
$ 346,362 
Greatbatch Medical [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
172,786 
171,216 
329,763 
344,811 
Greatbatch Medical [Member] |
Cardiac Neuromodulation [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
90,153 
80,005 
166,426 
166,785 
Greatbatch Medical [Member] |
Orthopaedic [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
35,481 
37,865 
74,452 
74,296 
Greatbatch Medical [Member] |
Portable Medical [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
17,700 
16,737 
31,367 
35,940 
Greatbatch Medical [Member] |
Vascular [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
12,907 
15,257 
23,263 
28,307 
Greatbatch Medical [Member] |
EME and Other [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
16,545 
21,352 
34,255 
39,483 
QiG [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
2,741 
865 
7,788 
1,551 
Intersegment Eliminations [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
$ (637)
$ 0 
$ (1,341)
$ 0 
Business Segment, Geographic And Concentration Risk Information (Reconciliation of Operating Profit (Loss) from Segments to Consolidated) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
$ 13,034 
$ 19,539 
$ 22,423 
$ 42,063 
Unallocated other expense
(1,099)
(1,407)
(668)
(1,870)
Income before provision for income taxes
11,935 
18,132 
21,755 
40,193 
Greatbatch Medical [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
28,914 
32,439 
50,667 
67,567 
QiG [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
(7,002)
(6,173)
(12,452)
(12,086)
Operating Segments [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
21,912 
26,266 
38,215 
55,481 
Segment Reconciling Items [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
$ (8,878)
$ (6,727)
$ (15,792)
$ (13,418)
Business Segment, Geographic and Concentration Risk Information Business Segment, Geographic and Concentration Risk Information (Schedule of Revenue From External Customers Attributed to Foreign Countries By Geographic Area) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Revenue, Major Customer [Line Items]
 
 
 
 
Sales Revenue, Net
$ 174,890 
$ 172,081 
$ 336,210 
$ 346,362 
UNITED STATES
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Sales Revenue, Net
75,041 
77,761 
145,557 
158,873 
PUERTO RICO
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Sales Revenue, Net
37,415 
31,885 
71,431 
66,483 
BELGIUM
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Sales Revenue, Net
16,018 
17,650 
33,385 
33,629 
Rest Of World [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Sales Revenue, Net
$ 46,416 
$ 44,785 
$ 85,837 
$ 87,377 
Business Segment, Geographic and Concentration Risk Information Business Segment, Geographic and Concentration Risk Information (Schedule of Revenue By Major Customers By Reporting Segments) (Details)
3 Months Ended 6 Months Ended
Jul. 3, 2015
Jul. 4, 2014
Jul. 3, 2015
Jul. 4, 2014
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
50.00% 
46.00% 
52.00% 
47.00% 
Customer A [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
20.00% 
17.00% 
21.00% 
19.00% 
Customer B [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
18.00% 
17.00% 
18.00% 
16.00% 
Customer C [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
12.00% 
12.00% 
13.00% 
12.00% 
Sales Revenue, Net [Member] |
Customer Concentration Risk [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Concentration risk, number of customers
 
 
 
Business Segment, Geographic And Concentration Risk Information (Schedule of Long-Lived Assets By Geographical Areas) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
$ 152,713 
$ 144,925 
UNITED STATES
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
111,503 
113,851 
Rest Of World [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
$ 41,210 
$ 31,074 
Business Segment, Geographic and Concentration Risk Information Business Segment, Geographic and Concentration Risk Information (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jul. 3, 2015
Segment
Segment Reporting Information [Line Items]
 
Number of Reportable Segments
QiG [Member]
 
Segment Reporting Information [Line Items]
 
Number of Ownership Interests
Liability of Expenses Incurred (percent)
100.00% 
FDA Submission Date
Dec. 16, 2013 
CE Submission Date
Jan. 10, 2014 
CE Approval Date
Jun. 17, 2014 
Minimum [Member] |
QiG [Member]
 
Segment Reporting Information [Line Items]
 
Parent Ownership Percentage
89.00% 
Nuvectra [Member] |
Spinoff [Member] |
Minimum [Member]
 
Segment Reporting Information [Line Items]
 
Restructuring and Related Cost, Expected Cost
$ 10.0 
Restructuring and Related Costs, Estimated Annual Future Operating Cost Savings
12 
Nuvectra [Member] |
Spinoff [Member] |
Maximum [Member]
 
Segment Reporting Information [Line Items]
 
Restructuring and Related Cost, Expected Cost
12.0 
Restructuring and Related Costs, Estimated Annual Future Operating Cost Savings
$ 16 
Impact of Recently Issued Accounting Standards Impact of Recently Issued Accounting Standards (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 3, 2015
Jan. 2, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
 
 
Deferred finance costs, net
$ 2,700 
$ 3,087