U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 13, 2015

GREATBATCH, INC.
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	1-16137	 	16-1531026	
(State or Other Jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
		
2595 Dallas Parkway, Suite 310, Frisco, Texas	 	75034	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code (716) 759-5600
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 1.01	Entry into a Material Definitive Agreement	
On October 13, 2015, Greatbatch Ltd., a wholly-owned subsidiary of Greatbatch, Inc. (the “Company”), entered into a Consent, Waiver and Amendment No. 2 (“Amendment No. 2”) to its Second Amended and Restated Credit Agreement, dated as of September 20, 2013 (the “Credit Agreement”). Amendment No. 2 amends certain existing covenants in the Credit Agreement to permit the Company to effect the Offering (as described below). No other material terms of the Credit Agreement were changed or amended in connection with Amendment No. 2.
The foregoing description of Amendment No. 2 as set forth in this Item 1.01 is only a summary and is qualified in all respects by the provisions of Amendment No. 2, a copy of which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.
 
Item 7.01	Regulation FD Disclosure.	
Senior Notes Offering
On October 13, 2015, the Company issued a press release announcing the commencement of a proposed offering (the “Offering”) by its wholly-owned subsidiary Greatbatch Ltd. of $360 million aggregate principal amount of senior notes due 2023 (the “Notes”). The Notes will be offered in a private offering not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in transactions outside of the United States in reliance on Regulation S under the Securities Act. The Company expects to use the net proceeds from the sale of the Notes as part of the financing for the previously announced acquisition (the “Acquisition”) of Lake Region Medical Holdings, Inc. (“Lake Region”). The financing is also expected to include a senior secured credit facility that consists of (i) a $200 million revolving credit facility, (ii) a $375 million term loan A facility and (iii) a $1,025 million term loan B facility. A copy of the press release announcing the Offering is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
In connection with the Offering, the Company is providing prospective purchasers with a confidential preliminary offering circular containing unaudited pro forma condensed combined financial information that gives effect to the Acquisition, the financing transactions contemplated in connection with the Acquisition and the Company’s previously announced spin-off (the “Spin-off”) of its QiG Group, LLC subsidiary (to be known upon completion of the Spin-off as Nuvectra Corporation) and its subsidiaries Algostim LLC and PelviStim, LLC and the Company’s NeuroNexus Technologies, Inc. subsidiary (the Acquisition, the financing transactions and the Spin-off are collectively referred to as the “Transactions”). This unaudited pro forma condensed combined financial information is attached hereto as Exhibit 99.2 and is incorporated by reference herein. This pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the Company’s operating results or financial condition actually would have been had the Transactions been completed on the date indicated therein. In addition, the pro forma financial information does not purport to project the Company’s future operating results or financial condition. The actual operating results of the Company may differ significantly from those reflected in the pro forma financial information.
In addition, in connection with the Offering, the Company is also providing prospective purchasers with consolidated financial statements as of January 3, 2015 and December 31, 2013 and for the years ended January 3, 2015, December 31, 2013 and December 31, 2012 of Accellent Inc., Lake Region’s indirect wholly-owned operating subsidiary. These financial statements are attached hereto as Exhibit 99.3 and are incorporated by reference herein.
The information furnished under Item 7.01 of this Current Report on Form 8-K and in Exhibits 99.1, 99.2 and 99.3 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act, except as shall be expressly set forth by specific reference in such filing.
The information contained in this Current Report on Form 8-K, including the information contained in Exhibits 99.1, 99.2 and 99.3, does not constitute an offer to sell, or the solicitation of an offer to buy, any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
 
1

Item 9.01.	Financial Statements and Exhibits.	
 
 	(d)	Exhibits	

Exhibit
Number	  	Description of Exhibit	
		
10.1	  	Consent, Waiver and Amendment No. 2 to Second Amended and Restated Credit Agreement, dated as of October 13, 2015, by and among Greatbatch Ltd., the Lenders party hereto and Manufacturers and Traders Trust Company, as administrative agent.	
		
99.1	  	Press Release issued by Greatbatch, Inc. on October 13, 2015.	
		
99.2	  	Unaudited Pro Forma Condensed Combined Financial Information.	
		
99.3	  	Consolidated Financial Statements as of January 3, 2015 and December 31, 2013 and for the years ended January 3, 2015, December 31, 2013 and December 31, 2012 of Accellent Inc., and Independent Auditors’ Report.	
 
2

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 13, 2015	 		 	GREATBATCH, INC.	
				
	 		 	By:	 	/s/ Michael Dinkins	
	 		 		 	Michael Dinkins	
	 		 		 	Executive Vice President & Chief Financial Officer	

EXHIBIT INDEX

Exhibit
Number	  	Description of Exhibit	
10.1	  	Consent, Waiver and Amendment No. 2 to Second Amended and Restated Credit Agreement, dated as of October 13, 2015, by and among Greatbatch Ltd., the Lenders party hereto and Manufacturers and Traders Trust Company, as administrative agent.	
		
99.1	  	Press Release issued by Greatbatch, Inc. on October 13, 2015.	
		
99.2	  	Unaudited Pro Forma Condensed Combined Financial Information.	
		
99.3	  	Consolidated Financial Statements as of January 3, 2015 and December 31, 2013 and for the years ended January 3, 2015, December 31, 2013 and December 31, 2012 of Accellent Inc., and Independent Auditors’ Report.	

Exhibit 10.1
Execution Version
CONSENT, WAIVER AND AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 13, 2015, (this “ Amendment ”) is made by and among GREATBATCH LTD., a New York corporation (the “ Borrower ”), the Lenders party hereto and MANUFACTURERS AND TRADERS TRUST COMPANY, acting in its capacity as administrative agent for the Lenders and the Issuing Bank (in such capacity, the “ Administrative Agent ”).
Background
WHEREAS , the Borrower, the Lenders and the Administrative Agent entered into that certain Second Amended and Restated Credit Agreement, dated as of September 20, 2013 and as amended by that certain Amendment No. 1 to Second Amended and Restated Credit Agreement on or about October 18, 2013 (as so amended, the “ Existing Credit Agreement ” and as the same may be further amended, restated, modified and/or supplemented from time to time, the “ Credit Agreement ”), which provides for certain extensions of credit to the Borrower, subject to certain conditions;
WHEREAS , the Borrower has advised the Lenders that Greatbatch, Inc., a Delaware corporation and the direct parent of Borrower (“ Parent ”), and Provenance Merger Sub Inc., a Delaware corporation and a direct subsidiary of Borrower (“ Merger Sub ”), have entered into that certain Agreement and Plan of Merger, dated as of August 27, 2015 (the “ Merger Agreement ”), with Lake Region Medical Holdings, Inc., a Delaware corporation (“ Target ”);
WHEREAS, the Borrower has further advised the Lenders that, in connection with the proposed consummation of the acquisition contemplated by the Merger Agreement (the “ Proposed Acquisition ”), it wishes to commence a senior note offering (the “ Note Offering ”), the proceeds of which are anticipated to be used, along with proceeds of certain other Indebtedness, to pay the cash consideration for the Proposed Acquisition, to refinance certain Indebtedness (including the Obligations), to pay certain transaction expenses and fees and for other corporate purposes;
WHEREAS , the Borrower has further advised the Lenders that it is possible that the Note Offering may close prior to the consummation of the Proposed Acquisition and, in that case, the Borrower wishes to deposit the proceeds of the Note Offering (together with certain other sums that would be sufficient to redeem the notes offered in the Note Offering if the Proposed Acquisition does not occur by a certain date) into an escrow account (a “ Note Escrow Account ”), with the understanding that (a) if the Proposed Acquisition should close on or prior to a certain date, the amounts in the Note Escrow Account shall be released to pay a portion of the purchase price of the Proposed Acquisition (concurrent with the payment and satisfaction in full of the Obligations) and certain transaction expenses and fees incurred in connection with the Note Offering, and (b) if the Proposed Acquisition shall not be consummated by such certain date, the amounts in the Note Escrow Account shall be used to redeem the notes issued pursuant to the Note Offering; and

WHEREAS , the Borrower has asked the Lenders to agree to certain changes to the Existing Credit Agreement to permit the foregoing and, subject to the terms and conditions set forth below, the Lenders are agreeable to such request.
NOW THEREFORE, in consideration of the promises and conditions set forth in this Amendment, and intending to be legally bound, the parties hereto hereby agree as follows:
1. DEFINED TERMS . Terms defined in this Amendment which are capitalized but not defined shall have the meanings given to such terms in the Existing Credit Agreement.
2. CONSENT TO PERMITTED OFFERING TRANSACTION . Subject to the terms and conditions hereof, the Lenders consent to the Note Offering provided that it constitutes a Permitted Offering Transaction (as defined in Section 3 below).
 
3.	AMENDMENTS TO EXISTING CREDIT AGREEMENT; CONSENT TO PERMITTED OFFERING TRANSACTION .	
(a) New Definitions . Section 1.1 of the Existing Credit Agreement (Definitions) is hereby amended by inserting the following new definitions in their correct alphabetical locations:
Amendment No. 2 : Amendment No. 2 to this Agreement.
Amendment No. 2 Effective Date : October 13, 2015.
Escrow Termination Date : the close of business on February 23, 2016 or any earlier date specified as the “Escrow End Date” in the offering circular for the Note Offering.
Merger Agreement : the meaning specified in Amendment No. 2.
Merger Sub : the meaning specified in Amendment No. 2.
Note Escrow Account : the meaning specified in Amendment No. 2.
Note Escrow Property : the amounts deposited the Note Escrow Account; provided , that such amounts do not exceed the sum of (i) the gross proceeds of the Note Offering, (ii) the Required Additional Redemption Amounts and (iii) any amounts received as a result of investing the foregoing as permitted by the Credit Agreement and the Note Offering Documentation.
Note Offering : the meaning specified in Amendment No. 2.
Note Offering Documentation : the offering circular, indenture, escrow agreement (if applicable), and other documentation related to the Note Offering as the same may be amended, restated, modified and/or supplemented from time to time.
 
-2-

Note Redemption Outside Date : the fifth Business Day after the Escrow Termination Date (or such later date as may be agreed to by the Administrative Agent).
Permitted Notes : notes issued by the Borrower pursuant to a Permitted Offering Transaction.
Permitted Offering Transaction : a transaction whereby each of the following events or conditions shall occur:
(1) pursuant to the Note Offering, the Borrower shall issue notes on or before February 23, 2016 in compliance with, and pursuant to, an offering exempt from registration under the Securities Act of 1933 as amended;
(2) the Note Offering Documentation shall (i) provide that the notes shall be secured by no Liens (except for Liens on the Note Escrow Property) and (unless and until the Obligations are paid or satisfied in full and the Commitments terminated) subject to no guarantees, (ii) provide that the net proceeds of the Notes Offering will be used to finance a portion of the cash consideration for the Proposed Acquisition and related transactions unless the conditions for release of the Note Escrow Property, to be set forth on the Note Offering Documentation, are not satisfied on or prior to the Escrow Termination Date, in which case, all outstanding notes shall be redeemed no later than the Note Redemption Outside Date at a redemption price not to exceed 100% of the aggregate principal amount of such notes plus accrued and unpaid interest to, but excluding, the date of such redemption and using only the Note Escrow Property;
(3) the gross cash proceeds of the Note Offering shall be deposited into the Note Escrow Account with an escrow agent as described in the offering circular relating to the Note Offering;
(4) the sums held in the Note Escrow Account shall be segregated from all other funds of the Loan Parties except that the Borrower may deposit into the Note Escrow Account the Required Additional Redemption Amounts prior to the Escrow Termination Date; and
(5) unless the Obligations are paid or satisfied in full and the Commitments terminated substantially concurrently with the consummation of the Proposed Acquisition and, in any case, on or prior to the Escrow Termination Date, the notes shall be redeemed in the manner described in clause (2) above.
Proposed Acquisition : the meaning specified in Amendment No. 2.
 
-3-

Required Additional Redemption Amounts : an amount of cash that will be sufficient to fund a special mandatory redemption of the notes on the Notes Redemption Outside Date pursuant to the Note Offering Documents.
Target : the meaning specified in Amendment No. 2.
(b) “Excluded Assets.” The definition of the term “Excluded Assets” in Section 1.1 of the Existing Credit Agreement (Definitions) is hereby amended and restated as follows:
Excluded Assets : collectively, (a) real property, (b) except as provided by clause (b) of Section 8.27 (Certain Obligations Respecting Subsidiaries), thirty-four percent (34%) of the Capital Stock of the First-Tier Foreign Subsidiaries of the Borrower, (c) each application to register a trademark, service mark, or other mark prior to the filing under applicable Law of a Statement of Use, Amendment to Allege Use (or the equivalent) for such trademark, service mark or other mark, and (d) the Note Escrow Property.
(c) “Indebtedness.” The definition of the term “Indebtedness” in Section 1.1 of the Existing Credit Agreement (Definitions) is hereby amended to add the following sentence at the end of such definition: “Notwithstanding the foregoing, at all times on or prior to the Note Redemption Outside Date, Indebtedness shall not include any indebtedness or obligations incurred and outstanding under the Permitted Notes except for purposes of the definition of Change of Control.”
(d) “Interest Expense.” The definition of the term “Interest Expense” in Section 1.1 of the Existing Credit Agreement (Definitions) is hereby amended to replace the phrase “excluding non-cash interest expense” with the phrase “excluding (i) non-cash interest expense and (ii) interest expense for the period between the Amendment No. 2 Effective Date and the Note Redemption Outside Date related to Permitted Notes.”
(e) Subsection 8.2.1 . Subsection 8.2.1 of the Existing Credit Agreement (Liens; and Licenses—In General) is hereby amended as follows:
(i) the phrase “the items referred to in clauses (a) through (g)” in the first paragraph of such Subsection is hereby replaced with “the items referred to in clauses (a) through (h)”;
(ii) the word “and” is hereby deleted at the end of clause (f);
(iii) the period at the end of clause (g) is hereby deleted and replaced with “; and”;
(iv) the following language is added as a new clause (h) to such Subsection: “(h) Liens in favor of the trustee for the holders of Permitted Notes; provide d , that no such Lien shall extend to or cover any property other than the Note Escrow Property.”
 
-4-

(f) Subsection 8.2.2 . Subsection 8.2.2 of the Existing Credit Agreement (Negative Pledge) is hereby amended to insert the phrase “or the Note Offering Documentation” immediately following the phrase “Except pursuant to the Loan Documents” set forth therein.
(g) Section 8.24. Section 8.24 of the Existing Credit Agreement (Limitations on Certain Restrictive Provisions) is hereby amended to replace the phrase “except any such agreement set forth in the Loan Documents with the phrase “except any such agreement set forth (i) in the Note Offering Documentation, and (ii) in the Loan Documents.”
(h) Section 8.27 . Section 8.27 of the Existing Credit Agreement (Certain Obligations Respecting Subsidiaries) is hereby amended to add the following sentence as a new paragraph at the end of such section: “Notwithstanding the foregoing, Merger Sub shall not be required to comply with this Section 8.27 until the Escrow Termination Date.”
4. AMENDMENTS TO LOAN DOCUMENTS . The Lenders hereby authorize the Administrative Agent, in their name and on their behalf, to enter into such amendments to the Loan Documents as the Administrative Agent may deem necessary or appropriate to allow for the Permitted Offering Transaction.
5. REPRESENTATIONS AND WARRANTIES . In order to induce the Lenders and the Administrative Agent to agree to the amendments set forth in this Amendment, the Borrower makes the following representations and warranties, which shall survive the execution and delivery of this Amendment:
(a) As of the date hereof, no Default or Event of Default has occurred and is continuing or would exist immediately after giving effect to the amendments contained herein.
(b) Each of the representations and warranties of the Loan Parties set forth in the Existing Credit Agreement and other Loan Documents is true and correct in all material respects both before and after giving effect to the amendments contemplated hereby as though each such representation and warranty were made at and as of the date hereof, except to the extent that any such representation and warranty specifically refers to an earlier date, in which case it is true and correct in all material respects as of such earlier date.
(c) No consent or approval of any third party, or any governmental agency or authority, is necessary in connection with the execution, delivery and/or performance of this Amendment or any other instrument, agreement or other document executed and/or delivered in connection herewith and/or the enforceability hereof or thereof.
(d) Upon satisfaction of the conditions set forth in Section 6 (Conditions Precedent) below, the Existing Credit Agreement, as amended by this Amendment, the other Loan Documents and each other instrument, agreement or other document executed and/or delivered in connection herewith to which the Borrower or any other Loan Party is a party will constitute the legal, valid and binding obligation of the Borrower and each other Loan Party, enforceable against it in accordance with the terms thereof.
 
-5-

6. CONDITIONS PRECEDENT . The consent set forth in Section 2, the amendments to the Existing Credit Agreement set forth in Section 3 and the authorization of the Administrative Agent set forth in Section 4 shall become effective, as of the date first above written, upon satisfaction of the following:
(a) the execution and delivery of this Amendment by the Borrower and the Administrative Agent upon the authorization of the Majority Lenders; and
(b) payment by the Borrower of all invoiced out-of-pocket fees, costs, expenses (including but not limited to attorney fees) and other amounts required to be paid by the Borrower in connection with the execution and delivery of this Amendment or otherwise under the Loan Documents.
 
7.	MISCELLANEOUS .	
(a) Counterparts . This Amendment may be executed in counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument. A photocopied or facsimile signature shall be deemed to be the functional equivalent of a manually executed original for all purposes.
(b) Ratification . Except as specifically modified hereby, all of the terms, covenants and conditions of the Existing Credit Agreement and each of the other Loan Documents are ratified, reaffirmed and confirmed and shall continue in full force and effect as therein written.
(c) Payment of Expenses . Without limiting other payment obligations of the Borrower and the other Loan Parties set forth in the Loan Documents, the Borrower agrees to pay all reasonable, out-of-pocket costs and expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment and any other documents or instruments which may be delivered in connection herewith, including, without limitation, the reasonable fees and expenses of its counsel, Drinker Biddle & Reath LLP, whether or not this Amendment shall become effective.
(d) Governing Law . This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be governed by, and construed in accordance with, the Law of the State of New York (excluding the Laws applicable to conflicts or choice of law).
(e) Binding Effect . This Amendment shall be binding upon and inure to the benefit of Borrower, the Administrative Agent, the Lenders and their respective successors and assigns; provided , that Borrower may not assign this Amendment or the Existing Credit Agreement or any of its rights hereunder or thereunder without the prior written consent of the Administrative Agent and each Lender and any such prohibited assignment shall be null and void.
(f) Severability . If any provision of this Amendment or the application thereof to any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Amendment and the application of such provision to any other Person or circumstance shall not be affected thereby and shall be enforced to the greatest extent permitted by law
 
-6-

(g) References . From and after the effective date of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereof”, “hereunder” or words of like import, and all references to the Credit Agreement in any and all Loan Documents, other agreements, instruments, documents, certificates and writings of every kind and nature, shall be deemed to mean the Existing Credit Agreement as modified and amended by this Amendment and as the same may be further amended, modified or supplemented in accordance with the terms thereof. The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any agent or Lender under, the Existing Credit Agreement or any of the other Loan Documents.
[signature page follows]
 
-7-

IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 2 to Second Amended and Restated Credit Agreement to be duly executed by their respective, duly authorized officers as of the date first above written.
BORROWER :

GREATBATCH LTD.	
		
By:	 	/s/ Thomas J. Mazza	
Name:	 	Thomas J. Mazza	
Title:	 	Vice President and Corporate Controller	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

ADMINISTRATIVE AGENT :

MANUFACTURERS AND TRADERS TRUST COMPANY, in its capacity as the Administrative Agent on behalf of the Lenders	
		
By:	 	/s/ Michael J. Prendergast	
Name:	 	Michael J. Prendergast	
Title:	 	Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Bank of America, N.A. ,	
in its capacity as a Lender	
		
By:	 	/s/ Thomas Strasenburgh	
Name:	 	Thomas Strasenburgh	
Title:	 	Senior Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Citibank N.A .	
in its capacity as a Lender	
		
By:	 	/s/ Christine Keating	
Name:	 	Christine Keating	
Title:	 	Senior Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Citizens Bank, N.A. ,	
in its capacity as a Lender	
		
By:	 	/s/ Jason D. Houseman	
Name:	 	Jason D. Houseman	
Title:	 	Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Comerica Bank ,	
in its capacity as a Lender	
		
By:	 	/s/ Kyle J. Weiss	
Name:	 	Kyle J. Weiss	
Title:	 	Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

CTBC Bank Co., Ltd., New York Branch (formerly known as Chinatrust Commercial Bank, New York Branch),	
in its capacity as a Lender	
		
By:	 	/s/ Ralph Wu	
Name:	 	Ralph Wu	
Title:	 	SVP & Branch General Manager	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Fifth Third Bank ,	
in its capacity as a Lender	
		
By:	 	/s/ Joshua N. Livingston	
Name:	 	Joshua N. Livingston	
Title:	 	Duly Authorized Signatory	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

First Niagara Bank ,	
in its capacity as a Lender	
		
By:	 	/s/ Joseph R. Murphy	
Name:	 	Joseph R. Murphy	
Title:	 	Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

JPMorgan Chase Bank, N.A. ,	
in its capacity as a Lender	
		
By:	 	/s/ Karen L. Mikols	
Name:	 	Karen L. Mikols	
Title:	 	Authorized Officer	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

KeyBank National Association ,	
in its capacity as a Lender	
		
By:	 	/s/ Sanya Valeva	
Name:	 	Sanya Valeva	
Title:	 	Senior Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

MUFG Union Bank, N.A. ,	
in its capacity as a Lender	
		
By:	 	/s/ Michael Gardner	
Name:	 	Michael Gardner	
Title:	 	Director	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

PNC Bank, National Association ,	
in its capacity as a Lender	
		
By:	 	/s/ Christian S. Brown	
Name:	 	Christian S. Brown	
Title:	 	Managing Director	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

LENDER :

Wells Fargo Bank, N.A. ,	
in its capacity as a Lender	
		
By:	 	/s/ Matthew Olson	
Name:	 	Matthew Olson	
Title:	 	Vice President	
 
(Signature Page to Amendment No. 2 to Second Amended and Restated Credit Agreement)

Exhibit 99.1
Greatbatch Announces Private Offering of $360 Million of Senior Notes in Connection with its Acquisition of Lake Region Medical
FRISCO, Texas, October 13, 2015 (GLOBE NEWSWIRE) — Greatbatch, Inc. (NYSE: GB) today announced that its wholly-owned subsidiary Greatbatch Ltd. intends to offer, subject to market and other conditions, $360 million aggregate principal amount of senior notes due 2023 in connection with its previously announced acquisition of Lake Region Medical Holdings, Inc. This offering is part of the financing for the acquisition. The acquisition of Lake Region is currently expected to close in the fourth quarter of 2015.
If the offering of the notes closes prior to the closing of the acquisition of Lake Region, the gross proceeds from the offering (together with certain additional amounts) will be deposited into an escrow account until closing of the acquisition. If the closing of the acquisition of Lake Region does not occur on or prior to February 23, 2016 or Greatbatch determines not to pursue the acquisition or the acquisition agreement is terminated, the notes will be subject to a special mandatory redemption at a redemption price equal to 100% of the initial issue price of the notes, plus accrued and unpaid interest to, but not including, the special mandatory redemption date.
Upon consummation of the acquisition, Greatbatch, Inc. and certain of its subsidiaries (including certain subsidiaries acquired in connection with the acquisition) will guarantee the notes.
The notes and related guarantees will be offered in a private offering only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside of the United States in reliance on Regulation S under the Securities Act. The notes and related guarantees will not be registered under the Securities Act or the securities laws of any jurisdiction and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements.
This press release is neither an offer to sell nor a solicitation of an offer to buy the notes or related guarantees nor shall there be any offer, solicitation or sale of the notes or related guarantees in any jurisdiction where the offer, solicitation or sale is not permitted.
About Greatbatch, Inc.
Greatbatch, Inc. (NYSE: GB) provides top-quality technologies to industries that depend on reliable, long-lasting performance through its brands Greatbatch Medical, Electrochem and QiG Group. The company develops and manufactures critical medical device technologies for the cardiac, neuromodulation, vascular and orthopaedic markets; and batteries for high-end niche applications in the portable medical, energy, military, and environmental markets. Additional information is available at www.greatbatch.com.

Forward-Looking Statements
Some of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended.
You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or “variations” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about the expected timing of completion of the acquisition of Lake Region and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Greatbatch’s management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, the inability to obtain regulatory approvals of the acquisition of Lake Region (including the approval of antitrust authorities necessary to complete the transaction) on the terms desired or anticipated; the timing of such approvals and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction; the risk that a condition to closing the transaction may not be satisfied on a timely basis or at all; and the risk that the proposed transaction fails to close for any other reason. Greatbatch assumes no obligation to update forward-looking statements in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

CONTACT:	  	Investor Relations Contact:	
	  	Elizabeth Cowell	
	  	ecowell@greatbatch.com	
	  	tel 214-618-4982	
		
	  	Media Contact:	
	  	Christopher Knospe	
	  	cknospe@greatbatch.com	
	  	tel 716-759-5727	

Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On August 27, 2015, Greatbatch, Inc. (the “Parent”), Provenance Merger Sub Inc. (the “Merger Sub”) and Lake Region Medical Holdings, Inc. (“Lake Region”) entered into an Agreement and Plan of Merger, dated August 27, 2015 (the “Merger Agreement”) providing for the merger of Lake Region into the Merger Sub, with Lake Region continuing as the surviving corporation and a wholly owned direct subsidiary of the Greatbatch Ltd. (the “Issuer”). The aggregate merger consideration to be paid by us to the equityholders of Lake Region will consist of approximately $479 million in cash and approximately 5.1 million newly issued shares of Greatbatch, Inc. common stock and options to purchase shares of Greatbatch, Inc. common stock. In connection with the acquisition of Lake Region (the “Lake Region Acquisition”), we will pay off all of Lake Region’s outstanding debt, estimated at approximately $1,045 million.
On August 27, 2015, in connection with the signing of the Merger Agreement, the Issuer entered into a commitment letter (as amended and restated or otherwise modified from time to time, the “Commitment Letter”) with Manufacturers and Traders Trust Company, Credit Suisse Securities (USA) LLC, Credit Suisse AG, KeyBank National Association and KeyBanc Capital Markets Inc. The Commitment Letter provides for commitments, subject to customary and other conditions set forth therein, for a $300 million Term Loan A Facility (“TLA Facility”), which was subsequently increased by $75 million to $375 million on a non-committed basis, a $1.0 billion Term Loan B Facility (“TLB Facility”), which was subsequently increased by $25 million to $1,025 million on a non-committed basis, a $200 million revolving credit facility (the “Revolving Credit Facility” and, together with the TLA Facility and TLB Facility, the “Senior Secured Credit Facilities”), and up to a $400 million senior unsecured bridge facility (the “Bridge Facility”). We are offering $360 million of notes hereby (the “Private Offering”) in lieu of a portion or all of the drawings under the Bridge Facility, subject to market and other conditions. For purposes of preparing the pro forma financial statements, it was determined that adequate financing will be obtained under the Private Offering.
On July 30, 2015, we announced a proposed spin-off (the “Spin-off”) of QiG Group, LLC (“QiG Group”). Immediately prior to completion of the Spin-off, QiG Group will be converted into a corporation organized under the laws of Delaware and change its name to Nuvectra Corporation. The Spin-off is expected to be comprised of QiG Group and its subsidiaries Algostim, LLC (“Algostim”) and PelviStim LLC (“Pelvistim”), and Parent’s NeuroNexus Technologies, Inc. (“NeuroNexus”) subsidiary, the shares of which will be transferred to Nuvectra in connection with the Spin-off.
The unaudited pro forma condensed combined financial statements of Parent present the pro forma consolidated balance sheet and statement of operations of the combined company based upon the financial statements of Parent and Accellent Inc. (“Accellent”) after giving effect to the Lake Region Acquisition, the financing transactions, and the Spin-off on Parent’s consolidated financial statements. The historical consolidated financial information has been adjusted to give effect to pro forma events that are: directly attributable to the aforementioned transactions; factually supportable; and, with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements were based on and should be read in conjunction with the financial statements discussed below. Lake Region is the parent company of Accellent Holdings Corp. (“Accellent Holdings”), which in turn is the parent company of Accellent Acquisition Corp., which in turn is the parent company of Accellent. The consolidated financial statements of Accellent include the accounts of Lake Region, Accellent Holdings, and Accellent Acquisition Corp. and are collectively referred to in these pro forma statements as Lake Region.
For purposes of preparing the unaudited pro forma condensed combined balance sheet as of July 3, 2015, we have presented the following information:
 
 	•	 	The unaudited Greatbatch condensed consolidated balance sheet as of July 3, 2015	
 
 	•	 	The unaudited Accellent condensed consolidated balance sheet as of July 4, 2015	
For purposes of preparing the unaudited pro forma condensed combined statement of operations for the fiscal year ended January 2, 2015 we have presented the following information:
 
 	•	 	The Greatbatch consolidated statement of operations for the year ended January 2, 2015	
 
 	•	 	The Accellent consolidated statement of operations for the year ended January 3, 2015	
 
1

For purposes of preparing the unaudited pro forma condensed combined statement of operations for the six months ended July 3, 2015 we have presented the following information:
 
 	•	 	The unaudited Greatbatch condensed consolidated statement of operations for the six months ended July 3, 2015	
 
 	•	 	The unaudited Accellent condensed consolidated statement of operations for the six months ended July 4, 2015	
The unaudited pro forma condensed combined statements of operations for the twelve months ended July 3, 2015 were calculated as follows:
 
 	•	 	The Greatbatch consolidated statement of operations for the year ended January 2, 2015	
 
 	•	 	The Accellent consolidated statement of operations for the year ended January 3, 2015	
less
 
 	•	 	The unaudited Greatbatch condensed consolidated statement of operations for the six months ended July 4, 2014	
 
 	•	 	The unaudited Accellent condensed consolidated statement of operations for the six months ended June 28, 2014	
plus
 
 	•	 	The unaudited Greatbatch condensed consolidated statement of operations for the six months ended July 3, 2015	
 
 	•	 	The unaudited Accellent condensed consolidated statement of operations for the six months ended July 4, 2015	
The unaudited pro forma financial information is for informational purposes only. It does not purport to indicate the results that would have actually been attained had the Lake Region Acquisition or the Spin-off been completed on the assumed dates or for the periods presented, or which may be realized in the future. To produce the unaudited pro forma financial information, we allocated the estimated purchase price using its best estimates of fair value. These estimates are based on the most recently available public information. To the extent there are significant changes to the business of Lake Region the assumptions and estimates herein could change significantly. The allocation of the purchase price is dependent upon certain valuation and other studies that are not yet started. Accordingly, the pro forma purchase price adjustments are preliminary and subject to further adjustments as additional information becomes available, and as additional analysis is performed. There can be no assurances that the final valuation will not result in material changes to the purchase price allocation.
As a result of the Lake Region Acquisition, the combined company expects to achieve annual synergies at the operating profit level of $25 million in 2016 which is expected to increase to at least $60 million in 2018. Additionally, twelve Lake Region executives have existing employee agreements that entitle them to severance payments upon a change-in-control and termination of employment with good reason. We would be responsible for a maximum payout of $12.3 million if all twelve executives were to be severed following the Lake Region Acquisition. The unaudited pro forma financial information does not reflect these potential expenses and efficiencies.
 
2

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
GREATBATCH, INC.
FOR THE TWELVE MONTHS ENDED
JULY 3, 2015

(in thousands, except per share data)	 	Greatbatch, Inc.
Historical	 	 	Lake Region
Adjusted
Historical
(Note 1)	 	 	Merger
and Related
Pro Forma
Adjustments	 	 	 	 	Financing
and Related
Pro Forma
Adjustments	 	 	 	 	Greatbatch, Inc.
Pro Forma
Combined	 	 	Nuvectra
Pro Forma
Adjustments	 	 	 	 	Greatbatch, Inc.
Post Spin-off
Pro Forma
Combined	 	
 	 	A	 	 	B	 	 	C	 	 	 	 	D	 	 	 	 	E=A+B+C+D	 	 	F	 	 	 	 	E+F	 	
Sales	 	$	677,635	  	 	$	805,687	  	 	$	(4,765	) 	 	5a	 	$	—  	  	 		 	$	1,478,557	  	 	$	(4,816	) 	 	6c	 	$	1,473,741	  	
Cost of sales	 	 	451,954	  	 	 	608,122	  	 	 	(4,765	) 	 	5a	 	 	—  	  	 		 	 	1,076,951	  	 	 	(2,941	) 	 	6c	 	 	1,074,010	  	
	 				 				 	 	18,333	  	 	5b	 				 		 				 				 		 				
	 				 				 	 	3,307	  	 	5c	 				 		 				 				 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Gross profit (loss)	 	 	225,681	  	 	 	197,565	  	 	 	(21,640	) 	 		 	 	—  	  	 		 	 	401,606	  	 	 	(1,875	) 	 		 	 	399,731	  	
Operating expenses:	 				 				 				 		 				 		 				 				 		 				
Selling, general and administrative expenses	 	 	93,683	  	 	 	84,895	  	 	 	28,438	  	 	5b	 	 	—  	  	 		 	 	207,393	  	 	 	(7,963	) 	 	6c	 	 	199,430	  	
	 				 				 	 	377	  	 	5c	 				 		 				 				 		 				
Research, development and engineering costs, net	 	 	49,129	  	 	 	10,324	  	 	 	19	  	 	5c	 	 	—  	  	 		 	 	59,472	  	 	 	(15,539	) 	 	6c	 	 	43,933	  	
Other operating expenses (income), net	 	 	26,855	  	 	 	29,878	  	 	 	(24,544	) 	 	5b	 	 	—  	  	 		 	 	32,189	  	 	 	(1,091	) 	 	6c	 	 	31,098	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total operating expenses	 	 	169,667	  	 	 	125,097	  	 	 	4,290	  	 		 	 	—  	  	 		 	 	299,054	  	 	 	(24,593	) 	 		 	 	274,461	  	
Operating income (loss)	 	 	56,014	  	 	 	72,468	  	 	 	(25,930	) 	 		 	 	—  	  	 		 	 	102,552	  	 	 	22,718	  	 		 	 	125,270	  	
Interest expense	 	 	4,421	  	 	 	60,413	  	 	 	—  	  	 		 	 	(4,421	) 	 	4b	 	 	98,115	  	 	 	—  	  	 		 	 	98,115	  	
	 				 				 				 		 	 	(60,413	) 	 	4c	 				 				 		 				
	 				 				 				 		 	 	5,391	  	 	4d	 				 				 		 				
	 				 				 				 		 	 	1,501	  	 	4e	 				 				 		 				
	 				 				 				 		 	 	90,752	  	 	4f	 				 				 		 				
	 				 				 				 		 	 	471	  	 	4g	 				 				 		 				
Gain on cost and equity method investments	 	 	(4,130	) 	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(4,130	) 	 	 	—  	  	 		 	 	(4,130	) 	
Loss on debt extinguishment	 	 	—  	  	 	 	(1	) 	 	 	—  	  	 		 	 	—  	  	 		 	 	(1	) 	 	 	—  	  	 		 	 	(1	) 	
Other (income) expense, net	 	 	(2,418	) 	 	 	1,016	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(1,402	) 	 	 	—  	  	 		 	 	(1,402	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Income (loss) before provision (benefit) for income taxes	 	 	58,141	  	 	 	11,040	  	 	 	(25,930	) 	 		 	 	(33,281	) 	 		 	 	9,970	  	 	 	22,718	  	 		 	 	32,688	  	
Provision (benefit) for income taxes	 	 	12,662	  	 	 	3,843	  	 	 	(8,402	) 	 	5e	 	 	(12,148	) 	 	4l	 	 	(4,045	) 	 	 	8,292	  	 	6d	 	 	4,247	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Net income (loss)	 	$	45,479	  	 	$	7,197	  	 	$	(17,528	) 	 		 	$	(21,133	) 	 		 	$	14,015	  	 	$	14,426	  	 		 	$	28,441	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Earnings per share:	 				 				 				 		 				 		 				 				 		 				
Basic	 	$	1.81	  	 				 				 		 				 		 	$	0.46	  	 				 		 	$	0.94	  	
Diluted	 	$	1.74	  	 				 				 		 				 		 	$	0.45	  	 				 		 	$	0.91	  	
Weighted average shares outstanding:	 				 				 				 		 				 		 				 				 		 				
Basic	 	 	25,146	  	 				 	 	5,069	  	 	5f	 				 		 	 	30,215	  	 				 		 	 	30,215	  	
Diluted	 	 	26,132	  	 				 	 	5,129	  	 	5f	 				 		 	 	31,261	  	 				 		 	 	31,261	  	
 
3

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
GREATBATCH, INC.
FOR THE TWELVE MONTHS ENDED
JANUARY 2, 2015

(in thousands, except per share data)	 	Greatbatch, Inc.
Historical	 	 	Lake Region
Adjusted
Historical
(Note 1)	 	 	Merger
and Related
Pro Forma
Adjustments	 	 	 	 	Financing
and Related
Pro Forma
Adjustments	 	 	 	 	Greatbatch, Inc.
Pro Forma
Combined	 	 	 	 	 	Nuvectra
Pro Forma
Adjustments	 	 	 	 	Greatbatch, Inc.
Post Spin-off
Pro Forma
Combined	 	
 	 	A	 	 	B	 	 	C	 	 	 	 	D	 	 	 	 	E=A+B+C+D	 	 	 	 	 	F	 	 	 	 	E+F	 	
Sales	 	$	687,787	  	 	$	  752,264	  	 	$	(6,839	) 	 	5a	 	$	—  	  	 		 	$	  1,433,212	  	 				 	$	(3,696	) 	 	6a	 	$	  1,429,516	  	
Cost of sales	 	 	456,389	  	 	 	573,616	  	 	 	(6,839	) 	 	5a	 	 	—  	  	 		 	 	1,058,689	  	 				 	 	(1,769	) 	 	6a	 	 	1,056,920	  	
	 				 				 	 	18,333	  	 	5b	 				 		 				 				 				 		 				
	 				 				 	 	2,548	  	 	5c	 				 		 				 				 				 		 				
	 				 				 	 	14,642	  	 	5d	 				 		 				 				 				 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Gross profit (loss)	 	 	231,398	  	 	 	178,648	  	 	 	(35,523	) 	 		 	 	—  	  	 		 	 	374,523	  	 				 	 	(1,927	) 	 		 	 	372,596	  	
Operating expenses:	 				 				 				 		 				 		 				 				 				 		 				
Selling, general and administrative expenses	 	 	90,602	  	 	 	82,676	  	 	 	28,438	  	 	5b	 	 	—  	  	 		 	 	202,006	  	 				 	 	(6,704	) 	 	6a	 	 	195,302	  	
	 				 				 	 	290	  	 	5c	 				 		 				 				 				 		 				
Research, development and engineering costs, net	 	 	49,845	  	 	 	8,763	  	 	 	15	  	 	5c	 	 	—  	  	 		 	 	58,623	  	 				 	 	(16,572	) 	 	6a	 	 	42,051	  	
Other operating expenses (income), net	 	 	15,297	  	 	 	55,017	  	 	 	(25,039	) 	 	5b	 	 	—  	  	 		 	 	45,275	  	 				 	 	(95	) 	 	6a	 	 	45,180	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Total operating expenses	 	 	155,744	  	 	 	146,456	  	 	 	3,704	  	 		 	 	—  	  	 		 	 	305,904	  	 				 	 	(23,371	) 	 		 	 	282,533	  	
Operating income (loss)	 	 	75,654	  	 	 	32,192	  	 	 	(39,227	) 	 		 	 	—  	  	 		 	 	68,619	  	 				 	 	21,444	  	 		 	 	90,063	  	
Interest expense	 	 	4,252	  	 	 	63,096	  	 	 	—  	  	 		 	 	(4,252	) 	 	4b	 	 	98,712	  	 				 	 	—  	  	 		 	 	98,712	  	
	 				 				 				 		 	 	(63,096	) 	 	4c	 				 				 				 		 				
	 				 				 				 		 	 	5,391	  	 	4d	 				 				 				 		 				
	 				 				 				 		 	 	1,509	  	 	4e	 				 				 				 		 				
	 				 				 				 		 	 	91,341	  	 	4f	 				 				 				 		 				
	 				 				 				 		 	 	471	  	 	4g	 				 				 				 		 				
Gain on cost and equity method investments	 	 	(4,370	) 	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(4,370	) 	 				 	 	—  	  	 		 	 	(4,370	) 	
Loss on debt extinguishment	 	 	—  	  	 	 	53,421	  	 	 	—  	  	 		 	 	—  	  	 		 	 	53,421	  	 				 	 	—  	  	 		 	 	53,421	  	
Other (income) expense, net	 	 	(807	) 	 	 	887	  	 	 	—  	  	 		 	 	—  	  	 		 	 	80	  	 				 	 	—  	  	 		 	 	80	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Income (loss) before provision (benefit) for income taxes	 	 	76,579	  	 	 	(85,212	) 	 	 	(39,227	) 	 		 	 	(31,364	) 	 		 	 	(79,224	) 	 				 	 	21,444	  	 		 	 	(57,780	) 	
Provision (benefit) for income taxes	 	 	21,121	  	 	 	(38,882	) 	 	 	(12,710	) 	 	5e	 	 	(11,448	) 	 	4l	 	 	(41,919	) 	 				 	 	7,827	  	 	6d	 	 	(34,092	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Net income (loss)	 	$	55,458	  	 	$	(46,330	) 	 	$	(26,517	) 	 		 	$	(19,916	) 	 		 	$	(37,305	) 	 				 	$	13,617	  	 		 	$	(23,688	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Earnings (loss) per share:	 				 				 				 		 				 		 				 				 				 		 				
Basic	 	$	2.23	  	 				 				 		 				 		 	$	(1.25	) 	 				 				 		 	$	(0.79	) 	
Diluted	 	$	2.14	  	 				 				 		 				 		 	$	(1.25	) 	 				 				 		 	$	(0.79	) 	
Weighted average shares outstanding:	 				 				 				 		 				 		 				 				 				 		 				
Basic	 	 	24,825	  	 				 	 	5,069	  	 	5f	 				 		 	 	29,894	  	 	 	5f	  	 				 		 	 	29,894	  	
Diluted	 	 	25,975	  	 				 	 	5,069	  	 	5f	 				 		 	 	29,894	  	 	 	5f	  	 				 		 	 	29,894	  	
 
4

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
GREATBATCH, INC.
FOR THE SIX MONTHS ENDED
JULY 3, 2015

(in thousands, except per share data)	 	Greatbatch,
Inc. Adjusted
Historical
(Note 1)	 	 	Lake Region
Adjusted
Historical
(Note 1)	 	 	Merger and
Related
Pro Forma
Adjustments	 	 	 	 	Financing
and Related
Pro Forma
Adjustments	 	 	 	 	Greatbatch, Inc.
Pro Forma
Combined	 	 	Nuvectra
Pro Forma
Adjustments	 	 	 	 	Greatbatch,
Inc. Post
Spin-off
Pro Forma
Combined	 	
 	 	A	 	 	B	 	 	C	 	 	 	 	D	 	 	 	 	E=A+B+C+D	 	 	F	 	 	 	 	E+F	 	
Sales	 	$	  336,210	  	 	$	  402,570	  	 	$	(2,429	) 	 	5a	 	$	—  	  	 		 	$	736,351	  	 	$	(2,671	) 	 	6a	 	$	  733,680	  	
Cost of sales	 	 	225,861	  	 	 	301,683	  	 	 	(2,429	) 	 	5a	 	 	—  	  	 		 	 	535,774	  	 	 	(1,937	) 	 	6a	 	 	533,837	  	
	 				 				 	 	9,167	  	 	5b	 				 		 				 				 		 				
	 				 				 	 	1,492	  	 	5c	 				 		 				 				 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Gross profit (loss)	 	 	110,349	  	 	 	100,887	  	 	 	(10,659	) 	 		 	 	—  	  	 		 	 	200,577	  	 	 	(734	) 	 		 	 	199,843	  	
Operating expenses:	 				 				 				 		 				 		 				 				 		 				
Selling, general and administrative expenses	 	 	46,713	  	 	 	42,437	  	 	 	14,219	  	 	5b	 	 	—  	  	 		 	 	103,538	  	 	 	(4,276	) 	 	6a	 	 	99,262	  	
	 				 				 	 	169	  	 	5c	 				 		 				 				 		 				
Research, development and engineering costs, net	 	 	25,608	  	 	 	5,283	  	 	 	9	  	 	5c	 	 	—  	  	 		 	 	30,900	  	 	 	(7,691	) 	 	6a	 	 	23,209	  	
Other operating expenses (income), net	 	 	15,605	  	 	 	13,185	  	 	 	(11,072	) 	 	5b	 	 	—  	  	 		 	 	17,718	  	 	 	(458	) 	 	6a	 	 	17,260	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total operating expenses	 	 	87,926	  	 	 	60,905	  	 	 	3,325	  	 		 	 	—  	  	 		 	 	152,156	  	 	 	(12,425	) 	 		 	 	139,731	  	
Operating income (loss)	 	 	22,423	  	 	 	39,982	  	 	 	(13,984	) 	 		 	 	—  	  	 		 	 	48,421	  	 	 	11,691	  	 		 	 	60,112	  	
Interest expense	 	 	2,326	  	 	 	29,664	  	 	 	—  	  	 		 	 	(2,326	) 	 	4b	 	 	48,909	  	 	 	—  	  	 		 	 	48,909	  	
	 				 				 				 		 	 	(29,664	) 	 	4c	 				 				 		 				
	 				 				 				 		 	 	2,696	  	 	4d	 				 				 		 				
	 				 				 				 		 	 	749	  	 	4e	 				 				 		 				
	 				 				 				 		 	 	45,228	  	 	4f	 				 				 		 				
	 				 				 				 		 	 	236	  	 	4g	 				 				 		 				
Gain on cost and equity method investments, net	 	 	(540	) 	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(540	) 	 	 	—  	  	 		 	 	(540	) 	
Other (income) expense, net	 	 	(1,118	) 	 	 	310	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(808	) 	 	 	—  	  	 		 	 	(808	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Income (loss) before provision (benefit) for income taxes	 	 	21,755	  	 	 	10,008	  	 	 	(13,984	) 	 		 	 	(16,919	) 	 		 	 	860	  	 	 	11,691	  	 		 	 	12,551	  	
Provision (benefit) for income taxes	 	 	4,464	  	 	 	1,543	  	 	 	(4,531	) 	 	5e	 	 	(6,175	) 	 	4l	 	 	(4,699	) 	 	 	4,267	  	 	6d	 	 	(432	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Net income (loss)	 	$	17,291	  	 	$	8,465	  	 	$	(9,453	) 	 		 	$	(10,744	) 	 		 	$	5,559	  	 	$	7,424	  	 		 	$	12,983	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Earnings per share:	 				 				 				 		 				 		 				 				 		 				
Basic	 	$	0.68	  	 				 				 		 				 		 	$	0.18	  	 				 		 	$	0.43	  	
Diluted	 	$	0.66	  	 				 				 		 				 		 	$	0.18	  	 				 		 	$	0.41	  	
Weighted average shares outstanding:	 				 				 				 		 				 		 				 				 		 				
Basic	 	 	25,369	  	 				 	 	5,069	  	 	5f	 				 		 	 	30,438	  	 				 		 	 	30,438	  	
Diluted	 	 	26,264	  	 				 	 	5,129	  	 	5f	 				 		 	 	31,393	  	 				 		 	 	31,393	  	
 
5

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
GREATBATCH, INC.
AS OF JULY 3, 2015

(in thousands)	 	Greatbatch,
Inc. Adjusted
Historical
(Note 1)	 	 	Lake Region
Adjusted
Historical
(Note 1)	 	 	Merger and
Related
Pro Forma
Adjustments	 	 	 	 	Financing
and Related
Pro Forma
Adjustments	 	 	 	 	Greatbatch,
Inc.
Pro Forma
Combined	 	 	Nuvectra
Pro Forma
Adjustments	 	 	 	 	Greatbatch,
Inc. Post
Spin-off
Pro Forma
Combined	 	
 	 	A	 	 	B	 	 	C	 	 	 	 	D	 	 	 	 	E = A+B+C+D	 	 	F	 	 	 	 	E+F	 	
Assets	 				 				 				 		 				 		 				 				 		 				
Current assets:	 				 				 				 		 				 		 				 				 		 				
Cash and cash equivalents	 	$	72,338	  	 	$	45,708	  	 	$	(478,618	) 	 	3a	 	$	532,938	  	 	4a	 	$	86,938	  	 	$	(1,674	) 	 	6a	 	$	10,264	  	
	 				 				 	 	(22,522	) 	 	3b	 	 	(177	) 	 	4b	 				 	 	(75,000	) 	 	6b	 				
	 				 				 				 		 	 	(3,442	) 	 	4c	 				 				 		 				
	 				 				 				 		 	 	(36,280	) 	 	4d	 				 				 		 				
	 				 				 				 		 	 	(10,250	) 	 	4e	 				 				 		 				
	 				 				 				 		 	 	(4,000	) 	 	4h	 				 				 		 				
	 				 				 				 		 	 	(6,557	) 	 	4i	 				 				 		 				
	 				 				 				 		 	 	(2,200	) 	 	4j	 				 				 		 				
Accounts receivable, net of allowance	 	 	122,101	  	 	 	82,731	  	 	 	—  	  	 		 	 	—  	  	 		 	 	204,832	  	 	 	(501	) 	 	6a	 	 	204,331	  	
Inventories	 	 	140,093	  	 	 	97,958	  	 	 	14,642	  	 	3d	 	 	—  	  	 		 	 	252,693	  	 	 	—  	  	 		 	 	252,693	  	
Refundable income taxes	 	 	2,368	  	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	2,368	  	 	 	—  	  	 		 	 	2,368	  	
Deferred income taxes	 	 	6,227	  	 	 	4,407	  	 	 	—  	  	 		 	 	—  	  	 		 	 	10,634	  	 	 	—  	  	 		 	 	10,634	  	
Prepaid expenses and other current assets	 	 	12,279	  	 	 	8,552	  	 	 	—  	  	 		 	 	—  	  	 		 	 	20,831	  	 	 	(158	) 	 	6a	 	 	20,673	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total current assets	 	 	355,406	  	 	 	239,356	  	 	 	(486,498	) 	 		 	 	470,032	  	 		 	 	578,296	  	 	 	(77,333	) 	 		 	 	500,963	  	
Property and equipment, net	 	 	152,713	  	 	 	184,304	  	 	 	22,996	  	 	3e	 	 	—  	  	 		 	 	360,013	  	 	 	(4,447	) 	 	6a	 	 	355,566	  	
Amortizing intangible assets, net	 	 	58,572	  	 	 	178,583	  	 	 	587,417	  	 	3f	 	 	—  	  	 		 	 	824,572	  	 	 	(2,128	) 	 	6a	 	 	822,444	  	
Indefinite-lived intangible assets	 	 	20,288	  	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	20,288	  	 	 	—  	  	 		 	 	20,288	  	
Goodwill	 	 	354,107	  	 	 	710,646	  	 	 	109,178	  	 	3c	 	 	—  	  	 		 	 	1,173,931	  	 	 	(38,182	) 	 	6a	 	 	1,135,749	  	
Deferred income taxes	 	 	2,654	  	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	2,654	  	 	 	—  	  	 		 	 	2,654	  	
Other assets	 	 	22,391	  	 	 	21,643	  	 	 	(19,680	) 	 	3g	 	 	36,280	  	 	4d	 	 	57,934	  	 	 	—  	  	 		 	 	57,934	  	
	 				 				 				 		 	 	(2,700	) 	 	4k	 				 				 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total assets	 	$	  966,131	  	 	$	  1,334,532	  	 	$	  213,413	  	 		 	$	  503,612	  	 		 	$	3,017,688	  	 	$	  (122,090	) 	 		 	$	  2,895,598	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Liabilities and Stockholders’ Equity	 				 				 				 		 				 		 				 				 		 				
Current liabilities:	 				 				 				 		 				 		 				 				 		 				
Current portion of long-term debt	 	$	13,750	  	 	$	8,350	  	 	$	—  	  	 		 	$	6,900	  	 	4a	 	$	28,898	  	 	$	—  	  	 		 	$	28,898	  	
	 				 				 				 		 	 	(102	) 	 	4e	 				 				 		 				
Accounts payable	 	 	44,858	  	 	 	33,787	  	 	 	—  	  	 		 	 	—  	  	 		 	 	78,645	  	 	 	(565	) 	 	6a	 	 	78,080	  	
Income taxes payable	 	 	1,761	  	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	1,761	  	 	 	—  	  	 		 	 	1,761	  	
Deferred income taxes	 	 	588	  	 	 	—  	  	 	 	4,744	  	 	3i	 	 	—  	  	 		 	 	5,332	  	 	 	—  	  	 		 	 	5,332	  	
Accrued expenses	 	 	37,670	  	 	 	56,123	  	 	 	—  	  	 		 	 	(6,557	) 	 	4i	 	 	83,617	  	 	 	(980	) 	 	6a	 	 	82,637	  	
	 				 				 				 		 	 	(177	) 	 	4b	 				 				 		 				
	 				 				 				 		 	 	(3,442	) 	 	4c	 				 				 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total current liabilities	 	 	98,627	  	 	 	98,260	  	 	 	4,744	  	 		 	 	(3,378	) 	 		 	 	198,253	  	 	 	(1,545	) 	 		 	 	196,708	  	
Long-term debt	 	 	168,750	  	 	 	1,036,212	  	 	 	—  	  	 		 	 	526,038	  	 	4a	 	 	1,720,852	  	 	 	—  	  	 		 	 	1,720,852	  	
	 				 				 				 		 	 	(10,148	) 	 	4e	 				 				 		 				
Deferred income taxes	 	 	51,087	  	 	 	37,931	  	 	 	117,362	  	 	3i	 	 	—  	  	 		 	 	206,380	  	 	 	—  	  	 		 	 	206,380	  	
Other long-term liabilities	 	 	6,065	  	 	 	9,431	  	 	 	(880	) 	 	3h	 	 	—  	  	 		 	 	14,616	  	 	 	—  	  	 		 	 	14,616	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total liabilities	 	$	324,529	  	 	$	1,181,834	  	 	$	121,226	  	 		 	$	512,512	  	 		 	$	2,140,101	  	 	$	(1,545	) 	 		 	$	2,138,556	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Stockholders’ Equity:	 				 				 				 		 				 		 				 				 		 				
Preferred stock	 	 	—  	  	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	—  	  	 	 	—  	  	 		 	 	—  	  	
Common stock	 	 	26	  	 	 	—  	  	 	 	5	  	 	3k	 	 	—  	  	 		 	 	31	  	 	 	—  	  	 		 	 	31	  	
Additional paid-in capital	 	 	380,293	  	 	 	718,430	  	 	 	(718,430	) 	 	3j	 	 	—  	  	 		 	 	647,695	  	 	 	—  	  	 		 	 	647,695	  	
	 				 				 	 	267,402	  	 	3k	 				 		 				 				 		 				
Treasury stock, at cost	 	 	(2,279	) 	 	 	—  	  	 	 	—  	  	 		 	 	—  	  	 		 	 	(2,279	) 	 	 	—  	  	 		 	 	(2,279	) 	
Retained earnings (loss)	 	 	256,739	  	 	 	(502,906	) 	 	 	502,906	  	 	3j	 	 	(4,000	) 	 	4h	 	 	225,317	  	 	 	(157,914	) 	 	6a	 	 	104,772	  	
	 				 				 	 	(22,522	) 	 	3b	 	 	(2,200	) 	 	4j	 				 	 	112,369	  	 	6a	 				
	 				 				 				 		 	 	(2,700	) 	 	4k	 				 	 	(75,000	) 	 	6b	 				
Accumulated other comprehensive income (loss)	 	 	6,823	  	 	 	(62,826	) 	 	 	62,826	  	 	3j	 	 	—  	  	 		 	 	6,823	  	 	 	—  	  	 		 	 	6,823	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total stockholders’ equity	 	 	641,602	  	 	 	152,698	  	 	 	92,187	  	 		 	 	(8,900	) 	 		 	 	877,587	  	 	 	(120,545	) 	 		 	 	757,042	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	 	 	 	 	 	 	 	 		 	 	 	 	
Total liabilities and stockholders’ equity	 	$	966,131	  	 	$	1,334,532	  	 	$	   213,413	  	 		 	$	503,612	  	 		 	$	3,017,688	  	 	$	(122,090	) 	 		 	$	2,895,598	  	

6

Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Basis of Presentation
Our accompanying unaudited pro forma condensed combined financial information presents the pro forma consolidated balance sheet and statement of operations of the combined company based upon the financial statements of Greatbatch, Nuvectra, and Accellent after giving effect to the Lake Region Acquisition, the financing transactions, and the Spin-off on our consolidated financial statements.
The unaudited pro forma condensed combined statements of operations for the six months ended July 3, 2015, for the fiscal year ended January 2, 2015, and for the last twelve months ended July 3, 2015 combine our historical consolidated statements of operations of Greatbatch and the historical consolidated statements of operations of Accellent. These statements of operations also eliminate the combined results of Nuvectra, giving effect to the Lake Region Acquisition, the financing transactions, and the Spin-off as if they had been consummated on January 4, 2014, the beginning of the earliest period presented. The unaudited pro forma condensed combined balance sheet combines our historical condensed consolidated balance sheet of Greatbatch and the historical condensed consolidated balance sheet of Accellent and it eliminates the condensed combined balance sheet of Nuvectra as of July 3, 2015, giving effect to the Lake Region Acquisition, the financing transactions, and the Spin-off as if they had been consummated on July 3, 2015.
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting with our Company considered the acquirer of Lake Region. Under the acquisition method of accounting the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed with any excess allocated to goodwill. The pro forma purchase price allocation was based on an estimate of the fair market value of the tangible and intangible assets acquired and liabilities assumed of Lake Region. In arriving at the estimated fair market values, we considered the appraisals of independent consultants which were based on a preliminary and limited review of assets and liabilities related to Lake Region which will be transferred. We expect to complete the purchase price allocation after considering the appraisal of Lake Region at the level of detail necessary to finalize the required purchase price allocation. The final purchase price allocation may be different than that reflected in the preliminary pro forma purchase price allocation presented herein, and this difference may be material.
The unaudited pro forma condensed combined financial statements do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies or revenue synergies expected to result from the Lake Region Acquisition.
Certain reclassifications were made to the historical financial statements of Accellent to conform to our presentation, which includes the following:
Adjustments made to Accellent’s historical consolidated financial statements for the year ended January 3, 2015
 
 	•	 	A reclassification of $26.8 million, $3.1 million, $25.0 million from impairment of intangible assets and goodwill, restructuring, and amortization of intangible assets respectively, to other operating expenses.	
Adjustments made to Accellent’s historical condensed consolidated financial statements as of or for the six months ended July 4, 2015
 
 	•	 	A reclassification of $1.9 million, $11.1 million and $0.2 million from restructuring, amortization of intangible assets and loss on disposal of assets, respectively, to other operating expenses.	
 
 	•	 	A reclassification of $20.1 million, $3.4 million and $32.6 million from accrued payroll and benefits, accrued interest, and accrued expenses and other current liabilities, respectively, to accrued expenses.	
 
7

The following reclassification was made to our historical financial statements to remain consistent across all periods presented:
Adjustments made to our historical condensed consolidated financial statements for the six months ended July 3, 2015
 
 	•	 	A reclassification of $0.54 million from other (income) expense, net to gain on cost and equity method investments.	
2. Lake Region Purchase Price and Preliminary Purchase Price Allocation
Purchase price
Upon consummation of the proposed Lake Region Acquisition, Lake Region’s shareholders will receive approximately $478.6 million in cash consideration and approximately $267.4 million in shares of Greatbatch, Inc. common stock and we will repay all of Lake Region’s outstanding debt, which we estimate to be approximately $1,045 million.

(in thousands except for share and per share data)	 	 	 	
Cash payment	 	$	477,000	  	
Cash consideration for exercise price of rollover stock options	 	 	1,618	  	
	 	 	 	 	
Cash consideration to Lake Region shareholders	 	$	478,618	  	
	 	 	 	 	
Number of Greatbatch shares to be issued	 	 	5,100,000	  	
Less: shares of rollover options (1)	 	 	(30,688	) 	
	 	 	 	 	
Total number of Greatbatch shares to be issued to Lake Region shareholders	 	 	5,069,332	  	
Multiplied by Greatbatch closing share price on October 8, 2015	 	$	52.75	  	
	 	 	 	 	
Stock consideration to Lake Region shareholders	 	$	267,407	  	
	 	 	 	 	
Total consideration to Lake Region shareholders	 	$	    746,025	  	

(1)	As the exercise price of the options is included as part of cash consideration, the equivalent number of shares has been removed from stock consideration.	
Preliminary purchase price allocation
The following is a summary of the preliminary purchase price allocation giving effect to the Lake Region Acquisition as if it had been consummated on July 3, 2015:

(in thousands)	 	 	 	
Cash	 	$	    45,708	  	
Property and equipment	 	 	207,300	  	
Accounts receivable	 	 	82,731	  	
Inventory	 	 	112,600	  	
Other assets	 	 	14,922	  	
Amortizing intangible assets	 	 	766,000	  	
Goodwill	 	 	819,824	  	
	 	 	 	 	
Total assets acquired	 	 	2,049,085	  	
	 	 	 	 	
Long-term debt	 	 	1,036,212	  	
Accounts payable, accrued expenses and other current liabilities	 	 	98,260	  	
Deferred tax liability, including current portion	 	 	160,037	  	
Other long-term liabilities	 	 	8,551	  	
	 	 	 	 	
Total liabilities assumed	 	 	1,303,060	  	
	 	 	 	 	
Net assets acquired, net of cash	 	$	    746,025	  	

8

a.	The table below depicts a sensitivity analysis of the estimated purchase consideration and goodwill, assuming a 10% increase or decrease in the closing price of Greatbatch, Inc.’s shares of common stock used to determine the total estimated purchase consideration:	

(in thousands, except share and per share data)	 	 	 	 	
					
  	 	Stock Consideration	 	 	Cash Consideration	 	 	Total	 	 	 	 	
 	 	Price of
Greatbatch
Ordinary
Shares	 	 	Shares
Exchanged	 	 	Total Stock
Consideration	 	 	Replacement
Option
Shares	 	 	Cash
Consideration
Replacement
Options	 	 	Other Cash
Consideration	 	 	Total Cash
Consideration	 	 	Total
Purchase
Price	 	 	Total
Goodwill	 	
As of 10/8/15	 	$	  52.75	  	 	 	5,069,332	  	 	$	  267,407	  	 	 	122,671	  	 	$	  1,618	  	 	$	  477,000	  	 	$	  478,618	  	 	$	  746,025	  	 	$	  819,824	  	
Decrease of 10%	 	 	47.48	  	 	 	4,963,699	  	 	 	235,676	  	 	 	136,301	  	 	 	1,618	  	 	 	477,000	  	 	 	478,618	  	 	 	714,294	  	 	 	788,093	  	
Increase of 10%	 	 	58.03	  	 	 	5,072,120	  	 	 	294,335	  	 	 	111,519	  	 	 	1,618	  	 	 	477,000	  	 	 	478,618	  	 	 	772,953	  	 	 	846,752	  	
3. Merger and Related Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments
The following summarizes the pro forma adjustments in connection with the proposed Lake Region Acquisition to give effect to the transaction as if it had occurred on July 3, 2015 for purposes of the unaudited pro forma condensed combined balance sheet:
 
a.	Reflects the cash consideration for the proposed Lake Region Acquisition as shown within Note 2: Lake Region Purchase Price and Preliminary Purchase Price Allocation.	
 
b.	Reflects the recognition of $22.5 million of transaction costs to be incurred by us. The $22.5 million is expected to be incurred through the consummation of the transaction. These fees are recorded against retained earnings solely for the purposes of this presentation. There is no continuing impact of these transaction costs on the combined results of operations and, as such, these fees are not included in the pro forma condensed combined statement of operations.	
 
c.	Reflects the elimination of the historical goodwill amount and the recognition of goodwill related to the proposed acquisition. Goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The estimated goodwill calculation is preliminary and is subject to change based upon final determination of the fair value of assets acquired and liabilities assumed and finalization of the purchase price. Goodwill is not amortized, but is assessed at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable based on management’s assessment.	
 
d.	Represents the estimated adjustment to step-up inventory to fair value of $112.6 million. The estimated step-up in inventory is preliminary and is subject to change based upon final determination of the fair values of finished goods and work-in-process inventories. We will reflect the fair value of the inventory of Lake Region as the acquired inventory is sold, which for purposes of the unaudited pro forma condensed combined statement of operations is assumed to occur within the first two months after closing.	
 
e.	Represents the estimated adjustment to step-up property and equipment to fair value of $207.3 million. The fair value of property and equipment acquired was valued primarily using a combination of the trended reproduction cost method and net book value. The fair value approximates the current cost of replacing an asset with another asset of equivalent economic utility adjusted further for obsolescence and physical depreciation. Additionally, 36% of the fair value of acquired property and equipment consists of property and equipment acquired by Lake Region in a transaction that was consummated on March 12, 2014. As these assets were recently recorded at fair value, it was determined that their current book value approximates fair value.	
 
    	The estimated useful lives of the property, plant and equipment range from 3 to 20 years. A ten percent change in the fair value of the property and equipment assets would result in a change in depreciation expense of $3.1 million for the 12 months ended July 3, 2015, $2.9 million for the 12 months ended January 2, 2015, and $1.5 million for the 6 months ended July 3, 2015.	
 
f.	Represents the estimated adjustment to record acquired identifiable intangible assets consisting of tradenames, technology, and customer relationships to fair value of $766.0 million. This adjustment is preliminary and is determined using the “income approach,” which is a valuation technique that calculates an estimate of the fair value	
 
9

 	of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of the identifiable intangible asset valuations, from the perspective of a market participant, include the estimated net cash flows for each year (including net revenues, cost of sales, research and development costs, selling and marketing costs, and working capital), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream, attrition rates, royalty rates, and other factors. This estimate is preliminary and subject to change and could vary materially from the actual adjustment on the consummation date.	
 
    	The estimated useful lives of the intangibles range from 5 to 21 years. A one year decrease in the useful lives of the definite-lived intangible assets would result in additional annual amortization expense of $3.7 million for the 12 months ended July 3, 2015 and January 2, 2015, and $1.9 million for the 6 months ended July 3, 2015.	
 
g.	Represents the elimination of Lake Region’s historical deferred financing costs as the debt was revalued under acquisition accounting. Refer to adjustment 4(k) for the write-off of our historical deferred financing costs.	
 
h.	Reflects the elimination of the historical deferred compensation liability, as all deferred compensation will be paid out upon consummation of the transaction.	
 
i.	The adjustments to deferred taxes result in a net increase to long-term deferred tax liability of $117.4 million and an increase to short-term deferred tax liability of $4.7 million. These adjustments reflect the tax impact of opening balance sheet purchase accounting adjustments on the unaudited pro forma condensed combined balance sheet, and are computed by applying the statutory tax rates of the relevant jurisdictions to basis differences created by the pro forma adjustments. In addition, the historic Lake Region valuation allowance against certain federal deferred tax assets of $80.4 million was released and is reflected in the net long-term deferred tax liability amount above. This estimate of deferred income tax liabilities is preliminary and is subject to change based upon the final determination of blended statutory tax rate post-acquisition, valuation allowance assessments, and management’s final determination of the fair values of tangible and identifiable intangible assets acquired and liabilities assumed by jurisdiction.	
 
j.	The adjustments relate to the elimination of Lake Region’s shareholders’ equity.	
 
k.	This adjustment reflects the increase in Greatbatch, Inc. shares of common stock outstanding due to 5.072 million shares being issued to Lake Region shareholders as part of the transaction consideration.	
4. Financing & Related Pro Forma Adjustments
The following summarizes the pro forma adjustments in connection with the financing for the proposed acquisition of Lake Region to give effect the transaction as if it had occurred on January 4, 2014 for purposes of the unaudited pro forma condensed combined statements of operations, and as if it had occurred on July 3, 2015 for purposes of the unaudited pro forma condensed combined balance sheet:
 
a.	On August 27, 2015, the Issuer entered into the Commitment Letter with Manufacturers and Traders Trust Company, Credit Suisse Securities (USA) LLC, Credit Suisse AG, KeyBank National Association and KeyBanc Capital Markets Inc. The Commitment Letter provides for commitments, subject to customary and other conditions set forth therein, for a $300 million TLA Facility, which was subsequently increased by $75 million to $375 million on a non-committed basis, a $1.0 billion TLB Facility, which was subsequently increased by $25 million to $1,025 million on a non-committed basis, a $200 million Revolving Credit Facility, and up to a $400 million Bridge Facility. We are offering $360 million of notes in the Private Offering in lieu of a portion or all of the drawings under the Bridge Facility, subject to market and other conditions. For purposes of preparing the pro forma financial statements, it was determined that adequate financing will be obtained under the Private Offering.	
The proceeds of the TLA Facility and the TLB Facility will be used to refinance our existing debt and Lake Region debt of $182.5 million and $1.0 billion respectively. The revolving credit facility will be
 
10

used for working capital requirements and it was determined that no amount would need to be drawn against the Revolving Credit Facility. The following is a reconciliation of the outstanding long-term debt amounts shown in the unaudited pro forma condensed combined balance sheet as of July 3, 2015:

(in millions)	 	 	 	
TLA Facility	 	$	375.0	  	
TLB Facility	 	 	1,025.0	  	
Private Offering	 	 	360.0	  	
Original issue discount (Note 4e)	 	 	(10.3	) 	
	 	 	 	 	
Total debt	 	 	1,749.7	  	
Less: current portion	 	 	(28.9	) 	
	 	 	 	 	
Total long-term debt	 	$	    1,720.8	  	

b.	Reflects the elimination of our existing accrued interest and interest expense as outstanding debt will be refinanced in conjunction with this transaction.	
 
c.	Reflects the elimination of existing Lake Region accrued interest and interest expense as outstanding debt will be refinanced in conjunction with this transaction.	
 
d.	We will incur approximately $36.3 million of debt issuance costs, of which $28.0 million relate to the Senior Secured Credit Facilities and $8.3 million relate to the Private Offering. The costs consist of various fees paid to the initial purchasers for their services in arranging and structuring the financing. The fees will be deferred, recorded within the other assets line item, and amortized over the lives of the respective debt, which range from 5-8 years. The amortization of these fees is $5.4 million per year and $2.7 million per each six month period.	
 
e.	The TLB Facility has an original issuance discount of $10.3. This discount will be amortized over the 7 year life of the debt based on the effective interest method. The amortization of the discount results in additional interest expense of $1.5 million per year and $0.75 million per the six month period.	
 
f.	The pro forma adjustment to interest expense is approximately $91.3 million for the twelve months ended January 2, 2015, $90.8 million for the twelve months ended July 3, 2015, and $45.2 million for the six month period ended July 3, 2015. The weighted average interest rate for TLA Facility, TLB Facility and the amounts outstanding under the Private Offering for all periods presented was approximately 5.20%.	
 
g.	Reflects unused commitment fees applied to the Revolving Credit Facility at an annual rate of 0.25% for unused capacity. The pro forma adjustment is approximately $0.47 million per year and $0.24 million for the six month period.	
 
h.	Reflects the commitment fee applied to the available amount under the Bridge Facility. It was determined that the Bridge Facility would not need to be utilized, as adequate financing will be secured under the Private Offering. The fee will be expensed in full as incurred.	
 
i.	Reflects the cash settlement of interest rate swap derivatives used to hedge Lake Region debt. As all Lake Region debt will be refinanced in conjunction with this transaction, all related derivatives will be terminated.	
 
j.	Reflects the prepayment penalty fees associated with refinancing Lake Region debt.	
 
k.	Represents the elimination of our historical deferred financing costs as the debt will be refinanced in conjunction with the acquisition resulting in the write-off of the recorded deferred financing costs.	
 
l.	Reflects tax expense computed by applying the statutory tax rates of the relevant jurisdictions to the respective pro forma adjustments presented in the unaudited pro forma condensed combined statements of	
 
11

 	operations. These rates do not reflect our effective tax rate, which includes other items and may be significantly different than the rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors.	
The fees that we will pay and the level of net debt expected to be incurred could vary significantly from what is assumed in these unaudited condensed combined pro forma financial statements. Variances could arise from multiple factors including: other acquisitions we may pursue, the amount of cash on hand at the time of the closing of the Lake Region Acquisition and subsequent to the Spin-off, the actual mix of permanent debt/equity financing, the actual fixed/floating mix of permanent debt and our credit rating. Accordingly, the estimated debt and interest expense reflected in these unaudited pro forma condensed combined financial statements may change and the change could be significant. A 0.125 percent change in the interest rate could result in an increase or decrease in the pro forma interest expense of approximately $2.2 million for a full year period.
5. Merger and Related Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments
The following summarizes the pro forma adjustments in connection with the Lake Region Acquisition to give effect to the transaction as if it had occurred on January 4, 2014 for purposes of the unaudited pro forma condensed combined statements of operations:
 
a.	Reflects the elimination of our sales and related cost of sales to Lake Region.	
 
b.	Represents an increase in amortization expense associated with fair value adjustments to the carrying value of intangible assets. The increase in amortization expense related to the tradename and customer relationship intangible assets is recorded within the selling, general, and administrative expenses line item. The increase in amortization expense associated with the technology intangible asset was recorded within the cost of sales line item. For purposes of the unaudited pro forma condensed combined statements of operations, amortization expense was assumed to be on a straight-line basis, which may be different than what is actually recorded. Amortization expense is recorded as follows:	

(in thousands)	 	 	 	 	 	 	 	Amortization Expense	 	
 	 	Fair Value	 	 	Useful
Life	 	 	12 Months
Ended
7/3/2015	 	 	12 Months
Ended
1/2/2015	 	 	6 Months
Ended
7/3/2015	 	
Tradename	 	$	16,000	  	 	 	5	  	 	$	3,200	  	 	$	3,200	  	 	$	1,600	  	
Customer Relationships	 	 	530,000	  	 	 	21	  	 	 	25,238	  	 	 	25,238	  	 	 	12,619	  	
Technology	 	 	220,000	  	 	 	12	  	 	 	18,333	  	 	 	18,333	  	 	 	9,167	  	
	 	 	 	 	 				 	 	 	 	 	 	 	 	 	 	 	 	
	 	$	    766,000	  	 				 	$	46,771	  	 	$	46,771	  	 	$	23,386	  	
	 	 	 	 	 				 	 	 	 	 	 	 	 	 	 	 	 	
Lake Region historical amortization expense	 				 				 	$	    24,544	  	 	$	    25,039	  	 	$	    11,072	  	

12

c.	Represents an increase in depreciation expense associated with fair value adjustments to the carrying value of property and equipment. The increase in depreciation expense is split between the selling, general, and administrative expenses, the cost of sales, and research, development and engineering costs, net line items based upon historical Lake Region depreciation expense. The increase in depreciation expense is recorded as follows:	

(in thousands)	 	 	 	 	Depreciation Expense	 	
 	 	Fair Value	 	 	12 Months
Ended
7/3/2015	 	 	12 Months
Ended
1/2/2015	 	 	6 Months
Ended
7/3/2015	 	
Property & Equipment	 	$	    207,300	  	 	$	30,916	  	 	$	28,617	  	 	$	15,058	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lake Region historical depreciation expense	 				 	$	27,213	  	 	$	25,764	  	 	$	13,388	  	
	 				 	 	 	 	 	 	 	 	 	 	 	 	
Increase in depreciation expense:	 				 				 				 				
Cost of sales	 				 	 	3,307	  	 	 	2,548	  	 	 	1,492	  	
Selling, general, and administrative expenses	 				 	 	377	  	 	 	290	  	 	 	169	  	
Research, development and engineering costs, net	 				 	 	19	  	 	 	15	  	 	 	9	  	
	 				 	 	 	 	 	 	 	 	 	 	 	 	
	 				 	$	    3,703	  	 	$	    2,853	  	 	$	    1,670	  	

d.	Represents an adjustment to cost of goods sold for the amortization expense associated with fair value adjustments to the carrying value of inventory. We will amortize the fair value of the inventory of Lake Region as the acquired inventory is sold, which for purposes of the unaudited pro forma condensed combined statement of operations is assumed to occur within the first three months after closing.	
 
e.	Reflects tax expense computed by applying the statutory tax rates of the relevant jurisdictions to the respective pro forma adjustments presented in the unaudited pro forma condensed combined statements of operations. These rates do not reflect our effective tax rate, which includes other items and may be significantly different than the rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors.	
 
f.	Represents the adjustment to weighted average shares outstanding to account for the Greatbatch, Inc. shares of common stock issued to Lake Region stockholders as part of the Merger consideration. Additionally, in order to reflect the dilutive effect of Greatbatch, Inc.’s replacement options issued to Lake Region stockholders, 60,000 shares were added to diluted weighted average shares outstanding for the twelve month period ended July 3, 2015 and the six month period ended July 3, 2015. For purposes of the unaudited pro forma condensed combined statement of operations for the twelve months ended January 2, 2015, the dilutive impacts of share based awards and equity warrants have been excluded from the calculation of the pro forma diluted loss per share, as the effect of including them would have been anti-dilutive.	
6. Nuvectra Pro Forma Adjustments
The following summarizes the pro forma adjustments in connection with the announced Spin-Off of Nuvectra to give effect to the disposition as if it had occurred on January 4, 2014 for purposes of the unaudited pro forma condensed combined statements of operations and as of July 3, 2015 for purposes of the unaudited pro forma condensed combined balance sheet.
 
a.	Reflects the elimination of historical financial information for Nuvectra. The historical financial information for Nuvectra have been “carved-out” of our consolidated financial statements and reflect assumptions and allocations made by us. These combined financial statements include the assets and liabilities that have historically been held at Greatbatch but which were specifically identifiable or attributable to Nuvectra or were transferred to Nuvectra in connection with the Spin-Off. All intercompany transactions and accounts within Nuvectra have been eliminated. All transactions between Nuvectra and Greatbatch are considered to be effectively settled in the combined financial statements at the time the	
 
13

 	transaction is recorded. In addition, certain expenses reflected in Nuvectra’s historical financial information are an allocation of corporate expenses from us including executive oversight, finance, legal, human resources, tax, information technology, product development, corporate procurement, and facilities. The actual costs that may have been incurred if Nuvectra had been a stand-alone company would be dependent on a number of factors including the chosen organizational structure and strategic decisions. As such, the Nuvectra combined financial statements do not necessarily reflect what Nuvectra’s financial condition and results of operations would have been had Nuvectra operated as a stand-alone company during the periods or at the date presented. As this information is not readily determinable, nor factually supportable, no pro forma adjustments have been made to adjust Nuvectra’s historic financial information to reflect costs that may have been incurred if Nuvectra had been a stand-alone company.	
 
b.	Represents the cash capital contribution of $75 million to Nuvectra to be made by us immediately prior to completion of the Spin-off. The amount of this capital contribution is a preliminary estimate and is subject to our board of directors’ approval of the Spin-off.	
 
c.	Reflects the elimination of historical financial information for Nuvectra. The historical financial information for the twelve month period ended July 3, 2015 was calculated by taking the Nuvectra combined statement of operations for the year ended January 2, 2015 less the unaudited Nuvectra condensed combined statement of operations for the six months ended July 4, 2014 plus the unaudited Nuvectra condensed combined statement of operations for the six months ended July 3, 2015.	
 
d.	Reflects tax expense computed by applying the statutory tax rates of the relevant jurisdictions to the respective pro forma adjustments presented in the unaudited pro forma condensed combined statements of operations. These rates do not reflect our effective tax rate, which includes other items and may be significantly different than the rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors.	
 
14

Exhibit 99.3
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Stockholder of Accellent Inc.
Wilmington, Massachusetts
We have audited the accompanying consolidated financial statements of Accellent Inc. and subsidiaries (the “Company”), which comprise the consolidated balance sheets as of January 3, 2015 and December 31, 2013, and the related consolidated statements of operations, comprehensive loss, stockholder’s equity, and cash flows for each of the three fiscal years in the period ended January 3, 2015, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 3, 2015 and December 31, 2013, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 3, 2015, in accordance with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
April 17, 2015
 
1

ACCELLENT INC.
Consolidated Balance Sheets
(in thousands, except per share data)

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Assets	 				 				
Current assets:	 				 				
Cash	 	$	44,191	  	 	$	72,240	  	
Accounts receivable, net of allowances of $5,119 and $2,601 at January 3, 2015 and December 31, 2013, respectively	 	 	78,078	  	 	 	59,624	  	
Inventory	 	 	89,191	  	 	 	61,688	  	
Deferred income taxes	 	 	4,404	  	 	 	—  	  	
Prepaid expenses and other current assets	 	 	6,192	  	 	 	2,973	  	
	 	 	 	 	 	 	 	 	
Total current assets	 	 	222,056	  	 	 	196,525	  	
Property, plant and equipment, net	 	 	186,637	  	 	 	116,957	  	
Goodwill	 	 	719,842	  	 	 	556,315	  	
Other intangible assets, net	 	 	193,782	  	 	 	119,808	  	
Deferred financing costs and other assets, net	 	 	23,443	  	 	 	11,625	  	
	 	 	 	 	 	 	 	 	
Total assets	 	$	1,345,760	  	 	$	1,001,230	  	
	 	 	 	 	 	 	 	 	
Liabilities and Stockholder’s Equity	 				 				
Current liabilities:	 				 				
Current portion of long-term debt	 	$	8,350	  	 	$	7	  	
Accounts payable	 	 	27,531	  	 	 	19,229	  	
Accrued payroll and benefits	 	 	20,865	  	 	 	11,928	  	
Accrued interest	 	 	3,460	  	 	 	19,303	  	
Accrued expenses and other current liabilities	 	 	31,847	  	 	 	20,927	  	
	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	92,053	  	 	 	71,394	  	
Long-term debt	 	 	1,040,388	  	 	 	713,652	  	
Deferred income taxes	 	 	38,936	  	 	 	33,925	  	
Other liabilities	 	 	9,480	  	 	 	7,783	  	
	 	 	 	 	 	 	 	 	
Total liabilities	 	 	1,180,857	  	 	 	826,754	  	
	 	 	 	 	 	 	 	 	
Commitments and contingencies (Note 19)	 				 				
Stockholder’s equity:	 				 				
Common stock, par value $0.01 per share, 50,000 shares authorized; 1 share issued and outstanding at January 3, 2015 and December 31, 2013	 	 	—  	  	 	 	—  	  	
Additional paid-in capital	 	 	717,345	  	 	 	640,703	  	
Accumulated other comprehensive loss	 	 	(41,071	) 	 	 	(1,186	) 	
Accumulated deficit	 	 	(511,371	) 	 	 	(465,041	) 	
	 	 	 	 	 	 	 	 	
Total stockholder’s equity	 	 	164,903	  	 	 	174,476	  	
	 	 	 	 	 	 	 	 	
Total liabilities and stockholder’s equity	 	$	1,345,760	  	 	$	1,001,230	  	
	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
2

ACCELLENT INC.
Consolidated Statements of Operations
(in thousands)

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Net sales	 	$	752,264	  	 	$	525,712	  	 	$	498,627	  	
Cost of sales (exclusive of amortization)	 	 	573,616	  	 	 	389,766	  	 	 	375,975	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	178,648	  	 	 	135,946	  	 	 	122,652	  	
Operating expenses:	 				 				 				
Selling, general and administrative	 	 	82,676	  	 	 	52,105	  	 	 	52,402	  	
Research and development	 	 	8,763	  	 	 	2,027	  	 	 	1,695	  	
Impairment of intangible assets and goodwill	 	 	26,800	  	 	 	63,128	  	 	 	—  	  	
Restructuring	 	 	3,138	  	 	 	280	  	 	 	2,866	  	
Amortization of intangible assets	 	 	25,039	  	 	 	14,939	  	 	 	14,939	  	
Loss on disposal of property and equipment	 	 	40	  	 	 	1,088	  	 	 	(261	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	146,456	  	 	 	133,567	  	 	 	71,641	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	32,192	  	 	 	2,379	  	 	 	51,011	  	
Other expense, net:	 				 				 				
Interest expense, net	 	 	(63,096	) 	 	 	(69,145	) 	 	 	(69,096	) 	
Loss on debt extinguishment	 	 	(53,421	) 	 	 	—  	  	 	 	—  	  	
Other, net	 	 	(887	) 	 	 	(1,036	) 	 	 	1,100	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total other expense, net	 	 	(117,404	) 	 	 	(70,181	) 	 	 	(67,996	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations before income taxes	 	 	(85,212	) 	 	 	(67,802	) 	 	 	(16,985	) 	
Provision (benefit) for income taxes	 	 	(38,882	) 	 	 	4,527	  	 	 	1,784	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations	 	 	(46,330	) 	 	 	(72,329	) 	 	 	(18,769	) 	
Net loss from discontinued operations	 	 	—  	  	 	 	(63	) 	 	 	(3,601	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(46,330	) 	 	$	(72,392	) 	 	$	(22,370	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
3

ACCELLENT INC.
Consolidated Statements of Comprehensive Loss
(in thousands)

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Net loss	 	$	(46,330	) 	 	$	(72,392	) 	 	$	(22,370	) 	
Other comprehensive income (loss), net of income taxes:	 				 				 				
Foreign currency translation adjustments	 	 	(34,884	) 	 	 	1,374	  	 	 	499	  	
Pension actuarial gain (loss)	 	 	(2,123	) 	 	 	170	  	 	 	(935	) 	
Amortization of pension actuarial loss	 	 	38	  	 	 	34	  	 	 	93	  	
Curtailment of pension	 	 	338	  	 	 	—  	  	 	 	—  	  	
Unrealized loss on derivatives	 	 	(3,254	) 	 	 	—  	  	 	 	—  	  	
Unrealized gain on investment	 	 	—  	  	 	 	32	  	 	 	(265	) 	
Realized gain on investment	 	 	—  	  	 	 	(242	) 	 	 	(680	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss), net of income taxes	 	 	(39,885	) 	 	 	1,368	  	 	 	(1,288	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	$	(86,215	) 	 	$	(71,024	) 	 	$	(23,658	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
4

ACCELLENT INC.
Consolidated Statements of Stockholder’s Equity
(in thousands, except per share data)

 	 	Common Stock
$0.01 par value	 	 	Additional
Paid-in
Capital	 	 	Accumulated
Other
Comprehensive
Income (Loss)	 	 	Accumulated
Deficit	 	 	Total
Stockholder’s
Equity	 	
 	 	Shares	 	 	Amount	 	 			 			 			 			
Balance, January 1,
2012	 	 	1	  	 	$	    —  	  	 	$	638,445	  	 	$	(1,266	) 	 	$	(370,279	) 	 	$	266,900	  	
Stock issuance	 	 	—  	  	 	 	—  	  	 	 	193	  	 	 	—  	  	 	 	—  	  	 	 	193	  	
Vesting of restricted stock	 	 	—  	  	 	 	—  	  	 	 	150	  	 	 	—  	  	 	 	—  	  	 	 	150	  	
Stock-based compensation	 	 	—  	  	 	 	—  	  	 	 	561	  	 	 	—  	  	 	 	—  	  	 	 	561	  	
Forfeiture of rollover options	 	 	—  	  	 	 	—  	  	 	 	127	  	 	 	—  	  	 	 	—  	  	 	 	127	  	
Exercise of employee stock options	 	 	—  	  	 	 	—  	  	 	 	177	  	 	 	—  	  	 	 	—  	  	 	 	177	  	
Repurchase of parent company stock	 	 	—  	  	 	 	—  	  	 	 	(43	) 	 	 	—  	  	 	 	—  	  	 	 	(43	) 	
Other comprehensive loss, net	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,288	) 	 	 	—  	  	 	 	(1,288	) 	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(22,370	) 	 	 	(22,370	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2012	 	 	1	  	 	$	—  	  	 	 	639,610	  	 	 	(2,554	) 	 	 	(392,649	) 	 	 	244,407	  	
Proceeds from issuance of parent company stock to employees	 	 	—  	  	 	 	—  	  	 	 	75	  	 	 	—  	  	 	 	—  	  	 	 	75	  	
Vesting of restricted stock	 	 	—  	  	 	 	—  	  	 	 	407	  	 	 	—  	  	 	 	—  	  	 	 	407	  	
Share-based compensation	 	 	—  	  	 	 	—  	  	 	 	651	  	 	 	—  	  	 	 	—  	  	 	 	651	  	
Exercise of employee stock options	 	 	—  	  	 	 	—  	  	 	 	70	  	 	 	—  	  	 	 	—  	  	 	 	70	  	
Repurchase of parent company stock	 	 	—  	  	 	 	—  	  	 	 	(110	) 	 	 	—  	  	 	 	—  	  	 	 	(110	) 	
Other comprehensive income, net	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,368	  	 	 	—  	  	 	 	1,368	  	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(72,392	) 	 	 	(72,392	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2013	 	 	1	  	 	 	—  	  	 	 	640,703	  	 	 	(1,186	) 	 	 	(465,041	) 	 	 	174,476	  	
Issuance of parent company stock in acquisition	 	 	—  	  	 	 	—  	  	 	 	75,000	  	 	 	—  	  	 	 	—  	  	 	 	75,000	  	
Proceeds from issuance of parent company stock to employees	 	 	—  	  	 	 	—  	  	 	 	95	  	 	 	—  	  	 	 	—  	  	 	 	95	  	
Vesting of restricted stock	 	 	—  	  	 	 	—  	  	 	 	387	  	 	 	—  	  	 	 	—  	  	 	 	387	  	
Share-based compensation	 	 	—  	  	 	 	—  	  	 	 	1,143	  	 	 	—  	  	 	 	—  	  	 	 	1,143	  	
Repurchase of parent company stock	 	 	—  	  	 	 	—  	  	 	 	(12	) 	 	 	—  	  	 	 	—  	  	 	 	(12	) 	
Settlement of roll-over stock options	 	 	—  	  	 	 	—  	  	 	 	29	  	 	 	—  	  	 	 	—  	  	 	 	29	  	
Other comprehensive loss, net	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(39,885	) 	 	 	—  	  	 	 	(39,885	) 	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(46,330	) 	 	 	(46,330	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at January 3, 2015	 	 	1	  	 	$	    —  	  	 	$	717,345	  	 	$	(41,071	) 	 	$	(511,371	) 	 	$	164,903	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
5

ACCELLENT INC.
Consolidated Statements of Cash Flows
(in thousands)

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Cash flows from operating activities:	 				 				 				
Net loss	 	$	(46,330	) 	 	$	(72,392	) 	 	$	(22,370	) 	
Net loss from discontinued operations	 	 	—  	  	 	 	(63	) 	 	 	(3,601	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations	 	 	(46,330	) 	 	 	(72,329	) 	 	 	(18,769	) 	
Adjustments to reconcile net loss to net cash flows provided by operating activities (net of acquisition):	 				 				 				
Depreciation and amortization	 	 	50,803	  	 	 	33,016	  	 	 	39,169	  	
Amortization of debt discounts and non-cash interest accrued	 	 	3,318	  	 	 	3,289	  	 	 	3,085	  	
Impact of inventory valuation step-up in an acquisition	 	 	6,263	  	 	 	—  	  	 	 	—  	  	
Change in allowance for bad debts	 	 	—  	  	 	 	(11	) 	 	 	10	  	
Restructuring charges, net of adjustments and payments	 	 	—  	  	 	 	—  	  	 	 	1,779	  	
Impairment of intangible assets and goodwill	 	 	26,800	  	 	 	63,128	  	 	 	—  	  	
Loss (gain) on disposal of property and equipment	 	 	40	  	 	 	1,088	  	 	 	(261	) 	
Realized gain on available for sale security	 	 	—  	  	 	 	(242	) 	 	 	—  	  	
Deferred income tax expense	 	 	(42,837	) 	 	 	2,820	  	 	 	392	  	
Non-cash compensation expense	 	 	1,649	  	 	 	768	  	 	 	799	  	
Loss on debt extinguishment	 	 	53,421	  	 	 	—  	  	 	 	—  	  	
Changes in operating assets and liabilities (net of effects of an acquisition):	 				 				 				
Accounts receivable	 	 	1,670	  	 	 	(10,140	) 	 	 	862	  	
Inventory	 	 	(3,148	) 	 	 	(4,421	) 	 	 	5,120	  	
Prepaid expenses and other assets	 	 	(1,078	) 	 	 	(762	) 	 	 	1,051	  	
Accounts payable, accrued expenses and other liabilities	 	 	(10,868	) 	 	 	8,092	  	 	 	(6,482	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities of continuing operations	 	 	39,703	  	 	 	24,296	  	 	 	26,755	  	
Net cash provided by (used in) operating activities of discontinued operations	 	 	—  	  	 	 	(262	) 	 	 	3,828	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	39,703	  	 	 	24,034	  	 	 	30,583	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	 				 				 				
Acquisition of a business, net of cash acquired	 	 	(303,871	) 	 	 	—  	  	 	 	—  	  	
Capital expenditures	 	 	(29,825	) 	 	 	(21,170	) 	 	 	(17,981	) 	
Proceeds from the sale of property and equipment	 	 	351	  	 	 	963	  	 	 	310	  	
Proceeds from the sale of security	 	 	—  	  	 	 	242	  	 	 	680	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities of continuing operations	 	 	(333,345	) 	 	 	(19,965	) 	 	 	(16,991	) 	
Net cash provided by investing activities of discontinued operations	 	 	—  	  	 	 	7,987	  	 	 	7,291	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(333,345	) 	 	 	(11,978	) 	 	 	(9,700	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
(Continued)
 
6

													
 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Cash flows from financing activities:	 				 				 				
Proceeds from borrowings on long-term debt	 	 	1,055,000	  	 	 	—  	  	 	 	—  	  	
Repayments of long-term debt and capital lease obligations	 	 	(721,272	) 	 	 	(11	) 	 	 	(22	) 	
Borrowings under revolving line of credit	 	 	27,000	  	 	 	—  	  	 	 	—  	  	
Repayment of principal under revolving line of credit	 	 	(27,000	) 	 	 	—  	  	 	 	—  	  	
Proceeds from sale of parent company stock	 	 	95	  	 	 	—  	  	 	 	—  	  	
Repurchase of parent company common stock	 	 	(12	) 	 	 	(110	) 	 	 	(43	) 	
Proceeds from the exercise of options in parent company stock	 	 	—  	  	 	 	25	  	 	 	—  	  	
Purchase of interest rate cap	 	 	(524	) 	 	 	—  	  	 	 	—  	  	
Fees on prepayment of long-term debt	 	 	(42,400	) 	 	 	—  	  	 	 	—  	  	
Payment of debt issuance costs	 	 	(23,982	) 	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	 	 	266,905	  	 	 	(96	) 	 	 	(65	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes	 	 	(1,312	) 	 	 	378	  	 	 	226	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	(28,049	) 	 	 	12,338	  	 	 	21,044	  	
Cash, beginning of year	 	 	72,240	  	 	 	59,902	  	 	 	38,858	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, end of year	 	$	44,191	  	 	$	72,240	  	 	$	59,902	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Supplemental cash flow information:	 				 				 				
Cash paid for interest	 	$	75,342	  	 	$	65,784	  	 	$	66,238	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Cash paid for income taxes, net of refunds	 	$	11,988	  	 	$	1,514	  	 	$	3,656	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of parent company stock in acquisition	 	$	75,000	  	 	$	—  	  	 	$	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Property and equipment purchases included in accrued expenses	 	$	1,269	  	 	$	1,894	  	 	$	884	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Asset sales unpaid and included in other current assets	 	$	—  	  	 	$	—  	  	 	$	8,300	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
(Concluded)
See notes to consolidated financial statements.
 
7

ACCELLENT INC.
Notes to Consolidated Financial Statements
1. Business and Basis of Presentation
Description of Business
Accellent Inc. (the “Company”) is a wholly owned subsidiary of Accellent Acquisition Corp., which in turn is a wholly owned subsidiary of Accellent Holdings Corp. (“Accellent Holdings”), which in turn is a wholly owned subsidiary of Lake Region Medical Holdings, Inc. (“LRM Holdings”). On March 12, 2014, the Company completed the acquisition of Lake Region Manufacturing, Inc. (“Lake Region”), a Minnesota entity doing business as Lake Region Medical (the “Lake Region Medical Acquisition”). The Lake Region Medical Acquisition was completed through a Contribution and Merger Agreement among the Company, Accellent Holdings, LRM Holdings (“Buyer”), Lake Region and the other parties thereto (the “Contribution and Merger Agreement”). Accellent Holdings formed Buyer and Accellent Inc. formed Lake Region Merger Sub Inc. (“Merger Sub”) for purposes of consummating the transaction. Pursuant to the Contribution and Merger Agreement, Merger Sub merged with and into Lake Region, with Lake Region surviving as a wholly owned subsidiary of the Company (“Lake Region Merger”). In September 2014, the Company commenced doing business as Lake Region Medical. LRM Holdings, since its formation, and Accellent Holdings, prior to the formation of LRM Holdings, is referred to herein as the “parent company”.
The Company provides its customers in the medical device industry design and engineering, precision component manufacturing, device assembly and supply chain management services and is a manufacturer of interventional and diagnostic wire-formed medical devices and components specializing in minimally invasive devices for cardiovascular, endovascular and neurovascular applications for customers worldwide. The Company has extensive resources focused on providing its customers with reliable, high-quality, cost-efficient, integrated outsourced solutions. Sales are focused primarily in the United States of America (“U.S.”) and Western European markets. Headquartered in Wilmington, Massachusetts, the Company has manufacturing facilities in North America, Europe, and Asia. The Company operates in two segments: Advanced Surgical (“AS Segment”) and Cardio & Vascular (“C&V Segment”).
Basis of Presentation
Effective January 1, 2014, the Company changed its financial reporting year end from the calendar twelve months ending December 31 to the date determined by an annual reporting cycle whereby each fiscal year will typically consist of four 13-week quarters. As a result of this change, fiscal year 2014 began on January 1, 2014, ended on January 3, 2015, and included an additional week in the fourth quarter resulting in a 53-week fiscal year with 368 days. The change in fiscal year did not have a material impact on the financial results for the year ended January 3, 2015. Fiscal years 2013 and 2012 presented in the accompanying consolidated financial statements included 52 weeks. Unless otherwise indicated, references to fiscal years 2014, 2013 and 2012 are to the Company’s fiscal years ended January 3, 2015, December 31, 2013 and December 31, 2012, respectively.
2. Summary of Significant Accounting Policies
Principles of Consolidation
These consolidated financial statements include the accounts of the Company, the parent company and the Company’s wholly owned subsidiaries, including those of Lake Region since March 13, 2014. All intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, the
 
8

Company bases estimates and assumptions on historical experience, currently available information, and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in bank deposit accounts and highly liquid investments with an original or remaining maturity of 90 days or less when acquired. At January 3, 2015 and December 31, 2013, the Company had no cash equivalents.
Allowance for Doubtful Accounts
The Company provides credit to its customers in the normal course of business. The Company maintains an allowance for doubtful accounts for those receivables that it determines are no longer collectible. The Company estimates its losses from uncollectable accounts based upon recent historical experience, the length of time the receivable has been outstanding and other specific information as it becomes available. The allowance for doubtful accounts was $0.6 million at January 3, 2015 and December 31, 2013.
Inventories
Inventories are stated at the lower of cost (on first-in, first-out basis) or market and include the cost of materials, labor and manufacturing overhead. Costs related to abnormal amounts of idle facility expense, freight, handling costs, and wasted material are recognized as current period expenses. In addition to stating inventory at the lower of cost or market, the Company also evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessment of economic conditions and expected demand. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures which significantly increase the value of, or extend the useful lives of property, plant and equipment, are capitalized, while replaced assets are retired when removed from service. Acquired assets to be placed in service are those assets where either ( i ) the Company has yet to begin using the asset in operations or ( ii ) additional costs are necessary to complete the asset for the use in operation. Depreciation expense is recorded on assets when they are placed in service.
Depreciation is calculated using the straight-line method over the estimated useful lives of depreciable assets. Useful lives of depreciable assets, by class, are as follows:

Buildings	 	20 years	
Machinery and equipment	 	3 to 10 years	
Leasehold improvements	 	Lessor of useful life or remaining lease term	
Computer equipment and software	 	3 years	
Automobiles	 	3 years	
The Company evaluates the useful lives and potential impairment of property, plant and equipment whenever events or changes in circumstances indicate that either the useful life or carrying value may be impaired. Events and circumstances which may indicate impairment include a change in the use or condition of the asset, regulatory changes impacting the future use of the asset, or projected operating or cash flow losses, or an expectation that an asset could be disposed of prior to the end of its useful life. If the carrying value of the asset is not recoverable based on an analysis of cash flow, a charge for impairment is recorded equal to the amount by which the carrying value of the asset exceeds its fair value, less costs to sell. In these instances, fair value is estimated utilizing either a market approach considering quoted market prices for identical or similar assets, or the income approach determined using discounted projected cash flows. Additionally, the Company analyzes the remaining useful lives of potential impaired assets and adjusts these lives when appropriate.
 
9

Goodwill
Goodwill represents the amount of cost over the fair value of the net assets of acquired businesses. Goodwill is carried at the reporting unit level and subject to an annual impairment test (or more often if impairment indicators arise), using an estimated fair value-based approach. Fair value is estimated using a combined weighted average of a market based (utilizing fair value multiples of comparable publicly traded companies) and an income based approach (utilizing discounted projected after tax cash flows). In applying the income based approach, the Company makes assumptions about the amount and timing of future expected cash flows, growth rates and appropriate discount rates. The amount and timing of future cash flows are based on the Company’s most recent long-term financial projections. The Company’s discount rate is determined using estimates of market participant risk-adjusted weighted-average costs of capital and reflects the risks associated with achieving future cash flows. If the estimated fair value of the reporting unit is less than its carrying value, the amount of impairment, if any, is based on the implied fair value of goodwill. The Company has elected October 31st as the annual impairment assessment date and performs additional impairment tests if triggering events occur. There was no impairment of the carrying value of goodwill at October 31, 2014, 2013 or 2012 due to the estimated fair values of the reporting units exceeding the carrying values of those reporting units. However, as discussed in Note 6, there was an impairment of the carrying value of goodwill within one of its reporting units in the first quarter of fiscal year 2013.
Other Intangible Assets
Other intangible assets include the value ascribed to trade names, developed technology and know-how, as well as customer contracts and relationships obtained in connection with acquisitions. The values ascribed to finite lived intangible assets are amortized to expense over the estimated useful life of the assets. The amortization periods are as follows:

 	 	Amortization
Period	 	
Developed technology and know-how	 	 	8.5 years	  	
Customer contracts and relationships	 	 	15 years	  	
Trade names	 	 	15 years	  	
The Company evaluates indefinite lived intangible assets, for potential impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable through projected undiscounted cash flows expected to be generated by the assets. If the carrying value of an intangible asset is not recoverable, a charge for impairment is recorded equal to the amount by which the carrying value of the asset exceeds its related fair value. The estimated fair value is generally based on projections of future cash flows using the relief-from-royalty method and appropriate discount rates. The Company’s discount rate is determined using estimates of market participant risk-adjusted weighted-average costs of capital and reflects the risks associated with achieving future cash flows.
Revenue Recognition
The Company recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been performed, the price from the buyer is fixed or determinable, and collectability is reasonably assured.
Amounts billed for shipping and handling fees are classified within net sales in the consolidated statements of operations. Costs incurred for shipping and handling are classified as cost of sales. Shipping and handling fees were not significant for fiscal years 2014, 2013 and 2012.
The Company recognizes an allowance for estimated future sales returns in the period revenue is recorded. The estimate of future returns is based on pending returns and historical return data, among other factors. The allowance for sales returns was $4.5 million and $2.1 million at January 3, 2015 and December 31, 2013, respectively.
A significant portion of the Company’s customer base is comprised of companies within the medical device industry. The Company does not require collateral from its customers.
 
10

Taxes collected from customers relating to product sales and remitted to governmental authorities are accounted for on a net basis. Accordingly, such taxes are excluded from both net sales and expenses.
Research and Development Costs
Research and development costs are expensed as incurred.
Environmental Costs
Environmental expenditures that relate to an existing condition caused by past operations and that do not provide future benefits are expensed as incurred. Liabilities are recorded when environmental assessments are made, the requirement for remedial efforts is probable and the amount of the liability can be reasonably estimated. Liabilities are recorded generally no later than the completion of feasibility studies. The Company has an ongoing monitoring and identification process to assess how the activities, with respect to known exposures, are progressing against the recorded liabilities, as well as to identify other potential remediation sites that are presently unknown.
Income Taxes
The Company utilizes the asset and liability method of accounting for income taxes. Under this method, the Company determines deferred tax assets and liabilities based on the differences between the financial statement and the tax bases of assets and liabilities using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided when the Company does not believe it to be more likely than not that the benefit of identified deferred tax assets will be realized. The Company records a liability to recognize the exposure related to uncertain income tax positions taken on returns that have been filed or that are expected to be taken in a tax return. The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense.
The Company has not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries as of January 3, 2015 because the Company intends to permanently reinvest such earnings outside the U.S. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.
Share-Based Compensation
The Company’s employees participate in the parent company’s share-based compensation and incentive plans and accounts for these arrangements in the Company’s financial statements using the fair value method. The Company recognizes compensation expense over the requisite service period of the award, which is generally the vesting period, and when attainment of the associated performance criteria becomes probable for stock option awards that vest upon attainment of certain performance targets. Share-based compensation expense is recorded using the graded attribution method, which results in higher compensation expense in the earlier periods than recognition on a straight-line method. The Company records the expense in the consolidated statements of operations in the same manner in which the award recipients’ costs are classified. The fair value of restricted stock awards and restricted stock units is based upon the estimated grant date fair value of the underlying common stock on the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options, inclusive of assumptions for the estimated grant date fair value of the underlying common stock, risk-free interest rates, dividends, expected terms and estimated volatility. The volatility of the parent company’s common stock is estimated utilizing a weighted average stock price volatility of its publicly traded peer companies, adjusted for the entity’s financial performance and the risks associated with the illiquid nature of the common stock. The risk free rate is based on U.S. Treasury rate for notes with terms best matching of the option’s expected term. The dividend yield assumption of 0.0% is based on the Company’s history and its expectation of not paying dividends on common shares. The Company calculated the weighted-average expected term of the options using the simplified
 
11

method, which is a method of applying a formula that uses the vesting term and the contractual term to compute the expected term of a stock option. The decision to use the simplified method is based on a lack of relevant historical data. The Company records expense related to awards issued to non-employees over the related service period and periodically revalues the awards as they vest. The accounting for stock options requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Defined Benefit Pension Plans
The Company recognizes the funded status of each of its defined benefit pension and postretirement plans as an asset or liability in the consolidated balance sheets. Changes in the funded status are recognized in the year in which changes occur through other comprehensive loss. The funded status of each of the Company’s plans is measured as of the reporting date.
Accumulated Other Comprehensive Loss
Comprehensive loss is comprised of net loss, plus all changes in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. These changes in equity are recorded as adjustments to accumulated other comprehensive loss in the Company’s consolidated balance sheet. The components of accumulated other comprehensive loss consist of cumulative foreign currency translation adjustments, pension related gains and losses and unrealized gains and losses on investments and derivatives, including interest rate cap structures (“interest rate cap”) and interest rate swap agreements (“interest rate swap”).
Fair Value Measurements
On a recurring basis, the Company measures certain financial assets and liabilities at fair value based upon quoted market prices when available, or from discounted future cash flows. The carrying value of the Company’s financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short maturities. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

Measurement Type	 	Description	
Level 1	 	Utilizes quoted market prices for identical assets or liabilities, principally in active brokered markets.	
		
Level 2	 	Utilizes other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.	
		
Level 3	 	Utilizes unobservable inputs determined using management’s best estimate of inputs that a market participant would use in pricing the asset or liability at the measurement date, including assumptions about risk.	
Derivatives and Hedging
The Company formally documents, designates and assesses the effectiveness of transactions that receive hedge accounting treatment initially and on an ongoing basis. All derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that qualify for hedge accounting treatment are recorded in accumulated other comprehensive loss. For the ineffective portions of the qualifying hedges, the change in fair value is recorded through earnings in the period of change. Derivative assets and derivative liabilities are classified as other current assets or other current liabilities based on the gain or loss position of the contract as of the reporting date.
The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates on long-term debt, and it seeks to mitigate a portion of these risks by entering into interest rate cap and interest rate swap transactions. The Company reports cash flows arising from its hedging instruments consistent with the classification of cash flows from the underlying hedged items. Accordingly, cash flows associated with the Company’s derivative programs are classified as operating activities in the accompanying consolidated statements of cash flows.
 
12

The Company is currently hedging cash flow fluctuations due to interest on long-term debt through March 2018. On March 18, 2014, the Company entered into a series of interest rate swap transactions. Under each interest rate swap agreement, the Company will exchange quarterly fixed payments with quarterly variable payments from the counterparties. Simultaneously, the Company also entered into an Interest Rate Cap Transaction with a counterparty, whereby the Company will receive payments to the extent the three month LIBOR rate exceeds 5%. Prior to March 18, 2014, there were no outstanding derivative transactions.
At January 3, 2015, the Company’s interest rate swap and interest rate cap agreements qualified as cash flow hedges, the fair values of which resulted in a current liability of $3.3 million. The Company expects to ultimately record any gains or losses on the interest rate swap and interest rate cap transactions in earnings consistent with the term of the contract.
During fiscal year 2014, no amounts were reclassified from accumulated other comprehensive income to earnings due to hedge ineffectiveness and no amounts are expected to be reclassified into earnings in fiscal year 2015.
Foreign Currency Translation
The Company has manufacturing subsidiaries in Europe, Mexico, and Malaysia. The functional currency of each of these subsidiaries is the respective local currency. Assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the current rate of exchange existing at period end, while revenues and expenses are translated at average monthly exchange rates. Translation gains and losses are recorded as a component of other comprehensive loss within the consolidated statements of other comprehensive loss. Transaction gains and losses are included in other expense, net. Currency transaction gains included in other expense, net in fiscal years 2014, 2013 and 2012 were $0.9 million, $2.1 million and $0.3 million, respectively.
Evaluation of Subsequent Events
Management has evaluated subsequent events involving the Company for potential recognition or disclosure in the accompanying consolidated financial statements through April 17, 2015. Subsequent events are events or transactions that occur after the balance sheet date but before the accompanying consolidated financial statements are issued.
Recent Accounting Pronouncements
On January 16, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-02, “Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (A Consensus of the Private Company Council)”, which provides private companies an alternative for the subsequent accounting of goodwill. This accounting update provides an accounting alternative for the subsequent measurement of goodwill, whereby a private entity may elect to amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate. An entity that elects the accounting alternative is further required to make an accounting policy election to test goodwill for impairment at either the entity level or the reporting unit level. The accounting alternative, if elected, should be applied prospectively to goodwill existing as of the beginning of the period of adoption and new goodwill recognized in annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted, including application to any period for which the entity’s annual or interim financial statements have not yet been made available for issuance. The Company does not intend to elect the alternative treatment of goodwill.
On January 16, 2014, the FASB issued ASU No. 2014-03, “Derivatives and Hedging (Topic 815): Accounting for Certain Receivable-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach (A Consensus of the Private Company Council)”, which provides private companies an alternative to apply a simplified hedge accounting approach if certain conditions are met. The simplified hedge accounting approach will be effective for annual periods beginning after December 15, 2014, and interim periods within annual
 
13

periods beginning after December 15, 2015, with early adoption permitted. The Company’s hedging transactions do not qualify for the simplified hedge accounting approach and as such the Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements.
On May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new guidance is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017; Nonpublic entities may apply the requirements earlier than the nonpublic effective date but no earlier than the public entity effective date beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. This update could impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption.
On June 12, 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Allow a Performance Target to Be Achieved After the Requisite Service Period,” which requires that a performance target that could be achieved after the requisite service period be treated as a performance condition that affects the vesting of the award. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (i) prospectively to all awards granted or modified after the effective date; or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements when adopted.
In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, companies will have reduced diversity in the timing and content of disclosures than under current guidance. ASU 2014-15 is effective for the Company in the first quarter of 2016 with early adoption permitted. The Company does not believe the impact of adopting ASU 2014-15 on its consolidated financial statements will be significant.
3. Acquisition of Lake Region
As discussed in Note 1, on March 12, 2014, the Company completed the Lake Region Medical Acquisition. Immediately prior to closing the transaction, i) certain stockholders of Lake Region, severally and not jointly, contributed certain of their shares of Lake Region common stock to Buyer in exchange for, and in the aggregate, 27.778 million shares of Buyer common stock at $2.70 per share for a value of $75.0 million and ii) certain stockholders of Accellent Holdings, severally and not jointly contributed their respective shares of Accellent Holdings to Buyer in exchange for an equal number of shares of Buyer. Following the contribution of those certain shares of Lake Region common stock to Buyer, the Company paid $315.0 million in cash consideration to the remaining former Lake Region stockholders (“Seller”) for the remaining outstanding shares of Lake Region common stock, which were acquired via the Lake Region Merger, subject to adjustments in respect of outstanding indebtedness, cash, change in control payments and certain expenses of Lake Region. Subsequent to the closing, $3.2 million of working capital adjustments, to the benefit of the Buyer, were identified, reviewed and agreed to by the Seller and received by the Company in June 2014 out of the $25.0 million initially held in escrow. Provided that the Buyer will have no further claims on the escrow amount pursuant to the Contribution and Merger Agreement on or prior to June 12, 2015 (the “Scheduled Release Date”), the remaining escrow of $21.8 million will be released to the Seller on the Scheduled Release Date. The acquisition of Lake Region supports the Company’s strategic intent to grow its C&V Segment and to create a leading interventional vascular business with more scale, a broader product offering and deeper customer relationships.
The transaction has been accounted for as a business combination. The acquired business contributed net sales of $173.7 million, or 23% of consolidated net sales, in fiscal year 2014. Additionally, the acquired business contributed $7.2 million of pre-tax income in fiscal year 2014. The results of the acquired business are included in the C&V Segment.
 
14

The Company generally employs the income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product life cycles, economic barriers to entry, a brand’s relative market position and the discount rate applied to the cash flows, among others.
Significant judgment is required in estimating the fair value of intangible assets acquired in a business combination and in assigning their respective useful lives. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product life cycles, economic barriers to entry, a brand’s relative market position and the discount rate applied to the cash flows, among others. Any resultant allocation of purchase price consideration paid in excess of the fair value of assets assessed and acquired less liabilities assumed was identified accordingly and recognized as goodwill. The Company recognized approximately $181.1 million of goodwill, which is not tax deductible and is primarily due to the inherent long-term value anticipated from the synergies and business opportunities expected to be achieved as a result of the transaction. A summary of the purchase price allocation for the acquisition of Lake Region is as follows:
Consideration transferred (in thousands):

Cash	 	$	315,000	  	
Fair value of equity securities issued by LRM Holdings to Seller	 	 	75,000	  	
Reimbursement of transaction costs to Seller	 	 	1,669	  	
Working capital adjustment	 	 	(3,264	) 	
	 	 	 	 	
Total fair value of consideration transferred	 	$	388,405	  	
	 	 	 	 	
Fair value measurement of the assets acquired and liabilities assumed (in thousands):

Cash	 	$	9,534	  	
Accounts receivable	 	 	22,613	  	
Inventories	 	 	32,832	  	
Prepaid expenses and other assets	 	 	16,076	  	
Property, plant and equipment	 	 	74,869	  	
Definitive life intangible assets	 				
Trade name	 	 	16,700	  	
Developed technology and know-how	 	 	38,000	  	
Backlog	 	 	1,200	  	
Customer relationships	 	 	78,000	  	
Goodwill	 	 	181,085	  	
Accounts payable, accrued expenses and other liabilities	 	 	(37,572	) 	
Deferred tax liabilities	 	 	(44,932	) 	
	 	 	 	 	
Total net assets acquired	 	$	388,405	  	
	 	 	 	 	
Net cash paid (in thousands):

Cash paid at the closing date	 	$	(315,000	) 	
Cash held by Lake Region	 	 	9,534	  	
Reimbursement of transaction costs to Seller	 	 	(1,669	) 	
Working capital adjustment received	 	 	3,264	  	
	 	 	 	 	
Net cash paid	 	$	(303,871	) 	

15

The Company incurred transaction related costs of $5.9 million during fiscal year 2014. These costs consisted primarily of legal and accounting fees and have been recorded in selling, general and administrative expenses. The $133.9 million of acquired intangible assets is comprised of trade name of $16.7 million, technology of $38.0 million, backlog of $1.2 million and customer relationships of $78.0 million, with weighted average amortization periods of 15 years, 11 years, 1 year and 15 years, respectively. The amortization expense related to the acquired intangible assets in fiscal year 2014 was $8.7 million. In fiscal year 2014, the $6.3 million related to the inventory fair value adjustment from the purchase price allocation was recorded to cost of sales.
4. Inventories
Inventories consisted of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Raw materials	 	$	22,849	  	 	$	13,885	  	
Work-in-process	 	 	41,233	  	 	 	29,969	  	
Finished goods	 	 	25,109	  	 	 	17,834	  	
	 	 	 	 	 	 	 	 	
	 	$	89,191	  	 	$	61,688	  	
	 	 	 	 	 	 	 	 	
During fiscal years 2014, 2013 and 2012, the Company recorded charges for excess and obsolete inventory of $0.7 million, $1.3 million and $0.9 million, respectively.
5. Property, Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Land	 	$	7,928	  	 	$	3,769	  	
Buildings	 	 	47,469	  	 	 	15,947	  	
Machinery and equipment	 	 	209,887	  	 	 	178,354	  	
Leasehold improvements	 	 	16,439	  	 	 	17,061	  	
Computer equipment and software	 	 	41,991	  	 	 	33,735	  	
Acquired assets to be placed in service	 	 	26,298	  	 	 	16,570	  	
	 	 	 	 	 	 	 	 	
	 	 	350,012	  	 	 	265,436	  	
Less—Accumulated depreciation	 	 	(163,375	) 	 	 	(148,479	) 	
	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	$	186,637	  	 	$	116,957	  	
	 	 	 	 	 	 	 	 	
Cost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any gain or loss on disposal is recorded in earnings. Capitalized interest in connection with constructing property and equipment was not material. Depreciation expense was $25.8 million, $18.1 million and $25.1 million for fiscal years 2014, 2013 and 2012, respectively.
 
16

6. Goodwill and Other Intangible Assets
The Company reports all amortization expense related to finite lived intangible assets separately within its consolidated statements of operations. For fiscal years 2014, 2013 and 2012, the Company recorded amortization expense related to intangible assets as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Cost of sales	 	$	3,596	  	 	$	1,988	  	 	$	1,988	  	
Selling, general and administrative	 	 	21,443	  	 	 	12,951	  	 	 	12,951	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total amortization reported	 	$	25,039	  	 	$	14,939	  	 	$	14,939	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Goodwill consisted of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Goodwill	 	$	1,000,269	  	 	$	836,742	  	
Accumulated impairment losses	 	 	(280,427	) 	 	 	(280,427	) 	
	 	 	 	 	 	 	 	 	
Goodwill carrying amount	 	$	719,842	  	 	$	556,315	  	
	 	 	 	 	 	 	 	 	
Upon completing the acquisition of Lake Region in March 2014, the Company concluded it would change its name to Lake Region Medical and no longer use the trade name “Accellent” (“Accellent Trade Name”). Immediately prior to the business combination, the Company had a carrying value of $29.4 million related to the Accellent Trade Name. The planned change in name represented a triggering event for impairment testing that resulted in the recording of an impairment charge related to the Accellent Trade Name of $26.8 million in the first quarter of fiscal year 2014. The then remaining balance of $2.6 million was amortized through the end of fiscal year 2014, its remaining useful life. Management recorded a tax benefit of $11.1 million on a discrete basis related to the impairment.
During the first quarter of 2013, the Company reorganized its business into the AS Segment and C&V Segment. The evaluation of the reporting units had also been reassessed and changed to reflect the current structure and operations. During the first quarter of fiscal 2013, goodwill was assigned to the new Advanced Surgical (“AS”) reporting unit and Cardio & Vascular (“C&V”) reporting unit based on the relative fair values of the reporting units. This resulted in goodwill of $134 million being assigned to its AS reporting unit, and $485.4 million being assigned to its C&V reporting unit. After the preliminary allocation of the goodwill, the carrying amount of the AS reporting unit exceeded its fair value by approximately $16 million, which required the Company to perform an interim goodwill impairment test for the AS reporting unit. Pursuant to the next step of impairment testing, the Company calculated an implied fair value of goodwill based on a hypothetical purchase price allocation. As a result, the Company recorded a pre-tax goodwill impairment charge of $63.1 million in fiscal year 2013.
The acquired tax basis of goodwill amortizable for federal income tax purposes is approximately $110.9 million. The remaining amortizable tax basis of goodwill is $15.4 million at January 3, 2015.
 
17

There were no changes in the carrying value of goodwill in fiscal year 2012. The following table depicts the change in the Company’s goodwill during fiscal years 2013 and 2014 (in thousands):

 	 	Cardio &
Vascular	 	 	Advanced
Surgical	 	 	Total	 	
Balance December 31, 2012	 	$	—  	  	 	$	—  	  	 	$	619,443	  	
Transfer to segments	 	 	485,354	  	 	 	134,089	  	 	 	—  	  	
Impairment	 	 	—  	  	 	 	(63,128	) 	 	 	(63,128	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2013	 	 	485,354	  	 	 	70,961	  	 	 	556,315	  	
Acquisition of Lake Region	 	 	181,085	  	 	 	—  	  	 	 	181,085	  	
Translation losses included as a component of other comprehensive loss	 	 	(17,558	) 	 	 	—  	  	 	 	(17,558	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at January 3, 2015	 	$	648,881	  	 	$	70,961	  	 	$	719,842	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Intangible assets consisted of the following at January 3, 2015 (in thousands):

 	 	Gross Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net Carrying
Amount	 	
Developed technology and know-how	 	$	53,832	  	 	$	(19,759	) 	 	$	34,073	  	
Customer contracts and relationships	 	 	268,700	  	 	 	(124,992	) 	 	 	143,708	  	
Trade names and trademarks	 	 	19,300	  	 	 	(3,506	) 	 	 	15,794	  	
Backlog	 	 	1,147	  	 	 	(940	) 	 	 	207	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	342,979	  	 	$	(149,197	) 	 	$	193,782	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Intangible assets consisted of the following at December 31, 2013 (in thousands):

 	 	Gross Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net Carrying
Amount	 	
Developed technology and know-how	 	$	16,991	  	 	$	(16,162	) 	 	$	829	  	
Customer contracts and relationships	 	 	197,575	  	 	 	(107,996	) 	 	 	89,579	  	
Trade names and trademarks	 	 	29,400	  	 	 	—  	  	 	 	29,400	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total intangible assets	 	$	243,966	  	 	$	(124,158	) 	 	$	119,808	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Estimated intangible asset amortization expense for future fiscal years is as follows (in thousands):

 	 	Amount	 	
2015	 	$	22,926	  	
2016	 	 	22,719	  	
2017	 	 	22,719	  	
2018	 	 	22,719	  	
2019	 	 	22,719	  	
Thereafter	 	 	79,980	  	
	 	 	 	 	
Total	 	$	193,782	  	

18

The remaining weighted average amortization periods for the Company’s finite lived intangible assets at the end of fiscal years 2014 and 2013 were as follows (in years):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Developed technology and know-how	 	 	9.9	  	 	 	0.4	  	
Customer contracts and relationships	 	 	9.2	  	 	 	6.9	  	
Trade names and trademarks	 	 	14.2	  	 	 	—  	  	
Customer backlog	 	 	0.2	  	 	 	—  	  	
Total finite lived intangible assets	 	 	9.7	  	 	 	6.9	  	
7. Other Liabilities
Other liabilities consisted of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Pension and other retirement plan liabilities	 	$	6,288	  	 	$	4,826	  	
Environmental liabilities	 	 	1,273	  	 	 	1,334	  	
Deferred compensation	 	 	590	  	 	 	501	  	
Restructuring liabilities	 	 	886	  	 	 	736	  	
Other long-term liabilities	 	 	443	  	 	 	386	  	
	 	 	 	 	 	 	 	 	
Total	 	$	9,480	  	 	$	7,783	  	
	 	 	 	 	 	 	 	 	
8. Long-Term Debt
Long-term debt consisted of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
First Lien Loan maturing on March 12, 2021, interest at 4.5%	 	$	828,738	  	 	$	—  	  	
Second Lien Loan maturing on March 12, 2022, interest at 7.5%	 	 	220,000	  	 	 	—  	  	
Senior secured notes maturing on February 1, 2017, interest at 8.375% (“Senior Secured Notes”)	 	 	—  	  	 	 	400,000	  	
Senior subordinated notes maturing on November 1, 2017, interest at 10.0% (“Senior Subordinated Notes”)	 	 	—  	  	 	 	315,000	  	
Capital lease obligations	 	 	—  	  	 	 	9	  	
	 	 	 	 	 	 	 	 	
Total debt	 	 	1,048,738	  	 	 	715,009	  	
Less—unamortized discount	 	 	—  	  	 	 	(1,350	) 	
Less—current portion	 	 	(8,350	) 	 	 	(7	) 	
	 	 	 	 	 	 	 	 	
Long-term debt, excluding current portion	 	$	1,040,388	  	 	$	713,652	  	
	 	 	 	 	 	 	 	 	
As of December 31, 2013, the Company had outstanding $400 million of 8.375% senior secured notes due 2017 (“2017 Senior Secured Notes”) and $315 million of 10% senior subordinated notes due 2017 (“2017 Senior Subordinated Notes”) and had available a $75 million asset based revolver with no outstanding borrowings. The 2017 Senior Secured Notes were issued in 2010 at a price of 99.9349% of par value, representing original issuance discount of $2.6 million. The 2017 Senior Secured Notes and 2017 Senior Subordinated Notes carried redemption rights, were subject to certain restrictions and were jointly and severally guaranteed on a senior secured basis by the
 
19

Company and all of the Company’s domestic subsidiaries. All obligations under these notes, and the guarantees of those obligations, were secured, subject to certain exceptions, by substantially all of the Company’s assets and the assets of the guarantors. The indentures that governed these notes and the credit agreement that governed the asset based revolver contained restrictions on the Company’s ability, and the ability of the Company’s subsidiaries: to (i) incur additional indebtedness or issue preferred stock; (ii) repay subordinated indebtedness prior to its stated maturity; (iii) pay dividends on, repurchase or make distributions in respect of the Company’s capital stock, or make other restricted payments; (iv) make certain investments; (v) sell certain assets; (vi) create liens; (vii) consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets; and (viii) enter into certain transactions with the Company’s affiliates. The discount and costs incurred on the issuance of these notes and credit agreement were being amortized as a component of interest expense over seven years.
In March 2014, in connection with the acquisition of Lake Region, the Company obtained $1.06 billion of new debt financing sufficient to finance the acquisition, repay the Company’s Senior Secured Notes and Senior Subordinated Notes (collectively the “Notes”), and pay transaction expenses (the “Refinancing”). On March 12, 2014, the Company completed its cash tender offers for any and all of (i) the $400 million aggregate principal amount of its outstanding Senior Secured Note and (ii) the $315 million aggregate principal amount of its outstanding Senior Subordinated Notes. A total of $368.7 million in aggregate principal amount, or approximately 92.16%, of the outstanding amount of the Senior Secured Notes, and $244.6 million in aggregate principal amount, or approximately 77.66%, of the outstanding amount of the Senior Subordinated Notes were repurchased by the Company in tender offers. Additionally on March 12, 2014, the Company transferred $111.7 million to the note paying agent to be held in escrow as payment to the holders that did not tender on the Senior Secured and Senior Subordinated Notes. On April 11, 2014, the note paying agent redeemed all of the Notes remaining outstanding after the consummation of the tender offers, including $31.3 million aggregate principal amount of the Senior Secured Notes and $70.4 million aggregate principal amount of the Senior Subordinated Notes (the “Redemption”). The Senior Secured Notes were redeemed at a redemption price of 103.0%, together with accrued and unpaid interest and the Senior Subordinated Notes were redeemed at a redemption price of 107.5%, together with accrued and unpaid interest.
In connection with the early repayment of existing debt, the Company recognized a loss on the debt extinguishment of $53.4 million, which includes $42.3 million of existing debt prepayment fees, $9.8 million of existing deferred financing fees, net and $1.3 million of existing discount on the Notes. As part of the Refinancing, the Company terminated its revolving credit facility.
The following describes the significant terms and conditions of the Company’s long-term debt arrangements in place at January 3, 2015.
First Lien Loan
The First Lien Loan (“First Lien”) administered by UBS AG—Stamford (“UBS”) totaling $835.0 million bears interest at an all-inclusive interest rate of 4.5% which includes a 3.5% margin, and for the first year of the loan, the LIBOR rate is fixed at 1% floor. After the first year, the rate is the greater of the 1% floor or the three month LIBOR. The alternative base rate (“ABR”) rate is the Federal prime rate plus a margin of 2.50%. Choosing between the ABR rate or LIBOR rate for the year is determined at the Company’s discretion, once chosen the contract for ABR or LIBOR is 12 months. The Company has elected the LIBOR rate for the first 12 months. The First Lien matures on March 12, 2021. Interest is payable quarterly, commencing June 12, 2014. Principal payments of the First Lien Loan are payable in quarterly installments at 0.25% of initial aggregate principal commencing June 30, 2014 that are approximately $2.1 million and running through December 31, 2020, with the remaining principal payment of approximately $778.6 million due at maturity.
The Company’s obligations under the First Lien are jointly and severally guaranteed on a secured basis by the Company and all of the Company’s domestic subsidiaries. All obligations under the First Lien, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company’s assets and the assets of the guarantors.
The Company may redeem the First Lien, in whole or in part, at a price equal to 100.00% of the principal amount thereof plus accrued and unpaid interest, if any, if the payment occurs on or before March 11, 2021.
 
20

Included in the First Lien is a Revolving Credit Commitment (the “Revolver”) with a syndicate of financial institutions. The Revolver provides for revolving credit financing of up to $75.0 million, which includes a Swingline Commitment of $15.0 million, subject to borrowing base availability, and matures on March 12, 2019. Borrowings under the Revolver bear interest at a rate per annum equal to, at the Company’s option: either (1) the ABR rate of the Federal prime rate plus a margin of 2.5%, or (2) the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period of intended borrowing plus a margin of 3.5%. In addition to interest on any outstanding borrowings under the Revolver, the Company is required to pay a commitment fee of 0.50% per annum related to unutilized commitments. The Company must also pay customary administrative agency fees and customary letter of credit fees equal to the applicable margin on LIBOR loans. Total amount of commitment, administrative agency and letter of credit fees incurred under the Revolver in fiscal year 2014 were minimal and are included within “Interest expense, net” in the accompanying condensed consolidated statements of operations. The Company’s aggregate borrowing capacity was $62.8 million, after giving effect to outstanding letters of credit totaling $12.2 million and there were no amounts outstanding under the Revolver at January 3, 2015.
All outstanding borrowings under the Revolver are due and payable in full on March 12, 2019 and are unconditionally guaranteed jointly and severally on a secured basis by all the Company’s existing and subsequently acquired or organized, direct or indirect U.S. restricted subsidiaries.
Solely with respect to any borrowings under the Revolver, the Company will not be permitted to have a First Lien Leverage Ratio greater than 7.75 to 1.00 for any trailing twelve month period beginning after June 30, 2014. The First Lien Leverage Ratio is the ratio of Consolidated First Lien Secured Debt minus cash and cash equivalents of the borrower, then divided by Consolidated EBITDA as defined in the agreement.
Second Lien Loan
The Second Lien Loan (“Second Lien”) administered by Goldman Sachs Bank USA (“Goldman Sachs”) totaling $220.0 million bears interest at an all-inclusive interest rate of 7.5%, per annum which includes a 6.5% margin for LIBOR loans and for the first year of the loans, the LIBOR rate is fixed at 1% floor. After the first year the rate is the greater of the 1% LIBOR floor or the three month LIBOR. The ABR rate is the Federal prime rate plus a margin of 5.50%. Choosing between ABR or LIBOR rate for the year is determined at the Company’s discretion. Once chosen the contract for ABR or LIBOR is 12 months. The Company has elected the LIBOR rate for the first 12 months. The Second Lien matures on March 12, 2022. Interest is payable quarterly, commencing June 12, 2014. Principal payment of the Second Lien is due at maturity.
The Company’s obligations under the Second Lien are jointly and severally guaranteed on a secured basis by the Company and all of the Company’s domestic subsidiaries. All obligations under the Second Lien, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company’s assets and the assets of the guarantors.
The Company may redeem the Second Lien, during any 12-month period commencing on the issue date, in whole or in part, at a price equal to 102.00% of the principal amount thereof plus accrued and unpaid interest, if any, if the prepayment occurs prior to March 12, 2015; at a price equal to 101.00% of the principal amount thereof plus accrued and unpaid interest, if any, if the prepayment occurs on or after March 12, 2015 through March 11, 2016; and at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, if the prepayment occurs on or after March 12, 2016 through March 11, 2022.
The indentures that govern the First Lien and Second Lien and the credit agreement that governs the Revolver, contain restrictions on the Company’s ability, and the ability of the Company’s subsidiaries: to (i) incur additional indebtedness or issue preferred stock; (ii) create liens; (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets; (iv) sell certain assets; (v) repay subordinated indebtedness prior to its stated maturity; (vi) pay dividends on, repurchase or make distributions in respect of the Company’s capital stock or make other restricted payments; (vii) make certain investments; (viii) enter into certain transactions with the Company’s affiliates.
 
21

Annual minimum principal payments on the Company’s long-term debt in future fiscal years are as follows (in thousands):

 	 	Amount	 	
2015	 	$	8,350	  	
2016	 	 	8,350	  	
2017	 	 	8,350	  	
2018	 	 	8,350	  	
2019	 	 	8,350	  	
Thereafter	 	 	1,006,988	  	
	 	 	 	 	
Total	 	$	1,048,738	  	
	 	 	 	 	
Interest expense, net, as reported in the statements of operations for fiscal years 2014, 2013 and 2012 has been offset by interest income of $0.1 million, $47,000 and $0.1 million, respectively.
Costs incurred in connection with the issuance of debt is deferred and amortized over the term of the debt on a straight-line basis as a component of interest expense. As of January 3, 2015 and December 31, 2013, the unamortized balance of deferred financing costs included in other assets in the accompany balance sheets was $21.3 million and $10.3 million, respectively.
9. Discontinued Operations and Divestitures
The Company sold certain of its businesses during fiscal year 2012 that were accounted for as discontinued operations. One of the sale transactions was consummated on December 31, 2012 and accounted for as sold as of and for fiscal year 2012. However, the cash proceeds resulting from the sale, which totaled $8.3 million, were not received at closing and were received in fiscal year 2013. In fiscal year 2013, the Company incurred $0.1 million of expenses related to the disposed businesses and reported this amount as loss from discontinued operations, net in the accompanying consolidated statements of operations and cash flows.
The Company recorded the following amounts for fiscal years 2013 and 2012, within net loss from discontinued operations—net of tax (in thousands):

 	 	2013	 	 	2012	 	
Loss on disposition of discontinued operations	 	$	(63	) 	 	$	(5,194	) 	
Income from discontinued operations prior to disposition	 	 	—  	  	 	 	1,593	  	
	 	 	 	 	 	 	 	 	
Net loss from discontinued operations—net of tax	 	$	(63	) 	 	$	(3,601	) 	
	 	 	 	 	 	 	 	 	
In connection with the sale of these businesses during the year ended December 31, 2012, the Company allocated $10.4 million of goodwill to these businesses, using the relative fair value method, which was included in the determination of loss on disposition of discontinued operations—net of tax.
Summary results of the discontinued operations prior to disposition for fiscal year 2012 follows (in thousands):

Sales	 	$	15,858	  	
Costs and expenses	 	 	14,266	  	
	 	 	 	 	
Operating income from discontinued operations	 	 	1,592	  	
Other income, net	 	 	1	  	
	 	 	 	 	
Net loss from discontinued operations—net of tax	 	$	1,593	  	

22

10. Capital stock
The Company’s Board of Directors has authorized an aggregate number of common shares for issuance equal to 1,000 shares, $0.01 par value per share. Upon formation of LRM Holdings and in connection with the Lake Region Merger, all outstanding common stock, stock options and other share-based awards of Accellent Holdings were converted into common stock, stock options and other share-based awards of LRM Holdings with the same rights, terms and conditions.
LRM Holdings is party to a registration rights agreement with entities affiliated with the Company’s principal stockholder, KKR & Co. L.P., (“KKR”), and entities affiliated with another significant stockholder, Bain Capital (“Bain”), (each a “Sponsor Entity” and together the “Sponsor Entities”) pursuant to which the Sponsor Entities are entitled to certain demand rights with respect to the registration and sale of their shares of LRM Holdings.
11. Restructuring Expenses
In December 2011, the Company’s Board of Directors approved a plan of closure with respect to the Company’s manufacturing facility in Manchester, England. In April of 2012, the Manchester facility was closed, and substantially all employees were terminated. All affected employees were provided stay bonuses as well as one-time termination benefits that were received upon cessation of employment, provided they remained with the Company through the closing date. The total one-time termination benefits totaled approximately $0.6 million and were recorded over each employee’s remaining service period as they were required to stay through their termination date to receive the benefits. During fiscal year 2013, the Company recorded approximately $0.3 million related to lease termination costs. All other restructuring costs related to the Manchester, England facility in fiscal year 2013 were negligible. During fiscal year 2012, the Company recorded $1.4 million of restructuring costs, including $1 million related to lease termination costs and $0.4 million related to one-time termination benefits that are recorded within “Restructuring expenses” in the accompanying consolidated statements of operations.
In April 2012, the Company announced a plan to close its manufacturing facility in Englewood, Colorado. The Company completed the facility closure in fiscal year 2013 upon completion of the transfer of the facility’s business to other of the Company’s facilities. In connection with the closure, the Company provided certain one-time termination benefits to affected employees. These one-time termination benefits were recorded over each employee’s remaining service period as employees were required to stay through their termination date to receive the benefits. During fiscal year 2013 and 2012, the Company recorded $0.2 million and $1.5 million of restructuring costs related to the facility’s closure, which consisted primarily of costs related to one-time termination benefits, and are recorded within “Restructuring expenses” in the accompanying consolidated statements of operations.
In fiscal year 2014, the Company announced the planned closure of its Arvada, Colorado site, the consolidation of its two Galway, Ireland sites and other restructuring actions that will result in a reduction in staff across both manufacturing and administrative functions at certain locations. All affected employees were offered individually determined severance arrangements. The decision to close its Arvada site and to consolidate its two Galway, Ireland sites results from the Company’s manufacturing strategy developed as part of the integration resulting from the Lake Region Merger in March 2014. For fiscal year 2014, the Company recorded a restructuring charge of $3.1 million relating to planned and actual staff reductions, including obligations for employee severances. The Company will incur additional restructuring charges related to the planned staff reductions through the first half of 2016, when the planned facilities consolidation and staff reductions are expected to be completed. Additional restructuring charges related to closing facilities and relocation of manufacturing equipment are also expected. The cash payments related to these restructuring actions are expected to continue through 2016, and possibly early 2017.
 
23

The following table summarizes the amounts recorded related to Corporate restructuring activities in fiscal years 2014, 2013 and 2012 (in thousands):

 	 	Employee
Costs	 	 	Other Exit
Costs	 	 	Total	 	
Balance, January 1, 2012	 	$	340	  	 	$	—  	  	 	$	340	  	
Restructuring expenses incurred	 	 	1,886	  	 	 	980	  	 	 	2,866	  	
Cash payments	 	 	(897	) 	 	 	(190	) 	 	 	(1,087	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual Balance, December 31, 2012	 	 	1,329	  	 	 	790	  	 	 	2,119	  	
Restructuring expenses incurred	 	 	(16	) 	 	 	296	  	 	 	280	  	
Cash payments	 	 	(1,240	) 	 	 	(162	) 	 	 	(1,402	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual Balance, December 31, 2013	 	 	73	  	 	 	924	  	 	 	997	  	
Restructuring expenses incurred	 	 	3,091	  	 	 	47	  	 	 	3,138	  	
Cash payments	 	 	(502	) 	 	 	(194	) 	 	 	(696	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual Balance, January 3, 2015	 	$	2,662	  	 	$	777	  	 	$	3,439	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
The restructuring expenses incurred are reflected in the accompanying consolidated statements of operations and the accrual balances as of January 3, 2015 and December 31, 2013 are included in accrued expenses and other current liabilities or other liabilities in the accompanying consolidated balance sheets as of their respective periods and depending on timing of the expected cash payments.
12. Share-Based Compensation
The Company’s employees participate under an Amended and Restated 2005 Equity Plan for Key Employees of Lake Region Medical Holdings, Inc. and its subsidiaries and affiliates (the “2005 Equity Plan”), which provides for grants of parent company stock in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and stock appreciation rights.
The 2005 Equity Plan requires exercise of stock options within 10 years of grant. Vesting is determined in the applicable stock option agreement and occurs either in equal installments over 5 years from the date of grant (“Time-Based”), or upon achievement of certain performance targets over a five-year period (“Performance-Based”). Targets underlying the vesting of Performance-Based awards are achieved upon the attainment of a specified level of targeted adjusted earnings performance “Adjusted EBITDA”, as defined in the Company’s long-term debt agreements and as measured each calendar year. The vesting requirements for Performance-Based awards permit a catch-up of vesting should the target not be achieved in the specified calendar year but is achieved in a subsequent calendar year within the five-year vesting period. As of January 3, 2015, the achievement of the underlying performance targets for outstanding Performance-Based awards is not deemed probable. The Company has not granted any Performance-Based awards since 2013. Certain of the share-based awards granted and outstanding as of January 3, 2015, are subject to accelerated vesting upon a sale of the Company or similar changes in control.
At January 3, 2015, the total number of shares authorized under the 2005 Equity Plan is 17.4 million shares and 3.6 million shares were available for future grant.
The fair value of the parent company common stock is determined by the parent company’s board of directors utilizing weighted market-based and discounted cash flow approaches and applying a variety of factors, including the entity’s financial position, historical financial performance, projected financial performance, valuations of publicly traded peer companies, the illiquid nature of the common stock, and arm’s length sales of parent company common stock. The fair value of the parent company common stock was $2.70 and $2.70 per share at January 3, 2015 and December 31, 2013, respectively.
 
24

Share-based compensation expense
The Company’s share-based compensation expense (benefit) for fiscal years 2014, 2013 and 2012 was as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Roll-over options	 	$	(2	) 	 	$	(65	) 	 	$	(2	) 	
Restricted stock awards and units	 	 	387	  	 	 	407	  	 	 	150	  	
Time-Based awards	 	 	1,144	  	 	 	651	  	 	 	561	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
	 	$	1,529	  	 	$	993	  	 	$	709	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
During fiscal years 2014, 2013 and 2012, the Company did not achieve the performance targets required for outstanding Performance-Based awards to vest and, as of January 3, 2015, any future vesting of the outstanding awards is not probable. Accordingly, no share-based compensation expense related to Performance-Based awards has been recorded.
Share-based compensation expense was recorded in the consolidated statements of operations for fiscal years 2014, 2013 and 2012 follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Cost of sales	 	$	599	  	 	$	340	  	 	$	158	  	
Selling, general and administrative	 	 	930	  	 	 	653	  	 	 	551	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
	 	$	1,529	  	 	$	993	  	 	$	709	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Restricted stock awards and units
Prior to fiscal year 2014, the Company granted restricted stock awards that were subject to forfeiture over vesting terms of one to five years. In fiscal year 2014, the Company exchanged the restricted stock awards for restricted stock units under the same terms and conditions. The exchange of restricted stock awards for restricted stock units has been accounted for as a modification and did not have a material effect upon the consolidated financial statements in fiscal year 2014. Restricted stock awards and units are generally issued for no consideration.
A summary of restricted stock awards and units activity for fiscal year 2014 is as follows:

 	 	Number of
Shares	 	 	Weighted
Average
Contractual
Term (in years)	 	 	Aggregate
Intrinsic Value
(in thousands)	 	
Issued and unvested, January 1, 2014	 	 	630,000	  	 	 	5.0	  	 	$	1,575	  	
Granted	 	 	—  	  	 				
Vested	 	 	(155,000	) 	 				
Forfeited, canceled or expired	 	 	—  	  	 				
	 	 	 	 	 				 				
Issued and unvested, January 3, 2015	 	 	475,000	  	 	 	4.0	  	 	$	1,188	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Shares expected to vest	 	 	475,000	  	 	 	4.0	  	 	$	1,188	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
At January 3, 2015, there is $1.3 million of unrecognized share-based compensation expense yet to recognize related to restricted stock units, which is expected to be recognized over the next 4.0 years.
 
25

Stock options
A summary of stock option activity for fiscal year 2014 is as follows:

 	 	Number of
shares	 	 	Weighted
average
exercise price
per share	 	 	Weighted
Average
Remaining
Contractual
Term (in years)	 	 	Aggregate
Intrinsic Value
(in thousands)	 	
Outstanding at January 1, 2014	 	 	11,252,455	  	 	$	2.78	  	 	 	7.0	  	 	$	48	  	
Granted	 	 	1,625,000	  	 	 	2.70	  	 	 	9.5	  	 	 	—  	  	
Forfeited	 	 	(169,000	) 	 	 	2.60	  	 	 	7.0	  	 	 	—  	  	
	 	 	 	 	 				 				 				
Outstanding at January 3, 2015	 	 	12,708,455	  	 	$	2.77	  	 	 	6.2	  	 	$	391	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vested or expected to vest at January 3, 2015	 	 	7,811,450	  	 	$	2.83	  	 	 	6.2	  	 	$	391	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Exercisable at January 3, 2015	 	 	3,982,563	  	 	$	2.96	  	 	 	6.2	  	 	$	391	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The weighted-average assumptions used for calculating the fair value of stock options granted during fiscal year 2014, 2013 and 2012, is as follows:

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Expected term to exercise (in years)	 	 	6.5	  	 	 	6.5	  	 	 	6.5	  	
Expected volatility	 	 	28.73	% 	 	 	28.93	% 	 	 	28.98	% 	
Risk-free rate	 	 	1.91	% 	 	 	1.99	% 	 	 	1.14	% 	
Dividend yield	 	 	—  	% 	 	 	—  	% 	 	 	—  	% 	
At January 3, 2015, there is $3.7 million of unrecognized share-based compensation expense attributed to Time-Based awards that is expected to be recognized over 3.5 years, the remaining weighted-average vesting period for Time-Based awards. In addition, at January 3, 2015, there is $4.4 million of unrecognized share-based compensation expense attributed to Performance-Based awards that may be recognized over 3.5 years should the underlying performance targets become probable.
In 2005, fully vested stock options, or “Roll-Over” options were issued to employees with an exercise price of $1.25 per share in exchange for replaced awards. The Company had, at its option, the right to repurchase the Roll-Over options at fair market value from terminating employees within 60 days of termination and provide employees with settlement options to satisfy tax obligations in excess of minimum withholding rates. As a result of these features, the Roll-Over options were recorded as a liability, included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets, until such options were exercised, forfeited, expired or settled. As of January 3, 2015, no Roll-Over options remain outstanding.
 
26

The table below summarizes the activity relating to the Roll-Over options during fiscal years 2014, 2013 and 2012:

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
 	 	Liability (in
thousands)	 	 	Roll-Over
Options
Outstanding	 	 	Liability (in
thousands)	 	 	Roll-Over
Options
Outstanding	 	 	Liability (in
thousands)	 	 	Roll-Over
Options
Outstanding	 	
Balance at beginning of fiscal year	 	$	31	  	 	 	20,182	  	 	$	141	  	 	 	80,727	  	 	$	355	  	 	 	201,817	  	
Options exercised	 	 	(29	) 	 	 	(20,182	) 	 	 	(45	) 	 	 	(60,545	) 	 	 	(177	) 	 	 	(100,908	) 	
Options forfeited	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(35	) 	 	 	(20,182	) 	
Change in fair value	 	 	(2	) 	 	 	—  	  	 	 	(65	) 	 	 	—  	  	 	 	(2	) 	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at end of fiscal year	 	$	—  	  	 	 	—  	  	 	$	31	  	 	 	20,182	  	 	$	141	  	 	 	80,727	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Roll-Over options permitted net settlement by the holder of the option and, therefore, no cash was required to be exchanged upon exercise.
As of December 31, 2013, the Roll-Over options had a weighted average estimated fair value of $1.45 per share based on the Black-Scholes option-pricing model. Weighted average assumptions used in fiscal year 2013 and 2012 were:

 	 	Fiscal Years	 	
 	 	2013	 	 	2012	 	
Expected term to exercise (in years)	 	 	0.4	  	 	 	1.0	  	
Expected volatility	 	 	20.9	% 	 	 	26.3	% 	
Risk-free rate	 	 	0.1	% 	 	 	0.3	% 	
Dividend yield	 	 	—  	% 	 	 	—  	% 	
Director’s Deferred Compensation Plan
The parent company maintains a Directors’ Deferred Compensation Plan (the “Directors’ Plan”) for all non-employee directors. The Plan allows each non-employee director to elect to defer receipt of all or a portion of their annual directors’ fees to a future date or dates. Any amounts deferred under the Directors’ Plan are credited to a phantom stock account. The number of phantom shares of parent company common stock credited to each director’s phantom stock account is determined based on the amount of the compensation deferred during any given year, divided by the then fair market value per share of the parent company common stock as determined in the good faith discretion by the parent company’ Board of Directors, or $2.70 at January 3, 2015. During fiscal years 2014, 2013 and 2012, the Company recorded compensation expense related to the Directors’ Plan of $0.1 million.
13. Employee Benefit Plans
Defined Benefit Pension Plans
The Company has pension plans covering employees at two facilities, one in the United States of America (the “Domestic Plan”) and one in Germany (the “Foreign Plan”).
The Domestic Plan was frozen as to new participants in November 2006. In fiscal year 2014, the Company implemented a plan to terminate the Domestic Plan (see Curtailment and Settlement below) and, as of January 3, 2015, the Domestic Plan held no assets and the obligation was completely settled. Benefits for the Domestic Plan were provided at a fixed rate for each month of service. The Company’s funding policy was consistent with the minimum funding requirements of laws and regulations. For the Domestic Plan, plan assets as of December 31, 2013 consisted of equity and fixed income investment funds. The Foreign Plan is an unfunded frozen pension plan and is limited to covering employees hired before 1993.
 
27

The Company recognizes the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its benefit plans in the consolidated balance sheet, with a corresponding adjustment to other comprehensive loss as of the end of each fiscal year. The measurement date used in determining the projected benefit obligation is December 31, consistent with the plan sponsor’s fiscal year end. As of January 3, 2015 and December 31, 2013, the Accumulated Benefit Obligation of the Company’s defined benefit pension plans totaled $3.8 million and $4.8 million, respectively.
The change in the projected benefit obligation is as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Benefit obligation at beginning of year	 	$	5,328	  	 	$	5,053	  	 	$	4,011	  	
Service cost	 	 	83	  	 	 	76	  	 	 	51	  	
Interest cost	 	 	177	  	 	 	192	  	 	 	188	  	
Actuarial loss	 	 	1,250	  	 	 	(16	) 	 	 	864	  	
Currency translation adjustment	 	 	(597	) 	 	 	154	  	 	 	71	  	
Benefits paid	 	 	(80	) 	 	 	(131	) 	 	 	(132	) 	
Settlement/curtailment	 	 	(1,652	) 	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Benefit obligation at end of year	 	$	4,509	  	 	$	5,328	  	 	$	5,053	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
The change in Domestic Plan assets during fiscal years 2014, 2013 and 2012 were as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Fair value of plan assets at beginning of year	 	$	1,381	  	 	$	1,063	  	 	$	883	  	
Actual return on plan assets	 	 	—  	  	 	 	195	  	 	 	123	  	
Employer contributions	 	 	278	  	 	 	183	  	 	 	114	  	
Benefits paid	 	 	(7	) 	 	 	(60	) 	 	 	(57	) 	
Settlement/curtailment	 	 	(1,652	) 	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets at end of year	 	$	—  	  	 	$	1,381	  	 	$	1,063	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
A reconciliation of the accrued benefit cost for both the Domestic and Foreign Plans recognized in the financial statements is as follows (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Funded status	 	$	(4,509	) 	 	$	(3,947	) 	
Unrecognized net actuarial gain	 	 	1,647	  	 	 	955	  	
	 	 	 	 	 	 	 	 	
Accrued benefit obligation	 	 	(2,862	) 	 	 	(2,992	) 	
	 	 	 	 	 	 	 	 	
Presented as current liabilities	 	 	(74	) 	 	 	(80	) 	
Presented as other long-term liabilities	 	 	(4,435	) 	 	 	(3,867	) 	
Accumulated other comprehensive income	 	 	1,647	  	 	 	955	  	
	 	 	 	 	 	 	 	 	
Total	 	$	(2,862	) 	 	$	(2,992	) 	

28

The following changes in projected benefit obligations were recognized in other comprehensive loss for fiscal years 2014, 2013 and 2012:

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Net actuarial pension gain (loss)	 	$	(2,123	) 	 	$	170	  	 	$	(935	) 	
Curtailment loss	 	 	338	  	 	 	—  	  	 	 	—  	  	
Amortization of net actuarial pension loss	 	 	38	  	 	 	34	  	 	 	93	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total recognized in other comprehensive loss (income)	 	$	(1,747	) 	 	$	204	  	 	$	(842	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total recognized in net periodic benefit cost and other comprehensive income (loss)	 	$	(2,375	) 	 	$	(21	) 	 	$	1,050	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
As of January 3, 2015, there was approximately $1.6 million of accumulated unrecognized net actuarial loss that has yet to be recognized as a component of net periodic benefit cost in the future periods. Of this amount the Company expects to recognize approximately $0.1 million in earnings as a component of net periodic benefit cost during fiscal year 2015. The Company does not expect to be required to make any contributions to the Company’s funded plans in fiscal 2016.
Components of net periodic benefit cost for both the Domestic and Foreign Plan were as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Service cost	 	$	83	  	 	$	76	  	 	$	51	  	
Interest cost	 	 	177	  	 	 	192	  	 	 	188	  	
Expected return of plan assets	 	 	(8	) 	 	 	(77	) 	 	 	(63	) 	
Recognized net actuarial loss	 	 	38	  	 	 	34	  	 	 	32	  	
Settlement/curtailment	 	 	338	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total net periodic benefit cost	 	$	628	  	 	$	225	  	 	$	208	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Assumptions for benefit obligations were as follows:

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Discount rate	 	 	2.3	% 	 	 	3.9	% 	
Rate of compensation increase	 	 	3.0	% 	 	 	2.2	% 	
Assumptions for net periodic benefit costs were as follows:

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Discount rate	 	 	2.7	% 	 	 	3.7	% 	 	 	4.7	% 	
Expected long term return on plan assets	 	 	—  	% 	 	 	7.0	% 	 	 	7.0	% 	
Rate of compensation increase	 	 	3.0	% 	 	 	2.2	% 	 	 	2.0	% 	
To develop the expected long-term rate of return on plan assets, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio and the payment of plan expenses from the pension trust. This resulted in the selection of the 7.0% expected long-term rate of return on plan assets assumption.
 
29

To develop the discount rate utilized in determining benefit obligations and net periodic benefit cost, the Company performed a cash flow analysis using third party pension discount curve information and the projected cash flows of the plan as of the measurement date.
Estimated annual future benefit payments for the Foreign Plan in future fiscal years are as follows:

Fiscal year	 	Amount
(in thousands)	 	
2015	 	$	74	  	
2016	 	 	74	  	
2017	 	 	96	  	
2018	 	 	99	  	
2019	 	 	100	  	
Thereafter	 	 	641	  	
The fair values of the Company’s Domestic Plan’s assets at December 31, 2013 by asset class, classified according to the fair value hierarchy were as follows:

 	 	Total
Carrying
Value	 	 	Quoted
Market Prices
in Active
Markets
(Level 1)	 	 	Significant
Other
Observable
Inputs
(Level 2)	 	 	Significant
Unobservable
Inputs
(Level 3)	 	
Fixed income securities	 	$	6	  	 	$	6	  	 	$	—  	  	 	$	—  	  	
Short- term fixed income securities	 	 	1,375	  	 	 	1,375	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 	$	1,381	  	 	$	1,381	  	 	$	—  	  	 	$	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Domestic Plan’s target asset allocation by asset class at December 31, 2013 were as follows:

Domestic equity	 	 	69.0	% 	
Fixed income	 	 	31.0	% 	
The asset allocation policy was developed in consideration of the long-term investment objective of ensuring that there is an adequate level of assets to support benefit obligations to plan participants. A secondary objective is minimizing the impact of market fluctuations on the value of the plans’ assets.
In addition to the broad asset allocation described above, the following policies apply to the individual asset classes:
 
 	i.	Fixed income investments shall be oriented toward investment grade securities rated “BBB” or higher. They are diversified among individual securities and sectors.	
 
 	ii.	Equity investments are diversified among individual securities, industries and economic sectors. Most securities held are issued by companies with medium to large market capitalizations.	
Curtailment and Settlement
In fiscal year 2014, in connection with a plan to terminate the Domestic Plan, the Company offered participants either lump-sum payment or fully funded annuities to settle their remaining pension benefit. As part of this program, the Company settled $1.7 million of its pension obligations for U.S. participants with an equal amount paid from plan assets and additional Company contributions. As a result, the Company recorded settlement losses of $0.3 million in fiscal year 2014. These settlement charges were recorded in selling, general and administrative expenses with a corresponding balance sheet reduction in accumulated other comprehensive loss.
 
30

401(k) and Other Plans
The Company has a 401(k) plan (“401(k) Plan”) available for most employees. An employee may contribute up to 50% of gross salary to the 401(k) Plan, subject to certain maximum compensation and contribution limits as adjusted from time to time by the Internal Revenue Service. The Company’s Board of Directors determines annually the amount of contribution, if any, the Company shall make to the 401(k) Plan. The employees’ contributions vest immediately, while the Company’s contributions vest over a five-year period. The Company matches 50% of an employee’s contributions for the first 6% of the employee’s gross salary at a maximum contribution rate per employee of 3% of the employee’s gross salary. The Company’s matching contributions totaled $3.7 million, $2.5 million and $2.4 million for fiscal years 2014, 2013 and 2012, respectively.
The Company also continued the 401(k) plan available for the Lake Region employees subsequent to the Lake Region Medical Acquisition through December 31, 2014. This plan was available for most Lake Region employees whereby employees were allowed to contribute up to 50% of gross salary to the plan, subject to certain maximum compensation and contribution limits as adjusted from time to time by the Internal Revenue Service. Lake Region matched 50% of an employee’s contributions for the first 6% of the employee’s gross salary at a maximum contribution rate per employee of 3% of the employee’s gross salary. The Company’s matching contributions for fiscal year 2014 totaled $0.7 million and vest over a five-year period. The plan terminated on December 31, 2014 and all eligible participants were eligible to participate in the 401(k) Plan.
The Company also maintains a Supplemental Executive Retirement Pension Program (“SERP”) that covers one of its employees. The SERP is a non-qualified, unfunded deferred compensation plan. Expenses incurred by the Company related to the SERP, which are actuarially determined, were $0.1 million for fiscal years 2014, 2013 and 2012. The liability for the plan was $1.8 million and $1.0 million as of January 3, 2015 and December 31, 2013, respectively, and was included within other long-term liabilities in the accompanying consolidated balance sheets.
The Company’s employees located in foreign jurisdictions meeting minimum age and service requirements participate in defined contribution plans whereby participants may defer a portion of their annual compensation on a pretax basis, subject to legal limitations. Company contributions to these plans are discretionary and vary per region. The Company expensed contributions of $0.5 million, $0.1 million and $0.1 million for fiscal years 2014, 2013 and 2012, respectively.
The Company has obligations to provide termination benefits to employees in certain foreign jurisdictions upon termination, whether voluntary or involuntary, in accordance with local employment laws. The Company accrues the termination benefits over each employee’s employment term based upon actual and estimated years of service. As of January 3, 2015 and December 31, 2013, the accrued benefits aggregated $1.0 million and $0.9 million, respectively, and are included in accrued payroll and benefits in the accompanying consolidated balance sheets.
 
31

14. Income Taxes
The provision for income taxes includes federal, state and foreign taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities. The components of the provision(benefit) for income taxes for fiscal years 2014, 2013 and 2012 were as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Current	 				 				 				
Federal	 	$	—  	  	 	$	—  	  	 	$	—  	  	
State	 	 	112	  	 	 	(92	) 	 	 	90	  	
Foreign	 	 	3,843	  	 	 	1,799	  	 	 	1,071	  	
Deferred	 				 				 				
Federal	 	 	(39,637	) 	 	 	2,502	  	 	 	1,689	  	
State	 	 	(2,685	) 	 	 	287	  	 	 	(1,083	) 	
Foreign	 	 	(515	) 	 	 	31	  	 	 	17	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total provision	 	$	(38,882	) 	 	$	4,527	  	 	$	1,784	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes included income from foreign operations of $13.5 million, $7.5 million and $6.3 million for fiscal years 2014, 2013 and 2012, respectively.
Major differences between income taxes at the federal statutory rate and the amount recorded in the accompanying consolidated statements of operations for fiscal years 2014, 2013 and 2012 were as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Expected tax benefit at statutory rate	 	$	(29,824	) 	 	$	(23,753	) 	 	$	(7,205	) 	
Change in valuation allowance on deferred tax assets	 	 	7,207	  	 	 	6,036	  	 	 	7,243	  	
State tax benefit, net of federal benefit	 	 	(2,859	) 	 	 	(2,114	) 	 	 	(489	) 	
Foreign rate differential	 	 	(1,801	) 	 	 	256	  	 	 	(784	) 	
Repatriation of earnings	 	 	1,225	  	 	 	1,126	  	 	 	2,902	  	
Changes in reserves for uncertain tax positions	 	 	36	  	 	 	(223	) 	 	 	(54	) 	
Stock options	 	 	(11	) 	 	 	(38	) 	 	 	(54	) 	
Foreign tax credits	 	 	(1,592	) 	 	 	(1,819	) 	 	 	—  	  	
Return to provision and other adjustments	 	 	(11,263	) 	 	 	2,961	  	 	 	225	  	
Permanent difference—goodwill impairment	 	 	—  	  	 	 	22,095	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Tax provision	 	$	(38,882	) 	 	$	4,527	  	 	$	1,784	  	

32

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities consists of the following (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Deferred tax assets	 				 				
Operating loss and tax credit carryforwards	 	$	142,767	  	 	$	125,487	  	
Environmental liabilities	 	 	484	  	 	 	504	  	
Accrued compensation	 	 	8,526	  	 	 	5,840	  	
Inventory and accounts receivable	 	 	4,675	  	 	 	3,570	  	
Other	 	 	10,052	  	 	 	6,604	  	
	 	 	 	 	 	 	 	 	
Total deferred tax asset	 	 	166,504	  	 	 	142,005	  	
	 	 	 	 	 	 	 	 	
Deferred tax liabilities:	 				 				
Depreciation	 	 	(15,667	) 	 	 	(5,629	) 	
Intangibles	 	 	(79,430	) 	 	 	(72,152	) 	
	 	 	 	 	 	 	 	 	
Total deferred tax liabilities	 	 	(95,097	) 	 	 	(77,781	) 	
	 	 	 	 	 	 	 	 	
Valuation allowance	 	 	(103,928	) 	 	 	(96,564	) 	
	 	 	 	 	 	 	 	 	
Total net deferred tax liability	 	$	(32,521	) 	 	$	(32,340	) 	
	 	 	 	 	 	 	 	 	
The Company’s deferred income tax expense results primarily from the different book and tax treatment for a portion of the Company’s goodwill and the Company’s trade name intangible asset, “the amortizing tax intangibles”. For tax purposes, the amortizing tax intangibles acquired in taxable asset transactions are subject to annual amortization, which reduces their tax basis. Such assets are not amortized for financial reporting purposes, which gives rise to a different book and tax basis. The lower taxable basis of the amortizing tax intangibles would result in higher taxable income upon any future disposition of the underlying business. Deferred taxes are recorded to reflect the future incremental taxes from the basis differences that would be incurred upon a future sale. This amount is included as a deferred tax liability in the table above within “Intangibles” and totals $24.1 million and $32.8 million at January 3, 2015 and December 31, 2013, respectively. In addition, as of January 3, 2015, there is a deferred tax liability of $7.3 million related to basis differences in assets of an Irish subsidiary.
At January 3, 2015, the Company had federal net operating loss (“NOL”) carryforwards of approximately $340.7 million expiring at various dates through 2034. If not utilized, these carryforwards will begin to expire in 2019. Such losses are also subject to limitations of Internal Revenue Code, Section 382, which in general provides that utilization of NOL’s is subject to an annual limitation if an ownership change results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. Such an ownership change occurred in 2005. Certain acquired losses are subject to preexisting Section 382 limitations, which predate the the ownership change in 2005. Subsequent ownership changes, as defined in Section 382, could further limit the amount of net operating loss carryforwards, as well as research and development credits that can be utilized to offset future taxable income.
The Company’s federal NOL carryforward for tax return purposes as of January 3, 2015 is $21.5 million greater than its federal NOL for financial reporting purposes due to $12.7 million of unrecognized tax benefits as well as $8.8 million of unrealized excess tax benefits related to share-based compensation awards. The tax benefit of the share-based compensation awards would be recognized for financial statement purposes through additional paid-in capital, in the period in which the tax benefit reduces income taxes payable.
The Company assessed the positive and negative evidence bearing upon the realizability of its deferred tax assets and, based on an assessment of this evidence, concluded that $33.7 million of deferred tax assets would be recognized as a result of future reversal of deferred tax liabilities associated with definite lived assets recorded in the accounting for the Lake Region Medical Acquisition. The Company concluded that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets. As a result, a valuation
 
33

allowance on substantially all of the net deferred tax assets has been provided, after considerations for deferred tax liabilities for goodwill, which will not be a future source of income.
The Company’s valuation allowance increased $7.4 million, $6.0 million and $7.2 million during fiscal years 2014, 2013 and 2012, respectively, principally due to the Company’s net losses in each of these years.
As of January 3, 2015 and December 31, 2013, the Company had not accrued deferred income taxes on $71.0 million and $11.2 million, respectively, of unremitted earnings from foreign subsidiaries as such earnings are expected to be permanently reinvested outside of the U.S. However, to the extent such foreign earnings were remitted in the future a deferred tax liability of $29.9 million would be recorded.
The change in unrecognized tax benefits related to uncertain tax positions for fiscal years 2014, 2013 and 2012 follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Balance, beginning of year	 	$	7,313	  	 	$	7,536	  	 	$	7,591	  	
Gross increases for tax positions taken in prior periods	 	 	36	  	 	 	36	  	 	 	46	  	
Lapse of statute of limitations	 	 	—  	  	 	 	(259	) 	 	 	(101	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, end of year	 	$	7,349	  	 	$	7,313	  	 	$	7,536	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Substantially all of the of uncertain tax benefits at January 3, 2015 would not impact the effective tax rate if recognized in a future period, assuming the Company were to continue to maintain a valuation allowance on substantially all net federal and state deferred tax assets.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its provision for income tax expense. During fiscal years 2014, 2013 and 2012, the recorded amounts for interest and penalties, respectively were minimal. The Company maintains balances for accrued interest and accrued penalties of $0.4 million and $0.1 million, and $0.4 million and $0.1 million, relating to unrecognized tax benefits as of January 3, 2015 and December 31, 2013, respectively.
The Company is subject to income taxes in the U.S. Federal jurisdiction, and various state and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax law and regulations and require significant judgment to apply. With exception to the state of New York, the Company is not currently under any examination by U.S. Federal, state and local, or non-U.S. tax authorities. The tax years since December 31, 2006 through 2014, inclusive, remain subject to examination by major tax jurisdictions. However, since the Company has net operating loss carryforwards which may be utilized in future years to offset taxable income, those years may also be subject to review by relevant taxing authorities if such net operating loss carryforwards are utilized, notwithstanding that the statute for assessment may have closed.
15. Related-Party Transactions
The Company maintains a management services agreement with its principal equity owner, KKR, pursuant to which KKR will provide certain structuring, consulting and management advisory services. During fiscal years 2014, 2013 and 2012, the Company incurred management fees and expenses with KKR of $1.6 million, $1.4 million and $1.4 million, respectively. As of January 3, 2015 and December 31, 2013, the Company owed KKR $0.4 million for unpaid management fees, which are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The Company has also historically utilized the services of Capstone Consulting LLC (“Capstone”), an entity affiliated with KKR. The Company incurred fees and expenses related to Capstone of $1.3 million during fiscal year 2014. No fees or expenses related to Capstone were incurred during fiscal years 2013 or 2012. At January 3, 2015 the Company owed Capstone $0.2 million, which are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet at that date, and had no outstanding payables as of December 31, 2013.
 
34

In addition to the above, entities affiliated with KKR Asset Management (“KKR-AM”), an affiliate of KKR, owned approximately $29.8 million and $16.5 million principal amount of the First Lien and Second Lien, respectively, term loans at January 3, 2015. At December 31, 2013, entities affiliated with KKR-AM owned approximately $14.0 million principal amount of the Company’s then outstanding Senior Secured Notes and approximately $26.4 million principal amount of the Company’s then outstanding Senior Subordinated Notes.
The Company sells products to Biomet, Inc., which is privately owned by a consortium of private equity sponsors, including KKR. Net revenues from sales to Biomet, Inc. during fiscal years 2014, 2013 and 2012 totaled $0.3 million, $0.2 million and $0.2 million, respectively. At January 3, 2015 and December 31, 2013, accounts receivable due from Biomet were immaterial.
The Company utilizes the services of SunGard Data Systems, Inc. (“SunGard”), a provider of software and information processing solutions, which is privately owned by a consortium of private equity sponsors, including KKR and Bain, another significant Company stockholder. The Company entered into an agreement with SunGard whereby SunGard provides information systems hosting services. The Company incurred approximately $0.8 million in fees in connection with this agreement for fiscal years 2014 and 2013 and $0.7 million for fiscal year 2012. At January 3, 2015 and December 31, 2013 the amount due to SunGard totaled $0.1 million.
16. Fair Value Measurements
Financial Instruments
The Company uses the Black-Scholes option pricing model to determine the fair value of its liability for Roll-Over option awards. A roll-forward of the change in fair value of this financial instrument and information regarding the Level 3 inputs and the significant assumptions used in estimating the Roll-Over options’ fair value are also included in Note 8.
The Company determines the fair value of interest rate swap and interest rate cap transactions based on forward yield curves.
The following table provide a summary of the financial assets and liabilities recorded at fair value as of January 3, 2015 and December 31, 2013 (in thousands):

 	 	 	 	 	Fair Value Measurements Determined Using	 	
 	 	Total Carrying
Value	 	 	Quoted Prices in
Active Markets
for Identical
Assets (Level 1)	 	 	Significant
Other
Observable
Inputs
(Level 2)	 	 	Significant
Unobservable
Inputs
(Level 3)	 	
At January 3, 2015:	 				 				
Liability for interest rate swap and interest rate cap transactions	 	$	3,253	  	 	$	—  	  	 	$	3,253	  	 	$	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
At December 31, 2013:	 				 				
Liability for Roll-Over options	 	$	31	  	 	$	—  	  	 	$	—  	  	 	$	141	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For other instruments, the estimated fair value has been determined by the Company using available market information; however, considerable judgment is required in interpreting market data to develop these estimates. The methods and assumptions used to estimate the fair value of each class of financial instruments is as set forth below:
 
 	•	 	Accounts receivable and accounts payable : The carrying amounts of these items are a reasonable estimate of their fair values at January 3, 2015 and December 31, 2013 based on the short-term nature of these items.	
 
35

 	•	 	Long-term Debt as of January 3, 2015:	
 
 	•	 	Borrowings under the First Lien due 2021 —Borrowings under the First Lien bear interest at an all-inclusive interest rate of 4.5% which includes a 3.5% margin, and for the first year of the loan, the LIBOR rate is fixed at 1% floor. After the first year the rate is the greater of the 1% LIBOR floor or the three month LIBOR. The Company intends to carry the First Lien until maturity. The fair value of the First Lien, was approximately 96.5%, or $799.7 million, compared to its carrying value of $828.7 million. The fair value of the Company’s First Lien was estimated using inputs derived principally from market observable data, also referred to as Level 2 inputs. The Company intends to carry the long-term debts until their maturity.	
 
 	•	 	Borrowings under the Second Lien Notes due 2022 —Borrowings under the Second Lien bear interest at an all-inclusive interest rate of 7.5% per annum, which includes a 6.5% margin, and for the first year of the loan, the LIBOR rate is fixed at the 1% floor. After the first year, the rate is the greater of the 1% LIBOR floor or the three month LIBOR. The Company intends to carry the Second Lien until maturity. The fair value of the Second Lien, was approximately 94.0%, or $206.8 million, compared to their carrying value of $220.0 million. The fair value of the Company’s Second Lien was estimated using inputs derived principally from market observable data, also referred to as Level 2 inputs. The Company intends to carry the long-term debts until their maturity.	
 
 	•	 	Long-term Debt as of December 31, 2013:	
 
 	•	 	Borrowings under the Senior Secured Notes due 2017 —Borrowings under the Senior Secured Notes had a fixed rate. The fair value of the Senior Secured Notes, which is level 2 in the fair value hierarchy, was approximately 104.8% or $419.2 million as of December 31, 2013, based on quoted market prices, compared to their carrying value of $400.0 million at that date.	
 
 	•	 	Borrowings under the Senior Subordinated Notes due 2017 —Borrowings under the Senior Subordinated Notes had a fixed rate. The fair value of the Senior Subordinated Notes, which is Level 2 in the fair value hierarchy, was 103.3%, or $325.4 million as of December 31, 2013, based on quoted market prices, compared to their carrying value of $315.0 million at that date.	
17. Environmental Matters
The Pennsylvania Department of Environmental Protection (“DEP”) filed a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit challenging recent amendments to the U.S. Environmental Protection Agency (“EPA”) National Air Emissions Standards for hazardous air pollutants from halogenated solvent cleaning operations. These revised standards exempt three industry sectors (aerospace, narrow tube manufacturers and facilities that use continuous web-cleaning and halogenated solvent cleaning machines) from facility emission limits for trichloroethylene (“TCE”) and other degreaser emissions. The EPA has agreed to reconsider the exemption. The Company’s Collegeville facility meets current EPA control standards for TCE emissions and is exempt from the new lower TCE emission limit since the Company manufactures narrow tubes. As part of efforts to lower TCE emissions, the Company has begun to implement a process that will reduce the Company’s TCE emissions generated by its Collegeville facility. However, this process will not reduce TCE emissions to the levels required should a new standard become law. The Company submitted a proposed Post Remediation Care Plan (“PRCP”) with a corresponding Environmental Covenant (“EC”) to the EPA. Upon EPA approval of the PRCP and EC, the current Administrative Consent Order associated with the Collegeville facility will be terminated. The Company’s obligations under the proposed PRCP include the continued operation and maintenance of the on-site groundwater extraction and treatment system and annual sampling of a defined set of groundwater wells as a means to monitor contaminant containment within approved boundaries.
At January 3, 2015 and December 31, 2013, the Company maintained reserves for environmental liabilities of approximately $1.3 million, of which the Company expects to pay $0.1 million during fiscal year 2015.
In January 2015, the Company was notified by the New Jersey Department of Environmental Protection (“NJDEP”) of its intent to revoke a no further action determination made by the NJDEP in favor of the Company in 2002 pertaining to the property on which the Company operated a manufacturing facility starting in 1971 (the
 
36

“Kleiner Property”). The Company sold the Kleiner Property in 2004 and vacated the facility in 2007. The Company is cooperating with the NJDEP and believes the NJDEP’s notice of intent is unwarranted. In December 2014, the current owner of the Kleiner Property commenced litigation against the Company and an executive officer of the Company, and other unrelated third parties, alleging that the defendants caused or contributed to alleged groundwater contamination beneath the Kleiner Property. The Company denies all of the allegations made by the current owner, and the Company is presently asserting a vigorous defense to the allegations. The Company has concluded that it is not probable that a liability has occurred and, as such, no liability has been recorded as of January 3, 2015.
18. Geographic Information and Significant Customers
Substantially all of the Company’s sales were derived from medical device manufacturing companies.
The following table presents net sales by country or geographic region based on the location of the customer and in order of significance for fiscal years 2014, 2013 and 2012 (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Net sales:	 				 				 				
United States of America	 	$	564,849	  	 	$	404,465	  	 	$	390,516	  	
Ireland	 	 	42,392	  	 	 	33,348	  	 	 	35,561	  	
Germany	 	 	41,668	  	 	 	35,192	  	 	 	30,341	  	
Central and South America	 	 	41,291	  	 	 	15,560	  	 	 	13,813	  	
Belgium	 	 	13,574	  	 	 	3,391	  	 	 	1,447	  	
Asia Pacific	 	 	10,699	  	 	 	6,363	  	 	 	3,575	  	
United Kingdom	 	 	5,899	  	 	 	3,034	  	 	 	3,581	  	
Switzerland	 	 	5,638	  	 	 	7,681	  	 	 	3,265	  	
Eastern Europe	 	 	5,584	  	 	 	2,229	  	 	 	986	  	
Sweden	 	 	5,057	  	 	 	4,503	  	 	 	5,334	  	
France	 	 	4,221	  	 	 	3,286	  	 	 	3,555	  	
Netherlands	 	 	3,284	  	 	 	1,423	  	 	 	1,860	  	
Rest of World	 	 	8,108	  	 	 	5,237	  	 	 	4,793	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	752,264	  	 	$	525,712	  	 	$	498,627	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment, based on the location of the assets, were as follows (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
United States	 	$	123,012	  	 	$	87,429	  	
Ireland	 	 	39,203	  	 	 	3,637	  	
Germany	 	 	12,201	  	 	 	11,969	  	
Asia	 	 	11,098	  	 	 	13,056	  	
Mexico	 	 	1,123	  	 	 	866	  	
	 	 	 	 	 	 	 	 	
Total	 	$	186,637	  	 	$	116,957	  	

37

Significant Customers
For fiscal years 2014, 2013 and 2012, the Company’s ten largest customers in the aggregate accounted for 74%, 68% and 65% of consolidated net sales, respectively. Percentages of net sales from all greater than 10% customers are as follows:

 	 	Fiscal Years Ended	 	
 	 	2014	 	 	2013	 	 	2012	 	
Customer A	 	 	18	% 	 	 	17	% 	 	 	13	% 	
Customer B	 	 	15	% 	 	 	15	% 	 	 	16	% 	
Customer C	 	 	14	% 	 	 	11	% 	 	 	11	% 	
Customer D	 	 	12	% 	 	 	10	% 	 	 	*	  	

*	Less than 10%	
Customers with 10% or greater concentration in accounts receivable are as follows:

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Customer A	 	 	14	% 	 	 	18	% 	
Customer B	 	 	11	% 	 	 	12	% 	
Customer C	 	 	*	  	 	 	12	% 	

*	Less than 10%	
19. Commitments and Contingencies
The Company is obligated on various lease agreements for office space, automobiles and equipment, expiring through 2020, which are accounted for as operating leases.
Aggregate rental expense for fiscal years 2014, 2013 and 2012 was $7.8 million, $7.2 million and $7.3 million, respectively. Minimum rental commitments under all operating leases in future fiscal years are as follows (in thousands):

 	 	Amount	 	
2015	 	$	6,525	  	
2016	 	 	5,922	  	
2017	 	 	5,119	  	
2018	 	 	4,355	  	
2019	 	 	3,504	  	
Thereafter	 	 	4,306	  	
	 	 	 	 	
Total	 	$	29,731	  	
	 	 	 	 	
The Company is involved in various legal proceedings in the ordinary course of business, including with respect to environmental matters. In the opinion of management, the outcome of such proceedings will not have a material effect on the Company’s financial position or results of operations or cash flows.
The Company has various purchase commitments totaling $45.4 million at January 3, 2015 for materials, supplies, machinery and equipment incident to the ordinary conduct of business. Such purchase commitments are generally for a period of less than one year, often cancelable and able to be rescheduled and not at prices in excess of current market prices.
Open letters of credit aggregated $15.4 million as of January 3, 2015.
 
38

20. Changes in Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive loss for fiscal year 2014 (in thousands):

 	 	Defined Benefit
Pension Items	 	 	Unrealized
Loss On
Derivatives	 	 	Foreign
Currency Items	 	 	Total	 	
Balance at January 1, 2014	 	$	(957	) 	 	$	—  	  	 	$	(229	) 	 	$	(1,186	) 	
Other comprehensive loss before reclassifications	 	 	(1,747	) 	 	 	—  	  	 	 	(34,884	) 	 	 	(36,631	) 	
Amounts reclassified from accumulated other comprehensive income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Change in fair value	 	 	—  	  	 	 	(3,254	) 	 	 	—  	  	 	 	(3,254	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net current-period other comprehensive income	 	 	(1,747	) 	 	 	(3,254	) 	 	 	(34,884	) 	 	 	(39,885	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at January 3, 2015	 	$	(2,704	) 	 	$	(3,254	) 	 	$	(35,113	) 	 	$	(41,071	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The following table summarizes the changes in accumulated other comprehensive loss for fiscal year 2013 (in thousands):

 	 	Defined Benefit
Pension Items	 	 	Unrealized
Gains and
Losses on
Available-for-
Sale Securities	 	 	Foreign
Currency Items	 	 	Total	 	
Balance at January 1, 2013	 	$	(1,161	) 	 	$	210	  	 	$	(1,603	) 	 	$	(2,554	) 	
Other comprehensive income before reclassifications	 	 	204	  	 	 	—  	  	 	 	1,374	  	 	 	1,578	  	
Amounts reclassified from accumulated other comprehensive income	 	 	—  	  	 	 	(210	) 	 	 	—  	  	 	 	(210	) 	
Change in fair value	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net current-period other comprehensive income	 	 	204	  	 	 	(210	) 	 	 	1,374	  	 	 	1,368	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2013	 	$	(957	) 	 	$	—  	  	 	$	(229	) 	 	$	(1,186	) 	

39

The following table summarizes the changes in accumulated other comprehensive loss for fiscal year 2012 (in thousands):

 	 	Defined Benefit
Pension Items	 	 	Unrealized
Gains and
Losses on
Available-for-
Sale Securities	 	 	Foreign
Currency Items	 	 	Total	 	
Balance at January 1, 2012	 	$	(319	) 	 	$	1,155	  	 	$	(2,102	) 	 	$	(1,266	) 	
Other comprehensive income before reclassifications	 	 	(842	) 	 	 	(945	) 	 	 	499	  	 	 	(1,288	) 	
Amounts reclassified from accumulated other comprehensive income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Change in fair value	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net current-period other comprehensive income	 	 	(842	) 	 	 	(945	) 	 	 	499	  	 	 	(1,288	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2012	 	$	(1,161	) 	 	$	210	  	 	$	(1,603	) 	 	$	(2,554	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
21. Segment Information
The Company has organized its business into the AS Segment and C&V Segment. In the AS Segment, the Company manufactures a broad range of products for its customers which primarily consist of medical devices, components, and instruments. These products are used in minimal invasive surgery, endoscopy, orthopedics, drug delivery, and other general surgery applications including spinal surgery, arthroscopy and joint preservation & reconstruction. Advanced surgical instruments typically consist of a handle/hand-piece, a rigid/flexible tube and an electromechanical or mechanical end piece. In the C&V Segment, the Company manufactures a broad range of products for its customers which primarily consist of devices used in i) interventional vascular therapies that include cardiovascular, neurovascular and peripheral catheters, guidewires and delivery systems; ii) cardiac rhythm management that includes pacemakers, implantable defibrillators, and cardiac leads; iii) neuromodulation that includes neurostimulation devices and leads and catheter systems for pain management; and iv) cardiac surgery that includes transcatheter heart valve systems, heart valve components and surgical tools.
Included in the C&V Segment are the results of Lake Region, which was acquired on March 12, 2014. Lake Region is an Original Development Manufacturer (ODM) of minimally invasive devices and delivery systems to the cardiology and endovascular markets. Lake Region contributed net sales of $173.7 million for fiscal year 2014, representing 32.5% of net sales of the C&V Segment.
The Company allocates resources based on revenues as well as earnings before interest, taxes, depreciation, amortization (“EBITDA”), and other specific and non-recurring items (“Adjusted EBITDA”) of each segment. Those expenses not allocable to each segment include non-allocable overhead costs, selling, general and administrative expenses, including human resources, legal, finance, information technology, general and administrative expenses. Non-allocable expenses also include the amortization of intangible assets and certain restructuring expenses. Corporate services assets include intangible assets, deferred tax assets and liabilities, cash and cash equivalents, debt and other non-allocated assets. EBITDA is adjusted based on the terms of the Company’s credit agreements. Certain costs and expenses incurred in fiscal year 2014 that were not incurred in fiscal years 2013 and 2012, including those related to the acquisition and integration of Lake Region as well as those related to Sarbanes-Oxley related preparation services, were excluded from Adjusted EBITDA for fiscal year 2014 in accordance with the Company’s credit agreements as described in Note 8.
 
40

The Company’s net sales and Adjusted EBITDA by segment as well as a reconciliation of Total Adjusted EBITDA to the consolidated loss from continuing operations before provision for income taxes is as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Net sales:	 				 				 				
Cardio & Vascular	 	$	533,819	  	 	$	326,769	  	 	$	313,883	  	
Advanced Surgical	 	 	223,219	  	 	 	202,468	  	 	 	192,216	  	
Intersegment	 	 	(4,774	) 	 	 	(3,525	) 	 	 	(7,472	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total net sales	 	$	752,264	  	 	$	525,712	  	 	$	498,627	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA:	 				 				 				
Cardio & Vascular	 	$	126,618	  	 	$	98,632	  	 	$	94,245	  	
Advanced Surgical	 	 	33,061	  	 	 	31,859	  	 	 	28,313	  	
Corporate Services	 	 	(22,234	) 	 	 	(24,574	) 	 	 	(23,895	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total Adjusted EBITDA	 	$	137,445	  	 	$	105,917	  	 	$	98,663	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Reconciliation of Adjusted EBITDA to loss from operations before income taxes:	 				 				 				
Impairment of intangible assets and goodwill	 	$	(26,800	) 	 	$	(63,128	) 	 	$	—  	  	
Interest expense, net	 	 	(63,096	) 	 	 	(69,145	) 	 	 	(69,096	) 	
Depreciation and amortization	 	 	(50,803	) 	 	 	(33,016	) 	 	 	(39,169	) 	
Impact of inventory value step-up	 	 	(6,263	) 	 	 	—  	  	 	 	—  	  	
Share-based compensation—employees	 	 	(1,529	) 	 	 	(993	) 	 	 	(709	) 	
Share-based compensation—non-employees	 	 	(120	) 	 	 	225	  	 	 	(90	) 	
Employee severance and relocation	 	 	(2,083	) 	 	 	(1,295	) 	 	 	(2,698	) 	
Restructuring expenses	 	 	(3,138	) 	 	 	(280	) 	 	 	(2,866	) 	
Merger costs and other	 	 	(5,860	) 	 	 	—  	  	 	 	—  	  	
Integration costs	 	 	(5,386	) 	 	 	—  	  	 	 	—  	  	
Plant closure costs	 	 	(621	) 	 	 	(1,468	) 	 	 	(732	) 	
Currency gain (loss)	 	 	(936	) 	 	 	(2,050	) 	 	 	283	  	
Gain (loss) on disposal of property and equipment	 	 	(40	) 	 	 	(1,088	) 	 	 	263	  	
Other taxes	 	 	(231	) 	 	 	(299	) 	 	 	(157	) 	
Loss on debt extinguishment	 	 	(53,421	) 	 	 	—  	  	 	 	—  	  	
Sarbanes-Oxley related preparation	 	 	(416	) 	 	 	—  	  	 	 	—  	  	
Pension curtailment and related costs	 	 	(419	) 	 	 	—  	  	 	 	—  	  	
Management fees to stockholder	 	 	(1,495	) 	 	 	(1,424	) 	 	 	(1,357	) 	
Gain from the sale of security	 	 	—  	  	 	 	242	  	 	 	680	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total adjustments	 	 	(222,657	) 	 	 	(173,719	) 	 	$	(115,648	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations before income taxes	 	$	(85,212	) 	 	$	(67,802	) 	 	$	(16,985	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
The Company’s capital expenditures by segment for fiscal years 2014, 2013 and 2012 are as follows (in thousands):

 	 	Fiscal Years	 	
 	 	2014	 	 	2013	 	 	2012	 	
Capital expenditures:	 				 				 				
Cardio & Vascular	 	$	18,359	  	 	$	11,182	  	 	$	9,949	  	
Advanced Surgical	 	 	10,994	  	 	 	9,683	  	 	 	7,427	  	
Corporate Services	 	 	472	  	 	 	305	  	 	 	605	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total capital expenditures	 	$	29,825	  	 	$	21,170	  	 	$	17,981	  	

41

The Company’s assets by segment are as follows (in thousands):

 	 	As of	 	
 	 	January 3,
2015	 	 	December 31,
2013	 	
Assets:	 				 				
Cardio & Vascular	 	$	1,041,551	  	 	$	624,418	  	
Advanced Surgical	 	 	178,709	  	 	 	179,319	  	
Corporate Services	 	 	125,500	  	 	 	197,493	  	
	 	 	 	 	 	 	 	 	
Total assets	 	$	1,345,760	  	 	$	1,001,230	  	

42