INTEGER HOLDINGS CORP, 10-Q filed on 5/9/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
May 4, 2017
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
INTEGER HOLDINGS CORPORATION 
 
Entity Central Index Key
0001114483 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2017 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Current Fiscal Year End Date
--12-29 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
31,298,606 
Condensed Consolidated Balance Sheets - Unaudited (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 30, 2016
Current assets:
 
 
Cash and cash equivalents
$ 54,881 
$ 52,116 
Accounts receivable, net of allowance for doubtful accounts of $1.0 million and $0.7 million, respectively
213,610 
204,626 
Inventories
231,292 
225,151 
Refundable income taxes
7,679 
13,388 
Prepaid expenses and other current assets
20,664 
22,026 
Total current assets
528,126 
517,307 
Property, plant and equipment, net
371,933 
372,042 
Goodwill
969,413 
967,326 
Other intangible assets, net
931,595 
940,060 
Deferred income taxes
3,978 
3,970 
Other assets
31,840 
31,838 
Total assets
2,836,885 
2,832,543 
Current liabilities:
 
 
Current portion of long-term debt
34,173 
31,344 
Accounts payable
90,713 
77,896 
Income taxes payable
3,873 
3,699 
Accrued expenses
75,362 
72,281 
Total current liabilities
204,121 
185,220 
Long-term debt
1,668,239 
1,698,819 
Deferred income taxes
208,542 
208,579 
Other long-term liabilities
15,325 
14,686 
Total liabilities
2,096,227 
2,107,304 
Stockholders’ equity:
 
 
Common stock, $0.001 par value; 100,000,000 shares authorized; 31,401,759 and 31,059,038 shares issued, respectively; 31,298,606 and 30,925,496 shares outstanding, respectively
31 
31 
Additional paid-in capital
647,797 
637,955 
Treasury stock, at cost, 103,153 and 133,542 shares, respectively
(4,506)
(5,834)
Retained earnings
105,050 
109,087 
Accumulated other comprehensive loss
(7,714)
(16,000)
Total stockholders’ equity
740,658 
725,239 
Total liabilities and stockholders’ equity
$ 2,836,885 
$ 2,832,543 
Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Mar. 31, 2017
Dec. 30, 2016
Current assets:
 
 
Allowance for doubtful accounts
$ 1.0 
$ 0.7 
Stockholders’ equity:
 
 
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
31,401,759 
31,059,038 
Common stock, shares outstanding
31,298,606 
30,925,496 
Treasury stock, shares
103,153 
133,542 
Condensed Consolidated Statements of Operations and Comprehensive Income - Unaudited (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Income Statement [Abstract]
 
 
Sales
$ 345,413 
$ 332,238 
Cost of sales
254,187 
240,770 
Gross profit
91,226 
91,468 
Operating expenses:
 
 
Selling, general and administrative expenses
39,499 
41,888 
Research, development and engineering costs, net
13,411 
17,306 
Other operating expenses, net
11,771 
21,140 
Total operating expenses
64,681 
80,334 
Operating income
26,545 
11,134 
Interest expense, net
28,893 
27,617 
Other expense (income), net
1,847 
(3,721)
Loss before provision (benefit) for income taxes
(4,195)
(12,762)
Provision (benefit) for income taxes
144 
(102)
Net loss
(4,339)
(12,660)
Loss per share:
 
 
Basic
$ (0.14)
$ (0.41)
Diluted
$ (0.14)
$ (0.41)
Weighted average shares outstanding:
 
 
Basic
31,016 
30,718 
Diluted
31,016 
30,718 
Comprehensive Income
 
 
Net loss
(4,339)
(12,660)
Foreign currency translation gain
6,536 
18,760 
Net change in cash flow hedges, net of tax
1,750 
367 
Other comprehensive income
8,286 
19,127 
Comprehensive income
$ 3,947 
$ 6,467 
Condensed Consolidated Statements of Cash Flows - Unaudited (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Cash flows from operating activities:
 
 
Net loss
$ (4,339)
$ (12,660)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
24,606 
22,413 
Debt related amortization included in interest expense
3,437 
1,773 
Stock-based compensation
4,669 
2,835 
Other non-cash (gains) losses
1,499 
(3,522)
Deferred income taxes
(1,753)
(2,445)
Changes in operating assets and liabilities:
 
 
Accounts receivable
(8,700)
23,856 
Inventories
(5,956)
(14,444)
Prepaid expenses and other current assets
1,853 
1,410 
Accounts payable
13,146 
1,913 
Accrued expenses
4,401 
7,844 
Income taxes
5,762 
885 
Net cash provided by operating activities
38,625 
29,858 
Cash flows from investing activities:
 
 
Acquisition of property, plant and equipment
(12,328)
(18,768)
Purchase of cost and equity method investments
(260)
(648)
Other investing activities
0 
285 
Net cash used in investing activities
(12,588)
(19,131)
Cash flows from financing activities:
 
 
Principal payments of long-term debt
(79,151)
(7,250)
Proceeds from issuance of long-term debt
50,000 
55,000 
Proceeds from the exercise of stock options
7,449 
0 
Payment of debt issuance costs
(1,789)
(781)
Distribution of cash and cash equivalents to Nuvectra Corporation
0 
(76,256)
Purchase of non-controlling interests
0 
(6,818)
Other financing activities
0 
(3,983)
Net cash used in financing activities
(23,491)
(40,088)
Effect of foreign currency exchange rates on cash and cash equivalents
219 
1,006 
Net increase (decrease) in cash and cash equivalents
2,765 
(28,355)
Cash and cash equivalents, beginning of period
52,116 
82,478 
Cash and cash equivalents, end of period
$ 54,881 
$ 54,123 
Condensed Consolidated Statement of Stockholders' Equity - Unaudited (USD $)
In Thousands, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 30, 2016
$ 725,239 
$ 31 
$ 637,955 
$ (5,834)
$ 109,087 
$ (16,000)
Balance, shares at Dec. 30, 2016
 
31,059 
 
(134)
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss
(4,339)
 
 
 
(4,339)
 
Other comprehensive income, net
8,286 
 
 
 
 
8,286 
Stock-based compensation
4,669 
 
4,669 
 
 
 
Net shares issued, shares
 
343 
 
31 
 
 
Net shares issued
7,313 
0 
5,985 
1,328 
 
 
Balance at Mar. 31, 2017
$ 740,658 
$ 31 
$ 647,797 
$ (4,506)
$ 105,050 
$ (7,714)
Balance, shares at Mar. 31, 2017
 
31,402 
 
(103)
 
 
Basis of Presentation
BASIS OF PRESENTATION
BASIS OF PRESENTATION
Integer Holdings Corporation (together with its consolidated subsidiaries, “Integer” or the “Company”) is a publicly traded corporation listed on the New York Stock Exchange under the symbol “ITGR.” Integer is one of the largest medical device outsource manufacturers in the world serving the cardiac, neuromodulation, orthopedics, vascular, advanced surgical and portable medical markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition, it develops batteries for high-end niche applications in the energy, military, and environmental markets. The Company’s reportable segments are: (1) Medical and (2) Non-Medical. The Company’s customers include large multi-national original equipment manufacturers (“OEMs”) and their affiliated subsidiaries.
On March 14, 2016, Integer completed the spin-off of a portion of its former QiG segment through a tax-free distribution of all of the shares of its QiG Group, LLC (“QiG”) subsidiary to the stockholders of Integer on a pro rata basis (the “Spin-off”). See Note 2 “Divestiture” for further description of this transaction. The Company’s results include the financial and operating results of QiG until the Spin-off on March 14, 2016.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. Intercompany transactions and balances have been fully eliminated in consolidation.
Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Refer to Note 15 “Segment Information,” for a description of the changes made to reflect the current year product line sales reporting and changes made to our reportable segment structure during the fourth quarter of 2016.
Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, certain components of equity, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2016.
The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31. The first quarter of 2017 and 2016 each contained 13 weeks, respectively, and ended on March 31, and April 1, respectively. The Company’s 2017 and 2016 fiscal years will end or ended on December 29, 2017 and December 30, 2016, respectively.
Divestiture
DIVESTITURE
DIVESTITURE
Spin-off of Nuvectra Corporation
On March 14, 2016, Integer completed the spin-off of a portion of its former QiG segment through a tax-free distribution of all of the shares of its QiG Group, LLC subsidiary to the stockholders of Integer on a pro rata basis. Immediately prior to completion of the Spin-off, QiG Group, LLC was converted into a corporation organized under the laws of Delaware and changed its name to Nuvectra Corporation (“Nuvectra”). On March 14, 2016, each of the Company’s stockholders of record as of the close of business on March 7, 2016 received one share of Nuvectra common stock for every three shares of Integer common stock held as of that date. Upon completion of the Spin-off, Nuvectra became an independent publicly traded company whose common stock is listed on the NASDAQ stock exchange under the symbol “NVTR.”
The portion of the QiG segment spun-off consisted of QiG Group, LLC and its subsidiaries: (i) Algostim, LLC (“Algostim”), (ii) PelviStim LLC (“PelviStim”), and (iii) the Company’s NeuroNexus Technologies (“NeuroNexus”) subsidiary. The operations of Centro de Construcción de Cardioestimuladores del Uruguay (“CCC”) and certain other existing QiG research and development capabilities were retained by the Company and not included as part of the Spin-off. As the Company continues to focus on the design and development of complete medical device systems and components, and more specifically on medical device systems and components in the neuromodulation market, the Spin-off was not considered a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the Spin-off is not presented as a discontinued operation in the Company’s Condensed Consolidated Financial Statements. The results of Nuvectra are included in the Condensed Consolidated Statements of Operations and Comprehensive Income through the date of the Spin-off.
In connection with the Spin-off, during the first quarter of 2016, the Company made a cash capital contribution of $75 million to Nuvectra and divested the following assets and liabilities (in thousands):
Assets divested
 
  Cash and cash equivalents
$
76,256

  Other current assets
977

  Property, plant and equipment, net
4,407

  Amortizing intangible assets, net
1,931

  Goodwill
40,830

  Deferred income taxes
6,446

Total assets divested
130,847

Liabilities transferred
 
     Current liabilities
2,119

Net assets divested
$
128,728


For the first quarter of 2016, Nuvectra contributed a pre-tax loss of $5.2 million to the Company’s results of operations.
In connection with the Spin-off, on March 14, 2016, Integer entered into several agreements with Nuvectra that govern its post Spin-off relationship with Nuvectra, including a Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement and Transition Services Agreement. The Transition Services Agreement contains customary mutual indemnification provisions. Amounts earned by Integer under the Transition Services Agreement were immaterial for the three month periods ended March 31, 2017 and April 1, 2016.
Supplemental Cash Flow Information
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
 
Three Months Ended
(in thousands)
March 31,
2017
 
April 1,
2016
Noncash investing and financing activities:
 
 
 
Property, plant and equipment purchases included in accounts payable
$
3,243

 
$
4,304

Purchase of technology included in accrued expenses
—

 
2,000

Divestiture of noncash assets
—

 
54,591

Divestiture of liabilities
—

 
2,119

Inventories
INVENTORIES
INVENTORIES
Inventories are comprised of the following (in thousands):
 
March 31,
2017
 
December 30,
2016
Raw materials
$
104,989

 
$
100,738

Work-in-process
91,749

 
89,224

Finished goods
34,554

 
35,189

Total
$
231,292

 
$
225,151

Goodwill and Other Intangible Assets, Net
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2017 were as follows (in thousands):
 
Medical
 
Non- Medical
 
Total
December 30, 2016
$
950,326

 
$
17,000

 
$
967,326

Foreign currency translation
2,087

 
—

 
2,087

March 31, 2017
$
952,413

 
$
17,000

 
$
969,413


Intangible Assets
Intangible assets at March 31, 2017 and December 30, 2016 were as follows (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
March 31, 2017
 
 
 
 
 
 

Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(104,977
)
 
$
794

 
$
152,536

Customer lists
759,987

 
(67,165
)
 
(4,202
)
 
688,620

Other
4,534

 
(5,171
)
 
788

 
151

Total
$
1,021,240

 
$
(177,313
)
 
$
(2,620
)
 
$
841,307

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288

 
 
 
 
 
 
 
 
December 30, 2016
 
 
 
 
 
 
 
Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(100,719
)
 
$
333

 
$
156,333

Customer lists
759,987

 
(60,474
)
 
(6,269
)
 
693,244

Other
4,534

 
(5,142
)
 
803

 
195

Total
$
1,021,240

 
$
(166,335
)
 
$
(5,133
)
 
$
849,772

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288


(5.)     GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Continued)
Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Cost of sales
$
4,084

 
$
4,240

Selling, general and administrative expenses
6,758

 
5,136

Research, development and engineering costs, net
136

 
88

Total intangible asset amortization expense
$
10,978

 
$
9,464


Estimated future intangible asset amortization expense based on the carrying value as of March 31, 2017 is as follows (in thousands):
 
2017
 
2018
 
2019
 
2020
 
2021
 
After 2021
Amortization Expense
32,689

 
44,542

 
44,605

 
45,192

 
$
44,080

 
$
630,199

Debt
DEBT
DEBT
Long-term debt is comprised of the following (in thousands):
 
March 31,
2017
 
December 30,
2016
Senior secured term loan A
$
351,563

 
$
356,250

Senior secured term loan B
948,286

 
1,014,750

9.125% senior notes due 2023
360,000

 
360,000

Revolving line of credit
82,000

 
40,000

Less unamortized discount on term loan B and debt issuance costs
(39,437
)
 
(40,837
)
Total debt
1,702,412

 
1,730,163

Less current portion of long-term debt
34,173

 
31,344

Total long-term debt
$
1,668,239

 
$
1,698,819


Senior Secured Credit Facilities
The Company has senior secured credit facilities (the “Senior Secured Credit Facilities”) consisting of (i) a $200 million revolving credit facility (the “Revolving Credit Facility”), (ii) a $375 million term loan A facility (the “TLA Facility”), and (iii) a $1,025 million term loan B facility (the “TLB Facility”). The TLA Facility and TLB Facility are collectively referred to as the “Term Loan Facilities.” The TLB facility was issued at a 1% discount.
On March 17, 2017, the Company amended the Senior Secured Credit Facilities to lower the interest rate on the TLB Facility. The amendment reduces the applicable interest rate margins of its TLB Facility for both base rate and adjusted LIBOR borrowings by 75 basis points. The amendment also includes a prepayment fee of 1.00% in the event of another repricing event (as defined in the Senior Secured Credit Facilities) on or before the six-month anniversary of this amendment. There was no change to maturities or covenants under the Senior Secured Credit Facilities as a result of this repricing amendment.
(6.)     DEBT (Continued)
Revolving Credit Facility
The Revolving Credit Facility matures on October 27, 2020. The Revolving Credit Facility also includes a $15 million sublimit for swingline loans and a $25 million sublimit for standby letters of credit. The Company is required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which will range between 0.175% and 0.25%, depending on the Company’s Total Net Leverage Ratio (as defined in the Senior Secured Credit Facilities agreement). Interest rates on the Revolving Credit Facility, as well as the TLA Facility, are at the Company’s option, either at: (i) the prime rate plus the applicable margin, which will range between 0.75% and 2.25%, based on the Company’s Total Net Leverage Ratio, or (ii) the applicable LIBOR rate plus the applicable margin, which will range between 1.75% and 3.25%, based on the Company’s Total Net Leverage Ratio.
As of March 31, 2017, the Company had $82 million of outstanding borrowings on the Revolving Credit Facility and an available borrowing capacity of $109.1 million after giving effect to $8.9 million of outstanding standby letters of credit. As of March 31, 2017, the weighted average interest rate on all outstanding borrowings under the Revolving Credit Facility was 4.10%.
Subject to certain conditions, commitments under the Revolving Credit Facility may be increased through an incremental revolving facility so long as, on a pro forma basis, the Company’s first lien net leverage ratio does not exceed 4.25:1.00. The outstanding amount of the Revolving Credit Facility approximated its fair value as of March 31, 2017 based upon the debt being variable rate and short-term in nature.
Term Loan Facilities
The TLA Facility and TLB Facility mature on October 27, 2021 and October 27, 2022, respectively. Interest rates on the TLB Facility are, at the Company’s option, either at: (i) the prime rate plus 2.50% or (ii) the applicable LIBOR rate plus 3.50%, with LIBOR subject to a 1.00% floor. As of March 31, 2017, the interest rates on the TLA Facility and TLB Facility were 4.24% and 4.50%, respectively. Subject to certain conditions, one or more incremental term loan facilities may be added to the Term Loan Facilities so long as, on a pro forma basis, the Company’s first lien net leverage ratio does not exceed 4.25:1.00.
As of March 31, 2017, the estimated fair value of the TLB Facility was approximately $950 million, based on quoted market prices for the debt, recent sales prices for the debt and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy. The par amount of the TLA Facility approximated its fair value as of March 31, 2017 based upon the debt being variable rate in nature.
Covenants
The Revolving Credit Facility and TLA Facility contain covenants requiring (A) a maximum Total Net Leverage Ratio of 6.25:1.00, subject to step downs beginning in the first quarter of 2018 and (B) a minimum interest coverage ratio of adjusted EBITDA (as defined in the Senior Secured Credit Facilities) to interest expense of not less than 2.50:1.00 subject to step ups beginning in the first quarter of 2018. The TLB Facility does not contain any financial maintenance covenants. As of March 31, 2017, the Company was in compliance with these financial covenants.
The Senior Secured Credit Facilities also contain negative covenants that restrict the Company’s ability to (i) incur additional indebtedness; (ii) create certain liens; (iii) consolidate or merge; (iv) sell assets, including capital stock of the Company’s subsidiaries; (v) engage in transactions with the Company’s affiliates; (vi) create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries; (vii) pay dividends on capital stock or redeem, repurchase or retire capital stock; (viii) pay, prepay, repurchase or retire certain subordinated indebtedness; (ix) make investments, loans, advances and acquisitions; (x) make certain amendments or modifications to the organizational documents of the Company or its subsidiaries or the documentation governing other senior indebtedness of the Company; and (xi) change the Company’s type of business. These negative covenants are subject to a number of limitations and exceptions that are described in the Senior Secured Credit Facilities agreement. As of March 31, 2017, the Company was in compliance with all negative covenants under the Senior Secured Credit Facilities.
The Senior Secured Credit Facilities provide for customary events of default. Upon the occurrence and during the continuance of an event of default, the outstanding advances and all other obligations under the Senior Secured Credit Facilities become immediately due and payable.
(6.)     DEBT (Continued)
9.125% Senior Notes due 2023
On October 27, 2015, the Company completed a private offering of $360 million aggregate principal amount of 9.125% senior notes due on November 1, 2023 (the “Senior Notes”). Interest on the Senior Notes is payable on May 1 and November 1 of each year.
As of March 31, 2017, the estimated fair value of the Senior Notes was approximately $381 million, based on quoted market prices of these Senior Notes, recent sales prices for the Senior Notes and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy.
The indenture for the Senior Notes contain certain restrictive covenants and provides for customary events of default, subject in certain cases to customary cure periods, in which the Senior Notes and any unpaid interest would become due and payable. As of March 31, 2017, the Company was in compliance with all restrictive covenants under the indenture governing the Senior Notes.
Contractual maturities under the Senior Secured Credit Facilities and Senior Notes for the remainder of 2017 and the five years and thereafter, excluding any discounts or premiums, as of March 31, 2017 are as follows (in thousands):
 
 
2017
 
2018
 
2019
 
2020
 
2021
 
After 2021
Future minimum principal payments
 
$
27,142

 
$
30,469

 
$
37,500

 
$
119,500

 
$
229,688

 
$
1,297,550


Debt Issuance Costs and Discounts
The change in deferred debt issuance costs related to the Revolving Credit Facility is as follows (in thousands):
December 30, 2016
$
3,800

Amortization during the period
(248
)
March 31, 2017
$
3,552

The change in unamortized discount and debt issuance costs related to the Term Loan Facilities and Senior Notes is as follows (in thousands):
 
Debt Issuance Costs
 
Unamortized Discount on TLB Facility
 
Total
December 30, 2016
$
32,096

 
$
8,741

 
$
40,837

Financing costs incurred
1,789

 
—

 
1,789

Write-off of debt issuance costs and unamortized discount (1)
(1,051
)
 
(508
)
 
(1,559
)
Amortization during the period
(1,299
)
 
(331
)
 
(1,630
)
March 31, 2017
$
31,535

 
$
7,902

 
$
39,437

(1) 
The Company prepaid a portion of its TLB Facility during the first quarter of 2017. The Company recognized a loss from extinguishment of debt of $1.6 million, which is included in Interest Expense, Net in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2017. The loss from extinguishment of debt represents the portion of the unamortized discount and debt issuance costs related to the TLB Facility prepaid.
Interest Rate Swaps
From time to time, the Company enters into interest rate swap agreements in order to hedge against potential changes in cash flows on its outstanding variable rate debt. During 2016, the Company entered into a one-year $250 million interest rate swap and a three-year $200 million interest rate swap to hedge against potential changes in cash flows on the outstanding variable rate debt, which is indexed to the one-month LIBOR rate. The variable rate received on the interest rate swap and the variable rate paid on the outstanding debt will have the same rate of interest, excluding the credit spread, and will reset and pay interest on the same date. The swaps are being accounted for as cash flow hedges.
(6.)     DEBT (Continued)
Information regarding the Company’s outstanding interest rate swaps designated as cash flow hedges as of March 31, 2017 is as follows (dollars in thousands):
Notional Amount
 
Start Date
 
End Date
 
Pay Fixed Rate
 
Receive Current Floating Rate
 
Fair Value
 
Balance Sheet Location
$
200,000

 
Jun-17
 
Jun-20
 
1.1325
%
 
N/A

 
$
3,536

 
Other Long-Term Assets
$
250,000

 
Jul-16
 
Jun-17
 
0.615
%
 
0.98
%
 
$
244

 
Prepaid Expenses and Other Current Assets

The estimated fair value of the interest rate swap agreements represents the amount the Company expects to receive (pay) to terminate the contract. No portion of the change in fair value of the Company’s interest rate swaps during the three months ended March 31, 2017 and April 1, 2016 was considered ineffective. The amount recorded as a reduction to Interest Expense during the three months ended March 31, 2017 related to the Company’s interest rate swaps was $0.1 million.
Benefit Plans
BENEFIT PLANS
BENEFIT PLANS
The Company is required to provide its employees located in Switzerland, Mexico, France, and Germany certain statutorily mandated defined benefits. Under these plans, benefits accrue to employees based upon years of service, position, age and compensation. The defined benefit pension plan provided to the Company’s employees located in Switzerland is a funded contributory plan, while the plans that provide benefits to the Company’s employees located in Mexico, France, and Germany are unfunded and noncontributory. The liability and corresponding expense related to these benefit plans is based on actuarial computations of current and future benefits for employees.
The change in net defined benefit plan liability is as follows (in thousands):
December 30, 2016
$
7,556

Net defined benefit cost
161

Benefit payments
(45
)
Foreign currency translation
242

March 31, 2017
$
7,914


Net defined benefit cost is comprised of the following (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Service cost
$
110

 
$
108

Interest cost
38

 
43

Amortization of net loss
17

 
46

Expected return on plan assets
(4
)
 
(5
)
Net defined benefit cost
$
161

 
$
192

Stock-Based Compensation
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors, or the Compensation and Organization Committee of the Board. The stock-based compensation plans provide for the granting of stock options, shares of restricted stock, restricted stock units (“RSUs”), stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers.
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Stock options
$
710

 
$
609

Restricted stock and restricted stock units
3,959

 
2,226

Total stock-based compensation expense
$
4,669

 
$
2,835

 
 
 
 
Cost of sales
$
142

 
$
197

Selling, general and administrative expenses
2,159

 
1,655

Research, development and engineering costs, net
105

 
177

Other operating expenses, net
2,263

 
806

Total stock-based compensation expense
$
4,669

 
$
2,835


During the first quarter of 2017, the Company recorded $2.2 million of accelerated stock-based compensation expense in connection with the transition of its former Chief Executive Officer (“CEO”) per the terms of his contract, which was classified as Other Operating Expenses, Net. In connection with the Spin-off, certain awards granted to employees who transferred to Nuvectra were canceled. As required, the Company accelerated the remaining expense related to these canceled awards of $0.5 million during the first quarter of 2016, which was classified as Other Operating Expenses, Net.
The weighted average fair value and assumptions used to value options granted are as follows:
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Weighted average fair value
$
9.14

 
$
12.81

Risk-free interest rate
1.63
%
 
1.69
%
Expected volatility
38
%
 
26
%
Expected life (in years)
4

 
5

Expected dividend yield
—
%
 
—
%

(8.)     STOCK-BASED COMPENSATION (Continued)
The following table summarizes the Company’s stock option activity:
 
Number of
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 30, 2016
1,739,972

 
$
28.26

 
 
 
 
Granted
33,636

 
29.55

 
 
 
 
Exercised
(343,898
)
 
21.66

 
 
 
 
Forfeited or expired
(9,490
)
 
45.82

 
 
 
 
Outstanding at March 31, 2017
1,420,220

 
$
29.77

 
6.4
 
$
17.8

Exercisable at March 31, 2017
1,164,993

 
$
27.94

 
5.8
 
$
16.1


During the three months ended March 31, 2017, the Company awarded grants of 0.6 million RSUs to certain members of management, of which 0.4 million are performance-based RSUs (“PSUs”) and the remainder are time-based RSUs that vest over three years. Of the PSUs, 0.3 million of the shares subject to each grant will be earned based upon achievement of specific Company performance metrics for the Company’s fiscal year ending December 29, 2017, and 0.1 million of the shares subject to each grant will be earned based on the Company’s achievement of a relative total shareholder return (“TSR”) performance requirement, on a percentile basis, compared to a defined group of peer companies over a two-year performance period ending December 28, 2018. The number of PSUs earned based on the achievement of the Company performance metrics and TSR performance requirements, if any, will vest based on the recipient’s continuous service to the Company over a period of generally one to three years from the grant date. The time-based RSUs generally vest ratably over a three-year period. The RSUs do not have rights to dividends or dividend equivalents.
The grant-date fair value of the TSR portion of the PSUs granted during the three months ended March 31, 2017 was determined using the Monte Carlo simulation model on the date of grant, assuming the following (i) expected term of 1.89 years, (ii) risk free interest rate of 1.12%, (iii) expected dividend yield of 0.0% and (iv) expected stock price volatility over the expected term of the TSR award of 48.9%. The grant-date fair value of all other restricted stock awards is equal to the closing market price of Integer common stock on the date of grant.
The following table summarizes time-vested restricted stock and RSU activity:
 
Time-Vested
Activity
 
Weighted Average Fair Value
Nonvested at December 30, 2016
39,394

 
$
45.51

Granted
250,132

 
32.10

Vested
(7,797
)
 
29.55

Forfeited
(2,321
)
 
40.72

Nonvested at March 31, 2017
279,408

 
$
33.99

The following table summarizes PSU activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at December 30, 2016
356,586

 
$
31.87

Granted
370,815

 
30.58

Forfeited
(134,223
)
 
31.40

Nonvested at March 31, 2017
593,178

 
$
31.18

Other Operating Expenses, Net
OTHER OPERATING EXPENSES, NET
OTHER OPERATING EXPENSES, NET
Other Operating Expenses, Net is comprised of the following (in thousands)
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
2014 investments in capacity and capabilities
$
1,590

 
$
4,153

Lake Region Medical consolidations
706

 
2,359

Acquisition and integration costs
4,820

 
9,965

Asset dispositions, severance and other
4,556

 
4,526

Other consolidation and optimization initiatives
99

 
137

Total other operating expenses, net
$
11,771

 
$
21,140


2014 Investments in Capacity and Capabilities
In 2014, the Company announced several initiatives to invest in capacity and capabilities and to better align its resources to meet its customers’ needs and drive organic growth and profitability. These included the following:
•
Functions performed at the Company’s facility in Plymouth, MN to manufacture catheters and introducers will transfer into the Company’s existing facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the end of 2017 and is dependent upon our customers’ validation and qualification of the transferred products as well as regulatory approvals worldwide.
•
Functions performed at the Company’s facilities in Beaverton, OR and Raynham, MA to manufacture products for the portable medical market were transferred to a new facility in Tijuana, Mexico. Products manufactured at the Beaverton facility, which do not serve the portable medical market, were transferred to the Company’s Raynham facility. This initiative was substantially completed during the first half of 2016. The final closure of the Beaverton, OR site occurred in the fourth quarter of 2016.
•
The design engineering responsibilities previously performed at the Company’s Cleveland, OH facility were transferred to the Company’s facilities in Minnesota in 2015.
•
The realignment of the Company’s commercial sales operations was completed in 2015.
The total capital investment expected for these initiatives is between $24.0 million and $25.0 million, of which $23.4 million has been expended through March 31, 2017. Total restructuring charges expected to be incurred in connection with this realignment are between $52.0 million and $55.0 million, of which $50.7 million has been incurred through March 31, 2017. Expenses related to this initiative are primarily recorded within the Medical segment and include the following:
•
Severance and retention: $6.0 million - $7.0 million;
•
Accelerated depreciation and asset write-offs: $3.0 million - $3.0 million; and
•
Other: $43.0 million - $45.0 million
Other expenses primarily consist of costs to relocate certain equipment and personnel, duplicate personnel costs, excess overhead, disposal, and travel expenditures. All expenses are cash expenditures except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):
 
Severance and Retention
 
Accelerated
Depreciation/
Asset Write-offs
 
Other
 
Total
December 30, 2016
$
66

 
$
—

 
$
—

 
$
66

Restructuring charges
140

 
—

 
1,450

 
1,590

Cash payments
—

 
—

 
(1,450
)
 
(1,450
)
March 31, 2017
$
206


$
—

 
$
—

 
$
206


(9.)     OTHER OPERATING EXPENSES, NET (Continued)
Lake Region Medical Consolidations
In 2014, Lake Region Medical initiated plans to close its Arvada, CO site, consolidate its two Galway, Ireland sites into one facility, and other restructuring actions that will result in a reduction in staff across manufacturing and administrative functions at certain locations. This initiative was substantially completed by the end of 2016.
During the third quarter of 2016, the Company announced the planned closure of its Clarence, NY facility. The machined component product lines manufactured in this facility will be transferred to other Integer locations in the U.S. The project is expected to be completed by the first quarter of 2018.
The total capital investment expected to be incurred for these initiatives is between $5.0 million and $6.0 million, of which $2.5 million has been expended through March 31, 2017. Total expense expected to be incurred for these initiatives are between $20.0 million and $25.0 million, of which $11.3 million has been incurred through March 31, 2017. Expenses related to these initiatives have been and will be recorded within the Medical segment and are expected to include the following:
•
Severance and retention: $8.0 million - $10.0 million;
•
Accelerated depreciation and asset write-offs: approximately $1.0 million - $2.0 million; and
•
Other: $11.0 million - $13.0 million.
Other expenses primarily consist of production inefficiencies, moving, revalidation, personnel, training, consulting, and travel costs associated with these consolidation projects. All expenses are cash expenditures except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the Lake Region Medical consolidation initiatives is as follows (in thousands):
 
Severance and Retention
 
Accelerated
Depreciation/
Asset Write-offs
 
Other
 
Total
December 30, 2016
$
729

 
$
—

 
$
402

 
$
1,131

Restructuring charges
423

 
—

 
283

 
706

Cash payments
(440
)
 
—

 
(292
)
 
(732
)
March 31, 2017
$
712


$
—

 
$
393

 
$
1,105


Acquisition and integration costs
During the first quarter of 2017 and 2016, the Company incurred $4.8 million and $10.0 million respectively, in acquisition and integration costs related to the acquisition of Lake Region Medical, consisting primarily of integration costs. Integration costs primarily include professional, consulting, severance, retention, relocation, and travel costs. In addition, the first quarter of 2016 includes transaction costs, primarily related to change-in-control payments to former Lake Region Medical executives, as well as professional and consulting fees. As of March 31, 2017 and December 30, 2016, $2.0 million and $4.5 million of acquisition and integration costs related to the Lake Region Medical acquisition are accrued.
Total expense expected to be incurred in connection with the integration of Lake Region Medical is between $40.0 million and $50.0 million, of which $37.3 million were incurred through March 31, 2017. Total capital expenditures for this initiative are expected to be between $20.0 million and $25.0 million, of which $9.5 million were incurred through March 31, 2017.
Asset dispositions, severance and other
During the first quarter of 2017 and 2016, the Company recorded gains and losses, respectively, in connection with various asset disposals and/or write-downs. The first quarter of 2017 amount also includes approximately $4.7 million in expense related to the Company’s leadership transitions, which were recorded within the corporate unallocated segment. The first quarter of 2016 amount also includes legal and professional costs in connection with the Spin-off of $4.3 million. Expenses related to the Spin-off were primarily recorded within the corporate unallocated and the Medical segment. Refer to Note 2 “Divestiture” for additional information on the Spin-off.
Income Taxes
INCOME TAXES
INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including discrete items, changes in the mix and amount of pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations.
The Company’s worldwide effective tax rate for the first quarter of 2017 was a negative 3.4% on $4.2 million of losses before the provision for income taxes compared to 0.8% on $12.8 million of losses before the benefit for income taxes for the same period in 2016. The effective tax rate for the first quarter of 2017 reflects $0.9 million of discrete tax expense items, including $0.6 million related, in part, to stock based compensation expense in accordance with new guidance under Accounting Standards Update (“ASU”) 2016-09. The difference between the Company’s effective tax rate and the U.S. federal statutory income tax rate in the current year is primarily attributable to the Company’s overall lower effective tax rate in the foreign jurisdictions in which it operates and where its foreign earnings are derived, including Switzerland, Mexico, Germany, Uruguay, and Ireland. In addition, the Company currently has a tax holiday in Malaysia through April 2018, with a potential extension through April 2023 if certain conditions are met.
As of March 31, 2017, the balance of unrecognized tax benefits is approximately $10.9 million. It is reasonably possible that a reduction of up to $0.1 million of the balance of unrecognized tax benefits may occur within the next twelve months as a result of potential audit settlements. Approximately $10.1 million of the balance of unrecognized tax benefits would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized.
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to litigation arising from time to time in the ordinary course of its business. The Company does not expect that the ultimate resolution of any pending legal actions will have a material effect on its consolidated results of operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, will not become material in the future.
In April 2013, the Company commenced an action against AVX Corporation and AVX Filters Corporation (collectively “AVX”) alleging that AVX had infringed on the Company’s patents by manufacturing and selling filtered feedthrough assemblies used in implantable pacemakers and cardioverter defibrillators that incorporate the Company’s patented technology. On January 26, 2016, a jury in the U.S. District Court for the District of Delaware returned a verdict finding that AVX infringed on two Integer patents and awarded Integer $37.5 million in damages. The finding is subject to post-trial proceedings currently scheduled to be held in August 2017. The Company has recorded no gains in connection with this litigation as no cash has been received.
Product Warranties
The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The Company does not expect future product warranty claims will have a material effect on its condensed consolidated results of operations, financial position, or cash flows. However, there can be no assurance that any future customer complaints or negative regulatory actions regarding the Company’s products, which the Company currently believes to be immaterial, does not become material in the future. The change in product warranty liability was comprised of the following (in thousands):
December 30, 2016
$
3,911

Reversal of warranty reserve
(252
)
Warranty claims settled
(832
)
March 31, 2017
$
2,827


(11.)     COMMITMENTS AND CONTINGENCIES (Continued)
Foreign Currency Contracts
The Company periodically enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate fluctuations in its international operations. The Company has designated these foreign currency forward contracts as cash flow hedges; and accordingly, the effective portions of the unrealized gains and losses on these contracts is reported in Accumulated Other Comprehensive Income (Loss) in the Condensed Consolidated Balance Sheets and is reclassified to earnings in the same periods during which the hedged transactions affect earnings. The estimated Accumulated Other Comprehensive Income (Loss) related to the Company’s foreign currency contracts that is expected to be reclassified into earnings within the next twelve months is a $0.3 million gain.
In connection with the Lake Region Medical acquisition, the Company terminated its outstanding forward contracts resulting in a $2.4 million payment to the foreign currency contract counterparty during 2015. As of the date the contracts were terminated, the Company had $1.6 million recorded in Accumulated Other Comprehensive Income (Loss) related to these contracts. This amount was fully amortized to Cost of Sales during 2016 as the inventory, which the contracts were hedging the cash flows to produce, was sold.
The impact to the Company’s results of operations from its forward contract hedges is as follows (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Decrease in sales
$
24

 
$
—

Increase in cost of sales
1,062

 
619

Ineffective portion of change in fair value
—

 
—


Information regarding outstanding foreign currency contracts designated as cash flow hedges as of March 31, 2017 is as follows (dollars in thousands):
Aggregate
Notional
Amount
 
Start
Date
 
End
Date
 
$/Foreign Currency
 
Fair
Value
 
Balance Sheet Location
$
18,490

 
Jan 2017
 
Dec 2017
 
0.0514

Peso
 
$
310

 
Prepaid expenses and other current assets
$
19,344

 
Feb 2017
 
Dec 2017
 
1.0747

Euro
 
$
22

 
Prepaid expenses and other current assets
Earnings (Loss) Per Share (EPS)
EARNINGS (LOSS) PER SHARE (EPS)
EARNINGS (LOSS) PER SHARE (“EPS”)
The following table illustrates the calculation of basic and diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Numerator for basic and diluted EPS:
 
 
 
Net loss
$
(4,339
)
 
$
(12,660
)
Denominator for basic EPS:
 
 
 
Weighted average shares outstanding
31,016

 
30,718

Denominator for diluted EPS
31,016

 
30,718

Basic EPS
$
(0.14
)
 
$
(0.41
)
Diluted EPS
$
(0.14
)
 
$
(0.41
)

The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Time-vested stock options, restricted stock and restricted stock units
1,700

 
1,890

Performance-vested restricted stock and restricted stock units
593

 
441

Accumulated Other Comprehensive Income (Loss)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated Other Comprehensive Income (Loss) is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
December 30, 2016
$
(1,475
)
 
$
1,420

 
$
(15,660
)
 
$
(15,715
)
 
$
(285
)
 
$
(16,000
)
Unrealized gain on cash flow hedges
—

 
1,712

 
—

 
1,712

 
(599
)
 
1,113

Realized loss on foreign currency hedges
—

 
1,086

 
—

 
1,086

 
(380
)
 
706

Realized gain on interest rate swap hedges
—

 
(106
)
 
—

 
(106
)
 
37

 
(69
)
Foreign currency translation gain
—

 
—

 
6,536

 
6,536

 
—

 
6,536

March 31, 2017
$
(1,475
)
 
$
4,112

 
$
(9,124
)
 
$
(6,487
)
 
$
(1,227
)
 
$
(7,714
)
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
January 1, 2016
$
(1,179
)
 
$
(2,392
)
 
$
3,609

 
$
38

 
$
1,332

 
$
1,370

Unrealized loss on cash flow hedges
—

 
(54
)
 
—

 
(54
)
 
19

 
(35
)
Realized loss on foreign currency hedges
—

 
619

 
—

 
619

 
(217
)
 
402

Foreign currency translation gain
—

 
—

 
18,760

 
18,760

 
—

 
18,760

April 1, 2016
$
(1,179
)
 
$
(1,827
)
 
$
22,369

 
$
19,363

 
$
1,134

 
$
20,497

The realized loss relating to the Company’s foreign currency hedges were reclassified from Accumulated Other Comprehensive Income (Loss) and included in Cost of Sales or Sales as the transactions they are hedging occur. The realized gain relating to the Company’s interest rate swap hedges were reclassified from Accumulated Other Comprehensive Income (Loss) and included in Interest Expense, Net as interest on the corresponding debt being hedged is accrued.
Fair Value Measurements
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). For the Company, these financial assets and liabilities include its derivative instruments. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.
Foreign Currency Contracts
The fair value of foreign currency contracts were determined through the use of cash flow models that utilize observable market data inputs to estimate fair value. These observable market data inputs included foreign exchange rate and credit spread curves. In addition, the Company received fair value estimates from the foreign currency contract counterparties to verify the reasonableness of the Company’s estimates. The Company’s foreign currency contracts are categorized in Level 2 of the fair value hierarchy. Refer to Note 11 “Commitments and Contingencies” for further discussion regarding the fair value of the Company’s foreign currency contracts.
Interest Rate Swaps
The fair value of the Company’s interest rate swap contracts outstanding were determined through the use of a cash flow model that utilizes observable market data inputs. These observable market data inputs include LIBOR, swap rates, and credit spread curves. In addition, the Company received a fair value estimate from the interest rate swaps counterparty to verify the reasonableness of the Company’s estimate. Refer to Note 6 “Debt” for further discussion regarding the fair value of the Company’s interest rate swaps.
The following table provides information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):
 
 
Fair Value
 
Quoted
Prices in
Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
March 31, 2017
 
 
 
 
 
 
 
 
Assets: Foreign currency contracts
 
$
332

 
$
—

 
$
332

 
$
—

Assets: Interest rate swaps
 
3,780

 
—

 
3,780

 
—

 
 
 
 
 
 
 
 
 
December 30, 2016
 
 
 
 
 
 
 
 
Assets: Interest rate swaps
 
$
3,482

 
$
—

 
$
3,482

 
$
—

Liabilities: Foreign currency contracts
 
2,063

 
—

 
2,063

 
—


Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. The carrying amounts of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these items. Refer to Note 6 “Debt” for further discussion regarding the fair value of the Company’s Senior Secured Credit Facilities and Senior Notes. A summary of the valuation methodologies for assets and liabilities measured on a nonrecurring basis is as follows:
Cost and Equity Method Investments
The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments, which are classified as Other Assets on the Condensed Consolidated Balance Sheets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments.
(14.)     FAIR VALUE MEASUREMENTS (Continued)
Gains and losses realized on cost and equity method investments are recorded in Other Expense (Income), Net, unless separately stated. The aggregate recorded amount of cost and equity method investments at March 31, 2017 and December 30, 2016 was $22.6 million and $22.8 million, respectively. The Company’s equity method investment is in a Chinese venture capital fund focused on investing in life sciences companies. This fund accounts for its investments at fair value with the unrealized change in fair value of these investments recorded as income or loss to the fund in the period of change. As of March 31, 2017, the Company owned 7.1% of this fund.
During the three month periods ended March 31, 2017 and April 1, 2016, the Company did not recognize any impairment charges related to its cost method investments. The fair value of these investments is primarily determined by reference to recent sales data of similar shares to independent parties in an inactive market. This fair value calculation is categorized in Level 2 of the fair value hierarchy. During the three month periods ended March 31, 2017 and April 1, 2016, the Company recognized a net loss of $0.4 million and a net gain of $1.3 million, respectively, on its cost and equity method investments.
Segment Information
SEGMENT INFORMATION
SEGMENT INFORMATION
As a result of the Lake Region Medical acquisition and Spin-off, during 2016 the Company reorganized its operations including its internal management and financial reporting structure. As a result of this reorganization, the Company reevaluated and revised its reportable business segments during the fourth quarter of 2016 and began to disclose two reportable segments: (1) Medical and (2) Non-Medical. Prior period amounts have been reclassified to conform to the new segment reporting presentation. The two reportable segments, along with their related product lines, are described below:
Medical - includes the (i) Cardio & Vascular product line, which includes introducers, steerable sheaths, guidewires, catheters, and stimulation therapy components, subassemblies and finished devices that deliver therapies for various markets such as coronary and neurovascular disease, peripheral vascular disease, interventional radiology, vascular access, atrial fibrillation, and interventional cardiology, plus products for medical imaging and pharmaceutical delivery; (ii) Cardiac & Neuromodulation product line, which includes batteries, capacitors, filtered and unfiltered feed-throughs, engineered components, implantable stimulation leads, and enclosures used in implantable medical devices; and (iii) Advanced Surgical, Orthopedics & Portable Medical product line, which includes components, sub-assemblies, finished devices, implants, instruments and delivery systems for a range of surgical technologies to the advanced surgical market, including laparoscopy, orthopedics and general surgery, biopsy and drug delivery, joint preservation and reconstruction, arthroscopy, and engineered tubing solutions. Products also include life-saving and life-enhancing applications comprising of automated external defibrillators, portable oxygen concentrators, ventilators, and powered surgical tools.
Non-Medical - includes primary (lithium) cells, and primary and secondary battery packs for applications in the energy, military and environmental markets.
During the first quarter of 2017, the Company revised the method used to present sales by product line in order to align the legacy Greatbatch and Lake Region Medical methodologies.  The Company believes the revised presentation will provide improved reporting and better transparency into the operational results of its business and markets.  Prior period amounts have been reclassified to conform to the new product line sales reporting presentation.
The tables below present information about our reportable segments (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Segment sales by product line:
 
 
 
Medical
 
 
 
Cardio & Vascular
$
125,108

 
$
113,671

Cardiac & Neuromodulation
103,813

 
108,533

Advanced Surgical, Orthopedics & Portable Medical
105,146

 
98,362

Total Medical
$
334,067

 
$
320,566

Non-Medical
11,346

 
11,672

Total sales
$
345,413

 
$
332,238


(15.)     BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION (Continued)
There were no sales between segments during the three months ended March 31, 2017 and April 1, 2016.
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Segment income (loss) from operations:
 
 
 
Medical
$
50,360

 
$
31,841

Non-Medical
1,562

 
(1,011
)
Total segment income from operations
51,922

 
30,830

Unallocated operating expenses
(25,377
)
 
(19,696
)
Operating income
26,545

 
11,134

Unallocated expenses, net
(30,740
)
 
(23,896
)
Loss before provision (benefit) for income taxes
$
(4,195
)
 
$
(12,762
)
Impact of Recently Issued Accounting Standards
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), Securities and Exchange Commission (“SEC”), or other authoritative accounting bodies to determine the potential impact they may have on the Company’s consolidated financial statements. Based upon this review, except as noted below, management does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Consolidated Financial Statements.
Recently Adopted
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies various aspects of the accounting for stock-based payments. The simplifications include:
•
recording all tax effects associated with stock-based compensation through the income statement, as opposed to recording certain amounts in other paid-in capital, which eliminates the requirements to calculate a windfall pool;
•
allowing entities to withhold shares to satisfy the employer’s statutory tax withholding requirement up to the highest marginal tax rate applicable to employees rather than the employer’s minimum statutory rate, without requiring liability classification for the award;
•
modifying the requirement to estimate the number of awards that will ultimately vest by providing an accounting policy election to either estimate the number of forfeitures or recognize forfeitures as they occur;
•
changing certain presentation requirements in the statement of cash flows, including removing the requirement to present excess tax benefits as an inflow from financing activities and an outflow from operating activities, and requiring the cash paid to taxing authorities arising from withheld shares to be classified as a financing activity; and
•
the assumed proceeds from applying the treasury stock method when computing EPS is amended to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital.
The Company adopted the provisions of ASU 2016-09 on December 31, 2016, the beginning of its 2017 fiscal year. The adoption of ASU 2016-09 resulted in the Company making an accounting policy election to change how it will recognize the number of stock awards that will ultimately vest. In the past, the Company applied a forfeiture rate to shares granted. With the adoption of ASU 2016-09, the Company will recognize forfeitures as they occur. This change resulted in the Company making a cumulative effect change to retained earnings of $0.3 million. In addition, the Company recorded the tax effects associated with stock-based compensation through the income statement, which resulted in $0.6 million, net tax expense for the first three months of 2017, and will continue to record amounts prospectively through the income statement in accordance with ASU 2016-09.  Finally, the Company adjusted its dilutive shares calculation to remove the excess tax benefits from the calculation of EPS on a prospective basis. The revised calculation is more dilutive, but did not have a material impact on the Company's diluted EPS calculation for the first three months of 2017.
(16.)     IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted this standard in the first quarter of fiscal year 2017 on a prospective basis. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test. A goodwill impairment will now be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the new guidance on a prospective basis during the first quarter of 2017. The adoption of this ASU did not impact the Company’s consolidated financial statements.
Not Yet Adopted
In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715),” which requires employers to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires other components of net periodic pension cost and net periodic postretirement benefit cost, including interest cost, return on plan assets and gains or losses, to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. This guidance is effective for the Company in the first quarter of fiscal year 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which outlines new minimum requirements for a set of assets to be considered a business. The intent of this ASU is to sharpen the distinction between the purchase or disposal of a business versus the purchase or disposal of assets. ASU 2017-01 is effective for the Company in the first quarter of 2018, with early adoption permitted, and prospective application required. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-entity Transfers of Assets Other Than Inventory,” which requires entities to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfers occur. This ASU is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments: A Consensus of the FASB Emerging Issues Task Force.” ASU 2016-15 makes targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. The areas specifically addressed include debt prepayment and debt extinguishment costs, the settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, cash premiums paid for and proceeds from corporate-owned life insurance policies, distributions received from equity method investees and cash receipts from payments on transferor’s beneficial interest on securitized trade receivables. Additionally, the amendment states that, in the absence of other prevailing guidance, cash receipts and payments that have characteristics of more than one class of cash flows should have each separately identifiable source or use of cash presented within the most predominant class of cash flows based on the nature of the underlying cash flows. These amendments are effective for the Company in annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating this ASU, but does not believe the adoption of this guidance will have a material impact on its consolidated financial statements.
(16.)     IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires companies to recognize a lease liability that represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet for most leases. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and are required to be applied on a modified retrospective basis. Earlier application is permitted. The Company expects the adoption of ASU 2016-02 will result in a material increase in the assets and liabilities on its Consolidated Balance Sheets. The Company is currently evaluating the impact that the adoption of this ASU will have on its Consolidated Statements of Operations and Other Comprehensive Income (Loss).
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and requires entities to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option. The new ASU is effective for public companies for fiscal years beginning after December 15, 2017. Early adoption of the own credit provision is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which has been subsequently updated by ASU 2015-14, 2016-08, 2016-10 and 2016-12. The core principle behind ASU 2014-09 is that an entity should recognize revenue in an amount that reflects the consideration to which it expects to be entitled in exchange for delivering goods and services using a five-step model. Enhanced disclosures are required, including revenue recognition policies to identify performance obligations and significant judgments in measurement and recognition. This ASU can be adopted using either a full retrospective approach, where historical financial information is presented in accordance with the new standard, or a modified retrospective approach, where this ASU is applied to the most current period presented in the financial statements. This ASU is effective for the Company in the first quarter of fiscal year 2018. The Company is continuing to evaluate the effect this guidance will have on its consolidated financial statements, including potential impacts on the amount and timing of revenue recognition and additional information that may be necessary for the required expanded disclosures. To date, the Company has performed the following: A transition team has been established to implement the required changes; an initial assessment of the Company’s revenue streams has been initiated; the Company has substantially completed its inventory of all outstanding contracts; and the Company has begun the process of applying the five-step model to those contracts and revenue streams to evaluate the quantitative and qualitative impacts the new standard will have on its business and reported revenues. The Company plans to adopt this ASU, as amended, in the first quarter of fiscal year 2018 on a modified retrospective basis.
Basis of Presentation (Policies)
Interim Basis of Accounting 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. Intercompany transactions and balances have been fully eliminated in consolidation.
Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Refer to Note 15 “Segment Information,” for a description of the changes made to reflect the current year product line sales reporting and changes made to our reportable segment structure during the fourth quarter of 2016.
Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.
For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2016.
Use of Estimates 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, certain components of equity, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.
Fiscal Period 
The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31. The first quarter of 2017 and 2016 each contained 13 weeks, respectively, and ended on March 31, and April 1, respectively.
Income Taxes 
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including discrete items, changes in the mix and amount of pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations.
Cost And Equity Method Investments 
The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments, which are classified as Other Assets on the Condensed Consolidated Balance Sheets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments.
(14.)     FAIR VALUE MEASUREMENTS (Continued)
Gains and losses realized on cost and equity method investments are recorded in Other Expense (Income), Net, unless separately stated.
Divestiture (Tables)
Summary of divested assets and liabilities
In connection with the Spin-off, during the first quarter of 2016, the Company made a cash capital contribution of $75 million to Nuvectra and divested the following assets and liabilities (in thousands):
Assets divested
 
  Cash and cash equivalents
$
76,256

  Other current assets
977

  Property, plant and equipment, net
4,407

  Amortizing intangible assets, net
1,931

  Goodwill
40,830

  Deferred income taxes
6,446

Total assets divested
130,847

Liabilities transferred
 
     Current liabilities
2,119

Net assets divested
$
128,728

Supplemental Cash Flow Information (Tables)
Schedule of Cash Flow, Supplemental Disclosures
 
Three Months Ended
(in thousands)
March 31,
2017
 
April 1,
2016
Noncash investing and financing activities:
 
 
 
Property, plant and equipment purchases included in accounts payable
$
3,243

 
$
4,304

Purchase of technology included in accrued expenses
—

 
2,000

Divestiture of noncash assets
—

 
54,591

Divestiture of liabilities
—

 
2,119

Inventories (Tables)
Schedule of Inventory, Current
Inventories are comprised of the following (in thousands):
 
March 31,
2017
 
December 30,
2016
Raw materials
$
104,989

 
$
100,738

Work-in-process
91,749

 
89,224

Finished goods
34,554

 
35,189

Total
$
231,292

 
$
225,151

Goodwill and Other Intangible Assets, Net (Tables)
Schedule of Goodwill 
The changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2017 were as follows (in thousands):
 
Medical
 
Non- Medical
 
Total
December 30, 2016
$
950,326

 
$
17,000

 
$
967,326

Foreign currency translation
2,087

 
—

 
2,087

March 31, 2017
$
952,413

 
$
17,000

 
$
969,413

Schedule of Finite-Lived Intangible Assets, Major Class 
Intangible assets at March 31, 2017 and December 30, 2016 were as follows (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
March 31, 2017
 
 
 
 
 
 

Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(104,977
)
 
$
794

 
$
152,536

Customer lists
759,987

 
(67,165
)
 
(4,202
)
 
688,620

Other
4,534

 
(5,171
)
 
788

 
151

Total
$
1,021,240

 
$
(177,313
)
 
$
(2,620
)
 
$
841,307

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288

 
 
 
 
 
 
 
 
December 30, 2016
 
 
 
 
 
 
 
Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(100,719
)
 
$
333

 
$
156,333

Customer lists
759,987

 
(60,474
)
 
(6,269
)
 
693,244

Other
4,534

 
(5,142
)
 
803

 
195

Total
$
1,021,240

 
$
(166,335
)
 
$
(5,133
)
 
$
849,772

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288

Schedule of Indefinite-Lived Intangible Assets 
Intangible assets at March 31, 2017 and December 30, 2016 were as follows (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
March 31, 2017
 
 
 
 
 
 

Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(104,977
)
 
$
794

 
$
152,536

Customer lists
759,987

 
(67,165
)
 
(4,202
)
 
688,620

Other
4,534

 
(5,171
)
 
788

 
151

Total
$
1,021,240

 
$
(177,313
)
 
$
(2,620
)
 
$
841,307

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288

 
 
 
 
 
 
 
 
December 30, 2016
 
 
 
 
 
 
 
Definite-lived:
 
 
 
 
 
 
 
Purchased technology and patents
$
256,719

 
$
(100,719
)
 
$
333

 
$
156,333

Customer lists
759,987

 
(60,474
)
 
(6,269
)
 
693,244

Other
4,534

 
(5,142
)
 
803

 
195

Total
$
1,021,240

 
$
(166,335
)
 
$
(5,133
)
 
$
849,772

Indefinite-lived:
 
 
 
 
 
 
 
Trademarks and tradenames


 
 
 
 
 
$
90,288

Schedule of Finite-Lived Intangible Assets, Amortization Expense 
Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Cost of sales
$
4,084

 
$
4,240

Selling, general and administrative expenses
6,758

 
5,136

Research, development and engineering costs, net
136

 
88

Total intangible asset amortization expense
$
10,978

 
$
9,464

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
Estimated future intangible asset amortization expense based on the carrying value as of March 31, 2017 is as follows (in thousands):
 
2017
 
2018
 
2019
 
2020
 
2021
 
After 2021
Amortization Expense
32,689

 
44,542

 
44,605

 
45,192

 
$
44,080

 
$
630,199

Debt (Tables)
Schedule of Long-Term Debt 
Long-term debt is comprised of the following (in thousands):
 
March 31,
2017
 
December 30,
2016
Senior secured term loan A
$
351,563

 
$
356,250

Senior secured term loan B
948,286

 
1,014,750

9.125% senior notes due 2023
360,000

 
360,000

Revolving line of credit
82,000

 
40,000

Less unamortized discount on term loan B and debt issuance costs
(39,437
)
 
(40,837
)
Total debt
1,702,412

 
1,730,163

Less current portion of long-term debt
34,173

 
31,344

Total long-term debt
$
1,668,239

 
$
1,698,819

Schedule of Maturities of Long-term Debt 
Contractual maturities under the Senior Secured Credit Facilities and Senior Notes for the remainder of 2017 and the five years and thereafter, excluding any discounts or premiums, as of March 31, 2017 are as follows (in thousands):
 
 
2017
 
2018
 
2019
 
2020
 
2021
 
After 2021
Future minimum principal payments
 
$
27,142

 
$
30,469

 
$
37,500

 
$
119,500

 
$
229,688

 
$
1,297,550

Schedule of Deferred Financing Fees 
The change in deferred debt issuance costs related to the Revolving Credit Facility is as follows (in thousands):
December 30, 2016
$
3,800

Amortization during the period
(248
)
March 31, 2017
$
3,552

The change in unamortized discount and debt issuance costs related to the Term Loan Facilities and Senior Notes is as follows (in thousands):
 
Debt Issuance Costs
 
Unamortized Discount on TLB Facility
 
Total
December 30, 2016
$
32,096

 
$
8,741

 
$
40,837

Financing costs incurred
1,789

 
—

 
1,789

Write-off of debt issuance costs and unamortized discount (1)
(1,051
)
 
(508
)
 
(1,559
)
Amortization during the period
(1,299
)
 
(331
)
 
(1,630
)
March 31, 2017
$
31,535

 
$
7,902

 
$
39,437

(1) 
The Company prepaid a portion of its TLB Facility during the first quarter of 2017. The Company recognized a loss from extinguishment of debt of $1.6 million, which is included in Interest Expense, Net in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2017. The loss from extinguishment of debt represents the portion of the unamortized discount and debt issuance costs related to the TLB Facility prepaid.
Schedule of Interest Rate Derivatives 
Information regarding the Company’s outstanding interest rate swaps designated as cash flow hedges as of March 31, 2017 is as follows (dollars in thousands):
Notional Amount
 
Start Date
 
End Date
 
Pay Fixed Rate
 
Receive Current Floating Rate
 
Fair Value
 
Balance Sheet Location
$
200,000

 
Jun-17
 
Jun-20
 
1.1325
%
 
N/A

 
$
3,536

 
Other Long-Term Assets
$
250,000

 
Jul-16
 
Jun-17
 
0.615
%
 
0.98
%
 
$
244

 
Prepaid Expenses and Other Current Assets
Benefit Plans (Tables)
Schedule of Defined Benefit Plan, Change in Benefit Obligation 
The change in net defined benefit plan liability is as follows (in thousands):
December 30, 2016
$
7,556

Net defined benefit cost
161

Benefit payments
(45
)
Foreign currency translation
242

March 31, 2017
$
7,914

Schedule of Net Defined Benefit Cost 
Net defined benefit cost is comprised of the following (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Service cost
$
110

 
$
108

Interest cost
38

 
43

Amortization of net loss
17

 
46

Expected return on plan assets
(4
)
 
(5
)
Net defined benefit cost
$
161

 
$
192

Stock-Based Compensation (Tables)
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs 
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Stock options
$
710

 
$
609

Restricted stock and restricted stock units
3,959

 
2,226

Total stock-based compensation expense
$
4,669

 
$
2,835

 
 
 
 
Cost of sales
$
142

 
$
197

Selling, general and administrative expenses
2,159

 
1,655

Research, development and engineering costs, net
105

 
177

Other operating expenses, net
2,263

 
806

Total stock-based compensation expense
$
4,669

 
$
2,835

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 
The weighted average fair value and assumptions used to value options granted are as follows:
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Weighted average fair value
$
9.14

 
$
12.81

Risk-free interest rate
1.63
%
 
1.69
%
Expected volatility
38
%
 
26
%
Expected life (in years)
4

 
5

Expected dividend yield
—
%
 
—
%
Schedule of Share-based Compensation, Stock Options Activity 
The following table summarizes the Company’s stock option activity:
 
Number of
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 30, 2016
1,739,972

 
$
28.26

 
 
 
 
Granted
33,636

 
29.55

 
 
 
 
Exercised
(343,898
)
 
21.66

 
 
 
 
Forfeited or expired
(9,490
)
 
45.82

 
 
 
 
Outstanding at March 31, 2017
1,420,220

 
$
29.77

 
6.4
 
$
17.8

Exercisable at March 31, 2017
1,164,993

 
$
27.94

 
5.8
 
$
16.1

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity 
The following table summarizes time-vested restricted stock and RSU activity:
 
Time-Vested
Activity
 
Weighted Average Fair Value
Nonvested at December 30, 2016
39,394

 
$
45.51

Granted
250,132

 
32.10

Vested
(7,797
)
 
29.55

Forfeited
(2,321
)
 
40.72

Nonvested at March 31, 2017
279,408

 
$
33.99

The following table summarizes PSU activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at December 30, 2016
356,586

 
$
31.87

Granted
370,815

 
30.58

Forfeited
(134,223
)
 
31.40

Nonvested at March 31, 2017
593,178

 
$
31.18

Other Operating Expenses, Net (Tables)
Schedule of Other Operating Cost and Expense By Component 
Other Operating Expenses, Net is comprised of the following (in thousands)
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
2014 investments in capacity and capabilities
$
1,590

 
$
4,153

Lake Region Medical consolidations
706

 
2,359

Acquisition and integration costs
4,820

 
9,965

Asset dispositions, severance and other
4,556

 
4,526

Other consolidation and optimization initiatives
99

 
137

Total other operating expenses, net
$
11,771

 
$
21,140

Schedule of Restructuring Reserve By Type of Cost 
The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):
 
Severance and Retention
 
Accelerated
Depreciation/
Asset Write-offs
 
Other
 
Total
December 30, 2016
$
66

 
$
—

 
$
—

 
$
66

Restructuring charges
140

 
—

 
1,450

 
1,590

Cash payments
—

 
—

 
(1,450
)
 
(1,450
)
March 31, 2017
$
206


$
—

 
$
—

 
$
206

Schedule of Restructuring Reserve By Type of Cost 
The change in accrued liabilities related to the Lake Region Medical consolidation initiatives is as follows (in thousands):
 
Severance and Retention
 
Accelerated
Depreciation/
Asset Write-offs
 
Other
 
Total
December 30, 2016
$
729

 
$
—

 
$
402

 
$
1,131

Restructuring charges
423

 
—

 
283

 
706

Cash payments
(440
)
 
—

 
(292
)
 
(732
)
March 31, 2017
$
712


$
—

 
$
393

 
$
1,105

Commitments and Contingencies (Tables)
Schedule of Product Warranty Liability 
The change in product warranty liability was comprised of the following (in thousands):
December 30, 2016
$
3,911

Reversal of warranty reserve
(252
)
Warranty claims settled
(832
)
March 31, 2017
$
2,827

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance 
The impact to the Company’s results of operations from its forward contract hedges is as follows (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Decrease in sales
$
24

 
$
—

Increase in cost of sales
1,062

 
619

Ineffective portion of change in fair value
—

 
—

Schedule of Foreign Exchange Contracts, Statement of Financial Position 
Information regarding outstanding foreign currency contracts designated as cash flow hedges as of March 31, 2017 is as follows (dollars in thousands):
Aggregate
Notional
Amount
 
Start
Date
 
End
Date
 
$/Foreign Currency
 
Fair
Value
 
Balance Sheet Location
$
18,490

 
Jan 2017
 
Dec 2017
 
0.0514

Peso
 
$
310

 
Prepaid expenses and other current assets
$
19,344

 
Feb 2017
 
Dec 2017
 
1.0747

Euro
 
$
22

 
Prepaid expenses and other current assets
Earnings (Loss) Per Share (EPS) (Tables)
Schedule of Calculation of Numerator and Denominator in Earnings Per Share 
The following table illustrates the calculation of basic and diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Numerator for basic and diluted EPS:
 
 
 
Net loss
$
(4,339
)
 
$
(12,660
)
Denominator for basic EPS:
 
 
 
Weighted average shares outstanding
31,016

 
30,718

Denominator for diluted EPS
31,016

 
30,718

Basic EPS
$
(0.14
)
 
$
(0.41
)
Diluted EPS
$
(0.14
)
 
$
(0.41
)
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share 
The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Time-vested stock options, restricted stock and restricted stock units
1,700

 
1,890

Performance-vested restricted stock and restricted stock units
593

 
441

Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
December 30, 2016
$
(1,475
)
 
$
1,420

 
$
(15,660
)
 
$
(15,715
)
 
$
(285
)
 
$
(16,000
)
Unrealized gain on cash flow hedges
—

 
1,712

 
—

 
1,712

 
(599
)
 
1,113

Realized loss on foreign currency hedges
—

 
1,086

 
—

 
1,086

 
(380
)
 
706

Realized gain on interest rate swap hedges
—

 
(106
)
 
—

 
(106
)
 
37

 
(69
)
Foreign currency translation gain
—

 
—

 
6,536

 
6,536

 
—

 
6,536

March 31, 2017
$
(1,475
)
 
$
4,112

 
$
(9,124
)
 
$
(6,487
)
 
$
(1,227
)
 
$
(7,714
)
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
January 1, 2016
$
(1,179
)
 
$
(2,392
)
 
$
3,609

 
$
38

 
$
1,332

 
$
1,370

Unrealized loss on cash flow hedges
—

 
(54
)
 
—

 
(54
)
 
19

 
(35
)
Realized loss on foreign currency hedges
—

 
619

 
—

 
619

 
(217
)
 
402

Foreign currency translation gain
—

 
—

 
18,760

 
18,760

 
—

 
18,760

April 1, 2016
$
(1,179
)
 
$
(1,827
)
 
$
22,369

 
$
19,363

 
$
1,134

 
$
20,497

Fair Value Measurements (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table provides information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):
 
 
Fair Value
 
Quoted
Prices in
Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
March 31, 2017
 
 
 
 
 
 
 
 
Assets: Foreign currency contracts
 
$
332

 
$
—

 
$
332

 
$
—

Assets: Interest rate swaps
 
3,780

 
—

 
3,780

 
—

 
 
 
 
 
 
 
 
 
December 30, 2016
 
 
 
 
 
 
 
 
Assets: Interest rate swaps
 
$
3,482

 
$
—

 
$
3,482

 
$
—

Liabilities: Foreign currency contracts
 
2,063

 
—

 
2,063

 
—

Segment Information (Tables)
Reconciliation of Revenue from Segments to Consolidated 
The tables below present information about our reportable segments (in thousands):
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Segment sales by product line:
 
 
 
Medical
 
 
 
Cardio & Vascular
$
125,108

 
$
113,671

Cardiac & Neuromodulation
103,813

 
108,533

Advanced Surgical, Orthopedics & Portable Medical
105,146

 
98,362

Total Medical
$
334,067

 
$
320,566

Non-Medical
11,346

 
11,672

Total sales
$
345,413

 
$
332,238

Reconciliation of Operating Profit (Loss) from Segments to Consolidated 
 
Three Months Ended
 
March 31,
2017
 
April 1,
2016
Segment income (loss) from operations:
 
 
 
Medical
$
50,360

 
$
31,841

Non-Medical
1,562

 
(1,011
)
Total segment income from operations
51,922

 
30,830

Unallocated operating expenses
(25,377
)
 
(19,696
)
Operating income
26,545

 
11,134

Unallocated expenses, net
(30,740
)
 
(23,896
)
Loss before provision (benefit) for income taxes
$
(4,195
)
 
$
(12,762
)
Basis of Presentation (Narrative) (Details)
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Accounting Policies [Abstract]
 
 
Fiscal Period Duration
91 days 
91 days 
Divestiture (Spin-off of Nuvectra Corporation) (Details) (Spin-off [Member], Nuvectra [Member], USD $)
0 Months Ended 3 Months Ended
Mar. 14, 2016
Apr. 1, 2016
Mar. 14, 2016
Spin-off [Member] |
Nuvectra [Member]
 
 
 
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
Stock conversion ratio
3 
 
 
Cash capital contribution
 
$ 75,000,000 
 
Assets divested
 
 
 
Cash and cash equivalents
 
 
76,256,000 
Other current assets
 
 
977,000 
Property, plant and equipment, net
 
 
4,407,000 
Amortizing intangible assets, net
 
 
1,931,000 
Goodwill
 
 
40,830,000 
Deferred income taxes
 
 
6,446,000 
Total assets divested
 
 
130,847,000 
Liabilities transferred
 
 
 
Current liabilities
 
 
2,119,000 
Net assets divested
 
 
128,728,000 
Pre-tax loss
 
$ 5,200,000 
 
Supplemental Cash Flow Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Noncash investing and financing activities:
 
 
Property, plant and equipment purchases included in accounts payable
$ 3,243 
$ 4,304 
Purchase of technology included in accrued expenses
0 
2,000 
Divestiture of noncash assets
0 
54,591 
Divestiture of liabilities
$ 0 
$ 2,119 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 30, 2016
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 104,989 
$ 100,738 
Work-in-process
91,749 
89,224 
Finished goods
34,554 
35,189 
Total
$ 231,292 
$ 225,151 
Goodwill and Other Intangible Assets, Net (Schedule of Indefinite-Lived Intangible Assets and Goodwill) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2017
Medical Segment [Member]
Mar. 31, 2017
Non-Medical Segment [Member]
Dec. 30, 2016
Non-Medical Segment [Member]
Goodwill [Roll Forward]
 
 
 
 
Goodwill
$ 967,326 
$ 950,326 
$ 17,000 
$ 17,000 
Foreign currency translation
2,087 
2,087 
 
 
Goodwill
$ 969,413 
$ 952,413 
$ 17,000 
$ 17,000 
Goodwill and Other Intangible Assets, Net (Schedule of Finite-Lived Intangible Assets, Major Class) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 30, 2016
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 1,021,240 
$ 1,021,240 
Accumulated Amortization
(177,313)
(166,335)
Foreign Currency Translation
(2,620)
(5,133)
Total estimated amortization expense
841,307 
849,772 
Trademarks And Tradenames [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Indefinite-Lived Intangible Assets (Excluding Goodwill)
90,288 
90,288 
Purchased Technology And Patents [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
256,719 
256,719 
Accumulated Amortization
(104,977)
(100,719)
Foreign Currency Translation
794 
333 
Total estimated amortization expense
152,536 
156,333 
Customer Lists [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
759,987 
759,987 
Accumulated Amortization
(67,165)
(60,474)
Foreign Currency Translation
(4,202)
(6,269)
Total estimated amortization expense
688,620 
693,244 
Other Intangible Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
4,534 
4,534 
Accumulated Amortization
(5,171)
(5,142)
Foreign Currency Translation
788 
803 
Total estimated amortization expense
$ 151 
$ 195 
Goodwill and Other Intangible Assets, Net (Schedule of Finite-Lived Intangible Assets, Amortization Expense) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Finite-Lived Intangible Assets [Line Items]
 
 
Total intangible asset amortization expense
$ 10,978 
$ 9,464 
Cost of Sales [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total intangible asset amortization expense
4,084 
4,240 
Selling General And Administrative Expense [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total intangible asset amortization expense
6,758 
5,136 
Research and Development Expense [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total intangible asset amortization expense
$ 136 
$ 88 
Goodwill and Other Intangible Assets, Net (Schedule of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
2017
$ 32,689 
2018
44,542 
2019
44,605 
2020
45,192 
2021
44,080 
After 2021
$ 630,199 
Debt (Schedule of Long-Term Debt) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 30, 2016
Debt Instrument [Line Items]
 
 
Less unamortized discount on term loan B and debt issuance costs
$ (39,437)
$ (40,837)
Total debt
1,702,412 
1,730,163 
Less current portion of long-term debt
34,173 
31,344 
Total long-term debt
1,668,239 
1,698,819 
Secured Debt [Member] |
Loans Payable [Member] |
Term Loan A (TLA) Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt, Gross
351,563 
356,250 
Secured Debt [Member] |
Loans Payable [Member] |
Term Loan B (TLB) Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt, Gross
948,286 
1,014,750 
Secured Debt [Member] |
Loans Payable [Member] |
9.125% Senior Notes due 2023 [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt, Gross
360,000 
360,000 
Secured Debt [Member] |
Revolving Credit Facility [Member] |
New Revolving Credit Facility 2015 [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt, Gross
$ 82,000 
$ 40,000 
Debt (Credit Facility) (Details) (USD $)
0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Oct. 27, 2015
Senior Notes [Member]
9.125% Senior Notes due 2023 [Member]
Mar. 31, 2017
Senior Notes [Member]
9.125% Senior Notes due 2023 [Member]
Oct. 27, 2015
Senior Notes [Member]
9.125% Senior Notes due 2023 [Member]
Oct. 27, 2015
Secured Debt [Member]
Revolving Credit Facility [Member]
New Revolving Credit Facility 2015 [Member]
Mar. 31, 2017
Secured Debt [Member]
Revolving Credit Facility [Member]
New Revolving Credit Facility 2015 [Member]
Oct. 27, 2015
Secured Debt [Member]
Revolving Credit Facility [Member]
New Revolving Credit Facility 2015 [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
loan_facility
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
Mar. 31, 2017
Secured Debt [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
Mar. 17, 2017
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Mar. 31, 2017
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Prime Rate [Member]
Mar. 17, 2017
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
London Interbank Offered Rate (LIBOR) [Member]
Oct. 27, 2015
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
London Interbank Offered Rate (LIBOR) [Member]
Mar. 17, 2017
Secured Debt [Member]
Loans Payable [Member]
Term Loan B (TLB) Facility [Member]
Base Rate [Member]
Oct. 27, 2015
Secured Debt [Member]
Swingline Loans [Member]
New Revolving Credit Facility 2015 [Member]
Apr. 27, 2016
Secured Debt [Member]
Standby Letters of Credit [Member]
New Revolving Credit Facility 2015 [Member]
Oct. 27, 2015
Secured Debt [Member]
Minimum [Member]
Revolving Credit Facility [Member]
New Revolving Credit Facility 2015 [Member]
Oct. 27, 2015
Secured Debt [Member]
Minimum [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
Prime Rate [Member]
Oct. 27, 2015
Secured Debt [Member]
Minimum [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
London Interbank Offered Rate (LIBOR) [Member]
Oct. 27, 2015
Secured Debt [Member]
Maximum [Member]
Senior Secured Credit Facilities [Member]
Oct. 27, 2015
Secured Debt [Member]
Maximum [Member]
Revolving Credit Facility [Member]
New Revolving Credit Facility 2015 [Member]
Oct. 27, 2015
Secured Debt [Member]
Maximum [Member]
Loans Payable [Member]
Oct. 27, 2015
Secured Debt [Member]
Maximum [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
Prime Rate [Member]
Oct. 27, 2015
Secured Debt [Member]
Maximum [Member]
Loans Payable [Member]
Term Loan A (TLA) Facility [Member]
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Facility Maximum Borrowing Capacity
 
 
 
 
 
$ 200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ 15,000,000 
$ 25,000,000 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
 
360,000,000 
 
 
 
 
 
 
375,000,000 
 
 
 
1,025,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Discount, Percentage
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reduction to the variable rate basis spread
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.75% 
 
0.75% 
 
 
 
 
 
 
 
 
 
 
Prepayment fee
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepayment period
 
 
 
 
 
 
 
 
 
 
6 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Maturity Date
Nov. 01, 2023 
 
 
Oct. 27, 2020 
 
 
 
Oct. 27, 2021 
 
 
 
Oct. 27, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.175% 
 
 
 
0.25% 
 
 
 
Variable rate basis spread
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.50% 
 
3.50% 
 
 
 
 
0.75% 
1.75% 
 
 
 
2.25% 
3.25% 
Revolving line of credit
 
 
 
 
82,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Remaining Borrowing Capacity
 
 
 
 
109,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of Credit Outstanding, Amount
 
 
 
 
8,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Weighted Average Interest Rate
 
 
 
 
4.10% 
 
 
 
4.24% 
 
 
 
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, First Lien Net Leverage Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.25 
 
4.25 
 
 
Debt Instrument, Interest Rate, Floor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, Number Of Additional Term Loan Facilities That May Be Added
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, Fair Value
 
$ 381,000,000 
 
 
 
 
 
 
 
 
 
 
$ 950,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, Maximum Leverage Ratio
 
 
 
 
 
 
 
6.25 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Compliance, Adjusted EBITDA To Interest Expense Ratio
 
 
 
 
 
 
 
2.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
9.125% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt (Long-term Debt Maturity Schedule) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Debt Disclosure [Abstract]
 
2017
$ 27,142 
2018
30,469 
2019
37,500 
2020
119,500 
2021
229,688 
After 2021
$ 1,297,550 
Debt (Schedule of Deferred Financing Fees) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Deferred Finance Costs [Roll Forward]
 
 
Total, Beginning Balance
$ (40,837,000)
 
Amortization during the period
(3,437,000)
(1,773,000)
Total, Beginning Balance
39,437,000 
 
Loss on extinguishment of debt
1,600,000 
 
Revolving Credit Facility [Member]
 
 
Deferred Finance Costs [Roll Forward]
 
 
Deferred Finance Costs, Net, Beginning Balance
3,800,000 
 
Amortization during the period
(248,000)
 
Deferred Finance Costs, Net, Ending Balance
3,552,000 
 
Term Loan And Senior Notes [Member]
 
 
Deferred Finance Costs [Roll Forward]
 
 
Deferred Finance Costs, Net, Beginning Balance
32,096,000 
 
Financing costs deferred
1,789,000 
 
Write-off of debt issuance costs and unamortized discount
(1,051,000)
 
Amortization during the period
(1,299,000)
 
Deferred Finance Costs, Net, Ending Balance
31,535,000 
 
Total, Beginning Balance
(40,837,000)
 
Financing costs incurred
1,789,000 
 
Write-off of debt issuance costs and unamortized discount
(1,559,000)
 
Amortization during the period
(1,630,000)
 
Total, Beginning Balance
39,437,000 
 
Term Loan B (TLB) Facility [Member]
 
 
Deferred Finance Costs [Roll Forward]
 
 
Unamortized Discount on TLB Facility, Beginning Balance
8,741,000 
 
Financing costs incurred
0 
 
Write-off of debt issuance costs and unamortized discount
(508,000)
 
Amortization during the period
(331,000)
 
Unamortized Discount on TLB Facility, Ending Balance
$ 7,902,000 
 
Debt (Schedule of Interest Rate Swaps and Details) (Details) (USD $)
3 Months Ended 1 Months Ended 1 Months Ended 3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Jul. 31, 2016
Interest Rate Swap 4 [Member]
Mar. 31, 2017
Interest Rate Swap 4 [Member]
Jun. 30, 2016
Interest Rate Swap 3 [Member]
Mar. 31, 2017
Interest Rate Swap 3 [Member]
Mar. 31, 2017
Interest Rate Swap [Member]
Apr. 1, 2016
Interest Rate Swap [Member]
Derivative [Line Items]
 
 
 
 
 
 
 
 
Derivative, Term of Contract
 
 
1 year 
 
3 years 
 
 
 
Derivative Asset, Notional Amount
 
 
$ 250,000,000 
 
 
 
 
 
Derivative Liability, Notional Amount
 
 
 
 
200,000,000 
 
 
 
Notional Amount
 
 
 
250,000,000 
 
200,000,000 
 
 
Pay Fixed Rate
 
 
 
0.615% 
 
1.1325% 
 
 
Receive Current Floating Rate
 
 
 
0.98% 
 
 
 
 
Fair Value, Asset
 
 
 
244,000 
 
3,536,000 
 
 
Gain (Loss) Recognized In Income Ineffective Portion
 
 
 
 
 
 
0 
0 
Interest Expense
$ 28,893,000 
$ 27,617,000 
 
 
 
 
$ 100,000 
 
Benefit Plans (Schedule of Defined Benefit Plan, Change in Benefit Obligation) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
December 30, 2016
$ 7,556 
 
Net defined benefit cost
161 
192 
Benefit payments
(45)
 
Foreign currency translation
242 
 
March 31, 2017
$ 7,914 
 
Benefit Plans (Schedule of Net Defined Benefit Cost) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
 
 
Service cost
$ 110 
$ 108 
Interest cost
38 
43 
Amortization of net loss
17 
46 
Expected return on plan assets
(4)
(5)
Net defined benefit cost
$ 161 
$ 192 
Stock-Based Compensation (Allocation of Recognized Period Costs) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
$ 4,669 
$ 2,835 
Stock Option [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
710 
609 
Restricted Stock And Unit Awards [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
3,959 
2,226 
Cost of Sales [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
142 
197 
Selling General And Administrative Expense [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
2,159 
1,655 
Research and Development Expense [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
105 
177 
Other Operating Income (Expense) [Member]
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
Allocated Share-based Compensation Expense
$ 2,263 
$ 806 
Stock-Based Compensation (Valuation Assumptions) (Details)
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Weighted average fair value
$ 9.14 
$ 12.81 
Risk-free interest rate
1.63% 
1.69% 
Expected volatility
38.00% 
26.00% 
Expected life (in years)
4 years 0 months 0 days 
5 years 0 months 0 days 
Expected dividend yield
0.00% 
0.00% 
TSR Performance Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Risk-free interest rate
1.12% 
 
Expected volatility
48.90% 
 
Expected life (in years)
1 year 10 months 21 days 
 
Expected dividend yield
0.00% 
 
Stock-Based Compensation (Stock Options Activity) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Stock Option Activity (in shares)
 
Options Outstanding, Beginning
1,739,972 
Granted
33,636 
Exercised
(343,898)
Forfeited or expired
(9,490)
Options Outstanding, Ending
1,420,220 
Options Exercisable
1,164,993 
Weighted Average Exercise Price (in dollars per share)
 
Options Outstanding, Beginning
$ 28.26 
Granted
$ 29.55 
Exercised
$ 21.66 
Forfeited or expired
$ 45.82 
Options Outstanding, Ending
$ 29.77 
Options Exercisable
$ 27.94 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Options Outstanding, Weighted Average Remaining Contractual Term
6 years 5 months 1 day 
Options Exercisable, Weighted Average Remaining Contractual Term
5 years 9 months 18 days 
Options Outstanding, Intrinsic Value
$ 17.8 
Options Exercisable, Intrinsic Value
$ 16.1 
Stock-Based Compensation (Restricted Stock and Restricted Stock Units Activity) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Restricted Stock And Restricted Stock Units Time Based [Member]
 
Restricted Stock and Restricted Stock Unit Activity (in shares)
 
Nonvested, Beginning
39,394 
Granted
250,132 
Vested
(7,797)
Forfeited
(2,321)
Nonvested, Ending
279,408 
Restricted Stock and Restricted Stock Unit Weighted Average Fair Value (in dollars per share)
 
Nonvested, Beginning
$ 45.51 
Granted
$ 32.10 
Vested
$ 29.55 
Forfeited
$ 40.72 
Nonvested, Ending
$ 33.99 
Restricted Stock And Restricted Stock Units Performance Based [Member]
 
Restricted Stock and Restricted Stock Unit Activity (in shares)
 
Nonvested, Beginning
356,586 
Granted
370,815 
Forfeited
(134,223)
Nonvested, Ending
593,178 
Restricted Stock and Restricted Stock Unit Weighted Average Fair Value (in dollars per share)
 
Nonvested, Beginning
$ 31.87 
Granted
$ 30.58 
Forfeited
$ 31.40 
Nonvested, Ending
$ 31.18 
Stock-Based Compensation (Additional Information) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Acceleration of remaining compensation expense
$ 2.2 
$ 0.5 
Performance period
2 years 
 
Restricted Stock Units (RSUs) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Awards granted
600,000 
 
Performance Shares [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Awards granted
400,000 
 
Performance Shares [Member] |
Minimum [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period
1 year 
 
Performance Shares [Member] |
Maximum [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period
3 years 
 
Financial Performance Stock Units [Member] |
Performance Period Ending December 29, 2017 [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Awards granted
300,000 
 
TSR Performance Stock Units [Member] |
Performance Period Ending December 28, 2018 [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Awards granted
100,000 
 
Time-Based Restricted Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period
3 years 
 
Other Operating Expenses, Net (Schedule of Other Operating Cost and Expense By Component) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
$ 11,771 
$ 21,140 
Investments in Capacity and Capabilities [Member]
 
 
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
1,590 
4,153 
Legacy Lake Region Medical Consolidation [Member]
 
 
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
706 
2,359 
Acquisition And Integration Costs [Member]
 
 
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
4,820 
9,965 
Asset Dispositions Severance And Other [Member]
 
 
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
4,556 
4,526 
Other Consolidation And Optimization Income (Costs) [Member]
 
 
Other Operating Income Expense Detail [Line Items]
 
 
Other Cost and Expense, Operating
$ 99 
$ 137 
Other Operating Expenses, Net (Schedule of Restructuring Reserve By Type of Cost) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
$ 66 
Restructuring charges
1,590 
Cash payments
(1,450)
Restructuring Reserve, Ending Balance
206 
Investments in Capacity and Capabilities [Member] |
Severance And Retention [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
66 
Restructuring charges
140 
Cash payments
0 
Restructuring Reserve, Ending Balance
206 
Investments in Capacity and Capabilities [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
0 
Restructuring charges
0 
Cash payments
0 
Restructuring Reserve, Ending Balance
0 
Investments in Capacity and Capabilities [Member] |
Other Restructuring [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
0 
Restructuring charges
1,450 
Cash payments
(1,450)
Restructuring Reserve, Ending Balance
0 
Legacy Lake Region Medical Consolidation [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
1,131 
Restructuring charges
706 
Cash payments
(732)
Restructuring Reserve, Ending Balance
1,105 
Legacy Lake Region Medical Consolidation [Member] |
Employee Severance [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
729 
Restructuring charges
423 
Cash payments
(440)
Restructuring Reserve, Ending Balance
712 
Legacy Lake Region Medical Consolidation [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
0 
Restructuring charges
0 
Cash payments
0 
Restructuring Reserve, Ending Balance
0 
Legacy Lake Region Medical Consolidation [Member] |
Other Restructuring [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
402 
Restructuring charges
283 
Cash payments
(292)
Restructuring Reserve, Ending Balance
$ 393 
Other Operating Expenses, Net (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Dec. 30, 2016
Restructuring Cost and Reserve [Line Items]
 
 
 
Leadership transition costs
$ 4.7 
 
 
Spinoff [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Professional Fees
 
4.3 
 
Investments in Capacity and Capabilities [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
23.4 
 
 
Restructuring and Related Cost, Cost Incurred to Date
50.7 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
24.0 
 
 
Restructuring and Related Cost, Expected Cost
52.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Severance And Retention [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
6.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
3.0 
 
 
Investments in Capacity and Capabilities [Member] |
Minimum [Member] |
Other Restructuring [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
43.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
25.0 
 
 
Restructuring and Related Cost, Expected Cost
55.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Severance And Retention [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
7.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
3.0 
 
 
Investments in Capacity and Capabilities [Member] |
Maximum [Member] |
Other Restructuring [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
45.0 
 
 
Legacy Lake Region Medical Consolidation [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
2.5 
 
 
Restructuring and Related Cost, Cost Incurred to Date
11.3 
 
 
Restructuring and Related Costs, Facility Consolidations
2 
 
 
Restructuring and Related Costs, Number of Facilities After Consolidation
1 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Minimum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
5.0 
 
 
Restructuring and Related Cost, Expected Cost
20.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Minimum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
1.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Minimum [Member] |
Other Restructuring [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
11.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Minimum [Member] |
Employee Severance [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
8.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Maximum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Expected Capital Expenditures
6.0 
 
 
Restructuring and Related Cost, Expected Cost
25.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Maximum [Member] |
Accelerated Depreciation And Asset Write Offs [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
2.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Maximum [Member] |
Other Restructuring [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
13.0 
 
 
Legacy Lake Region Medical Consolidation [Member] |
Maximum [Member] |
Employee Severance [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
10.0 
 
 
Lake Region Medical [Member] |
Acquisition And Integration Costs [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
9.5 
 
 
Restructuring and Related Cost, Cost Incurred to Date
37.3 
 
 
Acquisition related transaction costs
4.8 
10.0 
 
Business Combination, Integration Related Costs Accrued
2.0 
 
4.5 
Lake Region Medical [Member] |
Acquisition And Integration Costs [Member] |
Minimum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
40.0 
 
 
Restructuring And Related Costs, Expected Capital Investment
20.0 
 
 
Lake Region Medical [Member] |
Acquisition And Integration Costs [Member] |
Maximum [Member]
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and Related Cost, Expected Cost
50.0 
 
 
Restructuring And Related Costs, Expected Capital Investment
$ 25.0 
 
 
Income Taxes (Narrative) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Income Tax Disclosure [Abstract]
 
 
Effective income tax rate
(3.40%)
0.80% 
Loss before provision (benefit) for income taxes
$ 4,195,000 
$ 12,762,000 
Discrete tax expense items
900,000 
 
Share-based compensation expense related to ASU 2016-09 adoption
600,000 
 
Unrecognized Tax Benefits
10,900,000 
 
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit
100,000 
 
Unrecognized Tax Benefits that Would Impact Effective Tax Rate
$ 10,100,000 
 
Commitments and Contingencies (Narrative) (Details) (USD $)
3 Months Ended 0 Months Ended
Mar. 31, 2017
Jan. 26, 2016
Positive Outcome of Litigation [Member]
patent
Gain Contingencies [Line Items]
 
 
Gain Contingency, Patents Found Infringed upon, Number
 
2 
Litigation Settlement, Amount
 
$ 37,500,000 
Gain (Loss) Related to Litigation Settlement
$ 0 
 
Product Warranty Description
The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. 
 
Commitments and Contingencies (Schedule of Product Warranty Liability) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Movement in Standard Product Warranty Accrual [Roll Forward]
 
December 30, 2016
$ 3,911 
Reversal of warranty reserve
(252)
Warranty claims settled
(832)
March 31, 2017
$ 2,827 
Commitments and Contingencies (Foreign Currency Contracts) (Details) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Jan. 1, 2016
Foreign Currency Cash Flow Hedges [Abstract]
 
 
 
Decrease in sales
$ 24,000 
$ 0 
 
Increase in cost of sales
1,062,000 
619,000 
 
Ineffective portion of change in fair value
0 
0 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Payments for termination of foreign currency contract
 
 
2,400,000 
Foreign currency cash flow hedge gain (loss) to be reclassified
300,000 
 
 
Terminated FX Contract [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Foreign currency cash flow hedge gain (loss) to be reclassified
 
 
(1,600,000)
FX Contract 3 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Aggregate Notional Amount
18,490,000 
 
 
Start Date
Jan. 01, 2017 
 
 
End Date
Dec. 29, 2017 
 
 
FX Contract 4 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Aggregate Notional Amount
19,344,000 
 
 
Start Date
Feb. 25, 2017 
 
 
End Date
Dec. 29, 2017 
 
 
Accrued Expenses [Member] |
FX Contract 3 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Foreign Currency Cash Flow Hedge Asset at Fair Value
310,000 
 
 
Accrued Expenses [Member] |
FX Contract 4 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
Foreign Currency Cash Flow Hedge Asset at Fair Value
$ 22,000 
 
 
Peso [Member] |
FX Contract 3 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
$/Foreign Currency
0.0514 
 
 
Euro [Member] |
FX Contract 4 [Member]
 
 
 
Foreign Currency Cash Flow Hedge [Line Items]
 
 
 
$/Foreign Currency
1.0747 
 
 
Earnings (Loss) Per Share (EPS) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract]
 
 
Net loss
$ (4,339)
$ (12,660)
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
 
 
Basic
31,016,000 
30,718,000 
Denominator for diluted EPS
31,016,000 
30,718,000 
Basic EPS (in dollars per share)
$ (0.14)
$ (0.41)
Diluted EPS (in dollars per share)
$ (0.14)
$ (0.41)
Anitdilutive Securities Excluded From Earnings Per Share [Abstract]
 
 
Time-vested stock options, restricted stock and restricted stock units
1,700,000 
1,890,000 
Performance-vested stock options and restricted stock units
593,000 
441,000 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Defined Benefit Plan Liability
 
 
Defined Benefit Plan Liability, Beginning
$ (1,475)
$ (1,179)
Defined Benefit Plan Liability, Ending
(1,475)
(1,179)
Cash Flow Hedges
 
 
Cash Flow Hedges, Beginning
1,420 
(2,392)
Unrealized loss on cash flow hedges
1,712 
(54)
Realized gain loss on foreign currency hedges - before tax
1,086 
619 
Realized gain loss on interest rate swaps - before tax
(106)
 
Cash Flow Hedges, End
4,112 
(1,827)
Foreign Currency Translation Adjustment
 
 
Foreign Currency Translation Adjustment, Beginning
(15,660)
3,609 
Net foreign currency translation gain (loss)
6,536 
18,760 
Foreign Currency Translation Adjustment, End
(9,124)
22,369 
Total Pre-Tax Amount
 
 
Total Pre-Tax Amount, Beginning
(15,715)
38 
Unrealized loss on cash flow hedges
1,712 
(54)
Realized gain loss on foreign currency hedges - before tax
1,086 
619 
Realized gain loss on interest rate swaps - before tax
(106)
 
Net foreign currency translation gain (loss)
6,536 
18,760 
Total Pre-Tax Amount, End
(6,487)
19,363 
Tax
 
 
Tax, Beginning
(285)
1,332 
Unrealized gain (loss) on cash flow hedges
(599)
19 
Realized gain loss on foreign currency contracts - tax
(380)
(217)
Realized gain loss on interest rate swap hedges - tax
37 
 
Net foreign currency translation gain (loss)
0 
0 
Tax, End
(1,227)
1,134 
Net-of-Tax Amount
 
 
Total Net-of-Tax Amount, Beginning
(16,000)
1,370 
Unrealized gain (loss) on cash flow hedges, net of tax
1,113 
(35)
Realized gain loss on foreign currency hedges, net of tax
706 
402 
Realized gain loss on interest rate swap hedges, net of tax
(69)
 
Foreign currency translation gain (loss)
6,536 
18,760 
Total Net-of-Tax Amount, End
$ (7,714)
$ 20,497 
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) (Fair Value, Measurements, Recurring [Member], USD $)
Mar. 31, 2017
Dec. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Foreign currency contracts assets
$ 332,000 
 
Foreign currency contracts liabilities
 
2,063,000 
Interest Rate Swap [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap assets
3,780,000 
3,482,000 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Foreign currency contracts assets
0 
 
Foreign currency contracts liabilities
 
0 
Fair Value, Inputs, Level 1 [Member] |
Interest Rate Swap [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap assets
0 
0 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Foreign currency contracts assets
332,000 
 
Foreign currency contracts liabilities
 
2,063,000 
Fair Value, Inputs, Level 2 [Member] |
Interest Rate Swap [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap assets
3,780,000 
3,482,000 
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Foreign currency contracts assets
0 
 
Foreign currency contracts liabilities
 
0 
Fair Value, Inputs, Level 3 [Member] |
Interest Rate Swap [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap assets
$ 0 
$ 0 
Fair Value Measurements (Narrative) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Dec. 30, 2016
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Equity method investments, carrying value
$ 22,600,000 
 
$ 22,800,000 
Goodwill impairment loss
0 
0 
 
Indefinite-lived intangible assets (excluding goodwill) impairment loss
0 
0 
 
Cost-method investment impairment loss
0 
0 
 
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Gain on cost method and equity method investments
$ 400,000 
$ 1,300,000 
 
Chinese Venture Capital Fund [Member]
 
 
 
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
 
 
 
Equity method investment ownership (percent)
7.10% 
 
 
Segment Information (Narrative) (Details)
3 Months Ended
Mar. 31, 2017
Segment
Segment Reporting [Abstract]
 
Number of Reportable Segments
2 
Segment Information (Reconciliation of Revenue from Segments to Consolidated) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
$ 345,413 
$ 332,238 
Operating Segments [Member] |
Medical Segment [Member]
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
334,067 
320,566 
Operating Segments [Member] |
Medical Segment [Member] |
Cardio And Vascular [Member]
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
125,108 
113,671 
Operating Segments [Member] |
Medical Segment [Member] |
Cardiac Neuromodulation [Member]
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
103,813 
108,533 
Operating Segments [Member] |
Medical Segment [Member] |
Advanced Surgical, Orthopedics, and Portable Medical [Member]
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
105,146 
98,362 
Operating Segments [Member] |
Non-Medical Segment [Member]
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
Total sales
$ 11,346 
$ 11,672 
Segment Information (Reconciliation of Operating Profit (Loss) from Segments to Consolidated) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 1, 2016
Segment Reporting Information [Line Items]
 
 
Operating income
$ 26,545 
$ 11,134 
Unallocated expenses, net
(30,740)
(23,896)
Loss before provision (benefit) for income taxes
(4,195)
(12,762)
Operating Segments [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Operating income
51,922 
30,830 
Operating Segments [Member] |
Medical Segment [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Operating income
50,360 
31,841 
Operating Segments [Member] |
Non-Medical Segment [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Operating income
1,562 
(1,011)
Segment Reconciling Items [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Operating income
$ (25,377)
$ (19,696)
Impact of Recently Issued Accounting Standards (Narrative) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Dec. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Cumulative effect adjustment of the adoption of ASU 2016-09
 
$ (510,000)
Share-based compensation expense related to ASU 2016-09 adoption
600,000 
 
Retained Earnings [Member]
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Cumulative effect adjustment of the adoption of ASU 2016-09
 
302,000 
Retained Earnings [Member] |
Accounting Standards Update 2016-09 [Member]
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Cumulative effect adjustment of the adoption of ASU 2016-09
 
$ 300,000