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1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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2. | ACQUISITIONS |
Cash consideration paid to Lake Region Medical stockholders and equity award holders | $ | 478,490 | ||
Fair value of shares of Greatbatch common stock issued to Lake Region Medical stockholders | 245,368 | |||
Fair value of replacement stock options attributable to pre-acquisition service | 4,508 | |||
Total purchase consideration | $ | 728,366 |
Assets acquired | |||
Current assets | $ | 269,815 | |
Property, plant and equipment | 216,473 | ||
Amortizing intangible assets | 849,000 | ||
Indefinite-lived intangible assets | 70,000 | ||
Goodwill | 661,788 | ||
Other non-current assets | 1,629 | ||
Total assets acquired | 2,068,705 | ||
Liabilities assumed | |||
Current liabilities | 102,485 | ||
Debt assumed | 1,044,675 | ||
Other long-term liabilities | 193,179 | ||
Total liabilities assumed | 1,340,339 | ||
Net assets acquired | $ | 728,366 |
Amortizing Intangible Assets | Fair Value Assigned | Weighted Average Amortization Period (Years) | Estimated Useful Life (Years) | Weighted Average Discount Rate | ||||||
Technology | $ | 160,000 | 7 | 19 | 11.5% | |||||
Customer lists | 689,000 | 14 | 29 | 11.5% | ||||||
$ | 849,000 | 13 | 27 | 11.5% | ||||||
Indefinite-lived Intangible Assets | ||||||||||
Trademarks and tradenames | $ | 70,000 | N/A | N/A | 11.5% |
Assets acquired | |||
Current assets | $ | 10,670 | |
Property, plant and equipment | 1,131 | ||
Amortizing intangible assets | 6,100 | ||
Goodwill | 8,296 | ||
Total assets acquired | 26,197 | ||
Liabilities assumed | |||
Current liabilities | 4,842 | ||
Deferred income taxes | 1,590 | ||
Total liabilities assumed | 6,432 | ||
Net assets acquired | $ | 19,765 |
Amortizing Intangible Assets | Fair Value Assigned | Weighted Average Amortization Period (Years) | Weighted Average Discount Rate | |||||
Technology | $ | 1,400 | 10 | 18% | ||||
Customer lists | 4,600 | 10 | 18% | |||||
Trademarks and tradenames | 100 | 2 | 18% | |||||
$ | 6,100 | 10 | 18% |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Sales | $ | 1,445,689 | $ | 1,441,782 | $ | 677,657 | |||||
Net income (loss) | 2,405 | (25,865 | ) | 37,612 | |||||||
Earnings (loss) per share: | |||||||||||
Basic | $ | 0.08 | $ | (0.87 | ) | $ | 1.57 | ||||
Diluted | $ | 0.08 | $ | (0.87 | ) | $ | 1.49 |
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3. | SUPPLEMENTAL CASH FLOW INFORMATION |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
(in thousands) | |||||||||||
Noncash investing and financing activities: | |||||||||||
Common stock contributed to 401(k) Plan | $ | 3,920 | $ | 4,341 | $ | 2,477 | |||||
Property, plant and equipment purchases included in accounts payable | 7,401 | 2,926 | 2,103 | ||||||||
Common stock issued in connection with Lake Region Medical acquisition | 245,368 | — | — | ||||||||
Replacement stock options issued in connection with Lake Region Medical acquisition | 4,508 | — | — | ||||||||
Purchase of non-controlling interests in subsidiaries included in accrued expenses | 6,818 | — | — | ||||||||
Cash paid during the year for: | |||||||||||
Interest | 13,057 | 3,521 | 4,989 | ||||||||
Income taxes | 6,312 | 13,565 | 44,165 | ||||||||
Acquisition of noncash assets | 2,013,604 | 22,434 | — | ||||||||
Liabilities assumed | 1,340,339 | 6,432 | — |
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4. | INVENTORIES |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Raw materials | $ | 107,296 | $ | 73,354 | |||
Work-in-process | 93,729 | 38,930 | |||||
Finished goods | 51,141 | 16,958 | |||||
Total | $ | 252,166 | $ | 129,242 |
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5. | ASSETS HELD FOR SALE |
At | ||||||||||
Asset | Business Segment | January 1, 2016 | January 2, 2015 | |||||||
Building and building improvements | Greatbatch Medical | $ | 996 | $ | 1,635 |
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6. | PROPERTY, PLANT AND EQUIPMENT, NET |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Manufacturing machinery and equipment | $ | 285,068 | $ | 167,173 | |||
Buildings and building improvements | 130,184 | 89,258 | |||||
Information technology hardware and software | 43,947 | 31,725 | |||||
Leasehold improvements | 36,745 | 31,170 | |||||
Furniture and fixtures | 16,243 | 14,045 | |||||
Land and land improvements | 21,774 | 10,816 | |||||
Construction work in process | 76,835 | 14,129 | |||||
Other | 852 | 629 | |||||
611,648 | 358,945 | ||||||
Accumulated depreciation | (232,156 | ) | (214,020 | ) | |||
Total | $ | 379,492 | $ | 144,925 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Depreciation expense | $ | 27,136 | $ | 23,320 | $ | 22,799 |
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7. | INTANGIBLE ASSETS |
Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation | Net Carrying Amount | ||||||||||||
At January 1, 2016 | |||||||||||||||
Purchased technology and patents | $ | 255,776 | $ | (83,708 | ) | 1,444 | $ | 173,512 | |||||||
Customer lists | 761,857 | (40,815 | ) | (986 | ) | 720,056 | |||||||||
Other | 4,534 | (4,946 | ) | 821 | 409 | ||||||||||
Total amortizing intangible assets | $ | 1,022,167 | $ | (129,469 | ) | $ | 1,279 | $ | 893,977 | ||||||
At January 2, 2015 | |||||||||||||||
Purchased technology and patents | $ | 95,776 | $ | (75,894 | ) | $ | 1,966 | $ | 21,848 | ||||||
Customer lists | 72,857 | (31,460 | ) | 1,374 | 42,771 | ||||||||||
Other | 4,534 | (4,619 | ) | 803 | 718 | ||||||||||
Total amortizing intangible assets | $ | 173,167 | $ | (111,973 | ) | $ | 4,143 | $ | 65,337 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Cost of sales | $ | 7,403 | $ | 6,201 | $ | 6,822 | |||||
SG&A | 9,681 | 7,009 | 5,800 | ||||||||
RD&E | 412 | 667 | 545 | ||||||||
Total intangible asset amortization expense | $ | 17,496 | $ | 13,877 | $ | 13,167 |
Estimated Amortization Expense | |||
2016 | $ | 37,854 | |
2017 | 43,991 | ||
2018 | 44,894 | ||
2019 | 44,960 | ||
2020 | 45,467 | ||
Thereafter | 676,811 | ||
Total estimated amortization expense | $ | 893,977 |
Trademarks and Tradenames | |||
At January 2, 2015 | $ | 20,288 | |
Indefinite-lived intangible assets acquired | 70,000 | ||
At January 1, 2016 | $ | 90,288 |
Greatbatch Medical | QiG | Lake Region Medical | Total | ||||||||||||
At January 2, 2015 | $ | 304,297 | $ | 50,096 | $ | — | $ | 354,393 | |||||||
Goodwill acquired (Note 2) | — | — | 661,788 | 661,788 | |||||||||||
Foreign currency translation | (368 | ) | — | (2,243 | ) | (2,611 | ) | ||||||||
At January 1, 2016 | $ | 303,929 | $ | 50,096 | $ | 659,545 | $ | 1,013,570 |
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8. | ACCRUED EXPENSES |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Salaries and benefits | $ | 37,579 | $ | 20,770 | |||
Profit sharing and bonuses | 6,781 | 18,524 | |||||
Accrued interest | 9,378 | 195 | |||||
Purchase of non-controlling interest in subsidiaries | 6,818 | — | |||||
Severance and change in control payments | 11,969 | 1,878 | |||||
Warranty and customer rebates | 7,205 | 660 | |||||
Other | 17,527 | 6,357 | |||||
Total | $ | 97,257 | $ | 48,384 |
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9. | DEBT |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Senior secured term loan A | $ | 375,000 | $ | — | |||
Senior secured term loan B | 1,025,000 | — | |||||
9.125% senior notes, due 2023 | 360,000 | — | |||||
Variable rate term loan | — | 187,500 | |||||
Revolving line of credit | — | — | |||||
Less unamortized discount on term loan B and debt issuance costs | (45,947 | ) | (887 | ) | |||
Total debt | 1,714,053 | 186,613 | |||||
Less current portion of long-term debt | 29,000 | 11,250 | |||||
Total long-term debt | $ | 1,685,053 | $ | 175,363 |
2016 | $ | 29,000 | |
2017 | 31,344 | ||
2018 | 40,719 | ||
2019 | 47,750 | ||
2020 | 47,750 | ||
Thereafter | 1,563,437 | ||
Total | $ | 1,760,000 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Contractual interest | $ | — | $ | — | $ | 634 | |||||
Discount amortization | — | — | 5,368 |
At January 3, 2014 | $ | 2,786 | |
Amortization during the period | (586 | ) | |
At January 2, 2015 | 2,200 | ||
Financing costs deferred | 4,152 | ||
Write-off during the period | (907 | ) | |
Amortization during the period | (654 | ) | |
At January 1, 2016 | $ | 4,791 |
Debt Issuance Costs | Unamortized Discount on TLB Facility | Total | |||||||||
At January 3, 2014 | $ | 1,074 | $ | — | $ | 1,074 | |||||
Amortization during the period | (187 | ) | — | (187 | ) | ||||||
At January 2, 2015 | 887 | — | 887 | ||||||||
Financing costs incurred | 41,781 | 10,250 | 52,031 | ||||||||
Write-off during the period | (732 | ) | — | (732 | ) | ||||||
Amortization during the period | (6,028 | ) | (211 | ) | (6,239 | ) | |||||
At January 1, 2016 | $ | 35,908 | $ | 10,039 | $ | 45,947 |
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10. | BENEFIT PLANS |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Change in projected benefit obligation: | |||||||
Projected benefit obligation at beginning of year | $ | 2,843 | $ | 2,422 | |||
Projected benefit obligation acquired | 4,316 | — | |||||
Service cost | 439 | 203 | |||||
Interest cost | 165 | 75 | |||||
Plan participants’ contribution | 61 | 36 | |||||
Actuarial loss | 235 | 630 | |||||
Benefits transferred in, net | 258 | 155 | |||||
Settlement/curtailment gain | — | (337 | ) | ||||
Foreign currency translation | (325 | ) | (341 | ) | |||
Projected benefit obligation at end of year | 7,992 | 2,843 | |||||
Change in fair value of plan assets: | |||||||
Fair value of plan assets at beginning of year | 437 | 731 | |||||
Employer contributions (refund) | 69 | (39 | ) | ||||
Plan participants’ contributions | 61 | 36 | |||||
Actual loss on plan assets | (39 | ) | (101 | ) | |||
Benefits transferred in, net | 362 | 198 | |||||
Settlements | — | (337 | ) | ||||
Foreign currency translation | (19 | ) | (51 | ) | |||
Fair value of plan assets at end of year | 871 | 437 | |||||
Projected benefit obligation in excess of plan assets at end of year | $ | 7,121 | $ | 2,406 | |||
Defined benefit liability classified as other current liabilities | $ | 46 | $ | 25 | |||
Defined benefit liability classified as long-term liabilities | $ | 7,075 | $ | 2,381 | |||
Accumulated benefit obligation at end of year | $ | 6,299 | $ | 1,938 |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Net loss occurring during the year | $ | 164 | $ | 736 | |||
Amortization of losses | (156 | ) | (138 | ) | |||
Prior service cost | (1 | ) | (2 | ) | |||
Amortization of prior service cost | (9 | ) | (11 | ) | |||
Foreign currency translation | — | (76 | ) | ||||
Pre-tax adjustment | (2 | ) | 509 | ||||
Taxes | 22 | (135 | ) | ||||
Net loss | $ | 20 | $ | 374 |
Amortization of net prior service cost | $ | 10 | |
Amortization of net loss | 172 |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Service cost | $ | 439 | $ | 203 | |||
Interest cost | 165 | 75 | |||||
Settlements loss | — | 105 | |||||
Expected return on assets | (11 | ) | (3 | ) | |||
Recognized net actuarial loss | 164 | 45 | |||||
Net pension cost | $ | 757 | $ | 425 |
Projected Benefit Obligation | Net Pension Cost | |||||||||||||
January 1, 2016 | January 2, 2015 | 2015 | 2014 | 2013 | ||||||||||
Discount rate | 2.2 | % | 2.3 | % | 2.3 | % | 3.4 | % | 2.1 | % | ||||
Salary growth | 2.9 | % | 3.0 | % | 3.0 | % | 3.1 | % | 2.4 | % | ||||
Expected rate of return on assets | 2.0 | % | 2.3 | % | 2.3 | % | 2.5 | % | — | % |
Fair Value Measurements Using | |||||||||||||||
January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Insurance contract | $ | 871 | $ | — | $ | 871 | $ | — | |||||||
Total | $ | 871 | $ | — | $ | 871 | $ | — |
Fair Value Measurements Using | |||||||||||||||
January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Insurance contract | $ | 437 | $ | — | $ | 437 | $ | — | |||||||
Total | $ | 437 | $ | — | $ | 437 | $ | — |
2016 | $ | 166 | |
2017 | 205 | ||
2018 | 225 | ||
2019 | 277 | ||
2020 | 265 | ||
2020-2024 | 1,619 |
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11. | STOCK-BASED COMPENSATION |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Stock options | $ | 2,708 | $ | 2,523 | $ | 3,490 | |||||
Restricted stock and units | 6,668 | 6,417 | 5,843 | ||||||||
401(k) stock contribution | — | 4,246 | 4,768 | ||||||||
Total stock-based compensation expense | $ | 9,376 | $ | 13,186 | $ | 14,101 | |||||
Cost of sales | $ | 795 | $ | 3,530 | $ | 3,864 | |||||
Selling, general and administrative expenses | 7,510 | 7,923 | 7,907 | ||||||||
Research, development and engineering costs, net | 982 | 1,440 | 1,194 | ||||||||
Other operating expenses, net (Note 13) | 89 | 293 | 1,136 | ||||||||
Total stock-based compensation expense | $ | 9,376 | $ | 13,186 | $ | 14,101 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Weighted average grant date fair value | $ | 12.18 | $ | 16.43 | $ | 8.38 | |||||
Risk-free interest rate | 1.55 | % | 1.73 | % | 0.73 | % | |||||
Expected volatility | 26 | % | 39 | % | 39 | % | |||||
Expected life (in years) | 4.7 | 5.3 | 5.3 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | |||||
Annual prevesting forfeiture rate | 9 | % | 9 | % | 9 | % |
Number of Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value (In Millions) | |||||||||
Outstanding at December 28, 2012 | 2,060,772 | $ | 23.18 | |||||||||
Granted | 372,676 | 23.33 | ||||||||||
Exercised | (551,092 | ) | 23.24 | |||||||||
Forfeited or expired | (88,686 | ) | 28.05 | |||||||||
Outstanding at January 3, 2014 | 1,793,670 | 22.96 | ||||||||||
Granted | 183,571 | 43.84 | ||||||||||
Exercised | (353,625 | ) | 23.41 | |||||||||
Forfeited or expired | (33,279 | ) | 27.82 | |||||||||
Outstanding at January 2, 2015 | 1,590,337 | 25.17 | ||||||||||
Granted | 301,547 | 49.20 | ||||||||||
Replacement options granted in connection with the Lake Region Medical acquisition | 119,900 | 12.41 | ||||||||||
Exercised | (280,701 | ) | 23.45 | |||||||||
Forfeited or expired | (52,183 | ) | 42.45 | |||||||||
Outstanding at January 1, 2016 | 1,678,900 | $ | 28.32 | 6.1 | $ | 40.6 | ||||||
Expected to vest at January 1, 2016 | 1,643,386 | $ | 27.90 | 6.1 | $ | 40.4 | ||||||
Exercisable at January 1, 2016 | 1,467,256 | $ | 25.50 | 5.8 | $ | 39.6 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Intrinsic value | $ | 8,231 | $ | 7,997 | $ | 6,807 | |||||
Cash received | 6,583 | 8,278 | 12,807 | ||||||||
Tax benefit realized | 1,954 | 1,704 | 727 |
Time-Vested Activity | Weighted Average Fair Value | |||||
Nonvested at December 28, 2012 | 80,269 | $ | 23.48 | |||
Granted | 67,230 | 26.76 | ||||
Vested | (74,062 | ) | 23.93 | |||
Forfeited | (5,862 | ) | 22.26 | |||
Nonvested at January 3, 2014 | 67,575 | 26.37 | ||||
Granted | 63,817 | 44.78 | ||||
Vested | (53,568 | ) | 34.16 | |||
Forfeited | (9,992 | ) | 35.30 | |||
Nonvested at January 2, 2015 | 67,832 | 36.22 | ||||
Granted | 44,629 | 49.84 | ||||
Vested | (56,119 | ) | 37.93 | |||
Forfeited | (17,107 | ) | 40.48 | |||
Nonvested at January 1, 2016 | 39,235 | $ | 47.40 |
Performance- Vested Activity | Weighted Average Fair Value | |||||
Nonvested at December 28, 2012 | 782,446 | $ | 16.02 | |||
Granted | 318,169 | 15.86 | ||||
Vested | (49,139 | ) | 14.68 | |||
Forfeited | (271,798 | ) | 14.94 | |||
Nonvested at January 3, 2014 | 779,678 | 16.41 | ||||
Granted | 186,825 | 31.33 | ||||
Vested | (221,470 | ) | 18.51 | |||
Forfeited | (28,870 | ) | 18.42 | |||
Nonvested at January 2, 2015 | 716,163 | 19.57 | ||||
Granted | 179,940 | 32.92 | ||||
Vested | (270,198 | ) | 15.30 | |||
Forfeited | (48,080 | ) | 26.96 | |||
Nonvested at January 1, 2016 | 577,825 | $ | 25.11 |
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12. | RESEARCH, DEVELOPMENT AND ENGINEERING COSTS, NET |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Research, development and engineering costs | $ | 59,767 | $ | 58,974 | $ | 62,652 | |||||
Less: cost reimbursements | (6,772 | ) | (9,129 | ) | (8,575 | ) | |||||
Total research, development and engineering costs, net | $ | 52,995 | $ | 49,845 | $ | 54,077 |
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13. | OTHER OPERATING EXPENSES, NET |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
2014 investments in capacity and capabilities | $ | 23,037 | $ | 8,925 | $ | — | |||||
Orthopaedic facilities optimization | 1,395 | 1,317 | 8,038 | ||||||||
2013 operating unit realignment | — | 1,017 | 5,625 | ||||||||
Legacy Lake Region Medical consolidations | 1,961 | — | — | ||||||||
Other consolidation and optimization costs (income) | — | (71 | ) | 1,095 | |||||||
Acquisition and integration costs (income) | 33,449 | 3 | (502 | ) | |||||||
Asset dispositions, severance and other | 6,622 | 4,106 | 1,534 | ||||||||
Total other operating expenses, net | $ | 66,464 | $ | 15,297 | $ | 15,790 |
• | Functions performed at the Company’s facility in Plymouth, MN to manufacture catheters and introducers will transfer into the Company’s existing facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the first half of 2016 and is dependent upon our customers’ validation and qualification of the transferred products. |
• | Functions performed at the Company’s facilities in Beaverton, OR and Raynham, MA to manufacture products for the portable medical market will transfer to a new facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the end of the first quarter of 2016 and is dependent upon our customers’ validation and qualification of the transferred products. Products currently manufactured at the Beaverton facility, which do not serve the portable medical market, are planned to transfer to the Company’s Raynham facility. |
• | The design engineering responsibilities previously performed at the Company’s Cleveland, OH facility were transferred to the Company’s facilities in Minnesota in 2015. |
• | The realignment of the Company’s commercial sales operations was completed during the fourth quarter of 2015. |
• | Severance and retention: $5.0 million - $7.0 million; |
• | Accelerated depreciation and asset write-offs: $2.0 million - $3.0 million; and |
• | Other: $27.0 million - $29.0 million |
Severance and Retention | Accelerated Depreciation/ Asset Write-offs | Other | Total | ||||||||||||
At January 2, 2015 | $ | 1,163 | $ | — | $ | 1,066 | $ | 2,229 | |||||||
Restructuring charges | 2,729 | 235 | 20,073 | 23,037 | |||||||||||
Write-offs | — | (235 | ) | — | (235 | ) | |||||||||
Cash payments | (2,463 | ) | — | (19,544 | ) | (22,007 | ) | ||||||||
At January 1, 2016 | $ | 1,429 | $ | — | $ | 1,595 | $ | 3,024 |
• | Severance and retention: approximately $11.0 million; |
• | Accelerated depreciation and asset write-offs: approximately $13.0 million; and |
• | Other: $21.0 million - $24.0 million |
Severance and Retention | Accelerated Depreciation/ Asset Write-offs | Other | Total | ||||||||||||
At January 2, 2015 | $ | — | $ | — | $ | 287 | $ | 287 | |||||||
Restructuring charges | — | 88 | 1,307 | 1,395 | |||||||||||
Write-offs | — | (88 | ) | — | (88 | ) | |||||||||
Cash payments | — | — | (1,594 | ) | (1,594 | ) | |||||||||
At January 1, 2016 | $ | — | $ | — | $ | — | $ | — |
• | Severance and retention: $5.0 million; and |
• | Other: $1.6 million. |
• | Employee costs: $5.0 million - $6.0 million; and |
• | Other: $8.0 million - $9.0 million |
Employee Costs | Other Exit Costs | Total | |||||||||
At October 27, 2015 | $ | 3,392 | $ | 653 | $ | 4,045 | |||||
Restructuring charges | 557 | 1,404 | 1,961 | ||||||||
Write-offs | — | — | — | ||||||||
Cash payments | (282 | ) | (1,461 | ) | (1,743 | ) | |||||
At January 1, 2016 | $ | 3,667 | $ | 596 | $ | 4,263 |
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14. | INCOME TAXES |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
U.S. | $ | (42,166 | ) | $ | 56,801 | $ | 42,392 | ||||
International | 26,466 | 19,778 | 6,446 | ||||||||
Total income (loss) before provision for income taxes | $ | (15,700 | ) | $ | 76,579 | $ | 48,838 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Current: | |||||||||||
Federal | $ | (3,753 | ) | $ | 16,293 | $ | 39,353 | ||||
State | (367 | ) | 1,299 | 1,604 | |||||||
International | 6,312 | 2,998 | 1,470 | ||||||||
2,192 | 20,590 | 42,427 | |||||||||
Deferred: | |||||||||||
Federal | (8,144 | ) | 1,211 | (28,678 | ) | ||||||
State | (880 | ) | (310 | ) | 427 | ||||||
International | (1,274 | ) | (370 | ) | (1,605 | ) | |||||
(10,298 | ) | 531 | (29,856 | ) | |||||||
Total provision (benefit) for income taxes | $ | (8,106 | ) | $ | 21,121 | $ | 12,571 |
Year Ended | |||||||||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||||||||
Statutory rate | $ | (5,495 | ) | 35.0 | % | $ | 26,803 | 35.0 | % | $ | 17,093 | 35.0 | % | ||||
Federal tax credits | (1,850 | ) | 11.8 | (1,600 | ) | (2.1 | ) | (3,651 | ) | (7.5 | ) | ||||||
Foreign rate differential | (3,180 | ) | 20.2 | (3,276 | ) | (4.3 | ) | (348 | ) | (0.7 | ) | ||||||
Uncertain tax positions | (531 | ) | 3.4 | 412 | 0.6 | 831 | 1.7 | ||||||||||
State taxes, net of federal benefit | (1,490 | ) | 9.5 | 507 | 0.7 | 1,148 | 2.3 | ||||||||||
Change in foreign tax rates | (91 | ) | 0.6 | (446 | ) | (0.6 | ) | (1,806 | ) | (3.7 | ) | ||||||
Non-deductible transaction costs | 4,867 | (31.0 | ) | — | — | — | — | ||||||||||
Valuation allowance | 626 | (4.0 | ) | (299 | ) | (0.4 | ) | 186 | 0.4 | ||||||||
Other | (962 | ) | 6.1 | (980 | ) | (1.3 | ) | (882 | ) | (1.8 | ) | ||||||
Effective tax rate | $ | (8,106 | ) | 51.6 | % | $ | 21,121 | 27.6 | % | $ | 12,571 | 25.7 | % |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Tax credits | $ | 22,196 | $ | 5,828 | |||
Net operating loss carryforwards | 153,949 | 6,721 | |||||
Inventories | 6,543 | 3,335 | |||||
Accrued expenses | 13,138 | 4,338 | |||||
Stock-based compensation | 9,512 | 9,341 | |||||
Other | 38 | 1,659 | |||||
Gross deferred tax assets | 205,376 | 31,222 | |||||
Less valuation allowance | (39,171 | ) | (10,709 | ) | |||
Net deferred tax assets | 166,205 | 20,513 | |||||
Property, plant and equipment | (32,772 | ) | (2,646 | ) | |||
Intangible assets | (347,896 | ) | (57,850 | ) | |||
Convertible subordinated notes | (3,754 | ) | (5,006 | ) | |||
Gross deferred tax liabilities | (384,422 | ) | (65,502 | ) | |||
Net deferred tax liability | $ | (218,217 | ) | $ | (44,989 | ) | |
Presented as follows: | |||||||
Current deferred tax asset | $ | — | $ | 6,168 | |||
Current deferred tax liability | — | (588 | ) | ||||
Noncurrent deferred tax asset | 3,587 | 2,626 | |||||
Noncurrent deferred tax liability | (221,804 | ) | (53,195 | ) | |||
Net deferred tax liability | $ | (218,217 | ) | $ | (44,989 | ) |
Jurisdiction | Tax Attribute | Amount (in millions) | Begin to Expire | |||||
Federal | Net Operating Loss | $ | 386.2 | 2019 | ||||
International | Net Operating Loss | 42.2 | 2016 | |||||
State | Net Operating Loss | 298.7 | 2016 | |||||
Federal | Foreign Tax Credit | 17.0 | 2019 | |||||
U.S. and State | R&D Tax Credit | 2.6 | 2018 | |||||
State | Investment Tax Credit | 5.3 | 2016 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Balance, beginning of year | $ | 2,411 | $ | 1,858 | $ | 970 | |||||
Additions relating to business combinations | 7,443 | — | — | ||||||||
Additions based upon tax positions related to the current year | 274 | 268 | 325 | ||||||||
Additions related to prior period tax positions | 163 | 510 | 651 | ||||||||
Reductions relating to settlements with tax authorities | (550 | ) | (225 | ) | (88 | ) | |||||
Reductions as a result of a lapse of applicable statute of limitations | (470 | ) | — | — | |||||||
Balance, end of year | $ | 9,271 | $ | 2,411 | $ | 1,858 |
|
15. | COMMITMENTS AND CONTINGENCIES |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Beginning balance | $ | 660 | $ | 1,819 | |||
Additions to warranty reserve | 1,274 | 953 | |||||
Liabilities assumed from acquisition | 2,521 | — | |||||
Warranty claims paid | (1,139 | ) | (2,112 | ) | |||
Ending balance | $ | 3,316 | $ | 660 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Operating lease expense | $ | 6,516 | $ | 4,281 | $ | 4,379 |
2016 | $ | 14,118 | |
2017 | 10,951 | ||
2018 | 9,950 | ||
2019 | 8,979 | ||
2020 | 6,925 | ||
Thereafter | 27,674 | ||
Total estimated operating lease expense | $ | 78,597 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Increase (reduction) in Cost of Sales | $ | 1,948 | $ | (168 | ) | $ | (1,154 | ) | |||
Ineffective portion of change in fair value | — | — | — |
Instrument | Type of Hedge | Aggregate Notional Amount | Start Date | End Date | $/Peso | Fair Value | Balance Sheet Location | |||||||||||
FX Contract | Cash Flow | $ | 16,480 | Jan 2016 | Dec 2016 | 0.0584 | $ | (307 | ) | Accrued Expenses |
|
17. | ACCUMULATED OTHER COMPREHENSIVE INCOME |
Defined Benefit Plan Liability | Cash Flow Hedges | Foreign Currency Translation Adjustment | Total Pre-Tax Amount | Tax | Net-of-Tax Amount | ||||||||||||||||||
At January 2, 2015 | $ | (1,181 | ) | $ | (2,558 | ) | $ | 11,450 | $ | 7,711 | $ | 1,412 | $ | 9,123 | |||||||||
Unrealized loss on cash flow hedges | — | (4,413 | ) | — | (4,413 | ) | 1,545 | (2,868 | ) | ||||||||||||||
Realized loss on foreign currency hedges | — | 1,948 | — | 1,948 | (682 | ) | 1,266 | ||||||||||||||||
Realized loss on interest rate swap hedges | — | 2,631 | — | 2,631 | (921 | ) | 1,710 | ||||||||||||||||
Net defined benefit plan liability adjustments | 2 | — | — | 2 | (22 | ) | (20 | ) | |||||||||||||||
Foreign currency translation loss | — | — | (7,841 | ) | (7,841 | ) | — | (7,841 | ) | ||||||||||||||
At January 1, 2016 | $ | (1,179 | ) | $ | (2,392 | ) | $ | 3,609 | $ | 38 | $ | 1,332 | $ | 1,370 |
Defined Benefit Plan Liability | Cash Flow Hedges | Foreign Currency Translation Adjustment | Total Pre-Tax Amount | Tax | Net-of-Tax Amount | ||||||||||||||||||
At January 3, 2014 | $ | (672 | ) | $ | (468 | ) | $ | 14,952 | $ | 13,812 | $ | 546 | $ | 14,358 | |||||||||
Unrealized loss on cash flow hedges | — | (2,372 | ) | — | (2,372 | ) | 829 | (1,543 | ) | ||||||||||||||
Realized gain on foreign currency hedges | — | (168 | ) | — | (168 | ) | 59 | (109 | ) | ||||||||||||||
Realized loss on interest rate swap hedges | — | 450 | — | 450 | (157 | ) | 293 | ||||||||||||||||
Net defined benefit plan liability adjustments | (509 | ) | — | — | (509 | ) | 135 | (374 | ) | ||||||||||||||
Foreign currency translation loss | — | — | (3,502 | ) | (3,502 | ) | — | (3,502 | ) | ||||||||||||||
At January 2, 2015 | $ | (1,181 | ) | $ | (2,558 | ) | $ | 11,450 | $ | 7,711 | $ | 1,412 | $ | 9,123 |
|
18. | FAIR VALUE MEASUREMENTS |
Fair Value Measurements Using | |||||||||||||||
Description | At January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities | |||||||||||||||
Foreign currency contracts (Note 15) | $ | 307 | $ | — | $ | 307 | $ | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities | |||||||||||||||
Foreign currency contracts | $ | 1,568 | $ | — | $ | 1,568 | $ | — | |||||||
Interest rate swaps | 990 | — | 990 | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Cost method investment | $ | 1,100 | $ | — | $ | 1,100 | $ | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Assets Held for Sale | $ | 1,635 | $ | — | $ | 1,635 | $ | — |
|
19. | BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION |
• | Advanced Surgical, Orthopaedics, and Portable Medical: Includes legacy Greatbatch Orthopaedics and Portable Medical product line sales plus the legacy Lake Region Medical Advanced Surgical product line sales. Products include components, sub-assemblies, finished devices, implants, instruments and delivery systems for a range of surgical technologies to the advanced surgical market, including laparoscopy, orthopaedics 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 for the portable medical markets. |
• | Cardio and Vascular: Includes the legacy Greatbatch Vascular product line sales plus the legacy Lake Region Medical Cardio and Vascular product line sales less the legacy Lake Region Medical Cardiac/Neuromodulation sales. Products include 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. |
• | Cardiac/Neuromodulation: Includes the legacy Greatbatch Cardiac/Neuromodulation and QiG sales plus the legacy Lake Region Medical Cardiac/Neuromodulation sales previously included in their Cardio and Vascular product line sales. Products include batteries, capacitors, filtered and unfiltered feed-throughs, engineered components, implantable stimulation leads, and enclosures used in implantable medical devices. |
• | Electrochem: Includes the legacy Greatbatch Energy, Military and Environmental product line sales. Products include primary and rechargeable batteries and battery packs for demanding applications such as down hole drilling tools. |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Product line sales: | |||||||||||
Advanced Surgical, Orthopaedics, and Portable Medical | $ | 243,385 | $ | 216,339 | $ | 208,990 | |||||
Cardio and Vascular | 143,260 | 58,770 | 48,357 | ||||||||
Cardiac/Neuromodulation | 356,064 | 330,921 | 328,455 | ||||||||
Electrochem | 59,449 | 81,757 | 78,143 | ||||||||
Elimination of interproduct line sales | (1,744 | ) | — | — | |||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Business segment sales: | |||||||||||
Greatbatch Medical | $ | 649,977 | $ | 678,285 | $ | 660,902 | |||||
QiG | 13,571 | 9,502 | 3,043 | ||||||||
Lake Region Medical | 139,819 | — | — | ||||||||
Elimination of intersegment sales | (2,953 | ) | — | — | |||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Segment income (loss) from operations: | |||||||||||
Greatbatch Medical | $ | 109,737 | $ | 126,312 | $ | 111,805 | |||||
QiG | (25,855 | ) | (23,256 | ) | (30,484 | ) | |||||
Lake Region Medical | (16,416 | ) | — | — | |||||||
Total segment income from operations | 67,466 | 103,056 | 81,321 | ||||||||
Unallocated operating expenses | (54,320 | ) | (27,402 | ) | (19,982 | ) | |||||
Operating income | 13,146 | 75,654 | 61,339 | ||||||||
Unallocated other income (expense), net | (28,846 | ) | 925 | (12,501 | ) | ||||||
Income (loss) before provision for income taxes | $ | (15,700 | ) | $ | 76,579 | $ | 48,838 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Depreciation and amortization: | |||||||||||
Greatbatch Medical | $ | 30,160 | $ | 31,906 | $ | 31,112 | |||||
QiG | 1,862 | 2,101 | 1,539 | ||||||||
Lake Region Medical | 32,249 | — | — | ||||||||
Total depreciation and amortization included in segment income from operations | 64,271 | 34,007 | 32,651 | ||||||||
Unallocated depreciation and amortization | 3,347 | 3,450 | 3,315 | ||||||||
Total depreciation and amortization | $ | 67,618 | $ | 37,457 | $ | 35,966 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Expenditures for tangible long-lived assets, excluding acquisitions: | |||||||||||
Greatbatch Medical | $ | 32,921 | $ | 19,006 | $ | 13,242 | |||||
QiG | 1,160 | 1,453 | 2,134 | ||||||||
Lake Region Medical | 7,525 | — | — | ||||||||
Total reportable segments | 41,606 | 20,459 | 15,376 | ||||||||
Unallocated long-lived tangible assets | 6,448 | 5,187 | 2,798 | ||||||||
Total expenditures | $ | 48,054 | $ | 25,646 | $ | 18,174 |
At | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Identifiable assets: | |||||||||||
Greatbatch Medical | $ | 798,609 | $ | 761,225 | $ | 758,369 | |||||
QiG | 68,637 | 76,529 | 56,245 | ||||||||
Lake Region Medical | 1,971,071 | — | — | ||||||||
Total reportable segments | 2,838,317 | 837,754 | 814,614 | ||||||||
Unallocated assets | 143,819 | 117,368 | 75,015 | ||||||||
Total assets | $ | 2,982,136 | $ | 955,122 | $ | 889,629 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Sales by geographic area: | |||||||||||
United States | $ | 401,380 | $ | 312,539 | $ | 325,090 | |||||
Non-Domestic locations: | |||||||||||
Puerto Rico | 136,898 | 127,702 | 117,961 | ||||||||
Belgium | 62,546 | 65,308 | 67,155 | ||||||||
Rest of world | 199,590 | 182,238 | 153,739 | ||||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
At | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Long-lived tangible assets: | |||||||||||
United States | $ | 264,556 | $ | 113,851 | $ | 116,484 | |||||
Rest of world | 114,936 | 31,074 | 29,289 | ||||||||
Total | $ | 379,492 | $ | 144,925 | $ | 145,773 |
Sales | Accounts Receivable | |||||||||||||
Year Ended | At | |||||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | January 1, 2016 | January 2, 2015 | ||||||||||
Customer A | 18 | % | 18 | % | 16 | % | 23 | % | 23 | % | ||||
Customer B | 17 | % | 18 | % | 20 | % | 8 | % | 4 | % | ||||
Customer C | 12 | % | 12 | % | 13 | % | 6 | % | 8 | % | ||||
Customer D | 5 | % | 6 | % | 7 | % | 7 | % | 12 | % | ||||
52 | % | 54 | % | 56 | % | 44 | % | 47 | % |
|
20. | QUARTERLY SALES AND EARNINGS DATA—UNAUDITED |
4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
2015 | |||||||||||||||
Sales | $ | 317,567 | $ | 146,637 | $ | 174,890 | $ | 161,320 | |||||||
Gross profit | 73,140 | 51,646 | 57,951 | 52,398 | |||||||||||
Net income (loss) | (24,907 | ) | 22 | 9,283 | 8,008 | ||||||||||
EPS—basic | (0.85 | ) | — | 0.36 | 0.32 | ||||||||||
EPS—diluted | (0.85 | ) | — | 0.35 | 0.31 | ||||||||||
2014 | |||||||||||||||
Sales | $ | 169,726 | $ | 171,699 | $ | 172,081 | $ | 174,281 | |||||||
Gross profit | 57,214 | 58,118 | 58,470 | 57,596 | |||||||||||
Net income | 14,176 | 14,012 | 12,348 | 14,922 | |||||||||||
EPS—basic | 0.57 | 0.56 | 0.50 | 0.61 | |||||||||||
EPS—diluted | 0.54 | 0.54 | 0.48 | 0.58 |
|
Col. C—Additions | ||||||||||||||||||||||
Col. A Description | Col. B Balance at Beginning of Period | Charged to Costs & Expenses | Charged to Other Accounts- Describe | Col. D Deductions - Describe | Col. E Balance at End of Period | |||||||||||||||||
January 1, 2016 | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 1,411 | $ | (70 | ) | $ | 459 | (3)(4) | $ | (846 | ) | (2) | $ | 954 | ||||||||
Valuation allowance for deferred income tax assets | $ | 10,709 | $ | 788 | (1) | $ | 27,836 | (3)(4) | $ | (162 | ) | (5) | $ | 39,171 | ||||||||
January 2, 2015 | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 2,001 | $ | 98 | $ | 14 | (3)(4) | $ | (702 | ) | (2) | $ | 1,411 | |||||||||
Valuation allowance for deferred income tax assets | $ | 11,661 | $ | (729 | ) | (1) | $ | — | (4) | $ | (223 | ) | (1)(5) | $ | 10,709 | |||||||
January 3, 2014 | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 2,372 | $ | (93 | ) | $ | (15 | ) | (4) | $ | (263 | ) | (2) | $ | 2,001 | |||||||
Valuation allowance for deferred income tax assets | $ | 12,768 | $ | (1,263 | ) | (1) | $ | 32 | (4) | $ | 124 | (1) | $ | 11,661 |
(1) | Valuation allowance recorded in the provision for income taxes for certain net operating losses and tax credits. The net decrease in allowance in 2014 and 2013 primarily relates to the use of net operating loss carryforwards. |
(2) | Accounts written off. |
(3) | Balance recorded as a part of our 2015 acquisition of Lake Region Medical and our 2014 acquisition of Centro de Construcción de Cardioestimuladores del Uruguay. |
(4) | Includes foreign currency translation effect. |
(5) | Primarily relates to return to provision adjustments for prior years. |
|
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Sales | $ | 1,445,689 | $ | 1,441,782 | $ | 677,657 | |||||
Net income (loss) | 2,405 | (25,865 | ) | 37,612 | |||||||
Earnings (loss) per share: | |||||||||||
Basic | $ | 0.08 | $ | (0.87 | ) | $ | 1.57 | ||||
Diluted | $ | 0.08 | $ | (0.87 | ) | $ | 1.49 |
Cash consideration paid to Lake Region Medical stockholders and equity award holders | $ | 478,490 | ||
Fair value of shares of Greatbatch common stock issued to Lake Region Medical stockholders | 245,368 | |||
Fair value of replacement stock options attributable to pre-acquisition service | 4,508 | |||
Total purchase consideration | $ | 728,366 |
Assets acquired | |||
Current assets | $ | 269,815 | |
Property, plant and equipment | 216,473 | ||
Amortizing intangible assets | 849,000 | ||
Indefinite-lived intangible assets | 70,000 | ||
Goodwill | 661,788 | ||
Other non-current assets | 1,629 | ||
Total assets acquired | 2,068,705 | ||
Liabilities assumed | |||
Current liabilities | 102,485 | ||
Debt assumed | 1,044,675 | ||
Other long-term liabilities | 193,179 | ||
Total liabilities assumed | 1,340,339 | ||
Net assets acquired | $ | 728,366 |
Amortizing Intangible Assets | Fair Value Assigned | Weighted Average Amortization Period (Years) | Estimated Useful Life (Years) | Weighted Average Discount Rate | ||||||
Technology | $ | 160,000 | 7 | 19 | 11.5% | |||||
Customer lists | 689,000 | 14 | 29 | 11.5% | ||||||
$ | 849,000 | 13 | 27 | 11.5% | ||||||
Indefinite-lived Intangible Assets | ||||||||||
Trademarks and tradenames | $ | 70,000 | N/A | N/A | 11.5% |
Assets acquired | |||
Current assets | $ | 10,670 | |
Property, plant and equipment | 1,131 | ||
Amortizing intangible assets | 6,100 | ||
Goodwill | 8,296 | ||
Total assets acquired | 26,197 | ||
Liabilities assumed | |||
Current liabilities | 4,842 | ||
Deferred income taxes | 1,590 | ||
Total liabilities assumed | 6,432 | ||
Net assets acquired | $ | 19,765 |
Amortizing Intangible Assets | Fair Value Assigned | Weighted Average Amortization Period (Years) | Weighted Average Discount Rate | |||||
Technology | $ | 1,400 | 10 | 18% | ||||
Customer lists | 4,600 | 10 | 18% | |||||
Trademarks and tradenames | 100 | 2 | 18% | |||||
$ | 6,100 | 10 | 18% |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
(in thousands) | |||||||||||
Noncash investing and financing activities: | |||||||||||
Common stock contributed to 401(k) Plan | $ | 3,920 | $ | 4,341 | $ | 2,477 | |||||
Property, plant and equipment purchases included in accounts payable | 7,401 | 2,926 | 2,103 | ||||||||
Common stock issued in connection with Lake Region Medical acquisition | 245,368 | — | — | ||||||||
Replacement stock options issued in connection with Lake Region Medical acquisition | 4,508 | — | — | ||||||||
Purchase of non-controlling interests in subsidiaries included in accrued expenses | 6,818 | — | — | ||||||||
Cash paid during the year for: | |||||||||||
Interest | 13,057 | 3,521 | 4,989 | ||||||||
Income taxes | 6,312 | 13,565 | 44,165 | ||||||||
Acquisition of noncash assets | 2,013,604 | 22,434 | — | ||||||||
Liabilities assumed | 1,340,339 | 6,432 | — |
|
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Raw materials | $ | 107,296 | $ | 73,354 | |||
Work-in-process | 93,729 | 38,930 | |||||
Finished goods | 51,141 | 16,958 | |||||
Total | $ | 252,166 | $ | 129,242 |
|
At | ||||||||||
Asset | Business Segment | January 1, 2016 | January 2, 2015 | |||||||
Building and building improvements | Greatbatch Medical | $ | 996 | $ | 1,635 |
|
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Manufacturing machinery and equipment | $ | 285,068 | $ | 167,173 | |||
Buildings and building improvements | 130,184 | 89,258 | |||||
Information technology hardware and software | 43,947 | 31,725 | |||||
Leasehold improvements | 36,745 | 31,170 | |||||
Furniture and fixtures | 16,243 | 14,045 | |||||
Land and land improvements | 21,774 | 10,816 | |||||
Construction work in process | 76,835 | 14,129 | |||||
Other | 852 | 629 | |||||
611,648 | 358,945 | ||||||
Accumulated depreciation | (232,156 | ) | (214,020 | ) | |||
Total | $ | 379,492 | $ | 144,925 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Depreciation expense | $ | 27,136 | $ | 23,320 | $ | 22,799 |
|
Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation | Net Carrying Amount | ||||||||||||
At January 1, 2016 | |||||||||||||||
Purchased technology and patents | $ | 255,776 | $ | (83,708 | ) | 1,444 | $ | 173,512 | |||||||
Customer lists | 761,857 | (40,815 | ) | (986 | ) | 720,056 | |||||||||
Other | 4,534 | (4,946 | ) | 821 | 409 | ||||||||||
Total amortizing intangible assets | $ | 1,022,167 | $ | (129,469 | ) | $ | 1,279 | $ | 893,977 | ||||||
At January 2, 2015 | |||||||||||||||
Purchased technology and patents | $ | 95,776 | $ | (75,894 | ) | $ | 1,966 | $ | 21,848 | ||||||
Customer lists | 72,857 | (31,460 | ) | 1,374 | 42,771 | ||||||||||
Other | 4,534 | (4,619 | ) | 803 | 718 | ||||||||||
Total amortizing intangible assets | $ | 173,167 | $ | (111,973 | ) | $ | 4,143 | $ | 65,337 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Cost of sales | $ | 7,403 | $ | 6,201 | $ | 6,822 | |||||
SG&A | 9,681 | 7,009 | 5,800 | ||||||||
RD&E | 412 | 667 | 545 | ||||||||
Total intangible asset amortization expense | $ | 17,496 | $ | 13,877 | $ | 13,167 |
Estimated Amortization Expense | |||
2016 | $ | 37,854 | |
2017 | 43,991 | ||
2018 | 44,894 | ||
2019 | 44,960 | ||
2020 | 45,467 | ||
Thereafter | 676,811 | ||
Total estimated amortization expense | $ | 893,977 |
Trademarks and Tradenames | |||
At January 2, 2015 | $ | 20,288 | |
Indefinite-lived intangible assets acquired | 70,000 | ||
At January 1, 2016 | $ | 90,288 |
Greatbatch Medical | QiG | Lake Region Medical | Total | ||||||||||||
At January 2, 2015 | $ | 304,297 | $ | 50,096 | $ | — | $ | 354,393 | |||||||
Goodwill acquired (Note 2) | — | — | 661,788 | 661,788 | |||||||||||
Foreign currency translation | (368 | ) | — | (2,243 | ) | (2,611 | ) | ||||||||
At January 1, 2016 | $ | 303,929 | $ | 50,096 | $ | 659,545 | $ | 1,013,570 |
|
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Salaries and benefits | $ | 37,579 | $ | 20,770 | |||
Profit sharing and bonuses | 6,781 | 18,524 | |||||
Accrued interest | 9,378 | 195 | |||||
Purchase of non-controlling interest in subsidiaries | 6,818 | — | |||||
Severance and change in control payments | 11,969 | 1,878 | |||||
Warranty and customer rebates | 7,205 | 660 | |||||
Other | 17,527 | 6,357 | |||||
Total | $ | 97,257 | $ | 48,384 |
|
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Senior secured term loan A | $ | 375,000 | $ | — | |||
Senior secured term loan B | 1,025,000 | — | |||||
9.125% senior notes, due 2023 | 360,000 | — | |||||
Variable rate term loan | — | 187,500 | |||||
Revolving line of credit | — | — | |||||
Less unamortized discount on term loan B and debt issuance costs | (45,947 | ) | (887 | ) | |||
Total debt | 1,714,053 | 186,613 | |||||
Less current portion of long-term debt | 29,000 | 11,250 | |||||
Total long-term debt | $ | 1,685,053 | $ | 175,363 |
2016 | $ | 29,000 | |
2017 | 31,344 | ||
2018 | 40,719 | ||
2019 | 47,750 | ||
2020 | 47,750 | ||
Thereafter | 1,563,437 | ||
Total | $ | 1,760,000 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Contractual interest | $ | — | $ | — | $ | 634 | |||||
Discount amortization | — | — | 5,368 |
At January 3, 2014 | $ | 2,786 | |
Amortization during the period | (586 | ) | |
At January 2, 2015 | 2,200 | ||
Financing costs deferred | 4,152 | ||
Write-off during the period | (907 | ) | |
Amortization during the period | (654 | ) | |
At January 1, 2016 | $ | 4,791 |
Debt Issuance Costs | Unamortized Discount on TLB Facility | Total | |||||||||
At January 3, 2014 | $ | 1,074 | $ | — | $ | 1,074 | |||||
Amortization during the period | (187 | ) | — | (187 | ) | ||||||
At January 2, 2015 | 887 | — | 887 | ||||||||
Financing costs incurred | 41,781 | 10,250 | 52,031 | ||||||||
Write-off during the period | (732 | ) | — | (732 | ) | ||||||
Amortization during the period | (6,028 | ) | (211 | ) | (6,239 | ) | |||||
At January 1, 2016 | $ | 35,908 | $ | 10,039 | $ | 45,947 |
|
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Change in projected benefit obligation: | |||||||
Projected benefit obligation at beginning of year | $ | 2,843 | $ | 2,422 | |||
Projected benefit obligation acquired | 4,316 | — | |||||
Service cost | 439 | 203 | |||||
Interest cost | 165 | 75 | |||||
Plan participants’ contribution | 61 | 36 | |||||
Actuarial loss | 235 | 630 | |||||
Benefits transferred in, net | 258 | 155 | |||||
Settlement/curtailment gain | — | (337 | ) | ||||
Foreign currency translation | (325 | ) | (341 | ) | |||
Projected benefit obligation at end of year | 7,992 | 2,843 | |||||
Change in fair value of plan assets: | |||||||
Fair value of plan assets at beginning of year | 437 | 731 | |||||
Employer contributions (refund) | 69 | (39 | ) | ||||
Plan participants’ contributions | 61 | 36 | |||||
Actual loss on plan assets | (39 | ) | (101 | ) | |||
Benefits transferred in, net | 362 | 198 | |||||
Settlements | — | (337 | ) | ||||
Foreign currency translation | (19 | ) | (51 | ) | |||
Fair value of plan assets at end of year | 871 | 437 | |||||
Projected benefit obligation in excess of plan assets at end of year | $ | 7,121 | $ | 2,406 | |||
Defined benefit liability classified as other current liabilities | $ | 46 | $ | 25 | |||
Defined benefit liability classified as long-term liabilities | $ | 7,075 | $ | 2,381 | |||
Accumulated benefit obligation at end of year | $ | 6,299 | $ | 1,938 |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Net loss occurring during the year | $ | 164 | $ | 736 | |||
Amortization of losses | (156 | ) | (138 | ) | |||
Prior service cost | (1 | ) | (2 | ) | |||
Amortization of prior service cost | (9 | ) | (11 | ) | |||
Foreign currency translation | — | (76 | ) | ||||
Pre-tax adjustment | (2 | ) | 509 | ||||
Taxes | 22 | (135 | ) | ||||
Net loss | $ | 20 | $ | 374 |
Amortization of net prior service cost | $ | 10 | |
Amortization of net loss | 172 |
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Service cost | $ | 439 | $ | 203 | |||
Interest cost | 165 | 75 | |||||
Settlements loss | — | 105 | |||||
Expected return on assets | (11 | ) | (3 | ) | |||
Recognized net actuarial loss | 164 | 45 | |||||
Net pension cost | $ | 757 | $ | 425 |
Projected Benefit Obligation | Net Pension Cost | |||||||||||||
January 1, 2016 | January 2, 2015 | 2015 | 2014 | 2013 | ||||||||||
Discount rate | 2.2 | % | 2.3 | % | 2.3 | % | 3.4 | % | 2.1 | % | ||||
Salary growth | 2.9 | % | 3.0 | % | 3.0 | % | 3.1 | % | 2.4 | % | ||||
Expected rate of return on assets | 2.0 | % | 2.3 | % | 2.3 | % | 2.5 | % | — | % |
Fair Value Measurements Using | |||||||||||||||
January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Insurance contract | $ | 871 | $ | — | $ | 871 | $ | — | |||||||
Total | $ | 871 | $ | — | $ | 871 | $ | — |
Fair Value Measurements Using | |||||||||||||||
January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Insurance contract | $ | 437 | $ | — | $ | 437 | $ | — | |||||||
Total | $ | 437 | $ | — | $ | 437 | $ | — |
2016 | $ | 166 | |
2017 | 205 | ||
2018 | 225 | ||
2019 | 277 | ||
2020 | 265 | ||
2020-2024 | 1,619 |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Stock options | $ | 2,708 | $ | 2,523 | $ | 3,490 | |||||
Restricted stock and units | 6,668 | 6,417 | 5,843 | ||||||||
401(k) stock contribution | — | 4,246 | 4,768 | ||||||||
Total stock-based compensation expense | $ | 9,376 | $ | 13,186 | $ | 14,101 | |||||
Cost of sales | $ | 795 | $ | 3,530 | $ | 3,864 | |||||
Selling, general and administrative expenses | 7,510 | 7,923 | 7,907 | ||||||||
Research, development and engineering costs, net | 982 | 1,440 | 1,194 | ||||||||
Other operating expenses, net (Note 13) | 89 | 293 | 1,136 | ||||||||
Total stock-based compensation expense | $ | 9,376 | $ | 13,186 | $ | 14,101 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Weighted average grant date fair value | $ | 12.18 | $ | 16.43 | $ | 8.38 | |||||
Risk-free interest rate | 1.55 | % | 1.73 | % | 0.73 | % | |||||
Expected volatility | 26 | % | 39 | % | 39 | % | |||||
Expected life (in years) | 4.7 | 5.3 | 5.3 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | |||||
Annual prevesting forfeiture rate | 9 | % | 9 | % | 9 | % |
Number of Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value (In Millions) | |||||||||
Outstanding at December 28, 2012 | 2,060,772 | $ | 23.18 | |||||||||
Granted | 372,676 | 23.33 | ||||||||||
Exercised | (551,092 | ) | 23.24 | |||||||||
Forfeited or expired | (88,686 | ) | 28.05 | |||||||||
Outstanding at January 3, 2014 | 1,793,670 | 22.96 | ||||||||||
Granted | 183,571 | 43.84 | ||||||||||
Exercised | (353,625 | ) | 23.41 | |||||||||
Forfeited or expired | (33,279 | ) | 27.82 | |||||||||
Outstanding at January 2, 2015 | 1,590,337 | 25.17 | ||||||||||
Granted | 301,547 | 49.20 | ||||||||||
Replacement options granted in connection with the Lake Region Medical acquisition | 119,900 | 12.41 | ||||||||||
Exercised | (280,701 | ) | 23.45 | |||||||||
Forfeited or expired | (52,183 | ) | 42.45 | |||||||||
Outstanding at January 1, 2016 | 1,678,900 | $ | 28.32 | 6.1 | $ | 40.6 | ||||||
Expected to vest at January 1, 2016 | 1,643,386 | $ | 27.90 | 6.1 | $ | 40.4 | ||||||
Exercisable at January 1, 2016 | 1,467,256 | $ | 25.50 | 5.8 | $ | 39.6 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Intrinsic value | $ | 8,231 | $ | 7,997 | $ | 6,807 | |||||
Cash received | 6,583 | 8,278 | 12,807 | ||||||||
Tax benefit realized | 1,954 | 1,704 | 727 |
Time-Vested Activity | Weighted Average Fair Value | |||||
Nonvested at December 28, 2012 | 80,269 | $ | 23.48 | |||
Granted | 67,230 | 26.76 | ||||
Vested | (74,062 | ) | 23.93 | |||
Forfeited | (5,862 | ) | 22.26 | |||
Nonvested at January 3, 2014 | 67,575 | 26.37 | ||||
Granted | 63,817 | 44.78 | ||||
Vested | (53,568 | ) | 34.16 | |||
Forfeited | (9,992 | ) | 35.30 | |||
Nonvested at January 2, 2015 | 67,832 | 36.22 | ||||
Granted | 44,629 | 49.84 | ||||
Vested | (56,119 | ) | 37.93 | |||
Forfeited | (17,107 | ) | 40.48 | |||
Nonvested at January 1, 2016 | 39,235 | $ | 47.40 |
Performance- Vested Activity | Weighted Average Fair Value | |||||
Nonvested at December 28, 2012 | 782,446 | $ | 16.02 | |||
Granted | 318,169 | 15.86 | ||||
Vested | (49,139 | ) | 14.68 | |||
Forfeited | (271,798 | ) | 14.94 | |||
Nonvested at January 3, 2014 | 779,678 | 16.41 | ||||
Granted | 186,825 | 31.33 | ||||
Vested | (221,470 | ) | 18.51 | |||
Forfeited | (28,870 | ) | 18.42 | |||
Nonvested at January 2, 2015 | 716,163 | 19.57 | ||||
Granted | 179,940 | 32.92 | ||||
Vested | (270,198 | ) | 15.30 | |||
Forfeited | (48,080 | ) | 26.96 | |||
Nonvested at January 1, 2016 | 577,825 | $ | 25.11 |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Research, development and engineering costs | $ | 59,767 | $ | 58,974 | $ | 62,652 | |||||
Less: cost reimbursements | (6,772 | ) | (9,129 | ) | (8,575 | ) | |||||
Total research, development and engineering costs, net | $ | 52,995 | $ | 49,845 | $ | 54,077 |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
2014 investments in capacity and capabilities | $ | 23,037 | $ | 8,925 | $ | — | |||||
Orthopaedic facilities optimization | 1,395 | 1,317 | 8,038 | ||||||||
2013 operating unit realignment | — | 1,017 | 5,625 | ||||||||
Legacy Lake Region Medical consolidations | 1,961 | — | — | ||||||||
Other consolidation and optimization costs (income) | — | (71 | ) | 1,095 | |||||||
Acquisition and integration costs (income) | 33,449 | 3 | (502 | ) | |||||||
Asset dispositions, severance and other | 6,622 | 4,106 | 1,534 | ||||||||
Total other operating expenses, net | $ | 66,464 | $ | 15,297 | $ | 15,790 |
Employee Costs | Other Exit Costs | Total | |||||||||
At October 27, 2015 | $ | 3,392 | $ | 653 | $ | 4,045 | |||||
Restructuring charges | 557 | 1,404 | 1,961 | ||||||||
Write-offs | — | — | — | ||||||||
Cash payments | (282 | ) | (1,461 | ) | (1,743 | ) | |||||
At January 1, 2016 | $ | 3,667 | $ | 596 | $ | 4,263 |
Severance and Retention | Accelerated Depreciation/ Asset Write-offs | Other | Total | ||||||||||||
At January 2, 2015 | $ | 1,163 | $ | — | $ | 1,066 | $ | 2,229 | |||||||
Restructuring charges | 2,729 | 235 | 20,073 | 23,037 | |||||||||||
Write-offs | — | (235 | ) | — | (235 | ) | |||||||||
Cash payments | (2,463 | ) | — | (19,544 | ) | (22,007 | ) | ||||||||
At January 1, 2016 | $ | 1,429 | $ | — | $ | 1,595 | $ | 3,024 |
Severance and Retention | Accelerated Depreciation/ Asset Write-offs | Other | Total | ||||||||||||
At January 2, 2015 | $ | — | $ | — | $ | 287 | $ | 287 | |||||||
Restructuring charges | — | 88 | 1,307 | 1,395 | |||||||||||
Write-offs | — | (88 | ) | — | (88 | ) | |||||||||
Cash payments | — | — | (1,594 | ) | (1,594 | ) | |||||||||
At January 1, 2016 | $ | — | $ | — | $ | — | $ | — |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
U.S. | $ | (42,166 | ) | $ | 56,801 | $ | 42,392 | ||||
International | 26,466 | 19,778 | 6,446 | ||||||||
Total income (loss) before provision for income taxes | $ | (15,700 | ) | $ | 76,579 | $ | 48,838 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Current: | |||||||||||
Federal | $ | (3,753 | ) | $ | 16,293 | $ | 39,353 | ||||
State | (367 | ) | 1,299 | 1,604 | |||||||
International | 6,312 | 2,998 | 1,470 | ||||||||
2,192 | 20,590 | 42,427 | |||||||||
Deferred: | |||||||||||
Federal | (8,144 | ) | 1,211 | (28,678 | ) | ||||||
State | (880 | ) | (310 | ) | 427 | ||||||
International | (1,274 | ) | (370 | ) | (1,605 | ) | |||||
(10,298 | ) | 531 | (29,856 | ) | |||||||
Total provision (benefit) for income taxes | $ | (8,106 | ) | $ | 21,121 | $ | 12,571 |
Year Ended | |||||||||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||||||||
Statutory rate | $ | (5,495 | ) | 35.0 | % | $ | 26,803 | 35.0 | % | $ | 17,093 | 35.0 | % | ||||
Federal tax credits | (1,850 | ) | 11.8 | (1,600 | ) | (2.1 | ) | (3,651 | ) | (7.5 | ) | ||||||
Foreign rate differential | (3,180 | ) | 20.2 | (3,276 | ) | (4.3 | ) | (348 | ) | (0.7 | ) | ||||||
Uncertain tax positions | (531 | ) | 3.4 | 412 | 0.6 | 831 | 1.7 | ||||||||||
State taxes, net of federal benefit | (1,490 | ) | 9.5 | 507 | 0.7 | 1,148 | 2.3 | ||||||||||
Change in foreign tax rates | (91 | ) | 0.6 | (446 | ) | (0.6 | ) | (1,806 | ) | (3.7 | ) | ||||||
Non-deductible transaction costs | 4,867 | (31.0 | ) | — | — | — | — | ||||||||||
Valuation allowance | 626 | (4.0 | ) | (299 | ) | (0.4 | ) | 186 | 0.4 | ||||||||
Other | (962 | ) | 6.1 | (980 | ) | (1.3 | ) | (882 | ) | (1.8 | ) | ||||||
Effective tax rate | $ | (8,106 | ) | 51.6 | % | $ | 21,121 | 27.6 | % | $ | 12,571 | 25.7 | % |
At | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Tax credits | $ | 22,196 | $ | 5,828 | |||
Net operating loss carryforwards | 153,949 | 6,721 | |||||
Inventories | 6,543 | 3,335 | |||||
Accrued expenses | 13,138 | 4,338 | |||||
Stock-based compensation | 9,512 | 9,341 | |||||
Other | 38 | 1,659 | |||||
Gross deferred tax assets | 205,376 | 31,222 | |||||
Less valuation allowance | (39,171 | ) | (10,709 | ) | |||
Net deferred tax assets | 166,205 | 20,513 | |||||
Property, plant and equipment | (32,772 | ) | (2,646 | ) | |||
Intangible assets | (347,896 | ) | (57,850 | ) | |||
Convertible subordinated notes | (3,754 | ) | (5,006 | ) | |||
Gross deferred tax liabilities | (384,422 | ) | (65,502 | ) | |||
Net deferred tax liability | $ | (218,217 | ) | $ | (44,989 | ) | |
Presented as follows: | |||||||
Current deferred tax asset | $ | — | $ | 6,168 | |||
Current deferred tax liability | — | (588 | ) | ||||
Noncurrent deferred tax asset | 3,587 | 2,626 | |||||
Noncurrent deferred tax liability | (221,804 | ) | (53,195 | ) | |||
Net deferred tax liability | $ | (218,217 | ) | $ | (44,989 | ) |
Jurisdiction | Tax Attribute | Amount (in millions) | Begin to Expire | |||||
Federal | Net Operating Loss | $ | 386.2 | 2019 | ||||
International | Net Operating Loss | 42.2 | 2016 | |||||
State | Net Operating Loss | 298.7 | 2016 | |||||
Federal | Foreign Tax Credit | 17.0 | 2019 | |||||
U.S. and State | R&D Tax Credit | 2.6 | 2018 | |||||
State | Investment Tax Credit | 5.3 | 2016 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Balance, beginning of year | $ | 2,411 | $ | 1,858 | $ | 970 | |||||
Additions relating to business combinations | 7,443 | — | — | ||||||||
Additions based upon tax positions related to the current year | 274 | 268 | 325 | ||||||||
Additions related to prior period tax positions | 163 | 510 | 651 | ||||||||
Reductions relating to settlements with tax authorities | (550 | ) | (225 | ) | (88 | ) | |||||
Reductions as a result of a lapse of applicable statute of limitations | (470 | ) | — | — | |||||||
Balance, end of year | $ | 9,271 | $ | 2,411 | $ | 1,858 |
|
Year Ended | |||||||
January 1, 2016 | January 2, 2015 | ||||||
Beginning balance | $ | 660 | $ | 1,819 | |||
Additions to warranty reserve | 1,274 | 953 | |||||
Liabilities assumed from acquisition | 2,521 | — | |||||
Warranty claims paid | (1,139 | ) | (2,112 | ) | |||
Ending balance | $ | 3,316 | $ | 660 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Operating lease expense | $ | 6,516 | $ | 4,281 | $ | 4,379 |
2016 | $ | 14,118 | |
2017 | 10,951 | ||
2018 | 9,950 | ||
2019 | 8,979 | ||
2020 | 6,925 | ||
Thereafter | 27,674 | ||
Total estimated operating lease expense | $ | 78,597 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Increase (reduction) in Cost of Sales | $ | 1,948 | $ | (168 | ) | $ | (1,154 | ) | |||
Ineffective portion of change in fair value | — | — | — |
Instrument | Type of Hedge | Aggregate Notional Amount | Start Date | End Date | $/Peso | Fair Value | Balance Sheet Location | |||||||||||
FX Contract | Cash Flow | $ | 16,480 | Jan 2016 | Dec 2016 | 0.0584 | $ | (307 | ) | Accrued Expenses |
|
Defined Benefit Plan Liability | Cash Flow Hedges | Foreign Currency Translation Adjustment | Total Pre-Tax Amount | Tax | Net-of-Tax Amount | ||||||||||||||||||
At January 2, 2015 | $ | (1,181 | ) | $ | (2,558 | ) | $ | 11,450 | $ | 7,711 | $ | 1,412 | $ | 9,123 | |||||||||
Unrealized loss on cash flow hedges | — | (4,413 | ) | — | (4,413 | ) | 1,545 | (2,868 | ) | ||||||||||||||
Realized loss on foreign currency hedges | — | 1,948 | — | 1,948 | (682 | ) | 1,266 | ||||||||||||||||
Realized loss on interest rate swap hedges | — | 2,631 | — | 2,631 | (921 | ) | 1,710 | ||||||||||||||||
Net defined benefit plan liability adjustments | 2 | — | — | 2 | (22 | ) | (20 | ) | |||||||||||||||
Foreign currency translation loss | — | — | (7,841 | ) | (7,841 | ) | — | (7,841 | ) | ||||||||||||||
At January 1, 2016 | $ | (1,179 | ) | $ | (2,392 | ) | $ | 3,609 | $ | 38 | $ | 1,332 | $ | 1,370 |
Defined Benefit Plan Liability | Cash Flow Hedges | Foreign Currency Translation Adjustment | Total Pre-Tax Amount | Tax | Net-of-Tax Amount | ||||||||||||||||||
At January 3, 2014 | $ | (672 | ) | $ | (468 | ) | $ | 14,952 | $ | 13,812 | $ | 546 | $ | 14,358 | |||||||||
Unrealized loss on cash flow hedges | — | (2,372 | ) | — | (2,372 | ) | 829 | (1,543 | ) | ||||||||||||||
Realized gain on foreign currency hedges | — | (168 | ) | — | (168 | ) | 59 | (109 | ) | ||||||||||||||
Realized loss on interest rate swap hedges | — | 450 | — | 450 | (157 | ) | 293 | ||||||||||||||||
Net defined benefit plan liability adjustments | (509 | ) | — | — | (509 | ) | 135 | (374 | ) | ||||||||||||||
Foreign currency translation loss | — | — | (3,502 | ) | (3,502 | ) | — | (3,502 | ) | ||||||||||||||
At January 2, 2015 | $ | (1,181 | ) | $ | (2,558 | ) | $ | 11,450 | $ | 7,711 | $ | 1,412 | $ | 9,123 |
|
Fair Value Measurements Using | |||||||||||||||
Description | At January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities | |||||||||||||||
Foreign currency contracts (Note 15) | $ | 307 | $ | — | $ | 307 | $ | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities | |||||||||||||||
Foreign currency contracts | $ | 1,568 | $ | — | $ | 1,568 | $ | — | |||||||
Interest rate swaps | 990 | — | 990 | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 1, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Cost method investment | $ | 1,100 | $ | — | $ | 1,100 | $ | — |
Fair Value Measurements Using | |||||||||||||||
Description | At January 2, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Assets Held for Sale | $ | 1,635 | $ | — | $ | 1,635 | $ | — |
|
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Product line sales: | |||||||||||
Advanced Surgical, Orthopaedics, and Portable Medical | $ | 243,385 | $ | 216,339 | $ | 208,990 | |||||
Cardio and Vascular | 143,260 | 58,770 | 48,357 | ||||||||
Cardiac/Neuromodulation | 356,064 | 330,921 | 328,455 | ||||||||
Electrochem | 59,449 | 81,757 | 78,143 | ||||||||
Elimination of interproduct line sales | (1,744 | ) | — | — | |||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Business segment sales: | |||||||||||
Greatbatch Medical | $ | 649,977 | $ | 678,285 | $ | 660,902 | |||||
QiG | 13,571 | 9,502 | 3,043 | ||||||||
Lake Region Medical | 139,819 | — | — | ||||||||
Elimination of intersegment sales | (2,953 | ) | — | — | |||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Segment income (loss) from operations: | |||||||||||
Greatbatch Medical | $ | 109,737 | $ | 126,312 | $ | 111,805 | |||||
QiG | (25,855 | ) | (23,256 | ) | (30,484 | ) | |||||
Lake Region Medical | (16,416 | ) | — | — | |||||||
Total segment income from operations | 67,466 | 103,056 | 81,321 | ||||||||
Unallocated operating expenses | (54,320 | ) | (27,402 | ) | (19,982 | ) | |||||
Operating income | 13,146 | 75,654 | 61,339 | ||||||||
Unallocated other income (expense), net | (28,846 | ) | 925 | (12,501 | ) | ||||||
Income (loss) before provision for income taxes | $ | (15,700 | ) | $ | 76,579 | $ | 48,838 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Depreciation and amortization: | |||||||||||
Greatbatch Medical | $ | 30,160 | $ | 31,906 | $ | 31,112 | |||||
QiG | 1,862 | 2,101 | 1,539 | ||||||||
Lake Region Medical | 32,249 | — | — | ||||||||
Total depreciation and amortization included in segment income from operations | 64,271 | 34,007 | 32,651 | ||||||||
Unallocated depreciation and amortization | 3,347 | 3,450 | 3,315 | ||||||||
Total depreciation and amortization | $ | 67,618 | $ | 37,457 | $ | 35,966 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Expenditures for tangible long-lived assets, excluding acquisitions: | |||||||||||
Greatbatch Medical | $ | 32,921 | $ | 19,006 | $ | 13,242 | |||||
QiG | 1,160 | 1,453 | 2,134 | ||||||||
Lake Region Medical | 7,525 | — | — | ||||||||
Total reportable segments | 41,606 | 20,459 | 15,376 | ||||||||
Unallocated long-lived tangible assets | 6,448 | 5,187 | 2,798 | ||||||||
Total expenditures | $ | 48,054 | $ | 25,646 | $ | 18,174 |
At | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Identifiable assets: | |||||||||||
Greatbatch Medical | $ | 798,609 | $ | 761,225 | $ | 758,369 | |||||
QiG | 68,637 | 76,529 | 56,245 | ||||||||
Lake Region Medical | 1,971,071 | — | — | ||||||||
Total reportable segments | 2,838,317 | 837,754 | 814,614 | ||||||||
Unallocated assets | 143,819 | 117,368 | 75,015 | ||||||||
Total assets | $ | 2,982,136 | $ | 955,122 | $ | 889,629 |
Year Ended | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Sales by geographic area: | |||||||||||
United States | $ | 401,380 | $ | 312,539 | $ | 325,090 | |||||
Non-Domestic locations: | |||||||||||
Puerto Rico | 136,898 | 127,702 | 117,961 | ||||||||
Belgium | 62,546 | 65,308 | 67,155 | ||||||||
Rest of world | 199,590 | 182,238 | 153,739 | ||||||||
Total sales | $ | 800,414 | $ | 687,787 | $ | 663,945 |
At | |||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | |||||||||
Long-lived tangible assets: | |||||||||||
United States | $ | 264,556 | $ | 113,851 | $ | 116,484 | |||||
Rest of world | 114,936 | 31,074 | 29,289 | ||||||||
Total | $ | 379,492 | $ | 144,925 | $ | 145,773 |
Sales | Accounts Receivable | |||||||||||||
Year Ended | At | |||||||||||||
January 1, 2016 | January 2, 2015 | January 3, 2014 | January 1, 2016 | January 2, 2015 | ||||||||||
Customer A | 18 | % | 18 | % | 16 | % | 23 | % | 23 | % | ||||
Customer B | 17 | % | 18 | % | 20 | % | 8 | % | 4 | % | ||||
Customer C | 12 | % | 12 | % | 13 | % | 6 | % | 8 | % | ||||
Customer D | 5 | % | 6 | % | 7 | % | 7 | % | 12 | % | ||||
52 | % | 54 | % | 56 | % | 44 | % | 47 | % |
|
4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
2015 | |||||||||||||||
Sales | $ | 317,567 | $ | 146,637 | $ | 174,890 | $ | 161,320 | |||||||
Gross profit | 73,140 | 51,646 | 57,951 | 52,398 | |||||||||||
Net income (loss) | (24,907 | ) | 22 | 9,283 | 8,008 | ||||||||||
EPS—basic | (0.85 | ) | — | 0.36 | 0.32 | ||||||||||
EPS—diluted | (0.85 | ) | — | 0.35 | 0.31 | ||||||||||
2014 | |||||||||||||||
Sales | $ | 169,726 | $ | 171,699 | $ | 172,081 | $ | 174,281 | |||||||
Gross profit | 57,214 | 58,118 | 58,470 | 57,596 | |||||||||||
Net income | 14,176 | 14,012 | 12,348 | 14,922 | |||||||||||
EPS—basic | 0.57 | 0.56 | 0.50 | 0.61 | |||||||||||
EPS—diluted | 0.54 | 0.54 | 0.48 | 0.58 |
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