INTEGER HOLDINGS CORP, 10-Q filed on 8/12/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jul. 4, 2014
Aug. 12, 2014
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
GREATBATCH, INC. 
 
Entity Central Index Key
0001114483 
 
Document Type
10-Q 
 
Document Period End Date
Jul. 04, 2014 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
Current Fiscal Year End Date
--01-02 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
24,910,395 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Current assets:
 
 
Cash and cash equivalents
$ 51,193 
$ 35,465 
Accounts receivable, net of allowance for doubtful accounts of $1.7 million in 2014 and $2.0 million in 2013
124,562 
113,679 
Inventories
120,612 
118,358 
Refundable income taxes
2,306 
Deferred income taxes
5,871 
6,008 
Prepaid expenses and other current assets
8,898 
6,717 
Total current assets
311,136 
282,533 
Property, plant and equipment, net
143,457 
145,773 
Amortizing intangible assets, net
69,397 
76,122 
Indefinite-lived intangible assets
20,288 
20,288 
Goodwill
347,126 
346,656 
Deferred income taxes
3,136 
2,933 
Other assets
17,227 
16,398 
Total assets
911,767 
890,703 
Current liabilities:
 
 
Accounts payable
43,899 
46,508 
Income taxes payable
495 
Deferred income taxes
618 
613 
Accrued expenses
33,530 
44,681 
Total current liabilities
78,542 
91,802 
Long-term debt
192,500 
197,500 
Deferred income taxes
50,526 
52,012 
Other long-term liabilities
6,737 
7,334 
Total liabilities
328,305 
348,648 
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value, authorized 100,000,000 shares; no shares issued or outstanding in 2014 or 2013
Common stock, $0.001 par value, authorized 100,000,000 shares; 24,921,009 shares issued and 24,904,704 shares outstanding in 2014; 24,459,153 shares issued and 24,422,555 shares outstanding in 2013
25 
24 
Additional paid-in capital
357,587 
344,915 
Treasury stock, at cost, 16,305 shares in 2014 and 36,598 shares in 2013
(720)
(1,232)
Retained earnings
211,260 
183,990 
Accumulated other comprehensive income
15,310 
14,358 
Total stockholders’ equity
583,462 
542,055 
Total liabilities and stockholders’ equity
$ 911,767 
$ 890,703 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Current assets:
 
 
Allowance for doubtful accounts
$ 1.7 
$ 2.0 
Stockholders’ equity:
 
 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
100,000,000 
100,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
24,921,009 
24,459,153 
Common stock, shares outstanding
24,904,704 
24,422,555 
Treasury stock, shares
16,305 
36,598 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Income Statement [Abstract]
 
 
 
 
Sales
$ 172,081 
$ 171,331 
$ 346,362 
$ 319,596 
Cost of sales
113,611 
114,029 
230,296 
213,545 
Gross profit
58,470 
57,302 
116,066 
106,051 
Operating expenses:
 
 
 
 
Selling, general and administrative expenses
21,877 
22,248 
43,632 
42,340 
Research, development and engineering costs, net
12,793 
14,097 
26,324 
25,177 
Other operating expenses, net
4,261 
3,822 
4,047 
7,060 
Total operating expenses
38,931 
40,167 
74,003 
74,577 
Operating income
19,539 
17,135 
42,063 
31,474 
Interest expense
1,073 
1,445 
2,157 
8,433 
Other (income) expense, net
334 
679 
(287)
964 
Income before provision for income taxes
18,132 
15,011 
40,193 
22,077 
Provision for income taxes
5,784 
5,259 
12,923 
6,662 
Net income
12,348 
9,752 
27,270 
15,415 
Earnings per share:
 
 
 
 
Basic
$ 0.50 
$ 0.41 
$ 1.10 
$ 0.65 
Diluted
$ 0.48 
$ 0.39 
$ 1.06 
$ 0.62 
Weighted average shares outstanding:
 
 
 
 
Basic
24,838 
23,914 
24,726 
23,832 
Diluted
25,901 
24,922 
25,823 
24,818 
Comprehensive Income
 
 
 
 
Net income
12,348 
9,752 
27,270 
15,415 
Foreign currency translation gain (loss)
(393)
631 
789 
(2,432)
Net change in cash flow hedges, net of tax
86 
(231)
163 
38 
Defined benefit plan liability adjustment, net of tax
597 
Other comprehensive income (loss)
(307)
400 
952 
(1,797)
Comprehensive income
$ 12,041 
$ 10,152 
$ 28,222 
$ 13,618 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Cash flows from operating activities:
 
 
Net income
$ 27,270 
$ 15,415 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Depreciation and amortization
18,561 
17,853 
Debt related amortization included in interest expense
387 
5,887 
Stock-based compensation
6,729 
7,347 
Other Noncash Income (Expense)
(3,896)
(276)
Deferred income taxes
(1,655)
(30,910)
Changes in operating assets and liabilities:
 
 
Accounts receivable
(10,741)
(18,030)
Inventories
(2,049)
(15,966)
Prepaid expenses and other current assets
(69)
(161)
Accounts payable
(2,106)
(699)
Accrued expenses
(8,967)
(7,853)
Income taxes payable
3,052 
18,760 
Net cash provided by (used in) operating activities
26,516 
(8,633)
Cash flows from investing activities:
 
 
Acquisition of property, plant and equipment
(11,972)
(11,557)
Proceeds from sale of orthopaedic product lines (Note 8)
2,655 
3,228 
Purchase of cost and equity method investments
(450)
(1,287)
Other investing activities
30 
Net cash used in investing activities
(9,767)
(9,586)
Cash flows from financing activities:
 
 
Principal payments of long-term debt
(5,000)
(208,782)
Proceeds from issuance of long-term debt
215,000 
Issuance of common stock
5,353 
2,579 
Other financing activities
(1,129)
(688)
Net cash provided by (used in) financing activities
(776)
8,109 
Effect of foreign currency exchange rates on cash and cash equivalents
(245)
10 
Net increase (decrease) in cash and cash equivalents
15,728 
(10,100)
Cash and cash equivalents, beginning of period
35,465 
20,284 
Cash and cash equivalents, end of period
$ 51,193 
$ 10,184 
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)
In Thousands, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Jan. 03, 2014
$ 542,055 
$ 24 
$ 344,915 
$ (1,232)
$ 183,990 
$ 14,358 
Balance, shares at Jan. 03, 2014
 
24,459 
 
(37)
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
4,374 
 
4,374 
 
 
 
Net shares issued under stock incentive plans, shares
 
462 
 
(74)
 
 
Net shares issued under stock incentive plans
4,470 
8,172 
(3,703)
 
 
Shares contributed to 401(k), shares
 
 
 
95 
 
 
Shares contributed to 401(k)
4,341 
 
126 
4,215 
 
 
Net income
27,270 
 
 
 
27,270 
 
Total other comprehensive income (loss)
952 
 
 
 
 
952 
Balance at Jul. 04, 2014
$ 583,462 
$ 25 
$ 357,587 
$ (720)
$ 211,260 
$ 15,310 
Balance, shares at Jul. 04, 2014
 
24,921 
 
(16)
 
 
Basis of Presentation
BASIS OF PRESENTATION
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of Greatbatch, Inc. and its wholly-owned subsidiary, Greatbatch Ltd. (collectively “Greatbatch” or the “Company”), for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates. The January 3, 2014 condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2014. The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31st. The second quarter and year-to-date periods of 2014 and 2013 each contained 13 weeks and 26 weeks, respectively, and ended on July 4, and June 28, respectively.
Supplemental Cash Flow Information
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
 
Six Months Ended
(in thousands)
July 4, 2014
 
June 28, 2013
Noncash investing and financing activities:
 
 
 
Common stock contributed to 401(k) Plan
$
4,341

 
$
2,477

Property, plant and equipment purchases included in accounts payable
1,486

 
825

Cash paid during the period for:
 
 
 
Interest
$
1,845

 
$
2,926

Income taxes
7,939

 
18,895

Inventories
INVENTORIES
INVENTORIES
Inventories are comprised of the following (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
Raw materials
$
70,082

 
$
67,939

Work-in-process
38,995

 
36,670

Finished goods
11,535

 
13,749

Total
$
120,612

 
$
118,358

Intangible Assets
INTANGIBLE ASSETS
INTANGIBLE ASSETS
Amortizing intangible assets are comprised of the following (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
At July 4, 2014
 
 
 
 
 
 
 
Technology and patents
$
97,376

 
$
(72,555
)
 
$
2,062

 
$
26,883

Customer lists
68,257

 
(28,004
)
 
1,524

 
41,777

Other
4,434

 
(4,501
)
 
804

 
737

Total amortizing intangible assets
$
170,067

 
$
(105,060
)
 
$
4,390

 
$
69,397

At January 3, 2014
 
 
 
 
 
 
 
Technology and patents
$
97,376

 
$
(69,026
)
 
$
1,980

 
$
30,330

Customer lists
68,257

 
(24,671
)
 
1,367

 
44,953

Other
4,434

 
(4,399
)
 
804

 
839

Total amortizing intangible assets
$
170,067

 
$
(98,096
)
 
$
4,151

 
$
76,122


Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Cost of sales
$
1,566

 
$
1,759

 
$
3,129

 
$
3,539

Selling, general and administrative expenses
1,717

 
1,445

 
3,434

 
2,897

Research, development and engineering costs, net
200

 
136

 
401

 
272

Total intangible asset amortization expense
$
3,483

 
$
3,340

 
$
6,964

 
$
6,708


Estimated future intangible asset amortization expense based on the current carrying value is as follows (in thousands):
 
Estimated
Amortization
Expense
Remainder of 2014
$
6,842

2015
12,752

2016
10,457

2017
9,334

2018
7,046

Thereafter
22,966

Total estimated amortization expense
$
69,397


Indefinite-lived intangible assets are comprised of the following (in thousands):
 
Trademarks
and
Tradenames
At January 3, 2014
$
20,288

At July 4, 2014
$
20,288

The change in goodwill is as follows (in thousands):
 
Greatbatch Medical
 
QiG
 
Total
At January 3, 2014
$
304,856

 
$
41,800

 
$
346,656

Foreign currency translation
470

 

 
470

At July 4, 2014
$
305,326

 
$
41,800

 
$
347,126

Debt
DEBT
DEBT
Long-term debt is comprised of the following (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
Revolving line of credit
$

 
$

Variable rate term loan
192,500

 
197,500

Total long-term debt
$
192,500

 
$
197,500


Credit Facility – In September 2013, the Company amended and extended its credit facility (the “Credit Facility”). The new Credit Facility provides a $300 million revolving credit facility (the “Revolving Credit Facility”), a $200 million term loan (the “Term Loan”), a $15 million letter of credit subfacility, and a $15 million swingline subfacility. The Revolving Credit Facility can be increased by $200 million upon the Company’s request and approval by the lenders. The Revolving Credit Facility has a maturity date of September 20, 2018, which may be extended to September 20, 2019 upon notice by the Company and subject to certain conditions. The principal of the Term Loan is payable in quarterly installments as specified in the Credit Facility until its maturity date of September 20, 2019, when the unpaid balance is due in full.
The Credit Facility is secured by the Company’s non-realty assets including cash, accounts receivable and inventories. Interest rates on the Revolving Credit Facility and Term Loan are, at the Company’s option either at: (i) the prime rate plus the applicable margin, which ranges between 0.0% and 0.75%, based on the Company’s total leverage ratio or (ii) the applicable LIBOR rate plus the applicable margin, which ranges between 1.375% and 2.75%, based on the Company’s total leverage ratio. Loans under the swingline subfacility will bear interest at the prime rate plus the applicable margin, which ranges between 0.0% and 0.75%, based on the Company’s total leverage ratio. The Company is also required to pay a commitment fee, which varies between 0.175% and 0.25% depending on the Company’s total leverage ratio.
The Credit Facility contains limitations on the incurrence of indebtedness, liens and licensing of intellectual property, investments and certain payments. The Credit Facility permits the Company to engage in the following activities up to an aggregate amount of $300 million: 1) permitted acquisitions in the aggregate not to exceed $250 million; 2) other investments in the aggregate not to exceed $100 million; 3) stock repurchases and dividends not to exceed $150 million in the aggregate; and 4) investments in foreign subsidiaries not to exceed $20 million in the aggregate. At any time that the total leverage ratio of the Company for the two most recently ended fiscal quarters is less than 2.75 to 1.0, the Company may make an election to reset each of the amounts specified above. Additionally, these limitations can be waived upon the Company’s request and approval of a majority of the lenders. As of July 4, 2014, the Company had available to it 100% of the above limits except for the aggregate limit and other investments limit which are now $297 million and $97 million, respectively.
 
The Credit Facility requires the Company to maintain a rolling four quarter ratio of adjusted EBITDA to interest expense of at least 3.0 to 1.0, and a total leverage ratio of not greater than 4.5 to 1.0 decreasing to not greater than 4.25 to 1.0 after January 2, 2016. The calculation of adjusted EBITDA and total leverage ratio excludes non-cash charges, extraordinary, unusual, or non-recurring expenses or losses, non-cash stock-based compensation, and non-recurring expenses or charges incurred in connection with permitted acquisitions. As of July 4, 2014, the Company was in compliance with all covenants under the Credit Facility.
The Credit Facility contains customary events of default. Upon the occurrence and during the continuance of an event of default, a majority of the lenders may declare the outstanding advances and all other obligations under the Credit Facility immediately due and payable.
As of July 4, 2014, the weighted average interest rate on borrowings under the Credit Facility, which does not take into account the impact of the Company’s interest rate swap, was 1.57%. As of July 4, 2014, the Company had $300 million of borrowing capacity available under the Revolving Credit Facility. This borrowing capacity may vary from period to period based upon the debt and EBITDA levels of the Company, which impacts the covenant calculations described above.
Interest Rate Swap – From time to time, the Company enters into interest rate swap agreements in order to hedge against potential changes in cash flows on the outstanding borrowings on the Credit Facility. The variable rate received on the interest rate swaps and the variable rate paid on the debt have the same rate of interest, excluding the credit spread, and resets and pays interest on the same date. During 2012, the Company entered into a three-year $150 million interest rate swap, which amortizes $50 million per year. This swap was entered into in order to hedge against potential changes in cash flows on the outstanding Credit Facility borrowings, which are also indexed to the one-month LIBOR rate. This swap is being accounted for as a cash flow hedge. Information regarding the Company’s outstanding interest rate swap as of July 4, 2014 is as follows (dollars in thousands):
Instrument
Type of
Hedge
 
Notional
Amount
 
Start
Date
 
End
Date
 
Pay
Fixed
Rate
 
Current
Receive
Floating
Rate
 
Fair
Value
July 4, 2014
 
Balance
Sheet Location
Interest rate swap
Cash flow
 
$
100,000

 
Feb-13
 
Feb-16
 
0.573
%
 
0.153
%
 
$
(272
)
 
Other Long-Term Liabilities

The estimated fair value of the interest rate swap agreement 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 swap during the six months ended July 4, 2014 was considered ineffective. The amount recorded as Interest Expense during the six months ended July 4, 2014 and June 28, 2013 related to the Company’s interest rate swap was $0.2 million and $0.1 million, respectively.
 
Convertible Subordinated Notes – In March 2007, the Company issued $197.8 million of convertible subordinated notes (“CSN”) at a 5% discount. CSN accrued interest at 2.25% per annum. The effective interest rate of CSN, which took into consideration the amortization of the discount and deferred fees related to the issuance of these notes, was 8.5%. On February 20, 2013, the Company redeemed all outstanding CSN.
The contractual interest and discount amortization for CSN were as follows (in thousands):
 
Three Months ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Contractual interest
$

 
$

 
$

 
$
634

Discount amortization

 

 

 
5,368


The expected future minimum principal payments under the Term Loan as of July 4, 2014 are as follows (in thousands):
Remainder of 2014
$
5,000

2015
11,250

2016
16,250

2017
20,000

2018
20,000

Thereafter
120,000

Total
$
192,500


The Company has the ability and intent to use availability under the Revolving Credit Facility to fund principal payments on the Term Loan. As such, the entire balance of the Term Loan is classified as a non-current liability in the condensed consolidated balance sheets.
Deferred Financing Fees - The change in deferred financing fees is as follows (in thousands):
At January 3, 2014
$
3,860

Amortization during the period
(387
)
At July 4, 2014
$
3,473

Defined Benefit Plans
DEFINED BENEFIT PLANS
DEFINED BENEFIT PLANS
The Company is required to provide its employees located in Switzerland, Mexico and France certain statutorily mandated defined benefits. Under these plans, benefits accrue to employees based upon years of service, position, age and compensation. The defined benefit plan provided to employees located in Switzerland is a funded contributory plan while the plans that provide benefits to employees located in Mexico and France are unfunded and noncontributory. The liability and corresponding expense related to these benefit plans is based on actuarial computations of current and future benefits for employees.
During 2012, the Company transferred most major functions performed at its facilities in Switzerland into other existing facilities. As a result, the Company curtailed its defined benefit plan provided to employees at those Swiss facilities and recognized a curtailment gain during 2013. In accordance with ASC 715, this gain was recognized in Other Operating Expenses, Net as the related employees were terminated. Refer to Note 8 "Other Operating Expenses, Net" for further information.
The change in net defined benefit plan liability is as follows (in thousands):
At January 3, 2014
$
1,691

Net defined benefit cost
154

Benefit payments
(115
)
Foreign currency translation
4

At July 4, 2014
$
1,734


Net defined benefit cost (income) is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Service cost
$
52

 
$
69

 
$
104

 
$
151

Interest cost
20

 
40

 
39

 
103

Curtailment gain (Other Operating Expenses, Net)

 

 

 
(1,150
)
Amortization of net loss
5

 

 
11

 

Net defined benefit (income) cost
$
77

 
$
109

 
$
154

 
$
(896
)
Stock-Based Compensation
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Stock options
$
612

 
$
705

 
$
1,216

 
$
1,410

Restricted stock and units
1,601

 
1,482

 
3,158

 
2,945

401(k) Plan stock contribution
1,339

 
2,729

 
2,355

 
2,992

Total stock-based compensation expense
$
3,552

 
$
4,916

 
$
6,729

 
$
7,347

 
 
 
 
 
 
 
 
Cost of sales
$
1,147

 
$
1,707

 
$
2,058

 
$
2,129

Selling, general and administrative expenses
1,998

 
2,587

 
3,921

 
4,454

Research, development and engineering costs, net
407

 
622

 
750

 
764

Total stock-based compensation expense
$
3,552

 
$
4,916

 
$
6,729

 
$
7,347


The weighted average fair value and assumptions used to value options granted are as follows:
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
Weighted average fair value
$
16.43

 
$
8.38

Risk-free interest rate
1.73
%
 
0.73
%
Expected volatility
39
%
 
39
%
Expected life (in years)
5

 
5

Expected dividend yield
%
 
%

The following table summarizes time-vested stock option activity:
 
Number of
Time-Vested
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 3, 2014
1,616,409

 
$
22.92

 
 
 
 
Granted
183,571

 
43.84

 
 
 
 
Exercised
(179,032
)
 
22.83

 
 
 
 
Forfeited or expired
(29,792
)
 
27.32

 
 
 
 
Outstanding at July 4, 2014
1,591,156

 
25.26

 
6.5
 
$
38.7

Exercisable at July 4, 2014
1,168,372

 
23.05

 
5.7
 
$
31.0

The following table summarizes performance-vested stock option activity:
 
Number of
Performance-
Vested Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 3, 2014
177,261

 
$
23.27

 
 
 
 
Exercised
(54,271
)
 
23.32

 
 
 
 
Outstanding at July 4, 2014
122,990

 
23.26

 
3.4
 
$
3.2

Exercisable at July 4, 2014
122,990

 
23.26

 
3.4
 
$
3.2


The following table summarizes time-vested restricted stock and restricted stock unit activity:
 
Time-Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 3, 2014
67,575

 
$
26.37

Granted
39,191

 
44.08

Vested
(10,270
)
 
43.80

Forfeited
(5,812
)
 
32.89

Nonvested at July 4, 2014
90,684

 
31.63

The following table summarizes performance-vested restricted stock and restricted stock unit activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 3, 2014
779,678

 
$
16.41

Granted
186,825

 
31.33

Vested
(221,470
)
 
18.51

Forfeited
(24,022
)
 
17.86

Nonvested at July 4, 2014
721,011

 
19.58

Other Operating (Income) Expenses, Net
OTHER OPERATING (INCOME) EXPENSES, NET
OTHER OPERATING EXPENSES, NET
Other Operating Expenses, Net is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
2014 investments in capacity and capabilities
$
2,166

 
$

 
$
2,218

 
$

2013 operating unit realignment
32

 
852

 
1,035

 
852

Orthopaedic facility optimization costs
1,187

 
2,667

 
36

 
5,303

Medical device facility optimization

 
125

 
11

 
230

ERP system upgrade (income) costs
(10
)
 
64

 
(82
)
 
385

Acquisition and integration (income) costs
47

 
71

 
(381
)
 
182

Asset dispositions, severance and other
839

 
43

 
1,210

 
108

 
$
4,261

 
$
3,822

 
$
4,047

 
$
7,060


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. This included the following:
Functions currently 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 by the first half of 2016.
Functions currently 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 by the end of 2015. 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.
Establishing a R&D hub in the Minneapolis/St. Paul, MN area for the Company's Global R&D QiG - Medical Device Systems team, which will serve as the technical center of expertise for active implantable medical device development, implantable leads design, system level design verification testing, and continuation engineering. As part of this initiative, the design engineering responsibilities currently performed at our Cleveland, OH facility will be transferred to the new R&D hub by the end of 2014.
Establishing a commercial operations hub at its global headquarters in Frisco, Texas. This initiative will build upon the investment the Company has made to its global sales and marketing function and is expected to be completed during the first half of 2015.
The total capital investment expected for these initiatives is between $18.0 million and $20.0 million, of which $0.3 million has been expended to date. Total restructuring charges expected to be incurred in connection with this realignment are between $22.0 million and $27.0 million, of which $2.2 million has been incurred to date. Expenses related to this initiative are recorded within the applicable segment and corporate cost centers that the expenditures relate to and include the following:
Severance and retention: $7.0 million -$9.0 million;
Accelerated depreciation and asset write-offs: $2.0 million - $3.0 million; and
Other: $13.0 million - $15.0 million
Other costs primarily consist of costs to relocate certain equipment and other personnel, duplicate personnel costs, disposal and travel expenditures. All expenses are cash expenditures, except accelerated depreciation and asset write-offs.
The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):
 
Severance and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 3, 2014
$

 
$

 
$

 
$

Restructuring charges
531

 
33

 
1,654

 
2,218

Write-offs

 
(33
)
 

 
(33
)
Cash payments

 

 
(1,234
)
 
(1,234
)
At July 4, 2014
$
531


$

 
$
420

 
$
951


2013 operating unit realignment. In June 2013, the Company initiated a plan to realign its operating structure in order to optimize its continued focus on profitable growth. As part of this initiative, the sales and marketing and operations groups of its former Implantable Medical and Electrochem Solutions (“Electrochem”) reportable segments were combined into one sales and marketing and one operations group serving the entire Company. This initiative is expected to be completed during 2014. Total restructuring charges expected to be incurred in connection with this realignment are between $6.7 million and $7.1 million, of which $6.7 million has been incurred to date. Expenses related to this initiative are recorded within the applicable segment and corporate cost centers that the expenditures relate to and include the following:
 
Severance and retention: $5.0 million$5.2 million; and
Other: $1.7 million$1.9 million.
Other costs primarily consist of relocation, recruitment and travel expenditures.
 
The change in accrued liabilities related to the 2013 operating unit realignment is as follows (in thousands):
 
Severance and
Retention
 
Other
 
Total
At January 3, 2014
$
465

 
$
746

 
$
1,211

Restructuring charges
852

 
183

 
1,035

Cash payments
(1,205
)
 
(774
)
 
(1,979
)
At July 4, 2014
$
112

 
$
155

 
$
267


Orthopaedic facility optimization costs. In 2010, the Company began updating its Indianapolis, IN facility to streamline operations, consolidate two buildings, increase capacity, further expand capabilities and reduce dependence on outside suppliers. This initiative was completed in 2011.
In 2011, the Company began construction on an orthopaedic manufacturing facility in Fort Wayne, IN and transferred manufacturing operations being performed at its Columbia City, IN location into this new facility. This initiative was completed in 2012.
During 2012, the Company transferred manufacturing and development operations performed at its facilities in Orvin and Corgemont, Switzerland into existing facilities in Fort Wayne, IN and Tijuana, Mexico. In connection with this consolidation, in 2012, the Company entered into an agreement to sell assets related to certain non-core Swiss orthopaedic product lines to an independent third party including inventory, machinery, equipment, customer lists and technology related to these product lines. This transaction closed during the first quarter of 2013 and the Company received payments totaling $4.7 million in 2013 in connection with this transaction and the third party assumed $2.4 million of severance liabilities. During the first half of 2014, the Company recognized a gain and received an additional contingent payment of $2.7 million from the third party in connection with the achievement of certain milestones defined in the sales agreement. In addition, during the first quarter of 2013, the Company recognized a pension curtailment gain in connection with this consolidation. Refer to Note 6 "Defined Benefit Plans" for further information. These gains were recognized in Other Operating Expenses, Net in the Condensed Consolidated Statements of Operations.
During 2013, the Company initiated a project to expand its Chaumont, France facility in order to enhance its capabilities and fulfill larger volume customer supply agreements. This initiative is expected to be completed over the next three years.
The total capital investment expected for these initiatives is between $30 million and $35 million, of which $23.6 million has been expended to date. Total expense expected to be incurred for these initiatives is between $43 million and $48 million, of which $41.2 million has been incurred to date. All expenses are recorded within the Greatbatch Medical segment and are expected to include the following:
 
Severance and retention: approximately $11 million;
Accelerated depreciation and asset write-offs: approximately $13 million; and
Other: $19 million$24 million.
Other costs include production inefficiencies, moving, revalidation, personnel, training and travel costs associated with these consolidation projects.
All expenses are cash expenditures, except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the orthopaedic facility optimization is as follows (in thousands):
 
Severance
and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 3, 2014
$

 
$

 
$
857

 
$
857

Restructuring charges (income)

 
(2,655
)
 
2,691

 
36

Cash (payments) receipts

 
2,655

 
(2,952
)
 
(297
)
At July 4, 2014
$

 
$

 
$
596

 
$
596


Medical device facility optimization. Near the end of 2011, the Company initiated plans to upgrade and expand its manufacturing infrastructure in order to support its medical device strategy. This includes the transfer of certain product lines to create additional capacity for the manufacture of medical devices, expansion of two existing facilities, as well as the purchase of equipment to enable the production of medical devices. These initiatives are expected to be completed over the next year. Total capital investment under these initiatives is expected to be between $15 million and $20 million, of which approximately $12.5 million has been expended to date. Total expenses expected to be incurred on these projects is between $2.0 million and $3.0 million, of which $1.8 million has been incurred to date. All expenses are recorded within the Greatbatch Medical segment and are expected to include the following:
 
Production inefficiencies, moving and revalidation: $0.5 million$1.0 million;
Personnel: $1.0 million$1.5 million; and
Other: approximately $1.0 million.
The change in accrued liabilities related to the medical device facility optimization is as follows (in thousands):
 
Production
Inefficiencies,
Moving and
Revalidation
 
Personnel
 
Other
 
Total
At January 3, 2014
$

 
$

 
$

 
$

Restructuring charges

 
1

 
10

 
11

Cash payments

 
(1
)
 
(10
)
 
(11
)
At July 4, 2014
$

 
$

 
$

 
$


 
ERP system upgrade (income) costs. In 2011, the Company initiated plans to upgrade its existing global ERP system. This initiative was completed during the first half of 2014. Total capital investment expended under this initiative was $4.0 million. Total expenses incurred on this initiative were $5.8 million. Expenses related to this initiative were recorded within the applicable segment and corporate cost centers that the expenditures related to and included the following:
 
Training and consulting costs: $3.3 million; and
Accelerated depreciation and asset write-offs: $2.5 million.

The change in accrued liabilities related to the ERP system upgrade is as follows (in thousands):
 
Training &
Consulting
Costs
 
Accelerated
Depreciation/Asset
Write-offs
 
Total
At January 3, 2014
$

 
$

 
$

Restructuring income
(82
)
 

 
(82
)
Cash receipts
82

 

 
82

At July 4, 2014
$

 
$

 
$


Acquisition and integration (income) costs. During 2014 and 2013, the Company incurred (income) cost related to the integration of Micro Power Electronics, Inc. and NeuroNexus Technologies, Inc., which were acquired in December 2011 and February 2012, respectively. These expenses were primarily for retention bonuses, travel costs in connection with integration efforts, training, severance, and the change in fair value of the contingent consideration recorded in connection with these acquisitions. Refer to Note 13 "Fair Value Measurements" for discussion on changes in fair value of the contingent consideration, which resulted in net gains being recognized in Other Operating Expenses, Net in the Condensed Consolidated Statements of Operations for the first two quarters of 2014.
Asset dispositions, severance and other. During 2014 and 2013, the Company recorded charges in connection with various asset disposals and write downs. Additionally, during 2014 the Company recorded charges as a result of various tax planning initiatives in connection with its business reorganization to align its contract manufacturing operations, which is expected to produce tax savings over the long-term. Costs incurred primarily relate to consulting and IT development, which are expected to be completed during the second half of 2014.
Income Taxes
INCOME TAXES
INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, implementation of tax planning strategies, settlements with taxing authorities and foreign currency fluctuations.
As of July 4, 2014, the balance of unrecognized tax benefits is approximately $1.9 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 $1.7 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 On December 21, 2012, the Company and several other unaffiliated parties were named as defendants in a personal injury and wrongful death action filed in the 113th Judicial District Court of Harris County, Texas. The complaint seeks damages alleging marketing and product defects and failure to warn, negligence and gross negligence relating to a product the Company manufactured and sold to a customer, one of the other named defendants. The Company's customer, in turn, incorporated the Greatbatch product into its own product which it sold to its customer, another named defendant. This matter is currently scheduled for trial in the second half of 2014.
The Company is indemnified by its customer against any loss in this matter, including costs of defense, which obligation is supported by the customer's product liability insurance coverage in the amount of $5 million. The Company also has its own product liability insurance coverage, which has a $10 million retention. The Company has meritorious defenses and is vigorously defending the matter. In the event of an adverse judgment, however, the Company could have liability to the extent of the amount of any award its customer is unable to satisfy. To date, the Company has not recorded a reserve in connection with this matter since any potential loss is not currently probable and the range of loss is not reasonably estimable at this time.
The Company is a party to various other legal actions arising in the normal course of business. While the Company does not expect that the ultimate resolution of any of these pending actions will have a material effect on its consolidated results of operations, financial position, or cash flows, litigation is subject to inherent uncertainties and there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, does not become material in the future.
Product Warranties The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The change in aggregate product warranty liability is as follows (in thousands):
At January 3, 2014
$
1,819

Reduction to warranty reserve
(274
)
Warranty claims paid
(355
)
At July 4, 2014
$
1,190


Purchase Commitments – Contractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. The Company’s purchase orders are normally based on its current manufacturing needs and are fulfilled by its vendors within short time horizons. The Company also enters into blanket orders with vendors that have preferred pricing and terms, however these orders are normally cancelable without penalty. As of July 4, 2014, the total contractual obligation related to such expenditures is approximately $29.2 million and will primarily be funded by existing cash and cash equivalents, cash flow from operations, or borrowings under the Credit Facility. The Company also enters into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.
Workers’ Compensation Trust - The Company was a member of a group self-insurance trust that provided workers’ compensation benefits to its Western New York employees (the “Trust”). Under the Trust agreement, each participating organization has joint and several liability for Trust obligations if the assets of the Trust are not sufficient to cover those obligations. During 2011, the Company was notified by the Trust of its intention to cease operations at the end of 2011, and was assessed a pro-rata share of future costs related to the Trust. Based on actual experience, the Company could receive a refund or be assessed additional contributions for workers’ compensation claims insured by the Trust. Since 2011, the Company utilized a traditional insurance provider for workers’ compensation coverage.

Operating Leases – The Company is a party to various operating lease agreements for buildings, equipment and software. Estimated future operating lease expense is as follows (in thousands):
Remainder of 2014
$
2,557

2015
4,642

2016
4,001

2017
1,471

2018
1,002

Thereafter
936

Total estimated operating lease expense
$
14,609


Foreign Currency Contracts – The Company enters into forward contracts to purchase Mexican pesos in order to hedge the risk of peso-denominated payments associated with the operations at its Tijuana, Mexico facility. The impact to the Company’s results of operations from these forward contracts was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Increase(reduction) in cost of sales
$
8

 
$
(390
)
 
$
(156
)
 
$
(562
)
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
 
$
3,854

 
Jan-14
 
Dec-14
 
0.0767

 
$
(3
)
 
Other Current Assets
FX Contract
 
Cash flow
 
$
3,160

 
Jan-14
 
Dec-14
 
0.0752

 
$
58

 
Other Current Assets

Self-Insured Medical Plan The Company self-funds the medical insurance coverage provided to its U.S. based employees. The risk to the Company is being limited through the use of stop loss insurance, which has specific stop loss coverage per associate for claims in the year exceeding $225 thousand per associate with no annual maximum aggregate stop loss coverage. As of July 4, 2014, the Company has $1.5 million accrued related to the self-insurance portion of its medical plan, which is recorded in Accrued Expenses in the Condensed Consolidated Balance Sheet, and is primarily based upon claim history.
Subsequent Event On August 12, 2014, the Company purchased all of the outstanding common stock of Centro de Construcción de Cardioestimuladores del Uruguay (“CCC”), headquartered in Montevideo, Uruguay. CCC is an active implantable medical device systems developer and manufacturer that produces a range of devices for global medical device companies, including implantable pulse generators, programmer systems, battery chargers, patient wands and leads. This acquisition allows the Company to more broadly partner with medical device companies, complements the Company's core discrete technology offerings and enhances the Company's medical device innovation efforts. This transaction will be accounted for under the acquisition method of accounting. Accordingly, the operating results of CCC will be included in the Company's QiG segment from the date of acquisition. The aggregate purchase price of $18.0 million, plus a working capital adjustment, was funded with cash on hand.
Earnings Per Share (EPS)
EARNINGS PER SHARE (EPS)
EARNINGS PER SHARE (“EPS”)
The following table illustrates the calculation of Basic and Diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Numerator for basic and diluted EPS:
 
 
 
 
 
 
 
Net income
$
12,348

 
$
9,752

 
$
27,270

 
$
15,415

Denominator for basic EPS:
 
 
 
 
 
 
 
Weighted average shares outstanding
24,838

 
23,914

 
24,726

 
23,832

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options, restricted stock and restricted stock units
1,063

 
1,008

 
1,097

 
986

Denominator for diluted EPS
25,901

 
24,922

 
25,823

 
24,818

Basic EPS
$
0.50

 
$
0.41

 
$
1.10

 
$
0.65

Diluted EPS
$
0.48

 
$
0.39

 
$
1.06

 
$
0.62


The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met:
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Time-vested stock options, restricted stock and restricted stock units
179,000

 
72,000

 
179,000

 
395,000

Performance-vested restricted stock units

 

 

 


For the 2013 period, no shares related to CSN were included in the diluted EPS calculations as the average share price of the Company’s common stock for that period did not exceed CSN’s conversion price per share.
Accumulated Other Comprehensive Income
ACCUMULATED OTHER COMPREHENSIVE INCOME
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated Other Comprehensive Income is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 4, 2014
$
(672
)
 
$
(350
)
 
$
16,134

 
$
15,112

 
$
505

 
$
15,617

Unrealized gain on cash flow hedges

 
18

 

 
18

 
(6
)
 
12

Realized loss on foreign currency hedges

 
8

 

 
8

 
(3
)
 
5

Realized loss on interest rate swap hedges

 
106

 

 
106

 
(37
)
 
69

Foreign currency translation loss

 

 
(393
)
 
(393
)
 

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

 
$
14,851

 
$
459

 
$
15,310


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

 
$
13,812

 
$
546

 
$
14,358

Unrealized gain on cash flow hedges

 
168

 

 
168

 
(59
)
 
109

Realized gain on foreign currency hedges

 
(156
)
 

 
(156
)
 
55

 
(101
)
Realized loss on interest rate swap hedges

 
238

 

 
238

 
(83
)
 
155

Foreign currency translation gain

 

 
789

 
789

 

 
789

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

 
$
14,851

 
$
459

 
$
15,310

 
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At March 29, 2013
$
(365
)
 
$
533

 
$
10,368

 
$
10,536

 
$
214

 
$
10,750

Unrealized loss on cash flow hedges

 
(107
)
 

 
(107
)
 
37

 
(70
)
Realized gain on foreign currency hedges

 
(390
)
 

 
(390
)
 
137

 
(253
)
Realized loss on interest rate swap hedges

 
142

 

 
142

 
(50
)
 
92

Foreign currency translation gain

 

 
631

 
631

 

 
631

At June 28, 2013
$
(365
)
 
$
178

 
$
10,999

 
$
10,812

 
$
338

 
$
11,150

    
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At December 28, 2012
$
(962
)
 
$
120

 
$
13,431

 
$
12,589

 
$
358

 
$
12,947

Unrealized gain on cash flow hedges

 
421

 

 
421

 
(147
)
 
274

Realized gain on foreign currency hedges

 
(562
)
 

 
(562
)
 
197

 
(365
)
Realized loss on interest rate swap hedges

 
199

 

 
199

 
(70
)
 
129

Net defined benefit plan gain (Note 6)
597

 

 

 
597

 

 
597

Foreign currency translation loss

 

 
(2,432
)
 
(2,432
)
 

 
(2,432
)
At June 28, 2013
$
(365
)
 
$
178

 
$
10,999

 
$
10,812

 
$
338

 
$
11,150


The realized (gains) losses relating to the Company’s foreign currency and interest rate swap hedges were recognized in Cost of Sales and Interest Expense, respectively, in the Condensed Consolidated Statements of Operations.
The net defined benefit plan reclassifications from Accumulated Other Comprehensive Income are as follows (in thousands):
 
Six Months Ended
 
June 28, 2013
Net gain occurring during the period
$
(171
)
Amortization of losses
(581
)
Prior service cost
155

Pre-tax adjustment
(597
)
Taxes

Net gain
$
(597
)
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 and accrued contingent consideration. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.
Foreign currency contracts – The fair value of foreign currency contracts are determined through the use of cash flow models that utilize observable market data inputs to estimate fair value. These observable market data inputs include foreign exchange rate and credit spread curves. In addition, the Company received fair value estimates from the foreign currency contract counterparty to verify the reasonableness of the Company’s estimates. The Company’s foreign currency contracts are categorized in Level 2 of the fair value hierarchy. The fair value of the Company’s foreign currency contracts will be realized as Cost of Sales as the inventory, which the contracts are hedging the cash flows to produce, is sold, of which approximately $0.06 million is expected to be realized within the next six months as a reduction to Cost of Sales.
 
Interest rate swap – The fair value of the Company’s interest rate swap outstanding at July 4, 2014 was determined through the use of a cash flow model that utilizes observable market data inputs. These observable market data inputs include LIBOR, swap rates, and credit spread curves. In addition, the Company received a fair value estimate from the interest rate swap counterparty to verify the reasonableness of the Company’s estimate. This fair value calculation was categorized in Level 2 of the fair value hierarchy. The fair value of the Company’s interest rate swap will be realized as Interest Expense as interest on the Credit Facility is accrued.
Accrued contingent consideration – In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments it expects to make as of the acquisition date. The Company re-measures this liability each reporting period and records changes in the fair value through Other Operating Expenses, Net. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing, amount, or the likelihood of achieving the applicable milestones.
The fair value of accrued contingent consideration recorded by the Company represents the estimated fair value of the contingent consideration the Company expects to pay to the former shareholders of NeuroNexus Technologies, Inc. acquired in 2012 based upon the achievement of certain financial and development-based milestones. The fair value of the contingent consideration liability was estimated by discounting to present value, the probability weighted contingent payments expected to be made utilizing a risk adjusted discount rate. During the first quarter of 2014, the financial milestone expired unachieved and as a result, was determined to have a fair value of zero. The maximum amount of future contingent consideration (undiscounted) that the Company could be required to pay for the development milestone is $1.0 million. The Company’s accrued contingent consideration is categorized in Level 3 of the fair value hierarchy.
Changes in accrued contingent consideration were as follows (in thousands):
At January 3, 2014
$
840

Fair value adjustments
(620
)
At July 4, 2014
$
220


 
The recurring Level 3 fair value measurements of the Company’s contingent consideration liability include the following significant unobservable inputs (dollars in thousands):
Contingent Consideration Liability
 
Fair Value at July 4, 2014
 
Valuation Technique
 
Unobservable Inputs
Development milestone
 
$
220

 
Discounted cash flow
 
Discount rate
 
20
%
 
 
 
 
 
 
Projected year of payment
 
2015

 
 
 
 
 
 
Probability weighted payment amount
 
$
250


The following table provides information regarding assets and liabilities recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheet (in thousands):
 
 
Fair Value Measurements Using
 
 
At 
 July 4,
 
Quoted
Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
 
 
 
 
 
 
 
Foreign currency contracts (Note 10)
 
$
55

 
$

 
$
55

 
$

Liabilities
 
 
 
 
 
 
 
 
Interest rate swap (Note 5)
 
$
272

 
$

 
$
272

 
$

Accrued contingent consideration
 
220

 

 

 
220


 
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain nonfinancial 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. As of July 4, 2014, the fair value of the Company’s variable rate Long-Term Debt approximates its carrying value and is categorized in Level 2 of the fair value hierarchy. A summary of the valuation methodologies for the Company’s assets and liabilities measured on a nonrecurring basis is as follows:
Long-lived assets – The Company reviews the carrying amount of its long-lived assets to be held and used, other than goodwill and indefinite-lived intangible assets, for potential impairment whenever certain indicators are present such as: a significant decrease in the market price of the asset or asset group; a significant change in the extent or manner in which the long-lived asset or asset group is being used or in its physical condition; a significant change in legal factors or in the business climate that could affect the value of the long-lived asset or asset group, including an action or assessment by a regulator; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset or asset group; or a current expectation that it is more likely than not the long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
If an indicator is present, potential recoverability is measured by comparing the carrying amount of the long-lived asset or asset group to its related total future undiscounted cash flows. If the carrying value is not recoverable, the asset or asset group is considered to be impaired. Impairment is measured by comparing the asset or asset group’s carrying amount to its fair value, which is determined by using independent appraisals or discounted cash flow models. The discounted cash flow model requires inputs such as a risk-adjusted discount rate, terminal values, cash flow projections, and remaining useful lives of the asset or asset group. If the carrying value of the long-lived asset or asset group exceeds the fair value, the carrying value is written down to the fair value in the period identified. During the second quarter of 2014, the Company transferred $2.1 million of assets relating to the Company's Orvin, Switzerland property to held for sale. The Company did not record any impairment charges related to any of its long-lived assets during the first six months of 2014 and 2013.
Goodwill and indefinite-lived intangible assets – The Company assesses the impairment of goodwill and other indefinite-lived intangible assets on the last day of each fiscal year, or more frequently if certain indicators are present as described above under long-lived assets. The Company assesses goodwill for impairment by comparing the fair value of its reporting units to their carrying amounts. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill within the reporting unit is less than its carrying value. Fair values for reporting units are determined based on discounted cash flow models and market multiples. The discounted cash flow model requires inputs such as a risk-adjusted discount rate, terminal values, probability of success factor, and cash flow projections. The fair value from the discounted cash flow model is then combined, based on certain weightings, with market multiples in order to determine the fair value of the reporting unit. These market multiples include revenue multiples and multiples of earnings before interest, taxes, depreciation and amortization.
 
Indefinite-lived intangible assets are assessed for impairment by comparing the fair value of the intangible asset to its carrying value. If the carrying value of the indefinite-lived intangible asset exceeds the fair value, the carrying value is written down to the fair value in the period identified. The fair value of indefinite-lived intangible assets is determined by using a discounted cash flow model. The discounted cash flow model requires inputs such as a risk-adjusted discount rate, royalty rates, and cash flow projections.
The Company did not record any impairment charges related to its indefinite-lived intangible assets, including goodwill, during the first six months of 2014 and 2013, respectively. See Note 4 “Intangible Assets” for additional information on the Company’s intangible assets.
Cost and equity method investments – The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments and are classified as Other Assets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments. Gains and losses realized on cost and equity method investments are recorded in Other (Income) Expense, Net, unless separately stated. The aggregate recorded amount of cost and equity method investments at July 4, 2014 and January 3, 2014 was $13.6 million and $12.3 million, respectively. The Company recorded income (loss) related to its cost and equity method investments of $0.8 million and ($0.6) million during the first six months of 2014 and 2013, respectively.
Business Segment, Geographic and Concentration Risk Information
BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION
BUSINESS SEGMENT, GEOGRAPHIC AND CONCENTRATION RISK INFORMATION
In connection with the realignment of the Company's operating structure in 2013 to optimize profitable growth, which included changing the Company's management and reporting structure, the Company reevaluated its operating and reporting segments. Beginning in the fourth quarter of 2013, the Company determined that it has two reportable segments: Greatbatch Medical and QiG Group (“QiG”). As required, the Company reclassified certain prior year amounts to conform them to the current year presentation, including goodwill, segment operating income (loss), and segment sales categorizations.
Greatbatch Medical designs and manufactures medical devices and components where Greatbatch either owns the intellectual property or has unique manufacturing and assembly expertise and includes the financial results of the former Implantable Medical and Electrochem segments, excluding QiG. Greatbatch Medical provides medical devices and components to the following markets:
Cardiac/Neuromodulation: Products include batteries, capacitors, filtered and unfiltered feed-throughs, engineered components, implantable stimulation leads, and enclosures used in implantable medical devices.
Orthopaedic: Products include hip and shoulder joint reconstruction implants, bone plates and spinal devices, and instruments and delivery systems used in hip and knee replacement, trauma fixation, and spinal surgeries.
Portable Medical: Products include batteries, chargers and power supplies for a wide range of medical devices including automated external defibrillators, portable oxygen concentrators, ventilators, and powered surgical tools.
Vascular: Products include introducers, medical coatings, steerable sheaths, and catheters that deliver therapies for various markets such as coronary and neurovascular disease, peripheral vascular disease, interventional radiology, vascular access, atrial fibrillation, and interventional cardiology, plus products for medical imaging and pharmaceutical delivery.
Energy, Military, and Environmental (“EME”): Products include primary and rechargeable batteries and battery packs for demanding applications such as down hole drilling tools.
Greatbatch Medical also offers value-added assembly and design engineering services for medical devices that utilize its component products.
QiG focuses on developing medical device systems for some of healthcare’s most pressing challenges and reflects Greatbatch’s strategic evolution of its product offerings in order to raise the growth and profitability profile of the Company. QiG utilizes a disciplined and diversified portfolio approach with three investment modes: new medical device systems commercialization, collaborative programs with original equipment manufacturers (“OEM”), and strategic equity positions in start-up companies. The development of new medical device systems are facilitated through the establishment of newly formed business entities, usually limited liability companies (“LLC”). These entities do not own, but have the exclusive right to use the technology of Greatbatch Medical in certain specifically designated fields of use and have an exclusive manufacturing agreement with Greatbatch Medical. QiG currently owns 89% - 100% of three LLCs. Minority interest in these LLCs was granted to key opinion leaders, clinicians and strategic partners. Under the agreements governing these LLCs, QiG is liable for 100% of the expenses incurred by the LLC. However, no allocations of capital are made to the minority holders of the LLC until QiG is reimbursed for all expenses paid. Once QiG has been fully reimbursed, future net income is allocated based upon the respective LLCs ownership percentages. One of the LLCs established by QiG is for the Company's spinal cord stimulator to treat chronic intractable pain of the trunk and/or limbs. This product was submitted for premarket approval (“PMA”) to the United States Food & Drug Administration (“FDA”) in December 2013 and in January 2014 documentation for European CE Mark was submitted to the notified body, TÜV SÜD America. CE Mark approval was obtained on June 17, 2014. Another medical device system being developed by QiG is an implantable loop recorder for cardiac arrhythmia diagnostics.
Current QiG revenue includes sales of neural interface technology, components and systems to the neuroscience and clinical markets which are manufactured by QiG. Currently, no revenue earned by QiG is manufactured by Greatbatch Medical. Future income of QiG is expected to come from various sources including investment gains from the sales of LLC ownership interests, technology licensing fees, royalty revenue, and/or the sales of medical device systems to OEM customers.
Historical results reflecting the new business segments for previously reported periods are shown below. An analysis and reconciliation of the Company’s business segment, product line and geographic information to the respective information in the Condensed Consolidated Financial Statements follows. Sales by geographic area are presented by allocating sales from external customers based on where the products are shipped to (in thousands): 
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Sales:
 
 
 
 
 
 
 
Greatbatch Medical
 
 
 
 
 
 
 
Cardiac/Neuromodulation
$
80,005

 
$
83,177

 
$
166,785

 
$
153,701

Orthopaedic
37,865

 
32,341

 
74,296

 
61,964

Portable Medical
16,737

 
22,167

 
35,940

 
41,056

Vascular
15,257

 
12,249

 
28,307

 
22,873

Energy, Military, Environmental
21,352

 
20,560

 
39,483

 
38,522

Total Greatbatch Medical
171,216

 
170,494

 
344,811

 
318,116

QiG
865

 
837

 
1,551

 
1,480

Total sales
$
172,081

 
$
171,331

 
$
346,362

 
$
319,596


 
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Segment income (loss) from operations:
 
 
 
 
 
 
 
Greatbatch Medical
$
32,439

 
$
29,845

 
$
67,567

 
$
56,360

QiG
(6,173
)
 
(7,377
)
 
(12,086
)
 
(14,733
)
Total segment income from operations
26,266

 
22,468

 
55,481

 
41,627

Unallocated operating expenses
(6,727
)
 
(5,333
)
 
(13,418
)
 
(10,153
)
Operating income as reported
19,539

 
17,135

 
42,063

 
31,474

Unallocated other expense
(1,407
)
 
(2,124
)
 
(1,870
)
 
(9,397
)
Income before provision for income taxes
$
18,132

 
$
15,011

 
$
40,193

 
$
22,077


 
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Sales by geographic area:
 
 
 
 
 
 
 
United States
$
77,761

 
$
89,234

 
$
158,873

 
$
160,568

Non-Domestic locations:
 
 
 
 
 
 
 
Puerto Rico
31,885

 
27,158

 
66,483

 
55,656

Belgium
17,650

 
17,277

 
33,629

 
34,948

Rest of world
44,785

 
37,662

 
87,377

 
68,424

Total sales
$
172,081

 
$
171,331

 
$
346,362

 
$
319,596


Three customers accounted for a significant portion of the Company’s sales as follows:
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Customer A
17
%
 
19
%
 
19
%
 
19
%
Customer B
17
%
 
16
%
 
16
%
 
17
%
Customer C
12
%
 
12
%
 
12
%
 
14
%
Total
46
%
 
47
%
 
47
%
 
50
%

Long-lived tangible assets by geographic area are as follows (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
United States
$
114,535

 
$
116,484

Rest of world
28,922

 
29,289

Total
$
143,457

 
$
145,773

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, Emerging Issues Task Force, American Institute of Certified Public Accountants or other authoritative accounting bodies to determine the potential impact they may have on the Company’s Condensed Consolidated Financial Statements. Based upon this review except as noted below, management does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Condensed Consolidated Financial Statements.
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers.” The core principle behind ASU 2014-09 is that an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the entity satisfies the performance obligations. This ASU supersedes existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2016 with early application not permitted. This ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where this ASU is applied to the most current period presented in the financial statements. The Company is currently assessing the financial impact of adopting the new standard and the methods of adoption; however, given the scope of the new standard, the company is currently unable to provide a reasonable estimate regarding the financial impact or which method of adoption will be elected.
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The revised guidance changes how entities identify and disclose information about disposal transactions under U.S. GAAP. This ASU is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014, with early adoption permitted. This ASU will be applicable for disposal transactions, if any, that the Company enters into after the adoption date.
In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This ASU requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. This ASU was adopted during the first quarter of 2014 and did not impact the Company's Condensed Consolidated Financial Statements as the Company does not have any net operating loss carryforward deferred tax assets that are eligible to be reduced by an unrecognized tax benefit as required by the ASU.
Accounting Policies (Policies)
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of Greatbatch, Inc. and its wholly-owned subsidiary, Greatbatch Ltd. (collectively “Greatbatch” or the “Company”), for the periods presented.
The January 3, 2014 condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2014.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.
The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Friday nearest December 31st. The second quarter and year-to-date periods of 2014 and 2013 each contained 13 weeks and 26 weeks, respectively, and ended on July 4, and June 28, respectively.
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, implementation of tax planning strategies, settlements with taxing authorities and foreign currency fluctuations.
In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments it expects to make as of the acquisition date. The Company re-measures this liability each reporting period and records changes in the fair value through Other Operating Expenses, Net. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing, amount, or the likelihood of achieving the applicable milestones.
The Company reviews the carrying amount of its long-lived assets to be held and used, other than goodwill and indefinite-lived intangible assets, for potential impairment whenever certain indicators are present such as: a significant decrease in the market price of the asset or asset group; a significant change in the extent or manner in which the long-lived asset or asset group is being used or in its physical condition; a significant change in legal factors or in the business climate that could affect the value of the long-lived asset or asset group, including an action or assessment by a regulator; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset or asset group; or a current expectation that it is more likely than not the long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
If an indicator is present, potential recoverability is measured by comparing the carrying amount of the long-lived asset or asset group to its related total future undiscounted cash flows. If the carrying value is not recoverable, the asset or asset group is considered to be impaired. Impairment is measured by comparing the asset or asset group’s carrying amount to its fair value, which is determined by using independent appraisals or discounted cash flow models. The discounted cash flow model requires inputs such as a risk-adjusted discount rate, terminal values, cash flow projections, and remaining useful lives of the asset or asset group. If the carrying value of the long-lived asset or asset group exceeds the fair value, the carrying value is written down to the fair value in the period identified.
The Company assesses the impairment of goodwill and other indefinite-lived intangible assets on the last day of each fiscal year, or more frequently if certain indicators are present as described above under long-lived assets. The Company assesses goodwill for impairment by comparing the fair value of its reporting units to their carrying amounts. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill within the reporting unit is less than its carrying value.
Indefinite-lived intangible assets are assessed for impairment by comparing the fair value of the intangible asset to its carrying value. If the carrying value of the indefinite-lived intangible asset exceeds the fair value, the carrying value is written down to the fair value in the period identified.
The Company holds investments in equity and other securities that are accounted for as either cost or equity method investments and are classified as Other Assets. The total carrying value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investments. Gains and losses realized on cost and equity method investments are recorded in Other (Income) Expense, Net, unless separately stated.
Supplemental Cash Flow Information (Tables)
Schedule of Cash Flow, Supplemental Disclosures
 
Six Months Ended
(in thousands)
July 4, 2014
 
June 28, 2013
Noncash investing and financing activities:
 
 
 
Common stock contributed to 401(k) Plan
$
4,341

 
$
2,477

Property, plant and equipment purchases included in accounts payable
1,486

 
825

Cash paid during the period for:
 
 
 
Interest
$
1,845

 
$
2,926

Income taxes
7,939

 
18,895

Inventories (Tables)
Schedule of Inventory, Current
Inventories are comprised of the following (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
Raw materials
$
70,082

 
$
67,939

Work-in-process
38,995

 
36,670

Finished goods
11,535

 
13,749

Total
$
120,612

 
$
118,358

Intangible Assets (Tables)
Amortizing intangible assets are comprised of the following (in thousands):
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Foreign
Currency
Translation
 
Net
Carrying
Amount
At July 4, 2014
 
 
 
 
 
 
 
Technology and patents
$
97,376

 
$
(72,555
)
 
$
2,062

 
$
26,883

Customer lists
68,257

 
(28,004
)
 
1,524

 
41,777

Other
4,434

 
(4,501
)
 
804

 
737

Total amortizing intangible assets
$
170,067

 
$
(105,060
)
 
$
4,390

 
$
69,397

At January 3, 2014
 
 
 
 
 
 
 
Technology and patents
$
97,376

 
$
(69,026
)
 
$
1,980

 
$
30,330

Customer lists
68,257

 
(24,671
)
 
1,367

 
44,953

Other
4,434

 
(4,399
)
 
804

 
839

Total amortizing intangible assets
$
170,067

 
$
(98,096
)
 
$
4,151

 
$
76,122

Aggregate intangible asset amortization expense is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Cost of sales
$
1,566

 
$
1,759

 
$
3,129

 
$
3,539

Selling, general and administrative expenses
1,717

 
1,445

 
3,434

 
2,897

Research, development and engineering costs, net
200

 
136

 
401

 
272

Total intangible asset amortization expense
$
3,483

 
$
3,340

 
$
6,964

 
$
6,708

Estimated future intangible asset amortization expense based on the current carrying value is as follows (in thousands):
 
Estimated
Amortization
Expense
Remainder of 2014
$
6,842

2015
12,752

2016
10,457

2017
9,334

2018
7,046

Thereafter
22,966

Total estimated amortization expense
$
69,397

Indefinite-lived intangible assets are comprised of the following (in thousands):
 
Trademarks
and
Tradenames
At January 3, 2014
$
20,288

At July 4, 2014
$
20,288

The change in goodwill is as follows (in thousands):
 
Greatbatch Medical
 
QiG
 
Total
At January 3, 2014
$
304,856

 
$
41,800

 
$
346,656

Foreign currency translation
470

 

 
470

At July 4, 2014
$
305,326

 
$
41,800

 
$
347,126

Debt (Tables)
Long-term debt is comprised of the following (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
Revolving line of credit
$

 
$

Variable rate term loan
192,500

 
197,500

Total long-term debt
$
192,500

 
$
197,500

Instrument
Type of
Hedge
 
Notional
Amount
 
Start
Date
 
End
Date
 
Pay
Fixed
Rate
 
Current
Receive
Floating
Rate
 
Fair
Value
July 4, 2014
 
Balance
Sheet Location
Interest rate swap
Cash flow
 
$
100,000

 
Feb-13
 
Feb-16
 
0.573
%
 
0.153
%
 
$
(272
)
 
Other Long-Term Liabilities
The contractual interest and discount amortization for CSN were as follows (in thousands):
 
Three Months ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Contractual interest
$

 
$

 
$

 
$
634

Discount amortization

 

 

 
5,368

The expected future minimum principal payments under the Term Loan as of July 4, 2014 are as follows (in thousands):
Remainder of 2014
$
5,000

2015
11,250

2016
16,250

2017
20,000

2018
20,000

Thereafter
120,000

Total
$
192,500

The change in deferred financing fees is as follows (in thousands):
At January 3, 2014
$
3,860

Amortization during the period
(387
)
At July 4, 2014
$
3,473

Defined Benefit Plans (Tables)
The change in net defined benefit plan liability is as follows (in thousands):
At January 3, 2014
$
1,691

Net defined benefit cost
154

Benefit payments
(115
)
Foreign currency translation
4

At July 4, 2014
$
1,734

Net defined benefit cost (income) is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Service cost
$
52

 
$
69

 
$
104

 
$
151

Interest cost
20

 
40

 
39

 
103

Curtailment gain (Other Operating Expenses, Net)

 

 

 
(1,150
)
Amortization of net loss
5

 

 
11

 

Net defined benefit (income) cost
$
77

 
$
109

 
$
154

 
$
(896
)
Stock-Based Compensation (Tables)
The components and classification of stock-based compensation expense were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Stock options
$
612

 
$
705

 
$
1,216

 
$
1,410

Restricted stock and units
1,601

 
1,482

 
3,158

 
2,945

401(k) Plan stock contribution
1,339

 
2,729

 
2,355

 
2,992

Total stock-based compensation expense
$
3,552

 
$
4,916

 
$
6,729

 
$
7,347

 
 
 
 
 
 
 
 
Cost of sales
$
1,147

 
$
1,707

 
$
2,058

 
$
2,129

Selling, general and administrative expenses
1,998

 
2,587

 
3,921

 
4,454

Research, development and engineering costs, net
407

 
622

 
750

 
764

Total stock-based compensation expense
$
3,552

 
$
4,916

 
$
6,729

 
$
7,347

The weighted average fair value and assumptions used to value options granted are as follows:
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
Weighted average fair value
$
16.43

 
$
8.38

Risk-free interest rate
1.73
%
 
0.73
%
Expected volatility
39
%
 
39
%
Expected life (in years)
5

 
5

Expected dividend yield
%
 
%
The following table summarizes time-vested stock option activity:
 
Number of
Time-Vested
Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 3, 2014
1,616,409

 
$
22.92

 
 
 
 
Granted
183,571

 
43.84

 
 
 
 
Exercised
(179,032
)
 
22.83

 
 
 
 
Forfeited or expired
(29,792
)
 
27.32

 
 
 
 
Outstanding at July 4, 2014
1,591,156

 
25.26

 
6.5
 
$
38.7

Exercisable at July 4, 2014
1,168,372

 
23.05

 
5.7
 
$
31.0

The following table summarizes performance-vested stock option activity:
 
Number of
Performance-
Vested Stock
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(In Years)
 
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at January 3, 2014
177,261

 
$
23.27

 
 
 
 
Exercised
(54,271
)
 
23.32

 
 
 
 
Outstanding at July 4, 2014
122,990

 
23.26

 
3.4
 
$
3.2

Exercisable at July 4, 2014
122,990

 
23.26

 
3.4
 
$
3.2

The following table summarizes time-vested restricted stock and restricted stock unit activity:
 
Time-Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 3, 2014
67,575

 
$
26.37

Granted
39,191

 
44.08

Vested
(10,270
)
 
43.80

Forfeited
(5,812
)
 
32.89

Nonvested at July 4, 2014
90,684

 
31.63

The following table summarizes performance-vested restricted stock and restricted stock unit activity:
 
Performance-
Vested
Activity
 
Weighted
Average
Fair Value
Nonvested at January 3, 2014
779,678

 
$
16.41

Granted
186,825

 
31.33

Vested
(221,470
)
 
18.51

Forfeited
(24,022
)
 
17.86

Nonvested at July 4, 2014
721,011

 
19.58

Other Operating (Income) Expenses, Net (Tables)
Other Operating Expenses, Net is comprised of the following (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
2014 investments in capacity and capabilities
$
2,166

 
$

 
$
2,218

 
$

2013 operating unit realignment
32

 
852

 
1,035

 
852

Orthopaedic facility optimization costs
1,187

 
2,667

 
36

 
5,303

Medical device facility optimization

 
125

 
11

 
230

ERP system upgrade (income) costs
(10
)
 
64

 
(82
)
 
385

Acquisition and integration (income) costs
47

 
71

 
(381
)
 
182

Asset dispositions, severance and other
839

 
43

 
1,210

 
108

 
$
4,261

 
$
3,822

 
$
4,047

 
$
7,060

 
Severance and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 3, 2014
$

 
$

 
$

 
$

Restructuring charges
531

 
33

 
1,654

 
2,218

Write-offs

 
(33
)
 

 
(33
)
Cash payments

 

 
(1,234
)
 
(1,234
)
At July 4, 2014
$
531


$

 
$
420

 
$
951

 
Severance and
Retention
 
Other
 
Total
At January 3, 2014
$
465

 
$
746

 
$
1,211

Restructuring charges
852

 
183

 
1,035

Cash payments
(1,205
)
 
(774
)
 
(1,979
)
At July 4, 2014
$
112

 
$
155

 
$
267

 
Production
Inefficiencies,
Moving and
Revalidation
 
Personnel
 
Other
 
Total
At January 3, 2014
$

 
$

 
$

 
$

Restructuring charges

 
1

 
10

 
11

Cash payments

 
(1
)
 
(10
)
 
(11
)
At July 4, 2014
$

 
$

 
$

 
$

 
Severance
and
Retention
 
Accelerated
Depreciation/Asset
Write-offs
 
Other
 
Total
At January 3, 2014
$

 
$

 
$
857

 
$
857

Restructuring charges (income)

 
(2,655
)
 
2,691

 
36

Cash (payments) receipts

 
2,655

 
(2,952
)
 
(297
)
At July 4, 2014
$

 
$

 
$
596

 
$
596

 
Training &
Consulting
Costs
 
Accelerated
Depreciation/Asset
Write-offs
 
Total
At January 3, 2014
$

 
$

 
$

Restructuring income
(82
)
 

 
(82
)
Cash receipts
82

 

 
82

At July 4, 2014
$

 
$

 
$

Commitments and Contingencies (Tables)
The change in aggregate product warranty liability is as follows (in thousands):
At January 3, 2014
$
1,819

Reduction to warranty reserve
(274
)
Warranty claims paid
(355
)
At July 4, 2014
$
1,190

Estimated future operating lease expense is as follows (in thousands):
Remainder of 2014
$
2,557

2015
4,642

2016
4,001

2017
1,471

2018
1,002

Thereafter
936

Total estimated operating lease expense
$
14,609

The impact to the Company’s results of operations from these forward contracts was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Increase(reduction) in cost of sales
$
8

 
$
(390
)
 
$
(156
)
 
$
(562
)
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
 
$
3,854

 
Jan-14
 
Dec-14
 
0.0767

 
$
(3
)
 
Other Current Assets
FX Contract
 
Cash flow
 
$
3,160

 
Jan-14
 
Dec-14
 
0.0752

 
$
58

 
Other Current Assets
Earnings Per Share (EPS) (Tables)
The following table illustrates the calculation of Basic and Diluted EPS (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Numerator for basic and diluted EPS:
 
 
 
 
 
 
 
Net income
$
12,348

 
$
9,752

 
$
27,270

 
$
15,415

Denominator for basic EPS:
 
 
 
 
 
 
 
Weighted average shares outstanding
24,838

 
23,914

 
24,726

 
23,832

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options, restricted stock and restricted stock units
1,063

 
1,008

 
1,097

 
986

Denominator for diluted EPS
25,901

 
24,922

 
25,823

 
24,818

Basic EPS
$
0.50

 
$
0.41

 
$
1.10

 
$
0.65

Diluted EPS
$
0.48

 
$
0.39

 
$
1.06

 
$
0.62

The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations or the performance criteria have not been met:
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Time-vested stock options, restricted stock and restricted stock units
179,000

 
72,000

 
179,000

 
395,000

Performance-vested restricted stock units

 

 

 

Comprehensive Income (Tables)
Accumulated Other Comprehensive Income is comprised of the following (in thousands):
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At April 4, 2014
$
(672
)
 
$
(350
)
 
$
16,134

 
$
15,112

 
$
505

 
$
15,617

Unrealized gain on cash flow hedges

 
18

 

 
18

 
(6
)
 
12

Realized loss on foreign currency hedges

 
8

 

 
8

 
(3
)
 
5

Realized loss on interest rate swap hedges

 
106

 

 
106

 
(37
)
 
69

Foreign currency translation loss

 

 
(393
)
 
(393
)
 

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

 
$
14,851

 
$
459

 
$
15,310


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

 
$
13,812

 
$
546

 
$
14,358

Unrealized gain on cash flow hedges

 
168

 

 
168

 
(59
)
 
109

Realized gain on foreign currency hedges

 
(156
)
 

 
(156
)
 
55

 
(101
)
Realized loss on interest rate swap hedges

 
238

 

 
238

 
(83
)
 
155

Foreign currency translation gain

 

 
789

 
789

 

 
789

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

 
$
14,851

 
$
459

 
$
15,310

 
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At March 29, 2013
$
(365
)
 
$
533

 
$
10,368

 
$
10,536

 
$
214

 
$
10,750

Unrealized loss on cash flow hedges

 
(107
)
 

 
(107
)
 
37

 
(70
)
Realized gain on foreign currency hedges

 
(390
)
 

 
(390
)
 
137

 
(253
)
Realized loss on interest rate swap hedges

 
142

 

 
142

 
(50
)
 
92

Foreign currency translation gain

 

 
631

 
631

 

 
631

At June 28, 2013
$
(365
)
 
$
178

 
$
10,999

 
$
10,812

 
$
338

 
$
11,150

    
 
Defined
Benefit
Plan
Liability
 
Cash
Flow
Hedges
 
Foreign
Currency
Translation
Adjustment
 
Total
Pre-Tax
Amount
 
Tax
 
Net-of-Tax
Amount
At December 28, 2012
$
(962
)
 
$
120

 
$
13,431

 
$
12,589

 
$
358

 
$
12,947

Unrealized gain on cash flow hedges

 
421

 

 
421

 
(147
)
 
274

Realized gain on foreign currency hedges

 
(562
)
 

 
(562
)
 
197

 
(365
)
Realized loss on interest rate swap hedges

 
199

 

 
199

 
(70
)
 
129

Net defined benefit plan gain (Note 6)
597

 

 

 
597

 

 
597

Foreign currency translation loss

 

 
(2,432
)
 
(2,432
)
 

 
(2,432
)
At June 28, 2013
$
(365
)
 
$
178

 
$
10,999

 
$
10,812

 
$
338

 
$
11,150

The net defined benefit plan reclassifications from Accumulated Other Comprehensive Income are as follows (in thousands):
 
Six Months Ended
 
June 28, 2013
Net gain occurring during the period
$
(171
)
Amortization of losses
(581
)
Prior service cost
155

Pre-tax adjustment
(597
)
Taxes

Net gain
$
(597
)
Fair Value (Tables)
Changes in accrued contingent consideration were as follows (in thousands):
At January 3, 2014
$
840

Fair value adjustments
(620
)
At July 4, 2014
$
220

The recurring Level 3 fair value measurements of the Company’s contingent consideration liability include the following significant unobservable inputs (dollars in thousands):
Contingent Consideration Liability
 
Fair Value at July 4, 2014
 
Valuation Technique
 
Unobservable Inputs
Development milestone
 
$
220

 
Discounted cash flow
 
Discount rate
 
20
%
 
 
 
 
 
 
Projected year of payment
 
2015

 
 
 
 
 
 
Probability weighted payment amount
 
$
250

The following table provides information regarding assets and liabilities recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheet (in thousands):
 
 
Fair Value Measurements Using
 
 
At 
 July 4,
 
Quoted
Prices in
Active Markets
for Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
 
 
 
 
 
 
 
Foreign currency contracts (Note 10)
 
$
55

 
$

 
$
55

 
$

Liabilities
 
 
 
 
 
 
 
 
Interest rate swap (Note 5)
 
$
272

 
$

 
$
272

 
$

Accrued contingent consideration
 
220

 

 

 
220

Business Segment, Geographic and Concentration Risk Information (Tables)
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Sales:
 
 
 
 
 
 
 
Greatbatch Medical
 
 
 
 
 
 
 
Cardiac/Neuromodulation
$
80,005

 
$
83,177

 
$
166,785

 
$
153,701

Orthopaedic
37,865

 
32,341

 
74,296

 
61,964

Portable Medical
16,737

 
22,167

 
35,940

 
41,056

Vascular
15,257

 
12,249

 
28,307

 
22,873

Energy, Military, Environmental
21,352

 
20,560

 
39,483

 
38,522

Total Greatbatch Medical
171,216

 
170,494

 
344,811

 
318,116

QiG
865

 
837

 
1,551

 
1,480

Total sales
$
172,081

 
$
171,331

 
$
346,362

 
$
319,596

 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Segment income (loss) from operations:
 
 
 
 
 
 
 
Greatbatch Medical
$
32,439

 
$
29,845

 
$
67,567

 
$
56,360

QiG
(6,173
)
 
(7,377
)
 
(12,086
)
 
(14,733
)
Total segment income from operations
26,266

 
22,468

 
55,481

 
41,627

Unallocated operating expenses
(6,727
)
 
(5,333
)
 
(13,418
)
 
(10,153
)
Operating income as reported
19,539

 
17,135

 
42,063

 
31,474

Unallocated other expense
(1,407
)
 
(2,124
)
 
(1,870
)
 
(9,397
)
Income before provision for income taxes
$
18,132

 
$
15,011

 
$
40,193

 
$
22,077

Three customers accounted for a significant portion of the Company’s sales as follows:
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Customer A
17
%
 
19
%
 
19
%
 
19
%
Customer B
17
%
 
16
%
 
16
%
 
17
%
Customer C
12
%
 
12
%
 
12
%
 
14
%
Total
46
%
 
47
%
 
47
%
 
50
%
 
Three Months Ended
 
Six Months Ended
 
July 4, 2014
 
June 28, 2013
 
July 4, 2014
 
June 28, 2013
Sales by geographic area:
 
 
 
 
 
 
 
United States
$
77,761

 
$
89,234

 
$
158,873

 
$
160,568

Non-Domestic locations:
 
 
 
 
 
 
 
Puerto Rico
31,885

 
27,158

 
66,483

 
55,656

Belgium
17,650

 
17,277

 
33,629

 
34,948

Rest of world
44,785

 
37,662

 
87,377

 
68,424

Total sales
$
172,081

 
$
171,331

 
$
346,362

 
$
319,596

Long-lived tangible assets by geographic area are as follows (in thousands):
 
As of
 
July 4, 2014
 
January 3, 2014
United States
$
114,535

 
$
116,484

Rest of world
28,922

 
29,289

Total
$
143,457

 
$
145,773

Basis of Presentation (Details)
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Accounting Policies [Abstract]
 
 
 
 
Weeks In Reporting Period
13 
13 
26 
26 
Supplemental Cash Flow Information (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
 
 
Stock Issued During Period, Value, Employee Benefit Plan
$ 4,341 
$ 2,477 
Property, plant and equipment purchases included in accounts payable
1,486 
825 
Interest Paid
1,845 
2,926 
Income Taxes Paid
$ 7,939 
$ 18,895 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Inventory Disclosure [Abstract]
 
 
Inventory Raw Materials
$ 70,082 
$ 67,939 
Inventory, Work in Process
38,995 
36,670 
Inventory, Finished Goods
11,535 
13,749 
Inventories
$ 120,612 
$ 118,358 
Intangible Assets (Amortizing Intangible Assets) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
$ 170,067 
$ 170,067 
Finite-Lived Intangible Assets, Accumulated Amortization
(105,060)
(98,096)
Foreign Currency Translation
4,390 
4,151 
Amortizing intangible assets, net
69,397 
76,122 
Purchased Technology And Patents [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
97,376 
97,376 
Finite-Lived Intangible Assets, Accumulated Amortization
(72,555)
(69,026)
Foreign Currency Translation
2,062 
1,980 
Amortizing intangible assets, net
26,883 
30,330 
Customer Lists [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
68,257 
68,257 
Finite-Lived Intangible Assets, Accumulated Amortization
(28,004)
(24,671)
Foreign Currency Translation
1,524 
1,367 
Amortizing intangible assets, net
41,777 
44,953 
Other Intangible Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Finite-Lived Intangible Assets, Gross
4,434 
4,434 
Finite-Lived Intangible Assets, Accumulated Amortization
(4,501)
(4,399)
Foreign Currency Translation
804 
804 
Amortizing intangible assets, net
$ 737 
$ 839 
Intangible Assets (Amortization Expense by Categories) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Jan. 3, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
$ 3,483 
$ 3,340 
$ 6,964 
$ 6,708 
 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Remainder of 2014
6,842 
 
6,842 
 
 
2015
12,752 
 
12,752 
 
 
2016
10,457 
 
10,457 
 
 
2017
9,334 
 
9,334 
 
 
2018
7,046 
 
7,046 
 
 
Thereafter
22,966 
 
22,966 
 
 
Amortizing intangible assets, net
69,397 
 
69,397 
 
76,122 
Cost of Sales [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
1,566 
1,759 
3,129 
3,539 
 
Selling General And Administrative Expense [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
1,717 
1,445 
3,434 
2,897 
 
Research and Development Expense [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Finite Lived Intangible Assets, Amortization Expense
$ 200 
$ 136 
$ 401 
$ 272 
 
Intangible Assets (Indefinite Lived Intangible Assets) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Jul. 4, 2014
Greatbatch Medical [Member]
Jul. 4, 2014
QiG [Member]
Jul. 4, 2014
Trademarks And Tradenames [Member]
Jan. 3, 2014
Trademarks And Tradenames [Member]
Indefinite-lived Intangible Assets [Roll Forward]
 
 
 
 
 
Indefinite-lived intangible assets, beginning
$ 20,288 
 
 
$ 20,288 
$ 20,288 
Indefinite-lived intangible assets, ending
20,288 
 
 
20,288 
20,288 
Goodwill [Roll Forward]
 
 
 
 
 
Goodwill
346,656 
304,856 
41,800 
 
 
Foreign currency translation
470 
470 
 
 
Goodwill
$ 347,126 
$ 305,326 
$ 41,800 
 
 
Debt (Schedule of Long-Term Debt) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Debt Disclosure [Abstract]
 
 
Line of Credit Facility, Amount Outstanding
$ 0 
$ 0 
Term Loan
192,500 
197,500 
Long-term debt
$ 192,500 
$ 197,500 
Debt (Credit Facility Details) (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Line of Credit Facility [Abstract]
 
Credit Facility, Amendment Date
Sep. 20, 2013 
Line of Credit Facility, Maximum Borrowing Capacity
$ 300 
Term Loan, Maximum Borrowing Capacity
200 
Letter of Credit Subfacility Maximum Borrowing Capacity
15 
Swingline Subfacility Maximum Borrowing Capacity
15 
Credit Facility Borrowing Capacity Increase
200 
Line of Credit Facility, Expiration Date
Sep. 20, 2018 
Line Of Credit Expiration Date Extension
Sep. 20, 2019 
Debt Instrument, Maturity Date
Sep. 20, 2019 
Debt Instrument, Collateral
The Credit Facility is secured by the Company’s non-realty assets including cash, accounts receivable and inventories. 
Interest Margin Above Prime Minimum Credit Facility
0.00% 
Interest Margin Above Prime Maximum Credit Facility
0.75% 
Interest Margin Above LIBOR Minimum Credit Facility
1.375% 
Interest Margin Above LIBOR Maximum Credit Facility
2.75% 
Interest Margin Above Prime Minimum Swingline
0.00% 
Interest Margin Above Prime Maximum Swingline
0.75% 
Line of Credit Facility Commitment Fee Percentage Minimum
0.175% 
Line of Credit Facility Commitment Fee Percentage Maximum
0.25% 
Credit Facility Aggregate Restricted Activities Limit
300 
Credit Facility Maximum Permitted Acquisitions
250 
Credit Facility Maximum Other Investment Purchases
100 
Credit Facility Maximum Stock Repurchases and Declare Dividends
150 
Credit Facility Maximum Foreign Subsidiary Investment
20 
Line of Credit, Adjustments to Limitations on Incurrence of Indebtedness, Maximum Leverage Ratio
2.75 
Credit Facility Restriction Available
100.00% 
Credit Facility Aggregate Restricted Activities Limit Remaining
297 
Credit Facility Maximum Other Investment Purchases Remaining
97 
Line of Credit Covenant, Adjusted EBITDA to Interest Expense, Ratio Required
3.0 
Line of Credit Covenant, Leverage Ratio, Maximum
4.5 
Line of Credit Covenant, Leverage Ratio, Maximum, As of Covenant Restrictive Effective Date
4.25 
Total Leverage Covenant Restriction Effective Date
Jan. 02, 2016 
Debt Instrument, Covenant Compliance
As of July 4, 2014, the Company was in compliance with all covenants under the Credit Facility. 
Debt Weighted Average Interest Rate
1.57% 
Debt Instrument, Unused Borrowing Capacity Amount
$ 300 
Debt (Convertible Notes and Interest Rate Swap Details) (Details) (USD $)
0 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
Feb. 20, 2013
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Mar. 31, 2007
Jul. 4, 2014
Interest Rate Swap [Member]
Jun. 28, 2013
Interest Rate Swap [Member]
Dec. 28, 2012
Interest Rate Swap [Member]
Jul. 4, 2014
Interest Rate Swap [Member]
Other Liabilities [Member]
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
Annual Notional Amortizing Amount
 
 
 
 
 
 
$ 50,000,000 
 
 
 
Type of Hedge
 
 
 
 
 
 
Cash flow 
 
 
 
Notional Amount
 
 
 
 
 
 
100,000,000 
 
150,000,000 
 
Start Date
 
 
 
 
 
 
Feb. 20, 2013 
 
 
 
End Date
 
 
 
 
 
 
Feb. 22, 2016 
 
 
 
Pay Fixed Interest Rate
 
 
 
 
 
 
0.573% 
 
 
 
Current Receive Variable Interest Rate
 
 
 
 
 
 
0.153% 
 
 
 
Fair Value
 
 
 
 
 
 
 
 
 
(272,000)
Description Of Interest Rate Risk Exposure
 
 
 
 
 
 
This swap was entered into in order to hedge against potential changes in cash flows on the outstanding Credit Facility borrowings, which are also indexed to the one-month LIBOR rate. 
 
 
 
Description Of Interest Rate Cash Flow Hedge Accounting Method
 
 
 
 
 
 
This swap is being accounted for as a cash flow hedge. 
 
 
 
Gain (Loss) Recognized In Income Ineffective Portion
 
 
 
 
 
 
 
 
 
Interest expense
 
1,073,000 
1,445,000 
2,157,000 
8,433,000 
 
200,000 
100,000 
 
 
Debt Instruments [Abstract]
 
 
 
 
 
 
 
 
 
 
Convertible Subordinated Debt
 
 
 
 
 
$ 197,800,000 
 
 
 
 
Debt Discount Percentage at Issuance
 
 
 
 
 
5.00% 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
 
2.25% 
 
 
 
 
Debt Instrument, Interest Rate During Period
 
 
 
 
8.50% 
 
 
 
 
 
Debt Redemption Date
Feb. 20, 2013 
 
 
 
 
 
 
 
 
 
Debt (Contractual Interest) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Interest Costs Incurred [Abstract]
 
 
 
 
Contractual interest
$ 0 
$ 0 
$ 0 
$ 634 
Discount amortization
$ 0 
$ 0 
$ 0 
$ 5,368 
Debt (Long-term Debt Maturity Schedule) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Long-term Debt, Fiscal Year Maturity [Abstract]
 
 
Remainder of 2014
$ 5,000 
 
2015
11,250 
 
2016
16,250 
 
2017
20,000 
 
2018
20,000 
 
Thereafter
120,000 
 
Long-term debt
$ 192,500 
$ 197,500 
Debt (Deferred Financing Fees) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Deferred Finance Costs [Roll Forward]
 
Deferred Finance Costs, Net, Beginning Balance
$ 3,860 
Amortization during the period
(387)
Deferred Finance Costs, Net, Ending Balance
$ 3,473 
Defined Benefit Plans (Benefit Obligation Roll Forward) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
 
Defined Benefit Plan, Benefit Obligation Beginning
 
 
$ 1,691 
 
Defined Benefit Plan, Net Periodic Benefit Cost
77 
109 
154 
(896)
Defined Benefit Plan, Benefits Paid
 
 
(115)
 
Foreign Currency Translation
 
 
 
Defined Benefit Plan, Benefit Obligation Ending
$ 1,734 
 
$ 1,734 
 
Defined Benefit Plans (Defined Benefit Plan Costs) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
 
 
 
 
Service cost
$ 52 
$ 69 
$ 104 
$ 151 
Interest cost
20 
40 
39 
103 
Curtailment gain (Other Operating Expenses, Net)
(1,150)
Amortization of net loss
11 
Net defined benefit (income) cost
$ 77 
$ 109 
$ 154 
$ (896)
Stock-Based Compensation (Expense Details) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
$ 3,552 
$ 4,916 
$ 6,729 
$ 7,347 
Stock Option [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
612 
705 
1,216 
1,410 
Restricted Stock And Unit Awards [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,601 
1,482 
3,158 
2,945 
Retirement Plan [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,339 
2,729 
2,355 
2,992 
Cost of Sales [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,147 
1,707 
2,058 
2,129 
Selling General And Administrative Expense [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
1,998 
2,587 
3,921 
4,454 
Research and Development Expense [Member]
 
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
Allocated Share-based Compensation Expense
$ 407 
$ 622 
$ 750 
$ 764 
Stock-Based Compensation (Fair Value Assumptions) (Details)
6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
Weighted average fair value
$ 16.43 
$ 8.38 
Risk-free interest rate
1.73% 
0.73% 
Expected volatility
39.00% 
39.00% 
Expected life (in years)
5 years 
5 years 
Expected dividend yield
0.00% 
0.00% 
Stock-Based Compensation (Stock Option Activity) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Stock Options Time Based [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
Stock Options Outstanding, Beginning
1,616,409 
Option Grants in Period, Gross
183,571 
Option Exercises in Period
(179,032)
Option Forfeitures and Expirations in Period
(29,792)
Stock Options Outstanding, Ending
1,591,156 
Options Exercisable, Number
1,168,372 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Options Outstanding, Weighted Average Exercise Price, Beginning
$ 22.92 
Option Grants in Period, Weighted Average Exercise Price
$ 43.84 
Option Exercises in Period, Weighted Average Exercise Price
$ 22.83 
Option Forfeitures and Expirations in Period, Weighted Average Exercise Price
$ 27.32 
Options Outstanding, Weighted Average Exercise Price, Ending
$ 25.26 
Options Exercisable, Weighted Average Exercise Price
$ 23.05 
Options Outstanding, Weighted Average Remaining Contractual Term
6 years 6 months 
Options Exercisable, Weighted Average Remaining Contractual Term
5 years 8 months 12 days 
Options Outstanding, Intrinsic Value
$ 38.7 
Options Exercisable, Intrinsic Value
31.0 
Stock Options Performance Based [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
Stock Options Outstanding, Beginning
177,261 
Option Exercises in Period
(54,271)
Stock Options Outstanding, Ending
122,990 
Options Exercisable, Number
122,990 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Options Outstanding, Weighted Average Exercise Price, Beginning
$ 23.27 
Option Exercises in Period, Weighted Average Exercise Price
$ 23.32 
Options Outstanding, Weighted Average Exercise Price, Ending
$ 23.26 
Options Exercisable, Weighted Average Exercise Price
$ 23.26 
Options Outstanding, Weighted Average Remaining Contractual Term
3 years 4 months 24 days 
Options Exercisable, Weighted Average Remaining Contractual Term
3 years 4 months 24 days 
Options Outstanding, Intrinsic Value
3.2 
Options Exercisable, Intrinsic Value
$ 3.2 
Stock-Based Compensation (Stock Award Activity) (Details) (USD $)
6 Months Ended
Jul. 4, 2014
Restricted Stock And Restricted Stock Units Time Based [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
Nonvested Restricted Stock Units and Awards, Beginning
67,575 
Restricted Stock Units and Awards Granted
39,191 
Restricted Stock Units and Awards Vested
(10,270)
Restricted Stock Units and Awards Forfeited
(5,812)
Nonvested Restricted Stock Units and Awards, Ending
90,684 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
 
Restricted Stock Units and Awards, Weighted Average Grant Date Fair Value, Beginning
$ 26.37 
Restricted Stock Units and Awards Granted, Weighted Average Fair Value
$ 44.08 
Restricted Stock Units and Awards Vested, Weighted Average Fair Value
$ 43.80 
Restricted Stock Units and Awards Forfeited, Weighted Average Fair Value
$ 32.89 
Restricted Stock Units and Awards, Weighted Average Grant Date Fair Value, Ending
$ 31.63 
Restricted Stock And Restricted Stock Units Performance Based [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
Nonvested Restricted Stock Units and Awards, Beginning
779,678 
Restricted Stock Units and Awards Granted
186,825 
Restricted Stock Units and Awards Vested
(221,470)
Restricted Stock Units and Awards Forfeited
(24,022)
Nonvested Restricted Stock Units and Awards, Ending
721,011 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
 
Restricted Stock Units and Awards, Weighted Average Grant Date Fair Value, Beginning
$ 16.41 
Restricted Stock Units and Awards Granted, Weighted Average Fair Value
$ 31.33 
Restricted Stock Units and Awards Vested, Weighted Average Fair Value
$ 18.51 
Restricted Stock Units and Awards Forfeited, Weighted Average Fair Value
$ 17.86 
Restricted Stock Units and Awards, Weighted Average Grant Date Fair Value, Ending
$ 19.58 
Other Operating (Income) Expenses, Net (Expense Categories) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
$ 4,261 
$ 3,822 
$ 4,047 
$ 7,060 
Investments in Capacity and Capabilities [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
2,166 
2,218 
Operating Unit Realignment [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
32 
852 
1,035 
852 
Orthopaedic Facility Optimization [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
1,187 
2,667 
36 
5,303 
Medical Device Facility Optimization [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
125 
11 
230 
ERP System Upgrade [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
(10)
64 
(82)
385 
Acquisition And Integration Costs [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
47 
71 
(381)
182 
Asset Dispositions Severance And Other [Member]
 
 
 
 
Other Operating Income Expense Detail [Line Items]
 
 
 
 
Other Operating (Income) Expenses, Net
$ 839 
$ 43 
$ 1,210 
$ 108 
Other Operating (Income) Expenses, Net (Restructuring Costs and Reserve Details) (Details) (USD $)
6 Months Ended 12 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Minimum [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Minimum [Member]
Severance And Retention [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Minimum [Member]
Accelerated Depreciation And Asset Write Offs [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Minimum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Maximum [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Maximum [Member]
Severance And Retention [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Maximum [Member]
Accelerated Depreciation And Asset Write Offs [Member]
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
Maximum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Minimum [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Minimum [Member]
Severance And Retention [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Minimum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Maximum [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Maximum [Member]
Severance And Retention [Member]
Jul. 4, 2014
Operating Unit Realignment [Member]
Maximum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Jan. 3, 2014
Orthopaedic Facility Optimization [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Severance And Retention [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Accelerated Depreciation And Asset Write Offs [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Minimum [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Minimum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Maximum [Member]
Jul. 4, 2014
Orthopaedic Facility Optimization [Member]
Maximum [Member]
Other Restructuring [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Other Restructuring [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Minimum [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Minimum [Member]
Production Inefficiencies, Moving And Revalidation [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Minimum [Member]
Personnel [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Maximum [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Maximum [Member]
Production Inefficiencies, Moving And Revalidation [Member]
Jul. 4, 2014
Medical Device Facility Optimization [Member]
Maximum [Member]
Personnel [Member]
Jul. 4, 2014
ERP System Upgrade [Member]
Jul. 4, 2014
ERP System Upgrade [Member]
Training And Consulting Costs [Member]
Jul. 4, 2014
ERP System Upgrade [Member]
Accelerated Depreciation And Asset Write Offs [Member]
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring and Related Activities, Description
 
 
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. This included the following: Functions currently 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 by the first half of 2016. Functions currently 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 by the end of 2015. 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. Establishing a R&D hub in the Minneapolis/St. Paul, MN area for the Company's Global R&D QiG - Medical Device Systems team, which will serve as the technical center of expertise for active implantable medical device development, implantable leads design, system level design verification testing, and continuation engineering. As part of this initiative, the design engineering responsibilities currently performed at our Cleveland, OH facility will be transferred to the new R&D hub by the end of 2014. Establishing a commercial operations hub at its global headquarters in Frisco, Texas. This initiative will build upon the investment the Company has made to its global sales and marketing function and is expected to be completed during the first half of 2015.  
 
 
 
 
 
 
 
 
In June 2013, the Company initiated a plan to realign its operating structure in order to optimize its continued focus on profitable growth. As part of this initiative, the sales and marketing and operations groups of its former Implantable Medical and Electrochem Solutions ("Electrochem") reportable segments were combined into one sales and marketing and one operations group serving the entire Company. This initiative is expected to be completed in 2014. 
 
 
 
 
 
 
In 2010, the Company began updating its Indianapolis, IN facility to streamline operations, consolidate two buildings, increase capacity, further expand capabilities and reduce dependence on outside suppliers. This initiative was completed in 2011. In 2011, the Company began construction on an orthopaedic manufacturing facility in Fort Wayne, IN and transferred manufacturing operations being performed at its Columbia City, IN location into this new facility. This initiative was completed in 2012. During 2012, the Company transferred manufacturing and development operations performed at its facilities in Orvin and Corgemont, Switzerland into existing facilities in Fort Wayne, IN and Tijuana, Mexico. During 2013, the Company initiated a project to expand its Chaumont, France facility in order to enhance its capabilities and fulfill larger volume customer supply agreements. This initiative is expected to be completed over the next three years. 
 
 
 
 
 
 
 
Near the end of 2011, the Company initiated plans to upgrade and expand its manufacturing infrastructure in order to support its medical device strategy. This includes the transfer of certain product lines to create additional capacity for the manufacture of medical devices, expansion of two existing facilities, as well as the purchase of equipment to enable the production of medical devices. These initiatives are expected to be completed over the next year. 
 
 
 
 
 
 
 
In 2011, the Company initiated plans to upgrade its existing global ERP system. This initiative was completed during the first quarter of 2014. 
 
 
Restructuring Initiation Date
 
 
2014 
 
 
 
 
 
 
 
 
June 2013 
 
 
 
 
 
 
2010 
 
 
 
 
 
 
 
2011 
 
 
 
 
 
 
 
2011 
 
 
Restructuring And Related Activities Expected Capital Expenditures
 
 
 
$ 18,000,000 
 
 
 
$ 20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 30,000,000 
 
$ 35,000,000 
 
 
 
$ 15,000,000 
 
 
$ 20,000,000 
 
 
 
 
 
Restructuring And Related Activities Capital Expenditures Incurred To Date
 
 
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,600,000 
 
 
 
 
 
 
 
12,500,000 
 
 
 
 
 
 
 
4,000,000 
 
 
Restructuring and Related Cost, Expected Cost
 
 
 
22,000,000 
7,000,000 
2,000,000 
13,000,000 
27,000,000 
9,000,000 
3,000,000 
15,000,000 
 
6,700,000 
5,000,000 
1,700,000 
7,100,000 
5,200,000 
1,900,000 
 
 
11,000,000 
13,000,000 
43,000,000 
19,000,000 
48,000,000 
24,000,000 
 
1,000,000 
2,000,000 
500,000 
1,000,000 
3,000,000 
1,000,000 
1,500,000 
 
 
 
Restructuring and Related Cost, Cost Incurred to Date
 
 
2,200,000 
 
 
 
 
 
 
 
 
6,700,000 
 
 
 
 
 
 
41,200,000 
 
 
 
 
 
 
 
1,800,000 
 
 
 
 
 
 
 
5,800,000 
3,300,000 
2,500,000 
Proceeds from sale of orthopaedic product lines (Note 8)
2,655,000 
3,228,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities Assumed By Third Parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain (Loss) on Disposition of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Operating (Income) Expenses, Net Changes in Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
$ 0 
Restructuring charges
2,218 
Restructuring Reserve, Settled without Cash
(33)
Cash (payments) receipts
(1,234)
Restructuring Reserve, Ending Balance
951 
Operating Unit Realignment [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
1,211 
Restructuring charges
1,035 
Cash (payments) receipts
(1,979)
Restructuring Reserve, Ending Balance
267 
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
857 
Restructuring charges
36 
Cash (payments) receipts
(297)
Restructuring Reserve, Ending Balance
596 
Medical Device Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
11 
Cash (payments) receipts
(11)
Restructuring Reserve, Ending Balance
ERP System Upgrade [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
(82)
Cash (payments) receipts
82 
Restructuring Reserve, Ending Balance
Severance And Retention [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
531 
Restructuring Reserve, Settled without Cash
Cash (payments) receipts
Restructuring Reserve, Ending Balance
531 
Severance And Retention [Member] |
Operating Unit Realignment [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
465 
Restructuring charges
852 
Cash (payments) receipts
(1,205)
Restructuring Reserve, Ending Balance
112 
Severance And Retention [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
Cash (payments) receipts
Restructuring Reserve, Ending Balance
Production Inefficiencies, Moving And Revalidation [Member] |
Medical Device Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
Cash (payments) receipts
Restructuring Reserve, Ending Balance
Training And Consulting Costs [Member] |
ERP System Upgrade [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
(82)
Cash (payments) receipts
82 
Restructuring Reserve, Ending Balance
Accelerated Depreciation And Asset Write Offs [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
33 
Restructuring Reserve, Settled without Cash
(33)
Cash (payments) receipts
Restructuring Reserve, Ending Balance
Accelerated Depreciation And Asset Write Offs [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
(2,655)
Cash (payments) receipts
2,655 
Restructuring Reserve, Ending Balance
Accelerated Depreciation And Asset Write Offs [Member] |
ERP System Upgrade [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
Cash (payments) receipts
Restructuring Reserve, Ending Balance
Personnel [Member] |
Medical Device Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
Cash (payments) receipts
(1)
Restructuring Reserve, Ending Balance
Other Restructuring [Member] |
Investments in Capacity and Capabilities [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
1,654 
Restructuring Reserve, Settled without Cash
Cash (payments) receipts
(1,234)
Restructuring Reserve, Ending Balance
420 
Other Restructuring [Member] |
Operating Unit Realignment [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
746 
Restructuring charges
183 
Cash (payments) receipts
(774)
Restructuring Reserve, Ending Balance
155 
Other Restructuring [Member] |
Orthopaedic Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
857 
Restructuring charges
2,691 
Cash (payments) receipts
(2,952)
Restructuring Reserve, Ending Balance
596 
Other Restructuring [Member] |
Medical Device Facility Optimization [Member]
 
Restructuring Reserve [Roll Forward]
 
Restructuring Reserve, Beginning Balance
Restructuring charges
10 
Cash (payments) receipts
(10)
Restructuring Reserve, Ending Balance
$ 0 
Income Taxes (Narratives) (Details) (USD $)
In Millions, unless otherwise specified
Jul. 4, 2014
Income Tax Disclosure [Abstract]
 
Unrecognized Tax Benefits
$ 1.9 
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit
0.1 
Unrecognized Tax Benefits that Would Impact Effective Tax Rate
$ 1.7 
Commitments and Contingencies (Narratives) (Details) (USD $)
6 Months Ended 0 Months Ended
Jul. 4, 2014
Jul. 4, 2014
Litigation One [Member]
Aug. 12, 2014
Subsequent Event [Member]
CCC [Member]
Loss Contingencies [Line Items]
 
 
 
Customer Product Liability Insurance Coverage
 
$ 5,000,000 
 
Loss Contingency Domicile Of Litigation
 
113th Judicial District Court of Harris County, Texas 
 
Loss Contingency Allegations
 
The complaint seeks damages alleging marketing and product defects and failure to warn, negligence and gross negligence relating to a product the Company manufactured and sold to a customer, one of the other named defendants. The Company's customer, in turn, incorporated the Greatbatch product into its own product which it sold to its customer, another named defendant. 
 
Product Liability Insurance Coverage
 
10,000,000 
 
Loss Contingency Opinion Of Counsel
 
To date, the Company has not recorded a reserve in connection with this matter since any potential loss is not currently probable and the range of loss is not reasonably estimable at this time. 
 
Payments to Acquire Businesses, Gross
 
 
18,000,000 
Standard Product Warranty Description
The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. 
 
 
Significant Purchase Commitment Description
Contractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. The Company’s purchase orders are normally based on its current manufacturing needs and are fulfilled by its vendors within short time horizons. The Company also enters into blanket orders with vendors that have preferred pricing and terms, however these orders are normally cancelable without penalty. 
 
 
Significant Purchase Commitment Remaining Minimum Amount Committed
29,200,000 
 
 
Description of Types of Foreign Currency Cash Flow Hedging Instruments Used
The Company enters into forward contracts to purchase Mexican pesos in order to hedge the risk of peso-denominated payments associated with the operations at its Tijuana, Mexico facility. 
 
 
Maximum Aggregate Loss Under Medical Plan Stop Loss Insurance Per Employee
225,000 
 
 
Accrued Self Insured Medical Plan Liability
$ 1,500,000 
 
 
Commitments and Contingencies (Product Warranty Rollforward) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jul. 4, 2014
Movement in Standard Product Warranty Accrual [Roll Forward]
 
Standard Product Warranty Accrual, Beginning Balance
$ 1,819 
Standard Product Warranty Accrual, Warranties Issued
(274)
Standard Product Warranty Accrual, Payments
(355)
Standard Product Warranty Accrual, Ending Balance
$ 1,190 
Commitments and Contingencies (Future Lease Payments) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
Remainder of 2014
$ 2,557 
2015
4,642 
2016
4,001 
2017
1,471 
2018
1,002 
Thereafter
936 
Total estimated operating lease expense
$ 14,609 
Commitments and Contingencies (FX Contract Details) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Foreign Currency Cash Flow Hedges [Abstract]
 
 
 
 
Increase (reduction) in Cost of Sales
$ 8 
$ (390)
$ (156)
$ (562)
Ineffective portion of change in fair value
Fx Contract 1 [Member]
 
 
 
 
Derivative [Line Items]
 
 
 
 
Derivative, Type of Instrument
 
 
FX Contract 
 
Notional Amount of Foreign Currency Cash Flow Hedge Derivatives
3,854 
 
3,854 
 
Start Date
 
 
Jan. 01, 2014 
 
End Date
 
 
Dec. 31, 2014 
 
$/Peso
0.0767 
 
0.0767 
 
Fair Value
(3)
 
(3)
 
Balance Sheet Location
 
 
Other Current Assets 
 
Fx Contract 2 [Member]
 
 
 
 
Derivative [Line Items]
 
 
 
 
Derivative, Type of Instrument
 
 
FX Contract 
 
Notional Amount of Foreign Currency Cash Flow Hedge Derivatives
3,160 
 
3,160 
 
Start Date
 
 
Jan. 01, 2014 
 
End Date
 
 
Dec. 31, 2014 
 
$/Peso
0.0752 
 
0.0752 
 
Fair Value
$ 58 
 
$ 58 
 
Balance Sheet Location
 
 
Other Current Assets 
 
Earnings Per Share (EPS) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract]
 
 
 
 
Net income
$ 12,348 
$ 9,752 
$ 27,270 
$ 15,415 
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
 
 
 
 
Basic
24,838,000 
23,914,000 
24,726,000 
23,832,000 
Effect of dilutive securities stock options, restricted stock and restricted stock units
1,063,000 
1,008,000 
1,097,000 
986,000 
Denominator for diluted EPS
25,901,000 
24,922,000 
25,823,000 
24,818,000 
Basic EPS
$ 0.50 
$ 0.41 
$ 1.10 
$ 0.65 
Diluted EPS
$ 0.48 
$ 0.39 
$ 1.06 
$ 0.62 
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities
 
 
 
Anitdilutive Securities Excluded From Earnings Per Share [Abstract]
 
 
 
 
Time-vested stock options, restricted stock and restricted stock units
179,000 
72,000 
179,000 
395,000 
Performance-vested stock options and restricted stock units
Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax, [Abstract]
 
 
 
 
Defined Benefit Plan Liability, Beginning
$ (672)
$ (365)
$ (672)
$ (962)
Defined Benefit Plan Liability, Ending
(672)
(365)
(672)
(365)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax [Abstract]
 
 
 
 
Cash Flow Hedges, Beginning
(350)
533 
(468)
120 
Unrealized gain (loss) on cash flow hedges
18 
(107)
168 
421 
Realized Gain Loss On Foreign Currency Contracts Before Tax
(390)
(156)
(562)
Realized Gain Loss On Interest Rate Swaps Before Tax
106 
142 
238 
199 
Cash Flow Hedges, End
(218)
178 
(218)
178 
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax [Abstract]
 
 
 
 
Foreign Currency Translation Adjustment, Beginning
16,134 
10,368 
14,952 
13,431 
Net foreign currency translation gain (loss)
(393)
631 
789 
(2,432)
Foreign Currency Translation Adjustment, End
15,741 
10,999 
15,741 
10,999 
Other Comprehensive Income (Loss), before Tax [Abstract]
 
 
 
 
Total Pre-Tax Amount, Beginning
15,112 
10,536 
13,812 
12,589 
Unrealized gain (loss) on cash flow hedges
18 
(107)
168 
421 
Realized gain loss on foreign currency hedges - before tax
(390)
(156)
(562)
Realized gain loss on interest rate swaps - before tax
106 
142 
238 
199 
Net defined benefit plan liability adjustments
 
 
 
597 
Net foreign currency translation gain (loss)
(393)
631 
789 
(2,432)
Total Pre-Tax Amount, End
14,851 
10,812 
14,851 
10,812 
Other Comprehensive Income (Loss), Tax [Abstract]
 
 
 
 
Tax, Beginning
505 
214 
546 
358 
Unrealized gain (loss) on cash flow hedges
(6)
37 
(59)
(147)
Realized gain loss on foreign currency contracts - tax
(3)
137 
55 
197 
Realized gain loss on interest rate swap hedges - tax
(37)
(50)
(83)
(70)
Net defined benefit plan gain - tax
 
 
 
Net foreign currency translation gain (loss)
Tax, End
459 
338 
459 
338 
Other Comprehensive Income (Loss), Net of Tax [Abstract]
 
 
 
 
Net-of-Tax Amount, Beginning
15,617 
10,750 
14,358 
12,947 
Unrealized gain (loss) on cash flow hedges, net of tax
12 
(70)
109 
274 
Realized gain loss on foreign currency hedges, net of tax
(253)
(101)
(365)
Realized gain loss on interest rate swap hedges, net of tax
69 
92 
155 
129 
Net defined benefit plan gain, net of tax
597 
Foreign currency translation gain (loss)
(393)
631 
789 
(2,432)
Net-of-Tax Amount, End
$ 15,310 
$ 11,150 
$ 15,310 
$ 11,150 
Accumulated Other Comprehensive Income Amounts Recognized in AOCI (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net gain occurring during the period
 
 
 
$ (171)
Amortization of losses
 
 
 
(581)
Prior service cost
 
 
 
155 
Pre-tax adjustment
 
 
 
(597)
Taxes
 
 
 
Net
$ 0 
$ 0 
$ 0 
$ (597)
Fair Value Measurement (Recurring Measurements) (Details) (USD $)
In Millions, unless otherwise specified
Jul. 4, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
 
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months
$ 0.06 
Fair Value Measurement (Contingent Consideration Roll Forward) (Details) (USD $)
6 Months Ended
Jul. 4, 2014
Contingent Consideration Liability [Roll Forward]
 
Accrued Contingent Consideration, Beginning Balance
$ 840,000 
Change in Amount of Contingent Consideration Liability
(620,000)
Accrued Contingent Consideration, Ending Balance
220,000 
Financial Milestones [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Contingent Consideration Fair Value
$ 0 
Fair Value Measurement (Contingent Consideration Assumptions) (Details) (Development Milestones [Member], USD $)
6 Months Ended
Jul. 4, 2014
Development Milestones [Member]
 
Fair Value Assumptions [Line Items]
 
Contingent Consideration Fair Value
$ 220,000 
Risk Adjusted Discount Rate For Contingent Consideration
20.00% 
Contingent Consideration Liability Projected Year Of Payment
2015 
Contingent Consideration Liability Probability Weighted Payment Amount
$ 250,000 
Fair Value Measurement (Recurring and Nonrecurring Measurement Basis) (Details) (USD $)
6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jan. 3, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Foreign Currency Contract, Asset, Fair Value Disclosure
$ 55,000 
 
 
Assets Held-for-sale, Long Lived, Fair Value Disclosure
2,100,000 
 
 
Interest rate swap
272,000 
 
 
Accrued contingent consideration
220,000 
 
840,000 
Assets, Fair Value Disclosure [Abstract]
 
 
 
Long Lived Assets Impairment Loss
 
Maximum Potential Payment Due Upon Achievement Of Certain Milestones
1,000,000 
 
 
Goodwill, Impairment Loss
 
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)
 
 
Impairment of Intangible Assets (Excluding Goodwill)
 
 
Cost And Equity Method Investments Aggregate Carrying Amount
13,600,000 
 
12,300,000 
Cost And Equity Method Investments Realized Gains Losses Net
800,000 
(600,000)
 
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Foreign Currency Contract, Asset, Fair Value Disclosure
 
 
Interest rate swap
 
 
Accrued contingent consideration
 
 
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Foreign Currency Contract, Asset, Fair Value Disclosure
55,000 
 
 
Interest rate swap
272,000 
 
 
Accrued contingent consideration
 
 
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Foreign Currency Contract, Asset, Fair Value Disclosure
 
 
Interest rate swap
 
 
Accrued contingent consideration
$ 220,000 
 
 
Business Segment, Geographic And Concentration Risk Information (Segment Revenue by Categories) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Segment
Jun. 28, 2013
Segment Reporting Information, Revenue for Reportable Segment [Abstract]
 
 
 
 
Number of Reportable Segments
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
$ 172,081 
$ 171,331 
$ 346,362 
$ 319,596 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
46.00% 
47.00% 
47.00% 
50.00% 
Customer A [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
17.00% 
19.00% 
19.00% 
19.00% 
Customer B [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
17.00% 
16.00% 
16.00% 
17.00% 
Customer C [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Revenue Major Customer Percent
12.00% 
12.00% 
12.00% 
14.00% 
United States [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
77,761 
89,234 
158,873 
160,568 
Puerto Rico [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
31,885 
27,158 
66,483 
55,656 
Belgium [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
17,650 
17,277 
33,629 
34,948 
Rest Of World [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
44,785 
37,662 
87,377 
68,424 
Greatbatch Medical [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
171,216 
170,494 
344,811 
318,116 
Greatbatch Medical [Member] |
Cardiac Neuromodulation [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
80,005 
83,177 
166,785 
153,701 
Greatbatch Medical [Member] |
Orthopaedic [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
37,865 
32,341 
74,296 
61,964 
Greatbatch Medical [Member] |
Portable Medical [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
16,737 
22,167 
35,940 
41,056 
Greatbatch Medical [Member] |
Vascular [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
15,257 
12,249 
28,307 
22,873 
Greatbatch Medical [Member] |
EME and Other [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
21,352 
20,560 
39,483 
38,522 
QiG [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Controlling Interest, Number of Ownership Interests
 
 
Controlling Interest, Liability of Expenses Incurred, Percentage
 
 
100.00% 
 
FDA submission date
 
 
Dec. 16, 2013 
 
CE submission date
 
 
Jan. 10, 2014 
 
CE Approval Date
 
 
Jun. 17, 2014 
 
Sales Revenue, Net
865 
837 
1,551 
1,480 
Maximum [Member] |
QiG [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Noncontrolling Interest, Ownership Percentage by Parent
100.00% 
 
100.00% 
 
Minimum [Member] |
QiG [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Noncontrolling Interest, Ownership Percentage by Parent
89.00% 
 
89.00% 
 
Between Operating Segments [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Sales Revenue, Net
 
 
$ 0 
 
Business Segment, Geographic And Concentration Risk Information (Segment Income From Operations) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jul. 4, 2014
Jun. 28, 2013
Jul. 4, 2014
Jun. 28, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
$ 19,539 
$ 17,135 
$ 42,063 
$ 31,474 
Unallocated Other Expense
(1,407)
(2,124)
(1,870)
(9,397)
Income before provision for income taxes
18,132 
15,011 
40,193 
22,077 
Greatbatch Medical [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
32,439 
29,845 
67,567 
56,360 
QiG [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
(6,173)
(7,377)
(12,086)
(14,733)
Operating Segments [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
26,266 
22,468 
55,481 
41,627 
Segment Reconciling Items [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating income as reported
$ (6,727)
$ (5,333)
$ (13,418)
$ (10,153)
Business Segment, Geographic And Concentration Risk Information (Long-lived Assets by Category) (Details) (USD $)
In Thousands, unless otherwise specified
Jul. 4, 2014
Jan. 3, 2014
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
$ 143,457 
$ 145,773 
United States [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
114,535 
116,484 
Rest Of World [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Property, plant and equipment, net
$ 28,922 
$ 29,289