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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________ 
FORM 10-Q
 _____________________________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-16137
 _____________________________________________________________ 
itgr-20220701_g1.jpg
INTEGER HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
 _____________________________________________________________ 
Delaware 16-1531026
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5830 Granite Parkway,Suite 1150Plano,Texas 75024
(Address of principal executive offices) (Zip Code)
(214) 618-5243
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareITGRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filerNon-accelerated filer
Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of shares outstanding of the Company’s common stock, $0.001 par value per share, as of July 22, 2022 was: 33,122,853 shares.



INTEGER HOLDINGS CORPORATION
Form 10-Q
For the Quarterly Period Ended July 1, 2022
TABLE OF CONTENTS

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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands except share and per share data)July 1,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$15,593 $17,885 
Accounts receivable, net of provision for credit losses of $0.2 million and $0.1 million, respectively
221,939 182,310 
Inventories194,458 155,699 
Refundable income taxes4,627 4,735 
Contract assets70,408 64,743 
Prepaid expenses and other current assets25,988 27,610 
Total current assets533,013 452,982 
Property, plant and equipment, net280,461 277,099 
Goodwill978,559 924,704 
Other intangible assets, net841,122 807,810 
Deferred income taxes6,149 5,711 
Operating lease assets75,777 70,053 
Other long-term assets43,006 43,856 
Total assets$2,758,087 $2,582,215 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$15,250 $15,250 
Accounts payable103,111 76,859 
Income taxes payable259 725 
Operating lease liabilities10,762 9,862 
Accrued expenses and other current liabilities68,344 56,933 
Total current liabilities197,726 159,629 
Long-term debt931,889 812,876 
Deferred income taxes178,695 171,505 
Operating lease liabilities64,436 59,767 
Other long-term liabilities21,890 23,741 
Total liabilities1,394,636 1,227,518 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,121,833 and 33,063,336 shares issued and outstanding, respectively
33 33 
Additional paid-in capital722,175 713,150 
Retained earnings646,527 614,324 
Accumulated other comprehensive income (loss)(5,284)27,190 
Total stockholders’ equity1,363,451 1,354,697 
Total liabilities and stockholders’ equity$2,758,087 $2,582,215 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
 Three Months EndedSix Months Ended
(in thousands except per share data)July 1,
2022
July 2,
2021
July 1,
2022
July 2,
2021
Sales$350,081 $312,023 $660,993 $602,490 
Cost of sales257,184 223,277 486,621 429,258 
Gross profit92,897 88,746 174,372 173,232 
Operating expenses:
Selling, general and administrative41,786 35,379 81,346 70,881 
Research, development and engineering14,871 13,738 30,954 27,199 
Restructuring and other charges3,533 279 6,868 1,194 
Total operating expenses60,190 49,396 119,168 99,274 
Operating income32,707 39,350 55,204 73,958 
Interest expense7,773 7,532 13,741 16,064 
Loss on equity investments320 684 2,724 2,019 
Other loss, net191 356 368 119 
Income before taxes 24,423 30,778 38,371 55,756 
Provision for income taxes3,587 1,345 6,168 4,803 
Net income$20,836 $29,433 $32,203 $50,953 
Earnings per share:
Basic$0.63 $0.89 $0.97 $1.55 
Diluted$0.62 $0.89 $0.97 $1.53 
Weighted average shares outstanding:
Basic33,111 32,982 33,101 32,970 
Diluted33,350 33,254 33,326 33,221 
Comprehensive Income (Loss)
Net income$20,836 $29,433 $32,203 $50,953 
Other comprehensive income (loss):
Foreign currency translation gain (loss)(27,274)2,484 (35,161)(13,880)
Change in fair value of cash flow hedges, net of tax(47)845 2,687 139 
Other comprehensive income (loss), net of tax(27,321)3,329 (32,474)(13,741)
Comprehensive income (loss), net of tax$(6,485)$32,762 $(271)$37,212 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Six Months Ended
(in thousands)July 1,
2022
July 2,
2021
Cash flows from operating activities:
Net income$32,203 $50,953 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization45,753 40,419 
Debt related charges included in interest expense962 2,446 
Inventory step-up amortization798  
Stock-based compensation10,951 8,953 
Non-cash lease expense5,344 3,947 
Non-cash loss on equity investments2,724 2,019 
Other non-cash losses7,510 29 
Deferred income taxes(969)(242)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable(37,642)(19,141)
Inventories(41,471)898 
Prepaid expenses and other assets(783)(2,604)
Contract assets(6,189)(16,792)
Accounts payable25,554 16,937 
Accrued expenses and other liabilities(7,295)(13,737)
Income taxes(439)(5,298)
Net cash provided by operating activities37,011 68,787 
Cash flows from investing activities:
Acquisition of property, plant and equipment(22,610)(18,416)
Proceeds from sale of property, plant and equipment587 15 
Acquisitions, net(126,636) 
Net cash used in investing activities(148,659)(18,401)
Cash flows from financing activities:
Principal payments of term loans(7,625)(64,750)
Proceeds from revolving credit facility160,000  
Payments of revolving credit facility(34,000) 
Proceeds from the exercise of stock options 340 
Payment of debt issuance costs (141)
Tax withholdings related to net share settlements of restricted stock unit awards(1,926)(2,988)
Contingent consideration payments(493)(1,621)
Principal payments on finance leases(353)(24)
Net cash provided by (used in) financing activities115,603 (69,184)
Effect of foreign currency exchange rates on cash and cash equivalents(6,247)173 
Net decrease in cash and cash equivalents(2,292)(18,625)
Cash and cash equivalents, beginning of period17,885 49,206 
Cash and cash equivalents, end of period$15,593 $30,581 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
 Three Months EndedSix Months Ended
(in thousands)July 1,
2022
July 2,
2021
July 1,
2022
July 2,
2021
Total stockholders’ equity, beginning balance$1,364,350 $1,277,724 $1,354,697 $1,271,055 
Common stock and additional paid-in capital
Balance, beginning of period716,622 703,066 713,183 700,847 
Stock awards exercised or vested(370)(163)(1,926)(2,648)
Stock-based compensation5,956 4,249 10,951 8,953 
Balance, end of period722,208 707,152 722,208 707,152 
Retained earnings
Balance, beginning of period625,691 539,036 614,324 517,516 
Net income20,836 29,433 32,203 50,953 
Balance, end of period646,527 568,469 646,527 568,469 
Accumulated other comprehensive income (loss)
Balance, beginning of period22,037 35,622 27,190 52,692 
Other comprehensive income (loss)(27,321)3,329 (32,474)(13,741)
Balance, end of period(5,284)38,951 (5,284)38,951 
Total stockholders’ equity, ending balance$1,363,451 $1,314,572 $1,363,451 $1,314,572 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1.)    BASIS OF PRESENTATION
Integer Holdings Corporation (together with its consolidated subsidiaries, “Integer” or the “Company”) is a publicly-traded corporation listed on the New York Stock Exchange under the symbol “ITGR.” Integer is a medical device outsource manufacturer serving the cardiac, neuromodulation, vascular, orthopedics, advanced surgical and portable medical markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition, it develops batteries for high-end niche applications in the energy, military, and environmental markets.
The accompanying condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in the Company’s Annual Report on Form 10-K. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. The results for interim periods are not necessarily indicative of results or trends that may be expected for the fiscal year as a whole. The condensed consolidated financial statements were prepared using U.S. GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, certain components of equity, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.
The second quarter and first six months of 2022 ended on July 1 and consisted of 91 days and 182 days, respectively. The second quarter and first six months of 2021 ended on July 2 and consisted of 91 days and 183 days, respectively.
Reclassifications
Certain prior period amounts have been reclassified to conform to current year presentation. Refer to Note 5, “Goodwill and Other Intangibles, Net,” for a description of the changes made to the Company’s prior period definite-lived asset classification to reflect the current year presentation. Refer to Note 14, “Segment Information,” for a description of the changes made to the Company’s prior period product line sales classification to reflect the current year presentation.
Risks and Uncertainties
Significant uncertainty remains as to the potential impact of the COVID-19 pandemic on the Company’s operations, and on the global economy. Specific impacts to the Company’s business included and continue to include labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, restrictions on associates’ ability to travel or work, and delays in shipments to and from certain countries. The Company is uncertain of the future impact of the ongoing COVID-19 pandemic or recovery of prior deterioration in economic conditions to its sales channels, supply chain, manufacturing, and distribution. Additionally, the current conflict between Russia and Ukraine and the related sanctions and other penalties imposed by countries across the globe against Russia are creating substantial uncertainty in the global economy. While the Company does not have operations in Russia or Ukraine and does not have significant direct exposure to customers and vendors in those countries, it is unable to predict the impact that these actions will have on the global economy or on the Company’s financial condition, results of operations, and cash flows as of the date of these financial statements.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). The Company evaluated all recent accounting pronouncements issued, including those that are currently effective, and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, that are of significance, or potential significance, to the Company.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2.)    BUSINESS ACQUISITIONS
2022 Acquisition
On April 6, 2022, the Company acquired 100% of the equity interests of Connemara Biomedical Holdings Teoranta, including its operating subsidiaries Aran Biomedical and Proxy Biomedical (collectively “Aran”), a recognized leader in proprietary medical textiles, high precision biomaterial coverings and coatings as well as advanced metal and polymer braiding. Aran delivers development and manufacturing solutions for implantable medical devices. Consistent with the Company’s strategy, the combination with Aran further increases Integer’s ability to offer complete solutions for complex delivery and therapeutic devices in high growth cardiovascular markets such as structural heart, neurovascular, peripheral vascular, and endovascular as well as general surgery. The Company funded the purchase price with borrowings under its Revolving Credit Facility. Aran is included in the Company’s Medical segment. The total consideration transferred was $141.3 million, which includes an initial cash payment of $133.9 million ($129.3 million net of cash acquired) and $7.4 million in estimated fair value of contingent consideration. The contingent consideration represents the estimated fair value of the Company’s obligation, under the purchase agreement, to make additional payments of up to €10 million ($10.9 million at the exchange rate as of April 6, 2022) based on Aran’s achievement of 2022 revenue growth milestones. The contingent consideration will be paid after completion of the earn-out period ending December 31, 2022, in accordance with the terms of the share purchase agreement. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration.
The Company has preliminarily estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition. The determination of estimated fair value required management to make significant estimates and assumptions based on information that was available at the time the consolidated financial statements were prepared. The amounts reported are considered preliminary as the Company is completing the valuations that are required to allocate the purchase price in areas such as property and equipment, intangible assets, liabilities and goodwill. As a result, the allocation of the preliminary purchase price may change in the future, which could be material.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed (in thousands):
Fair value of net assets acquired
Current assets$9,319 
Property, plant and equipment4,151 
Goodwill68,460 
Definite-lived intangible assets71,485 
Operating lease assets3,505 
Other noncurrent assets1,354 
Current liabilities(4,370)
Operating lease liabilities(3,258)
Other noncurrent liabilities(9,377)
Fair value of net assets acquired$141,269 
The goodwill resulting from the transaction is primarily attributable to future customer relationships and the assembled workforce of the acquired business. The goodwill acquired in connection with the Aran acquisition was allocated to the Medical segment and is not deductible for tax purposes.
The breakout of definite-lived intangible assets acquired was as follows (dollars in thousands):
Definite-lived Intangible AssetsFair Value AssignedWeighted Average Amortization Period
(Years)
Weighted Average Discount Rate
Customer lists$53,395 26.09.5%
Technology17,435 12.09.5%
Tradenames655 1.59.5%
$71,485 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(2.)    BUSINESS ACQUISITIONS (Continued)
To determine the acquisition date estimated fair value of intangible assets acquired, the Company applied the income approach, specifically the multi-period excess earnings method for customer lists and the relief-from-royalty method for technology and tradenames. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted-average cost of capital used to discount future cash flows, and a customer attrition rate for customer relationships and royalty rates for technology and tradenames. For additional information, see the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for the methods and assumptions used to estimate the fair value of each class of net assets acquired.
For segment reporting purposes, the results of operations from Aran have been included in the Company’s Medical segment since the acquisition date. Sales and earnings related to the operations of Aran for the three and six months ended July 1, 2022 were not material.
2021 Acquisition
On December 1, 2021, the Company acquired 100% of the equity interests of Oscor Inc., Oscor Caribe, LLC and Oscor Europe GmbH (collectively “Oscor”), privately-held companies with operations in Florida, the Dominican Republic and Germany that design, develop, manufacture and market a comprehensive portfolio of highly specialized medical devices, venous access systems and diagnostic catheters and implantable devices. Serving the Company’s current markets, Oscor broadens the Company’s product portfolio, expands its research and development capabilities, and adds low-cost manufacturing capacity. The preliminary purchase price of Oscor is $215.2 million, including working capital and other closing adjustments of $5.2 million, which were settled in the second quarter of 2022. The Company used proceeds from its Senior Secured Credit Facilities to fund the acquisition. Oscor is included in the Company’s Medical segment. The goodwill is primarily associated with future customer relationships and an acquired assembled work force.
The Company preliminarily estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition. The determination of estimated fair value requires management to make significant estimates and assumptions based on information that is available at the time the consolidated financial statements are prepared. The Company recorded the preliminary purchase price allocation in the fourth quarter of 2021. During the first six months of 2022, the Company recorded measurement period adjustments, inclusive of working capital and other closing adjustments, resulting in increases to goodwill and current liabilities of $0.4 million and $2.3 million, respectively, and decreases to current assets (excluding inventory) and inventory of $2.5 million and $0.8 million, respectively. The preliminary purchase price allocation remains subject to measurement period adjustments. As a result, the allocation of the preliminary purchase price may change in the future.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed (in thousands):
Fair value of net assets acquired
Current assets (excluding inventory)$9,621 
Inventory11,360 
Property, plant and equipment17,977 
Goodwill78,302 
Intangible assets105,300 
Operating lease assets15,142 
Other noncurrent assets695 
Current liabilities(11,143)
Operating lease liabilities(12,044)
Fair value of net assets acquired$215,210 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2.)    BUSINESS ACQUISITIONS (Continued)
Pro Forma (unaudited) disclosures
The following table presents (in thousands) unaudited pro forma financial information as if Aran and Oscor had been included in the Company’s financial results as of the beginning of fiscal year 2021 and 2020, respectively, through the date of acquisition. The pro forma results include the historical results of operations of the Company, Aran and Oscor, as well as adjustments for additional amortization of the assets acquired, additional interest expense related to the financing of the transaction and other transactional adjustments. The pro forma results do not include efficiencies, cost reductions or synergies expected to result from the acquisition. These pro forma results do not purport to be indicative of the results that would have been obtained, or to be a projection of results that may be obtained in the future.
Six Months Ended
July 1, 2022
Three Months Ended
July 2, 2021
Six Months Ended
July 2, 2021
Sales$666,356 $332,360 $639,966 
Net income45,357 27,693 44,452 
Acquisition costs
During the three and six months ended July 1, 2022, direct costs of these acquisitions of $1.6 million and $2.8 million, respectively, were expensed as incurred and included in Restructuring and other charges in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
(3.)    SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):
Six Months Ended
July 1,
2022
July 2,
2021
Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payable$6,373 $4,364 
Supplemental lease disclosures:
Assets acquired under operating leases11,265 7,435 
(4.)    INVENTORIES
Inventories comprise the following (in thousands):
July 1,
2022
December 31,
2021
Raw materials$91,328 $70,956 
Work-in-process90,886 74,152 
Finished goods12,244 10,591 
Total$194,458 $155,699 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(5.)     GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The changes in the carrying amount of goodwill by reportable segment for the six months ended July 1, 2022 were as follows (in thousands):
MedicalNon- MedicalTotal
December 31, 2021$907,704 $17,000 $924,704 
Acquisition (Note 2)68,460  68,460 
Acquisition-related adjustments (Note 2)414 414 
Foreign currency translation(15,019) (15,019)
July 1, 2022$961,559 $17,000 $978,559 
Intangible Assets
The Company reclassified purchased tradenames with a net carrying value of $16.2 million from Purchased technology and patents as of December 31, 2021 to Amortizing tradenames and other to conform to the current period presentation. The Company made this reclassification to better align with the classification of amortization expense for similar assets. See Note 2 “Business Acquisitions” for additional details regarding intangible assets acquired during 2022. Intangible assets comprise the following (in thousands):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
July 1, 2022
Definite-lived:
Purchased technology and patents$283,022 $(170,380)$112,642 
Customer lists822,121 (200,119)622,002 
Amortizing tradenames and other21,021 (4,831)16,190 
Total amortizing intangible assets$1,126,164 $(375,330)$750,834 
Indefinite-lived:
Trademarks and tradenames$90,288 
December 31, 2021
Definite-lived:
Purchased technology and patents$269,359 $(164,298)$105,061 
Customer lists783,618 (187,412)596,206 
Amortizing tradenames and other20,462 (4,207)16,255 
Total amortizing intangible assets$1,073,439 $(355,917)$717,522 
Indefinite-lived:
Trademarks and tradenames$90,288 
Aggregate intangible asset amortization expense comprises the following (in thousands):
 Three Months EndedSix Months Ended
 July 1,
2022
July 2,
2021
July 1,
2022
July 2,
2021
Cost of sales$4,037 $3,233 $7,682 $6,501 
Selling, general and administrative expenses8,248 7,106 16,207 14,288 
Total intangible asset amortization expense$12,285 $10,339 $23,889 $20,789 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(5.)     GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Continued)
Estimated future intangible asset amortization expense based on the carrying value as of July 1, 2022 is as follows (in thousands):
Remainder of 20222023202420252026After 2026
Amortization Expense$24,618 51,982 51,352 50,542 48,709 523,631 
(6.)     DEBT
The Company has senior secured credit facilities (the “Senior Secured Credit Facilities”), which consist of a five-year $400 million revolving credit facility (the “Revolving Credit Facility”), a five-year “term A” loan (the “TLA Facility”) and a seven-year “term B” loan (the “TLB Facility” and, together with the TLA Facility, the “Term Loan Facilities”). The TLB Facility was issued at a 0.50% discount.
Long-term debt related to the Senior Secured Credit Facilities as of July 1, 2022 and December 31, 2021, respectively, comprises the following (in thousands):
 July 1,
2022
December 31,
2021
Senior secured term loan A$461,188 $467,062 
Senior secured term loan B347,375 349,125 
Senior secured revolving credit facility145,300 19,300 
Unamortized discount on term loan B and deferred debt issuance costs(6,724)(7,361)
Total debt947,139 828,126 
Current portion of long-term debt(15,250)(15,250)
Total long-term debt$931,889 $812,876 
Revolving Credit Facility
The Revolving Credit Facility matures on September 2, 2026 and includes a $40 million sublimit for swingline loans and standby letters of credit. As of July 1, 2022, the Company had available borrowing capacity on the Revolving Credit Facility of $249.2 million after giving effect to $145.3 million of outstanding borrowings and $5.5 million of outstanding standby letters of credit.
Interest rates on the Revolving Credit Facility are at the Company’s option, either at: (i) the applicable LIBOR (or an applicable benchmark replacement) plus the applicable margin, which will range between 1.25% and 2.25%, based on the Company’s Total Net Leverage Ratio (as defined in the Senior Secured Credit Facilities agreement), or (ii) the Base Rate (as defined below) plus the applicable margin, which will range between 0.25% and 1.25%, based on the Company’s Total Net Leverage Ratio. The Base Rate is defined, for any day, as the per annum rate equal to the highest of (i) the prime rate (as defined in the Senior Secured Credit Facilities agreement), (ii) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.50%, and (iii) one-month LIBOR plus 1.00%. As of July 1, 2022, the interest rate on outstanding borrowings under the Revolving Credit Facility was 3.21%.
The Company is required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which will range between 0.15% and 0.25%, depending on the Company’s Total Net Leverage Ratio. As of July 1, 2022, the commitment fee on the unused portion of the Revolving Credit Facility was 0.18%.
Term Loan Facilities
The TLA Facility and TLB Facility mature on September 2, 2026 and September 2, 2028, respectively, and require quarterly installments. The quarterly principal installments under the TLA Facility increase over the term of the loan. The interest rate terms for the TLA Facility are the same as those outlined above for the Revolving Credit Facility. Interest rates on the TLB Facility are, at the Company’s option, either at: (i) the applicable LIBOR rate plus 2.50%, with LIBOR subject to a 0.50% floor, or (ii) the Base Rate plus 1.50%. As of July 1, 2022, the interest rates on the TLA Facility and TLB Facility were 3.17% and 4.17%, respectively.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
Covenants
The Senior Secured Credit Facilities agreement contains customary terms and conditions, including representations and warranties and affirmative and negative covenants, as well as financial covenants for the benefit of the lenders under the Revolving Credit Facility and the TLA Facility, which require that (i) the Company maintain a Total Net Leverage Ratio not to exceed 5.50:1.00 (stepping down to 5.00:1.00 for the third fiscal quarter of 2023 through maturity and subject to increase in certain circumstances following qualified acquisitions, but shall not exceed 5.50:1.00) and (ii) the Company maintain an interest coverage ratio of at least 2.50:1.00. The TLB Facility does not contain any financial maintenance covenants. As of July 1, 2022, the Company was in compliance with these financial covenants.
Contractual maturities under the Senior Secured Credit Facilities for the remainder of 2022 and through maturity, excluding any discounts or premiums, as of July 1, 2022 are as follows (in thousands):
Remainder of 20222023202420252026After 2026
Future minimum principal payments$7,625 18,187 29,938 38,750 527,738 331,625 
(7.)     STOCK-BASED COMPENSATION
The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors (the “Board”) or the Compensation and Organization Committee of the Board. The stock-based compensation plans provide for the granting of stock options, restricted stock awards, restricted stock units (“RSUs”), stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers.
Stock-based Compensation Expense
The components and classification of stock-based compensation expense were as follows (in thousands):
 Three Months EndedSix Months Ended
 July 1,
2022
July 2,
2021
July 1,
2022
July 2,
2021
RSUs and PRSUs$5,956 $4,249 $10,951 $8,953 
Total stock-based compensation expense$5,956 $4,249 $10,951 $8,953 
Cost of sales$837 $823 $1,606 $1,937 
Selling, general and administrative4,308 3,215 7,853 6,570 
Research, development and engineering338 211 663 446 
Restructuring and other charges473  829  
Total stock-based compensation expense$5,956 $4,249 $10,951 $8,953 
Stock Options
The following table summarizes the Company’s stock option activity for the six month period ended July 1, 2022:
Number of
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(In Years)
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 31, 2021247,640 $38.03 
No activity— — 
Outstanding and exercisable at July 1, 2022247,640 $38.03 3.6$8.4 
- 13 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(7.)     STOCK-BASED COMPENSATION (Continued)
Restricted Stock Units
During the six months ended July 1, 2022, the Company awarded grants of either time-based RSUs or a mix of time-based RSUs and performance-based RSUs (“PRSUs”) to members of its Board of Directors and certain members of management. Most time-based RSUs granted during the six months ended July 1, 2022 vest over a period of three years from the grant date, subject to the recipient’s continuous service to the Company. RSUs are issued to members of the Board as a portion of their annual retainer and vest quarterly over a one-year vesting term. The grant-date fair value of all time-based RSUs is equal to the closing market price of Integer common stock on the date of grant.
The following table summarizes time-vested RSU activity for the six month period ended July 1, 2022:
Time-Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2021248,131 $81.14 
Granted179,242 78.85 
Vested(81,171)79.60 
Forfeited(10,997)79.35 
Nonvested at July 1, 2022335,205 $80.35 
For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of market-based performance conditions. The market-based performance conditions are based on the Company’s achievement of a relative total shareholder return (“TSR”) performance requirement, on a percentile basis, compared to a defined group of peer companies over three year performance periods, or contingent upon achieving specified stock price milestones over a five year performance period.
The following table summarizes PRSU activity for the six month period ended July 1, 2022:
Performance-
Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2021198,869 $92.07 
Granted131,393 90.84 
Forfeited(51,375)99.62 
Nonvested at July 1, 2022278,887 $90.10 
The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market-based performance conditions. The grant-date fair value of all other PRSUs is equal to the closing market price of Integer common stock on the date of grant.
The weighted average fair value and assumptions used to value the PRSU awards granted with market-based performance conditions are as follows:
 Six Months Ended
 July 1,
2022
July 2,
2021
Weighted average fair value$97.58 $85.16 
Risk-free interest rate1.58 %0.19 %
Expected volatility42 %41 %
Expected life (in years)3.93.0
Expected dividend yield % %
The valuation of the market-based PRSUs granted during 2022 and 2021 also reflects a weighted average illiquidity discount of 9.25% and 8.19%, respectively, related to the six-month period that recipients are restricted from selling, transferring, pledging or assigning the underlying shares, in the event of vesting.
- 14 -


INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(8.)     RESTRUCTURING AND OTHER CHARGES
The Company continuously evaluates the business and identifies opportunities to realign its resources to better serve its customers and markets, improve operational efficiency and capabilities, and lower its operating costs or improve profitability. To realize the benefits associated with these opportunities, the Company undertakes restructuring-type activities to transform its business. The Company incurs costs associated with these activities, which primarily include exit and disposal costs and other costs directly related to the restructuring initiative. The Company records exit and disposal costs (“restructuring charges”) as incurred in accordance with ASC 420, Exit or Disposal Cost Obligations, and are classified within Restructuring and other charges, while other costs directly related to the restructuring initiatives (“restructuring-related charges”) are classified within Cost of sales, Selling, general and administrative, and Research, development and engineering expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
In addition, from time to time, the Company incurs costs associated with acquiring and integrating businesses, and certain other general expenses, including asset impairments. The Company classifies costs associated with these items within Restructuring and other charges in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Restructuring and other charges comprise the following (in thousands):
 Three Months EndedSix Months Ended
 July 1,
2022
July 2,
2021
July 1,
2022
July 2,
2021
Restructuring charges$(5)$191 $1,098 $845 
Acquisition and integration costs
3,333 26 5,269 110 
Other general expenses205 62 501 239 
Total restructuring and other charges
$3,533 $279 $6,868 $1,194 
Restructuring programs
The following table comprises restructuring and restructuring-related charges by income statement classification for the three and six month periods ended July 1, 2022 (in thousands):
 Three Months EndedSix Months Ended
 July 1, 2022July 1, 2022
Restructuring charges:
Restructuring and other charges
$(5)$1,098 
Restructuring-related expenses(a):
Cost of sales179 334 
Selling, general and administrative384 702 
Research, development and engineering326 503 
Total restructuring and restructuring-related charges
$884 $