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Financial Instruments and Fair Value Measurements
 3 Months Ended
Apr. 02, 2021
Fair Value Disclosures [Abstract]  
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS FINANCIAL INSTRUMENTS AND 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 contingent consideration. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.
The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency exchange rates, and uses derivatives to manage these exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. All derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets.
The following tables provide information regarding assets and liabilities recorded at fair value on a recurring basis (in thousands):
Fair ValueQuoted
Prices in
Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
April 2, 2021
Assets: Foreign currency contracts$28 $— $28 $— 
Liabilities: Foreign currency contracts152 — 152 — 
Liabilities: Interest rate swap5,726 — 5,726 — 
Liabilities: Contingent consideration2,281 — — 2,281 
December 31, 2020
Assets: Foreign currency contracts$2,070 $— $2,070 $— 
Liabilities: Interest rate swap7,026 — 7,026 — 
Liabilities: Contingent consideration3,900 — — 3,900 
Interest Rate Swaps
The Company periodically enters into interest rate swap agreements in order to reduce the cash flow risk caused by interest rate changes on its outstanding floating rate borrowings. Under these swap agreements, the Company pays a fixed rate of interest and receives a floating rate equal to one-month LIBOR. The variable rate received from the swap agreements and the variable rate paid on the outstanding debt will have the same rate of interest, excluding the credit spread, and will reset and pay interest on the same date. The Company has designated these swap agreements as cash flow hedges based on concluding the hedged forecasted transaction is probable of occurring within the period the cash flow hedge is anticipated to affect earnings.
Information regarding the Company’s outstanding interest rate swap designated as cash flow hedges as of April 2, 2021 is as follows (dollars in thousands):
Notional AmountStart DateEnd
Date		Pay Fixed RateReceive Current Floating RateFair ValueBalance Sheet Location
$150,000 Jun 2020Jun 20232.1785 %0.1091 %$(5,726)Other long-term liabilities
Information regarding the Company’s outstanding interest rate swap designated as cash flow hedges as of December 31, 2020 is as follows (dollars in thousands):
Notional AmountStart DateEnd
Date		Pay Fixed RateReceive Current Floating RateFair ValueBalance Sheet Location
$200,000 Jun 2020Jun 20232.1785 %0.1480 %$(7,026)Other long-term liabilities
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
Foreign Currency Contracts
The Company periodically enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate fluctuations in its international operations. The Company has designated these foreign currency forward contracts as cash flow hedges. Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of April 2, 2021 is as follows (dollars in thousands):
Notional AmountStart
Date		End
Date		$/Foreign CurrencyFair ValueBalance Sheet Location
$1,553 Apr 2021Aug 20210.0232UYU Peso$30 Prepaid expenses and other current assets
3,270 Apr 2021Nov 20210.0227UYU Peso10 Prepaid expenses and other current assets
2,048 Jul 2021Dec 20210.0228UYU Peso(12)Prepaid expenses and other current assets
8,973 Apr 2021Sep 20211.1949Euro(133)Accrued expenses and other current liabilities
6,101 Apr 2021Sep 20210.0454MXN Peso480 Accrued expenses and other current liabilities
7,269 Apr 2021Dec 20210.0485MXN Peso(1)Accrued expenses and other current liabilities
10,985 Apr 2021Dec 20211.2206Euro(362)Accrued expenses and other current liabilities
9,069 Apr 2021Dec 20210.0490MXN Peso(136)Accrued expenses and other current liabilities
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2020 is as follows (dollars in thousands):
Notional AmountStart
Date		End
Date		$/Foreign CurrencyFair ValueBalance Sheet Location
$16,132 Nov 2020Sep 20211.1949Euro$399 Prepaid expenses and other current assets
10,224 Jan 2021Sep 20210.0454MXN Peso922 Prepaid expenses and other current assets
2,656 Jan 2021Mar 20210.0443MXN Peso341 Prepaid expenses and other current assets
7,269 Apr 2021Dec 20210.0485MXN Peso77 Prepaid expenses and other current assets
3,252 Jan 2021Aug 20210.0232UYU Peso165 Prepaid expenses and other current assets
3,966 Jan 2021Nov 20210.0227UYU Peso166 Prepaid expenses and other current assets
Derivative Instruments with Hedge Accounting Designation
The following tables present the effect of cash flow hedge derivative instruments on other comprehensive income (loss) (“OCI”),
AOCI and the Company’s Condensed Consolidated Statements of Operations for the three months ended April 2, 2021 and April 3, 2020 (in thousands):
Three Months Ended
April 2, 2021April 3, 2020
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Sales$290,467 $8 $328,426 $(128)
Cost of sales205,981 624 231,724 325 
Operating expenses49,878 27 52,626 — 
Interest expense8,532 (1,034)10,361 (748)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
Unrealized Gain (Loss) Recognized in OCIRealized Gain (Loss) Reclassified from AOCI
Three months ended,Location in Statements of Operations and Comprehensive IncomeThree months ended,
April 2,
2021		April 3,
2020		April 2,
2021		April 3,
2020
Interest rate swap$266 $(6,387)Interest expense$(1,034)$(748)
Foreign exchange forwards(886)(274)Sales8 (128)
Foreign exchange forwards(559)(4,813)Cost of sales624 325 
Foreign exchange forwards(90)— Operating expenses27 — 
The Company expects to reclassify net losses totaling $3.2 million related to its cash flow hedges from AOCI into earnings during the next twelve months.
Contingent Consideration
The following table presents the changes in the estimated fair values of the Company’s liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the three months ended April 2, 2021 and April 3, 2020 (in thousands):
 Three Months Ended
April 2,
2021		April 3,
2020
Fair value measurement at beginning of period$3,900 $4,200 
Amount recorded for acquisitions
— 2,700 
Fair value measurement adjustment— (500)
Payments(1)
(1,621)— 
Foreign currency translation2 — 
Fair value measurement at end of period$2,281 $6,400 
__________
(1)Consists of payments associated with the Company’s acquisitions of InoMec and USB, resulting from achievement of revenue-based goals for the period from March 1, 2020 to February 28, 2021 for InoMec and January 1, 2020 to December 31, 2020 for USB.
On February 19, 2020, the Company acquired certain assets and liabilities of InoMec. See Note 2 “Business Acquisition” for additional information about the InoMec acquisition. On October 7, 2019, the Company acquired certain assets and liabilities of USB, a privately-held developer and manufacturer of complex braided biomedical structures for disposable and implantable medical devices. The contingent consideration at April 2, 2021 is the estimated fair value of the Company’s obligations, under the asset purchase agreements for InoMec and USB, to make additional payments if certain revenue goals are met.
As of April 2, 2021, the current portion of contingent consideration liabilities is $1.0 million and included in Accrued expenses and other current liabilities, and the non-current portion is $1.3 million and included in Other long-term liabilities on the Condensed Consolidated Balance Sheets. As of December 31, 2020, the current portion of contingent consideration liabilities was $1.7 million and included in Accrued expenses and other current liabilities, and the non-current portion was $2.2 million and included in Other long-term liabilities on the Condensed Consolidated Balance Sheets.
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The following table provides quantitative information associated with the fair value measurement of the Company’s liabilities for contingent consideration:
April 2, 2021
Contingency TypeMaximum Payout (undiscounted)Fair ValueValuation TechniqueUnobservable InputsWeighted Average or Range
Revenue-based payments$6,750 $2,281 Monte CarloRevenue volatility35.0 %
Discount rate4.0 %
Projected year(s) of payment2022-2024
December 31, 2020
Contingency TypeMaximum Payout (undiscounted)Fair ValueValuation TechniqueUnobservable InputsWeighted Average or Range
Revenue-based payments$9,000 $3,900 Monte CarloRevenue volatility35.0 %
Discount rate4.0 %
Projected year(s) of payment2021-2024
During the first quarter of 2020, the Company acquired a set of similar identifiable intangible assets relating to a license to use technology within its Non-Medical segment. At the date of acquisition, the Company estimated the original fair value of the contingent consideration to be $1.0 million, which was paid during 2020 upon achievement of the applicable milestones.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. The carrying amounts of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these items.
Borrowings under the Company’s Revolving Credit Facility, TLA Facility and TLB Facility accrue interest at a floating rate tied to a standard short-term borrowing index, selected at the Company’s option, plus an applicable margin. The carrying amount of this floating rate debt approximates fair value based upon the respective interest rates adjusting with market rate adjustments.
Equity Investments
The Company holds long-term, strategic investments in companies to promote business and strategic objectives. These investments are included in Other long-term assets on the Condensed Consolidated Balance Sheets. Non-marketable equity securities are equity securities without readily determinable fair value. The Company has elected the practicability exception to use an alternative approach that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. If an impairment is recognized on the Company’s non-marketable equity securities during the period, these assets are classified as Level 3 within the fair value hierarchy based on the nature of the fair value inputs.
Equity investments comprise the following (in thousands):
April 2,
2021		December 31,
2020
Equity method investment$20,135 $21,470 
Non-marketable equity securities5,723 5,723 
Total equity investments
$25,858 $27,193 
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The components of (Gain) loss on equity investments for each period were as follows (in thousands):
Three Months Ended
April 2,
2021		April 3,
2020
Equity method investment (gain) loss$1,335 $(1,925)
The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of April 2, 2021, the Company owned 6.6% of this fund.