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Financial Instruments and Fair Value Measurements
 9 Months Ended
Oct. 01, 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)
October 1, 2021
Assets: Foreign currency contracts$115 $— $115 $— 
Liabilities: Foreign currency contracts420 — 420 — 
Liabilities: Interest rate swap4,403 — 4,403 — 
Liabilities: Contingent consideration2,282 — — 2,282 
December 31, 2020
Assets: Foreign currency contracts$2,070 $— $2,070 $— 
Liabilities: Interest rate swap7,026 — 7,026 — 
Liabilities: Contingent consideration3,900 — — 3,900 
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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 October 1, 2021 is as follows (dollars in thousands):
Notional AmountStart DateEnd
Date		Pay Fixed RateReceive Current Floating RateFair ValueBalance Sheet Location
$150,000 Jun 2020Jun 20232.1785 %0.0860 %$(4,403)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
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 October 1, 2021 is as follows (dollars in thousands):
Notional AmountStart
Date		End
Date		$/Foreign CurrencyFair ValueBalance Sheet Location
$665 Oct 2021Nov 20210.0222UYU Peso$34 Prepaid expenses and other current assets
1,015 Oct 2021Dec 20210.0226UYU Peso32 Prepaid expenses and other current assets
999 Oct 2021Dec 20210.0222UYU Peso49 Prepaid expenses and other current assets
2,155 Oct 2021Dec 20210.0479MXN Peso31 Accrued expenses and other current liabilities
3,669 Oct 2021Dec 20211.2230Euro(185)Accrued expenses and other current liabilities
3,648 Oct 2021Dec 20210.0486MXN Peso(5)Accrued expenses and other current liabilities
3,674 Oct 2021Dec 20211.2245Euro(190)Accrued expenses and other current liabilities
4,444 Oct 2021Dec 20210.0494MXN Peso(71)Accrued expenses and other current liabilities
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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 and Comprehensive Income for the nine months ended October 1, 2021 and October 2, 2020 (in thousands):
Three Months Ended
October 1, 2021October 2, 2020
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Sales$305,574 $(240)$235,942 $590 
Cost of sales223,702 434 178,009 (651)
Operating expenses48,782 12 18,175 (23)
Interest expense10,053 (584)9,368 (1,066)

Nine Months Ended
October 1, 2021October 2, 2020
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Sales$908,064 $(203)$804,483 $549 
Cost of sales652,960 1,508 591,985 (1,059)
Operating expenses148,056 50 119,479 (57)
Interest expense26,117 (2,613)29,002 (2,431)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
Unrealized Gain (Loss) Recognized in OCIRealized Gain (Loss) Reclassified from AOCI
Three Months EndedLocation in Statements of Operations and Comprehensive IncomeThree Months Ended
October 1,
2021		October 2,
2020		October 1,
2021		October 2,
2020
Interest rate swap$119 $(11)Interest expense$(584)$(1,066)
Foreign exchange contracts(239)68 Sales(240)590 
Foreign exchange contracts(235)451 Cost of sales434 (651)
Foreign exchange contracts49 57 Operating expenses12 (23)
Nine Months EndedLocation in Statements of Operations and Comprehensive IncomeNine Months Ended
October 1,
2021		October 2,
2020		October 1,
2021		October 2,
2020
Interest rate swaps$10 $(7,401)Interest expense$(2,613)$(2,431)
Foreign exchange contracts(977)277 Sales(203)549 
Foreign exchange contracts(69)(2,277)Cost of sales1,508 (1,059)
Foreign exchange contracts26 (15)Operating expenses50 (57)
The Company expects to reclassify net losses totaling $3.4 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 and nine months ended October 1, 2021 and October 2, 2020 (in thousands):
 Three Months EndedNine Months Ended
October 1,
2021		October 2,
2020		October 1,
2021		October 2,
2020
Fair value measurement at beginning of period$2,281 $5,887 $3,900 $4,200 
Amount recorded for acquisitions
— — — 2,700 
Fair value measurement adjustment— — — (500)
Payments(1)
— (500)(1,621)(1,000)
Foreign currency translation1 14 3 1 
Fair value measurement at end of period$2,282 $5,401 $2,282 $5,401 
__________
(1)Amounts for 2021 periods consist 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. Amounts for 2020 periods consist of a payment made to settle a portion of a contingent consideration arrangement relating to a license to use technology.
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 October 1, 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.
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
As of October 1, 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.
The following table provides quantitative information associated with the fair value measurement of the Company’s liabilities for contingent consideration:
October 1, 2021
Contingency TypeMaximum Payout (undiscounted)Fair ValueValuation TechniqueUnobservable InputsWeighted Average or Range
Revenue-based payments$6,750 $2,282 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
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):
October 1,
2021		December 31,
2020
Equity method investment$17,627 $21,470 
Non-marketable equity securities5,723 5,723 
Total equity investments
$23,350 $27,193 
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The components of (Gain) loss on equity investments for each period were as follows (in thousands):
Three Months EndedNine Months Ended
October 1,
2021		October 2,
2020		October 1,
2021		October 2,
2020
Equity method investment (gain) loss$(152)$(2,234)$1,867 $(3,954)
The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of October 1, 2021, the Company owned 6.6% of this fund.