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Business Acquisitions | 6 Months Ended
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Jul. 01, 2022
Business Combination and Asset Acquisition [Abstract] |
BUSINESS ACQUISITIONS | 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 equipment |  |  | 4,151 |
Goodwill |  |  | 68,460 |
Definite-lived intangible assets |  |  | 71,485 |
Operating lease assets |  |  | 3,505 |
Other noncurrent assets |  |  | 1,354 |
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 Assets |  | Fair Value Assigned |  | Weighted Average Amortization Period (Years) |  |  |  | Weighted Average Discount Rate
Customer lists |  | $ | 53,395 |  |  | 26.0 |  |  |  | 9.5%
Technology |  | 17,435 |  |  | 12.0 |  |  |  | 9.5%
Tradenames |  | 655 |  |  | 1.5 |  |  |  | 9.5%
|  | $ | 71,485 |  |  |  |  |  |  |
(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 |
Inventory |  |  | 11,360 |
Property, plant and equipment |  |  | 17,977 |
Goodwill |  |  | 78,302 |
Intangible assets |  |  | 105,300 |
Operating lease assets |  |  | 15,142 |
Other noncurrent assets |  |  | 695 |
Current liabilities |  |  | (11,143) |
Operating lease liabilities |  |  | (12,044) |
Fair value of net assets acquired |  |  | $ | 215,210 |
(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 income | 45,357 |  |  | 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).

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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