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 March 31,June 30, 2023
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
 _____________________________________________________________ 
itgrlogo20190925a07.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 AprilJuly 21, 2023 was: 33,276,42733,308,080 shares.



INTEGER HOLDINGS CORPORATION
Form 10-Q
For the Quarterly Period Ended March 31,June 30, 2023
TABLE OF CONTENTS
Page
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 5.
ITEM 6.

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Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGER HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands except share and per share data)(in thousands except share and per share data)March 31,
2023
December 31,
2022
(in thousands except share and per share data)June 30,
2023
December 31,
2022
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$40,604 $24,272 Cash and cash equivalents$38,615 $24,272 
Accounts receivable, net of provision for credit losses of $0.4 million and $0.3 million, respectivelyAccounts receivable, net of provision for credit losses of $0.4 million and $0.3 million, respectively250,513 224,325 Accounts receivable, net of provision for credit losses of $0.4 million and $0.3 million, respectively236,526 224,325 
InventoriesInventories225,282 208,766 Inventories228,931 208,766 
Refundable income taxesRefundable income taxes2,056 2,003 Refundable income taxes3,030 2,003 
Contract assetsContract assets80,929 71,927 Contract assets80,010 71,927 
Prepaid expenses and other current assetsPrepaid expenses and other current assets29,605 27,005 Prepaid expenses and other current assets28,816 27,005 
Total current assetsTotal current assets628,989 558,298 Total current assets615,928 558,298 
Property, plant and equipment, netProperty, plant and equipment, net330,995 317,243 Property, plant and equipment, net348,895 317,243 
GoodwillGoodwill986,906 982,192 Goodwill985,982 982,192 
Other intangible assets, netOther intangible assets, net811,460 819,889 Other intangible assets, net797,594 819,889 
Deferred income taxesDeferred income taxes6,363 6,247 Deferred income taxes6,447 6,247 
Operating lease assetsOperating lease assets72,532 74,809 Operating lease assets70,281 74,809 
Financing lease assetsFinancing lease assets8,650 8,852 Financing lease assets8,537 8,852 
Other long-term assetsOther long-term assets27,655 26,856 Other long-term assets27,680 26,856 
Total assetsTotal assets$2,873,550 $2,794,386 Total assets$2,861,344 $2,794,386 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:Current liabilities:Current liabilities:
Current portion of long-term debtCurrent portion of long-term debt$10,000 $18,188 Current portion of long-term debt$5,000 $18,188 
Accounts payableAccounts payable124,280 110,780 Accounts payable107,507 110,780 
Income taxes payableIncome taxes payable11,053 10,923 Income taxes payable3,036 10,923 
Operating lease liabilitiesOperating lease liabilities10,222 10,362 Operating lease liabilities10,075 10,362 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities69,920 73,499 Accrued expenses and other current liabilities74,214 73,499 
Total current liabilitiesTotal current liabilities225,475 223,752 Total current liabilities199,832 223,752 
Long-term debtLong-term debt992,469 907,073 Long-term debt980,398 907,073 
Deferred income taxesDeferred income taxes153,028 160,671 Deferred income taxes152,926 160,671 
Operating lease liabilitiesOperating lease liabilities61,975 64,049 Operating lease liabilities59,988 64,049 
Financing lease liabilitiesFinancing lease liabilities7,809 8,006 Financing lease liabilities7,677 8,006 
Other long-term liabilitiesOther long-term liabilities14,858 13,379 Other long-term liabilities14,868 13,379 
Total liabilitiesTotal liabilities1,455,614 1,376,930 Total liabilities1,415,689 1,376,930 
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Stockholders’ equity:Stockholders’ equity:Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,265,390 and 33,169,778 shares issued and outstanding, respectively33 33 
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,308,080 and 33,169,778 shares issued and outstanding, respectivelyCommon stock, $0.001 par value; 100,000,000 shares authorized; 33,308,080 and 33,169,778 shares issued and outstanding, respectively33 33 
Additional paid-in capitalAdditional paid-in capital709,171 731,393 Additional paid-in capital715,715 731,393 
Retained earningsRetained earnings693,766 680,701 Retained earnings717,737 680,701 
Accumulated other comprehensive incomeAccumulated other comprehensive income14,966 5,329 Accumulated other comprehensive income12,170 5,329 
Total stockholders’ equityTotal stockholders’ equity1,417,936 1,417,456 Total stockholders’ equity1,445,655 1,417,456 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$2,873,550 $2,794,386 Total liabilities and stockholders’ equity$2,861,344 $2,794,386 
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 Ended Three Months EndedSix Months Ended
(in thousands except per share data)(in thousands except per share data)March 31,
2023
April 1,
2022
(in thousands except per share data)June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
SalesSales$378,785 $310,912 Sales$400,044 $350,081 $778,829 $660,993 
Cost of salesCost of sales282,112 229,437 Cost of sales294,240 257,184 576,352 486,621 
Gross profitGross profit96,673 81,475 Gross profit105,804 92,897 202,477 174,372 
Operating expenses:Operating expenses:Operating expenses:
Selling, general and administrativeSelling, general and administrative41,886 39,560 Selling, general and administrative45,827 41,786 87,713 81,346 
Research, development and engineeringResearch, development and engineering19,092 16,083 Research, development and engineering16,883 14,871 35,975 30,954 
Restructuring and other chargesRestructuring and other charges1,529 3,335 Restructuring and other charges1,518 3,533 3,047 6,868 
Total operating expensesTotal operating expenses62,507 58,978 Total operating expenses64,228 60,190 126,735 119,168 
Operating incomeOperating income34,166 22,497 Operating income41,576 32,707 75,742 55,204 
Interest expenseInterest expense17,254 5,968 Interest expense11,459 7,773 28,713 13,741 
Loss on equity investments155 2,404 
(Gain) loss on equity investments(Gain) loss on equity investments(134)320 21 2,724 
Other loss, netOther loss, net760 177 Other loss, net359 191 1,119 368 
Income before taxesIncome before taxes15,997 13,948 Income before taxes29,892 24,423 45,889 38,371 
Provision for income taxesProvision for income taxes2,932 2,581 Provision for income taxes5,921 3,587 8,853 6,168 
Net incomeNet income$13,065 $11,367 Net income$23,971 $20,836 $37,036 $32,203 
Earnings per share:Earnings per share:Earnings per share:
BasicBasic$0.39 $0.34 Basic$0.72 $0.63 $1.11 $0.97 
DilutedDiluted$0.39 $0.34 Diluted$0.71 $0.62 $1.10 $0.97 
Weighted average shares outstanding:Weighted average shares outstanding:Weighted average shares outstanding:
BasicBasic33,258 33,091 Basic33,312 33,111 33,285 33,101 
DilutedDiluted33,575 33,302 Diluted33,686 33,350 33,631 33,326 
Comprehensive Income
Comprehensive Income (Loss)Comprehensive Income (Loss)
Net incomeNet income$13,065 $11,367 Net income$23,971 $20,836 $37,036 $32,203 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Foreign currency translation gain (loss)Foreign currency translation gain (loss)7,925 (7,887)Foreign currency translation gain (loss)(2,901)(27,274)5,024 (35,161)
Change in fair value of cash flow hedges, net of taxChange in fair value of cash flow hedges, net of tax1,712 2,734 Change in fair value of cash flow hedges, net of tax105 (47)1,817 2,687 
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax9,637 (5,153)Other comprehensive income (loss), net of tax(2,796)(27,321)6,841 (32,474)
Comprehensive income, net of tax$22,702 $6,214 
Comprehensive income (loss), net of taxComprehensive income (loss), net of tax$21,175 $(6,485)$43,877 $(271)
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)
Three Months Ended Six Months Ended
(in thousands)(in thousands)March 31,
2023
April 1,
2022
(in thousands)June 30,
2023
July 1,
2022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$13,065 $11,367 Net income$37,036 $32,203 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization24,126 22,542 Depreciation and amortization48,569 45,753 
Debt related charges included in interest expenseDebt related charges included in interest expense5,149 481 Debt related charges included in interest expense6,118 962 
Inventory step-up amortizationInventory step-up amortization— 798 Inventory step-up amortization— 798 
Stock-based compensationStock-based compensation6,102 4,995 Stock-based compensation11,603 10,951 
Non-cash lease expenseNon-cash lease expense2,741 2,539 Non-cash lease expense5,473 5,344 
Non-cash loss on equity investmentsNon-cash loss on equity investments155 2,404 Non-cash loss on equity investments21 2,724 
Contingent consideration fair value adjustmentContingent consideration fair value adjustment(265)— Contingent consideration fair value adjustment(265)— 
Other non-cash (gains) lossesOther non-cash (gains) losses(1,417)1,328 Other non-cash (gains) losses(1,437)7,510 
Deferred income taxesDeferred income taxes(5)(709)Deferred income taxes(4)(969)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities, net of acquisition:Changes in operating assets and liabilities, net of acquisition:
Accounts receivableAccounts receivable(24,206)(15,998)Accounts receivable(9,742)(37,642)
InventoriesInventories(17,016)(20,153)Inventories(21,646)(41,471)
Prepaid expenses and other assetsPrepaid expenses and other assets1,657 (458)Prepaid expenses and other assets1,308 (783)
Contract assetsContract assets(8,819)(1,754)Contract assets(7,983)(6,189)
Accounts payableAccounts payable12,877 14,997 Accounts payable797 25,554 
Accrued expenses and other liabilitiesAccrued expenses and other liabilities(7,773)(5,851)Accrued expenses and other liabilities1,781 (7,295)
Income taxesIncome taxes(183)1,633 Income taxes(9,296)(439)
Net cash provided by operating activitiesNet cash provided by operating activities6,188 18,161 Net cash provided by operating activities62,333 37,011 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Acquisition of property, plant and equipmentAcquisition of property, plant and equipment(24,694)(10,863)Acquisition of property, plant and equipment(57,416)(22,610)
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment— 465 Proceeds from sale of property, plant and equipment50 587 
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired— (126,636)
Net cash used in investing activitiesNet cash used in investing activities(24,694)(10,398)Net cash used in investing activities(57,366)(148,659)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Principal payments of term loansPrincipal payments of term loans(390,938)(3,813)Principal payments of term loans(398,438)(7,625)
Proceeds from issuance of convertible notes, net of discountProceeds from issuance of convertible notes, net of discount486,250 — Proceeds from issuance of convertible notes, net of discount486,250 — 
Proceeds from revolving credit facilityProceeds from revolving credit facility208,689 15,000 Proceeds from revolving credit facility229,604 160,000 
Payments of revolving credit facilityPayments of revolving credit facility(232,500)(10,000)Payments of revolving credit facility(263,443)(34,000)
Purchase of capped callsPurchase of capped calls(35,000)— Purchase of capped calls(35,000)— 
Payment of debt issuance costsPayment of debt issuance costs(1,055)— Payment of debt issuance costs(2,181)— 
Proceeds from the exercise of stock optionsProceeds from the exercise of stock options555 — Proceeds from the exercise of stock options1,948 — 
Tax withholdings related to net share settlements of restricted stock unit awardsTax withholdings related to net share settlements of restricted stock unit awards(2,610)(1,556)Tax withholdings related to net share settlements of restricted stock unit awards(2,930)(1,926)
Contingent consideration paymentsContingent consideration payments— (493)Contingent consideration payments(7,660)(493)
Principal payments on finance leasesPrincipal payments on finance leases(275)(166)Principal payments on finance leases(557)(353)
Net cash provided by (used in) financing activities33,116 (1,028)
Net cash provided by financing activitiesNet cash provided by financing activities7,593 115,603 
Effect of foreign currency exchange rates on cash and cash equivalentsEffect of foreign currency exchange rates on cash and cash equivalents1,722 1,048 Effect of foreign currency exchange rates on cash and cash equivalents1,783 (6,247)
Net increase in cash and cash equivalents16,332 7,783 
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents14,343 (2,292)
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period24,272 17,885 Cash and cash equivalents, beginning of period24,272 17,885 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$40,604 $25,668 Cash and cash equivalents, end of period$38,615 $15,593 
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 Ended Three Months EndedSix Months Ended
(in thousands)(in thousands)March 31,
2023
April 1,
2022
(in thousands)June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Total stockholders’ equity, beginning balanceTotal stockholders’ equity, beginning balance$1,417,456 $1,354,697 Total stockholders’ equity, beginning balance$1,417,936 $1,364,350 $1,417,456 $1,354,697 
Common stock and additional paid-in capitalCommon stock and additional paid-in capitalCommon stock and additional paid-in capital
Balance, beginning of periodBalance, beginning of period731,426 713,183 Balance, beginning of period709,204 716,622 731,426 713,183 
Stock awards exercised or vestedStock awards exercised or vested(2,074)(1,556)Stock awards exercised or vested1,043 (370)(1,031)(1,926)
Stock-based compensationStock-based compensation6,102 4,995 Stock-based compensation5,501 5,956 11,603 10,951 
Capped calls related to the issuance of convertible notes, net of taxCapped calls related to the issuance of convertible notes, net of tax(26,250)— Capped calls related to the issuance of convertible notes, net of tax— — (26,250)— 
Balance, end of periodBalance, end of period709,204 716,622 Balance, end of period715,748 722,208 715,748 722,208 
Retained earningsRetained earningsRetained earnings
Balance, beginning of periodBalance, beginning of period680,701 614,324 Balance, beginning of period693,766 625,691 680,701 614,324 
Net incomeNet income13,065 11,367 Net income23,971 20,836 37,036 32,203 
Balance, end of periodBalance, end of period693,766 625,691 Balance, end of period717,737 646,527 717,737 646,527 
Accumulated other comprehensive incomeAccumulated other comprehensive incomeAccumulated other comprehensive income
Balance, beginning of periodBalance, beginning of period5,329 27,190 Balance, beginning of period14,966 22,037 5,329 27,190 
Other comprehensive income (loss)Other comprehensive income (loss)9,637 (5,153)Other comprehensive income (loss)(2,796)(27,321)6,841 (32,474)
Balance, end of periodBalance, end of period14,966 22,037 Balance, end of period12,170 (5,284)12,170 (5,284)
Total stockholders’ equity, ending balanceTotal stockholders’ equity, ending balance$1,417,936 $1,364,350 Total stockholders’ equity, ending balance$1,445,655 $1,363,451 $1,445,655 $1,363,451 
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 rhythm management, neuromodulation, orthopedics, vascular, advanced surgical and portable medical markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition to medical technologies, the Company develops batteries for high-end niche applications in the energy, military, and environmental markets. The Company’s customers include large multi-national original equipment manufacturers (“OEMs”) and their affiliated subsidiaries.
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, 2022.
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 quarterssix months of 2023 ended on June 30 and consisted of 91 days and 181 days, respectively. The second quarter and first six months of 2022 ended on March 31 and AprilJuly 1 respectively, and consisted of 9091 days and 91182 days, respectively.
Trade Accounts Receivable - Factoring Arrangements
In the second quarter of 2023, the Company entered into a receivables factoring arrangement, pursuant to which certain receivables may be sold to a financial institution without recourse in exchange for cash. Transactions under the receivables factoring arrangement are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. Under this arrangement, the Company does not maintain any beneficial interest in the receivables sold. Once sold, the receivables are no longer available to satisfy creditors in the event of bankruptcy. Sale proceeds are reflected in Cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. Factoring fees are recorded in Selling, general, and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the six months ended June 30, 2023, the Company sold, without recourse, $50.3 million of accounts receivable. Factoring fees were $0.4 million for the three and six months ended June 30, 2023.
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, 2022, 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
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 earn-out period ended on December 31, 2022 and, in accordance with the terms of the share purchase agreement, full payment was made in April 2023. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration.
The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon itstheir estimated fair value at the date of the acquisition. There were no adjustments to the initial purchase price allocation. The following table summarizes the final 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 
Pro Forma (unaudited) disclosures
The following table presents (in thousands) unaudited pro forma results of operations for the three and six months ended AprilJuly 1, 2022 as if Aran had been included in the Company’s financial results as of the beginning of fiscal year 2021, through the date of acquisition. The pro forma results include the historical results of operations of the Company and Aran, as well as adjustments for additional amortization of the assets acquired, additional interest expense related to the financing of the transactions 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.
Sales$316,275 
Net income12,127 
Three Months Ended
July 1, 2022
Six Months Ended
July 1, 2022
Sales$350,081 $666,356 
Net income22,101 34,228 
Acquisition costs
Direct costs of this acquisition were not material for the three and six months ended March 31,June 30, 2023. During the three and six months ended AprilJuly 1, 2022, direct costs of this acquisition of $0.9$1.5 million and $2.3 million were expensed as incurred and included in Restructuring and other charges in the Condensed Consolidated Statements of Operations and Comprehensive Income.Income (Loss).
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(3.)    SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental information relating to the Condensed Consolidated Statements of Cash Flows (in thousands):
Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
Noncash investing and financing activities:Noncash investing and financing activities:Noncash investing and financing activities:
Property, plant and equipment purchases included in accounts payableProperty, plant and equipment purchases included in accounts payable$13,434 $3,688 Property, plant and equipment purchases included in accounts payable$9,059 $6,373 
Debt issuance costs incurred but not yet paid1,125 — 
Supplemental lease disclosures:Supplemental lease disclosures:Supplemental lease disclosures:
Assets acquired under operating leasesAssets acquired under operating leases325 7,914 Assets acquired under operating leases912 11,265 
(4.)    INVENTORIES
Inventories comprise the following (in thousands):
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
Raw materialsRaw materials$101,762 $98,640 Raw materials$102,280 $98,640 
Work-in-processWork-in-process110,701 98,188 Work-in-process112,887 98,188 
Finished goodsFinished goods12,819 11,938 Finished goods13,764 11,938 
TotalTotal$225,282 $208,766 Total$228,931 $208,766 
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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 threesix months ended March 31,June 30, 2023 were as follows (in thousands):
MedicalNon- MedicalTotalMedicalNon- MedicalTotal
December 31, 2022December 31, 2022$965,192 $17,000 $982,192 December 31, 2022$965,192 $17,000 $982,192 
Foreign currency translationForeign currency translation4,714 — 4,714 Foreign currency translation3,790 — 3,790 
March 31, 2023$969,906 $17,000 $986,906 
June 30, 2023June 30, 2023$968,982 $17,000 $985,982 
Intangible Assets
Intangible assets comprise the following (in thousands):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
March 31, 2023
June 30, 2023June 30, 2023
Definite-lived:Definite-lived:Definite-lived:
Purchased technology and patentsPurchased technology and patents$285,143 $(183,340)$101,803 Purchased technology and patents$284,921 $(187,279)$97,642 
Customer listsCustomer lists830,354 (226,011)604,343 Customer lists829,550 (234,506)595,044 
Amortizing tradenames and otherAmortizing tradenames and other21,030 (6,004)15,026 Amortizing tradenames and other21,012 (6,392)14,620 
Total amortizing intangible assetsTotal amortizing intangible assets$1,136,527 $(415,355)$721,172 Total amortizing intangible assets$1,135,483 $(428,177)$707,306 
Indefinite-lived:Indefinite-lived:Indefinite-lived:
Trademarks and tradenamesTrademarks and tradenames$90,288 Trademarks and tradenames$90,288 
December 31, 2022December 31, 2022December 31, 2022
Definite-lived:Definite-lived:Definite-lived:
Purchased technology and patentsPurchased technology and patents$283,929 $(178,844)$105,085 Purchased technology and patents$283,929 $(178,844)$105,085 
Customer listsCustomer lists825,634 (216,546)609,088 Customer lists825,634 (216,546)609,088 
Amortizing tradenames and otherAmortizing tradenames and other21,028 (5,600)15,428 Amortizing tradenames and other21,028 (5,600)15,428 
Total amortizing intangible assetsTotal amortizing intangible assets$1,130,591 $(400,990)$729,601 Total amortizing intangible assets$1,130,591 $(400,990)$729,601 
Indefinite-lived:Indefinite-lived:Indefinite-lived:
Trademarks and tradenamesTrademarks and tradenames$90,288 Trademarks and tradenames$90,288 
Aggregate intangible asset amortization expense comprises the following (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Cost of salesCost of sales$3,977 $3,645 Cost of sales$4,037 $4,037 $8,014 $7,682 
Selling, general and administrative expensesSelling, general and administrative expenses8,947 7,959 Selling, general and administrative expenses9,070 8,248 18,017 16,207 
Total intangible asset amortization expenseTotal intangible asset amortization expense$12,924 $11,604 Total intangible asset amortization expense$13,107 $12,285 $26,031 $23,889 
Estimated future intangible asset amortization expense based on the carrying value as of March 31,June 30, 2023 is as follows (in thousands):
Remainder of 20232024202520262027After 2027
Amortization Expense$39,507 $51,856 $51,069 $49,247 $46,283 $483,210 
Remainder of 20232024202520262027After 2027
Amortization Expense$26,368 $51,803 $51,014 $49,189 $46,232 $482,700 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT
Long-term debt comprises the following (in thousands):
March 31, 2023December 31, 2022 June 30, 2023December 31, 2022
Principal AmountUnamortizedDiscounts and Issuance CostsNet Carrying AmountPrincipal AmountUnamortizedDiscounts and Issuance CostsNet Carrying AmountPrincipal AmountUnamortizedDiscounts and Issuance CostsNet Carrying AmountPrincipal AmountUnamortizedDiscounts and Issuance CostsNet Carrying Amount
Senior Secured Credit Facilities:Senior Secured Credit Facilities:Senior Secured Credit Facilities:
Revolving credit facilitiesRevolving credit facilities$119,040 — $119,040 $140,300 — $140,300 Revolving credit facilities$108,640 $— $108,640 $140,300 $— $140,300 
Term loan ATerm loan A400,000 (2,095)397,905 455,313 $(2,172)453,141 Term loan A392,500 (1,958)390,542 455,313 (2,172)453,141 
Term loan BTerm loan B— — — 335,625 (3,805)331,820 Term loan B— — — 335,625 (3,805)331,820 
Convertible Senior Notes due 2028Convertible Senior Notes due 2028500,000 (14,476)485,524 — — — Convertible Senior Notes due 2028500,000 (13,784)486,216 — — — 
TotalTotal$1,019,040 $(16,571)$1,002,469 $931,238 $(5,977)$925,261 Total$1,001,140 $(15,742)$985,398 $931,238 $(5,977)$925,261 
Current portion of long-term debtCurrent portion of long-term debt(10,000)(18,188)Current portion of long-term debt(5,000)(18,188)
Long-term debtLong-term debt$992,469 $907,073 Long-term debt$980,398 $907,073 
Senior Secured Credit Facilities
On September 2, 2021, the Company entered into a credit agreement (the “2021 Credit Agreement”), governing the Company’s senior secured credit facilities (the “Senior Secured Credit Facilities”). As of December 31, 2022, the Senior Secured Credit Facilities consisted 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.
Amendments to the 2021 Credit Agreement
On January 30, 2023, the Company entered into a first amendment (the “First Amendment”) to the 2021 Credit Agreement to, among other things: (i) permit the Company to issue the notes (described below under 2028 Convertible Notes)Notes and Related Capped Call Transactions) and incur indebtedness thereunder in an aggregate principal amount of up to $600 million at any time outstanding; (ii) permit the Company to enter into bond hedge and capped call transactions; (iii) permit the Company to issue call options, warrants or purchase rights relating to the Company’s common stock; provided, in each case, that the terms of any such transaction are customary for transactions of such type.
On February 15, 2023, the Company entered into a second amendment (the “Second Amendment”) to the 2021 Credit Agreement to, among other things: (i) increase the maximum borrowing capacity under the Revolving Credit Facility by $100 million from $400 million to $500 million, (ii) extend the maturity date for both the Revolving Credit Facility and the TLA Facility to February 15, 2028, (iii) allow for borrowings by the Company under the Revolving Credit Facility denominated in Euros, subject to a sublimit equal to 50% of the maximum borrowing capacity under the Revolving Credit Facility, (iv) replace the LIBOR-based reference interest rate option with a forward-looking term rate based on the secured overnight financing rate (SOFR) for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), and (v) add carveouts to certain negative covenants included within the 2021 Credit Agreement to permit the expansion of capacity in Ireland by the Company and incur indebtedness related thereto.
The information provided below reflects the First Amendment and Second Amendment (collectively the “2023 Amendments”) described above. Details of our Long-term debt as of December 31, 2022 can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Revolving Credit Facility
The Revolving Credit Facility matures on February 15, 2028. As of March 31,June 30, 2023, the Company had available borrowing capacity on the Revolving Credit Facility of $377.5$387.9 million after giving effect to $119.0$108.6 million of outstanding borrowings and $3.5 million of outstanding standby letters of credit. Borrowings under the Revolving Credit Facility will bear interest at a rate of Adjusted Term SOFR, in relation to any loan in U.S. dollars, and EURIBOR, in relation to any loan in Euros, plus a margin based on the Company’s Secured Net Leverage Ratio (as defined in the Senior Secured Credit Facilities agreement). In addition, 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 Secured Net Leverage Ratio. As of March 31,June 30, 2023, the weighted average interest rate on outstanding borrowings under the Revolving Credit Facility was 4.76%4.92% and the commitment fee on the unused portion of the Revolving Credit Facility was 0.20%0.18%.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
Term Loan Facilities
The TLA Facility matures on February 15, 2028, and requires 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 above for the Revolving Credit Facility borrowings in U.S. dollars. As of March 31,June 30, 2023, the interest rate on the TLA Facility was 6.66%6.70%.
In February 2023, the Company used a portion of the proceeds from its notes offering (see 2028 Convertible Senior Notes and Related Capped Call Transactions) to settle in full principal and interest due under the TLB Facility.
Deferred Debt Issuance Costs and Discounts
The change in deferred debt issuance costs related to the Company’s Revolving Credit Facility is as follows (in thousands):
December 31, 2022$2,387 
Financing costs incurred579 
Write-off of deferred debt issuance costs(260)
Amortization during the period(130)(271)
March 31,June 30, 2023$2,5762,435 
The change in unamortized discount and deferred debt issuance costs related to the Term Loan Facilities is as follows (in thousands):
Deferred Debt Issuance CostsUnamortized Discount on TLB FacilityTotalDeferred Debt Issuance CostsUnamortized Discount on TLB FacilityTotal
December 31, 2022December 31, 2022$4,569 $1,408 $5,977 December 31, 2022$4,569 $1,408 $5,977 
Financing costs incurredFinancing costs incurred418 — 418 Financing costs incurred418 — 418 
Write-off of deferred debt issuance costs and unamortized discountWrite-off of deferred debt issuance costs and unamortized discount(2,742)(1,391)(4,133)Write-off of deferred debt issuance costs and unamortized discount(2,780)(1,391)(4,171)
Amortization during the periodAmortization during the period(150)(17)(167)Amortization during the period(249)(17)(266)
March 31, 2023$2,095 $— $2,095 
June 30, 2023June 30, 2023$1,958 $— $1,958 
Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred. In connection with the 2023 Amendments, the Company incurred and capitalized an aggregate of $1.0 million of debt issuance costs.
In connection with the 2023 Amendments, for each separate debt instrument on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment, the Company performed an assessment of whether the transaction was deemed to be new debt, a modification of existing debt, or an extinguishment of existing debt.
Based on this assessment, $3.8 million of unamortized deferred debt issuance costs related to the Revolving Credit Facility and TLA Facility were deemed to be related to the issuance of new debt, or the modification of existing debt, and therefore will continue to be deferred and amortized over the term of the associated debt. The remaining $0.6 million of unamortized deferred debt issuance costs related to the Revolving Credit Facility and TLA Facility were deemed to be related to the extinguishment of debt and were expensed and included in Interest expense during the threesix months ended March 31,June 30, 2023. Additionally, in connection with the full repayment of the TLB Facility, the Company incurred a $3.8 million loss on extinguishment of debt from the write-off of the remaining deferred debt issuance costs and original issue discount, which were expensed and included in Interest expense during the threesix months ended March 31,June 30, 2023.
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. As of March 31,June 30, 2023, the Company was in compliance with these financial covenants.
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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
Contractual maturities under the Senior Secured Credit Facilities for the remainder of 2023 and through maturity, excluding any discounts or premiums, as of March 31,June 30, 2023 are as follows (in thousands):
Remainder of 20232024202520262027After 2027
Future minimum principal payments$7,500 $10,000 $17,500 $27,500 $30,000 $426,540 
Remainder of 20232024202520262027After 2027
Future minimum principal payments$— $10,000 $17,500 $27,500 $30,000 $416,140 
2028 Convertible Senior Notes and Related Capped Call Transactions
In February of 2023, the Company issued $500 million aggregate principal amount of Convertible Senior Notes due in 2028 (“2028 Notes”) in a private offering, which aggregate principal amount included the exercise in full of the initial purchasers’ option to purchase up to an additional $65 million principal amount of the 2028 Notes. The 2028 Notes mature on February 15, 2028 and bear interest at a fixed rate of 2.125% per annum, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2023. The total net proceeds from the issuance of the 2028 Notes (which includes the additional proceeds from the purchasers’ option), after deducting initial purchasers' discounts and commissions and debt issuance costs, were approximately $485 million.
Conversion and Redemption Terms of the 2028 Notes
Each $1,000 principal amount of the 2028 Notes is initially convertible into 11.4681 shares of the Company’s common stock (the “2028 Conversion Option”), which is equivalent to an initial conversion price of approximately $87.20 per share of common stock, subject to standard anti-dilutive adjustments and adjustments upon the occurrence of specified events. The initial conversion price represents a premium of approximately 32.5% to the $65.81 per share closing price of the Company’s common stock on January 31, 2023.
The 2028 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders prior to the close of business on the business day immediately preceding November 15, 2027, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2023 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “Measurement Period”) in which the trading price (as defined in the Indenture governing the 2028 Notes) per $1,000 principal amount of the 2028 Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate in effect on each such trading day; (3) if the Company calls any or all of the 2028 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after November 15, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2028 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.
Upon conversion, the 2028 Notes will be settled in cash up to the aggregate principal amount of the 2028 Notes to be converted, and in cash, shares of the Company’s common stock or a combination thereof, at the Company’s option, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2028 Notes being converted. If the Company undergoes a fundamental change (as defined in the indenture governing the 2028 Notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2028 Notes, in principal amounts of $1,000 or a multiple thereof, at a fundamental change repurchase price equal to 100% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or during the relevant redemption period.
As of March 31,June 30, 2023, the conditions allowing holders of the Convertible Notes to convert had not been met and, therefore, the Convertible Notes are classified as a long-term liability on the Condensed Consolidated Balance Sheets at March 31,June 30, 2023.



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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(6.)     DEBT (Continued)
The Company may not redeem the 2028 Notes prior to February 20, 2026. The Company may redeem for cash all or any portion of the 2028 Notes, at its option, on or after February 20, 2026 and prior to February 15, 2028, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than two trading days immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the 2028 Notes.
Seniority of the 2028 Notes
The 2028 Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2028 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
Indenture
The Company issued the Notes pursuant to an indenture dated as of February 3, 2023 (the “Indenture”) by and between the Company and Wilmington Trust, National Association, as trustee. The Indenture provides for customary events of default, which include (subject in certain cases to grace and cure periods), among others: nonpayment of principal or interest; failure by the Company to comply with its conversion obligations upon exercise of a holder’s conversion right under the Indenture; breach of covenants or other agreements in the Indenture; defaults by the Company or any significant subsidiary (as defined in the Indenture) with respect to other indebtedness in excess of a threshold amount; failure by the Company or any significant subsidiary to pay final judgments in excess of a threshold amount; and the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to the Company or any significant subsidiary. Generally, if an event of default occurs and is continuing under the Indenture, either the Indenture trustee or the holders of at least 25% in aggregate principal amount of the 2028 Notes then outstanding may declare the principal amount plus accrued and unpaid interest on the Notes to be immediately due and payable.
Covenants
The 2028 Notes do not contain financial maintenance covenants.
Deferred Debt Issuance Costs and Discounts
The 2028 Notes are accounted for as a single liability measured at amortized cost. The discount and issuance costs related to the 2028 Notes are being amortized to interest expense over the contractual term of the 2028 Notes at an effective interest rate of 2.76%.
Fair Value of the 2028 Notes
The estimated fair value of the 2028 Notes was approximately $544$593 million as of March 31,June 30, 2023. The estimated fair value of the 2028 Notes was determined through consideration of quoted market prices. The fair value of the 2028 Notes are categorized in Level 2 of the fair value hierarchy.
Capped Call Transactions
In connection with the issuance of the 2028 Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are expected generally to reduce the potential dilution to the Company’s common stock in connection with any conversion of the 2028 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2028 Notes, as the case may be, with such reduction and/or offset subject to a cap based on strike price of written warrants. The initial upper strike price of the Capped Calls is $108.59 per share and is subject to certain adjustments under the terms of the Capped Calls. The Capped Calls cover, subject to anti-dilution adjustments, approximately 5.85.7 million shares of the Company’s common stock, the same number of shares initially underlying the 2028 Notes. For accounting purposes, the Capped Calls are separate transactions, and not integrated with the issuance of the 2028 Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The 2028 Notes and the Capped Calls will be integrated for tax purposes. The accounting impact of this tax treatment results in the Capped Calls being deductible as original issue discount for tax purposes over the term of the 2028 Notes, which generates an $8.8 million deferred tax asset recognized through equity. The cost to the Company of the Capped Calls was $35 million, which was recorded, net of tax, as a reduction to additional paid-in capital.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(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, performance awards, time-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”), 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 Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
RSUs and PRSUsRSUs and PRSUs$6,102 $4,995 RSUs and PRSUs$5,501 $5,956 $11,603 $10,951 
Total stock-based compensation expenseTotal stock-based compensation expense$6,102 $4,995 Total stock-based compensation expense$5,501 $5,956 $11,603 $10,951 
Cost of salesCost of sales$1,107 $769 Cost of sales$1,155 $837 $2,262 $1,606 
Selling, general and administrativeSelling, general and administrative4,465 3,545 Selling, general and administrative4,085 4,308 8,550 7,853 
Research, development and engineeringResearch, development and engineering469 325 Research, development and engineering259 338 728 663 
Restructuring and other chargesRestructuring and other charges61 356 Restructuring and other charges473 63 829 
Total stock-based compensation expenseTotal stock-based compensation expense$6,102 $4,995 Total stock-based compensation expense$5,501 $5,956 $11,603 $10,951 
Stock Options
The following table summarizes the Company’s stock option activity for the threesix month period ended March 31,June 30, 2023:
Number of
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(In Years)
Aggregate
Intrinsic
Value
(In Millions)
Number of
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(In Years)
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 31, 2022Outstanding at December 31, 2022240,622 $38.51 Outstanding at December 31, 2022240,622 $38.51 
ExercisedExercised(35,784)36.78 Exercised(68,821)38.92 
Outstanding and exercisable at March 31, 2023204,838 $38.82 3.2$7.9 
Outstanding and exercisable at June 30, 2023Outstanding and exercisable at June 30, 2023171,801 $38.35 3.3$8.1 
Time-Based Restricted Stock Units
Most RSUs granted to employees during the threesix months ended March 31,June 30, 2023 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 period of one year. 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 RSU activity for the threesix month period ended March 31,June 30, 2023:
Time-Vested
Activity
Weighted
Average
Grant Date Fair Value
Time-Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2022Nonvested at December 31, 2022291,929 $77.58 Nonvested at December 31, 2022291,929 $77.58 
GrantedGranted178,857 74.21 Granted230,782 75.74 
VestedVested(84,079)79.34 Vested(100,648)79.20 
ForfeitedForfeited(8,888)78.07 Forfeited(40,091)71.21 
Nonvested at March 31, 2023377,819 $75.58 
Nonvested at June 30, 2023Nonvested at June 30, 2023381,972 $76.71 
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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(7.)     STOCK-BASED COMPENSATION (Continued)
Performance-Based Restricted Stock Units
For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of financial and market-based performance conditions over three year performance periods. The financial performance conditions are based on the Company’s sales targets. The market-based performance conditions are based on the Company’s achievement of a relative total shareholder return performance requirement, on a percentile basis, compared to a defined group of peer companies, or contingent upon achieving specified stock price milestones over a five year performance period.
The following table summarizes PRSU activity for the threesix month period ended March 31,June 30, 2023:
Performance-
Vested
Activity
Weighted
Average
Grant Date Fair Value
Performance-
Vested
Activity
Weighted
Average
Grant Date Fair Value
Nonvested at December 31, 2022Nonvested at December 31, 2022263,906 $90.29 Nonvested at December 31, 2022263,906 $90.29 
GrantedGranted104,285 74.25 Granted105,757 74.32 
VestedVested(24,427)107.26 Vested(24,427)107.26 
ForfeitedForfeited(40,467)86.39 Forfeited(62,396)83.39 
Nonvested at March 31, 2023303,297 $83.93 
Nonvested at June 30, 2023Nonvested at June 30, 2023282,840 $84.38 
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:
Three Months Ended Six Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
Weighted average fair valueWeighted average fair value$74.29 $97.58 Weighted average fair value$74.29 $97.58 
Risk-free interest rateRisk-free interest rate3.79 %1.58 %Risk-free interest rate3.79 %1.58 %
Expected volatilityExpected volatility46 %42 %Expected volatility46 %42 %
Expected life (in years)Expected life (in years)3.03.9Expected life (in years)3.03.9
Expected dividend yieldExpected dividend yield— %— %Expected dividend yield— %— %
The valuation of the market-based PRSUs granted during 2023 and 2022 also reflects a weighted average illiquidity discount of 11.23% and 9.25%, 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.
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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 exitExit and disposal costs (“restructuring charges”) are expensed 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.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.Income (Loss).
Restructuring and other charges comprise the following (in thousands):
 Three Months Ended
 March 31,
2023
April 1,
2022
Restructuring charges$1,064 $1,103 
Acquisition and integration costs382 1,936 
Other general expenses83 296 
Total restructuring and other charges$1,529 $3,335 
Restructuring programs
 Three Months EndedSix Months Ended
 June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Restructuring charges$936 $(5)$2,000 $1,098 
Acquisition and integration costs556 3,333 938 5,269 
Other general expenses26 205 109 501 
Total restructuring and other charges$1,518 $3,533 $3,047 $6,868 
The following table comprises restructuring and restructuring-related charges by income statement classification forin the three month periods ended March 31, 2023Company’s Condensed Consolidated Statements of Operations and April 1, 2022Comprehensive Income (Loss) (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31, 2023April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Restructuring charges:Restructuring charges:Restructuring charges:
Restructuring and other chargesRestructuring and other charges$1,064 $1,103 Restructuring and other charges$936 $(5)$2,000 $1,098 
Restructuring-related expenses(a):
Restructuring-related expenses(a):
Restructuring-related expenses(a):
Cost of salesCost of sales177 155 Cost of sales516 179 693 334 
Selling, general and administrativeSelling, general and administrative241 318 Selling, general and administrative1,346 384 1,587 702 
Research, development and engineeringResearch, development and engineering323 177 Research, development and engineering318 326 641 503 
Total restructuring and restructuring-related chargesTotal restructuring and restructuring-related charges$1,805 $1,753 Total restructuring and restructuring-related charges$3,116 $884 $4,921 $2,637 
__________
(a) Restructuring-related expenses primarily include retention bonuses and consulting expenses.
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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(8.)     RESTRUCTURING AND OTHER CHARGES (Continued)
Restructuring programs
Operational excellence initiatives
The Company’s operational excellence (“OE”) initiatives mainly consist of costs associated with executing on its sales force, manufacturing, business process and performance excellence operational strategic imperatives. These projects focus on changing the Company’s organizational structure to match product line growth strategies and customer needs, transitioning its manufacturing process into a competitive advantage and standardizing and optimizing its business processes.
2022 OE Initiatives - Costs related to the Company’s 2022 OE initiatives are primarily recorded within the Medical segment or unallocated operating expenses and mainly include termination benefits. The Company estimates that it will incur aggregate pre-tax charges in connection with the 2022 OE initiatives of between approximately $5 million to $6 million, the majority of which are expected to be cash expenditures. As of March 31, 2023, total restructuring and restructuring-related charges incurred since inception were $4.1 million. These actions are expected to be substantially complete by the end of 2025.
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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(8.)     RESTRUCTURING AND OTHER CHARGES (Continued)
2021 OE Initiatives - Costs related to the Company’s 2021 OE initiatives are primarily recorded within the Medical segment or unallocated operating expenses and mainly include termination benefits. The Company estimates that it will incur aggregate pre-tax charges in connection with the 2021 OE initiatives of approximately $5 million, the majority of which are expected to be cash expenditures. As of March 31, 2023, total restructuring and restructuring-related charges incurred since inception were $4.9 million. These actions were substantially complete by the end of 2022.
Strategic reorganization and alignment
The Company’s strategic reorganization and alignment (“SRA”) initiatives primarily include those that align resources with market conditions and the Company’s strategic direction in order to enhance the profitability of its portfolio of products.
Cost Reduction Initiatives - As of March 31, 2023, the Company incurred $1.5 million since inception in restructuring charges related to cost reduction actions taken in response to higher manufacturing and direct labor costs. These charges consisted of employee termination benefits. The Company expects to incur aggregate pre-tax cash charges of up to $2 million through completion in the second quarter of 2023.
2021 SRA Initiatives - During the fourth quarter of 2021, the Company initiated plans to exit certain markets served in its Medical segment to enhance profitability and reallocate manufacturing capacity needed to support the Company’s overall growth plans. The Company estimates that it will incur a range of pre-tax charges in connection with the 2021 SRA initiatives of approximately $7 million and $9 million, the majority of which are expected to be cash expenditures. Costs related to the Company’s 2021 SRA Initiatives are primarily recorded within the Medical segment and mainly include termination benefits. As of March 31, 2023, total restructuring and restructuring-related charges incurred since inception were $4.7 million. These actions are expected to be completed by the end of 2025.
Manufacturing alignment to support growth
In 2022, the Company commenced initiatives designed to reduce costs and improve operating efficiencies by relocating certain manufacturing operations. The Company estimates that it will incur a range of pre-tax charges in connection with these initiatives of approximately $2 million and $3 million, the majority of which are expected to be cash expenditures. As of March 31, 2023, total restructuring and restructuring-related charges incurred since inception were $0.4 million. These actions are expected to be substantially complete by the end of 2024.
The following table summarizes the activity for restructuring reserves (in thousands):
Operational
excellence
initiatives
Strategic reorganization and alignmentTotalOperational
excellence
initiatives
Strategic reorganization and alignmentManufacturing alignment to support growthTotal
December 31, 2022December 31, 2022$232 $2,134 $2,366 December 31, 2022$232 $2,134 $— $2,366 
Charges incurred, net of reversalsCharges incurred, net of reversals498 566 1,064 Charges incurred, net of reversals710 979 311 2,000 
Cash paymentsCash payments(417)(1,862)(2,279)Cash payments(833)(2,170)— (3,003)
March 31, 2023$313 $838 $1,151 
June 30, 2023June 30, 2023$109 $943 $311 $1,363 
Acquisition and integration
Acquisition and integration costs primarily consist of professional fees and other costs related to business acquisitions. During the threesix months ended March 31,June 30, 2023 and AprilJuly 1, 2022, acquisition and integration costs of $0.9 million and $5.3 million, respectively, included expenses primarily related to the acquisitions of Oscor and Aran of $0.4 million and $1.9 million, respectively.Aran. Acquisition and integration costs for the threesix months ended March 31,June 30, 2023 and AprilJuly 1, 2022, included a benefit of $0.3 million and expense of $0.1 million, respectively, to adjust the fair value of acquisition-related contingent consideration liabilities. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration.
Other general expenses
During the threesix months ended March 31,June 30, 2023 and AprilJuly 1, 2022, the Company recorded expenses related to other initiatives not described above, which relate primarily to integration and operational initiatives to reduce future costs and improve efficiencies.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(9.)    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 discrete items, changes in the mix and amount of pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, business reorganizations, settlements with taxing authorities and foreign currency fluctuations. In addition, the Company continues to explore tax planning opportunities that may have a material impact on its effective tax rate.
The Company’s effective tax rate for the firstsecond quarter of 2023 was 18.3%19.8% on $16.0$29.9 million of income before taxes compared to 18.5%14.7% on $13.9$24.4 million of income before taxes for the same period in 2022. The Company’s effective tax rate for the six months ended June 30, 2023 was 19.3% on $45.9 million of income before taxes compared to 16.1% on $38.4 million of income before taxes for the same period of 2022. The difference between the Company’s effective tax rates and the U.S. federal statutory income tax rate of 21% for the second quarter and first quartersix months of 2023 and 2022 is due principally to the net impact of the Company’s earnings outside the U.S., which are generally taxed at rates that differ from the U.S federal rate, the Global Intangible Low-Taxed Income (“GILTI”) tax, the Foreign Derived Intangible Income (“FDII”) deduction, the availability of tax credits, and the recognition of certain discrete tax items. For the second quarter and first quartersix months of 2023, and 2022 the Company recorded discrete tax expense of $0.1$0.4 million and $0.5 million, respectively. The Company did not record discrete tax expense for the second quarter of 2022 and recorded discrete tax expense of $0.5 million for the first six months of 2022. The discrete tax expense for the second quarter and first six months of 2023 is predominately related to unfavorable return to provision adjustments attributable to certain foreign tax returns filed during the quarter. The remainder of the discrete tax amounts for both periodsrelate predominately relate to excess tax benefits recognized upon vesting of RSUs during those quarters and/orperiods partially offset by tax expense from shortfalls recorded for the forfeiture of certain PRSUs. The discrete tax amounts for the second quarter and first six months of 2022 are predominately related to tax expense on shortfalls recorded for the forfeiture of certain PRSUs, partially offset by excess tax benefits recognized upon vesting of RSUs during those periods.
Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax returns and the amounts reflected in the financial statements. As of March 31,June 30, 2023, the Company had unrecognized tax benefits of approximately $7.9$8.0 million, of which approximately $7.8$7.9 million would favorably impact the effective tax rate, net of federal benefit on state issues, if recognized. As of March 31,June 30, 2023, the Company believes it is reasonably possible that a reduction of approximately $1.9 million of the balance of unrecognized tax benefits may occur within the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements.
(10.)    COMMITMENTS AND CONTINGENCIES
Contingent Consideration Arrangements
The Company records contingent consideration liabilities related to the earn-out provisions for certain acquisitions. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information.
Litigation
The Company is subject to litigation arising from time to time in the ordinary course of its business. The Company does not expect that the ultimate resolution of any pending legal actions will have a material effect on its consolidated results of operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, will 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 product warranty liability is presented within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The change in product warranty liability comprised the following (in thousands):
December 31, 2022$77 
Additions to warranty reserve, net of reversals
March 31,June 30, 2023$84 
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Table of Contents

INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(11.)    EARNINGS PER SHARE (“EPS”)
The following table sets forth a reconciliation of the information used in computing basic and diluted EPS (in thousands, except per share amounts):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Numerator for basic and diluted EPS:Numerator for basic and diluted EPS:Numerator for basic and diluted EPS:
Net incomeNet income$13,065 $11,367 Net income$23,971 $20,836 $37,036 $32,203 
Denominator for basic and diluted EPS:Denominator for basic and diluted EPS:Denominator for basic and diluted EPS:
Weighted average shares outstanding - BasicWeighted average shares outstanding - Basic33,258 33,091 Weighted average shares outstanding - Basic33,312 33,111 33,285 33,101 
Dilutive effect of share-based awardsDilutive effect of share-based awards317 211 Dilutive effect of share-based awards374 239 346 225 
Weighted average shares outstanding - DilutedWeighted average shares outstanding - Diluted33,575 33,302 Weighted average shares outstanding - Diluted33,686 33,350 33,631 33,326 
Basic EPSBasic EPS$0.39 $0.34 Basic EPS$0.72 $0.63 $1.11 $0.97 
Diluted EPSDiluted EPS$0.39 $0.34 Diluted EPS$0.71 $0.62 $1.10 $0.97 
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 (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
RSUsRSUsRSUs— 
PRSUsPRSUs133 166 PRSUs83 165 108 165 
The dilutive effect for the Company's 2028 Notes is calculated using the if-converted method. The Company is required, pursuant to the Indenture governing the 2028 Notes, to settle the principal amount of the 2028 Notes in cash and may elect to settle the remaining conversion obligation (i.e., the stock price in excess of the conversion price) in cash, shares of the Company's common stock, or a combination thereof. Under the if-converted method, the Company includes the number of shares required to satisfy the conversion obligation, assuming all the 2028 Notes are converted. Because the average closing price of the Company's common stock for the three months ended March 31,June 30, 2023, which is used as the basis for determining the dilutive effect on earnings per share, was less than the conversion price of $87.20, all associated shares were antidilutive.
In connection with the issuance of the 2028 Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions. The Capped Calls cover, subject to anti-dilution adjustments substantially similar to those in the 2028 Notes, approximately 5.85.7 million shares of the Company's common stock, the same number of shares initially underlying the 2028 Notes, at a strike price of approximately $108.59, subject to certain adjustments under the terms of the Capped Calls. The Capped Calls will expire upon the maturity of the 2028 Notes, subject to earlier exercise or termination. Exercise of the Capped Calls would reduce the number of shares of the Company's common stock outstanding, and therefore would be antidilutive.
See Note 6 “Debt” for additional information related to 2028 Notes and Capped Calls.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(12.)     STOCKHOLDERS’ EQUITY
Common Stock
The following is a summary of the number of shares of common stock issued, treasury stock and common stock outstanding for the threesix month periods ended March 31,June 30, 2023 and AprilJuly 1, 2022:
Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
Shares outstanding at beginning of periodShares outstanding at beginning of period33,169,778 33,063,336 Shares outstanding at beginning of period33,169,778 33,063,336 
Stock options exercisedStock options exercised25,376 — Stock options exercised58,413 — 
Vesting of RSUs, net of shares withheld to cover taxesVesting of RSUs, net of shares withheld to cover taxes70,236 38,831 Vesting of RSUs, net of shares withheld to cover taxes79,889 58,497 
Shares outstanding at end of periodShares outstanding at end of period33,265,390 33,102,167 Shares outstanding at end of period33,308,080 33,121,833 
Accumulated Other Comprehensive Income
Accumulated other comprehensive income (“AOCI”) comprises the following (in thousands):
Defined
Benefit
Plan
Liability
Cash
Flow
Hedges
Foreign
Currency
Translation
Adjustment
Total
Pre-Tax
Amount
TaxNet-of-Tax
Amount
March 31, 2023March 31, 2023$(346)$3,927 $12,075 $15,656 $(690)$14,966 
Unrealized gain on cash flow hedgesUnrealized gain on cash flow hedges— 2,126 — 2,126 (447)1,679 
Realized gain on foreign currency hedgesRealized gain on foreign currency hedges— (1,318)— (1,318)277 (1,041)
Realized gain on interest rate swap hedgeRealized gain on interest rate swap hedge— (675)— (675)142 (533)
Foreign currency translation lossForeign currency translation loss— — (2,901)(2,901)— (2,901)
June 30, 2023June 30, 2023$(346)$4,060 $9,174 $12,888 $(718)$12,170 
Defined
Benefit
Plan
Liability
Cash
Flow
Hedges
Foreign
Currency
Translation
Adjustment
Total
Pre-Tax
Amount
TaxNet-of-Tax
Amount
December 31, 2022December 31, 2022$(346)$1,760 $4,150 $5,564 $(235)$5,329 December 31, 2022$(346)$1,760 $4,150 $5,564 $(235)$5,329 
Unrealized gain on cash flow hedgesUnrealized gain on cash flow hedges— 3,446 — 3,446 (723)2,723 Unrealized gain on cash flow hedges— 5,572 — 5,572 (1,170)4,402 
Realized gain on foreign currency hedgesRealized gain on foreign currency hedges— (692)— (692)145 (547)Realized gain on foreign currency hedges— (2,010)— (2,010)422 (1,588)
Realized gain on interest rate swap hedgeRealized gain on interest rate swap hedge— (587)— (587)123 (464)Realized gain on interest rate swap hedge— (1,262)— (1,262)265 (997)
Foreign currency translation gainForeign currency translation gain— — 7,925 7,925 — 7,925 Foreign currency translation gain— — 5,024 5,024 — 5,024 
March 31, 2023$(346)$3,927 $12,075 $15,656 $(690)$14,966 
June 30, 2023June 30, 2023$(346)$4,060 $9,174 $12,888 $(718)$12,170 
April 1, 2022April 1, 2022$(890)$1,170 $21,833 $22,113 $(76)$22,037 
Unrealized loss on cash flow hedgesUnrealized loss on cash flow hedges— (291)— (291)61 (230)
Realized gain on foreign currency hedgesRealized gain on foreign currency hedges— (295)— (295)62 (233)
Realized loss on interest rate swap hedgeRealized loss on interest rate swap hedge— 526 — 526 (110)416 
Foreign currency translation lossForeign currency translation loss— — (27,274)(27,274)— (27,274)
July 1, 2022July 1, 2022$(890)$1,110 $(5,441)$(5,221)$(63)$(5,284)
December 31, 2021December 31, 2021$(890)$(2,291)$29,720 $26,539 $651 $27,190 December 31, 2021$(890)$(2,291)$29,720 $26,539 $651 $27,190 
Unrealized gain on cash flow hedgesUnrealized gain on cash flow hedges— 2,856 — 2,856 (600)2,256 Unrealized gain on cash flow hedges— 2,565 — 2,565 (539)2,026 
Realized gain on foreign currency hedgesRealized gain on foreign currency hedges— (162)— (162)34 (128)Realized gain on foreign currency hedges— (457)— (457)96 (361)
Realized loss on interest rate swap hedgeRealized loss on interest rate swap hedge— 767 — 767 (161)606 Realized loss on interest rate swap hedge— 1,293 — 1,293 (271)1,022 
Foreign currency translation lossForeign currency translation loss— — (7,887)(7,887)— (7,887)Foreign currency translation loss— — (35,161)(35,161)— (35,161)
April 1, 2022$(890)$1,170 $21,833 $22,113 $(76)$22,037 
July 1, 2022July 1, 2022$(890)$1,110 $(5,441)$(5,221)$(63)$(5,284)
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     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 usesmay use 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)
Fair ValueQuoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
March 31, 2023
Assets: Interest rate swap$669 $— $669 $— 
June 30, 2023June 30, 2023
Assets: Foreign currency hedging contractsAssets: Foreign currency hedging contracts3,258 — 3,258 — Assets: Foreign currency hedging contracts$4,060 $— $4,060 $— 
Liabilities: Contingent considerationLiabilities: Contingent consideration11,732 — — 11,732 Liabilities: Contingent consideration555 — — 555 
December 31, 2022December 31, 2022December 31, 2022
Assets: Interest rate swapAssets: Interest rate swap$1,262 $— $1,262 $— Assets: Interest rate swap$1,262 $— $1,262 $— 
Assets: Foreign currency hedging contractsAssets: Foreign currency hedging contracts521 — 521 — Assets: Foreign currency hedging contracts521 — 521 — 
Liabilities: Foreign currency hedging contractsLiabilities: Foreign currency hedging contracts23 23 Liabilities: Foreign currency hedging contracts23 23 
Liabilities: Contingent considerationLiabilities: Contingent consideration11,756 — — 11,756 Liabilities: Contingent consideration11,756 — — 11,756 
Derivatives Designated as Hedging Instruments
Interest Rate Swaps
The Company may periodically entersenter 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 approximately the same rate of interest, excluding the credit spread, and will reset and pay interest on the same date. rate.
The Company has designated these swap agreementshad no outstanding interest rate swaps 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.
June 30, 2023. Information regarding the Company’s outstanding interest rate swap, designated as of March 31, 2023 is as follows (dollars in thousands):
Notional AmountMaturity DatePay Fixed RateReceive Current Floating RateFair ValueBalance Sheet Location
$100,000 Jun 20232.1785 %4.8306 %$669 Prepaid expenses and other current assets
Information regarding the Company’s outstanding interest rate swapa cash flow hedge, as of December 31, 2022 is as follows (dollars in thousands):
Notional AmountMaturity DatePay Fixed RateReceive Current Floating RateFair ValueBalance Sheet Location
$100,000 Jun 20232.1785 %4.3869 %$1,262 Prepaid expenses and other current assets
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(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.
Under master agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, it has the right of set-off and is allowed to net settle transactions of the same type with a single net amount payable by one party to the other. The Company has derivative assets and liabilities associated with Euro denominated foreign currency forward contracts with the same counterparty of $289 thousand and $112 thousand, respectively. The net asset of $177 thousand is presented in Prepaid expenses and other current assets.
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of March 31,June 30, 2023 is as follows (dollars in thousands):
Notional AmountNotional AmountMaturity Date$/Foreign CurrencyFair ValueBalance Sheet LocationNotional AmountMaturity Date$/Foreign CurrencyFair ValueBalance Sheet Location
$27,653 Dec 20230.0485MXN Peso$3,081 Prepaid expenses and other current assets18,289 Dec 20230.0481MXN Peso$3,436 Prepaid expenses and other current assets
41,051 Sep 20231.0860Euro177 Prepaid expenses and other current assets
40,377 40,377 Dec 20231.0796Euro624 Prepaid expenses and other current assets
Information regarding outstanding foreign currency forward contracts designated as cash flow hedges as of December 31, 2022 is as follows (dollars in thousands):
Notional AmountMaturity Date$/Foreign CurrencyFair ValueBalance Sheet Location
$37,175 Dec 20230.0489MXN Peso$504 Prepaid expenses and other current assets
2,685 Mar 20230.0249UYU Peso17 Prepaid expenses and other current assets
17,309 Mar 20231.0751Euro(23)Accrued expenses and other current liabilities
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 (Loss) for the three and six months ended March 31,June 30, 2023 and AprilJuly 1, 2022 (in thousands):
Three Months EndedThree Months Ended
March 31, 2023April 1, 2022June 30, 2023July 1, 2022
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
SalesSales$378,785 $(51)$310,912 $(54)Sales$400,044 $(83)$350,081 $(371)
Cost of salesCost of sales282,112 708 229,437 192 Cost of sales294,240 1,384 257,184 554 
Operating expensesOperating expenses62,507 35 58,978 24 Operating expenses64,228 17 60,190 112 
Interest expenseInterest expense17,254 587 5,968 (767)Interest expense11,459 675 7,773 (526)
Six Months Ended
June 30, 2023July 1, 2022
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Sales$778,829 $(134)$660,993 $(425)
Cost of sales576,352 2,092 486,621 746 
Operating expenses126,735 52 119,168 136 
Interest expense28,713 1,262 13,741 (1,293)
Unrealized Gain (Loss) Recognized in OCIRealized Gain (Loss) Reclassified from AOCI
Three Months EndedLocation in Statements of Operations and Comprehensive IncomeThree Months Ended
March 31,
2023
April 1,
2022
March 31,
2023
April 1,
2022
Interest rate swap$(6)$1,824 Interest expense$587 $(767)
Foreign exchange contracts149 (514)Sales(51)(54)
Foreign exchange contracts3,275 1,269 Cost of sales708 192 
Foreign exchange contracts28 277 Operating expenses35 24 




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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(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
 Income (Loss)
Three Months Ended
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Interest rate swap$$702 Interest expense$675 $(526)
Foreign exchange contracts364 (1,167)Sales(83)(371)
Foreign exchange contracts1,739 96 Cost of sales1,384 554 
Foreign exchange contracts17 78 Operating expenses17 112 
Six Months Ended
Location in Statements of Operations and Comprehensive
 Income (Loss)
Six Months Ended
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Interest rate swap$— $2,526 Interest expense$1,262 $(1,293)
Foreign exchange contracts513 (1,681)Sales(134)(425)
Foreign exchange contracts5,014 1,365 Cost of sales2,092 746 
Foreign exchange contracts45 355 Operating expenses52 136 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The Company expects to reclassify net gains totaling $3.9$4.1 million related to its cash flow hedges from AOCI into earnings during the next twelve months.
Net Investment Hedges
The Company has foreign-denominated long-term debt balances that qualify as net investment hedges. Changes in the value of these net investment hedges due to foreign currency gains or losses are deferred as foreign currency translation adjustments in Other comprehensive income (loss) on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and will remain in Accumulated other comprehensive income (loss) until the hedged investment is sold or substantially liquidated. We evaluate the effectiveness of the net investment hedges each quarter.
As of March 31,June 30, 2023, the Company had a €100 million borrowing on the Revolving Credit Facility that was designated as a net investment hedge on a portion of the Company’s net investments in certain of its entities with functional currencies denominated in the Euro. There were no net investment hedges outstanding at December 31, 2022.
Derivatives Not Designated as Hedging Instruments
The Company also has foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign currency and are adjusted to current values using period-end exchange rates. To minimize foreign currency exposure, the Company enters into foreign currency contracts with a one month maturity. At March 31,June 30, 2023 and December 31, 2022, the Company had total gross notional amounts of $17.0$15.0 million and $12.0 million, respectively, of foreign currency contracts outstanding that were not designated as hedges. The fair value of derivatives not designated as hedges was not material for any period presented. The Company recorded a net gainNet gains/losses on foreign currency contracts not designated as hedging instruments of $0.1 million and $0.3 million, for the three months ended March 31, 2023 and April 1, 2022, respectively, which are included in Other loss, net.net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company recorded net losses of approximately $0.1 million for the three and six months ended June 30, 2023, compared to gains of $0.4 million and $0.7 million, respectively, for the three and six months ended July 1, 2022, respectively. Each of the foreign currency contracts not designated as hedging instruments will have approximately offsetting effects from the underlying intercompany loans subject to foreign exchange remeasurement.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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 six months ended March 31,June 30, 2023 and AprilJuly 1, 2022 (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Fair value measurement at beginning of periodFair value measurement at beginning of period$11,756 $2,415 Fair value measurement at beginning of period$11,732 $1,976 $11,756 $2,415 
Amount recorded for current year acquisitionsAmount recorded for current year acquisitions— 7,375 — 7,375 
Fair value measurement adjustmentFair value measurement adjustment(265)54 Fair value measurement adjustment— — (265)54 
PaymentsPayments— (493)Payments(11,177)— (11,177)(493)
Foreign currency translationForeign currency translation241 — Foreign currency translation— (279)241 (279)
Fair value measurement at end of periodFair value measurement at end of period$11,732 $1,976 Fair value measurement at end of period$555 $9,072 $555 $9,072 
On April 6,October 7, 2019, the Company acquired certain assets and liabilities of US BioDesign, LLC (“USB”), a privately-held developer and manufacturer of complex braided biomedical structures for disposable and implantable medical devices. As of June 30, 2023 and December 31, 2022, the Company acquired Aran. See Note 2 “Business Acquisitions”assessed the probability of meeting the required revenue threshold as unlikely and determined the fair value of the contingent consideration liability relating to the acquisition of USB was zero. The final earnout period under the asset purchase agreement for additional information aboutUSB ends on December 31, 2023. During the Aransix months ended July 1, 2022, the Company made a $0.5 million payment associated with the USB acquisition, and related contingent consideration. resulting from achievement of revenue-based goals for the period from January 1, 2021 to December 31, 2021.
On February 19, 2020, the Company acquired certain assets and liabilities of InoMec Ltd. (“InoMec”), a privately-held company based in Israel that specializes in the research, development and manufacturing of medical devices, including minimally invasive tools, delivery systems, tubing and catheters, surgery tools, drug-device combination, laser combined devices, and tooling and production. On October 7, 2019, the Company acquired certain assets and liabilities of US BioDesign, LLC (“USB”), a privately-held developer and manufacturer of complex braided biomedical structures for disposable and implantable medical devices. The contingent consideration at March 31, 2023 is the estimated fair value of the Company’s obligations, under the asset purchase agreements for Aran, InoMec and USB, to make additional payments if certain revenue goals are met.
As of March 31, 2023 and December 31, 2022, the Company assessed the probability of meeting the required revenue threshold as unlikely and determined the fair value of the contingent consideration liability relating to the acquisition of USB was zero. During the three months ended April 1, 2022, the Company made a $0.5 million payment associated with the USB acquisition, resulting from achievement of revenue-based goals for the period from January 1, 2021 to December 31, 2021.

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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
As of March 31,June 30, 2023 and December 31, 2022, the fair value of the contingent consideration liability relating to the acquisition of InoMec was $0.8$0.6 million and $1.1 million, respectively. The fair valueDuring the six months ended June 30, 2023, the Company made a $0.3 million payment associated with the InoMec acquisition, resulting from achievement of the contingent consideration liability relating to the acquisition of InoMec was calculated using projected revenuerevenue-based goals for the remainingperiod from March 1, 2022 to February 28, 2023. The final earnout period and discounted using a discountunder the asset purchase agreement for InoMec ends on February 29, 2024. rate of 12.3%. The remaining maximum potential undiscounted payout for the contingent consideration liability relating to the acquisition of InoMec is $1.1$0.9 million with projected payments in 2023 and 2024..
On April 6, 2022, the Company acquired Aran. See Note 2 “Business Acquisitions” for additional information about the Aran acquisition and related contingent consideration. During the six months ended June 30, 2023, the Company made a $10.9 million payment associated with the final earnout period under the asset purchase agreement for Aran, resulting from achievement of the maximum revenue-based goals for the year ended December 31, 2022. As of March 31, 2023 and December 31, 2022, the fair value of the contingent consideration liability relating to the acquisition of Aran was $10.7 million and $10.9 million, respectively. The Company determined that Aran achieved the maximum revenue threshold for the year ended December 31, 2022. million.
The contingent consideration related to Aran was paid in full in April 2023.
at June 30, 2023 is the estimated fair value of the Company’s remaining obligations under the asset purchase agreements for InoMec and USB. As of March 31,June 30, 2023, contingent consideration liabilities of $0.6 million are included in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. As of December 31, 2022, the current portion of contingent consideration liabilities included in Accrued expenses and other current liabilities was $11.2 million and the non-current portion included in Other long-term liabilities on the Condensed Consolidated Balance Sheets was $0.6 million.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(13.)     FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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 and TLA 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.
Equity investments comprise the following (in thousands):
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
Equity method investmentEquity method investment$8,097 $8,252 Equity method investment$8,231 $8,252 
Non-marketable equity securitiesNon-marketable equity securities5,637 5,637 Non-marketable equity securities5,637 5,637 
Total equity investmentsTotal equity investments$13,734 $13,889 Total equity investments$13,868 $13,889 
The components of Loss(Gain) loss on equity investments for each period were as follows (in thousands):
Three Months Ended
March 31,
2023
April 1,
2022
Equity method investment loss$155 $2,404 
Three Months EndedSix Months Ended
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Equity method investment (gain) loss$(134)$320 $21 $2,724 
The Company’s equity method investment is in a venture capital fund focused on investing in life sciences companies. As of March 31,June 30, 2023, the Company owned 7.5%7.4% of this fund.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(14.)     SEGMENT INFORMATION
The Company organizes its business into two reportable segments: (1) Medical and (2) Non-Medical. This segment structure reflects the financial information and reports used by the Company’s management, specifically its Chief Operating Decision Maker, to make decisions regarding the Company’s business, including resource allocations and performance assessments. This segment structure reflects the Company’s current operating focus in compliance with ASC 280, Segment Reporting. For purposes of segment reporting, intercompany sales between segments are not material.
The following table presents sales by product line (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Segment sales by product line:Segment sales by product line:Segment sales by product line:
MedicalMedicalMedical
Cardio & VascularCardio & Vascular$191,203 $159,037 Cardio & Vascular$208,494 $180,604 $399,697 $339,641 
Cardiac Rhythm Management & NeuromodulationCardiac Rhythm Management & Neuromodulation145,139 123,324 Cardiac Rhythm Management & Neuromodulation153,411 135,945 298,550 259,269 
Advanced Surgical, Orthopedics & Portable MedicalAdvanced Surgical, Orthopedics & Portable Medical27,924 19,666 Advanced Surgical, Orthopedics & Portable Medical27,206 23,285 55,130 42,951 
Total MedicalTotal Medical364,266 302,027 Total Medical389,111 339,834 753,377 641,861 
Non-MedicalNon-Medical14,519 8,885 Non-Medical10,933 10,247 25,452 19,132 
Total salesTotal sales$378,785 $310,912 Total sales$400,044 $350,081 $778,829 $660,993 
The following table presents income for the Company’s reportable segments (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Segment income:Segment income:Segment income:
MedicalMedical$54,806 $44,148 Medical$68,497 $54,580 $123,303 $98,728 
Non-MedicalNon-Medical4,026 665 Non-Medical278 1,625 4,304 2,290 
Total segment incomeTotal segment income58,832 44,813 Total segment income68,775 56,205 127,607 101,018 
Unallocated operating expensesUnallocated operating expenses(24,666)(22,316)Unallocated operating expenses(27,199)(23,498)(51,865)(45,814)
Operating incomeOperating income34,166 22,497 Operating income41,576 32,707 75,742 55,204 
Unallocated expenses, netUnallocated expenses, net(18,169)(8,549)Unallocated expenses, net(11,684)(8,284)(29,853)(16,833)
Income before taxesIncome before taxes$15,997 $13,948 Income before taxes$29,892 $24,423 $45,889 $38,371 
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(15.)    REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenue
In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of its products and customer relationships and provides meaningful disaggregation of each business segment’s results of operations. For a summary by disaggregated product line sales for each segment, refer to Note 14, “Segment Information.”
Revenue recognized from products and services transferred to customers over time represented 28%27% of total revenue for the three and six months ended March 31,June 30, 2023, compared to 32% and 31%, respectively, for the three and six months ended AprilJuly 1, 2022. Substantially all of the revenue recognized from products and services transferred to customers over time during the periods presented was within the Medical segment.
The following tables present revenues by significant customers, which are defined as any customer who individually represents 10% or more of a segment’s total revenues.
Three Months Ended
March 31, 2023April 1, 2022
CustomerMedicalNon-Medical MedicalNon-Medical
Customer A18%*18%*
Customer B16%*18%*
Customer C14%*14%*
Customer D*22%*33%
All other customers52%78%50%67%
Three Months Ended
June 30, 2023July 1, 2022
CustomerMedicalNon-Medical MedicalNon-Medical
Customer A17%*18%*
Customer B17%*17%*
Customer C13%*14%*
Customer D*20%*42%
All other customers53%80%51%58%
Six Months Ended
June 30, 2023July 1, 2022
CustomerMedicalNon-MedicalMedicalNon-Medical
Customer A18%*18%*
Customer B17%*17%*
Customer C13%*14%*
Customer D*21%*37%
All other customers52%79%51%63%
__________
* Less than 10% of segment’s total revenues for the period.
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INTEGER HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(15.)    REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)
The following tables present revenues by significant ship to location, which is defined as any country where 10% or more of a segment’s total revenues are shipped.
Three Months EndedThree Months Ended
March 31, 2023April 1, 2022June 30, 2023July 1, 2022
Ship to LocationShip to LocationMedicalNon-Medical MedicalNon-MedicalShip to LocationMedicalNon-Medical MedicalNon-Medical
United StatesUnited States55%60%54%63%United States54%64%52%71%
United Kingdom***10%
CanadaCanada*12%**
All other countriesAll other countries45%40%46%27%All other countries46%24%48%29%
Six Months Ended
June 30, 2023July 1, 2022
Ship to LocationMedicalNon-MedicalMedicalNon-Medical
United States54%62%51%67%
Canada*11%**
All other countries46%27%49%33%
__________
* Less than 10% of segment’s total revenues for the period.
Contract Balances
The opening and closing balances of the Company’s contract assets and contract liabilities are as follows (in thousands):
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
Contract assetsContract assets$80,929 $71,927 Contract assets$80,010 $71,927 
Contract liabilitiesContract liabilities6,366 5,616 Contract liabilities8,777 5,616 
During the three and six months ended March 31,June 30, 2023, the Company recognized $1.3 million and $2.7 million, respectively, of revenue that was included in the contract liability balance as of December 31, 2022. During the three and six months ended AprilJuly 1, 2022, the Company recognized $0.9$0.8 million and $1.7 million, respectively, of revenue that was included in the contract liability balance as of December 31, 2021.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q should be read in conjunction with the disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2022. In addition, please read this section in conjunction with our Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements contained herein.
Forward-Looking Statements
Some of the statements contained in this Form 10-Q and other written and oral statements made from time to time by us and our representatives are not statements of historical or current fact. As such, they are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations, and these statements are subject to known and unknown risks, uncertainties and assumptions. Forward-looking statements include statements relating to:
recovery from the COVID-19 global pandemic;
future sales, expenses, and profitability; customer demand; supplier performance (including delivery delays); costs (including wages, staffing levels and freight); future development and expected growth of our business and industry, including expansion of our manufacturing capacity;
our ability to execute our business model and our business strategy, including completion and integration of current or future acquisition targets;
having available sufficient cash and borrowing capacity to meet working capital, debt service and capital expenditure requirements for the next twelve months; and
projected capital spending.
You can identify forward-looking statements by terminology such as “outlook,” “projected,” “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “projects” or “continue” or variations or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those stated or implied by these forward-looking statements. In evaluating these statements and our prospects, you should carefully consider the factors set forth below. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary factors and to others contained throughout this Form 10-Q.
Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A “Risk Factors” of our Annual Report on Form 10-K and in our other periodic filings with the SEC and include the following:
operational risks, such as the duration, scope and impact of global supply chain issues and the COVID-19 pandemic,military conflict between Russia and Ukraine, including the evolving health, economic, social and governmental environments and thetheir effect of the pandemic on our associates, suppliers and customers as well as the global economy; our dependence upon a limited number of customers; pricing pressures that we face from customers; our reliance on third party suppliers for raw materials, key products and subcomponents; our ability to attract, train and retain a sufficient number of qualified associates; the potential for harm to our reputation caused by quality problems related to our products; the dependence of our energy market-related revenues on the conditions in the oil and natural gas industry; interruptions in our manufacturing operations; our dependence upon our information technology systems and our ability to prevent cyber-attacks and other failures; our dependence upon our senior management team and technical personnel; and global climate change and the emphasis on ESG matters by various stakeholders;
strategic risks, such as the intense competition we face and our ability to successfully market our products; our ability to respond to changes in technology; our ability to develop new products and expand into new geographic and product markets; and our ability to successfully identify, make and integrate acquisitions to expand and develop our business in accordance with expectations;
financial risks, such as our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under our senior secured credit facilities; economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets; and
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual property and proprietary rights; our ability and the cost to comply with environmental regulations; our ability to comply with customer-driven policies and third party standards or certification requirements; our ability to obtain necessary licenses for new technologies; legal and regulatory risks from our international operations;operations, including trade regulation; and the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and
other risks and uncertainties that arise from time to time.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Except as may be required by applicable law, the Company assumes no obligation to update forward-looking statements in this Form 10-Q whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.
In this Form 10-Q, references to “Integer,” “we,” “us,” “our” and the “Company” mean Integer Holdings Corporation and its subsidiaries, unless the context indicates otherwise.
Our Business
Integer Holdings Corporation is one of the largest medical device outsource (“MDO”) manufacturers in the world serving the cardiac, neuromodulation, vascular, orthopedics, advanced surgical and portable medical markets. We also develop batteries for high-end niche applications in the non-medical energy, military, and environmental markets. Our vision is to enhance the lives of patients worldwide by being our customers’ partner of choice for innovative technologies and services.
We organize our business into two reportable segments, Medical and Non-Medical, and derive our revenues from four principal product lines. The Medical segment includes the Cardio & Vascular, Cardiac Rhythm Management & Neuromodulation and Advanced Surgical, Orthopedics & Portable Medical product lines and the Non-Medical segment comprises the Electrochem product line. For more information on our segments, please refer to Note 14 “Segment Information” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report.
The second quarter and first quarterssix months of 2023 ended on June 30 and consisted of 91 days and 181 days, respectively. The second quarter and first six months of 2022 ended on March 31 and AprilJuly 1 respectively, and consisted of 9091 days and 91182 days, respectively.
Impact of Global Events
Global economic challenges, including the impact of the war in Ukraine, the COVID-19 pandemic, severe and sustained inflation, a rising interest rate environment, fluctuations in global currencies, and supply chain disruptions may continue to cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business include increased borrowing costs, 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. We monitor economic conditions closely. In response to potential reductions in revenue, we can take actions to align our cost structure with changes in demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions and other developments.
Business Acquisitions
On April 6, 2022, we 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 our strategy, the combination with Aran further increases our 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.
Refer to Note 2 “Business Acquisitions” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these acquisitions.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Overview
Net income for the second quarter and first quartersix months of 2023 was $13.1$24.0 million, or $0.39$0.71 per diluted share, and $37.0 million, or $1.10 per diluted share, respectively, compared to $11.4$20.8 million, or $0.34$0.62 per diluted share, and $32.2 million, or $0.97 per diluted share for the second quarter and first quartersix months of 2022.2022, respectively. These variances are primarily the result of the following:
Sales for the second quarter and first quartersix months of 2023 increased $67.9$50.0 million and $117.8 million, respectively, when compared to the same periodperiods in 2022, primarily from the continueddriven by strong demand in our Medical product demand recovery from the impacts of the COVID-19 pandemic.lines and an improving supply chain and labor environment.
Gross profit for the second quarter and first quartersix months of 2023 increased $15.2$12.9 million and $28.1 million, respectively, primarily from higher sales volume, partially offset by incrementalincreased cost of sales resulting from labor and supply chain costs.constraints.
Operating expenses for the second quarter and first quartersix months of 2023 increased $3.5$4.0 million and $7.6 million, respectively, when compared to the same periodperiods in 2022, primarily due to higher SG&Alabor costs and RD&E costs,amortization expense, partially offset by lower acquisitionrestructuring and integration costs. Operating expenses as a percentage of sales improved to 16.5% for the first quarter of 2023 compared to 19.0% or the first quarter of 2022.other charges.
Interest expense for the second quarter and first quartersix months of 2023 increased $11.3$3.7 million and $15.0 million, respectively, compared to the same periodperiods in 2022, due to increasedhigher interest rates, higher average debt outstanding and $4.4 million ofhigher losses from extinguishment of debt.
During the second quarter and first quarterssix months of 2023, and 2022, we recognized lossesgains on equity investments of $0.2$0.1 million and $2.4losses of $0.02 million, respectively.respectively, compared to losses of $0.3 million and $2.7 million, respectively, for the second quarter and first six months of 2022. Gains and losses on equity investments are generally unpredictable in nature.
Other loss, net for the second quarter and first quartersix months of 2023 was $0.8$0.4 million and $1.1 million, respectively, compared to $0.2 million and $0.4 million, respectively, for the second quarter and first quartersix months of 2022, primarily due to fluctuations in foreign currency gains and losses in the respective periods.
We recorded provisions for income taxes for the second quarter and first quarterssix months of 2023 and 2022 of $2.9$5.9 million and $2.6$8.9 million, respectively.respectively, compared with provisions for income taxes of $3.6 million and $6.2 million, respectively, for the second quarter and first six months of 2022. The change in income tax expense was primarily due to relative changes in pre-tax income and the impact of discrete tax items.

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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Our Financial Results
The following table presents selected financial information derived from our Condensed Consolidated Financial Statements, contained in Item 1 of this report, for the periods presented (dollars in thousands, except per share).
 Three Months Ended  
 March 31,April 1,Change
 20232022$%
Medical Sales:
Cardio & Vascular191,203 $159,037 $32,166 20.2 %
Cardiac Rhythm Management & Neuromodulation145,139 123,324 21,815 17.7 %
Advanced Surgical, Orthopedics & Portable Medical27,924 19,666 8,258 42.0 %
Total Medical Sales364,266 302,027 62,239 20.6 %
Non-Medical14,519 8,885 5,634 63.4 %
Total sales378,785 310,912 67,873 21.8 %
Cost of sales282,112 229,437 52,675 23.0 %
Gross profit96,673 81,475 15,198 18.7 %
Gross profit as a % of sales25.5 %26.2 %
Operating expenses:
Selling, general and administrative (“SG&A”)41,886 39,560 2,326 5.9 %
SG&A as a % of sales11.1 %12.7 %
Research, development and engineering (“RD&E”)19,092 16,083 3,009 18.7 %
RD&E as a % of sales5.0 %5.2 %
Restructuring and other charges1,529 3,335 (1,806)(54.2)%
Total operating expenses62,507 58,978 3,529 6.0 %
Operating income34,166 22,497 11,669 51.9 %
Operating expense as a % of sales16.5 %19.0 %
Operating income as a % of sales9.0 %7.2 %
Interest expense17,254 5,968 11,286 189.1 %
Loss on equity investments155 2,404 (2,249)(93.6)%
Other loss, net760 177 583 NM
Income before taxes15,997 13,948 2,049 14.7 %
Provision for income taxes2,932 2,581 351 13.6 %
Effective tax rate18.3 %18.5 %
Net income$13,065 $11,367 $1,698 14.9 %
Net income as a % of sales3.4 %3.7 %
Diluted earnings per share$0.39 $0.34 $0.05 14.7 %
__________
 Three Months Ended  
 June 30,July 1,Change
 20232022$%
Medical Sales:
Cardio & Vascular208,494 $180,604 $27,890 15.4 %
Cardiac Rhythm Management & Neuromodulation153,411 135,945 17,466 12.8 %
Advanced Surgical, Orthopedics & Portable Medical27,206 23,285 3,921 16.8 %
Total Medical Sales389,111 339,834 49,277 14.5 %
Non-Medical10,933 10,247 686 6.7 %
Total sales400,044 350,081 49,963 14.3 %
Cost of sales294,240 257,184 37,056 14.4 %
Gross profit105,804 92,897 12,907 13.9 %
Gross profit as a % of sales26.4 %26.5 %
Operating expenses:
Selling, general and administrative (“SG&A”)45,827 41,786 4,041 9.7 %
SG&A as a % of sales11.5 %11.9 %
Research, development and engineering (“RD&E”)16,883 14,871 2,012 13.5 %
RD&E as a % of sales4.2 %4.2 %
Restructuring and other charges1,518 3,533 (2,015)(57.0)%
Total operating expenses64,228 60,190 4,038 6.7 %
Operating income41,576 32,707 8,869 27.1 %
Operating expense as a % of sales16.1 %17.2 %
Operating income as a % of sales10.4 %9.3 %
Interest expense11,459 7,773 3,686 47.4 %
(Gain) loss on equity investments(134)320 (454)(141.9)%
Other loss, net359 191 168 88.0 %
Income before taxes29,892 24,423 5,469 22.4 %
Provision for income taxes5,921 3,587 2,334 65.1 %
Effective tax rate19.8 %14.7 %
Net income$23,971 $20,836 $3,135 15.0 %
Net income as a % of sales6.0 %6.0 %
Diluted earnings per share$0.71 $0.62 $0.09 14.5 %
NM
Calculated amount not meaningful
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Six Months Ended
June 30,July 1,Change
20232022$%
Medical Sales:
Cardio & Vascular$399,697 $339,641 $60,056 17.7 %
Cardiac Rhythm Management & Neuromodulation298,550 259,269 39,281 15.2 %
Advanced Surgical, Orthopedics & Portable Medical55,130 42,951 12,179 28.4 %
Total Medical Sales753,377 641,861 111,516 17.4 %
Non-Medical25,452 19,132 6,320 33.0 %
Total Sales778,829 660,993 117,836 17.8 %
Cost of sales576,352 486,621 89,731 18.4 %
Gross profit202,477 174,372 28,105 16.1 %
Gross profit as a % of sales26.0 %26.4 %
Operating expenses:
SG&A87,713 81,346 6,367 7.8 %
SG&A as a % of sales11.3 %12.3 %
RD&E35,975 30,954 5,021 16.2 %
RD&E as a % of sales4.6 %4.7 %
Restructuring and other charges3,047 6,868 (3,821)(55.6)%
Total operating expenses126,735 119,168 7,567 6.3 %
Operating income75,742 55,204 20,538 37.2 %
Operating expense as a % of sales16.3 %18.0 %
Operating income as a % of sales9.7 %8.4 %
Interest expense28,713 13,741 14,972 109.0 %
Loss on equity investments21 2,724 (2,703)(99.2)%
Other loss, net1,119 368 751 204.1 %
Income before taxes45,889 38,371 7,518 19.6 %
Provision for income taxes8,853 6,168 2,685 43.5 %
Effective tax rate19.3 %16.1 %
Net income$37,036 $32,203 $4,833 15.0 %
Net income as a % of sales4.8 %4.9 %
Diluted earnings per share$1.10 $0.97 $0.13 13.4 %

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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Product Line Sales
For the second quarter and first quartersix months of 2023, Cardio & Vascular (“C&V”) sales increased $32.2$27.9 million, or 20%15%, and $60.1 million, or 18%, respectively, versus the comparable 2022 period.periods. The increase in C&V sales for the second quarter and first six months of 2023 was driven by continued strong demand across all markets, andgrowth in key products such as guidewires, new product ramps in electrophysiology, as well as strong performance from the Oscor and Aran acquisitions. acquisitions, and supply chain improvements. Foreign currency exchange rate fluctuations decreasedincreased C&V sales for the second quarter by $0.3 million and decreased sales for first quartersix months of 2023 by $0.7$0.4 million, in comparison to the 2022 period,periods, primarily due to U.S. dollar fluctuations relative to the Euro.
For the second quarter and first quartersix months of 2023, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $21.8$17.5 million, or 18%13%, and $39.3 million, or 15%, respectively, versus the comparable 2022 period,periods, driven by strong demand, including double-digit growth from emerging customers with PMA (premarket approval) products.products, and supply chain improvements. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the second quarter and first quartersix months of 2023 in comparison to 2022.
Advanced Surgical, Orthopedic & Portable Medical (“AS&O”) sales for the second quarter and first quartersix months of 2023 increased $8.3$3.9 million, or 42%17%, and $12.2 million or 28%, respectively, versus the comparable 2022 period, primarily due toperiods, driven by increased price and demand as a result of the execution of the multi-year Portable Medical exit announced in 2022, partially offset by a single-digit decline in Advanced Surgical and Orthopedics.2022. Foreign currency exchange rate fluctuations did not have a material impact on AS&O sales during the second quarter and first quartersix months of 2023 in comparison to 2022.the 2022 periods.
For the second quarter and first quartersix months of 2023, Non-Medical sales increased $5.6$0.7 million, or 63%7%, and $6.3 million, or 33%, respectively, versus the comparable 2022 period,periods, driven by strong demand across allin military and environmental market segments and continued supplier delivery recovery.. Foreign currency exchange rate fluctuations did not have a material impact on Non-Medical sales during the second quarter and first quartersix months of 2023 in comparison to 2022.the 2022 periods.
Gross Profit
Three Months EndedThree Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Gross profit (in thousands)Gross profit (in thousands)$96,673 $81,475 Gross profit (in thousands)$105,804 $92,897 202,477 174,372 
Gross marginGross margin25.5 %26.2 %Gross margin26.4 %26.5 %26.0 %26.4 %
Gross marginprofit as a percent of sales (“Gross margin”) for the second quarter and first quartersix months of 2023 decreased 7010 basis points and 40 basis points, respectively, compared to the comparable 2022 period,periods, primarily driven by incremental labor and supply chain costs related to manufacturing efficiency headwinds from supply chain volatility.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
SG&A Expenses
Changes to SG&A expenses from the prior year were due to the following (in thousands):
Three Months Ended Three Months Ended
March 31,
2023
April 1,
2022
Change June 30,
2023
July 1,
2022
Change
Compensation and benefits(a)Compensation and benefits(a)$21,589 $21,846 $(257)Compensation and benefits(a)$25,058 $23,324 $1,734 
Amortization expense(a)(b)
Amortization expense(a)(b)
9,137 8,027 1,110 
Amortization expense(a)(b)
9,268 8,373 895 
Professional fees(b)(c)
Professional fees(b)(c)
3,471 3,173 298 
Professional fees(b)(c)
3,858 3,094 764 
Contract services(c)(d)
Contract services(c)(d)
2,832 2,251 581 
Contract services(c)(d)
2,852 2,348 504 
All other SG&A(d)
4,857 4,263 594 
Bank fees and charges(e)
Bank fees and charges(e)
797 203 594 
All other SG&AAll other SG&A3,994 4,444 (450)
Net increase in SG&A expensesNet increase in SG&A expenses$41,886 $39,560 $2,326 Net increase in SG&A expenses$45,827 $41,786 $4,041 
 Six Months Ended
 June 30,
2023
July 1,
2022
Change
Compensation and benefits(a)
$46,647 $45,170 $1,477 
Amortization expense(b)
18,405 16,400 2,005 
Professional fees(c)
7,329 6,267 1,062 
Contract services(d)
5,684 4,599 1,085 
Bank fees and charges(e)
1,191 403 788 
All other SG&A8,457 8,507 (50)
Net increase in SG&A expenses$87,713 $81,346 $6,367 
__________
(a)Compensation and benefits expense increased during the second quarter and first six months of 2023. The increases were primarily due to annual merit increases and higher incentive compensation, partially offset by lower headcount.
(b)Amortization expense increased during the second quarter and first quartersix months of 2023 compared to the same periodperiods of 2022 primarily due to amortization of intangible assets from the Aran acquisition, which was acquired in the second quarter of 2022.and Oscor acquisitions.
(b)(c)Professional fees increased during the second quarter and first quartersix months of 2023 primarily due to inclusion of the operations of Aran.increased costs associated with third-party information technology services.
(c)(d)Contract services expense increased during the second quarter and first quartersix months of 2023 compared to the same periodperiods of 2022 primarily due to higher software costs from information technology enhancements.
(d)(e)The net increase in all other SG&A forbank fees and charges during the second quarter and first six months of 2023 was driven by increased factoring and supplier financing fees primarily due to the launch of an accounts receivable factoring arrangement during the second quarter of 2023 compared to the same period of 2022 is primarily attributable to higher supplies and travel costs partially offset by lower depreciation and insurance.2023.
RD&E
RD&E expense for the second quarter and first quartersix months of 2023 was $19.1$16.9 million and $36.0 million, respectively, compared to $16.1$14.9 million and $31.0 million, respectively, for the second quarter and first quartersix months of 2022. The increaseincreases in RD&E expenses forexpense during the second quarter and first six months of 2023 compared to the same periods in 2022, waswere primarily due to investments madehigher labor costs attributed to support long-term revenue growth, the timing of program milestone achievements for customer funded programs,annual merit increases and incremental expense due to the Aran Acquisition.higher incentive compensation. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Restructuring and Other Charges
We continuously evaluate our business and identify opportunities to realign resources to better serve our customers and markets, improve operational efficiency and capabilities, and lower operating costs. To realize the benefits associated with these opportunities, we undertake restructuring-type activities to transform our business. We incur costs associated with these activities, which primarily include exit and disposal costs and other costs directly related to the restructuring initiative. Restructuring charges include exit and disposal costs from these activities and restructuring-related charges are costs directly related to the restructuring initiatives. In addition, from time to time, we incur costs associated with acquiring and integrating businesses, and certain other general expenses, including asset impairments.
Restructuring and other charges comprise the following (in thousands):
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
April 1,
2022
June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Restructuring charges(a)
Restructuring charges(a)
$1,064 $1,103 
Restructuring charges(a)
$936 $(5)$2,000 $1,098 
Acquisition and integration costs(b)
Acquisition and integration costs(b)
382 1,936 
Acquisition and integration costs(b)
556 3,333 938 5,269 
Other general expenses(c)
Other general expenses(c)
83 296 
Other general expenses(c)
26 205 109 501 
Total restructuring and other chargesTotal restructuring and other charges$1,529 $3,335 Total restructuring and other charges$1,518 $3,533 $3,047 $6,868 
__________
(a)Restructuring charges for the first threesix months of 2023 and 2022 primarily consist of termination benefits associated with our operational excellence and strategic reorganization and alignment initiatives.
(b)Amounts include expenses related to the purchase of certain assets and liabilities from business acquisitions. Acquisition and integration costs for the threefirst six months ended March 31,of 2023 and April 1, 2022 include a benefit of $0.3 million and expense of $0.1 million, respectively, to adjust the fair value of acquisition-related contingent consideration liabilities. See Note 13 “Financial Instruments and Fair Value Measurements” for additional information related to the fair value measurement of the contingent consideration. Amounts for 2022 primarily include expenses related to the Aran and Oscor acquisitions.
(c)Amounts include expenses related to other initiatives not described above, which relate primarily to integration and operational initiatives to reduce future costs and improve efficiencies.
Refer to Note 8 “Restructuring and Other Charges” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information regarding these initiatives.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Interest Expense
Information relating to our interest expense is as follows (dollars in thousands):
Three Months EndedThree Months Ended
March 31, 2023April 1, 2022ChangeJune 30, 2023July 1, 2022Change
AmountRateAmountRateAmountRate (bp)AmountRateAmountRateAmountRate (bp)
Contractual interest expenseContractual interest expense$12,562 5.06 %$4,647 2.21 %$7,915 285Contractual interest expense$11,059 4.33 %$6,679 2.73 %$4,380 160
(Gain) loss on interest rate swap(Gain) loss on interest rate swap(587)(0.24)768 0.37 (1,355)(61)(Gain) loss on interest rate swap(675)(0.26)526 0.21 (1,201)(47)
Amortization of deferred debt issuance costs and original issue discountAmortization of deferred debt issuance costs and original issue discount756 0.38 481 0.25 275 13Amortization of deferred debt issuance costs and original issue discount931 0.43 482 0.22 449 21
Losses from extinguishment of debtLosses from extinguishment of debt4,393 1.79 — — 4,393 179Losses from extinguishment of debt38 0.02 — — 38 2
Interest expense on borrowingsInterest expense on borrowings17,124 6.99 %5,896 2.83 %11,228 416Interest expense on borrowings11,353 4.52 %7,687 3.16 %3,666 136
Other interest expenseOther interest expense130 72 58 Other interest expense106 86 20 
Total interest expenseTotal interest expense$17,254 $5,968 $11,286 Total interest expense$11,459 $7,773 $3,686 
Six Months Ended
June 30, 2023July 1, 2022Change
AmountRateAmountRateAmountRate (bp)
Contractual interest expenseContractual interest expense$23,621 4.69 %$11,326 2.49 %$12,295 220
(Gain) loss on interest rate swap(Gain) loss on interest rate swap(1,262)(0.25)1,293 0.29 (2,555)(54)
Amortization of deferred debt issuance costs and original issue discountAmortization of deferred debt issuance costs and original issue discount1,687 0.41 963 0.23 724 18
Losses from extinguishment of debtLosses from extinguishment of debt4,431 0.89 — — 4,431 89
Interest expense on borrowingsInterest expense on borrowings28,477 5.74 %13,582 3.01 %14,895 273
Other interest expenseOther interest expense236 159 77 
Total interest expenseTotal interest expense$28,713 $13,741 $14,972 
During 2023, contractual interest expense has increased due to higher average debt outstanding combined with increasing applicable interest rates. The higher average debt balance outstanding is the result of incremental borrowings related to fund the Aran acquisition, while intereststrategic change to replace some of our variable rate debt to fixed rate through issuance of the 2028 Notes. Interest rates have continued to climb due to increases in overall market rates.rates, partially offset by a 25 basis point decrease in the interest rate margin on our Senior Secured Credit Facilities. The decrease in the interest rate margin was effective during the second quarter of 2023 based on our Secured Net Leverage Ratio.
Other components of interest expense on borrowings include gains and losses on interest rate swaps and non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Interest rate swap includes realized (gains) losses on our interest rate swap contract which fluctuate depending on the spread between the rate swap contract fixed rate and senior secured credit facility floating rate. Compared to the same periods in 2022, amortizationOur outstanding interest rate swap matured as of June 30, 2023. Amortization of deferred debt issuance costs and original issue discount increased during 2023 compared to the same periods in 2022 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first threesix months of 2023 were related to prepayments of portions of the Term Loan A facility and full repayment of our Term Loan B facility in connection with the issuance of the convertible notes. We had no losses from extinguishment of debt during the first threesix months of 2022.
As of March 31,June 30, 2023 and December 31, 2022, approximately 59%50% and 11%, respectively, of our principal amount of debt are fixed rate borrowings or have been converted to fixed-rate borrowings with an interest rate swap.  During February 2023, we strategically replaced about half of our variable rate debt with fixed rate debt through the issuance of the 2028 Notes at a fixed rate of 2.125% and paying down our highest rate variable debt, the Term Loan B facility, and a portion of our Revolving Credit Facility. These transactions are expected to reducemitigate increased borrowing costs and result in a more balanced mix of fixed and floating rates to help protect against interest rate exposure. We may enter into interest rate swap agreements in order to reduce our exposure to fluctuations in floating rates.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
See Note 6 “Debt” and Note 13 “Financial Instruments and Fair Value Measurements” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information pertaining to our debt and interest rate swap agreement.
See Note 6 “Debt” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information pertaining to our debt.
(Gain) Loss on Equity Investments
During the second quarter and first quarterssix months of 2023, we recognized gains on equity investments of $0.1 million and losses of $0.02 million, respectively. During the second quarter and first six months of 2022, we recognized losses on equity investments of $0.2$0.3 million and $2.4$2.7 million, respectively. The amounts for both 2023 and 2022 relate to our share of equity method investee losses including unrealized appreciation/depreciation of the underlying interests of the investee. As of March 31,June 30, 2023 and December 31, 2022, the carrying value of our equity investments was $13.7 million and $13.9 million, respectively.million. See Note 13 “Financial Instruments and Fair Value Measurements” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for further details regarding these investments.
Other Loss, Net
Other loss, net for the second quarter and first quartersix months of 2023 was $0.8$0.4 million and $1.1 million, respectively, compared to $0.2 million and $0.4 million, respectively, for the second quarter and first quartersix months of 2022. Other loss, net primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies. Our foreign currency transaction gains/losses are based primarily on fluctuations of the U.S. dollar relative to the Euro, Mexican peso, Uruguayan peso, Malaysian ringgits, Dominican peso, or Israeli shekel.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
The impact of exchange rates on transactions denominated in foreign currencies included in Other loss, net for the second quarter and first quarterssix months of 2023 and 2022 were net losses of $0.8$0.4 million and $0.1$1.2 million, respectively, compared to net losses of $0.4 million and $0.5 million for the second quarter and first six months of 2022, respectively. We continually monitor our foreign currency exposures and seek to take steps to mitigate these risks. However, fluctuations in exchange rates could have a significant impact, positive or negative, on our financial results in the future.
Provision for Income Taxes
We recognized income tax expense of $2.9$5.9 million for the firstsecond quarter of 2023 on $16.0$29.9 million of income before taxes (effective tax rate of 18.3%19.8%), compared to an income tax expense of $2.6$3.6 million on $13.9$24.4 million of income before taxes (effective tax rate of 18.5%14.7%) for the same period of 2022. The income tax expense for the first six months of 2023 was $8.9 million on $45.9 million of income before taxes (effective tax rate of 19.3%), compared to income tax expense of $6.2 million on income before taxes of $38.4 million (effective tax rate of 16.1%) for the same period of 2022. Income tax expense for the second quarter and first quarterssix months of 2023 and 2022 included discrete tax expense of $0.1$0.4 million and $0.5 million, respectively. We did not record discrete tax expense for the second quarter of 2022. Income tax expense for the first six months of 2022 included $0.5 million of discrete tax expense.
Our effective tax rate for 2023 differs from the U.S. federal statutory tax rate of 21% due principally to the estimated impact of Federal Tax Credits (including R&D credits and Foreign tax credits), stock-based compensation windfalls or shortfalls, and the impact of earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. These benefits are partially offset by the impact of U.S taxes on foreign earnings, including the GILTI provision which requires us to include foreign subsidiary earnings in excess of a deemed return on a foreign subsidiary’s tangible assets in our U.S. income tax return. The U.S. tax on foreign earnings is reflected net of a statutory deduction of 50% of the GILTI inclusion (subject to limitations based on U.S. taxable income, if any) and net of FDII that provides a 37.5% deduction to domestic companies for certain foreign sales and services income. In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico (30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). We currently havehad been operating under a tax holiday in Malaysia, throughhowever this expired in April 2023, provided certain conditions continue to be met. In addition, we2023. We acquired manufacturing operations in the Dominican Republic as part of the acquisition of Oscor, and are operating under a free trade zone agreement in the Dominican Republic through March 2034.
There is a potential for volatility of our effective tax rate due to several factors, including changes in the mix of pre-tax income and the jurisdictions to which it relates, business acquisitions, settlements with taxing authorities, changes in tax rates, and foreign currency exchange rate fluctuations. We continue to closely monitor developments related to proposed changes in tax laws and tax rates, including current proposals for U.S. Tax Reform and the 15% Minimum Global Tax Rate proposed by the Organization for Economic Cooperation and Development. In addition, we continue to explore tax planning opportunities that may have a material impact on our effective tax rate.

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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS

Liquidity and Capital Resources
Sources of Liquidity
(dollars in thousands)(dollars in thousands)March 31,
2023
December 31,
2022
(dollars in thousands)June 30,
2023
December 31,
2022
Cash and cash equivalentsCash and cash equivalents$40,604 $24,272 Cash and cash equivalents$38,615 $24,272 
Working capitalWorking capital$403,514 $334,546 Working capital$416,096 $334,546 
Current ratioCurrent ratio2.79 2.50 Current ratio3.08 2.50 
Cash and cash equivalents at March 31,June 30, 2023 increased by $16.3$14.3 million from December 31, 2022, primarily as a result of cash generated by operating activities and proceeds from net borrowings on long-term debt, partially offset by purchases of property, plant and equipment.
Working capital increased by $69.0$81.6 million from December 31, 2022, primarily from positive working capital fluctuations in cash, accounts receivable and inventory, which were partially offset by increases in accounts payable.inventory. During the first threesix months of 2022,2023, accounts receivable increased mainly from an increase in sales volume, and timing ofwhich was offset by accelerated customer receiptscollections from a new factoring arrangement, while inventory increased to support higher product demand and sales volume and material stock levels to protect availability of critical components. Accounts payable increased mainly from higher sequential inventory purchases and the timing of supplier payments.volume.
At March 31,June 30, 2023, $24.8$22.6 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
As of March 31,June 30, 2023, our capital structure consisted of $1,002.5$985.4 million of debt, net of deferred debt issuance costs and unamortized discounts and 33 million shares of common stock outstanding. As of March 31,June 30, 2023, we had access to $377.5$387.9 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of March 31,June 30, 2023, our contractual debt service obligations for the remainder of 2023, consisting of principal and interest on our outstanding debt, wereare estimated to be approximately $40$21 million. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents and borrowings under our Revolving Credit Facility are sufficient to meet our working capital, debt service and capital expenditure requirements for the next twelve months. If our future financing needs increase, we may need to arrange additional debt or equity financing. We continually evaluate and consider various financing alternatives to enhance or supplement our existing financial resources. However, we cannot be assured that we will be able to enter into any such arrangements on acceptable terms or at all.
Credit Facilities and Convertible Notes
As of March 31,June 30, 2023, we had Senior Secured Credit Facilities that consist of a $500 million Revolving Credit Facility, with an outstanding principal balance of $119$109 million, and a TLA Facility with an outstanding principal balance of $400$393 million. The Revolving Credit Facility and TLA Facility mature on February 15, 2028. The Senior Secured Credit Facilities include a mandatory prepayment provision customary for credit facilities of its nature.
During the first quarter of 2023, we issued $500 million aggregate principal amount of notes. The 2028 Notes mature on February 15, 2028 and bear interest at a fixed rate of 2.125% per annum. The total net proceeds from the issuance of the 2028 Notes, after deducting initial purchasers' discounts and commissions and debt issuance costs, were approximately $485 million. We used the net proceeds from the issuance of the 2028 Notes to settle in full principal and interest due of $336.1 million under the TLB Facility, pay down principal and interest due of $113.9 million under the Revolving Credit Facility, to pay related fees and expenses, and to pay the cost of the capped calls related to the issuance of our 2028 Notes.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Revolving Credit Facility and TLA Facility contain covenants requiring that we maintain (i) 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 certain qualified acquisitions) and (ii) an interest coverage ratio of at least 2.50:1.00. As of March 31,June 30, 2023, we were in compliance with these financial covenants. As of March 31,June 30, 2023, our Total Net Leverage Ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 3.12.9 to 1.0. For the twelve month period ended March 31,June 30, 2023, our interest coverage ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 7.7 7.9to 1.0.
Failure to comply with these financial covenants would result in an event of default as defined under the Revolving Credit Facility and TLA Facility unless waived by the lenders. An event of default may result in the acceleration of our indebtedness. As a result, management believes that compliance with these covenants is material to us.
See Note 6 “Debt” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for a further information on the Company’s outstanding debt.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Summary of Cash Flow
Three Months Ended Six Months Ended
(in thousands)(in thousands)March 31,
2023
April 1,
2022
(in thousands)June 30,
2023
July 1,
2022
Cash provided by (used in):Cash provided by (used in):Cash provided by (used in):
Operating activitiesOperating activities$6,188 $18,161 Operating activities$62,333 $37,011 
Investing activitiesInvesting activities(24,694)(10,398)Investing activities(57,366)(148,659)
Financing activitiesFinancing activities33,116 (1,028)Financing activities7,593 115,603 
Effect of foreign currency exchange rates on cash and cash equivalentsEffect of foreign currency exchange rates on cash and cash equivalents1,722 1,048 Effect of foreign currency exchange rates on cash and cash equivalents1,783 (6,247)
Net change in cash and cash equivalentsNet change in cash and cash equivalents$16,332 $7,783 Net change in cash and cash equivalents$14,343 $(2,292)
Operating Activities During the first threesix months of 2023, we generated cash from operations of $6.2$62.3 million, compared to $18.2$37.0 million for the first threesix months of 2022. The decreaseincrease of $12.0$25.3 million was the result of a $15.9$23.5 million decreaseincrease in cash flow provided by changes in operating assets and liabilities partially offset byand a $3.9$1.8 million increase in net income adjusted for non-cash items such as depreciation and amortization.
The increase in net income adjusted for non-cash items such as depreciation and amortization is primarily from higher sales volume partially offset by higher interest expense. The decreaseincrease associated with changes in operating assets and liabilities is primarily related to higherless accounts receivable, inventory and contract assetaccounts payable growth. Accounts receivable benefited from a new factoring arrangement entered into during the first six months of 2023 that accelerated accounts receivable collections. Factoring activity on accounts receivable provided an increase of approximately $23 million in cash generated from operating activities during the first six months of 2023. Inventory growth was high in the current period partially offset byfirst six months of 2022 from investments to support growth and protect against supply chain risk, while accounts payable yielded less benefit to cash flow in the first six months of 2023 from lower inventory growth.growth and the timing of supplier payments.
Investing Activities The $14.3$91.3 million increasedecrease in net cash used in investing activities was primarily attributable to lower cash paid for acquisitions, partially offset by increased purchases of property, plant and equipment of $24.7$57.4 million in the first threesix months of 2023, compared to $10.9$22.6 million in the same period last year. Investing activities for the second quarter of 2022 included net cash paid of $126.6 million for the Aran acquisition and settlement of working capital and other closing adjustments with Oscor.
Financing Activities – Net cash provided by financing activities for the first threesix months of 2023, was $33.1$7.6 million compared to $1.0$115.6 million used in financing activities for the first threesix months of 2022. The cash provided by financing activities for the first threesix months of 2023 was primarily related to the issuance of our 2028 Notes of $486.3 million, which was partially offset by $335.6 million in full repayment of our term loan B facility, $55.3$62.8 million in repayments of our term loan A facility, $23.8$33.8 million of net payments on our Revolving Credit Facility, and $35.0 million of capped call purchases related to the issuance of our 2028 Notes.Notes, and $7.7 million paid to settle certain contingent consideration liabilities related to the Aran and Inomec acquisitions. The net cash inflow for 2022 included $160.0 million in borrowings on the revolving line of credit primarily to fund the Aran acquisition.
Off-Balance Sheet Arrangements
We do not currently have off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our Condensed Consolidated Financial Statements.
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INTEGER HOLDINGS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Impact of Recently Issued Accounting Standards
In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Condensed Consolidated Financial Statements. See Note 1 “Basis of Presentation” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.
Critical Accounting Policies and Estimates
The preparation of our Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Our estimates, assumptions and judgments are based on historical experience and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Making estimates, assumptions and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Management believes the estimates, assumptions and judgments employed and resulting balances reported in the Condensed Consolidated Financial Statements are reasonable; however, actual results could differ materially.
There have been no significant changes to the critical accounting policies and estimates as compared to those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to information appearing under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q. Furthermore, a discussion of market risk exposures is included in Part II, Item 7A, Quantitative and Qualitative Disclosure about Market Risk, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
There have been no material changes in reported market risk since the inclusion of this discussion in the Company’s Annual Report on Form 10-K referenced above.
ITEM 4. CONTROLS AND PROCEDURES
a.    Evaluation of Disclosure Controls and Procedures
Our management, including the principal executive officer and principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) related to the recording, processing, summarization and reporting of information in our reports that we file with the Securities and Exchange Commission as of March 31,June 30, 2023. These disclosure controls and procedures have been designed to provide reasonable assurance that material information relating to us, including our subsidiaries, is made known to our management, including these officers, by our employees, and that this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based on their evaluation, as of March 31,June 30, 2023, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective.
b.    Changes in Internal Control Over Financial Reporting
During the Company’s most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There were no new material legal proceedings that are required to be reported in the quarter ended March 31,June 30, 2023, and no material developments during the quarter in the Company’s legal proceedings as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 1A.RISK FACTORS
There have been no material changes to the Company’s risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended June 30, 2023, none of the Company’s directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
ITEM 6.EXHIBITS
Exhibit NumberDescription
10.1#*
31.1*
31.2*
32.1**
101.INS*XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*XBRL Extension Schema Document
101.CAL*XBRL Extension Calculation Linkbase Document
101.LAB*XBRL Extension Label Linkbase Document
101.PRE*XBRL Extension Presentation Linkbase Document
101.DEF*XBRL Extension Definition Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
*Filed herewith.
**Furnished herewith.
#Indicates exhibits that are management contracts or compensation plans or arrangements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated:AprilJuly 27, 2023 INTEGER HOLDINGS CORPORATION
 By:/s/ Joseph W. Dziedzic
 Joseph W. Dziedzic
 President and Chief Executive Officer
 (Principal Executive Officer)
 By:/s/ Jason K. GarlandDiron Smith
 Jason K. GarlandDiron Smith
 Executive Vice President and Interim
  Chief Financial Officer
 (Principal Financial Officer)
 By:/s/ Tom P. Thomas
 Tom P. Thomas
 Vice President, Corporate Controller
 (Principal Accounting Officer)


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