INTEGER HOLDINGS CORP MANAGEMENT REPORT OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

The following discussion and analysis of our financial condition and results of
operations should be read together with our consolidated financial statements
and the related notes appearing in Item 8 of this report. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of many factors, including but
not limited to those under the heading "Risk Factors" in Item 1A of this report.

Our Business

•Our business
•Impact of COVID-19
•Recent business acquisitions
•Discontinued operations
•Patent litigation
•Financial overview

Our Financial Results

•Fiscal 2021 compared with fiscal 2020
•Liquidity and capital resources
•Cash and other commitments
•Impact of recently issued accounting standards

Critical accounting estimates

•Acquisition method of accounting
•Inventories
•Valuation of goodwill and intangible assets

Our business

Integer Holdings Corporation is one of the largest MDO manufacturers in the
world serving the cardiac, neuromodulation, orthopedics, vascular and advanced
surgical 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 principle product lines. The Medical segment
includes the Cardio & Vascular, Cardiac & 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 18 "Segment and Geographic Information" of the Notes to
Consolidated Financial Statements contained in Item 8 of this report.

Impact of COVID-19

Beginning in early March 2020, the global spread of the novel coronavirus
("COVID-19") created significant uncertainty and worldwide economic disruption.
Specific impacts to our business include labor shortages, disruptions in the
supply chain, delayed or reduced customer orders and sales, restrictions on
associates' ability to travel or work, and delays in shipments to and from
certain countries. The extent to which COVID-19 will continue to impact our
operations will depend on future developments, which remain highly uncertain and
difficult to predict, including, among others, the duration of the outbreak, the
effectiveness and utilization of vaccines for COVID-19 and its variants, new
information that may emerge concerning the severity of COVID-19 and the actions,
especially those taken by governmental authorities to contain the pandemic or
treat its impact. As pandemic-related events continue to evolve, additional
impacts may arise or worsen that we are not aware of currently. Any prolonged
material disruption of our labor force, suppliers, manufacturing, or customers
could materially impact our consolidated financial position, results of
operations or cash flows.
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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Recent business acquisitions

On December 1, 2021, we acquired 100% of the outstanding equity interests of
Oscor, privately-held companies with operations in Florida, the Dominican
Republic and Germany that design, develop, manufacture and market a
comprehensive portfolio of highly specialized medical devices, venous access
systems and diagnostic catheters and implantable devices. Refer to Note 2
"Business Acquisitions" of the Notes to Consolidated Financial Statements
contained in Item 8 of this report for additional information about the
acquisition.

On February 19, 2020, we acquired certain assets and liabilities of 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. The acquisition
enabled us to create a research and development center in Israel, closer to the
customer base in the region.

Refer to Note 2 "Business Acquisitions" of the Notes to Consolidated Financial
Statements contained in Item 8 of this report for additional information about
the acquisition of Oscor and InoMec.

Discontinued operations

In July 2018, we completed the sale of the AS&O Product Line within our Medical
segment to Viant (formerly MedPlast, LLC). For all periods presented, financial
results reported as discontinued operations relate to the divested AS&O Product
Line. All results and information presented exclude the AS&O Product Line unless
otherwise noted.

During 2021, we recognized income from discontinued operations of $3.8 million
or $0.11 per diluted share. There was no income from discontinued operations
during 2020.

Refer to Note 20 “Discontinued Operations” of the Notes to the Consolidated Financial Statements in Section 8 of this report for additional information.

Patent litigation

In April 2013, we commenced an action against a competitor alleging they had
infringed on the our patents by manufacturing and selling filtered feedthrough
assemblies used in implantable pacemakers and cardioverter defibrillators that
incorporate our patented technology.

Following four trials and an appeal, the United States Court of Appeals for the
Federal Circuit affirmed, in all respects, a judgment in our favor. We received
proceeds related to the judgment of $28.9 million in October 2020, and after
recognizing certain related expenses, recognized a net gain of $28.2 million,
which is recorded in Selling, general and administrative expenses. The proceeds
were used to pay down a portion of our Revolving Credit Facility.

Refer to note 13 “Commitments and contingencies” of the notes to the consolidated financial statements appearing in section 8 of this report for additional information on this subject.

Financial overview

Fiscal 2021 vs. Fiscal 2020

Income from continuing operations for 2021 was $93.0 million Where $2.80 per diluted share compared to $77.3 million Where $2.33 per diluted share for 2020. These differences mainly result from the following elements:

•Sales for 2021 increased 14% to $1.221 billion as we began to see our sales
return to pre-pandemic levels as the demand for many of our products continues
to recover from the impacts of the COVID-19 pandemic.

• Gross profit for 2021 increased $51.3 million or 18%, mainly due to increased sales volume and production efficiency.

•Operating expenses for 2021 increased by $36.2 million compared to 2020,
primarily due to increases of $32.4 million in SG&A expenses and $3.5 million in
RD&E expenses. Included in SG&A expenses for 2020 is a net gain of $28.2 million
recognized in connection with a previously mentioned patent litigation judgment.

• Interest expense for 2021 decreased by $6.6 million primarily due to lower interest rates and lower average debt balances.

• We recorded a net loss on the equity investments of $3.1 million in 2021, against a net gain on equity investments of $5.3 million in 2020. Gains and losses on equity investments are generally unpredictable in nature.

•Other (income) loss, net for 2021 was income of $0.1 million compared to a loss
of $1.5 million during 2020, primarily due to fluctuations in foreign currency
gains and losses in the respective periods.

•We recorded provisions for income taxes of $8.0 million and $8.9 million for
2021 and 2020, respectively. The changes in income tax were primarily due to
relative changes in pre-tax income and the impact of discrete tax items.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Fiscal 2020 vs. Fiscal 2019

Income from continuing operations for 2020 was $77.3 million Where $2.33 per diluted share compared to $91.2 million Where $2.76 per diluted share for 2019. These differences mainly result from the following elements:

•Sales from continuing operations for 2020 decreased by 15%, mainly due to the impact of the COVID-19 pandemic.

•Gross profit for 2020 decreased $69.3 million or 20%, primarily from a decrease
in sales volume, price reductions to our customers, and a loss in volume
leverage, which resulted from our sales decrease, partially offset by 2019
charges associated with a customer bankruptcy. Cost of sales for fiscal years
2020 and 2019 included pre-tax charges of $1.1 million and $21.4 million,
respectively, in connection with the customer bankruptcy.

•Operating expenses for 2020 decreased by $32.3 million compared to 2019, due to
decreases of $29.7 million in SG&A expenses and $4.5 million in Other operating
expenses, partially offset by a $1.9 million increase in RD&E expenses. Included
in SG&A expenses for 2020 is a net gain of $28.2 million recognized in
connection with a previously mentioned patent litigation judgment.

• Interest expense for 2020 decreased by $14.3 million primarily due to lower interest rates and lower debt balances.

• We recorded a net gain on the equity investments of $5.3 million in 2020, against a net loss on investments of $0.5 million in 2019. Gains and losses on equity investments are generally unpredictable in nature.

•Other loss, net for 2020 was $1.5 million compared to other income, net of $0.6
million during 2019, primarily due to fluctuations in foreign currency gains and
losses in the respective periods.

•We recorded provisions for income taxes of $8.9 million and $14.0 million for
2020 and 2019, respectively. The decrease in provision for income taxes is
primarily due to our decrease in pre-tax income and the beneficial impact of the
final Treasury Regulations issued in 2020.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Our financial results

The following table presents selected financial information derived from our
Consolidated Financial Statements, contained in Item 8 of this report, for the
periods presented (dollars in thousands, except per share amounts):
                                                                                                                 Change                                Change
                                                                                                              2021 vs. 2020                        2020 vs. 2019
                                             2021                2020                2019                   $                  %                  $                  %
Medical Sales:
Cardio & Vascular                        $  626,013          $  569,948          $  610,056          $      56,065             10  %       $     (40,108)           (7) %
Cardiac & Neuromodulation                   446,569             346,242             457,194                100,327             29  %            (110,952)          (24) %
Advanced Surgical, Orthopedics &
 Portable Medical                           110,044             121,788             132,429                (11,744)           (10) %             (10,641)           (8) %

Total Medical Sales                       1,182,626           1,037,978           1,199,679                144,648             14  %            (161,701)          (13) %
Non-Medical                                  38,453              35,464              58,415                  2,989              8  %             (22,951)          (39) %
Total sales                               1,221,079           1,073,442           1,258,094                147,637             14  %            (184,652)          (15) %
Cost of sales                               884,109             787,735             903,084                 96,374             12  %            (115,349)          (13) %
Gross profit                                336,970             285,707             355,010                 51,263             18  %             (69,303)          (20) %
            Gross profit as a % of sales       27.6  %             26.6  %             28.2  %
Operating expenses:
Selling, general and administrative
("SG&A")                                    141,418             109,006             138,695                 32,412             30  %             

(29,689) (21)%

                    SG&A as a % of sales       11.6  %             10.2  %             11.0  %
Research, development and engineering
("RD&E")                                     51,985              48,468              46,529                  3,517              7  %               1,939             4  %
                    RD&E as a % of sales        4.3  %              4.5  %              3.7  %
Other operating expenses                      7,856               7,621              12,151                    235              3  %              (4,530)          (37) %
Total operating expenses                    201,259             165,095             197,375                 36,164             22  %             (32,280)          (16) %
Operating income                            135,711             120,612             157,635                 15,099             13  %             (37,023)          (23) %
        Operating income as a % of sales       11.1  %             11.2  %             12.5  %
Interest expense                             31,628              38,220              52,545                 (6,592)           (17) %             (14,325)          (27) %
(Gain) loss on equity investments, net        3,143              (5,337)                475                  8,480           (159) %              (5,812)           NM
Other (income) loss, net                       (123)              1,522                (578)                (1,645)          (108) %               2,100            NM

Income from continuing operations

  before taxes                              101,063              86,207             105,193                 14,856             17  %             (18,986)          (18) %
Provision for income taxes                    8,043               8,949              13,975                   (906)           (10) %              (5,026)          (36) %
                      Effective tax rate        8.0  %             10.4  %             13.3  %

Income from continuing operations $93,020 $77,258

      $   91,218          $      15,762             20  %       $     

(13,960) (15)%

                  Income from continuing
              operations as a % of sales        7.6  %              7.2  %              7.3  %

Diluted earnings per share of

  continuing operations                  $     2.80          $     2.33          $     2.76          $        0.47             20  %       $       (0.43)          (16) %

NM – Calculated change not significant.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion is a comparison between fiscal year 2021 and fiscal
year 2020 results. For a discussion of our results of operations for fiscal year
2020 compared to fiscal year 2019, please refer to Item 7 of Part II,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our   Annual Report on Form 10-K for the fiscal year ended
December 31, 20    20  , which was filed with the SEC on February 18, 2021.

Fiscal 2021 vs. Fiscal 2020

Sales

Sales by product line for 2021 and 2020 were as follows (dollars in thousands):
                                                                                                           Change
                                                          2021                 2020                 $                  %
Medical Sales:
Cardio & Vascular                                    $   626,013          $   569,948          $  56,065               9.8  %
Cardiac & Neuromodulation                                446,569              346,242            100,327              29.0  %
Advanced Surgical, Orthopedics & Portable Medical        110,044              121,788            (11,744)             (9.6) %
Total Medical Sales                                    1,182,626            1,037,978            144,648              13.9  %
Non-Medical                                               38,453               35,464              2,989               8.4  %
Total sales                                          $ 1,221,079          $ 1,073,442          $ 147,637              13.8  %

Total 2021 sales increased 14% to $1.221 billion compared to 2020. The main drivers of this decrease are as follows:

Cardio & Vascular sales for 2021 increased $56.1 million or 10% in comparison to
2020. Cardio & Vascular sales for 2021 reflect the continued recovery from the
negative impact of the COVID-19 pandemic, with strong increases across all
Cardio & Vascular markets, particularly in the neurovascular market, despite end
market demand fluctuations and supply chain constraints. During 2021, price
changes reduced Cardio & Vascular sales by $0.4 million in comparison to 2020.
Foreign currency exchange rate fluctuations increased Cardio & Vascular sales
for 2021 by $1.5 million. Cardio & Vascular sales for 2021 include Oscor sales
since the date of acquisition of $2.9 million.

Cardiac & Neuromodulation sales for 2021 increased $100.3 million or 29% in
comparison to 2020. Cardiac & Neuromodulation sales for 2021 reflect the
continued recovery from the negative impact of the COVID-19 pandemic and strong
sales across all markets, despite end market demand fluctuations and supply
chain constraints. Sales in the cardiac rhythm management market and
neuromodulation market saw double-digit increases when comparing fiscal year
2021 to fiscal year 2020. During 2021, price changes reduced Cardiac &
Neuromodulation sales by approximately $10.8 million in comparison to 2020.
Foreign currency exchange rate fluctuations did not have a material impact on
Cardiac & Neuromodulation sales during 2021 in comparison to 2020. Cardiac &
Neuromodulation sales for 2021 include Oscor sales since the date of acquisition
of $1.8 million.

In addition to Portable Medical sales, Advanced Surgical, Orthopedic & Portable
Medical includes sales to the acquirer of our former AS&O Product Line, under
supply agreements entered into as part of the divestiture in 2018. Advanced
Surgical, Orthopedics & Portable Medical sales for 2021 decreased by $11.7
million in comparison to 2020. The decreases in 2021 sales reflects a
double-digit decline in Advanced Surgical and Orthopedics, the divested product
line currently under supply agreement, and a low single-digit decline in
Portable Medical driven by lower demand for COVID-related ventilators and
patient monitoring components. Price changes reduced Advanced Surgical,
Orthopedic & Portable Medical sales by $0.4 million in comparison to 2020.
Foreign currency exchange rate fluctuations did not have a material impact on
Advanced Surgical, Orthopedic & Portable Medical sales during 2021 in comparison
to 2020.

Non-Medical sales for 2021 increased $3.0 million or 8% in comparison to 2020.
The sales increase reflects moving from a period of energy market contraction to
recovery beginning in the second quarter of 2021. Price and foreign currency
exchange rate fluctuations did not have a material impact on Non-Medical sales
during 2021 in comparison to 2020.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Gross Profit

Changes in gross margin as a percentage of sales (“gross margin”) from the prior year are due to the following:

                                                                                            % Change
                                                                                         2021 vs. 2020
Price(a)                                                                                             (0.7) %
Mix(b)                                                                                                0.8
Production efficiencies and volume(c)                                                                 0.7
Customer Bankruptcy(d)                                                                                0.2

Total percentage point change in gross margin as a percentage of sales

                           1.0  %

__________

(a) Our gross margin for 2021 was negatively impacted by price reductions granted to our largest OEM customers in exchange for long-term volume commitments.

(b) The amount represents the impact on our gross margin attributable to changes in product sales mix during the period.

(c) Our gross margin for 2021 was positively impacted by increased sales volume and production efficiency, primarily due to our manufacturing excellence imperative.

(d)In November 2019, one of our customers, Nuvectra Corporation, filed a
voluntary Chapter 11 bankruptcy petition (the "Customer Bankruptcy"). During
fiscal year 2021, we recognized benefits from favorable settlements on supplier
purchase order termination clauses and utilization of previously reserved
inventory. During fiscal year 2020, we incurred costs and recorded charges
associated with the Customer Bankruptcy, primarily consisting of charges related
to inventory recorded in cost of sales.

General and administrative costs

Changes in general and administrative expenses are mainly due to the following items (in thousands):

                                     $ Change
                                  2021 vs. 2020

Compensation and benefits(a) $5,069

Patent litigation gain, net(b)           28,167
All other SG&A, net(c)                     (824)

Net increase in SG&A fees $32,412

__________

(a) Compensation and benefits increased in 2021 compared to 2020, mainly due to higher stock-based compensation expense.

(b)We recognized a net gain of $28.2 million during 2020 related to a patent
litigation judgment. See "Patent Litigation" in the Financial Overview section
for additional information.

(c) The net decrease in all other SG&A expenses for 2021 compared to 2020 is mainly due to lower travel expenses and amortization expense.

R&D expenses

RD&E expenses for 2021 and 2020 were $52.0 million and $48.5 million,
respectively. The increase in RD&E expenses for 2021 compared to 2020 is
primarily attributable to increased compensation and benefits costs, consistent
with our strategy to invest in capabilities for growth. 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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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Other operating expenses

OOE includes the following for 2021 and 2020 (in thousands):

                                                 2021         2020        

Change

Operational excellence(a)                      $ 3,893      $ 2,791      $ 

1,102

Reorganization and strategic alignment(b) 911,686

225

Industrial alignment to support growth(c) – 241 (241)

Acquisition and integration costs(d)             2,544         (776)       3,320
Other general expenses(e)                          508        4,679       (4,171)
Other operating expenses                       $ 7,856      $ 7,621      $   235


__________

(a)These projects focus on modifying our organizational structure to align product line growth strategies with customer needs, transitioning our manufacturing process to competitive advantage, and standardizing and optimizing of our business processes. The associated costs for 2021 and 2020 consist mainly of severance pay.

(b)The Company's strategic reorganization and alignment 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. Costs related for 2021 primarily consist of termination benefits.
Costs related for 2021 primarily consist of termination benefits and fees for
professional services.

(c) In 2017, we launched several initiatives aimed at reducing costs, increasing manufacturing capacity to accommodate growth and improving operational efficiency. The plan included relocating some manufacturing operations and expanding some of our facilities. These actions were practically completed at the end of 2020.

(d)Amounts include expenses related to the acquisitions of Oscor in 2021 and
InoMec in 2020. The 2020 amount also includes a $2.0 million adjustment to
reduce the fair value of acquisition-related contingent consideration
liabilities. See Note 17 "Financial Instruments and Fair Value Measurements" of
the Notes to Consolidated Financial Statements contained in Item 8 of this
report for additional information related to the fair value measurement of the
contingent consideration.

(e)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. The 2020 amounts primarily include
severance, information technology systems conversion expenses, expenses incurred
in connection with the Customer Bankruptcy, and expenses related to the
restructuring of certain legal entities of the Company.

Refer to note 11 “Other operating expenses” of the notes to the consolidated financial statements in section 8 of this report for additional information regarding these initiatives.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Interest Expense

Interest expense consists primarily of cash interest and debt related charges,
such as amortization of deferred debt issuance costs and original issue
discount. Interest expense decreased $6.6 million to $31.6 million in 2021 from
$38.2 million in 2020, primarily due to lower interest rates and lower average
outstanding debt balances. The weighted average interest rates on outstanding
borrowings during 2021 and 2020 was 3.50% and 3.79%, respectively.

Debt related charges included in interest expense were $7.0 million for 2021
compared to $4.8 million for 2020. The increase in debt related charges during
2021 compared to 2020 is primarily attributable to write-offs of deferred debt
issuance costs and unamortized discount (losses from extinguishment of debt)
related to prepayments of portions of our Term Loan B facility and a write off
of $3.3 million of deferred issuance costs and unamortized discount in
connection with the refinancing of our credit facilities in September 2021. We
recognized losses from extinguishment of debt during 2021 and 2020 of $3.8
million and $0.5 million, respectively.

As of December 31, 2021, approximately 18% of our principal amount of debt
outstanding has been effectively converted to fixed-rate borrowings through the
use of interest rate swaps, in comparison to approximately 27% as of
December 31, 2020.  We enter into interest rate swap agreements to reduce our
exposure to fluctuations in the LIBOR rate. See Note 17 "Financial Instruments
and Fair Value Measurements" of the Notes to the Consolidated Financial
Statements contained in Item 8 of this report for additional information
pertaining to our interest rate swap agreements.

(Gain) Loss on Equity Investments, Net
During 2021, we recognized a net loss of $3.1 million on our equity investments
compared to net gains of $5.3 million for 2020. Gains and losses on equity
investments are generally unpredictable in nature. During 2021 and 2020, we
recognized impairment charges of $0.1 million and $0.4 million, respectively,
related to investments in our non-marketable equity securities. The residual
amounts for 2021 and 2020 relate to our share of equity method investee
gains/losses, including unrealized appreciation and depreciation of the
underlying interests of the investee. As of December 31, 2021 and December 31,
2020, the carrying value of our equity investments was $21.8 million and $27.2
million, respectively. See Note 17 "Financial Instruments and Fair Value
Measurements" of the Notes to Consolidated Financial Statements contained in
Item 8 of this report for further details regarding these investments.

Other (Income) Loss, Net
Other (income) loss, net was income of $0.1 million during 2021 compared to a
loss of $1.5 million during 2020. Other (income) 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.

The impact of foreign currency exchange rates on transactions denominated in
foreign currencies included in Other (income) loss, net for 2021 and 2020 were
net gains of $0.1 million and net losses of $1.6 million, respectively. We
continually monitor our foreign currency exposures and seek to take steps to
mitigate these risks. However, fluctuations in foreign currency exchange rates
could have a significant impact, positive or negative, on our financial results
in the future.
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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Provision for income taxes

During 2021 and 2020, our provision for income taxes was $8.0 million on
worldwide pre-tax income of $101.1 million
(effective tax rate of 8.0%) and $8.9 million on worldwide pre-tax income of
$86.2 million (effective tax rate of 10.4%), respectively. The stand-alone U.S.
component of the effective tax rate for 2021 reflected a $2.0 million provision
on $48.3 million of pre-tax book income (effective tax rate of 4.2%) versus a
$3.1 million provision on $35.3 million of pre-tax book income (effective tax
rate of 8.9%) for 2020. The stand-alone International component of the effective
tax rate for 2021 reflected a $6.0 million provision on $52.8 million of pre-tax
book income (effective tax rate of 11.4%) versus a $5.8 million provision on
$50.9 million of pre-tax book income (effective tax rate of 11.4%) for 2020.

The provision for income taxes for 2021 differs from the we statutory rate due to the following (in thousands of dollars):

                                                         U.S.                             International                           Combined
                                                  $                %                   $                   %                 $                 %
Income before provision for income taxes     $ 48,293                           $      52,770                           $ 101,063

Provision at statutory rate                  $ 10,141             21.0  %       $      11,082             21.0  %       $  21,223             21.0  %
Federal tax credits (including R&D)           (11,929)           (24.8)                     -                -            (11,929)           (11.8)
Foreign rate differential                       1,366              2.8                 (6,531)           (12.4)            (5,165)            (5.1)
Stock-based compensation                       (1,084)            (2.2)                     -                -             (1,084)            (1.1)
Uncertain tax positions                            18                -                      -                -                 18                -
State taxes, net of federal benefit             1,183              2.4                      -                -              1,183              1.2
U.S. tax on foreign earnings, net of §250
deduction                                       1,913              4.0                      -                -              1,913              1.9
Valuation allowance                                 -                -                    524              1.0                524              0.5
Other                                             398              0.8                    962              1.8              1,360              1.4
Provision for income taxes                   $  2,006              4.0  %       $       6,037             11.4  %       $   8,043              8.0  %

The provision for income taxes for 2020 differs from the we statutory rate due to the following (in thousands of dollars):

                                                         U.S.                             International                           Combined
                                                  $                %                   $                   %                 $                %
Income before provision for income taxes     $ 35,337                           $      50,870                           $ 86,207

Provision at statutory rate                  $  7,420             21.0  %       $      10,683             21.0  %       $ 18,103             21.0  %
Federal tax credits (including R&D)            (7,009)           (19.9)                     -                -            (7,009)            (8.1)
Foreign rate differential                         339              1.0                 (5,672)           (11.2)           (5,333)            (6.2)
Stock-based compensation                       (1,459)            (4.1)                     -                -            (1,459)            (1.7)
Uncertain tax positions                         1,208              3.4                      -                -             1,208              1.4
State taxes, net of federal benefit               553              1.6                      -                -               553              0.6
U.S. tax on foreign earnings, net of §250
deduction                                       3,216              9.1                      -                -             3,216              3.7
Valuation allowance                              (470)            (1.3)                   125              0.2              (345)            (0.4)
Other                                            (674)            (1.9)                   689              1.4                15              0.1
Provision for income taxes                   $  3,124              8.9  %       $       5,825             11.4  %       $  8,949             10.4  %


Our effective tax rate of 8.0% for 2021 is lower than our effective tax rate of
10.4% for 2020, primarily due to the beneficial impact of a year over year
increase in R&D tax credits, an increase in Foreign tax credits and Foreign
Derived Intangible Income ("FDII") resulting from an increase in foreign source
income in 2021, and the release of Uncertain Tax Positions relating to the tax
years 2017 and 2018 as the Internal Revenue Service ("IRS") effectively
concluded its examination of those years during 2021.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's effective tax rate for 2021 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, and the impact of the Company's 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 the
Company to include foreign subsidiary earnings in excess of a deemed return on a
foreign subsidiary's tangible assets in its 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. 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 have a tax holiday in Malaysia through April 2023
provided certain conditions continue to be met. In addition, 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. In
addition, we continue to explore tax planning opportunities that may have a
material impact on our effective tax rate.

The balance of unrecognized tax benefits is not expected to materially change
over the course of the next twelve months as a result of the lapse of the
statute of limitations and/or audit settlements. As of December 31, 2021,
approximately $5.5 million of unrecognized tax benefits would favorably impact
the effective tax rate (net of federal impact on state issues), if recognized.

Cash and capital resources

                             December 31,       December 31,
(dollars in thousands)           2021               2020
Cash and cash equivalents   $      17,885      $      49,206
Working capital             $     293,353      $     256,746
Current ratio                        2.84               2.64


Cash and cash equivalents at December 31, 2021 decreased by $31.3 million from
December 31, 2020. In 2021, we generated $156.7 million of cash from operating
activities and borrowed a net amount of $95.8 million under our Senior Secured
Credit Facility, which was more than offset by $218.0 million of net cash paid
for the Oscor acquisition and net purchases of property, plant and equipment of
$53.0 million.

Working capital increased by $36.6 million from December 31, 2020, primarily
from positive working capital fluctuations associated with accounts receivable,
contract assets, prepaid expenses and other current assets, and the current
portion of long-term debt aggregating to $84.6 million, which were partially
offset by fluctuations in cash and cash equivalents and accounts payable
aggregating to $56.6 million. During 2021, accounts receivable increased mainly
from higher sequential sales, and contract assets increased mainly due to a
contract modification to add existing products and extend the contractual term,
while the current portion of long-term debt decreased due to the refinancing of
our term loan facilities during the third quarter of 2021. Cash and cash
equivalents decreased primarily from net cash outflow in connection with the
Oscor acquisition, while accounts payable increased mainly from the timing of
supplier payments and higher sequential inventory purchases.

At December 31, 2021, $13.1 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.

Cash flow summary

The following summary cash flow information includes cash flow from discontinued operations (in thousands):

                                                                     2021                2020
Cash provided by (used in):
Operating activities                                             $  156,666          $  181,341
Investing activities                                               (270,998)            (56,576)
Financing activities                                                 81,986             (88,578)

Effect of exchange rates on cash and cash equivalents

                                                           1,025                (516)
Net change in cash and cash equivalents                          $  

(31,321) $35,671

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Operating Activities - Cash provided by operating activities decreased $24.7
million in 2021 compared to 2020. Net income as adjusted for non-cash items such
as depreciation and amortization increased $39.2 million but was more than
offset by a decrease from fluctuations in operating assets and liabilities,
which totaled $63.9 million.

The increase in net income adjusted for non-cash items such as depreciation and
amortization is primarily from higher sales volume, margin expansion and lower
interest expense partially offset by higher SG&A from the aforementioned patent
litigation judgement in the prior year. The decrease associated with changes in
operating assets and liabilities is primarily related to the impact of declining
sales volume in the prior year, which caused a significant prior year benefit to
operating cash flow from the collection of accounts receivable in a period of
declining sales and a lower investment in inventory. In addition, we deferred
payment of the employer portion of Social Security taxes during 2020 under the
provisions of the CARES Act, which further contributed to the prior year
benefit. These unfavorable impacts were partially offset with accounts payable
fluctuations based on timing of supplier payments.

Investing Activities - The $214.4 million increase in net cash used in investing
activities was primarily attributable to an increase in net cash paid for
business acquisitions of $212.8 million and increased purchases of property,
plant, and equipment of $6.6 million, partially offset by a decrease from the
purchase of an intangible asset of $4.6 million in 2020.

Financing Activities - Net cash provided by financing activities during 2021 was
$82.0 million compared to net cash used of $88.6 million in 2020. Financing
activities during 2021 included net borrowings of $95.8 million compared to net
payments of $87.5 million in 2020. The net cash inflow for 2021 included $220.0
million in borrowings to fund the Oscor acquisition. The payments made during
2020 include the utilization of proceeds received in conjunction with the patent
litigation judgment during the fourth quarter of 2020.

Capital Structure - As of December 31, 2021, our capital structure consists of
$828.1 million of debt, net of deferred debt issuance costs and unamortized
discounts, outstanding under our Senior Secured Credit Facilities and 33 million
shares of common stock outstanding. We have access to $375.0 million of
borrowing capacity under our Revolving Credit Facility, available for normal
course of business and letters of credit. We are also authorized to issue up to
100 million shares of common stock and 100 million shares of preferred stock. As
of December 31, 2021, our contractual debt service obligations for 2022,
consisting of principal and interest on our outstanding debt, are estimated to
be approximately $33 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.

Credit Facilities - On September 2, 2021, we entered into a new credit agreement
(the "2021 Credit Agreement") which permits borrowings and other extensions of
credit in an initial aggregate principal amount of up to $1 billion (as may be
increased from time to time in accordance with the terms). The 2021 Credit
Agreement governs the Company's senior secured credit facilities (the "Senior
Secured Credit Facilities"), which consist of a five-year $400 million revolving
credit facility (the "Revolving Credit Facility"), which had available borrowing
capacity of $375.0 million as of December 31, 2021, a five-year "term A" loan
(the "TLA Facility") with outstanding principal balance of $467 million, and a
seven-year "term B" loan (the "TLB Facility") with outstanding principal balance
of $349 million. The Revolving Credit and TLA Facilities mature on September 2,
2026. The TLB Facility matures on September 2, 2028.

Our off-balance sheet commitments related to our outstanding letters of credit December 31, 2021 were $5.7 million.

The 2021 Credit 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 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 qualified acquisitions, but not to exceed 5.50:1.00) and
(ii) an interest coverage ratio of at least 2.50:1.00. As of December 31, 2021,
we were in compliance with these financial covenants. The TLB Facility does not
contain any financial maintenance covenants. As of December 31, 2021, our total
net leverage ratio, calculated in accordance with our Senior Secured Credit
Facilities agreement, was approximately 2.7 to 1.0. For the twelve month period
ended December 31, 2021, our ratio of adjusted EBITDA to interest expense,
calculated in accordance with our Senior Secured Credit Facilities agreement,
was approximately 12.5 to 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 8 “Debt” in the Notes to the Consolidated Financial Statements in Section 8 of this report for a more detailed description of our outstanding debt.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Cash and other liabilities

We have significant cash requirements to pay third parties under various contractual obligations described below.

Below is a summary of the contractual obligations and other minimum commitments at December 31, 2021. Refer to note 13 “Commitments and contingencies” of the notes to the consolidated financial statements in section 8 of this report for additional information regarding self-insurance liabilities, which are not reflected in the table below.

                                                                          Payments due by period
                                                            Less than 1                                                More than 5
                                           Total               year              1-3 years          3-5 years             years

Principal outstanding debt(a) $835,487 $15,250

$48,126 $440,489 $331,622
Interest on debt(a)

                        99,758              17,532              34,173             30,780              17,273
Operating lease obligations(b)             80,691              12,423              22,126             20,490              25,652
Finance lease obligations(b)                9,894                 876               1,784              1,427               5,807


(a)Interest payments in the table above reflect the contractual interest
payments on our outstanding debt based upon the balance outstanding and
applicable interest rates at December 31, 2021, and exclude the impact of the
debt issuance cost and discount amortization and the impact of interest rate
swap agreements. Refer to Note 8 "Debt" of the Notes to Consolidated Financial
Statements contained in Item 8 of this report for additional information
regarding long-term debt.

(b) Refer to note 14 “Leases” in the notes to the consolidated financial statements in section 8 of this report for additional information on our operating lease and finance lease obligations.

Capital expenditures for 2021 totaled $53.5 million, compared to $46.8 million
and $48.2 million in 2020 and 2019, respectively. Capital expenditures in 2021
related primarily to upgrades of manufacturing facilities and information
technology. We expect 2022 capital expenditures to approximate $65 million to
$75 million, with a significant portion related to additional upgrades of
manufacturing facilities and information technology, as well as for
manufacturing equipment to support productivity initiatives.

In addition to debt obligations, lease obligations, and capital expenditures, we
enter into a variety of contractual obligations in connection with the execution
of our business. As of December 31, 2021, we had purchase obligations for raw
materials and other parts of approximately $91 million which we will incur
during 2022.

We have recorded liabilities for unrecognized tax benefits that, because of
their nature, have a high degree of uncertainty regarding the timing of future
cash payment and other events that extinguish these liabilities. Refer to Note
12 "Income Taxes" of the Notes to Consolidated Financial Statements in Item 8 of
this report for additional information about these unrecognized tax benefits.

Based on current expectations, we believe that our projected cash flows provided
by operations, available cash and cash equivalents and availability under our
Revolving Credit Facility are sufficient to meet our working capital, debt
service and capital expenditure requirements for at least the next twelve
months. However, such cash flows are dependent upon our future operating
performance which, in turn, is subject to prevailing economic conditions, the
effects of the COVID-19 pandemic, and to financial, business and other factors,
including the conditions of our markets, some of which are beyond our control.
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,
including our Senior Secured Credit Facilities. However, we cannot be assured
that we will be able to enter into any such arrangements on acceptable terms or
at all.

Impact of recently issued accounting standards

In the normal course of business, we evaluate all new accounting pronouncements
issued by the Financial Accounting Standards Board ("FASB"), SEC, or other
authoritative accounting bodies to determine the potential impact they may have
on our Consolidated Financial Statements. Refer to Note 1 "Summary of
Significant Accounting Policies" of the Notes to Consolidated Financial
Statements contained in Item 8 of this report for additional information about
these recently issued accounting standards and their potential impact on our
financial condition or results of operations.
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                      MANAGEMENT'S DISCUSSION AND ANALYSIS

CRITICAL ACCOUNTING ESTIMATES

Management's discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with GAAP. We make estimates and assumptions in the
preparation of our consolidated financial statements that affect the reported
amounts of assets and liabilities, revenue and expenses and related disclosures
of contingent assets and liabilities. We base our estimates and judgments upon
historical experience and other factors that are believed to be reasonable under
the circumstances. Changes in estimates or assumptions could result in a
material adjustment to the consolidated financial statements.

We have identified several critical accounting estimates. An accounting estimate
is considered critical if both: (a) the nature of the estimates or assumptions
is material due to the levels of subjectivity and judgment involved, and (b) the
impact of changes in the estimates and assumptions have had or are reasonably
likely to have a material effect on the consolidated financial statements. This
listing is not a comprehensive list of all of our accounting policies. For
further information regarding the application of these and other accounting
policies, see Note 1 "Summary of Significant Accounting Policies" of the Notes
to Consolidated Financial Statements contained in Item 8 of this report.

Inventories

Inventories are measured on a first-in, first-out basis at the lower of cost or
net realizable value. Net realizable value is the estimated selling prices in
the ordinary course of business, less reasonably predictable costs of
completion, disposal, and transportation. The valuation of inventory requires us
to estimate obsolete or excess inventory, as well as inventory that is not of
saleable quality.

Historically, our inventory adjustment has been adequate to cover our losses.
However, variations in methods or assumptions could have a material impact on
our results. If our demand forecast for specific products is greater than actual
demand and we fail to reduce manufacturing output accordingly, we could be
required to record additional inventory write-down or expense a greater amount
of overhead costs, which would negatively impact our net income.

Acquisition method of accounting

The Company accounts for business combinations using the acquisition method of
accounting. We recognize the identifiable assets acquired, the liabilities
assumed and any noncontrolling interest in the acquiree at their estimated fair
values on the date of acquisition. Any excess purchase price over the fair value
of net assets acquired is recorded to goodwill. Determining the fair value of
these items requires management's judgment and more often than not the
utilization of independent valuation specialists. The judgments made in the
determination of the estimated fair values assigned to the assets acquired, the
liabilities assumed and any noncontrolling interest in the investee, as well as
the estimated useful life of each asset and the duration of each liability, can
materially impact the financial statements in periods after acquisition, such as
through depreciation and amortization expense. For more information on our
acquisitions and application of the acquisition method, see Note 2 "Business
Acquisitions"of the Notes to Consolidated Financial Statements contained in
Item 8 of this report.

Valuation of Good will and intangible assets

We make assumptions in establishing the carrying value, fair value and, if
applicable, the estimated lives of our intangible and other long-lived assets.
Goodwill and intangible assets determined to have an indefinite useful life are
not amortized. Instead, these assets are evaluated for impairment on an annual
basis on the last day of our fiscal year and whenever events or business
conditions change that could indicate that the asset is impaired. Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset (asset group) may not be
recoverable.

Valuation of goodwill for impairment

We test each reporting unit's goodwill for impairment on the last day of our
fiscal year and between annual tests if an event occurs or circumstances change
that would more-likely-than-not reduce the fair value of a reporting unit below
its carrying value. In conducting this annual impairment testing, we may first
perform a qualitative assessment of whether it is more-likely-than-not that a
reporting unit's fair value is less than its carrying value. If not, no further
goodwill impairment testing is required. If it is more-likely-than-not that a
reporting unit's fair value is less than its carrying value, or if we elect not
to perform a qualitative assessment of a reporting unit, a quantitative analysis
is performed, in which the fair value of the reporting unit is compared to its
carrying value. If the carrying value of a reporting unit exceeds its fair
value, an impairment loss is recognized equal to the excess, limited to the
amount of goodwill allocated to that reporting unit.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
We performed a qualitative assessment of our Medical reporting unit as of
December 31, 2021. As part of this analysis, we evaluated factors including, but
not limited to, our market capitalization and stock price performance,
macro-economic conditions, market and industry conditions, cost factors, the
competitive environment, and the operational stability and overall financial
performance of the reporting unit. The assessment indicated that it was more
likely than not that the fair value of the Medical reporting unit exceeded its
carrying value.

We elected to bypass the qualitative assessment and performed a quantitative
analysis for our Non-Medical reporting unit. Resulting from the quantitative
analysis, the fair value exceeded the carrying value of the Non-Medical
reporting unit by approximately 184%. We do not believe that any of our
reporting units are at risk for impairment. However, changes to the factors
considered above could affect the estimated fair value of one or more of our
reporting units and could result in a goodwill impairment charge in a future
period. We may be unaware of one or more significant factors that, if we had
been aware of, would cause our conclusion to change, which could result in a
goodwill impairment charge in a future period.

Valuation of indefinite life intangible assets for impairment

Our indefinite-lived intangible assets include the Greatbatch Medical and Lake
Region Medical tradenames. Similar to goodwill, we perform an annual impairment
review of our indefinite-lived intangible assets on the last day of our fiscal
year, unless events occur that trigger the need for an interim impairment
review. We have the option to first assess qualitative factors in determining
whether it is more-likely-than-not that an indefinite-lived intangible asset is
impaired. If we elect not to use this option, or we determine that it is
more-likely-than-not that the asset is impaired, we perform a quantitative
assessment that requires us to estimate the fair value of each indefinite-lived
intangible asset and compare that amount to its carrying value. Fair value is
estimated using the relief-from-royalty method. Significant assumptions inherent
in this methodology include estimates of royalty rates and discount rates. The
discount rate applied is based on the risk inherent in the respective intangible
assets and royalty rates are based on the rates at which comparable tradenames
are being licensed in the marketplace. Impairment, if any, is based on the
excess of the carrying value over the fair value of these assets.

We performed a quantitative assessment to test our indefinite-lived intangible
assets for impairment as of December 31, 2021. For the Greatbatch Medical
tradename, the excess of the estimated fair value over carrying value (expressed
as a percentage of carrying value) was in excess of its carrying value of $20
million by approximately 386% as of December 31, 2021. The Lake Region Medical
tradename had an excess of the estimated fair value over carrying value of
approximately 78% and a carrying value of $70 million at December 31, 2021. We
do not believe that our indefinite-lived intangible assets are at risk for
impairment. However, a significant increase in the discount rate, decrease in
the terminal growth rate, increase in tax rates, decrease in the royalty rate or
substantial reductions in our end-markets and volume assumptions could have a
negative impact on the estimated fair values of either of our tradenames and
require us to recognize impairments of these indefinite-lived intangible assets
in a future period.

Valuation of long-lived assets for impairment

When impairment indicators exist, we determine if the carrying value of the
long-lived asset(s) or definite-lived intangible asset(s) including, but not
limited to, PP&E and right-of-use lease assets, exceeds the related undiscounted
future cash flows. In cases where the carrying value exceeds the undiscounted
future cash flows, the carrying value is written down to fair value. Fair value
is generally determined using a discounted cash flow analysis. When it is
determined that the useful life of an asset (asset group) is shorter than the
originally estimated life, and there are sufficient cash flows to support the
carrying value of the asset (asset group), we accelerate the rate of
depreciation/amortization in order to fully depreciate/amortize the asset over
its shorter useful life.

Estimation of the cash flows and useful lives of long-lived assets and
definite-lived intangible assets requires significant management judgment.
Events could occur that would materially affect our estimates and assumptions.
Unforeseen changes, such as the loss of one or more significant customers,
technology obsolescence, or significant manufacturing disruption, among other
factors, could substantially alter the assumptions regarding the ability to
realize the return of our investment in long-lived assets, definite-lived
intangible assets or their estimated useful lives.
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