13.) OTHER OPERATING EXPENSES, NET

Other Operating Expenses, Net for fiscal years 2016, 2015 and 2014 is comprised of the following (in thousands):



	2016		2015		2014
2014 investments in capacity and capabilities	$	17,159	$	23,037	$	8,925
Orthopedic facilities optimization	747		1,395		1,317
Lake Region Medical consolidations	8,584		1,961		—
Acquisition and integration costs	28,316		33,449		3
Asset dispositions, severance and other	6,931		6,622		4,106
2013 operating unit realignment	—		—		1,017
Other consolidation and optimization income	—		—		(71		)
Total other operating expenses, net	$	61,737	$	66,464	$	15,297

2014 Investments in Capacity and Capabilities

In 2014, the Company announced several initiatives to invest in capacity and capabilities and to better align its resources to meet its customers’ needs and drive organic growth and profitability. These included the following:

•

Functions performed at the Company’s facility in Plymouth, MN to manufacture catheters and introducers will transfer into the Company’s existing facility in Tijuana, Mexico. This initiative is expected to be substantially completed by the first half of 2017 and is dependent upon the Company’s customers’ validation and qualification of the transferred products as well as regulatory approvals worldwide.

•

Functions performed at the Company’s facilities in Beaverton, OR and Raynham, MA to manufacture products for the portable medical market transferred to a new facility in Tijuana, Mexico. Products manufactured at the Beaverton facility, which do not serve the portable medical market, were transferred to the Company’s Raynham facility. This initiative was substantially completed during the first half of 2016. The final closure of the Beaverton, OR site occurred in the fourth quarter of 2016.


•	The design engineering responsibilities previously performed at the Company’s Cleveland, OH facility were transferred to the Company’s facilities in Minnesota in 2015.


•	The realignment of the Company’s commercial sales operations was completed in 2015.

The total capital investment expected for these initiatives is between $24.0 million and $25.0 million, of which $23.3 million has been expended through December 30, 2016. Total restructuring charges expected to be incurred in connection with this realignment are between $50.0 million and $55.0 million, of which $49.1 million has been incurred through December 30, 2016. Expenses related to this initiative were primarily recorded within the Medical segment and include the following:


•	Severance and retention: $6.0 million - $7.0 million;


•	Accelerated depreciation and asset write-offs: $3.0 million - $3.0 million; and


•	Other: $41.0 million - $45.0 million

Other expenses primarily consist of costs to relocate certain equipment and personnel, duplicate personnel costs, excess overhead, disposal, and travel expenditures. All expenses are cash expenditures except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the 2014 investments in capacity and capabilities is as follows (in thousands):



	Severance and Retention			Accelerated Depreciation/ Asset Write-offs			Other			Total
January 1, 2016	$	1,429		$	—		$	1,595		$	3,024
Restructuring charges	397			2,451			14,311			17,159
Write-offs	—			(2,451		)	—			(2,451		)
Cash payments	(1,760		)	—			(15,906		)	(17,666		)
December 30, 2016	$	66		$	—		$	—		$	66

(13.) OTHER OPERATING EXPENSES, NET (Continued)

Orthopedic Facilities Optimization

In 2010, the Company began updating its Indianapolis, IN facility to streamline operations, consolidate two buildings, increase capacity, further expand capabilities and reduce dependence on outside suppliers. This initiative was completed in 2011.

In 2011, the Company began construction of an orthopedic manufacturing facility in Fort Wayne, IN and transferred manufacturing operations being performed at its Columbia City, IN location into this new facility. This initiative was completed in 2012.

During 2012, the Company transferred manufacturing and development operations performed at its facilities in Orvin and Corgemont, Switzerland into existing facilities in Fort Wayne, IN and Tijuana, Mexico. This initiative was completed in 2013.

In connection with this consolidation, in 2013, the Company sold assets related to certain non-core Swiss orthopedic product lines to an independent third party. The purchase agreement provided the Company with an earn out payment based upon the amount of inventory consumed by the purchaser within one year after the close of the transaction. As a result of this earn out, a gain of $2.7 million was recorded in Other Operating Expenses, Net and the cash was received during 2014. During 2014, the Company transferred $2.1 million of assets relating to the Company’s Orvin, Switzerland property to held for sale and recognized a $0.4 million impairment charge. During 2015, the Company sold $0.6 million of these assets held for sale with no additional gain or loss recognized. Refer to Note 5 “Assets Held For Sale” for additional information.

During 2013, the Company began a project to expand its Chaumont, France facility in order to enhance its capabilities and fulfill larger volume customer supply agreements. This initiative is expected to be completed in 2017.

The total capital investment expected to be incurred for these initiatives is between $31.0 million and $35.0 million, of which $30.0 million has been expended through December 30, 2016. Total expense expected to be incurred for these initiatives is between $45.0 million and $48.0 million, of which $44.6 million has been incurred through December 30, 2016. All expenses have been and will be recorded within the Medical segment and are expected to include the following:


•	Severance and retention: approximately $11.0 million;


•	Accelerated depreciation and asset write-offs: approximately $13.0 million; and


•	Other: $21.0 million - $24.0 million

Other expenses include production inefficiencies, moving, revalidation, personnel, training, consulting, and travel costs associated with these consolidation projects. All expenses are cash expenditures except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the orthopedic facilities optimizations is as follows (in thousands):



	Severance and Retention		Accelerated Depreciation/ Asset Write-offs			Other			Total
January 1, 2016	$	—	$	—		$	—		$	—
Restructuring charges	—		202			545			747
Write-offs	—		(202		)	—			(202		)
Cash payments	—		—			(545		)	(545		)
December 30, 2016	$	—	$	—		$	—		$	—

Lake Region Medical Consolidations

In 2014, Lake Region Medical initiated plans to close its Arvada, CO site, consolidate its two Galway, Ireland sites into one facility, and other restructuring actions that will result in a reduction in staff across manufacturing and administrative functions at certain locations. This initiative was substantially completed by the end of 2016.

During the third quarter of 2016, the Company announced the planned closure of its Clarence, NY facility. The machined component product lines manufactured in this facility will be transferred to other Integer locations in the U.S. This project is expected to be completed by the first quarter of 2018.

(13.) OTHER OPERATING EXPENSES, NET (Continued)

The total capital investment expected for this initiative since the acquisition date is between $5.0 million and $6.0 million, of which $2.2 million has been expended through December 30, 2016. Total expense expected to be incurred for these initiatives are between $20.0 million and $25.0 million, of which $10.5 million has been incurred through December 30, 2016. Expenses related to this initiative were primarily recorded within the Medical segment and include the following:


•	Severance and retention: $8.0 million - $10.0 million;


•	Accelerated depreciation and asset write offs: approximately $1.0 million - $2.0 million; and


•	Other: $11.0 million - $13.0 million

Other expenses primarily consist of production inefficiencies, moving, revalidation, personnel, training, consulting, and travel costs associated with these consolidation projects. All expenses are cash expenditures except accelerated depreciation and asset write-offs. The change in accrued liabilities related to the Lake Region Medical consolidation initiatives is as follows (in thousands:



	Severance and Retention			Accelerated Depreciation/ Asset Write-offs			Other			Total
January 1, 2016	$	3,667		$	—		$	596		$	4,263
Restructuring charges	740			1,398			6,446			8,584
Write-offs	—			(1,398		)	—			(1,398		)
Cash payments	(3,678		)	—			(6,640		)	(10,318		)
December 30, 2016	$	729		$	—		$	402		$	1,131

Acquisition and integration costs

During 2016 and 2015, the Company incurred $28.3 million and $33.1 million, respectively, in acquisition and integration costs related to the acquisition of Lake Region Medical, consisting primarily of transaction costs and integration costs. Transaction costs primarily relate to change-in-control payments to former Lake Region Medical executives, as well as professional and consulting fees. Integration costs primarily include professional, consulting, severance, retention, relocation, and travel costs. As of December 30, 2016 and January 1, 2016, $4.5 million and $6.2 million, respectively, of acquisition and integration costs related to the Lake Region Medical acquisition were accrued.

Total integration expense expected to be incurred in connection with the Lake Region Medical acquisition is between $40.0 million and $50.0 million of which $32.5 million was incurred through December 30, 2016. Total capital expenditures for this initiative are expected to be between $20.0 million and $25.0 million of which $8.2 million was incurred through December 30, 2016.

Asset dispositions, severance and other

During 2016, 2015 and 2014, the Company recorded losses in connection with various asset disposals and/or write-downs. In addition, during 2016 and 2015, the Company incurred legal and professional costs in connection with the Spin-off of $4.4 million and $6.0 million, respectively. Total transaction related costs incurred for the Spin-off since inception were $10.4 million. Expenses related to the Spin-off were primarily recorded within the corporate unallocated and the Medical segment. Refer to Note 2 “Divestiture and Acquisitions” for additional information on the Spin-off.