Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2016	May. 05, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Registrant Name	LIVANOVA PLC
Entity Central Index Key	0001639691
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		49,068,828
Trading Symbol	LIVN

Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Apr. 24, 2015
Income Statement [Abstract]
Net sales	$ 286,969	$ 74,072
Cost of sales	123,567	7,595
Gross profit	163,402	66,477
Operating expenses:
Selling, general and administrative	115,575	29,690
Research and development	31,690	10,689
Merger and Integration expenses	6,761	8,692
Restructuring expenses	28,592	0
Amortization of intangibles	15,892	685
Litigation related expenses	997	0
Total operating expenses	199,507	49,756
Income (loss) from operations	(36,105)	16,721
Interest income	(213)	(38)
Interest expense	1,192	7
Foreign exchange and other - (gain) loss	1,835	(112)
Income (loss) before income taxes	(38,919)	16,864
Income tax (benefit) expense	(1,258)	6,350
Losses from equity method investments	2,717	0
Net income (loss)	$ (40,378)	$ 10,514
Basic income (loss) per share (in Dollars per Share)	$ (0.83)	$ 0.40
Diluted income (loss) per share (in Dollars per Share)	$ (0.83)	$ 0.40
Shares used in computing basic income (loss) per share (in Shares)	48,918	26,024
Shares used in computing diluted income (loss) per share (in Shares)	48,918	26,269

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Apr. 24, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (40,378)	$ 10,514
Other comprehensive income (loss):
Net change in unrealized loss on derivatives	(3,765)	0
Tax effect	386	0
Net	(3,379)	0
Foreign currency translation adjustment, net of tax	48,501	(477)
Total other comprehensive income (loss)	45,122	(477)
Total comprehensive income (loss)	$ 4,744	$ 10,037

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 87,468	$ 112,613
Short-term Investments	6,988	6,997
Accounts receivable, net	288,537	272,352
Inventories	210,762	212,448
Prepaid taxes	51,354	42,425
Prepaid expenses and other current assets	38,560	26,579
Total Current Assets	683,669	673,414
Property, plant and equipment, net	253,750	244,587
Goodwill	764,540	745,356
Intangible assets, net	674,737	658,942
Investments	77,682	77,486
Deferred tax assets, net	157,811	153,509
Other assets	5,521	5,445
Total Assets	2,617,710	2,558,739
Current Liabilities:
Current debt obligations	75,539	82,513
Accounts payable	118,855	109,588
Accrued liabilities	80,534	63,047
Income taxes payable	26,951	26,699
Accrued employee compensation and related benefits liability	79,669	77,274
Total Current Liabilities	381,548	359,121
Long-term debt obligations	96,058	91,791
Deferred income taxes liability	250,531	235,483
Long-term employee compensation and related benefits liability	32,531	31,139
Other long-term liabilities	31,809	29,743
Total Liabilities	$ 792,477	$ 747,277
Commitments and contingencies (Note 16)
Stockholders’ Equity:
Ordinary Shares, £1.00 par value: unlimited shares authorized; 49,008,015 and 48,868,305 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	$ 75,640	$ 75,444
Additional paid-in capital	1,750,863	1,742,032
Accumulated other comprehensive loss	(9,106)	(54,228)
Retained earnings	7,836	48,214
Total Stockholders’ Equity	1,825,233	1,811,462
Total Liabilities and Stockholders’ Equity	$ 2,617,710	$ 2,558,739

Consolidated Balance Sheets (Parenthetical) - £ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Ordinary shares, par value (in Pounds per Share)	£ 1	£ 1
Ordinary shares issued	49,008,015	48,868,305
Ordinary shares outstanding	49,008,015	48,868,305

Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Total	Common / Ordinary Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Earnings (Loss) [Member]
Balance at Dec. 31, 2015	$ 1,811,462	$ 75,444	$ 1,742,032	$ (54,228)	$ 48,214
Balance (shares) at Dec. 31, 2015	48,868,305	48,868,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation plans	$ 9,027	$ 196	8,831
Stock-based compensation plans (shares)		140,000
Net income (loss)	(40,378)				(40,378)
Other comprehensive income (loss)	45,122			45,122
Balance at Mar. 31, 2016	$ 1,825,233	$ 75,640	$ 1,750,863	$ (9,106)	$ 7,836
Balance (shares) at Mar. 31, 2016	49,008,015	49,008,000

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Apr. 24, 2015
Cash Flows From Operating Activities:
Net income (loss)	$ (40,378)	$ 10,514
Non-cash items included in net income (loss):
Depreciation and amortization	23,568	1,991
Stock-based compensation	6,116	2,493
Deferred income tax expense	1,282	2,774
Impairment of intangible assets	0	448
Loss on disposal of assets	150	0
Loss from equity method investments	2,717	0
Unrealized (gain) loss in foreign currency transactions	(697)	109
Restructuring reserve	22,011	0
Other	3,292	0
Changes in operating assets and liabilities:
Accounts receivable	(8,442)	(3,754)
Inventories	10,800	(3,093)
Other current and non-current assets	(16,030)	(1,325)
Current and non-current liabilities	5,211	6,016
Net cash provided by operating activities	9,600	16,173
Cash Flow From Investing Activities:
Purchase of short-term investments	(6,991)	0
Maturities of short-term investments	7,000	0
Purchase of property, plant and equipment and other	(8,137)	(1,197)
Intangible assets purchases	(820)	0
Net cash used in investing activities	(8,948)	(1,197)
Cash Flows From Financing Activities:
Short-term borrowing	14,083	0
Short-term repayments	(24,425)	0
Repayment of long-term debt obligations	(569)	0
Repayment of trade receivable advances	(16,076)	0
Loans to equity-method investees	(2,846)	0
Proceeds from exercise of options and SARS for common stock	2,541	170
Realized excess tax benefits - stock-based compensation	705	1,612
Purchase of treasury stock	0	(8,350)
Cash settlement of compensation-based stock units	0	(384)
Other financial assets and liabilities	(482)	0
Net cash used in financing activities	(27,069)	(6,952)
Effect of exchange rate changes on cash and cash equivalents	1,272	(51)
Net increase (decrease) in cash and cash equivalents	(25,145)	7,973
Cash and cash equivalents at beginning of period	112,613	116,214
Cash and cash equivalents at end of period	87,468	124,187
Supplementary Disclosures of Cash Flow Information:
Cash paid for interest	602	1
Cash paid for income taxes	$ 3,603	$ 3,324

Nature of Operations	3 Months Ended
Nature of Operations	Mar. 31, 2016
Accounting Policies [Abstract]
Nature of Operations	Nature of Operations Background. LivaNova PLC and its subsidiaries (collectively, the “Company”, “LivaNova”, “we” or “our”), the successor registrant to Cyberonics, Inc., was incorporated in England and Wales on February 20, 2015 for the purpose of facilitating the business combination of Cyberonics, Inc., a Delaware corporation (“Cyberonics”) and Sorin S.p.A., a joint stock company organized under the laws of Italy (“Sorin”). As a result of the business combination, LivaNova became the holding company of the combined businesses of Cyberonics and Sorin. This business combination became effective on October 19, 2015, at which time LivaNova’s ordinary shares were listed for trading on the NASDAQ Global Market (“NASDAQ”) and on the London Stock Exchange (the “LSE”) as a standard listing under the trading symbol “LIVN.” Description of the business. Headquartered in London, United Kingdom (“U.K.”), LivaNova, is a global medical device company focused on the development and delivery of important therapeutic solutions for the benefit of patients, healthcare professionals and healthcare systems throughout the world. Working closely with medical professionals throughout the world in the field of Cardiac Surgery, Neuromodulation and Cardiac Rhythm Management, we design, develop, manufacture and sell innovative therapeutic solutions that are consistent with our mission to improve our patients’ quality of life, increase the skills and capabilities of healthcare professionals and minimize healthcare costs. Description of the Mergers. On October 19, 2015, pursuant to the terms of a definitive Transaction Agreement entered into by LivaNova, Cyberonics, Sorin and Cypher Merger Sub (the “Merger Sub”), dated March 23, 2015, (the “Merger Agreement”) Sorin merged with and into LivaNova, with LivaNova continuing as the surviving company, immediately followed by the merger of Merger Sub with and into Cyberonics, with Cyberonics continuing as the surviving company and as a wholly owned subsidiary of LivaNova (the “Mergers”). Upon the consummation of the Mergers, the historical financial statements of Cyberonics became the Company’s historical financial statements. Accordingly, the historical financial statements of Cyberonics are included in the comparative prior periods. The issuance of LivaNova ordinary shares in connection with the Mergers was registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Registration Statement on Form S-4 (File No. 333-203510), as amended, filed with the United States Securities and Exchange Commission (the “SEC”) by LivaNova and declared effective on August 19, 2015. Further, pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), LivaNova is deemed to be a “successor” issuer to Cyberonics. As such, the ordinary shares of LivaNova are deemed to be registered under Section 12(b) of the Exchange Act, and LivaNova is subject to the informational requirements of the Exchange Act and the rules and regulations promulgated thereunder.

Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies	Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies Basis of Presentation. The accompanying condensed consolidated financial statements of LivaNova at March 31, 2016 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.” and such principles, “U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 2015 has been prepared from audited financial statements but do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. 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 operating results of LivaNova and its subsidiaries, for the three months ended March 31, 2016, and are not necessarily indicative of the results that may be expected for the fiscal year that will end December 31, 2016. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our Transition Report on Form 10-KT for the fiscal period that began April 25, 2015 and ended December 31, 2015, as amended (the “2015 Form 10-KT”). We have included the condensed consolidated statement of income (loss), comprehensive income (loss) and the cash flow for the thirteen weeks ended April 24, 2015 as the equivalent prior period for comparative purposes. This financial information reflects all adjustments considered necessary for a fair presentation of the operating results of Cyberonics and its subsidiaries, as LivaNova’s predecessor, for the thirteen weeks ended April 24, 2015. Fiscal Year-End. Prior to the Mergers, Cyberonics, LivaNova’s predecessor, utilized a 52/53-week fiscal year that ended on the last Friday in April. After the Mergers, consummated on October 19, 2015, Cyberonics changed to a calendar year ending December 31st. Reporting Periods. In this Quarterly Report on Form 10-Q, we are reporting the results of our operations for the three months ended March 31, 2016, which consist of the combined results of operations of Cyberonics and Sorin. Since LivaNova is the successor company to Cyberonics, we are presenting the results of Cyberonics’ operations for the thirteen weeks ended April 24, 2015, as the prior year equivalent quarter. The thirteen weeks ended April 24, 2015 was selected for comparative purposes as it was the closest period to a calendar quarter ending March 31, 2015 (less than 30 days difference) and it was impracticable and cost prohibitive to recast Cyberonics’ prior year financial information in order to present the three months ended March 31, 2015. Consolidation. The accompanying condensed consolidated financial statements as of December 31, 2015 and/or for the three months ended March 31, 2016, as applicable, include the combined operating results for LivaNova and the legacy business of Cyberonics and Sorin, LivaNova’s wholly owned subsidiaries and the LivaNova PLC Employee Benefit Trust (the “Trust”). The accompanying consolidated operating results for the thirteen weeks ended April 24, 2015 include the results of operations for Cyberonics and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates. The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in such financial statements and accompanying notes. These estimates are based on management’s best knowledge of current events and actions we may undertake in the future. Estimates are used in accounting for, among other items, valuation and amortization of intangible assets, goodwill, amortization of intangible assets, measurement of deferred tax assets and liabilities, uncertain income tax positions, stock-based compensation, obsolete and slow-moving inventories, allowance for doubtful accounts, and in general, allocations to provisions and the fair value of assets and liabilities recorded in a business combination. Actual results could differ materially from those estimates. Merger, Integration and Restructuring Charges. As a result of the Mergers, we incurred merger, integration and restructuring charges and reported merger and integration expenses and restructuring expenses separately as operating expenses in the consolidated statement of income (loss). Merger Expenses. Merger expenses consisted of expenses directly related to the Mergers, such as professional fees for legal services, accounting services, due diligence, a fairness opinion and the preparation of registration and regulatory filings in the United States and Europe, as well as investment banking fees. Integration Expenses. Integration expenses consisted primarily of consultancy fees with regard to: our systems integration, organization structure integration, finance, synergy and tax planning, the transition to U.S. GAAP for Sorin activity, our LSE listing and certain re-branding efforts. Restructuring Expenses. After the consummation of the Mergers between Cyberonics and Sorin in October 2015, we initiated several restructuring plans (the “Restructuring Plans”) to combine our business operations. We identify costs incurred and liabilities assumed for the Restructuring Plans. The Restructuring Plans are intended to leverage economies of scale, eliminate duplicate corporate expenses and streamline distributions, logistics and office functions in order to reduce overall costs. Business Combinations. On October 19, 2015, and pursuant to the terms of the Merger Agreement, Sorin merged with and into LivaNova, with LivaNova continuing as the surviving company, immediately followed by the merger of Merger Sub with and into Cyberonics, with Cyberonics continuing as the surviving company and as a wholly owned subsidiary of LivaNova. Following the completion of the Mergers, LivaNova became the holding company of the combined businesses of Cyberonics and Sorin, and LivaNova’s ordinary shares were listed under the ticker symbol “LIVN” on NASDAQ and admitted for listing on the standard segment of the U.K. Financial Authority’s Official List and to trading on the LSE. The purchase price allocation recorded in the transition period April 25, 2015 to December 31, 2015 was based on a preliminary acquisition valuation and includes the use of estimates based on information that was available to management at the time. Management is in the process of finalizing appraisals and estimates that may result in a change in the valuation of assets acquired, liabilities assumed, goodwill recognized and the related impact on deferred taxes and cumulative translation adjustments. These changes may have a material impact on the results of operations and financial position. As management finalizes the valuation of assets acquired and liabilities assumed, additional purchase price adjustments will be recorded during the measurement period. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed can materially impact the results of operations. Refer to “Note 3. Business Combinations” for additional information. The following reclassifications have been made to conform prior period consolidated balance sheet and statement of income (loss) with current year presentation: Amortization Expense. Amortization expense of $685 thousand was reclassified and reported separately in the consolidated statement of income (loss) rather than included within Research and Development expense. Accrued Employee Compensation and Related Benefits. In the consolidated balance sheet, some accruals amounting to $17.5 million in total were reclassified from Other Current Liabilities to Accrued Employee Compensation and Related Benefit Liability. Cash and Cash Equivalents. We consider all highly liquid investments with an original maturity of three months or less, consisting of demand deposit accounts and money market mutual funds, to be cash equivalents and are carried in the balance sheet at cost, which approximated their fair value. We carried $21.1 million and $41.1 million in money market mutual funds at March 31, 2016 and December 31, 2015, respectively. U.S. Medical Device Excise Tax (“MDET”). Section 4191 of the Internal Revenue Code enacted by the Health Care and Education Reconciliation Act of 2010, in conjunction with the Patient Protection and Affordable Care Act, established a 2.3% excise tax on medical devices sold domestically beginning on January 1, 2013, with this excise tax now suspended from January 1, 2016 through December 31, 2017. We include the cost of MDET in cost of sales on the consolidated statements of income for the applicable reporting periods. The MDET tax expense amounted to $0.9 million for the thirteen weeks ended April 24, 2015. Italian Medical Device Payback (“IMDP”). The Italian Parliament introduced new rules for entities that supply goods and services to the Italian National Healthcare System. The new healthcare law is expected to impact the business and financial reporting of companies operating in the medical technology sector that sell medical devices in Italy. A key provision of the law is a ‘payback’ measure, requiring companies selling medical devices in Italy to make payments to the Italian state if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps. There is considerable uncertainty about how the law will operate and what the exact timeline is for finalization. Our current assessment of the IMDP involves significant judgment regarding the expected scope and actual implementation terms of the measure as the latter have not been clarified to date by Italian authorities. We account for the estimated cost of the IMDP as a deduction from revenue. The estimated cost of the IMDP amounted to $0.3 million for the three months ended March 31, 2016. Income Taxes. After the Mergers, we became a U.K. corporation and we operate through our various subsidiaries in a number of countries throughout the world. Our provision for income taxes is based on the tax laws and rates applicable in the jurisdictions in which we operate and earn income. We use significant judgment and estimates in accounting for our income taxes. We recognize deferred tax assets and liabilities for the anticipated future tax effects of temporary differences between the financial statements basis and the tax basis of our assets and liabilities, which are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Income tax expense compared to pre-tax income yields an effective tax rate. Segments. Prior to the Mergers we had one operating and reportable segment. Upon completion of the Mergers, we reorganized our reporting structure and aligned our segments and the underlying divisions and businesses. We currently function in three operating segments; the historical Cyberonics operations are included in the Neuromodulation segment with the historical Sorin businesses included in the Cardiac Surgery (“CS”) and the Cardiac Rhythm Management (“CRM”) segments. Refer to “Note 22. Geographic and Segment Information” for additional information.

Business Combinations

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Business Combinations

On October 19, 2015, and pursuant to the terms of the Merger Agreement, Sorin merged with and into LivaNova, with LivaNova continuing as the surviving company, immediately followed by the merger of Merger Sub with and into Cyberonics, with Cyberonics continuing as the surviving company and as a wholly owned subsidiary of LivaNova. Following the completion of the Mergers, LivaNova became the holding company of the combined businesses of Cyberonics and Sorin, and LivaNova’s ordinary shares were listed, under the ticker symbol “LIVN,” on NASDAQ and admitted for listing on the standard segment of the U.K. Financial Authority’s Official List and trading on the LSE. As a result of the Mergers, on October 19, 2015, LivaNova issued approximately 48.8 million ordinary shares.

On October 19, 2015, each ordinary share of Sorin was converted into the right to receive 0.0472 ordinary shares of LivaNova (the “Sorin Exchange Ratio”), and each share of common stock of Cyberonics was converted into the right to receive one ordinary share of LivaNova. The fair value of the shares issued as total consideration of the Mergers is based on Cyberonics’closing stock price of $69.95 per share on October 16, 2015, the last business day prior to the close of the Mergers. Based on the number of outstanding shares of Sorin and Cyberonics as of October 19, 2015, former Sorin and Cyberonics shareholders held approximately 46 percent and 54 percent, respectively, of LivaNova’s ordinary shares after giving effect to the Mergers.

Based on the relative voting rights of Cyberonics and Sorin shareholders immediately following completion of the Mergers and the premium paid by Cyberonics for Sorin ordinary shares, and after taking into consideration all relevant facts, Cyberonics was considered to be the acquirer for accounting purposes. LivaNova accounted for the acquisition of Sorin as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the tangible and identifiable intangible assets acquired and liabilities assumed were recorded based on their fair values at the acquisition date with the excess over the fair value of consideration recognized as goodwill.

We are in the process of finalizing appraisals and estimates utilized in the purchase price allocation that may result in a change in the valuation of assets acquired, liabilities assumed, goodwill recognized and the related impact on deferred taxes and cumulative translation adjustments. These changes may have a material impact on the results of operations and financial position. Although, as of March 31, 2016, no changes have been recognized. Fair values recorded in the acquisition will be finalized by October 19, 2016. During the measurement period, we may recognize adjustments to the provisional amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined. We will adjust our financial statements as needed, including recognizing in our current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated.

The following tables summarizes the fair value of consideration transferred in the Mergers (in thousands):



	As of
	October 16, 2015
Consideration Transferred:
Fair value of common shares issued to Sorin shareholders	$	1,577,603
Fair value of common shares issued to Sorin share award holders ⁽¹⁾	9,231
Fair value of LivaNova stock appreciation rights issued to Sorin stock appreciation rights holders ⁽²⁾	2,249
Total fair value of consideration transferred	$	1,589,083

(1)

Each Sorin share award (other than a Sorin stock appreciation right) granted prior to the Sorin merger effective time accelerated, vested and was converted into the right to receive LivaNova ordinary shares based on the Sorin Exchange Ratio. The total fair value of the replacement awards is $25.2 million, including $9.2 million attributable to pre-combination services and allocated to consideration transferred to acquire Sorin. Of the remaining $16.0 million, $8.3 million was recognized immediately in the post-combination period and $7.7 million will be recognized over the post-combination service period to February 28, 2017 due to the service period requirements of the awards. Refer to “Note 18. Stock-Based Incentive Plans” for further discussion of treatment of equity awards. The consideration transferred in the Mergers was measured using the fair-value-based measure of the share awards as of the closing date. For purposes of calculating the consideration transferred, the fair-value-based measure of the Sorin share awards was determined to be the opening market price of LivaNova’s ordinary shares of $69.39 on October 19, 2015.

(2)

As of October 16, 2015 there were 3,815,824 Sorin stock appreciation rights. Each Sorin stock appreciation right granted prior to the Sorin merger effective time accelerated, vested and was converted into the right to receive 0.0472 LivaNova stock appreciation right based on the Sorin Exchange Ratio. The total fair value of the replacement stock appreciation rights is $3.8 million, including $2.2 million attributable to pre-combination services and allocated to consideration transferred to acquire Sorin. The remaining $1.6 million was recognized immediately in the post-combination period. Refer to “Note 18” for further discussion of treatment of equity awards.

During the three months ended March 31, 2016, we did not remeasure the fair values of the assets acquired in the merger with Sorin. The following tables summarizes the preliminary fair values of Sorin’s assets acquired and liabilities assumed in the Mergers on October 19, 2016 (in thousands):



	As of
	October 19, 2015
Estimated Fair Value of Assets Acquired and Liabilities Assumed:
Cash and cash equivalents	$	12,495
Accounts receivable	224,466
Inventories	233,832
Other current assets	60,674
Property, plant and equipment	207,639
Intangible assets	688,729
Equity investments	67,059
Other assets	7,483
Deferred tax assets	135,370
Total assets acquired	1,637,747
Current portion of debt and other obligations	110,601
Other current liabilities	237,855
Long-term debt	128,458
Deferred tax liabilities	279,328
Other long-term liabilities	55,567
Total liabilities assumed	811,809
Goodwill	$	763,145

Goodwill has been allocated to Cardiac Surgery, Cardiac Rhythm Management and Neuromodulation reporting units. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents growth opportunities and expected cost synergies of the combined company. As a result we have provisionally assigned the goodwill arising from the Sorin acquisition to all three reporting units. This assignment was made by taking into consideration market participant rates of return for each acquired reporting unit (Cardiac Surgery and Cardiac Rhythm Management) in order to assess the respective fair values. The remaining goodwill, allocated to Neuromodulation, which is the accounting acquirer’s existing business unit, is supported by the synergies deriving from the Mergers. Goodwill recognized as a result of the acquisition is not deductible for tax purposes.

The following table summarizes the calculation of the fair value of LIvaNova’s ordinary shares issued to Sorin shareholders (in thousands, except per share data and the exchange ratio):



Total Sorin shares outstanding as of October 16, 2015	477,824
Sorin Exchange Ratio	0.0472
Shares of LivaNova issued	22,553
Value per share of Cyberonics as of October 16, 2015	$	69.95
Fair value of ordinary shares transferred to Sorin shareholders	$	1,577,603

Based upon a preliminary acquisition valuation, LivaNova acquired $464.0 million of customer-related intangible assets, $211.1 million of developed technology intangible assets, and $13.6 million related to the Sorin trade-name, with weighted average estimated useful lives of 17, 14, and 4 years, respectively. Other long-term liabilities include $2.7 million of unfavorable leases with weighted average remaining lives of 5 years.

Contingent liabilities assumed includes $9.2 million related to uncertain tax positions. During the three months ended March 31, 2016, we did not alter the contingent liability related to uncertain tax positions we assumed during the Mergers, except for changes due to foreign currency exchange rates.

Contingent liabilities also include $3.4 million for contingent payments at fair value related to two acquisitions completed by Sorin prior to the closing of the Mergers. The contingent payments for one acquisition are based on achievement of sales targets by the acquiree through June 30, 2018 and the contingent payments for the second acquisition are based on sales of cardiopulmonary disposable products and heart lung machines through 2019 of the acquiree. During the three months ended March 31, 2016, we did not change the carrying amount of these contingent liabilities, although, due to foreign currency exchange rate changes the carrying amount increased by $0.7 million to $4.1 million.

During the three months ended March 31, 2016, we incurred $6.8 million of merger and integration expenses. The merger and the integration costs were related primarily to advisory, legal, and accounting fees.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1392-128463

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
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+ Details

Restructuring Plans

3 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

Restructuring Plans

Reorganization Plans

Our 2015 and 2016 Reorganization Plans (the “Plans”) were initiated October 2015 and March 2016, respectively, and were initiated in conjunction with the completion of the Mergers. These Plans are intended to leverage economies of scale, streamline distribution and logistics and strengthen operational and administrative effectiveness in order to reduce overall costs. Costs associated with these Plans were reported as restructuring expenses in the operating results of our consolidated statement of income (loss). There were no restructuring expenses in the comparative thirteen weeks of historical Cyberonics activity ended April 24, 2015.

We estimate that the Plans will result in a net reduction of approximately 131 personnel in the workforce. The Plans also include the closure of our R&D facility in Meylan, France and consolidation of it’s research and development (“R&D”) capabilities into the Clamart facility.

The Reorganization Plans’ details for the three months ended March 31, 2016 are as follows (in thousands):



	Employee severance and other termination costs			Other		Total
Beginning liability balance	$	6,919		$	—	$	6,919
Restructuring charges	27,350			1,242		28,592
Cash payments	(6,581		)	—		(6,581		)
FX and other	(463		)	—		(463		)
Ending liability balance	$	27,225		$	1,242	$	28,467

The following table presents restructuring expense by reportable segment (in thousands):



	Three Months Ended March 31, 2016
Cardiac Surgery	$	4,210
Cardiac Rhythm Management	15,166
Neuromodulation	2,163
Other	7,053
Total	$	28,592

Accounts Receivable and Allowance for Bad Debt

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Accounts Receivable and Allowance for Bad Debt

Accounts receivable, net, consisted of the following (in thousands):



	March 31, 2016			December 31, 2015
Trade receivables from third parties	$	290,427		$	274,005
Allowance for bad debt	(1,890		)	(1,653		)
	$	288,537		$	272,352

Inventories

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following (in thousands):



	March 31, 2016		December 31, 2015
Raw materials	$	54,199	$	52,482
Work-in-process	43,580		44,369
Finished goods	112,983		115,597
	$	210,762	$	212,448

Inventories are reported net of the provision for obsolescence which totaled $4.0 million and $3.6 million at March 31, 2016 and December 31, 2015, respectively.

Property, Plant and Equipment

3 Months Ended

Mar. 31, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment (“PP&E”)

PP&E consisted of the following (in thousands):



	March 31, 2016			December 31, 2015			Estimated lives in years
Land	$	16,227		$	15,662		---
Building and building improvements	84,706			82,014			up to 45
Equipment, software, furniture and fixtures	154,289			140,364			up to 16
Other	8,239			8,634			up to 10
Capital investment in process	40,902			42,210			---
Total	304,363			288,884
Accumulated depreciation	(50,613		)	(44,297		)
	$	253,750		$	244,587

Aggregate depreciation for LivaNova was $10.9 million for the three months ended March 31, 2016 and $2.1 million for Cyberonics for the thirteen weeks ended April 24, 2015. As part of the Mergers, in October 2015, we acquired Sorin’s PP&E at an estimated fair value of $207.6 million.

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Detail of finite-lived and indefinite-lived intangible assets (in thousands):



	March 31, 2016			December 31, 2015
Schedule of finite-lived intangible assets:
Developed technology	$	220,936		$	213,873
Customer relationships	466,196			444,472
Trademarks and trade names	13,679			13,030
Other intangible assets	12			11
Total	$	700,823		$	671,386
Accumulated amortization	(26,086		)	(12,444		)
Net	$	674,737		$	658,942
Schedule of indefinite-lived intangible assets:
Goodwill, net of impairment:	$	764,540		$	745,356

The amortization periods for our finite-lived intangible assets as of March 31, 2016:



	Minimum Life in years	Maximum life in years
Developed technology	5	18
Customer relationships	4	18
Trademarks and trade names	4	4
Other intangible assets	5	5

Aggregate amortization was $15.9 million and $0.7 million for the three months ended March 31, 2016 and the thirteen weeks ended April 24, 2015, respectively. This increase in aggregate amortization was due to the acquisition of intangibles during with the Mergers in October 2015, in which we acquired certain finite-lived intangible assets as follows: $464.0 million of customer relationships, $211.1 million of developed technology and $13.6 million of trade names.

The estimated future aggregate amortization based on our finite-lived intangible assets at March 31, 2016 (in thousands):



Year ending December 31,
2016 - remaining nine months	$	35,971
2017	47,895
2018	47,914
2019	46,991
2020	43,987
Thereafter	451,979

Detail of goodwill movements during the three months ended March 31, 2016 by segment (in thousands):



	Neuromodulation		Cardiac Surgery		Cardiac Rhythm Management		Total Goodwill
Balance as of December 31, 2015	$	315,943	$	412,541	$	16,872	$	745,356
Other adjustments, net	—		—		—		—
Impairments	—		—		—		—
Currency adjustments	—		18,438		746		19,184
Balance as of March 31, 2016	$	315,943	$	430,979	$	17,618	$	764,540

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued Liabilities

3 Months Ended

Mar. 31, 2016

Accrued Liabilities [Abstract]

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):



	March 31, 2016		December 31, 2015
Restructuring related expense accruals	$	28,467	$	6,919
Advances received on customer receivables	9,607		24,494
Derivatives	6,282		1,815
Provisions for agents, returns and other	5,656		7,199
Product warranty obligations	2,112		2,119
Accrued royalty costs	1,405		1,316
Clinical study costs	1,170		2,004
Accrued insurance	165		2,566
Other	25,670		14,615
	$	80,534	$	63,047

Product Warranties

3 Months Ended

Mar. 31, 2016

Product Warranties Disclosures [Abstract]

Product Warranties

We include warranty obligations with current accrued liabilities in the consolidated balance sheet. Warranty obligation consisted of the following (in thousands):



	Amount
December 31, 2015	$	2,119
Warranty claims provision	142
Settlements made	(193		)
Effect of changes in foreign currency exchange rates	44
March 31, 2016	$	2,112

Other Long-Term Liabilities

3 Months Ended

Mar. 31, 2016

Other Liabilities, Noncurrent [Abstract]

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):



	March 31, 2016		December 31, 2015
Liability for uncertain tax positions	$	13,401	$	13,048
Government grant deferred revenue	4,108		3,918
Earnout for contingent payments ⁽¹⁾	4,075		3,457
Unfavorable operating leases ⁽²⁾	3,164		2,513
Financial derivatives ⁽³⁾	2,180		1,793
Other	4,881		5,014
	$	31,809	$	29,743

(1)

The earnout for contingent payments represents contingent payments we assumed during the Mergers for two acquisitions completed by Sorin prior to the Mergers. The first acquisition, in September 2015, was of Cellplex PTY Ltd. in Australia; the second acquisition was of the commercial activities of a local distributor in Colombia. The contingent payments for the first acquisition are based on achievement of sales targets by the acquiree through June 30, 2018 and the contingent payments for the second acquisition are based on sales of cardiopulmonary disposable products and heart lung machines of the acquiree through December 2019.


(2)	The unfavorable operating lease adjustment obligation represents our acquisition of Sorin’s future lease obligations at their estimated fair value in conjunction with the Mergers.


(3)	Financial derivative obligations, long-term, represent forward interest rate swap contracts, which hedges our long-term European Investment Bank debt.

Investments

3 Months Ended

Mar. 31, 2016

Investments [Abstract]

Investments

Short-Term Investments Detail. Our short-term investment consisted of held-to-maturity commercial paper with maturities over three months but less than twelve months and carried at cost plus accrued interest, as shown below (in thousands):



	March 31, 2016		December 31, 2015
Commercial paper ⁽¹⁾	$	6,988	$	6,997


(1)	Refer to “Note 13. Fair Value Measurements.”

Cost-Method Investments. Our cost-method investments are shown in long-term assets in the consolidated balance sheets and consist of our equity positions in the following privately-held companies (in thousands):



	March 31, 2016		December 31, 2015
ImThera Medical, Inc. - convertible preferred shares and warrants ⁽¹⁾	$	12,000	$	12,000
Rainbow Medical Ltd.⁽²⁾	4,042		3,847
Total	$	16,042	$	15,847


(1)	ImThera Medical, Inc. is a private U.S. company developing a neurostimulation device system for the treatment of obstructive sleep apnea. Refer to “Note 13. Fair Value Measurements.”


(2)	Rainbow Medical Ltd. is a private Israeli venture capital company that seeds and grows companies developing medical devices in a diverse range of medical fields. Refer to “Note 13. Fair Value Measurements.”

Equity Method Investments. Our equity-method investments are shown in long-term assets of our condensed consolidated balance sheets and consist of our equity position in the following entities (in thousands, except for percent ownership):



	% Ownership ⁽¹⁾		March 31, 2016		December 31, 2015
La Bouscarre S.C.I.	50.0	%	$	17	$	16
LMTB - Laser und Medizin Technologie Gmbh	—	%	—		3
Caisson Interventional LLC ⁽²⁾	43.7	%	12,718		13,712
Highlife S.A.S. ⁽²⁾	38.0	%	8,457		8,363
MicroPort Sorin CRM (Shanghai) Co. Ltd.	49.0	%	8,729		8,959
Respicardia Inc.	19.7	%	31,719		30,586
Total			$	61,640	$	61,639


(1)	Ownership percentages as of March 31, 2016.

(2)

We have outstanding loans to Caisson Interventional LLC and to Highlife S.A.S for $6.6 million included in Other Assets (long-term) on the consolidated balance sheet. We loaned an additional $2.8 million to Highlife during the three months ended March 31, 2016. Refer to “Note 13. Fair Value Measurements - Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis” for further information.

We adjusted the carrying amount of our equity-method investments for our share of the investees losses, in the amount of $2.7 million during the three months ended March 31, 2016. Our share of the losses are reflected in the consolidated statements of income (loss). In addition, we adjusted the carrying amount of our equity-method investments for foreign currency translation gains of $2.7 million during the three months ended March 31, 2016, which are reflected in the consolidated statement of other comprehensive income. During the thirteen weeks ended April 24, 2015, there were no historical Cyberonics equity-method investments.

Other Assets. “Other assets” in the long-term section of the consolidated balance sheet includes the cash surrender value of company-owned life insurance policies, which are based on the fair values in a mutual fund portfolio, amounting to $1.8 million at March 31, 2016 and December 31, 2015.

Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value. The hierarchy can be described as follows:

Level 1. Observable inputs such as quoted prices in active markets.

Level 2. Inputs other than the quoted prices in active markets that are observable either directly or indirectly. To measure the fair value of its derivative transactions (transactions to hedge exchange risk and interest rate risk), we calculate the mark-to-market of each transaction using prices quoted in active markets (e.g., the spot exchange rate of a currency for forward exchange transactions) and observable market inputs processed for the measurement (e.g., the fair value of an interest rate swap using the interest rate curve), or the measurement of an exchange rate option (with the processing of listed prices and observable variables such as volatility). For all level 2 valuations, we use the information provided by a third-party as a source for obtaining quoted observable prices and to process market variables.

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The fair value of assets using Level 3 input are based on our own judgments about the assumptions that market participants would use in pricing the asset and on observable market data, when available. We generally consider: (a) sale prices for similar assets, (b) discounted estimated future cash flows using an appropriate discount rate and/or (c) estimated replacement cost.

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2016 or the thirteen weeks ended April 24, 2015.

Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis

The following table provides information by level for assets and liabilities that are measured at fair value on a recurring basis (in thousands):



	Fair Value as of		Fair Value Measurements Using Inputs Considered as:
	March 31, 2016		Level 1		Level 2		Level 3
Liabilities:
Derivative Liabilities - for hedging (foreign currency exchange rates)	$	2,214	$	—	$	2,214	$	—
Derivative Liabilities - for hedging (interest rates)	3,335		—		3,335		—
Derivative Liabilities - not for hedging (interest rates)	4		—		4		—
Derivative Liabilities - not for hedging (exchange rates)	2,909		—		2,909		—
Earnout for contingent payments ⁽¹⁾	4,075		—		—		4,075
Total Liabilities	$	12,537	$	—	$	8,462	$	4,075



	Fair Value as of		Fair Value Measurements Using Inputs Considered as:
	December 31, 2015		Level 1		Level 2		Level 3
Assets:
Derivative Assets - for hedging (exchange rates)	$	839	$	—	$	839	$	—
Derivative Assets - not for hedging (exchange rates)	—		—		—		—
Total Assets	$	839	$	—	$	839	$	—

Liabilities:
Derivative Liabilities - for hedging (interest rates)	$	2,876	$	—	$	2,876	$	—
Derivative Liabilities - not for hedging (interest rates)	24		—		24		—
Derivative Liabilities - not for hedging (exchange rates)	1,547		—		1,547		—
Earnout for contingent payments ⁽¹⁾	3,457		—		—		3,457
Total Liabilities	$	7,904	$	—	$	4,447	$	3,457

(1)

This contingent payment arose as a result of acquisitions by Sorin, prior to the Mergers. Cellplex PTY Ltd. was acquired in September 2015 and the contingent payments are based on achievement of sales targets by the acquiree through June 30, 2018. The other acquisition was the commercial activities of a local distributor in Colombia and the contingent payments are based on sales of cardiopulmonary disposable products and heart lung machines of the acquiree through December 2019.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Our investment in cost-method equity securities and our investments in equity securities that are accounted for using the equity method consisted of investments in equity, partnership interests and advances to privately held companies for which there are no quoted market prices. These investments and our non-financial assets such as: goodwill of $763.1 million recorded on the date of the Mergers, intangible assets, and PP&E, are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized. We classify the measurement of these assets as Level 3 input within the fair value hierarchy. No impairment was recognized during the three months ended March 31, 2016. During the thirteen weeks ended April 24, 2015 we fully impaired certain finite-lived intangible assets and PP&E for a loss of $0.4 million and $0.8 million, respectively, that were primarily related to R&D projects that no longer factored into our future product plans.

Short-Term Financial Instruments Not Measured at Fair Value

The carrying values of our cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these items. The balance of our investments in short-term securities, consisted of commercial paper carried at cost plus accrued interest which approximates its fair value. Refer to “Note 12. Investments” for further information.

The carrying value of our long-term debt including the short-term portion, as of March 31, 2016, was $118.0 million which we believe approximates fair value. Cyberonics had no debt outstanding as of April 24, 2015.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Financing Arrangements

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Financing Arrangements

The outstanding principal amount of long-term debt at March 31, 2016 and December 31, 2015, consisted of the following (in thousands, except interest rates):



	Principal Amount at		Principal Amount at			Effective Interest Rate
	March 31, 2016		December 31, 2015		Maturity	Effective Interest Rate
European Investment Bank ⁽¹⁾	$	104,260	$	99,426	June 2021	1.035	%
Banca del Mezzogiorno ⁽²⁾	9,321		8,851		December 2019	0.50% - 3.35%
Bpifrance (ex-Oséo) ⁽³⁾	2,576		2,621		October 2019	2.58	%
Novalia SA (Vallonie) ⁽⁴⁾	920		1,192		March 2020 - June 2033	0.00% - 3.42%
Mediocredito Italiano ⁽⁵⁾	926		944		September 2021-2026	0.0525% - 0.765%
Total long-term facilities	118,003		113,034
Less current portion of long-term debt	21,945		21,243
Total long-term debt	$	96,058	$	91,791


(1)	In July 2014, Sorin obtained a European Investment Bank loan to support product development projects in Italy and France for the Cardiac Surgery (the “CS”) and Cardiac Rhythm Management (the “CRM”) Business Units, and in addition, for the support of New Venture therapeutic solutions aimed at treating heart failure and mitral valve regurgitation.


(2)	In January 2015, Sorin obtained loans to support R&D projects as a part of the Large Strategic Project program of the Italian Ministry of Education, Universities and Research. One loan is subsidized by Cassa Depositi e Prestiti, at a fixed rate of 0.5%, and a second loan provided by GE Capital Interbanca, at a floating interest rate of the 6-month Euribor rate plus 3.3%.


(3)	In 2012, Sorin obtained a loan with Bpifrance, a French government entity that provides financial support for R&D.


(4)	In 2010, Sorin obtained loans from Novalia SA, a finance company in the Wallonia Region in Belgium, to support several R&D projects.


(5)	In 2014, Sorin assumed real estate loans with the acquisition of the cannulae business. The loans are due to Mediocredito Italiano and are secured by a mortgage on our building located at our Cantù manufacturing site in Italy.

The outstanding principal amount of short-term debt as of March 31, 2016, and December 31, 2015, consisted of the following (in thousands, except interest rates):



	Principal Amount at		Principal Amount at		Effective Interest Rate
	March 31, 2016		December 31, 2015		Effective Interest Rate
Intesa San Paolo Bank	$	10,257	$	20,630	0.300	%
BNL BNP Paribas	15,955		18,459		0.300	%
Unicredit Banca	6,838		15,201		0.380	%
Barclays Bank	13,676		—		0.324	%
BNP Paribas (Brazil)	2,852		2,225		16.20	%
French Government	2,130		2,030		—
Other short-term facilities	1,886		2,725
Total short-term facilities	53,594		61,270
Current portion of long-term debt	21,945		21,243
Total current debt	75,539		82,513
Total debt	$	171,597	$	174,304

Derivatives and Foreign Currency Risk Management

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Foreign Currency Risk Management

Derivatives and Risk Management

Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations, and, due to certain loans with floating interest rates, we are also subject to the impact of changes in interest rates on our interest payments. We enter into foreign currency exchange rate (“FX”) forward contracts and interest rate swap contracts, to reduce the impact of foreign currency rates and interest rate fluctuations on net revenues and cash flow. We measure all outstanding derivatives at fair value and report the fair value in the consolidated balance sheets as either financial assets or liabilities. We do not enter into derivative contracts for speculative purposes. Derivatives that are not designated as hedge instruments are referred to as freestanding derivatives and we account for changes in fair value in earnings. If a derivative qualifies for hedge accounting and is designated as a hedging instrument, then, depending on hedge effectiveness, we account for changes in the fair value of the derivative immediately in earnings or in other comprehensive income until the hedged item is recognized in earnings upon settlement or termination of the hedge contract. We measure hedge effectiveness each quarter end. If a derivative that qualified for hedge accounting is later determined to be ineffective, in whole or in part due to changes in the underlying hedged transaction, the fair value of the portion of the derivative determined to be ineffective will be recognized as a gain or loss in earnings for the applicable period. If the hedging instrument matures or is canceled, the amounts previously recorded in the statement of accumulated other comprehensive income is reclassified to earnings.

Freestanding Derivative Foreign Currency Forward Contracts

The gross notional amount of derivative FX forward contracts, not designated as hedging instruments, outstanding at March 31, 2016 and December 31, 2015 was $285.3 million and $254.4 million, respectively. These contracts consist of primarily FX forward contracts designed to offset the FX effects in earnings of intercompany loans denominated in a variety of foreign currencies versus the Euro, which settle monthly or quarterly, and are renewed or not in accordance with the underlying outstanding intercompany loan amounts. In addition, we included FX forward currency contracts originally designed to hedge net revenues denominated in British pounds and Japanese yen but derecognized during the period ended March 31, 2016.

The amount and location of the gains (losses) in the condensed consolidated statements of income (loss) related to freestanding FX contracts (in thousands):



Derivatives Not Designated as Hedging Instruments	Location of gains / (losses) in the statement of net income (loss)	Three Months Ended March 31, 2016
FX forward contracts ⁽¹⁾	Foreign exchange and other	$	(3,822	)


(1)	The aggregate amounts include realized and unrealized gains and losses. There were no derivative contracts outstanding during the thirteen weeks of historic Cyberonics activity that ended April 24, 2015.

Cash Flow Hedges

Foreign Currency Risk

We utilize FX forward contracts that are designed to hedge the variability of cash flows associated with our 15 month forecast of net revenues denominated in British Pound and Japanese Yen and are designated as a cash flow hedges. These hedges are denominated in USDs and are settled when the earnings process has completed and the receivables collected. The gross notional amount of FX forward contracts designated as cash flow hedges outstanding at March 31, 2016 was $82.8 million, related to contracts for £8.5 million and ¥8.1 billion, and at December 31, 2015 the gross notional amount was $66.9 million, related to contracts for £8.5 million and ¥6.4 billion. At March 31, 2016, we had $2.4 million in after-tax net unrealized losses associated with FX cash flow hedging recorded in Accumulated Other Comprehensive Income (“AOCI”) and of this total we expect that $2.3 million will be reclassified to earnings during the next 12 months. There was no FX hedge ineffectiveness and there were no components of the FX hedge contracts excluded in the measurement of hedge effectiveness during the three months ended March 31, 2016. During the three months ended March 31, 2016, we discontinued FX forward contracts in the amount of £1.5 million ($2.3 million) due to a review of the forecast for 2016 of our revenues and costs denominated in GBP’s, which resulted in a gain of $190 thousand. There were no FX derivatives outstanding during the thirteen weeks of historic Cyberonics activity that ended April 24, 2015.

Interest Rate Risk

In July 2014, Sorin entered into a European Investment Bank (“EIB”) long-term loan agreement that matures in June 2021 with variable interest payments due quarterly based on the Euribor 3 month floating interest rate. To minimize the impact of changes in interest rates on our interest payments we entered into an interest rate swap agreement program to swap the EIB floating-rate interest payments for fixed-rate interest payments. The interest rate swap contracts qualify for, and are designated as, a cash flow hedge. Each interest rate swap contract has a quarterly settlement in conjunction with the scheduled payment of interest on the European Investment Bank loan. The contracts had an aggregate notional amount of €73.3 million (equivalent to $83.5 million) at March 31, 2016 and €73.3 million (equivalent to $79.6 million) at December 31, 2015. At March 31, 2016, we had $0.1 million in after-tax net unrealized losses associated with interest rate cash flow hedging recorded in AOCI, and of this total we expect that $61 thousand will be reclassified to earnings during the next 12 months. There was no interest rate swap hedge ineffectiveness or component of the swap contract excluded in the measurement of hedge effectiveness during the three months ended March 31, 2016. In addition, no interest rate swap contract was derecognized, canceled or discontinued during the three months ended March 31, 2016. There were no interest rate swap contracts outstanding during the thirteen weeks of historic Cyberonics activity that ended April 24, 2015.

Presentation in Financial Statements

The amount of gains (losses) posted to other comprehensive income related to FX forward contracts, and interest rate swap derivative instruments, designated as cash flow hedges during the three months ended March 31, 2016 and the amount of cash flow hedge gains (losses) reclassified to the consolidated statements of income (loss) from other comprehensive income for the three months ended March 31, 2016, were as follows (in thousands):



	Gross Gains (Losses) Recognized in OCI on the Effective Portion of the Derivative			Effective Portion of Gains (Losses) on Derivatives Reclassified from AOCI to Earnings:
Derivatives in Cash Flow Hedging Relationships	Amount			Location	Amount
FX forward contract	$	(3,580	)	Foreign Exchange and Other ⁽¹⁾	$	190
				SG&A	(291		)
Interest rate swap contracts	(319		)	Interest expense	(33		)
Total	$	(3,899	)		$	(134	)


(1)	Includes FX contracts derecognized as revenue hedges during the three months ended March 31, 2016.

The fair value on a gross basis and the location of derivative instruments reported in the consolidated balance sheet are shown in the table below as of March 31, 2016 (in thousands):



	Liability Derivatives
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value ⁽¹⁾
Interest rate contracts	Accrued liabilities	$	1,155
Interest rate contracts	Other long-term liabilities	2,180
Foreign currency exchange rate contracts	Accrued liabilities	2,214
Total derivatives designated as hedging instruments		$	5,549
Derivatives not designated as hedging instruments
Interest rate contracts	Accrued liabilities	$	4
Foreign currency exchange rate contracts	Accrued liabilities	2,909
Total derivatives not designated as hedging instruments		$	2,913
Total derivatives		$	8,462

The fair value on a gross basis and the location of derivative instruments reported in the consolidated balance sheet are shown in the table below as of December 31, 2015 (in thousands):



	Liability Derivatives
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value ⁽¹⁾
Interest rate contracts	Accrued liabilities	$	1,083
Interest rate contracts	Other long-term liabilities	1,793
Foreign currency exchange rate contracts	Accrued liabilities	(839		)
Total derivatives designated as hedging instruments