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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2016	Oct. 28, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
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		48,774,669
Trading Symbol	LIVN

Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Oct. 18, 2015	Sep. 30, 2016	Oct. 18, 2015
Income Statement [Abstract]
Net sales	$ 295,268	$ 67,521	$ 903,284	$ 222,603
Cost of sales	106,454	9,536	360,675	26,564
Gross profit	188,814	57,985	542,609	196,039
Operating expenses:
Selling, general and administrative	107,553	41,186	343,309	104,581
Research and development	32,175	14,739	94,076	35,233
Merger and Integration expenses	7,576	27,902	20,537	43,143
Restructuring expenses	4,381	0	37,219	0
Amortization of intangibles	11,775	510	33,959	1,452
Litigation related expenses	2,369	0	4,678	0
Total operating expenses	165,829	84,337	533,778	184,409
Income (loss) from operations	22,985	(26,352)	8,831	11,630
Interest income	(585)	(39)	(1,119)	(124)
Interest expense	3,495	125	6,665	154
Impairment of investment	0	0	0	2,064
Foreign exchange and other - (gain) loss	(1,216)	109	2	1
Income (loss) before income taxes	21,291	(26,547)	3,283	9,535
Income tax (benefit) expense	9,731	(1,456)	16,891	11,693
Losses from equity method investments	13,129	0	19,382	0
Net loss	$ (1,569)	$ (25,091)	$ (32,990)	$ (2,158)
Basic income (loss) per share (in Dollars per Share)	$ (0.03)	$ (0.96)	$ (0.67)	$ (0.08)
Diluted income (loss) per share (in Dollars per Share)	$ (0.03)	$ (0.96)	$ (0.67)	$ (0.08)
Shares used in computing basic income (loss) per share (in Shares)	49,075	26,025	49,016	26,015
Shares used in computing diluted income (loss) per share (in Shares)	49,075	26,025	49,016	26,015

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Oct. 18, 2015	Sep. 30, 2016	Oct. 18, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,569)	$ (25,091)	$ (32,990)	$ (2,158)
Other comprehensive income (loss):
Net change in unrealized loss on derivatives	2,042	0	(5,224)	0
Tax effect	(673)	0	1,513	0
Net of tax	1,369	0	(3,711)	0
Foreign currency translation adjustment, net of tax	(1,805)	569	32,598	256
Total other comprehensive income (loss)	(436)	569	28,887	256
Total comprehensive loss	$ (2,005)	$ (24,522)	$ (4,103)	$ (1,902)

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 63,632	$ 112,613
Short-term Investments	0	6,997
Accounts receivable, net	284,345	272,352
Inventories	197,649	212,448
Prepaid taxes	49,854	42,425
Prepaid expenses and other current assets	51,850	26,579
Total Current Assets	647,330	673,414
Property, plant and equipment, net	245,120	244,587
Goodwill	731,144	745,356
Intangible assets, net	650,366	658,942
Investments	67,435	77,486
Deferred tax assets, net	6,010	153,509
Other assets	149,555	5,445
Total Assets	2,496,960	2,558,739
Current Liabilities:
Current debt obligations	53,617	82,513
Accounts payable	104,549	109,588
Accrued liabilities	62,046	63,047
Income taxes payable	16,655	26,699
Accrued employee compensation and related benefits liability	80,028	77,274
Total Current Liabilities	316,895	359,121
Long-term debt obligations	90,938	91,791
Deferred income taxes liability	213,062	235,483
Long-term employee compensation and related benefits liability	32,008	31,139
Other long-term liabilities	27,170	29,743
Total Liabilities	680,073	747,277
Commitments and contingencies (Note 16)
Stockholders’ Equity:
Ordinary Shares, £1.00 par value: unlimited shares authorized; 48,924,009 and 48,868,305 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	75,538	75,444
Additional paid-in capital	1,751,466	1,742,032
Accumulated other comprehensive loss	(25,341)	(54,228)
Retained earnings	15,224	48,214
Total Stockholders’ Equity	1,816,887	1,811,462
Total Liabilities and Stockholders’ Equity	$ 2,496,960	$ 2,558,739

Condensed Consolidated Balance Sheets (Parenthetical) - £ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Ordinary shares, par value (in Pounds per Share)	£ 1	£ 1
Ordinary shares issued	48,924,009	48,868,305
Ordinary shares outstanding	48,924,009	48,868,305

Condensed Consolidated Statements of Stockholders' Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Total	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	$ 22,392	$ 374	22,018
Stock-based compensation plans (shares)		269,000
Shares repurchased	(12,864)	$ (280)	(12,584)
Shares repurchased (shares)		(213,000)
Net loss	(32,990)				(32,990)
Other comprehensive income	28,887			28,887
Balance at Sep. 30, 2016	$ 1,816,887	$ 75,538	$ 1,751,466	$ (25,341)	$ 15,224
Balance (shares) at Sep. 30, 2016	48,924,009	48,924,000

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Oct. 18, 2015
Cash Flows From Operating Activities:
Net loss	$ (32,990)	$ (2,158)
Non-cash items included in net loss:
Depreciation	30,193	4,570
Amortization	33,959	1,004
Stock-based compensation	15,575	21,281
Deferred income tax expense (benefit)	(10,224)	4,638
Loss from investments	19,382	2,064
Other	8,765	912
Changes in operating assets and liabilities:
Accounts receivable	(11,040)	1,431
Inventories	20,607	(4,849)
Other current and non-current assets	(23,142)	(3,771)
Restructuring reserve	14,961	0
Accounts payable and accrued current and non-current liabilities	(16,698)	40,507
Net cash provided by operating activities	49,348	65,630
Cash Flow From Investing Activities:
Purchase of short-term investments	(7,054)	(6,995)
Maturities of short-term investments	14,051	27,033
Purchase of property, plant and equipment and other	(26,772)	(4,272)
Intangible assets purchases	(1,934)	(1,000)
Purchases of equity and cost method investments	(8,059)	0
Net cash provided by (used in) investing activities	(29,768)	14,766
Cash Flows From Financing Activities:
Short-term borrowing	6,060	0
Short-term repayments	(39,891)	0
Proceeds from long-term debt obligations	7,994	0
Repayment of long-term debt obligations	(11,354)	0
Repayment of trade receivable advances	(23,848)	0
Loans to equity method investees	(6,595)	0
Proceeds from exercise of options for common stock	7,888	5,305
Realized excess tax benefits - stock-based compensation	1,208	4,531
Purchase of ordinary stock	(11,053)	0
Purchase of treasury stock	0	(15,700)
Cash settlement of compensation-based stock units	0	(1,092)
Net cash used in financing activities	(69,591)	(6,956)
Effect of exchange rate changes on cash and cash equivalents	1,030	122
Net increase (decrease) in cash and cash equivalents	(48,981)	73,562
Cash and cash equivalents at beginning of period	112,613	116,215
Cash and cash equivalents at end of period	63,632	189,777
Supplementary Disclosure of a Non-Cash Operating Transaction:
Cash paid for interest	5,442	19
Cash paid for income taxes	38,947	8,272
Supplementary Disclosure of a Non-Cash Financing Transaction:
Increase to liabilities related to share-based compensation options cashed-out	0	4,814
Decrease to APIC related to share-based compensation options cashed out	0	$ (4,814)
Supplementary Disclosure of a Non-Cash Financing Transaction:
Decrease to Ordinary shares at par value and APIC related to shares repurchased and unsettled	(1,811)
Increase to Current debt obligations related to unsettled shares	$ 1,811

Nature of Operations	9 Months Ended
Nature of Operations	Sep. 30, 2016
Accounting Policies [Abstract]
Nature of Operations	Nature of Operations Background. LivaNova PLC and its subsidiaries (collectively, the “Company”, “LivaNova”, “we” or “our”) was organized under the laws of 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.” LivaNova PLC is headquartered in London, United Kingdom (“U.K.”). Description of the Business. We are 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	9 Months Ended
	Sep. 30, 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 The Mergers: On October 19, 2015, as further described herein, LivaNova became the holding company of the combined businesses of Cyberonics and Sorin, and LivaNova’s ordinary shares were listed for trading on the NASDAQ Global Market and admitted to listing on the standard segment of the United Kingdom Financial Conduct Authority’s Official List and to trading on the Main Market of the London Stock Exchange under the trading symbol “LIVN.” Based on the structure of the Mergers, management determined that Cyberonics is considered to be the accounting acquirer and predecessor for accounting purposes. The purchase price allocation recorded and reported in the 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”), was based on a preliminary acquisition valuation and includes the use of estimates based on information that was available to management at the time. The finalization of appraisals and estimates resulted in a change in the valuation of assets acquired, liabilities assumed, goodwill recognized and the related impact on deferred taxes and cumulative translation adjustments. During the quarters ended June 30, 2016 and September 30, 2016, we recorded adjustments to the estimated fair values of the assets acquired and liabilities assumed in the Mergers as a result of analysis of the facts and circumstances that existed at the time of the acquisition. 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 further information regarding the adjustments. Basis of Presentation. The accompanying condensed consolidated financial statements of LivaNova 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 derived from audited financial statements contained in our transitional report on form 10-KT for the period ended December 31, 2015, 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 and nine months ended September 30, 2016, and are not necessarily indicative of the results that may be expected for the fiscal year ending 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. 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 that consummated on October 19, 2015, Cyberonics, as a subsidiary of LivaNova PLC, 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 and nine months ended September 30, 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 twelve and thirty-eight weeks ended October 18, 2015, as the prior year equivalent periods. The twelve and thirty-eight weeks ended October 18, 2015 were selected for comparative purposes as they were the closest periods to the three and nine months ended September 30, 2016 (with approximately a two week difference) as it was impracticable and cost prohibitive to recast Cyberonics’ prior year financial information in order to present the three and nine months ended September 30, 2016. Foreign Currency Translation and Remeasurement. We translate the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. Our subsidiaries that use the U.S. dollars as their functional currency remeasure their assets and liabilities that are denominated in a currency other than the U.S. dollars, at exchange rates in effect at the end of each period, while their inventories, property and nonmonetary assets and liabilities denominated in a currency other than the U.S. dollars, at historical rates. Consolidation. The accompanying condensed consolidated operating statements for the three and nine months ended September 30, 2016, include the operating results for LivaNova PLC and the LivaNova PLC Employee Benefit Trust (the “Trust”), which consist of the combined results of operations of Cyberonics and Sorin. The accompanying condensed consolidated operating results for the twelve and thirty-eight weeks ended October 18, 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 statements 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. Reclassifications. The following reclassifications have been made to conform the prior period consolidated financial statements to current year presentations: Amortization Expense. Amortization expense of $0.5 million and $1.5 million for the twelve and thirty-eight weeks ended October 18, 2015 were reclassified and reported separately in the consolidated statement of income (loss) rather than included with Research and Development expense. Accrued Employee Compensation and Related Benefits. In the consolidated balance sheet, 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 $41.1 million in money market mutual funds at December 31, 2015 and none at September 30, 2016. 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 included 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 and $2.9 million for the twelve and thirty-eight weeks ended October 18, 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 $0.2 million and $0.7 million for the three and nine months ended September 30, 2016, respectively. Income Taxes. LivaNova, organized as a public limited company under the laws of England and Wales, operates through 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, Cyberonics 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 while the historical Sorin businesses comprise the Cardiac Surgery (“CS”) and the Cardiac Rhythm Management (“CRM”) segments. Refer to “Note 22. Geographic and Segment Information” for additional information.

Business Combination

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Business Combination

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.

The estimated fair value of the assets acquired and liabilities assumed in the Mergers, as adjusted in the table below, are based on information that became available during the measurement period. We recognized adjustments to the provisional amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments were determined.

The measurement period ended and the fair values of the Mergers were finalized by October 19, 2016.

Goodwill is calculated as the excess of the consideration transferred over the fair value of assets acquired and liabilities assumed. Goodwill represents growth opportunities and expected cost synergies of the combined company. We assigned goodwill arising from the Mergers to the Cardiac Surgery, Cardiac Rhythm Management and Neuromodulation 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 their respective fair values. The remaining goodwill, allocated to Neuromodulation, which is the accounting acquirer’s existing business unit, is supported by the synergies derived from the Mergers.

The following table summarizes the fair value of the assets acquired and liabilities assumed in the Mergers on October 19, 2015, including the measurement period adjustments recognized since the fair values were presented in our report on Form 10-K/T for the transitional period ended December 31, 2015 (in thousands):



	October 19, 2015		Adjustments			October 19, 2015 (as adjusted)
Total fair value of consideration transferred	$	1,589,083	$	—		$	1,589,083
Estimated Fair Value of Assets Acquired and Liabilities Assumed:
Cash and cash equivalents	12,495		—			12,495
Accounts receivable	224,466		—			224,466
Inventories	233,832		—			233,832
Other current assets	60,674		(84		)	60,590
Property, plant and equipment	207,639		(1,121		)	206,518
Intangible assets	688,729		—			688,729
Equity investments	67,059		(72		)	66,987
Other assets	7,483		(1,328		)	6,155
Deferred tax assets	135,370		(121,234		)	14,136
Total assets acquired	1,637,747		(123,839		)	1,513,908
Current portion of debt and other obligations	110,601		—			110,601
Other current liabilities	237,855		830			238,685
Long-term debt	128,458		—			128,458
Deferred tax liabilities	279,328		(148,640		)	130,688
Other long-term liabilities	55,567		—			55,567
Total liabilities assumed	811,809		(147,810		)	663,999
Goodwill	$	763,145	$	(23,971	)	$	739,174

The measurement period adjustments shown in the table above were recorded in the quarters ended June 30, 2016 and September 30, 2016, and reflect changes in the estimated fair values of certain assets and liabilities, primarily related to deferred income taxes as a result of new information on facts and circumstances that existed at the time of acquisition. Adjustments were made to deferred income taxes as a result of the allocation of fair value to the legal entities. In addition, deferred income taxes were aggregated and presented on a net basis by jurisdiction.

We recorded reductions or (increases) to the following expenses due to the measurement period adjustments that were recorded during the nine months ended September 30, 2016 (in thousands):



	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Amortization of intangible assets	$	193		$	1,844
Depreciation	1,539			2,790
Other costs	—			(40		)
Income tax	(3,232		)	(3,756		)
Net	$	(1,500	)	$	838

The valuation of the intangible assets acquired in the Mergers and related amortization periods are as follows (in thousands, except years):



	Valuation as of October 19, 2015		Amortization period in years
Customer relationships	$	464,019	16-18
Developed technology	211,091		9-15
Sorin trade-name	13,619		4
	$	688,729

Proforma results of operations

The following pro forma information presents the results of LivaNova as if the Mergers were consummated on April 26, 2014 and had been included in our consolidated statement of income (loss) for the twelve and thirty-eight weeks ended October 18, 2015 (in thousands, except per share data):



	Twelve Weeks Ended October 18, 2015			Thirty-Eight Weeks Ended October 18, 2015
Net Sales	$	295,099		$	901,493
Net Loss	(51,984		)	(81,433		)
Basic and diluted net loss per share	$	(1.07	)	$	(1.68	)

The unaudited pro forma combined results of operations for the twelve and thirty-eight weeks ended October 18, 2015 have been prepared by adjusting the historical results of Cyberonics for these same periods to include the historical results of Sorin. The unaudited pro forma information included for Sorin for the twelve weeks ended October 18, 2015 is based on the accounts of Sorin for the three months ended September 30, 2015 and the information for the thirty-eight weeks ended October 18, 2015 includes the accounts of Sorin for the nine months ended September 30, 2015.

The unaudited pro forma information reflects the effect of purchase accounting adjustments and the elimination of merger-related transactions expenses, among other items. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on April 26, 2014, and it is not indicative of any future results.

- 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=65885119&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=65885119&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
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+ Details

Reorganization Plans

9 Months Ended

Sep. 30, 2016

Restructuring and Related Activities [Abstract]

Reorganization Plans

Our 2015 and 2016 Reorganization Plans (the “Plans”) were initiated October 2015 and March 2016, respectively, 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). We expect to complete these plans in the first half of fiscal year 2018. There were no restructuring expenses in the comparative prior year periods.

We estimate that the Plans will result in a net reduction of approximately 190 personnel of which 115 have occurred as of September 30, 2016. The Plans also include the closure of our R&D facility in Meylan, France and consolidation of its research and development (“R&D”) capabilities into our Clamart, France facility.

The Reorganization Plans’ accrual detail is as follows (in thousands):



	Employee severance and other termination costs			Other			Total
Balance as of December 31, 2015	$	6,919		$	—		$	6,919
Restructuring charges	34,288			2,931			37,219
Cash payments	(21,066		)	(591		)	(21,657		)
Balance as of September 30, 2016	$	20,141		$	2,340		$	22,481

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



	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Cardiac Surgery	$	916	$	5,878
Cardiac Rhythm Management	571		16,592
Neuromodulation	2,882		7,017
Other	12		7,732
Total	$	4,381	$	37,219

Accounts Receivable and Allowance for Bad Debt

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Accounts Receivable and Allowance for Bad Debt

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



	September 30, 2016			December 31, 2015
Trade receivables from third parties	$	291,620		$	274,005
Allowance for bad debt	(7,275		)	(1,653		)
	$	284,345		$	272,352

During the nine months ended September 30, 2016, we increased our allowance for bad debt primarily due to certain receivables in Greece whose probability of recoverability became doubtful during the quarter ended June 30, 2016.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details

Inventories

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following (in thousands):



	September 30, 2016		December 31, 2015
Raw materials	$	52,658	$	52,482
Work-in-process	40,725		44,369
Finished goods	104,266		115,597
	$	197,649	$	212,448

The step-up in inventory basis of $35.0 million that resulted from the Mergers was fully amortized as of June 30, 2016 and is recorded in cost of sales in the consolidated statement of net income (loss). Inventories are reported net of the provision for obsolescence, which totaled $7.5 million and $3.6 million at September 30, 2016 and December 31, 2015, respectively. The provision reflects normal obsolescence and inventory turnover while the comparatively lower provision as of December 31, 2015 was positively conditioned by Sorin inventories which were fair valued as of the acquisition date.

Property, Plant and Equipment

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

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

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



	September 30, 2016			December 31, 2015
Land	$	16,321		$	15,662
Building and building improvements	101,898			82,014
Machinery equipment, software, furniture and fixtures	175,000			140,364
Capital investment-in-process	21,668			42,210
Other	7,896			8,634
Total	322,783			288,884
Accumulated depreciation	(77,663		)	(44,297		)
	$	245,120		$	244,587

Depreciation expense for LivaNova was $10.7 million and $30.2 million for the three and nine months ended September 30, 2016, respectively, and $1.6 million and $4.6 million for legacy Cyberonics for the twelve and thirty-eight weeks ended October 18, 2015, respectively. During the nine months ended September 30, 2016, the increases in our investments in PP&E were primarily due to costs associated with manufacturing and office facilities, R&D equipment, in addition to general infrastructure and information technology system improvements.

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

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



	September 30, 2016			December 31, 2015
Finite-lived intangible assets:
Developed technology	$	216,334		$	213,873
Customer relationships	461,966			444,472
Trademarks and trade names	13,393			13,030
Other intangible assets	2,104			11
Total	693,797			671,386
Accumulated amortization	(43,431		)	(12,444		)
Net	$	650,366		$	658,942
Indefinite-lived intangible assets:
Goodwill	$	731,144		$	745,356

The amortization periods for our finite-lived intangible assets as of September 30, 2016:



	Minimum life in years	Maximum life in years
Developed technology	7	15
Customer relationships	16	18
Trademarks and trade names	4	4
Other intangible assets	5	10

The estimated future aggregate amortization of our finite-lived intangible assets remaining at September 30, 2016 is as follows (in thousands):



Year ending December 31,
2016	$	11,845
2017	47,661
2018	47,665
2019	47,665
2020	47,664
Thereafter	447,866

Detail of goodwill movements by segment is as follows (in thousands):



	Neuromodulation		Cardiac Surgery			Cardiac Rhythm Management			Total Goodwill
Balance as of December 31, 2015	$	315,943	$	412,541		$	16,872		$	745,356
Measurement period adjustments, net	—		(25,728		)	1,757			(23,971		)
Effect of changes in currency exchange rates	—		10,040			(281		)	9,759
Balance as of September 30, 2016	$	315,943	$	396,853		$	18,348		$	731,144

We assigned goodwill arising from the Mergers to the Cardiac Surgery, Cardiac Rhythm Management and Neuromodulation reporting units.

We test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists. If our operating performance or our anticipated business outlook deteriorates, our reporting units’ estimated fair value could decline below their carrying value, resulting in an impairment of goodwill. Likewise, if the market conditions or anticipated performance for our Cardiac Rhythm Management reporting unit deteriorates, it is possible that the estimated fair value of this reporting unit could be less than its carrying value when we perform our annual impairment analysis in our fourth quarter of 2016.

Factors that could have a negative impact on the fair value of our reporting units include, but are not limited to:

•Decreases in revenue as a result of the inability of our sales force to effectively market and promote our products;

•Increased competition, patent expirations or new technologies or treatments;

•Declines in anticipated growth rates;

•The outcome of litigation, legal proceedings, investigations or other claims resulting in significant cash outflows;

•Sustained decline in our stock price

Adverse changes in one or more of these factors could reduce the estimated fair value of our reporting unit below its carrying value in future periods.

- 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

9 Months Ended

Sep. 30, 2016

Accrued Liabilities [Abstract]

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):



	September 30, 2016		December 31, 2015
Restructuring related expense	$	22,481	$	6,919
Derivatives	6,267		1,815
Provisions for agents, returns and other	7,490		7,199
Advances received on customer receivables	1,329		24,494
Product warranty obligations	2,124		2,119
Royalty costs	2,152		1,316
Clinical study costs	1,815		2,004
Insurance	114		2,566
Other	18,274		14,615
	$	62,046	$	63,047

Product Warranties

9 Months Ended

Sep. 30, 2016

Product Warranties Disclosures [Abstract]

Product Warranties

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




As of December 31, 2015	$	2,119
Product warranty accrual	247
Settlements	(266		)
Effect of changes in currency exchange rates	24
As of September 30, 2016	$	2,124

Other Long-Term Liabilities

9 Months Ended

Sep. 30, 2016

Other Liabilities, Noncurrent [Abstract]

Other Long-Term Liabilities

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



	September 30, 2016		December 31, 2015
Uncertain tax positions	$	13,358	$	13,048
Government grant deferred revenue	4,027		3,918
Earnout for contingent payments ⁽¹⁾	1,435		3,457
Unfavorable operating leases ⁽²⁾	1,932		2,513
Financial derivatives ⁽³⁾	1,929		1,793
Other	4,489		5,014
	$	27,170	$	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. Refer to “Note 13. Fair Value Measurements.”


(2)	The unfavorable operating leases represents the adjustment to recognize Sorin’s future lease obligations at their estimated fair value in conjunction with the Mergers.


(3)	Financial derivatives represent forward interest rate swap contracts, which hedge our long-term European Investment Bank debt. Refer to “Note 15. Derivatives and Risk Management.”

Investments

9 Months Ended

Sep. 30, 2016

Investments [Abstract]

Investments

Short-Term Investments. As of December 31, 2015 our short-term investment consisted of $7.0 million held-to-maturity commercial paper with maturities over three months but less than twelve months which were carried at cost plus accrued interest. The commercial paper matured during the quarter ended September 30, 2016, and was not rolled over, as a result, we had no short-term investments at quarter end.

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):



	September 30, 2016		December 31, 2015
ImThera Medical, Inc. - convertible preferred shares and warrants ⁽¹⁾	$	12,000	$	12,000
Rainbow Medical Ltd.⁽²⁾	3,950		3,847
MD Start II	560		—
Total	$	16,510	$	15,847


(1)	ImThera Medical, Inc. is a private U.S. company developing a neurostimulation device system for the treatment of obstructive sleep apnea.


(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.

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⁾		September 30, 2016		December 31, 2015
Caisson Interventional LLC ⁽²⁾	49.1	%	$	17,629	$	13,712
Highlife S.A.S. ⁽²⁾	38.0	%	7,002		8,363
MicroPort Sorin CRM (Shanghai) Co. Ltd.	49.0	%	6,516		8,959
Respicardia, Inc. ⁽³⁾	19.6	%	19,761		30,586
Other			17		19
Total ⁽⁴⁾			$	50,925	$	61,639


(1)	Ownership percentages as of September 30, 2016.


(2)	We have outstanding loans to Caisson Interventional LLC and to Highlife S.A.S that amount to $9.1 million, which are included in Other Assets (long-term) on the consolidated balance sheet. We invested an additional $7.5 million in Caisson Series B Preferred Units upon achievement of a previously agreed upon milestone.


(3)	Respicardia is a privately funded U.S. company developing an implantable device designed to restore a more natural breathing pattern during sleep in patients with central sleep apnea ("CSA") by transvenously stimulating the phrenic nerve.


(4)	The total difference between the carrying amount of the investments and the amount of underlying equity in the net assets of the investees was $47.1 million at September 30, 2016.

Respicardia. During the quarter ended September 30, 2016, we declined to exercise or extend our option to purchase all of the issued and outstanding shares of Respicardia held by other investors as we preferred to continue as a minority investor instead of becoming a strategic acquirer as taken into consideration with our overall portfolio management program. Our analysis indicated that our carrying value in Respicardia might not be recoverable and the decrease in value of our investment was other than temporary. We estimated the fair value of our investment in Respicardia using information about past events, current conditions, and forecasts and an estimate of future cash flows. The estimated fair value was below our carrying cost and we impaired our investment in Respicardia by $9.2 million, which essentially represents the purchase option’s carrying value on the date we declined to exercise our option. This loss is included in Losses from Equity Method Investments in the consolidated statement of income (loss). In addition, during the quarter ended September 30, 2016, we started the process that will result in the cancellation of our distributor agreement with Respicardia in the fourth quarter ending December 31, 2016. The distributor agreement is a key component in the determination of whether our influence over Respicardia is significant. We accounted for Respicardia as an equity method investment through September 30, 2016 and will reevaluate our accounting method as of the date of the complete cancellation of the distributor agreement.

Caisson. In July 2016, we invested $7.5 million in Caisson Series B Preferred Units upon their achievement of a previously agreed upon milestone. This investment raised our interest in Caisson by 5.4% to 49.1%. There were no other changes with respect of our interest in, and control of, Caisson, therefore we continue to account for this investment under the equity method of accounting.

We adjusted the carrying amount of our equity-method investments for our share of the investees’ losses and amortization of basis differences in the amount of $3.9 million and $10.1 million during the three and nine months ended September 30, 2016, respectively. In addition, we adjusted the carrying amount of certain of our equity-method investments for foreign currency translation gains of $0.3 million and $1.4 million during the three and nine months ended September 30, 2016, respectively, which are reflected in the consolidated statements of other comprehensive income (loss). Our share of the investee losses, the amortization of basis differences and the impairment of Respicardia were reflected in “Losses from equity method investments” in the consolidated statements of income (loss).

Other Assets. “Other assets” in the long-term section of the consolidated balance sheet includes $136.8 million in deferred tax expense related to the inter-company sale of intangible assets which is discussed further in “Note 20. Income Taxes”. Other assets also include 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 and $1.8 million at September 30, 2016 and December 31, 2015, respectively.

Fair Value Measurements

9 Months Ended

Sep. 30, 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 nine months ended September 30, 2016 or the thirty-eight weeks ended October 18, 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:
	September 30, 2016		Level 1		Level 2		Level 3
Assets:
Derivative Assets - freestanding hedges (FX)	$	1,249	$	—	$	1,249	$	—
Total assets	$	1,249	$	—	$	1,249	$	—

Liabilities:
Derivative Liabilities - designated as cash flow hedges (FX)	$	3,943	$	—	$	3,943	$	—
Derivative Liabilities - designated as cash flow hedges (interest rate swaps)	2,994		—		2,994		—
Derivative Liabilities - freestanding hedges (FX)	1,259		—		1,259		—
Earnout for contingent payments ⁽¹⁾	1,435		—		—		1,435
Total Liabilities	$	9,631	$	—	$	8,196	$	1,435



	Fair Value as of		Fair Value Measurements Using Inputs Considered as:
	December 31, 2015		Level 1		Level 2		Level 3
Assets:
Derivative Assets - designated as cash flow hedges (FX)	$	839	$	—	$	839	$	—
Total Assets	$	839	$	—	$	839	$	—

Liabilities:
Derivative Liabilities - designated as cash flow hedges (interest rate swaps)	$	2,876	$	—	$	2,876	$	—
Derivative Liabilities - freestanding hedges (interest rate swaps)	24		—		24		—
Derivative Liabilities - freestanding hedges (FX)	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, see “Note 11. Other Long-Term Liabilities” for further information.

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

Our investment in entities accounted for under the cost-method and the equity method have no quoted market prices. These investments and our non-financial assets such as: goodwill, intangible assets, and PP&E, are remeasured at fair value if there is an indication of impairment and recorded at fair value only when the impairment is recognized. We classify the measurement input for these assets as Level 3 inputs within the fair value hierarchy.

During the quarter ended September 30, 2016, we recorded a $9.2 million impairment of our equity-method investment in Respicardia, Inc. Refer to “Note 12. Investments” for further information.

During the thirty-eight weeks ended October 18, 2015, we fully impaired certain finite-lived intangible assets and PP&E for a loss of $0.4 million and $0.6 million, respectively, which was 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 September 30, 2016, was $113.0 million which we believe approximates fair value.

- 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

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Financing Arrangements

The outstanding principal amount of long-term debt consisted of the following (in thousands, except interest rates):




	September 30, 2016		December 31, 2015		Maturity	Interest Rate
European Investment Bank ⁽¹⁾	$	92,925	$	99,426	June 2021	0.98	%
Banca del Mezzogiorno ⁽²⁾	8,170		8,851		December 2019	0.50	%
Mediocredito Italiano	7,278		—		December 2023	0.50	%
Bpifrance (ex-Oséo) ⁽³⁾	2,190		2,621		October 2019	2.58	%
Novalia SA (Vallonie) ⁽⁴⁾	844		1,192		March 2020 - June 2033	0.00% - 3.42%
Mediocredito Italiano - mortgages ⁽⁵⁾	846		944		September 2021-2026	0.87% - 1.37%
Mediocredito Italiano - Intesa Sanpaolo	719		—		December 2023	0.50% - 3.07%
Total long-term facilities	112,972		113,034
Less current portion of long-term debt	22,034		21,243
Total long-term debt	$	90,938	$	91,791

(1)

In July 2014, Sorin obtained a European Investment Bank (“EIB”) 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 Ventures therapeutic solutions aimed at treating heart failure and mitral valve regurgitation. The interest rate for the EIB loan is reset by the lender each quarter based on the Euribor. Interest payments are quarterly and principal payments are at six months. The variable interest rate for this debt was hedged with interest rate swap agreements. Refer to “Note 15. Derivatives and Risk Management.”


(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, at various fixed interest rates, 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 mortgage 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.

During the quarter, we entered into two term loans as part of the Fondo Innovazione Tecnologica program implemented by the Italian Ministry of Education, University and Research through Mediocredito Italiano Bank. The first loan, has a fixed interest rate of 0.50% per annum, with principal and interest payments due half yearly, starting December 31, 2016 and ending December 31, 2023. The second loan has a floating interest rate using the six month Euribor rate plus 3.30%, with principal and accumulated interest due half yearly starting June 30, 2021 and ending December 31, 2023.

The outstanding principal amount of short-term debt (revolving credit agreements) consisted of the following (in thousands, except interest rates):




	September 30, 2016		December 31, 2015		Interest Rate
Intesa San Paolo Bank	$	7,813	$	20,630	0.300	%
BNL BNP Paribas	3,348		18,459		0.250	%
Unicredit Banca	12,277		15,201		0.194	%
BNP Paribas (Brazil)	3,164		2,225		14.13	%
French Government	2,088		2,030		—
Banco de Bogota	802		—		2.95	%
Other short-term facilities	2,091		2,725
Total short-term facilities	31,583		61,270
Current portion of long-term debt	22,034		21,243
Total current debt	53,617		82,513
Total debt	$	144,555	$	174,304

Derivatives and Risk Management

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Risk Management

Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. In addition, 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 rate and interest rate fluctuations on net revenues and cash flow. We measure all outstanding derivatives each period end at fair value and report the fair value as either financial assets or liabilities in the consolidated balance sheets. We do not enter into derivative contracts for speculative purposes. Derivatives that are not designated as hedging instruments are referred to as freestanding derivatives with changes in fair value included in earnings. If a derivative is designated as a hedging instrument and qualifies for hedge accounting then, depending on hedge effectiveness, we account for changes in the fair value of the derivative either immediately in earnings, for the ineffective portion, or in other comprehensive income for the effective portion. Accumulated hedge gains and losses in other comprehensive income are transferred to earnings upon settlement, termination or cancellation of the hedge contract. We measure hedge effectiveness each quarter end and 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.

Freestanding Derivative Foreign Currency Forward Contracts

The gross notional amount of derivative FX forward contracts, not designated as hedging instruments, outstanding at September 30, 2016 and December 31, 2015 was $422.4 million and $254.4 million, respectively. These contracts are 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.

The amount and location of the net gains (losses) in the condensed consolidated statements of income (loss) related to open and settled 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 September 30, 2016			Nine Months Ended September 30, 2016
FX forward contracts ⁽¹⁾	Foreign exchange and other	$	(1,802	)	$	428


(1)	There were no derivative FX contracts opened or settled during the thirty-eight weeks ended October 18, 2015.

Cash Flow Hedges

Foreign Currency Risk

We utilize foreign currency exchange rate (“FX”) derivative contracts designed to hedge the variability of cash flows associated with our 12 month forecast of revenues denominated in British Pound and Japanese Yen. These contracts are settled when the earnings process has completed and the receivables collected. These contracts are designated as cash flow hedges.

There was no hedge ineffectiveness and there were no components of the FX derivative contracts excluded in the measurement of hedge effectiveness during the nine months ended September 30, 2016.

During the nine months ended September 30, 2016, we discontinued and settled certain of our FX derivative contracts due to changes in our foreign currency revenue forecast that resulted in a gain of $0.2 million reclassified to earnings from accumulated other comprehensive income.

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 the interest rate 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, cash flow hedges.

There was no interest rate swap hedge ineffectiveness or component of the swap contract excluded in the measurement of hedge effectiveness during the nine months ended September 30, 2016.

The notional amount of interest rate swap contracts designated as cash flow hedges is as follows (in thousands):



Notional amounts:	September 30, 2016		December 31, 2015
Foreign currency exchange rate contracts	$	90,087	$	66,900
Interest rate swap contracts	74,407		79,625
Total	$	164,494	$	146,525

After-tax net gain (loss) associated with open FX cash flow hedging contracts recorded in the ending balance of AOCI and the net amount expected to be reclassed to earnings in the next 12 months:



	September 30, 2016			Net amount expected to be reclassed to earnings in next 12 months
Foreign currency exchange rate contracts	$	(3,003	)	$	(3,003	)
Interest rate swap contracts	180			38
Total	$	(2,823	)	$	(2,965	)

There were no FX or interest rate swap derivative contracts outstanding for the thirty-eight weeks ended October 18, 2015.

Gains (losses) posted to other comprehensive income (“OCI”) and the amount reclassified to earnings for derivative contracts designated as cash flow hedges is as follows (in thousands):



		Three Months Ended September 30, 2016					Nine Months Ended September 30, 2016
Description of derivative contract	Location in earnings of reclassified gain or loss	Gains (Losses) Recognized in OCI		Gains (Losses) Reclassified from OCI to Earnings:			Gains (Losses) Recognized in OCI			Gains (Losses)Reclassified from OCI to Earnings:
FX derivative contracts	Foreign Exchange and Other	$	2,535	$	2,795		$	(5,932	)	$	2,943
FX derivative contracts	SG&A	—		(1,876		)	—			(3,437		)
Interest rate swap contracts	Interest expense	263		(163		)	(38		)	(252		)
Total		$	2,798	$	756		$	(5,970	)	$	(746	)

The following tables present the fair value on a gross basis, and the location of, derivative contracts reported in the consolidated balance sheet (in thousands):



September 30, 2016	Asset Derivatives			Liability Derivatives
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value ₍₁₎		Balance Sheet Location	Fair Value ₍₁₎
Interest rate contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	1,065
Interest rate contracts	Other assets (long term)	—		Other long-term liabilities	1,929
Foreign currency exchange rate contracts	Prepaid expenses and other current assets	—		Accrued liabilities	3,943
Total derivatives designated as hedging instruments		—			6,937
Derivatives not designated as hedging instruments
Foreign currency exchange rate contracts	Prepaid expenses and other current assets	1,249		Accrued liabilities	1,259
Total derivatives not designated as hedging instruments		1,249			1,259
Total derivatives		$	1,249		$	8,196

December 31, 2015

Asset Derivatives

Liability Derivatives

Derivatives designated as hedging instruments

Balance Sheet Location

Fair Value ₍₁₎

Balance Sheet Location

Fair Value ₍₁₎

Interest rate contracts

Prepaid expenses and other current assets

—

Accrued liabilities

1,083

Interest rate contracts

Other assets (long term)

—

Other long-term liabilities

1,793

Foreign currency exchange rate contracts

Prepaid expenses and other current assets

839

Accrued liabilities

—

Total derivatives designated as hedging instruments

839

2,876