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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2017	Aug. 07, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
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		48,181,815
Trading Symbol	LIVN

Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Net sales	$ 321,387	$ 321,047	$ 606,492	$ 608,016
Cost of sales	108,888	130,654	210,351	254,221
Product remediation	1,723	848	931	1,554
Gross profit	210,776	189,545	395,210	352,241
Operating expenses:
Selling, general and administrative	120,369	120,645	232,766	236,511
Research and development	43,007	30,211	72,658	61,901
Merger and integration expenses	3,522	6,200	5,730	12,961
Restructuring expenses	1,118	4,246	11,268	32,838
Amortization of intangibles	11,681	6,292	23,095	22,184
Total operating expenses	179,697	167,594	345,517	366,395
Income (loss) from operations	31,079	21,951	49,693	(14,154)
Interest income	252	321	525	534
Interest expense	(1,578)	(1,978)	(3,893)	(3,170)
Gain on acquisition of Caisson Interventional, LLC	39,428	0	39,428	0
Foreign exchange and other (losses) gains	(2,973)	617	466	(1,218)
Income (loss) before income taxes	66,208	20,911	86,219	(18,008)
Income tax expense	3,313	8,418	8,968	7,160
Losses from equity method investments	(15,397)	(3,536)	(18,482)	(6,253)
Net income (loss)	$ 47,498	$ 8,957	$ 58,769	$ (31,421)
Basic income (loss) per share (in Dollars per Share)	$ 0.99	$ 0.18	$ 1.22	$ (0.64)
Diluted income (loss) per share (in Dollars per Share)	$ 0.98	$ 0.18	$ 1.22	$ (0.64)
Shares used in computing basic income (loss) per share (in Shares)	48,140	49,056	48,104	48,987
Shares used in computing diluted income (loss) per share (in Shares)	48,303	49,162	48,241	48,987

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 47,498	$ 8,957	$ 58,769	$ (31,421)
Other comprehensive income (loss):
Net change in unrealized loss on derivatives	(1,310)	(3,501)	(3,943)	(7,266)
Tax effect	559	1,800	1,283	2,186
Net of tax	(751)	(1,701)	(2,660)	(5,080)
Foreign currency translation adjustment, net of tax	56,587	(14,098)	72,017	34,403
Total other comprehensive income (loss)	55,836	(15,799)	69,357	29,323
Total comprehensive income (loss)	$ 103,334	$ (6,842)	$ 128,126	$ (2,098)

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 42,690	$ 39,789
Accounts receivable, net	305,355	275,730
Inventories	204,680	183,489
Prepaid and refundable taxes	55,584	60,615
Assets held for sale	13,859	4,477
Prepaid expenses and other current assets	49,213	55,973
Total Current Assets	671,381	620,073
Property, plant and equipment, net	211,164	223,842
Goodwill	763,525	691,712
Intangible assets, net	713,176	609,197
Investments	41,013	61,092
Deferred tax assets, net	11,981	6,017
Other assets	121,445	130,698
Total Assets	2,533,685	2,342,631
Current Liabilities:
Current debt obligations	55,776	47,650
Accounts payable	105,109	92,952
Accrued liabilities and other	90,046	75,567
Taxes payable	22,654	22,340
Accrued employee compensation and related benefits	68,863	78,302
Total Current Liabilities	342,448	316,811
Long-term debt obligations	69,741	75,215
Deferred income taxes liability	169,208	172,541
Long-term employee compensation and related benefits	33,102	31,668
Other long-term liabilities	75,666	39,487
Total Liabilities	690,165	635,722
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Ordinary Shares, £1.00 par value: unlimited shares authorized; 48,215,885 shares issued and 48,163,627 shares outstanding at June 30, 2017; 48,156,690 shares issued and 48,028,413 shares outstanding at December 31, 2016	74,652	74,578
Additional paid-in capital	1,726,235	1,719,893
Accumulated other comprehensive income (loss)	870	(68,487)
Retained earnings (deficit)	44,194	(14,575)
Treasury stock at cost, 52,258 shares at June 30, 2017 and 128,277 shares at December 31, 2016	(2,431)	(4,500)
Total Stockholders’ Equity	1,843,520	1,706,909
Total Liabilities and Stockholders’ Equity	$ 2,533,685	$ 2,342,631

Condensed Consolidated Balance Sheets (Parenthetical) - £ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Ordinary shares, par value (in Pounds per Share)	£ 1	£ 1
Ordinary shares issued (shares)	48,215,885	48,156,690
Ordinary shares outstanding (shares)	48,163,627	48,028,413
Treasury stock (shares)	52,258	128,277

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2015		$ (54,228)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (31,421)
Other comprehensive income	29,323
Ending Balance at Jun. 30, 2016		(24,905)
Beginning Balance at Dec. 31, 2016	$ 1,706,909	(68,487)
Balance (shares) at Dec. 31, 2016	48,156,690
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 58,769
Other comprehensive income	69,357
Ending Balance at Jun. 30, 2017	$ 1,843,520	$ 870
Balance (shares) at Jun. 30, 2017	48,215,885

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating Activities:
Net income (loss)	$ 58,769	$ (31,421)
Non-cash items included in net income (loss):
Depreciation	17,998	19,483
Amortization	23,095	22,184
Stock-based compensation	8,564	10,807
Deferred income tax benefit	(19,791)	(12,845)
Losses from equity method investments	18,482	6,253
Gain on acquisition of Caisson Interventional, LLC	(39,428)	0
Impairment of property, plant and equipment	4,581	0
Amortization of income taxes payable on inter-company transfers of property	17,770	8,656
Other	1,830	4,723
Changes in operating assets and liabilities:
Accounts receivable, net	(15,912)	(27,174)
Inventories	(6,927)	24,735
Other current and non-current assets	(13,904)	(14,998)
Restructuring reserve	(11,129)	16,803
Accounts payable and accrued current and non-current liabilities	(12,438)	(14,622)
Net cash provided by operating activities	31,560	12,584
Investing Activities:
Purchases of property, plant and equipment and other	(14,923)	(16,656)
Acquisition of Caisson Interventional, LLC, net of cash acquired	(14,194)	0
Proceeds from sale of cost method investment	3,192	0
Proceeds from asset sales	5,170	0
Purchases of short-term investments	0	(7,028)
Maturities of short-term investments	0	7,026
Other	(145)	609
Net cash used in investing activities	(20,900)	(16,049)
Financing Activities:
Change in short-term borrowing, net	(12,812)	(15,599)
Proceeds from short-term borrowing (maturities greater than 90 days)	20,000	0
Repayment of long-term debt obligations	(11,306)	(11,066)
Loans to cost and equity method investees	(6,834)	(3,775)
Repayment of trade receivable advances	0	(21,626)
Proceeds from exercise of stock options and SARs	2,442	4,722
Other	(1,691)	1,168
Net cash used in financing activities	(10,201)	(46,176)
Effect of exchange rate changes on cash and cash equivalents	2,442	914
Net increase (decrease) in cash and cash equivalents	2,901	(48,727)
Cash and cash equivalents at beginning of period	39,789	112,613
Cash and cash equivalents at end of period	$ 42,690	$ 63,886

Unaudited Condensed Consolidated Financial Statements	6 Months Ended
Unaudited Condensed Consolidated Financial Statements	Jun. 30, 2017
Accounting Policies [Abstract]
Unaudited Condensed Consolidated Financial Statements	Unaudited Condensed Consolidated Financial Statements Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three and six months ended, June 30, 2017 and June 30, 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, 2016 has been derived from audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2016, but does 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 six months ended June 30, 2017 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our Annual Report on Form 10-K for the year ended December 31, 2016. Description of the Mergers On October 19, 2015 LivaNova became the holding company of the combined businesses of Cyberonics, Inc. (“Cyberonics”) and Sorin S.p.A. (“Sorin”) (the “Mergers”). Based on the structure of the Mergers, management determined that Cyberonics was considered to be the accounting acquirer and predecessor for accounting purposes. Reclassification of Prior Year Comparative Period Presentation To conform the condensed consolidated statement of income (loss) for the three and six months ended June 30, 2016, to the current period presentation, we reclassified $0.8 million and $1.6 million, respectively, of Litigation Related Expenses to the Product Remediation line, and $0.5 million and $0.8 million, respectively, of Litigation Related Expenses to Selling, General and Administrative Expenses. To conform the condensed consolidated balance sheet as of December 31, 2016 to the current period presentation, we reclassified $4.5 million of Assets Held for Sale, relating to our plan to exit the Costa Rica manufacturing operation, to a separate line item in the condensed consolidated balance sheet from Prepaid Expenses and Other Current Assets. We received $4.9 million in proceeds from the sale of our Costa Rica manufacturing operation during the three months ended June 30, 2017. To conform the condensed consolidated statement of cash flows for the six months ended June 30, 2016 to the current period presentation, certain amounts were reclassified within Operating Activities. Significant Accounting Policies Our significant accounting policies are detailed in "Note 2: Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2016. A further explanation of our Foreign Currency accounting policy is discussed below: Foreign Currency Our functional currency is the U.S. dollar, however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar. We determine the functional currency of our subsidiaries that exist and operate in different economic and currency environments based on the primary economic environment in which the subsidiary operates, that is, the currency of the environment in which an entity primarily generates and expends cash. Our significant foreign subsidiaries are located in Europe and the U.S. The functional currency of our significant European subsidiaries is the euro and the functional currency of our significant U.S. subsidiaries is the U.S. dollar. Assets and liabilities for subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. dollars based on a combination of both current and historical exchange rates, while their revenues earned and expenses incurred are translated into U.S. dollars at average period exchange rates. Translation adjustments are included as in Accumulated Other Comprehensive Income (Loss) in the condensed consolidated balance sheets. Gains and losses arising from transactions denominated in a currency different from an entity’s functional currency are included in Foreign exchange and other gains (losses) in our condensed consolidated statements of income (loss).

Acquisitions

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Acquisitions

In support of our strategic growth initiatives, on May 2, 2017, we acquired the remaining 51% equity interests in Caisson Interventional, LLC (“Caisson”) for a purchase price of up to $72.0 million, net of $6.3 million of debt forgiveness, consisting of $18.0 million paid at closing, $14.4 million to be paid after 12 months, and contingent consideration of up to $39.6 million to be paid on a schedule driven primarily by regulatory approvals and sales earnouts.

Caisson, a clinical-stage medical device company based in Maple Grove, Minnesota, is focused on the design, development and clinical evaluation of a novel transcatheter mitral valve replacement (“TMVR”) implant device with a fully transvenous delivery system.

The following table presents the acquisition date fair-value of the consideration transferred and the fair value of our interest in Caisson prior to the acquisition (in thousands):



Cash ⁽¹⁾	$	15,660
Debt forgiven ⁽²⁾	6,309
Deferred consideration ⁽¹⁾	12,994
Contingent consideration ⁽¹⁾	29,303
Fair value of consideration transferred	64,266
Fair value of our interest prior to the acquisition ⁽²⁾	52,505
Fair value of total consideration	$	116,771

(1)

Concurrent with the acquisition, we recognized $5.8 million of post-combination compensation expense. Of this amount, $2.4 million is reflected as a reduction of $18.0 million in cash paid at closing of the acquisition, while $3.4 million increased the deferred consideration and contingent consideration liabilities recognized at the date of the acquisition to a total of $14.1 million and $31.7 million, respectively.


(2)	On the acquisition date, we remeasured the notes receivable from Caisson and our existing investment in Caisson at fair value and recognized a pre-tax non-cash gain of $1.3 million and $38.1 million, respectively, which are included in Gain on acquisition of Caisson Interventional, LLC in the condensed consolidated statements of income (loss).

The following table presents the preliminary purchase price allocation at fair value for the Caisson acquisition (in thousands):



Cash and cash equivalents	$	1,468
In-process research and development	89,000
Goodwill	42,417
Other assets	918
Current liabilities	1,023
Deferred income tax liabilities, net	16,009
Net assets acquired	$	116,771

Acquired goodwill of $9.6 million is expected to be deductible for tax purposes. Additionally, $3.0 million of the initial cash payment has been deposited in escrow for future claims indemnification. Of this amount, $2.0 million is included in Prepaid expenses and other current assets and the remaining $1.0 million is included in Other long-term assets on the condensed consolidated balance sheet at June 30, 2017.

We recognized acquisition-related expense of approximately $1.0 million for legal and valuation expenses during the three months ended June 30, 2017. These expenses are included within selling, general and administrative expenses in the condensed consolidated statements of income (loss). Additionally, the results of Caisson for the period of May 2, 2017 through June 30, 2017 added no revenue and $2.0 million in expenses in our condensed consolidated statement of income (loss) for the three and six months ended June 30, 2017.

The contingent consideration arrangements are composed of potential cash payments upon the achievement of certain regulatory milestones and a sales-based earnout associated with sales of products covered by the purchase agreement. The sales-based earnout was valued using projected sales from our internal strategic plans. Both arrangements are Level 3 fair value measurements and include the following significant unobservable inputs (in thousands):



	Fair value at May 2, 2017		Valuation Technique	Unobservable Input	Ranges
Regulatory milestone-based payments	$	14,883	Discounted cash flow	Discount rate	2.6% - 3.4%
				Probability of payment	90-95%
				Projected payment years	2018-2023

Sales-based earnout	16,805		Monte Carlo simulation	Discount rate	11.5-12.7%
				Sales volatility	36.9%
				Projected years of sales	2019-2033
	$	31,688

Restructuring

6 Months Ended

Jun. 30, 2017

Restructuring and Related Activities [Abstract]

Restructuring

Our 2015 and 2016 Reorganization Plans (the “Plans”) were initiated October 2015 and March 2016, respectively, in conjunction with the completion of the Mergers. We initiated these plans 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 our operating results in the condensed consolidated statements of income (loss). We estimate that the Plans will result in a net reduction of approximately 323 personnel of which 270 have occurred as of June 30, 2017.

In March 2017, we committed to a plan to sell our Suzhou Industrial Park facility in Shanghai, China. As a result of this exit plan we recorded an impairment of the building and equipment of $4.6 million and accrued $0.5 million of additional costs, primarily related to employee severance, during the six months ended June 30, 2017. In addition, the remaining carrying value of the land, building and equipment was reclassified to Assets Held for Sale in March 2017, with a balance of $13.9 million as of June 30, 2017, on the condensed consolidated balance sheet.

The following table presents restructuring expense accrual detail (in thousands):



	Employee severance and other termination costs			Other			Total
Balance at December 31, 2016	$	21,092		$	3,056		$	24,148
Charges	6,193			5,075			11,268
Cash payments and adjustments	(20,312		)	(5,457		)	(25,769		)
Balance at June 30, 2017	$	6,973		$	2,674		$	9,647

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Cardiac Surgery	$	501		$	751	$	6,503		$	4,962
Cardiac Rhythm Management	(1,479		)	855		(1,359		)	16,021
Neuromodulation	(185		)	1,973		499			4,136
Other	2,281			667		5,625			7,719
Total	$	1,118		$	4,246	$	11,268		$	32,838

Product Remediation Liability

6 Months Ended

Jun. 30, 2017

Environmental Remediation Obligations [Abstract]

Product Remediation Liability

At December 31, 2016, we recognized a liability for a product remediation plan related to our 3T Heater-Cooler device (“3T device”). The remediation plan we developed consists primarily of a modification of the 3T device design to include internal sealing and addition of a vacuum system to new and existing devices. These changes are intended to address regulatory actions and further reduce the risk of possible dispersion of aerosols from 3T devices in the operating room. The deployment of this solution for commercially distributed devices will occur upon final validation and verification of the design changes and approval or clearance by regulatory authorities worldwide, including FDA clearance in the United States (“U.S.”) In April 2017, we obtained CE Mark in Europe for the design change of the 3T device. As part of this plan, we also intend to perform a no-charge deep disinfection service for 3T device users who have reported confirmed M. chimaera mycobacterium contamination. Although the deep disinfection service is not yet available in the U.S., it is currently offered in many countries around the world and will be expanded to additional geographies as regulatory approvals are received. We are continuing with the loaner program for 3T devices, initiated in the fourth quarter of 2016, to provide existing 3T device users with a new loaner 3T device at no charge pending regulatory approval and implementation of the vacuum system addition and deep disinfection service worldwide. This loaner program began in the U.S. and is being progressively made available on a global basis, prioritizing and allocating devices to 3T device users based on pre-established criteria. Finally, in May 2017 we completed our first vacuum and sealing upgrade on a customer-owned device. As capacity of upgrade components increases, we anticipate expanding the vacuum and sealing upgrade program to as many countries as possible throughout the remainder of 2017.

Changes in the carrying amount of the product remediation liability are as follows (in thousands):



Balance at December 31, 2016	$	33,487
Adjustments	(15		)
Remediation activity	(3,076		)
Effect of changes in foreign currency exchange rates	1,579
Balance at June 30, 2017	$	31,975

It is reasonably possible that our estimate of the remediation liability could materially change in future periods due to the various significant assumptions involved such as customer behavior, market reaction and the timing of approvals or clearance by regulatory authorities worldwide. We recognize changes in estimates on a prospective basis. For further information, please refer to “Note 9. Commitments and Contingencies - 3T Heater-Cooler Devices.” At this stage, no liability has been recognized with respect to any lawsuits involving us related to the 3T device, while related legal costs are expensed as incurred.

Investments

6 Months Ended

Jun. 30, 2017

Investments [Abstract]

Investments

Cost-Method Investments

Our cost-method investments are included in Investments in the condensed consolidated balance sheets and consist of our equity positions in the following privately-held companies (in thousands):



	June 30, 2017		December 31, 2016
Respicardia Inc. ⁽¹⁾	$	20,046	$	17,518
ImThera Medical, Inc. ⁽²⁾	12,000		12,000
Rainbow Medical Ltd. ⁽³⁾	4,045		3,733
MD Start II	571		526
Other ⁽⁴⁾	145		—
	$	36,807	$	33,777

(1)

Respicardia Inc. (“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. During the six months ended June 30, 2017, we loaned Respicardia $1.4 million, which is included in Prepaid expenses and other current assets on the condensed consolidated balance sheet.


(2)	ImThera Medical Inc. (“ImThera”) is a privately funded U.S. company developing a neurostimulation device system for the treatment of obstructive sleep apnea. During the six months ended June 30, 2017, we loaned ImThera $1.0 million, which is included in Other assets on the condensed consolidated balance sheet.


(3)	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.


(4)	During the six months ended June 30, 2017, we sold our investment in Istituto Europeo di Oncologia S.R.L, for a gain of $3.2 million. This gain is included in Foreign exchange and other (losses) gains in the condensed consolidated statement of income (loss).

Equity Method Investments

Our equity-method investments consist of our equity position in the following entities (in thousands, except for percent ownership):



	% Ownership ⁽¹⁾		June 30, 2017		December 31, 2016
Caisson Interventional LLC ⁽²⁾			$	—	$	16,423
Highlife S.A.S. ⁽³⁾	38.0	%	883		6,009
MicroPort Sorin CRM (Shanghai) Co. Ltd.	49.0	%	3,306		4,867
Other			17		16
Total			$	4,206	$	27,315


(1)	Ownership percentages as of June 30, 2017.


(2)	On May 2, 2017, we acquired the 51% remaining equity interests in Caisson Interventional LLC (“Caisson”), and we began consolidating the results of Caisson as of the acquisition date. Refer to “Note 2. Acquisitions” and to “Note 6. Fair Value Measurements” for further information.

(3)

Highlife S.A.S is a privately held clinical-stage medical device company located in France and is focused on the development of a unique transcatheter mitral valve replacement system to treat patients with mitral regurgitation. During the three months ended June 30, 2017, we recognized an impairment of our investment in, and notes receivable from, Highlife, see the paragraph below for further details.

Highlife Impairment

We recognized an impairment of our equity-method investment in, and notes receivable from, Highlife S.A.S. (“Highlife”) during the three months ended June 30, 2017. Certain factors, including a revision in our investment strategy, indicated that the carrying value of our aggregate investment might not be recoverable and that the decrease in value of our aggregate investment was other than temporary. We, therefore, estimated the fair value of our investment and notes receivable using the market approach. The estimated fair value of our aggregate investment was below our carrying value by $13.0 million. This aggregate impairment was included in Losses from Equity Method Investments in the condensed consolidated statements of income (loss). The updated carrying value of our notes receivable from Highlife at June 30, 2017 was $0.8 million and is included in Other Assets on the condensed consolidated balance sheet.

Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Assets and Liabilities 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:
	June 30, 2017		Level 1		Level 2		Level 3
Assets:
Derivative assets - designated as cash flow hedges (FX)	$	1,813	$	—	$	1,813	$	—

Liabilities:
Derivative liabilities - designated as cash flow hedges (interest rate swaps)	$	1,899	$	—	$	1,899	$	—
Derivative liabilities - freestanding instruments (FX)	84		—		84		—
Contingent payments ⁽¹⁾	36,080		—		—		36,080
	$	38,063	$	—	$	1,983	$	36,080



	Fair Value as of		Fair Value Measurements Using Inputs Considered as:
	December 31, 2016		Level 1		Level 2		Level 3
Assets:
Derivative assets - designated as cash flow hedges (FX)	$	4,911	$	—	$	4,911	$	—
Derivative assets - freestanding instruments (FX)	3,358		—		3,358		—
	$	8,269	$	—	$	8,269	$	—

Liabilities:
Derivative liabilities - designated as cash flow hedges (FX)	$	942	$	—	$	942	$	—
Derivative Liabilities - designated as cash flow hedges (interest rate swaps)	1,392		—		1,392		—
Contingent payments ⁽¹⁾	3,890		—		—		3,890
	$	6,224	$	—	$	2,334	$	3,890


(1)	These contingent payments arose as a result of acquisitions, refer to “Note 15. Supplemental Financial Information - Other Long-Term Liabilities” for further information.

- 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

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Financing Arrangements

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



	June 30, 2017		December 31, 2016		Maturity	Interest Rate
European Investment Bank ⁽¹⁾	$	76,072	$	78,987	June 2021	0.95	%
Banca del Mezzogiorno ⁽²⁾	6,283		6,747		December 2019	0.50% - 3.15%
Mediocredito Italiano ⁽³⁾	7,404		7,276		December 2023	0.50% - 3.07%
Bpifrance (ex-Oséo)	1,724		1,909		October 2019	2.58	%
Region Wallonne	804		798		December 2023 and June 2033	0.00% - 2.42%
Mediocredito Italiano - mortgages and other	803		799		September 2021 and September 2026	0.40% - 0.65%
Total debt	93,090		96,516
Less current portion of long-term debt	23,349		21,301
Total long-term debt	$	69,741	$	75,215


(1)	The European Investment Bank (“EIB”) loan was obtained in July 2014 to support product development projects. The interest rate for the EIB loan is reset by the lender each quarter based on the Euribor. Interest payments are paid quarterly and principal payments are paid semi-annually.


(2)	The Banca del Mezzogiorno loan was obtained in January 2015 to support R&D projects as a part of the Large Strategic Project program of the Italian Ministry of Education.


(3)	We obtained the Mediocredito Italiano Bank loan in July 2016 as part of the Fondo Innovazione Teconologica program implemented by the Italian Ministry of Education.

Revolving Credit

The outstanding principal amount of our short-term unsecured revolving credit agreements and other agreements with various banks was $32.4 million and $26.4 million, at June 30, 2017 and December 31, 2016, respectively, with interest rates ranging from 0.2% to 12.6% and loan terms ranging from one day to 365 days.

European Investment Bank Financing Agreement

On June 29, 2017, we entered into a new finance contract (the “Finance Contract”) with the EIB to support financing of certain of our R&D projects. The Finance Contract has a borrowing base of €100 million (or approximately $114 million USD equivalent) and can be drawn in up to two tranches, each in a minimum amount of €50 million (or approximately $57 million USD equivalent). Drawdowns must occur by December 30, 2018, and the last repayment date of any tranche will be no earlier than four years and no later than eight years after the disbursement of the relevant tranche. Loans under the Finance Contract are subject to certain covenants and other terms and conditions. No loan drawdowns have occurred as of June 30, 2017.

Derivatives and Risk Management

6 Months Ended

Jun. 30, 2017

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”) derivative contracts and interest rate swap contracts to reduce the impact of foreign currency rate and interest rate fluctuations on earnings 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. At inception of the contract, the derivative is designated as either a freestanding derivative or a hedge. Derivatives that are not designated as hedging instruments are referred to as freestanding derivatives with changes in fair value included in earnings.

If the derivative qualifies for hedge accounting, depending on the nature of the hedge and hedge effectiveness, changes in the fair value of the derivative will either be recognized immediately in earnings or recorded in other Accumulated Other Comprehensive Income (loss) (“AOCI”) until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to the consolidated statement of income (loss) as shown in the tables below and interest rate swaps gains and losses in AOCI are reclassified to interest expense in the consolidated statement of income (loss). We evaluate hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be highly effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. Cash flows from derivative contracts are reported as operating activities in the condensed consolidated statements of cash flows.

Freestanding Derivative FX Contracts

The gross notional amount of freestanding derivatives outstanding at June 30, 2017 and December 31, 2016 was $240.5 million and $489.1 million, respectively. These derivative contracts are designed to offset the FX effects in earnings of various intercompany loans, our European Investment Bank loan, and trade receivables. We recorded net losses for these freestanding derivatives of $5.4 million and $7.2 million for the three and six months ended June 30, 2017, respectively, and net gains of $6.1 million and $2.2 million for the three and six months ended June 30, 2016, respectively. These gains and losses are included in Foreign Exchange and Other (Losses) Gains in the condensed consolidated statements of income (loss).

Cash Flow Hedges

Notional amounts of open derivative contracts designated as cash flow hedges (in thousands):



Description of contract:	June 30, 2017		December 31, 2016
FX derivative contracts to be exchanged for British Pounds	$	19,268	$	6,663
FX derivative contracts to be exchanged for Japanese Yen	58,902		57,840
FX derivative contracts to be exchanged for Canadian Dollars	15,868		—
Interest rate swap contracts	60,907		63,246
	$	154,945	$	127,749

After-tax net gain associated with derivatives designated as cash flow hedges recorded in the ending balance of Accumulated Other Comprehensive Income and the amount expected to be reclassified to earnings in the next 12 months (in thousands):



Description of contract:	June 30, 2017		Net amount expected to be reclassified to earnings in the next 12 months
FX derivative contracts	$	613	$	613
Interest rate swap contracts	346		87
	$	959	$	700

Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in Other Comprehensive Income (Loss) (“OCI”) and the amount reclassified to earnings from Accumulated Other Comprehensive Income (Loss) (“AOCI”) (in thousands):



		Three Months Ended June 30,
		2017						2016
Description of derivative contract	Location in earnings of reclassified gain or loss	Losses Recognized in OCI			(Losses) Gains Reclassified from AOCI to Earnings:			(Losses) Gains Recognized in OCI			Losses Reclassified from AOCI to Earnings:
FX derivative contracts	Foreign Exchange and Other (Losses) Gains	$	(755	)	$	(532	)	$	(4,887	)	$	(42	)
FX derivative contracts	SG&A	—			544			—			(1,270		)
Interest rate swap contracts	Interest expense	—			543			18			(56		)
		$	(755	)	$	555		$	(4,869	)	$	(1,368	)



		Six Months Ended June 30,
		2017						2016
Description of derivative contract	Location in earnings of reclassified gain or loss	Losses Recognized in OCI			(Losses) Gains Reclassified from AOCI to Earnings:			Losses Recognized in OCI			Gains (Losses)Reclassified from AOCI to Earnings:
FX derivative contracts	Foreign Exchange and Other (Losses) Gains	$	(7,587	)	$	(5,210	)	$	(8,467	)	$	148
FX derivative contracts	SG&A	—			1,354			—			(1,561		)
Interest rate swap contracts	Interest expense	—			212			(301		)	(89		)
		$	(7,587	)	$	(3,644	)	$	(8,768	)	$	(1,502	)

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



June 30, 2017	Asset Derivatives			Liability Derivatives
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value ₍₁₎		Balance Sheet Location	Fair Value ₍₁₎
Interest rate swap contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	897
Interest rate swap contracts	Other assets	—		Other long-term liabilities	1,002
FX derivative contracts	Prepaid expenses and other current assets	1,813		Accrued liabilities	—
Total derivatives designated as hedging instruments		1,813			1,899
Derivatives not designated as hedging instruments
FX derivative contracts	Prepaid expenses and other current assets	—		Accrued liabilities	84
Total derivatives not designated as hedging instruments		—			84
		$	1,813		$	1,983



December 31, 2016	Asset Derivatives			Liability Derivatives
Derivatives designated as hedging instruments	Balance Sheet Location	Fair Value ₍₁₎		Balance Sheet Location	Fair Value ₍₁₎
Interest rate swap contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	942
Interest rate swap contracts	Other assets	—		Other long-term liabilities	1,392
FX derivative contracts	Prepaid expenses and other current assets	4,911		Accrued liabilities	—
Total derivatives designated as hedging instruments		4,911			2,334
Derivatives not designated as hedging instruments
FX derivative contracts	Prepaid expenses and other current assets	3,358		Accrued liabilities	—
Total derivatives not designated as hedging instruments		3,358			—
		$	8,269		$	2,334


(1)	For the classification of input used to evaluate the fair value of our derivatives, refer to “Note 6. Fair Value Measurements.”

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies 3T Heater-Cooler Devices FDA Warning Letter. On December 29, 2015, the FDA issued LivaNova a Warning Letter (the “Warning Letter”) alleging certain violations of FDA regulations applicable to medical device manufacturers at our Munich, Germany and Arvada, Colorado facilities. The FDA inspected the Munich facility from August 24, 2015 to August 27, 2015 and the Arvada facility from August 24, 2015 to September 1, 2015. On August 27, 2015, the FDA issued a Form 483 identifying two observed non-conformities with certain regulatory requirements at the Munich facility. We did not receive a Form 483 in connection with the FDA’s inspection of the Arvada facility. Following the receipt of the Form 483, we provided written responses to the FDA describing corrective and preventive actions that were underway or to be taken to address the FDA’s observations at the Munich facility. The Warning Letter responded in part to our responses and identified other alleged violations not previously included in the Form 483. The Warning Letter further stated that our 3T devices and other devices we manufactured at our Munich facility are subject to refusal of admission into the U.S. until resolution of the issues set forth by the FDA in the Warning Letter. The FDA has informed us that the import alert is limited to the 3T devices, but that the agency reserves the right to expand the scope of the import alert if future circumstances warrant such action. The Warning Letter did not request that existing users cease using the 3T device, and manufacturing and shipment of all of our products other than the 3T device remain unaffected by the import limitation. To help clarify these issues for current customers, we issued an informational Customer Letter in January 2016, and that same month agreed with the FDA on a process for shipping 3T devices to existing U.S. users pursuant to a certificate of medical necessity program. Lastly, the Warning Letter stated that premarket approval applications for Class III devices to which certain Quality System regulation deviations identified in the Warning Letter are reasonably related will not be approved until the violations have been corrected. However, this restriction applies only to the Munich and Arvada facilities, which do not manufacture or design devices subject to Class III premarket approval. We continue to work diligently to remediate the FDA’s inspectional observations for the Munich facility, as well as the additional issues identified in the Warning Letter. We take these matters seriously and intend to respond timely and fully to the FDA’s requests. CDC and FDA Safety Communications and Company Field Safety Notice Update On October 13, 2016 the Centers for Disease Control and Prevention (“CDC”) and FDA separately released safety notifications regarding the 3T devices. The CDC’s Morbidity and Mortality Weekly Report (“MMWR”) and Health Advisory Notice (“HAN”) reported that tests conducted by CDC and its affiliates indicate that there appears to be genetic similarity between both patient and 3T device strains of the non-tuberculous mycobacterium (“NTM”) bacteria M. chimaera isolated in hospitals in Iowa and Pennsylvania. Citing the geographic separation between the two hospitals referenced in the investigation, the report asserts that 3T devices manufactured prior to August 18, 2014 could have been contaminated during the manufacturing process. The CDC’s HAN and FDA’s Safety Communication, issued contemporaneously with the MMWR report, each assess certain risks associated with 3T devices and provide guidance for providers and patients. The CDC notification states that the decision to use the 3T device during a surgical operation is to be taken by the surgeon based on a risk approach and on patient need. Both the CDC’s and FDA’s communications confirm that 3T devices are critical medical devices and enable doctors to perform life-saving cardiac surgery procedures. Also on October 13, 2016, we issued a Field Safety Notice Update for U.S. users of 3T devices to proactively and voluntarily contact facilities to aid in implementation of the CDC and FDA recommendations. In the fourth quarter of 2016, we initiated a program to provide existing 3T device users with a new loaner 3T device at no charge pending regulatory approval and implementation of additional risk mitigation strategies worldwide. This loaner program began in the U.S. and is being progressively made available on a global basis, prioritizing and allocating devices to 3T device users based on pre-established criteria. We anticipate that this program will continue until we are able to address customer needs through a broader solution that includes implementation of one or more of the risk mitigation strategies currently under review with regulatory agencies. At December 31, 2016, we recognized a liability for our product remediation plan related to our 3T device. We concluded that it was probable that a liability had been incurred upon management’s approval of the plan and the commitments made by management to various regulatory authorities globally in November and December 2016, and furthermore, the cost associated with the plan was reasonably estimable. At June 30, 2017, the product remediation liability was $32.0 million. Refer to “Note 4. Product Remediation Liability” for additional information. Litigation On February 12, 2016, LivaNova was alerted that a class action complaint had been filed in the U.S. District Court for the Middle District of Pennsylvania with respect to our 3T devices, naming as evidence, in part, the Warning Letter issued by the FDA in December 2015. The named plaintiffs to the complaint underwent open heart surgeries at WellSpan York Hospital and Penn State Milton S. Hershey Medical Center in 2015, and the complaint alleges that: (i) patients were exposed to a harmful form of bacteria, known as nontuberculous mycobacterium (“NTM”), from our 3T devices; and (ii) we knew or should have known that design or manufacturing defects in 3T devices can lead to NTM bacterial colonization, regardless of the cleaning and disinfection procedures used (and recommended by us). Named plaintiffs seek to certify a class of plaintiffs consisting of all Pennsylvania residents who underwent open heart surgery at WellSpan York Hospital and Penn State Milton S. Hershey Medical Center between 2011 and 2015 and who are currently asymptomatic for NTM infection (approximately 3,600 patients). The putative class action, which has not been certified, seeks: (i) declaratory relief finding the 3T devices are defective and unsafe for intended uses; (ii) medical monitoring; (iii) general damages; and (iv) attorneys’ fees. On March 21, 2016, the plaintiffs filed a First Amended Complaint adding Sorin Group Deutschland GmbH and Sorin Group USA, Inc., wholly-owned subsidiaries of LivaNova PLC, as defendants. On September 29, 2016 the Court dismissed LivaNova PLC from the case, and on October 11, 2016, the Court denied our motion to dismiss Sorin Group Deutschland GmbH and Sorin Group USA, Inc. from the lawsuit. In addition to the case addressed in the preceding section, we have received additional lawsuits in the U.S. and Canada related to surgical cases in which a 3T device was allegedly used. Approximately 50 additional lawsuits have been filed against us in state and federal courts in the U.S. and three cases have been filed in Canada. We intend to defend each of these claims vigorously. Given the relatively early stage of each of these matters, we cannot give any assurances that additional legal proceedings making the same or similar allegations will not be filed against us or one of our subsidiaries, nor that the resolution of these complaints or other related litigation in connection therewith will not have a material adverse effect on our business, results of operations, financial condition and/or liquidity. We have not recognized an expense related to damages in connection with this matter because any potential loss is not currently probable or reasonably estimable. In addition we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. Other Litigation SNIA Litigation Sorin was created as a result of a spin-off (the “Sorin spin-off”) from SNIA S.p.A. (“SNIA”). The Sorin spin-off, which spun off SNIA’s medical technology division, became effective on January 2, 2004. Pursuant to the Italian Civil Code, in a spin-off transaction, the parent and the spun-off company can be held jointly liable up to the actual value of the shareholders’ equity conveyed or received (we estimate that the value of the shareholders’ equity received was approximately €573 million (approximately $654 million USD equivalent) for certain indebtedness or liabilities of the pre-spin-off company. We believe and have argued before the relevant fora that Sorin is not jointly liable with SNIA for its alleged SNIA debts and liabilities. Specifically, between 1906 and 2010, SNIA’s subsidiaries Caffaro Chimica S.r.l. and Caffaro S.r.l. and their predecessors (the “SNIA Subsidiaries”), conducted certain chemical operations (the “Caffaro Chemical Operations”), at sites in Torviscosa, Brescia and Colleferro, Italy (the “Caffaro Chemical Sites”). These activities allegedly resulted in substantial and widely dispersed contamination of soil, water and ground water. In connection with SNIA’s Italian insolvency proceedings, the Italian Ministry of the Environment and the Protection of Land and Sea (the “Italian Ministry of the Environment”), sought compensation from SNIA in an aggregate amount of €3.4 billion (approximately $3.9 billion USD equivalent) for remediation costs relating to the environmental damage at the Caffaro Chemical Sites. In September 2011, the Bankruptcy Court of Udine, and in July 2014, the Bankruptcy Court of Milan each held (in proceedings to which we are not parties) that the Italian Ministry of the Environment and other Italian government agencies (the “Public Administrations”) were not creditors of either SNIA Subsidiaries or SNIA in connection with their claims in the context of their Italian insolvency proceedings. In January 2016, the Court of Udine rejected the appeal brought by the Italian Public Administrations. The Public Administrations have appealed that second loss in pending proceedings before the Italian Supreme Court. The appeal by the Public Administrations before the Court of Milan remains pending. In January 2012, SNIA filed a civil action against Sorin in the Civil Court of Milan asserting joint liability of a parent and a spun-off company. SNIA’s civil action against Sorin also named the Public Administrations Italian Ministry of the Environment and other Italian government agencies, as defendants, in order to have them bound to the final ruling. On April 1, 2016 (the “Decision”) the Court of Milan dismissed all legal actions of SNIA and of the Public Administration against Sorin, further requiring the Public Administrations to pay Sorin €300,000 (or approximately $342,600 USD equivalent), as legal fees (of which SNIA is jointly liable for €50,000). On June 21, 2016, the Public Administrations filed an appeal against the Decision before the Court of Appeal of Milan. The first hearing of the appeal proceedings was held on December 20, 2016, and the final hearing is now scheduled for November 22, 2017. After such hearing, the parties will file their final briefs, and the Court is expected to render its decision in mid-2018. SNIA did not file an appeal. We (as successor to Sorin in the litigation) continue to believe that the risk of material loss relating to the SNIA litigation is not probable as a result of the reasoning contained in, and legal conclusions reached in, the recent court decisions described above. We also believe that the amount of potential losses relating to the SNIA litigation is, in any event, not estimable given that the underlying alleged damages, related remediation costs, allocation and apportionment of any such responsibility, which party is responsible, and various time periods involving different parties, all remain issues in dispute and that no final decision on a remediation plan has been approved. As a result, we have not made any accrual in connection with the SNIA litigation. Pursuant to European Union, United Kingdom and Italian cross-border merger regulations applicable to the Mergers, legacy Sorin liabilities, including any potential liabilities arising from the claims against Sorin relating to the SNIA litigation, are assumed by us as successor to Sorin. Although we believe the claims against Sorin in connection with the SNIA litigation are without merit and continue to contest them vigorously, there can be no assurance as to the outcome. A finding during any appeal or novel proceedings that we are liable for environmental damage at the Caffaro Chemical Sites or its alleged cause(s) could have a material adverse effect on our results of operations, financial condition and/or liquidity. Environmental Remediation Order On July 28, 2015, Sorin and other direct and indirect shareholders of SNIA received an administrative order from the Italian Ministry of the Environment (the “Remediation Order”), directing them to promptly commence environmental remediation efforts at the Caffaro Chemical Sites (as described above). We (as successor to Sorin) believe that we should not be liable for damages relating to the Caffaro Chemical Operations pursuant to the Italian statute on which the Remediation Order relies because, inter alia, the statute does not apply to activities occurring prior to 2006, the date on which the statute was enacted. (Sorin was spun off from SNIA in 2004). Additionally, we believe that Sorin should not be subject to the Remediation Order because Italian environmental regulations only permit such an order to be imposed on an “operator” of a remediation site, and Sorin never operated any activity of whatsoever nature at any of the industrial sites concerned and, further, was never identified in any legal proceeding as an operator at any of the Caffaro Chemical Sites and could not and in fact did not cause any environmental damage at any of the Caffaro Chemical Sites. Accordingly, we (as successor to Sorin) alongside other parties, challenged the Remediation Order before the Administrative Court of Lazio in Rome (the “TAR”). On March 21, 2016 the TAR annulled the Remediation Order based on the fact that (i) the Remediation Order lacks any detailed analysis of the causal link between the alleged damage and our activities, a pre-condition to imposition of the measures proposed in the Remediation Order, (ii) the situation of the Caffaro site does not require urgent safety measures, because no new pollution events have occurred and no additional information or evidence of a situation of contamination exists, and (iii) there was no proper legal basis for the Remediation Order, and in any event, the Ministry failed to verify the legal elements that could have led to a conclusion of legal responsibility of the recipients of the Remediation Order. The TAR decisions described above have been appealed by the Ministry before the Council of State. No information on the timing of the first hearing of this appeal is presently available. We have not recognized an expense in connection with this matter because any potential loss is not currently probable or reasonably estimable. In addition, we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. Opposition to Merger Proceedings On July 28, 2015, the Public Administrations filed an opposition proceeding to the proposed merger between Sorin and Cyberonics (the “Merger”), before the Commercial Courts of Milan, asking the Court to prohibit the execution of the Merger. In its initial decision on August 20, 2015, the Court authorized the Merger and the Public Administrations did not appeal this decision. The proceeding then continued as a civil case, with the Public Administration seeking damages against us. The Commercial Court of Milan delivered a first instance decision on October 6, 2016 fully rejecting the Public Administration’s request and awarding us €200,000 (approximately $228,000 USD equivalent) in damages for frivolous litigation, plus €200,000 (approximately $228,000 USD equivalent) in legal fees. The Public Administrations has appealed this decision to the Court of Appeal of Milan. The final hearing is scheduled on January 17, 2018. The Court of Appeal is likely to make a decision in mid-June 2018. We have not recognized an expense in connection with this matter because any potential loss is not currently probable or reasonably estimable. In addition, we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. Tax Litigation In a tax audit report received on October 30, 2009, the Regional Internal Revenue Office of Lombardy (the “Internal Revenue Office”) informed Sorin Group Italia S.r.l. that, among several issues, it was disallowing in part (for a total of €102.6 million (approximately $117.2 million USD equivalent), related to tax years 2002 through 2006) a tax-deductible write down of the investment in the U.S. company, Cobe Cardiovascular Inc., which Sorin Group Italia S.r.l. recognized in 2002 and deducted in five equal installments, beginning in 2002. In December 2009, the Internal Revenue Office issued notices of assessment for 2002, 2003 and 2004. The assessments for 2002 and 2003 were automatically voided for lack of merit. In December 2010 and October 2011, the Internal Revenue Office issued notices of assessment for 2005 and 2006, respectively. We challenged all three notices of assessment (for 2004, 2005 and 2006) before the relevant Provincial Tax Courts. The preliminary challenges filed for 2004, 2005 and 2006 were denied at the first jurisdictional level. We appealed these decisions. The appeal submitted against the first-level decision for 2004 was successful. The Internal Revenue Office appealed this second-level decision to the Italian Supreme Court (Corte di Cassazione) on February 3, 2017. The Italian Supreme Court’s decision is pending. The appeal submitted against the first-level decisions for 2005 and 2006 were rejected. We appealed these adverse decisions to the Italian Supreme Court, which is still pending. In November 2012, the Internal Revenue Office served a notice of assessment for 2007, and in July 2013, served a notice of assessment for 2008. In these matters the Internal Revenue Office claims an increase in taxable income due to a reduction (similar to the previous notices of assessment for 2004, 2005 and 2006) of the losses reported by Sorin Group Italia S.r.l. for the 2002, 2003 and 2004 tax periods, and subsequently utilized in 2007 and 2008. We challenged both notices of assessment. The Provincial Tax Court of Milano has stayed its decision for years 2007 and 2008 pending resolution of the litigation regarding years 2004, 2005, and 2006. The total amount of losses in dispute is €62.6 million (approximately $71.5 million USD equivalent). We have continuously reassessed our potential exposure in these matters, taking into account the recent, and generally adverse, trend to Italian taxpayers in this type of litigation. Although we believe that our defensive arguments are strong, noting the adverse trend in some of the court decisions, we have recognized a risk provision of €17.0 million (approximately $19.4 million USD equivalent). Other Matters Additionally, we are the subject of various pending or threatened legal actions and proceedings that arise in the ordinary course of our business. These matters are subject to many uncertainties and outcomes that are not predictable and that may not be known for extended periods of time. Since the outcome of these matters cannot be predicted with certainty, the costs associated with them could have a material adverse effect on our consolidated net income, financial position or cash flows.

Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Comprehensive income

The table below presents the change in each component of accumulated other comprehensive income (loss) (“AOCI”), net of tax, and the reclassifications out of AOCI into net earnings for the six months ended June 30, 2017 and June 30, 2016 (in thousands):



	Change in Unrealized Gain (Loss) on Derivatives			Foreign Currency Translation Adjustments Gain (Loss) ⁽¹⁾			Total
As of December 31, 2016	$	3,619		$	(72,106	)	$	(68,487	)
Other comprehensive (loss) income before reclassifications, before tax	(7,587		)	72,017			64,430
Tax benefit	1,821			—			1,821
Other comprehensive (loss) income before reclassifications, net of tax	(5,766		)	72,017			66,251
Reclassification of loss from accumulated other comprehensive income, before tax	3,644			—			3,644
Tax benefit	(538		)	—			(538		)
Reclassification of loss from accumulated other comprehensive income, after tax	3,106			—			3,106
Net current-period other comprehensive (loss) income, net of tax	(2,660		)	72,017			69,357
As of June 30, 2017	$	959		$	(89	)	$	870

As of December 31, 2015	$	888		$	(55,116	)	$	(54,228	)
Other comprehensive (loss) income before reclassifications, before tax	(8,768		)	34,403			25,635
Tax benefit	2,639			—			2,639
Other comprehensive (loss) income before reclassifications, net of tax	(6,129		)	34,403			28,274
Reclassification of loss from accumulated other comprehensive income, before tax	1,502			—			1,502
Tax benefit	(453		)	—			(453		)
Reclassification of loss from accumulated other comprehensive income, after tax	1,049			—			1,049
Net current-period other comprehensive (loss) income, net of tax	(5,080		)	34,403			29,323
As of June 30, 2016	$	(4,192	)	$	(20,713	)	$	(24,905	)


(1)	Taxes are not provided for foreign currency translation adjustments as translation adjustments are related to earnings that are intended to be reinvested in the countries where earned.

Stock-Based Incentive Plans

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Incentive Plans

Stock-based incentive plans compensation expense (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Service-based stock appreciation rights ("SARs")	$	1,866	$	2,009	$	3,466	$	4,584
Service-based restricted stock units ("RSUs")	2,289		2,393		4,493		5,904
Market-based performance restricted stock units	177		—		181		3
Operating performance-based restricted stock units	388		289		424		316
Total stock-based compensation expense	$	4,720	$	4,691	$	8,564	$	10,807

During the three months ended June 30, 2017, we executed stock-based compensatory grant agreements with contract terms agreed upon by us and the respective individuals, as approved by the Compensation Committee of our Board of Directors. Grants with service conditions vest ratably over four years subject to forfeiture unless service conditions are met. Market-based grants vest ratably over four years subject to forfeiture unless certain future prices of our shares on the NASDAQ Stock Market exceed certain threshold prices in the first year following the grant date. And finally, operating performance-based grants vest ratably over four years subject to forfeiture unless certain thresholds of adjusted net sales and adjusted net income are met for fiscal year 2017. Compensation expense related to grant agreements executed during the three months ended June 30, 2017 was $1.2 million.

Stock-based compensation agreements executed during the three months ended June 30, 2017, representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars):



	Three Months Ended June 30, 2017
	Shares	Weighted Average Grant Date Fair Value
Service-based SARs	639	$	17.03
Service-based RSUs	108	57.37
Market-based performance RSUs	158	25.29
Operating performance-based RSUs	189	56.18

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes During the three and six months ended June 30, 2017, we recorded consolidated income tax expense of $3.3 million and $9.0 million, respectively, with consolidated effective income tax rates of 5.0% and 10.4%, respectively. During the three and six months ended June 30, 2016, we recorded consolidated income tax expense of $8.4 million and $7.2 million, respectively, with consolidated effective income tax rates of 40.3% and (39.8)%, respectively. Our consolidated effective income tax rates for the three and six months ended June 30, 2017 include the impact of various discrete tax items, including the acquisition of Caisson and the $38.1 million non-taxable gain recognized to re-measure our existing equity investment in Caisson at fair value on the acquisition date. Additionally, we recognized a $3.9 million deferred tax benefit associated with certain temporary differences arising from the Mergers. Discrete tax items for the six months ended June 30, 2017 also include the recognition of a $3.0 million deferred tax asset related to a reserve for an uncertain tax position recognized in a prior year, in addition to various other discrete items. Our consolidated effective tax rate for the three and six months ended June 30, 2016 was impacted by $58.7 million of unbenefited net operating losses in certain tax jurisdictions, including France and the U.K.

Net Income (Loss) Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Income (Loss) Per Share

Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share, (in thousands, except per share data):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator:
Net income (loss)	$	47,498	$	8,957	$	58,769	$	(31,421	)

Denominator:
Basic weighted average shares outstanding	48,140		49,056		48,104		48,987
Add effects of share-based compensation instruments ⁽¹⁾	163		106		137		—
Diluted weighted average shares outstanding	48,303		49,162		48,241		48,987
Basic income (loss) per share	$	0.99	$	0.18	$	1.22	$	(0.64	)
Diluted income (loss) per share	$	0.98	$	0.18	$	1.22	$	(0.64	)

(1)

Excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2017 were approximately 1.8 million stock options, SARs and restricted share units outstanding as of June 30, 2017, because to include them would be anti-dilutive. Excluded from the computation of diluted earnings per share for the three months ended June 30, 2016 were approximately 1.5 million stock options, SARs and restricted share units outstanding as of June 30, 2016, because to include them would be anti-dilutive. Excluded from the computation of diluted earnings per share for the six months ended June 30, 2016, were approximately 131 thousand average outstanding stock options, SARs and restricted share units that would have been dilutive but were excluded due to the net loss.

Geographic and Segment Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Geographic and Segment Information

Segment Information

We identify operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources and assessing performance. We have three reportable segments: Cardiac Surgery, Neuromodulation, and Cardiac Rhythm Management.

The Cardiac Surgery segment generates its revenue from the development, production and sale of cardiovascular surgery products. Cardiac Surgery products include oxygenators, heart-lung machines, autotransfusion systems, mechanical heart valves and tissue heart valves.

The Neuromodulation segment generates its revenue from the design, development and marketing of neuromodulation therapy for the treatment of drug-resistant epilepsy and treatment resistant depression. Neuromodulation products include the VNS Therapy System, which consists of an implantable pulse generator, a lead that connects the generator to the vagus nerve, surgical equipment to assist with the implant procedure, equipment to enable the treating physician to set the pulse generator stimulation parameters for the patient, instruction manuals and magnets to suspend or induce stimulation manually.

The Cardiac Rhythm Management segment generates its revenue from the development, manufacturing and marketing of products for the diagnosis, treatment, and management of heart rhythm disorders and heart failure. Cardiac Rhythm Management products include high-voltage defibrillators, cardiac resynchronization therapy devices and low-voltage pacemakers.

“Other” includes Corporate shared services expenses for finance, legal, human resources and information technology and Corporate business development (“New Ventures”). New Ventures, which includes our recent Caisson acquisition, is focused on new growth platforms and identification of other opportunities for expansion.

Net sales of our reportable segments include end-customer revenues from the sale of products they each develop and manufacture or distribute. We define segment income as operating income before merger and integration, restructuring, and amortization of intangibles.

Net sales and income (loss) from operations by segment (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
Net Sales:	2017		2016		2017		2016
Cardiac Surgery	$	158,586	$	161,051	$	297,790	$	304,494
Neuromodulation	97,015		90,039		184,174		171,397
Cardiac Rhythm Management	65,544		69,558		123,824		131,289
Other	242		399		704		836
	$	321,387	$	321,047	$	606,492	$	608,016



	Three Months Ended June 30,						Six Months Ended June 30,
Income (Loss) from Operations:	2017			2016			2017			2016
Cardiac Surgery	$	23,665		$	9,020		$	39,683		$	11,406
Neuromodulation	51,747			47,240			93,425			87,822
Cardiac Rhythm Management	5,617			(335		)	8,109			(9,834		)
Other	(33,629		)	(17,236		)	(51,431		)	(35,565		)
Total Reportable Segments’ Income from Operations	47,400			38,689			89,786			53,829
Merger and integration expenses	3,522			6,200			5,730			12,961
Restructuring expenses	1,118			4,246			11,268			32,838
Amortization of intangibles	11,681			6,292			23,095			22,184
Income (Loss) from operations	$	31,079		$	21,951		$	49,693		$	(14,154	)

The following tables present our assets and capital expenditures by segment (in thousands):



Assets:	June 30, 2017		December 31, 2016
Cardiac Surgery	$	1,351,706	$	1,277,799
Neuromodulation	600,074		611,085
Cardiac Rhythm Management	345,464		341,998
Other	236,441		111,749
	$	2,533,685	$	2,342,631



	Three Months Ended June 30,				Six Months Ended June 30,
Capital expenditures:	2017		2016		2017		2016
Cardiac Surgery	$	3,957	$	4,820	$	7,751	$	10,309
Neuromodulation	517		1,906		1,978		3,821
Cardiac Rhythm Management	1,148		715		2,806		1,195
Other	1,185		258		2,388		1,331
	$	6,807	$	7,699	$	14,923	$	16,656

The changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2017 were as follows (in thousands):

Neuromodulation

Cardiac Surgery

Cardiac Rhythm Management

Other

Total

December 31, 2016