Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form

-Q and Article

of Regulation S-

Accordingly, they do

not

include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation of the results of these interim periods have been included. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results

may

differ from these estimates. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are updated as appropriate. The results for the

nine

months ended

September 30, 2019

are

not

necessarily indicative of results to be expected for the entire year. The information contained in these interim financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended

December

31,

2018,

including the notes thereto, included in our Form

-K filed with the Securities and Exchange Commission (SEC) on

March

11,

2019.

Consolidation, Policy [Policy Text Block]

Consolidation

Our consolidated financial statements include the accounts of LeMaitre Vascular and the accounts of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Our revenue is derived primarily from the sale of disposable or implantable devices used during vascular surgery. We sell primarily directly to hospitals and to a lesser extent to distributors, as described below, and, during the periods presented in our consolidated financial statements, entered into consigned inventory arrangements with either hospitals or distributors on a limited basis. With the acquisition of the RestoreFlow allograft business, we also derive revenues from the processing and cryopreservation of human tissues for implantation in patients. These revenues are recognized when services have been provided and the tissue has been shipped to the customer, provided all other revenue recognition criteria discussed in the succeeding paragraph have been met.

We recognize revenue under the provisions of ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

)

. The core principle of Topic

606

is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard explains that to achieve the core principle, an entity should take the following actions:

Step

Identify the contract with a customer

Step

Identify the performance obligations in the contract

Step

Determine the transaction price

Step

Allocate the transaction price

Step

Recognize revenue when or as the entity satisfies a performance obligation

Revenue is recognized when or as a company satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). In instances in which shipping and handling activities are performed after a customer takes control of the goods (such as when title passes upon shipment from our dock), we have made the policy election allowed under Topic

606

to account for these activities as fulfillment costs and

not

as performance obligations.

We generally reference customer purchase orders to determine the existence of a contract. Orders that are

not

accompanied by a purchase order are confirmed with the customer either in writing or verbally. The purchase orders or similar correspondence, once accepted, identify the performance obligations as well as the transaction price, and otherwise outline the rights and obligations of each party. We allocate the transaction price of each contract among the performance obligations in accordance with the pricing of each item specified on the purchase order, which is in turn based on standalone selling prices per our published price lists. In cases where we discount products or provide certain items free of charge, we allocate the discount proportionately to all performance obligations, unless it can be demonstrated that the discount should be allocated entirely to

one

or more, but

not

all, of the performance obligations.

We recognize revenue, net of allowances for returns and discounts, fees paid to group purchasing organizations, and any sales and value added taxes required to be invoiced, which we have elected to exclude from the measurement of the transaction price as allowed by the standard, at the time of shipment (taking into consideration contractual shipping terms), or in the case of consigned inventory, when it is consumed. Shipment is the point at which control of the product and title passes to our customers, and at which LeMaitre Vascular has a present right to receive payment for the goods.

Below is a disaggregation of our revenue by major geographic area, which is among the primary categorizations used by management in evaluating financial performance, for the periods indicated (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	($ in thousands)				($ in thousands)

Americas	$	17,698	$	14,941	$	51,584	$	46,885
Europe, Middle East and Africa		9,452		7,857		29,479		25,685
Asia/Pacific Rim		1,950		1,366		5,999		4,609
Total	$	29,100	$	24,164	$	87,062	$	77,179

Except as discussed in Note

we do

not

carry any contract assets or contract liabilities, as there are generally

unbilled amounts due from customers under contracts for which we have partially satisfied performance obligations, or amounts received from customers for which we have

not

satisfied performance obligations. We satisfy our performance obligations under revenue contracts within a very short time period from receipt of the orders, and payments from customers are typically received within

days of fulfillment of the orders, except in certain geographies such as Spain and Italy where the payment cycle is customarily longer. Accordingly, there is

significant financing component to our revenue contracts. Additionally, we have elected as a policy that incremental costs (such as commissions) incurred to obtain contracts are expensed as incurred, due to the short-term nature of the contracts.

Customers returning products

may

be entitled to full or partial credit based on the condition and timing of the return. To be accepted, a returned product must be unopened (if sterile), unadulterated, and undamaged, must have at least

months remaining prior to its expiration date, or

twelve

months for our hospital customers in Europe, and generally be returned within

days of shipment. These return policies apply to sales to both hospitals and distributors. The amount of products returned to us, either for exchange or credit, has

not

been material. Nevertheless, we provide for an allowance for future sales returns based on historical returns experience, which requires judgment. Our cost of replacing defective products has

not

been material and is accounted for at the time of replacement.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

January 1, 2019

we adopted the provisions of ASU

No.

2016

02,

Leases (Topic

842

subsequently amended by ASU

2018

11,

Leases (Topic

842

): Targeted Improvements

. Under the new guidance, we are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. As allowed by the standard, we elected to use the transition option

not

to apply the new lease standard to comparative periods but instead to recognize a cumulative-effect adjustment to retained earnings as of the date of adoption,

January 1, 2019.

Upon adoption of this standard, we recognized lease liabilities of

$7.0

million and right-of-use assets in the amount of

$6.5

million (net of the reversal of a previously recorded deferred rent liability of

$0.5

million). There was

cumulative-effect adjustment to retained earnings required. Additional disclosures required under the new standard are included in Note

to these financial statements.

August 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU)

2018

15,

Intangibles—Goodwill and Other—Internal-Use Software (Subtopic

350

)

, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard is effective for us beginning

January

2020,

with early adoption permitted. The adoption of this standard is

not

expected to have a material impact on our financial statements.

August 2018,

the FASB issued ASU

2018

Fair Value Measurement (Topic

820

), which modifies the disclosure requirements for fair value measurements. The new standard is effective for us beginning

January

2020,

with early adoption permitted. The adoption of this standard is

not

expected to have a material impact on our financial statements.

January 2017,

the FASB issued ASU

2017

04,

which, among other provisions, eliminates “step

2”

from the goodwill impairment test. The annual, or interim, goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. The new standard is effective for us beginning

January

2020,

with early adoption permitted. The adoption of this standard is

not

expected to have a material impact on our financial statements.

June 2016,

the FASB issued ASU

No.

2016

13,

Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments (“ASU

2016

13”

), which modifies the measurement of expected credit losses of certain financial instruments, including accounts receivable. The new standard is effective for us beginning

January

2020,

with early adoption permitted. The adoption of this standard is

not

expected to have a material impact on our financial statements.