Note 13 - Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

1

3

. Fair Value Measurements

The fair value accounting guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following

three

categories:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Level

1

assets being measured at fair value on a recurring basis as of

December 

31,

2019

included our short-term investment mutual fund account.

We had

no

Level

2

assets being measured at fair value on a recurring basis as of

December 

31,

2019.

As discussed in Notes

1

and

2,

several of our acquisition-related assets and liabilities have been measured using Level

3

techniques. During

2019,

we recorded contingent liabilities associated with our acquisition of the CardioCel and VascuCel patch business from Admedus. The agreement includes the potential for us to pay up to

$7.8

million of additional consideration beyond payments made to date, with

$0.3

million contingent upon the delivery of audited financial statement of the acquired business to us;

$2.0

million contingent on LeMaitre Vascular’s success in obtaining CE marks on the acquired products,

$0.5

million contingent upon Admedus’ success in extending the shelf life of the acquired products as specified in the agreement, and another

$5.0

million contingent on the achievement of specified levels of revenues in the

first

12

and

24

months following the acquisition date. This additional contingent consideration was initially valued in total at

$2.0

million and will being re-measured each reporting period until the payment requirement ends, with any adjustments reported in income from operations. The following table provides a rollforward of the fair value of these liabilities, as determined by Level

3

unobservable inputs including management’s forecast of future revenues for the acquired business, as well as, management’s estimates of the likelihood of Obtaining CE marks on the acquired products, as well as of Admedus’ ability to extend the shelf life of the acquired products. The contingent payment related to the delivery of audited financial statements of the business was paid in

November 2019

upon satisfaction of the deliverable.

	Year ended December 31,
	2019			2018			2017
	(in thousands)
Beginning balance	$	72		$	1,300		$	1,320
Additions		1,989			-			-
Payments		(309	)		(1,199	)		(126	)
Change in fair value included in earnings		12			(29	)		106
Ending balance	$	1,764		$	72		$	1,300