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Restatement of the Condensed Consolidated Financial Statements (Tables)

3 Months Ended

Mar. 31, 2013

Text Block [Abstract]

Adjustments to Previously Filed Consolidated Income Statements

The results of the adjustments to the Company’s previously filed consolidated statements of operations detailed above are summarized in the tables below. The tax effect of the adjustments is estimated based on the Company’s effective tax rate.

		Three Months Ended March 31, 2013
						Adjustments by Category
		Previously				Distributor				Inventory												Total
(U.S. Dollars, in thousands)		Reported				Revenue				Reserves				Royalties				Other				Adjustments				Restated
Net sales		$	100,254			$	2,963			$	—			$	—			$	156			$	3,119			$	103,373
Cost of sales			22,699				471				86				2,030				331				2,918				25,617
Gross profit			77,555				2,492				(86	)			(2,030	)			(175	)			201				77,756
Operating expenses
Sales and marketing			48,839				(2,073	)			—				(2,030	)			318				(3,785	)			45,054
General and administrative			18,788				—				—				—				(458	)			(458	)			18,330
Research and development			5,400				—				—				—				341				341				5,741
Amortization of intangibles assets			504				—				—				—				40				40				544
Charges related to U.S. Government resolutions			—				—				—				—				—				—				—
			73,531				(2,073	)			—				(2,030	)			241				(3,862	)			69,669
Operating income			4,024				4,565				(86	)			—				(416	)			4,063				8,087
Other income and (expense)			4,204				—				—				—				—				—				4,204
Income before income taxes			8,228				4,565				(86	)			—				(416	)			4,063				12,291
Income tax expense			(3,320	)			(1,529	)			29				—				139				(1,361	)			(4,681	)
Net income from continuing operations, net of tax		$	4,908			$	3,036			$	(57	)		$	—			$	(277	)		$	2,702			$	7,610

		Three Months Ended March 31, 2012
						Adjustments by Category
		Previously				Distributor				Inventory												Total
(U.S. Dollars, in thousands)		Reported				Revenue				Reserves				Royalties				Other				Adjustments				Restated
Net sales		$	116,042			$	(7,394	)		$	—			$	—			$	288			$	(7,106	)		$	108,936
Cost of sales			21,940				(1,471	)			(1,212	)			2,126				(5	)			(562	)			21,378
Gross profit			94,102				(5,923	)			1,212				(2,126	)			293				(6,544	)			87,558
Operating expenses
Sales and marketing			49,521				(417	)			—				(2,126	)			150				(2,393	)			47,128
General and administrative			14,570				—				—				—				—				—				14,570
Research and development			7,050				—				—				—				—				—				7,050
Amortization of intangibles assets			530				—				—				—				50				50				580
Charges related to U.S. Government resolutions			—				—				—				—				310				310				310
			71,671				(417	)			—				(2,126	)			510				(2,033	)			69,638
Operating income			22,431				(5,506	)			1,212				—				(217	)			(4,511	)			17,920
Other income and (expense)			(2,852	)			—				—				—				—				—				(2,852	)
Income before income taxes			19,579				(5,506	)			1,212				—				(217	)			(4,511	)			15,068
Income tax expense			(7,363	)			1,089				(240	)			—				43				892				(6,471	)
Net income from continuing operations, net of tax		$	12,216			$	(4,417	)		$	972			$	—			$	(174	)		$	(3,619	)		$	8,597

Effects of Restatement on Condensed Consolidated Balance Sheet

The effects of the restatement on the Company’s condensed consolidated balance sheet as of March 31, 2013 are as follows:

(Unaudited, U.S. Dollars, in thousands, except share data)		As of March 31, 2013
		Previously Reported				Adjustments				Restated
Assets
Current assets:
Cash and cash equivalents		$	33,675			$	—			$	33,675
Restricted cash			29,446				—				29,446
Trade accounts receivable, less allowances of $11,731			132,425				(35,919	)			96,506
Inventories			92,133				(7,442	)			84,691
Deferred income taxes			17,363				16,552				33,915
Prepaid expenses and other current assets			32,211				2,179				34,390
Total current assets			337,253				(24,630	)			312,623
Property, plant and equipment, net			52,402				1,717				54,119
Patents and other intangible assets, net			6,765				170				6,935
Goodwill			72,607				—				72,607
Deferred income taxes			20,200				(1,024	)			19,176
Other long-term assets			14,153				(3,855	)			10,298
Total assets		$	503,380			$	(27,622	)		$	475,758
Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable		$	14,230			$	757			$	14,987
Other current liabilities			51,295				(6,566	)			44,729
Total current liabilities			65,525				(5,809	)			59,716
Long-term debt			20,000				—				20,000
Deferred income taxes			11,460				765				12,225
Other long-term liabilities			4,227				6,198				10,425
Total liabilities			101,212				1,154				102,366
Contingencies (Note 17)
Shareholders’ equity:
Common shares $0.10 par value; 50,000,000 shares authorized; 19,453,294 issued and outstanding			1,945				—				1,945
Additional paid-in capital			250,186				195				250,381
Retained earnings			150,665				(31,318	)			119,347
Accumulated other comprehensive income			(628	)			2,347				1,719
Total shareholders’ equity			402,168				(28,776	)			373,392
Total liabilities and shareholders’ equity		$	503,380			$	(27,622	)		$	475,758

The effects of the restatement on the Company’s condensed consolidated balance sheet as of December 31, 2012 are as follows:

(Unaudited, U.S. Dollars, in thousands, except share data)		As of December 31, 2012
		Previously Reported				Adjustments				Restated
Assets
Current assets:
Cash and cash equivalents		$	31,055			$	—			$	31,055
Restricted cash			21,314				—				21,314
Trade accounts receivable, less allowances of $13,543			150,316				(43,004	)			107,312
Inventories			88,744				(5,371	)			83,373
Deferred income taxes			16,959				16,491				33,450
Prepaid expenses and other current assets			32,056				2,023				34,079
Total current assets			340,444				(29,861	)			310,583
Property, plant and equipment, net			51,362				2,473				53,835
Patents and other intangible assets, net			6,880				410				7,290
Goodwill			74,388				—				74,388
Deferred income taxes			19,904				(1,023	)			18,881
Other long-term assets			11,303				(3,383	)			7,920
Total assets		$	504,281			$	(31,384	)		$	472,897
Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable		$	21,812			$	763			$	22,575
Other current liabilities			46,985				(7,375	)			39,610
Total current liabilities			68,797				(6,612	)			62,185
Long-term debt			20,000				—				20,000
Deferred income taxes			11,456				—				11,456
Other long-term liabilities			4,930				6,494				11,424
Total liabilities			105,183				(118	)			105,065
Contingencies (Note 17)
Shareholders’ equity:
Common shares $0.10 par value; 50,000,000 shares authorized; 19,339,329 issued and outstanding			1,934				—				1,934
Additional paid-in capital			246,111				195				246,306
Retained earnings			148,549				(33,702	)			114,847
Accumulated other comprehensive income			2,504				2,241				4,745
Total shareholders’ equity			399,098				(31,266	)			367,832
Total liabilities and shareholders’ equity		$	504,281			$	(31,384	)		$	472,897

Effects of Restatement on Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)

The effects of the restatements on the Company’s condensed consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2013 are as follows:

(Unaudited, U.S. Dollars, in thousands, except share and per share data)		Three Months Ended March 31, 2013
		Previously Reported				Adjustments				Restated
Product sales		$	88,358			$	2,978			$	91,336
Marketing service fees			11,896				141				12,037
Net sales			100,254				3,119				103,373
Cost of sales			22,699				2,918				25,617
Gross profit			77,555				201				77,756
Operating expenses
Sales and marketing			48,839				(3,785	)			45,054
General and administrative			18,788				(458	)			18,330
Research and development			5,400				341				5,741
Amortization of intangible assets			504				40				544
			73,531				(3,862	)			69,669
Operating income			4,024				4,063				8,087
Other income and expense
Interest expense, net			(560	)			—				(560	)
Other income			4,764				—				4,764
			4,204				—				4,204
Income before income taxes			8,228				4,063				12,291
Income tax expense			(3,320	)			(1,361	)			(4,681	)
Net income from continuing operations, net of tax			4,908				2,702				7,610
Discontinued operations (Note 16)
Loss from discontinued operations			(4,432	)			(2	)			(4,434	)
Income tax benefit			1,640				(316	)			1,324
Net loss from discontinued operations, net of tax			(2,792	)			(318	)			(3,110	)
Net income		$	2,116			$	2,384			$	4,500
Net income (loss) per common share- basic:
Net income from continuing operations, net of tax		$	0.25			$	0.14			$	0.39
Net loss from discontinued operations, net of tax			(0.14	)			(0.02	)			(0.16	)
Net income per common share- basic		$	0.11			$	0.12			$	0.23
Net income (loss) per common share- diluted:
Net income from continuing operations, net of tax		$	0.25			$	0.14			$	0.39
Net loss from discontinued operations, net of tax			(0.14	)			(0.02	)			(0.16	)
Net income per common share- diluted		$	0.11			$	0.12			$	0.23
Weighted average number of common shares:
Basic			19,431,093				—				19,431,093
Diluted			19,691,141				—				19,691,141
Comprehensive (loss) income		$	(1,016	)		$	2,490			$	1,474

The effects of the restatements on the Company’s condensed consolidated statement of operations and comprehensive income for the three months ended March 31, 2012 are as follows:

(Unaudited, U.S. Dollars, in thousands, except share and per share data)		Three Months Ended March 31, 2012
		Previously Reported				Adjustments				Restated
Product sales		$	104,820			$	(7,212	)		$	97,608
Marketing service fees			11,222				106				11,328
Net sales			116,042				(7,106	)			108,936
Cost of sales			21,940				(562	)			21,378
Gross profit			94,102				(6,544	)			87,558
Operating expenses
Sales and marketing			49,521				(2,393	)			47,128
General and administrative			14,570				—				14,570
Research and development			7,050				—				7,050
Amortization of intangible assets			530				50				580
Charges related to US Government Resolutions			—				310				310
			71,671				(2,033	)			69,638
Operating income			22,431				(4,511	)			17,920
Other income and expense
Interest expense, net			(2,221	)			—				(2,221	)
Other expense, net			(631	)			—				(631	)
			(2,852	)			—				(2,852	)
Income before income taxes			19,579				(4,511	)			15,068
Income tax expense			(7,363	)			892				(6,471	)
Net income from continuing operations, net of tax			12,216				(3,619	)			8,597
Discontinued operations (Note 16)
(Loss) income from discontinued operations			(506	)			1,033				527
Income tax benefit			306				(23	)			283
Net (loss) income from discontinued operations, net of tax			(200	)			1,010				810
Net income		$	12,016			$	(2,609	)		$	9,407
Net income (loss) per common share- basic:
Net income from continuing operations, net of tax		$	0.65			$	(0.19	)		$	0.46
Net (loss) income from discontinued operations, net of tax			(0.01	)			0.05				0.04
Net income per common share- basic		$	0.64			$	(0.14	)		$	0.50
Net income (loss) per common share- diluted:
Net income from continuing operations, net of tax		$	0.64			$	(0.19	)		$	0.45
Net (loss) income from discontinued operations, net of tax			(0.01	)			0.05				0.04
Net income per common share- diluted		$	0.63			$	(0.14	)		$	0.49
Weighted average number of common shares:
Basic			18,675,694				—				18,675,694
Diluted			19,116,195				—				19,116,195
Comprehensive income		$	14,726			$	(2,918	)		$	11,808

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Tabular disclosure of the nature and effects of a restatement to correct an error in the reported results of operations of prior periods. When prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net income of prior periods are disclosed in the annual report for the year in which the adjustments are made, and amended filings of previously issued reports are typically issued.

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