Restatement of the Condensed Consolidated Financial Statements (Tables)

6 Months Ended

Jun. 30, 2013

Adjustments to Previously Filed Consolidated Income Statements

The results of the adjustments to the Company’s previously filed consolidated statements of operations detailed above for the three and six months ended June 30, 2012 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 June 30, 2012
				Adjustments by Category
(U.S. Dollars, in thousands)	Previously Reported			Distributor Revenue			Inventory Reserves			Royalties			Other			Total Adjustments			Restated
Net sales	$	119,492		$	(5,862	)	$	—		$	—		$	(207	)	$	(6,069	)	$	113,423
Cost of sales		23,676			(2,101	)		3,880			2,079			13			3,871			27,547

Gross profit		95,816			(3,761	)		(3,880	)		(2,079	)		(220	)		(9,940	)		85,876
Operating expenses
Sales and marketing		49,810			(527	)		—			(2,079	)		(129	)		(2,735	)		47,075
General and administrative		14,295			—			—			—			—			—			14,295
Research and development		9,252			—			—			—			—			—			9,252
Amortization of intangibles assets		530			—			—			—			50			50			580
Charges related to U.S. Government resolutions		1,364			—			—			—			(988	)		(988	)		376

		75,251			(527	)		—			(2,079	)		(1,067	)		(3,673	)		71,578

Operating income		20,565			(3,234	)		(3,880	)		—			847			(6,267	)		14,298
Other income and (expense)		(605	)		—			—			—			—			—			(605	)

Income before income taxes		19,960			(3,234	)		(3,880	)		—			847			(6,267	)		13,693
Income tax expense		(5,993	)		1,120			1,343			—			(293	)		2,170			(3,823	)

Net income from continuing operations, net of tax	$	13,967		$	(2,114	)	$	(2,537	)	$	—		$	554		$	(4,097	)	$	9,870


	Six Months Ended June 30, 2012
				Adjustments by Category
(U.S. Dollars, in thousands)	Previously Reported			Distributor Revenue			Inventory Reserves			Royalties			Other			Total Adjustments			Restated
Net sales	$	235,534		$	(13,256	)	$	—		$	—		$	81		$	(13,175	)	$	222,359
Cost of sales		45,616			(3,572	)		2,668			4,205			8			3,309			48,925

Gross profit		189,918			(9,684	)		(2,668	)		(4,205	)		73			(16,484	)		173,434
Operating expenses
Sales and marketing		99,331			(944	)		—			(4,205	)		21			(5,128	)		94,203
General and administrative		28,865			—			—			—			—			—			28,865
Research and development		16,302			—			—			—			—			—			16,302
Amortization of intangibles assets		1,060			—			—			—			100			100			1,160
Charges related to U.S. Government resolutions		1,364			—			—			—			(678	)		(678	)		686

		146,922			(944	)		—			(4,205	)		(557	)		(5,706	)		141,216

Operating income		42,996			(8,740	)		(2,668	)		—			630			(10,778	)		32,218
Other income and (expense)		(3,457	)		—			—			—			—			—			(3,457	)

Income before income taxes		39,539			(8,740	)		(2,668	)		—			630			(10,778	)		28,761
Income tax expense		(13,356	)		2,209			1,103			—			(250	)		3,062			(10,294	)

Net income from continuing operations, net of tax	$	26,183		$	(6,531	)	$	(1,565	)	$	—		$	380		$	(7,716	)	$	18,467

Effects of Restatements on Consolidated Balance Sheet

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


	As of December 31, 2012
(Unaudited, U.S. Dollars, in thousands, except share data)	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 16)
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 Restatements on Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

The effects of the restatements on the Company’s condensed consolidated statement of operations and comprehensive income for the three months ended June 30, 2012 are as follows:


	Three Months Ended June 30, 2012
(Unaudited, U.S. Dollars, in thousands, except share and per share data)	Previously Reported			Adjustments			Restated
Product sales	$	107,906		$	(6,004	)	$	101,902
Marketing service fees		11,586			(65	)		11,521

Net sales		119,492			(6,069	)		113,423
Cost of sales		23,676			3,871			27,547

Gross profit		95,816			(9,940	)		85,876
Operating expenses
Sales and marketing		49,810			(2,735	)		47,075
General and administrative		14,295			—			14,295
Research and development		9,252			—			9,252
Amortization of intangible assets		530			50			580
Charges Related to US Government Resolutions		1,364			(988	)		376

		75,251			(3,673	)		71,578

Operating income		20,565			(6,267	)		14,298
Other income and expense
Interest expense, net		(1,265	)		—			(1,265	)
Other income		660			—			660

		(605	)		—			(605	)

Income before income taxes		19,960			(6,267	)		13,693
Income tax expense		(5,993	)		2,170			(3,823	)

Net income from continuing operations, net of tax		13,967			(4,097	)		9,870

Discontinued operations (Note 16)
Gain on sale of Breg, Inc. (net of tax)		1,040			—			1,040
Loss from discontinued operations		(5,846	)		(7	)		(5,853	)
Income tax benefit		2,044			153			2,197

Net loss from discontinued operations, net of tax		(2,762	)		146			(2,616	)

Net income	$	11,205		$	(3,951	)	$	7,254

Net income (loss) per common share- basic:
Net income from continuing operations, net of tax	$	0.74		$	(0.22	)	$	0.52
Net loss from discontinued operations, net of tax		(0.15	)		0.01			(0.14	)

Net income per common share- basic	$	0.59		$	(0.21	)	$	0.38

Net income (loss) per common share- diluted:
Net income from continuing operations, net of tax	$	0.73		$	(0.22	)	$	0.51
Net loss from discontinued operations, net of tax		(0.15	)		0.01			(0.14	)

Net income per common share- diluted	$	0.58		$	(0.21	)	$	0.37

Weighted average number of common shares:
Basic		18,827,452			—			18,827,452
Diluted		19,215,984			—			19,215,984
Comprehensive income	$	6,822		$	(3,112	)	$	3,710

The effects of the restatements on the Company’s condensed consolidated statement of operations and comprehensive income for the six months ended June 30, 2012 are as follows:


	Six Months Ended June 30, 2012
(Unaudited, U.S. Dollars, in thousands, except share and per share data)	Previously Reported			Adjustments			Restated
Product sales	$	212,726		$	(13,216	)	$	199,510
Marketing service fees		22,808			41			22,849

Net sales		235,534			(13,175	)		222,359
Cost of sales		45,616			3,309			48,925

Gross profit		189,918			(16,484	)		173,434
Operating expenses
Sales and marketing		99,331			(5,128	)		94,203
General and administrative		28,865			—			28,865
Research and development		16,302			—			16,302
Amortization of intangible assets		1,060			100			1,160
Charges Related to US Government Resolutions		1,364			(678	)		686

		146,922			(5,706	)		141,216

Operating income		42,996			(10,778	)		32,218
Other income and expense
Interest expense, net		(3,486	)		—			(3,486	)
Other income		29			—			29

		(3,457	)		—			(3,457	)

Income before income taxes		39,539			(10,778	)		28,761
Income tax expense		(13,356	)		3,062			(10,294	)

Net income from continuing operations, net of tax		26,183			(7,716	)		18,467

Discontinued operations (Note 16)
Gain on sale of Breg, Inc. (net of tax)		1,040			—			1,040
Loss from discontinued operations		(6,352	)		1,026			(5,326	)
Income tax benefit		2,350			130			2,480

Net loss from discontinued operations, net of tax		(2,962	)		1,156			(1,806	)

Net income	$	23,221		$	(6,560	)	$	16,661

Net income (loss) per common share- basic:
Net income from continuing operations, net of tax	$	1.40		$	(0.42	)	$	0.98
Net loss from discontinued operations, net of tax		(0.16	)		0.06			(0.10	)

Net income per common share- basic	$	1.24		$	(0.36	)	$	0.88

Net income (loss) per common share- diluted:
Net income from continuing operations, net of tax	$	1.37		$	(0.41	)	$	0.96
Net loss from discontinued operations, net of tax		(0.16	)		0.07			(0.09	)

Net income per common share- diluted	$	1.21		$	(0.34	)	$	0.87

Weighted average number of common shares:
Basic		18,751,573			—			18,751,573
Diluted		19,168,940			—			19,168,940
Comprehensive income	$	21,548		$	(6,030	)	$	15,518

- Definition

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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