Original and Further Restatement of the Consolidated Financial Statements (Tables)

12 Months Ended

Dec. 31, 2013

Effects of Original Restatement and Further Restatement to Previously Filed Consolidated Income Statements

The tables below show the effects of the Original Restatement for each of the fiscal years ended December 31, 2012 and 2011, as well as the effects of the Further Restatement for each of the fiscal years ended December 31, 2013, 2012 and 2011. In each case, the tax effect of the adjustments is estimated based on the Company’s estimated tax rate.


	Year Ended December 31, 2013
				Further Restatement Adjustments by Category
(U.S. Dollars, in thousands)	Originally Reported			Co-Pay and Self-Pay Revenue			Bad Debt Timing			Accounts Receivable Reserve			Intercompany Profit			Inventory			Other			Total Further Restatement Adjustments			Restated
Net sales	$	400,534		$	(2,242	)	$	—		$	(582	)	$	—		$	—		$	(99	)	$	(2,923	)	$	397,611
Cost of sales		102,300			—			—			—			1,090			3,688			(166	)		4,612			106,912

Gross profit		298,234			(2,242	)		—			(582	)		(1,090	)		(3,688	)		67			(7,535	)		290,699
Operating expenses
Sales and marketing		176,581			(2,242	)		1,455			122			—			—			(448	)		(1,113	)		175,468
General and administrative		65,147			—			—			—			—			—			(317	)		(317	)		64,830
Research and development		26,768			—			—			—			—			—			—			—			26,768
Amortization of intangible assets		2,687			—			—			—			—			—			—			—			2,687
Costs related to the accounting review and restatement		12,945			—			—			—			—			—			—			—			12,945
Impairment of Goodwill		19,193			—			—			—			—			—			—			—			19,193

		303,321			(2,242	)		1,455			122			—			—			(765	)		(1,430	)		301,891

Operating (loss) income		(5,087	)		—			(1,455	)		(704	)		(1,090	)		(3,688	)		832			(6,105	)		(11,192	)
Other income and (expense)		295			—			—			—			—			—			294			294			589

Loss before income taxes		(4,792	)		—			(1,455	)		(704	)		(1,090	)		(3,688	)		1,126			(5,811	)		(10,603	)
Income tax expense		(10,116	)		—			509			246			381			1,290			88			2,514			(7,602	)

Net loss from continuing operations	$	(14,908	)	$	—		$	(946	)	$	(458	)	$	(709	)	$	(2,398	)	$	1,214		$	(3,297	)	$	(18,205	)


	Year Ended December 31, 2012
				Original Restatement Adjustments by Category
(U.S. Dollars, in thousands)	As Reported in the 2012 Form 10-K Prior to Original Restatement			Distributor Revenue			Inventory Reserves			Royalties			Other			Total Original Restatement Adjustments			As Originally Restated in 2012 Form 10-K/A
Net sales	$	462,320		$	(14,777	)	$	—		$	—		$	38		$	(14,739	)	$	447,581
Cost of sales		86,492			(2,032	)		5,647			8,190			(44	)		11,761			98,253

Gross profit		375,828			(12,745	)		(5,647	)		(8,190	)		82			(26,500	)		349,328
Operating expenses
Sales and marketing		200,343			(6,629	)		—			(8,190	)		1,607			(13,212	)		187,131
General and administrative		53,827			(2	)		—			—			(434	)		(436	)		53,391
Research and development		28,577			—			—			—			—			—			28,577
Amortization of intangible assets		2,098			—			—			—			200			200			2,298
Charges related to U.S. Government resolutions		1,973			—			—			—			(678	)		(678	)		1,295

		286,818			(6,631	)		—			(8,190	)		695			(14,126	)		272,692

Operating income		89,010			(6,114	)		(5,647	)		—			(613	)		(12,374	)		76,636
Other income and (expense)		(6,282	)		—			—			—			(166	)		(166	)		(6,448	)

Income before income taxes		82,728			(6,114	)		(5,647	)		—			(779	)		(12,540	)		70,188
Income tax expense		(28,792	)		1,782			1,645			—			227			3,654			(25,138	)

Net income from continuing operations	$	53,936		$	(4,332	)	$	(4,002	)	$	—		$	(552	)	$	(8,886	)	$	45,050


	Year Ended December 31, 2012
				Further Restatement Adjustments by Category
(U.S. Dollars, in thousands)	As Originally Restated in 2012 Form 10-K/A			Co-Pay and Self-Pay Revenue			Bad Debt Timing			Accounts Receivable Reserve			Intercompany Profit			Inventory			Other			Total Further Restatement Adjustments			Restated
Net sales	$	447,581		$	(9,049	)	$	—		$	1,653		$	—		$	—		$	4		$	(7,392	)	$	440,189
Cost of sales		98,253			—			—			—			207			1,774			492			2,473			100,726

Gross profit		349,328			(9,049	)		—			1,653			(207	)		(1,774	)		(488	)	$	(9,865	)		339,463
Operating expenses
Sales and marketing		187,131			(9,049	)		1,097			(408	)		—			—			—		$	(8,360	)		178,771
General and administrative		53,391			—			—			—			—			—			259			259			53,650
Research and development		28,577			—			—			—			—			—			—			—			28,577
Amortization of intangible assets		2,298			—			—			—			—			—			—			—			2,298
Charges related to U.S. Government resolutions		1,295			—			—			—			—			—			—			—			1,295

		272,692			(9,049	)		1,097			(408	)		—			—			259			(8,101	)		264,591

Operating income		76,636			—			(1,097	)		2,061			(207	)		(1,774	)		(747	)		(1,764	)		74,872
Other income and (expense)		(6,448	)		—			—			—			—			—			641			641		$	(5,807	)

Income before income taxes		70,188			—			(1,097	)		2,061			(207	)		(1,774	)		(106	)		(1,123	)		69,065
Income tax expense		(25,138	)		—			384			(721	)		72			621			838			1,194		$	(23,944	)

Net income from continuing operations	$	45,050		$	—		$	(713	)	$	1,340		$	(135	)	$	(1,153	)	$	732		$	71		$	45,121


	Year Ended December 31, 2011
				Original Restatement Adjustments by Category
(U.S. Dollars, in thousands)	As Reported in the 2012 Form 10-K Prior to Original Restatement			Distributor Revenue			Inventory Reserves			Royalties			Other			Total Original Restatement Adjustments			As Originally Restated in 2012 Form 10-K/A
Net sales	$	470,121		$	(29,135	)	$	—		$	—		$	985		$	(28,150	)	$	441,971
Cost of sales		92,619			(8,289	)		3,377			7,713			107			2,908			95,527

Gross profit		377,502			(20,846	)		(3,377	)		(7,713	)		878			(31,058	)		346,444
Operating expenses
Sales and marketing		200,145			(1,216	)		—			(7,713	)		2,295			(6,634	)		193,511
General and administrative		64,374			—			—			—			107			107			64,481
Research and development		22,861			—			—			—			—			—			22,861
Amortization of intangible assets		2,350			—			—			—			200			200			2,550
Charges related to U.S. Government resolutions		56,463			—			—			—			678			678			57,141

		346,193			(1,216	)		—			(7,713	)		3,280			(5,649	)		340,544

Operating income		31,309			(19,630	)		(3,377	)		—			(2,402	)		(25,409	)		5,900
Other income and (expense)		(11,868	)		—			—			—			3,915			3,915			(7,953	)

Income (loss) before income taxes		19,441			(19,630	)		(3,377	)		—			1,513			(21,494	)		(2,053	)
Income tax expense		(21,181	)		6,408			1,102			—			(494	)		7,016			(14,165	)

Net loss from continuing operations	$	(1,740	)	$	(13,222	)	$	(2,275	)	$	—		$	1,019		$	(14,478	)	$	(16,218	)


	Year Ended December 31, 2011
				Further Restatement Adjustments by Category
(U.S. Dollars, in thousands)	As Originally Restated in 2012 Form 10-K/A			Co-Pay and Self-Pay Revenue			Bad Debt Timing			Accounts Receivable Reserve			Intercompany Profit			Inventory			Other			Total Further Restatement Adjustments			Restated
Net sales	$	441,971		$	(5,960	)	$	—		$	(439	)	$	—		$	—		$	(53	)	$	(6,452	)	$	435,519
Cost of sales		95,527			—			—			—			253			321			314			888			96,415

Gross profit		346,444			(5,960	)		—			(439	)		(253	)		(321	)		(367	)		(7,340	)		339,104
Operating expenses
Sales and marketing		193,511			(5,960	)		(2,143	)		(252	)		—			—			—			(8,355	)		185,156
General and administrative		64,481			—			—			—			—			—			304			304			64,785
Research and development		22,861			—			—			—			—			—			—			—			22,861
Amortization of intangible assets		2,550			—			—			—			—			—			—			—			2,550
Charges related to U.S. Government resolutions		57,141			—			—			—			—			—			—			—			57,141

		340,544			(5,960	)		(2,143	)		(252	)		—			—			304			(8,051	)		332,493

Operating income		5,900			—			2,143			(187	)		(253	)		(321	)		(671	)		711			6,611
Other income and (expense)		(7,953	)		—			—			—			—			—			(21	)		(21	)		(7,974	)

Loss before income taxes		(2,053	)		—			2,143			(187	)		(253	)		(321	)		(692	)		690			(1,363	)
Income tax expense		(14,165	)		—			(752	)		66			89			113			206			(278	)		(14,443	)

Net loss from continuing operations	$	(16,218	)	$	—		$	1,391		$	(121	)	$	(164	)	$	(208	)	$	(486	)	$	412		$	(15,806	)

Effects of Original Restatement and Further Restatement on Consolidated Balance Sheet

The effects of the Further Restatement on the Company’s consolidated balance sheet as of December 31, 2013 are as follows:


	As of December 31, 2013
(U.S. Dollars, in thousands except share and per share data)	Originally Reported in 2013 Form 10-K		Further Restatement Adjustments			Restated
Assets
Current assets:
Cash and cash equivalents	$	30,486	$	(1,562	)	$	28,924
Restricted cash		23,761		—			23,761
Trade accounts receivable, less allowances of $9,111		75,567		(4,756	)		70,811
Inventories		90,577		(17,899	)		72,678
Deferred income taxes		33,947		6,052			39,999
Prepaid expenses and other current assets		25,906		3,027			28,933

Total current assets		280,244		(15,138	)		265,106
Property, plant and equipment, net		54,606		(234	)		54,372
Patents and other intangible assets, net		9,046		—			9,046
Goodwill		53,565		—			53,565
Deferred income taxes		18,336		4,058			22,394
Other long-term assets		7,385		107			7,492

Total assets	$	423,182	$	(11,207	)	$	411,975

Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable	$	20,674	$	—		$	20,674
Other current liabilities		46,146		3,530			49,676

Total current liabilities		66,820		3,530			70,350
Long-term debt		20,000		—			20,000
Deferred income taxes		13,132		(106	)		13,026
Other long-term liabilities		12,736		—			12,736

Total liabilities		112,688		3,424			116,112
Contingencies (Note 17)
Shareholders’ equity
Common shares $0.10 par value; 50,000,000 shares authorized; 18,102,335 issued and outstanding		1,810		—			1,810
Additional paid-in capital		216,653		—			216,653
Retained earnings		89,332		(15,435	)		73,897
Accumulated other comprehensive income		2,699		804			3,503

Total shareholders’ equity		310,494		(14,631	)		295,863

Total liabilities and shareholders’ equity	$	423,182	$	(11,207	)	$	411,975

The effects of the Original Restatement and the Further Restatement on the Company’s consolidated balance sheet as of December 31, 2012 are as follows:


	As of December 31, 2012
(U.S. Dollars, in thousands except share and per share data)	As Reported in the 2012 Form 10-K Prior to Original Restatement		Original Restatement Adjustments			As Originally Restated in the 2012 Form 10-K/A		Further Restatement Adjustments			Restated
Assets
Current assets:
Cash and cash equivalents	$	31,055	$	—		$	31,055	$	(288	)	$	30,767
Restricted cash		21,314		—			21,314		—			21,314
Trade accounts receivable, less allowances of $6,673		150,316		(43,004	)		107,312		(3,510	)		103,802
Inventories		88,744		(5,371	)		83,373		(13,560	)		69,813
Deferred income taxes		16,959		16,491			33,450		5,037			38,487
Prepaid expenses and other current assets		32,056		2,023			34,079		2,370			36,449

Total current assets		340,444		(29,861	)		310,583		(9,951	)		300,632
Property, plant and equipment, net		51,362		2,473			53,835		(1,042	)		52,793
Patents and other intangible assets, net		6,880		410			7,290		—			7,290
Goodwill		74,388		—			74,388		—			74,388
Deferred income taxes		19,904		(1,023	)		18,881		2,642			21,523
Other long-term assets		11,303		(3,383	)		7,920		—			7,920

Total assets	$	504,281	$	(31,384	)	$	472,897	$	(8,351	)	$	464,546

Liabilities and shareholders’ equity
Current liabilities:
Bank borrowings	$	16	$	—		$	16	$	—		$	16
Trade accounts payable		21,812		763			22,575		—			22,575
Other current liabilities		46,969		(7,375	)		39,594		3,148			42,742

Total current liabilities		68,797		(6,612	)		62,185		3,148			65,333
Long-term debt		20,000		—			20,000		—			20,000
Deferred income taxes		11,456		—			11,456		(106	)		11,350
Other long-term liabilities		4,930		6,494			11,424		—			11,424

Total liabilities		105,183		(118	)		105,065		3,042			108,107
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		—			1,934
Additional paid-in capital		246,111		195			246,306		—			246,306
Retained earnings		148,549		(33,702	)		114,847		(12,138	)		102,709
Accumulated other comprehensive income		2,504		2,241			4,745		745			5,490

Total shareholders’ equity		399,098		(31,266	)		367,832		(11,393	)		356,439

Total liabilities and shareholders’ equity	$	504,281	$	(31,384	)	$	472,897	$	(8,351	)	$	464,546

Effects of Original Restatement and Further Restatement of Consolidated Statement of Operations and Comprehensive Income (Loss)

The effects of the Further Restatement on the Company’s consolidated statement of operations and comprehensive income for the year ended December 31, 2013 are as follows:


	Year Ended December 31, 2013
(U.S. Dollars, in thousands, except share and per share data)	Originally Reported in 2013 Form 10-K			Further Restatement Adjustments			Restated
Product sales	$	352,796		$	(3,244	)	$	349,552
Marketing service fees		47,738			321			48,059

Net sales		400,534			(2,923	)		397,611
Cost of sales		102,300			4,612			106,912

Gross profit		298,234			(7,535	)		290,699
Operating expenses
Sales and marketing		176,581			(1,113	)		175,468
General and administrative		65,147			(317	)		64,830
Research and development		26,768			—			26,768
Amortization of intangible assets		2,687			—			2,687
Costs related to the accounting review and restatement		12,945			—			12,945
Impairment of Goodwill		19,193			—			19,193

		303,321			(1,430	)		301,891

Operating loss		(5,087	)		(6,105	)		(11,192	)
Other income and (expense)
Interest expense, net		(1,925	)		98			(1,827	)
Other expense		2,220			196			2,416

		295			294			589

Loss before income taxes		(4,792	)		(5,811	)		(10,603	)
Income tax expense		(10,116	)		2,514			(7,602	)

Net loss from continuing operations		(14,908	)		(3,297	)		(18,205	)

Discontinued operations (Note 16)
Loss from discontinued operations		(15,510	)		—			(15,510	)
Income tax benefit (expense)		4,903			—			4,903

Net loss from discontinued operations		(10,607	)		—			(10,607	)

Net loss	$	(25,515	)	$	(3,297	)	$	(28,812	)

Net loss per common share—basic:
Net loss from continuing operations	$	(0.80	)	$	(0.17	)	$	(0.97	)
Net loss from discontinued operations		(0.57	)		—			(0.57	)

Net loss per common share—basic	$	(1.37	)	$	(0.17	)	$	(1.54	)

Net loss per common share—diluted:
Net loss from continuing operations	$	(0.80	)	$	(0.17	)	$	(0.97	)
Net loss from discontinued operations		(0.57	)		—			(0.57	)

Net loss per common share—diluted	$	(1.37	)	$	(0.17	)	$	(1.54	)

Weighted average number of common shares:
Basic		18,697,228			—			18,697,228
Diluted		18,697,228			—			18,697,228
Other comprehensive loss, before tax:
Translation adjustment	$	(1,768	)	$	60		$	(1,708	)
Unrealized gain on derivative instrument		(442	)		(1	)		(443	)

Other comprehensive loss, before tax		(2,210	)		59			(2,151	)
Income tax expense related to components of other comprehensive income		164			—			164

Other comprehensive loss, net of tax		(2,046	)		59			(1,987	)

Comprehensive loss	$	(27,561	)	$	(3,238	)	$	(30,799	)

The effects of the Original Restatement and the Further Restatement on the Company’s consolidated statement of operations and comprehensive income for the year ended December 31, 2012 are as follows:


	Year Ended December 31, 2012
(U.S. Dollars, in thousands, except share and per share data)	As Reported in the 2012 Form 10-K Prior to Original Restatement			Original Restatement Adjustments			As Originally Restated in the 2012 Form 10-K/A			Further Restatement Adjustments			Restated
Product sales	$	415,850		$	(14,811	)	$	401,039		$	(7,392	)	$	393,647
Marketing service fees		46,470			72			46,542			—			46,542

Net sales		462,320			(14,739	)		447,581			(7,392	)		440,189
Cost of sales		86,492			11,761			98,253			2,473			100,726

Gross profit		375,828			(26,500	)		349,328			(9,865	)		339,463
Operating expenses
Sales and marketing		200,343			(13,212	)		187,131			(8,360	)		178,771
General and administrative		53,827			(436	)		53,391			259			53,650
Research and development		28,577			—			28,577			—			28,577
Amortization of intangible assets		2,098			200			2,298			—			2,298
Charges related to U.S. Government resolutions (Note 17)		1,973			(678	)		1,295			—			1,295

		286,818			(14,126	)		272,692			(8,101	)		264,591

Operating income		89,010			(12,374	)		76,636			(1,764	)		74,872
Other income and (expense)
Interest expense, net		(4,577	)		(166	)		(4,743	)		582			(4,161	)
Other expense		(1,705	)		—			(1,705	)		59			(1,646	)

		(6,282	)		(166	)		(6,448	)		641			(5,807	)

Income before income taxes		82,728			(12,540	)		70,188			(1,123	)		69,065
Income tax expense		(28,792	)		3,654			(25,138	)		1,194			(23,944	)

Net income from continuing operations		53,936			(8,886	)		45,050			71			45,121

Discontinued operations (Note 16)
Gain on sale of Breg, Inc.,		1,345			—			1,345			—			1,345
Loss from discontinued operations		(4,012	)		1,018			(2,994	)		(500	)		(3,494	)
Income tax benefit (expense)		26			(589	)		(563	)		443			(120	)

Net loss from discontinued operations		(2,641	)		429			(2,212	)		(57	)		(2,269	)

Net income	$	51,295		$	(8,457	)	$	42,838		$	14		$	42,852

Net income (loss) per common share—basic:
Net income from continuing operations	$	2.84		$	(0.47	)	$	2.37		$	0.01		$	2.38
Net loss from discontinued operations		(0.14	)		0.02			(0.12	)		—			(0.12	)

Net income per common share—basic	$	2.70		$	(0.45	)	$	2.25		$	0.01		$	2.26

Net income (loss) per common share—diluted:
Net income from continuing operations	$	2.78		$	(0.46	)	$	2.32		$	0.01		$	2.33
Net loss from discontinued operations		(0.14	)		0.03			(0.11	)		(0.01	)		(0.12	)

Net income per common share—diluted:	$	2.64		$	(0.43	)	$	2.21		$	0.00		$	2.21

Weighted average number of common shares:
Basic		18,977,263			—			18,977,263			—			18,977,263
Diluted		19,390,413			—			19,390,413			—			19,390,413
Other comprehensive income, before tax:
Translation adjustment	$	480		$	288		$	768		$	363		$	1,131
Unrealized gain on derivative instrument		416			—			416			—			416

Other comprehensive income, before tax		896			288			1,184			363			1,547
Income tax expense related to components of other comprehensive income		(153	)		—			(153	)		—			(153	)

Other comprehensive income, net of tax		743			288			1,031			363			1,394

Comprehensive income	$	52,038		$	(8,169	)	$	43,869		$	377		$	44,246

The effects of the Original Restatement and the Further Restatement on the Company’s consolidated statement of operations and comprehensive loss for the year ended December 31, 2011 are as follows:


	Year Ended December 31, 2011
(U.S. Dollars, in thousands, except share and per share data)	As Reported in the 2012 Form 10-K Prior to Original Restatement			Original Restatement Adjustments			As Originally Restated in the 2012 Form 10-K/A			Further Restatement Adjustments			Restated
Product sales	$	432,975		$	(27,828	)	$	405,147			(6,452	)	$	398,695
Marketing service fees		37,146			(322	)		36,824			—			36,824

Net sales		470,121			(28,150	)		441,971			(6,452	)		435,519
Cost of sales		92,619			2,908			95,527			888			96,415

Gross profit		377,502			(31,058	)		346,444			(7,340	)		339,104
Operating expenses
Sales and marketing		200,145			(6,634	)		193,511			(8,355	)		185,156
General and administrative		64,374			107			64,481			304			64,785
Research and development		22,861			—			22,861			—			22,861
Amortization of intangible assets		2,350			200			2,550			—			2,550
Charges related to U.S. Government resolutions (Note 17)		56,463			678			57,141			—			57,141

		346,193			(5,649	)		340,544			(8,051	)		332,493

Operating income		31,309			(25,409	)		5,900			711			6,611
Other income and (expense)
Interest expense, net		(9,456	)		3,915			(5,541	)		100			(5,441	)
Other expense		(2,412	)		—			(2,412	)		(121	)		(2,533	)

		(11,868	)		3,915			(7,953	)		(21	)		(7,974	)

Income (loss) before income taxes		19,441			(21,494	)		(2,053	)		690			(1,363	)
Income tax expense		(21,181	)		7,016			(14,165	)		(278	)		(14,443	)

Net loss from continuing operations		(1,740	)		(14,478	)		(16,218	)		412			(15,806	)

Discontinued operations (Note 16)
Income (loss) from discontinued operations		1,263			(3,968	)		(2,705	)		—			(2,705	)
Income tax (expense) benefit		(596	)		1,409			813			—			813

Net income (loss) from discontinued operations		667			(2,559	)		(1,892	)		—			(1,892	)

Net loss	$	(1,073	)	$	(17,037	)	$	(18,110	)		412		$	(17,698	)

Net (loss) income per common share—basic:
Net loss from continuing operations	$	(0.10	)	$	(0.79	)	$	(0.89	)	$	0.02		$	(0.87	)
Net income (loss) from discontinued operations		0.04			(0.14	)		(0.10	)		—			(0.10	)

Net loss per common share—basic	$	(0.06	)	$	(0.93	)	$	(0.99	)	$	0.02		$	(0.97	)

Net (loss) income per common share—diluted:
Net loss from continuing operations	$	(0.10	)	$	(0.79	)	$	(0.89	)	$	0.02		$	(0.87	)
Net income (loss) from discontinued operations		0.04			(0.14	)		(0.10	)		—			(0.10	)

Net loss per common share—diluted:	$	(0.06	)	$	(0.93	)	$	(0.99	)	$	0.02		$	(0.97	)

Weighted average number of common shares:
Basic		18,219,343			—			18,219,343			—			18,219,343
Diluted		18,219,343			—			18,219,343			—			18,219,343
Other comprehensive loss, before tax:
Translation adjustment	$	(3,192	)	$	913		$	(2,279	)	$	382		$	(1,897	)
Unrealized loss on derivative instrument		(693	)		—			(693	)		—			(693	)

Other comprehensive loss, before tax		(3,885	)		913			(2,972	)		382			(2,590	)
Income tax benefit related to components of other comprehensive income		256			—			256			—			256

Other comprehensive loss, net of tax		(3,629	)		913			(2,716	)		382			(2,334	)

Comprehensive loss	$	(4,702	)	$	(16,124	)	$	(20,826	)		794		$	(20,032	)

Effects of Original Restatement and Further Restatement on Consolidated Cash Flow

The effects of Further Restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2013 are as follows:


(U.S. Dollars, in thousands)	Year Ended December 31, 2013
	Originally Reported in 2013 Form 10-K			Further Restatement Adjustments			Restated
Cash flows from operating activities:
Net loss	$	(25,515	)	$	(3,297	)	$	(28,812	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		22,659			163			22,822
Amortization of debt costs		720			—			720
Amortization of exclusivity agreements		1,546			—			1,546
Provision for doubtful accounts		6,003			(1,413	)		4,590
Deferred income taxes		(1,986	)		4,815			2,829
Share-based compensation		6,267			—			6,267
Impairment of goodwill		19,193			—			19,193
Gain on sale of Breg, Inc., net of tax		—			—			—
Excess income tax benefit on employee stock-based awards		(82	)		—			(82	)
Income tax benefit (expense) on employee stock-based awards		795			(795	)		—
Other		4,442			94			4,536
Changes in operating assets and liabilities, net of effect of dispositions:
Trade accounts receivable		25,747			2,815			28,562
Inventories		(6,626	)		3,413			(3,213	)
Escrow receivable		—			—			—
Prepaid expenses and other current assets		6,791			1,973			8,764
Trade accounts payable		(2,280	)		—			(2,280	)
Charges related to U.S. Government resolutions		—			—			—
Other current liabilities		8,018			(1,049	)		6,969
Other long-term assets		2,750			(8,079	)		(5,329	)
Other long-term liabilities		(1,561	)		1,521			(40	)

Net cash provided by operating activities		66,881			161			67,042
Cash flows from investing activities:
Capital expenditures for property, plant and equipment		(24,787	)		—			(24,787	)
Capital expenditures for intangible assets		(4,891	)		—			(4,891	)
Purchase of other investments		—			(1,374	)		(1,374	)
Net proceeds from sale of Breg, Inc.		—			—			—

Net cash (used in) provided by investing activities		(29,678	)		(1,374	)		(31,052	)
Cash flows from financing activities:
Net proceeds from issuance of common shares		3,450			—			3,450
Payment of refinancing fees and debt issuance costs		—			—			—
Repayments of long-term debt		(16	)		—			(16	)
Repayment of bank borrowings, net		—			—			—
Changes in restricted cash		(2,375	)		—			(2,375	)
Purchase of common stock		(39,494	)		—			(39,494	)
Cash payment for purchase of minority interest in subsidiary		—			—			—
Excess income tax benefit on employee stock-based awards		82			—			82

Net cash used in financing activities		(38,353	)		—			(38,353	)
Effect of exchange rate changes on cash		581			(61	)		520

Net (decrease) increase in cash and cash equivalents		(569	)		(1,274	)		(1,843	)
Cash and cash equivalents at the beginning of the year		31,055			(288	)		30,767

Cash and cash equivalents at the end of the year	$	30,486		$	(1,562	)	$	28,924

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	2,046		$	—		$	2,046

Income taxes	$	8,773		$	—		$	8,773

The effects of the Original Restatement and the Further Restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2012 are as follows:


(U.S. Dollars, in thousands)	Year Ended December 31, 2012
	As Reported in the 2012 Form 10-K Prior to Original Restatement			Original Restatement Adjustments			As Originally Restated in the 2012 Form 10-K/A			Further Restatement Adjustments			Restated
Cash flows from operating activities:
Net income	$	51,295		$	(8,457	)	$	42,838		$	14		$	42,852
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,261			319			20,580			152			20,732
Amortization of debt costs		1,737			—			1,737			—			1,737
Amortization of exclusivity agreements		1,289			—			1,289			—			1,289
Provision for doubtful accounts		13,302			(2,730	)		10,572			(8,360	)		2,212
Deferred income taxes		871			(2,123	)		(1,252	)		5,023			3,771
Share-based compensation		6,303			—			6,303			—			6,303
Impairment of goodwill		—			—			—			—			—
Gain on sale of Breg, Inc, net of tax		(1,345	)		—			(1,345	)		—			(1,345	)
Excess income tax benefit on employee stock-based awards		—			(1,020	)		(1,020	)		—			(1,020	)
Income tax benefit on employee-stock-based awards		—			2,910			2,910			(2,910	)		—
Other		2,125			2,011			4,136			662			4,798
Changes in operating assets and liabilities, net of effect of dispositions:
Trade accounts receivable		(31,600	)		13,162			(18,438	)		7,310			(11,128	)
Inventories		(6,341	)		3,846			(2,495	)		2,111			(384	)
Escrow receivable		41,537			—			41,537			—			41,537
Prepaid expenses and other current assets		(6,191	)		(9,386	)		(15,577	)		1,002			(14,575	)
Trade accounts payable		5,554			(979	)		4,575			—			4,575
Charges related to U.S. Government resolutions		(82,500	)		(678	)		(83,178	)		—			(83,178	)
Other current liabilities		(2,842	)		(2,887	)		(5,729	)		490			(5,239	)
Other long-term assets		(2,114	)		4,241			2,127			(5,518	)		(3,391	)
Other long-term liabilities		(135	)		751			616			—			616

Net cash provided by operating activities		11,206			(1,020	)		10,186			(24	)		10,162
Cash flows from investing activities:
Capital expenditures for property, plant and equipment		(27,994	)		—			(27,994	)		—			(27,994	)
Capital expenditures for intangible assets		(780	)		—			(780	)		—			(780	)
Purchase of other investments		—			—			—			(714	)		(714	)
Proceeds from sale of other investments		—			—			—			878			878
Net proceeds from sale of Breg Inc.		153,773			—			153,773			—			153,773

Net cash provided by (used in) investing activities		124,999			—			124,999			164			125,163
Cash flows from financing activities:
Net proceeds from issuance of common shares		25,586			—			25,586			—			25,586
Payment of refinancing fees and debt issuance costs		—			—			—			—			—
Repayments of long-term debt		(188,695	)		—			(188,695	)		—			(188,695	)
Proceeds of bank borrowings, net		(1,297	)		—			(1,297	)		—			(1,297	)
Changes in restricted cash		25,799			—			25,799			—			25,799
Cash payment for purchase of minority interest in subsidiary		—			—			—			—			—
Excess income tax benefit on employee stock-based awards		—			1,020			1,020			—			1,020

Net cash used in financing activities		(138,607	)		1,020			(137,587	)		—			(137,587	)
Effect of exchange rates changes on cash		250			—			250			36			286

Net increase (decrease) in cash and cash equivalents		(2,152	)		—			(2,152	)		176			(1,976	)
Cash and cash equivalents at the beginning of the year		33,207			—			33,207			(464	)		32,743

Cash and cash equivalents at the end of the year	$	31,055		$	—		$	31,055		$	(288	)	$	30,767

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	4,569		$	—		$	4,569		$	—		$	4,569

Income taxes	$	18,268		$	—		$	18,268		$	—		$	18,268

The effects of the Original Restatement and the Further Restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2011 are as follows:


(U.S. Dollars, in thousands)	Year Ended December 31, 2011
	As Reported in the 2012 Form 10-K Prior to Original Restatement			Original Restatement Adjustments			As Originally Restated in the 2012 Form 10-K/A			Further Restatement Adjustments			Restated
Cash flows from operating activities:
Net loss	$	(1,073	)	$	(17,037	)	$	(18,110	)	$	412		$	(17,698	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		22,776			241			23,017			165			23,182
Amortization of debt costs		1,239			—			1,239			—			1,239
Amortization of exclusivity agreements		374			—			374			—			374
Provision for doubtful accounts		11,532			1,404			12,936			(8,356	)		4,580
Deferred income taxes		936			(988	)		(52	)		(13,889	)		(13,941	)
Share-based compensation		6,648			—			6,648			—			6,648
Impairment of goodwill		—			—			—			—			—
Gain on sale of Breg, Inc, net of tax		—			—			—			—			—
Excess income tax benefit on employee stock-based awards		(1,737	)		—			(1,737	)		—			(1,737	)
Income tax benefit on employee-stock-based awards		—			—			—			—			—
Other		4,906			(415	)		4,491			(2,193	)		2,298
Changes in operating assets and liabilities, net of effect of dispositions:
Trade accounts receivable		(25,818	)		26,111			293			6,352			6,645
Inventories		(8,349	)		(4,275	)		(12,624	)		(81	)		(12,705	)
Escrow receivable		(32,562	)		—			(32,562	)		—			(32,562	)
Prepaid expenses and other current assets		(4,057	)		6,886			2,829			(447	)		2,382
Trade accounts payable		576			1,746			2,322			—			2,322
Charges related to U.S. Government resolutions		88,463			638			89,101			—			89,101
Other current liabilities		3,384			(1,965	)		1,419			2,097			3,516
Other long-term assets		(1,588	)		(16,093	)		(17,681	)		15,364			(2,317	)
Other long-term liabilities		(869	)		3,747			2,878			525			3,403

Net cash provided by operating activities		64,781			—			64,781			(51	)		64,730
Cash flows from investing activities:
Capital expenditures for property, plant and equipment		(24,965	)		—			(24,965	)		—			(24,965	)
Capital expenditures for intangible assets		(793	)		—			(793	)		—			(793	)
Payment made in connection with acquisition		(5,250	)		—			(5,250	)		—			(5,250	)
Purchase of other investments		—			—			—			(468	)		(468	)

Net cash provided by (used in) investing activities		(31,008	)		—			(31,008	)		(468	)		(31,476	)
Cash flows from financing activities:
Net proceeds from issuance of common shares		20,113			—			20,113			—			20,113
Payment of refinancing fees and debt issuance costs		(758	)		—			(758	)		—			(758	)
Repayments of long-term debt		(7,500	)		—			(7,500	)		—			(7,500	)
Proceeds of bank borrowings, net		(2,561	)		—			(2,561	)		—			(2,561	)
Changes in restricted cash		(24,178	)		—			(24,178	)		—			(24,178	)
Cash payment for purchase of minority interest in subsidiary		(517	)		—			(517	)		—			(517	)
Excess income tax benefit on employee stock-based awards		1,737			—			1,737			—			1,737

Net cash used in financing activities		(13,664	)		—			(13,664	)		—			(13,664	)
Effect of exchange rates changes on cash		(463	)		—			(463	)		55			(408	)

Net increase (decrease) in cash and cash equivalents		19,646			—			19,646			(464	)		19,182
Cash and cash equivalents at the beginning of the year		13,561			—			13,561			—			13,561

Cash and cash equivalents at the end of the year	$	33,207		$	—		$	33,207		$	(464	)	$	32,743

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	17,088		$	—		$	17,088		$	—		$	17,088

Income taxes	$	26,227		$	—		$	26,227		$	—		$	26,227

Effects of Original Restatement and Further Restatement on Consolidated Shareholders' Equity

The results of the Further Restatement adjustments to the Company’s previously filed consolidated shareholders’ equity as of January 1, 2011, by category as discussed above under the subheadings “Bad Debt Timing Adjustments”, “Accounts Receivable Reserves”, “Intercompany Profit Adjustments”, “Piece Parts Inventory”, “Inventory Reserves” and “Other Adjustments” are summarized in the table below.


	Cumulative Adjustments to Shareholders’ Equity at January 1, 2011
	(U.S. Dollars, in thousands)
Further Restatement Adjustments by Category Increase (decrease) to Retained earnings	Further Restatement Adjustments for Years ended December 31, 2009 and Prior			Further Restatement Adjustments to Year ended December 31, 2010			Total Cumulative Adjustments through December 31, 2010
Bad debt timing adjustments	$	—		$	409		$	409
Accounts receivable reserves		(4,383	)		(1,037	)		(5,420	)
Intercompany profit adjustments		(812	)		(203	)		(1,015	)
Inventory existence		(68	)		(16	)		(84	)
Inventory reserves		(13,352	)		2,581			(10,771	)
Other adjustments		(1,426	)		(285	)		(1,711	)
Income tax benefit (expense)		7,416			(1,388	)		6,028

Retained earnings decrease	$	(12,625	)	$	61		$	(12,564	)