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

6 Months Ended

Jun. 30, 2014

Accounting Changes and Error Corrections [Abstract]

Effects of Further Adjustments to Previously Filed Consolidated Income Statements

The tables below show the effects of the Further Restatement for the fiscal quarter ended June 30, 2013 and the six months ended June 30, 2013. The tax effect of the adjustments is estimated based on the Company’s estimated tax rate.

	Three Months Ended June 30, 2013
				Further Restatement Adjustments by Category
(U.S. Dollars, in thousands)	Originally Reported in 2013 Form 10-Q			Co-Pay and Self-Pay Revenue			Bad Debt Timing		Accounts Receivable Reserve			Intercompany Profit			Inventory			Other			Total Further Restatement Adjustments			Restated
Net sales	$	98,280		$	(336	)	$	—	$	(313	)	$	—		$	—		$	9		$	(640	)	$	97,640
Cost of sales		20,246			—			—		—			363			1,259			16			1,638			21,884
Gross profit		78,034			(336	)		—		(313	)		(363	)		(1,259	)		(7	)		(2,278	)		75,756
Operating expenses
Sales and marketing		44,910			(336	)		—		48			—			—			(83	)		(371	)		44,539
General and administrative		15,204			—			—		—			—			—			(23	)		(23	)		15,181
Research and development		8,551			—			—		—			—			—			—			—			8,551
Amortization of intangible assets		565			—			—		—			—			—			—			—			565
		69,230			(336	)		—		48			—			—			(106	)		(394	)		68,836
Operating (loss) income		8,804			—			—		(361	)		(363	)		(1,259	)		99			(1,884	)		6,920
Other income and (expense)		(1,677	)		—			—		—			—			—			15			15			(1,662	)
Loss before income taxes		7,127			—			—		(361	)		(363	)		(1,259	)		114			(1,869	)		5,258
Income tax expense		(2,997	)		—			—		126			127			441			(943	)		(249	)		(3,246	)
Net loss from continuing operations	$	4,130		$	—		$	—	$	(235	)	$	(236	)	$	(818	)	$	(829	)	$	(2,118	)	$	2,012

	Six Months Ended June 30, 2013
				Further Restatement Adjustments by Category
(U.S. Dollars, in thousands)	Originally Reported in 2013 Form 10-Q			Co-Pay and Self-Pay Revenue			Bad Debt Timing			Accounts Receivable Reserve			Intercompany Profit			Inventory			Other			Total Further Restatement Adjustments			Restated
Net sales	$	201,653		$	(1,789	)	$	—		$	123		$	—		$	—		$	(68	)	$	(1,734	)	$	199,919
Cost of sales		45,863			—			—			—			242			2,079			(459	)		1,862			47,725
Gross profit		155,790			(1,789	)		—			123			(242	)		(2,079	)		391		$	(3,596	)		152,194
Operating expenses
Sales and marketing		89,964			(1,789	)		1,455			40			—			—			713			419			90,383
General and administrative		33,534			—			—			—			—			—			(112	)		(112	)		33,422
Research and development		14,292			—			—			—			—			—			—			—			14,292
Amortization of intangible assets		1,109			—			—			—			—			—			—			—			1,109
		138,899			(1,789	)		1,455			40			—			—			601			307			139,206
Operating income		16,891			—			(1,455	)		83			(242	)		(2,079	)		(210	)		(3,903	)		12,988
Other income and (expense)		2,527			—			—			—			—			—			33			33			2,560
Income before income taxes		19,418			—			(1,455	)		83			(242	)		(2,079	)		(177	)		(3,870	)		15,548
Income tax expense		(7,678	)		—			509			(29	)		85			728			(1,225	)		68			(7,610	)
Net income from continuing operations	$	11,740		$	—		$	(946	)	$	54		$	(157	)	$	(1,351	)	$	(1,402	)	$	(3,802	)	$	7,938

Effects of Further Restatement on Consolidated Balance Sheet

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

	As of December 31, 2013
(Unaudited, U.S. Dollars, in thousands, except share data)	Originally Reported in 2013 Form 10-Q		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 at December 31, 2013		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 16)
Shareholders’ equity:
Common shares $0.10 par value; 50,000,000 shares authorized; 18,102,335 issued and outstanding as of December 31, 2013		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

Effects of Further Restatements of Consolidated Statement of Operations and Comprehensive Income

The effects of the Further Restatement on the condensed consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2013 are as follows:

	Three Months Ended June 30, 2013
(Unaudited, U.S. Dollars, in thousands, except share and per share data)	Originally Reported in 2013 Form 10-Q			Further Restatement Adjustments			Restated
Product sales	$	86,633		$	(704	)	$	85,929
Marketing service fees		11,647			64			11,711
Net sales		98,280			(640	)		97,640
Cost of sales		20,246			1,638			21,884
Gross profit		78,034			(2,278	)		75,756
Operating expenses
Sales and marketing		44,910			(371	)		44,539
General and administrative		15,204			(23	)		15,181
Research and development		8,551			—			8,551
Amortization of intangible assets		565			—			565
		69,230			(394	)		68,836
Operating income		8,804			(1,884	)		6,920
Other income and expense
Interest expense, net		(470	)		15			(455	)
Other expense		(1,207	)		—			(1,207	)
		(1,677	)		15			(1,662	)
Income before income taxes		7,127			(1,869	)		5,258
Income tax expense		(2,997	)		(249	)		(3,246	)
Net income from continuing operations		4,130			(2,118	)		2,012
Discontinued operations (Note 15)
Loss from discontinued operations		(9,154	)		1,062			(8,092	)
Income tax benefit		2,707			362			3,069
Net loss from discontinued operations		(6,447	)		1,424			(5,023	)
Net loss	$	(2,317	)	$	(694	)	$	(3,011	)
Net income (loss) per common share- basic:
Net income from continuing operations	$	0.22		$	(0.11	)	$	0.11
Net loss from discontinued operations		(0.34	)		0.07			(0.27	)
Net income (loss) per common share- basic	$	(0.12	)	$	(0.04	)	$	(0.16	)
Net income (loss) per common share- diluted:
Net income from continuing operations	$	0.21		$	(0.11	)	$	0.10
Net loss from discontinued operations		(0.33	)		0.07			(0.26	)
Net income (loss) per common share- diluted	$	(0.12	)	$	(0.04	)	$	(0.16	)
Weighted average number of common shares:
Basic		19,140,520			—			19,140,520
Diluted		19,270,044			—			19,270,044
Comprehensive loss	$	(2,836	)	$	(664	)	$	(3,500	)

	Six Months Ended June 30, 2013
(Unaudited, U.S. Dollars, in thousands, except share and per share data)	Originally Reported in 2013 Form 10-Q			Further Restatement Adjustments			Restated
Product sales	$	177,969		$	(1,799	)	$	176,170
Marketing service fees		23,684			65			23,749
Net sales		201,653			(1,734	)		199,919
Cost of sales		45,863			1,862			47,725
Gross profit		155,790			(3,596	)		152,194
Operating expenses
Sales and marketing		89,964			419			90,383
General and administrative		33,534			(112	)		33,422
Research and development		14,292			—			14,292
Amortization of intangible assets		1,109			—			1,109
		138,899			307			139,206
Operating income		16,891			(3,903	)		12,988
Other income and expense
Interest expense, net		(1,030	)		33			(997	)
Other income		3,557			—			3,557
		2,527			33			2,560
Income before income taxes		19,418			(3,870	)		15,548
Income tax expense		(7,678	)		68			(7,610	)
Net income from continuing operations		11,740			(3,802	)		7,938
Discontinued operations (Note 15)
Loss from discontinued operations		(13,588	)		1,536			(12,052	)
Income tax benefit		4,031			519			4,550
Net loss from discontinued operations		(9,557	)		2,055			(7,502	)
Net income	$	2,183		$	(1,747	)	$	436
Net income (loss) per common share- basic:
Net income from continuing operations	$	0.61		$	(0.20	)	$	0.41
Net loss from discontinued operations		(0.50	)		0.11			(0.39	)
Net income per common share- basic	$	0.11		$	(0.09	)	$	0.02
Net income per common share- diluted:
Net income from continuing operations	$	0.60		$	(0.19	)	$	0.41
Net loss from discontinued operations		(0.49	)		0.10			(0.39	)
Net income per common share- diluted	$	0.11		$	(0.09	)	$	0.02
Weighted average number of common shares:
Basic		19,285,004			—			19,285,004
Diluted		19,483,715			—			19,483,715
Comprehensive loss	$	(1,362	)	$	(1,688	)	$	(3,050	)

Effects of Restatements of Condensed Consolidated Statement of Cash Flows

The effects of the Further Restatement on the condensed consolidated statement of cash flows for the six months ended June 30, 2013 are as follows:

	Six Months Ended June 30, 2013
(Unaudited, U.S. Dollars, in thousands)	Originally Reported in 2013 Form 10-Q			Further Restatement Adjustments			Restated
Cash flows from operating activities:
Net income	$	2,183		$	(1,747	)	$	436
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,209			76			10,285
Amortization of debt costs		360			—			360
Amortization of exclusivity agreement		688			—			688
Provision for doubtful accounts		2,486			(294	)		2,192
Deferred income taxes		222			—			222
Share-based compensation		3,437			—			3,437
Excess income tax benefit on employee stock-based awards		(82	)		—			(82	)
Other		2,296			56			2,352
Change in operating assets and liabilities:
Trade accounts receivable		13,124			1,701			14,825
Inventories		(12,882	)		1,404			(11,478	)
Prepaid expenses and other current assets		9,343			(4,128	)		5,215
Trade accounts payable		(3,452	)		—			(3,452	)
Other current liabilities		8,844			2,951			11,795
Long-term assets		(1,451	)		(43	)		(1,494	)
Long-term liabilities		(1,164	)		—			(1,164	)
Net cash provided by operating activities		34,161			(24	)		34,137
Cash flows from investing activities:
Capital expenditures for property, plant and equipment		(12,826	)		—			(12,826	)
Capital expenditures for intangible assets		(651	)		—			(651	)
Purchase of other investments		—			(776	)		(776	)
Net cash used in investing activities		(13,477	)		(776	)		(14,253	)
Cash flows from financing activities:
Net proceeds from issuance of common shares		2,188			—			2,188
(Repayment of) proceeds from bank borrowings, net		(16	)		—			(16	)
Changes in restricted cash		721			—			721
Repurchase of treasury shares		(26,868	)		—			(26,868	)
Excess income tax benefit on employee stock-based awards		82			—			82
Net cash used in financing activities		(23,893	)		—			(23,893	)
Effect of exchange rate changes on cash		(476	)		87			(389	)
Net decrease in cash and cash equivalents		(3,685	)		(713	)		(4,398	)
Cash and cash equivalents at the beginning of the period		31,055			(288	)		30,767
Cash and cash equivalents at the end of the period	$	27,370		$	(1,001	)	$	26,369