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

9 Months Ended

Sep. 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 September 30, 2013 and the nine months ended September 30, 2013. The tax effect of the adjustments is estimated based on the Company’s estimated tax rate.

	Three Months Ended September 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	$	92,738		$	(1,191	)	$	—	$	240		$	—		$	—		$	19		$	(932	)	$	91,806
Cost of sales		23,920			—			—		—			770			1,320			(946	)		1,144			25,064
Gross profit		68,818			(1,191	)		—		240			(770	)		(1,320	)		965			(2,076	)		66,742
Operating expenses
Sales and marketing		42,382			(1,191	)		—		14			—			—			(2,129	)		(3,306	)		39,076
General and administrative		13,202			—			—		—			—			—			(269	)		(269	)		12,933
Research and development		6,361			—			—		—			—			—			—			—			6,361
Amortization of intangible assets		616			—			—		—			—			—			—			—			616
Costs related to the accounting review and restatement		2,664			—			—		—			—			—			—			—			2,664
Impairment of goodwill		19,193			—			—		—			—			—			—			—			19,193
		84,418			(1,191	)		—		14			—			—			(2,398	)		(3,575	)		80,843
Operating (loss) income		(15,600	)		—			—		226			(770	)		(1,320	)		3,363			1,499			(14,101	)
Other income and (expense)		(2,036	)		—			—		—			—			—			16			16			(2,020	)
Loss before income taxes		(17,636	)		—			—		226			(770	)		(1,320	)		3,379			1,515			(16,121	)
Income tax expense		(448	)		—			—		(79	)		(270	)		462			(588	)		65			(383	)
Net loss from continuing operations	$	(18,084	)	$	—		$	—	$	147		$	(500	)	$	(850	)	$	2,791		$	1,580		$	(16,504	)

	Nine Months Ended September 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	$	294,391		$	(2,980	)	$	—		$	364		$	—		$	—		$	(50	)	$	(2,666	)	$	291,725
Cost of sales		69,783			—			—			—			1,012			3,399			(1,405	)		3,006			72,789
Gross profit		224,608			(2,980	)		—			364			(1,012	)		(3,399	)		1,355		$	(5,672	)		218,936
Operating expenses
Sales and marketing		132,346			(2,980	)		1,455			54			—			—			(1,416	)		(2,887	)		129,459
General and administrative		46,736			—			—			—			—			—			(381	)		(381	)		46,355
Research and development		20,653			—			—			—			—			—			—			—			20,653
Amortization of intangible assets		1,725			—			—			—			—			—			—			—			1,725
Costs related to accounting review and restatement		2,664			—			—			—			—			—			—			—			2,664
Impairment of goodwill		19,193			—			—			—			—			—			—			—			19,193
		223,317			(2,980	)		1,455			54			—			—			(1,797	)		(3,268	)		220,049
Operating income		1,291			—			(1,455	)		310			(1,012	)		(3,399	)		3,152			(2,404	)		(1,113	)
Other income and (expense)		491			—			—			—			—			—			49			49			540
Loss before income taxes		1,782			—			(1,455	)		310			(1,012	)		(3,399	)		3,201			(2,355	)		(573	)
Income tax expense		(8,126	)		—			509			(109	)		354			1,190			(1,811	)		133			(7,993	)
Net loss from continuing operations	$	(6,344	)	$	—		$	(964	)	$	201		$	(658	)	$	(2,209	)	$	1,390		$	(2,222	)	$	(8,566	)

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-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 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 Loss

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

	Three Months Ended September 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	$	81,061		$	(1,024	)	$	80,037
Marketing service fees		11,677			92			11,769
Net sales		92,738			(932	)		91,806
Cost of sales		23,920			1,144			25,064
Gross profit		68,818			(2,076	)		66,742
Operating expenses
Sales and marketing		42,382			(3,306	)		39,076
General and administrative		13,202			(269	)		12,933
Research and development		6,361			—			6,361
Amortization of intangible assets		616			—			616
Costs related to the accounting review and restatement		2,664			—			2,664
Impairment of goodwill		19,193			—			19,193
		84,418			(3,575	)		80,843
Operating loss		(15,600	)		1,499			(14,101	)
Other income and expense
Interest expense, net		(555	)		16			(539	)
Other expense		(1,481	)		—			(1,481	)
		(2,036	)		16			(2,020	)
Loss before income taxes		(17,636	)		1,515			(16,121	)
Income tax expense		(448	)		65			(383	)
Net loss from continuing operations		(18,084	)		1,580			(16,504	)
Discontinued operations (Note 15)
Loss from discontinued operations		(3,041	)		666			(2,375	)
Income tax benefit		1,303			(1,260	)		43
Net loss from discontinued operations, net of tax		(1,738	)		(594	)		(2,332	)
Net loss	$	(19,822	)	$	986		$	(18,836	)
Net loss per common share-basic:
Net loss from continuing operations, net of tax	$	(1.00	)	$	0.09		$	(0.91	)
Net loss from discontinued operations, net of tax		(0.10	)		(0.03	)		(0.13	)
Net loss per common share-basic	$	(1.10	)	$	0.06		$	(1.04	)
Net loss per common share-diluted:
Net loss from continuing operations, net of tax	$	(1.00	)	$	0.09		$	(0.91	)
Net loss from discontinued operations, net of tax		(0.10	)		(0.03	)		(0.13	)
Net loss per common share-diluted	$	(1.10	)	$	0.06		$	(1.04	)
Weighted average number of common shares:
Basic		18,142,935			—			18,142,935
Diluted		18,142,935			—			18,142,935
Comprehensive loss	$	(16,064	)	$	1,017		$	(15,047	)

	Nine Months Ended September 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	$	259,030		$	(2,823	)	$	256,207
Marketing service fees		35,361			157			35,518
Net sales		294,391			(2,666	)		291,725
Cost of sales		69,783			3,006			72,789
Gross profit		224,608			(5,672	)		218,936
Operating expenses
Sales and marketing		132,346			(2,887	)		129,459
General and administrative		46,736			(381	)		46,355
Research and development		20,653			—			20,653
Amortization of intangible assets		1,725			—			1,725
Costs related to the accounting review and restatement		2,664			—			2,664
Impairment of goodwill		19,193			—			19,193
		223,317			(3,268	)		220,049
Operating income (loss)		1,291			(2,404	)		(1,113	)
Other income and expense
Interest expense, net		(1,585	)		49			(1,536	)
Other income		2,076			—			2,076
		491			49			540
Income (loss) before income taxes		1,782			(2,355	)		(573	)
Income tax expense		(8,126	)		133			(7,993	)
Net loss from continuing operations		(6,344	)		(2,222	)		(8,566	)
Discontinued operations (Note 15)
Loss from discontinued operations		(16,629	)		2,202			(14,427	)
Income tax benefit		5,334			(741	)		4,593
Net loss from discontinued operations		(11,295	)		1,461			(9,834	)
Net loss	$	(17,639	)	$	(761	)	$	(18,400	)
Net loss per common share-basic:
Net loss from continuing operations	$	(0.34	)	$	(0.11	)	$	(0.45	)
Net loss from discontinued operations		(0.60	)		0.08			(0.52	)
Net loss per common share-basic	$	(0.94	)	$	(0.03	)	$	(0.97	)
Net loss per common share-diluted:
Net loss from continuing operations	$	(0.34	)	$	(0.11	)	$	(0.45	)
Net loss from discontinued operations		(0.60	)		0.08			(0.52	)
Net loss per common share-diluted	$	(0.94	)	$	(0.03	)	$	(0.97	)
Weighted average number of common shares:
Basic		18,897,887			—			18,897,887
Diluted		18,897,887			—			18,897,887
Comprehensive loss	$	(17,426	)	$	(671	)	$	(18,097	)

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 nine months ended September 30, 2013 are as follows:

	Nine Months Ended September 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 loss	$	(17,639	)	$	(761	)	$	(18,400	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		15,459			126			15,585
Amortization of debt costs		540			—			540
Amortization of exclusivity agreements		—			1,069			1,069
Provision for doubtful accounts		4,225			(1,471	)		2,754
Deferred income taxes		(223	)		—			(223	)
Share-based compensation		4,714			—			4,714
Impairment of goodwill		19,193			—			19,193
Excess income tax benefit on employee stock-based awards		(82	)		—			(82	)
Other		(520	)		(645	)		(1,165	)
Change in operating assets and liabilities:
Trade accounts receivable		27,758			2,616			30,374
Inventories		(11,596	)		2,819			(8,777	)
Prepaid expenses and other current assets		5,541			864			6,405
Trade accounts payable		(8,028	)		—			(8,028	)
Other current liabilities		13,040			(3,555	)		9,485
Long-term assets		482			(1,907	)		(1,425	)
Long-term liabilities		(912	)		796			(116	)
Net cash provided by operating activities		51,952			(49	)		51,903
Cash flows from investing activities:
Capital expenditures for property, plant and equipment		(19,427	)		—			(19,427	)
Capital expenditures for intangible assets		(4,525	)		—			(4,525	)
Purchase of other investments		—			(1,232	)		(1,232	)
Net cash used in investing activities		(23,952	)		(1,232	)		(25,184	)
Cash flows from financing activities:
Net proceeds from issuance of common shares		3,431			—			3,431
(Repayment of) proceeds from bank borrowings, net		(16	)		—			(16	)
Changes in restricted cash		(1,371	)		—			(1,371	)
Repurchase of treasury shares		(39,494	)		—			(39,494	)
Excess income tax benefit on employee stock-based awards		82			—			82
Net cash used in financing activities		(37,368	)		—			(37,368	)
Effect of exchange rate changes on cash		532			79			611
Net decrease in cash and cash equivalents		(8,836	)		(1,202	)		(10,038	)
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	$	22,219			(1,490	)	$	20,729