BASIS OF PRESENTATION	6 Months Ended
Jun. 30, 2014
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE A — BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of Hanger, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of regulation S-X, and, therefore, do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair statement of the Company’s results of operations, financial position and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December, 2013, included in the Company’s Form 10-K filed with the SEC. In the second quarter and first six months of 2014, the Company recorded certain adjustments that relate to prior periods totaling $l.9 million and $2.4 million, respectively. The most significant adjustment relates to the recording of depreciation expense of $1.4 million in the second quarter of 2014 on equipment that should have been fully depreciated in prior years. The Company recorded these amounts in the second quarter and first six months of 2014 as the Company believes the adjustments are immaterial to both current and prior periods. Revision of Previously Reported Consolidated Financial Information During the third quarter 2013, the Company corrected an error in the classification of certain components of bad debt expense. Hanger previously classified the reserves related to the write-off of older accounts receivable balances due from commercial and government payors as bad debt expense, which was reported as Other Operating Expense in its financial statements, instead of as a reduction of sales. Management has assessed the materiality of the classification error on previously reported periods and concluded the impact was not material to any of the prior annual or quarterly consolidated financial statements. The reclassification error had no impact on previously reported net income, balance sheet totals or the operating cash flows for any of the periods. The impact of the reclassification lowers sales and reduces Other Operating Expenses by equal and offsetting amounts in the Consolidated Statements of Income and Comprehensive Income and the Provision for doubtful accounts and Change in accounts receivable by equal and offsetting amounts in the Consolidated Statements of Cash Flows. Further, the Company has historically included the reserve for contra revenue in its presentation of the Allowance for doubtful accounts on the Consolidated Balance Sheets and the net change in the reserve for contra revenue in the Provision for doubtful accounts on the Consolidated Statements of Cash Flows and the Schedule II Valuation and Qualifying Accounts included in the Company’s Annual Report on Form 10-K. The Company has revised that presentation for all periods to only include the reserve for doubtful accounts and the related activity in the reserve for doubtful accounts in those respective balances. Recent Accounting Pronouncements In July 2013, the FASB issued ASU 2013-11, “Income Taxes” that requires unrecognized tax benefits be classified as an offset to deferred tax assets to the extent of any net operating loss carryforwards, similar tax loss carryforwards, or tax credit carryforwards available at the reporting date in the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. An exception would apply if the tax law of the tax jurisdiction does not require the Company to use, and it does not intend to use, the deferred tax asset for such purpose. This guidance is effective for reporting periods beginning after December 15, 2013. The Company adopted this guidance and its implementation did not have a material impact on the Company’s Condensed Consolidated Financial Statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which clarifies existing accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This guidance is effective for reporting periods beginning after December 15, 2016. The Company is in the process of determining what impact, if any, the adoption of this ASU will have on its financial position, results of operations and cash flows.

NOTE A — BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Hanger, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of regulation S-X, and, therefore, do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the Securities and Exchange Commission (“SEC”).

In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair statement of the Company’s results of operations, financial position and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year.

A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December, 2013, included in the Company’s Form 10-K filed with the SEC.

In the second quarter and first six months of 2014, the Company recorded certain adjustments that relate to prior periods totaling $l.9 million and $2.4 million, respectively. The most significant adjustment relates to the recording of depreciation expense of $1.4 million in the second quarter of 2014 on equipment that should have been fully depreciated in prior years. The Company recorded these amounts in the second quarter and first six months of 2014 as the Company believes the adjustments are immaterial to both current and prior periods.

Revision of Previously Reported Consolidated Financial Information

During the third quarter 2013, the Company corrected an error in the classification of certain components of bad debt expense. Hanger previously classified the reserves related to the write-off of older accounts receivable balances due from commercial and government payors as bad debt expense, which was reported as Other Operating Expense in its financial statements, instead of as a reduction of sales. Management has assessed the materiality of the classification error on previously reported periods and concluded the impact was not material to any of the prior annual or quarterly consolidated financial statements. The reclassification error had no impact on previously reported net income, balance sheet totals or the operating cash flows for any of the periods. The impact of the reclassification lowers sales and reduces Other Operating Expenses by equal and offsetting amounts in the Consolidated Statements of Income and Comprehensive Income and the Provision for doubtful accounts and Change in accounts receivable by equal and offsetting amounts in the Consolidated Statements of Cash Flows. Further, the Company has historically included the reserve for contra revenue in its presentation of the Allowance for doubtful accounts on the Consolidated Balance Sheets and the net change in the reserve for contra revenue in the Provision for doubtful accounts on the Consolidated Statements of Cash Flows and the Schedule II Valuation and Qualifying Accounts included in the Company’s Annual Report on Form 10-K. The Company has revised that presentation for all periods to only include the reserve for doubtful accounts and the related activity in the reserve for doubtful accounts in those respective balances.

Recent Accounting Pronouncements

In July 2013, the FASB issued ASU 2013-11, “Income Taxes” that requires unrecognized tax benefits be classified as an offset to deferred tax assets to the extent of any net operating loss carryforwards, similar tax loss carryforwards, or tax credit carryforwards available at the reporting date in the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. An exception would apply if the tax law of the tax jurisdiction does not require the Company to use, and it does not intend to use, the deferred tax asset for such purpose. This guidance is effective for reporting periods beginning after December 15, 2013. The Company adopted this guidance and its implementation did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which clarifies existing accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This guidance is effective for reporting periods beginning after December 15, 2016. The Company is in the process of determining what impact, if any, the adoption of this ASU will have on its financial position, results of operations and cash flows.