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NOTE 10 DISCONTINUED OPERATIONS
 12 Months Ended
Dec. 31, 2012
Discontinued Operations and Disposal Groups [Abstract]  
NOTE 10 DISCONTINUED OPERATIONS

NOTE 10 DISCONTINUED OPERATIONS

Cosmeceutical and Toiletry Business

On July 25, 2000, we completed the sale of certain technology rights for our cosmeceutical and toiletry business to RP Scherer Corporation (RP Scherer), a subsidiary of Cardinal Health, Inc.

Under the terms of the agreement with RP Scherer, we guaranteed a minimum gross profit percentage on RP Scherer’s combined sales of products to Ortho and Dermik (Gross Profit Guaranty). In July 2011, Valeant Pharmaceuticals announced it was acquiring both Ortho and Dermik. The guaranty period initially commenced on July 1, 2000 and was to end on the earlier of July 1, 2010 or the end of two consecutive guaranty periods where the combined gross profit on sales to Ortho and Dermik equals or exceeds the guaranteed gross profit (Two Period Test). The Gross Profit Guaranty expense totaled $944,000 for the first seven guaranty years and in those years profits did not meet the Two Period Test. Effective March 2007, in conjunction with a sale of assets by RP Scherer’s successor company to an Amcol International subsidiary (Amcol), a new agreement was signed between us and Amcol to provide continuity of product supply to Ortho and Dermik. This new agreement potentially extended the Gross Profit Guaranty period an additional two years to July 1, 2013, unless it was terminated earlier with the Two Period Test. In February 2013, an arbitrator ruled that no additional amounts were owed under the gross profit guaranty and that the term of the gross profit guaranty has ended. We had previously recorded a liability of the $1.1 million related to the amount that Amcol asserted was due under the Gross Profit Guaranty. This event qualifies as an adjusting event under ASC 855, Subsequent Event and in light of the arbitrator’s decision in February 2013, which was final and binding, we reversed this accrual as of December 31, 2012.

The cosmeceutical and toiletry business is reported as discontinued operations for all periods presented in the accompanying Statements of Operations. Gain (loss) from discontinued operations represents primarily the gain (loss) attributable to changes in estimates of our cosmeceutical and toiletry business that was sold to RP Scherer on July 25, 2000, as follows (in thousands): 

 

For the years ended December 31,  2012  2011  2010
Cosmeceutical and Toiletry Business:         
Change in estimates for guarantees  $1,082   $(379)  $(150)

There was no revenue relating to discontinued operations for the years ended December 31, 2012, 2011 and 2010.

Basic and diluted loss per common share from discontinued operations was $0 for the years ended December 31, 2012, 2011 and 2010. 

As of December 31, 2012, 2011 and 2010, accrued disposition cost of $0, $1.1 million and $0.7 million, respectively, represents accruals for gross profit guarantees related to discontinued operations.