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DISCONTINUED OPERATIONS
 3 Months Ended
Mar. 31, 2013
DISCONTINUED OPERATIONS  
DISCONTINUED OPERATIONS

9.    DISCONTINUED OPERATIONS

 

On August 10, 2012, the Company entered into an agreement with Sinclair to terminate, effective September 30, 2012, the distribution agreements relating to the promotion and sale of Xclair®, Numoisyn® Lozenges and Numoisyn® Liquid.

 

Product revenue, cost of goods sold and selling, general and administrative costs related to the promotion and sales of the of Xclair®, Numoisyn® Liquid and Numoisyn® Lozenges have been reclassified from operating results from continuing operations to (loss) income from discontinued operations in the consolidated statement of operations for all periods presented as follows (in $000s):

 

 

 

Three
months ended
March 31,
 2012

 

Three
months ended
March 31,
 2013

 

Period from
August 13,
1996
(inception) to
March 31,
2013

 

Product revenue

 

$

161

 

$

—

 

$

3,604

 

Cost of goods sold

 

(94

)

—

 

(2,045

)

Selling, general and administrative

 

(228

)

—

 

(9,295

)

Goodwill and intangible impairment

 

—

 

—

 

(5,187

)

Interest income

 

—

 

26

 

58

 

Interest expense

 

—

 

—

 

(110

)

Gain on termination of license agreement

 

—

 

—

 

1,192

 

(Loss) income from discontinued operations

 

(161

)

26

 

(11,783

)

Income tax expense

 

—

 

(10

)

(347

)

(Loss) income from discontinued operations, net of tax

 

$

(161

)

$

16

 

$

(12,130

)

 

The assets and liabilities associated with product promotion and sales have been classified within assets and liabilities of discontinued operations in the accompanying consolidated balance sheets (in $000s):

 

 

 

December 31,
2012

 

March 31,
2013

 

 

 

 

 

 

 

Current assets of discontinued operations:

 

 

 

 

 

Short term portion of minimum royalty arrangement receivable, net

 

$

536

 

$

512

 

Returns indemnification receivable

 

325

 

323

 

Total current assets of discontinued operations

 

861

 

835

 

Long-term assets of discontinued operations:

 

 

 

 

 

Long-term portion of minimum royalty arrangement receivable, net

 

353

 

272

 

Total assets of discontinued operations

 

1,214

 

1,107

 

 

 

 

 

 

 

Current liabilities of discontinued operations:

 

 

 

 

 

Accounts payable

 

$

10

 

$

—

 

Returns provision

 

325

 

323

 

Total current liabilities of discontinued operations

 

$

335

 

$

323

 

 

The $0.8 million minimum royalty arrangement receivable outstanding as of March 31, 2013, relates to the present value of the remaining portion of the approximately $1.0 million in minimum royalty payments the Company will receive through September 30, 2015 under the terms of the termination and settlement agreement.

 

The Company offered a right of return on product sales made prior to the termination of the distribution agreements. The Company has estimated a provision for product returns of $0.3 million as of March 31, 2013 based on historical returns for each product, for which an offsetting asset has been recorded based on the terms of the termination and settlement agreement.