Annual report pursuant to Section 13 and 15(d)

Composition of Certain Financial Statement Captions

v2.4.0.8
Composition of Certain Financial Statement Captions
12 Months Ended
Dec. 31, 2013
Compositions of Certain Financial Statement Captions [Abstract]  
Composition of Certain Financial Statement Captions
Composition of Certain Financial Statement Captions
 
December 31,
(In thousands)
2013
 
2012
Accounts receivable, net:
 
 
 
Accounts receivable
$
21,652

 
$
21,636

Less: allowance for doubtful accounts
(1,885
)
 
(474
)
 
$
19,767

 
$
21,162

Inventories, net:
 
 
 
Finished products
$
13,374

 
$
17,963

Work in-process
1,350

 
688

Raw materials
4,132

 
4,923

Less: inventory reserve
(777
)
 
(1,313
)
 
$
18,079

 
$
22,261

Prepaid expenses and other current assets:
 
 
 
Prepaid supplies
$
945

 
$
443

Prepaid insurance
892

 
301

Pharmsynthez Note Receivable and Purchase Option
6,151

 

Other receivables
1,985

 
886

Taxes recoverable
3,458

 
1,493

Other
5,653

 
4,750

 
$
19,084

 
$
7,873

Property and equipment, net:
 
 
 
Machinery and equipment
$
11,656

 
$
7,984

Building
3,615

 
3,457

Land
2,666

 
2,619

Furniture and fixtures
2,051

 
1,908

Software
807

 
853

Leasehold improvements
3,107

 
2,616

Construction in process
489

 

Less: accumulated depreciation
(7,364
)
 
(3,732
)
 
$
17,027

 
$
15,705

Investment properties, net:
 
 
 
Building
$

 
$
384

Land

 
450

Less: accumulated depreciation

 
(13
)
 
$

 
$
821

Intangible assets, net:
 
 
 
Technologies
$
51,660

 
$
52,810

Customer relationships
22,725

 
23,088

Product registrations
9,692

 
9,637

Tradenames
3,669

 
3,746

Covenants not to compete
8,671

 
8,662

Other
2,519

 
367

Less:  accumulated amortization
(24,403
)
 
(14,072
)
 
$
74,533

 
$
84,238

 
December 31,
(In thousands)
2013
 
2012
Accrued expenses:
 
 
 
Taxes payable
$
702

 
$
1,614

Deferred revenue
7,639

 
1,518

Clinical trials
3,342

 
50

Professional fees
402

 
675

Employee benefits
4,399

 
3,319

Deferred acquisition payments, net of discount
5,465

 
6,172

Contingent consideration
28,047

 
5,126

Interest payable related to the Notes

 

Other
15,878

 
6,182

 
$
65,874

 
$
24,656

Other long-term liabilities:
 
 
 
Contingent consideration – Cytochroma
$
34,401

 
$

Contingent consideration – Farmadiet
504

 
532

Contingent consideration – OPKO Diagnostics
8,340

 
11,310

Contingent consideration – FineTech

 
2,578

Contingent consideration – CURNA
316

 
510

Deferred acquisition payments, net of discount

 
3,931

Mortgages and other debts payable
3,270

 
5,150

Deferred tax liabilities
166,435

 
9,777

Other, including deferred revenue
1,509

 
380

 
$
214,775

 
$
34,168


The following table summarizes the fair values assigned to our major intangible asset classes upon each acquisition:
(In thousands)
Technology
 
In-process research and development
 
Customer relationships
 
Product registrations
 
Covenants not to compete
 
Tradename
 
Other
 
Total identified intangible assets
 
Goodwill
OPKO
Chile(1)
$

 
$

 
$
3,945

 
$
5,829

 
$

 
$
1,032

 
$

 
$
10,806

 
$
5,441

Exakta
OPKO

 

 
121

 
77

 
70

 
77

 

 
345

 
21

CURNA

 
10,000

 

 

 

 

 
290

 
10,290

 
4,827

OPKO Diagnostics
44,400

 

 

 

 

 

 

 
44,400

 
17,977

FineTech
2,700

 

 
14,200

 

 
1,500

 
400

 

 
18,800

 
11,623

Farmadiet
3,017

 
1,459

 
436

 
2,930

 
187

 
349

 

 
8,378

 
8,062

OPKO Lab
1,370

 

 
3,860

 

 
6,900

 
1,830

 
70

 
14,030

 
29,629

SciVac
1,090

 

 
40

 

 

 

 

 
1,130

 
760

OPKO Brazil

 

 

 

 

 

 
686

 
686

 

Cytochroma

 
191,530

 

 

 

 

 
210

 
191,740

 
2,411

PROLOR

 
590,200

 

 

 

 

 

 
590,200

 
139,784

Weighted average amortization period
9 years

 
Indefinite

 
6 years

 
9 years

 
5 years

 
4 years

 
4 years

 
 
 
Indefinite

(1)
Includes intangible assets and goodwill related to ALS acquisition.
All of the intangible assets and goodwill acquired relate to our acquisitions of OPKO Chile, including the intangibles assets and goodwill related to the ALS acquisition, Exakta-OPKO, CURNA, OPKO Diagnostics, FineTech, Farmadiet, OPKO Lab, Cytochroma and PROLOR. The pharmaceutical, nutraceutical and veterinary products from ALS and Farmadiet do not require ongoing product renewals. We do not anticipate capitalizing the cost of product registration renewals, rather we expect to expense these costs, as incurred. Our goodwill is not tax deductible for income tax purposes in the U.S., Chile, Canada, Spain, or Israel.
At December 31, 2013, the changes in value of the intangible assets and goodwill are primarily due to the acquisitions of OPKO Brazil, Cytochroma and PROLOR, as well as the foreign currency fluctuations between the Chilean and Mexican pesos, the Brazilian Reals, the Euro and the Shekel against the U.S. dollar. At December 31, 2012, the changes in value of the intangible assets and goodwill were primarily due to the acquisitions of ALS, Farmadiet, and OPKO Lab, as well as the foreign currency fluctuations between the Chilean and Mexican pesos, the Euro and the Shekel against the U.S. dollar. The purchase price allocation of the assets acquired in the Cytochroma and PROLOR acquisitions are subject to change while contingencies that existed on the acquisition dates are resolved.
The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuation allowance accounts for continuing operations:
 
(In thousands)
Beginning
balance
 
Charged
to
expense
 
Written-off
 
Charged
to other
 
Ending
balance
2013
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
(474
)
 
(979
)
 
28

 
(459
)
 
$
(1,884
)
Inventory reserve
$
(1,313
)
 
(2,015
)
 
2,188

 
363

 
$
(777
)
Tax valuation allowance
$
(59,145
)
 
(1,148
)
 

 
(25,077
)
 
$
(85,370
)
2012
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
(440
)
 
(86
)
 
86

 
(34
)
 
$
(474
)
Inventory reserve
$
(325
)
 
(2,544
)
 
1,582

 
(26
)
 
$
(1,313
)
Tax valuation allowance
$
(53,255
)
 
9,626

 

 
(15,516
)
 
$
(59,145
)


The following table summarizes the changes in Goodwill.
 
2013
 
2012
(In thousands)
Balance at January 1
 
Acquisitions
 
Foreign exchange, other
 
Balance at December 31
 
Balance at January 1
 
Acquisitions
 
Foreign exchange, other
 
Balance at December 31
Pharmaceuticals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURNA
$
4,827

 
$

 
$

 
$
4,827

 
$
4,827

 
$

 
$

 
$
4,827

Mexico
114

 

 

 
113

 
106

 

 
8

 
114

Chile
6,697

 

 
(594
)
 
6,102

 
5,282

 

 
1,415

 
6,697

Pharmadiet
8,712

 

 
363

 
9,075

 

 
8,313

 
399

 
8,712

Finetech
11,698

 

 

 
11,698

 
11,623

 

 
74

 
11,698

SciGen
796

 

 
943

 
1,740

 

 
796

 

 
796

Cytochroma

 
2,411

 
(342
)
 
2,069

 

 

 

 

Prolor

 
139,784

 

 
139,784

 

 

 

 

Diagnostics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Claros
17,977

 

 

 
17,977

 
17,977

 

 

 
17,977

OPKO Lab
29,629

 

 
3,359

 
32,988

 

 
29,629

 

 
29,629

 
$
80,450

 
$
142,195

 
$
3,729

 
$
226,373

 
$
39,815

 
$
38,739

 
$
1,896

 
$
80,450