Annual report pursuant to Section 13 and 15(d)

Derivative Contracts

v2.4.0.8
Derivative Contracts
12 Months Ended
Dec. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Contracts
Derivative Contracts
The following table summarizes the fair values and the presentation of our derivative financial instruments in the Consolidated Balance Sheets:
(In thousands)
Balance Sheet Component
 
December 31,
2013
 
December 31,
2012
Derivative financial instruments:
 
 
 
 
 
Pharmsynthez Note Receivable and
     Purchase Option
Prepaid expenses and other current assets
 
$
6,151

 
$

Common stock options/warrants
Investments, net
 
$
5,988

 
$
1,872

Embedded conversion option
3.00% convertible senior notes, net of discount
     and estimated fair value of embedded
     derivatives
 
$
101,087

 
$

Forward contracts (1)
Current portion of lines of credit and notes
      payable
 
$
1,585

 
$
1,294

(1)
The loss on forward contracts is recorded in Accrued expenses. The gain on the forward contracts is recorded in Prepaid expenses and other current assets.
We enter into foreign currency forward exchange contracts to cover the risk of exposure to exchange rate differences arising from inventory purchases on letters of credit. Under these forward contracts, for any rate above or below the fixed rate, we receive or pay the difference between the spot rate and the fixed rate for the given amount at the settlement date.
To qualify the derivative instrument as a hedge, we are required to meet strict hedge effectiveness and contemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge. At December 31, 2013 and 2012, our derivative financial instruments do not meet the documentation requirements to be designated as hedges. Accordingly, we recognize the changes in Fair value of derivative instruments, net in our Consolidated Statements of Operations. The following table summarizes the (losses) and gains recorded during the three and years ended December 31, 2013 and 2012:
 
For the years ended December 31,
(In thousands)
2013
 
2012
 
2011
Derivative gain (loss):
 
 
 
 
 
Pharmsynthez Note Receivable and Purchase Option
$
1,936

 
$

 
$

Common stock options/warrants and BZNE Note conversion feature (1)
4,608

 
1,350

 
(77
)
Notes
(43,082
)
 

 

Forward contracts
49

 
(10
)
 
38

Total
$
(36,489
)
 
$
1,340

 
$
(39
)

(1)
BZNE Note conversion feature for 2012 only

The outstanding forward contracts at December 31, 2013 and 2012 have been recorded at fair value and their maturity details are as follows:
(In thousands)
Days until maturity
 
Contract value
 
Fair value at
 December 31, 2013
 
Effect on income (loss)
0 to 30
 
$
472

 
$
489

 
$
17

31 to 60
 
562

 
579

 
18

61 to 90
 
503

 
517

 
14

91 to 120
 

 

 

121 to 180
 

 

 

More than 180
 

 

 

Total
 
$
1,537

 
$
1,585

 
$
49

(In thousands)
Days until maturity
 
Contract value
 
Fair value at
 December 31, 2012
 
Effect on income (loss)
0 to 30
 
$

 
$

 
$

31 to 60
 
581

 
577

 
(4
)
61 to 90
 
341

 
339

 
(2
)
91 to 120
 
212

 
210

 
(2
)
121 to 180
 
170

 
168

 
(2
)
More than 180
 

 

 

Total
 
$
1,304

 
$
1,294

 
$
(10
)