Annual report pursuant to Section 13 and 15(d)

Composition of Certain Financial Statement Captions

v2.4.1.9
Composition of Certain Financial Statement Captions
12 Months Ended
Dec. 31, 2014
Compositions of Certain Financial Statement Captions [Abstract]  
Composition of Certain Financial Statement Captions
Composition of Certain Financial Statement Captions
 
For the years ended December 31,
(In thousands)
2014
 
2013
Accounts receivable, net
 
 
 
Accounts receivable
$
21,875

 
$
21,651

Less: allowance for doubtful accounts
(1,906
)
 
(1,884
)
 
$
19,969

 
$
19,767

Inventories, net
 
 
 
Finished products
$
12,116

 
$
13,374

Work in-process
1,011

 
1,350

Raw materials
4,116

 
4,132

Less: inventory reserve
(639
)
 
(777
)
 
$
16,604

 
$
18,079

Prepaid expenses and other current assets
 
 
 
Prepaid supplies
$
1,123

 
$
945

Prepaid insurance
968

 
892

Pharmsynthez notes receivable

 
6,151

Other receivables
669

 
1,985

Taxes recoverable
2,417

 
3,458

Other
4,212

 
5,653

 
$
9,389

 
$
19,084

Property, plant, equipment and investment properties, net:
 
 
 
Machinery and equipment
$
13,710

 
$
11,656

Building
3,171

 
3,615

Land
2,391

 
2,666

Furniture and fixtures
2,148

 
2,051

Software
1,695

 
807

Leasehold improvements
3,592

 
3,107

Construction in process
225

 
489

Less: accumulated depreciation
(10,521
)
 
(7,364
)
 
$
16,411

 
$
17,027

Intangible assets, net:
 
 
 
Technologies
$
52,508

 
$
51,660

Customer relationships
22,108

 
22,725

Product registrations
8,763

 
9,692

Trade names
3,483

 
3,669

Covenants not to compete
8,639

 
8,671

Other
1,079

 
2,519

Less:  accumulated amortization
(33,931
)
 
(24,403
)
 
$
62,649

 
$
74,533

Accrued expenses:
 
 
 
Taxes payable
$
77

 
$
702

Deferred revenue
4,185

 
7,639

Clinical trials
8,643

 
3,342

Professional fees
1,860

 
402

Employee benefits
4,127

 
4,399

Deferred acquisition payments, net of discount
15

 
5,465

 
For the years ended December 31,
Contingent consideration
27,352

 
28,047

Other
14,653

 
15,878

 
$
60,912

 
$
65,874

 
 
 
 
Other long-term liabilities:
 
 
 
Contingent consideration – OPKO Renal
$
36,529

 
$
34,401

Contingent consideration – OPKO Health Europe
254

 
504

Contingent consideration – OPKO Diagnostics
6,992

 
8,340

Contingent consideration – CURNA
440

 
316

Mortgages and other debts payable
2,434

 
3,270

Deferred tax liabilities
167,153

 
166,435

Other, including deferred revenue
3,556

 
1,509

 
$
217,358

 
$
214,775


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

OPKO
Mexico

 

 
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

OPKO Health Europe
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

 

OPKO Renal

 
191,530

 

 

 

 

 
210

 
191,740

 
2,411

OPKO Biologics

 
590,200

 

 

 

 

 

 
590,200

 
139,784

OPKO Uruguay Ltda.

 

 

 

 

 

 
347


347

 

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 intangible assets and goodwill related to the ALS acquisition, OPKO Mexico, CURNA, OPKO Diagnostics, FineTech, OPKO Health Europe, OPKO Lab, OPKO Brazil, OPKO Renal, OPKO Biologics, OPKO Uruguay Ltda. and SciVac, a consolidated VIE. The pharmaceutical, nutraceutical and veterinary products from ALS and OPKO Health Europe 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, Mexico, Spain, or Israel.
At December 31, 2014, the changes in value of the intangible assets and goodwill are primarily due to foreign currency fluctuations between the Chilean and Mexican pesos, the Euro and the Shekel against the U.S. dollar. 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.
The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuation allowance accounts:
 
(In thousands)
Beginning
balance
 
Charged
to
expense
 
Written-off
 
Charged
to other
 
Ending
balance
2014
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
(1,884
)
 
(646
)
 
321

 
303

 
$
(1,906
)
Inventory reserve
$
(777
)
 
(1,082
)
 
1,028

 
192

 
$
(639
)
Tax valuation allowance
$
(85,370
)
 

 

 
(46,561
)
 
$
(131,931
)
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
)

The following table summarizes the changes in Goodwill during the years ended December 31, 2014.
 
2014
 
2013
(In thousands)
Balance at January 1st
 
Acquisitions
 
Foreign exchange
 
Balance at December 31st
 
Balance at January 1
 
Acquisitions
 
Foreign exchange, other
 
Balance at December 31
Pharmaceuticals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURNA
$
4,827

 
$

 
$

 
$
4,827

 
$
4,827

 
$

 
$

 
$
4,827

OPKO Mexico
114

 

 
(14
)
 
100

 
114

 

 

 
114

OPKO Chile
6,102

 

 
(819
)
 
5,283

 
6,697

 

 
(595
)
 
6,102

OPKO Health Europe
9,075

 

 
(1,062
)
 
8,013

 
8,712

 

 
363

 
9,075

FineTech
11,698

 

 

 
11,698

 
11,698

 

 

 
11,698

SciVac
1,739

 

 
(186
)
 
1,553

 
796

 

 
943

 
1,739

OPKO Renal
2,069

 

 

 
2,069

 

 
2,411

 
(342
)
 
2,069

OPKO Biologics
139,784

 

 

 
139,784

 

 
139,784

 

 
139,784

Diagnostics
 
 
 
 
 
 
 
 

 

 

 

OPKO Diagnostics

17,977

 

 

 
17,977

 
17,977

 

 

 
17,977

OPKO Lab
32,988

 

 

 
32,988

 
29,629

 

 
3,359

 
32,988

 
$
226,373

 
$

 
$
(2,081
)
 
$
224,292

 
$
80,450

 
$
142,195

 
$
3,728

 
$
226,373