UNCONSOLIDATED JOINT VENTURE

3 Months Ended

Mar. 31, 2012

UNCONSOLIDATED JOINT VENTURE [Abstract]

UNCONSOLIDATED JOINT VENTURE

NOTE 17 - UNCONSOLIDATED JOINT VENTURE

On September 22, 2004, the Company entered into a 50/50 joint venture agreement (the "Joint Venture Agreement") with Strides Arcolab Limited ("Strides"), a pharmaceutical manufacturer based in India, for the development, manufacturing and marketing of various generic pharmaceutical products for sale in the United States. The joint venture, known as Akorn-Strides LLC (the "Joint Venture Company"), launched its first commercialized product during 2008. The Joint Venture Company operated until May 2011, ceasing operations after the sale and transfer of its operating assets to Pfizer, Inc. pursuant to an Asset Purchase Agreement entered into on December 29, 2010. It is anticipated that the Joint Venture Company will continue to exist until all product that it sold is beyond the potential product return period.

Under the joint venture arrangement entered into between the Company and Strides on September 22, 2004, Strides was primarily responsible for developing and manufacturing products, while the Company was responsible for marketing and selling the products. To supplement Strides' manufacturing capabilities, the Company began manufacturing one Joint Venture Company product in the second quarter of 2010. For its sales and marketing efforts, the Company earned revenue from the Joint Venture Company in the form of a fee calculated as a percentage of the Joint Venture Company's monthly net sales revenue.

On December 29, 2010, the Joint Venture Company entered into an Asset Purchase Agreement with Pfizer, Inc. ("Pfizer") to sell the rights to all of its abbreviated new drug applications ("ANDAs") to Pfizer for $63.2 million in cash. In accordance with an amendment to the Joint Venture Agreement, the proceeds were split unevenly, with the Company receiving $35.0 million and Strides receiving $28.2 million. The Asset Purchase Agreement included an initial closing date of December 29, 2010 and a final closing date of May 1, 2011. The ANDAs for dormant and in-development products were transferred on the initial closing date, while the ANDAs for actively-marketed products were transferred to Pfizer on the final closing date. The Joint Venture Company recognized a gain of $63.1 million from the sale, of which $38.9 million was recognized in the fourth quarter of 2010 and the remaining $24.2 million was be recognized in the second quarter of 2011. Having sold all of its ANDAs, the Joint Venture Company discontinued product sales in the second quarter of 2011 and its operations ceased.

The following tables set forth a condensed statement of income of the Joint Venture Company for the quarters ended March 31, 2012 and 2011, as well as condensed balance sheets as of March 31, 2012 and December 31, 2011.

CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS)
	Three months ended March 31,
	2012		2011
Revenues	$	-	$	4,664
Cost of sales		-		2,650
Gross profit		-		2,014
Operating expenses		-		366
Operating income		-		1,648
Income before income taxes		-		1,648
Income tax provision		-		-
Net income	$	-	$	1,648

CONDENSED BALANCE SHEETS

(IN THOUSANDS)

	March 31,		December 31,
	2012		2011
Assets:
Cash	$	871	$	859
Other assets		36		75
Total assets	$	907	$	934
Liabilities and members' equity:
Trade accounts payable & other accrued liabilities	$	466	$	543
Accounts payable - members		78		28
Total liabilities		544		571
Members' deficit, net of advances		363		363
Total liabilities & members' deficit	$	907	$	934