ACCOUNTS RECEIVABLE ALLOWANCES

3 Months Ended

Mar. 31, 2013

ACCOUNTS RECEIVABLE ALLOWANCES [Abstract]

ACCOUNTS RECEIVABLE ALLOWANCES

NOTE 5 — ACCOUNTS RECEIVABLE ALLOWANCES

The nature of the Company's business inherently involves, in the ordinary course, significant amounts and substantial volumes of transactions and estimates relating to allowances for product returns, chargebacks, rebates, doubtful accounts and discounts given to customers. This is a natural circumstance of the pharmaceutical industry and not specific to the Company and inherently lengthens the final net collections process. Depending on the product, the end-user customer, the specific terms of national supply contracts and the particular arrangements with the Company's wholesaler customers, certain rebates, chargebacks and other credits are deducted from the Company's accounts receivable. The process of claiming these deductions depends on wholesalers reporting to the Company the amount of deductions that were earned under the respective terms with end-user customers (which in turn depends on which end-user customer, with different pricing arrangements might be entitled to a particular deduction). This process can lead to partial payments against outstanding invoices as the wholesalers take the claimed deductions at the time of payment.

The provisions for the following customer reserves are reflected in the accompanying financial statements as reductions of revenues in the statements of income with the exception of the provision for doubtful accounts which is reflected as part of selling, general and administrative expense. The ending reserve amounts are included in trade accounts receivable, net in the Company's balance sheets.

Net trade accounts receivable consists of the following (in thousands):

	MARCH 31,			DECEMBER 31,
	2013			2012
Gross accounts receivable	$	85,230		$	74,855
Less:
Chargeback and rebates reserves		(15,740	)		(13,452	)
Returns reserve		(8,409	)		(8,409	)
Discount and allowances reserve		(1,631	)		(1,362	)
Advertising and promotion reserve		(436	)		(585	)
Allowance for doubtful accounts		(16	)		(30	)
Net trade accounts receivable	$	58,998		$	51,017

For the three-month periods ended March 31, 2013 and 2012, the Company recorded chargeback and rebate expense of $43,763,000 and $22,042,000, respectively.  For the three-month periods ended March 31, 2013 and 2012, the Company recorded provisions for product returns of $1,231,000 and $1,419,000, respectively.  For the three-month periods ended March 31, 2013 and 2012, the Company recorded provisions for cash discounts of $1,975,000 and $1,207,000, respectively.  The increases in each of these sales adjustment expenses over the prior year period were primarily due to increased sales in the Ophthalmic and Hospital drugs & Injectables segments.