INDUSTRY SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2013

INDUSTRY SEGMENT INFORMATION [Abstract]

INDUSTRY SEGMENT INFORMATION

NOTE 11 — INDUSTRY SEGMENT INFORMATION

During the quarters ended March 31, 2013 and March 31, 2012, the Company reported results for three segments:
-	Ophthalmic
-	Hospital Drugs & Injectables
-	Contract Services

The ophthalmic segment manufactures, markets and distributes diagnostic and therapeutic pharmaceuticals. The hospital drugs & injectables segment manufactures, markets and distributes drugs and injectable pharmaceuticals, primarily in niche markets, as well as certain vaccines.  The contract services segment manufactures products for third party pharmaceutical and biotechnology customers based on their specifications.  The contract services segment also includes the operating results of our subsidiary in India – Akorn India Private Limited ("AIPL") – as their principal current business activity involes the manufacture of drugs on contract for other drug companies.

The Company's reportable segments are based upon internal financial reports that aggregate certain operating information. The Company's chief operating decision maker, as defined in ASC Topic 280,  Segment Reporting, is its chief executive officer ("CEO"). The Company's CEO oversees operational assessments and resource allocations based upon the results of the Company's reportable segments, all of which have available discrete financial information.

 Selected financial information by industry segment is presented below (in thousands). 

	THREE MONTHS ENDED MARCH 31,
	2013			2012
REVENUES:
Ophthalmic	$	25,705		$	21,811
Hospital Drugs & Injectables		40,434			27,376
Contract Services		7,715			2,530
Total revenues	$	73,854		$	51,717
GROSS PROFIT:
Ophthalmic	$	14,716		$	12,719
Hospital Drugs & Injectables		22,814			17,041
Contract Services		1,615			1,141
Total gross profit		39,145			30,901
Operating expenses		20,556			23,239
Operating income		18,589			7,662
Other (expense) income		(2,332	)		(2,420	)
Income before income taxes	$	16,257		$	5,242

The Company manages its business segments to the gross profit level and manages its operating and other costs on a company-wide basis. Inter-segment activity at the gross profit level is minimal. The Company does not identify assets by segment for internal purposes, as certain of the Company's manufacturing and warehouse facilities support more than one segment.

Sales to customers in foreign countries accounted for $8.5 million and $5.3 million of the Company's sales during the three month periods ended March 31, 2013 and 2012, respectively.  Sales by AIPL to its customers represented $5.1 million and $0.9 million of the sales in these respective quarterly periods.