ACCOUNTS RECEIVABLE ALLOWANCES

6 Months Ended

Jun. 30, 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 terms of the respective with the end-user customer (which in turn depends on which end-user customer, each having its own pricing arrangement 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 comprehensive 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 condensed consolidated balance sheets.

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

	JUNE 30,			DECEMBER 31,
	2013			2012
Gross accounts receivable	$	79,696		$	74,855
Less reserves for:
Chargebacks and rebates		(11,515	)		(13,452	)
Products returns		(8,359	)		(8,409	)
Discounts and allowances		(1,616	)		(1,362	)
Advertising and promotions		(468	)		(585	)
Doubtful accounts		(31	)		(30	)
Net trade accounts receivable	$	57,707		$	51,017

For the three month periods ended June 30, 2013 and 2012, the Company recorded chargeback and rebate expense of $42.9 million and $23.0 million, respectively.  For the six month periods ended June 30, 2013 and 2012, the Company recorded chargeback and rebate expense of $86.7 million and $45.0 million, respectively.

For the three month periods ended June 30, 2013 and 2012, the Company recorded provisions for product returns of $0.5 million and $1.6 million, respectively.  For the six month periods ended June 30, 2013 and 2012, the Company recorded provisions for product returns of $1.7 million and $3.0 million, respectively.

For the three month periods ended June 30, 2013 and 2012, the Company recorded provisions for cash discounts of $1.9 million and $1.4 million, respectively.  For the six month periods ended June 30, 2013 and 2012, the Company recorded provisions for cash discounts of $3.9 million and $2.6 million, respectively.

The current period increases in chargebacks and rebates and cash discounts were related to the increase in sales within the Ophthalmic and Hospital drugs & injectables segments.  The current period decrease in the provisions for product returns was due to a decline in the anticipated rate of future product returns based on historical returns experience.