DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

12 Months Ended

Dec. 31, 2012

Distribution Agreements and Major Customer [Abstract]

DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

NOTE O - DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

Our brachytherapy seed business sells our TheraSeed® device directly to healthcare providers and to third-party distributors.  Under our third-party distribution agreements, we are the exclusive palladium-103 seed supplier for the treatment of prostate cancer for each distributor, and each distributor has the non-exclusive right to sell TheraSeed® in the U.S. and Canada.  Certain agreements also provide distributors with rights to distribute TheraSeed® for the treatment of solid localized tumors other than in the prostate and with rights to distribute to certain locations outside of North America.  Such applications (non-prostate and outside of North America) have not been material.  Our principal non-exclusive distribution agreement is with C. R. Bard (“Bard”).  Our agreement with Bard provides for automatic one year extensions of the term, unless either party gives notice of its intent not to renew at least twelve months prior to the end of the current term. The current term expires December 31, 2014 and will be automatically extended for one additional year unless either party gives notice of its intent not to extend by December 31, 2013.   Sales to Bard under the Bard agreement represented approximately 25%, 28%, and 33% of brachytherapy segment revenue in 2012, 2011, and 2010, respectively.  Our surgical products segment also sells to Bard.  Total consolidated sales to Bard, including sales in our brachytherapy seed segment and our surgical products segment, did not equal or exceed 10% of our consolidated revenue in 2012.  Consolidated sales to Bard totaled 10% and 11% of consolidated revenue  in 2011 and 2010, respectively.  Accounts receivable from Bard represented approximately 16% and 19% of brachytherapy accounts receivable at December 31, 2012 and 2011, respectively, and were less than 10% of consolidated accounts receivable at December 31, 2012 and 2011.

Core Oncology (“Core”) became an additional non-exclusive distributor of TheraSeed® in January 2010.  In February 2011, we terminated our agreement with Core due to Core’s failure to satisfy its financial obligation to us in accordance with the contractual terms of the agreement.Corehad been attempting to become current with amounts due to us.  However, litigation filed against Core by a third party in January 2011 created what we viewed as an unacceptable level of uncertainty surrounding Core’s ability to satisfy their financial obligations to us for both current and ongoing sales.  Subsequent to termination of the agreement, we continued to supply TheraSeed® to Core on a prepaid basis.  Sales to Core in our brachytherapy segment totaled approximately 8% and 14% of total brachytherapy seed segment revenue in 2011 and 2010, respectively.  In the latter half of 2011, certain customers who previously purchased TheraSeed® through Core began purchasing either from us on a direct basis or through one of our other TheraSeed® distributors. On February 17, 2012, we acquired Core’s prostate brachytherapy customer base.  See Note C.   Brachytherapy accounts receivable due from Core at December 31, 2011 and 2010 totaled $1.8 million and $1.7 million, respectively (consolidated accounts receivable due from Core totaled $2.2 million and $2.1 million at December 31, 2011, and 2010, respectively).  An allowance for doubtful accounts was established for all unpaid amounts due from Core at December 31, 2011 and 2010.  In connection with the acquisition of the Core customer base on February 17, 2012, we released Core from all claims existing at that date, including the Core Accounts Receivable.  Accordingly, the $2.2 million for which an allowance had been established was written off as uncollectible for financial reporting purposes in 2012.

One surgical products customer represented 17% of surgical products accounts receivable and 11% of consolidated accounts receivable at December 31, 2012.