Revenue Recognition and Sales Returns Reserves

3 Months Ended

Mar. 31, 2012

REVENUE RECOGNITION AND SALES RETURN RESERVES: [Abstract]

Revenue Recognition, Policy [Policy Text Block]

REVENUE RECOGNITION AND SALES RETURNS RESERVES:

Net revenues include net product revenues (sales of Progesterone Products to Watson and Merck Serono and sales of STRIANT through April, 2011), royalty revenues (primarily royalty revenues from Watson on sales of Progesterone Products) and other revenues, (primarily the amortization of the deferred revenue and milestone payments from the Watson Transactions).

Net product revenues are recognized when shipped, except in the case of product shipments to Watson, which are recognized when received at Watson's warehouse. Royalty revenues, based on sales by licensees, are recorded as revenues as those sales are made by the licensees.

The Watson Transactions included allocated proceeds for licenses to the Progesterone Products and the continuation of development of the Progesterone Products through the filing of the related NDA with the FDA.  The Company could not determine the fair value of the continuation of development of the Progesterone Products and concluded the license fee and continuation of development to be a single unit of account resulting in the deferral of allocated proceeds and recognition as revenue over the estimated development period. In June 2011, Columbia earned a $5 million milestone payment from Watson based on FDA's acceptance for filing of the NDA submission for the use of progesterone vaginal gel 8% to reduce the risk of preterm birth in women with premature cervical shortening.

The Company is responsible for sales returns for products sold to domestic customers prior to both the Watson Transactions and the sale of STRIANT to Actient. Revenues from the sale of products to domestic customers were recorded at the time goods were shipped to customers.  The Company believes that it has not made any shipments in excess of its customers' ordinary course of business inventory levels.  Except for sales to licensees, our return policy allows product to be returned for a period beginning three months prior to the product expiration date and ending twelve months after the product expiration date.  Products sold to licensees are not returnable to us.  Provisions for returns on sales to wholesalers, distributors and retail chain stores were estimated based on a percentage of sales, using such factors as historical sales information, distributor inventory levels and product prescription data, and were recorded as a reduction to sales in the same period as the related sales were recognized.  The Company evaluates its remaining provision for returns on a quarterly basis based on returns processed rate and adjusts the provision if its analysis indicates that the potential for product non-salability exists. The Company is not responsible for returns for international sales.  Sales adjustments for international sales are estimated to recognize changes in foreign exchange rates and government tenders that may fluctuate within a year.

An analysis of the reserve for sales returns follows:

	Three Months Ended March 31,
	2012			2011
Balance at beginning of year	$	1,429,597		$	2,663,648
Provision:
Related to current period sales	—			41,096
Related to prior period sales	(100,000		)	—
	(100,000		)	41,096
Returns:
Related to current period sales	—			(283,880		)
Related to prior period sales	(42,848		)	—
	(42,848		)	(283,880		)
Balance at end of quarter	$	1,286,749		$	2,420,864