Discontinued Operations

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 17 : Discontinued Operations

On December 1, 2014, the Company signed an Asset Purchase Agreement with Recipharm AB (“Recipharm”) to divest its development and manufacturing facility and associated business located in Pessac, France. The assets included in the divestiture were tangible equipment, furniture and fixtures, inventories and all intellectual property rights relating to the operation and technological know-how necessary in manufacturing the products that are produced in the facility, as well as the assignment to Recipharm of all employees, customer contracts and liabilities which primarily relate to agreements of the Company with GlaxoSmithKline (“GSK”) for the manufacture and sale of Coreg CR®, which was Flamel’s lead product at the time, using its Micropump drug delivery platform and manufactured in the Pessac Facility.

The aggregate consideration received for the divested assets and business was $13,200, plus the value of divested inventory as determined using inventory valuation methodology as defined by the two parties. All cash and receivables pertaining to the Pessac Facility business prior to the sale were retained by the Company. A contribution of $700 was made by the Company to finance potential future retirement indemnities payable on transferred employees. The business was accounted for as a discontinued operation in the fourth quarter of 2014 and, therefore, the operating results of our Pessac Facility business were included in Discontinued Operations in the Company’s consolidated financial statements for all applicable years presented. The Company recognized a $5,007 gain on disposal, which was included in our income from Discontinued Operations, in fiscal year 2014. Concurrently with the above, Recipharm made an investment of $13,000 in newly issued Flamel shares, the purchase price of which was based on the average of the trailing 20 days’ trading prices of the Company’s shares prior to the closing date.

In connection with the Asset Purchase Agreement, the Company also entered into a number of other agreements with Recipharm:

Master Agreement on Supply and Services of Products (“MSA”)

Recipharm will provide various services in the domain of R&D and manufacture of pharmaceutical products for an initial non-cancellable period of five years.

Over the initial term, any services to be provided to shall include internal and external costs incurred by Recipharm plus 20%, which has been determined to be fair value for such services. The minimum amount of services per year, for a cumulative total of $22,500 as follows:

Year 1	$	4,250
Year 2	$	4,250
Year 3	$	4,250
Year 4 & 5 (each)	$	4,860

During the year ended December 31, 2015, the Company recorded $4,089 of research and development expenses, and cash outflows of $5,679, related to this commitment to Recipharm.

Option Agreement

Recipharm has a first option (right of first refusal) to discuss and negotiate licenses of the Company’s intellectual property rights for the sale of certain products in Europe. Upon exercise of the option, Recipharm and the Company shall agree in good faith on terms and conditions of the related license agreement within forty-five (45) days from the exercise of the option. The term of the Option Agreement is from the signing of the agreement through December 31, 2017. The Company received no compensation related to the option agreement.

Summary results of operations for the divested Pessac business were as follows for the years ended December 31,:

	2015		2014		2013
Revenues	$	-	$	14,967	$	18,265
Operating income (loss)		-		(875)		3,667
Gain on disposal		-		5,007		-
Interest Expense		-		(4)		(9)
Income tax provision (benefit)		-		110		74
Net income from discontinued operations	$	-	$	4,018	$	3,584

Carrying amounts of major classes of assets and liabilities classified as held for sale in the Consolidated balance sheets are as follows as of December 31,:

	2015		2014
Accounts receivable, net	$	-	$	730
Total assets of the disposal group classified as held for sale		-		730
Accounts payable		-		168
Total liabilities of the disposal group classified as held for sale	$	-	$	168

The major cash flows related to Discontinued Operations as included in the Consolidated statements of cash flows are as follows for the years ended December 31,:

	2015		2014		2013
Capital expenditures	$	-	$	1,271	$	872
Depreciation and amortization		-		1,709		1,751
Operating and investing non-cash elements		-		(740)		(676)