Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v2.4.0.6
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2011
COMMITMENTS AND CONTINGENCIES [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
10.
Commitments and Contingencies
 
The Company leases facilities, automobiles and certain equipment under agreements classified as operating leases, which expire at various dates through 2017.  Substantially all of the property leases provide for increases based upon use of utilities and landlord’s operating expenses as well as pre-defined rent escalations.  Total expense under these agreements for the years ended December 31, 2011 and 2010 was approximately $3.8 million and $4.0 million, respectively, of which $3.3 million and $3.5 million, respectively, related to automobiles leased for use by employees for a maximum lease term of one year from the date of delivery with the option to renew.

As of December 31, 2011, contractual obligations with terms exceeding one year and estimated minimum future rental payments required by non-cancelable operating leases with initial or remaining lease terms exceeding one year are as follows:
 
 
 
Less than
 
1 to 3
 
3 to 5
 
After
 
Total
 
1 Year
 
Years
 
Years
 
 5 Years
Contractual obligations (1)
$
146

 
$
41

 
$
83

 
$
19

 
$
4

Operating lease obligations:
 
 
 
 
 
 
 
 
 
  Minimum lease payments
19,221

 
4,329

 
8,875

 
5,731

 
285

  Less minimum sublease rentals (2)
(9,042
)
 
(1,431
)
 
(4,408
)
 
(3,203
)
 
—

       Net minimum lease payments
10,178

 
2,898

 
4,468

 
2,528

 
285

               Total
$
10,325

 
$
2,939

 
$
4,550

 
$
2,547

 
$
289


(1) Amounts represent contractual obligations related to software license contracts, office equipment, and outsourcing contracts for software system support.

(2) As of December 31, 2011, the Company has entered into various sublease agreements for substantially all of the office space at the Saddle River, New Jersey facility and the Dresher, Pennsylvania facility. These subleases will provide aggregated lease payments of approximately $6.0 million and $3.0 million, respectively, over the remaining lease periods.

Letters of Credit
 
As of December 31, 2011, the Company had $3.1 million in letters of credit outstanding as required by its existing insurance policies and its facility leases.
 
Litigation 

Due to the nature of the businesses in which the Company is engaged, such as product detailing and in the past, the distribution of products, it is subject to certain risks. Such risks include, among others, risk of liability for personal injury or death to persons using products the Company promotes or distributes. There can be no assurance that substantial claims or liabilities will not arise in the future due to the nature of the Company’s business activities and recent increases in litigation related to healthcare products, including pharmaceuticals. The Company seeks to reduce its potential liability under its service agreements through measures such as contractual indemnification provisions with customers (the scope of which may vary from customer to customer, and the performance of which is not secured) and insurance. The Company could, however, also be held liable for errors and omissions of its employees in connection with the services it performs that are outside the scope of any indemnity or insurance policy. The Company could be materially adversely affected if it were required to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnification agreement; if the indemnity, although applicable, is not performed in accordance with its terms; or if the Company’s liability exceeds the amount of applicable insurance or indemnity.