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Biotech / Medical : New Brunswick Scientific Co., Inc. (NBSC)
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To: GeoDude who wrote (395)2/13/2002 3:45:43 PM
From: quidditch  Read Replies (1) of 724
 
Not badly written--and even the substance was encouraging <gg>. However, the juxtaposition of the following two statements leads me to believe that the company is mis-communicating an aspect of the DGI investment:

Most significantly, the carrying value of our equity investment in 47-percent-owned DGI BioTechnologies, Inc., was reduced to zero during the fourth quarter of 2001 and the Company no longer has any future financial obligations related to DGI....Moreover, as a result of our retained ownership position, our shareholders maintain a substantial interest in DGI's attractive upside potential going forward,'' he said.

What charge or other non-recurring event caused carrying value to be reduced to zero? To couple the words "most significantly" (an implied positive) with "carrying value...reduced to zero" is either a misstatement or an error in emphasis. Carrying value does not necessarily have anything to do with "future financial obligations". Carrying value DOES relate to the value of an investment/asset on the company's balance sheet. Writing down an investment to zero may be a consequence of zero market value of an investment, indefinite future losses to be incurred by an investee (with negative stockholders' equity), market value less than cost and de minimis, a fully depreciated asset (not usually used in the context of an equity investment). Companies maintain carrying values of investees without having future obligations tied to the investment.
What am I missing by way of background that makes sense of this?

quid
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