Update: Caliper can sell its stock in Aclara at any time, since the 18 month waiting period ended a month ago, and it's guaranteed a minimum of $36.11. Given that Caliper isn't doing very well itself, my guess is it has done so (Caliper recognized the revenue in '01). Meanwhile, Aclara's royalty obligation began this year and runs to '08 with a minimum of $2.5 million per annum. It has restructured some, and figures its revenue won't ramp in serious fashion till early next year. Will have to check to see if Roche is making any noise about the Arteas chips. Meanwhile, some guy named Kevin Tang (name rings bells, but I can't think why*) has taken a 9% stake.
From the latest 10-Q:
>>2. RESTRICTED CASH
Current restricted cash at June 30, 2002 and December 31, 2001 comprised of $34.1 million held in escrow as part of our settlement of litigation with Caliper Technologies Corporation (“Caliper”). Pursuant to the Caliper settlement agreement, ACLARA has provided a letter of credit to Caliper in the amount of $32.5 million as a guarantee of ACLARA’s performance. The banking institution, which had issued the letter of credit, required ACLARA to maintain a balance of 105% of the letter of credit amount in a segregated account. This amount of $34.1 million is invested in short-term US government agency debt and money market funds.
3. LITIGATION SETTLEMENT AND CONTINGENCIES
As part of the litigation settlement with Caliper, 900,000 shares of ACLARA common stock were issued in March 2001 with a guaranteed liquidation price of $36.11 per share if Caliper sells the shares after August 21, 2002 but before February 21, 2003. ACLARA initially valued the put obligation associated with these shares at $20.8 million. The put obligation is classified as a liability as ACLARA had posted collateral in the form of a letter of credit to Caliper in the amount of $32.5 million, as a guarantee of ACLARA’s performance under the terms of the litigation settlement.
Based on the change in ACLARA’s stock price and in accordance with EITF No. 96-13 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF No. 96-13”) and its related interpretations, and Statement of Financial Accounting Standards No. 133, “Accounting for Derivatives Instruments and Hedging Activities” (“SFAS 133”), the put obligation was subsequently revalued on a quarterly basis and at December 31, 2001, March 31, 2002 and June 30, 2002, the put obligation had a value of $27.2 million, $28.7 million and $30.5 million, respectively. As a result of these revaluations, a revaluation expense of $1.8 million and a revaluation credit of $2.4 million were recorded in the accompanying Statements of Operations for the three months ended June 30, 2002 and 2001, respectively, and revaluation expenses of $3.3 million and $2.4 million were recorded in the accompanying Statements of Operations for the six months ended June 30, 2002 and 2001, respectively. The revaluation of the put obligation uses a Black-Scholes pricing model with changes in valuation being recorded in the Statements of Operations.<<
It will be interesting to see how the tax loss selling season treats Aclara. If it gets beaten up some more, and the Arteas and eTaq lines show signs of gaining traction in the next couple of quarters, it could be worth a try.
* Edit regarding why Kevin Tang's name ringing bells for me:
>>DURHAM, NC, August 22, 2001 – Trimeris, Inc. (Nasdaq: TRMS) announced today that Kevin Tang, formerly with Deutsche Banc Alex. Brown, has been elected to the Board of Directors of the Company.
Mr. Tang until recently served as a Managing Director of Deutsche Banc Alex. Brown, Inc., an investment banking firm, where he headed the Life Sciences research group. In this capacity, he was involved with providing strategic and financial advice to many of the leading growth companies in the Life Sciences industry. During his tenure, he ranked four times as one of the top research analysts in his sector by The Wall Street Journal’s All-Star Analysts Survey. Mr. Tang originally joined Alex. Brown & Sons Inc. in 1991.<<
Tang's ownership of Aclara comes from a recently formed LLC, per the 13D.
snip
Cheers, Tuck |
