Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : New Brunswick Scientific Co., Inc. (NBSC) -- Ignore unavailable to you. Want to Upgrade?

To: scaram(o)uche who wrote (405)	2/14/2002 12:21:06 AM
From: quidditch	Read Replies (1) \| Respond to of 724

Bulba, Rick - thanks. I'm well aware that carrying value does not necessarily reflect actual B/S value (conversely, GAAP rules recently tightened on reflecting impairment of long term assets and taking writedowns to reflect such impairment)- a classic example being in an industrial (e.g. oilfield drilling) company where a rig has been fully depreciated, has 0 value on the books but has been well-maintained and pumps it out of the seabed like a champ. No, what baffled me, as I tried to explain in the original post, was the characterization of the writedown of DGI's carrying value to zero. (Remember, all this started with the notion that it was a well written report.) Again: 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. Ordinarily, the writedown to 0 is nothing to brag about; to the contrary, it may reflect impairment, unremitting losses at an investee to bring down original investment to zero, etc., etc. I think Rick is closer to the mark. As noted in Rick's find, it was the change from consolidating DGI (when NBSC owned >50%) to accounting for its investment in DGI on the equity method, that allows NBSC not to have to reflect future losses beyond the original investment. [The Company is not required to, and will not record losses from its share of DGI's operations beyond the carrying value of its investment since it has no further obligations to fund the DGI operations. Thus, one must conclude that between 6/30/01 and 12/30/01, NBSC's share of DGI's losses equalled or exceeded $410,000, not necessarily something to brag about (viz. "Most significantly, the carrying value...yada yada:) That was my only point. I guess what the report was trying to say was: "With the carrying value of our investment in DGI now zero, our results of operations will no longer be adversely affected as a consequence of our investment in DGI; this will allow greater transparency as to the true value and earnings power of our core operations. Nonetheless, our 47% interest in DGI has the potential to significantly enhance shareholder value...." Note: I think that (and I could well be wrong), once you write down an investment/asset to zero, you can't write the value up to >0 unless the asset has actual value and you change the characterization of the asset as an asset held for sale--then, in that line item, you can book the implied sale value, but you have to have a bona fide intent to sell. I bought a little starter position in the company a few weeks ago for my daughter's education fund, so I'm happy with today's report--wish I'd bought more, and if it pulls back, I will. quid