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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Machaon who wrote (27204)	1/5/1999 1:21:00 PM
From: Tommy D	Respond to of 32384

Sorry Bob but I think you are. The exercise of the warrants is recorded only on the balance sheet as an increase (or a credit) to share capital or equity and an increase in cash. It would only effect the income statement to the extent that some portion of the discount (or the imputed interest cost) was recorded as an expense. However, I would expect that this cost would be amortized over the remaining live of the warrants so would not be a charge on the 4th quarter. I want LGND to go up and I think the exercise is positive but don't expect it to effect the P&L statement for the quarter. Regards TommyD

To: Machaon who wrote (27204)	1/5/1999 1:22:00 PM
From: Exacctnt	Respond to of 32384

Bob, If you were talking cash flow, you'd be correct. However, the financing deal with Elan and the warrant exercises are not included in the income statement. Regards, Bob

To: Machaon who wrote (27204)	1/5/1999 1:29:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 32384

Bob, You have to distinguish between the balance sheet impact of transactions and the earnings effect. Transactions in a company's own stock effect the balance sheet, but not the P&L statement. (There are some exceptions like certain convertible preferred with a variable conversion price which can produce an earnings charge, or if a company uses its stock or options to pay consultants or the utility bill). The recent transaction will not have any impact on this quarter's earnings. It will, however, increase the cash balance and the shares outstanding, while reducing the warrants outstanding. It also tidies up the balance sheet a little. These warrants would have eventually been converted anyhow - LGND just paid a moderate premium to get the cash now. Peter

To: Machaon who wrote (27204)	1/5/1999 3:42:00 PM
From: dwc	Respond to of 32384

Yes Bob, you are missing the difference between revenues and borrowings or direct capital infusion. The deal will help the balance sheet look pretty (called window dressing), but does nothing for bottom line. DWC cpa

To: Machaon who wrote (27204)	1/5/1999 4:19:00 PM
From: LLCF	Respond to of 32384

< Anyone have any comments? Am I missing something? > Yes... whats going on with the warrents and/or sale of securities is a "capital item"... there is no operating earnings from this source of cash. It shows up on the statement of cash flow under capital items and will not show up in the income statement at all unless they have to declare some sort of "non recurring" income from the transaction which we hope not cause we certainly don't want them paying any taxes. In any case no one on the planet will look at this as "earnings" in reality. They may look at the balance sheet in a more favorable light however.... IMO. DAK