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

To: Exacctnt who wrote (27236)	1/6/1999 3:09:00 PM
From: Biomaven	Respond to of 32384

Bob, the warrants as well as outstanding employee stock options are already included in the number of shares used in the diluted earnings per share calculation. Therefore, no extra dilution when the warrants are exercised. This is basically correct when a company is making a profit. However, for a company making a loss on continued operations (like LGND), only basic shares outstanding are now reported under FAS 128, because the extra shares would be anti-dilutive (show a smaller loss per share). If LGND were making a profit, the exercise of warrants and options would basically be a wash and wouldn't significantly change diluted shares outstanding. (It actually does increase them slightly, but this is offset by more cash in the company. Diluted stock is actually calculated by assuming the exercise of all in-the-money options and warrants at the average price for the quarter, and then using the assumed proceeds to buy back shares at this same price). This last transaction was actually slightly dilutive, because they effectively reduced the exercise price of the warrants. Peter