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Ligand Pharmaceuticals Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 09:30PM
Ligand Pharmaceuticals Inc. (LGND) filed Quarterly Report for the period ended 2011-03-31. Ligand Pharmaceuticals Inc. has a market cap of $215.4 million; its shares were traded at around $10.98 with and P/S ratio of 9.1. Ligand Pharmaceuticals Inc. had an annual average earning growth of 7.2% over the past 10 years.
Highlight of Business Operations:
In September 2010, we ceased use of our facility located in Cranbury, New Jersey. As a result, during the quarter ended September 30, 2010, we recorded lease exit costs of $9.7 million for costs related to the difference between the remaining lease obligations of the abandoned operating leases, which run through August 2016, and managements estimate of potential future sublease income, discounted to present value. Actual future sublease income may differ materially from our estimate, which would result in us recording additional expense or reductions in expense. In addition, we wrote-off approximately $5.4 million of property and equipment related to the facility closure and recorded approximately $0.8 million of severance related costs. During the quarter ended March 31, 2011, we sold certain property and equipment for $0.2 million from our former facility, which was recorded as a reduction of lease termination and exit costs.
On November 9, 2006, we sold real property located in San Diego, California for a sale price of $47.6 million. This property included our corporate headquarter building totaling approximately 82,500 square feet, the land on which the building was situated, and two adjacent vacant lots. As part of the sale transaction, we agreed to leaseback the building for a period of 15 years. We recognized an immediate pre-tax gain on the sale transaction of $3.1 million and deferred a gain of $29.5 million on the sale of the building. The deferred gain was being recognized on a straight-line basis over the 15 year term of the lease at a rate of approximately $2.0 million per year. In August 2009, we entered into a lease termination agreement for this building. As a result, we recognized $20.4 million of accretion of deferred gain during the quarter ended September 30, 2009, and will recognize the remaining balance of the deferred gain through the term of our new building lease, which expires in December 2011. The amount of the deferred gain recognized for the three months ended March 31, 2011 was $0.4 million, compared to $0.4 million for the same period in 2010.
In August 2009, we entered into a lease termination agreement for our corporate facility in San Diego. Under the terms of the agreement, we paid a termination fee of $14.3 million as follows: $4.5 million was paid upon signing, $4.5 million was paid in July 2010 and $5.3 million was paid in April 2011. In addition, we entered into a new lease for a period of 27 months commencing October 2009, for premises consisting of office and lab space located in San Diego to serve as our new corporate headquarters.
The cash generated for the three months ended March 31, 2011 reflects net income of $9.5 million, adjusted by $4,000 of gain from discontinued operations and $2.2 million of non-cash items to reconcile the net income to net cash used in operations. These reconciling items primarily reflect the change in estimated fair value of contingent value rights of $1.7 million, depreciation and amortization of $0.6 million and stock-based compensation of $0.5million, partially offset by accretion of deferred gain on the sale leaseback of the building of $0.4 million and non-cash lease costs of $0.1 million. The cash generated during the three months ended March 31, 2011 is further impacted by changes in operating assets and liabilities due primarily to deferred income taxes of $13.9 million, an increase in other liabilities of $0.8 million, an increase in inventory of $1.8 million and a decrease in accounts payable and accrued liabilities of $0.6 million, partially offset by decreases in other current assets of $4.6 million, accounts receivable of $1.0 million and other long term assets of $0.5 million. None of the cash provided by operating activities for the three months ended March 31, 2011 related to discontinued operations.
The use of cash for the three months ended March 31, 2010 reflects a net loss of $2.8 million, adjusted by $0.2 million of gain from discontinued operations and $0.3 million of non-cash items to reconcile the net income to net cash used in operations. These reconciling items primarily reflect the change in estimated fair value of contingent value rights of $0.6 million, accretion of deferred gain on the sale leaseback of the building of $0.4 million and
realized gain on investment of $0.7 million, partially offset by depreciation of assets of $0.7 million and the recognition of $0.6 million of stock-based compensation expense. The use of cash during the three months ended March 31, 2010 is further impacted by changes in operating assets and liabilities due primarily to decreases in accounts payable and accrued liabilities of $9.8 million, an increase in other long term assets of $0.5 million, a decrease in other liabilities of $1.3 million and a decrease in deferred revenue of $1.6 million, partially offset by a decrease in accounts receivable, net of $0.3 million. Net cash provided by operating activities of discontinued operations was $0.3 million for the three months ended March 31, 2010.
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