How many companies were taking available cash and reaching for yield?
ADCT fesses up, taking a gigunta writedown.
On previous occassions we reported that credit concerns in the capital markets have significantly reduced our ability to liquidate auction-rate securities we hold. These securities are classified as both short and long-term available-for-sale securities on our balance sheet.
We reported a $29.4 million other-than-temporary impairment charge as of the end of our fiscal 2007 (i.e. October 31, 2007) because of a decrease in the fair-value of our auction-rate securities. Further, we reported that we expect to take an additional other-than-temporary impairment charge as the end of our first quarter of fiscal 2008 (i.e., February 1, 2008) estimated to be $31.0 million because account statements dated November 30, 2007 and December 28, 2007 received from the firms managing our investments indicated a further decrease in the fair-value of these securities. We stated that the amount of this first quarter charge was subject to significant change in the event of additional changes in market conditions.
On February 6, 2008 we received account statements dated February 1, 2008 from the firms managing our investments. We analyzed these statements and concluded on February 6, 2008 that a further decrease in the estimated fair value of the auction-rate securities we hold has occurred. We therefore have increased the estimated amount of the other-than-temporary impairment charge we expect to take at the end of our first fiscal quarter from $31.0 million to approximately $50.0 million. This updated estimate for the first fiscal quarter is subject to change as we complete the preparation of our financial results in connection with the filing of our quarterly report on Form 10-Q.
Taking into account this current increase in the estimated other-than-temporary impairment charge, our auction-rate securities had an estimated fair value of approximately $90.4 million as of February 1, 2008. On October 31, 2007 the estimated fair value of our auction-rate securities was $140.4 million. The estimated fair value of the auction-rate securities we hold could decrease or increase significantly in the future based on market conditions. We will continue to assess the fair value of our auction-rate securities based on our analysis of account statements we receive from the firms managing these investments.
We all know how rich corporate balance sheets are. Well, here’s a thought, where do they have the cash parked? Perhaps the same place [[ADCT]] has it?
UPDATE II: This is a fitting song.[youtube:http://www.youtube.com/watch?v=dE-LDfroa1w&eurl=http://lolstreet.blogspot.com/ 450 300]
UPDATE III: More shoes (must read)If you enjoy the content at iBankCoin, please follow us on Twitter