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John P. Gavin, CFA, is the founder and CEO of Disclosure Insight®, an independent publisher of investment research. Mr. Gavin has spent his entire career of over 25 years in the financial services industry. Prior to starting “DI” in 2000, he worked as an equity analyst and portfolio manager... More
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  • USEC Discloses Impairment Charges and Possibility of More to Come

    Last Friday, USEC Inc. (NYSE: USU) disclosed that it expects to expense approximately $137 million in previously capitalized items at its American Centrifuge Plant. Of that amount, $127 million relates to machines that were deemed no longer compatible with the commercial plant’s design and $10 million related to capitalized prepayments made to a plant supplier.

    The larger of the two charges was the result of an evaluation of the utility provided by a number of centrifuge machines at the plant. The company determined that such machinery no longer carries future economic benefit and therefore must be expensed. The second and smaller charge relates to a prepayment balance for materials that the company will not purchase under a contract with a supplier that will not be extended.

    In addition, USU expects to record a full valuation allowance in 4Q11 for the net deferred tax asset created as a result of the charges, as well as other previously recorded deferred tax assets. A valuation allowance is required if it is more likely than not that a deferred tax asset will not be realized in the future. As of 30-Sep-11, the company’s net deferred tax assets were approximately $246 million.

    USU is continuing to evaluate the recoverability of the remaining capitalized costs related to the American Centrifuge project as part of its year-end financial review. These previously capitalized costs, including the approximately $137 million described above, totaled approximately $1.3 billion as of 30-Sep-11. The company disclosed that depending on the outcome of the evaluation, it could expense up to the full amount of previously capitalized costs related to the American Centrifuge project as early as 4Q11.

    Tags: USU
    Jan 17 12:48 PM | Link | Comment!
  • Medivation’ s Dimebon Fails in Third Study - Company Now Solely Reliant on MDV3100

    Medivation (NASDAQ: MDVN) announced this morning that dimebon had failed to achieve statistically significant results for either of its two co-primary endpoints in the Phase 3 CONCERT trial. The failure was the third Phase 3 disappointment for the drug and signals the end of MDVN’s collaboration with Pfizer.

    The CONCERT trial, which evaluated dimebon as a supplement to ongoing treatment with donepezil for patients with mild-to-moderate Alzheimer’s disease, will be the drug’s last following failures in the Mar-10 CONNECTION trial and the Apr-11 HORIZON trial. MDVN and Pfizer stated that they will discontinue development of dimebon and that they will terminate their collaboration agreement.

    MDVN’s stock, which had been crushed in the wake of the negative results of the CONNECTION and HORIZON trials, surged in early November following positive interim results from its Phase 3 AFFIRM trial involving the use of MDV3100 for men with advanced prostate cancer. The company will now be entirely reliant upon the success of that product as MDV3100 and dimebon were the only drugs listed in the pipeline as of the 10-Q filed 9-Nov-11.

    Jan 17 12:39 PM | Link | Comment!
  • IGT to Acquire Double Down - Position Itself to Take Advantage of Recent DOJ Gambling Opinion

    International Game Technology (NYSE: IGT) announced yesterday that it had reached a definitive agreement to acquire Double Down Interactive, an online social gaming company and developer of the DoubleDown Casino on Facebook. The acquisition will put IGT in position to take advantage of a massive untapped market should Facebook delve into real money gambling in the U.S., a real possibility in light of a recent DOJ opinion.

    Rumors have already swirled regarding Facebook’s interest in supporting real money gambling in the U.K. Presumably, as the social media giant does not appear to be morally opposed to gambling, it would pursue similar ventures in the U.S. should legal channels allow it. A recent DOJ ruling, regarding what was barred under federal laws, indicated that such legal pathways could be open in the near future, if they aren’t already.

    In its press release regarding the acquisition, IGT indicated that the DoubleDown Casino had approximately 4.7 million monthly active users, an impressive growth rate over an estimated 3.3 million users in Oct-11. It was also rated as a top 4 social media game in 2011 by Facebook.

    As part of the acquisition agreement, IGT will pay $250 million in cash up front, $85 million in retention payments over the next two years, and up to $165 million in contingent earn-outs over the next three years based on financial performance. The transaction is estimated to be accretive to FY12 earnings and is expected to close in fiscal 2Q12 (ending 31-Mar-12).

    Since Jun-07, IGT has completed 5 other acquisitions for approximately $265 million, $146 million of which was allocated to goodwill. Over the same time period, the company recorded $80 million in asset impairments and $36 million in restructuring charges.

    Tags: IGT
    Jan 13 12:10 PM | Link | Comment!
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