XOMA Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Condensed Consolidated Financial Statement Detail

Condensed Consolidated Financial Statement Detail

9 Months Ended

Sep. 30, 2011

Condensed Consolidated Financial Statement Detail [Abstract]

Condensed Consolidated Financial Statement Detail

3. Condensed Consolidated Financial Statement Detail

Comprehensive Loss

Comprehensive loss is equal to net loss for the three and nine months ended September 30, 2011 and 2010.

Net Loss Per Common Share

Basic and diluted net loss per common share is based on the weighted average number of common shares outstanding during the period.

Potentially dilutive securities are excluded from the calculation of earnings per share if their inclusion is anti-dilutive. The following table shows the weighted average outstanding securities considered anti-dilutive and therefore excluded from the computation of diluted net loss per share (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Options for common shares		4,036		2,332		3,837		2,138
Convertible preference shares		-		254		90		254
Warrants for common shares		1,608		1,608		1,608		1,677
Total		5,644		4,194		5,535		4,069

For the three and nine months ended September 30, 2011 and 2010, all of the above outstanding securities were considered anti-dilutive, and therefore the calculations of basic and diluted net losses per share were the same.

Cash and Cash Equivalents

At September 30, 2011, cash equivalents consisted of demand deposits and money market funds with maturities of less than 90 days at the date of purchase. At December 31, 2010, cash equivalents consisted of demand deposits, money market funds and repurchase agreements with maturities of less than 90 days at the date of purchase.

Cash and cash equivalent balances were recorded at fair value as follows as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value

Cash	$	15,062	$	-	$	-	$	15,062
Cash equivalents		30,645		-		-		30,645
Total cash and cash equivalents	$	45,707	$	-	$	-	$	45,707

	December 31, 2010
	Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value

Cash	$	29,536	$	-	$	-	$	29,536
Cash equivalents		7,768		-		-		7,768
Total cash and cash equivalents	$	37,304	$	-	$	-	$	37,304

Foreign Exchange Options

The Company holds debt and may incur expenses denominated in foreign currencies, which exposes it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and the Euro. The Company is required to make principal and accrued interest payments in Euros on its €15.0 million loan from Les Laboratoires Servier (“Servier”) (refer to Note 6 below). In order to manage its foreign currency exposure related to these payments, in May of 2011, the Company entered into two foreign exchange option contracts to buy €15.0 million and €1.5 million on January 2016 and January 2014, respectively. By having these option contracts in place, the Company's foreign exchange rate risk is reduced if the U.S. dollar weakens against the Euro. However, if the U.S. dollar strengthens against the Euro, the Company is not required to exercise these options, but will not receive any refund on premiums paid.

Upfront premiums paid on these foreign exchange option contracts totaled $1.5 million. The fair values of these option contracts are re-valued at each reporting period and are estimated based on pricing models using readily observable inputs from actively quoted markets. The fair values of these option contracts are included in other assets on the condensed consolidated balance sheet and changes in fair value on these contracts are included in other income (expense) on the condensed consolidated statements of operations. The foreign exchange options were revalued at September 30, 2011 and had an aggregate fair value of $1.4 million, and the Company recognized losses of $0.3 million and $0.1 million related to the revaluation for the three and nine months ended September 30, 2011, respectively.

Receivables

Receivables consisted of the following at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011		December 31, 2010
Trade receivables, net	$	14,107	$	20,309
Other receivables		793		555
Total	$	14,900	$	20,864

Property and Equipment

Property and equipment consisted of the following at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011			December 31, 2010
Furniture and equipment	$	33,483		$	31,700
Buildings, leasehold and building improvements		21,490			21,463
Construction-in-progress		420			203
Land		310			310
		55,703			53,676
Less: Accumulated depreciation and amortization		(42,346	)		(38,807	)
Property and equipment, net	$	13,357		$	14,869

Depreciation expense was $1.4 million and $4.1 million for the three and nine months ended September 30, 2011, respectively, compared with $1.4 million and $4.4 million, respectively, for the same periods in 2010.

Accrued Liabilities

Accrued liabilities consisted of the following at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011		December 31, 2010
Accrued payroll and other benefits	$	2,906	$	2,752
Accrued management incentive compensation		2,864		4,982
Accrued clinical trial costs		1,349		1,020
Accrued severance payments		1,076		-
Accrued professional fees		816		1,020
Other		1,423		884
Total	$	10,434	$	10,658