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

6 Months Ended

Jun. 30, 2011

Condensed Consolidated Financial Statement Detail [Abstract]

Condensed Consolidated Financial Statement Detail

3. Condensed Consolidated Financial Statement Detail

Comprehensive Loss

Unrealized gain on the Company's available-for-sale securities is included in accumulated comprehensive income. Comprehensive loss and its components for the three and six months ended June 30, 2011 and 2010 was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net loss	$	(8,130	)	$	(15,580	)	$	(14,466	)	$	(37,365	)
Unrealized gain on available-for-sale securities		1			-			1			-
Comprehensive loss	$	(8,129	)	$	(15,580	)	$	(14,465	)	$	(37,365	)

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 total outstanding securities considered anti-dilutive and therefore excluded from the computation of diluted net loss per share (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Options for common shares		3,833		1,478		3,711		1,223
Convertible preference shares		17		254		135		254
Warrants for common shares		1,607		1,607		1,607		1,607
Total		5,457		3,339		5,453		3,084

For the three and six months ended June 30, 2011 and 2010, all 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 June 30, 2011, cash equivalents consisted of demand deposits, money market funds and treasury bonds 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.

The treasury bond held in cash and cash equivalents is classified as an available-for-sale security and is stated at fair value, with unrealized gains and losses, net of tax, if any, reported in other comprehensive income. The estimate of fair value is based on publicly-available market information. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment and interest income. The cost of investments sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are also included in investment and interest income.

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

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

Cash	$	15,548	$	-	$	-	$	15,548
Cash equivalents		35,608		1		-		35,609
Total cash and cash equivalents	$	51,156	$	1	$	-	$	51,157

	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 June 30, 2011 and had an aggregate fair value of $1.7 million, and the Company recognized a gain of $0.2 million related to the revaluation for the three and six months ended June 30, 2011.

Receivables

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

	June 30, 2011		December 31, 2010
Trade receivables, net	$	8,257	$	20,309
Other receivables		2,802		555
Total	$	11,059	$	20,864

Property and Equipment

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

	June 30, 2011			December 31, 2010
Furniture and equipment	$	32,827		$	31,700
Buildings, leasehold and building improvements		21,481			21,463
Construction-in-progress		943			203
Land		310			310
		55,561			53,676
Less: Accumulated depreciation and amortization		(41,151	)		(38,807	)
Property and equipment, net	$	14,410		$	14,869

Depreciation expense was $1.4 million and $2.7 million for the three and six months ended June 30, 2011, respectively, compared with $1.4 million and $3.0 million, respectively, for the same periods in 2010.

Accrued Liabilities

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

	June 30, 2011		December 31, 2010
Accrued payroll and other benefits	$	2,709	$	2,752
Accrued management incentive compensation		2,253		4,982
Accrued professional fees		709		1,020
Accrued clinical trial costs		224		1,020
Other		1,192		884
Total	$	7,087	$	10,658