Replies to post #1805 on SurModics Inc (SRDX)

[DewDiligence]

Hmmm...

[Democritus_of_Abdera]

Next quarter’s cash flow number should be high; albeit due to one-time items that probably will be discounted by the analysts.

In the recent CC, Phil stated that $5.8M will be recorded as Q2 2008 cash flow to reflect payment of the note receivable from the sale of the Bloomington facility.

The milestone payment associated with the Jan 28th announcement regarding progress in the Merck collaboration likely will be recorded in Q2 2008.

Finally, I anticipate continuation of the $5-$10M net cash usually generated on a quarterly basis by the other operating activities.

For the record, net cash provided by operating activities for the past 2 yrs has been (per the filed 8K’s):

Q1 2006: $10,355
Q2 2006: $ 8,314
Q3 2006: $ 8,405
Q4 2006: $ 8,205
Q1 2007: $11,780
Q2 2007: $ 4,674
Q3 2007: $ 7,143
Q4 2007: $27,117 (Includes Merck's $20M upfront payment)
Q1 2008: $ 4,429

[fritz12721]

I realize that you guys rarely discuss stock price but I have to admit that it is a concern to me.Let me start with the fact that i have held SRDX since 2001 and plan to hold it for the long term as I see nothing but good things coming. That said, it seems that someone (or ones)is bailing and I am guessing that it concerns the accounting methods being used and i would like to pose a few questions to anyone that would care to opine.I apologize in advance for any overly ignorant questions.
1. Is SRDX "required "to ammortize income from MRK over time while they expense costs to achieve that income in the present quarter?
2. Will any future deal involving I-vation be handled in the same manner?
3. Why wasn't the Cypher deal handled in the same way?
4. Didn't management see that the stock price would be hammered by anyone wiyh a short term outlook?
5. DEW ..what did "Hmmm" mean in post 1806?
Maybe I am making this over simplistic or overly complicated but I cannot see any of this. Its like Ford spending money to build a car and having to spread the income recieved for the car over the distant future. A deal involving a potential $288 mill is turning into a negative..I'm afraid of what the next deal will bring.. When they sign with Genentech we should really get clobbered!! Like I said above ..they are not going to scare me out because i believe in the long term potential..but tonight I am a little confused (for lack of a better term). Any enlightenment on the current situation would be greatly appreciated.
Thanks again to all .. I probably depend on you guys more than I should but I respect and enjoy all the intelligent, thoughtful posts on this board ( a good example of which were Skiplarsens terrific reports from the annual meeting) Please keep them coming as I I think it helps all of us
Thanks Fritz