Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Jeff Zekauskas with JP Morgan. Please proceed.
Silke Kueck – JP Morgan
Good afternoon. This is Silke Kueck for Jeff. How are you?
John McCarthy
Hey, Silke.
Carlos Riva
Yes.
Silke Kueck – JP Morgan
A couple of questions. First on BP. I understand how the $2.5million flow through income statement as a reimbursement to your cost and can you explain how the other part, the other $45 million will flow through income statement? Meaning, there is $24.5 million you’ve received in August and should that amount be somehow amortized over some period of time and should that somehow appear on your income statement?
John McCarthy
It’s a good question, Silke. If you look at our financial statements and again, it’s more detailed in the 10-Q than it is in the press release, but what you’ll see is a line item, effectively, a minority interest line item that’s $19.5 million in the September 30 statement. What you don’t see is another $5 million that’s running through the equity line item, the two of which total $24.5 million that we repaid as part of the closing of the transaction. That $24.5 million, as we get paid the balance in January and July of this year, will accrete up to $45 million on the balance sheet, okay? So that’s one – that’s the $45 million license fee, if you will, and the $2.5 million per month funding from BP to co-fund our biofuels development will run through the P&L below the operating expense line item as you see in the third quarter, and that’s how it gets accounted for. It’s technical, it’s pretty technical accounting through what’s called FIN 46 and we spend a lot of time with ENY and in company, making sure that we had what we felt was a proper accounting treatment here.
Silke Kueck – JP Morgan
So, I guess, I’ve understood that right. It means that the $45 million will go through a cash flow statement chart on the balance sheet, but it doesn’t really run through the P&L.
John McCarthy
Yes, the $45 million license fee, if you will, if you want to think about it in that manner, will go directly on to the balance sheet, $24.5 million of which is already there by virtue of having gotten paid $24.5 million, as we’ve detailed in prior descriptions. $6.5 million gets paid early January, another $14 million related to that component of the transaction gets paid in July, so those three elements will go directly onto the balance sheet. The $2.5 million monthly payments that would be getting paid through January of 2010 will run through the P&L.
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