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Technology Stocks : American Power Conversion

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To: Joseph Francis Torti who wrote (1190)	4/22/1997 6:29:00 PM
From: w0z	of 2574

"This past quarter, there's no doubt that we were affected by multiple millions of dollars in translation impact due to currency fluctuations," Dowdell said. After the meeting however, chief financial officer Donald Muir clarified Dowdell's comments, saying that Dowdell was not speaking about revenues for the first quarter. Financial results for the first quarter are scheduled to be released on Thursday, after the market closes. Joe, this sounds very contradictory to me. Maybe the CFO is trying to help Roger gracefully extract his foot from his mouth. If currency did not affect Q1 revenues, I wonder how much it will affect Q2 revenues since we are barely into Q2 and since the dollar runup has not been a phenomenon in April alone. Furthermore, these impacts are usually immediate since sales must be recognized at the current exchange rate in effect at the end of Q1 (March 31). Most companies with a large percentage of international business learn how to manage currency impact on both their income statements (due to revenue and cost translation impacts) as well as their balance sheets (overseas assets and liabilities must be revalued based on the current exchange rates). APC may have some learning to do to reduce their currency exposure but many companies use currency futures to minimize the impact of currency on overseas business. I don't know the overall foreign content of APC's products, but I would imagine the batteries come from overseas. A strong dollar actually lowers their cost of offshore components. Since most of their business is currently domestic, there may be some postive elements to the dollar's strength. I guess we'll find out Thursday!

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