Sheesh, you're digging for all my neat tricks, huh?
Here goes:
If you look at the 8/19/97 10K (CQ2, i.e. pre-Thailand), you'll see that SEG had locked up a cool BILLION dollars in FX contract with the ringgit, S$, and baht.
By the 11/12/97 10Q, contracts were winded down to less than $800 million, with fair value of $-160 million ($60 million was written off this quarter). The losses associated with the other $200 million (undisclosed, but probably in the $-40 million range or so) were absorbed in the P&L that quarter.
By the 2/11/98 10Q, they only had $600 million in contracts left, with fair value of $-190 million (an additional $10 million was written off here). Again, the work-out of $200 million in contracts was flowed into the P&L.
Anyway, the point is that FX hedges are flowed into the P&L in the quarter in which they come due, unless they have already been written off earlier. So, you ask, why the write-offs? According to SEG: "Because not all economic hedges qualify as accounting hedges, unrealized gains and losses may be recognized in advance of the actual foreign currency cash flows." Oh.
Got it? |
