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To: Michael Burry who wrote (10094)	3/2/2000 3:12:00 PM
From: Madharry	Read Replies (1) \| Respond to of 78661

I don't know if this will add clarity or not- but I would distinguish between the cash flows and the non cash flows. In otherwords there are assets and liabilities that are fixed assets but are valued in foreign currency and then have to be translated for exchange purposes- those would not effect cash flow. Then you have foreign sales and expenses and short term foreign assets and liabilities and those would effect cash flow.

To: Michael Burry who wrote (10094)	3/2/2000 3:34:00 PM
From: 16bit	Read Replies (1) \| Respond to of 78661

Mike, Foreign assets are valued in the local currency. If that currency is subsequently devalued relative to the dollar then you have lost money. Currency exchange rates do not have much effect on the price of local products and services in the local currency, except for imported items. Let's say you buy Juan's Repair Shop in Mexico. The purchase price is 1,000 pesos. The exchange rate is 25 pesos to the dollar. Juan's business would cost you $250. If the next day the peso is devalued to 20 pesos to the dollar then you have lost $50 in equity. You still own the business, but the dollar value of future cash flows has become less valuable by 20%. Those 10 pesos a day in profits would now only bring you $2.00 instead of $2.50 you were expecting when you bought the business. If you were to try and sell the business you would only receive 1,000 pesos ($200). The exchange rate would have little to no effect on the price of Juan's Repair Shop. A local purchaser of Juan's would not feel these effects except in that his 10 pesos profit would not buy as much American product. I think the key is to remember that as a US owner you will now receive fewer dollars from that foreign business, with regards to current income and the future sale of the business. Byron

To: Michael Burry who wrote (10094)	3/3/2000 9:41:00 AM
From: Bob Rudd	Respond to of 78661

Mike: Currency effects - This is pretty complicated stuff and I doubt there's quick fix since various reporting methods can be used. Basic rule is to unbundle currency effects and look at business results. Refer to: 'Analysis and Use of Financial Statements', 2nd edition, by White, Sondhi, & Fried, Chapter 15, Analysis of Multinational Operations, for a reasonably comprehensive, yet readable, coverage. [Note: This book can be purchased much cheaper from UK book sellers on the net than US based -Start here evenbetter.com goto books, search for ISBN: 0471111864 ] bob

To: Michael Burry who wrote (10094)	3/4/2000 12:51:00 AM
From: Paul Senior	Respond to of 78661

Foreign currency analysis and EFX. Question was regarding: "how to interpret and value this, especially as respect to cash flow analysis and cash return on equity/cash return on capital calculations." As a general interest question or as part of a specific valuation methodology or for those who believe the more you know the better off you are--- a good discussion item. I'll take a different viewpoint. For EFX, from what I can understand, the currency issues were primarily from Brazil operations. Total 1999 operating income (i.e. Operating Contribution) of Latin America was 22.9M (up from 21.4M the previous year) out of a total Operating Contribution of 450.5M. There was also some Brazil component perhaps in another category "Payment Services" (corp. tot.: 135M vs. 109M prior year). I don't have this broken out in the 1/25 press release. These currency issues seem minor -- Latin America contributing only 5% of total operating income. EFX in recent weeks has: hired a new CFO, announced a $260M acquisition, and made several announcements with partners in e-commerce thrusts. Success or lack thereof within these areas greatly outweighs the effects currency swings might have and are much more significant aspects for anyone considering starting a position in EFX. Jmo, although I've been wrong many, many times before. Paul (long EFX)