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Technology Stocks : Safeguard Scientifics SFE -- Ignore unavailable to you. Want to Upgrade?

To: robert miller who wrote (2096)	12/27/1998 10:49:00 AM
From: David Lawrence	Read Replies (1) \| Respond to of 4467

Bob, I believe GAAP requires SFE to routinely "mark to market" all of their marketable securities. Therefore, we should expect another capital gain resulting from the ISCG merger. A couple of observations, though: 1. Subsequent revaluations (of TLAB and ISCG) could result in losses if they are trading lower than the prior quarter end. (Obviously not the case with TLAB this quarter.) 2. These are "books only" changes; since they were tax-free pooling of interests mergers, the tax books are only affected with the stock is actually sold. 3. I don't believe this applies to the companies in which SFE records earnings and losses on their consolidated P&L (i.e. CMPC?). The above observations are from my non-expert point of view, of course. David

To: robert miller who wrote (2096)	12/27/1998 11:56:00 AM
From: John Arnopp	Read Replies (1) \| Respond to of 4467

bob, I think David is right. Over 50% is consolidated, and generally from 20% to 49% ownership is supposed to be equity method accounting (reported as a long-term investment) and under 20% is the market methods (like TLAB now) because the intent is not a long-term "influence" position, but for sale and conversion to cash. However, Safeguard routinely uses the equity method for companies they own less than 20% of since they feel they exert considerable influence over them anyway (see the footnotes in their annual report). But this would not be the case with FCGI, I believe, unless they managed to get significant board representation. David? Hope you had a Happy Holiday, and on into 1999, --John