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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frodo Baxter who wrote (8223)	3/8/1999 10:40:00 AM
From: Paul Berliner	Read Replies (1) \| Respond to of 9980

>>'Sheesh, you're digging for all my neat tricks, huh?' >>'They lost a lot more than their write-offs. Most of the FX losses were washed through the P&L. By my calculations, they lost something like $250 mln or so.' >>'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.' Lawrence, whether SEG took charges for a portion of the derivative losses or simply logged some under 'unrealized gains & losses' can not 1. confirm a sum of $200M, or even $100M. 2. be washed-through the P&L. The items are logged by SEG and most companies as non-opertaing items & thus can only appear in the Other, Net line of the I/S. 3. the auditors for the 10-K could not sign off on the books if these items were somehow mixed in with costs or revenues or general & admin. The only way that such a sum could not appear in the non-op. section is if they were cookin' the books. Maybe they were - but its doubtful because it is nearly impossible to hide gains & losses, both unrealized & realized on securities held or sold. The grand total of hedging losses for SEG in the 6/98 (really 7/3/98) annual was around the $76M they state simply in the notes. The net operating loss of $686M can not contain and hedging losses cleverly 'washed through' the P&L. It simply isn't allowed. The pre-tax charge of $76 M is contained in the non-op. line item Other, Net. P.S. - I know how suspicious and mind-boggling it is that the calculated losses on the original $1B in instruments didn't seem to materialize into the I/S. I was equally bewildered when the HKMA spent billions on a stockmarket intervention last year, only to have you send me a link showing an INCREASE in the reserves for the end of that memorable month - some mysteries most go unsolved.