Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Analyst for Todd Slater – Lazard Capital Markets.
Analyst for Todd Slater – Lazard Capital Markets
I’ve got a couple of questions, first it looks like the forex benefit, will that reverse itself in the next quarter because last quarter I think that guidance assumed a $3 million forex transaction loss for the year and now I think for the first half you’re tracking about a $1 million gain?
Adrian Kowalewski
There’s two issues that are in play because of foreign currency, the first one is the foreign currency transaction gain or loss and that’s strictly due to transfers of intercompany amounts during the time where there are changing exchange rates. In the first quarter we had a negative foreign currency exposure or foreign currency loss because we had sold merchandise to our foreign subsidiaries and since that period the US dollar appreciated so when those dollars were remitted we took a loss.
In the second quarter what we saw was the reverse of that, we saw the foreign currency depreciation against the dollar so we had the opposite impact. When those invoiced amounts, those subsidiaries remitted back to the United States they were done at an exchange rate that was more favorable and therefore we picked up a again. That’s the foreign transaction gain or loss that shows up on the income statement.
What is perhaps a bigger impact is the effect of translating the financial results for the period on the exchange rates that are prevalent during the period. So, when you look at Q2 2009 versus Q2 2008, Q2 2008 was translated at exchange rates where the dollar was at a lower level than it is today so the impact was that relative to today the results of the international subsidiaries from a revenue and EBITDA standpoint were higher. [Inaudible] where the currency was the other way where the dollar appreciate the revenue from the foreign subsidiaries and EBITA declined.
Analyst for Todd Slater – Lazard Capital Markets
So I’m just talking about the transaction, the foreign currency transactions. So, right now for the first half you’ve got about a $1 million gain for forex transactions, right?
Adrian Kowalewski
That’s because we had a $2.8 million transaction gain in the second quarter because the dollar appreciated significantly.
Analyst for Todd Slater – Lazard Capital Markets
So last quarter you had said that your full year guidance assumed a $3 million forex transaction loss so should we change that?
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