admitted to hiding billions of dollars of liabilities

Who Else Is Hiding Debt When energy trader Enron Corp. (ENE ) admitted to hiding billions of dollars of liabilities in mysterious off-book entities, it trotted out the lame excuse of scoundrels: Everyone does it. And this time, it was the gospel truth. coach factory outlet online Hundreds of respected U.S. companies are ferreting away trillions of dollars in debt in off-balance-sheet subsidiaries, partnerships, and assorted obligations, including leases, pension plans, and take-or-pay contracts with suppliers. Potentially bankrupting contracts are mentioned vaguely in footnotes to company accounts, at best. The goal is to skirt the rules of consolidation, the bedrock of the American financial reporting system and the source of much its credibility. These rules, set clear in 1959, aim to make public companies give a full and fair picture of their business--including all the assets and liabilities of any subsidiaries. But accountants, lawyers, and bankers have learned to drive a coach and horses through them. Because of a gaping loophole in accounting practice, companies coach outlet online create arcane legal structures, often called special-purpose entities (SPEs). Then, the parent can bankroll up to 97% of the initial investment in an coach factory outlet online SPE without having to consolidate it into its own accounts. Normally, once a company owns 50% or more of another, it must consolidate it under the 1959 rules. The controversial exception that outsiders need invest only 3% of an SPE's capital for it to be independent and off the balance sheet came about through fumbles by the Securities & Exchange Commission and the Financial Accounting Standards Board. In 1990, accounting firms asked the SEC to endorse the 3% rule that had become a common, though unofficial, practice in the '80s. The SEC didn't like the idea, but it didn't stomp on it, either. It asked the FASB to set tighter rules to force consolidation of entities that were effectively controlled by companies. FASB drafted two overhauls of the rules but never finished the job, and the SEC is still waiting. It's not just the energy industry that exploits the loophole and stashes major liabilities in the never-never land of SPEs. Increasingly, companies of all stripes routinely use them to offload potential balance-sheet bombshells such as loan guarantees or the financing of sales of their own products. For example, the accounts of data processor Electronic Data Systems Corp. (EDS ) don't show $500 million--half of last year's earnings--that it would owe if its customers were to cancel their contracts and leave it holding the bag for loans on their computer equipment. The arrangement is acknowledged only in a footnote. An EDS spokesman says the tactic is common in the industry and does not put the company at undue risk. Airlines keep appearances aloft by shunting billions worth of airplane financing into off-balance-sheet vehicles, says credit analyst Philip Baggaley of Standard & Poor's Corp. United Airlines Inc. parent UAL Corp.'s (UAL ) published balance sheet for 2000 shows $5 billion of long-term debt. But only a footnote describes the bulk of its lease payments, which Baggaley estimates have a present value of $12.7 billion, due over 26 years on 233 airplanes. AMR Corp., parent of American Airlines Inc., is on the hook for $7.9 billion in lease payments not on its balance sheet. "Everyone who's involved in the industry knows that the true leverage is higher" than what's shown on the balance sheet, says Baggaley. UAL and AMR declined to comment. Banks arrange many of the devices and are big users themselves. J.P. Morgan Chase & Co. (JPM ), for example, has revealed in the Enron bankruptcy that it has nearly $1 billion in potential liabilities stemming from a single 49%-owned Channel Islands entity called Mahonia that traded with Enron. The liabilities bring the bank's total Enron exposure to $2.6 billion. And J.P. Morgan is not alone. A suit filed earlier this month shows that many U.S. finance companies are among 52 partners in LJM2, an Enron off-balance-sheet entity with over $300 million in assets. The partners, including Citigroup, Wachovia, and American International Group, may all have to takes losses on coach outlet store it. The banks' participation in SPEs is attracting scrutiny of federal regulators. A Federal Reserve spokesman said it is "concerned about" off-balance-sheet exposures and hopes new accounting rules will be put in place. How many more Mahonia or LJM2-like entities are there? The Channel Islands tax haven boasts more than 350 SPEs and similar entities, though it is impossible to know how many should really be consolidated on balance sheets of U.S. companies. Assets in the entities total more than $635 billion, according to Fitzrovia International PLC, a London-based research firm. The Cayman Islands, which has been competing for the business since the 1980s, claims another coach online outlet 600 trusts coach outlet sale and banks, most of which have SPE expertise. With some of the vehicles, it is impossible for investors to know from financial reports who could be responsible for what. For example, Dell Computer Corp. (DELL ) has a joint venture with Tyco International Ltd. (TYC ) called Dell Financial Services that last year originated $2.5 billion in customer financing, according to a footnote to Dell's accounts. According to the note, Dell owns 70% of DFS, but does not control it and therefore keeps DFS debts off its own balance sheet. What if DFS has trouble from customers not paying? Dell spokesman T.R. Reid says any obligations of DFS are Tyco's responsibility and Tyco agrees. Jeffrey D. Simon, president of the global vendor financing business at Tyco Capital, says Tyco would look to Dell's customers to pay and not to Dell. Tyco's balance sheet reflects borrowing to finance Dell's customers. Companies argue that off-balance-sheet vehicles benefit investors because they enable management to tap extra sources of financing and hedge trading risks that could roil earnings. Maybe so, but they sure make the companies, and their executives, look good: Return on capital looks better than it is because balance sheets understate the amount employed. And investors and regulators don't freak out as corporate debt balloons. But critics charge that the widespread use of off-balance-sheet schemes encourages contempt for accounting rules in the executive suite and spreads confusion among investors. "The nonprofessional has no idea of the extent of the real liabilities," says J. Edward Ketz, accounting professor at Pennsylvania State University. "Professionals can be easily fooled, too." Worse yet, many SPEs have provisions that can throw their users into a full-blown financial crisis. To get assets off its books, a company typically sells them to an SPE, funding the purchase by borrowing cash from institutional investors. As a sweetener to protect investors, many SPEs incorporate triggers that require the parent to repay loans or give them new securities if its stock falls below a certain price or credit-rating agencies downgrade its debt. It was just such triggers in its notorious off-balance-sheet partnerships that sent Enron into a death spiral. And triggers fueled the crises last year at Pacific Gas & Electric (PCG ), Southern California Edison, and Xerox (XRX ), according to Moody's Investors Service. "All of this hidden debt and these triggers could make the next economic downturn a lot worse than it would otherwise be," says Lynn Turner, who was chief accountant at the Securities & Exchange Commission until July. Despite the risks, SPEs remain very appealing to companies. And any attempt to curb them or abolish the 3% rule will run into furious opposition. Since the early '90s, an army of accountants, lawyers, and bankers built a huge industry to concoct ever more creative ways to evade consolidated reporting. So reform won't come easily. "It will be a phenomenal fight," says Turner. Maybe so, but Enron's demise shows how quickly a tiny loophole can tear the country's economic fabric. And there may never be a better time to close it. By David Henry, with Heather Timmons and Steve Rosenbush in New York and Michael Arndt in Chicago Before it's here, it's on the Bloomberg Terminal. LEARN MORE

Anecdotes from Olympic athletes and Brazilian

Anecdotes from Olympic athletes and Brazilian citizens make the Rio waterways sound like a disaster 6 months before the Olympics Scott Davis coach online outlet coach factory outlet online Feb. 18, 2016, 11:21 AM 2,161 1 facebook linkedin coach factory outlet online twitter email print Buda Mendes/Getty The contaminated Rio de Janeiro waterways have been a subject of alarm for months in the buildup to the 2016 Olympics. Several studies found that some waterways, including Guanabara Bay and the Rodrigo de Freitas lagoon, that will host Olympic events in August have levels of contamination akin to raw sewage, while several others have large buildups of trash in the water and along the shore. Now, with the Olympics less than six months away, an Outside the Lines story by Bonnie D. Ford on the state of Rio makes the waterways sound as disastrous as ever. Athletes are worried about competing in the waters, as some have come down with illnesses during training, though Ford notes that there's no evidence that those illnesses were a direct result of the contamination. Nonetheless, anecdotes from athletes and citizens about some of the trash found in the waterways are unsettling. Martine Grael, a Brazilian sailor, told Ford she had hauled entire TV sets out of the water during training sessions. Dutch windsurfer Dorian van Rijsselberghe posted on a Netherlands-based nonprofit site (translated by OTL), saying in 2013 that he had to "slalom" through garden chairs, a refrigerator, and dead animals. US sailor Brad Funk told Ford he frequently had to pull plastic bags off his rudder and centerboard while sailing. Ford went on one of the trash-collection boats and watched a 14-year-old boy scoop up a plastic wrapper, juice box, used condom, and "assorted gunk" with a net. Ford also described a trip on a boat to the island of Pombeba, where along the shoreline there was a collection of trash, ranging from old clothes, a car bumper, a tire, a headless doll, a suitcase, cleaning products, soda bottles, and more. And, of course, there's the sewage. During Ford's trip through the Marina da Gloria (adjacent to where coach online outlet Olympics sailing events will take place), a biologist she accompanied took pictures of the coach factory outlet online water, pointing out fecal matter along the way. Rijsselberghe said raw sewage was in the water and one of his coaches nearly threw up from the smell before entering the harbor. Matthew Stockman/Getty Images While some athletes have shrugged off the conditions, the smell seems like a consistent factor few can ignore. Ford describes the smell coming off the water and quotes several other athletes and citizens who also complain of it. OTL received a copy of a US Olympic Committee statement to athletes that said, "The USOC has ongoing concerns over possible existing viral and bacterial contaminants in the water ... There is currently no way to 'zero out' the risk of infection or illness when competition occurs in any water, and especially in Rio waters." Athletes are trying to combat the conditions — some will wear plastic overalls, receive vaccinations, use loads of sanitizer, or take fast and frequent showers after races. Some are simply going to compete, then return home to cleaner conditions and more medical options. US swimmer Haley Anderson explained that it was not so easy to decide to simply not attend: "It's like, 'OK. You make the Olympic team and then you decide not to swim. You tell me how that goes.'" It's becoming increasingly clear that with so little time coachoutletonline remaining, the dirty waterways will most likely remain a problem at the events. Read the entire story here > SEE ALSO: A 2016 Rio Olympics waterway has levels of viruses akin to raw sewage — here's what it looks like NOW WATCH: Hope Solo says she might skip the Olympics because of Zika Loading video... More: 2016 Olympics Rio Waters

Airlines Say 'Happy New Year' With New Fees

Airlines Say 'Happy New Year' With New Fees Airlines are ringing in the new coach online outlet year with a cherished ritual: new and higher fees. Virgin Atlantic will assess a £25 ($41) fee each way on long-haul flights for coach-class passengers who wish to select a seat more than 24 hours before departure. The dun begins on April 1 on flights from London to Las Vegas before expanding to the coach factory outlet online rest of the airline’s longer flights over the next 60 days. Analysts interpreted Virgin Atlantic’s seat-assignment fee as one impact of Delta Air Lines’ 49 percent ownership stake in the airline. That type of new fee could also eventually lead to Europe’s major airlines deciding to assess fees on the first bag for trans-Atlantic flights, Wolfe Research analyst Hunter Keay wrote.Stateside, meanwhile, United Airlines has already doubled the fee for oversized bags, with a $200 price in effect since Dec. 13. The nation’s second-largest carrier also increased the fee for three or more checked bags, from $100 to $125 coach online outlet each. “The transportation of checked bags—particularly excess and oversized bags—requires a complex and costly infrastructure, and this increase better enables us to recover those costs,” United spokesman Charles Hobart said in an e-mail. Spirit Airlines, the low-fare pioneer coach outlet sale of coach outlet store creative travel fees, raised its bag fees by $5 to $6 for people who pay during online check-in and $10 to $15 if purchased through Spirit’s reservations center. Travelers in the airline’s “$9 Fare Club” will also see bag fees rise by $1. (Spirit will still charge $100 at the boarding gate for all carry-on bags and each checked bag.)Airlines have found revenue from bags and other fees to be easy money, akin to losing weight without watching one’s calorie consumption. For the most part, nearly every dollar in such ancillary revenues trickles directly to the net income line on a carrier’s balance sheet—a rare feat in the vexatious world of airline finance. In the third quarter, U.S. airlines collected $879 million in baggage fees and $735 million in ticket-change fees, the latter category boosted by sizable increases that the major carriers imposed in April. The industry was led by Delta, which has collected $635.4 million in bag fees so far this year, followed by United and US Airways, which merged with American this month. In change fees, Delta was also No. 1 through Sept. 30, at $636.9 million followed by United and American. The U.S. Department of Transportation will release coach outlet online the full-year totals in May. (A nice chart of the fee totals, by carrier, appears here.) “We find it incomprehensible that some airlines believe a lack of irritating fees, imposed on low value customers, creates shareholder wealth,” Keay wrote, boosting his target for Spirit’s share price to $58. “We advise avoiding those stocks, all else equal.” Before it's here, it's on the Bloomberg Terminal. LEARN MORE

Why the Apple Watch Needs More Fashion Partnerships

Why the Apple Watch Needs More Fashion Partnerships
Apple recently announced the Apple Watch Series 2 at their annual iPhone coach online outlet event last week. With that, the company announced a partnership with Nike and new colors and bands for the Apple Watch Hermès. What the brand didn’t announce was a new partnerships with a fashion brand other than Hermès. They should have and here’s why.
When the Apple Watch was first announced, Apple promoted the device not only as a new gadget but as a new fashion accessory. The watch was being worn by models on cover of magazines.  appltThen, fashion icons and models started wearing it. People like Vogue editor in chief Anna Wintour, Karl Lagerfeld, Karlie Kloss and more. After that, Apple partnered with Christy Turlington Burns to promote the watch before launch.
Later in the year, Apple announced the Apple Watch Hermès. Apple’s partnerships with the French brand accredited the watch as both a tech accessory and fashion accessory. The watch, however, still wasn’t that popular among fashionistas.
Apple has since refreshed the watch twice. The company released new colors for the Apple Watch Hermès bands in April and released new colors and new bands last week. Releasing new colors for the device is good but refreshing the fashion branded watch won’t be enough to get fashion to like the watch. What Apple needs to do is partner with more brands.
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If Apple were to partner with more fashion brands, the Apple Watch would become so much more popular in fashion. People would see watch bands in styles from their favorite brands and they would probably be more willing to spend over $1,000 on it.
Fashionistas often spend well over that amount on luxury accessories like Cartier love bracelets, Tiffany “T” bracelets, or Hermès Kelly bracelets. coach outlet sale People also spend hundreds on bag charms. So, it wouldn’t be very surprising to see people spending that amount or close to that amount of money on coach online outlet something coach outlet online that’s probably a lot more useful.
Apple, however, shouldn’t partner with just any brand. It should partner with the major coach online outlet three handbag and accessory makers. The company has actually already partnered with one.
Hermès, Louis Vuitton, and Chanel are the major three handbag and accessory makers. Handbags from these brands are the most sought after in the world. Hermès has the Birkin, the coach factory outlet online most expensive handbag line in the world, Louis Vuitton has the famous monogram, and Chanel has the signature quilted leather.
All three of these brands have iconic bags and designs with a rich brand history and heritage. Items from these brands hold their value more than any other brand and value is what the Apple Watch needs right now.
partnering with these brands would give the Apple Watch a lot more value. Partnering with Hermès has already done that, but if Apple released and Apple Watch Louis Vuitton or Apple Watch Chanel the device would get a lot more credibility in fashion and more people would buy it.
Another thing Apple should do is at least sell third party watch bands from other fashion brands online and in stores.
Coach recently released some Apple Watch bands and while they were made in limited quantities, some bands sold out immediately. Also, Coach made these separately without Apple but a lot of “made for iPhone” products are sold at Apple stores and Apple could do the same thing for the watch.
Regardless of what Apple does, the company needs to get more credibility in fashion and give the Apple Watch more value. The only way it can do that, though, is to partner with more brands or sell third party bands by fashion brands in their stores.
So, what do you think? Should Apple partner with more fashion brands? Let me know in the comments below. Also, don’t forget to subscribe to get new posts sent directly to your inbox and follow me on Facebook, Instagram, and Snapchat.

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Baggage Fees Are Doubling Your Boarding Time At The Gate

Baggage Fees Are Doubling Your Boarding Time At The Gate Mandi Woodruff coach factory outlet online Oct. 31, 2011, 6:08 PM 593 1 facebook linkedin twitter email print coach outlet sale kalleboo via flickr By tacking on endless fees for baggage and carry-ons and creating new classes of seating to justify price hikes, air carriers may be doing more to exacerbate flying these days than simply rifling through passengers' wallets, the New York Times' Jad Mouawad reports.  Boarding flights now takes longer than ever. A Boeing study found it takes twice coach outlet sale as long coach outlet store to board a 140-passenger domestic flight these days (30 to 40 minutes) than it did in 1970.  With more passengers loading up with carry-ons to avoid paying a hefty fee for checking bags, the overhead bins on flights begin to fill up almost instantly. That often leaves the last to board—penny pinchers flying coach—to either involuntarily check their bags or crowd the aisle as they try to squeeze their bag into unavailable space.  “Boarding can be like driving behind a slow-moving truck that you can’t overtake," Mark DuPont, the vice president for airport planning at American Airlines, told the Times.  As it happens, airlines that charge fees for carry-on bags might actually be on to something when it comes to shortening boarding time. When we looked at the crazy fees airlines are hitting consumers with, we found Spirit Air slaps $35 fees on carry-on bags. That gives fliers all the more reason to check their bags, which cuts back on the pile-ups that can delay boarding, Mouawad says. To read more on how airlines are clogging up the boarding process, check out Mouawad's article here.   Click here for 7 rules to coachoutlet.com save money on holiday travel > coach outlet online More: Personal Finance Travel Fees New York Times Airline Industry

Cameron Pre-Election Program Features Fracking, Pensions

Cameron Pre-Election Program Features Fracking, Pensions U.K. Prime Minister David Cameron outlined his government’s final legislative program before next coach online outlet year’s election, with bills promised to change pension rules and make fracking easier. Queen Elizabeth II, in her role as head of state, read out a speech to Parliament in London listing the plans of the coalition government. It featured measures ranging from changes to the electricity market to charges for plastic carrier bags. The need for Cameron’s Conservatives and the Liberal Democrats to stick to the program they negotiated in 2010 and the difficulty of agreeing new measures meant this Queen’s Speech couldn’t follow the usual pre-election practice of making eye-catching promises. Instead, ministers aimed to rebut the charge from the opposition Labour Party that this is a “zombie Parliament” that’s run out of steam. “It is easy to forget when we first came together in the national interest just how skeptical people were about how long the coalition could last and how much change we could effect,” Cameron and Deputy Prime Minister Nick Clegg wrote in a joint introduction to the speech. “The Queen’s Speech marks a significant step.” The speech listed two pensions bills, one to change tax rules, allowing the over-55s to withdraw their savings, and removing the requirement to buy an annuity, and the other allowing the introduction of Dutch-style collective pension plans to permit savers to cut costs and pool risks. ‘New Options’“Big employers have been moving away from defined-benefit pensions schemes for years,” Pensions Minister Steve Webb told BBC Radio 4’s “Today” program. “We need to provide new options.” As part of an Infrastructure Bill, the government will consult on ways to speed up permission for fracking, meaning companies won’t need separate agreements with every landowner under whose property coach outlet sale the process is taking place. Cameron’s spokesman Jean-Christophe Gray coachoutletonline told reporters later that the government is considering compensation to communities of about 20,000 pounds ($33,000) for each lateral well drilled underneath them. “The coalition’s introduction of fixed-term Parliaments has changed the rules of the game,” Philip Cowley, professor of politics at the University of Nottingham, said in an interview. “Traditionally, the final session in any Parliament would be curtailed by an election, so governments can introduce bills designed to attract headlines, knowing they wouldn’t reach the statute book. They can’t do that now.” Minimum WageWith an election a year away, there are a number of measures aimed at shutting down areas in which Labour has attacked the government. A Small Business, coach outlet store Enterprise and Employment Bill will increase penalties for employers dodging the minimum wage and tighten rules on “zero-hours” contracts, under which staff aren’t guaranteed work. Cameron’s Tories had 32 percent support in a YouGov Plc poll published today against Labour’s 36 percent. YouGov questioned 1,962 adults on June 2 and 3 for the survey, for which no margin of error was specified. In his speech to lawmakers later, Cameron confirmed he would support any attempt coach outlet sale by one of his party’s rank-and-file lawmakers to introduce a bill legislating for a referendum on membership of the European Union. Such a bill in the last session of Parliament ran out of time. Plastic BagsIn a bid to halt damage to the environment from the 7 billion plastic bags that the government says were used in England in 2012, it will introduce a charge of 5 pence (8 U.S. cents) on each bag issued from October next year. The levy raised will go to charity and will coach outlet online apply to major retailers. Ministers are also looking at how to update the century-old legislation governing compensation payable to victims of riots. It follows the 2011 protests in London, Manchester and the Midlands in which gasoline bombs were thrown and vehicles, homes and businesses torched. The draft bill will improve compensation for individuals and small and medium-sized businesses. Seeking to encourage people who act heroically in dangerous situations, the government will introduce a Social Action, Responsibility and Heroism Bill to reassure those intervening in emergencies that the courts will take full account of the context of their actions in the event they are sued. Royal StandardThe day was a mix of politics and pageantry. The queen traveled by horse-drawn coach from Buckingham Palace to the Houses of Parliament, escorted by the Household Cavalry. As she arrived, the Union Flag of the U.K. was lowered and her Royal Standard raised over parliament. Lieutenant General David Leakey, who has the title Gentleman Usher of the Black Rod, marched to the House of Commons, the lower, elected, chamber, to summon lawmakers to hear the queen, waiting in the House of Lords, the upper, unelected chamber. The door of the Commons was slammed in his face. This ritual symbolizes the independence of the Commons from the crown: no British monarch has entered the lower house since 1642, when King Charles I tried to arrest five members in the run-up to a civil war that ended with his execution in 1649. After Leakey summoned the Commons, lawmakers processed to the House of Lords. Seated on a gilded throne next to her husband, the Duke of Edinburgh, the queen read the speech from a goatskin parchment, ending by telling lawmakers: “I pray that the blessing of Almighty God rest upon your counsels.” Before it's here, it's on the Bloomberg Terminal. LEARN MORE