Hutton Reports $112.7 Million Loss

NEW YORK —  The E. F. Hutton Group Inc. brokerage firm, clearing the decks of bad news ahead of its final takeover by Shearson Lehman Bros., said Friday that it had an after-tax loss of $112.7 million in October and November.

The company said the losses were because of a decline in the value of securities it held for investment, bad debts by customers and equity trading losses.

In addition, $36.6 million of the loss, or more than a third, was caused by tax changes.

Hutton, like many other Wall Street brokerage houses, was believed to have been hard hit by the massive stock declines surrounding the Oct. 19 Black Monday stock crash. Hutton did not spell out the size of its stock market losses.

In an unusual statement reporting on just two months, instead of the common three-month reports, Hutton said more losses are expected for December due to costs associated with staff cutbacks and the winding down of certain businesses in anticipation of the merger with Shearson.

Hutton also said it adopted the new Financial Accounting Standards Board rule on accounting for income taxes, which will result in an aggregate charge to equity of about $184 million, stemming from the writeoff of deferred tax assets against prior years’ earnings. However, Hutton said adoption of the rule will not have an effect on 1987 earnings.