William,
I came across an 8K which gives a clue to the potential earnings benefit from TMEI's aquisition of Trinity Electronics.
"On December 22, 1997, Trinity Electronics, Inc., a distributor of electronic parts located in Santa Clara, California, merged with and into TMCI/Trinity Acquisition Corp., a wholly-owned subsidiary of TMCI Electronics, Inc. The effective date of the transaction was October 1, 1997.
"The Company paid a total of $4,290,000, consisting of a cash payment of $1,000,000, two promissory notes in the amounts of $1,000,000 and $290,000, respectively, and the issuance of 404,539 shares of common stock of the Company, valued at $2,000,000. The money for the cash payment was supplied through a loan from Manufacturer's Bank which will be repaid by excess cash from operations. The $1,000,000 promissory note is due on March 9, 1998 and is personally guaranteed by Rolando Loera, Chairman, President and Chief Executive Officer of the Company. The $290,000 note is for payment of income taxes on earnings of Trinity accrued through September 30, 1997."
The clue is the $290,000 note for income taxes as of September 30, 1997. If I assume a 35% tax rate and that Trinity is operating on a calendar basis, and that their earnings are not cyclical, then their annual earnings after taxes should be around $720,000. In the last quarter, TMEI reported 5,393,000 shares. Adjusting for the 404,539 new shares, this means an additional earnings of .124 cents per share for TMEI on an annual basis. Not bad. Plus, possibly, a little more, if the aquisition means the company can aquire parts for its own use on a cheaper basis. However, there will be interest expenses on the $3,000,000 of loan/notes so after-tax income should really be around 10 cents better. The 8K says the company will publish pro forma earnings for the aquisition within 60 days.
John |
