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Gold/Mining/Energy : GEAC.....Canadian best kept secret -- Ignore unavailable to you. Want to Upgrade?

To: Doug who wrote (1034)	2/5/2000 12:07:00 PM
From: dumpthelackies	Read Replies (1) \| Respond to of 1571

Doug---you hit the nail with DD You see, Bergeron according to my sources has an undesirable lack of skillset when it comes to DD. Thus his acquisitions for both Geac and his former outfit Sunguard have done nothing but cause mass confusion and lack of shareholder confidence. Look, I am long and mad at this point. I have nothing personal against the man. He is just unfit for the position.

To: Doug who wrote (1034)	2/5/2000 11:31:00 PM
From: PlayTheKing	Read Replies (2) \| Respond to of 1571

Hi Doug, Am I correct to assume that the excess of the price over book has to be allotted to I.P and or Goodwill and these need to be depreciated albeit at different rates. Correct. Goodwill is ALWAYS the price paid in excess over book value. Where the interesting aspect begins is determining what is book value which is what your second comment addresses. If I recall JBA had a large amt of Inventory and receivables. Many times Companies exaggerate and DD fails to scrutinize the history There are two processes that Geac had to do in order to determine what book value was. This is a very difficult part of the integration process as many of the amounts are subjective. The processes were: 1) Identification of Integration Reserves; and 2) Write-offs. 1) Integration reserves are essentially those costs that have OR will be incurred relating specifically to the acquistiion of JBA. The most common integration reserves are redundancies, premises (i.e leased space that have to be abondoned), relocation costs, unrecorded liabilities, asset write-offs, systems integration and other liabilities. JBA's inventory and receivables balances would have been assessed in the determination of book value. Any inventory found to be obsolete by Geac would have been identified as an ASSET WRITE-OFF and would have REDUCED the book value of JBA. Similarily, any JBA receivables determined to be uncollectible would have been written off as well and identified as an ASSET WRITE-OFF. In both cases the book values would have been DECREASED thereby INCREASING the goodwill paid. Surprisingly, management's bias in this case is NOT to exaggerate the asset balances but in fact would be to UNDERSTATE the book value of JBA. Why? This would enable Geac to write-off as much as possible so that a larger goodwill balance would result. Although goodwill will eventually be written off to income, the write-off will be spread over a number of years! I will stop here as the process and accounting guidelines get very complicated. However, I hope I have described enough so that you get a feel of what this process entails. 2) Write-offs. There are specific costs that the OSC will disallow and not be considered an integration item. These costs will have to be identified as a one-time charges which will be taken to income. Obviously, here too, management will tend to OVERSTATE this amount as it is in management's interest to dump as many costs in here and fix it later. Management will tend to give the worst case scenario and if the costs come in under then they will have "EXTRA CUSHION" to work with. What happens in this case is that the write-offs identified will be booked as an accrual and the corresponding entry as a charge to income. When the costs are incurred and amounts paid, the accrual account will be charged and drawn down. Let's say 2 years later Geac determines the actual costs are lower than expected they will be left with an excess accrual, essentially a cushion to off-set any future unexpected costs. In simplified terms this means that Geac expensed too much in the year the one-time charge was identified (i.e 1999/00) and now have "EXTRA INCOME" to work with. This is how management can "smooth income". A real disaster stock especially when most TECH stocks are at their peak. You said it!! I never imagined I would be able to repurchase Geac at these levels!!!! PlayTheKing