To: Jdaasoc who wrote (58832 ) 4/29/2002 7:58:13 PM From: Zeev Hed Read Replies (3) | Respond to The question is what is the earning power off that good will. The reason TYC was booted from the core, was that heavy goodwill on the balance sheet. I don't know how much of these values are depreciated assets, and how much was simply TYC paper issued for the many acquisitions they made. They do have some very solid business like US surgical and Kendall in the Medical field, AMP (the leader in connectors) and few other outfits in the electronics sector, and of course their security business (ADT) is second to none. CIT is the big question, because a good chunk of the debt is associated with this financial animal, and that is of course their business (the spread). Cash flow from operations has been consistently above a $ 1 billion per quarter (much more in better times...), quite ample to support their debt of about $40 B. As for the goodwill, during acquisitions, when they buy a $100 MM manufacturing facility, depreciated on the acquired company's book to $20 MM, they charge goodwill with the other $80 MM, and unfortunately, I don't know how much of of the $20 B in depreciated plant and equipment was treated that way. I don't like that massive goodwill either (thus TYC has een booted at $53 on this thread), but I can easily see them earning $2/share and $12 for an earning stream like that, which is still growing, is a bargain. The main worry is rollover of debt, if they succeed in jettisoning CIT, that ma very well solve that problem (most of the commercial paper debt is associated with CIT's financial operations).
