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To: 007 who wrote (21890)	5/12/1998 5:56:00 PM
From: 007	Respond to of 95453

I was asked in a private message why TCMS has so much good will. For whoever may be interested, here is my reply: I think the goodwill exists because, for accounting purposes, TCMS acquired the four companies instead of just starting with its own assets. So, I believe (I'm not an accountant) that the goodwill is the sum of the amounts greater than market value paid to each company for their assets. I suppose you can't buy a company for just what its assets(minus liabilities) are worth if they have a good business. The goodwill can be viewed as the intangible business value of the companies TCMS purchased. When we try to assess valuations according to book value, what we're looking at is the assets minus the liabilities. In other words, the amount the company is worth aside aside from the value of its business. Naturally, it's nice to buy stock in a business at book value and get the ongoing business thrown in for free. The theory being that eventually the market will give value to the business as well. Goodwill kind of thwarts this whole analysis because it includes a value for the business. It must be subtracted to get tangible book value if you want to know what the value of the company is without its business. At two times tangible book value, TCMS must be about half the average of the sector. In any case, all of this is only as important as you make it. For value investors this is very important, but for chartists it's irrelevant. Best Regards, 007