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Hi Kit,

I see now that it is hard to decipher what my little table was trying to show. Let me elaborate:

LDR paid $93M for IZI and will receive a tax benefit with a net present value of $18.6M. So, the net purchase price is $74.4M.

If IZI will add $0.16 per share to LDR's earnings, then

$0.16 * 9.4M LDR shares outstanding = $1.5M net income to LDR from IZI.

Then, the transaction P/E = $74.4 / $1.5 = 49.6x

I would think this deal could close this year, yet, or maybe sometime early in Q1. So, the 16 cents should be pretty close to a full years earnings.

Another way to look at it is if we extrapolate the 9 mo sales figure in the release to a full 12 mo. then IZI sales is about $14 million.

Taking my $1.5M in net income and dividing by the $14 million in sales, gives a net margin of 10.7% which seems reasonable. Doesn't it? Or, would you expect it to be higher? What kind of margins would you expect a company like IZI to earn?

If I'm close with all this, LDR paid too much unless IZI can grow very quickly for an extended period.

I admit that there's lots of things I could be missing. There are acquisition expenses that could be depressing the incremental eps figure for 2012 only. Plus all my extrapolating is a source for error too.

Perhaps, LDR is underpromising so they can overdeliver next year?

Rich
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