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the years 1985 through 1988 if it had continued to operate as it
had during the years 1983 and 1984, reduced by any profits that
ETS actually earned during each of the years 1985 through 1988.
Mr. Donnelly used the following approach to estimate what those
profits would have been: (1) He calculated ETS' average net
profits for the years 1983 and 1984 (viz., $110,248); (2) he used
a constant annual inflation rate of 4 percent; (3) he concluded
that if ETS had continued to operate during the years 1985, 1986,
1987, and 1988 as it had during 1983 and 1984, it would have
earned profits of $114,658, $119,245, $124,015, and $128,976,
respectively; (4) he determined that ETS actually earned profits
of $39,875 during 1985 and reduced the 1985 estimated profits
figure of $114,658 by that amount; and (5) he reduced the forego-
ing estimated profits figures for the years 1985 through 1988 by
$38 to reflect certain rounding adjustments for all four years.
Under the selected allocation analysis, Mr. Donnelly also
recommended (1) that his selected allocation ratio of 29.86
percent be applied to the punitive damages, the interest, and
the attorneys' fees and costs components of the proceeds of the
Farmers lawsuit and (2) that the resulting amounts be allocated
to ETS. He also recommended that his selected allocation ratio
of 29.86 percent be applied to the attorneys' fees and costs
actually incurred in the Farmers lawsuit14 and that the resulting
14 In applying his selected allocation ratio to the attorneys'
(continued...)
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