Estate of Ross H. Freeman, Deceased, Dennis Hersey, Executor - Page 8

                                        - 8 -                                         
          exceed 43 percent.  Spiro thought that the company’s growth rate            
          was “meteoric” when compared to a 25-percent growth rate in 1989            
          for the semiconductor industry.  Spiro concluded that the                   
          corporation’s growth rate was higher than any publicly traded               
          comparable company that he examined other than one.                         
               For the first 6 months of 1990, operating income was                   
          $3,606,000, which, if annualized, would be $7,212,000.  Spiro               
          concluded, however, that, if sales for the first 6 months of 1990           
          continued to grow, and expenses continued to decline as a                   
          percentage of sales, then operating income would be even greater.           
          The corporation’s actual operating income for 1990 was                      
          $8,846,000.                                                                 
               Spiro’s analysis of the corporation’s financial position               
          also included an examination of the corporation’s gross profit              
          margins, research and development expenses, marketing, general              
          and administrative expenses, interest income and expenses, tax              
          position, profitability, assets, liabilities, and book equity               
          value.                                                                      
               Spiro determined the value of the shares using both an                 
          income and a market approach.                                               
               Under the income approach, Spiro projected the cash-flow               
          available for distribution for 5 years.  He made assumptions                
          about future levels of sales, expenses, and taxes to estimate               
          annual available cash-flow.  After making certain adjustments, he           
          calculated the present value of that income stream and added to             




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011