- 33 -
transferred a customer list to petitioner, and the parties
intended the royalties to compensate DM for the list. Respondent
further argues that petitioner received the customer list in its
merger with SMP. Upon termination of SMP's license with DM, SMP
did not own the customer list; thus, it could not transfer it to
petitioner, as respondent argues. Petitioner argues that DM also
received any new customers that SMP developed when the license
terminated. We do not believe the uncorroborated testimony of
petitioner's witnesses that the customers developed by SMP also
reverted to DM.
Petitioner's business records show that it retained a larger
number of customers than AVG predicted. Over 50 percent of
petitioner's gross sales during the years in issue were
attributable to customers from DM's customer list. Petitioner
argues that AVG did not consider the actual sales generated by
DM's customers when determining the value of the customer list.
We recognize this as a flaw in respondent's valuation of the
customer list, but there is no evidence in the record of the
revenues generated by the customers in 1985. As AVG established,
it is necessary to adjust the value of the customer list for
petitioner's own efforts to maintain and increase the sales to
the customers. SMP's 1987 gross sales of $2.8 million provide
some insight into the portion of sales revenues that is due to
petitioner's efforts. Without specific information about the
revenues generated from the customers in 1985, our ability to
value the customer list is limited. However, we find that
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011