DHL Corporation and Subsidiaries - Page 26

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          sufficient cash-flow existed to warrant allocation of income to             
          the trademark.  He used financial information and projections               
          that came from petitioners and their advisers, some of which were           
          adjusted from yearend to the valuation date on July 9, 1990.                
          Then, he made adjustments for taxes, using a 30-percent rate                
          worldwide and adjustments for capital expenditures (5 percent of            
          revenues) and depreciation and amortization (3 percent of                   
          revenues).  Finally, networking capital additions were projected            
          at 10 percent of incremental revenues in each projection year.              
          He then proceeded to determine the fair market value of the DHL             
          network as the sum of the present values of the available cash-             
          flows in the projection period plus the present value of cash-              
          flows expected beyond the projection period at a 6-percent growth           
          rate.  Finally, he capitalized the “residual period cash flow”              
          using a 12.5-percent discount rate.  That computation resulted in           
          a 1990 total asset value of all DHL companies of $1.2 billion,              
          equity of $630 million, and an amount that was attributed to                
          intangible assets of $520 million.                                          
               There is no question that the DHL network was successful and           
          that it had value over and above the shareholder equity.                    
          Although certain of respondent’s expert’s assumptions were                  
          generous and resulted in the inflation of value, overall we can             
          accept that there was a reasonably large amount of value in                 
          excess of the equity reflected in the network entities.  The more           






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