- 114 - 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 morePage: Previous 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 Next
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