Estate of Richard R. Simplot - Page 50





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          approach, determini ng a $720,926,00017 aggregate equity value for          

          J.R. Simplot Co. on the valuation date.                                     


               17   Dr. Spiro's calculations (in millions) were as follows:           
          (We note that mathematically his calculations are slightly off.)            

          8/31/94    8/31/95     8/31/96     8/31/97      8/31/98                     
          Net income       $59,900    $70,033     $80,908     $92,329      $96,133    
          Cash-flow                                                                   
          adjustments:                                                                
          (+)depreciation   75,097     81,104      86,782      91,989       96,588    
          (-)Capital                                                                  
          Expenditures    (96,278)  (103,980)   (111,259)   (117,934)    (123,831)    
          (-)Working                                                                  
          capital                                                                     
          additions       (20,669)   (20,026)    (18,924)    (17,356)     (15,331)    
          Free cash-flow    18,051     27,131      37,506      49,027       53,559    
          Discount rate     10.20%                                                    
          Present value                                                               
          factor           0.9526     0.8644      0.7844      0.7118       0.6459     
          Present value                                                               
          of cash-flow     17,195     23,453      29,421      34,899       34,595     
          Total present                                                               
          value of cash-                                                              
          flows           139,563                                                     
          Present value                                                               
          of reversion    956,900                    Reversion cash-flow: $80,8021    
          Business                                                                    
          enterprise                                                                  
          value         1,096,462                                                     
          Less total                                                                  
          long-term                                                                   
          debt as of                                                                  
          5/31/93         375,536                                                     
          Aggregate equity                                                            
          value-liquid                                                                
          minority                                                                    
          basis           720,926                                                     
               1  Dr. Spiro explained that the discounted cash-flow model projects    
          cash-flows independently for 5 years.  However, the business is expected to 
          generate cash-flows after the 5th year of the forecast.  The present value of
          the cash-flows that the business is expected to generate after the 5th year 
          or, equivalently, the present value of the reversion, is calculated using the
          Gordon Model formula (or Dividend Discount Model).                          

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Last modified: May 25, 2011