- 51 -
Then, Dr. Spiro used a market valuation approach, focusing on
three food companies (ConAgra, H.J. Heinz, and Universal Foods) and
one fertilizer company (Vigoro), with size and business operations
comparable to J.R. Simplot Co.'s two primary divisions. He
compared relevant ratios (price-to-revenue; price-to-cash-flow;
price-to-EBIT; price-to-EBDIT) and data for J.R. Simplot Co. and
the chosen comparable companies as of their most recent fiscal year
or 12-month period,18 concluding: (1) J.R. Simplot Co. was smaller
than the average of the four comparable companies in revenue; (2)
the average comparable company used less debt in its capital
structure than J.R. Simplot Co., and J.R. Simplot Co.'s debt-to-
assets ratio was higher than the average of the comparable
companies; (3) based on revenue and income growth rates, J.R.
Simplot Co. was growing faster than all of the comparable companies
(only H.J. Heinz increased its assets faster, primarily due to
several acquisitions); (4) profitability ratios indicated that J.R.
Simplot Co. and ConAgra were less profitable than the other
18 Because J.R. Simplot Co.'s sales and profitability
figures were unavailable for the 12 months preceding the
valuation date, and the Company's fiscal yearend data was
sufficiently removed from the valuation date to be of limited
direct use, Dr. Spiro used two methods to derive J.R. Simplot
Co.'s revenue, earnings, and performance ratios. The first
method is based on a fiscal 1993 forecast prepared by J.R.
Simplot Co.'s management in May 1993. Certain financial
statistics were not computed for the fiscal 1993 period because
of insufficient support data. Second, Dr. Spiro derived
performance measures for the Company by annualizing operating
data for the 9 months ended May 31, 1993.
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