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Company's Micron Technology holding. Mr. Much valued J.R. Simplot
Co. by reviewing financial statements for the 5 fiscal years ended
August 1988 through 1992, and for the 9-month period ended May
1993. The adjustments he made to his values for cash and debts of
the Company were derived from information on the quarterly
financial statement for the quarter ended May 1993.
J.R. Simplot Co.'s controller, James D. Crawford, testified
that Mr. Much improperly failed to account for the seasonally high
levels of the Company's receivables and inventory. According to
Mr. Crawford, because the Company's business was seasonal, its
financial statements from one quarter to another were not
comparable. Mr. Crawford explained that the Company's balance
sheet for the quarter ending in May would have higher levels of
inventory, receivables, and short-term debt than its balance sheet
for the year ending in August. (The high levels of inventory and
receivables were financed with working capital, resulting in high
short-term debt.) Mr. Crawford estimated that the Company's short-
term debt would have varied by approximately $150 million between
May and August 1993. We found Mr. Crawford a credible witness.
Mr. Much admitted at trial that if the seasonal changes in
short-term debt were not taken into consideration the equity value
as of August 1993 would be approximately $113,000,000 higher than
his value as of late June 1993. We believe that the high short-
term debt of the Company as of May 1993 is an aberration, and as a
result it should not have been taken into account.
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