- 34 -
available. As a consequence, the amount added back into the
cash-flows for amortization must be subtracted from the
calculation.
We find that an additional adjustment is warranted in the
determination of the value of the nonoperating assets that are
added to the value of the operating business to achieve the value
of PCAB. The BVS report adds back, inter alia, the following
assets: Cash over $100,000 having a fair market value of
$366,774 and deferred charges having a fair market value of
$243,031. We find no basis for this treatment.
The cash in excess of $100,000 held by PCAB and the deferred
charges are, in our opinion, operating assets. The balance
sheets for the 3 years preceding the valuation date all show cash
on hand substantially in excess of $100,000. Mr. Robert
Shircliff, a witness with considerable experience with Pepsi-Cola
bottlers, testified that the rule of thumb for bottling plants is
that they need working capital of 40 cents per case sold. Mr.
Richard Lawrence, a vice president of Pepsi-Cola Co., also
testified that as a general rule Pepsi-Cola bottlers required
working capital of 40 cents per case. In 1986, PCAB sold
1,884,051 cases. Using this rule of thumb, PCAB would require
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