Estate of Mary D. Maggos - Page 38

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          Mr. McGraw holds a degree in chemistry from Johns Hopkins                   
          University and an M.B.A. from Harvard.                                      
               The CFC report concluded that the fair market value of 56.7            
          percent of PCAB’s stock as of May 1, 1987, was $2,691,458.  This            
          conclusion is based on the whole enterprise value of PCAB being             
          $6,329,120 and applying a discount of 25 percent for lack of                
          marketability of the 56.7-percent block of stock being valued.              
          CFC used a capitalization of cash-flows as the primary valuation            
               CFC also performed a reasonableness test using a guideline             
          (comparative) company approach.  Their report states:  “This                
          approach, however, was not used as a primary measure due to the             
          fact that there were no public companies comparable enough to use           
          as reliable indicators of value for a small, atypical Pepsi                 
          bottler like PCAB.”  CFC also did not use a discounted cash-flow            
          approach “because of difficulties in forecasting future revenues            
          and earnings, given significant changes in margins and earnings             
          in the years preceding the Valuation Date.”                                 
               CFC also rejected the use of multiples based on the then-              
          current sales of other franchises or dollar-per-case valuations.            
          CFC cited PCAB’s small size and heavy reliance on purchasing                
          products from other suppliers (about 75 percent of sales) as                
          reasons to consider PCAB as atypical from other bottlers.                   

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