- 13 -
Mr. Kramer’s value estimates for Renier’s operating and
nonoperating assets produced a total value of $921,029 on the
valuation date.
We shall consider their differences.
1. Computation of Normalized Income
The experts agreed that the starting point for computing
normalized income should be the average of Renier’s reported net
income7 for the 69.33-month period preceding the valuation date,
July 1, 1988,8 through April 10, 1994 (base period9). Further,
to avoid “unwarranted controversy”, Mr. Kramer adopted several of
Mr. Sliwoski’s normalizing adjustments. Prior to normalizing,
6(...continued)
number is corrected to account for the double counting of a
$137,038 liability in Mr. Kramer’s original report.
7 Mr. Sliwoski started with pretax net income and, after
making his normalizing adjustments, subtracted Federal and State
income taxes at an estimated combined rate of approximately 38
percent. Mr. Kramer started with after-tax net income and, when
making normalizing adjustments, also accounted for the income tax
impact of the normalizing adjustments, at an estimated income tax
rate of 34 percent. Except for the difference in assumed income
tax rates, their respective methodologies to account for taxes
would produce the same result.
8 Although Mr. Kramer’s report states that he used the
period from July 1, 1989, through the valuation date, an
examination of the data in the exhibits to his report shows that
the period used included the fiscal year starting July 1, 1988,
as well.
9 Although Mr. Sliwoski treats the period from July 1, 1988,
through the valuation date as consisting of 5.778 years, and Mr.
Kramer uses at various times 69.33 and 69.333 months to describe
this period, for the sake of consistency, we have adopted (and
treat the experts as having adopted) a base period of 69.33
months.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011