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in terms of total assets14 and revenues15 than JM and Specialty,
and the five companies engaged in a broader range of business
activities, including a wider variety of products for sale.
Also, other than one Macy’s store in San Francisco, none of the
five companies had stores located in San Francisco or Reno. Mr.
Stewart compared JM to the companies using the following
measures: (1) Invested capital to revenue; (2) earnings before
depreciation, interest expense and taxes (EBDIT); and (3) price-
to-book value. These measures indicated values of the aggregate
minority interest in JM ranging from $906,000 to $1.31 million.
Giving greater weight to the price-to-book measure, Mr. Stewart
determined that JM had an overall value of approximately $1
million.
In applying the income approach to JM, Mr. Stewart projected
net income 5 years forward from the year ending January 31,
1952.16 Mr. Stewart considered JM’s future sales and earning
potential and then: (1) Projected JM’s sales, expense levels, and
14JM’s total assets at the time of the 1951 Agreement were
approximately $2 million while the comparables used had total
assets ranging from approximately $119 million to $230 million.
Specialty’s total assets were smaller than JM’s.
15JM’s revenues at the time of the 1951 Agreement were
approximately $5 million while the comparables used had revenues
ranging from approximately $223 million to $440 million.
Specialty’s revenues were smaller than JM’s.
16Mr. Stewart used a base year ending after the valuation
date because, in his opinion, that year had more reliable
information than the prior year.
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