John E. Wall - Page 23




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          measures, Ms. Walker concluded that the publicly traded                     
          equivalent value of Demco’s equity was $4,900,000.  This is not             
          materially different from the $4,914,000 value Ms. Walker                   
          determined using historical performance measures.                           
               Conclusion of Ms. Walker’s Original Report                             
               Giving great weight to the two guideline company approaches            
          (historical performance and 1992 forecasted earnings), and giving           
          very little weight to a capitalized distributions approach,15 Ms.           
          Walker concluded that the publicly traded equivalent value of               
          Demco’s equity was $4,890,000.  After applying the 40-percent               
          lack of marketability and 5-percent nonvoting discounts, Ms.                
          Walker concluded that the fair market value of the Demco                    
          nonvoting common stock on the date of the gifts was $211.20 per             
          share.16                                                                    
               Ms. Walker’s Revised Report                                            
               In February 1999, Ms. Walker prepared a revised report                 
          appraising the value of the Demco stock.  This report was                   
          prepared in response to respondent’s criticism that Ms. Walker’s            
          original report had failed to include an income-based                       
          determination of Demco’s value.  In response to respondent’s                


               15 See supra note 10.                                                  
               16 The calculation is ($4,890,000) times (.6) times (.95)              
          divided by (13,200) equals ($211.16) per share, which Ms. Walker            
          rounded to $211.20.                                                         





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