John E. Wall - Page 42




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          discounts, then treating the media note as a nonoperating asset             
          would add approximately $35 per share to Ms. Walker’s values.               
               Erroneous Income Amount                                                
               The forecasted earnings measures Ms. Walker used in her                
          guideline company approach were significantly less than the                 
          measures actually projected by Demco’s management.  For example,            
          Ms. Walker’s original report stated that Demco was projecting               
          1992 EBIT of $1,372,000 and 1992 earnings of $1,034,615.                    
          However, Demco was actually projecting that its earnings would be           
          approximately $400,000 higher; i.e., 1992 EBIT of $1,774,306 and            
          earnings of $1,434,198.  We conclude that Ms. Walker simply made            
          a few transcription errors; nevertheless, these errors mean that            
          Ms. Walker’s appraisals significantly understated Demco’s value.            
               If the 1992 EBIT and earnings actually projected by Demco              
          were substituted for the erroneous amounts used by Ms. Walker,              
          then Ms. Walker’s appraisal of the Demco stock under her                    
          forecasted earnings approach would have been approximately $289             
          per share, approximately $77 per share higher than the forecasted           
          earnings value set forth in her original report.  The record does           
          not disclose Demco’s projected EBDIT for 1992.  However, based on           
          Demco’s historical depreciation, we conclude that the measure of            
          1992 EBDIT used by Ms. Walker was, like her 1992 EBIT and                   
          earnings measures, also approximately $400,000 too low.  If Ms.             
          Walker’s measure of Demco’s 1992 EBDIT were also increased by               





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