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As of December 31, 1994, Korbel’s audited balance sheet
showed assets valued at $83,985,000, liabilities of $10,115,000
(current liabilities of $5,456,000 and long-term obligations of
$4,659,000), and shareholder equity of $73,870,000. Among
Korbel’s assets was a $2,209,000 interest-bearing note receivable
from KFTY Broadcasting (KFTY), a company owned by Gary Heck.
In 1994, although sales of Charmat process and transfer
method brands declined 11 percent, sales by domestic methode
champenoise producers increased by 4 percent. Korbel’s sales of
champagne increased by 6 percent in 1994. That year, although
Korbel was responsible for only 8.8 percent of total sales of
champagne in the United States, it represented 47.6 percent of
the domestic market for champagne produced by the methode
champenoise.
Respondent’s Expert
Respondent offered Herbert T. Spiro, Ph.D. (Dr. Spiro), as
an expert witness, to testify concerning the valuation of closely
held companies. Dr. Spiro is president of the American Valuation
Group, Inc. (AVG), and has directed and conducted valuation
studies of various types of business enterprises. The Court
accepted Dr. Spiro as an expert in the valuation of closely held
companies and received written reports of AVG into evidence as
Dr. Spiro’s direct testimony and his rebuttal testimony,
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