- 15 - to the MLOCR or any expenses related to any other portion of the presorting division would be capital in nature, this misunderstanding does not persuade us that ZSI would incur capital expenditures with regard to the presorting division. Likewise, petitioner’s arguments that respondent’s projections of capital expenditures are inconsistent with ZSI’s history of expenses, projected level of growth, and projected depreciation are not supported by evidence. Specifically, petitioner alleged that respondent’s projections (1) improperly reduce ZSI’s assets’ book values during a period of corporate growth; (2) improperly depreciate assets not yet acquired; and (3) fail to recognize that proper appraisal methodology would project a growing company’s capital expenditures to be relatively equal to its depreciation, in order to maintain the asset base. As discussed below, we disagree with petitioner. Petitioner has not directed us to any authority that a decline in a corporation’s assets’ book values is irreconcilable with that corporation’s growth. ZSI’s growth is tied more closely to the service fees, the presorting discounts, and the value-added refunds it generates than to its assets’ book values.13 We therefore are not persuaded by petitioner’s 13For 1993 and 1994, it appears that respondent projected ZSI’s assets’ cumulative book value to increase, as ZSI’s capital expenditures are projected to exceed its depreciation allowances.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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