- 15 - “comparable”, did not explain with specificity why the companies with losses or the remaining limited universe would not be “reliable”. Mr. Dorman concluded that Godfrey’s adjusted net book value was $17,341,379, as of September 15, 1997. That number is close to Godfrey’s unadjusted balance sheet total shareholders’ equity, which was $17,160,705 on the valuation date. Mr. Dorman started with the shareholders’ equity and deducted $126,806 to account for the partial year. Mr. Dorman explained the deduction as being attributable to an expectation that shareholders’ equity would decrease by the end of the year.9 We could find no foundation for such a deduction. He then converted the book values to fair market values, resulting in a $2,392,916 increase or excess of fair market value over book value. Mr. Dorman then formulated a $1,919,869 deduction for something he labeled “Environmental Liabilities”. Finally, he deducted $165,566 for Federal and Indiana tax (ostensibly for the capital gains on liquidation and/or sale of the assets). With respect to Mr. Dorman’s net asset approach, we found his reasoning and/or basis for his conclusions in support of the adjustments (reductions) to be inadequate and without meaningful explanation. 9 In the use of a net asset valuation approach, it would be irrelevant that shareholders’ equity decreases after the valuation date.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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