Johann T. and Johanna Hess - Page 42

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                    Well, with regard to these particular industries                  
               and with regard to Hess, I mean, even though they are                  
               in a cyclical industry, it appeared that they were                     
               going through a period of secular growth, which would                  
               mean a growth without regard to the normal patterns of                 
               the industry.                                                          
                    And, certainly, that’s borne out in the growth                    
               rate of the company’s sales, the growth rate of the                    
               company’s earnings and the budget data regarding what                  
               expectations were for the future.  So for this                         
               particular company, I don’t think that it’s appropriate                
               to measure it over a period of years.                                  
          Under these circumstances, we cannot agree that Mr. Engstrom’s              
          use of the 1995 fiscal year information alone renders his                   
          analysis unreliable.39  We are not convinced that his reliance on           
          the 1995 financial information necessarily overstates the fair              
          market value of HII stock.  Nevertheless, we recognize this                 
          possibility and consider it in reaching our conclusions.                    
               Petitioners also suggest that Mr. Engstrom should have made            
          a downward adjustment to the P/E ratios to reflect the fact that            
          HII’s asset utilization (sales to total assets) was higher than             
          that of the guidelines.  In Mr. Heebink’s market comparable                 
          analysis, he made a downward adjustment to reflect the                      
          differences in HII’s asset utilization.  According to Mr.                   


               38(...continued)                                                       
          217.                                                                        
               39Mr. Heebink testified generally regarding the benefits and           
          preferability of using longer periods for comparison and the                
          potential of an overstatement when using financial information              
          for only 1 year.  However, he did not testify regarding whether             
          the use of a longer period or averages would have affected Mr.              
          Engstrom’s conclusions.                                                     




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