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dividing the net capitalization rate into the net free cashflow
capacity he derived for each of the four different periods, Mr.
Hitchner determined capitalized earnings of $2.5 to $4.1 million.
Mr. Hitchner calculated that BCC had approximately $2.3
million of nonoperating assets by identifying actual nonoperating
assets (valued at $433,572) and determining the “excess cash” on
hand, which he estimated at $1,869,941. He derived this figure
by comparing BCC’s ratio of cash to assets as of the valuation
date with industry standards for the Standard Industrial Code
(SIC) category that he believed most closely matched BCC. He
then added this $2.3 million of nonoperating assets to his range
of capitalized earnings to yield an income-based value in a range
from $4.8 to $6.4 million. Unlike Mr. Fodor, Mr. Hitchner did
not decrease his income-based value by any amount associated with
the obligation to repurchase shares held by the ESOP
participants.
Mr. Hitchner used two different approaches to determine
BCC’s asset-based value: The adjusted book value approach, where
he determined BCC’s book value and then adjusted it to reflect
the fair market value of BCC’s machinery and equipment, as
reported in BCC’s internal “value in use” analyses, and the
modified adjusted book value approach, where he made the
adjustments described above and then decreased the value of BCC’s
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