- 57 -
Company Gross Revenue Revenue Growth Net Income
Home Depot 1$24.156 23.7% $1.160
Lowe’s 10.137 17.9 0.357
Menards 3.420 12.7 20.204
1All dollar amounts are in billions and have been rounded to
the nearest million.
2A slight discrepancy existed between Mr. Rowley’s and Dr.
Hakala’s numbers for the value of Menards’s net income for TYE
1998. See Appendix. After comparing the expert reports to
Menards’s TYE 1998 financial statement, we accept the net income
value as contained in Mr. Rowley’s report.
Across all three measures, Menards performed in third place. In
contrast, however, Menards had the highest return on equity and
return on assets of its direct competitors:50
Return on Return on
Company Equity Assets
Menards 18.8% 14.2%
Home Depot 16.1 10.3
Lowe’s 13.7 6.8
50Mr. Rowley calculated the companies’ returns on “beginning
shareholders’ equity”, “average shareholders’ equity”, and
“average assets”, but did not explain how he arrived at those
numbers or why he used such variations on return on equity.
Additionally, petitioners’ expert on investor returns, John
Gilbertson of Goldman, Sachs & Co., calculated returns on
“beginning shareholders’ equity”, “average shareholders’ equity”,
“beginning assets”, and “average assets”. Although Mr.
Gilbertson explained how he arrived at those numbers, other than
stating his rationale for emphasizing the return on average
shareholders’ equity over the return on beginning shareholders’
equity, Mr. Gilbertson did not explain why he used these
variations on return on equity and return on assets. In the
absence of credible evidence to explain the calculations made by
petitioners’ experts, we shall rely on Dr. Hakala’s values
computed for the companies’ return on equity and return on
assets.
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