- 29 -
The adjustments made by the estate’s experts to TPC’s historic
pretax income for 1993-97 are summarized below:8
1993 1994 1995 1996 1997
Reported Pretax Income$24,902,000 $22,152,000 $18,737,000 $23,057,000 $26,921,000
Less Technology Expenditures10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
Less Additional Depreciation1,340,000 756,000 920,000 1,183,000 1,078,000
Adjusted Pretax Income$13,562,000 $11,396,000 $ 7,817,000 $11,874,000 $15,843,000
In order to then calculate an after-tax average sustainable
annual net income for TPC, using the above adjusted pretax income
figures for 1993-97, the estate’s experts made the following
calculations:
Adjusted
Year Pretax Income
1993 $13,562,000
1994 11,396,000
1995 7,817,000
1996 11,874,000
1997 15,843,000
Total Adj. Pretax Income for 5 Years$60,492,000
Divided by Number of Years 5
TPC Average Annual Sustainable Net
Income 12,098,000
Less 35% Taxes 4,234,000
TPC After-Tax Average
Sustainable Annual Net Income $ 7,864,000
The experts for the estate then applied their 30-percent
capitalization rate for TPC to their $7,864,000 after-tax average
sustainable annual net income for TPC and thereby calculated a
value for TPC of $25,784,000 ($7,864,000 � .305 = $25,784,000).
8 In this and the following tables, generally, the numbers
are rounded to the nearest thousand.
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