- 34 -
ratio was the most consistent measurement ratio as between the 11
companies), respondent’s expert adjusted upward this $217 million
to take into account the higher valuation amounts reflected by
the other measurement ratios, and he calculated a total value for
TPC under his comparable public company method of $260 million.
As stated, in both his original report and in his revised
report, respondent’s expert also valued TPC using the discounted
cashflow method. Thereunder, using TPC’s 1997 reported income,
respondent’s expert calculated a 2.7-percent annual income growth
rate (in his original report) and a 2.4-percent annual income
growth rate (in his revised report), which growth rates he
applied to TPC’s actual net cashflow for 1997 to estimate TPC’s
net cashflow for the subsequent 5 years (1998-2002).
As explained supra, however, in his original report, for
TPC’s 1997 net cashflow number, respondent’s expert used
$13,069,000. This number was incorrect and was significantly
overstated because respondent’s expert added back to TPC’s 1997
cashflow deferred taxes of $13,294,000, instead of the correct
deferred tax add-back of only $1,609,793.10
To his estimated TPC net cashflow numbers for 1998-2002
(based on his calculation of TPC’s $13,069,000 net 1997
10 In his revised report, in calculating TPC’s 1997 net
cashflow, respondent’s expert used the corrected deferred tax
add-back of $1,609,793. This correction resulted in a revised or
new number for TPC’s 1997 net cashflow of only $1,384,000.
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