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separate risk factor for what the estate’s experts refer to as
management risk.
Respondent asserts that the estate’s $25 million valuation
for TPC as an entity (and $1.7 million for the estate’s 20-
percent interest therein) is absurd in light of TPC’s 1997 fiscal
yearend book value in the range of $148 million. Respondent also
asserts that if we utilize the capitalization of income method to
value TPC (as did the estate’s experts and as we do), we should
take the cash and short-term liquid assets from TPC’s balance
sheet, treat them as nonoperating assets, and add them to any
calculation of the capitalized income of TPC that we make.
From the end of its 1993 fiscal year through the end of its
1997 fiscal year, TPC’s cash and outside short-term (more than 3-
month) investments reported on its yearend balance sheets
increased from $42.3 million to $73.6 million. Throughout the
1990s, TPC increased its short-term liquid investments and still
paid significant cash dividends to its stockholders. Not until
its 2000 fiscal year does TPC’s yearend balance sheet reflect any
significant reduction in outside short-term investments.
On each of TPC’s 1997 and 1998 fiscal yearend balance
sheets, approximately $68 million is shown as outside short-term
investments with an investment term of more than 3 months. We
treat these $68 million in short-term liquid investments as
nonoperating assets to be added to the valuation of TPC under a
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