Robert Dallas - Page 26

                                        - 26 -                                        
          Total Equity                                                                
                                                       1999        2000               
          Net sales                                    $30,867   $33,225              
          Adjusted EBIT:                                                              
          $4,600 less $1,300 for 1999                  3,300                          
          and $1,100 for 2000                                    3,500                
          Long-term growth rate                        3%             3%              
          EBIT (next 12 months)                        3,399     3,605                
          Less incremental operating working capital     (148)     (159)              
          Net operating cashflow for capitalization    3,251     3,446                
          Capitalization rate (16%-3%; 15%-3%)           13%       12%                
          Indicated enterprise value (excl.                                           
          nonoperating assets)                         25,008    28,717               
          Indicated enterprise value (rounded)         25,000    28,700               
          Plus excess working capital                   1,108     623                 
          Fair market value of business enterprise     26,108    29,323               
          Nonoperating assets                           3,253     3,199               
          Total equity value                           29,361    32,522               
          Total equity value (rounded)                 29,400    32,500               
          Discounted Equity                                                           
          Total equity value                           29,400    32,500               
          Discounts for lack of control:                                              
          Operating assets (20%)                       (5,222) (5,865)                
          Nonoperating assets (15%)                    (488)     (480)                
          As-if freely traded value                    23,690    26,155               
          Discount for lack of marketability (20%)     (4,738)   (5,231)              
          Fair market value of equity                  18,952    20,924               
          Fair Market Value Per Share                                                 
          Number of shares                             25,250    25,328               
          Fair market value per share                  751       801                  
               The fair market value of the DGA stock at issue was $751 per           
          share on November 29, 1999, and $801 per share on November 29,              
          2000.                                                                       
          D.   Fair Market Value of the 1999 Notes                                    
               Respondent determined that the fair market value of each of            
          the 1999 notes was $1,687,704, which is less than face value                
          because they were self-canceling.  Petitioner contends that the             





Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011