What support did the analyst provide for not utilizing this well-accepted
methodology? Application of the method requires finding companies suffi-
ciently comparable. Many companies share SICs with the subject, but further
analysis was the key. The company has a narrow focus and market niche,
which was not in line with the public companies. Again the analyst documents
the reasons for ultimately not applying the method. Doing this helps the reader
understand the unique nature of the business and why reliance must be placed
on other methodologies. Analysis and judgment may have revealed companies
an analyst believes to be sufficiently similar for application of this method.
Going back to RR 59-60, we see that the use of the method is supported. We
also know that the terms “same” or “similar” as they apply to publicly traded
companies have been widely interpreted by the courts and by analysts.
Guideline Company Transaction Method
The guideline company transaction method is very similar to the guideline public
company method. In this method, the subject company is compared to similar com-
panies that have recently been purchased.
We searched the following sources for information on relevant purchases of
public and private companies within the above-stated SIC classifications:
• The transaction database of the Institute of Business Appraisers (IBA)
• Pratt’s Stats
• The acquisitions database of Thomson Financial Securities Data Corporation
(SDC)
• Houlihan Lokey Howard & Zukin’s Mergerstat Review, within the
“Instruments” classifications
Our sources, which consist of transactions occurring on a national basis,
located transactions within Acme’s general industry group.
The analyst documents consideration of utilizing private company transaction
multiples, and indicates the limitations of the method. Why were the located
comparative transactions not used? They were for acquisitions of controlling
interests, and synergistic considerations may be reflected in the prices. This
may move the standard of value closer to “investment value” (value to a spe-

cific purchaser). We are valuing a minority interest under fair market value
definition. Can we apply a minority discount to the multiples obtained from
this method to develop a value for a minority, nonmarketable interest? Many
analysts do so based on the level of information available about the transac-
tions, the number of transactions available, the dates of the transactions, and
other factors. The choice is made on a case-by-case basis.
As can be seen in Exhibit 9.19, the transactions were for small- to large- size
companies with revenues ranging from approximately $1.1 million to $75 million.
394 REPORT WRITING
The transactions found occurred between 1995 and 2000. In addition, the transac-
tion values ranged from $1.5 million to $85.0 million. The median Market Value to
Invested Capital (MVIC) to Net Sales multiple was 1.13.
As with any analysis of this type and scale, information availability is often
sketchy and incomplete. Moreover, information related to these transactions can be
misleading, because economies of scale and synergies, which are considered in a
buyer’s analysis, are difficult to calculate based on historical public information.
Also, this method is sometimes more applicable when valuing a control ownership
interest in a company, since an eventual sale of the business would not be control-
lable by a minority shareholder.
As a result, we did not utilize the private company transaction method in deter-
mining the value of a minority ownership interest in Acme.
Adjusted Net Asset Method—Going Concern Value
The Adjusted Net Asset Method gives consideration to the fair market value of the
assets and liabilities of the business being valued as a starting point in the determi-
nation of the value of its equity. A current and accurate accounting of the assets and
liabilities of the business is essential in obtaining an accurate indication of value.
In order to determine the fair market value of a company utilizing the
Adjusted Net Asset Method, we need to adjust all assets and liabilities to reflect fair
market value. In addition, any off-balance sheet assets and liabilities need to be
addressed. The starting point is the financial position of the Company as set forth

in its balance sheet as of May 31, 2000. As discussed in the financial review, the
underlying assets of the Company are, for the most part, fairly liquid, with cash
and cash equivalents, contract receivables, marketable securities, and other assets
comprising approximately 50 percent of total assets. The rest is comprised of
inventory and fixed assets. Liabilities similarly are very liquid, and are comprised
of accounts payable and obligation under capital lease. Our analysis and discus-
sions with management determined that all balance sheet items would remain at
book value in our analysis.
In addition to the assets and liabilities stated on Acme’s books as of May 31,
2000, our analysis did not determine any off–balance sheet assets or liabilities.
Based on our analysis of the fair market value of the underlying assets
(making small adjustments for potential bad debts) and liabilities (adjusting for
extra disposing costs for nuclear material) of the Company, we have determined
the underlying net asset value by subtracting the stated or estimated fair market
values of the liabilities from the fair market value of the underlying assets. This
calculation indicated a likely value for the total equity in the Company in the
range of approximately $12.45 to $12.75 million. This provided some corrobora-
tion for our conclusion of value determined under the Income Capitalization
Method.
The Net Asset Value Method derives an amount that the business as a whole
would likely sell for and is therefore an amount that all shareholders would share
in equally if it occurred. However, it is important to note that the choice to sell the
business would be in the hands of a controlling interest shareholder and would not
be controllable by a minority shareholder.
For this reason, we did not utilize the cost approach in determining the value
of a minority ownership interest in Acme.
Addendum 395
The analyst briefly considers the asset approach. Many of the company’s assets
are highly liquid and thus are stated at a reasonable market value. Discussions
with management indicated that book value was reasonably reflective of the

value of other assets. In certain types of engagements appraisals may have
been necessary. No effort was made to adjust the balance sheet for the value
for any intangibles that may be present, but here the balance sheet simply was
viewed as an analytical tool for gauging reasonableness of the value conclu-
sion. We are valuing a minority interest that does not have the power to cause
an asset sale and receive the value of the underlying assets. Would you have
included such a discussion in your report?
Other Valuation Information
We also considered the following additional valuation information:
• The Valuation Report finalized on March 15, 1991 by Mark Jones, Jr., of
Valuation Nation, Inc., in which the fair market value of a 100 percent interest
in the common stock of Acme as of December 31, 1989, was determined to be
$10,300,410. As of that time, the Company’s total net revenue for the year ended
December 31, 1989, was $16,197,000; the adjusted operating income was
$1,721,590, or 10.6 percent of total revenue; and the adjusted net income was
$1,064,530, or 6.6 percent of total revenue. For a total of 125,000 shares as of
December 31, 1989, the value per share derived was $86.00.
• We identified several transactions in the Company stock but, as per management,
none occurred in the past 12 years. As a result we did not rely on the data from
these transactions.
The analyst considered a past valuation report and prior stock transactions.
Past transactions are an element for consideration under Revenue Ruling 59-60
but must be viewed with caution. Due to the dates and transaction circum-
stances, they were not deemed relevant to a determination of current value.
Discount for Lack of Marketability
When an indication of value is developed without control adjustments and using
multiples, discount rates, or capitalization rates derived from quoted security prices,
the resulting value is normally equivalent to a minority, marketable value. Hence,
generally no specific minority interest discount is necessary. However, publicly
traded securities possess a much higher degree of liquidity than do closely held secu-

rities. Without market access, an investor’s ability to control the timing of potential
gains, avoid losses, and make changes to their investment portfolio is severely
impaired. Given two investment instruments identical in all other respects, the mar-
396 REPORT WRITING
Addendum 397
ket will accord a considerable premium to the one that can be liquidated into cash
quickly, especially without risk of loss in value. For this reason, an ownership inter-
est in a privately held entity usually is worth less than a comparable interest in an
otherwise similar publicly held entity whose securities are readily tradable.
Consequently, a discount for lack of marketability would be required to induce a
hypothetical willing buyer to purchase such a closely held security.
Studies on restricted stock transactions compare the discounted prices paid for
equity securities subject to trading restrictions with market prices for similar securi-
ties that are freely tradable without such restrictions.
Restricted stock studies examine the prices paid for restricted shares of compa-
nies whose ordinary shares are freely traded on one or more public markets, either
on a public exchange or over the counter. Publicly traded companies are permitted
to issue “investment letter” stock to “sophisticated” investors without complying
with normal SEC registration requirements. The terms of such transactions vary
considerably. Sometimes the investors get a commitment from the issuer to register
the securities at some future date, or they get “demand” rights allowing them to
require registration at any time. Sometimes they receive “piggyback” rights, which
require the issuer to include the securities in any future registration undertaken by
the issuer. Most often, however, the securities are subject to Rule 144 sales restric-
tions. Under Rule 144, the investors are not permitted to sell securities acquired in
such a transaction until a required minimum holding period has lapsed. Since April
29, 1997, the required holding period has been one year; however, during the peri-
ods covered by the studies, investors generally were required to hold restricted secu-
rities for two years. After the required holding period lapses, the stock becomes
marketable, although certain restrictions having to do with overall trading volume

of the company’s shares and the total number of shares outstanding remain in place
for an additional year.
Appendix C summarizes the results of commonly cited restricted stock studies.
The studies cover a broad range of periods but show remarkably consistent results.
The studies report mean and/or median discounts ranging from 24 to 45 percent.
The average median and average mean results reported in the studies are 33 and 31
percent, respectively.
Other Factors
In addition, several other factors were also considered in our analysis in order to
estimate the appropriate marketability discount for Acme. These included:
1. Financial Statement Analysis
2. Company’s Dividend Policy
3. The Nature of the Company, Its History, Its Position in the Industry, and Its
Economic Outlook
4. Company’s Management
5. Amount of Control in Transferred Shares
6. Restrictions on Transferability of Stock
7. Holding Period for Stock
8. Company’s Redemption Policy
9. Costs Associated with Making a Public Offering
398 REPORT WRITING
A description of these nine factors as they pertain to Acme is follows:
(Note: Some analysts reflect some of these factors in the pre-discount value.)
1. Financial Statement Analysis. Investors normally regard the analysis of a com-
pany’s financial statements as a significant factor in determining the worth of
the company’s stock. Financial statements include the annual results of a com-
pany’s operations (an income statement) and the company’s status at its year
end (a balance sheet). Financial statements also include relevant footnotes relat-
ing to the statements and the opinion of the preparer (e.g., an independent cer-
tified public accountant or CPA) as to the condition of the company and the

presentation of its financial statements. A nonexclusive list of relevant inquiries
to make when analyzing financial statements includes the type of opinion ren-
dered by the preparer, the soundness of the company’s capitalization, the ratio
of the company’s assets to liabilities, the company’s net worth and future earn-
ing power, the quality of the company’s revenue and earnings, and the com-
pany’s goodwill.
We found that Acme engaged Smith & Smith to perform audits on, and
gave unqualified opinions with respect to, Acme’s financial position as of
December 31, 1995; December 31, 1996; December 31, 1997; December 31,
1998; and December 31, 1999.
The Financial Statement Analysis section of the report describes the
Company’s financial position and helps identify some of the Company’s
strengths and weaknesses—both on an absolute basis and relative to other indus-
try norms. Overall, based on the Financial Statement Analysis section and the
analysis under the quantitative factors affecting the selection of a capitalization
rate for Acme, we concluded that Acme would be considered somewhat average
in desirability as an investment compared to alternative investments in the mar-
ketplace.
This factor favors an average marketability discount.
2. Company’s Dividend Policy. Investors regard a company’s dividend policy as a
factor to consider in determining the worth of that company’s stock. Critical to
this factor is whether an investor will receive a fair rate of return on his or her
investment. The fact that a company pays small or no dividends will not always
negatively affect the company’s marketability.
Even if a corporation seldom pays dividends, an investor may aim to par-
ticipate in the corporation’s success mainly through the appreciation in the value
of his or her stock brought on by retained earnings and the possibility of a future
return.
Acme paid small dividends in comparison to its net income. We do not find
this fact determinative. Acme’s net income increased continually from 1997,

reaching almost $1.5 million for the LTM ending May 31, 2000. Acme also had
sufficient cash during the past five years. Accordingly, Acme stock might attract
an investor more interested in long-term growth than in current return.
Overall, the net effect of this favors a below average marketability discount.
3. Nature of the Company, Its History, Its Position in the Industry, and Its
Economic Outlook. Investors generally regard the nature of a company, its his-
tory, its position in the industry, and its economic outlook as relevant factors for
determining the worth of the company’s stock.
Addendum 399
Acme began its operations in 1965 and is a manufacturer of instruments for
measurement of the physical properties of engineering materials. The Company
faces a number of risks due to the nature of the technology employed. The major
risk is that of the nuclear source material which entails a number of component
risks.
Acme finds itself in a difficult environment, being squeezed by the bargain-
ing power of its buyers and suppliers as well as being concerned with the imme-
diate loss of market share in the event of a breakthrough discovery of a
substitute product that does not use radioactive materials.
During the five-year period ending in 2004, analysts project an annual com-
pound growth rate of 4 percent, with total U.S. industry shipments of measur-
ing and controlling instruments reaching $24.1 billion.
These factors favor an above-average marketability discount.
4. Company’s Management. Investors regard the strength of a company’s manage-
ment as a factor to consider when determining the worth of that company’s
stock.
As mentioned in the Management/Personnel section of this report, the
Company has a balanced management team comprised of individuals with
extensive experience in the measuring devices industry. The key person factors
associated with the loss of the services of Mr. Acme were previously considered
in development of the capitalization rate and are not a part of this analysis.

This factor favors an average marketability discount.
5. Amount of Control in Transferred Shares. Investors regard the control inherent
in transferred shares as a relevant factor for determining the worth of the stock.
Control reflects a shareholder’s ability to direct a corporation through his or her
dictation of its policies, procedures, or operations. Control of a closely held cor-
poration represents an element of value that justifies a higher value for a con-
trolling block of stock. An investor will generally pay more for a block of stock
that represents control than for a block of stock that is merely a minority inter-
est in the company.
The 13.1 percent block of stock that is at issue herein represents a minor-
ity ownership in Acme. The concentration of the remaining shares indicates that
a 13.1 percent block will have a medium impact on the decisions of the
Company.
This factor favors a below-average marketability discount.
6. Restrictions on Transferability of Stock. Investors consider transferability
restrictions as a factor to consider in determining the worth of that company’s
stock.
As per management, there are no contractual restrictions on the transfer-
ability of the stock at Acme.
This factor favors a below-average marketability discount.
7. Holding Period for Stock. The length of time that an investor must hold his or
her investment is a factor to consider in determining the worth of a corporation’s
stock. An interest is less marketable if an investor must hold it for an extended
period of time in order to reap a sufficient profit. Market risk tends to increase
(and marketability tends to decrease) as the holding period gets longer.
We are not aware of any intention on the part of management to sell the
Company in the near future. Therefore, a long-term holding period is likely.
As such, this factor favors an above-average discount.
400 REPORT WRITING
8. Company’s Redemption Policy. A company’s redemption policy is a factor to

consider in determining the worth of the company’s stock.
Acme has no record of redeeming its shares and we are not aware of any
anticipated change in this policy.
This factor favors an above-average marketability discount.
9. Costs Associated with Making a Public Offering. Investors consider the costs
associated with making a public offering in determining the value of unlisted
stock. An above-average to average discount is warranted if the buyer com-
pletely bears the cost of registering the purchased stock. However, the discount
is lessened to the extent that the buyer has the ability to minimize his or her reg-
istration costs. For example, registration costs may be minimal to the buyer if he
or she has the right to compel the corporation to register (or otherwise “piggy-
back”) the unlisted shares at its expense.
This factor favors an above-average marketability discount as there is no
obligation on the part of the Company to register the stock or bear any cost
incurred to register the stock.
Overall, the analysis of the above factors indicates an average discount for lack
of marketability.
Conclusion for a Discount for Lack of Marketability
The valuation approach and method are very important when determining the pro-
priety and magnitude of a discount for lack of marketability. The income capital-
ization result is developed using rates of return from freely traded securities. As
such, the result is regarded as a marketable result, necessitating the application of a
lack of marketability discount for applicability to a privately held interest.
Accordingly, based on the above analysis, the cited restricted stock studies, and
all other information in this report, a marketability discount of 35 percent was
selected for application to the result of the income capitalization method.
Applying this discount to the minority marketable value of $12,054,134
derives a closely held minority interest value of approximately $7,835,187.
The prior indication of value was developed on a minority, marketable basis.
Marketability here refers to the price as if freely traded. The interest in a

closely held business, while clearly capable of being sold, is obviously less mar-
ketable (or less liquid) than its publicly traded counterpart. The analyst
focuses on restricted stock studies for quantification of the marketability dis-
count. Other studies (pre-IPO) are also available to assist in this process and
can provide meaningful guidance.
Notice that court cases are not mentioned specifically. Such cases are rel-
evant for issues only and not for citation as supporting a selected level of dis-
count. Quoting cases in your report also put you on the “turf” of an attorney
in a litigation engagement. Keep the issues in your “turf” based on an analy-
sis of the specific facts and your judgment.
Addendum 401
Nonoperating and Excess Assets
As of May 31, 2000, the total cash and equivalent account amounted to
$4,367,501, or 17.0 percent of total assets, which was comprised of the following:
Cash and Equivalent
Petty cash $ 10,725
First Commercial Bank 2,398,171
Regions Trust 698,401
Brokerage money market 379,612
Commercial checking 526,909
National Bank of Commerce 353,683
__________
Total $4,367,501
_________
_________
As of May 31, 2000, the Company had securities available for sale and securi-
ties held to maturity which amounted to $1,128,321, or 4.4 percent of total assets,
as follows:
Securities
Stocks

Central Power $ 75,187
CPC 45,657
Natural Dynamic Resources 29,437
Sterling Corp. 106,633
Lauderdale 16,405
__________
Total stocks 273,319
__________
Bonds
U.S. Treasury 375,000
Associates Finance 225,000
Merrill Lynch 247,500
Federal Housing Financing Agency 7,500
__________
Total bonds 855,000
__________
Total securities $1,128,321
__________
_________
As of the Valuation Date, Acme’s most liquid assets amounted to $5,495,824,
or 21.4 percent of total assets, which was above the industry median (21.4 percent
for Acme versus 8.6 percent 1999 RMA data). Removal of the excess cash amount
aligns the Company’s cash position relative to the industry median.
We concluded that the amount of $3,289,330 ($5,495,824 –$25,656,903×
8.6%=$3,289,330) of Acme’s cash and marketable securities account should be
treated as a nonoperating asset. We also treated as nonoperating assets the cash sur-
render value of life insurance account of $86,034 and other receivables account of
a nonoperating nature. In addition, as of May 31, 2000, the Company had
$239,583 in securities held to maturity. We believe the Company historically had
high cash reserves and the seasonality would not affect our calculation.

Discussions with management indicated that there were no other nonoperating
assets or liabilities on the Company’s balance sheet. Therefore, the total nonoperat-
ing asset amount, as of the Valuation Date, was approximated to $4,117,078. A 10
percent discount
16
was applied to this amount to account for the fact that the minor-
ity stockholders do not have direct access to these assets. An additional 35 percent
was applied for lack of marketability as previously derived. This results in a com-
bined discount of 41.5 percent when sequentially applied.
Accordingly, we conclude that the fair market value of the total equity of the
Company, on a minority, non-marketable interest basis derived through the income
capitalization method, is $10,243,678 ($7,835,187 +$4,117,078× (1–41.50%)
=$10,243,678).
A nonoperating or an excess asset is an asset that can be removed from opera-
tions and have little or no impact on the operating earnings stream of the busi-
ness. Such assets can be excess cash, investments, owner toys, and the like. As
such, their value is not directly captured by application of a capitalization rate
to an operating cash flow. Nor do several other methods capture their values.
As indicated earlier, the analyst identified certain nonoperating or excess assets
for consideration in this assignment. After his or her analysis, the analyst made
an addition to value for these nonoperating items. Why would such an addi-
tion to value be made if the minority shareholder has no power to cause an
asset sale or to tap into the value of those assets? Would not the minority
owner simply focus on the earnings of the business that are available in the
form of dividends, cash distributions, and appreciation of the underlying value
of the minority interest? Opinion as to how this issue should be handled often
is divided, but it also can depend on the facts and circumstances of the case.
Regardless of the ultimate treatment, the presence of significant nonoperating
or excess assets should generally receive consideration and discussion in the
valuation report.

One way to incorporate the presence of such assets is to view them as
reducing risk. They can provide greater short-term or long-term liquidity,
which may be a factor in reducing the discount rate, capitalization rate, or
market multiple. Alternatively, often, when the relative value is large for these
assets, they are treated as an addition to value, net of an appropriate discount
for lack of control. If the analyst treats them as an addition to value, care must
be exercised to avoid double counting.
Analysts will often not reduce the discount rate for the impact of their
assets on risk if they are not considered as an operating asset of the company.
402 REPORT WRITING
16
Source: James R. Hitchner, “Tax Court Reviews for Selecting a Discount on Non-operating
Assets when Valuing a Non-controlling Interest.” Based on this source and our analysis, we con-
cluded that a combined minority/marketability discount of 10 percent is applicable in this case.
Addendum 403
Conclusion
The Company’s net revenues were almost flat at around $29 million since 1997. As
a result, we discarded the Discounted Cash Flow method from our analysis and
relied instead on the Income Capitalization Method.
We discarded the Guideline Public Company Method due to lack of compara-
bility with Acme from an operational and investment point of view.
Also, we discarded the Guideline Company Transaction Method and the Cost
Approach since these methods are often more applicable when valuing a control
ownership interest in a company, since an eventual sale of the business or assets would
not be controllable by a minority shareholder. There were also data limitations.
Exhibit 9.11 shows how the value indication was derived from the Income
Capitalization Method.
Exhibit 9.11 Summary Calculation
100% Minority equity, marketable
(derived from the Income Capitalization Method) $12,054,134

ϪMarketability Discount Ϫ35%
_________
ϭ100% Equity value, on a minority interest 7,835,187
ϩnon-operating assets (cash, securities, and proceeds from
life insurance of approx. $100,000) discounted by 41.5% 2,408,491
__________
ϭ100% Equity minority, non-marketable 10,243,678
Total number of shares 124,684
__________
Value/share (rounded) $ 82.00
Based on our analysis, we have concluded that the fair market value of a minor-
ity, nonmarketable ownership interest, on a going-concern basis, in the common
stock of Acme, as of May 31, 2000, based on 124,684 shares issued and outstand-
ing, is approximately $82.00 per share ($10,243,678 / 124,684).
Per share value $ 82.00
___________
___________
Value 16,279 shares $1,334,878
___________
___________
The valuation conclusion is expressed again at the end of the report narrative.
Here, a per-share calculation is presented as well as a total for the value of the
subject interest. This information was carried forward in the report to the
cover/transmittal letter and/or valuation summary. Thus, in keeping with good
communications skills, the analyst told the company what the analyst was
going to tell the company—and then did so.
Appendix A—Valuation Certification and Signature of the Analyst
I certify that, to the best of my knowledge:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the

reported assumptions and limiting conditions, and are my unbiased professional
analyses, opinions, and conclusions.
3. I have no bias with respect to the property that is the subject of this report or to
the parties involved with this assignment.
4. I have no present or prospective interest in the property that is the subject of this
report, and I have no personal interest or bias with respect to the parties
involved.
5. My compensation is not contingent on any action or event resulting from the
analyses, opinions, or conclusions in, or the use of, this report.
6. My analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the Uniform Standards of Professional Appraisal
Practice, the Business Valuation Standards of the American Society of Appraisers
Business Valuation Committee, and the Standards of the National Association of
Certified Valuation Analysts.
7. No one provided significant professional assistance to the person signing this
report.
Signature of the Analyst:
__________________________________
Ms. Cyndi Smith, CPA/ABV, ASA, CVA
Senior Consultant
XYZ Appraisal Associates PLLC
404 REPORT WRITING
Addendum 405
Appendix B—Assumptions and Limiting Conditions
This valuation is subject to the following assumptions and limiting conditions:
1. This valuation was performed for the purpose stated in the introduction section
of this report, namely for gift tax purposes, as of May 31, 2000. The various
estimates of value presented in this report apply to this valuation only in the
report prepared as of March 14, 2001, and may not be used out of the context
presented herein.

2. Information, estimates, and opinions contained in this report are obtained from
sources considered to be reliable. However, we did not independently verify
such information, and we assume no liability for the accuracy of information
obtained from or provided by such sources.
3. Financial information of the subject company is included solely to assist in the
development of the value conclusion presented in this report, and should not be
used to obtain credit or for any other purpose. Because of the limited purpose
of the information presented, it may be incomplete and contain departures from
generally accepted accounting principles. We have not audited, reviewed, or
compiled this information, and express no assurance on it.
4. The Company and its representatives warranted to us that the information they
supplied was complete and accurate to the best of their knowledge and that the
financial information properly reflects the Company’s results of operations and
financial condition in accordance with generally accepted accounting principles.
Information supplied by management has been accepted as correct without fur-
ther verification, and we express no opinion on the accuracy or completeness of
such information.
5. We have conducted this estimate of value only for the stipulated purpose. The
distribution of the report is restricted to the use of the Attorney and the rele-
vant taxing authorities with a need to know the results. This report will not be
distributed to parties other than those named herein, nor will the report be used
for any other purposes, without the prior written consent of XYZ Appraisal
Associates PLLC.
6. Possession of this report, or a copy thereof, does not carry with it the right of
publication of all or part of it, nor may it be used for any purpose by anyone
other than those enumerated in the introduction section without the previous
written consent of the appraisers and, in any event, only with proper attribu-
tion.
7. The terms of this engagement do not require us to give testimony in court, be
in attendance during any hearings or depositions, or appear at any Internal

Revenue Service examination, with reference to the Company being valued,
unless previous arrangements have been made.
8. The various estimates of value presented in this report apply to this valuation
only and may not be used out of the context presented. This valuation is valid
only for the purpose specified.
9. This valuation reflects facts and conditions existing or reasonably foreseeable at
the Valuation Date. Subsequent events have not been considered, and we have
no obligation to update our report for such events and conditions.
10. We have assumed that the Company was formed in accordance with, and the
provisions of its articles of incorporation and by-laws conform to the require-
406 REPORT WRITING
ments of, the State of Colorado. Our valuation conclusion is an estimate of
value, including the estimated impact of applicable valuation discounts and/or
premiums. Our conclusions regarding the impact on value of applicable provi-
sions in the Company documents and/or stock purchase agreement reflect the
estimated economic impact of such provisions, assuming such provisions are
fully enforceable and are to be taken into account for valuation purposes.
11. Our valuation estimates fair market value as defined in this report and XYZ
Appraisal Associates PLLC did not value the subject interest at an “investment
value” or “strategic value” to a specific potential acquirer. An actual transac-
tion of an equity interest in the Company may be concluded at a higher or lower
price than our value conclusion because of the above and other factors.
Therefore, no assurance is provided that an actual sale of an interest in the
Company would occur at the price indicated by our valuation conclusion.
12. Our engagement for this valuation consulting work does not include any pro-
cedures designed to discover defalcations or other irregularities, should any
exist. In addition, our work does not include any procedures designed to iden-
tify or evaluate the impact of the Year 2000 Issue.
13. We are not licensed attorneys. Any comments, discussions, or analyses of
Company documents or any other federal or state law, provision, or regulation

is not to be considered a legal opinion. Our focus is to consider all relevant fac-
tors that might impact value and estimate the extent of the impact of such fac-
tors.
14. The historical financial statements presented in the exhibits are included solely
to assist in the development of the value conclusion presented in the report, and
they should not be used to obtain credit or for any other purpose. XYZ
Appraisal Associates PLLC has not been engaged to apply, and therefore has
not applied, procedures prescribed by the American Institute of Certified Public
Accountants to any historical or prospective financial information included or
incorporated in this report. Accordingly, we are not assuming the role of report-
ing Certified Public Accountants and are not separately reporting on such finan-
cial information by virtue of its incorporation into the valuation of the
Company.
15. We have made no investigation of title to property, and assume that the owner’s
claim to the property is valid. We have given no consideration to liens or
encumbrances, which may be against the property except as specifically stated
in this report.
16. We assume that the Company is in full compliance with applicable federal,
state, and local environmental regulations and laws.
17. This report was prepared by Cyndi Smith. Neither the professional who worked
on this engagement nor the members of XYZ Appraisal Associates PLLC have
any present or contemplated future interest in the Company, any personal inter-
est with respect to the parties involved, or any other intent that might prevent
us from performing an unbiased valuation. Our compensation is not contingent
on an action or event resulting from the analyses, opinion, or conclusions in, or
the use of, this report.
Appendix C—Restricted Stock Studies: Discounts Observed
Exhibit 9.12 Restricted Stock Studies: Discounts Observed
Observed Discounts
Number of Median Mean Standard

Study (period examined) Published observations discount discount deviation Low
SEC Institutional Investor
Study (1966–1969) (a) 1971 398 24% 26% n.a. (15%)
Gelman (1968–1979) (b) 1972 89 33% 33% n.a. < 15%
Trout (1968–1972) (c) 1977 60 n.a. 34% n.a. n.a.
Moroney (1968–1972) (d) 1973 146 34% 35% 18% (15%)
Maher (1969–1973) (e) 1976 34 33% 35% 18% 3%
Standard Research
Consultants (1978–1982) (f) 1983 28 45% n.a. n.a. 7%
Willamette Management
Associates (1981–1984) (g) ** 33 31% n.a. n.a. n.a.
Silber (1981–1988) (h) 1991 69 n.a. 34% 24% (13%)
FMV Opinions, Inc.
(1969–1992) (i) ** > 100 n.a. 23% n.a. n.a.
Management Planning,
Inc. (1980–1995) (j) 1997 49 29% 28% 14% 0%
_____ _____
Averages 33% 31%
_____ _____
_____ _____
NOTES:
n.a. Result not computed in study or not available.
(a) From “Discounts Involved in Purchases of Common Stock (1966-1969),” Institutional Investor Study Report
of the Securities and Exchange Commission. H.R. Doc. No. 64, Part 5, 92d Cong., 1st Sess. 1971, pp.
2444–2456.
(b) From Milton Gelman, “An Economist-Financial Analyst’s Approach to Valuing Stock of a Closely Held
Company,” Journal of Taxation, June 1972, pp. 353–354.
(c) From Robert R. Trout, “Estimation of the Discount Associated with the Transfer of Restricted Securities,”
Taxes, June 1977, pp. 381–385.
(d) From Robert E. Moroney, “Most Courts Overvalue Closely Held Stocks,” Taxes, March 1973, pp. 144–154.

(e) From J. Michael Maher, “Discounts for Lack of Marketability for Closely-Held Business Interests,” Taxes,
September 1976, pp. 562–571.
(f) From “Revenue Ruling 77-287 Revisited,” SRC Quarterly Reports, Spring 1983, pp. 1–3.
(g) This study is unpublished. It is discussed in Pratt, Shannon P., et al., Valuing a Business: The Analysis and
Appraisal of Closely Held Companies., Third Edition, Homewood, Illinois: Irwin Professional Publishing, 1995,
p. 341.
(h) From William L. Silber, “Discounts on Restricted Stock: The Impact of Illiquidity on Stock Prices,” Financial
Analysts Journal, July-August 1991, pp. 60–64.
(i) This study is unpublished. It is discussed in an article by Lance S. Hall and Timothy C. Polacek, “Strategies
for Obtaining the Largest Discount,” Estate Planning, January/February 1994, pp. 38–44.
(j) This study was published as Chapter 12 of Mercer, Z. Christopher, Quantifying Marketability Discounts,
Peabody Publishing, LP, 1997, pp. 345–364.
Addendum 407
Appendix D—Professional Qualifications of the Analyst/Appraiser
CYNDI SMITH, CPA/ABV, ASA, CVA
Professional Qualifications
Experience
Senior Consultant in the Business Valuation and Litigation Services group of XYZ
Appraisal Associates PLLC. Cyndi’s expertise includes both valuation and valua-
tion-related consulting for entire business entities and business interests.
Cyndi specializes in financial modeling and cash flow forecasting. She has performed
valuations of closely held corporations for mergers and acquisitions and gift and
estate tax purposes. Cyndi’s industry experience includes but is not limited to com-
panies operating in the manufacturing industry, construction, automotive parts
manufacturers, battery manufacturers, specialty chemical companies, investment
holding companies, restaurant companies, and engineering companies.
Prior to joining the Valuation Group at XYZ Appraisal Associates PLLC, Cyndi
spent four years with National Accounting Firm LLP. Cyndi’s experience was pre-
dominantly in the valuation department.
Education

• M.B.A. Colorado State University (Business Strategy), (1996)
• B.A. Colorado State University (Accounting), (1990)
Membership in Professional Organizations
• American Institute of Certified Public Accountants (CPA/ABV)
• Certified Public Accountant, Accredited in Business Valuation
• American Society of Appraisers (ASA)
• Intellectual Property Owners Association
• National Association of Certified Valuation Analysts (CVA)
Speeches and Presentations
• Colorado State University: “Current Developments in Business Valuations” (1998)
• University of Pittsburgh: “Current Developments in Business Valuations” (1997)
408 REPORT WRITING
Appendix E—Other Sources Consulted
Business Valuation Standards, ASA and NACVA.
Fishman, Pratt et. al. Guide to Business Valuations, Forth Worth, TX: Practitioner’s
Publishing Company, 1998.
Pratt, Shannon P. et al. Valuing a Business: The Analysis and Appraisal of Closely
Held Companies, 4th ed. Homewood, IL: Irwin Professional Publishing, 2000.
RMA Annual Statement Summaries. Philadelphia: Robert Morris Associates (cur-
rently Risk Management Association), annual, 1995-1999.
Standard Industrial Classification Manual. Washington, DC, 1987.
Uniform Standards of Professional Appraisal Practice. Appraisal Foundation.
Acme Measurement Devices, Inc., information including:
• Financial statements of the Company for the years ended December 31, 1995
through 1999.
• Various Company schedules of expenses, personnel, fixed assets, etc.
• Articles of incorporation, by-laws, board and stockholder meeting minutes.
• On-site visit and teleconferences with Company officers.
Exhibits
The historical financial statements in Exhibits 9.13, 9.14, and 9.15 for Acme were

prepared from Company financial statements for the purpose of preparing the val-
uation. XYZ Appraisal Associates PLLC has not audited, reviewed, or compiled
these statements and expresses no opinion or any other form of assurance on them.
Addendum 409
Exhibit 9.13
Acme Measurement Devices, Inc.—Comparative Balance Sheets
1999-
2000
RMA
Internal
(a)
Audited Audited
Audited
Audited
Audited
Financials ratios
12/31/95 % 12/31/96 % 12/31/97 % 12/31/98
% 12/31/99 % 05/31/00 % %
________ ___ ________ ___ ________ ___ ________
___ ________ ___ ________ ___ ____
Assets
CURRENT ASSETS
Cash & cash equivalents $3,299,826 14.9 $4,708,548
19.5 $2,976,288 12.0 $4,352,541 18.1 $5,236,842 21.5
$4,367,504 17.0 8.6
Securities
Available for sale—
at market value
712,058 3.2 777,762 3.2 643,511 2.6 519,198
2.2 280,821 1.2

0 0.0
Held to maturity
587,864 2.7 669,999 2.8 179,822 0.7
0 0.0 375,000 1.5 1,128,321 4.4
Trade accounts receivable 2,445,408 11.0 3,384,081 14.0
4,181,567 16.9 2,921,720 12.1 2,795,967 11.5
4,585,083 17.9 29.6
Income taxes receivable
0.0
0.0
0.0 301,451 1.3
0.0
0.0
Inventories:
Finished goods
1,348,467 6.1 1,062,243 4.4 1,699,754 6.9 1,811,675
7.5 2,167,428 8.9 1,053,000 4.1
Work-in-process
549,150 2.5 386,700 1.6 409,521 1.7
483,375 2.0 496,500 2.0 255,000 1.0
Materials and supplies 3,033,917 13.7 3,001,548
12.4 3,255,290 13.2 3,170,754 13.2 2,550,464 10.5
3,967,013 15.5
_________ ____ __________ _
____ __________ ____ __________ ____ __________ ____
__________ ____ ____
Total Inventories
4,931,534 22.3 4,450,491 18.4 5,364,564 21.7 5,465,804
22.7 5,214,392 21.4 5,275,013 20.6 30.8
Deferred income taxes

440,550 2.0 493,050 2.0 796,050 3.2 994,050
4.1 951,488 3.9 951,488 3.7
Prepaid expenses
76,350 0.3 68,454 0.3 62,517 0.3
83,286 0.3 218,220 0.9 194,735 0.8
_________ ____ __________ _
_
___ __________ ____ __________ ____ __________ ____
__________ ____ ____
Total Current Assets
12,493,589 56.4 14,552,385 60.3 14,204,318 57.4
14,638,049 60.8 15,072,729 61.9 16,502,142 64.3 72.9
PROPERTY, PLANT AND
EQUIPMENT, AT COST:
Land and Building
10,447,610 47.2 10,621,832 44.0 11,421,392 46.1 11,527,878
47.9 11,540,555 47.4 11,564,268 45.1
Manufacturing equipment 3,489,845 15.8 3,590,913
14.9 4,125,582 16.7 4,501,364 18.7 4,923,600 20.2
5,451,329 21.2
410
Office furniture and equipment 2,177,048 9.8 2,156,771
8.9 2,006,327 8.1 2,133,801 8.9 2,004,740 8.2
2,072,582 8.1
Automobiles
474,515 2.1 554,291 2.3 589,812 2.4 627,471
2.6 624,156 2.6 588,827 2.3
Equipment leased to others 302,700 1.4 317,025
1.3 346,350 1.4 412,350 1.7 355,125
1.5 310,875 1.2

___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
16,891,716 76.2 17,240,831 71.4 18,489,462 74.7 19,202,864
79.7 19,448,175 79.8 19,987,880 77.9
Less: Accumulated depreciation 8,516,358 38.4 9,233,250 38.2
10,047,561 40.6 11,333,708 47.1 12,385,041 50.8
12,834,102 50.0
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
Net property, plant and
equipment
8,375,358 37.8 8,007,581 33.2 8,441,901 34.1 7,869,156
32.7 7,063,134 29.0 7,153,778 27.9 16.3
OTHER ASSETS
Patents, less accumulated
amortization
288,552 1.3 287,015 1.2 283,178 1.1 298,928
1.2 309,965 1.3 319,086 1.2 5.2
Cash surrender value of
life insurance
72,464 0.3 75,939 0.3 79,367 0.3 82,739
0.3 86,034 0.4 86,034 0.3
Other receivables
227,312 1.0 280,469 1.2 321,723 1.3

360,876 1.5 402,131 1.7 402,131 1.6
Deferred income taxes
547,650 2.5 648,150 2.7 877,650 3.5
834,150 3.5 954,150 3.9 954,150 3.7
Securities held to maturity 150,819 0.7 299,639
1.2 546,527 2.2
0.0 472,500 1.9 239,583 0.9
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
Total other assets
1,286,796 5.8 1,591,211 6.6 2,108,444 8.5 1,576,692
6.5 2,224,779 9.1 2,000,984 7.8 10.9
Total Assets
$22,155,743 100.0 $24,151,176 100.0 $24,754,662 100.0 $24,083,897
100.0 $24,360,642 100.0 $25,656,903 100.0 100.0
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
Liabilities and Stockholders’
Equity

CURRENT LIABILITIES
Accounts payable—trade 778,385 3.5 1,053,479
4.4 1,170,801 4.7 1,372,983 5.7 888,152 3.7
1,289,225 5.0 10.2
Accrued compensation
and related items
937,001 4.2 1,342,259 5.6 1,116,093 4.5 819,744
3.4 837,300 3.4 969,531 3.8
Accrued expenses and
other liabilities
397,535 1.8 520,025 2.2 1,566,176 6.3
794,744 3.3 643,725 2.7 689,883 2.7
Unearned income
290,346 1.3 274,334 1.1 281,367 1.1
350,070 1.5 480,752 2.0 505,913 2.0
Note payable
0.0 35,787 0.1 23,384 0.1 16,697
0.1 6,710 0.0
0.0 12.5
411
(continues)
1999-
2000
RMA
Internal
(a)
Audited Audited
Audited
Audited
Audited

Financials ratios
12/31/95 % 12/31/96 % 12/31/97 %
12/31/98 % 12/31/99 % 05/31/00 % %
________ ___ ________ ___ ________ ___
________ ___ ________ ___ ________ ___ ____
Obligation under capital lease
—current portion
176,178 0.8 323,513 1.3 250,784 1.0 362,693
1.5 480,591 2.0 526,605 2.1
Income taxes payable
159,597 0.7 529,302 2.2 82,553 0.3
76,464 0.3 399,128 1.6 475,527 1.9
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
Total Current Liabilities 2,739,041 12.4 4,078,697
16.9 4,491,156 18.1 3,793,394 15.8 3,736,356 15.4
4,456,683 17.4 36.1
OBLIGATION UNDER
CAPITAL LEASE
8,628,981 38.9 8,305,469 34.4 8,801,765 35.6 8,439,072
35.0 7,958,802 32.8 7,719,261 30.1 7.0
Stockholders’ Equity
Common stock; $1.50 par
value 450,000 shares
authorized
197,019 0.9 196,869 0.8 189,436 0.8 188,151
0.8 112,176 0.5 187,026 0.7

Unrealized gain on securities,
net of tax
79,371 0.4 69,446 0.3 75,957 0.3 97,895
0.4 54,707 0.2 54,707 0.2
Retained earnings
10,575,609 47.7 11,575,763 47.9 11,343,407 45.8
11,779,070 48.9 12,643,319 52.1 13,421,627 52.3
Foreign currency translation
adjustments, unrealized (64,278) -0.3 (75,066) -0.3
(147,059) -0.6 (213,684) -0.9 (219,717) -0.9 (182,400)
-0.7
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
Total Stockholder’s Equity 10,787,721 48.7 11,767,011
48.7 11,461,741 46.3 11,851,431 49.2 12,590,484 51.8
13,480,959 52.5 54.1
Total Liabilities and
Stockholders’ Equity $22,155,743 100.0 $24,151,176 100.0
$24,754,662 100.0 $24,083,897 100.0 $24,285,642 100.0 $25,656,903
100.0 100.0
___________ _____ ___________ __
____ ___________ _____ __
__________ _____ __
__________ _____ __
__________ _____ _____
___________ _____ ___________ __
____ ___________ _____ __

_
_________ _____ __
__________ _____ __
_
_________ _____ _____
References:
(a) 1999-2000 RMA data for SIC #3829 “Measuring & controlling devices, nec” with revenues between $10-25 million (used with per
mission). © 2002 by RMA—The Risk Management Association.
All rights reserved. No part of this table may be reproduced or utilized in any form or by any means, electronic or mechanical,
including photocopying, recording, or by any information storage and
retrieval system without permission in writing from RMA—The Risk Management Association. Please refer to
www.rmahq.org
for further warranty, copyright and use of data information.
Exhibit 9.13
continued
412
Exhibit 9.14
Acme Measurement Devices, Inc.—Comparative Income Statements
1999-
2000
RMA
(a)
Audited
Audited
Audited
Audited
Audited
LTM as of ratios
12/31/95 % 12/31/96 % 12/31/97 % 12/31/98
% 12/31/99 % 05/31/00 % %

________ ___ ________ ___ ________ ___
________ ___ ________ ___ ________ _____ _____
REVENUES
Equipment
n/a 20,944,452 75.9 21,534,516 75.0 20,289,575
70.2 19,612,049 68.6 20,126,975 70.4
Parts & repairs
n/a 4,147,502 15.0 4,386,449 15.3 5,469,996
18.9 5,763,689 20.2 5,475,587 19.2
Training
n/a
843,693 3.1 866,817 3.0 1,011,872 3.5 1,044,042
3.7 917,651 3.2
Other
n/a
687,122 2.5 751,631 2.6 693,132 2.4 741,018
2.6 698,804 2.4
___________ _____ ___________ _____ ___________ _____
___________ _____ ___________ _____ ___________ _____
Net sales
21,642,206 93.9 26,622,768 96.5 27,539,412 95.9 27,464,574
95.0 27,160,797 95.0 27,219,015 95.2
Rentals and sales
of leased equipment
998,660 4.3 733,155 2.7 947,327 3.3
1,157,432 4.0 1,180,511 4.1 1,087,727 3.8
Other income (interest
income on investments) 410,465 1.8 221,816
0.8 233,999 0.8 299,682 1.0 257,847 0.9
278,936 1.0

___________ _____ ___________ _____ ___________ _____ ___________
_____ ___________ _____ ___________ _____ ____
_
Total Revenue
$23,051,330
100% $27,577,739
100%
$28,720,737
100% $28,921,688
100%
$28,599,155
100% $28,585,677
100% 100%
COSTS AND EXPENSES
Cost of Goods Sold
Materials
6,587,496 28.6 8,408,381 30.5 9,383,924 32.7 8,565,641
29.6 7,738,926 27.1 7,403,193 25.9
Direct Labor
1,217,618 5.3 1,418,480 5.1 1,592,294 5.5 2,176,301
7.5 2,025,638 7.1 2,063,087 7.2
Indirect Labor
661,967 2.9 674,331 2.4 834,713 2.9 1,664,589
5.8 1,565,958 5.5 1,502,237 5.3
Payroll Taxes
140,591 0.6 155,354 0.6 180,288 0.6
285,992 1.0 269,114 0.9 267,467 0.9
Profit Sharing
69,168 0.3 70,542 0.3 60,090 0.2 77,039
0.3 124,629 0.4 143,379 0.5

Plant Supplies
225,365 1.0 248,571 0.9 307,887 1.1 484,310
1.7 308,285 1.1 350,028 1.2
(continues)
413
1999-
2000
RMA
(a)
Audited
Audited
Audited
Audited
Audited
LTM as of ratios
12/31/95 % 12/31/96 % 12/31/97 %
12/31/98 % 12/31/99 % 05/31/00 % %
________ ___ ________ ___ ________ ___
________ ___ ________ ___ ________ _____ _____
Repairs and maintenance 123,072 0.5 156,285
0.6 164,664 0.6 179,094 0.6 165,446 0.6
160,910 0.6
Utilities
143,438 0.6 160,934 0.6 149,792 0.5 167,726
0.6 156,276 0.5 157,659 0.6
Freight
88,169 0.4 92,336 0.3 127,689 0.4 131,802
0.5 107,126 0.4 126,629 0.4
Insurance General
346,680 1.5 355,517 1.3 414,806 1.4

475,212 1.6 479,000 1.7 470,618 1.6
Other Taxes
73,955 0.3 81,126 0.3 79,473 0.3
82,893 0.3 83,883 0.3 83,883 0.3
Depreciation and amortization 541,712 2.4 527,657
1.9 555,750 1.9 615,084 2.1 620,613 2.2
677,382 2.4
Telephone
22,346 0.1 18,252 0.1 25,754 0.1 24,588
0.1 16,016 0.1 16,170 0.1
Travel
— 0.0 15,602 0.1 10,365 0.0 77,424
0.3 35,832 0.1 33,528 0.1
Employment - Ads/Relocate — 0.0 6,240 0.0
30,404 0.1 26,567 0.1 15,207 0.1
27,507 0.1
Outside Labor/Services
— 0.0 95,679 0.3 204,366 0.7 126,710
0.4 35,423 0.1 45,084 0.2
Miscellaneous Expenses 162,105 0.7 32,258
0.1 453,392 1.6 (301,626) –1.0 106,116 0.4
50,687 0.2
Allocated Information Resources 45,360 0.2 107,880
0.4 145,800 0.5 103,508 0.4 99,384 0.3
87,234 0.3
Allocated Building and Grounds (322,293) –1.4 (331,113)
–1.2 (355,931) –1.2 (379,026) –1.3 (324,569)
–1.1 (320,669) –1.1
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________ _____

_____
Total Cost of Goods Sold
10,126,745 43.9 12,294,308 44.6 14,365,517 50.0 14,583,824
50.4 13,628,300 47.7 13,346,010 46.7 61.5
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
(SG&A)
Salaries and wages
5,858,048 25.4 6,560,538 23.8 6,695,264 23.3 6,736,661
23.3 6,303,152 22.0 6,210,704 21.7
Sales commissions
178,554 0.8 77,873 0.3 86,157 0.3
68,814 0.2 75,711 0.3 51,453 0.2
Payroll taxes
430,944 1.9 482,627 1.8 485,507 1.7
497,559 1.7 478,122 1.7 456,711 1.6
Profit sharing & 401-K
221,319 1.0 329,345 1.2 208,257 0.7 245,036
0.8 239,966 0.8 230,490 0.8
Outside labor
— 0.0 402,126 1.5 386,390 1.3 411,935
1.4 327,800 1.1 270,027 0.9
Employment ads
— 0.0 31,179 0.1 64,275 0.2
86,141 0.3 54,054 0.2 68,030 0.2
Other taxes and licenses
48,815 0.2 192,051 0.7 51,030 0.2
119,394 0.4 42,744 0.1 33,683 0.1
Rent
186,560 0.8 184,752 0.7 187,041 0.7

195,224 0.7 193,418 0.7 228,158 0.8
Exhibit 9.14
continued
414
Travel and entertainment 584,660 2.5 598,113
2.2 659,990 2.3 580,998 2.0 379,589 1.3
434,316 1.5
Insurance
296,900 1.3 320,939 1.2 316,590 1.1 472,124
1.6 424,731 1.5 393,023 1.4
Telephone
140,114 0.6 148,116 0.5 182,774 0.6 187,748
0.6 136,604 0.5 136,541 0.5
Patents and attorney
157,319 0.7 192,213 0.7 305,966 1.1 103,494
0.4 118,974 0.4 116,982 0.4
Legal and consulting
99,702 0.4 100,074 0.4 181,769 0.6
27,125 0.1 73,638 0.3 67,754 0.2
Audit and accounting
88,139 0.4 140,244 0.5 164,247 0.6
136,682 0.5 174,654 0.6 180,756 0.6
Directors and shareholders
meetings
15,000 0.1 15,498 0.1 21,000 0.1 21,750
0.1 15,750 0.1 8,250 0.0
Advertising
93,845 0.4 102,905 0.4 128,559 0.4 118,071
0.4 108,336 0.4 123,993 0.4
Meetings and conferences 36,371 0.2 19,736 0.1

29,496 0.1 16,289 0.1 26,147 0.1
17,142 0.1
Printing and supplies
307,724 1.3 256,358 0.9 394,443 1.4
379,310 1.3 291,671 1.0 316,965 1.1
Trade shows
— 0.0 — 0.0 — 0.0 50,937
0.2 51,159 0.2 21,776 0.1
Royalty
— 0.0 — 0.0 — 0.0 43,592
0.2 151,676 0.5 72,032 0.3
Engineering design services 134,492 0.6 102,521
0.4 138,608 0.5 108,725 0.4 94,902
0.3 94,902 0.3
Freight and postage
220,454 1.0 271,739 1.0 350,205 1.2 297,432
1.0 270,537 0.9 272,349 1.0
Dues and subscriptions
53,454 0.2 59,889 0.2 67,203 0.2
69,504 0.2 56,307 0.2 46,017 0.2
Equipment and building
maintenance
91,733 0.4 59,183 0.2 64,577 0.2 44,459
0.2 50,054 0.2 56,735 0.2
Depreciation and amortization 626,759 2.7 686,661
2.5 729,153 2.5 747,125 2.6 785,616
2.7 791,096 2.8
Miscellaneous
520,712 2.3 244,493 0.9 291,972 1.0 252,881
0.9 177,398 0.6 229,301 0.8

Allocated information
resources costs
(45,360) –0.2 (107,880) –0.4 (145,800) –0.5
(103,508) –0.4 (99,384) –0.3 (87,234) –0.3
Allocated building and
grounds costs
322,293 1.4 331,112 1.2 355,931 1.2 379,026
1.3 324,569 1.1 320,669 1.1
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________ _____
_____
Total SG&A
10,668,543 46.3 11,802,399 42.8 12,400,599 43.2 12,294,521
42.5 11,327,889 39.6 11,162,615 39.5 36.5
Interest Expense
1,535,303 6.7 1,532,672 5.6 1,516,313 5.3
1,596,369 5.5 1,533,153 5.4 1,510,803 5.3 0.6
Other Expenses (Foreign
currency translation)
402,113 1.7 224,084 0.8 162,449 0.6 76,034
0.3 199,362 0.7 213,548 0.7
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________ _____
_____
TOTAL COSTS AND EXPENSES 22,732,703 98.6 25,853,462 93.7
28,444,877 99.0 28,550,747 98.7 26,688,704 93.3 26,232,975
91.8 97.9
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________
_____ _____

(continues)
415
1999-
2000
RMA
(a)
Audited
Audited
Audited
Audited
Audited
LTM as of ratios
12/31/95 % 12/31/96 % 12/31/97 %
12/31/98 % 12/31/99 % 05/31/00 % %
________ ___ ________ ___ ________ ___
________ ___ ________ ___ ________ _____ _____
INCOME BEFORE TAXES
318,627 1.4 1,724,277 6.3 275,861 1.0 370,941
1.3 1,910,451 6.7 2,352,702 8.2 1.5
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________ _____
_____
PROVISION FOR INCOME TAXES
Current:
Federal
229,500 1.0 506,400 1.8 213,867 0.7 (167,937)
–0.6 679,910 2.4 n/a
State
45,150 0.2 112,800 0.4 40,620 0.1 (25,560)
–0.1 111,735 0.4 n/a

Deferred:
Federal
(322,083) –1.4 (141,764) –0.5 (496,500) –1.7
(141,000) –0.5 (48,563) –0.2 n/a
State
(16,500) –0.1 (10,500) –0.0 (36,000) –0.1 (13,500)
–0.0 (3,000) –0.0 n/a
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________
_____ ___
__
Total
(63,933) –0.3 466,937 1.7 (278,013) –1.0 (347,997)
–1.2 740,082 2.6 886,632 3.1
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________ _____
_____
NET INCOME
$382,560 1.7 $1,257,341 4.6 $553,874 1.9
$718,938 2.5 $1,170,369 4.1 $1,466,070 5.1
___________ _____ ___________ _____ ___________ __
___ ___________ _____ ___________ _____ ___________
_____ _____
___________ _____ ___________ _____ ___________ __
_
__ ___________ _____ ___________ _____ ___________ _____ ___
__
Operating EBIT
2,256,042 9.8 3,481,032 12.6 1,954,622 6.8 2,043,344
7.1 3,642,966 12.7 4,077,053 14.3

Total Depreciation
& Amortization
1,152,008 5.0 1,214,318 4.4 1,284,903 4.5
1,453,905 5.0 1,406,625 4.9 1,468,874 5.1 3.3
EBITDA
3,408,050 14.8 4,695,350 17.0 3,239,525 11.3 3,497,249
12.1 5,049,591 17.7 5,545,926 19.4
References:
(a) 1999-2000 RMA data for SIC #3829 “Measuring & controlling devices, nec” with revenues between $10-25 million (used with per
mission). © 2002 by RMA—The Risk Management Association.
All rights reserved. No part of this table may be reproduced or utilized in any form or by any means, electronic or mechanical,
including photocopying, recording, or by any information storage and
retrieval system without permission in writing from RMA—The Risk Management Association. Please refer to
www.rmahq.org
for further warranty, copyright and use of data information.
Exhibit 9.14
continued
416
Exhibit 9.15
Acme Measurement Devices, Inc.—Statements of Cash Flows
Audited Audited Audited Audited Audited
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
12/31/99
________ _________ _________ ________ ________
_________
Operating Cash Flow
Net profit (current earnings)
382,560 1,257,341 553,874 718,938
1,170,369
+ depreciation & amortization

1,152,008 1,214,318 1,284,903 1,453,905 1,406,625
- increase/+decrease in current assets (except cash)
(722,286) (610,095) (2,257,016) 961,022 172,991
+ increase/-decrease of accounts payable and other payable
(432,770) 1,156,535 503,529 (1,125,204) 136,502
_________ _________ ________ ________ _________
Total Operating Cash Flow
379,512 3,018,098 85,290 2,008,661 2,886,486
Investing Cash Flow
-increase/+decrease in other assets (including long term investments)
(789,107) (818,096) (1,036,950) (846,470) (553,260)
-increase/+decrease of fixed assets (cost)
1,154,858 (382,764) 371,456 822,722 (763,439)
_________ _________ ________ ________
_________
Total Investing Cash Flow
365,751 (1,200,860) (665,495) (23,748) (1,316,699)
Financing Cash Flow
+ increase/-decrease of payments under capital lease
(223,523) (422,265) (490,925) (438,935) (596,342)
+ increase/-decrease of shareholders’ equity (shares redeemed, etc.)
(753,863) 24,537 (616,623) (103,100)
(83,112)
_________ _________ ________ ________
_________
Total Financing Cash Flow
(977,385) (397,728) (1,107,548) (542,034) (679,454)
Effect of exchange rate changes
(43,178) (10,788) (44,508) (66,626) (6,033)
Cash increase (decrease)

(275,300) 1,408,722 (1,732,260) 1,376,253
884,301
Cash beginning of period
3,575,126 3,299,826 4,708,548 2,976,288
4,352,541
Cash the end of the period
3,575,126 3,299,826 4,708,548 2,976,288
4,352,541 5,236,842
417
Exhibit 9.16 Acme Measurement Devices, Inc.—Debt-Free Working Capital Computation
Industry Debt-Free Working Capital Requirements (1)
SIC # 3829
Manufacturing - Measuring & Controlling Devices
All $10 MM - $25 MM
_____ _________________
As a % of Total Assets
Current Assets 70.0% 72.9%
Less: Current Liabilities 44.7% 36.1%
___________ __________
Working Capital 25.3% 36.8%
Working Capital 25.3% 36.8%
Plus: Notes Payable—Short-term 14.9% 11.8%
Plus: Current Mat.—L.T.D. 4.7% 2.3%
___________ __________
Debt-Free Working Capital (DFWC) 44.9% 50.9%
Debt-Free Working Capital 44.9% 50.9%
Times: Total Assets ($000) $1,297,482 $189,572
___________ __________
Debt-Free Working Capital ($000) $ 582,569 $ 96,492
Debt-Free Working Capital ($000) $ 582,569 $ 96,492

Divided by: Total Sales ($000) $1,573,747 $265,456
___________ __________
DFWC/Sales 37.0% 36.3%
Subject Historical Debt-Free Working Capital Requirements
DFWC for the Company DFWC/Sales
_____________________ _________________
1997, 1998 Average $6,270,007 21.9%
Most Recent Year $7,076,240 24.8%
Concluded Debt-Free Working Capital
Requirements (2) 25.0%
Notes:
(1) 1999 Robert Morris Associates (Risk Management Association). Used with permission. © 2002 by RMA—The
Risk Management Association. All rights reserved. No part of this table may be reproduced or utilized in any form or
by any means, electronic or mechanical, including photocopying, recording, or by any information storage and
retrieval system without permission in writing from RMA—The Risk Management Association. Please refer to
www.rmahq.org for further warranty, copyright and use of data information.
(2) We have relied on Acme’s most recent year data.
418 REPORT WRITING