COMPUTER HARDWARE & SOFTWARE
Appraisal Economics Inc. valued certain hardware/software products, and related technical support services owned by a major U.S. professional sports league. The league received discounts off the list prices of certain products and support services in exchange for sponsorship benefits. We determined the reasonableness of these discounts and estimated the fair value of the products and support services by comparing the discounts negotiated by the league to typical discounts offered to the supplier’s other contract partners. Appraisal Economics was engaged to value the hardware/software and related support services for financial reporting purposes.
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BIOMASS FACILITY
Appraisal Economics Inc. has completed a valuation of a biomass facility in the United States. The process steam and process water generated by the plant are sold to two adjacent chemical producers under energy supply agreements. The plant’s assets include one biomass-fired industrial boiler that acts as the primary source of steam, and two natural gas-fired package boilers that are used during periods of higher demand. Appraisal Economics was engaged to estimate the fair market value of the plant for bank financing purposes.
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RESTITUTION RECEIVABLE
Appraisal Economics Inc. valued the legal right to receive court-ordered restitution due to the victim of a Ponzi scheme. The operator of the Ponzi scheme was ordered to pay restitution to his victims after his release from prison. Appraisal Economics reviewed the legal memoranda of the U.S. District Court and interviewed representatives of the court and the attorney who represented the architect of the scheme. We considered restitution payments made to date, and we projected future payments and an appropriate discount rate to reduce the restitution payments to present value. Our analysis was based, in part, on our previous experience valuing the right to receive a portion of assets recovered related to the liquidation of Bernard L. Madoff Investment securities LLC.
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STOCK OPTION EXCHANGE
Appraisal Economics Inc. valued all the outstanding stock options of a national apparel and home goods retailer to facilitate the company’s option exchange. In conjunction with a debt recapitalization and cash dividend on the underlying common stock leading up to its initial public offering, the company cancelled all previously issued stock options and issued new options with lower exercise prices and otherwise identical terms. Appraisal Economics Determined the aggregate value of the options immediately before and after the option exchange. The concluded fair values were used to measure the compensation expense of the option exchange for financial reporting purposes.
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