Free Motion for Leave to File - District Court of Federal Claims - federal

Case 1:03-cv-00289-FMA

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

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UNITED MEDICAL SUPPLY COMPANY, INC., Plaintiff v. THE UNITED STATES, Defendant AFFIDAVIT OF ROBERT IMEL 1.

CASE NO: 03-CV-289 Judge Allegra

My name is Robert Imel. I am over the age of 21-years and fully competent to make this affidavit. All statements made in this affidavit are based on personal knowledge unless otherwise noted and are true. Attached to this affidavit as Exhibit A is a genuine copy of my resume that truthfully and accurately represents my professional experience and education. I am a certified public accountant with substantial experience in valuation of assets and on-going business concerns. In making such valuations, I routinely prepare proforma balance sheets and profit and loss statements in order to estimate values and future profits and losses. I understand that United Medical Supply Company, Inc. is the plaintiff in the above captioned lawsuit and all references to United Medical in this affidavit refer the Plaintiff. I previously was employed by counsel for United Medical to estimate lost profits resulting from lost sales under a contract between the Department of Defense and United Medical, which I understand is identified as Contract SP0200-97-D-7133 and is a requirements contract. I understood that the estimate would be used in conjunction with a claim being submitted to the Contracting Officer. I understand that there is a range of estimated lost profits that would be reasonable. The estimate I provided in my initial report was based on a 100% fill rate on the total expected contract sales, as amended. I have been asked to estimate the lower end of that range and have been provided assumptions to use in connection with that estimate. The assumptions I have been asked to make and my opinions regarding those assumptions are as follows:

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a. That, over the 47-month ordering period, United Medical only filled 85% of the Government's orders. I have been provided fill rate reports and fill rate summaries from United Medical. The average fill rate for 1998 was 90.5%. The 90.5% fill rate is the calculated fill rate during calendar 1998, which is the first full calendar year of the Contract and pre-dates the substantial payment problems I understand United Medical had starting in 1999 and continuing through the end of the contract. Therefore, the 85% fill rate would be conservative and favor the Government. Accordingly, this assumption is reasonable and would make the lost profit estimate on the low end of reasonable. b. That the Government's orders would have been uniform throughout each year following the first contract year. This is reasonable since the Government estimates of its requirements as provided in the Solicitation were the same for each of the four years following the initial contract year. c. The Government's actual requirements were identical to its estimated requirements. d. The Government ordered approximately $35 million dollars of supplies during the Contract Period, as amended, and that each facility had the same fill rate.

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e. United Medical did not have access to equity capital markets to fund substantial negative cash flows. This is a reasonable assumption since I have not seen any evidence to the contrary and it would not be unusual for a company of this size to not have access to capital markets to fund negative cash flows. It is more reasonable to make this assumption than to assume otherwise unless there was specific information to the contrary. f. The Government would have paid timely in accordance with the Contract terms, that the prompt pay rebates are as represented by United Medical, and United Medical would have taken advantage of prompt pay rebates offered by its suppliers. 8. I have been asked to revise my report so that it can be used in conjunction with a motion for summary judgment and to use different assumptions in order to estimate lost profits at the lower end of the damages scale, although I understand that if I am called to testify at trial I will be asked to provide my best estimate of lost profits, which I believe would be higher than the opinion I am providing with this affidavit. Based on the proforma methodology I used in connection with the claim submitted by United Medical to the Government Contracting Officer, and adjusted by the assumptions described above, I estimate lost profits, using a fill rate of 85%, to be $10,929,000. The detailed calculations made are shown on Exhibit B, attached.

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Robert A. Imel, CPA
10110 Gaywood Road Dallas, Texas 75229 (214) 763-3058 Fax (214) 691-4384 Email: [email protected]

RESUME

Areas of Expertise: Corporate workouts and reorganizations, Litigation support, Expert witness, Bankruptcy, Business valuations, and financial consulting Industry Expertise: Oil and Gas, Real Estate, and Commercial Highlights: Served as court appointed Liquidator in $20 million consolidated Chapter 11 bankruptcy. The case involved three related debtors and over 70 creditors. Part of a three-man management group responsible for the growth of a small-cap public company from a market capitalization of under $5 million to over $300 million. Directly involved in oil and gas property acquisitions totaling over $170 million. Also, negotiated public high-yield securities and private bank debt totaling in excess of $365 million related to the oil and gas industry. Managed multi-state and international litigation and insolvency case involving coal properties and steel technology. Coordinated concurrent litigation and bankruptcies in Knoxville, Tennessee, Chicago, Illinois, Detroit, Michigan and Toronto, Ontario, along with providing expert witness testimony. Successfully worked out and reorganized $30 million in troubled loans for mezzanine lender to the oil and gas industry. Managed both private foreclosures and public bankruptcy Provided expert testimony as to the valuation of a regional retail shoe company in connection with its Chapter 11 Plan of Reorganization. The company had operating revenues of approximately $15 million and over 300 creditors. Developed financial model to assess economic viability of iron carbide, a steel processing technology. Analysis was subsequently incorporated into model used by McKinsey & Company. Developed financial model for the owner of a bio-tech company used in determining whether to sell or divest of a multi-million dollar research and development company.
EXHIBIT A TO AFFIDAVIT

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Robert A. Imel, CPA

Background:

Twenty-two years experience in public accounting and industry, both public and private. 1996 to Present: Independent business consultant since 1996 while also serving in various executive capacities (i.e. president, senior vice president and chief financial officer) in the oil and gas industry. 1992 to 1996: President of Imel & Hayes, P.C., a certified public accounting firm specializing in the oil and gas industry with emphasis on contract operating and contract chief financial officer work. Other specialties included litigation support, bankruptcy, expert witness testimony and real estate. 1983 to 1992: Various financial positions (i.e. controller and chief financial officer) in the oil and gas industry. 1980 to 1983: Employed by Peat, Marwick, Mitchell & Co., now known as KPMG LLP, a "Big Five" certified public accounting firm with offices worldwide. Performed audit, tax and consulting services in the banking, oil and gas, and real estate industries.

Partial Client List: The Stroh Brewing Company; Peter Stroh, individually; Thomas J. Devine, National Energy Group, Inc.; Vantage Shoe Warehouse; Murchison Capital Partners; Orenstein & Associates, P.C.; Goins, Underkofler, Crawford & Langdon, L.L.P Lawyer References: Rosa R. Orenstein, Orenstein and Associates, P.C., Dallas, Texas
E. Bruce Leonard, Cassels Brock & Blackwell LLP, Toronto, Ontario William P. Smith, McDermott, Will & Emery, Chicago, Illinois John R. Sandrelli, Fraser Milner Casgrain, LLP, Vancouver, British Columbia E. Eldridge Goins, Goins, Underkofler, Crawford & Langdon, L.L.P., Dallas, Texas Frank L. Broyles, Goins, Underkofler, Crawford & Langdon, L.L.P., Dallas, Texas

Education:

B.S. degree in Accounting and Finance from Oklahoma State University Licensed as a CPA in the State of Texas since 1982

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Imel Affidavit, Exhibit B

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