Free Statement - District Court of Arizona - Arizona

Mann, etal.
‘ GT CR Golder Runner, LLC, et ul.
N0. CIV-02-2099-PHX-RCB
Statement of Facts in Support of:
Motion for Summary Judgment on (1) Contract Claims,
(2) Breach of Fiduciary Duty Claims and
All Other Claims Against Defendant Makings
1 EXHIBIT 24
(Relevant pages of Deposition Transcript
of Edward M. McDonough)
Case 2:02-cv—O2099-RCB Document 341-17 Filed O3/10/2006 Page 1 of 4

A
TT I I IN THE UNITED STATES DISTRICT COURT j
IQ ‘ DISTRICT OF ARIZONA
iq “ T· DIANE MANN, as Trustee for ) N0. CIV 02—2099 PHX—RCB I
A the Estate ot LeapS0uroe, ) I
Q - Inc., CHRISTINE V. KIRK, et )
I - aT., )
.. l )
v» Piaintiffs, )
. )
. vs. )
Q )
I GTCR GOLDER RAUNER, L.L.C.; )
‘ et aT., )
I r )
; Defendants. )

.r ) _ y
_. AND RELATED COUNTERCLAIM )
r Q, ,
°i _ VIDEOTAPE DEPOSITION OF EDWARD M. McDONOUGH 2
I January 20, 2006
I 9:07 a.m.
;n _ ScottsdaTe, Arizona
O ’
_ ___4}4 Prepared by: I
p »’2~ `·`·’· i~~&§;§wq;_e r=r~ ·~·t ..., CaroTyn T. Suiiivan, RPR
”‘ ’‘‘``‘‘ RWWWUHQSHWMES Arizona Certified
Reporter No. 50528
I 5333 N 01*1% 7rH Street
~ &nmBu0 Prepared for:
i Fm, Pmmu»Aw¤ma8mH42&m Daniel P. Jensen T
M Attorney at Law ,
r' (602) 26es·6525 Phone I
I (602) 266+2661 mv ( C o p y ) ,

173
EDWARD M. McDoNoDs1~1 - 1/2 0 /06
1 So that tells me that projecting at 10 percent profit i
2 margin is very strong because their actual results were A i
3 much less than that. So that gives me comfort that my 10 j
4 percent isn't understated. l
O%2M3l 5 Q. You didn't answer my question, though, which i
6 concerned the period prior to the acquisition of ICG by i
7 LeapSource. E
8 A. No, I thought you were ask —— then I completely i
9 misunderstood your question, so why don't we start that i
OLZOAB 10 again. Q
11 Q. My question is, you didn't ~— you didn't do Q
12 anything to determine whether the circumstances that i
13 produced a 22.9 percent pretax income as a percent of i
14 revenues in 1999 could be duplicated by Mr. Makings after i
m;m»m 15 he reacquired the company from LeapSource in 2001? i
16 A. I did —— i
17 MR. FARIS: Object to that question. i
18 THE WITNESS: I did answer that question, i
19 when I said I didn't determine whether it was an abnormal i
w¤m»m 20 event or a normal event. You could slice both ways. But 0
21 I didn't analyze to figure out which way, other than just i
Q 22 looking at the averages over time. j i
23 Q. BY MR. STIRLING: Could you explain so the jury i
24 would understand what pretax income as a percent of i
OL2h3725 revenues means? Q i
Case 2:O2—cv—O2099-RCB GgglcwriwiniQ§4Ej?E1gINGFi%dR07§/$%?2'OOL0- L Tgage 3 of 4 ,

174 1
EDWARD M. McDONOUGH — 1/20/06
1 A. Sure. What is your net income for a company l
2 before they pay any federal or state income tax. That's i
3 a number, and you divide that by the revenue to get your l
4 percentages. That's how it comes into play. So in other f
w:m;m 5 words, the only expense that you would have after that l
6 and excluding extraordinary items and things along that y
7 that sometimes hit a financial statement below the line, i
8 if you would. But from an operating perspective, the ,
9 only other expense you would have after pretax income l
p m¤m;u 10 would be income tax at both the federal and state level, E
11 and if there was any international tax if you were l
12 dealing with an international company. i
13 Q. So this number reflects the projected —— let me Z
14 strike that. i
w;m¤x 15 This 10 percent figure that you have for the j
16 years 2001 through 2005 reflects projected expense levels {
17 for the company during those years as well, correct? i
18 A. Well, the difference would be —— yes, the d
19 difference, in other words, between 100 percent and 10 l
m;m;M 20 percent would be the expenses.
21 Q. I'd like to see if I can actually quantify j
22 correctly the amount of work that was being done by ICG l
23 employees for LeapSource clients. You have —— Exhibit y
24 F5 —-
j m;m.m 25 A. To Exhibit 681?
GLENNIE REPORTING SERVICES, L.L.C.
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