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license of $5,171,422. It determined that the pretax, present
value of the license was $1,411,480 per year.
Peterson Consulting considered SMMT to be the majority of
the license's value and identified below-market labor costs and
employee productivity as two benefits of SMMT. To measure the
value of SMMT, Peterson Consulting compared petitioner's total
labor costs as a percentage of its gross sales with the industry
average labor costs-to-gross sales for sheet-fed printers with
similar gross sales from the Printing Industries of America, Inc.
(PIA) annual reports. In 1989 and 1990, petitioner's labor
costs-to-gross sales ratio was 21.36 percent, while the PIA
industry ratio was 38.38 percent. According to Peterson
Consulting, the 17.02-percent difference produced labor cost
savings for petitioner in 1989 and 1990 of $1,548,714. Peterson
Consulting did not include payroll taxes, worker compensation
insurance costs, and vacation wages as part of petitioner's labor
costs and overstated petitioner's labor costs savings.
Peterson Consulting also assessed the value of SMMT by
comparing petitioner's sales-to-assets ratio with the PIA
industry average. According to Peterson Consulting, the sales-
to-assets ratio measured petitioner's productivity. It
determined that petitioner's gross sales-to-net fixed assets in
1989 and 1990 was 9.44 percent, and the PIA industry average was
7.11 percent. It concluded that the higher sales-to-assets ratio
meant that petitioner had an additional $2.33 in sales for each
dollar that it spent on fixed assets compared to its average
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