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To determine the reasonableness of the return on equity, Dr.
Lacey compared petitioner's returns on equity for 1995 and 1996
with those of publicly traded companies in the construction
industry for the same years. Dr. Lacey found 19 publicly traded
companies in the highway and heavy construction industry. He
excluded seven companies for one or more of the following
reasons:
(1) The company's annual sales exceeded $5 billion;
(2) a large portion of the company's operations were
conducted outside the United States;
(3) the company made large acquisitions during the relevant
period;
(4) the company reported negative equity, indicating
insolvency;
(5) construction was not the company's primary business;
(6) the company had material expense for settlement of
contract claims and unapproved change orders.
The 12 remaining companies that Dr. Lacey used to compare to
petitioner included Amerilink Corp. (AmC), Atkinson, G.F. Co.
(AtC), Dycom Industries, Inc. (DII), Foster Wheeler (FW),
Goldfield Corp. (GoC), Granite Construction (GrC), Insituform
Technologies (IT), Jacobs Engineering (JE), Mastec Inc. (MI),
Meadow Valley Corp. (MV), MYR Group (MG), and Utilx Corp. (UC).
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