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business with the same SIC code classification, in every respect, including the relationship 

 between gross income, operating expenses and net profit. 



A thorough understanding and review of the above clearly demonstrates that the NFS, 

 in accordance with its predetermined objective, attempted to set FST's franchise fee at a level 

 that would cause its profitability, if any, to fall at or near the average profitability for all of 

 the other unknown businesses classified under the same SIC code. The NFS assigned FST 

 to SIC code #4489 for the years 1988-1990. For the years 1985-1987, there was no SIC code 

 4489; therefore, deponent reviewed any and all other SIC codes involving any type of water 

 transportation service for the years 1985-1989. In the FFA, the NFS stated that it applied 

 SIC code 4489 to FST for the years 1985-1989. However, this is a clearly obvious and 

 undebatable error because the 4489 code did not exist until 1988. Therefore, by using this 

 methodology, the entire franchise fee determination process for FST was predicated upon a 

 completely invalid assumption. That is, that the net profitability levels reported in the D&B 

 Industry Norms for SIC code 4489 is a proper yardstick to measure the net income 

 profitability level of FST, simply because the NFS has assigned FST the SIC code number 

 4489. In my professional and academic opinion, the NFS's most basic assumption, described 

 above, is fatally flawed and therefore fee calculations based thereon are also flawed. This 

 renders the NFS calculations concerning FST statistically invalid, as it would any other 

 concessioner when this process is similarly applied. Absolutely, no statistically valid 

 inferences regarding any particular one or all other businesses classified under SIC 4489, can 

 be drawn from the data reported in the D&B Industry Norms or the RMA statement studies. 

 Specifically, it is totally invalid for the NFS to infer that any data contained in the D&B 

 Industry Norms or the RMA Statement Studies properly reflects the financial statement 

 information, including profitability, for all other businesses, or any particular business 

 classified under the same SIC code number. Drawing any such inferences from this 

 published data clearly violates fundamental principles of statistics, and constitutes a flagrant 



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