2012 pia financial ratio study

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2012FINANCIAL

RATIO STUDY

2012 PRINTING INDUSTRIES OFAMERICA FINANCIAL RATIO STUDY

PRINTING INDUSTRIES ASSOCIATION, INC.OF SOUTHERN CALIFORNIA

ALL PRINTERS

An Annual Financial Survey Conducted By:Printing Industries of America, Inc.

200 Deer Run RoadSewickley, PA 15143

Tel: (800) 910-4283www.printing.org

Edited and Prepared by:MargolisBecker, LLC

Certified Public Accountants161 Washington Street

Conshohocken, PA 19428Tel: (610) 667-4310

www.MargolisBecker.com

The introduction and published statistical material may not be distributed in whole or inpart without express permission.

2012 by Printing Industries of America, Inc.


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THE PRINTING INDUSTRIES OF AMERICA FINANCIAL RATIO STUDIES -

STANDARDS OF ANALYSIS FOR THE PRINTING INDUSTRY

The Printing Industries of America Financial Ratio Studies permit management, using these standards of comparative financialanalysis, to find their company's position in the graphic arts industry. Using the data from the ratios, management can evaluatetheir company's policies to improve profitability.

The Financial Ratio Studies consist of 16 unique studies, each in its own booklet. They are:

Management Guide to the Ratios Printers With Sales Over $18,000,000 All Printers by Sales Volume and Geographic Area Binders All Printers by Product Specialty Printers With Sales Under $3,000,000 Sheetfed Printers by Sales Volume and Quick Printers

Geographic Area Forms and Document Printers Web Offset Printers - Heatset Label Printers Web Offset Printers - Coldset/Non-Heatset Digital Printers Combination Offset - Sheetfed/Web Commercial and Advertising Printers Book Manufacturers

Each booklet allows management to compare their company's financial operations with the financial operations of othercompanies, including the industry's Profit Leaders. These comparisons can be with companies with similar manufacturingspecialties, sales volume, printing processes and geographical areas. A company's strengths and weaknesses can bepinpointed using the information within the Financial Ratio Studies. They also help answer questions such as:

Are my expenses too high in relation to sales? Is there too little or too much inventory? Am I producing enough value added sales? Are our customers' receivables collected promptly? Can we meet our debts as they mature? Should we increase our selling prices? How can we increase our profits?

To maximize the value of the Financial Ratio Studies you must apply them effectively. The aim of this customized Area Study isto help management make the fullest use of the Financial Ratio Studies in analyzing and interpreting their relevant financial

information.

HOW THE PRINTING INDUSTRIES OF AMERICA FINANCIAL RATIO STUDIES ARE COMPUTED

AVERA GING

The Printing Industries of America Financial Ratio Studies use a method of computation that avoids distortion or bias, of thedata, by companies with very large or very small dollar amounts. This distortion known as " self-weighting", is common whendealing with statistics with extreme highs and lows. With the use of proper safeguards self-weighting can be eliminated.

Our method is a valid statistical approach that calculates a ratio or percentage between the sales of a company and each of itscost categories. The percentages are added and an average is computed. This average gives us an excellent basis forcomparison.


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AVERA GING (Continued)

The following example shows how this method eliminates the problem of possible distortion by very large firms.

% OF SALES

FACTORY FIRM'S RATIO RATIOFIRM SALES PAYROLL FACTORY PAYROLL FACTORY PAYROLL

A $ 200,000 $ 60,000 30.0 %

B 500,000 100,000 20.0

C 8,000,000 975,000 12.2

62.2 % Divided by 3 = 20.7 %

MEDIAN VALUES

The Financial Ratio Study also uses median values in reporting certain significant facts. A median value is defined as the middlenumber in a series of numbers. Therefore at least half the reporting firms are as small as or smaller than the median, and atleast half are as large as or larger than the median. Using the median eliminates the skewing in the values reported when thedistribution is asymmetric. We believe that the use of the median, for certain significant facts, provides the reporting of theappropriate values for the responding companies.

WHO ARE ALL FIRMS?

In the Financial Ratio Studies, the term "All Firms" has two distinct meanings. It stands for all the firms participating in theFinancial Ratio Studies, and at other times it refers to all participating firms within in a particular category. When the term "All

Firms" is used, the context in which it is placed will make the intent clear.PROFIT LEADERS CRITERION

Since 1992 the PIA/GATF Ratio Studies defines "Profit Leaders" as those firms whose profits are above the upper quartile pointbased on profits as a measure of value added. The median divides the distribution into two equal parts. The quartiles divide itinto four equal parts. By selecting the upper quartile, we allowed the data for the top 25% of the participating firms to beaveraged together, to give all printers purposeful results to strive towards.


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PROFIT LEADERS CRITERION (Continued)

Lower QuartilePoint

Median Upper QuartilePoint

This method to calculate "Profit Leaders" allows for more meaningful "Profit Leaders" ratios and related significantfacts. The formula is able to compensate for recessions and expansions. If the economics of an aspect of theindustry warrants a lower or higher profit standard, this upper quartile technique produces the desired results. Afterall, there are significant differences between a hand bindery and a web press printing plant, and we have a methodfor determining "Profit Leaders" that is flexible to the financial differences presented. We have a "Profit Leaders" ratiowhich, provided there are at least twenty firms in the category, would then designate five firms to be the "ProfitLeaders."

SURVEY RESULTS - SALES BREAKDOWN FROM SERVICES

Percentage of Sale s Revenue

Services Rendered 2012 2011 2010 2009 2008Printing and Prepress 72.55 % 71.18 % 72.98 % 72.27 % 75.03 %Binding and Finishing 13.90 15.83 15.69 16.16 14.49Mailing Services 6.12 5.45 4.21 4.83 4.34Fulfillment Services 3.32 3.25 3.13 3.20 2.57

Database Management Services 0.70 0.75 0.44 0.78 0.75Other Non-Print Ancillary Services 3.41 3.54 3.55 2.76 2.82Total Services 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %

Sales Breakdow n From Services

The proportion of printers sales revenues derived from printing and prepress decreased to 71.18 percent of sales,the lowest level reported over the five-year period and continuing the general pattern of decline. In contrast, theproportion of sales from binding/finishing increased from 15.69 percent to 15.83 percent. In total, ancillary servicesrevenue increased slightly from 11.33 percent of sales to 12.99 percent, continuing its general pattern of increases.

The "PROFIT LEADERS"are the average of the

common size percentages offirms above the upper

quartile point.


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PRINTING INDUSTRIES OF AMERICA AREA FINANCIAL RATIO STUDY

Each section of this analysis calculates your area's results. The sections are: Report on Operations - Value Added = 100% Report on Operations - Sales = 100% The Balance Sheet Significant Facts

Each section of the analysis calculates your groups results so the reader can make easy comparisons. A discussionof each section follows below.

SECTION 1 - REPORT ON OPERATIONS - VALUE ADDED = 100%

If sales are up but profits are down, something is wrong. Even when sales are level and profits are lower, management has aproblem. The problem area, in all likelihood, is in your Inside Sales, or Value Added. Typically, managers are unfamiliar with

this critical concept and do not realize this may be the root of their problem.Value Added Defined

Value Added is the term for the sale of products manufactured in a company's plant. To calculate Value Added you subtract thecost of materials and outside purchases from the sales price. In other words, Value Added is the value added to purchasedmaterials and outside services by your manufacturing efforts.

SALES $ 100

LESS: MATERIALSPAPER $ 22OTHER CHARGEABLE MATERIALS 6

OUTSIDE SERVICES 735

VALUE ADDED $ 65

Value Added Maximizes Profit

Profit is attained from sales of a company's own manufacture. This is a basic maxim in the printing industry. Or, to put it simply:you make your profit from the work done inside your plant, not outside. When managers ignore this key principle, they lose avaluable tool for earning superior profits. There may be other reasons, of course, for poor operating performance, but neglect ofthe Value Added principle is the major and most frequent reason for low profits.


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AREA FINANCIAL RATIO STUDY

SECTION 2 - REPORT ON OPERATIONS - SALES = 100%

Reports on Operations start with sales, the amount you charge for your product. You should price your company's productsintelligently. Printing is a made to order product. Every job is different and uses different facilities in your plant for varyingperiods of time. You must know your costs. To price your finished job sensibly, you must also have a good system for gatheringcosts and formulating a sales price that is competitive and profitable.

SECTION 3 - THE BALANCE SHEET

A balance sheet is a statement of a company's financial position at a point in time. It lists assets, liabilities and owners' equity.The term, "balance sheet," describes a financial report where the two sides must balance or be equal. The balance sheetequation may take one of two forms:

Assets = Liabilities + Owners' Equity

OR

Assets - Liabilities = Owners' Equity

A company's assets are everything the company owns. Its liabilities are everything it owes. Owners' equity is what is left afterliabilities are subtracted from assets. It represents the financial interest of the proprietor, partner(s) or shareholder(s) - whoeverowns the company.

A good manager should understand the relationship of a balance sheet's components to the company operations. Anassessment of the company's balance sheet can reveal many aspects of its operational capabilities. As with other financial data,an intelligent analysis can provide a unique management tool.

Keep in mind that particular ratios and relationships may diverge according to the processes a company uses or what products it

produces. For example, it is likely that a web-offset printer would have a greater investment in plant equipment and,correspondingly, more liabilities (debt) or equity (owners' financial interest) to support those assets than a bindery.

SECTION 4 - SIGNIFICANT FACTS

The significant facts are composed of extensive ratios in the following areas: Profitability Ratios Liquidity and Activity Ratios Leverage and Funding Ratios Employee Profiles

These ratios are important statistics for management. They are as meaningful as the financial statements themselves. Often,

they offer the lowest common denominator, which can be easily managed to produce higher profits. The next section gives yousome definitions and the use of certain significant facts.


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DEFINITIONS AND PURPOSES OF PERTINENT RATIOS

1. RETURN ON INVESTMENT

Return on investment (ROI) refers to the capital employed to produce income. The calculation is a very simple computationand is done two ways.

ROI - GROSS ASSETS =PROFIT BEFORE INTEREST AND OTHER INCOME

NET ASSETS PLUS ACCUMULATED DEPRECIATION

ROI - NET ASSETS =PROFIT BEFORE INTEREST AND OTHER INCOME

NET ASSETS

Return on investment incorporates the two major factors in measuring profits - income and investment. For this reason, it isconsidered the most comprehensive measure of profitability.

ROI is gaining wider acceptance as a tool in measuring profitability in the graphic arts industry. This is due to the capital-intensive nature of the industry. Most firms have large dollar amounts invested in fixed assets and their profit performanceshould be measured against the investment.

2. VALUE ADDED PER FACTORY EMPLOYEE

This ratio is important and is computed as follows:

VALUE ADDED SALES LESS MATERIALS AND OUTSIDE PURCHASES PER FACTORY EMPLOYEE NUMBER OF FACTORY EMPLOYEES

Often, managers do not know whether they have too many factory employees or not enough. This ratio gives you a chanceto measure what your factory employees are producing and how they compare to the industry. You must know this numberand plan to improve it; the result will be increased profitability.

3. CURRENT RATIO

The current ratio measures a company's ability to meet short-term obligations, thus playing a key role in determiningwhether there is adequate working capital. It is computed by dividing current assets by current liabilities.

CURRENT RATIO = CURRENT ASSETSCURRENT LIABILITIES

Some people say that doing business with other people's money, "trading on equity," is good business. This is rarely true.If the current ratio is lowered by too much debt, assets such as inventory and cash will not be available when needed.


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3. CURRENT RATIO (Cont inued)

In addition, when working with too much of other people's money, a demand for cash repayment of the loan can prevent aprinter from investing current assets profitably in his business. It can prevent him from buying and discounting rawmaterials and outside services, and can affect his credit with banks that, in turn, can hinder the purchase of fixed assets. Inshort, working with other people's money makes the lender a partner who is mainly concerned with his money and interest,not your business.

4. COLLECTION PERIOD

The collection period of accounts receivable shows the time that is required to collect cash from customers after sales aremade. The sooner receivables are collected, the sooner the money can be put to use -- to invest in more assets, to pay offliabilities, or to earn interest. As the collection period increases or decreases, it affects a company's cash, receivables,inventory, payables, and interest; in other words, it affects the company's entire operation.

The collection period is computed by dividing the average accounts receivable by the annual sales figure, and thenmultiplying the result by 365.

COLLECTION PERIOD = AVERAGE ACCOUNTS RECEIVABLE X 365OF RECEIVABLES ANNUAL SALES

This ratio reflects a company's credit and collection policies. Most firms have about 51 days worth of their annual sales inaccounts receivable. For example, if sales were $2,500,000, a typical firm would have $349,300 outstanding. Shorteningthe collection period reduces that portion of assets that are tied up in receivables and related interest costs.

All companies, including Profit Leaders, should make every possible effort to shorten collection periods. Some ways to do

this are:

1. BILL CUSTOMERS WHEN THE JOB IS COMPLETED, not at the end of the month as many printers do.

2. Offer effective incentives for customers to pay on time.

3. Seek good, credit-worthy customers.

4. If good customers are consistently slow paying, consider the cost of maintaining large accounts receivablebalances when pricing their work.


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5. INVENTORY TURNOVER

Inventory is the sum of work-in-process, paper and other chargeable materials and supplies. Finished goods inventory maybe small or non-existent because most of a printer's sales are specialized, produced "to order" jobs.

The equation used for computing inventory turnover is as follows:

TOTAL INVENTORY TURNOVER =COST OF PRODUCT PRODUCED

AVERAGE INVENTORY

The cost of materials, labor and factory overhead, is taken from the income statement and is divided by the averageinventory.

In those instances where customers supply paper, inventories will fluctuate. This could possibly affect a printer'scomparison of his inventory percentages to those in the Ratio Study. Parenthetically, when customers supply paper, aprinter should still make a realistic handling and overhead charge for paper to cover his labor and warehousing costs, plus aprofit mark-up.

A low inventory turnover points to the possibility of a larger than necessary investment in inventory. A higher turnoverimplies better management and control.

6. DEBT TO EQUITY

Leverage and funding ratios reflect a company's total debt - short-term and long-term. These ratios are important to amanager, especially if his company is expanding and needs debt financing. He will want his company's leverage ratios tocompare favorably with those of the graphic arts industry. This is a factor that lending institutions will look at closelybecause it measures the relationship between shareholders' funds and borrowed funds.

Management should consider the two debt-to-equity ratios analyzed below:

DEBT TO EQUITY =TOTAL LIABILITIES

EQUITY

LONG-TERM LIABILITIES TO EQUITY = LONG-TERM LIABILITIESEQUITY

Profit leaders have dramatically lower ratios of both debt to equity and long-term debt to equity. This indicates that they are

more financially secure and in a better position to fund further acquisitions and expansion.


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Printing Indust ries Association, Inc. of Southern California

REPORT ON OPERATIONS

VALUE ADDED = 100%

ALL FIRMS

*Other income net of interest expense

-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Profit 1.15%

Other Income* 0.20%

Selling Expenses 16.92%

Admin. Expenses 19.34%

Factory Expenses 27.09%

Factory Payroll 35.70%

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Printing Industries Association, Inc. of Southern California

REPORT ON OPERATIONS - VALUE ADDED = 100%

All Printers

Al lFirms

SALES OR VALUE OF PRODUCT PRODUCED X

LESS: PAPER, OTHER CHARGEABLE MATERIALS AND OUTSIDE SERVICES X

VALUE ADDED BY MANUFACTURE 100.00 %

FACTORY PAYROLL 35.70

FACTORY EXPENSES 27.09

TOTAL FACTORY COST OF PRODUCT 62.79

GROSS PROFIT 37.21

ADMINISTRATIVE AND SELL ING EXPENSES

Administrative expenses 19.34 Selling expenses 16.92

TOTAL ADMINISTRATIVE AND SELLING EXPENSES 36.26

INCOME BEFORE INTEREST EXPENSE 0.95

Interest expense 1.66

OPERATING INCOME (LOSS) (0.71)

Other income 1.86

INCOME BEFORE INCOME TAXES 1.15 %

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SUPPORTING SCHEDULES - VALUE ADDED = 100%

All Printers Al l

Firms

FACTORY PAYROLL Salaries - executive 2.40 %

Direct wages 22.44 General factory salaries and wages 3.41 Packing, shipping and delivery wages 2.14 Payroll taxes 2.34 Employee benefits 2.97

TOTAL FACTORY PAYROLL 35.70 %

FACTORY EXPENSES Fixed Expenses Depreciation - real estate 0.01 %

Depreciation - other 5.11 Taxes - real estate 0.20 Taxes - other 0.52 Insurance 1.22 Building rent 6.55 Utilities - heat, light etc. 2.12 Equipment rental 0.85

Total Fixed Expenses 16.58 Other Expenses

Factory supplies and expense 2.58 Packing, shipping and delivery expense 3.96 Repairs and maintenance 2.78 Other factory expense 1.19

Total Other Expenses 10.51

TOTAL FACTORY EXPENSES 27.09 % ADMINISTRATIVE EXPENSES Salaries - executive 5.79 %

Salaries - office 5.46 Payroll taxes 0.78 Employee benefits 0.97 Bad debts 0.36 Data processing expense 0.48 Office supplies and expenses 0.73 Professional fees 1.13 Taxes - business 0.15 Telephone 0.72 Other administrative expenses 2.77

TOTAL ADMINISTRATIVE EXPENSES 19.34 %

SELLING EXPENSES Salaries - executive 1.93 %

Salaries and commissions - salesmen 9.84 Salaries - sales office clerical 0.89 Payroll taxes 0.84 Employee benefits 0.79

Advertising 0.83 Travel and entertainment 0.66 Other selling expenses 1.14

TOTAL SELLING EXPENSES 16.92 % - 11 -


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REPORT ON OPERATIONS

SALES = 100%

ALL FIRMS

*Other income net of interest expense

-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Profit 1.01%

Other Income* 0.04%

Selling Expenses 10.12%

Admin. Expenses 12.18%

Factory Expenses 17.23%

Factory Payroll 21.80%

Materials 37.70%

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REPORT ON OPERATIONS - SALES = 100%

All Printers Al l

Firms

SALES OR VALUE OF PRODUCT PRODUCED 100.00 %

FACTORY COST OF PRODUCT MATERIALS Paper 19.62

Other chargeable materials 4.91 Outside services 13.17 TOTAL MATERIALS 37.70

FACTORY PAYROLL 21.80 FACTORY EXPENSES 17.23

TOTAL FACTORY COST OF PRODUCT 76.73

GROSS PROFIT 23.27

ADMINISTRATIVE AND SELL ING EXPENSES Administrative expenses 12.18

Selling expenses 10.12

TOTAL ADMINISTRATIVE AND SELLING EXPENSES 22.30

INCOME BEFORE INTEREST EXPENSE 0.97 Interest expense 1.01

OPERATING INCOME (LOSS) (0.04)

Other income 1.05

INCOME BEFORE INCOME TAXES 1.01 %

SUPPORTING SCHEDULES - SALES = 100%

OTHER CHARGEABLE MATERIALS Ink 1.84 %

Click charges 0.61

Plates 1.00 Other chargeable materials 1.46

TOTAL OTHER CHARGEABLE MATERIALS 4.91 %

OUTSIDE SERVICES Prepress 0.17 %

Printing 6.47 Binding 3.55 Other outside services 2.98

TOTAL OUTSIDE SERVICES 13.17 % - 13 -


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SUPPORTING SCHEDULES - SALES = 100%

All Printers Al l

Firms

FACTORY PAYROLL Salaries - executive 1.41 %

Direct wages 13.61 General factory salaries and wages 2.31 Packing, shipping and delivery wages 1.23 Payroll taxes 1.44 Employee benefits 1.80

TOTAL FACTORY PAYROLL 21.80 %

FACTORY EXPENSES Fixed Expenses Depreciation - real estate 0.00 %

Depreciation - other 3.31 Taxes - real estate 0.12 Taxes - other 0.33 Insurance 0.75 Building rent 4.02 Utilities - heat, light etc. 1.30 Equipment rental 0.52

Total Fixed Expenses 10.35 Other Expenses

Factory supplies and expense 1.56 Packing, shipping and delivery expense 2.71 Repairs and maintenance 1.82 Other factory expense 0.79

Total Other Expenses 6.88

TOTAL FACTORY EXPENSES 17.23 % ADMINISTRATIVE EXPENSES Salaries - executive 3.55 %

Salaries - office 3.50 Payroll taxes 0.50 Employee benefits 0.60 Bad debts 0.24 Data processing expense 0.27 Office supplies and expenses 0.47 Professional fees 0.70 Taxes - business 0.09 Telephone 0.45 Other administrative expenses 1.81

TOTAL ADMINISTRATIVE EXPENSES 12.18 %

SELLING EXPENSES Salaries - executive 1.10 %

Salaries and commissions - salesmen 5.88 Salaries - sales office clerical 0.57 Payroll taxes 0.51 Employee benefits 0.45

Advertising 0.47 Travel and entertainment 0.44 Other selling expenses 0.70

TOTAL SELLING EXPENSES 10.12 % - 14 -


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BALANCE SHEET

TOTAL ASSETS = 100%

ALL FIRMS

ASSETS LIABILITIES AND EQUITY

Other Assets3.61%Fixed Assets

38.86%

Current Assets57.53% Equity

22.74%

Long-TermLiabilities31.99%

CurrentLiabilities45.27%

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BALANCE SHEET

All Printers Al l

Firms

ASSETS

CURRENT ASSETS Cash 10.99 %

Receivables 31.41 Inventories 9.52 Marketable securities 0.00 Other current assets 5.61

TOTAL CURRENT ASSETS 57.53

FIXED ASSETS Real estate 0.38

Less: Accumulated depreciation 0.22 0.16

Machinery and equipment 157.07 Less: Accumulated depreciation 122.19

34.88

Other fixed assets 18.97 Less: Accumulated depreciation 15.15

3.82

NET FIXED ASSETS 38.86

OTHER ASSETS 3.61

TOTAL ASSETS 100.00 %

LIABILITIES AND EQUITY

CURRENT LIABILITIES Notes payable 10.44 %

Accounts payable 19.30 Other current liabilities 15.53

TOTAL CURRENT LIABILITIES 45.27

LONG-TERM LIABILITIES 31.99

TOTAL LIABILITIES 77.26

SHAREHOLDERS' & PROPRIETORS' EQUITY 22.74

TOTAL LIABILITIES AND EQUITY 100.00 %

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FACTORY EMPLOYEE DATASALES AND VALUE ADDED PER FACTORY EMPLOYEE

ALL FIRMS

EMPLOYEE WAGE DATA AVERAGE PAYROLL PER EMPLOYEE

ALL FIRMS

Wages include taxes and benefits (Executives are included)

$0

$10,000$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Factory$50,090

Administrative$82,682

Sales$91,515

All$63,361

$0

$50,000

$100,000

$150,000

$200,000

$250,000

SALES $249,991 VALUE ADDED $159,610

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SIGNIFICANT FACTS - PROFITABILITY RATIOS

All Printers Al l

Firms

PROFITABILITY RATIOS

MEASURE OF PROFITS Income before income taxes A. As a percent of sales 1.01 %

B. Per employee 933$Income before interest expense

(Return on Investment) A. As a percent of gross assets 0.71 %

B. As a percent of net assets 1.43 Earnings before income taxes, interest expense,

factory depreciation and amortization (EBITFDA) A. As a percent of sales 5.33 %

B. As a percent of value added 7.93

SALES FACTORS Sales per $1 of gross assets 1.29$

Sales per $1 of net assets 3.10 Sales per $1 of current assets 5.68 Sales per $1 of net fixed assets 12.40 Sales per employee 171,261 Sales per factory employee 249,991

GROSS PROFIT ANALYSIS Gross profit as a percent of sales 23.27 %

Gross profit per factory employee 60,936$Components of cost of product

produced as a percent of sales A. Materials 37.70 %

B. Factory payroll 21.80 C. Factory expenses 17.23

VALUE ADDED ANALYSIS Value added per employee 106,187$

Value added per factory employee 159,610 Analysis of operations to value added

A. Factory payroll 35.70 % B. Factory expenses 27.09 C. Administrative expenses 19.34

D. Selling expenses 16.92 E. Interest expense 1.66 Gross profit as a percent of value added 37.21 Income before income taxes

as a percent of value added 1.15

umer ca verage e an aue

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SIGNIFICANT FACTS - FINANCIAL RATIOS

All Printers Al l

Firms

Financial Ratios

FINANCIAL LEVERAGE Income before interest expense as a multiple of interest expense Times interest earned 0.96

LIQUIDITY AND ACTIVITY RATIOS Current ratio 1.27

Quick ratio 0.94 Cash asset ratio 0.24 Days cash for operating expenses

excluding depreciation 8 Accounts receivable turnover 8.24 Number of days sales in accounts

receivable (Collection Period) 44 Inventory turnover

A. Total inventory turnover 19.22 B. Number of days - total inventory 19 C. Paper inventory turnover 42.76 D. Number of days - paper inventory 9

Current asset turnover 5.68 Operating cycle - in days 63 Distribution of current assets

A. Cash 16.80 % B. Accounts receivable 55.03 C. Inventory 16.92

D. Other current assets 11.25

LEVERAGE AND FUNDING RATIOS Debt to equity 3.40

Long-term debt to equity 1.41 Funding of total assets

A. Current liabilities 45.27 % B. Long-term debt 31.99 C. Total debt 77.26 D. Shareholders' equity 22.74

Long-term debt to long-term debt and equity 0.58

Fixed assets to long-term debt 1.21 Fixed assets to shareholders' equity 1.71 Fixed assets to long-term debt and

shareholders' equity 0.71 Investment turnover

Sales to assets A. Gross assets 1.29

B. Net assets 3.10 C. Net fixed assets 12.40

Sales to total debt 4.34

Numerical Average / Median Value - 19 -


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SIGNIFICANT FACTS - EMPLOYEE PROFILE

All Printers Al l

Firms

EMPLOYEE PROFILE

INVESTMENT PER EMPLOYEE Per employee for all employees A. Shareholders' equity 26,083$

B. Net assets employed 65,166 Per employee for all factory employees

A. Net assets employed 99,801 B. Machinery and equipment employed 129,865

EMPLOYEES As a percent of total employees Factory employees 68.97 %

Administrative employees 17.15

Sales employees 13.88

PAYROLL - INCLUDING TAXES & BENEFITS INCLUDING EXECUTIVES Total payroll as a percent of sales 38.46 %

Total payroll as a percent of value added 62.99 Factory payroll as a percent of gross

plant investment 36.56 Payroll per employee - all employees 63,361$

Payroll per factory employee 50,090 Payroll per administrative employee 82,682 Payroll per sales employee 91,515

PAYROLL - EXCLUDING TAXES & BENEFITS EXECUTIVE PAYROLL Payroll per executive - all executives 111,135$

Payroll per factory executive 68,172 Payroll per administrative executive 119,083 Payroll per sales executive 120,000

NON-EXECUTIVE PAYROLL Payroll per non-executive employee - all employees 52,638

Payroll per factory non-executive employee 41,152 Payroll per administrative non-executive employee 48,996 Payroll per sales non-executive employee 77,117

DIRECT AND SUPPORT LABOR RATIOS INCLUDING TAXES & BENEFITS Direct labor as a % of value added 26.36 %

Support labor as a % of value added 36.63 Support labor efficiency factor 1.39$

Numerical Average / Median Value- 20 -


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Printing Industr ies Association, Inc. of Southern California

Absolu te Data

Average Firm Reporting**Number of Sales or Total

Participating Total Value of IncomeFirms Assets Production (Loss)

Total - All Firms 16 $ 310,565 $ 722,571 $ ( 10,228 )

Total - Profit Leaders* 4 *** Data Not Being Presented

* "PROFIT LEADERS" are those firms who achieved profits in the first quartile (25%), of their respective category,based on value added.

** Unlike the ratios in this book, the figures are arithmetic averages.*** To assure confidentiality, data is not being presented due to the limited number of respondents in the category.

2012 pia financial ratio study

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