Opinion ID: 196794
Heading Depth: 2
Heading Rank: 3

Heading: SG & A Expenses

Text: 91 Cambridge Plating had to prove lost profits in terms of net profits, not gross profits. Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159, 385 N.E.2d 1349, 1359 n. 15 (1979). Generally, this requires that gross profits be adjusted for SG & A expenses. In this case, however, Cambridge Plating argued that SG & A expenses would not have increased as its sales increased and thus the anticipated gross profits should not be reduced by SG & A expenses. The district court accepted Cambridge Plating's argument, as do we. 92 Cambridge Plating relies on the testimony of Finn that lost gross profit for Cambridge Plating is the exact same number as the lost net profit for the years in question. Although, as Napco points out, the consolidated financial statements from 1980 to 1985 show a general increase in both sales and SG & A expenses, Finn testified that SG & A expenses increased only 10%-11% as sales increased 30% for the period 1982 to 1984. Moreover, in 1984, SG & A expenses decreased slightly as sales increased. From this evidence, Finn believed that there was no dependent relationship between S G and A and sales and that SG & A expenses would not have necessarily increased as gross profits increased. Although these inferences from the evidence are weak, they are sufficiently plausible to survive Napco's challenge on appeal.