TO ALL:
Ok folks, some of you have asked for it so here goes with my latest projection for TAVA's operating results for fiscal 1999. First you have to read my assumptions:
1. Company operates from a backlog of business
2. Company elects to defer base business where possible but not entirely resulting in a 2/3 Y2K and 1/3 Base business model
3. The starting employee head count at 7/1/98 will be 515 (370 technical 145 nontechnical) {it was 473 at 6/15 with 336 and 137 respectively}
4. The Company hires new technical at the rate of 30 per month until they reach 500 at which time hiring ceases entirely except as to replacements.
5. The average technical employee works 1,800 billable hours a year. (thats not a lot folks. In the CPA business that would only be average. In my career when I was young and was assigned to large jobs I often averaged between 2200-2400 hours a year)
6. Billing rates are as follows: Y2K work $150 an hour; Base work $100 an hour
7. Gross Margins Y2K revenue 55%; Base Revenue 40%; Hardware Sales 10%; Software sales and other 80%
8. Hardware sales 30% of base revenues Software sales and other 20% of Y2K revenue
9. Selling, General and Administrative (SG&A) 10% of Service Revenues
10. Income tax rate at 35%
Ok now you have the assumptions. Here is what they translate into:
Qtly and yrly average technical employees 415; 500;500;500 avg for yr 480
Revenues: Gross Margins:
y2k 300 x $150 x 1,800--------------81,000,000 @ 55%---------$44,550,000
Base 180 x $100 x 1,800------------32,400,000 @ 40%---------$12,960,000
Subtotals 113,400,000 $57,510,000
Hdwe. Sales 32,400,000x's 30% 9,720,000 @10% Rd. 1,000,000
Sftwe Sales 81,000,000 x's 20% 16,200,000 @ 80% Rd 13,000,000
Total Sales and Gross Margin $139,320,000 $71,510,000 (51%)
Selling, General and Administrative @ 10% of 113,400 Rd. 11,510,000
Pretax profit-----------------------------------------------------------------------60,000,000
Income taxes @ 35%----------------------------------------------------------21,000,000
Net income------------------------------------------------------------------------$39,000,000
Earnings per share at 25,000,000 wght aver.--------------------------$1.56
Alright, now you have my estimate. I hope that you will read it and give me some feedback this time. I consider it reasonable conservative. JDN |
