To All,
A letter to Tava Shareholders
It has been over three years since the company's last shareholder meeting. Clearly, the fundamental character and quality of the company and its future prospects have all changed dramatically since that last meeting.
LOOKING BACK
In November 1994, the company was operating solely in Denver and was engaged in three businesses: electrical contracting through Sharp Electric Construction; control systems component distribute via Tech Sales, and control system itegration through Tpro Systems
Integration. Consolidated revenues were $12,865,000 for fiscal 1994, and control systems integration services accounted for approximately $10,600, of that total.
From that base, in the spring of 1995, shortly after I joined Topro as Chief Executive Officer, the company launched a new strategy to concentrate all its resources on growing the control system integration business and establishing a true national operating presence.
The execution of that strategy was a major under-taking; in less than twenty-four months, we:
Discontinued the operations of Sharp Electric Construction Co.
Discontinued the operations of Tech Sales, Inc.
Acquired MDCS Inc., an Atlanta based control system integrator.
Acquired Advanced Control Technology Inc., a control system integrator with operations in Albany, Oregon and Seattle, Washington.
Acquired Vision Engineering Inc., a control system integrator with operations in Cypress, California; Sacramento, California; Phoenix, Arizona; Atlanta, Georgia; Chicago, Illinois and San Juan, Puerto Rico.
Merged the Vision Atlanta operations with MDCS
Closed the Vision San Juan operations.
Acquired All Control Systems Inc., in West Chester, Pennsylvania.
This was a rugged journey, but well worth the price.
WHERE WE ARE NOW
Three years later the company is engaged only in its core business of Industrial Information Technology Services which includes not only control system integration, but also includes more expanded offerings such as providing sophisticated manufacturing systems.
The revenue run rate in the core business now stand at $45,000,000, and is growing and operating results are moving sharply forward. The balance sheet and cash position are much improved.
The company is now the largest independent control system integrator in the U.S., employing 300 + personnel and operating from ten offices; Denver, CO; Phoenix, AZ; Cypress, CA; Sacramento, CA; Albany, OR; Seattle, WA; Chicago, IL; Atlanta, GA; Greenville, SC; West Chester, PA.
This geographical positioning allows us to better serve our vertical markets and national accounts, such as Coca-Cola, Hershey Foods, Nestle, Merck and Coastal. More importantly, we are now positioned to accelerate growth by taking existing products to new geographical
markets.
The company has developed a series of applications solution products that includes , among others, BevOne, BakeOne, LineOne, FabOne, This element of our strategy further distinguishes us from the competition and provides opportunity for improved execution margins. We will continue to expand the "product" component of the business.
The company is investing in a Intranet structure that will allow our branch operations to easily distribute workload across offices, allowing engineers in several locations to work "side by side"
electronically. This is of great value in maintaining high resource utilization during the typical peak and valley demand cycles faced by each branch.
In the process of this transformation, the company the company has made major changes to its organization and management structure. At the executive level this includes the recent naming of Kevin Fallon as Chief Operating Officer, Douglas Kelsall as Chief Financial Officer and Larry Hagewood as Executive Vice President of Sales and Marketing. These gentleman all bring demonstrated skill and industry specific experience to their assignments.
Of Greater importance is the continued professional growth and constant dedication of our employees. This market places very rigorous demands on our staff; deadlines are always tight, technology is stretched, projects start-ups require continuous 24-hour, on-site presence away from home, in venues from Alaska to India. Our staff continues to not only respond to these demands, but constantly develop fresh ideas by which we upgrade our own effectiveness and
create even greater value for our client.
THE FUTURE
In July, 1997, the company launched a major business initiative to address Year 2000 (Y2K) compliance in factory automation and process control, offering a suite of services and products called Plant Y2kOne.
Plant Y2kOne includes: a CD-ROM based methodology, including Internet enabled access to our vendor compliance database that supports client self-execution of their Year 2000 program; training services and help desk support; and project services ranging from complete execution to program management of client staff.
Our Technical staff worked at a breakneck pace to ensure on-time shipment of the initial release of the CD-ROM.
The Market response to this offering has been very strong. As of this date, the company has closed a number of contracts with Fortune 500 clients for multi-site engagements and expects to finalize several more by the end of December, 1997. The company is actively recruiting additional staff with current plans to hire as many as 150 in the next nine months to meet demand. We expect our core business to grow to support this additional staff beyond the year 2000 demand.
At this time, the company finds itself in a clear leadership position as the only organization providing a comprehensive offering of product and services for the Year 2000 process control compliance.
Of critical importance is that the Plant Y2kOne initiative directly supports the objectives of our base business. In only 30 days since the release of the CD-ROM we find ourselves positioned to do business with more than 30 new Fortune 500 clients. We expect that number to grow dramatically and that, as a result of this y2k-driven introduction, we will continue to practice our core business in these new accounts after the Year 2000 event is behind us.
In addition, the Y2K activity will force many of our client to understand the value to be gained from vertical integration of their business and process control information technology systems. This will further significantly expand the growth opportunity for our company as we are
particularly well positioned to provide the product and services required to effect that integration.
The future holds dramatic opportunity for our organization to broaden its industry leadership position. Our challenge is to meet that opportunity in an aggressive and timely fashion. We relish that challenge and look forward to your continued support and shared success.
Sincerely,
John Jenkins, Chief Executive Officer, Topro, Inc.
This letter taken from TAVA Annual Report 1997
FROM FORTUNE MAGAZINE
Unfounded gloom and doom? Not if you listen to Ralph J. Szygenda, chief information officer at General Motors, whose staff is now feverishly correcting what he calls "catastrophic problems" in every GM plant. In March the automaker disclosed that it expects to spend $400 million to $550 million to fix year 2000 problems in factories as well as engineering labs and offices. Or consider the words of Rob Baxter, Honeywell's vice president in charge of making his
company's line of industrial control products "year 2000 compliant," to use computer industry jargon. From what he has seen among Honeywell customers, Baxter fears that "some plants will have trouble operating and will have to shut down. Some will run at a reduced scope. I expect considerable system outages during December 1999 through February 2000."
Tava Technologies of Englewood, Colo., has one of the few software tools for automatically finding year 2000 errors in manufacturing's embedded systems. Among other things, Tava's program can read the "ladder logic" directing programmable logic controllers (PLCs). These simple, computerlike devices issue commands to factory equipment in the manner of a drill sergeant. Thousands of PLCs dot factory floors, and all have to be checked.
Many embedded programs, however, can't be fixed at all because they are inscribed on silicon chips. In those cases, whole pieces of factory equipment, from time clocks to expensive computer numerically controlled (CNC) machine tools, have to be junked and replaced.
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