Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Ron Epstein – Bank of America/Merrill Lynch.
Ronald Epstein – BAS/ML
Mark, I guess a broad question. When I look at many of your competitors in a declining revenue environment, it's very challenging for them to, not just to stay in margins, but their margins tend to go down. When you talk about the toolkit, what exactly are you guys doing to, I mean, it's amazing how you grew margins facing the revenue declines that you did.
Mark Donegan
It's not a fancy thing. I think what it is it's a very detailed process. It's very standardized. It has the ability, you've heard about our infamous quarterly review process. There is roughly 25 pages I'd say you get two pages to say look how good I did, and I think the other 23 then begin to say, okay, what did you leave on the table and it breaks it down into excruciating detail. So it just doesn't look at cost. It breaks out fixed cost, every segment of fixed cost, salary, depreciation. It goes into variable. It would look at labor, material, supplies, overtime.
It then would go into a number of the cash generators or balance sheet items. It looks at every piece of inventory. It looks at receivables. The thing that makes it different is I think the time we put into it. So if you look at a time that myself, my division presidents, it's kind of all encompassing. So if you look at the way of life, supervisors are going to get that same breakdown every day. How did you do? What did you get? Where's your opportunity? What did you miss on?
And he would have, he or she would have very, very excruciating detail in terms of every element they have out there. It's not fancy. It's not fun. And it takes a tremendous amount of effort on everybody's time, but it is geared to really knowing where it is. And then I think besides that you get a group of people that get it. I mean I don't fight a lot of battles as where should it be, people get we want to improve margins. We want to fight through it. Sometimes it's just trying to figure out what it looks like to get that. So it's kind of it in a nutshell.
Ronald Epstein – BAS/ML
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