Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mark Jordan – Noble Financial.
Mark Jordan – Noble Financial
Looking at the business and from the comments in that 10-K, it seems with once the dust has settled here, you should the operating at roughly a 40% gross margins and I believe you said that R&D being the 6% to 7% range, SG&A 24% to 26% which would yield an operating margin potential of 7% to 10%, is that the correct inference from the comments indicate?
Roger Derse
I think those are reasonable planning numbers.
Mark Jordan – Noble Financial
Is there any specific reducible expenses? I know as you scale back the organization, you have at least all of the overhead of a large company. Is there efficiencies that need to be rung out of your cost structure and when can it may be achieved so that we would see that normalize operating margin. I mean is that something we should see in the first quarter or is it later in the year before you should achieve that level?
Roger Derse
I think from a continuing operation perspective we’re done, okay. We are in order and we are moving forward. Relative to the obvious relationship of being a public company, as the top line grows, the public company costs drop as a percent. From an overall perspective we are in order and we are going forward and don’t plan to make any further adjustments.
Mark Jordan – Noble Financial
Giving your comments its sounds like you have put all commercial revenues in a discontinued status and so it fair to say therefore that the $56.4 million that you reported is a pure ongoing numbers; there’s no residual business revenue that will drop off early in the year?
Roger Derse
No, you’re absolutely correct Mark and that was a challenge for us over the last several weeks and that’s why it took us a considerable amount of time to basically review and reconstruct that 10-K to reflect continuing as a pure defense electronics place. So that 56 that you see, the numbers that you see in the prior years are pure play defense electronics only not tainted at all by anything commercial, display or interface that’s up in command.
Mark Jordan – Noble Financial
Your book-to-bill was one for the year, but had clearly a strong fourth quarter. Could you give some sense of range in terms of that might be reasonable from a revenue side in the upcoming year?
- To read the full transcript on Seeking Alpha, click here »
