1980 Income Statement Elling Bros. The Industry

($000) (%) ($000) (%)

GROSS REVENUES 12,174 100.0 10,590 100.0

Materials & 3,358 27.6 3,310 31.3

equipment

Subcontracts 4,125 33.9 1,907 18.0

Job-related 2,100 17.2 2,929 27.6

wages

Payroll taxes, 680 5.6 807 7.6

job insurance,

union benefits

Misc. direct 96 0.8 290 2.7

job costs

DIRECT JOB COSTS 10,359 85.1 9,242 87.3

GROSS PROFIT 1,815 14.9 1,348 12.7

G&A expenses 999 8.2 1,186 11.2

NET INCOME (LOSS) 726 6.0 162 1.5

BEFORE TAXES

In 1980, when an intensive cost-monitoring program was finally beginning to pay off for Elling Bros., the company had gross revenues of $12,174,000. An industrywide survey by the Mechanical Contractors Association of America (MCAA), published in 1980, showed that average construction revenues for member firms were about the same -- $10,590,000. Elling Bros. also spent similar amounts on direct costs -- 85.1% of revenues compared to an industry average of 87.3% -- and on G&A costs -- 8.2% compared to an average of 11.2%. Yet small cost savings had a dramatic effect on overall profitability. The average mechanical contracting firm earned 1.5% on its construction revenues; Elling Bros. earned four times as much, with 6.0% in pretax profits.