Exhibit 1 shows results for two representative Hl'u'll divisions for the year 2919. the rst year under the new bonus plan. The Surgical Instruments Division [SID]. one of HMl's original businesses. sold a variety of surgical instruments, including scissors. scapels. retractors. and clamps. The markets for these products were mature. so growth was relatively slow. Not much innovation was needed. but controlling costs was critical. The Ultrasound Diagnostic Equipment Division {Ultrasound}. which was acquired in 299?. sold and serviced ultrasound probes. transducers. and diagnostic imaging systems. The ultrasound market promised excellent growth and prots if the division could keep its sophisticated products on the cutting edge technologically and control both product development and product costs effectively: In 2999. the total annual bonuses for the year earned by the managers of SID and Ultrasound were approximately 95099 and 1224.999. respectively. Exhibit 1 Harwood Medical Instruments PLE Operating results for the surgical Instruments and Ultrasound Diagnostic Equipment Divisions. 2111!] IIE in 9995} Surgical instruments Division Ulbasoono' Diagnostic Equipment Division 1'r half of 201 9 2nd half of 2919 .1\" half of 29119 2"\" half of 2919 es 1342.999 44,999 2B.Eil]l] 29399 erating prot 134.629 4.4l] 3.42l] 4959 -tin'1e deliveries 95.4% 93.3% 93.2% 94.6% es returns 459 429 291 239 :ent applications led :1 1 4 El 'ap and rework costs 51.1 451] 39.? 232 3to mer satisfaction lave rage] 19% 39% 81% 91% Assign ment Questions