Your client, Virus-Victim, Inc. (VVI), has suffered an attack. The company sells popular retail items only via the Internet to customers all over the world. The perpetrator has been identified and local law enforcement and the county prosecutor are handling the criminal action.

VVI believes that the perpetrator has the deep pockets to compensate VVI for its losses associated with the attack. The perpetrator committed the act at 12:01 am Saturday, July 4th and the retail website was down for 8 hours. At 12:01 am, alarms triggered and the Director of Information Technology (IT) and 10 IT programmers worked all weekend long, 20 hours, to restore and remediate the attack.

1. and 2. VVIs supervisor from information technology and an accounting clerk have assembled the following lists of costs:

• The IT Director earns a salary of $175,000 annually.
• Each IT person earns $40 per hour; IT personnel work scheduled shifts to provide 24 hour coverage; each of the 10 IT programmers had worked 40 hours the prior week and worked their scheduled 40 hours the week after the incident.
• The companys cost for benefits is approximately 25%.
• The police and prosecutor believe that the perpetrator worked alone, but his daughter works for VVI IT and earns $50 per hour and is normally scheduled for 40 hours per week. She averages 10 hours of overtime each week. The company put her on paid-administrative leave starting, Monday, July 6. She was paid administrative leave until police arrested her father on August 3, 28 days later. The daughter and VVI worked out an exit compensation package, where the daughter resigned immediately on August 3 and was paid for her expected earnings for 20 weeks.
• IT Department utilities and nonpersonnel operational costs for the month of the attack were approximately on budget of $500,000, though 5% higher than the prior year. Operational costs equal $672 per hour during the month of July.
• As part of the remediation process, the company purchased a redundant server. The cost of the server, peripherals, and software totaled $75,000.
• After the attack, the company purchased a new software protection package for $100,000 to prevent future attacks, similar to then July 4th attack.

1. Assuming that ALL costs above are damages, estimate incremental costs to VVI.
2. Assuming that true incremental costs to remediate and restore the Internet website are damages, estimate incremental costs to VVI.
3. The warehouse and distribution center usually operates 24 hours a day, 7 days per week. Normal productivity is 50 packages per hour. Sales are packaged and ready for shipping an average of two hours after the customers completes their purchase on the VVI website. During the Internet outage productivity in the warehouse operated as follows:

12-2 am - Normal workload=100 packages

2-4 am - Productivity= 76 packages

4-6 am - Productivity=50 packages

6-8 am - Productivity= 24 packages

At the 8-hour mark, the warehouse and distribution center was at zero packages

8-10 am - Productivity= 24 packages

10-12 pm - Productivity= 50 packages

2-4 pm - Productivity= 100 packages

The variable warehouse and distribution costs average $400 per hour; annual warehouse and distribution fixed costs average $250 per hour. The warehouse maintained full operational capability during the outage and restoration period. Estimate lost productivity to VVI.

4. VVI is an international retailer and the flow of retail sales is approximately equal for each hour in a 24-hour day. VVI has seasonal sales variability. The following are relevant sales data:

Sales	Annual	July
Total	96,000,000	10,000,000
Per Month	8,000,000	10,000,000
Per Day	263,014	322,580
Per Hour	10,959	13,441

VVI sells generic low-cost groceries with lots of competition. When customers cannot buy from VVI, they typically do not return, but rather purchase from a competitor. VVI's historical gross margin is 45%; incremental profit margin is 20% and net profit margin is 7%. Estimate lost (a) sales and (b) profits to VVI.