How to Manage Portfolio Companies When the Economy Is Down

Transcription

1 Private Equity How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage

2 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Cotets Maagemet summary... 1 Impact of a dowtur o fiacial performace... 3 Impact of implemetig cost realizatio ad reveue optimizatio opportuities... 4 Use these turbulet times to stregthe your portfolio compaies Key factors for improvig your portfolio compay Authors: Markus Lahrkamp, Dr. Daiel Schelleberg, Jeifer Kim, Simo Flax ad Carlos Vicetelli

3 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Maagemet summary The curret U.S. ecoomic eviromet has profoudly hurt compaies of all sizes ad owership structures. Risig raw material costs, drive by volatile commodity prices ad risig supply chai costs, have crippled EBITDA margis. Addig to the pai, compaies i may idustries are strugglig to maitai sales volume i the face of decreased dowstream demad. The private equity professioal feels the dowtur directly. Compaies capitalized i a attractive eviromet are squeezed both o sales ad o cost cotrol, resultig i a reduced EBITDA margi ad lower operatig cash flow. The latter ihibits a compay s ability to service its debt ad restricts re-ivestmet of retaied earigs i value creatio iitiatives. With a lowered EBITDA, valuatio suffers ad the ability for a private equity firm to make a profitable exit is threateed. However, there are several strategies a private equity firm ca iitiate to achieve quick wis without a large capital expediture. I difficult ecoomic times, may firms are reluctat to make large capital expeditures to overhaul the operatios of portfolio compaies. Ofte, implemetig capital itesive or comprehesive improvemet projects such as process automatio, CRM, BPO, lea maufacturig or Six Sigma are put o the back burer util the operatig cash flows retur to acceptable levels. I dowturs, Arthur D. Little recommeds private equity firms to focus o immediate impact ad low capital expediture projects such as overhead cost reductio, sourcig excellece ad reveue optimizatio. Arthur D. Little, the world s first maagemet cosultig firm, has extesive experiece ad prove methodologies for scopig ad implemetig projects cetered o protectig EBITDA margis ad cushioig the impact of a difficult ecoomic eviromet. I challegig times it is crucial that a project s impact is measured by the effect o EBITDA. By ivestig i EBITDA preservatio projects, a portfolio compay sets the foudatio to survive the difficult times ad emerge from the dowtur better positioed i the marketplace, fiacially stroger ad operatioally smarter. 1

4 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Figure 1 Producer Prices, chage from previous year (ot adjusted for seasoality) Soarig commodity prices are shrikig EBITDA margis 10% Source: Bureau of Labor Statistics, Arthur D. Little aalysis % INCREASE FROM 12 MONTHS AGO 8% 6% 4% 2% 0% -2% 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 Figure 2 Real Gross Domestic Product, aualized rates (adjusted for seasoality) Slower ecoomic output i 2008 has iflueced reveue streams 5% Source: Departmet of Commerce, Arthur D. Little aalysis % CHANGE OF GDP FROM PREVIOUS QUARTER (ANNUALIZED) 4% 3% 2% 1% 0% 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 Short term aalyst projectios 3Q 08 4Q %

5 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Impact of a dowtur o fiacial performace The Uited States is curretly embroiled i a credit-marketdrive ecoomic dowtur that is affectig compaies of all sizes ad capital structures. Compaies feel the strai both i reveue growth ad effective cost cotrol. Reveues ca suffer due to dowstream pressures o customers to reduce ivetory ad adjust to chagig appetites from ed users. As top-lie pressures icrease, sales force performace ca suffer, especially if adequate structure, performace trasparecy or resources are ot i place. Fixed geeral ad admiistrative costs add to the burde, absorbig uderperformig resources ad straiig profit margis. I dowturs, strugglig compaies may reduce costs through decreased iput costs. However, i most cases, these realizatios are offset by higher raw material costs ad pressure from fiacially strapped suppliers, resultig i a et icrease i maufacturig costs as a percetage of reveues ad a decrease i EBITDA. I the example show, assumig a 10 percet decrease i reveues, a 10 percet icrease i maufacturig costs ad a static SG&A expese, EBITDA could drop from $20 millio to $10.5 millio as a compay is affected by a dowtur. The impact o cash flow post-lbo debt servicig is equally uervig. Assumig a 6x leverage ratio ad a Libor basis poit iterest rate o fiacig, the compay s cash flow post-lbo servicig would drop to $1.9 millio from $11.4 millio. The reductio makes it icreasigly difficult for the compay to cover its iterest burde ad to reivest retaied earigs i value creatio iitiatives. The private equity ower feels the tight cash positio i the carried iterest gaied ad subsequetly upo exit, whe a weakeed EBITDA drives dow valuatio. The result is a cash-strapped compay i eed of cost reductios ad reveue optimizatio iitiatives. Figure 3 The dowtur decreases profitability of portfolio compaies Mfg cost $50 millio (50%) Reveues $100 millio (100%) Mfg cost $50.4 millio (56%) Reveues $90 millio (100%) Note: Operatig cash flow aalysis based o 6x leverage at L + 400bp. Maufacturig cost = 50% of reveues i the base case. 50% + 6% raw material cost icrease i a dowtur Valuatio based o EBITDA = $20 ml with 60% debt SG&A $30 millio (30%) EBITDA $20 millio (20%) LBO debt service Cash flow post LBO servicig $14.8 millio 14.8% SG&A $30 millio (33%) EBITDA $9.6 millio (10.7%) LBO debt service Cash flow post LBO servicig $4.4 millio 4.9% YESTERDAY The Good Times TODAY I the Dowtur 3

6 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Impact of implemetig cost realizatio ad reveue optimizatio opportuities Ecoomic dowturs are ofte the best times for cost reductio ad reveue optimizatio iitiatives. The dire situatio a compay fids itself i presets a clear eed for chage, which should eutralize may political obstacles that ofte threate cost reductio ad reveue ehacemet. Arthur D. Little s prove program targets three mai levers: 1. Overhead reductio (15% 20% savigs o overhead spet) 2. Sourcig excellece (10% 15% savigs o total spet) 3. Reveue optimizatio (5% 10% icrease i sales; 10% 15% icrease i GM) Implemetig these strategies i a dowtur ofte results i a trasformatio that ca icremetally improve EBITDA margis beyod pre-dowtur levels. These iitiatives are readily adoptable because they require miimal capital expediture compared to more labor-itesive processrelated improvemets. Figure 4 Emerge from the dowtur better positioed i the marketplace, fiacially stroger ad operatioally smarter Reveues $90 millio 100% Reveues $101 millio Mfg cost $43.9 millio 43.5% Note: Operatig cash flow aalysis based o 6x leverage at L + 400bp. Mfg cost $50.4 millio 56% 1. Reveue Optimizatio 10% to 15% ehacemet 2. Overhead Reductio ~15% to 20% opportuity 3. Sourcig ~15% opportuity SG&A $25 millio 24.6% Valuatio based o EBITDA = $20 ml with 60% debt LBO debt service SG&A $30 millio 33% EBITDA $9.6 millio 10.7% TODAY I the Dowtur LBO debt service Cash flow post LBO servicig $4.4 millio 4.9% EBITDA $32.1 millio 32.7% TOMORROW Post Implemetatio Cash flow post LBO servicig $26.9 millio 26.6% 4

7 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Overhead reductio Cuttig overhead costs i a ecoomic dowtur is oe of the most tagible ways a compay ca maitai ad improve overall profitability, although this ca be time cosumig ad challegig. Arthur D. Little uses prove methods to idetify ad realize SG&A reductio opportuities with these distict tools for both maagemet ad staff fuctios: Maagemet Savigs Toolkit Spa of Cotrol Aalysis helps users uderstad the appropriate umber of departmets, regios ad staff idividual maagers ca effectively support. Exceptio Aalysis further refies savigs potetial idetified by the Spa of Cotrol Aalysis by examiig various factors affectig the ability to cut maagemet staffig, such as geography or fuctioal or domai expertise required to supervise activities. Orgaizatioal Redesig defies the ew orgaizatio that captures savigs from optimized spa of cotrol ad develops a blueprit for a smooth trasitio of roles ad resposibilities. Staff Savigs Toolkit Exteral Bechmarks give idicatios of appropriate staffig levels. Bechmarks must be selected carefully ad based o the ecessary graularity of activities to be meaigful to a specific compay. Iteral Bechmarks provide a alterative to exteral bechmarks whe staff fuctios are split across orgaizatios while performig similar tasks. Figure 5 Arthur D. Little SG&A Streamliig approach follows a comprehesive ad structured methodology SG&A STREAMLINING PROGRAM Source: Arthur D. Little aalysis Aalyze Cost Structure Cost data aalysis Bechmarkig Gap aalysis 1. Assessmet 2. Blueprit Desig 3. Implemetatio 1.1 Cost Structure 2.1 Levers 3.1 Diagostic Idetificatio Recommed improvemet levers Idetify potetial levers Workshops to test cocepts Estimate $ impact Implemetatio Program Desig implemetatio program Outlie objectives ad stakeholders Develop resources & timelie Actio Pla Prioritizatio Developmet Implemetatio Executio Prioritize potetial iitiatives SWOT aalysis Quatify costs & beefits Determie implemetability Select ecessary actios Detail actio pla Potetial savigs Necessary resources Execute implemetatio pla Assist i implemetatio efforts Moitor & cotrol pla 5

8 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Activity Aalysis helps discover iefficiecies that ca be corrected to reach best-i-class iteral or exteral bechmark productivity levels. Efficiecy Levers address the idetified iefficiecies ad opportuities. These levers ca iclude: Icreasig utilizatio levels by smoothig workload Reducig errors ad reworkig through stadardized processes Traiig ad reorgaizig to improve productivity Upgradig automatio or techology to reduce maual tasks Chagig customer processes to reduce complexity Each lever determies specific actios ad steps to reach savigs potetial. The efficiecy levers are applied with cocrete actios defied i bluepritig. Implemetatio ca vary sigificatly i time due to the level of complexity of the levers (e.g., process stadardizatio may take several moths while a techology upgrade could take much loger) SG&A cost reductio programs typically deliver cost savigs of 15 percet to 20 percet of targeted costs, with some savigs available almost immediately. These results directly affect EBITDA, with portfolio compaies able to improve EBITDA five percet to 10 percet i the first 12 moths after implemetatio. 6

9 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Sourcig Excellece Sourcig Excellece is oe of the most effective strategies to reduce costs ad improve profitability quickly. Typically, portfolio compaies are rich with opportuities to drive costs out of their supply chai by implemetig a Sourcig Excellece program. Traditioal procuremet efforts ted to focus o two areas: price egotiatio ad vedor cosolidatio. This is particularly true for smaller, mid-market compaies that are usually ot exposed to world-class sourcig iitiatives. Arthur D. Little s Sourcig Excellece program goes beyod price ad vedor cosolidatio. Our program reduces Total Cost of Owership (TCO) i key spedig categories. TCO is a holistic approach to impact EBITDA positively i collaboratio with suppliers to drive up profitability. There are multiple focus dimesios to our TCO approach, such as: Raw materials specificatios Reviewig materials specificatios with potetial suppliers, operatios ad marketig executives ucovers cost savigs opportuities by addressig issues like substitute products, waste, quality, ad yield. Ivetory costs Improvig capital tied i ivetory has great potetial for most portfolio compaies. Raw materials, ufiished ad fiished products alog the supply chai ca be optimized to reduce ivetory costs whe workig collaboratively with suppliers. Logistics ad trasportatio Whe fuel ad freight costs rise, the percet of TCO represeted by logistics ad trasportatio steadily icreases over time. Itegratig supply chai operatios with suppliers results i savigs by drivig out iefficiecies. Trasactio ad overhead costs The amout of resources employed i processig routie purchasig trasactios, which typically add little value, is aother area for improvemet. These costs impact the supply chai twice, Figure 6 Sourcig Excellece program follows comprehesive ad structured methodology Source: Arthur D. Little Methodology 1. PROCUREMENT ASSESMENT Profile detailed sped Uderstad cotracts i place Estimate total cost of owership Aalyze suppliers Actively prepare/ maage stakeholders for chage 2. SOURCING STRATEGY Coduct iteral iterviews ad workshops Bechmark idustry-leadig practices Idetify ad explore savigs levers Develop strategy to achieve targets 3. TCO WORKSHOP & NEGOTIATIONS Create list of qualified suppliers Coduct supplier workshops Develop & sed RFPs Negotiate w/ suppliers Aalyze other iteral cost reductio levers 4. MONITOR & CONTROL 2 3 weeks 1 2 weeks 8 12 weeks ogoig Desig implemetatio project roadmap Develop budget modificatio pla Create iteral KPI ad support ifrastructure Create supplier scorecards Fact based aalysis to support project ad blueprit for future implemetatio Prelimiary sourcig strategy New cotracts with chose suppliers List of procuremet improvemets to adopt Rigorous processes ad tools to esure value capture 7

10 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow from the vedor ad customer sides. Collaboratio optimizes these costs quickly. Pricig ad strategic plaig Creatig a trasparet ad iteractive process allows iovatio ad ope commuicatio with suppliers, ad creates the appropriate coditios to receive fair ad predictable pricig. As a result, compaies ca project costs ad pla productio, market strategy ad operatios to icrease their profitability. Improvig o these dimesios ot oly drives dow costs, but also impacts reveues by reducig stock-outs ad improvig pricig ad quality. Arthur D. Little has adapted world-class practices used by leaders of may idustries to develop its Sourcig Excellece program. This program is prove to be effective ot oly i large multiatioal corporatios, but also i smaller mid-market portfolio compaies across a wide spectrum of idustries. Our methodology uses a rigorous approach i four phases: Procuremet Assessmet, Sourcig Strategy, TCO Workshop & Negotiatios, Moitor & Cotrol. Our methodology applies to a broad rage of areas, ad its implemetatio i multiple sped categories helps develop a set of corporate competecies that allows the compay to cotiuously drive efficiecies ad cut costs out of the supply chai. The world-class experiece of our team, combied with our methodology, has delivered cost savigs i the rage of 10 percet to 15 percet per category, i as little as 90 days. Figure 7 A Case Study i Sourcig Excellece: Specialty paper coverter facig idustry pricig ad cost pressures DECLINING EBITDA DUE TO MARKET PRESSURES CAGR +1% Risig Reveues ad Decliig Profits 102 CAGR -5% YR 0 YR 2 YR 0 YR 2 Sales idex* EBITDA idex* Locatio: USA Idustry: Paper products Price competitio from other players Reveues: ~ $70M Employees: ~ 600 Owership: Private Iflux of Asia-made stock products that compete with custom solutios New techology (eg. filmless X-rays) reduces demad for paper filig i radiology segmet Cosolidatio of distributors Idustry Treds Ed-users lookig for oe-stop shoppig Distributors movig to stockless model, expectig maufacturer to hold ivetory ad drop-ship to ed-users Maagemet requested the team to reduce cliet s cost structure ad meet market challeges 8

11 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Figure 8 A Case Study i Sourcig Excellece: Team implemeted a Sourcig Excellece program to reduce Total Cost of Owership (TCO) ad boost EBITDA 1. PROCUREMENT ASSESSMENT 2. SOURCING STRATEGY Profile detailed sped Aalyzed existig cotracts ad supplier relatioships Estimated total cost of owership Actively prepare stakeholders for chage 3. TCO WORKSHOPS Prepared request for proposal (RFP) Coducted TCO workshops with suppliers ad maagemet Idetified savigs through collaborative cost reductio Distributed RFPs TOTAL COST OF OWNERSHIP APPROACH TO SOURCING EXCELLENCE Coducted iteral iterviews ad workshops Bechmarked idustry-leadig practices Aalyzed savigs levers by category Idetified potetial ew vedors through rigorous selectio process 4. IMPLEMENTATION Aalyzed RFP resposes Negotiated with suppliers ad siged cotracts Developed iteral KPI s ad cotrol procedures Created supplier scorecards Determied ew cost structure Figure 9 A Case Study i Sourcig Excellece: Cliet s cost structure was reduced by $1.3M i approximately 90 days CASE STUDY RESULTS ADL APPROACH TO VALUE CREATION $M ADL's case-specific approach focused o Data/Sped Aalysis Before ~70 Reveue EBITDA (with %) ~$Y a% $1.3M i material cost reductio After ~70 ~$Z b% Total cost of owership Collaborative cost reductio process RFP process Multi-dimesioal supplier egotiatio Realizatio ad sustaiability of improved cost structure Icremetal EBITDA: Exit multiple (EBITDA): $1.34M 5x $1.34M icrease i EBITDA projected Value created: ~ $13.5M 9

12 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow These results have a direct impact o COGS ad EBITDA with portfolio compaies beig able to improve EBITDA i the three percet to five percet rage over the first twelve moths after implemetatio. Reveue Optimizatio Private equity owers should seize the opportuity for structured ad more efficiet top-lie growth of their portfolio assets durig a dowtur. Top-lie growth, alog with costcuttig efforts, ca be a powerful combiatio to protect ad eve stregthe profitability durig difficult times. While the competitio laguishes or cuts costs that may hamper their growth potetial whe the ecoomy rebouds, your portfolio compaies ca be drivig towards smarter, leaer, more effective reveue executio. With our Reveue Optimizatio program, we help compaies reach their full sales potetial through structured customer segmetatio, optimized customer care programs ad orgaizatioal aligmet. Effective i favorable ecoomic times, our Sales Optimizatio program is a especially vital tool whe ecoomic coditios become difficult because it allows for reveue ehacemet i the face of shrikig resources. Arthur D. Little s Reveue Optimizatio program helps our cliets brig world-class sophisticatio ad results to: Customer Segmetatio: Iteral sales staff ad procedures ofte classify customers accordig to past success or comfort level, which ca prevet aggressive ad forward-lookig sales activities. Our program helps compaies move to the ext level by segmetig customers based o overall market potetial, reveue ad margi cotributio potetial ad strategic impact. Customer Acquisitio ad Service: Our program the desigs a customer care program based specifically o optimal resource allocatio ad customer eeds quatified through a ABC groupig. Resource Aligmet: Buildig o previous steps, the program aligs resources people, sales territories, orgaizatioal structure ad processes to maximize effectiveess, efficiecy, trasparecy ad crossfuctioal collaboratio. Trackig ad Icetives: The fial step to esure ideal performace aligs orgaizatioal icetive structures ad tools, such as visual accoutability, to promote motivatio ad performace trasparecy. Our program is a effective, prove ad structured tool ot oly for a domestic growth strategy but also for: Iteratioal growth ad diversificatio New product / market growth ad diversificatio Chael maagemet ad ew chael growth I a ecoomic dowtur whe sales growth is challeged ad margis are threateed, a more structured sales ad sales resource aligmet approach meas that top-lie growth ad margi growth do ot have to take a temporary backseat to efficiecy measures, but ca work i harmoy with them. Arthur D. Little s Reveue Optimizatio program typically delivers reveue ehacemets of up to 5 percet to 10 percet, ad a gross margi improvemet of 10 percet to 15 percet. 10

13 Strategies to Tur a Ecoomic Slump to Portfolio Compaies Advatage Use these turbulet times to stregthe your portfolio compaies Ay measure to improve efficiecy meas chage ad therefore will result i some resistace. Our suggested activities specifically provide measures to reduce ovalue-add activities i SG&A while icreasig the output of existig value-add activities. Necessary actios like ours are easier to commuicate whe the compay faces ufavorable circumstaces. Additioally, exteral pressures o the sales force help to reveal which performers succeeded due to strog capabilities ad which succeeded oly because of easy ecoomic times. Necessary strategic adjustmets i the sales force become readily apparet. leders. Whe the approach shows tagible results, it boosts the maagemet team s credibility ad presets a track record of cost cosciousess ad value creatio, which leads to more favorable egotiatios with leders. Improvig busiess without addig complexity is key i ecoomic dowturs. There are may iitiatives a mid-market compay ca embrace to improve results. I ecoomically challegig times, it is importat to focus o those iitiatives that quickly deliver results ad have a immediate ad measurable retur o ivestmet. Sice ot oly the portfolio compaies themselves are uder pressure but also their suppliers, it is ow easier to reegotiate cotracts, terms ad prices with them. Whe suppliers have bee uder pressure for a while, they will realize that they must act as well i order to retai their customers. With a exteral expert, private equity firms ca use this active approach of improvig the portfolio compaies as a meas of positive commuicatio to ay additioal stakeholders, such as 11

14 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Key factors for improvig your portfolio compay Durig the curret ecoomic dowtur, Arthur D. Little is workig with may portfolio compaies o developig strategic frameworks. Several compaies that have successfully implemeted their framework have icreased profitability despite difficult ecoomic coditios. Arthur D. Little has idetified six key factors to create a successful platform for chage: 1. Quick Trasparecy: Idetifyig the sources of costs, ad how the compay will be affected fiacially i the ear term. 2. Correct Doses: Defiig ad segregatig those costs associated with value geeratio ad cocetratig o reducig costs that do ot add value. 3. Maagemet Commitmet: Providig maagemet teams with a strategy they ca buy ito ad fully ow. 4. Clear ad Cocise Objectives: Braistormig with maagemet to allocate resposibilities ad idetify the resources ecessary for success. 5. Clearly Defied Milestoes: Developig a process to alert maagemet of future goals, ad creatig a pla for potetial pitfalls. 6. Exact Sequecig: Uderstadig what improvemet measures are depedet o each other ad the syergies that ca be created through proper implemetatio. Figure 10 Portfolio compaies must follow a logical framework for successful chage QUICK TRANSPARENCY Maagemet immediately realizes the fiacial effect o the compay EXACT SEQUENCE OF STRATEGY Objectives are applied as a systematic process CORRECT DOSES Uderstad how to cut costs while preservig value KEY SUCCESS FACTORS CLEARLY DEFINED MILESTONES Cotiuous feedback esures the objectives are carried out CLEAR & CONCISE OBJECTIVES Resposibilities are defied ad a pla is created MANAGEMENT COMMITMENT Maagemet is aliged as a team to achieve their objectives 12

15 How to Maage Portfolio Compaies Whe the Ecoomy Is Dow Cotacts If you would like more iformatio or to arrage a iformal discussio o the issues raised here ad how they affect your busiess, please cotact: Markus Lahrkamp Maagig Director lahrkamp.markus@adlittle.com Dr. Daiel Schelleberg Maager schelleberg.daiel@adlittle.com Simo Flax Maager flax.simo@adlittle.com Jeifer Kim Maager kim.jeifer@adlittle.com Carlos L. Vicetelli Maager vicetelli.carlos@adlittle.com Arthur D. Little, Ic. 405 Lexigto Ave, 21st Floor Chrysler Buildig New York, NY T: +1 (212)

16 Arthur D. Little Arthur D. Little, fouded i 1886, is a global leader i maagemet cosultacy; likig strategy, iovatio ad techology with deep idustry kowledge. We offer our cliets sustaiable solutios to their most complex busiess problems. Arthur D. Little has a collaborative cliet egagemet style, exceptioal people, ad a firm-wide commitmet to quality ad itegrity. The firm has over 30 offices worldwide. With its parters Altra Techologies ad Cambridge Cosultats Ltd, Arthur D. Little has access to a etwork of over 16,000 professioals. Arthur D. Little is proud to serve may of the Fortue 100 compaies globally, i additio to may other leadig firms ad public sector orgaizatios. For further iformatio, please visit Our Global Private Equity practice brigs world-class cosultig services to some of the largest buyout fuds ad to middle market private equity ivestors. We serve our private equity cliets i all the key areas of their ivestmet process. Fud maagers rely o us for strategic ad operatioal due diligece as well as operatioal value creatio at their portfolio compaies. Copyright Arthur D. Little All rights reserved. This report is prited o process chlorie free paper made from 100% recycled post cosumer waste.