Benefits of Parent Education Programmes

Benefits of Parent Education Programmes Chen Yishu Why parent education program? Persuasive goal: Adoption: I want the audience to think about taking parent education program before they become parents. Specific proposition: Policy: Parents should take parental courses before they have children. Taking parental courses can benefit not only parents but also children. Audience’s current opinion: Neutral: Some people think parents should take parental courses while some don’t think so. Introduction: (example 1, pathos and ethos) When talking about children, what do you commonly think of? Well, if you asked me half a year ago, I would throw out various adjectives like cute, energetic, enthusiastic, and so on. However, now I’ve changed. Last summer vacation, one of my cousins came to visit my family, together with her two-year-old son, my nephew. He is a pretty boy with extraordinary big eyes and long black eyelashes, and when he stared at you wishfully, you will never wish to reject any of his wishes. Even though people always say we shouldn’t judge by appearance, I couldn’t help holding him up and kissed him as soon as I saw him. At that time, he was the loveliest creature in the world until we went to take a nap. I had no idea that he didn’t feel asleep at all and got up secretly after my parents and my cousin went shopping. In just two hours, he broke into my study room and destroyed all my collection of Japanese animation figures. He tore down their heads, dismembered them, and then threw them away. The moment when I found him, he was surrounded by corpses, with my favorite comic book in his hand. He cocked his head and just smiled at me, like an angel proclaiming the end of the world. I was so shocked that I couldn’t even speak a word. But the worse thing happened when his mother, my cousin, arrived at home. The only comment she made after hearing the disaster had only four words: â€Å"Oh, you naughty boy.† She didn’t say sorry, not even express that emotion. When I asked her to compensate for the damage, she was even more astonished than me: â€Å"They are just toys! How can you be so stingy?!† I wanted to argue more but my parents wouldn’t let me do so. She walked away easily. It’s impossible for me to say that I don’t blame my nephew for what he did, but I did attribute his naughtiness to his mother for she lacked the ability and awareness to educate her chil d. Preview statement: Today I like to speak about the necessity for parents, especially parents with their first child, to receive parent education as well as the reasons for taking such courses. To illustrate the points, I’m going to divide the issue into two parts: first, what is parent education; second, why should parents take parent education. Transition: If you look around in your life in China, perhaps you will notice that many of our next generation are actually raised by their grandparents instead of their parents. Certainly one of the reasons is because they have no time to take care of them, but the deficiency of parenting knowledge and skill also has something to do with the situation. In China, parent education is a brand-new concept that worth our attention for the well-being of our offspring. Main Point 1: (logos) Parent education programs contain mainly three categories. Sub-point 1: (evidence 12, ethos) The authors of the academic paper Facilitators and Barriers to Engagement in Parenting Programs: A Qualitative Systematic Review point out in the article that â€Å"Parenting programs are short-term interventions to promote changes in the behavior of parents that result in improved relationships with their children and changes in child behavior† (Julie Mytton, Jenny Ingram, Sarah Manns, James Thomas 127-137) and aim at â€Å"activat[ing] the strengths, competence, and possibilities for change that exist in parents and in the social context,† according to Professor Ching-Man Lam from Chinese University of Hong Kong, in order to enable parents to take good care of their children (Lam 147-168). Sub-point 2: Roughly, there are three types of parent education program as the child grows. Programs that get parents prepared for the new birth. Programs that aim at parents with toddlers and young children Programs that cover common issue with teenagers. Transition: Honestly speaking, it is very hard to divide the types of parent education program for each couple has different demand and as a result, hundreds of thousands of parent education programs that focus on different aspect of parenting exist in the market. Whereas, the influence of parent education program is relatively easier to categorize. Main Point 2: (logos) Parents play a vital role in children’s development. Sub-point 1: When searching online, numerous articles and research papers that emphasize the influences of parents on their children from personality to lifelong goals can be found. (evidence 3, ethos) For example, in the article The Role of Parents in Childrens Psychological Development, Jerome Kagan, an American psychologist, stated that â€Å"The profile of cognitive abilities, beliefs†¦ that characterizes each child†¦ is the result of diverse influences operating in complex ways†¦ the most important determinants of the different profiles include parental practices and personality† (Kagan 164-67). (evidence 4, ethos) At the same time, a newly published article Parents influence suicidal children in the journal The Australian, pointed out that â€Å"PARENTS are more likely than school bullies to influence childrens suicide attempts† (Bita n.pag.). Sub-point 2: Therefore, since parents play a vital role in the quality of children’s development, parent education is needed urgently to help shape the well-being of parents in order to support the growth of children. Otherwise, children may experience severe problems as they grow because their parents don’t know how to take good charge of them. (example 2, pathos)One vivid example is my nephew, the two-year-old boy. He is my cousin’s first child and honestly speaking, she knew nothing about how to take care of him, even though admittedly she loves him very much. She went back to work in Changsha after labor while my nephew was left with his grandparents in a tiny village simply because she didn’t want to sacrifice her spare time to take care of him. She promised to visit once a week, stayed for one day and left again. As a consequence, they weren’t very intimate until my cousin changed her attitude suddenly and took him back when he was one year ol d. Then he was spoiled. My cousin, his mother, gave everything he wanted and praised everything he did. No one could blame his mistakes for he did no wrong in his mother’s eyes. Finally a child with severe behavior problems, or a little evil, was created. Transition: I believe every one of us has encountered some wild kids in our lives, and mostly, their parents are especially guilty. Therefore, since parents have a great impact on children’s development, it is critical for parents to attend parent education and therefore, gain the knowledge and skills to ensure their children’s well-being. Main Point 3: (logos) Parent education programs can benefit children. Sub-point 1: Parent education programs are very likely to improve the health of children. When we look around, we may find that many young parents don’t know how to take good care of children and have to rely on their own parents, especially when it comes to infants. (evidence 5, ethos) In the research paper Preventing Abusive Head Trauma Among Infants and Young Children: A Hospital-Based, Parent Education Program, the author indicated that â€Å"Abusive head injuries among infants (shaken infant or shaken impact syndrome) represent a devastating form of child abuse† while â€Å"25 to 50% of people have not received information about this problem.† What’s worse, â€Å"in some cases of abuse, the perpetrators admitted to shaking the infant violently but confessed that they were unaware of the dangers of doing so.† Then the authors evaluated the effectiveness of parent education program on reducing the injuries and found out that â€Å"a coordinated, hospital-based, parent education program, targeting parents of all newborn infants, can reduce significantly the incidence of abusive head injuries among infants and children Sub-point 2: (evidence 6, ethos) Jane Barlow, a journalist from Oxford University, pointed out in an academic paper that Parent education program can improve the mental health of children and reduce the amount of children’s behavior problems (Jane Barlow, S. Stewart-Brown 356-370). Transition: Besides doing good to children, parent education program can also help parents out of their struggles. Main Point 4: (logos) Parent education programs can benefit parents. Sub-point 1: It is conceivable that parent education programs can help parents understand their influence on kids’ behaviors and the importance to control their emotions and actions. (example 3, pathos) For instance, one of my mother’s colleagues often complained that her son got angry and irritable easily and frequently as long as there was anything unsatisfied. She tried every method and none of them worked. She finally went to a famous parent educator and counselor for help and found out that it was herself who became angry uncontrollably when troubles occurred and her son was just imitating her. She was recommended to attend a anger management class along with parent education courses where she learned that the uncontrollable eruption of anger may get in the way of parenting her children in a good way. Since then, she worked hard to control her temper and gradually, she also made influence on her son and he changed marvelously. Sub-point 2: Parent education programs can improved mental health and well-being of parents, more specifically, it can help ease parent’s stress when facing difficulties at every stage as their children grow, for example, Autism Spectrum Disorders (ASDs). (evidence 7, ethos) In a research paper A Parent Education Program for Parents of Chinese American Children With Autism Spectrum Disorders (ASDs): A Pilot Study, professor Hsu-Min Chiang from Columbia University pointed out that â€Å"parenting stress of parents of children with ASDs could be decreased through a short-term group parent education program† while â€Å"parental confidence in parents of children with ASDs can be improved through the parent education program using a group format.† Besides, the study also found that the parent education program â€Å"result[ed] in significant improvements in the physical health and environment domains† (Chiang 88-94). Transition: However, it is universally acknowledge that every coin has two sides and everything has its benefits and consequences. Therefore, even though parent education program has many advantages, they aren’t exceptions. Problems exist when people begin doing researches on the effectiveness of many programs and the results make them cast doubt. Main Point 5: Counterargument Sub-point 1: (evidence 8, ethos) Unfortunately, many people tend to believe that parents who attend parent education program are inadequate parent, sometimes even carers think so. Consequently, in order to avoid feeling guilty or stigmatized, parents are less likely to join the program, showed in the article Technique Is Not Enough: A framework for ensuring that evidence-based parenting programmes are socially inclusive (Barrett, 9). Sub-point 2: However ironically, the vast majority of the parents who don’t take parent education program are very likely to be the ones who really need to improve their parenting skills, the study showed later. (Barrett, 9). The text also points out that to change their attitudes, government should â€Å"empower local voices by implementing new programmes in co-production with local program service user parents so they become culturally congruent† (Barrett 10). Transition: It is undeniable that the development of parent education program still has to overcome numerous difficulties and problems however, by conducting further research, things will be better. Summary Statement: In my opinion, due to the influence parents have on their children’s development and the numerous advantages of parent education can bring to both parents and children, it is necessary for young parents to take the course. Besides, improvement still need to be done to increase the effectiveness of the programs. Conclusion: Briefly speaking, based on the arguments offered above, we as grown up who are very likely to have our own children within 10 years, should think about taking parent education program before becoming truly parents. Works Cited Barlow, Jane, and S. Stewart-Brown. Behavior Problems and Group-based Parent Education Programs.JOURNAL OF DEVELOPMENTAL AND BEHAVIORAL PEDIATRICS No.21 (2000): 356-70. Web. 19 Dec. 2014. http://www.ncbi.nlm.nih.gov/pubmed/11064964?dopt=Abstract>. Bita, Natasha. Parents Influence Suicidal Children. The Australian 29 Nov. 2014, Australian3 ed., THENATION sec.: 11. Print. Chiang, Hsu-Min. A Parent Education Program for Parents of Chinese American Children With Autism Spectrum Disorders (ASDs): A Pilot Study.Hammill Institute on Disabilities Vol. 29. No. 2, (2014): 88 –94. Hammill Institute on Disabilities. Web. 19 Dec. 2014. http://foa.sagepub.com/content/29/2/88.full.pdf html>. Davis, Fabian A., Lynn McDonald, and Nick Axford. Introduction. Technique Is Not Enough: A Framework for Ensuring That Evidence-based Parenting Programmes Are Socially Inclusive. Leicester, England: British Psychological Society, 2012. 9. Print. Dias, Mark S., Kim Smith, Kathy DeGuehery, R Paula Mazur, Veetai Li, and Michele L. Shaffer. Preventing Abusive Head Trauma Among Infants and Young Children: A Hospital-Based, Parent Education Program.PEDIATRICSVol. 115. No. 4 (2005): Pp. E470-E477.PEDIATRICS. Web. 19 Dec. 2014. http://pediatrics.aappublications.org/content/115/4/e470.full?sid=7ea8cd19-674c-4b9c-9ebe-9dc4d0d048de>. Kagan, Jerome. The Role of Parents in Childrens Psychological Development. PEDIATRICS Vol. 104. No. Supplement 1 July 1, 1999 Pp. (1999): 164-67. PEDIATRICS. 1 Jul. 1999. Web. 19 Dec. 2014. à ¯Ã‚ ¼Ã…“http://pediatrics.aappublications.org/content/104/Supplement_1/164.full.htmlà ¯Ã‚ ¼Ã… ¾. Lam, Ching-Man. Parent Education: Revision and Vision.Asian Journal of Counselling Vol. 10. No. 2, (2003): 147–168. The Chinese University of Hong Kong. Web. 19 Dec. 2014. . Mytton, Julie, Jenny Ingram, Sarah Manns, and James Thomas. Facilitators and Barriers to Engagement in Parenting Programs A Qualitative Systematic Review.Health Education BehaviorVol.41. No. 2 (2013): 127-37.SAGE Journals. Web. 19 Dec. 2014. http://heb.sagepub.com/content/41/2/127.full.pdf html>.

Air Pollution from World War Ii Production

Air pollution From Wikipedia, the free encyclopedia Jump to: navigation, search Air pollution from World War II production Smog over Santiago, Chile Air pollution is the introduction of chemicals, particulate matter, or biological materials that cause harm or discomfort to humans or other living organisms, or damages the natural environment into the atmosphere. The atmosphere is a complex dynamic natural gaseous system that is essential to support life on planet Earth.Stratospheric ozone depletion due to air pollution has long been recognized as a threat to human health as well as to the Earth's ecosystems. Indoor air pollution and urban air quality are listed as two of the world's worst pollution problems in the 2008 Blacksmith Institute World's Worst Polluted Places report. [1] Contents[hide] * 1 Pollutants * 2 Sources * 2. 1 Emission factors * 3 Indoor air quality (IAQ) * 4 Health effects * 4. 1 Effects on cystic fibrosis * 4. 2 Effects on COPD * 4. Effects on children * 4. 4 Heal th effects in relatively â€Å"clean† areas * 5 Reduction efforts * 5. 1 Control devices * 6 Legal regulations * 7 Cities * 8 Carbon dioxide emissions * 9 Atmospheric dispersion * 10 Environmental impacts of greenhouse gas pollutants * 11 See also * 12 References * 13 External links| [edit] Pollutants Main articles: Pollutant and Greenhouse gas Before flue gas desulfurization was installed, the emissions from this power plant in New Mexico contained excessive amounts of sulfur dioxide.Schematic drawing, causes and effects of air pollution: (1) greenhouse effect, (2) particulate contamination, (3) increased UV radiation, (4) acid rain, (5) increased ozone concentration, (6) increased levels of nitrogen oxides An air pollutant is known as a substance in the air that can cause harm to humans and the environment. Pollutants can be in the form of solid particles, liquid droplets, or gases. In addition, they may be natural or man-made. [2] Pollutants can be classified as either pri mary or secondary.Usually, primary pollutants are substances directly emitted from a process, such as ash from a volcanic eruption, the carbon monoxide gas from a motor vehicle exhaust or sulfur dioxide released from factories. Secondary pollutants are not emitted directly. Rather, they form in the air when primary pollutants react or interact. An important example of a secondary pollutant is ground level ozone  Ã¢â‚¬â€ one of the many secondary pollutants that make up photochemical smog. Note that some pollutants may be both primary and secondary: that is, they are both emitted directly and formed from other primary pollutants.About 4 percent of deaths in the United States can be attributed to air pollution, according to the Environmental Science Engineering Program at the Harvard School of Public Health. Major primary pollutants produced by human activity include: * Sulfur oxides (SOx) – especially sulfur dioxide, a chemical compound with the formula SO2. SO2 is produced by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide. Further oxidation of SO2, usually in the presence of a catalyst such as NO2, forms H2SO4, and thus acid rain. 2] This is one of the causes for concern over the environmental impact of the use of these fuels as power sources. * Nitrogen oxides (NOx) – especially nitrogen dioxide are emitted from high temperature combustion. Can be seen as the brown haze dome above or plume downwind of cities. Nitrogen dioxide is the chemical compound with the formula NO2. It is one of the several nitrogen oxides. This reddish-brown toxic gas has a characteristic sharp, biting odor. NO2 is one of the most prominent air pollutants. * Carbon monoxide – is a colourless, odourless, non-irritating but very poisonous gas.It is a product by incomplete combustion of fuel such as natural gas, coal or wood. Vehicular exhaust is a major source of car bon monoxide. * Carbon dioxide (CO2) – a greenhouse gas emitted from combustion but is also a gas vital to living organisms. It is a natural gas in the atmosphere. * Volatile organic compounds – VOCs are an important outdoor air pollutant. In this field they are often divided into the separate categories of methane (CH4) and non-methane (NMVOCs). Methane is an extremely efficient greenhouse gas which contributes to enhanced global warming. Other hydrocarbon VOCs are lso significant greenhouse gases via their role in creating ozone and in prolonging the life of methane in the atmosphere, although the effect varies depending on local air quality. Within the NMVOCs, the aromatic compounds benzene, toluene and xylene are suspected carcinogens and may lead to leukemia through prolonged exposure. 1,3-butadiene is another dangerous compound which is often associated with industrial uses. * Particulate matter – Particulates, alternatively referred to as particulate matt er (PM) or fine particles, are tiny particles of solid or liquid suspended in a gas.In contrast, aerosol refers to particles and the gas together. Sources of particulate matter can be man made or natural. Some particulates occur naturally, originating from volcanoes, dust storms, forest and grassland fires, living vegetation, and sea spray. Human activities, such as the burning of fossil fuels in vehicles, power plants and various industrial processes also generate significant amounts of aerosols. Averaged over the globe, anthropogenic aerosols—those made by human activities—currently account for about 10 percent of the total amount of aerosols in our atmosphere.Increased levels of fine particles in the air are linked to health hazards such as heart disease,[3] altered lung function and lung cancer. * Persistent free radicals connected to airborne fine particles could cause cardiopulmonary disease. [4][5] * Toxic metals, such as lead, cadmium and copper. * Chlorofluoro carbons (CFCs) – harmful to the ozone layer emitted from products currently banned from use. * Ammonia (NH3) – emitted from agricultural processes. Ammonia is a compound with the formula NH3. It is normally encountered as a gas with a characteristic pungent odor.Ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to foodstuffs and fertilizers. Ammonia, either directly or indirectly, is also a building block for the synthesis of many pharmaceuticals. Although in wide use, ammonia is both caustic and hazardous. * Odors  Ã¢â‚¬â€ such as from garbage, sewage, and industrial processes * Radioactive pollutants – produced by nuclear explosions, war explosives, and natural processes such as the radioactive decay of radon. Secondary pollutants include: Particulate matter formed from gaseous primary pollutants and compounds in photochemical smog. Smog is a kind of air pollution; the word â€Å"smog† is a portmanteau of smoke and fog. Classic smog results from large amounts of coal burning in an area caused by a mixture of smoke and sulfur dioxide. Modern smog does not usually come from coal but from vehicular and industrial emissions that are acted on in the atmosphere by sunlight to form secondary pollutants that also combine with the primary emissions to form photochemical smog. Ground level ozone (O3) formed from NOx and VOCs. Ozone (O3) is a key constituent of the troposphere (it is also an important constituent of certain regions of the stratosphere commonly known as the Ozone layer). Photochemical and chemical reactions involving it drive many of the chemical processes that occur in the atmosphere by day and by night. At abnormally high concentrations brought about by human activities (largely the combustion of fossil fuel), it is a pollutant, and a constituent of smog. Peroxyacetyl nitrate (PAN) – similarly formed from NOx and VOCs. Minor air pollutants include: * A la rge number of minor hazardous air pollutants. Some of these are regulated in USA under the Clean Air Act and in Europe under the Air Framework Directive. * A variety of persistent organic pollutants, which can attach to particulate matter. Persistent organic pollutants (POPs) are organic compounds that are resistant to environmental degradation through chemical, biological, and photolytic processes.Because of this, they have been observed to persist in the environment, to be capable of long-range transport, bioaccumulate in human and animal tissue, biomagnify in food chains, and to have potential significant impacts on human health and the environment. [edit] Sources Main article: AP 42 Compilation of Air Pollutant Emission Factors Dust storm approaching Stratford, Texas Controlled burning of a field outside of Statesboro, Georgia in preparation for spring planting Sources of air pollution refer to the various locations, activities or factors which are responsible for the releasing of pollutants n the atmosphere. These sources can be classified into two major categories which are: Anthropogenic sources (human activity) mostly related to burning different kinds of fuel * â€Å"Stationary Sources† include smoke stacks of power plants, manufacturing facilities (factories) and waste incinerators, as well as furnaces and other types of fuel-burning heating devices * â€Å"Mobile Sources† include motor vehicles, marine vessels, aircraft and the effect of sound etc. * Chemicals, dust and controlled burn practices in agriculture and forestry management.Controlled or prescribed burning is a technique sometimes used in forest management, farming, prairie restoration or greenhouse gas abatement. Fire is a natural part of both forest and grassland ecology and controlled fire can be a tool for foresters. Controlled burning stimulates the germination of some desirable forest trees, thus renewing the forest. * Fumes from paint, hair spray, varnish, aerosol spra ys and other solvents * Waste deposition in landfills, which generate methane. Methane is not toxic; however, it is highly flammable and may form explosive mixtures with air.Methane is also an asphyxiant and may displace oxygen in an enclosed space. Asphyxia or suffocation may result if the oxygen concentration is reduced to below 19. 5% by displacement * Military, such as nuclear weapons, toxic gases, germ warfare and rocketry Natural sources * Dust from natural sources, usually large areas of land with little or no vegetation. * Methane, emitted by the digestion of food by animals, for example cattle. * Radon gas from radioactive decay within the Earth's crust. Radon is a colorless, odorless, naturally occurring, radioactive noble gas that is formed from the decay of radium.It is considered to be a health hazard. Radon gas from natural sources can accumulate in buildings, especially in confined areas such as the basement and it is the second most frequent cause of lung cancer, aft er cigarette smoking. * Smoke and carbon monoxide from wildfires. * Volcanic activity, which produce sulfur, chlorine, and ash particulates. [edit] Emission factors Main article: AP 42 Compilation of Air Pollutant Emission Factors Air pollutant emission factors are representative values that attempt to relate the quantity of a pollutant released to the ambient air with an activity associated with the release of that pollutant.These factors are usually expressed as the weight of pollutant divided by a unit weight, volume, distance, or duration of the activity emitting the pollutant (e. g. , kilograms of particulate emitted per megagram of coal burned). Such factors facilitate estimation of emissions from various sources of air pollution. In most cases, these factors are simply averages of all available data of acceptable quality, and are generally assumed to be representative of long-term averages. The United States Environmental Protection Agency has published a compilation of air p ollutant emission factors for a multitude of industrial sources. 6] The United Kingdom, Australia, Canada and many other countries have published similar compilations, as well as the European Environment Agency. [7][8][9][10][11] [edit] Indoor air quality (IAQ) Main article: Indoor air quality A lack of ventilation indoors concentrates air pollution where people often spend the majority of their time. Radon (Rn) gas, a carcinogen, is exuded from the Earth in certain locations and trapped inside houses. Building materials including carpeting and plywood emit formaldehyde (H2CO) gas. Paint and solvents give off volatile organic compounds (VOCs) as they dry.Lead paint can degenerate into dust and be inhaled. Intentional air pollution is introduced with the use of air fresheners, incense, and other scented items. Controlled wood fires in stoves and fireplaces can add significant amounts of smoke particulates into the air, inside and out. [12] Indoor pollution fatalities may be caused by using pesticides and other chemical sprays indoors without proper ventilation. Carbon monoxide (CO) poisoning and fatalities are often caused by faulty vents and chimneys, or by the burning of charcoal indoors. Chronic carbon monoxide poisoning can result even from poorly adjusted pilot lights.Traps are built into all domestic plumbing to keep sewer gas, hydrogen sulfide, out of interiors. Clothing emits tetrachloroethylene, or other dry cleaning fluids, for days after dry cleaning. Though its use has now been banned in many countries, the extensive use of asbestos in industrial and domestic environments in the past has left a potentially very dangerous material in many localities. Asbestosis is a chronic inflammatory medical condition affecting the tissue of the lungs. It occurs after long-term, heavy exposure to asbestos from asbestos-containing materials in structures.Sufferers have severe dyspnea (shortness of breath) and are at an increased risk regarding several different typ es of lung cancer. As clear explanations are not always stressed in non-technical literature, care should be taken to distinguish between several forms of relevant diseases. According to the World Health Organisation (WHO)[dead link], these may defined as; asbestosis, lung cancer, and mesothelioma (generally a very rare form of cancer, when more widespread it is almost always associated with prolonged exposure to asbestos). Biological sources of air pollution are also found indoors, as gases and airborne particulates.Pets produce dander, people produce dust from minute skin flakes and decomposed hair, dust mites in bedding, carpeting and furniture produce enzymes and micrometre-sized fecal droppings, inhabitants emit methane, mold forms in walls and generates mycotoxins and spores, air conditioning systems can incubate Legionnaires' disease and mold, and houseplants, soil and surrounding gardens can produce pollen, dust, and mold. Indoors, the lack of air circulation allows these ai rborne pollutants to accumulate more than they would otherwise occur in nature. edit] Health effects The World Health Organization states that 2. 4 million people die each year from causes directly attributable to air pollution, with 1. 5 million of these deaths attributable to indoor air pollution. [13] â€Å"Epidemiological studies suggest that more than 500,000 Americans die each year from cardiopulmonary disease linked to breathing fine particle air pollution. . . â€Å"[14] A study by the University of Birmingham has shown a strong correlation between pneumonia related deaths and air pollution from motor vehicles. 15] Worldwide more deaths per year are linked to air pollution than to automobile accidents. [citation needed] Published in 2005 suggests that 310,000 Europeans die from air pollution annually. [citation needed] Causes of deaths include aggravated asthma, emphysema, lung and heart diseases, and respiratory allergies. [citation needed] The US EPA estimates that a pro posed set of changes in diesel engine technology (Tier 2) could result in 12,000 fewer premature mortalities, 15,000 fewer heart attacks, 6,000 fewer emergency room visits by children with asthma, and 8,900 fewer espiratory-related hospital admissions each year in the United States. [citation needed] The worst short term civilian pollution crisis in India was the 1984 Bhopal Disaster. [16] Leaked industrial vapors from the Union Carbide factory, belonging to Union Carbide, Inc. , U. S. A. , killed more than 25,000 people outright and injured anywhere from 150,000 to 600,000. The United Kingdom suffered its worst air pollution event when the December 4 Great Smog of 1952 formed over London. In six days more than 4,000 died, and 8,000 more died within the following months. citation needed] An accidental leak of anthrax spores from a biological warfare laboratory in the former USSR in 1979 near Sverdlovsk is believed to have been the cause of hundreds of civilian deaths. [citation need ed] The worst single incident of air pollution to occur in the United States of America occurred in Donora, Pennsylvania in late October, 1948, when 20 people died and over 7,000 were injured. [17] The health effects caused by air pollutants may include difficulty in breathing, wheezing, coughing and aggravation of existing respiratory and cardiac conditions.These effects can result in increased medication use, increased doctor or emergency room visits, more hospital admissions and premature death. The human health effects of poor air quality are far reaching, but principally affect the body's respiratory system and the cardiovascular system. Individual reactions to air pollutants depend on the type of pollutant a person is exposed to, the degree of exposure, the individual's health status and genetics. citation needed] A new economic study of the health impacts and associated costs of air pollution in the Los Angeles Basin and San Joaquin Valley of Southern California shows that mo re than 3800 people die prematurely (approximately 14 years earlier than normal) each year because air pollution levels violate federal standards. The number of annual premature deaths is considerably higher than the fatalities related to auto collisions in the same area, which average fewer than 2,000 per year. 18] Diesel exhaust (DE) is a major contributor to combustion derived particulate matter air pollution. In several human experimental studies, using a well validated exposure chamber setup, DE has been linked to acute vascular dysfunction and increased thrombus formation. [19][20] This serves as a plausible mechanistic link between the previously described association between particulate matter air pollution and increased cardiovascular morbidity and mortality. [edit] Effects on cystic fibrosis Main article: Cystic fibrosisA study from around the years of 1999 to 2000, by the University of Washington, showed that patients near and around particulate matter air pollution had a n increased risk of pulmonary exacerbations and decrease in lung function. [21] Patients were examined before the study for amounts of specific pollutants like Pseudomonas aeruginosa or Burkholderia cenocepacia as well as their socioeconomic standing. Participants involved in the study were located in the United States in close proximity to an Environmental Protection Agency. clarification needed] During the time of the study 117 deaths were associated with air pollution. Many patients in the study lived in or near large metropolitan areas in order to be close to medical help. These same patients had higher level of pollutants found in their system because of more emissions in larger cities. As cystic fibrosis patients already suffer from decreased lung function, everyday pollutants such as smoke, emissions from automobiles, tobacco smoke and improper use of indoor heating devices could further compromise lung function. 22] [edit] Effects on COPD Main article: Chronic obstructive pu lmonary disease Chronic obstructive pulmonary disease (COPD) include diseases such as chronic bronchitis, emphysema, and some forms of asthma. [23] A study conducted in 1960-1961 in the wake of the Great Smog of 1952 compared 293 London residents with 477 residents of Gloucester, Peterborough, and Norwich, three towns with low reported death rates from chronic bronchitis. All subjects were male postal truck drivers aged 40 to 59.Compared to the subjects from the outlying towns, the London subjects exhibited more severe respiratory symptoms (including cough, phlegm, and dyspnea), reduced lung function (FEV1 and peak flow rate), and increased sputum production and purulence. The differences were more pronounced for subjects aged 50 to 59. The study controlled for age and smoking habits, so concluded that air pollution was the most likely cause of the observed differences. [24] It is believed that much like cystic fibrosis, by living in a more urban environment serious health hazards b ecome more apparent.Studies have shown that in urban areas patients suffer mucus hypersecretion, lower levels of lung function, and more self diagnosis of chronic bronchitis and emphysema. [25] [edit] Effects on children Cities around the world with high exposure to air pollutants have the possibility of children living within them to develop asthma, pneumonia and other lower respiratory infections as well as a low initial birth rate. Protective measures to ensure the youths' health are being taken in cities such as New Delhi, India where buses now use compressed natural gas to help eliminate the â€Å"pea-soup† smog. 26] Research by the World Health Organization shows there is the greatest concentration of particulate matter particles in countries with low economic world power and high poverty and population rates. Examples of these countries include Egypt, Sudan, Mongolia, and Indonesia. The Clean Air Act was passed in 1970, however in 2002 at least 146 million Americans we re living in areas that did not meet at least one of the â€Å"criteria pollutants† laid out in the 1997 National Ambient Air Quality Standards. [27] Those pollutants included: ozone, particulate matter, sulfur dioxide, nitrogen dioxide, carbon monoxide, and lead.Because children are outdoors more and have higher minute ventilation they are more susceptible to the dangers of air pollution. [edit] Health effects in relatively â€Å"clean† areas Even in areas with relatively low levels of air pollution, public health effects can be substantial and costly. This is because effects can occur at very low levels and a large number of people can potentially breathe in such pollutants. A 2005 scientific study for the British Columbia Lung Association showed that a 1% improvement in ambient PM2. 5 and ozone concentrations will produce a $29 million in annual savings in the region in 2010. 28] This finding is based on health valuation of lethal (mortality) and sub-lethal (morbidi ty) effects. [edit] Reduction efforts There are various air pollution control technologies and land use planning strategies available to reduce air pollution. At its most basic level land use planning is likely to involve zoning and transport infrastructure planning. In most developed countries, land use planning is an important part of social policy, ensuring that land is used efficiently for the benefit of the wider economy and population as well as to protect the environment.Efforts to reduce pollution from mobile sources includes primary regulation (many developing countries have permissive regulations),[citation needed] expanding regulation to new sources (such as cruise and transport ships, farm equipment, and small gas-powered equipment such as lawn trimmers, chainsaws, and snowmobiles), increased fuel efficiency (such as through the use of hybrid vehicles), conversion to cleaner fuels (such as bioethanol, biodiesel, or conversion to electric vehicles). [edit] Control devices The following items are commonly used as pollution control devices by industry or transportation devices. They can either destroy contaminants or remove them from an exhaust stream before it is emitted into the atmosphere. * Particulate control * Mechanical collectors (dust cyclones, multicyclones) * Electrostatic precipitators An electrostatic precipitator (ESP), or electrostatic air cleaner is a particulate collection device that removes particles from a flowing gas (such as air) using the force of an induced electrostatic charge.Electrostatic precipitators are highly efficient filtration devices that minimally impede the flow of gases through the device, and can easily remove fine particulate matter such as dust and smoke from the air stream. * Baghouses Designed to handle heavy dust loads, a dust collector consists of a blower, dust filter, a filter-cleaning system, and a dust receptacle or dust removal system (distinguished from air cleaners which utilize disposable filters to remove the dust). * * Particulate scrubbersWet scrubber is a form of pollution control technology.The term describes a variety of devices that use pollutants from a furnace flue gas or from other gas streams. In a wet scrubber, the polluted gas stream is brought into contact with the scrubbing liquid, by spraying it with the liquid, by forcing it through a pool of liquid, or by some other contact method, so as to remove the pollutants. * Scrubbers * Baffle spray scrubber * Cyclonic spray scrubber * Ejector venturi scrubber * Mechanically aided scrubber * Spray tower * Wet scrubber * NOx control * Low NOx burners Selective catalytic reduction (SCR) * Selective non-catalytic reduction (SNCR) * NOx scrubbers * Exhaust gas recirculation * Catalytic converter (also for VOC control) * VOC abatement * Adsorption systems, such as activated carbon * Flares * Thermal oxidizers * Catalytic oxidizers * Biofilters * Absorption (scrubbing) * Cryogenic condensers * Vapor recovery systems * Acid Ga s/SO2 control * Wet scrubbers * Dry scrubbers * Flue gas desulfurization * Mercury control * Sorbent Injection Technology * Electro-Catalytic Oxidation (ECO) K-Fuel * Dioxin and furan control * Miscellaneous associated equipment * Source capturing systems * Continuous emissions monitoring systems (CEMS) [edit] Legal regulations Smog in Cairo In general, there are two types of air quality standards. The first class of standards (such as the U. S. National Ambient Air Quality Standards) set maximum atmospheric concentrations for specific pollutants. Environmental agencies enact regulations which are intended to result in attainment of these target levels.The second class (such as the North American Air Quality Index) take the form of a scale with various thresholds, which is used to communicate to the public the relative risk of outdoor activity. The scale may or may not distinguish between different pollutants. [edit] Cities Air pollution is usually concentrated in densely populated metropolitan areas, especially in developing countries where environmental regulations are relatively lax or nonexistent. However, even populated areas in developed countries attain unhealthy levels of pollution. [edit] Carbon dioxide emissionsMost Polluted World Cities by PM[29]| Particulate matter, ?g/m? (2004)| City| 169| Cairo, Egypt| 150| Delhi, India| 128| Kolkata, India (Calcutta)| 125| Tianjin, China| 123| Chongqing, China| 109| Kanpur, India| 109| Lucknow, India| 104| Jakarta, Indonesia| 101| Shenyang, China| Total CO2 emissions Main article: List of countries by carbon dioxide emissions Countries with the highest CO2 emissions| Country| Carbon dioxide emissions per year (106 Tons) (2006)| Percentage of global total| China| 6,103| 21. 5%| United States| 5,752| 20. 2%| Russia| 1,564| 5. 5%| India| 1,510| 5. %| Japan| 1293| 4. 6%| Germany| 805| 2. 8%| United Kingdom| 568| 2. 0%| Canada| 544| 1. 9%| South Korea| 475| 1. 7%| Italy| 474| 1. 7%| Per capita CO2 emissions[30] Main article: List of countries by carbon dioxide emissions per capita Countries with the highest per capita CO2 emissions| Country| Carbon dioxide emissions per year (Tons per person) (2006)| | Qatar| 56. 2| | United Arab Emirates| 32. 8| | Kuwait| 31. 2| | Bahrain| 28. 8| | Trinidad and Tobago| 25. 3| | Luxembourg| 24. 5| | Netherlands Antilles| 22. 8| | Aruba| 22. 3| | United States| 19| | Australia| 18. | | [edit] Atmospheric dispersion Main article: Atmospheric dispersion modeling The basic technology for analyzing air pollution is through the use of a variety of mathematical models for predicting the transport of air pollutants in the lower atmosphere. The principal methodologies are: * Point source dispersion, used for industrial sources. * Line source dispersion, used for airport and roadway air dispersion modeling * Area source dispersion, used for forest fires or duststorms * Photochemical models, used to analyze reactive pollutants that form smogVisualization of a buoyant Gaus sian air pollution dispersion plume as used in many atmospheric dispersion models The point source problem is the best understood, since it involves simpler mathematics and has been studied for a long period of time, dating back to about the year 1900. It uses a Gaussian dispersion model for buoyant pollution plumes to forecast the air pollution isopleths, with consideration given to wind velocity, stack height, emission rate and stability class (a measure of atmospheric turbulence). [31][32] This model has been extensively validated and calibrated with experimental data for all sorts of atmospheric conditions.The roadway air dispersion model was developed starting in the late 1950s and early 1960s in response to requirements of the National Environmental Policy Act and the U. S. Department of Transportation (then known as the Federal Highway Administration) to understand impacts of proposed new highways upon air quality, especially in urban areas. Several research groups were activ e in this model development, among which were: the Environmental Research and Technology (ERT) group in Lexington, Massachusetts, the ESL Inc. roup in Sunnyvale, California and the California Air Resources Board group in Sacramento, California. The research of the ESL group received a boost with a contract award from the United States Environmental Protection Agency to validate a line source model using sulfur hexafluoride as a tracer gas. This program was successful in validating the line source model developed by ESL inc. Some of the earliest uses of the model were in court cases involving highway air pollution, the Arlington, Virginia portion of Interstate 66 and the New Jersey Turnpike widening project through East Brunswick, New Jersey.Area source models were developed in 1971 through 1974 by the ERT and ESL groups, but addressed a smaller fraction of total air pollution emissions, so that their use and need was not as widespread as the line source model, which enjoyed hundreds of different applications as early as the 1970s. Similarly photochemical models were developed primarily in the 1960s and 1970s, but their use was more specialized and for regional needs, such as understanding smog formation in Los Angeles, California.

Porsche Changes Tack

Porsche Changes Tack Yes, of course, we have heard of shareholder value. But that does not change the fact that we put customers first, then workers, then business partners, suppliers and dealers, and then shareholders. Dr. Wendelin Wiedeking, CEO, Porsche, Die Zeit, April 17, 2005. Porsche had always been different. Statements by Porsche leadership, like the one above, always made Veselina (Vesi) Dinova nervous about the company’s attitude about creating shareholder value. The company was a paradox.Porsche’s attitudes and activities were like that of a family-owned firm, but it had succeeded in creating substantial shareholder value for more than a decade. Porsche’s CEO, Dr. Wendelin Wiedeking, had been credited with clarity of purpose and sureness of execution. As one colleague described him: â€Å"He grew up PSD: poor, smart, and driven. † Porsche’s management of two minds had created confusion in the marketplace as to which value proposition Por sche presented. Was Porsche continuing to develop an organizational focus on shareholder value, or was it returning to its more traditional German roots of stakeholder capitalism?Simply put, was Porsche’s leadership building value for all shareholders, including the controlling families, or was it pursuing family objectives at the expense of the shareholder? Vesi had to make a recommendation to her investment committee tomorrow, and the evidence was confusing at best. Shareholder Wealth or Stakeholder Capitalism? Vesi’s dilemma was whether Porsche—Porsche’s leadership—was increasingly pursuing shareholder wealth maximization or the more traditional Continental European model of stakeholder capitalism.Shareholder Wealth Maximization. The Anglo-American markets—the United States and United Kingdom primarily—have followed the philosophy that a firm’s objective should be shareholder wealth maximization. More specifically, the firm should strive to maximize the return to shareholders, as measured by the sum of capital gains and dividends. This philosophy is based on the assumption that stock markets are efficient; that is, the share price is always correct, and quickly incorporates all new information about expectations of return and risk.Share prices, in turn, are deemed the best allocators of capital in the macro economy. Agency theory is the subject of how shareholders can motivate management to accept the prescriptions of shareholder wealth. For example, liberal use of stock options should encourage management to think like shareholders. If, however, management deviates too far from shareholder objectives, the company’s board of directors is responsible for replacing them. In cases where the board is too weak or ingrown to take this action, the discipline of the equity markets could do it through a takeover.This discipline is made possible by the one-share-one-vote rule that exists in most Anglo-Ame rican markets. Copyright  © 2007 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professor Michael H. Moffett for the purpose of classroom discussion only, and not to indicate either effective or ineffective management. Special thanks to Wesley Edens and Pilar Garcia-Heras, MBA ‘06, for case-writing assistance. Stakeholder Capitalism. In the non-Anglo-American markets, particularly continental Europe, controlling shareholders also strive to maximize long-term returns to equity.However, they are more constrained by powerful other stakeholders like creditors, labor unions, governments, and regional entities. In particular, labor unions are often much more powerful than in the Anglo-American markets. Governments often intervene more in the marketplace to protect important stakeholder interests in local communities, such as environmental protection and employment needs. Banks and other financial institutions often have cross-memberships on corporate boards, and as a result are frequently quite influential. This model has been labeled stakeholder capitalism.Stakeholder capitalism does not assume that equity markets are either efficient or inefficient. Efficiency is not really critical because the firm’s financial goals are not exclusively shareholder-oriented since they are constrained by the other stakeholders. In any case, stakeholder capitalism assumes that long-term â€Å"loyal† shareholders—typically, controlling shareholders—rather than the transient portfolio investor should influence corporate strategy. Although both philosophies have their strengths and weaknesses, two trends in recent years have led to an increasing focus on shareholder wealth.First, as more of the non-Anglo-American markets have increasingly privatized their industries, the shareholder wealth focus is seemingly needed to attract international capital from outside investors, many of whom are from other countries. Second, and still quite controversial, many analysts believe that shareholder-based multinationals are increasingly dominating their global industry segments. Porsche AG I know exactly what I want and what must happen. I am the real one. You can be sure. Dr. Wendelin Wiedeking Porsche AG was a publicly traded, closely held, German-based auto manufacturer.Porsche’s President and Chief Executive Officer, Dr. Wendelin Wiedeking, had returned the company to both status and profitability since taking over the company in 1993. Wiedeking’s background was in production, and many had questioned whether he was the right man for the job. Immediately after taking over Porsche, he had killed the 928 and 968 model platforms to reduce complexity and cost, although at the time this left the company with only one platform, the 911. Wiedeking had then brought in a group of Japanese manufacturing consultants, in the Toyota tradition, who led the complete overhaul of the company’s manufacturing processes. Wiedeking himself made news when he walked down the production line with a circular saw, cutting off the shelving which held parts. Porsche had closed the 2004/05 fiscal year (ending July 2005) with â‚ ¬6. 7 billion in sales and â‚ ¬721 million in profit after-tax. Wiedeking and his team were credited with the wholesale turnaround of the specialty manufacturer. Strategically, the leadership team had now expanded the company’s business line to reduce its dependence on the luxury sports car market, historically an extremely cyclical business line.Although Porsche was traded on the Frankfurt Stock Exchange (and associated German exchanges), control of the company remained firmly in the hands of the founding families, the Porsche and Piech families. Porsche had two classes of shares, ordinary and preference. The two families held all 8. 75 million ordinary shares—the shares which held all voting rights. The second class of share, preference s hares, participated only in profits. All 8. 75 million preference shares were publicly traded. Approximately 50% of all preference shares were held by large institutional investors in the United States, Germany, and the United Kingdom; 14% were eld by the Porsche and Piech families; and 36% were held by small private investors. As noted by the Chief Financial Officer, Holger Harter, â€Å"As long as the two families hold on to their stock portfolios, there won’t be any external influence on company-related decisions. I have no doubt that the families will hang on to their shares. † One of the consultants, focused on lean manufacturing techniques and Porsche’s overwhelming levels of subcomponent assemblies and various automotive parts and inventory, was quoted as saying, â€Å"Where is the car factory? This looks like a mover’s warehouse. 1 2 TB0067 Porsche was somewhat infamous for its independent thought and occasional stubbornness when it came to discl osure and compliance with reporting requirements—the prerequisites of being publicly traded. In 2002, the company had chosen not to list on the New York Stock Exchange after the passage of the Sarbanes-Oxley Act. The company pointed to the specific requirement of Sarbanes-Oxley that senior management sign off on the financial results of the company personally as inconsistent with German law (which it largely was) and illogical for management to accept.Management had also long been critical of the practice of quarterly reporting, and had in fact been removed from the Frankfurt exchange’s stock index in September 2002 because of its refusal to report quarterly financial results (Porsche still reports operating and financial results only semi-annually). Porsche’s management continued to argue that the company believed itself to be quite seasonal in its operations, and did not wish to report quarterly. It also believed that quarterly reporting only added to short-te rm investor perspectives, a fire which Porsche felt no need to fuel (see Appendix 4).Exhibit 1 7,000 Porsche’s Growth in Sales, Income and Margin Operating Margin 28% Millions of euros (â‚ ¬) Sales 6,000 20. 8% 5,000 18. 0% 18. 2% 17. 9% 20% 24% 4,000 13. 6% 3,000 11. 6% 12. 0% 16% Operating Margin (EBIT / Sales) 12% 2,000 7. 0% Operating Income (EBIT) 8% 4. 2% 1,000 2. 0% 0 1996 1997 1998 1999 2000 2001 2002 2003 4% 0% 2004 2005 Note: EBIT = earnings before interest and tax. But, after all was said and done, the company had just reported record profits for the tenth consecutive year (see Exhibit 1).Returns were so good and had grown so steadily that the company had paid out a special dividend of â‚ ¬14 per share in 2002, in addition to increasing the size of the regular dividend. The company’s critics had argued that this was simply another way in which the controlling families drained profits from the company. There was a continuing concern that management came first. In the words of one analyst, â€Å"†¦ we think there is the potential risk that management may not rate shareholders’ interests very highly. † The motivations of Porsche’s leadership team had long been the subject of debate.The compensation packages of Porsche’s senior management team were nearly exclusively focused on current year profitability (83% of executive board compensation was based on performance-related pay), with no management incentives or stock option awards related to the company’s share price. Porsche clearly focused on the company’s own operational and financial results, not the market’s valuation—or opinion—of the company. Leadership, however, had clearly built value for all stakeholders in recent years, TB0067 3 nd had shared many of the fruits of the business, in the form of bonuses, with both management and labor alike. â€Å"We are aware that our lofty ambitions for products, processes , and customer satisfaction can only be achieved with the support of a high-quality and well-motivated team. Here at Porsche, we have such a team—and we believe that they should share in the success of the company by means of special bonus payments. †2 Porsche’s Growing Portfolio Porsche’s product portfolio had undergone significant change as CEO Wiedeking pursued his promise to shareholders that he would grow the firm.The company had three major vehicle platforms: the premier luxury sports car, the 911; the competitively priced Boxster roadster; and the recently introduced off-road sport utility vehicle, the Cayenne. Porsche had also recently announced that it would be adding a fourth platform, the Panamera, which would be a high-end sedan to compete with Jaguar, Mercedes, and Bentley. 911. The 911 series was still the focal point of the Porsche brand, but many believed that it was growing old and due for replacement. Sales had seemingly peaked in 2001/02 , and fallen back more than 15% in 2002/03.The 911 was a highly developed series with more than 14 current models carrying the 911 tag. The 911 had always enjoyed nearly exclusive ownership of its market segment. Prices continued to be high, and margins some of the very highest in the global auto industry for production models. Although its sales had been historically cyclical, 911 demand was not priceelastic. The 911 was the only Porsche model which was manufactured and assembled in-house. Boxster. The Boxster roadster had been introduced in 1996 as Porsche’s entry into the lower-price end of the sports car market, and had been by all measures a very big success.The Boxster was also considered an anticyclical move, because the traditional 911 was so high priced that its sales were heavily dependent on the disposable income of buyers in its major markets (Europe, the United States, and the United Kingdom). The Boxster’s lower price made it affordable and less sensitive to the business cycle. It did, however, compete in an increasingly competitive market segment. Although the Boxster had competed head-to-head with the BMW Z3 since its introduction in 1996, the introduction of the Z4 in 2003 had drastically cut into Boxster sales. Boxster sales volumes had peaked in 2000/01.Volume sales in 2003/04 were down to 12,988, less than half what they had been at peak. Cayenne. The third major platform innovation was Porsche’s entry into the sports utility vehicle (SUV) segment, the Cayenne. Clearly at the top end of the market (2002/03 Cayenne sales averaged more than $70,000 each), the Cayenne had been a very quick success, especially in the SUVcrazed American market. The Cayenne introduction was considered by many as one of the most successful new product launches in history, and had single-handedly floated Porsche sales numbers in recent years.The Cayenne’s success had been even more dramatic given much pre-launch criticism that the market would not support such a high-priced SUV, particularly one which shared a strong blood-line with the Volkswagen (VW) Touareg. The Porsche Cayenne and VW Touareg had been jointly developed by the two companies. The two vehicles shared a common chassis, and in fact were both manufactured at the same factory in Bratislava, Slovakia. To preserve its unique identity, however, Porsche shipped the Cayenne chassis 17 hours by rail to its facility in Leipzig, Germany, where the engine, drive â€Å"Porsche Stays on Course,† Dr.Wendelin Wiedeking, President and Chief Executive Officer, Porsche Annual Report 2003/04, p. 5. 2 4 TB0067 train, and interior were combined in final assembly. 3 A new six-cylinder version was introduced in 2004 to buoy Cayenne sales after the initial boom of the introduction year, by offering a significantly cheaper model choice. 4 As illustrated by Exhibit 2, Porsche’s platform innovations had successfully grown sales volumes over the past decade. Exhib it 2 Units 0,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note: Excludes sales of the discontinued 928 and 944/968 models in 1994-1996. These models totaled 1005 in 1995 and 104 in 1006. 911 sales in 2004 and 2005 include 222 and 660 Carrera GTs, respectively. Porsche’s Expanding Platforms and Growing Sales 911 Boxster Cayenne Panamera. On July 27, 2005, Porsche announced that it would proceed with the development and production of a fourth major model—the Panamera. The name was derived from the legendary Carrera Panamericana long-distance road race held for many years in Mexico.The Panamera would be a premium class, four-door, four-seat sports coupe, and would compete with the premium sedan models produced by Mercedes Benz and Bentley. Pricing was expected to begin at $125,000, rising to $175,000. Production was scheduled to begin in 2009 at a scale of 20,000 units per year. This new model would g ive Porsche a competitive element in every major premium-product market segment. The Most Profitable Automobile Company in the World Porsche’s financial performance and health, by auto manufacturer standards, European or elsewhere, was excellent.It was clearly the smallest of the major European-based manufacturers with total sales of â‚ ¬6. 4 billion in 2004. 5 This was in comparison to DaimlerChrysler’s â‚ ¬142 billion in sales, and Volkswagen’s The engine was, in fact, the only part of the Cayenne which was actually manufactured by Porsche itself. All other components of the vehicle were either outsourced or built in conjunction with other manufacturers. 4 The six-cylinder engine, however, was actually a Volkswagen engine which had been reconfigured. This had led to significant debate, as Porsche was criticized for degrading the Porsche brand. Comparing Porsche’s financial results with other major automakers is problematic. First, Porsche’s fiscal year ends July 31. Hence Porsche’s financial results for 2004 reported in Exhibit 3 are those for the August 1, 2003, through July 31, 2004, period. Secondly, Porsche announced that beginning with the 2004/05 period, which ended July 31, 2005, it would move to InternationalFinancial Reporting Standards (IFRS), rather than the German Commercial Code and special accounting requirements of the German Stock Corporation Law (German Generally Accepted Accounting Principles) which it has followed since it went public in 1984.These results will not be comparable to previous reporting years, and will require both Porsche and its analysts to reconstruct its financial history following IFRS. 3 TB0067 5 â‚ ¬89 billion. But, as illustrated in Exhibit 3, Porsche was outstanding by all metrics of profitability and return on invested capital. Porsche’s EBITDA, EBIT, and net income margins were the highest among all European automakers in 2004. 6 What also always stood out a bout Porsche was the average revenue per vehicle. At â‚ ¬83,671, only DaimlerChrysler was even close. Exhibit 3 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenPorshe’s Competitive Positioning, 2004 Earnings Measures Sales (millions) â‚ ¬ 44,335 â‚ ¬ 142,059 â‚ ¬ 46,703 â‚ ¬ 56,797 â‚ ¬ 6,359 â‚ ¬ 40,715 â‚ ¬ 88,963 Revenue per vehicle â‚ ¬ 39,622 â‚ ¬ 78,056 â‚ ¬ 28,844 â‚ ¬ 19,354 â‚ ¬ 83,671 â‚ ¬ 19,291 â‚ ¬ 18,369 EBITDA â‚ ¬ 5,780 â‚ ¬ 10,280 â‚ ¬ 2,190 â‚ ¬ 4,502 â‚ ¬ 1,665 â‚ ¬ 4,414 â‚ ¬ 7,140 EBIT â‚ ¬ 3,745 â‚ ¬ 4,612 â‚ ¬ 22 â‚ ¬ 1,916 â‚ ¬ 1,141 â‚ ¬ 2,148 â‚ ¬ 1,620 Net Income â‚ ¬ 2,222 â‚ ¬ 2,466 -â‚ ¬ 1,586 â‚ ¬ 1,357 â‚ ¬ 616 â‚ ¬ 3,551 â‚ ¬ 677 EBITDA Margin 13. 0% 7. 2% 4. 7% 7. 9% 26. 2% 10. 8% 8. 0% Margin Measures EBIT Net Income Margin Margin 8. 4% 5. 0% 3. 2% 1. 7% 0. 0% -3. 4% 3. 4% 2. 4% 17. 9% 9. 7% 5. 3% 8. 7% 1. % 0. 8% Source: â€Å"European Autos,† Deutsche Bank, July 20, 2005; â€Å"Porsche,† Deutsche Bank, September 26, 2005; Thomson Analytics; author estimates. Renault’s results included 343 million in extraordinary income in 2004, accounting for net income exceeding EBIT. Porsche’s financial results, however, had been the subject of substantial debate in recent years as upwards of 40% of operating earnings were thought to be derived from currency hedging. Porsche’s cost-base was purely European euro; it produced in only two countries, Germany and Finland, and both were euro area members.Porsche believed that the quality of its engineering and manufacturing were at the core of its brand, and it was not willing to move production beyond Europe (BMW, Mercedes, and VW had all been manufacturing in both the United States and Mexico for years). Porsche’s sales by currency in 2004 were roughly 45% European euro, 40% U. S. dollar, 10% British pound s terling, and 5% other (primarily the Japanese yen and Swiss franc). Porsche’s leadership had undertaken a very aggressive currency hedging strategy beginning in 2001 when the euro was at a record low against the U.S. dollar. In the following years, these financial hedges (currency derivatives) proved extremely profitable. For example, nearly 43% of operating earnings in 2003 were thought to have been derived from hedging activities. Although profitable, many analysts argued the company was increasingly an investment banking firm rather than an automaker, and was heavily exposed to the unpredictable fluctuations between the world’s two most powerful currencies, the dollar and the euro. Exhibit 4 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenReturn on Invested Capital (ROIC) for European Automakers, 2004 Operating Margin Sales (millions) â‚ ¬ 44,335 â‚ ¬ 142,059 â‚ ¬ 46,703 â‚ ¬ 56,797 â‚ ¬ 6,359 â‚ ¬ 40,715 â‚ ¬ 88,96 3 EBIT â‚ ¬ 3,745 â‚ ¬ 4,612 â‚ ¬ 22 â‚ ¬ 1,916 â‚ ¬ 1,141 â‚ ¬ 2,148 â‚ ¬ 1,620 Taxes â‚ ¬ 1,332 â‚ ¬ 1,177 -â‚ ¬ 29 â‚ ¬ 676 â‚ ¬ 470 â‚ ¬ 634 â‚ ¬ 383 EBIT After-tax â‚ ¬ 2,413 â‚ ¬ 3,435 â‚ ¬ 51 â‚ ¬ 1,240 â‚ ¬ 671 â‚ ¬ 1,514 â‚ ¬ 1,237 Interest Bearing debt â‚ ¬ 1,555 â‚ ¬ 9,455 â‚ ¬ 24,813 â‚ ¬ 6,445 â‚ ¬ 2,105 â‚ ¬ 7,220 â‚ ¬ 14,971 Invested Capital Stockholders' equity â‚ ¬ 17,517 â‚ ¬ 33,541 â‚ ¬ 5,946 â‚ ¬ 13,356 â‚ ¬ 2,323 â‚ ¬ 16,444 â‚ ¬ 23,957 Invested Capital â‚ ¬ 19,072 â‚ ¬ 42,996 â‚ ¬ 30,759 â‚ ¬ 19,801 â‚ ¬ 4,428 â‚ ¬ 23,664 â‚ ¬ 38,928 Capital Turnover 2. 2 3. 30 1. 52 2. 87 1. 44 1. 72 2. 29 ROIC 12. 65% 7. 99% 0. 17% 6. 26% 15. 15% 6. 40% 3. 18% Source: â€Å"European Autos,† Deutsche Bank, July 20, 2005; â€Å"Porsche,† Deutsche Bank, September 26, 2005; Thomson Analytics; author estimates. Invested Capital = total stockho lders’ equity + gross interest-bearing debt. Capital turnover = sales/invested capital. ROIC (return on invested capital) = EBIT – taxes/invested capital. ROIC. It was Porsche’s return on invested capital (ROIC), however, which had been truly exceptional over time.The company’s ROIC in 2004—following Deutsche Bank’s analysis presented in Exhibit 4—was 15. 15%. This was clearly superior to all other European automakers; BMW’s ROIC was second highest at 12. 65%. Other major European automakers struggled to reach 6% to 7%. EBITDA (earnings before interest, taxes, depreciation, and amortization) is frequently used as the income measure of pure business profitability. EBIT (earnings before interest and taxes) is similar but is reduced by depreciation and amortization charges associated with capital asset and goodwill write-offs. 6 6 TB0067This ROIC reflected Porsche’s two-pronged financial strategy: 1) superior margins on the narrow but selective product portfolio; and 2) leveraging the capital and capabilities of manufacturing partners in the development and production of two of its three products. The company had successfully exploited the two primary drivers of the ROIC formula: ROIC = EBIT after-tax Sales x Sales Invested Capital The first component, operating profits (EBIT, earnings before interest and taxes) after-tax as a percent of sales—operating margin—was exceptional at Porsche due to the premium value pricing derived from its global brand of quality and excellence.This allowed Porsche to charge premium prices and achieve some of the largest of margins in the auto industry. As illustrated in Exhibit 4, Porsche’s operating profits after-tax of â‚ ¬671 million produced an operating margin after-tax of 10. 55% (â‚ ¬671 divided by â‚ ¬6,359 in sales), the highest in the industry in 2004. The second component of ROIC, the capital turnover ratio (sales divided by inves ted capital)— velocity—reflected Porsche’s manufacturing and assembly strategy.By leveraging the Valmet and VW partnerships in the design, production, and assembly of both the Boxster (with Valmet of Finland) and the Cayenne (with Volkswagen of Germany), Porsche had achieved capital turnover ratios which dwarfed those achieved by any other European automaker. Porsche’s capital turnover ratio had surpassed all other European automakers consistently over the past decade. As illustrated by Exhibit 5, Porsche’s growing margins and relatively high velocity had sustained a very impressive ROIC for many years. In recent years, however, invested capital had risen faster than sales.But Porsche was not adding fixed assets to its invested capital basis, but cash. The rising cash balances were the result of retained profits (undistributed to shareholders) and new debt issuances (raising more than 600 million in 2004 alone). As a result, fiscal 2003/04 had prov en to be one of Porsche’s poorest years in ROIC. Exhibit 5 2. 5 Porsche’s Velocity, Margin, and ROIC Margin ;amp; ROIC 20% Velocity = Sales/Invested Capital 2. 15 2. 0 2. 12 Velocity 1. 97 1. 99 1. 81 18% 1. 91 ROIC (Operating Margin X Velocity) 14. 2% 12. 5% 11. 7% 11. 6% 10. 5% 1. 19 10. 5% 1. 21 9. % 11. 6% 13. 8% 16% 12. 9% 1. 5 14% 12. 6% 11. 9% 12% 10% 1. 0 8. 0% 6. 1% Operating Margin 6. 4% 6. 0% 6. 4% 8% 0. 91 0. 84 6% 0. 5 3. 8% 2. 0% 3. 7% 4% 2% 0. 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0% Operating margin = ( EBIT – Taxes ) / Sales. Invested capital = cash + net working capital + net fixed assets. Porsche’s minimal levels of invested capital resulted from some rather unique characteristics. Invested capital is defined a number of ways, but Vesi used her employer’s standardized definition of cash plus net working capital plus net fixed assets. As illustrated in Exhibit 6, Porsche’s invested capital base TB0067 7 had be en growing rapidly in recent years, but not because of additional fixed asset investments. Porsche’s invested capital was growing primarily because of its accumulation of cash. 8 Vesi was concerned that using this measure of â€Å"invested capital† led to a distorted view of the company’s actual performance. Porsche’s minimal fixed-asset capital base resulted from the explicit strategy of the company as executed over the past decade.The development and manufacturing and assembly of the Cayenne was a clear example: †¢ Porsche had spent only $420 million in the development of the Cayenne. Auto analysts estimated that any other major automaker would have spent between $1. 2 and $1. 8 billion. †¢ Porsche had effectively avoided these costs and investments by co-producing the Cayenne with Volkswagen. The Cayenne shared some 65% of its parts and modules with the VW Touareg, with only 13% of the Cayenne’s actual wholesale value being derived fro m parts developed and manufactured by Porsche itself. The production agreement between Porsche and VW made VW responsible for all costs associated with quality problems arising at VW’s manufacturing facilities. Porsche paid VW a unit price for each Cayenne body produced in VW’s assembly facility in Bratislava, Slovakia. Porsche had successfully off-loaded both cost and risk. Exhibit 6 Asset Structure Cash Net working capital Net fixed assets Invested capital Liability Structure Short-term debt Long-term debt Total debt Equity Invested capital Porsche’s Managerial Balance Sheet (millions of euros) 996 â‚ ¬ 227 38 487 â‚ ¬ 753 1997 â‚ ¬ 281 116 578 â‚ ¬ 975 1998 â‚ ¬ 466 132 590 â‚ ¬ 1,188 1999 â‚ ¬ 730 225 649 â‚ ¬ 1,604 2000 â‚ ¬ 823 258 755 â‚ ¬ 1,835 2001 â‚ ¬ 1,121 369 960 â‚ ¬ 2,449 2002 â‚ ¬ 1,683 (355) 2,746 â‚ ¬ 4,073 2003 â‚ ¬ 1,766 (382) 3,215 â‚ ¬ 4,599 2004 â‚ ¬ 2,791 403 3,797 â‚ ¬ 6,992 2005 ↚ ¬ 4,325 (131) 3,641 â‚ ¬ 7,834 â‚ ¬8 19 â‚ ¬ 27 726 â‚ ¬ 753 â‚ ¬7 124 â‚ ¬ 131 844 â‚ ¬ 975 â‚ ¬ 10 114 â‚ ¬ 124 1,064 â‚ ¬ 1,188 â‚ ¬ 52 107 â‚ ¬ 159 1,445 â‚ ¬ 1,604 â‚ ¬ 20 82 â‚ ¬ 102 1,733 â‚ ¬ 1,835 â‚ ¬ 158 (49) â‚ ¬ 108 2,341 â‚ ¬ 2,449 â‚ ¬ 137 850 â‚ ¬ 987 3,086 â‚ ¬ 4,073 â‚ ¬ 70 859 â‚ ¬ 929 3,670 â‚ ¬ 4,599 â‚ ¬ 649 1,641 â‚ ¬ 2,290 4,702 â‚ ¬ 6,992 â‚ ¬ 1,107 2,026 â‚ ¬ 3,133 4,701 â‚ ¬ 7,834Net working capital = accounts receivable, inventories, and prepaid expenses, less accounts payable and accured expenses. This assumes ‘provisions for risk and charges' as equity. Porsche Changes Tack The summer and fall of 2005 saw a series of surprising moves by Porsche. First, Porsche announced that the â‚ ¬1 billion investment to design and manufacture the new Panamera would be largely funded by the company itself. Although the introduction of the Panamera had been anticipat ed for quite some time, the market was surprised that Porsche intended to design and build the car—and its manufacturing facility—nearly totally in-house.The new sports coupe was to be produced in Leipzig, Germany, at the existing Porsche facility, although a substantial expansion of the plant would be required. As opposed to the previous new product introductions, the Boxster and the Cayenne, there would be no major production partner involved. Porsche CEO Wendelin Wiedeking specifically noted this in his press release: â€Å"There are no plans for a joint venture with another car maker. But to ensure the profitability of this new model series, we will cooperate more closely than so far with selected system suppliers. 9 The German share of the value of the Panamera would be roughly 70%. Like the 911, Boxster, and Cayenne, the Panamera would bear the Made in Germany stamp. This methodology defines invested capital by assets, the left-hand side of the managerial balanc e sheet. Alternative definitions of invested capital focus on the right-hand side of the balance sheet; for example, as stockholder equity plus interest-bearing debt. Either version can also be netted for cash holdings under different methods. 8 Porsche’s cash and marketable securities grew from â‚ ¬2. billion in 2004 to over â‚ ¬4. 3 billion at the end of 2005 (July 31, 2005). Credit Suisse First Boston had in fact noted on September 21, 2005, just days before the VW announcement, that, â€Å"In our view, the only disappointment is that management indicated that the company would not look into returning cash to shareholders in the next 18 months. † 9 â€Å"Go Ahead for Porsche’s Fourth Model Series,† Porsche Press Release, July 27, 2005. 7 8 TB0067 The second surprise occurred on September 25, 2005, with the announcement to invest â‚ ¬3 billion in VW.Porsche AG, Stuttgart, seeks to acquire a share of approximately 20 percent in the stock capital of Volkswagen AG, Wolfsburg, entitled to vote. Porsche is taking this decision because Volkswagen is now not only an important development partner for Porsche, but also a significant supplier of approximately 30 percent of Porsche’s sales volume. In the words of Porsche’s President and CEO: â€Å"Making this investment, we seek to secure our business relations with Volkswagen and make a significant contribution to our own future plans on a lasting, long-term basis. Porsche is in a position to finance the acquisition of the planned share in Volkswagen through its own, existing liquidity. After careful examination of this business case, Porsche is confident that the investment will prove profitable for both parties. †¦ The planned acquisition is to ensure that†¦ there will not be a hostile takeover of Volkswagen by investors not committed to Volkswagen’s long-term interests. In the words of Porsche’s President and CEO: â€Å"Our planned investm ent is the strategic answer to this risk.We wish in this way to ensure the independence of the Volkswagen Group in our own interest. This ‘German solution’ we are seeking is an essential prerequisite for stable development of the Volkswagen Group and, accordingly, for continuing our cooperation in the interest of both Companies. † â€Å"Acquisition of Stock to Secure Porsche’s Business,† Porsche AG (press release), September 25, 2005. Porsche would spend approximately â‚ ¬3 billion to take a 20% ownership position in VW. This would make Porsche VW’s single largest investor, slightly larger than the government of Lower Saxony. 0 It clearly eliminated any possible hostile acquisitions which may have been on the horizon (DaimlerChrysler was rumored to have been interested in raiding VW. ) The announcement was met by near-universal opposition The family linkages between the two companies were well known. Ferdinand K. Piech, one of the most prom inent members of the Piech family which, along with the Porsche family, controlled Porsche, was the former CEO (he retired in 2002) and still Chairman of Volkswagen. He was the grandson of Ferdinand Porsche, the founder of Porsche.Accusations of conflict of interest were immediate, as were calls for his resignation, and the denial of Porsche’s request for a seat on VW’s board. Although VW officially welcomed the investment by Porsche, Christian Wulff, VW’s board member representing the state of Lower Saxony where VW was headquartered, publicly opposed the investment by Porsche. In the eyes of many, the move by Porsche was a return to German corporate cronyism. For years, â€Å"Deutschland AG† was emblematic of the cosy network of cross-shareholdings and shared non-executive directorships that insulated Germany from international capitalism.Wendelin Wiedeking, Porsche’s chief executive, himself invoked the national angle, saying this: â€Å"German solution was essential to secure VW, Europe’s largest carmaker, against a possible hostile takeover by short-term investors. † â€Å"Shield for Corporate Germany or a Family Affair? VW and Porsche Close Ranks,† Financial Times, Tuesday, September 27, 2005, p. 17. Germany, although long known for complex networks of cross-shareholdings, had effectively unwound most of these in the 1990s.The German government had successfully accelerated the unwinding by making most cross-shareholding liquidations tax-free in recent years, and both the financial and nonfinancial sectors had sold literally billions of euros in shares. This move by Porsche and VW was seen as more of a personal issue—Ferdinand Piech—rather than a national issue of German alliances. Many Porsche investors had agreed, arguing that if they had wanted to invest in VW, they would have done it themselves. The resulting ownership structure of Volkswagen in October 2005 was: 18. 3% Porsche; 18. 2% State of Lower Saxony; 13. 0% Volkswagen; 8. 58% Brandes Investment Partners; 3. 5% Capital Group; and 38. 19% widely distributed. Porsche still possessed the option to purchase another 3. 4%. 10 TB0067 9 There were also potential strategic conflicts between the two companies. Volkswagen’s premium segment company, Audi, was a distinct competitor to Porsche, particularly in light of the new Panamera project. VW itself had fallen on bad times (see Exhibit 3), and many VW watchers believed that the company needed activist shareholders.VW and its Audi unit were both suffering from high wage costs in German factories, and VW had been seeking wage concessions from many of its unions to regain competitiveness and profitability. Porsche had a reputation of being soft on German unions, and with the growing presence of both Porsche and Ferdinand Piech, critics feared VW would back away from its wage-reduction push. Porsche was not expected to be as cost-conscious or to push VW to ma ke drastic strategic changes.Instead, Porsche was expected to push VW to underwrite a number of the new models and platforms Porsche was in the process of introducing. There were, in fact, lingering allegations that a number of VW’s new product introductions had been delayed by the Cayenne’s production in 2003 and 2004. Shareholders in Porsche—the nonfamily-member shareholders—were both surprised and confused by this dramatic turn of events. Although the arguments for solidifying and securing the Porsche/ VW partnership were rational, the cost was not.At â‚ ¬3 billion, this was seemingly an enormous investment in a nonperforming asset. Analysts concluded that the potential returns to shareholders, even in the form of a special dividend, were now postponed indefinitely; shareholders would not â€Å"see the money† for years to come. The move was also seen by some as an acknowledgment by Porsche that it could no longer expand into new product categ ories without significantly larger capital and technical resources. Automotive electrical systems, for example, were increasingly complex and beyond capabilities possessed in-house by Porsche.The interest in VW, Europe’s second largest automaker to DaimlerChrysler, would surely provide the company with access to key resources. But why weren’t these resources accessible through partnerships and alliances, without the acquisition of one-fifth ownership in Europe’s largest moneyloser? The announcement of Porsche’s intention to take a 20% equity interest in Volkswagen in September 2005 was greeted with outright opposition on the part of many shareholders in both Volkswagen and Porsche. Major investment banks like Deutsche Bank immediately downgraded Porsche from a buy to a sell, arguing that the returns on the massive investment, ome â‚ ¬3 billion, would likely never accrue to shareholders. 11 Although Porsche and VW were currently co-producing the Porsche Cayenne and Volkswagen Touareg, this ownership interest would take the two companies far down a path of cooperation way beyond the manufacture of a sport utility vehicle. Although Porsche had explained its investment decision to be one which would assure the stability of its future cooperation with VW, many critics saw it as a choice of preserving the stakes of the Porsche and Piech families at the expense of nonfamily shareholders.The question remained as to whether this was indeed a good or bad investment by Porsche, and good or bad for whom? Vesi wondered if her position on Porsche might have to, in the end, distinguish between the company’s ability to generate results for stockholders versus its willingness to do so. Why should a small and highly profitable maker of sports cars suddenly hitch its fortunes to a lumbering and struggling mass-producer? That was the question that some alarmed shareholders asked this week when Porsche, the world’s most profitable carma ker, announced plans to buy 20% stake in Volkswagen (VW), Europe’s biggest carmaker.To some critics of the deal, Porsche’s move looked like a return to cosy, German corporatism at its worst. Since January 2002, when a change in the law encouraged German companies to sell their cross-shareholdings in each other, free of capital gains tax, new foreign shareholders have often shaken up fossilised German management. A deal with friendly compatriots from Porsche might rescue VW from this distasteful fate, particularly since foreign hedge funds and corporate raiders have been rumored to be circling VW. â€Å"Business: Keeping It in the Family,† The Economist, October 1, 2005. 1 â€Å"Porsche: We may never see the cash; downgrade to sell,† Deutsche Bank, September 26, 2005. TB0067 10 Appendix 1 (Millions of euros) Sales Cost of goods sold Gross profits Porsche’s Statement of Income, 1996-2005 (period ending July 31) 1996 â‚ ¬ 1,438 1,177 â‚ ¬ 261 24 3 15 64 â‚ ¬ 97 6. 8% 68 â‚ ¬ 29 2. 0% 3 â‚ ¬ 26 1 0 â‚ ¬ 25 1. 7% —-1997 â‚ ¬ 2,093 1,648 â‚ ¬ 446 339 21 67 â‚ ¬ 195 9. 3% 108 â‚ ¬ 87 4. 2% 7 â‚ ¬ 81 9 1 â‚ ¬ 70 3. 4% 45. 6% 40. 0% 1998 â‚ ¬ 2,519 1,853 â‚ ¬ 667 439 17 88 â‚ ¬ 334 13. 2% 157 â‚ ¬ 176 7. 0% 13 â‚ ¬ 164 22 â‚ ¬ 142 5. 6% 20. 4% 12. 4% 1999 â‚ ¬ 3,161 2,154 â‚ ¬ 1,007 571 29 84 â‚ ¬ 550 17. % 184 â‚ ¬ 366 11. 6% 12 â‚ ¬ 354 164 â‚ ¬ 191 6. 0% 25. 5% 16. 3% 2000 â‚ ¬ 3,648 2,527 â‚ ¬ 1,121 625 26 114 â‚ ¬ 636 17. 4% 197 â‚ ¬ 439 12. 0% 12 â‚ ¬ 427 220 â‚ ¬ 207 5. 7% 15. 4% 17. 3% 2001 â‚ ¬ 4,441 3,062 â‚ ¬ 1,380 793 61 87 â‚ ¬ 735 16. 5% 133 â‚ ¬ 602 13. 6% 14 â‚ ¬ 588 318 â‚ ¬ 270 6. 1% 21. 8% 21. 2% 2002 â‚ ¬ 4,857 2,981 â‚ ¬ 1,877 914 79 110 â‚ ¬ 1,152 23. 7% 279 â‚ ¬ 873 18. 0% 48 â‚ ¬ 825 363 (0) â‚ ¬ 462 9. 5% 9. 4% -2. 6% 2003 â‚ ¬ 5,582 3,250 â‚ ¬ 2,332 1,187 116 147 â‚ ¬ 1, 409 25. 2% 392 â‚ ¬ 1,017 18. 2% 88 â‚ ¬ 928 363 0 â‚ ¬ 565 10. 1% 14. 9% 9. 0% 2004 â‚ ¬ 6,359 3,787 â‚ ¬ 2,572 1,254 99 248 â‚ ¬ 1,665 26. % 525 â‚ ¬ 1,141 17. 9% 58 â‚ ¬ 1,082 470 (4) â‚ ¬ 616 9. 7% 13. 9% 16. 5% 2005 â‚ ¬ 6,574 3,501 â‚ ¬ 3,073 1,539 172 169 â‚ ¬ 1,875 28. 5% 510 â‚ ¬ 1,365 20. 8% 127 â‚ ¬ 1,238 459 (4) â‚ ¬ 783 11. 9% 3. 4% -7. 6% Selling, general & admin expenses Non-operating income Other income/expense, net EBITDA EBITDA/sales Depreciation & amortization Earnings before interest and tax EBIT/sales Interest expense on debt Earnings before taxes (EBT) Income taxes Minority interest Net income availabe to common Net income/sales (ROS) Sales growth Earnings growthSource: Thomson Analytics, June 2006, and author calculations. Appendix 2 (Millions of euros) Assets Cash ;amp; equivalents Receivables, net Inventories Prepaid expenses Total current assets Porsche’s Balance Sheet, 1996-2005 (period ending Jul y 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 â‚ ¬ 227 91 199 23 â‚ ¬ 540 â‚ ¬0 60 â‚ ¬ 1,324 917 â‚ ¬ 407 21 â‚ ¬ 1,027 â‚ ¬ 281 170 297 47 â‚ ¬ 795 â‚ ¬ 12 5 â‚ ¬ 1,536 994 â‚ ¬ 541 20 â‚ ¬ 1,374 â‚ ¬ 466 196 328 37 â‚ ¬ 1,027 â‚ ¬ 10 5 â‚ ¬ 1,623 1,062 â‚ ¬ 561 14 â‚ ¬ 1,617 730 202 357 42 â‚ ¬ 1,332 â‚ ¬ 30 9 â‚ ¬ 1,683 1,183 â‚ ¬ 501 110 â‚ ¬ 1,981 â‚ ¬ 823 321 396 45 â‚ ¬ 1,585 â‚ ¬ 177 14 â‚ ¬ 1,797 1,310 â‚ ¬ 487 76 â‚ ¬ 2,340 â‚ ¬ 1,121 439 468 29 â‚ ¬ 2,056 â‚ ¬ 253 38 â‚ ¬ 1,960 1,399 â‚ ¬ 561 108 â‚ ¬ 3,016 â‚ ¬ 1,683 638 487 50 â‚ ¬ 2,858 â‚ ¬ 539 39 â‚ ¬ 3,607 1,652 â‚ ¬ 1,955 214 â‚ ¬ 5,604 â‚ ¬ 1,766 823 539 42 â‚ ¬ 3,170 â‚ ¬ 552 42 â‚ ¬ 4,122 1,847 â‚ ¬ 2,276 346 â‚ ¬ 6,385 â‚ ¬ 2,791 939 726 23 â‚ ¬ 4,479 â‚ ¬ 733 21 â‚ ¬ 4,724 2,116 â‚ ¬ 2,607 436 â‚ ¬ 8,276 â‚ ¬ 4,325 971 572 17 â‚ ¬ 5,885 â‚ ¬ 1,211 27 â‚ ¬ 4,486 2,378 â‚ ¬ 2,108 295 â‚ ¬ 9,525Long term receivables Investments in unconsol subsidiaries Property, plant ;amp; equipment, gross Accumulated depreciation Property, plant ;amp; equipment, net Other assets Total Assets Liabilities Accounts payable ST debt ;amp; current portion due LT debt Income taxes payable Other current liabilities Current liabilities, total Long term debt Provision for risks ;amp; charges Deferred taxes Other liabilities Total liabilities Shareholders' Equity Non-equity reserves & minority interest Common Equity Shareholders' equity, total Total liabilities ;amp; shareholders' equity Common shares outstanding (millions) 117 8 3 156 â‚ ¬ 283 â‚ ¬ 17 481 1 1 â‚ ¬ 782 â‚ ¬ 148 7 10 241 â‚ ¬ 406 â‚ ¬ 116 541 4 4 â‚ ¬ 1,071 â‚ ¬ 159 10 8 262 â‚ ¬ 439 â‚ ¬ 114 648 n/a 0 â‚ ¬ 1,202 â‚ ¬ 193 52 10 174 â‚ ¬ 429 â‚ ¬ 102 856 n/a 5 â‚ ¬ 1,392 â‚ ¬ 240 20 17 248 â‚ ¬ 525 â‚ ¬ 102 95 1 (22) 2 â‚ ¬ 1,558 â‚ ¬ 236 158 28 303 â‚ ¬ 725 â‚ ¬0 1,312 (52) 2 â‚ ¬ 1,987 â‚ ¬ 305 137 200 1,027 â‚ ¬ 1,668 â‚ ¬ 317 1,619 97 437 â‚ ¬ 4,138 â‚ ¬ 337 70 71 1,378 â‚ ¬ 1,856 â‚ ¬ 337 1,916 173 350 â‚ ¬ 4,631 â‚ ¬ 368 649 61 855 â‚ ¬ 1,933 â‚ ¬ 1,457 2,378 182 2 â‚ ¬ 5,953 â‚ ¬ 440 1,107 187 1,064 â‚ ¬ 2,798 â‚ ¬ 1,985 1,281 36 5 â‚ ¬ 6,105 â‚ ¬ 10 235 â‚ ¬ 245 â‚ ¬ 1,027 17. â‚ ¬5 298 â‚ ¬ 303 â‚ ¬ 1,374 17. 5 â‚ ¬0 416 â‚ ¬ 416 â‚ ¬ 1,617 17. 5 â‚ ¬2 587 â‚ ¬ 589 â‚ ¬ 1,981 17. 5 â‚ ¬0 782 â‚ ¬ 782 â‚ ¬ 2,340 17. 5 â‚ ¬0 1,028 â‚ ¬ 1,028 â‚ ¬ 3,016 17. 5 â‚ ¬1 1,466 â‚ ¬ 1,467 â‚ ¬ 5,604 17. 5 (â‚ ¬ 0) 1,755 â‚ ¬ 1,755 â‚ ¬ 6,385 17. 5 â‚ ¬6 2,317 â‚ ¬ 2,323 â‚ ¬ 8,276 17. 5 â‚ ¬8 3,412 â‚ ¬ 3,420 â‚ ¬ 9,525 17. 5 Source: Thomson Analytics, June 2006, and author calculations. TB0067 11 Appendix 3 (Millions of euros) Porscheâ₠¬â„¢s Statement of Cash Flow, 1996-2005 (period ending July 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Operating Activities Income before extraordinary items Depreciation & amortization Other Cash Flow Funds From/For Other Operating Activities Net Cash Flow From Operating Activities Investing Activities Capital Expenditures Additions To Other Assets Increase In Investments Disposal of Fixed Assets Net Cash Flow From Investing Activities Financing Activities Net Proceeds From Sales/Issue of Com/Prf Stock Com/Prf Purchased,Retired,Converted,Redeemed Long Term Borrowings Inc(Dec) In ST Borrowings Reduction In Long Term Debt Cash Dividends Paid – Total Net Cash Flow From Financing Activities Exchange Rate Effect Cash & Cash Equivalents – Inc(Dec) â‚ ¬ 25 74 47 26 â‚ ¬ 171 â‚ ¬ 71 127 (0) 22 â‚ ¬ 220 â‚ ¬ 142 157 (7) 72 â‚ ¬ 363 â‚ ¬ 191 184 23 (5) â‚ ¬ 392 â‚ ¬ 210 197 11 (22) â‚ ¬ 396 â‚ ¬ 270 133 16 151 â‚ ¬ 570 â‚ ¬ 462 279 26 611 â‚ ¬ 1,377 â‚ ¬ 565 392 423 77 â‚ ¬ 1,456 â‚ ¬ 612 525 515 (349) â‚ ¬ 1,303 â‚ ¬ 779 510 42 (157) â‚ ¬ 1,175 (â‚ ¬ 184) (15) (14) (â‚ ¬ 214) (â‚ ¬ 230) n/a n/a (â‚ ¬ 230) (â‚ ¬ 174) (2) (0) 10 (â‚ ¬ 166) (â‚ ¬ 145) (12) (7) 27 (â‚ ¬ 136) (â‚ ¬ 257) n/a n/a 8 (â‚ ¬ 249) (â‚ ¬ 306) n/a (1) 23 (â‚ ¬ 285) (â‚ ¬ 1,833) 831 (â‚ ¬ 1,002) (â‚ ¬ 1,338) n/a 309 (â‚ ¬ 1,028) (â‚ ¬ 1,265) n/a 478 (â‚ ¬ 787) (â‚ ¬ 851) (63) (243) 226 (â‚ ¬ 932) â‚ ¬0 6 1 â‚ ¬8 (30) â‚ ¬0 102 (33) (5) â‚ ¬ 64 54 â‚ ¬0 (13) (â‚ ¬ 13) 185 â‚ ¬0 49 (21) (22) â‚ ¬6 1 263 â‚ ¬0 (36) (22) (â‚ ¬ 58) 4 93 â‚ ¬0 37 (26) â‚ ¬ 11 2 298 0 339 (102) (45) â‚ ¬ 192 (5) 562 â‚ ¬0 (39) (297) (â‚ ¬ 336) (8) 84 â‚ ¬0 639 n/a (0) (59) â‚ ¬ 580 5 1,025 â‚ ¬6 147 (69) â‚ ¬ 84 (32) 296 Source: Thomson Analytics, November 2005, and author calculations. Appendix 4 Porsche Dispenses wi th Listing in New York Stuttgart. The preferred stock of Dr. Ing. h. c. F. Porsche AG, Stuttgart, will continue to be listed exclusively on German stock exchanges. All considerations about gaining an additional listing in the U. S. A. have been laid aside by the Porsche Board of Management. The sports car manufacturer had been invited to join the New York Stock Exchange at the beginning of the year. The Chairman of the Board of Management at Porsche, Dr.Wendelin Wiedeking explained the decision: â€Å"The idea was certainly attractive for us. But we came to the conclusion that a listing in New York would hardly have brought any benefits for us and our shareholders and, on the other hand, would have led to considerable extra costs for the company. † The crucial factor in Porsche’s decision was ultimately the law passed by the U. S. government this summer (the â€Å"Sarbanes-Oxley Act†), whereby the CEO and the Director of Finance of a public limited company liste d on a stock exchange in the U. S. A. have to swear that every balance sheet is correct and, in the case of incorrect specifications, are personally liable for high financial penalties and even up to 20 years in prison.In Porsche’s view, this new American ruling does not match the legal position in Germany. In Germany, the annual financial statement is passed by the entire Board of Management and is then presented to the Supervisory Board, after being audited and certified by chartered accountants. The chartered accountants are commissioned by the general meeting of shareholders and they are obliged both to report and to submit the annual financial statement to the Supervisory Board. The annual financial statement is only passed after it is approved by the Supervisory Board. Therefore there is an overall responsibility covering several different committees and, as a rule, involving over 20 persons, including the chartered accountants.The Porsche Director of Finance, Holger P. Harter, made the following comments: â€Å"Nowadays in Germany, the deliberate falsification of balance sheets is already punished according to the relevant regulations in the Commercial Code (HGB) and the Company Act (Aktiengesetz). Any special treatment of the Chairman of the Board of Management of the Director of Finance would be illogical because of the intricate network within the decision-making process; it would also be irreconcilable with current German law. † Source: Porsche, News Release of October 16, 2002. 12 TB0067 Appendix 5 Porsche’s Share Price, 2004-2006 Source: www. porsche. com. TB0067 13

Seizure Origins, Text, And History - 1169 Words

Seizure: Origins, Text, And History). The second was the importance that prohibition-era cases began to place on requiring a warrant to search and seize evidence (Search and Seizure: Origins, Text, And History). Third was the rising standard of probable cause need to achieve a search warrant (Search and Seizure: Origins, Text, And History). This effectively made Fourth Amendment law standard while ensuring that probable cause was needed to achieve a warrant. Today’s search and seizure law were made by the founding fathers of America who felt that government should be ruled by the people and not the other way around. This amendment specifically gives the right to citizens of the United States to be secure in their homes and belonging†¦show more content†¦Even if the evidence proves guilt or the contraband is known to be there, officers must implement proper procedure of search and seizure or risk the evidence being suppressed in court. The same can be stated for the seizure of a person as well. To deprive one of freedom requires more than just a hunch of a police officer. This ensures that citizen’s right is not infringed on without a meaningful reason. It also means that police officers need to practice proper police work when seizing suspects. Civil and even criminal court charges can be brought up against a police officer who use excessive force or lack proper evidence. The fourth amendment can be broken down into several different categories that involve law enforcement officers interacting with citizens and their possessions. These categories include searching persons for evidence, searching locations or things for evidence seizing evidence, and seizing people (Kanovitz 185). All of the actions listed play a major role in the Criminal Justice system and heavily affects how police officers can operate. Another major factor that plays into search and seizure etiquette is the warrant. A warrant is the written authorization of a judge t o perform an otherwise illegal action such seizing a person or thing. Two of the most common warranted associated with law enforcement action is the arrest warrant and search