Jose Rizal Movie Review

Jose Protasio Rizal Mercado y Alonso Realonda is an important person in the history of the Philippines and an icon that we can find in every history books in our country. We know him as the guy who dated a lot of women, he was short and not that physically attractive as others but he was more than that. Behind that minute physique of his, is a man that was full of courage and bravery. That same man was the one who wrote two of the most important literary works that somewhat defines us as a nation (Noli Me Tangere and El filibusterismo).He believes that education is the key to a brighter future. Rizal was just a normal person, just like a man that you can see at the streets everyday. He falls in love, values his family and behaves like an ordinary individual. What makes him exceptional is that he stands by what he think is right and he doesn’t just talk the talk but he walks the walk. The film enlightens us regarding the life story of our national hero, Jose Rizal. It uncovers his life from his childhood until his execution at the hands of the Spanish colonizers, who occupied Philippines for 333 years.We are also thrown into the world of Rizal's novels, thus we get a peep of how he viewed the Filipino society under the Spanish regime. The movie gives us an idea about how Jose Rizal, which is just an ordinary citizen like us, helped our country acquire independence. It showed us how hard it was for them to gain the freedom that we are enjoying right now. That behind every free man at the moment is equivalent to a man that was maltreated by the Spaniards before.It was a very heroic thing to do, sacrificing your own life and not having the assurance if all your sacrifices will be worth it in the end. Based on the ending of the film, I can say that Rizal did it out of love- love for his family and countrymen and that he did not regret giving up things which was important to him in order to help our country. I personally was indifferent about the life and work s of our national hero. However, after watching the film, it made me value more the sacrifices that he did for our motherland.The question that kept swarming on my mind was now answered. What makes Rizal better than the other brave people who also fought for the Philippines? What makes Rizal different? Possibly because Rizal fought for what he believes in a nonviolent and a diplomatic way. He did not fought in a bloody manner like what Andres Bonifacio did rather he used the skill that he was good at which is writing. His works provoke truly heartfelt nationalism. Sure he was a very good writer, poet, novelist, a octor, a warrior, a man who can speak different languages, a charmer, and a man that has his name written in all history books but most importantly he was man that we can really label as a true blooded Filipino. Today, things are not in an ideal situation which was opposite of what Rizal would have wanted. Nevertheless it’s not yet too late to work things out. All of us, especially the youth, just have to bring out the inner â€Å"Rizal† spirit that they have within. As what Rizal deems ‘youth are the tomorrow’s leader’.

Court Organization Essay

The paper focuses on the various court organizations and the corresponding function of every court organization as a whole as well as the various functions of its internal elements. Among the court organizations that the paper aims to analyze are appellate courts and trial courts. By looking into the corresponding jurisdiction of each court organization, the paper further completes the analysis by juxtaposing the jurisdiction of one against the other. With the idea of jurisdiction, the paper also elucidates on the types of cases that each court organization handles and the legal manners in which such cases are decided. Court Organization The system of courts that comprise the totality of the American federal courts are organized essentially by the U. S. Constitution and the laws legislated by the American federal government. Among these courts that function in the American judicial branch are trial courts and appellate courts. For the most part, federal trial courts are referred to as Federal District Courts which has the authority to hear appeals from lower bodies such as the administrative law judges. On the other hand, the intermediate appellate courts are referred to as the Federal Court of Appeals which functions under a mandatory review process that amounts to the task of hearing all appeals from the lower court bodies. The organization of these two judicial bodies, generally speaking, is more parallel in contrast to being different. In essence, the differences between the federal trial courts and the appellate courts can be observed from their respective internal organizational composition. While much of the similarities between the two courts can be obtained from their general task of deciding on legal cases, their distinctive features on how they are to specifically function substantiates their individual characteristics and separates their roles despite their apparent overlapping similarities as we shall see later. What is important to note at this point is to bear in mind that appellate courts and trial courts, specifically in a federal government, have separate functions amidst the parallel characteristics that one may observe from the two. The conception of these two distinct but seemingly parallel courts can be traced from the evolution of the judicial system of the United States. Much of the written historical basis for establishing a judicial system can be extracted from the Constitution of the United States of America. The history of the American judiciary includes the Judiciary Act of 1789 which created a Supreme Court composed of one chief justice as well as five associate justices. In essence, the Act established the judiciary arm of the American government which also defined the Supreme Court’s jurisdiction. Among these jurisdictions include, but is not limited to, the appellate jurisdiction over larger civil cases as well as cases wherein state courts ruled over federal statutes. The Act also provided the composition of the lower district courts, which amounted to thirteen back then, as well as the proposition that the Supreme Court can resolve conflicts between states and that the judgment of the Supreme Court is final (â€Å"The Judiciary Act of 1789,† 1999). From the Judiciary Act of 1789, District Courts were established which had judicial responsibility over their respective districts. As these district courts were divided into circuits, the jurisdictions of these courts were divided as well according to the circuits they belong. Federal District Courts Being the general courts of the court system of America, federal district courts are the courts where both criminal and civil cases are filed. This can also be taken from the fact that federal district courts were conceived as a court both of equity and of law. Each of these courts spread across the various judicial districts unique for every state are formally named after the district where the court has jurisdiction such as the United States District Court for the Southern District of New York for instance. United States district judges are judges of the district courts of the federal government where their total numbers for every district court are defined by Congress in connection with the Judicial Code. Under Article 3, federal district judges are appointed throughout their life in their position where they can be removed involuntarily from their position in factual instances where they breach the standard of ‘good behavior’. This involuntary removal from office can be obtained through an impeachment process initiated by the House of Representatives proceeded by a trial in the Senate. After a two-thirds vote to convict is established in the Senate, only then is the federal district judge removed from his or her office. Moreover, in order for an individual to file a case in the federal district court, the individual must be able to provide a substantial justification as to why a federal court instead of a state court should decide on the case. This in turn leads to the observation that not all cases can be admitted by the federal district courts under its adjudicatory powers. Since not all legal cases can be litigated in federal courts, it is an imperative for the individual to be able to make certain that the case being filed is a federal case if the individual is after a federal case against an individual for instance. State laws are oftentimes the basis for the claims for federal district courts as in most cases the claims under state laws were pleaded and that the sole and primary source for federal jurisdiction is the variety of citizenship. There are also instances wherein the plaintiff has pleaded claims under the state law even if the case is under a federal question. In such cases, the federal district courts must decide state law claims through the application of the substantial or relevant state law in which they preside even if federal court judges apparently employ federal law for the corresponding procedure. Ironically, the opinions set forth by the state courts supersede the opinions given by federal courts and that, further, a federal court must give way to a state supreme court in matters that involve the interpretation of state laws. In essence, a final court ruling by any district court in criminal or civil cases can be appealed towards the Court of Appeals of the United States with respect to the corresponding federal judicial circuit under which the district court is situated. One exception to this is that some rulings from federal district courts which involves patents and several other matters that are specialized must be appealed to the United States Court of Appeals for the Federal Circuit. In several rare occasions, the cases may be directly forwarded and appealed immediately to the Supreme Court of the United States. Federal Court of Appeals The Federal Courts of Appeals of America are considered as the mid-level appellate courts under the system of federal courts of America. It is the court that adjudicates the appeals for cases previously decided by the federal district courts of the United States which is under the corresponding federal judicial circuit. In essence, the total number of thirteen Courts of Appeals in the United States is positioned between the Supreme Court and the District Courts of the United States although there are cases where a case can be appealed directly to the Supreme Court. As every particular state in the United States has its own structure of appellate courts, it leads to the variations on how cases are to be handled. For instance, the Court of Appeals in the state of New York is considered as the highest court within the state inasmuch as it is the court of ultimate resort within the legal confines and jurisdiction of the state. One exception, however, are cases that pose questions concerning the federal law where they can be appealed from the respective court of appeals to the Supreme Court. What differentiates a federal district court from a federal court of appeals? The answer to this question rests on the legal presumption that the court of appeals can reevaluate and overturn any previous decision from federal district courts. This is essentially initiated by the instance when the accused who was previously given a ‘guilty’ verdict files an appeal to the federal court of appeals. This can be observed from what has been termed under the ‘due process of the law. ’ The term itself implies the administration of equal laws according to established rules, not violating the fundamental principles of private right, by a competent tribunal having jurisdiction of the case and proceeding upon notice and hearing. Nevertheless, one must not fail to recognize that certain lower court decisions can be overturned which then presents the idea that these lower court decisions are not yet final. For one, the decisions upheld by federal district court justices can be overturned by a higher court. However, the higher courts cannot instantaneously initiate a thorough reconsideration and cannot simply arrive at a decision—either the court will uphold the decision of the lower court or overturn the judgment—without a ‘formal’ appeal from the accused. For instance, the case of Pell v. E. I. DuPont de Nemours & Co. Inc. gives us a brief sketch on how accused parties can resort to a reconsideration of a previous district court decision. In the case, the district court of Delaware earlier denied the request of the plaintiff for restitution for unduly payments for pension that are deemed low. In consequence the plaintiff resorted to a motion for reconsideration for the district court which, in the end, the court denied for the reason that the plaintiff failed to discharge the high burden necessary to prevail on the motion filed by the plaintiff. In essence, the case and the plaintiff’s motion for reconsideration emphasize the ideas: that the district court can look into a motion for reconsideration from the plaintiff once filed and, conversely, that the district court can either deny or grant the motion. In contrast to the function of federal district courts to hold trial and determine the punishment for criminal cases or damages which will be awarded, the appellate courts of the federal government do not essentially hold trials as part of their innate legal function. On the other hand, these courts merely serve the legal function of reviewing the decisions of federal trial courts for the existence of any errors of law. This conversely relates the idea that these courts merely have appellate jurisdiction. Moreover, federal appellate courts do not accept anything else other than the records from the federal trial courts such as the papers that both legal parties have filed as well as the exhibits and transcripts relating to the trial. The federal appellate courts also consider the legal arguments of the involved parties in the case. With these ideas in hand, one can note the essential differences which separate one court from the other. More importantly, the scheme in which court hearings and legal cases flow signify that there is a formal system being strictly followed. That is, an individual cannot originally file a legal complaint against another individual or entity in the appellate courts for such an instance is not the definitive function of federal appellate courts. Moreover, a plaintiff can still resort to an appeal to the federal court of appeals once the verdict of the lower courts, or the federal district courts for instance, do not favor their side. All of this information leads us towards the larger understanding that there is indeed what we call a ‘court organization’ which gives a formal and rigid structure to the entire legal system especially in a federal government. The hierarchy in courts or the court organization in general limits certain legal actions while sustaining the due process of law. While the organization of courts gives certain limitations, it can be seen as a legal tool for securing the systematic approach for meticulously arriving at crucial decisions. Let us now look into the advantages and disadvantages that come along with the very nature and structure of the organization of courts, specifically between federal district courts and federal appellate courts, in a federal system of government. Advantages and disadvantages It is an established fact that appellate courts cannot simply address a legal appeal without the parties requesting for one. Moreover, appellate courts do not have the legal jurisdiction of hearing trials and providing punishments and damages to individuals and other entities. Conversely, these things suggest the ideas that there must first be an appeal and that, second, there must be previous court decisions on which the appellate courts will derive their corresponding decision. Hence, an appealing party has the advantage of going through a rigorous examination of their case which ensures that the decisions made until it reaches the Supreme Court are carefully brought into proper attention. On the other hand, the very organization of the court makes it a disadvantage for the appealing party at least in terms of resources. Specifically, financial resources must be present o as to sustain a continuous appeal for the appealing parties as the case ascends higher into the hierarchy of courts. Financial resources, for the most part, applies very well for the funding of legal battles which come in the form of payments for legal services rendered and other related expenses. In essence, appellate courts, being the courts between the trial courts and the Supreme Court, stand in the way for appellants to go directly to the Supreme Court for a final appeal. Nevertheless, these appellate courts were not essentially established to hinder individuals from going directly to the higher court but to see to it that lower court rulings are kept in accordance to the law while giving the Supreme Court a lesser task to attend to so that the Court can focus on larger issues that need large amounts of careful analysis. On the other hand, it appears that federal district courts can also legally entertain motions for reconsideration which barely amounts to an appeal to the appellate courts. Hence, plaintiffs, for instance, have the option to file a motion for reconsideration in federal district courts before filing an appeal to the appellate court once the motion for reconsideration is denied by the district court. One disadvantage to this scheme is that it takes a considerable length of time assuming that the plaintiff is willing to take all legal paths so as to attain the desired court decision. The value that must be noted here is that a seemingly justified and rightful decision comes as several expenses. These expenses, for the most part, come in the form of time and financial resources. These two elements are exhaustible which presents the idea that either an individual can spend a considerable fraction of his or her life fighting a legal case for the rightful decision or a certain court, the appellate court for instance, can hinder the individual’s attempt inasmuch as the court sees fit. On a deeper analysis, one can observe that if a certain federal district court grants the motion for reconsideration filed by a plaintiff, it translates into the acceptance that, at some point in time, the court has failed to see all the angles in the case and provide the necessary, justified, and rightful decision. For instance, a federal district court can decide to grant the motion for reconsideration filed. However doing so leaves us the assumption that the trial court accepts its failure to formally account and resolve the legal case. While the courts are essentially expected o arrive at firm decisions bounded within the confines of the law, these courts are not essentially assumed to commit to error either deliberately or unintentionally. In any case, federal district courts are at the helm or core of the case since these are the courts that primarily decide on verdicts and that the role of the higher courts, in essence, can be seen as something more of a reviewing body that realigns the decisions of the lower courts in accordance to the law. The need for court organization Is it possible to arrive at a substantial decision from among courts if they re not linked in one way or another? For instance, if the federal district courts and federal appellate courts function entirely separate without having a schematic purpose or correlation, would it lead to a substantial advantage to the people they serve? Interestingly, it can be seen that one of the primary reasons why court organization has been established is to give an ample room for reviewing and realigning previous court decisions in a lawful manner. Although federal trial courts are the primary courts where legal cases are filed and decided, it can be noted, however, that federal district courts are not the penultimate courts where no appeal can be filed. Quite on the contrary, the fact that these courts allow individuals to file a motion for reconsideration of court rulings brings us towards the perception that these courts may not be entirely devoid of committing to either partially or totally erroneous court decisions. Since federal courts, and perhaps any other courts, are still open to unintentionally committing errors in judgment, there must be at least a scheme that addresses such a situation. Otherwise, any court would hardly be able to correct its own misjudgments or the misjudgments of other lower courts. Given this observation, court organization—specifically the manners in which federal district courts are lower than appellate courts at least in terms of the scope of jurisdiction—can help resolve the underlying problems that may substantially arise over the course of time. How can court organization be able to help resolve the underlying problems in erroneous court rulings? The answer to this question rests on the premise that, by placing a certain hierarchy among courts and by limiting and specifying the jurisdiction for every court, certain decision can be reviewed and be realigned in accordance to the proper dictates of the law. By having a form of checking the decisions of the lower courts—for instance, the case between federal district courts and federal appellate courts—higher courts such as appellate courts can see or reiterate that the decision of the lower courts is fitting. On the other hand, appellate courts can also reverse the previous decision of the lower courts. What is important to note here is that the organization of courts, specifically the jurisdiction under which they operate, allows for a ‘refining’ of previous court decisions given the instances where there is an appeal from the concerned party. Although federal district courts can entertain motions for reconsideration from the concerned party, it does not necessarily translate to the idea that the party can resort to an infinite number of motions for reconsideration until the court has decided favorably to the side of the party. The very idea of court organization gives due importance of an appeal from individuals. This it does by allowing the individual to file for a motion or an appeal yet in a planned scheme. By ‘planned scheme’, what is being contended is that, from the lower courts to the Supreme Court, the right of the party to file for an appeal or a motion is met by dispersing the jurisdiction of courts to hear the appeal or motion sequentially. That is, the party must follow the sequences or procedures established by the law when appealing. For the most part and in most cases, an ordinary individual cannot go directly straight to the Supreme Court to file for an appeal without having first to pass through the lower appellate courts. Like in most organizational scheme, a hierarchy of the divisions of the organization permits a systematic approach in handling the tasks innate to the function of the organization. Since the court system of a federal government is an essential and significant portion of the government’s functioning, it is an imperative that the court system must be given due attention. One way to achieve this end is to provide a scheme in which the entire court system will be able to effectively handle its multifarious tasks from the bottom level to the larger degree. This ‘scheme’ is parallel to a court organization whereby there is a level of court divisions handling specific functions. As we have seen, federal district courts are the courts which receive the cases filed by individuals. On the other hand, federal appellate courts are the courts which receive appeals from individuals seeking a decision that legally favors them. Conclusion The system of courts that comprise the totality of the American federal courts are organized essentially by the U. S. Constitution and the laws legislated by the American federal government. Federal District Courts and Appellate Courts are two of the courts in the federal government that serve the identical functions of bringing justified and lawful decisions to legal cases. On the other hand, these two court systems also have varying functions. In essence, the differences they have rest on their respective jurisdictions. References Courts. Appellate Jurisdiction of Supreme Court. Suit against United States. (1919). The Yale Law Journal, 28(5), 513. Appellate Practice: Power to Amend Judgments. (1927). Michigan Law Review, 25(7), 789. Constitutional Law. Construction, Operation, and Enforcement of Constitutions. Constitutionality of an Appellate Court with Final Jurisdiction. (1931). Harvard Law Review 25(2), 187. Federal Courts. State Rule Holding Payment of Federal Judgment Attached in State Court a Valid Satisfaction of the Judgment Not Controlling on Federal Court. (1940). Virginia Law Review, 27(2), 231. Constitutional Law. Judicial Powers. Statute Authorizing Appellate Court to Pass on Motion for New Trial Undisposed of by Trial Court Held Unconstitutional. (1941). Harvard Law Review, 54(8), 1391. Federal Courts. Relations of Federal and State Courts. Federal Interpretation of State Legislation. (1954). Harvard Law Review, 37(8), 1140. Collins, M. G. (2005). The Federal Courts, the First Congress, and the Non-Settlement of 1789. Virginia Law Review, 91(7), 1515. Fair, D. R. (1971). State Intermediate Appellate Courts: An Introduction. The Western Political Quarterly, 24(3), 415. Grunbaum, W. F. , & Wenner, L. M. (1980). Comparing Environmental Litigation in State and Federal Courts. Publius, 10(3), 129. Haas, K. C. (1982). The Comparative Study of State and Federal Judicial Behavior Revisited. The Journal of Politics, 44(3), 721. J. , G. (1929). Courts: Appellate Courts: Review of Findings. California Law Review, 18(1), 84. Newman, J. O. (1989). Restructuring Federal Jurisdiction: Proposals to Preserve the Federal Judicial System. The University of Chicago Law Review, 56(2), 761. O’Neill, M. E. (1990). A Two-Pronged Standard of Appellate Review for Pretrial Bail Determinations. The Yale Law Journal, 99(4), 885. Richardson, R. J. , & Vines, K. N. (1967). Review, Dissent and the Appellate Process: A Political Interpretation. The Journal of Politics, 2(3), 597. The Judiciary Act of 1789. (1999). Retrieved September 5, 2007, from http://usinfo. state. gov/usa/infousa/facts/democrac/8. htm Yuhas, G. (1976). Statewide Public Defender Organizations: An Appealing Alternative. Stanford Law Review, 29(1), 157. Outline Introduction The paper will initially provide the substantial facts and accounts to court organizations as a whole, including a brief sketch of its history and evolution as well as its current state. The introductory part will conclude with a brief overview of the trial courts and appellate courts. Body The paper will further substantiate on the essential attributes for the trial courts and appellate courts correspondingly which will then be used as a basis for the varying approaches trial and appellate courts handle and decide cases as well as the jurisdictions of every court organization. By introducing these various factors, the paper will then attempt to establish an account of the jurisdiction, including the possibility of overlap in jurisdiction as well as restrictions thereof, for every court organization. The body of the paper will conclude with a paragraph restating the differences and similarities between the two court organizations. Conclusion In conclusion, the paper shall provide a brief rerun of what has previously been discussed to be followed by an account of each court’s jurisdiction as well as the unique roles of every internal element of trial and appellate courts.

The Effect of Biological and Nonbiological Material

The Effect of Biological and Nonbiological Material on the Reaction to a Changing pH Level This experiment was conducted to learn exactly how biological material responds to rising or dropping pH levels in comparison to how nonbiological material does. The dependent variable in this experiment was how the different materials react, and the independent variable was the type of material, biological or nonbiological. Tap water was the selected nonbiological material, and the generally known pH level for water is 7, or neutral. Potato homogenate, liver homogenate and egg white solution was used as the biological material. A buffer solution that serves as a model of a biological material’s chemical that helps it carry out homeostasis was also used in the experiment, being tested in the same manner as the other materials. This topic was tested in order to confirm a tissue’s biological chemical processes, presence of buffers, and their ability to maintain its needed pH level for normal function. For actually conducting the experiment, each material was measured out into 25 mL and put into a beaker to be measured for its pH level with pH paper. Then five drops hydrochloric acid was added to the beaker with a 0. 1M dropper, and then the pH level was measured again. This process was repeated until a total of 30 drops of HCl was added to the beaker. Each material was tested in this way, and then the same was done with each material, only adding sodium hydroxide with five drops at a time as well, measuring the pH level each time in between with pH paper. If both biological and nonbiological material are treated in the same way with hydrochloric acid and sodium hydroxide to raise or lower the pH level, then the biological material will have less of a change in its pH level, because its biological tissues have natural chemical processes that regulate the pH level. If a chemical solution that is a model of a biological buffer is treated with hydrochloric acid and sodium hydroxide to raise or lower the pH level, then it will stay generally the same pH level as its start, because a buffer’s purpose is to regular the pH level of a biological material.

Community Assessment of Somers Point, NJ Essay Example | Topics and Well Written Essays - 1000 words

Community Assessment of Somers Point, NJ - Essay Example While the United States Average age is as per the last time was 35. 3 in the last census, Somers Point City had a median age of 38.4. In terms of age distribution in the city, there were up to 8,899 people who were above the age of 18 year. This figure represented an estimated 76.6% of the city’s population. This percentage was slightly above the national average that stood at 74.3% (Census.gov, 2013). The percentage number of people of 65 years and above was 15.1%. Again, this was higher figure when compared to the national average of 12.4%. In terms of racial composition of the city, the last census had placed the whites at 78.8%, African Americans at 0.25% and Native Americans at 3.1%. Other races such as the Asians, Pacific Islander and other races were placed at 0.06%, 4.17% and 3.025 respectively. The statistics are expected to vary with each census conducted. Again one may be able to compare the population distribution statistics with the national averages which place A frican Americans at 12.3% and Hispanic population at 6% (Census.gov, 2013). A comparison with state population would reveal some little differences where New Jersey State was at 8,864,590 as at the year 2012. This figure was arrived at by factoring in the 0.8% state increase in population to the 2010 census. The racial makeup in the state of New Jersey was 68.8% whites, a figure lower by 10% when compared to Somers Point City. African Americans in the state were 13.7% in the state, Native Americans at 0.3% and Asians at 8.3%. Other races made up 6.4% while an unclassified group and illegal immigrants were 2.7% and 17.7% respectively (Census.gov, 2013). Education profile in the city reveals that there are 84.2% of high school graduates or higher. This translates to 6,812 people while the number of people with Bachelor degree or higher in Somers Point stand at 1,601. This figure translates to 19.8% of the population. This is below the national average, which as per the last census was 24.4%. However, one may observe that the City’s median house hold income of $42,222 is slightly above the national median household income which was $41,994. Another socio-economic issue worth noting is that the number of families living below the poverty line in Somers Point City was 147 or approximately 5% of the population (Census.gov, 2013). In terms of life expectancy, the state of New Jersey is 81.94. The national rate is 81.17. In Atlantic County, male life expectancy is 74.5. At the state level, male life expectancy is 77.80 and 76.20 at the national level. Female have the highest life expectancy with Atlantic County being at 79.9 while the state life expectancy is 82.20. Female life expectancy at the national level is 81.30. Currently, access to health is improving throughout the state. This is especially after the passing of regulations to make healthcare affordable. Even so, the exact statistics are not immediately available. Even so, one would easily observe that the 5% that constitutes those living below the poverty lines as well as the illegal immigrants constitute the group that is hardest hit in terms of being able to afford health care (World Life Expectancy, 2011). 2. With the community as partner, identify five strengths and five weaknesses of the community The community in Somers Point boasts of the following

Compar three individuals in the McCarthy Hearing to three individuals Research Paper

Compar three individuals in the McCarthy Hearing to three individuals in The Crucible - Research Paper Example The Crucible explores the fight of one man with his ethics, and his ultimate refinement, drawing parallels with the McCarthy Hearing through characters like John Proctor  and Judge Danforth. Miller gives a warning at the beginning of this play that The Crucible is not history but it is dependent on the storys historical events. This play presents two periods of the American history. The main period of this play lies in the 17th century, particularly during Salem Witch trials according to Burnet (57). Running parallel to these ancient events in the history of the United States are those that occurred in Miller’s own time on which the author figuratively comments. The author used this play to condemn the 1950s’ McCarthyism and the RED SCARE. He states that history repeats itself and thus there is the need to recognize it and in this case he repeats himself. He claims that McCarthyism was beyond the contemporary day witch hunt. Miller cautiously uses the historical information to form the basis for the play. The play uses the language of modern the 17th century religious customs, which he often employs, expresses the carefulness of his historical examine into the traditions of this period. Miller was interested in political matters, including socialism which had developed after the WW II after Russia’s socialist government became an important world power. The McCarthy hearing subcommittee was renamed after Senator Joseph McCarthy. Senator McCarthy went into the limelight of national interest in February 1950 with a speech delivered at Wheeling, West Virginia as suggested by Collins (97). At this time, McCarthy was in the final days of his first term as a senator and was in need of an immense issue to strengthen his run for the second term. A week before he gave his speech, China had fallen to the communist side and the USSR had developed an atomic bomb which was aimed at

Lady Gaga's public image Thesis Example | Topics and Well Written Essays - 1000 words

Lady Gaga's public image - Thesis Example In most cases, a positive public image dominates in the society. A public image is very significant in business and international relations. People with good public image are highly trusted as compared to those with a bad public image. A good public image is thus an incentive in any industry. However, in the entertainment industry, a public image does not have to be good to attract sales. Whether this will demean their public image or not, does not matter to them. Indeed, many celebrities have made huge earnings by jeopardizing their public image. However, a bad public image will always cost somebody, even in the celebrities’ world. Actually previous literatures can confirm how bad public images have led to imprisonments, low sales and even loss of entertainment careers. This paper will compare and contrast the pros and cons position on Lady Gaga’s public image. In doing so, the paper will consider five articles on Lady Gaga’s public image. Lady Gaga is a secular music artist and music director who in the recent past has generated a lot of controversy. A group of designers known as Haus of Gaga designs her public image.  This ranges from her flashy mode of transport, her unique hairstyles, makeup  and weird dressing, and her huge support for gay rights. This controversy has fostered public debate on her public image from the mainstream media, paparazzi, and the public. Many have argued that her public is dwindling because of her controversial way of life. She has seven tattoos with different meanings (Hombach 14). Additionally, there are many questions about Lady Gaga’s sexuality. Some want to know if she is subverting sexual norms and if she is a hermaphrodite (Mr P Web). Lady Gaga has actually lost a lot in the public image as perceived by her music enemies, religious groups, fellow musicians like Christina Aguilera, and even political leaders. In fact, when Lady Gaga met Obama in a human rights campaign f undraiser,

ELECTRICAL POWER GENERATION SYSTEM Assignment Example | Topics and Well Written Essays - 1000 words - 1

ELECTRICAL POWER GENERATION SYSTEM - Assignment Example There are interconnections undersea through to the Republic of Ireland (EirGrid), Isle of Man (Isle of Man to England Interconnector), Northern Ireland (HVDC Moyle), the Netherlands (BritNed), and northern France (HVDC Cross-Channel). The paper will start with the different types of grid interfaces, protection issues and short circuit change levels. Then the paper will discuss the electrical power design of the components involved in generation of the electricity. In most cases, the low scale generators are indirectly connected to the grid. The characteristics of operation and the technology of generation need the incorporation of some interfaces in between the grid of distribution and the generator. For instance, photovoltaic panel of solar produce direct current electricity and thus, converter based on the power electronics is needed in between the generator and the grid. In technologies like induction generator using wind or hydro, this generator is directly connected to the Alternating Current grid. In the interconnection of the distributed generation, protection is essential. Distribution network is configured in the radial form. In this radial form, the network has over current schemes of time graded protection. The connection of the Distribution Grid may change the present schemes of protection coordination. In case, this is ignored, the protection system may fail to work. The major issues with relation to the Distribution Grid interconnection are as follows: This is the major measure useful in coordinating between over current relays and the selection of current transformers, fuses, reclosers, circuit breaker. The characteristic of short circuit is the equivalence system impendence at the points of and in this way, shows the fault current level that is expected. The variation in the time of this faulty current is affected by the rotating machinery characteristics (Cete, 2010). The majority of

Consumer Behaviour Essay Example | Topics and Well Written Essays - 750 words - 1

Consumer Behaviour - Essay Example In this respect, it is especially important in determining its characteristics. In addition, there is also insight it provides with regards to the consumer behavior and likely actions, which allow for the identification of problems and opportunities in marketing the product afterwards. There are at least five stages/steps by which the consumer makes his or her purchases: 1) need recognition; 2) information search; 3) evaluation of alternatives; 4) purchase; and, 5) postpurchase behavior (Lamb, Hair and McDaniel 2008, 140). Some experts add some stages in the process, such as with the model developed by Engle, Kollat and Blackswell, which divided the consumption stage into two - consumption and post-consumption - and adding a unique element in the form of divestment (Verma 2007, 178). All in all, the stages are pretty straightforward and speak for themselves. For instance, need recognition pertains to the actual desire, want or need of a consumer. This is usually the first stage in th e process, but the rest of the stages do not strictly follow the order by which they were outlined here in this paper. The stages as outlined by this paper highlight the fact that consumer purchase decisions are influenced by several factors - both external and internal influences. Personal desires, wants and needs as well as the available information and influencers are just some of these variables. They have to be understood in order to make sense of the complexity of the process. Finally, there is also the fact that consumer decision-making process does not end with the purchase of the product. For product developers, it may as well be an endless cycle that is why understanding the process is crucial in order to identify some semblance of pattern and coherence and make use of it in product development and in marketing. Theory 2: Family Roles influence on decision Making   Certainly, the motivating factors behind each consumer's purchase behavior are unique and different. Howeve r, the role of the family as a single most important variable in the decision-making process for all consumers is the same for most consumers in most purchase decisions. This powerful influence, according to Blythe (2006) is due to three reasons: 1. the parental influence in the case of the children is deeply embedded because it started the earliest and therefore impact the children's perception of everything that follows; 2. the parental desire to do what is best for the children and the family; and, 3. the influence of siblings as role models, particularly when the sibling is older or in some cases the carer or the adviser (138). The above reasons were just the fundamental ones especially when considering the fact that in some families, membership is not confined to the parents and their offspring. Rather, there are also the extended family such as aunts, uncles, cousins and grandparents. Finally, it must be underscored that within the family or within household, a relationship ex ists, wherein each member has a role and participates in every decision-making process. This relationship, role and participation are underpinned by other issues such as gender and other variables that characterize the interpersonal relations within. Collectively, they can define who

Survey online travel agencies Essay Example | Topics and Well Written Essays - 750 words

Survey online travel agencies - Essay Example The second type is the 'blind' sites which are similar to open sites but they allow a customer to bid a price, a location or a time to get his/her ticket reservation but a user may not know the airline, departure time or specific hotel until the actual ticket is bought. These websites also have the normal search functionality where a customer can view the travel fares without bidding. The third type of online travel sites are merely search engines popularly known as 'meta search engines' (Rand, 2006). The term means that they search other sites which provide air travel. The search engine goes through all available online travel agencies websites (open sites) and finds the best results for the user. (CR, 2008) As mentioned above, there are three types of online travel agencies. These agencies fight within themselves to get the highest market share (Rand, 2006). For the analysis sake, the business strategy is compared according to these types. Popular open sites include agencies like Orbitz, Expedia, and Travelocity amongst others. Orbitz (www.orbitz.com) strategy is to market itself in the eco-tourism and beats the other two companies in terms of thoroughness and provides car rentals and hotel reservations at guaranteed prices. Expedia (www.expedia.com) is a highly rated site which offers extra benefits to the customers like rewards for frequent flyers, going to less-common foreign routes and awards programs. Travelocity's (www.Travelocity.com) website is easily customizable to find what the user wants. Best fares, time frame and different combinations of airline, hotels, car rentals etc. can be entered as search parameters and found easily. (CR, 2008) Blind Sites Two popular blind sites are there in the category, Priceline and Hotwire. Priceline's (www.priceline.com) strategy is to let travelers bid a price on where and when they want to fly. The website then searches for all available seats on any airline matching the cost, time and the destination. The bid can be rejected if the bid is too low, where a traveler can increase the bid and try again in 24 hours. Due to the inconvenience of not knowing the exact time of departure and airline, Priceline is best option only for people who are flexible and need a low cost travelling solution. On the other hand, Hotwire (www.hotwire.com) is successful on its own strategy. Travelers can select a tourism package complete with hotel and car reservation without knowing the airline or the hotel. However by specifying the location radius, the website can choose the best priced hotel within that radius. The site also offers consultancy with the help of historical trends which makes Hotwire more interesting and better in terms of customer perception. (CR, 2008) Search Engines Travel search engines like Kayak and Yahoo! FareChase are two of the most popular Meta search engines. Kayak (www.kayak.com) plays on its extra features like finding the lowest fares from a traveler's closest airport. Their deals with hotels and airlines return a very good price for the customers. Its most helpful feature includes the fare comparison tool that lets a customer check the lowest fares that other passengers paid for similar routes and to compare search results against those found on other open or blind sites. Yahoo!

Managing Organizational Change (2) Essay Example | Topics and Well Written Essays - 250 words

Managing Organizational Change (2) - Essay Example The transformation may not make one satisfied completely but it will still be better to have it then to not have it at all. I feel that the technology evolution as spoken by Ray Kurzweil would be incredible. It will pave way for an organizational culture wherein human labor will not be overburdened. As said by Ray Kurzweil â€Å"Technology will always hurt less and benefit more†. It will lead to an atmosphere wherein organizations would be compelled to cut down on work hours requiring man power. Right now the trend is more towards letting people work over time then hiring more people. This trend will change post singularity. On the negative side, human dependency on machine will increase exponentially and manifold. Technology will completely handicap humanity. It will be difficult to convince employees who have become accustomed to the old format to adapt to the rapidly emerging technology. (Kurzweil,

A leader of your choice Research Paper Example | Topics and Well Written Essays - 2000 words

A leader of your choice - Research Paper Example In this case, the sitting President of Uruguay will be the leader that this paper will reflect on according to Maxwell’s twenty-one irrefutable laws of power. Jose Alberto Pepe Mujica was born on 20 May 1935, and he is the sitting Uruguayan President. He had worn the 2009 presidential elections and took office on 1 March 2010. He employed guerilla tactics of warfare when he joined the Tupamos revolutionary movement that drew inspiration from the Cuban revolt. During his rebellious times, the military captured him four times and detained him under the rule of Jorege Pacheco Areco. He was a political prisoner who fought hard for the liberation of his native Uruguay. Incidentally, he got six gunshots in a failed coup attempt in 1973. Mujica witnessed a lot of torture and suffering in his rise to being president, as he sought democracy for his people. He is a leader with immense repute, as the world considers him the poorest president. Remarkably, President Mujica donates ninety p ercent of his salary and only takes home ten percent that he says is enough for him. Ideally, this President has shunned the luxurious lifestyle that presidents accord themselves for the life of an average citizen. Surprisingly, this President does not have a bank account to his name, as he claims to take home only what he needs and does not find much to save. Jose is a distinctive leader as no president has ever lived a life like his. In essence, he lives by the notion that what he gets is more than enough as there are people under his rule who earn less than what he earns and tend to do fine with that amount. On the contrary, his only valued possession is a rusty Volkswagen beetle, which is his primary mode of transport. Mujica became the first president that traced his roots to guerilla life. However, his rule has had its controversies as his government legalized the sale of Marijuana within state controlled measures in order to control substance abuse and drugs related offences. Mujica and Maxwell’s twenty-one laws of power John Maxwell is a full time motivational speaker, and a writer in all aspects of leadership. He has written over sixty books on leadership, and he is a minister of evangelism. His organizations have gained accreditation from all over the world for being the leaders in international leadership nurturing and cultivation. In one of his books, John Maxwell sought to bring out the true aspects and traits a leader portrays through the twenty-one laws of leadership. These laws serve as a basis in which a leader can rate themselves and ascertain whether their leadership is effective or not. The laws in this book are relevant and practical in modern day leadership, as it serves as an instruction manual that leaders can use to evaluate themselves on how to improve on their leadership styles. As per these laws of power, President Mujica applies these in the effective running of his country (Maxwell, 2007). For one, he applied the law of inf luence as he led people in his country to advocate for democracy and the liberation of their country from dictatorial rule. His perseverance in jail bore fruit, as he became the leader that he had desired to be. In addition, he grew progressively through his experiences as a guerilla fighter to being an admirable leader. In essence, his experiences shaped his destiny, as it was a gradual process. He did not become a leader overnight hence; he underwent a process, as he grew from an

The Empire In Transition Essay Example for Free

The Empire In Transition Essay 1. How did the relationship between the king and Parliament change during the early 18th century? During the early eighteenth century, the British Parliament established a growing supremacy over the King. The two German kings, George I and George II, were not used to English ways, and the Prime minister and his cabinet ministers became the nation’s real executives. They did not hold their control by the king’s favor, but by their ability to control majority in Parliament. So during this time the king and parliament were still together in overseeing the colonies, but they had different roles in governing and controlling them. 2. How did British officials in the colonies carry out (or fail to carry out) their duties, and what was the effect of their activities? The British officials in the colonies failed to carry out their duties given to them. Some of these appointed officials wanted to raise their incomes with bribes. For example, customs collectors waived duties on goods when merchants paid them to do so. The activities carried out by the officials lead American society to corruption. 3. How was England’s hold on the colonies weakened between 1700 and 1775? England’s hold on the colonies weakened between 1700 and 1775 because the administration of colonial affairs remained decentralized and inefficient. There was no colonial office in London. There was a mere advisory body that had little role in any actual decisions. Real authority rested in the Privy Council, the admiralty, and the treasury, but these agencies were responsible for managing laws at home as well as overseas; no one could concentrate on colonial affairs alone. The character of the royal officials in America also weakened England’s hold on the colonies because most of these officeholders were not able and intelligent. Appointments generally came as results of bribery or favoritism, not as a reward for distinction. 4. What factors helped promote colonial divisions during this period? The factors that helped promote colonial divisions during this period were growth of the colonial population, and the fact that the colonies were so far apart from each other that communication was rare between the colonies. 5. What was the Albany Plan, and what did it reveal about colonial unity? The Albany Plan was proposed by Benjamin Franklin, and this plan said that parliament would set up in America â€Å"one general government† for all the colonies. Each colony could have its own constitution, but would grant to the new general government powers like the authority to govern all relations with the Indians. The central government would have a â€Å"president general† appointed and paid by the king and a legislature elected by colonial assemblies. The Struggle for the Continent (103-107) 6. How did the French attempt to secure their hold on the vast areas they claimed in North America? The French attempted to secure their vast areas by being the Indian allies. They told the Indians to attack the British. 7. What caused the Great War for empire, and why is called by that name? It was caused because the French and Indians were mad because the British got more land; therefore, the Indians and French wanted more land for them. It was called the great war of empire because the English had more land than the French and Indians. 8. How did the Great War for empire become a â€Å"truly international conflict†, and how did Britain carry out its part of the struggle? It became a truly international conflict because of the French and Great Britain having many fronts and having wars on many places it became an international conflict. 9. What were the terms of the Peace of Paris of 1763? The terms were that this treaty ended the seven years war, also known as the French and Indian war. the French also lost Canada, which was dominated by the British side. In order for Spain to recover Cuba they had to give up Florida. The French gave up most of the east of Mississippi except New Orleans. The New Imperialism (107-113) 10. What dilemma faced London policymakers at the end of the Great War for Empire? The dilemma that faced London policymakers was how to fund the British administration and how to defend the North American colonies in long term. 11. What arguments were raised for and against the post-1763 â€Å"territorial imperialism†? How did this change British attitudes towards the colonies? After the American and French Revolutions the British were rendered speechless. The empire on which the sun had never set had fallen and faltered. They were virtually thrown out of America . They realized that they were not omnipotent and they began ruling with more of an iron hand policy. This resulted in worse conditions in the remaining colonies. 12. What initial policy changes occurred when George III ascended the throne, and what were the motives? George wanted to be in control of everything so removed Whigs’ who had previously governed empire for long time and replaced them with his own coalition that was very unstable 13. What was it about post-1763 British policy that caused colonists in every section to see the Disadvantages rather than the advantages of being part of the British Empire? The Proclamation of 1763 caused colonists in every section to see the disadvantages rather than the advantages of being part of the British Empire because it limited the colonists from western expansion beyond the Appalachian Mountains. From there, British started implementing taxes on the colonists to which the colonists did not agree. Stirrings of Revolt (113-121) 14. Why did the Stamp Act antagonize the American colonists so much? The Colonists were angered by the Stamp Act because they did not want to pay more taxes for other stamps. While Great Britain still needed to pay off the rest of their debt from the French and Indian War (Seven Years War) the Colonists had their own problems and wanted to be an independent country, they wanted to fend for themselves and not pay a tax. Stamp act imposed tax  on printed documents and was taxation without representation that they weren’t willing to pay. 15. Who sounded the â€Å"trumpet of sedition† in Virginia over the Stamp Act? Were there reasons other than those in the proposed resolutions? The Virginia House of Burgesses sounded the â€Å"trumpet of sedition† over the Stamp Act. The reason was to challenge the power of tidewater planters who dominated Virginia politics. 16. What role did Samuel Adams play in the American protests? Were his motives different from others? Samuel Adams was the leading figure in fomenting public outrage over the Boston Massacre. He was the most effective radical in the colonies. John Adams’s motives were different from others because he viewed everything in stern moral terms, since he was a member of an earlier generation with strong ties to New England’s Puritan past. 17. Why was the Tea Act seen by many Americans as a direct threat to themselves and their institutions? The Tea Act was seen by many Americans as a direct threat to themselves and their institutions because it meant that parliament had control over them instead of their own government. What were the Coercive Acts? How did the Quebec Act help unite the colonies with Boston in opposition to these acts? The Coercive Acts (known as the Intolerable Acts) were a group of acts that were passed to punish the colonists for the Boston Tea Party. These acts closed the port of Boston, reduced colonial self-government, allowed royal officers to be tried in other colonies or in England when accused of crimes, and provided for the quartering troops in the colonists’ barns and empty houses. The Quebec Act helped unite the colonies with Boston in opposition to these acts because many people in the thirteen English colonies considered it a threat. The passage of the Quebec Act convinced some of the m that a plot was afoot in London to subject Americans to the tyranny of the pope. Cooperation and War (121-125) 19. What role was played by the committees of correspondence in the American protests? The Committees of Correspondence organized protests and performed additional political functions. 20. What were the five major decisions made at the First Continental Congress, and what was their significance? Five major decisions made by the first continental Congress where they rejected a plan for colonial union under British authority, endorsed a statement of grievances, they approved a series of resolutions, recommending that the colonists make military preparations for defense against possible attack by the British, they agreed to non importation, non exportation, and non-consumption as means of stopping all trade with Great Britain, and they formed a â€Å"Continental Association† to enforce the agreements, and they agreed to meet the next spring. These five major decisions indicated that the Continental Congress was considered a continuing organization. 21. What British leaders spoke out in support of the American cause, and what were their reasons for doing so? The Howe brothers supported the American cause. 22. What were the circumstances that led to the fighting at Lexington and Concord? Patterns of Popular Culture (120) The battle of Lexington and concord battle was caused by a set of riots led by the British. Their purpose was to take the weapons and powder in the communities surrounding Boston. 23. How and why did taverns become a central institution in colonial American social life? Taverns became a central institution in colonial American social life because taverns were the place where everyone (men) met to discuss any political issues. The taverns were also known as the â€Å"public houses†. 24. What circumstances and events helped make taverns central to political life as well? The revolutionary crisis made taverns and pubs become the central meeting places for discussions of the ideas that fueled resistance to British policies. There were also few other places where people could meet and talk openly in public. Almost all politicians found it necessary to visit taverns if they wanted any real contact with the public.

Food Safety Management Strategies

Food Safety Management Strategies Food Issues Abstract The following essay on food safety will discuss about the importance of food safety and why governments and food standards agency now a days focus on the devastating consequences of food borne illness and diseases. It will deal with food poisoning and its risks. Apart from it the most common types of pathogens (salmonella, e coli, and campylobacter) have been mentioned describing the outbreaks. The main thing is that all the above-mentioned things have been explained here with a focus on the food safety management. Some of the tools such as irradiation and specially HACCP (Hazard Analysis and Critical Control Points) to support hospitality management have also occupied some space here with its importance. As a final point, it has been thought to be practical to examine the solution with recommendations for practical adoption for the hospitality industry to deal with the complexity and cost of the above food safety management tools Introduction The world is full of various kinds of problems and it is true that everyday efforts are made to find out solution to these problems and some of them are sorted out too. Among the issues concerned directly with the human survival, which are posing a very big challenge in front of the world, one is the issue of food safety. According to Nestle 2004, food ‘poisonings, causing death, raise alarm not only about the food served in restaurants and fast-food outlets but also about the food bought in supermarkets. Consumers, industries as well governments are together taking food safety as a serious issue. There is a saying â€Å"health is wealth† and any carelessness which may cause food poisoning or any problem like this may lead to a very fatal consequence, so it becomes essential to take necessary food safety measures. To make sure food is safe to eat the Food Standards Agency carries out a range of work, including funding research on chemical, microbiological and radiologica l safety, as well as food hygiene and allergy.. As Griffths 2000 says, the food chain, like any other chain, is only as strong as its weakest link and the responsibility for food safety lies not only with producers and processors of food, but also governments and consumers themselves. Food Poisoning its risks Food is essential to life but if contaminated can cause illness and even death. But fortunately only in a minority of cases the latter happened although there is social and economic consequences associated with the millions of cases of food related illness. The WHO definition embraces all food and waterborne illness regardless of the presenting symptoms and includes â€Å"any disease of an infectious or toxic nature caused by, or thought to be cause by, the consumption of food or water† (Griffith 2006). Food borne disease therefore includes illness caused by various chemical, physical or microbiological hazards, which may be present in food or water. Anything that interferes with the safe foods is a food hazard (Hemminger, 2000) which can be present in the product that can cause harm to the consumer either through illness. Biological hazards include food borne infection which occurs eating something with live germs inside them. On the other hand it also consists of food intoxication occurring when a person eats something with bacteria- produced poisons that wont be killed by heating. The agents causing these food infections are bacteria, toxins, virus, parasites and fungi. Current food trends reveal that more and more frequently today we buy pre-prepared ready-to eat convenience foods, dine out in restaurants and cafà ©s, prefer fresh over frozen products and have a growing demand for foods of animal origin. While this gives us many new choices in the food we eat, this vast selection of foods we expect to be available to us â€Å"now† has possibly created a greater risk of bacterial food poisoning. Germs or bacteria grow in the food themselves when people dont store it properly or handle with care. Even in the fridge, the food may get bacteria. Food poisoning bacteria are often present naturall y in food but usually only in small numbers. However, given the right conditions their numbers can increase extremely quickly, so that 1 single bacteria could multiply to over 16 million in only 6 hours. This is where the food poisoning problem begins. As Eley 1996 says, some food poisoning is of mild level and some is strong level. Accordingly the food affects the human body and causes health problems while sometimes it result to be fatal too. For food poisoning to occur there must be bacteria or their toxin present in the food. Secondly the food must be suitable for organisms growth. There must be right conditions of warmth and moisture for the bacteria to grow while with sufficient tome for bacteria to grow and multiply. Adding above all there must be enough bacteria or their toxin present to cause present to cause illness and the food should be consumed. This is commonly called the food poisoning chain which is diagrammed below. (resources.ccc.govt.nz) Food Poisoning Bacteria Contaminate High Risk Foods . HIGH RISK FOODS Common Pathogens (in the Hospitality Industry) The three principle food poisoning pathogens that are dealt with that might affect the hospitality industries are Salmonella, E-coli and Campylobacter. Salmonella is usually heard of in the catering industry with reference to chicken and eggs. Some pets like birds and turtles also carry this Salmonella. The most appalling thing about it is that it can even go into the lymph tracts, which are known for tracking water and protein to the blood, and the blood itself. Thus it may cause some serious complications too. The main symptoms associated with the disease salmonellasis are fever, nausea, vomiting, diarrhoea, cramps, and headache. Time frame lasts for 12-36 hrs normally 4-7 days. The prevention could be to chill food quickly, using pasteurized milk and egg products. Raw and cooked cross-contamination should be avoided and equipment should be sanitized properly. Escherichia coli (E. coli) belong to the host of bacterial germs and is mainly found in beef. However, its dangerous relative, E.Coli 0157 H7, only appeared in the 1970s, perhaps coevolving in Argentina or Chile, two cattle raising countries with a high meat diet. E Coli 0157 is a mutant form which lives in the intestines of some cattle, sheep and goats but is not naturally found in the intestines of man but it can produce toxins which can be very fatal even if ingested in small amounts. It was first recognised as a pathogen in 1982 as a result of outbreak of unusual gastrointestinal illness. The illness was traced to contaminated hamburgers and it was similar to the other outbreaks in Japan and America. Among other known sources of infection are eating of vegetables like sprouts, lettuce, salami,unpasteurized milk and juice, and swimming in or drinking sewage-contaminated water. In September 2006, there was an outbreak of food-borne illness caused by Escherichia coli (E. coli) bacteria found in uncooked spinach in 26 U.S. states. By October 06, 2006 199 people had been infected, including three people who died and 31 who suffered a type of kidney failure called hemolytic uremic syndrome[3] after eating spinach contaminated with the E. coli O157:H7. A subsequent outbreak, in November-December 2006, was initially attributed to green onions served by two restaurant chains — Taco Bell and Taco Johns — but later was determined to have been caused by prepackaged iceberg lettuce. Overall, at least 276 consumer illnesses and 3 deaths have been attributed to the tainted produce. (en.wikipedia.org) Among the most recent outbreaks of E Coli 0157 in U.K. was in August 2009 which lead to severe illness in a number of visitors to Godstone Farm in Surrey. It was reported by the Health Protection Agency (HPA) that the total number of cases of E Coli O157 linke d to Godstone Farm in Surrey is 86 ( www.ecoli-uk.com). Campylobacter bacteria differ from E.Coli and Salmonella as it is a food-borne pathogen, as opposed to a food poisoning pathogen and is transmitted by food. In contrast with food poisoning bacteria it does not develop and multiply in food. However only a few bacteria are required to cause illness, with the food acting as the vehicle of transmission. This bacteria is found on poultry, cattle, and sheep can contaminate meat and milk of these animals. Symptoms occur are severe vomiting, diarrhoea, cramps and prostration. Time frame is usually 2-4hrs and lasts for 2-3 days. This can be prevented by keeping hot food and cold food cold while washing hands properly. Appendix A provides the various causes and symptoms of the pathogens that can impact on the hospitality industry. FOOD SAFETY MANAGEMENT TOOLS Food Irradiation its costs Food irradiation is a processing technique that exposes food to electron beams, X-rays or gamma rays, and produces a similar effect to pasteurization, cooking or other forms of heat treatment, but with less effect on look and texture (www.food.gov.uk). It is used to kill bacteria listed above like Salmonella, Ecoli, and campylobacter. Irradiation stops vegetables such as onions and potatoes from sprouting and also delays fruit ripening. Generally beams of radiation are passed into food transferring energy which kills the bacteria. It can prevent the division of microorganisms which cause food spoilage, such as bacteria and moulds, by changing their molecular structure. Any food process will add cost which In most cases just dont rise just because a product has been treated. Many variables affect it ,one of them is the cost of processing. Irradiation costs range from US $10 to $15 per tonne for a low-dose application (for example, to inhibit the growth of sprouts in potatoes and onions) to US $100 to $250 per tonne for a high-dose application. The cost to build a commercial cobalt-60 food irradiation plant is in the range of US $3 million to $5 million, depending on its size, processing capacity, and other factors but this is within the range of plant cost for other technologies (www.iaea.org). Often the capital costs of irradiation equipment are seen as too expensive, even though low operating costs for most products make per unit costs very competitive with other treatments. Commercial contract multipurpose irradiators work in many countries offering irradiation services at reasonable cost. Since irradiation gives the added economic benefit of lon g-lasting fresh market life for many foods, decreased waste and increased market potential of the food should be considered in a cost-benefit analysis. Implementation of HACCP its costs HACCP is a systematic approach to be used in food production as a means to assure food safety (Corlett Pierson 1992). (Appendix B provides the seven principles). But according to Mayes Martimore, 2005 â€Å"absolute safety is absolutely unattainable, but effective HACCP implementation is the surest way of delivering safe food†. If implemented properly (Appendix C), there are benefits in the area of product quality which is primarily due to the increased awareness of hazards in general and people participation from all areas of operation. While on the other hand if HACCP is not properly applied then it may not result in an effective control system. This may be due to improperly trained or untrained personnel not following the principles correctly or it may be through lack of maintenance of the HACCP system. HACCP is carried out by people. If the people are not properly experienced and trained then the resulting HACCP system is likely to be ineffective and unsound (Mortimore Wallace 1998). Small and Medium sized enterprise (SMEs) rarely have the skills, knowledge or resources needed to develop and implement a HACCP programme. This is where the use of internal or external expert consultants can be a good way of getting started. But it is also debated that the SMEs might lack the internal resources to organize the training themselves and the financial resources to use an external training provider. Naturally the larger the company the smaller the percentage and so it makes it more difficult and costly for small businesses to implement HACCP which will need the services of external consultants as they can not afford full time staff. Another major issue related to the implementation of HACCP is its costs which come from staff training, investing in new equipment, external consultancy service, structural changes to buildings and employing new staffs. Not only has the cost of HACCP for hospitality industry depended on the requirements of the system but also on the improvement of the current status of the food safety-related practices in the company. It is better to acknowledge that there will be an investment in order to reap the benefits of HACCP. How much will depend on its available resources within the organization and what training is needed. However accurate estimation of benefits and costs prior to implementation is difficult and should be based on actual experience. Conclusion To sum up it is seen that food borne illness is always at a high in some countries. Whilst it is difficult to predict events, strategies and research in the future are likely to recognise not only the importance of food safety management systems, but the role of individuals, working with their peers and superiors, within a business food safety culture. It is understood that this actively involves the businesses and managers themselves and they must consider the active and unconscious food safety messages they communicate to their employees. Failure to do so might result in high volume of food borne illness in some day among ourselves. Recommendations for Hospitality Industry The following recommendations were being suggested that can be applied to the hospitality industry. * Hospitality Industries must follow the four basic steps to reduce food borne diseases Clean: Washing hands and surfaces often Separate: Dont cross- contaminate Cook: Cooking to proper temperature Chill: Refrigerating properly * Realistic guidance should be provided to the caterers to identify the hazards present and deal with the complexity of HACCP. It must reflect the working conditions of hospitality operations and be produced by professional caterers with operational experience. It must deal with all the possible hazards involved in producing food for immediate consumption, from the source to the customers plate. * Effective training should be given to the senior management, the HACCP team and team leader and other production staff which will develop awareness and motivation as well as provide technical and practical knowledge. It should not be an classroom activity but an ongoing programme in the workplace. * To deal with the complexity of HACCP, proper documentation should be made of the hazards together with the critical control points in order to make it safe, which in turn will allow chefs to see HACCP as useful and easy to apply. * A base line audit of training requirements, researching the available resources and then drafting a casted training plan can be made. From the total of these costs and a comparison with the annual sales of food and beverage a percentage will be found that is what is the percentage of food and beverage sales which needs to be spent on a HACCP system. Based on the above percentage managers could implement a strategy for menu pricing to cover up the cost. * Finally developing and distributing clear guidelines to the food service mangers in the event of a suspected food borne illness outbreak will improve food safety within the hospitality industry. Bibliography Corlett, Jr. A. D and Pierson, D. M. (1992). Haccp: Principles and applications. Chapman Hall: London. Eley, A. R. (1996), Microbial food poisoning, 2nd edition, Chapman Hall, London, pp. 200 Griffiths, O. A. (2001). Haccp works: Integrated Food Safety Management for Food Business. Highfield publication: Doncaster. Hemminger, M. J. (2000). Food Safety: A guide to what you really need to know. Blackweel publishing:U.S. Mayes, T. and Mortimore, S. (2001), Making the most of HACCP: Learning from others experience, Woodhead Publishing Limited, Cambridge. Nestle, M. (2003) Safe Food:bacteria, biotechnology and bioterroisism. University of California press: London. Wallace, C. and Mortimore, S. (1994). Haccp: a pratical approach. Chapman Hall: London. Griffith, J. C. (2006). Food Safety:where from and where to? British Food Journal 108 (1),pp 6-15. Available at http://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=ArticleFilename=html/Output/Published/EmeraldFullTextArticle/Pdf/0701080101.pdf (Accessed: 18th Nov 2009) Food Irradiation . Retrieved from http://www.food.gov.uk/safereating/rad_in_food/irradfoodqa/ at 10 pm on 20th Nov,2009 Food Irradiation .Retieved from www.iaea.org/nafa/d5/public/foodirradiation.pdf at 11pm on 19th Nov,2009 E Coli. Retrieved from http://www.ecoli-uk.com/news.php at 8pm on 15th Nov,2009 E Coli Outbreaks. Retrieved from http://en.wikipedia.org/wiki/2006_North_American_E._coli_outbreak on 15th Nov, 2009 Food Poisoning. Retrieved from resources.ccc.govt.nz/files/FoodPoisoning-healthsafety.pdf on 11th Nov,2009 Food Borne Illness. Retrieved from http://www.fightbac.org/content/view/11/18/ on 9th Nov,2009

General Dynamics and Lockheed Martin Comparison

General Dynamics and Lockheed Martin Comparison Financial Statement Analysis General Dynamics vs. Lockheed Martin Executive Summary: This analysis provides a comparison of two major companies within the Aerospace and Defense industry, General Dynamics and Lockheed Martin. General Dynamics had an ROE of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher spread and generated a higher amount of return above its cost of equity capital as compared to GD. GD generates a higher NOPAT margin over LMT (9.4% and 7.8%, respectively) allowing GD to contribute more to ROE as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. LMT has a considerable advantage for generating increased asset turnover, by generating $1.37 for every dollar as compared to GDs $1.08 for every dollar spent on company assets. General Dynamics stock is extremely undervalued (estimated $77.71 compared to closing price of $57.79) whereas Lockheed Martins stock was slightly overvalued ($85.93 compared to closing price of $84.08). Equity valuation indicates that investors were overly opt imistic in LMTs earning potential and pessimistic for GDs earning potential. Despite the valuation, the destiny of this industry remains dependent on governments decisions to decrease military spending, which will have a negative impact on both companies. However, expansion of commercial airlines and partnerships with healthcare industries will have a positive effect on these companies and overall this industry will have a neutral outcome for the upcoming year. General Dynamics (NYSE: GD) General Dynamics is the sixth largest defense contractor in the world and the second largest maker of corporate jets. The company maintains four business groups including aerospace, combat systems, marine systems and information systems and technology. Net earnings for the company increased from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. Sales for all groups increased from $24.1 to $29.3 billion from 2006-2008, a 17% increase. The company is based in Virginia and gets 67% of its revenue from the Department of Defense. The aerospace group generated $5.5 billion (19%) in sales in 2008, mostly due to Gulfstream business jet, which include long-range and ultra-long-range jets. In response to the downturn in the economy, the production of large-body and medium-size aircraft were reduced from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, which are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. Production of both of these aircrafts, which enter into service in 2011 and 2012, are foreseeable income generators based on orders placed in 2008. The combat systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by demand for combat vehicles, specifically Mine-Resistant, Ambush-Protected (MRAP) vehicles. The combat system group makes, repairs and supports wheeled and tracked armored vehicles and munitions. Combat system product lines include combat vehicles, guns and ammunition systems, mobile bridge systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi Arabia between 2010 and 2012. The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, submarines, logistic ship and the first commercial product carrier. Upcoming contracts include doubling production to two submarines per year beginning in 2011, which is predicted to increase revenue and earnings over the next three years. The information systems and technology generated $10 billion (34%) of sales in 2008; its biggest achievement developing a battlefield communications network program and Joint Tactical Radio System (JTRS). Customers include federal civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The acquisition of two companies in the tactical communications and healthcare information technology field are indicative of the direction this group will be making in the upcoming years. Information gathered from Morningstar1, SP500 Industry reports2 and www.generaldynamics.com3 Lockheed Martin (NYSE: LMT) Lockheed Martin is the worlds largest military weapons maker, deriving 84% of its net sales from the United States government, including the Department of Defense. The company is comprised of four operating systems including aeronautics, electronic, space and information systems and global services. Net sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over three years ($2.5 to $3.2 billion). The company operates in Maryland and employs 146,000 people. The aeronautics segment generated 27% of sales ($11.5 billion) in 2008. The segments primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics segment is focused on making fighter jets and military transport planes and on unmanned military aircraft. The segment also operates the Global Sustainment enterprise to ensure success throughout the life cycle of its aircraft. The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is focused on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal Altitude Area Defense System (THAAD), the Ballistic Missile Defense system and the firehead control system for the Apache helicopter. The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of satellites, strategic and defensive missile systems, and space transportation systems. The US government customers accounted for 96% of this segments sales in 2008. An ongoing partner is NASA; the LMT-built Phoenix Lander will continue to rove on Mars. Another venture is with Boeing, the United Launch Alliance, which provides satellite launch services to the US government. Information systems and global services segment account for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. Major products/programs include communication systems, mission and combat support solutions, civil agency programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and various NASA programs. Collaborations and partnerships with companies around the globe enable Lockheed Martin to grow its international business both with government and industry. The establishment of Lockheed Martin Australia in 2009 indicates an international interest to grow and expand. Information gathered from Morningstar1, SP500 Industry reports2 and www.lockheedmartin.com4 Industry Outlook: Aerospace Defense The aerospace and defense industry relies heavily on US government allocation and the upcoming year will likely bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq war ends, there will be a need for repair and replacement. Due to the high levels of deficit spending and an increasing trend for social spending, it is likely there will be cuts in defense spending and the outlook for this industry will decline. On the other hand, it is estimated that there will be an increased growth of global passenger air traffic in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are less fuel-efficient in the US will also need to be upgraded and replaced with newer aircraft. The industry predictions are moderate production cuts at Boeing and Airbus, and declines in the business jet markets due to falling corporate profits. The industry outlook is therefore at a neutral rating, due to decreased military budget but increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will strive for contracts within the industry. Many of these defense contractors will face uncertainty from upcoming government decisions in the next year and hence the neutral outlook for this industry. Information gathered from Morningstar and SP500 Industry Reports Financial Statement Adjustments The following table contains information on the cumulative adjustment to General Dynamics and Lockheed Martins financial Statements. Adjustments General Dynamics Lockheed Martin Income Statement  · Increase Net Income by $19 million from loss from discontinued operations net of tax  · Increase Net Income by $196 million from deferred portion of income tax  · Decrease Net Income by $70 million for gain on sale of LKEI and ILS net of tax  · Decrease Net Income by $56 million for gain on land sale  · Increase Net Income by $215 million to reverse impairment charge (215 = 314(1-.316)  · Increase Net Income by $72 million to unwind deferred taxes  · Subtract $246 million from Net Income for Pension Income Balance Sheet  · Increase assets by 75% of PV of capitalized leases ($709 million)  · Decrease assets by $7 million to unwind taxes (DTA)  · Adjustments for LIFO reserve not added to Total Assets. Added in denominator of ITR and Current Asset in Current Ratio  · Added 100% of PV of capitalization of leases to Total Liabilities ($946 million)  · Subtracted 25% of PV of capitalized leases to SE ($236 million)  · Decrease SE by $7 million to unwind deferred taxes effect (-DTA; +DTL)  · Increase assets by 75% of PV of capitalized leases ($699 million)  · Decrease assets by $5,390 million to unwind deferred taxes (DTA)  · Increase liabilities by 100% of PV of capitalized leases ($932 million)  · Decrease SE by 25% of PV of operating leases ($233 million)  · Decrease SE by $5,390 million to unwind deferred tax (-DTA; +DTL) Caveats  · Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court. Cost of Equity Capital Historically, LMT common stock has proven less sensitive to the broad stock market. With a beta of .923 and using the Capital Asset Pricing Model (CAPM), LMT investors require an annual rate of return of 10.2%. Although this is lower than the expected market return of 10.8% (see appendix for calculation and assumptions), it is greater than its industry (Guided Missile Space Vehicles) expected return of 8.7%. However, although LMT may be more volatile as a stock than its competitors, it enjoyed a Return on Equity (ROE) significantly higher than the industry average. In 2008, LMT had an ROE of 49.2% while the industry followed with a 23.4% average ROE. Just as significant and telling is the comparison of LMTs ROE to its own required rate of return. This spread of 39% is an impressive sign as it demonstrates the amount of return LMT generated above its cost of equity capital. This is also impressive to investors at first glance, and will warrant a deeper interest from prospective investors. Much the same can be said for GD when comparing its required rate of return to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of equity. However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves; and has an expected return less than its industry return by approximately 1.25%. NOPAT Margin When we analyze the potential net income in the absence of debt, NOPAT, we observe that General Dynamics (9.4%) generates a higher margin over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% average that was established for 2008, but does not necessarily signify any under-performance in this area since the industry data only takes into account two firms when generating Industry NOPAT margin averages. Lockheed Martin was similarly compared to Industry data, generated by two firms as well, in which NOPAT margins were recorded that were more than double of what was found for similarly classified companies (Guided Missiles Space Vehicles 3.69%). Asset Turnover This portion of the ROE evaluates the efficiency to produce revenue based on the investment in assets made by the company. When we begin to evaluate the simplified Asset TO values provided by the multiplicative decomposition of ROE, we observe a noticeable advantage by Lockheed Martin since they reportedly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower values at $1.08 for every $1.00 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 needed to be adjusted, and was done so by pulling out all non-interest bearing liabilities (NIBL). This is where we noticed that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09 ) with respect to assets dollars invested by each company. As we can observe, unexpected losses in each companys pension fund had led them to classify their losses as liabilities since they will still needed to be accounted for in the near future. The 32% drop in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount lost reflects LMTs larger workforce of 140,000 employees. GD, although enduring a similar percentage drop in fund value, only accommodates a workforce of 91,000, and therefore lost less in overall value amount. Leverage When we analyze leverage, we are analyzing each companys ability and efficiency in using interest bearing debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three times higher than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large variation in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom recorded a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008. Selected Ratio Comparison: Accounts Receivable Days General Dynamics Industry Lockheed Martin Industry 39.51 32.50 43.62 57.12 From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account receivable days by 7 days. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account receivable average of 43.62 days, which means LMT was collecting from customers on an average of 13.5 days ahead of the rest of the industry. Accounts Payable Days General Dynamics Industry Lockheed Martin Industry 33.88 31.50 20.09 19.66 GD is collecting from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just  ½ day over the industry average of 19.66 days Inventory Days General Dynamics Industry Lockheed Martin Industry 25.97 56.62 17.35 13.55 GD is turning inventory on average over 30 days under the industry average of 56.62 days LMT is turning inventory on average over 3 days over the industry average of 13.55 days Interest Coverage General Dynamics Industry Lockheed Martin Industry 29.57 30.43 14.49 5.49 GD could cover its yearly interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 times Equity Valuation The equity valuation of General Dynamics for 2008 produced an estimated share price of $77.71. This price is significantly higher than the closing per-share price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns about growth for General Dynamics stem from shrinking credit markets, which would impair the ability to finance business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and deficit spending. Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggested by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were used to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The terminal value assumption used in computing abnormal net income was the competitive equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising approximately 67% of the companys revenue. This lead to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing custo mers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a risk free rate of 5% and a market risk premium of 4%. This produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital. The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares outstanding according to the 2008 annual report to arrive at an estimated share price of $77.71. The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly optimistic in their opinion of Lockheed Martins earnings potential. Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 pro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be devoted to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of s hares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93. References: 1www.Morningstar.com 2www.netadvantgage.standardandpoors.com 3www.generaldynamics.com 4www.lockheedmartin.com 5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 2010 6Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010 APPENDIX CAPM = Rf Rate + (Beta*Rmrkt) Given Data Risk Free rate = 3.77% (10 Year Treasury as of 2/18/10) Market Premium (Rmrkt) = 7% (given on page 26 of class notes) LMT Beta = 0.923 Industry Beta = 0.697 GD Beta = 1.119 Industry Beta = 1.298 CAPM Calculations LMT = .0377 + .923*.07 LMT = 10.23% Industry = .0377 + .697*.07 Industry = 8.65% GD = .0377 + 1.119*.07 GD = 11.60% Industry = .0377 + 1.298*.07 Industry = 12.86% Financial Statement Analysis GD LMT 2008 2008 Beginning assets 25,733 28,926 Ending assets 28,373 33,439 Beginning equity 11,768 9,805 Ending equity 10,053 2,865 Beginning interest-bearing liabilities 2,791 4,407 Ending interest-bearing liabilities 4,024 3,805 Net income (pro forma) 2,674 3,114 Sales revenue 29,300 42,731 Other revenue 0 0 Research development expense 474 1,220 Selling, general administrative expense 1,700 2,344 Income tax expense 1,126 1,485 Income tax rate 0.31 0.32 Interest expense 133 341 Beginning inventory 1,621 1,718 Ending inventory 2,029 1,902 Cost of goods sold 25,647 38,082 Beginning accounts receivable 2,874 4,925 Ending accounts receivable 3,469 5,296 Beginning accounts payable 2,318 2,163 Ending accounts payable 2,443 2,030 Shares outstanding 386 393 Closing price per share 57.59 84.08 bloomberg.com Average assets 27,053 31,183 Average equity 10,911 6,335 Average interest-bearing liabilities 3,408 4,106 Average non-interest bearing liabilities 12,735 20,742 Average accounts receivable 3,172 5,111 Average inventory 1,825 1,810 Average accounts payable 2,381 2,097 After-tax interest rate 0.03 0.06 Multiplicative Decomposition of ROE ROE 0.25 0.49 Net profit margin 0.09 0.07 Asset turnover 1.08 1.37 Leverage 2.48 4.92 Additive Decomposition of ROE ROE 0.25 0.49 Market-to-book 2.21 11.53 NOPAT Margin 0.09 0.08 Asset turnover 2.05 4.09 ROA 0.19 0.32 Spread 0.17 0.26 Leverage 0.31 0.65 Effect of leverage 0.05 0.17 Gross profit margin 0.12 0.11 RD to revenue 0.02 0.03 SGA to revenue 0.06 0.05 Accounts receivable days 39.51 43.65 Inventory days 25.97 17.35 Operating cycle 65.48 61.00 Accounts payable days 33.88 20.09 Cash-to-cash cycle 31.60 40.91 Interest coverage 29.57 14.49 Debt ratio 0.65 0.91 Appendix C: General Dynamics Lockheed Martin Financial Statement Adjustments Cumulative Financial Statement Adjustments Summary of Income Statement Adjustments Summary of Income Statement Adjustments Net Income as Reported: $ 2,459 Net Income as Reported: $ 3,217 Discontinued operations 19 Loss on sale of property, (126) Unwind tax effects 196 land, equipment Adjusted Net Income $ 2,674 Reverse of Impairment charge 215 Unwind tax effects 72 Pension Income (264) Adjusted Net Income $ 3,114 Summary of Balance Sheet Adjustments Summary of Balance Sheet Adjustments Total Assets as reported $ 28,373 Total Assets as reported $ 33,439 Constructive capitalization of 709 Constructive capitalization 699 operating leases of operating leases Unwind tax effects (DTA) (7) Unwind tax effects (DTA) (5,390) Adjusted Total Assets $ 29,075 Adjusted Total Assets $ 28,748 Total Liabilities as reported $ 18,320 Total Liabilities as reported $ 30,574 Constructive capitalization 946 Constructive capitalization 932 of operating leases of operating leases Adjusted Total Liabilities $ 19,266 Adjusted Total Liabilities $ 31,506 Total SE as reported $ 10,053 Total SE as reported $ 2,865 Constructive capitalization (236) Constructive capitalization of operating leases (233) of operating leases Unwind tax effects (5,390) Unwind tax effects (7) (DTA+DTL) (DTA+DTL) Adjusted Total SE $ (2,758) Adjusted Total SE $ 9,810 Adjusted Total Liabilities + SE $ 29,075 Adjusted Total Liabilities + SE $ 28,748 General Dynamics Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 20 Net postretirement plan cost 56 Total cost $ 76 Net earnings $ 2,459 Percentage 3.1% 2008 2007 2 Funded status pensions $ (2,922) $ 383 Funded status other postretirement plans (640) (642) Total funded status (3,562) (259) Difference $ (3,303) 3 Rate of return on U.S. plan assets 8.1% Expected return 593 Implied asset base 7,330 = 592 / .081 Actual return percentage -32.20% = 2360 / 7330 4 Implied asset base $ 7,330 Pro forma expected rate 7.0% Given Pro forma expected return 513 Less: Original expected return (593) Difference (reduction in pension income) (80) 1 Effective tax rate 68.8% =1-.312 Adjustment (reduction) to net income $ (55) OR: [(.081-.070)*7,330] * (1-.312) = $ 55 Adjusted income $ 2,404 = 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 462 Net postretirement plan cost 46 Total cost $ 508 Net earnings $ 3,217 Percentage 15.8% 2008 2007 2 Funded status pensions $ (11,882) $ (879) Funded status other postretirement plans 1426 2017 Total funded status (10,456) 1,138 Difference $ (11,594) 3 Rate of return on U.S. plan assets 8.5% Expected return $ 2,184 Implied asset base 25,694 = 2184 / .085 Actual return percentage -28.62% = 7354 / 25694 4 Implied asset base $ 25,694 Pro forma expected rate 7.0% Given Pro forma expected return 1,799 Less: Original expected return (2,184) Difference (reduction in pension income) (385) 1 Effective tax rate 68.4% =1-.316 Adjustment (reduction) to net income $ (264) Adjusted income $ 2,953 = 3,217 264 General Dynamics Capitalization of Operating Leases Enter interest rate below: 0.039 Enter operating lease commitments below (in millions): 2009 205.0 2010 174.0 2011 131.0 2012 97.0 2013 70.0 2014 thereafter 405.0 Solution: Present value of operating lease commitments $ 945.9 Calculation of Present Value of Operating Lease Payments: 0 205.0 1.000 205.0 1 174.0 1.039 167.5 2 131.0 1.080 121.3 General Dynamics and Lockheed Martin Comparison General Dynamics and Lockheed Martin Comparison Financial Statement Analysis General Dynamics vs. Lockheed Martin Executive Summary: This analysis provides a comparison of two major companies within the Aerospace and Defense industry, General Dynamics and Lockheed Martin. General Dynamics had an ROE of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher spread and generated a higher amount of return above its cost of equity capital as compared to GD. GD generates a higher NOPAT margin over LMT (9.4% and 7.8%, respectively) allowing GD to contribute more to ROE as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. LMT has a considerable advantage for generating increased asset turnover, by generating $1.37 for every dollar as compared to GDs $1.08 for every dollar spent on company assets. General Dynamics stock is extremely undervalued (estimated $77.71 compared to closing price of $57.79) whereas Lockheed Martins stock was slightly overvalued ($85.93 compared to closing price of $84.08). Equity valuation indicates that investors were overly opt imistic in LMTs earning potential and pessimistic for GDs earning potential. Despite the valuation, the destiny of this industry remains dependent on governments decisions to decrease military spending, which will have a negative impact on both companies. However, expansion of commercial airlines and partnerships with healthcare industries will have a positive effect on these companies and overall this industry will have a neutral outcome for the upcoming year. General Dynamics (NYSE: GD) General Dynamics is the sixth largest defense contractor in the world and the second largest maker of corporate jets. The company maintains four business groups including aerospace, combat systems, marine systems and information systems and technology. Net earnings for the company increased from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. Sales for all groups increased from $24.1 to $29.3 billion from 2006-2008, a 17% increase. The company is based in Virginia and gets 67% of its revenue from the Department of Defense. The aerospace group generated $5.5 billion (19%) in sales in 2008, mostly due to Gulfstream business jet, which include long-range and ultra-long-range jets. In response to the downturn in the economy, the production of large-body and medium-size aircraft were reduced from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, which are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. Production of both of these aircrafts, which enter into service in 2011 and 2012, are foreseeable income generators based on orders placed in 2008. The combat systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by demand for combat vehicles, specifically Mine-Resistant, Ambush-Protected (MRAP) vehicles. The combat system group makes, repairs and supports wheeled and tracked armored vehicles and munitions. Combat system product lines include combat vehicles, guns and ammunition systems, mobile bridge systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi Arabia between 2010 and 2012. The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, submarines, logistic ship and the first commercial product carrier. Upcoming contracts include doubling production to two submarines per year beginning in 2011, which is predicted to increase revenue and earnings over the next three years. The information systems and technology generated $10 billion (34%) of sales in 2008; its biggest achievement developing a battlefield communications network program and Joint Tactical Radio System (JTRS). Customers include federal civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The acquisition of two companies in the tactical communications and healthcare information technology field are indicative of the direction this group will be making in the upcoming years. Information gathered from Morningstar1, SP500 Industry reports2 and www.generaldynamics.com3 Lockheed Martin (NYSE: LMT) Lockheed Martin is the worlds largest military weapons maker, deriving 84% of its net sales from the United States government, including the Department of Defense. The company is comprised of four operating systems including aeronautics, electronic, space and information systems and global services. Net sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over three years ($2.5 to $3.2 billion). The company operates in Maryland and employs 146,000 people. The aeronautics segment generated 27% of sales ($11.5 billion) in 2008. The segments primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics segment is focused on making fighter jets and military transport planes and on unmanned military aircraft. The segment also operates the Global Sustainment enterprise to ensure success throughout the life cycle of its aircraft. The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is focused on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal Altitude Area Defense System (THAAD), the Ballistic Missile Defense system and the firehead control system for the Apache helicopter. The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of satellites, strategic and defensive missile systems, and space transportation systems. The US government customers accounted for 96% of this segments sales in 2008. An ongoing partner is NASA; the LMT-built Phoenix Lander will continue to rove on Mars. Another venture is with Boeing, the United Launch Alliance, which provides satellite launch services to the US government. Information systems and global services segment account for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. Major products/programs include communication systems, mission and combat support solutions, civil agency programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and various NASA programs. Collaborations and partnerships with companies around the globe enable Lockheed Martin to grow its international business both with government and industry. The establishment of Lockheed Martin Australia in 2009 indicates an international interest to grow and expand. Information gathered from Morningstar1, SP500 Industry reports2 and www.lockheedmartin.com4 Industry Outlook: Aerospace Defense The aerospace and defense industry relies heavily on US government allocation and the upcoming year will likely bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq war ends, there will be a need for repair and replacement. Due to the high levels of deficit spending and an increasing trend for social spending, it is likely there will be cuts in defense spending and the outlook for this industry will decline. On the other hand, it is estimated that there will be an increased growth of global passenger air traffic in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are less fuel-efficient in the US will also need to be upgraded and replaced with newer aircraft. The industry predictions are moderate production cuts at Boeing and Airbus, and declines in the business jet markets due to falling corporate profits. The industry outlook is therefore at a neutral rating, due to decreased military budget but increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will strive for contracts within the industry. Many of these defense contractors will face uncertainty from upcoming government decisions in the next year and hence the neutral outlook for this industry. Information gathered from Morningstar and SP500 Industry Reports Financial Statement Adjustments The following table contains information on the cumulative adjustment to General Dynamics and Lockheed Martins financial Statements. Adjustments General Dynamics Lockheed Martin Income Statement  · Increase Net Income by $19 million from loss from discontinued operations net of tax  · Increase Net Income by $196 million from deferred portion of income tax  · Decrease Net Income by $70 million for gain on sale of LKEI and ILS net of tax  · Decrease Net Income by $56 million for gain on land sale  · Increase Net Income by $215 million to reverse impairment charge (215 = 314(1-.316)  · Increase Net Income by $72 million to unwind deferred taxes  · Subtract $246 million from Net Income for Pension Income Balance Sheet  · Increase assets by 75% of PV of capitalized leases ($709 million)  · Decrease assets by $7 million to unwind taxes (DTA)  · Adjustments for LIFO reserve not added to Total Assets. Added in denominator of ITR and Current Asset in Current Ratio  · Added 100% of PV of capitalization of leases to Total Liabilities ($946 million)  · Subtracted 25% of PV of capitalized leases to SE ($236 million)  · Decrease SE by $7 million to unwind deferred taxes effect (-DTA; +DTL)  · Increase assets by 75% of PV of capitalized leases ($699 million)  · Decrease assets by $5,390 million to unwind deferred taxes (DTA)  · Increase liabilities by 100% of PV of capitalized leases ($932 million)  · Decrease SE by 25% of PV of operating leases ($233 million)  · Decrease SE by $5,390 million to unwind deferred tax (-DTA; +DTL) Caveats  · Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court. Cost of Equity Capital Historically, LMT common stock has proven less sensitive to the broad stock market. With a beta of .923 and using the Capital Asset Pricing Model (CAPM), LMT investors require an annual rate of return of 10.2%. Although this is lower than the expected market return of 10.8% (see appendix for calculation and assumptions), it is greater than its industry (Guided Missile Space Vehicles) expected return of 8.7%. However, although LMT may be more volatile as a stock than its competitors, it enjoyed a Return on Equity (ROE) significantly higher than the industry average. In 2008, LMT had an ROE of 49.2% while the industry followed with a 23.4% average ROE. Just as significant and telling is the comparison of LMTs ROE to its own required rate of return. This spread of 39% is an impressive sign as it demonstrates the amount of return LMT generated above its cost of equity capital. This is also impressive to investors at first glance, and will warrant a deeper interest from prospective investors. Much the same can be said for GD when comparing its required rate of return to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of equity. However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves; and has an expected return less than its industry return by approximately 1.25%. NOPAT Margin When we analyze the potential net income in the absence of debt, NOPAT, we observe that General Dynamics (9.4%) generates a higher margin over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% average that was established for 2008, but does not necessarily signify any under-performance in this area since the industry data only takes into account two firms when generating Industry NOPAT margin averages. Lockheed Martin was similarly compared to Industry data, generated by two firms as well, in which NOPAT margins were recorded that were more than double of what was found for similarly classified companies (Guided Missiles Space Vehicles 3.69%). Asset Turnover This portion of the ROE evaluates the efficiency to produce revenue based on the investment in assets made by the company. When we begin to evaluate the simplified Asset TO values provided by the multiplicative decomposition of ROE, we observe a noticeable advantage by Lockheed Martin since they reportedly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower values at $1.08 for every $1.00 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 needed to be adjusted, and was done so by pulling out all non-interest bearing liabilities (NIBL). This is where we noticed that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09 ) with respect to assets dollars invested by each company. As we can observe, unexpected losses in each companys pension fund had led them to classify their losses as liabilities since they will still needed to be accounted for in the near future. The 32% drop in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount lost reflects LMTs larger workforce of 140,000 employees. GD, although enduring a similar percentage drop in fund value, only accommodates a workforce of 91,000, and therefore lost less in overall value amount. Leverage When we analyze leverage, we are analyzing each companys ability and efficiency in using interest bearing debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three times higher than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large variation in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom recorded a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008. Selected Ratio Comparison: Accounts Receivable Days General Dynamics Industry Lockheed Martin Industry 39.51 32.50 43.62 57.12 From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account receivable days by 7 days. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account receivable average of 43.62 days, which means LMT was collecting from customers on an average of 13.5 days ahead of the rest of the industry. Accounts Payable Days General Dynamics Industry Lockheed Martin Industry 33.88 31.50 20.09 19.66 GD is collecting from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just  ½ day over the industry average of 19.66 days Inventory Days General Dynamics Industry Lockheed Martin Industry 25.97 56.62 17.35 13.55 GD is turning inventory on average over 30 days under the industry average of 56.62 days LMT is turning inventory on average over 3 days over the industry average of 13.55 days Interest Coverage General Dynamics Industry Lockheed Martin Industry 29.57 30.43 14.49 5.49 GD could cover its yearly interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 times Equity Valuation The equity valuation of General Dynamics for 2008 produced an estimated share price of $77.71. This price is significantly higher than the closing per-share price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns about growth for General Dynamics stem from shrinking credit markets, which would impair the ability to finance business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and deficit spending. Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggested by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were used to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The terminal value assumption used in computing abnormal net income was the competitive equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising approximately 67% of the companys revenue. This lead to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing custo mers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a risk free rate of 5% and a market risk premium of 4%. This produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital. The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares outstanding according to the 2008 annual report to arrive at an estimated share price of $77.71. The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly optimistic in their opinion of Lockheed Martins earnings potential. Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 pro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be devoted to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of s hares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93. References: 1www.Morningstar.com 2www.netadvantgage.standardandpoors.com 3www.generaldynamics.com 4www.lockheedmartin.com 5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 2010 6Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010 APPENDIX CAPM = Rf Rate + (Beta*Rmrkt) Given Data Risk Free rate = 3.77% (10 Year Treasury as of 2/18/10) Market Premium (Rmrkt) = 7% (given on page 26 of class notes) LMT Beta = 0.923 Industry Beta = 0.697 GD Beta = 1.119 Industry Beta = 1.298 CAPM Calculations LMT = .0377 + .923*.07 LMT = 10.23% Industry = .0377 + .697*.07 Industry = 8.65% GD = .0377 + 1.119*.07 GD = 11.60% Industry = .0377 + 1.298*.07 Industry = 12.86% Financial Statement Analysis GD LMT 2008 2008 Beginning assets 25,733 28,926 Ending assets 28,373 33,439 Beginning equity 11,768 9,805 Ending equity 10,053 2,865 Beginning interest-bearing liabilities 2,791 4,407 Ending interest-bearing liabilities 4,024 3,805 Net income (pro forma) 2,674 3,114 Sales revenue 29,300 42,731 Other revenue 0 0 Research development expense 474 1,220 Selling, general administrative expense 1,700 2,344 Income tax expense 1,126 1,485 Income tax rate 0.31 0.32 Interest expense 133 341 Beginning inventory 1,621 1,718 Ending inventory 2,029 1,902 Cost of goods sold 25,647 38,082 Beginning accounts receivable 2,874 4,925 Ending accounts receivable 3,469 5,296 Beginning accounts payable 2,318 2,163 Ending accounts payable 2,443 2,030 Shares outstanding 386 393 Closing price per share 57.59 84.08 bloomberg.com Average assets 27,053 31,183 Average equity 10,911 6,335 Average interest-bearing liabilities 3,408 4,106 Average non-interest bearing liabilities 12,735 20,742 Average accounts receivable 3,172 5,111 Average inventory 1,825 1,810 Average accounts payable 2,381 2,097 After-tax interest rate 0.03 0.06 Multiplicative Decomposition of ROE ROE 0.25 0.49 Net profit margin 0.09 0.07 Asset turnover 1.08 1.37 Leverage 2.48 4.92 Additive Decomposition of ROE ROE 0.25 0.49 Market-to-book 2.21 11.53 NOPAT Margin 0.09 0.08 Asset turnover 2.05 4.09 ROA 0.19 0.32 Spread 0.17 0.26 Leverage 0.31 0.65 Effect of leverage 0.05 0.17 Gross profit margin 0.12 0.11 RD to revenue 0.02 0.03 SGA to revenue 0.06 0.05 Accounts receivable days 39.51 43.65 Inventory days 25.97 17.35 Operating cycle 65.48 61.00 Accounts payable days 33.88 20.09 Cash-to-cash cycle 31.60 40.91 Interest coverage 29.57 14.49 Debt ratio 0.65 0.91 Appendix C: General Dynamics Lockheed Martin Financial Statement Adjustments Cumulative Financial Statement Adjustments Summary of Income Statement Adjustments Summary of Income Statement Adjustments Net Income as Reported: $ 2,459 Net Income as Reported: $ 3,217 Discontinued operations 19 Loss on sale of property, (126) Unwind tax effects 196 land, equipment Adjusted Net Income $ 2,674 Reverse of Impairment charge 215 Unwind tax effects 72 Pension Income (264) Adjusted Net Income $ 3,114 Summary of Balance Sheet Adjustments Summary of Balance Sheet Adjustments Total Assets as reported $ 28,373 Total Assets as reported $ 33,439 Constructive capitalization of 709 Constructive capitalization 699 operating leases of operating leases Unwind tax effects (DTA) (7) Unwind tax effects (DTA) (5,390) Adjusted Total Assets $ 29,075 Adjusted Total Assets $ 28,748 Total Liabilities as reported $ 18,320 Total Liabilities as reported $ 30,574 Constructive capitalization 946 Constructive capitalization 932 of operating leases of operating leases Adjusted Total Liabilities $ 19,266 Adjusted Total Liabilities $ 31,506 Total SE as reported $ 10,053 Total SE as reported $ 2,865 Constructive capitalization (236) Constructive capitalization of operating leases (233) of operating leases Unwind tax effects (5,390) Unwind tax effects (7) (DTA+DTL) (DTA+DTL) Adjusted Total SE $ (2,758) Adjusted Total SE $ 9,810 Adjusted Total Liabilities + SE $ 29,075 Adjusted Total Liabilities + SE $ 28,748 General Dynamics Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 20 Net postretirement plan cost 56 Total cost $ 76 Net earnings $ 2,459 Percentage 3.1% 2008 2007 2 Funded status pensions $ (2,922) $ 383 Funded status other postretirement plans (640) (642) Total funded status (3,562) (259) Difference $ (3,303) 3 Rate of return on U.S. plan assets 8.1% Expected return 593 Implied asset base 7,330 = 592 / .081 Actual return percentage -32.20% = 2360 / 7330 4 Implied asset base $ 7,330 Pro forma expected rate 7.0% Given Pro forma expected return 513 Less: Original expected return (593) Difference (reduction in pension income) (80) 1 Effective tax rate 68.8% =1-.312 Adjustment (reduction) to net income $ (55) OR: [(.081-.070)*7,330] * (1-.312) = $ 55 Adjusted income $ 2,404 = 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 462 Net postretirement plan cost 46 Total cost $ 508 Net earnings $ 3,217 Percentage 15.8% 2008 2007 2 Funded status pensions $ (11,882) $ (879) Funded status other postretirement plans 1426 2017 Total funded status (10,456) 1,138 Difference $ (11,594) 3 Rate of return on U.S. plan assets 8.5% Expected return $ 2,184 Implied asset base 25,694 = 2184 / .085 Actual return percentage -28.62% = 7354 / 25694 4 Implied asset base $ 25,694 Pro forma expected rate 7.0% Given Pro forma expected return 1,799 Less: Original expected return (2,184) Difference (reduction in pension income) (385) 1 Effective tax rate 68.4% =1-.316 Adjustment (reduction) to net income $ (264) Adjusted income $ 2,953 = 3,217 264 General Dynamics Capitalization of Operating Leases Enter interest rate below: 0.039 Enter operating lease commitments below (in millions): 2009 205.0 2010 174.0 2011 131.0 2012 97.0 2013 70.0 2014 thereafter 405.0 Solution: Present value of operating lease commitments $ 945.9 Calculation of Present Value of Operating Lease Payments: 0 205.0 1.000 205.0 1 174.0 1.039 167.5 2 131.0 1.080 121.3