Facebook Badge

Friday, December 30, 2011

Century Partners has partnered with Jhunjhunwala family, BSE


Century Partners has partnered with Jhunjhunwala family, BSE


I am writing here to let you know that during 2011, Century Partners have partnered with an investment research and advisory firm Jhunjhunwala's at BSE Bombay Stock Exchange Towers, Dalal Street, Fort, MUMBAI (MUMBAI is the fastest growing International Financial Center like Hong Kong, Shanghai). Jhunjhunwala's Family is a well known brand locally and globally, established and hold BSE membership since 1921 and now managed by fourth generation financial passionate Mr. Niraj Jhunjhunwala. Niraj is an outstanding human being and an ace investor and I will like to introduce him to you here and request you for a meeting with him in Mumbai soon.

Jhunjhunwala family has immense knowledge, passion and a century long investment experience with capital markets throughout the globe. Century Partners has joined hands with them and share same vision and mission to provide excellent financial services to people around the world.

We have created a financial platform where we will involve multiple channels for companies across the globe to partner with us. What we are going to show case is the huge opportunity existing in emerging INDIA and guide Global investors to come here and see for themselves what INDIA can offer. What ever help we can do from our side to help you in understanding India better we will do it.

We can collaborate with global companies in several ways such as providing them with Investment Advisory services, Independent well research services on Indian companies , Private Equity / Investment Banking Services, Management Consulting, Media Aid, Local Distribution Channel, Global Collaboration opportunities with our existing partners to help you expand further.

If you have the same passion for Finance & Economics  ...... lets connect together as a TEAM ......



DISCLAIMER

INVESTMENTS ARE SUBJECT TO MARKET RISK
ALWAYS CONSULT A PROFESSIONAL BEFORE INVESTMENT DECISION

Wednesday, November 2, 2011

Equity Research

Gujarat State Petronet Limited
BSE: 532702   |   NSE: GSPL   |   ISIN: INE246F01010


My latest recommendation as of now is on GSPL, Here is the link to Equity Research Report Presentation:
https://docs.google.com/EquityResearchReport_CP_GSPL

Wednesday, September 21, 2011

Equity Research: Astral Poly Technik

Today on Sep 4th 2012, Astral Poly Technik Ltd. reached our target price of Rs. 281, four months before our expectation! 

100%+ Returns gained since our recommendation on Jan 11th 2011.

http://www.moneycontrol.com/india/stockpricequote/plastics/astralpolytechnik/APT02


Equity Research Presentation: 


21 Sep 2011
Warren Buffett's $245million investment in JV with Astral Poly Technik, India
In Jan 2011, conducted value based research, valuation study and talked with the management of Astral Poly Tecknik and made a strong buy recommendation in my network. (See the email from Jan 2011 below to a US Manager.)

Warren Buffett's Berkshire Hathaway is in JV ($245mm) with this company, his company's first major investment in India.

Astral Poly Technik Ltd.  (NSE: ASTRAL; BSE: 532830; Bloomberg Ticker: ASTRA:IN)
Equity Research Presentation: 
Quote: http://www.moneycontrol.com/india/stockpricequote/plastics/astralpolytec/APT02

BSE: 532830   |   NSE: ASTRAL   |   ISIN: INE006I01020 

Buffett is back, to invest in Gujarat chemical JV
BS Reporter / Ahmedabad September 22, 2011, 0:28 IST
Oracle of Omaha will initially invest Rs 1,177 crore in the venture.

Billionaire investor Warren Buffett, the Oracle of Omaha, is back in India doing what he does best: investing. Ohio, US-based speciality chemicals maker Lubrizol Corporation, a wholly owned subsidiary of Buffett’s investment company, Berkshire Hathaway Inc, will be setting up a chlorinated polyvinyl chloride (CPVC) industrial unit, in partnership with Astral Poly Technik, at the Gujarat Industrial Development Corporation complex in Dahej. This will be the second investment by Berkshire in India and arguably the largest so far. So far, Berkshire’s sole investment in India is Bangalore-based tool maker TaeguTec India, whose parent I-M-C is also controlled by it. TaeguTec specialises in tungsten carbide cutting tools, tungsten carbide rolls and industrial products.

During his maiden trip to India earlier this year, Buffett did predict he would “make one big investment a year in India”.



Lubrizol will initially pump $245 million (Rs 1,177 crore) into the venture in Gujarat. The construction work was expected to start in January 2013 and the production from October 2014, the state government stated in a statement on Wednesday.

Tom Frubus, chief of Lubrizol Corporation (USA), and Sandip Engineer, managing director of Astral Poly Technik, on Wednesday met Gujarat chief minister Narendra Modi and other state government officials in Gandhinagar to inform them about their decision to invest in the state.



Frubus said, “CPVC products have great demand in Southeast Asia, West Asia and Africa. Considering the investor-friendly environment, transparent policies and best infrastructure facilities in Gujarat, we have chosen the state for setting up of the first unit.”



Dahej is already a major chemical hub, with India’s largest Petroleum, Chemicals and Petrochemicals Investment Region being developed here. Berkshire had acquired Lubrizol Corporation for about $9.7 billion (Rs 46,613 crore) in March.

Headquartered in Ahmedabad, Astral Poly Technik manufactures plumbing systems for residential and industrial applications. It specialises in a range of plastic products like Astral FlowGuard CPVC, FlowGuard Bendable, Astral Aquarius uPVC and Astral Under Ground, and also has technical tie-ups with global majors like Tyco, Spears and Wavin.
------------------------------------------------------------------------------------------------------------

-----Original Message-----
From: Century Partners
Sent: Tue 1/11/2011 8:12 AM
Hello ,
I have shortlisted another company called Astral Poly Technik Ltd. (Mkt. cap
$70M) it's a very good company to make an investment......(Confidential)...

------End of Message----
Disclaimer: This is for information purpose only and express our views about the company, not an offer to buy or sell.


Tuesday, June 21, 2011

ET: 20 years to an economic miracle

http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/20-years-to-an-economic-miracle/articleshow/8945862.cms



20 years to an economic miracle



Twenty years ago, on June 21, 1991, Narasimha Rao became head of a weak minority government grappling with a terrible financial crisis. Yet he initiated economic reforms that eventually transformed India, and even the world. India in 1991 was a poor, misgoverned country, derided as a bottomless pit for foreign aid. Today it is called a potential economic superpower, backed for UN Security Council membership by the US, and set to overtake China to become fastest growing country in the world. 

When economic reforms began, critics warned that India would suffer a "lost development decade" like African and Latin American countries in the 1980s that supposedly followed IMF-World Bank advice. Critics said fiscal austerity would cause mass unemployment and shatter safety nets, while economic opening up would enable multinationals to thrash and oust Indian business. All three criticisms stand exposed today as nonsense. Far from suffering a lost decade India has become a miracle economy: social and welfare spending are at record levels: and Indian businesses have not only held their own but become multinationals themselves. India has averaged over 8% GDP growth in the last decade. Its savings rate has shot up from 22% to 34-36% in two decades. 


So, with just modest foreign capital inflows, India can sustain an investment rate of 36-38% of GDP, which can sustain 8-9% GDP growth. Per capita income has shot up from $300 to $1,700 in two decades. Fast growth has created a shortage of not just skills but even casual labour. Salaries have gone through the roof, and casual wages have shot up by 40% in the last year in Bihar and Orissa. Fast GDP growth has yielded a tremendous revenue bonanza -central revenues are rising by over one lakh crore per year. 


This has helped finance record spending on education and health, on welfare schemes (such as NREGA and Sarva Shiksha Abhiyan), and on Bharat Nirman. However, these areas are still dogged by massive corruption and waste, and badly need reforms China) based fast growth on labour-intensive exports. This was impossible in India because the very incomplete reform process excluded any labour reform. 


To everybody's surprise, India instead developed skill-intensive exports - computer software, business services, autos and pharmaceuticals. This skill-intensive path was totally novel, unrelated to any IMF-World Bank model, and arose spontaneously when economic reforms allowed Indians to innovate in unanticipat ed ways. However, this pattern is now threatened by a serious skill shortage which the highly flawed educational system is struggling to solve. 


India has become world leader in frugal engineering, a concept that didn't exist a decade ago. Frugal engineering cuts costs by not just 10-15% under western levels but by 50-90%. One example is the Nano, the world's cheapest car. Indian telecom has the cheapest call rate of one rupee per minute. Narayan Hrudalaya and Aravind Netralaya perform heart and eye operations at a tiny fraction of the cost overseas. 


Innovation has improved productivity so dramatically that merchandise exports are growing faster than 30% annually despite substantial real appreciation of the rupee. China and some other Asian countries have manipulated exchange rates to create large mercantilist trade surpluses. But the RBI has aimed at a modest current account deficit financed by capital inflows. This is more sustainable than the Chinese approach. Critics claim that fast growth gions. This is simply false. 
Poverty has declined from 45.3% in 1993-94 to 32% in 2009-10 according to the NSSO. But NSSO consumption data now capture only 43% of consumption measured by the national accounts, so the actual fall in poverty is probably steeper. We now have politicians offering free TV sets and laptops at election time. If poverty were really deep, such ploys would lead to Marie Antoinette-style derision. Cellphone penetration is approaching 70% of households. These are signs of falling poverty. 


The hunger ratio has fallen from 17.5% in 1983 to just 2.5% in 2004-05. Research by Devesh Kapur and others has demonstrated an astonishing improvement in the living standards and social status of dalits in UP since the reforms began. Literacy has improved by 21.8% in the last two decades, against just 13% in the previous two decades. In 2001-11, female literacy has outpaced overall literacy, and both have grown fastest in the poorest states. Bihar recorded an improvement of over 20% and 16% respectively in female and overall literacy. Nutrition indicators, however, remain terrible. 


GDP growth has doubled or tripled since 2004 in six large, poor states - Uttar Pradesh, Bihar, Orissa, Chhattisgarh, Jharkhand and Madhya Pradesh. But for this, the national GDP rate could never have risen to 8%. Fast growth has trickled up from the poor states to the national level. These states are affected by Maoism, which is widely held to be evidence of extreme deprivation. In fact, it is more indicative of ethnic tension between tribals and non-tribals, especially over land and mining rights. 


The unfinished agenda is huge. Crony capitalism rather than free competition prevails in many sectors, especially real estate, natural resources and government contracts, making politicians millionaires on an unprecedented scale. Government services - subsidised food, employment programmes, education, health - are dogged by massive absenteeism, corruption and leakages. The police-judicial system is corrupt and moribund, and simply does not combat crime or redress public grievances. Criminals have entered politics in unprecedented numbers. 


Much economic reform is still needed. India ranks only 134th of 183 countries in ease of doing business, according to the Doing Business series of the World Bank/IFC. But even more urgent are reforms to improve governance. After all, economic reform has sufficed to create miracle growth. Governance, alas, still needs a miracle.

Monday, April 25, 2011

Highlights of USA Inc. A Report by Mary Meeker


Highlights of USA Inc. A Report by Mary Meeker [Full Report 481 pg at www.kpcb.com/usainc]
Foreword: George P. Shultz, Paul Volcker, Michael Bloomberg, Richard Ravitch and John Doerr

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BxhOYCkM_sgOYmI4ZjVmMWQtYzE5Ny00NTc5LWI2MTEtOWUzY2UzNjg4YjNk&hl=en

About USA Inc. This report looks at the federal government as if it were a business, with the goal of informing the debate about our nation’s financial situation and outlook. In it, we examine USA Inc.’s income statement and balance sheet. We aim to interpret the underlying data and facts and illustrate patterns and trends in easy-to-understand ways. We analyze the drivers of federal revenue and the history of expense growth, and we examine basic scenarios for how America might move toward positive cash flow.

Summary: By the standards of any public corporation, USA Inc.’s financials are discouraging.

Underfunded entitlements are among the most severe financial burdens USA Inc. faces. And because some of the most underfunded programs are intended to help the nation’s poorest, the electorate must understand the full dimensions of the challenges.



Millions of Americans have come to rely on Medicare and Medicaid and spending has skyrocketed, to 21% of USA Inc.’s total expenses (or $724B) in F2010, up from 5% forty years ago.

Amid the rancor about government’s role in healthcare spending, one fact is undeniable: government spending on healthcare now consumes 8.2% of GDP, compared with just 1.3% fifty years ago.


Unemployment Insurance and Social Security are adequately funded...for now. 
Their future, unfortunately, isn’t so clear.

Regardless of the emotional debate about entitlements, fiscal reality can’t be ignored – if these programs aren’t reformed, one way or another, USA Inc.’s balance sheet will go from bad to worse.

Federal Government Spending Had Risen to 24% of GDP in 2010, Up From an Average of 3% From 1790 to 1930

Entitlement Spending Increased 11x While Real GDP Grew 3x Over Past 45 Years The problem gets worse. Even as USA Inc.’s debt has been rising for decades, plunging interest rates have kept the cost of supporting it relatively steady. Last year’s interest bill would have been 155% (or $290 billion) higher if rates had been at their 30-year average of 6% (vs. 2% in 2010). As debt levels rise and interest rates normalize, net interest payments could grow 20% or more annually. Below-average debt maturities in recent years have also kept the Treasury’s borrowing costs down, but this trend, too, will drive up interest payments once interest rates rise.

Can we afford to wait until the turning point comes? By 2025, entitlements plus net interest payments will absorb all – yes, all – of USA Inc.'s revenue, per CBO.


At the same time, however, these numbers don’t lie. With our demographics and our debts, we’re on a collision course with the future. The good news: Although time is growing short, we still have the capacity to create positive outcomes.

Even though USA Inc. can print money and raise taxes, USA Inc. cannot sustain its financial imbalance indefinitely – especially as the Baby Boomer generation nears retirement age. Net debt levels are approaching warning levels, and some polls suggest that Americans consider reducing debt a national priority. Change is legally possible. Unlike underfunded pension liabilities that can 
bankrupt companies, USA Inc.’s underfunded liabilities are not legal contracts.
Congress has the authority to change the level and conditions for Social Security and Medicare benefits; the federal government, together with the states, can also alter eligibility and benefit levels for Medicaid.

Options for entitlement reform, operating efficiency, and stronger long-term GDP growth.

As analysts, not public policy experts, we can offer mathematical illustrations as a framework for discussion (not necessarily as actual solutions). 
We also present policy options from third-party organizations such as the CBO.

Reforming entitlement programs – Social Security.

Reforming entitlement programs – Medicare and Medicaid.

Improving operating efficiency.

Improving long-term GDP growth – productivity and employment.

How Much Would Real GDP Need to Grow to Drive USA Inc. to Break-Even Without Policy changes? 6-7% in F2012E-F2014E &4-5% in F2015- F2020EWell Above 40-Year Average of 3%

Since the 1960s, as more resources have gone to entitlements and interest payments, USA Inc. has scaled back its investment in technology R&D and infrastructure as percentages of GDP. Competitors are making these investments.

India plans to double infrastructure spending as a percent of GDP by 2013, and its tertiary (college) educated population will double over the next ten years, according to Morgan Stanley analysts, enabling its GDP growth to accelerate to 9-10% annually by 2015 (China’s annual GDP growth is forecast to remain near 8% by 2015). USA Inc. can’t match India’s demographic advantage, but technology can help.

For employment gains, USA Inc. should minimize tax and regulatory uncertainties and encourage businesses to add workers. While hiring and R&D-related tax credits may add to near-term deficits, over time, they should drive job and GDP growth. Immigration reform could also help: A Federal Reserve study in 2010 shows that immigration does not take jobs from U.S.-born workers but boosts productivity and income per worker.

Changing tax policies.

These issues are undoubtedly complex, and difficult decisions must be made. But inaction may be the greatest risk of all. The time to act is now, and our first responsibility as investors in USA Inc. is to understand the task at hand.
America’s Resources Allocated to Housing + Healthcare Nearly Doubled as a Percent of GDP Since 1965, While Household and Government Savings Fell Dramatically

Common principles for overcoming this kind of burden include the following:

1) Acknowledge the problem – some 80% of Americans believe ‘dealing with our growing budget deficit and national debt’ is a national priority, according to a Peter G. Peterson Foundation survey in 11/09;

2) Examine past errors – People need clear descriptions and analysis to understand how the US arrived at its current financial condition – a ‘turnaround CEO’ would certainly initiate a ‘no holds barred’ analysis of the purpose, success and operating efficiency of all of USA Inc.’s spending;

3) Make amends for past errors – Most Americans today at least acknowledge the problems at personal levels and say they rarely or never spend more than what they can afford (63% according to a 2007 Pew Research study). The average American knows the importance of managing a budget. Perhaps more would be willing to sacrifice for the greater good with an understandable plan to serve the country’s long-term best interests;

4) Develop a new code of behavior – Policymakers, businesses (including investment firms), and citizens need to share responsibility for past failures and develop a plan for future successes.

Past generations of Americans have responded to major challenges with collective sacrifice and hard work. Will ours also rise to the occasion?


USA Inc. Concept

Healthy financials and compelling growth prospects are key to success for businesses (and countries). So if the US federal government – which we call USA Inc. – were a business, how would public shareholders view it?

How would long-term investors evaluate the federal government’s business model, strategic plans, and operating efficiency? How would analysts react to its earnings reports? Although some 45% of American households own shares in publicly traded companies and receive related quarterly financial statements, not many “stakeholders” look closely at Washington’s financials. Nearly two-thirds of all American households2 pay federal income taxes, but very few take the time to dig into the numbers of the entity that, on average, collects 13% of all Americans’ annual gross income (not counting another 15-30% for payroll and various state and local taxes).

We drill down on USA Inc.’s past, present, and (in some cases) future financial dynamics and focus on the country’s income statement and balance sheet and related trends. We isolate and review key expense and revenue drivers. On the expense side, we examine the major entitlement programs (Medicare, Medicaid and Social Security) as well as defense and other major discretionary programs. On the revenue side, we focus on GDP growth (driven by labor productivity and employment in the long run) and tax policies.

We present basic numbers-driven scenarios for addressing USA Inc.'s financial challenges. In addition, we lay out the type of basic checklists that corporate turnaround experts might use as starting points when looking at some of USA Inc.’s business model challenges.





Common Financial Metrics Applied to USA Inc. in F2010

Cash Flow Per Share = -$4,171

USA Inc.’s F2010 cash flow -$1.3 trillion, divided by population of ~310 million (assuming each citizen holds one share of USA Inc.).

Net Debt to EBITDA Ratio = -8x

USA Inc. net debt held by public ($9.1 trillion) divided by USA Inc. F2010 EBITDA (-$1.1 trillion). It’s notable that the ratio compares with S&P500 average of 1.4x in 2010.

Even Adjusting For Cyclical Impact of Recessions, USA Inc.’s 2010 Structural Operating Loss = -$817 Billion vs. -$78 Billion 15 Years Ago

The Original Estimates of Medicare’s Costs Were Vastly Underestimated

In 1965, the official estimate of Medicare’s costs was $500 million per year, roughly $3 billion in 2005 dollars.*

The actual cost of Medicare has turned out to be 10x that estimate. Medicare’s actual net loss (tax receipts + trust fund interest – expenditures) has exceeded $3 billion (adjusted for inflation) every year since 1976 and was $146 billion in 2008 alone. In other words, had the original estimate been accurate, the cumulative 43-year cost since Medicare was created would have been $129 billion, adjusted for inflation.

In fact, the actual cumulative spending has been $1.4 trillion** (adjusted for inflation)...in effect, 10x over budget.

While calculations have been flawed from the beginning for some of USA Inc.’s entitlement programs, little has been done to correct the problems.

An accurate economic forecast might have sunk Medicare. David Blumenthal and James Morone “The Lessons of Success – Revisiting the Medicare story”, November 2008

Summary: 40-Year USA, Inc. Trends*

America is spending beyond its means, and the problem – with mounting losses & increasing debt – is getting worse, not better
Healthcare spending and obesity are rising dramatically.
Education spending is growing slower than healthcare spending.
Defense spending is declining on relative basis.
More and more Americans are on the government payroll or receive government subsidies for retirement income, medical care, housing, and food.
Inequality of income and wealth is rising, and fewer Americans pay income taxes to support USA Inc.

Government increasingly resorts to borrowing to fund rising spending levels (primarily for entitlement programs)
We begin with the premise that for an enterprise (even a country that can ‘print money’ and tax) to be sustainable, it cannot lose money on an ongoing basis.
Successful businesses (and households) typically base their expenses on their ability to generate present and future revenue – in other words, they don’t spend unless they can pay.
We analyze the data and present scenarios and options for solving the math and financial challenges facing USA Inc.


Conclusions: 100-Year Review of USA Inc. Income Statement

America’s government has grown dramatically - USA Inc.’s revenue as percent of GDP has risen from 2% to 15%. Individual / social insurance (Social Security + Medicare) taxes have risen dramatically while customs / excise / estate taxes have declined in relative importance. In addition, USA Inc.’s spending as percent of GDP has risen to 24% in 2010, up from 3% average between 1790 and 1930.

USA Inc.’s average operating income was at or near breakeven for most of the periods from 1910 to 1970.

In the 1970s, as healthcare expenses (related to Medicare and Medicaid) began to surge, USA Inc. reported more frequent – and bigger – losses. Since 1970, USA Inc. showed a profit just 4 times (F1998-F2001, when economic growth was especially robust and defense spending was relatively low).

General expense trends since 1970: non-defense discretionary spending has been flattish (except in recessions with material one-time charges), healthcare spending (largely Medicare + Medicaid) has risen materially, Social Security spending has been flattish, defense spending has been down to flattish, and interest payments varied with interest rates.









General Motors – Entitlement Spending Became Too Onerous for this Great American Company

1908 – Founded in Flint, Michigan to manufacture automobiles
1954 – Shipped 50 millionth automobile
1988 – Free cash flow peaked at $6.3B
1999 – Reached a peak market capitalization of $61B
2006 – Revenue peaked at $207B
2009 – Filed for bankruptcy

Why did GM file for bankruptcy?

Products became increasingly uncompetitive. In addition, pension plans to support 650,000 retirees and their dependents (compared with 80,000 active employees in N. America as of 2010) rose to 4.8% of GM’s annual expenses and $4,679 in annual pension payments per worker to former workers.


Highlights from F2010 USA Inc. Financials
Summary – USA Inc. has challenges.

Cash Flow – While recession depressed F2008-F2010 results, cash flow has been negative for 9 consecutive years ($4.8 trillion, cumulative), with no end to losses in sight. Negative cash flow implies that USA Inc. can't afford the services it is providing to 'customers,' many of whom are people with few alternatives.

Balance Sheet – Net worth is negative and deteriorating.
Off-Balance Sheet Liabilities – Off-balance sheet liabilities of at least $31 trillion (primarily unfunded Medicare and Social Security obligations) amount to nearly $3 for every $1 of debt on the books. Just as unfunded corporate pensions and other post-employment benefits (OPEB) weigh on public corporations, unfunded entitlements, over time, may increase USA Inc.’s cost of capital. And today’s off-balance sheet liabilities will be tomorrow’s on-balance sheet debt.

Conclusion – Publicly traded companies with similar financial trends would be pressed by shareholders to pursue a turnaround. The good news: USA Inc.’s underlying asset base and entrepreneurial culture are strong. The financial trends can shift toward a positive direction, but both ‘management’ and ‘shareholders’ will need collective focus, willpower, commitment, and sacrifice.

Table of Contents

About USA Inc. ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ii
Foreword ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ iii
Summary ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ vii
Introduction ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ 5
High-Level Thoughts on Income Statement/Balance Sheet ∙ ∙ ∙ ∙ 25

Income Statement Drilldown ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 53

Entitlement Spending ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙∙ ∙ 72
Medicaid ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙  ∙ 94
Medicare ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙  ∙ 100
Unemployment Benefits ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙∙ ∙ ∙ 121
Social Security ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ 129
Rising Debt Level and Interest Payments ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ 142
Debt Level ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ 145
Effective Interest Rates ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙ ∙ 161
Debt Composition ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ 168
Periodic Large One-Time Charges ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙177
TARP ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ 188
Fannie Mae / Freddie Mac ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 193
ARRA ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 200

Balance Sheet Drilldown ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙  ∙  ∙ ∙ ∙ ∙ ∙ ∙ ∙ 209

What Might a Turnaround Expert Consider? ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 221
High-Level Thoughts on How to Turn Around USA Inc.’s Financial Outlook ∙ ∙ ∙ ∙ 237
Focus on Expenses ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 253
Reform Entitlement Programs ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙  ∙ ∙ ∙ ∙ ∙ 255
Restructure Social Security ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 256
Restructure Medicare & Medicaid ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 268
Focus on Operating Efficiency ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ 329
Review Wages & Benefits ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 335
Review Government Pension Plans ∙  ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 338
Review Role of Unions ∙ ∙ ∙ ∙ ∙ ∙ ∙   ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 342
Review Cost Structure & Headcount ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 345
Review Non-Core 'Business' for Out-Sourcing ∙ ∙ ∙ ∙ 349
Focus on Revenues ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙∙ ∙ ∙∙ ∙ ∙ 355
Drive Sustainable Economic Growth ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙   ∙ ∙ ∙ ∙ ∙ ∙ 356
Invest in Technology / Infrastructure / Education  ∙ ∙ 366
Increase / Improve Employment ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ 383
Improve Competitiveness ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 389
Consider Changing Tax Policies ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 395
Review Tax Rates ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙∙ ∙ ∙ ∙ ∙ ∙ ∙ 396
Reduce Subsidies / Tax Expenditures / Broaden Tax Base ∙ ∙ ∙ ∙ ∙ ∙ ∙ 400

Consequences of Inaction ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 413

Short-Term, Long-Term ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 415
Public Debt, Net Worth vs. Peers ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ ∙ ∙ ∙ ∙ ∙ 416
Lessons Learned From Historical Debt Crisis ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙ ∙ 422
General Motors ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙   ∙ ∙ ∙ ∙ ∙ ∙∙∙ ∙ 431

Summary ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙  ∙  ∙  ∙ ∙ ∙ 437


Highlights of USA Inc. 
A Report by Mary Meeker [Full Report 461 pg at www.kpcb.com/usainc]
Foreword: George P. Shultz, Paul Volcker, Michael Bloomberg, Richard Ravitch and John Doerr