VLKAY » Topics » Business Strategy

This excerpt taken from the VLKAY 10-K filed Mar 22, 2010.

Business Strategy

Our business strategy is to enhance operations by:



Increasing Commercial Real Estate Lending. In order to increase the yield of and reduce the term to repricing of our loan portfolio, we have increased our originations and, to a lesser extent, purchases of commercial real estate loans. However, we do not expect significant growth in such lending until economic conditions begin to improve.



Maintaining a Portfolio of Residential Loans. Although we have reduced to an extent the percentage of our loan portfolio consisting of residential loans, in view of the generally high credit quality of such assets, and in order to maintain close ties with our customers, we intend to devote a significant amount of our assets to one- to four-family and home equity loans.



Building, Subject to Market Conditions, Mortgage Warehouse Lending. In order to increase the yield and balance of our loan portfolio and increase other noninterest income, we introduced the mortgage warehouse line of business. We intend to maintain and possibly increase the activity in this division.



Maintaining Our Status As An Independent Community Oriented Institution. We intend to use our customer service and our knowledge of our local community to enhance our status as an independent community financial institution.



Managed Growth. We believe that it can be helpful to increase our loans and deposits, if possible, in order to help cover the costs of operating in a highly competitive and regulated



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marketplace. Our acquisition of City Savings Financial was a part of this effort. In the future, we will continue, subject to market and economic conditions, to explore ways to grow our franchise both through internal growth and external acquisitions.



Maintaining the Quality of our Loan Portfolio. Maintaining the quality of our loan portfolio is a key factor in managing our operations, particularly during a period of economic downturn. We will continue to use customary risk management techniques, such as independent internal and external loan reviews, portfolio credit analysis and field inspections of collateral in overseeing the performance of our loan portfolio.



Managing Interest Rate Risk. We believe that it is difficult to achieve satisfactory levels of profitability in the financial services industry without assuming some level of interest rate risk. However, we believe that such risk must be carefully managed to avoid undue exposure to changes in interest rates. Accordingly, we seek to manage to the extent practical our interest rate risk, which may include the use of interest rate swap agreements as a part of our strategy.

Our strategy is subject to changes necessitated by future market conditions and other factors.

This excerpt taken from the VLKAY 10-K filed Mar 22, 2010.

Our Business Strategy

Our primary objective is to be the leading provider of high-quality integrated communications services in the markets in which we compete. Our goal is to provide our customers with a superior level of customer service in order to enable us to enhance our operating margins, limit customer turnover and grow our revenue base. To accomplish this objective, we seek to:

Focus on attracting new high-margin customers. We utilize multiple sales channels to attract customers that purchase high-margin services through multi-year contracts that have high retention rates. We focus our sales efforts on business customers with communications-intensive needs that require multiple services and complex communications solutions. We are currently expanding our sales force in each of our distribution channels to reach new customers. We believe that these organizations historically have been underserved by the large incumbent carriers and have limited alternatives for high-quality integrated communications products and services. We believe that these customers generally purchase higher-margin services, have lower turnover rates and are more profitable for us than our customers that principally purchase non-core communications services. We also believe that the demand in this market, combined with our ability to deliver an end-to-end communications solution, presents us with a significant growth opportunity and will offset the managed reduction of our non-core services historically marketed to small customers.

Continue to leverage our network investment. We continue to invest in expanding our network and reducing costs through the deployment of both local and regional network infrastructure, network grooming and other network optimization initiatives. Our network assets and infrastructure permit us to offer an integrated bundle of services to our customers. We are able to increase penetration in our core markets by taking advantage of our extensive deployment of voice and data switches, colocations and transmission equipment, as well as our long-haul fiber optic network facilities. Our network reliability and availability are especially attractive to these high-margin customers, including larger businesses and governmental agencies, that emphasize these features in their purchasing decisions.

Offer a comprehensive suite of high-quality data and voice communications services to our customers. We provide a broad range of integrated data and voice communications services to increase efficiencies for our customers. Our approach provides an attractive service to our customers and should permit us to transition customers from non-core services to higher-margin core services. We provide an integrated communications



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solution through our conveniently bundled package of network and support services. We believe that our bundle of services is an especially attractive means of delivering communications solutions, thereby increasing retention rates and limiting customer turnover.

Provide a superior customer service experience with a consultative sales approach. We seek to differentiate ourselves from our competitors by building long-term customer relationships based on customized service offerings and personalized customer service. Our collaborative sales approach allows our sales force to offer product bundles that meet the particular needs of each prospective and current customer. We have increased and plan to continue increasing our locally-based sales force to offer more face-to-face sales service on a consistent basis and to increase the number of new customer sales opportunities. We are also seeking to improve customer response times through internal training programs and integrated billing, support and sales systems. We reinforce our strategy through compensation programs that reward our sales and account management staff based on customer retention and revenue growth.

Pursue a disciplined and selective acquisition and market expansion strategy. We seek to supplement our internal growth by pursuing disciplined and selective acquisition and market expansion opportunities that we believe will enable us to add customers, increase market penetration, enhance product capabilities and achieve network efficiencies.

This excerpt taken from the VLKAY 10-K filed Mar 22, 2010.

Business Strategy

Overall Approach:  We have a four-pronged approach for ensuring long-term success.

Patent Protection.  We have and will continue to pursue patent protection of developed technology, and will continue to aggressively defend against violators of our patents. We do not believe that direct competitors in the chemiluminescent field commit significant resources to research and development. By conducting research and development, we expect to have a distinct competitive advantage in maintaining our market leading position.
Environmental Initiatives.  As evidenced by the news media, governments and the public are becoming more and more concerned with protecting the environment.
Federal law now bans the use of phthalates as a possible human health risk, so we have developed light sticks that are phthalate free.
Our recently signed contract with the U.S. military (discussed below in Customers) requires that we certify that none of the chemical components have any reporting requirements under SARA (Superfund Amendments and Reauthorization Act) and that none of the chemical components are defined as hazardous or have any release reporting requirements under CERCLA (Comprehensive Environmental Response Compensation and Liability Act). We believe our products are the only products that meet these standards.
We offer a bio-degradable light stick that meets the specifications that the NATO Maintenance and Supply Agency (“NAMSA”) developed in response to their member countries’ concerns over landfill capacity.
The U.S. military has environmental and operational concerns about the use of live ammunition in training exercises, so we have created a 40 mm training round for the military that is non pyrotechnic and does not contain heavy metals.
Product Diversification.  Over the next several years we intend to accelerate diversification into additional products and applications utilizing current technology and technology now under development. Product diversification will allow us to present a more complete line of products that meet current and projected user needs. As part of this process we seek to get customers, such as the many militaries we serve, to upgrade their specifications. Additionally, product diversification reduces our dependence on a relatively small number of products for financial and competitive success. Diversification also helps further distinguish us from competitors who do not make the investment in innovation that we do.
Strategic Partnering.  We actively seek partners who can help us advance our technologies or introduce our products to the market. For example, for the 40mm training ammunition, we partner with Rheinmetall Waffe Munition, GmbH, (“Rheinmetall”) a major global manufacturer of munitions and other products.
This excerpt taken from the VLKAY 10-K filed Mar 22, 2010.

Business Strategy

We intend to continue to expand our business, enhance our market position and increase our revenues and cash flow by focusing on the following:



Continue to Maintain Sales to Existing Customers. We intend to continue providing our customers with a broad range of products and Industry-leading service through our innovative sales and marketing techniques. By leveraging these competitive strengths and capitalizing on the critical role that large distributors play in the Industry, we believe we will be able to maintain sales to our existing customers during this continuing difficult economic environment. We believe that potential for sales to existing customers exists in all regions in which we do business. In the last seven years, we have expanded from our historic base of operations in the Northeast by opening cross-dock facilities in the Southeast, Midwest, West Coast, Southwest, Northwest United States and Eastern, Central and Western portions of Canada, and warehouse operations in Southern California and Georgia.



Leverage Existing Infrastructure to Expand into New Customer Markets. Our hub-and-spoke distribution infrastructure provides extensive operating leverage. We intend to add new and leverage current routes that utilize existing warehouses, cross-docks and sales and marketing infrastructure in order to maximize the efficiency of additional capital expenditures while minimizing the risk. Because inventory is consolidated within our distribution centers, the primary costs associated with expanding into a new region often includes only leasing space for a local cross-dock, obtaining delivery trucks and hiring drivers and supervisory personnel. New routes allow us to expand our customer base by penetrating markets which have not had ready access to the breadth and depth of products that we carry.



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We believe that large retail auto chains represent a source of potential sales for us. These chains are relatively minor players in the specialty automotive equipment market because their distribution infrastructure and business models are based on delivering and merchandising high-volume replacement parts. Lacking internal capability, they have traditionally relied upon a patchwork of local distributors and common carrier shipments to meet their specialty automotive equipment demand. As our geographic footprint has expanded, we have entered into agreements with several of these retailers to supply their specialty automotive equipment needs. As a result of changes in the specialty automotive equipment market, specifically our purchase of certain operating assets from Arrow, we have been able to negotiate contracts with some of these retailers, to which we had not historically had access, and are now supplying products to these retailers.



Selectively Pursue Acquisitions. We believe we are well-suited to capitalize on opportunities to acquire smaller companies that either have key customer relationships or are in areas not currently well served by our existing distribution network. The acquisition of inventory and other operating assets of Arrow is representative of the types of transactions that we are pursuing. We have significant experience in acquiring other distributors, integrating their sales forces, retaining their customer relationships, and implementing our hub-and-spoke distribution network in their distribution markets. We believe that this experience will help us continue to select suitable acquisition opportunities in the future. Consistent with this strategy, we continue to evaluate potential acquisition targets.

This excerpt taken from the VLKAY 10-K filed Mar 19, 2010.

Business Strategy

We have focused primarily on improving the execution of our community oriented retail banking strategy. Highlights of our current business strategy include the following:



Continue to Focus on Residential Lending. We have been and will continue to be primarily a one-to-four family residential mortgage lender for borrowers in our market area. As of December 31, 2009, $81.4 million, or 46.8% of our total loan portfolio consisted of one- to four-family residential mortgage loans (including home equity loans and lines of credit). We have recently developed a secondary mortgage capacity so that we can offer loans, including long-term fixed-rate loans, to our customers that we do not wish to retain in our loan portfolio from an asset/liability management standpoint. We consider the current interest rate environment in making decisions as to whether to hold our originated mortgage loans for investment or to sell the loans to investors, choosing the strategy that is most advantageous to us from a profitability and risk management standpoint.



Increase Commercial Real Estate Lending. While we will continue to emphasize one- to four-family residential mortgage loans, we also have increased and, subject to market conditions, intend to continue to increase our origination of commercial real estate loans in order to increase the yield of, and reduce the term to repricing of, our total loan portfolio. We originated $10.8 million and $25.5 million of commercial real estate loans during the years ended December 31, 2009 and 2008, respectively. At December 31, 2009, $60.6 million, or 34.8% of our total loan portfolio consisted of commercial real estate loans.



Manage Interest Rate Risk While Maintaining or Enhancing to the Extent Practicable our Net Interest Margin. Subject to market conditions, we have sought to enhance net interest income by emphasizing controls on the cost of funds rather than attempting to maximize asset yields, as loans with high yields often involve greater credit risk



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or may be repaid during periods of decreasing market interest rates. We try to promote “core deposits” such as passbook and statement savings accounts, money market accounts and regular and commercial checking accounts, which generally are lower-cost sources of funds than certificates of deposit, and which are less sensitive to withdrawal when interest rates fluctuate. At December 31, 2009, 41.9% of our deposits were core deposits. We attempt to attract and retain core deposits by offering competitive products that meet the full-service banking needs of our customers, by emphasizing quality customer service, and through our convenient locations and advertising and promotions programs.



Expand Banking Relationships to a Larger Base of Customers. Our banking subsidiary, Cullman Savings Bank was established in 1887 and has been operating continuously in Cullman County since that time. Our share of FDIC-insured deposits in Cullman County as of June 30, 2009 (the latest date for which such information is available) was 8.7%. We will seek to expand our customer base and offer our products and services to the new base of customers, by using our recognized brand name and the goodwill developed over years of providing timely, efficient banking services.



Maintain Strong Asset Quality. We have emphasized maintaining strong asset quality by following conservative underwriting guidelines, sound loan administration, and focusing on loans secured by real estate located within our market area only. Our non-performing assets and troubled debt restructurings totaled $931,000, or 0.43% of total assets at December 31, 2009. Our total nonperforming loans to total loans ratio was 0% at December 31, 2009. Total loan delinquencies, greater than 30 days, as of December 31, 2009 were $2.2 million, or 1.24% of total loans

This excerpt taken from the VLKAY 20-F filed Feb 12, 2010.

Business Strategy

ArcelorMittal’s success has been built upon a consistent strategy that emphasizes size and scale, vertical integration, product diversity, continuous growth in higher value products and a strong customer focus. We intend to continue to be the global leader in the steel industry, in particular through the following:

Three-dimensional strategy for sustainability and growth. ArcelorMittal has unique geographical and product diversification, coupled with upstream and downstream integration that reduces exposure to risk and cyclicality. This strategy can be broken down into its three major elements:

Geography: ArcelorMittal is the largest producer of steel in Europe, North and South America, Africa, the second largest steel producer in the CIS region, and has a growing presence in Asia, particularly in China. ArcelorMittal has steel-making operations in 20 countries on four continents, including 65 integrated, mini-mill and integrated mini-mill steel-making facilities which provide a high degree of geographic diversification. Approximately 35% of its steel is produced in the Americas, approximately 47% is produced in Europe and approximately 18% is produced in other countries, such as Kazakhstan, South Africa and Ukraine. ArcelorMittal is able to improve management and spread its risk by operating in six segments (Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, AACIS, Stainless Steel, and Steel Solutions and Services) reflecting its geographic and product diversity.



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Worldwide steel demand in recent years has been driven by growth in developing economies, in particular in the BRICET countries. The Company’s expansion strategy in recent years has given it a leading position in Africa, Central and Eastern Europe, South America and Central Asia. The Company is also building its presence in China and India and recently made its first strategic investment in India in Uttam Galva.

Products: As a global steel producer, ArcelorMittal is able to meet the needs of diverse markets. Steel consumption and product requirements are different in mature economy markets and developing economy markets. Steel consumption in mature economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. As these economies develop, local customers will require increasingly advanced steel products as market needs evolve. To meet these diverse needs, ArcelorMittal maintains a high degree of product diversification and seeks opportunities to increase the proportion of its product mix consisting of higher value-added products. The Company produces a broad range of high-quality finished, semi-finished carbon steel products and stainless steel products.

Value chain: ArcelorMittal has access to high-quality and low-cost raw materials through its captive sources and long-term contracts. ArcelorMittal plans to continue to develop its upstream and downstream integration in the medium-term, following a return to a more favorable market environment. Accordingly, the Company intends in the medium-term to increase selectively its access to and ownership of low-cost raw material supplies, particularly in locations adjacent to, or accessible from, its steel plant operations.

Downstream integration is a key element of ArcelorMittal’s strategy to build a global customer franchise. In high-value products, downstream integration allows steel companies to be closer to the customer and capture a greater share of value-added activities. As its key customers globalize, ArcelorMittal intends to invest in value-added downstream operations, such as steel service centers and building and construction support services for the construction industry. In addition, the Company intends to continue to develop its distribution network in selected geographic regions. ArcelorMittal believes that these downstream and distribution activities should allow it to benefit from better market intelligence and better manage inventories in the supply chain to reduce volatility and improve working capital management. Furthermore ArcelorMittal will continue to expand its production of value-added products in developing markets, leveraging off its experience in developed markets.

Growth Prospects. Notwithstanding the difficult market conditions of 2008/2009, ArcelorMittal’s management believes that there will be strong global steel demand growth in the medium to long term. The Company will continue to invest opportunistically in expanding the production capacity of its existing facilities depending on market conditions and projected global and regional demand trends.

Mergers and acquisitions have historically been a key pillar of ArcelorMittal’s strategy to which it brings unique experience, particularly in terms of integration. Instead of creating new capacity, mergers and acquisitions increase industry consolidation and create synergies. ArcelorMittal has also placed strong emphasis on growth in emerging economies through greenfield developments. In light of the difficult economic and market conditions prevailing in late 2008 and 2009, ArcelorMittal curtailed M&A and greenfield investment activity. To the extent market conditions continue to improve, however, the Company gradually expects to resume M&A and other investment activity in order to take advantage of selected growth opportunities, mainly in emerging markets. In addition the Company remains focused on pursuing its greenfield growth opportunities.

This excerpt taken from the VLKAY 20-F filed Dec 11, 2009.

Business strategy

        We intend to maintain and further strengthen our leading positions in our core product and geographical markets through competitive positioning and by focusing on our core strengths, including efficient manufacturing and distribution, customer service, innovation and reliability. We have been a leader in the coated woodfree paper and chemical cellulose markets for over a decade, and we believe that our strengths position us well to further increase our customer base, expand our market share and achieve higher levels of service and reliability.

        We are focusing on profitability and cash flow generation through tightly managing our working capital levels without compromising on customer service, and through carefully reviewing all non-essential capital expenditures. We also continue to implement variable and fixed cost reduction plans throughout the Group.

        In particular, we are striving to improve efficiencies at our facilities and to optimize our cash generation by implementing production curtailments in each of our operating businesses to minimize the impact of current weak market conditions. We will continue to curtail production as may be required.

        We undertook major Refinancing during fiscal 2009 to improve our debt maturity profile. Following the completion of the Refinancing, we believe that our good liquidity and strengthened balance sheet


positions us to meet the challenges of the uncertain market conditions and to ensure that we are able to take advantage of our leading market positions when markets start to recover.

        One of our main objectives is the further integration of our international marketing and distribution efforts, with an emphasis on meeting our customers' requirements and expectations. We intend to enhance client relationships by continually improving service and reliability, and we will continue to focus on increasing service and efficiency, including through interaction and end-use customers such as publishers and printers. We expect to continue to maintain a focus on innovation through our research and development centers in Europe, North America and South Africa, transferring knowledge throughout our Group and implementing best-practice policies.

        While our main focus is the integration of the Acquired Business, we will continue to carefully evaluate opportunities that may arise from time to time. We intend to remain at the forefront of consolidation in the pulp and paper industry, aiming to further strengthen our position. We intend to focus on investments and acquisition opportunities that fit our strategies and that can be conservatively financed while offering a potential return that exceeds our cost of capital in the medium term.

This excerpt taken from the VLKAY 8-K filed Nov 24, 2009.
Business Strategy. Our strategy is to increase shareholder value through strategic acquisitions, appraisal drilling and development. We are focused on the acquisition, appraisal development and exploitation of oil properties.  Our assets currently consist of primarily of the Alamo Property. The company is also searching for possible joint-ventures and new prospects that fit the Company’s strategic focus.
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