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Analysis and Balance Scorecard – DuPont
Analysis and Balance Scorecard
DuPont
Written byCates, JasonChoudhury, FatimaPatel, RaviPatel, Roshan
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Analysis and Balance Scorecard – DuPont
© Jason Cates, Fatima Choudhury Ravi Patel and Roshan Patel, 2013
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To be delivered to the University of Hertfordshire on or by
11 March 2012
Ordered to be printed
11 March 2012
Printed in the United Kingdom
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Analysis and Balance Scorecard – DuPont
Table of ContentsType of Business...........................................................................................................................................3
Size of Business............................................................................................................................................4
Major Product/Service Areas.......................................................................................................................6
Agriculture................................................................................................................................................6
Performance Chemicals............................................................................................................................6
Performance Materials.............................................................................................................................7
Geographical Structure.................................................................................................................................8
Financial Performance................................................................................................................................10
Major Strategic Challenges.........................................................................................................................12
Balance Scorecard......................................................................................................................................13
Financial................................................................................................................................................13
Customer...............................................................................................................................................13
Internal Business Processes.................................................................................................................14
Learning and Growth............................................................................................................................14
Learning and Growth............................................................................................................................15
Notes to the Balance Scorecard.................................................................................................................16
Signatories..................................................................................................................................................17
Word count: 1471/1500
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Analysis and Balance Scorecard – DuPont
Type of Business
DuPont is a chemical and performance material based company and considers itself a “world leader in
market-driven innovation and science”. Founded in 1802, DuPont has been involved in a number of
major material breakthroughs throughout history. Along with Wallace Carothers, DuPont helped discover
the first synthetic rubber Neoprene. During the Second World War, DuPont was the largest manufacturer
of gunpowder and explosives in the United States and went on to supply materials necessary for the US
Apollo Project. (DuPont, 2013bcd)
DuPont currently consists of seven differentiated segments ranging from “Electronics and
Communication” to agriculture and pharmaceuticals. Half of company sales currently come from
DuPont’s agriculture and performance chemical divisions currently contributing $17bn to corporate
revenue. In recent years, DuPont has focused on creating sustainable growth through targeting market
needs brought about by increasing global challenges. These include the need for a reduced dependence
on fossil fuels and the need for greater food productivity. (DuPont, 2013a)
DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed 1 March 2013]DuPont (2013) Global Challenges. Available at: http://www2.dupont.com/inclusive-innovations/en-us/gss/global-challenges.html [Accessed 5 March 2013].DuPont (2013) Innovation starts here. Available at: http://www2.dupont.com/Phoenix_Heritage/en_US/landing_era4.html [Accessed 5 March 2013]
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Analysis and Balance Scorecard – DuPont
DuPont (2013) Our company. Available at: http://www2.dupont.com/corp/en-us/our-company/index.html [Accessed 5 March 2013]
Size of Business
DuPont is among the largest chemical performance material manufacturers in the world,
operating in more than 70 countries with 58,000 employees. According to their annual report, DuPont is
the global leader of selling and manufacturing nylon, titanium dioxide, elastane and fluropolymers. They
are also the largest supplier of automotive coating and the market leader in supplying resins and films,
advanced electronic material and holographic optical components and holograms. (DuPont, 2013a)
(Corporate Watch, 2013)(Forbes, 2013)
DuPont own over twenty thousand worldwide patents and over fourteen thousand patent
applications. Additionally, the company also has over twenty-one thousand unique trademarks for its
products/services and over twenty-three thousand worldwide registrations and applications for these
trademarks. This market stronghold makes it difficult for competitors to compete. However, due to the
continuous evolution of technology and new innovations, DuPont must continually invest in research and
development in order to maintain its competitive position. (DuPont, 2013a)(Reed, 2013)
Dow BASF Bayer DuPont0
102030405060708090
Net Sales
Net
Sal
es $
bn
Graph 2a
Dow BASF Bayer DuPont0
1
2
3
4
5
6
Net Income
Net
Inco
me
$bn
Graph 2b
(Dow, 2012)(BASF, 2013)(Bayer, 2013)(DuPont, 2013a)
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Analysis and Balance Scorecard – DuPont
As shown in graph 2a, DuPont’s net sales have been significantly lower than those of its main
competitive rivals and half those of BASF. However, in regards to net income, DuPont outperforms two
of its rival at $2.79bn, but still behind BASF with net income of $4.88bn. This shows that even though
DuPont has significantly lower sales than many of its main rivals, it can still compete on the world stage.
(DuPont. 2013a)
Bayer (2013a) Annual Report 2012. [Online] Available at: http://www.annualreport2012.bayer.com/en/bayer-annual-report-2012.pdfx [Accessed 1 March 2013]BASF (2012) Annual Report 2012. [Online] Available at: http://www.basf.com/group/corporate/en/function/conversions:/publishdownload/content/about-basf/facts-reports/reports/2012/BASF_Report_2012.pdf [Accessed 1 March 2013]Dow (2011) Annual Report 2011. [Online] Available at: http://www.dow.com/investors/pdfs/161-00769_2011_Annual_Report_Final.pdf [Accessed 1 March 2013]DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed 1 March 2013]Corporate Watch (2013) DuPont. Available at:: http://www.corporatewatch.org/?lid=170 [Accessed 5 March 2013]
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Analysis and Balance Scorecard – DuPont
Forbes (2013) Forbes earnings preview: DuPont. Available at: http://www.forbes.com/sites/narrativescience/2012/04/17/forbes-earnings-preview-dupont-2/2/ [Accessed: 1 March 2013]Reed Business Information Ltd, 2013. DuPont: Company structure information from ICIS. [Online] Available at:http://www.icis.com/v2/companies/9145202/dupont/structure.html [Accessed 5 March 2013]
Major Product/Service Areas
30%
20%18%
11%
10%
8%
3%
Segment Sales
Agriculture
Performance Chemicals
Performance Materials
Safety and Protection
Nutrition and Health
Electronics and Communications
Industrial Biosciences
Graph 3a
(DuPont, 2013a)
Graph 3a shows the contribution each of DuPont’s main segment makes to corporate sales. The
company consists of seven “reportable segments”, of which, those described below make up 68.4% of
total net sales. The remaining 31.6% of net sales come from safety and protection, nutrition and health,
electronics and communications and industrial bioscience segments. (DuPont, 2013a)
Agriculture “DuPont Pioneer” has a portfolio of products/services targeted to improve crop yields and
productivity. Products include fungicides and herbicides, fungicides, insecticides and seed products.
“DuPont Crop Protection” principle products include weed, disease and insect control offerings. This
segment makes up 29.6% of net sales and is equivalent to $10.4bn. (DuPont, 2013a)
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Analysis and Balance Scorecard – DuPont
Performance Chemicals“DuPont Titanium Technologies” main products are its range of DuPont “Ti-Pure” titanium
dioxide products used for plastics, papers and coatings. “DuPont Chemicals and Fluoroproducts”
chemical products are seen in refrigerants, lubricants, propellants, solvents and fire extinguishers. This
segment makes up 20.4% of net sales and is equivalent to $7.2bn. (DuPont, 2013a)
Performance Materials“Performance Polymers” product portfolio includes a range of engineering polymers used in a
variety of chemical, electrical and mechanical systems. “Packaging & Industrial Polymers” produces
resins and films used in an array of packaging and industrial polymer applications. This segment makes
up 18.3% of net sales and is equivalent to $6.5bn. (DuPont, 2013a)
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Analysis and Balance Scorecard – DuPont
DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
Geographical Structure
2010 2011 20120%
10%20%30%40%50%60%70%80%90%
100%
38.0% 36.3% 38.1%
2.9% 2.6% 2.6%
23.3% 24.1% 23.1%
24.6% 24.8% 23.1%
11.2% 12.2% 13.1%
Geography - Net Sales
Latin AmericaAsia PacificEMEACanadaUnited States
Graph 4a
United States
Canada EMEA Asia Pacific
Latin America
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Change in Net Sales(2010 - 2012)
Graph 4b
(DuPont, 2011-2013a)
Graph 4a shows that Du Pont’s main single market remains the United States, followed by the
EMEA (Europe, Middle East and Africa) and the Asia Pacific regions. However, growth in regards to net
sales since 2010 has largely come from Latin America. This includes growth in Latin America being almost
double that seen in any other region, including that in the US. (DuPont, 2013a)
Although growth was seen Du Pont’s Latin American operations, its starting point was relatively
low as compared to its US operations. As such, the US market will likely remain Du Pont’s topmost source
of income in the short-to-medium term. However, if this growth in Du Pont’s Latin American market
continues at the rate seen between 2010 and 2012, Latin America will become an increasingly important
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Analysis and Balance Scorecard – DuPont
market for Du Pont’s products. As such, future strategic targets and measures should reflect such
importance. (DuPont, 2013a)
2010 2011 20120%
10%20%30%40%50%60%70%80%90%
100%
69.1% 64.6% 66.8%
1.5%1.3% 1.2%
15.3% 19.4% 18.1%
8.7% 9.2% 8.2%5.4% 5.5% 5.7%
Geography - Property
Latin AmericaAsia PacificEMEACanadaUnited States
Graph 4c
(DuPont, 2011-2013a)
In regards to Du Pont’s property portfolio, Du Pont has a disproportionate degree of property
weighted towards the US. This hinders Du Pont’s ability to grow in markets such as Latin America by
increasing the timing and costs involved in product distribution.
Overall, Du Pont has a diverse geographical market base with footholds in both mature markets
and in key growth markets including China and Brazil. This diverse geographical portfolio will help ensure
Du Pont’s long-term growth prospects.
DuPont (2011) Annual Report 2010. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDEzMDc1fENoaWxkSUQ9NDI0MTU3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]DuPont (2012) Annual Report 2011. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDU1NjkyfENoaWxkSUQ9NDgyMTk5fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
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Analysis and Balance Scorecard – DuPont
DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
Financial Performance
2008 2009 2010 2011 201205
10152025303540
Revenue vs. Net Income
Revenue Net Income
Valu
e $B
n
Graph 5a
2008 2009 2010 2011 201202468
10121416
Cash vs. Short-term Liabilities
Short-Term LiabilitiesCash
Valu
e $B
n
Graph 5b
(DuPont, 2009-2013a)
Graph 5a shows that Du Pont’s revenues declined in the year ended 2009. This was due to
subdued economic conditions which included “declining consumer and business confidence”. This, in Du
Pont’s view, caused customers to delay or cancel their orders. This also led to delays in customer
payments for goods, thus impeding Du Pont’s cash flow performance. However, graph 4b shows cash
flow remaining stable throughout this period. Furthermore, revenue performance improved from 2010
onwards and reached $34.8bn by 2012. This shows that, although Du Pont’s financial performance
declined in 2009, the long-term prospects for the company remain stable. (DuPont, 2011-2013a)
Regarding short-term liabilities, although these have increased since 2010, they have remained
in proportion to the company’s overall size in relation to total assets. As such, this increase should not be
an issue of concern at the present time.
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Analysis and Balance Scorecard – DuPont
2008 2009 2010 2011 20120.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Profit Margin(Revenue - Cost of Sales)
Graph 5c
2008 2009 2010 2011 20120.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Net Income/Revenue(Revenue - Cost of Sales - Expenses)
Graph 5d
(DuPont, 2009-2013a)
Du Pont saw an increase in its profit margin in both 2009 and 2010 after which it levelled out at
slightly above 26%. As shown in graph 5c, when factoring in general expenses such as administration, the
net income margin for 2012 stood at 8%, a fall from 10.3% the previous year. This shows an increase in
company expenses is disproportionate to its increase in revenue, thus reducing Du Pont’s financial
performance. However, this margin remains higher than in 2009 when it stood at 6.7%. As such, this
lower margin of 8% is likely to remain sustainable in the long-term on the condition it doesn’t decline
significantly in future years. (DuPont, 2009-2013a)
DuPont (2009) Annual Report 2008. [Online] Available at: http://media.corporate-ir.net/media_files/irol/73/73320/BOP72619BOP005_BITS_N_1519.pdf [Accessed: 1 March 2013]DuPont (2010) Annual Report 2009. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY5MjM3fENoaWxkSUQ9MzY1ODgyfFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]DuPont (2011) Annual Report 2010. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDEzMDc1fENoaWxkSUQ9NDI0MTU3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]DuPont (2012) Annual Report 2011. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDU1NjkyfENoaWxkSUQ9NDgyMTk5fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
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Analysis and Balance Scorecard – DuPont
DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
Major Strategic ChallengesChallenge Description
“Price increases for
energy and raw
materials could have a
significant impact on the
company's ability to
sustain and grow
earnings”
Although DuPont improved its profit margin during the period 2008 to 2010, the
volatility in the costs of energy and raw materials remain key factors to DuPont’s
long-term viability and success. This volatility has a significant impact on the
company’s net profit figure year-on-year and contributes to long-term instability
and risk. Therefore, systems should be put in place to mitigate exposure to such
volatility. Such systems will require years to implement and perfect and thus,
require long-term management commitment. Such systems should result in a
reduction in waste material and reducing reliance on key raw and energy materials.
Efficient procurement and logistics will also be required to further reduce waste
and improve profitability.
“Failure to develop and
market new products
and manage product life
cycles could impact the
company's competitive
position and have an
adverse effect on the
company's financial
results.”
Research and development will remain crucial to DuPont’s long-term viability as a
chemical company. As product lifecycles come to an end, DuPont must ensure it
has sufficient new products to replace and grow upon these declining products. As
such, DuPont’s investment in research and development increased by 48.8% during
the period 2008 to 2012 and has focused on growing customer needs including
“food productivity” and “decreasing dependency on fossil fuels”. This investment, if
maintained, will help maintain DuPont’s competitive advantage and further ensure
the company’s long-term viability and success.
“The company's results
of operations could be
adversely affected by
litigation and other
commitments and
contingencies.”
By the nature of being a chemicals based company, Du Pont faces significant
liabilities relating to litigation and related contingencies. A significant challenge
over the medium term will be implementing systems that prevent such litigation
from taking place at all, successful or not. As such, DuPont must ensure it meets
the highest ethical and environmental standards with investment in such being
returned in the form of lower litigation liabilities. In the short-term, DuPont must
ensure it meets all legal requirements regarding its environmental impact. This will
better allow DuPont to successfully defend against such litigation and reduce its
liabilities as appropriate.
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Analysis and Balance Scorecard – DuPont
DuPont (2013a) Annual Report 2012. [Online] Available at: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDkzNzU2fENoaWxkSUQ9NTMxODQ3fFR5cGU9MQ==&t=1 [Accessed: 1 March 2013]
Balance ScorecardPerspective Objectives Measures Targets Initiatives
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Analysis and Balance Scorecard – DuPont
Financial
Customer
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12.5%, 28%, 11% and $4.5bn
respectively by year end 2015
Reduce to $50mn by year
end 2018
Reduce Energy usage by 10% per $ of Revenue by year end 2020
Sum of all the objectives and initiatives that
follow.
“Bold Energy Plan” and the “Global
Climate and Energy Project”
“Bold Energy Plan” and the “Global
Climate and Energy Project”
ROCEGross Profit
Net Profit MarginNet Pre-Tax Profit
Improve Reputation
Increase Market Share
Reduce Delivery Times
Improve Profitability
Reduce Environmental
Costs
Reduce Energy Costs
Reduce Delivery Costs
Stability and Growth of Revenue
Improve Satisfaction
with Products
Improve Customer
Service
Annual Environmental Remediation
Total Energy Costs per $ of Revenue
Average Delivery Cost per Unit
Revenue
Number of New
Customers
Market Share
Orders per Customer
Average Delivery Times
Customer Retention Rate
Reduce by 15% by year end 2018
$41bn by year end 2015
15% More Customers by year
end 2015
24.5% in Corn, Soybean & Other Seeds by year end
2019
15% Increase in orders per
customer by year end 2016
Reduce by 25% by year end
2018
15% Increase by year end
2015
“US Resilience Project”
Indirectly“Central Research and Development
Team”
Indirectly“Bold Energy Plan”
and the “US Resilience Project”
Indirectly “Central Research and Development
Team”
“Central Research and Development
Team”
“US Resilience Project”
Indirectly
“US Resilience Project”
Objectives Measures Targets Initiatives
Internal Business
Processes
Learning and Growth
Develop 1000 new products
by 2015
Reduce to $300mn by end 2016
GP of 28% and Reduce Energy
usage by 10% by year end 2020
Reduce by 15% by Year End
2018
Investment in Research and Development
Develop New Products
Reduce Environmental
Impact
Reduce Material and Energy Waste
Shorten Supply Chains
Geographical Diversification
Improve Environmental Sustainability
Number of Total Products
CO2 Emissions and Annual
Environmental Remediation
Gross Profit Margin and Total
Energy Costs
Average Delivery Time
Break Down of Sales by
Geographic Location
Latin America 20% and Asia Pacific 30% by year end
2018
Revenues from Sustainable
Products
“Bold Energy Plan” and the “Global
Climate and Energy Project”
$8bn from Non-Depletable Resources
$2bn from Low Emission products
Greenhouse Gas Emissions
& Fuel Efficiency
Reduce greenhouse gas
emissions by 15% and Reduce water consumption by 30% by year end
2015
$2bn Annual Investment
Invest $640mn and develop 1000 new products by
2015
Total Investment in R&D
Investment in R&D for Sustainable
Products
“Bold Energy Plan” and the “Global
Climate and Energy Project”
“US Resilience Project”
Indirectly“Demand Planning Systems” and US
Resilience Project”
“Global Climate and Energy
Project” and the “Central Research and Development
Team”
“Bold Energy Plan” and the
“Global Climate and
Energy Project”
“Central Research and Development
Team”
“Central Research and Development
Team”
Analysis and Balance Scorecard – DuPont
Perspective Objectives Measures Targets Initiatives
Learning and Growth
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Investment in International
Logistics
Investment in Non US/EMEA
Facilities
Average Delivery Times
Value of Non US/EMEA
Warehouses and R&D Facilities
Reduce by 15% by Year End
2018
$2bn in Latin America & $1.5bn in Asia Pacific by year end 2018
Develop workforce Capability
Investment in Training and Development
“Modern Apprenticeship
Program”
Increase No. of Apprenticeships by 25% by 2018
“Demand Planning Systems” and US Resilience
Project”
“US Resilience Project”
Analysis and Balance Scorecard – DuPont
Notes to the Balance Scorecard1. Colours
a. Red – Delivery, Supply Chain and Logisticsb. Blue – Research, Corporate Development and Training.c. Purple – Applicable to both of the above.
2. US Resilience Projecta. This initiative sets out to “standardise” the business processes within DuPont’s supply chain.
i. This standardisation will reduce delivery times and associated costs and will facilitate “Investment in Non US/EMEA Facilities”. These simpler supply chains will also contribute to “enhancing customer satisfaction” and “improved customer service”.
3. Demand Planning Systemsa. This system will use factors such as work-in-progress, inventory levels, plant capacities and
production plans to further enhance DuPont’s ability to meet “customer demand”. b. This will help “reduce deliver times” and contribute to the “Investment in International Logistics”.
4. Central Research and Development Teama. This central R&D team is aimed at producing breakthroughs in science and technology that will
lead to the coordinated development of new products. This initiative will also increase the productivity of corporate development through the streamlining of the R&D process.
b. This initiative aims at contributing to the “stability and growth of revenue” by enhancing growth in DuPont’s product portfolio and contributing to an “increase in market share”.
c. The initiative will work with the “Global Climate and Energy Project” on the development of environmentally friendly products, reducing energy costs and aiding corporate sustainability.
5. Modern Apprenticeship Programa. This training program will aid the workforce in gaining required skills and qualifications. This will
bring in new and different perspectives necessary for the “development of new products” and improve corporate productivity.
b. This will contribute to “improving company reputation” as DuPont will be seen as providing new opportunities in the job market.
6. Bold Energy Plana. The “Bold Energy Plan” aims to improve corporate sustainability and energy efficiency within
DuPont’s current supply chain, thus contributing to DuPonts “2020 Energy Plan”. This, by default, will also reduce DuPont’s total energy costs by $179 million by 2020.
7. Stanford University’s Global Climate and Energy Projecta. This project supports the “Bold Energy Plan” by encouraging innovative research into sustainable
energy technologies. The project will address Du Pont’s technology based needs in fields such as solar energy, second-generation biofuels and energy storage, therefore contributing to achieving its energy and environmental targets.
b. Collaborators in this project include Toyota, General Electric and ExxonMobil who, since the projects launch in 2002, have together invested over $113Mn in ninety-three research programs.
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Analysis and Balance Scorecard – DuPont
SignatoriesWe commend this paper to the University of Hertfordshire to be delivered on or by 11 March 2012.
Signed on behalf of authors as stated on front page.
Jason Cates
___________
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