Liquidity Management

The Board of Directors will be responsible for managing this complex issue that depends on weighing multiple and sometimes, conflicting factors.  We state generally some guiding management principles on two broad topics related to the subject:  appropriation of free cash flow generated annually by the investment, and the sale of the investment.

We consider the following factors in managing the free cash flow:

• Our primary goal is the achievement of superior, long-term, after-tax rates of returns for our shareholders.  So, we will reinvest free cash flow into the business as long as it can be done at rates greater than its opportunity cost.  
• We will conservatively capitalize our portfolio companies.  Free cash flow will be used to pay-down debt when more productive uses cannot be identified.  This philosophy is consistent with our strategy to generate superior returns primarily through improvement of the economic fundamentals of the business. 
• We want the financial flexibility to take advantage of opportunities in the marketplace and allow for long-term strategic investments in the business.
• When our primary goals are met and no other use for the cash is foreseen, we will return the money to our shareholders in cash dividends. 
• We want to minimize taxes.

Regarding the timing of the sale of an investment, our goal is to hold the investment for a 7-10 year time frame.  However, under the right conditions, we will be open to sell our investment sooner.