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United Financial Mortgage $15 .6 Million Secondary Offering

Drugmax Inc. $3.21 Million Private Placement

Recom Managed Systems

Recom Managed Systems $5.4 Million PIPE Financial Advisory M&A

EPIXTAR Epixtar Corporation $7.5 Million Private Placement

Egenix $4.5 Million PIPE Private Placement

NetSol Technologies, Inc. $2.4 million Private Placement

New York City 405 Lexington Ave., New York, NY 10174 路tel: 800-724-0761, tel: 212-895-3500, fax: 212-895-3555 Long Island, New York 99 Sunnyside Blvd., Woodbury, NY 11797 路tel: 800-537-6923, tel: 516-393-8300, fax: 516-364-1310 Chicago 200 West Jackson Boulevard, Suite 2000, Chicago, IL 60606 路tel: 800-621-0659, tel: 312-554-2200, fax: 312-554-1009 Member NASD & SIPC

We Invite You From an early morning idea that just popped into my head after a sunrise jog, to a public company that has changed the way companies do business, to a building filled with excited people, working, thriving, all moving energetically in the same direction. The ValueRich Company has taken flight. We are proud to present the second issue of ValueRich magazine. We have been overwhelmed with e-mails and phone calls after the publishing and distribution of our premiere issue to every CEO and president of every public company in the country. From ideas scratched onto a legal pad, we wrote a business plan, searched for employees over the Internet and rented a small office with the requisite phone lines and Internet connections. We developed our Web site and mailed thousands of printed marketing packages. We made calls, left voice messages and mounted eight road shows (two in Europe) to introduce the ValueRich concept. Eventually, we moved into our own building and hired editors, writers, photographers, graphic designers and sales people. We worked and waited, waited and worked . Entrepreneurs always look for confirmation of their ideas. Confirmation comes in many forms. Companies that were previously unapproachable are now calling us and asking how they can get involved. The phone is ringing and e-mails are arriving with requests for subscriptions, advertising, co-sponsorships for our convention and business contacts. People are flying to visit us and pitch their needs. 1 was recently invited to speak atTrump International Country Club, where the ValueRich MarketPlace was well-received. We have received requests from Fortune 1000 companies interested in co-op marketing, business development and advertising. Institutions have approached us with offers of investment. Amazing people have approached us to help carry the ValueRich message. We have entered into agreements with people from New York to California, Asia and several European countries.

The idea that published advertisements by public companies can make the contacts necessary to raise capital, find partners, merge and acquire, develop business and attract market support, is making a great deal of sense with the nearly 90 percent of public companies that are too small to warrant Wall Street's attention. The response to the ValueRich business model was so dramatic that we realized we were on to something much larger than originally thought. Not only are the initially targeted 14,000 public companies desirous of exposure to ValueRich readers, but we've also created a way for high quality advertisers to reach one of the most affluent groups of consumers on the planet. As we set out to change the way companies accomplish investment banking goals, it became apparent that ValueRich could also create new ways for companies to develop business and market themselves. When the new 400,000-square-foot Palm Beach county convention center opened, we realized what we had to do. The ValueRich International Public Company Assembly and Exposition concept was born as the obvious third link in public company business development- publishing, investment banking and networking. Little did we realize that the ValueRich concept would one day include holding the largest public company conference ever- lofty ambitions and risky ventures! Our hometown, West Palm Beach, was recently rated fifth in the nation by Inc. magazine for business and first by Forbes for lifestyle. It's been estimated that Palm Beach is the winter haven of 25 percent of America's wealth during its social and tourism season. We have decided to pull out all the stops and are working with sponsors to host dinners in fine restaurants and events at prominent venues. And, we'll close the whole event with a celebrity golf tournament on the PGA National Champion course. Yes, we are taking ValueRich to the next level- publishing magazines, holding the largest public company event of its kind, celebrity golf tournaments- all this from an idea after an early morning jog.

We invite you to join us We invite you to advertise your public company's needs in our ValueRich MarketPlace We invite you to let us create and build value for your company We invite you to visit out Web site and register for a free subscription ofValueRich magazine We invite you to advertise in ValueRich magazine We invite you to attend our ValueRich public company conference in Palm Beach, March 9-12, 2005 We invite your feature story ideas and comments on our company We invite you ...

;;;d?p~J Joseph Visconti President, ValueRich, Inc. Valu eRich Magazi ne 3

I Trading

on Tradition

Tradition is not a word that carries much clout in today's culture. Editors, broadcast-

ers and politicians typically resist using it because it causes audiences to flip channels and turn pages. So I was greatly surprised and intrigued upon realizing that tradition had emerged as the common element and theme in this issue of ValueRich magazine. Take, for instance, our article about the Morgan Motor Company. Given the fact that Morgan still builds cars with many of the same sensibilities, materials and techniques it has used since 1912, one might have written it off years ago. Yet it has recently launched the Morgan Aero 8 sport roadster, which is an undeniable hit. The Aero 8 GT racing team also is turning heads on the Le Mans circuit. One key reason for Morgan's success is that it is a family-run business. Each successive Morgan heir to take over the company developed the next generation of Morgan car. The current managing director, Charles Morgan, very publicly snubbed the advice of so-called industry experts when they told him Morgan had to become more of an assembly line business. He decided that the Morgan Motor Company would continue being passionate about its cars and so would Morgan's customers. It was a Morgan family tradition. Our cover story about Steinway & Sons hammers the idea home with even more force. Steinway has made the world's finest pianos for 150 years. The company's history sets it apart from all others. But most people don't get together and play chamber music in their home anymore. The market for pianos has dwindled and become saturated with cheaply produced pianos since Steinway's heyday. When CEO Bruce Stevens joined the company he was told he'd have to build Steinway pianos more cheaply and discount existing inventory. Much like Charles Morgan, he also didn't listen to common wisdom . Stevens decided to stick with tradition, take the long view and be uncompromising. He thinks more public company leaders should do the same. Steinway is profitable and growing, the brand name stronger than ever. As dull as the word may sound, tradition can generate the strongest kind of enthusiasm and the best kind of entrepreneur. Samuel Friedmann, owner of Gevril, was a collector of complicated Swiss timepieces who had dreams of owning a historical brand name and restoring the art form to its former glory. So, when the opportunity arose, he purchased Gevril. He took an incredible risk in a market already saturated with venerable brand names so that he might design and build contemporary Gevril watches based on concepts hundreds of years old - because he didn't want to see those traditions pass into history. We offer the success of these and other entrepreneurs featured in this issue of ValueRich magazine as an inspiration- in the best tradition of publishing.

David Willson Editor-in-chief

Valu eRich Ma gazine 5




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700 F"IFTH AVENUE & 55T" STREET • NEW YORK • 212.397.9000

Hamburg Berlin Munich Dusseldorf Frankfurt London Madrid Paris Vienna




Joseph C. Visconti President & CEO David A. Willson Editor-in-chief dw ill son @valuerichon

BMW, Mercedes-Benz, Porsche, Jaguar, Lexus, Rolls Royce, Bentley Sales & Rentals

Jon C. Sprad ley Art Director j cs@va luerichon Contributing Editors Ellen Bainer Ka ren Willson Contributors Greg Allikas Will Andrews Steve Bennett Bill Burt Richard Caturano, CPA Ralph V. De Martino Ronald D. Hunter Martha Moffett Charles V. Payne Advertising Executive Kim J. Armstrong Public Company Profiles Brandyce H. Stephenson Corporate Development Advertising/ Public Company Profi les Ashley Sosner ashley@va luerichon Cristina Kaiser Director of Corporate Communications


Now taking orders for the 2005 AeroB -The New Generation of Morgen.

Wendy Walesch Corporate Communicatio ns w hwa Director of Global Affairs Roxane E. West 1-214-244-6400, 1-2 12-956-2461 Specia l thanks to: Leo Spel lman

Plus, we have a few of the very last Plus8 35th Anniversary Edition to ever be built. Available Dec/ Jan.

Senior Director Comm unicatio ns, Steinway & Sons Copyright 2004 by ValueRich, Inc. All rights reserved. ValueRich magazine is published four times a year. Reproducti on w ithout the permission of the publisher is prohibited. The publisher and editors are not responsible for unsolicited material and it w ill be treated as unconditionally assigned for publication subject to ValueRich magazine's right to edit. Return postage must accompany all manuscripts, photographs and drawings. Every effort has been made to assure that all information presented in thi s issue is accurate, and neither ValueRich magazine or any of its staff is responsible for omissions or information that has been misrepresented to the magazine. ValueRich, Inc. P. 0 . Box 962, Pa lm Beach, FL 33480 56 1-832-8878, Fax: 561 -841 - 1524

ValueRich Magazi ne 7




i.Want.1 The Saddest and the Best


Cover Story Enduring Steinway


By Martha Moffett

A great American company celebrates 150 years of quality and innovation.

From a hand-built chopper to a thumbsized camcorder, it's all the stuff you won't believe, and just gotta have.

1.&.0nly Gevril: The Watch of Kings


By David Willson

What does a true timepiece connoisseur and enthusiast dream about? Buying a 260-yearold Swiss watch company fit for royalty and bringing it back to its former glory.

n.Motion Morgan Aero 8


Cover Photo of Steinway CEO Bruce Stevens by Thomas Werner, Mr. Stevens is wearing a rose gold Avenue of Ameicas watch by Gevril.

X. Peditions

By Ellen Bainer

By Will Andrews

Super-lightweight and fast, a great British motor company outdoes itself with a roadster for the new millennium.

Stealth Wealth By Bill Burt


Look at an SUV or van customized by Becker Automotive, and you'd have no idea that the interior rivals a plush private jet, loaded with the latest high-tech gear. And that's exactly what Becker's very important customers want.

Mercedes European Deliveries

The Luxury of Choice Multimillion-dollar homes in the world's


greatest locations, a jet, a chef and a butler -Abercrombie & Kent sets the standard.


Mercedes-Benz has sweetened the deal for customers who wish to combine an auto purchase with European travel.

Pershing: American Cruising Italian Style


By Steve Bennett

Nobody builds yachts like the Italians. Imagine a yacht that would satisfy James Bond's need for speed, technology and sophisticated comfort, and you've got a Pershing.

Queen Mary 2


The word "unique" defines, but does not describe, the QM2. She returns travelers to a bygone era of elegance as they sail into the future.

ValueRich Magazine 9

Big 4 expertise with responsive, flexible service.

Sarbanes Oxley Compliance Internal and External Audit Transactional Planning Individual &Entity Taxation Federal, Multistate & International Tax Intercompany Transfer Pricing Cost Segregation wealth Management Technology


We offer the power and expertise of many years of experience working with medium to large public and private companies. Our partners and senior staff members, some of whom have joined us from the former Boston office of Arthur Andersen, have the intellectual capital you need, the understanding of your cost concerns and the close attention you're looking for. Whatever your needs, we can provide the service that is right for you.



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n.Business NASD Financing Rule 2710 Can Be Disastrous for PIPE Offerings


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n.Town The Lure of Palm Beach By David Willson


This elegant playground of the rich and its sister city, West Pa lm Beach, have blossomed into a world center for wealth

n.Spiration Ollie the Otter Goes Hollywood


By Will Andrews

30 CG animated films rule at the box office, and CritterPix is poised to take advantage of the trend.

and entrepreneurism.

Prezza Impresses This Boston North End eatery

Some NASD members may be unaware that participating in a PIPE offering could be an expensive liability.

Building an Effective Audit Committee


By Richard Caturano, CPA

Establishing a methodology is the first step for an effective audit committee.


attracts all kinds of customers, with a menu and wine list that are just as varied.

Clarence Clemons Cooks a Mean Musical Gumbo


By Karen Willson

energy from "the big man's" new live CD.

June Jazz in the Rockies

The Future of NASA


Senator Bill Nelson f lew aboard the space shuttle and is NASA's biggest supporter on Capitol Hill. Why is he so perplexed with the Bush space initiative?


By Charles V. Payne

You won't be able to resist the infusion of


International Outsourcing: The Day After Tomorrow

The hills are alive with music at Aspen's summertime Jazz festivals.

Fabric Fantasies Artist Elaine Fortune celebrates the diversity of nature and the world's cultures with wearable artwork.

86 87

White-collar outsourcing is a shocking development. Still, ta xing trade is not the answer to the problem.

Faith in Governance Is a Two-way Street


By Ronald Hunter

Penalizing honest businesses while continuing to tolerate misdeeds only breeds contempt for the process.

The ValueRich The ValueRich MarketPlace is where public companies advertise their investment banking and financial needs to the readers of ValueRich magazine. View these companies based on their business objectives:

Page 113 Page 116 Page 1 1 B Page 1 20 Page 122

Companies Companies Companies Companies Companies

Seeking to Raise Capital Seeking to Merge and Acquire Seeking Partnerships and Joint Ventures Seeking to Develop New Business Contacts Seeking to Attract Market Support Valu eRi ch Magazine 11

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Access to your entire movie library is instantly available by browsing to select and play movies, jump to favorite scenes, pause and resume. You can even pause a movie in one room, and resume it later in another. Movies that span multiple DVDs are automatically linked together to create a seamless viewing experience. Each room

om mended movie list, or a pre-selected "watch-soon" list. Kaleidescape is ahead of the curve for anticipated widespread availability of HD content. The massive capacity of the server is ideal for storing large HD movies and the

can be configured individually for audio settings, the screen aspect ratio and parental control. Kaleidescape's Movie Guide Service provides detailed information about thousands of movies via the Internet. This database is matched with your collection to create on-sc reen movie lists sorted by title, genre, director, actor or even cover art. You can also create your own favorites menu, rec-

Additional cartridges can be added to the Kaleidescape Server to store up to 440 movies.

Movie Player hardware is designed to su pport both 720p and 1 080i video output. A base Kaleidescape system in cl uding a Kaleidescape server with sufficient storag e for 160 DVD movies, a movie player for playback in a single zone, and a DVD reader for importing DVDs lists for $27,000. Additional servers, movie players and DVD readers can be added to the system to increase movie storage capacity, add viewing zon es, or to make it more convenient to import DVDs. Valu eRi ch Magazi ne 13

i.WANT.1 Arlen Ness choppers break new ground in comfort and performance

Bad-Ness It all started back in 1967 when Arlen Ness took $300 won in a bowling tournament and bought his first motorcycle. Then he stripped the bike down, experimented with his spray gun and rebuilt it the way he wanted. Eventually he entered the motorcycle into his very first custom show and came home with the first place trophy. This success was just the beginning though . When it comes to motorcycles, Arlen is a natural. Since those first days in 1967, Arlen has built thousands of bikes for customers around the world. Nowadays, it's a father and son team. Cory Ness was born into the motorcycle business. His reputation for design innovations is only rivaled by dad. For instance, Cory designed the Y2K rubber-mounted Dyna frame that makes the new Arlen Ness bikes like no other. Its technology provides one of the most comfortable rides on the road.

And the revolutionary continuous twin loop design allows for offsetting the main shaft and transmission so that the engine is perfectly centered in the frame and the seat height is lower. All of this makes for a smoother, more balanced and comfortable ride. The $47,999.95 bike also has a TP diamond cut 124 cubic inch engine, Martin Brothers Slickstas exhaust pipes, a custom Jeff McCann paint job, Ness-Tech Evil 7 wheels plus many other items .. . too many to list. (925) 479-6350

Oftentimes music sounds better after a few glasses of wine. But who would have guessed that a JVC sound engineer would build that feature right into a stereo system.


JVC has introduced a new desktop audio system that incorporates speaker cones made from sheets of birch soaked in sake and dried squid. JVC researchers knew that one reason a cello or wood-

pressed into speaker cones without splitting. The solid wood cones are featured in JVC's new EX-A 1, an ele-

wind instrument sounds so beautiful is the positive effect of solid wood on frequency response. But they were having problems forming wood sheets into a speaker cone- they would crack or split when stamped. A JVC audio engineer in Japan hit upon the sake solution while enjoying dried squid at a restaurant. He asked if anything special was done to make the dried squid so chewy. It was soaked in sake, he was told. Inspired, he tried the same technique with wood sheets. It worked- after soaking in sake, the sheets could be 14 Valu eRich Magazin e

gantly designed desktop music system. The wood provides an ideal combination of high sound propagation speed and high internal loss, allowing the speaker to naturally reproduce a wider frequency range than conventional paper cones. Power is provided by a hybrid digital feedback amplifier with two feedback loops to minimize distortion. JVC further reduced noise by placing the amplifier and switching power module in aluminum cabinets, physically separating them from the audio circuit to prevent interference. The EX-A 1 handles nearly every popular video and audio digital

Techno Torn Thurnb Shoot digital video and photographs and carry music and data wherever and whenever you want, because your camcorder is always with you. The latest in Philips' collection of wearable devices is bound to set the online video world on its ear. The darn thing is so small, you can stick it just about anywhere. Tape it to your radio controlled toy car, or shoot a documentary of the inside of that mouse hole in your garage. The possibilities are endless. The Philips wearable Camcorder is a little

two hours of MP3 music, or function as a 128MB storage device, and you've got a veritable electronic Swiss Army Knife for the 21st Century. A single button controls the action, so the camcorder is as plug-and-play easy to operate as it is to carry around. And USB

larger than a man's thumb. Capable of up

connection makes it quick and easy to transfer video or photos to a PC while recharging the battery.

to 25 minutes of continuous video MPEG4 recording, the camcorder can also snap

The tiny $375 techno-marvel also packs a micro-display viewfinder so you

up to 200 still pictures with 2 mega-pixel imaging quality- anywhere and anytime

can accurately frame your shots or playback the results. There is also a five-key

inspiration strikes. Add the fact that it can store and play

remote control for trouble-free playback.


Featuring the world's first wine-soaked wood cone speakers, the EX-A 1 offers the rich tonality of sound associated with fine musical instruments, but in a small desktop footprint

Digital pies, MPEGmovies and MP3 audio; about the only thing this mighty mite is missing is a bottle opener.

format and includes Dolby Digital and DTS decoders, a high output 192kHz/24-bit audio D/A converter, and screw-type speaker terminals for the best possible connection. Composite, S-Video and component video outputs guarantee compatibility with most television monitors currently in use, and it's easy to add an outboard subwoofer for room-rattling bass. The $550 EX-A 1 is a positive addition to any decor. The aluminum encased main unit is no larger than a laptop. The cherry speaker cabinets are meticulously constructed and beautifully finished, with a floating cloth grille that can be removed to show off the sake soaked wood drivers. ValueRich Magazine 15

.WANT.1 Where the Rubber Meets the H20 How many times have you wished you could bypass that waterfront and bridge traffic by just driving across the water to the other side? Well now it's possible with the Gibbs Aquada.

The Gibbs Aquada is the first amphibious car to develop enough speed to get up on a plane, allowing ski boat-like performance. Built in England, the Aquada is neither a boat with wheels nor a waterproof car, it's the first true high-speed sports amphibious veh icle. It is able to drive at speeds of 100 mph on land and over 30 mph on water, moving between surfaces at the touch of a button . All you need is a boat ramp or shallow decline into the water. The jet drive automatically takes

steering all the way at full power- water donuts! Since its official launch at London's Docklands on Sept. 3, 2003, the Gibbs Aquada has captured the imagination of a huge audience. Sir Richard Branson, Chairman of the Virgin Group, was the first to ever testdrive an Aquada. He wants one, and when his Aquada is delivered, he plans to take it

over with a near seamless transition. Power is provided by a 2.5 Liter V6 engine, capable of delivering 175

across the English Channel. Branson has the advantage of being able to afford the $266,000 price tag for

horsepower to a proprietary jet propulsion drive that generates a ton of thrust

the little technological wonder. Not to

mention the fact that he's British, and England is currently the only place where it -enough to quickly get the Aquada up on a plane. That is uniquely possible beis legal to drive one right now. But Gibbs Gibbs patented systems enable smooth transitions Technologies expects to finish the Eurocause of innovative hydraulic struts that retract the wheels up into the wheel from land to water at the push of a button. pean approval process by November, and wells, transforming the car into a boat with a smooth keel. the U.S. process somet ime in 2005. Steering is not accomplished with a rudder, but by directing the By then, maybe Gibbs will have developed the technology for a jet drive. If you cut the throttle, you have no steering. So to avoid cheaper, mass-market version. They've indicated that they're worka collision, one must point the drive nozzle away and hit the gas. ing on it. This can also provide for some pretty exciting effects if you turn the 16 ValueRich Maga zin e

Pocket Tailgate Party The Jetboil Personal Cooking System fills the gap between vacuum bottles and stoves with a product that integrates a heater and multipurpose eating vessel into a single fast and fuelefficient unit. The JetBoil is ideal This Hermes edition Leica MP is elegantly accented with a Barenia calfskin cover.

Photo Phashion For the photographic purist, nothing quite matches up to a Leica. And now the collector at heart has a very special series of these historic precision cameras to lust after. Leica rangefinder cameras have long represented the epitome of quality for profes-

for outdoor activities such as football games backpacking, hunting, fishing, and boating. The handy portable container merges butane fuel, heater, and a combination cooking and hot drink mug into one compact portable unit that is more efficient than conven-

sional and serious amateur photographers who desire precise manual control of the relevant exposure time, aperture and depth of field without being subjected to unwanted assistance or distraction from automatic features and options. And Lei cas last forever. The Leica MP Edition Hermes represents the first collaboration between Leica and Hermes in a series of limited edition rangefinder cameras. Five hundred of these special

tional propane stoves and cookware. The $79.95 Jetboil's

edition silver chrome Leica MP cameras are covered with exquisite Barenia calfskin supplied by Hermes. Barenia calfskin is tanned for an extensive period oftime, periodically interspersed with rest phases, for a very fine natural grain. The Leica MP Edit ion Hermes sports a Leica Summicron-M 35 MM F/2 ASPH lens finished in silver chrome. The lens hood and camera body cover, as well as the front and rear covers of the lens, are made of solid brass and are also finished in silver chrome. Unique features, such as the silver chrome finger rest on the lens and the serial numbers from 1/ 500 to 500/500 engraved on the lens and camera, differentiate the Leica MP Edition Hermes from regular production models. The Leica MP Edition Hermes lists for S10,000 and is available at authorized Leica dealers.

wind-protective shroud. The base-burner is powered by a 110 gram Jetboil butan e fu el canister connected by industry-standard threads.

JetBoil is always ready to warm hands and heart.

base contains a lightweight burner, piezo electric igniter and fuel valve, housed in a

The base and one liter cooking cup snap securely together during use and rest, along with the fuel canister in a compact package, which can be stowed in pack pockets and fanny packs. Backpackers will rejoice in its light weight (12 oz.) and efficiency.

ValueRich Maga zine 17

Fonseca "The Original" Our first and most classic cigar! We have been making this cigar since /992 with twice aged Connecticut Shade wrap!Jer grown in Connecticut US A. This wrapJJer is chosen for its beautiful , golden brown color and mild , rich smoke. We then add an aged , Mexican Suma tra binder for a little spice and smokey flavor. Also ava ilable in Maduro!

Fonseca Serle F

Fonseca Vinta~e

A ll tobacco in chis cigar is aged a minimum of 5 years! We start with a beautiful Ecuador, Connecticur Seed, Shade Grown wrapper. The Tercio Aged Dominican filler and binder /Jrovide a rich, creamy fla vor chat give tlte cigar f>resence without being over/)owering. A medium bodied smoke su[J[JOrted by a flaral aroma of natural tobacco .

T he "F is or fuene .. Spanish for full flavor . This blend starts with a well aged dark brown , oily Connecticut wra[Jper to attract the cigar connoisseur. The filler is Tercio Aged Ligero C uban Seed. The smoke is robust yet smooch and very, very tasty. This blend is designed to be savored slowly <vhen you're in the mood for a full bodied , strong cigar.

Six different cigars. Six different flavors. Six different personalities. One proud name.


de Fonseca This cigar is bold and daring! We use a Cameroon wrafJIJer for its unique tas te and [Jair it with a sweet tasting Connecticur Broadleaf binder. The filler is bold with Nicaraguan Ligero and Dominican Tercio Aged tobaccos. This cigar starts off mellow and builds in flavor as the Nicaraguan Ligero heat< up . The smoke is a medium bodied, rich fla vor.

Fonseca Sun Grown Cedar As the name implies, this cigar has a Sun G rown wrap[Jer that is matched with a Dominican Olor binder. In the filler we really go wild by combining Nicaraguan Ligem for strength , Peruvian tobacco for its flaral character and Dominican Cuban Seed w round out the blend . The result is a medium to full bodied cigar with loads of flavor and taste!


Limited Edition Fonseca Reserva Especial .2003 This full bodied cigar is wrapped in the fin est Havana Criollo Honduran leaf and filled with 1996 Dominican and Nicaraguan Ligero . It comes packaged in an exquisite, mahogany chest, brass plate numbered with the box [Jersonally signed by Master Blender Manuel Quesadtt. Get yours before they are gone!

There's for you.

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Annual Calendar by Patek Philippe

ENDU If you have a Steinway in the family and don't know when it was made, locate the number stenciled onto the cast-iron plate a few inches above the keyboard. You can determine the age of your piano by going to a list of serial numbers on the Internet at steinway-serial-numbers.htm

20 Va lueRich Magazine


There are very few companies that have manufactured the same product at the same high level of quality for more than 150 years. Fewer still have been family-owned and family-run for 130 of those years. Steinway & Sons has survived the American Civil War, two world wars, the Depression and the invention of recorded music, to become one of America's great companies.

RING STEIN With 120 patents to its name, Steinway essentially invented the modern piano. It is still handcrafted in the same 113-year-old Queens, New York, factory. It's quality is so well-respected that 99 percent of all concert pianists insist on playing a Steinway. By Martha Moffett If you find yourself in midtown Manhattan, take a stroll through Steinway Hall, the landmark beaux arts building at 109 West 57th Street, appropriately located across the street from Carnegie Hall. You'll see an elegant and legendary interior that is part showroom and part museum. You'll take in the large octagonal rotunda with its marble arches and Waterford crystal chandelier and admire the paintings of legendary pianists on the wall, while potential buyers look for the piano of their dreams in the vast array of new and refurbished pianos for sale. There's a changing display of historic art case pianos with elaborately carved cases and legs, decorated with lavish gold leaf and oil paintings. You may catch the first, made in 1857, on d isplay. In 2002 a collector paid $675,000 for one of these - the most expensive piano ever handcrafted by Steinway & Sons.

To celebrate its 1OO,OOO'h piano in 1903, Steinway &Sons presented an art case piano

able for his debut across the street. Why was it difficult for him to make a

to the White House of Teddy Roosevelt. Now in the permanent collection of the Smithsonian Institution, it is decorated with the seals of the original 13 colonies and a beautiful allegorical painting under the lid. In 1938, another art case piano of mahog-

choice? Every Steinway is made in the same way, from the same materials, going back decades. The craftspeople - as many as 450 - who have worked on this piano bend and shape the wood in the same way. The sounding boards are made to the same

any, supported by fierce golden eagles, was a second White House gift, with FOR in

specifications. The strings, pins, hammers and keys are Steinway standard. Yet every

residence. Downstairs, in the basement, you'll see earnest musicians mulling over the ranks of gleaming ebony pianos in the Concert Piano Bank. You may see a young Steinway artist - a musician who selects and plays only Steinways- go from instrument to instrument, trying out a phrase from the second movement of Beethoven's "Pathetique:' He frowns ... he shakes his head ... finally he lifts his eyes in a beatific smile: He has found his piano. The company will make it avail-

Steinway piano has its own sound. It's a mystery. No one knows exactly why one has a crisp sound, another a deep, monumental sound. And, of course, the artist reacts individually, too. Glenn Gould, a Steinway artist, rather liked the fact that his piano had a "hiccup" in the middle ranges, and said that he felt toward it"greater devotion than to any other piano I have encountered:' In 1850, when Heinrich Steinweg stepped off the boat in New York Harbor ValueRich Magazin e 21

22 ValueRich Magazi ne

with his family, he and his sons were already skilled cabinetmakers. They not only were accomplished craftsmen; they also were a musical family. Heinrich had built his first piano in the family's kitchen workshop. But revolutionary times in Germany and a failing economy sent the family to the New World to seek its fortune. New York City was a boomtown for piano makers. Heinrich Americanized

American iron plate that transformed the music-box sound of the European pianoforte into a concert piano. About the same time, the Steinways worked out a way to overstring a piano, overlapping the bass and treble strings, allowing the strings to be longer and therefore richer in tone. The eldest Steinway son, Theodore, who had originally stayed behind in Germany to

his name to Henry Steinway, and his sons went to work for Manhattan piano makers. When

people say, what gives each Steinway piano its own tonal personality. In all, 120 patents trace the history of the Steinway piano. And it was William, the fourth of Henry's five sons and the company's first president, who set out to make the family name a famous brand, one that distinguished it from its competitors. First-generation Steinway management also recognized the importance of global marketing when they opened a factory in Hamburg, Germany, in 1880, tapping the markets of Europe and England. While turning out a superb product was important, it was only a first step; marketing and brand recognition were equally vital. The Steinways authorized inde-

his son Charles' workplace, Bacon & Raven, was closed by a strike, Henry and his boys formed the firm of Henry Steinway & Sons. At that time there were more than 300 piano makers in the northeastern states. Within 10

pendent sales agents across the country to represent their pianos, increasing their market beyond New York City. And they embraced the then-original idea of celebrity

years, Steinway & Sons became the largest and most successful piano company in North America, with a factory filling the block on

endorsements, in order to make the Steinway the concert instrument of the world 's most famous pianists.

Park Avenue where the Seagram Building stands today. The first piano sold in the U.S. under the Steinway name was bought in 1853, for $500. It was given the number 483. The serial numbers are in sequence going

Today, celebrity endorsements are so familiar, from sneakers to lipstick, that we think the phenomThe Steinway rim-bending process has remained the same since it enon is contemporary. But Henry's all the way back to the first piano was invented by C. F. Theodore Steinway in 1880. son William in 1873 figured out Henry Steinway built in his kitchen, study acoustics and amass 40 patents of his the value of the superstar endorsement years before he emigrated from Germany. own, joined the family business and became when he persuaded famed artist Anton The Steinways were innovators from of patents awarded to family members.

one of its biggest innovators between 1865 and 1875, developing the most important

Rubinstein to tour America playing the Steinway piano. He was contracted to play

In 1857, Henry Steinway Jr. was awarded a first patent for grand piano action, the complicated mechanism that transfers the pianist's touch to the hammers that strike the strings. While Henry Jr. oversaw piano construction, brother Charles ran the busi-

series of piano inventions ever patented by a single man. It was Theodore who developed a unique method for bending the inner and outer piano rims into a single continuous piece. Before that, rims were made of separate pieces held together with

ness side. Henry's name was also on a patent for a full cast-iron plate, which increased the string tension a piano could carry and increased the volume of a piano so that its sound could fill a large hall. It's the

joints. Another brother, Albert, worked out the mechanism for one of the pedals, and a younger relative patented the design of the all-important sounding board, which amplifies the sound of the string and is, some

100 concerts and be paid $200 per concert. Apprehensive of the United States economy at the time, the Russian stipulated that he should be paid in gold, until William Steinway challenged him to lift a 140-pound bag of gold coins to see how heavy it was. The artist agreed to accept American money. Richard Wagner, Sergei Rachmaninoff, and Vladimir Horowitz joined the list, declaring that the Steinway was their piano of choice. lgnacy Paderewski toured America

the beginning, attested to by the parade

ValueRi ch Magazin e 23

in a private parlor car, with piano and chef, raising funds for his beloved Poland. The list of Steinway artists today includes more than 1,300 names of active performers - Daniel Barenboim, Van Cliburn, Billy Joel, Billy Taylor, Diana Krall and Mitsuko Uchida are just a few on a list that reads like a Who's Who of the music world. Just as the Steinway piano changed in subtle ways through the decades, the parent company itself went through changes. There were bad times. The Depression forced the plants to close for nearly two years. People began to ' l.i sten to radio instead of gathering arounlthe piano, and in World War II, Steinway was restricted from using materials that were needed for the war effort. In 1952, Henry Z. Steinway, the greatgrandson of the founder and grandson of Theodore, became president of a company that was waning . With radio, television and

Steinway and Sony Classical artist Emanuel Ax inspires students in a Master class at the Yale School of Music. Yale has been a Steinway School since 1897.

and Robert Birmingham bought Steinway, returning it to private hands. Ten years later, the Birmingham brothers sold Steinway to The Selmer Company for $100 million.

took the company public once more, trading on the New York Stock Exchange under the ticker symbol LVB- easy to remember when you think "Ludwig van Beethoven:'

the company going. But he was worried

Two young investment bankers, Dana

about the future, especially as no one in the younger generation seemed interested in taking over the reins. In 1972, with no heirs interested in enter-

Messina and Kyle Kirkland, had previously bought Selmer, a producer of quality band instruments, and restored it to profitability. Their plan on acquiring Steinway & Sons

Stock began trading at $19; a recent week saw it at $35. Net revenues at the end of 2003 were reported at $337 million.

ing the firm, the Steinway family sold its

was to create Steinway Musical Instruments and make it the world 's largest and most profitable maker of band instruments. Because of its hallmark name, Steinway & Sons would be their standard-bearer. They

stereos, people were listening to music in their homes rather than playing it. He cut back on expenses and production, and kept

piano business to CBS, and the family business went public. Under pressure to focus on its broadcast bus iness, CBS later began selling off assets, and Boston investors John

In the Steinway & Sons division, Bruce Stevens serves as president. He joined the company at a time when the owners and the dealer network were pressuring to discount pianos and downscale quality in order to move product. The company found itself with 900 pianos in inventory (a lot of

Henry Z. Steinway

Steinway's Goodwill Ambassador Henry Z. Stei nway,the last link between the name on the piano and the business his great-grandfather started, still drops by Steinway Hall almost every day. People call him the goodwill ambassador for Steinway, full of anecdotes about the family's long history and always ready to "autograph" a piano for a new buyer. After graduating from Harvard in 1937, the great-grandson of the founder

signed on as an apprentice at Steinway, the traditional way of learning the business. During World War II he served in Army counterintelligence. Then came the struggles of the fifties. Henry Z. is said to be the one who made the tough decisions that saved the company. Today, in the landmark building that bears the family name, he is regarded as a treasure of piano history and lore.




> ..c




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Henry Z. Steinway signs a new owner's piano.

Valu eRi ch Magazi ne 25

inventory for a one-product company). But Stevens was not willing to compromise, sensing that the greatest asset they had was the historical Steinway reputation for quality. He visited every dealer in the country. He rolled up his sleeves in showrooms and listened to their criticism - hearing the words "arrogant" and "unresponsive" to describe his company. Upon returning to New York, Stevens uncrated and re-tuned t he entire inventory, pat iently selling pianos one by one while bankers pressed him to slash prices, clear out the inventory and pay down t he com-

Dale Chihuly designed "Olympia;• a .~ . ~ - ... . ......... concert grand, for the programs of the : -~ .. • "'.... · . - :'<. ..._. 2002 Winter Olympics in Salt Lake . -~--~- - - . City. The piano lid consists of . : ..._ . translucent Plexiglas, into which Chihuly's colorful abstract glass designs are cast (left). The bitter-green lacquered case and the orange and yellow keys make this one of the most eye-catching pianos ever made by Steinway.

·~<f.:~ ··· · .~ '

pany debt. The company became a stronger operatio n because of this. It lost some dealers but gained new ones. Stevens says, "We could have gotten a short-term boost (by discounting), but it would have done serious damage to the Steinway name and it would have compromised the credibility of management. Holding firm was the best decision I've ever made:· Stevens set a new standard of responsiveness to Steinway representatives across the country. Then, as now, he took the long

M aster furniture designer Terrance Hunt finished "Ellipse" in a parquet design of rare African bubinga wood. The music desk, bench and legs are covered in black leather with aluminum accents. 26 Valu eRi ch Magazin e

The Steinway-Steuben piano combines fine crystal and lenses as exquisite disks of light, through which the viewer is transported into the inner workings of the piano.

The Karl Lagerfeld Limited Edition Collection art case piano was produced to celebrate the 1 SO'h anniversary of Steinway & Sons. This sleek, dramatic piano with polished red touches and a black satin leather-like finish has three rectangular supports that make it seem suspended in space. Only 1 SO of these limited-edition anniversary pianos will be produced, at $85,000 each.

a range of sizes, from a small

view: "We're going to position ourselves as the company that builds the best pianos:' This means, he says, taking the long approach, looking for results in seven to nine years, not next quarter- not a popular stance today, but one that maintains quality and reputation. Stevens' unpopular decisions proved to be correct. Recently, when Forbes magaLVB zine published a special issue l!liiE naming 50 of America's best products, Steinway was at the forefront of the list. The most The closing bell ceremony at New York Stock Exchange on March 5, 2003,


t he official 150'h anniversary date of Steinway & Sons.

important question Forbes ed itors asked in each category was: "Does anybody make this better?" Steinway today

has become a benchmark to other companies, who ask, "How did you do it?" and come to learn strategy from a company that has celebrated its 1SO'h anniversary.

for the core of the hammers; maple for the action, rim and case; sugar pine for the ribs; and yellow poplar for the lid top. Sitka spruce, used for the all-important sounding board, is cut and dried in the open air.

upright to the 9-foot concert grand. But not everyone can afford a $15,500 Steinway upright or $86,000 concert grand. For them, Steinway also offers affordable models, all made with the traditional Steinway attention to detail. The "Essex'; a quality piano of moderate price, is made in Japan. The Boston line, made in Korea, is affordable and dependable. To inspire young musicians of the future, Steinway & Sons has backed a program for All-

Steinway Schools, now numbering 35, including The Juilliard School, Curtis Institute of Music, and Oberlin College Conservatory. Through the generosity of donor Wanda L. Bass, Oklahoma City University will have 133 Steinways, almost one for every student. As well, for

Steinway & Sons has produced more

Walnut, mahogany and cherry veneers and exotic woods such as rosewood, pearwood

than half a million pianos. Each one takes more than a year of handcrafted labor. The

and ebony also may be used. All the veneer on a single Steinway piano is cut from

benefactors who would like to bestow the gift of a Steinway piano on their alma mater, there's the Steinway Living Legacy

woods used in construction include birch

the same tree. Today, Steinways come in


I You


could be driving a Steinway instead of a Ford I

When William Steinway died, the family William Steinway, who had the most ily built engines for street cars and boats wide-ranging interests of the five sons reorganized the automotive business as the based on Daimler designs. of Henry Sr., was described as Daimler Manufacturing Company. "into everything .. . loved doing They were making Daimler delivery business:' Traveling in Europe in vans three years before the found 1888, he was intrigued to hear that ing of the Ford Motor Company. Gottlieb Daimler in Germany was Eventually an exorbitantly priced expe rimenting with self-propelled limited edition Steinway-Mercedes vehicles. automobile with a Daimler engine Eight years before Henry Ford was manufactured in 1905. Stein way family members built his f irst quadricycle, William arrang ed to test-drive one of couldn't cope with William's myriad Daim ler's "motorized quadricycles:' entrepreneurial ventures and ultiIF YOU WANT THE BEST The ride was enough to convince him mately closed the Steinway-Daimler of coune you wo1.nt a foreign ca.r. If you lmport, of course. you Import the Mercedes- tilÂŁ finest C:l.r in the worfd. to secure American patent rights to plant in order to concentrate on THE AMERICAN MERCED ES ban cnct duplicate of the 1905 Mcrcc:dea of 40-1:5H.P. No detail is omitted; none lsaliR:htcd. Daimler engines and vehicles. With making pianos. The only remaining How do w e do It ? Our b ooklet t ells. = = = = = = = = = ADDREBS= = = = = = : ' =,.,===:== this, the American auto industry had 1905 Steinway-Daimler automobil e DAIMLER MANUFACI'URING CO., 993 Steinway Avenue, Long Island City its fo rmal beginnings. There was no is exhibited in a place of honor at road system to serve automobil es This advertisement for the American Mercedes appeared in the headquarters of Mercedes USA yet in America, so Steinway primar- t he February 1905 issue of Scribner's Magazine. in Montvale, New Jersey. 28 Valu eRi ch Mag azin e

Gevril's flagship collection, the Avenue of Americas, is available in four basic configurations. Shown here, is the GMT Power Reserve crafted in stainless steel, polished steel and sapphire crystal.


The Watch of Kings By David Willson

'We sail on the tide ... Meet me at high noon ... The attack will commence at dawn ... Get out of town by sundown .. .'it takes a leap of imagination for the 21 st_century mind to comprehend, but civilization once marched to rhythms of the tides, sun and moon. The earliest clock towers began to ap-

help pinpoint longitude within one-half

royalty and the aristocracy collected them


degree during a voyage to the West Indies.

as exotic and beautiful objects. During this period, three Swiss watchmakers were gaining worldwide recognition for a series of innovations in the construction of timepieces. Daniel Jean Richard, Pierre Jaquet-Droz and Jacques Gevril were the equivalent of Silicon Valley whiz kids in their day.

pear in Italian cities during the early century, but their rudimentary workings were unreliable. Constant attention had to be paid to keep them working properly. It took nearly 300 years before civilization began dancing to a regular beat with any

The winning timepiece, created by British inventor George Graham in 1761, made the

degree of accuracy. In the mid-17th century the Dutch scientist Christiaan Huygens developed the first pendulum clock, with an error of one min-

Born in La Chaux-de-Fonds in the Le Lode Valley, Jacques Gevril began his career as a restorer of timepieces in his home-

ute a day; later decreased it to 10 seconds. By 1675, he had invent ed the balance wheel and spring movement that ultimately gave birth to the first portable watches. Accurate timekeeping was the high technology of the day. The ability to position and synchronize troop movements or accurately navigate the seas gave a king and his country the edge. Most importantly, the fortunes of England, Spain and France were rising and falling based on ventures in the New World. In 1714 the British government offered a prize equal to $10 million in today's dollars for the development of a clock that would

A Gevril pocket watch from the 1800s

world's first Global Positioning System possible. His ship's clock design maintained precision despite the rolling motion of ocean swells and changes in- barometric pressure and humidity. Beyond the practical and scientific enticements of these precision instruments,

town, where he invented numerous watch and clock movements. In 1744, he changed the face of watchmaking forever by creating the repetition dial. Gevril became the first exporter of Swiss timepieces when he answered a call by Spain in the year 1758 to produce a timepiece for the king. Upon its completion, Gevril set out with Pierre Jaquet-Droz on a historic journey to Madrid to present his masterpiece. The king was so impressed with Gevril 's creation that he appointed Gevril as watchmaker to the crown . Gevril was known for his impeccable

ValueRich Magazine 31

modern and extravagant styling.

craftsmanship creating, unique timepieces

Friedmann did his research before buy-

of the highest quality. His timepieces were

ing Gevril and could recite the history of

The new lines are not re-creations of old

the prized possessions of royalty and high society. Gevri\'s designs can be found in watchmaking museums in Switzerland, where he is generally recognized as a ma-

the Gevril watch chapter and verse. He was serious about rebuilding the name to something that Jacques Gevril would be proud

styles. Instead, they are new designs based on historical ideas. Gevril watches have mechanical movements that include func-

of, intending to pass the business along to subsequent generations of his own family. Friedmann was so passionate about re-

tions such as chronographs, Tourbillions, perpetual calendars and minute repeaters.

jor contributor to the advancement of fine timepieces. As was often the case, the Gevril nameplate lasted only a few generations. His son and grandson were also well-known clock and watchmakers, but eventually the Gevrilline ended.

viving Jacques Gevril 's ethics of innovation and artistry that he closed the existing Gevril company and removed re-

All Gevril timepieces are produced in numbered and signed limited editions of 100 in gold and 500 in steel. The new Gevril is an American company that conducts business in true Swiss style. The corporate offices are located in a 6,000square-foot Monsey, New York, manor

In the 1990s, the Gevril name was reprised as a subsidiary of the Swiss luxury goods company UTC, international distributorsof Audemars Piguet, Breguet, Breitling, Bertalucci and GirardPerregaux. Gevril wa s pu rchased in 2001 by First SBF Holding, Inc., and spearheaded by Samuel Friedmann, a self-described watch connoisseur and enthusiast. Born in Lugano, Switzerland, Fried-

Today's Gevril configurations include, from left to right, the Soho Deluxe Complete Calendar, Day/Date/Month, Moonphase, Automatic; the Gramercy Regulator Automatic; the Madison Sub-Dial Second Data Automatic; and the Sea Cloud Chronograph Automatic.

mann shared a similar heritage with Jacques Gevril and came from a long line of Swiss businessmen. The fam ily owned several upscale fash ion boutiques, but he was more fascinated with the traditions of bl ending art and science in fine w atches. Initially, Friedmann had a sales office in Lugano where he sold complicate timepieces to Italian collectors and bought overstocked watches from a number of top Swiss brands. Later, he moved to the U.S. with his American wife, yearning to create a watch company of his own. 32 ValueRich Maga zin e

tail inventory that didn't reflect his vision for the brand name. He focused on refining the strongest existing product lines and unveiling innovative fresh designs. Within a year of the Gevril purchase, Friedmann's new watches were wowing the most jaded connoisseurs. The incredible attention to detail and craftsmanship harkens back 250 years to the original skill of Jacques Gevril, but with thoroughly

house, about 35 minutes up the Hudson River from New York City, but the watches themselves are built at a modern Swiss facility in Tramelan, northeast of the Gevril birthplace. Every timepiece is crafted in Gevril's Swiss workshops. Gevril's watch movements are ETA-based with Debwa Depress layers and are finished by Gevril craftsmen. This multilayered combination of movement complications and finishing work ensures that each Gevril timepiece is unique.

36 ValueRich Magazine




n.Motion7 7


By Will Andrews

YEAH BABY! Back in the '50s and early '60s Americans were in love with Peter Sellers, lan Fleming's James Bond, the Beatles and The Avengers' Mr. Steed and Mrs. Peel -who all rode in quirky British cars that were fun to drive. Americans also had a love affair with British roadsters. They were fast and fun to drive because they were so unusual. They had musical exhaust systems, and there was a particular kind of "thunk-click" noise they made when you shut the door that captured all of the romance of the road in a single sound. But things changed with the passing of time. The Germans mass-produced well-engineered cars that were very fast. The Italians started making flashy cars that were very, very fast. The Japanese made endearing little cars that were inexpensive and fun to drive. Even the Detroit assembly line juggernauts added sporty Corvettes and Mustangs to their line-up. Safety and emission regulations changed. Marketing methods changed . Many British automobile manufacturers either couldn't or wouldn't adjust. The result today is that most remaining British marques are owned and operated by American or German auto manufacturers. Depending on how much of a purist you are, you might find that lamentable or an improvement. Through it all, there has been one Briti sh car company that has remained true to its roots- a family-owned, and thoroughly British company. The Morgan Motor Company has built only four basic models since 1910, yet Morgan continues to have an ardent following due to its focus on excellent engineering and craftsmanship.

Low, Light and Explosive The new Morgan Aero 8 - a sleek, ultra-light, techno-classic, race-inspired sports car- is the

first new model for Morgan since1968. Actually, the 1968 Plus 8 model was not much more than an update of the Plus 4, a car with a 50-year-old heritage. Don't confuse the Aero 8 with its predecessors, however. It chews up 0- 60 mph in less than 4.5 seconds and has a top speed of 170 mph. This kind of performance puts it squarely in the Porsche and Ferrari class. If that were all that Morgan set out to accomplish, this redesign would be considered a slamdunk. But, Morgan had another pressing issue. Their 36-year-old Plus 8 roadster has a rabidly enthusiastic following and is still generating six-month waiting lists for its 200 car a year production schedule. Morgan knew that the Aero 8 would have to gain acceptance with their classic sports car purist customer base. How do you create a thoroughly modern car, one that would stand the test of time for the next 25 years, and incorporate the look and feel of a classic British roadster? To do that, Morgan turned to veteran racing engineer and vehicle designer Christopher Lawrence. For his inspiration, Lawrence obviously turned to Morgan's extensive heritage.

The First and Last Sports Car In 1906, Henry Frederick Stanley Morgan, a young draftsman of railroad steam engines, left his railway job and opened a garage and bus line in Malvern Link, England. His enthusiasm for automobiles eventually manifested itself in building a 7 horsepower, single-seat, 3-wheeler that was a very successful design. Built on a lightweight rigid frame, its front two wheels had Valu eRi ch Magazi ne 37

Peter Morgan, known for his personal approach to business, with the Morgan Plus 8, the car that he ushered into the Morgan line-up in 1968.

an independent suspension design so advanced that it continued with slight variations in the Morgan line for nearly 90 years. Morgan had not intended to manufacture the car, but he received so many favorable comments that he changed his mind. In 1910 the original patent designs we re filed and in 1912 the Morgan Motor Company was founded. Within a year, Morgan was racing several low slung versions of his car and won the French Grand Prix in Amiens against a strong field of continental 4-wheelers. After World War I, the need for inexpensive transportation grew and the Morgan Motor Company had to expand to meet demand. They established a factory in 1918 that has remained their manufacturing site to this day. The original car was so well-engineered that little development was needed for quite some time. The racing versions were so fast that once they were required to start a lap later than the 4-wheeled cars in their class. 38 Valu eRich Maga zin e

The U.S. spec Morgan Plus 8, still popular with Morgan enthusiasts in spite of its aging pedigree.

The Morgan Motor Company built the durable small 3-wheeled cars for 26 years, finally introducing their first Four by Four (four cylinders, four wheels) in 1936. The car had a Z section full-width chassis with boxed cross members. With the body con-

structed on an ash wood frame with aluminum paneling, the result was a light, durable and speedy coach built car. It was an immediate success. Morgan continued to race and in 1939 a racing Four by Four Morgan took first in

The ultra-light Morgan Aero 8 GT is giving Porsche and TVR teams fits on the British GT and Le Mans circuits.

Underdog Morgan Gaining Fans at the Races Morgan impressed fans and cynics alike in March 2004 with a storming performance in the opening round of the American Le Mans Series at Sebring, Fla. The Morgan Aero 8 GT's lightweight chassis proved to be a huge advantage over the competition, allowing them to complete the race with 60 percent fewer pit stops. Watched by millions of TV viewers, the Aero 8 GT ran flawlessly throughout the 12 hours, racing ahead of both TVR entries and several Porsches to take the checkered flag in 1O'h position in a GT class of 22 and 20'h overall out of 44 cars. This was accomplished in spite of the disadvantages of racing without a sponsor. The Aero 8 placed second and third at the British GT Championship- and

now threatens the long-established domination of Porsche and Ferrari in Le Mans racing. "We find that the car is really light on the brake pads and light on the tires, which is absolutely amazing for endurance racing in Le Mans;'

down, but Morgan was selected. "We had to make a choice and refuse some entries;' admitted one of the selection committee members. "It was among the GTs that the choice was the most difficult:'

says Morgan driver Adam Sharpe. Le Mans is where they are headed, recently receiving the news that they have been selected to start by the

Team manager David Dowse also thinks their days of racing without a

Automobile Club de !'Ouest selection committee. Morgan wasn't selected to run in 2003 at Le Mans, a decision that shocked them . Since then, they have worked doubly hard to prove their

and audience attention. We've taken on and beaten some very w ell-funded teams - no mean achievement for a race team whose total budget is no more than the catering budget for some competitors. The car has real potential and with an investment in some development we know we can get within striking distance of the frontrunning Porsches:'

mettle. Obviously they made their point. Out of the 77 entries received by Club de !'Ouest this year, 27 had to be turned

sponsor are numbered. "Because the car is so different, it gets huge media

ValueRi ch Magazin e 39

Charles Morgan, managing director of the Morgan Motor Company is surrounded by stacks of curing ash wood used to build the Aero S's frame.

thei r cla ss at LeMans again. Peter Morgan joined his father's company as a drafts-

day, the late Peter Morgan's son, Charles Morgan, runs the Morgan Motor Compa-

man in 1947 and quickly began making a name for himself taking the Morgan

ny. Generations of Morgans have built their beautiful

to repeated victories in rally racing . In the '50s racing versions of the Four by Four began tearing up the field in many prod uction sports car races, and in particular, dominated the SCCS class D in the Unit-

cars as true craftsmen and sports ca r racing enthusiasts - each generation contributing to the next evolution of the Morgan . Morgan Owners Groups (MOGs) began to flourish around the world . The

Morgan Sports Car Club, ed St ates. founded in 1951 , currently So few changes have has more than 3,000 membeen made to the Morgan bers. Morgan's enthusiastic Chief Development Engineer Christopher Lawrence shows off the Aero S's line in its history that the customer base has at times racing inspired lightweight aluminum chassis. Four by Four has the world 's proved to be a challenge. In longest production run . The Morgan Plus 4, 1963, they rejected a fully enclosed roadwith modernization, safety and engineerintroduced as the first major update of the ster with wraparound body as not being in ing enhancements. Four by Four in 1950 and the 1968 update the Morgan tradition, and the model was The Morgan family has very defined Plus 8 have essentially been the same car, discontinued. ideas about the nature of their business. To-

40 Valu eRich Ma gazin e

A Classic Racing Pedigree Even though Charles Morgan and Christopher Lawrence have added CAD design and modern fabrication technology in developing the new Aero 8, it remains an individually crafted coach built car. Charles Morgan developed the Aero 8 chassis design while racing Plus 8s in the 1990s. His all -new aluminum chassis is made of rectangular tubing reinfo rced with adhesively bonded and riveted aluminum panels. The Aero 8's lightweight sectional body is still fabricated on a flexible and durable ash wood frame. Its aluminum body panels are superformed using heat and air pressure - the same precision technique used to clad the Bentley Continental GT, the Aston Martin DB9 and the Jagua r XJ. The Aero 8 is only 6.5 inches longer than a Mazda Miata. However, the wheelbase is over 10 inches longer allowing for the engine to be set well back of the front wheels for outstanding weight distribution. The original Aero 8 has been available in Eu rope for over two years. Morgan has gone to considerable expense and preparation to market the car in America - including crashing 15 of these hand-built cars for safety qualifications. The U.S. version of the Aero 8 will ship with a slightly larger BMW engine. The same 330-horsepower engine that powers the BMW 745 and

Developed by Charles Morgan, the CAD designed Aero 8 chassis is constructed of rectangular aluminum tubing reinforced with adhesively bonded and riveted aluminum panels (above). The ash wood frame of the Aero 8 is computer cut to exact dimensions, then hand-finished to the finest precision fit by Morgan craftsmen (below).

645 series is mated to a ZF 6 speed gearbox for smooth, quiet performance. However, the Aero 8 is a full 1,900 pounds lighter than the BMW 745i that the engine was designed for, giving it outstanding power-to-weight performance. Other U.S. version improvements include power assist steering refinements, a slightly wider cabin and a deeper trunk to accommodate more luggage, or a set of golf clubs. Will American Morgan enthusiasts truly accept the Aero 8? If various reviews posted on MOG websites are any indication, the answer is yes. They all agree that the Aero 8 has successfully captured the classic ethic of older Morgans. In spite of some controversy about the aesthetics of the Aero 8's front-end design, they like the look and feel of the car. And it still makes that distinctive "thunk-clink" sound when you shut the door. But most importantly, the new car has an exhilarating ride with very precise handling charValu eRi ch Magazin e 41

Numerous performance and ergonomic improvements have been made to the U.S. spec Morgan Aero 8, the most visible is more elbow room in the cockpit and a higher trunk configuration, yielding more luggage space.

acteristics. "This car is a real driver's car;' says Adam Sharpe, one of the drivers for the MorganWorks RaceTeam ."We can really feel the torque pull us from this big V-8 engine. Through the chicanes, you can really push the car to its limits and beyond, because you always feel that you're in control :'

types of leather and piping styles for the interior:'

The price of the Aero 8 is roughly $107,200 plus shipping and customs du-

Morgan expects to produce 400 Aero 8s

ties. Of course, keep in mind that this will be subject to variations in the exchange rate between the dollar and British pound. VR

per year, worldwide, with 200 allocated to the U.S. market.

Dealers are very excited about the Aero 8's potential with American auto enthusiasts. Hugh D. Bate, president of Chariots of Palm Beach, exclusive southeastern dealer for Morgan, was present at this year's Los Angeles and New York auto shows where attendees gathered four deep to have a look at the car. "Some people knew what it was and some people had no clue, but they were very, very enthusiastic;' says Bate. "They loved the brutal look of it. It was universal. Everybody said, 'Wow!' "There is a lot of interest in this ca r. We have sold all seven of the cars we expect from Morgan this year and are taking orders for delivery in the spring;' says Bate, whose

dealership specializes in ultra-exclusive automobiles for Palm Beachers. "The Aero 8 is a handmade coach built car, completely made to orde r. It's a car that each owner has fashioned like a Saville Row suit. There are over 30,000 possible body paint combinations, many finishes possible on the wood accents, as well as numerous shades and 42 ValueRich Magazine

Hugh Bate, president, Chariots of Palm Beach, left; and Tim Whitworth, director of finance for the Morgan Motor Company, right, review the first production U.S. spec Aero 8 at the April 2004 New York auto show. Deliveries will begin in September 2004.

By Bill Burt

Aconvoy of shiny black vehicles smoothly snakes its way along Pennsylvania Avenue and glides onto the grounds of the White House, barely attracting a second glance from the ever present tourists and curious bystanders. Unless you are close enough to notice the small state pennants fluttering discreetly on each side of the windshield, there is nothing about the well-appointed, black sport utility vehicle to give onlookers a clue as to the importance of its passenger: King Abdullah II of Jordan on his way to a state visit with President Bush. "There was nothing conspicuous or ostentatious to indicate a royal leader was part of that particular entourage. And that's the way it was meant to be;' custom SUV manufacturer Howard Becker told

behind the more overt trappings of power and wealth such as in-your-face stretch limos. With this in mind, it would be stating the obvious that Becker and his exciting vehi-

Va/ueRich magazine.

cles happen to be in the right place at the right time - providing a refreshingly new and welcome means of transportation for

"We felt very honored. King Abdullah's drive to the White House was the maiden voyage of one of our custom-designed Excursion SUVs, tailor-made down to the last detail by our company to the specifications requested by King Abdullah himself' Jordan's monarch is only one name on an impressive, fast-growing list of international personalities who are turning to efficient, luxurious, and discreet customized SUVs - primarily Ford Excursions, GMC Denalis and Cadillac ESVs - and leaving

security-conscious executives, celebrities and assorted dignitaries. But it's also true that nothing happens in business by pure accident. Becker Automotive owes the major share of its success to president and CEO Becker's entrepreneurial skills in developing the modest car radio business he took over from his father. With degrees in business and psychology, he is more than equipped to cope with present challenges and deal with future issues. ValueRich Magazine 43

When a well-meaning critic suggested that his SUV limousines were a tad pricey, Becker responded succinctly: "They're certainly not overly pricey. If you consider the value of a businessman's time gained by commuting in one of these, it virtually pays for itself:' For obvious reasons, Becker is reluctant to go into great detail about celebrity clients whether they're entertainers, captains of industry, sports figures, politicians or heads of state. Suffice to say, past and present customers of this unique privately owned company in-

moms. They also have evolved into today's luxury stealth vehicles -vehicles that appear everyday ordinary from the outside, but inside are a pleasure to behold. As Becker himself says, "They've become the elite vehicles in today's world, popular with every segment of the population :' For those requiring more room and seating, or the added comfort of recliner seating for four to six executives, Becker offers custom conversions of Ford and MercedesBenz Sprinter Vans with a variety of floor plans that include everything from luxury shuttle seating to limousine configurations inside a completly private compartment. To establish itself as the unchallenged design group for these vehicles, Becker has come up with the ultimate transportation for all occasions- a high-concept but lowkey dream machine in which you can travel in style, feel secure and be productive, while remaining incognito. It's a mobile office and conference room equipped with an onboard PC or personal laptop docking station, wireless keyboard, mouse, printer and wireless Internet connection via cellular or secure satellite networks. The computing desktop is displayed on the 20- or 30-inch screen perfectly coordinated

Becker interiors are comparable with that of a corporate jet.

44 Valu eRich Magazin e

into an entertainment system on a par with the best home theater installations. The end result is a high-tech communications and entertainment center where international movers and shakers can conduct their business while they are securely in the lap of luxury. And for the seriously security-conscious,

elude Michael Douglas, Jane Fonda, Steven Spielberg, Bruce Springsteen, Sylvester

one fascinating extra is the option of

Stallone, Barbra Streisand, Tiger Woods,


King Abdullah II and corporate customers such as Dell, Disney and Dreamworks. Becker Automotive Design, based in Oxnard, Cal if. - where a staff of 40 is currently working on 15 vehicles at a time has an early foothold in a business that, for obvious reasons, is going to be around for some time to come. SUVS are no longer most popula r as the transportation choice of harassed soccer

risk assessment, Becker's vehicles can be armored to .44 magnum handgun or powerful assault rifle specifications, and include top-echelon featu res, such as bullet traps in all the doors, designed to deflect hot shrapnel, and fully functional windows. Additional security features include custom machined anti-grab door handles, ram bumpers, Runflat tires, remote engine start and GPS tracking. And, of course, the best





security feature of all is the inconspicuous exterior. Getting into the armored car business was not a Becker bus iness plan . But clients kept asking for the security and Becker acquiesced - but only if the security innovations dovetailed with his discreet transportation concept. Unlike most armored vehicles, Becker's conversions remain completely luxurious and appear normal, inside and out. "Unless you've been in an armored vehicle, you have no idea how oppressive they can be;' says Becker. "With our design, you hardly notice anything unusual :' Sitting inside a Becker product is an experience in itself. Once you get over the initial thrill of an impressive array of state-of-theart entertainment and wireless communi-

Becker and company didn't set out to become the foremost manufacturer of custom-converted SUVs. The company's initial idea was to create a limousine without resorting to a stretching process. Eventually, Becker found that a Ford Excursion, ?V2 inches longer than GM's Denali and other SUVs, was perfect for what he had in mind - except for the suspen-

ground in the mid-1990s, its popularity and business have increased by leaps and bounds. Just recently, Becker shipped 10 allwheel-drive Chevy Express Vans to Tokyo. Becker conversions can be found around the world in places such as Romania, Africa, Saudi Arabia, Syria, Kuwait, Mexico City and

sion. Becker was very discouraged to learn that the Excursion suspension was a tooth rattler on the cobblestones and potholes of New York City. "Since 40 percent of our production

The base price for one of Becker's conversions starts at $85,000, but prices typically range around $120,000 and frequently go as high as $200,000.

Beijing. A showroom in Moscow is in the works.

Becker's armored packages, excluding

cation installations, you can rela x and enjoy plush luxury you'd most likely associate with a multimillion-dollar Gulfstream jet. Becker SUVs have taken their inspiration from the best of everything - Maybach type leather seats, Rolls Royce burl wood veneer and Mercedes-Benz upholstery. Comparing the exquisitely detailed Becker coachwork interiors to the plush cabin of a private jet is no accident or coincidence. "Describing them as Gulfstreams of the road - as some people have - is okay with me;' says Becker, acknowledging the comparison compliment. "In many instances our interiors are equal to and often surpass what you'll find on an expensive jet. "Many dignitaries and celebrities who

VIPs come to Howard Becker for an indispensable, comfortable, secure, and discreet ride.

buy our SUVs already own private planes, yachts and European luxury cars. They are used to the best. And we will continue to supply th em with that luxury but in a subtle stylish way with no exterior ostentation whatsoever. "So if our interiors do seem aviation-oriented, it's not by accident. We are re-creating, in a SUV, the same luxurious appointments they are used to in their privileged lifestyle. Whatever the latest technology is for - business or entertainment purposes- we can provide it with total lu xury thrown in as a bonus:'

goes to New York, we had to make a tremendous investment and develop an independent rear suspension for the Excursion;' says Becker. "Now the Excursion gives a smoother and quieter ride on New York streets than a Cadillac:' Although the Excursion is ideal for his purposes in terms of its length, Becker says that any or most SUVs could be adapted if requested . The adapted Excursion provides a comfortable ride for five rear passengers, with walled-off privacy from the driver's compartment. Since Becker Automotive got off the

the cost of the car and interior accoutrements- start at around $75,000 and go up to about $145,000. A fully armored vehicle with a complete interior package can cost $365,000. A Becker conversion is all about options, and they don't come cheap. But as Howard Becker would put it, "The best option is the option to conduct your business using the latest secure mobile wireless Internet technology, in privacy, safety and comfort even though you're stuck in traffic for an hour on the way in from the airport:' R Information: Valu eRich Magazin e 45


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Mercedes Airns to Rally European Deliveries

Mercedes has made it more lucrative and fun to travel to Germany and pick up a 2004 C-Ciass, E-Ciass (above), CLK coupe, S-CI ass, or SLK roadster. European delivery has become an even more popular "option" for those who wish to combine picking up a new Mercedes with a European vacation. Mercedes-Benz USA announced recently that it w ill boost the price advantage of their European delivery program to seven percent off the total vehicle price from five percent. Customers have combined their vacation and business travel to Europe with the purchase of a new Mercedes for over 40 years. But, with even more aggressive pricing and the addition of the S-CI ass sedan, Mercedes aims to pump new energy into the venerable sales program. The European Delivery program includes 2004 C-Ciass sedans, coupes and wagons; E-Ciass sedans and wagons; CLK coupes; S-Ciass sedans and SLK roadsters. Limitedproduction models, such as the CL coupes,

SL roadsters and AMG models, are not eligible. The standard European Delivery package includes a variety of benefits at no additional cost to the customer, including overnight accommodation at a first-class hotel, taxi vouchers, and a tour of the factory in Sindelfingen, Germany. Since most customers who take advantage of the program usually schedule the pick-up of their vehicle around a European vacation or business trip, the package also includes 15 days of full European car insurance coverage with no deductible, so customers can enjoy carefree driving of their new cars throughout the continent.

Black Forest Rally Package Now that you've got the car, why not put it to good use? Mercedes-Benz USA also of-

fers customers the convenient option of a Black Forest-Alps Rally Package, featuring five nights at exceptional hotels and a selfguided "rally" tour through the most scenic areas of Germany and Austria for $1 ,200 per couple. When customers are ready to return to the States, there are convenient 14 no-cost drop-off points throughout Europe. The cost of shipping and delivery to your local U.S. Mercedes-Benz dealer, including U.S. Customs duty, is included. Mercedes-Benz USA's European Delivery program is available through all of its U.S. dealers and online at The website has program details and travel tips. You can even build your own virtual Mercedes by selecting from a variety of color combinations and options to determine the price of a specific configuration. Valu eRich Mag az in e 47

Pershing interiors are impeccably outfitted with lush Italian contemporary styling featuring rare woods and exotic upholstery materials.

The Pershing story began 20 years ago with a wooden craft and three friends who were seagoing fanatics. In 1982, Pershing president Tilli Antonelli and two partners, Fausto Filippetti and Giuliano Onori, founded the precursor company to Pershing, Cantieri Navali deii'Adriatico. The three partners started out constructing cold-molded custom sailing yachts. Their first boat was a 53foot sailing cruiser. Italian singer Lucio Dalla commissioned a second 50-footer and the legend that would become Pershing was born.

Elegant form follows function in Pershing's sculptural interiors. 50 ValueRich Magazine

After selling their third sailboat, Antonelli and his partners started down a new path in boat building, one that would eventually lead to the Pershing vessels of today. When Cantieri Navali deii'Adriatico was ap~ proached by a fourth customer, who could not decide what type of boat he wanted, Antonelli and his partners called on Fulvio de Simoni, a young and promising yacht designer. The boat that they delivered was

an immediate success.

The First Pershing Cantieri Navali deii'Adriatico's first power cruiser was born of a completely new idea: a seagoing craft combin ing the features of a speedboat with those of a motor yacht, not only in terms of performance, but also in terms of design, comfort and quality. The first Pershing was a 45-foot Kevlarhulled power cruiser with three double cabins and three bathrooms - accommodations far exceeding any other vessels of comparable size. It also featured an open design that quickly became a\\ the rage for crafts in the Mediterranean. The 45-footer was ahead of its time in terms of speed and power. So impressive were the performance characteristics of the new yacht that it gained an immense following with high-profile international Formula One race drivers - Michele Alboreto, Thierry Boutsen and Aguri Suzuki

Photos courtesy of Ferretti Group USA

among them. Piero Ferrari, son of Enzo Fer-

1998. The Pershing name seemed most

rari, was another notable owner of the 45footer. The yacht proved so successful that the original design is still being produced

oped a 52-foot model based on the same hull as the successful 45-footer. During the 1990s, the company expanded its product line to include 30- and 33-foot entry-level

clearly to embody the essence of their fleet of sleek power cruisers. In choosing the name, Antonelli and his partners drew inspiration from Pershing military missiles. The missiles, they reasoned, shared some important characteristics with their yachts - speed, power, flexibility and dependability. Thus the name Pershing was adopted,

models, as well as 60- and 70-footers.

but there were more changes to come.

today with minimal changes. Antonelli and his partners soon devel-

By the mid-1990s, what had started as a modest Italian sailboat manufacturer had become an international sensation in the motor yacht world. Cantieri Navali deii'Adriatico's Pershing yachts were sleeker, faster and sexier than anything else on the seas. The new yachts became increasingly popular on an international level, bringing profound changes that would take the company to even greater heights. Antonelli and his partners officially adopted Pershing as the corporate name in

The Ferretti Impact A world leader in engineering and manufacturing luxury motor yachts and sport boats, Ferretti Group had maintained an ownership stake in Pershing since its inception in the early 1980s. In 1998, Ferretti Group initiated a major acquisition strategy targeting the world 's most prestigious shipyards. Some of the largest, most well-known names in the marine industry - Bertram, Riva, Apreamare, Machi Craft,

...t .a Contemporary European galleys are fit for lavish entertaining. Valu eRi ch Magazine 51

Careful attention to detail and outstanding ergonomic design provide for eminently livable spaces.

Custom Line and CRN -would all eventually call Ferretti Group home. With its industry-leading position in the construction of high-performance luxury mod-

and expansive dealer network, which today includes operations in more than 60 coun-

customers coming back {70 percent of Pershing yachts are sold to existing Pershing

tries, certainly plays a significant role in Per-


Power and Performance

els, it was only natural that Pershing would make Ferretti Group its new home as well. New ownership meant increased production and profits. By 2002, new builds had increased to 57, while sales had

Pershing has long been celebrated for its boat building and performance-enhancing inno-

reached $54 million, a whop-

cally designed to accommodate

vations. They were one of the first builders to use Arneson Surface Drives (ASD) on their yachts. The Pershing 54-footer was specifi-

ping 325 percent gain in just four the ASD system. Today, ASDs are standard on all but the smallest years. "The impact that Ferretti has had on our operations is simPershing models, giving the Pershing fleet unmatched power ply fantastic;' said Antonelli. "Our and acceleration. dealer network effectively went from five or so dealers up to 22 or Pershing is also the only The latest technology ensures optimum power, safety and navigation. 23 more or less overnight when builder using hydraulic steering we got together, and that has probably had rams between the drive units rather than shing's continued growth and success, but the biggest single impact:' outside. This ensures that Pershing yachts it is the quality and advanced thinking that Ferretti Group's global marketing reach provide proper location for such items as goes into each Pershing vessel that keeps 52 ValueRich Maga zine

Sleek, fast, high-tech and luxuriously outfitted -the Pershing 88 offers an unprecedented Mediterranean-style cruising experience.

No compromises are made on the furnishings of the smaller cruisers, such as the Pershing 43, left. ValueRich Magazine 53

Each Pershing model is distinctively innovative. The entire rear transom of the Pershing 76 raises to reveal berths for two jet skis.

trim tabs and exhausts. Even the Pershing hulls, developed using exclusive "Scrimp System" technology to optimize weight/power ratios, are lauded for their progressive design. The deep-V hulls of the Pershing yachts have been designed in conjunction with Ferretti Group Engineering to ensure top performance according to different sea conditions. Elaborate computer tests employing advanced CAD technology enable engineers to con-

gonomics gives all Pershing models, despite their size, the look and feel of much larger yachts. Finite structural solutions combine with real leather, fine woods, creative lighting, cutting-edge audio/visual components and stylish furniture to satisfy the most discerning tastes. Refined and elegant from any vantage point, the atmosphere on a

duct virtual tests on individual sections of the hull, emulating various sea conditions, to ensure strength, safety, comfort and durability.

gressive lines, sculpted volumes and bold forms. Pershing designs convey a harmonious balance of stylistic elegance and top performance. If you want a yacht that turns heads, buy a Pershing.

Luxury, Italian Style

As advanced as Pershing yachts are from a technology and performance standpoint, their comfort and design characteristics are even more impressive. Pershing yachts are all about pleasure. Careful attention to interior design and er-

54 ValueRich Magazine

Pershing is a truly exclusive one. Each Pershing model sets a new trend with its Italian contemporary styling - ag-

Future Mega-yachts

Today's Pershing yachts adhere to the original high-performance, high-comfort "open" formula initially developed for the 45-footer. There are currently 10 different models- a 37-footer, 37-Cabin, 43-footer,

45-Limited, 50-footer (which made its U.S. debut at the 2004 Miami International Boat Show), 52-footer, 54-footer, 62-footer, 76-footer and 88-footer- all of which espouse a combination of flair and elegance unique to Pershing. Spring 2004 saw Pershing unveil its largest vessel yet - a lavish 115-foot megayacht with the same contemporary styling and performance found in its smaller models - only on a much larger scale. Twin -3,700 hp MTU engines hooked up to water jets will enable the new Pershing 115 to achieve top speeds in excess of 40 knots. Antonelli has hinted that even larger vessels may be in Pershing's future. "I am quite confident that the Pershing formula can go quite a bit larger than 115;' said Antonelli. "I can see us topping out with maybe a Pershing 135:' Given what the company has done so far, anything is possible from Pershing. VR

Pershing and Ferretti in America

A new state-of-the-art Pershing manufacturing complex is under construction.

With a new distribution deal and exceptional customer care, Pershing and Ferretti Group are enjoying rapid expansion in the U.S. market. When Pershing became part of Ferretti Group in 1998, the company went from a modest Italian boat builder to a major player in the international marine industry almost overnight. For U.S. yacht enthusiasts, the marriage between the two companies has meant that owning these jewels of quintessential Italian engineering and design is now easier than

The CEO of Ferretti Group USA, Bob Fritsky

marine industry experts, each assigned to a particular Ferretti Group brand, the Product Manager System empowers these individuals to do whatever it takes to satisfy U.S.-based customers. This commitment to superior customer service extends throughout the entire life cycle of Ferretti boat ownership. During the construction phase, product managers visit Ferretti Group shipyards in Italy to ensure that customer needs are being met. Before Ferretti Group vessels leave Italy,

products here in the U.S:' Addressing the distribution issue, in late 2003 Ferretti Group inked a deal with MarineMax, Inc. (NYSE: HZO), the

they team up with Italian-based Ferretti Group engineers and technicians to personally inspect and sea-trial each one. When Ferretti Group yachts arrive in the U.S., product managers conduct a final re-inspection and sea trial. Once they accept delivery, customers can be assured that an experienced marine industry professional has gauranteed superior quality and developed the type of intimate knowledge of the individual vessel that yields exceptional after-sales customer care. During the after-sales period, product managers provide

nation's largest recreational boat retailer, making Marine Max the exclusive dealer in the U.S. and Canada for all Ferretti Group vessels built in Italy. Ferretti Group's sole U.S. brand, Bertram Yachts, also is distributed by MarineMax everywhere in the U.S. and Canada, except for Florida and certain portions of New England. "Our partners at MarineMax have 66 retail locations across

quick solutions to warranty and maintenance issues, utilizing direct access to factory parts housed in the company's new Fort Lauderdale-based inventory warehouse. They also have the authority to make instant decisions on warranty issues. With the marriage between MarineMax and Ferretti Group USA providing broad distribution and industry-leading customer care, the honeymoon is just beginning for U.S. buyers.

ever. "Foreign-built yachts have historically been at a disadvantage in the U. S. because of limited distribution and concerns over customer service and the availability of parts from overseas;' says Bob Fritsky, CEO of Ferretti Group USA. "Thankfully for us, we've managed to overcome these issues, giving owners ultimate peace of mind when purchasing Ferretti Group

the country, so owners have no problem finding Ferretti Group in the u.s.;' said Fritsky. In terms of foreign parts and customer service, Ferretti Group USA has overcome these issues by establishing a unique Product Manager System. Comprising a collection of

Information: MarineMax, Inc.- Ferretti Group USA- Valu eRi ch Magazi ne 55











Exquisite oceanfront home in the Estate Section with beautiful pool and an eastern veranda capturing the brilliant ocean views. $12.9 million

Over 285' of direct Intracoastal property. Two contiguous deeded parcels that can be sub-divided. $18.5 million Jim McCann: 561-655-6550

Laura Coyner, Rosalind Clarke and Jim McCann: 561-655-6550



Exquisitely renovated 8,000 sq. ft. residence opens onto beautiful gardens and lawns in the Estate Section of Palm Beach. $7.695 million Rosalind Clarke, GRI: 561-655-6550

Extraordinary and unique golf course home with park-like views. Beautiful open floorplan and wonderful gardens surround the home. $3.75 million Gary Little: 561-309-6379 or Lynn Warren: 561-346-3906

333 Peruvian Avenue • Palm Beach, Florida 33480 • 561.655.6550 •

The Luxury of Choice By Ellen Bainer

Size matters, at least when it comes to vacation homes. Locations matter as well, Aspen for ski season, Cabo for fishing, the Bahamas for a beach getaway ... but who would want the headache of owning homes in each location, even if they could easily afford it? "This is the answer for those wishing to build a long-term luxury lifestyle. They know they'll be treated right and go to the

best places;' says Mike Hess, Vice President of Marketing for Abercrombie & Kent Destinations. Members of A&K Destination Clubs stay at top-of-the-line luxury homes, which include more amenities than a five-star hotel and are located in the world 's best resort destinations. It's a true luxury alternative for those who are disenchanted with the com-

plexities of owning a second home and the limited options provided by resort hotels. "Many of our members looked at options for owning a second home;' Hess explains. "They decided they didn't want to be tied to a single destination, and they wanted fabulous homes:' Abercrombie and Kent, a leader in luxury travel for the past 40 years, launched Valu eRich Magazin e 57

The view of the Pacific from the luxury villa at Esperanza Resort in Cabo San Lucas is spectacular.

the revolutionary concept in 1998 and today there are over 500 members in two different membership clubs. Director of Acquisitions for A&K Destination Clubs Larry Langer comments: "We received an overwhelming response to our new club, Distinctive Retreats by A&K. Our membership directors sold more than 100 memberships in the first 30 days of availability:' "It's the most exciting thing to hit this industry in 30 years;' says Rick Dumas, Director of Destination Management Companies for A&K Destination Clubs. "It's a lifestyle solution for people who have worked hard and have the discretionary income:' Members choose from a diverse portfolio of luxury residences and resort suites in more than 30 world-class resort destinations including Nevis, Rancho Santa Fe, Jackson Hole, Cabo San Lucas, Telluride, Tortola, Belize, Scottsdale and Hawaii. Citycenter luxury suites are available in Paris, London, Rome, New York, San Francisco, Miami and San Diego. Tropical Boca Raton offers boating access and waterfront views. ValueRich Magazine 59

A&K Jets and Bombardier Flexjet offer Destination Club members luxurious no-hassle flights on a personal aircraft.

Members also have access to A&K Jets, a private fleet powered by Bombardier Flexjet. No contracts or minimum usage are required. Preferred rates are comparable with fractional jet ownership. "A&K Jets is revolutionary because of its flexibility- members pay only when they fly;' says A&K Jets Vice President Richard C. Michaels. "No other jet program offers a concept th is comprehensive and without commitment:' Partnerships with Bombardier Flexjet and Avantair give members access to the Bombardier Learjet 31 A, Learjet 45, Learjet 60, and Challenger 604, as well as the Piaggio P180 Avanti. "Fiexjet has exceptionally high customer satisfaction;' says Michaels. "This aligns perfectly with our members' high expectations:' A&K Destination Clubs deliver on their promise of exceptional service and consistency throughout the collection. "I've never seen a more dedicated group;' says Dumas. "The entire company has a culture of service." All staffers are available to members 60 ValueRi ch Magazin e

Rustic-sheik Aspen is one of the world's top dest inations.

by cell phone 24/7. How does it work? First chat with a scheduler (who knows you by first name) and check availability (you're guaranteed the destination of your choice as long as you call within 60 days of arrival). Then the Retreat Planning Specialist arranges for all

your needs in detail: grocery list, spa services, rental car and directions to the property. A complete destination planning guide lists all the activities in the area (emergency phone numbers, too) . You'll even receive a write-up from members who have previously stayed at the residence, noting the

The hardwood and thatched roofs add an West Indian flavor to this A&K Nevis residence.

Pho tos: courtesy of Abercrombie & Kent

available 24/ 7 by cell phone in case anything pops up. Each residence also has a private chef at your disposal. "At a hotel, you have to deal with the bellman, the desk agent, and housekeeping. True luxury is people to serve you on a one-to-one ratio;' says Dumas. "Distinctive Retreats by A&K provide me with an upscale home almost anywhere in the world at a moment's notice;' says David Fansler, club member. "One week I can be skiing in Sun Valley and the next lying on the beach in Cabo San Lucas:' V R Abercrombie & Kent Private Retreats homes up to $1 million. Membership fee $275,000. Annual dues $9,500. The Trump International Hotel & Tower city club suite offers commanding views of Central Park.

highlights of their experience. "Our members don't want to waste time testing the waters. They are being pointed in the right direction right off the bat;' says Hess. Upon arrival at your residence, you're met by the Resort Host, who serves as

your personal concierge throughout your stay. The host attends to your every need : showing you how to operate the Jacuzzi, snagging reservations at the hot new restaurant in town, arranging a massage or securing a tee time. The host will check in with you once a day and is

Abercrombie & Kent Distinctive Retreats, launched January 2004, homes valued at $2.5 million or more. Membership fee $510,000. Annual dues S13,500. Abercrombie & Kent Legendary Retreats are slated to launch in 2005, with homes valued at $7,000,000. Information: Valu eRi ch Magazin e 61

Queen Mary 2 By Ellen Bainer

After an evening of gustatory delights, a swing on the dance floor of the world's largest ballroom at sea, and a front row seat at "Rock the Opera," you can even write home about it. Every stateroom is equipped with a data port and e-mail, and the interactive TV in your cabin allows you to make spa appointments for the 20,000-square-foot Canyon Ranch Spa Club or dinner reservations. "Queen Mary 2 will carry the grace and elegance of a bygone era into the future;' claims visionary Micky Arison, chairman of Cunard's parent company, Carnival Corporation. Queen Mary 2 is the longest, tallest, widest, heaviest and most expensive passenger ship ever built. However, what sets QM2 apart is not quantitative, but qualitative. Cunard has partnered with many of the pre-eminent names in the luxury lifestyle business and collaborated with them

QM2 weighs 150,000 tons and can reach a speed of 29.3 knots. 62 Valu eRich Magazine

Old World Elegance

New World Wired

in a very special way. The roster of Cunard 's on board partners is an eclectic mix of the traditional and the sublime: Canyon Ranch, Todd English, Wedgwood and Waterford, Veuve Clicquot, Royal Academy of Dramatic Art, Oxford University, and onboard retailers Dunhill, Chopard, and Hermes. It's everything you want wrapped in one grand and glorious gift called QM2. Bespoke (bi-'spok) adj. 1. a. custommade. A custom-made pair of shoes by British bootmaker John Lobb will cost you $4,000plus. A handmade two-piece suit from Savile Row, about $5,000. A lavish duplex suite on the Queen Mary 2 ac ross the Atlantic? A mere $4,500 per day (that's per person). "Everything needed to be bespoke;' says Edie Bornstein, Vice President of Business Development for Cunard Line, creator of the Queen Mary 2. "It's unique, one-off. We kept the classic elegance and added a twist of hip and modern:'

Partners in Luxe Other cruise ships may choose a famous chef as "culinary adviser" to offer menu

The elegant Grand Lobby takes you back to a grand age of sailing from the minute you board. Valu eRich Magaz in e 63

guidance, but QM2 went one giant step further to actually open a famous chef's restaurant on board. "We have our own kitchen -

that was

really important to me;' says Todd English of his eponymous restaurant on QM2. "It's got its own style. The decor is uncharacteristic of the rest of the ship. I put the bar out front. It's a wine bar and tapas bar. It's what we do today - social grazing - sometimes we'd rather spend the calories on a Cosmopolitan or just eat smaller portions of food. Service is more American in style and more relaxed, not so French and formal. I want you to feel like you're walking in off the streets of Manhattan . It's about modern thinking -you may not want to do the grand dinners every night:'

Meeting of the Minds When English described his vision to a group of 15 designers in London more than two years ago, he was greeted with silence across the table. "It needs to be more lush;' Every stateroom is equipped with a data port, e-mail and interactive TV.

Activities on board the largest ship at sea include athletic playing fields, a planetarium (above) and the Maritime Quest Exhibit. 64 Va lueRich Mag azi ne

The wine and tapas bar at the entrance of Todd English is designed to provide a modern urban-style dining experience.

he mused, "the sun-drenched colors, tomatoes and eggplants, t he Tuscan sunset:' But the 15 upright English people didn't understand at first. After lunch and a few lagers at the local pub, they finally got it. I got on the plane the next day and it was done;' says English. "It's been a great working relationship. I never once felt that I couldn't go to them. It was pretty much 'whatever you want' with certain limitations:' Bornstein was also at that meeting in London. "We had the luxury of time. We began the design concept in its embryonic stage - we could capture his food, his look, his feel. This restaurant is unique in the world even to his brand:'

Arbiter of Global Good Taste "They are our partners;' says Bornstein. "They understand that life at sea is different. Take the custom china created by Wedgwood for the Queens and Princess Grills, for example. We told Wedgwood that we use a higher heat process for washing dishes

Many passengers never discover the intimate Commodore Club lounge on Deck 9.

ValueRi ch Magazin e 65

onboard ship. So we created a unique design. It's distinctly Wedgwood. It's distinctly Cunard. It's a collaborative relationship. Everybody benefits;' adds Bornstein. There's even a rose, the Queen Mary 2 rose, which was created especially by Meilland, the distinguished nursery in Provence. It is off-white, smells delicious, and is available on board. Even though the QM2 is the hottest thing on the high seas right now, there's still time to book for 2005. You had better move quickly, though; even Todd English didn't get to sail on the inaugural crossing. "They kicked me off;' he says. "They needed the cabin!" VR Todd English (center) with his staff on the restaurant's terrace, overlooking the pool.

Fun Facts About QM2 She towers 203 feet above the waterline: passengers sailing in and out of New York Harbor can see eye-to-eye with Lady Liberty. At 147 feet wide, she is too broad to pass through the locks of the Panama Canal. Cunard's first transatlantic vessel, the Britannia, was launched in 1840, weighed 1,135 gross registered tons, and sailed at a speed of 9 knots. QM2 was launched in 2003, weighs 150,000 gross registered tons, and has a speed of 29.3 knots. QM2 has only 10 feet of clearance under the Verrazzano Narrows Bridge. Micky Arison's Carnival Corporation operates 66 passenger vessels with annual revenues close to $7 billion. The original Queen Mary entered service in 1936. She's now a hotel docked in Long Beach, California . Staff at Buckingham Palace have jumped ship to take better-paid jobs on QM2. At least two housemaids and a footman have landed posts on the ship so far! The price tag of a six-day transatlantic crossing in the duplex Balmoral Suite (2,249 sq.ft.): $27,499 The price tag of a six-day transatlantic crossing in a standard inside stateroom (194 sq.ft.): $2,119 Bob Dickinson, Carnival Cruise Lines president: "We need 130,000 people a year to fill this ship. That's the size of a small Midwest city." Todd English's favorite bar on board: the Commodore Club on Deck 9. Live jazz and wraparound windows at the bow of the ship offer a nearly 360-degree view.

66 ValueR ich Magazine


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By David Willson

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Palm Beach was once merely a tropical paradise. The brilliant blue-green ocean ebbed and flowed against rows of low dunes. Just over those dunes, separating the barrier island from the mainland, was a narrow crystal-clear three-mile-long freshwater lake. Herds of deer roamed. Panthers hunted them. Sea turtles nested. Black bears feasted on their eggs. Schools of fish swam, so large that the ocean's surface danced from their movement. Caribbean Indian tribes considered it a spiritual and powerful place. Today's residents and visitors feel much the same way. The natural beauty of the area still dazzles. Development has been of a very high quality. Local government and well-to-do philanthropists have infused culture and the arts into virtually every project. Consequently, the area has attracted people from all over the world, and also a great deal of meValu eRi ch Magazin e 69

dia attention.

-a remarkable confluence of unique geo-

where pioneers could homestead. Visiting

"In the last decade, Palm Beach has seen an influx of big new money unprecedented even for a resort founded as a playground for the super-rich;' wrote Bob Colacello in

graphical features. The barrier island is on the far eastern edge of the Florida peninsula, where it is kissed by the great warm current of the Gulfstream. Steady subtropical trade winds dissipate summer heat and

the area at that time would have been more like visiting an island in the West Indies than a typical American town. Family settlements of island-colonial and cracker-style frame homes spread along the shores of Lake

winter cold, maintaining a yearly temperature average in the mid-70s. But the narrow 56-nautical mile-wide Florida Straights between Palm Beach and the Bahamas can also be treacherous. There were so many shipwrecks from early

Worth . The standard mode of transportation was a shallow draft, drop-keel sailboat

Spanish treasure fleets along the coastline, that it was nicknamed the Gold Coast. Later, that name would take on a new connotation, as the world's wealthy and elite arrived to play and stay.

made his fortune as the second in command and partner of John D. Rockefeller in

his February 2004 feature article about Palm Beach society for Vanity Fair. "A lot of Northerners loved the idea of Miami, went down there and discovered that maybe it's just another big city at the end of the day;' said New York real estate heiress and socialite Beth Rudin in Guy Trebay's March 2004 New York Times article featuring a dozen or so well-connected Manhattan/Hamponites who recently have snapped up homes in restored West Palm Beach neighborhoods. Inc. magazine recently named West Palm

Beach the fifth best large metropolitan area to do business in America. Perhaps Palm Beach's magical attraction has something to do with its location

The Last Frontier in America

called a "Sharpie:' The easy-going lifestyle disappeared when Henry Flagler, one of America's wealthiest men, came to town. Flagler

Standard Oil. At an age when most men retire, Flagler began building a railroad and worked his way down Florida's East Coast developing

In the late 1800s when much of the American West was already won, South

resorts in St. Augustine and Daytona Beach. In 1893, Flagler's advanced agents blew into Palm Beach like a hurricane. Within nine

Florida was one of the last places in America

months, the Royal Poinciana Hotel was con-

In spite of the subtropical climate, early Palm Beach settlers wore heavy long-sleeved clothing for protection from mosquitos. 70 ValueRich Maga zin e

structed on the island, connected to the mainland by a rail trestle bridge over Lake Worth - ready and waiting

million mark. Top-flight real estate brokerage firms have been creating a one-stop-shopping approach of offering real

for the first train to arrive. The wealthiest people in America traveled down Flagler's railroad in their private rail cars to stay at the elegant Victorian-style hotel. It was the largest

estate to connected New Yorkers in Manhattan, the i5 Hamptons and Palm Beach. ~ Sotheby's Realty was the first


wooden structure and the


national firm to exploit the connected markets. Other ~ "l::l c:: Palm Beach companies such


first fully electrified hotel in the world. Flagler held court at the Royal Poinciana Hotel like American royalty- thus

.g as Brown Harris Stevens and c:: ~ c::

McCann Coyner Clarke have

8 strong Manhattan connecc. c:: :::.



setting the standard in Palm

"Twenty-five percent of "S Beach for years to come. ~ the capital wealth of the Across the lake to the ..ยง United States is sitt ing in ~ west, a small group of locals Palm Beach during the sea2 quickly got together and votll!!!=::::::::!!!!!!!~::::t;.;::=:=:::::::::~~~~~;;~;~~~~===:J ~ son;' stated an unnamed ed to incorporate as a town . Wall Street financier in Vanity Flagler's beachfront hotel, the Breakers, Fair's recent article. Some wanted to name the town Flagler. was originally built in wood. After the hotel But, pre-Flagler residents would hear nothburned down twice, the third Breakers was Hot, Hot West Palm Beach designed to be fireproof, and built with coning of it, and carried the vote to call the crete and stucco made from beach sand in town West Palm Beach. Unfortunately, over During Palm Beach's high society years, the Mizner-inspired Mediterranean style. the next few years, two bad hurricanes and West Palm Beach followed a different path a devastating fire destroyed much of downof development. Boom and bust real estate the iconographic image for Palm Beach. town West Palm Beach. Some said that the ma rkets, the Great Depression, World War town had bad luck because it had thirteen letters in its name. West Palm Beach housed hundreds of Flagler's rough and tumble construction and rail workers in tents and shotgun houses. Banyan Street was like Dodge City in the Old West. Saloons were open 24 hours a day. There were regular brawls, knifings and even a lynching.

High Society

Flagler's new resort brought the Vanderbilts, Rockefellers, Carnegies, Mellons and Morgans among others. Eventually, down-on-his-luck New York architect Addison Mizner came to Palm Beach. Palm Beach's social elite took an imme-

II and destructive hurricanes created sporadic and disconnected periods of growth and desolation . As a result, West Palm Beach is divided into a variety of distinctive neighborhoods such as Northwood, El Cid, Prospect Park, and Flamingo Park with a mix of bungalow

diate liking to Mizner and his architecture.

and Mediterranean revival homes, recently

He was a gigantic impressive man and a real

faithfully restored to their nostalgic glory

Flagler didn't stop building after fini sh-

showman . His g randiose designs were just

by South Florida professionals and th e local

ing the Royal Poinciana Hotel. He built the Palm Beach Inn on the beachfront, then expanded it to double its size over the next few years, renaming it the Breakers. The original Breakers burned down in 1903, was rebuilt, and burned down again in 1926. When it was constructed the third time, it became the elegant 5-star replacement for the aging Royal Poinciana. Its twin Spanish revival towers are world famous today as

what the Palm Beach patrons wanted, each t rying to outdo the other's fancy mansion. Every new house in Palm Beach began to emulate Mizner's Moorish-Italian-Arabianmixed-with-Gothic look. Building a mansion became the ultimate Palm Beach pastime, which continues to this day. Today, interest in Palm Beach is at an alltime high and real estate prices have followed suit, frequently reaching the $20-30

gentry. With the connection between Palm Beach and New York firmly established, it was only a matter of time until interest spilled over into West Palm Beach. The relaxed yet distinctive lifestyle available on the west side of the lake has attracted attention from Manhattan professionals, artists and Hamptonites. One couldn't have said the same thing Valu eRich Magazin e 71

The West Palm Beach waterfront hosts numerous large public events, including Sunfest (shown above), and the Palm Beach Boat Show.

residential units. At the center of it all is a lovingly refurbished Spanish mission-style church converted

15 years ago. West Palm Beach's downtown had gone into steady decline and urban blight was creeping into the best of the surrounding neighborhoods. There was, literally, a big dusty 55-acre hole in the middle of town from a real estate developer who had razed the area to the ground and then gone bankrupt. All that changed when the citizenry backed a referendum to

into a cultural center. West Palm Beach is still undergoing significant repairs and development. The biggest frustration today is the immense amount of road construction being done; ., widening the major highways, re"' building the main bridge to Palm





put unprecedented power in the hands of the mayor and elected Nancy Graham to the post. Graham took her strong mayor mandate seriously and immediately put major city commitments behind sprucing up downtown and bringing resources together to develop the vacant parcel. Graham also kicked in support from the city to host a performing arts center on the edge of the desolate site. The world-class Raymond F. Kravis Center for the Performing Arts was 72 ValueRich Magazine

B 0



West Palm Beach's architecturally distinctive Kravis Center for the Performing Arts.

opened in 1992, debt-free. Within three years, the entire property was revived as the $550 million CityPiace development, based on an Italian plaza, combining high-quality retail with a 4,000 seat Parisian opera house-styled movie theater, outstanding restaurants and thousands of

Beach island, replacing 100-yearold sewer systems and laying fiber optic cable downtown. At the same

time, more than 3,100 downtown residential units are being constructed in 10 luxury high-rise condominium projects within a 12-block area. With revitalization in full swing, property values in the surrounding neighborhoods have soared. Revitalization has also meant the return of business and greater attraction of the wealth from Palm Beach. In a short period of time, a number of major cultural

Revelers from all over South Florida flock to the nightclubs and eateries along Clematis Street in downtown West Palm Beach.

venues have been opened with the help of Palm Beach wealth and influence. The Norton Museum of Art was transformed from a sleepy private gallery into a world-class art museum. The Armory Art Center and School was established, largely with the aid of Palm Beach attorney Robert Montgomery, and is going through rapid expansion. Their Master Artist Workshop seminars attract artists from all over America . Another Montgomery beneficiary, the Palm Beach Institute for Contemporary Art in nearby Lake Worth, is gaining a nation al reputation for their edgy presentations of emerging artists. The Wellington community, west of West Palm Beach, has grown as an equestrian center that hosts the world 's largest annual equestrian event in February. Horses are so big in the Palm Beach area that it boasts two polo stadiums, the most recent having been built by Palm Beach polo patron and player John Goodman. All of this activity, involving many of the

nation's wealthiest and most influential people, has led to West Palm Beach being recognized as a prime place to do business.

An International Destination Palm Beach County recently beat several other competing locations to attract The Scripps Research Institute new biomedical research campus. Scripps will build a 100-acre biomedical research center surrounded by a complete community on the northwest fringes of West Palm Beach. Notfor-profit Scripps has stated that one determining reason why they picked West Palm Beach over other locations was its proximity to wealthy potential donors in Palm Beach. West Palm Beach appears to be poised on the verge of sharing international prominence with its neighbor Palm Beach, which has long-standing ties to wealth, royalty and the European corporate elite. The Palm Beach-West Palm Beach area also offers traditional neighborhoods, tropical beauty, elegant venues, and a harbor and interna-

tiona I airport that cater more to yachts and corporate jets than giant cruise ships and commercial flights- making it very attractive to a broad spectrum of business and private interests. The latest jewel in the crown of the Palm Beaches is the new Palm Beach County Convention Center. The center was designed as an elegant and technologically advanced venue to house medium-sized consumer and corporate events. This beautiful facility is in close proximity to some of the finest restaurants, hotels, cultural venues and natural attractions to be found anywhere. ValueRich Inc. will be among the first to showcase the Palm Beaches to the entire financial industry when it holds the ValueRich International Public Company Assembly and Exposition at this grand new venue, March 9-11 , 200S. Public company officers, investment bankers, investors and corporate service providers will sample the excitement of the Palm Beaches for themselves, as they participate in a variety of events. VR Valu eRich Magazin e 73

n.Town l

Prezza Impresses There is a restaurant at 24 Fleet Street in Boston's North End that used to be a good insider tip: "that edgy little place where all the well-connected professionals gather:' After being listed as one of the best Italian restaurants in Boston by the Zagat Survey and others for several years running, Prezza is no longer insider knowledge. You'd I better make reservations if you want to eat there. It all started when Danvers, Mass., native Chef Anthony Caturano happened on a vacant restaurant space while looking for his next place of employment. Caturano assembled a talented front and back of Prezza's Anthony Caturano creates magic using traditional influences. house team, and began work on Prezza, named after his Italian grandmother's hometown in Italy. The family connections don't end there; Prezza's eye-opening wine list was crafted with the help of his wine enthusiast father, Richard Caturano. But more about the wine later. Caturano's cooking style is the product of a world of influences, starting with time spent traveling through Italy and informed by stints in South Beach, at Memo and Mark's Place; Los Angeles at Patina; and back home in Boston at Todd English's Olives and Figs. Working with English played a sign ificant role in Caturano's style. Prezza's homemade pastas and wood-gri lled items are favorites on the menu. Caturano likes his North End location because of the mixed clientele. Waterfront locals might be seated at one table and millionaires from Marblehead at the next. The neighborhood matches the menu, which is popular for its rustic Italian dishes, but always with a dash of sophisticated innovation. Example: the Zucchini flowers - an Italian cultural staple to die for. Nothing quite compares with Prezza's wine list, however. This 22page, 700-bottle compendium is actually a lot of fun to browse. The list is designed to complement the menu and make the process of choosing wine enjoyable. In fact, everything goes together perfectly at Prezza; the ambiance, the energy, the bar, the menu, and the wine list. Prezza may have appeared in the North End without much fanfare, but it is now one of Boston's star destinations. V R


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76 Valu eRich Magazin e

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Otters Sadie and Ollie swim in an environment illustration painted

Ollie the Otter Goes Holl~ood

Ollie the Otter seems destined to be a movie star. He's already had a pretty good run in his own children's book. He is great with kids, exceptionally cute, lovably furry and comical.

By Will Andrews

It's hard to believe, but there has never been an animated feature film about an otter. That's all about to change, thanks to CritterPix Studios. It all started in 1996 when Kelly Alan Williamson was on vacation

visiting t he Monterey Bay Aquarium with his family. After leaving the sanctuary, he witnessed a wild sea otter frantically swimming around a fisherman's baited hook. "The otter kept diving down toward the bait. I just knew something bad was about to happen;'

says Williamson . Luckily, the hungry otter didn't grab the clam-baited hook and escaped injury. But, having just learned about the playful sea critters at the aquarium, Williamson was inspired by the episode."The whole story of Ollie the Otter literally flashed before my eyes:' In th_e story Ollie swims into a kelp harvester's hose to escape the hungry jaws of Skull, a killer whale whose goal is to eat every otter in the sea. Ollie ends up at The Sea Park to be rehabilitated Value Ri ch Mag azin e 77

~~we realized that if you had a great story and the ownership of great content- which

we have- and you knew a lot of fantastic animation talent - which we do - and, if you had the ability to raise significant finances, you could create a world-class animation company and have a fun time doing it" back to the wild, and meets a number of new friends. He and his friends are repatriated to the sea just as Skull makes final plans to devour Ollie's family. Ollie emerges as the leader of the team of new friends to defeat Skull and save his family- but not before he discovers that true leaders learn from others, and no one leads alone. By 2001, Ollie the Otter sold out its first edition of 10,000 copies. Eventually, the film rights came back to Williamson as the original option expired. "Year after year I would get these letters from children. The letters are so adorable. I saw the effect that Ollie the Otter had on kids. So I decided to create the company CritterPix;' he says. CritterPix is an entertainment company built around making 3D

experience in show business, technology and business development. Since 1996 he has been the executive vice president of sales for lntellon Corporation (powerline networking semiconductors) and BuzMe. com (Internet call waiting services), where he concluded deals with many leading networking companies, Internet content providers and consumer electronics manufacturers. But there is also a creative side to Williamson. He holds a Bachelor of Arts in Film Studies from the University of California, Santa Barbara, and has studied acting in Hollywood. He has

Kelly Williamson's Ollie the Otter book was a hit with kids and adults.

Computer Generated (CG) animated feature films. The first CritterPix project is an Ollie the Otterfeature film based on Williamson's book. Plans are to follow the first film with two sequels; Ollie 2: Son of Skull and Ollie 3: Down Under. CritterPix was also formed


Will iamson saw an opportunity emerging in the entertainment world . "The price of software and hardware in the animation business had come down to the point where we realized that if you had a great story and the ownership of great content - which we have- and you knew a lot of fantastic animation talent- which we do- and, if you had the ability to raise significant finances, we could create a world-class animation 78 ValueRich Magazine

company and have a fun time doing it;' says Williamson. Williamson has a rare combination of

written, produced and corporate directed

sales and training videos, and written novels and screenplays for 25 years.

New Opportunities Through Technology Williamson and Ollie are riding a wave of technological advancement that is altering the complexion of the entertainment industry. In the last few years, the vast capabilities represented in readily available animation software, combined with a huge decrease in the cost of high-end processing power, have spawned a wide-open environment for developing CG animated feature films. One of the most technology-intensive and expensive aspects of creating high quality 3D digital animation is rendering. It

Photos courtesy of CritterPix

takes three hours per frame to render the furry and flexible figure of Ollie. That's just the otter, not the background and other characters in the scene. At 24 frames per second, the processing power required to render a feature length film is almost beyond comprehension . This is accomplished by thousands of interconnected processors called a render farm. Amazing advances have been made in networking inexpensive systems during

Ollie's 30 computer graphics animated pal Bingo is covered with thousands of digital feathers- one of the most difficult effects to produce.

t he last year. Apple's new 64 bit dual processor GS computer is revolutionizing the cost/performance ratio of the calculation intensive computing needed on a render farm . Recently, Virginia Polytechnic Institute assembled the world's third fastest supercomputer using 1,100 off-the-shelf 2GHz dual-processor Apple GS computers in less than three months - and it cost less than one-tenth as much as previous supercomputers to build.

Williamson is well aware of the significance of these advances. "Today we can render four times faster than other companies could a year ago for the same price. It might even be less;' he says. There is not much difference in the animation capabilities of off-the-shelf animation software and what the big studios are currently using. In fact, today's leading 3D CG animation company sells its software for extra revenues. "We can buy Pixar's

Renderman ;' says Williamson .

Audience Tastes Are Changing Successes of recent 3D CG features like Ice Age and Finding Nemo compared to the recent box office performance of 2D features like Disney's Treasure Planet and Dream Works' Sinbad- Legend of the Seven Seas seem to indicate that audiences prefer 3D cute critters over old-st yle 2D "human based" animation features. Disney is curValu eRi ch Magazi ne 79

rently in the process of overhauling its operation from a 20 to a 30 world. OreamWorks has recently announced that Sinbad was the last 20 cell animated feature it will produce. There are currently less than seven animated features scheduled to be released per year by major distributors. Yet 30 computer generated PG- and G-rated features have been the most popular and most profitable films, significantly outperforming other film genre. Simply put, Hollywood is not supplying enough 30 CG entertainment to meet demand. CritterPix is ready to fill the void.

Making Ollie a Reality CritterPix has posted some animation tests on to show investors that inexpensive 30 CG animation is for real. "The two hardest technical ele-

80 ValueRich Maga zine

Award-winning children's book illustrator Cathy Trachok created initial designs for the characters Iron head the sea turtle (right), Skull the rogue killer whale (bottom) and a sea slug named Gypsy (next page), among others.

ments to achieve in animation are liquid dynamics and feathers - the third hardest being fur;' says Williamson. "What we're showing you is that we can achieve those three hardest elements - we're going to prove to you we can do i t - and not only that, we can do it at one-fifth the cost:' Rapid technology advances mean that high quality computer-generated feature film production is now possible for smaller

creative companies at a fraction of previous costs. This is great news for the potential success of an Ollie the Otter feature film . But, being the

author, Williamson isn't overly focused on the technology. He believes that the most successful animated features have one common thread- great writing . "Just look at The Simpsons;'


Williamson. "The Simpsons is wonderfully creative storytelling, but the animation is certainly not state-of-the-art. It is 2D, outsourced to Korea- at best, Saturday morning cartoon level animation. Why then is it such a prime time hit? Because of the storytelling. The truth is, it's really about telling a great story. "It is so exciting after 25 years of having been a writer and optioned properties to Hollywood - suffering through many of the decisions that happen to movies - to be in this position with a measure of control to see one of my stories made well:' Making Ollie the Otter well will take roughly 18 to 20 months of complicated teamwork in a exhaustive process of refining the movements and textures of the wire-frame "rigs;' smoothing facial expressions, matching mouth movements to the dialogue and marrying the characters to their environment. Currently Ollie has gone through story and character development and some CG, but the real work will begin as soon as a distribution deal is negotiated and financing is completed .

The CritterPix All-Star Team The first talent to join CritterPix was Gary Goldman, a producer/ director with over 20 animated feature films to his credit, including All Dogs Go To Heaven, Secret of Nimh , Titan AE, Anastasia, An American Tail and The Land Before Time. "Gary knows the ani-

mation process cold;' says Williamson . "He was an animator himself at Disney 35 years ago. Our young animators love working with him:' CritterPix Executive Producer and VP of Marketing is JC Davis. JC currently produces empowering and inspiring DVD programs with his independent production company, Johnny Cat Productions. The CritterPix creative ensemble also

includes Ricardo Curtis who has worked as a story artist for Pixar, Jambalya Studios, Sony Pictures Studios, Warner Bros. and DreamWorks on titles including Monsters Inc., The lncredibles, The Iron Giant and The Road to Eldorado; and Chris Rock who was previously with Pixar and Square and worked on Final Fantasy, Monsters, Inc. , Finding Nemo, and The lncredibles. Rewrite reviews of the three Ollie the Otter scripts have been conducted by Laura

Harcom, who is a script consultant for DreamWorks SKG and Don Bluth Films and has sold scripts to Columbia Pictures, Jim Henson Pictures and Miramax Studios. CritterPix also hired Jonathan Roberts to do production polish on the Ollie the Otter script. Roberts' writing credits include contributions to Disney 's The Lion King, James and the Giant Peach and The Hunchback of Notre Dame, as well as screenplay material for Pixar's Monsters Inc. and Warner Bros: ValueRi ch Magazin e 81

Moneyman John Alvarez, (top, then clockwise) animator Christopher Rock, CritterPix CEO Kelly Williamson and executive producer JC Davis are surrounded by the fuzzy critters they've collected to research Ollie the Otter merchandising. big investors are waiting for us to close the distribution deal and then they will come forward;' says Williamson.

lends itself to partnerships that other feature films have seldom explored. Like its founder and CEO, CritterPix has

By financing 100 percent of the production costs, CritterPix takes the biggest risk, but then will reap the largest potential rewards by commanding an ownership share of the theatrical, DVD and merchandise revenues. In general, G-rated movies generate

both business and creative aspects. By controlling costs and streamlining production in a new technological environment, CritterPix intends to show good profits and return on investment even if Ollie the Otter is only a marginal hit. But, Williamson himself sums up the real legacy that he expects

CritterPix is currently in negotiations

double the revenues from video release

CritterPix to leave. "I really want people to

with a Hollywood studio for the distribu-

that other films do. Better yet, the largest amount of money can be made in merchandising. Williamson envisions a great deal of flexibility in merchandising. "We'll look to nontraditional sources to get our merchandise licensing out there in a variety of ways that impact today's people in a big way:' Williamson believes that Ollie the Otter is an environmentally aware and potentially educational concept which

come walking out of the theater with an upbeat smile on their face because they thoroughly enjoyed themselves watching Ollie the Otter:' Or as Ollie would say, "That's the whole story in a clamshell:' V R

Jack Frost.

On the business side, Rick Rassmussen, with a background in managing high-tech companies such as LSI Logic, C-Cube and @Road, will take an active roll in overseeing company operations for CritterPix. WealthShield pri ncipal, John Alvarez, an investment consultant with 15 years experience, is helping CritterPix develop $35 million in start-up capital.

tion . "Primarily they like the story. They have confidence that we have assembled the allstar team that can execute;' says Williamson, "and there's one more thing- an animated otter has never been done befo re in a feature film . Studios love to do something that 's never been done before:' Closing the distribution deal will be a watershed moment for CritterPix. "Most of the 82 ValueRi ch Magazin e

For more information: CritterPix: WealthSh ield : John Alvarez (4 15) 293.8202

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Clarence Clemons Cooks a Mean Musical Gumbo By Karen Willson

I dare you to listen to Clarence Clemons' new CD, Live at Asbury Park Vol. II, sitting still. Hey, I don't care if you are driving and buckled in, and you can't get the daily grind out of your head. Put this CD in your player and you won't be able to stop the infusion of energy from this soulful and funky live album. That's exactly what Clarence Clemons wants his music to do to you . He describes hi s latest band, Temple of Soul, as a combination of "New Jersey rock 'n' roll and South Beach Latin" music. Whatever music you dig - rock, blues, soul, or jazz - this is a combination that's bound to soar your spirits and get your body down. Even though Clemons has many fans from a long musical career, he is best known as "The Big Man" - the dread locked saxophone player in Bruce Springsteen's E Street Band. Yes, he still tours with Springsteen. But in his recent interview with ValueRich magazine, Clemons wanted to talk about "coming home and playing his own music:' Home is now South Florida. When Clemons moved from New Jersey to South Florida six years ago, the Latin beat began to filter into his sound. Clemons' band has a new name, Temple of Soul, and a unique sound that incorporates distinct influences from Detroit R & B, Chicago blues, Delta blues, jazz, roadhouse rock and a mixture of Caribbean and South American grooves. In the hands of a lesser master this could be a musical train wreck, but Clemons pulls it off, with every ph rase and note harmonious to the whole. In doing so, he has created a thoroughly American, cross-cultural style of music that is as effort.84 ValueRi ch Maga zine

less to listen to as it is easy to dance to. Clemons sought out the best musicians in South Florida to create the right mix for Temple of Soul. The guitar, keyboard, organ, horns, violin and drums all play off each other and Clemons' sax to create the band's dynamic sound and energy.

LIV E IN A SBU RY PAR K VOL. II Live in Asbury Park Vol. II captures the raw energy of Clemons and Temple in concert.

Live In Asbury Park Vol. II is a followup to the band's Live In Asbury Park, recorded in September 2001. Vol. II features never-before-heard live tracks recorded from the Asbury Park concert. Included are the classic Springsteen "Pink Cadillac;' "Friend of Mine;' the hit single from his bestselling album Hero, "Raise Your Hand" and "Lights of the City:' On Vol. II Clemons talks about going back to his New Jersey roots in an introduction to "Road to Paradise", a sultry instrumental ballad. Clemons is quick to say that Vol. // is edgier than the previous CD. I agree; the first CD

had more polished production values. But Vol. II definitely captures the raw energy of Temple of Soul's music in concert. You can't help but sense that the band is having as much fun performing as you are being the recipient of their musical tide. Nearly all the band members also contribute vocals, which creates an eclectic mix in these latest live COs. John Colby, musical director of the band and keyboardist, co-produced the COs and co-wrote a couple of tracks with Clemons. Colby also presently writes TV musical scoring for ESPN. Playing music since he was nine and professionally for decades, Clemons believes that he was truly blessed when a school teacher introduced music to him at an early age. That's why, whenever he gets a chance, he goes into local schools and talks to kids about music, staying in school, and following their dreams. He's a strong advocate of keeping music in the schools at a time when art programs are being cut. He says his biggest reward is "when you see those faces light up- that's a joy- when you stop to give back to someone else:' Clemons considers it his calling to be entertaining us with his music. When asked about spirituality and his music, he re sponds, "There's a difference between spirituality and religion. My music is spiritual ... I came from a religious background, but I grew to be spiritual. My music is to lighten the soul and make you feel good. If you can do that for four or five minutes out of someone's life, your job is pretty complete:' But music isn't the only creative energy




.; ~ -




_ ...

- . ... -.:-..;,..._ ~

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. - -.....



...... .


Valu eRi ch Magazine 85

coming from Clemons these days. Last

direction. Once you get those juices flow-

March, he was out in L.A. writing scripts for sitcoms, and trying to sell his idea for a new

ing, it's nonstop, whether it's scriptwriting,

sitcom. He also loves to cook and has two recipes in former President Bill Clinton's new cookbook. Clemons hopes to get his own cookbook published in the near future. "In my travels around the world, I've eaten some very delicious foods with interesting flavors. I come home and re-create the same flavors:'

He further explains,

"Whenever I eat something I can always The first Live in Asbury Park CD was a polished performance.

come back and duplicate it. It's part of the creative flow ... just directed in a different

writing music, cooking:' Watch for a new Temple of Soul CD to be released by the end of 2004. Clemons is presently working on writing material for this studio CD, which he says will be the best yet. If you get to know Clemons and his music, you will understand what he means when he says, "The key to life is finding what you're supposed to do, and hopefully it's going to be something you like to do. My purpose in life is to give joy and light to the world :' VR

They May Be Rockies, But in June It's Jazz The Colorado rockies come alive with the sound of music this summer, starting in June with an incredible lineup of musical legends at the Jazz Aspen Snowmass (JAS) June and Labor Day festivals. Pulitzer Prize winner Wynton Marsalis, Natalie Cole, Medeski Martin & Wood, blues legend Buddy Guy and soul

legend AI Green will be there. So, bookend your summer plans w ith the JAS June festival June 24 - 27 in downtown Aspen and the incredible JAS Labor Day festival Sept. 3 - 6 at the foot of the Elk Mountains. The JAS summer sea-

have made JAS an internationally recognized destination. The June festival kicks off on Thursday, June 24, with the traditional New Orleans sounds ofThe Rebirth Brass Band in a free concert and parade. Wynton Marsalis gets things hopping later on the mainstage in Rio Grande Park. The JAS After Dark series also presents The Soul Survivors, featuring Les McCann, Cornell Dupree and Ernie Watts in the historic Hotel Jerome. Friday, in the main tent, jazz-pop vocalist Natalie Cole will perform an eclectic mix of jazz standards and R&B. Saturday features AI Green and the breakout genre-busting vocalist Lizz Wright, who blends jazz, gospel and soul

son also includes a free 13-concert series on Snow-

into a powerhouse blend of Aretha Franklin meets Sarah

mass Ski Mountain and an all-scholarship JAS Academy- Summer Sessions education residency for gifted young students. JAS is nestled in the sce-

Vaughn. Sunday, four-time Grammy -winning blues legend Buddy Guy will hand out some Mississippi Delta blues. The startlingly innovative Medeski Martin &

nic and breathtaking Rocky Mountains,



Jazz Aspen Snowmass mixes musical styles with an altitude.

devotees enjoy four days of music from top performers in pedestrian-friendly and lively Aspen. A centrally located tent hosts a series of main evening concerts. Free daytime concerts in the park and after-dark club programs round out fest ival events. Now in its fourteenth season, JAS has earned a reputation for adventurous bookings. One of the trademarks of the JAS June and Labor Day festivals is innovative pairing of disparate musical types. The magical atmosphere and intimate setting

86 ValueRich Magazin e

Wood trio will open for Buddy.

Wildly creative New York-based Yerba Buena performs its mix of Latin, hip-hop, funk and soul on Saturday and Sunday. Vocalist Jenna Mamina, Colorado's DKO, the breakout Brazilian singer Daude, and Grammy-winning pianist Mike Melvoin are also scheduled on the Wagner Park free stage. The Labor Day JAS festival line-up currently includes Lyle Lovett, David Byrne and Jack Johnson, with special guests G. Love & Special Sauce and Donavan Frankenreiter. Check the Web site for artists to be announced.


n.S iration

Eclectic Ethnicity Elaine Fortune is obsessed with her artwork. The meticulous magic she has worked with a needle and thread has taken a toll on her fingers, but she doesn't stop. In fact, she dreams about her work, inventing revolutionary new quilting techniques in her sleep. The body of work

Fortune's Eclectic Ethnicity includes displays of some of her signature techniques.

appropriate exhibited as hanging art. Her major works all make commentary on multiple levels. Sometimes taking as long as a year to make, projects such as "No Where to Run; No Where to Hide" and "Eclectic Ethnicity"

Beauty in the Beaston a fashion runway.

express Fortune's ideas about the environment, the family of man and

that this "fiber artist" has created is impres-

social consciousness.

sive: full -length coats, jackets, vests and hats, all lavishly embellished with details that represent an entire lexicon of ethnic and original techniques.

Recently, Fortune has been busy as the costume designer for a new rock opera debuting in South Florida, and her fashionable artwork is proving to be as dramatic on the stage as it is on the runway. VR

Fortune's work has graced runways around the world and would be equally


Valu eRich Magazi ne 87



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An Interview with Senator and NASA Astronaut Bill Nelson

The IVIoon 1 IVIars and As a child growing up in Florida, Bill

The Bush Plan and NASA's Role

Nelson, 0-Fia., never imagined that one day he would both catapult into space from a NASA launch site just miles from his grandfather's homestead and go on to serve the people of Florida in the U.S. Senate. A fifth-generation Floridian, Nelson has spent thirty years serving his home state as a state legislator, congressman, state treasurer, insurance commissioner and U.S. senator. In 7986, Senator Nelson spent six days on a NASA shuttle orbiting Earth . An outspoken advocate for space exploration, he believes the future success of the space program depends on continued congressional support, fiscal responsibility, and the development of a long-range vision at NASA. He probably knows more about the importance of NASA and the challenges it faces than any other elected official in Wash ington, D.C. With that in mind, ValueRich contacted Senator Nelson with questions about the sweeping changes of the new Bush space initiative. Below: A panoramic camera image taken by the Spirit rover. The reflective speck about 650 feet away was identified as Spirit's protective heat shield. The image in the box provides a closer look.

President Bush's vision for the future of the space program, announced on January 14, 2004, includes: ¡completion of American work on the International Space Station by 201 0; â&#x20AC;˘ re-focused research on safety in space missions; â&#x20AC;˘ expansion of manned exploration of space and an extended human presence on the moon as a precursor to manned missions to Mars and beyond. ValueRich: Several of NASA's major contractors have said that the President's proposed initiatives, including manned missions to Mars, and their timetable are very doable. Some have said they could deliver ahead of schedule, given the right level of commitment. Do you concur?

Nelson: Returning to the moon by 2020 and reaching Mars by 2030 are attainable goals. We were able to send humans to the moon on a short timeline in the 1960s. Applying our experience, along with all the technology developed in the last 30 years, makes the President's new initiative possible. But it'll only happen if the President makes a strong case to the American people

and to Congress for adequate funding. ValueRich: Completing the space station, decommissioning the shuttles, and consequently ending orbital programs like the Hubble observatory by 201 0 represent a radical shift in NASA's program focus of the last 20 years. Do you believe the post201 0 NASA has the structural flexibility to reinvent itself in six years? Nelson: NASA already has taken some steps to do just that. It's established an office that's responsible for developing the mission and vehicle requirements to carry out the new initiative. And more changes will come as the current shuttle program winds down and the International Space Station is completed. ValueRich: Will NASA continue as the preeminent gatekeeper to space that it has been since its inception? Nelson: It's my hope that the United States, through NASA, remains the leader in space exploration, science, and research and development. There are several reasons why. First, the development of technology and its spin-offs improve the quality of our lives. Next, a strong space program energizes ou r nation's youth and provides motivation for them to study mathematics


the Future of NASA and potential public safety threat associated with unsuccessful rocket launches, not




enormous amount of money it takes to launch a rocket into orbit. Until those barriers and risks become more manageable, government involvement must and will continue.

The Space Industry ValueRich: Our readers are public company officers and investment professionals. How have NASA's contractor relationships functioned up to now (for instance, does NASA mainly deal with a few very large contractors such as Rockwell, who subcontract to smaller companies)? Senator Bill Nelson flew on the space shuttle Columbia in 1986 as a civilian observer.

and science. And lastly, it's in our nature and character as a people to press the bounds of exploration and knowledge. ValueRich: Is it possible that NASA will eventually secede earth orbital space initia-

tives to private business and a global coalition while focusing on planetary missions? Nelson: The commercial sector can and should have a role. However, there are significant barriers and risks, such as the risks

Nelson: Over the past 10 years there has been tremendous consolidation in the aerospace sector. NASA has put complex operations under large cost-reimbursable contracts. Today, there are only a few large contractors to bid for NASA projects. Still, these firms do a good job of subcontracting

with small businesses. And shifting to long-

affecting the future of NASA and the Ameri-

sian to Mars. And so far, the President hasn't

term missions will require restructuring of NASA's focus. This means smaller high-tech

can space program?

done a good job of making the case. ValueRich: Is it possible that the Bush

firms may find increased opportunities.! expect business opportunities to increase for both di rect participants and spin-off technologies.

Nelson: I want to believe it's not, because the resources we put into NASA di-

ValueRich: Senator Barbara Mikulski,

rectly benefit our society through spin-off technologies and the education of another generation of engineers and scientists. This is what will help keep us competitive in the global marketplace. ValueRich: Why do you think the White

D-Md., accused NASA administrator Sean

House lets its own space initiative twist in


O'Keefe of making a unilater-

program is a Trojan horse by which NASA's key programs would be dismantled on a rapid timetable, without replacing them with anything significant (due to lack of commitment to the fund ing), in an effort to weaken NASA, clearing the way for less bureaucratic corporate/ government partnerships for the exploitation of space? Nelson: I don't think

al decision to let the Hubble observatory die prematurely, against the wishes of astronomers. Is it true that the life and death of such a major program as the Hubble observatory can be decided this

any administration will dismantle NASA. Congress and the American public won't stand

way, based on your knowledge of NASA's management structure, or is it a bit more complicated than that?

ValueRich: Many ValueRich readers grew up with the space program and imagined that by this time in our lives we might be spending a holiday on the moon. The world we live in is a much different one than we imagined. Why do you believe that those dreams are taking longer than we imagined? Nelson: When JFK

for it.

Why Space?

Nelson: NASA operates with an executive leadership council. But the council reports to Mr. O'Keefe. Ultimately the final decision rests with him. ValueRich: Should the Hubble be refurbished one more time? Nelson: NASA is asking for ideas on how to extend the life of Hubble without send ing up astronauts. And Senator Mikulski has called for an independent study of ou r options. I suppo rt the efforts to find ways of servicing

NASA's Hubble Space Telescope and CARA's W. M. Keck Telescopes on Mauna Kea in Hawai i were recently combined to discover what is the most distant known galaxy in the universe. Located an estimated 13 billion light-years away, the object is being viewed at a time when the universe was barely 5 percent of its current age.

Hubble without the cost or prospect of putt ing astronauts in danger. ValueRich: On March 12, 2004, you made a special point in the Senate of questioning the White House's commitment to NASA and the President's space initiative, noting that there was not even an eleventhhour effort to back the budget request in the face of a significant cut in the Senate Budget Committee. To what degree do you believe the political season in Washington is 94 Valu eRich Magazin e

the wind?

Nelson: Perhaps it's because the White House felt it didn't get a welcome enough reception from the American public. ValueRich: Do you think that the NASA administration is unilaterally and perhaps unnecessarily trimming its funding expectations due to a lack of leadership from the White House? Nelson: Ultimately it requires strong leadership from the President to fund a mis-

..: announced we were ~ going put a man on ~ the moon and return ~ him safely to the Earth, .


he raised the stakes In what was then a space race with the Soviet

Union. And with the support of the country, we won the race. But when the race to the moon was over, President Nixon gutted NASA's budget. Absent a bold new vision, the space shuttle program then failed to capture America's imagination. All of this has translated into less funding. ValueRich: Most news articles about the American space program pose the same question. Why do we spend the money on space when there are so many needs

Illustration: NASA I Pat Rawlings, of SAIC

ValueRich Magazine 95

unfilled on Earth? The reply is usually the same old mantra about how we enjoy an enhanced life due to the spin-off developments f rom the space program. The answer is adequate but not compelling . You have personal experience in space. From the heart, what do you believe space exploration means to us? Nelson: It means the quality of ou r lives

here on Earth is better. Look, we can thank the space prog ram for spawning more than 1,300 technological advances - like CAT scans, kidney dialysis machines, and even the artificial heart. And beyond this, ou r space program represents the very char96 Valu eRich Magazine

acter of our people. We Americans, after all, are a nation of pioneers and adventurers. Our astronauts soar to the heavens in pu rsuit of knowledge that can make our world

a better place in which to live. It has been in pursuit of this noble cause for which our explorers risk their lives- and, sadly, 17 of them have made the ultimate sacrifice. R

NASA and Business Development To learn more about NASA incubator projects and procurement, visit NASA Acquisition Internet Service (NAIS), a network of online servers from each NASA field installation to ease vendor access to all NASA acquisitions: NAIS Homepage: nais!index.cgi NAIS Frequently Asked Questions:! nais! faq.cgi NASA Office of Procurement: office!procurement Business Opportunities with NASA:! hq!library! biz.html Senator Bill Nelson's Home page:


Nelson to Congress: White House, Where Are You? Senator Bill Nelson's comments on

and ... we develop the technology

the Senate floor March 72, 2004, re-

... that then translates into magnif-

garding the NASA FY 2005 budget:

icent enhancement in the quality

In the wee hours of the morn-

of our .. . everyday lives.

ing, an amendment was passed

I call on the White House. I call

by unanimous consent sponsored

on the leadership of NASA. We can-

by Senator Sessions, R-Aia., Sena-

not take for granted, just because

tor Shelby, R-Aia ., this Senator from

the President has announced a

Florida (Senator Bill Nelson (D-Fia.)

major new initiative, that it is go-

and Senator Graham 0-Fia. It was

ing to get funded. Indeed, we are

an amendment to bring the level of

swimming upstream. The immedi-


funding for NASA provided in the

W. Bush). This was no small amount


ple to the President's initiative was


of money, for what had come out


of the Budget Committee, over my

President George W. Bush announced plans to shift NASA's focus to the Moon and Mars in January, but the administration has been strangely silent on the subject since.

space program ... of $631 million.

ate reaction of the American peo-

~ ~

requested by the President (George

objection, was a cut to America's

8 ~

budget resolution up to the level



they didn't support it. There is only one person who can lead the space program. That is the President or the Vice President. A senator can't lead it. The administrator of NASA can't lead it, particularly on bold

My pleas in the course of our delibera-

initiative announced by the President back

tions in the Budget Committee to get the

in January of going back to the moon and

new initiatives. It has to be the White House that leads it.

White House to step forward and to support

then eventually to Mars . . . but all the other things on NASA's plate.

step forward and support your report. Oth-

its request for its full funding at a level of

I implore the White House and NASA to

$16.2 billion went unheeded. Indeed, those

We had a major space disaster, the sec-

erwise, we are going to get into a situation

pleas went unheeded for the White House

ond one that occurred within the span of 17

where mistakes of omission are going to oc-

to support its own budget on NASA all the

years. Now, as a result of an excellent report

cur like almost occurred last night. Sudden-

way up through the end of the delibera-

brought forth by Admiral Geman's commis-

ly we are going to find ourselves with a final

tions this entire week until around 1 o'clock

sion, we understand what specific things

budget product that is going to straitjacket

this morning.

need to be done to fix the problem and to

NASA with less funds than the President requested.

It was only when Senator Sessions and

get back into flight. Of course, it is going to

Senator Shelby each put their foot down to let the chairman of the Budget Committee

cost a lot of money to make those fixes, and indeed the downtime is costing NASA all

know that their votes on final passage were

kinds of turmoil and uncertainty.

Now more than ever NASA needs those funds to return to flight as safely as possible. I say that because space flight is risky. But it

questionable unless that was brought up to

For us not to have the White House step

is a risk worth taking because of the expan-

the level of the President's request did we

forward and say with vigor that they sup-

sion of our knowledge and the fulfilling of

successfully get inserted into the budget an

port their budget request for NASA caused

amendment that would bring NASA up to the $16.2 billion.

us to just narrowly, by the skin of our teeth, avert a disaster of almost passing a budget resolution last night that was $631 million

our desire in our inner souls to be explorers and adventurers, a characteristic of the American people.

Where is the White House? There is no greater supporter in the Senate for Ameri-

under the President's request.

ca's space program than this senator from

There is too much riding on our exploring

Florida, who has had the great privilege of being a part of the space program. There is

the heavens for this extremely prestigious and very productive program of the United States called America's space program. As we explore the heavens, we continue to push out the frontiers of our knowledge,

no greater need than the need at this particular time for the full funding of the President's request ... It has not only the new

I felt compelled to share these thoughts as one of the biggest boosters of the U.S. space program- indeed, the world 's space program ... It is important the White House back their request vigorously. I hope and I expect they will do so, and then we will continue to have an excellent space program.

ValueRich Magazine 97


Is There a Mars Demon?

NASA Mars rovers Spirit and Opportunity beat the odds and have completed their mission. They continue to explore and send back data from Mars. 98 ValueRich Magazine

Two-thirds of the nearly 40 attempted international missions to Mars have ended in failure. Some scientists speak of a 'Mars Demon' in reference to the high rate of failure. • Mariner 4 was the first successful mission to Mars. It was launched by NASA in November of 1964.1t passed within 5,595 miles of Mars on July 14, 1965, returning 22 pictures showing lunar-type impact craters and indicating that Mars had more in common with the Earth's moon than the stories of H.G. Wells and Edgar Rice Burroughs. • Mariner 8 and 9 Mars orbiters were the third and final pair of Mars missions in NASA's Mariner series. Unfortunately, Mariner 8 failed during launch, but Mariner 9 became the first artificial satellite of Mars when it arrived and went into orbit, where it functioned for nearly a year. • The Soviet Union launched Mars 2 and 3 spacecraft in 1971. Mars 2 entered orbit but its lander crashed on the surface when braking rockets failed. It still gained the dis-

just before its arrival on Mars in 1993. The Russian Mars '96 mission, carrying several European experiments, was lost in a launch vehicle accident in 1996. •

Mars Global Surveyor became the first successful mission to the Red Planet in twenty years, entering orbit in 1997. But the next four missions ended in failure, either destroyed or severely damaged.

• The U.S. Mars Climate Orbiter and the U.S. Mars Polar Lander/Deep Space 2 probes were both lost on arrival in 1999. • The U.S. Mars Odyssey successfully arrived in orbit carrying science experiments designed to make global observations of Mars in October 2001. The Odyssey continues to serve as a communication relay for U.S. and European missions.

tinction of becoming the first man-made object on Mars. The sister ship, Mars 3, dropped its lander successfully,

• The European Space Agency's (ESA) Mars Express went into orbit around Mars on December 25, 2003. Its Beagle

but it worked for only 20 seconds. Experts suspect that it was destroyed by a Martian dust storm.

lander was lost on deployment, but the Mars Express orbiter continues to complete its mission of mapping the

NASA's Viking missions of the mid-1970s consisted of orbiters and landers, which returned the first detailed pictures from the Martian surface. The Viking orbiters mapped 97 percent of the planet. • Martian exploration languished for the next two decades, with only a few failed or partially successful attempts. The Soviet's Phobos 1 and Phobos 2 orbiter/landers were lost en route to Mars in 1989. The U.S. Mars Observer was lost

entire surface with high-resolution images. Selected areas are being documented at super resolution (6.5 feet/pixel). • NASA's Spirit and Opportunity arrived in January 2004 and deployed rovers to the surface. After a brief programming scare with the Spirit rover, both have completed their missions and are now engaged in extracurricular exploration. • The Japanese Nozomi spacecraft was due to arrive in early 2004 but suffered a malfunction and was lost.

ValueRich Magazine 99


D E A l E R







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Virchow, Krause & Company, LLP Steve Stensrud, CPA

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NASD Corporate Financing Rule 2710 Can Be Disastrous For PIPE Offerings By Ralph V. De Martino The bear market following the runaway bull market of the 1990s was long and uninterrupted. PIPE offerings (private investment into public equity) have become a popular form of equity financing for many companies that are not household names, and whose securities are not considered investment grade. In a PIPE offering, an investment banker (acting as a selling agent for a public company) privately places equity securities of the issuer with accredited investors (often institutional investors) at a negotiated discount to the public price at which the securities trade. The issuer agrees to register the re-offer and resale of the privately placed securities with the Securities and Exchange Commission (SEC) within some discrete time (for instance 90 or 120 days) following the closing of the private placement- thus enabling the investors to resell the securities into the public market. Failure to have the registration statement declared effective prior to the agreed-upon date usually results in the imposition of substantial cash penalties, the reduction of the conversion or exercise price of derivative securities issued in the private placement and/ or the issuance of additional securities to the private investors. Anything that threatens the effectiveness of the registration statement raises the specter of investor dissatisfaction, increased financing costs for the issuer and reduced credibility of the issuer and the placement agent. In macro terms, it also threatens the overall utility of PIPES as a means of facilitating capital formation . The National Association of Securities Dealers, Inc. (NASD) addresses the fairness of financing terms imposed by NASD member firms engaged in public offerings with Corporate Financing Rule, 2710. This rule sets forth filing requirements that must be met by any NASD member proposing to participate in an offering and it also requires that the NASD issue an affirmative determination regarding the proposed terms of a public financing prior to the commencement of the offering. Generally, the lead syndicate member files all relevant information relating to the compensatio n of members of the selling syndicate, as well as copies of all proposed operative underwriting and selling agreements. That filing satisfies the obligation of every NASD member that may ultimately participate in the offering. The NASD reviews the terms of the proposed financing, engages in dialogue with the filing member and ultimately issues a determination with respect to whether the proposed compensation and terms of the financing are fair. In the absence of an affirmative determination by the NASD, no member may participate in the offering. Moreover, the staff of the SEC has generally NASD and PIPE Offerings ... continued on page 104

Ralph V. De Martino is a corporate securities lawyer and Managing Partner of Dilworth Paxson LLP, Washington , D.C. He has substantial experience in private placements and the issues encountered by NASD member firms. He serves on the American Bar Association Federal Regulation of Securities Committee Subcommittee on NASD Corporate Finan cing Rules , wh ich addresses issues arisin g under NASD Rule 2710. Valu eRich Magazine 103



NASD and PIPE Offerings ... continued from page 103

by Richard Caturano, CPA

taken the position that it will not take action to cause a registration statement to be declared effective, absent the conclusion of the NASD review process with an affirmative determination by the NASD.

In the wake of Sarbanes-Oxley, regulators and corporate America have placed a new emphasis on audit committees. Both congressmen and CEOs have come to see the critical role these committees play in the successful operation of publicly

But Rule 2710 does not apply to private placements, at least not directly. That fact has led to substantial misunderstanding, violations of the Rule and delays in processing resale reg istration statements.

traded companies. Boards of Directors must take an active role in ensuring that their audit committees not only comply with evolving regulations

Rule 2710 is implicated whenever a member of the NASD "participates" in a public offering. Oddly enough, the mere par-


governing their composition and duties, but also add value to the

ticipation by a member of the NASD as a selling sha reholder of securities purchased in a private offering, or of securities issued to it, or to people associated with it, in connection with acting as placement agent in a private offering (such as placement agent warrants) may trigger the applicability of Rule 2710. The NASD also takes the position that in the absence of a Rule 2710 approval, members may be foreclosed from facilitating the resale of securities for customers seeking to offer and sell their securities pursuant to an effective resale prospectus. This is based upon the argument that the member firm 's facilitation of the re-offer or resale constitutes "participation" in the public offe ring. As members of the NASD and their counsel become more aware of their obligations under Rule 2710 in the PIPE context, selling security holders may find themselves frustrated by their inability to resell their securities because the broker through which they seek to sell may not have the benefit of a 2710 determination. At the present time Rule 2710 is honored more in breach than in compliance in the PIPE context, but the NASD is aggressively pursuing non-compliance. Rule 2710 has been the subject of a panoply of recent amendments. Therefore, anyone engaged in PIPES needs to consult with counsel expert in this area. It is also possible that the SEC staff may refuse to process a request to accelerate the effective date of a registration statement because it has not received notice from the NASD that it has issued a determination as to the fairness of the financing terms. Therefore, it is extremely important that the filing required by 2710 be done promptly, and that the issuer and its counsel work with counsel for the placement agent to assure that the filing is timely made. Also, the issuer is allowed to make the filing directly. If its counsel is expert in the area, this may be the preferable course of action, as it allows the issuer's counsel to control the entire process. 104 ValueRich Mag azin e

Richard J. Caturano, CPA , is president of Vitale Catu rano & Company of Boston, the largest regional CPA f irm in New England , which represents both national and international clients with a full range of financial and strategic services. Mr. Caturano is also chair of PCPS , the AICPA's Alliance for CPA Firms, and sits on the AICPA's committee on staffing issues.

even Steps Toward Building an Effective Audit Committee Creating a sophisticated structure and a clearly defined meth odology for the audit committee is the first step in making it effective. Some of the functions and duties boards may want to consider for their audit committee include:

Audit Committee Charter Matrix Audit committee charters should be a living document used to

actually perform the work. Further, the committee should determine that the service provider: 1. maintains integrity and objectivity 2. is free of conflicts of interest with respect to the members of the audit committee and the company 3. has the expertise and resources necessary to do the work it is under consideration to do; and

manage the committee's agenda rather than a requirement that is soon forgotten . A good tool to help accomplish this is an audit committee charter matrix. The matrix should list each objective of the charter, steps to accomplish the objective, the deliverable, the

4. has a reputation for reliability, among other considerations.

timing and the date completed. By updating the matri x on an ongoing basis, the committee

The audit committee should take an active role in preventing and deterring fraud, as well as implementing an effective ethics and compliance program. The committee should constantly challenge management and the auditors to ensure that the company has appropriate programs and controls in place to identify potential fraud and to take appropriate action.

and the board have a way of monitoring whether it is meeting its objectives.

Financial Expert Screening Sections 406 and 407 of the Sarbanes-Oxley Act of 2002 explicitly define the term "financial expert " and how that term applies to audit committees. Audit committees should document their evaluation of financial expert candidates by matching the candidate against each criteria. This ensures that the committee has the required depth and breadth of experience, while also highlighting the strengths and

Fraud Prevention & Detection

SEC Rules on Internal Control A well-educated committee is an effective comm ittee. It is critical that the audit committee be familiar with the final SEC rules on Section 404 of the Sarbanes-Oxley Act of 2002, which are avail able on the SEC website: rules/ final / 33-8238.htm

Audit Committee Self-Evaluation

weaknesses of the group.

Regular Executive Sessions Audit committees should conduct executive sessions on a regular basis in which they meet face to face with key financial management staff and the independent auditors in a safe environment. Anyone who is not a member of the audit committee is excluded from the meeting. Committee members should ask open-ended questions during the executive sessions to unearth critical information that can help them fulfill their objectives. Members must carefully listen to the responses and follow up on anything that is not clear.

Selection of Independent Counsel and Other Advisors In addition to giving audit committees the authority to engage independent counsel and other advisors, the Sarbanes-Oxley Act dictates that companies provide appropriate funding for payment of these advisers . Careful consideration of a wide range of issues during the selection process will increase the value of the selected external advisers. When selecting independent counsel or other advisers, the audit committee should take into account the education, training and experience of the specialists and staff assistants who will

Audit committees should conduct a self-evaluation on an annual basis which assesses its strengths and weaknesses and areas where improvement is needed. To help boards and their audit committees succeed, the American Institute of Certified Public Accountants (AICPA) has established an Audit Committee Effectiveness Center (ACEC) ( acec) which has two main features: The Audit Committee Matching System and the AICPA Audit Committee Toolkit.


The Audit Committee Matching System links CPAs who are willing to be on corporate boards and audit committees with the publicly traded companies that have the need. e The Audit Committee Toolkit contains checklists, matrix questionnaires and other materials that aud it committees need to fulfill their responsibilities. Taken together, these systems and tools can ensure that an audit committee continually adds value to public companies, their boards and thei r shareholders. Some of the points made herein have been cited from the 136 page toolkit that can be downloaded at no charge from the ACEC website. The toolkit provides guidance on all of the issues raised in this article. ValueRich Maga zine 105

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INTERNATIONAL OUTSOURCING The Day After Tomorrow Domo Arigato, Mr. Roboto Thank you very much, Mr. Roboto for doing the jobs that nobody wants to. And thank you very much, Mr. Roboto for helping me escape just when I needed to. Thank you- Thank you- Thank you. I want to thank you, please thank you. Oh! Oh-ah-oh! The problem's plain to see Too much technology Machines to save our lives Machines dehumanize - Styx, Mr. Roboto

By Charles Payne

Back in the early 1980s it was believed that U.S. jobs would be lost to the Japanese business machine and an army of robot workers. While the characters have changed, the script remains the same. America gave away the jobs that nobody wanted to do, and it opened a Pandora's box. The politics of outsourcing have become so intense that the issue may have leapfrogged terrorism as a hot button issue for the November elections. Ironically, the outsourcing of jobs has been on the rise for more than a decade without causing much of a stir, particularly t he successful call center operations in India beginning in 2000. Initially outsourcing was seen as a way to off-load low paying junk businesses. Most Americans hear the words call center and immediately visualize a boiler room filled with scummy characters or a big football field-sized building with students and retirees bombarding folks at dinnertime. India's business people always under-

Indian employees at a call center provide service support to international customers, in the southern city of Bangalore. Valu eRi ch Mag azi ne 107

stood the possibility for backlash, so most of the phone operators at their call centers had scripts and false names attached in case the caller wanted to chat. Typically they'd have an alias like Becky and be told to say that they were from Middle America and working to pay for college. Now that the cat is out of the bag many Americans, who are more than likely already in a surly mood because they can't figure out how to operate their new Japanese camcorder, have another reason to be agitated - they've realized they're dealing with someone halfway around the world. "Hey, I have a niece, Becky, who could use a job like this!" Still, this phenomenon didn't raise any red flags until recently when the notion that just about any job, including most service jobs, could be relocated to another country. Recently the Economic Times stated that 14 million jobs, 11 percent of the U.S. workforce, could eventually be outsourced. The list included:

e e e e e e

Telephone call centers Computer operators and data entry Business and financial support Paralegal and legal assistance

Diagnostic support and accounting Bookkeeping and payroll Details of the possible job losses are more frightening than the Blair Witch Project. It is estimated that 500,000 financial services jobs will be exported to India over the next five years and that only the complicated U.S. tax code will prevent higherend accounting jobs from vanishing. It is believed that IT outsourcing, the tip of the

Ireland $23,000to $34,000and Israel $15,000

government would have to assist in sub-

to $38,000. Contrast that with a $63,337 an-

sidizing prices for goods and services that

nual take-home in America, and the worldwide scope of the problem is evident. An annual IT programmer's salary in India

are too high. It would mean a withdrawal of private investment- abroad and domestically. And barriers to our exports would be

is only $5,800. But the real threat is that India is expected to have the largest population in the world soon, and they speak fluent English. India's success in becoming the destination for U.S. job outsourcing is a

erected. Outsourcing of jobs began in the manufacturing niche as a result of much lower

result of the country's determination to focus national policy on education. In his book, the New New Thing, Jim Clark was asked why he hired so many employees from India. He responded by telling

costs overseas. It is natural business evolution to follow the path leading to the lowest costs and widest profit margins. Americans understand the facts of business, so there was little outcry when white-collar jobs, like computer programming, began being outsourced. Few complained when Silicon Valley was bringing in nearly a million work-

It is estimated that 500,000 financial services jobs will be exported to India over the next five years and that only the complicated US tax code will prevent higher-end accounting jobs from vanishing.

ers from places like India. It was a skilled position that had to be imported. There are more than 500,000 IT engineers in India. In contrast, U.S. schools only produce 35,000 mechanical engineers a year.

the story of the best programmer he'd ever known, a man who followed him to three ventures in a row. This guy's sister was the prettiest girl in the village and one evening was preparing for a date. Upon finding out who she was going on the date with, this future programming genius asked, "Why him, he's the ugliest guy in the village?" To which his sister answered, "because he is the smartest guy in the village:' I won-

ment to quality. It's ironic that our so-called service economy exhibits very little good service these days. When I grew up, an attendant cheerfully cleaned the windows and checked the oil in the gas station - cashiers said "thank-you" and "come again;' and shoppers weren't intimidated when

der if that scene could play out anywhere

Learning from the Competition Although America could slow the outsourcing trend down with protectionist saber rattling, the real solution is for America to reemphasize education and a commit-

asking questions. I believe that the decline of quality services goes hand in hand with our decline in emphasis on education. Service deals with the emotional intelli-

outsourcing iceberg, will consume as many as 3.3 million jobs by 2015. India, which is

in America? Therein lies the rub, and why protectionist politics is so far off the mark

gence of an individual and education deals

expected to generate $56 billion in revenues and employ 4 million people in IT services by 2008, isn't the only non-U.S. winner in this sweepstakes.

when addressing the issue. While protectionism might be a sane response to a threat in general life, it would have disastrous repercussions for trade. Throwing up tariffs would certainly block trade and lead to a domino effect that would do more harm than good to our nation - which is the hub of the global economy. This would result in higher taxes, as the

vidual. Now they are sinking into an abyss together and taking American prosperity and respect along for the ride. India has gained the respect of the outside world, especially American management, because of their consistency and work ethic. As a result, many are predicting that the real flood of quality jobs to India will occur in 2010, once their infrastructure is established enough to absorb the

According to a recent article in the Christian Science Monitor, the average year-

ly salary of an IT programmer in Poland or Hungary is $4,800 to $8,000, the Philippines $6,564, Malaysia $7,200, Russia $5,000 to $7,500, China $8,952, Canada $28,174, 108 ValueRich Maga zine

with the intelligence quotient of an indi-

huge influx of white-collar jobs. Until then, we have a window of opportunity to try and turn things around. Americans might do well to pay attention to a paper by the International Moneta ry Fund outlining how poor countries could play a role in globalization . Suggestions included: e Macroeconomic stability to create the right conditions for investment



and saving Outward oriented policies to promote efficiency through increased trade and investment Structural reform to encourage do-


mestic competition Strong institutions and an effective government to foster good gover-


nance Education, training, and research and development to promote pro-

ductivity e External debt management to ensure adequate resources for sustainable development. Higher education is the key. In the Philippines, a country of only 75 million people, 380,000 graduate college each year. In India the government launched a national education campaign in July 1993. The results were a volunteer teaching force that swelled to 10 million people and a surge in the total number of schools and enrollment. By contrast, America is caught in a situ-

Of the total direct foreign investment in 2002, $42.8 billion went to buying existing businesses - not a real job creator. Only $9.8 billion went to establishing new businesses. Newly acquired or established businesses by foreign concerns in 2002 employed only 182,000 people, with the lion's share being manufacturing jobs, much lower than the 410,000 in 2001. This was a direct result of political threats and a "Buy

to 2002 (ventures under $500,000 aren't

search and development. Aggressive R&D

It should be noted that China had no direct business investment in the U.S. up to 2002. Yet they enjoy an imbalance of trade where they ship the U.S. $11 billion more in goods and services each month than they import. counted). Yet they enjoy an imbalance of trade where they ship the U.S. $11 billion more in goods and services each month than they import. Pacifying foreign business isn't the answer either.


legalities continue to stymie progress.

reassessing the situation so that the direst

the U.S. Foreign business investment in the U.S. hit a record $335 .6 billion in 2000. But in 2001 that number tumbled to $147.1 billion and by 2002 it dropped further to $52.6 billion, the lowest since 1994.

billion, and Microsoft has over $50 billion. Some posit that these funds should be passed on to investors in the form of dividends or even stock repurchases. I think these funds should be plowed into re-

There is no clear-cut answer to the outsourcing dilemma. But there is a way of

When President Bush says that we shouldn't rock the boat with respect to protectionism, he also mentions that foreign companies employ six million Americans in

nies are sitting on hordes of cash. Warren Buffet's Berkshire Hathaway has over $30

America" campaign that forced the hand of foreign manufacturers. It should be noted that China had no direct business investment in the U.S. up

ation where the educational system is stagnant. High school dropout rates have not declined since 1990, yet bureaucracy and

Home Turf Dilemma

owner is that they aren't aggressively pursuing the kind of new ideas and development that traditionally has made America the innovation and business hub of the world . I'm not sure if there is a post recession, post bubble shock syndrome across all the boardrooms of America, but compa-

of consequences never materialize. There should be more pressure on the American employer. I'm not talking about government applying taxes and tariffs on outsourcing. Heck, if a company in Silicon Valley would pay moving expenses and then a yearly salary of S130,000 for an Indian IT programmer to come work in America, it makes a lot more sense to leave that person in India and pay them S11 ,000 a year. My beef with the American business

leads to new homegrown technologies and skills resulting in new products ideal for export. Aggressive R&D leads to innovation that sparks broad-based investment and in turns creates jobs. Unfortunately investors aren't making companies pay via stock valuations for lax research and development spending. Investors should demand that businesses (at least those that are publicly traded) begin investing in America . There is too much cash and too much at stake for corporations to play it so close to the vest. Politicians should help to level the playing field. Any efforts short of protectionism would help. As for the Indian juggernaut and the outsourcing trends, they will not stop anytime soon. Several shots have been fired across the bow of the American market-oriented economy, and foreign interests have drawn up their battle plans. The ball is in our court. It's all about evolution. If America relies solely on a political solution to this problem then we will lose.

Charles V. Payne is the founder, CEO and Principal Analyst of Wall Street Strategies, a leading independent stock market research company since 1991. He is a regular contributor to internationally televised networks and shows covering the stock market, and is routinely sought after for his market opinions by news organizations . Valu eRi ch Magazine 109


Faith in Governance is a Two-way Street By Ronald D. Hunter To any officer of a publicly held company, the name Sarbanes-Oxley is as familiar as a holiday season. Yet few of us in business, whether large or small, truly understand or can even predict the total impact the Sarbanes-Oxley Act will have on the American way of life. When we think of corporate governance, and drop the word "corporate;' we are reminded that governance applies to every facet of our lives. We employ governance personally, professionally and socially. As president of our state's insurance association, I have had the opportunity to deal with CEOs from small companies as well as "Fortunate" 100 company executives. We all agree that governance is important, but at what price? Where do we draw the line in our partnership with the federal government and our elected officials? Do we wish to have a true free enterprise democracy? In considering the foundation of American free enterprise, shouldn't the nurturing of the entrepreneurial spirit outweigh risk aversion? If we believe this, then we must understand that a small or microcap company cannot compete on a level playing field if indeed they are incurring the costs of the same regulatory requirements of a General Motors or a Microsoft. These new requirements have been mandated by the very government and regulatory bodies that presided over 20 years of the most egregious self-indulgence in the history of our great nation, allowing us to sell off our future and even contributing to the situation that prompted the need to impose stricter regulatory guidelines. Have we lost so much faith in corporate America that the wrongdoing of a few corporate leaders could prevent small to medium sized businesses from growing and competing in a capitalistic society? It is my 110 ValueRich Magazine

personal belief that, unless we immediately address the overreaction of our regulatory authorities, five to ten years from now we

It is the enforcement of these guidelines that lacks the proper attention. Continuing tolerance of misdeeds only exacerbates the

will experience a financial market that is

overall mistrust. The solution is to institute policies and

greatly impaired because we simply did not face the real issues. We have spent far too many years with our elected officials treating the symptoms and not the cause. We would be more productive taking a pragmatic approach and understanding the fundamentals, true costs to smaller public companies, and market conditions before we rush into a one size fits all remedy. I am not against governance for corporate America. It is the cost associated in the application that should concern us. Since the passage of Sarbanes-Oxley, new compliance procedures have increased public company costs significantly. We have adequate regulations and guidelines in place.

procedures that reflect proper risk/reward scenarios. The irrational application of governance breeds contempt. Once business clearly understands what is expected and has a true commitment to doing what is right, governance would become very powerful and very inexpensive to institute. As Americans, the one right we were all granted at birth was the right to turn our dreams into realities. Anyone who understands the meaning of a truly free nation should take the time to provide meaningful input to our leaders in Congress and our President. While we appreciate their effort to protect shareholders, they should also be mindful of the American dream. If government and regulatory agencies had more faith in the integrity of American business people, we would have more faith in their efforts. Let's revisit this issue and stop compounding mediocrity.

Ronald D. Hunter serves as Chairman and Chief Executive Officer of Standard Management Corporation, a publicly traded (NASDAQ: SMAN) holding company with interests in the financial services and health services industries, headquartered in Indianapolis , Ind. He also directs the Standard Management Corporation Charitable Trust, a fund that supports various char itable and community endeavors. Mr. Hunter is the author of the book , Vision Questing: Turning Dreams into Realities.


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ValueRich Magazine Summer 2004 | Steinway & Sons  

ValueRich Magazine Summer 2004 | Steinway & Sons - Quality and Patience Pay off for a Great American Company with CEO, Bruce Stevens

ValueRich Magazine Summer 2004 | Steinway & Sons  

ValueRich Magazine Summer 2004 | Steinway & Sons - Quality and Patience Pay off for a Great American Company with CEO, Bruce Stevens