2. Change
Culture
Execution Turnaround
Turnaround Formula is Simple

3. Water

5. Types of Turnaround
Growth through innovation
Financially stable
Distressed
Financially unstable
Bankrupt
Today our focus is on the second type

6. Model
&
Process

7. Turnaround Model – Executing Strategy

8. Dhamo’s Model

9. Turnaround
Process

10. Financial Analysis
Cash Flow
Break-even
Profitability
Balance Sheet
Marketing Analysis
Products & Services
Product Distribution
Sales & Mktg System and
Strategies
Manufacturing & Operations Analysis
Engineering Research & Development
Company Organization
People Issues
Strategic & Competitive Position
Analyze
Situation

11. Stabilize
Business
Financial Management
Marketing Management
Manufacturing & Operations
Management
Engineering / Research &
Development Management
Challenging the Culture

12. Org Structure
Partial or full Management
Change
Strategies and Expectation

13. Restructure
Business
Financial Management
Liquidity Improvement
Balance Sheet Cleanup
Control Systems Development
Managerial Accounting Systems
Marketing Management
Reassess Product Line /
Competitive Pricing
Exploit and Develop Products
Study Customer / Distribution Mix
Review Sales and Mktg Strategies
Manuf. & Oper. Management
Eng, R&D Management
Organization and People Management

14. Return to
Normal

16. Issues Emerging from Bankruptcy
• Heavy Northeast concentration, Marcal brand limited growth
opportunities, existing position threatened
• Introduction of Small Steps® in 2009
– Re-brand with better softness and tensile strength
– Raise prices
– Green authenticity – major differentiator
• Strategy Response
– Differentiate from competitor Own Brands
– Create a platform to grow business in new markets
10/20/2011 16Dhamo,S

17. 10/20/2011 Dhamo,S 17
Issues Emerging from Bankruptcy
• Employees were stressed out and morale was low
• Chaotic environment
• High inventories
Finished Goods, Raw material, working capital
• Issues with Teamster
• High injury rate, service and delivery issues
• High production Cost
• Poor efficiency
• Quality issues

18. 2009 – 2010 Headwinds
Slow
Adoption
Rate
Many retailers outside of Northeast wanted
proven sales track record for the Small
Steps® brand before selling in stores
Single-Focus
Strategy
Initiatives concentrated on Small Steps® At
Home (“AH”) opportunities; few resources
invested in Away From Home (“AFH”) or Own
Brand efforts
Sales Decline
Exited from perceived unprofitable
business; spike in input costs in
2008 (fiber, energy, freight)
Increased
Competitive
Intensity
Growth in Own Brand sales led big
brands to increase the frequency and
depth of price promotions
10/20/2011 18Dhamo,S

19. • 16% reduction in
cost per ton since
2008
• $3mm in savings
• Reduced net
working capital
by $21mm
• 32 staff positions
eliminated (25%)
Business Transformation
Barriers to profitability Course of action Results to date
• High production
costs
• High
transportation
costs
• Operational
inefficiencies
(poor inventory
management and
converting
efficiency)
• High SG&A
• “Lean Six Sigma”
operational
efficiencies and
cost reductions
• Outsourced to 3PL
and restructured
purchasing
• Working capital
reduction
• Overhead
reduction
Stabilize Business Org Structure
Restructure
Business10/20/2011
Dhamo,S

20. • Opened new
accounts with
significant new
customers (Wal-
Mart, Food Lion,
Kroger)
• Significant increase
in Own Brand bids
($100mm+ in 2011)
Business Transformation
Barriers to profitability Course of action Results to date
• Lack of sales focus
relative to
customer needs
• Reorganized sales
and marketing into
customer-focused
teams
• Added virgin
product grades to
converted product
and parent roll lines
• Expanded Own
Brand and Away
From Home (“AFH”)
teams to pursue
new growth
opportunities
Stabilize Business Org Structure
Restructure
Business10/20/2011
Dhamo,S

21. 10/20/2011
Dhamo,S
Complete change in Senior Management Team
Restructured organization (top to bottom)
Restructure
Business
Value stream map – Order to Cash
Kaizen and Lean on both manufacturing
and transactional processes
KPI/Dashboards
Metrics, Follow up, Auditing
Pricing of products
Policies and Procedures
Improved Quality of the product
Performance Management
Organizational Development
Org Structure

22. Marcal Brands

23. Safety Improvements
Industry Average =
3.50
Safety Metrics – OSHA TIRR
10/20/2011 23Dhamo,S

24. Operational Excellence
(1) Chart shows reductions using an index based on 2008 cost per ton
•Union job
classification
Complete
restructuring from
120 to 22
•Order fulfillment
Fill rate
increased from
80% to 98%
• Scrap
– 40% reduction in
scrap since 2008
16% Cost per Ton
Reduction
Cost Per Ton Reductions Through Operational Excellence Initiatives(1)
2008 Material Labor Energy Mfg OverheadKaofin 2011
Note: Being Scrappy
10/20/2011 24Dhamo,S

26. Key Take Away
People are the best asset = Change Culture
Weeding out below average
Retaining top talent
Bring-in fresh thinkers
NJMEP
Lean, Kaizen, 6 Sigma
Value Stream, RCA, FMEA, 5Ws
KPI, Dashboards, Metrics
Organization Development (OD)
Operational Excellence
Performance Management
Safety Culture
Service/Quality Culture
Scrappy - Cost
Engagement

27.  Turning around distressed business is stressful ????
 Strategy and Execution is critical
 Cultural Change is essential
 Adapting to change management is a must
 Focus, Speed and Scrappy
 Attitude
 Lots of opportunity
 Having Fun
Key Take Away

28. Key Take Away
Failures in
Turnaround
Management’s inability to
implement change culture
and structural change
Market and economic
conditions
Organizational inertia in the
face of compelling need to
change

30. Water

31. Water /
Change
Management
Solid Gas
Shape /
Flexible
StrongWeak
Necessity
Liquid