• Where are we?

• Why?

• What does that mean?

• Where are we going?

• Risks & Opportunities

• I need it now!

Planning, Budgeting, Reporting, Forecasting

Basic Objectives:

1. Increase Shareholder Value

2. Provide the Basis for Improved Shareholder

Value

3. Identify Developing Opportunities &

Problems in Time for Effective Action

4. Provide Logic & Order in Financial Process

Planning – Tactical & Strategic

• Controls the Numbers

• Ability to Impact

Develops:

• Mergers, Acquisitions, and Divestitures

Planning – Tactical & Strategic

Needed Quantifiable Abilities:

• Modeling Skills (mechanical – economic)

• Presentation Skills

• Networking Skills

– Talk to people outside the group

– Get beneath the smoke

– Keep internal confidences

Planning – Tactical & Strategic Needs:

• Knowledge of Business/ Industry/ Economics

• Management and Board Interface

Reporting

• Levels of Involvement

• Motivations

• Coordination of the #’s 1 Set

– Accounting - Business Analysis

– Tax - Treasury

– Sales - Manufacturing

Reporting – Accounting/Business Analysis

• LOB, Overhead, Corporate Costs

• EVA … Base vs. Acquired

• Time needed for producing Reports

• Management Simplification

Lessons Learned - Reporting

• Protect Confidences

• Promote Finance to Finance Discussions

• Help Educate Up & Down

• Recognize there are Lots of No Option Deadlines

Going in – be Flexible, & Manage Stress

• Lowes’ Theorem of “Steel Management”

L.L. – Reporting II

• Great Place to Visit/Learn

– But be careful not to stay too long

• Get a Clear Separation of Responsibilities with

Accounting

• Insure Continuity

• Drive Systems Standards

• Overlay Systems and Models Only if Necessary

• Network, Network, Network

Investor Relations

• Driven By S.E.C. Filings

To Stockholders

– Results of Operations

– Unusual or Infrequent Items

– Liquidity

– Capital Resources

– Significant Uncertainties

Investor Relations Responsibilities:

• See that the Company is Favorably Understood

• To Ensure Full and Timely Public Disclosure

• To Respond to Requests for Reports & Info.

• To Maintain Productive Relations with Firms:

– Investment Bankers, Specialists, Major Broker-Dealers, and

Institutional Investors

• To Take Direct Measures to Ensure that the Company’s

Shares are Properly Valued

Investor Relations

• Communications

– Strategy

– Manage Management

– Analyst Meetings

– Annual Reports

– Quarterly Reports

– Buy Side / Sell Side

– Employees

Investor Relations – Focuses On:

• Buy Side– Index– Value– Growth– Growth At a Reasonable Price

(GARP)– Momentum (Day Traders)

– Tiger– Soros

Long-termShareholders

Short-termShareholders

Momentum Creators

Lessons Learned – I.R.

• Need to Educate Analysts

• Shutdown Problem Analysts

• Control Your Temper

• Keep Your Integrity

• “No Comment” is a Good Comment

• Help Good Analysts Sell

L.L. – I.R. II

• Careful How you Give out Business

• Remember the Rest of the Management Team

• Remember the Employees

• Be Careful working for CEO’s that are Not

Financially Savvy

• Don’t Stay Glued to the Screen

• You Can’t Explain Every Up & Down

L.L. – I.R. III

• If you have to Disappoint or Restructure

– Go Big and Never Go Back.

• K.I.S.S.

– Convoluted Data / Discussions – Lock You In.

• The First Sound Bite is Very Important

• The Entire Style should be Bites

• Deal with the Issue Yourself, so you can Place the Spin

YUM – 3/31/00

Spin

Warning

Q3

RumorsNew CFO

YUM – 3/31/00

Rumors

New CFO

Rumors

New CFO

Business Analysis-From Tons of Data to Useful Information

• Economics

-Global

-Country

-Industry

-Business

Business Analysis

• Economics

– Base Business Models

– Competition – Global

– Demographics

• Population, Birth Rate, Shifts in Distribution of

Disposable Income

• Growing Incongruence between Economic

Globalization & Political Splintering

• “Think Global, Act Local”

Business Analysis Personnel

• Analysts – Corporation vs. Industry

• Corporate – in all areas / functions / levels of Co.

• Management Support Role – Process Mgt.

– Budgeting

– Forecasts

– Capital Expenditure Analysis

Business Analysis

• Skill Base

– Modeling

• Accounting / Financial

• Statistics

– Communications

– Interpersonal / Relationships

Business Analysis

• Skill Base

– Knowledge of Business

– Analytical

– Presentation

• Verbal & Written

• Project Management

• Cross-Functional Teams

Business Analysis

• Facts vs. Forecasts

• Forecasting Distortions

– other agendas

• Sensitivity Analysis

– Ranges vs. Single Points

• Conflicts

Business Analysis - Pitfalls

• Sunk Costs• Ex: Toaster Strudel

• Incrementally Influenced Costs

• Residual Value

• Integration Costs

• Overhead Allocations

Business Analysis• Q1- Too Early to Call +

• Opportunity & Risk

• Q2 – Adjust Forecast

• Q3 – Call Year Conservatively• Base for Opportunity

• Forecast that’s Managed

• Provides the #’s for next year’s bonuses and budgets

• Q4 – Manage til Year End

Lessons Learned – Business Analysis Problem Resolution Process

• Focus Data Collection on Leverage Points

• Sort and Understand the Problem– Will Probably Require: “Thinking Outside the Box”

• Analytically Play with it– Develop and Play with Options

• Create Solutions

L.L. – Business Analysis II

• Beta Test It (Test Run)

– Revise as Necessary

– Sell a Larger Test

– Continue Cycling through the Process

• Evaluate & Rethink it with New Data

– Over Communicate at Critical Points

– Supervise Implementation

L.L. – Business Analysis III

• Having and Knowing where your Hard Data comes from

• Have Lots of Qtrly Forecasts

• Under Promise Over Deliver

If It’s Not Broken,

Don’t Fix It.

- Don’t spin your wheels analyzing

something to death.

Change the Things that you Can,

Accept the Things that you Cannot Change,

And God Willing you Will Know the Difference.

Project Assessment

Risk

Political/CultureChange

R = P(s) & $

P(s) = Amountof Change

+TechnicalAbilities

+Resources

+Commitment

L.L. – Red Zone

• Get the Biggest Champion or Mentor you Can Get

• Protect Your People

• Be Careful Not to be Used & Abandoned

• Cover All the Bases/Options• Be Ready & Armed for the Opposition

– Know the Reasons for Failure

& Be Able to Knock Down Objections

• Oscar Mayer (OM)

Slaughter Plant Restructuring

Louis Rich - Protein Analysis

• Phillip Morris (PM)

GF – Restructuring / Integration

Kraft – Acquisition / Integration

• Heinz (HNZ)

CAPM

Ketchup vs. Pickles

Distribution Tracking

• General Foods (GF)

Sugar Pricing Model

Coffee Logistics

Burger Chef

Oscar Mayer

Gaines

Entenmann’s

Merriwether’s

Gaudalaharry’s

• Pillsbury

Divestitures

POGO

Pillsbury Push

• Grand Metropolitan (GMET)

Divestitures

Brewing

Dairy

• GMFENational BusinessesPillsbury - U.K.Haagen Daz

• Burger King (BKC)Focus & Restructure International / U.S. Product Line

-Get Your Burger’s Worth-French Fry