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Where are we? Why? What does that mean? Where are we going? Risks & Opportunities I need it now!

Where are we? Why? What does that mean? Where are we going? Risks & Opportunities I need it now!. Planning, Budgeting, Reporting, Forecasting. Basic Objectives: Increase Shareholder Value Provide the Basis for Improved Shareholder Value

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Where are we? Why? What does that mean? Where are we going? Risks & Opportunities I need it now!

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  1. Where are we? • Why? • What does that mean? • Where are we going? • Risks & Opportunities • I need it now!

  2. Planning, Budgeting, Reporting, Forecasting Basic Objectives: • Increase Shareholder Value • Provide the Basis for Improved Shareholder Value • Identify Developing Opportunities & Problems in Time for Effective Action • Provide Logic & Order in Financial Process

  3. Planning – Tactical & Strategic • Controls the Numbers • Ability to Impact Develops: • Mergers, Acquisitions, and Divestitures

  4. 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

  5. Planning – Tactical & Strategic Needs: • Knowledge of Business/ Industry/ Economics • Management and Board Interface

  6. Reporting • Levels of Involvement • Motivations • Coordination of the #’s  1 Set • Accounting - Business Analysis • Tax - Treasury • Sales - Manufacturing

  7. Reporting – Accounting/Business Analysis • LOB, Overhead, Corporate Costs • EVA … Base vs. Acquired • Time needed for producing Reports • Management Simplification

  8. 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”

  9. 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

  10. Investor Relations • Driven By S.E.C. Filings To Stockholders • Results of Operations • Unusual or Infrequent Items • Liquidity • Capital Resources • Significant Uncertainties

  11. Investor RelationsResponsibilities: • 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

  12. Investor Relations • Communications • Strategy • Manage Management • Analyst Meetings • Annual Reports • Quarterly Reports • Buy Side / Sell Side • Employees

  13. Investor Relations – Focuses On: • Buy Side • Index • Value • Growth • Growth At a Reasonable Price (GARP) • Momentum (Day Traders) • Tiger • Soros Long-term Shareholders Short-term Shareholders Momentum Creators

  14. 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

  15. 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

  16. 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

  17. YUM – 3/31/00 Rumors New CFO Q3 Warning Spin

  18. YUM – 3/31/00 Rumors Rumors New CFO New CFO

  19. Business Analysis-From Tons of Data to Useful Information • Economics -Global -Country -Industry -Business

  20. 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”

  21. 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

  22. Business Analysis • Skill Base • Modeling • Accounting / Financial • Statistics • Communications • Interpersonal / Relationships

  23. Business Analysis • Skill Base • Knowledge of Business • Analytical • Presentation • Verbal & Written • Project Management • Cross-Functional Teams

  24. Business Analysis • Facts vs. Forecasts • Forecasting Distortions • other agendas • Sensitivity Analysis • Ranges vs. Single Points • Conflicts

  25. Business Analysis - Pitfalls • Sunk Costs • Ex: Toaster Strudel • Incrementally Influenced Costs • Residual Value • Integration Costs • Overhead Allocations

  26. 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

  27. 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

  28. 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

  29. L.L. – Business Analysis III • Having and Knowing where your Hard Data comes from • Have Lots of Qtrly Forecasts • Under Promise  Over Deliver

  30. If It’s Not Broken, Don’t Fix It. - Don’t spin your wheels analyzing something to death.

  31. Change the Things that you Can, Accept the Things that you Cannot Change, And God Willing you Will Know the Difference.

  32. Project Assessment Risk R = P(s) & $ P(s) = Amount of Change + Technical Abilities + Resources + Commitment Political/Culture Change

  33. 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

  34. Oscar Mayer (OM) Slaughter Plant Restructuring Louis Rich - Protein Analysis • Phillip Morris (PM) GF – Restructuring / Integration Kraft – Acquisition / Integration

  35. Heinz (HNZ) CAPM Ketchup vs. Pickles Distribution Tracking

  36. General Foods (GF) Sugar Pricing Model Coffee Logistics Burger Chef Oscar Mayer Gaines Entenmann’s Merriwether’s Gaudalaharry’s

  37. Pillsbury Divestitures POGO Pillsbury Push • Grand Metropolitan (GMET) Divestitures Brewing Dairy

  38. GMFE National Businesses Pillsbury - U.K. Haagen Daz • Burger King (BKC) Focus & Restructure International / U.S. Product Line -Get Your Burger’s Worth -French Fry

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