• 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
Long-term
Shareholders
Short-term
Shareholders
Momentum Creators
–
–
–
–
Index
Value
Growth
Growth At a Reasonable Price
(GARP)
– Momentum (Day Traders)
– Tiger
– Soros
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
Rumors
New CFO
Q3
Warning
Spin
YUM – 3/31/00
Rumors
Rumors
NewCFO
CFO
New
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
R = P(s) & $
P(s) = Amount
of Change
+
Technical
Abilities
+
Resources
+
Commitment
Political/Culture
Change
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
• 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