Building Business Acumen®
Spirit AeroSystems
Facilitated by Mark Wood
mwood@acumenlearning.com
Acumen Learning
Acumen Defined:
(Page 3)
• Quickness of perception
• Keen insight
• Mental acuteness
~Wayne Gretzky~
“The Great One”
When asked by a reporter,
“What makes you so great?”
Wayne responded by saying;
“I don’t skate to where the puck is.”
“I skate to where the puck… is
going to be.”
Please use these
customized questions
POP QUIZ!
(Write your answers on Page 35)
For fiscal year:
1. How much cash was on hand?
2010
Its OK to guess! 
_______
2. How much cash was generated from operating activities?
_______
3. What were net revenues?
_______
4. What was the net income?
_______
5. What was the gross margin %?
_______
6. What was SG&A as a % of revenues?
_______
7. What was operating income as a % of Revenue?
_______
8.
What was the inventory turnover?
_______
9.
What was your return on assets (ROA)?
_______
10. What was the % change in revenues year over year?
_______
11. What was the % change in net income year over year?
_______
12. What was the % change in diluted EPS year over year?
_______
Today's Learning Objectives:
 Know and understand what measures are important to Jeff
Turner and the Executive Team.
 Understand the five business drivers all successful
businesses must focus on.
 Have a better understanding of Spirit’s financial statements.
 Become a better communicator of company strategy and
performance.
 Have an action plan on how you will positively impact
company results.
Ram Charan Believes:
(Page 4)
“When it comes to running a business successfully,
the street vendor and the CEOs of some of the
world’s largest and most successful companies talk
and think very much alike.”
5-Step Approach per Driver:
Case Study
1. Define the driver.
2. Know how we measure it.
3. Know why it is important.
4. Discover our numbers (& comp).
5. Create an Action Plan.
Five Business Drivers
Cash
On Hand
Generation
Growth
People
Profit
Top Line
Bottom Line
Employees
Customers
Revenues
Expenses
Assets
Strength
Utilization
1.
2.
3.
4.
5.
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
Define the driver.
Know how to measure driver.
Why is it important?
Know the numbers (& Competitor’s)
Impact by creating an Action Plan.
6
Cash & Cash Flow
(Page 8)
Definition:
Cash:
“Cash is the bills and coins in the register, petty cash, and
cash in the bank. It also includes cash equivalents, like
Certificates of Deposits (CD’) and other highly liquid investments
(i.e. easily converted into cash within 90 days).”
Also see:  Appendix: Cash, Page 58)
Cash:
(Savings Account)
$25,000 On hand
Cash Flow:
The cash generation from “core operating activities”
• The difference between the cash that flows into and out of
the business
• In a given period of time, such as a quarter or a year.
Cash out-flows: result from:
1) expenses
2) investments 
Cash in-flows: arise from:
1) operating activities
2) investing activities
3) financing activities
Cash Flow:
(Checking Account)
$80,000 Salary
- $70,000 Expenses
$10,000  ???
 Pay off loans
 Buy furniture
 Put in savings
Why is CASH so important
to a business?
(Page 8)
Cash is King!
Sources of
Cash
“Cash is a company’s oxygen supply.”
(It gives you the ability to stay in business)
-Ram Charan
“Cash Flow is more important than profit.”
(Comes from core business,
or core operating activities)
-Peter Drucker
Operations
Investing
Financing
(Core Biz)
(Assets)
(Debt/Equity)
Can a company
be profitable and
go out of
business?
“Cash is more important than your mother.“
-Al Shugart
Former Seagate CEO
Fred Smith - FedEx
Cash
Cash
Spirit AeroSystems
(Take notes on Page 9)
2007
2008
2009
2010
$3,861
$3,772
$4,079
$4,172
Net Income
$297
$265
$192
$217
Cash
$133
$217
$369
$482
Cash From Ops.
$180
$205
-$14
$125
Total Revenue
Driver: Cash
Cash balance ended at $482 million, up from $66 million at
the end of Q3.
Cash Flow for 2010 was positive $125 million. Forecast for
full-year 2010 projected at $75 million positive.
Capital Expenditures Projecting $325 Million but spent
$288. Free cash flow was -$163 million.
Adequate Funding. $650 Million LOC entirely available.
Liquidity in excess of $1.1 Billion.
Spirit’s Performance on Cash
Spirit Aero
Element
Boeing
United
Technologies
Goodrich
2007
2008
2009
2010
2010
2010
2010
$3,861
$3,772
$4,079
$4,172
$64,306
$54,326
$6,967
Net Income
$297
$265
$192
$219
$3,307
$4,711
$579
Cash
$133
$217
$369
$482
$10,517
$4,083
$799
Cash From Ops.
$180
$205
-$14
$125
$2,952
$5,906
$514
3.4%
5.8%
9.0%
11.6%
Total Revenue
Cash
Spirit’s Free Cash Flow:
2009
CFOA
-$14
Cap Expen.
-$228
Free Cash Flow -$242
2010
$125
-$288
-$163
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
16.4%
8.4%
12.2%
Spirit’s 2010 Use of Cash:
• $300 M in Inventory Build
• $ 42 M in A/R Build
• $288 M in Capital Expenses
10
How can you personally impact
CASH and CASH FLOW:
(Personal action plan - page 9)
CASH:
 Pay slower
 Collect faster… with the same sales revenues and costs.
CASH or CASH FLOW:
 Increase revenues/sales
 Reduce/costs
•
•
•
•
•
•
•
•
Reduce Waste
Reduce re-work
Control rivet usage/waste
Manage/Reduce OT
Increase sales/revenues
Maintain schedule/ship dates
Increase operational efficiencies
Compress A/R – Extend A/P
•
•
•
•
•
•
•
Better training / faster ramp up
Decrease or better manage inventory
Vendor Owned/Managed Inventory
Control expenses
Don’t hoard (tools, parts, people)
Reduce/conserve utilities
Reduce conflicts (systems, people,
processes, IT technologies)
12
Five Business Drivers
Cash
On Hand
Generation
“No margin, no
mission.”
Growth
People
Profit
Top Line
Bottom Line
Employees
Customers
Revenues
Expenses
Assets
Strength
Utilization
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
13
Definition: PROFITS
(Page 10)
Profit is what is left over after you have paid
your expenses. It can be expressed in dollars ($)
or as a percent (%).
How do you increase
Gross Margin?
#1-
Increase price
#3- Or Both!
#2-
Lower costs
The types of expenses you deduct determine which margin you are
calculating. Most common margin calculations are:
 Gross Margin: deducts Cost of Goods Sold (COGS)
 Operating Margin: deducts Operating expenses (Overhead)
 Net Profit Margin: deducts all expenses
Margins: Gross, Operating & Net
2010
(in Millions)
Revenues
- Costs of Revenue (COGS)
= Gross Profit
- Operating Expenses
- Research & Development
= Operating Margin
- Interest & Other
- Income Taxes
= Net Profit Margin
$4,172
- $3,608
$ 565
13.5%
- $ 156
- $ 52
$ 357
8.6%
- $ 59
- $ 78
$ 219
Also called: “Net Income” and “Net Earnings”
5.2%
HIGH MARGIN
High Margin = Unique product and/or higher demand than supply.
2010 S&P 500 Average Net Profit Margin = 11%
Differentiation
28%
Mkt Share
32%
Patent
27%
Brand
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
LOW MARGIN
High Margin = Unique product and/or higher demand than supply.
2010 S&P 500 Average Net Profit Margin = 11%
Commodity
1.4%
Many
alternative
3.6%
Sells Volume
1.7%
Membership
“Price Club”
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
Strong Core Business…
Multiple New Business Wins
2005
2010
2011
2012
Production
Sole-source, Life-of-Program Contracts… 737,777,787,747,767
Core Business
2006
2007
2008
2009
2013
2014
2015
A320, A330, A380
850XP
Development
P-8A
Test Units
Low Rate Production
Production
G250
G650
New Business
CH-53K
A350 XWB
MRJ
CSeries
Long-Term Growth Strategy
SPIRIT PROPRIETARY
18
Spirit’s Performance on Profit
Spirit Aero
Element
Boeing
United
Technologies
Goodrich
2007
2008
2009
2010
2010
2010
2010
$3,861
$3,772
$4,079
$4,172
$64,306
$54,326
$6,967
$297
$265
$192
$219
$3,307
$4,711
$579
Gross Margin
17.2%
16.0%
12.2%
13.5%
19.4%
27.4%
30.5%
Operating Margin
10.9%
10.8%
7.4%
8.6%
7.7%
13.2%
11.6%
Net Income Margin
7.1%
7.0%
4.7%
5.2%
5.1%
8.7%
8.3%
Total Revenue
Net Income
Cash
Segment
Segment
Revenue
Operating
Income %
% of
Company
Profits
Fuselage
$2,035
14.4%
55%
Propulsion
$1,062
12.9%
26%
Wing
$1,067
9.5%
19%
(3 qtrs 2010)
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
19
Ways to Increase Profits
Profit is the difference
between. . .
Revenue
• Sell more
• Improve Quality  Strengthen Pricing
• Understand Product Mix (sell more of
the higher margin products)
• Improve execution and up-selling
• Make prudent investments in growth
Profits go to
the Profitminded
Profit
Increase sales
Increase sales
Reduce Costs
Costs
Reduce Costs
•
•
•
•
•
•
Negotiate materials costs
Reduce inventories
Decrease employee turnover
Scrutinize spend on R&D
Reduce/conserve Operating costs
Improve Project Planning
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
What area can
YOU impact?
Write down
your Action
Item
“if you are not talking
about costs on a
weekly basis,
challenge your boss”
-- Bob Skinner
20
How can you personally impact
PROFIT:
(Personal action plan - page 11)
PROFIT:
Increase price or decrease costs.
 Product Margin: Increase Price and/or Decrease costs or both
 Company Margin: increase Sales and/or decrease expenses or both
 Expressed in dollars ($) or as a percent (%).
• Manage “Mix” (dev vs. prod programs)
• Decrease Re-Work ($225 per day)
Decrease/Eliminate waste (840
lbs. of fasteners thrown out wkly)
• Reduce $109M Overtime by 50%
• Decrease utilities
• Reduce $50 Waste expenses
• Reduce shortages
• Reduce “rush” charges
• Timely and accurate data (visibility)
• Create accurate schedules
• Improve operational efficiencies
• Better education on costs
• Change requests go through proper
channels
• Increase Revenue - Collect on work
that’s been done
• Increase Revenue – Get quality right
• Faster on-boarding
• Reduce employee turnover
• Improve accountability
• Improve communication
• Effective training
21
Five Business Drivers
Cash
On Hand
Generation
Anything you own or
control…which has value.
Growth
People
Profit
Top Line
Bottom Line
Employees
Customers
Revenues
Expenses
Assets
Strength
Utilization
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
22
ASSET
Definition – What we have and how well we
use what we have.
Asset Strength – the ability to remain viable during
ups and downs in the marketplace.
Asset Utilization – the ability to efficiently and
effectively use assets to generate profits.
MEASURES
Equity Ratio – The ratio of shareholder equity to total assets.
Return on Assets – The percent value of sales or revenues to
total assets.
Inventory Turnover – The number of times total inventory is
sold or needs to be replenished.
Example: 12 turns = once a month.
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
12
Definition: Assets
Balance…
Asset
Strength
Asset
Utilization
Cash • Inventory • Credit Rating
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
24
ASSETS IN ACTION
“In 1912, the Model T for the first time cost less than the
prevailing average annual wage in the United States.”
“Ignoring conventional wisdom, Henry Ford continually
sacrificed margins to increase sales. In fact, profits per car did
fall as he slashed prices from $220 in 1909 to $99 in 1914.”
“But Sales Exploded!”
“Ford demonstrated that a strategic,
systematic lowering of prices could boost
profits, as net income rose from…
$3 million in 1909 to $25 million in 1914.”
~Daniel Gross, Forbes Greatest Business Stories
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
13
Spirit’s Performance on Assets
Spirit Aero
Element
Total Revenue
Net Income
Boeing
United
Technologies
Goodrich
2007
2008
2009
2010
2010
2010
2010
$3,861
$3,772
$4,079
$4,172
$64,306
$54,326
$6,967
$297
$265
$192
$219
$3,307
$4,711
$579
2.4
1.7
1.6
1.4
2.4
4.6
2.0
8.9%
7.1%
4.3%
4.3%
5.1%
7.0%
6.2%
Driver: Assets
Inventory Turnover
Return on Assets
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
26
How can you personally
impact ASSETS:
(Personal action plan - page 13)
ASSET EXECUTION
= Efficiencies, productivity, speed,
making assets work harder
 Note: Profit x Asset = Return/Margin multiplier!
•
Improve understanding of priority
•
Better communication with other groups
•
Communicate performance
•
Decrease redundancies
•
Increase efficiencies (employee/company)
•
Use resources better within the company
•
Increase employee productivity
•
Share tools where appropriate
•
Increase performance
•
Schedule more efficiently
•
Increase process efficiencies
•
Encourage web meetings
•
Consistent QMR process
•
Don’t over build
•
Share best-practices
•
Cross train employees
•
Forecast more accurately
•
Alternative work arrangements
•
Execute plans with more discipline
•
Improve work flow / planning
27
Five Business Drivers
Cash
On Hand
Generation
Why is GROWTH so
important to business?
Growth
People
Profit
Top Line
Bottom Line
Employees
Customers
Revenues
Expenses
Assets
Strength
Utilization
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
28
Definition: Growth
(Page 14)
Definition:
Business growth is most commonly measured by:
1) Top-line (sales)
2) Bottom-line (profit)
3) Earnings per share growth (public company)
There are two types of growth:
1) Organic growth: comes from a company’s existing business
2) Inorganic growth: comes from merger and acquisition.
Definition: Growth
In today’s business world, no growth
means lagging behind in a world that
grows every day…
Investors expect it, employees are
more energized by it, customers are
generally attracted to it and
executives are measured by it.
The Role of Growth
Business in
Rapid Decline
Business in
Growth Mode
• Best & brightest leave first.
• Productivity goes down.
• Morale goes down.
• costs are cut, which limits ability to grow,
company becomes less profitable.
• Attracts/Retains the best & brightest!
• Productivity goes up = more profit = more
cash = more ability to grow!
• Morale is typically higher.
• You have the ability to grow in your career!
Growth is critical because of its impact on Employees & Customers.
Spirit’s Performance on Growth
Spirit Aero
Element
Total Revenue
Net Income
Boeing
United
Technologies
Goodrich
2007
2008
2009
2010
2010
2010
2010
$3,861
$3,772
$4,079
$4,172
$64,306
$54,326
$6,967
$297
$265
$192
$219
$3,307
$4,711
$579
20.6%
-2.3%
8.1%
2.3%
-2.1%
1.3%
4.7%
Up
-10.6%
-27.5%
14.0%
-3.0%
10.9%
-5.2%
Cash
Revenue Growth
Net Income Growth
Segment
Segment
Revenue
Revenue
Growth
Op Inc.
Growth
Fuselage
$2,035
1.6%
1.6%
Propulsion
$1,062
3.1%
12.2%
Wing
$1,067
4.2%
388%
(3 qtrs 2010)
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
32
Spirit’s Outlook
Guidance:
Revenue
Net Income
Cash Flow
CapEx
2009
2010
2011
$4,079
$4,172
$4.5 – $4.7 B
$ 192
$ 219
$240 – $265 M
$
-14
$ 125
$
$ 228
$ 288
$ 325
75
As of: 02/15/11
Analyst Recommendations and Revisions
Current
6
1 Month
Ago
7
3 Month
Ago
7
6 Month
Ago
6
(2) OUTPERFORM
3
4
4
5
(3) HOLD
10
7
5
4
(4) UNDERPERFORM
1
2
2
2
(5) SELL
0
0
0
1
No Opinion
0
0
0
0
2.30
2.20
2.11
2.28
1-5 Linear Scale
(1) BUY
Mean Rating
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
33
How can you personally impact
GROWTH:
(Personal action plan - page 15)
GROWTH = Increase:
-top-line (sales), and/or
-bottom-line (profits), and/or
-earnings per share (EPS) for public companies.
 Quarter over quarter, or year over year increases
 Organic growth: comes from a company’s existing business
 Inorganic growth: comes from merger and acquisitions.
•
•
•
•
•
•
•
Play a part in culture shaping and
acquisition integration
Hire talent that is strong and adaptable
Develop great leaders
Anticipate employee needs that will
support a growth strategy
Promote products to everyone!
Create quality and value
Create customer loyalty
•
•
•
•
•
•
•
•
Increase global services
Provide exceptional service (Int’l & Ext’l)
Invest in employees
Share institutional memory/knowledge
Save cash to put into new programs
Help transition programs to Production
Get costs down to strengthen Spirit bids
34
Five Business Drivers
Cash
On Hand
Generation
Customers and employees
are the key to driving
profitable & sustainable
growth.
Growth
People
Profit
Top Line
Bottom Line
Customers
Employees
Revenues
Expenses
Assets
Strength
Utilization
© 2010 Acumen Learning. All rights reserved. Do not copy. 801-224-5444 | www.acumenlearning.com
35
CUSTOMERS
What is more important than meeting customer expectations?
Exceeding?
Anticipating Customer Needs & Expectations!
“If I would have asked my customer
what they wanted, they would have
said a faster horse!”
~Henry Ford
“I skate to where the puck
is going to be!”
~Wayne Gretzky
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
17
Failing to Anticipate customer
needs/expectations!
(Take notes on Page 17)
What companies have failed to anticipate customer
expectations? What were the results?




Blockbuster
AAA
Kodak
Sony
What limits companies from anticipating their
customers’ wants and needs?
QUIZ: 1 of 3
How would Spirit’s customers rate
the service they receive from Spirit?
38% 38%
Terrible
Below average
Average
Above average
Excellent
25%
nt
ce
Ex
av
er
ve
bo
A
lle
ag
e
e
ra
g
ve
av
el
ow
B
Mean = 3.125
0%
A
rr
ib
er
ag
e
le
0%
Te
1.
2.
3.
4.
5.
QUIZ: 2 of 3
How would you rate the service you
receive from other internal people or
departments?
48%
Terrible
Below average
Average
Above average
Excellent
30%
13%
9%
nt
ce
Ex
av
er
ve
bo
A
lle
ag
e
e
ra
g
ve
av
el
ow
B
Mean = 2.4783
A
rr
ib
er
ag
e
le
0%
Te
1.
2.
3.
4.
5.
QUIZ: 3 of 3
How would your internal customers
rate the service they receive from you?
40%
Terrible
Below average
Average
Above average
Excellent
16%
nt
ce
Ex
av
er
ve
bo
A
lle
ag
e
e
ra
g
ve
av
el
ow
A
rr
ib
B
Mean = 3.6
4%
er
ag
e
le
4%
Te
1.
2.
3.
4.
5.
36%
How can you personally impact
CUSTOMERS?
(Take notes on Page 17)
Customers: Both Internal & External
INTERNAL:
EXTERNAL:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Exceed deadlines
Be positive
Always follow through
Increase vision
Anticipate needs and expectations
Increase quality staffing
Increase employee education
Retain employees
HR: Hire the best!
Listen with empathy to resolve unhappy customers
Qualify each customer
Better educate customers
Increase customer demos
Set up customer phones
Ensure equipment functionality before customer takes it home
Possess good product knowledge when selling
Increase customer negotiations
Increase customer awareness
Accurately set customer expectations
41
VZW Financial Statements



Income Statement
Balance Sheet
Statement of Cash Flows
Proprietary & Confidential!
(Take lots of notes!)
1.
What is the basic equation for each statement?
2.
What is the purpose of the statement?
3.
What are the key numbers and how are they trending?
4.
How can you impact each statement?
Revenues –– Expenses
Expenses ==
Revenues
Net Income
Net
Income
Pg. 28
Spirit AeroSystems
• Income Statement
Holdings, Inc.
• P&L
These are the critical
few
Profitability
Consolidated Statement of Operations
components to look for
2010
2009
2008
($ in millions, except per share data)
Top Line
Net revenues
$
Operating costs and expenses
Gross Margin
Margin –– 13.5%
13.5%
Gross
Cost of sales
3.6%
Selling, general and administrative
Research and development
8.2%
8.2%
Interest exp. & fincing fee amortization
Interest income
3,607.90 0.7%
156.00 14%
Bottom Line
5.2%
$
Earnings per share
Basic
= Net Income / # of Shares
Diluted
3,581.40
$
16%
3,771.80
3,163.20
137.1
154.5
56.7
48.4
3,775.20
3,366.10
357.00 17%
303.3
(59.10) 36%
(43.6)
7.4
.4%
%
405.7
3. WhatPerform
actions can I
Variance
take to impactAnal.
this
(1.2)
report?
6.1
272.8
-80.9
383.9
-118.5
219.6
-0.7
191.9
-0.2
265.4
—
1.56
1.55
14%$
191.70
1.39
1.37
• Top Line
1. What is the report’s
• Bottom Line
17%
basic structure
(equation)?
Then for Margins:
Gross
2. What•are
keyMargin
• Operating
Margin
measures
and how
11
11.9%
.9%
• Net
Margin
are they
trending?
18.6
297.8
-78.2
218.90
Review
Look for Growth:
(39.2)
7
(0.40) 106%
Income before loss of affiliates
Equity in net loss of affiliates
4,078.50
(9%)
3,815.40 1.1%
0.30
Other income (expense), net
Income before income taxes and equity
in net loss of affiliates
Income tax provision
Net income
2.3%
$
51.50
Total operating costs and expenses
Operating income
4,172.40
7.0%$
265.40
1.93
1.91
4. What is the reports
overall purpose?
7.7% discussion
Profit
(Page 11 actions)
Growth discussion
(Page 15 actions)
Financial
Strength
B
Assets = Liabilities
+ Equity
2010
2009
Current assets
Cash and cash equivalents
Most Liquid
$
Accounts receivable, net
481.6
31%
$
369.0
200.2
160.4
2,507.9
2,206.90
9.9
14.2
Income tax receivable
45.9
45.5
Deferred tax asset-current
47.6
55.8
3,294.7
2,852.90
1,470.0
1,279.30
172.4
171.2
55.0
95.8
Inventory, net
Prepaids
Current
Total current assets
Assets: Liquid < 1 Year
Property, plant and equipment, net
Pension assets
Deferred tax asset non-current, net
Other assets
Least Liquid
Total assets
109.9
$
5,102.0
74.6
14%
$
4,473.8
1.
Current liabilities
Accounts payable
Due First
Accrued expenses
Profit sharing/deferred compensation
Current portion of long-term debt
443.5
441.3
190.7
161.9
29.6
3.6
9.5
9.1
Advance payments, short-term
169.4
237.4
Deferred revenue, short-term
302.6
107.1
Deferred grant income liability — current
5.1
—
Income tax payable
3.1
3.5
11.3
18.3
1,164.8
982.2
1,187.3
884.7
655.2
727.5
Other current liabilities
Current Liabilities: Due < 1 Year
Total current liabilities
Long-term debt
Advance payments, long-term
Pension/OPEB obligation
Deferred grant income liability — non-current
Deferred revenue and other deferred credits
Deferred tax liability — non-currentDue
Last
Other liabilities
72.5
62.6
128.4
129.3
29.0
46.0
8.1
15.6
45.8
52.1
2.
B
Ratio:
BCurrent
Pg. 2.8
27
Current
CurrentAssets
Assets ==2.8
BCurrent Liabilities
B
Equity Ratio: 35%
35%
B
B
Review
B
These are the
What is the report’s basic
critical
structure (equation)?
numbers to
look for
What are key measures and
B are they trending?
how
3. What actions can I take to
impact this report?
4. What is the reports overall
purpose?
Equity
Common stock
Common stock, Class B 150,000,000 shares
Additional paid-in capital
983.6
949.8
Accumulated other comprehensive loss
(75.3)
(59.7)
900.7
681.8
“If we sell our Assets &
Retained earnings pay our Liabilities, how
Total shareholders' equity
much do we have left?”
Total equity
Total liabilities and equity
1,810.4
1,810.9
$
5,102.0
1,573.3
15%
1,573.8
$
4,473.8
Asset Discussion
(Page 13 actions)
Cash Discussion
(Page 9 actions)
Equation
Cash: Operating Activities
+/- Investing Activities
+/- Financing Activities
= Total Cash
Review
1. What is the report’s basic
structure (equation)?
2. What are key measures and
how are they trending?
3. What actions can I take to
impact this report?
4. What is the reports overall
purpose?
Cash Discussion (Pg 9)
Profit Discussion (Pg 11)
Asset Discussion (Pg 13)
Growth Discussion (Pg 15)
People Discussion
17) Sheet
Same # at top of(Pg
Balance
Indicates
Cash
Management
Cash
Same # at bottom of P&L
Where did the $$$ come from
Where did the $$$ go to
Management
5-BUSINESS DRIVERS
Statement of Cash Flow
Statement of Income (P&L)
Balance Sheet
30
Talent Management – AcumenLearning,LLC. All Rights Reserved. Use, disclosure, or distribution of this material is not permitted to any unauthorized persons or third parties except by written permission.
Pop Quiz: (page 35)
For fiscal year:
2010
1. How much cash was on hand?
__$ 482 M_
2. How much cash was generated from operating activities?
__$ 125 M_
3. What were net revenues?
_$4,172 M_
4. What was the net income?
__$ 219 M_
5. What was the gross margin %?
__13.5 %__
6. What was SG&A as a % of revenues?
___ 3.7%__
7. What was operating income as a % of Revenue?
___ 8.6%__
8.
What was the inventory turnover?
___ 1.4 X__
9.
What was your return on assets (ROA)?
___4.3 %__
10. What was the % change in revenues year over year?
___2.3 %__
11. What was the % change in net income year over year?
___14 %_
12. What was the % change in diluted EPS year over year?
___14 %_
T-3: Review & Teaching
1) In groups of 3, assign a report to each person:

Statement of Income (P&L , Statement of Earnings)

Balance Sheet

Statement of Cash Flows
2) Take 2 minutes each, to teach your group:
1.
How this report is organized.
2. What are key measures to look for. How are they
trending? How can you impact this?
3. What is the overall purpose of that report?
3) Ask 1 or 2 questions.
6-minute Tracker
4t ‘ s LEFT
5 Income
minutes
left Balance
5 Completed
3 Completed
minutes
left ONE MINUTE
L eminutes
Dleft
i s c u s s . 3. .
Sheet
-2
6 Statement
2
1
Retaining Content over Time
Content Retention
(Page 52)
Review
Apply
Teach
15%
Time
Where to Find Information
(Page 55)
Web Sites:
•
www.nasdaq.com
•
www.finance.google.com
•
www.reuters.com
•
www.hoovers.com
•
www.yahoo.com
•
www.smartmoney.com
One final thought…
“People will work
hard for a paycheck,
harder for a person, and
hardest for a Purpose.”
~Thomas Monson
Post Course Action Items:
1. 7-days:
Teach one of the principals learned in class, to someone
in your department.
2. 7 days:
Discuss your action items with your manager in the next.
3. 30 days:
Read the first 90 pages of:
“What The CEO Wants You to Know“
3. 90 days:
Get with your class coach and give an accounting of your
progress on the action items.
Start now:

Build and practice your new business acumen skills.

When making decisions, determine how the outcome will impact Cash, Margin,
Velocity, Growth, Customers…
HINT: Tear out page 47 and use it at your desk!