BOSTON COLLEGE CARROLL SCHOOL OF MANAGEMENT INTERNATIONAL CONSULTING

BOSTON COLLEGE CARROLL SCHOOL OF MANAGEMENT: INTERNATIONAL CONSULTING PROJECT 波士顿商学院管理学院-国际交流项目 CASH FLOW MANAGEMENT OF LARGE COMPANIES 大型跨国集团的资金管理 1

TABLE OF CONTENTS (ENGLISH) Team Introduction u 团队介绍 u Research Guidelines u 研究提纲 Review u 资金管理模式回顾 u Cash Flow Management u 案例1-石油公司 Overview u 案例2 – 油田服务公司 u Case Study 1 – Oil Source u 案例3 – 飞机制造公司 Company u 结论 u Case Study 2 – Oilfield Service Company u Case Study 3 – Aerospace Company u Initial Conclusions u 2

TEAM INTRODUCTION 团队介绍 u Peter Rossetti (Project Leader) o o o u Part Time Master of Finance Student Computer Engineer, Syracuse University Current Position: Release Engineer, Turbine Inc. www. turbine. com Mark Binsfeld (CCAFM Liaison) o o o Full Time MBA Student. Strategic Management Mechanical Engineer, University of Colorado at Boulder Future Position - Project Manager, J. F. Brennan Company 3

TEAM INTRODUCTION CONTINUED u Matt Muhlhauser (Presentation Coordinator) o o o u Full Time MBA Student, Asset Management Accounting / Finance, University of Portland Future Position - Senior Financial Analyst, Boeing Capital Corporation. www. boeing. com/bcc Michael Comer (Research Analyst) o o o Part Time MBA / MSF Student Electrical Engineer, Rensselaer Polytechnic Institute Current Position: Senior Systems Engineer, Raytheon www. raytheon. com 4

TEAM INTRODUCTION CONTINUED u Jeff Kanof (Research Analyst) o o o u Full Time Law Student Sport and Entertainment Management, University of South Carolina Future Position –Associate, Seward and Kissel LLP, , www. sewkis. com Jonathan Lanham (Research Analyst) o o o Part Time Master of Social Work Student History, Eastern Nazarene College Current Position: Assistant Registrar, Eastern Nazarene College www. enc. edu 5

RESEARCH GUIDELINES (PART 1) u Based on the models of cash management, please introduce some cases in oilfield service or oil source company focusing on the global model and the regional with global oversight model. Please emphasize on how to set up such a system, and analyze the reason why these companies choose such a model. 研究提纲 u 基于资金管理的几种模式,对全球集中和全球监管下的区域集中资金管理 模式,请介绍一些油田服务公司或者石油公司的案例,重点介绍为什么他 们选择了这样的资金管理模式,以及介绍一下他们是如何建立资金管理体 系的。 6

RESEARCH GUIDELINES (PART 2) u How do the large foreign companies integrate their cash flow and budget management? Are there any usual models? And how to do it ? Please introduce some cases (especially in oil industry). 研究提纲 2 u 大型跨国集团公司是如何将资金管理与预算管理相结合的?是否有一些通 用模式?请介绍相关案例。 7

CASH FLOW MANAGEMENT MODELS - REVIEW Centralized Treasury • Global • Regional with Global Oversight • Regional Autonomy • Local with Regional Oversight • Local Autonomy Decentralized Treasury Source: 2008 CCAFM Financial Management Project 8

IMPORTANT CONSIDERATIONS (PART 1) Organizational structure / reporting responsibilities u Communication flow u Decision making authority u 案例中的几个关注点: u u u 组织结构 流程构造 决策体系 9

IMPORTANT CONSIDERATIONS (PART 2) Forecasting / budgeting u Risk mitigation u u Hedging 案例中的几个关注点(续): u u 预测/预算 风险规避 u 套期保值 10

COMPANY SELECTION OVERVIEW u Case study selection criteria u 选择案例的标准 大型集团 u Large company u 国际性的,世界领先的 u International, world leaders u 全球运营的 u Global operations u 三个案例 u 3 selections Case 1 - Oil production and exploration u Case 2 - Oilfield service u Case 3 - Aerospace manufacturing u u 案例1 – 石油公司 u 案例2 – 油田服务公司 u 案例3 – 飞机制造公司 u 11

CASE STUDY 1: OIL SOURCE COMPANY u u u Leading European oil source company Operations in over 100 countries on 6 continents More than 50, 000 employees Over $300 B (USD) in revenue for 2008 Regional with global oversight 案例1 -石油公司 u u u 领先的欧洲石油公司 业务遍布六个大洲,100多个国家 拥有超过5万名员 2008年收入超过3000亿美元 全球监管下的区域集中资金管理模式 Case Study 1 http: //www. stocktradersdaily. com/News. jpg (accessed November 2009) 12

ORGANIZATIONAL STRUCTURE (ENGLISH) Global Cash Management Policies Developed Business Segments Corporate Upstream Downstream Exploration and Production Marketing and Refining Business Functions Oil and Natural Gas Exploration Development Transportation and Production Processing Europe Case Study 1 USA Canada Business Functions Trading Russia Refining South America Regional Oversight Manufacturing Chemicals Australasia Asia Marketing Africa 13

FINANCIAL ORGANIZATION (PART 1) (ENGLISH) Accounting and Financial Planning 财务部 Cost Management 费用管理部 Corporate CFO 公司CFO Business Segment CFO 事业部CFO Business Line CFO 产品线CFO Estimating Contracts 评估部 合同部 Regionally Dispersed Functions 区域层级的财务职能部门 Case Study 1 交易记录 和全球服 务中心 Transactional Accounting / Global Service Center Off-Shored Function 离岸财务管理组织 Financial Planning 计划部 14

FINANCIAL ORGANIZATION (PART 2) (ENGLISH) 公司CFO Corporate CFO 合同管理部 商务谈判部 资金管理部 Contracts Procurement Treasury 税务部 Tax Centralized Corporate Functions 集中在公司层级的财务职能部门 Case Study 1 15

FORECASTING AND BUDGETING (PART 1) u Done on quarterly basis u u With next 1/3 year added for “informational” purposes Five year forecast – long range, used to focus on where money is planned to be spent 预测和预算 u u 公司以季度为基础滚动年度预算 u 同时包括下一年的前四个月 五年预测-长期的,便于关注资金配置 Case Study 1 16

FORECASTING AND BUDGETING (PART 2) u Each planning unit performs revenue and cost forecasts Upstream Planning Units (exploration and production) u Downstream Planning Units (refining, selling and distribution of crude oil) u Other Planning Units u u Each segment consolidates forecasts geographically 预测和预算(续) 预算编制单元分别对利润和费用进行预测 u 上游的业务单元(开采和生产部门) u 下游的业务单元(炼化、销售和分销部门) u 其他单元 u 各责任单元按照区域上报汇总形成公司预算 Case Study 1 u 17

DECISION MAKING PROCESS u Centralized for large capital expenditures u u Provides thorough oversight at different company levels Dispersed for daily operations u Allows for responsive low-level cash management 决策过程 u u 大型资本性支出集中管理 u 与公司各层级进行详尽的沟通 日常营运资金决策权下放 u 满足适宜于低层次的现金管理需要 Case Study 1 18

u DAILY TRANSACTIONS Business conducted regionally with local customers u u Transactions in over 100 countries in the country’s local currency Cash kept in region where transaction takes place Avoid domestic tax penalties from moving cash into home country u Transaction costs of moving cash are significant u Utilize notional pooling u 日常交易 u u 业务按照区域发生 u 各区域以当地货币在 100多个国家开展业务 现金保留在交易发生的区域 u 避免资金移动产生的税收问题 u 资金转移的成本很高 u 实施虚拟现金池 Case Study 1 19

NOTIONAL POOLING CHART (ENGLISH) 现金池 USA No Physical Transfer of Cash Europe “Australasia” 现金非物理转移 MASTER ACCOUNT Asia Africa Russia Canada South America Case Study 1 20

NOTIONAL POOLING u Advantages of Notional Pooling u u u Centralization Few bank relationships No intercompany loans More local autonomy/responsibility for cash Disadvantages of Notional Pooling u Separate available loans amounts are not available to other regions 现金池 u u 现金池优点 u 集中管理 u 比较少的银行关系 u 无公司内贷款 u 区域内的资金管理自治权 缺点 u 不能相互融通的信用链条 Case Study 1 21

RISK MITIGATION Hedging not used u Currency diversity u u Holding hundreds of different currencies diversifies away exchange risk 风险规避 u u 套期保值缺失 货币多样性 u 持有上百种不同的货币使得汇率风险多样化 Case Study 1 22

CAPITAL EXPENDITURES u Strategy based on maintaining / upgrading existing refineries u u 20 -30% of cash flows Planning units present project opportunities to segments u Segments assign a budget to regional planning units 资本性支出 u u 着眼于维持现有炼化设备 u 20 -30%现金 预算编制单元提出向事业部项目机会 u 事业部分配各区域内预算编制单元的预算 Case Study 1 23

DISTRIBUTION TO SHAREHOLDERS u Dividends – High yield return on investment Primary focus and first contribution from segments u Goal of 6 -7% annual yield u Stock designed to have corporate US bond-type behavior due to investor preference u 股东回报 u 股息-投资带来高产出 u 主要来自两个事业部的贡献 u 6 -7%的目标 u 基于投资者的偏好公司的投资更倾向于美元债券 Case Study 1 24

CASE STUDY 1 SUMMARY (PART 1) u Cash management structure differences Top-down management based out of central location u Optimal structure to create high yield dividends consistently u Hedging is not a strategic source of cash management u 案例总结 u 现金管理架构的差异 u 基于中心帐户的自上而下的架构 u 最佳的持续产生年息的架构 u 套期保值不是资金管理的策略之一 Case Study 1 25

CASE STUDY 1 SUMMARY (PART 2) Centralized Structure u Risk Adverse u u u No Hedging Strategy Capital Preservation 案例总结 u u u 集中模式 风险规避 u 不需要套期保值 资金保值 Case Study 1 26

CASE STUDY 2: MAJOR OILFIELD SERVICE COMPANY u One of the world’s largest oilfield service companies 2008 Revenues of greater than $25 B (USD) u Services in over 80 countries u More than 80, 000 employees u Local autonomy with regional oversight cash management model u 某大型油田服务公司 u 世界上最大的油田服务公司之一 u u u Case u 2008年年收入超过250亿 美元 服务于80多个国家 员 人数超过80000人 Study 2 地区监管下的地方自治资金管理模式 http: //www. eatonoiltools. com Accessed November 2009 27

COMPANY OVERVIEW u Major Oilfield Services Directional drilling u Oil Well testing u Formation evaluation u Well cementing and stimulation u 公司回顾 u 主要的油田服务 u u 定向钻探 油井测试 储层评价 固井和油气井增产 艺 Case Study 2 28

ORGANIZATIONAL STRUCTURE (ENGLISH) Global Cash Management Policies Developed Corporate Business Segment Oilfield Services Seismic Services Regional Oversight North America Middle East & Asia Regional Oversight Latin America Europe, Africa & Russia North America Middle East & Asia Latin America Europe, Africa & Russia Multiple Geo. Markets (Within Regions) Individual Projects (Within Districts) Case Study 2 29 29

FORECASTING AND BUDGETING (PART 1) Regions consolidate all Geographical Market / District forecasts u Budgets developed on a project by project basis collectively by both Geo. Market / District and Regional offices u Business segments consolidate all regionally developed forecasts for review by Corporate Headquarters u 预测和预算(1) u u u 地区合并所有地理市场/区域预测 预算制定上,以单个项目为基础,Geo. Market /区域和地区公司进行合并 业务分部合并所有地区的预测,公司总部进行审核 Case Study 2 30

FORECASTING AND BUDGETING (PART 2) u Greater independence / autonomy than oil production companies u Individual project focused u Independent focus on operational expenses and revenue on a project basis 预测和预算(2) u 比石油生产企业有更大的独立性/自主权 u 以单个项目为基础 u 项目运营开支和收入比较独立 Case Study 2 31

FORECASTING AND BUDGETING (PART 3) u u Projects managed similar to “individual businesses” Specific project level targets u u u Revenues and expenses Cash management Specific Geo. Market / District level targets u u Return on Capital Investment Budget Development 预测和预算(3) u u u 项目管理类似于“个人业务” 具体项目层面目标 u 收入/费用 u 资金管理 具体的Geo. Market/区域层面目标 u 资本投资回报 u 预算制定 Case Study 2 32

HEDGING AND DERIVATIVE STRATEGY (PART 1) u 80% of revenues from non-American operations Revenues in functional currency (USD) u Expenses in non-American currency u Actively hedge foreign currencies u Corporate Headquarters implements hedging strategy u 套期和衍生策略(1) u u u 80%的收入来自于美国之外的业务 u 业务收入货币(美元) u 费用开支使用非美货币 积极对冲外币 公司总部实现套期保值策略 Case Study 2 33

HEDGING AND DERIVATIVE STRATEGY (PART 2) u Specific risks Foreign currency exchange rates u Commodity prices u u $100 M (USD) lost on hedging activities in 2008 套期和衍生策略(2) u u 特定风险 u 外汇汇率 u 商品价格 在 2008年对冲活动中损失了1亿美元 Case Study 2 34

HEDGING AND DERIVATIVE STRATEGY (PART 3) u Specific types of hedges u Short-term hedges u Currency u swaps Long-term hedges u Debt, physical products 套期和衍生策略(3) u 具体的套期方式 u 短期套期 u 货币掉期 u 长期套期 u 债务、实物产品 Case Study 2 35

THEORETICAL EXAMPLE (PART 1) Process of securing a contract, budgeting and cash management for a project u Example will be a purchase of an “Artificial Lift” u u u Artificial lift is the injection of gas or steam into an existing oil well to increase pressure and the flow of oil from the well Focus on how budgeting and forecasting decisions occur 理论案例(1) 项目合同签订,预算和现金管理 u 以 “人 举升(助采)”项目为例 u 人 举升(助采)是将石油气体或蒸汽注入现有的井中,增加压力和井中的油的 流动性 u 集中讨论预算和预测决定如何进行 Case Study 2 36 u

THEORETICAL EXAMPLE (PART 2) u Contract for an Artificial Lift project Geo. Market / District will negotiate contract with client u Regional involvement may be required on very large contracts u When contract received Geo. Market / District will select project management and equipment 理论案例(2) u u 一个“人 举升(助采)”项目 u Geo. Market /区将与客户签订的合同谈判 u 地区参与大额合同的签订 u 合同签订后,Geo. Market /区会选择项目管理和设备 Case Study 2 37

THEORETICAL EXAMPLE (PART 3) (ENGLISH) Corporate Office Regional performance will reflect combination of individual Geo. Market performance Contract Negotiations with client Regional Office Geo. Market (District) Yearly forecast and budget performance goals passed to Geo. Markets Budget Assignment Artificial Lift Project Management Case Study 2 Corporate develops budgets that are provided to each region Project Expenses 38

THEORETICAL EXAMPLE (PART 4) u Project details Length: 5 Years to Completion u Location: China u Revenues in USD u $50 M (USD) in annual expenses u u Hedging process 理论案例 u u 项目细节/详情 u 期限: 5年完成 u 地点:中国 u 收入以美元表示 u 每年的支出/费用 5000万 (美元) 套期保值过程? Case Study 2 39

THEORETICAL EXAMPLE (PART 5) u Corporate Treasury receives detailed forecast of revenues / expenses from project manager Timing and quantity of revenues / expenses u Reviews project in aggregate of all other projects involving the same currency u u Final hedging decision u Hedges completed 理论案例 u u 公司资金管理部门收到项目经理提供的详细的收入/费用预测 u 时间和收入/费用金额 u 同一币种的项目集中起来进行评价 最后套期保值决策 u 套期完成 Case Study 2 40

CASE 2 SUMMARY u Cash management structure Easy to implement, allows for significant independence u Regional oversight enforces Corporate policies u Cash management policies develop by Corporate Headquarters u Decentralized model increases operating expenses u 案例2总结 u 资金管理结构 u u 很容易实现,允许一定程度的独立 区域制定公司政策 公司总部决定资金管理政策 集中模型增加了操作费用 Case Study 2 41

CASE STUDY 3: AEROSPACE COMPANY Over $60 B (USD) in revenue for 2008 u One of the world’s leading aerospace manufacturer’s of commercial and military aircraft u More than 100, 000 employees worldwide u Global cash management model u 案例3:航天飞机制造公司 2008年年收入超过60亿美元 u 世界领先的航空航天商用和军用飞机的 制造商之一 u 全球员 人数超过10万 u Case Study 3 Source: http: //blog. flightstory. net Accessed November 2009 42

ORGANIZATIONAL STRUCTURE (ENGLISH) Corporate Commercial Airplanes Specific Aircraft Programs Case Study 3 Inter. Company Items Shared Services Group Shared Expenses Integrated Defense Systems Missile Defense Military Helicopter Engineering and Technology Information Technology Aerospace Research Capital Group Aircraft Financing Arm 43

CASH MANAGEMENT STRUCTURE u Centralized u Treasury, Corporate Units Accounting, Financial Planning, and Tax u Decentralized Business Unit functions u Cost Management, Estimating, Contracts, and Procurement 资金管理结构 u u 集中的部门 u 资金管理,会计,财务规划,税务 分散的业务单位职能 u 成本管理,估算,合同和采购 Case Study 3 44

CENTRALIZED CASH MANAGEMENT STRUCTURE (ENGLISH) Corporate CFO Corporate Tax Engineering and Technology Case Study 3 Corporate Accounting Integrated Defense Systems Corporate Financial Planning Capital Group Corporate Treasury Commercial Airplanes Shared Services Group 45

DECENTRALIZED CASH FLOW MANAGEMENT STRUCTURE (ENGLISH) Engineering and Technology Business Unit CFO Cost Management Case Study 3 Estimating Contracts Procurement 46

DECENTRALIZED BUSINESS UNIT DEPARTMENTS u Business Unit Department Responsibilities Cost Management: Tracks expenditures u Estimating: Develops cost studies for future projects u Contracts: Negotiates and signs contracts for new sales u Procurement: Evaluates, negotiates and signs supplier contracts u 分散的业务单元部门 u 业务部门的职责 u 成本管理:跟踪费用流向 u 估算:用于未来项目的成本研究 u 合同:谈判和签署新的销售合同 u 采购:评估,谈判和签署供货合同 Case Study 3 47

CENTRALIZED BUSINESS UNIT DEPARTMENTS u Business Unit Department Responsibilities Financial Planning: Develops 5 -year business plan u Accounting: Develops financial statements and reports u Treasury: Short-term investing u Tax: Responsible for all tax related reporting u 集中的业务单元部门 u 业务部的职责 u 财务规划: 5年的业务计划 u 会计:财务报表和报告 u 财政部:短期投资 u 税务:相关报告的所有税务责任 Case Study 3 48

CORPORATE BUSINESS UNITS u u Treasury u Invests cash for the short-term and long-term needs. u Stock and Debt Issuance, Communication with Rating Agencies Accounting u Responsible for filing annual and quarterly reports u Develops corporate wide accounting policies Financial Planning u Reviews corporate wide business plan on a monthly basis u Finalizes annual five year business plan Tax u Responsible for all tax related reporting 公司财务职能部门 资金 u 负责长期和短期投资 u 股票和债券发行,与评级机构保持联系 u 会计 u 负责整理季度报表 u 制定公司范围内的制度 u 财务计划 u 按月分析公司计划预算执行情况 u 按年滚动下五年的商业计划 u 税务 Case Study 3 u 负责所有税务相关报告 u 49

FORECASTING AND BUDGETING (PART 1) Corporate office sets requirements for long range business plan u Multi-stage process u Corporate planning team sends requirements to business units u 预测和预算 u u u 公司确定长期规划的要求 不同阶段的过程 公司计划部门对预算编制单位提出编制要求 Case Study 3 50

FORECASTING AND BUDGETING (PART 2) (ENGLISH) u Goals set by corporate u u Conservative Top Down Guidelines Business Unit development of budgets u Bottom up development Levels of Budget Review Board CEO CFO Corporate Treasury Business Units 预测和预算(续) u u Conservative Corporate Guidelines 保守的公司预算 指导原则 Optimal Business Unit Budget Developmen t 积极的业务预算 公司层确定预算目标 u 保守的自上而下的制定预算编制指导原则 业务单元编制业务预算 Case Study 3 51

CASH MANAGEMENT STRATEGY (PART 1) u Guidelines developed by the corporate treasury u u Focus is on preservation of cash, not the return on investment (ROI) Only investments with US standard rating of AA or higher u Conservative investment strategy 资金管理策略 u u 公司资金管理部门制定预算编制指导原则 u 关注点在于资金的留存,而非投资收益率 只对美国标准评级AA以上的证券进行投资 u 较为保守的投资策略 Case Study 3 52

CASH MANAGEMENT STRATEGY (PART 2) u Revenue Company is based out of the US u All sales are in the functional currency (USD) u u u Expenses All supplier contracts in USD u 90% of expenses incurred in the functional currency (USD) u Risk adverse strategy u Using the functional currency for revenues and expenses eliminates need for currency hedging. 资金管理策略(续) 收入-公司在美国以外,所有的交易以美元结算; 支出-所有供货合同以美元结算,90%以上的费用以美元发生; Caseu Study 3 u 53

CASH INVESTMENT (PART 1) u 40% of excess cash used in very short-term investments (overnight to three month) u u u Purpose is preservation, not yield Cash must be kept safe Treasury funds daily operations u u Cash must be accessible and liquid Daily excess cash is estimated 40% Short-term Long-term 20% Capital 投资管理 u u 40%剩余现金被用作短期投资(1天-3个月) u 目的在于保值,而非获利 u 资金必须保证安全 日常运营资金 u 现金必须是流动的,可获得的 u 估算每日多余的资金 Case Study 3 40% 54

CASH INVESTMENT (PART 2) u 40% in long-term investments (six months to one year) directly with money managers Potential for larger return, but cash is not accessible u Long-term investments are used to fund Research and Development programs u Risk adverse, preservation of capital u 投资管理(续) u 40%的长期投资(6个月至一年)直接投资于基金 u u u 回报潜力较大,但资金不易利用 长期投资被用来资助研究和发展计划 风险规避,保全资本 Case Study 3 55

CASE 3 SUMMARY (PART 1) u Forecasting / budgeting structure u Very conservative structure to avoid risk u Hedging not used Company policies developed and enforced by corporate headquarters u Little independence outside business unit level u 案例3结论 u 预测/预算结构 u 非常保守的结构,以避免风险 u 不使用套期保值 u 公司总部制定和执行公司政策 u 业务单元级以外几乎没有独立性 Case Study 3 56

CASE 3 SUMMARY (PART 2) u Cash management focus is on preservation of cash u u Inflexible u u Risk aversion is more important than yield Extreme top-down decision making US based operations and revenue structure creates little need for hedging 案例3结论(续) u u u 资金管理的重点是资金的保存 u 风险规避比收益更重要 缺乏弹性 u 极端的自上而下的决策 以美元为基准的费用支出和收入结构,没有必要对冲 Case Study 3 57

INITIAL CONCLUSIONS (PART 1) u Research completed on 3 different companies Oil source company u Oilfield service company u Aerospace manufacturing company u u Sources included company financial releases, relevant articles, general business resources, and interviews of current and former employees 最后结论(1) u u 研究完了3种不同的集团企业 u 石油公司 u 油田服务公司 u 航空航天制造公司 来源包括公司的财务公布,有关条款,一般商业资源,以及现任和前任员 访谈 58

INITIAL CONCLUSIONS (PART 2) u Corporate structure for each company Oil source company - regional with global oversight u Oilfield service company – globally controlled, with a high level of regional and individual project level autonomy u Aerospace company – centrally managed cash management u 最后结论(2) u 每个公司公司结构 u 石油公司-全球监督下的地区集中 u 油田服务公司-全球控制、高层次的地区和个别项目层次的自治 u 航天飞机制造公司-资金高度集中管理 59

INITIAL CONCLUSIONS (PART 3) Oil source companies prefer a risk adverse, stable cash management structure u Oil service companies will tend to try and reduce currency risks by hedging u u Decisions are made by corporate Not always a successful way to reduce currency risks Aerospace companies prefer a risk adverse cash management structure 最后结论(3) u u u 石油公司偏好风险不利、稳定的现金管理结构 石油服务公司往往会设法减少对冲货币风险 u 决策是公司做出的 u 减少货币风险并不总是一个成功的方法 飞机制造公司喜欢风险不利的资金管理结构 60

THANK YOU! u Q&A 61
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