Human Capital Management Program European Payroll Consolidation Human

Human Capital Management Program European Payroll Consolidation, Human Capital Management (HCM), CIPS Reintegration October 21, 2008 CONFIDENTIAL – SPE Use Only 1 1

International Payroll Global HCM Executive Summary: Problem North American Payroll Business Challenges • International Payroll is fragmented among vendors resulting in processes that are inconsistent, controls that are poor and little cost leverage. • Human Resources applications don’t support even basic business needs, provide little in the way of decision support and are at-risk from obsolete and unsupported technology. Little support exists to manage and oversee a global workforce. • North American Payroll is under-integrated with HR and Financials and has a high-risk support model. • Certain SOX and GISP requirements may be hard – or impossible concerning encryption – to meet from where we are now. CONFIDENTIAL – SPE Use Only 2 2

International Payroll Global HCM Executive Summary: Response North American Payroll Resolutions • Initiate a strategic, phased program to address each set of issues and provide more integrated solutions that ultimately piggy-back on SAP investment. Ensure SOX and GISP compliance on all fronts. • Consolidate territories onto a single international payroll provider and also gain basic HR information from them to enhance reporting and support consistent processes and controls. • Implement “core” HR functionality in North America on SAP for potential expansion internationally and then as a platform for future process enhancements and providing basic global reporting. • Improve CIPS to maintain its viability for several years until a replacement strategy can begin and document the system to reduce support risks. CONFIDENTIAL – SPE Use Only 3 3

International Payroll Global HCM North American Payroll Executive Summary: Program Overview FY 09 FY 10 FY 11 -13 International Payroll European Payroll Consolidation Asia-Pacific Latin America Data consolidated into global reporting Global HR SAP HCM Platform Extend Domestic SAP HCM Platform Provide data integrity CONFIDENTIAL – SPE Use Only International SAP HR These phases may occur in some other sequence or with alternate timing North American Payroll CIPS Reintegration A global employee reporting mechanism is built, leveraging the SAP platform consolidating information from global systems Maintenance, Support and Develop Long-Term Replacement Strategy 4 N. America SAP Payroll 4

International Payroll Global HCM Executive Summary: Why? North American Payroll Benefits • Consolidating international payroll providers means cost economies of scale, greater consistency and controls more easily monitored. Basic global reporting accommodated. • “Core” HR functionality on SAP will be richer than now available and will replace the hardware and software obsolescence risks with a more flexible platform. • CIPS gets a makeover with long-awaited improvements and better integration to HR and Financials. Urgency for replacement can be reduced by extending system life 3 -5 years. • Manage spend over a longer investment period to reduce nearterm capital spend. Make changes over a longer planning horizon to enable other options to mature and to allow SPE to absorb changes incrementally. CONFIDENTIAL – SPE Use Only 5 5

International Payroll Global HCM Executive Summary: Competitive Analysis North American Payroll How have other studios addressed this? Disney: SAP HR and Payroll, application support outsourced Fox Studios: People. Soft HR and Payroll managed inhouse NBC-U: People. Soft HR and Payroll managed inhouse; considering SAP HCM Paramount: People. Soft HR and Payroll managed inhouse Warner Bros: People. Soft HR now, selected SAP HCM, outsourcing with TCS CONFIDENTIAL – SPE Use Only 6 6

International Payroll Global HCM Executive Summary: Financial Summary CONFIDENTIAL – SPE Use Only 7 North American Payroll 7

International Payroll Global HCM Executive Summary: Financial Summary Project Costs • S/W and Licenses: • Hardware • Internal Labor: • External Labor: • Other/Miscellaneous $ 135 K $ 667 K $ 1, 835 K $10, 478 K $ 950 K Total Project Costs: $ 14, 065 K Project Benefits • Hard Dollar Benefits: • Soft Dollar Benefits: $ 2, 694 K $50, 584 K Total Project Benefits: $53, 278 K CONFIDENTIAL – SPE Use Only North American Payroll Ten-year Summary and Payback • Ten-year total costs: $ 35. 9 M • Ten-year total benefits: $ 53. 3 M • Ten-year net benefit: $ 17. 4 M • Internal Rate of Return: 16. 6% • Net present value @ 10%: $ 3. 9 M • Payback: 65 months Budget Summary (This project is in the FY 09 Budget • Current Funding $ 4. 4 M • Funding Needed $ 9. 7 M 8 8

International Payroll Global HCM Executive Summary: Financial Summary North American Payroll Project Depreciation Annual Support Costs CONFIDENTIAL – SPE Use Only 9 9

Appendices A. B. C. D. E. F. G. H. Background Key discussion points 1. HR benefits detail 2. HR backfill summary 3. European payroll one-sheet 4. COE leverage 5. Controls and security benefits 6. Benefits of CIPS upgrades Scope Budget Program Governance Model Key Assumptions Risks Stakeholders CONFIDENTIAL – SPE Use Only 10 10

International Payroll Global HCM A. Background North American Payroll A great deal of work precedes each initiative International Payroll • • Evaluations of vendor options were considered and several vendors considered Patersons chosen for flexibility and technology; due diligence nears completion; SPE Europe failed to satisfy scale requirements of certain other vendors Design session (called “Discovery Workshop”) held in London first week of October with pilot territories (Italy and France), UK and Corporate management present Final negotiations in process with hopes to be in pilot late January for April go-live HCM Domestic • • A year ago, HCM prospects were investigated resulting in an RFP to several vendors, including finalists Deloitte, Accenture, IBM and Capgemini; Accenture dropped out. Towers Perrin brought in as advisor to independently assess various options’ viability Payroll excised, scope refined to US-only and “core” functionality Through rigorous evaluation, Capgemini selected and negotiations proceeding North American Payroll • • • Implementing SAP Payroll was deferred given costs and competing initiatives Enhancements identified, prioritized and scheduled to reduce intensity of spend. First phase converting CIPS to SAP coding block due for delivery early 2009. CONFIDENTIAL – SPE Use Only 11 11

International Payroll Global HCM B. 1. Discussion items North American Payroll Quantifiable Benefits • Reduced support costs (People. Soft, Aspire, etc. ) – $240 K per year • Elimination of IT support for Peoplesoft and HR Connection CONFIDENTIAL – SPE Use Only 12 12

International Payroll Global HCM B. 1. Discussion items North American Payroll Difficult to Quantify Reduced Turnover – $1. 2 M annually • Replacement costs • 497 voluntary terminations in 2007 (67% growth since 2003) • Average cost to replace ~$39 K (6 months average salary, low range of estimates from various sources) • 5% reduction (25 terms/year) results in $975 K savings annually • Severance/settlement costs • $3. 9 M estimated severance payments in 2007 • 5% reduction results in $195 K savings annually Productivity Gains – $1. 0 M annually Each day of employee savings (0. 4%) is equivalent to adding 17 headcount avoiding ~$2. 0 M Conservatively assumed savings of 4 hours – ½ day – per employee per year • Improved self-service, HR support, improved image and reduced “hassle” from errors, duplicate activities, delays and error corrections • Reduced time for routine updates (i. e. SHRM indicates 12% of employees change address each year) by overall population • Reduced effort in headcount tracking, duplicate entry of people data in non-integrated systems • Manager effort in compensation administration Indirect savings may include reduced absenteeism, more effective work due to better job design, placement, training, engagement CONFIDENTIAL – SPE Use Only 13 13

International Payroll Global HCM B. 1. Discussion items North American Payroll Non-Quantifiable Benefits Wage & Benefits Cost Control – $1. 5 M annually • Wage & Benefits Growth • Growth averaged ~7% annually over last 5 years • Wage base ~$480 M in 2007 • Reduction of growth by 0. 25% (to 6. 75%) saves $1. 2 M annually • Similar reduction in benefits cost growth adds $0. 3 M annually BLS private industry average shows <4% annual wage growth CONFIDENTIAL – SPE Use Only 14 14

International Payroll Global HCM B. 2. Discussion items North American Payroll HR Backfill Support Breakdown • HRIS Contractor (10 months at $75/hr) = $129, 000 • Comp Contractor (5 month at $125/hr) = $105, 000 • HRBP Contractor (10 months at $50/hr) = $86, 000 • Vendor support (6 months at $45/hr) = $45, 000 • Analyst temp (3 months at $40/hr) = $20, 000 • Int’l intern (part time 12 months $16/hr) = $8, 000 • Total >> $393, 000 CONFIDENTIAL – SPE Use Only 15 15

International Payroll Global HCM B. 3. Discussion items North American Payroll European One-Sheet (Euro at current rate) Amounts in US$ 000 s € = US$ 1. 33 Cost Type Current Annual Costs Future Annual Cost Annual Savings Notes Payroll Processing 240 184 56 Original non-negotiated processing quote; 2 -Way Traffic not included SPE Labor for Payroll 250 0 Assumes no labor savings Subtotal 490 434 56 Apples-to-apples processing cost savings 118 (118) Patersons HR/PRl licensing fee - Annual Cost based on $10 per month per employee (980 not including 2 -Way Traffic) 552 (62) Achieving an 25% savings in SPE labor gets us to breakeven. 198 (198 Patersons cost $1. 4 M, SPE cost 800 K 750 (250) Includes depreciation burden License Fee Subtotal 490 Depreciation Total 490 CONFIDENTIAL – SPE Use Only 16 16

International Payroll Global HCM B. 4. Discussion items North American Payroll Our Existing COE will be leveraged for HCM Leadership • Our Center of Excellence model will be leveraged to support HCM • Current Leadership Structure manages new applications • Global support and coordination is maintained • Governance structure incorporates HR input to changes • Core management and support processes easily expand to include HR capabilities • Some team expansion and additional infrastructure will be required Support Resources • HCM Support is integrated into current support model • Reporting, MDMA, Security, SD, BI and Basis teams need minor increments for new technology • An additional process team is added to support HCM Infrastructure • Existing infrastructure for ECC and BI supports HCM • The SAP Portal requires an additional landscape • Will be able to leverage internal control environment (e. g. , ITGCs) for existing SAP platform. CONFIDENTIAL – SPE Use Only 17 • Leveraging our existing SAP environment provides substantial savings over building an entire organization • Hardware infrastructure costs savings are $2 M per year • Headcount required would be higher • Once support is expanded to include HCM technologies, additional HR functionality will not require significant additional costs 17

International Payroll Global HCM B. 5. Discussion items North American Payroll Controls and Security Benefits Our Peoplesoft implementation uses Sybase version 11 which does not allow encryption of data elements. If it did and the database were encrypted, then the application would no longer be able to access it. HRMS would have to be upgraded to meet the requirement. The estimate for that is conservatively $10 -12 M. Leverage internal control environment from existing SAP platform (e. g. , program maintenance, computer operations, information security, inc. GISS compliance). Single HR system of record (i. e. , converting local SPE employee master data into SAP). Increased security and controls over personally identifiable information (e. g. , social security numbers, storing only legally required employee history). Enhanced interface data and visibility (e. g. , TAAS employee master data and status information for back lot employees to be included in HCM database; T&E employee master data and Ariba organization data available to determine approval hierarchies). Better visibility of employee contracts (e. g. , contract status, special provisions, and scheduled contractual increases). Will facilitate integration of on-boarding and off-boarding processes. Reduced number of international interfaces (e. g. , European Payroll from 35 to 1). CONFIDENTIAL – SPE Use Only 18 18

International Payroll Global HCM B. 6. Discussion items North American Payroll Benefits provided by CIPS Reintegration SAP COA Reduce/eliminate translation research issues & distractions for both Payroll and the business units. Business units ability to have payroll information timely and accurate. Reduction of Journal entries in Payroll (CIPS) and SAP - minimize manual errors and miscoding. Prerequisite to SAP HCM, enable tighter integration of CIPS to SAP HCM. Payroll department uses (learns) SAP COA sooner. E-Paystub Cost avoidance of expensive paper stock, postage and envelopes. Cost avoidance in payroll staff sorting and stuffing pay stubs. Reduction in paper supports SPE’s green program. Automate GPMS feed Eliminate payroll research and manual entry (labor intensive). Prevent under/over pension payments. Automate Liens & Garnishments Eliminate manual payroll entry (labor intensive). Improve accuracy of data across the end to end process. Payroll Data Query Cost avoidance of IT resources to generate reports for analysis and research. Improve turnaround time for research and analysis. IT resources can be freed up to focus on CIPS system controls. System Audit capabilities Improve system controls and reporting. Enable payroll to research problems, issues and better answers questions. Automate Ariba feed for check requests Eliminate manual payroll manual entry (labor). Reduce human error on entry. CIPS system interfaces Tighter integration with HR and financials (as well as external interfaces) will improve quality and accuracy of data. Address support model concerns Reduce risks to current support model – we’ll have means and resources to ensure business continuity. CONFIDENTIAL – SPE Use Only 19 19

International Payroll Global HCM C. Scope: International Payroll Included in Scope Phases European Payroll Consolidation: • Blueprint Phase • Consolidate Payroll with a single European vendor • Standardize Comp and Benefit controls, administration and reporting • Streamline EU HR Processes • Support Treasury oversight to payroll disbursements • Enabled HR Shared Services function in London CONFIDENTIAL – SPE Use Only – Acquire baseline input from territories in the form of completed Business Requirements Questionnaires – Conduct “discovery” requirements and planning sessions with pilot territories • Pilot Realization Phase – Italy – France Evaluate and resolve gaps for territories where payroll vendor performs services beyond core payroll (such as related HR services provided to Italy) • North American Payroll • European Realization Phase – Remainder of Europe • Support Phase 20 20

International Payroll Global HCM C. Scope: HCM North American Payroll Included in Scope Phases HCM: • • Project Preparation Phase • Blueprint Phase Personnel Administration – Hiring – Employee lifecycle activity – Daily hire – Terminating Compensation – Overall management – Bonus plans – Merit increases Organization and Position Mgmt Employee Contract Management Basic Employee Self-Service Domestic Employees – Corporate (US & Canada) – Backlot & Talent Global Employee Reporting CONFIDENTIAL – SPE Use Only – Rapid Realization Workshops – Global Template and US HR • Realization Phase – US HR • Final Preparation and Cutover Phase – US HR • Support Phase 21 21

International Payroll Global HCM C. Scope: HCM Continued North American Payroll Specifically Excluded or Deferred Global Human Resources Benefit Administration Leave Administration, COBRA, FSA, and 401 K Benefit Plan Maintenance Open Enrollment Staffing/Recruitment Applicant Tracking Organizational Development Learning Management System Competency Management Succession Planning Performance Management Global HR Self-service actions constrained by international local regulations Manager self-service actions handled by other SPE systems such as ARIBA approvals International payroll actions Payroll CONFIDENTIAL – SPE Use Only 22 22

International Payroll Global HCM C. Scope: North American Payroll Included in Scope North American Payroll Phases • CIPS system enhancements • Convert CIPS to SAP COA • Planning Phase • CIPS Payroll • All programs modifications • Reports • Screens (timecards) • Interfaces • SAP Validation subroutine • SAP Lighting Bolt (baby CIPS) • Ariba • All manual payroll forms • CIPS system interfaces and modifications – Refine proposed target enhancements • Realization Phase – Implementation of an enhancements will occur when it is is ready; enhancements will be released throughout the phase as opposed to a single, major release • Support Phase – Support phase is concurrent to regular releases since this initiative enhances an existing production system. • Electronic payment stub • Liens & Garnishments • GPMS auto feed • Payroll data query capabilities • CIPS support model • SPE internal resource engagement or additional contractor • Documentation • ESI Contract extension CONFIDENTIAL – SPE Use Only 23 23

International Payroll Global HCM D. Project Budget North American Payroll The FY 09 spending is estimated at $5, 255, 712 with total project costs at $14, 065, 135 FY 09 FY 10 FY 11 TOTAL $741, 000 $1, 094, 552 $0 $1, 835, 552 External Labor $3, 966, 920 $6, 333, 279 $178, 000 $10, 478, 199 Software/Hardware/Travel: $547, 792 $1, 203, 592 $0 $1, 751, 384 Internal Labor ESTIMATED PROJECT TOTAL CONFIDENTIAL – SPE Use Only $14, 065, 135 24 24

International Payroll Global HCM E. Program Governance North American Payroll How will we organize? Executive Committee Int’l Payroll Steering Committee* HCM Steering Committee Program Management Office Meets monthly or as appropriate Senior Executives Resolves policy issues, monitors overall progress, major issue resolution, responds to change requests outside budget CIPS Steering Committee Meets as appropriate (weekly, to start) Includes mix of Executive Management, Project Management and Stakeholders Manages change requests within budget Ensures timely resolution of issues or raises them to Exec Committee, tracks progress, advisory support Oversight and advisory to all 3 initiatives Ensures integration across initiatives is effective Coordinates communication and status reporting Tracks budget, scope and schedule progress Ensures contributions of support teams, such as security, architecture, SOX, IT Operations, etc. Project Management Mary Becquet Trey Bradley Bob Loperena Clinton Heys Ronald Kimura Donna Miller Manages day-to-day activities of project Raises issues to Steering committee Manages resources and ensures timely and on-budget completion * May include interim members from the prospective territories being implemented CONFIDENTIAL – SPE Use Only 25 25

International Payroll Global HCM North American Payroll E. Program Governance: Organization Project Structures: HCM Steering Committee Senior Advisors Andy Schlei Cameron Crosby Cutover Manager PA/OM Team David Nelson Ajay Kunatham Compensation : Dawn Thompson Capgemini Process Owner PA US David Nelson Process Owner OM US Javier Velasquez Process Owner PY US Justin Russell Business Analyst - New Hire - Business Analyst PA US BA: Payroll Integration Business Analyst PA Global (2) Test analyst (PT) BA Payroll Integration Ajay Kurantham Business Analyst OM US Phil Taylor Business Analyst (2) Cindy Hubbard Janet Montano Business Analyst Lead - New Hire - Test analyst (PT) (4) Business Analyst Global PA (PT) Business Analyst ESS Sunanda Trivedi CONFIDENTIAL – SPE Use Only Capgemini PMO Analyst Ruchika Kaur Development Amit Kapoor Ravi Chitta. Jalu Reporting Joe Willis Cap – Business Analyst Compensation Management Business Analyst (PT) (4) SPE New Hire Project Management Trey Bradley – IT Bob Loperena Clinton Heys Gilda Torabian Integration Manager Dirk Liepold SPE Solution Architect BI Dongain Luo Conversion Lead/Analyst Report Interface Developers (6) Infrastructure Burt Germain Cap – Change Management Security Analysts (2) Change Management Analyst BASIS Analysts (2) Business Analyst (BI + Reporting) Conversion Developers(2) Legacy Development Coordinator Amit Kapoor Business Analyst (BI) BI Developer (2) Enhancement Developer 26 Offshore Lead Bhavesh Kapoor Portal Administrator Training Content Development (2) Sap Security Analyst (PT) Trainers (3) SAP ABAP Developers (2) - New Hire - Legacy Developers (5) Training Content Developer BASIS Analyst (PT) Offshore Coordinator 26

International Payroll Global HCM F. Key Assumptions North American Payroll • Strong user and management involvement coupled with project team empowerment (true for all initiatives) • Territories make available their payroll processing resource for design and testing • Each Territory will work closely with their current payroll processing vendor to gather requirements and complete the Business Requirements Questionnaire detailing territory processes. • Payroll processing cost overlaps of up to 3 months may be incurred as varied providers are given notice and cutover occurs to Patersons • Data for payroll will be converted from existing payroll providers’ systems • Existing payroll providers will provide data for conversion at no additional cost • Leverage existing SAP hardware (no additional hardware is required) • TAAS and IDM integration will be completed successfully by 3/09 • No material changes to the SPE organization will occur during the duration of the project • HR will use the IT’s training tool as a replacement for HRC training module. • Data for HR will be converted from IHRS, Peoplesoft and CIPS • Payroll, IT, SAP, Ariba and Imageworks Finance resources are available • Payroll IT external resource can be found in a timely manner • CIPS transition to SAP coding block can be completed prior to Payroll year-end activities in December • PS HRMS will not be modified. CIPS will translate Walker COA to SAP COA for PS HRMS CONFIDENTIAL – SPE Use Only 27 27

International Payroll Global HCM G. Risks 1 of 2 North American Payroll SPE resources are distracted by other influences and / or pulled to production support issues Backfill key project resources Availability of SPE Subject Matter Experts “in scope” process areas Communicate to Sr. Management the importance of full participation during the blueprint and report deficiencies to Executive Committee Implementation risks associated with other projects (e. g. SPE European Payroll) may impact the timeline/cost Schedule meetings at regular intervals between project managers to review critical path and milestones – resolve and escalate issues on a timely manner Integration of TAAS and IDM TAAS / IDM interaction to be completed no later than the start of the Realization phase Clearly limit scope to avoid logistics and supply chain. Detailed collaborative cut-over planning, and integration / regression testing. Timing of rollouts to avoid key business events. Implementation of Radiant Logic (part of IDM project) Upgrade to be completed no later than the start of the Realization phase Carrying forward existing legacy design inefficiencies Extensive Business contribution to Blueprint. ASE to collaborate on global design and provide new ways of thinking on the future processes. Multiple rounds of approval. Influence and design is too U. S. centric Upfront creation of Global Blueprint. ASE to foster greater collaboration on global design. Inability to gain agreement within HR and other groups (Finance, security, etc. ) on changes in process and responsibilities might impact the timeline/cost Engaging the right people in design workshops and ASE; Formal change management; Win/win solutions Inability to control scope and maintain aggressive schedule Formal process for managing change requests. Engaging the right people in design workshops and ASE; Formal change management; Win/win solutions Early communication, end user training, user involvement during design CONFIDENTIAL – SPE Use Only 28 28

International Payroll Global HCM G. Risks 2 of 2 North American Payroll Other competing projects, initiatives and activities take precedence (e. g. H&W Benefits, HCM) Track and report critical path activities and escalate to Senior Management when necessary Support model resolutions come to an impasse with ESI Investigate industry tools to extract Payroll business logic from legacy mainframe systems Identify current SPE resources who have supported CIPS in the past (2 to 3) and develop a strategy to engage them Obtain Senior Mgmt approval to accept risk Vendor is a smaller company, with strong recent growth which may not be able to deliver timely or may have financial issues in current market environment Monitor vendor schedules and deliverables closely; Perform due diligence on vendor financial condition continuously Failure to properly integrate the payroll application with internal systems and teams Detailed collaborative cut-over planning, and integration / regression testing with IT and business teams Failure by the project team and the vendor to integrate the system with external systems or third parties Prepare effective testing strategies and coordinate with 3 rd parties Failure of the existing providers to support SPE's intended transition to Patersons Collaborate effort with the financial directors to prepare the communication plan Failure of the existing providers to support SPE's intended transition to Patersons Collaboration between SPE Legal, outside counsel and SPE Info Security department to ensure all requirements are met Failure by the project team to effectively manage change and user buy-in to the new solution, as much of the team is primarily based in the home office and the users are international. Involve Local Financial Directors in the Operating Committee, planning, testing and transition decisions. Have proper communication plan in place. Failure to ensure standard reporting is adequate – reporting requirements have not been fully documented at greenlight. Proper requirement gathering process and documentation during the discovery phase CONFIDENTIAL – SPE Use Only 29 29

International Payroll Global HCM H. Stakeholders North American Payroll Business Unit Stakeholders Title/Role Charlie Falcetti Line of Business CFO Kesa Tsuda, Ron Mc. Nair Executive Sponsors Sherri Nadeau, Kriege Janz Project Sponsors Bob Loperena Project Manager Mary Becquet Project Manager Donna Miller Project Manager Jason Spaltro SEHS - Information Security IT Stakeholders Rick Hopfer CIO Andy Schlei DCIO – Corporate Applications Trey Bradley Project Manager (interim) Ronald Kimura Project Manager David Buckholtz Enterprise Architecture Ferdinand Fattorini Enterprise Infrastructure Services CONFIDENTIAL – SPE Use Only 30 30