FoundationsTM Annual Report

Part 1

The Foundations Annual Reportmust be turned inNovember 20th. Each team shouldreview their activities over the eight years that they have managed their Foundations company. This includesthe company’s business plan, strategic decisions, competitive / market assumptions, tactical decisions, the outcomes of those decisions, and changes that were necessary to meet competition. Based on this information, each team will document its Foundations TM experiences in the form of a final year annual reportto the Company's shareholders.

Your Annual Report is not intended to be an academic paper. It should be a professional andtruthful “sell-job” to thestockholders and Board illustrating your management team’sunderstanding of the industry and your specific company, the effectiveness of your decisions, your financial accomplishments with specific emphasis on the final year, and your company’s positioning for the future.

  • Don't be generic!
  • What makes your firm unique?
  • What were your successes?
  • In what fundamental ways did you distinguish yourself from your competitors?

Make sure you provide evidence to support your conclusions and that you integrate the material from the class discussions in your presentation. The report must be a typed, single spaced, 10 - 15page (guideline)document that is spiral-bound with any included attachments and appendices. You must also submit your report to the Dropbox on eCollege prior to the beginning of class on the due date. This final written Annual Report is the basis for your presentation to the stockholders and the Board of Directors during the last week of class (see Part 2 of the assignment.)

The Annual Reportmust include, at a minimum:

  • Cover Page
  • Table of Contents
  • Letter to stockholders
  • Corporate Message. It almost always reflects how a company sees itself, or how it would like others to see it. Here, the company can explain itself to stockholders, using photographs, illustrations and text.
  • Your company's Vision and Mission statements
  • Business Philosophy
  • What is important to you in business?
  • Describe your industry and markets.
  • Was it a growth industry?
  • What changes occurred in the industry, short term and long term?
  • How was your company poised to take advantage of them?
  • Company’s strategic direction
  • Summarize your original strategy and compare any emergent strategies versus the original strategy.
  • In a narrative format, evaluate your strategy within the context of SWOT analysis
  • What factors made the company succeed?
  • Describe your most important company strengths and core competencies.
  • Financial Highlights. These highlights give a quick summary of a company’s performance. The numbers appear in a short table and usually compare performance over multiple (3-5) years.

Example from Kellogg 2010 Annual report:
MILLIONS EXCEPT PER SHARE DATA AND NUMBER OF EMPLOYEES / 2010 / 2009 / 2008 / 2007 / 2006 / 2005 / 5- Year CAGR
Net Sales / $12,397 / $12,575 / $12,822 / $11,776 / $10,907 / $10,177 / 4%
Gross Profit as a % of Net Sales / 42.7% / 42.9% / 41.9% / 44.0% / 44.2% / 44.9%
Operating Profit / $1,990 / $2,001 / $1,953 / $1,868 / $1,766 / $1,750 / 3%
Basic per share amount / $3.32 / $3.17 / $3.01 / $$2.79 / $2.53 / $2.38 / 7%
Cash Flow (net cash provided by operating activities, reduced by capital expenditures) / $534 / $1,266 / $806 / $1,031 / $957 / $769
Stock Price Range / $47-56 / $36-54 / $40-59 / $49-57 / $42-51
Dividends Paid per Share / $1.56 / $1.43 / $1.30 / $1.20 / $1.14 / $1.06 / 8%
Earnings per Share (diluted) / $3.30 / $3.16 / $2.99 / $2.76 / $2.51 / $2.36 / 7%
Number of Employees / 30,645 / 30,949 / 32,398 / 26,494 / 25,856

Management discussion. A series of short, detailed reports that discuss and analyzes the company’s performance for your last year of operation. It must cover results of R&D, Production, Marketing, TQM initiatives and the adequacy of capital resources (Finance) to fund operations.Include in these reports your analysis and comparison to your selected competitors.

  • What decisions did you make and why you made them
  • How did you implement them
  • How successful they were
  • Financial Statement and notes.(print your final year of Foundations Annual Reports)
  • The SEC requires three statements – statement of earnings, statement of financial position, and statement of cash flows
  • Selected Financial Data. This information summarizes a company financial condition and performance over five years usually accompanied by supporting charts.
  • Select the data for3 – 4“key financial objectives / ratios”; these may include revenue (sales), gross profit, net earnings (net income), earnings per share, dividends per share, market price per share and key ratios.
  • Include a brief narrative for each data set that you select.

Example from Kellogg 2010 Annual report:

Our high quality, delicious foods, loved by consumers around the world generated net sales of more than $12 billion in 2010. / We maintained operating profit while continuing to invest in our business.
2010 EPS increased 4% over 2009, the 9th consecutive year of growth. / Dividends per share have increased 47% over the past 5 years.
Total shareowner return on Kellogg shares for 2010 was –1%. Kellogg Company remains a strong long-term investment, with ten-year cumulative annual return on Kellogg shares of 157% significantly outperforming both the S&P Packaged Foods Index 80% return and the S&P 500 Index 15% return for the same period.(d) / Advertising investment of more than $1.1 billion in 2010 continued our consistent and strong investment in building our brands. / Cost-saving and efficiency programs in 2010 continued to provide substantial progress toward our goal of $1 billion in annual cost-savings by the end of 2011, and we now expect to exceed this target.
  • Using your company’s “key financial objectives / ratios”
  • How well did you perform against these objectives
  • How did your selected competitors do against these objectives
  • What actions did you take to maximize your objectives attainment
  • The Company’s Future.
  • Discuss specifically what your Executive teamhas done to position your company for the future.
  • Discuss what you are going to accomplish next year as your company continues to grow and prosper.
  • Required attachments: (These pages are not included in the 10– 15 page guideline)
  • Brief Bio for each member of the executive team stating their primary responsibilities as executives in the simulation company.
  • Any addition charts, graphs, etc. to support your written report (do not include the last FastTrack Report).

Annual Report Expectations:

Thisassignmentmust be a typed, single spaced, (10 - 15 page guideline) documentthat is spiral-bound with any included attachments and appendices.Grading will include both objective and subjective components. The objective portion will focus on technical errors – misspelling, incorrect word choice, structure of sentences and paragraphs, unnecessary font changes etc. The subjective portion will focus on understanding of the simulation, clarity of the writing, meeting the needs of the target audiences – Board of Directors and Stockholders.

Part 2

Stockholders’ Meeting: Your presentation to the members of the Board of Directors will provide them with the information they need to decide whether to give you a “vote of confidence”and retain you as a management team, or to replace you with new management. As such, they have asked you to come before them to discuss four things:

(1)your management team’soverall performance over the past eight years

(2)The company’s financial performance in your final year as shown in your Annual Report

(3)The company’s performance compared against two of your key competitors (select two of your major rivals - Baldwin, Chester, Digby, Erie, or Ferris and prepare a competitor analysis).

(4)what specific steps your management team has taken to position your company for future success

All presentations must be emailed to before 3:00p.m. on WednesdayDecember 3. Failure to do so will result in an 8 point penalty on the team grade. No changes are allowed to your presentation materials after this time. In addition, you must schedule a practice presentation with the Professional Development Center. And since the PDC often suggests changes to the visuals, you should try to schedule this practice presentation prior to the date that presentation materials are due, since no changes are allowed after that date.

BUSI 20173Fall 2013