Case 3

1
Case 3

• Mandi Heckinger
• Andrew Maxfield

2
Kraft Foods

• Debt to equity ratio lower than industry
• Not as levered
• Stockholder claim
• ATWACC 7.14
• Higher than the industry
• Higher beta
• Industry has more debt, creating lower ATWACC

3
Difficulties

• Issues with finding market value of debt
• Hybrid Securities
• Compensation Plan for Executives

4
Abbott Laboratories

• Abbott Park, IL
• Market Capitalization 88.22 Billion
• April 21, 2006 purchased 1.4 billion in shares
  of Boston Scientific and loaned 900 million to
  subsidiary
• Stock rose 41.06 in last year

5
Difficulties

• Differences in values from outside reports and
  official company reports
• Hard to estimate market value of debt
• Executive stock options hard to find not
  clearly stated in 10-K

6
Your Choices

• What company did your group choose and why?

7
Your Findings

• What significant values/interesting facts did
  your group learn about your company?

8
Where did you get most of your information?

• A) Yahoo! Financial
• B) Forbes/Hoovers
• C) Companys Website
• D) SEC/EDGAR Filings
• E) Other

9
Your Methods

• Why did your group choose to use these methods of
  information gathering? Was the information easy
  to find?

10
What gave you the most trouble?

• A) Locating the information
• B) Interpreting the information
• C) Information didnt match up (multiple sources)
• D) Other

11
Difficulties

• Describe the difficulties your groups were having
  with the parts that gave you the most trouble.

12
What grade did you give the corporate governance?

• A) A
• B) B
• C) C
• D) D
• E) F

13
The Board of Directors

• How did you determine if there was a connection
  between management and independent Board members?