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Richard J. Rudden Senior Vice President
Black & Veatch Enterprise Management Solutions
A Challenging Year Lies Ahead: The Economy and Its Impacts on Public Power
APPA 2009 Business and Financial ConferenceSeptember 14, 2009 - Savannah, GA
Page - 2
Credit Spreads (basis points above US Treasury yield)
© Standard & Poor’s 2009
Data as of Aug 17, 2009. Sources: Standard & Poor’s Global Fixed Income Research.‘AAA’, ‘CC’, and ‘C’ rating categories not displayed because of small sample size
Standard & Poor’s Composite Credit Spreads by Rating Category Since June 17, 2003
Page - 3
Annual percent change, 2000 dollars Percent
Source: IHS Global Insights
Real GDP Growth and the Unemployment Rate
Page - 4
Fiscal Stimulus Has Peak Impact in 2010
2009 2010 2011
Total Stimulus 252 309 129
Personal Tax Cuts 51 92 37
Income Assistance 54 44 30
Corporate Tax Cuts 58 31 -4
State & Local Govt. Transfers
62 88 22
Infrastructure & Other 27 55 44
(Billions of dollars)
Source: IHS Global Insights
Page - 5
Top Concerns of CFOs – Macro Economy
1. Consumer Demand
2. Credit market/interest rates
3. Federal-government policies
4. Housing-market fallout
5. Cost of nonfuel commodities
6. Cost of fuel
7. Currency risk
8. Foreign competition
9. Environmental regulation
10. Trade policies and tradeagreements
Source: CFO Magazine, July/August 2009
When will we get a little help from the consumer?
Page - 6
Top Concerns of CFOs – Their own companies
1. Ability to forecast results
2. Working-capital management
3. Maintaining morale/productivity during economic downturn
4. Balance-sheet weakness
5. Attracting and retaining qualified employees
6. Cost of health care
7. Managing IT systems
8. Supply-chain risk
9. Pension obligations
10. Protection of intellectual property
Source: CFO Magazine, July/August 2009
Forecasting is now the top internal worry as companies struggle to gauge demand
Page - 7
Negotiating Position is Improving…
Source: CFO Magazine, July/August 2009
No, haven’t tried
Have you tried to renegotiate with your lenders or suppliers for terms that are more favorable for your company?
Suppliers Lenders
Yes, successfully renegotiated
Yes, but unsuccessfully
Page - 8
The Economy is Improving… Sooner or Later
Source: CFO Magazine, July/August 2009
When do you expect the U.S. economy to begin recovery?
Page - 9
The “Top Ten” Challenges for 2010
1. Declining or flat sales
2. Constraints on capital expenditures
3. Uncertainty over future carbon costs
4. Unfunded pensions and “OPEBs”
5. Customer rates
6. Local taxes and transfers
7. Rating agency surveillance
8. Investor relations
9. Renewables and Smart Grid
10. Potential monetization of assets
Page - 10
A Challenging Year Lies Ahead: The Economy and Its Impacts on Public Power
APPA 2009 Business and Financial ConferenceSeptember 14, 2009 - Savannah, GA
A Challenging Year Lies Ahead: The Economy and Its Impacts on Public Power
APPA 2009 Business and Financial ConferenceSeptember 14, 2009 - Savannah, GA
Richard J. Rudden Senior Vice President
Black & Veatch Enterprise Management Solutions
Richard J. Rudden Senior Vice President
Black & Veatch Enterprise Management Solutions
