1. Transforming the ‘last mile’ of finance Slide 1 – MOVARIS CONFIDENTIAL ‘Last Mile’ of Finance: Integrating the Close April 19, 2006 Eric Keller, President and CEO Transforming the ‘last mile’ of finance

2. Agenda Financial close pains Regulatory guidance The ‘last mile’ of finance Checklist to ‘last mile’ success

3. Transforming the ‘last mile’ of finance The Financial Close Series of interdependent tasks that a finance organization must perform on a quarterly and annual basis to produce the data and disclosures for SEC financial reports External reporting Compliance management Management reporting Audit management Analysis, Review, Adjustments

4. Transforming the ‘last mile’ of finance Financial Close Process – Pain Points Difficult to manage Fraught with risk Time pressures increasing Expensive

5. Transforming the ‘last mile’ of finance Restatements: every CFO’s nightmare Source: Restatements – Traversing Shaky Ground, Glass Lewis & Co., May 31, 2005 and January 2006 Increased regulatory oversight and more complex accounting rules

6. Transforming the ‘last mile’ of finance Growing Material Weakness Disclosures (MWDs)  1/3 of companies with MWDs had weaknesses in operational finance  46% of operational finance MWDs related to the close and consolidation process Source: Movaris analysis of publicly-filed MWDs for 2004 Operational Finance Weaknesses

7. Transforming the ‘last mile’ of finance ‘Last Mile’ Issues – Often Material Weaknesses 2005 SEC filings with material weakness disclosures Misstated accruals and estimates made during close “The company concluded that controls over the financial statement close process related to the determination of accrued liabilities and prepaid expenses were not operating effectively….resulting in numerous adjustments.” Errors in intercompany eliminations “[W]e discovered an error in a spreadsheet application, which was designed to eliminate intercompany balances. As a result of the error, amounts accumulated in the property account for one subsidiary were … inadvertently not eliminated in consolidation.”

8. Transforming the ‘last mile’ of finance 2005 SEC filings with material weakness disclosures “[T]he company did not maintain effective controls over the communication among operating, functional and accounting departments of financial and other business information that is important to the period-end financial reporting process, including the specifics of non-routine and non-systematic transactions. Contributing factors included the large number of manual processes utilized during the period-end financial reporting process and an insufficient number of accounting and finance personnel…” Reliance on manual processes Inadequate controls over non routine transactions “[A material weakness in the] design and implementation of adequate controls over the financial reporting and close process, including controls over non- routine transactions.” ‘Last Mile’ Issues – Often Material Weaknesses

9. Transforming the ‘last mile’ of finance PCAOB Comments on Period End Process “Given the high degree of risk that misstatements could occur during the period-end financial reporting process, significant attention to this process is necessary in virtually all audits." PCAOB Release 2005-023, November 30, 2005 (emphasis added)

10. Transforming the ‘last mile’ of finance CFO’s Operational Goals Increase process efficiencies, devoting more time to analysis and less time to close and compliance efforts Decrease both direct and indirect costs Increasing financial statement accuracy while reducing risks of restatements and material weakness disclosures

11. Transforming the ‘last mile’ of finance Period End = ‘Last Mile’ of Finance Audit opinion Board book FORM 10-K Critical processes that bridge from transaction systems to financial statements Typically informal, occurring outside any formal system of record Last opportunity to identify and resolve issues before statements Financial Close CRMERP* SCM Consol- idation BI / DW Excel

12. Transforming the ‘last mile’ of finance ‘Last Mile’ of Finance – Disconnected Processes Report & Disclose Informatio n Enter & Process Transactions Evaluate & Test Controls Aggregat e & Analyze Results Internal Controls Aggregate Financial Amounts Review Preliminar y Results Financial Transactions Financial Close Report & Disclose Informati on Perform Final Adjustmen ts Remediate Controls §302 Certification ERP ExcelemailWord Consoli- dation ExcelemailWord Audit Opinion Board book FORM 10-Q 10-K

13. Transforming the ‘last mile’ of finance ‘Last Mile’ Tasks – Many Not Automated Mgt reports FORM 10-K Audit Opinion Board book 302 Cert. FORM 10-Q, 10-K Report Production Consolidation I/C eliminations, minority interest eliminations Aggregate financial data Enter & Process Transactions Financial systems Transaction Systems Reporting Entity Close Consolidation Enter Adjusting Journals Provide evidence for audit Finalize Financial Statements Re-consolidate to reconcile Enter top-level adjustments to reconcile

14. Transforming the ‘last mile’ of finance ‘Last Mile’ Tasks – Many Not Automated Mgt reports FORM 10-K Audit Opinion Board book 302 Cert. FORM 10-Q, 10-K Report Production Consolidation I/C eliminations, minority interest eliminations Aggregate financial data Enter & Process Transactions Financial systems Transaction Systems Reporting Entity Close Consolidation Enter Adjusting Journals Provide evidence for audit Finalize Financial Statements Re-consolidate to reconcile Enter top-level adjustments to reconcile Develop disclosures Review preliminary results in readiness dashboard Determine final, top-level adjustments “Close the books” -Reconciliations - Valuations - etc. Perform compliance activities Create & file financial statements Load consolidated financials Assess internal controls with fin accounts Provide evidence for audit Manual steps Review & approve consolidated results. Detect & resolve exceptions Review & approve reconciling adjustments Review & approve adjusting journals Financial Analytics

15. Transforming the ‘last mile’ of finance Challenges in ‘Last Mile’ Tasks Reporting Entity Close ConsolidationFinalize Financial Statements Report Production Are all my close tasks complete? Did we miss any steps? What are my open issues related to the close? Did we have any control failures? Were all control remediation’s completed? Have we booked all adjustments? What’s the impact to my financial statements? Do we have documentation and approval for all top-level adjustments? Are all top-level adjustments posted to the system of record? Do we have supporting documentation for all elimination and consolidation entries? Is there review and approval documentation for each trial balance? Did each consolidation step occur? What are my open issues related to consolidation? Do we have supporting documentation for all footnote disclosures? Did we make all the required disclosures? Can we sign off on internal controls over financial reporting? Does the management reporting package agree with the financial statements? Is there consistency across all critical internal & external reporting? x x x x

16. Transforming the ‘last mile’ of finance SEC, PCAOB Call for Integration “An integrated audit combines an audit of internal control over financial reporting with the audit of the financial statements such that the objectives of the two audits are achieved simultaneously through a single coordinated process.” PCAOB, Integrated Audit, May 2005 (emphasis added) “We expect the internal control audit to be better integrated with the audit of a company's financial statements….” SEC, May 2005 (emphasis added)

17. Transforming the ‘last mile’ of finance From Disconnected Processes Report & Disclose Informatio n Enter & Process Transactions Evaluate & Test Controls Aggregat e & Analyze Results Internal Controls Aggregate Financial Amounts Review Preliminar y Results Financial Transactions Financial Close Report & Disclose Informati on Perform Final Adjustmen ts Remediate Controls §302 Certification ExcelemailWord Audit Opinion Board book FORM 10-Q 10-K ERP ‘Last mile’ of finance Consoli- dation ExcelemailWord

18. Transforming the ‘last mile’ of finance To Integrated Close Solution Consoli- dation Integrated close Enter & Process Transactions Report & Disclose Informati on Aggregate Financial & Control Results Review Preliminar y Results Perform Final Adjustme nts Evaluate Controls Audit opinion Board book §302 Cert FORM 10-K ERP Integrate internal controls, close tasks and financial reporting in the ‘last mile’

19. Transforming the ‘last mile’ of finance Slide 19 – MOVARIS CONFIDENTIAL Slide 19

20. Transforming the ‘last mile’ of finance Slide 20 – MOVARIS CONFIDENTIAL What issues are holding up revenue close tasks? Slide 20 – MOVARIS CONFIDENTIAL Slide 20

21. Transforming the ‘last mile’ of finance What is the magnitude of the issue? Slide 21

22. Transforming the ‘last mile’ of finance Estimated dollar impact is $385M. Slide 22

23. Transforming the ‘last mile’ of finance What ’ s the problem with R&D expense controls? Slide 23

24. Transforming the ‘last mile’ of finance Slide 24

25. Transforming the ‘last mile’ of finance Slide 25

26. Transforming the ‘last mile’ of finance Slide 26 What are the tax footnote issues?

27. Transforming the ‘last mile’ of finance Slide 27

28. Transforming the ‘last mile’ of finance 28 Generate 10K

29. Transforming the ‘last mile’ of finance Slide 29

30. Transforming the ‘last mile’ of finance Income Statement Balance Sheet Cash Flow Tax Footnote Slide 30

31. Transforming the ‘last mile’ of finance Movaris Checklist for a well-run close Integrate close, compliance task list Automate routine business processes Track, manage, secure, store critical documentation Distribute tasks to the right individuals across company Unify controls, close tasks, financial statement accounts Apply analytics for continuous improvement Automate creation of financial documents Create system of record for ‘last mile’ activities Transforming the ‘last mile’ of finance

32. Benefits of a Well Run Close Decrease Costs Reduce Time Increase Confidence

33. Transforming the ‘last mile’ of finance Benefits of an Integrated Close A tight and robust financial close is the reflection of well honed finance processes.

34. Transforming the ‘last mile’ of finance Slide 34 – MOVARIS CONFIDENTIAL ‘Last Mile’ of Finance: Integrating the Close April 19, 2006 Q&A Transforming the ‘last mile’ of finance