REPORTING TRAINING PRESENTATION

July 6, 2006

2

Objectives

PROVIDE CLEAR UNDERSTANDING OF METRICS

PROVIDE CLEAR UNDERSTANDING OF REPORTING

PROCESS

CLARIFY CM’S RESPOSIBILITIES

3

Metrics Overview

VOB (Volume of Business)

- Provides annual value of contract or business relationship

- Measured in USD/year

- Metric annualized to a calendar year

- Why? Purchasing level of involvement and control on AA’s procurement effort

PVAR (Price Variance)

- Provides magnitude of price savings/price increases

- 12 month-period rolling basis

- Price savings are positive (deflation) / Price increases are negative (inflation)

- Why? Basic metric for CM/Manager/MD performance

MBE (Minority Spend)

- Provides VOB spend in minority businesses

- 3 different metrics MBE/WBE: Minority/Women Business Enterprise (complete universe for minority businesses) DTF: Dallas Together Forum. Organization formed by companies with offices in DFW. Subset of

MBE/WBE WBI: Women Business Initiative. Subset of MBE/WBE

- Why? Needed for government contracts compliance Important MD performance metric

4

Additional Concepts

Carryover: Portion of PVAR that is accrued the year after the deal is completed

– Why?

- Reporting measures performance within a calendar year Excludes carryover that will accrue next year Includes carryover from deals done last year

Revenue Generating Contracts– VOB and PVAR tracked separately– Negative VOB

Jan-06 Dec-06 Dec-07Jul-06 Jun-07

carryover

5

What is Reporting

Process that identifies differences between actual values and projected values (goals) for Field-Purchasing metrics

- Field-Purchasing performance snap-shot

- Provides explanation on actual/goal differences at a contract level

Each contract has associated specific goal values for each metric

- Process done by region

Requires coordination with Strategy owner CM, Big Bid Team, etc

- Utilize information retrieved from database (historical data) not actual data from the field

- Performed at the end of each quarter

On a cumulative basis (Year-To-Date basis)

- Information helps define strategic direction for the group

Results are eventually rolled-up to CFO

6

What is Reporting

Reporting process is complemented by:

- Goal setting process Metric values next year projections for each contract Performed between 2Q and 3Q

- 6+6 Process Full year metric projection (current year), based on 2Q reporting results Performed in conjunction with 2Q reporting

CM responsibilities

- Provide completed Reporting template with fully detailed explanations on variances for assigned region

Reporting Template must adhere to standardization requirements

- Present Reporting results to Manager and Managing Director