CFO Studio Magazine with David Huber

4 WWW.CFOSTUDIO.COM 4th QUARTER 2012 • Big Data: Gathering, Storing, Mining, and Using Information • Green Initiatives vs.Profitability • Influential CFOs in a Roundtable Discussion • How CFOs Become CEOs • Business Intelligence • Generating Profits in a Private Equity World • Post-Election Political & Business Risk • Evolution of the CFO Role • Managing the Legal Spend • Industry Vendor Spotlight: • Accounting • Benefits & Compensation • Insurance • Banking NEED MORE INSIGHT? CFOs may request FREE copies at www.cfostudio.com The CFO’s Guide To Understanding Corporate Real Estate Transactions IN-PRINT I MOBILE I ONLINE I EVENTS Get your company, products, or services in front of thousands of New Jersey–area CFOs. Advertise in CFO Studio Magazine CFO Studio Publications provide financial executives with valuable tools to support their own financial and strategic expertise. ® Capture Greater Profits In Your Next M&A Transaction...During Due Diligence Networking Tips for Executives Who Never Ever Ever Expect Their Careers to Be In Transition 12 WWW.CFOSTUDIO.COM 4thQUARTER2012 N ovember inanelectionyearwith economic recoverystillweak isa toughenvironment inwhich towork upabusiness forecastandyear-end plan.But for thepastsix toeightweeks,a fair amountof informationhasbecomeavailable thatallowedCFOs tofinalizeplans forhealth- carebenefits, taxes,anddividends.Perhaps that’swhy theCFOs interviewed for this articleseemed reasonablyconfidentwith their year-endplanning. “We’reprettyclose todone…andwe’re trying to forecast thenextyearona rolling basis,” saysone,aCFO foramultinational R&Dcompany. AnotherCFO says, “We’re stillmassaging things… It’snot somuch theuncertainties, it’s the fact thatwe’renotable toexecuteat the revenue levels thatwehadhoped.The economyoverall is sluggish.” As this issuewent topress, theelectionwas still severalweeksaway.But the taxplansput forwardbyPresidentBarackObamaandhis challenger,MittRomney,presentaclearer, if stillpartial,pictureof thecutsandfixes that bothhope tomake.MichaelHadjiloucas, CPA,partnerwithEisnerAmper,LLP in Edison,NJ, says that this is thefirst time in severalyears thatCFOshavean idea “ofwhat the futurewill look like. I think theyare look- ing forward—whoevergetselected— they look forward toa lowercorporate tax rate.” TheTaxPicture Taking intoaccountwhat isknownabout bothcandidates’plans,Hadjiloucas laidout themain tax-planningquestions thatCFOs shouldbe thinkingabout thisyear-end. ObamaandRomneyarebothproposing to cutcorporate taxes,Romney from35percent to25percent,andObama from35percent to28percent formostcorporationsand25 percent forcompaniesmanufacturing in the UnitedStates.Strategy:Spend in2012;defer income to2013. “SoanyCFOmust focusonhow tomaxi- mize taxdeductions for2012anddefer in- come into2013 toget thebenefitof the lower tax rateon taxable income,”Hadjiloucassays. Theaccelerateddepreciationcredit that was ineffect for2010 to2012will “likelybe goingaway,” saysHadjiloucas, if thepresident —whichevercandidategetselected— is able to reduce the tax rate from35down to 25or28percent.Currently the lawallowsa bonus50percentofcertainassets’cost tobe deducted if theassetwasput into service in 2012andbefore January1,2013. Onemorepieceof tax-relatedadvice:Divi- dendsare taxedat15percentuntil theendof theyear. “TheCFO shouldbe talking tohis ownerabout the taxconsiderations if they giveadividendnextyearversus today,” says Hadjiloucas. “If theywant to takemoneyout of thecompany, this is theyear todo it.” Health-CarePlanning Fundingbenefitsandhealth-careprograms is also topofmind rightnow.MichaelDentici, seniorvicepresidentandCFOofT&M Associates,anengineeringfirm inMiddle- town,NJ,knows that thebenefitsoffered to employeesare important in recruitmentand retention,andsohehasbeenwatchingwhat keycompetitorsareoffering, readingupon trends inmanagingcosts,consultingwitha benefitsadvisor,andshopping for thebest- priced insurance. Too small to self-insure,T&MAssociates, with300employees, foundanew insur- anceprovidera fewyearsago.Claimswere “trendinghigher,”he says, “butwehadbetter results thanwe thought”when itcame time to renew inAugust. Evenso, thecompany isaskingemployees tomakeahighercopay,not juston themedical sidebutonpharmacychargesaswell.“Health care… isasignificantpieceof theoffering fora servicefirm,”saysDentici. Seeing Through the Haze YEAR-END PLANNING MUCHABOUT2013 REMAINSUNCLEAR, BUTYEAR-ENDPLANS CAN’TWAIT continuedonpage26 By JulieBarker IllustrationbyChadCrowe 12 WWW.CFOSTUDIO.COM 3rdQuarter2012 CFO CFO 2 DamianFinio ChiefFinancialOfficer,West-WardPharmaceuticals, a subsidiaryofHIKMA Larger M y recentcareermoves have takenmebackwards in termsofcompany sizeand revenue,yet providedmewith fantasticopportu- nities fordesignand implemen- tationofpeople,processesand systems. I initiatedeachof these careermoves.However,with larger companiescontinuing to reduce the sizeof theirfinancedepartments, it’sa trend thatsomeofyoumaybe forced toencounteryourselfor for thepeopleyou recruit. Ibenefited fromsophisticated operationsatAstraZeneca($34B inrevenues), transitioned toDaiichi Sankyo($12B inrevenues),andnow findmyselfatHIKMA($1B inrev- enues),wonderingwhatknowledge andexperienceIshouldbringwith meandwhat isbetter leftbehind. Whileknowledgeandexperi- encegetyou the job, it isoften this sameknowledgeandexperience thatcan leaveyou frustratedanddis- appointed ifyoudon’tadjustyour expectations toyournewenviron- ment.Smallercompaniessimplydo nothave themeans to invest in the people,processes,andsystems that their largercompetitorsdo,yet the complexityof theirbusinessmodels isarguablycomparable. Allof thecompanieswhereI workedaremultinationalfirmswith headquartersoutsideof theU.S. competing in theregulatedpharma- ceutical industry.EachusesSAP,has manufacturing facilitiesaround the world,sells inmultiplecountries,and employs thousandsofpeoplewith varyingculturalbackgroundsand skillsets.Yet thequalityandquantity offinancestaff,maturityoffinancial processes,andsuccess inexploiting systemsvaries.Therearemore than likelyahostofreasonswhy this is the case,butsurelysomecomponentof thisdynamicmustbeattributable to to Smaller Organizations WHATTOBRING ANDWHAT TOLEAVEBEHIND From Transitioning WHAT’S COMING IN CFO STUDIO ® MAGAZINE?