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CFO Signals

What North Americas top financeexecutives are thinkingand doing

2nd Quarter 2010


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CFO Signals

CFO Signals tracks the thinking and actions of leading CFOs representing North

Americas largest and most influential companies every quarter. Seventy five percent

of the CFOs are from companies with more than one billion US dollars in annual

revenues. Seventy five percent are from publicly-traded companies.

Each quarterly report analyzes CFOs opinions in five areas: CFO career, finance

organization, company, industry, and economy.

This is the second quarter report for 2010. We invited 240 CFOs to participate, and a

total of 136 responded during the two weeks ending on May 31.

For more information about CFO Signals, please contact [email protected].

IMPORTANT NOTES ABOUT THIS SURVEY REPORT:

All participating CFOs have agreed to have their responses aggregated and presented.

Please note that this is a pulse survey intended to provide CFOs with quarterly information regarding their CFO peersthinking across a variety of topics; it is not, nor is it intended to be, scientific in its number of respondents, selection ofrespondents, or response rate especially within individual industries. Accordingly, this report summarizes findings for thesurveyed population but does not necessarily indicate economy- or industry-wide perceptions or trends. Except where

noted, we do not comment on findings for segments with fewer than ten respondents. Please see the appendix for moreinformation about survey methodology.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting,business, financial, investment, tax, legal, or other professional advice or services. This publication is not a substitute forsuch professional advice or services, nor should it be used as a basis for any decision or action that may affect your

business. Before making any decisions that may affect your business, you should consult a qualified professional advisor.
mailto:[email protected]:[email protected]


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Contents

In brief 4

Topical highlights 6

Appendix

Industry highlights 27

Detailed findings 44

About this survey 61


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In brief (continued)

Now that health reform is underway within the United States, CFOs generally expectthe cost of employee health care to increase and at a rate that outpaces wage

growth. Although a large proportion of CFOs do not expect reform to significantlyaffect the benefits they provide to employees, there are notable factions who expectbenefits to increase or decrease for at least some staff and some who expect both.Industries with high concentrations of temporary workers expect the biggestincreases in benefits, while manufacturing-oriented firms are most likely to decreasebenefits.

Despite their positive business outlook, CFOs expect only modest increases inemployment suggesting that the productivity of current, often-reduced staffing can

support growth in at least the near term. Where there is employment growth, it willlikely be limited to particular industries and dominated by offshore hiring andoutsourcing.

At a personal level, CFOs are focused on emerging from defensive activities andleading their companies into recovered, albeit changed, economies. They indicatestrong ambitions to increase their personal impact on their organizations throughelevated roles (many aspire to be CEOs), through increased work as catalysts andstrategists, and through facilitating others' business decisions.

Though CFOs in different sectors have similar responsibility and ambition, they livein distinct worlds governed to a large extent by the idiosyncrasies of their industries.For example, technology CFOs appear more likely than most to encounter strategicambiguity, internal power struggles, and difficulty attracting the financial talent theyneed. They are also the least likely to desire a move to CEO. Not surprisingly, CFOsin energy and resources, financial services, and health care are considerably morelikely to be feeling the stresses of new and potential government actions.

Who participated?

Responses from top CFOs make this an

unparalleled survey group.

All participating CFOs were invited

specifically because of their experience

and industry influence.

More than 75% of this quarters 136 CFOs

are from companies with over $1 billion in

annual revenues and 75% are from

public companies.


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Topical highlights


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CFO career

CFOs are torn by the challenges of uncertain times

Top challengesChange is at the heart of top CFO concerns

Major change initiative: 44%

Changing regulatory requirements: 38%

Strategic ambiguity: 35%

Pressures from poor performance: 29%

This quarter's top career concerns are predictably influenced by thefallout of economic turmoil over the past two years. Poorperformance is creating substantial pressure on many CFOs,especially in the technology and energy and resources sectors.Changing regulatory requirements and other post-recession shiftshave created ambiguity around go-forward strategies, especiallywithin the manufacturing, energy and resources, andtelecommunications, media, and entertainment (TME) sectors.Major change initiatives were named the top challenge and were inthe top two challenges for six of the eight industries. Technology,TME, and services sectors are particularly affected by thischallenge.

Other notable concerns: internal power struggles 24%, excessiveworkload/responsibilities 22%, poor managerial information 21%,and insufficient internal political influence 21%.

Please note that there were only nine responses each to this question for the technology,TME, and services industries.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Major change initiative (e.g., M&A, IT systems change, IPO)

Changing regulatory requirements

Strategic ambiguity

Pressures from poor company performance

Excessive workload/responsibilities

Poor quantity/quality/reliability of information

Internal power struggles

Insufficient internal political influence/authority

Insufficient support staff (skills or number)

Other

Expansion of job role/responsibility into areas of less comfort

Insufficient pay

Challenges with external service providers

Personal liability

Percent of respondents who placed each option in their top three


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CFO career

Why CFOs would change roles

CFOs have their eye on expanded influence and the CEO role

Elevated role: 57%

Expanded CFO role: 30%

Better pay and benefits: 28%

Better work-life balance: 28%

Retirement: 26%

A majority of top CFOs have ambitions to increase their influence,either through expanding their CFO role or by becoming a CEO.More than half said they aspire to a CEO role the top choice forall sectors except technology, where joining a larger company ledthe responses. Roughly a quarter of CFOs would also consider achange for a bigger company.

Relatively few leading CFOs are looking for a lower pressure role(only 10%), and even fewer for a more stable company (less than8%). Roughly 25% of all CFOs said they would consider a move forbetter pay and benefits, and for a better work-life balance.

A quarter also said they are contemplating retirement as their nextcareer move including nearly 45% in retail and wholesale.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Elevated role (e.g., CEO)

Expanded CFO role

Better work/life balance

Better pay and benefits for similar role/responsibility

Retirement

Bigger company

Higher-growth company

Better culture

Different form of ownership

Different industry

Lower stress/pressure

Other

More stable company



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CFO career

Personal sounding boards

CFO use of internal sounding boards is rational and necessary

Member of own staff: 75%

Peer within company: 69%

CEO: 69%

CFOs overwhelmingly depend on internal networks to test theirthinking. They are comfortable reaching out not only to their ownstaff and peers, but also to their chief executives.

Internal interaction significantly eclipses utilization of externalresources. Only 24% use external CFO peers as sounding boards,and less than 10% utilize each of the external specialists.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%



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Finance organization

As operations and results stabilize,finance organizations are challenged toinfluence organizational decision-making

Top challenges

Finance organizations are being pushed to directly and indirectlycontribute to good business decisions

Influencing business strategy and operating priorities: 57%

Providing metrics, information, and tools needed for sound

business decisions: 54% Supporting a major change initiative: 30%

Allocating financial resources to maximize ROI: 29%

The top challenges for finance organizations are primarily forward-looking. Facilitating and influencing decisions around businessstrategy and operational priorities is the dominant challenge, withCFOs expected to contribute both directly through personalparticipation and insight and indirectly by providing information,

analysis, and metrics. This trend is dominant across seven of theeight industries whose CFOs were surveyed. Allocating financialresources and forecasting and reporting business results are othersubstantial forward-looking challenges, each cited by more than aquarter of CFOs.

Roughly a third of finance organizations are challenged insupporting major change initiatives. The retail and wholesale andhealth care and pharma sectors cite the most prevalent challenges

in this area.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Influencing business strategy and operational priorities

Providing metrics, information, and tools needed for sound business decisions

Supporting a major change initiative (e.g., M&A, IT systems change, IPO)

Allocating financial resources to maximize ROI

Forecasting and reporting business resultsEnsuring investments achieve desired business outcomes

Ensuring funding, liquidity, and acceptable costs of capital

Ensuring compliance with financial reporting and control requirements

Addressing changes in tax laws and/or accounting standards

Securing and retaining finance talent

Managing finance organization's costs

Meeting service levels

Communicating with external stakeholders

Other



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Measures of bottom-line operational performance

Earnings are still the benchmark performance metric

Despite the perceived shortcomings of performance measuresbased on income statements, earnings (both current and projected)dominate when it comes to measuring operational performance.More than 60% of CFOs report a heavy focus on earnings-basedmetrics, with less than one-third using economic measures such asROIC1 and CFROI2.

Among economic performance measures, ROIC was the most

frequently cited at 10%. Only the TME sector displays a biastoward economic measures (mostly ROI and ROIC) at 55%, withretail and wholesale and manufacturing just behind at 40%.

There does seem to be a correlation with company size: companiesover $10 billion (USD) in annual revenues cite economic measures(especially ROIC) at roughly triple the rate of companies $5 billionor less. Also, private companies appear more inclined than publiccompanies to use economic metrics perhaps because they arenot as pressured for quarterly earnings projections.

1 Return on Invested Capital

2 Cash Flow Return on Investment

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Economic measures

Earnings-based measures

Bottom-line measure of companyoperational performance


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Shifts in capital structure

Despite turmoil in credit markets and de-leveraging across theglobal economy, most CFOs are satisfied with their current mix ofdebt and equity.

Sixty percent of CFOs do not expect their capital structures tochange over the next year. For some, there may be a belief thatthere is no need to make adjustments because current capitalstructures successfully weathered recent storms, becausecompanies believe they can absorb the risk of higher interest rates(and current rates are as good as it gets), or because other factors

are simply more important right now. For others, it may be thecase that their companies have already changed their capitalstructures to account for new capital market realities.

Approximately 23% of CFOs expect a moderate or strong shifttoward equity, and 16% a shift toward debt. Manufacturing andenergy and resources companies are the most likely to shift towardequity at 35% and 33%, respectively. Manufacturers are also themost likely to shift toward debt (30%), behind the services sector at

33%.

Please note that there were only nine responses to this question for the services industry.

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Strong shifttoward equity,

6%

Moderate shifttoward equity,

17%

No significantchange, 60%

Moderate shifttoward debt,

13%

Strong shifttoward debt, 3%

Impact of the downturn on levels of corporate debt and equity


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Company

Despite widespread change in a stabilizing economy,CFOs are mostly optimistic about their companies

prospects

Top challenges

Companies are challenged to get their feet back underneath themas their economies stabilize

Improving or maintaining margins: 59%

Framing and adapting strategy: 58%

Prioritizing investments: 45%

CFOs indicate a heavy focus on improving and maintaining marginsas their companies and economies emerge from two years ofturmoil. Their other key challenges are adjusting their strategiesand determining where to make investments. (Remember, strategicambiguity is a top career concern for CFOs as well.)

Challenges around adapting strategies are particularly strong in the

technology, energy and resources, TME, and financial servicessectors with roughly 70% of CFOs citing this challenge. Marginchallenges are particularly evident in the manufacturing and healthcare and pharma sectors, where 75% of CFOs cite this challenge.Prioritizing investments is a consistent challenge for all sectorsexcept health care and pharma.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Improving/maintaining margins

Framing and/or adapting strategy

Prioritizing investments

Addressing government policy and regulation

Talent (availability and cost)

Raising/maintaining customer demand

Managing operations and supply chain risks

Managing assets and working capital

Sourcing capital (availability and cost)

Morale and staff reductions

Projecting and reporting results

Other

Managing corporate responsibility and sustainability



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Company

Own-company optimism

For reasons both internal and external, CFOs have growingoptimism about their companies

CFO optimism has improved over the past quarter, with nearly two-thirds of those surveyed saying they are more optimistic about theircompany's prospects. In explaining their improved optimism, 37%cite primarily improvements in external conditions and 27% citeprimarily internal improvements. Fewer than one in five CFOs isless optimistic.

The manufacturing, technology, and TME sectors lead the way withroughly 80% of CFOs citing improved optimism.

Health care and pharma show less optimism and moreambivalence but did not indicate particularly high pessimism.

Energy and resources show the greatest trend toward pessimism,with 31% of CFOs indicating lower optimism driven by externalfactors.

Companies over $10 billion in annual revenues are much morelikely to anticipate no change than the rest and are much moreoptimistic than pessimistic when there is a change.

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less optimistic, primarilydue to external factors (e.g.,economy, industry, andmarket trends)

Less optimistic, primarilydue to internal/company-specific factors (e.g.,products/services,operations, financing,

assets)

No notable change

More optimistic, primarilydue to internal/company-specific factors (e.g.,products/services,

operations, financing,assets)

More optimistic, primarilydue to external factors (e.g.,economy, industry, andmarket trends)

Company optimism compared to last quarter


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Company

Companies are loosening their purse strings

On the whole, CFOs are projecting dividends to rise 6.5% andcapital spending to rise 12%, with high variation across industries.This reinforces companies general optimism regarding operational

performance and may also indicate broader stabilization ofcompany financing.

Consistent with their strong earnings expectations, manufacturingCFOs are projecting 18% increases in dividends and 14%increases in capital spending. Strong technology sector earningsare not expected to translate into dividends, but are projected to

boost capital spending by 13%.

Energy and resources is the sector projecting the lowest dividendincrease at under 2%, but it still projects capital spending increasesof nearly 18%.

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0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Dividends Capital spending

Dividends and capital spending (year-over-year change)


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Company

Employment will be held in check

Despite the positive earnings outlook, CFOs project only modestincreases in employment. The number of domestic personnel isprojected to increase just 3%, which roughly matches the projectedchange in offshore personnel and the use of offshore third-partypersonnel. The TME sector projects a 12% increase in domesticpersonnel.

Where employment is projected to grow, offshore employment willoutpace domestic hiring. Aside from the anomalous TME sector,the manufacturing and health care and pharma sectors project the

highest domestic employment gains at 4% and 5%, respectively,and also the largest gains in employment abroad (8% and 7%).Energy and resources CFOs project a slight decline in domesticemployment. The technology and manufacturing sectors project thehighest increase in outsourced/offshore labor at 8% and 5%,respectively.

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0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Number of domestic personnel

Number of offshore personnel (internal company personnel)

Use of outsourced/offshore third party services (contracted personnel)

Projected employment increases (year-over-year)


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Company

Strategic focus

Revenue growth and cost reduction drive the agenda

Optimism and forward-looking sentiment is evident in companiesstrategic focus as well. Nearly 36% of companies' strategic focus ison revenue growth for the year ahead, with only the technology(50%) and energy and resources (22%) sectors showingsubstantial variation from the average.

Twenty eight percent of companies' strategic focus is on costreduction, split roughly evenly between direct cost reduction andoverhead cost reduction. All industries are within approximately fourpercentage points of this average, with energy and resources thelowest at 24%.

Asset efficiency (9%), capability development (13%), andfunding/liquidity (11%) split the remaining third of strategic focus,and it is within these areas where some of the most significantindustry differences lie. For example, asset efficiency appears to bea somewhat stronger focus for industries with high fixed assets,inventory, and receivables (manufacturing, energy and resources,

TME) and lower for low-asset industries (technology, financialservices). Financing and liquidity is in the 4% to 6% range fortechnology and services, but in the 15% to 21% range formanufacturing and energy and resources.

.

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0

5

10

15

20

25

30

35

40

Revenue growth

Direct cost reduction

Overhead costreduction

Asset efficiency

Capabilitydevelopment

Financing andliquidity


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Industry

Industry optimism

Very little pessimism regarding industries prospects

Across industries, half of CFOs are more optimistic about theirindustries than they were a quarter ago, with 37% unchanged andthe balance (only 13%) less optimistic. Leading the pack are thetechnology and TME sectors at 73% and 64% more optimistic,respectively. Financial services changed the least, with 54%unchanged and 33% of CFOs more optimistic this quarter. Energyand resources was strongly split, with 47% more optimistic and20% less optimistic. This could reflect differing outlooks of thebusiness types within the sector (e.g., petroleum companies versus

utilities).

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Considerablyless optimistic

Less optimistic

No change

More optimistic

Considerably

more optimistic

Optimism regarding your firms industry


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Economy

All eyes on government

Top challengesPolicy decisions are top of mind

Social policy/spending/investment: 57%

Environmental policy: 34%

Currency exchange rates: 34%

Unemployment: 31%

Corporate tax policy: 28%

Capital cost and availability: 28%

The top economic challenges voiced by CFOs highlight the attentioncompanies are paying to increased government regulation. More thanhalf of all CFOs name social policy, spending, and investment in their

top three concerns, and six of the eight industries name it in their toptwo. More than 90% of health care and pharma CFOs name social policya top challenge, and nearly 70% of financial services CFOs do the same.

The importance of environmental policy is clear, but its high placement in

cross-industry results is substantially driven by the 100% of energy andresource CFOs who name it a top concern. Unemployment, currencyexchange rate, and capital cost/availability challenges are secondary topolicy challenges for many industries.

Currency exchange rate challenges are stronger in Canada and Mexicothan in the US, as are concerns about inflation. Social policy challengesare greater in the US and Mexico than in Canada, and the US is the mostchallenged by environmental policy. Accounting, reporting, and controls

policy is a stronger challenge in Canada than in the US and Mexico.

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Social policy/spend/invest (health care, education, infrastructure, etc.)

Environmental policy (regulation, carbon reporting/tax, etc.)

Currency exchange rates

Unemployment

Capital cost/availability

Corporate tax policy

Accounting/reporting/controls policy

Inflation

Intellectual property policy

Personal income tax policy

Other

International trade policy

Military/defense policy



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Appendix


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CategoryExpected Net

Change YOY

Sales 7.94%

Earnings 18.00%

Wages and salaries 3.00%

Employee benefits 3.79%

Non-labor input costs 3.71%

Dividends 18.20%

Capital spending 14.00%

Number of domestic

personnel 3.88%

Number of offshore

personnel 7.81%

Use of outsourced/offshore third party

services 5.06%

Manufacturing

Sample size: 20

Economy Economy challenges: High for currency exchange rates (45%); highest for

capital cost/availability (40%); below average for socialpolicy/spend/investment (40%); average for environmental policy (35%) andcorporate tax policy (30%); highest for international trade policy (25%)

Impact of US health care reform: Average for decrease in benefits toemployees (26%) and high for increased benefits to employees (25%); lowimpact on executive compensation (11%); high impact on tax planning (37%)

Industry Industry challenges: Average around pricing trends (55%) and market

growth (45%); highest for foreign competition (35%) and input prices (35%);above average for excess inventory/capacity (25%) and M&A (25%); amonglowest for new competitive tactics (10%)

Impact of governments response to economic turmoil: Among highest forneutral (55%); highest for positive (30%); lowest for negative (15%)

Optimism regarding industry: High optimism (60%); low pessimism (5%)

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Explanatory note: Relative terms like highest, low, and above average

denote comparisons to other industries, not comparisons to other challenges.


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Retail and wholesale

Company

Company challenges: Highest for prioritizing investments (56%) and among highest for talent availability/cost (44%); below averagearound improving/maintaining margins (56%); lowest around framing/adapting strategy (39%); by far the highest around managing

assets and working capital (33%); lowest for managing operations and supply chain risks (6%) Company optimism: Highest optimism for internal reasons. Optimism due to internal factors (50%) and external factors (11%); less

optimistic due to external factors (22%) and internal factors (6%)

Projected operating results: Lowest sales expectations; relatively low earnings expectations (3rd lowest); high dividendsexpectations (2nd highest behind manufacturing)

Finance Organization

Finance organization challenges: Average for influencing business strategy and operational priorities (56%); below average around

providing metrics, information, and tools needed for sound business decisions (50%); among highest around supporting major changeinitiatives (39%) and allocating financial resources to maximize ROI (33%); among lowest for ensuring funding, liquidity, and cost ofcapital (11%)

Measure of operational performance: Primarily earnings, with some ROIC

Change in debt-to-equity: One of least likely industries to make a shift (only 27%), roughly split equally between shifting toward debt(11%) and toward equity (17%)

Career

Career concerns: Below average around major change initiative (39%); average around strategic ambiguity (39%); highest aroundexcessive workload/responsibilities (33%) and highest around expansion of role into uncomfortable areas (21%); low around changingregulatory requirements (28%) and pressures of poor company performance (17%)

CFO time allocation: Average

CFO reasons to change roles/company: Average for elevated role (56%); highest for retirement (39%); above average forexpanded CFO role (33%); average for work/life balance (28%); among least likely to shift to different industry for better culture ordifferent ownership structure (6%)

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Change YOY

Sales 22.00%

Earnings 48.64%




Dividends 2.20%


Number of domesticpersonnel 2.75%

Number of offshorepersonnel 6.30%

Use of outsourced/offshore third partyservices 7.60%

Technology

Sample size: 11

Economy Economy challenges: Average for social policy/spend/investment (55%) and

highest for currency exchange rates (55%); highest for intellectual propertypolicy (36%); lowest for accounting/reporting/controls policy and inflation (both0%)

Impact of US health care reform: One of highest for decreasing benefits toemployees (36%) and low for increasing benefits to employees (10%); lowimpact on executive compensation (10%); moderate impact on tax planning(20%)

Industry

Industry challenges: Highest for pricing trends (82%) and new competitivetactics (36%); among lowest for market growth (36%); high for M&A (27%) andexcess capacity/inventory (27%); by far lowest for industryregulation/legislation (9%), foreign competition (9%), and availability ofpeople/skill sets (0%)

Impact of governments response to economic turmoil: Highest for neutral(73%); more negative (18%) than positive (9%)

Optimism regarding industry: Most optimistic industry (73%); littlepessimism (9%)

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Change YOY

Sales 10.87%

Earnings 15.36%




Dividends 1.79%


Number of domesticpersonnel -0.21%



Energy and resources

Sample size: 15

Economy Economy challenges: Highest for environmental policy (100%) and capital

cost/availability (40%); among highest for accounting/reporting/controls policy(27%); lowest for social policy/spend/investment (20%)

Impact of US health care reform: Around average for decreasing benefits toemployees (21%) and very low for increasing benefits to employees (0%); lowimpact on executive compensation (14%); moderate impact on tax planning(21%)

Industry Industry challenges: Second-highest for industry regulation/legislation (80%)

after financial services; among lowest for pricing trends (40%); high for excesscapacity/inventory (27%) and input prices (27%); lowest for market growth(27%) and lowest for new competitive tactics (7%)

Impact of governments response to economic turmoil: Among lowest forneutral (40%); highest for negative (53%); lowest for positive (7%)

Optimism regarding industry: Mostly optimistic (54%); less pessimism(23%)

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Energy and resources

Company

Company challenges: Highest around framing and/or adapting strategy (73%) and addressing government policy and regulation(53%); average for prioritizing investments (47%); highest in sourcing capital (20%) and projecting/reporting results (20%); lowest

around improving margins (27%) and raising/maintaining customer demand (7%) Company optimism: Among least optimistic of industries. Optimistic due to internal factors (27%) and external factors (20%); less

optimistic due only to external factors (27%).

Projected operating results: Highest increase in wages and salaries; only industry predicting a decrease in domestic personnel

Finance Organization

Finance organization challenges: Highest around providing metrics, information, and tools needed for sound business decisions(67%) and average around influencing business strategy and operational priorities (53%); among highest in ensuring funding,

liquidity, and acceptable costs of capital (27%); highest around meeting service levels (27%); lowest for forecasting/reportingbusiness results (0%)

Measure of operational performance: Mostly EPS with some ROE and ROIC

Change in debt-to-equity: Significant likelihood of making a shift (around 40%), but among highest in shift toward equity (33%);minor shift toward debt

Career

Career concerns: Highest for changing regulatory requirements (53%) and pressures from poor company performance (47%);

among highest around major change initiative (47%) and strategic ambiguity (40%); highest for insufficient support staff (33%);among lowest for internal power struggles and insufficient political influence (both 13%)

CFO time allocation: Average

CFO reasons to change roles/company: Highest for elevated role (80%), better work/life balance (47%), and expanded CFO role(40%); among highest for higher pay/benefits for similar role (33%); lowest for higher-growth company (7%) and better culture (0%)

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Change YOY

Sales 6.90%

Earnings 15.65%




Dividends 3.55%





Financial services

Sample size: 24

Economy Economy challenges: Among highest for social policy/spend/invest (67%)

and unemployment (38%); highest around accounting/reporting/controls policy(38%); by far the highest for personal income tax policy (29%); roughlyaverage for environmental policy (21%)

Impact of US health care reform: Average for decreasing benefits toemployees (25%) and very low for increasing benefits to employees (0%); lowimpact on executive compensation (8%); moderate impact on tax planning(29%)

Industry

Industry challenges: Highest for industry regulation/legislation (83%); amonghighest for market growth (58%) and pricing trends (42%); second-highest forchanging cost structures (21%); among lowest for new competitive tactics(8%). One of the most pessimistic when it comes to industry impact ofgovernment response to economic crises probably because of bankingreform fallout.

Impact of governments response to economic turmoil: Among lowest for

neutral (38%); more negative (38%) than positive (25%) Optimism regarding industry: One of most neutral (57%); more optimistic

(35%); more pessimistic (9%)

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Change YOY

Sales 11.22%

Earnings 11.67%




Dividends 5.40%





Health care and pharmaceuticals

Sample size: 19

Economy Economy challenges: Highest for social policy/spend/invest (95%) andintellectual property policy (32%); among highest foraccounting/reporting/controls policy (32%); average for environmental policy(32%); among lowest for currency exchange rates (16%) and unemployment(11%)

Impact of US health care reform: Most neutral, below average fordecreasing benefits to employees (17%) and for increasing benefits toemployees (6%); low impact on executive compensation (12%); moderateimpact on tax planning (24%)

Industry

Industry challenges: Among highest for pricing trends (58%); high forindustry regulation/legislation (58%) and market growth (53%); among highestfor new market entrants (32%); among lowest for excess capacity/inventory(11%) and availability of people/skill sets (5%)

Impact of governments response to economic turmoil: Lowest for neutral(37%); second-highest for negative (47%) after energy and resources; among

lowest for positive (16%) Optimism regarding industry: Mostly optimistic (44%); lower pessimism

(21%)

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Detailed findings


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CFO careers Top job stresses

Question: What are your top job stresses?

45 CFO Signals

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Major change initiative (e.g., M&A, IT systems change, IPO) Changing regulatory requirements

Strategic ambiguity Pressures from poor company performance

Excessive workload/responsibilities Poor quantity/quality/reliability of information

Internal power struggles Insufficient internal political influence/authority

Insufficient support staff (skills or number) Other

Expansion of job role/responsibility into areas of less comfort Insufficient pay

Challenges with external service providers Personal liability


46/64


47/64

CFO careers Reasons to make a change

Question: What circumstances would make you most likely to change your role/company?

47 CFO Signals

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Elevated role (e.g., CEO) Expanded CFO role Better work/life balance

Better pay and benefits for similar role/responsibility Retirement Bigger company

Higher-growth company Better culture Different form of ownership

Different industry Lower stress/pressure Other

More stable company


48/64


49/64

Finance organization Top challenges

Question: What are your finance organizations top three current challenges?

49 CFO Signals

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Influencing business strategy and operational priorities Providing metrics, information, and tools needed for sound business decisions

Supporting a major change initiative (e.g., M&A, IT systems change, IPO) Allocating financial resources to maximize ROI

Forecasting and reporting business results Ensuring investments achieve desired business outcomes

Ensuring funding, l iquidity, and acceptable costs of capital Ensuring compliance wi th financial reporting and control requirements

Addressing changes in tax laws and/or accounting standards Securing and retaining finance talent

Managing finance organization's costs Meeting service levels

Communicating with external stakeholders Other


50/64

Finance organization Centralization vs. decentralization

Question: How is responsibility for the following finance processes distributed within your organization?

50 CFO Signals

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Highly central ized Mostly centralized Hybrid (or even) Mostly decentral ized Highly decentral ized


51/64

Finance organization Impact of downturn on capital structure

Question: To what extent do you believe the downturn will cause your firm to shift toward lower levels ofcorporate debt and higher levels of equity?

51 CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Strong shift toward debt

Moderate shift toward debt

No significant change

Moderate shift toward equity

Strong shift toward equity


52/64

Finance organization Operational performance metric

Question: What is your company's bottom-line measure of operational performance (excluding metrics drivenby share price)?

52 CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

RONA

CROCI

CFROI

ROCE

ROIC

ROI

Economic Margin

EVA

ROE

EPS

Earnings or Earnings Growth


53/64

C O i i di


54/64

Company Optimism regarding company

Question: How does your optimism regarding your company compare to last quarter?

54 CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less optimistic, primarily due to external factors (e.g.,

economy, industry, and market trends)

Less optimistic, primarily due to internal/company-specific factors (e.g., products/services, operations,financing, assets)

No notable change

More optimistic, primarily due to internal/company-specific factors (e.g., products/services, operations,financing, assets)

More optimistic, primarily due to external factors (e.g.,

economy, industry, and market trends)


55/64

I d t T h ll


56/64

Industry Top challenges

Question: What are your company's top three industry challenges?

56 CFO Signals

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Industry regulation/legislation Pricing trends Market growth Mergers and acquisitions

Overcapacity/excess inventory New competitive tactics Input prices Availability of people/skill sets

Foreign competition Changing cost structures New market entrants (domestic) Product substitutes

Other

I d t I t f li h


57/64

Industry Impact of policy changes

Question: For my industry, government responses to recent economic crises are

57 CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Stronglynegative

Negative

Neutral/mixed

Positive

Stronglypositive

I d t O ti i


58/64

Industry Optimism

Question: How does your firms optimism regarding your industry compare to last quarter?

58 CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Considerably less optimistic

Less optimistic

No change

More optimistic

Considerably more optimistic

E T h ll


59/64

Economy Top challenges

Question: What are your company's top three ECONOMY challenges?

59 CFO Signals

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Social policy/spend/invest (health care, education, infrastructure, etc.) Environmental policy (regulation, carbon reporting/tax, etc.)

Currency exchange rates Unemployment

Capital cost/availability Corporate tax policy

Accounting/reporting/controls policy Inflation

Intellectual property policy Personal income tax policy

Other International trade policy

Military/defense policy

Economy US health reform impact


60/64

Economy US health reform impact

Question: What will be the effect of US health care reform on your business?

60 CFO Signals

0%10%20%30%40%50%60%70%80%90%

100%Strongly disagree

Disagree

Neutral

Agree

Strongly agree

0%

10%20%

30%

40%

50%60%

70%

80%90%


Disagree

Neutral

Agree

Strongly agree

0%10%20%30%40%50%60%

70%80%90%


Disagree

Neutral

AgreeStrongly agree

0%10%20%30%40%50%60%

70%80%90%


Disagree

Neutral

AgreeStrongly agree

Decrease health benefits we provide to some employees Increase health benefits we provide to some employees

Change our executive compensation packages Increase our strategic tax planning


61/64

Demographics


62/64

Demographics

N=136

62 CFO Signals

Lessthan$1B

($US),21.8%

$1B -$5B,

39.1%

$5.1B -$10B,18.0%

Morethan

$10B,21.1%

Public,73.1%

Private,26.9%

US,64.9%

Canada, 25.4%

Mexico,9.7%

Manufac-turing,14.9%

ConsumerProducts /Services,

13.4%

Tech,8.2%

Energy

andResources

, 11.2%

FinancialServices,

17.9%

HealthCare /

Pharma,14.2%

Telecom /Media /

Entertain.,8.2%

Services,6.7%

Other,5.2%

No

(HoldingCompany/

Group)85.0%

Yes(Subsid.of North

AmericanCompany)

7.5%

Yes(Subsid.of Non-North

AmericanCompany)

7.5%

Annual Revenues Ownership Country

Industry Subsidiary Company


63/64


64/64

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting,business, financial, investment, tax, legal or other professional advice or services. This publication is not a substitute for suchprofessional advice or services, nor should it be used as a basis for any decision or action that may affect your business.Before making any decisions that may affect your business, you should consult a qualified professional advisor.

As used in this survey, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a

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