Not for public distribution until confirmed by PR eg.

Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Signals What North America’s top finance executives are thinking – and doing
TM

Full Report

2nd Quarter 2012

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Signals
About the CFO Signals survey
Each quarter, CFO Signals tracks the thinking and actions of CFOs representing many of North America’s largest and most influential companies. This report summarizes CFOs’ opinions in five areas: economy, industry, company, finance organization, and career. This is the second quarter report for 2012. For more information, please see the methodology section at the end of this document or contact nacfosurvey@deloitte.com.
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 peers’ thinking across a variety of topics. It is not, nor is it intended to be, scientific in any way, including in its number of respondents, selection of respondents, or response rate, especially within individual industries. Accordingly, this report summarizes findings for the surveyed 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 five respondents. Please see the Appendix for more information 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 for such 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 impact your business, you should consult a qualified professional advisor.

Who participated this quarter?
Ninety-three CFOs responded during the two weeks ended May 29. Three fourths are from public companies, and over 77% are from companies with more than $1B in annual revenue.

Results at a glance
Participation by Country
25 Mexico 10.9% Canada 20.7% U.S. 68.5% 20 15 10 5 0 13 10 10 7 23

3

Participation by Industry
23

Overview
• • Summary Key metrics 5 7 9

4

2

1

Topical highlights Appendix
• • • • Detailed findings Industry highlights Country highlights About the survey

29 48 57 61

2

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Results at a Glance
Economy
What high-impact risk worries you the most? Nearly half of all CFOs mention either U.S. or global economic conditions as their most worrisome risk, and about three quarters of those specifically cite European conditions. About 20% cite governmental and regulation-related issues. Internal worries continued to rise this quarter, led mostly by concerns about competitive pressures, declining sales volume, and missed financial targets. Page 10. What are your company’s top three economy challenges? In the U.S., unemployment concerns rose sharply to 58% and social policy concerns declined to 50%. Canadian CFOs cite mostly environmental policy (63%) and capital cost/availability (42%), while Mexican CFOs mostly cite social policy (70%). Pages 11-12. How do you think the national debt should be tackled? About 60% of U.S. CFOs advocate substantial spending cuts, but 30% prefer to freeze spending or hold off on major cuts (while formalizing a long-term plan). One third of U.S. CFOs prefer to leave taxes unchanged while substantially cutting spending, but nearly 30% prefer raising taxes and substantially cutting spending simultaneously. Page 13. How are you addressing the coming year-end “fiscal cliff” of pending tax increases and spending cuts? About two thirds of CFOs say they are not reacting at all, and the remaining third are split when it comes to accelerating and decelerating their investments, hiring, and transactions. Page 13. How does your optimism regarding your company compare to last quarter? In the U.S., net optimism (the spread between those more and less optimistic) took another hit this quarter and now sits at zero. Sentiment is better in Canada and Mexico, but continental net optimism still fell from +48 points last quarter to +11 this quarter. Overall, 39% of CFOs report a more positive outlook and 28% report rising pessimism (33% report no change). Page 19. Can your earnings growth outpace your sales growth? This is the ninth consecutive quarter in which CFOs’ expected year-over-year earnings growth has exceeded their expected revenue growth. But of the 52% of CFOs expressing this expectation this quarter, just 41% expect it to hold for more than another year. Page 20. What steps are you taking to strengthen margins? More than 80% of CFOs say their companies have taken steps to reduce direct and indirect costs through process efficiency gains. More than half say they have reduced their focus on lower-margin businesses and/or lower-margin customers, and a remarkable two thirds say they have raised prices. Page 21.

Finance Organization
What are your finance organization’s top three challenges? Providing metrics/info/tools for business decisions remains the top challenge at 50%. Influencing business strategy and operational priorities rose from 32% to 39%, and ensuring business initiatives achieve desired outcomes rose to notably to 34%. Supporting a major transaction (e.g. merger, acquisition, or divestiture) dropped sharply from 27% to 14%. Page 22. What pricing activities does your finance organization perform? Three fourths of CFOs say their finance organizations are at least moderately involved in tracking and reporting pricing performance and profitability. More than half of also report substantial involvement in aligning pricing strategies with corporate strategies, managing exceptions to general policies, and setting pricing based on data and analytics. Page 23. What levels of profitability analysis does your company utilize? Consolidated/business-level analysis is utilized by 98% of companies with a strong influence on compensation, operating spend, and investment decisions. Product/service-level analysis is utilized by 88%, mostly for pricing and investment decisions. Customer-level profitability is comparatively less utilized and influential.
Page 24.

Industry
What are your company’s top three industry challenges? Pricing trends take over the top spot this quarter at 48%, displacing the eight-time top challenge, industry regulation/legislation (which is still at 46%) . Market contraction and availability of people/skill sets round out the top three, tied at 29%. Concerns about overcapacity and excess inventory continue to rise. Page 14.

Company
What are your company’s top three company-specific challenges? Revenue growth from existing markets (steady at 60%), talent (up 7 points to 41%), and prioritizing investments (steady at 32%) remain the top three challenges. Page 15. What is your company’s business focus for the next 12 months? Revenue growth declined from 57% to 52% (34% for existing markets and 18% for new markets). Indirect costs and direct costs held relatively steady at 12% and 15%, respectively. The focus on fixed asset efficiency held steady at about 10% , but the focus on working capital climbed to 9%. Page 16. Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Sales growth expectations increased to 6.6%*, up from last quarter’s survey-low 5.9%*. Earnings growth is still expected to exceed sales growth, but with a slower growth rate of 10.5%* (versus an expected 12.8%* last quarter). Domestic hiring growth held steady at 2.1%, while offshore personnel (3.8%*) and outsourcing (3.6%*) growth came in higher. Capital investment growth expectations receded this quarter to 11.4% but are still among the highest we have seen over the past two years. Pages 17-18.

Career
What are your top three job stresses? Major change initiatives are again the dominant CFO job stress at 47%. Changing regulatory requirements are second at 39%, with pressures from poor company performance rising notably to third at 38%. Insufficient support staff rose to nearly 30%, while strategic ambiguity continued its three quarter decline. Page 25. What factors are most important in selecting a successor? Well over half of CFOs say personal compatibility with the CEO is a top factor. Internal relationship-building expertise is next at 46%, while experience in FP&A and a strategy development background tied at 30%. Page 26. How are you allocating your personal investments? CFOs appear cautious when it comes to equities and bonds. While CFOs do hold these instruments, they indicate a roughly equal preference for cash. About 40% indicate a preference for stocks over bonds, with 26% preferring bonds and the rest indifferent. About 60% of the stock focus is on domestic stocks. Page 27.

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

3

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Overview

4

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Summary
With still more macro uncertainty and volatility, companies are turning toward what they can control
Last quarter’s comparative reprieve from terrible news about Europe and the broader global economy yielded a substantial rise in CFO optimism – although this is not saying much given the two quarters of dismal CFO sentiment we saw in last half of 2011. CFOs were still voicing strong concerns, however, about slow growth at home, government stagnation – especially going into an election year in the U.S. – and the potential for renewed global economic volatility. This quarter’s resurgence of both uncertainty and bad news confirmed their fears. Recent and upcoming national elections in Europe, combined with approaching national elections in the U.S. and Mexico, are further obscuring the direction of government policy. Economic performance measures in most regions have soured, Europe’s (and the euro’s) future has become even less certain, and equity markets have tumbled again. Not surprisingly, CFOs’ optimism gains were mostly erased this quarter – especially in the U.S. One bright spot up until now has been corporate performance, which has held up quite well despite volatile conditions. But this quarter’s survey puts even that in question. While CFOs’ projections for year-over-year earnings growth continue to outpace their projections for sales growth – implying that efficiency gains and improved business focus can largely make up for slow revenue growth – this quarter’s findings indicate that only one in three CFOs believes their company can sustain this dynamic for more than another year.
CFO optimism relative to previous quarter
100% 75% 50% 25% 0% -25%

Own-Company Optimism

More optimistic

No change
Less optimistic Net optimism (% more optimistic minus % less optimistic) +

another hit this quarter – admittedly much more in the U.S. than in Canada and Mexico. After two quarters firmly in the red (-24 percentage points in 3Q11 and -9 in 4Q11), net optimism for the continent turned positive again last quarter at +48. While it is still positive at +11, U.S. net optimism now sits at zero.

Earnings still outpacing revenues – for now
Despite their worries, CFOs continue to project improving company performance. Sales growth rebounded from a survey-low 5.9%* last quarter to 6.6%* this quarter, but with very high variability. And after climbing to 12.8%* last quarter, earnings growth receded to 10.5%* – 12.3%* for the U.S. (down from 14.5%*), 11.7%* for Mexico (down from 15.8%*), and just 4.6%* for Canada (down from 6.9%*) – also with very high variability. This is the ninth consecutive quarter where CFOs’ expected earnings growth has outpaced revenue growth, and recent strength of corporate earnings seems to validate their past perceptions. This quarter we dug deeper into how companies have been doing it. CFOs say their companies have been bolstering margins through both strategic and tactical shifts. More than half say they have reduced their focus on lowermargin businesses and/or lower-margin customers, and a remarkable two thirds say they have raised prices. The most common approaches, however, reflect operational blocking and tackling, with more than 80% of CFOs citing a heavy focus on improving process efficiencies in both indirect and direct cost areas. But how long can these gains make up for slow growth? Of this quarter’s 52% of CFOs expecting year-over-year earnings growth to exceed sales growth, just 41% said the same would be true beyond a year from now.

Monitoring the big picture; managing the small picture
Macroeconomic conditions are providing a difficult backdrop for business decisions. CFOs say they are increasingly worried about a spread of European financial distress to North American banks and a resulting deterioration of capital availability. Especially in the U.S., they are becoming even more worried about slowing economic growth and unrelenting unemployment, and even more frustrated by uncertainties resulting from election-year gridlock and the return of national debt issues. These worries and frustrations appear to be driving companies to hunker down and focus more on industry- and company-level issues where they have more control. As high unemployment drives rising customer demand concerns, companies are working to address overcapacity, pricing trends, and new competitive tactics. Many are focusing less on new markets and more on working capital, inventories, and further efficiency gains. As they continue to find ways to further bolster performance, there is still no denying that CFOs remain worried. That explains why CFOs’ optimism took

5

CFO Signals

* All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers. + Note that net optimism, as calculated, does not explicitly account for the level of “no change” responses.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Summary
Investment holding up; hiring positive but muted
For the time being, though, companies do not appear to be backing off on their capital investments and hiring. Capital investment growth expectations receded this quarter to 11.4% but are still among the highest we have seen over the past two years. The driver appears to be a continued focus on business growth, with CFOs saying that about half of their companies’ business focus is now on revenue growth and that two thirds of that growth focus is directed toward existing markets. Hiring growth expectations remain positive but modest. Having risen from 1.0%* in the fourth quarter of last year to 2.1%* last quarter, estimates held steady this quarter. But companies continue to struggle in finding the right skill sets, and talent-related challenges are now the number three industrylevel challenge and the number two company-level challenge. Finance organizations are feeling the effects with 25% of CFOs citing trouble finding and retaining finance talent and 30% citing insufficient support staff. major cuts (while formalizing a long-term plan). Moreover, one third of U.S. CFOs prefers to leave taxes unchanged while substantially cutting spending (and 5% think taxes should be lowered), but nearly 30% prefer raising taxes and substantially cutting spending simultaneously (presumably to speed deficit reduction), and 8% prefer to raise taxes while only freezing spending. Whatever their preferred solution, U.S. CFOs are facing a federal “fiscal cliff” of pending tax increases and spending cuts at year-end, and a lack of clarity around what will happen appears to be driving differing conclusions about how to respond. About two thirds of CFOs say they are not reacting at all to the possibility of spending and tax changes, and the remaining third are split when it comes to accelerating or decelerating their investments, hiring, and transactions.

CFOs’ own money
One area CFOs have complete control over is their own investment portfolio. So what exactly are CFOs doing with their own money? Despite strong corporate performance and historically modest equity valuations, CFOs appear cautious when it comes to equities and bonds. While CFOs do hold these instruments, they indicate a roughly equal preference for cash – a possible sign that, like their companies, they value the security and flexibility cash provides. About 46% of CFOs indicate a preference for stocks, and 25% prefer bonds (the rest are indifferent), and about 60% of the stock focus is on domestic stocks versus just 20% for foreign.

Pushing pricing
Pricing management may be one of the brightest spots in companies’ continued strong performance. With slow growth putting heavy pressure on sales volume, many companies have turned toward very aggressive pricing management – and with very good results. Fueled by improved understanding of pricing sensitivities and profitability at regional, product/service and customer levels, companies have often been able avoid deep discounts and price wars that might have made matters worse. Central to this effort have been finance organizations that have moved beyond the pricing basics of tracking and reporting, managing exceptions, and enforcing policies. Many are now driving the alignment of pricing approaches with corporate strategies and helping business units get the most out of customer-specific investments – especially within industries like manufacturing, retail/wholesale and financial services.

Focus on the softer skills
CFOs say they are playing broader and more strategic roles, and that their success is increasingly determined not by their technical competency or industry knowledge, but by their ability to work with others and contribute to strategy development. Specifically, and regardless of industry, CFOs say personal compatibility with the CEO is the most important trait for their successor, and ability to develop internal relationships is second. Experience around financial and strategic planning is next, with industry experience, ownership type, and audit experience finishing at the bottom. Clearly, as CFOs increasingly work side-by-side with CEOs, business unit leaders, and boards, they are having to flex and/or develop new muscles. And with the broader business environment becoming even more volatile, this is a trend that seems unlikely to relent any time soon.

Different ideas about the U.S. national debt and “fiscal cliff”
The long-term costs of national debt are a clearly a concern for CFOs, but even if they could take the national debt into their own hands, it appears their solutions would vary considerably. About 60% of U.S. CFOs advocate substantial spending cuts, but 30% prefer to freeze spending or hold off on

6

CFO Signals

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Growth Trends
CFOs’ expected year-over-year increases in growth metrics
Revenue Growth
50% 40% 30% 20% 10%
6.0%

Earnings Growth
100% 80% 60% 40%

9.3%

10.9% 6.5%
5.0% 5.0%

10.0%

8.2%
5.5%

7.1%
5.0%

6.8%
5.0%

6.3%
5.0%

5.9%
5.0%

6.6%

20% 0% -20%
6.0%

17.3%
10.0%

19.5% 12.0%
8.0% 10.0%

12.6%

14.0%
8.0%

10.0%

9.3%

10.1%

12.8%
8.5%

0% -10%

9.0%

9.5%

10.5%

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Capital Spending Growth
100% 80%

Domestic Employment Growth
25% 20% 15% 10% 5%
3.1%
0.5%

60%
40% 20% 0% -20% -40% 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
5.0%

12.4%
5.0%

8.3%

8.7%

11.8%

4.0%

5.0%

10.0%

10.7%
5.0%

7.9%

9.6%

12.0%

5.0%

6.0%

10.0%

11.4%

0% -5% -10% -15%

2.0%

2.0%

1.0%

1.8%

1.8%

1.0%

1.2% 2.0% 2.0% 1.0% 1.0% 1.0% 1.0%

2.1%

1.0%

2.1%

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

7

CFO Signals

Vertical lines indicate the range for responses between the 5th and 95th percentiles. Horizontal marks indicate outlier-adjusted means. Circles indicate unadjusted medians for all responses .

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Operating Trends
CFOs’ expected year-over-year increases in operating metrics
(and percent of CFOs who expect year-over-year gains)

Year-Over-Year Projections

Sales Earnings Wages/salaries Employee benefits Non-labor input costs / commodities Dividends Capital spending R&D spending Marketing and advertising Number of domestic personnel Number of offshore personnel Use of offshore/outsourced third parties

2Q10 9.3%
84%

3Q10 10.9%
93%

4Q10 6.5%
81%

1Q11 8.2%
89%

2Q11 7.1%
80%

3Q11 6.8%
83%

4Q11 6.3%
87%

1Q12 5.9%
79%

2Q12 6.6%
85%

17.3%
89%

19.5%
93%

12.0%
80%

12.6%
83%

14.0%
83%

9.3%
82%

10.1%
84%

12.8%
79%

10.5%
81%

3.1%
94%

3.3%
93%

3.2%
95%

3.1%
96%

3.3%
95%

3.2%
94%

2.9%
94%

3.2%
94%

3.0%
90%

4.1%
85%

4.7%
90%

5.3%
89%

4.5%
87%

4.7%
90%

4.3%
93%

4.3%
87%

4.3%
89%

4.5%
93%

2.9%
73%

2.2%
68%

2.6%
75%

3.4%
84%

5.0%
93%

4.2%
89%

3.5%
78%

2.7%
78%

2.9%
84%

6.5%
38%

8.6%
39%

4.1%
28%

4.4%
36%

3.7%
35%

3.5%
41%

2.4%
27%

2.2%
31%

3.9%
33%

12.4%
62%

8.3%
58%

8.7%
57%

11.8%
61%

10.7%
69%

7.9%
59%

9.6%
61%

12.0%
68%

11.4%
70%

4.1%
54%

5.9%
51%

3.5%
43%

3.9%
47%

5.4%
53%

3.5%
38%

2.9%
40%

4.6%
59%

4.4%
53%

3.9%
60%

4.6%
56%

3.9%
56%

3.1%
50%

2.0%
60%

1.8%
48%

1.8%
61%

2.0%
64%

1.2%
52%

1.0%
51%

2.1%
51%

2.1%
52%

3.5%
41%

2.8%
49%

3.6%
47%

3.7%
41%

4.1%
57%

2.9%
37%

4.8%
50%

3.7%
43%

3.8%
41%

2.9%
35%

1.4%
37%

2.8%
32%

2.2%
41%

2.2%
31%

3.1%
36%

3.7%
49%

2.5%
26%

3.6%
30%

8

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Topical highlights

9

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

High-Impact Risks
European fallout, governmental shifts, and rising competition
CFOs’ most-worrisome risks Europe’s economic and capital markets effects and worldwide debt

Last quarter, despite apparent improvements in European and North American economic conditions, CFOs continued to worry about slowing economic growth, the possible spread of European financial distress to North American banks, and the deterioration of capital availability. This quarter, with new and resurgent economic and political issues looming in Europe, those concerns have only gotten stronger. With elections and a “fiscal cliff” looming in the U.S., CFOs also appear very worried about increasing regulation and changes in fiscal policy. • Global economy concerns: Nearly half of all CFOs mention either U.S. or global economic conditions as their most worrisome risk, and about three quarters of those CFOs specifically mention European conditions. About 10% of all CFOs are most worried about the health of world financial markets (interest rates, credit/liquidity constraints, equity markets, etc.), especially within Financial Services. Impacts of government: About 20% of all CFOs name government- and regulation-related issues as their most worrisome risk. Concerns about both general and industry-specific legislation are predictably very high within Financial Services. Internal missteps: The number and scope of internal worries continued to rise this quarter, led mostly by concerns about competitive pressures, declining sales volume, and missed financial targets. There is also rising mention of concerns about executive transitions, succession planning, and availability of needed skill sets.

Please see Appendix for industry-specific findings.

10

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy
Europe even more volatile, and governments even more gridlocked
Top challenges Jobs concerns accelerate in U.S.; capital cost/availability a growing challenge in Canada and Mexico As they indicated through their “most worrisome risks” (in the previous section), CFOs remain very concerned about the health of their domestic economies. But there continue to be strong differences in domestic economic concerns across the North American regions. In the U.S., the combination of bleak prospects for near-term growth in Europe and slowing growth in China appears to be increasing CFOs’ focus on domestic markets. And as this happens, CFOs seem increasingly worried about both consumptionlimiting unemployment and corporate tax policy – on top of their perpetually high concerns about social policy. • Unemployment tops CFOs’ economy-level concerns for the first time this quarter with a whopping 59% of U.S. CFOs naming it in their top three (well above last quarter’s high of 43%). (Across all geographies, it is the top challenge for Retail/Wholesale, Technology, and Financial Services and is second for Services.) Social policy/spending/investment repeats as a top concern this quarter, with 51% of U.S. CFOs naming it a top three concern – down from 62% and 57% over the past two quarters. (Across all geographies, it is a top-two challenge for five of the eight industries – Manufacturing and Retail/Wholesale are the notable exceptions.) Environmental policy concerns declined from 38% last quarter to 25% this quarter. (Across all geographies, it is the top challenge for Energy/Resources and a top-two challenge for Healthcare/Pharma and Manufacturing) Corporate tax policy concerns, which began to rise at the end of last year, hold steady at 35% this quarter, mostly driven by Manufacturing, Energy/Resources, and Healthcare/Pharma. Other notable U.S. findings: Inflation concerns, which fell sharply from 32% to 16% over the past two quarters, settled at 19% this quarter. Capital cost/availability concerns, which declined last quarter, resumed their normal level of about 25% this quarter driven by high importance in Healthcare/Pharma. The most prevalent write-in choices concern global and European economies, government deficits, interest rates, and commodity prices.
Percent of respondents who place each option in their top three
Unemployment Social policy/spending/investment (healthcare, education, infrastructure, etc.) Corporate-tax policy Environmental policy (regulation, carbon reporting/tax, etc.) Capital cost/availability Inflation Currency exchange rates Other Accounting/reporting/controls policy Personal income tax policy International-trade policy Intellectual-property policy Military/defense policy 0% 10% 20% 30% 40% 50% 60%

Economy Challenges – U.S.

3Q11 4Q11 1Q12 2Q12

Please see Appendix for industry-specific findings.

11

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy
Top challenges (cont.) Canadian concerns are notably different, significantly influenced by both Canada’s economic reliance on energy and resources and by high survey participation among Energy/Resources CFOs. • • • • • • Environmental policy concerns remain elevated this quarter, but fell from 71% to 63%. The concern was again prevalent in all represented sectors. Capital cost/availability concerns, which rose to 57% last quarter, resumed their norm of about 42%. Social policy/spending/investment concerns fell from their survey high of 52% last quarter to just 32% this quarter – well below their typical level. Currency exchange rates became a top concern for 32% of CFOs, after being only a minor concern in previous quarters. Unemployment concerns, which fell to just 5% last quarter, bounced back to 16% this quarter, more in line with historical averages. Other concerns mentioned in write-ins focus on construction activity, commodity taxes, and reduced energy consumption.

Percent of respondents who place each option in their top three
Environmental policy (regulation, carbon reporting/tax, etc.) Capital cost/availability Other Social policy/spending/investment (healthcare, education, infrastructure, etc.) Currency exchange rates Accounting/reporting/controls policy Unemployment Inflation Corporate-tax policy International-trade policy Intellectual-property policy Personal income tax policy Military/defense policy 0% 10% 20% 30% 40% 50% 60% 70% 80%

Economy Challenges – Canada

3Q11 4Q11 1Q12 2Q12

Percent of respondents who place each option in their top three

Economy Challenges – Mexico

Mexican CFOs indicate a strong focus on social policy at 70% – well above last quarter’s 50%. Environmental policy fell from 42% to 20% while accounting/reporting/controls policy rose to 40%. Currency exchange rates rose from 42% to 50%, and capital cost/availability rose from 33% to 50%.

Social policy/spending/investment (healthcare, education, infrastructure, etc.) Currency exchange rates Capital cost/availability Accounting/reporting/controls policy Environmental policy (regulation, carbon reporting/tax, etc.) Inflation Other, please specify Corporate tax policy Unemployment Intellectual-property policy Personal income tax policy International trade policy Military/defense policy

1Q12
2Q12

12

CFO Signals

0%

10%

20%

30%

40%

50%

60%

70%

80%

Please see Appendix for industry-specific findings.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy
Solving the National Debt Crisis
How to tackle the U.S. national debt Mostly agreement around spending cuts; less around taxes The specific components of CFOs’ solutions to the U.S. national debt problem are varied, but more than 60% of U.S. CFOs prefer an approach that includes substantial reduction in government spending. Just over 20% believe the goal should be to support near-term economic recovery by holding off on major spending cuts (while also formalizing a longerterm path to debt reduction). There is broader diversity of opinion when it comes to taxes. Nearly 30% of U.S. CFOs believe the best approach is to raise taxes at the same time the government substantially reduces spending – presumably to increase the pace of deficit reduction. Nearly 10% believe the government should raise taxes while only freezing spending. About one third of CFOs prefer to leave taxes unchanged, and about 5% say personal and/or corporate taxes should be lowered. Other recommendations (mostly American) include adopting the Simpson-Bowles proposal (the final report of the 2010 National Commission on Fiscal Responsibility and Reform), moving to a territorial tax system, devaluing the U.S. dollar, and downsizing entitlement programs. Canadian CFOs are relatively more inclined to raise taxes and hold off on major spending reductions, but a core of about 30% strongly opposes raising taxes. Mexican CFOs generally prefer one of two paths: cut spending and raise taxes at the same time, or bolster near-term recovery by holding off on major cuts. Opinions across industries are directionally similar in many cases, but with some interesting differences. In particular, Retail/Wholesale shows a strong opposition to any option that raises taxes, while Technology and Services both tend to favor a balance of spending cuts and tax increases. Response to the “fiscal cliff” Lack of clarity drives varying (or non-existent) mitigation More than two thirds of U.S. CFOs say their government’s looming “fiscal cliff” is not causing their companies to alter their approaches to investments, hiring, or transactions. The remaining third is largely split around the types of adjustments they are making. Roughly equal proportions (about 10%) of CFOs report delaying and accelerating investments. About 10% say they are accelerating major transactions, and about 5% say they are delaying them. There is more agreement around hiring, where 13% claim delays and just 2% cite acceleration. CFOs cite other responses, including accelerating dividends and stock transactions, and providing more conservative guidance to investors. Responses from Canada and Mexico are similar to those from the U.S.
Reduce near-term deficits by substantially cutting spending now (no changes in taxes) Support near-term economic recovery by holding off on major spending cuts, but formalize a longerterm path to debt reduction Reduce near-term deficits by substantially cutting spending now and raising taxes Reduce near-term deficits by freezing spending now and raising taxes

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

Please see Appendix for industry-specific findings.

How CFOs are Addressing Fiscal Uncertainty
Percent of respondents indicating each action (multiple answers permitted) Not taking any steps in response to the "fiscal cliff" Delaying hiring Accelerating investments Delaying investments Accelerating major transactions Delaying major transactions Accelerating hiring Other, please specify 0% 10% 20% 30% 40% 50% 60% 70% 80%

13

CFO Signals

Please see Appendix for industry-specific findings.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Industry
Signs of declining demand and intensifying competition
Top challenges Pricing and regulation Over the past several quarters, CFOs’ growth-related concerns have been giving way to rising concerns about the health and competitiveness of their core markets. This quarter’s results support this trend while indicating ever-present concerns about regulation and rising concerns around talent. • Pricing trends claim the top spot this quarter, rising from 37% to 48%. They are the top concern within Retail/Wholesale and Services and a top-two concern in Manufacturing, Technology, and Financial Services.
Percent of respondents who place each option in their top three
Pricing trends Industry regulation/legislation Market contraction (declining demand/customer base)* Availability of people/skill sets Market growth (increasing number of products/services/customers) Overcapacity/excess inventory New competitive tactics Mergers and acquisitions New market entrants (domestic) Product substitutes Input prices Changing cost structures Foreign competition Other 0% 10% 20% 30% 40% 50% 60%

Industry Challenges

Industry regulation/legislation falls to a close second at 46% after leading for seven consecutive quarters. It is again the top concern for Energy/Resources, Financial Services, and Healthcare/Pharma.
Changing cost structures loses ground (mostly to pricing trends), falling from 24% to 10%. It is still a substantial concern for Healthcare/Pharma, but the sample size for this sector is low this quarter. Market contraction holds steady at 27% and is the top challenge in Manufacturing and a top-two concern for Services. Market growth holds steady at 23% and is a top-two challenge for Financial Services and Services. Availability of talent rises to 27% this quarter and is again a top-two challenge for Energy/Resources. Other notable findings: New competitive tactics are again a top-two challenge for Retail/Wholesale and Services, and they are the top challenge in Technology; input prices are no longer the top challenge in Manufacturing, but they are still in the top three; foreign competition concerns have declined notably over the past year; new market entrants are a strong concern in Healthcare/Pharma (although the sample size is small); and product substitutes are still a top challenge in Technology.

• •

3Q11 4Q11 1Q12 2Q12

Please see Appendix for industry-specific findings.

14

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Growing, profitable, and lean – but diminishing returns
Top challenges Current markets and talent After indicating a strong focus on business planning and growth near the end of 2011, companies now appear more focused on execution and defending current markets with a declining focus on new markets and M&A. • Revenue from existing markets again tops this quarter’s list, with 60% of all CFOs naming it a top challenge – the same as last quarter. It is the top company challenge for all industries, which has not been the case for any of our previous surveys.
Percent of respondents who place each option in their top three
Revenue growth/preservation in existing markets Talent (availability, development, morale and cost) Prioritizing investments Framing and/or adapting strategy Revenue growth/preservation in new markets Addressing government policy and regulation Overhead cost reduction Pursuing or responding to M&A opportunities/approaches Managing assets and working capital Direct cost reduction Managing operations and supply chain risks Financing and liquidity Projecting and reporting results Other, please specify 0% 10% 20% 30% 40% 50% 60%

Company Challenges

Revenue from new markets is a top challenge for 22% of companies. This is the second consecutive quarterly decline, possibly signifying a scaling back of geographic expansion in response to conditions in Europe and Asia. It is still a topthree challenge in Technology and Manufacturing.
Talent availability concerns continued their ascent, topping 40% and reaching their highest level in the history of this survey. They are strongest in Manufacturing and Energy/Resources, where half of CFOs cite this challenge. Framing and/or adapting strategy declined from 40% to 27% last quarter and rose back to 30% this quarter. As we pointed out last quarter, this may signify a shift away from strategy revision/formulation efforts and toward execution. It is still a top challenge for Technology and Retail/Wholesale. Prioritization of investments again ranks third, holding steady at 32%. It is a topthree challenge in Energy/Resources, Financial Services, and Healthcare/Pharma. M&A-related challenges declined from 25% to 19% and are not particularly strong in any sector. Overhead cost reduction holds steady at 22%, and direct cost reduction receded from 19% to 13%.

3Q11 4Q11 1Q12 2Q12

• • •

Please see Appendix for industry-specific findings.

15

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Business focus Less on growth, more on asset efficiency Consistent with most quarters, about half of companies’ strategic focus this quarter is on revenue growth and preservation, down from last quarter’s 57%. Retail/Wholesale and Technology again lead at about 60%, but both indicate a decline. Taking up the slack for the declining focus on growth is an increased focus on asset efficiency – especially within Manufacturing, Energy/Resources, Services, and Healthcare/Pharma. • Growth: Across all companies, CFOs cite a 34% (down from 37%) focus on revenue growth/preservation in existing markets with Retail/Wholesale highest at 44% and Healthcare/Pharma and Energy/Resources lowest at about 25%. CFOs cite an 18% focus on growth in new markets (down from 20%) with Technology highest at 27% and Services trailing at just 13%. Costs: The focus on indirect costs and direct costs both holds relatively steady at 12% and 15%, respectively. All industries are close to the mean for indirect costs. Services and Technology indicate the highest focus on direct costs at about 18%. Asset efficiency: The focus on fixed assets holds steady at about 10%, but the focus on working capital jumps more than three points to 9%. Healthcare/Pharma and Energy/Resources are high for fixed assets (19% and 15%, respectively), and Manufacturing is very high for working capital at 17%.
Distribution of company focus among respondents
Revenue growth/preservation - current markets Revenue growth/preservation - new markets Cost reduction - direct costs Cost reduction - indirect costs Asset efficiency - fixed assets Asset efficiency - working capital Other 0% 10% 20% 30%

Company Business Focus

3Q11 4Q11 1Q12 2Q12
40%

Please see Appendix for industry-specific findings.

16

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Expected sales and earnings Still positive year over year, but very high variability Despite their global economic concerns and declining optimism, CFOs continue to express rising expectations for their companies’ performance over the next year. Growth projections for earnings, capital investment, and domestic hiring are all still positive. But rising variability of CFOs’ projections and their responses to our direct question around longer-term earnings growth (see page 20) suggest there may be cause for longer-term worry. • Sales growth expectations of 6.6%* are above last quarter’s survey low of 5.9%,* and they are about average relative to the projections we have seen over the past year. Approximately 85% of CFOs expect year-over-year gains (up from last quarter’s survey low of 79%), with Manufacturing the most optimistic at nearly 9%. U.S. expectations are 6.7%* (5.2% last quarter), with Canada and Mexico at 5.9%* and 8.7%*, respectively (both were about 7% last quarter). Earnings growth expectations have been trending upward despite relatively flat sales growth estimates. This quarter’s 10.5%* expectation is lower than last quarter’s 12.8%,* but it is still above all other estimates from the past year. Similar to last quarter, about 80% of CFOs expect gains, but the median expectation fell from 9.5%* to 8.5%.* Manufacturing and Technology are most optimistic at about 15%, while Financial Services’ estimates declined sharply. U.S. estimates lead at 12.3%* (14.5%* last quarter) with Mexico slightly behind at 11.7%* (15.8%* last quarter),and Canada again trailing at just 4.6%* (6.9%* last quarter). Similar to last quarter, high variability suggests significant difference of expectations. Non-labor input cost growth expectations remain low this quarter at 2.9%, just above last quarter’s survey-low 2.7%. Wage/salary projections are consistent with previous quarters at around 3%, and expected employee benefits cost increases of 4.5% are about the same as last quarter.
Expected change year-over-year
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

Operating Results*

3Q11 4Q11 1Q12 2Q12

Expected change year-over-year
14% 12% 10% 8% 6%

Investments*

Expected dividends and investment Still bullish on capital investment Despite strong economic concerns and moderating expectations for sales and revenue, companies are not yet backing off their capital investments – although their R&D and marketing spend did take a hit. • Dividend increases of 3.9% are well above their survey low 2.2% last quarter – possibly signaling a change in companies’ use of cash. The median expectation is again 0%, and just 33% of CFOs project dividend increases. Manufacturing, Retail/Wholesale, and Energy/Resources are highest at roughly 5%* expected dividend growth.

4% 2% 0%

3Q11 4Q11 1Q12 2Q12 *Averages have been adjusted to eliminate the effects of stark outliers. Please see Appendix for industry-specific findings.

17

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
• Capital investment growth expectations remain relatively strong this quarter at 11.4% – below last quarter’s 12% but still among the highest we have seen over the past two years. About 70% of CFOs again expect gains, and the median is 10%. Estimates from Manufacturing, Technology, Healthcare/Pharma, and Services are all near the mean. Energy/Resources is well above the average at nearly 20%.* R&D spending is expected to rise just 2.9%* – lowest in the history of this survey, and well below the 3.5%* estimate from last quarter. Only Manufacturing and Healthcare/Pharma are above this quarter’s level. Marketing spend is expected to rise 3.9%* (down from 4.6%* last quarter), led mostly by a sharp expected decline in Retail/Wholesale.
Expected change year-over-year
6%

Costs*

Expected change year-over-year
5% 4%

Employment*

4%

3% 2% 1%

2%

Employment Still comparatively optimistic Despite CFOs’ broad-based concerns and flattening performance estimates, and despite recent disappointing jobs growth data in the U.S., domestic hiring estimates are relatively strong this quarter. Estimates rose substantially last quarter and held steady this quarter, although increasing variability suggests widening diversity of opinion.

0%

0%

Domestic hiring expectations repeat at 2.1%,* among the highest in the two-year history of this survey. The median expectation is again1.0% and just over half of CFOs project gains, but variability is very high. Canadian projections declined from 3.7%* to 2.7%.* U.S. projections held steady at 1.9%,* and Mexico rose to 1.9%* from 1.3%.* Energy/Resources again leads the pack at about 4%.*
Offshore personnel growth, which peaked in 4Q11 at 4.5%,* matches last quarter’s projection at 3.8%. U.S. projections are unchanged and highest at 4.2%.* Canada fell from 3.0%* last quarter to 2.7%* this quarter, and Mexico came in at 3.6%.* Technology leads at 10%.* Outsourced staffing growth rose to 3.6%* this quarter, very close to the surveyhigh 3.7%* it reached in 4Q11 – led by the U.S. at 4.4%* (up from 3%*) and Mexico at 3.8%* (up from 2.6%*). Canada is again lowest at 0.4% (down from 1.1%* last quarter). Technology rose to 5%.

3Q11 4Q11 1Q12 2Q12 *Averages have been adjusted to eliminate the effects of stark outliers. Please see Appendix for industry-specific findings.

3Q11 4Q11 1Q12 2Q12

* Numbers with asterisks have been adjusted to eliminate the effects of stark outliers.

18

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Own Company Optimism Rising anxiety…again… During our last survey, global economic news and national macroeconomic indicators were mostly positive, and both the Dow and S&P 500 indices had risen substantially. This quarter, Europe took another turn for the worse and again appears on the brink. Upcoming elections and current political stalemates in the U.S. are raising worries about regulation and the end-of-year “fiscal cliff.” Consequently, the S&P 500 index has fallen about 4% since our last survey,* and so has CFO sentiment – especially within the U.S. • Still optimistic on the whole: After two quarters in negative territory, net optimism rebounded sharply to +48 percentage points last quarter. This quarter’s net optimism is more muted at +11, dragged down by declining sentiment among U.S. CFOs. Nearly 40% of CFOs say they are more optimistic this quarter than they were last quarter (down from nearly two thirds last quarter), but 28% are now more pessimistic (a large 33% report no change from last quarter’s mostly positive sentiment). About 45% of the optimism is driven by external factors, with 55% driven by internal factors. Just over 20% of CFOs say they are less optimistic due to external factors, up from 10% last quarter. U.S. becoming more cautious: Net optimism in the U.S. rose markedly from lows of -15 and -34 at the end of 2011 to +40 last quarter. This quarter it fell to zero, with roughly equal proportions of CFOs reporting rising optimism, rising pessimism, and no change. Reflecting rising concerns about the external business environment, about two thirds of the rise in pessimism is fueled by external factors, and just 40% of optimism is fueled externally. Canada and Mexico remain optimistic: Continuing a trend evident for the past four quarters, Canadian CFOs’ are comparatively positive at +42 net optimism – down from +57 last quarter but still very high. Just 16% express declining optimism, and those CFOs exclusively cite external reasons. About 55% of the optimism is driven by rising assessments of external factors. Half of Mexican CFOs indicate rising optimism (down from three quarters last quarter) and 30% are less optimistic (fueled exclusively by external factors).
100% 80% 60% 40% 20% 0% -20% -40%
More optimistic primarily due to internal/companyspecific factors (e.g., products/services, operations, financing, assets) No notable change

Net optimism and causes of rising/falling optimism
More optimistic primarily due to external factors (e.g., economy, industry, and market trends)

Company Optimism

Less optimistic primarily due to internal/companyspecific factors (e.g., products/services, operations, financing, assets) Less optimistic primarily due to external factors (e.g., economy, industry, and market trends) Net optimism (% more optimistic minus % less optimistic)

Optimism and net optimism relative to S&P500 price
70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% 1500 1400 1300 1200 1100 1000 900 800 700 600 500 Optimism (% of CFOs more optimistic) Net Optimism (% more optimistic less % more pessimistic) S&P 500 price at survey period midpoint

Company Optimism

*The decline was 3% to 6% depending on when a particular CFO responded within the two-week survey period

Please see Appendix for industry-specific findings.

19

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Earnings growth ahead of sales growth Signs of flattening (and maybe declining) earnings Since this survey launched in the second quarter of 2010, CFOs’ expectations for year-over-year earnings growth have been consistently positive and considerably above their estimates for sales growth. Sales growth expectations have been positive but falling for the last several quarters, prompting the question, “How much longer can companies continue to generate earnings growth despite weakening sales growth?” The good news is that nearly two thirds of CFOs say their earnings growth can outpace their sales growth for at least six more months. The bad news is that only one third thinks this can continue for more than a year, and 17% say this dynamic has already run its course. The most optimistic sector is Retail/Wholesale, where 60% of CFOs say their margin growth can continue to outpace revenue growth for more than a year. Next are Technology and Energy/Resources (57% and 50%, respectively). Results for Healthcare/Pharma, Financial Services, and Services are the most pessimistic. The 0% projection from Healthcare/Pharma may be attributable to a small sample size, but just 17% of Financial Services CFOs and 25% of Services CFOs expect to see margin growth ahead of sales growth beyond a year from now despite higher sample sizes. About one third of CFOs from both these sectors say that margin gains from efficiency improvements and cost reduction have already run their course. There are some differences by country. Most notably, Canadian and Mexican CFOs are much more likely to say their earnings cannot fuel further earnings growth in excess of sales growth going forward.
Yes

Can Earnings Growth Continue to Outpace Sales Growth?

No

Other

0%

10%

20%

30%

40%

50%

60%

Yes - cost savings/efficiencies can fuel this for more than a year Yes - cost savings/efficiencies can fuel this for the next year Yes - cost savings/efficiencies can fuel this for the next six months Not anymore - cost savings/efficiencies fueled this for a while, but they have run their course No - cost savings/efficiencies have not been able to fuel this Other

Please see Appendix for industry-specific findings.

20

CFO Signals

Please see Appendix for industry-specific findings.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company
Steps taken to improve margins Industries vary, but few stones left unturned In the absence of strong consumption and revenue growth, many companies have been maintaining (and often improving) margins through better focus, cost cutting, and efficiency gains. The results have been remarkable, with many companies generating better profitability now than they did preceding the recession. So how have they been doing it? The dominant mechanisms reflect basic blocking and tackling – with a very heavy focus on improving process efficiencies in both indirect and direct cost areas. More than 80% of all companies cite these tactics, and fewer than 10% say these efforts are over. Another 17% (perhaps those who have only recently become margin-challenged) say they plan to start these efforts in the future. Retail/Wholesale, Financial Services, and Healthcare/Pharma lead the pack with 100% of CFOs saying they have improved process efficiencies in overhead cost areas, and well over half of those in each industry say they will continue to make improvements. Manufacturing and Healthcare/Pharma lead in reducing direct costs with 87% and 100% of CFOs reporting this tactic, respectively, and at least 75% saying they will continue to make improvements. About 70% of CFOs report substantial cost-saving changes to their supply chains – mostly through reconfigured and renegotiated sourcing arrangements. Nearly 90% of those who have already used this tactic say they will pursue supply-chain changes in the future, as will two thirds of those who haven’t yet employed this tactic. Healthcare/Pharma and Manufacturing have been most likely to use this tactic and are also the most likely to continue to employ it. About 40% of CFOs report using outsourcing and/or offshoring as a costreduction tactic for both direct and overhead costs, and about 75% say they will make more use of it. The highest use has been in Technology (86% for direct costs, 67% for overhead costs) and Financial Services (59% and 61%). Overall, about 40% of CFOs say they do not plan to utilize this tactic at all.

What Have Companies Done to Strengthen Margins?
Percent of respondents citing each level of action Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring 0% 20% 40% 60% 80% 100%

Already taken - done

Already taken - more coming

Not yet - but likely

Not yet - and unlikely

Please see Appendix for industry-specific findings.

With sales volume a rising challenge, companies have been actively managing the pricing component of the top line, especially in Manufacturing and Retail/Wholesale. A remarkable 65% of all CFOs report having raised prices (82% in Manufacturing, 90% in Retail/Wholesale), and 42% say more price increases are coming. About one third of the companies who have not employed price increases say they will likely do so. More than 40% of CFOs in Technology, Energy/Resources, and Financial Services say they have not raised prices and do not plan to.

Narrowing their business focus has been a margin-improvement tactic for nearly 60% of companies, and 80% of these companies plan to further reduce their focus on lower-margin businesses. This dynamic is most prevalent in Technology (70% and 80%) and Healthcare/Pharma (67% and 100%). Overall, about half of those who haven’t done this say they expect to do so in the future. Refining their customer focus has been a margin-improvement tactic for 48% of companies, and 76% of these companies plan to further reduce their focus on less profitable customers. This dynamic is most prevalent in Technology (71% and 80%) and Financial Services (55% and 55%). Overall, 47% of those who have not done this say they expect to do so in the future. Just 44% of Healthcare/Pharma CFOs say their company has already employed this tactic, and 56% say they do not plan to do so.

21

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization
Adapting to both immediate and longer-term company needs
Top challenges Getting the core things right Similar to last quarter, this quarter’s findings appear to indicate a weaker focus on growth and a more tactical focus on operational execution and maximizing the value generated by current investments. • Providing information, analysis, and metrics repeats as the top challenge this quarter, but declined from 54% last quarter to 50% this quarter. It is the top challenge for Manufacturing, Retail/Wholesale, Energy/Resources, and Financial Services.

Finance Organization Challenges
Percent of respondents who place each option in their top three Providing metrics, information and tools needed for sound business decisions Influencing business strategy and operational priorities Ensuring initiatives achieve desired business outcomes* Forecasting and reporting business results Supporting a major infrastructure initiative (e.g., IT systems change, shared services consolidation, outsourcing)* Securing and retaining finance talent Aligning budgets and capex decisions with priorities/strategies Supporting a major business initiative (e.g., geographic or product/service expansion, new production facility)* Ensuring funding, liquidity and acceptable costs of capital Supporting a major transaction (e.g., merger, acquisition, divestiture)* Ensuring compliance with financial reporting and control requirements Managing finance organization's costs Addressing changes in tax laws and/or accounting standards Other 0% 10% 20% 30% 40% 50% 60%

Influencing strategy and operational priorities remains a top priority at 39%, up from 32% last quarter. It is a top-two challenge for Retail/Wholesale and Energy Resources, and is the top challenge in Services.
Ensuring initiatives achieve desired business outcomes is third at 34% (up from 29% last quarter). It is a top-two concern for Financial Services and Services. Forecasting and reporting business results is cited by roughly 29% (up from 25%) of CFOs and is a top-three challenge for Technology, Retail/Wholesale, and Financial Services. Supporting major infrastructure initiatives rose from 25% to 29% and is a top-two challenge for Manufacturing and Healthcare/Pharma. Supporting a major transaction, which rose markedly to 27% last quarter, retreated to its normal level of 14%. Challenges are highest in Manufacturing. Other notable findings: Supporting a major business initiative is the top challenge for three quarters of Healthcare/Pharma CFOs, but the sample size is just four; Aligning budgets and capex decisions with priorities is the top challenge for nearly half of Technology companies. Ensuring funding, liquidity, and an acceptable cost of capital is a top challenge for half of Energy/Resources CFOs.

Q3 11
Q4 11 Q1 12 Q2 12

• • •

Please see Appendix for industry-specific findings.

22

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization
Finance’s involvement in pricing decisions Strong and growing role, especially in some industries For many companies, slow growth in North America has put pressure on sales volume. Consequently, many have turned toward more aggressive management of pricing, and it appears that finance organizations are playing a major role. Much of finance’s effort appears focused on the administrative side of pricing – tracking and reporting, managing exceptions, and enforcing policies. But within some industries (especially Manufacturing, Retail/Wholesale, and Financial Services), finance is playing a more strategic role around aligning pricing with corporate strategies, driving pricing approaches, and getting the most out of customer-specific investments. • Tracking and reporting pricing performance and profitability: About 77% of CFOs say their finance organization is moderately to heavily involved. Manufacturing, Retail/Wholesale, and Financial Services are highest, all around 90%. Two thirds of Manufacturing CFOs report heavy involvement. Healthcare/Pharma is also very high, but the sample size is small. Managing exceptions to general policies: About 63% of CFOs say their finance organization is moderately to heavily involved. Retail/Wholesale and Manufacturing are highest at about 70%, with 40% of Retail/Wholesale CFOs citing heavy involvement. Healthcare/Pharma is also very high, but the sample size is small. Aligning pricing strategies with corporate strategies: About 60% of CFOs say their finance organization is moderately to heavily involved. Financial Services is highest at 75%, with half reporting heavy involvement. Manufacturing is next at about 70%. Healthcare/Pharma is very high, but the sample size is small. Nearly 40% of Energy/Resources CFOs report no involvement. Setting pricing based on data and analytical approaches: About 60% of CFOs say their finance organization is moderately to heavily involved. Manufacturing and Financial Services are highest at about 68%. Healthcare/Pharma is also very high, but the sample size is small.

Finance’s Involvement in Pricing Activities
Degree to which CFOs say their organizations are involved

Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments (promotions, discounts, rebates, etc.) 0% 20% 40% 60% 80% 100%

Heavily

Moderately

Somewhat

Not at all

Please see Appendix for industry-specific findings.

Enforcing pricing policies: About 53% of CFOs say their finance organization is moderately to heavily involved. Manufacturing and Retail/Wholesale are highest at about 67%. Healthcare/Pharma is again very high, but with a small sample size. Financial Services is below average despite being above average in most other areas.
Maximize benefits of customer-specific investments (promotions, discounts, rebates, etc.): About 35% of CFOs say their finance organization is moderately to heavily involved. Retail/Wholesale and Manufacturing are highest at 50% and 43%, respectively.

23

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization
Use of profitability analysis Consolidated/business-level analysis dominates, but there are substantial industry differences There are two basic ways to look at what CFOs say about profitability analysis – from an “analysis outward” perspective (i.e. which levels/types of analysis are conducted and which decisions each type drives), and from a “decision outward” perspective (i.e. which decisions are affected by profitability analysis and which types of profitability analysis are utilized). From an “analysis outward” perspective: • Consolidated and geography-level profitability analyses are the most prevalent levels of profitability analysis and are the most-utilized levels when it comes to pricing, investment, spending, and compensation decisions. While this is probably not surprising, it is perhaps more of a surprise that, although 80% of companies utilize geographic profitability analysis, well under one third utilize it in making pricing decisions – suggesting that pricing decisions are most often made on a standardized, cross-geography basis. Compensation appears to be driven more by consolidated profitability than by regional profitability, but roughly half of CFOs say they utilize a mixture of the two. Product- and service-level profitability analysis is utilized by about 88% of companies, mostly for pricing and investment decisions (about 60% of companies cite each use). This analysis is heavily utilized for pricing decisions in Manufacturing (78%) and Financial Services (73%) and for investment decisions in Retail/Wholesale (70%) and Healthcare/Pharma (75%). About half of companies use it to make operating expenditure decisions, mostly in Manufacturing (57%) and Retail/Wholesale (70%), and about one third use it for compensation decisions, mostly in Financial Services and Healthcare/Pharma (both 50%). Customer-level profitability analysis is utilized by about 75% of companies, mostly for pricing and investment decisions (about 46% and 39% of companies cite each, respectively). This analysis is used most heavily in Retail/Wholesale for operating expenditure decisions (50%) and in Manufacturing for both pricing (60%) and investment (55%) decisions. Just 24% use it for compensation decisions, mostly in Energy/Resources (33%) and Technology (29%).

Use of Profitability Analysis in Decision-Making
Percent of CFOs utilizing each level of analysis for each decision type Impacts Operating Impacts Spend Compensation 71% 52% 47% 35% 75% 48% 36% 24%

Not utilized Consolidated/business level profitability analysis Geographic/region level profitability analysis Product/service level profitability analysis Customer level profitability analysis 2% 20% 12% 25%

Impacts Pricing 40% 30% 60% 46%

Impacts Investment 68% 58% 59% 39%

Please see Appendix for industry-specific findings.

From a “decisions outward” perspective: • Pricing decisions are typically driven by product/service-level profitability analysis at 60% (78% for Manufacturing, and 73% for Financial Services). Customer-level profitability analysis affects pricing decisions for 46% of companies (59% for Manufacturing, and 58% for Services), and about 40% use consolidated/business-level profitability (57% for Financial Services). Investment decisions are typically driven by consolidated/business-level profitability analysis at 68% (86% for Technology). Product/service-level profitability analysis affects investment for 59% of companies, 58% use regionlevel analysis (86% for Technology, and 70% for Energy/Resources), and 39% use customer-level analysis (57% for Technology, and 55% for Manufacturing). Operating spend decisions are typically driven by consolidated/business-level profitability analysis at 71% (92% for Services). Region-level profitability affects operating spend for 52% of companies, about 45% of all companies incorporate product/service-level profitability analysis (70% for Manufacturing), and 35% use customer-level analysis (50% for Retail/Wholesale). Compensation decisions are typically driven by consolidated/business-level profitability analysis at 75% (91% for Financial Services, and 86% for Technology). Region-level profitability analysis affects compensation decisions for 48% of companies (71% for Technology, and 70% for Energy/Resources), and 36% us product/service-level profitability (50% for Financial Services).

24

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career
Declining company performance and rising demands for soft skills
Top job stresses Less strategic ambiguity, but worsening performance Strategic ambiguity, which was a top job stress up until last quarter, continues to decline this quarter. In its place are rising concerns about execution and rapidly increasing pressures from poor company performance. • Major change initiatives (e.g. M&A, systems changes, IPOs) are again CFOs’ dominant career stress, cited by just under half of all CFOs. It is the top stress for Manufacturing and Energy/Resources and ties for the top spot in Retail/Wholesale and Healthcare/Pharma.
Major change initiatives (e.g., M&A, IT systems change, IPO) Changing regulatory requirements Pressures from poor company performance Insufficient support staff (skills and/or number) Excessive workload/responsibilities Strategic ambiguity Internal power struggles and politics Poor quantity/quality/reliability of information Insufficient internal political influence/authority Other, please specify Relationship with and demands from board Expansion of job role/ responsibility into areas of less comfort Q3 11 Q4 11 Q1 12 Q2 12

Job Stresses
Percent of respondents who place each option in their top three

Changing regulatory requirements are a top career stress for just under 40% of CFOs, down from 49% last quarter. They are again the dominant stress for Financial Services and Healthcare/Pharma and second for Energy/Resources.
Strategic ambiguity topped out as a top job stress for 42% of all CFOs in 3Q11 and spent seven straight quarters in the top three. But it fell to 26% and fifth place last quarter and to just 19% and sixth place this quarter– suggesting that the worries CFOs expressed in previous surveys about obsolete and unclear strategies may have largely subsided. The exceptions are Technology and Energy/Resources, where 43% and 30% of companies still name it a top challenge, respectively. Pressures from poor company performance continued to grow this quarter, again ranking third and rising from 31% to 38%. It is the top job stress in Technology (71%) and Services (54%) and ranked second in Manufacturing (39%). Insufficient support staff ranked fourth at 29%, driven largely by Healthcare/Pharma (50%), Manufacturing (35%), and Financial Services (also 35%). Other notable findings: Internal power struggles and insufficient internal political influence/authority are top stresses for 50% and 60% of Retail/Wholesale CFOs, respectively. Excessive workloads and responsibilities are a top concern for 23% of CFOs overall.

0%

10%

20%

30%

40%

50%

Please see Appendix for industry-specific findings.

25

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career
Key traits for CFO successor CEO compatibility, relationship skills, and a strategy background In light of escalating demands on Finance and CFOs, what do CFOs look for in their successors? CFOs say the most important traits for their successors are centered on their ability to work effectively with others – particularly the CEO -and to contribute to strategy development. In fact, CFOs from all industries (other than Healthcare/Pharma with its small sample size) say personal compatibility with the CEO is the most important trait for their successors. And consistent with CFOs’ need to work effectively with the broader management team, ability to build other internal relationships finishes second. Strategy development experience, a financial planning and analysis background, and company knowledge come in third through fifth, respectively, consistent with CFOs’ rising contributions to strategic planning. Technical experience (financial accounting, capital/treasury management, and audit/controls) are seen as generally less important, as are experience with industry and ownership type. There are, however, some interesting industry differences. Energy/Resources and Manufacturing place higher-than-average emphasis on capital/treasury management. Retail/Wholesale and Energy/Resources place comparatively high importance on external relationship-building experience, while Technology and Services emphasize a background in financial planning and analysis.

Important Factors for Selecting a CFO Successor
Percent of respondents who place each factor in their top three
Personal compatibility with CEO Internal relationship-building expertise FP&A background Strategy development background Company knowledge External relationship-building expertise Financial accounting knowledge Capital/treasury management experience Industry experience Ownership type (i.e. public, private) experience Other, please specify Audit/controls experience 0% 10% 20% 30% 40% 50% 60% 70% 80%

Please see Appendix for industry-specific findings.

26

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career
How CFOs invest their own money Cash benefits apply at a personal level, too Despite strong recent corporate performance and stock valuations considerably below historic highs, CFOs appear cautious when it comes to putting their own money at risk in equities and bonds. While CFOs do indicate a willingness to hold these instruments, they also indicate an equal preference for cash – a possible sign that, like their companies, they value the security and flexibility cash provides. Real estate investment appears substantial, with about 30% of CFOs indicating more investment in this vehicle than in stocks, bonds, and commodities. Commodity investing is relatively weak, with only about 12% of CFOs indicating this preference. When it comes to stocks and bonds, about 46% of CFOs favor stocks versus 25% for bonds. About 60% of the stock focus is on domestic stocks with 14% indicating a very strong preference, and just 20% indicate a preference for foreign stocks. When it comes to foreign stocks, CFOs are about evenly split between mature and emerging markets. Domestic Stocks

CFOs’ Allocation of Personal Investments
CFOs’ relative preference of different investment vehicles

Cash

5.6%

31.5%

20.2%

32.6%

10.1%

Stocks/Bonds

Stocks

14.6%

31.5%

29.2%

19.1%

5.6%

Bonds

13.6%

46.6%

19.3%

17.0%

3.4%

Foreign Stocks

Foreign Stocks – Mature Markets

7.2%

22.9%

33.7%

30.1%

6.0%

Foreign Stocks – Emerging Markets

Real Estate

8.2%

17.6%

15.3%

50.6%

8.2%

Stocks/Bonds/Commodities

Commodities

2.4%

10.8%

21.7%

44.6%

20.5%

Stocks/Bonds/ Real Estate

Mean Median

27

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Appendix

28

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Detailed findings

29

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

High-Impact Risks
What one high-impact risk are you worried about most?
Manufacturing (n=20) Macro / Economy / Markets
Global economic uncertainty (4)

Retail / Wholesale (n=10)

Technology (n=6)

Energy / Resources (n=10)

Financial Services (n=23)
Risk/contagion from Europe (4)

Healthcare / Pharma (n=4)
European crisis (2) GDP growth

Telecom / Media / Ent. (n=1)

Services (n=13)

Impact of European debt Deep European recession Global economic and Euro breakdown (3) (2) conditions/recession (4)

INSUFFICIENT SAMPLE General economic SIZE THIS QUARTER concerns (3)

Eurozone split (3)
European crisis (3) Exchange rates US macroeconomic decline General economic outlook

US economy (2)
Market instability

Weak US recovery

Eurozone crisis
Domestic economy

Eurozone crisis/ implosion (4)
General/global economic conditions (3) Low interest rates (2) Financial markets meltdown Systemic risk to financial system Volatile equity markets

Financial stability of states
Oil prices

Weak and uncertain economic recovery
Risk of a large-scale global recession Financial system meltdown

Credit crisis
Liquidity risk Returns on retirement income

Government policy/regulation

Regulatory climate/environment (2) Government (many countries) policy risk

Over-regulation US budget deficit

Over-regulation and vigilant application of regulations US taxes Unemployment

Change in regulation Bad regulatory decisions US elections

Chinese growth 2012 presidential election US healthcare reform Increased regulatory oversight and related capital requirements Regulations Political gridlock Government regulation leading to industry changes

INSUFFICIENT SAMPLE Political discord and SIZE THIS QUARTER inaction (2) Sarbanes-Oxley Legal environment

Regulatory overreaction
US fiscal policy Budgetary inaction Impact of uncertainty on consumption Survival of the company

Industry / Company

Stagnant growth

Competition Fraud and shareholder lawsuit Reputation risk

Ability to execute against competitive pressures Events that triggers a restatement

Operating failures

Pension plan performance Proprietary trading at banks Project start-up failures Security and reputation risk Labor unrest Personal liabilities Succession planning Impacts of employee turnover

Industry changes due to regulation changes

INSUFFICIENT SAMPLE Becoming obsolete SIZE THIS QUARTER Declining sales volumes Not achieving financial objectives

People and personal challenges

Availability of sufficiently experienced staff (3)

INSUFFICIENT SAMPLE CEO succession planning SIZE THIS QUARTER Internal politics

Board of directors changes
CEO transitions Internal politics

30

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy – Top Challenges
What are your company’s top three economy challenges?
Total
(n=93)
Social policy/spending/investment (healthcare, education, infrastructure, etc.) Unemployment

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)*

Services
(n=13)

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

Capital cost/availability

Corporate tax policy

Currency exchange rates

Other

Accounting/reporting/controls policy

Inflation

Intellectual property policy

Personal income tax policy

International trade policy

Military/defense policy

0% 25% 50% 75% 0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%
* Q2 12 data not shown (insufficient sample size)

0% 25% 50% 75%

Q3 11 31

Q4 11

Q1 12

Q2 12

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy – Tackling the National Debt
Which best describes how you think we should tackle the national debt?
Total
(n=92)

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=0)

Services
(n=13)

Reduce near-term deficits by substantially cutting spending now (no changes in taxes)

Support near-term economic recovery by holding off on major spending cuts, but formalize a longerterm path to debt reduction

Reduce near-term deficits by substantially cutting spending now and raising taxes

Insufficient sample size this quarter

Reduce near-term deficits by freezing spending now and raising taxes

Other

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

32

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Economy – Preparing for the “Fiscal Cliff”
How are you addressing uncertainty around the coming 'fiscal cliff' of pending tax increases and spending cuts at year-end?
Total
(n=91)

Manufacturing
(n=22)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=0)

Services
(n=13)

We are not taking any steps in response to the "fiscal cliff"

Delaying hiring

Accelerating investments

Delaying investments

Insufficient sample size this quarter

Accelerating major transactions

Delaying major transactions

Accelerating hiring

Other

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

33

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Industry – Top Challenges
What are your company’s top industry challenges?
Total
(n=92)
Pricing trends

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=0)*

Services
(n=13)

Industry regulation/legislation Market contraction (declining demand/customer base) Availability of people/skill sets Market growth (increasing number of products/services/ customers) Overcapacity/excess inventory

New competitive tactics

Mergers and acquisitions

New market entrants (domestic)

Product substitutes

Input prices

Changing cost structures

Foreign competition

Other

0% 25% 50% 75% 0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%
* Q2 12 data not shown (insufficient sample size)

0% 25% 50% 75%

Q3 11 34

Q4 11

Q1 12

Q2 12

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Top Challenges
What are your company’s top three company-specific challenges?
Total
(n=93)
Revenue growth/preservation in existing markets Talent (availability, development, morale, and cost) Prioritizing investments

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)*

Services
(n=13)

Framing and/or adapting strategy Revenue growth/preservation in new markets Addressing government policy and regulation Overhead cost reduction Pursuing or responding to M&A opportunities/approaches Managing assets and working capital Direct cost reduction Managing operations and supply chain risks Financing and liquidity

Projecting and reporting results

Other

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%
* Q2 12 data not shown (insufficient sample size)

0% 25% 50% 75%

Q3 11 35

Q4 11 CFO Signals

Q1 12

Q2 12

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Business Focus
What is your company’s business focus for the next 12 months?
Total
(n=93)

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)*

Services
(n=13)

Revenue growth/preservation current markets

Revenue growth/preservation new markets

Cost Reduction - direct costs

Cost Reduction - indirect costs

Asset Efficiency - fixed assets

Asset efficiency - working capital

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

0%

25%

50%

Q3 11 36

Q4 11

Q1 12

Q2 12

Totals may not add to 100% due to possible respondent selection of an “other” option that is not included in this chart.

* Q2 12 data not shown (insufficient sample size)

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Operational Results Expectations
Compared to the past 12 months, how do you expect the following factors to change over the next 12 months?

Operating Results*
(n=83) 30% 25% 20% 15% 10% 5% 0% (n=23) (n=10) (n=7) (n=8) (n=18) (n=4) (n=1)** (n=12)

Sales - 4Q11 Earnings - 4Q11

Sales - 1Q12 Earnings - 1Q12

Sales - 2Q12 Earnings - 2Q12

Costs*
7% 6% 5% 4% 3% 2% 1% 0% (n=86) (n=23) (n=11) (n=6) (n=10) (n=18) (n=4) (n=1)** (n=13)

* Averages have been adjusted to eliminate the effects of stark outliers. ** Q212 data not shown (insufficient sample size)

Wages/salaries - 4Q11 Employee benefits - 4Q11 Non-labor input costs - 4Q11

Wages/salaries - 1Q12 Employee benefits - 1Q12 Non-labor input costs - 1Q12

Wages/salaries - 2Q12 Employee benefits - 2Q12 Non-labor input costs - 2Q12

37

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Investment and Employment Expectations
Compared to the past 12 months, how do you expect the following factors to change over the next 12 months?

Investments*
(n=59-74) 20% 15% 10% 5% 0% -5% -10% Dividends - 4Q11 Capital spending - 1Q12 Research and development - 2Q12 Dividends - 1Q12 Capital spending - 2Q12 Marketing and advertising - 4Q11 Dividends - 2Q12 Research and development - 4Q11 Marketing and advertising - 1Q12 Capital spending - 4Q11 Research and development - 1Q12 Marketing and advertising - 2Q12 (n=11-14) (n=6-11) (n=4-7) (n=5-8) (n=9-11) (n=2-4) (n=0)** (n=6)

Employment*
(n=56-76)
15% 10% 5% 0% -5% -10% Number of domestic personnel - 4Q11 Number of domestic personnel - 2Q12 Number of offshore personnel (internal company personnel) - 1Q12 Use of outsourced/offshore third-party services (contracted personnel) - 4Q11 Use of outsourced/offshore third-party services (contracted personnel) - 2Q12 Number of domestic personnel - 1Q12 Number of offshore personnel (internal company personnel) - 4Q11 Number of offshore personnel (internal company personnel) - 2Q12 Use of outsourced/offshore third-party services (contracted personnel) - 1Q12
* Averages have been adjusted to eliminate the effects of stark outliers ** Q212 data not shown (insufficient sample size)

(n=11-14)

(n=6-10)

(n=5-7)

(n=5-8)

(n=7-13)

(n=1-4)

(n=0)**

(n=4-6)

38

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Own-Company Optimism
How does your optimism regarding your company compare to last quarter?
Total
100%
(n=92)

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=0)*

Services
(n=2)

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Less optimistic primarily due to external factors (e.g., economy, industry, and market trends)

* Q2 12 data not shown (insufficient sample size)

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)

39

CFO Signals

More optimistic primarily due to external factors (e.g., economy, industry, and market trends)

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Earnings Growth vs. Sales Growth
Can your earnings growth outpace your sales growth?
Total (n=91)
Yes

No

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes - cost savings/efficiencies can fuel this for more than a year Yes - cost savings/efficiencies can fuel this for the next year Yes - cost savings/efficiencies can fuel this for the next six months Not anymore - cost savings/efficiencies fueled this for a while, but they have run their course No - cost savings/efficiencies have not been able to fuel this

Manufacturing (n=23)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Financial Services (n=23)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Retail / Wholesale (n=10)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Healthcare / Pharma (n=4)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Technology (n=7)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Services (n=12)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Energy / Resources (n=10)
Yes No
0% 10% 20% 30% 40% 50% 60% 70% 80%

Telecom / Media / Entertainment (n=0)
Yes No
0% 10% 20%

Insufficient sample size this quarter
30% 40% 50% 60% 70% 80%

40

CFO Signals

Totals may not add to 100% due to possible respondent selection of an “other” option that is not included in these charts.

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Company – Strengthening Margins
Which of the following steps are you taking to strengthen margins?
Total (n=92)
Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring 0% Already taken - done 20% 40% 60% 80% Not yet - and unlikely 100%

Already taken - more coming

Not yet - but likely

Manufacturing (n=23)
Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring

Financial Services (n=23)

Retail / Wholesale (n=10)
Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring

Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring

Healthcare / Pharma (n=4)

Technology (n=7)
Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring

Services (n=13)

Energy / Resources (n=10)
Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring Reduce indirect costs through efficiency gains Reduce direct costs through process efficiency gains Reduce direct costs through supply chain changes Raise prices Reduce focus on lower-margin businesses Reduce focus on lower-margin customers Reduce direct costs through outsourcing/offshoring Reduce indirect costs through outsourcing/offshoring

Telecom / Media / Entertainment (n=0) Insufficient sample size this quarter

41

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization – Top Challenges
What are your finance organization’s top three current challenges?
Total
(n=93)
Providing metrics, information and tools needed for sound business decisions Influencing business strategy and operational priorities Ensuring initiatives achieve desired business outcomes Forecasting and reporting business results Supporting a major infrastructure initiative (e.g., IT systems change, shared services consolidation, outsourcing) Securing and retaining finance talent Aligning budgets and capex decisions with priorities/strategies Supporting a major business initiative (e.g., geographic or product/service expansion, new production facility) Ensuring funding, liquidity and acceptable costs of capital Supporting a major transaction (e.g., merger, acquisition, divestiture) Ensuring compliance with financial reporting and control requirements Managing finance organization's costs Addressing changes in tax laws and/or accounting standards Other, please specify

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)*

Services
(n=13)

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75% 0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%
* Q2 12 data not shown (insufficient sample size)

0% 25% 50% 75%

Q3 11 42

Q4 11

Q1 12

Q2 12

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization – Pricing Activities
How involved is your finance organization in the following pricing activities?

Total (n=93)
Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments 0% 20% 40% 60% 80% 100%

Heavily

Moderately

Somewhat

Not at all

Manufacturing (n=23)
Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments

Financial Services (n=23)

Retail / Wholesale (n=10)
Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments

Healthcare / Pharma (n=4)

Technology (n=7)
Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments

Services (n=13)

Energy / Resources (n=10)
Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments Track and report pricing performance and profitability Align pricing strategies with corporate strategies Manage exceptions to general policies Set pricing based on data and analytical approaches Enforce pricing policies Maximize benefits of customer-specific investments

Telecom / Media / Entertainment (n=1) Insufficient sample size this quarter

43

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Finance Organization – Uses of Profitability Analyses
What levels of profitability analysis do you utilize, and what decisions does these analyses impact?
Total
(n=93)

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)

Services
(n=13)

Consolidated/ business level

Geographic/ region level

Insufficient sample size this quarter

Product/ service level

Customer level

0%

25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

44

CFO Signals

0%

25%

50%

75%

Impacts Compensation

Impacts Operating Spend

Impacts Investment

Impacts Pricing

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career – Top Job Stresses
What are your top three job stresses?
Total
(n=93)
Major change initiatives (e.g., M&A, IT systems change, IPO)

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)*

Services
(n=13)

Changing regulatory requirements

Pressures from poor company performance Insufficient support staff (skills and/or number) Excessive workload/responsibilities

Strategic ambiguity

Internal power struggles and politics* Poor quantity/quality/reliability of information Insufficient internal political influence/authority

Other, please specify

Relationship with and demands from board Expansion of job role/responsibility into areas of less comfort

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%
* Q2 12 data not shown (insufficient sample size)

0% 25% 50% 75%

Q3 11 45

Q4 11

Q1 12

Q2 12

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career – Selecting a Successor
What factors do you think are most important in selecting a successor?
Total
(n=93)
Personal compatibility with CEO Internal relationship-building expertise

Manufacturing
(n=23)

Retail / Wholesale
(n=10)

Technology
(n=7)

Energy / Resources
(n=10)

Financial Services
(n=23)

Healthcare / Pharma
(n=4)

Telecom / Media / Ent.
(n=1)

Services
(n=13)

FP&A background

Strategy development background

Company knowledge

External relationship-building expertise Financial accounting knowledge Capital/treasury management experience

Insufficient sample size this quarter

Industry experience

Ownership type (i.e. public, private) experience

Other

Audit/controls experience

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

0% 25% 50% 75%

46

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

CFO Career – Personal Investments
How are you allocating your personal investments?
CFO Allocations of Personal Investments
Mean Values by Industry
Manufacturing Cash Retail/Wholesale Technology Energy & Resources Financial Services Healthcare/Pharma Services Tel/Media/Entertainment. – Data Unavailable Foreign Stocks – Mature Markets
7.2% 22.9% 33.7% 30.1% 6.0% 5.6% 31.5% 20.2% 32.6% 10.1%

Stocks/Bonds

Stocks

14.6%

31.5%

29.2%

19.1%

5.6%

Bonds

Domestic Stocks

13.6%

46.6%

19.3%

17.0%

3.4%

Foreign Stocks

Foreign Stocks – Emerging Markets

Cross Industry Mean

Real Estate

8.2%

17.6%

15.3%

50.6%

8.2%

Stocks/Bonds/ Commodities Stocks/Bonds/ Real Estate

Commodities

2.4%

10.8%

21.7%

44.6%

20.5%

47

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Industry highlights

48

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Manufacturing
(n = 23)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on global economic uncertainty, the European economic crisis, and the availability of experienced staff (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (26%) More optimistic – internal factors (13%) No change (35%) Less optimistic – external factors (13%) Less optimistic – internal factors (13%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 8.7 13.4 3.6 4.4 3.9 4.8 11.5 4.8 4.6 2.2 4.6

Median % Change YoY
9.0 10.0 3.0 4.0 3.0 0.0 10.0 4.0 2.0 1.0 2.0

What are your company’s top economic challenges?
Currency exchange rates (52%) Environmental policy (39%) Corporate tax policy (35%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (41%) No (59%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (70%) No (17%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (13%) Cut spending and freeze taxes (35%) Cut spending and raise taxes (17%) No near-term cuts; forge a long-term debt reduction plan (30%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (48%) Supporting a major infrastructure initiative (39%) Ensuring initiatives achieve desired outcomes (30%)

Industry
What are your company’s top industry challenges?
Market contraction (44%) Pricing trends (39%) Input prices (35%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.6) Align pricing strategies with corporate strategies (3.0) Manage exceptions to general policies (2.9) Enforce pricing policies (2.8) Set pricing based on data and analytical approaches (2.8) Maximize benefits of customer-specific investments (2.4)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (52%) Talent (52%) Revenue growth/preservation in new markets (35%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (30%) Revenue growth/preservation in new markets (17%) Cost reduction – direct costs (12%) Cost reduction – indirect costs (12%) Asset efficiency – fixed assets (11%) Asset efficiency – working capital (17%)

What are the most frequent uses of profitability analyses in your finance organization?
Product/service level – impacts pricing (78%) Consolidated/business level – impacts investment (74%) Consolidated/business level – impacts compensation (65%)

Career
What are your top job stresses?
Major change initiatives (52%) Pressures from poor company performance (39%) Insufficient support staff (35%)

1.3

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce direct costs through process efficiency gains (87%) Raise prices (82%) Reduce direct costs through supply chain changes (74%)

What are the top factors in determining your successor?
Personal compatibility with CEO (57%) Internal relationship-building expertise (57%) Strategy development background (39%)

*Averages have been adjusted to eliminate the effects of stark outliers.

49

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Retail / Wholesale
(n = 10)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on the impacts of European debt/Eurozone instability and US economic concerns (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (10%) More optimistic – internal factors (30%) No change (50%) Less optimistic – external factors (10%) Less optimistic – internal factors (0%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 7.3 15.3 1.7 4.9 3.7 4.4 7.0 1.3 4.2 0.0 4.1

Median % Change YoY
7.0 14.0 3.0 3.5 3.0 0.0 7.5 0.0 3.0 0.0 0.0

What are your company’s top economic challenges?
Unemployment (70%) Inflation (40%) Social policy/spending/investment (30%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (20%) No (80%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (60%) No (30%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (0%) Cut spending and freeze taxes (60%) Cut spending and raise taxes (10%) No near-term cuts; forge a long-term debt reduction plan (20%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (50%) Influencing business strategy and operational priorities (50%) Forecasting and reporting business results (40%)

Industry
What are your company’s top industry challenges?
Pricing trends (50%) New competitive tactics (50%) Industry regulation/legislation (30%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.4) Manage exceptions to general policies (3.0) Set pricing based on data and analytical approaches (2.7) Enforce pricing policies (2.7) Maximize benefits of customer-specific investments (2.6) Align pricing strategies with corporate strategies (2.4)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (60%) Framing and/or adapting strategy (50%) Revenue growth/preservation in new markets (30%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (44%) Revenue growth/preservation in new markets (17%) Cost reduction – direct costs (9%) Cost reduction – indirect costs (12%) Asset efficiency – fixed assets (5%) Asset efficiency – working capital (10%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts operating spend (80%) Product/service level – impacts operating spend (70%) Product/service level – impacts investment (70%)

Career
What are your top job stresses?
Internal power struggles and politics (50%) Major change initiatives (50%) Insufficient internal political influence/authority (40%)

2.1

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce indirect costs through efficiency gains (100%) Raise prices (90%) Reduce direct costs through process efficiency gains (70%)

What are the top factors in determining your successor?
Personal compatibility with CEO (60%) Company knowledge (40%) External relationship-building expertise (40%)

*Averages have been adjusted to eliminate the effects of stark outliers.

50

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Technology
(n = 7)
Economy
What one high-impact risk are you worried about most?
No consistent patterns in findings (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (29%) More optimistic – internal factors (29%) No change (0%) Less optimistic – external factors (14%) Less optimistic – internal factors (29%)

Operational Metrics*
(CFOs’ expected changes)

What are your company’s top economic challenges?
Social policy/spending/investment (71%) Unemployment (71%) Currency exchange rates (29%)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 4.6 11.7 2.8 5.0 2.4 1.0 11.0 2.0 4.7 2.3 9.8

Median % Change YoY
5.0 10.0 3.0 4.0 2.0 0.0 7.5 0.0 5.0 0.0 10.0

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (29%) No (71%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (86%)
No (14%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (0%) Cut spending and freeze taxes (29%) Cut spending and raise taxes (43%) No near-term cuts; forge a long-term debt reduction plan (14%)

Finance Organization
What are your finance organization’s top challenges?
Forecasting and reporting business results (57%) Providing metrics/info/tools for business decisions (43%) Aligning budgets/capex decisions with priorities/strategies (43%)

Industry
What are your company’s top industry challenges?
New competitive tactics (57%) Pricing trends (43%) Product substitutes (29%0

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (2.6) Manage exceptions to general policies (2.6) Enforce pricing policies (2.3) Align pricing strategies with corporate strategies (2.1) Set pricing based on data and analytical approaches (2.1) Maximize benefits of customer-specific investments (1.6)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (86%) Framing and/or adapting strategy (71%) Revenue growth/preservation in new markets (57%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (35%) Revenue growth/preservation in new markets (27%) Cost reduction – direct costs (18%) Cost reduction – indirect costs (11%) Asset efficiency – fixed assets (1%) Asset efficiency – working capital (4%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts operating spend (86%) Consolidated/business level – impacts compensation (86%) Geographic/region level – impacts investment (70%)

Career
What are your top job stresses?
Pressures from poor company performance (71%) Strategic ambiguity (43%) Major change initiatives (29%)

5.0

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce indirect costs through efficiency gains (86%) Reduce direct costs through outsourcing/offshoring (86%) Reduce focus on lower-margin businesses (71%)

What are the top factors in determining your successor?
Personal compatibility with CEO (71%) FP&A background (57%) Strategy development background (29%)

*Averages have been adjusted to eliminate the effects of stark outliers.

51

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Energy / Resources
(n = 10)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on global economic recession, regulatory conditions, and labor concerns (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (20%) More optimistic – internal factors (20%) No change (20%) Less optimistic – external factors (40%) Less optimistic – internal factors (0%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 6.5 10.0 3.0 4.3 5.6 7.1 19.3 0.3 0.0 4.2 0.5

Median % Change YoY
5.0 5.0 3.0 4.0 3.0 3.0 15.0 0.0 0.0 3.5 0.0

What are your company’s top economic challenges?
Environmental policy (80%) Social policy/spending/investment (50%) Corporate tax policy (50%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (30%) No (70%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (60%) No (30%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (10%) Cut spending and freeze taxes (50%) Cut spending and raise taxes (10%) No near-term cuts; forge a long-term debt reduction plan (30%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (70%) Influencing business strategy and operational priorities (50%) Ensuring funding, liquidity, and acceptable costs of capital (50%)

Industry
What are your company’s top industry challenges?
Industry regulation/legislation (70%) Availability of people/skill sets (70%) Pricing trends (50%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Set pricing based on data and analytical approaches (2.7) Align pricing strategies with corporate strategies (2.6) Manage exceptions to general policies (2.5) Track and report pricing performance and profitability (2.4) Enforce pricing policies (2.1) Maximize benefits of customer-specific investments (2.0)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (50%) Talent (50%) Prioritizing investments (40%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (26%) Revenue growth/preservation in new markets (18%) Cost reduction – direct costs (15%) Cost reduction – indirect costs (13%) Asset efficiency – fixed assets (15%) Asset efficiency – working capital (9%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts investment (80%) Consolidated/business level – impacts operating spend (70%) Geographic/region level – impacts investment (70%)

Career
What are your top job stresses?
Major change initiatives (50%) Changing regulatory requirements (40%) Pressures from poor company performance (30%)

4.0

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce direct costs through process efficiency gains (80%) Reduce indirect costs through efficiency gains (70%) Reduce direct costs through supply chain changes (60%)

What are the top factors in determining your successor?
Personal compatibility with CEO (50%) External relationship-building expertise (50%) Capital/treasury management experience (50%)

*Averages have been adjusted to eliminate the effects of stark outliers.

52

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Financial Services
(n = 23)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on economic impacts of Europe, financial market instability, and regulatory conditions (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (9%) More optimistic – internal factors (22%) No change (44%) Less optimistic – external factors (22%) Less optimistic – internal factors (4%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 6.6 6.3 3.3 4.1 2.1 3.3 7.9 2.1 5.7 2.2 2.8

Median % Change YoY
5.0 7.0 3.0 4.5 2.0 0.0 2.0 0.0 5.0 0.0 0.0

What are your company’s top economic challenges?
Unemployment (52%) Social policy/spending/investment (48%) Capital cost/availability (35%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (30%) No (70%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (65%) No (35%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (9%) Cut spending and freeze taxes (17%) Cut spending and raise taxes (30%) No near-term cuts; forge a long-term debt reduction plan (30%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (52%) Ensuring initiatives achieve desired business outcomes (44%) Forecasting and reporting business results (39%)

Industry
What are your company’s top industry challenges?
Industry regulation/legislation (74%) Pricing trends (61%) Market growth (30%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.4) Align pricing strategies with corporate strategies (3.3) Set pricing based on data and analytical approaches (3.1) Manage exceptions to general policies (2.9) Enforce pricing policies (2.5) Maximize benefits of customer-specific investments (2.1)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (70%) Prioritizing investments (44%) Talent (39%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (38%) Revenue growth/preservation in new markets (20%) Cost reduction – direct costs (15%) Cost reduction – indirect costs (13%) Asset efficiency – fixed assets (7%) Asset efficiency – working capital (5%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts compensation (91%) Product/service level – impacts pricing (73%) Consolidated/business level – impacts operating spend (61%)

Career
What are your top job stresses?
Changing regulatory requirements (65%) Major change initiatives (48%) Insufficient support staff (35%)

5.9

0.0

What are the top actions you have already taken to strengthen your margins?

Reduce indirect costs through process efficiency gains (100%) Reduce direct costs through efficiency gains (83%) Reduce direct costs through supply chain changes (73%)

What are the top factors in determining your successor?
Personal compatibility with CEO (48%) External relationship-building expertise (48%) Company knowledge (39%)

*Averages have been adjusted to eliminate the effects of stark outliers.

53

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Healthcare / Pharmaceuticals
(n = 4)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on industry changes resulting from government regulation (please see page 28 for more information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (0%) More optimistic – internal factors (0%) No change (100%) Less optimistic – external factors (0%) Less optimistic – internal factors (0%)

Operational Metrics*
(CFOs’ expected changes)

What are your company’s top economic challenges?
Social policy/spending/investment (100%) Environmental policy (50%) Capital cost/availability (50%)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 4.3 6.3 2.8 2.3 2.7 0.0 13.3 8.0 1.5 2.5 4.5

Median % Change YoY
4.0 7.0 2.5 1.5 3.5 0.0 10.0 5.0 1.5 2.0 4.5

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (75%) No (25%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (75%) No (0%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (0%) Cut spending and freeze taxes (25%) Cut spending and raise taxes (75%) No near-term cuts; forge a long-term debt reduction plan (0%)

Finance Organization
What are your finance organization’s top challenges?
Supporting a major business initiative (75%) Supporting a major infrastructure initiative (50%) Ensuring initiatives achieve desired business outcomes (25%)

Industry
What are your company’s top industry challenges?
Industry regulation/legislation (75%) New domestic market entrants (75%) Availability of people/skill sets (50%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.8) Align pricing strategies with corporate strategies (3.8) Enforce pricing policies (3.8) Manage exceptions to general policies (3.5) Set pricing based on data and analytical approaches (3.5) Maximize benefits of customer-specific investments (2.8)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (75%) Talent (50%) Prioritizing investments (50%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (28%) Revenue growth/preservation in new markets (15%) Cost reduction – direct costs (15%) Cost reduction – indirect costs (14%) Asset efficiency – fixed assets (19%) Asset efficiency – working capital (10%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts compensation (100%) Geographic/region level – impacts compensation (100%) Consolidated/business level – impacts operating spend (75%)

Career
What are your top job stresses?
Major change initiatives (75%) Changing regulatory requirements (75%) Insufficient support staff (50%)

8.5

8.5

What are the top actions you have already taken to strengthen your margins?

Reduce indirect costs through process efficiency gains (100%) Reduce direct costs through efficiency gains (100%) Reduce direct costs through supply chain changes (100%)

What are the top factors in determining your successor?
Industry experience (75%) Internal relationship-building expertise (50%) Strategy development background (50%)

*Averages have been adjusted to eliminate the effects of stark outliers.

54

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Telecom / Media / Entertainment
(n = 1)
Economy
What one high-impact risk are you worried about most?

Company (cont.)
How does your optimism regarding your company compare to last quarter?

Operational Metrics*
(CFOs’ expected changes)

Mean %
What are your company’s top economic challenges? Do you think earnings growth can outpace sales growth? Sales What are the top actions you have already taken to strengthen your margins? Earnings Wages and salaries Employee benefits

Median % Change YoY

Category

Change YoY

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?

How would you solve the national debt crisis?

Finance Organization Industry

Insufficient sample size this quarter What are your finance organization’s top challenges?

Non-labor input costs and commodities Dividends Capital spending

What are your company’s top industry challenges? What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)

Company
What are your top company-specific challenges?

Research and development

Marketing and advertising
Number of domestic personnel What are the most frequent uses of profitability analyses in your finance organization? Number of offshore personnel Use of outsourced/ offshore third-party services
*Averages have been adjusted to eliminate the effects of stark outliers.

What is your company’s business focus for the next 12 months?

Career
Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? What are your top job stresses?

What are the top factors in determining your successor?

55

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Services
(n = 13)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on general economic conditions and company-specific concerns (please see page 28 for more information). Social policy/spending/investment (69%) Unemployment (54%) Other (39%)

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (23%) More optimistic – internal factors (31%) No change (8%) Less optimistic – external factors (31%) Less optimistic – internal factors (8%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 3.8 9.1 2.4 5.6 2.2 1.7 11.2 1.4 3.0 1.9 2.9

Median % Change YoY
5.0 5.0 3.0 5.0 2.0 0.0 5.0 0.0 4.0 1.0 0.0

What are your company’s top economic challenges?

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (38%) No (62%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (58%) No (42%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (23%) Cut spending and freeze taxes (15%) Cut spending and raise taxes (39%) No near-term cuts; forge a long-term debt reduction plan (23%)

Finance Organization
What are your finance organization’s top challenges?
Influencing bus. strategy and operational priorities (62%) Ensuring initiatives achieve desired business outcomes (54%) Providing metrics/info/tools for business decisions (46%)

Industry
What are your company’s top industry challenges?
Pricing trends (46%) New competitive tactics (39%) Market contraction (39%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.0) Align pricing strategies with corporate strategies (2.6) Manage exceptions to general policies (2.5) Enforce pricing policies (2.4) Set pricing based on data and analytical approaches (2.2) Maximize benefits of customer-specific investments (1.8)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (62%), Framing and/or adapting strategy (39%) Addressing government policy and regulation (31%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (38%) Revenue growth/preservation in new markets (13%) Cost reduction – direct costs (19%) Cost reduction – indirect costs (9%) Asset efficiency – fixed assets (15%) Asset efficiency – working capital (5%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts operating spend (92%) Consolidated/business level – impacts compensation (69%) Geographic/region level – impacts investment (62%)

Career
What are your top job stresses?
Pressures from poor company performance (54%) Internal power struggles and politics (31%) Insufficient support staff (31%)

3.5

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce direct costs through process efficiency gains (77%) Reduce indirect costs through efficiency gains (69%) Raise prices (69%)

What are the top factors in determining your successor?
Personal compatibility with CEO (62%) Internal relationship-building expertise (54%) FP&A background (54%)

*Averages have been adjusted to eliminate the effects of stark outliers.

56

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Country highlights

57

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

United States
(n = 63)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on global economic uncertainty, European economic conditions, potential regulatory changes, and companyspecific concerns (please see page 28 for more industry-based information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (13%) More optimistic – internal factors (19%) No change (37%) Less optimistic – external factors (21%) Less optimistic – internal factors (11%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 6.7 12.3 2.9 4.9 3.0 4.0 9.6 3.2 4.6 1.9 4.2

Median % Change YoY
5.0 9.0 3.0 5.0 3.0 0.0 5.0 0.0 4.0 1.0 0.5

What are your company’s top economic challenges?
Unemployment (59%) Social policy/spending/investment (51%) Corporate tax policy (35%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (33%) No (67%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (76%) No (19%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (8%) Cut spending and freeze taxes (33%) Cut spending and raise taxes (29%) No near-term cuts; forge a long-term debt reduction plan (22%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (49%) Influencing business strategy and operational priorities (38%) Forecasting and reporting business results (32%)

Industry
What are your company’s top industry challenges?
Industry regulation/legislation (49%) Pricing trends (46%) Market contraction (32%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.2) Align pricing strategies with corporate strategies (2.9) Manage exceptions to general policies (2.8) Set pricing based on data and analytical approaches (2.8) Enforce pricing policies (2.6) Maximize benefits of customer-specific investments (2.2)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (65%) Prioritizing Investments (35%) Talent (35%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts compensation (79%) Consolidated/business level – impacts operating spend (70%) Consolidated/business level – impacts investment (65%)

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (37%) Revenue growth/preservation in new markets (19%) Cost reduction – direct costs (14%) Cost reduction – indirect costs (12%) Asset efficiency – fixed assets (8%) Asset efficiency – working capital (8%)

Career
What are your top job stresses?
Major change initiatives (46%) Changing regulatory requirements (40%) Pressures from poor company performance (38%)

4.4

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce indirect costs through efficiency gains (84%) Reduce direct costs through efficiency gains (84%) Reduce direct costs through supply chain changes (68%)

What are the top factors in determining your successor?
Personal compatibility with CEO (56%) Internal relationship-building expertise (44%) FP&A background (38%)

*Averages have been adjusted to eliminate the effects of stark outliers.

58

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Canada
(n = 19)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on global economic uncertainty, European economic conditions, and financial market instability (please see page 28 for more industry-based information).

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (32%) More optimistic – internal factors (26%) No change (26%) Less optimistic – external factors (16%) Less optimistic – internal factors (0%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 5.9 4.6 2.8 3.6 2.8 2.9 11.2 1.1 1.4 2.7 2.4

Median % Change YoY
7.5 6.0 3.0 3.0 2.0 0.0 10.0 0.0 0.0 1.0 0.0

What are your company’s top economic challenges?
Environmental policy (63%) Capital cost/availability (42%) Other, unspecified (37%)

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (33%) No (67%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (37%)
No (47%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (21%) Cut spending and freeze taxes (32%) Cut spending and raise taxes (11%) No near-term cuts; forge a long-term debt reduction plan (32%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (47%) Influencing business strategy and operational priorities (47%) Ensuring initiatives achieve desired business outcomes (42%)

Industry
What are your company’s top industry challenges?
Industry regulation/legislation (47%) Availability of people/skill (47%) Pricing trends (42%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Track and report pricing performance and profitability (3.4) Manage exceptions to general policies (2.9) Align pricing strategies with corporate strategies (2.5) Set pricing based on data and analytical approaches (2.5) Enforce pricing policies (2.4) Maximize benefits of customer-specific investments (1.8)

Company
What are your top company-specific challenges?
Talent (53%) Revenue growth/preservation in existing markets (47%) Pursuing or responding to M&A (32%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (26%) Revenue growth/preservation in new markets (18%) Cost reduction – direct costs (14%) Cost reduction – indirect costs (12%) Asset efficiency – fixed assets (15%) Asset efficiency – working capital (9%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts investment (84%) Consolidated/business level – impacts operating spend (74%) Consolidated/business level – impacts compensation (68%)

Career
What are your top job stresses?
Major change initiatives (58%) Changing regulatory requirements (42%) Pressures from poor company performance(42%)

0.4

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce indirect costs through efficiency gains (79%) Raise prices (78%) Reduce direct costs through efficiency gains (69%)

What are the top factors in determining your successor?
Personal compatibility with CEO (68%) Internal relationship-building expertise (53%) External relationship-building expertise (37%)

*Averages have been adjusted to eliminate the effects of stark outliers.

59

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Mexico
(n = 10)
Economy
What one high-impact risk are you worried about most?
Most-cited risks center on global economic uncertainty and European economic conditions (please see page 28 for more industry-based information). Social policy/spending/investment (70%) Capital cost/availability (50%) Currency exchange rates (50%)

Company (cont.)
How does your optimism regarding your company compare to last quarter?
More optimistic – external factors (20%) More optimistic – internal factors (30%) No change (20%) Less optimistic – external factors (30%) Less optimistic – internal factors (0%)

Operational Metrics*
(CFOs’ expected changes)

Mean % Category Change YoY
Sales Earnings Wages and salaries Employee benefits Non-labor input costs and commodities Dividends Capital spending Research and development 8.7 11.7 4.0 3.8 5.4 5.7 22.7 5.0 4.3 1.9 3.6

Median % Change YoY
5.0 10.0 4.0 4.0 4.0 0.0 25.0 2.5 0.0 0.0 0.0

What are your company’s top economic challenges?

Is your company taking steps in response to the “fiscal cliff” of pending tax increases and spending cuts?
Yes (40%) No (60%)

Compared to the past 12 months, how do you expect your performance, spending, and hiring to change over the next 12 months? Please see table at right. Do you think earnings growth can outpace sales growth?
Yes (60%) No (30%)

How would you solve the national debt crisis?

Freeze spending and raise taxes (10%) Cut spending and freeze taxes (10%) Cut spending and raise taxes (40%) No near-term cuts; forge a long-term debt reduction plan (40%)

Finance Organization
What are your finance organization’s top challenges?
Providing metrics/info/tools for business decisions (60%) Ensuring initiatives achieve desired business outcomes (50%) Supporting a major infrastructure initiative (40%)

Industry
What are your company’s top industry challenges?
Pricing trends (70%) New market entrants (60%) Overcapacity/excess inventory (30%)

What is your finance organization’s level of involvement in pricing activities? (1 = no involvement; 4 = heavy involvement)
Set pricing based on data and analytical approaches (3.3) Track and report pricing performance and profitability (3.1) Align pricing strategies with corporate strategies (3.1) Enforce pricing policies (3.0) Manage exceptions to general policies (2.6) Maximize benefits of customer-specific investments (2.5)

Company
What are your top company-specific challenges?
Revenue growth/preservation in existing markets (60%) Talent (60%) Framing and/or adapting strategy (40%)

Marketing and advertising
Number of domestic personnel Number of offshore personnel Use of outsourced/ offshore third-party services

What is your company’s business focus for the next 12 months?
Revenue growth/preservation in existing markets (32%) Revenue growth/preservation in new markets (16%) Cost reduction – direct costs (17%) Cost reduction – indirect costs (11%) Asset efficiency – fixed assets (10%) Asset efficiency – working capital (14%)

What are the most frequent uses of profitability analyses in your finance organization?
Consolidated/business level – impacts operating spend (70%) Geographic/regional level – impacts investment (60%) Product/service level – impacts pricing (60%)

Career
What are your top job stresses?
Insufficient support staff (skills and/or number) (40%) Strategic ambiguity (40%) Major change initiatives (30%)

3.8

0.0

What are the top actions you have already taken to strengthen your margins?
Reduce direct costs through efficiency gains (90%) Reduce direct costs through supply chain changes (90%) Reduce indirect costs through efficiency gains (80%)

What are the top factors in determining your successor?
Company knowledge (50%) Strategy development background (50%) External relationship-building expertise (40%)

*Averages have been adjusted to eliminate the effects of stark outliers.

60

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

About the survey

61

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Demographics
Annual Revenue ($U.S.)
(n=92)

Ownership
(n=92)

$5.1B $10B, 18.5% More than $10B, 19.6% Less than $1B, 22.8%

Private, 25.0%
$1B - $5B, 39.1%

Public, 75.0%

Revenue from North America
(n=92)

Subsidiary Company
Yes (Subsid. of NonNorth American Company), 8.9%
(n=90)

21% - 40%, 7.6%

20% or less, 6.5%

41% - 60%, 16.3%

81% - 100%, 55.4%

Yes (Subsid. of North American Company), 15.6% No (Holding Company/ Group), 75.6%

61% - 80%, 14.1%

62

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Demographics
Country
(n=92)

CFO Experience (Years)
More than 20, 9.2%
(n=92)

Mexico, 10.9%
Canada, 20.7% U.S., 68.5%

11 to 20, 29.9%

Less than 5, 29.9%

5 to 10, 31.0%

Industry
(n=93)

Previous CFO Role
(n=92)

Consultant, 2.2%

Healthcare/ Pharma, 4.3%

Other, 8.7%

Services, 14.0%

Manufacturing, 24.7%

Technology, 7.5% Other, 2.2% Energy & Resources, 10.8% Financial Services, 10.8% Tel/Med/Ent, 1.1%

Bus. Unit Leader, 8.7% FP&A Leader, 6.5% Treasurer, 10.9% Controller, 23.9% Public Accounting Prof.,, 2.2%

CFO of Another Org., 37.0%

Retail/ Wholesale, 10.8%

63

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

Methodology
Background
The Deloitte North American CFO Survey is a quarterly survey of CFOs from large, influential companies across North America. The purpose of the survey is to provide these CFOs with quarterly information regarding the perspectives and actions of their CFO peers across five areas: CFO career, finance organization, company, industry, and economy.

Participation
This survey seeks responses from client CFOs across the United States, Canada, and Mexico. The sample includes CFOs from public and private companies that are predominantly over $3B in annual revenue. Respondents are nearly exclusively CFOs. Participation is open to all sectors except for government.

Survey Execution
At the opening of each survey period, CFOs receive an email containing a link to an online survey hosted by a third-party service provider. The response period is typically two weeks, and CFOs receive a summary report approximately two weeks after the survey closes. Only CFOs who respond to the survey receive the summary report for the first 30 days after the report is released.

Nature of Results
This survey is a “pulse survey” intended to provide CFOs with information regarding their CFO peers’ thinking across a variety of topics; it is not, nor is it intended to be, scientific in any way, including in its number of respondents, selection of respondents, or response rate – especially within individual industries. Accordingly, this report summarizes findings for the surveyed population but does not necessarily indicate economy- or industry-wide perceptions or trends.

64

CFO Signals

Not for public distribution until confirmed by PR eg. Wednesday June 27, 2012 or Thursday June 28, 2012

As used in this survey, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited.

Sign up to vote on this title
UsefulNot useful