CFO Career Grid Corporate Cost Accnt. Planning, Reporting, Investor Relations Business Analysis, Treasury Strategic Planning Acct.Audit Tax Entry Manager New Co.’s International Crossfunctional Development of Finance

Tax - Responsibilities Federal –Social Security –Corporate –Sales State –Sales –Payroll Audit –Any of the above.

Tax - Personnel Personnel –Rules & Regs.  Specialized/Technical People who make it their career During Audit Time(s) –Need other Specialists & Best Negotiators to provide support

Tax - Responsibilities Minimization of Given Tax Payments Effects of M&A’s –Classification of Assets –Ownership –Depreciation

Tax - Responsibilities International Planning Function –For at least 4-5 Countries –(or different places with Impacts on Business) Incentives Tax-Sheltered Programs

International Tax Planning U.S.GmbHEire 35% 55% 10% Royalties Trademarks Management Fees (Same Scenario w/ States) State Income Taxes Property Taxes Sales Taxes Corporate Payrolls

Lessons Learned - Tax Aggressively Challenge IRS –But reserve aggressively as well Global Businesses demand - World Class Planning Always include Tax Management in M&A –Planning and Negotiations –At the Beginning & Strategic Level

Operations & Cost Accounting Highly Competitive Global Economy Firms that Accurately Measure and Understand their Costs may Survive. Those that Don’t, Will Not.

Operations & Cost Accounting Controlling Costs & Capital –Raw Materials –Processes –Systems Capital Budgeting & Returns on Capital -- Productivity

CEO & Team Understand Concepts of System –Shared commitment to making them work efficiently. Timely & Accurate (System) Numbers Operations & Cost Accnt. System Imperatives

Integrated Systems  One Forecast –Marketing - Updated & Sensitized –Manufacturing as necessary –Distribution, etc… (-bonuses based on the above One Forecast) Operations & Cost Accnt. System Imperatives

Operations & Cost Accnt. Systems Management from Top to Bottom must Know the Systems Lower Levels must be trained in the use of the systems and the need for required discipline. –i.e.: Time Lines & Accuracy

Operations & Cost Accnt. Systems Responsibilities: Sales & Production Forecasts –Procurements –Maintenance of Product Data Records Info. must be clearly defined & accepted by the members of management –Inventory Levels Shrinkage, Obsolescence

Operations & Cost Accnt. Systems Assigned to Specific Management Fxns. Computer Based Systems –Updated on a Daily Basis For Key Items: Manufactured, Used, or Purchased –Constant Training & Retraining Accountability for Training

Operations & Cost Accnt. Systems Manufacturing/Inventory Planning Systems –Must be Soundly Conceived »Integrated with: Financial/Cost Accounting Systems

Operations & Cost Accounting Capital Appropriation Needs: 1.Climate in which Innovation Flourishes 2.Acceptable method for Evaluation of Proposals 3.Expenditures on a project to be Controlled & Periodically Reviewed 4.Planned Post-Audit Program 5.Shared Lessons Learned

Operations & Cost Accounting Budgeting & Financial Models Capital Expenditures Cost of Capital Capital Rationing –i.e.: Strategically Important Projects NPV & EVA

Analysis Methods Breakeven Point Cost/Volume Variance

Break-Even Point B.E.P. = Sales Revenue that Equals the Total Variable and Fixed Costs for a Given Volume at a Particular Capacity Utilization. BEP units = Fixed Costs Unit Contribution BEP dollars = Fixed Costs Contribution Margin

Cost-Volume-Profit Analysis $ Units Loss B.E.P. Profit Contribution Fixed Costs

Contribution Analysis Contribution = Excess of Sale(s) over the Variable Costs or the Amount of Money Available to Cover Fixed Costs & Generate Profit.

Ability to Analyze & Explain The Casual Factors Behind Changes in Profits. Variance Analysis

1.Volume Variance Variance = = (100 units – 110 units) * $4 = ($ 40) -- Unfavorable due to Fewer Units Actual Quantity Standard Quantity _ Standard Profit Per Unit *

Variance Analysis 2.Price/Cost Variance Variance = = 110 units * ($9.5/unit - $10/unit) = $ 55 --Favorable if Price Unfavorable if Cost Actual Quantity Actual Price/Cost Standard Price/Cost * _

Earnings Variance Analysis Plan/ForecastActual Volume/Units Revenue$ 1000$ 1045 Costs Profit$ 400$ 330

Earnings Variance Analysis Plan/ForecastActualEarnings Variance Volume100110$ 40 Revenue$ 1000$ 1045 Costs Profit$ 400$ 330 Good Volume Offset by Lower Price Levels and Higher Unit Costs

Operations & Cost Accounting Need to Account for & Manage: Overhead –Payroll, Benefits, etc… Absorption Sunk Fixed Semi-Variable Influenced –Affects of every addition Costs

Operations & Cost Accounting Manage By: Standard Cost Accounting –Std’s, Budgets, Variances Inventory Valuation and Control –Avg., Std., LIFO, FIFO, Cost Specific LOT

Operations & Cost Accounting Manage By: Budgeting –Cycles Annual are the most effective –Gamesmanship Under promise, Over deliver –Allocations Know their Influences

Lessons Learned - Restructuring Bite the Bullet, for everyone’s sake Cut Once and Cut Deep Collapse Layers Keep it Secret Do it Quickly Do All that You Can for Employees Continue Recruiting

L.L. – Restructuring II Empower People – Increase Span of Control Over Communicate, At All Levels Be Humble, Be Honest For People and Markets: “Cutting Losses Rather Than Hoping for Rebounds.” “Hope is Not a Strategy”