Detailed Survey Results 1Q 2017

Transcription

1 Detailed Survey Results 1Q

2 Survey Background Conducted between February 7-22, 2017 Quarterly Survey CPA decision makers (primarily CFOs, CEOs and Controllers) AICPA members in Business & Industry only 930 qualified responses 2

3 Survey Highlights 76 Overall index improved Up from 74 last quarter, and 63 in Q All components up year to year Optimism, expansion plans, revenues and employment 3 points quarter to quarter 69% Now optimistic about U.S. Economy Outlook for economy at a new high mark the highest since 2004 Optimism in retail falls off from 50% optimistic in Q4 to 38% in Q1 Manufacturing continues to improve Healthcare declines 67% Have plans for expansion Index component improves from 74 to 77 as those with plans to expand lower than Q3 61% of companies with revenues <$10 million and 72% with $10 to $100 million now have plans to expand Expansion plans for companies with revenues > $1 billion also recover from 62% to 66% 3

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5 CPA Outlook Index The CPA Outlook Index is a robust measure of sentiment about the U.S. economy that is supported by the unique insight and knowledge that CEOs, CFOs, Controllers, and other CPA executives have about the prospects for their own organizations, their expectations for revenues and profits, and their plans for spending and employment. The CPA Outlook Index is the composite of the following nine indicators at equal weights: U.S. Economy Optimism - Respondent optimism about the U.S. economy Organization Optimism - Respondent optimism about prospects for their own organization Expansion Plans - Respondent expectations of whether their business will expand over the next 12 months Revenue - Expectations for increases or decreases in revenue over the next 12 months Profits - Expectations for increases or decreases in profits over the next 12 months Employment - Expectations for increases or decreases in headcount over the next 12 months IT Spending - Plans for IT spending over the next 12 months Other Capital Spending - Plans for capital spending over the next 12 months Training & Development - Plans for spending on employee training and development over the next 12 months A reading above 50 indicates a generally positive outlook with increasing activity. A reading below 50 indicates a generally negative outlook with decreasing activity. 5

6 CPA Outlook Index (CPAOI) CPA Outlook Index CPA Outlook Index 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q

7 CPA Outlook Index Component Indicators U.S. Economic Optimism Organization Optimism Expansion Plans Revenue Profits Employment IT Spending Other Capital Spending Training & Development Total CPAOI

8 CPA Outlook Index (CPAOI) vs. GDP CPA Outlook Index 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% CPA Outlook Index Change in GDP GDP Growth 4Q15 1Q16 2Q16 3Q16 4Q16 1Q % 0.8% 1.4% 3.2% 1.9% -6.0% -8.0% -10.0% 8

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10 US Economy and Organization Highlights 69% Optimism for U.S. economy up from 62% in Q4 66% Organizational optimism up from 61% in Q4 33% Inflation concerns increase to 2014 levels New administration results cited by both optimists and pessimists Optimists noted hopes for regulatory relief, tax reform, and infrastructure spending Pessimists noted healthcare reform and costs, interest rate increases, and oil/gas prices anticipated Optimism for respondent s own organization at 66% is higher than any period since 4Q 2014 The percentage of companies with expansion plans rose from 62% in Q4 to 67% The percentage of companies expecting their businesses to contract eased from 14% in Q4 to 13% in Q1 Concern about labor costs continues to be most significant but eased from 43% to 40% Raw material cost increases now concern 24% up from 20% in Q4 Energy cost and interest rate concerns both dropped Energy from 10% to 7% Interest from 23% to 21% 10 10

11 Optimism & Expansion U.S., Organization, Expansion 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 U.S. 43% 34% 22% 21% 32% 49% 44% 38% 49% 51% 52% 64% 68% 52% 48% 45% 28% 37% 38% 62% 69% Organization 55% 54% 44% 41% 50% 57% 55% 57% 59% 61% 65% 67% 63% 58% 59% 53% 44% 53% 53% 61% 66% Expansion 61% 61% 56% 50% 58% 62% 62% 62% 63% 64% 68% 71% 64% 61% 60% 57% 52% 58% 62% 62% 67% 11 11

12 For your business, are you more concerned about inflation or deflation? For your business, over the next 6 months, are you more concerned about the possibility of? 100% Inflation or Deflation? 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 37% 38% 36% 35% 33% 32% 31% 30% 31% 32% 29% 27% 23% 23% 25% 23% 22% 23% 33% 18% 28% 6% 9% 10% 9% 10% 12% 10% 10% 11% 12% 6% 7% 7% 7% 8% 6% 5% 14% 4% 3% 11% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Inflation Deflation 12

13 Inflationary Risks and Costs Inflationary Factor Representing the Most Significant Risk to your Business 55% 44% 44% 43% 40% 3% 0% 4% 1% Food costs 2% 6% 11% 10% 8% 5% Energy costs 20% 19% 20% 18% Raw material costs Labor costs Interest rates 1Q16 3% 6% 19% 44% 19% 9% 2Q16 0% 11% 20% 44% 16% 9% 3Q16 4% 5% 18% 55% 14% 4% 4Q16 1% 10% 20% 43% 23% 4% 1Q17 2% 8% 24% 40% 21% 5% 24% 19% 16% 14% 23% 21% 9% 9% 4% Other 4% 5% 13 13

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15 Key Performance Indicator Highlights Revenues and Profits Revenue and Profit projections both improve Expected revenue increase for coming twelve months improves from 3.6% in Q4 to 4.3% in Q1 Profit projections also increase from 3.1% in Q4 to 3.5% in Q1 Hiring and Employment Headcount plans improve; costs also tick up Anticipated increases in headcount for the coming year increased to 1.6% in Q4 to 1.8% in Q1 Salary and benefit cost maintains at 2.1% for Q1 Healthcare cost projections also to fall from 6.1%, back to 3Q16 at 5.6% Spending Plans R&D spending, Marketing lead the improvements Spending for IT continues projected at 3.0% in Q1 Training ticks up from 1.6% to 1.8% Other capital spending slightly decreased from 2.7% in Q4 to 2.6% R&D spending jumps from 1.5% in Q4 to 1.7% in Q1 Marketing increased from 1.5% in Q4 to 1.7% in Q

16 Key Performance Indicators Expected Growth in Revenue and Profits Thinking about the coming 12 months, please comment on the probable change for your organization for 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Revenue 3.5% 3.1% 2.6% 2.1% 3.0% 3.1% 3.3% 3.6% 3.6% 3.8% 4.4% 4.7% 3.6% 3.2% 3.3% 2.9% 1.7% 3.0% 2.9% 3.6% 4.3% Profit 2.9% 2.6% 2.2% 1.4% 2.1% 2.4% 2.5% 2.7% 2.9% 2.9% 3.6% 3.9% 2.8% 2.4% 2.6% 2.0% 0.7% 1.5% 2.3% 3.1% 3.5% 16 16

17 Employees, Salary & Benefits and Healthcare Costs Thinking about the coming 12 months, please comment on the probable change for your organization 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Employees 1.5% 1.1% 0.8% 0.5% 1.1% 1.0% 1.3% 1.2% 1.5% 1.3% 1.8% 2.1% 1.6% 1.5% 1.3% 1.0% 0.5% 1.1% 1.3% 1.6% 1.8% Salary & Benefits 2.0% 2.0% 1.9% 1.9% 2.2% 2.2% 2.3% 2.2% 2.2% 2.1% 2.4% 2.5% 2.0% 2.1% 2.0% 1.8% 1.4% 1.8% 2.1% 2.3% 2.3% Healthcare 6.2% 6.3% 6.4% 6.4% 6.3% 6.7% 6.8% 6.6% 6.2% 5.7% 6.6% 5.9% 5.8% 5.8% 5.8% 5.4% 5.4% 5.7% 5.6% 6.1% 5.6% 17 17

18 Pricing & Other Costs Average Change Expected Thinking about the coming 12 months, please comment on the probable change for your organization 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Prices Charged 1.4% 1.2% 1.2% 1.1% 1.3% 1.1% 1.3% 1.3% 1.3% 1.8% 1.7% 1.7% 1.4% 1.4% 1.6% 1.5% 0.8% 1.3% 1.5% 1.8% 1.9% Input Prices 2.1% 1.9% 1.9% 1.9% 2.0% 1.8% 1.9% 1.8% 1.8% 2.4% 2.3% 2.1% 2.1% 2.0% 2.2% 2.1% 1.5% 2.1% 1.9% 2.4% 2.4% 18 18

19 Spending Plans IT, Other Capital & Training Thinking about the coming 12 months, please comment on the probable change for your organization for 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 IT 2.8% 2.8% 2.4% 2.1% 2.7% 2.8% 2.7% 2.9% 3.2% 3.1% 3.3% 3.3% 3.1% 3.1% 3.0% 2.8% 2.3% 2.6% 2.8% 2.9% 3.0% Other Capital 2.1% 2.0% 1.7% 1.3% 1.9% 2.2% 2.2% 2.1% 2.3% 2.4% 2.9% 3.2% 2.4% 2.4% 2.5% 2.4% 1.5% 2.1% 2.4% 2.7% 2.6% Training 1.4% 1.2% 1.0% 0.7% 1.3% 1.3% 1.3% 1.5% 1.7% 1.8% 2.0% 2.2% 1.6% 1.8% 1.4% 1.4% 1.1% 1.3% 1.6% 1.6% 1.8% 19 19

20 Spending Plans Marketing & R&D 10.0% Thinking about the coming 12 months, please comment on the probable change for your organization for 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Marketing 1.8% 1.5% 1.1% 1.0% 1.5% 1.4% 1.5% 1.5% 1.7% 1.6% 1.6% 1.8% 1.6% 1.8% 1.6% 1.6% 1.4% 1.4% 1.4% 1.5% 1.9% R&D 1.2% 1.0% 0.6% 0.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.0% 1.2% 1.3% 1.3% 1.2% 1.7% 1.2% 0.9% 1.1% 1.1% 1.5% 1.7% 20 20

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22 Hiring Plans 22% Hiring plans continue to improve 16% Are hesitant to hire needed employees 52% of all companies say they have the appropriate number of employees Those with excess number of employees eased another point to only 8% down from 13% in Q The total of companies who say they have too few employees is 38%, compared to only 31% in Q The percentage with too few employees who are reluctant to hire rose from 15% to 16% Those with too few employees that are planning to hire rose two points from 20% in Q4 to 22% in Q

23 Overall staff situation relative to your needs Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)? 55% 53% 52% 49% 48% 13% 12% 13% 9% 8% 18% 16% 17% 16% 15% 22% 21% 19% 20% 15% 3% 2% 1% 1% 2% We have an excess number of employees We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire 1Q16 13% 53% 16% 15% 3% 2Q16 12% 49% 18% 19% 2% 3Q16 13% 48% 17% 21% 1% 4Q16 9% 55% 15% 20% 1% 1Q17 8% 52% 16% 22% 2% Other 23 23

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25 Top Challenges Facing Organizations Employee and benefit costs jumped one spot to the first place in the ranking of challenges Regulatory requirements slipped to the second place of the challenges list Domestic economic conditions fell another slot this quarter to fourth as Availability of skilled personnel returned to the third place. Domestic competition maintained in the fifth place, with Developing new products/services/markets dropping two places down to the eighth place Changing customer preferences moving up from eighth to the sixth place while Domestic political leadership remained in the seventh spot Staff turnover moved up one to ninth in challenges Materials/supplies/equipment costs returned to the top ten for the first time since Q

26 Top Challenges for Organizations Please indicate the top three challenges for your organization 1Q16 2Q16 3Q16 4Q16 1Q17 1 Domestic economic conditions Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Employee and benefits costs 2 Regulatory requirements/changes Domestic economic conditions Domestic economic conditions Employee and benefits costs Regulatory requirements/changes 3 Stagnant/declining markets Availability of skilled personnel Availability of skilled personnel Domestic economic conditions Availability of skilled personnel 4 Domestic competition Domestic competition Domestic competition Availability of skilled personnel Domestic economic conditions 5 Availability of skilled personnel Employee and benefits costs Employee and benefits costs Domestic competition Domestic competition 6 Employee and benefits costs Stagnant/declining markets Stagnant/declining markets Developing new products/services/markets Changing customer preferences 7 Domestic political leadership Domestic political leadership Domestic political leadership Domestic political leadership Domestic political leadership 8 Financing (access/cost of capital) Developing new products/services/markets Liquidity Changing customer preferences Developing new products/services/markets 9 Developing new products/services/markets Liquidity Developing new products/services/markets Stagnant/declining markets Staff Turnover 10 Domestic political leadership Energy costs Financing (access/cost of capital) Staff Turnover Materials/supplies/ equipment costs 26 26

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28 Industry, Region and Business-size Outlook - 1 of 3 Optimism Improves for Wholesale Trade and Manufacturing, drops for Retail Real Estate and Finance & Insurance see improved optimism, Construction fell slightly Retail trade optimism dropped from 50% in Q4 to 38% in Q1 Wholesale trade optimism, however, improved greatly from 48% to 79% Manufacturing optimism also improved from 55% to 71% Construction optimism dropped from 75% in Q4 to 74% in Q1 Real Estate and Property improved from 69% to 79% Finance & Insurance increases from 66% optimistic to 79% Hiring for retail continues to be soft and eased further from only 0.8% in Q4 to <0.3%> in Q1 Manufacturing hiring improved from 1.7% to 2.1% Construction hiring improved from 2.0 % to 2.8% Real Estate hiring espectations remained constant at 1.5% Finance and Insurance improved to 2.0% from its Q4 1.8% rate Banking sector hiring dropped from 2.3% in Q4 to 1.8% in Q

29 Industry, Region and Business-size Outlook - 2 of 3 Technology declines. Professional Services sees jump in optimism Technology optimism eases slightly from 67% in Q4 to 65% in Q1 Professional service optimism jumps from 48% optimistic to 66% Technology hiring improves from 2.0% in Q4 to 2.9% in Q1 Professional service hiring continues to be strong; rising from 2.5% in Q4 to 3.9% in Q1 Healthcare providers and Healthcare other decline in optimism Healthcare providers dropped from 69% in Q4 to 43% in Q1 Healthcare other dropped from 80% optimistic in Q4 to 70% in Q1 Expected hiring by Healthcare providers eases from 3.37% in Q4 to 2.8% in Q

30 Industry, Region and Business-size Outlook - 3 of 3 All regions see improvement in optimism South optimism in South bounces from 68% in Q4 to 71% in Q1 Midwest improving from 62% in Q4 to 65% optimistic in Q1 West improves from 59% in Q4 to 68% Northeast also improves from 56% to 57% Largest employers most hesitant to hire Employers with > $1 billion in revenues is the segment with the highest percentage of respondents (8%) with excess employees; they are also the segment with too few employees (34%). However, 19% of the largest companies with too few employees are hesitant to hire. Employers with revenues < $10 million are also mixed; only 7% have excess employees; while 33% have too few employees, only 18% are planning to hire; 15% are hesitant. Plans to hire in the category of employers with revenues in the $100 million to $1 billion category are at 23% 30 30

31 Organization Optimism by Industry 100% 80% 60% 40% 20% 69% 85% Retail Trade 65% 50% 39% 28% 33% 50% 38% 100% 80% 60% 40% 20% 54% Wholesale Trade 65% 54% 42% 50% 45% 48% 23% 79% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 100% 80% 60% 40% 63% 55% 53% Manufacturing 41% 48% 48% 47% 55% 71% 100% 80% 60% 40% 80% Technology 60% 67% 52% 53% 61% 71% 67% 65% 20% 20% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q

32 Organization Optimism by Industry 100% 80% 60% 83% Construction 64% 64% 59% 59% 51% 69% 75% 74% 100% 80% 60% 68% 65% 69% Real Estate 48% 52% 62% 62% 69% 79% 40% 40% 20% 20% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 100% 80% 60% Finance & Insurance 66% 74% 65% 58% 57% 66% 49% 41% 79% 100% 80% 60% Professional Service 72% 64% 68% 70% 67% 60% 46% 48% 66% 40% 40% 20% 20% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q

33 Organization Optimism by Industry 100% 80% 60% 40% 20% Health Care Other 67% 67% 63% 56% 50% 50% 44% 80% 70% 100% Health Care Provider 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 80% 60% 40% 49% 47% 69% 38% 52% 69% 68% 69% 43% 20% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q

34 Expected Employment Change by Industry Thinking about the coming 12 months, please comment on the probable change for your organization for Number of Employees Professional Services Healthcare Provider Technology Construction Finance and Insurance Trans & Distribution Manufacturing Mining Banking Q1 Q4 Real Estate Property Not for Profit Retail Trade

35 Organization Optimism by Region Please select the rating that best describes your view for the economic outlook for your own organization for the next 12 months. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q16 2Q16 3Q16 4Q16 1Q17 South 38% 53% 48% 68% 71% Midwest 45% 53% 53% 62% 65% West 55% 54% 57% 59% 68% Northeast 48% 62% 58% 56% 57% 35 35

36 Expansion Plans by Business Size Please indicate whether you expect your business to expand or contract over the next 12 months 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 54% of all businesses expect to expand a little in the next twelve months 13% expect to expand a lot 31% expect to contract a little or stay the same Only 2% expect to contract a lot vs 1% in Q4 0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 < $10 million 55% 58% 50% 44% 52% 53% 56% 56% 56% 59% 59% 65% 59% 47% 61% 52% 44% 55% 53% 52% 61% $10 to <$100 million 60% 59% 58% 52% 58% 63% 61% 63% 62% 65% 69% 72% 63% 66% 62% 57% 59% 61% 65% 63% 72% $100 million to <$1 billion 66% 66% 56% 53% 63% 63% 64% 62% 71% 65% 73% 72% 67% 65% 60% 57% 50% 61% 59% 67% 67% > $1 billion 65% 62% 54% 53% 68% 68% 68% 64% 69% 66% 71% 75% 77% 53% 56% 59% 49% 50% 66% 62% 66% 36 36

37 Businesses in the >$1 billion range are most likely to have excess employees Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)? 57% 57% 52% 49% 19% 15% 15% 16% 27% 23% 18% 15% 7% 7% 7% 8% 2% 1% 1% 1% We have an excess number of employees We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire < $10 million 7% 57% 15% 18% 2% $10 to <$100 million 7% 49% 15% 27% 1% $100 million to <$1 billion 7% 52% 16% 23% 1% > $1 billion 8% 57% 19% 15% 1% Other 37 37

38 Survey Within a Survey Federal Corporate Income Tax Affordable Care Act 38 38

39 Federal Corporate Income Tax - Reduction Do you expect the new administration s proposal to lower federal corporate income taxes will be enacted this year? EVENTUALLY, BUT NOT UNTIL AT LEAST % YES 31% NO 11% NOT SURE 8% 0% 10% 20% 30% 40% 50% 60% 39 39

40 Federal Corporate Income Tax - Impact What impact would a potential reduction in the federal corporate income tax rate to the 15% to 20% range have on your company s bottom line? SIGNIFICANTLY POSITIVE 18% MODERATELY POSITIVE 18% SLIGHTLY POSITIVE 15% NOT SURE 5% NEGATIVE IMPACT 2% NOT A FACTOR 43% 0% 10% 20% 30% 40% 50% (Note: most Not a Factor are Not for Profit) 40 40

41 Federal Corporate Income Tax - Savings If federal corporate income taxes are reduced, what are the likeliest ways your company would deploy the tax savings? INCREASE CAPITAL EXPENDITURES AND BUSINESS EXPANSION SPENDING PAY DOWN DEBT 27% 40% ISSUE OR INCREASE DIVIDEND 17% HIRE MORE FULL-TIME WORKERS 17% ACQUIRE OR MERGE WITH ANOTHER COMPANY 11% BUY BACK STOCK 6% HIRE MORE PART-TIME WORKERS 3% OTHER (PLEASE SPECIFY) 31% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 41 41

42 Federal Corporate Income Tax - Other If federal corporate income taxes are reduced, what are the likeliest ways your company would deploy the tax savings? Other Deployment Increase in bonuses, compensation Increase liquidity Increase R&D spending Owners bigger net payment Add to investments Additional incentive compensation Build reserves Continue to build capital to support growth Develop new products Dividend to private equity holders Increase wages and profit sharing benefits 42 42

43 Affordable Care Act What is your preference for action on the Affordable Care Act? REPEAL AND REPLACE 61% LEAVE AS IS 18% NOT SURE 10% REPEAL AND DON'T REPLACE 10% 0% 10% 20% 30% 40% 50% 60% 70% 43 43

44 Affordable Care Act Given the uncertainty over the status of the Affordable Care Act, what does your company expect to spend on health care for employee programs in ? INCREASE IN SPENDING 1-5% 26% 32% INCREASE IN SPENDING 6-10% 36% 43% INCREASE IN SPENDING 11-20% 11% 9% INCREASE OF 21% OR MORE NO CHANGE IN SPENDING FROM LAST YEAR 2% 2% 8% 10% DECREASE IN SPENDING OVER LAST YEAR 2% 3% NOT SURE 6% 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 44 44

45 Affordable Care Act Under the Affordable Care Act, how have you tried to contain health care costs so far? HIGHER DEDUCTIBLES 65% HIGHER CO-PAYS 49% WELLNESS PROGRAMS TO REDUCE FUTURE CLAIMS 41% OTHER (PLEASE SPECIFY) 15% NONE OF THE ABOVE, OUR COSTS HAVE REMAINED STABLE OR GONE DOWN LIMITING HOURS TO ENSURE SOME EMPLOYEES DO NOT QUALIFY FOR FULL-TIME BENEFITS STATUS 12% 10% STOPPED PROVIDING COVERAGE ALTOGETHER 2% 0% 10% 20% 30% 40% 50% 60% 70% 45 45

46 Affordable Care Act For the coming year, what strategies do you plan to employ for the first time to curb health care costs? HIGHER DEDUCTIBLES 35% HIGHER CO-PAYS NONE OF THE ABOVE, OUR COSTS HAVE REMAINED STABLE OR GONE DOWN WELLNESS PROGRAMS TO REDUCE FUTURE CLAIMS 27% 27% 31% OTHER (PLEASE SPECIFY) 18% LIMITING HOURS TO ENSURE SOME EMPLOYEES DO NOT QUALIFY FOR FULL-TIME BENEFITS STATUS 7% STOPPED PROVIDING COVERAGE ALTOGETHER 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 46 46

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48 Demographics Position Size of Organization Type of Organization 7% 5% 4% 9% 2% 10% 4% 4% 13% 22% 3% 16% 1% 15% 20% 12% 2% 41% 13% 32% 66% CEO/President COO VP/SVP CFO CAO/CAE CIO Controller Director Accounting, Audit, Tax or Technology Manager Other $0 to under $10 million $10 million to under $50 million $50 million to under $100 million $100 million to under $250 million $250 million to under $500 million $500 million to under $1 billion $1 billion or more Publicly Listed Company Privately Owned Entity Government Not for Profit Other 48 48

49 For additional information contact: Kenneth W. Witt, CPA, CGMA Lead Technical Manager Management Accounting Cary Jones Associate Manager Business, Industry & Government Team 49 49