CFO, The Magazine for Senior Financial Executives articles from May 2003

CFO, The Magazine for Senior Financial Executives archives from May 2003

Uneasy alliance. (From the Editor).(Editorial)
May 1, 2003... EVERY CORPORATION IS AN ALLIANCE BETWEEN SHARE-holders and managers. As in any relationship involving two parties with overlapping but not identical interests, at times tensions can run high--especially in public companies, where shareholders...

Crocodile tears. (Letters to the Editor).(Letter to the Editor)
May 1, 2003... IN "COMING CLEAN (SORTA)" (GRAPE-vine, March), you note that "As part of his sentence, former CFO [Richard K.] Halford lectures about his new understanding of the evils of corporate wrongdoing." His understanding includes probation and 1,000...

When to insure. (Letters to the Editor).(Letter to the Editor)
May 1, 2003... Russ BANHAM DID A GREAT JOB OF explaining the issues surrounding key-executive insurance coverage ("Filling the Void," March). While my risk-management colleagues (Mr. Inserra of Praxair and Mr. Hennes of Toro) were quoted as not supporting...

A blessing in disguise? (Letters to the Editor).(Letter to the Editor)
May 1, 2003... AFTER READING YOUR EXCELLENT Q&A with Nell Minow ("The Prime of Ms. Nell Minow," March), I can't help but think that, in some way, the misery and betrayal that many of us felt during 2002 will evolve, down the road, into a blessing in disguise....

What can go wrong. (Letters to the Editor).(Letter to the Editor)
May 1, 2003... I ENJOYED YOUR ARTICLE ON CUSTOMER financing ("What Goes Around," March). In April 1996 I was hired by Nortel Networks as vice president of finance to create a North American customer finance practice. Nortel gave me carte blanche to hire other...

Appreciating cash flow. (Letters to the Editor).(Letter to the Editor)
May 1, 2003... YOUR ARTICLE "TUNING IN TO CASH Flow" (December 2002) was very well written, and Prof. Charles H. Mulford's data are very impressive. It is also very useful for the reader to appreciate that even cash flows are susceptible to different...

Poetry and the SEC. (Letters to the Editor).(Letter to the Editor)
May 1, 2003... EDITOR'S NOTE: William Baker III was the assistant director of enforcement for the Securities and Exchange Commission, who returned to private practice in November after spearheading the commission's investigation of WorldCom. Eugene Schlanger,...

Corrections.(Correction Notice)
May 1, 2003... In the March Special Report on Banking, the sidebar ("Whose Assets?" page 67) incorrectly characterized the role of Mellon Bank in a securitization involving bankrupt steelmaker LTV's assets. Mellon did not lead that securitization, as the...

In & out. (News Watch).
May 1, 2003... Nothing lasts forever, not even the venerable members of the S&P 500 index. In fact, only 243 of the companies that were on the list in January 1990 remain. S&P estimates that M&A activity accounts for 70 to 80 percent of turnover on the...

Trade battles ahead? (International Commerce).
May 1, 2003... WITH MEMBERS OF CONGRESS FEASTING on "freedom fries" and French protesters defacing McDonald's restaurants, you might think that transatlantic trade relations are in bad shape. And so they are. But it's not because of the war with Iraq--not...

Hot Spots. (News Watch).
May 1, 2003... Bolivia, Paraguay, and Uruguay were downgraded by Coface Group, which measures risk and business outlook abroad.

Not going anywhere for awhile? (Work Visas).
May 1, 2003... HOMELAND SECURITY efforts are complicating business travel to the United States. Hypervigilance on the part of U.S. consulates in various areas of the world, particularly China, Russia, and India, has delayed visa processing from 15 days to up...

Reg G spells glitch for early adopter. (Disclosure).
May 1, 2003... No good deed goes unpunished. During a fourth-quarter conference call in January, R.R. Donnelley CFO Gregory Stoklosa alerted analysts that the accompanying earnings release reflected the Chicago-based printer's early adoption of the Securities...

The Sars Threat. (News Watch).
May 1, 2003... THE SARS THREAT has caused 58% of businesses responding to a survey by the Business Travel Coalition to ban travel to Asia.

Ralph rides again. (Accounting).
May 1, 2003... RALPH NADER IS TAKING on the accounting regulators. The consumer advocate and former Presidential candidate wants to help restore integrity to an accounting profession that he says has been compromised by scandal. In early March, he announced...

Hidden agenda. (Lease Accounting).
May 1, 2003... In the past seven months, the Financial Accounting Standards Board has changed accounting for special-purpose entities, energy-trading contracts, and guarantees. Now the board has officially added the explosive topic of employee stock-option...

Wasted Talent. (News Watch).(Brief Article)
May 1, 2003... Just 30% of companies use a formal approach to develop high-potential leaders, according to a survey by Hewitt.

Malpractice insurance rift. (Health Care).(Brief Article)
May 1, 2003... IF SWELLING COSTS aren't enough to prove that something is wrong with health care, then the sight of doctors on a picket line certainly is. But while physicians are finally making headway in their fight against escalating medical-malpractice...

Singing the Moody's blues. (Credit Rating).(effectively credit-rating agencies are doing their jobs)
May 1, 2003... Since Enron declared bankruptcy, there's been no end of criticism about how effectively credit-rating agencies are doing their jobs. Moody's Investors Service recently drew fire from an unusual corner, though--one of its own clients. In...

Property-Related Hazards. (News Watch).(Brief Article)
May 1, 2003... PROPERTY-RELATED HAZARDS, such as fire and natural disaster, pose the greatest threat to revenue sources, says an FM Global survey.

Ten signs your finance department is second rate. (Worst Practices).
May 1, 2003... TO BOWDLERIZE TOLSTOY, good finance departments are not alike, but all poor performers are the same in certain ways. Avoiding these worst practices doesn't guarantee success, but committing them practically guarantees its opposite. 1. SLOW...

Earnings Season. (News Watch).(Brief Article)(Industry Overview)
May 1, 2003... EARNINGS SEASON: 65% of public companies announce their earnings within 30 days of the end of the quarter, says CCBN.

Design and conquer: PLM claims to speed manufacturing, cut R&D costs, and boost sales. (Tech Watch).(product life-cycle management)
May 1, 2003... WHILE ERP SYSTEMS are often viewed as all-encompassing, particularly for companies in the manufacturing sector, new software is emerging that tackles a broad range of functions largely untouched by traditional applications. Dubbed PLM, for...

Misery loves another company: Federal-Mogul, burdened with asbestos claims, tests the limits of bankruptcy law. (New Deals).
May 1, 2003... FEDERAL-MOGUL CORP. had already recognized a $1.6 billion liability for asbestos-litigation costs when it filed for bankruptcy. But that expenditure got it no closer to ending these liabilities. The nature of asbestos claims is such that...

Corrective lenses: some experts contend that options-pricing models give a better view of cost of capital. (Spotlight Treasury).
May 1, 2003... QUICK, WHAT'S YOUR COMPANY'S COST OF capital? Not sure? That's OK -- you're far from alone. Finance executives have long wrestled with that question when establishing hurdle rates for investments. During the last throes of the bull market, with...

Better options: disillusioned investors are demanding stronger links between executive pay and long-term performance. (Cover Story).(Avery Dennison Corp.)
May 1, 2003... Avery Dennison Corp. sticks to what works--not just in its business, but also in its executive compensation. The adhesive-products company has pointedly not abandoned its stock-option program, despite the recent exodus from options by many...

Off the street: stricker rules and wary investors are prompting more companies to exit the public markets.
May 1, 2003... These days, John Henderson thinks of himself as a brewer. That's not to say the former CFO of Genesee Corp. actually brews beer: "We have talented guys who take care of that," he notes. But ever since Henderson and two other executives...

"You are the guardians".(As chairman of the Securities and Exchange Commission from 1993 to 2001,Arthur Levitt warned that inadequate disclosure and the conflicts of interest entangling Corporate America with its auditors and analysts could ultimately damage confidence in the capital markets)
May 1, 2003... As chairman of the Securities and Exchange Commission from 1993 to 2001,Arthur Levitt warned that inadequate disclosure and the conflicts of interest entangling Corporate America with its auditors and analysts could ultimately damage confidence...

Security blanket: management options for 401(k) investments protect both participants and sponsors. (Buyer's Guide 401(k) Providers Part 2).
May 1, 2003... THE EFFECT OF the bear market on 401(k) participants seems clear, at least to plan providers. Employees who once demanded numerous investment alternatives and "advice" services are less sanguine about making their own decisions these days. Even...

Where wireless works: mobile technology may work even better beyond the executive suite. (Special Report: Wireless).
May 1, 2003... The phrase "mobile workforce" still conjures up images of smartly dressed executives hurrying through airport terminals while conferring with colleagues on cell phones and checking E-mails on their wireless-enabled PDAs. But when it comes to...

On closer examination: reform of sell-side research is creating a variety of new headaches for corporations. (Equity Research).
May 1, 2003... IN THE SPRING OF 2000, BERNIE EBBERS, PRESIDENT AND CEO of WorldCom Inc., called Scott Cleland "the idiot Washington analyst" because Cleland predicted that WorldCom's proposed merger with Sprint would fail. The reference to Washington, D.C.,...

Meet your new property: if you're contemplating an acquisition, don't overlook real-estate issues. (Real Estate).
May 1, 2003... ALAN WHITE KNEW HE HAD A TOUGH sell on his hands. Back in the 1990s, White was in charge of managing the property portfolio of British Telecom. At the time, the telco was engaged in a pitched battle with local start-ups, which were...

Two masters? (Facing a Stronger Board).(Computer Associates International Inc.)
May 1, 2003... WALTER SCHUETZE, once the Securities and Exchange Commission's chief enforcement-division accountant under Arthur Levitt, can hardly contain his exuberance about being audit-committee chair for Computer Associates International Inc. "I like...

CFOs on the move. (Grapevine).(Brief Article)
May 1, 2003... Owens-Illinois Inc. names Thomas L. Young, a 33-year veteran of the glass and plastics company, as its new CFO. Previously EVP of administration and chief counsel, he replaces Scott Trumbull, who became CEO of Franklin Electric Co. in...

History as teacher. (Grapevine).(Civil War battlefield of)
May 1, 2003... HILLENBRAND Industries Inc. CFO Scott K. Sorensen now has some idea of what it's like to be under fire. And no, that doesn't mean the Batesville, Ind., company has been hit by shareholder suits or SEC investigations. Sorensen recently...

How much is not enough?(Will Weston Smith and William T. Owens, who admitted they helped commit massive accounting fraud at HealthSouth Corp.,)(Brief Article)
May 1, 2003... Will Weston Smith and William T. Owens, who admitted they helped commit massive accounting fraud at HealthSouth Corp., get off with a slap on the wrist in exchange for their testimony? It's unlikely, say observers, but the two former CFOs...