Spring 2011 issue of Horizons

Spring | 2011

horizons Cautious A Publication of RubinBrown LLP

Optimism: TheRoadtoEconomicRecovery

How will proposed lease accounting rules affect you? RubinBrown gears up to serve growing life sciences industry Find out how RubinBrown’s industries are faring economically

Table Of Contents

horizons A publication of RubinBrown LLP Spring | 2011

Features 2

Welcome From The Managing Partner

3 7 9

RubinBrown News Chairman’s Corner

Chairman James G. Castellano, CPA Managing Partner John F. Herber, Jr., CPA

Baker Tilly International Update

11 15

Proposed Lease Accounting Rules Rouse Uncertainty

Key Compliance Dates for a 401(k) and Profit Sharing Plan RubinBrown Gears Up To Serve Growing Life Sciences Industry

Denver Office Managing Partner

20

Gregory P. Osborn, CPA Kansas City Office Managing Partner Todd R. Pleimann, CPA Editor Dawn M. Martin Art Director Joe Ebeler

65

Timely Reminders

Industry-Specific Articles 27 Automotive How Fast Can Your Dealership Go From Zero to Sixty? 30 Media & Entertainment Are You Managing The Risk For Your Call Center? 33 Contractors Strategies For Economic Recovery 35 Public Sector GASB Statements Issued During 2010 39 Hospitality & Gaming Trends In Today’s Evolving Country Club Market 42 Manufacturing & Distribution

Horizons, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matters covered. Although prepared by professionals, its contents should not be construed as the rendering of advice regarding specific situations. If accounting, legal or other expert assistance is needed, consult with your professional business advisor. Please call RubinBrown with any questions (contact information is located on the back cover).

Seminars, Webinars, and Surveys: RubinBrown Connects With Manufacturers & Distributors Colleges & Universities New Rules Trigger Additional Work For Higher Education Institutions Not-For-Profit Expense Allocations & Reserves For Not-For-Profit Organizations Professional Services Implementing An Effective Compliance Program For Healthcare Providers Real Estate Tax Credits Face Scrutiny In Deficit-Minded Environment

45

49

53

57

61

Home Builders 2003 Is The “New Normal”

Raise Your Expectations

1

Greetings! The theme of this issue of Horizons is “Cautious Optimism: The Road to Economic Recovery.” There’s no doubt that that we’re all looking forward with hope and little trepidation that 2011 leads us to more stable economic times. As you peruse this issue, you’ll note that there are hints of positive news throughout. Most of the industries we serve are reporting or expecting—both anecdotally and financially—improved bottom lines. Another key indicator for improvement is that hiring appears to be gradually recovering. A Gallup Poll reports that 41 percent of Americans in January said the economy is “getting better.” This is an increase from 35 percent in December and represents the highest percentage since Gallup began tracking economic optimism in January 2008. As your business experiences the ebbs and flow of the recovering economy, please let us know how we can help you and your business. We are committed to serving as your company’s strategic advisor—as our mission says to build and protect value for our clients, while at all times honoring the responsibility to serve the public interest. As always, I personally welcome your feedback on this issue of Horizons and, overall, on your business views. Please email me directly at john.herber@rubinbrown.com . Welcome fromRubinBrown’s Managing Partner

John F. Herber, Jr., CPA Managing Partner

Pleasant reading,

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2

News

RubinBrown Around Town

RubinBrown Sponsors RCGA Greater St. Louis Top 50 Awards The Greater St. Louis Top 50 Awards, co-sponsored by RubinBrown and the

St. Louis Regional Chamber & Growth Association, recognizes 50 companies for their positive effects on the future of St. Louis’ business community.

RubinBrown’s Jim Castellano cuts a rug with his dance partner, Angi Heien.

Jim Castellano Competes In St. Louis’ Dancing With the Stars RubinBrown Chairman Jim Castellano showed off impressive agility and dancing flair during the 3rd Annual Dancing with the St. Louis Stars. This event, which benefits the Independence Center, featured eight St. Louis stars and their professional dancing partners. Jim placed third with his dazzling rendition of Michael Jackson’s “The Way You Make Me Feel.”

RubinBrown Managing Partner John Herber welcomes the more than 700 guests at the RCGA Top 50 Awards dinner.

Join Us At The RubinBrown 5K Run All RubinBrown clients and friends are invited to join the firm at the RubinBrown 5K Run, which will benefit the RubinBrown Charitable Foundation. Saturday, October 1, 2011 Tower Grove Park, St. Louis 7:00 a.m., Registration, 8:00 a.m. Race Begins 7:30 a.m., Kid’s Run

RubinBrown Chairman Jim Castellano presents the Spirit of St. Louis Technology Award to Paul Acker of Express Scripts.

Raise Your Expectations

3

RubinBrown New Hires New Partners

New Managers

Nancy Borron, CPA, is a new manager in the Kansas City office. She specializes in serving tax clients. She has extensive experience in corporate taxation. Nancy also serves clients with state and local tax services. Stephanie Drew, CPA, CFE, joins the Denver office as a manager in the Business Advisory Services Group. She brings thirteen years of varied experience in accounting,

Pete Schulman, CPA, CIRA, CDBV , joins the Denver office as a partner in RubinBrown’s Business Advisory Services Group. He has experience in bankruptcy and commercial damages, computer forensics, and white collar crime. Pete

provides expertise in litigation consulting and support, forensic fraud investigations, and expert witness testimony.

Mary Shermer, CPA, is an international tax partner in RubinBrown’s St. Louis office. Mary provides tax consulting services to many domestic and international corporations. Prior to joining RubinBrown, Mary has served clients through a Big 4 firm. Matt Wester, CPA, CFE, is a new partner in RubinBrown’s Business Advisory Services Group in Denver. Matthew has 17 years of in-depth experience in corporate finance and forensics and provides services to counsel and business management on a variety of legal disputes.

taxation and consulting. She has recently concentrated her efforts on assisting counsel representing both plaintiffs and defendants in a variety of legal disputes.

Nancy Rehkemper, CPA , rejoins the firm as a tax manager in RubinBrown’s St. Louis office. Nancy is responsible for federal and state tax compliance and consulting with middle market

companies, high net worth individuals and flow-through entities. She specializes in various industries, including manufacturing and distribution.

Kirk Wonio, CPA, joins RubinBrown as a manager in our Tax Consulting Services Group in the St. Louis office. Kirk provides international tax consulting, planning and return

preparation services, as well as acquisition and disposition structuring for clients, primarily in the manufacturing and distribution industry.

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News – continued

RubinBrown Announcements RubinBrown Chairman and Managing Partner Named Most Influential On an annual basis, the St. Louis Business Journal compiles a list of the Most Influential St. Louisans. This year’s list featured Chairman Jim Castellano for the third year in a row. Joining Castellano on the list this year is Managing Partner John Herber. Chairman Named to Rockhurst Board Rockhurst University recently named RubinBrown Chairman Jim Castellano as chairman of its Board of Trustees. Managing Partner Named To AICPA Committee Congratulations to RubinBrown Managing Partner John Herber, who has been named chairman of the AICPA Professional Liability Insurance Program Committee.

Ingram’s Magazine’s 40 Under 40 RubinBrown is very proud of Chip Harris, a partner in the Kansas City office. He was recently named to Ingram’s Magazine’s 40 Under 40. RubinBrown Awards and Recognitions

RubinBrown Managing Partner John Herber accepts the TORCH Award from the Better Business Bureau.

RubinBrown Presented with Better Business Bureau’s TORCH Award

Tax Chairman Named To AICPA Committee RubinBrown Tax Chairman and Partner Steve Brown was recently appointed to the Tax Executive Committee for the American Institute of CPAs.

RubinBrown was awarded a prestigious honor in October. The Better Business Bureau of Eastern Missouri and Southern Illinois honored 10 companies with their TORCH Award, which is presented to businesses that are committed to customer service through exceptional standards for ethical business practices. RubinBrown was selected thanks to our dedication to totally satisfied clients, as well as our ongoing commitment to our communities.

Partner Appointed to Institute of Internal Auditors Advisory Board RubinBrown Partner Chelle Adams was named to the Advisory Board, Audit Gaming Group for the Institute of Internal Auditors.

Partner Awarded Saint Louis University Alumni Award Congratulations to RubinBrown Partner Judy Murphy who has been selected to receive the Fr. Joseph E. Boland Outstanding Alumni Award for 2011 by Saint Louis University’s John Cook School of Business.

Partner Named To Missouri Biotechnology Association

Shortly after being appointed Partner-In-Charge of RubinBrown’s Life Sciences Group, Felicia Malter was named to the Board of Directors of Missouri’s Biotechnology Association.

Raise Your Expectations

5

MSCPA Work-Life Balance Award Presented to RubinBrown RubinBrown was honored with the Work-Life Balance Award from the Missouri Society of CPAs. This award honors firms that promote an effective balance between their team members personal and professional commitments. On behalf of RubinBrown, Managing Partner John Herber accepts the MSCPA Work- Life Balance Award.

RubinBrown Partner Presented MSCPA Woman To Watch Congratulations to RubinBrown Partner Audrey Katcher, who was named one of the Missouri Society of CPAs’ Women To Watch. This award recognizes women who promote a work environment that provides opportunities for the successful integration of their personal and professional lives, as well as the advancement of women to positions of leadership.

Enjoy The Digital Edition of Horizons!

RubinBrown is proud to present a new, interactive way to enjoy Horizons , our firm’s full color, informational magazine. The new digital Horizons offers a number of enhanced tools, including: • Easy navigation and readability

Cover Welcome ii RubinBrownNews 3 Chairman’sCorner 7 BakerTilly InternationalUpdate 9 Proposed LeaseAccountingRules RouseUncertainty 11 KeyComplianceDAtes fora401(k) andProfitSharingPlan 15 RubinBrownGearsUpToServe Growing LifeSciences Industry 20 Automotive 27 Media&Entertainment 30 Contractors 33 PublicSector 35 Hospitality&Gaming 39 Manufacturing&Distribution

Spring | 2011

FPO horizons Cautious Optimism: TheRoadtoEconomicRecovery APublicationofRubinBrown LLP

• Keyword search capability • Active links to websites and email addresses • Easy printing capabilities

• Forward to a friend/posting to your social media network functionality • Desktop shortcut You can access the new digital edition of Horizons at www.rubinbrownhorizons.com

Howwillproposed lease accounting rules affect you? RubinBrowngearsup to serve growing life sciences industry FindouthowRubinBrown’s industries are faring economically

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Chairman’s Corner

Client Satisfaction Fuels Our Optimism By Jim Castellano, CPA

Spring is in the air! After our long, cold, and severe winter, the thoughts of warming weather and longer days contribute to the natural feelings of optimism that fill my mind each year at this time. Maybe the thoughts arise from days gone by when the aroma of freshly mowed lawns was a sign that school would soon be over and summer on its way. It’s also a time when baseball teams were about to break from spring training, each brimming with optimism that perhaps this would be their year to prevail as World Champions. Optimism….is it a hope or is there real cause for such emotion? A recent survey of leaders of nearly 70 accounting firms conducted by L. Harris and Partners revealed

that 71 percent of the firms were optimistic or very optimistic about their growth prospects for 2011. Overall, the survey indicates a noticeable increase in optimism about prospects for 2011 over 2010. I found it especially interesting that 94 percent of the firms surveyed are placing a high priority on retaining existing clients. What a novel strategy! As I reflect on the effects of the global financial crisis on RubinBrown, it is clear to me that our commitment to the total satisfaction of our clients was a principal factor in our ability to weather the storm without reducing our staffing levels. “Totally satisfied clients” is a cornerstone of our vision and has been for decades. This passion and commitment to the total satisfaction of our clients

Raise Your Expectations

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Jim Castellano, CPA Chairman james.castellano@rubinbrown.com 314-290-3300

Monthly electronic surveys are sent to segments of our client population seeking input on their satisfaction with our quality and service. We ask whether our clients are totally satisfied, somewhat satisfied, somewhat dissatisfied or totally dissatisfied with our quality and our service. These results are reported monthly to our board and any less-than- satisfied clients are immediately addressed. Every two years, we conduct an in-depth survey of a broad segment of our clients. In addition, personal visits are scheduled with a few clients every month to inquire of their satisfaction. Have we achieved the total satisfaction of our clients? Of course not. Are we continuously striving for total satisfaction of our clients? Of course. If you are a RubinBrown client and are not totally satisfied with us, I would like to hear from you. Please be assured that we care. Yes, there is cause for optimism. At RubinBrown, our optimism is founded in the satisfaction of our clients with the quality and service we provide. Thank you for your confidence in us.

is not a “passing fad” or “strategy du jour” at RubinBrown. Rather, it is an essential piece of our culture. Our vision at RubinBrown is to be “One firm, highly respected, nationally prominent, with a solid foundation of core values, inspired team members David Ogilvy, often called the “father of advertising”, once said “set exorbitant standards and hold your people accountable when they don’t live up to them. There is nothing so demoralizing as a boss who tolerates second-rate work.” I assure you that anything less than the total satisfaction of our clients is unacceptable at RubinBrown. Measuring the satisfaction of our clients is essential to achievement of this aspect of our vision. We need to know what you think and have created a variety of processes to receive your feedback. and totally satisfied clients.” A very simple statement, but not so simple to achieve.

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Baker Tilly International

Both Kylee Rich and Donna Lee come to RubinBrown from New Zealand through the Baker Tilly International Secondment Program.

Secondment Opportunities Transport Global Perspectives to RubinBrown

Among the many rewards of RubinBrown’s membership in the Baker Tilly International Network is the enriching opportunity to participate in an international exchange program with our fellow firms. The Baker Tilly Secondment Program is designed to provide a unique working experience for staff of its member firms, as well as the opportunity to learn the culture of another country. A secondment opportunity provides the opportunity to work in another office for a set amount of time, typically three or six months. Team members who participate in secondments are quickly immersed in client engagements and given authentic work assignments to complete. The goal of the program is to be able to share knowledge with your home office upon returning and to better understand the regulations and challenges each independent firm faces.

Secondments are beneficial in sharing best practices and strengthening relationships across the network. Another byproduct is that they can ease staff shortages experienced during busy seasons for the host firms. RubinBrown has been an active participant in the Baker Tilly International Secondment Program for many years. It has been advantageous for the firm, because it focuses on building talented professionals in a growing global economy. RubinBrown is doing its part to provide education and culture by currently hosting two secondees from Staples Rodway in Auckland, New Zealand. Kylee Rich joined RubinBrown in early January in our Assurance Services Group and Donna Lee followed a few weeks later as a new addition to our Business Advisory Services Group. Both Kylee and Donna report that their time with RubinBrown has been both gratifying and educational.

Raise Your Expectations

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Two RubinBrown Team Members Appreciate Memorable Secondment Opportunities

Kevin Bickel, CPA Staff Accountant, Assurance Services Group 12 Week Secondment - Summer 2010 Staples Rodway in Auckland, New Zealand “This program was an extremely rewarding experience in which

Jeff Sparks, CPA Manager, Assurance Services Group 4 Week Secondment Fall 2010 Collins Barrow in Toronto, Canada “One of the objectives of my secondment was to gain a deeper expertise in the area of International Financial Reporting Standards (IFRS). In

–

RubinBrown’s Kevin Bickel enjoys a kiwi orchard while working in New Zealand through the Baker Tilly Secondment Program.

Manager Jeff Sparks learned about IFRS while working in Toronto, Canada.

I was able to work, learn, and grow personally and

professionally. I was given the opportunity to senior/in-charge numerous audit engagements

the first quarter of 2011, Canadian public companies will be converting their accounting standards to IFRS. My time was spent working with companies to understand how their accounting policies will need to change and how this will impact their financial statements. Not only was I able to gain deep expertise in IFRS, but I also had the opportunity to learn best practices in the implementation process. The program was an amazing experience both personally and professionally as it gave me the opportunity to build a strong relationship with Collins Barrow, experience the Canadian business environment, and enjoy all that Toronto has to offer.”

which enabled me to learn the accounting principles and auditing procedures used in New Zealand. It also allowed me to learn the different processes used at Staples Rodway and to gain a general understanding of the local business environment. In addition, I was fortunate enough to be able to travel on numerous weekends and enjoy the beautiful countryside that New Zealand has to offer.”

“My secondment at RubinBrown has been an incredible learning, cultural and out-of-this-world weather experience,“ says Kylee with a smile about the turbulent winter the Midwest has experienced this year. “I have really enjoyed getting to know the RubinBrown team, working on a range of fascinating clients and seeing the similarities and differences of corporate culture between St. Louis and Auckland.” Donna Lee agrees stating that “the secondment program has been an amazing experience. I have gained knowledge in business advisory areas that were not available to me in New Zealand. I have also gained insight into U.S. companies, their operations, processes and some of the challenges

they face. It is also great to see the different cities around the United States and be immersed in the American culture.” Baker Tilly International states that its overall mission with the program is to ensure every secondment is a valuable and successful experience for the host firm, the home firm, and the secondee. Without a doubt, they have achieved their goal.

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General Topics

Proposed

Uncertainty Lease Accounting Rules Rouse By Fred Kostecki, CPA

Late last summer, the Financial Accounting Standards Board (FASB) published an exposure draft of proposed accounting changes which would require the recognition of assets and liabilities on the balance sheet of entities to reflect lease obligations.

Under these newly proposed changes, the concept of an “operating” lease would be essentially eliminated. The proposed changes have generated plenty of discussion within the accounting community. Some feel doubtful that the proposed rules would improve financial reporting and have concerns about potential distortion on financial statements. Currently, operating leases are not recorded on balance sheets. This results in many investors having to adjust financial statements (using disclosures and other available information) to estimate the effects of lessees’ operating leases for the purpose of investment analysis.

The proposed treatment may have a considerable impact on entities with debt to equity and leverage ratio requirements which are often contained within lending agreements. The FASB proposes that the new rules would provide more complete and useful information to investors and other users of financial statements. The proposed rules would likely take effect in 2013, and would:

• Record a “right to use” asset and a corresponding lease obligation liability

• Treat traditional operating and capital leases in a similar manner

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Will lease accounting changes have an impact on debt covenants?

• Require the “right to use” asset to be amortized over the shorter of the expected lease term or the life of the underlying asset • Provide consistency for both short-term and long- term leases Final vote is expected to occur in the second quarter of 2011. The complete exposure draft can be located on the FASB website at www.fasb.org. In February 2011, the board began deliberations as to whether two types of lease categories would provide more decision-useful information, as opposed to the single attribute model proposed in the exposure draft. The two potential categories discussed were (i) finance leases and (ii) other-than-finance leases. These potential types of leases could have differing income statement effects but would, nonetheless, both be reported on the balance sheet. It should be noted that the board’s discussions of a two- category lease model are preliminary. RubinBrown Lease Accounting Survey In late 2010, RubinBrown surveyed its clients and contacts about their familiarity with the proposed lease accounting rules, along with their impact and expectations with regard to financial reporting. More than 115 people provided their input on the survey. Seventy percent of the respondents worked for companies from a variety of industries with $100 million or less in revenue. The majority of respondents indicated some familiarity with the proposed changes to lease accounting. However, a large percentage of respondents have not quantified the impact on their debt covenants. For those who have, a majority have indicated there will be a negative impact on the covenants.

29%

42%

26%

3%

Haven’t Quantified Impact

Don’t Have Debt Covenants

Yes - Negative Impact

Yes - Positive Impact

A significant majority of respondents have indicated that the proposed changes do not improve the clarity of financial reporting.

Do lease accounting changes improve financial reporting?

2%

24%

74%

No - Do Not Improve Clarity

Yes - Improve Clarity

No Response

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Survey Comments Revealing On Lease Accounting Rules

A majority of respondents have indicated that they do have the systems to track the new information, but it will still take a significant amount of time to gather the data and determine the necessary accounting adjustments.

In written survey comments, respondents expressed mixed reactions regarding the proposed lease accounting rules. Below are a few of the responses: “They require a substantial amount of work and do not result in better information than good notes would provide.” “This is a change which is long overdue. The gymnastics used to keep many leases off the books as operating leases has been, at best, a distortion of the true liabilities of many companies and, at worse, a material misstatement of the balance sheet.” “The lease payment costs should not be considered any differently than other operating costs. It is just an annual cost of business. The values on the balance sheet will not clarify the worth of the entity.” “While operationally tricky, it will record liabilities that have long existed and never been reflected on the face of the financials.” “I think the changes are ridiculous as they relate to operating leases where there is absolutely no intent for the leased object to change hands at the end of the lease. If it is material, I believe a footnote to the financial statements would be much better and could clearly state whether or not title was to be transferred.”

Do you have the IT systems available to track and account?

18%

33%

2%

47%

Yes

No

No Response

Yes - But It Will Take Time

Opinion is largely split in terms of whether the users of the financial statements will understand the proposed changes to lease accounting. Will users of financial statements understand changes in lease accounting?

31%

42%

2%

25%

Yes - After Explanation

No Yes

No Response

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A majority of respondents disagree with the proposed changes to lease accounting. Respondent comments generally suggest that leasing is not ownership and the new accounting creates balance sheet distortion. Overall, the respondents felt that sophisticated users already understand a company’s lease obligations and suggest that operating leases should not be considered differently from other normal operating costs.

Do you agree with proposed lease accounting rules?

28%

51%

14%

7%

No Yes

No Opinion or Response

Yes - With Changes

RubinBrown’s Assurance Services Group Your company will benefit from our highly trained professionals with experience in many industries. We utilize our renowned Business Performance Analysis (BPA) to bring value-added ideas and feedback while performing attest services. Todd Pleimann, CPA - Kansas City Managing Partner, Kansas City Office 913.499.4411 todd.pleimann@rubinbrown.com Fred Kostecki, CPA - St. Louis Partner-In-Charge Assurance Services Group 314.290.3398 fred.kostecki@rubinbrown.com

Rodney Rice, CPA - Denver Partner Assurance Services Group 303.952.1233 rodney.rice@rubinbrown.com

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General Topics

Key Compliance Dates for a 401(k) and Profit Sharing Plan

With A December 31 Year End

By Wayne Isaacs, CPA, JD, CEBS

The following is a summary of key compliance dates for a 401(k) and profit sharing plan that does not include employer securities for the period January 1 to December 31. While a quarter of the year has already passed, RubinBrown is publishing this listing to help its contacts and clients understand the tasks related to a plan year ended December 31, 2010. The information is intended to be used by individuals who perform plan administrator responsibilities for their company’s plans.

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January 1, 2011 Retirement Plan Limits Review your payroll system to limit the following contribution information: • Annual compensation limit for calculating employee and employer contributions, and forfeitures - $245,000 • Deferral contributions (pretax and Roth) - $16,500 • Catch-up contributions (participant 50 years of age or older in 2011) - $5,500 • Annual addition - the total of all employee and employer contributions, and forfeitures for the limitation year - $49,000 (excluding catch-up contributions) Update Participant Beneficiary Designation Forms Disseminate beneficiary designation forms to newly eligible participants, existing participants who have had a life event that may impact their previous beneficiary designations (i.e., marriage, children, divorce, military leave, etc.), and beneficiaries of recently deceased participants. You may also consider sending information about updating beneficiary designation forms to all participants, including those who are inactive or not currently employed by your company. (Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.) Deadline for mailing the forms to the participants and beneficiaries who received retirement plan distributions during 2010. Mailing of IRS Form 945 (Annual Return of Withheld Federal Income Tax) Mailing of the form to the IRS to report the amount of federal income tax withheld during 2010 for distributions made to participants and beneficiaries. The filing deadline is extended to February 10, 2011 if you made your deposits on time and in full during 2010. January 31, 2011 Mailing of IRS Forms 1099-R

IRS Determination Letter Requests Deadline for individually designed plans on Cycle E (Employers with an employer identification number that ends in 0 or 5) to file a request for a determination letter with the IRS February 28, 2011 Filing IRS Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) with IRS Form 1099-Rs (Paper Documents) Deadline for filing paper documents of IRS Form 1099-Rs to the IRS for distributions made to participants and beneficiaries during 2010 March 15, 2011 Deadline for Depositing Employer Contributions Deadline for corporations with a December 31, 2010 tax year end to deposit employer contributions to the plan’s trust so the employer contributions will be deductible for the December 31, 2010 tax year. This date may be extended for an additional six months to file the Corporation’s Federal Corporate Income Tax Return. Failed Actual Deferral Percentage (ADP) or Actual Contribution Percentage (ACP) Test Deadline for making corrective distributions to affected participants due to a failed ADP and/or ACP test to avoid the Internal Revenue Code 10% excise tax for the plan year ending December 31, 2010. (The deadline is June 30, 2011 for a plan that has an eligible automatic contribution arrangement (EACA).) March 31, 2011 Filing IRS Forms 1099-R (Electronically) Deadline for electronically filing copies of IRS Form 1099-Rs to the IRS for distributions made to participants and beneficiaries during 2010. Reporting Excise Taxes Deadline for filing IRS Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) to report excise taxes on corrective distributions for a failed December 31, 2009 ADP and/or ACP test that were distributed after March 15, 2010 for a plan, other than an EACA. The form and payment must be submitted

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General Topics – continued

September 15, 2011 Deadline for Depositing Employer Contributions (Extension)

to the IRS within fifteen months after the close of the plan year to which the distributions apply.

If a request for a six-month extension of time to file the Corporation’s Federal Corporate Income Tax Return was sent to the IRS, September 15 is the deadline for corporations with a December 31, 2010, tax year end to deposit employer contributions to the plan’s trust in order for them to be deductible.

April 1, 2011 Deadline for Making Required Minimum Distributions (RMD) Internal Revenue Code deadline for distributing the 2010 initial RMD to affected participants. Individuals who attained age 70 1/2 prior to 2011 and either retired or were terminated, or are at least 5% owners must receive RMD. April 15, 2011 Deadline for Distributing Excess Deferral Contributions Internal Revenue Code deadline for distribution June 30, 2011 Failed Actual Deferral Percentage (ADP) or Actual Contribution Percentage (ACP) Test for an Eligible Automatic Contribution Arrangement (EACA) Deadline for making corrective distributions to affected participants due to a failed ADP and/or ACP test to avoid the Internal Revenue Code 10% excise tax for the plan year ending December 31, 2010 for a plan that has an “eligible automatic contribution arrangement.” of excess deferral contributions to affected participants for the 2010 calendar year.

September 30, 2011 Distribution of Summary Annual Report (SAR)

Deadline for distributing the SAR to participants for the plan year ending December 31, 2010, unless a request was made for a two and one-half month extension of time to file Form 5500 or Form 5500-SF. October 17, 2011 Deadline for Filing Form 5500 or Form 5500-SF (Extension) Deadline to file Form 5500 or 5500-SF if a request for a two and one-half month extension of time to file was made by August 1, 2011. This is a reminder for the next plan year December 1, 2011 Deadline for Distributing Participant Notices Deadline for distributing the 401(k) Safe Harbor Contribution (Safe Harbor), Eligible Automatic Contribution Arrangement (EACA), Qualified Automatic Contribution Arrangement (QACA) and Qualified Default Investment Alternative (QDIA) notices to affected participants for the plan year beginning January 1, 2012. (The notice must be distributed to eligible participants at least 30 days but not more than 90 days before the beginning of the plan year. In addition, the notice must be distributed to new employees who become eligible during the plan year within a reasonable time before they become eligible.)

August 1, 2011 Deadline for Filing Form 5500 Series Return

Deadline to electronically file Form 5500 or Form 5500-SF (Short Form Annual Return/Report of Small Employee Benefit Plan) for plans with fewer than 100 participants as of the beginning of the plan year and related schedules to the DOL for the plan year ending December 31, 2010. A two and one-half month extension of time to file can be requested to extend the deadline.

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Compliance Notes The following compliance notes are general in nature but may apply to your plan. • Fiduciary or Retirement Committee Meetings - The Retirement or Investment Committee should meet periodically throughout the plan year and fulfill its fiduciary responsibilities. In addition, the Committee should review the investment policy statement periodically during the plan year and take appropriate action. • Eligible Employee - An employee must be provided with the relevant documentation once he/she is eligible to participate in the plan. The employee must satisfy the eligibility requirements contained in the plan document for each type of contribution. • Depositing Participant Contributions and Loan Repayments - Safe Harbor (Fewer Than 100 Participants) - A Department of Labor (DOL) regulation was finalized in January of 2010 that requires the plan sponsor of a plan with fewer than 100 participants as of the beginning of the plan year to timely deposit participant contributions (401(k) salary deferral, Roth 401(k) and after-tax) and loan repayments into a retirement plan’s trust. The money must be deposited within seven business days after it has been withheld from participant compensation. - Non Safe Harbor (100 or More Participants) - The DOL did not finalize the regulation for a plan with 100 or more participants but the current regulations require that money be deposited into the plan’s trust as of the earliest date it can be reasonably segregated from the employer’s general assets but no later than 15 business days after the end of the month in which the contributions were withheld by the employer from participants’ compensation. The Department of Labor indicated that the 15 business day period should not be used as a safe harbor. Failure to comply with the requirements can result in a prohibited transaction that must be reported on Form 5500. • Retirement Plan Audit - Generally a retirement plan that has 100 or more participants as of the beginning of the plan year must have an audit

performed by an independent public accountant. The audit report must be attached to the Form 5500 (Annual Return/Report of Employee Benefit Plan). A plan administrator should contact its accountant to schedule the audit if one is required. • Form 8955-SSA (Annual Registration Statement Identifying Participants with Deferred Vested Benefits) - Plan sponsors of qualified retirement plans were for the first time required to electronically file Form 5500 (Annual Return/Report of Employee Benefit Plan) for plan years beginning on or after January 1, 2009. Form 5500 Schedule SSA previously included information about terminated participants with vested deferred benefits. The information included the name, social security number, type and the amount of the benefit owed to the participant. However, the Form 5500s are now public information once they are filed with the Department of Labor. They did not want participant social security numbers to be posted on their website, so they did not require plan sponsors to report this information with their 2009 Form 5500. The government recently released a draft of Form 8955-SSA (Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits) for public commentary. After it is finalized, the IRS will announce a special due date for plan sponsors that had terminated participants with vested accrued benefits when they filed their 2009 Form 5500. Plan sponsors will be required to complete and file the new form but the participant information will not be made public. • Plan Error Correction - Plan administrators must ensure that their plan satisfies the statutory and regulatory requirements both in form and in operation. Generally, failure to keep a plan in compliance can result in adverse consequences to the employer, employees and trust. The IRS and Department of Labor have error correction programs to enable a plan sponsor or fiduciary to correct certain plan defects. An employer or plan administrator should seek professional assistance to remedy and correct any plan defect.

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General Topics – continued

December 15, 2011 Distribution of Summary Annual Report (Extension)

and participant compliance limits for the plan year ending December 31, 2010. Required Minimum Distributions (RMD) Internal Revenue Code deadline for distributing the 2011 RMD to affected participants. Individuals who attained age 70 1/2 prior to 2011 and either retired or were terminated, or are at least 5% owners must receive a RMD. This is a reminder for the plan year ending December 31, 2011 Discretionary Plan Document Amendment Deadline to amend the plan document for any discretionary amendment made during the plan year ending December 31, 2011.

Deadline for distributing the SAR to participants for the plan year ending December 31, 2010, if a request was made for a two and one-half month extension of time to file Form 5500 or Form 5500-SF. December 31, 2011 ADP, ACP and Annual Addition Refund Deadline Internal Revenue Code deadline for issuing distributions to affected participants due to a failed ADP and/or ACP test for the plan year ending December 31, 2010, and/or a failed annual addition

limitation test for the limitation year. Non-Discrimination Test Deadline

Internal Revenue Code deadline for a plan to satisfy non-discrimination testing requirements

RubinBrown’s Benefits Group RubinBrown’s Benefits Group serves employers in the design, development, and maintenance of retirement plans, cafeteria plans, defined benefit plans and more.

Robert Merenda, CPA - St. Louis Partner-In-Charge Wealth Management Services Group robert.merenda@rubinbrown.com 314.290.3236

Chip Harris, CPA - Kansas City Partner-In-Charge Plan Audit Services Group chip.harris@rubinbrown.com 913.499.4426

Brian Frevert, CPA, CFP, MBA - Denver Partner Wealth Management Services Group brian.frevert@rubinbrown.com 303.952.1231

Wayne Isaacs, CPA, JD, CEBS - St. Louis Manager-In-Charge Benefits Group wayne.isaacs@rubinbrown.com 314.290.3493

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RubinBrown Gears Up to Serve Growing Life Sciences Industry

RubinBrown recently formed a dedicated group to serve the vibrant and growing life sciences industry.

The RubinBrown Life Sciences Industry Group works with local, national and international companies to help improve their financial position and provide superior accounting and tax services, including companies working in:

Kansas City Business Journal recently reported that life sciences companies have raised record levels of venture capital money in 2010, bringing in about $9 billion, compared with $4 billion in 2009. The global industry saw $148 billion in disclosed merger-and-acquisition activity and an additional $63 billion in partnerships created during 2010. In addition, RubinBrown has experienced an increase in the number of clients in the life sciences industry and is dedicating professionals and resources to assist organizations in this growing sector.

• Animal health and nutrition • Plant science and technology • Medical devices • Pharmaceuticals and human health • Renewable energy

RubinBrown has noted there are several reasons to concentrate on the life sciences industry. The

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General Topics

What Is Life Sciences? According to the Missouri Biotechnology Association (MOBIO), which is focused on maintaining the growth of the biotechnology industry for the state, life science research and work are critical to our world’s future. In the next 20 years, people will place a much greater value on resources such as clean water, clean air, a stable global climate, productive land, biological diversity and healthy and secure communities. Much of the world already is looking to science to provide innovative solutions, and researchers are beginning to think about how we can answer and meet key questions and challenges. The answers to these questions lies in the life sciences. The concept of life sciences is a recent one that is based on meeting the food and health needs of a rapidly expanding world, while recognizing the importance of environmental sustainability. Life sciences is about trying to meet these unprecedented challenges by recognizing, developing, utilizing and managing the interconnection of several different disciplines— agriculture, pharmaceuticals and food. The term “life sciences” describes an interconnected system that shares common goals and technologies. The common goals are to help people around the world lead longer, healthier lives, at costs that they and their nations can afford and without continued environmental degradation. The shared technologies are those of advanced bioscience, including genomics — a group of technologies that dramatically increases the speed and power of genetic research. Understanding gene sequences and functions permits a dramatically faster, less expensive development of knowledge that can be practically applied to solve complex human problems in many areas, such as agriculture, nutrition, health, material sciences and environmental sustainability.

It is important that people globally begin thinking about addressing the critical needs and issues that are affecting individuals now and will continue into the future. Life sciences help us meet the food and health needs of this rapidly expanding world in an environmentally sustainable manner.

Missouri To Consider Legislation For Life Sciences

Many in the life sciences industry are keeping their fingers crossed that the Missouri General Assembly will consider passage of the Missouri Science and Innovation Reinvestment Act (MOSIRA). According to MOBIO, MOSIRA will foster economic growth and the creation, attraction, and retention of quality jobs related to science and innovation in Missouri. It will enable the state to capitalize on its existing assets that make it a national leader in science and innovation. By providing a stable source of funding, the act will make Missouri a leader for science and innovation entities to locate and grow which will create new jobs, foster economic growth, advance scientific knowledge, and improve quality of life. The legislation functions by capturing the new growth in state income taxes generated by employees working in Missouri within designated science and innovation fields and reinvesting this revenue to assure future and continued growth in this important sector of Missouri’s economy. It’s important to note that funding through the act will not involve the use of existing general revenue funds. Missouri Life Sciences Initiatives Missouri has an active and growing life sciences community, encompassing world-class research institutions; as well as strong plant, animal and medical sciences companies. Missouri is also home to a fertile technology transfer, incubator and start-up environment and has

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an active venture capital initiative that provides a full spectrum of capital availability. MOBIO reports that in order to maximize the enormous potential rewards offered by the rapidly expanding life sciences sector, Missouri is targeting six fields for advancement:

with angel investors and venture capital investment, are important to attract and support early stage companies. He says the Kansas City area saw two new incubators open their doors in 2010—the Bioscience and Technology Business Center in Lawrence, Kansas and the Regional Ennovation Center in Independence, Missouri. Two other facilities are expected to open in 2011—the KU Medical Center Biomedical Entrepreneurial Research Accelerator and the KBA Venture Accelerator in Olathe. These new facilities complement the existing incubators in Columbia, MO, St. Joseph, MO, Manhattan, KS, Springfield, MO and Kansas City, MO. Getman also states that a recent positive development is the effort by both Kansas State University and the University of Missouri to increase their physical presence in the immediate metropolitan Kansas City area. The Kansas State Olathe Innovation Campus will open in 2011 to integrate education, research and entrepreneurship focused on animal health, food safety and security. Missouri Life Sciences Facts and Figures • Missouri is a part of the world’s most fertile cropland, which generates 75 percent of American farm productions. • Quality agriculture industry: Missouri ranks second nationally in the number of farms (105,000) and ranks in the top ten for production of every major crop and livestock category. • Missouri ranks second in plant genomics funding from the National Sciences Foundation; number five in total life sciences funding. • The top five sectors in the life sciences industry in Missouri, which account for 76.9% of jobs, include: physical, engineering and biological research; pharmaceutical preparation manufacturing; pesticide and other agriculture chemical manufacturing; medical laboratories;

• Animal Health and Nutrition • Plant Science and Technology • Pharmaceutical and Human Health • Industrial Biotechnology • Bioterrorism • Comparative Medicines

St. Louis Plant science is a major emphasis for the eastern half of Missouri. The Donald Danforth Plant Science Center works to develop new varieties of crops, ranging from cassava with improved nutritional qualities to disease-resistant and drought-tolerant plants. They are working toward new biofuels to create a sustainable energy source, as well as ways to reduce pesticide and fertilizer use. William H. Danforth of the Donald Danforth Plant Science Center states that “our goal is to improve nutrition, end starvation, preserve the environment, and build St. Louis as a center for plant science.” St. Louis-based Monsanto has also become a major force in the search for new ways to make agriculture more sustainable. The company is doing its part by developing better tools for farmers, including advanced hybrid and biotech seeds. Kansas City The organization dedicated to advancing life sciences in the Kansas City Region is the Kansas City Area Life Sciences Institute. Dan Getman of the institute reports that there is a major emphasis in the Kansas City area on animal sciences. He further notes that incubators, along

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and surgical and medical instrument manufacturing. • The National Institute of Health awarded Missouri more than $473 million through 1,206 grants.

• Venture capital investment has increased by more than $120 million in the last six years as reported by the National Association of Venture Capital. • Kansas is ranked as the 5th most vibrant bioscience economy according to a national site selection magazine. • The nation’s largest bioscience venture fund selected Kansas as the location of its only Midwest office and formed its first Kansas company in December 2010. Colorado Life Sciences Initiatives Information gathered from the Colorado BioScience Association reveals that Colorado continually ranks in the top ten cities for bioscience industries. A friendly tax and regulatory environment is crucial to the state so it can remain competitive and grow the bioscience industry. The single sales factor apportionment for corporate income tax, the Colorado Innovation Investment Tax Credit and the sales and use tax refunds and exemptions all help raise Colorado rankings in the biosciences. These programs and initiatives help retain current companies, attract new companies to the state, and ensure the growth of new start-ups in the bioscience sector. • Colorado’s bioscience sector employed 18,000 in the late 2000s, spanning 920 establishments. • Bioscience employment grew 5.5 percent between 2001 and 2006, outpacing total private sector job growth. • The average bioscience annual wage of $67,320 is 54 percent more than the private sector annual average wage in Colorado. • The Denver metro region ranks 19th among all U.S. metro areas in the size of its medical device sector. Colorado Life Sciences Facts and Figures

Kansas Life Sciences Initiatives The Kansas Bioscience Authority reports that Kansas ranks fifth in the nation for biotech strength. Kansas possesses one of the largest concentrations of animal health companies in the world. Kansas researchers are making breakthroughs in oncology, medical devices, and other areas of human health, and are delivering bioenergy solutions to the nation. In addition to the Kansas Bioscience Authority, another organization working toward the expansion of biosciences in the state is KansasBio. Across the human, plant, animal and industrial biosciences, KansasBio is focused on enhancing the business and research climate and working with leaders across the state to attract and retain bioscience talent, companies and funding. • “Kansas’ bioscience industry has grown at a faster rate than the national sector since 2004,” reported the Batelle 2010 industry report. • Kansas bioscience establishments include 464 companies, providing 11,960 bioscience jobs according to the 2010 Batelle report. • Kansas is in its seventh year operating one of the nation’s most successful bioscience growth funds through formation of the Kansas Bioscience Authority’s $581 million fund. • Growth in bioscience employment has increased by nearly 2,000 jobs since formation of the KBA as reported in the agency’s most recent annual report. Kansas Life Sciences Facts and Figures

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