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We are a SEC reporter and we are thinking of changing our FYE from 9/30 to 10/31.

changing fiscal yearHas anybody had any experience in doing this?  Is it worth it?  What were the pros and cons?  How  did you handle your tax year?


Gennadiy Vernikov
Title: Director, Internal Audit
Company: Arista Networks
(Director, Internal Audit, Arista Networks) |

I have always advocated changing the financial year to help avoid QEs and YE during major holidays. Unfortunately, the costs of switching are up-front and visible while the benefits and cost savings are long-term and often hidden:

- improved job satisfaction retention - finance & accounting personnel can take time during holidays in December and July.

- less destruction during period-close will help avoid errors and improve efficiency.

- better availability of non-finance personnel will help obtain necessary operational information, clarification etc.

- you can negotiate better fees with your external auditors when your financial year is not during their busy season; even if it's not a visible rate reduction, you will get better, more efficient service, more consistent staffing which ultimately translates into savings.

On the cons side, if most your competitors report on a calendar-year basis (or any other standard for your industry) then some will see it as a disadvantage to report on a different cycle, especially if it's later than your competitors.

Jack Ormberget
Title: CFO
Company: Color Star Growers of Texas, Inc.
(CFO, Color Star Growers of Texas, Inc.) |

We are in the process of changing to a June 30 FY from a Dec 31 CY. This period better matches our seasonality of revenues, and takes advantage of our revenue/profit cycle for closing purposes. There are additional pro's to this move, but these alone justified our decision. The most significant con that we weighed was the additional audit period of the 1/2 year, and the costs associated with that activity.

I think it is a hard sell for a reporting company to justify this when the impetus might be more esoteric than functional. Be ready to defend this action and become the ire of the analyst community. I have experienced how the market analysts/the "Street" treats outliers.

Topic Expert
Phyllis Proffer
Title: Owner, Investor Relations Counselor
Company: The Heights Company, LLC
(Owner, Investor Relations Counselor, The Heights Company, LLC) |

The change in your fiscal calendar is manageable with the investment community, including the sell side analysts who are publishing research and their financial estimates. I have done this before with very good results.

We made a significant change to our fiscal calendar which shifted our fiscal quarters about four weeks. We provided historical information on our quarterly results based upon the new fiscal calendar. By this I mean a complete income statement by quarter with one column for what was previously reported and one column for what would have been reported if the company had been on the new fiscal calendar.

Depending on your business, you may want to consider providing balance sheet and/or cash flow ratios on a quarterly basis if the calendar shift impacts those results significantly.

Time is on your side or can be if you provide the investment community plenty of advance notice of the change. One to two quarters is a good rule of thumb. Announcing a change in your fiscal calendar without the historical information will create uncertainty. Therefore, have the historical data mentioned above available at the time you announce the change.

The investment community will appreciate a change to better match the seasonality of your revenues and profit cycle, particularly if the change better matches how the companies in your peer group are reporting their results. It will be a push if changing your fiscal calendar makes it more difficult to compare your financial results with others in your peer group.


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