You often stress the importance of the shareholder letter—that it reflects the CEO, leads off with a good photo and doesn't comprise 20 pages. I'm working on an annual report, and the designers want to put the letter in the back of the report. I strongly disagree with this idea (it would be like receiving documents in the mail, the letter from the sender clipped in the back) and would greatly appreciate your opinion on this matter.

S.C.: Your graphic designer's idea is marvelous—except...he or she doesn't know the territory. Doesn't understand this involves more than contest-winning design; the annual report to shareholders is a corporate communications piece of utmost importance. Tell your designer to get lost, take the afternoon off and/or take a cold shower—or all of the above! Stick by your guns. In severe instances like this, if it comes down to a battle between your savvy approach and the designer's silly suggestion, call everyone's bluff; say, "Let's get Sid Cato on the phone and I'll abide by whatever he recommends!"

In order to save money, my company has discussed eliminating distributing printed annual reports to employees. Instead, the company would encourage employees to "look at and read our report online on our Internet site." What factors do you think should go into this decision, and do you think the company's idea is a good one?

S.C.: First, I don't like your company's idea—any more than I countenance printing a special report for "the little people." That to me is talking down to employees—who, the company's patronizing position appears to be, couldn't be expected to comprehend the "real" report, distributed to Wall St., etc. That said, I asked an annual report pro whom I admire for his opinion concerning your question. Mike Klodnicki, currently seeking new annual report career opportunities, is one of the leaders in the field: For the last eight years, he has produced Southern Co.'s uniquely creative annuals, earning a slot among the world's 10 best reports for the last five years in succession, and achieving "world-class" status (by scoring at least 100 of a potential 135 points) the other three. Here's his opinion: "Before deciding to eliminate distributing printed annuals to employees, you should consider what your objectives are with that audience. Put simply, how important is it to you that employees read your report? Many may not take the time to go through the entire document online. So if part of your objective is to communicate a message (or messages) to employees, you won't achieve that by providing them with an online version alone. What's more, many employees take pride in their company, and the annual report can serve as a symbol of that pride. They have the book at home, show it to spouses, children and other family members, as well as friends and neighbors. When the annual is well done, it can help build employee loyalty. In short, not providing employees with the printed annual report would be a missed opportunity to communicate something important with that group, and a lot of intangible benefit would be lost. Apparent cost savings also can be somewhat misleading. If you have a large print run, the incremental cost to print annuals for employees probably isn't that large. Moreover, most employees who read the online annual report would likely do so at work -- on the job, on company time. (Whereas a hard copy delivered to their homes is likely to be handled there.) If a company has, say, 35,000 employees and they spend an hour calling up, downloading, looking at and reading the annual report online, that's 35,000 hours of lost work time. It's a hidden cost that ought to be considered."

I understand people usually quote Warren Buffet or Jack Welch's piece as model chairmen's letters, but could you highlight some points that make a good chairman's letter? What should shareholders/investors look for in a chairman's letter?

S.C.: First, know you've used a self-limiting word when you refer to "a chairman's letter." The letter is to be from the chief executive officer, be he or she chairman or president or what-have-you. That aside: Warren Buffett (with two "t's," please) and Jack Welch—well, their reputations without question precede them. Cato's not so sure they're as great as reputed, stock market marvels aside. Playing devil's advocate, let's see for example if the Welch magic rubs off on his successor—that, to me, would indicate he truly was a great CEO. Buffett? His report several years back made my list of world's worst. Reason? A walk-on-water, arrogant attitude by a guy who affects an aw-shucks manner while in Omaha and environs, wears tailor-made, thousand-dollar suits when in the Big Apple. What qualified him for world's-worst status was his publication of a trilogy of his best works, copyrighted. His secretary said "Of course, you're forbidden to quote from Mr. Buffett's writings without his express, written permission." To which, in polite company, I responded: "Balderdash!" Getting to the point: A good letter to shareholders first must sound as if the person whose name's at the end actually had a hand in its creation. Second, he or she must use words that sound as if a human-being actually authored them. Third, it must deal, at the very outset, with the results—if, that is, they're dire. Obfuscation (ignoring the numbers, or waiting an interminable length of time to address them) is one nail in a CEO's coffin. Translated: gets him or her on our—well, bad side. The letter shouldn't be overly long (average, year after year, with excesses omitted, is three pages), and ideally won't waste paragraph after paragraph reiterating what's better shown in the financial highlights, hopefully on the facing page. I've had high praise for the letter in Alcoa's annual report, its CEO since named to a high government position. Others, meantime, continue to swear by Warren & Jack. Call me contrary, but I'm not so sure.

Can you provide explanations on the six fundamental topics directors must include in their annual reports?

We're proposing to use a large matrix of our operations and how the business model applies to it. This will require four panels and we've proposed a gatefold within the report. Our CEO is a worried that people won't open it and look inside. Do you have any research concerning the use of gatefolds in annual reports?

S.C.: I believe the 1999 Andrew report (it's a Chicagoland corporation) used a four-page upfront gatefold, though I could be wrong. But one 2000 report, for Comdisco, also based in Chicagoland, has an upfront, two-page gatefold, which is what most run, and where most most position it. Any research? No, but gatefolds work—certainly for the purpose you have in mind. I'm reminded of the Ameritech gatefolds, certainly for 1997 and I believe 1998—both done by one of the industry's leading lights. Go with it! You may tell your CEO I said so. (And, yes, by coincidence Ameritech was yet another Chicagoland corporation, now part of Texas-based SBC Communications.)

With all the companies reporting bad-to-awful earnings, how will that affect 2000 annual reports, do you think? How should CEOs experiencing bad years handle things in their annuals?

S.C.: It's amazing the number of corporations, big names all, reporting poor results. All CEOs have to do to escape Cato's wrath is address the bad news without delay, without subterfuge; no windup-before-the-pitch. Do yourself a favor: Don't engage in industry-associating euphemisms ("The economy was bad for (fill-in-the-blank) corporations as a whole; so your company wasn't alone in reporting a poor performance.") Also, I'd expect companies worldwide to tighten their belts where annual report expenditures are concerned. This isn't the time for all-out, grandiose productions, folks. No gimmicks or extensive print runs.

This is my first year to do the annual report for my company. I read your answer about the drawing of a CEO and his photo in the back of the annual report with him looking like room temp. My CEO does not want his picture at all in the annual report. He felt really bad about a poor photo taken last year. He's using that as his excuse. Should I just use your previous example to try to convince him or do you have a new one for me?

S.C.: Would it help if you told him "Sid wants you to give it another try"? I know where your CEO is coming from: I find it somewhat distasteful to make all the arrangements to have a picture taken that couldn't possibly show me as good-looking as I'm sure I am! If your boss doesn't permit a picture to be used—and he certainly should choose one he likes—he's shortchanging himself, and the company. Readership (of the letter, that is) will rise if his photo is used, and the letter will get not only better, but more favorable recall. Good luck!

I'm a veteran newspaper and magazine journalist with a lot of staff and freelancing experience. I would like to get into the business of writing annual reports. Is there an agency that recruits writers for this?

S.C.: Not that I'm aware of. Many writers working on annuals today are graduates of my annual conference (details online). That's always the best way to get business: Join as an equal affiliate of others at a meeting such as mine. Reason why 75 spots will be filled, most likely, by those who've attended previously. Short of that, perhaps the way to proceed is to write the producers of some annuals you think could be better written.

Can you recommend any specific examples of recent letters from the CEO that handle poor financial results particularly well (in the honest, up-front way you discuss)?

S.C.: It's easier to name those who've done poorly in this regard. The year-ago AT&T report is one that comes to mind, as well as this year's BankUnited report. Neither one of those deserves kudos. But I'd commend the 2000 Lucent Technologies letter (though overall the report didn't do all that well). I've said many times that all a chief executive has to do is address the poor performance and position it properly. I guarantee he or she won't be alone among the 2000 crop of reports in having to deal with bad news. Above all, don't lead with the industry-associating euphemism, which smacks of disrespect for the reader's intellect.

What would be the advantages if companies could be allowed to report their financial reports in any way they choose?

S.C.: I think it would be a negative. Each company would decide how and what to report. That obviously would do away with the proverbial level playing field. Investors would have no way to know if they were comparing apples and oranges. In other words, companies could pick and choose what to present, what to ignore—to the potential stockholder's detriment. That, for example, is why my copyrighted criteria mandate certain standards. Uniformity is vital for there to be full disclosure.

Where can I purchase older annual reports? I am looking for all the the Home Depot annual reports from IPO to about 1990 to use as "art work."

S.C.: May I suggest—contact Home Depot itself! Only way I could think of to get what you seek.

Have you received any information on SPX Corp. annual report for the year 2000?

S.C.: Most 2000 annual reports aren't received until the second quarter of this year, 2001. SPX is on a calendar-year basis. Being a New York Stock Exchange-listed company, it's not required to have its annual in the mail until the end of March. So, no, no word yet on the SPX report. If it lives up to its reputation, though, it'll be bad. (Made my list of world's worst three years ago.)

Have you noticed a trend of companies beginning work on their annual reports later each year? Normally, I have at least one or two drafts written before Christmas. This year, none of my outlines had been approved by the first week in January. And, unbelievably, I just began an assignment this week for a company with a calendar year-end and an April 15 shareholders' meeting. I've seen my busy months shift from November through January to January through March. Just wondered if you have any evidence from other folks to support this timetable shift.

S.C.: This has been a long time coming, essentially the fault of the auditors, who think God created water for them to walk on! Managements, too, are to blame. I sometimes think they're convinced we writers simply have to "think" words and phrases—"what's the big deal?" We scribes know how untrue that is. Increasingly, auditors do their adding and subtracting at the printer, or as the book is being finalized. Charitably, I suppose they're under increasing pressure from their corporate clients, staffing lessened along with all of today's other cutbacks.

I work for a large design firm. My client has recently gone public and my company has been awarded the assignment to design its first annual report. I made a suggestion that they treat their first quarterly report as a very important document like a mini-annual to introduce the company to investors. They appear intrigued with this idea and asked that I show them samples. Do you know of other companies that have used this strategy? If so could you share their names so I could contact them with the hope of getting a printed sample to show my client?

S.C.: Sounds like a novel idea, but I don't know of anyone else that has gone this route. Sorry.

I am looking for dates of importance to annual report writers. There wasn't anything on your site. I imagine there are deadlines for publishing a report, or am I mistaken?

S.C.: All over the ASK Mr. Annual Report feature (at least, I certainly hope so!) you'll see reference to the fact that NYSE-listed companies are required, by their listing agreement, to have their annual report out so many days prior to the annual meeting. Everyone throws out a different date (especially corporate secretaries, who want us to recognize their importance). Some say 21 days prior to the annual meeting, some say more. The rule is that technically stockholders should have the latest annual report in hand when they vote their proxy. American Stock Exchange companies, unless the rule has been changed, have 120 days after close of their year. Vs. 90 for NYSE-listed companies.

I'm working on my first annual report and need to know the best type of paper to utilize for printing a full color annual report produced on PageMaker.

S.C.: I asked ace AR designer Fred Biliter to give his opinions. The Meta-4 partner observed: Paper choice is always part of the overall design strategy. We pick paper in conjunction with the message the corporation is trying to put forth, either in the current year's book or in the firm's long-term strategy. We also take into account the complexity of the imagery to be printed on the paper. Cost is another important issue for anyone selecting paper for any printed piece. Paper is available in about any color you might imagine as well as in a variety of surface finishes or textures and it may even come with specks, hairs, imbedded plant parts (leaf bits, stems, petals, etc.). We have seen it all and used a good variety of papers ourselves. My advice for someone printing four-color process is that he stick with a coated paper stock even though there are some great uncoated stocks on the market these days. Actually, the current trend (as I see it) seems to weigh in heavily on the uncoated side of the decision column. If you are new to the paper decision-making process, your best and safest bet would be to contact one of your local paper distributors or a good printer's representative and have them bring or send you printed samples of a variety of annual reports and paper swatch books. They would love to help you out. Also, is this a web or sheet fed job? So many questions, so little time.

I AM A STUDENT OF A BUSINESS SCHOOL. I AM DOING A RESEARCH ON THE INFORMATION TECHNOLOGY HARDWARE SECTOR. I DON'T KNOW WHERE I CAN FIND THE MOST RECENT ANNUAL REPORT(1999-2000) OF IBM AND COMPAQ. CAN YOU HELP?

S.C.: First off, both companies—IBM and Compaq—are on a calendar-year basis. Meaning their 2000 annuals won't be out for more than a month. But to secure their 1999 reports, have you thought of visiting their websites? Also, Compaq's '99 annual was named to my "world-class" list, so there's an email contact to its producer on my website. Finally: WHY ARE YOU SHOUTING? (That's what typing in all caps indicates.)

Having worked on more than 16 annual reports over the last nine years, one question someone recently asked has me stumped. Should marketing/investor relations or the finance department take the lead role in briefing/producing the report?

S.C.: Neither. Strangely enough, this topic has been in the forefront of my thinking recently, probably because of several contacts with IR people, who have—well, charitably, failed to impress. From my standpoint, the best annuals are done by professional communicators. That clearly rules out financial types (though the great Don Janis is a classic exception). IR folks are a microcosm of the communications business, dealing only with the financial community—analysts and others following their company. None has a better feel for the broader audience than such professional communicators as ex-newspapermen and women. That is, journalists, for whom an external approach is second nature, comes naturally. But that doesn't mean input from IR pros should be avoided. Indeed, I recommend the annual report contain the same in-depth disclosure given Wall Street, but written so non-financial types can comprehend.

We're looking into what other companies send out in the way of a quarterly or semiannual newsletter to shareowners. For starters, what percent, roughly, of companies even mail out a communique' with their dividend checks? If you have any samples you could loan us, that would help immensely. Cost data would also be good, but it's not a necessity.

S.C.: I have no samples of anything to lend. Besides, I don't monitor quarterlies or other such items. Only annual reports. I suspect the Corporate Secretaries organization could give you a firm fix on how many companies mail periodically, but it's certainly far less than it used to be—to a company's detriment, I'm convinced.

You seem to base one's score in Category 14—dealing with CEO involvement in the annual report—more on quantity than content. Am I correct?

S.C.: To a degree, you're right. Take Apogee Enterprises, for instance: In its 2000 report, it followed its one-page letter to shareholders with a nine-question Q&A (if enlivened with an excessive eight photos of the boss). Also this year, Tellabs followed its substantive three-page shareholder letter with an eight-item Q&A involving its two top officers. First Data a year earlier supplemented its five-page shareholder letter with a Q&A encompassing eight questions. If yours is, say, a brief three questions, that doesn't carry the same weight as eight or nine—or, in the case of Knight Ridder two years ago, its 19-question interview with management. Keep in mind that having the CEO serve as ringmaster, commending material to follow in the report, enables you to garner points in Category 14, even without a Q&A. Throw in that feature, and your score soars accordingly.

Why do you advocate an action-oriented contents listing in an annual report? And does anyone pay attention to such advocacies of yours?

S.C.: Most readers of annuals aren't—they're scanners. That's why you want to provide them with a complete picture (if, granted, an overview) at the outset, not assuming they'll find everything if only they search for it. Most won't—search for it, that is. That's why EVERY last magazine, and virtually all daily newspapers, run a "talking table of contents." Not only to provide an overview, but a lure to entice the reader. Which a prosaic index fails to do. So far among 2000 reports, one in seven knew enough to enliven the contents listing. It stood at one in six—16.2%—among 1999s. 17.3% among '98s.

Do you have any experience or "words of wisdom" on measuring the effectiveness of annual reports with readers/shareholders? Would appreciate your thoughts.

Is there a list of spring or off-year annual reports for companies that do not have a 12/31 fiscal year?

S.C.: Not to my knowledge, but you might search online—maybe someone has thought to catalog that facet of corporations...those on a fiscal-year basis, rather than calendar.

Are you aware of any sources for really old annual reports? I'm looking for a Patterson-era NCR report (circa 1920s or 1930s).

I read somewhere that Martha Stewart is the queen of self-branding. How about Sid Cato?

S.C.: I guess you're right. When I began my newsletter, and my online website, people snickered at "everything is named for the Great One!" Well, I used to respond, "I thought of naming it for you, but realized nobody ever heard of you!" Translated: Who else would I name it for? Annual Reports Online, as generic as they come? I don't think so.

Are the needs of shareholders, the end users of accounting information, met?

S.C.: It's nice that you truly believe (assuming you do) the financial data in an annual report is aimed at the shareholder. I'm not sure that's true. I believe most corporations around the world focus primarily on the professional investor. Analysts who follow the company. Wall St., in other words. I have a different take on shareholders vis-a-vis "accounting information," as you call it. I believe that, to be sure, the numbers are significant (especially if they vary front to back of the book). But what's more meaningful is how well the company communicates with its stockholders. Does the CEO present an easy-to-comprehend look at where the company's headed? Is he (or, infrequently, she) forthright, and does the CEO communicate with clarity? Is the book made inviting, easy to navigate? Those are every bit as important, if not more so, than the actual numbers. Which, of course, the bean-counters can juggle, can play with. (Remember the old saw, "Figures don't lie, but liars figure"?)

I want to understand the current trend in annual reports, i.e. how quickly are these moving online, and how many companies are opting instead for a chairman's letter with financials?

S.C.: What you've described I don't recall seeing—a "chairman's letter with financials." Yes, annuals are moving online, but it hasn't become a deluge. Neither, to my way of thinking, is there such an entity as "an online annual report." At best there's a corporate website that, if one guesses correctly, may lead to some version of an online report. Which often is little more than repetition of the letter to shareholders (from the CEO, whether chairman or president, or both) reprised from the print report. Let's see if I can read between the lines of your query: Yes, increasing numbers of companies are putting some semblance of their annual report online. But I'm seeing precious few CEOs who believe their letter, accompanied by the financials, is adequate...in the print version, that is.

What should make the Management discussion of Annual Reports attractive to the Investor? Please reply latest by Monday.

S.C.: First, I can't make such promises, though I try to respond to each question the very day it's received. Now, to your question, just received: I assume you refer to the SEC-mandated Management's Discussion & Analysis of Operations (MD&A), which leads off the "back of the book." How can it be made more inviting? By treating it, graphically, the same way the first part of the book traditionally is handled. With graphs, fully captioned, with such readability devices as bulleted paragraphs and the like. Even with photographs—perhaps operations pictures, maybe of employees. (Before you say, "This can't be done!" let me remind you that Armco, the Pittsburgh-based steel company, did just that in an annual not all that long ago.) What I advocate is a cohesive presentation—a book that appears to have been prepared in its entirety by the professional communicators. I abhor the traditional "Chinese wall" separating the inviting part of the book from the dull, boring financials. Does anyone meet my standards? So far, among 2000 reports, three companies have received credit for sufficiently enlivening the financials: Canada's Aliant (formerly Bruncor), Chicago-based R.R. Donnelley & Sons Co., and another Chicagoland corporation, Walgreen Co.

Could you help a student out? I'm writing a term paper on Jack Welch and his work philosophy. Can you tell me anything about how he made GE the company that it is today? Also, if you know anywhere where this question or something related to it could be found it would be much appreciated.

S.C.: Why not try (1) the GE website; (2) a web search on the key words—Jack Welch; (3) your local library, which no doubt has not only magazine articles on GE's long-time CEO, but possibly a book or two on or by the subject.

Do you give any additional credit when a company's controller signs its Report of Management, in addition to the CEO and CFO? More companies are now having all three individuals sign their reports.

S.C.: No, I don't. Also, it must be an officer or officers; not credited are directors' signoffs, usually among non-North American ARs. And I'm not sure your surmission is correct. It's been two or three or four individuals signing, often, for years. Not just recently.

In your news release dated 9-1-00, dealing with the costs of producing annual reports, is that $3.84 average per copy for printing costs only or for total production costs?

S.C.: My annual Producer Poll, beginning its 16th year, indicates the average of $3.84 per copy includes printing, photography, writing (if outsiders are used)—everything save internal staff time. That number also is excluding results-distortions—in this instance, a low of 65 cents a copy, a high of $18 per. This year, my Producer Poll survey form will be online. For corporate AR producers only—not design firms, PR agencies and the like.

Is the primary purpose of the shareholder letter to communicate to the reader where the organization is headed?

S.C.: Yes, to my way of thinking—that's its primary purpose. I'm an advocate of the CEO not reiterating in his or her letter all the numbers shown more clearly, usually on the facing page. Refer to, explain those numbers, by all means, but don't dwell on the year part—except as it indicates what the future holds.

Do you know of companies that "consolidate" annual reports, and THEN send to the customer. I mean, let's say I want only ARs of automotive companies all at once. Anyone out there do this???

S.C.: Not that I know of off the top of my head. But didn't I answer a similar question—maybe among 1999 questions? Referring folks to the Wall Street Journal annual report service? Check it out—I suspect that's where you'll find your answer.

I have recently been assigned to develop the annual report for the General Services Administration (GSA). GSA is the purchasing arm of the Federal Government. It is responsible for the maintenance, leasing and construction of federal buildings worldwide, the purchasing of supplies and services, and the purchase and installation of IT and telephone services. Each year GSA must report its financial health to Congress and the President. Over the years, the report has come to look like a corporate annual financial report. My organization would very much like for you to evaluate our report. I believe that GSA could benefit tremendously from a fresh perspective. However, federal regulations prevent us from purchasing these types of services. Therefore, I would like to send you our report and if you have the time to thumb through it, give us a brief opinion of it. This opinion could be a brief email or phone call. If you can be of help to us, please email me a response and I will send you our report.

S.C.: Our poor government. Sad that it doesn't have big bucks to throw around on consultants like Sid Cato! Seriously: I only deal with annuals of publicly held corporations. I promise you: Yours couldn't possibly do well, as you would know if you checked out my criteria. There are loads of such non-corporate folk as you who would love me to provide some observations. Gratis, of course. If I did this, I'd soon be getting $$$ from your employer, that's for sure—for welfare and/or unemployment. Sorry.

I have enjoyed your site! I was informed that companies can enter their annual reports in national competitions for style, content, etc. Would you be able to assist me in the research and let me know of some resources of where we could enter our report?

S.C.: If you're a publicly held company, forward your report to me. (Mailing directions are online.) If not, please don't—I only monitor annuals of publicly held companies. I believe I've answered your question previously—so you might check the ASK Mr. Annual Report storehouse of knowledge concerning this unique business. I'm told that NAIC—which I believe stands for National Association of Investment Clubs—and I have by coincidence the very same standards. Putting it another way, it tends to like those I honor, dislike those I've had harsh words for. I'm sure it must have a website. If you're thinking of entering design competitions, you came to the wrong place. I abhor what such contests encourage—design for design's sake; that is, in a vacuum. Only the paper companies (Mead, Potlatch) benefit—and they hurt individual shareholders, to my way of thinking. Good luck.

You still owe me that steak dinner! But I am pleased to see you are still covering Summary Annual Reports. Back in 1989, you declared the SAR "dead on arrival" and offered to buy a steak dinner to any reporter who could find more than 25 summaries. Then I reported, in our publication, "Sorg Says," the names of 36 companies that used the SAR format. My choice is medium rare, by the way, when next you are in New York. Continued best wishes. I look forward to dinner.

S.C.: Had no idea Sorg is still in business! What have you been doing all these years of quiet? Also, was I aware you found three dozen companies that went the SAR route? Are they dinky little guys or big boys? (Know that my online look at the SAR shows few go that down-and-dirty route, which so severely short-changes the stockholder. To be sure, by a 3-to-1 vote, visitors to my website are either in opposition to the SAR, or aren't sure it's desirable.) So you're the ones to blame for encouraging this bastardization of the key corporate communiqué! I'll run your comments, by the way (for the record, I no longer eat steak; makes one overly aggressive, I hear...), as well as mine. If you wish to add a retort like, "You always were a sore loser, Sid!" I'll include that. Fair's fair.

I need to understand the steps to producing a successful corporate brochure and tips on layout and writing powerful copy for brochures i need it asap bec i am a corporate communicator and i am in the preliminary stage of brainstorming the design structure of my clients brochure and i need some urgent guidance. thanx.

S.C.: I believe you're from abroad—that is, from a "foreign" country. If you'll read all my ASK Mr. Annual Report questions, and my responses, you'll pretty much get a handle on what needs to be done...assuming, as I do, the brochures you refer to are annual reports to shareholders. Key thing, as my splash page indicates: An annual report cover must demand the recipient become reader; it must say "Open me! Read me!" Good luck.

I am a marketing intern for a community foundation and I would like to know where to go to find information on how to create an annual report for a non-profit organization? The organization wants to spotlight many of the different funds it is in control of.

S.C.: The best I could come up with is the IABC—International Association of Business Communicators. It's headquartered in San Francisco, I'm sure has a website. Good luck!

Could you please tell me if there are any statistics available on shareholders or prospective shareholders preferred medium. The print version or the electronic version. (Fully interactive on-line annual or PDF.) If so, what is the percentage breakdown. Secondly, are there any forseeable trends in favor of the electronic version. Cheers.

S.C.: Cheers to you, too! No statistics exist that I'm aware of, but one chap who has delved deeply into researching the wants and needs of shareholders, both prior to publication, and afterward, indicates to me that a combination of print and electronic remains the way to go. More and more, stockholders and potential investors will become increasingly comfortable with the electronic version than they may be initially. But I'm convinced that the print version will be discarded only by the careless—or by those who never cottoned to full communications with shareholders in the first place. For them, the less they have to tell stockholders, the better. My working hypothesis: Beware the CEO who's gung ho for things electronic. Fully interactive or PDF? My, your erudition is showing!

Where can I get a complete copy of the (annual, quarterly) corporate earnings report?

S.C.: Guess first I'd try an individual company you're interested in—it might, just might put you on the mailing list for such material. I'd certainly keep checking The Wall Street Journal daily for such data. Not to overlook your local library, which should be able to provide such information. Lastly, as we've responded in previous ASK Mr. Annual Report questions and my responses (check 'em out!), there are a couple of services that may be able to help you.

I am a writer for a company that produces educational curriculum for high schools. I am writing a topic on how to run a business. In one activity, students are required to design an annual report. I also want them to present the annual report to the class. I want to create a real-world context for this presentation. Can you tell me how a company presents its annual report. Is it presented at a stockholders meeting or a meeting with the board of directors? Or is it simply submitted to the SEC?

S.C.: Every company is different, but most don't share the annual report, while it's in process, with outside directors. That's been my experience, though I'm sure some companies want directors (especially the lawyers among them) to review the entire book—deadly, this. By law, the report is out far in advance of the shareholders meeting. From a practical standpoint, directors receive the annual by mail and/or messenger. Officers traditionally either would be handed a copy (if they shared headquarters space with the producer) or sent one immediately upon publication. What the Security and Exchange Commission views as the annual report it mandates is—the legalistic, one-color Form 10-K. That's sent the SEC, though many companies doubtless file the printed, four-color report as well.

What is the purpose of a cash flow statement in an annual report? Why it is so important? And how to measure if it is a good or bad report?

Are there any companies that provide on-line access to past years' annual reports for a fee? If so, who and where are these service providers?

S.C.: Not that I know of, but if any reader can point us in the right direction, I'll share his or her guidance with others.

The company I work for is looking at the possibilty of having our annual report available online sometime in the future. Before we do this, I am to find information relating to the legal issues involved on having the annual report available to the general public via the internet. Any information or references you could give me related to this issue would be appreciated.

S.C.: Those I've checked with hasten to point out that, not being lawyers, we never would attempt to provide legal advice. They (and I) suggest you talk with your legal department, first. Second, let me repeat what I've said in open forum: Heaven help the company whose online annual is an abbreviated version of the print piece. Should I invest in your company's stock, and subsequently learn you omitted perhaps-vital information online, I believe I'd have a good case against you. For failing, that is, to disclose salient facts—facts that could have influenced me against investing in your company. Another, terribly knowledgeable chap observed that "My attorneys have always insisted that the online annual report be identical to the print report, which also means no revisions even if the facts change at a later date. It's an archival document."

What are the points of financial disclosure you look for in an annual report?

S.C.: I want to see an up front financial highlights page containing at least 13 items, the year after year average. I want to see a percentage-change column, indicating how the current year's showing compares with prior years. (Current year's figures on the left, not from left to right, as some slippery chaps experiment.) If a company insists on fabricating categories—like DQE, for instance, in its 2000 report—I want it to present the more traditional data along with its newfangled approach. Two more things: I want the CEO to discuss those up front financial figures—tell why they're meaningful, or not to be paid attention to. And I want to see those same numbers in the back of the book. The very same, indicating that no games were played up front. Also, you make me nervous when I see all the financial data footnoted. That to me indicates caveats are needed to justify their inclusion. Doubly scary is when the footnotes are presented in type so small that, to peruse, one requires a magnifying glass.

Design a questionnaire containing at least 20 questions on finding the fact that "The Men/Women ratio in India has improved."

S.C.: I'm not sure what you want, but, for sure, I don't design questionnaires. But you've intrigued me: Has the men/women ratio in India improved? If so, how so?

How can I find the list of lists of companies in the world who have undergone mergers and acquisitions, joint ventures and strategic alliances?

S.C.: I have no idea. If any visitor to this feature does, please share it with us.

I'm writing for my investment club. We would like to put together a "list of red flags" for reading an annual report. Do you have one? Thank you!

S.C.: First, be sure the cover demands the recipient become reader. If it doesn't, heave the unopened document in the nearest waste basket. Second, look for a meaningful financial highlights listing up front—one that compares this year with the year earlier, more-recent year on the left. And, for sure, with a percentage-change column. (I arbitrarily demand at least 13 non-operating items, the year-after-year worldwide average.) I won't get complicated with you: Check on the inside front cover or Pg. 1 to be sure there's a clear description of the company—one that makes sense to the reader. (If a company, as with General Electric, haughtily opts to avoid describing its operations ["surely, everyone knows us!"], I'd reward it, again, by moving onto a more stockholder-friendly turf. Next—and this doesn't begin to cover all the red flags I perceive (employees pictured but not identified, numbers in the back of the book that don't jibe with those in the front)—read the letter to shareholders to see if the boss deals in an understandable manner with results of the year past. Avoid a firm whose letter begins with an industry-associating euphemism—like, "The year past was difficult for the computer software industry as a whole." Meaning, we lost our shirts, but maybe you won't notice since others did poorly as well. Foremost, though, the cover must declare, "Open me! Read me!" If it doesn't accomplish that, the company has failed its most basic task—rather obvious, when you think about it. Not to forget my Bonus Articles, Nos. 1 and 2 on the Major Contents Page. You should have plenty of ammunition for creating your "red flags."

I am trying to get the annual report on La Petite Academy, Inc. Are you able to help me?

S.C.: No. First off, the most I would have of any particular annual report would be one copy—mine. None to share. Besides, La Petite sounds suspiciously like a privately held company. Regardless, sorry I'm unable to help.

Do you have any information that indicates a preference from investors for the 8.5" x 11" annual report size? What insight can you share on the topic of companies opting for non-traditional sized (anything but 8.5" x 11") annual reports?

S.C.: No data, but my personal opinion is that companies should think long and hard before departing from the traditional size. Try filing an outsized report, for instance. Even one that's tiny, while it may attract attention, gives me a subconsciously negative feeling—at least, that's my guess. Let's put it this way: I can't remember the last time an annual of an unusual size impressed me—with its disclosure, its contents and the like. My working hypothesis, thus: You can't lose if you go with the traditional size. Going with an unusual size, which many graphic designers seem to favor, can be a problem.

A client is considering separating their financials from the bound narrative section, and placing them (or their 10K) in a pocket on the inside back cover. Do you know a rough percentage of the number of companies that do this annually, and are there any circumstances that would make this a good (or bad) strategic move?

S.C.: First off, know that as a professional communicator and former corporate officer, I strongly object to this course of action, a not-so-subtle segue to a summary report, to my way of thinking. First, the numbers: So far among 2000 reports, only six companies have had the bad judgment to produce a two-part book. Two dozen have included the legalistic Form 10K as part of their report. An additional nine turkeys have gone straight to the summary (that is, incomplete) report. That's fewer than 40 companies worldwide to date. I couldn't object to a company on its last legs going that route, but that's about it. What such action (make that "inaction") says to the stockholder is this isn't a company that prides itself on a full-bodied communications program. My working hypothesis: Beware the company whose annual report is truncated. Back in 1987, when McKesson opened this can of worms with the world's first-ever summary report, its argumentative, hot-headed (and rude) communications vice president maintained—to me and the regional PR chap from General Motors—"Ha, ha! You forget we included the financials with every copy we mailed!" "Not in mine," said the GM guy. "Not in mine," I said. McKesson's response: "So we missed a couple!" Yeah, right. I hate to reveal this, but I've taken great pride in McKesson's numerous troubles over the years. Couldn't happen to a nice bunch of turkeys! You may quote me.

How can I find out what graphic firm designed what annual report? Is there a listing anywhere to find this information, particularly involving publicly held corporations?

S.C.: First off, I only deal with publicly held companies—no nonprofits, for instance. But my answer remains: No, I'm afraid not, though often, the design firm will be credited on the inside back cover (or thereabouts) of an annual report. Also, should you find (possibly at your local library) a Potlatch Paper Co. or Mead Paper Co. listing of what it considers the world's best annuals, that should be helpful. Also, I frequently hail the good guys—those who know what annual reports are all about—this, as part of the ASK Mr. Annual Report feature. If not this year, than a year earlier, or two...

In the quarterly report of a certain company, it says that they have 40 millions in "debt securities." The amount has increased since the last year. What does this mean? Is that good or bad?

S.C.: I asked one of my wiser advisors, who can be counted on to come up with the correct answer, if there is one. Here's his response:

I am doing an MBA dissertation on the United Kingdom advertising industry. Could you provide me the annual reports of the top five agencies in UK?

S.C.: No, sorry. Were I to have any such reports, it would be a single copy for my use. This is not an annual reports-providing service. Besides, advertising agencies are not necessarily publicly held. I don't traffic in nonprofits' reports under any circumstances -- only those produced by publicly held corporations. And, then, at most, a single copy for my own use. Brilliant idea: Why don't you contact the individual advertising agencies?

I was wondering if you have ever critiqued an annual report for MetLife Insurance Company? If you have I would really like to read what you wrote.

S.C.: Try my search function—I believe I have mentioned Metropolitan Life, perhaps in the ASK Mr. Annual Report feature.

Where is it possible to get my hands on your copyrighted piece entitled "About Writing"? (By the way, how 'bout grouping your Q&As according to topic rather than year to make searching easier?) Thanks for your help.

Do you consider the annual report to be a marketable piece for attracting new investors? Several annual report services are available and annual report advertising seems to be a relatively common practice for companies looking to get more exposure to investors.

S.C.: Yes.

I reviewed your list of top reports by company, but do you publish a list of top annual report design firms? I would appreciate if you could provide your recommendations.

S.C.: If you'll peruse my ASK Mr. Annual Report feature, for this year and last, the questions and my responses, I'm sure you'll find answers to your questions. Design, though—as surely you are aware—isn't where it's at as far as this competition is concerned. Important, yes. Key, no.

Do you know of any services that will proactively "market" my annual report to investors? If so, would you please provide names. Thank you.

S.C.: Financial public relations firms engage in this kind of activity, I believe you'll find. There are such firms in major cities. You're welcome.

Wahat does foreign economist think about the action of malaysia goverment fixed the foreign exchange rate? Is this action will make malaysia economic better? What will Happen if malaysia goverment doesn't fixed it foreign rate? Why some foreign economist said that the action is IQ O ? Whatv they mean by IQ 0?

S.C.: You've got me. I haven't a clue.

I am writing this message from Japan. I enjoyed visiting your homepage very much. Will you please tell me why not many companies show the date the homepage has been updated on the splash page or the main page? Is it sufficient to let visitors know the date updated in an investor relations page in the form of "News" or "What's new?" Is it very difficult to do so from a technical point of view? I appreciate very much your opinion.

S.C.: I agree that companies tend to be lax about updating their websites. It's a new medium that not all executives take to ("If print was good enough for my father, it's good enough for me!"). Frankly, it can be a bit scary, especially at the beginning. Since precious few wish to have maintenance of the corporate website as their responsibility, few realize the Internet's immense potential. What's more, keeping a website up to date takes a lot of hard work. Finally, not all companies care about timeliness. This website—www.sidcato.com—does, though. We constantly are updating our last revised date—so visitors will know how timely we are. We care. Is it technically difficult? My webmaster says it isn't.

We've begun work on our annual report. One of the ideas put forth is a "dust jacket" wrapper to go on the book much like the dust jacket on hard cover books. The outside of the jacket would be a product photo collage suitable for framing. The back, also suitable for framing, would be "the grid" of company information that's usually in the book itself; this would replace the grid in the book. Would this location of the grid affect the point score under your criteria?

S.C.: If the wrapper isn't a permanent part of the book, (ruling consistently) a grid wouldn't be credited. Of course, non-criteria material there wouldn't be a problem.

How can I get a hold of The Limited's annual report?

S.C.: The Limited, based in Columbus, Ohio, has both a phone number and a website, I'm confident. Or, try your local library, the business section.

Are you familiar with the Annual Reports Service? How much value would you place on a service like this that is associated with so many financial publications and internet sites?

S.C.: I was unacquainted with this service until you called it to my attention. I'm somewhat negative about it preliminarily, but I suppose it serves a purpose. I do, though, have strong dislike for companies that pester me with news releases touting their stock. Our new VP's company sent bullish releases every week, it seemed—until he was announced as the new VP, that is. I considered all those stock-touting releases unseemly. I recently asked another oil exploration company, Devon Energy, to take me off its mailing list. Too much, already.

Since when did writing in the annual report become an ethical issue? Also, why are shareholders scrutinizing the writing in annuals so much these days?

S.C.: I didn't know it was—and that they were. Of course, honesty in an annual report always is, as you put it, "an ethical issue." Perhaps especially in light of the current worldwide crisis. If you'll familiarize yourself with my 15 copyrighted criteria, you'll see that writing is, and has always been, an integral aspect of a good report.

Can you tell me what actual sales were for Outboard Marine Corp. (no longer exists) for the first quarter of 1997? I can't find their financials anywhere.

S.C.: Again, I'm not a fount of knowledge concerning such things—I only monitor, year by year, the world's annual reports to shareholders. May I suggest you (and others with similar requests) either (1) contact your financial advisor or (2) try calling the company—which, as I recall, used to be located in a northern Illinois suburb, perhaps Waukegan, Illinois. I don't know who acquired it, but I believe it's a Wisconsin firm.

What do we need to understand or look for in order to summarize the important points, problems and opportunities when reading the President's letter section and the Management's Discussion and Analysis section of the annual report?

S.C.: That's a terribly technical question, and the answer will pretty much depend on the reader's desires. Only a business school student would likely delve so deeply into both the letter to shareholders and the MD&A. What I encourage is form somewhat more than substance: In other words, does the MD&A—wonder of wonders!—seem to encourage readership, strive to enlighten the reader about the company's prospects, its future? Or is it treated as a throwaway, despite the 1987 Securities and Exchange Commission mandate that companies make more revelatory their MD&As? Same with the shareholder letter: First off, do the figures cited in the letter correspond to those presented, ideally, on a facing page—in highlights form, complete with a percentage-change column? Does the CEO communicate in simple, easy-to-understand language? Can you actually imagine a human was at the controls, or is the company on auto-pilot, run by word processors spewing forth bromides rather than basics? Do you sense a real, live person is in the driver's seat, someone with sensitivity, an advanced ability to communicate, and with a makes-sense vision for the future? In short, does he or she talk a good game, or actually impress as knowing what the heck's going on? That's what I look for.

Is there a requirement that U.S. companies have a section in their annual reports dealing with forward-looking information -- that is, a company's prospects?

S.C.: One corporate officer whose opinion I respect fielded the question thusly: "I don't know, but I don't think so. It's the kind of question you don't want to ask Legal since they may answer 'yes'."

What do you look for or at in an annual report to find out what type of structure a company operates under? Example: divisional, functional, matrix structure.

S.C.: I haven't a clue. If you find out, please share your knowledge with me (I think...). Thanks.

Where can I find an annual report for Kay Bee Toys? I've looked all over and I can't find anything. Help!

S.C.: KB Toys is privately held, so it isn't required to issue an annual report.

I'm writing the copy for a client's annual report. The client is grappling with how to address the events of Sept.11 in the report. The company wasn't affected directly by the attacks—only indirectly, like everyone else. Do you have a sense of how companies are responding to these events in their annual reports? Are patriotic themes popping up more? Is it appropriate NOT to mention the events of this fall at all? I'd appreciate your insight.

S.C.: If you were a subscriber to my newsletter—especially, the bonus piece that accompanied my October issue—then you'd know (two entire pages full). Suffice to say: Never has the need been more imperative for CEOs to speak English, as I call it. Talk about the year's results, but don't use the terrorist attacks as an excuse for not doing well. How are others doing? Most companies are on a calendar year basis, so their annuals are very much in progress. Even those able to incorporate reference to Sept. 11, etc., wouldn't be out yet.

What are the requirements/customs for delivering your company's annual report to stock exchanges and burses? Is your company's listing exchange the only absolute requirement? Is it customary to also mail samples to exchanges in countries/regions where your company does business?

S.C.: A man whose opinion I value reported back to me thusly: "Our VP of finance says that we send a copy of all periodic SEC filings (including the annual report) to the exchanges (we're on NYSE, Pacific and Toronto) at the time we file them. We also are required to send reports to the Alberta and British Columbia securities commissions since we do business in those Canadian provinces.. We do not provide, as a matter of course, the reports to the Australian or New Zealand exchanges since the listed entities in those jurisdictions in which we have an interest have their own compliance standards to maintain."

Can an annual report data be potentially biased? How much twisting of information is allowed within the annual report to make the past year and outlook of the company seem positive for shareholder and possible investors? I understand the numbers used in the financial review section need to be reviewed by auditors. Are there any other sections reviewed by auditors?

S.C.: Of course. Otherwise, I wouldn't have found 12% of the CEOs less-than-forthright in their 2000 reports. I often see letters to shareholders that are nothing if not ebullient. Yet, their upbeat approach is belied by the numbers in the book's financial section. Where, for instance, were the auditors in the case of an Enron? While they may not be required by law to review other than the financial section, most in my experience want to verify that the numbers are the same elsewhere in the book. That no conflicts exist. One classic was Owens Corning a few years back. I found the figures quoted in its upfront financial highlights deceitful and, indeed, the auditors indicated in essence, in a once-in-a-lifetime caveat—which the company included in type so tiny it defied readership—that the figures focused on weren't meaningful. Tip: Beware investing in a company whose shareholder letter begins with an industry-associating euphemism. A classic of this genre: Utah-based Evans & Sutherland.

What are your feeling concerning the financial analysis of the IBM Corporation?

S.C.: This is a terribly broad question, given the size and complexity of IBM, though I have hailed the CEO and quality of its annual report—speaking here as a journalist.

I need a business report for arnotts biscuits about the new changes in efficiancy pronto, please

S.C.: If I had one -- and I don't -- it would be for my use only, not to send out to a stranger. And what's with the pronto already? (Who do you think you are -- the Lone Ranger?) At least you said "please."

I work for a high tech company and am responsible for producing the annual report. I believe that the writing should be clean, simple and jargon-free. Other executives disagree saying that because of the technological nature of our business, investors of high-tech companies expect and want jargon-heavy writing. I am losing this battle and would like to leverage my argument with some outside, objective opinons, namely yours. What do you think? Are some industries exempt from the clean and simple writing rule?

S.C.: Typical male (?) executives. They think if they "speak English," as I put it, no one will appreciate how terribly intelligent they are. (Then everyone will think it's easy to be a big exec.) Compromise: Let them do a special, say, two-page dissertation by the CEO or some top person—and let them fill it with jargon. If it's the letter that gets the heavy-handed treatment, I'll no doubt take your company to task for incomprehensible writing. Tell 'em Sid promises!