How can I get the annual report of Reebok International for the years 1997 and 1998? I can only find the annual reports for 1999 to 2001.

S.C.: Can I assume you've tried, online, to locate Reebok's address, and have asked the company for its 1997 and 1998 annuals? Or you've visited your local public library? That's all I could suggest. Good luck!

Can you tell me how big the annual report market is on a national level? I have discussed this with some people within my company and they suggested I look at your website. I have perused your site and haven't found the answer to my question. Would you be able to assist me? We also were wondering if you have ever done a study on how much of the annual report business goes to financial printers.

S.C.: No, to the last question you posed. I estimate that, worldwide, annual reports are an $8.5 billion business. Frankly, that number has soared since first promulgated, but I've stuck with that estimate. Which, by the way, is based on my annual Producer Poll, in which corporate producers of annuals reveal (their identity kept anonymous) such items as how much they're paid, if they report to the CEO on the project, how many copies they print and at what total budget. Which I then break down into a per-copy investment. As you would know were you a subscriber to my monthly Newsletter on Annual Reports, which presents those findings each year. Since mine is an international scope, I have no estimate for how large a U.S. market exists.

I'm interested in your thoughts on the definition of a fully captioned photo. What elements does it include: person's name; years of service; division within the company; what he/she is doing (if it isn't obvious in the photo); location of the person's facility (does it matter to an investor whether it's Columbia City, Indiana or Barcelona, Spain?); other? What are the essential elements? What are the ideal elements?

S.C.: First, I advocate fully captioned graphs—that is, their meaning spelled out in text, not left to the reader to fathom. Photographs of employees? Simply one's name, though perhaps (a) job title and (b) years of service, if appropriate. I'm simply against employees being treated (subconsciously if not consciously) as cannon fodder; not important enough to be identified (by name), as all executives of course are.

You're adamant about words per sentence averaging no more than 16, which you say is what writers for the likes of Fortune, Newsweek and the Wall Street Journal strive for. Isn't there any room for excellence in writing—are you inflexible? (I’m a writer, as you might have guessed.)

S.C.: Funny you should ask. I just last evening savored the opening sentence in a Newsweek "My Turn" feature, by an adjunct professor at the University of Buffalo. Listen to this: "Whenever I pick up a newspaper, I see articles about the dismal state of race relations in America, and I feel as if I have once again entered a long, dark tunnel where I'm surrounded by anguished faces and heavy hearts, and where no one dares speak of anything positive." That, by my count, runs 50 words—three times greater than I advocate. But what a magnificent passage, lengthy or no. Despite the fact that words per sentence (first four sentences) averaged 30.5. Proving, once again, there's an exception to every rule.

In your January 2003 newsletter, you unkindly (to say the least) described Campbell Soup's CEO as none-too-attractive. Is that fair? A guy can't help it if he’s born homely, can he?

S.C.: I agree it's not his fault he's not—well, gorgeous. I faulted the annual report team for not acknowledging that reality, instead ran five photographs of the chap, three on the opening page of the letter alone. Strangely enough, I came upon a photo, in color, that’s not half bad—on Pg. 98 of the December 30, 2002, issue of Fortune. If his annual report preparers had run that—just one photo—specific picture, for example, I’d have had no complaints. In fact, I’d have been overjoyed—as I suspect the boss would have been.

I am working on an annual environmental report for a mining company. Where can I find guidelines or recomendations so it is outstanding? Thank you very much for your help.

I would really appreciate your expertise on guidelines for writing annual reports. Also, what makes good copy? What makes for interesting content?

I am the executive director of a non-profit agency that has three distinct residential programs for children. I am interested in putting together an annual report and would like to know if there is any specific information for compiling/designing reports for the non-profit sector. Thanks for your help.

Surely there must be shareholder letters—other than those by IBM's Louis V. Gerstner, Jr., that is—you truly care for? Even one?

S.C.: At best, nine of 10 shareholder letters year after year believably were written by the CEO himself or herself...convince that the boss actually played a part in its preparation. If one were to believe the CEO actually authored the majority of letters, then the cryonics crowd has drained the emotion from most corner office occupants: Sadly, little if any real feeling is indicated in most letters. One decided exception: the 2000 annual report of Quaker Chemical, which I came upon recently. Its CEO, one Ronald J. Naples, wrote movingly, believably. I've checked, and he's still the company's CEO. Should he ever leave, he's got the potential of a career as a wordsmith.

Where can I find updated information on SEC regulations regarding publication of annual reports (typography, etc.)?

S.C.: One assumes, first off, you've checked out the very first item in the left-hand column of my major contents page —dealing with the dates an annual must be issued (that is, how long after close of a company's year). Also, that you've checked out the more than 400 ASK Mr. Annual Report questions and my responses. One of the 400 I'm sure deals with type size. When you come upon it, you'll see that various type sizes (and type fonts) are bandied about in corporate offices. When, as a brash young corporate officer, I called the SEC, and said the entire book—including financials and notes—was being set in the very same type size. I wanted to be sure that, "under these circumstances, I'm correct in assuming I won't hear from the SEC." The SEC's response: "That's correct." Never in all my years at this stand have I once—not even once!—heard of the SEC coming down on anyone for size of his or her type size and style, even though I've seen books whose letter was shoehorned into a crowded page—on the inside front cover, say.

What in your view constitutes an abbreviated annual report, and why would a company produce it?

S.C.: Any annual report that doesn't include a letter to shareholders, a narrative dealing with the company's operations and probably a recitation of how it did during the year past—which I consider essentials—I would consider an abbreviated report. Also...an upfront financial highlights listing, containing at least 13 non-operational items (the year-after-year average), along with a percentage-change column. As well as a complete financial section, ideally not on separate paper stock. Including biographical data (photos, ideally) concerning both directors and officers—more than simply years of service. (Try: ages, too.) Also, a mission statement, glossary of terms and, with luck, a special section. Did I mention 11-year financial data (so one can calculate the 10-year compound growth rate) Or, even better, simply the 10-year CGR for several key elements! Anything short of that I consider abbreviated—including, though not limited to, a legalistic Form 10-K with perhaps a shareholder letter shoehorned in. Or a narrative followed by—nothingness. No financials whatsoever. Does my stance make sense? Why would a publicly held company go a down-and-dirty route? Because (1) it's dumb or terribly unsophisticated, (2) the CEO doesn't feel comfortable serving in a public capacity or (3) the financial types, uncomfortable as well with such a highly visible, external exposure, are quick to sense the boss likewise doesn't cotton to being other than regressive. So the bean counters play right into a hermit-like CEO's head-in-the-sand mode of operation. ("If we don't talk about how poorly we did, do you suppose anyone will notice?") Did I leave anything out?

Could you give us an idea concerning existing competitions, national and international, for annual reports? Apart, that is, from the ARC award?

S.C.: Only competition I know of (other than mine, of course) that's worthy is that of the National Association of Investment Clubs (NAIC), whose standards I'm told are similar to mine. ARC? You get what you pay for. I consider it demeaning when one tells me he or she walked off with beau coup ARC awards. "Well, of course you did!" is my reaction.

Do you think the incipient war in Iraq will have an effect on annual reports to shareholders? If so, how?

S.C.: Yes. I believe most corporate chieftains, and their staffs, largely internal in scope and vision, are looking for any excuse to opt out on a full-bodied, in-depth annual report to shareholders. The current war jitters, accompanied by terrorist treats in the United States and elsewhere around the world, provides just the cover CEOs worldwide are seeking—a reason to truncate their key corporate communiqué because of the "need to husband our resources in the event of war" or some-such excuse. A sad day, not only for the world as a whole, but for shareholder communications specifically.

I know you want to see more than the standard five-year data the SEC requires, but what is the minimum above that to get full point credit?

S.C.: I advocate inclusion of 11-year financial data—or a 10-year compound growth rate, same thing to my way of thinking. Data for 11 years gets you five points in my Category 11 (dealing with financial disclosure). Ten-year data? Two points fewer (three). Six-year data warrants but two points.

Companies in these dreadful times are talking about economizing. Any sign among the new crop of annual reports of that materializing?

S.C.: Few 2002s have arrived so far—a bad sign in itself. Typifying, I suspect, the new "run-scared" attitude of corporations is exemplified by Dow Chemical. Its net loss for the fourth quarter topped $800 million, reason enough, I suppose, for it to "no longer routinely" send copies of its annual report to shareholders to journalists like Sid Cato. Its CEO, according to a WSJ head, "vows to cut expenses." While obviously I disagree, it's apparent many CEOs will react similarly, either limiting distribution of their reports or emasculating their key corporate communique'. Sad day indeed at Black Rock.

Do you really trust CEOs to do right where the stockholder is concerned? Truly trust them?

S.C.: I told USA Today I'm convinced "most corporate chieftains are no better than the staff they've assembled. Bad (that is, weak, venal) staff translates into a poor boss. What the world needs now," I told USA Today, "is more naysayers." So the answer means, at best: maybe.

Do you have any information as to what companies are filing Summary Annual Reports, and the trend to/away from that type of reporting?

S.C.: The summary report comprised but 3.4% of last year's annuals—for 2001. Among the first three dozen 2002s, none qualified as a summary. (Among 2000s: 4.7%.) That doesn't necessarily mean corporations worldwide aren't taking that down-and-dirty path; the bad guys may simply refrain from sending me their report, knowing I'll dislike it intensely—as well as the corporation whose name's on the cover. My investment advice: Don't waste your hard-earned dough on a company that goes that down-and-dirty, stockholder-shortchanging route. Addendum: That stood at 2.5% at year's end among 2002s.

Have you ever seen a company include more than one letter in its annual report? Perhaps one from the CEO and one from another executive such as the COO?

S.C.: Yes, I've seen letters (plural), though I can't for the life of me recall what company specifically did that. More common: a letter from the outgoing, long-time CEO as well as his successor. For sure, it's not unheard of.

Could you tell me how much companies normally spend on producing their annual reports—both print and online?

S.C.: I've never polled companies concerning their online reports (which at best are a part of the company's overall online presence; no such thing as a company's annual report website as such). But my 17th annual Producer Poll, an exclusive survey of corporate producers of the document, indicates the average per-copy investment runs $3.22. That does not include staff time, but it does include all other charges involved with producing the key corporate communiqué. First year of the Producer Poll, 1985, the per-copy investment averaged $2.44. That's a 32% increase over 17 years, hardly out of control.

What's the process for obtaining an "annual filing report" for a corporation currently registered in California?

S.C.: I haven't a clue. Sorry.

How do I find the annual report for Guess?

S.C.: I don't mean to be flip, but your guess is as good as mine—assuming, that is, you've tried the Guess website. (Or that of whatever company owns that brand.)

Hi, Sid: My friends in China told me that there is a strong need for any Annual Report design books in China, the Chinese stock market just opens for about 20 years, and after a rough start, now the companies realize they would better have a strong presentation on their Investor Relations. Do you have any books ever translated in Chinese? Is there anyway they can contact you or any legal departments for buying copyrights? I can be used as interpretor if you wish.

S.C.: I don't mean to poke fun at someone learning our language; after all, I barely speak English, let alone Chinese or Russian or whatever. But I wanted to retain, as much as possible, the flavor of your request. First off, I have no books—excluding, of course, my monthly Newsletter on Annual Reports, which is, rather, a newsletter. I know of no annual report design books to recommend for translation into Chinese. Should I be invited, though, to speak in China, you'll be the first person I call to serve as my interpreter.

What percentage of companies include five-year financial summaries in the front of their book vs. three? What is the norm for five- and 10-year financial highlights pages (and the percentage for five and 10)?

S.C.: First off, I don't monitor all the things you're interested in. I can tell you this: Few (if any) run five-year financial highlights in the front of their books; none, to my recollection, include data there for 10 years. I look, upfront, for at least a two-year comparison along with a percentage-change column. In the back of the book's financials, I check to see if companies have gone the extra mile—have presented more than just the mandated five-year figures. So far among 2002 reports, 9.4% included data for six years (enabling analysts to calculate a five-year compound growth rate, of course), 9.4% data for 10 years—and 17.0% data for 11 years, thus enabling calculation of a 10-year CGR. A year ago—among 2001s—the figures read thusly: 8.6% used six-year data, 7.3% data for 10 years, 21% for the 11 years I encourage. Meaning, alas: 63.1% a year ago offered up, at best, five-year data, the bare minimum. Three in five firms worldwide. Sad.

Does Xerox owns other businesses? Do they have sister companies?

S.C.: I don't know, but if you get the Xerox report (which presumably you can get via its website), you'll find the answer, I suspect.

What are you seeing among 2002 annuals? Are fewer—or more—doing well by your standards?

S.C.: To date, one in 10 has achieved what we refer to as "world-class" status; that is, scoring at least 100 of a potential 135 points. A year ago, the percentage was 12—one in eight, essentially. So there's a glimmer of hope among the early arrivals in this, our 20th year of monitoring the world's annual reports.

What is the average cost of producing an annual report?

S.C.: So far (and it's awfully early to tell), the per-copy investment is averaging $3.13—that's the initial response to my 18th annual Producer Poll, exclusive with Cato Communications, Inc. Back among 1985 annuals, the per-copy investment averaged $2.44, up to $3.35 among '89s. $3.11 among '96s, $3.55 among 2000s, $3.10 a year ago. So producers have held the line against inflation and increased costs—as they should. I maintain the learning curve ought to enable them to effect economies; putting it another way, not waste dough. Bear in mind that the $3.13 figure is predicted on an average print run of 335,167 copies. Virtually two copies, average, for every stockholder—that's the current ratio.

Could you tell me the answer or tell me where to find an answer to the following: With a publicly held company, calendar year (January 1 - December 31), when do they have to set the date for the stockholder's annual meeting? And, how many days prior to the meeting does the annual report need to be mailed to stockholders? And if not publicly owned, but a company that is employee-owned, (for example 5-6,000 employees and probably 1,000 employee stock owners), what are the filing deadline requirements for their "annual review"? And what are the requirements for mailing the report to their stockholders?

how to read an annual report for a bank? i mean as investor what is the most and critical things and note i have to take into account when i decide to open or not an account with a bank i will highley appreciated your prompt reply

What is your opinion of annual reports that "bind in" the 10-K within the book? Pros and cons? I am seeing an increased number of these crossing my desk this year.

S.C.: Funny you should ask: I'm seeing the very same thing. Let me point out, at the outset, that the legalistic Form 10-K never was intended for popular consumption; it's a legalistic filing required, by the government, of publicly held companies. That companies are including it, often as the major portion of their 2002 annual reports, is a cop out, pure and simple. There's no positive side, to my way of thinking. You are indeed seeing an increased number this year. As you may or may not know, I've monitored various elements in annuals worldwide for two decades. More companies—more than one in five—are including the Form 10-K, in whole or in part, in their 2002 reports. Back among 1982 reports, 4.5% included the 10-K, off to 2.2% the following year. A third as many companies—7%—among 1998 reports went that route. Today, three times as great. I find it disgusting—that business and industry, especially in the United States, would stoop to such depths. Were I an investor, or looking for a job, you can be sure I'd give wide berth to such sleazes.

I find it interesting, if not puzzling, that so many large, profitable and/or well-liked companies are choosing to incorporate the legalistic Form 10-K, in whole or in part, into their annual reports to shareholders. For example, Washington Mutual, Microsoft, ExxonMobil, Fortune Brands, Union Pacific, Lennar Corp, Alltel, etc. What do you think of this trend?

S.C.: I think it stinks. I wouldn't invest a cent in any company that relied, in whole or in part, on the legalistic Form 10-K, which is only intended for filing with the Securities and Exchange Commission. That's its purpose—not to bore the living daylights out of folks like you and I. So far this year, record numbers are taking that down-and-dirty route—more than one in five corporations, and the number is rising daily. Why is this happening? Not only because loads of sleazy managements are out there, but because the external aspect of this once-a-year document is alien to the typical CEO. Putting it another way: Few CEOs truly feel comfortable with this decidedly external, to-them-outgoing print piece—which, no doubt many CEOs feel, "can only come back to haunt me!" Well, I got news for you, boys: Relying on the 10-K instead of an externally oriented document will come back to haunt you—mark my word.

Nike simply stopped listing its R&D expenses in 2000. How can I find those expenses if they are not listed in the 10K?

S.C.: I simply don't know, short of calling the company itself, which as you likely know is based in Oregon. Sorry.

What are some hints on how to analyze an annual report? For example, IBM's.

S.C.: I've had marvelous things to say about the 2002 IBM report, including online, I believe you'll find. Also online: my criteria on what makes a good annual report. Check out those and other items—I believe you'll find your answers.

What's the best source to obtain past annual reports of insurance companies now in the hands of state regulators for purpose of liquidation? The companies' web sites no longer are valid, or point to the states' insurance department.

S.C.: You've stumped me, frankly. I haven't a clue. Sorry.

I can't for the life of me figure out why my annual didn't score better in your competition! I'm devastated!

S.C.: As I recall, this isn't the first year you've questioned my positioning of your report. Know that I have fully reviewed, on several occasions, your entire 2002 book—to be sure a momentary whim, based on friendship, barometric pressure or the existence (or absence) of sunshine, hasn't affected my evaluation. Meantime, aren't you glad you're not Cinergy, which no doubt was thrilled at what it perceived "an exceptional effort"?

Does your posted price per copy for annual reports ($3.24 for 2001) include mailing and shipping costs?

S.C.: Never—the figure always excludes postage and handling and the like, as well as executive staff time. Per-copy investment as of this moment averages $3.58. (It's updated as new Producer Poll responses are received in this, our 18th year.)

When and why was IBM started?

In the Q&A with the CEO, do you have a preference for posing the questions with a personal approach (example: "Did WE meet OUR goals?") or a more detached journalistic approach ("Did THE COMPANY meet ITS goals?")?

S.C.: I'm guessing a Q&A would take the "Did the company meet its goals" approach. But I might suggest that you prepare the Q&A both ways—the personal approach and the detached approach—and see if the CEO (or your immediate boss) has a preference. That way, you can't lose. And higher-up executives would applaud your giving them options.

How can I get the Good Guys annual report for 2003 today? I've checked many online services and no one has the new report.

S.C.: The problem likely is that few companies will have their 2003 reports out—not unless they're on a weird fiscal year. What companies are mailing currently is the 2002 report. Good luck.

I have been browsing the Internet looking for the 2002 sales figure for McDonald's Restaurant Ltd. Do you know where they can be found on the Internet immediately?

S.C.: Try phoning the company; it's based in a Chicago suburb, last time I checked. Good luck.

I'm anxiously awaiting your newsletter critique of (our) 2002 annual report. I'm guessing we didn't make your world class list. I'm curious about what you thought of the overall publication. We had to cut the budget substantially. I anticipate a standstill budget for this year's publication, so I'm very interested in finding out where I'm falling short and putting my time and resources in the proper areas.

S.C.: I never promise to review a specific report in my newsletter—or, for that matter, online. If it's not listed among the year's reports to achieve "world-class" status, scoring at least 100 of a potential 135 points, then it didn't make the cut. Since your management doesn't think enough of my monthly Newsletter on Annual Reports to allow you to subscribe, it follows that my coments concerning your document wouldn't carry all that much weight anyway. Besides, since you're acquainted with my criteria (copyrighted), you tell me how you believe you fared.

This is more of a reaction than a question. I appreciated your pithy, Catoesque response to the question about the growing popularity of the 10-K wrap. I'm fighting an increasingly intense internal battle over whether the company I'm an officer with should move to the 10-K format. Not surprisingly, the leading proponents of the 10-K are the corporate secretary and the general counsel. Fortunately, my president and CEO understands what you describe as the "external aspects" of the report. However, he's not oblivious to the siren call that the 10-K wrap would lower production costs and create the perception that the corporation is eschewing "puffery" by eliminating photography and self-serving promotion. A new argument being used by the wrappers is that the shortened SEC-mandated reporting requirements make it virtually impossible to produce a traditional report. The 10-K will have to be produced within 45 days instead of 60, and the AR likely will follow suit. I wonder if you and your experienced cadre of annual report producers could develop a white paper of sorts on the advantages of a traditional AR over the 10-K? I'm holding out as long as I can, but the battle is intensifying. Thanks for your help.

S.C.: Yours is one of the more temperate, more learned analyses of the situation corporate communicators increasingly are confronting, as indicated by the growing percentage of companies worldwide (currently, one in five) to include the legalistic Form 10-K, either in whole or in part, in their annuals. And you hit on it when you said the proponents of going the down-and-dirty 10-K route are (1) the corporate secretary and (2) the legal counsel, both of whom I find tend to be regressive. I'll solicit some reactions from some of the very best corporate AR producers to see if they see any way out of this dilemma. Thanks.

What is your view on annual reports done on CD-ROM in an interactive style in replacement of a paper copy?

S.C.: I stand in opposition to any denigration of the print annual report (not to be confused with the legalistic Form 10-K) to shareholders. Though, granted, the annual additionally presented in another media—such as CD-ROM, and, especially, online—increasingly makes sense. But, again, not to the exclusion of, the denigration of the print piece. (I assume by "interactive style" you mean, say, a quiz to test what the reader recalls having seen—that sort of thing.)

I need to write a letter to the shareholder part or an annual report for a class assignment. What are important things to include? Do you know where I can get a sample?

S.C.: Any annual report—well, almost any—will contain a sample of the type of letter you should write. If you'll check out (1) my criteria on what makes a good annual report as well as (2) components of the Cato Positive Index, I believe you'll have more than a head start on your project. Meantime, if you want to see what someone else has done, call McDonald's or PepsiCo or ChevronTexaco for a copy of their 2002 report. P.S. Isn't there an online disclaimer indicating I don't do class assignments?

What do you think of companies that turn thumbs down on a full-scale annual report to shareholders?

S.C.: An annual report, more than any other element, reflects on a company's stature—what it's made of, what it stands for. I would hope that the companies that opt for a down-and-dirty print piece would find themselves—well, "down and dirty" and painfully seeking gainful employment. You may quote me.

Can you please provide the annual report for wall mart for the year 2001-2002

S.C.: I don't provide annual reports—only answers concerning this unique species. (Try phoning Wal-Mart in Bentonville, Arkansas, why don't you?)

What is meant by the term "Unusual Items" in an annual report?

S.C.: I'm not a financial type, but I'd assume it refers to items that—well, aren't usual. If you need a more precise, learned answer, may I suggest you try a company whose annual you've seen use that term, or an accountant of your acquaintance.

What arguments can you give to a current client wishing to switch to an expanded 10-K wrap vs. a full fledged annual report?

S.C.: Among other places where my opposition to the legalistic Form 10-K being included in an annual report is elaborated on: Item 2 in the left-hand column on my major contents page, as well as the latest Sid's Soapbox. Try that for starters, as well as each issue of my monthly Newsletter on Annual Reports.

What is Xerox' current credit rating?

S.C.: I haven't a clue. I only monitor the annual report to shareholders of publicly held companies. Sorry.

What are were the NET SALES for Nike, New Balance, Reebok, and Adidas in 1999, 2000, 2001, 2002, and 2003?

S.C.: I have no idea. I only monitor annuals that I receive. None of those companies sent theirs to me—for any of the five years.

How many common stock shares are outstanding at Nike and Reebok? Does Nike/Reebok have any outstanding bonds?

S.C.: I have absolutely no idea whatsoever. My bailiwick is, solely, the annual report to shareholders. May I suggest you call your stockbroker—or, better yet, the companies themselves.

I am considering going to work for AFLAC. Is this a smart investment for me?

S.C.: By coincidence, I think the world of AFLAC, after having some trouble, admittedly, cottoning to its quacking duck, the centerpiece of its television commercials. I'd say going to work for AFLAC probably is a good decision. Good luck.

Your format isn't comfortable for eyes; please change the font to Arial.

S.C.: My webmaster reminded me, first, "Arial is cleaner," second, "A long time ago, years possibly, we did some stuff in Arial and you wanted it in Times. Some of the newer material is in Arial and you liked the layout." So—your wish is our command!

Are there any published surveys that might outline of the 300,000-plus annual reports per company (average), how many are read, how many are scanned, and how many are tossed by recipients?

S.C.: I don't know where you came up with the 300,000 figure; my exclusive, 17th annual Annual Report Producer Poll, dating back to 1985, indicates an average of 449,000 copies printed—close to half a million. I contend no one can possibly know how long recipients spend with an annual, whether reading or simply scanning. Think about it: If a recipient were to know he or she was being watched/surveyed, don't you think one would be inclined to spend longer, indicate a greater interest in the key corporate communique'? Only one company to my knowledge has surveyed recipients, and it learned that nearly half "read or looked at some of the report." Just under one in four quickly skimmed the document, while just over one in five were said to have "thoroughly reviewed" it.

Are there any websites whatsoever you would commend to those of us in the annual report field?

Why do women on average earn only about 75% as much as men?

S.C.: Good question, but the percentage difference—in the annual report field, at least—isn't 75%. It figures out to 88%, disturbing, regardless. Why the disparity? Because, in the case of annual report producers, the men respondents to our 18th annual Producer Poll tended to be higher up on the corporate ladder—an executive VP, VPs for finance, corporate communications and the like. Only a couple of women producers hold officer-level rank. And the pay disparity is despite the fact that women respondents to my exclusive survey tended to have longer tenure with their company: 11.6 years average vs. 10.3 years average for male respondents.

I have some stock in Southwest Airlines (not much but enough that I would like to keep up with it). I find reading the annual report is acceptable, I have some business excutive friends who say I could get more from reading the 10-K. Is this so and what can I get from the 10-K that I can't find in the annual report?

S.C.: I only answer questions for annual report producers—this industry, that is, which I monitor full time. But I will tell you your friends are playing uppity-up with you; that is, trying to big time you, to show how much they know about the stock market and the like. The 10-K is a legalistic document required by the Securities and Exchange Commission to be filed by U.S. publicly held companies. It's at best a dull recitation of a company's results, not intended for popular consumption. An annual report—a good one, that is—should make palatable a company's activities and results and personnel. And, especially, its future. Tell your business executive friends to take their 10-Ks and—well, you figure out how to direct them to go soak their heads!

What is the mission statement for Campbell Soup?

S.C.: Don't know. May I suggest you ask Campbell Soup?

What website can I visit for tips (examples) on designing an annual report in Desktop publishing?

S.C.: None that I know of. Sorry.

What exactly should the letter to the shareholders contain? And what is something most companies leave out that should have been present?

S.C.: Every shareholder letter at a minimum should be forthright—should address, good or bad, news of the year past, plus where the boss sees the company headed. Its prospects, in other words. Moreover, every letter should convince it was written (or, at least, actively participated in) by the CEO whose name is at the end. Know that eight of 100 letters among 2002 reports didn't convince of CEO authorship, essentially the same as a year earlier.

What role does color play in designing a good corporate annual report?

S.C.: An annual doesn't require four (or more) colors to be assessed as "good." But even those forced to produce a one-color book confide they'll be doing several hits of black, perhaps one of blue, etc. And because all of us, Wall St. included, watch color TV exclusively (no longer any B&W), and savor colorful magazines and, even, newspapers with spots of color, I'm guessing color—to some degree—is almost obligatory. If, that is, one wants his or her annual report to be read and appreciated.

Why do you think annual reports sometimes contain a shareholder letter that takes a totally different tone from the company's numbers? Is it because companies think we're stupid, can't see when the year has been awful—yet the CEO's letter is upbeat?

S.C.: As a hands-on practitioner—that is, one who produced roughly half a hundred annuals during my corporate and consulting days—I suspect the problem is that the letter to shareholders often, if not "usually," is written long before the actual numbers are in hand. In other words, it's not so much that companies are venal, it's often simply a matter of timing: The letter is written in anticipation of the actual numbers, which may be a huge surprise when finally issued. Most times, it's too late to redo the letter to shareholders—the boss is traveling abroad, say, or he (or she) is the kind of person who prides himself/herself on addressing a project but once.

How does the 10K report differ from the annual report for any given company?

S.C.: The 10-K (it's with a hyphen) bears no resemblance to the traditional annual report to shareholders. It is a government-mandated document to be filed with the Securities and Exchange Commission. Period. It never was intended for public consumption—that's left to the traditional AR, which, sadly, fewer and fewer companies opt to produce. Increasingly, companies pad out a wanting disclosure piece with—the lengthy, one-color-on-cheap-paper-stock 10-K.

Can you tell me which annuals made the 10-best list for 2002? I don't recall ever having seen your listing.

S.C.: The Pg. 4 article in my October issue was barkered on Pg. 1. The 10 best were listed on Pg. 4 in this order (ties where indicated): Tellabs, AFLAC, DTE, tie between Manitowoc and MDU Resources, tie between Ford and Knight Ridder, Unisys, and a tie between Constellation and Pepsi. I'm betting that, next, you'll want a breakdown of scores of each winner, and each winner's Cato Positive Index—all of which was contained in my newsletter.

Do companies that produce summaries also send their shareholders the 10k? Our legal department seems to think you can't not provide full financial disclosure to your stockholders.

S.C.: I disagree with your legal department (wonder of wonders!). The 10-K is intended only for filing with the SEC. Having said that: My sense is that, yes, many producers of summary reports do indeed send along the 10-K.

Do you have any information on the relative effectiveness of the chairman's message/letter and the narrative section to the reader as compared with the financial portions of an annual report? Also a separate issue, where are companies choosing to place their Non GAAP financial infromation in their annual report?

S.C.: No such information exists (hard to come by, if you think about it). I'm convinced, though, that there's no comparison; the letter to shareholders (not necessarily from the chairman, of course) is far, far more informative and attention-getting than the financial portions of an annual report. Certainly among most stockholders, other than Wall Street types and accountants. About non-GAAP data: I've asked a financial VP to provide some insight. Stay tuned.

What do you mean by an "action-oriented" contents listing -- one that's enlivened? Can you provide some examples of companies whose reports had this element?

S.C.: Wells Fargo, though its score was but 91 points. AFLAC, DTE Energy, Manitowoc, MDU Resources, Tellabs, among the 10 best. Others to do well: Canada's Aliant, Ford, NW Natural, Orthodontic Centers of America, Sonoco, Tyson Foods, Unisys.

What exactly is the CPI as you apply it to annual reports to shareholders of publicly held companies, pray tell? And where can I review this feature, which I just heard about?

Can you tell me if Nike complies with the issues involved in corporate governance in its annual report?

S.C.: Sorry, no, I can't: Its report wasn't sent me. Let me say that, to my jaded way of thinking, few companies support not just the spirit of the law, but corporate governance requirements fully. Also know I have a bias: I have relatives employed by Nike, who insist it's a fine, upstanding company.

What are Office Depot's company goals?

S.C.: I haven't a clue. Why don't you ask your bosses? Or your human resources department. Or see if they're cited in the Office Depot annual report?

Our client has three outgoing directors and three incoming directors. Should both incoming and outgoing directors be pictured in the 2003 annual report? My inclination would be to picture all directors and, perhaps, group the incoming ones. What would you do, Sid?

S.C.: I agree completely with your—as you put it—inclination. Indicating, of course, which were new, which were holdovers.

Quick: How should we handle the auditors' report, since we fired Arthur Andersen for its well-publicized involvement with scandals?

S.C.: Your legal department should be the first you go to for advice, but know how one company—St. Louis-based Angelica—handled things in its early-arriving fiscal 2003 report. Opposite Angelica's "Report of Management," which I contend must appear (signed by the CEO, if others as well; among 2002s, barely two in five firms met that new government standard; even fewer among early 2003s), it reprinted the auditors' signoff issued by Andersen a year prior. I'm not sure why it did that. Regardless, on the previous page, it ran the current auditors' signoff—by Deloitte & Touche, whose name used to be "Touche, Ross, Bailey & Smart," which I bastardized as "Touche, Ross, Bailey & Dumb" when I was a corporate officer. Isn't Sid clever!

What are the names of and what organizations issue awards for industry recognized awards for outstanding annual reports? What are some examples for 2002?

S.C.: You'll think me egotistical, but I know of no awards programs for annual reports worthy of your time. Other, that is, than mine and that of the National Association of Investment Clubs, which I'm told has the very same standards as yours truly. Some examples among 2002s? Surely you've visited my website and seen the listing of 2002 reports, and their producers' contact address. Plus winners the previous several years? What more do you want?

What's your position currconcernng the summary annual report instead of a regular, full-bodied one?

S.C.: Let me answer that in the words an esteemed corporate officer used in a recent email to me: "Bad idea—in this day and age where financials are becoming longer and more complex, we need the traditional annual report to give stockholders information in language they can understand!" Hear, hear!

Can you refer me to any Form 10-Ks that featured Plain English?

S.C.: You obviously don't read my newsletter, and/or visit my website often enough. Or you'd know the Constellation Energy folks are to be emulated; same with PepsiCo's 2002 offering, which ended up being reproduced in a college textbook, along with a shrink-wrapped copy of the annual report.

Two-part question: Why do companies have an annual report/financial statements? I know (the) SEC requires the 10-K and all that, although (that's) not what I am looking for. My (question) for my finance training was (1) Give us a snapshot of the company's financial health; (2) Help us understand the company so we can make our own conclusions. I need help (with) that answer. My second question: I am trying to understand EBITDA and can you explain it to me in layman's terms? Usually this number is used to evaluate new companies, not a 50-year-old company, right?

S.C.: I'm unable to help with college (or high school or whatever) lessons. I will tell you, though, there's a full-bodied discussion (online, of course) concerning EBITDA. If you don't come away knowing all about that subject, then I will have failed miserably as a communicator. May I gently suggest you spend time perusing my ASK Mr. Annual Report feature—both questions and my responses. For not only 2003, but prior years as well. This should help. It may take an hour online, but it's worth it, no?

I get confused; you talk about 2002 reports, now 2003 reports—but this is 2004, almost. Are you traditionally a year behind the times? What gives?

S.C.: It is confusing. Companies don't produce their annuals until after the close of their year. That means most reports arrive during the first quarter of the following year (assuming a corporation is on a calendar year; companies on a fiscal basis—their annuals for 2003 already have arrived, in many instances). We're approaching the year 2004, which means annuals for the 2003 year haven't arrived yet for our evaluation—other than reports of firms on a fiscal year basis, as noted. We just finished up analyzing the 2002 crop—which arrived sometime during 2003. Make sense?