Sid Cato -- August 2001 Quiz Answers

(Answers for August 2001)

1. If the annual report to shareholders of publicly held companies is fading rapidly, in part because of the Internet, then one would assume so is your monthly newsletter. True or false?
Answer: False, I'm happy to report. I've long said my Newsletter on Annual Reports is the engine that drives this enterprise. That we've turned out 216 issues, and counting, speaks for itself, wouldn't you say? Besides, if there weren't a monthly newsletter as forum for my reviews and critiques of annuals, and interviews with producers of top annuals, there'd be far less impetus to analyze hundreds upon hundreds of reports each year. This is our 18th in a row at this stand.

2. Picking top reports isn't really all that difficult. True or false?
Answer: False. On the contrary, the pack gets tighter and tighter—just as all the bicycle racers in an international competition are packed tightly together. Often, precious few points separate those whose annuals finish among the 10 best. This year, at least four reports are vying to cross the finish line first—Ford again, RLI Corp., R.R. Donnelley & Sons Co. and Tellabs. Is there room for an upstart? Absolutely. Sid Cato plays no favorites.

3. I'm going to ask the same question as a month ago: Your background is absent any financial education or experience. True or false? (Again, if so, where do you get off challenging corporate disclosure?)
Answer: True, I'm the first to admit. (If I'm not good in this lifetime, God may make me come back as an accountant!) My contretemps with the financial types was starkly illuminated recently when I volunteered to help produce my church's annual report. Main body of the document? Revenues (I'd call it "Income," but then there'd be no mumbo-jumbo, no scholarly bean-counters to take issue) and expenses. Getting to the point: I was reminded of how difficult it is for corporate communicators who have to deal with folks with an entirely different mindset. Accountants are internally oriented, while the professional communicators who turn out scintillating, effective annuals are externally oriented. With my church's accounting type, a member of academia, he sees the annual as his document, while the rest of us see it as ours; we see his revenue and expenses as boilerplate, if you will. He's bent out of shape something awful, as you can imagine. (He pouts.) Working with such nitpickers reminds me of how happy I am to have the corporate world behind me. (To show you how out of touch with reality my academic associate is, he insists "no CEO plays loose with the truth in the annual report; if he did, he'd go to jail.")

4. You claim "nobody gets a pass in this competition." True or false? And if true, what does that mean, exactly?
Answer: True. Take the Ford report: One of Ford's executives is to speak at my 14th annual International Annual Report Conference. I initially had strong reservations about how its 2000 report fared. I wasn't at all sure it would even make the list of 10 best worldwide. While that could have been a problem for the Ford folks, it would have been their problem, not mine. Last year, as I recall, an attendee's annual report made my list of 10 worst. Again, that's his problem, not mine. I calls 'em as I sees 'em.

5. Last month, you talked about the proliferation of themes. Surely you can't be serious; companies would be out of their minds to pick several themes for their report. True or false?
Answer: True—but they do, regardless. Here's the latest to be wishy-washy concerning the theme proclaimed (as I advocate) on the report cover: American General Financial Group (whose real name is American General Corporation), as it calls itself, proclaimed on the cover the theme "Partnerships for a Lifetime." The headline on the table of contents is "American General's franchise is the engine that drives our growth." The action-oriented contents listing indicated that on Pg. 9, one would find a profile of "Partners in success." On the second page of the shareholder letter is the subhead in red: "Building partnerships for a lifetime," close enough. The letter is followed by a six-question interview with the three top guys. It's entitled "The power of the franchise." That's followed by a special section entitled "Partners in success." In case you're not confused sufficiently, on the inside front cover is the similar-but-different "Partnerships that add value." Well, guys, make up your mind—which is it?

6. My understanding is that annual report producers traditionally spend, at best, a couple of years at that stand before being promoted, before moving on. True or false?
Answer: I believe you're misinformed. (Meaning: The answer is false.) Take John Deere's Greg Derrick. This is his 17th year in the business, for Phillips Petroleum previously. Average length of time producers responding to my 16th annual Producer Poll say they've been with their company? Precisely a dozen. 12. I tell producers: If you view this as a steppingstone to greater heights, you're in the wrong business. When you're assigned the annual report to shareholders—you've arrived.

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Test your knowledge by taking previous monthly quizzes


	1.	If the annual report to shareholders of publicly held companies is fading rapidly, in part because of the Internet, then one would assume so is your monthly newsletter. True or false? *Answer:* False, I'm happy to report. I've long said my Newsletter on Annual Reports is the engine that drives this enterprise. That we've turned out 216 issues, and counting, speaks for itself, wouldn't you say? Besides, if there weren't a monthly newsletter as forum for my reviews and critiques of annuals, and interviews with producers of top annuals, there'd be far less impetus to analyze hundreds upon hundreds of reports each year. This is our 18th in a row at this stand.

	2.	Picking top reports isn't really all that difficult. True or false? *Answer:* False. On the contrary, the pack gets tighter and tighter—just as all the bicycle racers in an international competition are packed tightly together. Often, precious few points separate those whose annuals finish among the 10 best. This year, at least four reports are vying to cross the finish line first—Ford again, RLI Corp., R.R. Donnelley & Sons Co. and Tellabs. Is there room for an upstart? Absolutely. Sid Cato plays no favorites.

	3.	I'm going to ask the same question as a month ago: Your background is absent any financial education or experience. True or false? (Again, if so, where do you get off challenging corporate disclosure?) *Answer:* True, I'm the first to admit. (If I'm not good in this lifetime, God may make me come back as an accountant!) My contretemps with the financial types was starkly illuminated recently when I volunteered to help produce my church's annual report. Main body of the document? Revenues (I'd call it "Income," but then there'd be no mumbo-jumbo, no scholarly bean-counters to take issue) and expenses. Getting to the point: I was reminded of how difficult it is for corporate communicators who have to deal with folks with an entirely different mindset. Accountants are internally oriented, while the professional communicators who turn out scintillating, effective annuals are externally oriented. With my church's accounting type, a member of academia, he sees the annual as his document, while the rest of us see it as ours; we see his revenue and expenses as boilerplate, if you will. He's bent out of shape something awful, as you can imagine. (He pouts.) Working with such nitpickers reminds me of how happy I am to have the corporate world behind me. (To show you how out of touch with reality my academic associate is, he insists "no CEO plays loose with the truth in the annual report; if he did, he'd go to jail.")

	4.	You claim "nobody gets a pass in this competition." True or false? And if true, what does that mean, exactly? *Answer:* True. Take the Ford report: One of Ford's executives is to speak at my 14th annual International Annual Report Conference. I initially had strong reservations about how its 2000 report fared. I wasn't at all sure it would even make the list of 10 best worldwide. While that could have been a problem for the Ford folks, it would have been their problem, not mine. Last year, as I recall, an attendee's annual report made my list of 10 worst. Again, that's his problem, not mine. I calls 'em as I sees 'em.

	5.	Last month, you talked about the proliferation of themes. Surely you can't be serious; companies would be out of their minds to pick several themes for their report. True or false? *Answer:* True—but they do, regardless. Here's the latest to be wishy-washy concerning the theme proclaimed (as I advocate) on the report cover: American General Financial Group (whose real name is American General Corporation), as it calls itself, proclaimed on the cover the theme "Partnerships for a Lifetime." The headline on the table of contents is "American General's franchise is the engine that drives our growth." The action-oriented contents listing indicated that on Pg. 9, one would find a profile of "Partners in success." On the second page of the shareholder letter is the subhead in red: "Building partnerships for a lifetime," close enough. The letter is followed by a six-question interview with the three top guys. It's entitled "The power of the franchise." That's followed by a special section entitled "Partners in success." In case you're not confused sufficiently, on the inside front cover is the similar-but-different "Partnerships that add value." Well, guys, make up your mind—which is it?

	6.	My understanding is that annual report producers traditionally spend, at best, a couple of years at that stand before being promoted, before moving on. True or false? *Answer:* I believe you're misinformed. (Meaning: The answer is false.) Take John Deere's Greg Derrick. This is his 17th year in the business, for Phillips Petroleum previously. Average length of time producers responding to my 16th annual Producer Poll say they've been with their company? Precisely a dozen. 12. I tell producers: If you view this as a steppingstone to greater heights, you're in the wrong business. When you're assigned the annual report to shareholders—you've arrived.