Sid Cato -- October 2001 Quiz Answers

(Answers for October 2001)

1. In view of what's happened to America, surely you're not going to talk about the terrorist attacks in your newsletter, since it deals strictly with annual reports of publicly held companies, here and abroad. True or false?
Answer: False. One of the complaints being heard is that precious few in business and industry are addressing the issue of terrorism and its horrible impact on all of us. That's a terrible mistake, experts on grieving agree. To ignore what happened Sept. 11, 2001, to pretend everything's back to normal—well, it's neither true nor healthy.

2. If you're such a big shot, then how come your fellow big shots don't have nice things to say about you? Actually, they tend to pan you. True or false?
Answer: False. They do say nice things—at least, one does. I've recently received letters of praise from Robert Dilenschneider, dean of the world's public relations counselors. He not only hailed our beginning the 19th year at this, but our stand against companies "twisting accounting rules to their personal and corporate interests."

3. You have loads of "requirements" for annual reports, but the truth is, few pay any attention. True or false?
Answer: Depends on how you view things. For instance, this is our 19th year of encouraging companies to run graphs in their annual reports. The figure among 1982 reports was 82%—just over four of five to include that so-informative visual element. That's up, ever-so-slightly, to 85%. Lowest year was among 1992 reports, when but three of four (75%) heeded our urging. Back among 1993 annuals, we raised the bar, encouraging that at least three graphs in a report be fully explained for credit. That year, a far-lesser one in five was so credited. It rose to one in four among '96 and '97 reports. But then we raised the bar again—that is, mandated that all graphs had to be fully explained for credit, so the percentage declined a year ago to 14, off slightly to 13.5% so far this year—among 2000s.

4. While you advocate that companies run 11-year financial data in their annuals, the reality is that fewer and fewer—especially those actively diversifying—are going that route. True or false?
Answer: Again, false. We began to monitor this element among 1987 reports, when only 16%—one in six—ran data for that length of time (or declared a 10-year compound growth rate; same thing). Peak performance was among 1990 and 1997 reports, by coincidence, when 27% went that route. So far among 2000 reports, the figure stands at an essentially flat 26.4%. So it has risen 10% in 14 years—not all that bad, I'd say.

5. Everyone knows you play favorites. In other words, if you like someone, his or her annuals tend to do better than, say, someone who rubs you the wrong way. True or false?
Answer: Again, that's untrue. My personal feelings toward those in this industry have nothing to do with how their report is judged. That's the reason for my 15 copyrighted (and computerized) criteria—to eliminate, as much as possible, my personal feelings. Examples: I used to praise to the heavens the Twin Cities' Little & Co., which I thought produced graphically arresting reports. I've criticized in recent years its work for Wells Fargo (whose executive VP is a dear friend), hail its current effort on behalf of St. Paul Companies. Same with corporations: A delight in the industry is Vivian Leigh Forde (whose mother, Grace Baby! was expected at the since-postponed 14th annual conference), lead person on the Chevron report. And while it's improved year to year, the 2000 Chevron report is criticized where warranted—concerning its theme, for instance, which may or may not actually be the producer's fault.

6. Since you're based in Battle Creek, Michigan, you no doubt have nice things to say about the city's leading industry, Kellogg ("The best to you each morning!") Co. True or false?
Answer: False on both counts: We're based in Kalamazoo, whose Upjohn I had harsh things to say about years back—before it was acquired by Pharmacia. While I live in Battle Creek, and I do say the Kellogg report has improved year to year, it's still lacking essentials, as indicated by its 87 points—a lonely one better than the preceding year. Big deal.

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	1.	In view of what's happened to America, surely you're not going to talk about the terrorist attacks in your newsletter, since it deals strictly with annual reports of publicly held companies, here and abroad. True or false? *Answer:* False. One of the complaints being heard is that precious few in business and industry are addressing the issue of terrorism and its horrible impact on all of us. That's a terrible mistake, experts on grieving agree. To ignore what happened Sept. 11, 2001, to pretend everything's back to normal—well, it's neither true nor healthy.

	2.	If you're such a big shot, then how come your fellow big shots don't have nice things to say about you? Actually, they tend to pan you. True or false? *Answer:* False. They do say nice things—at least, one does. I've recently received letters of praise from Robert Dilenschneider, dean of the world's public relations counselors. He not only hailed our beginning the 19th year at this, but our stand against companies "twisting accounting rules to their personal and corporate interests."

	3.	You have loads of "requirements" for annual reports, but the truth is, few pay any attention. True or false? *Answer:* Depends on how you view things. For instance, this is our 19th year of encouraging companies to run graphs in their annual reports. The figure among 1982 reports was 82%—just over four of five to include that so-informative visual element. That's up, ever-so-slightly, to 85%. Lowest year was among 1992 reports, when but three of four (75%) heeded our urging. Back among 1993 annuals, we raised the bar, encouraging that at least three graphs in a report be fully explained for credit. That year, a far-lesser one in five was so credited. It rose to one in four among '96 and '97 reports. But then we raised the bar again—that is, mandated that all graphs had to be fully explained for credit, so the percentage declined a year ago to 14, off slightly to 13.5% so far this year—among 2000s.

	4.	While you advocate that companies run 11-year financial data in their annuals, the reality is that fewer and fewer—especially those actively diversifying—are going that route. True or false? *Answer:* Again, false. We began to monitor this element among 1987 reports, when only 16%—one in six—ran data for that length of time (or declared a 10-year compound growth rate; same thing). Peak performance was among 1990 and 1997 reports, by coincidence, when 27% went that route. So far among 2000 reports, the figure stands at an essentially flat 26.4%. So it has risen 10% in 14 years—not all that bad, I'd say.

	5.	Everyone knows you play favorites. In other words, if you like someone, his or her annuals tend to do better than, say, someone who rubs you the wrong way. True or false? *Answer:* Again, that's untrue. My personal feelings toward those in this industry have nothing to do with how their report is judged. That's the reason for my 15 copyrighted (and computerized) criteria—to eliminate, as much as possible, my personal feelings. Examples: I used to praise to the heavens the Twin Cities' Little & Co., which I thought produced graphically arresting reports. I've criticized in recent years its work for Wells Fargo (whose executive VP is a dear friend), hail its current effort on behalf of St. Paul Companies. Same with corporations: A delight in the industry is Vivian Leigh Forde (whose mother, Grace Baby! was expected at the since-postponed 14th annual conference), lead person on the Chevron report. And while it's improved year to year, the 2000 Chevron report is criticized where warranted—concerning its theme, for instance, which may or may not actually be the producer's fault.

	6.	Since you're based in Battle Creek, Michigan, you no doubt have nice things to say about the city's leading industry, Kellogg ("The best to you each morning!") Co. True or false? *Answer:* False on both counts: We're based in Kalamazoo, whose Upjohn I had harsh things to say about years back—before it was acquired by Pharmacia. While I live in Battle Creek, and I do say the Kellogg report has improved year to year, it's still lacking essentials, as indicated by its 87 points—a lonely one better than the preceding year. Big deal.