Sid Cato—December 2001 Quiz Answers

(Answers for December 2001)

1. The cost of producing an annual report has become obscenely high. True or false?
Answer: Not by my standards. At least one 2000 report came in at a low 45 cents a copy, though of course the print run was huge. Average per-copy investment (which is what it is – an investment, not an indulgence) has risen but 2% a year during the 16 years I've been polling annual report producers. To a current $3.21 per copy, all costs (save staff time) included.

2. Virtually no CEO is actively involved in his or her annual report. True or false?
Answer: False again. My 16th annual Producer Poll indicates that more than nine of 10 CEOs are actively involved in the project. That's a third better than during first year of my poll.

3. You have a reputation of never deigning to mention companies not among your favorites. True or false?
Answer: Again, false. Take BellSouth, for instance: I've had harsh words to say concerning its summary report, one of only a dozen we've seen on the year (4.7% of the 2000 universe). Yet two years ago, it made my "world-class" list, scoring at least 102 of a possible 135 points. This year, its report is heralded as the world's easiest to read, with a 4.36 fog index and 10.9 average words per sentence.

4. If a company retains you to critique its report for pay (a hefty fee, or so it's said), it thus insures you'll keep hands-off: no nasty comments, either online or in print. True or false?
Answer: Grupo Vitro wouldn't agree with you. Annual report of the Mexico-based company was among the year's dozen hardest to read, its fog index (12.37) and average words per sentence (17.8) exceeding standards I've promulgated. Had its writing in the letter to shareholders not been less-than-top-notch, it would have scored 97 points, only three from "world-class" status. Had it been honest in its shareholder letter, its score would have been 10 points greater.

5. Okay—poor writing (by your assessment) aside, is there really any relationship between that and how a report performs overall? Isn't all this much ado about nothing—true or false?
Answer: False. Take Giant Industries: The Arizona company had the year's hardest-to-read letter, its fog index 15.15 accompanied by an equally humongous 30.5 average words per sentence, as we wrote in the December newsletter. Its overall score, not surprisingly? A tiny 40 points (of a potential 135), along with a negative Cato Positive Index of -25.0%.

6. You're big on themes, but few corporations concern themselves with that, even if you do push 'em. True or false? Besides, hasn't use of themes, despite your support, declined dramatically?
Answer: False on both counts. More than seven of 10 reports offer up a theme—usually on the report cover. (Though, granted, less than 68% support their theme forcefully.) When I began monitoring this element 13 years ago, barely one in four producers themed his or her report—progress of sorts.

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	1.	The cost of producing an annual report has become obscenely high. True or false? *Answer:* Not by my standards. At least one 2000 report came in at a low 45 cents a copy, though of course the print run was huge. Average per-copy investment (which is what it is – an investment, not an indulgence) has risen but 2% a year during the 16 years I've been polling annual report producers. To a current $3.21 per copy, all costs (save staff time) included.

	2.	Virtually no CEO is actively involved in his or her annual report. True or false? *Answer:* False again. My 16th annual Producer Poll indicates that more than nine of 10 CEOs are actively involved in the project. That's a third better than during first year of my poll.

	3.	You have a reputation of never deigning to mention companies not among your favorites. True or false? *Answer:* Again, false. Take BellSouth, for instance: I've had harsh words to say concerning its summary report, one of only a dozen we've seen on the year (4.7% of the 2000 universe). Yet two years ago, it made my "world-class" list, scoring at least 102 of a possible 135 points. This year, its report is heralded as the world's easiest to read, with a 4.36 fog index and 10.9 average words per sentence.

	4.	If a company retains you to critique its report for pay (a hefty fee, or so it's said), it thus insures you'll keep hands-off: no nasty comments, either online or in print. True or false? *Answer:* Grupo Vitro wouldn't agree with you. Annual report of the Mexico-based company was among the year's dozen hardest to read, its fog index (12.37) and average words per sentence (17.8) exceeding standards I've promulgated. Had its writing in the letter to shareholders not been less-than-top-notch, it would have scored 97 points, only three from "world-class" status. Had it been honest in its shareholder letter, its score would have been 10 points greater.

	5.	Okay—poor writing (by your assessment) aside, is there really any relationship between that and how a report performs overall? Isn't all this much ado about nothing—true or false? *Answer:* False. Take Giant Industries: The Arizona company had the year's hardest-to-read letter, its fog index 15.15 accompanied by an equally humongous 30.5 average words per sentence, as we wrote in the December newsletter. Its overall score, not surprisingly? A tiny 40 points (of a potential 135), along with a negative Cato Positive Index of -25.0%.

	6.	You're big on themes, but few corporations concern themselves with that, even if you do push 'em. True or false? Besides, hasn't use of themes, despite your support, declined dramatically? *Answer:* False on both counts. More than seven of 10 reports offer up a theme—usually on the report cover. (Though, granted, less than 68% support their theme forcefully.) When I began monitoring this element 13 years ago, barely one in four producers themed his or her report—progress of sorts.