Sid Cato -- June 2004 Quiz Answers

(Answers for June 2004)

1. You spoke of 120 annuals for 2003 as having been "fully evaluated" to date. Yet, didn't you used to speak of "upwards of a thousand reports analyzed"? Am I confused, or what?
Answer: You're correct—far more annuals used to exist than today. Reason? Mergers and acquisitions have resulted in fewer companies. Back among 1991 reports, for example, 770 were received, and analyzed in depth. 791 reports received, and analyzed, a year later. I can't analyze if I don't receive.

2. An admittedly somewhat-superficial glance indicates you tend to play favorites—to be crass, that you "suck up" to the likes of a Ford, while attacking insignificant companies (those that aren't big players, let us say). True or false?
Answer: You decide. Since you mentioned Ford specifically, let me remind you its annual for the last several years was adjudged as outstanding. This year, it's at best an also-ran, despite protests from its producer, who seems to believe mine is an opinion. I insist an evaluation/finding is predicated on my proprietary computer programs, which remove the personal aspect, as much as possible. Another example: RLI Corp. year after year did superbly. I wrote a Sid's Soapbox, blasting its "inability" to find women or minorities for its board of directors. Henceforth, it hasn't seen fit to send me its report. I wouldn't say there's evidence I play favorites, would you?

3. Your dislike of "the legalistic Form 10-K," as you call it, pretty much precludes any report including that element from achieving "world-class" status. True or false?
Answer: True—but, as so often is the case, exceptions do occur. By wild coincidence, in the June 2004 issue of my monthly newsletter, Pgs. 1 and 6 contain praiseworthy evaluations of two reports that relied in part on the legalistic 10-K. (Being grown-up is the ability to be flexible...no?)

4. In virtually every instance, companies whose reports a decade or so ago scored superbly—well, they're nowhere to be found today. True or false?
Answer: Not true in every instance. Take NW Natural: Back in 1990, as Northwest Natural Gas Co., its annual achieved world-class status. And, today, under its new guise, it continues to score at least 100 points—specifically, 128 this time around. Indicating it's virtually assured of Top 10 status.

5. You do play favorites—for instance, graphic design firms you're especially fond of seem to get more positive exposure in your newsletter than others. True or false?
Answer: I admit to my prejudices, but I'm delighted when proven wrong. One way to avoid being unduly influenced by "friendship" or admiration is not to study the credits first. Such was the case with a report for Chesapeake Corp.. Only after review did I discover the memorable appearance was the handiwork of one of the staunchest supporters of our activities, Atlanta-based Critt Graham + Associates.

6. The death knell for an annual report is when a CEO isn't humble, doesn't pretend "to hide his light under a bushel," to use a cliché. True or false?
Answer: False, I believe we can agree, since two annuals hailed in my June newsletter (No. 250) on Pgs. 1 and 6 are for companies whose CEOs are...well, not shy in the least. In fact, I'd prefer a self-confident CEO to the self-effacing type, a reject from the accounting department, say.

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	1.	You spoke of 120 annuals for 2003 as having been "fully evaluated" to date. Yet, didn't you used to speak of "upwards of a thousand reports analyzed"? Am I confused, or what? *Answer:* You're correct—far more annuals used to exist than today. Reason? Mergers and acquisitions have resulted in fewer companies. Back among 1991 reports, for example, 770 were received, and analyzed in depth. 791 reports received, and analyzed, a year later. I can't analyze if I don't receive.

	2.	An admittedly somewhat-superficial glance indicates you tend to play favorites—to be crass, that you "suck up" to the likes of a Ford, while attacking insignificant companies (those that aren't big players, let us say). True or false? *Answer:* You decide. Since you mentioned Ford specifically, let me remind you its annual for the last several years was adjudged as outstanding. This year, it's at best an also-ran, despite protests from its producer, who seems to believe mine is an opinion. I insist an evaluation/finding is predicated on my proprietary computer programs, which remove the personal aspect, as much as possible. Another example: RLI Corp. year after year did superbly. I wrote a Sid's Soapbox, blasting its "inability" to find women or minorities for its board of directors. Henceforth, it hasn't seen fit to send me its report. I wouldn't say there's evidence I play favorites, would you?

	3.	Your dislike of "the legalistic Form 10-K," as you call it, pretty much precludes any report including that element from achieving "world-class" status. True or false? *Answer:* True—but, as so often is the case, exceptions do occur. By wild coincidence, in the June 2004 issue of my monthly newsletter, Pgs. 1 and 6 contain praiseworthy evaluations of two reports that relied in part on the legalistic 10-K. (Being grown-up is the ability to be flexible...no?)

	4.	In virtually every instance, companies whose reports a decade or so ago scored superbly—well, they're nowhere to be found today. True or false? *Answer:* Not true in every instance. Take NW Natural: Back in 1990, as Northwest Natural Gas Co., its annual achieved world-class status. And, today, under its new guise, it continues to score at least 100 points—specifically, 128 this time around. Indicating it's virtually assured of Top 10 status.

	5.	You do play favorites—for instance, graphic design firms you're especially fond of seem to get more positive exposure in your newsletter than others. True or false? *Answer:* I admit to my prejudices, but I'm delighted when proven wrong. One way to avoid being unduly influenced by "friendship" or admiration is not to study the credits first. Such was the case with a report for Chesapeake Corp.. Only after review did I discover the memorable appearance was the handiwork of one of the staunchest supporters of our activities, Atlanta-based Critt Graham + Associates.

	6.	The death knell for an annual report is when a CEO isn't humble, doesn't pretend "to hide his light under a bushel," to use a cliché. True or false? *Answer:* False, I believe we can agree, since two annuals hailed in my June newsletter (No. 250) on Pgs. 1 and 6 are for companies whose CEOs are...well, not shy in the least. In fact, I'd prefer a self-confident CEO to the self-effacing type, a reject from the accounting department, say.