Sid Cato -- October 2005 Quiz Answers

(Answers for October 2005)

1. To a man (or, in this instance, woman), none got behind the New York Stock Exchange broadside doing away with the printed annual report for stockholders. True or false?
Answer: Well, I thought for a few minutes there that that wasn't entirely true. Annual report executives with companies ranging from Leggett & Platt in Carthage, Missouri, to Alcoa's Kevin G. Lowery in Pittsburgh to Deb Mitchell, senior managing director with Dix & Eaton in Cleveland—all clearly took issue with the ill-advised NYSE edict. At first, it seemed Wells Fargo's executive VP was in the minority, but upon closer reading, it's clear Larry Haeg shares, pretty much, our opposition. "Content is still king," he said. And, "The only thing we have to fear is...boring reading."

2. In your October newsletter (No. 265), you take a somewhat-moderate view of companies that include the legalistic Form 10-K in their annuals. True or false?
Answer: False—very much so. I am on record as vowing I'd "never invest in a company that showed such disdain" for the individual stockholders—which I how I view the legalistic 10-K, never intended for public consumption; it's a filing document required of corporations, never intended for the general public. Can you say "BOR-ING"?

3. That leads to the next question: I thought that, to indicate clearly your impartiality, you never invest in any company. Not true?
Answer: Yes, it is true, for the reasons given (that and the fact I'm poor). But, were I an investor, I'd avoid like the plague (as they used to say) any company that went the 10-K route as major portion of its annual report to shareholders.

4. Since it's the year's 10th month, you've pretty much moved on—no longer any attention paid 2004 reports; the 2005 crop, for companies on a calendar year basis, is in the beginning stages, at least. True or false?
Answer: Obviously, false, as anyone who reads my October newsletter (No. 265—since September 1983) knows. I continue to review '04 books. Though, to be sure, some early 2005s—by companies on a fiscal-year basis—are beginning to trickle in.

5. Paper companies believe that the Form 10-K can save a corporation a bundle. True or false?
Answer: The answer would be "true" if indeed paper companies believed it, but they don't. Privately, as my October roundup indicates, paper companies (one of them, at least) stated that going the 10-K route would save a corporation 25-30%. But it confesses, off the record, the figure's a lower "10-12% at best," according to one producer of award-winners. As I wrote, "Not figured in is the lackluster reputation companies experience when they go with what's essentially a down-and-dirty book," never one intended for public consumption. It's a filing document, pure and simple.

6. One final question: Isn't it true that sometimes you slip up and fail to identify any potential conflict of interest? For example, you get paid to critique a report and then you turn around and praise it in your newsletter, or online. True or false?
Answer: Were I to do what you've envisioned, as a responsible journalist I'd be obligated to disclose any potential conflicts. I recall one reporter whom I knew to take money from a Chicago corporation, which he wrote a glowing article about. I told him in no-uncertain terms that made him a whore. So there. (Cato practices what he preaches.)

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	1.	To a man (or, in this instance, woman), none got behind the New York Stock Exchange broadside doing away with the printed annual report for stockholders. True or false? *Answer:* Well, I thought for a few minutes there that that wasn't entirely true. Annual report executives with companies ranging from Leggett & Platt in Carthage, Missouri, to Alcoa's Kevin G. Lowery in Pittsburgh to Deb Mitchell, senior managing director with Dix & Eaton in Cleveland—all clearly took issue with the ill-advised NYSE edict. At first, it seemed Wells Fargo's executive VP was in the minority, but upon closer reading, it's clear Larry Haeg shares, pretty much, our opposition. "Content is still king," he said. And, "The only thing we have to fear is...boring reading."

	2.	In your October newsletter (No. 265), you take a somewhat-moderate view of companies that include the legalistic Form 10-K in their annuals. True or false? *Answer:* False—very much so. I am on record as vowing I'd "never invest in a company that showed such disdain" for the individual stockholders—which I how I view the legalistic 10-K, never intended for public consumption; it's a filing document required of corporations, never intended for the general public. Can you say "BOR-ING"?

	3.	That leads to the next question: I thought that, to indicate clearly your impartiality, you never invest in any company. Not true? *Answer:* Yes, it is true, for the reasons given (that and the fact I'm poor). But, were I an investor, I'd avoid like the plague (as they used to say) any company that went the 10-K route as major portion of its annual report to shareholders.

	4.	Since it's the year's 10th month, you've pretty much moved on—no longer any attention paid 2004 reports; the 2005 crop, for companies on a calendar year basis, is in the beginning stages, at least. True or false? *Answer:* Obviously, false, as anyone who reads my October newsletter (No. 265—since September 1983) knows. I continue to review '04 books. Though, to be sure, some early 2005s—by companies on a fiscal-year basis—are beginning to trickle in.

	5.	Paper companies believe that the Form 10-K can save a corporation a bundle. True or false? *Answer:* The answer would be "true" if indeed paper companies believed it, but they don't. Privately, as my October roundup indicates, paper companies (one of them, at least) stated that going the 10-K route would save a corporation 25-30%. But it confesses, off the record, the figure's a lower "10-12% at best," according to one producer of award-winners. As I wrote, "Not figured in is the lackluster reputation companies experience when they go with what's essentially a down-and-dirty book," never one intended for public consumption. It's a filing document, pure and simple.

	6.	One final question: Isn't it true that sometimes you slip up and fail to identify any potential conflict of interest? For example, you get paid to critique a report and then you turn around and praise it in your newsletter, or online. True or false? *Answer:* Were I to do what you've envisioned, as a responsible journalist I'd be obligated to disclose any potential conflicts. I recall one reporter whom I knew to take money from a Chicago corporation, which he wrote a glowing article about. I told him in no-uncertain terms that made him a whore. So there. (Cato practices what he preaches.)