 |  Periodic editorials concerning everything from the very worst industry—from an annual report standpoint, that is—to what's wrong with the Fourth Estate. Reporters who can't hit an accuracy with a cannon. |
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| Periodic editorials concerning everything from the very worst industry—from an annual report standpoint, that is—to what's wrong with the Fourth Estate. Reporters who can't hit an accuracy with a cannon. |
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BorgWarner's product magnificent?
"Isn't it magnificent? Don't you just love BorgWarner's report?" I'd bet money comments like that abound among aficionados of this unique species, the annual report to shareholders of publicly held companies worldwide. Seldom, in my 20 years at this stand, have I seen a more inviting, exciting document. Nor, to be brutally frank, one more seriously flawed, more vulnerable to criticism. Let me explain: First off, there's no letter to shareholders from the CEO, one of our requirements. There's one from the chairman, but clearly he's no longer CEO: that chap is pictured with him (along with the executive VP/chief financial officer) in a three-person photo leading off the shareholder letter. Its outgoing chairman (not CEO) begins by telling the reader how gratifying it is to write "my last letter as chairman." To his way of thinking, BorgWarner is "a solid company—financially, technically and ethically." I disagree. While sales rose 16.1% year to year, net earnings were in the loss column. ($4.44) a share, contrasted with a year-prior per-share profit of $2.51. Then there's the matter of EBITDA—"the dreaded EBITDA," as I describe it. Space galore on my website devoted to my staunch opposition to that technique of—well, of trying to make "a silk purse of a sow's ear," never more apt a usage of that old saw. The report, despite those deadly sins, is marvelous in so many respects. For one thing, it's employee centric—starting with the cover, where seven employees are pictured (identified fully on the inside front cover). Plus, inside, the unique head-and-shoulders shots of 25 additional employees, accompanied by their job titles, the pictures printed in what appears to be 10% of black. Read: barely discernible. In the gutters of various spreads. The big space inside (surprise, surprise!) is devoted to the three top execs, with the outgoing chairman getting the lead position, followed by his successor as CEO and the nipping-at-his-heels executive VP. Each of the three is pictured large—make that huge—along with a six-question "conversation." (One more for the CEO-successor.) The games corporations play. And the gorgeous books they turn out in an attempt to obscure their gamesmanship. I'm sure most said, as I did on first reading, "How marvelous." I question how many truly went deeper to find—well, this report epitomizes the cliché, "Deep down he's superficial." In BorgWarner's case, certainly: You said it. |
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