Follow the money: How to decipher financial reports and better cover your industry

Two sessions at this year’s ASBPE national conference in Chicago dealt with foreign languages – that of corporate financial statements.

Ceci Rodgers, a business and economics lecturer at Medill School of Journalism, Northwestern University, walked editors through the nuts and bolts of financial reporting and sorting through the often confusing (sometimes on purpose) world of 10-Qs, 10-Ks and 8-Ks.

“If you can read a nutrition label or a stock quote, you can read this,” Rodgers said.

She recommends editors skip past the “PR garbage” and go straight to the tables on the forms, highlight the lines of information they need, and only then go to the PR/analyst section for explanations from the company.

BREAKDOWN. Rodgers broke down the three most common financial reports journalists and editors deal with:

10-K – annual report

  •  Offers some MD&A (management discussion and analysis)
  • Focus on the footnotes, especially anything listed as “other liabilities” or “special entities”
  • This is the only audited report; the 10-Q isn’t

10-Q – quarterly statement

  •  Income statement – measures profitability
  • Balance sheet – financial health
  • Statement of cash flows – focus on the cash from operations line

8-K – disclosure of information material to the company

14-A – deals with executive compensation

STORY IDEAS. Think there’s nothing in that mass of numbers, percentages and analyst double-speak? Here are some story ideas you can easily pull from a company’s 10-K or 10-Q:

  • How much income tax does the company pay?
  • How much cash does it have on hand?
  • Does it face any pending litigation?
  • What’s the status of its pension funds?
  • What are its “other” liabilities or assets?
  • Is the company “channel stuffing” – moving a lot of product to retailers or distributors and listing it as sold on their books?

WHERE TO LOOK. The 2002 Sarbanes-Oxley law mandates companies follow GAAP (generally accepted accounting principles) that allow journalists and analysts to make apples-to-apples comparisons of companies in the same industries/segments. That doesn’t always make it easy, but Rodgers recommended b2b editors focus on three areas when quarterly and annual reports are released to the media:

  • Income statement – how profitable is the company?
  • Balance sheet – What is the financial health of the company?
  • Statement of cash flow – How much liquidity does the company have?

I – income statement

  • A company’s top line is its total sales plus revenues.
  • Operating income focuses on profit without interest or taxes and tells you how the company is doing in its everyday business.
  • EBITDA (earnings before interest, taxes, debt and amortization) “takes the noise out,” Rodgers said, so analysts like it as a metric to judge the company’s performance.
  • The cost of goods sold (or COGS) shows the impact of commodity costs on business.
  • Sales and G&A expenses – compare this to the same three-month period from last year. If this rises too fast, cost cutting and layoffs might be imminent.
  • Gross margin = revenue minus COGS divided by revenue

II – balance sheet

  • Assets are cash and short-term (three-month) securities. Look for a trend here; are they building cash or not?
  • Goodwill should be less than 20% of total assets?
  • Liabilities are long-term debt (one year or more).
  • Market capitalization = stock price x shares

III – Cash flow

  •     Good ratios of operating cash to net income are 1:1 or 3:1

Author Chuck Bowen is a 2011 ASBPE Young Leader Scholarship award winner, and editor and associate publisher of Lawn & Landscape magazine. You can email him at

Kiplinger Social Media Fellowship

From the Kiplinger Program at the Ohio State University, Columbus:

Want to learn the latest digital reporting skills?

The journalism field has radically shifted. But when you’re working endless hours and juggling two or three beats, it can be tough to make sense of it all.

That’s why the new Kiplinger Fellowship teaches you innovative digital tools and approaches — all at no cost to you.

This March 30-April 6, fifteen journalists will spend an intensive, hands-on week at Ohio State University, using social media to build a following, develop sources and cover their beats. We’ll talk Twitter, deep web searches, digital footprints, SEO, the backchannel and more. Tools you can use to get a step ahead in the constantly evolving digital world.

Then, back in the newsroom, you can log in for coaching sessions — getting tips and ideas from renowned journalists.

And there’s more — your editor has the option to attend our three-day condensed version of the training in June.

And thanks to the generous support of the Kiplinger Foundation, all of this will be free-of-charge — plus we’ll cover lodging and give you a travel stipend.

Want to apply? Visit for more details, or access our online application now.

Application Deadline: November 30, 2010

Contact: Debra Jasper, Director
Kiplinger Program in Public Affairs Journalism
John Glenn School of Public Affairs

Even Sexier Than the Girl With the Dragon Tattoo

By Photo: Steven RollSteve Roll

By now thousands have read about how the publisher of Millennium magazine doesn’t let his executive duties stand in the way of writing investigative reporting pieces that uncover corporate trickery for his readers.

His biggest complaint about the business press is the cozy relationship between journalists and the executives they cover.

But despite his well-known accomplishments, he isn’t a candidate for ASBPE’s Lifetime Achievement Award (too young) or Journalism That Matters honors.

Who is this amazing business journalist in our ranks? It’s Mikael Blomkvist, the main character in this summer’s blockbuster detective trilogy, which begins with The Girl with the Dragon Tattoo.

Fortunately for his readers, the misdeeds Blomkvist uncovers go well beyond corporate governance issues.

But like any serious journalist, Blomkvist is sometimes confronted with serious ethical issues. Following a well-publicized crisis that cast doubt on the integrity of his magazine, both advertising and circulation are declining.

Blomkvist must decide whether to accept financial assistance from the former CEO of a dysfunctional corporate dynasty.

Later on in the story, as he begins to piece together the lurid details of a ghastly series of crimes, he must grapple with other ethical conundrums, such as whether it’s okay to obtain information by hacking into someone’s computer.

When he breaks his big story, he must weigh the merits of publishing a book along with his feature article.

But these are just some of the things that Blomkvist faces in the first book. He must overcome an array of other knotty problems in the second and third novels.

At a time when many in the business-to-business press are faced with furloughs and layoffs, it’s refreshing to read about the exploits of Blomkvist. While both he and his exploits are pure fiction, he’s a reminder of just how talented and resourceful business journalists can be.

Steve Roll is the immediate past president of ASBPE.

Look Into the Numbers

By Maureen Alley

Journalism and new media experienced a front-end collision in the last few years. Social media, faster news cycles and increased demand from all angles are driving journalists to report more at faster rates. And with more to do with less time to do it, journalists often fall to the numbers.

What do I mean by falling to the numbers? Simply: Quickly posting content that cites statistics because they sound interesting. People love stats, and love to cite stats to back up their beliefs. And knowing this, you grab the articles that have numbers and post them. You’ll increase your traffic and user engagement. However, you may be hurting the very people you’re trying to report to.

During my time as managing editor for Website Magazine, I quickly learned that any headline with statistics would drive huge traffic numbers to the website. It would increase retweets on Twitter and ultimately discussion. And isn’t this all what it’s about? Well, not really.

Anyone who is a close follower of politics knows that it’s easy to sway stats in your favor. And anyone who attended journalism school knows it’s important to look at all the numbers to really know what they mean.

So while we need to report and provide the information our readers want/need, we also need to remember our journalistic foundation. You could be providing information to your readers that is inaccurate or doesn’t take into account the whole story. It might take a little longer to report the story, but you’ll know you’re reporting accurate information. Your readers will recognize it, and so will your advertisers.

Maureen recently left her job at Website Magazine to move closer to home in Madison, Wis. She’s currently looking for a new writing/editing gig, so give her a shout at if you know of anything in that area.

Mike’s 24 B2B Editorial Essentials

By Howard Rauch

Whether you’re talking about websites, digital magazines or conventional publications, high-quality content is essential. That’s not necessarily a new thought; however, it does seem to be getting more support from the B2B blogger community.

In fact, even as important as top-notch content may be, there are essential ways to achieve that goal that may have gotten lost in the shuffle. Recently I was reminded of that reality while reading a commentary about “How to Succeed in Trade Magazine Publishing.”

The author, Mike Antich, is a group editor at Bobit Business Media, a company that few can surpass when it comes to emphasizing editorial excellence. I have known Mike for the 20 years BBM has been an Editorial Solutions client. He just finished a stint as president of one of his industry’s key associations. Tomorrow he may send out an e-mail inquiry to several dozen contacts pertaining to a feature he has in the works. And most likely, almost everybody will respond, because Mike is no stranger.

On a typical day, he may be preparing one of several blogs … or speaking at an important industry event … or supervising an array of weekly e-newsletters and magazines of varying frequencies published by his group. For those reasons among others, I thought his recent memo deserved your attention.

His description of 24 essential practices serves as a reminder that beyond delivering high-quality content, there are other equally important ways to attain status as an industry authority. What follows is an outline of Mike’s list.

(1) Make a commitment to become a subject-matter expert.

(2) Read all the back issues of your publication.

(3) Go out of your way to meet new people.

(4) Develop the reputation of being someone who is trustworthy.

(5) Tape record interviews; upon listening, you’ll be surprised at nuances you missed.

(6) Take notes of “casual” conversations that occur at conferences.

(7) Request story assignments about topics you don’t understand.

(8) Volunteer to help produce industry directories.

(9) Maintain relationships even when people move on to different positions.

(10) Develop a reputation of being the industry’s go-to person.

(11) Get to know the people running your industry associations.

(12) If asked to serve in an association, accept the offer and provide a 100% commitment.

(13) Write a blog.

(14) Give industry speeches. The preparation effort required forces you to become an expert.

(15) Be aggressive in your use of e-mail.

(16) Develop a curiosity and passion about your industry.

(17) Don’t be afraid to ask lots of questions.

(18) Seek out mentors.

(19) Listen – don’t talk too much.

(20) Always ask what’s new.

(21) Peer-review your articles.

(22) Never stop learning.

(23) Never make enemies in your industry.

(24) Be a thorough researcher.

Yes … I think this is terrific list! Undoubtedly some or all of the practices deserve a higher priority than what I perceive to be our preoccupation with social media, key words, editorial analytics, landing pages and other modern concepts.

*You can email Howard for a full commentary at
Howard Rauch is president of Editorial Solutions Inc., a consultancy focusing on B2B magazines. Rauch is the 2002 recipient of ASBPE’s Lifetime Achievement Award.

446 Articles Can’t Be Wrong

By Howard Rauch

Routine E-news Coverage Will Be Our Downfall!!

This commentary is based on the 50-site e-news survey I just finished and is a combination of my e-news philosophy and information that I found during the study that goes against that philosophy.

Reaction A: “Wow!!! What a terrific article!!”

Reaction B: “These people just don’t get it?!!?”

These two outbursts – clearly at opposite ends of the opinion poll – came to mind often depending upon whose e-news I was evaluating. The occasion of this evaluation was the several months spent conducting a 50-site study of B2B e-news delivery. Unfortunately, the former reaction was rare. The latter squawk occurred more often as I examined 446 e-news articles encompassing dozens of B2B industries.

Was the anguish justified? Maybe not. It depends upon which e-news philosophy you embrace. Mine is simple enough. No matter what day it is, breaking news highlighted in e-newsletters must be “best in show” calibre. Specifically, when assessing the presence of urgency on the basis of being High, Medium or Low, there is no room for Low. Knowingly or not, that is what we all signed up for when we embraced the web. Further, if enterprise is being judged on the basis of High, Medium or Low, “No” is not an option. Even so, two-thirds of the articles rated were in the “No” category.

Of course, there are obvious reasons – we all know them – why “best in show” remains elusive. “Time” tops the list. “Resources” also is up there somewhere. Most of us have had to add website responsibilities to a job description that includes print, show business and, most recently, digital. In some cases, the need to deliver hot news on a regular basis is a new adventure for veteran staffs.

With all this, we must do everything possible to avoid making routine coverage a regular habit. Here are five items … some major, others admittedly minor … that we might consider as we plan future e-news:

(1) Every e-newsletter edition must lead off with dynamite coverage. What is dynamite? Try this: When it came to reporting regulatory news, most items rehashed a press release and stopped there. On rare occasions, writers saw the wisdom of producing a reaction story. In at least one case, the staff in question definitely was hard pressed in terms of workload. But the desire to excel won out and a terrific reaction story was the result. When evaluated during my study, the article earned 89 out of a possible 100 points, making it number two out of 446 on the e-news delivery scale. The “best in show” article scored a remarkable 98. Most articles fell into the 40-50-point range.

(2) Clearly distinguish your coverage from competitors’. Before starting this blog, I was running some “like item” analysis as part of a competitive analysis project. “Like item” refers to how two competitive sites cover an identical event. In the case of one article, it immediately was clear that both parties rewrote the same news release. Even the quotes were exactly the same. Unfortunately, this happens a lot. It’s lack of enterprise coming back to haunt us.

(3) Make statistical articles more digestible. Numbers generate hot news, so it’s no surprise e-news reports often focus on the latest survey results. However, when you run a 600-700 word article that recites all sorts of percentage increases and decreases, you’ll probably lose the reader. Instead, follow the “one picture is worth 1,000 words” principle and run one or more quick-read charts.

(4) Use at least one stimulating quote in every article. Quote-barren articles definitely are insufficient if we’re looking to engage e-news visitors.

(5) Ban “source first, news next” articles. Yes, I keep harping on this one. If a person’s name, title and affiliation use up 11 words or more, please don’t launch an article with that albatross weighing it down. One factor measured in my survey is lead value. This is the number of words wasted before a key story point is reached. Most articles reviewed were pretty good, meaning the key point was made within ten words. But there were enough cases where anywhere between 20 and 150 words elapsed before a meaningful connection was made. “Source first” was the culprit in almost every case.

Legal Alert: Three Ways to Keep Out of Trouble

By Howard Rauch

Occasionally we need to remember that there is life beyond websites and digital issues. Basic editing snafus — especially those of a legal nature — can land us in hot water. Even experienced editors fall into an occasional trap involving libel or some other snag. Here are three reminders worth including in your editorial manual if you have one … or in a policy statement distributed to all staff members.

1. Avoid midstream reporting of undecided legal disputes. For example, the fact someone is charged with committing a crime or otherwise violating a regulation doesn’t mean the accused will be found guilty. In my editorial director days, I dealt with several situations where an editor interviewed the plaintiff in a dispute while the case was still in progress. The interviewee took some serious pot shots at the defendant’s character. If the article made it into print, we would have been up the creek. However, we had a policy that all articles of an inflammatory nature had to be cleared by a member of top management. That policy kept us out of trouble.

A variation on this theme is that X, one party to a dispute, issues a press release announcing intent to sue Y. The release includes a description of stiff penalties Y would incur if found guilty. You publish that information at your peril. Instead, wait until the case is settled. Meanwhile, obtain a copy of the complaint as a way of verifying the accuracy of the information contained in X’s press release.

2. Fact-check information excerpted from other media before it gets printed. If certain details are misleading or totally inaccurate, you may end up on the wrong side of a complaint. The fact that the excerpted material did not originate with you is no defense. In my consulting practice, I constantly needle editors who frequently use excerpted material in news sections. The better practice is to use, say, a newspaper article as a lead only. Then develop your own exclusive slant by following up with sources cited. Most likely, you know the parties quoted in the original story. If not, now you have an opportunity to make a new contact.

A variation on the above theme occurs when editors routinely reprint information from websites without obtaining clearance to do so. Remember that copyright privileges apply. Aggrieved parties are within their rights to make your life miserable.

3. Beware of using “endorsement language.” At the very least, resulting infractions will haunt you forever with important contacts. In this case, typical goofs occur in the way we edit (or don’t edit) new product announcements. I’m sure you know the drill. A product announcement lands on your desk filled with glowing descriptions of an item’s value to your readers. Experienced editors assume a “glow must go” position and routinely red-pencil all the puffy stuff. But from what I’ve seen, this is not real life at every publication. Among the glitches that sneak through are statements alleging that product X is better than all competitors. Or the announcement will claim that the product is the only one of its kind out there … or the first one in its field. You had better verify that competitive claims are true. If you can’t do that, please have a policy in place describing how to field complaints from competitors who have a legitimate beef.

Howard Rauch is president of Editorial Solutions Inc., a consultancy focusing on B2B magazines. Rauch is the 2002 recipient of ASBPE’s Lifetime Achievement Award. You can contact him directly at

Raising the Barr (Award)

By Roy Harris
ASBPE Foundation President

When jurors for this year’s Stephen Barr Award selected American Farriers Journal editor Frank Lessiter — for his remarkable series on equine abuse, a shameful but little-known part of competitions among “gaited horses” — Lessiter became the sixth business-to-business writer chosen to receive ASBPE’s top individual prize for feature writing.

Further, the latest winner once again extended the widely diverse range of work honored with the Stephen Barr Award, which is keyed to evidence of “inventiveness, insight, balance, depth, and impact.”

The first one, in 2004, went to Adam Minter, a Shanghai-based freelance journalist who had produced a groundbreaking series on the Chinese recycling industry for Scrap magazine. It was a series, focusing on China’s rapidly expanding, but then little-understood role as a repository for the world’s refuse, and especially hard-to-process computer parts. Since then, winners have been recognized for work on legal affairs (John Gibeaut, ABA Journal); swimming-pool drownings (Shabnam Mogharabi, Aquatics International); Harvard missteps in a Russian initiative (David McClintick, Institutional Investor); and fuel choices by trucking companies (David Cullen, FleetOwner.)

What all six writers have in common — besides the handsome crystal trophies on their mantles — is that their stories won over a prestigious pair of jurors, who spent weeks analyzing the best journalism among national gold-award winners in the year’s Azbee competition. This years jurors — long-time journalists and educators George Gendron and Lou Ureneck — have been involved with Stephen Barr Award judging since the beginning.

Gendron, perhaps best known for his two decades as editor-in-chief of Inc. magazine, now is director of the Innovation and Entrepreneurship Program at Clark University in Massachusetts — a program he founded. Years ago, Gendron also created the Inc. 500, the annual listing of America’s fastest-growing private companies.

Ureneck, now the director of Boston University’s journalism program, formerly was deputy managing editor of the Philadelphia Inquirer, and before that the editor and vice president of Maine’s Portland Press Herald. He has been editor-in-residence at Harvard’s Neiman Foundation, where he pursued a comparative study of the methods of historians and the practices of journalists. He is also a frequent commentator on national media issues.

In past years, Gendron and Ureneck have been joined by Walter V. Robinson, a veteran Boston Globe reporter and editor who now holds the position of Distinguished Professor of Journalism at Boston’s Northeastern University. As assistant managing editor for investigations, Robinson headed the paper’s Spotlight Team, whose projects included the Pulitzer Prize-winning disclosures of sexual abuse of parishioners by Catholic priests, and a Church cover-up of the situation.

Since helping to found the Stephen Barr Award — endowed by Stephen’s parents not long after his death from cancer at age 43 — I have been honored to coordinate the judging process, and to work with these busy journalists as they give their time to ASBPE matters. Their dedication to candor, to six years of “getting it right,” no matter how long it took, has been truly impressive.

But my favorite job related to the Stephen Barr Award is sneaking behind the backs of the unsuspecting winners, and maneuvering with associates and relatives to make sure that recipients will be in the audience, to get the surprise of their lives. So far, four of the our six winners have been in attendance — to be blindsided from the lectern at the Azbee Awards of Excellence banquet. This year, Frank Lessiter’s son Michael managed to persuade his dad to make the trip, knowing that his father was about to receive the honor of a lifetime.

Six impressive Stephen Barr Award winners. Six extraordinary projects. And six triumphs for ASBPE. George Gendron, Lou Ureneck, and Walter V. Robinson: our membership salutes you.

Where Is B2B as U.S. Gets Reinvented?

By Thomas R. Temin
Media and Government Consulting

If you read the daily, traditional media, you might believe these “facts”:

  • 50 million Americans have no access to health care.
  • The cap-and-trade system being debated in Congress will help the U.S. reduce carbon dioxide emissions and thereby help reduce global warming.
  • The stimulus bill, formally known as the American Reinvestment and Recovery Act, is pumping $787 billion into the economy and creating several million jobs.
  • General Motors had a hidebound, political culture and that is why it failed. The new CEO has set out to change all that.
  • Interior Secretary Ken Salazar says windmills off the Eastern shore of the U.S. could generate 1,000 gigawatts of electricity.

The last statement is true, but it is patently absurd. The others represent the Obama administration party line, but contain demonstrable half-truths, falsehood and highly debatable points.

Yet this is what people read day in and day out in the newspapers, and what they hear on television. One fact that is true: politicians and political activists of all stripes are using statistics and highly interpreted “facts” to try and remake the American economy in an extremely expensive and risky set of schemes.

And so there is a perfect opportunity for the trade, business-to-business press to cut through the nonsense with its deep knowledge of narrow markets and the economics that drive them. Engineering publications can sort myth from reality about wind power. Management and finance-focused publications should be able to write in more deeply informed ways about companies like General Motors or Bank of America.

Yet the trade press is filled with optimistic headlines about how programs like the stimulus bill is helping our industry, whatever it might be. It is mainly the bloggers who are analyzing and finding the holes in popular shibboleths. There are exceptions. A story this month in Medical Economics blew holes in the growing disaster for physicians that is Massachusetts mandatory health coverage. But for the most part, you could hardly tell from the B2B media that the federal government is on the verge of upending perhaps 50 percent of the U.S. economy. Of all times, this is when the perception and discernment of people who know what they are talking about needs to come to the fore and join the debate.

Listen to Temin weekday mornings 6:00 a.m. to 10:00 a.m. at Federal News Radio 1500 AM in Washington D.C. and read his federal market analysis fortnightly at and follow his IT and media blog posts at

When It Comes to Being an Editorial Giant, Size Doesn’t Matter!

By Howard Rauch

Last week, an editorial giant invited me to join him at the Neal Awards. I gladly accepted. Among other reasons, sitting through an awards presentation – be it Neals, Azbees or similar occasions – is a learning experience.

It reminds one of all the great content B2B editors strive to deliver every day. Industry involvement, creative thinking and hard work are qualities that shine through. In those respects, the description of the Neal winners delivered fully.

But there was one other realization that occurred. Many folks believe that when it comes to awards events, magazines with the biggest staffs and plenty of other resources will always walk away with the honors.

Not true … as my giant proved in two cases. The person I’m talking about is Jim Prevor, one of my earliest clients. He is editor-in-chief of Phoenix Media Network headquartered in Florida. For years he has blazed a trail of editorial leadership for Produce Business, his flagship magazine. He was at the Neals to receive the 2009 Timothy White Award for Editorial Courage and Integrity. Moreover, Produce Business was a finalist in the Best News Coverage category for a publication with gross revenue up to $3 million.

By Neal standards, Jim’s company was one of the smallest represented at the event. But in terms of editorial excellence, he was as much of a giant as any other Neal Award recipient that day. When I first met Jim, he made it clear he was a guy looking for new ideas. Even then – over 15 years ago – it was obvious that he had achieved insider status with his industry. He was and continues to be a shirtsleeve guy, even though he’s built his operation into a four-publication company.

Actually, there are plenty of editorial giants around who are not award winners. In many cases, their magazines have limited space that prevents them from devoting the blockbuster space typically required to, say, contend in a best feature category. Even so, their information packages are consistently high value.

Are you an editorial giant? Here’s a quick self-scoring profile quiz that will clarify your achievement level. Each question can be answered with a “yes,” “no” or “maybe.”

(1) My editorial columns always address key issues that reflect my status as an industry insider. Never is my editorial merely a recitation of the issue’s contents.

(2) I publish important original research reports at least twice a year.

(3) I’ve met hundreds of industry movers and shakers who have become my friends.

(4) Important sources call me constantly to offer angles involving important news stories.

(5) I always write at least one important feature story for every issue.

(6) I am in demand as an industry speaker as well as a recognized information source always sought out by the media.

(7) I travel as often as possible to meet new readers as well as old friends.

(8) I believe training of staff members is an important responsibility that deserves my personal attention.

(9) I’ve organized an editorial advisory board of key industry movers and shakers who constantly provide important guidance.

(10) I enter editorial excellence competitions and have even won a few awards.

So … give yourself ten points for every “yes,” zero for every “no” and five points for every “maybe.”

If you score at least an 80, consider yourself an editorial giant. This kind of accomplishment doesn’t come easy … but it can happen if you’re determined enough to make it so!

Howard Rauch is president of Editorial Solutions Inc., a consultancy focusing on B2B magazines. Rauch is the 2002 recipient of ASBPE’s Lifetime Achievement Award. You can contact him directly at