Preparing Annual Reports in the 1990s (1991)

Compliance and disclosure are the basis of annual reporting. When the Securities and Exchange Commission (SEC) was formed in 1934, the accompanying securities laws required public companies to file certain financial data and other information about their operations with the SEC so it would be available to investors. What they didn't require was embellished prose, slick four-color photographs and fluorescent pie charts and graphs. There are no legal requirements for a company to publish this type of annual report. With today's electronic communication, the facsimile machine, video and advanced computer networks, is the traditional annual report becoming an anachronism? Annual reports will exist, in one form or another, as long as public companies offer shares of stock to the public and to their institutional fiduciaries. Corporate identity is the motivating factor. annual report is a company's primary calling card; the lasting visual impression of an organization. Yet, market psychology and economic factors are fluid. following points must be kept in mind when planning an annual report in the 1990s. 1) Identify target audiences and how they perceive the corporation. 2) Make decisions about how to resolve conflicts among the external perceptions. 3) Understand how changes passed by the SEC will affect the annual report. 4) Develop a concept and create a visual impression that reflects the company's culture. 5) Plan the report with an international audience in mind. Identify the audience For public relations executives, an important issue in the 1990s will be corporate governance. Who is controlling the corporation and what issues are they concerned with? Identifying the shareholder audience for the annual report is essential in order to understand how it should be written and designed. Investment bankers are another key audience. At times, members of the media and other interested parties might look at the report. During the 1960s and 1970s, annual reports were directed to individual shareholders, as well as institutions. Today, almost 70% of all stock is managed by institutions and professional money managers. shift in U.S. investor type is a result of the stock market crash of October 1987. At that time, many individual investors were forced out of the market. The lack of realization on the part of senior management of who constitutes the audience accounts for the lack of balance in the presentation, said James McClure, a vice president in the Senior Management Equity Assets Group at Goldman Sachs & Company, New York City. Institutional investors are sophisticated. Most look at the financial statements in the annual report first. While the average individual investor does not understand the financial statements, institutional investors know what to look for. Therefore, the chairman's letter can't gloss over figures buried in the back of the report. Resolve conflicts in perception Conflicts often occur between internal and external perceptions of the company because of what happens inside the company before such new developments reach the investing public. role of the communications department is to suggest methods of defining and then resolving these conflicts in how the company is perceived. It might require something as formal as an audit conducted by an outside consulting firm or as informal as conversations with analysts covering the industry, important customers and even representative shareholders. One annual report that dealt with this issue effectively was published by the Lotus Corporation in 1988. Lotus was a high-flying technology company in 1982 with sales of $53 million, when its business plan had called for $5 million. company stumbled in 1988. Analysts and others were asking, Where is the company today, where is it going and how is it perceived in the marketplace? …