How 21 companies handled their summary annual reports.

• Author: Gibson, Charles H.
• Position: Regulatory

How 21 companies handled their summary annual reports

How condensed have summary annual reports proven to be? Is the change to the summary format more apparent on financial pages than on non-financial pages? How different were the approaches that companies took to the summary format? The authors recently conducted a study of the "Enterprising 21" - those firms identified in the July/August, 1988, issue of Financial Executive as having issued summary annual reports for 1987. The companies were Adobe Resources Corp.; American Fructose Corp.; American Maize-Products Co.; American Management Systems, Inc.; Avery International Corp.; Banc One Corp.; Becton Dickinson & Co.; Branch Corp.; Compugraphic Corp.; ENSERCH Corp.; First Interstate Corp. of Wisconsin; Iowa Resources, Inc.; The Kroger Co.; Maxus Energy Corp.; Marine Midland Banks, N.A.; McKesson Corp.; Prime Computer; Society Corp.; Sound Advice, Inc.; TW Services, Inc.; and Weyerhaeuser Co. Interestingly, only four companies actually used the heading "summary annual report." Fourteen continued to use the title "annual report," two used the title "annual review," and one used the title "1987 report."

While Banc One called its publication an "annual report," the company's disclosure that it was issuing a summary annual appeared on the inside front cover: This is the first summary annual report to be issued by Banc One Corporation. You will note that, unlike previous reports, much of the traditional financial information has been reduced or summarized. Full disclosure of all financial information is detailed in the 10-K and proxy statement, which is available to shareholders, and the 1987 financial statements have been filed with the Securities and Exchange Commision.

How many pages did it take?

Our research revealed that the summary annual reports for the 21 companies consisted of an average of 42 percent fewer pages than did the companies' prior annual reports. (See the figure on page 47). Non-financial pages were reduced 16 percent, while financial pages were reduced 57 percent. However, the averages hide some diverse reporting practices. For example, Compugraphic Corp. actually increased its number of pages from the prior annual report by 12 percent, using 21 percent more non-financial pages with no change in the number of financial pages. Banc One Corp. reduced its number of pages by 54 percent, increasing non-financial pages by 24 percent and reducing financial pages by 88 percent. And...