Every spring, Quiksilver's zqk investors could look forward to having a thick annual report land in their mailboxes, filled with colorful photos of tanned bodies and monster waves. Not this year.
As part of cost cutting not only at the Southern California surf wear company but at many companies, the traditional printed annual report to shareholders is slimming down if not disappearing completely.
Hoping to save money spent producing glossy magazinelike paper documents for shareholders, many companies are trying new ways to get financial information to shareholders. And most use less paper.
Statistics aren't available to summarize how much more modest printed annual reports are getting. But firms that design them overwhelmingly say printed reports are getting smaller and more spare. "The (print) annual report is dead," says Gary Baker of Baker Brand Communications, which produces corporate communications documents, including annual reports.
For some companies, cutting back on the annual report means merely putting a multiple-page cover on the black-and-white 10-K, the annual financial document required by regulators. That is what Quiksilver did.
And that's if companies mail anything at all. Many are pushing investors to read annual reports online. Kim Baer, who designs annual reports at her firm, KBDA, has seen a big difference. "This was the first year we didn't go through an annual report season," she says. "Most of our clients decided to cut back."
Some of annual reports' weight-loss program is because of the slow economy, designers say. Companies don't want to put out glorious glossy reports when they are telling shareholders that they are cutting costs.
But much of the change, too, stems from the regulators. Rules from the Securities and Exchange Commission, which went into effect for all companies this year, allow companies to mail printed annual reports only to shareholders who request them.
And many investors have gone electronic. At online brokerage firm TradeKing, for instance, 75% of account holders request that all communications from companies be delivered electronically, says Rich Hagen, TradeKing's president.
Still, some companies recognize the annual report is their best chance to tell their full story and steer investors' focus away from the quarterly earnings rat race. And that's why many companies are this year trying new things such as:
• Strategy add-ons. Hoping to get the most out of their investment, companies are looking for ways to make the annual report more than just a pretty presentation of financial numbers investors most likely already have. Companies such as telecom firm Qualcomm, qcom for instance, include a glossy document with their 10-K, called a Corporate Overview, to serve as the management's view of the future. The glossy portion is focused on strategy, not the financial data that are in the 10-K.
•Interactive online annual reports. Some companies are trying to move attention to online annual reports that are more than just an electronic copy of the printed annual reports and are designed to give users a more interactive look at a company, says Bill Ferguson of INC Design. For instance, insurer Endurance Specialty Holdings enh this year cut back the glossy portion of its printed annual report to 25 pages out of a total 204 pages, vs. 39 pages the previous year.
But making up for that cut in print, the company added video of its top executives on the site. Trading exchange International Securities Exchange also added videos of top executives in its interactive annual report, Ferguson says.
•Social responsibility reports. While companies cut back on printed annual financial reports, many are launching documents called CSRs that describe what they are doing to be respectful of the environment. Even these reports are seeing changes. Starbucks, sbux which has released a CSR document since 2001, made no printed copies this year for the first time.
That's not to say all companies are closing the books on elaborate printed annual reports. Plenty of companies, including IBM, ibm still produce lengthy printed annual reports, in addition to offering an online version, and consider it worth the effort.
IBM printed more than 1.3 million copies of its 2008 annual report, which was down from the 1.8 million it printed a few years ago, but still significant, says Terry Yoo, IBM's director of brand systems. "This is the one time for us to send something to stockholders," she says, adding that employees and customers often ask for printed copies. "We take it seriously."
So while some companies may decide saving money on print reports is most important, those that use print wisely may stand out, says Robert Louey, creative director at Robert Louey Design.
"This year was especially bad for annual" reports, he says, but adds, "Great annual reports always have a place."