Companies cut back on fancy annual reports

ByABC News
May 6, 2009, 10:17 PM

— -- 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.