I'm going to backtrack on something I've said on multiple occasions regarding annual reports. No, this has nothing to do with some cockeyed determination that I suddenly prefer that companies tell their shareholders exactly what they want to hear as opposed to what happens to be true. Nor does it have to do with a newfound respect for doublespeak and lawyerese, the indecipherable diction to which companies seem to turn whenever they don't really want shareholders to understand.
Here's my bias: I love cheap annual reports. Costco
On the other hand, though, I've come to believe that extremely well-produced annual reports are also testaments to companies. There are a few reasons that I've altered my core belief here.
The first of which is a discussion in the May 8-K of freight forwarder Expeditors International
Expeditors also puts out a slick and expensive-looking annual report. The first time I saw it, I was a bit shocked, as this is a company that comes across as being extraordinarily cost-conscious in the same way that Costco is. In the aforementioned May 8-K, Expeditors' top executives fielded a question that asked them this very thing: "Why spend so much on your annual report?" Their answer changed my mind to some degree about the rationale of a sharp-looking annual report. OK, part of their answer -- I think the scorn the company heaped on this particular interlocutor was a bit over the top. If you'd like to read it yourself, it's Question 15.
Whereas you may be pardoned if you confuse Costco's corporate offices with another one of its warehouses, the Expeditors offices are well appointed. The company isn't building white elephants here -- Expeditors isn't building corporate golf courses a la Lucent
The reason Expeditors has such a nice annual report is that this is the one tangible thing that shareholders receive from the company. This isn't a retailer, where anyone can visit and get a feel for the company and its products -- to most people companies such as Expeditors and the services it performs are invisible. So the company uses this one time to put its best foot forward, to present the image that the company has for itself. And yes, Expeditors gets extra credit for the fact that the CEO drafts the letter to shareholders himself.
I think this makes a great deal of sense, and something else that happened this past week rammed home exactly what the folks at Expeditors were talking about. I received a copy of what is simply the coolest annual report I have ever seen. It speaks volumes about the company that produced it. It oozes success and creativity -- just the types of images that any company would want to present.
It comes from Ameristar Casinos
The report itself contains dozens of pictures showing off each of the Ameristar properties and explains in crystal-clear language what the company's operating strategy is, how it makes money, and what it considers to be the key elements that define its success. So all at once you have a single document/package that acts as the communicator of all of the information required by the Securities and Exchange Commission. But also it serves to connect shareholders to the company they own. It acts as a travel advertisement, a guide to the company's properties, and it offers some fairly inexpensive and useful schwag in the form of two decks of cards to remind people of the fun they can have at resort properties that they own a piece of. The annual report looks almost like one of those "everything's bigger in Texas" gag gifts, only about 100 times cooler. It oozes success. It screams "fun."
And it made me realize that the Expeditors folks -- though they are in a completely different business -- have a point. The annual report package really does communicate something. The Tiffany
Still, deep down I am a skinflint. I guess I'll have to take a more binary position than I had in the past. Companies, if you're going to drop the big dollars to put together a slick annual report, take a look at what Ameristar did with its 2003 report. Get it right.
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