SMALL SD Warren Making Points With Your Annual Report

7/28/2019 SMALL SD Warren Making Points With Your Annual Report

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o you ' re in cha rge of th e an n u al rep or t . . .

so , or if you are involved in th i s ye ar ly corpo ra te un de r ta k in g in an yS. D. W a rre n h a s p u b l ish e d t h i s "book for you . A n an nu a l rep or tu ld do m uc h m ore for a com pa ny th a n m ere ly fu lfill l ega l requi reen t s . I t shou ld p lay a key ro le in eve ry com pany ' s com m unica t ions"by g e t t in g a c ro s s p o i n t s t h a t h e l p o t h e r s u n d e r s t a n d w h a te com pa ny i s an d w he re i t i s go ing .

if yo u ar e the execut ive in ch arg e of pro duc ing th e an n ua l rep or t ,"book wil l "be of pra ct ic al use to you. The tex t describes th e "m akin g"a n an n u al rep or t - de term inin g th e ton e of th e rep or t , dec id ing onh at to fea ture , th e involvem ent of th e ch ief execut ive , ho w to m ai n t a i ne co nt ro l of cos t s .seco nd major sec t ion i s a ser ies of p ic to r ia l sp rea ds , sh ow ing h owp a n i e s m a k e p a r t i c u l a r p o i n t s w i t h t h e i r a n n u a l r e p o r t s . Weth i s sec t ion i s an o r ig ina l con t r ibu t ion an d th a t i t w i l l "be ofto a l l t ho se concern ed w i th the ann ua l rep or t - no t on lyves and w r i t e r s "but a l so d e s i g n e r s , p r i n t e r s , p h o t o g ra p h e r s a n db e r s of t h e a n n u a l r e p o r t t e a m .

M a k i n g of a n A n n u a l R e p o r t 2You Can M a k e with Y o u r A n n u a l R e p o r t 11h a v e a l e r t m a n a g e m e n t 1 2ar e d i f ferent t ha n y o u t h i n k 1 4ha ve a good f ina nc ia l s t o r y 16a r e a h i g h - t e c h n o l o g y c o m p a n y 1 8sp ea k to t he problems 2 0m a k e t e r r i f i c p r o d u c t s 2 2prov ide exc e l l en t s e rv ices 24e x p l a i n h o w t h i n g s w o r k 2 6h a v e a p r o m i s i n g f u t u r e 2 8ar e in key loc a t io ns 30m e e t t h e n e e d f o r n a t u r a l r e s o u r c e s 3 2c a r e a b o u t o u r c u s t o m e r s 3 4ar e soc ia l ly co nsc iou s 36h a v e t o p - n o t c h e m p l o y e e s 3 8a r r e n ' s I d e a E x c h a n g e 4 0


4/44

M aking of a n A n nu a l R epor t

m o d e r n a n n u a lth e on e han d , i t i s a

p lex fac t s and f ig , w h i c h w i l l l e a v et o r a f inanc ia l an a s c r a t c h i n g h i s h e a d

th e o th e r han d , i t i s

h a n d s o m e a n d ex l y p r o d u c e d , at h a t r e l i e s h e a v i l y" look" to m ak e ae e o r f o u r t i m e s a sy a n n u a l r e p o r t s a sh a v e s h a r e h o l d e r s .u s e a n n u a l r e p o r t s

u s e t h e m a ss . P e r s o n n e lr t m e n t s u s e t h e m a s' s A n n u a l R e p o r tD i s t i n c t P a r t s

h e b e s t w a y t ou n d e r s t a n d t o d a y ' sa n n u a l r e p o r t i s t ok o f i t a s t w o t o t a l l yp p e d i n t h e s a m e

n th e f ron t of th e re y o u h a v e t h e c o r p o a g e . I t i n c l u d e sand the rev iew ofs e c t i o nd b y

c i p a t i o n b y t h e c h i efhimself. T h e

In t h e back half of ther e p o r t a r e t h e f i n a n c i a ls t a t e m e n t s , f o o t n o te sa n d o t h e r r e q u i r e d m a t e -r i a l . T h i s s e c t i o n i s a l m o s ta l w a y s i n t h e h a n d s oft h e a c c o u n t a n t s , l a w y e r sa n d f i n a n c i a l e x e c u t i v e s .T h e t o n e i s c a u t i o u s .Three Key Object ives

A n a n n u a l r e p o r t -M\ i n a d d i t i o n toJ L J L meet ing a l l d i s c l o s u r e r e q u i r e m e n t s -s h o u l d d o t h e s e t h i n g s : C lea r ly iden t ify th e co mp a n y - i n t e r m s of p e o p le ,p r o d u c t s , p r o g r a m s a n dp r o s p e c t s . P r e s e n t t h e c o m p a n y ' ss t r e n g t h s , t h o s e t h a t w i l lenab le i t to g ro w an dp r o s p e r . Meet the specif ic comm u n i c a t i o n s n e e d s o f t h ec o r p o r a t i o n . O f t e n t h i sm e a n s i t s h o u l d h e l p t h ech ie f execu t ive ge t ac ros sw h a t ' s o n h i s m i n d .Th i s in fo rmat ion i s o fin te res t no t on ly to s tockh o l d e r s b u t a l s o t o e m p l o y ee s , c u s t o m e r s a n dsupp l ie r s . I t i s o f in te res tt o co l le g e r e c r u i t s w h oare a sk i ng , " I s th i s a goodc o m p a n y t o g o t o w o r kf o r ?" And t o b a n k e r s w h ow a n t t o k n o w , " Is t h i s ag o o d c o m p a n y t o l e n dm o n e y t o ? " In fac t, th em a t e r i a l i s of i n t e r e s t t oj u s t a b o u t a n y o n e w h ow a n t s t o k n o w m o r ea b o u t t h e c o m p a n y f o ra n y r e a s o n .The cha l l en ge , ofcou rse , i s to rea l ly comm un ica te , to e l i c it a genu i n e r e s p o n s e fr o m y o u rreader . So tha t the co l l eges t u d e n t , f or e x a m p l e ,conc lud es : "Yes, th i s i s ag o o d c o m p a n y t o g o t owork for ."

Use Gra ph ics Well toM a k e Y o u r P o i n t sA s a n n u a l r e p o r t s \ b e c o m e i n c r e a s i n g -J b J L ly f il led wi t h com p lex da ta , the job of comm u n i c a t i n g f a ll s t o t h eg r a p h i c s . T h i s i s how y o um a k e p o i n t s with y o u ra n n u a l r e p o r t t o d a y , n o tw i t h e n d l e s s w o r d s b u tw i t h p i c t u r e s - e x c i t i n gp h o t o s , l ar g e c h a r t s ,c o m p e l l i n g i l l u s t r a t i o n s .An d y o u s u p p o r t t h e

g r a p h i c s w i t h s m a l la m o u n t s o f e a s i l ys c a n n e d t e x t i n p i c t u r ec a p t i o n s , h e a d l i n e s , d e c k sa n d s u b h e a d s .The p ic to r ia l sec t ion o ft h i s b o o k , b e g i n n i n g o np a g e 11, p r e s e n t s e x am p l e s of h o w c o m p a n i e sm a k e p o i n t s w i t h t h e i ra n n u a l r e p o r t s .T h e A n n u a l R e p o r tHas Cred ib i l i tyTh e a n n u a l r e p o r t i ss e n t t o m a n y a u d i e n c e s b e c a u s e i thas credibi l i ty . I t i ss i g n e d b y t h e p r e s i d e n to f th e compa ny , sc ru t i n i z e d b y t h e l a w y e r s ,aud i ted by th e acco unt a n t s a n d f il ed w i t h t h es t o c k e x c h a n g e a n d t h eS e c u r i t i e s a n d E x c h a n g eC o m m i s s i o n .S u r v e y s a t t e s t t o t h ei m p o r t a n c e of t h e a n n u a lr e p o r t . A s h a r e h o l d e rr e a d e r s h i p s u r v e y b y t h eGeo rgeson Co ., an in v e s t o r r e l a t i o n s fi r m , r e v e a l e d t h a t 8 5 % of s h a r e h o l d e r s s p e n d s o m e t i m eo n t h e a n n u a l r e p o r t st h e y r e c e iv e - a l t h o u g hm a n y of t h e m h a v e c o m p l a i n t s a b o u t t h e " c on f u s i n g " w a y a n n u a l r e p o r t s a r e w r i t t e n .

A n n u a l r e p o r t s a r ee v e n m o r e i m p o r t a n t t of i n a n c i a l a n a l y s t s . T h e

O p i n i o n R e s e a r c h C o r pr a t i o n fo u n d t h a t 9 3 % ot h e f i n a n c i a l a n a l y s t ss u r v e y e d c o n s i d e r t h ea n n u a l r e p o r t " t h e m o su s ef u l w r i t t e n c o m m u nc a t i o n " a c o m p a n y p r o duces . I n fa c t, a n a l y s t sf av o r t h e s h a r e h o l d e ra n n u a l r e p o r t o v e r t h em o r e d e t a i le d 10-K a n na l r epor t . The 10-K, w h ic o n s i s t s o f f in a n c i a lf a c ts a n d f ig u r e s , m u s tbe fi led wi th t he SEC 90days af ter the c lose of thf iscal year .O n e r e a s o n t h e s t o c k h o l d e r a n n u a l r e p o r t i sfavored i s beca use i t s t ip e r m i t s " f r e e " e x p r e s s i o n . Wh i l e t h e l a w y e r sa n d a c c o u n t a n t s a l m o sa l w a y s w r i t e t h e 10-Ksa n d p r o x y s t a t e m e n t s ,c o r p o r a t e e x e c u t i v e sw r i t e t h e i r o w n m e s s a g e s f o r a n n u a l r e p o r tT h e y i n t e r p r e t i n f o r m at i o n , p u t t h i n g s i n p e r spec t ive , vo ice op in io nsa b o u t t h e f u t u r e a n d ,g e n e r a l l y , s p e a k t h e i rm i n d s .I n r e c e n t y e a r s , c h i e fe x e c u t i v e s h a v e b e g u n ts p e a k o u t a b o u t c o n c e rb e y o n d t h e i r o w n c o r p or a t e b o u n d a r i e s . T h e1975 Genera l E lec t r i c rp o r t h a d s h o r t e s s a y s ov a r i o u s a s p e c t s o f t h eb u s i n e s s e n v i r o n m e n t :cap i ta l incen t ives , gove r n m e n t g r o w t h , e ne r gd e p e n d e n c e a n d A m e r ica' s ne w ro le a s a " t radn a t i o n ! ' K o p p e r s d i s cus sed the ro le o f "Prof iWi t h H o n o r, " a n d U n i o nCarbide - in a specia l set i o n o n "Wh e r e U n i o nC a r b i d e S t a n d s " - c o v e r e d s u b j e c ts r a n g i n gf r o m e q u a l e m p l o y m e n tp r a c t i c e s t o t h e e n v i r o nm e n t .


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Ten Year Growth

al report coverbe a poster, g ettingacros s quickly. Fort point to make is

1975 coverard curve on a

ths ofcolor tied to legends

for a

Obviously , then, corpor a t e e x e c u t i v e s t a k e thea n n u a l r e p o r t s e r i o u s l y .Surveys ind ica te ch ie fe x e c u t i v e s s p e n d a n y w h e r e from 2 to 80 w orki n g h o u r s on t h e a n n u a lrepor t p ro jec t . Theyusua l ly ge t invo lved wi ththe major g raph ic dec i s io ns a s we l l a s th e l e t t e r- th a t i s , th e cover de sign, choice of i l lust rat i o n s o r p h o t o s a n d s e l ec t io n of paper .I n v e s t o r s A r e t h e M o s tI m p o r t a n t A u d i e n c eW h i l e t h e a n n u a lr e p o r t g o e s t om a n y p e o p l e f orm a n y r e a s o n s , i t s s i n g l em o s t i m p o r t a n t m i s s i o ni s t o in f o r m s t o c k h o l d e r sa n d p o t e n t i a l i n v e s t o r sa b o u t t h e c o m p a n y . A n d ,s i n c e i n v e s t o r s a r e f a rm o r e i n t e r e s t e d i n t h ef u t u r e t h a n i n t h e p a s t ,m a n y c o m p a n i e s i n c l u dei n f o r m a t i o n t h a t w i l lh e l p i n v e s t o r s p r e d i c tt h e c o m p a n y ' s f u t u r ed i r e c t i o n .

S o m e t i m e s t h i s i n fo rm a t i o n i s a straightf o r w a r d s t a t e m e n t o f t h ee x p e c t a t i o n o f i n c r e a s e de a r n i n g s . T r a n s c o n t ine n t a l O il sa id on i t s1 9 7 5 a n n u a l r e p o r t c ov e r : "Our f inanc ia l pe r f o r m a n c e d u r i n g 1 9 7 6sho u ld be even be t t e r . "M o r e of te n , c o m p a n i e sa r e t a k i n g m o r e s e a r c h ing looks in to th e fu tu re .Un i ted Techno log ies Corp o r a t i o n , f o r e x a m p l e ,c a r r i e d it s b u s i n e s s v i e win to the yea r 2000 , ou t l in in g in a two-pag e p ic -t o g r a p h t h e v a r i o u s r e s e a r c h a n d d e v e l op m e n tp r o j e c t s t h e c o m p a n y ' ss c i e n t i s t s a n d e n g i n e e r sa r e w o r k i n g o n .

H o w t o D e t e r m i n e Y o u rC o r p o r a t e S t r e n g t h sM o s t c o m m o n l y ,c o m p a n i e s d i s c u s s t h e f u t u r ei n t e r m s o f s t r e n g t h s . T oi d en t if y y o u r c o m p a n y ' ss t r e n g t h s , a s k yourself:"What are the four or f ivet h i n g s m y c o m p a n y h a sgo ing for i t se lf th a t wi l lenab le i t to com pete an dg r o w i n t h e f u t u r e ?" O n ey e a r w h e n S t. J o e M i n e r a l s a s k e d t h i s q u e s t i o ni n p r e p a r i n g f o r i t s an n u a l r e p o r t , it c a m e u pw i t h : We h a v e m i n e r a l r e s e r v e s i n t h e g r o u n d f o r30 to 4 0 y e a r s . We hav e rec en t ly d ive rs i f ied into oi l and gas. We ha ve eff ic ient m in esa n d s m e l t e r s . We ha ve ex ce l l en t oper a t i n g m a n a g e m e n t .T h e c o m p a n y t h e nw e n t o n t o g r a p h i c a l l yp r e s e n t t h e s e p o i n t swi t h : a cover pho to o f ano i l r ig a t sea ; c ha r t ss h o w i n g s a l e s a n d p r o f i t sb r o k e n o u t b y p r o d u c tl ine ; t a l k i n g h e a d l i n e se m p h a s i z i n g o r e , o il a n dg a s r e s e r v e s ; a n d a s e r i e sof l a rge ph o to s o f min esa n d p r o c e s s i n g p l a n t s ,w i t h o p e ra t i n g m a n a g e r si n t h e f o r e g r o u n d s .S o m e t i m e s i t' s i m p o r t a n t t o a d d r e s s a n e g a t i v ep o i n t o r a m i s c o n c e p t ion . For yea r s Scov i llw r e s t l e d w i t h t h e p r o b lem t h a t m a n y i n v e s t o r st h o u g h t of t h e c o m p a n ya s a b r a s s m i l l , e v e nth ou gh i t ha d d ive r s if i edw i d el y i n t o h o u s e w a r e sa n d c o n s u m e r p r o d u c t s .F i n al ly , t h e c o m p a n y ' sd e s i g n e r h i t u p o n a n i n nova t ive so lu t ion . Thec e n t e r s p r e a d w a s d e

s ign ed as a pop-up o f th et y p e fo u n d i n c h i l d r e n ' sb o o k s . When t h e r e a d e ro p e n e d t h e r e p o r t , u pp o p p e d a c a r d b o a r dhouse f i l l ed wi th house w a r e s , t o d e m o n s t r a t eonce and fo r a l l tha tScov il l i s a lo t more th a na b r a s s m i l l .H igh l igh t Your Comp a n y ' s I n d i v i d u a l i t y

Aproper goa l fo ra n y a n n u a l r e p o r tis to con vey a lo okof ind iv idua l i ty fo r th ec o m p a n y i t r e p r e s e n t s .S t u d e n t s a n d f o r e i g n v is i t o r s w h o h a v e s t u d i e dA m e r i c a n c o r p o r a t i o n sf i r s t h a n d r e m a r k h o wdi f fe ren t one company i sf rom ano the r . The gene ra l pub l ic , on t h e o t h e rh a n d , t e n d s t o l u m p b u s i n e s s e s t o g e t h e r . U n f o r t u n a t el y , m a n y a n n u a l re p o r t s , b e c a u s e o f t h e i r

look-al ike qual i ty , helpp e r p e t u a t e t h e s t e r e o t y p e t h a t a l l b u s i n e s s i st h e s a m e .Most ch ie f execu t ives ,w h e n a sk e d , e x p r e s ss t r o n g v i e w s on w h a tt h e y w a n t f r o m t h e i r a n n u a l r e p o r t . A 1 9 7 5 Corp o r a t e CommunicationsR e p o r t s u r v e y a n s w e r e db y 217 c o m p a n y h e a d sr e v e a l e d t h a t 7 5 % o f

t h e m w a n t e d t o p u ta c r o s s o n e o r m o r e o f t h efo l lowing f ive po in t s .They wa nt to g ive thei m p r e s s i o n t h a t t h e i rc o m p a n y i s: G r o w i n g Sound a n d s t a b l e Progress ive Wel l -managed Prof i t ab le .Or, as one chief execut ive pu t i t : " I w an t us tocome ac ross a s a goodcomp any , a good p lace towo rk, a good stock to buy.


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A n n u a l R e p o r t s A r eC h a n g i n g

In r e c e n t y e a r s , a n n u a l r e p o r t s h a v ec h a n g e d d r a s t i c a l l y .The decade of th e 196 0sw a s a m a g i c a l p e r i o d f o rs t o c k h o l d e r s , g r o w t hc o m p a n i e s a n d a n n u a lr e p o r t s - w h i c h o f te nta lked " fu tu res" and fo r got about fac t s . No mat t e r t h a t c u r r e n t "businesswa sn ' t so good : I f you ha da g rea t con cep t , an d ifyou cou ld p resen t i t conv i n c i n g l y in y o u r a n n u a lr e p o r t , w h y , y o u r s t o c kj u s t m i g h t s o a r .A c c o u n t i n g r u l e s w e r ere la t ive ly l ax in thosedays an d foo tno tes d idn ' ta m o u n t t o m u c h . M o r eo v e r, d e s i g n e r s h a d t h eh a b i t , w i t h t h e t a c i t a p p r o v a l of t h e c o m p a n i e s ,o f r edu c ing th e type s i zeof th e foo tno tes so the yc o u l d s a v e s p a c e o r r u nm o r e p h o t o g r a p h s .T h e n i n 1969 t h i s u n rea l - if o f t en p lea sa n t -wor ld co l l apsed . Thes t o c k m a r k e t p l u n g e d .A n d t h e c o m p a n i e s w i t ht h e m o s t f l a m b o y a n t a n n u a l r e p o r t s s e e m e d t ob e h i t t h e h a r d e s t .Out o f the wre cka geem erg ed a "whole ne w att i t u d e : C o m p a n i e s w e r eg u n s h y ; i n v e s t o r s w e r ed i s i l lus ioned ; account a n t s w e r e c o n c e r ne d ;a n d t h e S EC w a s a r o u s e d .S ince 1969 a c o n t i n u a ls t r e a m of d i s c l o s u r e r e q u i r e m e n t s h a s c a s c a d e dd o w n o n c o m p a n i e s , i n t r o d u c e d e i t h e r b y t h eSEC or by th e acc ou n t in gp r o f e s s i o n .The typical s ize of ana n n u a l r e p o r t h a ss w o l l e n f r o m 2 4 p a g e s t o38 p a g e s , a n d m a n y r e

p o r t s a r e m u c h larger.O c c i d e nt a l P e t r o l e u m ' s1974 a n n u a l report w a s9 6 p a g e s p l u s c o v e r a n dw e i g h e d n e a r l y a p o u n d .When t h e SEC J u m p e d I nMo s t r e p o r t sadded pag es a s ad i rec t r e su l t ofne w SEC d i sc lo sure ru le sth a t becam e e ffec tivew i t h 1974's crop . P rev i o u s l y t h e a g e n c y h a d l e tt h e s t o c k e x c h a n g e s s e ts t a n d a r d s f o r s t o c k h o l d e r a n n u a l r e p o r t s .The SEC ru le s to uc hed9,000 c o m p a n i e s a n d r e q u i r e d , a m o n g o t h e rt h i n g s , a m a n a g e m e n ta n a l y s i s . T h i s s e c t i o n oft e x t , w h i c h c o n t i n u e s t ocause confus ion , i s suppos ed to d i scuss a l l "mat e r i a l f i n a n c ia l c h a n g e s ,favorab le o r unfavorab le"th a t ha ve a ffected th e in c o m e s t a t e m e n t fo r t h el a s t fiv e y e a r s . F i n a n c i a le x e c u t i v e s a n d a c c o u n tan t s have t ended to fu l f i l l t h e r e q u i r e m e n t w i t ha h i g h l y t e c h n i c a l p r e s e n t a t i o n , w h i c h m a k e sfor du ll r ead ing an d o f tenc o n f u s e s r e a d e r s .Meanwhi le , SECs p o k e s m e n h a v e s a i dt h a t w h a t t h e y r e a l lyw an t i s a s im ple , easy- to -u n d e r s t a n d c o m m e n t a r y .To q u o t e t h e c o m m i s s i o n ' s c h i e f a c c o u n t a n t :"We w an t you to t e l l thes h a r e h o l d e r , t h e a v e r a g es h a r e h o l d e r , i n w o r d s h eu n d e r s t a n d s w h a t ism o s t i m p o r t a n t i n u n d e r s t a n d i n g t h e p r o g r e s s i o nof t h e b u s i n e s s f ro m o n eye ar to th e nex t . "

Re al i t ies of Today 'sA n n u a l R e p o r tsO ne o f th e rea l i t i e sof t o d a y ' s a n n u a lr e p o r t s i s t h a tm o s t of t h e n e w m a t e r i a l ,desp i t e th e SEC's goodi n t e n t i o n s , is p r e s e n t e di n a w a y t h a t i s b e y o n dt h e c o m p r e h e n s i o n o ft h e u n s o p h i s t i c a t e dshareholder T h i s m a t e r ia l i s d i f f icul t to grasp,f i r s t , beca use i t i s m os t lyw r i t t e n b y a c c o u n t a n t sa n d l a w y e r s , a n d , s e c o n d ,because i t i s in facth i g h l y c o m p l i c a t e d . S u c hm a t e r i a l t e n d s t o s c a r ereaders o f f , mak ing p ic t u r e s , c h a r t s a n d o t h e rg r a p h i c p r e s e n t a t i o n sm o r e i m p o r t a n t t h a never.A s e c o n d r e a l i t y i s t h a ti t 's g e t t i n g h a r d e r a n dh a r d e r fo r t h e a c c o u n t a n t s t o p u t t h e n u m b e r sa n d n o t e s t o g e t h e r b e c a u s e of t h e i n c r e a s i n g l yc o m p l e x r e g u l a t i o n s .A n d t h e y a r e d e l i v e r i n gl a t e r a n d later. T h i s , i nt u r n , is p l a c i n g e x t r a o r d i n a r y p r e s s u r e o n de s i g n e r s , t y p e s e t t e r s a n dp r i n t e r s .T h i s l e a d s t o t h e t h i r dr e a l i t y - a n n u a l r e p o r t sc o s t m o r e t h a n t h e y u s e dto . In pa r t , th i s i s be c a u s e t h e r e a r e m o r ep a g e s , bu t mo s t ly i t i s be c a u s e t h e r e i s m o r e h a s t eand m u c h m o r e w a s t e , i nt e r m s o f l a s t - m i n u t ec h a n g e s , a d d i t i o n a l t y p e s e t t i n g a n d c r a s h p r i n t i n g s c h e d u l e s .A f ina l r ea l i ty i s tha ts o m e c o r p o r a t i o n s a r ef o c u s i n g m o r e a n d m o r eo n s im p l i f y i n g t h e w h o l ep u b l i c a t io n p r o c e s s ,s o m e t i m e s a t t h e e x p e n s e of i n n o v a t i v eg r a p h i c d e s i g n . I t i s n ' tt h a t c o m p a n i e s d o n 't

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K O P P E R S

What 1975 Brought:. . . . The f i f th con sec utive year ofimproved earn ings....the f irst -l-biilion sales year....a r ise in return on shareholders

What 1975 Demonstrated:. . .. The abil i ty to p rodu cecons is ten t earn ings g rowthi n a s l o w e d e c o n o m y. .. . the wor th o f p roduc t d ive rs i f i cath rough coheren t expans ion asa bu f fe r aga ins t eco nomic vaganl'

Other companies tell thgrow th story in the simplest, most straightforw ay - wi th words .1. Scovill did it in han ding, covering 1973's fincial highlig hts.2 . Koppers summarizeresul ts that 1975 brouand told wh at th e year onstra ted about the company's s t rengths.3 . Harsco in thre e sentestablished an identitytold its 1975 res ults sto


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j u s t t h a t t h e y a r e"by t h e u r g e n tm s o f g e t t i n g t h eI m p o r t a n t F i r s t- P l a n n i n g

o develop an ann u a l r e p o r t p l a nyou need inp u t . Rel a s t y e a r ' s a n n u a la n d p r i n t e r t ow h a t w e n ta n d w h a t w e n tTalk to peop led e y o u r c o m p a n ya p o s i t i o n t oe a use fu l pe r s pec o n w h a t s h o u l d b e i nr t , s u c h a s s e c ua n a l y s t s a n dTalk t o y o u rt o p m a n a g e m e n t ,

w h o c a n tell y o um a n y p a g e s y o u ' l l

i m p o r t a n t , t a l k

su re to a sk : "Aree a n y m i s c o n c e p t t h e c o m p a n ya n n u a l r e p o r th e l p se t s t r a i g h t ? "a t l eas t one m is t i o n t h a t r e a l l y

. I t w i l l h e l pfocus th e report ift h r e e m o s t i m t h i s y e a r ' s

w y o u c a n p r e p a r el a n . T h e p u r p o s e ofn i s to spe l l ou tand to ind ica teu s t of t h e report -h w o r d s a n d p i cp l a n s h o u l d

p a g e b r e a k d o w n o f t h ee n t i r e r e p o r t .If th e objective, fo re x a m p l e , i s t o d e m o n s t r a t e y o u r c o m p a n y ' sm a r k e t i n g s a vv y , t h e r e s p o n s e m i g h t b e t o i n clude a ser ies of photog r a p h s t h a t show y o u rkey sa le s peop le posed inf ron t o f ma jor p la n t s an ds y s t e m s y o u r c o m p a n yhas recen t ly so ld . Th i s i sw h a t Combustion Engi n e e r i n g d i d i n a r e c e n tr e p o r t .If the objective is top r e s e n t y o u r c o m p a n y ' si m p o r t a n t b u t g e n e r a l l yu n r e c o g n i z e d e x p a n s i o ni n t o t h e w i n e b u s i n e s s ,t h e n t h e re s p o n s e m i g h tbe a spec ia l f ea tu re a r t i cl e o n w i n e , i l l u s t r a t e dw i t h l a v i s h p h o t o s a n dw r i t t e n b y a n o t e d a u t h o r i t y . T h i s i s w h a t T h eS e a g r a m C o m p a n y L t d .did.If the objective is tos i g n a l a b u s i n e s s t u r n a r o u n d , t h e r e s p o n s em i g h t b e t o p u t t h e w o r d s"Prof i le of a ChangingC o m p a n y " on t h e c o v e ran d inc lude a spec ia l d ia l o g ue i n w h i c h t h e n e wp r e s i d e n t d i s c u s s e s h o wt h e c o m p a n y h a sc h a n g e d . U .S . I n d u s t r i e stook t h i s a p p r o a c h .Even i f yo u expec t toh a v e a s i m p l e a n n u a l r e

por t w i th no spec ia l f ea t u r e s , y o u s h o u l d s t i l lc o n s t r u c t a p l a n and p u ti t in to wr i t i ng . W i th ann u a l r e p o r t s b e c o m i n gi n c r e a s i n g l y c o m p l e x , i ti s i m p o r t a n t t h a t y o ui t e m i z e w h a t g o e s o ne a c h p a g e . E v e r y y e a rs o m e c o m p a n y g e ts d o w nto th e wi re be fore i t sexecu t ives rea l i ze to

P l a n A n n u a l a n d Q u a r t e r l y R e p o r t s T o g e t h e rJ u s t a s p l a n n i n g i s t h ei m p o r t a n t f i r s t s t e p i ny o u r a n n u a l r e p o r t , s o i ti s n e c e s s a r y t o y o u r e n t i r e c o r p o r a t e c o m m u n i c a t i o n s p r o g r a m . Q u a r t e r l y r e p o r t s a r e g a i n i n gr a p i d l y i n i m p o r t a n c e t ot h a t p r o g r a m . M a k e y o u rqua r te r l i e s - wh ich o ffergreat potent ia l for effect i v e c o m m u n i c a t i o n t o avar ie ty of aud ie nces -re in fo rce and ampl i fyk e y p o i n t s m a d e in y o u ra n n u a l r e p o r t .T h e q u a r t e r l y r e p o r twas once desc r ibed as" the l a s t g rea t f ron t ie r "of c o r p o r a t e d i s c l o s u r e .In 1975 , th e SEC moveda c r o s s t h a t f r o n t ie r , i s s u i n g r u l e s t h a t s u b s t a n t i a l l y e x p a n d e d m a t e r i a lc o r p o r a t i o n s m u s t d i s c l o se e a c h q u a r t e r .T h e n e w r e g u l a t i o n sc a l le d f o r e x p a n d i n g t h e10-Q fo rm f i led w i th thego ver nm en t . The 10-Qneed no t be sen t to s tockho lde rs . But SEC off ic ia lsma de i t c l ea r they expec t e d c o r p o r a t i o n s t o s e n dm o r e i n f o r m a t i o n a b o u tt h e i r q u a r t e r l y r e s u l t s t ot h e i r s t o c k h o l d e r s .And , in fac t , m an y comp a n i e s h a d a l r e a d y b e g u ne x p a n d i n g t h e s t o c k h o l d e r q u a r t e r l y w e l lbe fore the SEC en te re dthe p ic tu re . Genera l E lec t r i c l a u n c h e d a p i o n e e r ing ef fo rt in 1969 w he nit , in effect, divided itsa n n u a l r e p o r t i n t o f o u rq u a r t e r l y m a g a z i n e s .Other companies fo l l o w e d G E i n t o q u a r t e r l ym a g a z i n e s . B u t t h e d o m i n a n t t r e n d i s t o a n e w s le t t e r fo rmat . A newsle t t e r i s inexpens ive , doesno t r equ i re a l a rge s t a ffa n d can b e p r o d u c e dquickly.

Severa l f ac to r s a reb e h i n d t h i s e x p a n s i o n .T h e c o m p a n i e s w a n t : To m ak e i t eas ier forWa ll S t r e e t a n a l y s t s .S i n ce t h e s h a k e o u t o nWal l S t ree t in the ea r ly1 9 7 0 s , t h e r e h a v e b e e nf e w e r a n a l y s t s c o v e r i n gf e w e r c o m p a n i e s . S os o m e c o m p a n i e s d e c i d e dt o t a k e t h e i n i t i a t i v e i np r o v i d i n g t i m e l y a n dr e l e v a n t i n f o r m a t i o n . To app ea l to ind iv idu a ls t o c k h o l d e r s . S p e c i a l" s h a r e h o l d e r i n f o r m a t i o n " s e c t i o n s g i ve s u c hi n f o r m a t i o n a s t h e r e c e ns toc k p r ice , d iv idend y ie la n d p a y m e n t d a t e s , p r i c ee a r n i n g s r a t i o , e t c .

C o m p a n i e s a l s o u s es h a r e h o l d e r q u a r t e r l yr e p o r t s t o p r o m o t e d i vi d e n d r e i n v e s t m e n t p l a n sD e t a il e d q u a r t e r l i e st e n d t o e a s e a n x i e t y d u r i n g p e r i o d s o f b u s i n e s su n c e r t a i n t y . T h i s i s o n er e a s o n m o r e c o m p a n i e ss e n d t h e i r q u a r t e r l i e s t oemployees a s we l l a ss t o c k h o l d e r s .To do a p r op er job , ofc o u r s e , t h e q u a r t e r l y r e p o r t m u s t h a v e f r e s hi n f o r m a t i o n and be publ i she d qu ickly . A 1975G e o r g e s o n s u r v e y f o u n dt h a t i n d i v i d u a l i n v e s t o r sw e r e c o n c e r n e d a b o u tt ime l iness above a l l ;m a n y f el t t h e y w e r e n ' tg e t t i n g i n f o r m a t i o n a sf a s t a s i n s t i t u t i o n a li n v e s t o r s .T h e i n c r e a s e d e m p h a s i s o n q u a r t e r l y r e p o r t si s no t l ike ly to d im in i s ht h e i m p o r t a n c e o f t h ea n n u a l r e p o r t . T h e t w oserve d if fe ring func t io ns ,t h o u g h t h e y go t o t h es a m e a u d i e n c es .


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t h e i r c h a g r i n t h a t t h e ya r e a p a g e s h o r t .W h e n t h e p l a n i s w r i t t en , sho w i t to th e ch ie fexecu t ive f i r s t . After h eh a s a p p r o v e d i t , s h o w i tt o o t h e r m e m b e r s o f t o pm a n a g e m e n t . K n o w l e d g et h a t t h e t o p m a n h a s g iv e n h i s a p p r o v a l u s u a l l yd e t e r s o t h e r e x e c u t i v e sf r o m a d d i n g t h e i r o w n ,of ten conf l i c t ing , ideas .I f yo u don ' t ob ta in ea r lya p p r o v a l f r o m t h e c h i e fe x e c u t iv e , y o u r u n t h er i s k of s u r p r i s i n g h i mla te in t h e g a m e . T h i s c a nlead to expens ive , l a s t -m i n u t e r e v i s i o n s .Give Your De s igne rClear GoalsW i t h t h e p l a n a p p r o v e d , y o u a r eno w in a pos i t ion to give y o u r d e s i g n e rc lea r goa l s . Many comp a n i e s r e l y o n t h e i rg r a p h i c d e s i g n e r n o ton ly fo r c rea t iv e he lp b u ta l s o f or h a n d l i n g t h eday-to-day details of proj e ct m a n a g e m e n t . T h e s ei n c l u d e d e a l i n g w i t h t h eo t h e r s u p p l i e r s , i n c l u d ing the p r in te r , typogr a p h e r a n d p h o t o g r ap h e r s . D e s i g n e r s u s u a l l yp r e p a r e t h e m e c h a n i c a l s ,o r c a m e r a - r e a d y a r t ,w h i c h a l s o g o u n d e r t h en a m e o f k e y l i n e s . T h em e c h a n i c a l s a r e f u r n i s h e d t o t h e p r i n t e r ,w h o p h o t o g r a p h s t h e m .F r o m t h e fi lm , t h ep r i n t e r f i r s t m a k e s ab l u e p r i n t ( a l s o c a ll e d ab l u e l i n e , b r o w n l i n e , sil-v e r p r i n t , s a l t p r i n t o rV an Dyke ) . When t h eb l u e p r i n t i s a p p r o v e d , h ep r e p a r e s t h e p r i n t i n gp la te s . The des igner usua l ly spec i fi e s the pa pe ra n d p r o v i d e s s a m p l e s s o

t h e c o m p a n y c a n m a k e af inal decis ion.I n c r e a t i n g a n a n n u a lr e p o r t , a d e s i g n e r h a ss e v e r a l e l e m e n t s t o w o r kw i t h : f o r m a t , t y p e ,paper , co lo r and a r t ,w h i c h i n c lu d e s p h o t o s ,i l l u s t r a t i o n s , c h a r t s a n dm a p s .One of the f i r s t th in gsa des igner usua l ly does i se s t a b l i s h t h e f o r m a t ,w h i c h m i g h t b e a s s i m p l eas a l a rge p ic tu re one a c h r i g h t - h a n d p a g eand t w o c o l u m n s o f t y p eon each l e f t-hand p age .Or it mig h t be a s comp l i ca ted a s a 12-unit g r i dtha t d iv ides each pagein to twe lve 2-1/2-square-i n c h m o d u l e s . A n n u a l r e p o r t s w i t h c o n s i s t e n t f or m a t s tend to look o rde r lya n d m o d e r n . I n s o m ec a s e s , a n i m a g i n a t i v eform at c an se t up a ce r t a i n v i s u a l t e n s i o n be t w e e n t h e w o r d s a n d p i ct u r e s t h a t s p a r k s e x c i t e m e n t . On t h e o t h e r h a n d ,a des igner may de l ib e r a t e l y b r e a k t h e f o r m a tto ach ieve a m a g a z i n e l ike cha ng e o f pace .T h e I m p o r t a n c e of T yp eTy p e is a n e x t r e m e l yi m p o r t a n t e l e m e n ti n a n a n n u a l r e p o r t , a l t h o u g h m a n yr e a d e r s a r e n o t e v e naw are of i t s sub t le in f luence. B ut if typ e isbadly used, the effect maybe to leave th e rep or tl o o k in g s o m e h o w c r u d eor old-fashioned. I f typei s use d we l l , it w i l l b r i nga h a r m o n y a n d f i n is h t ot h e r e p o r t .S ize of type in an nu a lr e p o r t s is a l s o i m p o r t a n t ,because i t i s a ma t te rt h a t c o n c e r n s t h e S EC .

T h r e e i t e m s m u s t b e c on s i d e r e d i n s e t t i n g t y p esize:1) F o o t n o t e s m u s t b e s e ti n m o d e r n ty p e a s l a r g eand legible as 10 point .In p rac t i ce , 9 po in t He l v e t i c a a n d o t h e r l a r g efaces have met the SECr e q u i r e m e n t s .2 ) Tab les mu s t be se t int y p e n o s m a l l e r t h a n 8p o i n t .3 ) A q u e s t i o n t h a t h a sc r e a t e d s o m e c o n f u s i o nis th e s ize of tab les inf o o t n o t e s . I n p r a c t i c et h e s e t a b l e s h a v e a l s obee n se t in 8 po in t typ e .Another fac to r to de te rmine i s the s i ze o f thea n n u a l r e p o r t . M o s t r e ports are 8-1/2 x 11i n c h e s . A n d t h e r e a r es e v e r a l g o od r e a s o n s f ord e s i g n i n g y o u r b o o kwi th in a ha l f inch o fthese d imens ions . I f i t i sm u c h l a r g e r i t c a n n o t b eeas i ly fi led by peo ples u c h a s a n a l y s t s . A s ec ond advan tage i s th a t i f ac r i s i s a r i s e s a n d a n e wsup ply of pa pe r i s neededimmedia te ly , paper i sa l m o s t a l w a y s a v a i l a b l ein t h i s s i z e.M a k e Y o u r F o r m a tFlexibleThese days i t i s ess e n t i a l t h a t y o u d es i g n a n a n n u a lrep or t w i th f l ex ib il ity .F i r s t , n e w a c c o u n t i n gf o o t n o te s , of u n c e r t a i nl e n g t h s , a r e b e i n g a d d e d ,f requen t ly l a te in th e ann u a l r e p o r t p r o c e s s .Second ly, th e r e i s mu chm o r e l a s t - m i n u t e n e g o t ia t i n g b e t w e e n c o m p a n ya c c o u n t a n t s a n d t h e SECover "what m u st be included. One major comp a n y ' s r e p o r t w a ss t o p p e d o n p r e s s t h r e et i m e s i n 1 9 7 5 .

Thi rd ly , beca use og e n e r a l l y n e r v o u s so f economic cond i t ioc o m p a n y m i g h t d ecm a k e a major c h a n gthe l a s t minu te . As dt o p N e w Y o r k i n t e r nt i o n a l b a n k w h e n i t ou t a cen t ra l f ea tu res e c t i o n t h a t n o l o n gs e e m e d a p p r o p r i a t eT w o t e c h n i q u e s caof g re a t he lp in bu i ldin f lexibi l ity . Fir s t , ar a n g e t o r u n t e x t c oth e f ron t o f th e booktha t i t ca r r i e s over fs p r e a d t o s p r e a d o r t o p a g e w i t h i n a s e cI n t h i s w a y y o u a r e nlocked in to wr i t in g tspec i f i c pages and ap a r a g r a p h s a t t h e l am inu te wi l l be eas ieSecond, a l low for" s w i n g " p a g e s - p a g ewhich no type o r i l lut ion i s p lanned . For a m p l e , in y o u r o r i g ides ig n inc lude a t i t l efo r the f inanc ia l secTh en i f you ge t squeel a t e r y o u c a n e l i m i nthe t i t l e page and usspac e fo r exp and ed fn o t e s o r o t h e r m a t e rFor t h e s a m e r e a sm a n y d e s i g n e r s l e a vi n s i d e c o v e r s b lanki n c a s e t h e y n e e d m os p a c e a t t h e l a s t m i nHow to Selectt h e R i g h t P a p e rPa p e r s a r e s e l e cfo r two bas ic reson s : to func t ioa n i n t e g r a l p a r t o f t hdes ign o r to a l low fot h e h i g h e s t q u a l i t y op r i n t i n g .P a p e r s s e l e c te d a s i n t e g r a l p a r t o f t h e da r e c h o s e n f or t h e i n


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lue s th ey offer -, t ex tu r e , bu lk , a look. The se pap er s u sua r e u n c o a t e d t e x t, a n d t h e y c o m e i n

b l u e s , g r e e n s a n d. T h e s e p a p e r ssoft , nonre f lec t ive( t h i c k n e s s ) t h a nr s o f c o m p a

p a p e r s a l s o c o m ewide va r ie ty o f rou gho t h te x t u r e s . B utr t s c o n t a i n o n l y t e x tuse o f i t st o r e p r o d u c e

used t o i n s u r et q u a l i t y o fl y m a x i m u m f id e li tyt h e r e p r o f p h o t o g r a p h s ,r s . T h e y a r e w h i t em and h a v e g l o s s

e d p a p e r s p r o v i d en s t h e c o lo r e dt i n g i n k s d o n 't s o a k

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if you w an t readab i l i ty ,t e x t u r e and bu lk to goa l o n g w i t h g o o d p i c t u r er e p r o d u c t i o n .Some a n n u a l r e p o r t sc o n t a i n b o t h a c o a t e ds to ck in th e f ron t fo rp h o t o g r a p h i c r e p r o d u c t io n and a t ex t s t ock fo rreada b i l i ty in th e f inanc ia l sec t ion .The we igh t o f a pa pe rh a s a n i m p o r t a n t e f f e c to n t h e fi n i s h ed a n n u a lr e p o r t . A h e a v i e r p a p e rg ives a rep or t a k ind o fhef t , or sol id feel ing, thatsub t ly p ro jec t s a f ee l ingof "class! ' A hea vy or mid-w e i g h t p a p e r a l s o p r e v e n t s " s h o w t h r o u g h "t h e a n n o y i n g e x p e r i e n c eof s e e i n g t h r o u g h a p a g et o t h e c h a r t s , p h o t o s a n de v e n w o r d s o n t h e o t h e rs ide .B u t w i t h h i g h e r p o s t a g e r a t e s , t h e r e a r e v a l i de c o n o m i c r e a s o n s t o u s es o m e w h a t l i g h t e r p a p e r s .A n d a s a n n u a l r e p o r t sa d d p a g e s , m a n y c o m p a n ies a re sh i f t ing to mid-w e i g h t p a p e r s i n o r d e r t ore ta in a sol id feel ing fort h e r e p o r t .I n d e e d , c o m p a n i e si n s t i n c t i v e l y a v o i d u s i n gp a p e r s s o l i g h t t h e ywo uld give a f l imsy feeling to a repo r t . "Whenyoug iv e s o m e o n e a n a n n u a lr e p o r t " e x p l a i n s o n e e x ecut ive , " i t ' s sor t of l ikes h a k i n g h a n d s . And y o uw an t to p ro jec t a f i rmh a n d s h a k e ! 'Before making a f ina lp a p e r c h o i c e , a l w a y s a s ky o u r d e s i g n e r f o r p a p e rd u m m i e s . Hold t h e v a r i ous cho ices in y o u r h a n d st o d e t e r m i n e w h i c h o n efeels r ight for you.

M o s t C o m p a n i e s C h o o s eColor Pho tosSh o u l d t h e p h o t o g r a p h s i n y o u ra n n u a l r e p o r t b e inco lo r o r in b lack-and-w h i t e ? B a s e d o n c u r r e n tp r a c t i c e , t h e a n s w e r i ss i m p l e . A l m o s t a l l m a j o rc o m p a n i e s u s e c o l o r p i ct u r e s i n t h e i r a n n u a l r ep o r t s , and t h e y u s e c o l o rc o n s i s t e n t l y , f r o m y e a rto yea r , in good t im es an db a d. C o r p o r a t e A n n u a lR e p o r t s , I n c . s u r v e y e d4 2 4 a n n u a l r e p o r t s i s s u e db y F o r t u n e 5 0 0 m e m b e r sin 1975.The r e s u l t s : 3 1 8 ,co lo r on ly ; 68 , b lack-and-w hi te on ly ; 7, co lo r an db l a c k - a n d - w h i t e ; 3 8 , n op h o t o g r a p h s .T h u s , c o l o r i n a n n u a lr e p o r t s t o d a y i s n e i t h e ra l u x u r y n o r a n e x c e s s ; iti s t h e n o r m .B u t f or a c o m p a n y w i t hs e r i o u s e a r n i n g s p r o b lem s and a b lea k fu tu re , ab l a c k - a n d - w h i t e r e p o r tm i g h t b e a n e c e s s a r ycho ice . For smal l comp a n i e s t h a t p r o d u c e r e l a t i v e ly f ew a n n u a l r e p o r t s ,i t i s a l s o a p p r o p r i a t e t op r i n t a b l a c k - a n d - w h i t ea n n u a l r e p o r t . E v e n s o ,m a n y s m a l l co m p a n i e schoose co lo r , becauset h e y u s e t h e i r r e p o r t s f ora v a r i e t y of p u r p o s e s a n dw a n t t h e e x t r a i m p a c t o fc o lo r . T h e a n n u a l r e p o r tmaybe the on ly corpor a t e c o m m u n i c a t i o n sd o c u m e n t a s m a l l c om p a n y p r o d u c e s .S u r v e y s c o n f i r m t h eva lu e o f co lo r. G ene ra lE lec t r i c found tha t s tockh o l d e r s a r e m u c h m o r el ike ly to read a l l th e w ayt h r o u g h a n a n n u a l r e p o r t w i t h c o l o r p h o t o s .I l l u s t r a t i o n s , m a p s a n dch ar t s a l l benef i t f romthe us e of color .

ManufacturersHanoverCorporationAnnualReport1975

3

More examples of thegrow th story, as told inchar t s .1. AMAX's 19 75 cover featured a three-dimensionalch art of capital expenditures superimposed on aU.S. map to il lustrate i ts"Capital Commitment:USA:'2 . Manufacturers Hanoverimplies growth in a graph icpat tern carr ied through theentire 1975 report.3. Telecor 1975's five-barcha rt on the cover was repeated inside the book incolor over black-and-whitephotographs.


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C h a r t s I n c r e a s ei n I m p o r t a n c eC h a r t s , g r a p h s a n dmaps have a l l assumed g rea t e r imp o r t a n c e a s a n n u a l r e p o r t s h a v e "become m o r ecomplex.The SEC, in fact,encourages c o m p a n i e s t oinc lude i n t he i r ann ua lr e p o r t s " tab les , schedu l e s , c h a r t s a n d g r a p h i ci l l u s t r a t i ons t o p r e sen tf i nanc i a l i n fo rma t ioni n a n u n d e r s t a n d a b l em a n n e r . "The ke y to effectivec h a r t s a n d g r a p h s i s t okeep t he m s imp le . Acha r t shou ld be used totel l only one story, tomake only one poin t . Andi t i s usu a l ly be t te r to h aveone l a rge ch a r t t ha tm a k e s a s t r o n g p o i n tt han t o i nc lude manys m a l l c h a r t s a n d s c a t t e rt he impac t .Normal ly a graphic des igner wi l l ins t inc t ive lyavoid complexity. Buts o m e t i m e s h e is p u s h e din to i t, by an eng inee rwh o dem ands more i nfo rm a t i o n in a d i a g r a m t h a nis nec es sa ry or by a finan c i a l execu t ive wh oins i s t s on combin ing twoor t h r e e s imp le c ha r t si n to one complex cha r t .Draw Up a BudgetO nce t he fo rma t andovera l l des ign p lana re e s t ab l i shed ,along with a page-by-pageb reak dow n o f t he l ayou t ,a p r e l i m i n a r y b u d g e tshou ld be d r aw n up . Fo rth i s p r e l imina ry budge t ,you mus t de t e rmine : Quantity Nu mb er of page s Type of pa pe r Bas ic typ ese t t ing cos t s

P h o t o g r a p h y a n d o t h e ri l l u s t r a t i o n s Black-and-whi te orco lo r p r in t i ng Mai l ing an d d is t r ibut i o n .Pap er i s one p lacew he re i t pay s to go f i r s tc l a s s . Relat ive to the ent i r e job, the cost differen t i a l is sma l l be tw eenus in g a t op -qua l it y pa pe rand one of lesser quali ty.How to Control CostsThe budget is only a nout l ine , however ,giving basic or est im a t e d c o s t s . The keys tokeeping c lose to the budget are careful advancep l a n n i n g a n d s c h e d u l i n g ,and ear ly dec is ions onany co r r ec t i ons o rchan ges . The re a r e t h r eema jo r s t age s wh e re cos t sm o u n t u n n e c e s s a r i l y : When chan ges a r e madein the text af ter i t hasbeen in i t ia l ly typese t . When chan ges a r e madeon the mec han i c a l s a f te rt hey have been pa s t edd o w n . Wh en changes a r e madeaf te r the job ha s b eensen t t o t he p r in t e r .Changes cos t mo re a teach succeeding s tage .Re touch ing a pho to t oe l imina t e a b l em i sh onthe cha i rman ' s f acemigh t cos t $50 when thepho to i s a g lossy p r in t ;t he sam e change cou ldcost $650 af te r the colors e p a r a t i o n s h a v e b e e nmade and a s mu ch a s$2,000 jus t beforep r i n t i n g .Changes i n t he t ex t ,ca l led author ' s a l te rat i ons o r AAs, can doubleor even t r ip le th e bas ictypese t t i ng cha rge . I nsome ca se s chang es a r eunavo idab l e , pa r t i cu l a r l yin f inancia l s . In most

ca se s t hey a r e t he r e su l tof inadeq uate c le aran ceof copy i n m anu sc r ip tform or the fai lure of execu t ive s t o co ncen t r a t eon f irst gal ley s of t y p e .Even more cos t l y a r echanges a t the pr in te r . I fa book mi s s e s i t s p r e s sdeadl ine , cos t s soar. T hemany s t eps r equ i r ed t oco r r ec t p r i n t i ng p l a t e sare pa id for a t premiumr a t e s ; moreover , the onlyt im e le ft to pr in t your re po r t m ay be on t he weekend a t ove r t ime r a t e s .M any of the se pro blem s can be pre ven ted ifth e execut ive in cha rge oft h e a n n u a l r e p o r t g e tss igned app ro va l s f romthe o ther execut ives involved in the project atkey s tage s - preferablyon th e f ir s t or s econdproofs .The P roduc t ion P roces sP oduc ing an annua l rep or t i s as comp lex a s pub l i sh inga ma gazin e . But few cor po ra t e execu t ive s havepub l i shed a magaz ine , soth i s depa r tu r e f rom theda i ly rou t i n e p r e sen t saddit ional diff icul t ies forthe pe r so n p laced i ncha rge of th e pro jec t .Tha t t he annua l r epo r t i sa s ens i t i ve co rpo ra t edocumen t t ha t mus t bep roduced und e r a r e s t r i c t ed t im e schedu le f ur th ercompl i ca t e s t h i s t a sk .The p roduc t ion p roces shas four s tages : P l an n ing - d i scus s ingthemes and objec t ives . A s s e m b l i n g - g a t h e r i n gi l l u s t r a ti o n s a n d w r i t t e nm a t e r i a l . Review and approval -m a n a g e m e n t p a s s e s o nthe p i c tu r e s and l ayou t .

P roduc t ion coun td- from release of f icial data to del iveryt h e p r i n t e d r e p o r t .Man y w e l l -o rganc o m p a n i e s s p e n d s eo r e igh t m on ths got h r o u g h t h e s e s t a g eMore typical ly, sixm on ths i s a l lo t t ed . whether the pace i s sure ly or c rash , theca l p rob l em i s t he s- keeping a l l involvpa r t i e s on sched u leinc ludes the des ignew ho sh oul d be in oncus s ion s of th e p ro jf rom the beg inn ingI t ' s one th in g to hschedu le , an d qui te o th er to ge t a l l th e pinvo lved i n t he an nrepor t to agree to mthe i r deadl ines . A pl em in l a rge r com pais th at different exet ives m ay be in charthe f ron t and b a c k pof th e book. They m aeven be wo rk ing a gthe same schedule . Ie s sen t i a l t h a t e ach nua l r epo r t have a sc o o r d i n a t o r w i t h i n company , and t h a t hbr ing a l l par t ies invin th e rep or t pro jecgether a t an ear ly s tIn add i t ion to th e dee r and p r in t e r , t he tinc ludes th e f inancig a l a n d c o m m u n i c aexecut ives and the os ide acco un tan t . Eapa r ty m us t a cknowlh i s r e spons ib i l i t i e s accept h i s deadl inesWe hav e a l re ady dcussed a t l ength buit h e a n n u a l r e p o r t pNow we are ess ent iathe a s sembl ing s t agb r i n g i n g t o g e t h e r t hi l l u s t r a t io n s a n d w rm ater ia l . One of th e impor t an t a spec t s os tage i s obta in ing thp h o t o g r a p h y .


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F-18, i n s t roboscop ici t m e n t t o g r o w t h "gh a pho tog ra ph o f aa rch f ac i li ty und er con

p o i n t s u pack of th e oneg ing f rom deep

How to Workw i t h a P h o t o g r a p h e rFor mos t annua l r e p o r t s , p h o t o g r a p h yi s t he m os t impor t an t g r aph i c e l emen t . Ac cordin g to surv eys , i t i sa l so t he second g rea t e s tf ru s t r a t i on f ac ing t hosew h o c o o r d i n a te a n n u a lrep or t s . (Th e f i r s t: obta in ing execut ive c lear a n c e s . )As a ru le , you ca n obt a i n the b e s t r e s u l t s w h e nyou w ork wi th one photog rap he r fo r a l l o r mo s tof t he an nu a l r epo r t a s s ig nm ent . An d it i s impor t an t t o e s t ab l i sh af i n a n c i a l u n d e r s t a n d i n gw i t h t h e p h o t o g r a p h e r a tt he ou t se t . Ma ny compan i e s have t he i r de s igne r snego t i a t e w i th t he pho t o g r a p h e r .P h o t o g r a p h e r s u s u a l l ycha rge o n a da i ly ra te bas i s . Fees gene ra l l y r a ngefrom $200 to $1 ,000, dep e n d i n g on t he i nd iv idua lp h o t o g r a p h e r ' s e x p e r i ence and r epu t a t i on .Cl ients a l so pay a l l out-of-pocket expenses , inc luding f ilm, fi lm pro ces s in gand t r ave l expen se s . Add it i ona l pay m en t fo r t heuse of a s s i s t a n t s a nd models , for half-day assignme n t s , f or l a s t -m inu t ecance l l a t i ons , fo r t r av e lt i m e and for the u s e of t h ep h o t o s i n a d v e r t i s e m e n t ssho uld a l so be se t t led inadvance .Some com pan ie s p r e f e rt o nego t i a t e a packagedea l. The pho tog rap he r ,in re turn for a somewhathigher fee , absorbs a l lout-of-pocket cos ts. Thecompany ha s a f i rm ,budgetable f igure .In ei ther case, i t is imp o r t a n t fo r t h e c o m p a n yt o p r e p a r e t h e g r o u n d i nadvance , so t ha t w he n

t h e p h o t o g r a p h e r a r r i v e sa t a m a n u f a c t u r i n g p l a n tor o ther s i te h i s t ime wi l lnot be w ast ed looking forpeople to he lp h im o r g iveh im approva l t o shoo t .Sugges t i ons on H o wto Wr i t e t he Repo r tC o m p a n y t r a d i t i o n sfor wr i t i ng t he t e x tof t he an nu a l reportva ry widely. Often divis i ons j e a lous ly gu a rdthe i r p r e roga t i ve s i nwr i t i ng t he va r io us sec t i o n s . B u t w h e t h e r t h ewo rk i s pa r ce l ed ou ta m o n g d e p a r t m e n t s o rcent ra l ized in one or twopeop le, wr i t i ng i s u sua l l yin two s t ages : i n t e rv i ewing and wr i t i n g t he f i r s tdraf t ; and obta in ingc l e a r a n c e a n d r e w r i t i n g .Ea r ly i n t he project'sschedu le t he pe r s on i ncha rge of t he a nn ua l r e por t pro jec t should contac t no t only th e chiefoperat ing off icer but alsochiefs of operat ing divis i ons t o ob t a in answ er s t obas i c ques t i ons , such a s : How did your d iv i s i ondo t h i s yea r i n t e rm s o fsa l e s an d p ro f i t s ? Wha t we re t he majorr e a s o n s b e h i n d t h i sp e r f o r m a n c e ? Wha t new p rodu c t sw e r e b r o u g h t o u t t h i syea r? Nex t yea r ? W hat new c api ta l inve s tmen t p ro j ec t s we recomple t ed o r a r e un de r w a y ? W hat econom ic or soc ia l t re nd s a re a f fec t ingy o u r b u s i n e s s ? W hat i s yo ur ou t look forthe yea r ahead? Wha tpro blem s do you face?A n s w e r s t o t h e s e a n do the r qu es t i ons w i l l p ro vide th e m ea t of th e edi

tor ia l con ten t of th e le tt e r and t h e o p e r a t i o n sreview.Ge t t i ng C lea rancesIs a Big ProblemThe second s t age i nt h e w r i t i n g p r o c e si s obta in ing c lear a n c e from execut ives . Thclea ranc e pro ces s d i f fe rsi n each company , bu tt he re a r e a f ew g ene ra lru l e s : Circulate text for clearanc es only to tho se oper a t ing execut ives d i rec t lyr e spons ib l e fo r t h a t pa r t i cu l a r a r ea . Ob ta in s i gned ap p rova lbefore se t t ing tex t in totype if poss ib le . As k execut ives to conf ine the i r rem a r k s t o a r e a s o f t h e i rexpe r t i s e . A n easy w ay to avoid a rgumen t s ove r s t y l e andgr am m ar i s t o deve lop ac o m p a n y "style guide" a tthe pro jec t ' s outse t . I tshould cover capi ta l izat i on , pun c tua t i o n , u se ofn u m e r a l s , d o ll a r a n dcen t s i gns , pe r cen t ages igns , abb rev i a t i ons .Such a guide can serv e a sa s ty le a rb i te r , sa v ingn u m e r o u s l a s t - m i n u t e -a n d u s u a l l y u n n e c e s s a r y - c h a n g e s , m a n y ofw h ic h r e l a t e t o s t y l ei n c o n s i s t e n c i e s .P r e s e n t i n g t h e D u m m yfor Approva l

About t w o m o n t h sJUL before publica-J L J L t ion , t he p ro j ec tr each es t he c r i ti c a l po inof review of th e layoutsp reads o r t he dummy byt o p m a n a g e m e n t . T h ed u m m y c o n t a i n s p h o t o g raphs and o the r i l l u s t r a t i o n s a n d s h o w s h o wth e book lays out on apage-by-page bas i s . I np r e p a r i n g for t h i s r ev iew


12/44


13/44

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14/44

We ha ve a l e rt m a na ge m e n t

W h e n s e c u r i t y a n a l y s t s ando the r p ro fes s iona l inves t o r s ar e a s k e d to n a m e thes ing le mos t impor tan t c r i t e r i o n on w h i c h t h e y b a s einves tmen t dec i s ions , invar ia bly the y reply : "Management! ' The p r e s e n t a t i o nof ma nage me n t , p r e f e r ab lyin a w o r k i n g e n v i r o n m e n t ,is one of the m os t p opu la rp h o t o t h e m e s for a n n u a lr e p o r t s .I t ' s also a way for a chiefexecutive to " to s s a bouquet" to his key m a n a g e r s .But if you go t h i s rou te ,don ' t forget anyone.1 . The p h o t o s in the A mer i c a n E x p r e s s 1975 r e p o r t dodouble duty. The c o m p a n y ' sd is t inguished- looking execu t ives ar e p ic tu red in ci t iesa r o u n d the w or ld , thus imp a r t i n g a global f lavor aswell as the image of compe tence .2. United Cal i fornia Ban ka t t a i n s a " n o n - b a h k i s h "look by s h o w i n g its m a n a g e m e n t t e a m in w o r k i n gs i t u a t i o n s in its 1973 book.3 . Getty Oil's 1975 r e p o r tp u t s its po in t ac ros s w i th afull-page black-and-whitepho to o f the m ana ger andmodel s r e l a t ing to his w o r kw i th sma l l co lo r in se t pho tos of th e act ual job s i tes .4 . InDeanWitter's 1975 repor t , fu ll -page pho tog rap hsof executives at easeb r o u g h t a bit of w a r m t h tot he t r ad i t iona l ly fo rmal image of i n v e s t m e n t b a n k i n g .5. Borg-Warner wi th a dramat ic cover photograph feat u r e d its s t r o n g e m p h a s i son in te rna l f inanc ia l manageme n t , e spec ia l ly du r in g"a l ean yea r , " 1975.6 . Wes te rn Ba ncorp o ra t ionin 1971 used an u n u s u a lcu t -ou t pho to t r ea tmen t ,s e p a r a t i n g the indiv idualfrom the b a c k g r o u n d .7. S igna l i l lu s t r a t ed it s enginee r in g capab i l i t ie s by sup e r i m p o s i n g e n g i n e e r i n gdes igns over pho tog raphsof th e top people in e a c h div i s ion in the 1973 r epo r t .

American Express lawyersprovide on-the-scene assistance to management as theCompany andits subsidiaries expand their presencearound the world.

q u i c k l y a n d e f f e c t i v e l y t o c h a n g i n g E d g e A c t s u b s i d i a r y i n N e w Y o r k e x c h a n g e t r a d i n g o p e r a t i o n s . I nc u s t o m e r n e e d s . O f all U C B ' S c o r p o - Ci ty , U n i t e d Ca l i f o r n i a Ba n k I n te r - o r d e r to c o m p l e m e n t t h e s e a c t i v i -r a t e b a n k i n g a c t i v i ti e s , i n f a c t , n a t i o n a l , w h i c h is s t a f f e d t o h a n d l e t i e s a n d a u g m e n t t h o s e o f UCBn o n e i s w i d e r r a n g i n g , m o r e a f u l l r a n g e o f i n t e r n a t i o n a l b a n k - L o n d o n ' s E u r o t r a d i n g , a n e w E u r o -s p e c i a l i z e d , o r m o r e c u s t o m e r - i n g s e r v i c e s , UCB i s i n c r e a s i n g l y d o l l a r t r a d i n g u n i t w a s f o r m e d t or e s p o n s i v e . a c t i v e i n a s s i s t i n g m u l t i n a t i o n a l w o r k w i t h UCB N a s s a u .

U C B 'S w o r l d w i d e n e t w o r k of c o r p o r a t i o n s in a r r a n g i n g E u r o- U CB c on t i n u e s to b r o a d e n it sb a n k s i n c l u d e s b r a n c h e s i n L o n d o n , c u r r e n c y c r e d i t f a c i l i ti e s a n d t r a n s - a c c e s s t o k e y i n t e r n a t i o n a l m a r k e t s .T o k y o a n d N a s s a u , a l o n g w i t h a a c t s a l a r g e v o l u m e o f b u s i n e s s T h e b a n k i s a m a j o r p a r t i c i p a n t i ns u b s i d i a r y i n B r u s s e l s a n d a f f i li a t e s u n d e r t h e F o r e i g n C r e d i t I n s u r a n c e a n e w f i n a n c e c o m p a n y i n H o n ga n d c o r r e s p o n d e n t b a n k s i n k e y A s s o c i a t i o n a n d E x p o r t - I m p o r t K o n g k n o w n a s W e s t e r n I n t e r -c i t i e s an d c e n t e r s of c o m m e r c e . B a n k p r o g r a m s , UCBI is a l so n ot e d n a t io n a l C a p it a l L i mi t e d ( w i c ) ,

t o r , irporas i n t h e A s i a - P a c i f i c .

M o r e o v e r , Urn's FntprnaHrB a n k i n g G r c

a, P e r u , w h i c h w i l l s

It is apparent thafunds transfer syplay a substantiafinancial transacfuture. The Comnew subsidiary, Systems, Inc ., enability of AmericCompany to expparticipate in thitechnology.

Kid

For al l i ts global scope, U C B ' Sl t l y o p e n e d a I n t e r n a t i o n a l B a n k i n g G r o u p i sp r e s e n t a t i v e o f f i c e i n T a i p e i , a n y t h i n g b u t a n o r g a n i z a t i o n a l

a i w a n , w h i c h is e x p e c t e d t o b e e n t i t y u n t o i tself. T o t h e c o n t r a :i n v e r t e d t o a b r a n c h d u r i n g 1 9 7 4 ; t h e b a n k ' s i n t e r n a t i o n a l s e r v i c e !j u b l e d i t s c a p i t a l r e s o u r c e i n v e s t - a r e d e s i g n e d t o c o m p l e m e n t o t he n t s i n A u s t r a l i a ; i s f u r t h e r c o r p o r a t e b a n k i n g ac t iv i t iec p a n d i n g it s f o r e i gn e x c h a n g e U C B 'S i n t e r n a t i on a l e x p e r t s

c l o s e l y w i t h s p e c i a l i s t s i n t

es , th e

md

d a i l y c o n t a c t w i t h a l l l em a n a g e m e n t , t h u s e n hm u n i c a t i o n s a n d d e c i sc a p a b i l i t i e s . T h e W e s t t i n g

al E d g e A c t s u b s i dw r e p r e s e n t a t offic H e a d q u a r t e r e d in t h e

p r o v i d i n g m a j o r n e w tt u n i t i e s f o r U . S . c o m pi f o r n i a h a s l o n g b e e n k

FinancialInstitutions

U C B ' S Corporate Banking Croupconcentrates solely on the needs ofbusiness, providing varied and soph.,sizes and descriptions. Stock brokerssaving and loan associations, insur-ance companies and other banks, asimportant examples, are effectivelyserved by UCB corporate bankersfinancial instittdions. In each case, thcustomer need deal with but a singleUCB decision-maker-a skilled andexperienced banking officer. He has

, , , , ' 1 , ' , 1 meet ndvidual customer needs. Among thos

to help expedite the flow of fun

all financial institutions.Among the leading financial institu

tions served by UCB is E. F. Mutton Inc.a full service investment banking, andbrokerage firm. Shown in large photoare E. Joe Kelley, vice president andLoan'and Service Department, and E.F. Mutton president R obert M. Fomanlonc.-hnpha-oisvr.F.riu.tu-nsnew . i


15/44

c

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16/44

We a re different than y o u t h i n k

Compan ies a r e con t inua l lychanging. This of ten f rust r a t e s c o m p a n y e x e c u t iv e s ,who f ind that the publ ic ' spe rcep t ion o f the i r compan y l ags beh in d the r ea l i ty1 . I f you hav e a na m e l ikeThe Coca-Cola Bottl ing Compa ny of New York and y o uha pp en to be a l a rge p ro ducer of table wine , th eprob lem is a s t ickler . So youann oun ce "We a re m oret h a n our n a m e i m p l i e s "and p ic tu re a co rksc rewalong w ith a pa ir of Cokebo t t l e caps on your 1973cover.Z. A ve t e r a n ma ker of sp ir i t s , The S eag ram CompanyLtd., also faced an identityp rob lem w he n i t moved in tooi l an d gas oper at io ns . Soi ts 1975 cover featured noton ly the ing red ien t s andtools of disti l l ing but also ofoil dril l ing.

The Coca-Cola Bottling C o m p a n yof New York, Inc. 1973 Annual Report\*e are more than our name implies.


17/44

"When I joined the Company,American Can simply meantthe best in cans. But todayit has developed intoan international businesswith consumer products,chemicals and waste-recovery products as well asfar more diversifiedcontainers and packaging."

3 . Scovil l, once kno wn pr i ma r i ly fo r i t s b r as s mi l lp r o d u c t s , d r a m a t i z e d i t ss h i ft i n to h o u s e w a r e s i n1971 wi th a pop-up centerfold of a hous e an d all th eth in g s Sc ov il l m a k e s t h a tgo int o i t .4 and 5 . In a s l igh t ly whims ic a l a p p r o a c h , t h e Ge n e r aCigar Co. (now t he CulbroCo r p o r a t i o n ) t e l e g r a p h e d an a m e c h a n g e o n it s 1975c o ve r, a n d th e n p r e s e n t e dits diversi ty in a ser ies ofbr igh t co lo r sp reads d is p lay ing i t s snac k foods an do th e r n o n to b a c c o p r o d u c t s6 . An d Am e r i c a n C a n Com pany , on i t s 75 th ann iver sa ry in 1975 , en l i s ted a 75-year -o ld re t i re d employee tc o n t r a s t t h e c o m p a n y ' sp r e s e n t d iv e rs i f ic a t i on w i ti t s p a s t c o n c e n t r a t i o n o nc a n s .


18/44

e ha ve a good financ ial s to ry

s f in a n c i a l d i s c lo s u r e he-c o m e s m o r e c o m p l i c a t e d ,c h a r t s a s a m e a n s of s im p l i fy ing f inanc ia l in fo rm at io nhecome m o r e i m p o r t a n t .Re m e m b e r : Us u a l ly a l a r g ec h a r t m a k e s a s t r o n g e r p o i n tt h a n s e v e r a l s m a l l c h a r t s .1 . The Olin C o r p o r a t i o n h a da good s tory to tel l in 1975an d to ld i t on the cover -i n c r e a s e d e a r n i n g s e a c hq u a r t e r o v e r t h e c o m p a r a h l eq u a r t e r o f t h e p r e v io u s y e a ro r f iv e s t r a ig h t y e a r s .2 . United Cal i fo rn ia Ba nke a tu r e d a s e r i e s of d r a m a t i co u r - c o lo r c h a r t s a g a in s t a"background in 1 9 7 5 .

The Major Factors Which:

Increased 1974 Earnings From 1973 Decreased 1974 Ea

,.. ,.., .sSSasr

" , , ^ " : : : ? , " ' . . . W B B m r " 2 ; ' F l " J ,

5EE:Hr

nings From 1973

pe.Sh 3.e

" 32

Five Yeori ifl R e v i e w (fiscalyears ending June 30) Contributions to Net Worth 1972-1975 How AZCON'S P r e .

1971 c decision to get out of unprofitable zinc business. Write-downs and:s total $25.2 million, bringing cumulative tota l of losses to (35:on, which can potentially be applied against future taxable profits.loss: (25.2 million; Net worth: $1.5 million.1973

Name changed to AZCON Corporation. First acquisitionsa producer ofmobile drilling rigs and a steel distributo r specializing in carbon steelproduc ts .Income from contin uing operat ions: $142,000; Net loss: $390,000;Ne t wor th: $1 . 3 million, starting point for chart on facing page.AZCON makes further advance into metals di stribution bu siness, buyinganother company specializing in carbon steel. Rights issue raises addition al$10million inequi ty .

; operations: $1.8 million; Net income: $4.4million

1974 AZCON makes its large:,! acquisition in distribution field, increasingwarehouses to 14 and expanding into higher-value alloy and stainlesssteel and nonferrous metals. s $v. 2m il i ion;Ne tincom e:1975 At start of fiscal 1 9 7 5 , AZCON buys integrated steel manufacturerand initiates major expansion pro gram. Develops plans fordirectreduction plant to provide feed for steel production. Begins furtherinvestigation of additional mill capacity. Dividend payments start agafirst time since 1967.53 . Ar i s t a r c o n v e y e d c om p le x f i n a n c i a l i n f o r m a t io nin 1973 w i th s im p le h u t i n t e r e s t i n g l y s h a p e d t h r e e -d i m e n s i o n a l c h a r t s .

4 . Sc o t t Pa p e r Co m p a n y in1974 e x p la in e d th e f a c to r sth a t c o n t r i b u t e d t o i n c o m ea n d t h o s e t h a t t o o k a w a yfrom income in a full-paget h r e e - d i m e n s i o n a l c h a r t .5 . AZCOH" to ld it s e x t r a o r d i

n a r y g r o wth s to r y i n i tr e p o r t w i t h a d r a m a t i c a n d h o ld t y p e p r e s e n t a t6 . F in a n c i a l Fe d e r a t i o ntu r e d a 17 x 2 2 - in c h c es p r e a d fo ldo u t w i th g i ac h a r t s i n 1 9 7 5 .


19/44


20/44

We are a h igh- technology co m pa ny

I n the p a s t two d e c a d e sm o s t high-growth c o m p a n i e s h a v e a l s o been h ig h -t e c h n o l o g y c o m p a n i e s .T e c h n o lo g ic a l s t r e n g th c a nb e c o m m u n i c a t e d v i s u a l lyin m a n y w a y s . On e of t h efavored techn iques i s c lose-u p p h o t o g r a p h y .1. VSI C o r p o r a t i on , w h i c hm a k e s m o ld b a s e s f o r t h ep las t ics indus t ry , in 1974u n d e r s c o r e d i t s t e c h n o lo g yb y u s i n g a n e n g i n e e r i n gdrawing to over lay a c lose-u p p h o t o g r a p h t h a t s h o w sth e m i l l i n g t o o l m a r k in g so n a p r e - m a c h in e d p o c k e t o fa s p e c i a l m o ld b a s e .2 . T h e Sy b r o n Co r p o r a t i o ne m p h a s i z e d i t s p r o c e s s c o n t r o l l e a d e r s h ip i n a s e v e n -page spec ia l sec t ion o f i t s1 9 7 5 r e p o r t . T h e m e s s a g ewa s c a r r i e d b o ld ly i n l a r g etype on the sec t ion ' s openin g p a g e , wh ic h a l s o c a r r i e da ser ie s of ph o to s to conveythe s to ry .3 . Br i s to l - M y e r s u s e s as t r i k i n g p h o t o m i c r o g r a p hof an an t ib io t ic a t wo rk toca l l a t t en t io n to a 15-pages p e c i a l r e p o r t o n a n t ib io t i c sw i t h i n i t s 1975 a n n u a l r eport . The effect was to highl i g h t t h e c o m p a n y ' s c o m m i t m e n t t o b a s i c m e d ic a lr e s e a r c h .4 . 5 and 6 . Three consecut i v e y e a r s o f M a r t i n P r o c e s s i n g a n n u a l r e p o r t c o v e r s( 1 9 7 3 , 1 9 7 4 , 1975)showho w th e use o f c lose-up photo g r a p h y c a n s u s t a in a f ee ling of h ig h techno logy eventhough the sub jec ts o f theseh o to g r a p h s a r e f a i r l y m u n dan e - th e need les o f a

a n d o f y a r n , a d r o p o f. In i t s 1972 repor t , WalM u r r a y i l l u s t r a t e s h o w

t le a d s t o a n o t h e r w i t hh a r d g r in d in gm a c h i n e t h e h a r d

l a t wo r k a n d brief,c h y t e x t te l l t h e s t o r y

Tooling for Plastics

vsi 's concept of standardized moldbases, precision tooling and accessories for the plastics industry gainedwider-than-everacceptance duringfiscal 1974. World-wide sales rosete % to S45.6 million.VSI enjoys a eading position in thisgrowing industry. In turn, fhe toolingbusiness provides the largest salesvolume of the tour product groups.Plastics are sought for an ever-widening'range of prpducts becauselightweight, durable and extremely versatile. Plestics material consumplipnis rising at an 11.2% compounded rateper year, according to Ihe StanfordResearch institute.plasticproducts . Resins can be moldedby injection, transfer or compression.The principal processisinjection molding. Mdlten plastic material is " in-jecteO"byan injection molding machine into a steel mold where it takes

the desired shape It s then cooled andejeciedtromihemoidasafinishedplastic part. The meld itself ccnsisls oftwo majpr systems: (1|the moO baseand (2) the rel ofthe plastic fprpduces or inserts into the base. Theinjeclion molding prpcess captures

about 30% of Ihe plastics processingbusiness now. and growing at a fasterrate than that pf the plastics industryas a wholeD-M-E Company, e VSI divisien,precision tooling, including accesso-

ihings. Together

States la:20.000 of them.Sales of moid b;closely related to 1anO redesigned pitare partially fled tdlie material used. Standardized, pre-engineered, proprietary producls

Mold bases weigh anywhere froma few ppunds tp several thousandpounds. To prodiinilial machining ot heavy plate steel

cutting, gtindinginstalled at a ccst ofof time. The pretinishedplatesshippedtemanufacturing plantsthe Uniled Slates for spthen assembly andVSI s optimistic;lulure. The Company

ic products: s

customer specified mb represents si

Sales (S thouTotal Sales SEarnings (S tTotal Earningssxzs,3r.3s)ousands)-%";s

197028,14629%4.80237%

0 " < * '

197126,28633%2.00436%

""V""""

197230,98334%3.79334%e-""9"'

197338.49635%6.08341%

wU0meno

197445.60232%5,89033%

ftooess C-bnttoL.a new, changing cecru^cgy-Whateverth e ir^LSpickxis be^iiining of pixxBvscontrol, it is no wone of the rrxst sophisticated teciiixJogics yet developedand offers growth oppordjnities nwchecl by few kisinessesIts obvious that die rew-ards will go to those ronpaniesihathave asoDrig. woiidw : in jgica]base.


21/44


22/44


23/44

from Arctic Management,In recent

i> time company"What isArctic today?Obvious ly , our withdrawal from the l a w n 'tittd garden market has plated even moteimportance on our primary businesssnowmobiles. We're basically a snowmobilecom pany, but Silverline b-oats continue tocomplement our snowmobiles as a summerproduct,What categorises Arctic today more thanits products, however, is the attitude of itspeople. We're realistic about conditions in.our industry and the challenge we face in theyear ahead and above all, we're trying veryha rd to be r e spons ive to our cus tom ers , outdistributors and dealers, to our employees,and to our shareholders. We're not justcoping, with the excess capacity problemscreated by the shake-out in the snowmobileindustry and bv rhe Kiel scare oflastseason. We're tishtins to support our dealers,to reduce our inventor ie s , and above a l l ,1 'to return to a profit position,Is that theshape ofArctic'sforeseeablefuture?

borrowings are presently too high. We mustget our inventories into line. This willsharply reduce our bank borrowings andallow us to diversify into other products tobe sold through our own distribution systemor by othe r s .For the present, our primary emphasiswill he on snowmobiles and related products.They olfer the greatest opportunity for usto return to a profitable position and preventthe erosion of stockholder equity But, givenreasonable snow and rhe absence of fuelscares, we expect the shake-out to affectArctic significantly for only one more year.Thereafter, We expect Arctic to be a strongcash producer, enabling us to invest in other....! i 'orised

Do thingsb r a g M t er f o rSgherimeiiit h e comingyear?

Siivertine's cash needs are not that great.The overhead at their plant was reduced byof January I, n V ^ ' l W v!lc%Vked up inApril of this year. Ou r newly in troduced

apidlyandmg sailboat market with three s;dels that will highlight Siivcrline's j75duet line. We've temporarily postponedd e l , however, the development costs weiused off in fiscal 1974. In sum m ary,

ilhoai

market conditions have caused us to holdback some expansion plans fw Silverline,but the present situation is one we can

At the tiine GeneralProducts vvasacquir ,: stated that lawn andn products were aJ addition to your pro-^ WhydidGLPfail?That rationale is still true. Our dealerscont inue to nmd contra-seasonal products.However, General Leisure was burdenedwith so many problems, which resulted insignificant cash needs, that we had to get out- seriously weaken our financial stre ngth,"he facthief M.. . mong these problems w .that our engineering capabilities at GI T weovertaxed dw to : I. compliance with newO u t d o o r Tower lua.inmcut Institute safetystandards; 2. the need to improve the qualityof the product line and; ) . the need tobroaden the product line to include the moreprofitable self-propelled rotaries and tractors.With product deficiencies, our marketingefforts could not bro aden the base- of G I F sprivate label customers. As a result, th e GI Tplant was operating at approximately WA ofpractical capacity. 1 heir lower priced productline did not generate sufficient gross marginsto cover our ongoing overhead costs. Ar thesame time, conditions in the snowmobileindustry required us to focus mr capital andhuman resources on our main line of business.Whatwfflprevent similarproblems nomoccurring in

diesnowmobile business?The very things we lacked with GLP-breadth of product line; a quality product,brand awareness and customer loyalty,engineering expertise ,vv\ a strong sales andmnrkefiiw organiza t ion- a re out resourciiiimice:...*, v.M.v>>.,marketing orga , ;a : -igths, withit

efforts: We have'capable in te rna l , . padvertising agency, which has !us for over five years, has consiset the standard in our industryits marketing and advertising pion our behalf.None of th is m eans tha t won our past laurels. We have prmanagement experience gainedparticipation in a m ature markineed to -sustain our cu stomer c


24/44

We m ak e terr if ic pr od uc ts

3 . The Coca-Cola BottlCompany of New Yorkl igh ted new p roduc t l i1975 with s tage-set s tp h o t o g r a p h y .4 . The A. B. Dick Comppioneer in copying, efft ive ly upda ted i t s p rodimage in 1975 w i th phgraphs of i t s la tes t , u lm o d e r n co p y in g m a c h5 . T he Norlin repor t ocon t a in s ex ample s o f t i fu l double-exposure t o g r a p h y t h a t i l l u s t r aG ibson gu i t a r s and o tqua l i ty mus ica l in s t rum en t s c r a ft ed by the cp a n y6. Chesebrough-Pond 'boos ts i t s food produ ctvis ion with a superb cup pho to g rap h o f a yow o m an ea t ing a S loppmad e with o ne of the cpany ' s sauces in i t s 19r e p o r t .7 . Campbel l Taggar t , ajo r na t io na l baker of bpu t an em bossed " lookgood-enough- to-eat" saw ich o n i t s 1975 cover8 . SCM solved the probof p i c t u r i n g n o n c o n s uproduc t s w i th an e l egwel l - l i t co lor photogra

The p roduc t s a companymakes a r e obv ious ly p r imecand ida te s for i l lu s t r a t ion sin t he annua l r epo r t . P rod uct p ic tures provide ident i ty for a compa ny. When t h e yare beaut i fu l ly done theycrea te p r ide am ong employ ees and provide a senseof accom pl i shm en t . Theycan a l so c r ea te cus tomer sfo r p roduc t s .1 . Revlon's 1974 an nu a l r e po r t sh ow s a c lose-up of awo m an 's face , he r eyes covered by multi-hued fingerna i l s - a v iv id pho to tha tneeded l i t tl e exp lana t ion .2 . The th in gs Com bus t ionE n g i n e e r i n g m a k e s a r e o na d if ferent scale a l together .CE bu i ld s p lan t s , cons t ruc t ssys tem s , and in i t s 1975 re por t d isp lays in a ser ies oftw o-page sp reads such"pro duc ts" as foss i l fuelg e n e r a t i n g s y s t e m s .

pow dered me ta l s and tl ighter , s t ronger , morer a b l e m a c h i n e p a r t s t hca n be made from them9. A ne w use for an o lduct - and a great photog r a p h i n J o h n s o n & J oson ' s 1974 r e p o r t .


25/44

ipim

^*

m4

fe ***


26/44

We provide excellent services

B ut what if you r c om panyprovides services ins tead ofp rodu c t s ? S e rv ice compan ies need in sp i r ed photography even more , be cause a serv ice is so muchmore difficult to portrayS ome imag ina t ive so lu t ionsa p p e a r o n t h e s e p a g e s .1 . P u ro la to r , w h ich coun t sa cou r ie r s e rv ice amon g i t sbus in es ses , added exci t em e n t to a c o m m o n p l a c es i tua t io n - i t s t r uc ks load inga t an a i rp o r t - by t ak in g a nexce l l en t ly composed sho tat n ight for the 1975 r e p o r t .

Z. H a r r a h ' s - o w n e r -tor of Nevada cas in osho te l s - in t roduced a d imens iona l e l emen t pho tog raph s of i t s garooms by scat ter ing lgambl ing ch ip s abou tpages of the 1974 re p3 . W e s t e r n Bancorp oused sho r t she e t s in i1975 r epo r t to ca r ry a n d p h o t o g r a p h s t h ra year- long chronologbu i ld ing an 11-state cp o r a t i o n .4 . T r a n s a m e r i c a C o r pt ion in 1975 to ld i t s s

s to ry th rough r ea l i s t itog rap hs o f dow n- to -es i tua t ion s , f ocus ing oindiv idual being serve5 . The Trave le r s coveumbre l l a has become sym bol of serv ice for tl a r g e i n s u r a n c e c o m pTh e logo com es to life f ine cover pho to for th1975 r epo r t .6 . H ow to i l lu s t r a t e dp roces s ing s e rv ices? Athe l a rges t pay ro l l p roso r in the na t ion , i s sumi l l ions of paych ecksw a g e e a r n e r s e a c h mIt symbol ized i t s serv idel iver ing a paycheckbul ldozer dr iver in th1974 r epo r t .


27/44

.,

pjm


28/44

We expla in how th in gs w ork

,,

"^Z:::'r-,T-i:^,^'''

w , li .., ,d,, i,.,h O-ph , r... HlenITher.ptUtlc dhnta-.uriqo.dm .H .,SS''".K

H S f S j ^ V , /

f c ^ ' i . ' M ^ g ^

I ' 'r

trr

n o n o n r r s s ^ - ^ " ^ ^^T^^ci**, Acting like a n old- t ime p iano ro l l , thisp e r f o r a t e d t a p e ( p r e - p u n c h e d by c o m

for each different s ize and s tyle) controe v e r y m o v e m e n t of c o l l a r t h r o u g ha u t o m a t i c s e w i n g m a c h i n e .

Somet imes i t ' s poss ib le toadd a n e d u c a t io n a l d im e n s io n t o a n a n n u a l r e p o r t .M a n y c o m p a n i e s have enh a n c e d t h e i r r e p o r t s w i t hd i a g r a m s t h a t e x p l a i n h o wt h i n g s w o r k . D i a g r a m s c a nt a k e m a n y fo r m s and u s em a n y t e c h n i q u e s .1 . Alza Co r p o r a t i o n , a p h a r m a c e u t i c a l s m a k e r , i l l u st r a t e d it s 1 9 7 5 r e p o r t w i thd i a g r a m s s h o w i n g t h e a c t i o n of t h e r a p e u t i c s y s t e m sth a t c o n t r o l t h e d e l i v e r y ofmedica t ion . The co lo r usedis low key , th e l ine d ra wi ngte c h n iq u e d e l i c a t e.

lypc development is followed byextensive testing, both in Schlum-bcrgcr test wells and in the oilfields.Oi'ltii. .i[j:iik^!H d.aiiiio must benijdc : i;suul lai-mus envivi'nmaii;:!conditions. Too, there is extensivefc(L"nL-k (rem (ivd engineers withvaluable suggestions for improvement.The computer is used more and

Four typical weU-hiwinn instruments ( from left to right).Sonic InstrumentMeasures soundvelocity in the ormation along theborehole, indicating porosity.Compensated Neutron Instrum ent-Neutrons radiated from the toolmeasure hydrogen content offormations and give another poro-Compcnsated Density InstrumentCumina-ruy^ niiiittict!jrotna nuclearsource in the tool measure theilcmiiyaj the formation.Dual-I.sterol Og/Micro SphericallyFocused Combination InstrumentElectrical current sent into theform

the same borehole.

nitivhydro-

arch to improve logIn simple terms, we have definedthe terminology used and have explained the technology involved inproviding wireline services to theoil industry.There are many other essentialfeatures to wireline operations -quality of service, integrity in handling confidential information, thefield engineer, the operators, their

a highly technical service business-but this is another story for another

Data from the our lagging instruments on the opposite page weremerge/l by computer to produce aComputer Processed Interpretation220 feet of computed log astheel r. Thei the le ft shows the depth

Section 1 shows the percentage bykW.hydrt.-earhun-;MJ.e er(C).ctions2, S. and 4 show physicalaracteristics of the rocks, thetount of water in the formationmpared to hydrocarbons, and the

3 . Cluett, Peabody & Co1975 ut i l ized a n u m b e rs i l h o u e t t e d r a win g s t op l a in n e w t e c h n iq u e s shown in fu l l -page phoThis de ta i l f rom a two -s p r e a d i l l u s t r a t e s t h e at i o n o f a p r e - p u n c h e d tt h a t o p e r a t e s l i k e a n ot im e p l a y e r p i a n o r o l l d i r e c ts t h e s e w i n g m a cto s t i t c h a c c o r d in g to tt a p e ' s p r o g r a m .3 . Sc h lu m b e r g e r p r o v iserv ice s and too ls to thin d u s t r y . In i t s 1 9 7 3 r eth e c o m p a n y d e t a i l e d so f th e dev ices used to m


29/44

ure chemica l and phys ica lp rope r t i e s o f t e s t a r ea s inc u t a w a y d r a w i n g s .4 . Polaroid, in Part II of i ts1972 r epo r t , exp la ined th ew ork ing of i t s new in s tan tc a m e r a i n a d i a g r a m m a t i ca p p r o a c h t h a t s h o w e d"How the SX-70 Ma kes t heImposs ib le Poss ib le ."5 . Teledyne in 1974 used acom plete ly d if ferent a r ttech niqu e, wi th bold , f latco lo r i l lu s t r a t ion , to sho who w two dif ferent type s ofnuc lea r r eac to r s p roducepow er f rom the s amesource , th e fuel pel le t . Thisi l lu s t r a t io n i s unu sua l be cause it b rou gh t m an in tot h e d i a g r a m .6. Peabody Gal ion Corporat ion , wh ich ca l ls i tse l f "ThE n v i r o n m e n t C o m p a n y , "used f low d iag rams in th r ecolors to i l lus t ra te the opera t ion o f new p roduc t s andtechn iqu es in the 1975 r e po r t . Th i s is a s c rubber thacleans f lue gases .7 . U tah P ow er & Ligh t u sea cha r t t echn iqu e in i t s1975 r epo r t to exp la in t hefacts of uti l i ty l ife - t he pe aload and peaking capabi l i t ies - th at l imit capaci ty ormean ex t r a cap i t a l ou t l aysfor addi t ional p lant .

/4/Xetv&uu(scr>v


30/44

We hav e a p ro m isin g future

Through the Year 2000

Achieving and maintaining technological leadership demand an unremitting commitment toresearch and development. R&D lies at the heartof United Technologies' achievements over awidening sweep of activities. From R&D come ne wconcepts, new products, imp rovements to existing products, and greater business opportunities.Research and development, in carefully selectedtechnical areas, go forward a t the Corporation'sdivisions a nd subsidiaries. This work is performedagainst a backdrop of multi-discipline investigation and experimentation, basic and applied, atthe corporate Research Center. Company-fundedR&D is currently running at the record rate ofnearly $32 4 million a year. Invested today,these expenditures are targeted at yielding returnstomorrow in product acceptance, market expansion, company growth. On these pages is asampling of the Corporation's forward projects,with potential time frames in which they couldcome to fruition.

1975 1980 1985 1990 1 9 9 5 2 0 0 0

Radar SystemsFour-color display provideseasily understood air-trafficsituations.EnergyAdvanced alloys are undertest for high-temperatureindustrial gas turbines.

Flight SystemsUTTAS medium-lift helicoptercan carry 11combat-equipped soldiers plus crewof three.LasersPoweriul lasers offersignificant potential forprecision cutting of metal.

DiagnosticEquipmentComputerized systems

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