Launching annual reports into cyberspace. More and more companies are putting their annual reports on the Web. Craig McGuire examines how they’re going about that - plus what’s working and what’s not

For Internet juggernaut Cisco Systems, putting its annual report online means so much more than satisfying regulators. It’s a banner unfurled in cyberspace to lure talent, stroke investors and attract clients. Simply put, the Internet is making the annual report - already the most important document most companies produce each year - that much more critical to a company’s growth.

For Internet juggernaut Cisco Systems, putting its annual report online means so much more than satisfying regulators. It’s a banner unfurled in cyberspace to lure talent, stroke investors and attract clients. Simply put, the Internet is making the annual report - already the most important document most companies produce each year - that much more critical to a company’s growth.

For Internet juggernaut Cisco Systems, putting its annual report

online means so much more than satisfying regulators. It’s a banner

unfurled in cyberspace to lure talent, stroke investors and attract

clients. Simply put, the Internet is making the annual report - already

the most important document most companies produce each year - that much

more critical to a company’s growth.

This year’s edition of Cisco’s online annual report includes all of the

standard features you’d expect to see.

But amidst the financials and corporate fodder, viewers can find

features like video clips of the CEO discussing the Internet economy,

Cisco’s networking academy and customer testimonials.

’The medium is part of the message,’ says Jere King, Cisco’s director of

worldwide marketing communications. ’When you put the annual report

online it offers so many more things than the printed version ever


It’s not just the Ciscos of the world that are realizing the Internet’s

potential. A new report issued by the National Investor Relations

Institute (NIRI), conducted by Rivel Research Group, points to a

dramatic increase in the number of companies with online annual reports

(76% of those surveyed, up from 31% in 1996).

Why go online?

There are several reasons companies are scrambling to roll out online

versions of their annual reports. But cost savings, at least over the

short haul, is not one of them. Eventually it will be, and it will allow

companies to cut down on - but not cut out completely - the print

reports they produce. For now, the online annual report is more of a

marketing tool - as well as a way to stay on par with competitors. After

all, according to this year’s PRSA National Credibility Index, most

people hold the information in the annual report in the highest regard.

That’s ahead of journalists, analysts, chat rooms - even family


Around since just the mid-1990s, annual report design for the Web is not

an exact science. The technology is impressive, yet often


As Sid Cato, publisher of the monthly Newsletter on Annual Reports, puts

it, ’There are just so many ways to go wrong with the online version. A

lot of people want bells and whistles, which is really exciting, but the

technology is not there right now to make it friendly for novice users.

They’re not going to wait around for downloads.’

Archiving of past reports, HTML format, industry resources, embedded

hyperlinks, audio and video clips, downloadable financial tools,

detailed site maps and customer response features are just a few of the

ingredients in most successful electronic versions. The Internet also

offers IR professionals the chance to track online reports. ’When we

send print reports out, we’re never sure who reads it or how much time

they spent on it,’ says John Brady of John Brady Design in Pittsburgh.

’With the Web report, we can track hits, page views, average length of

visit. This helps improve the product each year.’

Clearly, Web design can improve on the print version because it can

offer more features. For example, the cumbersome glossaries in print

reports can be replaced online by hyperlinking arcane words to their


’You have to make it easier for people not familiar with the nuances of

an annual report,’ says John Bukovinsky, who heads up the production of

annual reports at IBM, a company that consistently garners industry

praise for its online versions. ’We offer an Investor Tips section that

helps explain the report.’

There are three basic ways to put an annual report on the Web: wrap the

10K filed with the SEC around a letter from the chairman and have a

text-only Web page; convert the print version into an exact-replica PDF,

or Portable Document Format file; or create a full HTML Web page with

all the trimmings.

The PDF route requires Adobe Acrobat Reader to view. While a non-issue

for most analysts and journalists, shareholders are often turned off

when forced to wade through an Acrobat download. ’While it is often

financially much cheaper to make a downloadable PDF version of an exact

printed annual report,’ says Cathy Kyle, owner of Kyle Designs, ’I can’t

think of anyone who is willing to wait for this download.’ Kyle, like

most designers, urges companies to offer an HTML version.

Jim Casper, president of the Casper Design Group in Berkeley, CA,

cautions that many of the things that make the print version work -

full-page photos, complex photo-collages, detailed charts and graphs,

rich typography - actually detract from the Web experience. Though it

may only be a matter of minutes, viewers will not sit through long

downloads - either of Internet plug-ins to view elements of the report

or the report itself.

’The printed 1998 NorthrupGrumman annual report is a handsome piece,

wrapped in a rich black cover with distinctive black embossing on front

and back,’ says Margo Bowden, senior client strategist at New York

design house Via. ’The PDF conversion on the company’s Web site

replicates the design of the book exactly. But the impact is lost. The

visitor has to scroll down individual pages, rather than across


Several experts say the solution is to offer the report in small bites -

or bytes. ’You have to break it up into distinct units so that a PC is

not overwhelmed downloading the document all at once,’ says James

Spellman, SVP of corporate communications for the Securities Industry


Alternate methods

Some companies have tried different approaches. ’Before being acquired

by WorldCom, MCI used to do a great job with its reports,’ says Shel

Holtz, author of Public Relations on the Net. ’They produced a

four-color print version, an online version on a dedicated site, as well

as a downloadable version in (Microsoft) Word. Now, it’s very typical -

a PDF regurgitation of the print. It’s in one corner of the site bunched

in with a few financial press releases.’ (MCI did not respond to a

request for comment.)

Bowden adds: ’Clorox lets visitors read its 1998 annual report directly

online or as a PDF file. Having this option is very helpful, as the

segmented online version lets the visitor review the contents

selectively and provides readable screens of information. The PDF

version preserves the format of the printed book, but the small type

makes it much harder to read.

Equally off-putting is the fact that the material takes a long time to

scroll through.’ Bowden says that General Motors handles its online

annual report in a similar fashion.

Experts agree that the look and feel of the print and online versions

should be similar. Mike Klodnicki, manager of shareholder communications

at Southern Company, which has a reputation for producing top-notch

printed reports, learned that the hard way. In 1995, the first year

Southern put its annual report online, it hired a designer. ’We handed

off the entire book to a design firm,’ he explains. ’What they came back

with was really neat but didn’t look anything like the print version

whatsoever. In the end we wound up scrapping it and having it re-done.

Since then we’ve used one designer for both versions.’

Although the print and online versions should look similar, the

cyberspace version should rely on fewer words. ’You have to understand,

these two versions serve two different functions,’ says George

Stenitzer, VP of corporate communications at R.R. Donnelly. ’Look at it

by the audiences that use each version. For example, if there’s a

company that wants a partner, or a potential employee, its probably

going to see the Web report first. Investors, analysts and employees, on

the other hand, will probably see it in print.’

An important difference is that readers of print versions tend to read

from cover to cover, while Web users search for specific


’Web versions of annual reports should include the main financial data

without all the front-end text,’ says Kyle of Kyle Design in Rockville,

MD. ’Reading on the screen is a much different situation than holding a

book or piece of paper. And while the design of a printed annual report

is based as much on the look and feel as on the information it contains,

the Web is a different delivery vehicle and should be addressed as


Most Web surfers are looking for direct information without the sales

pitch, quickly. A printed annual report has a longer audience

participation usually because of its ’feel’ and presence. On the Web,

’content and speed’ are king.’

There are those, however, who aren’t taking any chances. ’Our print

version and online version are identical,’ says Lockheed Martin

spokesman Hugh Burns. ’They must be identical since those who have

elected to receive it electronically should see the same document as any

other shareholder. We have elected to make it a straight document with

no additions.’

Another issue may be the timing of the distribution. ’If you offer

shareholders electronic delivery, the Web report must go live at the

same time the print reports arrive in the mail,’ says Karen Hampton, a

spokeswoman for Ford Motor. ’If the Web report is supplemental to the

print report, the timing of the Web version is up to the company.’

Saving paper, ink - and money

Most firms don’t expect to start saving money from diminishing print

distribution and printing for at least a few years, partly because not

everyone is online. NIRI places the average budget for producing an

annual report - often a lengthy and expensive undertaking - at around

dollars 138,000, including production and distribution, but not postage.

The average cost per copy in 1999 was dollars 4.38, up from dollars 4.01

in 1996.

Most companies lump the cost of producing the online version in with the

overall budget for producing the annual report. ’I’ve seen some

companies charged as much as dollars 20,000 for an online version

alone,’ says David Roach, CEO of Cornerstone Investor Relations. ’But,

on average, firms pay anywhere from dollars 5,000 to dollars 10,000.’

According to NIRI’s numbers, the average fee charged by an outside

design firm for an online report is dollars 12,400 - much less than the

estimated dollars 64,500 designers charge for the print version.

Roach warns against placing too much trust in an outside firm. ’To some

of these design firms and printers, this is like the gold rush,’ says

Roach. ’They know the companies are inexperienced, so they’re leading

them around by the nose. They tell them they need video here and some

Flash there, but you don’t find out how much it all costs or really what

you’re getting until it’s too late.’

For most the greatest savings will come from reducing the cost of

distribution (including such things as packing and labeling) and


’We do Disney’s annual report, and this year we’ll print around three

million copies,’ Roach says. ’Not counting printing or processing, it

costs dollars 3 per copy just to mail. You do the math.’ Companies like

Cisco are already realizing some of these savings. King says about 10%

of shareholders receive all Cisco-related financial information


Brady of Brady Design says that one of his clients ’was printing an

average of 130,000 reports for their shareholder mailing and follow-up

responses throughout the year. The number had recently been reduced to

80,000.’ Brady attributes the reduction to steering requests for

financial information to the Web site. ’This is not great news for the

printer,’ he adds.

The Securities and Exchange Commission treats online annual reporting as

somewhat of a non-issue.

’Basically, our approach is that federal securities laws regulate

transactions and activities in the securities market and not the medium

whereby that is accomplished,’ says John Heine, a spokesman for the SEC.

’Therefore, all of the same rules apply. But, common sense has to apply

as well.

When you talk about delivering electronically, you have to make sure the

recipient is comfortable receiving it that way.’ Heine also points out

that the official filing of every annual report is available at SEC’s

Edgar database (

While NIRI reports that 5% of companies surveyed have no plans to put

their annual report online, they are clearly behind the IR times. That’s

not to say that the print report will be totally replaced, however.

’I’ve given this a great deal of thought,’ says Cato. ’First I thought

that the print reports would fade, but now I know that there’s a place

for them. Whereas the online version can be constantly changed, the

print version is set. It’s a historical document. When the world comes

to an end, one thing you can count on is that we’ll have files and files

full of printed annual reports.’

ANNUAL REPORTS IN CYBERSPACE: Who’s getting it right


Ameritech’s annual report team focused equally on the print and online

versions. They took previous criticisms to heart, and made necessary

improvements, grasping the tenuous nature (especially to Internet

visitors like yours truly) of a Web surfer’s attention span. Give an

Internet visitor a slow-to-load page and he or she is outta there!


Accessing its annual report, you are presented with one of nine bars to

click. The site offers an Annual Report Index with Ford’s last three

reports. There are nice, narrow columns of type wrapped around the CEO’s

photo. There’s an interesting pull-quote used. The letter is a page long

(as opposed to IBM’s cumbersome 1998 letter that occupies 12 pages


And the CEO’s signature is used - a nice touch. Ford’s team of more than

half a dozen communications professionals declared adamantly: ’We’re

going to be number one or die trying!’ Its online version parallels the

print piece.


Chevron’s print report for 1998 marked its 12th straight year to finish

among the world’s 10 best. Its annual report team has taken the online

edition equally seriously, tailoring the new technology to its audience,

rather than simply translating print to electronic, which is a


This is the only online version that I’ve found that enables visitors to

easily ’request a copy.’ Clicking on these words instantly takes a

viewer to an e-mail format, ready for the salient details to be filled

in. Also, this is one of the first online versions to solicit viewer



IBM takes a back seat to none with its online report. It makes sense

that Big Blue would be a pioneer when it comes to electronic delivery of

an annual report. While I’ve never met him, I’ve admired from afar the

work David Kalis (senior VP of corporate communications) has done on the

reports. IBM did some very innovative things with audio and video.

The communications on behalf of the CEO are just brilliant - it looks

like you’re actually hearing from the boss man. IBM has a pioneering

spirit - just look at the ’98 online report. For one thing, I can’t

recall another online report that can be read in English, Chinese,

French, German, Italian, Japanese or Spanish.


Since 1997, Cinergy’s advertising focused on ’The Electric Universe,’ or

the world of the public utility. A year later (1998 annual report time)

it tailored its Web site to ’Who are you today?’ (meaning, are you a

professional investor, a stockholder, a student?). It was one of the Web

sites to excessively demand that the visitor drop cookies - leave an

electronic trail - at every turn, much to my irritation, at least. Its

annual report on the Web, though, I found highly readable and externally



The only one of the top five companies from my annual print rankings

with a top-notch online version was Southern Company. Mike Klodnicki

(manager of shareholder communications) is a former journalist who knows

how to produce a successful annual report. Southern Company’s CEO, Bill

Dahlberg, has a delightful sense of humor and trusts Klodnicki, which

shines through.

He approved approaches in both the print and online version that most

other executives would have rejected out of hand. Example: ’Lunch with

Bill,’ a with-it way to label an interview with the CEO. The red-on-gray

color scheme, however, makes for a tough read.

Based on interviews with Sid Cato, who assembles the rankings of the 10

best print annual reports for Chief Executive Magazine. Cato has

published the Newsletter on Annual Reports since September 1983.

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