Most Michigan companies keep their shareholder letter short and sweet regardless of performance.A majority of the responding companies, 59%, said that their most recent shareholder letter was 1 to 2 pages in length, while 34% reported letters in the 3 to 4 page range, and only 7% had letters of 5 or more pages. Whether a company made or lost money for the year had no apparent bearing on the length of the shareholder letter, since a large majority of those firms reporting losses (which represented only 11% of the total) also had letters of 1 to 2 pages in length.
The larger companies, those with print runs exceeding 50,000 copies, however, had longer letters, with 90% reporting letters in the 3 to 4 page range.
The large majority of Michigan companies surveyed were profitable last year.
90% of participating Michigan companies were profitable last year, with only 10% reporting a loss.
Michigan annual reports go beyond the numbers, especially those of larger companies.
80% of the Michigan companies surveyed reported that they include a narrative section in their annual report, with an average length of 10 pages, while only 20% did not include such a section, all of which were smaller companies. All larger companies, as previously defined, had narrative sections in their reports, with an average length of 16 pages.
'Products and services' were the central focus of most Michigan annual report narrative sections last year.
The ranking of narrative section themes for last year was as follows:
1. Products & services
2. Markets served
3. Customers
4. Employees
5. Geographic markets
6. Community involvement
Other narrative section themes included: global strategy, capabilities, operations, industry change, and business philosophy.
'Providing context for the company's financial performance' is ranked as the primary function of the annual report by most Michigan public companies.
- The consensus ranking of the various functions served by the annual report was as follows:
- Provide context for company's financial performance.
- Provide an indication of company's future direction & plans
- Improve understanding of company's lines of business
- Retain current shareholders
- Attract new shareholders
- Communicate company's unrealized value
In a market dominated by institutional investors, individual shareholders are still regarded as the primary audience for the annual report.
Michigan companies surveyed ranked the following groups in order of their importance as an audience for their annual report:
1. Individual investors
2. Financial analysts
3. Institutional investors
4. Employees
5. Customers
6. Company management
7. Media
8. Foreign investors
At many Michigan companies responsibility for production of the annual report falls to corporate finance departments.
Responsibility for production of the annual report was fairly evenly divided between the corporate finance, the investor relations function and, corporate communications, in that order.
Despite the lure of New York and Chicago, most Michigan companies create and produce their annual reports using local talent.
Of the various functions that comprise the production of an annual report, 90% of the photography, 84% of the graphic design, 87% of the production supervision, 82% of the printing and 78% of the copywriting were provided by Michigan firms.
Annual report design is ranked as the most important graphic element by a majority of Michigan companies.
A consensus ranking of annual report graphic elements by importance revealed the following preferences among Michigan companies:
1. Design
2. Unifying theme
3. Photography/illustration
4. Headlines & captions
5. Graphs & charts
6. Typeface
7. Quality of paper
8. Four color printing
Of Michigan companies surveyed, the average per copy cost for their annual report was $4.43. Two-thirds of the companies printed fewer than 20,000 copies.
The number of copies printed as a percent of the total and the average cost per copy were as follows:
5,000 or less 26% $5.52 5,000 to 10,000 20% $5.40 10,000 to 20,000 20% $4.57 20,000 to 50,000 10% $5.65 50,000 to 100K 14% $3.63 100K to 500K 10% $1.63 Total 100% $4.43 Avg.
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