The annual report traditionally is the centerpiece of a public company’s financial communications. The best reports clearly and effectively lay out the company’s value proposition, answering the question, “Why buy or hold the stock?”
Shareholders, institutional investors, analysts and portfolio managers all have a stake in the answer. Crafting the approach and message requires a thorough understanding of the company’s strategic direction and opportunities through both good times and bad.
Reports that are transparent and forthcoming do connect with readers. That lowers investor risk, boosts the company’s reputation and contributes to a higher market valuation.
We’ve done annuals for billion-dollar corporations and for small cap companies. We can help your company tell its value story effectively as well.
SITUATION: For more than 50 years, Dollar General was a successful retailer of basic merchandise to low and middle income families. Management wanted to emphasize that they were a neighborhood retailer, and close to the customer.
SOLUTION: That concept of “closeness” was carried out through a simple panoramic drawing which represented each of their operations — from the stores through distribution — in small town and city settings. The National Association of Investors Corp. recognized the report as the best in its class.
Kimball International, Inc.
SITUATION: For years, Kimball International was known throughout the world for its magnificent pianos. Over the years the company had expanded into office, institutional and residential furniture, and into new fields, such as anti-lock braking systems, keyboards and other electronic devices. What didn’t change was Kimball’s approach to business – that the employee was a valued partner in the entire manufacturing and distribution process. The company wanted to convey the importance of this long-term approach to business, particularly because fiscal earnings had been disappointing.
SOLUTION: The annual report team – which included management, an outside design firm and Mozaic – produced the theme “Heartland Values, Global Impact.” The book highlighted the company’s core values – among them, persistence toward goals and prudent management of resources. The shareholder letter emphasized long-term value creation, rather than quarter-by-quarter knee-jerk reactions to a constantly changing business climate.
RESULTS: Kimball’s message was well-received among investors and employees, and its longer-term focus was recognized. Eight weeks after the report was distributed, the stock was trading about 20 percent higher.
SITUATION: Integra Bank Corporation was a regional bank holding company, based in Southern Indiana. The year’s financial results reflected a large loan write-off that reduced earnings, but significantly strengthened the bank. Management’s preoccupation with these concerns meant the annual report production process got started much later than normal.
SOLUTION: Mozaic developed alternative directions for the annual report, interviewed management and wrote copy. The bank chose a very simple design with the word “focus” highlighted in a circular cover cutout.
RESULTS: The annual report — completed on time and on budget – positively conveyed the CEO’s restructuring message. The marketing director said, “It was the easiest annual report I have been involved with in my seven years at the bank. We are pleased with the end result and this book accomplishes the objectives we set forth at the beginning of the project.”
SITUATION: Through a series of acquisitions, this small public company became the nation’s fifth largest home improvement company. But overburdened by debt, a new CEO took the helm to solve its financial and operational difficulties. Shareholders had witnessed a precipitous decline in the company’s market value.
SOLUTION: The annual report was the centerpiece of a comprehensive investor relations program. The CEO’s message acknowledged the difficulties of the past – but more importantly, also detailed plans for recovery and growth.
RESULTS: Informal surveys within the financial community and among shareholders showed that the CEO gained significant credibility for putting forth such a public plan and then meeting the milestones that were set forth. The stock price reflected that confidence.
SITUATION: The whole system of how consumers buy electricity and natural gas was changing. SIGCORP, a utility in Southern Indiana, wanted to tell its shareholders how it was positioned to do well with coming deregulation because it was already one of the nation’s lowest-cost utilities.
SOLUTION: The annual report discussed the changes in the industry and how those trends would affect their investment in the company.
SITUATION: A regional bank holding company based in Western Kentucky, CBT Corporation wanted to grow larger by acquiring small town banks in its region. Thus, the company needed an annual report projecting financial strength and progressiveness, but one that didn’t appear to waste shareholder money on “glitz.”
SOLUTION: After in-depth discussions with bank representatives, a report using the theme, “Beyond the Box,” was developed to show how the bank goes beyond normal boundaries to solve problems and provide financial solutions.
SITUATION: Why couldn’t the best of underground coal mining be combined with surface mining? That was the idea that Addington Resources chairman and CEO Larry Addington pursued with the development and deployment of a radically new mining system for his mining operations in Eastern Kentucky. The system eliminated the need for personnel inside a mine. Instead, mining took place by remote control using a camera, lights, a coal mining machine and a series of conveyor cars.
RESULTS: The company sold rights to the system to a major North American company, which built remote mining machines to companies in mining areas all over the world.