Effective Annual Reports Maureen Wolff-Reid President & Partner Sharon Merrill Associates, Inc. November 14, 2007

Sharon Merrill Associates  Boston-based investor relations and corporate communications consultancy  Nationally recognized investor relations experts  Former sell- and buy-side analysts, business journalists, communications professionals  20+ years of award-winning IR leadership  Diverse client base

 Forrester Research January 2006 Survey of 1,500 investors:  96 percent of investors who vote their proxies read the annual report  64 percent of investors who don’t vote their proxies read the annual report  Rival Research 2005 Survey of institutional investors:  64 percent identified the annual report as of the most helpful sources of information on a company So, Who Reads Annual Reports?

 A regulatory requirement  A strategic communication vehicle  A marketing document At Your Company, Is The Annual Report:

 Every public company must provide an annual report on Form 10-K to its shareholders  All communications are strategic  Visionary document:  Identifying growth opportunities  Discussing plans for expansion  Laying out the roadmap for years to come Answer: All of the above

 Stakeholders  Institutional Investors  Retail investors  Employees  Business Partners  Customers Know Your Target Audience

 Cover  Creative elements  Letter to shareholders  Operations section (marketing)  Financials – 10K or summary  Corporate information Core Components of the AR

 Use a simple MS Word document  Let the document evolve  Share the document early and often  Use the document as a consensus builder  Keep refining and reviewing The Concept Document

 Your opportunity to write your own analyst report  Goal: keep them reading  Avoid “straight text”  Candor sells  Support the theme  Be forward looking The Shareholder Letter

 Financial highlights and lowlights  Significant advancements  Challenges/problems  Customers/deals/partnerships  Acquisitions/divestitures Ten Potential Topics

 Market trends and assessments  Governance update  Environmental/social initiatives  Community involvement  Outlook for next year Ten Potential Topics (continued)

 Opportunity to be creative  Core values  Case studies  Q&A formats  Employee focused Operations Section

 Investors don’t read long documents on screen .PDFs must have bookmarks  Interactive Annual Reports  Printing capability/management  Readability Web Considerations