ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, May 26, 1996 TAG: 9605240015
SECTION: BUSINESS PAGE: 1 EDITION: METRO
SOURCE: TOM SHEAN LANDMARK NEWS SERVICE
It's been only two months since Norfolk Southern Corp.'s 1995 annual report hit shareholders' mailboxes.
But more than 1,000 of the company's 53,400 shareholders have responded to a questionnaire asking how they use the magazine-sized report and what they think about its organization and readability.
In recent weeks, Rebecca Burcher has been sifting through their comments because preparation for next spring's annual report is already under way.
By early June, Burcher and a handful of other Norfolk Southern employees will toss around ideas for the 1996 report: What sort of theme should it have? What kind of photographs should be used? Production costs, too, will be a consideration.
"In the last several years, we've asked ourselves, `Do we want to keep putting out a rather elegant report?''' said Robert C. Fort, assistant vice president for public relations at Norfolk Southern.
``You hear from some shareholders who ask, `Why do you spend this money?''' By law, the 15,000 U.S. companies whose stock is publicly traded must provide shareholders with a summary of their financial performance during the past year.
For a few thousand large companies, including Norfolk Southern, the glossy reports are more than financial documents. They've become marketing tools and are provided to customers and job applicants, as well as shareholders and securities analysts.
But the availability of advanced technology has prompted several companies to investigate faster, less costly ways of disseminating the contents of their reports. Some, including Norfolk Southern, have posted much of the information in their annual reports on Internet home pages.
Meanwhile, some corporate executives have complained to federal securities regulators that requirements for more financial detail in annual reports have become burdensome.
The Securities and Exchange Commission responded last year by soliciting public comments about ways it might scale back its reporting requirements. The commission has not yet announced the conclusions of its study.
The length of Norfolk Southern's annual report has swelled by 50 percent since the late 1980s to 60 pages because of requirements for additional financial detail. Still, that hasn't been a major concern for the company, said Fort, its public relations officer.
In fact, Norfolk Southern was lauded in November for the quality of its report and other financial communication. The Association for Investment Management and Research, a Charlottesville-based organization of securities analysts, said the quality of Norfolk Southern's financial reporting during 1994 surpassed that of eight other large railroads.
One of the few shortcomings in Norfolk Southern's annual report, the committee said, was the chairman's letter, which "could have benefited from more details about the company's goals." While companies must comply with specific SEC requirements for the financial parts of their annual reports, they have great leeway with the information they provide elsewhere in these documents.
Lowe's Cos. Inc., the North Wilkesboro, N.C.-based chain of home-improvement stores, included a long description in its 1995 annual report of home-ownership patterns in the United States and the outlook for sales of home-improvement materials.
After a phase in the late 1980s that emphasized the marketing value of annual reports, many companies have sought to make their reports more useful to shareholders, said Bill Gravitt, president of Beatley Gravitt Communications Inc., a Richmond graphics design firm that produced annual reports for 20 companies this spring.
Whatever a company's intent, an annual report can be expensive to produce. "The average cost today is in the range of $4 a copy - from about $3.50 to as high as $5," Gravitt said.
Norfolk Southern printed 195,000 copies of its latest annual report at a cost of $1 each. This was substantially lower than the average because the company uses an in-house staff that also puts together other publications for customers and employees, Fort said.
One company whose annual report attracted attention this spring was First Union Corp. Inside its report, the Charlotte, N.C.-based banking company included a computer disk containing the contents of First Union's 1995 report, additional financial tables and information about its lines of business and products.
"The traditional annual report costs us about $2.50 to produce, while the CD-ROM version costs only about a third of that," said Marianna Sheridan, a First Union spokeswoman. "If in the future we weren't required to provide the paper version as well, there could be a significant cost savings for the bank."
At Norfolk Southern, the process of compiling an annual report for 1996 will accelerate in November. That's when Burcher and Mary McNeeley will interview eight of the company's senior executives about their ideas for the document.
What they hope to capture during these interviews is a single, simple message. "There are all kinds of readers, from the person who flips through a few pages to the one who reads the annual report from cover to cover," said Burcher, manager of external communications.
"You've got to have one message" that can catch the attention of both types.
Burcher and McNeeley, corporate manager for visual communications, will meet with senior executives again in early January. McNeeley will bring along hundreds of photographs for executives to consider using in the upcoming report. These will have been culled from a couple of thousand photos being taken throughout 1996.
By mid-January, Norfolk Southern's financial results for 1996 should be complete, and the company's accountants will make their contribution to the annual report. The lawyers, too, will have a role.
``The lawyers might say, `We've got to disclose even more in that environmental footnote this year,' so we will need more pages,'' Burcher said.
By early February, she and McNeeley will have a completed version of the 1996 report in hand. They will hold a telephone conference call with the senior management and the participating departments to consider possible changes.
One week later, Norfolk Southern's full board of directors will review the report. "If they are satisfied, we send it to the printer," Burcher said.
Then the cycle will begin again.
LENGTH: Long : 121 lines ILLUSTRATION: PHOTO: LANDMARK NEWS SERVICE Early next month, Mary McNeeleyby CNB(left), Rebecca Burcher, Robert Fort and a handful of other Norfolk
Southern employees will start tossing around ideas for the company's
1996 annual report. color.