Volume 13, Nos. 2 & 3


A User's Guide To Annual Reports, 2003  For analysts and investors, there's a lull between the fourth quarter earnings season and the Final Four (the basketball kind, not the auditor kind) - a lull before the springtime storm of annual reports. Don't get too relaxed: that springtime storm starts earlier than usual. The SEC requires companies with calendar year-ends to file their 10-K reports by March 15 this year, early enough to interfere with your Final Four plans if you're an ardent annual report reader. (Though for most folks, it works the other way around.) If you're not an ardent annual report reader, slack at your own risk. There's no other time of year you'll receive corporate information as richly informative as the annual report. The beauty is not just in the details: read these economic epistles with a wary eye and you just might find challenges to your beliefs about a company - or its management. You just might find a disclosure or two that tweaks your fear factor and makes you bail out of a stock before the company disappoints investors, or worse, flames out it in shame leaving a trail of shattered, bitter shareholders in its wake. Hyperbole aside: finding a magical fact that lets you sidestep an extreme loss should not be the point of reading annual reports. Knowledge is a cumulative asset that helps investors understand the economics for companies and the industries in which they play - and that develops the ability of an investor to assess reasonableness of expectations for companies and industries. Call it smarts, experience or wisdom - there's no better way to develop your knowledge base of companies and industries than going directly to the source: the annual report. Take advantage of the pre-Final Four lull to figure out just what you want to get out of this year's annual reports for your relevant companies.

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