Get ready to shed a tear at the passing of the Annual Report-that glossy paean to management's genius will soon be history. The Annual Report is becoming as out-dated as the typewriter.

Each year at the Haas School of Business at Berkeley, we teach more than 1,000 undergraduates in our introductory business course. And for the last few years, I've gone to no end of trouble to induce one of the local firms to donate enough copies of their annual report so that we could hand one to each student. This is no small undertaking: Those four-color glossies cost more than $5 each to produce and shipping 20 boxes of reports involves considerable expense.

For the last couple of years, we've been using annual reports donated by our friendly colleagues at The Gap, a great local company with a product line that is very familiar to our students. But when I was asking my course assistants for suggestions for a new company to inveigle into sending us reports next year they brought me up short: "No one reads that stuff."

While I launched on an apologia for annual reports and the importance of learning how to read them, I had to admit that, for my own stock trading, I view annual reports as completely irrelevant. If a firm closes its books at the end of December, even if I already own the stock, I'm lucky to see the report by mid April-by that time, I've already read the first quarter results in the newspaper. If there are major events, I can read what I need to know, and get up to date financial information, through the Internet.

Worse, thinking back to this year's crop of annual reports, it occurred to me that they don't so much gloss over the truth, as to deny the harsh realities of business. The Chairman's letter is usually full of self-congratulation but rarely seems to explain very much about the firm's mistakes. I decided to look up a few annual reports to see how some of 1997's most notorious management blunders were explained away.

The Boeing report arrived in mid-April, and here is chairman Philip Condit gamely admitting to shareholders in his December message: "We failed to do a good job of managing a rapid ramp-up in production in commercial aircraft." But, don't worry, folks, turn the page and we are reassured that these problems are behind us. Too bad that was wishful thinking and the problems with out-of-sequence work seem to be getting worse.

Over at Quaker Oats, management achieved the spectacular destruction of $1.41 billion in shareholder value by buying and then selling Snapple Beverages in 1997. But shareholders can't look for much soul-searching in the Annual Report. Everything is coming up roses: "These results delivered value to you" boasts Chairman Robert S. Morrision, who was appointed late in the year to clear the mess up. Well, not really. The value delivered was a net loss of $6.80 per share. The previous Quaker management must have had some plan for this line of business which somehow went wrong, but we aren't offered any explanation (or apology!) in the Annual Report.

But the prize goes to Michael Eisner over at Disney: In the 1996 Annual report, hiring Michael Ovitz as President was touted as the best thing that has happened to the firm since Eisner himself arrived. But in 1997 Ovitz was shown the door and was apparently paid $11 million in cash (plus huge stock options) for doing not much of anything. In the 1997 Annual Report, Michael Eisner's letter to shareholders mentions President Clinton, but no mention of no-longer-President Ovitz. Apparently this nasty little incident isn't worth explaining to the shareholders.

So the truth of the matter is that Annual Reports arrive too late to be useful, and in any case don't contain a lot of the information shareholders ought to know.

High-tech companies are trying to get away from the expense of mailing reports to thousands of shareholders. At Intel, a spokesman told me: "Rather than send our Annual Report to our ever growing stockholder base, Intel makes its Annual, and other regularly requested financial reports, available through a literature fulfillment house, as well as on line." And at Netscape, their press officer said: "In fact we are not printing an Annual Report this year. We have had the 10K printed which is in essence the annual report without the gloss. Anyone that calls and requests information we try to encourage to go to our web site, rather than mailing out the information."

So this year I'm going to teach our students that they can find up to date, accurate financial data on-line through the SEC's EDGAR web site about three months earlier than you can read it in an Annual Report. And if they really want to understand what's going on with management, try an old-fashioned trick: read the newspaper. €

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David Robinson is lecturer in Marketing at the Haas School of Business, University of California, Berkeley.