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Jun 30, 2006

Out with the old

Consolidated filings, simpler technology and redesigned annual reports are just some of the methods companies are using to increase printing efficiency.

When is a printer not a printer? When it’s a financial printer. This may seem like a flippant statement, but the industry has changed so much over the past few years that almost every significant player is offering a suite of services that range far beyond those of a traditional printing company. Some can even envision a future in which the printing of hard-copy documents is no longer the majority of their business.

So what is driving this shift in the world of printing? There are a number of factors, but the most pressing is time. It is not news to anyone that filing deadlines are now far tighter than they have ever been. In addition to reporting in a more timely fashion, companies are required to report more information more often. Regulators and stock exchanges are requiring listed companies to present a far greater range of information to investors, and this has resulted in a surge in filings, including Form 8K.

In response to this new reporting environment, most companies are reevaluating their long-held practices of printing hard copies of all forms and mailing them to the relevant parties. This is just not a viable option in the modern business world. But it’s not just regulatory filings such as 8Ks that are seeing changes. Many companies are working with their printing firms to change they way they design, print and distribute annual reports, 10Ks and proxy statements.

Printing companies are taking different approaches to the changing demands of corporate clients, but they all agree that the business is evolving and the traditional approach is unlikely to remain in place for long. ‘Now, as a financial printer, you have to offer all the services that a client could conceivably want,’ says Robert Durham, president of Kcomm.

Along with offering a full suite of services, some printers are becoming more involved in the design and construction of documentation. David Klaiss, president of CGI North America, explains that his company has been changing the way it prints Form 10K and the notice of proxy statement (NPS) as well as the annual report.

‘We absolutely have seen some design trends in the past 18 months,’ Klaiss says. ‘One example is the 10K wrap, which not only cuts down on the cost of manufacturing and printing, but also saves printing costs.’ The wrap reduces the amount of pages that need to be printed – thus creating efficiencies for both the client and printer – and are growing more common. ‘We did around 200 of these this year, up from 130 last year,’ he adds.

Another significant change is the trend toward combining some documents. This is most often done with the 10K and the NPS.

Combining the 10K and NPS is an important innovation, notes Klaiss. The process of sending both documents together saves time and money. There is some information that is duplicated in both reports, which means space can easily be saved. Companies also go through a similar process when producing both documents, so by combining the process, it is possible to save time internally.

Durham points out that changing the way companies print documents is not always easy. ‘Financial printing has been a very traditional industry,’ he says. Making changes to the system requires a significant amount of communication and interaction between companies, and much of the growth that is taking place in the industry is coming from non-traditional areas, he explains.

Apart from working with clients to redesign documents to achieve reductions in printing and mailing costs, some printers are also assisting companies with printing their own documents. David Shea, president and chief operating officer at Bowne, explains that one innovation becoming more popular is self-filing tools for Form 8K and other regulatory documents. These forms are standard and use the same format, so it is possible to create templates that a company can use and populate itself and then have the documents printed. This is likely to increase in popularity as the volume of 8K and 14F filings continues to grow.

Such tools are also an important part of so-called print on demand. This is a situation where companies produce the requisite forms and make them available on their corporate web site. Investors, analysts and other interested parties can then request printed forms and the company can simply tally up how many copies are required and contact the printer to produce them.

It is also possible to print to the web, HTML or some other electronic format, which can be extremely useful if the company wants to utilize electronic filing or other formats that require digital documents.

Virtual data rooms and content management tools are also becoming more popular, and most financial printers are moving into these services as a natural extension of traditional printing operations. These products allow documents to be kept in electronic format in a single repository that can be accessed by a controlled group of clients.

Durham points out, however, that technology can sometimes overcomplicate matters and make the process less efficient. Cutting down on the types of technology being used and simplifying the overall process can be far better than building complicated and expensive systems. Simple technologies present fewer challenges when it comes to sharing documents since all parties will likely be more comfortable using them. Durham adds that, as lawyers and others become more comfortable with the technology, the process will become quicker and easier.

Financial printing will continue to develop in the coming years, and it is likely that even more changes will take place both in the technology being utilized and the collaboration between printer and corporation. This will drive change in the style and format of documentation being produced – combined filings and shorter annual reports that use less color and thinner paper.

One of the major challenges that corporations and printers face is the SEC’s ‘access equals delivery’ proposal, though it is unlikely that this rule will take effect until 2008, if it is fully implemented at all. The result would be a significant reduction in the need for printing and delivering documentation to shareholders. Some printers are preparing for this by expanding their areas of operations, while companies are getting ready by implementing print-to-web and print-on-demand tools.

Brendan Sheehan

Brendan Sheehan is the former Executive Editor at Corporate Secretary magazine, and is a leading expert in public company governance and compliance. He regularly lectures on cutting edge governance, risk and compliance issues and is a regular...