sample annual report cover letter

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Annual Report Cover Letter

Re. Annual Report for the Fiscal Year 20XX

Dear [NAME], I am [NAME], the [DESIGNATION] from the [NAME THE COMPANY]. I have been working on the compilation and final formats of the annual report for the fiscal year 20XX. I have conducted an in-depth analysis of the annual performance of the company. With the assistance of honorable [NAME-I], [NAME-II], and [NAME-III], this report has been finalized. A copy of the report has been sent to all the shareholders and stakeholders of the company who are actually or potentially annexed to the company’s internal affairs.

According to the annual report 20XX, there has been seen a surge in the annual sale of the company despite lockdown restrictions and sudden changes in the policies on the court orders for the electronics companies. It has been mentioned that the company’s sales incremented [X%] as compared to the previous three years. The company’s deal remained [X] during the fiscal year 20XX, whereas it increased to X] in the fiscal year 20XX. Please refer to annexure-II for the graphical view of the sale.

Moreover, manpower of the company was lowered as compared to the previous year as the department of technical alliances was given off to the [ANOTHER COMPANY]. The technical alliance closure made the manpower to be lowered by X% which did not bring any considerable impact on the company.

The company’s performance appraisals showed that X% improvement was shown by the other departments. The addition of ten new employees was done to the company who proved themselves to be highly competent and adroit in their relevant fields. [Refer annexure-IV].

The company’s balance sheets, cash improvisations, and cash sheets have been profoundly determined and analyzed to draw the annual report. Please refer to the compiled annual report book annexed for a complete and detailed look into the year 20XX.

Please do not hesitate to ask for any assistance. We are at your disposal to guide you through the annual report. Submit your queries to the [EMAIL ADDRESS]. We thank you for considering [NAME THE COMPANY].

Re. Annual Report Covering for the Year-20XX

Dear [NAME],

The letter has been written to highlight the main issues, events, happenings, surges, and declines in the company. For this purpose, the annual report for the year 20XX has been compiled and framed for a clear understanding.

The report has been attached to the letter, please find it in the annexure-I-XIV. The report has been kept precise and to the point. Most of the points have been indicated through graph lines, pictures, and balance sheets. Please do a thorough study of the report for a better understanding.

Overall, the year 20XX has been seen as a challenging year with a lot of hurdles and halts in the accomplishment of projects and conceiving bids and proposals due to shortfall of the economic decline, global inflation, deviation in market trends, and operational challenges due to coronavirus restrictions.

We aspire to do a lot more in the future for the coming year. The company has marked and put high and achievable goals for the future. We are committed to the delivery of quality than quantity and uplifting working standards. If you find anything erroneous or ambiguous in the report, please send our [POSITION] an email at [EMAIL ADDRESS]. We are happy to have your dedicated contributions to the company’s successes. Thank you.

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How to Make a Report Cover Letter

Whether you're an independent contractor providing a report as part of an assigned project or a company employee drafting an internal report for staff review, an attached cover letter will serve as a brief overview of the report's contents, and can help provide clarity about the report. Report cover letters summarize the details in the report, and provide an overview of why the report was requested, and what its contents are intended to do.

Business Cover Letter Contents

Much like a cover letter you would draft to accompany a resume when applying for a job, a report cover letter in business serves a similar purpose: It provides a snapshot and states that details will follow. It should not be confused with an executive summary, which is the narrative usually found at the beginning of a report, which indicates key findings and recommendations. In other words, the cover letter tells you what's in the report, and the executive summary at the beginning of the report tells you why the information is important.

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Introduction -- who the report is aimed toward, and the purpose it serves. Example:

To the Board of Directors:

Attached please find the 2018 Annual Report that the board requested at the start of the new fiscal year.

Brief summary of rationale -- why the report was requested. Example:

As requested, the report provides an in-depth overview of corporate profits broken down into six-month increments. It also provides a market summary which details cost projections and anticipated revenues moving forward, in 12-month increments.

Bullet-point overview -- a detailed list of other elements included: Example:

Additional report contents include the following:

• Breakdown of costs, revenue and earning projections per department
• Market share analysis
• New product performance metrics

Performance Report Contents

When drafting something such as performance reports that will be delivered to human resources or to a department director, the cover letter can be brief and to-the-point. Example:

Attached please find six performance evaluations of marketing department staff members. The evaluations were conduced the week of January 5, 2018. Each has been reviewed and signed by the individual employee and also by that employee's immediate supervisor. As you will read, the majority of the reports are quite positive, and several exceed expectations. Please let me know if you require additional information or documentation.

Project Report Contents

Well-written project reports are usually all-inclusive, but a cover letter to accompany the report can be helpful, when it includes details, such as a summary of purpose and next steps. Example:

Attached please find an update on the re-branding campaign project the graphic arts department is conducting. Once approved by the marketing committee, the project can move into phase two, in which we will have a focus group that will help assess overall perception and name recognition.

Take care to proof read your report cover letter carefully before attaching. The letter serves as a first impression for the report's contents, and as such, should be professional and free of errors.

• State of Michigan: Report Cover Letter
• University of Wisconsin-Madison: Writing Cover Letters

Lisa McQuerrey has been a business writer since 1987. In 1994, she launched a full-service marketing and communications firm. McQuerrey's work has garnered awards from the U.S. Small Business Administration, the International Association of Business Communicators and the Associated Press. She is also the author of several nonfiction trade publications, and, in 2012, had her first young-adult novel published by Glass Page Books.

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Writing a Cover Letter for a Report

Table of Contents

Are you looking to write a cover letter for formal report ? You’re in luck — this article explores the detail.

What is a Report Cover Letter?

The cover letter provides a brief overview for those preparing independent reports.

Cover letters summarize the details of the report and explain why it was requested and what its contents were intended to accomplish.

We are required to include a cover letter with a larger report that might be sent by mail, special delivery, or email. You should write cover letters specifically so that it explains their contents, reaffirms their salient theme, and suggests future steps.

Report cover letters in business serve a similar purpose: They provide a snapshot and the details which follow. While similar to an executive summary, they aren’t the same. You may find an executive summary at the start of the paper, which outlines key findings and recommendations.

You see, the cover letter tells you what the report contains, while the executive summary tells us why this information is important.

How to Write a Cover Letter for Formal Report?

It is helpful to employ company letterhead stationery to compose a cover letter in recognition of the importance of the document it accompanies. If using email stationery, treat it as a paper cover letter by including an image of the company logo on the email page.

Include the day’s date and address information, including first and last names, title, business name, street address, and zip code. You can begin with the salutation “Dear,” “Mr,” or “Mrs.”

Declare the letter’s purpose without using ambiguous or obscure language. Consider briefly capturing the essence of the report. Summarize the purpose of the report in one or two sentences.

Note the conclusion of the report in this part, but don’t give away the underlying findings. You want the reader to read the entire report, not just the cover letter. Keep in mind that you are writing a cover letter, not an executive summary. Stating all the important findings is appropriate in an executive summary but not in a cover letter.

In a formal conclusion or next step section, indicate what actions you want from the recipient. Is it necessary for them to pass the document on? If so, make sure you state with a clear call to action. Or are you coordinating a larger meeting to present the findings? Be specific about the next steps as well as the day and date if necessary.

Why Write a Cover Letter for Formal Report?

Project reports have all the content necessary. However, cover letters can be useful when they include details such as the description of the goal and next steps.

We hope this article was helpful in showing you the main guidelines for writing cover letters for your business reports. In many aspects, writing cover letters for reports are similar to the cover letters for job applications. Instead of briefly explaining your skills and qualifications, you would be describing the essence of a business report.

Pam is an expert grammarian with years of experience teaching English, writing and ESL Grammar courses at the university level. She is enamored with all things language and fascinated with how we use words to shape our world.

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Free Annual Report Templates

Praburam Srinivasan

Growth Marketing Manager

April 30, 2024

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Highlighting successes and failures at the end of the year lays the groundwork for a better and more fruitful new year. It’s a time to review performance, assess financial reports, and take those insights to make improvements.

One way companies do this is by creating an annual report. For public companies, this document is required for shareholders to understand the health of the business. For smaller businesses and teams, creating an annual report can also help to build better decision-making.

An annual report template lets you create your financial report in half the time. Here, we’ll share some of the best templates to build an informative annual report. You’ll find templates for progress reports, work breakdowns, and annual reports for businesses in different sectors. 🙌

Why are Annual Reports Important?

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Annual reports are documents that lay out the company’s financial health and describe operations. It’s required for public companies, but can also be used by smaller businesses and private firms for internal reporting. 

Prior to the 1929 Wall Street crash , the annual report was not mandated. Following the financial implosion, regulators required annual reports from all public companies so shareholders and stakeholders could understand the financial health and operations. 📈

The corporate annual report typically starts with a letter to the stakeholders briefly outlining the main takeaways. The annual reporting process centers around collecting data and building diagrams to form a narrative that explains how the previous year went and what is expected for the future. The final parts of the report include in-depth metrics to highlight financial and operational procedures.

Most annual reports contain the following:

• A letter to shareholders
• Management discussion and analysis (MD&A)
• Financial statements 
• Audit reports
• Summary of financing and operating wins

Businesses can choose to hire outside agencies to create the annual report or handle it internally. With a template for annual reports, you can take information from impact reports and sales reports to create your own financial and operational review.

What makes a good annual report template 

Annual reports must have specific financial information to help shareholders understand the health of the company. These reports are designed to provide information on the ability to meet existing debts, profits or losses over the previous year, and operational plans. 💰

A comprehensive annual report should have:

• Detailed financial information : The whole point of this document is to meet regulatory requirements by providing in-depth financial information on revenues, profits, and losses
• A letter to stakeholders: Annual reports generally start with your organization’s mission statement and key takeaways from the previous year, so choose a template that includes a cover page for this information
• Support for data visualizations: Look for a template that features built-in graphs, pie charts, and Kanban boards to display key financial information and future plans
• Customizable fonts and graphic designs : Present your annual report in line with branding standards by selecting a template that offers customization for typography, design elements, and color schemes

10 Free Annual Report Templates

Ready to start making annual reports? You’ll need to start by gathering insights on key financial metrics and operational performance. Dive into team performance reviews , assess success on project management goals , and delve into the nitty gritty numbers when it comes to revenue, debts, and profits.

Then, use one of these pre-built templates for annual reports to quickly put all of the information together in one informative document. From all-in-one templates to progress reports and financial analysis reports, you’ll find what you need to inform your shareholders. 💪

ClickUp’s Annual Report Template takes a daunting task and turns it into a manageable step-by-step process. From gathering the correct data to presenting it in a professional annual report, this free annual report template will be your best friend when working on your most important end-of-the-year tasks.

Start by collecting important data from the previous year’s financial statements, project milestones, and marketing reports. Next, pop into the annual report template and fill out basic information like the company name, logo, and main people involved. 

Use the Annual Highlights section to call out big wins like sales growth, market share expansion, and global ranking. Next, cover at least two notable projects, focusing on objectives and the impact on the company at large.

Finally, go over the year’s best practices that had the best results and a financial analysis for the entire year. Share the presentation with board members, teammates, and shareholders. Use key takeaways from the report to improve communication plans , lay the groundwork for increased profits, and streamline operations to meet team and HR goals .

The Business Annual Report Template from ClickUp is an easy tool to gather, document, and present financial data at the end of the year. This modern annual report template provides support for advanced graphics, charts, and data tools to share information the way you want to.

Start by creating a report overview by breaking down information into summaries of business objectives, vision, and mission. Next, cover the company strategy, including reports on growth and shares. Add charts and graphs to drive home key successes and takeaways. 📊

The next section of the annual report template is all about finances. Write a financial statement laying out where the company stands and use hard numbers to back up the claims. Add a brief conclusion summarizing the main takeaways and finish with forecasts for the next few years.

The ClickUp Annual Report Work Breakdown Structure Template makes creating annual reports easier than ever by divvying up the work. Use the template to break down your entire annual report into tasks and subtasks. Automatically assign them to the correct team member to gather analytics and build sections of the annual report.

Use the different views packed into this modern annual report template to visualize progress and see who is working on what. Use priority flags to identify work that needs to be addressed immediately. Add relationships for dependencies so the team knows which tasks are blocking others.

The built-in Gantt chart lets you quickly see the timeline for creating the annual report. Use it for a broad overview of all the tasks in progress. Open the individual task cards to get more detailed information on financial stats and reporting progress.

Use the Financial Analysis Report Template from ClickUp to craft an up-to-date and detailed report on financial health that you can use as part of a bigger annual report. Pre-built spreadsheets make it easy to fill out financial data and track changes as needed.

Start by filling out the basic company information, including your logo, business address, and contact details. Next, add graphs and charts laying out details on financial essentials. These can include things like cash flow analysis, liquidity ratios, and debt ratios. 💸

The following sections include summaries for valuation and risk analysis. Add data and narratives to keep the reader’s attention and help them understand the company’s standing. Finish off by summarizing key takeaways, tips for improvement, and a quick recap.

Use the report to give a quick presentation to internal stakeholders or share it more widely in a PowerPoint or webinar with shareholders. Custom permissions settings let you control who sees the report and whether they can edit it or not.

The ClickUp Progress Report Template is a great add-on to an annual report. It allows you to keep track of project objectives, stay on schedule, and share summaries of progress with shareholders. Use the Progress Report Template to assess individual team member success or monitor achievements for the entire department. 

Customize the sheet to evaluate a single team member or the department. Fill out the basic information, including job titles, project scope, and contact information. Next, create a performance evaluation by breaking down main goals into key metrics. 

Develop a skills assessment section in the template by coming up with key skills the team or employee should meet. Break the ranking down into three to five ratings. Finally, end the report by featuring a recommendations section where you take the evaluated metrics and assess them alongside company and project objectives.

Use the Progress Report Template to highlight wins and areas for improvement in your annual report. The Progress Report can also be used to identify cases where teams have improved operations and elevated the company’s health and success.

The Nonprofit Annual Report Template from ClickUp allows organizations to share insights into operations and financial standings. Use nonprofit annual reports to share key takeaways with the public at large or offer reporting to advocates and donors. 🤩

The Nonprofit Annual Report Template starts with a message from the executive director. Use this section to thank investors and volunteers for their contributions and make a statement on the past year’s successes.

Next, lay out the vision and mission for your non-profit organization. Be sure to explain where the company stands today and where you see it going over the next year or two. The Annual Report layout then goes on to cover key accomplishments and program activities. 

Follow up by highlighting stories of change where people made the biggest impact in the organization this past year. Dive into financial statements and share special thank-yous to donors and volunteers who went above and beyond.

End your nonprofit annual report templates by focusing on future goals for the organization. Here, you can focus on financial goals in terms of fundraising as well as upcoming projects that you want to take on.

ClickUp’s LLC Annual Report Template lets you share operational details and financial results from the past year. Use it to manage business filings, save time creating annual reports, and keep track of progress over the years.

This corporate annual report template features four pre-built sections, but you can add more as you see fit. The first section is all about project growth, including detailed financial statistics. Sections for the growing team and corporate social responsibility highlight a people-first approach to the company. 

Finally, a section on plans for the year ahead lets you add in financial forecasts and potential projects. This is a great place to get buy-in for the year ahead from key stakeholders.

Canva is known more for design than it is for annual reports. However, this tool can take a generally boring set of information and turn it into a creative annual report, ready for presentations and sharing among the company. Featuring dozens of annual report design templates, the Modern Cover Annual Report is among our favorites. 

This creative annual report template features a blue and yellow design, but you can customize it to feature your branding colors or go for a simple black-and-white layout. Personalize the fonts to use your branding style in the annual report cover. 👩🏽‍🎨

Add photos, graphics, and icons to make the design really stand out. Download the design in two clicks and instantly share it across forums from social media to your internal annual report document. 

Venngage is a professional infographic design tool that features an eye-catching Year End Annual Report Template. The vintage design features retro color palettes that you can customize to suit your company’s branding.

The six-page template starts with a cover page, introduction, and table of contents. The next few pages cover year-end highlights, industry trends, and performance. Throughout the free template, you’ll find bright colors, gradients, and charts to highlight the most important information from expense reports and other financial documentation.

This attractive annual report template is best used for businesses that want to provide short insights into the business dealings of the past year. Add more pages and deeper insights if you prefer a more in-depth report.

The Annual Report Template from Envato is an in-depth, 24-page approach to informing shareholders about the state of your business. Featuring a professional design, the final product can be shared as a PDF or email attachment. 📧

This annual report example lets you present your business in a formal and eye-catching way. Use it to share quarterly business reviews , key wins, and financial statements with relevant parties. 

Change all the colors throughout the document in one place to match your branding. Use the built-in free fonts to change the text to meet your brand guidelines. The design works best in Adobe InDesign and features layered and vector functionality for elevated designs.

Update Shareholders with Annual Report Templates

With a simple annual report template, you’ll update shareholders on the company’s health and financial situation faster than ever before. From gorgeous, customizable designs to simple, informative layouts, there’s a way to share your information the way you want to.

Sign up for ClickUp today and start creating a comprehensive annual report that’s sure to be informative and engaging. Browse more than 1,000 templates to gather data for financial reporting and leverage the 15+ views and customization tools to monitor success throughout the year. When you’re ready to craft an annual report, there are several template options from ClickUp to get the job done. 🌻

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Professional Business Documents, Agreements & Letters

All Types of Business Documents, Agreements and letters

• Discount/Special Offer Expired Order Processing
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Annual Report, CEO Letter

[tab name=’Guidelines’]

Guidelines : Annual Report, CEO Letter

Annual Report, Letter from the CEO

Guidelines and Alternate Phrases

• Give a state-of-the-company summary statement, including new product or new service information, financial position, marketing matters, proposed new ventures, and legal confrontations.
• Explain not only what happened, but why.
• Relate the company’s performance to the industry as a whole and give projections regarding the future.
• Show modest pride if your company has had a successful year.
• We want to congratulate our employees for their dedication to this new….
• We think this attitude has been a successful one in enabling us to….
• This approach has turned out to be quite beneficial to….
• The risk and hard work of prior years has paid off handsomely this past quarter.
• Communicate management philosophy about major events such as new or ongoing market changes, new-product introductions, legal battles, acquisitions, divestitures, or changes in senior management.
• Mention any company civic commitments.

[/tab] [tab name=’Example 1′]

Example 1: Sample letter of company annual report

Company Name or Letterhead Address City, State Zip Date

Addressee Address City, State Zip

To Our Shareholders:

Financial Highlights

We submit herewith the Annual Report of The Procter & Gamble Company for the 1987 fiscal year that ended June 30, 1987.

Net sales for the year amounted to $17.0 billion, an increase of 10 percent over net sales of $15.4 billion for the previous year.

Net earnings for the year amounted to $327 million, and earnings per share amounted to $1.87 per share. Excluding the impact of the reserve to restructure manufacturing operations we wrote to you about in June, net earnings amounted to $786 million, an increase of 11 percent over net earnings of $709 million for the previous year. Pre-tax earnings excluding the restructuring reserve were up 21 percent over the comparable amount a year ago. Earnings per share excluding restructuring were $4.59, which compares with $4.20 for the previous year.

Dividends of $2.70 per common share were paid during the year. The comparable amount for the previous year was $2.625 per share. This marked the 31st consecutive fiscal year of increased dividend payments.

Sesquicentennial Anniversary

This year marks the 150th anniversary of the partnership formed by the Company’s founders, candlemaker William Procter and soapmaker James Gamble. We are proud of our long and successful history. As we look to the future, we are committed to do what’s right for the long-term interest of our Company so it will prosper through another 150 years.

Restructuring of Manufacturing Operations

In June, we reported to you we had established a restructuring reserve for the Company’s worldwide manufacturing operations. After final review, this resulted in a pre-tax charge against the fourth quarter of $805 million that reduced net earnings by $459 million, or $2.72 per share. The restructuring program primarily focuses on consolidations of manufacturing operations, which result in the conversion or disposal of some plants, buildings, and equipment in the United States and abroad.

A significant part of the program includes a sharp curtailment of Duncan Hines cookie manufacturing operations in the United States and Canada. This cutback in resources behind the ready-to-serve cookie business is related directly to the infringement of the Company’s patented technology by three major U.S. cookie manufacturers and the injury this has done to our cookie business. We are continuing to pursue these lawsuits in U.S. District Court.

Over the long-term, the restructuring program will result in a stronger, more competitive company and will set the stage for more vigorous growth in the current year and beyond. The program will have a positive impact on cash flow and will not inhibit the Company’s ability to pay dividends.

Acquisitions

Earlier this month, the Company announced an agreement to purchase all shares of the Blendax Group subject to governmental agreement. Blendax is a major European manufacturer and marketer of health and beauty aids headquartered in Mainz, Germany. It holds important market positions in the Federal Republic of Germany and Austria. Blendax’s products include dentifrice, toothbrushes, oral care appliances, bath and shower foams, hand and body lotions, shampoos, hair colorings, and deodorants. Its experienced organization of more than 2,000 employees will give the Company an expanded presence in European health and beauty aid markets.

In mid-June, the Company’s Richardson-Vicks subsidiary signed an agreement to purchase the worldwide rights to Bain de Soleil, the second-largest-selling sun care line in the U.S. The line comprises a full range of sun care products for tanning, sun protection and moisturizing.

United States Business

Net earnings from operations in the United States excluding the effects of restructuring totaled $711 million, a 12 percent increase over the previous year. A new unit volume record was established for the domestic consumer products divisions despite a business climate that was particularly competitive throughout the markets in which we do business. Termination of investment tax credits by the Tax Reform Act of 1986 had a negative impact on net earnings this past year. However, beginning July 1, 1987, the drop in the federal statutory tax rate from 46 to 34 percent under the Act will more than offset the loss of these tax credits.

Notable volume and market share increases were achieved in the dentifrice and deodorant categories, led by Crest Tartar Control toothpaste and Secret anti-perspirant. In the mouthwash category, Peppermint Scope was expanded broadly as a companion product to Original Mint Scope. Two new and unique health and beauty aids were expanded into national distribution: New Pert Plus, which replaced original Pert, is the first hair care product that delivers complete cleaning and conditioning benefits in one product. Peridex, a prescription mouthwash, is the first product to carry the American Dental Association’s seal of acceptance for control of plaque and gingivitis.

There was significant growth in the coffee and fruit juice business. A record market share boosted Vacuum Folgers coffee to leadership in its category. Record unit volumes of Citrus Hill Select orange juice were shipped, and the stage was set for future growth by expanding Citrus Hill Plus Calcium nationally in orange juice and grapefruit flavors. Its calcium source marks an important breakthrough in family nutrition. Patent approval on the product is pending. The American Medical Women’s Association accorded special recognition to Citrus Hill Plus Calcium as an effective source of dietary calcium, which also marked the first product acceptance citation by this professional organization.

Record unit volume was attained in paper products, led by Charmin bathroom tissue, Bounty towels, Always feminine sanitary pads and liners, and Pampers disposable diapers, all of which reported significant growth over the previous year. New Always Slender for Teens was expanded nationally late in the year and is directed specifically at the teenage catamenial market. In June, Luvs Deluxe diapers with improved containment and ultra thin padding were expanded into national distribution.

In the laundry and cleaning products segment, a number of reformulated and companion products to existing Company brands were expanded successfully to national distribution.

• Liquid Cascade dishwashing detergent is generating new volume in tandem with powder Cascade, the dishwashing market leader. • Liquid Cheer detergent offers all-temperature cleaning versatility just like Cheer powder detergent. • Dash detergent was repositioned as a lemon-scented economically priced detergent. • New, fresh-scented Lemon Comet joins regular Comet in the cleanser category.

Our industrial and institutional businesses made significant progress this past year, most notably from improved margins on wood pulp that helped to restore profitability to more satisfactory levels.

International Operations

International operations achieved net earnings of $197 million excluding the effects of restructuring. This represented an increase of 38 percent over the prior year. This was the second straight year of strong earnings growth. The growth was broadly based geographically and by product line and included the effect of favorable currency exchange rates.

The soap and detergent business in Europe recorded significantly improved margins. New or re-formulated products expanded our brand line-up in many major markets. Additionally, we are very encouraged by the growth of the citrus beverage business in Germany, where we introduced improved products with unique technology that retains more of the natural juice flavors. In most countries improved versions of Pampers contributed important unit volume growth. This progress was particularly noteworthy in Japan, where our market share improved in a disposable diaper category that has grown substantially.

During the past year we completed the integration of the Richardson-Vicks international business with P&G operations. Revised divisional structures and the combining of companies in many countries are providing efficiencies and presenting new opportunities for business growth to the unified organizations.

Geographic expansion activities continued during the past year. A joint venture became operational in Egypt, and a joint venture was established in Turkey with the Mintax Company. In Colombia, the Company acquired a controlling interest in Inextra, a local manufacturer of soaps and detergents.

Research and Development

Last year, the Company invested $576 million in research and development expenses, a 20 percent increase over the previous year. Expenditures included basic research with emphasis on relevant new technologies as well as applied research to develop new products and to maintain the vitality of existing brands. Worldwide, about 6,000 employees–or more than eight percent of the Company’s total enrollment–are engaged in research and development activities.

Following 20 years of extensive research, the Company has developed an important new food ingredient. In May, the Company’s petition for approval of a new calorie-free ingredient to replace fat in everyday foods was accepted for processing by the U.S. Food and Drug Administration. Olestra, its proposed generic name, will let consumers reduce their intake of fat and calories. Products containing olestra cannot be marketed until the FDA reviews and approves its use, but we are very much encouraged by this first step in making these important nutritional and health benefits available to the public.

Capital Expenditures

Last year, capital expenditures amounted to $925 million, or slightly below the expenditure level of the previous two years. Product and process improvement projects to existing manufacturing capacity and cost savings projects accounted for more than 60 percent of these expenditures.

Financial Strength

The Company maintained its strong financial position in 1987. All of the past year’s cash needs were provided by internally generated funds. Coupled with considerable unused debt potential and ready access to capital markets here and abroad, we have a great deal of financial flexibility in funding the future growth of the business.

The commemorative booklet inside the front cover of this report reviews how “Excellence through commitment and innovation” has characterized the Company’s operations since it was founded in 1837. It is particularly appropriate in this sesquicentennial year to pay tribute to the men and women of Procter & Gamble, both past and present, who have contributed to that record. They are primarily responsible for the past achievements and growth of the Company through the years, and it’s because of them, now 73,000 strong, that you can share our confidence in the future.

Respectfully,

John G. Smale

Chairman of the Board and CEO

John E. Pepper

Reprinted by courtesy of The Procter & Gamble Company. [/tab] [end_tabset]