Montclair State University

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Montclair State University

• Accounting 201
• Review of
• Annual
• Reports

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Montclair State University

• Accounting 520
• Review of
• Annual
• Reports

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Annual Reports
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Annual Reports
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Review of Annual Reports
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Topics To Be Discussed

• General Format of Annual Reports
• Management Responsibility for Financial
  Statements
• Auditors Report
• Financial Statements
• Disclosure of Significant Accounting Policies
• Fiscal Year End
• Rounding of Amounts

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Topics To Be Discussed

• General Format of Annual Reports
• Management Responsibility for Financial
  Statements
• Auditors Report
• Financial Statements
• Disclosure of Significant Accounting Policies
• Fiscal Year End
• Rounding of Amounts

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General Format of Annual Reports

• Financial Highlights
• Letter to the Shareholders
• Description of Companys Operations
• Managements Discussion and Analysis of Financial
  Statements
• Financial Statements
• Footnotes to Financial Statements
• Managments Statement of Responsibility for Annual
  Report
• Auditors Report
• Multi-Year Statistical Data

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General Format of Annual Reports

• Financial Highlights
• Letter to the Shareholders
• Description of Companys Operations
• Managements Discussion and Analysis of Financial
  Statements
• Financial Statements
• Footnotes to Financial Statements
• Managments Statement of Responsibility for Annual
  Report
• Auditors Report
• Multi-Year Statistical Data

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Financial Highlights
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Letter to the Shareholders

• Why invest, or retain an investment in Quaker
  Oats?

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Letter to the Shareholders

• We are taking charge of our own destiny by
  creating our own opportunities.

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Letter to the Shareholders

• Our ultimate objective is to deliver a superior
  total return to our shareholders.

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Letter to the Shareholders

• The numbers for 1994 fiscal year only begin to
  tell of our progress.

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Letter to the Shareholders

• A Company In Transition
• Three years ago, it was clear that technology
  and regulation would transform the communications
  industry. ATT had to act. We needed to move
  beyond long distance. So we improved the margins
  of our core business and used the cash flow to
  help fund our own transformation. Through
  acquisitions and internal development we created
  three of the most sophisticated end-to-end
  networks in the world for digital wireless,
  broadband cable and data. We also made good
  progress in attracting customers to these new
  networks. Through our actions, three years
  later, ATT boasts four businesses each a leader
  in its industry.
• A Timeless Strand
• ATT Business is an enterprise communications
  and networking leader. ATT Wireless is one of
  the fastest-growing wireless businesses in the
  United States. ATT Consumer is a leading
  consumer communications and marketing business.
  And ATT Broadband is the largest cable broadband
  services business and one of the
  fastest-growing. Our restructuring plan is
  designed to provide ATT shareowners with
  publicly-traded securities that reflect each of
  these four businesses. Theyre linked with a
  common vision yet will have the focus and
  flexibility of separate businesses.

• Transitions are tough, and 2000 was a major
  transition year for the communications industry
  and for ATT.

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Managements Discussion

• Compare
• Fiscal
• Years
• 2000
• 1999
• 1998

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Managements Discussion

• Compare
• Fiscal
• Years
• 2000
• 1999
• 1998

• Operating Profit and Margin
• Change B/(W)
• 2000 1999 1998 2000 1999
• Reported
• Operating profit 3,225 2,818 2,584 14 9
• Operating
• profit margin 15.8 13.8 11.6 2.0 2.2
• Comparable
• Operating profit 3,163 2,830 2,526
  12 12
• Operating
• profit margin 15.7 15.2 15.5 0.5 (0.3)

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Managements Discussion

• Compare
• 2000
• vs.
• 1999
• Compare
• 1999
• vs.
• 1998

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Managements Discussion

• Compare
• 1998
• vs.
• 1997
• Compare
• 1997
• vs.
• 1996

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Multi-Year Statistical Data

• Minimum of 5-year statistical data
• Some balance sheet, some income statement
  information
• Some non-financial statement information
• General Mills 11-year data is overkill

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. We use informed estimates and
  judgments that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  our best judgment at the time, future facts and
  circumstances could change, causing the ultimate
  results to differ from our estimates.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. We use informed estimates and
  judgments that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  our best judgment at the time, future facts and
  circumstances could change, causing the ultimate
  results to differ from our estimates.

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Managements Statement ofResponsibility for
Annual Report

• Management is responsible for the information in
  this report. We use informed estimates and
  judgments that affect the reported amounts in the
  financial statements and disclosures regarding
  contingencies. While the estimates were based on
  our best judgment at the time, future facts and
  circumstances could change, causing the ultimate
  results to differ from our estimates.

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• Our system of internal controls is designed to

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• Our system of internal controls is designed to
• provide reasonable assurance that assets are
  safeguarded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• Our system of internal controls is designed to
• provide reasonable assurance that assets are
  safeguarded
• that transactions are properly recorded and
  executed, and

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• Our system of internal controls is designed to
• provide reasonable assurance that assets are
  safeguarded
• that transactions are properly recorded and
  executed, and
• that established policies and procedures are
  followed

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded
• transactions are properly recorded

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Managements Statement ofResponsibility for
Annual Report

• Internal Controls
• American Generals system of internal controls
  is designed to provide reasonable assurance that
• assets are safeguarded
• transactions are properly recorded
• and executed, and that established policies
  and procedures are followed.

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Managements Statement ofResponsibility for
Annual Report

• Tupperware Corp.
• . . . There are inherent limitations in all
  internal controls systems based on the fact that
  the cost of such systems should not exceed the
  benefits derived. Management believes that the
  Company's systems provide the appropriate balance
  of costs and benefits.

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Managements Statement ofResponsibility for
Annual Report

• Lucent Technologies Inc.
• . . . Even an effective internal control system,
  no matter how well designed, has inherent
  limitations -- including the possibility of
  circumvention or overriding of controls -- and
  therefore can provide only reasonable assurance
  with respect to financial statement presentation.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization. Internal control
  systems are subject to inherent limitations due
  to the necessity to balance costs incurred with
  benefits provided.

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Managements Statement ofResponsibility for
Annual Report

• MCI Communications Corporation
• The company maintains a system of internal
  controls designed to . . . provide reasonable
  assurance that assets are safeguarded and
  transactions are recorded and executed with
  managements authorization. Internal control
  systems are subject to inherent limitations due
  to the necessity to balance costs incurred with
  benefits provided.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of Toys "R" Us, Inc. and
  subsidiaries as of February 3, 2001 and January
  29, 2000, and the related consolidated statements
  of earnings, stockholders equity and cash flows
  for each of the three years in the period ended
  February 3, 2001. These financial statements are
  the responsibility of the company's management.
  Our responsibility is to express an opinion on
  these financial statements based on our audits.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of Toys "R" Us, Inc. and
  subsidiaries as of February 3, 2001 and January
  29, 2000, and the related consolidated statements
  of earnings, stockholders equity and cash flows
  for each of the three years in the period ended
  February 3, 2001. These financial statements are
  the responsibility of the company's management.
  Our responsibility is to express an opinion on
  these financial statements based on our audits.

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Auditors Report

• We have audited the accompanying consolidated
  balance sheets of Toys "R" Us, Inc. and
  subsidiaries as of February 3, 2001 and January
  29, 2000, and the related consolidated statements
  of earnings, stockholders equity and cash flows
  for each of the three years in the period ended
  February 3, 2001. These financial statements are
  the responsibility of the company's management.
  Our responsibility is to express an opinion on
  these financial statements based on our audits.

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Auditors Report

• We have conducted our audits in accordance with
  auditing standards generally accepted in the
  United States. Those standards require that we
  plan and perform the audit to obtain reasonable
  assurance about whether the financial statements
  are free of material misstatement. An audit
  includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the
  financial statements. An audit also includes
  assessing the accounting principles

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Auditors Report

• An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures
  in the financial statements. An audit also
  includes assessing the accounting principles used
  and significant estimates made by management, as
  well as evaluating the overall financial
  statement presentation. We believe that our
  audits provide a reasonable basis for our
  opinion.

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Auditors Report

• In our opinion, the financial statements
  referred to above present fairly, in all material
  respects, the consolidated financial position of
  Toys "R" Us, Inc. and subsidiaries at February 3,
  2001 and January 29, 2000, and the consolidated
  results of their operations and their cash flows
  for each of the three years in the period ended
  February 3, 2001, in conformity with accounting
  principles generally accepted in the United
  States.

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Auditors Report

• Standard Unqualified Opinion
• Explanatory Language Added to Report
• Opinion of another auditor
• Uncertainties
• Consistency
• Emphasis of matter
• Qualified Opinion
• Scope limitation
• Adverse Opinion
• Disclaimer

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Disclosure ofSignificant Accounting Policies

• Usefulness of financial statements depends on
  users understanding of accounting policies of
  reporting entity

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Disclosure ofSignificant Accounting Policies

• Generally
• Recognition of revenue and expense
• Specifically
• Selection from existing alternatives
• Principles peculiar to particular industry
• Unusual or innovative applications

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Disclosure ofSignificant Accounting Policies

• May be shown
• separate Summary of Significant Accounting
  Policies section preceding notes
• initial note

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Notes to ConsolidatedFinancial Statements

• Consolidation
• Fiscal Year
• Inventories
• Plant Assets
• Depreciation
• Intangibles
• Use of Estimates

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Notes to ConsolidatedFinancial Statements

• The consolidated financial statements include The
  Quaker Oats Company and all of its subsidiaries.
  All significant intercompany transactions have
  been eleminated. . . .

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Notes to ConsolidatedFinancial Statements

• The consolidated financial statements include The
  Quaker Oats Company and all of its subsidiaries.
  All significant intercompany transactions have
  been eleminated. . . .

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Month of Fiscal Year End
1999 1998 1997
1996 January ................................... 2
6 25 24 21 February ..............................
... 11 11 10 11 March ............................
......... 16 14 14 15 April ......................
................ 9 9 10 10 May ...................
.................... 17 14 14 14 June ............
........................... 53 52 53 57 July .....
................................... 9 8 11 11 Augu
st .................................. 15 14 14 15
September .............................. 38 38 36
37 October .................................. 21
23 22 23 November ..............................
16 15 15 14 Subtotal ...........................
231 223 223 228 December .........................
..... 369 277 377 372 Total Companies ...........
. 600 600 600 600
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Rounding of Amounts
1999 1998 1997 1996 To nearest
dollar 26 31 30 33 To nearest thousand
dollars Omitting 000 338 345 349 352 Presenting
000 6 9 13 17 To nearest million
dollars 230 215 208 198 Total Companies 600 600 60
0 600
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Review of Annual Reports