Management Discussion and Analysis

Company annual reports are long and boring documents that contains numbers, pictures and tables that can put you to sleep — right at the start of your day.

However, there is one section in an annual report that is concise (less than 10 minutes reading time) and you almost always end up knowing a little more about the company than you started out with. This section is the — Management Discussion and Analysis.

This section contains a brief description of the year gone by and some of the key factors that influenced the business of the company in that year. You should read it with a healthy dose of skepticism, as the management is talking about its own business and are usually optimistic. It is a quick read and often reveals interesting bits of information about a business that trigger important questions.

Where Can You Find The Management Discussion and Analysis?

Let’s take the example of New York Times to see where we can find its management discussion and if we find anything interesting in it.

Go to NyTimes.com
Look for a link called — Investors. This should be a small link hidden somewhere at the top or the bottom. In this case, there is no such link, but, if you scroll down to the bottom of the page –Â you will find that there is a link called — The New York Times Company. This seems to be the parent company, click on this link.
On this page, you will see the — Investors — link right at the top. Click it.
On the right side of the page that opens up — you will see a link called — Financials. Click it.
You will see the link for Annual Reports & Forms 10 – K. Click on 2008 Annual Report & 10-k
This will open up the PDF, look for the section of Management Discussion and Analysis in the Index or Table of Contents and go directly to it.

This is the section that you are interested in.

The first thing that I noticed in this section was the company structure and which parts were contributing to the revenue of the $2.9 billion dollar revenue. I also didn’t know that About.com was part of the same company as NYT.

nyt-structure

revenue-break-up-nytimes

Source: 2008 NYTCO Annual Report

As you read on — you will find other bits of interesting information about the company — its business environment, challenges it faces, measures it plans to take etc.

Almost all companies have their annual reports located in the same way as NYT and the Management Discussion is present in all of them.

Reading this in ten minutes won’t make you an expert stock picker or a star fund manager, but, it is an excellent start for people who have never picked up an annual report and want to learn more about the companies they plan to invest in or are already invested in.