This article about reading the footnotes to financial statements is so, so true. My wife, the auditor, thinks they are one of the most important pieces of information in the annual report. From the article:
So which footnotes are the most important? All of them, though at some companies certain footnotes require a closer look than others. For example, at an acquisitive firm like School Specialty, a roll-up of school-supply companies, the footnote on Business Combinations and Proforma Results is a must-read for investors interested in the quality of earnings growth. This footnote shows that in last year's third fiscal quarter, revenues fell by 1% without acquisitions–a much different figure from the 6% rise over the same quarter a year earlier cited in the company's press release. The difference suggests that the company could be reliant on acquisitions for growth. Indeed, the company's own guidance for organic growth since last November has been 0% to 2%, and recent press releases concede that revenue increases have been "driven primarily by acquired businesses."