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In ArcGIS versions 8.3 and later, it is possible to control whether or not annotation projected on the fly in ArcMap will become curved or not. Instructions provided describe how to make annotation either curve or not curve when projecting on the fly in ArcMap.
Prior to ArcGIS version 8.3, when straight Geodatabase annotation was projected on the fly in ArcMap, it always became curved. This was due to a process called densification. At version 8.3 and later, densification is a user option and it is off by default. This topic describes how to turn on or off densification by changing the ArcMap Advanced Setting.
Densification is a process that can produce more accurate results when projecting on the fly. If densification is on when annotation is projected on the fly, a number of points are added to the baseline of the text at small intervals. When the text is projected to the new coordinate system, each point is projected. With densification, the result is that the annotation can become curved, and if the annotation is stacked (i.e., multiline), then the text will become unstacked when projected.
Densification may or may not be desirable. Densification may be desirable when creating a small scale map with relatively long pieces of annotation text that need to be gradually curved to fit the graticule of the new projection. Densification may not be desirable when creating a large scale map with straight annotation text that needs to remain straight after projecting, or when there is stacked text that needs to remain stacked after projecting.
ArcGIS 9 users: Look in C:\Program Files\ArcGIS\Utilities for AdvancedArcMapSettings.exe