A template processor converts an initial template document into an XSL template that can be used to automatically generate reports from report data extracted from a database or other application. Users create initial template documents using a word processor or other rich-text editing application. The initial template document employs the word processor's native formatting features to specify the formatting of report data. The initial template document includes placeholder tags inserted by the user to define the locations of report data in the report. The initial template document also includes transformation tags that dynamically define the content of a report based on the value or quantity of report data. The template processor can include a reader adapted to read portions of the initial template file and a parser adapted to create corresponding XSL code from these portions. The XSL template can be combined with XML-formatted data to create a report.