Annual reports offer a wealth of information when you are researching specific companies. This article will familiarize researchers with annual reports, how to use them, and how to find them.
What is an annual report?
An annual report is a document that a company makes available to its shareholders each year. The report normally includes a profit and loss account and balance sheet, as well as a directors’ report and an auditor’s report. Annual reports can be as plain as an ascii text document, or they can also be full color documents.
If a company is public, it has to submit an extensive version of the annual report, called a 10-K, to the Securities and Exchange Commission (SEC). Private companies do not have to submit an annual report to the SEC as their stocks(securities) are not sold to the public. Generally, annual reports are not available for private companies. The purpose of filing with SEC is “the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company’s securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.” (SEC website)
Why are they useful?
An annual report contains excellent information about a company. It will contain company financial information, as well as other information about how well the company is performing. Many commercial databases use the annual reports extensively when gathering data.
What should I look out for?
This is perhaps stating the obvious, but one should remember that an annual report is a self-published document from the company. Besides stating the financial information required by law, the report may also provide other information, such as how the company has reacted to market trends, or where the company plans to go in the future.
How can I find them?
Many companies have their own websites. Such companies may have an “About Us” or “Company Information” or “For Investors” section on their website. These sections may contain links to PDF or HTML copies of the annual reports.
The SEC Filings & Forms (EDGAR) website is a great place to look for company filings. Reports are accessible electronically from 1993 to the present.
LexisNexis Academic offers one of the easiest ways to access 10-K and other reports. When you arrive at the database home page, click on “Company” on the left side, then choose “SEC Filings”, as shown in the image below.
If you are looking for color copies of the annual reports, you might check Mergent Online for those. You’ll have to search for the company first, and then on the company report screen, click on Annual Reports. These reports will have the same info as Lexis, they’re just prettier to look at. Reports are in PDF format, and date ranges will vary depending on the company. Mergent also contains annual reports for international companies.