What is an Annual Report?

Publicly traded companies that meet certain criteria are required to file financial reports
with the Securities and Exchange Commission (SEC). Of the many report types, the
investor population is most familiar with the 10-K, a document that is filed annually and
is sometimes referred to as a company's annual report. Because the 10-K includes a
tremendous amount of detail and legal jargon, most companies also produce a more
reader-friendly annual report that typically contains product information, photographs,
charts, a letter from the CEO, and other company and financial data. More than 10,300
of these colorful electronic publications are listed on the IRIN site.

Why would I read an Annual Report?

Most investors consider the annual report to be the most useful and credible tool for
gaining a comprehensive overview of a company. It is one of the most critical
documents that a company produces and is often the primary document used by
investors when researching a company. It provides details about the financial condition
of the company, and offers insight into the details of its business, as well as its
management philosophy.

According to a survey by Research Strategy Management, Inc., 91 percent of investors

indicate that a company's annual report is the most credible source of information about
that company. Billionaire investor Warren Buffet stated that nearly everything he learns
about a company comes from public documents. And according to research conducted
by Shelley Taylor & Associates, of the 26 sources of information that investors can rely
on to make financial decisions, the annual report is ranked as one of the top five.

What content is included in an Annual Report?

The content in annual reports is unique to each company. Whereas the 10-K that
companies file with the SEC must include specific items and adhere to stringent
guidelines, the content that companies select to include in their annual report varies
from company to company, and from year to year. Investors usually can expect to find
the following items in a company's annual report:

 A summary of the previous year

 Information about the company, including its structure, product line, and
subsidiaries
 A letter to shareholders from the President or CEO
 A detailed discussion about the company's financial results
 The financial statements (balance sheet, income statement, and cash flow
statement)
 Notes to the financial statements
 Other information about the company that often is not included in other
documents.