Sources of financial statement information in the United States

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Sources of Financial Statement Information 

Firms whose bonds or common shares trade in public capital markets in the United States typically make the following information available:

•  Annual Report to Shareholders. The glossy annual report includes balance sheets for the most recent two years and income statements and statements of cash flows for the most recent three years, along with various notes and supporting schedules. The annual report also includes a letter from the chairperson of the board of directors and from the chief executive officer summarizing the activities of the most recent year. The report typically includes management’s discussion and analysis (MD&A) of the firm’s operating performance, financial position, and liquidity. Firms vary with respect to the quality of information provided here. Some firms, such as PepsiCo, give helpful information about the firm’s strategy and reasons for the changes in profitability, financial position, and risk. (See Appendix B.) Other firms merely repeat amounts presented in the financial statements without providing helpful explanations for operating results
•  Form 10-K Annual Report. The Form 10-K annual report filed with the SEC includes the same financial statements and notes as the corporate annual report with the addition of supporting schedules required by the SEC. For example, compared to the corporate annual report, Form 10-K often includes moredetailed information on changes in the allowance for uncollectible accounts and other valuation accounts. Firms are required by the SEC to report several key items in the Form 10-K, including:

• a description of the business (Item 1), including its risk factors (Item 1A). 
•  a description of company properties (Item 2). 
•  the management discussion and analysis (Item 7). 
•  the financial statements, notes, and supplemental schedules (Item 8).

Large firms must file their annual reports with the SEC within 60 days after the
end of their annual accounting period.

• Form 10-Q Quarterly Report. The Form 10-Q quarterly report filed with the SEC includes condensed balance sheet and income statement information for the most recent three months, as well as comparative data for earlier quarters. Unlike the annual filing of Form 10-K, the financial statements included in Forms 10-Q are not audited.
• Prospectus or Registration Statement. Firms intending to issue new bonds or capital stock file a prospectus with the SEC that describes the offering (amount and intended uses of proceeds). The prospectus includes much of the financial information found in the Form 10-K annual report.

A large number of firms include all or a portion of their annual reports and SEC filings on their corporate websites. For example, PepsiCo provides all of the financial data and analysis provided in Appendices A and B on its website (www.pepsico.com). In addition, many firms provide additional financial data on their sites that are not published in the annual reports. Other useful information in the investor relations section of corporate websites may include (1) presentations made to analysts; (2) press releases pertaining to new products, customer acquisitions, and earnings announcements; and (3) transcripts or archived webcasts of conference calls with analysts. Firms are required to file reports electronically with the SEC, and filings for recent years are available at the SEC website (www.sec.gov). Numerous commercial online and CD-ROM services also provide financial statement information (for example, Bloomberg, Standard & Poor’s, and Moody’s).

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