Annual Report

The term annual report refers to a document that summarizes the operating and financial performance of a company over the course of a year. An annual report is typically distributed to shareholders along with a definitive proxy statement approximately forty days prior to the company's annual stockholder meeting.

Publicly-traded companies are required by federal securities laws to disclose certain operating and financial information on an ongoing basis. Rules under the jurisdiction of the Securities and Exchange Commission (SEC) require companies to send an annual report to shareholders prior to any meeting held to elect members to their Board of Directors. Companies oftentimes combine their annual reports with their Form 10-K and definitive proxy statement; distributing these materials to shareholders approximately forty days prior to these meetings.

As is the case with Form 10-K, the information contained in an annual report is typically audited by the company's accounting firm. The information found in this report normally includes:

• Financial Highlights: a multi-year comparison of revenues, net income, earnings per share, dividends paid per share, the market price of the stock at year-end, as well as the total assets of the company.

• Chairperson's Letter: the background of the business, operating geography, strategy, fundamental principles, operating highlights, and future direction.

• Form 10-K: the business background, select financial data, financial statements and disclosures, exhibits to financial statements, corporate leadership, as well as controls and operating procedures.