Reviewing a company’s SEC filings

Reviewing a company’s SEC filings
The government is on your side when it comes to getting
information about publicly traded companies.
The Securities and Exchange Commission (SEC) requires all
publicly traded companies to file an annual report. You can
get the annual report from the company itself. Publicly traded
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companies are not only required to provide annual reports
to investors (as I discuss in Chapter 2); they’re required to file
several other types of reports with the SEC during the year.

Looking at annual reports

If you’re a shareholder of a company, then you automatically
receive a copy of its annual report each year. If you’re not a
shareholder, you can either call the company to request an
annual report or access it from the company’s Web site. Usually
the company has a hypertext link that you can click to
download a copy of the report from the Web site.
Annual reports are gold mines of information because they
include the following financial statements and information:
n Income statement: Discloses all of the company’s earnings
and profits for the year.
n Balance sheet: Identifies all of the company’s long- and
short-term assets and liabilities.
n Statement of cash flows: Tells you all of the company’s
sources for and uses of cash for the past year.
n Research and development expenses: Tells you a lot
about where the company’s headed in the future.
n Overhead expenses: High overhead expenses relative to
total revenues can signal inefficient management or lagging
markets for the company’s products or services.
If you’re researching several companies, you can order copies
of all their annual reports at once using the Public Register
Annual Report Service (PRARS) Web site located at
www.prars.com. The PRARS Web site is a sort of clearinghouse
for the distribution of annual reports. In exchange
for entering certain information about yourself and completing
a survey, PRARS will mail you copies of annual
reports for the companies you’ve specified. You don’t even
have to pay postage!

Viewing other SEC filings
In addition to annual reports, the SEC requires companies
with more than 500 investors and $10 million in assets to
make other filings during the year. Some examples of required
SEC filings include:
n 10-Q: A quarterly form published three times a year to
supplement the company’s annual report.
n 8-K: The SEC requires that this form be filed to provide
notice of important financial events during the year that
may affect shareholders’ interests.
n 10-K: A report that companies must file annually at the
close of the fiscal year. It is a sort of unembellished
annual report that lacks the fancy graphics and promotional
hype included in the shareholders’ annual reports.
You can search and download recent SEC filings for a company
using the SEC Electronic Data Gathering and Retrieval
Service (EDGAR). They’re posted on the Web at
www.sec.gov/edgarhp within 24 hours after SEC
receives them.

An even more valuable government site than the EDGAR site
is the FreeEdgar site, which collects several years’ worth of SEC
filings for each company and organizes them into comparative
reports and charts. Using the data located at
www.freeedgar.com, you can get a sense of a company’s
earnings, profits, and sales history over time. You can even sign
up to receive e-mails from the FreeEdgar Web site alerting you
each time a specified company has made a required filing.