Investopedia / Ryan Oakley

SEC Form ARS: An Overview

U.S. Securities and Exchange Commission (SEC) Form ARS, or the Annual Report to Shareholders, is a document used by a public company to report its latest financial performance to its shareholders shortly before its annual shareholders' meeting.

Form ARS is not required to be filed with the SEC. Instead, it is intended as a direct communication from a company's executives to its shareholders. It summarizes the company's latest financial performance and may also contain hints about its future direction.

In recent years, most public companies have combined or replaced the Form ARS with the Form 10-K, which contains more comprehensive financial information and must be filed with the SEC.

Key Takeaways

  • A company may use SEC Form ARS to report its performance for the past year to shareholders in advance of their annual meeting.
  • "ARS" is an acronym for "Annual Report to Shareholders", and is an optional document intended as a direct communique with shareholders.
  • In lieu of Form ARS, many companies use SEC Form 10-K, as it contains more comprehensive financial information.

Understanding Form ARS

A typical SEC Form ARS will include a summary of the year's major events and a list of some of its accomplishments and future plans as well as detailed financial information regarding the last year's operations.

This document and the company's proxy statement are essential reading for fundamental analysts who study the ongoing business of a company in order to determine whether it makes a good investment for the future.

An annual report is a document that public corporations must provide annually to shareholders that describes their operations and financial conditions. The front part of the report often contains an impressive combination of graphics, photos, and an accompanying narrative, all of which chronicle the company's activities over the past year and may also make forecasts about the future of the company. The back part of the report contains detailed financial and operational information.

Information Contained in the ARS

The ARS contains financial statements for each period since its last annual meeting and for the previous year as a whole. Financial statements include:

  • The income statement, which compares the company’s income with the cost of operating expenses during the year.
  • The balance sheet, which gives a complete picture of the company’s assets and debts over the course of the previous financial year.
  • The cash flow statement, which shows how the company has generated and used liquid assets and cash during the year under review.

The more comprehensive SEC Form 10-K must also provide an overview of the company's major operations, an outline of known risk factors to the business, specific financial data covering the past five years, and commentary from the management as well as a full financial report.

The breakdown below shows what a Form ARS will typically include:

  • A director’s report, which includes information about the director’s salary and a review of corporate governance policies and procedures
  • General information about the company
  • A review of company financial information and operations
  • A statement by the chairperson
  • An auditor’s report with an opinion on the accuracy of the financial information found in the ARS
  • Financial statements, including income statements, balance sheets, cash flow statements, and a statement of changes in equity
  • Notes relevant to the financial statements
  • Information on the company’s accounting policies

Stock analysts use SEC Form ARS or Form 10-K to track a company's financial results and form an opinion on its value as an investment.

The ARS may cover additional information as its executives see fit, including reports on the company’s social responsibility policy, a description of its manufacturing operations, and any other details considered useful for shareholders and potential investors.

Presentation of the ARS

The ARS is, to some extent, a public relations (PR) or investor relations (IR) document. As such, it is usually published on high-gloss paper with photos, images, and compelling graphics.

The Form 10-K, on the other hand, is a more detailed version of the Form ARS and is submitted to the SEC, without many of the bells and whistles. That is why many companies forego a separate ARS and provide shareholders only with a copy of its 10-K.

Article Sources
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  1. U.S. Securities and Exchange Commission. "Annual Report." Accessed Aug. 14, 2021.

  2. U.S. Securities and Exchange Commission. "Form 10-K." Accessed Aug. 14, 2021.

  3. U.S. Securities and Exchange Commission. "How to Read a 10-K/10-Q." Accessed Aug. 14, 2021.