SEC compliance and disclosure- Annual Report to the Shareholders, the case of GE

Research conducted by Arthur Mboue

SEC compliance and disclosure-session 12

Annual Report to Shareholders (the case of GE)

ByArthur Mboue, GE SEC reporting VP


Cover page of the GE 2012 Annual Report


I- Requirements to prepare and distribute the Annual Report

• Rule 14a-3 and 14c-3 under the Exchange Act provide that proxy solicitation relating to an Annual or special meeting of shareholders at which directors are to be elected, or a written consent in lieu of such a meeting must be accompanied or preceded by an Annual Report

• Registrants are also required to post their Annual Reports and other proxy materials on their company websites, mostly investor relations


Role of the participants in the Annual Report disclosure

• Advisor including Counsel• They must make sure that

– All required disclosures are present– Statistics and other information have been verified; and – The disclosure is consistent with the registrant’s internal analyses

• Management of the Registrant• They should

– Develop a good theme (2012 Annual Report GE works) and choose good pictures, size of the document(landscape or portrait) and slogan (thriving in the 21st century)• They can use the services of public relation and advertising firms as consultants

– Draft the narrative disclosure highlighting the registrant’s performance – Make sure that the letter to shareholders is drafted by either the Chairman

or/and the CEO of the company– Review the entire Annual Report closely to ensure it’s free of fraud, mistake

or any aggressive statements


Role of the participants in the annual report disclosure

• Board of Directors• It must– Review the final copy of the Annual Report especially if a

least part of this report is incorporated by reference from the Annual Report into the Form 10-K

– PS: You must understand securities law associated to incorporation by reference, once you incorporate by reference any thing, you invite the Staff to review that document, at the same it means that you did review that document, it is reliable and it is a part of your disclosure.


Another was GE builds the world- you see them in action, here


II- Preparing the Annual Report/Format• II.1.Two types of Annual Reports/Format

– Standard Annual Report under Rules 14a-3 and 14c-3 of the Exchange Act

– Form 10-K wrap or wrap 10-K wrapped by a letter to shareholders signed and dated by the chairman or CEO of the registrant and ‘glossy’ cover (including magnificent photographic pictures, slogan and company logo) as landscape or portrait magazine or the like

• II.2.Cover Page• The cover page of the ‘standard’ Annual Report usually provides

– The registrant’s name – The registrant logo– The year to which the Annual Report relates– The background of the format is full of pictures of the working

employees, company equipment or the like to set the tone of the marketing the company strength to the shareholders and readers


II. Preparing the Annual Report/format• II.3.Insider Front cover/operating highlights• Registrant use

– Table of content or– Table comparing the past years financial and operating highlights to that of prior years

• II.4. Letter to Shareholders– Signed and dated by the CEO or/and Chairman– Content analysis will uncover

• Recent accomplishments of the company often tied to the particular theme• Current activities of the company• Plans for the future of the company• Campaign to fight particular regulation or legislation• Report of major changes• Information regarding key customers or suppliers

– A few pages • II.5-Text of the Annual Report

– Surrounded by photographs and variety of dates presented in various graphic designs– Style, increased brevity-the degree of brevity is very high


II. Preparing the Annual Report/format• II.6.Financial Statements and information– A)-Required Financial Statements• Audited consolidated balance sheets as of the end of the two

most recent fiscal years• Audited consolidated statements of income and cash flows for

each of the three most recent fiscal years; and• Unaudited consolidated quarterly financial data for the two

most recent fiscal years, except in the case of foreign private issuers• Selected financial data described in item 301 of Regulation S-K;

and• Information relating to the registrant’s industry segments,

classes of similar products or services, foreign and domestic operations and export sales


II. Preparing the Annual Report/format • II.6 Financial Statements and Information– B)-Other Required information

• A brief description of the business of the registrant and its subsidiaries• MD&A of financial condition and results of operations required by item

303 of Regulation 303 of Regulation S-K (it is identical to that required in the Form 10-K)

• Quantitative and qualitative disclosure about market risk required by item 305 of Regulation S-K

• Information concerning changes in and disagreement with accountants required by item 304 of Regulation S-K

• The market price of, and dividends on, the registrant’s common equity securities and related security holder matters as required by Item 201 of Regulation S-K

• The performance graph required by Item 201e of Regulation S-K (plot point, measurement period from published industry or line business index and peer issuer data group);and

• Certain information concerning each of the registrant’s directors and executive officers


GE themes “GE works’


II. Preparing the Annual Report/format• C. Additional Information Commonly Provided• The Annual Report can also include– The date, time, and location of the registrant’s upcoming

annual meeting;– The registrant’s web address(es), including contact

information for investor relations personnel– The name of the registrant’s independent auditors– Contact information for the registrant’s transfer agent

and registrar; and– A safe harbor statement for forward looking statements.


II. Preparing the Annual Report/format• D. Form of Presentation– Use of tables, schedules, charts and graphic illustrations

to present financial information• E. Type size requirements– Roman type at least as large and as legible as 10 point

modern type– All type must be leaded at least 2 points


III. DELIVERY TO THE SEC• Seven copies of the Annual Report must be

mailed to the SEC no later than the date on which such report is provided to shareholders.


IV. Other Required Distributions of Annual ReportRequired receivers Rule and Time of delivery Number of copies

NYSE Its members must simultaneously make their Annual Reports available to shareholders on or through the company ‘s website. It must be free of charge to anyone. The press release must specify the company’s website address and indicate that shareholders have the ability to receive a free of charge copy.

6 copies

AMEX Its members must simultaneously make their Annual Reports available to shareholders on or through the company’s website. It must be free of charge to anyone and mostly shareholders.

3 copies

NASDAQ Its members must make it available within ‘reasonable period of time’ following the delivery to the SEC

2 copies

Shareholder It must be delivered at least 20 calendar days before the date of the meeting

1 copy


GE Chairman/CEO Jeff Immelt letter to shareholders image of man in control

Law

SEC compliance and disclosure- Annual Report to the Shareholders, the case of GE