SECURITIES AND EXCHANGE COMMISSION FORM 20-F Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d) Filing Date: 2017-04-04 | Period of Report: 2016-12-31 SEC Accession No. 0001193125-17-109310 (HTML Version on secdatabase.com) FILER PEARSON PLC Mailing Address Business Address 80 STRAND 80 STRAND CIK:938323| IRS No.: 000000000 | State of Incorp.:X0 | Fiscal Year End: 1231 LONDON ENGLAND X0 LONDON ENGLAND X0 Type: 20-F | Act: 34 | File No.: 001-16055 | Film No.: 17736174 WC2R 0RL WC2R 0RL SIC: 2731 Books: publishing or publishing & printing 442070102000 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 3, 2017 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2016 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to or ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number 1-16055 PEARSON PLC (Exact name of Registrant as specified in its charter) England and Wales (Jurisdiction of incorporation or organization) 80 Strand London, England WC2R 0RL (Address of principal executive offices) Stephen Jones Telephone: +44 20 7010 2000 Fax: +44 20 7010 6060 80 Strand London, England WC2R 0RL (Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Class Name of Each Exchange on Which Registered *Ordinary Shares, 25p par value New York Stock Exchange American Depositary Shares, each New York Stock Exchange Representing One Ordinary Share, 25p per Ordinary Share * Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the SEC. Securities registered or to be registered pursuant to Section 12(g) of the Act: None Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuers classes of capital or common stock at the close of the period covered by the annual report: Ordinary Shares, 25p par value 822,126,713 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒ Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated file and large accelerated filer, in Rule 12b-2 of the Exchange Act. (Check one): ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing ☐ US GAAP ☒ International financial Reporting Standards as Issued ☐ Other by the International Accounting Standards Board If Other has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow: Item 17 ☐ Item 18 ☐ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒ Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents TABLE OF CONTENTS Page Introduction 3 Forward-Looking Statements 4 PART I Item 1. Identity of Directors, Senior Management and Advisers 5 Item 2. Offer Statistics and Expected Timetable 5 Item 3. Key Information 5 Selected Consolidated Financial Data 5 Dividend Information 6 Exchange Rate Information 7 Risk Factors 8 Item 4. Information on the Company 14 Pearson plc 14 Overview 14 Recent Developments 15 Our Strategy 15 Operating Divisions 16 Operating Cycles 19 Competition 20 Intellectual Property 20 Raw Materials 20 Government Regulation 20 Licenses, Patents and Contracts 21 Legal Proceedings 21 Organizational Structure 21 Property, Plant and Equipment 22 Capital Expenditures 22 Item 4A. Unresolved Staff Comments 23 Item 5. Operating and Financial Review and Prospects 23 General Overview 23 Results of Operations 27 Liquidity and Capital Resources 48 Accounting Principles 50 Item 6. Directors, Senior Management and Employees 51 Directors and Senior Management 51 Compensation of Senior Management 55 Share Options of Senior Management 65 Share Ownership of Senior Management 66 Employee Share Ownership Plans 66 Board Practices 67 Employees 68 Item 7. Major Shareholders and Related Party Transactions 69 Item 8. Financial Information 69 Item 9. The Offer and Listing 69 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 10. Additional Information 70 Articles of Association 70 Material Contracts 76 Exchange Controls 76 Tax Considerations 76 Documents on Display 79 1 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Page Item 11. Quantitative and Qualitative Disclosures about Market Risk 79 Introduction 79 Capital Risk 80 Interest and Foreign Exchange Rate Management 80 Liquidity and Re-financing Risk Management 80 Financial Counterparty Risk Management 81 Item 12. Description of Securities Other Than Equity Securities 81 American Depositary Shares 81 Fees paid by ADR holders 81 Fees incurred in past annual period and fees to be paid in the future 82 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 83 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 83 Item 15. Controls and Procedures 83 Disclosure Controls and Procedures 83 Managements Annual Report on Internal Control over Financial Reporting 83 Change in Internal Control over Financial Reporting 83 Item 16A. Audit Committee Financial Expert 83 Item 16B. Code of Ethics 84 Item 16C. Principal Accountant Fees and Services 84 Item 16D. Exemptions from the Listing Standards for Audit Committees 84 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchases 84 Item 16F. Change in Registrants Certifying Auditor 85 Item 16G. Corporate Governance 85 Item 16H. Mine Safety Disclosure 85 PART III Item 17. Financial Statements 86 Item 18. Financial Statements 86 Item 19. Exhibits 86 2 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents INTRODUCTION In this Annual Report on Form 20-F (the Annual Report) references to Pearson, the Company or the Group are references to Pearson plc, its predecessors and its consolidated subsidiaries, except as the context otherwise requires. Ordinary Shares refer to the ordinary share capital of Pearson of par value 25p each. ADSs refer to American Depositary Shares which are Ordinary Shares deposited pursuant to the Second Amended and Restated Deposit Agreement dated August 15, 2014, amended and restated as of August 8, 2000 among Pearson, The Bank of New York Mellon as depositary (the Depositary) and owners and holders of ADSs (the Deposit Agreement). ADSs are represented by American Depositary Receipts (ADRs) delivered by the Depositary under the terms of the Deposit Agreement. We have prepared the financial information contained in this Annual Report in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) which in respect of the accounting standards applicable to the Group do not differ from IFRS as adopted by the European Union (EU). Unless we indicate otherwise, any reference in this Annual Report to our consolidated financial statements is to the consolidated financial statements and the related notes, included elsewhere in this Annual Report. We publish our consolidated financial statements in sterling. We have included, however, references to other currencies. In this Annual Report: references to sterling, pounds, pence or £ are to the lawful currency of the United Kingdom, references to euro or are to the euro, the lawful currency of the participating Member States in the Third Stage of the European Economic and Monetary Union of the Treaty Establishing the European Commission, and references to US dollars, dollars, cents or $ are to the lawful currency of the United States.