A 10-K is a detailed annual report required by the U.S. Securities and Exchange Commission (SEC). Publicly-traded companies use it to provide a comprehensive overview of their financial performance. Unlike a company’s glossy annual report meant for shareholders, the 10-K offers exhaustive detail necessary for serious investors.
Some key information documented in a 10-K includes corporate history, organizational structure, financial statements, earnings per share, details of subsidiaries, executive compensation, and other pertinent data. The SEC mandates these filings to ensure investors have a sound understanding of the company’s financial health, letting them make well-informed decisions before buying or selling shares, or investing in corporate bonds.
Key Takeaways
- A 10-K is a comprehensive annual report about a public company’s financial performance.
- It is mandated by the SEC and provides more detailed information than an annual report intended for shareholders.
- The 10-K includes corporate history, financial statements, earnings per share, and more.
- It’s an indispensable tool for investors to make informed decisions.
Understanding 10-Ks
Due to the depth and intricate nature of the details, 10-Ks are usually lengthy and complex. For serious investors, it’s a vital resource providing the most accurate yearly snapshot of a public company’s operations and financial standing. Canadian companies file a similar document known as the SEC Form 40-F.
The requirement to publish these forms ensures investors gain a transparent view of a company’s operations and potential risks, enabling informed investments. For quick access, these forms can be retrieved from the SEC’s EDGAR database using the company’s search function.
Five Key Sections of a 10-K
- Business: An overview of the company’s main operations, including how it generates revenue via its products and services.
- Risk Factors: A list of current and potential future risks in order of importance.
- Selected Financial Data: Specific financial information over the past five years, presenting a more immediate view of recent performance.
- Management’s Discussion and Analysis: Also known as MD&A, this section is where management explains the company’s financial results in their own words.
- Financial Statements and Supplementary Data: This includes audited financial statements like the income statement, balance sheets, and statement of cash flows, along with a verification letter from the company’s independent auditor.
A 10-K also features signed letters from the Chief Executive Officer and Chief Financial Officer, certifying the accuracy of the provided information. These certifications became crucial after high-profile accounting scandals in the tech sector.
Where to Find a 10-K
10-K filings are public records easily accessible. Most companies include them in the Investor Relations section on their websites. Though the information might initially appear overwhelming, familiarity will make identifying crucial details easier.
10-K Filing Deadlines
Filing deadlines vary depending on the company’s size. Companies with a public float—shares available to trade—of $700 million or more must file their 10-K within 60 days post-fiscal year-end. Companies with a float between $75 million and $700 million have 75 days, while those with a float under $75 million have 90 days.
Complementary Forms: 10-Q and 8-K
Aside from 10-K, public companies must frequently file Forms 10-Q and 8-K
- Form 10-Q: Submitted quarterly, it provides a detailed account of a company’s financial status. Notably, this form is usually unaudited and required only for the first three quarters, as the 10-K covers the final quarter.
- Form 8-K: Required upon significant events that shareholders need to know—such as acquisitions, departures of executives, changes in control, etc.
By understanding and utilizing these comprehensive reports, investors can make wiser decisions armed with the robust data provided in these invaluable documents.
Related Terms: 10-Q, 8-K, SEC Filings, Annual Reports, EDGAR Database.
References
- U.S. Securities and Exchange Commission. “Form 10-K”.
- U.S. Securities and Exchange Commission. “How to Read a 10-K/10-Q”.
- U.S. Securities and Exchange Commission. “Using EDGAR to Research Investments”.
- U.S. Securities and Exchange Commission. “How to Read a 10-K”.
- U.S. Securities and Exchange Commission. “Testimony Concerning Implementation of the Sarbanes-Oxley Act of 2002”.
- U.S. Securities and Exchange Commission. “Form 10-Q”.
- U.S. Securities and Exchange Commission. “Form 8-K”.
