SEC Filings

What's in the 10-K?

The SEC mandates the inclusion of 14 items in the 10-K report.

  • Item 1: Business
  • Item 2: Properties
  • Item 3: Legal Proceedings
  • Item 4: Submission of Matters to a Vote
  • Item 5: Market for Securities
  • Item 6: Selected Financial Data
  • Item 7: Management Discussion & Analysis (MD&A)
  • Item 7A: Market Risk
  • Item 8: Financial Statements
  • Item 9: Change in Accountants
  • Item 10: Directors & Executive Officers
  • Item 11: Executive Compensation
  • Item 12: Ownership
  • Item 13: Relations & Transactions
  • Item 14: Controls & Procedures
  • Item 15: Exhibits, Schedules, and Reports on Form 8-K

Exhibits to the 10-K

Some common exhibit types -

  • Underwriting agreement
  • Plan of acquistion or reorganization
  • Articles of incorporation and By-laws
  • Material contracts
  • Voting trust agreement
  • Material foreign patents
  • Statements about computation of earnings
  • List of subsidiaries
  • Letters about material events

Filing Dates

Depending on their market cap, companies have 60 to 90 days after the end of their fiscal year to file their 10-K report.

Find Bad News

Looking for bad news? Here are some tips.

  • Note if the company has filed an amended statement, a 10-K/A or a 10-Q/A.
  • Read the footnotes carefully.
  • Read Item 3 - Legal Proceedings and Item 13 - Related Party Transactions in the 10-K.
  • Check if the auditor has filed a "qualified opinion" or a "going concern" opinion.
  • Investigate the background of items reported in 8-K reports.
  • Do a text search of all the company's filings using words like legal, litigate, regulate, default, etc.

How to Read a 10-K

Item 1 - Business

Companies typically define their business in this opening section of the 10-K report. They describe their various product lines and business segments. They list contracts, raw materials used, and supplier or distribution channels. They talk about the competition and competitive factors in the market. If research and development or intellectual property issues are important to company operations, they are included. Government regulations are covered. Finally, several pages are devoted to outlining risk factors to consider in evaluating the company's business.

Item 7 - The MD&A

What is the Management Discussion and Analysis (MD&A)?

You can find a narrative explanation of a company’s financial performance in a section of the quarterly or annual report entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” MD&A is management’s opportunity to provide investors with its view of the financial performance and condition of the company. It’s management’s opportunity to tell investors what the financial statements show and do not show, as well as important trends and risks that have shaped the past or are reasonably likely to shape the company’s future.

The SEC’s rules governing MD&A require disclosure about trends, events or uncertainties known to management that would have a material impact on reported financial information. The purpose of MD&A is to provide investors with information that the company’s management believes to be necessary to an understanding of its financial condition, changes in financial condition and results of operations. It is intended to help investors to see the company through the eyes of management. It is also intended to provide context for the financial statements and information about the company’s earnings and cash flows.

From the SEC. Beginners' Guide to Financial Statements.

Item 8 - Financial Statement

Item 8 is the audited financial statement. It includes three main parts: the balance sheet; income statement; and cash flow statement.

Don't ignore the footnotes. Information commonly found in the footnotes includes reporting about accounting policies, income taxes, pension plans, and stock options for officers and employees.


The 10-Q

Companies are required to update their financial position after each quarter. The 10-Q report must be filed for each of the first three fiscal quarters of the company's fiscal year. The 10-Q includes unaudited financial statements and an updated MD&A.