This is the company’s annual financial report
Listed companies report their financial activities by lodging a financial report to the U.S. Securities and Exchange Commission (SEC). These reports are typically lodged every quarter for the first three quarters and then for the fourth quarter they lodge a final report that covers the entire fiscal year’s financial activities. Most U.S. listed companies are required to produce quarterly reports known as ’10-Q filings’ and an annual report known as a ’10-K filing’.
The SEC also requires listed companies to send an annual report to their stockholders. This stockholder annual report can simply be the 10-K annual report, but a lot of companies will actually reproduce the 10-K report into a colorful glossy publication to send to their stockholders.
The 10-K reports can be viewed and downloaded from the SECs EDGAR website. Most companies will also provide the 10-K reports on their websites and summary versions are available from a variety of sources including yahoo finance.
The 10-K report is a standardized reporting format and the items are the same for every company that files a 10-K with the SEC. The items are listed as follows.
Part I
Item 1. Business: Provides a description of the company’s business operations, its main products or services and other information.
Item 1A. Risk Factors: Details any significant risks to the company’s business or its shares. These may include company specific risks or general economy risks.
Item 1B. Unresolved Staff Comments: The company is required to explain any comments it received from SEC staff about previous filled reports that have not been resolved. This item might not have any unresolved SEC staff comments.
Item 2. Properties: Provides information on any significant property the company owns such as manufacturing plants or coal mines or their headquarters.
Item 3. Legal Proceedings: Details any significant legal matters such as lawsuits against the company.
Item 4. Other information: This item has no required information and may be blank.
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities: Provides information about the company’s stock, including number of stockholders, dividends and stock repurchases.
Item 6. Selected Financial Data: This item may contain summarized information about the company for the last five years. This information might be included as an exhibit in item 15.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations: This is the item where management discusses the financial results in item 8. but it may be included as an exhibit in item 15.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk: Provides details on risks such as interest rates, currency exchange rates, commodity prices and stock prices. This might be included as an exhibit in item 15.
Item 8. Financial Statements and Supplementary Data: This is where the financial statements are found. The income statement, the balance sheets statement, the cash flow statement and the stockholders’ statement. Some companies might include the statements as an exhibit in item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure: If the company changes its accountants, this is noted here.
Item 9A. Controls and Procedures: Provides information about the company’s disclosure and the internal control over its financial reporting.
Item 9B. Other Information: Includes any information that was required to be reported during the last quarter but has not yet been reported.
Part III
Item 10. Directors, Executive Officers and Corporate Governance: Provides information on the background and experience of the company’s key employees and directors. Also provides information on the company’s code of ethics.
Item 11. Executive Compensation: Provides details on the compensation paid to the company’s key employees.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters: Provides information on the shares owned by key employees, directors and large stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence: Provides information about the relationships and transactions between the company and its key employees and directors.
Item 14. Principal Accountant Fees and Services: Provides details on accounting fees paid by the company.
Part IV
Item 15. Exhibits and Financial Statement Schedules: Lists the financial statements and exhibits. The actual financial statements might be included here rather than in item 8. This Item tends to be the largest item containing the most pages. It includes various documents such as the company’s bylaws.
Companies might provide the information required for certain items in a separate report known as a proxy statement, which companies provide to their stockholders for their annual meeting.
As the investor has probably observed, the all important financial statements are included in either item 8 or item 15. The 10-Q and 10-K reports have an index at the beginning of the report, so the investor can simply look up the page number and go directly to the financial statements, which is probably the most important information.
After checking the financial statements, the investor can then check the other items if needed. Some of the items that may be of particular interest to the investor are items 1, 1A, 3, 5, 7, 7A, 9, 12.