SEC Form 10-K: A Mine of Valuable Information

Form 10-K is broken down into four parts, which are divided into sub-sections. Part one consists of the description of the business, including what it does, what market it is aimed at, whether it is regulated and any subsidiaries it owns; risk factors, such as likely external factors which may prevent the company from performing optimally; description of properties, including physical assets and intellectual property; disclosure of any legal proceeding the company may be involved in; and disclosure of any matters relating to a vote of security holders.

Part two of Form 10-K addresses matters relating to financial data, as well as controls and procedures in day-to-day operations. This part also details the management’s analysis of the company’s financial condition and any changes in, or disagreements, regarding accounting and financial disclosure. Part three focuses on the directors, executive officers and corporate governance, as well as executive compensation. In light of the current outcry regarding exorbitant remuneration and bonuses paid to executives, especially for the companies that have been recipients of government “bail-out” funds, disclosure of executive compensation will no doubt be of great interest to investors. Part three also addressed security ownership and principal accounting fees and services.

Public companies will generally include the Form 10-K along with other forms required by the SEC on their websites. Also, the SEC publishes this information on their electronic data gathering, analysis and retrieval database (EDGAR). Public companies are also obliged to submit three Form 10-Qs (quarterly) during the year, with the fourth quarter report being replaced by the annual Form 10-K.