SEC Form 10-K: A Mine of Valuable Information
In the current economic climate, stock market investors need all the help they can get in making sound investment decisions. An invaluable decision making aid is the Form 10-K that public companies must submit to the Securities and Exchange Commission (SEC) within 60 days of the end of the fiscal year. This document, which can run into more than 100 pages, provides a comprehensive summary of a company’s performance during the past fiscal year. While companies are obliged to make their Form 10-Ks available to the public, the annual report issued to shareholders as standard practice seldom contains as much detail as the 10-K, making this official document much sought after by investors wanting to gain meaningful insight into a specific company’s worth as an investment.
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.