Annual Report vs. 10-K: An Overview

Publicly traded companies in the U.S. are required to provide yearly reports on their financial activities to both the Securities and Exchange Commission (SEC) and their shareholders. The report provided to the SEC is known as Form 10-K and is sometimes called an annual report because it must be filed every year. The yearly report provided to shareholders is known exclusively as an 澳洲幸运5官方开奖结果体彩网:annual report, and this may be a distinct document from ꦅthe 10-K.

These filings include data and information about their most recent profits, cash🃏 flow, operations, and finances, as well as plans and projections for the future. An annual report and a 10-K often contain much of the same information, though the 10-K may provide a more comprehensive financial picture of the company. However, in some cases, companies may simply provide their 10-K to shareholders, rather than producing a separate annual report. In this case, the two documents are the same.

Understanding the Annual Report

A corporation's annual report is usually an illustrated, thick booklet. It is a professionally created document that often resembles a printed magazine. It is intended for shareholders and distributed directly to them before the annual shareholders' meeting, either by mail or email. It is also freely available to anyone interested in the company, generally on the company's website.

An annual report functions as a yearly reference foꦕr the company. It is often lavishly illustrated with professionally shot photos and includes charts, diagrams, maps, and other visuals.

An annual report typically will include:

• A letter from the company's chief executive officer (CEO) and chair of the board of directors
• A review of the company's history
• Overviews of major company divisions and subsidiaries, operations, and various initiatives over the preceding fiscal year
• Significant financial statements, including the 澳洲幸运5官方开奖结果体彩网:balance sheet, income statement, and cash flow statement

The financial information included in an annual report offers a snapshot of the company's 澳洲幸运5官方开奖结果体彩网:financial performance over the last year, often in comparison to past years. Backing up this material are notes, explaining the accounting methodology. There sܫhould also be an Auditor's Report, which is a statement from an outside accounting firm that reviews the documents and at🐲tests to their accuracy.

Understanding Form 10-K

Public companies are required to submit a 10-K report every year to the Securities and Exchange Commission. While the 10-K is officially filed with the SEC, it is also available to t🍒he public.

Visually, the Form🔯 10-K is a bare-bones document, compared to the annual report. The SEC has strict guidelines on what information must be included and how it must be organized. This generic format contains no pictures or charts.

Ultimately, a 10-K report is a full description of the company's financial activity during a given fiscal year and a full rundown of risks, legalities, liabilities, corporate agreements, operations, and♏ market performance. Also, 10-K repor🧸ts provide a full analysis of the relevant industry, the marketplace as a whole, and individual business operations.

Reading Form 10-K

The 10-K includes four distinct sections. The first three provide an overview of the company’s main operations, including its products and services; any and all risks the company faces; and information about senior management, including executive compensation. The fourth section shares the company’s financial statements and documents. Each of the four parts is broken down into specific items.

Form 10-K Part I

• Item 1 Business: An overview of the company’s main operations, including its products and services (i.e., how it makes money)
• Item 1A Risk Factors: Any risks the company faces or may face in the future, typically listed in order of importance
• Item 1B Unresolved Staff Comments: An explanation of any comments from SEC staff on previous reports that currently remain unresolved
• Item 2 Properties: Information on any physical, materially important properties, such as plants, mines, or warehouses
• Item 3 Legal Proceedings: Significant legal proceedings, including pending lawsuits, other than ordinary litigation

There is space for Item 4 in Part I of the 10-K, but this section doesn't currently have any required information. It is available for any future rulemaking from the SEC.

Form 10-K Part II

• Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities: Data relating to the company's securities, including the number of shareholders, dividends, and stock repurchases
• Item 6 Selected Financial Data: Specific financial information about the company over the last five years, often presenting a near-term view of the company’s recent performance
• Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations: Space for the company to explain its business results from the previous fiscal year; also known as MD&A
• Item 7A Quantitative and Qualitative Disclosures about Market Risk: The company's exposure to different kinds of risk, including interest rate risk and commodity price risk, along with how it manages risk exposure
• Item 8 Financial Statements and Supplementary Data: Audited financial statements, including the income statement, balance sheets, and statement of cash flows, along with letters from the company’s senior management and independent auditor certifying the scope of their review

• Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure: States if there has been any change in accountants and, if so, whether there was any disagreement with those accountants

• Item 9A Controls and Procedures: The company's disclosure controls and procedures, including internal controls over financial reporting
• Item 9B Other Information: Any information required to be reported on a different form during the fourth quarter of the year but not yet reported

Form 10-K Part III

• Item 10 Directors, Executive Officers and Corporate Governance: Background and professional experience of executive officers and the board of directors; qualifications for the board of directors; and the company's code of ethics
• Item 11 Executive Compensation: Detailed disclosure of executive compensation for the past year, along with compensation policies and programs
• Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters: Information about shares owned by executive officers, directors, and other large shareholders, along with shares included in employee compensation plans
• Item 13 Certain Relationships and Related Transactions, and Director Independence: Information about any transactions or relationships between the company, executive officers, directors, and their family members; also includes which directors are independent
• Item 14 Principal Accountant Fees and Services: Disclosure of fees paid to accounting firms throughout the year

Form 10-K Part IV

• Item 15 Exhibits, Financial Statement Schedules: All financial statement and exhibits, many required by Form 10-K, including company bylaws, material contracts, and any subsidiaries

Annual Report vs. Form 10-K

In some cases, a company's annual report and its yearly 10-K filing are the same document. Companies can choose to provide their form 10-K to shareholders, rather than creating a separate annual report. In these cases, there are no differences between the annual report and the 10-K; they are the same document.

When the 10-K and the annual report are separate documents, however, they have a great deal of information in common. However, there are also key differences, including where to find each document, their intended audience, and the timeline on which they must be produced.

Key Differences

Location

Generally, 10-Ks are found on the SEC ๊website. It is publicly available and may be read by anyone. The SEC website will have 10-K reports from previous years as well; they must be filed yearly for every publicly tra🌌ded company.

The annual report is sent directly to shareholders, either by mail or email. Usually, the annual report can🌳 also be found on the company’s website underℱ the investor relations section.

Timeline

The annual report is sent to shareholders each year ahead of the annual shareholder meeting and voting for the board of directors. The deadline for filing a 10-K is between 60 and 90 days after the end of the company’s fiscal year, depending on the size of the company.

Intent

The design and the intent of the annual report are distinctly separate from the 10-K. The annual report is more of a glossy and user-friendly publication, intended for the non-expert shareholders to understand. It🤪 has something oඣf a public relations function.

By contrast, 10-Ks tend to be lengthy and more difficult to digest than annual reports. They are not designed for easy consumption by the average✨ individual.

Level of Detail

Where an annual report may include company information, financials, and a letter from the CEO, the 10-K will include various ris🌠ks and a detailed discussion of operations.

In terms of hard-core financials. the annual report offers a shorter version of the 10-K report. That said, an investor or analyst will still find the details of a company’s finances in the annual report, including the balance sheet and income statement, as well as other useful finanꦺcial data.

Key Similarities

Insights

Both a company's annual report and its 10-K provide detailed insights into the company’s financial health, operations, and strategic direction. They can both serve as key resources for investors, analysts, and other stakeholders who want to know about a company's performance and make informed decisions.

Content

Both documents include comprehensive financial statements. These financial statements typically consist of the balance sheet, income statement, cash flow statement, and statement of shareholders' equity. The consistency of financial information in both the annual report and the 10-K ensures that users can cross-reference data and gain a clear understanding of the company's financial status.

Both the annual report and the 10-K also contain a management discussion and analysis section. This section offers management's perspective on the financial results, including explanations for significant changes, trends, risks, or uncertainties. By detailing management’s insights and forward-looking statements, both documents go beyond just the numbers to help stakeholders understand the company.

Governance

Finally, both the annual report and the 10-K can highlight the company’s governance practices. They provide information about the board of directors, executive compensation, corporate governance policies, and any significant legal proceedings involving the company. This information, while it's not always financial, can still be insightful for making decisions about the company.

Example of Annual Report vs. Form 10-K

In the example below, we'll look at Microsoft's 2023 Annual Report as well as the company's Form 10-K filing for the fiscal year ending June 30, 2023.

First, let's take a look at Microsoft's annual report.

The annual report opens with a summary letter from Satya Nadella, Microsoft's CEO. Though commentary is given on a Form 10-K, it is usually less formal and more editorial in the annual report.

The annual report does cover financial information. However, companies often have greater control over not only which information to present but how to present it.

An annual report may be confined to publishing financial statements in accordance with generally accepted accounting principles (GAAP); it also may present metrics or visualizations. The company may select some financial statements from the year to present in the report while leaving out others that are more appropriate for an expert audience.

By contrast, a Form 10-K is less editorial and promotional. S⛦ince this form is filed with🍒 the SEC, it is highly standardized.

The tab꧅le of contents lays out the information that shareholders, analysts, and others can expect to find in a 10-K. Some of this information would also be shown in an annua♛l report; however, as a government filing, a 10-K is more rigorous and in the financial information it is required to contain.

A 10-K will contain a mix of editorial commentary about t🐓he company along with detailed assessments of different operational areas.

♌ Finally, a 10-K will include financial statements from the past year.

Much of this information can also be included in an annual report, though often in less detail or more simplified terms. The many areas of overlap are why some companies do not create a separate shareholders' annual report and simply use their 10-K for both purposes.

The Bottom Line

An annual report provides a comprehensive overview of a company's financial performance, operations, and outlook, typically including a letter from the CEO, financial statements, and market analysis. A 10-K is a detailed annual filing required by the SEC that includes extensive financial data, legal information, and management discussion, with stricter regulatory disclosures compared to the annual report.

These terms are sometimes used interchꦇangeably, however, because the 10-K is filed yearly, making it an annual fiscal report. Some companies also will distribute their 10-K to shareholders, rather than creating a separate annual report. In these cases, the 10-K and the annual report are the same document.