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Reading an SEC 10-k corporate filing
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Okay, here we are looking at Apple's 10-K.
0:00
All 10-K's are required to
follow a similar structure,
0:05
with the same parts and
subsections of those parts.
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You will see variations in the substance
and level of detail in these different
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sections though, depending on what
management has decided to disclose.
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Some management teams go into
further details than others.
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I always like to start with part 2, item
7, management's discussion and analysis.
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Here are the different parts and
subsections of those parts.
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There are four parts and
management's discussion and
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analysis is item 7 of part II.
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Let's go down there.
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This is a section I like to look at first.
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So you'll get an overview
of the highlights.
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They talk about the fiscal period.
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Any financial highlights
they wanna call out for
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the current year and the previous year.
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And then there's select sales data.
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You can see they go into a little bit
greater detail than they would on
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the normal PNL.
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So you have geographic breakouts of sales.
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And then also product.
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And they're showing you the percentage
change year on year of these different
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products or geographies.
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And then also reporting unit sales and
volume,
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not just dollar figures
associated with that.
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There's just a lot of information that
management will communicate through
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the financial statements that is really
quite fascinating if you take the time
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to read it.
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So after I've read the management
discussion analysis section,
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I scroll down to
the financial information.
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Here we can see the financials, but
you can also read the footnotes.
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And typically,
you'll find a lot more elaboration and
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details behind the different
accounts in the footnotes.
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So we see the consolidated
statements of operations or
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the profit and loss statement.
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We talked about that
earlier in the course.
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A statement of comprehensive
income which we're not covering.
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Balance sheet, Shareholders equity
statement, I'm not covering it.
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The statement of cash flows.
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And then here's the footnotes.
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So they talk about
the basis of preparation,
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what their revenue
recognition policies are.
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And then, the individual line items
behind what you see on the PNL.
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What methods are used for inventories,
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details of how they've
spent their money for PP&E.
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So, I tend to focus on
the management discussion and
2:48
analysis in the financial statements and
footnotes when I'm reading 10-Ks.
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That's where I think the bulk
of the value is, but
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clearly there's a lot more
information in these documents.
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And potentially interesting information.
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So, the 10-K is an annual filing with SEC,
but
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there's a different kind of annual report
that shouldn't be confused with the 10-K.
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This different kind of annual
report is just what it sounds like,
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it's an annual report.
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But it's generally released to
shareholders in conjunction with
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a shareholder meeting.
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Not all companies publish annual
reports and 10-K filings.
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For example, Apple doesn't have an annual
report for 2018, just the 10-K.
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Annual reports tend to have more
of a marketing slang to them, and
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less of a legal field.
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The 10-K is quite formal, and the annual
report often has lots of pictures and
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charts, they're more like a brochure.
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That's a bit of an oversimplification but
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here we're looking at Baker Hughes'
annual report for 2017.
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And you can see it's already much
different than the 10-K documents that
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we've looked at previously in this course.
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In contrast,
here's Baker Hughes' 10-K, and
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this looks a lot like Apple's in
terms of structure and format.
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You can see they have the same four parts.
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And then up here in part 2, item 7,
management's discussion and
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analysis followed by item 8, financial
statements and supplementary data.
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I would encourage you to think of
a publically listed company that you're
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curious about or whose products you love.
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And download their annual report,
or 10-Ks,
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and see what you can learn about them.
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