10-Q, 8-K and proxy statements: the other SEC filings

The annual 10-K gets most of the attention, but a company's story changes between annual reports. Three other filings fill the gaps: the Form 10-Q for quarterly results, the Form 8-K for significant events, and the proxy statement for governance and pay. Knowing what each one contains helps you follow a business in real time and spot developments early.

Form 10-Q: the quarterly report

The 10-Q is filed for each of the first three fiscal quarters. There is no 10-Q for the fourth quarter, because the annual 10-K covers the full year. The deadline is generally 40 days after quarter-end for large accelerated and accelerated filers and 45 days for other companies.

What it contains:

• Condensed financial statements. Income statement, balance sheet and cash flow statement for the quarter and the year to date, with comparisons to the prior year. They are unaudited, although the company's auditor performs a review.
• MD&A. Management's explanation of the quarter's results, liquidity and any changes in trends.
• Market risk and controls. Updates on market-risk exposure and internal controls.
• Legal proceedings and risk factors. Material developments and any changes to risks reported in the last 10-K.
• Share repurchases. A summary of buyback activity during the quarter. See share buybacks explained.

Use the 10-Q to track trends: sales growth, margins, cash flow and debt from one quarter to the next. Quarterly numbers can be seasonal, so compare each quarter with the same quarter a year earlier. The earnings press release usually appears first, and the 10-Q follows with more detail. Context on that cycle is in earnings season and guidance.

Form 8-K: the current report

The 8-K reports events that investors need to know about promptly. In most cases a company must file within four business days of the event. Each report is organized under numbered Items. Some of the most common:

The Items most worth noticing are 4.01, 4.02 and 5.02. An unexpected auditor change, a statement that earlier financials should no longer be relied upon, or the sudden departure of a chief financial officer do not prove wrongdoing, but they justify a closer look at the filing. Many 8-Ks are routine, such as the earnings release under Item 2.02.

The proxy statement

Before each annual shareholder meeting, a company files a proxy statement (form DEF 14A) and sends it to shareholders. It explains what shareholders will vote on and gives the information needed to vote. It typically covers:

• Director elections. Nominees' backgrounds, independence and committee roles.
• Executive compensation. Pay for the top executives, with a discussion of how pay is tied to performance. Look at the metrics that determine bonuses and equity awards, since they influence management's incentives.
• Say on pay. A shareholder advisory vote on executive compensation.
• Auditor ratification. The vote to retain the auditor, and fees paid to it.
• Shareholder proposals. Governance or social proposals submitted by investors, with the board's response.
• Ownership. Shares held by directors, executives and holders of more than 5%.
• Related-party transactions. Dealings between the company and its insiders.

The proxy is the best place to judge governance and whether management's pay encourages long-term value or short-term targets. For companies with multiple share classes, it also explains voting power. See dual-class shares.

Example (illustrative numbers)

A company reports a quarter with sales up 8% on the prior-year quarter in its 10-Q. A week later, an 8-K under Item 4.01 announces a change of auditor, and the proxy statement filed in the spring shows bonuses paid on an adjusted profit measure that excludes several recurring costs. None of these facts decides anything alone. Together they suggest reading the notes and the auditor's letter more closely, which is exactly the use of these filings: they let you connect events with results.

Other filings worth knowing

Insiders report trades on Form 4, generally within two business days. Large holders file Schedules 13D and 13G, and companies selling new shares file registration statements. These are available on EDGAR, although StocksXray does not show insider or institutional ownership data. For background, see insider transactions.

Common mistakes

• Reading only headlines. Press coverage of an 8-K may leave out the exhibits where the detail sits.
• Ignoring the date. Check the filing date against the event, and whether it is an amendment (10-K/A, 8-K/A).
• Over-reading one quarter. Quarterly numbers are noisy and seasonal.
• Skipping the proxy. Compensation and governance problems rarely show up in financial ratios.

Where to see it on StocksXray

Stock pages list a company's SEC filings, so you can open recent reports directly. The filing types described here are the ones to look for next to the annual report covered in how to read a 10-K.

Key takeaways

• The 10-Q gives unaudited quarterly financials for the first three quarters, and the 10-K covers the full year.
• The 8-K reports material events within four business days, and Items 4.01, 4.02 and 5.02 deserve extra attention.
• The proxy statement covers directors, executive pay, auditor fees and ownership.
• Combine all of them with the annual report to follow a business between yearly updates.