Anatomy of a 10-K and a German Geschäftsbericht: where every number lives

What you will learn

• The fixed structure of a US Form 10-K and of a German Geschäftsbericht, and which section holds which number.
• How the Lagebericht (management report) and the MD&A differ.
• Where IFRS and US GAAP produce different figures for the same business.
• A reading order that gets you to the important pages fast.

Explanation

The three statements were covered line by line in Stocks & Fundamental Analysis. This course starts one level up: the whole document and the parts most investors skip.

The US Form 10-K

A 10-K is the annual report a US-listed company files with the Securities and Exchange Commission (SEC). It follows a numbered template:

• Item 1 Business – products, customers, suppliers, competitors.
• Item 1A Risk Factors – the required list of what could go wrong (compared year over year in lesson 8).
• Item 3 Legal Proceedings – lawsuits and investigations.
• Item 7 Management's Discussion and Analysis (MD&A) – results, liquidity, capital resources, critical accounting estimates.
• Item 7A Market Risk – interest-rate, currency and commodity sensitivities.
• Item 8 Financial Statements – the audited statements, notes and auditor's report.
• Item 9A Controls and Procedures – internal control over financial reporting.

As of 2026 a large accelerated filer must file within 60 days after the year end, an accelerated filer within 75 days and other companies within 90 days. Foreign companies listed in the US file a Form 20-F with comparable items, often under IFRS. All filings are free on the SEC's EDGAR database.

The German Geschäftsbericht

A German listed company publishes a Geschäftsbericht (annual report). Its legally required core is the Jahresfinanzbericht under § 114 of the Wertpapierhandelsgesetz (WpHG, Securities Trading Act): financial statements, management report, a board responsibility statement (Bilanzeid) and the auditor's opinion, published within four months of the year end in the European Single Electronic Format (ESEF), a machine-readable XHTML file stored in the Unternehmensregister.

A typical German report contains: letter to shareholders (marketing, not audited), the Konzernlagebericht (group management report), the Konzernabschluss (consolidated statements) with the Konzernanhang (notes), the Bestätigungsvermerk (auditor's report), the Aufsichtsrat (supervisory board) report and the remuneration report (lesson 9).

Lagebericht versus MD&A

Both explain the year in words, but they differ in three ways. Legal status: the Lagebericht is required by § 289 and § 315 of the Handelsgesetzbuch (HGB, Commercial Code) and is audited; the MD&A is only reviewed for consistency with the statements. Forecast: a Lagebericht must contain a Prognosebericht with an explicit outlook per key figure; a 10-K contains no formal forecast (guidance comes in press releases). Risk reporting: the Lagebericht classifies risks by probability and impact; a 10-K lists risk factors without ranking them.

IFRS versus US GAAP

EU-listed companies prepare consolidated statements under International Financial Reporting Standards (IFRS); the German parent's single-entity statements still follow HGB. US companies use US Generally Accepted Accounting Principles (US GAAP). Differences that move headline numbers: development costs (capitalised under IFRS when six criteria are met, expensed under US GAAP outside software), inventory (LIFO allowed in US GAAP, banned in IFRS), impairment reversals (allowed in IFRS, not in US GAAP), lease presentation (lesson 2) and income-statement layout. IFRS 18 replaces IAS 1 for financial years beginning on or after 1 January 2027 and adds required subtotals and disclosure of "management-defined performance measures"; check its EU endorsement status when reading 2027 reports.

Worked example

Hypothetical example: a software group reports under IFRS. Revenue is €1,200 million, EBIT €150 million. It capitalised €40 million of development costs this year and amortises €10 million of earlier capitalised costs.

1. IFRS EBIT margin: 150 ÷ 1,200 = 12.5%.
2. Convert to a US GAAP style: remove the €40 million that was moved to the balance sheet and add back the €10 million amortisation that would not exist. EBIT = 150 − 40 + 10 = €120 million.
3. US GAAP style EBIT margin: 120 ÷ 1,200 = 10.0%.

The same business shows 12.5% or 10.0% depending on the framework. The inputs sit in the intangible-assets note (additions and amortisation of capitalised development costs), not on the face of the statements. Tax effects are ignored.

Common mistake

Practice activity

On paper, name the section where you would find each item in a 10-K and in a German Geschäftsbericht: (a) the discount rate used for pension obligations, (b) the forecast for next year's revenue, (c) pending lawsuits, (d) the auditor's opinion, (e) the sensitivity of profit to a 10% euro move. Then: a company with a 31 December year end is a large accelerated filer in the US; another is listed in Frankfurt. By which dates must each publish its annual report?

Key takeaways

• A 10-K follows numbered items; a German report follows HGB structure with an audited Lagebericht and a mandatory forecast.
• Only the statements, notes and (in Germany) the management report are audited; the narrative front half is not.
• IFRS and US GAAP can move margins by several percentage points; the notes contain the data to reconcile them.
• Reading order: auditor's report, statements, notes, management report, narrative.

Next step

Next you will read the notes to the financial statements in a fixed order, from revenue recognition to contingencies.