How to read an 8-K

A Form 8-K is the filing a company makes between the scheduled ones. Something happened that investors are entitled to know now rather than at the end of the quarter.

It is short. Often a single page plus an attachment. The attachment is called an exhibit and it is usually the press release.

Every 8-K declares which item number it is filed under, and the item number tells you what kind of event it is before you read a word. Item 2.02 is results of operations. Item 5.02 is a departure or appointment of a director or officer. Item 8.01 is other events, which is where a company puts anything material that the numbered list does not already cover.

Learn to read the item number first. It's the fastest filter in the whole system.

Costco filed an 8-K dated December 13 2023 and filed on December 14.

Note what that filing did. It moved about $6.7 billion out of the company on a date that had nothing to do with the fiscal calendar. The next 10-K was nine or ten months away. Without the 8-K the market would have learned about it from a press release with no filed status.

Three dates do three different things. The declaration date is when the board decided. The record date decides who gets it, which means anyone holding shares on December 28 2023. The payment date is when the cash actually moves.

The $15.00 is in the 8-K body. The $6.7 billion total is in Exhibit 99.1, the press release attached to it. That's typical. The body carries the fact and the exhibit carries the detail.

One more thing about this particular filing. It carried two item numbers. Item 2.02 for the quarter's results and Item 8.01 for the dividend. One filing can report more than one event.

The trap is reading the exhibit and skipping the form.

The press release is written for readers. It's clearer and it's the part that gets quoted. But the item number and the dates are in the form itself, and those are what tell you what kind of event this is and exactly when it takes effect. A press release will tell you a company is paying a special dividend. The form tells you it was filed under Item 8.01, declared on the thirteenth, with a record date of the twenty-eighth.

The second trap is assuming an 8-K means bad news. It means material news. A special dividend, an acquisition, a new chief executive, the loss of a large customer, a completed merger. All of them arrive the same way.