Appendix B — Selected Regulation S-X Rules
Selected Regulation S-X rules are
reproduced below for reference.
SEC Regulation S-X, Rules 1-02(l) and 1-02(w)
§210.1-02 Definitions of terms used in Regulation S-X (17 CFR
part 210). . .
(l) Foreign business. A business that is majority owned by
persons who are not citizens or residents of the United States
and is not organized under the laws of the United States or any
state thereof, and either:
(1) More than 50 percent of its assets are
located outside the United States; or
(2) The majority of its executive officers
and directors are not United States citizens or residents.
(w) Significant subsidiary.
(1) The term significant subsidiary
means a subsidiary, including its subsidiaries, which meets any
of the conditions in paragraph (w)(1)(i), (ii), or (iii) of this
section; however if the registrant is a registered investment
company or a business development company, the tested subsidiary
meets any of the conditions in paragraph (w)(2) of this section
instead of any of the conditions in this paragraph (w)(1). A
registrant that files its financial statements in accordance
with or provides a reconciliation to U.S. Generally Accepted
Accounting Principles (U.S. GAAP) must use amounts determined
under U.S. GAAP. A foreign private issuer that files its
financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board (IFRS-IASB) must use amounts determined under IFRS-IASB.
(i) Investment test.
(A) For acquisitions, other than
those described in paragraph (w)(1)(i)(B) of this
section, and dispositions this test is met when the
registrant’s and its other subsidiaries’ investments in
and advances to the tested subsidiary exceed 10 percent
of the aggregate worldwide market value of the
registrant’s voting and non-voting common equity, or if
the registrant has no such aggregate worldwide market
value the total assets of the registrant and its
subsidiaries consolidated as of the end of the most
recently completed fiscal year.
(1) For acquisitions, the
“investments in” the tested subsidiary is the
consideration transferred, adjusted to exclude the
registrant’s and its other subsidiaries’ proportionate
interest in the carrying value of assets transferred by
the registrant and its subsidiaries consolidated to the
tested subsidiary that will remain with the combined
entity after the acquisition. It must include the fair
value of contingent consideration if required to be
recognized at fair value by the registrant at the
acquisition date under U.S. GAAP or IFRS-IASB, as
applicable; however if recognition at fair value is not
required, it must include all contingent consideration,
except contingent consideration for which the likelihood
of payment is remote.
(2) For dispositions, the
“investments in” the tested subsidiary is the fair value
of the consideration, including contingent
consideration, for the disposed subsidiary when
comparing to the aggregate worldwide market value of the
registrant’s voting and non-voting common equity, or,
when the registrant has no such aggregate worldwide
market value, the carrying value of the disposed
subsidiary when comparing to total assets of the
registrant.
(3) When determining the
aggregate worldwide market value of the registrant’s
voting and nonvoting common equity, use the average of
such aggregate worldwide market value calculated daily
for the last five trading days of the registrant’s most
recently completed month ending prior to the earlier of
the registrant’s announcement date or agreement date of
the acquisition or disposition.
(B) For a combination between
entities or businesses under common control, this test
is met when either the net book value of the tested
subsidiary exceeds 10 percent of the registrant’s and
its subsidiaries’ consolidated total assets or the
number of common shares exchanged or to be exchanged by
the registrant exceeds 10 percent of its total common
shares outstanding at the date the combination is
initiated.
(C) In all other cases, this test
is met when the registrant’s and its other subsidiaries’
investments in and advances to the tested subsidiary
exceed 10 percent of the total assets of the registrant
and its subsidiaries consolidated as of the end of the
most recently completed fiscal year.
(ii) Asset test. This test is met when the
registrant’s and its other subsidiaries’ proportionate
share of the tested subsidiary’s consolidated total
assets (after intercompany eliminations) exceeds 10
percent of such total assets of the registrant and its
subsidiaries consolidated as of the end of the most
recently completed fiscal year.
(iii) Income test.
(A) This test is met when:
(1) The absolute value of
the registrant’s and its other subsidiaries’ equity in
the tested subsidiary’s consolidated income or loss from
continuing operations before income taxes (after
intercompany eliminations) attributable to the
controlling interests exceeds 10 percent of the absolute
value of such income or loss of the registrant and its
subsidiaries consolidated for the most recently
completed fiscal year; and
(2) The registrant’s and
its other subsidiaries’ proportionate share of the
tested subsidiary’s consolidated total revenue from
continuing operations (after intercompany eliminations)
exceeds 10 percent of such total revenue of the
registrant and its subsidiaries consolidated for the
most recently completed fiscal year. This paragraph
(w)(1)(iii)(A)(2) does not apply if either the
registrant and its subsidiaries consolidated or the
tested subsidiary did not have material revenue in each
of the two most recently completed fiscal years.
(B) When determining the income
component in paragraph (w)(1)(iii)(A)(1) of this
section:
(1) If a net loss from
continuing operations before income taxes (after
intercompany eliminations) attributable to the
controlling interest has been incurred by either the
registrant and its subsidiaries consolidated or the
tested subsidiary, but not both, exclude the equity in
the income or loss from continuing operations before
income taxes (after intercompany eliminations) of the
tested subsidiary attributable to the controlling
interest from such income or loss of the registrant and
its subsidiaries consolidated for purposes of the
computation;
(2) Compute the test using
the average described in this paragraph
(w)(1)(iii)(B)(2) if the revenue component in paragraph
(w)(1)(iii)(A)(2) of this section does not apply and the
absolute value of the registrant’s and its subsidiaries’
consolidated income or loss from continuing operations
before income taxes (after intercompany eliminations)
attributable to the controlling interests for the most
recent fiscal year is at least 10 percent lower than the
average of the absolute value of such amounts for each
of its last five fiscal years; and
(3) Entities reporting
losses must not be aggregated with entities reporting
income where the test involves combined entities, as in
the case of determining whether summarized financial
data must be presented or whether the aggregate impact
specified in §§210.3-05(b)(2)(iv) and
210.3-14(b)(2)(i)(C) is met, except when determining
whether related businesses meet this test for purposes
of §§210.3-05 and 210.8-04.
(2) For a registrant that is a registered
investment company or a business development company, the term
significant subsidiary means a subsidiary, including
its subsidiaries, which meets any of the following conditions
using amounts determined under U.S. GAAP and, if applicable,
section 2(a)(41) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(41)):
(i) Investment test. The value of the
registrant’s and its other subsidiaries’ investments in
and advances to the tested subsidiary exceed 10 percent
of the value of the total investments of the registrant
and its subsidiaries consolidated as of the end of the
most recently completed fiscal year; or
(ii) Income test. The absolute value of the sum
of combined investment income from dividends, interest,
and other income, the net realized gains and losses on
investments, and the net change in unrealized gains and
losses on investments from the tested subsidiary
(except, for purposes of §210.6-11, the absolute value
of the change in net assets resulting from operations of
the tested subsidiary), for the most recently completed
fiscal year exceeds:
(A) 80 percent of the absolute
value of the change in net assets resulting from
operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal
year; or
(B) 10 percent of the absolute
value of the change in net assets resulting from
operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year
and the investment test (paragraph (w)(2)(i) of this
section) condition exceeds 5 percent. However, if the
absolute value of the change in net assets resulting
from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the
average of the absolute value of such amounts for each
of its last five fiscal years, then the registrant may
compute both conditions of the income test using the
average of the absolute value of such amounts for the
registrant and its subsidiaries consolidated for each of
its last five fiscal years.
SEC Regulation S-X, Rule 3-01
§210.3-01 Consolidated balance
sheets.
(a) There shall be filed, for the registrant and its subsidiaries
consolidated, audited balance sheets as of the end of each of
the two most recent fiscal years. If the registrant has been in
existence for less than one fiscal year, there shall be filed an
audited balance sheet as of a date within 135 days of the date
of filing the registration statement.
(b) If the filing, other than a filing on Form 10-K or Form 10,
is made within 45 days after the end of the registrant’s fiscal
year and audited financial statements for the most recent fiscal
year are not available, the balance sheets may be as of the end
of the two preceding fiscal years and the filing shall include
an additional balance sheet as of an interim date at least as
current as the end of the registrant’s third fiscal quarter of
the most recently completed fiscal year.
(c) The instruction in paragraph (b) of this
section is also applicable to filings, other than on Form 10-K
or Form 10, made after 45 days but within the number of days of
the end of the registrant’s fiscal year specified in paragraph
(i) of this section: Provided, that the following
conditions are met:
(1) The registrant files annual, quarterly
and other reports pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 and all reports due have been
filed;
(2) For the most recent fiscal year for
which audited financial statements are not yet available the
registrant reasonably and in good faith expects to report income
attributable to the registrant, after taxes; and
(3) For at least one of the two fiscal years
immediately preceding the most recent fiscal year the registrant
reported income attributable to the registrant, after taxes.
(d) For filings made after 45 days but within the number of days
of the end of the registrant’s fiscal year specified in
paragraph (i) of this section where the conditions set forth in
paragraph (c) of this section are not met, the filing must
include the audited balance sheets required by paragraph (a) of
this section.
(e) For filings made after the number of days specified in
paragraph (i)(2) of this section, the filing shall also include
a balance sheet as of an interim date within the following
number of days of the date of filing:
(1) 130 days for large accelerated filers
and accelerated filers (as defined in §240.12b-2 of this
chapter); and
(2) 135 days for all other registrants.
(f) Any interim balance sheet provided in accordance with the
requirements of this section may be unaudited and need not be
presented in greater detail than is required by §210.10-01.
Notwithstanding the requirements of this section, the most
recent interim balance sheet included in a filing shall be at
least as current as the most recent balance sheet filed with the
Commission on Form 10-Q.
(g) For filings by registered management investment companies,
the requirements of §210.3-18 shall apply in lieu of the
requirements of this section.
(h) Any foreign private issuer, other than a registered
management investment company or an employee plan, may file the
financial statements required by Item 8.A of Form 20-F (§249.220
of this chapter) in lieu of the financial statements specified
in this rule.
(I)
(1) For purposes of paragraphs (c) and (d)
of this section, the number of days shall be:
(i) 60 days (75 days for fiscal years ending before
December 15, 2006) for large accelerated filers (as
defined in §240.12b-2 of this chapter);
(ii) 75 days for accelerated filers (as defined in
§240.12b-2 of this chapter); and
(iii) 90 days for all other registrants.
(2) For purposes of paragraph (e) of this
section, the number of days shall be:
(i) 129 days subsequent to the end of the registrant’s
most recent fiscal year for large accelerated filers and
accelerated filers (as defined in §240.12b-2 of this
chapter); and
(ii) 134 days subsequent to the end of the registrant’s
most recent fiscal year for all other registrants.
[45 FR 63687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17,
1981; 46 FR 36124, July 14, 1981; 50 FR 49531, Dec. 3, 1985; 56
FR 30053, July 1, 1991; 64 FR 53908, Oct. 5, 1999; 67 FR 58503,
Sept. 16, 2002; 68 FR 17880, Apr. 14, 2003; 69 FR 68235, Nov.
23, 2004; 70 FR 76640, Dec. 27, 2005; 73 FR 952, Jan. 4, 2008;
74 FR 18614, Apr. 23, 2009; 83 FR 50198, Oct. 4, 2018]
SEC Regulation S-X, Rule 3-02
§210.3-02 Consolidated statements of comprehensive income and
cash flows.
(a) There shall be filed, for the registrant and its subsidiaries
consolidated and for its predecessors, audited statements of
comprehensive income and cash flows for each of the three fiscal
years preceding the date of the most recent audited balance
sheet being filed or such shorter period as the registrant
(including predecessors) has been in existence. A registrant
that is an emerging growth company, as defined in §230.405 of
this chapter (Rule 405 of the Securities Act) or §240.12b-2 of
this chapter (Rule 12b-2 of the Exchange Act), may, in a
Securities Act registration statement for the initial public
offering of the emerging growth company’s equity securities,
provide audited statements of comprehensive income and cash
flows for each of the two fiscal years preceding the date of the
most recent audited balance sheet (or such shorter period as the
registrant has been in existence).
(b) In addition, for any interim period between the latest
audited balance sheet and the date of the most recent interim
balance sheet being filed, and for the corresponding period of
the preceding fiscal year, statements of comprehensive income
and cash flows shall be provided. Such interim financial
statements may be unaudited and need not be presented in greater
detail than is required by §210.10-01.
(c) For filings by registered management investment companies,
the requirements of §210.3-18 shall apply in lieu of the
requirements of this section.
(d) Any foreign private issuer, other than a registered
management investment company or an employee plan, may file the
financial statements required by Item 8.A of Form 20-F (§249.220
of this chapter) in lieu of the financial statements specified
in this rule.
[45 FR 63687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17,
1981; 46 FR 36125, July 14, 1981; 50 FR 49531, Dec. 3, 1985; 56
FR 30053, July 1, 1991; 57 FR 45292, Oct. 1, 1992; 64 FR 53908,
Oct. 5, 1999; 82 FR 17551, Apr. 12, 2017; 83 FR 50198, Oct. 4,
2018]
SEC Regulation S-X, Rule 3-04
§210.3-04 Changes in stockholders’ equity and noncontrolling
interests.
An analysis of the changes in each caption of stockholders’
equity and noncontrolling interests presented in the balance
sheets shall be given in a note or separate statement. This
analysis shall be presented in the form of a reconciliation of
the beginning balance to the ending balance for each period for
which a statement of comprehensive income is required to be
filed with all significant reconciling items described by
appropriate captions with contributions from and distributions
to owners shown separately. Also, state separately the
adjustments to the balance at the beginning of the earliest
period presented for items which were retroactively applied to
periods prior to that period. With respect to any dividends,
state the amount per share and in the aggregate for each class
of shares. Provide a separate schedule in the notes to the
financial statements that shows the effects of any changes in
the registrant’s ownership interest in a subsidiary on the
equity attributable to the registrant.
[83 FR 50199, Oct. 4, 2018]
SEC Regulation S-X, Rule 3-05
§210.3-05 Financial statements of businesses acquired or to be
acquired.
(a) Financial statements required.
(1) Financial statements (except the related
schedules specified in §210.12) prepared and audited in
accordance with Regulation S-X (including the independence
standards in §210.2-01 or, alternatively if the business is not
a registrant, the applicable independence standards) must be
filed for the periods specified in paragraph (b) of this section
if any of the following conditions exist:
(i) During the most recent fiscal year or subsequent
interim period for which a balance sheet is required by
§210.3-01, a business acquisition has occurred; or
(ii) After the date of the most recent balance sheet
filed pursuant to §210.3-01, consummation of a business
acquisition has occurred or is probable.
(2) For purposes of determining whether the
provisions of this section apply:
(i) The determination of whether a business has
been acquired should be made in accordance with the
guidance set forth in §210.11-01(d); and
(ii) The acquisition of a business encompasses the
acquisition of an interest in a business accounted for
by the registrant under the equity method or, in lieu of
the equity method, the fair value option.
(3) Acquisitions of a group of related
businesses that are probable or that have occurred subsequent to
the latest fiscal year-end for which audited financial
statements of the registrant have been filed must be treated
under this section as if they are a single business acquisition.
The required financial statements of related businesses may be
presented on a combined basis for any periods they are under
common control or management. For purposes of this section,
businesses will be deemed to be related if:
(i) They are under common control or management;
(ii) The acquisition of one business is conditional on
the acquisition of each other business; or
(iii) Each acquisition is conditioned on a single
common event.
(4) This section does not apply to a real
estate operation subject to §210.3-14 or a business which is
totally held by the registrant prior to consummation of the
transaction.
(b) Periods to be presented.
(1) If registering an offering of securities
to the security holders of the business to be acquired, then the
financial statements specified in §§210.3-01 and 210.3-02 must
be filed for the business to be acquired, except as provided
otherwise for filings on Form N-14, S-4, or F-4 (§239.23,
§239.25, or §239.34 of this chapter). The financial statements
covering fiscal years must be audited except as provided in Item
14 of Schedule 14A (§240.14a-101 of this chapter) with respect
to certain proxy statements or in registration statements filed
on Forms N-14, S-4, or F-4 (§239.23, §239.25, or §239.34 of this
chapter).
(2) In all cases not specified in paragraph
(b)(1) of this section, financial statements of the business
acquired or to be acquired must be filed for the periods
specified in this paragraph (b)(2) or such shorter period as the
business has been in existence. Determine the periods for which
such financial statements are to be filed using the conditions
specified in the definition of significant subsidiary in
§210.1-02(w), using the lower of the total revenue component or
income or loss from continuing operations component for
evaluating the income test condition, as follows:
(i) If none of the conditions exceeds 20 percent,
financial statements are not required.
(ii) If any of the conditions exceeds 20 percent, but
none exceed 40 percent, financial statements must be
filed for at least the most recent fiscal year and the
most recent interim period specified in §§210.3-01 and
210.3-02.
(iii) If any of the conditions exceeds 40 percent,
financial statements must be filed for at least the two
most recent fiscal years and any interim periods
specified in §§210.3-01 and 210.3-02.
(iv) If the aggregate impact of businesses acquired or
to be acquired since the date of the most recent audited
balance sheet filed for the registrant, for which
financial statements are either not required by
paragraph (b)(2)(i) of this section or are not yet
required based on paragraph (b)(4)(i) of this section,
exceeds 50 percent for any condition, the registrant
must provide the disclosure specified in paragraphs
(b)(2)(iv)(A) and (B) of this section, however in
determining the aggregate impact of the investment test
condition also include the aggregate impact calculated
in accordance with §210.3-14(b)(2)(ii) of any acquired
or to be acquired real estate operations specified in
§210.3-14(b)(2)(i)(C). In determining whether the income
test condition (i.e. both the revenue component
and the income or loss from continuing operations
component) exceeds 50 percent, the businesses specified
in this paragraph (b)(2)(iv) reporting losses must be
aggregated separately from those reporting income. If
either group exceeds 50 percent, paragraphs
(b)(2)(iv)(A) and (B) of this section will apply to all
of the businesses specified in this paragraph (b)(2)(iv)
and will not be limited to either the businesses with
losses or those with income.
(A) Pro forma financial
information pursuant to §§210.11-01 through 210.11-02
that depicts the aggregate impact of these acquired or
to be acquired businesses and real estate operations, in
all material respects; and
(B) Financial statements covering
at least the most recent fiscal year and the most recent
interim period specified in §§210.3-01 and 210.3-02 for
any acquired or to be acquired business or real estate
operation for which financial statements are not yet
required based on paragraph (b)(4)(i) of this section or
§210.3-14(b)(3)(i).
(3) The determination must be made using
§210.11-01(b)(3) and (4).
(4) Financial statements required for the
periods specified in paragraph (b)(2) of this section may be
omitted to the extent specified as follows:
(i) Registration statements not subject to the
provisions of §230.419 of this chapter and proxy
statements need not include separate financial
statements of an acquired or to be acquired business if
neither the business nor the aggregate impact specified
in paragraph (b)(2)(iv) of this section exceeds any of
the conditions of significance in the definition of
significant subsidiary in §210.1-02 at the 50 percent
level computed in accordance with paragraph (b)(3) of
this section, and either:
(A) The consummation of the
acquisition has not yet occurred; or
(B) The date of the final
prospectus or prospectus supplement relating to an
offering as filed with the Commission pursuant to
§230.424(b) of this chapter, or mailing date in the case
of a proxy statement, is no more than 74 days after
consummation of the business acquisition, and the
financial statements have not previously been filed by
the registrant.
(ii) A registrant, other than a foreign private issuer
required to file reports on Form 6-K (§249.306 of this
chapter), that omits from its initial registration
statement financial statements of a recently consummated
business acquisition pursuant to paragraph (b)(4)(i) of
this section must file those financial statements and
any pro forma information specified by §§210.11-01
through 210.11-03 (Article 11) under cover of Form 8-K
(§249.308 of this chapter) no later than 75 days after
consummation of the acquisition.
(iii) Separate financial statements of the acquired
business specified in paragraph (b)(2)(ii) of this
section need not be presented once the operating results
of the acquired business have been reflected in the
audited consolidated financial statements of the
registrant for at least nine months. Separate financial
statements of the acquired business specified in
paragraph (b)(2)(iii) of this section need not be
presented once the operating results of the acquired
business have been reflected in the audited consolidated
financial statements of the registrant for a complete
fiscal year.
(iv) A separate audited balance sheet of the acquired
business is not required when the registrant’s most
recent audited balance sheet required by §210.3-01 is
for a date after the date the acquisition was
consummated.
(c) Financial statements of a foreign business. Financial
statements of an acquired or to be acquired foreign business (as
defined in §210.1-02(l)) meeting the requirements of Item 17 of
Form 20-F (§249.220f of this chapter) will satisfy this section.
Such financial statements may be reconciled to U.S. Generally
Accepted Accounting Principles (U.S. GAAP) or International
Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS-IASB) if the registrant is a
foreign private issuer that prepares its financial statements in
accordance with IFRS-IASB. This reconciliation must generally
follow the form and content requirements in Item 17(c) of Form
20-F; however, accommodations in Item 17(c)(2) of Form 20-F that
would be inconsistent with IFRS-IASB may not be applied, and
IFRS 1, First-time Adoption of International Financial
Reporting Standards, may be applied.
(d) Financial statements of an acquired or to be acquired
business that would be a foreign private issuer if it were a
registrant. Financial statements of an acquired or to be
acquired business that is not a foreign business (as defined in
§210.1-02(l)), but would qualify as a foreign private issuer (as
defined in §§230.405 and 240.3b-4 of this chapter) if it were a
registrant may be prepared in accordance with IFRS-IASB without
reconciliation to U.S. GAAP or, if the registrant is a foreign
private issuer that prepares its financial statements in
accordance with IFRS-IASB, may be prepared according to a
comprehensive basis of accounting principles other than U.S.
GAAP or IFRS-IASB and must be reconciled to IFRS-IASB or to U.S.
GAAP. This reconciliation must generally follow the form and
content requirements in Item 17(c) of Form 20-F; however,
accommodations in Item 17(c)(2) of Form 20-F that would be
inconsistent with IFRS-IASB may not be applied, and IFRS 1,
First-time Adoption of International Financial Reporting
Standards, may be applied.
(e) Financial statements for net assets that constitute a
business. For an acquisition of net assets that
constitutes a business (e.g., an acquired or to be acquired
product line), the financial statements prepared and audited in
accordance with Regulation S-X may be abbreviated financial
statements prepared in accordance with paragraph (e)(2) of this
section if the business meets all of the qualifying conditions
in paragraph (e)(1) of this section.
(1) Qualifying conditions.
(i) The total assets and total revenues (both after
intercompany eliminations) of the acquired or to be
acquired business constitute 20 percent or less of such
corresponding amounts of the seller and its subsidiaries
consolidated as of and for the most recently completed
fiscal year.
(ii) Separate financial statements for the business
have not previously been prepared;
(iii) The acquired business was not a separate entity,
subsidiary, operating segment (as defined in U.S. GAAP
or IFRS-IASB, as applicable) or division during the
periods for which the acquired business financial
statements would be required; and
(iv) The seller has not maintained the distinct and
separate accounts necessary to present financial
statements that, absent this paragraph (e), would
satisfy the requirements of this section and it is
impracticable to prepare such financial
statements.
(2) Presentation
requirements.
(i) The balance sheet may be a statement of assets
acquired and liabilities assumed;
(ii) The statement of comprehensive income must include
expenses incurred by or on behalf of the acquired
business during the pre-acquisition financial statement
periods to be presented including, but not limited to,
costs of sales or services, selling, distribution,
marketing, general and administrative, depreciation and
amortization, and research and development, but may
otherwise registrant or its subsidiaries consolidated,
and income tax expense. The title of the statement of
comprehensive income must be appropriately modified to
indicate it omits certain expenses; and
(iii) The notes to the financial statements must
include:
(A) A description of the type of
omitted expenses and the reason(s) why they are excluded
from the financial statements.
(B) An explanation of the
impracticability of preparing financial statements that
include the omitted expenses.
(C) A description of how the
financial statements presented are not indicative of the
financial condition or results of operations of the
acquired business going forward because of the omitted
expenses.
(D) Information about the
business’s operating, investing and financing cash
flows, to the extent available.
(f) Financial statements of a business that
includes oil and gas producing activities.
(1) Disclosures about oil and gas producing
activities must be provided for each full year of operations
presented for an acquired or to be acquired business that
includes significant oil- and gas-producing activities (as
defined in the FASB ASC Master Glossary). The financial
statements may present the disclosures in FASB ASC Topic 932
Extractive Activities — Oil and Gas, 932-235-50-3
through 50-11 and 932-235-50-29 through 50-36 as unaudited
supplemental information. If prior year reserve studies were not
made, they may be computed using only production and new
discovery quantities and valuation, in which case there will be
no “revision of prior estimates” amounts. Registrants may
develop these disclosures based on a reserve study for the most
recent year, computing the changes backward. The method of
computation must be disclosed in a footnote.
(2) The financial statements prepared and
audited in accordance with Regulation S-X may consist of only
statements of revenues and expenses that exclude expenses not
comparable to the proposed future operations such as
depreciation, depletion and amortization, corporate overhead,
income taxes, and interest for debt that will not be assumed by
the registrant or its subsidiaries consolidated if:
(i) The acquisition generates substantially all of its
revenues from oil and gas producing activities
(as defined in §210.4-10(a)(16)); and
(ii) The qualifying conditions specified in paragraph
(e)(1) of this section are met.
(3) If the financial statements are
presented in accordance with paragraph (f)(2) of this section,
the disclosures specified in paragraph (e)(2)(iii) of this
section must be provided.
[85 FR 54060, Aug. 31, 2020]
SEC Regulation S-X, Rule 3-06
§210.3-06 Financial statements covering a period of nine to
twelve months.
(a) Except with respect to registered investment companies, the
filing of financial statements covering a period of 9 to 12
months will be deemed to satisfy a requirement for filing
financial statements for a period of 1 year where:
(1) The issuer has changed its fiscal
year;
(2) The issuer has made a significant
business acquisition for which financial statements are required
under §210.3-05, §210.3-14, §210.8-04, or §210.8-06 and the
financial statements covering the interim period pertain to the
business being acquired; or
(3) The Commission so permits pursuant to
§210.3-13 or §210.8-01(e).
(b) Where there is a requirement for filing financial statements
for a time period exceeding one year but not exceeding three
consecutive years (with not more than 12 months included in any
period reported upon), the filing of financial statements
covering a period of 9 to 12 months will satisfy a filing
requirement of financial statements for one year of that time
period only if the conditions described in paragraph (a)(1),
(2), or (3) of this section exist and financial statements are
filed that cover the full fiscal year or years for all other
years in the time period.
[85 FR 54062, Aug. 31, 2020]
SEC Regulation S-X, Rule 3-12
§210.3-12 Age of financial statements at effective date of
registration statement or at mailing date of proxy
statement.
(a) If the financial statements in a filing are as of a date the
number of days specified in paragraph (g) of this section or
more before the date the filing is expected to become effective,
or proposed mailing date in the case of a proxy statement, the
financial statements shall be updated, except as specified in
the following paragraphs, with a balance sheet as of an interim
date within the number of days specified in paragraph (g) of
this section and with statements of comprehensive income and
cash flows for the interim period between the end of the most
recent fiscal year and the date of the interim balance sheet
provided and for the corresponding period of the preceding
fiscal year. Such interim financial statements may be unaudited
and need not be presented in greater detail than is required by
§210.10-01. Notwithstanding the above requirements, the most
recent interim financial statements shall be at least as current
as the most recent financial statements filed with the
Commission on Form 10-Q.
(b) Where the anticipated effective date of a filing, or in the
case of a proxy statement the proposed mailing date, falls
within the number of days subsequent to the end of the fiscal
year specified in paragraph (g) of this section, the filing need
not include financial statements more current than as of the end
of the third fiscal quarter of the most recently completed
fiscal year unless the audited financial statements for such
fiscal year are available or unless the anticipated effective
date or proposed mailing date falls after 45 days subsequent to
the end of the fiscal year and the registrant does not meet the
conditions prescribed under paragraph (c) of §210.3-01. If the
anticipated effective date or proposed mailing date falls after
45 days subsequent to the end of the fiscal year and the
registrant does not meet the conditions prescribed under
paragraph (c) of §210.3-01, the filing must include audited
financial statements for the most recently completed fiscal
year.
(c) Where a filing is made near the end of a fiscal year and
audited financial statements for that fiscal year are not
included in the filing, the filing shall be updated with such
audited financial statements if they become available prior to
the anticipated effective date, or proposed mailing date in the
case of a proxy statement.
(d) The age of the registrant’s most recent audited financial
statements included in a registration statement filed under the
Securities Act of 1933 or filed on Form 10 (17 CFR 249.210)
under the Securities Exchange Act of 1934 shall not be more than
one year and 45 days old at the date the registration statement
becomes effective if the registration statement relates to the
security of an issuer that was not subject, immediately before
the time of filing the registration statement, to the reporting
requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934.
(e) For filings by registered management investment companies,
the requirements of §210.3-18 shall apply in lieu of the
requirements of this section.
(f) Any foreign private issuer may file financial statements
whose age is specified in Item 8.A of Form 20-F (§249.220f of
this chapter). Financial statements of a foreign business which
are furnished pursuant to §210.3-05 or §210.3-09 because it is
an acquired business or a 50 percent or less owned person may be
of the age specified in Item 8.A of Form 20-F.
(g)
(1) For purposes of paragraph (a) of this
section, the number of days shall be:
(i) 130 days for large accelerated filers and
accelerated filers (as defined in §240.12b-2 of this
chapter); and
(ii) 135 days for all other registrants.
(2) For purposes of paragraph (b) of this
section, the number of days shall be:
(i) 60 days (75 days for fiscal years ending before
December 15, 2006) for large accelerated filers (as
defined in §240.12b-2 of this chapter);
(ii) 75 days for accelerated filers (as defined in
§240.12b-2 of this chapter); and
(iii) 90 days for all other registrants.
[45 FR 62687, Sept. 25, 1980]
SEC Regulation S-X, Rule 3-13
§210.3-13 Filing of other financial statements in certain
cases.
The Commission may, upon the informal written request of the
registrant, and where consistent with the protection of
investors, permit the omission of one or more of the financial
statements herein required or the filing in substitution
therefor of appropriate statements of comparable character. The
Commission may also by informal written notice require the
filing of other financial statements in addition to, or in
substitution for, the statements herein required in any case
where such statements are necessary or appropriate for an
adequate presentation of the financial condition of any person
whose financial statements are required, or whose statements are
otherwise necessary for the protection of investors.
SEC Regulation S-X, Rule 3-14
§210.3-14 Special instructions for financial statements of
real estate operations acquired or to be acquired.
(a) Financial statements required.
(1) Financial statements (except the related
schedules specified in §210.12) prepared and audited in
accordance with Regulation S-X (including the independence
standards in §210.2-01 or, alternatively if the real estate
operation is not a registrant, the applicable independence
standards) for the periods specified in paragraph (b) of this
section and the supplemental information specified in paragraph
(f) of this section must be filed if any of the following
conditions exist:
(i) During the most recent fiscal year or subsequent
interim period for which a balance sheet is required by
§210.3-01, an acquisition of a real estate operation has
occurred; or
(ii) After the date of the most recent balance sheet
filed pursuant to §210.3-01, consummation of an
acquisition of a real estate operation has occurred or
is probable.
(2) For purposes of determining whether the
provisions of this section apply:
(i) The term real estate operation means a
business (as set forth in §210.11-01(d)) that generates
substantially all of its revenues through the leasing of
real property.
(ii) The acquisition of a real estate operation
encompasses the acquisition of an interest in a real
estate operation accounted for by the registrant under
the equity method or, in lieu of the equity method, the
fair value option.
(3) Acquisitions of a group of related real
estate operations that are probable or that have occurred
subsequent to the latest fiscal year-end for which audited
financial statements of the registrant have been filed will be
treated under this section as if they are a single acquisition.
The required financial statements may be presented on a combined
basis for any periods they are under common control or
management. For purposes of this section, acquisitions will be
deemed to be related if:
(i) They are under common control or management;
(ii) The acquisition of one real estate operation is
conditional on the acquisition of each other real estate
operation; or
(iii) Each acquisition is conditioned on a single
common event.
(4) This section does not apply to a real
estate operation that is totally held by the registrant prior to
consummation of the transaction.
(b) Periods to be presented.
(1) If registering an offering of securities
to the security holders of the real estate operation to be
acquired, then the financial statements specified in paragraph
(c) of this section and the supplemental information specified
in paragraph (f) of this section must be filed for the real
estate operation to be acquired for the periods specified in
§§210.3-01 and 210.3-02, except as provided otherwise for
filings on Form S-4 or F-4 (§239.25 or §239.34 of this chapter).
The financial statements covering fiscal years must be audited
except as provided in Item 14 of Schedule 14A (§240.14a-101 of
this chapter) with respect to certain proxy statements or in
registration statements filed on Form S-4 or F-4 (§239.25 or
§239.34 of this chapter).
(2) In all cases not specified in paragraph
(b)(1) of this section, financial statements of the real estate
operation acquired or to be acquired must be filed for the
periods specified in this paragraph (b)(2) or such shorter
period as the real estate operation has been in existence. The
periods for which such financial statements are to be filed must
be determined using the investment test condition specified in
the definition of significant subsidiary in §210.1-02(w)(1)(i)
modified as follows:
(i)
(A) If the condition does not
exceed 20 percent, financial statements are not
required.
(B) If the condition exceeds 20
percent, financial statements of the real estate
operation for at least the most recent fiscal year and
the most recent interim period specified in §§210.3-01
and 210.3-02 must be filed.
(C) If the aggregate impact of
acquired or to be acquired real estate operations since
the date of the most recent audited balance sheet filed
for the registrant, for which financial statements are
either not required by paragraph (b)(2)(i)(A) of this
section or are not yet required based on paragraph
(b)(3)(i) of this section, exceeds 50 percent, the
registrant must provide the disclosures specified in
paragraphs (b)(2)(i)(C)(1) and (b)(2)(i)(C)(2) of this
section. If there are also businesses acquired or to be
acquired as described in §210.3-05(b)(2)(iv), the
requirements in §210.3-05(b)(2)(iv) will apply
instead.
(1) Pro forma financial
information pursuant to §§210.11-01 through 210.11-02
that depicts the aggregate impact of these acquired or
to be acquired real estate operations in all material
respects; and
(2) Financial statements
covering at least the most recent fiscal year and the
most recent interim period specified in §§210.3-01 and
210.3-02 for any acquired or to be acquired real estate
operation for which financial statements are not yet
required based on paragraph (b)(3)(i) of this
section.
(ii) When the investment test is based on the total
assets of the registrant and its subsidiaries
consolidated, include any assumed debt secured by the
real properties in the “investments in” the tested real
estate operation.
(iii) The determination must be made using
§210.11-01(b)(3) and (4).
(3) Financial statements required for the
periods specified in paragraph (b)(2) of this section may be
omitted to the extent specified as follows:
(i) Registration statements not subject to the
provisions of §230.419 of this chapter and proxy
statements need not include separate financial
statements of the acquired or to be acquired real estate
operation if neither the real estate operation nor the
aggregate impact specified in paragraph (b)(2)(i)(C) of
this section exceeds the condition of significance in
the definition of significant subsidiary in
§210.1-02(w)(1)(i), as modified by paragraphs (b)(2)(ii)
and (iii) of this section, at the 50 percent level
computed in accordance with paragraph (b)(2) of this
section, and either:
(A) The consummation of the
acquisition has not yet occurred; or
(B) The date of the final
prospectus or prospectus supplement relating to an
offering as filed with the Commission pursuant to
§230.424(b) of this chapter, or mailing date in the case
of a proxy statement, is no more than 74 days after
consummation of the acquisition of the real estate
operation, and the financial statements have not
previously been filed by the registrant.
(ii) A registrant, other than a foreign private issuer
required to file reports on Form 6-K (§249.306 of this
chapter), that omits from its initial registration
statement financial statements of a recently consummated
acquisition of a real estate operation pursuant to
paragraph (b)(3)(i) of this section must file those
financial statements and any pro forma information
specified by §§210.11-01 through 210.11-03 (Article 11)
under cover of Form 8-K (§249.308 of this chapter) no
later than 75 days after consummation of the
acquisition.
(iii) Separate financial statements of the acquired
real estate operation specified in paragraph
(b)(2)(i)(B) of this section need not be presented once
the operating results of the acquired real estate
operation have been reflected in the audited
consolidated financial statements of the registrant for
at least nine months.
(c) Presentation of the financial statements.
(1) The financial statements prepared and
audited in accordance with Regulation S-X may be only statements
of revenues and expenses excluding expenses not comparable to
the proposed future operations such as mortgage interest,
leasehold rental, depreciation, amortization, corporate overhead
and income taxes.
(2) The notes to the financial statements
must include the following disclosures:
(i) The type of omitted expenses and the reason(s) why
they are excluded from the financial statements;
(ii) A description of how the financial statements
presented are not indicative of the results of
operations of the acquired real estate operation going
forward because of the omitted expenses; and
(iii) Information about the real estate operation’s
operating, investing and financing cash flows, to the
extent available.
(d) Financial statements of a foreign real estate
operation. Financial statements of an acquired or to be
acquired foreign business (as defined in §210.1-02(l)) that is a
real estate operation, specified in paragraph (c) of this
section and meeting the requirements of Item 17 of Form 20-F
(§249.220f of this chapter), will satisfy this section. Such
financial statements may be reconciled to U.S. Generally
Accepted Accounting Principles (U.S. GAAP) or International
Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS-IASB) if the registrant is a
foreign private issuer that prepares its financial statements in
accordance with IFRS-IASB. This reconciliation must generally
follow the form and content requirements in Item 17(c) of Form
20-F; however, accommodations in Item 17(c)(2) of Form 20-F that
would be inconsistent with IFRS-IASB may not be applied, and
IFRS 1, First-time Adoption of International Financial
Reporting Standards, may be applied.
(e) Financial statements of an acquired or to be acquired real
estate operation that would be a foreign private issuer if
it were a registrant. Financial statements of an
acquired or to be acquired real estate operation that is not a
foreign business (as defined in §210.1-02(l)), but would qualify
as a foreign private issuer (as defined in §§230.405 and
240.3b-4 of this chapter) if it were a registrant, may be
prepared in accordance with IFRS-IASB without reconciliation to
U.S. GAAP or, if the registrant is a foreign private issuer that
prepares its financial statements in accordance with IFRS-IASB,
may be prepared according to a comprehensive basis of accounting
principles other than U.S. GAAP or IFRS-IASB and must be
reconciled to IFRS-IASB or to U.S. GAAP. This reconciliation
must generally follow the form and content requirements in Item
17(c) of Form 20-F; however, accommodations in Item 17(c)(2) of
Form 20-F that would be inconsistent with IFRS-IASB may not be
applied, and IFRS 1, First-time Adoption of International
Financial Reporting Standards, may be applied.
(f) Supplemental information. For each real estate
operation for which financial statements are required to be
filed by paragraphs (b)(2)(i)(B) and (b)(2)(i)(C)(2) of this
section, material factors considered by the registrant in
assessing the real estate operation must be described with
specificity in the filing, including sources of revenue
(including, but not limited to, competition in the rental
market, comparative rents, and occupancy rates) and expense
(including, but not limited to, utility rates, property tax
rates, maintenance expenses, and capital improvements
anticipated). The disclosure must also indicate that the
registrant is not aware of any other material factors relating
to the specific real estate operation that would cause the
reported financial statements not to be indicative of future
operating results.
Instruction 1 to paragraph (f): When the financial
statements are presented in Form S-11 (§239.18 of this chapter),
the discussion of material factors considered should supplement
the disclosures required by Item 15 of Form S-11.
[85 FR 54062, Aug. 31, 2020]
SEC Regulation S-X, Article 11
Pro Forma Financial Information
Source: Sections 210.11-01 through 210.11-03 appear at 47
FR 29837, July 9, 1982, unless otherwise noted.
§210.11-01 Presentation requirements.
(a) Pro forma financial information must be filed when any of the
following conditions exist:
(1) During the most recent fiscal year or
subsequent interim period for which a balance sheet is required
by §210.3-01, a significant business acquisition has occurred
(for purposes of this section, this encompasses the acquisition
of an interest in a business accounted for by the equity
method);
(2) After the date of the most recent
balance sheet filed pursuant to §210.3-01, consummation of a
significant business acquisition or a combination of entities
under common control has occurred or is probable;
(3) Securities being registered by the
registrant are to be offered to the security holders of a
significant business to be acquired or the proceeds from the
offered securities will be applied directly or indirectly to the
purchase of a specific significant business;
(4) The disposition of a significant portion
of a business either by sale, abandonment or distribution to
shareholders by means of a spin-off, split-up or split-off has
occurred or is probable and such disposition is not fully
reflected in the financial statements of the registrant included
in the filing;
(5) [Reserved]
(6) Pro forma financial information required
by §229.914 of this chapter is required to be provided in
connection with a roll-up transaction as defined in §229.901(c)
of this chapter;
(7) The registrant previously was a part of
another entity and such presentation is necessary to reflect
operations and financial position of the registrant as an
autonomous entity; or
(8) Consummation of other transactions has
occurred or is probable for which disclosure of pro forma
financial information would be material to investors.
(b) A business acquisition or disposition will be considered
significant if:
(1) The business acquisition meets:
(i) The definition of a significant subsidiary in
§210.1-02(w)(1), substituting 20 percent for 10 percent
each place it appears therein; or
(ii) If the business is a real estate operation as
defined in §210.3-14(a)(2), the significant subsidiary
condition in §210.1-02(w)(1)(i) (i.e., the
investment test condition), substituting 20 percent for
10 percent, as modified by the guidance in
§210.3-14(b)(2)(ii).
(2) The business disposition, including a
business that is a real estate operation as defined in
§210.3-14(a)(2), meets the definition of a significant
subsidiary in §210.1-02(w)(1), substituting 20 percent for 10
percent each place it appears therein.
(3) The determination must be made, except
as noted in paragraph (b)(4) of this section for the continuous
offerings described therein, by using:
(i) For amounts derived from financial statements, the
registrant’s most recent annual consolidated financial
statements required to be filed at or prior to the date
of acquisition or disposition and the business’s
pre-acquisition or pre-disposition financial statements
for the same fiscal year as the registrant or, if the
fiscal years differ, the business’s most recent fiscal
year that would be required if the business had the same
filer status as the registrant, however the
determination may be made using:
(A) The financial statements for
the business described in §210.3-05(e) or (f) if the
business meets the conditions for presenting those
financial statements.
(B) Pro forma amounts for the
registrant for the periods specified in §210.11-01(b)(3)
that only depict significant business acquisitions and
dispositions consummated after the latest fiscal
year-end for which the registrant’s financial statements
are required to be filed and only include Transaction
Accounting Adjustments (see §210.11-02(a)(6)(i)),
provided that:
(1) The registrant has
filed audited financial statements for any such acquired
business for the periods required by §210.3-05 or
§210.3-14 and the pro forma financial information
required by §§210.11-01 through 210.11-02 for any such
acquired or disposed business. The tests may not be made
by “annualizing” data; and
(2) If a registrant has
used pro forma amounts to determine significance of an
acquisition or disposition, it must continue to use pro
forma amounts to determine significance of acquisitions
and dispositions through the filing date of its next
annual report on Form 10-K (§249.310 of this chapter) or
Form 20-F (§249.220f of this chapter); or
(C) The registrant’s annual
consolidated financial statements, for the most recent
fiscal year ended prior to the acquisition or
disposition, that are included in the registrant’s Form
10-K (§249.310 of this chapter) filed after the date of
acquisition or disposition, but before the date
financial statements and pro forma financial information
for the acquisition or disposition would be required to
be filed on Form 8-K (§249.308 of this chapter).
(ii) If the business is a related business (see
§210.3-05(a)(3)), combined pre-acquisition financial
statements of the group of related businesses for the
fiscal year specified in paragraph (b)(3)(i) of this
section.
(4) When a registrant, including a real
estate investment trust, conducts a continuous offering over an
extended period of time and applies the Item 20.D. Undertakings
of Industry Guide 5, the income test condition does not apply,
and the determination must be made for the investment test
condition, when it is based on the total assets of the
registrant and its subsidiaries consolidated, and the asset test
condition, if applicable, using the following for the registrant:
(i) During the distribution period, total assets as of
the date of acquisition or disposition plus the proceeds
(net of commissions) in good faith expected to be raised
in the registered offering over the next 12 months,
except that for acquisitions total assets must exclude
the acquired business; and
(ii) After the distribution period ends and until the
next Form 10-K is filed, total assets as of the date of
acquisition or disposition, except that for acquisitions
total assets must exclude the acquired business;
and
(iii) After that next Form 10-K is filed, the guidance
in paragraph (b)(3).
(c) The pro forma effects of a business acquisition need not be
presented pursuant to this section if separate financial
statements of the acquired business are not included in the
filing, except where the aggregate impact of businesses acquired
or to be acquired is significant as determined by
§210.3-05(b)(2)(iv) or §210.3-14(b)(2)(i)(C).
(d) For purposes of this rule, the term business should be
evaluated in light of the facts and circumstances involved and
whether there is sufficient continuity of the acquired entity’s
operations prior to and after the transactions so that
disclosure of prior financial information is material to an
understanding of future operations. A presumption exists that a
separate entity, a subsidiary, or a division is a business.
However, a lesser component of an entity may also constitute a
business. Among the facts and circumstances which should be
considered in evaluating whether an acquisition of a lesser
component of an entity constitutes a business are the
following:
(1) Whether the nature of the
revenue-producing activity of the component will remain
generally the same as before the transaction; or
(2) Whether any of the following attributes
remain with the component after the transaction:
(i) Physical facilities,
(ii) Employee base,
(iii) Market distribution system,
(iv) Sales force,
(v) Customer base,
(vi) Operating rights,
(vii) Production techniques, or
(viii) Trade names.
(e) This rule does not apply to transactions between a parent
company and its totally held subsidiary.
[47 FR 29837, July 9, 1982, as amended at 50 FR 49533, Dec. 3,
1985; 56 FR 57247, Nov. 8, 1991; 61 FR 54514, Oct. 18, 1996; 74
FR 18616, Apr. 23, 2009; 85 FR 54066, Aug. 31, 2020]
§210.11-02 Preparation requirements.
(a) Form and content.
(1) Pro forma financial
information must consist of a pro forma condensed balance sheet,
pro forma condensed statements of comprehensive income, and
accompanying explanatory notes. In certain circumstances
(i.e., where a limited number of pro forma
adjustments are required and those adjustments are easily
understood), a narrative description of the pro forma effects of
the transaction may be disclosed in lieu of the statements
described in this paragraph (a)(1).
(2) The pro forma financial information must
be accompanied by an introductory paragraph which briefly sets
forth a description of:
(i) Each transaction for which pro forma effect is
being given;
(ii) The entities involved;
(iii) The periods for which the pro forma financial
information is presented; and
(iv) An explanation of what the pro forma presentation
shows.
(3) The pro forma condensed
financial information need only include major captions
(i.e., the numbered captions) prescribed by the
applicable sections of Regulation S-X. Where any major balance
sheet caption is less than 10 percent of total assets, the
caption may be combined with others. When any major statement of
comprehensive income caption is less than 15 percent of average
net income attributable to the registrant for the most recent
three fiscal years, the caption may be combined with others. In
calculating average net income attributable to the registrant,
loss years should be excluded unless losses were incurred in
each of the most recent three years, in which case the average
loss must be used for purposes of this test. Notwithstanding
these tests, de minimis amounts need not be shown
separately.
(4) Pro forma statements will ordinarily be
in columnar form showing condensed historical statements, pro
forma adjustments, and the pro forma results.
(5) The pro forma condensed statement of
comprehensive income must disclose income (loss) from continuing
operations and income or loss from continuing operations
attributable to the controlling interest.
(6) The pro forma condensed balance sheet
and pro forma condensed statements of comprehensive income must
include, and be limited to, the following pro forma adjustments,
except as noted in paragraph (a)(7) of this section:
(i) Transaction Accounting Adjustments.
(A) Adjustments that depict in the
pro forma condensed balance sheet the accounting for the
transaction required by U.S. Generally Accepted
Accounting Principles (U.S. GAAP) or, as applicable,
International Financial Reporting Standards as issued by
the International Accounting Standards Board
(IFRS-IASB). Calculate pro forma adjustments using the
measurement date and method prescribed by the applicable
accounting standards. For a probable transaction,
calculate pro forma adjustments using, and disclose, the
most recent practicable date prior to the effective date
(for registration statements), qualification date (for
offering statements under 17 CFR 230.251 through 230.263
(Regulation A)), or the mail date (for proxy
statements).
(B) Adjustments that depict in the
pro forma condensed statements of comprehensive income
the effects of the pro forma balance sheet adjustments
in paragraph (a)(6)(i)(A) of this section assuming those
adjustments were made as of the beginning of the fiscal
year presented. Such adjustments must be made whether or
not the pro forma balance sheet is presented pursuant to
paragraph (c)(1) of this section. If the condition in
§210.11-01(a) that is met does not have a balance sheet
effect, then depict the accounting for the transaction
required by U.S. GAAP or IFRS-IASB, as applicable.
(ii) Autonomous Entity Adjustments. Adjustments
that depict the registrant as an autonomous entity if
the condition in §210.11-01(a)(7) is met. Autonomous
Entity Adjustments must be presented in a separate
column from Transaction Accounting Adjustments.
(7) Management’s Adjustments depicting
synergies and dis-synergies of the acquisitions and dispositions
for which pro forma effect is being given may, in the
registrant’s discretion, be presented if in its management’s
opinion, such adjustments would enhance an understanding of the
pro forma effects of the transaction and the following
conditions are met:
(i) Basis for Management’s Adjustments.
(A) There is a reasonable basis
for each such adjustment.
(B) The adjustments are limited to
the effect of such synergies and dis-synergies on the
historical financial statements that form the basis for
the pro forma statement of comprehensive income as if
the synergies and dis-synergies existed as of the
beginning of the fiscal year presented. If such
adjustments reduce expenses, the reduction must not
exceed the amount of the related expense historically
incurred during the pro forma period presented.
(C) The pro forma financial
information reflects all Management’s Adjustments that
are, in the opinion of management, necessary to a fair
statement of the pro forma financial information
presented and a statement to that effect is disclosed.
When synergies are presented, any related dis-synergies
must also be presented.
(ii) Form of presentation.
(A) If presented, Management’s
Adjustments must be presented in the explanatory notes
to the pro forma financial information in the form of
reconciliations of pro forma net income from continuing
operations attributable to the controlling interest and
the related pro forma earnings per share data specified
in paragraph (a)(9) of this section to such amounts
after giving effect to Management’s Adjustments.
(B) Management’s Adjustments
included or incorporated by reference into a
registration statement, proxy statement, Regulation A
offering statement, or Form 8-K should be as of the most
recent practicable date prior to the effective date,
mail date, qualification date, or filing date as
applicable, which may require that they be updated if
previously provided in a Form 8-K that is appropriately
incorporated by reference.
(C) If Management’s Adjustments
will change the number of shares or potential common
shares, reflect the change within Management’s
Adjustments in accordance with U.S. GAAP or IFRS-IASB,
as applicable, as if the common stock or potential
common stock were outstanding as of the beginning of the
period presented.
(D) The explanatory notes must
also include disclosure of the basis for and material
limitations of each Management’s Adjustment, including
any material assumptions or uncertainties of such
adjustment, an explanation of the method of the
calculation of the adjustment, if material, and the
estimated time frame for achieving the synergies and
dis-synergies of such adjustment.
Instruction 1 to paragraph
(a)(7): Any forward-looking information supplied
is expressly covered by the safe harbor rules under
§§230.175 and 240.3b-6 of this chapter.
(8) All pro forma adjustments should be
referenced to notes that clearly explain the assumptions
involved.
(9)
(i) Historical and pro forma basic and diluted per
share amounts based on continuing operations
attributable to the controlling interests and the number
of shares used to calculate such per share amounts must
be presented on the face of the pro forma condensed
statement of comprehensive income and only give effect
to Transaction Accounting Adjustments and Autonomous
Entity Adjustments.
(ii) The number of shares used in the calculation of
the pro forma per share amounts must be based on the
weighted average number of shares outstanding during the
period adjusted to give effect to the number of shares
issued or to be issued to consummate the transaction, or
if applicable whose proceeds will be used to consummate
the transaction as if the shares were outstanding as of
the beginning of the period presented. Calculate the pro
forma effect of potential common stock being issued in
the transaction (e.g., a convertible security),
or the proceeds of which will be used to consummate the
transaction, on pro forma earnings per share in
accordance with U.S. GAAP or IFRS-IASB, as applicable,
as if the potential common stock were outstanding as of
the beginning of the period presented.
(10) If the transaction is structured in
such a manner that significantly different results may occur,
provide additional pro forma presentations which give effect to
the range of possible results.
(11) The accompanying explanatory notes must disclose:
(i) Revenues, expenses, gains and losses and related
tax effects which will not recur in the income of the
registrant beyond 12 months after the transaction.
(ii) For Transaction Accounting Adjustments:
(A) A table showing the total
consideration transferred or received including its
components and how they were measured. If total
consideration includes contingent consideration,
describe the arrangement(s), the basis for determining
the amount of payment(s) or receipt(s), and an estimate
of the range of outcomes (undiscounted) or, if a range
cannot be estimated, that fact and the reasons why;
and
(B) The following information when
the accounting is incomplete: A prominent statement to
this effect; the items for which the accounting depicted
is incomplete; a description of the information that the
registrant requires, including, if material, the
uncertainties affecting the pro forma financial
information and the possible consequences of their
resolution; an indication of when the accounting is
expected to be finalized; and other available
information that will enable a reader to understand the
magnitude of any potential adjustments to the
measurements depicted.
(iii) For each Autonomous Entity Adjustment, a
description of the adjustment (including the material
uncertainties), the material assumptions, the
calculation of the adjustment, and additional
qualitative information about the Autonomous Entity
Adjustments, if any, necessary to give a fair and
balanced presentation of the pro forma financial
information.
(12) A registrant must not:
(i) Present pro forma financial information on the face
of the registrant’s historical financial statements or
in the accompanying notes, except where such
presentation is required by U.S. GAAP or IFRS-IASB, as
applicable.
(ii) Present pro forma financial information, or
summaries of such information, elsewhere in a filing
that excludes material transactions for which pro forma
effect is required to be given.
(iii) Present the pro forma amounts in paragraph (a)(7)
of this section elsewhere in a filing without also
presenting with equal or greater prominence the amounts
specified in paragraph (a)(7) of this section to which
they are required to be reconciled and a cross-reference
to that reconciliation.
(iv) Give pro forma effect to the registrant’s adoption
of an accounting standard in pro forma financial
information required by §§210.11-01 through
210.11-03.
(b) Implementation guidance —
(1) Historical statement of comprehensive
income. The historical statement of comprehensive income
used in the pro forma financial information must only be
presented through income from continuing operations (or the
appropriate modification thereof).
(2) Business acquisitions. In some
transactions, such as in financial institution acquisitions,
measuring the acquired assets at their acquisition date fair
value may result in significant discounts relative to the
acquired business’s historical cost of the acquired assets. When
such discounts can result in a significant effect on earnings
(losses) in periods immediately subsequent to the acquisition
that will be progressively eliminated over a relatively short
period, the effect of the discounts on reported results of
operations for each of the next five years must be disclosed in
a note.
(3) Business dispositions.
Transaction Accounting Adjustments giving effect to the
disposition of a business must not decrease historically
incurred compensation expense for employees who were not, or
will not be, transferred or terminated as of the disposition
date.
(4) Multiple transactions.
(i) When consummation of more than one transaction has
occurred, or is probable, the pro forma financial
information must present in separate columns each
transaction for which pro forma presentation is required
by §210.11-01.
(ii) If the pro forma financial information is
presented in a proxy or information statement for
purposes of obtaining shareholder approval of one of the
transactions, the effects of that transaction must be
clearly set forth.
(5) Tax effects.
(i) Tax effects, if any, of pro forma adjustments
normally should be calculated at the statutory rate in
effect during the periods for which pro forma condensed
statements of comprehensive income are presented and
should be reflected as a separate pro forma
adjustment.
(ii) When the registrant’s historical statements of
comprehensive income do not reflect the tax provision on
the separate return basis, pro forma statements of
comprehensive income adjustments must reflect a tax
provision calculated on the separate return basis.
(c) Periods to be presented.
(1) A pro forma condensed balance sheet as
of the end of the most recent period for which a consolidated
balance sheet of the registrant is required by §210.3-01 must be
filed unless the transaction is already reflected in such
balance sheet.
(2)
(i) Pro forma condensed statements of comprehensive
income must be filed for only the most recent fiscal
year, except as noted in paragraph (c)(2)(ii) of this
section, and for the period from the most recent fiscal
year end to the most recent interim date for which a
balance sheet is required. A pro forma condensed
statement of comprehensive income may be filed for the
corresponding interim period of the preceding fiscal
year. A pro forma condensed statement of comprehensive
income must not be filed when the historical statement
of comprehensive income reflects the transaction for the
entire period.
(ii) For transactions required to be accounted for
under U.S. GAAP or, as applicable, IFRS-IASB by
retrospectively revising the historical statements of
comprehensive income (e.g., combination of
entities under common control and discontinued
operations), pro forma statements of comprehensive
income must be filed for all periods for which
historical financial statements of the registrant are
required. Retrospective revisions stemming from the
registrant’s adoption of a new accounting principle must
not be reflected in pro forma statements of
comprehensive income until they are depicted in the
registrant’s historical financial statements.
(3) Pro forma condensed statements of
comprehensive income must be presented using the registrant’s
fiscal year end. If the most recent fiscal year end of any other
entity involved in the transaction differs from the registrant’s
most recent fiscal year end by more than one fiscal quarter, the
other entity’s statement of comprehensive income must be brought
up to within one fiscal quarter of the registrant’s most recent
fiscal year end, if practicable. This updating could be
accomplished by adding subsequent interim period results to the
most recent fiscal year end information and deducting the
comparable preceding year interim period results. Disclosure
must be made of the periods combined and of the sales or
revenues and income for any periods which were excluded from or
included more than once in the condensed pro forma statement of
comprehensive income (e.g., an interim period that is included
both as part of the fiscal year and the subsequent interim
period).
Instruction 1 to paragraph (c)(3): In
circumstances where different fiscal year ends exist, §210.3-12
may require a registrant to include in the pro forma financial
information an acquired or to be acquired foreign business
historical period that would be more current than the periods
included in the required historical financial statements of the
foreign business.
(4) Whenever unusual events enter into the
determination of the results shown for the most recently
completed fiscal year, the effect of such unusual events should
be disclosed and consideration should be given to presenting a
pro forma condensed statement of comprehensive income for the
most recent twelve-month period in addition to those required in
paragraph (c)(2)(i) of this section if the most recent
twelve-month period is more representative of normal
operations.
[85 FR 54066, Aug. 31, 2020]
§210.11-03 Presentation of financial forecast.
(a) A financial forecast may be filed in lieu of the pro forma
condensed statements of comprehensive income required by
§210.11-02(a)(1).
(1) The financial forecast shall cover a
period of at least 12 months from the latest of
(i) the most recent balance sheet included in the
filing or
(ii) the consummation date or estimated consummation
date of the transaction.
(2) The forecasted statement of
comprehensive income shall be presented in the same degree of
detail as the pro forma condensed statement of comprehensive
income required by §210.11-02(a)(3).
(3) Assumptions particularly relevant to the
transaction and effects thereof should be clearly set forth.
(4) Historical condensed financial
information of the registrant and the business acquired or to be
acquired, if any, shall be presented for at least a recent 12
month period in parallel columns with the financial
forecast.
(b) Such financial forecast shall be presented in accordance with
the guidelines established by the American Institute of
Certified Public Accountants.
(c) Forecasted earnings per share data shall be substituted for
pro forma per share data.
(d) This section does not permit the filing of a financial
forecast in lieu of pro forma information required by U.S. GAAP
or IFRS-IASB.
[47 FR 29837, July 9, 1982, as amended at 83 FR 50208, Oct. 4,
2018; 85 FR 54069, Aug. 31, 2020]