It is important to apply the terminology used throughout S-X Article 11 in the proper context. For instance:

The pro forma condensed balance sheet should be presented as of the end of the most recent period for which a consolidated balance sheet of the registrant is required by S-X 3-01. The captions which must be presented in the pro forma condensed balance sheet are set forth in S-X 11-02(a)(3). A pro forma condensed balance sheet is not required if the transaction is already reflected in the registrant’s most recent historical balance sheet filed. See S-X 11-02(c)(1). Consider the following example.

Company A, a calendar year-end SEC registrant, consummated the acquisition of Business B on November 30, 2023, and the acquisition is significant above 50%. Company A files a registration statement on Form S-3 on December 15, 2023. In this fact pattern, the registration statement should include/incorporate by reference a pro forma condensed balance sheet as of September 30, 2023 (i.e., the most recent period for which a consolidated condensed balance sheet of the registrant is required by S-X 3-01) and the pro forma condensed statements of comprehensive income for the year ended December 31, 2022 and the nine months ended September 30, 2023. A pro forma condensed balance sheet is not required as of December 31, 2022.

Assume similar facts described above except Company A files its Form S-3 on April 15, 2024. In this fact pattern, the most recent historical balance sheet of Company A incorporated by reference in the registration statement will be as of December 31, 2023. A pro forma condensed balance sheet as of December 31, 2023 would not need to be included/incorporated by reference because the acquisition of Business B is already reflected in Company A’s historical balance sheet as of December 31, 2023. However, Company A would need to include/incorporate by reference a pro forma condensed statement of comprehensive income for the year ended December 31, 2023 in the Form S-3.

Except as described below, pro forma condensed statements of comprehensive income are presented only for the most recently completed fiscal year and subsequent interim period up to the most recent interim date for which a balance sheet is required. A pro forma condensed statement of comprehensive income for the comparable interim period is optional. See S-X 11-02(c)(2)(i). Consider the following example.

Company X, a calendar year-end SEC registrant, acquired Business Y on December 15, 2023. The acquisition is significant for purposes of S-X Article 11. In September 2024, Company X files a registration statement on Form S-3. In this case, a pro forma condensed statement of comprehensive income is only required for the fiscal year ended December 31, 2023 because the acquisition of Business Y is already reflected in the 2024 interim statement of comprehensive income of Company X.

However, if Company X had acquired Business Y on January 31, 2024, a pro forma condensed statement of comprehensive income would also be required for the six months ended June 30, 2024 to include the one-month pre-acquisition period.

For transactions required to be accounted for under US GAAP or IFRS-IASB by retrospectively revising the historical statements of comprehensive income (e.g., combination of entities under common control and discontinued operations), pro forma condensed statements of comprehensive income must be filed for all periods for which historical financial statements of the registrant are required to be presented. Retrospective revisions to the registrant’s historical financial statements stemming from the registrant’s adoption of a new accounting principle must not be reflected in the pro forma condensed statements of comprehensive income until they are reflected in the registrant’s historical financial statements. See S-X 11-02(c)(2)(ii).

The captions which must be presented in the pro forma condensed statements of comprehensive income are set forth in S-X 11-02(a)(3).

The statement of comprehensive income used to prepare the pro forma financial information must only be presented through income (loss) from continuing operations. See S-X 11-02(b)(1). The pro forma condensed statement of comprehensive income should disclose income (loss) from continuing operations, and income (loss) from continuing operations attributable to the controlling interests. See S-X 11-02(a)(5).

Historical and pro forma basic and diluted earnings per share are presented on the face of the pro forma condensed statement of comprehensive income as specified by S-X 11-02(a)(9). The notes to the pro forma financial information should make the computation of pro forma EPS clearly determinable.

If a registrant consummates a business acquisition using the proceeds from a common stock offering, the pro forma EPS should be based on the historical weighted average shares outstanding and only be adjusted to include the number of common shares whose proceeds were used to consummate the business acquisition. Effect should be given to shares issued or to be issued as if issuance had taken place at the beginning of the period presented.

When convertible securities will automatically convert to common stock in connection with an IPO, the number of shares used to compute pro forma EPS should include the number of common shares into which the securities will convert as if they were outstanding as of the beginning of the most recently completed fiscal year presented in the S-X Article 11 pro forma financial statements, irrespective of when the convertible securities were issued. Refer to Topic III.B.1 from the highlights of the March 2021 meeting of the CAQ SEC Regulations Committee.

Common shares whose proceeds will be used for general corporate purposes should not be included as an adjustment in computing pro forma EPS. See SEC FRM 3230.4 #6.

The pro forma condensed balance sheet and statements of comprehensive income must include and, except as described below, be limited to the following pro forma adjustments:

Additionally, a registrant may, in its discretion, include Management’s Adjustments in the explanatory notes to the pro forma financial information. See S-X 11-02(a)(7). Management’s Adjustments may not be presented on the face of the pro forma condensed balance sheet or statements of comprehensive income.

Pro forma adjustments should be referenced to notes that clearly explain the assumptions involved. See S-X 11-02(a)(8).

Transaction Accounting Adjustments and Autonomous Entity Adjustments are required to be presented in separate columns. See S-X 11-02(a)(6)(ii).

Pro forma adjustments generally should not be netted unless the gross amounts can be clearly determined from the explanatory footnotes. See SEC FRM 3240.7.

The SEC’s rules generally allow registrants to omit pro forma financial information if the financial statements of an acquired business are not required in the filing. However, pro forma financial information is still required when the aggregate impact of businesses acquired or to be acquired for which financial statements were not or are not yet required under either S-X 3-05 or S-X 3-14 is significant above the 50% level. See SEC 4550.23 and SEC 4555.24.

In a business acquisition, the registrant or the acquired or to be acquired business may expect to dispose of certain operations in order to gain the approval of one or more regulatory agencies. The pro forma financial information should reflect the impact of these disposals to the extent the specific operations to be disposed are identifiable at the time the pro forma financial information is prepared. If the operations are not identifiable with any reasonable certainty at that time, the notes to the pro forma financial information should disclose the contingency and its reasonably possible impact on the financial results. See SEC FRM 3250.1(l).

The SEC staff has indicated the periods for which pro forma adjustments are presented generally should be based on the transaction that is triggering the pro forma reporting requirements (e.g., the business acquisition), and therefore the pro forma adjustments to reflect the discontinued operations would be limited to only the most recent year and interim period.

Nonetheless, while the separate pro forma reporting requirement may not have been triggered for the discontinued operation, the SEC staff has indicated that, if the registrant believes it is material to investors, there may be circumstances where pro forma condensed statements of comprehensive income reflecting the discontinued operation may be necessary for the relevant periods. In such circumstances, the pro forma adjustments to reflect the business acquisition would be limited to the most recent year and interim period. See Topic IX.C in the Highlights of the March 27, 2012 CAQ SEC Regulations Committee.

No. Transaction Accounting Adjustments giving effect to the disposition of a business should not decrease historically incurred compensation expense for employees who were not, or will not be, transferred or terminated as of the disposition date. See S-X 11-02(b)(3).

Generally, no. S-X 11-02(c)(4) indicates that:

The latest twelve-months pro forma presentation is in addition to (and not instead of) the required annual and interim pro forma condensed statements of comprehensive income.

S-X 11-01(a)(1) indicates that the phrase business acquisition “encompasses the acquisition of an interest in a business accounted for by the equity method.” S-X 3-05(a)(2)(ii) and S-X 3-14(a)(2)(ii) make it clear that the phrase “business acquisition” also includes the acquisition of an interest in a business accounted for by the registrant under the fair value option in lieu of the equity method. Accordingly, the acquisition of an interest in a business that will be accounted for by the registrant under the fair value option in lieu of the equity method that is significant would require compliance with S-X Article 11. However, the SEC staff has indicated that full pro forma financial information under S-X Article 11 generally is not required when the registrant elects the fair value option for the investment (in accordance with US GAAP). In this situation, the SEC staff would expect registrants to include a narrative discussion explaining how the application of the fair value option for its investment will impact the results of operations and balance sheet in future periods. See the Note to SEC FRM 3110.1.

Generally, no. Item 8(a) of Form 10-K specifically states that compliance with S-X Article 11 is not required. However, disclosure of certain pro forma financial information relating to a business acquisition is required by US GAAP. Additionally, the SEC staff has indicated that if a registrant prepares a supplemental pro forma MD&A (e.g., a discussion in Form 10-K to give investors additional insight regarding the ongoing effects of a major acquisition), then pro forma financial information may be presented in a format consistent with S-X Article 11. Other formats, such as the footnote pro forma information specified by ASC 805, may also be appropriate depending on the particular facts and circumstances. See SEC FRM 9220.6-.9.

If the financial statements of an acquired business are required in the filing, the pro forma financial information required by S-X Article 11 should be filed at the same time. The SEC staff has indicated that the presentation of an acquiree's financial statements without accompanying pro forma financial information can be misleading. See SEC FRM 3110.4.

The registrant may present pro forma financial information for the transition period and the most recent fiscal year (and interim period). Alternatively, the registrant may present a pro forma statement of comprehensive income for the most recent annual period (9 to 12 months under S-X 3-06). In either case, the length of the period used for the target should be identical to the period of the registrant. See Note to SEC FRM 3230.1.

Generally, the interest rate should be based on either the current interest rate or the interest rate for which the registrant has a commitment. If actual interest rates in the transaction can vary from those depicted, disclosures of the effect on income of a 1/8 percent variance in interest rates should be disclosed. Although use of current or committed interest rates is appropriate in most cases, careful consideration should be given to the facts and circumstances specific to each presentation to determine whether the interest rate used is reasonable. Certain limited circumstances may warrant the use of an interest rate other than the current or committed rate. The SEC staff has indicated that in some instances the registrant should use the interest rates that were prevailing during the period covered by the pro forma financial information. When a rate other than the current or committed rate is used, prominent disclosure of the basis of presentation and the anticipated effects of the current interest rate environment should appear in the introduction to the pro forma financial statements and wherever pro forma financial information is provided. See SEC FRM 3260.

Registrants should use the most recent practicable date prior to the effective date (for registration statements), qualification date (for Regulation A offering statements) or mailing date (for proxy statements) for determining the value of stock to be issued in a transaction that has not yet been consummated. In addition, the notes to the pro forma condensed balance sheet should include a disclosure of the date at which the stock price was determined and a sensitivity analysis for the range of possible outcomes based upon percentage increases and decreases in the recent stock price. The percentages should be reasonable in light of existing volatility in the acquirer's stock price. See Note to SEC FRM 3250.1(f).

We understand the SEC staff would generally not object to a registrant disclosing Management’s Adjustments as a range provided that the appropriate reconciliation as required by S-X 11-02(a)(7)(ii)(A) is included.

We understand that the SEC staff has indicated that transaction expenses already incurred should not be eliminated and that the pro forma financial information should reflect an estimate for those expenses not yet incurred.

The SEC staff has indicated that there is no single set of considerations, and individual facts and circumstances should drive the conclusion. Companies should consider various factors such as (i) the basis of accounting to be used by the combined entity after the merger, (ii) the needs of the respective shareholder groups, and (iii) home country regulatory requirements when determining the basis of accounting used for preparing the pro forma financial information. Multiple pro forma presentations on both bases of accounting may be appropriate in certain situations. Companies should consider consulting with the SEC staff if there are complexities in evaluating the appropriate basis of accounting to use for the pro forma financial information in a reverse acquisition. See Topic C in the Highlights of the November 2015 CAQ International Practices Task Force.

Yes. There could be situations based on the fiscal year ends of a US domestic registrant and an acquired foreign business, where pro forma financial information could be required that would be more current than the foreign business’s separate historical financial statements.

For example, assume Company Q, a calendar year-end US domestic SEC registrant acquired Business N, a calendar year-end private company that meets the definition of a foreign business, on June 15, 2023. Business N is 45% significant and does not prepare quarterly financial statements under its home-country reporting requirements.

In the Item 2.01/9.01 Form 8-K reporting the acquisition, Company Q will be required to provide historical financial statements of Business N for the years ended December 31, 2022 and 2021 but is not required to provide interim financial statements of Business N as of March 31, 2023 and for the three-month periods ended March 31, 2023 and 2022. See SEC 4550.42.

Even though Company Q is not required to provide Business N’s March 31, 2023 and 2022 historical financial statements, Company Q will need to include Business N’s March 31, 2023 balance sheet information in Company Q’s March 31, 2023 condensed pro forma balance sheet and Business N’s statement of comprehensive income information for the three months ended March 31, 2023 in Company Q’s condensed pro forma statement of comprehensive income for the three-month period ended March 31, 2023.