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3240 Form
us SEC - Financial Reporting Manual
3240.1 Financial information should be presented in columnar form, with separate columns presenting historical results, pro forma adjustments, and pro forma results. In limited cases, (where there are only a few easily understood adjustments) a narrative description of the effects of the transaction may suffice.
3240.2 Financial information should be preceded by an introductory paragraph which briefly describes:
a. each transaction for which pro forma effects are presented,
b. the entities involved,
c. the periods presented, and
d. an explanation of what the pro forma presentation shows.
3240.3 Pro forma adjustments should be referenced to footnotes which clearly explain the assumptions involved.
3240.4 Pro forma information may be in condensed form (similar to interim financial statements required in Form 10-Q) which reflects only those numbered captions of Regulation S-X. Any balance sheet caption less than 10% of total assets may be combined with others; any statement of comprehensive income caption less than 15% of average net income of the registrant for the last three years (excluding loss years) may be combined with others. See S-X Article 11.
3240.5 If the transaction is structured in such a manner that significantly different results may occur, additional pro forma presentations should be made that give effect to the range of possible results. The additional results may be of equal prominence or lesser, depending on the facts and circumstances. Additional presentations might include the following:
a. Pro forma financial statements depicting minimum required issuances of securities or acceptance of offers along with separate pro forma depiction of maximum issuance or acceptance.
1. If the minimum or maximum outcome will only affect the balance sheet, the registrant need only present an additional pro forma balance sheet.
2. If the outcome of minimum or maximum participation does not have a pervasive impact on the financial statements, possible outcomes and their impacts may be discussed in a note to the pro forma financial statements.
3. If the number of offer acceptances in a proposed business combination may determine the accounting to be applied to the transaction and the only factor influencing the appropriate accounting is the number of acceptances, full pro forma financial information should be presented assuming each accounting method. For example, if the minimum number of acceptances would result in application of the equity method of accounting while the maximum number of acceptances would result in consolidation of the target, full pro forma financial information should be presented assuming each accounting method. If other factors may influence the accounting, pro formas should be based on the most likely accounting to be applied to the transaction based on due diligence performed by the registrant and its financial advisors. (Last updated: 6/30/2009)
b. Sensitivity analysis for a change in one variable which may produce different outcomes. Also see Section 3260 for guidance regarding changes in interest rates.
For example: A registrant files a proxy statement requesting shareholder approval of an acquisition. The registrant will issue a certain number of common shares in the acquisition, the number of which will be determined by a formula such that the total dollar amount of the acquisition is subject to change. The registrant may present the pro forma effects of the acquisition using a purchase price calculated as if the acquisition was consummated at the date of filing (by using the most current trading price of the common shares). If the range of possible outcomes may have a material impact on the amount of goodwill to be recorded in the financial statements, the registrant should disclose the impact on the balance sheet of increases or decreases in the common share trading price.
3240.6 Pro forma information for a particular acquisition or other transaction usually should be presented separately from pro forma information for unrelated transactions for which pro forma information may be required if:
a. The proceeds of an offering will be used to fund that acquisition,
b. Shareholders are being asked to vote on that acquisition or other transaction, or
c. A Form 8-K is required to be filed for that acquisition or transaction.
Other transactions appropriate for inclusion in a pro forma presentation should be accumulated in a separate column. Otherwise, if consummation of more than one transaction has occurred or is probable, pro forma information may be presented on either a combined or separate basis. If combined, footnote explanation should disaggregate the various transactions in a reasonable fashion.
3240.7 Generally, pro forma adjustments should be presented gross on the face of the pro forma statements. Alternatively, a more detailed explanation of the components of the adjustments may be presented in the notes to the pro forma statements.
3240.8 An auditor's report on pro forma financial information is not required. However, any auditor report provided on pro forma financial information must comply with AICPA's guidelines as set forth in the Statement on Standards for Attestation Engagements; Reporting on Pro Forma Financial Information (as adopted by the PCAOB pursuant to Rule 3300T as Interim Attestation Standards). See AT Section 401. (Last updated: 6/30/2009)
This is a work of the U.S. Government
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