Handbook: SEC pro forma financial information

SEC pro forma financial information is designed to help investors understand how a significant transaction would have affected a company's historical financial statements. The SEC's amendments to Regulation S-X Article 11 refined the framework for preparing that information, including the adjustments that may be reflected in the pro forma presentation. Yet, putting these rules into practice can still feel like navigating a maze.

The SEC's rules distinguish between several categories of adjustments – each with its own detailed requirements. At the core of the framework are 'transaction accounting adjustments', which reflect the direct accounting effects of the transaction. In addition to the transaction accounting adjustments, companies may also need to include ‘autonomous entity adjustments’ for newly independent entities, as well as consider optional ‘management’s adjustments’ that reflect expected synergies and dis-synergies.

This Handbook provides detailed guidance related to the SEC rules for pro forma financial statements. Using a Q&A format, it includes practical insights and examples to help you understand how the rules apply in real-world scenarios.