Form and Content of Financial Statements
Rule 3-05 -- Financial Statements of Businesses Acquired or to Be Acquired
Financial statements required.
Financial statements prepared and audited
in accordance with this regulation should be furnished for the periods
specified in paragraph (b) below if any of the following conditions exist:
A business combination has occurred or is probable (for purposes of this section,
this encompasses the acquisition of an interest in a business accounted for by the equity method); or
Consummation of a combination between entities under common control is probable.
For purposes of determining whether the provisions
of this rule apply, the determination of whether a business has
been acquired should be made in accordance with the guidance set forth
in Rule 11-01(d).
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 shall be treated under this section as if they are a single
business combination. 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 shall
be deemed to be related if:
They are under common control or management;
The acquisition of one business is
conditional on the acquisition of each other business; or
Each acquisition is conditioned on
a single common event.
This rule shall not apply to a business which
is totally held by the registrant prior to consummation of the transaction.
Periods to be presented.
If securities are being registered to be offered
to the security holders of the business to be acquired, the financial statements
specified in Rule 3-01 and Rule
3-02 shall be furnished for the business to be acquired, except as provided
otherwise for filings on Form N-14, S-4
or F-4. The financial statements covering
fiscal years shall be audited except as provided in Item
14 of Schedule 14A with respect to certain proxy statements or in registration
statements filed on Forms N-14, S-4 or F-4.
In all cases not specified in paragraph (b)(1)
of this section, financial statements of the business acquired or to be
acquired shall be filed for the periods specified in this paragraph (b)(2)
or such shorter period as the business has been in existence. The periods
for which such financial statements are to be filed shall be determined
using the conditions specified in the definition of significant subsidiary
in Rule 1-02(w) as follows:
If none of the conditions exceeds 20
percent, financial statements are not required. However, if the aggregate
impact of the individually insignificant businesses acquired since
the date of the most recent audited balance sheet filed for the registrant
exceeds 50%, financial statements covering at least the substantial
majority of the businesses acquired shall be furnished. Such financial
statements shall be for at least the most recent fiscal year and any
interim periods specified in Rule 3-01 and Rule 3-02.
If any of the conditions exceeds 20
percent, but none exceed 40 percent, financial statements shall be
furnished for at least the most recent fiscal year and any interim
periods specified in Rule 3-01 and Rule 3-02.
If any of the conditions exceeds
40 percent, but none exceed 50 percent, financial statements shall
be furnished for at least the two most recent fiscal years and any
interim periods specified in Rule 3-01 and Rule 3-02.
If any of the conditions exceed 50 percent, the full financial statements specified in Rules 210.3-01 and 210.3-02 shall be furnished. However, financial statements for the earliest of the three fiscal years required may be omitted if net revenues reported by the acquired business in its most recent fiscal year are less than $50 million.
The determination shall be made by comparing the
most recent annual financial statements of each such business, or group of related
businesses on a combined basis, to the registrant's most recent annual consolidated
financial statements filed at or prior to the date of acquisition. However, if
the registrant made a significant acquisition subsequent to the latest fiscal
year-end and filed a report on Form 8-K
which included audited financial statements of such acquired business for the
periods required by this section and the pro forma financial information required
by Rule 11, such determination may be made by using pro
forma amounts for the latest fiscal year in the report on Form 8-K rather than
by using the historical amounts of the registrant. The tests may not be made by
Financial statements required for the periods
specified in paragraph (b)(2) of this section may be omitted to the extent
specified as follows:
Registration statements not subject
to the provisions of Rule 419
of this chapter (Regulation C) and proxy statements need not include
separate financial statements of the acquired or to be acquired business
if it does not exceed any of the conditions of significance in the
definition of significant subsidiary in Rule
1-02 at the 50 percent level, and either:
The consummation of the acquisition
has not yet occurred; or
The date of the final prospectus
or prospectus supplement relating to an offering as filed with
the Commission pursuant to Rule
424(b), or mailing date in the case of a proxy statement,
is no more than 74 days after consummation of the business combination,
and the financial statements have not previously been filed by
An issuer, other than a foreign private issuer
required to file reports on Form 6-K, that
omits from its initial registration statement financial statements of a recently
consummated business combination pursuant to paragraph (b)(4)(i) of this section
shall furnish those financial statements and any pro forma information specified
by Article 11 of Regulation S-X under cover of Form 8-K
no later than 75 days after consummation of the acquisition.
Separate financial statements of
the acquired business 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
unless such financial statements have not been previously filed or
unless the acquired business is of such significance to the registrant
that omission of such financial statements would materially impair
an investor's ability to understand the historical financial results
of the registrant. For example, if, at the date of acquisition, the
acquired business met at least one of the conditions in the definition
of significant subsidiary in Rule 1-02 at the 80 percent level, the
income statements of the acquired business should normally continue
to be furnished for such periods prior to the purchase as may be necessary
when added to the time for which audited income statements after the
purchase are filed to cover the equivalent of the period specified
in Rule 3-02.
A separate audited balance sheet of
the acquired business is not required when the registrant's most recent
audited balance sheet required by Rule 3-01
is for a date after the date the acquisition was consummated.
Financial statements of foreign business.
If the business acquired or to be acquired is a foreign business, financial statements
of the business meeting the requirements of Item 17 of Form
20-F will satisfy this section.
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