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Non-GAAP Financial Measures: SEC Staff Comments Focus on Compliance With 2016 Guidance

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Apr 19, 2017

On April 19, 2017, Sullivan & Cromwell LLP issued an analysis of the comment letters released by the SEC staff to nearly 250 companies challenging the calculation and presentation of non-GAAP financial measures in filings made subsequent to the issuance of the 2016 guidance.

Based on their analysis of these comment letters, they have identified a number of areas of SEC staff focus during this period, in descending order of frequency:

  • Failure to present GAAP measure with equal or greater prominence (C&DI 102.10)
  • Inadequate explanation of usefulness of non-GAAP measure
  • Misleading adjustments, such as exclusion of normal, recurring cash expenses (C&DI 100.01)
  • Inadequate presentation of income tax effects of non-GAAP measure (C&DI 102.11)
  • Individually tailored revenue recognition or measurement methods (C&DI 100.04)
  • Misleading title or description of non-GAAP measure
  • Use of per share liquidity measures (C&DI 102.05)

Review the publication on the Sullivan & Cromwell LLP's website.

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