June 20, 2016

SEC Non-GAAP Guidance: Impact on Earnings Releases, SEC Reports and Other Disclosures

The compliance and disclosure interpretations, or C&DIs, published by the staff, or Staff, of the Division of Corporation Finance of the Securities and Exchange Commission in May 2016 will require many companies to make changes in how they present non-GAAP financial measures in their upcoming SEC reports, earnings releases and other public disclosure materials. This client alert discusses the principal impacts of the new C&DIs on upcoming earnings releases, SEC reports and other public materials that contain non-GAAP financial measures. See our “New Non-GAAP Guidance Review Checklist,” attached as Appendix A, for a one-page list of items to consider when reviewing communications associated with the next earnings release/SEC reporting cycle.

As discussed in our recent client alert “SEC Issues Important Non-GAAP Interpretations” (May 19, 2016), the SEC recently released a series of new C&DIs on the use of non-GAAP financial measures by reporting companies and new SEC registrants in public communications and SEC filings. These C&DIs were published after most public companies had completed their reporting and disclosure process for the quarter ended March 31. As a result, most companies will be considering the Staff’s interpretive views reflected in the new C&DIs for the first time when they prepare their earnings releases, SEC reports and other public disclosure materials for the fiscal quarter (or year) ending June 30. Please click here for the full alert text.