The SEC staff has released updated Compliance Disclosure and Interpretations
regarding Regulation G/non-GAAP financial measures.Non-GAAP
measures have been under attack in recent SEC speeches and media
articles and now there are updated parameters surrounding their
usage.
From a practical standpoint, the biggest changes in the
CD&Is appear in new question 102.10 –this will
impact many companies' earnings releases due to the parameters
it places around ordering, headlines, etc. This CD&I points out
that the rules require that when a registrant presents a non-GAAP
measure it must present the most directly comparable GAAP measure
with equal or greater prominence. Included among the examples of
disclosures that would cause a non-GAAP measure to be more
prominent are some practices that are currently quite common,
including (1) a non-GAAP measure that precedes the most directly
comparable GAAP measure (including in an earnings release headline
or caption); (2) omitting
