Compliance into the Weeds-Episode 65-The Trouble with Non-GAAP Metrics
What is non-GAAP?
On December 13, 2022, the Securities and Exchange Commission (SEC) issued seven new or revised Compliance and Disclosure Interpretations (C&DIs) on topics regarding the use of non-GAAP financial measures in SEC filings....more
According to audit firm PwC, non-GAAP financial measures play an important role in financial reporting, “showing a view of the company’s financial or operational results to supplement what is captured in the financial...more
As covered in our last Hogan Lovells REIT team SEC update, the SEC staff recently revised its non-GAAP financial measures Compliance & Disclosure Interpretations (C&DIs). The revisions have raised concerns in the REIT sector...more
It should come as no surprise to readers of our blog that public companies often expend significant resources each year on managing litigation matters. As a result, perhaps it is natural that some companies might want to...more
Following up on our prior blog post regarding 2020 first quarter COVID-19 adjustments in connection with the presentation of non-GAAP financial measures, we surveyed 102 S&P 500 companies who presented Adjusted EBITDA in...more
In response to the COVID-19 epidemic, the U.S. government has provided relief to companies through various grant programs. The receipt of these grant proceeds represents a meaningful lifeline to many companies and the...more
Based on Q2 reporting to date, few companies opted to present non-GAAP financial measures using the new metric term “EBITDAC” (earnings before interest, tax, depreciation, amortization – and COVID-19). That is not surprising,...more
The definition earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA have always been important and highly negotiated pieces of credit agreements and M&A transactions....more
A recent SEC comment letter contained an exchange in which the Staff, in connection with a 10-K review, reminded the registrant to give equal prominence to the comparable margins computed on a GAAP basis wherever EBITDA...more
One of the key areas of disclosure focus for the Securities and Exchange Commission (SEC) following the emergence of the COVID-19 pandemic was the impact that the pandemic might have on the presentation of non-GAAP financial...more
As COVID-19 sends shockwaves through the global economy, many experts are predicting one of the deepest recessions in U.S. history. The hospitality, employment services, transportation, travel, leisure, mining, and oil...more
This update provides an overview of recent developments that will affect preparation of annual results and annual reports for companies listed on The Stock Exchange of Hong Kong Limited (HKEX). In particular, it covers...more
It is now time for foreign private issuers to prepare their annual reports on Form 20-F. For companies with a calendar year-end, the Form 20-F must be filed with the U.S. Securities and Exchange Commission (the SEC) by April...more
The recent SEC enforcement action against ADT Inc. for its failure to comply with the SEC’s equal prominence requirements applicable to non-GAAP financial measures, as outlined in our recent blog post, is a clear reminder...more
At the end of last year, in an enforcement action brought by the Division of Enforcement of the Securities and Exchange Commission (SEC) against ADT Inc. (ADT), reporting companies were reminded that the SEC continues to...more
In recent years, the Staff of the Securities and Exchange Commission (the “SEC”) has been providing comments regarding companies’ presentations of non-GAAP financial measures in public filings. ...more
The SEC’s Division of Enforcement recently instituted cease-and-desist proceedings against a company for violating Section 13(a) of the Exchange Act and Rule 13a-11 by including non-GAAP financial measures in two of its...more
The SEC recently instituted cease and desist proceedings relating to a company's use of non-GAAP financial measures, signaling the agency's continued focus on these disclosures, particularly in public company earnings...more
In a cease-and-desist order dated December 26, 2018, the Securities and Exchange Commission enforced rules regarding the disclosure of non-GAAP financial measures, resulting in a $100,000 penalty to the violating issuer. With...more
On December 26, 2018, the SEC filed a cease-and-desist order and fined ADT Inc. (“ADT”) $100,000 for its use of non-GAAP financial measures without giving equal or greater prominence to the comparable GAAP financial measures....more
The US Securities and Exchange Commission (SEC) recently gave a strong reminder of the importance of providing equal or greater prominence to the most directly comparable financial measures calculated and presented in...more
On December 26, 2018, the Securities and Exchange Commission (“SEC”) entered a Cease-and-Desist Order against ADT Inc. (“ADT”) pursuant to Section 21C of the Securities Exchange Act of 1934 (the “Exchange Act”) based on ADT’s...more
The SEC brought a settled enforcement action against ADT Inc. because it did not afford equal or greater prominence to comparable GAAP financial measures in two of its earnings releases containing non-GAAP financial...more
As we wind down the third quarter of 2018 and turn our attention toward year-end disclosures, it is helpful to review U.S Securities and Exchange Commission (SEC) comment letter trends to improve financial statement...more
Welcome to this fifth edition of Proskauer’s IPO Study. In it you will find our analysis of market practices and trends for U.S.-listed initial public offerings (IPOs). Our proprietary database and analyses now cover 462 IPOs...more