Securities Regulation and Corporate Governance


Securities Regulation and Corporate Governance > Posts > Recent SEC Comment Letters Addressing Non-GAAP Financial Disclosures
Recent SEC Comment Letters Addressing Non-GAAP Financial Disclosures

Since the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) released updated guidance addressing the use of non-GAAP financial measures on May 17, 2016, the Staff has made public over 200 comment letters sent to companies relating to non-GAAP disclosures.  The below chart summarizes the major topics addressed in those comment letters and the frequency with which each topic appears. 

The Staff’s comment letters relate to non-GAAP disclosures contained in earnings releases, Exchange Act reports, registration statements, proxy statements and even investor presentation slide decks that were never furnished to or filed with the Commission.  A majority of the comment letters address multiple non-GAAP disclosure issues.  Because the comments are not limited to a single topic and because non-GAAP disclosures often implicate multiple overlapping topics, this chart is best understood as a general guide to the topics the Staff finds important, rather than as a precise tabulation of all topics covered during the relevant period. 

The Staff is just now beginning to upload comment letters addressing filings made after the May 2016 guidance was published.  As such, in the coming weeks and months we expect to see many more comments addressing the Staff’s new interpretations.

Special thanks to Mike Titera and Matt Haskell for compiling the summary below.




Equal or greater prominence


Historical reconciliation


Explanation of why each financial measure provides useful information to investors


Explanation of how financial measure is defined or calculated


Incorrect calculation or use of defined term (e.g., EBIT, EBITDA, FFO)


Explanation of tax adjustments


Exclusion of items requiring cash settlement from liquidity measure


Prohibition on adjustments to eliminate or smooth items identified as non-recurring


Forward-looking reconciliation to the extent available without unreasonable efforts


Use of “organic” or “core” financial measures


Potentially misleading or confusing non-GAAP disclosures


Explanation of other reasons for which management uses a financial measure


Constant currency or currency-neutral financial measures


Exclusion of normal, recurring, cash operating expenses from performance measures


Inconsistent presentation of financial measures between reporting periods


Presentation of non-GAAP measures on a segment basis


Use of individually tailored accounting principles


Exclusion of charges but not gains



 ‭(Hidden)‬ Blog Tools

© Copyright 2019 Gibson, Dunn & Crutcher LLP.
Attorney Advertising. Prior results do not guarantee a similar outcome. All information provided on this site is for informational purposes only, does not constitute legal advice, is not confidential, and does not create an attorney-client relationship. Statements and content posted to this site do not represent the opinion of Gibson Dunn & Crutcher LLP ("Gibson Dunn"). Gibson Dunn makes no representations as to the accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors or omissions therein, nor for any losses, injuries, or damages arising from its display or use.