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Non-GAAP financial measures result in frequent comments regarding compliance with Item 10(e) of Regulation S-K and the related Compliance and Disclosure Interpretations (C&DIs), sometimes resulting in requests to remove or substantially modify non-GAAP metrics.
In December 2022, the SEC staff updated its C&DIs relating to non-GAAP financial measures. The staff noted that the updates were intended to memorialize existing staff views provided through public statements or comment letters. A key focus of the updates was to provide further guidance on non-GAAP measures that are considered misleading, including guidance on operating expenses that are “normal and recurring,” labeling of non-GAAP measures and adjustments, and measures that represent a tailored accounting principle. Refer to the “Non-GAAP C&DIs” guidance below for further information.
These focus areas remain relatively consistent from prior periods and have been emphasized through the updated C&DIs:
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Comment examples | Guidance references |
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