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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, sometimes resulting in requests to remove or substantially modify non-GAAP metrics. Focus areas have included:
  • the presentation with equal or greater prominence of the most directly comparable GAAP financial measure;
  • the reconciliation to the most comparable GAAP financial measure;
  • the appropriateness of adjustments to eliminate or smooth items identified as non-recurring, infrequent, or unusual;
  • the use of individually tailored accounting principles; and
  • the disclosure of why management believes the non-GAAP presentation provides useful information to investors regarding the financial condition or results of operations of the registrant.
Comment Examples
Guidance references
  • You disclose non-GAAP measures without presenting the comparable GAAP measures with equal or greater prominence. Please ensure any discussion regarding non-GAAP measures is preceded by an equal or more prominent discussion of the comparable GAAP measure.
  • Please include a reconciliation of core earnings that begins with the most directly comparable GAAP measure. Your revised reconciliation should provide disaggregated disclosure of all the adjustments necessary to arrive at core earnings from the most directly comparable GAAP measure.
  • Your current disclosure discusses management’s use, but not how the presentation of the measure is useful to investors. Please revise your disclosure to include a discussion of investor’s use of these measures. Excluding amortization of acquired intangible assets may result in non-GAAP measures that are based on individually tailored accounting principles. Please tell us how you considered Question 100.04 of the non-GAAP C&DIs and why you believe these measures are useful to investors.
  • The title of your non-GAAP financial measure is confusingly similar to that of a GAAP performance measure. Please change the title of this measure. Refer to Item 10(e)(1)(ii)(E) of Regulation S-K.
  • We note your disclosure of adjusted diluted earnings per share excludes the provision for credit losses, a normal and recurring charge for your business. Please revise future filings to refrain from disclosing performance measures that exclude the provision for credit losses. See 100.01 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations.

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