The SEC issued four new Compliance and Disclosure Interpretations on non-GAAP financial measures.  According to the CDIs:

• Certain adjustments, although not explicitly prohibited, may result in a non-GAAP measure that is misleading. For example, presenting a performance measure that excludes normal, recurring, cash operating expenses necessary to operate a registrant’s business could be misleading.
• A non-GAAP measure can be misleading if it is presented inconsistently between periods. For example, a non-GAAP measure that adjusts a particular charge or gain in the current period and for which other, similar charges or gains were not also adjusted in prior periods could violate Rule 100(b) of Regulation G unless the change between periods is disclosed and the reasons for it explained. In addition, depending on the significance of the change, it may be necessary to recast prior measures to conform to the current presentation and place the disclosure in the appropriate context.
• A non-GAAP measure can be misleading if the measure excludes charges, but does not exclude any gains.
• A non-GAAP performance measure that is adjusted to accelerate revenue recognized ratably over time in accordance with GAAP as though it earned revenue when customers are billed could violate Rule 100(b) of Regulation G.

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