TheCorporateCounsel.net

I’ve been reviewing the Staff’s 2021 comments on non-GAAP disclosures.  As you might expect, most of them fall under the heading of “blocking & tackling,” and focus on discrete compliance issues regarding the content and reconciliation of non-GAAP numbers.  But “equal or greater prominence” issues also haven’t gone away, and in a couple of instances, the Staff asked companies to re-order the presentation of sections of their periodic reports in order to give greater prominence to GAAP information.

An example of this is Bill.com Holdings, which included a subsection in the forepart of the MD&A section of its 2020 10-K captioned “Non-GAAP Financial Measures.”  As you might expect, this section included the required Reg G disclosures & reconciliations for the non-GAAP numbers that the company used in its MD&A discussion.  The Staff’s comment letter included the following comment on this disclosure:

Please revise the first table on page 58 to disclose the comparable GAAP measure with greater prominence. Also, to avoid giving undue prominence to your non-GAAP financial measures, please move this section so that it follows the results of operations section. Refer to Item 10(e)(1)(i)(A) of Regulation S-K and Question 102.10 of the Non-GAAP Compliance and Disclosure Interpretations (“C&DIs”).

This was one of those Staff comments that didn’t mention whether an amendment to the prior filing was required. However, Bill.com indicated in its response that it would comply with the Staff’s comment in future filings. The Staff didn’t comment further.

– John Jenkins