TheCorporateCounsel.net

The inaugural post on Goodwin’s new Public Company Advisory Blog shares some helpful tools on navigating the legal and practical aspects of the earnings release process.  This 18-page Earnings Release Compliance Guide provides an overview of the legal issues that companies need to keep in mind when preparing their earnings releases, as well as guidance on dealing with potential problem areas.  For example, this excerpt addresses the use of KPIs:

– Review key performance measures/indicators (KPIs) for consistency across quarters and other disclosure documents.

– KPIs are used by management to manage or evaluate the performance of the business. Certain KPIs may not meet the definition of a non-GAAP financial measure and thus may not be subject to Regulation G or Item 10(e) of Regulation S-K. Nevertheless, you need to consider what additional information may be necessary to provide adequate context for an investor to understand the KPI metric presented. In this regard, the SEC generally expects the following disclosures to accompany any KPI metric:

– a clear definition of the metric and how it is calculated,
– a statement indicating the reasons why the metric provides useful information to investors, and
– a statement indicating how management uses the metric in managing or monitoring the performance of the business

This publication is accompanied by a 6-page Earnings Release Compliance Checklist that provides a bullet-point summary of many of the topics covered in more depth in the Guide.

– John Jenkins