G non gaap net sales interest expense and may give

measures (e.g., non-GAAP net sales, interest expense) and may give the impression
that the non-GAAP income statement represents a comprehensive basis of
accounting. Please confirm to us that you will revise your presentation to provide
relevant information to investors without providing full non-GAAP income
statements in future filings. For additional guidance, please refer to Compliance
and Disclosures Interpretation 102.10 which is available on our website at
.
Liquidity versus performance measures
Non-GAAP financial measures may be presented as performance measures, liquidity
measures or both. When a non-GAAP measure is used as both a performance and
liquidity measure, multiple reconciliations may be necessary. For example, EBITDA
generally should be reconciled to net income if it is presented as a performance
measure and to cash flow from operations if it is presented as a liquidity measure.
The SEC staff may question a registrant’s disclosure that indicates a non-GAAP
measure is a liquidity measure (e.g., used to assess ability to service debt, generate
cash flows, or fund acquisitions and capital expenditures), but the non-GAAP
measure is reconciled only to a performance measure such as net income. The SEC
staff may request that registrants revise their disclosure to clarify how the non-
GAAP measure is used (i.e., as a performance or liquidity measure) and include the
appropriate reconciliation to the most directly comparable GAAP measure.

SEC reporting issues
26
When a registrant discloses a non-GAAP liquidity measure, it is precluded under
Item 10(e)(ii)(A) from excluding charges or liabilities that require cash settlement.
If a non-GAAP measure is presented as a liquidity measure, the SEC staff may
challenge the appropriateness of certain adjustments (e.g., excluding certain
charges or liabilities that require, or will require, cash settlement) that might
otherwise be acceptable when calculating non-GAAP performance measures.
Example SEC staff comment: Non-GAAP liquidity measures
We note your presentation of a non-GAAP measure you identify as “Adjusted
EBITDA.” We note you disclose several uses of this measure, including to “assess
your ability to service your debt.” It appears to us you are presenting this measure
as both a performance measure and a liquidity measure. If you present this
measure as a liquidity measure, please revise it to not exclude items that will
impact cash and reconcile it to cash flows from operating activities.
EY resources
2012 SEC annual reports — Form 10-K (SCORE No. CC0360), November 2012

SEC Comments and Trends 27
Summary of issues noted
The SEC staff may ask about pro forma financial information disclosed in filings,
including registration statements, proxy statements and Forms 8-K. The SEC staff
may request that registrants explain how they have met the requirements of Article 11
of Regulation S-X. The SEC staff also may ask registrants to provide more transparent
disclosure about how they calculate pro forma adjustments.