SEC Division of Corporation Finance Guidance Clarifies that Forecasts Provided to the Board and Bidders Do Not Require GAAP Reconciliation

On April 4, 2018, the SEC Division of Corporation Finance issued two new Compliance & Disclosure Interpretations confirming that forecasts provided to the board of directors or bidders in connection with an M&A transaction will not be deemed non-GAAP financial measures requiring GAAP reconciliation. Question 101.02 exempts forecasts provided to a registrant’s board of directors or board committee from the definition of non-GAAP financial measures. Similarly, Question 101.03 extends the non-GAAP definition exemption to forecasts exchanged between the parties in a business combination transaction where the forecasts are deemed material and must be disclosed in order to comply with securities laws, especially anti-fraud provisions. This guidance builds on other C&DIs issued in October 2017.