"Hid" is a strong word. They're basically trying to sell this idea:
"We won't need much marketing, nor will we be offering significant equity compensation in the future. Acquisitions are a "one-time" thing. Therefore, our long term profitability is looking pretty good."
We, as investors, are welcome to accept that reasoning or not. I think it's pretty weak. Others will disagree. But it's pretty plainly stated. (If anything in a financial report can be considered "plain").
Edit: I'd love to hear why I"m wrong about this from someone who down-voted. Am I missing something?
In addition to requiring a full reconciliation to GAAP, the SEC’s disclosure rules for nonstandard financial metrics require companies to provide “a statement disclosing the reasons why the registrant’s management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the registrant’s financial condition and results of operations.”
Frankly, if the SEC (who makes the Keystone Kops look serious) is giving them a hard time about this non-standard financial measure, it is not simply that investors "are welcome to accept the reasoning or not"
That's a technicality. Would you be satisfied if they tacked on a statement that said, "We think this is an important metric because it shows our current profitability given the exclusion of non-recurring startup costs." or whatever version of that that the SEC finds acceptable?
Granted, I'm speculating as to their pitch as to why this is relevant, but the numbers are exceedingly clear to any investor who reads it, regardless of their spin (or lack of spin).
Do we really want financial statements packed with management's perspective on why the numbers are important? There is a balancing act there as well. The more you demand explanation, the more you invite abuse and salesmanship into what is supposedly a factual report.
Too little explanation and you get a frustratingly difficult to read report. Too much, and you may as well be reading a marketing brochure.
In the grand scheme of financial shenanigans, this one barely registers. At worst, it's a poorly explained, weak argument aimed at painting a pretty picture of the company.
"We won't need much marketing, nor will we be offering significant equity compensation in the future. Acquisitions are a "one-time" thing. Therefore, our long term profitability is looking pretty good."
We, as investors, are welcome to accept that reasoning or not. I think it's pretty weak. Others will disagree. But it's pretty plainly stated. (If anything in a financial report can be considered "plain").
Edit: I'd love to hear why I"m wrong about this from someone who down-voted. Am I missing something?