Called to Account: ConocoPhillips drops use of revenue figure first flagged by MarketWatch
ConocoPhillips has changed the way it will report revenue, according to correspondence released by the Securities and Exchange Commission that shows the agency took action after MarketWatch flagged the issue.
MarketWatch has been focusing on results that do not comply with Generally Accepted Accounting Principles, or GAAP and has highlighted companies like General Electric that were later pushed by the SEC to change their disclosures. MarketWatch began its call to action on non-GAAP metrics in May after the SEC began ramping up scrutiny of companies that report quarterly earnings that could be confusing or even misleading for investors.
Within a month of MarketWatch’s questioning why ConocoPhillips COP, +2.57% didn’t disclose revenue figures according to what’s called GAAP, the SEC asked why the oil producer, instead, disclosed an annual revenue amount based on both historical and future performance, according to agency letters from August that were publicly released Thursday.
After a few missives back and forth, ConocoPhillips by late October agreed to drop the use of the annualized revenue figure.
The SEC also posted letters to Brookdale Senior Living Inc. BKD, +2.19% That correspondence began in July.
The SEC took exception to Brookdale’s treatment of a non-GAAP measure for facility operating income that excluded general and administrative expenses as well as facility lease expense. The SEC also asked about the adjustment of several non-GAAP measures relating to entrance fees.
Finally the regulator disagreed with its non-GAAP presentation of cash from facility operations, saying it was inconsistent with new guidelines for non-GAAP metrics issued by the SEC in May.
The latter issue was mentioned as potential hot button for SEC review in a MarketWatch report.
Brookdale will discontinue reporting facility operating income in its SEC filings and other investor relations materials, and has changed its definition and calculation of CFFO from prior periods to remove Brookdale’s proportionate share of unconsolidated ventures.