It’s the time of year when calendar-year-end public companies gear up to release their annual earnings. Therefore, as you dust off last year’s earnings release, it may be helpful to consider some pitfalls experienced by even the most compliant companies.

Excessive, confusing or inconsistent non-GAAP financial measure disclosures. It is understandable that companies want to present their financial results in the most flattering light. However, the creative use of non-GAAP financial measures can easily get out of hand. (See this Doug’s Note on “non-GAAP disclosure creep”.) Remember also that non-GAAP financial measures may not be presented more prominently than their comparable GAAP numbers (which creates tricky issues regarding the use of headings and bullets). And be sure your explanation for using non-GAAP information is up to date, rather than the same old language the company has used for the last decade.

Stale or boilerplate forward-looking statement safe harbor language. Everyone knows that meaningful safe harbor language is an essential protection against liability for forward-looking statements. Yet, it is easy, as the company’s circumstances change, for that language to become obsolete or inconsistent with the MD&A and other disclosures. (See this Doug’s Note for tips for avoiding common safe harbor oversights.)

Inconsistency with periodic report disclosures. Earnings releases tend to be drafted by the investor relations department, while other disclosures originate from the legal or finance departments. These groups typically have different perspectives, goals and processes. In the press of time and deadlines, it can be difficult to reconcile variances in tone or even substantive content without effective, coordinated processes that take into account the various stakeholders.

Inadequate or excessive guidance disclosures. Without getting into the bigger issue of the advantages or disadvantages of providing guidance (see this Doug’s Note), if you choose to do so, be sure that guidance is consistently presented from period to period, avoids confusing and arbitrary “adjustments” and doesn’t get the company so far out on a limb that valuable time and credibility is later spent explaining actual or perceived misses. Resist the urge to be too granular with guidance categories, and be sure that this important part of the earnings release is consistent with the tone and scope of the other (for example, MD&A) disclosures.

Over-emphasizing the positive (and ignoring the negative). This gets back to the concept of earnings releases as quasi-marketing documents. Avoid cherry picking information that overstates the positive and downplays/ignores the negative. Remember that earnings releases are often scrutinized by the SEC staff during its registrations statement and periodic report reviews. To the extent that they are unrealistically positive, or inconsistent with the company’s “real” disclosures, the company could draw staff comments or even be subject to liability or penalties.

Failing to allow time for meaningful review and revision. Because this mistake encompasses, and perhaps accounts for, many of the concerns mentioned above, it deserves separate emphasis. Last minute scrambles, while sometimes unavoidable, can give rise to poor disclosure. Avoid falling into the trap of eleventh-hour reviews limited to “major issues only” and devoid of meaningful opportunities to vet concerns or implement revisions. “We’ll think about that next time” does not qualify as effective disclosure controls and procedures.