FEI and NIRI Issue Earnings Press Release Guidance; Encourage Inclusion of GAAP Financial Results

Apr 26, 2001, 01:00 ET from Financial Executives International and The National Investor Relations

    MORRISTOWN, N.J., and VIENNA, Va., April 26 /PRNewswire/ -- Financial
 Executives International (FEI) and The National Investor Relations Institute
 (NIRI) today jointly issued best practices guidelines for company-issued
 earnings press releases addressing, in particular, the use of "pro forma"
 numbers. FEI and NIRI concluded that although pro forma results may sometimes
 be more analytically useful, such results should always be accompanied by
 clearly described reconciliation to GAAP (Generally Accepted Accounting
 Principals) results, which provide a critical framework for pro forma numbers.
     (Logo:  http://www.newscom.com/cgi-bin/prnh/20001222/FEILOGO )
     Commenting on the guidelines, Philip B. Livingston, president and CEO of
 Financial Executives International (FEI), said "Given today's complex,
 diversified business models, many companies, analysts and investors are
 appropriately seeking to make the results of operations more accessible and
 relevant. Pro forma operating results can meet this objective. On the other
 hand, GAAP serves as a critical framework for financial information, and we
 urge companies to be very clear in disclosing the path from pro forma to GAAP
 results. We also urge a balanced view in presenting results - access to both
 the positives and negatives is critically important for users."
     Louis M. Thompson, Jr., president and CEO of NIRI, stated, "We are very
 pleased to work closely with the FEI on establishing guidelines for earnings
 press releases.  In the wake of Regulation FD and in this era when non-GAAP
 measures are becoming more relevant, we felt that it was important to take a
 leadership role in promoting advanced disclosure practices by our membership."
     The complete guidelines are attached and can be found on both
 organizations' Web sites, at http://www.niri.org or http://www.fei.org.
 
     About NIRI
     NIRI is the professional association of corporate officers and investor
 relations consultants responsible for communications among corporate
 management, shareholders, security analysts and other financial publics.
 NIRI's more than 5,300 members represent over 2,600 publicly held companies in
 the U.S.
 
     About FEI
     FEI is the leading advocate for the views of corporate financial
 management. Its 15,000 members hold policy-making positions as chief financial
 officers, treasurers, and controllers.  FEI enhances member professional
 development through peer networking, career planning services, conferences,
 publications, and special reports and research. Members participate in the
 activities of 85 chapters, 74 of which are in the United States and 11 in
 Canada. For more information about FEI, visit http://www.fei.org.
 
                  FEI / NIRI EARNINGS PRESS RELEASE GUIDELINES
 
     Financial Executives International (FEI) and the National Investor
 Relations Institute (NIRI) believe that broad guidelines for earnings press
 releases will improve consistency among companies for the presentation and
 analysis of results. These are not standards, but best practices for clear and
 consistent public statements on corporate earnings.
 
     Included below are matters for consideration about earnings press
 releases:
 
     Scope
     Earnings press releases as defined in this document do not include pre-
 announcements of changes in earnings estimates or announcements of significant
 unusual items that may affect earnings. Pre-announcements of this type will
 likely be less detailed than the quarterly earnings release.
 
     Timing
     Earnings press releases should generally be issued as soon as practicable
 after quarter-end. NYSE and Nasdaq rules exceed SEC Regulation FD requirements
 in that they require press releases. Public companies may also elect to file
 earnings releases on Form 8-K with the SEC.
 
     Content
     Historical data
     Earnings press releases should include "reported" results for the period
 presented under generally accepted accounting principles (GAAP). Pro forma
 "cash basis" or "adjusted," "underlying," "ongoing" or "core" results are
 often used to supplement the period's GAAP results, and are provided to
 clarify both that period's performance as well as future prospects. GAAP
 results provide a critical framework for pro forma results, although the pro
 forma results may be more analytically useful. It is important to provide the
 pro forma results in context of their GAAP framework. The order in which
 reported or pro forma results are presented in the release is not as important
 as their context. Pro forma results should always be accompanied by clearly
 described reconciliation to GAAP results; this reconciliation is often
 provided in tabular form.
     Although management does not hold an independent or arms'-length view of
 the enterprise, it is management's responsibility to prepare earnings press
 releases with a reasonably balanced perspective of operating performance. Such
 releases should ordinarily include analyses of operating results and a
 discussion of both positive and negative factors significantly affecting
 revenue, profitability and other key financial indicators that measure the
 health of the enterprise (e.g. debt to equity ratios, etc.).
 
     Examples of matters that may be particularly useful include discussions of
     significant:
 
       -- Enterprise phenomena (e.g., noncore gains and losses; accounting
          changes; productivity, price, volume and cost trends; geographic
          performance; competitors' actions)
 
       -- Natural phenomena (e.g., weather disruptions, earthquakes)
 
       -- Economic phenomena (e.g., interest rate changes, price changes,
          exchange rate changes, and regional economic factors)
 
     The most significant factors affecting the enterprise's results for the
 period will appear in both the earnings press release as well as management's
 discussion and analysis (MD&A) filed with the Securities and Exchange
 Commission. Some enterprises use earnings press releases as a framework for
 the more detailed analysis in MD&A -- a best practice.
 
     Forward Looking Statements
     Predictability of key revenue and earnings factors differs by enterprise.
 Thus, management is encouraged to discuss, within appropriate Safe Harbor
 provisions, the outlook for the coming quarters. Such discussion may have the
 benefit of reducing volatility in the share prices.
 
     Other
     It is usually desirable to display prominently in headlines of the
 earnings press release the most meaningful information. Most often, this is
 GAAP and/or pro forma earnings per share.
     Enterprises are encouraged to include the telephone and Web site
 information for access to the quarterly earnings conference call, if
 applicable.
     Management should regularly review both the Safe Harbor language in the
 earnings press release and the enterprise description to assure that it is
 accurate, complete and specific to all appropriate risk factors.
 
     Consistency
     Reconciliation between GAAP and pro forma results should be treated in
 similar fashion for comparable periods. In other words, elements of the
 reconciliation should not be presented in one period without including similar
 elements in pro forma results of comparable periods.
 
     Reference Materials
     For more information on appropriate disclosure and using the Safe Harbor
 for forward-looking statements, see the "Standards of Practice for Investor
 Relations," second edition, published January 2001. For additional information
 on related subjects, look to the following websites:  http://www.fei.org and
 http://www.niri.org.
 
 

SOURCE Financial Executives International and The National Investor Relations
    MORRISTOWN, N.J., and VIENNA, Va., April 26 /PRNewswire/ -- Financial
 Executives International (FEI) and The National Investor Relations Institute
 (NIRI) today jointly issued best practices guidelines for company-issued
 earnings press releases addressing, in particular, the use of "pro forma"
 numbers. FEI and NIRI concluded that although pro forma results may sometimes
 be more analytically useful, such results should always be accompanied by
 clearly described reconciliation to GAAP (Generally Accepted Accounting
 Principals) results, which provide a critical framework for pro forma numbers.
     (Logo:  http://www.newscom.com/cgi-bin/prnh/20001222/FEILOGO )
     Commenting on the guidelines, Philip B. Livingston, president and CEO of
 Financial Executives International (FEI), said "Given today's complex,
 diversified business models, many companies, analysts and investors are
 appropriately seeking to make the results of operations more accessible and
 relevant. Pro forma operating results can meet this objective. On the other
 hand, GAAP serves as a critical framework for financial information, and we
 urge companies to be very clear in disclosing the path from pro forma to GAAP
 results. We also urge a balanced view in presenting results - access to both
 the positives and negatives is critically important for users."
     Louis M. Thompson, Jr., president and CEO of NIRI, stated, "We are very
 pleased to work closely with the FEI on establishing guidelines for earnings
 press releases.  In the wake of Regulation FD and in this era when non-GAAP
 measures are becoming more relevant, we felt that it was important to take a
 leadership role in promoting advanced disclosure practices by our membership."
     The complete guidelines are attached and can be found on both
 organizations' Web sites, at http://www.niri.org or http://www.fei.org.
 
     About NIRI
     NIRI is the professional association of corporate officers and investor
 relations consultants responsible for communications among corporate
 management, shareholders, security analysts and other financial publics.
 NIRI's more than 5,300 members represent over 2,600 publicly held companies in
 the U.S.
 
     About FEI
     FEI is the leading advocate for the views of corporate financial
 management. Its 15,000 members hold policy-making positions as chief financial
 officers, treasurers, and controllers.  FEI enhances member professional
 development through peer networking, career planning services, conferences,
 publications, and special reports and research. Members participate in the
 activities of 85 chapters, 74 of which are in the United States and 11 in
 Canada. For more information about FEI, visit http://www.fei.org.
 
                  FEI / NIRI EARNINGS PRESS RELEASE GUIDELINES
 
     Financial Executives International (FEI) and the National Investor
 Relations Institute (NIRI) believe that broad guidelines for earnings press
 releases will improve consistency among companies for the presentation and
 analysis of results. These are not standards, but best practices for clear and
 consistent public statements on corporate earnings.
 
     Included below are matters for consideration about earnings press
 releases:
 
     Scope
     Earnings press releases as defined in this document do not include pre-
 announcements of changes in earnings estimates or announcements of significant
 unusual items that may affect earnings. Pre-announcements of this type will
 likely be less detailed than the quarterly earnings release.
 
     Timing
     Earnings press releases should generally be issued as soon as practicable
 after quarter-end. NYSE and Nasdaq rules exceed SEC Regulation FD requirements
 in that they require press releases. Public companies may also elect to file
 earnings releases on Form 8-K with the SEC.
 
     Content
     Historical data
     Earnings press releases should include "reported" results for the period
 presented under generally accepted accounting principles (GAAP). Pro forma
 "cash basis" or "adjusted," "underlying," "ongoing" or "core" results are
 often used to supplement the period's GAAP results, and are provided to
 clarify both that period's performance as well as future prospects. GAAP
 results provide a critical framework for pro forma results, although the pro
 forma results may be more analytically useful. It is important to provide the
 pro forma results in context of their GAAP framework. The order in which
 reported or pro forma results are presented in the release is not as important
 as their context. Pro forma results should always be accompanied by clearly
 described reconciliation to GAAP results; this reconciliation is often
 provided in tabular form.
     Although management does not hold an independent or arms'-length view of
 the enterprise, it is management's responsibility to prepare earnings press
 releases with a reasonably balanced perspective of operating performance. Such
 releases should ordinarily include analyses of operating results and a
 discussion of both positive and negative factors significantly affecting
 revenue, profitability and other key financial indicators that measure the
 health of the enterprise (e.g. debt to equity ratios, etc.).
 
     Examples of matters that may be particularly useful include discussions of
     significant:
 
       -- Enterprise phenomena (e.g., noncore gains and losses; accounting
          changes; productivity, price, volume and cost trends; geographic
          performance; competitors' actions)
 
       -- Natural phenomena (e.g., weather disruptions, earthquakes)
 
       -- Economic phenomena (e.g., interest rate changes, price changes,
          exchange rate changes, and regional economic factors)
 
     The most significant factors affecting the enterprise's results for the
 period will appear in both the earnings press release as well as management's
 discussion and analysis (MD&A) filed with the Securities and Exchange
 Commission. Some enterprises use earnings press releases as a framework for
 the more detailed analysis in MD&A -- a best practice.
 
     Forward Looking Statements
     Predictability of key revenue and earnings factors differs by enterprise.
 Thus, management is encouraged to discuss, within appropriate Safe Harbor
 provisions, the outlook for the coming quarters. Such discussion may have the
 benefit of reducing volatility in the share prices.
 
     Other
     It is usually desirable to display prominently in headlines of the
 earnings press release the most meaningful information. Most often, this is
 GAAP and/or pro forma earnings per share.
     Enterprises are encouraged to include the telephone and Web site
 information for access to the quarterly earnings conference call, if
 applicable.
     Management should regularly review both the Safe Harbor language in the
 earnings press release and the enterprise description to assure that it is
 accurate, complete and specific to all appropriate risk factors.
 
     Consistency
     Reconciliation between GAAP and pro forma results should be treated in
 similar fashion for comparable periods. In other words, elements of the
 reconciliation should not be presented in one period without including similar
 elements in pro forma results of comparable periods.
 
     Reference Materials
     For more information on appropriate disclosure and using the Safe Harbor
 for forward-looking statements, see the "Standards of Practice for Investor
 Relations," second edition, published January 2001. For additional information
 on related subjects, look to the following websites:  http://www.fei.org and
 http://www.niri.org.
 
 SOURCE  Financial Executives International and The National Investor Relations

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http://www.fei.org