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

Business Wire, April 26, 2001

Business Editors/Banking Writers

MORRISTOWN, N.J. & VIENNA, Va.--(BUSINESS WIRE)--April 26, 2001

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.

"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 a lot of 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 also be found on both organizations' Web sites, at www.niri.org or 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.

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.).