Pro Forma Warning.

• Position: Advocacy - From the Securities and Exchange Commission - Brief Article

CEI reacted quickly to the early December warning issued by the Securities and Exchange Commission (SEC) on the use of pro forma earnings per share measures used in earnings press releases. The SEC warned that companies issuing earnings press releases should always include net earnings per share determined according to U.S. generally accepted accounting principles (GAAP), and recommended that any use of pro forma measures should be accompanied by a plain English reconciliation back to the GAAP results. The SEC stated that companies not following these practices could be subject to the anti-fraud provisions of laws governing corporate financial reporting.

The SEC advisory went on to recommend the guidance provided by the "FEI/NIRI Earnings Press Release Guidelines," a best practices standard drafted last spring by FEI's Committee on Corporate Reporting and the National Institute of Investor Relations. These guidelines can be found on the FEI Web site at http://www.fei.org/news/FEI-NIRIEPRGuidelines-4-26-2001.cfm. SEC officials have broadly endorsed these guidelines in public speeches and repeatedly encouraged their use.

FEI added: "Current market and economic conditions make it important for...