NEWS RELEASE
For Immediate Release: July 17, 2007
Contact: Matt Brusch (703) 506-3574

NIRI Issues Results of 2007 Earnings Guidance Practices Survey

Vienna, VA – According to the results of The National Investor Relations Institute’s (NIRI’s)
recent annual Earnings Guidance Survey, a vast majority of member companies are now
providing financial guidance on a broad array of longer term financial and non-financial
performance measures and have shifted away from quarterly earnings per share guidance.

Key Trends
• A majority (71%) of NIRI member company survey respondents provide quantifiable
financial performance measurements, which is interpreted more broadly than earnings
per share to include such other measures as annual revenue, cash flow and other
quantitative measures. This is based on a comparison of 51% of total respondents
providing earnings guidance in 2007 versus 66% in 2006, and 47% of total respondents
providing revenue guidance in 2007 compared to 56% in 2006.
• Of companies providing earnings guidance, more companies reported providing annual
estimates (58%) than quarterly estimates (27%). This is consistent with the trend
identified in the 2006 survey, and is interpreted to reflect the growing importance that
companies are placing on long-term forecasting.
• The survey refutes the perception that discontinuing guidance will adversely affect stock
price, increase volatility and be negatively regarded by investors. The largest percent of
our respondents reported an indifferent reaction from both the buy- and sell-side to
discontinuing guidance; that the decision had a neutral effect on valuation; the stock is
not more volatile; has not experienced unusual shareholder turnover, and has not
experienced a substantial change in the short position.

“These survey results confirm the continuing trend toward longer-term guidance and away from only providing short-term quarterly earnings per share guidance,” said Linda Y. Kelleher, NIRI’s Interim Chief Executive Officer. “NIRI has long advocated for public companies to take a more comprehensive view of guidance. The survey results announced today indicate that companies
are providing a broader, more qualitative and nuanced picture of the opportunities, challenges and strategies they face, along with a fairly broad-brush range of numbers where appropriate.”

Summary of Key Findings
• Most companies providing financial guidance do so to ensure sell-side consensus and
reasonable expectations. (Respondents select all that apply)
o To provide better external visibility – 43%
o To ensure reasonable consensus and market expectations – 82%
o General policy – 24%
o Revenue/earnings visibility – 39%
o Company performance – 21%
o Competitive industry conditions – 15%
o Peers provide guidance – 41%
o Investors or sell-side request – 33%
o Other – 9%

• Financial guidance is provided in a broad variety of measures. Beyond EPS, revenue
and cash flow measures, companies that provide guidance also report providing other
financial information such as EBITDA, operating income, gross margin, expenses,
CAPEX, tax rates, and quantitative information on business measures and other
assumptions. (Select all that apply)
o Earnings per share – 77%
o Revenue – 71%
o Cash flow – 31%
o Other quantitative information on business measures and/or assumptions – 50%
o Other – 31%

• Financial guidance is most often provided in a range. (Select all that apply)
o Fixed estimate – 9%
o Range: less than 5% – 50%
o Range: greater than 5% – 42%
o A percent – 12%
o Earnings model – 3%
o Other – 8%

• If there were any type of material change, 87% would update financial guidance.
o Yes, if there was a positive material change only – 1%
o Yes, if there was a negative material change only – 6%
o Yes, if there was a positive or negative material change – 87%
o No, would not update guidance if there were a material change – 6%

• More respondents report that they reiterate guidance than do not.
o Yes – 64%
o No – 36%

• In lieu of financial performance measurements, 78% provide guidance on nonquantifiable
performance measurements such as: (Select all that apply)
o Qualitative statements about market conditions – 81%
o Trend information that may impact the business of the company – 80%
o Industry-specific information – 71%
o Estimates or forecasts that may drive earnings – 56%
o Qualitative statements about high-level performance measures – 51%
o Other – 8%

Considerations for Investor Relations Officers (IROs) contemplating a change in
earnings guidance
According to respondents, recommendations to change earnings guidance are often driven by the investor relations officer. Of those that discontinued financial guidance, 28% reported that the decision stemmed from the IRO. NIRI encourages members to provide a longer-term view of a company’s financial prospects. Because each company is unique, the decision to provide
financial guidance and the type of financial and non-financial information provided by companies should reflect the company’s own strategy based on cap size, industry peers and company philosophy.

Survey Demographic
The following provides demographic information about the survey participants and their
respective companies:
• Company exchange listing:
o NYSE – 60%
o NASDAQ – 33%
o AMEX – 2%
o Foreign – 3%
o Other – 2%

• Company market cap size:
o Over $10 billion – 21%
o $5-$10 billion – 15%
o $1.5-$4.9 billion – 28%
o $500 million-$1.4 billion – 20%
o $100-$500 million – 13%
o Under $100 million – 2%

About the Survey
This electronic survey, conducted in May 2007, was sent to 3,145 NIRI corporate members. A total of 752 respondents (24%) participated in the survey representing a wide array of industries.

About NIRI
NIRI is the professional association of corporate officers and investor relations consultants
responsible for communications among corporate management, shareholders, securities
analysts and other financial publics. NIRI’s 4,400 members represent over 2,100 publicly held companies in the United States. For more information on NIRI, please visit www.niri.org.
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