A press release is initiated by the investor relations officer (IRO), and brings significant company events to the attention of the investment community. Examples of events worthy of a press release are the award of a large new contract, the hiring of a new CEO, or a new product launch. It is also frequently used to release the most recent company earnings information.
Though a press release can be structured in many ways, in reality it follows a regimented format from which few companies deviate. The general structure of a press release is as follows:
- Header. The header line is intended to grab the attention of the reader with the shortest possible number of words. The font is usually in bold to add emphasis.
- Dateline. When creating a press release, always include in the dateline the city and state where the company headquarters is located, because the business editors of local publications will give coverage preference to local firms. Also, list the stock exchange and ticker symbol in parentheses after the company name, since a variety of search engines will search the press release specifically for this information.
- Story. Summarize the story in the first sentence, so that the reader does not have to dig through the release to locate the kernel of the story. Also, keep the entire story short – very short! In addition, it is customary to include a quote from a company officer.
- About the company. A brief statement about the company is a useful extract for a reporter to use in writing about it, and also gives sufficient information for the reporter to decide if the issuing company is one worth writing a story about.
- Forward-looking statement. To avoid legal liability, always include a forward-looking statement in the press release. Given the bulk of this statement, it frequently contains the largest amount of verbiage of any part of a press release.
An example of a press release that incorporates the elements noted above is as follows:
ABC Corporation Awarded a $10 Million Contract
Denver, Colorado -- ABC Corporation (NASDAQ: ABC), a producer of really large donuts, today announced that it has been awarded a $10 million contract by the Department of Defense. The contract provides for the inclusion of ABC’s donuts in the standard Meal, Ready to Eat (MRE) that is provided to soldiers in the field.Richard Jelly, President of ABC, said, “This contract is a strong vote by the nutrition experts in the federal government that really large donuts are an excellent emergency meal supplement for intense battlefield situations.”
About ABC Corporation
ABC Corporation produces industrial-grade donuts for high-volume applications. It distributes its donuts throughout North America, with applications in large-headcount organizations such as Fortune 500 companies and the federal government.Forward-Looking Statements
The statements included in this press release, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “seek,” or “believe.” These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements, including, but not limited to our ability to win additional government business. In particular, you should consider the risks outlined under the heading "Risk Factors" in our most recent Annual Report on Form 10-K. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements apply only as of the date of this press release; as such, they should not be unduly relied upon as circumstances change. Except as required by law, we are not obligated, and we undertake no obligation, to release publicly any revisions to these forward-looking statements that might reflect events or circumstances occurring after the date of this release or those that might reflect the occurrence of unanticipated events.
When issuing a material event in a press release, try to quantify the news. Otherwise, analysts will have difficulty translating it into revenue, profits, and earnings per share, and may issue estimates of altered company performance that are highly inaccurate. For example, rather than stating “ABC Corporation was awarded a $10 million contract,” say “ABC Corporation was awarded a $10 million contract that is comprised of a $2 million base year and four one-year contract extensions.” Using the later wording will keep analysts from mis-construing the news and assuming that the company will realize $10 million of revenue in a single year.
An earnings release is a highly formulaic press release that itemizes a company’s earnings results, usually for the last quarter. It follows the generally outline just noted for a press release, but earnings information takes the place of the story. A bare-bones earnings release merely itemizes a company’s revenues, profits, and earnings per share for the past quarter, and in comparison to the same quarter in the preceding year, with no other supporting information. An example of the story follows:
Denver, Colorado -- ABC Corporation (NASDAQ: ABC), a producer of really large donuts, today announced financial results for the first quarter ended March 31, 2010: (1) first quarter 2010 net revenue of $2,777,000, up from $2,601,000 in the first quarter of 2009, (2) net income for the first quarter 2008 of $503,000, compared to net income of $80,000 in the first quarter 2009; and (3) basic and diluted net profit per common share of $0.02 and $0.02, respectively, in the first quarter 2010, as compared to basic and diluted net profit per common share of $0.01 and $0.01 in the first quarter 2009.
A more informative alternative for an earnings release is to include the income statement, balance sheet, and statement of cash flows, as well as a summary-level management discussion and analysis (MD&A) section. The MD&A section should include a brief description of the company, primary trends impacting revenues and expenses, changes in accounting policies, an explanation of special charges, discussion of liquidity, any FASB accounting changes impacting the company, and current guidance. Also, if the earnings release contains pro forma results, then put GAAP results in front of the pro forma results, and reconcile any differences between the two.
Whatever format is used for the story section of an earnings release, the header should reveal the contents of the release in the fewest possible words. For example:
ABC Corporation Reports First Quarter Financial Results
Once a press release is written, the next order of business is to disseminate it to the investment community. The best approach is to do so through a reputable wire service. Though there are many wire services, the two most established ones are Business Newswire and PR Newswire, which will send a press release to all major financial publications in the United States, a massive number of publications and newspapers, and many brokerage houses. Thus, they offer an extremely rapid way to disseminate news. In addition, they assign at least one proofreader to check every press release before it is issued, and who sometimes recommend changes to improve readability.
Once a press release is issued, be sure to send it by fax or e-mail to everyone who needs to see the information, since many people will not see the initial issuance. The trouble with press releases is that thousands of them are issued every day, so a specific corporate release is very likely to be lost in the flood of information. And besides, issuing an extra copy represents another opportunity to push the company’s name into the marketplace. Finally, post a copy of each press release in the investor relations section of the company web site.
At a minimum, any outside investor relations firm retained by a company should receive all press releases, as well as its market makers (for over the counter stocks) or specialists (for national exchanges). These people should be made aware of every press release within minutes of their being formally released (though sending it early is neither acceptable nor legal).