Anthony @ Equity Investigations, Dear Anthony, Message Board

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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,

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To: ZenWarrior who wrote (69893)	4/13/2001 5:01:31 PM
From: peter michaelson	Read Replies (1) of 122087

Zen: I appreciate your good cheer, but that is not a correct definition of pro forma. Pro forma statements used to be those which incorporate adjustments to GAAP accounting such that comparisons between periods are consistent - apples to apples. Literally hundreds of circumstances might make different periods not comparable - discontinued or acquired businesses being a prime example. Pro forma's were never legally or specifically defined though, and that flexibility has led to severe misuse where on-going costs of conducting businesses are eliminated for calculations used in public relations announcements. These abuses include omitting employee costs which are paid with stock, omitting marketing payments (to AOl, for example) which are paid in stock, and many other creative abuses. These omissions are what cause people to satirically say that pro forma means revenue before expenses. Peter Late Edit: I see you self-corrected, but I'll leave the post up because I spent over 2 minutes working on it.

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