Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (109578)	6/21/2001 12:26:46 AM
From: mishedlo	Read Replies (1) \| Respond to of 436258

SEC Is Probing `Pro-Forma' Releases at Four Companies Washington, June 18 (Bloomberg) -- The Securities and Exchange Commission is investigating whether four companies misled investors in announcements about so-called cash earnings,alternative presentations that typically makes profit figures look better by excluding some costs. ``It looks like, in some cases, people use these pro forma press releases as a vehicle to spin the investors,'' SEC Chief Accountant Lynn Turner said after a speech to an accountants group in Washington. ``I will tell you that we have, in the Division of Enforcement, four cases involving pro-forma earnings releases that we are investigating today.'' The SEC's examination likely is the first time regulators have considered charges against companies that release cash earnings figures, said David Tice, a manager of the Prudent Bear Fund. ``Pro forma'' earnings, or figures prepared differently than required by formal U.S. accounting rules, have been popular among computer- and Internet-related companies that may leave out merger- related write-offs and other expenses when calculating their profit. Overall, about 200 to 300 companies use pro forma earnings, said Ken Perkins, a research analyst at Thomson Financial First Call. The Boston-based researcher covers about 6,000 companies. ``It's a tiny percentage of the universe,'' said Perkins. Obscuring Real Figures All public U.S. companies must file disclosures with the SEC showing their finances under proper U.S. accounting rules. Still, critics say pro forma numbers -- often included in press releases days or weeks before an SEC filing -- can obscure the real nature of a company's finances. Turner wouldn't say which companies are being examined and didn't offer information about the progress of the probes. Turner discussed the issue after a speech to the National SEC Reporting Conference, a meeting of securities industry accountants. game that we've got going on out there where people are saying one thing in their press release, but important facts are stated through the 10-Q'' quarterly SEC filing, Turner said. SEC officials are discussing whether companies should be required to file quarterly and annual financial statements prepared under generally accepted accounting principles within some time frame, such as three-to-seven days after release of cash or pro forma earnings. `Past Overdue' ``It's a great idea. It's past overdue,'' Tice, president of David W. Tice & Associates, said of the SEC probes. ``For these companies to use pro forma earnings and exclude depreciation, interest, charges,'' is unacceptable, he said. Tice helped set off a 1999 drop in Tyco International Ltd.'s shares after questioning the company's accounting. Jack Ciesielski, publisher of the Analyst's Accounting some financial statements as `` Everything but Bad Stuff,'' or ``EBS'' releases. ``EBS press releases do not present a complete or transparent picture,'' Turner said in an April speech. ``Often they appear to be trying to lead investors away from the `real' numbers, from real net income, and from real cash inflows and outflows.'' For example, some releases don't consider interest or the cost of starting new businesses or product lines as real costs paid with ``real'' cash, Turner said in the April speech to the Financial Executives Institute, which recently issued guidelines for what to include in earnings press releases. --Vicky Stamas in Washington at (202) 624-1958 or vstamas@bloomberg.net/bd with reporting by Dan Goldstein at dgoldstein@bloomberg.net.