As a result, companies use different definitions of pro forma earnings, causing inconsistency and confusion. Some company earnings releases are straightforward, while others are highly complex with multiple, and sometimes questionable, omissions. The Securities and Exchange Commission won't accept only pro forma numbers in companies' quarterly filings, but it appears regulators can't stop companies from using pro forma calculations in their earnings press releases. Shames says some analysts and companies think the GAAP rules aren't as relevant as they were in the past. Companies often emphasize pro forma numbers in press releases to provide a more useful way to look at their operations and cash flow, he says.
Analysts look at pro forma.
Not everyone buys that argument. These press releases are always asking you to ignore certain things that have importance to you as a shareholder. Pro forma results usually exclude amortization of goodwill and stock compensation which, companies are quick to point out, are non-cash items that don't reflect operating performance. Obviously, the reason why companies vuse pro forma is to make the numbers look better, but in every release I've seen, the data is there on the GAAP numbers. Vastera reported a quarterly net loss of 28 cents a share, though it emphasized a pro forma net loss of 10 cents a share, which excluded amortization and stock-based compensation.