Whatever gets excluded, it's amazing how this compassionate counting seems to make the company look more successful. Lynn Turner, the SEC's chief accountant, has an acronym for news releases deploying pro forma results. Turner has been concerned about the use of pro forma numbers for several years. I said, 'Here's our concern. In practice, this means that companies announcing profits using pro forma numbers should also state the profits, or lack of them, using real numbers, and explain the difference.
Many companies do that now.
It's not that the companies that announce pro forma numbers are lying. Charitably speaking, they're just excluding costly items they think are irrelevant to measuring the real performance of the company. Less charitably speaking, they're trying desperately to make losing look like winning. The new guidelines from Financial Executives International and the National Investor Relations Institute in no way criticize the use of pro forma results. Indeed, they describe them as a useful tool that can ''clarify'' a company's performance and ''may be more analytically useful'' than GAAP results.