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Author: TMFSelena Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2221  
Subject: Re: "Pro-forma" earning Reports??? Date: 5/18/1999 11:38 AM
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<<I noticed some news today on TWP. There was a "pro forma" earnings report showing and increase to $.35 EPS. What is this "pro forma stuff all about? How does it differ from "non-pro-forma" earning reports?>>

Imagine that Company AAA merges with Company BBB. AAA's next financial statements (balance sheet, income statement, etc. -- including reports of profits) will reflect the new, combined, bigger AAA/BBB company.

But -- there's a problem. Whereas you used to be able to compare AAA's latest numbers with those from last quarter or last year, they're no longer comparable. The AAA/BBB entity is a different, bigger beast.

This is where pro-forma statements come in. They show numbers as they would have been, had the companies been merged in the earlier period. Essentialy, they permit you to compare current numbers with previous ones, by creating a new, pro-forma version of the previous numbers.

Hope that helps!

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