But in 1998 and 1999, they found, pro forma earnings had crept into 72%.
Pro forma earnings are oxygen to unhealthy companies, especially tech ones.
By definition pro forma earnings are supposed to show hypothetical results.
Ciena says the deal would begin to add to pro forma earnings in the second-half of fiscal 2002 but would dilute pro forma earnings for fiscal 2001 by 19 cents to 22 cents, excluding one-time charges and amortization of intangibles and deferred stock-compensation costs.
He says the deal will be dilutive to GAAP earnings per share by one penny (because of nonrecurring charges related to deferred compensation), and accretive to pro-forma earnings in 2004.
In this case, releasing GAAP earnings first can result in an investor making a wrong decision since analysts and the press have consistently been reporting non-GAAP (pro forma) earnings estimates as the expected earnings.
FORBES: How GAAP Accounting Rules May Be Damaging To Investors
In 1986 and 1987 just 18% of earnings announcements mentioned pro forma results, according to a study of earnings releases from 200 companies by Harvard Business School's Mark T.
On the third page of its latest earnings release, Zynga provides some of the reasons why they report pro forma (non-GAAP) earnings.
FORBES: How GAAP Accounting Rules May Be Damaging To Investors
And investors saw a growing number of companies using fake pro forma numbers to pump up their earnings releases.
Companies need to stop using a dizzying array of earnings measures, from pro forma and cash to EBIDTA, and focus on a uniform standard that doesn't give a misleading picture of the balance sheet.
The tests will estimate the pro forma impact of these scenarios on capital and earnings every quarter utilizing a nine quarter forward time horizon.
Putting this behind us removes earnings volatility and meaningfully improves our pro forma Tier 1 Common ratio under Basel III.
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So, while these pro forma statements are viewed by analysts and investors to better reflect current company performance and ongoing earnings potential, they are not subject to the same level of scrutiny and regulation as are GAAP financial statements.
FORBES: How GAAP Accounting Rules May Be Damaging To Investors
Pro forma numbers move stock prices more than GAAP ones, says a study of 25, 000 earnings reports from 1989 through 1997 by two accounting professors, Georgia State's Lawrence D.
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