CONDITIONS FOR COMPILING PRO FORMA
The following best practices for reporting pro forma
earnings come from an analysis of these three sources.
Sender (2002) notes that, just six weeks before it sought bankruptcy protection, Enron's pro forma
earnings figure excluded $1.
Accounting researchers Lawrence Brown and Kumar Sivakumar have found evidence suggesting that pro forma
results can provide higher-quality earnings measures (i.
Extracting that information in a pro forma
disclosure can reduce the likelihood that an investor will consider that onetime event in predicting future earnings.
For each such Adjusted Pro Forma
financial measure, the adjustment provides management with information about the Company's underlying operating performance that enables a more meaningful comparison of its financial results in different reporting periods.
Considerable variance exists in the relative prominence given to pro forma
versus GAAP earnings among companies that state both in their press releases.
Management uses Adjusted Pro Forma
EBITDA as a measure as it excludes depreciation, amortization, equity-based compensation, transaction costs, transition and integration costs, insurance settlements and discontinued product lines; items management does not consider to be "core costs" when making business decisions.
Priceline expects pro forma
EBITDA of $360 million to $380 million and to earn approximately $5.
Rock-Tenn announced that based on the pro forma
combination of the 12 months ended December 31, 2007 results for Rock-Tenn and the unaudited 52 weeks ended December 29, 2007 results for Southern Container and preliminary purchase price allocation, pro forma
combined net income and pro forma
diluted income per share of combined Rock-Tenn was $95.
September 29, 2006 total adjusted leverage (adjusted for rents and A/R securitizations) is expected to be approximately 7.
The expected Stable Outlook is also supported by the company's adequate liquidity position pro forma
the proposed transaction, which includes $103 million of pro forma
cash, $600 million revolving credit facility (of which $150 million is expected to be drawn at closing for seasonal working capital purposes), and a $250 million accounts receivable securitization program.