GateHouse said in a pro forma statement
that it didn't know of any disagreement between Friedman and the company.
According to the company's 2000 pro forma statement
, which includes the Nonious acquistion (see IBO 3/31/01), it posted net income of $683,000 on net sales of $77.
The buyer required three years of tax returns, a 12-month pro forma statement
, a cost and revenue analysis of the top five customers, an operational study illustrating the labor cost for three different product types, six months' bank statements, and a break-even analysis," he explains.
Respondents did perceive some value in pro forma statements
in terms of providing relevant and timely information and in having predictive value and feedback value.
Pro forma statements
("If most expenses are ignored or capitalized as customer database development, operations will appear marginally profitable, so buy our stock").
The FASB also plans a project on reporting financial performance, though Lucas said he saw little relationship between the project and the controversy over pro forma statements
However, pro forma statements
are not audited and may not even be reconcilable with financial statements filed with the commission.
Prior years' financial statements are generally not altered, but pro forma statements
are issued to show how the statements would have looked if the new method had been used.
Consider the remarks of SEC Chair Harvey Pitt: "I would say in cases where pro forma statements
change a loss into a profit, my view is there is an almost 100% chance that a company that is capable of doing that without appropriate disclosure will have defrauded or confused its investors.