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Pro forma

Figures restated as if something had already happened or had never happened, such as a full year of an acquisition or the removal of a disposed division.

Pro forma presentation has a legitimate purpose: showing what the combined company would have earned had a mid-year acquisition closed on day one makes growth comparable. It also has an abused version, where it becomes a synonym for non-gaap numbers with generous exclusions.

Always locate the GAAP reconciliation, which regulators require. The gap between the headline and the audited number is the information.

Example: Northwind Tools closed a distributor acquisition in September. GAAP revenue is $840M; pro forma revenue including a full year of the distributor is $873M, so pro forma growth is 6% rather than the reported 8%.

Related: non-gaap, adjusted-ebitda, organic-growth, goodwill, footnotes

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