Pro Forma is Back

This can't be good.

After just a couple of quarters of good behavior, companies are once again asking analysts and investors to ignore certain expenses on the grounds that they are one-time charges — events that are so far out of the bounds of their normal business environment that they'll probably never, ever happen again.

Forget about that money we sank into research and development on that one product area — it didn't pan out. Forget about the costs we incurred when we mothballed that plant, or when we fired those people.

The problem is that a lot of these supposedly non-recurring charges are for stuff that a private business owner would think of as normal, though unfortunate, costs of doing business. It's only public companies that seem to think that they're not ordinary events.

I agree that it is sometimes nice to filter out certain one-time charges from financial statements in order to compare changes in the core business. But for many companies, these one-time charges occur all the time, and thus mergers, writedowns, etc. are part of the "core business." I think this is bad news. I say leave the nonrecurring stuff in the financial statements, and let investors and analysts figure it out.

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