Companies are using a variety of accounting practices to put the best spin on their results. Here's what those terms mean:
The bottom line, according to generally accepted accounting principles (GAAP). Sometimes called "reported earnings," these are the numbers the Securities & Exchange Commission accepts in its filings.
An adjustment of net income that excludes certain costs deemed to be unrelated to the ongoing business. Although it sounds deceptively like a GAAP figure called "operating income" (revenue minus the costs of doing business), it is not an audited figure.
Another term for operating earnings. Neither core nor operating earnings are calculated according to set rules. They can include or exclude anything the preparer wishes.
PRO FORMA EARNINGS
The 1990s term for operating earnings. Popularized by dot-coms, it sometimes excludes such basic costs as marketing and interest.
Earnings before interest, taxes, depreciation, and amortization. The granddaddy of pro forma, it was initially highlighted by industries that carried high debt loads, such as cable TV, but has since come to be widely quoted.
A new term for pro forma.
A general term for anything a company wants to highlight as unusual and therefore to be excluded from future earnings projections.
Charges taken to bring something a company paid a high price for down to its current market value. Many companies are now taking these charges on internal venture-capital funds that bought Internet and other high-tech stocks at inflated prices.
The same idea as asset impairments except they're used to write down the premium a company paid over the fair market value of the net tangible assets acquired. These charges will explode in the first quarter of 2002 because of a change in mergers-and-acquisitions accounting that eliminates goodwill amortization and requires holdings to be carried at no more than fair values.
An accrued expense (not usually cash) to cover future costs of closing down a portion of a business, a plant, or of firings. These are projected costs and if overstated can later become a boost to earnings as they are reversed.
Lowering the value of an asset, such as a plant or stock investment. It is often excused as a bookkeeping exercise, but there may have been a real cost long ago that now proves ill spent, or there may have been associated cash costs, such as investment-banking fees.