pro forma investment & finance definition

Earnings that have been adjusted by the company to exclude expenses that are not representative of the company’s true business. During the height of the Internet boom during the late 1990s, many companies excluded the cost of employees’ stock options. Other items that often are excluded from companies regular earnings are charges for extraordinary items, charges for discontinued operations, and one-time charges. Pro-forma earnings are in contrast to GAAP earnings, which follow set rules developed by accountants. Also called normalized earnings. See also GAAP.