Pro forma debate. (Investments & Finance).

YAHOO Inc.'s first-quarter results omitted two words that were included in its quarterly press releases for the past four years: "pro forma."

It's tempting to view that change as a milestone in U.S. corporate earnings reporting. For the past four years, the owner of the most-visited group of Web sites had been among the largest companies to report pro-forma earnings -- a measure that follows a company's dictates, not generally accepted accounting principles.

Look more closely, though, and there's less reason to celebrate. Yahoo simply replaced the measure with another one, known by the acronym Ebitda, and again used its own definition.

Pro forma reporting was once limited largely to companies that had completed mergers and acquisitions. The newly expanded company would restate past results to show what they would have looked like if the transaction had been done earlier.

Then came the mid-1990s, when companies such as Yahoo were started and taken public. They defined pro forma as excluding any costs and expenses they didn't view as relevant to their basic business. While these items varied, they usually included two types of takeover-related costs:

* One-time reductions in the value of the acquired company's "in-process research and development," or work being done at the time of the takeover.

* Quarterly charges for goodwill, or the difference between the price paid for a company and the market value of the target's assets. Accounting standards required them to amortize, or write off, this amount in 40 years or less.

Goodwill amortization went away this year in an overhaul of merger and acquisition accounting rules. Instead, companies only have to take "impairment" charges when they determine the assets of takeover targets aren't worth the price paid.

Results such as Yahoo's show how much of an effect this accounting change can have on a company. On the one hand, its first-quarter amortization costs tumbled 77 percent from a year earlier, to $3.4 million. On the other, it took a S64.1 million charge to implement the new standard.

Yahoo's loss for the quarter widened more than fourfold to $53.6 million because of the charge. Without it, the company reported a profit of $11.5 million.

The first paragraph provided figures for revenue and Ebitda (earnings before interest, taxes, depreciation and amortization). Ebitda shows how much cash flowed into a business. It's popular as a performance measure for media and telecommunications companies because they tend to borrow relatively large amounts of money.

Pro-forma has come to serve another purpose in the latest batch of earnings statements to let readers know that the year-earlier results were adjusted for the change in merger. accounting

Tribune Co., for example, provided figures showing its first-quarter profit before an impairment charge dropped 44 percent from its amortization-adjusted earnings a year earlier. Based on actual results, the earnings decline for the Los Angeles Times' publisher was only 9.4 percent.