AOL completes earnings report
After more than a month of involved talks with the SEC, AOL reports full earnings results for the fourth quarter of 1998.
The company had announced its operating results for the fourth quarter on August 4, but had withheld net income, saying it was in discussions with the SEC over one-time charges related to research and development at Mirabilis and NetChannel, companies AOL recently acquired.
The online giant today reported a net income of $7.1 million for the fourth quarter or 3 cents per fully diluted share. This compares to a net loss of $11.8 million, or 6 cents per share in last year's fourth quarter.
AOL also reported net income for the full year of $91.8 million or 35 cents per share compared to fiscal 1997's net loss of $499.3 million or $2.61 per share.
Before one-time charges of $88.2 million and fully taxed, fourth-quarter net income climbs to $57.3 million or 23 cents per share and full-year net income rises to $134 million or 55 cents per share.
Although AOL had repeated that it was prepared to report its full earnings in August, it had decided to wait. "The treatment of in-process research and development is something that the SEC has been paying more and more attention to lately," an AOL spokeswoman said. "We wanted to reach out to the SEC in advance to give them an opportunity to review the accounting treatment for our acquisitions."
AOL today reported fourth-quarter noncash charges for acquired research and development of $60.5 million in connection with its acquisition of the assets of Mirabilis, including its ICQ instant communication and chat technology, and of $10 million in connection with its acquisition of NetChannel.
The company's fiscal 1998 net income reported today reflects one-time charges taken in the fourth quarter, which AOL said have no effect on the previously announced operating results.
Fourth-quarter net income, before special charges and on a fully taxed basis, climbed to $57.3 million or 23 cents per share on revenues of $792.3 million. The company reported that these earnings represent a tenfold increase on a comparable basis over AOL's earnings for the fiscal 1997 fourth quarter.
The full year's net income, before special charges and on a fully taxed basis, rose to $134 million or 55 cents per share on revenues of $2.6 billion. That compares to a fiscal 1997 net loss of $13.4 million or 7 cents per share on revenues of $1.7 billion.
"Our fiscal 1998 operating results reflect our strong momentum as the leading interactive services company," Steve Case, AOL chairman and chief executive, said in a statement. "America Online is firing on all cylinders, and we look forward to continuing to strengthen our unique position in the fastest-growing industry in the world."
AOL reported that its membership climbed by 3.9 million during fiscal 1998, compared to 2.4 million in 1997. The company said it has more than 13 million members worldwide as of August.
The CompuServe acquisition was completed in the fiscal 1998 third quarter and the service ended the year with approximately 2 million members.
AOL also said that revenue from services climbed to nearly $2.2 billion for fiscal 1998, a 51 percent increase from the previous year. Revenues from advertising and commerce rose to $439 million for fiscal 1998, compared to $255.8 million during the prior year.