Internet investment and holding company CMGI Inc has announced that it will restate earnings for its past four quarters after a review of in-process research and development charges in light of the newly-issued SEC guidelines. The Andover, Massachusetts-based company said the changes mostly relate to recently-announced adjustments made to in-process R&D charges by Lycos Inc – in which it is the largest shareholder – and the charge recorded in the third quarter of fiscal 1998 in conjunction with CMGI’s acquisition of Accipiter Inc.
Lycos has effectively reduced its cumulative one-time in-process R&D charges from several acquisitions and adjusted the related amortization of assets for the subsequent quarters. The accounting gets complex, however, as during the affected periods, CMGI’s ownership in Lycos ranged from roughly 46% to 22% due to stock sales. Thus CMGI has restated previously-reported equity in losses at Lycos, gains on sales of Lycos stock and gains on the issuance of stock by Lycos.
CMGI’s quarters ended April 30, July 31 and October 31 of 1998 and the quarter ended January 31, 1999 were affected. For the third quarter of fiscal 1998, the restatement resulted in net income of $7.9m, or $0.17 per share, against an originally reported loss of $11.7m, or $0.27 per share. For the fourth quarter, net income was lowered to $27.1m, or $0.55, from $31.4m, or $0.64. For the first quarter of fiscal 1999, net income was reduced to $38.3m, or $0.77, from $38.6m, or $0.77. For the second quarter, net income was restated to $13m, or $0.25, from $14.1m, or $0.28.
