SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


A Look at AOL's Books

Until recently, AOL treated many costs of acquiring new members, including 
advertising, as a capital investment rather than as a current expense.

   1. AOL elected to defer certain costs.
   2. That allowed it to report lower total expenses.
   3. The result: The company reported profits in 1993 and 1994 and a $34 
million 1995 loss.

   Business Week asked American Securities to calculate the effect of treating 
all member-acquisition costs as a current expense. It found:

   4. Total expenses would have been far higher.
   5. There would have been losses in all three years; the 1995 loss would have 
been more than double the one reported.

   After an SEC review, AOL now capitalizes more member-acquisition expenses.

A Look at AOL's Books

                                               1993        1994       1995
TOTAL REVENUES REPORTED*                     $52,355      $117,496   $397,313
1 Deferred Subscriber Acquisition Expenses   $3,647       $19,502    $50,837
2 Total Expenses Reported**                  $51,956      $114,946   $430,960
3 Total Income Reported                      $399         $2,550    -$33,647
4 Total Expenses Revised                     $55,603      $134,448   $481,797
5 Net Income Revised                        -$3,248      -$6,952    -$84,484

*Includes other revenues **Includes income taxes Note: Amounts are in thousands 
of dollars
DATA: COMPANY REPORTS, AMERICAN SECURITIES


SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
Terms of Use