To: Lizzie Tudor who wrote (4359 ) 1/28/1999 9:33:00 PM From: Chuzzlewit Read Replies (2) | Respond to
Michelle, here is the pertinent section:The Company is currently responding to a comment letter from the SEC related to its accounting for the PMAN acquisition in 1996, and is clearing with the SEC its accounting for the Intrepid acquisition completed in the fourth quarter of 1998. In both cases, the SEC is reviewing the charge to In Process Research and Development in light of recent guidance from the SEC on valuation of purchase accounting for acquisitions. Upon completion of the SEC review, the Company may be required to restate its financial statements of 1996, 1997 and 1998 to reflect a lower In Process R&D write-down from 1996 for PMAN, and/or to change the In Process R&D write-down taken in the fourth quarter of 1998 for Intrepid. The Company believes its accounting for PMAN was proper and in accordance with GAAP and with industry practices in effect in 1996, and the Company's calculation of the adjustment required to reflect the recent SEC guidelines show that any adjustment would not be material to the financial statements of 1996, 1997 or 1998. The Company also believes that its accounting for Intrepid in the fourth quarter of 1998 is in accordance with the SEC's recent guidelines. However, there can be no assurance that the SEC comments once issued will not require a material change in reported earnings of 1996, 1997, or 1998 related to the accounting for the PMAN or Intrepid acquisitions.
