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Technology Stocks : THQ,Inc. (THQI)
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To: Jim Munroe who wrote (9521)2/15/1999 10:51:00 AM
From: Jim Munroe   of 14266
 
Isn't THQ in a similar situation to this?

SALT LAKE CITY--(BUSINESS WIRE)--Feb. 12, 1999--Evans & Sutherland Computer Corporation (E&S) (NASDAQ: ESCC - news) today reported revised financial results for the quarters ended in June and September, 1998. All results are unaudited.

The revisions were made in response to new guidance from the Securities and Exchange Commission to public accounting firms regarding in-process research and development (IPR&D) charges in acquired companies. Although E&S reported its second and third quarter results in accordance with established accounting practices and specific review by its public accountants, the new SEC guidance requires retroactive changes.

The revised SEC guidance affects IPR&D provisions made during the acquisition of AccelGraphics, Inc. and Silicon Reality, Inc. by E&S during the second quarter. The revisions have the overall effect of increasing profitability of E&S during 1998 but decreasing profitability in future years. All changes are non-cash and do not affect other operating results of the company.

The changes reduce the one-time writeoff of IPR&D at the time of the acquisitions by approximately $7.1 million, moving this amount into goodwill and deferred income taxes to be amortized over future periods. For 1998, this results in a $7.1 million increase to second quarter earnings, and a $1.3 million decrease to earnings in each of the third and fourth quarters. The overall result is a net increase in earnings of approximately $4.5 million for the year. Pre-tax earnings in future periods extending forward as long as seven years will be reduced by $4.1 million as a result of the new guidance.
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