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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)
SIII 0.00010000.0%May 12 5:00 PM EST
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To: Ken Muller who wrote (8532)12/21/1997 3:54:00 PM
From: Ken Muller   of 14577
 
Additional Analysis of Re-stated Numbers

Accounts Receivable (12/31/96-9/30/97)

While Revenue (due to Improper Revenue Recognition) was being reduced over this time period by a total of $32,959K, Accounts Receivable increased by $41,338K (to $117,458K). However, this increase came in spite of lower quarterly sales revenue and a lower inventory valuation.There seems to be no explanation for this increase. (A/R was well past 90 days.)

History of Improper Revenue Recognition (1/1/96-9/30/97)

A final review of the re-stated quarterly revenue statements indicates that during the entire time period involved, there was never a single increase in quarterly re-stated revenue. If S3 is correct in their statements that revenue was recognized too early, that revenue reduction in one quarter should show up as an additional revenue increase in a subsequent quarter(when it was correctly recognized).There is little evidence to support that. Neither the re-stated inventory nor the restated quarterly revenue numbers show any impact due to additional recognized revenue.

I have not formed any conclusions yet on the re-stated financial reports. However, S3's re-stated numbers raise questions on how much and when the $58 million in revenue was actually recognized.

Happy Holidays,
Ken
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