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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: NOVEMBER 3, 1997
(Date of earliest event reported)
S3 INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 0-21126 77-0204341
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2801 MISSION COLLEGE BOULEVARD, SANTA CLARA, CA 95052-8058
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 588-8000
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Item 5. Other Events.
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On November 3, 1997, S3 Incorporated (the "Company") issued a press
release concerning the discovery of errors in the timing of its recognition of
sales to international distributors and the anticipated restatement of the
Company's financial statements to reflect adjustments to revenue that will
decrease revenue and net income from previously reported amounts. A copy of the
press release is attached hereto as Exhibit 99.1 and is incorporated herein.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
99.1 Press release dated November 3, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 4, 1997.
S3 INCORPORATED
By /s/ Walt Amaral
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Walt Amaral, Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT
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99.1 Press release dated November 3, 1997.
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EXHIBIT 99.1
S3 EXPECTS TO RESTATE REVENUES FROM PRIOR QUARTERS; DISCOVERS ERRORS IN ITS
TIMING OF REVENUE RECOGNITION
SANTA CLARA, CA -- November 3, 1997 -- S3 Incorporated (Nasdaq: SIII)
said today that the company has uncovered material errors in the timing of its
recognition of sales to several international distributors and consequently
expects to restate its revenues downward for prior quarters by a cumulative
total of between $40 million and $70 million. The Company currently expects the
resulting net income effect for those quarters to be a cumulative decrease of 14
cents to 29 cents per share.
According to S3's accounting policies, which S3 does not believe have
been fully adhered to, the company defers recognition of revenue on all sales to
distributors until the product is actually sold by each distributor to its end
customers.
"We are currently implementing measures to ensure that this type of
error will not recur," said Gary Johnson, S3's president and CEO. "The inventory
at our distributors' locations today consists largely of S3's 2D and 3D
mainstream products. Based on the rates at which this existing inventory is
expected to move through the channel, we expect the bulk of the revenue from
that existing inventory to be recognized during the fourth quarter of 1997. Any
new shipments into the channel during, and subsequent to, the fourth quarter of
1997 will be recognized during the quarter in which those products move off the
distributors' shelves in line with company policy."
Walt Amaral, S3's recently appointed chief financial officer and senior
vice president of finance said, "We have initiated tighter monitoring and
control procedures to ensure strict compliance with our revenue recognition
policy moving forward."
The audit committee of the Company's board of directors, which consists
entirely of outside directors, and the company's management and independent
auditors, are in the process of reviewing and resolving the revenue recognition
matters raised by the company's review, to date. The company expects the release
of additional and more definitive information concurrent with the filing of its
third quarter Form 10Q.
About S3 Incorporated
S3 Incorporated, founded in 1989 with headquarters in Santa Clara,
California, is the world's largest supplier of multimedia acceleration hardware
and its associated software*. S3 is committed to applying its expertise in
audio, video and graphics acceleration to create innovative and affordable
products for the home, desktop and mobile markets. The company's vision for the
future is to also bring a rich, consumer electronics-type experience to PC users
- -- integrating the best available consumer multimedia technologies into the
mainstream PC platform.
Except for historical information contained herein, the matters set
forth in this press release, such as statements relating to the extent of, and
periods subject to, the company's possible restatement and the rates at which
existing inventory will move through the channel, are forward-looking
statements that are subject to risk and uncertainties, including the impact of
competitive
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products and pricing and of alternative technological advances, market
acceptance of the company's and its customers' new products, and other risks
detailed from time to time in S3's SEC reports, including its Annual Report on
From 10-K for the year ended December 31, 1996.
NOTE: The S3 corporate logo is a trademark of S3 Incorporated. Other
marks referenced herein are the property of their respective owners. All third
party quotes and product information are furnished by the respective companies.
* Source: Mercury Research (Scottsdale, AZ)
