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S3 REPORTS RECORD FIRST-QUARTER RESULTS

 SANTA CLARA, Calif., April 21 /PRNewswire/ -- S3 Incorporated (NASDAQ: SIII) today reported that net revenues for the first quarter of fiscal 1993, which ended March 31, were $17.6 million, as compared to $3.6 million for the first quarter of 1992 and $11.6 million for the fourth quarter of 1992. Income before an accounting change for the current quarter was $2.0 million, or 25 cents per share, compared to net income of $0.5 million, or 8 cents per share, for the same quarter last year and $1.7 million, or 24 cents per share, for the fourth quarter of 1992. Offsetting the increase in the current quarter's income before an accounting change was a higher effective tax rate of 34 percent versus 4.7 percent in 1992. Net income for the current quarter was $5.5 million, or 68 cents per share, after the favorable impact of $3.5 million, or 43 cents per share, from the cumulative effect of a change in accounting for income taxes resulting from the adoption of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes.
 As a result of S3's initial public offering of 2.3 million shares of common stock on March 5, 1993, the weighted shares outstanding increased from 6.8 million for the first quarter of 1992 to 8.0 million for the first quarter of 1993. The weighted shares outstanding will be higher in future quarters because the 2.3 million shares sold in S3's initial public offering were only outstanding for a portion of the first quarter of 1993.
 "S3's strong first-quarter results reflect increased demand for our graphics acceleration products from large systems customers, increased output from our external foundry to meet that demand, and the growing popularity of Microsoft Windows(R)," said Terry Holdt, president and chief executive officer.
 S3's customers are among the computer industry's leading personal computer (PC) suppliers and add-in board manufacturers. In the first quarter of this year, S3 began shipping its 805 graphics accelerator to the IBM(R) Personal Computer Co. for its Personal Systems/ValuePoint(TM) family of PCs.
 Also during the first quarter, S3 announced the introduction of its 928PCI accelerator, bringing the power of S3's high-end product to systems that are based on Intel's Peripheral Component Interconnect(TM) (PCI) architecture, such as Intel's 486- and Pentium(TM)-based PCs.
 S3 Incorporated is dedicated to apply acceleration technology to create a natural interface for PCs. The company combines silicon and software to offer a range of acceleration products supporting the leading PC operating environments.
 NOTE: IBM is a registered trademark of IBM; Personal Systems/ValuePoint is a trademark of IBM. Microsoft and Windows are registered trademarks of Microsoft Corp. Other references noted with (TM) or (R) are trademarks of their respective companies.
 S3 INCORPORATED
 STATEMENTS OF OPERATIONS
 (Unaudited, dollars in thousands, except share data)
 Three Months Ended March 31: 1993 1992
 Net sales $17,562 $ 3,640
 Cost of sales 9,738 1,333
 Gross margin 7,824 2,307
 Operating expenses:
 Research and development 2,104 731
 Selling, general and
 administrative 2,701 997
 Total operating expenses 4,805 1,728
 Income from operations 3,019 579
 Interest income (expense), net 20 (15)
 Income from operations before
 income taxes and change in
 accounting 3,039 564
 Income taxes 1,034 25
 Income before change in accounting 2,005 539
 Cumulative effect of change in
 accounting for income taxes 3,500 --
 Net income $ 5,505 $ 539
 Per-share amounts:
 Income before change in
 accounting $ 0.25 $ 0.08
 Cumulative effect of change in
 accounting for income taxes $ 0.43 --
 Net income $ 0.68 $ 0.08
 Number of shares used in computing
 per-share amounts 8,046 6,849
 BALANCE SHEETS
 (Dollars in thousands)
 March 31, Dec. 31,
 1993 1992
 (unaudited) (audited)
 ASSETS
 Current assets:
 Cash and equivalents $40,887 $ 5,583
 Accounts receivable 8,695 7,253
 Inventories 1,444 768
 Prepaid expenses 474 364
 Deferred taxes 2,763 ---
 Total current assets 54,263 13,968
 Property and equipment - net 2,633 1,602
 Non-current deferred taxes 369 --
 Other assets 30 30
 Total $57,295 $15,600
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
 Current liabilities:
 Accounts payable $ 8,117 $ 4,621
 Accrued liabilities 2,394 1,874
 Income taxes payable 667 136
 Current portion of long-term
 obligations 1,631 967
 Total current liabilities 12,809 7,598
 Long-term obligations 452 1,179
 Total liabilities 13,261 8,777
 Redeemable convertible preferred
 stock -- 16,761
 Stockholders' equity (deficiency):
 Common stock 48,649 182
 Accumulated deficit (4,615) (10,120)
 Total stockholders' equity
 (deficiency) 44,034 (9,938)
 Total $57,295 $15,600
 -0- 4/21/93
 /CONTACT: George Hervey, vice president-Finance and chief financial officer, or Anne Banta, director of Corporate Communications, of S3, 408-980-5400; or Heidi Flannery of in.ves'com, 503-221-2087, for S3/
 (SIII)


CO: S3 Incorporated ST: California IN: CPR SU: ERN

LM-SG -- SE019 -- 9072 04/21/93 20:48 EDT
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Date:Apr 21, 1993
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