I want to know what types of companies use "sell in" as opposed to
"sell through" accounting.  Product categories (noting example company
names and products) would be a great answer.  I am most interested in
consumer products from computer peripherals to blenders (just
examples, not specifically these).  I understand that "sell through"
is the more conservative practice, but the information is difficult to
obtain.  I understand (from googling) that proxim uses sell through
for wireless links. Sub question, are the ipod numbers recently
released sell in or sell through?

Wjaz --

"Revenue recognition" has received a great deal of scrutiny in various
industries for a combination of reasons.  The Enron scandal, in
particular, involved highly questionable revenue-creation techniques
with limited partnerships -- but it's far from the first attempt to
play with revenues, as Rex Moore notes in this Fool.com article that
discusses SEC guidelines:
Fool.com
"Recognizing Revenue Tricks" (Moore, June 27, 2003)
http://www.fool.com/news/commentary/2003/commentary030627rm.htm

Indeed, as your question asks, there are categories of companies that
use "sell through" accounting.  The most-notable would be retailers,
which represent the last step in reaching the consumer.  And there are
dozens of examples here: companies like Pier 1 (NYSE: PIR), Wal-Mart
(NYSE: WMT), Barnes & Noble (NYSE: BKS), Best Buy (NYSE: BBY),
Albertson's (NYSE: ABS).

However, there are other companies which use "sell through" in
attempts to be conservative about their financial reporting -- though
they may use different terms.  I'll come back to those in a minute in
the high technology area.

Historically, "sell in" was used because companies were using
wholesale distributors and retailers to complete the transaction. 
When the product was kicked off the shipping dock to the distributor
(or retailer), a sale could be recorded.  Newer direct-distribution
models, such as the business model used by Dell (NASDAQ: DELL), have
changed it somewhat by eliminating two-step distribution.  However,
two-step distribution remains the norm in many sectors of American
business, including auto parts, food and liquor distribution.

Two-step distribution raises a number of issues with revenue due to
frequent merchandising discounts given by manufacturers, which in the
past were sales & marketing expenses -- rather than being reductions
in sale price, as required by Financial Accounting Standards Board
(FASB) EITF 01-09.  Wholesale distributors and many large retailers
are also typically given price-protection for inventories, so that
when prices are reduced (particularly with manufactured durable
products like electronics) they are provided inventory protection
credits by manufacturers.

There are even some extraordinary cases where manufacturers will hold
title until the product goes through the cash register.  See the
example of warehouse store Costco in this Google Answer:
"Example by Omnivorous" (Dec. 26, 2003)
http://answers.google.com/answers/threadview?id=290394

FASB is the authority for accounting rules.  It has become interested
enough in recent revenue scandals to try to attack the issue again
after it's December, 2003 meeting:
FASB
Project Updates -- Revenue Recognition (December, 2003)
http://www.fasb.org/project/revenue_recognition.shtml

Even before recent issues on revenue recognition, both FASB and the
SEC have been changing rules regarding traditional practices under
which manufacturers provide cooperative advertising; merchandising
discounts or service fees (such as sign-up fees paid by cellular
companies to their retailers).  The most-recent series of changes came
with FASB's EITF 01-09 and the Securities and Exchange Commission's
Staff Accounting Bulletin 101:
SEC
"SEC Staff Accounting Bulletin No. 101" (Dec. 3, 1999)
http://www.sec.gov/interps/account/sab101.htm

SEC
"Revenue Recognition in Financial Statements ? Frequently Asked
Questions and Answers" (Oct. 26, 2001)
http://www.sec.gov/info/accountants/sab101faq.htm


The changes were necessary because the SEC noted that over half of all
financial frauds involved misstatements of revenues.



HIGH TECHNOLOGY
-----------------------------

High technology companies introduce many types of revenue-recognition
problems.  Some are related to distribution but many are related to
more complex product and service issues, including:
?	long-term government contracts
?	leasing of equipment
?	service revenues (often listed as "deferred")
?	customer-acceptance terms
?	value of software or other intellectual property

An interesting accounting project describes just how Lucent
Technologies was required to re-state earnings after using
off-the-book discounts, incomplete shipments and over-valued
distributor inventory in over-stating earnings:
Iowa State University
"Revenue Recognition -- Lessons from the Lucent Debacle" (Zhang, undated)
http://www.public.iastate.edu/~chrisz/Academic%20Projects/acct598/598-p1.pdf

Where can you find companies that have delayed earnings for the final
"sell-through"?  One good category to look is in "deferred revenues."

KLA-Tencor (NASDAQ: KLAC) is perhaps a good example.  The
semiconductor equipment supplier in its Q1, 2004 earnings call in
October, noted that they have $330 million in product that was shipped
but not signed off by customers.  Though John Kispert, CFO/EVP's
comments from the earnings call are no longer on the company website,
he noted that the company's policy is to defer revenues until signed
off by customers, per SAB 101: "It includes no service revenue, is
made up of inspection and metrology products delivered, but awaiting
written acceptance from the customer.  The ability to maintain this
combined level of both shipment and deferred revenue backlog continues
to allow KLA-Tencor to sustain profitability throughout the business
cycle."

KLA-Tencor's revenue deferral process is a financially conservative
one, even though the company largely deals with customers directly and
doesn't have typical "sell through" issues.

Yahoo Finance
KLA-Tencor Quarterly Report Summary
http://biz.yahoo.com/e/031107/klac10-q.html

Of course, deferred revenue can be managed a number of ways.  It's
common for technology companies to book maintenance revenues as
deferred, so that years 2 or 3 don't show as income until the matching
expense period.  That's the practice of Micromuse (NYSE: MUSE), as
noted in it 2002 Form 10-K filing (see pp. 15-16) on "Revenue
Recognition":
SEC Edgar
Micromuse 2002 Form 10-K
http://www.sec.gov/Archives/edgar/data/1036425/000089843002004624/d10k.htm 


APPLE COMPUTER
-----------------

Virtually all companies discuss their revenue recognition policies in
the Form 10-K, including Apple Computer.  Apple is pretty clear that
revenues are recognized at "sell in" or when title moves from the
company to its distributors or retailers.  The recently-issued 2003
Form 10-K says, " Product is considered delivered to the customer once
it has been shipped, and title and risk of loss have been transferred.
For most of the Company's product sales, these criteria are met at the
time the product is shipped."  Apple's exception to the above is for
on-line sales, which obviously eliminate resellers.
SEC Edgar
Apple Computer 2003 Form 10-K (Dec. 19, 2003, pages 20-21)
http://www.sec.gov/Archives/edgar/data/320193/000104746903041604/a2124888z10-k.htm

Your concern about the iPod is timely because Apple is widely expected
to announce a $100 version of the MP3 player, which could result in
price adjustments for the original:
Telegraph.co.uk
"iPod Buyers Singing the Blues" (Uhlig, Dec. 30, 2003)
http://www.telegraph.co.uk/connected/main.jhtml?xml=/connected/2003/12/31/ecntipod30.xml&sSheet=/connected/2003/12/31/ixconnrite.html



Google search strategy:
"revenue recognition" + NYSE
"revenue recognition" + FASB
"revenue recognition" + SAB101
"revenue recognition" + FASB + "EITF 01-09"

Best regards,

Omnivorous-GA