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CHIPS AND TECHNOLOGIES REPORTS A LOSS FOR SECOND FISCAL QUARTER 1992; INCLUDES RESTRUCTURING CHARGES AND INCREASED INVENTORY RESERVES

CHIPS AND TECHNOLOGIES REPORTS A LOSS FOR SECOND FISCAL QUARTER 1992; INCLUDES RESTRUCTURING CHARGES AND INCREASED INVENTORY RESERVES
 SAN JOSE, Calif., Jan. 28 /PRNewswire/ -- Chips and Technologies Inc. (NASDAQ: CHPS), today reported net sales of $43.7 million and a net loss of $28.4 million, or $2.06 per share, for the quarter ended Dec. 31, 1991 (Second Quarter 1992). The company had announced on Jan. 21, 1992, that it expected to report a substantially greater loss in Second Quarter 1992 as compared to the quarter ended Sept. 30, 1991, (First Quarter 1992) due to additional inventory reserves and a restructuring of operations. Included in the Second Quarter 1992 results are a $19.7 million charge to cost of goods sold for excess and slow moving inventory and one time pretax $6.4 million restructuring charge. Excluding the additional inventory reserve and restructuring charge recorded, and utilizing the same effective tax benefit rate as that used in First Quarter 1992, the net loss per share for Second Quarter 1992, is $0.66. Second Quarter 1992 results compare to net sales of $61.0 million and a net loss of $273,000, or $0.02 per share, for the second quarter ended Dec. 31, 1990.
 The restructuring charge includes costs associated with a consolidation of facilities, severance costs related to the previously announced headcount reduction and a partial write off of goodwill and purchased technology relating to a previous acquisition. The restructuring charge also includes costs related to the previously announced intended sale of the multiprocessing architecture (M/PAX) product line. The increased inventory reserve is primarily due to continued decreases in volume demand and price erosion on some of the company's more mature products.
 Gordon A. Campbell, president and CEO of Chips, said, "The chipset market continues to be characterized by intense competition and continued pricing pressure. We are not satisfied with our recent financial results and have been conducting a comprehensive review of all aspects of the company's operations, including products under development, existing products and our operational methodologies. Some of our restructuring plans will take several months to implement, however, we expect most of the actions to be accomplished by June 30, 1992. We are accelerating the company's evolution from being solely a supplier of stand-alone chipsets to a provider of high performance microprocessor-based products and tightly coupled total systems solutions. These technologies and our expertise in multi-media, imaging and communications also enable us to be a provider of highly integrated PC systems. We believe that our corporate restructuring combined with the expected financial impact of our new products should enable us to be successful in this rapidly changing and competitive environment."
 Chips and Technologies Inc. is the world's leading supplier of integrated silicon, software, and design services to the worldwide microcomputer industry. The company's products include microprocessor-based solutions, VLSI CHIPSets, software accelerators, networking solutions, firmware, and design services. Chips common stock is traded over the counter and is listed on the NASDAQ National Market System under the symbol "CHPS".
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Balance Sheets
 (Dollars in thousands)
 Dec. 31, June 30,
 1991 1991
 (unaudited)
 Assets:
 Cash & Cash Equivalents $ 26,418 $ 37,603
 Accounts Receivable (Net) 30,135 34,323
 Finished Goods Inventory 18,923 35,147
 Prepaid Income Taxes 18,982 6,816
 Prepaid Expenses 2,212 2,375
 Total Current Assets 96,670 116,264
 Property, Plant and Equipment (Net) 29,530 32,735
 Other Assets (Net) 8,020 9,522
 Total Assets $134,220 $158,521
 Liabilities & Stockholders' Equity:
 Accounts Payable $ 18,830 $ 15,892
 Other Accrued Liabilities 15,639 11,271
 Current Portion of Capitalized
 Lease Obligations 7,051 6,731
 Deferred Gross Profit 2,178 3,327
 Accrued Restructuring Costs 2,906 --
 Total Current Liabilities 46,604 37,221
 Long Term Capital Lease Obligations 6,058 6,841
 Accrued Restructuring Costs 1,161 --
 Total Liabilities 53,823 44,062
 Stockholders' Equity:
 Common Stock 147 147
 Capital in Excess of Par Value 44,893 44,289
 Treasury Stock (4,071) (11,226)
 Retained Earnings 39,428 81,249
 Total Stockholders' Equity 80,397 114,459
 Total Liabilities and
 Stockholders' Equity $134,220 $158,521
 Certain prior year information has been reclassified to conform with current presentation.
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Statements of Operations
 (Unaudited)
 (In thousands except per share amounts)
 Three Months Ended Six Months Ended
 Dec. 31, Dec. 31,
 1991 1990 1991 1990
 Net Sales $43,693 $61,008 $76,690 $120,551
 Cost of Goods Sold
 and Manufacturing
 Expenses 53,045(A) 38,209 78,304(A) 72,836
 Gross Margin (9,352) 22,799 (1,614) 47,715
 Research & Development 11,586 12,768 23,737 24,720
 Marketing & Selling 9,293 8,483 17,006 18,089
 General &
 Administrative 4,173 3,149 7,730 6,170
 Restructuring Charge 6,400 -- 6,400 --
 Total Operating
 Expenses 31,452 24,400 54,873 48,979
 Loss from Operations (40,804) (1,601) (56,487) (1,264)
 Other Income, Net 401 671 618 1,455
 Income (loss) Before
 Taxes (40,403) (930) (55,869) 191
 Benefit for Income
 Taxes (12,031) (657) (17,599) (270)
 Net Income (loss) $(28,372) $(273) $(38,270) $461
 Net Income (loss) per
 Share $(2.06) $(0.02) $(2.81) $0.03
 Weighted Average Common
 Shares and Share Equivalents
 Outstanding 13,773 13,214 13,640 13,930
 (A) Includes $19.7 million related to additional provisions for excess and slow moving inventory.
 -0- 1/28/92
 /CONTACT: Chris Hoberg of Chips and Technologies Inc., 408-434-0600/
 (CHPS) CO: Chips and Technologies ST: California IN: CPR SU: ERN


RM -- SJ005 -- 4378 01/28/92 15:59 EST
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Date:Jan 28, 1992
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