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CHIPS AND TECHNOLOGIES REPORTS NET SALES OF $141.1 MILLION AND A LOSS FOR FISCAL 1992; INCLUDES FURTHER RESTRUCTURING CHARGES

 CHIPS AND TECHNOLOGIES REPORTS NET SALES OF $141.1 MILLION


AND A LOSS FOR FISCAL 1992; INCLUDES FURTHER RESTRUCTURING CHARGES
 SAN JOSE, Calif., July 28 /PRNewswire/ -- Chips and Technologies Inc. ("Chips") (NASDAQ-NMS: CHPS) today reported net sales of $141.1 million and a net loss of $57.4 million, or $4.00 per share, for the fiscal year ended June 30, 1992 ("Fiscal 1992"). Included in the Fiscal 1992 results are a previously announced $19.7 million charge to cost of goods sold for excess and slow moving inventory and a pretax $9.1 million restructuring charge, $2.7 million of which was recorded in the fourth quarter ended June 30, 1992 ("Fourth Quarter 1992") in anticipation of a restructuring to occur in the quarter ending Sept. 30, 1992. This $2.7 million charge may be reduced as those restructuring activities are refined. The net loss for Fiscal 1992 would have been $37.6 million, or $2.63 per share, excluding the inventory reserve and restructuring charges. This compares to net sales of $225.1 million and a net loss of $9.6 million, or $.71 net loss per share, for the fiscal year ended June 30, 1991 ("Fiscal 1991").
 For the Fourth Quarter 1992, Chips reported net sales of $33.1 million and a net loss of $8.8 million, or $.58 per share, including a restructuring charge of $2.7 million. This compares to net sales of $48.9 million and a net loss of $5.3 million, or $0.40 per share, for the fourth quarter ended June 30, 1991 ("Fourth Quarter 1991"). The net loss per share for Fourth Quarter 1992, excluding the restructuring charge, would have been $6.9 million, or $.45 per share.
 Gross margin decreased from 37 percent in Fiscal 1991 to 12 percent in Fiscal 1992. Excluding the $19.7 million inventory charge, gross margin for Fiscal 1992 was 26 percent. Fourth Quarter 1992 gross margin was 34 percent compared to 33 percent in Fourth Quarter 1991.
 Cash and cash equivalents decreased $23.4 million during Fiscal 1992 to $14.2 million at June 30, 1992. On July 16, 1992, Chips announced a $23 million financing package which included a private placement exceeding $10 million in convertible promissory notes and reconfirmed bank lines of $13 million. A tax refund in excess of $25.0 million is expected in the first half of Fiscal 1993 as a result of the carryback of net operating losses to prior tax years.
 According to Gordon Campbell, Chips' president and chief executive officer, "Fiscal 1992 financial results were negatively impacted by a second year of intense competition and pricing pressure across the company's entire line of products. Additionally, the company's new products did not account for a significant portion of net sales in Fiscal 1992."
 Campbell continued, "In response to this environment, Chips took aggressive steps to reduce costs in Fiscal 1992. These measures included reducing headcount, consolidating facilities, scrapping excess and obsolete inventory, and discontinuing sale of low margin products. Concurrently, Chips focused its engineering and marketing activities on higher margin products.
 "I am pleased to report that in the Fourth Quarter 1992 we saw the first tangible results of Chips' program to produce a better margin structure through a combination of restructuring and capturing the higher margins generated by our new products. We believe that the Fourth Quarter 1992 results are tangible evidence that our restructuring programs, gross margin improvement, and continued focus on cost controls are making a difference," Campbell said.
 Campbell noted Fourth Quarter 1992 revenues increased $1.8 million compared to the third quarter ended March 31, 1992 ("Third Quarter 1992"). In addition, Fourth Quarter 1992 gross margins improved to 34 percent compared to Third Quarter 1992 gross margins of 24 percent. This improvement in quarter-to-quarter gross margins was driven by the combination of a higher margin product mix and the Fiscal 1992 cost cutting programs.
 "The Fiscal 1992 cost cutting will continue during Fiscal 1993. We will be attacking our overhead structure and will be focusing our resources on our strategic lines of business. The restructuring charge taken in Fourth Quarter 1992 was done in anticipation of these ongoing changes," Campbell said.
 Campbell continued, "In Fiscal 1992, the company strengthened its core technologies with the introduction of X86-compatible microprocessor technologies, Windows accelerator technologies, a new family of advanced VGA-compatible flat panel controllers, and additional multi-media solutions for emerging video windowing applications.
 "With the industry's evolution from chipset to single chip P.C. architecture, we believe the technologies Chips has developed enables us to compete successfully in the current marketplace. We are encouraged by Fourth Quarter 1992 results. The reduction in the loss, the improvement in margins, and the increased percentage of new product sales have produced positive results. We will continue to take those measures we believe will be necessary to return Chips to profitability in Fiscal 1993."
 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 of "CHPS."
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Balance Sheets
 (Dollars in thousands)
 June 30, June 30,
 1992 1991
 Assets:
 Cash & Cash Equivalents $ 14,175 $ 37,603
 Accounts Receivable, Net 23,324 34,323
 Finished Goods Inventory 18,256 35,147
 Income Taxes Refundable 28,261 5,639
 Prepaid Expenses 3,867 3,552
 Total Current Assets 87,883 116,264
 Property, Plant and Equipment, Net 25,897 32,735
 Other Assets, Net 7,040 9,522
 Total Assets $120,820 $158,521
 Liabilities & Stockholders' Equity:
 Accounts Payable $ 19,477 $ 15,892
 Other Accrued Liabilities 11,622 11,271
 Current Portion of Capitalized
 Lease Obligations 5,459 6,731
 Deferred Gross Profit 3,660 3,327
 Accrued Restructuring Costs 2,507 --
 Total Current Liabilities 42,725 37,221
 Long-Term Capital Lease Obligations 3,835 6,841
 Accrued Restructuring Costs 2,436 --
 Total Liabilities 48,996 44,062
 Stockholders' Equity:
 Common Stock 155 147
 Capital in Excess of Par Value 51,896 44,289
 Treasury Stock -- (11,226)
 Retained Earnings 19,773 81,249
 Total Stockholders' Equity 71,824 114,459
 Total Liabilities & Stockholders' Equity $120,820 $158,521
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Statements of Operations
 (In thousands, except per share amounts)
 Three Months Ended, Year Ended,
 June 30, June 30,
 1992 1991 1992 1991
 (unuadited)
 Net sales $33,125 $48,925 $141,106 $225,088
 Cost of goods sold
 and manufacturing
 expenses 21,921 32,613 124,145 142,592
 Gross margin 11,204 16,312 16,961 82,496
 Research
 & development 10,283 13,847 45,739 52,722
 Marketing & selling 7,148 8,541 31,901 35,832
 General
 & Adminstrative 4,159 3,779 14,866 13,035
 Restructuring cost 2,740 -- 9,131 --
 Total operating
 expenses 24,330 26,167 101,637 101,589
 Loss from
 operations (13,126) (9,855) (84,676) (19,093)
 Interest income,
 net 246 507 916 2,553
 Loss before taxes (12,880) (9,348) (83,760) (16,540)
 Benefit for
 income taxes (4,057) (4,039) (26,384) (6,916)
 Net loss $(8,823) $(5,309) $(57,376) $(9,624)
 Net loss
 per share $ (0.58) $ (0.40) $ (4.00) $ (0.71)
 Weighted average
 shares and
 share equivalents 15,310 13,278 14,332 13,512
 -0- 7/28/92
 /CONTACT: Lesley J. Mattos of Chips and Technologies, 408-434-0600/
 (CHPS) CO: Chips and Technologies Inc. ST: California IN: CPR SU: ERN 1401 07-28-92 16:48 EDT MM-DG -- SJ011 -- 4266 07/28/92 16:53 EDT
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