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CHIPS AND TECHNOLOGIES REPORTS NET SALES OF $28.4 MILLION AND A LOSS FOR FISCAL SECOND QUARTER 1993; INCLUDES RESTRUCTURING CHARGES

 SAN JOSE, Calif., Feb. 4 /PRNewswire/ -- CHIPS and Technologies Inc. ("CHIPS") (NASDAQ-NMS: CHPS) today reported net sales of $28.4 million and a net loss of $25.9 million, or $1.67 per share, for the fiscal quarter ended Dec. 31, 1992 ("Second Quarter 1993"). Included in the Second Quarter 1993 results are a $17-million restructuring charge, a $5-million charge for excess and slow-moving inventory and $3.4 million of other income due to the settlement of a lawsuit. These results compare to net sales of $43.7 million and a net loss of $28.4 million, or $2.06 per share, for the fiscal quarter ended Dec. 31, 1991 ("Second Quarter 1992"). Results for Second Quarter 1992 included a $19.7-million charge for excess and slow-moving inventories, a restructuring charge of $6.4 million and a tax benefit of $12 million. Net sales for the fiscal quarter ended Sept. 30, 1992 ("First Quarter 1993"), were $26.3 million with a net loss of $9.7 million, or 63 cents per share.
 Gross margin was $3.1 million for Second Quarter 1993 compared to a negative gross margin of $9.4 million for Second Quarter 1992. First Quarter 1993 gross margin was $7.8 million.
 Exclusive of restructuring charges, operating expenses in Second Quarter 1993 were $14.9 million compared to $25.1 million in Second Quarter 1992, and $17.9 million in First Quarter 1993. Restructuring charges of $17.0 million in Second Quarter 1993, and $6.4 million in Second Quarter 1992 include consolidation of facilities, severance costs related to head-count reductions and write-off of fixed assets. The Second Quarter 1993 restructuring charge includes head-count reductions significantly greater than those announced on Nov. 18, 1992.
 Other income in Second Quarter 1993 includes a $3.4-million payment from the recent settlement of a lawsuit.
 At Dec. 31, 1992, cash and cash equivalents were $30.9 million compared to $26.4 million at Dec. 31, 1991, and $37.3 million at Sept. 30, 1992.
 Gordon A. Campbell, chief executive officer and president, commented, "We still are not satisfied with these results, but believe progress has been made as a result of the dramatic and difficult actions we have taken to reduce expenses. Although revenues are down $15.3 million, or 35 percent from Second Quarter 1992 to Second Quarter 1993, it is important to note that recurring operational expenses have been reduced $10.2 million, or 41 percent from a year ago and head-count is down 318, or 48 percent. Our ongoing operating results, exclusive of charges for restructuring and excess and slow-moving inventory, have improved from an operating loss of $14.7 million a year ago to an operating loss of $6.9 million for Second Quarter 1993. We plan to reduce operating expenses even further in the quarter ending March 31, 1993, as we continue to implement additional turnaround strategies.
 "While cost-control measures remain in place, we will continue to stress key product areas such as graphics, I/O devices and multimedia. We are working with major OEMs to beta test new products in these areas. These companies are creating new designs that target greater performance within industry-standard environments such as Microsoft Windows," Campbell continued.
 "Revenues from media products now represent the largest segment of our business, partially offsetting the decline in our systems logic business. This is a reflection of strong growth in the multimedia area as demonstrated by the significant contribution to revenue from sales of Vampire and Apple Corp. LCD controllers. While we have experienced a continued decline in mature systems logic products over the past two years, we are now seeing new opportunities in that area with products such as our ISA486 chipset.
 "We are announcing today the settlement of the lawsuit with Intel Corp., which includes certain cross-licenses, a corporate non-disclosure agreement in order to allow business discussions in areas of common interest, and which does not include any settlement payments.
 "We are pleased to announce that Larry Roffelsen has joined Chips as vice president, engineering. Mr. Roffelsen has over 25 years experience and has held senior management positions in both start-ups and large international corporations, most recently as vice president, engineering at Fujitsu Microelectronics Inc. In addition, Irv Abzug has joined Chips' board of directors. Mr. Abzug was vice president and director of corporate component procurement at IBM and has 45 years of experience in the industry. We look forward to both of their contributions to Chips," said Campbell.
 NOTE: CHIPS and Technologies Inc. is a leading supplier of integrated silicon, software and design services to the worldwide microcomputer industry. The company's products include CHIPSystem Architecture microprocessor-based solutions incorporating the SuperState System Management Architecture, 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 Statements of Operations
 (Unaudited, in thousands except per share amounts)
 Three Months Ended Six Months Ended
 Ended Dec. 31: 1992 1991 1992 1991
 Net sales $28,415 $43,693 $54,732 $76,690
 Cost of Goods Sold
 and Manufacturing
 Expenses 25,365 53,045 43,912 78,304
 Gross Margin 3,050 (9,352) 10,820 (1,614)
 Research & Development 5,876 11,586 13,881 23,737
 Marketing & Selling 5,774 9,293 11,822 17,006
 General
 & Administrative 3,245 4,173 7,081 7,730
 Restructuring Charge 17,038 6,400 17,038 6,400
 Total Operating
 Expenses 31,933 31,452 49,822 54,873
 Loss from Operations (28,883) (40,804) (39,002) (56,487)
 Interest and Other
 Income, Net 3,032 401 3,425 618
 Loss Before Taxes (25,851) (40,403) (35,577) (55,869)
 Benefit (Provision)
 for Income Taxes (32) 12,031 (32) 17,599
 Net Loss ($25,883) ($28,372) ($35,609) ($38,270)
 Net Loss Per Share ($1.67) ($2.06) ($2.29) ($2.81)
 Weighted Average
 Common Shares 15,547 13,773 15,546 13,640
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Balance Sheets
 (Unaudited, Dollars in Thousands)
 Dec. 31, June 30,
 1992 1992
 ASSETS:
 Cash & Cash Equivalents $30,854 $14,175
 Accounts Receivable, Net 20,625 23,324
 Finished Goods Inventory 12,188 18,256
 Income Taxes Refundable 278 28,261
 Prepaid Expenses 3,457 3,867
 Total Current Assets 67,402 87,883
 Property, Plant & Equipment, Net 17,887 25,897
 Other Assets, Net 7,189 7,040
 Total Assets $92,478 $120,820
 LIABILITIES & STOCKHOLDERS' EQUITY:
 Accounts Payable $12,194 $19,477
 Other Accrued Liabilities 8,454 11,622
 Current Portion of Capitalized
 Lease Obligations 4,386 5,459
 Deferred Gross Profit 1,816 3,660
 Accrued Restructuring Costs 9,158 2,507
 Total Current Liabilities 36,008 42,725
 Convertible Notes 10,280 ---
 Long-Term Capital Lease Obligations 2,186 3,835
 Accrued Restructuring Costs 7,078 2,436
 Total Liabilities 55,552 48,996
 Common Stock 53,040 52,323
 Notes to Officers (277) (272)
 Retained Earnings (15,837) 19,773
 Total Stockholders' Equity 36,926 71,824
 Total Liabilities
 & Stockholders' Equity $92,478 $120,820
 -0- 2/4/93
 /CONTACT: Lesley J. Mattos of Chips and Technologies, 408-434-0600/
 (CHPS)


CO: Chips and Technologies Inc. ST: California IN: CPR SU: ERN

GT-SG -- SJ002 -- 3152 02/04/93 16:06 EST
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