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CHIPS AND TECHNOLOGIES REPORTS PROFIT FOR FISCAL FIRST QUARTER

 SAN JOSE, Calif., Oct. 19 /PRNewswire/ -- Chips & Technologies Inc. (NASDAQ-NMS: CHPS) (Chips) reported a net profit of $322,000, or $0.02 per share, for the fiscal quarter ended Sept. 30, 1993 (First Quarter 1994) as compared with a net loss of $9.4 million, or $0.59 per share for the Fourth Fiscal Quarter of 1993 (Fourth Quarter 1993). Net losses for Fourth Quarter 1993 would have been $3.2 million, or $0.20 per share, in the absence of one-time restructuring charges of $6.2 million. The net loss for the First Fiscal Quarter of 1993 (First Quarter 1993) was $9.7 million, or $0.63 per share.
 Net revenues for First Quarter 1994 were $21.2 million, compared with Fourth Quarter 1993 net revenues of $21.5 million, despite some loss of revenues from the previously announced discontinued businesses. This compares with net sales of $26.3 million for First Quarter 1993.
 Operating expenses in First Quarter 1994 were $8.0 million, compared with $16.9 million in the Fourth Quarter 1993. Fourth Quarter 1993 expenses included a one time restructuring charge of $6.2 million; excluding that charge, Fourth Quarter 1993 operating expenses were $10.7 million. First Quarter 1993 operating expenses were $17.9 million.
 Gross margins for First Quarter 1994 were 38 percent, as compared with gross margins of 35 percent for Fourth Quarter 1993, and 30 percent for First Quarter 1993.
 At Sept. 30, 1993, cash and short term investments were $21.3 million, as compared with $29.2 million at June 30, 1993 and $37.3 million at Sept. 30, 1992. The reduction in cash during First Quarter 1994 was primarily due to the termination of building lease obligations and other payments required under the restructuring plan.
 "We are obviously very pleased to report a profit this quarter," said Jim Stafford, president and chief executive officer. "The company has worked hard to reduce operating expenses to bring them in line with expected revenues.
 "Chips' well-accepted family of LCD controllers led the way to improved results. Our new multi-function I/O controller should begin to contribute revenues in the current quarter, and we expect sales of our Wingine(TM)DGX graphics user interface (GUI) accelerator to ramp up in the third fiscal quarter.
 "By focusing our product strategy on areas where we can provide cost- effective, integrated solutions and by leveraging our successful core technologies for future products," Stafford continued, "we feel the company is better positioned to face the market pressures and challenges ahead."
 Note: CHIPS and Technologies Inc. supplies advanced semiconductor devices to the worldwide personal computer industry. CHIPS' products are found in a wide range of systems from compact portables to high performance desktop computers. 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
 Sept. 30,
 1993 1992
 Net sales $21,171 $26,318
 Cost of goods sold
 and manufacturing expenses 13,113 18,548
 Gross margin 8,058 7,770
 Research & development 3,259 8,005
 Marketing & selling 3,117 6,048
 General & administrative 1,670 3,836
 Total operating expenses 8,046 17,889
 Income (loss) from operations 12 (10,119)
 Interest and other income, net 344 393
 Income (loss) before taxes 356 (9,726)
 Provision for income taxes 34 --
 Net income (loss) $322 ($9,726)
 Net income (loss) per share $0.02 ($0.63)
 Weighted average common shares 16,403 15,545
 CHIPS AND TECHNOLOGIES INC.
 Consolidated Balance Sheets
 (Unaudited)
 (Dollars in thousands)
 Sept. 30, 1993 June 30, 1993
 Assets:
 Cash & cash equivalents $20,336 $20,742
 Short-term investments 1,000 8,436
 Accounts receivable, net 12,693 10,287
 Finished goods inventory 5,750 5,244
 Prepaid and other assets 4,414 5,401
 Total Current Assets 44,193 50,110
 Property, plant & equipment, net 11,945 13,059
 Other assets, net 1,921 1,637
 Total assets $58,059 $64,806
 Liabilities & stockholders' equity:
 Accounts payable $8,899 $6,889
 Other accrued liabilities 9,930 10,555
 Current portion of capitalized
 lease obligations 2,673 3,410
 Defferred gross profit 1,120 1,581
 Accrued restructuring costs 4,917 13,775
 Total current liabilities 27,539 36,210
 Convertible debentures 7,910 7,910
 Long-term capital lease obligations 613 1,009
 Noncurrent notes payable 942 --
 Total liabilities 37,004 45,129
 Convertible preferred stock 1 1
 Common stock 56,541 55,489
 Notes to officers (29) (34)
 Retained earnings (deficit) (35,458) (35,779)
 Total stockholders' equity 21,055 19,677
 Total liabilities & stockholders'
 equity $58,059 $64,806
 -0- 10/19/93
 /CONTACT: Annie Gladue of Chips and Technologies, 408-434-0600/
 (CHPS)


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

PK-TM -- SJ004 -- 4150 10/19/93 16:07 EDT
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Date:Oct 19, 1993
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