================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------
FORM 10-Q
(Mark One)
| X | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For quarter period ended March 31, 1995
-------------------------
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- --------------------
Commission file number 0-15012
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CHIPS AND TECHNOLOGIES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 77-0047943
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2950 Zanker Road, San Jose, California 95134
--------------------------------------------
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (408) 434-0600
--------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year.
If changed since last report.
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
At March 31, 1995, the registrant had 17,564,257 shares
of common stock outstanding.
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<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements 3
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 8
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Not applicable
Item 2. Changes in Securities Not applicable
Item 3. Defaults Upon Senior Securities Not applicable
Item 4. Submission of Matters to a Vote of Security Holders Not applicable
Item 5. Other Information Not applicable
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
Page 2
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, JUNE 30,
(Dollars in thousands except share amounts) 1995 1994
------- -------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 22,064 $ 17,372
Short-term investments 4,969 5,171
Accounts receivable, net of allowances for doubtful 8,437*
accounts of $1,009 and $1,269, respectively 11,046
Inventory 10,344 5,845
Prepaid and other assets 2,775 3,100
-------- --------
Total current assets 51,198 39,925
Property and equipment, net 10,352 10,352
Other assets 710 1,050
-------- --------
$ 62,260 $ 51,300
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,470 $ 7,081
Current portion of capitalized lease obligations 730 571
Other accrued liabilities 8,523 6,850*
Accrued restructuring costs -- 1,542
-------- --------
Total current liabilities 17,723 16,044
Long-term capitalized lease obligations, less current portion 984 100
Notes payable 882 919
Convertible debentures 7,910 7,910
-------- --------
Total liabilities 27,499 24,973
======== ========
Stockholders' Equity:
Convertible preferred stock, 58,000 and 123,000 shares issued and 1 1
outstanding
Common stock, 17,564,000 and 16,881,000 issued and outstanding 175 169
Capital in excess of par value 62,019 59,222
Notes receivable from officer (105) --
Retained deficit (27,329) (33,065)
-------- --------
Total stockholders' equity 34,761 26,327
-------- --------
$ 62,260 $ 51,300
======== ========
<FN>
* Accounts have been reclassified for comparative purposes (see Note 2)
See notes to Unaudited Condensed Consolidated Financial Statements
</FN>
</TABLE>
Page 3
<PAGE>
<TABLE>
CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
(In thousands except per share amounts) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 27,231 $ 14,442 $ 70,881 $ 58,051
Cost of sales and other manufacturing expenses 16,866 9,269 44,019 36,442
-------- -------- -------- --------
Gross margin 10,365 5,173 26,862 21,609
Operating expenses
Research and development 3,216 2,598 9,510 9,205
Marketing and selling 3,754 2,596 9,489 8,627
General and administrative 1,112 1,260 3,309 4,255
Restructuring recovery -- (372) (1,429) (372)
-------- -------- -------- --------
Total operating expenses 8,082 6,082 20,879 21,715
Income (loss) from operations 2,283 (909) 5,983 (106)
Interest income and other, net 60 1,072 304 1,427
-------- -------- -------- --------
Income before taxes 2,343 163 6,287 1,321
Provision for income taxes (234) (16) (551) (132)
-------- -------- -------- --------
Net Income $ 2,109 $ 147 $ 5,736 $ 1,189
======== ======== ======== ========
Net income per share
Primary $ 0 11 $ 0 01 $ 0 32 $ 0 07
======== ======== ======== ========
Fully diluted $ 0 11 $ 0 01 $ 0 31 $ 0 07
======== ======== ======== ========
Shares used in per share calculation
Primary 18,902 17,492 18,215 16,720
======== ======== ======== ========
Fully diluted 20,290 17,492 18,719 16,721
======== ======== ======== ========
<FN>
See notes to Unaudited Condensed Consolidated Financial Statements
</FN>
</TABLE>
Page 4
<PAGE>
<TABLE>
CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
(In thousands) 1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,736 $ 1,189
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 2,002 2,721
Provision for losses on accounts receivable 225 676
Provision for losses on inventory 1,112 409
Gain on sale of investments, net -- (939)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable (2,834) 504
Inventory (5,611) (2,146)
Accounts payable 1,389 (1,686)
Other assets and liabilities 1,427 294
Accrued restructuring costs (498) (10,308)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,948 (9,286)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,190) (1,264)
Sale of short-term investments 155 6,436
Sale of stock investment -- 2,014
Disposition of fixed assets 199 1,236
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,836) 8,422
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to capital lease obligations, net of principle payment 1,043 (3,218)
Proceeds from (repayment of) note payable principle (37) 929
Proceeds from issuance of stock 2,627 3,470
Repayments of (issued to) officer loans (100) 35
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,533 1,216
-------- --------
Net increase in cash and cash equivalents 4,645 352
Cash and cash equivalents at beginning of period 17,372 20,742
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,017 $ 21,094
======== ========
Supplemental disclosure cash flow information:
Cash paid during the period for:
Interest $ 528 $ 396
Income taxes 181 38
Supplemental noncash financing activities:
Additions under capital lease obligations 1,806 --
Conversion of preferred stock to common stock 65 --
<FN>
See notes to Unaudited Condensed Consolidated Financial Statements
</FN>
</TABLE>
Page 5
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited Condensed Consolidated Financial Statements have been prepared by
the Company, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary for a fair
statement of the financial position, operating results and cash flows for those
periods presented. These consolidated condensed financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
for the year ended June 30, 1994, included in the Company's 1994 Annual Report
on Form 10-K.
The results of operations for the interim periods are not necessarily indicative
of the results that may be expected for the entire year.
NOTE 2. REVENUE RESERVES
Beginning in the first quarter of fiscal 1995, the Company reclassified deferred
distributor income. Previously classified as current liabilities, deferred
distributor income is now classified as a reduction to accounts receivable.
NOTE 3. STOCK INVESTMENT
The Company currently holds a minority preferred stock investment in Nexgen,
Inc. During April 1995, Nexgen, Inc. filed for a public offering of equity
securities. Should this public offering take place, the Company's preferred
stock investment will be converted to common stock and the fair market value of
the Company's equity investment will be recorded in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt & Equity Securities." The Company's equity investment is subject to lock-up
provisions restricting the sale of the securities for 180 days after the public
offering.
NOTE 4. ACCRUED RESTRUCTURING COSTS
During the second quarter of fiscal 1995, the restructuring plans that were
undertaken in prior years were substantially completed. As a result, the Company
recorded the reserve balance of $0.2 million as income. During fiscal 1995, the
Company took charges against the reserves relating primarily to consolidations
of operations activities, which consisted of the costs of closure of certain
foreign sales offices and estimated litigation costs. The following table
summarizes the status of the restructuring reserves at March 31, 1995:
(In thousands) Consolidations of Reduction of
Operations & other Workforce Total
------------------ --------- -----
Balance at 6/30/94 $ 1,442 $ 100 $ 1,542
Charges against reserves (1,258) (100) (1,358)
Reversal of provision (184) -- (184)
------- ------- -------
Balance at 03/31/95 $ -- $ -- $ --
======= ======= =======
Page 6
<PAGE>
<TABLE>
NOTE 5. NET INCOME PER SHARE
Shares used in the computation of primary net income per share are based on the
weighted average number of common shares outstanding plus dilutive common stock
equivalents. The fully diluted computation also includes other dilutive
convertible securities. Primary and fully diluted income per share have been
determined as follows:
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
(In thousands except per share amounts) 1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income $ 2,109 $ 147 $ 5,736 $ 1,189
Interest saving on convertible debenture -- 5 44 21
------- ------- ------- -------
Adjusted income for calculation of earnings per share $ 2,109 $ 152 $ 5,780 $ 1,210
======= ======= ======= =======
Average number of common and common equivalent shares:
Weighted average common shares outstanding 17,479 16,621 17,157 16,142
Dilutive common stock equivalents:
Common stock options and warrant, using treasury stock method 1,365 748 1,000 455
Convertible preferred stock 58 123 58 123
------- ------- ------- -------
Common and common equivalent shares used in the
calculation of net income per share: 18,902 17,492 18,215 16,720
======= ======= ======= =======
Primary earnings per share: $ 0 11 $ 0 01 $ 0 32 $ 0 07
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Net Income $ 2,109 $ 147 $ 5,736 $ 1,189
Interest saving on convertible debenture 151 5 -- 5
------- ------- ------- -------
Adjusted income for calculation of earnings per share $ 2,260 $ 152 $ 5,736 $ 1,194
======= ======= ======= =======
Average number of common and common equivalent shares:
Weighted average common shares outstanding 17,479 16,621 17,157 16,142
Dilutive common stock equivalents:
Common stock options & warrant, using treasury stock method 1,365 748 1,504 456
Convertible preferred stock 58 123 58 123
Convertible debentures
1,388 * * *
------- ------- ------- -------
Common and common equivalent shares used in the
calculation of net income per share: 20,290 17,492 18,719 16,721
======= ======= ======= =======
Fully diluted earnings per share: 0 11 0 01 0 31 0 07
======= ======= ======= =======
<FN>
*Antidilutive
</FN>
</TABLE>
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
Net revenues for the third quarter of fiscal 1995 increased 17% from the prior
quarter and 89% from the same quarter a year ago. The gross margin percentage
for the third quarter of fiscal 1995 improved slightly compared to the same
quarter in the prior year. Revenues from graphics controllers continue to
represent the majority of the Company's revenues. Operating expenses in the
third quarter of fiscal 1995 have increased in absolute dollars compared to the
same quarter a year ago largely due to higher sales commissions and R & D
expenses.
NET REVENUE
Net revenues for the third quarter of fiscal 1995 were $27.2 million, an
increase of 89% from $14.4 million reported for the third quarter of fiscal
1994. Net sales for the first three quarters of fiscal 1995 were $70.9 million,
an increase of 22% from $58.1 million reported for the same period of fiscal
1994. The increase in net revenues for both the third quarter of fiscal 1995 and
the first three quarters of fiscal 1995 was due to significant increases in unit
shipment volume of flat panel graphics controllers. Revenue from graphics
products comprised 71% of sales for the first three quarters of fiscal 1995
compared to 58% of sales in the same period of fiscal 1994.
GROSS MARGIN
Gross margin was 38% in the third quarter of fiscal 1995 compared to 36% for the
third quarter of fiscal 1994. For the first three quarters of fiscal 1995, the
gross margin was 38% compared to 37% for the same period of fiscal 1994. The
improvement in gross margin was mainly due to reductions in manufacturing
expenses and lower inventory obsolescence.
RESEARCH AND DEVELOPMENT EXPENSES
R&D expenses were $3.2 million in the third quarter of fiscal 1995, an increase
of $0.6 million from the third quarter of fiscal 1994. R & D expenses were $9.5
million for the first three quarters of fiscal 1995, an increase of $0.3 million
from the same period of fiscal 1994. R & D expenses as a percentage of net
revenues were 12% and 18% in the quarters ended March 31, 1995 and 1994,
respectively. R&D spending may fluctuate from quarter to quarter due to the
timing of spending on prototype fabrication. The Company intends to continue
investing in new product development and its modular high level design
methodology and expects these expenditures to increase in absolute amounts.
SALES AND MARKETING EXPENSES
Sales and marketing expenses were $3.8 million in the third quarter of fiscal
1995, an increase of $1.2 million from the third quarter of fiscal 1994. Sales
and marketing expenses were $9.5 million for the first three
Page 8
<PAGE>
quarters of fiscal 1995, an increase of $0.9 million from the same period of
fiscal 1994. Sales and marketing expenses increased primarily due to higher
commissions paid to sales representatives as the result of higher revenues.
Sales and marketing expenses as a percentage of net revenues were 14% and 18% in
the quarters ended March 31, 1995 and 1994, respectively. The Company expects
that sales and marketing expenses will increase in absolute amounts during the
fourth quarter of fiscal 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
G&A expenses were $1.1 million in the third quarter of fiscal 1995, a decrease
of $0.2 million compared to the third quarter of fiscal 1994. G & A expenses
were $3.3 million in the first three quarters of fiscal 1995, a decrease of $1.0
million for the same periods of fiscal 1994. The lower expenses are largely due
to reductions in headcount, depreciation costs and bad debt provisions. The
Company expects that G & A expenses will remain flat during the fourth quarter
of fiscal 1995.
RESTRUCTURING COSTS
During the first two quarters of fiscal 1995, the Company recognized $1.4
million as income against its restructuring provision. $1.2 million of this
amount represented the final principal payment against a note receivable
recorded in respect of the sale of certain of the Company's product lines which
were discontinued and fully reserved in fiscal 1993. Because the restructuring
plans which were reserved for in prior years were substantially completed, the
Company also recorded the remaining reserve balance of $0.2 million to income in
the second quarter of fiscal 1995.
INTEREST INCOME AND OTHER, NET
Other income for the first three quarters of fiscal 1995 was $0.3 million
compared to $1.4 million for the same period of fiscal 1994. During the third
quarter of fiscal 1994, the Company recorded a net gain of approximately $0.9
million as the result of selling common stock investments and making provisions
against the value of other investments.
INCOME TAXES
The Company provides for income taxes during interim reporting periods based
upon an estimate of its annual effective tax rate. The Company utilizes the net
operating loss carryforward to offset a significant portion of the Company's
income taxes. The estimated tax rate reflects certain alternative minimum tax
and state tax obligations.
LIQUIDITY AND CAPITAL RESOURCES
Due to the completion of most of the Company's restructuring during fiscal 1994,
usage of cash for restructuring programs was not significant for the first three
quarters of fiscal 1995. The Company funded payment for its restructuring
programs through existing working capital resources.
During the first three quarters of fiscal 1995, accounts receivable increased
$2.6 million, inventory increased $4.5 million and current liabilities increased
$1.7 million. Accounts receivable increased because of higher sales during the
quarter. Increases in inventory are due to the higher levels of inventory
maintained for the Company's portable graphics controller products. Current
liabilities increased primarily due to an increase in accounts payable and other
accrued expenses; the increases are partially offset by the completion of the
Company's restructuring program. Long term debt increased $0.8 million during
the third quarter of fiscal
Page 9
<PAGE>
1995 as the result of additional capital lease financing for certain equipment
expenditures. The Company has $1.7 million in standby letters of credit
outstanding to secure its capital lease financing arrangement.
The Company has two revolving line of credit agreements allowing borrowings of
up to $13.0 million at the banks' reference rates. There were no borrowings
outstanding against these lines at March 31, 1995 and both agreements expire in
October 1995. Based on the current levels of working capital and available
borrowing capacity, the Company believes that its present capital resources are
sufficient to meet its needs for the remainder of the fiscal year.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company anticipates its revenues will continue to increase in the fourth
quarter of fiscal 1995. The largest portion of the Company's sales is comprised
of portable graphics controllers and the Company expects that the majority of
its revenues over the next quarter will be from sales of portable graphics
controllers. However, the Company's revenues are directly affected by customer
demand for its products. Customer demand fluctuates, sometimes dramatically,
based on the customers' buildup of internal inventory, seasonal factors, and
product transitions, among other things. While the Company makes every effort to
be consistently informed of customers' expected demand for its products,
customers from time to time make unexpected changes in product purchasing
forecasts and in existing orders. Customer rescheduling, reduction of quantities
of products ordered and cancellations of orders could have a material adverse
impact on the Company's revenues and results of operations.
The Company relies on obtaining and maintaining design wins for its products
with leading personal computer manufacturers. Many factors affect and could
adversely impact design wins, including internal scheduling delays, choices of
features, aggressive competition, changes in staffing at customers, and
intangible factors affecting customer relationships. To the extent that the
Company is unable to retain existing designs or to acquire new design wins and
the associated revenues generated from them for the Company's existing and
future products, there could be a material adverse effect on the Company's
results of operations.
The Company believes it currently maintains a leadership position in the
portable graphics controller market and anticipates its competition may
aggressively price alternative solutions to attempt to gain or maintain market
position. To the extent that the Company must reduce prices to meet competition,
maintain market share or meet customer requirements, gross margins achieved
during the first three quarters of fiscal 1995 may not be sustainable. The
Company expects gross margin percentages for the next quarter will remain
relatively stable compared to the first three quarters of fiscal 1995. The
Company anticipates its future operating expenses, including sales commissions
and research and development expenses, will increase in absolute dollar amounts
over the next quarter. However, the Company believes that operating expenses
from ongoing operations will decline as a percentage of sales over the next
quarter.
Because the Company uses subcontract vendors for the manufacture of its
products, the Company must place orders with its suppliers far in advance of
shipment to its end customers. The reliance on subcontract vendors presents
risks including the lack of guaranteed production capacity, delays in delivery,
susceptibility to disruption in supply and reduced control over product costs
and manufacturing yields. Long production lead times and limited control over
the manufacturing process could adversely affect the Company to the extent it is
not able to anticipate its inventory supply requirements and as a result
generates excess or insufficient product inventories. The majority of the
Company's current products are implemented in 0.8 micron semiconductor process
fabrication technology. The Company expects most of its new products to utilize
0.6 and 0.5 micron geometries in order to achieve high performance and lower
production costs. The semiconductor industry has historically passed through
periods of both surplus and deficits in available fabrication capacity. In
addition, scarcity of advanced process technologies and fabrication capacity is
often limited until the technology matures. Due to the Company's use of advanced
process technology and sub contract vendors, inability to obtain sufficient
supplies of advanced semiconductor fabrication processes could have a materially
adverse effect on the Company's operating results.
Page 10
<PAGE>
The Company's business is currently heavily concentrated in the portable
computer market. The Company's future operating results could be adversely
affected by various factors beyond its control that could impact that
marketplace. Such factors include: slower than anticipated growth in demand for
portable computers, market demand for features or capabilities other than those
anticipated by the Company and its OEM customers, and shortages of key
components not supplied by the Company.
The statements asserted in this section do not contain all the conditions which
may affect the Company's future operating results. For simplicity of
presentation the Company has not repeated in its Quarterly Report all factors
affecting future operating results that were contained in its Annual Report on
Form 10-K. Therefore, the Company's Quarterly Report on Form 10-Q should be read
in combination with the Company's Annual Report on Form 10-K for fiscal year
1994.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Not applicable
Item 2. Changes in Securities Not applicable
Item 3. Defaults upon Senior Securities Not applicable
Item 4 Submission of Matters to a Vote of Security Holders Not applicable
Item 5. Other Information Not applicable
Item 6. Exhibits 14
Reports on Form 8-K Not applicable
Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHIPS AND TECHNOLOGIES, INC.
(Registrant)
/s/ James F. Stafford
---------------------------------------------
James F. Stafford
President & Chief Executive Officer
/s/ Timothy R. Christoffersen
---------------------------------------------
Timothy R. Christoffersen
Vice President of Finance
Chief Financial Officer and
Principal Accounting Office
Date: May 11, 1995
Page 13
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
------ ----------- ----
3.1 (2) Amended Certificate of Incorporation of Chips and
Technologies, Inc., a Delaware corporation.
3.2 (7) Restated By-laws of Chips and Technologies, Inc., a
Delaware corporation.
3.3 (4) Certificate of Designation, Preferences and Rights of the
Terms of the Series A Preferred Stock filed with the State
of Delaware on May 20, 1993.
4.1 (1) Stockholders' Rights Agreement dated August 23, 1989.
4.2 (7) Registration Rights Agreement dated October 10, 1985 and
amendment thereto dated January 24, 1986.
10.1 (4) Lease Termination Agreement and related exhibit between the
Company and The Equitable Life Assurance Society dated
September 10, 1993.
10.2 (6) * First Amended 1988 Nonqualified Stock Option Plan for
Outside Directors dated October 1, 1993.
10.3 (2) * Form of Indemnity Agreement between the Company and each of
its directors and executive officers.
10.4 (4) * Confidential Termination Agreement and General Release of
Claims between the Company and Nancy S. Dusseau, dated
September 1, 1993.
10.5 (4) * Confidential Termination Agreement and General Release of
Claims between the Company and Jeffrey H. Grammer, dated
September 2, 1993.
10.6 (4) * Confidential Resignation and Consulting Agreement and
General Release of Claims between the Company and Gordon A.
Campbell dated September 30,1993.
10.7 (4) Convertible Promissory Notes and Preferred Stock Purchase
Agreement dated as July 16, 1992.
10.8 (4) Amendment to Convertible Promissory Notes and Preferred
Stock Purchase Agreement.
10.9 (4) Form of Convertible Subordinated Debentures Due June 30,
2002.
10.10 (4) Amendment to 8 1/2% Convertible Subordinated Debentures
Due, June 30, 2002.
10.11 (5) Agreement for Sale and Purchase of Assets between Techfarm,
Inc. and Chips and Technologies, Inc., dated September 24,
1993.
10.12 (8) Restated Secured Promissory Note, Secured Continuing
Guarantee, and Restated Loan and Security Agreement between
Techfarm, Inc. and Chips and Technologies, Inc. dated March
31, 1994.
Page 14
<PAGE>
10.13 (8) * Promissory note to the Company from Keith Angelo dated
August 1, 1994.
10.14 (8) * Independent Contractor Services Agreement between the
Company and Henri Jarrat dated August 11, 1994.
10.15 (9) * Amended and restated 1994 stock option plan dated November
10, 1994
10.16 (9) * Key employee bonus plan dated November 8, 1994
27. 0 Financial Data Schedule for the quarter ended March 31,
1995 16
(1) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1989.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1990.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1992.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1993.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1993.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1994.
(7) Incorporated by reference to Registration Statement No. 33-8005
effective October 8, 1986.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1994.
(9) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended December 31, 1994.
* Denotes management contracts or compensatory plans or arrangements
covering executive officers or directors of Chips and Technologies, Inc.
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted
from Q395 10Q financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 22064
<SECURITIES> 4969
<RECEIVABLES> 12055
<ALLOWANCES> 1009
<INVENTORY> 10344
<CURRENT-ASSETS> 51198
<PP&E> 34066
<DEPRECIATION> 23714
<TOTAL-ASSETS> 62260
<CURRENT-LIABILITIES> 17723
<BONDS> 0
<COMMON> 62194
1
0
<OTHER-SE> (27434)
<TOTAL-LIABILITY-AND-EQUITY> 62260
<SALES> 27231
<TOTAL-REVENUES> 27231
<CGS> 16866
<TOTAL-COSTS> 16866
<OTHER-EXPENSES> 3216
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2343
<INCOME-TAX> 234
<INCOME-CONTINUING> 2109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2109
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
