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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 December 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
CHIPS AND TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0047943
(State or other jurisdiction of incorporation or (I.R.S. Employee
organization) Identification No.)
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
--- ---
At December 31, 1995, the registrant had 20,381,564 shares of common
stock outstanding.
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
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 Operations 8
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 12
Item 5. Other Information Not applicable
Item 6. Exhibits and Reports on Form 8-K 12
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except share amounts) DECEMBER 31, 1995 JUNE 30, 1995
----------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $27,803 $22,385
Short-term investments 24,698 23,644
Accounts receivable, net of allowance for
doubtful accounts of $1,139 and $1,032, respectively 12,337 14,696
Inventory 9,305 11,667
Prepaid and other assets 988 2,549
------- -------
Total current assets 75,131 74,941
Property and equipment, net 10,851 10,550
Other assets 2,295 276
------- -------
Total assets $88,277 $85,767
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,900 $ 8,072
Current portion of capitalized lease obligations 898 689
Other accrued liabilities 7,626 9,585
------- -------
Total current liabilities 15,424 18,346
Long-term capitalized lease obligations, less current portion 863 849
Notes payable 876
------- -------
Total liabilities 16,287 20,071
------- -------
Stockholders' equity:
Common stock, 20,382,000 and 19,744,000 shares issued
and outstanding 204 197
Capital in excess of par value 76,645 73,016
Notes receivable from officer (77) (107)
Unrealized gain on investments 8,860 16,267
Retained deficit (13,642) (23,677)
------- -------
Total stockholders' equity 71,990 65,696
------- -------
Total liabilities and stockholders' equity $88,277 $85,767
======= =======
See notes to Unaudited Condensed Consolidated Financial Statements.
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CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
(In thousands except per share amounts) 1995 1994 1995 1994
------- ------- ------- -------
Net sales $38,259 $23,277 $75,478 $43,650
Cost of sales 23,301 14,418 46,159 27,153
------- ------- ------- -------
Gross margin 14,958 8,859 29,319 16,497
Operating expenses
Research and development 4,811 3,286 9,716 6,294
Selling, general and administrative 5,214 4,130 10,118 7,932
Restructuring recovery -- (1,057) -- (1,429)
------- ------- ------- -------
Total operating expenses 10,025 6,359 19,834 12,797
Income from operations 4,933 2,500 9,485 3,700
Interest income and other, net 1,297 134 1,665 244
------- ------- ------- -------
Income before taxes 6,230 2,634 11,150 3,944
Provision for income taxes 623 263 1,115 317
------- ------- ------- -------
Net Income $5,607 $2,371 $10,035 $3,627
======= ======= ======= =======
Net income per share $0.26 $0.13 $0.46 $0.20
======= ======= ======= =======
Shares used in per share calculation 21,804 19,967 21,991 18,537
======= ======= ======= =======
See notes to Unaudited Condensed Consolidated Financial Statements
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CHIPS AND TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
DECEMBER 31,
(In thousands) 1995 1994
------- ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 10,035 $ 3,627
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 1,303 1,326
Gain on sale of land (949)
Changes in operating assets and liabilities:
Accounts receivable 2,359 (2,351)
Inventory 2,362 (3,646)
Accounts payable (1,172) (814)
Other assets and liabilities (2,227) 1,105
Accrued restructuring costs (498)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 11,711 (1,251)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,604) (1,545)
Purchase of short-term investments (8,461) (1,511)
Deposit for capacity agreement (2,000)
Proceeds from sale of land and other 2,759 168
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (9,306) (2,888)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to capital lease obligations, net of principle payment 223 620
Repayment of note payable principle (876) (30)
Proceeds from issuance of stock 3,636 1,359
Repayments (issuance) of officer's loan 30 (100)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,013 1,849
-------- --------
Net increase (decrease) in cash and cash equivalents 5,418 (2,290)
Cash and cash equivalents at beginning of period 22,385 17,372
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,803 $ 15,082
======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 125 $ 474
Income taxes 148 170
Additions under capital lease obligations 778 1,229
See notes to Unaudited Condensed Consolidated Financial Statements
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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 adjustments, necessary for a
fair statement of the financial position, operating results and cash flows for
those periods presented. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto for the year ended June 30, 1995, included in the Company's 1995
Annual Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative of
the results that may be expected for the entire year.
NOTE 2. SHORT-TERM INVESTMENTS
The Company classified all investments on December 31, 1995 as
available-for-sale. The fair market value and the amortized cost of the
securities at December 31, 1995 are presented in the table below. The
investments are adjusted to fair market value as of the balance sheet date and
any unrealized gains were recorded as a separate component of stockholders'
equity. During the quarter ended December 31, 1995, the unrealized gain from
short-term investments decreased by $7.4 million as compared to $16.3 million on
June 30, 1995. The decrease was primarily due to a decline in the fair market
value of NexGen Common Stock.
Unrealized Unrealized Fair
(In thousands) Amortized Holding Holding Market
Gain Losses Value Cost
- -------------- --------- ---------- ---------- ------
NexGen Common Stock $ -- $8,819 $ -- $ 8,819
U.S. Government and Corporation
Obligations 15,839 40 -- 15,879
- -------------- ------- ------ -------- -------
Total $15,839 $8,859 $ -- $24,698
============== ======= ====== ======== =======
NOTE 3. INVENTORY
Inventory consists of the following:
(In thousands) December 31, 1995 June 30, 1995
----------------- -------------
Work-in-process $3,787 $ 5,471
Finished goods 5,518 6,196
------ -------
$9,305 $11,667
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NOTE 4. INCOME TAXES
The Company provides for income taxes during interim reporting periods based
upon an estimate of the annual effective tax rate of approximately 10%. This
rate is substantially lower than the statutory income tax rate because the
Company utilizes its net operating loss carryforwards to offset a significant
portion of the Company's estimated income tax liability. The estimated tax rate
reflects alternative minimum taxes and other state tax obligations.
NOTE 5. NET INCOME PER SHARE
Net income per share is based on the weighted average common shares outstanding
and dilutive common equivalent shares (using the treasury stock method). Common
equivalent shares include stock options and warrants.
NOTE 6. LONG-TERM CAPACITY AGREEMENTS
During the second quarter of fiscal 1996, the Company entered into two wafer
capacity agreements, one with Taiwan Semiconductor Manufacturing Company
('TSMC') and another with Chartered Semiconductor Manufacturing PTE LTD ('CSM').
These agreements require deposits to be paid by the Company totaling $23.5
million and $20.0 million, respectively. Both agreements were entered into for
the purpose of securing additional wafer supplies.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
Net sales for the second quarter of fiscal 1996 increased 3% from the prior
quarter and 64% from the same quarter a year ago. Gross margin for the second
quarter of fiscal 1996 improved slightly compared to the prior quarter and the
same quarter a year ago. Revenues from portable graphics accelerators continue
to represent a substantial majority of the Company's net sales. Operating
expenses in the second quarter of fiscal 1996 have increased in absolute dollars
compared to the same quarter a year ago, largely due to higher sales commissions
from higher net sales and increased Research & Development spending.
NET SALES
Net sales for the second quarter of fiscal 1996 were $38.3 million, an increase
of $15.0 million from $23.3 million reported for the same quarter in fiscal
1995. Net sales for the first half of fiscal 1996 were $75.5 million, an
increase of $31.8 million from $43.7 million for the same period of fiscal 1995.
The increase in net sales was mainly due to significant increases in unit
shipments of portable graphics accelerators. Revenue from portable graphics
accelerator products comprised 87% of the Company's net sales in the second
quarter of fiscal 1996, compared to 59% of net sales in the same quarter of
fiscal 1995.
GROSS MARGIN
The gross margin percentage was 39.1% in the second quarter of fiscal 1996,
compared to 38.1% for the same quarter of fiscal 1995. For the first half of
fiscal 1996, the gross margin was 38.8% , compared to 37.8% for the same period
of fiscal 1995. The improvement in gross margin percentage was primarily due to
an improved mix of products.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased $1.5 million from the second quarter
of fiscal 1995 to $4.8 million in the second quarter of fiscal 1996. The
research and development expenses were approximately 13% of net sales in the
second quarter of fiscal 1996, compared to 14% in the second quarter of fiscal
1995. For the first half of fiscal 1996, research and development expenses were
13% of net sales as compared to 14% in the same period of fiscal 1995. Research
and development spending increased mainly from higher engineering staffing
levels and product prototyping costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $1.1 million from the
second quarter of fiscal 1995 to $5.2 million in the second quarter of fiscal
1996. Selling, general and administrative expenses were approximately 14% of net
sales in the second quarter of fiscal 1996, compared to 18% in the second
quarter of fiscal 1995. For the first half of fiscal 1996, selling, general and
administrative expenses as a percentage of net sales were 13% as compared to 18%
in the same period of fiscal 1995. The increase in absolute dollars was
primarily due to higher commission expenses as the result of higher sales.
Although expenses increased in absolute dollars, selling, general and
administrative expenses as a percentage of sales declined as sales grew at a
faster rate than spending.
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INTEREST INCOME AND OTHER, NET
Interest and other income for the second quarter of fiscal 1996 was $1.3
million, compared to $0.1 million in the second quarter of fiscal 1995. In
December 1995, the Company sold an undeveloped parcel of land and recorded a
$0.9 million gain on the sale.
INCOME TAXES
The Company provides for income taxes during interim reporting periods based
upon an estimate of the annual effective tax rate of approximately 10%. This
rate is substantially lower than the statutory income tax rate because the
Company utilizes its net operating loss carryforwards to offset a significant
portion of the Company's estimated income tax liability. The estimated tax rate
reflects alternative minimum taxes and other state tax obligations.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short term investments were $52.5 million on December
31, 1995, an increase of $6.5 million from $46.0 million on June 30, 1995. This
increase was primarily attributable to cash generated from operating activities
and proceeds from the sale of the Company's land. The increase was partially
offset by usage of cash for a deposit to a foundry to obtain a commitment for
the supply of additional wafers and by repayment of a note related to a building
lease settlement. Short term investments as of December 31, 1995 included $8.8
million of NexGen Common Stock. The market value of such stock declined from
$16.3 million as of June 30, 1995. These holdings were subject to contractual
restrictions on transfer which lapsed in November; however, the Company did not
reduce its share position during the quarter.
During the first half of fiscal 1996, total liabilities decreased $3.8 million
from $20.1 million on June 30, 1995. The decrease was primarily attributable to
the repayment of an outstanding promissory note and payment of income tax
liabilities.
The Company entered into wafer capacity agreements during the quarter with
Taiwan Semiconductor Manufacturing Company ('TSMC') and Chartered Semiconductor
Manufacturing PTE LTD ('CSM'). Both agreements were entered into for the purpose
of securing additional guaranteed wafer supplies through the year 2000 and both
require the payment of cash deposits and the purchase by the Company of certain
quantities of wafers. Under the agreement with TSMC, the Company will deposit
$23.5 million with TSMC during calendar year 1996. The deposit will be applied
against the price of wafers purchased under the agreement, and is not refundable
except under certain circumstances. The agreement with CSM requires the Company
to make deposits totaling $20 million over the next two years. The deposits will
be refunded to the Company at the end of the agreement term except subject to
certain conditions, including purchase by the Company of the required quantity
of wafers. The Company expects to finance these deposits from existing cash
balances and funds generated from operations.
The Company's capital requirements consist primarily of financing working
capital items and funding operational activities. The Company has agreements
with three banking institutions for a combined total of $21 million in unsecured
lines of credit. The lines of credit will expire at various times from August
1996 through August 1997. There was no borrowing against line of credit
agreements as of December 31, 1995. The Company's line of credit agreements
contain certain covenants related to financial performance and condition, and
the ability to borrow under such lines is subject to compliance with such
covenants. On October 13, 1995, the Company filed a Registration Statement on
Form S-3 with respect to the proposed offering of 3,350,000 shares of common
stock. Subsequently, the Company decided to indefinitely postpone this offering
and has no present plan as to when it may go forward with the offering. The
Company expects that its existing cash balances, bank lines of credit and funds
generated from operations will be sufficient to meet the Company's capital and
operating requirements for the remainder of this fiscal year.
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FACTORS AFFECTING FUTURE OPERATING RESULTS
This report includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including those discussed below or in the Company's report on Form 10-K for the
fiscal year ended June 30, 1995, that could cause actual results to differ
materially from historical results or those anticipated. In this report, the
words "expect," "anticipate" and similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statement, which speak only as of the date hereof.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
As previously announced, the Company expects its revenues will decline in the
third quarter of fiscal 1996 by $2 to $3 million as compared to revenue in the
most recent quarter due to a delay in getting a product into volume production
at a third foundry. However, gross margin percentages for the next quarter is
expected to remain stable as compared to the quarter just ended. The Company's
quarterly revenues, gross margin and other operating results have been and will
continue to be affected by a wide variety of factors that could have a material
adverse effect during any particular period, including the level of orders that
are received and can be shipped in a quarter, the rescheduling or cancellation
of orders by its customers, gain or loss of any strategic relationships with
customers, availability and cost of foundry capacity and raw materials, the
Company's ability to predict product demand and manage its inventory levels,
fluctuations in manufacturing yields, the timing of qualification of new
foundries or foundry production lines, new product introductions by the
Company's competitors, the Company's ability and timing in introducing new
products and technologies, market acceptance of products of both the Company and
its customers, supply constraints and price or other fluctuations for other
components incorporated into its customers' products, such as portable display
screens and memory devices, competitive pressures on selling prices, changes in
product or customer mix, and the level of expenditures for research and
development and for selling, general and administrative functions.
The Company does not own or operate a wafer fabrication facility, and all of its
semiconductor device requirements are supplied by outside foundries. In
addition, all of the Company's semiconductor products are currently assembled
and tested by third party vendors, primarily in Asia. The Company's reliance on
subcontractors to manufacture, assemble and test its products involves
significant risks, including reduced control over delivery schedules, quality
assurance, manufacturing yields and cost and potential misappropriation of the
Company's intellectual property. Delays in delivery of the Company's products,
problems with quality or yields, cost increases and other factors beyond the
Company's control could result in the loss of customers, limitations or
reductions in the Company's revenues or other material adverse effects on the
Company's business, conditions and operating results.
In connection with the manufacture of its products, the Company expects to
obtain access to and qualify new foundries or new production lines at
established foundries that employ advance manufacturing and process
technologies, which are currently available from a limited number of foundries.
The Company expects that the majority of its products will utilize increasingly
advanced process geometries in order to achieve high performance and lower
production costs. The Company is currently qualifying a new foundry supplier and
is in the process of qualifying certain of its existing products at additional
foundry suppliers and on new semiconductor process technologies. The
qualification process can take six months or longer. The Company has in the past
experienced increased costs and delays in connection with the qualification of
new foundries or new production lines or processes at established foundries.
Failure to qualify and obtain adequate access to advanced process technologies
to supply products on a timely basis would delay product introduction and
delivery to the Company's customers. Delays, as well as cost increases or
quality and yield problems resulting from the qualification of new foundries or
new production lines or processes at established foundries, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The semiconductor industry is experiencing worldwide capacity limitations in the
production of advanced semiconductor devices, and access to wafer fabrication
capacity is difficult to secure. The Company believes that available foundry
manufacturing capacity is in particularly short supply for advanced process
geometries, and in particular 0.5 micron. As a result of this capacity shortage,
manufacturers may be able to raise prices and to impose burdensome terms and
conditions on their customers in exchange for assurances of supply allocation.
The Company has entered into agreements with two foundries
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to secure additional foundry capacity which require the Company to make deposits
in an aggregate amount of $43.5 million. The Company may also be required to
enter into additional arrangements in the future. Although the Company has
recently entered into these two foundry agreements, there is no assurance that
the Company will be able to obtain enough production capacity to meet its
demands.
A limited number of customers account for a substantial portion of the Company's
net sales. The Company expects that sales to a limited number of customers will
continue to account for a substantial portion of its net sales for the
foreseeable future. Some companies with strong presence in the desktop PC market
have recently announced lower than expected revenue results due to various
issues affecting the desktop PC market. The Company's business is primarily in
the portable computer segment of the market which does not appear to have been
similarly affected. However, in the event that one or more of the Company's
major customers were to cancel and/or substantially reschedule orders for
significant quantities of product, the Company's results of operation could be
materially adversely affected.
The Company relies on obtaining and maintaining design wins for its products
with leading personal computer manufacturers. In the event that the Company's
competitors have products, product features and performance which are perceived
as valuable by the market but are not included in the Company's products, the
Company could lose current design wins or not acquire new design wins. In
addition, other factors such as internal product development delays, aggressive
competition and intangible factors affecting customers relationships could also
adversely impact design wins. To the extent that the Company is unable to retain
existing design wins 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 on the Company's business, financial condition and results
of operations.
The Company currently places noncancelable orders to purchase its products from
independent foundries on an approximate three month rolling basis, while its
customers generally place purchase orders with the Company fewer than three
months prior to delivery. Customers may cancel their orders without significant
penalty. Consequently, if anticipated sales and shipments in any quarter are
canceled or do not occur as quickly as expected, expense and inventory levels
could be disproportionately high and revenues could be reduced, and the
Company's business, financial condition and results of operations could be
materially adversely affected.
In recent periods, due to various market, supply, economic and competitive
factors, there has been a favorable pricing environment for PC components
including the Company's graphics products; however, the PC semiconductor market
is generally characterized by price erosion and there can be no assurance that
the Company will not experience increased price competition, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company expects its competitors to 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 margin percentages achieved in recent
periods may not be sustainable.
The largest portion of the Company's sales is comprised of portable graphics
accelerators. The Company expects that the majority of it revenues for at least
the next two quarters will continue to be from sales of those products. While
the market for PCs in general and portable computers in particular has recently
experienced substantial growth, the overall industry has historically been
cyclical and seasonal, and there can be no assurance that growth rates
experienced in prior periods will continue in the future.
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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
The Annual Meeting of the Stockholders of Chips and
Technologies, Inc. was held on November 9, 1995 in San
Jose, California. 17,539,200 shares of common stock or
86.5% of the total outstanding shares as of the record
date were present or represented by proxies at the
meeting. The matters voted upon at the meeting and the
results of those votes were as follows:
1. Election of one class I director, Gene P. Carter. Mr. Carter received
16,900,140 affirmative votes and 639,060 votes were withheld.
2. Approval of an increase to the share reserve under the
Amended and Restated 1994 Stock Option Plan by 1,000,000
shares. The proposal received 7,336,209 affirmative
votes, 3,530,041 negative votes and 322,111 abstentions.
The brokers' non-vote totaled 6,350,839 shares.
3. Approval of an increase to the share reserve under the
First Amended 1988 Nonqualified Stock Option Plan for
Outside Directors by 200,000 shares. The proposal
received 7,903,121 affirmative votes, 3,374,811 negative
votes and 329,848 abstentions. The brokers' non-vote
totaled 5,931,420 shares.
4. Appointment of Price Waterhouse LLP as the independent
accountants of the Company for the fiscal year ending
June 30, 1996. The proposal received 17,347,417
affirmative votes, 48,881 negative votes and 142,902
abstentions.
Item 5. Other Information Not applicable
Item 6 Exhibits 14
The exhibits listed in the
Exhibit Index set forth on page 14 of this report are
incorporated herein by reference.
Reports on Form 8-K Not applicable
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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 Officer
Date: February 12, 1996
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INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
3.1 (1) Amended Certificate of Incorporation of Chips and Technologies, Inc.
3.2 (2) Restated By-laws of Chips and Technologies, Inc.
4.1 (3) Stockholders' Rights Agreement dated August 23, 1989.
10.1 * First Amended 1988 Nonqualified Stock Option Plan for Outside Directors dated October 1,
1993 (as amended through November 9, 1995) .
10.2 (1) * Form of Indemnity Agreement between the Company and each of its directors and executive
officers.
10.3 (4) 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.
10.4 (4) * Promissory note to the Company from Keith Angelo dated August 1, 1994.
10.5 (4) * Independent Contractor Services Agreement between the Company and Henri Jarrat dated
August 11, 1994.
10.6 * Amended and restated 1994 stock option plan dated November 10, 1994 (as amended through
November 9, 1995).
10.7 (5) * Executive bonus plan dated September 21, 1995
10.8 Option Agreement between the Company and Taiwan Semiconductor Manufacturing Company dated
November 6, 1995. (**)
10.9 Deposit Agreement between the Company and Chartered Semiconductor Manufacturing PTE LTD
dated November 16, 1995. (**)
11.1 Statement re: Calculation of Earnings per Share.
27.0 Financial Data Schedule for the quarter ended December 31, 1995
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1990.
(2) Incorporated by reference to Registration Statement No. 33-8005 effective October 8, 1986.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1989.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for the period ended June 30, 1994.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1995.
* Denotes management contracts or compensatory plans or arrangements covering executive officers or directors of Chips and
Technologies, Inc.
** Confidential treatment has been requested for a portion of this document.
Page 14