CPS Technologies Corporation Announces 2010 Results

NORTON, MA -- (Marketwire) -- 03/23/11 -- CPS Technologies Corporation (OTCBB: CPSH) today announced revenue of $21 million and net income of $710 thousand or $0.06 per basic and diluted share for the fiscal year ended December 25, 2010. This compares with revenue of $13 million and net income of $562 million or $0.04 per basic and diluted share for the fiscal year ended December 26, 2009.

Revenue in all three of the Company's major product families grew substantially, offset partially by lower revenue from the Company's Cooperative Agreement with the Army for armor development. Year-to-year, revenue from baseplates used in motor controllers grew 172% as a result of underlying market growth, CPS market share gains, and the introduction of new products, particularly for hybrid automobiles. The Company's baseplates are a critical component in motor controllers used in electric trains, subway cars, wind turbines and hybrid and electric cars. Revenue from heat spreaders and lids used in internet routers and switches grew 80%, driven by growth in new products. Revenue from hermetic metal packages used in communications and avionics grew 41% driven by, among other things, increased demand for the Company's AlSiC hermetic packages.

Revenue from the Company's Cooperative Agreement with the US Army for armor development declined 11% due to timing variations inherent in technology development programs. Technical progress in 2010 under the Agreement was excellent. In addition to our work with the Army, several non-governmental potential customers are now evaluating prototypes of CPS' HybridTech™ Armor. Management believes armor represents a very significant growth opportunity for the Company.

Q4 2010 revenue grew 39% year-to-year, but declined 20% on a sequential basis from Q3 2010. This sequential decline is a result of a precipitous 50% decline in revenue in Q4 for heat spreaders and lids used in internet switches and routers. Management believes this decline is the result of inventory adjustments by systems OEMs and ongoing uncertainty in the downstream supply chain rather than a decline in underlying demand. Q3 2010 demand for heat spreaders and lids exceeded customer forecasts, Q4 2010 demand was below customer forecasts. Looking forward, the Japanese earthquake and tsunami may add further volatility in this segment as many of our customers source other components needed for these switches and routers from Japan.