-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SBlXqT3Ify2oTI/rdgkabV37je9xIq5/N05O0KO9e9lQkccWCWRIlffJzCdckc3u 3geMYL324vHcfN7xV6PETw== 0000093384-05-000017.txt : 20050713 0000093384-05-000017.hdr.sgml : 20050713 20050615175114 ACCESSION NUMBER: 0000093384-05-000017 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050330 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050615 DATE AS OF CHANGE: 20050713 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD MICROSYSTEMS CORP CENTRAL INDEX KEY: 0000093384 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 112234952 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-07422 FILM NUMBER: 05898501 BUSINESS ADDRESS: STREET 1: 80 ARKAY DRIVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 6314342904 MAIL ADDRESS: STREET 1: 80 ARKAY DR CITY: HAUPPAUGE STATE: NY ZIP: 11788 8-K/A 1 form_8k-a.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------------------ FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 30, 2005 ------------------------------------------------ STANDARD MICROSYSTEMS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 0-7422 11-2234952 (State or other jurisdiction of (Commission File (I.R.S. Employer incorporation) Number) Identification No.) 80 Arkay Drive, Hauppauge, New York 11788 (Address of principal executive offices) (Zip Code) (631) 435-6000 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant, Standard Microsystems Corporation, a Delaware corporation, filed a Current Report on Form 8-K on April 4, 2005, describing its acquisition of OASIS SiliconSystems Holding AG, a German corporation. This Current Report on Form 8-K/A amends the previously filed Form 8-K to include the financial information required by Item 9.01 of Form 8-K. This Current Report on Form 8-K/A contains forward-looking statements that involve risks and uncertainties relating to this transaction and actual results and developments may differ materially from those described in this amended Current Report. For more information about the Company and risks relating to investing in the Company, please refer to information contained within the Company's annual report on Form 10-K for the fiscal year ended February 28, 2005. ------------------------------------------------ Item 2.01. Completion of Acquisition or Disposition of Assets On March 30, 2005, Standard Microsystems Corporation (the Company or SMSC) announced the completion that day of its acquisition of OASIS SiliconSystems Holding AG (OASIS). Based in Karlsruhe, Germany, OASIS is engaged in the development and marketing of integrated circuits that enable networking of multimedia devices for automotive infotainment applications. SMSC acquired all of OASIS' outstanding capital stock in exchange for aggregate consideration of $118.7 million, including approximately 2.1 million shares of SMSC common stock value, for accounting purposes, at $35.8 million, $79.5 million of cash, and approximately $3.4 million of direct acquisition costs, including legal, banking, accounting and valuation fees. The tangible assets of OASIS at March 30, 2005 included approximately $22.3 million of cash and cash equivalents, resulting in a net cash outlay of approximately $60.6 million. SMSC's existing cash balances were the source of the cash used in the transaction. The value of the SMSC common stock was determined using the stock's market value for a reasonable period before and after the date the terms of the acquisition were announced. Under the terms of the Share Purchase Agreement, approximately 1.2 million of the shares and $1.8 million of the cash issued to the former shareholders of OASIS is being be held in an escrow account as security for certain indemnity obligations of OASIS's former shareholders. Up to $20.0 million of additional consideration, payable in cash and SMSC common stock, may be issued to OASIS's former shareholders during fiscal 2007 upon satisfaction of certain future performance goals. The amount of consideration was determined by arms length negotiations. There is no material relationship between SMSC and the former OASIS shareholders other than in respect of the transaction. The representations and warranties of each party set forth in the Share Purchase Agreement have been made solely for the benefit of the other parties to the Share Purchase Agreement and such representations and warranties should not be relied on by any other person. In addition, such representations and warranties have been qualified by disclosures made to the other parties in connection with the Share Purchase Agreement, and were made only as of the date of the Share Purchase Agreement or such other date as is specified in the Share Purchase Agreement. A copy of the Share Purchase Agreement dated as of March 30, 2005 by and among SMSC, SMSC GmbH, a wholly owned subsidiary of SMSC, and the shareholders of OASIS, was attached as Exhibit 2.1 to the Current Report on Form 8-K filed on April 4, 2005. The foregoing description is qualified in its entirety by reference to the Share Purchase Agreement previously filed as an Exhibit. ------------------------------------------------ Item 9.01 Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. The audited financial statements of OASIS SiliconSystems Holding AG, as of December 31, 2004 and 2003 and for the years then ended, together with the accompanying Independent Auditors' Report, are set forth in Exhibit 99.1. (b) Unaudited Pro Forma Financial Information The unaudited pro forma condensed combined financial information for SMSC and OASIS, for the periods reflected therein, is set forth in Exhibit 99.2. (c) Exhibits 2.1 Stock Purchase Agreement (*) 23.1 Consent of Independent Auditors 99.1 Audited financial statements of OASIS SiliconSystems Holding AG, as of and for the years ended December 31, 2004 and 2003 99.2 Pro Forma Condensed Combining Financial Information for SMSC and OASIS 99.3 Press Release date March 30, 2005 (*) (*) Exhibit is incorporated by reference to the Company's Current Report on Form 8-K filed on April 4, 2005. ------------------------------------------------ SIGNATURE 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 hereunto duly authorized. STANDARD MICROSYSTEMS CORPORATION (Registrant) Date: June 15, 2005 By: /s/ WILLIAM D. SHOVERS ------------------------------ William D. Shovers Senior Vice President and Chief Financial Officer (Principal Financial Officer) Exhibit Index Exhibit No. Description - ----------- -------------- 23.1 Consent of Independent Auditors 99.1 Audited financial statements of OASIS SiliconSytems Holding AG, as of and for the years ended December 31, 2004 and 2003 99.2 Pro Forma Condensed Combined Financial Information for SMSC and OASIS EX-23.1 2 exhibit-23_1.txt Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statements on Form S-3 (No. 333 - 81067) and Form S-8 (No. 2 - 78324, No. 33 - 69224, No. 33 - 83400, No. 333 - 09271, No. 333 - 64043, No. 333 - 84237, No. 333 - 47794, No. 333 - 66138, and No. 333-108842) of Standard Microsystems Corporation, of our report dated 18 March, 2005, relating to the consolidated financial statements of OASIS SiliconSystems Holding AG and subsidiaries as of and for the years ended 31 December, 2004 and 2003, appearing in this Form 8-K/A of Standard Microsystems Corporation. /s/ Deloitte & Touche GmbH Wirtschaftsprufungsgesellschaft Stuttgart, 15 June 2005 EX-99.1 3 exhibit-99_1.txt Exhibit 99.1 TABLE OF CONTENTS INDEPENDENT AUDITORS` OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN GERMANY OF OASIS SILICONSYSTEMS HOLDING AKTIENGESELLSCHAFT FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003 GERMAN STATUTORY CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003 o Consolidated balance sheet o Consolidated profit and loss statement o Consolidated cash flow statement o Notes to the consolidated financial statements INDEPENDENT AUDITORS` OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN GERMANY OF OASIS SILICONSYSTEMS HOLDING AKTIENGESELLSCHAFT FOR THE YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003 We have audited the accompanying consolidated balance sheet of OASIS SiliconSystems Holding AG and subsidiaries as of 31 December 2004 and 2003, and the related consolidated statements of income, stockholders` equity and consolidated cash flows for each of the two years in the period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Germany and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company`s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of OASIS SiliconSystems Holding AG and its subsidiaries as of 31 December 2004 and 2003, and the consolidated results of their operations and their consolidated cash flows for each of the two years ended in conformity with accounting principles generally accepted in Germany. Application of accounting principles generally accepted in the United States of America would have affected stockholders` equity as of December 31, 2004 and 2003 and net income for each of the two years in the period ended December 31, 2004 to the extent summarized by the Company in Note D. to the Consolidated Financial Statements. Stuttgart, 18 March 2005 Deloitte & Touche GmbH Wirtschaftsprufungsgesellschaft Signed: Dette Signed: ppa. Klingor Wirtschaftsprufer Wirtschaftsprufer [German Public Auditor] [German Public Auditor] OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe Consolidated Balance Sheet as at 31 December 2004
A s s e t s =============================================================================================== 31 December 2004 Prior year EUR '000 EUR '000 EUR'000 ------------------------------- ------------ A. Fixed assets I. Intangible assets Concessions, industrial and similar rights and assets 709 747 ------------ II. Tangible assets 1. Buildings including buildings on third-party land 99 30 2. Technical equipment and machines 384 422 3. Other equipment, factory and office equipment 1,524 1,128 -------------- ------------ 2,007 1,580 ------------- ------------ 2,716 2,327 ------------- ------------ B. Current assets I. Inventories 1. Work in process 3,723 4,561 2. Finished goods and merchandise 3,567 1,600 -------------- ------------ 7,290 6,161 II. Receivables and other assets 1. Trade receivables 4,222 3,944 2. Other assets 249 275 -------------- ------------ 4,471 4,219 III. Securities Other short term investments 16,295 12,003 IV. Cash in hand, bank balances 2,391 4,806 ------------- ------------ 30,447 27,189 ------------- ------------ C. Prepaid expenses 220 152 ============= ============ 33,383 29,668 ------------- ------------
S h a r e h o l d e r s' E q u i t y a n d L i a b i l i t i e s ================================================================================ 31 December 2004 Prior year EUR '000 EUR '000 EUR'000 ------------------------------ ------------ A. Equity I. Subscribed capital 10,000 10,000 II. Consolidated capital reserve 12,355 12,355 III. Consolidated retained profits brought forward 1,316 1,056 IV. Consolidated net income for the year 1,553 259 V. Difference due to foreign currency translation -267 -203 -------------- ------------ 24,957 23,467 ------------ B. Accruals 1. Tax accrual 624 94 2. Other accruals 3,600 2,380 -------------- ------------ 4,224 2,474 C. Liabilities 1. Liabilities to banks 1,326 112 2. Trade payables 1,910 3,130 3. Other liabilities 964 485 of which taxes: EUR 459 thousand (prior year: EUR 126 thousand) of which relating to social security and similar obligations: EUR 120 thousand (prior year: EUR 88 thousand) -------------- ------------ 4,200 3,727 ------------ D. Deferred income 2 0 -------------- ------------ 33,383 29,668 -------------- ------------ OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe Consolidated Profit and Loss Account for the Business Year from 1 January to 31 December 2004
from 1 Jan. to 31 Dec. 2004 Prior year EUR '000 EUR'000 --------------------------- ----------- 1. Sales 40,189 36,698 2. Decrease (prior year: increase) in finished goods inventories and work in process -838 1,667 3. Other operating income 1,114 1,170 --------- --------- 40,465 39,535 4. Cost of materials a) Cost of raw materials, consumables and supplies and of purchased merchandise 16,694 20,039 b) Cost of purchased services 3,063 1,336 --------- --------- 19,757 21,375 5. Personnel expenses a) Wages and salaries 9,773 9,022 b) Social security and pension expenses 1,928 1,824 --------- --------- 11,701 10,846 6. Depreciation and amortization on intangible fixed assets and tangible assets 1,092 1,050 7. Other operating expenses 5,757 6,039 8. Other interest and similar income 333 248 9. Interest and similar expenses 16 16 --------- --------- 10. Result of ordinary activities 2,475 457 --------- --------- 11. Taxes on income 760 179 12. Other taxes 162 19 --------- --------- 13. Consolidated net income for the year 1,553 259 ========= =========
Statement of cash flows under German GAAP 2004 2003 EUR'000 EUR'000 ----------- ----------- Consolidated net income for the year 1,553 259 Depreciation on fixed assets 1,092 1,050 ----------- ----------- 2,645 1,309 Increase/decrease (-) in short and medium-term accruals 1,750 992 Increase (-)/decrease in inventories, trade receivables and other assets including changes in fixed assets due to disposals and effects caused by foreign currency -1,311 3,866 Increase/decrease (-) in trade payables and other liabilities excluding liabilities to banks payable on demand, and including the difference between equity due to foreign currency translation -914 -2,727 ----------- ----------- Cash flow from operating activities 2,170 3,440 ----------- ----------- Cash outflow (-) from capital expenditure on property, plant and equipment -1,287 -797 Cash outflow (-) from capital investments in intangible fixed assets -332 -378 ----------- ----------- Cash flow from investing activities -1,619 -1,175 ----------- ----------- Change in cash and cash equivalents 551 2,265 Opening balance of cash and cash equivalents 16,809 14,544 ----------- ----------- Closing balance of cash and cash equivalents 17,360 16,809 =========== =========== Analysis of cash and cash equivalents December 31, December 31, 2004 2003 EUR'000 EUR'000 ------------- ------------- Other short-term investments (shares in investment funds) 16,295 12,003 Liquid funds 2,391 4,806 Liabilities to banks payable on demand (-) -1,326 0 ------------- ------------- 17,360 16,809 ============= ============= OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe Notes to the Consolidated Financial Statements as at 31 December 2004 A. GENERAL PRINCIPLES The consolidated financial statements are prepared in accordance with the accounting provisions in the German Commercial Code. The regulations under German Corporation Law are complied with, which are a supplement to the mentioned provisions. B. ACCOUNTING AND VALUATION METHODS The prior year's accounting and valuation methods remained unchanged. The type of expenditure format is applied to the income statement. Assets and liabilities disclosed in the consolidated financial statements are consistently accounted for and valued by taking into consideration applicable provisions under commercial law. The financial statements of included subsidiaries are based on Commercial Balance Sheets I prepared under German national law, and are then adjusted to Commercial Balance Sheets II by means of adjusting entries in the account books. The method of translating balance sheets and statements of profit and loss denominated in foreign currency of group companies is to translate items of the balance sheet at the rates in effect at the balance sheet date, and to translate items of the statement of profit and loss on the basis of average market prices. The conversion rates are as follows:
Rate in effect at the balance sheet date Average market prices Currency 31 December 2004 2004 - -------- ---------------------------------------- ----------------------------------- USD USD 1.00000 EUR 0.73314 USD 1,00000 EUR 0.79790 SEK SEK 1.00000 EUR 0.11231 SEK 1,00000 EUR 0.10892 JPY EUR 1.00000 JPY 132.40000 EUR 1,00000 JPY 132.81512
Items are accounted for and valued by taking into consideration the consolidation principles as defined in ss.ss. 300 et seq. of the Commercial Code. Tangible assets and intangible assets are disclosed at acquisition cost less scheduled straight-line depreciation over their anticipated useful lives. Inventories are disclosed at acquisition and production cost, or recorded at their latest value where this is lower. Receivables are disclosed at their nominal value. Receivables denominated in foreign currency are disclosed at the exchange rate in effect at the balance sheet date, insofar as it results in lower valuations under ss. 253 (3) of the Commercial Code (HGB). Other short-term investments (shares in investment funds) are valued under ss. 253 (1) of the Commercial Code (HGB) at acquisition cost, and the Company sees no reason to depreciate under ss. 253 (3) of the Commercial Code (HGB) as at the balance sheet date. The mentioned shares including retained claims for gains are disclosed under other short-term investments. Other accruals were set aside for contingent liabilities. They cover all identifiable risks and commitments, such as among others outstanding invoices, warranties, overdue vacation commitments / year-end closing and audit expenses. Liabilities are disclosed at the amounts at which they will be repaid. Liabilities denominated in foreign currency are disclosed at the exchange rate in effect at the balance sheet date, insofar as it results in higher amounts to be repaid (ss. 253 (1) of the Commercial Code (HGB)). Entities Included in the Consolidation OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe, is directly or indirectly entitled to 100 % of voting rights with respect to the following companies. These subsidiaries are included in the consolidated financial statements by way of full consolidation: Companies Share in capital - % -------------------------- Oasis SiliconSystems Aktiengesellschaft, Karlsruhe 54.88 directly 45.12 indirectly -------------------------- 100.0 SiliconSystems GmbH Multimedia Engineering, Karlsruhe 100.0 OASIS SiliconSystems AB, Gothenburg, Sweden 100.0 OASIS SiliconSystems Inc., Austin/Texas, USA 100.0 OASIS SiliconSystems KK, Yokohama, Japan 100.0 Consolidated Balance Sheet Capital consolidation is based on the book-value method according to ss. 301 of the Commercial Code (HGB). Acquisition cost of subsidiaries was charged against prorated equity at the time of each first consolidation. The treatment of foreign-currency differences arising from the consolidation of intra-group balances and other offsetting differences is such that the statement of profit and loss is not affected. Inventories and tangible assets accounted for by the consolidated companies as at the balance sheet date of the consolidated financial statements, have been written down to group acquisition or production cost to the extent that these inventories and tangible assets resulted from goods and services provided by other companies included in the group. The cost of acquisition or production incurred by the company providing goods or services, is stated as group acquisition or production cost. Inter-company profits to be eliminated, do not exist in the year 2004. The Movements in Fixed Assets are presented on the following page. OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe Movements in Consolidated Fixed Assets in the Business Year 2004
Gross book values ---------------------------------------------------------------------------- Differences due to Balance on foreign currency Additions Disposals Balance on 1 Jan. 2004 translation 31 Dec. 2004 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 ---------------------------------------------------------------------------- I. Intangible assets Concessions, industrial and similar rights and assets 1,984 -97 331 21 2,199 ------- ------- --------- ------- ------- II. Tangible assets 1. Buildings including buildings on third-party land 31 -1 69 0 99 2. Technical equipment and machines 1,051 -45 88 0 1,094 3. Other equipment, factory and office equipment 2,167 -67 1,130 218 3,012 ------- ------- --------- ------- ------- 3,249 -112 1,287 218 4,205 ------- ------- --------- ------- 5,233 -209 1,619 238 6,404 ======= ======= ========= ======= =======
Accumulated depreciation/amortization Net book values ----------------------------------------------------------------------------- ------------------------------ Differences due Balance on to foreign currency Additions Disposals Balance on Balance on Prior year 1 Jan. 2004 translation 31 Dec. 2004 31 Dec. 2004 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 ------------ ------------------- --------- --------- ------------ ------------ ------------- I. Intangible assets Concessions, industrial and similar rights and assets 1,237 -67 321 0 1,490 709 747 ------- ------- ------- ------- ------- ------- ------- II. Tangible assets 1. Buildings including buildings on third-party land 1 0 3 3 0 99 30 2. Technical equipment and machines 629 -38 125 6 710 384 422 3. Other equipment, factory and office equipment 1,039 -30 644 165 1,488 1,524 1,128 ------- ------- ------- ------- ------- ------- ------- 1,669 -67 771 174 2,199 2,007 1,580 ------- ------- ------- ------- ------- ------- ------- 2,906 -135 1,092 175 3,689 2,716 2,327 ======= ======= ======= ======= ======= ======= =======
As in the prior year, receivables do not exist whose residual terms exceed 1 year. Liabilities which become due for payment in less than one year amount to EUR 4,200 thousand (prior year: EUR 3,727 thousand). Liabilities do not exist as in the prior year whose residual terms exceed 5 years. Items for the purpose of cutting off deferred taxes according to ss. 306 of the Commercial Code (HGB) are not to be set aside. Development of Consolidated Equity As at Change in As at January 1 fiscal year December 31 EUR'000 EUR'000 EUR'000 ----------- ------------- ------------- Fiscal year 2003 Subscribed capital 10,000 10,000 Consolidated capital reserve 12,355 12,355 Consolidated retained profits brought forward 1,056 1,056 Consolidated net income for the year 259 259 Difference due to foreign currency translation -109 -94 -203 ----------- ------------- ------------- Total consolidated equity 23,302 165 23,467 Fiscal year 2004 Subscribed capital 10,000 10,000 Consolidated capital reserve 12,355 12,355 Consolidated retained profits brought forward 1,315 1 1,316 Consolidated net income for the year 1,553 1,553 Difference due to foreign currency translation -203 -64 -267 ----------- ------------- ------------- Total consolidated equity 23,467 1,490 24,957 =========== ============= ============= The nominal capital of OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe, is divided into 10,000,000 individual share certificates made out to bearer. Capital Reserve/Difference Arising from Capital Consolidation The difference arising from capital consolidation and the capital reserve were offset according to ss. 309 (1) Sentence 3 of the Commercial Code (HGB), and developed as follows: EUR'000 --------------- Goodwill on 31 December 2000 4,145 Goodwill charged against capital reserve according to ss. 309 (1) Sentence 3 of the Commercial Code (HGB) -4,145 --------------- Goodwill on 31 December 2001/31 December 2002/ 31 December 2003/ 31 December 2004 0 =============== Other Financial Commitments Other financial commitments of EUR 2,792 thousand relate to agreements to rent buildings, and extend to the year 2009. Contingent Liabilities The following guarantee was given as at 31 December 2004: Type: Credit by way of a guarantee given by a bank that rent will be paid Currency/amount: EUR 862 thousand (USD 1,175 thousand) Expiry on: 30 November 2008 Securities classified into current assets are pledged as security for credit of EUR 862 thousand (USD 1,175 thousand) by way of a guarantee given by a bank that rent will be paid, and for a credit line of EUR 1,466 thousand (the Company had availed itself of EUR 1,265 thousand thereof as at the balance sheet date). Consolidated Statement of Profit and Loss Sales are classified into geographical regions as follows: 2004 Prior year EUR'000 EUR'000 ----------------- ----------------- Domestic 25,798 26,512 Foreign 14,392 10,186 ----------------- ----------------- 40,190 36,698 ================= ================= Sales revenues focus on the sale of complex integrated circuits in the multimedia and network area, as well as development, analysis and demonstration tools. C. OTHER DISCLOSURES The average number of staff employed by companies whose financial statements were included in the consolidated financial statements, is 151 (prior year: 139). Supervisory Board The following individuals are members of the supervisory board of OASIS SiliconSystems Holding Aktiengesellschaft as at 31 December 2004: o Dr. Hans-Gerd Hoptner (Chairman), Dipl.-Ing., Oberwinter/Remagen o Sabine Ahlers (Vice-Chairman), board of directors of Deutsche Effecten und Wechsel-Beteiligungsgesellschaft AG, Jena o Dr. Rudolf Simon, Dipl.-Ing., Korntal The emoluments paid to the members of the supervisory board in the 2004 business year amount to EUR 23 thousand (prior year: EUR 23 thousand). Board of Directors The following individuals were members of the board of directors in the 2004 business year of OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe: o Dipl.-Ing. (FH) Herbert Hetzel, Schweigen o Dr. Manfred Muller, Golmsdorf o Dave Knapp, Austin/Texas, USA o Rolf Jurgen Brub, Grobenzell (since 1 February 2004) The above individuals are members of the board of directors by profession. Members of the board of directors of the parent company were paid in 2004 a remuneration of EUR 687 thousand (prior year: EUR 509 thousand) for the work they did for the parent company and its subsidiaries. Conditional Capital An extraordinary general meeting of shareholders of OASIS SiliconSystem Holding Aktiengesellschaft, Karlsruhe, passed the following resolution on 26 June 2001: The Company's nominal capital is conditionally increased by up to EUR 1,000 thousand by way of issuing up to 1,000,000 individual no-par-value share certificates payable to bearer, whose calculated share in the nominal capital is EUR 1.00 per share certificate. The purpose of the conditional capital increase is to grant once or more than once according to ss. 192 (2) No. 3 of the German Corporation Law (AktG) subscription rights to members of the Company's board of directors, managing directors of enterprises affiliated with the Company within the meaning of ss. 15 of the German Corporation Law (AktG), and authorized staff of the Company and its affiliated enterprises. The board of directors is authorized to grant subscription rights to subscribe for individual share certificates with the approval of the supervisory board. Subscription rights are supposed to be granted as follows: o up to 800,000 subscription rights granted to employees of the Company and its affiliated enterprises o up to 100,000 subscription rights granted to managing directors of the Company and its affiliated enterprises o up to 100,000 subscription rights granted to members of the board of directors of the Company. As at the balance sheet date, 523,998 subscription rights had been granted to employees of the Company and its affiliated enterprises.
Investment Holdings Companies Participation Nominal capital/ Results for the quota Share capital Equity year 2004 (Name/registered office) per cent EUR EUR EUR - ------------------------------------ --------------- ------------------- ------------- ---------------- 1. Domestic a. Oasis Silicon Systems AG, Karlsruhe 54.88 56,653.70 4,605,929.44 1,019,826.98 Allocation under ss. 16 (4) of German Corporation Law (AktG) 45.12 b. Silicon Systems GmbH Multimedia Engineering, Karlsruhe 100.00 25,564.59 206,538.93 88,722.52 2. Foreign a. OASIS SiliconSystems Inc. Austin/Texas (USA) 100.00 793.02 769,377.66 418,292.02 b. OASIS SiliconSystems AB, Gothenburg, Sweden 100.00 109,958.99 111,739.87 2,865.50 c. OASIS SiliconSystems KK, Yokohama, Japan 100.00 74,100.00 94,743.75 14,337.71 Shares in capital denominated in foreign currency were translated at the rates in effect at respective balance sheet dates.
Disclosures under ss. 158 of German Corporation Law (AktG) EUR '000 ------------- Consolidated net income for the year according to consolidated statement of profit and loss 1,553 Prior year's consolidated retained profits brought forward 1,315 ------------- Consolidated retained profits brought forward by the end of the business year 2,868 ============= Karlsruhe, 17 March 2005 OASIS SiliconSystems Holding Aktiengesellschaft The Board of Directors - ----------------- -------------------- -------------- ---------------------- (Herbert Hetzel) (Dr. Manfred Muller) (Dave Knapp) (Rolf Jurgen Brub) D. ADDITIONAL NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS WITH RESPECT TO U.S. GAAP REQUIREMENTS 1. Accounting principles used to prepare the financial statements The consolidated financial statements of OASIS SiliconSystems Holding AG included above were prepared in accordance with the accounting and valuation principles of the German Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz) - hereafter also referred to as German GAAP. Reconciliation to net income and shareholder's equity of the differences to U.S. GAAP is described in the following paragraphs. 2. Material deviations in the principles, practices and methods used under German GAAP and methods generally accepted in the United States of America with respect to the consolidated balance sheets of OASIS SiliconSystems Holding AG as of December 31, 2004 and 2003 The balance sheet line "Other short-term investments" (shares in investment funds) amounting to EUR 16,295 thousand as at December 31, 2004 and EUR 12,003 thousand as at December 31, 2003 under German GAAP represents cash equivalents under U.S. GAAP because of its short maturity date. Thereof EUR 862 thousand as at December 31, 2004 and EUR 1,150 thousand as at December 31, 2003 are pledged funds and represent restricted cash under U.S. GAAP. The presentation of the other balance sheet line items is not materially different in comparison to balance sheet line items presented under U.S. GAAP. The amounts from reconciling items between German GAAP and U.S. GAAP with regard to balance sheet line items presented in the German GAAP balance sheets in comparison to balance sheet line items presented under U.S. GAAP are shown in the reconciliation of Stockholders` Equity to U.S. GAAP. The following is a summary of the significant adjustments to net income and stockholders` equity that would be required if U.S. GAAP had been applied rather than German GAAP. 3. Reconciliation of net income to U.S. GAAP 2004 in 2003 in Reconciliation of net income to U.S. GAAP Footnote EUR'000 EUR'000 - -------------------------------------------------------------------------------- Net income as reported in the consolidated financial statements according to German GAAP 1,553 259 --------------------- Items having the effect of increasing reported income according to US GAAP - reduced cost of materials (cost of goods sold) due to overhead cost allocation in inventory valuation a) 72 32 - reduction in trade liabilities due to foreign currency valuation b) 34 3 - increase in trade receivables due to reversal of general reserve c) 39 0 Items having the effect of decreasing reported income according to US GAAP - deferred income taxes on items discussed above d) -55 -13 ---------------------------- Net income in consolidated financial statements according to U.S. GAAP 1,643 281 ---------------------------- 4. Reconciliation of Stockholders` Equity to U.S. GAAP as of December 31, 2003 and 2004 Reconciliation of Stockholders` Equity to U.S. GAAP for 2003 Footnote EUR'000 - -------------------------------------------------------------------------------- Stockholders` Equity as reported in the consolidated balance sheet under German GAAP as at January 1, 2003 23,302 Consolidated net income under German GAAP for the year 2003 259 Change in difference arising from 2003 currency translation (German GAAP) -94 ------- Stockholders` Equity as reported in the consolidated balance sheet under German GAAP as at December 31, 2003 23,467 ------- Overhead cost allocation in inventory valuation a) 299 Reduction in trade liabilities due to foreign currency b) 3 valuation Deferred income taxes -115 ------- Stockholders` Equity in accordance with U.S. GAAP as at December 31, 2003 23,654 ------- Reconciliation of Stockholders` Equity to U.S. GAAP for 2004 Footnote EUR'000 - -------------------------------------------------------------------------------- Stockholders` Equity as reported in the consolidated balance sheet under German GAAP as at January 1, 2004 23,467 Consolidated net income under German GAAP for the year 2004 1,553 Change in difference arising from 2004 currency translation (German GAAP) -63 ------- Stockholders` Equity as reported in the consolidated balance sheet under German GAAP as at December 31, 2004 24,957 ------- Overhead cost allocation in inventory valuation a) 371 General reserve on trade receivables c) 39 Reduction in trade liabilities due to foreign currency valuation b) 37 Deferred income taxes d) -170 ------- Stockholders` Equity in accordance with U.S. GAAP as at December 31, 2004 25,234 ------- 5. Footnotes to net income and stockholders` equity reconciliation a) Inventory valuation: Under German GAAP overhead costs are directly recorded as expenses. For U.S. GAAP purposes overhead costs are capitalized to inventories. As a result a U.S. GAAP adjustment is recorded which leads to a higher value of inventories. b) Valuation of trade liabilities: Under German GAAP trade liabilities are valuated with the exchange rate effective at transaction date in case that rate leads to a higher valuation of the liabilities. For U.S. GAAP purposes trade liabilities not denominated in EUR are valuated with the exchange rate effective at balance sheet closing date. As a result a U.S. GAAP adjustment is recorded which leads to a higher valuation of trade liabilities. c) Valuation of trade receivables: Under German GAAP a general reserve on trade receivables is recorded. For U.S. GAAP purposes a general reserve is generally disallowed. As a result a U.S. GAAP adjustment is recorded which leads to a higher valuation of trade receivables. d) Deferred income taxes: On the reconciling items for U.S. GAAP described under footnotes a) to c) deferred income taxes need to be applied for due to reversal effects in future periods. 6. Statement of cash flows prepared in accordance with International Accounting Standard No. 7 as amended in October 1992 2004 2003 EUR'000 EUR'000 ---------- ---------- Consolidated net income for the year 1,553 259 Depreciation on fixed assets 1,092 1,050 ---------- ---------- 2,645 1,309 Increase/decrease (-) in short and medium-term accruals 1,750 992 Increase (-)/decrease in inventories, trade receivables and other assets including changes in fixed assets due to disposals and effects caused by foreign currency -1,311 3,866 Increase/decrease (-) in trade payables and other liabilities excluding liabilities to banks payable on demand, and including the difference between equity due to foreign currency translation -914 -2,727 ---------- ---------- Cash flow from operating activities 2,170 3,440 ---------- ---------- Cash outflow (-) from capital expenditure on property, plant and equipment -1,287 -797 Cash outflow (-) from capital investments in intangible fixed assets -332 -378 ---------- ---------- Cash flow from investing activities -1,619 -1,175 ---------- ---------- Change in cash and cash equivalents 551 2,265 Opening balance of cash and cash equivalents 16,809 14,544 ---------- ---------- Closing balance of cash and cash equivalents 17,360 16,809 ========== ========== Analysis of cash and cash equivalents December December 31, 2004 31, 2003 EUR'000 EUR'000 ---------- ---------- Other short-term investments (shares in investment funds) 16,295 12,003 Liquid funds 2,391 4,806 Liabilities to banks payable on demand (-) -1,326 0 ---------- ---------- 17,360 16,809 ========== ========== EX-99.2 4 exhibit-99_2.txt EXHIBIT 99.2 Pro Forma Condensed Combined Financial Information for Standard Microsystems Corporation and Subsidiaries (SMSC) and OASIS SiliconSystems Holding AG (OASIS) Index - Unaudited Pro Forma Condensed Combined Financial Information - -------------------------------------------------------------------- Basis of Presentation Unaudited Pro Forma Condensed Combined Balance Sheet as of February 28, 2005 Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended February 28, 2005 Notes to Unaudited Pro Forma Condensed Combined Financial Information Basis of Presentation The unaudited pro forma condensed combined financial information is based on the assumptions set forth in the notes to such information. The unaudited pro forma adjustments made in the compilation of the unaudited pro forma financial information are based upon available information and assumptions that the Company considers to be reasonable, and have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission. The unaudited pro forma condensed combined financial information does not purport to be indicative of the results of operations for future periods or the combined financial position or the operating results that would have occurred had the transaction occurred on the dates assumed. The actual operating results for OASIS have been consolidated with the Company's operating results for all periods subsequent to the acquisition date of March 30, 2005. The unaudited pro forma condensed combined statement of operations included herein does not reflect any potential cost savings or other operating efficiencies that could result from the transaction. The pro forma condensed combined financial information included herein does not reflect any contingent consideration that may be paid to the former shareholders of OASIS in the future. The actual amount of future consideration, if any, will be recognized as an adjustment to goodwill in the period in which the contingency is resolved. The allocation of the initial purchase price consideration paid by SMSC for OASIS to the assets acquired and liabilities assumed included in the unaudited pro forma condensed combined financial information is based upon preliminary estimates of the fair market values of the acquired assets and assumed liabilities. These estimates of fair market values may change upon completion of the Company's final valuation of the assets and liabilities of OASIS. Under the provisions of Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. Intangible assets with finite lives are amortized over their estimated useful lives. In accordance with the provisions of SFAS No. 142, the Company will not amortize goodwill and intangible assets with indefinite lives recorded in connection with the acquisition of OASIS, and will perform an annual impairment test of the goodwill and any indefinite lived intangible assets. The historical financial information for OASIS included within Exhibit 99.1 of this report is presented in conformity with accounting principles generally accepted in Germany. The financial information for OASIS used within the unaudited pro forma condensed combined financial information presented herein has been prepared in accordance with accounting principles generally accepted in the United States of America. The February 28, 2005 unaudited pro forma condensed combined balance sheet gives affect to the acquisition of OASIS by SMSC as if it had occurred effective February 28, 2005, by combining the Company's consolidated balance sheet as of February 28, 2005 with OASIS' unaudited consolidated balance sheet as of February 28, 2005. The unaudited pro forma condensed combined statement of operations for the year ended February 28, 2005 gives affect to the acquisition of OASIS by SMSC as if it had occurred effective March 1, 2004, and includes the historical operating results of SMSC for the fiscal year ended February 28, 2005 and the historical operating results of OASIS for the year ended December 31, 2004. The Company's financial results are reported on the basis of a fiscal year ending February 28, and OASIS' financial results are reported on the basis of a calendar year ending December 31. These operating results for different fiscal year-end periods may be appropriately combined for pro forma purposes, since the fiscal year-end periods are within 93 days of each other, in accordance with Securities and Exchange Commission guidance contained within Regulation S-X. This unaudited pro forma condensed combined financial information should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 28, 2005 and the audited consolidated financial statements and notes thereto of OASIS included in this report. Standard Microsystems Corporation and Subsidiaries Unaudited Pro Forma Condensed Combined Balance Sheet As of February 28, 2005 (In thousands)
Pro Forma Pro Forma SMSC OASIS Adjustments Combined ---- ----- ----------- ------------ Assets Current assets: Cash and cash equivalents $ 116,126 $ 24,146 $ (79,539) (a) $ 60,733 Short-term investments 56,519 - - 56,519 Accounts receivable, net 23,788 6,168 - 29,956 Inventories 33,310 10,990 1,726 (c) 46,026 Deferred income taxes 17,701 - - 17,701 Other current assets 4,295 1,175 - 5,470 - ------------------------------------------------------------------------------------------------------------------ Total current assets 251,739 42,479 (77,813) 216,405 - ------------------------------------------------------------------------------------------------------------------ Property, plant and equipment, net 22,630 2,664 - 25,294 Goodwill 29,435 - 53,507 (h) 82,942 Intangible assets, net 3,584 896 47,945 (b) 52,425 Deferred income taxes 7,163 - (7,163) (f) - Other assets 4,708 - (1,076) (d) 3,632 - ------------------------------------------------------------------------------------------------------------------ $ 319,259 $ 46,039 $ 15,400 $ 380,698 ================================================================================================================== Liabilities and shareholders' equity Current liabilities: Accounts payable $ 15,995 $ 2,242 $ - $ 18,237 Deferred income on shipments to distributors 7,689 - - 7,689 Accrued expenses, income taxes and other liabilities 13,400 10,019 2,277 (d) 25,696 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 37,084 12,261 2,277 51,622 - ------------------------------------------------------------------------------------------------------------------ Deferred income taxes - - 12,018 (b)(c)(f) 12,018 Other liabilities 12,326 - - 12,326 Shareholders' equity: Preferred stock - - - - Common stock 2,053 13,254 (13,047) (a) (e) 2,260 Additional paid-in capital 187,854 16,376 19,200 (a) (e) 223,430 Retained earnings 100,612 4,606 (5,506) (e) (g) 99,712 Treasury stock, at cost (23,799) - - (23,799) Deferred stock-based compensation (1,925) - - (1,925) Accumulated other comprehensive income 5,054 (458) 458 (e) 5,054 - ------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 269,849 33,778 1,105 304,732 - ------------------------------------------------------------------------------------------------------------------ $ 319,259 $ 46,039 $ 15,400 $ 380,698 ==================================================================================================================
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements. Standard Microsystems Corporation and Subsidiaries Unaudited Pro Forma Condensed Combined Statement of Operations For the Year Ended February 28, 2005 (In thousands, except per share data)
Pro Forma Pro Forma SMSC OASIS * Adjustments Combined ---- ------- ----------- ------------- Sales and Revenues $ 208,815 $ 50,370 $ - $ 259,185 Cost of goods sold 114,066 29,170 4,050 (i) 147,286 - ------------------------------------------------------------------------------------------------------------------- Gross profit 94,749 21,200 (4,050) 111,899 Operating expenses (income): Research and development 42,988 9,612 - 52,600 Selling, general and administrative 48,759 8,881 (14) (k) 57,626 Amortization of intangible assets 1,113 - 1,313 (i) 2,426 Gains on real estate transactions (1,017) - - (1,017) Settlement charge 6,000 - - 6,000 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from operations (3,094) 2,707 (5,349) (5,736) Other income (expense): Interest income 2,532 398 (1,233) (j) 1,697 Interest expense (134) - - (134) Other income (expense), net 31 179 - 210 - ------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes and minority interest (665) 3,284 (6,581) (3,962) Provision for (benefit from) income taxes (2,267) 1,225 (2,152) (3,194) Net income (loss) $ 1,602 $ 2,059 $ (4,430) $ (769) =================================================================================================================== Basic net income (loss) per share: $ 0.09 $ (0.04) ================================================================= ============= Diluted net income (loss) per share: $ 0.08 $ (0.04) ================================================================= ============= Shares Used in the Calculation of Net Income (Loss) Per Share: Basic 18,376 20,448 Diluted 19,318 20,448
* Reflects OASIS' historical operating results for the year ended December 31, 2004. See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements. Standard Microsystems Corporation and Subsidiaries Notes to Unaudited Pro Forma Condensed Combined Financial Information 1. Summary of Transaction On March 30, 2005, SMSC completed the acquisition of 100% of the outstanding capital stock of OASIS in a transaction accounted for as a purchase under accounting principles generally accepted in the United States of America. Under the purchase method of accounting, the total estimated purchase price is allocated to the net tangible and intangible assets acquired, based upon their fair values as of the completion of the acquisition. 2. Consideration Paid, Assets Acquired and Liabilities Assumed The following table sets forth the components of the purchase price (in millions): Cash paid $ 79.5 SMSC common stock issued 35.8 Estimated transaction costs 3.4 ------------------------------------------------ $ 118.7 ================================================ The following table provides the estimated fair values of the assets acquired and liabilities assumed, based upon OASIS' February 28, 2005 balance sheet (in millions): Net current assets, including $24.1 million of cash and cash equivalents $ 31.9 Net non-current liabilities, including deferred income taxes (15.9) Intangible assets 48.3 Goodwill 53.5 In-process research and development 0.9 --------------------------------------------------------------------- $ 118.7 ===================================================================== In accordance with the provisions of SFAS No. 141, OASIS' finished goods inventory has been valued at estimated selling prices less the costs of disposal and a reasonable profit allowance for the related selling effort; work in process inventory has been valued at estimated selling prices of the finished goods less costs to complete, costs of disposal, and a reasonable profit allowance for the completing and selling efforts; and raw materials have been valued at current replacement costs. These values initially exceed OASIS' historical cost by approximately $1.7 million. This value will be recorded as an increase to the carrying value of inventory, and then recorded as a component of cost of goods sold as the underlying inventory is sold. The unaudited pro forma condensed combined balance sheet reflects this inventory valuation, but to the extent that this inventory valuation exceeds historical cost, it has not been reflected in the unaudited pro forma condensed combined statement of operations as it is nonrecurring in nature. The final determination of the purchase price allocation will be based upon the assets acquired and liabilities assumed as of the March 30, 2005 acquisition date, and will be completed as soon as practicable, but no later than one year from the acquisition date. The final amounts allocated to assets acquired and liabilities assumed could differ from the amounts presented in this unaudited pro forma condensed combined financial information. 3. Intangible Assets The amounts allocated to acquired identifiable intangible assets consists of the following (in millions): Existing technologies $ 32.4 Customer relationships 10.5 Trademark 5.4 ------------------------------------------- $ 48.3 =========================================== The estimated fair value attributed to existing technologies was determined based upon a discounted forecast of the estimated net future cash flows to be generated from the technologies using a discount rate of 25%. The estimated fair value of existing technologies will be amortized over a period of 8 years on a straight-line basis, which approximates the pattern in which the economic benefits of the existing technologies are expected to be realized. The estimated fair value attributed to customer relationships was determined based on a discounted forecast of the estimated net future cash flows to be generated from the relationships discounted at a rate of 23%. The estimated fair value of the customer relationships will be amortized over a period of 8 years on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are expected to be realized. OASIS owns the MOST trademark, which is an acronym for Media Oriented Systems Transport, the core of its automotive infotainment technology. The estimated fair value attributed to this trademark was determined by calculating the present value of the royalty savings related to the trademark using an assumed royalty rate of 1.5% and a discount rate of 23%. This trademark has an indefinite life and will therefore not be amortized, and will be subject to an impairment test on an annual basis, or when an event or circumstance occurs indicating a possible impairment in value. Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets. In accordance with SFAS No. 142, goodwill is not amortized but will be tested for impairment at least annually. 4. In-Process Research and Development The amount allocated to in-process research and development represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, have not reached technological feasibility and have no alternative future use. These projects primarily are focused on deployment of certain technology into consumer applications. The estimated fair value of in-process research and development will be recorded as an expense in the Company's fiscal quarter ended May 31, 2005. The unaudited pro forma condensed combined balance sheet gives effect to this charge as if it had been incurred as of March 1, 2004, but the effect of this in-process research and development has not been reflected in the unaudited pro forma condensed combined statement of operations as it is nonrecurring in nature. 5. Pro Forma Adjustments The pro forma adjustments included in the unaudited pro forma condensed combined financial information are as follows: Unaudited Pro Forma Condensed Combined Balance Sheet: (a) To reflect the cash payments of $79.5 million and issuance of common stock valued at $35.8 million ($0.2 million of common stock and $35.6 million of additional paid-in capital), to the former shareholders of OASIS. (b) To reflect the preliminary $48.3 million fair value of the acquired identifiable intangible assets of OASIS, less certain historical OASIS intangible assets of $0.4 million, and $19.2 million of related deferred income taxes. (c) To reflect a preliminary $1.7 million fair value adjustment for the acquired inventory of OASIS, and $0.5 million of related deferred income taxes. (d) To reflect estimated direct costs of $3.3 million related to the acquisition of OASIS, $1.1 million of which were accrued by SMSC at February 28, 2005. (e) To eliminate OASIS' $33.8 million of historical shareholder's equity. (f) To reflect a $0.6 million tax credit carryforward not reflected in OASIS historical financial statements, and to reclassify deferred income taxes. (g) To reflect the $0.9 million preliminary fair value for in-process research and development related to the acquisition of OASIS. This expense is directly attributable to the acquisition and will not have a continuing impact on the Company's operating results, and therefore, it is not reflected as an expense in the pro forma condensed combined statement of operations. (h) To reflect the preliminary $53.5 million fair value of goodwill. Unaudited Pro Forma Condensed Combined Statement of Operations: (i) To reflect amortization expense related to the acquired identifiable finite-lived intangible assets, calculated over estimated useful lives of 8 years, on a straight-line basis. (j) To reduce interest income by $1.2 million for fiscal 2005, as if the $79.5 million cash payment related to the acquisition of OASIS had occurred on March 1, 2004. An interest rate of 1.55% and an effective income tax rate of 6% was used in this pro forma adjustment. The majority of the Company's interest income in fiscal 2005 was tax-exempt, resulting in the unusually low effective income tax rate used in this adjustment. (k) To eliminate amortization expense related to certain of OASIS' historical intangible assets. In addition, pro forma net income (loss) per share for the year ended February 28, 2005 has been adjusted to reflect the issuance of 2,072,000 shares of SMSC common stock related to this transaction, and assumes that such shares were outstanding from March 1, 2004. -----END PRIVACY-ENHANCED MESSAGE-----