-----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, CflyeUrduM46iiQiOj89g78k4umLXWUDSeeIqxge9oZaWBh+q9N049Nia3OSVE6B L8W891q5e6vpZUj5TyXKGg== 0000093384-05-000023.txt : 20050711 0000093384-05-000023.hdr.sgml : 20050711 20050711164723 ACCESSION NUMBER: 0000093384-05-000023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050629 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050711 DATE AS OF CHANGE: 20050711 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-07422 FILM NUMBER: 05948530 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 1 form_8k-q1fy06.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 29, 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, former address and former fiscal year, 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)) Section 2 - Financial Information Item 2.02 - Results of Operations and Financial Condition On June 29, 2005, Standard Microsystems Corporation issued a press release announcing its financial results for the first quarter of fiscal 2006. A copy of the press release is attached as Exhibit 99.1. The information in Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Section 9 - Financial Statements and Exhibits Item 9.01 - Financial Statements and Exhibits ( c ) Exhibits 99.1 - Press release dated June 29, 2005, reporting Standard Microsystems Corporation's financial results for the first quarter of fiscal 2006. 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 hereunto duly authorized. STANDARD MICROSYSTEMS CORPORATION (Registrant) Date: July 11, 2005 By: /s/ ANDREW M. CAGGIA ----------------------------- Andrew M. Caggia Senior Vice President and Chief Financial Officer, and Director (Principal Financial Officer) Exhibit Index Exhibit No. Description 99.1 Press release dated June 29, 2005, reporting Standard Microsystems Corporation's financial results for the first quarter of fiscal 2006. EX-99.1 2 exhibit_99-1.txt Exhibit 99.1 SMSC REPORTS 30% YEAR-OVER-YEAR INCREASE IN FIRST QUARTER REVENUES, INCLUDING OASIS ACQUISITION Earnings Per Share Exceeds Company Expectation Hauppauge, NY - June 29, 2005 - SMSC (Nasdaq: SMSC) today announced that revenues for the first quarter ended May 31, 2005 were $68.8 million, an increase of approximately 30% from last year's first quarter revenues of $53.1 million. Of the 30% increase, 18% was due to the acquisition of OASIS SiliconSystems Holding AG (OASIS), which closed on March 30, 2005, and 12% was due to growth in SMSC's other products lines. Gross profit percentage was 47.0% for the three months ended May 31, 2005 and 50.3% for the year-earlier quarter. Operating income for the period was $3.7 million, compared to $3.6 million a year ago. Net income was $0.15 per share in first quarter of fiscal year 2006, compared to $0.15 per share in the first quarter of last year. To provide additional insight into its underlying operations, SMSC is also presenting a first quarter fiscal 2006 statement of operations on a pro forma (non-GAAP) basis, excluding non-cash acquisition-related charges, which are in-process research and development, amortization of acquired intangibles and adjustments to the value of opening inventory at the date of the OASIS acquisition. This statement is presented in a format that reconciles the pro forma, non-GAAP measures to the most comparable GAAP measures. On a pro forma basis, operating results were as follows. Gross profit percentage for the period was 47.9%, compared to 50.3% in the previous year's first quarter, exceeding SMSC's prior expectation due to a shift in mix to higher margin products. Operating income was $6.4 million, or 9.3% of sales, compared to $4.0 million, or 7.5% of sales, in the year-ago period. Pro forma net income was $4.7 million or $0.23 per share, an increase in earnings per share of 44%, from pro forma net income of $3.1 million, or $0.16 per share in the first quarter of fiscal 2005. "Revenues for the first quarter were robust, driven by the addition of revenues from OASIS and strong sales of our mobile PC, EMC and USB connectivity products," said Steven J. Bilodeau, Chairman and Chief Executive Officer. "We realized higher profitability than anticipated due to product mix coupled with lower operating expenses than previously projected. As sales increased, we also benefited from positive leverage in our operating expenses, which improved operating profit margins by nearly 4% of sales." Mr. Bilodeau continued, "This is an exciting time for our business as we are realizing the benefits of investments made in recent years to build a more diversified global semiconductor company. This was also the first quarter of sales contribution from our recent OASIS acquisition, which is now our new Automotive Infotainment Systems group, and we are pleased with the progress of the integration of this business into SMSC. These strong first quarter results demonstrate that our strategy to drive sales growth and improved profitability is on track." Cash and liquid investments at May 31, 2005 were $121.0 million, compared to $172.6 million at February 28, 2005, of which approximately $61 million, net of cash acquired, was utilized in the acquisition of OASIS on March 30, 2005. The Company has no bank debt, and book value per share was $14.57 as of May 31, 2005. Pro Forma Business Outlook: Second quarter guidance for pro forma net income, which is expected to be between $0.17 and $0.21 per share, is presented only on a pro forma basis because of SMSC's inability to project its future stock price and its impact on any expense provision that might be required to mark Stock Appreciation Rights (SARs) to market until the end of the fiscal quarter. For the second quarter, in line with the pro forma net income guidance above, SMSC expects the following measures on a pro forma basis: o Revenues to be between $73 million and $77 million, reflecting a year-over-year increase of nearly 50% at the midpoint of that range. o Gross profit percentage to be between 46% and 48%. o Research and development expense to be between $14 million and $15 million. o Selling, general and administrative expense to be between $15 million and $16 million. o The effective tax rate to be approximately 36%, including an expected one-time provision related to a streamlining of the legal entity structure of certain wholly owned subsidiaries acquired from OASIS. Expense recognition related to SARs is determined by a mark-to-market calculation based on the SMSC stock price at the end of each period. The SARs outstanding as of May 31, 2005 have an average exercise price of approximately $17.10. Each $1.00 increase in SMSC's share price over $17.10 as of August 31, 2005 would require an expense provision of approximately $0.7 million ($0.4 million or $0.02 per share, after tax) in the second quarter, based on approximately 1.5 million SARs outstanding. None of the SARs outstanding are currently vested and all SARs are scheduled to vest between September 2005 and April 2010. In addition, the pro forma adjustments included in the guidance above exclude the impacts of two non-cash acquisition related charges, which are the amortization of acquired intangibles, estimated to be $1.6 million, and an adjustment to the cost of goods sold to reflect the write up of the cost of inventory at the date of the OASIS acquisition, which is estimated to be $0.9 million. About SMSC: Many of the world's most successful global technology companies rely upon SMSC as a go-to resource for semiconductor system solutions that span analog, digital and mixed-signal technologies. Leveraging substantial intellectual property, integration expertise and a comprehensive global infrastructure, SMSC solves design challenges and delivers performance, space, cost and time-to-market advantages to its customers. SMSC's application focus targets key vertical markets including mobile and desktop PCs, servers, consumer electronics, automotive infotainment and industrial applications. The Company has developed leadership positions in its select markets by providing application specific solutions such as mixed-signal PC system controllers, non-PCI Ethernet, ARCNET, MOST, Hi-Speed USB and other high-speed serial communications. SMSC is headquartered in Hauppauge, New York with operations in North America, Taiwan, Japan, Korea, China and Europe. Engineering design centers are located in Arizona, New York, Texas and Karlsruhe, Germany. Additional information is available at www.smsc.com. Forward Looking Statements: Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties. These include the timely development and market acceptance of new products; the impact of competitive products and pricing; the effect of changing economic conditions in domestic and international markets; changes in customer order patterns, including loss of key customers or distributors, order cancellations or reduced bookings; and excess or obsolete inventory and variations in inventory valuation, among others. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and may not reflect the potential impact of any future acquisitions, mergers or divestitures. SMSC competes in the semiconductor industry, which has historically been characterized by intense competition, rapid technological change, cyclical market patterns, price erosion and periods of mismatched supply and demand. In addition, sales of many of the Company's products depend largely on sales of personal computers and peripheral devices, as well as general industry and market conditions. Reductions in the rate of growth of the PC, consumer electronics, embedded or automotive markets could adversely affect its operating results. SMSC conducts business outside the United States and is subject to tariff and import regulations and currency fluctuations, which may have an effect on its business. All forward-looking statements speak only as of the date hereof and are based upon the information available to SMSC at this time. Such information is subject to change, and the Company may not necessarily inform, or be required to inform, investors of such changes. These and other risks and uncertainties, including potential liability resulting from pending or future litigation, are detailed from time to time in the Company's reports filed with the SEC. Investors are advised to read the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, particularly those sections entitled "Other Factors That May Affect Future Operating Results" for a more complete discussion of these and other risks and uncertainties. SMSC is a registered trademark of Standard Microsystems Corporation. Product names and company names are trademarks of their respective holders. Contact: Carolynne Borders Director of Corporate Communications SMSC Phone: 631-435-6626 Fax: 631-273-5550 carolynne.borders@smsc.com STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Three Months Ended May 31, -------------------------------- 2005 2004 -------------- -------------- Revenues $ 68,807 $ 53,053 Costs and expenses: Cost of goods sold 36,492 26,385 Research and development 12,966 10,862 Selling, general and administrative 13,591 11,852 Amortization of intangible assets 1,153 317 In-process research and development 895 - - -------------------------------------------------------------------------------- Income from operations 3,710 3,637 Interest income 723 466 Other expense, net (47) (32) - -------------------------------------------------------------------------------- Income before provision for income taxes 4,386 4,071 Provision for income taxes 1,359 1,159 - -------------------------------------------------------------------------------- Net income $ 3,027 $ 2,912 ================================================================================ Basic net income per share: $ 0.15 $ 0.16 ================================================================================ Diluted net income per share: $ 0.15 $ 0.15 ================================================================================ Weighted average common shares outstanding: Basic 20,066 18,246 Diluted 20,476 19,790 STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES PRO FORMA (NON-GAAP) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Three Months Ended May 31, ---------------------------------------------------------------------------------- 2005 2004 -------------------------------------- --------------------------------------- Pro Forma Pro Forma GAAP Adjustment (Non-GAAP) GAAP Adjustment (Non-GAAP) Revenues $ 68,807 $ - $ 68,807 $ 53,053 $ - $ 53,053 Costs and expenses: Cost of goods sold 36,492 (614)(a) 35,878 26,385 - 26,385 Research and development 12,966 - 12,966 10,862 - 10,862 Selling, general and administrative 13,591 - 13,591 11,852 - 11,852 In-process research and development 895 (895)(b) - - - - Amortization of intangible assets 1,153 (1,153)(c) - 317 (317)(c) - - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations 3,710 2,662 6,372 3,637 317 3,954 Interest income 723 - 723 466 - 466 Other income (expense), net (47) - (47) (32) - (32) - ------------------------------------------------------------------------------------------------------------------------------------ Income before provision for income taxes 4,386 2,662 7,048 4,071 317 4,388 Provision for income taxes 1,359 998 (d) 2,357 1,159 114 (d) 1,273 - ------------------------------------------------------------------------------------------------------------------------------------ Net income 3,027 1,664 4,691 2,912 203 3,115 ==================================================================================================================================== Basic net income per share $ 0.15 $ 0.23 $ 0.16 $ 0.17 ==================================================================================================================================== Diluted net income per share $ 0.15 $ 0.23 $ 0.15 $ 0.16 ==================================================================================================================================== Weighted average common shares outstanding: Basic 20,066 20,066 18,246 18,246 Diluted 20,476 20,476 19,790 19,790
Notes: SMSC uses pro forma information to evaluate its operating results and believes such information also provides investors with additional insight into its underlying operations. This schedule presents a full reconciliation between pro forma and GAAP results. (a) The adjustment to Cost of goods sold is to remove from the pro forma results the impact of writing up the cost of inventory at the date of the Oasis acquisition over Oasis' original cost of the inventory. That write up will only impact GAAP Cost of goods sold for the turnover period of the OASIS inventory at the date of acquisition. That turnover period is expected to conclude in the quarter ending November 30, 2005. (b) The adjustment to In-process research and development is to remove from the pro forma results the cost of in-process research and development that was purchased in the Oasis acquisition and immediately expensed. (c) The adjustment to Amortization of intangible assets for the three months ended May 31, 2005 includes $887 related to the Oasis acquisition and $266 related to the fiscal 2003 acquisition of Gain Technology Corporation (Gain). The adjustment for the three months ended May 31, 2004 relates entirely to the Gain acquisition. (d) The adjustments to the Provision for income taxes was determined by applying the appropriate incremental tax rates to the adjustments described in notes (a) through (c) above. STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) May 31, February 28, 2005 2005 ------------ ------------- Assets Current assets: Cash and cash equivalents $ 19,674 $ 116,126 Short-term investments 101,279 56,519 Accounts receivable, net 29,881 23,788 Inventories 42,303 33,310 Deferred income taxes 16,252 17,701 Other current assets 5,753 4,295 - -------------------------------------------------------------------------------- Total current assets 215,142 251,739 - -------------------------------------------------------------------------------- Property, plant and equipment, net 25,959 22,630 Goodwill 78,912 29,435 Intangible assets, net 49,671 3,584 Deferred income taxes 7,728 7,163 Other assets 3,549 4,708 - -------------------------------------------------------------------------------- $ 380,961 $ 319,259 ================================================================================ Liabilities and shareholders' equity Current liabilities: Accounts payable $ 21,097 $ 15,995 Deferred income on shipments to distributors 11,126 7,689 Accrued expenses, income taxes and other liabilities 17,772 13,400 - -------------------------------------------------------------------------------- Total current liabilities 49,995 37,084 - -------------------------------------------------------------------------------- Deferred income taxes 16,658 - Other liabilities 12,215 12,326 Shareholders' equity: Preferred stock - - Common stock 2,273 2,053 Additional paid-in capital 225,515 187,854 Retained earnings 103,639 100,612 Treasury stock, at cost (25,961) (23,799) Deferred stock-based compensation (3,642) (1,925) Accumulated other comprehensive income 269 5,054 - -------------------------------------------------------------------------------- Total shareholders' equity 302,093 269,849 - -------------------------------------------------------------------------------- $ 380,961 $ 319,259 ================================================================================ -----END PRIVACY-ENHANCED MESSAGE-----