-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, RRUf9dtjfTRqmM3xjX/rUj/HcCCJzbHc7nZc6xbkd/hfxI0naVvhKzxhpGxEVmyk RZv/KUiorKYH+D716V1pkw== 0000950168-95-000559.txt : 199507180000950168-95-000559.hdr.sgml : 19950718 ACCESSION NUMBER: 0000950168-95-000559 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950717 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD MICROSYSTEMS CORP CENTRAL INDEX KEY: 0000093384 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 112234952 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07422 FILM NUMBER: 95554390 BUSINESS ADDRESS: STREET 1: 80 ARKAY DRIVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5164656000 MAIL ADDRESS: STREET 1: 80 ARKAY DR CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-Q 1 STANDARD MICROSYSTEMS CORP. 10-Q #82051.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-7422 STANDARD MICROSYSTEMS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 11-2234952 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 80 ARKAY DRIVE, HAUPPAUGE, NEW YORK 11788 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 516-273-3100 Indicate by check mark 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 reprts), and (2) has been subject to such filing requirements for the past 90 days. Yes ____X____ No ________ As of July 14, 1995 there were 13,321,423 shares of the registrant's common stock outstanding. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
May 31, February 28, 1995 1995 Assets Current assets: Cash and cash equivalents $ 24,074 $ 29,478 Accounts receivable, net of allowance for doubtful accounts of $1,129 and $1,102, respectively 45,734 75,826 Inventories 61,301 45,789 Deferred tax benefits 6,707 5,392 Other current assets 5,412 6,291 Total current assets 143,228 162,776 Property, plant and equipment: Land 3,832 3,832 Buildings and improvements 27,126 26,901 Machinery and equipment 87,380 77,639 118,338 108,372 Less: accumulated depreciation 76,002 73,464 Property, plant and equipment, net 42,336 34,908 Intangible assets 25,107 26,479 Long-term investment 13,990 - Deferred tax benefits 1,846 1,795 Other assets 2,915 2,620 $229,422 $228,578 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 21,295 $ 24,193 Accrued expenses and other liabilities 13,389 15,527 Income taxes payable 87 3,701 Total current liabilities 34,771 43,421 Long-term debt 10,000 - Minority interest in subsidiary 11,215 11,174 Shareholders' equity: Preferred stock, $.10 par value- Authorized 1,000,000 shares, none outstanding - - Common stock, $.10 par value- Authorized 30,000,000 shares, outstanding 13,301,000 and 13,222,000 shares, respectively 1,330 1,322 Additional paid-in capital 78,062 77,319 Retained earnings 85,615 88,616 Unrealized gain on investment, net of tax 863 718 Foreign currency translation adjustment 7,566 6,008 Total shareholders' equity 173,436 173,983 $229,422 $228,578
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three Months Ended May 31, 1995 1994 Revenues $72,209 $80,020 Cost of goods sold 43,814 44,665 Gross profit 28,395 35,355 Operating expenses: Research and development 8,236 6,492 Selling, general and administrative 23,505 18,147 Amortization of intangible assets 1,372 1,372 33,113 26,011 Income (loss) from operations (4,718) 9,344 Other income (expense): Interest income 112 234 Interest expense (228) (356) Other income (expense), net (45) (238) (161) (360) Income (loss) before minority interest and provision for income taxes (4,879) 8,984 Minority Interest in net income of subsidiary 41 39 Income (loss) before provision for income taxes (4,920) 8,945 Provision for (benefit from) income taxes (1,919) 3,587 Net income (loss) $(3,001) $5,358 Net income (loss) per common and common equivalent share $ (0.22) $ 0.41 Weighted average common and common equivalent shares outstanding 13,460 13,156 STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Three Months Ended May 31, 1995 1994 Cash flows from operating activities: Cash received from customers $102,367 $ 89,349 Cash paid to suppliers and employees (91,555) (82,239) Interest received 112 229 Interest paid (382) (306) Income taxes paid (3,349) (2,726) Net cash provided by operating activities 7,193 4,307 Cash flows from investing activities: Capital expenditures (10,121) (2,216) Long-term investment (13,990) - Other 28 36 Net cash used for investing activities (24,083) (2,180) Cash flows from financing activities: Proceeds from issuance of common stock 426 375 Principal payments of long-term debt (750) Net borrowings under line of credit agreements 10,000 252 Net cash provided by (used for) financing activities 10,426 (123) Effect of foreign exchange rate changes on cash and cash equivalents 1,060 54 Net increase (decrease) in cash and cash equivalents (5,404) 2,058 Cash and cash equivalents at beginning of period 29,478 32,115 Cash and cash equivalents at end of period $24,074 $34,173 Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) $(3,001) $ 5,358 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,319 3,678 Minority interest in net income of subsidiary 41 39 Other adjustments, net 179 379 Changes in operating assets and liabilities: Accounts receivable 30,159 9,317 Inventories (15,309) (7,337) Accounts payable and accrued expenses and other liabilities (5,092) (7,298) Other changes, net (4,103) 171 Net cash provided by operating activities $ 7,193 $ 4,307
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The interim financial statements furnished reflect all adjustments (consisting of only normal and recurring adjustments) which are, in the opinion of management, necessary to present a fair statement of the Company's financial position and results of operations for the three month period ended May 31, 1995. The financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended February 28, 1995. 2. Inventories consist of the following (in thousands): May 31, 1995 Feb. 28, 1995 Raw Materials $12,456 $11,547 Work in Process 19,790 16,239 Finished Goods 29,055 18,003 $61,301 $45,789 Management's Discussion and Analysis of Financial Condition and Results of Operations The following table sets forth, as percentages of revenues, the items included in the Company's Consolidated Statements of Income for the three month periods ended May 31, 1995 and 1994: Three Months Ended May 31, 1995 1994 Revenues 100.0 % 100.0 % Cost of goods sold 60.7 55.8 Gross profit 39.3 44.2 Operating expenses Research and development 11.4 8.1 Selling, general and administrative 32.5 22.7 Amortization of intangible assets 1.9 1.7 Total operating expenses 45.8 32.5 Income (loss) from operations (6.5) 11.7 Other income (expense), net (0.2) (0.5) Income (loss) before minority interest and taxes (6.7) 11.2 Minority interest in net income of subsidiary 0.1 - Income (loss) before provision for income taxes (6.8) 11.2 Provision for (benefit from) income taxes (2.6) 4.5 Net income (loss) (4.2)% 6.7 % Revenues and Cost of Goods Sold Revenues of $72.2 million for the three months ended May 31, 1995, were 10% lower than the $80.0 million recorded for the three months ended May 31, 1994. Revenues from system products declined 32% to $40.3 million in the first quarter of fiscal 1996 from $59.2 million a year earlier. Component products revenue increased 53% to $31.9 million from $20.8 million for the same periods. The decline in system products revenue resulted from a program to reduce excessive inventory levels at a number of the Company's major distributors. These inventories had increased during fiscal 1995 as distributors' shipments to resellers failed to achieve targeted levels. The growth of component products revenues continues to be led by increased shipments of personal computer input/output integrated circuits. Despite an industry-wide shortage of manufacturing capacity, shipments and net operating profits grew substantially over year-earlier levels. The Company's gross profit margin of 39.3% for the first quarter of fiscal 1996 declined from 44.2% in the year-earlier period. Costs associated with marketing programs designed to reduce inventory of networking products at distribution, as well as lower average selling prices on network interface cards, were the principal reasons for the lower margin. Operating Expenses The 27% increase in research and development expenses in the first quarter, compared to the year-earlier period, reflected personnel increases. Most of the increase was for the development of LAN switching and hub products. Selling, general and administrative expenses increased 30% in the first quarter of fiscal 1996 from the year-earlier period. Most of the increase reflected selling and marketing expenses for LAN switching and hub products. In addition, the Company continues to expand its worldwide LAN sales force and support costs. Other Income and Expenses The decline in interest expense and other income (expense) in the first quarter of fiscal 1996, compared to a year earlier, reflected lower average borrowings and financing fees. A reduction in interest income reflected lower average cash balances. Income Taxes Income taxes for the first quarter were provided at the Company's expected effective income tax rate for fiscal 1996 of 39.0%. The prior year's three month effective tax rate was 40.1%. The reduction in the first quarter tax rate for fiscal 1996 primarily reflects the benefit of an election, made in the fourth quarter of fiscal 1995, under section 197 of the Internal Revenue Code, allowing the deductibility of goodwill associated with the October 1991 acquisition of the LAN adapter business of Western Digital Corporation. Liquidity and Capital Resources Working capital was $108.5 million at May 31, 1995, compared to $119.4 million at February 28, 1995. Accounts receivable at May 31, 1995, represented approximately 57 days sales outstanding, compared to 63 days a year earlier and 67 days at February 28, 1995. The improvement chiefly represents a more even distribution of revenues during the quarter than in either the first or fourth quarters of fiscal 1995. Inventories increased to $61.3 million at May 31, 1995, from $45.8 million at February 28, 1995, mainly reflecting lower than expected shipments for the first quarter. Second quarter production is being adjusted in an effort to reduce inventories. Additions to property, plant and equipment were $10.1 million during the first quarter of fiscal 1996, compared to $2.2 million during the year-earlier period. The most significant capital expenditures were $2.3 million for a project to improve the Company's information systems, and $4.1 million pursuant to an agreement to purchase approximately $16 million of wafer manufacturing equipment for installation at an AT&T Microelectronics facility in Madrid, Spain. In addition, a long-term investment of $14.0 million was made under a $20 million commitment to purchase a minority interest in Chartered Semiconductor Pte Ltd. of Singapore. These two investments are intended to provide SMC with a portion of its long-term requirements for integrated circuits, beginning near the end of fiscal 1996. SMC used $5.4 million of cash and $10 million of its $80 million credit line, chiefly for capital items and the investment in Chartered Semiconductor. The Company believes that its present working capital position, combined with expected cash flows and available borrowing capacity, will be sufficient to meet its cash requirements for the foreseeable future. PART II - OTHER INFORMATION Item 1. Legal Matters 1. Gaffney v. Richman, et al., CV-95-2282 Russ v. Richman, CV-95-2283 Weinstein v. Richman, CV-95-2284 Altman v. Standard Microsystems Corp., et al., CV-95-2578 Slaby v. Standard Microsystems., Corp. CV-95-2266 Goodman v. Standard Microsystems Corp., et al., CV-95-2621 These related actions were filed in June 1995 by certain shareholders of Standard Microsystems Corporation who purport to represent a class of commonly-situated individuals. These shareholders are seeking damages against the company and certain officers and directors of the company for the diminution of the value of their stock. In substance, the complaints allege that between December 20, 1994, and June 2, 1995, the price of Standard Microsystems Corporation common stock was artificially inflated by false and misleading statements made by the defendants and by failure of the defendants to disclose certain information. Standard Microsystems Corporation intends to vigorously defend against these suits. Item 6.Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K. None. 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 thereunto duly authorized. STANDARD MICROSYSTEMS CORPORATION (Registrant) DATE: July 14, 1995 /S/ Anthony M. D'Agostino (Signature) Anthony M. D'Agostino Senior Vice President, Finance and Treasurer (Principal Financial Officer) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS FEB-28-1995 MAY-31-1995 24,074 0 45,734 1,129 61,301 143,228 118,338 76,002 229,422 34,771 10,000 1,330 0 0 172,106 229,422 72,209 72,209 43,814 43,814 33,113 133 228 (4,879) (1,919) (3,001) 0 0 0 (3,001) (.22) (.22)
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