SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) - April 7, 2003
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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 or organization) 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)
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Item 7. Financial Statements and Exhibits
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(c) Exhibits.
Exhibit No. Description of Exhibit
- ----------- ----------------------
99.1 Press release issued by Standard Microsystems Corporation dated
April 7, 2003.
Item 9. Regulation FD Disclosure
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This information, furnished under this "Item 9. Regulation FD Disclosure," is
intended to be furnished under "Item 12. Disclosure of Results of Operations and
Financial Condition" in accordance with SEC Release No. 33-8216.
On April 7, 2003, Standard Microsystems Corporation issued a press release
announcing fourth quarter and year-end fiscal 2003 results. A copy of the press
release is attached as Exhibit 99.1.
SIGNATURES
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Pursuant to the requirements of Section 13 or 15 (d) 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: April 10, 2003 By: /s/ ANDREW M. CAGGIA
--------------------
Andrew M. Caggia
Senior Vice President and
Chief Financial Officer,
and Director
(Principal Financial Officer)
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 Press release, dated April 7, 2003, announcing fourth quarter and
year-end fiscal 2003 results.
Exhibit 99.1
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SMSC REPORTS 27% GROWTH IN FOURTH QUARTER FISCAL 2003 REVENUES
Fourth Quarter Net Income Exceeds $1 Million
Posts 20% Growth In Fiscal 2003 Product Revenues
Hauppauge, N.Y. - April 7, 2003 - Standard Microsystems Corporation (Nasdaq:
SMSC) today announced that revenues for the fourth quarter ended February 28,
2003 increased by 27% to $42.6 million, compared to $33.5 million in the fourth
quarter of fiscal 2002.
Gross profit percentage for the fourth quarter of fiscal 2003 grew by more than
four percentage points to 45.3%, compared to 41.2% in the previous year's fourth
quarter. Research and development expenses for the quarter were $8.5 million,
compared to $6.4 million in the year-ago quarter, and selling, general and
administrative expenses were $9.9 million, compared to $7.3 million in last
year's fourth quarter. Amortization of acquired intangible assets associated
with the acquisition of Gain Technology Corporation in June 2002, was $0.4
million in this year's fourth quarter.
Fourth quarter income from continuing operations was $1.1 million, or $0.06 per
share, compared to $0.8 million, or $0.04 per share, in the year-ago quarter.
"In an industry suffering ongoing economic hardships, SMSC's fourth quarter
capped off a year of solid growth. Success in value integration and profitably
growing market share enabled SMSC to deliver fourth quarter revenue that was 27%
higher than the prior year," said Steven J. Bilodeau, Chairman and Chief
Executive Officer. "Our Advanced I/O business contributed significantly during
the quarter and experienced a 17% increase in revenues over the prior year, with
a particular strength in notebook sales. In large part, reflective of our focus
on product diversification, our Embedded business grew by over 60% versus last
year's fourth quarter, as sales of new USB 2.0 and Ethernet products ramped."
On a GAAP basis, revenues for fiscal 2003 were $155.5 million compared to $159.3
million in fiscal 2002, and SMSC reported a loss from continuing operations of
$0.42 per share in fiscal 2003 versus a profit of $0.47 per share in the
year-ago period.
Due to the significance of special items recorded earlier in fiscal 2003 and in
fiscal 2002, SMSC is presenting certain pro forma information to facilitate a
comparison of the operating results for both periods. The special items include
investment impairment charges, restructuring charges associated with SMSC's exit
from the PC chipset business and a special intellectual property-related
payment. Details of the special items are shown in the attached table of pro
forma information.
Full Year Financial Highlights:
- - Revenues for fiscal 2003 were $155.5 million, an increase of 20% from pro
forma revenues of $129.7 million in fiscal 2002, exceeding the
semiconductor industry's composite revenue growth of approximately 1%.
- - Gross profit of 44.6% grew by more than six percentage points compared to a
pro forma 38.3% in fiscal 2002, as SMSC continued to increase the analog
content in its product line and provide innovative, higher-value features
to cost effectively address its customers' needs. Reported gross profit in
fiscal 2002, including special items, was 49.0%.
- - Pro forma income from continuing operations of $0.14 per share was a $0.43
per share improvement over the prior year.
- - SMSC's balance sheet remains strong with cash and short-term investments at
February 28, 2003 of $112.9 million, no bank debt and book value per share
of $12.17.
"The dramatic year-over-year improvement in SMSC's pro forma income from
continuing operations, from a loss of $4.7 million in fiscal 2002 to a profit of
$2.5 million in fiscal 2003, illustrates our leverage to earnings as revenue
grows," said Andrew M. Caggia, Senior Vice President and Chief Financial
Officer. "Our balance sheet remains strong and we look forward to continued
growth as we enter 2004. "
Commenting on operating achievements over the last year, Mr. Bilodeau said, "In
addition to solid financial performance, the Company achieved a number of
milestones that enhanced its ability to grow profitably. SMSC completed an
important acquisition that greatly broadened its technical capabilities,
significantly increased market share, introduced several products serving new
high growth markets, secured a number of key design wins and upgraded its
quality certification to the highest ISO standards."
KEY FISCAL 2003 BUSINESS HIGHLIGHTS FOR SMSC:
- - Completed the acquisition of Gain Technology Corporation, now known as the
SMSC Analog Technology Center. The acquisition brought to SMSC a veteran
analog and mixed-signal development team of 35 engineers and designers with
an average of more than ten years experience. It greatly enhanced the
Company's existing analog and mixed-signal capabilities and brought with it
a depth of talent that expands the product and market opportunities that
SMSC may pursue in the future.
- - Announced the availability of SMSC's GT3200, the first in a family of
high-performance analog physical layer (PHY) and high-speed serial data
communication IC's for networking, computing, consumer electronics and
embedded system applications.
- - Joined with ARC International to announce the availability of a complete
USB 2.0 solution, certified for high-speed operation by the USB
Interoperability Forum (USB-IF), which allows developers to combine ARC's
customizable VUSB-HS device controller with SMSC's GT3200 PHY IC to reduce
product cost and power consumption while accelerating time-to-market for
products with 480-Mbps USB connectivity.
- - Introduced the USB97C242 Single-Chip Hi-Speed USB Flash Drive Controller, a
low- cost product designed for use in flash drives which are portable,
solid-state storage devices small enough to hang on a key chain.
- - National Technical Systems, Inc. certified the Company's USB97C210 USB 2.0
Multi-Format Flash Memory Card Controller Chip and the USB97C201 USB 2.0
ATA/ATAPI/CF Controller Chip as Hi-Speed USB Peripheral Silicon building
blocks. The USB97C210 was also the first 6-in-1 Flash Card Controller to
receive Hi-Speed USB certification from the USB-IF and the first Hi-Speed
6-in-1 Flash Card Controller in production.
- - SMSC's USB97C202 Second Generation USB 2.0 Mass Storage Class Controller, a
USB bridge chip designed for use in external hard disks, CDRW, and DVD
drives, was certified as USB compliant by the USB-IF.
- - Accelent Systems Inc. selected SMSC's LAN91C111 10/100 non-PCI Ethernet
device to be incorporated in its Integrated Development Platform based on
the Intel(R) PXA250 applications processor with XScale(TM) technology.
- - Introduced the LPC47N253 Integrated Advanced Notebook I/O Controller,
Embedded Controller and Keyboard Controller for full-featured notebook
PC's, combining the functionality of a Super I/O, a high-performance 8051
microprocessor for keyboard control and system management, as well as a
shared flash interface.
- - Introduced the LPC47N350 Keyboard and System Controller with LPC
PortSwitch(TM) Interface for legacy-free notebook PC's. The LPC47N350
interface is a unique, hot-switchable external interface that enables the
design of cost-effective, full-featured port replication and docking
solutions.
- - Introduced the LPC47N237 Controller, an LPC-based I/O targeted for notebook
PC port replicators and docks, and companion product to SMSC's line of
Notebook PC Keyboard and System Controllers that feature the LPC PortSwitch
interface.
- - Achieved an upgrade to ISO 9001:2000 certification by NSAI, Inc.,
demonstrating the Company's commitment to maintaining a world-class quality
management system. According to recently published statistics, as of
mid-February 2003, only 13% of the total number of registrations in North
America have been upgraded to ISO 9001:2000.
BUSINESS OUTLOOK FOR SMSC:
For the first quarter of fiscal 2004, SMSC expects revenues to be approximately
$42 million, which represents an increase of nearly 24% over the first quarter
of fiscal 2003. Gross profit percentage is expected to be approximately 45%.
Research and development expenses and selling, general and administrative
expenses are both expected to range from $8.5 million to $9.5 million.
Acquisition-related charges are expected to be equal to the fourth quarter of
fiscal 2003. The effective tax rate is estimated to be approximately 25% for all
of fiscal 2004, and the Company expects income from continuing operations to be
approximately $0.04 per share.
For fiscal 2004, SMSC expects revenues to grow by more than 15% from the annual
period just closed. Gross profit percentage is expected to be approximately 44%.
Research and development expenses are expected to be between $35 million and $38
million, and selling, general and administrative expenses are expected to range
from $36.5 million to $40 million. Acquisition-related charges are expected to
be approximately $1.3 million. Income from continuing operations is expected to
be approximately $0.20 per share for fiscal 2004.
ABOUT SMSC:
SMSC provides Real World Connectivity(TM) solutions for high-speed communication
and computing applications. Leveraging a broad intellectual property portfolio
and an extensive history in the design of the world's most preferred Advanced
Input/Output products, SMSC delivers integrated hardware and software solutions
to manage systems and connect peripherals in today's rapidly evolving computing
architectures. SMSC works with industry leading OEMs to combine advanced
digital, mixed-signal and analog functionality into Application Specific
Standard Products.
The Company's Embedded Products connect people, machines and information. SMSC
delivers integrated Ethernet and USB 2.0 solutions, along with a diverse range
of other products, for network printers, set-top boxes, home gateway products,
car navigation systems, cellular base stations, USB peripherals and more.
SMSC is based in Hauppauge, New York and maintains offices worldwide, including
locations in North America, Asia, Europe and Japan. SMSC operates engineering
design centers in Phoenix, AZ, Tucson, AZ, Hauppauge, NY and Austin, TX. More
information about the Company is available on the World Wide Web at
http://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, 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, and reductions in the rate of growth
of the PC and Embedded 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 we will not necessarily inform you 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.
Standard Microsystems and SMSC are registered trademarks, and Real World
Connectivity is a trademark, of Standard Microsystems Corporation. Product names
and company names are trademarks of their respective holders.
Contact:
Carolynne Borders
Director of Investor Relations
Standard Microsystems Corporation
Voice: 631-435-6626
Fax: 631-273-5550
carolynne.borders@smsc.com
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
PRO FORMA INFORMATION (Unaudited)
(in thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
February 28, February 28,
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2003 2002 2003 2002
- --------------------------------------------------------------------------------
Revenues:
As reported, per GAAP $ 42,612 $ 33,459 $ 155,517 $ 159,298
Deduct special intellectual
property payment - - - (29,595)
- --------------------------------------------------------------------------------
Pro forma revenues $ 42,612 $ 33,459 $ 155,517 $ 129,703
================================================================================
Income (loss) from continuing
operations:
As reported, per GAAP $ 1,060 $ 773 $ (6,971) $ 7,475
Add (Deduct):*
Investment impairment charges - 160 10,436 428
Special intellectual property
payment - - - (18,941)
Inventory write-off related to
business restructuring - - - 816
Restructuring charges
(adjustments) (158) (182) (158) 4,950
Other special SG&A charges - - - 575
Prior years' tax benefits - - (829) -
- --------------------------------------------------------------------------------
Pro forma income (loss) from
continuing operations $ 902 $ 751 $ 2,478 $ (4,697)
================================================================================
Diluted income (loss) per share
from continuing operations:
As reported, per GAAP $ 0.06 $ 0.04 $ (0.42) $ 0.44
Pro forma $ 0.05 $ 0.04 $ 0.14 $ (0.29)
Diluted weighted average common
shares outstanding:
As reported, per GAAP 17,905 17,070 16,538 16,900
Pro forma 17,905 17,070 17,928 16,069
* All amounts added and deducted in calculating pro forma income (loss) from
continuing operations, except for prior years' tax benefits, are presented
net of applicable income taxes at 36%.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
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February 28, February 28,
-------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
Sales and Revenues:
Product sales $ 42,175 $ 33,254 $ 154,244 $ 128,528
Intellectual property revenues 437 205 1,273 30,770
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42,612 33,459 155,517 159,298
Cost of goods sold 23,316 19,683 86,093 81,264
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Gross profit 19,296 13,776 69,424 78,034
Operating expenses:
Research and development 8,504 6,378 31,166 31,178
Selling, general and administrative 9,881 7,345 36,268 32,744
Amortization of intangible assets 360 - 1,167 -
Restructuring costs (247) (285) (247) 7,734
- --------------------------------------------------------------------------------
Income from operations 798 338 1,070 6,378
Interest income 459 578 2,069 3,450
Impairment of investments - (250) (16,306) (669)
Other income (expense), net (109) (23) (209) 1,527
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Income (loss) before provision for
income taxes and minority interest 1,148 643 (13,376) 10,686
Provision for (benefit from) income
taxes 81 (142) (6,422) 3,171
Minority interest in net income of
subsidiary 7 12 17 40
- --------------------------------------------------------------------------------
Income (loss) from continuing
operations 1,060 773 (6,971) 7,475
Loss from discontinued operations
(net of income tax benefits of
$21, $558, $281 and $918) (36) (896) (500) (1,564)
- --------------------------------------------------------------------------------
Net income (loss) $ 1,024 $ (123) $ (7,471) $ 5,911
================================================================================
Basic net income (loss) per share:
Income (loss) from continuing
operations $ 0.06 $ 0.05 $ (0.42) $ 0.47
Loss from discontinued operations - (0.06) (0.03) (0.10)
- --------------------------------------------------------------------------------
Basic net income (loss) per share $ 0.06 $ (0.01) $ (0.45) $ 0.37
================================================================================
Diluted net income (loss) per share:
Income (loss) from continuing
operations $ 0.06 $ 0.04 $ (0.42) $ 0.44
Loss from discontinued operations - (0.05) (0.03) (0.09)
- --------------------------------------------------------------------------------
Diluted net income (loss) per share $ 0.06 $ (0.01) $ (0.45) $ 0.35
================================================================================
Weighted average common shares
outstanding:
Basic 16,748 16,018 16,538 16,069
Diluted 17,905 17,070 16,538 16,900
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
February 28, February 28,
2003 2002
---- ----
Assets
Current assets:
Cash and cash equivalents $ 90,025 $ 98,065
Short-term investments 22,872 28,595
Accounts receivable, net 22,738 21,828
Inventories 17,644 17,585
Deferred income taxes 8,545 8,582
Other current assets 8,710 4,317
- --------------------------------------------------------------------------------
Total current assets 170,534 178,972
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Property, plant and equipment, net 22,257 24,170
Goodwill 29,773 -
Intangible assets, net 6,008 -
Investment in Chartered Semiconductor 1,840 9,992
Deferred income taxes 11,779 7,196
Other assets 5,758 15,733
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$ 247,949 $ 236,063
================================================================================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 9,114 $ 8,477
Deferred income on shipments to distributors 5,943 6,225
Accrued expenses, income taxes and other
liabilities 9,838 9,289
- --------------------------------------------------------------------------------
Total current liabilities 24,895 23,991
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Other liabilities 7,379 6,973
Minority interest in subsidiary 11,663 11,646
Shareholders' equity:
Preferred stock - -
Common stock 1,859 1,728
Additional paid-in capital 145,553 119,505
Retained earnings 77,492 84,963
Treasury stock, at cost (23,454) (13,861)
Accumulated other comprehensive income 2,562 1,118
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Total shareholders' equity 204,012 193,453
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$ 247,949 $ 236,063
================================================================================