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) - June 16, 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
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99.1 Press release issued by Standard Microsystems Corporation dated
June 16, 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 June 16, 2003, Standard Microsystems Corporation issued a press release
announcing first quarter fiscal 2004 revenues. 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
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(Registrant)
Date: June 19, 2003 By: /s/ ANDREW M. CAGGIA
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Andrew M. Caggia
Senior Vice President and
Chief Financial Officer,
and Director
(Principal Financial Officer)
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press release, dated June 16, 2003, announcing first quarter
fiscal 2004 revenues.
SMSC REPORTS 26% YEAR-OVER-YEAR GROWTH
IN FIRST QUARTER FISCAL 2004 REVENUES
Company Expects More than 15% Year-over-Year Growth in Second Quarter Revenues
Raises Fiscal 2004 Earnings Estimate by Approximately 30%
Hauppauge, NY - June 16, 2003 - Standard Microsystems Corporation (Nasdaq: SMSC)
today announced that revenues for the first quarter ended May 31, 2003 of $42.7
million exceeded prior Company estimates and increased by 26%, compared to $34.0
million in the first quarter of fiscal 2003. This is the fifth consecutive
quarter of sequential revenue increases.
Gross profit percentage for the first quarter of fiscal 2004 also exceeded
Company estimates and grew by more than four percentage points to 48.4%,
compared to 44.3% in the previous year's first quarter. The increase in gross
profit in the first quarter of fiscal 2004 was due in large part to a greater
than previously expected proportion of higher margin non-PC I/O product
revenues.
Research and development expenses for the quarter were $9.1 million, compared to
$6.9 million in the year-ago quarter, and selling, general and administrative
expenses were $9.5 million, compared to $8.2 million in last year's first
quarter. The year-over-year increases in operating expenses primarily reflect
the addition of operating expenses associated with Gain Technology Corporation,
which was acquired in June 2002. Amortization of acquired intangible assets
associated with the acquisition was $0.4 million in this year's first quarter.
Compared to the first quarter of fiscal 2003, the increases in revenues and
gross profit percentage, as well as gains on real estate transactions, resulted
in operating income of $3.1 million versus breakeven in the year-ago period.
Without the real estate gains, operating income for the first quarter of fiscal
2004 would have been $1.7 million.
First quarter income from continuing operations was $1.9 million, or $0.11 per
share, compared to $0.4 million, or $0.02 per share, in the year-ago quarter.
During the first quarter of fiscal 2004, SMSC also sold certain publicly listed
securities. The net impact of the real estate and securities transactions was an
increase in income from continuing operations of $0.5 million, or $0.03 per
share.
Cash and short-term investments at the end of the first quarter of fiscal 2004
were $120.9 million, up from $112.9 million at the end of fiscal 2003, primarily
as a result of the aforementioned sales of assets. The Company has no bank debt,
and book value per share as of May 31, 2003 was $12.30.
"SMSC kicked off fiscal 2004 with results that outpaced our expectations for
both revenue and profit growth," said Steven J. Bilodeau, Chairman and Chief
Executive Officer. "Our focus on expanding into new markets and capturing market
share in existing businesses has enabled SMSC to grow profitably in a difficult
market, with a 26% growth in revenues from last year's first quarter. As a
result of our ongoing diversification efforts, sales of SMSC's higher margin
non-PC I/O products reached about 35% of total revenues during the first
quarter. Our networking product sales exceeded our expectations and SMSC's USB
2.0 products are now contributing meaningful revenue, following our launch of
seven new USB 2.0 products in the last year."
Mr. Bilodeau continued, "In the past several years we have made significant
strides in expanding our technological portfolio from a rich base of digital
solutions to an expansive library of analog and mixed-signal capabilities.
Today, nearly 40% of our unit sales come from mixed-signal products. As a
result, we are offering greater design flexibility to customers in both existing
and new markets and are well positioned to continue to build momentum when
demand begins to return to more robust levels in the end markets we serve."
BUSINESS OUTLOOK FOR SMSC:
For the second quarter of fiscal 2004, SMSC expects revenues to be between $44
million and $45 million, representing an increase of 15% to 17% over the second
quarter of fiscal 2003. Gross profit percentage is expected to remain above the
last fiscal year's average at approximately 45% in the second quarter, yet lower
sequentially, due to an expected increase in the proportion of lower margin PC
I/O product sales in the second quarter. Research and development expenses and
selling, general and administrative expenses are both expected to range from
$9.0 million to $10.0 million. Amortization of acquired intangibles is expected
to be approximately $0.3 million. The effective tax rate is estimated to be
approximately 30% for fiscal 2004, and the Company expects second quarter income
from continuing operations to be approximately $0.05 per share.
For fiscal 2004, SMSC expects revenues to grow by more than 15% from fiscal
2003. Gross profit percentage is expected to be approximately 45%. Research and
development expenses are expected to be between $36 million and $38 million, and
selling, general and administrative expenses are expected to range from $38
million to $40 million. Amortization of acquired intangibles is expected to be
approximately $1.3 million. Income from continuing operations is expected to be
between $0.24 and $0.28 per share for fiscal 2004. This represents an increase
of approximately 30% from the Company's prior estimate.
ABOUT SMSC:
SMSC provides Real World Connectivity(TM) solutions for high-speed communication
and computing applications. Leveraging a broad intellectual property portfolio,
the Company thrives at the intersection of software, silicon and customized OEM
applications. Through the integration of its leading-edge digital, mixed-signal
and analog functionality and software expertise, SMSC delivers complete
solutions that monitor and manage computing systems and connect peripherals to
computers and to one another.
The Company is the world's leading provider of Advanced Input/Output (I/O)
hardware and software solutions ranging from legacy PC I/O to leading-edge
system management functionality. Through high-speed serial interfaces, including
USB 2.0 and embedded Ethernet, SMSC delivers faster and higher-bandwidth
peripheral connections for a wide range of products such as memory card readers,
mass storage devices, digital cameras and keyboards and enables innovative
high-speed networking functionality for consumer electronics, set-top boxes,
printers, car navigation systems, cellular base stations, and more.
SMSC, a fabless semiconductor supplier, is based in Hauppauge, New York and
maintains offices worldwide, including locations in North America, Taiwan,
Japan, Korea, China and Europe. 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,
except as required by law. 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
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
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May 31,
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2003 2002
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Sales and revenues $ 42,721 $ 34,007
Cost of goods sold 22,059 18,935
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Gross profit 20,662 15,072
Operating expenses (income):
Research and development 9,101 6,851
Selling, general and administrative 9,513 8,194
Amortization of intangible assets 360 -
Gains on real estate transactions (1,444) -
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Income from operations 3,132 27
Interest income 443 581
Other expense, net (736) (15)
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Income before provision for income taxes
and minority interest 2,839 593
Provision for income taxes 895 154
Minority interest in net income of subsidiary 61 6
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Income from continuing operations 1,883 433
Loss from discontinued operations
(net of income taxes of $92 and $46) (164) (81)
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Net income $ 1,719 $ 352
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Basic net income per share:
Income from continuing operations $ 0.11 $ 0.03
Loss from discontinued operations (0.01) (0.01)
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Basic net income per share $ 0.10 $ 0.02
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Diluted net income per share:
Income from continuing operations $ 0.11 $ 0.02
Loss from discontinued operations (0.01) -
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Diluted net income per share $ 0.10 $ 0.02
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Weighted average common shares outstanding:
Basic 16,793 16,060
Diluted 17,331 17,811
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
May 31, February 28,
2003 2003
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Assets
Current assets:
Cash and cash equivalents $ 101,807 $ 90,025
Short-term investments 19,100 22,872
Accounts receivable, net 23,690 22,738
Inventories 20,766 17,644
Deferred income taxes 10,772 8,545
Other current assets 10,694 8,710
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Total current assets 186,829 170,534
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Property, plant and equipment, net 20,080 22,257
Goodwill 29,773 29,773
Intangible assets, net 5,648 6,008
Deferred income taxes 8,608 11,779
Other assets 5,433 7,598
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$ 256,371 $ 247,949
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 13,146 $ 9,114
Deferred income on shipments to
distributors 7,428 5,943
Accrued expenses, income taxes and
other liabilities 10,167 9,838
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Total current liabilities 30,741 24,895
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Other liabilities 7,128 7,379
Minority interest in subsidiary 11,724 11,663
Shareholders' equity:
Preferred stock - -
Common stock 1,863 1,859
Additional paid-in capital 148,234 147,655
Retained earnings 79,211 77,492
Treasury stock, at cost (23,454) (23,454)
Deferred stock-based compensation (2,355) (2,102)
Accumulated other comprehensive income 3,279 2,562
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Total shareholders' equity 206,778 204,012
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$ 256,371 $ 247,949
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