Exhibit 99.1
SMSC REPORTS 24% INCREASE IN YEAR-OVER-YEAR FIRST
QUARTER REVENUES
Non-PC I/O Sales Grow by Almost 40% Over Prior Year and Contribute
40% of First Quarter Product Revenues
Hauppauge, NY - June 14, 2004 - SMSC (Nasdaq: SMSC) today announced that
revenues for the first quarter ended May 31, 2004 were $53.1 million, an
increase of approximately 24% over revenues of $42.7 million in the first
quarter of fiscal 2004.
Gross profit percentage for the first quarter of fiscal 2005 was 50.3%, compared
to 48.4% in the previous year's first quarter.
Research and development expenses for the first quarter were $10.9 million,
compared to $9.1 million in the year-ago quarter, and selling, general and
administrative expenses were $11.9 million, compared to $9.5 million in last
year's first quarter. The year-over-year increases in operating expenses
primarily reflect investments in engineering and marketing personnel, tooling
costs for new product developments, litigation costs and generally higher
expenses associated with increasing revenues.
Operating income in the first quarter of fiscal 2005 was $3.6 million as
compared to $3.1 million in the year-ago period. First quarter net income was
$2.9 million, or $0.15 per share, compared to income from continuing operations
of $1.9 million, or $0.11 per share, in the first quarter of fiscal 2004.
Cash and liquid investments at May 31, 2004 were $169.7 million, compared to
$173.9 million at February 29, 2004. Inventories at May 31, 2004 totaled $23.2
million and remain appropriate relative to expected demand. The Company has no
bank debt, and book value per share was $14.41 as of May 31, 2004.
"SMSC once again executed on its financial goals and delivered first quarter
revenues that were 24% higher than the same period last year," said Steven J.
Bilodeau, Chairman and Chief Executive Officer. "Gross margin percentage was
over 50% and operating income exceeded last year's first quarter by more than
16%."
Mr. Bilodeau added, "During the quarter, PC I/O sales continued to be strong,
with notebook device sales increasing by 20% over last year's first quarter.
Networking and Connectivity products also continued to show strong sales,
increasing collectively by over 50% from the year-ago period. In addition, total
non-PC I/O revenues contributed 40% of total first quarter product sales as SMSC
continues to gain recognition as a supplier of a diversified portfolio of
products to a broad range of markets."
New Brand Identity
On April 26, 2004, SMSC was honored to open Nasdaq and unveiled a new global
brand identity, including a new logo, tagline - "Success by Design," and website
design at its www.smsc.com homepage. Through its communication initiatives, the
Company is placing renewed emphasis on building awareness of its market
leadership position and unique capabilities to serve its customers. The new
"Success by Design" tagline underscores the Company's mission of being an
essential ingredient that fuels its customers' success. This tagline highlights
SMSC's culture, which is deliberate in the manner in which it ensures success
for its customers and stakeholders.
Business Outlook:
For the second quarter of fiscal 2005, SMSC expects revenues to be between $56
million and $60 million, representing a year-over-year increase of 20%, or a
sequential increase of 9%, at the midpoint of that range. Gross profit
percentage is expected to be between 48% and 49%. Research and development
expenses and selling, general and administrative expenses are each expected to
be between $11 million and $12 million. Amortization of acquired intangibles is
expected to be $300 thousand. The effective tax rate is estimated to be
approximately 28.5%, and the Company expects second quarter net income to be
between $0.17 and $0.21 per share.
About SMSC:
Many of the world's most successful global technology companies rely upon SMSC
as a go-to resource for integrated circuits and semiconductor system solutions
that span analog, digital and mixed-signal technologies. SMSC delivers products
that solve the challenges of space, cost and time-to-market for high-speed
computing, connectivity and embedded networking applications.
SMSC addresses computing, communications and consumer electronics markets
through world-leading positions in Input/Output and non-PCI Ethernet products;
innovations in USB 2.0 and other high-speed serial solutions; and integrated
networking products employed in a broad range of applications. Leveraging
substantial intellectual property and a comprehensive global infrastructure,
SMSC thrives at the intersection of silicon, software and customized OEM
applications.
SMSC is based in Hauppauge, New York with operations in North America, Taiwan,
Japan, Korea, China and Europe. Engineering design centers are located in
Arizona, New York and Texas. 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, 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.
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
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
---------------------------------------
May 31,
---------------------------------------
2004 2003
---- ----
Sales and revenues:
Product sales $ 50,352 $ 42,488
Intellectual property revenues 2,701 233
- -------------------------------------------------------------------------------
53,053 42,721
Cost of goods sold 26,385 22,059
- -------------------------------------------------------------------------------
Gross profit 26,668 20,662
Operating expenses (income):
Research and development 10,862 9,101
Selling, general and administrative 11,852 9,513
Amortization of intangible assets 317 360
Gains on real estate transactions - (1,444)
- -------------------------------------------------------------------------------
Income from operations 3,637 3,132
Interest income 466 443
Other expense, net (32) (736)
- -------------------------------------------------------------------------------
Income before provision for income taxes
and minority interest 4,071 2,839
Provision for income taxes 1,159 895
Minority interest in net income of
subsidiary - 61
- -------------------------------------------------------------------------------
Income from continuing operations 2,912 1,883
Loss from discontinued operations
(net of income tax benefits of $92) - (164)
- -------------------------------------------------------------------------------
Net income $ 2,912 $ 1,719
===============================================================================
Basic net income per share:
Income from continuing operations $ 0.16 $ 0.11
Loss from discontinued operations - (0.01)
- -------------------------------------------------------------------------------
Basic net income per share $ 0.16 $ 0.10
===============================================================================
Diluted net income per share:
Income from continuing operations $ 0.15 $ 0.11
Loss from discontinued operations - (0.01)
- -------------------------------------------------------------------------------
Diluted net income per share $ 0.15 $ 0.10
===============================================================================
Weighted average common shares
outstanding:
Basic 18,246 16,793
Diluted 19,790 17,331
The sum of the income (loss) per share amounts may not total due to rounding.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
May 31, February 29,
2004 2004
---- ----
Assets
Current assets:
Cash and cash equivalents $ 130,855 $ 135,161
Short-term investments 27,260 23,136
Accounts receivable, net 29,821 21,946
Inventories 23,199 23,162
Deferred income taxes 14,748 15,064
Other current assets 8,946 8,549
- --------------------------------------------------------------------------------
Total current assets 234,829 227,018
- --------------------------------------------------------------------------------
Property, plant and equipment, net 23,295 23,430
Long-term investments 11,600 15,600
Goodwill 29,595 29,595
Intangible assets, net 4,380 4,697
Deferred income taxes 6,276 6,493
Other assets 3,169 3,192
- --------------------------------------------------------------------------------
$ 313,144 $ 310,025
================================================================================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 12,661 $ 14,679
Deferred income on shipments to distributors 11,912 7,972
Accrued expenses, income taxes and other
liabilities 11,654 13,168
- --------------------------------------------------------------------------------
Total current liabilities 36,227 35,819
- --------------------------------------------------------------------------------
Other liabilities 11,488 12,104
Shareholders' equity:
Preferred stock - -
Common stock 2,024 2,019
Additional paid-in capital 182,993 181,830
Retained earnings 101,922 99,010
Treasury stock, at cost (23,454) (23,454)
Deferred stock-based compensation (2,658) (1,962)
Accumulated other comprehensive income 4,602 4,659
- --------------------------------------------------------------------------------
Total shareholders' equity 265,429 262,102
- --------------------------------------------------------------------------------
$ 313,144 $ 310,025
================================================================================