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) : October 7, 1997
STANDARD MICROSYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-7422 11-2234952
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(State of (Commission (IRS Employer
Incorporation) File No.) Identification No.)
80 ARKAY DRIVE, HAUPPAUGE, NEW YORK 11788
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 516-435-6000
Not applicable
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On October 7, 1997, the registrant transferred substantially all of the
assets comprising its System Products Division to a newly formed wholly-owned
subsidiary (originally organized as AJJA Inc., now known as SMC Networks, Inc.)
and then sold 80.1% of the subsidiary's outstanding stock to Global
Business Investments (B.V.I.) Corp., a newly formed wholly-owned subsidiary of
Accton Technology Corporation, a Taiwan company limited by shares. The System
Products Division supplied local area network (LAN) network interface cards,
hubs, and switches. In consideration for the sale of stock, the registrant
received $40,237,000 in cash, of which $2,012,000 was placed in an escrow
account to secure the registrant's indemnity obligations under the Stock
Purchase Agreement. As a result of this transaction, the Company expects to
realize a pre-tax gain of approximately $2 million in its third quarter ended
November 30, 1997.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
(1) Unaudited Pro Forma Consolidated Condensed Statement of Income
for the year ended February 28, 1997.
Note: An Unaudited Pro Forma Consolidated Condensed Statement of Income for the
six month period ended August 31, 1997, and an Unaudited Pro Forma
Consolidated Condensed Balance Sheet as of August 31, 1997 are not
presented herein. The Consolidated Financial Statements included within
the Company's previously filed Form 10-Q for the quarterly period ended
August 31, 1997 reflect this transaction as a discontinued operation for
all periods presented within the Consolidated Statements of Income filed
therein, including the six month period ended August 31, 1997, and on the
Consolidated Balance Sheet as of August 31, 1997, also filed therein.
(c) Exhibits. The exhibits identified below are made part of this report.
Exhibit No. Exhibit
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10.1 Stock Purchase Agreement, dated September 30, 1997, among
Accton Technology Corporation, Global Business Investments
(B.V.I.) Corp., Standard Microsystems Corporation, the Seller
Subsidiaries, and AJJA Inc.
10.2 Stockholders Agreement, dated October 7, 1997,
among Standard Microsystems Corporation, Accton Technology
Corporation, Global Business Investments (B.V.I.) Corp.,
and AJJA Inc.
10.3 Transition Services Agreement, dated October 7, 1997,
between AJJA Inc. and Standard Microsystems Corporation.
10.4 Intellectual Property License Agreement, dated October 7,
1997, between Standard Microsystems Corporation and
AJJA Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
duly authorized.
STANDARD MICROSYSTEMS CORPORATION (Registrant)
Date: October 22, 1997 /S/ Eric M. Nowling,
Vice President - Finance and Chief
Financial Officer
Item 7 (b) Pro Forma Financial Information
DESCRIPTION OF TRANSACTION
On October 7, 1997, the Company reorganized its System Products Division into a
new corporation, SMC Networks, Inc. (originally organized as AJJA Inc.), and
sold an 80.1% interest in this new corporation to Global Business Investments
(B.V.I.) Corp., a newly formed wholly-owned subsidiary of Accton Technology
Corporation, a Taiwan company limited by shares.
The Unaudited Pro Forma Consolidated Condensed Statement of Income for the year
ended February 28, 1997 presents Standard Microsystems Corporation's
consolidated operating results, excluding the discontinued operation,
assuming the transaction had taken place at the beginning of that period.
This Pro Forma Financial Statement eliminates the results of the System
Products Division, which was reorganized and reported as a discontinued
operation. These statements show the Company retaining a 19.9% interest in this
new company, and makes the related pro forma adjustments as described in the
accompanying notes. These adjustments show how this transaction might have
affected the historical statements as if the transaction was consummated at an
earlier time.
The pro forma figures presented do not necessarily represent the actual results
that would have occurred had the transaction taken place as assumed herein, nor
are they necessarily indicative of future operating results.
Standard Microsystems Corporation
Unaudited Pro Forma Consolidated Condensed Statement Of Income
For the year ended February 28, 1997
(in thousands, except per share amounts)
Year Ended System Pro Forma Twelve Months
Feb. 28, 1997 Products Adjustments Ended 2/28/97
Actual Division (See Notes) Pro Forma
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Revenues $ 354,138 $ (157,595) $ - $ 196,543
Cost of goods sold 258,790 (108,378) 764 (A) 151,176
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Gross Profit 95,348 (49,217) (764) 45,367
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Operating expenses:
Research and development 26,340 (14,706) - 11,634
Selling, general and administrative 93,123 (58,200) 5,721 (A) 40,644
Amortization of intangible assets 4,899 (4,797) - 102
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124,362 (77,703) 5,721 52,380
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Income (loss) from operations (29,014) 28,486 (6,485) (7,013)
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Interest income 520 - - 520
Interest expense (619) - - (619)
Litigation settlement (4,057) 4,057 - -
Other income (expenses) 168 9 - 177
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(3,988) 4,066 - 78
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Income (loss) before minority interest and
provision for taxes (33,002) 32,552 (6,485) (6,935)
Minority interest in net income of subsidiary 22 - - 22
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Income (loss) before provision for taxes (33,024) 32,552 (6,485) (6,957)
Provision for (benefit from) income taxes (11,726) - 9,256 (B) (2,470)
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Net income (loss) $ (21,298) $ 32,552 $(15,741) $ (4,487)
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Net income (loss) per common and
common equivalent share $ (1.54) $ (0.32)
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Weighted average common and
common equivalent shares outstanding 13,838 13,838
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STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Unaudited Pro Forma Consolidated Condensed Statement of Income
(A) The System Products Division was charged with certain corporate
administrative costs, including executive, finance, human resource, and
information systems costs, which would not have been eliminated had the
transaction occurred as presented. The Company will continue to provide
these services to SMC Networks, Inc., at fair value, until such time as
either party elects to terminate such services. The pro forma adjustment
presented here is net of the approximate fees which SMC Networks, Inc.
would pay to the Company for these services.
(B) Income taxes benefits have been provided at a rate of 35.5%, which is
consistent with the Company's consolidated effective income tax rate for
the period presented.
EXHIBIT INDEX
Exhibit No. Exhibit
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10.1 Stock Purchase Agreement, dated September 30, 1997, among
Accton Technology Corporation, Global Business Investments
(B.V.I.) Corp., Standard Microsystems Corporation, the Seller
Subsidiaries, and AJJA Inc.
10.2 Stockholders Agreement, dated October 7, 1997,
among Standard Microsystems Corporation, Accton Technology
Corporation, Global Business Investments (B.V.I.) Corp.,
and AJJA Inc.
10.3 Transition Services Agreement, dated October 7, 1997,
between AJJA Inc. and Standard Microsystems Corporation.
10.4 Intellectual Property License Agreement, dated October 7,
1997, between Standard Microsystems Corporation and
AJJA Inc.