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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
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):
January 12, 1996
STANDARD MICROSYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 0-7422 11-2234952
(State or other jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
80 ARKAY DRIVE
HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices, including zip code)
(516) 434-4600
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 9, 1996, the registrant, Standard Microsystems
Corporation ("SMC"), together with SMC Enterprise Networks, Inc., a Delaware
corporation and wholly-owned subsidiary of SMC (collectively, the "Sellers"),
and Cabletron Systems, Inc., a Delaware corporation ("Cabletron") and Cabletron
Systems Acquisition, Inc., a Delaware corporation ("Acquisition"), entered into
an Asset Purchase Agreement (the "Agreement"). Under the terms of the Agreement,
on January 12, 1996, Cabletron and Acquisition (collectively, the "Buyer")
purchased substantially all of the assets (and assumed certain of the
liabilities) of the Enterprise Networks business unit of the Sellers for
$75,900,000 in cash. The Enterprise Networks business unit of Sellers designed,
developed, manufactured and sold enterprise-wide switching products for computer
networks. The purchase price is subject to adjustment based on certain changes
that may be required upon audit of the final assets acquired and liabilities
assumed by the Buyer at the closing date of the asset sale. The purchase price
was determined by arms-length negotiations between Sellers and the Buyer. Under
the terms of the Agreement, the Sellers have agreed to indemnify the Buyer
against certain losses. As security for Sellers' indemnification obligations,
$7,050,000 of the purchase price was placed in escrow to be used as a source
from which certain indemnifiable losses may be paid by Sellers to Buyer.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
(1) Unaudited Pro Forma Consolidated Condensed Balance Sheet as
of November 30, 1995.
(2) Unaudited Pro Forma Consolidated Condensed Statements of
Income for the year ended February 28, 1995 and nine months
ended November 30, 1995
(c) Exhibits. The exhibit identified below is made part of this report.
Exhibit No. Description
- ----------- -----------
2 Asset Purchase Agreement, dated as of January 9, 1996,
among Cabletron Systems, Inc., Cabletron Systems
Acquisition, Inc., SMC Enterprise Networks, Inc., and
Standard Microsystems Corporation.
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SIGNATURES
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 hereunto duly authorized.
STANDARD MICROSYSTEMS CORPORATION
(Registrant)
Date: January 26, 1996 By: /s/ Anthony M. D'Agostino
--------------------------------
Anthony M. D'Agostino
Vice President Finance and
Chief Financial Officer
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ITEM 7 (b) PRO FORMA FINANCIAL INFORMATION
DESCRIPTION OF TRANSACTION
In January 1996, Standard Microsystems Corporation and its wholly-owned
subsidiary, SMC Enterprise Networks, Inc. (collectively, the "Company") sold
substantially all of the net assets of the Company's Enterprise Networks
business unit ("ENBU") to Cabletron Systems, Inc. and Cabletron Systems
Acquisition, Inc. (collectively, "Cabletron") pursuant to an Asset Purchase
Agreement between the Company and Cabletron. The Company's ENBU designs,
develops, manufactures and sells enterprise-wide switching products for
computer networks.
Under the terms of the agreement, Cabletron acquired specific assets and
intellectual properties, and assumed certain liabilities, related to the ENBU
in exchange for $75.9 million in cash, subject to certain purchase price
adjustments as defined in the Asset Purchase Agreement.
FINANCIAL INFORMATION PRESENTED
The unaudited Pro Forma Consolidated Condensed Balance Sheet as of November 30,
1995 presents Standard Microsystems Corporation's consolidated financial
position assuming the transaction had taken place on that date. The unaudited
Pro Forma Consolidated Condensed Statements of Income for the year ended
February 28, 1995 and nine months ended November 30, 1995 present Standard
Microsystems Corporation's consolidated operating results (before extraordinary
items) assuming the transaction had taken place at the beginning of each period
presented.
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 or financial
condition.
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STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF NOVEMBER 30, 1995
(IN THOUSANDS)
PRO FORMA
NOV. 30, 1995 BUSINESS ADJUSTMENTS NOV. 30, 1995
ACTUAL SOLD (SEE NOTES) PRO FORMA
----------------------------------------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 12,594 $ - $ 68,850 (A) $ 81,444
Accounts receivable 50,456 (3,774) - 46,682
Inventories 50,151 (8,485) - 41,666
Deferred tax benefits 10,929 - (1,934) (C) 8,995
Other current assets 5,889 (1,448) 254 (B) 4,695
----------------------------------------------- ------------
Total current assets 130,019 (13,707) 67,170 183,482
----------------------------------------------- ------------
Property, plant and equipment 136,571 (6,926) - 129,645
Accumulated depreciation and amortization 80,616 (2,798) - 77,818
----------------------------------------------- ------------
55,955 (4,128) - 51,827
----------------------------------------------- ------------
Intangible assets 19,663 (4,423) - 15,240
Long-term investment 13,990 - - 13,990
Deferred tax benefits 2,904 - (920) (C) 1,984
Other assets 4,287 - 7,050 (A) 11,337
----------------------------------------------- ------------
$ 226,818 $ (22,258) $ 73,300 $ 277,860
=============================================== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 17,712 $ (1,846) $ - $ 15,866
Accrued expenses and other liabilities 17,739 (1,609) 5,734 (B) 21,864
Income taxes payable 174 - 17,793 (C) 17,967
----------------------------------------------- ------------
Total current liabilities 35,625 (3,455) 23,527 55,697
----------------------------------------------- ------------
Long-term debt 18,000 - - 18,000
Minority interest in subsidiary 11,327 - - 11,327
Shareholders' equity:
Preferred stock - - - -
common stock 1,342 - - 1,342
Additional paid-in capital 79,467 - - 79,467
Retained earnings 73,813 - 30,970 (D) 104,783
Unrealized gain on investment, net 1,929 - - 1,929
Foreign currency translation adjustment 5,315 - - 5,315
----------------------------------------------- ------------
Total shareholders' equity 161,866 - 30,970 192,836
----------------------------------------------- ------------
$ 226,818 $ (3,455) $ 54,497 $ 277,860
=============================================== ============
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STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED PRO FORMA YEAR ENDED
FEB. 28, 1995 BUSINESS ADJUSTMENTS FEB. 28, 1995
ACTUAL SOLD (SEE NOTES) PRO FORMA
------------------------------------------------------ ------------------
Revenues $ 378,671 $ (22,113) $ - $ 356,558
Cost of goods sold 214,269 (11,336) - 202,933
------------------------------------------------------ ------------------
Gross profit 164,402 (10,777) - 153,625
Operating expenses:
Research and development 28,286 (7,604) - 20,682
Selling, general and administrative 90,005 (9,386) 1,296 (A) 81,915
Amortization of intangible assets 5,489 (1,083) - 4,406
------------------------------------------------------ ------------------
123,780 (18,073) 1,296 107,003
Income from operations 40,622 7,296 (1,296) 46,622
Other income (expense), net 670 - - 670
------------------------------------------------------ ------------------
Income before minority interest and
provision for income taxes 41,292 7,296 (1,296) 47,292
Minority interest in net income
of subsidiary 185 - - 185
------------------------------------------------------ ------------------
Income before provision for income taxes 41,107 7,296 (1,296) 47,107
Provision for income taxes 15,940 - 1,918 (B) 17,858
------------------------------------------------------ ------------------
Income before extraordinary item $ 25,167 $ 7,296 $ (3,214) (C) $ 29,249
====================================================== ==================
Income per share before extraordinary item $ 1.89 $ 2.20
================== ==================
Weighted average common and common
equivalent shares outstanding 13,305 13,305
================== ==================
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STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS NINE MONTHS
ENDED PRO FORMA ENDED
NOV. 30, 1995 BUSINESS ADJUSTMENTS NOV. 30, 1995
ACTUAL SOLD (SEE NOTES) PRO FORMA
----------------------------------------------------- ------------------
Revenues $ 248,213 $ (13,708) $ - $ 234,505
Cost of goods sold 159,339 (11,210) - 148,129
----------------------------------------------------- ------------------
Gross profit 88,874 (2,498) - 86,376
Operating expenses:
Research and development 23,937 (7,616) - 16,321
Selling, general and administrative 79,659 (9,541) 1,306 (A) 71,424
Amortization of intangible assets 6,816 (812) - 6,004
----------------------------------------------------- ------------------
110,412 (17,969) 1,306 93,749
Income (loss) from operations (21,538) 15,471 (1,306) (7,373)
Other income (expense), net (620) - - (620)
----------------------------------------------------- ------------------
Income (loss) before minority interest and
provision for income taxes (22,158) 15,471 (1,306) (7,993)
Minority interest in net income
of subsidiary 153 - - 153
----------------------------------------------------- ------------------
Income (loss) before provision
for income taxes (22,311) 15,471 (1,306) (8,146)
Provision for (benefit from) income taxes (7,508) - 5,208 (B) (2,300)
----------------------------------------------------- ------------------
Net income (loss) $ (14,803) $ 15,471 $ (6,514) $ (5,846)
===================================================== ==================
Net income (loss) per share $ (1.11) $ (0.44)
================== ==================
Weighted average common and common
equivalent shares outstanding 13,325 13,325
================== ==================
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STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(A) Reflects the sale of substantially all of the assets of the ENBU to
Cabletron Systems, Inc. for $75.9 million in cash, of which $7.1
million was placed in escrow pursuant to the Asset Purchase Agreement
as security for the Company's indemnification obligations.
(B) Represents certain assets not conveyed ($254,000) and liabilities not
assumed ($1,434,000) by Cabletron, as well as an accrual for
approximately $4.3 million of expenses directly related to the
transaction.
(C) Income taxes on the gain realized by the Company on the transaction
have been accrued at a rate of 40%, which includes the statutory
federal tax rate and state tax rates of those states impacted by this
transaction. Of the resulting $20.6 million accrued for income taxes,
$17.8 million is estimated to be currently payable, and $2.8 million is
deferred.
(D) An after-tax gain of approximately $31.0 million on this transaction is
presented within these assumptions.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(A) Represents various allocated selling, general and administrative
expenses which would not have been eliminated had the transaction
occurred as presented. These expenses include general marketing
services, sales administration and certain field sales expenses.
(B) Income taxes have been provided at a rate of 39%, which approximates
the effective combined federal and state statutory rate for the periods
presented.
(C) The Company reported a $944,000 extraordinary loss (net of tax) on an
early extinguishment of debt in fiscal 1995. This loss is excluded from
these pro forma results for the year ended February 28, 1995.
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EXHIBIT INDEX
Exhibit Index Description
- ------------- -----------
2 Asset Purchase Agreement, dated as
of January 9, 1996, among Cabletron
Systems, Inc., Cabletron Systems
Acquisition, Inc., SMC Enterprise
Networks, Inc., and Standard Microsystems
Corporation.