Exhibit 99
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One) :
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] .
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] .
FOR THE TRANSITION PERIOD FROM ........ TO ........
Commission File Number 0-7422
A. Full title of the plan and address of the plan, if different from that
of the issuer name below:
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
STANDARD MICROSYSTEMS CORPORATION
80 ARKAY DRIVE
HAUPPAUGE, NEW YORK 11788
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee has duly caused this annual report to be signed on their behalf by the
undersigned hereunto duly authorized.
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND
RETIREMENT PLAN
By:
---------------------------------------
Anthony M. DiAgostino
Member, Plan Committee
May 25, 1995
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants 4
Statements of Financial Condition as of
December 31, 1994 and December 31, 1993 5, 6
Statement of Income and Changes in Plan Equity
For the Plan Year ended December 31,
1994 7
Notes To Financial Statements 8 - 14
Schedule I - Assets Held for Investment as of
December 31, 1994 15
Schedule I - Assets Held For Investment as of
December 31, 1993 16
Schedule II - Reportable Transactions For the
Year Ended December 31, 1994 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Standard Microsystems Corporation Incentive Savings and Retirement
Plan Committee:
We have audited the accompanying Statements of Financial Condition of the
Standard Microsystems Corporation Incentive Savings and Retirement Plan as of
December 31, 1994 and December 31, 1993, and the related Statement of Income and
Changes in Plan Equity for the plan year ended December 31, 1994. These
financial statements are the responsibility of the plan administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial condition of the Standard Microsystems
Corporation Incentive Savings and Retirement Plan as of December 31, 1994 and
1993, and its income and changes in plan equity for the plan year ended December
31, 1994 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
April 7, 1995
Washington, D.C.
-4-
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
STATEMENT OF FINANCIAL CONDITION
As of December 31, 1994
Puritan Ginnie Mae Magellan
Total Fund Fund Fund
ASSETS
Cash and cash equivalents $ 1,059 $ 25 11 $ 35
Contributions receivable:
Employee 208,740 48,760 11,540 70,707
Employer matching 117,961 - - -
Investments:
Fidelity Puritan Fund (cost of
$2,379,537) 2,241,881 2,241,881 - -
Fidelity Ginnie Mae Fund
(cost of $565,846) 524,849 - 524,849 -
Fidelity Magellan Fund (cost of
of $3,704,721) 3,529,154 - - 3,529,154
Fidelity Asset Manager Fund
(cost of $2,188,606) 1,988,713 - - -
Fidelity Managed Income Fund
(cost of $1,336,863) 1,336,863 - - -
Standard Microsystems Corp. Common
Stock (359,384 shares, cost of
$7,607,083) 10,781,520 - - -
Loans Receivable 720,734 - - -
Total Assets 21,451,474 2,290,666 536,400 3,599,896
LIABILITIES
Benefits payable 1,539 - - -
Total Liabilities 1,539 - - -
PLAN EQUITY $ 21,449,935 $ 2,290,666 536,400 $ 3,599,896
The accompanying notes to financial statements are an integral part of
this statement.
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
STATEMENT OF FINANCIAL CONDITION
As of December 31, 1994
Asset Manager Managed Income Company Loan
Fund Fund Stock Fund Fund
ASSETS
Cash and cash equivalents $ 29 $ 30 $ 929 $ -
Contributions receivable:
Employee 39,101 21,191 17,441 -
Employer matching - - 117,961 -
Investments:
Fidelity Puritan Fund (cost of
$2,379,537) - - - -
Fidelity Ginnie Mae Fund
(cost of $565,846) - - - -
Fidelity Magellan Fund (cost of
of $3,704,721) - - - -
Fidelity Asset Manager Fund
(cost of $2,188,606) 1,988,713 - - -
Fidelity Managed Income Fund
(cost of $1,336,863) - 1,336,863 - -
Standard Microsystems Corp. Common
Stock (359,384 shares, cost of
$7,607,083) - - 10,781,520 -
Loans Receivable - - - -
Total Assets 2,027,843 1,358,084 10,917,851 -
LIABILITIES
Benefits payable - - 1,539 -
Total Liabilities - - 1,539 -
PLAN EQUITY $ 2,027,843 $1,358,084 $10,916,312 $720,734
The accompanying notes to financial statements are an integral part of
this statement.
5
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
STATEMENT OF FINANCIAL CONDITION
As of December 31, 1993
Puritan Ginnie Mae Magellan
Total Fund Fund Fund
ASSETS
Cash and cash equivalents $ 4,943 $ 25 11 $ 35
Contributions receivable:
Employee 57,160 10,061 2,907 16,795
Employer matching 90,365 - - -
Investments:
Fidelity Puritan Fund (cost of
$1,535,417) 1,572,498 1,572,498 - -
Fidelity Ginnie Mae Fund
(cost of $507,278) 496,614 - 496,614 -
Fidelity Magellan Fund (cost of
of $2,332,582) 2,475,306 - - 2,475,306
Fidelity Asset Manager Fund
(cost of $1,474,742) 1,634,721 - - -
Fidelity Managed Income Fund
(cost of $888,758) 888,758 - - -
Standard Microsystems Corp. Common
Stock (355,672 shares, cost of
$9,311,368) 7,646,948 - - -
Loans Receivable 258,116 - - -
Total Assets 15,125,429 1,582,584 499,532 2,492,136
LIABILITIES
Benefits payable 9,769 1,739 - -
Total Liabilities 9,769 1,739 - 2,023
PLAN EQUITY $ 15,115,660 $ 1,580,845 499,532 $ 2,490,113
The accompanying notes to financial statements are an integral part of
this statement.
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
STATEMENT OF FINANCIAL CONDITION
As of December 31, 1993
Asset Manager Managed Income Company
Fund Fund Stock Fund
ASSETS
Cash and cash equivalents $ 28 $ 29 $ 4,815 $ -
Contributions receivable:
Employee 8,997 3,786 14,614 -
Employer matching - - 90,365 -
Investments:
Fidelity Puritan Fund (cost of
$1,535,417) - - - -
Fidelity Ginnie Mae Fund
(cost of $507,278) - - - -
Fidelity Magellan Fund (cost of
of $2,332,582) - - - -
Fidelity Asset Manager Fund
(cost of $1,474,742) 1,634,721 - - -
Fidelity Managed Income Fund
(cost of $888,758) - 888,758 - -
Standard Microsystems Corp. Common
Stock (355,672 shares, cost of
$9,311,368) - - 7,646,948 -
Loans Receivable - - - -
Total Assets 1,643,746 892,573 7,756,742 258,116
LIABILITIES
Benefits payable 1,538 369 4,100 -
Total Liabilities 1,538 369 4,100 -
PLAN EQUITY $ 1,642,208 $ 892,204 $7,752,642 $258,116
The accompanying notes to financial statements are an integral part of
this statement.
6
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
For the plan year ended December 31, 1994
Puritan Ginnie Mae Magellan Asset Manager Managed Income Company Loan
Total Fund Fund Fund Fund Fund Stock Fund Fund
BEGINNING BALANCE, PLAN EQUITY $15,115,660 $1,580,845 $499,532 $2,490,113 $1,642,208 $ 892,204 $ 7,752,642 $258,116
Employee contributions 3,066,308 694,665 158,139 1,084,585 596,755 370,583 161,581 -
Employer matching contributions 876,262 - - - - - 876,262 -
Investment income 489,090 163,673 31,067 115,899 74,536 103,356 559 -
Realized gains (losses) on
securities transactions (110,190) (699) (6,592) (6,576) (9,165) - (87,158) -
Unrealized appreciation
(depreciation) of investments 2,745,815 (136,954) (34,404) (168,991) (190,728) - 3,276,892 -
Interfund transfers (0) 86,926 (96,850) 204,927 36,949 57,739 (752,309) 462,618
7,067,285 807,611 51,360 1,229,844 508,347 531,678 3,475,828 462,618
Benefit payments 733,010 97,790 14,492 120,061 122,712 65,798 312,157 -
733,010 97,790 14,492 120,061 122,712 65,798 312,157 -
INCREASE IN PLAN EQUITY 6,334,275 709,821 36,868 1,109,783 385,635 465,880 3,163,670 462,618
ENDING BALANCE, PLAN EQUITY $ 21,449,935 $ 2,290,666 $536,400 $3,599,896 $2,027,843 $1,358,084 $10,916,312 $720,734
The accompanying notes to financial statements are an integral part
of this statement.
7
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1) Description of the Plan
-----------------------
Purpose and Eligibility
- -----------------------
The Standard Microsystems Corporation Incentive Savings and Retirement Plan
(the "Plan"), formerly known as the "Employee Stock Purchase Plan", was
established on June 23, 1982 to encourage and assist eligible employees to
invest in Standard Microsystems Corporation (the "Company"), to adopt a regular
savings program, and to help provide additional security for their retirement.
Effective January 1, 1993, the plan was amended and restated to provide
participants with improved benefits, as well as facilitate certain
administrative functions. The Plan was established under sections 401(a) and
401(k) of the Internal Revenue Code which, among other provisions, allow for the
deferral of income taxes on amounts contributed.
Participation can begin on the first day of any calendar month after the
completion of three months of service as defined in the Plan.
Investment Programs
- -------------------
With the amendments adopted effective January 1, 1993, the Plan allows
participants to allocate their contributions among six investment programs.
These investment vehicles are as follows:
1. FIDELITY PURITAN FUND - This fund seeks to obtain as much income as
possible, consistent with the preservation of capital, by investing in a
broadly diversified portfolio of high yielding securities, including
common stocks, preferred stocks, bonds, and foreign securities.
2. FIDELITY GINNIE MAE FUND- This fund seeks a high level of current income,
by investing primarily in mortgage-related securities issued by the
Government National Mortgage Association.
-8-
3. FIDELITY MAGELLAN FUND - This fund seeks capital appreciation by investing
primarily in common stock and securities convertible into common stock.
Up to 20% of the fund's assets may also be invested in debt securities of
all types and qualities issued by foreign and domestic issuers if Fidelity
Magellan Fund believes they have potential for capital appreciation.
Equity investments can be made in domestic or foreign corporations.
4. FIDELITY ASSET MANAGER FUND - This fund seeks high total return with
reduced risk by allocating its assets among stock, bonds, and money market
instruments, including foreign securities, normally within the following
parameters: 10-50% in stocks; 20-60% in bonds, 0-70% in money market
instruments.
5. FIDELITY MANAGED INCOME FUND - This portfolio will purchase high-quality,
short and long-term Guaranteed Investment Contracts (GICs), Bank
Investment Contracts (BICs), short-term money market instruments, and
"synthetic" GICs (debt obligations issued by one institution and insured
by another as to payment of interest and return of principal at maturity).
The Portfolio strives to maintain a stable $1.00 share price.
6. STANDARD MICROSYSTEMS CORPORATION COMMON STOCK - Common stock issued by
Standard Microsystems Corporation.
The value of each participant's account equals the participant's
contributions, the Company's matching and regular contributions, net earnings,
forfeitures allocated in accordance with the Plan provisions, and current value
adjustments.
Employee Contributions
- ----------------------
Each eligible participant may make qualified earnings reduction
contributions from 1% - 15% of his/her earnings which are not currently subject
to income taxes. These earnings reduction contributions are subject to certain
statutory and regulatory limitations and may not exceed $7,000, as indexed for
inflation, per calendar year ($9,240 for 1994). Participant contributions,
which are entirely voluntary, are allocated by the employee between the six
investment programs in ten percent increments. There were 699 and 634 active
participants in the Plan and 542 and 522 participants making contributions as of
December 31, 1994 and 1993, respectively.
There were 65 and 76 terminated employees with funds in the plan as of
December 31, 1994 and 1993, respectively.
-9-
Participants may also make "rollover" contributions of distributions from
other qualified plans which are not matched by the Company. For the Plan period
ending December 31, 1994, "rollover" contributions of $505, 828 were received by
the Plan and are included in Employee contributions in the accompanying
Statement of Income and Changes in Plan Equity.
Employer Contributions
- ----------------------
The Company may, at its discretion, contribute to the Plan "Matching
Contributions" in cash or securities equal to 50% of each participant's
qualified earnings reduction contribution (up to a maximum participant
contribution of 6% of earnings), subject to certain statutory and regulatory
limitations. In addition, the Company may, at its discretion, make an
additional "Profit Sharing Contribution" which, if made, is allocated pro rata
to participants on the basis of their earnings. No Profit Sharing Contribution
was made to the Plan during the last plan year.
Benefits
- --------
Upon the death, retirement (at age 65 or later) or total and permanent
disability of a participant while in the employ of the Company, the
participantis entire account (including the employee's share of the Company's
contributions) becomes 100% vested.
If a participant's employment with the Company is terminated for any other
reason, the participant is entitled to receive in full the portion of his or her
account attributable to participant contributions and is also entitled to
receive a portion of his or her account allocable to Employer contributions
based upon the following schedule:
Years of Service Percentage Vested
---------------- -----------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
-10-
The unvested portion of a former participantis account will be allocated to
the remaining participants as discussed in note 7 below. A separated
participant may elect to defer distribution of his or her benefit if the benefit
exceeds $3,500. In such event, the benefit remains invested in the Plan and
contines to participate in Plan earnings.
A separated participant, who elected to receive a distribution and who was
not fully vested at the time of distribution, that is subsequently rehired and
becomes eligible to participate before having incurred five consecutive One Year
Breaks in Service, may repay the distribution which he or she received within
five years of receiving same. A participant who, upon rehire, repays his or her
distribution is recredited with all previous years of service and the full
account balance, determined as of the prior termination date. The Company
remains contingently liable should any such participant rejoin the Company.
Participant Loans and Withdrawals
- ---------------------------------
Subject to certain Plan provisions, participants may apply for Loans against
their vested account balance. Additionally, participants are entitled to apply
for hardship withdrawals and, after attaining age 59 1/2, receive in-service
distributions (excluding company contribution accounts).
2) Summary of Significant
Accounting Policies
----------------------
Basis of Accounting
-------------------
The financial statements of the Plan are presented on the accrual basis
of accounting.
Security Valuation
------------------
Investments are stated at current value based upon the latest publicly
quoted market prices at the end of the applicable period.
The following summarizes the activity in employer securities for the Plan
year ended December 31, 1994:
-11-
December 31,
1994
Shares in the Plan, beginning
of the period 355,672
Shares issued to the Plan 68,662
Shares redeemed and transferred
to former participants <64,950>
Shares in the Plan, end of the
period 359,384
The per share price at which the Plan purchased the Company's stock ranged
from $13.75 to $27.13 for the Plan year ended December 31, 1994. See Note 8 for
the effect of changes in the Company's stock price subsequent to December 31,
1994.
3) Plan Administration
-------------------
Management
----------
Pursuant to the terms of the Plan:
a) The Board of Directors of the Company has established the Plan Committee
to act as the Company's agent to administer the Plan. The Plan Committee
consists of members of the Companyis management.
b) Midlantic National Bank, (the "Trustee"), is the custodian of the Planis
property and funds. Under the terms of the Plan and trust agreement,
securities credited to the participants' accounts are registered in the
name of the Trustee. Securities issued by the Company are voted by the
Trustee in accordance with participant instructions. If, however, a
participant does not provide the Trustee with instructions in a timely
manner, the Trustee will vote such shares at its own discretion. The Plan
has obtained the required surety bonding under ERISA.
-12-
Plan Costs
----------
Administrative costs of $46,253 for the Plan year ended December 31, 1994
were paid by the Company. These expenses are for record keeping and
investment management services.
4) Termination of the Plan
-----------------------
Although the Company intends to continue the Plan indefinitely, it
reserves the right to amend or discontinue the Plan at any time, or to
reduce, suspend or discontinue payments to be made by the Company to the
Plan. Upon termination of the Plan or discontinuance of payments, the
account of each participant (including the employee's share of the
Companyis contribution) shall become fully vested, regardless of length of
service.
5) Income Tax Status
-----------------
Effective January 1, 1993 the Plan was amended and restated in its
entirety to comply with the Tax Reform Act of 1986 and subsequent tax
legislation. The Plan Administrator in June 1994 applied for a
determination letter from the Internal Revenue Service (IRS) with regard
to the ongoing tax qualified status of the Plan. On October 19, 1994 the
IRS issued a favorable determination letter in this regard.
Since the Plan has been determined by the IRS to be qualified,
contributions by participants and the Company, and the earnings thereon,
will continue to be exempt from Federal taxes until distributed to the
participants or their beneficiaries.
6) Benefits Payable
----------------
Benefits payable, as of December 31, 1994 and 1993, include approximately
52 and 191 shares, respectively, of the Company's common stock to be
distributed to former participants, with the remainder payable in cash.
-13-
7) Forfeitures
-----------
During the Plan year ended December 31, 1994, $31,634 in non-vested
account balances were forfeited by former participants who elected to have
their vested account balance distributed to them. This amount was
reallocated to the accounts of those participants who made qualified
earnings reduction contributions during the plan year in the proportion of
each Participant's qualified earnings reduction contributions, up to 6%,
provided the participant was active on the last day of the plan year.
8) Standard Microsystems Corporation Stock Price
---------------------------------------------
The Company's stock price is affected by both the fundamental economic
environment and computer industry conditions. Through April 7, 1995, the
Company's stock has traded in the range of $ 13.38 to $31.63 per share.
Based upon the closing price of $16.75 per share on April 7, 1995, the
shares held by the Plan at December 31, 1994 have decreased approximately
44%. There has been no significant change in the value of the Plan's
other assets. The value of the Plan's investments may continue to
fluctuate considerably and past performance may not be representative of
future results.
9) Supplementary Schedules and Disclosures
---------------------------------------
See Schedule I for the assets held for investment as of December 31, 1994
and 1993. Schedule II lists reportable transactions, as defined by ERISA,
which occurred during the Plan year ended December 31, 1994. During this
period, there were no investments in default or transactions with parties
in interest.
-14-
Standard Microsystems Corporation Schedule I
Incentive Savings and Retirement Plan
Schedule of Assets Held for Investment
As of December 31, 1994
NUMBER VALUE
INVESTMENT DESCRIPTION COST CURRENT VALUE OF UNITS OR SHARES PER FUND UNIT
Fidelity Puritan Fund $2,379,537 $ 2,241,881 151,376 $14.81
Fidelity Ginnie Mae Fund $ 565,846 $ 524,849 52,537 $ 9.99
Fidelity Magellan Fund $3,704,721 $ 3,529,154 52,832 $66.80
Fidelity Asset Manager Fund $2,188,606 $ 1,988,713 143,797 $13.83
Fidelity Managed Income Fund $1,336,863 $ 1,336,863 1,336,863 $ 1.00
SMC Common Stock $7,607,083 $10,781,520 359,384 $30.00
15
Standard Microsystems Corporation Schedule I
Incentive Savings and Retirement Plan
Schedule of Assets Held for Investment
As of December 31, 1993
NUMBER VALUE
INVESTMENT DESCRIPTION COST CURRENT VALUE OF UNITS OR SHARES PER FUND UNIT
Fidelity Puritan Fund $1,535,417 $1,572,498 99,841 $15.75
Fidelity Ginnie Mae Fund $ 507,278 $ 496,614 45,728 $10.86
Fidelity Magellan Fund $2,332,582 $2,475,306 34,937 $70.85
Fidelity Asset Manager Fund $1,474,742 $1,634,721 106,151 $15.40
Fidelity Managed Income Fund $ 888,758 $ 888,758 888,758 $ 1.00
SMC Common Stock $9,311,368 $7,646,948 355,672 $21.50
16
STANDARD MICROSYSTEMS CORPORATION SCHEDULE II
INCENTIVE SAVINGS AND RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31,1994
/--------------AMOUNTS IN DOLLARS------------/
INVESTMENT REALIZED NUMBER OF
DESCRIPTION TYPE SHARES COST PROCEEDS GAIN TRANSACTIONS
FIDELITY:
PURITAN FUND SALE 28,707 280,077 279,378 (699) 41
PURITAN FUND PURCHASE 80,242 1,086,417 56
GINNIE MAE SALE 14,584 158,011 151,419 (6,592) 27
GINNIE MAE PURCHASE 21,393 220,650 45
MAGELLAN FUND SALE 4,117 290,864 284,288 (6,576) 45
MAGELLAN FUND PURCHASE 22,012 1,513,704 57
ASSET MANAGER FUND SALE 15,268 233,759 224,594 (9,165) 42
ASSET MANAGER FUND PURCHASE 52,914 778,479 51
MANAGED INCOME FUND SALE 792,359 792,359 792,359 0 65
MANAGED INCOME FUND PURCHASE 1,240,647 1,240,647 71
SMC COMMON STOCK SALE 64,999 1,389,698 1,302,540 (87,158) 55
SMC COMMON STOCK PURCHASE 66,155 1,207,145 60
17
STANDARD MICROSYSTEMS CORPORATION
INCENTIVE SAVINGS AND RETIREMENT PLAN
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- ------------
1 Consent of
Independent Public
Accountants
Exhibit 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 11-K, into the Company's previously
filed Registration Statement on Forms S-8 (No. 2-78324).
April 7, 1995
Washington, D.C.