Thursday September 26 11:44 AM EDT
Standard Microsystems announces revenues and net income for the second quarter of fiscal 1997
HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Sept. 26, 1996--Standard Microsystems Corp. (SMC(R)) ( Standard Microsystems Corp ) today announced results for the second quarter of its 1997 fiscal
year.
Revenues for the second quarter ended Aug. 31, 1996 were $99.2 million, which were 16.1% above the $85.4 million in revenues reported by the company for the second quarter of the previous fiscal
year. Standard Microsystems' net income for the second quarter was $0.1 million, or $0.01 per share, compared to a net loss of $12.1 million, or $0.91 per share, in the second quarter of the prior fiscal
year.
For the first half year ended Aug. 31, 1996, SMC's revenues increased 26.4% to $199.3 million, from revenues of $157.6 million in the comparable period of the previous fiscal year. Net income was $2.1
million, or $0.15 per share, compared to a net loss of $15.1 million, or $1.14 per share, in the first half of the previous fiscal year.
Paul Richman, Standard Microsystems Corporations's Chairman of the Board and Chief Executive Officer, commenting on these results, stated that, "Historically, the second quarter has been a more difficult
quarter for the company. Despite experiencing significantly lower margins in our Component Products Division because of industry-wide pricing pressures, SMC made a profit for the second quarter. One of
the major factors causing these lower margins was our decision to react quickly to market conditions and to substantially reduce the Divisions inventory of older Super I/O integrated circuit products at
lower-than-planned prices. Most of this inventory was shipped during the quarter just ended. Primarily as a result of this action, Standard Microsystems was able to achieve a reduction of approximately $14
million in its inventory, from $81 million at the end of the first quarter to $67 million at the end of the second quarter."
During the second quarter just ended, SMC's Component Products Division, a leading supplier of metal-oxide-semiconductor/very-large-scale integrated (MOS/VLSI) circuits for the worldwide personal
computer industry, continued its efforts to bring advanced input/output (I/O) circuits to the market. As a result, the Division achieved volume production and shipments of the FDC37C957FR, the industry's
first Ultra I/O device with an embedded microcontroller, providing Fast IR (Infrared) communications and advanced power and system management for personal computer applications.
Although the Component Products Division's book-to-bill ratio was less than one for the second quarter and generally in line with that of the semiconductor industry, the Division experienced an increase in
the book-to-bill ratio during the second quarter, compared with the first quarter. In addition, during the month of August, the Division recorded the highest monthly revenues in its history.
SMC's System Products Division achieved significant improvement in its operations during the second quarter. The Division increased its revenues and reduced its losses, compared to the first quarter of the
current fiscal year, and substantially reduced its losses, compared to the second quarter of the last fiscal year. The Division also continued to see increases in shipments from its North American distributors to
resellers, an encouraging trend that started during the first quarter.
During the second quarter, the System Products Division expanded its product offerings by successfully introducing a new EtherEZ(TM) line of Ethernet PC Card adapters that provide network
communications for portable and laptop computers. The Division also experienced over 50% growth in its shipments of Fast Ethernet adapters, compared to the first quarter of the current fiscal year. In the
networking industry, Fast Ethernet is generally expected to be the next generation of office connectivity technology.
For the second quarter ended Aug. 31, 1996, revenues for the Component Products Division were $49.7 million, compared to $32.0 million in the second quarter of the prior fiscal year. Operating income
for the Division in the second quarter was $4.1 million, compared to $8.6 million in the corresponding quarter of the last fiscal year. For the first half year ended Aug. 31, 1996, the Component Products
Division's revenues reached $105.7 million, compared to $62.1 million in the comparable period of the prior fiscal year. Operating income for the Division for the first half year ended Aug. 31, 1996 was
$16.2 million, compared to $17.1 million in the first half of the prior fiscal year.
Revenues for the System Products Division for the second quarter ended Aug. 31, 1996 were $45.5 million, compared to $48.8 million in the second quarter of the prior fiscal year. Operating income for the
Division in the second quarter just ended was $1.6 million, compared to an operating loss of $19.0 million in the comparable quarter of the last fiscal year. For the first half of the current fiscal year, revenues
for the System Products Division were $85.1 million, compared to $87.8 million in the first half of the prior fiscal year. In the fist half of the current fiscal year, the Division reduced its operating loss to $1.8
million, compared to a loss of $28.6 million in the first half of the last fiscal year.
SMC's Japanese subsidiary, Toyo Microsystems Corp. (TMC), which sells both component and system products in the Japanese market, operates as a separate profit center and is reported as a separate
segment of SMC's operations. For the second quarter ended Aug. 31, 1996, TMC's revenues were $4.0 million, compared to $4.6 million in the second quarter of the prior fiscal year. Its operating results
for the second quarter were break-even, compared to operating income of $0.2 million in the comparable quarter of the last fiscal year. For the first half of the current fiscal year, TMC's revenues were $8.5
million, compared to $7.8 million in the first half of the last fiscal year. Its operating results for the period were break-even, compared to operating income of $0.3 million in the first half of the prior fiscal year.
During the second quarter ended August 31, 1996, general corporate and other operating expenses were $5.4 million, compared to $7.4 million in the second quarter of the previous fiscal year. For the first
half of the current fiscal year, these expenses were $11.0 million, compared to $11.3 million in the prior fiscal year.
The Component Products Division provided 50.1% of the company's revenues during the second quarter ended August 31, 1996 compared to 37.5% a year earlier, and the System Products Division
provided 45.9% of SMC's revenues, compared to 57.2% in the comparable period of the prior fiscal year. TMC provided 4.0% of the company's revenues during the second quarter, compared to 5.3% in
the second quarter of the last fiscal year.
For the first half year ended August 31, 1996 the Component Products Division provided 53.0% of SMC's revenues, compared to 39.4% in the first half of the last fiscal year, and the System Products
Division generated 42.7% of the company's revenues, compared to 55.7% in the first half of the previous fiscal year. TMC provided 4.3% of SMC's revenues for the first half of the current fiscal year,
compared to 4.9% in the first half of the prior fiscal year.
Standard Microsystems Corporation, with headquarters in Hauppauge, New York, is a leading worldwide supplier of MOS/VLSI circuits and systems for the personal computer industry.
SMC's Component Products Division supplies MOS/VLSI circuits for personal computers and embedded control systems. These include input/output devices for disk drive control, communications
interface, power management and other PC motherboard functions, Ethernet and Fast Ethernet controllers for LAN applications and ARCNET controllers for embedded networking applications.
SMC's System Products Division provides a broad range of networking solutions for scaling, managing and connecting LANs. It products include network adapters, hubs, switches and network
management software. The Division has an installed base of over 12 million nodes. SMC uses internally developed integrated circuits to achieve lower costs and to enhance product performance.
SMC and Standard Microsystems are registered trademarks of Standard Microsystems Corp. Product names and company names are the trademarks of their respective holders.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the matters discussed in this report are forward-looking statements that
involve risks and uncertainties, including the timely development and market acceptance of new products, the impact of competitive products and pricing, the effect of changing economic conditions, and such
risks and uncertainties as are detailed from time to time in the company's SEC reports, including the Annual Report filed on form 10-K.
Standard Microsystems Corp. and Subsidiaries
Consolidated Highlights of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Revenues $ 99,217 $ 85,434 $ 199,289 $157,643
Income (loss) before
provision for taxes $ 241 $(17,909) $ 3,490 $(22,828)
Provision for (benefit from)
income taxes $ 99 $ (5,804) $ 1,431 $ (7,722)
Net income (loss) $ 142 $(12,105) $ 2,059 $(15,106)
Net income (loss) per share $ .01 $ (0.91) $ 0.15 $ (1.14)
Weighted average number of
common and common equivalent
shares outstanding 13,864 13,331 13,836 13,298
Consolidated Balance Sheet Highlights
(in thousands, except per share data)
August 31, February 29,
1996 1996
Current assets $162,911 $148,884
Current liabilities $ 51,301 $ 55,781
Working capital $111,610 $ 93,103
Property, plant and
equipment, net $ 62,421 $ 60,208
Other assets, net $ 41,435 $ 51,567
Long-term debt $ 8,000 $ -
Minority interest in subsidiary $ 11,375 $ 11,376
Shareholders' equity $196,091 $193,502
Shareholders' equity per
common share outstanding at
end of period $ 14.15 $ 14.11
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Six Months Ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Revenues $ 99,217 $ 85,434 $ 199,289 $157,643
Cost of goods sold 69,267 62,611 132,463 106,425
Gross profit 29,950 22,823 66,826 51,218
Operating expenses:
Research and development 6,168 7,952 12,154 16,188
Selling, general and
administrative 22,398 28,686 48,809 52,191
Amortization of
intangible assets 1,220 3,872 2,460 5,244
29,786 40,510 63,423 73,623
Income (loss) from operations 164 17,687 3,403 22,405
Other income (expense):
Interest income 137 112 265 224
Interest expense (244) (225) (337) (453)
Other income (expense), net 184 (73) 160 (118)
77 (186) 88 (347)
Income (loss) before minority
interest and provision
for income taxes 241 (17,873) 3,491 (22,752)
Minority interest in
net income of subsidiary - 36 1 76
Income (loss) before provision
for income taxes 241 (17,909) 3,490 (22,828)
Provision for (benefit from)
income taxes 99 (5,804) 1,431 (7,722)
Net income (loss) $ 142 $(12,105) $ 2,059 $(15,106)
Net income (loss) per
common and common
equivalent share $ 0.01 $ (0.91) $ 0.15 $ (1.14)
Weighted average common
and common equivalent
shares outstanding 13,864 13,331 13,836 13,298
Consolidated Balance Sheets
(in thousand's)
Aug. 31 Feb. 29
1996 1996
Assets:
Current assets:
Cash and cash equivalents $ 11,612 $ 18,459
Accounts receivable, net 62,346 55,976
Inventories 67,095 60,408
Deferred tax benefits 8,737 8,607
Other current assets 13,121 5,434
Total current assets 162,911 148,884
Property, plant and
equipment:
Land $ 3,832 $ 3,832
Buildings and improvements $ 27,374 $ 26,839
Machinery and equipment 119,023 109,235
150,229 139,906
Less: accumulated depreciation 87,808 79,698
Property, plant and equipment,
net 62,421 60,208
Other assets 41,435 51,567
$ 266,767 $ 260,659
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 27,785 $ 30,801
Accrued expenses and other
liabilities 22,261 23,884
Income taxes payable 1,255 1,096
Total current liabilities 51,301 55,781
Long-term debt $ 8,000 --
Minority interest in subsidiary $ 11,375 $ 11,376
Shareholders' equity:
Preferred stock -- --
Common stock 1,386 1,371
Additional paid-in capital 86,234 84,737
Retained earnings 102,276 100,217
Unrealized holding gain, net 1,624 2,226
Foreign currency translation
adjustment 4,571 4,951
Total shareholders' equity 196,091 193,502
$ 266,767 $ 260,659
Results of Operations by Industry Segment
(In thousand's)
Three Months Ended Six Months Ended
Aug. 31, Aug. 31,
1996 1995 1996 1995
Component Products
Integrated circuit
revenues $ 44,975 $ 28,604 $ 95,056 $ 56,252
Foundry device
revenues 4,718 3,426 10,665 5,809
Total component
products revenues 49,693 32,030 105,721 62,061
Operating income 4,055 8,608 16,195 17,145
Operating income as a
% of revenues 8.2% 26.9% 15.3% 27.6%
System Products
Adapter revenues 35,598 35,240 66,285 66,659
Hub and switch
revenues 9,931 13,591 18,774 21,138
Total system products
revenues 45,529 48,831 85,059 87,797
Operating income
(loss) 1,558 (19,017) (1,827) (28,612)
Operating income (loss)
as a % of revenues 3.4% (38.9%) (2.1%) (32.6%)
Toyo Microsystems Corp.
Revenues 3,995 4,573 8,509 7,785
Operating income (loss) (1) 165 (14) 322
Operating income (loss)
as a % of revenues -- 3.6% -- 4.1%
General, Corporate and
Other
Operating (loss) (5,448) (7,443) (10,951) (11,260)
Interim figures are subject to independent year end audit.
CONTACT: Standard Microsystems Corporation
John Tweedy, 516/434-4630 (phone)
516/273-5550 (fax)
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