The latest results were inline with expectations (-.10 excluding the one time lawsuit settlement charge). The stock does seem to be taking a hit on the news though.
Monday December 16 8:30 AM EDT
Standard Microsystems announces results for the third quarter of fiscal 1997
HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Dec. 16, 1996--Standard Microsystems Corp. (SMC(R))(NASDAQ:SMSC) today announced results for the
third quarter of its 1997 fiscal year.
Revenues for the third quarter ended Nov. 30, 1996 were $93.8 million, which were 3.5% above the $90.6 million in revenues reported by the company for the
third quarter of the prior fiscal year. SMC's net loss for the third quarter was $3.9 million, or 28 cents per share, compared to net income of $0.3 million, or two
cents per share, in the third quarter of the prior fiscal year. The net loss for the third quarter included a one-time charge to pre-tax earnings of $4.1 million due to
the previously announced settlement of a legal action with Penril DataComm Networks Inc. (Penril). Excluding this one-time charge, the company's net loss for
the third quarter would have amounted to approximately ten cents per share.
For the first nine months ended Nov. 30, 1996, the company's revenues increased 18.1%, to $293.1 million, from revenues of $248.2 million in the comparable
period of the previous fiscal year. The net loss for the period was $1.8 million, or 13 cents per share, compared to a net loss of $14.8 million, or $1.11 per share,
in the first nine months of the previous fiscal year. Excluding the one-time charge from the Penril settlement, SMC's net income for the first nine months of the
current fiscal year would have been approximately 5 cents per share.
As previously announced, the Component Products Division experienced lower than expected orders for personal computer (PC) input/output (I/O) circuits from
its customers in the Pacific Rim countries. The company believes that constraints on the supply of Intel's Triton HX and VX core logic chipsets available to PC
manufacturers in the Pacific Rim countries during the third quarter led to a reduction in the number of PC motherboards being produced there. Furthermore, as a
result of the supply constraints on core logic chipsets and the increasing supplies of certain I/O circuits from competitors in the Pacific Rim countries, the market
price for these circuits was also under pressure, contributing to the decrease in revenues for the third quarter.
In addition, the System Products Division's revenues for the third quarter were down from the second quarter of the current fiscal year, primarily due to decreased
sales of 10 Mbit Ethernet products which were not fully offset by increased sales of newer Fast Ethernet products. The Division introduced several Fast Ethernet
products during the quarter and, even though they were not in production for the entire period, revenues from Fast Ethernet products were up more than 50% for
the third quarter, compared to the second quarter. Fast Ethernet products represented 18% of the System Products Division's Ethernet-related product revenues
for the third quarter.
SMC's Component Products Division has worked very closely with leaders in the PC industry to provide integrated circuits that its customers can use to make
their products more affordable and able to support the latest PC industry standards. In November, the Division introduced a pair of Enhanced Super I/O chips,
the FDC37C67x and FDC37C68x, that were specifically designed to work with Intel's Triton TX, the next generation PC core logic chipset. These new devices
were developed by SMC with the cooperation of two of the largest manufacturers in the PC industry.
During the third quarter, the Component Products Division also introduced the industry's first PC I/O controller with ACPI (Advanced Configuration and Power
Interface) management capability. The FDC37C93xAPM is an Ultra I/O device that brings advanced power management to desktop machines.
The company continued to make strategic investments in technologies that are expected to result in new product revenue opportunities in the future. During the
third quarter, SMC announced that it had entered into an agreement with ACCELERIX Inc. (ACCELERIX) of Carp, Ontario, Canada. The agreement provides
SMC with the rights to market, second source and enhance technology developed by ACCELERIX. It also gives SMC a 19.9% equity interest in privately held
ACCELERIX. SMC intends, through ACCELERIX, to pursue a significant segment of the multibillion dollar PC semiconductor marketplace with "systems on a
chip" which employ leading-edge Application Specific Memory (ASM) technology.
In another technology investment during the third quarter, the company acquired the Cardbus technology and the Cardbus design talent of Databook Inc. of
Danvers, Mass. Initially, this technology is expected to be used in chips for the laptop and notebook PC marketplace. With the engineering talent from this
acquisition, SMC's Component Products Division also established a new integrated circuit design center in the Boston area.
During the third quarter, the System Products Division announced SMC Connect 100, a new Fast Ethernet strategy designed to help customers understand and
integrate Fast Ethernet technology into their networks through cost-effective Fast Ethernet products that solve bandwidth, cabling, distance, 10/100 integration
and management issues. The strategy also includes a variety of service and support programs designed to educate customers about the benefits and practical
implementation of Fast Ethernet technology.
The products supporting the SMC Connect 100 strategy consist of an affordable new line of high-performance hubs, stackable hubs, switches and adapter cards
that provide flexible, scalable Fast Ethernet solutions for workgroup and departmental local area networks. During the third quarter, the System Products Division
started shipping a number of these new Fast Ethernet products, including the TigerStack(TM) 100 stackable hub, the TigerSwitch(TM) 100 switch, the EZ
Hub(TM) 100 and three EtherPower 10/100(TM) PCI adapter cards.
The Component Products Division provided 48.7% of the company's revenues during the third quarter ended Nov. 30, 1996, compared to 37.1% a year earlier,
and the System Products Division provided 46.2% of SMC's revenues, compared to 57.4% in the comparable period of the prior fiscal year. The company's
Japanese subsidiary, Toyo Microsystems Corp. (TMC), provided 5.1% of the company's revenues during the third quarter, compared to 5.5% in the third
quarter of the last fiscal year.
For the first nine months ended Nov. 30, 1996, the Component Products Division provided 51.7% of SMC's revenues, compared to 38.5% in the first nine
months of the last fiscal year, and the System Products Division generated 43.8% of the company's revenues, compared to 56.3% in the first nine months of the
previous fiscal year. TMC provided 4.5% of SMC's revenues for the first nine months of the current fiscal year, compared to 5.2% in the first nine months of the
prior fiscal year.
Standard Microsystems Corp., 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. Its 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 and the Quarterly Reports filed on Form 10-Q.
Standard Microsystems Corp. and Subsidiaries
Consolidated Highlights of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1996 1995 1996 1995
Revenues $ 93,769 $ 90,570 $ 293,057 $248,213
Income (loss) before
provision for taxes $ (6,253) $ 517 $ (2,762) $(22,311)
Provision for (benefit from)
income taxes $ (2,399) $ 214 $ (967) $ (7,508)
Net income (loss) $ (3,854) $ 303 $ (1,795) $(14,803)
Net income (loss) per share $ (0.28) $ 0.02 $ (0.13) $ (1.11)
Weighted average number of
common and common equivalent
shares outstanding 13,877 13,519 13,817 13,325
Consolidated Balance Sheet Highlights
(in thousands, except per share data)
Nov. 30, February 29,
1996 1996
Current assets $155,542 $148,884
Current liabilities $ 57,445 $ 55,781
Working capital $ 98,097 $ 93,103
Property, plant and
equipment, net $ 63,279 $ 60,208
Other assets $ 41,913 $ 51,567
Minority interest in subsidiary $ 11,386 $ 11,376
Shareholders' equity $191,903 $193,502
Shareholders' equity per
common share outstanding at
end of period $ 13.81 $ 14.11
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Nine Months Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1996 1995 1996 1995
Revenues $ 93,769 $ 90,570 $ 293,057 $248,213
Cost of goods sold 65,421 52,914 197,884 159,339
Gross profit 28,348 37,656 95,173 88,874
Operating expenses:
Research and development 7,118 7,749 19,272 23,937
Selling, general and
administrative 22,244 27,468 71,053 79,659
Amortization of
intangible assets 1,160 1,572 3,620 6,816
30,522 36,789 93,945 110,412
Income (loss) from operations (2,174) 867 1,228 (21,538)
Other income (expense):
Interest income 154 74 420 299
Interest expense (151) (325) (488) (778)
Litigation settlement (4,057) - (4,057) -
Other income (expense), net (15) (23) 145 (141)
(4,069) (274) (3,980) (620)
Income (loss) before minority
interest and provision
for income taxes (6,243) 593 (2,752) (22,158)
Minority interest in
net income of subsidiary 10 76 10 153
Income (loss) before provision
for income taxes (6,253) 517 (2,762) (22,311)
Provision for (benefit from)
income taxes (2,399) 214 (967) (7,508)
Net income (loss) $ (3,854) $ 303 $(1,795) $(14,803)
Net income (loss) per
common and common
equivalent share $ (0.28) $ 0.02 $ (0.13) $ (1.11)
Weighted average common
and common equivalent
shares outstanding 13,877 13,519 13,817 13,325
Consolidated Balance Sheets
(in thousands)
Nov. 30 Feb. 29
1996 1996
Assets:
Current assets:
Cash and cash equivalents $ 10,207 $ 18,459
Accounts receivable, net 52,751 55,976
Inventories 69,269 60,408
Deferred tax benefits 9,184 8,607
Other current assets 14,131 5,434
Total current assets 155,542 148,884
Property, plant and
equipment:
Land $ 3,832 $ 3,832
Buildings and improvements $ 28,034 $ 26,839
Machinery and equipment 123,600 109,235
155,466 139,906
Less: accumulated depreciation 92,187 79,698
Property, plant and equipment,
net 63,279 60,208
Other assets 41,913 51,567
$ 260,734 $ 260,659
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 37,109 $ 30,801
Accrued expenses and other
liabilities 20,183 23,884
Income taxes payable 153 1,096
Total current liabilities 57,445 55,781
Minority interest in subsidiary $ 11,386 $ 11,376
Shareholders' equity:
Preferred stock - -
Common stock 1,390 1,371
Additional paid-in capital 86,837 84,737
Retained earnings 98,422 100,217
Unrealized holding gain, net 1,195 2,226
Foreign currency translation
adjustment 4,073 4,951
Treasury stock (14) -
Total shareholders' equity 191,903 193,502
$ 260,734 $ 260,659
Results of Operations by Industry Segment
(In thousands)
Three Months Ended Nine Months Ended
Nov. 30, Nov. 30,
1996 1995 1996 1995
Component Products
Integrated circuit
revenues $ 43,710 $ 28,881 $138,766 $ 85,133
Foundry device
revenues 1,941 4,673 12,606 10,482
Total component
products revenues 45,651 33,554 151,372 95,615
Operating income 4,993 9,056 21,189 26,201
Operating income as a
% of revenues 10.9% 27.0% 14.0% 27.4%
System Products
Adapter revenues 32,715 40,835 99,000 107,494
Hub and switch
revenues 10,604 11,194 29,378 32,332
Total system products
revenues 43,319 52,029 128,378 139,826
Operating income
(loss) (2,015) (4,403) (3,842) (33,015)
Operating income (loss)
as a % of revenues (4.7%) (8.5%) (3.0%) (23.6%)
Toyo Microsystems Corp.
Revenues $ 4,799 $ 4,987 $ 13,307 $ 12,772
Operating income $ 34 $ 371 $ 20 $ 693
Operating income
as a % of revenues 0.7% 7.4% 0.2% 5.4%
General, Corporate and
Other
Operating expenses
and other (5,186) (4,157) (16,139) (15,417)
Interim figures are subject to independent year end audit.
CONTACT: Standard Microsystems Corporation
John Tweedy, 516/434-4630 (phone)
516/273-5550 (fax) |
