SMSC Meets Prereleased Fiscal Fourth Quarter 2001 Estimates and Announces Fiscal 2001 Results.Business Editors HAUPPAUGE Hauppauge can refer to:
Revenues for Fiscal 2001 Exceed $163 Million with Net Income of $1.57 Per Share Embedded Systems Embedded systems Computer systems that cannot be programmed by the user because they are preprogrammed for a specific task and are buried within the equipment they serve. Product Line Grows to One Third of Revenues Standard Microsystems Corporation (Nasdaq: SMSC SMSC Short Message Service Center SMSC Standard Microsystems Corporation (New York) SMSC Spiritual Moral Social Cultural (education) SMSC Stephenville Medical and Surgical Clinic ) today announced that revenues for the fourth quarter ended February February: see month. 28, 2001 were $32.4 million, compared to $33.9 million in the fourth quarter of fiscal 2000. Fourth quarter income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $0.08 million, or $0.00 (break-even) per share, compared to $0.3 million, or $0.02 per share, in the year-ago quarter. For the fiscal fourth quarter of 2001, income from continuing operations included $0.04 per share from gains on sales of securities. Additionally, results for that quarter reflect a reduction of the Company's annual effective income tax rate due, in part, to an increased proportion of tax-exempt income Tax-exempt income Dividends and interest not subject to federal and, in some cases, state and local income taxes. from short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. On February 26, 2001, SMSC had announced that adverse economic conditions would impact fiscal fourth quarter 2001 results. SMSC also stated at that time that it expected revenues for the 2001 fourth quarter to be between $31 million and $33 million and income (loss) per share from continuing operations to be between ($0.04) and break-even. Net income for the fourth quarter of fiscal 2001 was $0.08 million, or $0.00 per share, compared to net income of $4.4 million, or $0.27 per share, in the fourth quarter of fiscal 2000. Net income for the quarter ended February 29, 2000 included an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. credit of $4.2 million, or $0.25 per share, from adjusting the loss provision, originally recorded in fiscal 1999, on the disposal of SMSC's Foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. Business Unit. "Results for the fiscal fourth quarter were in line with the revenue and earnings expectations set forth in our February announcement," said Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. J. Bilodeau, Chairman and Chief Executive Officer. "Compared to last year's fourth quarter, revenues were down modestly, but gross margins improved by 1.4 percentage points. Due to planned acceleration of investments in research and development and new product marketing, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. grew on a year-over-year basis by 19.6% during the quarter. We expect that the investments we are making today in the development of solutions for emerging, high-growth applications requiring advanced I/O (Input/Output) The transfer of data between the CPU and a peripheral device. Every transfer is an output from one device and an input to another. See PC input/output. I/O - Input/Output , connectivity and chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). solutions, will be the platform for driving SMSC's future growth into new markets." For the year ended February 28, 2001, revenues were $163.4 million, compared to the prior year's $153.2 million, a 6.7% increase. Due to an increase of $8.2 million in research and development expenses, the Company incurred an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.2 million for fiscal 2001, compared to an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $2.0 million in fiscal 2000. Income from continuing operations was $22.2 million, or $1.29 per share, in fiscal 2001, compared to $3.4 million, or $0.22 per share, in fiscal 2000. Income from continuing operations for fiscal 2001 included after-tax gains of $18.7 million, or $1.09 per share, resulting from sales of securities, primarily related to a portion of SMSC's investment in Chartered Semiconductor Manufacturing Chartered Semiconductor Manufacturing SGX: C27 NASDAQ: CHRT (abbreviated CSM) is the world's fourth largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Woodlands Industrial Park, Kranji Singapore. , Ltd. (Chartered). Net income was $26.9 million, or $1.57 per share, in fiscal 2001, compared to net income of $4.7 million, or $0.29 per share, in fiscal 2000. As previously reported, SMSC sold most of its ownership in Standard MEMS (MicroElectroMechanical Systems) Tiny mechanical devices that are built onto semiconductor chips and are measured in micrometers. In the research labs since the 1980s, MEMS devices began to materialize as commercial products in the mid-1990s. , Inc. in fiscal 2001 and realized an after-tax gain of $4.8 million, or $0.28 per share, which is reported as a gain on sale of discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Fiscal 2000 net income included an after-tax charge of $2.9 million, or $0.19 per share, which recognized the cumulative effect of a change in accounting principle providing for the deferral deferral - Waiting for quiet on the Ethernet. of revenue recognition on shipments to distributors until the distributors sell SMSC's products, in addition to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. adjustment. At February 28, 2001, cash and short-term investments totaled $109.2 million, up from $75.4 million at February 29, 2000, and the Company remained debt-free. "Despite the economy clearly putting a damper damp·er n. 1. One that deadens, restrains, or depresses: Rain put a damper on our picnic plans. 2. An adjustable plate, as in the flue of a furnace or stove, for controlling the draft. on our fourth quarter results, our full year performance reflects several important achievements," said Steven J. Bilodeau. "Revenues grew by more than $10 million and, due to focused efforts, our high-margin Embedded Systems product line grew to one third of total revenues. Gross margins increased by over 2 percentage points year-over-year, and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , excluding research and development, improved by $5 million, clearly demonstrating the Company's improved operating efficiencies. Finally, net income jumped to $1.57 per share, due principally to gains on sales of Chartered stock, illustrating the success of our campaign to better utilize and extract value from our capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) ." KEY FISCAL YEAR 2001 HIGHLIGHTS FOR SMSC: -- Announced Single Chip Non-PCI 10/100 Ethernet MAC+PHY for Embedded Applications -- Demonstrated USB 2.0 ATAPI/ATA Prototype System -- Introduced World's First Production LPC-Compliant Advanced I/O Controller for Notebook PC's - LPC47N252 -- Introduced LPC47N267 Low Pin Count Notebook I/O Controller with X-Bus Interface Compatible with Mitsubishi Electric's M38867 -- Announced Victory 66 South Bridge and VictoryBX-66 Chipset Including Intel North Bridge -- Introduction of NEC USB Floppy Drives Based on SMSC Controller -- Announced Two New System Controller Hub(TM)Devices Designed Specifically for the Next Generation of PCs Using the Intel Accelerated Hub Architecture -- Announced that COM20020 ARCNET Controller Now Supports 3.3 Volt Operation Over Industrial Temperature Range -- Delivered Intel Components as Part of Complete Chipsets -- Expanded Stock Repurchase Program -- Reduced Interest in Standard MEMS, Inc. "Over the past year, SMSC has shown significant progress in diversifying and expanding its business," said Steven J. Bilodeau. "We are receiving favorable market acceptance from new product introductions and have gained critical design wins in both our Advanced I/O and Embedded Systems product lines. We have had great success over the past two years in streamlining operating efficiencies and bringing innovative solutions to market. Leveraging this success, as the economy recovers, we look forward to an acceleration of growth and to making even greater strides in building market share." BUSINESS OUTLOOK FOR SMSC: In line with ongoing economic pressures, which continue to affect industry-wide results and limit long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. visibility, SMSC's current business outlook maintains an expectation of a weaker first half of fiscal 2002, compared to the first half of fiscal 2001, but continues to call for a return to revenue and earnings growth, before gains on sales of securities, in the second half of the fiscal year. Commenting on SMSC's fiscal 2002 business outlook, Andrew M. Caggia, Senior Vice President and Chief Financial Officer said, "Though it appears that the current economic trend will continue to adversely affect semiconductor companies in the near-term, our financial strength will enable SMSC to sustain itself throughout this challenging period. Although fiscal first quarter 2002 operating results are expected to be fairly similar to fourth quarter 2001 on a revenue and operating income basis, we expect to report sequential improvements for the second and third quarters of fiscal 2002. Our target operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. for fiscal 2002 will seek to maintain overall gross margins of at least 40%, and assumes research and development investments in the range of 20% to 25% of revenues." ABOUT SMSC: SMSC is a worldwide supplier of metal-oxide-semiconductor/very large-scale integrated (MOS/VLSI) circuits for the personal computer, peripherals and embedded systems marketplaces. The Company's products provide solutions in Advanced Input/Output (I/O) technology, Systems Logic, USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. Connectivity, Local Area Networking and Embedded Inserted into. See embedded system. Control Systems. SMSC is the world's leading supplier of PC I/O integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. . Standard Microsystems is based in Hauppauge, New York Hauppauge (pronounced /hɔpɔg/) is a hamlet in the Town of Islip and the Town of Smithtown in Suffolk County, New York, United States. and maintains offices worldwide, including locations in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Asia, Europe and Japan. SMSC operates engineering design centers in San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , CA, Hauppauge, NY and Austin, TX. More information about the Company is available on the World Wide Web at http://www.smsc.com. FORWARD LOOKING STATEMENTS: Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 reports filed with the SEC. Investors are advised to read the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission, particularly those sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Other Factors That May Affect Future Operating Results" for a more complete discussion of these and other risks and uncertainties. Standard Microsystems is a registered trademark and SMSC is a trademark of Standard Microsystems Corporation. Product names and company names are the trademarks of their respective holders.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
--------------------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 29,
2001 2000 2001 2000
---- ---- ---- ----
Revenues $ 32,382 $ 33,901 $ 163,428 $ 153,247
Cost of goods sold 19,354 20,753 96,660 93,884
----------------------------------------------------------- ----------
Gross profit 13,028 13,148 66,768 59,363
Operating expenses:
Research and
development 8,219 6,572 32,580 24,365
Selling, general and
administrative 8,720 7,587 35,369 32,993
----------------------------------------------------------- ----------
Income (loss)
from operations (3,911) (1,011) (1,181) 2,005
Interest income 1,341 1,182 5,534 3,442
Other income
(expense), net 1,047 189 28,759 (27)
----------------------------------------------------------- ----------
Income (loss) before
provision for
income taxes
and minority
interest (1,523) 360 33,112 5,420
Provision for
(benefit from)
income taxes (1,616) 123 10,852 2,007
Minority interest in
net income (loss)
of subsidiary 14 (28) 96 (29)
----------------------------------------------------------- ----------
Income from continuing
operations 79 265 22,164 3,442
Gain on sale of
discontinued
operation
(net of income
taxes of $2,799,
and ($2,980) ) - 4,151 4,765 4,151
----------------------------------------------------------------------
Income before
cumulative effect
of change in
accounting
principle 79 4,416 26,929 7,593
Cumulative effect of
change in
accounting
principle
(net of income tax
benefits of $1,716) - - - (2,924)
----------------------------------------------------------------------
Net income $ 79 $ 4,416 $ 26,929 $ 4,669
======================================================================
Basic net income
(loss) per share:
Income from
continuing
operations $ - $ 0.02 $ 1.39 $ 0.22
Gain on sale of
discontinued
operation - 0.26 0.30 0.27
Cumulative effect
of change in
accounting
principle - - - (0.19)
----------------------------------------------------------------------
Basic net income
per share $ - $ 0.28 $ 1.69 $ 0.30
======================================================================
Diluted net income
(loss) per share:
Income from
continuing
operations $ - $ 0.02 $ 1.29 $ 0.22
Gain on sale of
discontinued operation - 0.25 0.28 0.26
Cumulative effect of
change in accounting
principle - - - (0.19)
----------------------------------------------------------------------
Diluted net income
per share $ - $ 0.27 $ 1.57 $ 0.29
======================================================================
Weighted average common
shares outstanding:
Basic 16,044 15,626 15,924 15,620
Diluted 17,485 16,420 17,165 15,915
Certain items shown have been reclassifed to conform with the fiscal
2001 presentation. Interim figures are unaudited.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
February 28, February 29,
2001 2000
---- ----
Assets
Current assets:
Cash and cash equivalents $ 99,545 $ 73,405
Short-term investments 9,629 2,000
Accounts receivable, net 16,776 16,559
Inventories 31,999 20,051
Deferred income taxes 8,718 12,779
Other current assets 7,080 9,277
----------------------------------------------------------------------
Total current assets 173,747 134,071
----------------------------------------------------------------------
Property, plant and equipment, net 37,492 34,137
Investment in Chartered Semiconductor 13,001 73,104
Deferred income taxes 2,019 -
Other assets 14,839 19,196
----------------------------------------------------------------------
$ 241,098 $ 260,508
======================================================================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 11,721 $ 9,575
Deferred income on shipments to
distributors 6,672 5,958
Accrued expenses, income taxes
and other liabilities 10,972 9,522
----------------------------------------------------------------------
Total current liabilities 29,365 25,055
----------------------------------------------------------------------
Deferred income taxes - 15,387
Other liabilities 5,812 6,764
Minority interest in subsidiary 11,606 11,510
Shareholders' equity:
Preferred stock - -
Common stock 1,708 1,643
Additional paid-in capital 116,515 112,297
Retained earnings 79,052 52,123
Treasury stock, at cost (8,330) (4,379)
Accumulated other comprehensive income 5,370 40,108
----------------------------------------------------------------------
Total shareholders' equity 194,315 201,792
----------------------------------------------------------------------
$ 241,098 $ 260,508
======================================================================
Certain items shown have been reclassified to conform with the fiscal
2001 presentation.
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