SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended November 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-7422
STANDARD MICROSYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 11-2234952
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 ARKAY DRIVE, HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 516-273-3100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ____X____ No ________
As of January 13, 1997 there were 13,916,781 shares of the
registrant's common stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
November 30, February 29,
1996 1996
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 10,207 $ 18,459
Accounts receivable, net of allowance for doubtful
accounts of $1,883 and $1,369, respectively 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, $.10 par value-
Authorized 1,000,000 shares, none outstanding - -
Common stock, $.10 par value-
Authorized 30,000,000 shares,
outstanding 13,898,000 and 13,711,000
shares, respectively 1,390 1,371
Additional paid-in capital 86,837 84,737
Retained earnings 98,422 100,217
Unrealized holding gain, net of tax 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
Interim figures are subject to independent year-end audit.
</TABLE>
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
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) 857 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
Interim figures are subject to independent year-end audit.
</TABLE>
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
November 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 295,680 $ 273,037
Cash paid to suppliers and employees (280,150) (262,355)
Interest received 414 290
Interest paid (611) (957)
Income taxes paid (1,380) (3,470)
Cash paid for litigation settlement (4,057) -
Net cash provided by operating activities 9,896 6,545
Cash flows from investing activities:
Capital expenditures (16,289) (28,231)
Investment in Chartered Semiconductor Pte Ltd. - (13,990)
Investment in Accelerix Incorporated (1,434) -
Other (291) 44
Net cash used for investing activities (18,014) (42,177)
Cash flows from financing activities:
Proceeds from issuance of common stock 434 1,168
Borrowings under line of credit agreements 26,610 32,000
Repayments of borrowings under line of credit agreements (26,610) (14,000)
Net cash provided by financing activities 434 19,168
Effect of foreign exchange rate changes
on cash and cash equivalents (568) (420)
Net decrease in cash and cash equivalents (8,252) (16,884)
Cash and cash equivalents at beginning of period 18,459 29,478
Cash and cash equivalents at end of period $ 10,207 $ 12,594
Reconciliation of net loss
to net cash provided by operating activities:
Net loss $ (1,795) $ (14,803)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 16,851 14,988
Other adjustments, net 1,292 968
Changes in operating assets and liabilities:
Accounts receivable 2,602 24,696
Inventories (8,995) (4,458)
Accounts payable and accrued expenses and other liabilities 3,276 (4,577)
Other changes, net (3,335) (10,269)
Net cash provided by operating activities $ 9,896 $ 6,545
Interim figures are subject to independent year-end audit.
</TABLE>
<PAGE>
STANDARD MICROSYSTEMS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial statements furnished reflect all adjustments
(consisting of only normal and recurring adjustments) which are,
in the opinion of management, necessary to present a fair statement
of the Company's financial position and results of operations for the
three and nine month periods ended November 30, 1996. The financial
statements should be read in conjunction with the summary of
significant accounting policies and notes to consolidated financial
statements included in the Company's annual report on Form 10-K filed
with the Securities and Exchange Commission for the fiscal year ended
February 29, 1996.
2. Inventories are valued at the lower of first-in, first-out cost or
market and consist of the following (in thousands):
Nov. 30, 1996 Feb. 29, 1996
Raw Materials $10,703 $ 9,556
Work in Process 35,577 34,622
Finished Goods 22,989 16,230
$69,269 $60,408
3. Commitments and Contingencies
In September 1996, the Company reached an agreement with Penril
DataComm Networks, Inc., to settle a legal action initiated by
Penril in June 1993. In 1990 and 1991, Penril had entered into
technology and product agreements with Sigma Networks Systems,
Inc., which was subsequently acquired by SMC in December 1992.
Sigma became a wholly-owned subsidiary of SMC and was renamed
SMC Enterprise Networks, Inc. In January 1996, SMC sold the
business of SMC Enterprise Networks to Cabletron Systems Inc.
SMC and Penril agreed to a settlement under which all claims of both
parties were dismissed, with prejudice. As a result, SMC
recorded a $4.1 million pretax charge in the third quarter
of fiscal 1997.
4. Long-term Debt
During the third quarter of fiscal 1997, the Company obtained
waivers respecting the failure to meet a financial condition
covenant under its $25.0 million line of credit agreement.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The following table presents the Company's Consolidated Statements of Income,
as percentages of revenues, for the three and nine month periods
ended November 30, 1996 and 1995:
3 Months 9 Months
Periods ended November 30, 1996 1995 1996 1995
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 69.8 58.4 67.5 64.2
Gross profit 30.2 41.6 32.5 35.8
Research and development 7.6 8.6 6.6 9.7
Selling, general and administrative 23.7 30.3 24.3 32.1
Amortization of intangible assets 1.2 1.7 1.2 2.7
Total operating expenses 32.5 40.6 32.1 44.5
Income (loss) from operations (2.3) 1.0 0.4 (8.7)
Other income (expense), net (4.4) (0.3) (1.3) (0.2)
Income (loss) before minority
interest and taxes (6.7) 0.7 (0.9) (8.9)
Minority interest in net income
of subsidiary - 0.1 - 0.1
Income (loss) before provision
for income taxes (6.7) 0.6 (0.9) (9.0)
Provision for (benefit from)
income taxes (2.6) 0.3 (0.3) (3.0)
Net income (loss) (4.1)% 0.3 % (0.6)% (6.0)%
Results of Operations by Industry Segment
The following table presents the Company's revenues and operating
income by industry segment for the three and nine month periods ended
November 30, 1996 and 1995 (in millions):
3 Months 9 Months
Periods ended November 30, 1996 1995 1996 1995
Component products
Integrated circuit revenues $43.7 $28.9 $138.8 $ 85.1
Foundry device revenues 1.9 4.7 12.6 10.5
Total component products revenues $45.6 $33.6 $151.4 $ 95.6
Operating income 5.0 9.1 21.2 26.2
% of revenues 10.9 % 27.0 % 14.0 % 27.4 %
System products
Adapter revenues $32.7 $40.8 $ 99.0 $107.5
Hub and switch revenues 10.6 11.2 29.4 32.3
Total system products revenues $43.3 $52.0 $128.4 $139.8
Operating loss (2.0) (4.4) (3.8) (33.0)
% or revenues (4.7)% (8.5)% (3.0)% (23.6)%
Toyo Microsystems Corporation
Revenues $ 4.8 $ 5.0 $ 13.3 $ 12.8
Operating income - 0.4 - 0.7
% of revenues 0.7 % 7.4 % 0.2 % 5.4 %
General, corporate and other
Operating expenses and other ($ 5.2) ($ 4.2) ($ 16.1) ($ 15.4)
Standard Microsystems Corporation conducts its operations primarily through
the Component Products Division and the System Products Division. The
Component Products Division designs, produces and markets very-large-
scale-integrated circuits, mainly for control of various personal computer
functions, and specialized semiconductor-related products that are produced
in SMC's own foundry. The System Products Division designs, produces
and markets products that connect personal computers to, and allow
communications over, local area networks (LANs). The Company's
subsidiary, Toyo Microsystems Corporation (TMC), sells component
and system products in the Japanese market.
Transfers between industry segments are excluded from the above
figures. The majority of these transfers consist of component and system
products shipped to TMC for resale in Japan.
Revenues
The Company's revenues rose 3.5% in the third quarter of fiscal 1997
from the year-earlier level as a 36.1% increase in component
products' revenues more than offset a 16.7% decrease in system products'
revenues as well as a 3.8% decrease in TMC's revenues. In the first nine
months of fiscal 1997, the Company's revenues rose 18.1% as a 58.3% increase
in component products' revenues, as well as a 4.2% increase in TMC's
revenues, more than offset an 8.2% decrease in system products' revenues.
In the third quarter of fiscal 1997, the Company's revenues declined
5.5% from the second quarter of fiscal 1997 reflecting an 8.1% decrease
in component products' revenues and a 4.9% decrease in system products'
revenues that were partially offset by a 20.1% increase in TMC's revenues.
Compared to year-earlier results, component products' revenue growth in the
third quarter of fiscal 1997 continued to be led by increased shipments of
personal computer input/output (PC I/O) integrated circuits. Sales
growth of the Ultra I/O generation of PC I/O devices more than offset sales
declines of the mature Super I/O class of circuits. Compared to the
second quarter of fiscal 1997, increased third quarter Ultra I/O and
Super I/O revenues were unable to offset declines in
sales of other integrated circuits and foundry devices. During the first
nine months of fiscal 1997, revenues grew from year-earlier levels for
all classes of SMC component products.
A device used in inkjet printer cartridges accounts for most
foundry device shipments. This part is sold principally to a single
customer who canceled orders in the third quarter of fiscal 1997.
SMC expects no recovery in revenues from this customer in the near
term.
During the fourth quarter of fiscal 1996, SMC received initial
wafers from two suppliers under the programs discussed in the Wafer
Purchase Agreements section below. The Company also received
initial wafers from other suppliers. These sources enabled integrated
circuit revenues to increase in the third quarter and first nine months
over the year-earlier periods, during which time, integrated circuit
revenues were constrained by capacity shortages.
Relative to year-earlier third quarter and nine month results,
system products' lower revenues primarily reflected decreased unit
shipments of Ethernet ISA-bus adapters and reduced LAN switch sales.
Increased Ethernet PCI-bus adapter and Fast Ethernet adapter and
stackable hub revenues partially offset other system products' revenue
declines. The shift in product mix toward Fast Ethernet adapters,
with higher selling prices than other Ethernet adapters, moderated the
decline in average selling prices. The decline in LAN switch revenues was
due primarily to the January 1996 sale of the Enterprise Networks Business
Unit (ENBU) to Cabletron Systems, Inc. ENBU's revenues were approximately
$5 million in the third quarter and $12 million in the first nine
months of fiscal 1996.
Reduced shipments of older Ethernet and other technology adapter
products were responsible for the majority of the decline in adapter
shipments in the third quarter from the second quarter of fiscal 1997.
Higher Fast Ethernet adapter shipments were a partial offset. New Fast
Ethernet stackable hub shipments were primarily responsible for the increased
hub and switch revenues in the third quarter over the second quarter
of fiscal 1997.
Compared to year-earlier results, TMC's third quarter revenue decline
came from both lower system products shipments, principally adapter
products. Higher component products revenues offset most of the system
products decline. First nine month revenue growth came from increased
integrated circuit shipments, principally PC I/O devices, as
networking product revenues declined.
The following table presents the Company's revenues by geographic area as
percentages of total revenues from unaffiliated customers. Within the
category Revenues outside the United States, all but Japan (TMC) revenues
are considered export revenues from U.S. operations.
3 Months 9 Months
Periods ended November 30, 1996 1995 1996 1995
United States 47.4% 46.5% 46.6% 44.7%
Asia and Pacific Rim 29.4 20.5 32.8 23.4
Europe 15.3 21.4 13.3 20.7
Canada 1.9 3.4 1.4 3.3
Other 0.9 2.7 1.4 2.7
Export revenues 47.5 48.0 48.9 50.1
Japan (TMC) 5.1 5.5 4.5 5.2
Revenues outside the United States 52.6 53.5 53.4 55.3
Total Revenues 100.0% 100.0% 100.0% 100.0%
United States revenues increased 7.0% in the third quarter
and 24.4% in the first nine months of fiscal 1997 over year-earlier levels.
The increases in both periods were largely from shipments of
component products, principally PC I/O integrated circuits.
System products' third quarter fiscal 1997 domestic revenues declined
reflecting the ENBU sale. An increase in System products' first nine
months domestic revenues primarily reflected a first quarter improvement
as year earlier results had been impeded by the liquidation of excess
distributor inventories.
International revenues increased 3.4 % in the third quarter and 14.1% in
the first nine months of fiscal 1997 over year-earlier results.
Asian and Pacific Rim revenues grew 50.7% in the third quarter and 62.0%
in the first nine months largely because component products'
domestic branded customers increased the proportion of PCs produced in
offshore factories and demand grew from a major Asian-based PC producer.
Asian and Pacific Rim revenues did, however, decline from the level of the
second quarter. European revenues fell 25.1% in the third quarter and
25.3% in the first nine months, chiefly reflecting a decline in system
products' revenues from its major international market. This decline
reflected the absence of the divested ENBU product line.
Gross Profit
The gross profit margin decreased to 30.2% for the third quarter of fiscal
1997 from 41.6% for the third quarter of fiscal 1996. For the first nine
months of fiscal 1997, the gross profit margin decreased to 32.5% from
35.8% a year earlier. The principal factors contributing to the gross
margin decrease were:
- sharply reduced average selling prices for the Super I/O generation
of PC I/O products
- greater competition for foundry products and reduced revenues to
cover manufacturing overhead
- a shift in system products' revenue mix to lower margined products.
The year-to-year decline in nine month gross profit would have been
greater except for an $11.8 million charge to cost of goods sold to reduce
the carrying value of certain system products inventory in the second
quarter of fiscal 1996. That charge reduced gross margins by 4.8
percentage points in the first nine months of fiscal 1996.
Operating Expenses
Research and development expenses declined 8.1% to $7.1 million
in the third quarter of fiscal 1997 from $7.7 million
in the year earlier period. For the first nine months of fiscal 1997,
R&D expenses declined 19.5% to $19.3 million from
$23.9 million a year earlier. The decline reflected
elimination of the divested ENBU's expenditures, partially offset by higher
R&D spending for component products and the remaining networking
products business.
Selling, general and administrative expenses decreased 19.0% to $22.2
million in the third quarter of fiscal 1997, compared to $27.5 million in
the year earlier period. For the first nine months of fiscal 1997, SG&A
expenses declined to 10.8% to $71.1 million from $79.7 million a year
earlier. The lower SG&A costs reflected elimination of the divested
ENBU's expenditures and, for the nine months, absence of severance
charges. In the second quarter of fiscal 1996, the Company incurred
severance-related charges of $2.5 million. The overall reductions were
partially offset by increased spending to support higher component products'
revenues and costs related to a new client/server information system.
Amortization of intangible assets decreased 26.2% to $1.2 million in the
third quarter and 46.9% to $3.6 million in the first nine months of fiscal
1997 from comparable year earlier periods. The lower amortization reflected
benefits from an accelerated write-off of certain assets during fiscal 1996
that reduced the rate of quarterly amortization in succeeding periods and,
for the nine months, the absence of a write-down. In the second
quarter of fiscal 1996, the Company incurred a $2.4 million write-down
of previously acquired LAN technology to its estimated
realizable value.
Operating Profits
In the third quarter of fiscal 1997, the Company reported an operating
loss of $2.2 million, which compared to an operating profit of $0.9 a year
earlier. In the first nine months of fiscal 1997, the Company reported an
operating profit of $1.2 million which compared to an operating loss of
$21.5 a year earlier. The major contributors to the improvement were:
- the absence of special charges which primarily hindered system products
in fiscal 1996
- elimination of losses from the divested ENBU
- higher component product revenues.
These benefits were partially offset by lower gross profit margins for
component products and higher information systems costs.
Other Income and Expense
Other income (expense), net was a net expense of $4.1 million
in the third quarter and a net expense of $4.0 million in the
first nine months of fiscal 1997 compared to net expenses of
$0.3 million and $0.6 million in the respective year-earlier
periods. The principal difference resulted from a charge for a
litigation settlement. In September 1996, the Company reached
an agreement with Penril DataComm Networks, Inc., to settle a
legal action initiated by Penril in June 1993. As a result, SMC
charged $4.1 million to pretax earnings in the third quarter of
fiscal 1997.
Income Taxes
In the third quarter income taxes were provided at an effective rate of
38.4% and in the first nine months of fiscal 1997, income taxes were
provided at a rate for fiscal 1997 of 35.1%. In fiscal 1996, income taxes
were provided at a rate of 41.4% for the third quarter
and at 33.7% for the first nine months. The Company's effective
income tax rate primarily reflects the statutory rate and nondeductible
goodwill amortization.
Wafer Purchase Agreements
During fiscal 1996, the Company purchased $16.0 million of wafer fabrication
equipment for installation in a semiconductor plant owned by Lucent
Technologies' (formerly AT&T Corp.) Microelectronics Business Unit in
Madrid, Spain. The agreement, under which the equipment was purchased,
allocates sub-micron wafer production capacity to the Company for five years
beginning in March 1996.
In fiscal 1996, SMC purchased a minority equity interest in
Singapore-based Chartered Semiconductor Pte Ltd. for $19.9 million
which is included within Other assets on the accompanying balance
sheet. Under this agreement, Chartered allocates sub-micron wafer
production capacity to the Company for ten years. This arrangement and the
Lucent agreement are intended to provide a portion of the Company's
long-term production requirements for integrated circuits.
Liquidity and Capital Resources
The Company's working capital increased to $98.1 million at November 30,
1996, from $93.1 million at the end of fiscal 1996. The increase in working
capital primarily reflected increases of $8.9 million in inventories and
$8.7 in other current assets, partially offset by decreases of $8.3 million
in cash and cash equivalents and $3.2 million in accounts receivable and an
increase of $1.7 million in current liabilities.
During the first nine months of fiscal 1997,
the decrease in cash and cash equivalents to $10.2 million
primarily reflected financing capital expenditures of $16.3
million, the increase in inventories and the litigation
settlement. The increase in other current assets primarily reflects
reclassifying a $7.1 million escrow account from other assets to other
current assets in the second quarter. These funds are scheduled to become
available during the second quarter of fiscal 1998. The escrow account was
established as security for the Company's indemnification obligation when
the Enterprise Networks Business Unit was sold to Cabletron Systems, Inc.
Of $16.3 million of capital expenditures in the first nine months of
fiscal 1997, the most significant items were $3.0 million for upgrading the
Company's information system, and $5.9 million for production
equipment for SMC's own wafer foundry and $1.2 million for an
integrated circuit tester. Capital expenditures expected during the
final quarter of fiscal 1997 will be principally for test and other
equipment.
In October 1996, the Company acquired a 19.9% equity interest
in privately-held ACCELERIX Incorporated of Carp, Ontario, Canada, for
$1.4 million. The Company also entered into an agreement providing SMC
with rights to market, second source and enhance ACCELERIX' application
specific memory technology.
In November 1996, the Company acquired the Cardbus technology and
product line of Databook Inc. of Danvers, Massachusetts. SMC had been
a licensee of Databook's Cardbus technology and a second source for a
Databook Cardbus host controller chip.
During the third quarter of fiscal 1997, a decrease in cash and accounts
receivable and an increase in current liabilities led to the Company's
noncompliance with a financial condition covenant under its $25.0
million line of credit agreement. In connection therewith, the Company
obtained waivers from its banks respecting the failure to meet this
covenant. As a result of this performance and current projections of
results for all of fiscal 1997, the Company anticipates that it will fail
to be in compliance with other financial condition covenants under its
revolving credit agreement. The Company intends to obtain
appropriate waivers and is presently renegotiating the terms of its
credit agreement with its banks.
Nevertheless, the Company believes that its present cash and cash
equivalents position, combined with expected cash flows and
borrowings, as necessary, will be sufficient to meet its working
capital and capital expenditure requirements for the next twelve months.
Factors That May Affect Future Results
Except for the historical information contained in this quarterly report,
certain matters discussed herein are forward-looking statements that involve
risks and uncertainties. The forward-looking statements contained herein
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.
Variables that affect the Company's future operating results include product
selling prices and costs, worldwide demand for personal computers and
numerous competitive factors. ASPs for the Company's products generally
decline from period to period. The Company attempts to offset this trend
by reducing manufacturing costs by comparable amounts and introducing
products with higher values. The ability to accomplish these objectives
is a key determinant of the Company's gross profit margins.
The Company's most important customers for component products are personal
computer producers, and a slowdown in the rate of growth in demand for PCs
could affect the Company's growth and intensify competition. The inability
to obtain adequate integrated circuit wafers could allow competitors who
process wafers internally to gain market share relative to the Company.
These competitors may also, more aggressively, reduce product
selling prices.
The Company's adapters are inserted in newly sold and previously installed
PCs, so that the sales growth of PCs influences sales of adapters as well.
Improvements in PC performance require more powerful adapters, and that
has led to a shift in the mix of adapters that the Company sells toward the
high speed PCI bus and Fast Ethernet adapters. The Company also sells PC
cards for portable computers. Product mix, product selling prices and the
acceptance of newly introduced products can be altered by competitors'
new products, promotions and pricing.
The Company's product development, sales and marketing progress is dependent
on hiring and retaining employees with specific skills. The Company is also
dependent on a limited number of suppliers for certain components,
assemblies, software and finished products.
High levels of production by PC manufacturers led to an industry-wide
shortage of silicon wafer fabrication capacity in fiscal 1996 and 1995.
While these shortages eased during the fourth quarter of fiscal 1996,
they could occur again and lead to difficulty in securing additional
manufacturing capacity, potentially curtailing revenue and profit growth
over the remainder of fiscal 1997 and beyond. Alternatively, PC production
could weaken, leading customers to hold excess inventories of components
and other parts, resulting in canceling or rescheduling orders for
the Company's products.
With 53.4% of the Company's revenues in the first nine months of fiscal
1997 shipped to customers located outside of the United States, global
economic conditions and changes in foreign currency exchange rates can
influence the demand for the Company's products. Because of these and
other circumstances that could affect the Company's operating results,
past financial performance is not necessarily indicative of results to be
expected in the future.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
STANDARD MICROSYSTEMS CORPORATION
(Registrant)
DATE: January 13, 1997 /S/ Anthony M. D'Agostino
(Signature)
Anthony M. D'Agostino
Senior Vice President, Finance
and Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> NOV-30-1996
<CASH> 10,207
<SECURITIES> 0
<RECEIVABLES> 52,751
<ALLOWANCES> 1,883
<INVENTORY> 69,269
<CURRENT-ASSETS> 155,542
<PP&E> 155,446
<DEPRECIATION> 92,187
<TOTAL-ASSETS> 260,734
<CURRENT-LIABILITIES> 57,445
<BONDS> 0
<COMMON> 1,390
0
0
<OTHER-SE> 190,513
<TOTAL-LIABILITY-AND-EQUITY> 260,734
<SALES> 293,057
<TOTAL-REVENUES> 293,057
<CGS> 197,884
<TOTAL-COSTS> 197,884
<OTHER-EXPENSES> 93,945
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