Exhibit 18
April 3, 2000
Mr. Andrew M. Caggia
Chief Financial Officer
Standard Microsystems Corporation
80 Arkay Drive
Hauppauge, New York 11788
Re: Form 10-K Report for the year eneded February 29, 2000
Dear Mr. Caggia:
This letter is written to meet the requirements of Regulation S-K calling for
a letter from a registrant's independent accountants whenever there has been
a change in accounting principle or practice.
As of March 1, 1999, the Company changed its accounting method for recognizing
revenue on sales to distributors from recognition on shipment, net of
appropriate reserves for sales returns and allowances, to deferral of revenue
and related gross margins until the product is shipped by the distributors to
end-users. According to the management of the Company, this change was made
as it better recognizes the substance of demand for its products, and will
accordingly better focus the Company on, and allow investors to better
understand end-user demand trends for its products. Additionally, it is more
consistent with industry practice.
A complete coordinated set of financial and reporting standards for determining
the preferability of accounting principles among acceptable alternative
principles has not been established by the accounting profession. Thus, we
cannot make an objective determination of whether the change in accounting
described in the preceding paragraph is to a preferable method. However, we
have reviewed the pertinent factors, including those related to financial
reporting, in this particular case on a subjective basis, and our opinion
stated below is based on our determination made in this manner.
We are in the opinion that the Company's change in method of accounting is to
an acceptable alternative method of accounting, which, based upon the reasons
stated for the change and our discussions with you, is also preferable under
the circumstances in this particular case. In arriving at this opinion, we
have relied on the business judgment and business planning of your
management.
Very truly yours,
ARTHUR ANDERSEN LLP
