|
| [April 18, 2006] |
 |
SMSC Reports Fourth Quarter and Fiscal Year 2006 Results; Fiscal 2006 Revenues Increase by 53% to $319 Million and EPS Grows by $0.47
HAUPPAUGE, N.Y. --(Business Wire)-- April 18, 2006 -- SMSC (Nasdaq: SMSC) revenues for the fourth quarter ended February 28, 2006 rose by $29.7 million, or 54%, to $84.6 million, compared to last year's fourth quarter revenues of $54.9 million, and were down by $2.0 million, or 2%, from the third quarter of fiscal 2006, consistent with previous guidance and expected seasonality. Approximately $13.6 million, or 46%, of the year-over-year fourth quarter revenue growth was due to the inclusion of OASIS SiliconSystems (OASIS), acquired on March 30, 2005, and approximately $16.1 million, or 54%, of the revenue growth came from SMSC's pre-existing product lines.
On a GAAP basis, operating income was $3.3 million in the fourth quarter, compared to an operating loss of $6.9 million a year ago, and net income was $3.8 million, or $0.16 per share, compared to a net loss of $2.8 million, or $0.15 per share, in the fourth quarter of last year.
SMSC also presents results on an adjusted non-GAAP basis to provide additional insight into underlying operating performance on a comparable basis. For fiscal 2005, this excludes a patent litigation settlement and a gain on the sale of real estate, and for fiscal 2005 and 2006, excludes non-cash acquisition related charges and non-cash charges and credits associated with Stock Appreciation Rights (SARs). A reconciliation of GAAP to non-GAAP measures is provided in the schedule that accompanies this release.
On this basis, non-GAAP operating income for the fourth quarter of fiscal 2006 was $7.2 million, or 8.5% of revenues, compared to a loss of $2.4 million in the year-ago period. Non-GAAP net income was $6.3 million, or $0.27 per share, compared to net income of $0.1 million in the fourth quarter of last year. Non-GAAP net income of $0.27 per share in the fourth quarter of fiscal 2006 includes a $1.1 million expense ($0.7 million, or $0.03 per share, after tax) for the cash impact of SARs that were exercised during the period. SMSC does not consider SAR-related expenses in its earnings estimates due to the inability to predict stock prices and their impact on SAR exercises during the quarter. Excluding these expenses, non-GAAP earnings per share were consistent with the Company's prior estimates.
For fiscal 2006, SMSC posted record annual semiconductor product sales of $308.3 million, 56% higher than product sales of $197.8 million in the prior year. Total revenues increased to $319.1 million from $208.8 million last year. OASIS accounted for $52.8 million of total product sales in fiscal 2006. On a GAAP basis, net income per share was $0.55 versus $0.08 in fiscal 2005. On a non-GAAP basis, as described above, net income per share was $1.13 versus $0.29 in fiscal 2005.
Cash and liquid investments at February 28, 2006 increased to $155.0 million from $141.7 million at November 30, 2005. The Company has no bank debt, and book value per share as of February 28, 2006 was $15.18. SMSC's February 28, 2006 Consolidated Balance Sheet reports a $17.8 million liability, and a corresponding increase in goodwill, reflecting additional cash and SMSC common stock which is payable to former OASIS shareholders in the first quarter of fiscal 2007, as a result of achievement of certain performance goals.
Steven J. Bilodeau, Chairman and Chief Executive Officer, said, "In fiscal 2006, SMSC's revenues grew by over 54% from the prior year with more than half of that growth coming organically. Excluding the acquisition of OASIS, the Company grew 28%, or more than three times the rate of the semiconductor industry as a whole. The acquisition of OASIS and its Automotive Infotainment product line, which provided the balance of the revenue increase, is proving to be an excellent fit because of its strong growth prospects, as well as market and technological synergies.
"SMSC significantly improved profitability as non-GAAP operating income on a full year basis reached 10.4% of revenues and non-GAAP earnings per share rose by $0.84 to $1.13. Our current product portfolio and new product pipeline is giving us exciting new opportunities in all of our markets."
For the first quarter of fiscal 2007, revenues are expected to be between $82 and $85 million, which represents over 20% year-over-year growth at the midpoint. Non-GAAP net income is expected to be between $0.23 and $0.27 per share, assuming approximately 23.1 million diluted weighted average shares outstanding. This guidance is presented only on a non-GAAP basis to provide comparability to historical non-GAAP financial measures and because of SMSC's inability to project its future stock price and the charges or credits that might be required to record stock-based compensation. Accordingly, this guidance excludes both non-cash acquisition related charges and the impact of expensing stock-based compensation in accordance with the requirements of FASB Statement No. 123 (R), which will be effective for SMSC in the first quarter of fiscal 2007.
A management teleconference to discuss the quarterly and full year results is scheduled for 5:00 PM EDT, April 18, 2006. Slide presentation materials containing additional disclosure regarding results and future earnings expectations, and a link to a webcast of the teleconference will be accessible from the investor relations section of SMSC's website at www.smsc.com.
About SMSC:
Many of the world's most successful global technology companies rely upon SMSC as a go-to resource for semiconductor system solutions that span analog, digital and mixed-signal technologies. Leveraging substantial intellectual property, integration expertise and a comprehensive global infrastructure, SMSC solves design challenges and delivers performance, space, cost and time-to-market advantages to its customers. SMSC's application focus targets key vertical markets including mobile and desktop PCs, servers, consumer electronics, automotive infotainment and industrial applications. The Company has developed leadership positions in its select markets by providing application specific solutions such as mixed-signal PC system controllers, non-PCI Ethernet, ARCNET, MOST and Hi-Speed USB.
SMSC is headquartered in Hauppauge, New York with operations in North America, Asia and Europe. Engineering design centers are located in Arizona, New York, Texas and Karlsruhe, Germany. Additional information is available at www.smsc.com.
Forward Looking Statements:
Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties. These uncertainties may cause our actual future results to be materially different from those discussed in forward-looking statements. Our risks and uncertainties include the timely development and market acceptance of new products; the impact of competitive products and pricing; our ability to procure capacity from our suppliers and the timely performance of their obligations, the effects of changing economic conditions domestically and internationally and on our customers; changes in customer order patterns, our relationships with and dependence on customers and growth rates in the personal computer, consumer electronics and embedded and automotive markets and within our sales channel; changes in customer order patterns, including order cancellations or reduced bookings; the effects of tariff, import and currency regulation; potential or actual litigation; and excess or obsolete inventory and variations in inventory valuation, among others. In addition, SMSC competes in the semiconductor industry, which has historically been characterized by intense competition, rapid technological change, cyclical market patterns, price erosion and periods of mismatched supply and demand.
Our forward looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and may not reflect the potential impact of any future acquisitions, mergers or divestitures. All forward-looking statements speak only as of the date hereof and are based upon the information available to SMSC at this time. Such statements are subject to change, and the Company does not undertake to update such statements, except to the extent required under applicable law and regulation. These and other risks and uncertainties, including potential liability resulting from pending or future litigation, 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 and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, particularly those sections entitled "Other Factors That May Affect Future Operating Results" or "Risk Factors" for a more complete discussion of these and other risks and uncertainties.
SMSC is a registered trademark of Standard Microsystems Corporation.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
February 28, February 28,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues $ 84,628 $ 54,850 $ 319,118 $ 208,815
Costs and expenses:
Cost of goods sold 45,748 33,938 172,309 114,066
Research and development 15,647 10,516 58,205 42,988
Selling, general and
administrative 18,431 12,066 68,318 48,759
Amortization of
intangible assets 1,545 265 5,802 1,113
In-process research and
development - - 895 -
Settlement charge - 6,000 - 6,000
Gains on real estate
transactions - (1,017) - (1,017)
----------------------------------------------- ---------------------
Income (loss) from operations 3,257 (6,918) 13,589 (3,094)
Interest income 1,016 806 3,288 2,532
Other expense, net (3) (45) (76) (103)
----------------------------------------------- ---------------------
Income (loss) before
provision for income taxes 4,270 (6,157) 16,801 (665)
Provision for (benefit
from) income taxes 518 (3,339) 4,612 (2,267)
----------------------------------------------- ---------------------
Net income (loss) $ 3,752 $ (2,818) $ 12,189 $ 1,602
=============================================== =====================
Basic net income (loss)
per share: $ 0.17 $ (0.15) $ 0.59 $ 0.09
=============================================== =====================
Diluted net income (loss)
per share: $ 0.16 $ (0.15) $ 0.55 $ 0.08
=============================================== =====================
Weighted average common
shares outstanding:
Basic 21,468 18,552 20,783 18,376
Diluted 23,304 18,552 21,998 19,318
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP AND ADJUSTED NON-GAAP CONSOLIDATED FINANCIAL
DATA (Unaudited)
(In thousands, except per share amounts)
Three Months Ended February 28,
-------------------------------------
2006
-------------------------------------
GAAP Adjustment Non-GAAP
---------- -------------- ----------
Revenues $ 84,628 $ - $ 84,628
Costs and expenses:
Cost of goods sold 45,748 (104)(a) 45,644
Research and development 15,647 (611)(b) 15,036
Selling, general and
administrative 18,431 (1,651)(b) 16,780
Amortization of intangible
assets 1,545 (1,545)(c) -
Settlement charge - - -
Gains on real estate
transactions - - -
--------------------------------------------------------------------
--
Income (loss) from operations 3,257 3,911 7,168
Interest income 1,016 - 1,016
Other expense, net (3) - (3)
------------------------------------------------------------------
----
Income (loss) before provision
for income taxes 4,270 3,911 8,181
Provision for (benefit from)
income taxes 518 1,402 (f) 1,920
----------------------------------------------------------------
------
Net income (loss) $ 3,752 $ 2,509 $ 6,261
================================================================
======
Basic net income (loss) per
share $ 0.17 $ 0.29
=================================================================
=====
Diluted net income (loss) per
share $ 0.16 $ 0.27
=================================================================
=====
Weighted average common shares
outstanding:
Basic 21,468 21,468
Diluted 23,304 23,304
Three Months Ended February 28,
--------------------------------------
2005
-------------------------------------
GAAP Adjustment Non-GAAP
---------- -------------- ----------
Revenues $ 54,850 $ - $ 54,850
Costs and expenses:
Cost of goods sold 33,938 50 (a) 33,988
Research and development 10,516 197 (b) 10,713
Selling, general and
administrative 12,066 519 (b) 12,585
Amortization of intangible assets 265 (265)(c) -
Settlement charge 6,000 (6,000)(d) -
Gains on real estate
transactions (1,017) 1,017 (e) -
--------------------------------------------------------------------
--
Income (loss) from operations (6,918) 4,482 (2,436)
Interest income 806 - 806
Other expense, net (45) - (45)
-----------------------------------------------------------------
-----
Income (loss) before provision
for income taxes (6,157) 4,482 (1,675)
Provision for (benefit from)
income taxes (3,339) 1,569 (f) (1,770)
--------------------------------------------------------------
--------
Net income (loss) $ (2,818) $ 2,913 $ 95
===================================================================
===
Basic net income (loss) per
share $ (0.15) $ 0.01
=================================================================
=====
Diluted net income (loss) per
share $ (0.15) $ -
====================================================================
==
Weighted average common shares
outstanding:
Basic 18,552 18,552
Diluted 18,552 19,224
Notes:
SMSC uses certain non-GAAP information to evaluate its operating
results and believes such information also provides investors with
additional insight into its underlying operations. This schedule
presents a full reconciliation between GAAP and non-GAAP operating
measures.
(a) The adjustment to Cost of goods sold for the three months ended
February 28, 2006 removes the impact of non-cash charges
associated with Stock Appreciation Rights (SARs). The adjustment
for the three months ended February 28, 2005 removes a $50 credit
associated with SARs.
As SARs are exercised, the actual cash cost of SARs is included
within non-GAAP operating measures.
(b) The adjustments to Research & development and Selling, general &
administrative expense remove the impact of non-cash charges or
credits associated with SARs.
As SARs are exercised, the actual cash cost of SARs is included
within non-GAAP operating measures.
(c) The adjustment to Amortization of intangible assets for the three
months ended February 28, 2006 includes $1,279 related to the
OASIS acquisition and $266 related to the fiscal 2003 acquisition
of Gain Technology Corporation (Gain). The adjustment for the
three months ended February 28, 2005 relates entirely to the Gain
acquisition.
(d) The adjustment to Settlement charge for the three months ended
February 28, 2005 removes the impact of a litigation settlement
payment.
(e) The adjustment to Gains on real estate transactions for the three
months ended February 28, 2005 removes a gain realized on the sale
of an idle facility.
(f) The adjustments to the Provision for (benefit from) income taxes
were determined by applying the appropriate incremental tax rates
to the adjustments described in notes (a) through (e) above.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP AND ADJUSTED NON-GAAP CONSOLIDATED FINANCIAL
DATA (Unaudited)
(In thousands, except per share amounts)
Fiscal Year Ended February 28,
----------------------------
2006
----------------------------
GAAP Adjustment Non-GAAP
-------- ---------- --------
Revenues $319,118 $ - $319,118
Costs and expenses:
Cost of goods sold 172,309 (2,282)(a)170,027
Research and development 58,205 (2,757)(b) 55,448
Selling, general and administrative 68,318 (8,013)(b) 60,305
Amortization of intangible assets 5,802 (5,802)(c) -
In-process research and development 895 (895)(d) -
Settlement charge - - -
Gains on real estate transactions - - -
--------------------------------------------------------------------
-
Income (loss) from operations 13,589 19,749 33,338
Interest income 3,288 - 3,288
Other expense, net (76) - (76)
-----------------------------------------------------------------
----
Income (loss) before provision for income
taxes 16,801 19,749 36,550
Provision for (benefit from) income taxes 4,612 7,121(g) 11,733
---------------------------------------------------------------
------
Net income $ 12,189 $12,628 $ 24,817
===============================================================
======
Basic net income per share $ 0.59 $ 1.19
=================================================================
====
Diluted net income per share $ 0.55 $ 1.13
=================================================================
====
Weighted average common shares
outstanding:
Basic 20,783 20,783
Diluted 21,998 21,998
Fiscal Year Ended February 28,
-------------------------------
2005
-----------------------------
GAAP Adjustment Non-GAAP
---------- ---------- --------
Revenues $208,815 $ - $208,815
Costs and expenses:
Cost of goods sold 114,066 (8)(a) 114,058
Research and development 42,988 (32)(b) 42,956
Selling, general and administrative 48,759 (85)(b) 48,674
Amortization of intangible assets 1,113 (1,113)(c) -
In-process research and development - - -
Settlement charge 6,000 (6,000)(e) -
Gains on real estate transactions (1,017) 1,017 (f) -
--------------------------------------------------------------------
-
Income (loss) from operations (3,094) 6,221 3,127
Interest income 2,532 - 2,532
Other expense, net (103) - (103)
----------------------------------------------------------------
-----
Income (loss) before provision for
income taxes (665) 6,221 5,556
Provision for (benefit from) income
taxes (2,267) 2,178(g) (89)
-----------------------------------------------------------------
----
Net income $ 1,602 $ 4,043 $ 5,645
================================================================
=====
Basic net income per share $ 0.09 $ 0.31
=================================================================
====
Diluted net income per share $ 0.08 $ 0.29
=================================================================
====
Weighted average common shares
outstanding:
Basic 18,376 18,376
Diluted 19,318 19,318
Notes:
SMSC uses certain non-GAAP information to evaluate its operating
results and believes such information also provides investors with
additional insight into its underlying operations. This schedule
presents a full reconciliation between GAAP and non-GAAP operating
measures.
(a) The adjustment to Cost of goods sold for the fiscal year ended
February 28, 2006 includes $1,652 to remove the impact of writing
up the cost of inventory at the date of the OASIS acquisition over
OASIS' original cost of the inventory. That write-up only impacted
GAAP Cost of goods sold for the turnover period of the OASIS
inventory at the date of acquisition, which was completed in
September 2005. The remaining $630 adjustment to Cost of goods
sold removes non- cash charges associated with Stock Appreciation
Rights (SARs). The adjustment for the fiscal year ended February
28, 2005 removes a charge of $8 associated with SARs.
As SARs are exercised, the actual cash cost of SARs is included
within non-GAAP operating measures.
(b) The adjustments to Research & development and Selling, general &
administrative expenses remove the impact of non-cash charges
associated with SARs.
As SARs are exercised, the actual cash cost of SARs is included
within non-GAAP operating measures.
(c) The adjustment to Amortization of intangible assets for the fiscal
year ended February 28, 2006 includes $4,740 related to the OASIS
acquisition and $1,062 related to the fiscal 2003 acquisition of
Gain Technology Corporation (Gain). The adjustment for the fiscal
year ended February 28, 2005 relates entirely to the Gain
acquisition.
(d) The adjustment to In-process research and development for the
fiscal year ended February 28, 2006 removes a charge related to
the OASIS acquisition.
(e) The adjustment to Settlement charge for the fiscal year ended
February 28, 2005 removes the impact of a litigation settlement
payment.
(f) The adjustment to Gains on real estate transactions for the fiscal
year ended February 28, 2005 removes a gain realized on the sale
of an idle facility.
(g) The adjustments to the Provision for (benefit from) income taxes
were determined by applying the appropriate incremental tax rates
to the adjustments described in notes (a) through (f) above.
STANDARD MICROSYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
February 28,
-------------------
2006 2005
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 43,932 $116,126
Short-term investments 111,101 56,519
Accounts receivable, net 39,802 23,499
Inventories 41,861 33,310
Deferred income taxes 17,457 17,701
Other current assets 5,599 4,584
----------------------------------------------------------------
-----
Total current assets 259,752 251,739
--------------------------------------------------------------
-------
Property, plant and equipment, net 38,242 22,630
Goodwill 94,606 29,435
Intangible assets, net 44,039 3,584
Deferred income taxes 8,307 7,163
Other assets 3,314 4,708
----------------------------------------------------------------
-----
$448,260 $319,259
=============================================================
========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 27,153 $ 15,995
Deferred income on shipments to distributors 13,205 7,689
Business acquisition consideration payable 17,750 -
Accrued expenses, income taxes and other
liabilities 28,935 13,400
---------------------------------------------------------------
------
Total current liabilities 87,043 37,084
---------------------------------------------------------------
------
Deferred income taxes 9,817 -
Other liabilities 17,269 12,326
Shareholders' equity:
Preferred stock - -
Common stock 2,400 2,053
Additional paid-in capital 250,792 187,854
Retained earnings 112,801 100,612
Treasury stock, at cost (25,961) (23,799)
Deferred stock-based compensation (3,953) (1,925)
Accumulated other comprehensive income (loss) (1,948) 5,054
----------------------------------------------------------------
-----
Total shareholders' equity 334,131 269,849
--------------------------------------------------------------
-------
$448,260 $319,259
=============================================================
========
[ Back To Contact Center Solutions Homepage's Homepage ]
|
NextiraOne Obtains Cisco's Unified Contact Centre Enterprise ATP Status 
The Customer Cascade: How Customer Feedback Drives Experience Design and Business Outcomes
NEW Consolidating Infrastructures: IT's New Call to Business [white paper]
