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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the Fiscal Year Ended February 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
Commission File No. 0-7422
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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)
(516) 435-6000
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each Exchange on
None which registered
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
- - --------------------------------------------------------------------------------
(Title of Class)
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
As of April 30, 1996, 13,532,501 shares of the registrant's common stock
were outstanding and the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $216,500,000.
Documents Incorporated Reference
The documents incorporated by reference into this Form 10-K and the Parts
hereof into which such documents are incorporated are listed below:
Document Part
Those portions of the registrant's 1996 annual report to shareholders (the
"Annual Report") which are specifically identified herein as incorporated
by reference into this Form 10-K. II
Those portions of the registrant's proxy statement for the registrant's 1996
Annual Meeting (the "Proxy Statement") which are specifically identified
herein as incorporated by reference into this Form 10-K. III
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PART I
ITEM 1. BUSINESS.
GENERAL
Standard Microsystems Corporation (the "Company", the "Registrant", or "SMCR")
is a Delaware corporation, organized in 1971. As used herein, the term "Company"
includes the Company's subsidiaries except where the context otherwise requires.
The address of the principal executive office of the Company is 80 Arkay Drive,
Hauppauge, New York 11788, and its telephone number at that address is
516-435-6000. Toyo Microsystems Corporation, a majority owned subsidiary located
in Tokyo, Japan, markets and sells SMC products in Japan. Through wholly owned
subsidiaries listed below, SMC operates branch offices to market and sell its
products in the following locations:
Subsidiary Location
Standard Microsystems Corporation (Asia) Taipei, Taiwan
SMC Australia Pty. Ltd. Sydney, Australia
Standard Microsystems Corporation (Canada) Oakville, Ontario, Canada
SMC Enterprise Networks, Inc. Andover, Massachusetts
Standard Microsystems (Europe) Ltd. London, England
SMC France, Inc. St. Germain-en-Laye, France
Standard Microsystems GmbH Munich, Germany
SMC de Mexico SA de CV Mexico DF, Mexico
SMC North America, Inc. Various states
SMC Singapore Singapore
BUSINESS AND PRODUCT DESCRIPTION
Standard Microsystems conducts its operations primarily through two divisions,
System Products and Component Products. The System Products Division designs,
produces and markets products that connect personal computers (PCs) to, and
allow communications over, local area networks (LANs). The Component Products
Division designs, produces and markets very-large-scale-integrated (VLSI)
circuits, primarily for control of various personal computer functions, as well
as specialized semiconductor-related products that are produced in SMC's own
semiconductor foundry. As a separate profit center, Toyo Microsystems
Corporation (TMC), sells the Company's component and system products in the
Japanese market.
The Company's fiscal 1996 revenues declined to $341.9 million, from $378.7
million in fiscal 1995, after increasing from $322.6 million in fiscal 1994. As
a percentage of consolidated revenues, system products declined to 54.6% in
fiscal 1996 from 67.7% in fiscal 1995 and 81.6% in fiscal 1994. In contrast, as
a percentage of consolidated revenues, component products' revenues increased to
40.5% from 29.2% and 16.7% and TMC's revenues increased to 4.9% from 3.1% and
1.7%.
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REVENUES BY PRODUCT LINE ($MILLIONS)
FOR THE YEARS ENDED FEBRUARY 29 OR 28, % change % change
1996 96/95 1995 95/94 1994
------- ---- ------ ---- ------
SYSTEM PRODUCTS
Adapter revenues $ 144.5 -29% $ 204.9 -10% $ 228.1
Hub and switch revenues 42.0 -19 51.5 46 35.3
Total system products revenues $ 186.5 -27% $ 256.4 -3% $ 263.4
% of Company revenues 54.6% 67.7% 81.6%
COMPONENT PRODUCTS
Integrated circuit revenues $ 123.0 15% $ 106.9 102% $ 52.8
Foundry device revenues 15.6 320 3.7 226 1.1
Total component products revenues $ 138.6 25% $ 110.6 105% $ 53.9
% of Company revenues 40.5% 29.2% 16.7%
TOYO MICROSYSTEMS CORPORATION
Revenues $ 16.8 44% $ 11.7 120% $ 5.3
% of Company revenues 4.9% 3.1% 1.7%
STANDARD MICROSYSTEMS CORPORATION
Revenues $ 341.9 -10% $ 378.7 17% $ 322.6
BUSINESS DIVESTITURE AND ACQUISITION: In January 1996, SMC and SMC Enterprise
Networks, Inc., a wholly-owned subsidiary, sold substantially all the net assets
and technology of the Enterprise Networks Business Unit (ENBU) to Cabletron
Systems, Inc., for $74.0 million in cash. ENBU had developed, manufactured and
sold enterprise-wide switching products for computer networks. The business unit
was included in SMC's system products operations for approximately ten months of
fiscal 1996 and accounted for approximately 4% of consolidated revenues in
fiscal 1996, 6% in fiscal 1995 and 2.5% in fiscal 1994.
In February 1996, SMC acquired the assets and technology of EFAR Microsystems of
Santa Clara, CA. EFAR supplies core logic chipsets for use with x86-architecture
and Pentium microprocessors. The transaction was valued at $5.6 million based on
the issuance of 240,000 SMC common shares, the assumption of certain liabilities
and transaction fees. Nearly all of the purchase price represented purchased
in-process technology and was charged to SMC's operations. Over the next three
years, SMC may issue to EFAR additional common stock with a market value of up
to $20 million, contingent on achieving certain operating results.
BUSINESS AND PRODUCT DESCRIPTION: SYSTEM PRODUCTS DIVISION
The System Products Division sells LAN products that enable personal computers
to be connected to networks and permit communications among LAN users.
Connection to a LAN permits a PC user to send messages to and receive messages
from other LAN
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users and share common resources such as printers, disk drives, files and
programs. LANs offer individuals the advantages of working at their own PCs and,
at the same time, provide an organization the benefits of connectivity and
productivity by allowing multiple users to communicate and share resources.
Internetworking, or connecting LANs to each other, allows users to communicate
and share resources over a wider sphere.
SMC LAN products include network interface cards (adapters), wiring hubs,
associated software and transceivers that operate over a variety of media
including unshielded twisted pair, shielded twisted pair, coaxial, and optical
fiber cabling. The Company provides LAN products for major protocols or
technologies used for PC-based LANs: Ethernet, Fast Ethernet, Token Ring,
ARCNETR and PC Card. After the end of fiscal 1996, SMC introduced its first
high-speed asynchronous transfer mode (ATM) adapters. SMC's low-cost, workgroup
Ethernet switches improve network performance by segmenting the network into
smaller portions, each of which receives full network bandwidth.
LAN technologies combine hardware and software to control traffic signaling and
message passage between PCs and peripheral devices. End users differentiate LAN
technologies chiefly based upon speed and volume of data transmitted,
installation procedures and equipment cost.
NETWORK INTERFACE CARDS (ADAPTERS): Installed in a personal computer or
workstation, an adapter is a printed circuit board that provides a connection to
a LAN over telephone -- unshielded twisted pair (UTP) or shielded twisted pair
(STP) -- wire, coaxial or fiber optic cables. The Company's adapters connect to
the communications links or buses internal to a PC. These buses, which allow for
transmission of signals within a computer, are known as industry standard
architecture (ISA), extended industry standard architecture (EISA),
micro-channel architecture (MCA) and peripheral component interconnect (PCI).
Inserted in a PC, an adapter provides a connector for a cable that plugs into a
wall outlet, much as a telephone cable connects to a wall outlet. For its
Ethernet, Fast Ethernet and Token Ring adapters, SMC provides software for
communicating over and diagnosing a network, installing an adapter and
collecting data for managing a network.
Based on an advanced single chip controller, the ETHEREZTM family of
auto-configurable 16-bit Ethernet adapters was shipped in August 1994. EtherEZ
supports Plug and Play (PnP), a protocol that allows a PC to analyze itself and
automatically discover an adapter. When installed in a PC not supporting PnP,
the EtherEZ set-up procedure is similar to but faster than that of the ETHERCARD
ELITE ULTRATM adapters. Elite Ultra was SMC's first family of single-chip-based
Ethernet controller adapters. For ISA bus installation, customers are
increasingly purchasing the EtherEZ family as the Elite Ultra family is phased
out as demand for it declines.
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EtherEZ and Elite Ultra adapters feature SIMULTASKINGTM that improves data
transmission speed. Simultasking technology forwards an information packet to
the PC or cable before that packet has been fully received into the adapter's
buffer memory.
Elite Ultras were shipped in July 1993. Based on SMC proprietary chips, a 32-bit
EISA bus master version was shipped in February 1994. Bus mastering transfers
data between the network adapter and workstation without intervention by the
workstation's microprocessor.
Shipped in September 1994, the ETHERPOWERTM family of auto-configurable Ethernet
adapters installs on the 32-bit PCI local bus. Serving as a high-speed interface
between the processor and the adapter, the PCI bus eliminates bottlenecks by
bypassing the traditional I/O bus (ISA), provides a wider data path and a faster
data transfer rate.
Shipped in February 1995, the ETHERPOWER 10/100TM PCI bus and ETHER 10/100TM
EISA bus auto-configurable Fast Ethernet adapters work with either 10Mbps or
100Mbps hubs. Both adapter families feature connectors for UTP and STP cabling.
The STP connection allows Token Ring users to switch to Fast Ethernet by
changing adapters and hubs, leaving the cabling intact.
Using an internally developed chip set, the TOKENCARD ELITETM adapter line
marked SMC's entry into the Token Ring market in October 1992. Shipped in June
1994, a 32-bit EISA version uses the same bus master chip as on the Ethernet bus
master adapter.
In fiscal 1996, Ethernet (including PC Card and Fast Ethernet) adapters
accounted for approximately 92% of SMC's adapter revenues, compared to 88% in
fiscal 1995. Token Ring adapters fell to approximately 6% of adapter revenues in
fiscal 1996 from 10% in fiscal 1995. ARCNET adapters accounted for the remainder
of adapter revenues.
Ethernet adapters that address PCI and EISA high-speed buses, the PC Card bus
for laptop PCs and Fast Ethernet and plug-and-play protocols accounted for
approximately 57% of SMC's adapter revenues in fiscal 1996 compared to 12% in
fiscal 1995. Most of these products were first shipped in high volume after
mid-year fiscal 1995.
WIRING HUBS AND LAN SWITCHES: The cables, beginning at the adapter connector,
are usually linked to a centrally located wiring hub. The hub passes along and
boosts signals from one computer or port on a LAN to one or more other ports.
Wiring hubs are called concentrators for Ethernet and Fast Ethernet,
multi-station access units (MAUs) for Token Ring and hubs for ARCNET. SMC hubs
are suited to workgroup or departmental LANs.
In addition to the physical signaling provided by conventional hubs, intelligent
hubs incorporate software for managing a network. SMC produces both conventional
and intelligent hubs and the software to support network management.
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Among conventional Ethernet 10Mbps hubs, the newest and lowest cost SMC family
is the ETHEREZTM line of 5, 8 and 16 10BaseT port models that began shipping in
December 1995. Initially shipped in May 1994, the 6-member 3 to 12-port
TIGERHUBTM unmanaged hub family utilizes a proprietary, integrated circuit that
controls 7 hub ports. SMC's older ELITE 3512TM 12-port Ethernet concentrator is
upgradable to an intelligent concentrator by installing a Network Management
Module (NMM).
In May 1995 SMC entered the conventional Fast Ethernet hub market with shipment
of the TIGERHUB 100TM family. Models include concentrators with 8 and 16
100BaseTX ports, 12 100BaseFX (optical fiber) ports and 15 100BaseTX ports and 1
100BaseFX port.
TIGERSTACK TM, SMC's newest intelligent stackable concentrator, stacks up to 8
hubs or 224 UTP, coax or fiber ports, segmentable up to 32 sectors per stack.
The entire stack, whether one or 32 collision domains, is managed by a single
NMM. Hub configurations range from 12 to 28 UTP ports. Other models support
50-pin telco, multiple coax or multiple fiber ports. SMC believes the TigerStack
is the industry's most segmentable stackable hub line. The first TigerStack
models were shipped in May 1995.
SMC's older ELITE 3812TM line allows stacking 8 concentrators or 96 UTP ports or
112 total ports, all controlled by a single NMM. SMC's Ring Management Module,
when added to the ELITESTACKTM stackable MAUs, provides industry compliant SNMP
network management for Token Ring.
Shipped in December 1995, SMC's EZSWITCHTM 6-port model was the first low priced
switch that SMC introduced for workgroup switching. With dedicated 10Mbps links
to hubs, file servers, print servers or workstations, EZSwitch boosts network
bandwidth in client/server workgroups. Introduced in fiscal 1997 for connecting
workgroups to a network backbone or server farm, the EZSWITCH PLUS provides six
10Mbps and two 100Mbps ports and the TigerSwitchTM XFE provides 16 10Mbps ports
and one 100Mbps port. SMC has changed its focus to workgroup and departmental
LAN switches from backbone switching products under the divested ENBU.
In fiscal 1996, hubs accounted for approximately 70% of SMC's hub and LAN switch
revenues, compared to 59% in fiscal 1995. Approximately 94% of SMC's hub
revenues were Ethernet (including Fast Ethernet) hubs, compared to 90% in fiscal
1995. Stackable Ethernet hubs rose to approximately 50% of SMC's Ethernet hub
revenues from 34% in fiscal 1995.
SUPPORT SOFTWARE: Supporting software that accompanies SMC's Ethernet and Token
Ring adapters is delivered on SUPERDISKTM which contains: (i) driver software
for popular network operating systems, (ii) EZSTARTTM installation and test
utility and (iii) PC
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AGENT/SNMP. SMC believes extensive software support, supplied without charge,
distinguishes its line of adapters.
Drivers enable network hardware to communicate over a LAN by linking the network
protocol and the network operating system (NOS). The NOS suppliers regularly
update their software, requiring SMC to regularly alter its drivers. SMC also
upgrades drivers to improve performance over a network.
Drivers are supplied for servers and workstations operating under network
operating systems such as NovellR NetwareR 2.x, Novell Netware 3.x, Novell
Netware 4.x, Novell Netware Lite, Novell Netware for SAA, MicrosoftR LAN
Manager, Microsoft NT, IBMR LAN Server, SCO or ISC UNIX, Artisoft LANtasticR,
BanyanR VinesR and the OSI consortium's GOSIP. SMC offers DRIVER ASSURANCE,
insuring that drivers which work on new adapters are compatible with prior SMC
generations. Installers also have the flexibility to choose either a fully
software or hardware (jumper) configurable setup.
With a Windows-like user interface in a DOS environment, EZStart (i)
automatically configures an adapter; (ii) loads the drivers of choice; (iii)
diagnoses the adapter and tests communications along the network and (iv)
installs PC Agent/SNMP. EZStart's macro function records mouse clicks or
keystrokes to be saved and reused to automatically install a large number of
adapters without installer intervention.
PC Agent/SNMP uses Simple Network Management Protocol (SNMP), an
industry-standard protocol that facilitates network management. PC Agent/SNMP
gathers status data about a computer in which an adapter resides. On request,
that data is passed along to an SNMP-based network management program. PC
Agent/SNMP for Ethernet, Fast Ethernet and Token-Ring allows SMC adapters to be
polled for status data by SNMP compliant network management systems such as
enterprise-wide packages offered by Hewlett-Packard, Sun Microsystems or Novell.
SNMP agents are provided as software embedded in flash, read only memory with
SMC's intelligent hub platforms. The agents gather status data about the
physical hardware on the segment of a LAN connected to that hub. Network
management systems that utilize data gathered by PC Agent/SNMP also utilize data
gathered by hub-based agents.
SMC offers ELITEVIEWTM, a family of SNMP-based software packages for managing
workgroup, departmental or enterprise LANs. EliteView's capabilities have been
regularly upgraded. EliteView 4.2 operates on a PC under a Windows environment
and supports Ethernet and Token Ring networks. Features that improve upon prior
releases include the ability to: (i) utilize dynamic data exchange (DDE) to
share information with DDE-based applications such as Microsoft's Excel
spreadsheet; (ii) create an inventory and a logical road map; (iii) graphically
display the devices that are IP, IPX and SNMP auto-discoverable; and (iv) draw
and customize hierarchical views of various network levels.
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SMC provides an out-of-band network management utility with SMC's intelligent
MAUs. Out-of-band management allows the utility to monitor the network even when
the network is unable to operate. SMC also offers network management for ARCNET
installations.
DESIGN CRITERIA: SMC's System Products Division designs and develops critical
integrated circuits that control the operation of its Ethernet and Token Ring
adapters. The Company believes that this vertical integration provides an
advantage in terms of control over costs, performance, quality and
time-to-market, when compared to competitors who buy critical integrated
circuits from merchant semiconductor manufacturers. The single-chip 795 Ethernet
controller is the key device on EtherEZ adapters. The single-chip 790
ULTRACHIPTM Ethernet controller is the key device on Elite Ultra adapters. The
571 EISA bus master chip is used on both Ethernet and Token Ring EISA adapters.
SMC has also designed critical components for its hub products. The 710 chip
supports up to seven 10Base-T Ethernet ports on TigerHub and TigerStack hubs.
BUSINESS AND PRODUCT DESCRIPTION: COMPONENT PRODUCTS DIVISION
The Component Products Division (CPD) designs, develops and manufactures
very-large-scale-integrated (VLSI) circuits. SMC maintains its SUPERCELLTM
library of complex circuit functions, shortening the design cycle for VLSI
circuits. Component products are focused on the personal computer input/output
(PC I/O) and networking markets. In fiscal 1996 approximately 80% of the
Division's revenues were from PC I/O devices, compared to approximately 88% in
fiscal 1995.
SMC's PC I/O controllers are integrated circuits with multiple functions for
controlling and interfacing various peripheral and communications functions in a
PC. Features include digital data separation, vertical or horizontal recording,
control of serial and parallel ports, interfaces with the game port and hard
disk drive and floppy disk control. CHIPROTECTTM circuitry prevents damage to
the integrated circuit from inadvertent current overloads on the parallel port
interface.
PC I/O controllers introduced by SMC during fiscal 1993 and 1994 are known as
super I/O devices. In a single package, these circuits combine many of the
connectivity functions listed above that have become required features for PCs.
SMC's super I/O class of devices are pin compatible, offering customers the
flexibility to design one circuit board layout, modifying characteristics by
inserting one or another of SMC's devices. Popular PC I/O devices support
Enhanced Parallel Port (EPP) and Microsoft and Hewlett-Packard sponsored
Extended Capabilities Port (ECP) protocols that provide very high speed
communications through the parallel port between a PC and peripheral equipment.
During fiscal 1995 and 1996, SMC announced PC I/O devices with enhanced features
including interfaces for infrared (IR) wireless communications, support of PnP
and low
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electrical power usage for laptop and handheld PCs. SMC also announced and began
to ship a class of PC I/O controllers known as ultra I/O. On a single chip,
these devices add keyboard and mouse control, system clock generator and a real
time clock to the super I/O level of functionality. New PC I/O features in
fiscal 1997 include support of the 4.4Mbps IrDA Fast IR standard.
Network circuits are sold to vendors of ARCNET, Ethernet and Fast Ethernet
equipment. Versions of ARCNET devices are optimized for use in industrial
control and transportation markets. CPD's most advanced single-chip Ethernet
controller integrates memory management, PC Card-bus interface logic, 4.6kb RAM
and optional Simultasking. In fiscal 1995, the Division entered the Fast
Ethernet market with the 10Base-T/100Base-T FEASTTM controller device.
The technologies received from the February 1996 EFAR acquisition focus on the
PCI bus. SuperCell designs include controllers for memory, cache memory, PCI
bus, IDE disk drives and DMA and power management technology. These designs are
expected to be incorporated into future SMC integrated circuits. EFAR's
principal product is the ULTRACORETM logic chipset for high-speed PCI-bus PCs.
SMC's fastest growing business in fiscal 1996 was foundry products that employ
semiconductor fabrication techniques in the Company's own wafer production
facility. By far, the most important contributor to SMC's foundry revenues was a
heater device for the ink cartridge used on a customer's line of ink jet
printers. Foundry devices accounted for approximately 4.5% of SMC's revenues and
11% of divisional revenues in fiscal 1996 compared to approximately 1% and 3%,
respectively, in fiscal 1995.
BUSINESS AND PRODUCT DESCRIPTION: WARRANTY POLICY
Depending upon the product, the Company generally warranties against defects in
material and workmanship for periods varying from one year to the lifetime of a
product. Estimated warranty costs are accrued when products are sold.
MARKETS AND COMPETITION
Network products of the System Products Division are used chiefly in conjunction
with personal computers which are connected to local area networks. Integrated
circuits of the Component Products Division are used primarily in personal
computers.
Competition is characterized by rapid technological change and significant unit
price reductions which may not always correspond to a decrease in production
costs. Product line differentiation may be determined by breadth, diversity,
performance characteristics such as speed, quality and reliability and prices.
Among the competitors, important distinctions are timeliness of shipments, depth
of customer support and technical service.
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The principal methods SMC uses to compete include new products, servicing
customers and reducing manufacturing costs. While past performance can be a
guide, there is no assurance that the Company can improve or maintain gross
profit margins.
MARKETS AND COMPETITION: SYSTEM PRODUCTS DIVISION
The available worldwide market for the Company's LAN products is determined by
the installed base of PCs, sales of new PCs and the portion of PCs connected to
local area networks. SMC agrees with market analysts who believe that the number
of PCs shipped and the percentage of PCs connected to LANs has increased over
recent years. Competitors include domestic and foreign manufacturers, many of
whom possess substantially greater resources than SMC.
SMC's Ethernet, Fast Ethernet, Token Ring and ARCNET adapters accounted for 78%
of System Products Division (SPD) revenues, or 42% of Company revenues, during
fiscal 1996. SMC addresses over 95% of the available market for network
interface cards in terms of units sold. The coverage statistics are based upon
estimates of the worldwide adapter market for calendar 1995 made by market
research firms. According to the market research estimates, during 1995,
approximately 29 million adapters were shipped compared to 23 million adapters
in calendar 1994. The Company shipped 2.3 million adapters in fiscal 1996 and
2.6 million adapters in fiscal 1995, the fiscal years most comparable to
calendar 1994 and 1995.
SMC's Ethernet, Fast Ethernet Token Ring and ARCNET conventional and intelligent
wiring hubs and low port-count Ethernet switches accounted for 22% of divisional
revenues, and 12% of Company revenues, during fiscal 1996. With the importance
of increasing messaging speed and network management in workgroup and
departmental networks, SMC believes hub and switch products will become a larger
portion of networking revenues. The baseline for this expectation excludes
revenues from the internetworking LAN switch product line that was divested in
January 1996.
According to a market research estimate, during calendar 1995, approximately 38
million shared media hub ports were shipped for connecting computers and
computer peripheral equipment to LANs. This compares to an estimate of 26
million hub ports for calendar 1994. The Company shipped over 1.2 million hub
ports in fiscal 1996 and over 0.9 million hub ports in fiscal 1995, the fiscal
years most comparable to calendar 1994 and 1995.
Because many competitors sell products that perform similar functions, SPD's
strategy is to provide superior price/performance solutions for the PC LAN
market, along with a high level of customer support, technical service and
embedded software. SMC has combined its comprehensive product line with services
under its BUYER ASSURANCE program that includes 3-year to lifetime product
warranties, 7-day/24-hour phone technical support,
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cross-shipment product replacement and 30-day money-back privileges. Market
share for each competitor is based on a combination of price, performance,
service, promotional and advertising activity and strength of the marketing
channels.
Competition is provided by domestic and foreign manufacturers in US and
international markets. Some companies concentrate on aggressive pricing as the
principal competitive tool. On the other hand, many manufacturers differentiate
themselves by supplementing price strategies with performance, service and
acceleration of new product design cycles.
The Company has generally been able to lower production costs through
manufacturing efficiencies and pass along cost savings through reduced selling
prices, while providing new product features and technology. In most cases,
product improvements are derived from SMC's semiconductor, board design,
production, testing and software capabilities. Most system products competitors
lack the depth of SMC's semiconductor design capability and commitment. SMC
believes its breadth and timeliness of driver support provides an advantage over
most other adapter suppliers.
MARKETS AND COMPETITION: COMPONENT PRODUCTS DIVISION
The Division's strategy is to concentrate its product development, sales and
marketing resources into the PC I/O, networking and core logic chipset markets.
These markets represent a small portion of the total semiconductor market.
Competitors include both domestic and foreign manufacturers, many of whom
possess substantially greater resources than SMC.
Within the PC I/O market, SMC believes the variety of performance features and
the design flexibility provided to customers has led to strong acceptance of its
family of PC I/O devices and allowed SMC to become a market leader. The Division
has continually added devices with enhanced features. Principal customers for PC
I/O devices are most major producers of PCs.
Entry into the competitive chipset market, through the EFAR acquisition,
concentrates on devices for the high speed PCI-bus. Incorporating EFAR's
technology into future SMC devices is expected to be the primary benefit to the
Company.
In the market for single-chip Ethernet control devices, the Division has
emphasized products for laptop computers. SMC's principal customers have been
producers of PC Card-bus adapters. A family of low-cost industrial ARCNET
controllers addresses industrial network solutions, usually characterized by
long design-in cycles and low volume. Customers use these devices in
machine-to-machine networking applications.
While many companies offer semiconductor foundry services worldwide, SMC has
been willing to undertake engineering programs for prospective customers and
deliver non-
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standard devices that require semiconductor fabrication techniques. The
processes that SMC's foundry business undertakes might be considered too
specialized to be economically viable by many wafer fabrication facilities that
deliver high-volume, advanced technology VLSI circuits.
SALES AND DISTRIBUTION
SMC's system products are sold worldwide, primarily to distributors of computer
and networking products and also to system integrators and original equipment
manufacturers (OEMs). Component products are sold worldwide, primarily to OEMs
and also to distributors of semiconductor devices. The Company maintains a
reserve for anticipated product returns and price protection.
No customer accounted for as much as 10% of revenues in fiscal 1996.
SALES AND DISTRIBUTION: SYSTEM PRODUCTS DIVISION
Standard Microsystems sells LAN products primarily through LAN and microcomputer
distributors. The distributors sell products to thousands of resellers who offer
products to end users. The Division provides service and support and promotional
programs to encourage resellers to buy SMC products from distributors. In
addition, the Company sells to strategic accounts, who may be PC producers who
ship their PCs with SMC adapters, or system integrators, who include SMC
adapters when bidding for government or commercial contracts.
In accordance with industry practice, distributor inventory is protected with
respect to price on inventories that the distributor may have on hand at the
time of a change in the published list price, and with respect to the rotation
of slow moving inventory in exchange for other inventory of equal value.
Distributor contracts may be terminated by written notice by either party. The
contracts specify terms covering the return of inventories. Returns of product
pursuant to termination of these agreements have not been material. Reserves are
estimated based on information provided by distributors on sales to their
customers and on their inventory levels.
SALES AND DISTRIBUTION: COMPONENT PRODUCTS DIVISION
Sales are primarily to OEMs. Producers of PCs are the Division's largest
customer group. In addition, a small percentage of products are sold to
electronic component distributors. In accordance with industry practice,
distributor inventory is protected with respect to price on inventories which
the distributor may have on hand at the time of a change in the published list
price. Also, in accordance with industry practice, slow moving inventory may be
exchanged for other inventory of equal value. Distributor contracts may be
terminated by written notice by either party. The contracts specify the terms
for the return
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of inventories. Returns of product pursuant to termination of these agreements
have not been material.
SALES AND DISTRIBUTION: INTERNATIONAL SALES
As a percentage of total revenues, the Company's sales to customers located
outside the United States (mainly in Europe, Asia and the Pacific Rim and
Canada) has increased. The principal shift occurred in sales to Asia and the
Pacific Rim, caused primarily by a trend of component products' domestic branded
customers to produce a greater proportion of their PCs in offshore factories.
The European market was relatively more stable than North American markets,
which incurred a higher portion of the adjustments made in networking products
distribution inventory during fiscal 1996 and fiscal 1995. The decline in
revenues in the US and Canada primarily reflected a reduction of distributor
inventory to levels that were considered appropriate for the rate of sales of
SMC's networking products by distributors to their reseller customers during
fiscal 1996. The improvement in Japan, reflected in TMC's progress, resulted
principally from selling more PC I/O devices in fiscal 1996 and selling more
networking products in fiscal 1995.
FOR THE YEARS ENDED FEBRUARY 29 OR 28, %change %change
1996 96/95 1995 95/94 1994
---- ------ ---- ----- ----
United States $149.4 -26% $201.5 12% $180.7
Export
Asia and Pacific Rim 87.0 62 53.7 79 30.1
Europe 69.3 -20 86.5 3 84.3
Canada 10.8 -29 15.3 11 13.8
Other 8.6 -13 9.9 18 8.5
- - --------------------------------------------------------------------------------------------------------------------
Export revenues $175.7 6 $165.5 21 $136.5
Japan (TMC) 16.8 44 11.7 120 5.3
- - --------------------------------------------------------------------------------------------------------------------
Revenues outside the U.S. 192.5 9 177.1 25 141.8
- - --------------------------------------------------------------------------------------------------------------------
Total revenues $341.9 -10% $378.7 17% $322.6
- - --------------------------------------------------------------------------------------------------------------------
Export sales are made in United States dollars. Sales by Toyo Microsystems,
which are not classified as export sales, are denominated in Japanese yen. SMC's
competitive position in international markets may be affected by currency
fluctuations.
BACKLOG
The Company schedules production based upon a forecast of demand for its
products. Sales of networking products are made primarily pursuant to purchase
orders generally requiring delivery within one month. In light of industry
practice and experience, the
13
Company believes that backlog is not a particularly meaningful indicator of
future sales of networking products.
Sales of component products are made primarily pursuant to purchase orders
generally requiring delivery within six months. Customers do cancel and extend
the delivery time for products on order. Nevertheless, in light of industry
practice and experience, the Company believes that backlog can be a meaningful
indicator of future sales of component products.
At the end of fiscal 1996, SMC's backlog was $86.3 million, compared to $28.2
million at the end of fiscal 1995.
MANUFACTURING
Products of the System Products Division are assembled by turnkey subcontractors
at plants located in the United States and Ireland. Design and assembly of these
products primarily utilize surface mount technology. SMC provides the
subcontract manufacturer with detailed documentation necessary to build a board
to required quality specifications. This documentation includes board schematics
and drawings, bills of materials, quality specifications and packaging, handling
and shipping details.
The subcontract manufacturer is then responsible for component and printed
circuit board procurement, incoming test of components, mounting components on a
printed circuit board and the burn-in and final testing of the boards. SMC
requires that assembled boards be manufactured to Interconnecting and Packaging
and Electronic Circuit (IPC) standards.
SPD's manufacturing support, customer support, and sales operations have been
ISO-9002 certified since September 1995. In January 1996, the adapter products
operation was recommended for ISO-9001 registration. ISO-9000 is an
international quality system standard. Internal procedures and business process
changes implemented as part of an effort to obtain ISO-9000 certification have
contributed to reducing internal costs, increasing efficiency and establishing
baseline quality measurements through documented work processes. ISO procedures
have been integrated into SMC's total quality management program.
SMC utilizes semiconductor foundries and assembly contractors in the US,
Southeast Asia and Western Europe to provide state-of-the-art integrated circuit
manufacturing and assembly capacity. These foundries manufacture most of the
integrated circuits required by the Component Products Division and proprietary
circuits used by the System Products Division. During fiscal 1996, 89% of the
revenues of the Component Products Division resulted from the sale of product
manufactured by subcontractor foundries, compared to 92% in 1995.
14
In fiscal 1996, SMC purchased $16.0 million of wafer fabrication equipment for a
semiconductor plant in Madrid, Spain, owned by AT&T Corp.'s Microelectronics
Business Unit. This investment was made pursuant to an October 1994 cooperative
wafer fabrication agreement between SMC and AT&T that is intended to provide SMC
with wafers for five years beginning in March 1996. The Madrid facility is
capable of producing device geometries of 0.9 to 0.45 microns (millionths of a
meter).
In fiscal 1996, SMC purchased a minority equity interest in Singapore-based
Chartered Semiconductor Pte Ltd. for $19.9 million. This transaction is intended
to provide SMC with wafers for ten years from an advanced facility that will be
capable of producing device geometries of 0.6 to 0.2 microns. This arrangement,
along with the AT&T agreement, is intended to provide a portion of the Company's
long-term production requirements for state-of-the-art integrated circuits.
The Company has developed relationships with several suppliers who represent the
primary source for certain components, raw material and finished product. Most
components and other materials purchased by SMC and its subcontractors are
generally available from multiple suppliers. However, certain components and
other materials are available only from a single source. The inability to obtain
certain components or materials could lead to an interruption in shipments of
certain SMC products. SMC and its subcontract assemblers have generally been
able to obtain both sole and multiple-sourced materials without interrupting
production schedules. However, the inability to obtain certain components,
materials or finished products from a supplier or subcontractor could cause a
temporary interruption in the sale of the Company's products.
High levels of production by PC manufacturers led to an industry-wide shortage
of silicon wafer fabrication capacity in fiscal 1996 and fiscal 1995. As a
result, SMC believes that, in both years, it was unable to produce all the
integrated circuits it was capable of selling. Although the shortage of silicon
wafer fabrication capacity eased during the fourth quarter of fiscal 1996,
difficulty in securing additional capacity could reemerge and impact revenue and
profit growth in the future.
RESEARCH AND DEVELOPMENT
The technology involved in designing and manufacturing SMC's products is complex
and is constantly being refined. Accordingly, the Company is committed to a
program of research and development oriented toward improving and refining its
existing capabilities and developing new techniques, designs and technologies
for producing component and system products.
During the fiscal year which ended February 29, 1996, SMC spent $31.7 million on
research and development, which equaled 9.3% of revenues. This compares with
$28.3
15
million, or 7.5% of revenue, spent during fiscal 1995 and $24.0 million, or 7.4%
of revenues, during fiscal 1994. Of these amounts, $9.8 million was spent by the
divested Enterprise Networks Business Unit in fiscal 1996 compared to $7.6
million in fiscal 1995.
Engineering groups, developing both system products and component products,
utilize semiconductor design techniques to minimize chip area and utilize
advanced wafer processing and packaging methods. The goal is to improve
features, performance and reliability while minimizing integrated circuit
manufacturing costs.
NEW PRODUCTS: Networking products introduced by the System Products Division
during fiscal 1996 included cost reduced and enhanced Ethernet adapters, a
flexible Ethernet stackable hub family, low cost, unmanaged Ethernet and Fast
Ethernet concentrators and a low cost workgroup Ethernet switch.
Integrated circuits introduced by the Component Products Division during fiscal
1996 included extensions to its PC I/O controller family, a single-chip Ethernet
controller with a PC Card-bus interface, and an enhanced industrial ARCNET
controller.
PRODUCTS INITIALLY SHIPPED IN FISCAL 1996
ETHERNET AND FAST ETHERNET ADAPTERS:
ETHEREZTM: 8416 - Cost reduced models of 16-bit ISA PnP (auto-configurable)
compliant, I/O or memory mapped adapters with 10Base-T connector, thin coax
connector or a combination of 10Base-T and thin coax connectors; added model
with a combination of 10Base-T, thin coax and AUI connectors
ETHERPOWERTM: 8432 - Cost reduced models of 32-bit PCI auto-configurable, bus
master adapters with 10Base-T connector or a combination of 10Base-T and thin
coax connectors; added model with a combination of 10Base-T, thin coax and
AUI connectors ETHERPOWER2TM: 8434 - 32-bit PCI auto-configurable, dual
channel bus master adapters with 10Base-T connector or a combination of
10Base-T and thin coax connectors
DRIVER SOFTWARE: Macintosh drivers for EtherPower, EtherPower2 and
EtherPower 10/100 adapters for installation in PCI-bus Power Macintosh
computers. AIX Version Four drivers for EtherPower, EtherPower2 and EtherPower
10/100 adapters for installation in PCI-bus Power PC based IBM Personal Computer
series computers.
ETHERNET AND FAST ETHERNET HUBS:
TIGERHUB 100TM: Family of four unmanaged 100 Mbps hubs, configured: 5116TX - 16
100Base-TX ports; 5116TFX - 16 100Base-TX ports, 1 100Base-FX port; 5112FX - 12
100Base-FX ports; 5108TX - 8 100Base-TX ports, desktop
TIGERSTACKTM: Family of nine segmentable, manageable stackable hubs,
configured: 3312TC - 12 10Base-T ports, 1 BNC port, 1 AUI port;
3312TCI - 3312TC with NMM; 3314T - 14 10Base-T ports; 3326TC - 26 10Base-T
ports, 1 BNC port, 1 AUI port; 3326TCI - 3326TC with NMM; 3328T - 28 10Base-T
ports; 3328TELCO - 2 50-pin telco
16
ports, 4 RJ45 ports; 3306BC - 6 BNC ports, 1 AUI port, 1 10Base-T port; 3306FC -
6FL ports, 1 AUI port, 1 BNC port; 3300NMM -SNMP network management module
ETHEREZ HUB TM: Family of three unmanaged hubs, configured: 3605T-EZ - 5
10Base-T ports; 3608TC-EZ - 8 10Base-T ports, 1 BNC port; 3616TC-EZ - 16
10Base-T ports, 1 BNC port, 1 AUI port
LAN SWITCHING PRODUCTS:
EZ SWITCH TM: EZ006 - Six-port, low-cost Ethernet cut-through switch with
5 10Base-T ports and 1 AUI port, half duplex or full duplex
NETWORK MANAGEMENT SOFTWARE:
ELITEVIEWTM V4.2: Windows based NMS supporting SNMP agents for SMC
Ethernet and Token Ring adapters and intelligent hubs
NETWORK AND PC I/O CONTROLLERS:
COM20023: ARCNET controller with CD interface to accept digital signal streams
from data or audio CD drives and frequency-shift-keying encode/decode to
maximize data transfer rate from ARCNET protocol
SMC91C94: 10Mbps Ethernet controller, with PC Card interface logic, 4.6kb RAM
with optional Simultasking FDC37C669: ISA PnP compatible in addition to Super
I/O features of 2.88 megabyte floppy disk control, serial port and parallel
port control with chip protection and power down, EPP and ECP protocol
support to interface with high speed peripherals
PATENTS AND LICENSE AGREEMENTS
The Company has received United States patents, and the corresponding Foreign
equivalents, relating to its technologies and additional patent applications are
pending.
The Company has entered into non-exclusive patent licensing and
patent/technology licensing agreements which have entitled the licensees to
utilize the Company's patents or technologies, in exchange for which the Company
has received, in various combinations, lump-sum payments, royalty payments, the
right to utilize other patents or technologies of the licensees or other
consideration, including the right to manufacture, market and sell specific
products designed by the licensees. These agreements have typically provided for
bi-directional licenses under certain patents, utility models and design
patents, existing at the effective date of the particular agreement and patent
applications filed within a specified period of years after the effective date
of the agreement. The licenses usually continue for the life of the particular
patent.
The Company has, from time to time, been informed of claims that it may be
infringing patents owned by others. When the Company deems it appropriate, the
Company may seek licenses under certain of such patents. However, no assurance
can be given that
17
satisfactory license agreements will be obtained, if sought by the Company, or
that failure to obtain any such licenses would not adversely affect the
Company's future operations.
ENVIRONMENTAL REGULATION
Federal, state and local regulations impose various controls on the discharge of
certain chemicals and gases used in semiconductor processing. The Company's
facilities have been designed to comply with these regulations. However,
increasing public attention has focused on the environmental impact of
electronics manufacturing operations and there is no assurance that future
regulations will not impose significant costs on the Company.
EMPLOYEES
As of February 29, 1996, of the Company's 864 employees, 168 were engaged in
engineering, including research and development, 287 in marketing and sales, 165
in executive and administrative activities and 244 in manufacturing and
manufacturing support. This compared to February 28, 1995, when, of the
Company's 861 employees, 202 were engaged in engineering, including research and
development, 301 in marketing and sales, 161 in executive and administrative
activities and 197 in manufacturing and manufacturing support.
Many employees are highly skilled and SMC's success depends upon its ability to
retain and attract such employees. The Company has never had a work stoppage. No
employees are represented by a labor organization and the Company considers its
employee relations to be satisfactory.
- - -----------------------------------------------------------------
SMC and Standard Microsystems are registered trademarks of Standard Microsystems
Corporation. Product names and company names are the trademarks of their
respective holders.
18
ITEM 2. PROPERTIES.
The Company owns five facilities, totaling approximately 249,000 square feet of
plant and office space, located on approximately 28 acres in Hauppauge, New
York, where research, development, manufacturing, product testing, warehousing,
shipping, marketing, selling and administrative functions are conducted.
The Company occupies a 50,000 square foot facility in Irvine, California, where
SMC's System Products Division conducts most of the research, development and
marketing for adapter products. The lease expires in 1997.
In addition, the Company maintains offices in leased facilities in: San Jose,
California; Miami, Florida; Atlanta, Georgia; Oakbrook Terrace, Illinois;
Andover, Massachusetts; Dayton, Ohio; Austin and Dallas, Texas; Falls Church,
Virginia; Bellevue, Washington; Melbourne and Sydney, Australia; Oakville,
Ontario, Canada; London, England; St. Germain-en-Laye, France; Munich, Germany;
Tokyo, Japan; Mexico DF, Mexico; Singapore; Johannesburg, South Africa and
Taipei, Taiwan.
As of February 29, 1996, the Company owned machinery and equipment, property and
leasehold improvements with an original cost of $139.9 million and accumulated
depreciation and amortization of $79.7 million.
ITEM 3. LEGAL PROCEEDINGS.
In June 1993, Penril Datacom Networks, Inc., commenced an action against the
Company, its wholly-owned subsidiary SMC Enterprise Networks, Inc. (successor by
merger to Sigma Network Systems, Inc.), and two former officers of Sigma,
alleging, among other items, breach of September 1991 and March 1990 agreements
between Sigma and Penril and seeking $8.0 million. The Company counterclaimed
against Penril, alleging breach of contract and sought damages in excess of $1.4
million. In November 1995, Penril filed a First Amended complaint seeking $50.0
million in damages and a trebling of those damages. Penril has filed further
motions that the Company has opposed. While it is not possible to assess the
likelihood of Penril establishing liability, nor predict the amount of damages
that might be awarded in the event of a successful claim, the Company has
accrued the estimated cost of legal fees to defend against these claims and
intends to defend against these claims vigorously.
In June 1995, several actions were filed against the Company and certain of its
officers and directors. The actions have been consolidated into one complaint.
The consolidated claims purport to be a class action on behalf of the purchasers
of the Company's common stock between September 19, 1994, and June 2, 1995. The
consolidated complaint asserts claims under federal securities laws and alleges
that the
19
price of the Company's common stock was artificially inflated during the class
action period by false and misleading statements and the failure to disclose
certain information. While it is not possible to assess the likelihood of any
liability being established, nor predict the amount of damages that might be
awarded in the event of a successful claim, the Company has answered the
consolidated complaint, has accrued the estimated cost of legal fees to defend
against these claims, and intends to defend against these claims vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant as of April 30, 1996, are as follows:
SERVED AS AN
NAME POSITION AGE OFFICER SINCE
Paul Richman Chairman and 53 1971
Chief Executive Officer
Arthur Sidorsky Executive Vice President 62 1980
Component Products Division
Anthony M. D'Agostino Senior Vice President Finance 38 1988
and Treasurer
Lance Murrah Senior Vice President and 40 1994
General Manager System
Products Division
Eric Nowling Vice President and Controller 39 1995
All officers serve at the pleasure of the Board of Directors
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
The information captioned "Market price" and the last paragraph appearing in the
Annual Report under the heading "Quarterly Financial Data" are incorporated
herein by this reference. Except as specifically set forth herein and elsewhere
in this Form 10-K, no information appearing in the Annual Report is incorporated
by reference into this report nor is the Annual Report deemed to be filed, as
part of this report or otherwise, pursuant to the Securities Exchange Act of
1934.
ITEM 6. SELECTED FINANCIAL DATA.
The information appearing in the Annual Report under the caption "Selected
Financial Data" is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information appearing in the Annual Report under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" is
incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements, notes thereto, Report of Independent Public
Accountants thereon and quarterly financial data appearing in the Annual Report
are incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Inapplicable.
21
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information appearing in the Proxy Statement under the caption "Election of
Directors" is incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information appearing in the Proxy Statement under the caption "Executive
Compensation" is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
The information appearing in the Proxy Statement under the captions "Election of
Directors" and "Voting Securities of Certain Beneficial Owners and Management"
is incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information appearing in the Proxy Statement under the caption "Certain
Relationships and Related Transactions" is incorporated herein by this
reference.
22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) 1. Financial Statements
The following consolidated financial statements of the Company
and its subsidiaries have been incorporated by reference from
the Annual Report pursuant to Part II, Item 8:
Consolidated Statements of Income for the three years
ended February 29, 1996
Consolidated Balance Sheets, February 29, 1996 and
February 28, 1995
Consolidated Statements of Shareholders' Equity for the
three years ended February 29, 1996
Consolidated Statements of Cash Flows for the three years
ended February 29, 1996
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
2. Financial Statement Schedules
Schedules are omitted because of the absence of conditions
requiring them or because the required information is shown on
the consolidated financial statements or the notes thereto.
3. Exhibits, which are listed on the Exhibit Index, are filed as
part of this report and such Exhibit Index is incorporated by
reference. Exhibits 10.1 through 10.22 listed on the
accompanying Exhibit Index identify management contracts or
compensatory plans or arrangements required to be filed as
exhibits to this report, and such listing is incorporated
herein by reference.
(b) A report on Form 8-K dated January 12, 1996, was filed during the last
quarter of the period covered by this report. The Form 8-K reported the sale of
the assets of the Enterprise Networks Business Unit and contained the following
financial statements pursuant to Item 7:
23
Unaudited Pro Forma Consolidated Condensed Balance Sheet at
November 30, 1995
Unaudited Pro Forma Consolidated Condensed Statement of Income
for the Nine Months Ended November 30, 1995
Unaudited Pro Forma Consolidated Condensed Statement of Income
for the Fiscal Year Ended February 28, 1995
Notes to Unaudited Pro Forma Consolidated Condensed Financial
Statements
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By S/ANTHONY M. D'AGOSTINO
ANTHONY M. D'AGOSTINO
Vice President Finance and Treasurer
(Principal Financial and Accounting Officer)
Date: May 2_, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.
Signature and Title Date
PAUL RICHMAN May 25, 1996
Paul Richman, Chairman,
Chief Executive Officer and Director
(Principal Executive Officer)
ERIC M. NOWLING May 25, 1996
Eric M. Nowling
Vice President and Controller
(Principal Accounting Officer)
25
EVELYN BEREZIN May 25, 1996
Evelyn Berezin
Director
ROBERT M. BRILL May 25, 1996
Robert M. Brill
Director
PETER F. DICKS May 25, 1996
Peter F. Dicks
Director
HERMAN FIALKOV May 25, 1996
Herman Fialkov
Director
RAYMOND FRANKEL May 25, 1996
Raymond Frankel
Director
IVAN T. FRISCH May 25, 1996
Ivan T. Frisch
Director
26
EXHIBIT INDEX
Incorporated By Exhibit
Reference To: No. Exhibit
Exhibit 3(a) [9] 3.1 Restated Certificate of Incorporation
Exhibit 3(b) [8] 3.2 By-Laws as amended
Exhibit 1 [5] 3.3 Rights Agreement dated January 7,
1988, with Securities Trust Company as
Rights Agent
Exhibit 3 [6] 3.4 Amendment No. 1 to Rights Agreement
Exhibit 10.1[14] 10.1 Employment Agreement dated
March 1, 1995, with Paul Richman
* 10.2 Amendment thereto dated July 10, 1995
Exhibit 10(d)[13] 10.3 Employment Agreement dated
March 1, 1993, with Arthur Sidorsky
Registrant's Proxy 10.4 1984 Stock Option Plan for Officers
Statement dated May and Key Employees
16, 1984, Exhibit A
Exhibit 10(g) [4] 10.5 Amendment to 1984 Stock
Option Plan for
Officers and Key Employees
Registrant's Proxy 10.6 1986 Stock Option Plan for
Statement dated May Officers and Key Employees
22, 1986, Exhibit A
Exhibit 10(i) [4] 10.7 Amendment to 1986 Stock
Option Plan for Officers and Key Employees
Exhibit 10(m) [1] 10.8 Amendment to 1986 Stock Option
Plan for Officers and Key Employees
dated March 29, 1990
Registrant's Proxy 10.9 1989 Stock Option Plan
Statement dated June
6, 1989, Exhibit A
Registrant's Proxy 10.10 1991 Restricted Stock Bonus Plan
Statement dated July
17, 1991, Exhibit A
Registrant's Proxy 10.11 Director Stock Option Plan
Statement dated May
29, 1990, Exhibit A
Registrant's Proxy 10.12 1994 Director Stock Option Plan
Statement dated May
31, 1995, Exhibit A
Exhibit 10(m) [11] 10.13 Resolutions adopted February 18, 1992,
amending Director Stock Option Plan,
1991 Restricted Stock Bonus Plan,
1989 StockOption Plan,
1986 Stock Option Plan and
1984 Stock Option Plan
Exhibit 10.14 [14] 10.14 Retirement Plan for Directors
Registrant's Proxy 10.15 1993 Stock Option Plan for Officers
Statement dated May and Key Employees
25, 1993, Exhibit A
Exhibit 10(x)[13] 10.16 Executive Retirement Plan
Registrant's Proxy 10.17 1994 Stock Option Plan for Officers
Statement dated May and Key Employees
26, 1994, Exhibit A
Exhibit 10.18 [14] 10.18 Resolutions adopted October 31, 1994,
amending the Retirement Plan for
Directors and the Executive Retirement
Plan
Exhibit 10.19 [14] 10.19 Resolutions adopted January 3, 1995,
amending the 1994, 1993, 1989, 1986,
and 1984 Stock Option Plans and the
1991 Restricted Stock Plan
Exhibit 10.2 [2] 10.20 Patent and Trade Secrets Agreement
dated March 12, 1983, with Paul
Richman
Exhibit 10.22 [14] 10.21 Consulting Agreement dated
March 1, 1995, with Herman Fialkov
Exhibit 10(t) [7] 10.22 Form of Severance Pay Agreement
(renewed annually through
December 31, 1996)
Exhibit 2(b) [10] 10.23 Technology Transfer Agreement
between SMC and Western Digital
Corporation dated September 27, 1991
Exhibit 2(c) [10] 10.24 Noncompetition Agreement between
SMC and Western Digital Corporation
dated September 27, 1991
Exhibit 10.27 [14] 10.25 Credit Agreement dated
January 13, 1995
* 10.26 First Amendment dated March 28, 1995
* 10.27 Second Amendment dated
October 13, 1995
* 10.28 Third Amendment dated
March 28, 1996
Exhibit 2 [15] 10.29 Asset Purchase Agreement dated
January 9, 1996, among Cabletron
Systems, Inc., and SMC Enterprise
Networks, Inc
* 10.30 Agreement for Purchase and Sale of
Assets among SMC, EFAR
Microsystems, Inc., and the Key Officers
identified therein dated
February 26, 1996
* 13 Portions of Annual Report to
Stockholders for year ended February
29, 1996, incorporated by reference
* 23 Consent of Arthur Andersen LLP
* 27 Financial Data Schedule
* 99 Form 11-K for year ended December
31, 1995, of registrant's Incentive
Savings and Retirement Plan
* Filed herewith.
[1] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1990.
[2] Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31,
1983.
[3] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1985.
[4] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1987.
[5] Registrant's Registration on Form 8-A dated January 11, 1988.
[6] Registrant's Amendment No. 2 on Form 8 dated April 14, 1988 to Registration
on Form 8-A.
[7] Registrant's Annual Report on Form 10-K for fiscal year ended February 29,
1988.
[8] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1989.
[9] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1991.
[10] Registrant's Current Report on Form 8-K filed October 31, 1991.
[11] Registrant's Annual Report on Form 10-K for fiscal year ended February 29,
1992.
[12] Registrant's Current Report on Form 8-K filed January 13, 1993.
[13] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1994.
[14] Registrant's Annual Report on Form 10-K for fiscal year ended February 28,
1995.
[15] Registrant's Current Report on Form 8-K dated January 26, 1996.