Standard Microsystems Corp. (SMSC, Financial) filed Quarterly Report for the period ended 2010-11-30.
Standard Microsystems Corp. has a market cap of $673.37 million; its shares were traded at around $29.74 with a P/E ratio of 27.79 and P/S ratio of 2.19. SMSC is in the portfolios of NWQ Managers of NWQ Investment Management Co, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Research and Development expenses were $72.5 million, or 23.5% of sales and revenues, for the nine months ended November 30, 2010 compared to $56.5 million, or approximately 25.2% of sales and revenues, for the nine months ended November 30, 2009. The increase was primarily due to the increase in engineering headcount and compensation charges of $8.0 million and other engineering costs associated with the acquisitions of Tallika, K2L and Kleer in the prior fiscal year and STS and Symwave in the current fiscal year. Other increases include depreciation expense, which increased $1.6 million primarily due to the purchase of a significant amount of system design tools over the preceding twelve months. In addition, there was an increase of $2.7 million relating to stock based compensation charges associated with Stock Appreciation Rights (“SARs”), as mentioned previously.
SG&A expenses were $74.4 million, or approximately 24.1% of sales and revenues, for the nine months ended November 30, 2010, compared to $63.6 million, or approximately 28.3% of revenues, for the nine months ended November 30, 2009. The increase of $10.8 million was primarily the result of the increase of $6.0 million in stock based compensation charges associated with Stock Appreciation Rights (“SARs”), as mentioned previously. Other SG&A expense increases include increases in incentives and bonuses of $0.7 million due to the fact that bonuses were not earned in the first quarter of the prior fiscal year, as well as increases in accounting and consulting fees of $1.2 million related to due diligence and integration associated with recent acquisitions, and an increase of $1.0 million in amortization of intangibles acquired with recent acquisitions.
The provision for income taxes for the three and nine month periods ended November 30, 2010 was a ($3.5) million benefit, and $7.0 million provision or an effective income tax rate of 43.6 % on $8.1 million of loss and an effective tax rate of 43.8% on $16.0 million of income before income taxes respectively. The tax provision for the nine month period ended November 30, 2010 includes the impact of a $1.6 million decrease in reserves for uncertain tax positions in connection with a lapse of applicable statutes of limitations, and the reversal of $0.3 million in related accrued interest and penalties. The provision excludes the impact of certain losses in various jurisdictions that could not be benefited. In addition, as the research and development tax credit expired on December 31, 2009 there is no such tax credit included in the tax provision for the three and nine month periods ended November 30, 2010.
The provision for income taxes for the three-month period and the benefit from income taxes for the nine-month period ended November 30, 2009, was $2.4 million and $6.3 million, or an effective income tax rate of 26.0% against $9.2 million of income and an effective income tax rate of 41.5% on $15.3 million of losses before income taxes, respectively. The tax benefit for the nine month period ended November 30, 2009 included the impact of a $0.8 million decrease in reserves for uncertain tax positions in connection with a lapse of applicable statutes of limitations. As of the November 30, 2010, legislation had not been passed to extend U.S. income tax credits relating to qualified research and development expenditures beyond December 31, 2009. For the three months and nine months ended November 30, 2009, $0.5 million and $1.3 million of qualified research and development tax credit have been included in the net provision/benefit for income taxes.
Investing activities contributed $11.8 million of cash during the first nine months of fiscal 2011, resulting from the sale of $30.5 million in short-term investments in commercial paper, the redemption of $14.4 million in auction rate securities and cash acquired in the acquisition of Symwave of $1.5 million, partially offset by the $21.9 million used in the acquisition of STS, $3.
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Standard Microsystems Corp. has a market cap of $673.37 million; its shares were traded at around $29.74 with a P/E ratio of 27.79 and P/S ratio of 2.19. SMSC is in the portfolios of NWQ Managers of NWQ Investment Management Co, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
SMSC made an initial $5.2 million equity investment in Symwave in fiscal 2010, resulting in an equity stake of 14 percent, and in fiscal 2011 provided $3.1 million in bridge financing to Symwave. At acquisition, the initial equity investment was revalued to $2.0 million and an impairment loss of $3.2 million was recorded within income from operations. The terms of the purchase agreement provide for quarterly cash payments to former Symwave shareholders upon achievement of certain revenue and gross profit margin goals. As a result, no cash was paid at acquisition and SMSC recorded a $3.1 million liability for contingent consideration.Research and Development expenses were $72.5 million, or 23.5% of sales and revenues, for the nine months ended November 30, 2010 compared to $56.5 million, or approximately 25.2% of sales and revenues, for the nine months ended November 30, 2009. The increase was primarily due to the increase in engineering headcount and compensation charges of $8.0 million and other engineering costs associated with the acquisitions of Tallika, K2L and Kleer in the prior fiscal year and STS and Symwave in the current fiscal year. Other increases include depreciation expense, which increased $1.6 million primarily due to the purchase of a significant amount of system design tools over the preceding twelve months. In addition, there was an increase of $2.7 million relating to stock based compensation charges associated with Stock Appreciation Rights (“SARs”), as mentioned previously.
SG&A expenses were $74.4 million, or approximately 24.1% of sales and revenues, for the nine months ended November 30, 2010, compared to $63.6 million, or approximately 28.3% of revenues, for the nine months ended November 30, 2009. The increase of $10.8 million was primarily the result of the increase of $6.0 million in stock based compensation charges associated with Stock Appreciation Rights (“SARs”), as mentioned previously. Other SG&A expense increases include increases in incentives and bonuses of $0.7 million due to the fact that bonuses were not earned in the first quarter of the prior fiscal year, as well as increases in accounting and consulting fees of $1.2 million related to due diligence and integration associated with recent acquisitions, and an increase of $1.0 million in amortization of intangibles acquired with recent acquisitions.
The provision for income taxes for the three and nine month periods ended November 30, 2010 was a ($3.5) million benefit, and $7.0 million provision or an effective income tax rate of 43.6 % on $8.1 million of loss and an effective tax rate of 43.8% on $16.0 million of income before income taxes respectively. The tax provision for the nine month period ended November 30, 2010 includes the impact of a $1.6 million decrease in reserves for uncertain tax positions in connection with a lapse of applicable statutes of limitations, and the reversal of $0.3 million in related accrued interest and penalties. The provision excludes the impact of certain losses in various jurisdictions that could not be benefited. In addition, as the research and development tax credit expired on December 31, 2009 there is no such tax credit included in the tax provision for the three and nine month periods ended November 30, 2010.
The provision for income taxes for the three-month period and the benefit from income taxes for the nine-month period ended November 30, 2009, was $2.4 million and $6.3 million, or an effective income tax rate of 26.0% against $9.2 million of income and an effective income tax rate of 41.5% on $15.3 million of losses before income taxes, respectively. The tax benefit for the nine month period ended November 30, 2009 included the impact of a $0.8 million decrease in reserves for uncertain tax positions in connection with a lapse of applicable statutes of limitations. As of the November 30, 2010, legislation had not been passed to extend U.S. income tax credits relating to qualified research and development expenditures beyond December 31, 2009. For the three months and nine months ended November 30, 2009, $0.5 million and $1.3 million of qualified research and development tax credit have been included in the net provision/benefit for income taxes.
Investing activities contributed $11.8 million of cash during the first nine months of fiscal 2011, resulting from the sale of $30.5 million in short-term investments in commercial paper, the redemption of $14.4 million in auction rate securities and cash acquired in the acquisition of Symwave of $1.5 million, partially offset by the $21.9 million used in the acquisition of STS, $3.
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