HAUPPAUGE, N.Y. — (BUSINESS WIRE) — October 1, 2009 — SMSC (NASDAQ: SMSC) today announced financial results for its second quarter of fiscal 2010, ended August 31, 2009.
Total revenue for the second quarter of fiscal 2010 was $75.1 million, an increase of 20 percent sequentially and a decrease of 23 percent when compared to the same period in the prior year. The GAAP net loss for the second quarter of fiscal 2010 was $6.5 million, or $0.30 per diluted share, compared to GAAP net income of $8.7 million or $0.38 per diluted share for the same period in the prior year. The non-GAAP net income for the second quarter of fiscal 2010 was $1.7 million or $0.08 per diluted share, compared to non-GAAP net income of $10.3 million or $0.46 per diluted share in the second quarter of fiscal 2009. The GAAP gross margin for the second quarter of fiscal 2010 was 47.3 percent.
"SMSC revenue, non-GAAP gross margin and non-GAAP earnings all exceeded our expectations in the fiscal second quarter,” said Christine King, President & Chief Executive Officer. “The strong sales growth from the first quarter was primarily driven by improved consumer and automotive product sales. In fact, our portable product line achieved record sales in the second quarter. PC sales were also healthy. Most importantly, our non-GAAP gross margin grew by over 500 basis points from first quarter as a result of our cost reduction actions and higher revenue. Finally, we surpassed our goal of breakeven non-GAAP net income results in the second quarter, delivering $0.08 of profit per diluted share.”
Ms. King continued, “Our fiscal third quarter revenue is expected to grow by 9 to 15 percent sequentially and we expect typical seasonality in the fourth quarter of fiscal 2010. It is our goal to continue to execute on our financial and strategic objectives.”
During the second quarter, SMSC also announced an agreement to acquire Tallika Corporation, a team of engineers located in India and Phoenix, for $3.4 million as well as a strategic relationship with Symwave, Inc., a supplier of system solutions for SuperSpeed USB devices, in which SMSC invested $4 million.
During the second quarter of fiscal 2010, the Company generated $6.7 million in cash from operations, and the sum of cash and investments increased by $4.1 million from $171.2 million at May 31, 2009 to $175.3 million. For the three months ended August 31, 2009, $6.2 million of auction rate securities were redeemed at par, as well as an additional $10.0 million redeemed at par to date in the third quarter of fiscal 2010.
Looking ahead to the third quarter of fiscal 2010, the Company expects:
The unaudited non-GAAP financial measures in this release, including the business outlook, exclude charges and credits for stock appreciation rights (SARs) and stock options associated with the accounting pursuant to SFAS 123R, the amortization of acquired intangible assets, restructuring charges and related accelerated depreciation on certain test equipment and litigation settlement expenses.
Conference Call and Webcast Information
Christine King, President and Chief Executive Officer of SMSC, will host a conference call and webcast on October 1, 2009 at 5 P.M. ET, to discuss the Company’s second quarter fiscal 2010 financial results and its business outlook. The teleconference may be accessed by dialing 1-888-452-3998 in the U.S. or 1-719-325-2103 from outside of the U.S. A replay of the call will also be available. The live call and replay teleconference confirmation code is 8474742. A webcast and replay will be available under the investor relations section of the Company’s web site at www.smsc.com.
Use of Non-GAAP Financial Information
Included within the press release are non-GAAP financial measures that
supplement the Company’s Condensed Consolidated Income Statements
prepared under generally accepted accounting principles (GAAP). These
non-GAAP financial measures adjust the Company's actual results prepared
under GAAP to exclude certain charges. In the schedules attached to this
press release, the non-GAAP measures have been reconciled to and should
be considered together with the Condensed Consolidated Income Statements.