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WELCOME TO SMSC’S ANALYST DAY June 28, 2011 NASDAQ Market Site – New York

1


SMSC: GROWTH THROUGH CONNECTIVITY

2

Christine King, President & CEO


Safe Harbor Statement Forward Looking Statements This presentation includes forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties, which may cause actual future results to be materially different from those discussed in forward-looking statements. 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. See SMSC’s “Other Factors That May Affect Future Operating Results” and “Risk Factors” included within the Company’s filings with the Securities & Exchange Commission and the “Forward Looking Statements” description accompanying the Company’s earnings releases.

Non-GAAP Financial Measures Non-GAAP financial measures referenced in this presentation are offered to provide additional insight into underlying operating performance. These non-GAAP measures exclude charges and credits for stock appreciation rights (SARs), stock options and restricted stock units associated with the accounting pursuant to SFAS 123R, the amortization of acquired intangible assets, restructuring charges and related accelerated depreciation on certain test equipment, executive transition costs, costs associated with business acquisition related activities including the impact of writing up the cost of acquired inventory and the revaluation of contingent consideration, and litigation settlement expenses, impairment losses, an acquisition termination fee gain, employee stock purchase plan costs and an out-of-period adjustment for the release of an inventory liability. These non-GAAP measures also exclude certain revenues as reflected in the accompanying materials. A reconciliation of non-GAAP measures to GAAP is contained in the appendix to this presentation. The Company's management believes that this information assists in evaluating operational trends, financial performance and cash generating capacity. Non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. Guidance is presented on a non-GAAP basis only, given that the GAAP basis charges for equity-based compensation related to SARs cannot be projected reasonably.

3


SMSC: A Blueprint for Growth

“Enabling Content Rich Connectivity Systems�

Customer Value

Our Target Market Market Growth = ~20% CAGR

~98% Single Sourced

SMSC Connectivity Revenue = ~90%

55% Gross Margin

Defendable Growth Through Core Competencies

Increasing Content Computing

Today

Future

$2

$5

High Value USB

$12

$15

Automotive

$17

$25

Computing & Automotive Architecture Knowledge Wireless Audio & Systems Capability Hi-Speed Interface Circuit Design Network Engineering Expertise

All Drive Our Target Business Model ~20% Revenue CAGR Opportunity 20% Operating Margin @$145M in Quarterly Revenue

4

Source: SMSC and Third Party Estimates FY11 Data Except Business Model; Non-GAAP Measures; See appendix for GAAP to Non-GAAP Reconciliation


“The SMSC Advantage” Results in a CAGR Growth Opportunity that Outpaces the Market Automotive

USB

Market Unit Growth 8%

New MOST® Adopters Increasing Non-MOST Content Companions USB Software

5

>20%

Market Unit Growth 6%

Computing

SMSC $ Opportunity

SMSC $ Opportunity

SMSC $ Opportunity ~30%

Audio

>40% 3%

Consumer Market Unit Growth

Differentiated USB Sockets Drive Higher ASPs

Attractive Wireless Audio Growth >40%

Expanded Use Case and Software Extend Content

SMSC Drives The Complete Solution from Cloud to Destination

Transition to USB 3.0

SMSC $ Opportunity >12%

Market Unit Growth 9%

Market Share Growth Worldwide with Major PC OEMs Adding Content Through New Features & Analog Integration

Source: IMS, CEA, NPD, NEA, Intstat, FutureSource, ABI & DisplaySource, IDC, Gartner, JD Powers & SMSC Estimates


Our Connectivity Solutions

USB Market Revenue

SMSC Revenue Growing Faster Than Market Units 90%

Commodity

USB

10%

Focus on Differentiated Solutions Multiple Port Connectivity Added Content Graphics Security Growth Driven by “Connected Devices” Transition To USB 3.0

DIFFERENTIATED SMSC’s Focus

Networking Products New Opportunities in Industrial Networking Home Connectivity Drives Significant Growth Energy Conservation “Green” Provides a Product Refresh Computing Products New Embedded Control Customers Increasing Content New Features Analog Integration 6

.. .

.

. .. . .


USB, Networking & Computing Products Our Base Business Continues to Grow

High Value USB Products USB to Ethernet Hubs

Security

CAGR Growth Opportunity

Today’s Content

21%

$0.30 to $25

Forecast Today

Future

22%

23%

Portable Products USB

Networking Products

9%

Industrial Networking

$0.30 to $8

13% 18% Networking

Consumer Networking

Computing & Peripheral Products Embedded Controllers Analog 7

17%

$0.25 to $4 32%

Computing

27%

Pies Represent Percentage of Total SMSC Revenue


Multiple Growth Vectors For Automotive Products SMSC Provides “One Stop Shopping” with a Full System Solution

New OEM Introductions of MOST Further Opportunities !  ! 

Round-out opportunities in Europe, Asia and the US Initial activity in China

Nodes Per Year

Expansion of Our Content n

tio

M

w

Ne

OE

p do

A

lC

na

Ad

io dit

ing

o pp

ies

O

k or

tw

w

Ne

Ne

Multiple Growth Vectors

2001

2004

2008

Years

2012

2016

New Networking Opportunities Driver Assist Camera Networking Specialty Component Networking

8

HEADUNIT

nit

rtu

t

en

t on

Video IO Function Content Protection

K2L Gateway Software & Software Framework

Power Management MOST Base Node

USB

Ethernet

Kleer

Headunit Content Range $3

$28

Reach Extended to Non-MOST Cars


Automotive Products Growing Beyond MOST®

CAGR Growth Opportunity

Today’s Content

MOST Networking MOST25 MOST50

MOST150

21%

$7 to $28

Forecast Today

Future

MOST Networking

K2L Software

53%

Companion Chips Video

Power

I/O

Connectivity Functions USB

Ethernet

112%

$1 to $24

$1 to $33

15%

15%

1%

2% Companion Chips

1%

Connectivity Functions

Wireless Audio Pies Represent Percentage of Total SMSC Revenue

9

7%


Digital Wireless Audio Market Group A New High Growth Segment

Wireless Audio Market Growth R

AG %C

$191M

>30

Wireless Audio Adoption at ~5% Today

$82M CY11

CY12

CY13

CY14

Home Theater

Headphones

AirPlay

Automotive

Speakers and Docks

SMSC has the Full Solution From Cloud to Destination Full Standard Support with Proprietary Audio Quality Design Wins with Top Consumer OEMS, Headphone Makers and Speaker System Providers 10

Source: IMS, CEA, NPD, NEA, Intstat, FutureSource, ABI & DisplaySource, IDC, Gartner, JD Powers & SMSC Estimates


Wireless Audio Products

Convergence Provides Accelerated Growth Opportunity

Today’s Content

Today

Future

$6 to $10 10%

Automotive

11

$4 to $6

>40% CAGR Opportunity

14%

Pies Represent Percentage of Total SMSC Revenue

Over 40% Share Today and Growing Combined JukeBlox and Kleer Roadmap Creates a Unique Leadership Position $1B Total Addressable Market Opportunity Once Audio is Fully Connected

Source: IMS, CEA, NPD, NEA, Intstat, FutureSource, ABI & DisplaySource, IDC, Gartner, JD Powers & SMSC Estimates


Increased Connectivity Drives Strong Growth in Automotive and Consumer Applications Vertical Market Revenues

13% Industrial 36% Consumer Future

Electronics

Revenues by Product Line

14%

27% PC

Audio Products

24%

62% 24% Automotive

Future

Automotive

USB, Networking & Computing

Audio Products

10%

15%

Industrial

33%

17%

PC

Automotive

34%

Consumer Electronics

Today 12

73% 18% Automotive

Today = FY12 Estimate

Today

USB, Networking & Computing

Unaudited Data


SMSC Addresses a Substantial Market Opportunity with Attractive Growth Rates Target Addressable Market

25%

28%

CAGR

CAGR

USB

Automotive

A $1.3B Market in CY12 Growing at ~20% CAGR

Computing 13

11%

32%

CAGR

CAGR

Wireless Audio

Source: IMS, CEA, NPD, NEA, Intstat, FutureSource, ABI & DisplaySource, IDC, Gartner, JD Powers & SMSC Estimates


Strong Market Share Positions in Our Target Markets CY10

SMSC USB SAM $263M

SMSC AUTOMOTIVE

SAM $146M MOST®

$80M

TrueAuto™ USB

$12M

MOST Companion

Hubs

$91M

$48M

USB Subsystems

TrueAuto Ethernet

$70M

$6M

SMSC WIRELESS AUDIO SAM $50M

USB to Ethernet

$18M

TrueAuto™ USB

$12M

14

Embedded Controllers

Thermal Management

I/O Controllers

RightTouch™

$222M

Wireless Audio

$50M

Media Readers USB Graphics

$59M

SMSC PC SAM $506M

$72M

$70M $11M

Energy Management

$13M

$131M

SMSC Auto Market Share

SMSC USB Market Share

SMSC Wireless Audio Market Share

SMSC PC Market Share

50%

35%

34%

26%

SMSC & Third Party Estimates


SMSC Core Competencies Drive & Defend Our Growth

Differentiated Core Competencies Starts with System Expertise Computing & Automotive Architecture Knowledge Wireless Audio & Systems Capability Hi-Speed Interface Circuit Design Network Engineering Expertise IC Hardware

15

Middleware Firmware

Software System Architecture


Deep Computing & Automotive Systems Knowledge Computing Ecosystem Notebook/Desktop

Automotive Ecosystem SMSC: “Where Consumer Content Meets Automotive Reliability” - For 10 Years

“Development Partner of Major OEMs for Over 15 Years”

Complete System Offering Peripheral Subsystem Inventor Hardware/Firmware Partitioning Shared Memory Architecture PC Bus and Low Level Software Expertise

Analog Integration Licensed to ~30,000 US Patents

Tablets

Network & Data Transmission Gateway Systems & Software Full Software Solution TrueAuto™ Quality Harsh Environmental Performance Audio/Video & Content Protection

USB PHY

Thermal Mgt

USB/HSIC Hub

USB/HSIC to Ethernet

16

Low Power USB Multiple Protocol Interfaces


A Leader in Wireless Audio Solutions SMSC Drives the Wireless Audio Ecosystem from the Cloud to Destination HD Audio Delivered Wirelessly Connecting to a New World of Entertainment

Low Cost. Simple. Robust. Low Power. Your Music & the World’s Music ...from Any Device, Anytime & Anywhere

Connected and Interoperable Audio Software Deep Protocol Expertise WiFi USB Ethernet AirPlay DLNA 17

Hear the Difference!

Ultra Low-Power Audio Baseband and RF Full System Design & Architecture Including: Software Baseband RF Audio Multiple Interface & Protocol Support


World Class Hi-Speed Interface Circuit Design USB

MOST Network Ring

SMSC PHY

Competitor PHY Competitor

SMSC

4 Port Size

10.0mm2

2.74mm2

Single Port Power

320mW

165mW

Competitor 4-Port Hub

Size Package

Ring + Star + Daisy Chain

Diverse Transmission Wiring Optical • Coax • UTP High Performance Synchronous Protocol Optimized for Audio & Video Highly Flexible & Efficient

SMSC 7-Port Hub Competitor

SMSC

15.53mm2

15.46mm2

80-pin QFP

64-pin QFN

Small Size Low Power Integration of Proprietary Features & Software Industrial & Automotive Qualified 18

Ring + Star

Ethernet Industrial & Automotive Ready Integration with Many Interfaces Low-Power & Energy Efficient


Comprehensive Networking System Expertise

Computing

Consumer

Industrial

Automotive

Wide Reaching Operating System Driver Expertise

World Class Physical Interfaces

Interoperability with Multiple Protocols MOST • USB • Ethernet • HSIC • Video • Graphics • SPDIF • Audio • Content Protection

Co-Inventor of MOST

Inventor of Inter-Chip Connectivity™ Technology

Harsh Environments Low Latency Green Solutions Energy Efficient Ethernet 19


SMSC Makes Customers Successful Moving to Supply Higher Architectural Value

MOST150 at VW/AUDI – Rollout into All Models

Samsung Central Station

CNET: "The Samsung monitor features a number of connection options and the display performs well; USB Super Charging is a welcome bonus."

ViewSpan ASP = $10

Laptop Magazine: "Move your notebook near this ingenious device, and voila–you've got an extra screen. What's more, the Central Station can accommodate up to four USB peripherals, including three USB 3.0 devices."

PC Customer Acquisition Through Unique Solutions

. ..

20

.

. ... .

2007 Predominately Serving Two Major PC Customers

Today Serving 12 Major PC OEMS Worldwide


Engineers Delivering Differentiated Solutions “A Global R&D Footprint� >650 Engineers Across the Globe Key SMSC Sites Karlsruhe Pforzheim

New York

85: Automotive

Sofia 20: Analog

150: USB & Computing

.. .

Tucson Phoenix

.

60: Mixed Signal & Analog

.. . ..

. .

Shenzhen 15: Analog

Singapore 25: Wireless Audio

Austin

100: USB & Automotive

Chennai Bangalore 140: Hardware/Software Solutions & Wireless Audio

27% 10% 11% 21

25%

27%

Full Systems Solution Capability Mixed Signal & Analog Design Support Applications Systems Software


Sustaining 55% Gross Margin Achieved World Class Operations Performance $46M $32M Cumulative Cost Savings

$14M

FY10

FY11

t s o C s n u o atio u in iz t n tim o C Op

FY12

FY12 ACTIONS COMPLETED Test Move Supply Chain Optimization Qualification of Low Cost Sources Wafer Fabs

22

Non-GAAP Measures

Assembly

Gold to Copper Production Multisite x16 Test Ramp Acquisition Supply Chain Optimization More Efficient Support Functions Test


An Exciting & Achievable Business Model 20% Long Term Revenue Growth Opportunity ~30%

Automotive & Wireless

~15%

USB, Networking & Computing

...while Managing Costs and Investing in the Future

Drives an Attractive Target Model 20% Operating Margin at $145M in Revenue Per Quarter

Revenue/Qtr

$145M

Gross Margin

55%

R&D

20%

SG&A

15%

OPERATING MARGIN 23 Non-GAAP Measures

20%

Driving to a 25% Operating Margin at $175M - $200M in Revenue Per Quarter


SMSC is a GROWTH Company Attractive Markets Growing Content Product Differentiation With Leading Customers Which Drives

PROFITABILITY & EARNINGS

24


THE NETWORKED AUTOMOBILE

Christian Thiel, VP & GM


Multiple SMSC Automotive Growth Drivers

MOST has been adopted as the de facto high bandwidth infotainment networking standard

Recent design wins of VW and GM give MOST a potential reach of close to 50% of cars produced worldwide.

Architectural Value + One-Stop-Shop Model

Potential Future Adopters 26


Multiple SMSC Automotive Growth Drivers HEADUNIT Video IO Function Content Protection

K2L Gateway Software & Software Framework

Power Management MOST Base Node

USB

Ethernet

Kleer

SMSC’s content opportunity per infotainment device has grown from $3 to $28. Reach extended to non-MOST cars

MOST has been adopted as the de facto high bandwidth infotainment networking standard 27

©SMSC 2011. All rights reserved.


Multiple Automotive Network Opportunities Kleer Headphones Rear Seat NAS Entertainment Displays

WLAN Rear View Camera Module

In Cabin Camera Module

Side View Camera Module Driver Assist Processing Unit

TV Tuner Box Rear Seat Entertainment HU Side View Camera Module Instrument Cluster Front View Camera Module

28

USB Interface Infotainment HU

Infotainment MOST BUS Driver Assistance MOST BUS


WIRELESS AUDIO: AN EMERGING GROWTH MARKET

Gene Sheridan, Senior VP & GM


A Major Transformation in Audio is Underway Massive content waiting to be “unlocked”… 10B music downloads from iTunes® >90% of music downloads are illegal . . . that’s 100B music files! Almost all “locked” to the PC or smart phone A dramatic shift from download to streaming . . . iTunes® Download Rates Millions

18 15 12

0

2011 2012 2013 2014 2015 2016

9 250

6

Internet Radio Growth Projections

200

Millions

Daily Track Download in Millions

Mobile Music Streaming Subscribers

180

3 0

150 100 50

’04

‘05

‘06

‘07

‘08

‘09

’10

0 2005

2006

2007

2008

2009 2010 2015 2020

The Seven Market Enablers to a $1B Market Enablers

30

Market Need

&

Content

Your music . . . & the world’s music

Interoperability

WiFi standards-based + AirPlay & DLNA

Easy-to-use

Simple set-up & intuitive GUI

Quality

Quality of Service, Quality of Audio

Power

A full day of listening on one charge

Cost

Sub $5 incremental costs

Consumer Awareness

Great marketing!


A Leader in Wireless Audio Solutions HD Audio Delivered Wirelessly Connecting to a New World of Entertainment

Automo<ve  Audio 50Mu/yr,  $250M/yr Opportunity

SpeakerDocks

33Mu/yr,  $215M/yr Opportunity

Low Cost. Simple. Robust. Low Power.

Global  Market Opportunity Over  200Mu/yr Over  $1B/yr

Home  Theater,  SoundBars   &  Home  Speakers 25Mu/yr,  $175M/yr Opportunity

31

Your Music & the World’s Music ...from Any Device, Anytime & Anywhere

Hear the Difference!

Headphones  &  Headsets 105Mu/yr,  $265M/yr Opportunity

AVR  &  Mini-­‐Systems 16Mu/yr,  $100M/yr Opportunity


NEW TRENDS IN CONNECTIVITY

Robert Hollingsworth, Senior VP & GM


Expanding Connectivity Platforms Drive SMSC's Growth Market Units 300

200

100

100

600

240

150

75

75

450

100

50

50

300

50

25

25

150

180 120 60 2011 2012 2013

0

Notebooks

2011 2012 2013

0

0

2011 2012 2013

2011 2012 2013

0

2011 2012 2013

Desktops

Smart TV’s

Tablets

Smart Phones

Desktops

Smart TV’s

Tablets

Smart Phones

Key Applications

Notebooks Embedded Controller USB Charging Docking Ethernet Security

Embedded Controller USB Charging Security

USB Charging Ethernet Graphics

USB Charging Docking

USB Charging Docking Ethernet Security

Content Per Platform $0.35 - $3.00

$0.35 - $10.00 2011

SMSC Revenue Projection Notebook PCs Desktop PCs Smartphones Tablets Set-top Box/TVs

33

$0.65 - $10.00

$0.30 - $7.00

$0.30 - $3.00

2012

2013 13%

12% 2% 11%

9% 10% 15%

13% 66%

Source: Mobile Thinking, IDC, Techspot, InStat & SMSC Estimates

6% 10% 62%

13%

58%

0


USB Evolution Continues USB Generation

Speed Grades

USB Next Gen.

25,000Mbit

USB3

5,000Mbit 480Mbit

USB2 11Mbit

USB1

1996

2000

2004

2008

2012

2018

10

100

1k

10k

Growth of USB Market Key Adoption Factors:

A Differential Opportunity

4 Billion

Units

Backward Compatibility Power Enhancements Open Standard >10x Speed Improvement per step ASP Increase ~ 2-3x per step

100k

90%

3 Billion

Commodity 2 Billion

10%

1 Billion

SMSC’s Focus 2011

2013

2012 USB 2.0

USB 3.0

SMSC’s Play in USB

Revenue % CY13 Projection 34

HUBS

POWER

45%

27%

Source: InStat & SMSC Estimates

GRAPHICS

TRANSCEIVERS

NETWORKING

SECURITY

AUTOMOTIVE

10%

6%

5%

4%

4%


SMSC: GROWTH IN EARNINGS

Kris Sennesael, SVP & CFO


Revenue: SMSC is a “GROWTH” Company $120

113.0 104.1

$100

107.0 101.2

97.2 87.2

$80

103.5

83.0

Revenue in Millions

75.1 $60

62.5

$40

$20

$0

37

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12*

*SMSC Guidance Represents Midpoint


Acquisitions Enhance SMSC's Leadership & Growth “New Products & Customers • Valuable IP • Additional Skill Sets”

Wireless Audio

Organic SMSC Business FY11

BridgeCo STS Kleer

23%

Auto Software Tools

Networking

38%

K2L

Computing

USB IP & Skills

17%

Symwave

FY12*

Automotive

22% USB

18%

Networking

32%

Computing

17%

Automotive

23%

USB

10%

Audio 38

Unaudited Data

*SMSC Estimate


Continuing to Drive Healthy Gross Margins Organic SMSC Business FY11

~70%

Networking

~50%

Computing

~60%

USB

Automotive

FY12*

~55% ~70%

Networking

~50%

Computing

~65%

Automotive

~60% USB

~40% Audio

39

Unaudited Data Based on Non-GAAP Gross Margin; See Reconciliations from GAAP to Non-GAAP Measures at the End of this Presentation

*SMSC Estimate


Sustaining Target Gross Margins

60 %

Target at 55%

55 %

50 %

45 % Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12*

Total Gross Margin Organic Gross Margin, Excluding K2L, Kleer, STS, Symwave & BridgeCo Acquisitions

40

Non-GAAP Measures

*SMSC Guidance


Opex: Focus on R&D to Support the “GROWTH” $50

$40

$30

$20

$10

$0 Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12*

Acquisitions (K2L, Kleer, STS, Symwave & BridgeCo) R&D SG&A

41

Non-GAAP Measures

*SMSC Guidance


Improvement of Operating Margins 25 %

20 %

15 %

10 %

5%

0%

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12*

Total Operating Margin Organic Gross Margin, Excluding K2L, Kleer, STS, Symwave & BridgeCo Acquisitions

42 Non-GAAP Measures

*SMSC Guidance


Achieved 16% Target Model Organically

Investment in New Opportunities Enhanced Growth But Initially Dilutive to Model July 2009: Analyst Day Model at $100M/Q

FY11

$100M

$385.8M

$409.5M

Gross Margin

55%

56.3%

55.1%

R&D

20%

20.7%

21.9%

SG&A

19%

19.3%

19.1%

Operating Margin

16%

16.3%

14.1%

Revenue

Organic Data Excludes K2L, Kleer, STS and Symwave acquisitions.

43

FY11 Organic

Unaudited Data; Non-GAAP Measures


20% Target Model Achievable at $145M/Q Including Acquired R&D Investments AND in the Same Timeframe as Our Previous Target at $120M/Q

Driving to 25% Longterm Model Through Revenue Growth with Efficient & Disciplined Spending Target Model

$145M

$175-200M

Gross Margin

55%

56%

R&D

20%

18%

SG&A

15%

13%

Operating Margin

20%

25%

Revenue/Q

44 Non-GAAP Measures

Longterm Model


Maintaining a Strong Balance Sheet $200

$150

$100

$50

$0 Feb 10

May 10

Aug 10

Nov 10

Investments Cash

45

Acquired Companies After 3/1/10

Cash Paid

STS

$22.0M

BridgeCo

$40.0M

Feb 11

May 11


International Structure Live

Implementation of International Structure Operating company in Hong Kong IP holding company in Luxembourg Business Process Reengineering of sales and operations

Target Non-GAAP Effective Tax Rate Reduction FY12 38%

FY13 25%

FY14 20%

FY15 18%

Illustration of Potential Benefit (Non-GAAP Basis) Revenue Operating Margin @20% Tax with ETR @38%

46

$600M $120M $45M

ETR Tax Savings

@25% $30M $15M

@20% $24M $21M

@18% $22M $23M

EPS Increase

$0.65

$0.90

$1.00


On Track for Significant Earnings Growth SMSC is a Growth Company Organic Growth Market Growth Market Share Gains New Product Introductions Growth through acquisitions

SMSC is a “Profitable” Growth Company Overachieved “organic” target operating model Acquisitions accelerated revenue growth

Non-GAAP EPS Upside Opportunity Top line growth + operating leverage = 20% non-GAAP operating margin Lower Effective Tax Rate

47


Non-GAAP to Organic Achievements Reconciliation Gross Profit, Expense and Operating Margins (in thousands)

Three Months Ended May 31, 2009 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended August 31, 2009 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended November 30, 2009 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended February 28, 2010 Acquisition Organic Non-GAAP Adjustments* Achievements

Twelve Months Ended February 28, 2010 Acquisition Organic Non-GAAP Adjustments* Achievements

Sales & Revenues

62,479

62,479

75,075

75,075

87,236

(263)

86,973

82,989

(672)

82,317

307,778

(935)

306,843

Costs of Goods Sold

33,105

33,105

35,871

35,871

39,370

(35)

39,335

37,902

(345)

37,557

146,247

(380)

146,627

29,374

39,204

39,204

47,866

(228)

47,638

45,087

(327)

44,760

161,531

(555)

160,216

(1,116)

145,956

Gross Profit G.P. % (incl IP Revenues)

29,374

-

47.0%

47.0%

-

52.2%

52.2%

54.9%

54.8%

54.3%

54.4%

52.5%

Operating Expenses

34,768

-

34,768

36,372

-

36,372

37,062

(315)

36,747

38,886

(801)

38,085

147,072

Operating (Loss) Profit

(5,394)

-

(5,394)

2,832

-

2,832

10,804

87

10,891

6,201

474

6,675

14,459

Three Months Ended May 31, 2010 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended August 31, 2010 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended November 30, 2010 Acquisition Organic Non-GAAP Adjustments* Achievements

Three Months Ended February 28, 2011 Acquisition Organic Non-GAAP Adjustments* Achievements

52.2% 561

14,260

Twelve Months Ended February 28, 2011 Acquisition Organic Non-GAAP Adjustments* Achievements

Sales & Revenues

97,159

(2,204)

94,955

104,084

(4,394)

99,690

107,025

(7,478)

99,547

101,211

(9,605)

91,606

409,479

(23,681)

385,798

Costs of Goods Sold

43,459

(954)

42,505

44,381

(2,814)

41,567

47,758

(5,924)

41,834

48,392

(5,723)

42,669

183,991

(15,415)

168,576

53,700

(1,250)

52,450

59,703

(1,580)

58,123

59,267

(1,554)

57,713

52,819

(3,882)

48,937

225,488

(8,266)

217,222

Gross Profit G.P. % (incl IP Revenues)

55.3%

Operating Expenses

41,011

Operating Profit

12,689

55.2% (1,758) 508

57.4%

58.3%

(3,910)

39,515

43,431

(5,135)

38,296

167,742

(13,497)

154,245

13,197

19,828

1,114

20,942

15,842

2,356

18,198

9,388

1,253

10,641

57,746

5,231

62,977

(8,554)

94,941

(5,473)

39,623

58,399

(3,081)

55,318

(3,599)

40,141

Operating Profit

14,659

58.3% 518

15,177

Note: * - Acquisition adjustments are to exclude the activity related to the acquisitions of K2L, Kleer, STS, Symwave and BridgeCo from the organic acheivement results.

48

56.3%

43,425

45,096

43,740

55.1%

37,181

103,495

Operating Expenses

53.4%

(2,694)

Sales & Revenues

56.4%

52.2%

39,875

Costs of Goods Sold

G.P. % (incl IP Revenues)

58.0%

39,253

Three Months Ended May 31, 2011 Acquisition Organic Non-GAAP Adjustments* Achievements

Gross Profit

55.4%


Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (in thousands, except per share amounts) FY 10 Q3

Q1

Q2

Gross profit - GAAP basis Stock-based compensation (a) Amortization of intangible assets Accelerated depreciation on test equipment Release of goods received liability Impact of inventory write-off (Symwave) Impact of inventory write-up on acquisitions Gross profit - non-GAAP basis

$ 27,712 550 1,112 $ 29,374

$ 35,543 904 1,058 1,699 $ 39,204

Income (loss) from operations – GAAP basis

$ (14,597) $ (10,056) $

FY 10

Q4

$ 45,034 $ 44,688 $ 152,923 (342) 281 1,394 941 1,140 4,304 2,233 3,932 (1,022) (1,022) $ 47,866 $ 45,087 $ 161,531 9,439

$

1,227

$ (13,987)

Q1

FY 11 Q3

Q2

$ 51,795 782 1,078 45 $ 53,700

$ 58,658 $ 55,755 (491) 1,980 1,376 1,432 160 100 $ 59,703 $ 59,267

$

$ 22,346

1,802

$

FY 11

Q4 $ 48,685 290 1,545 2,234 65 $ 52,819

(8,186) $

2,685

$

$

214,894 2,561 5,431 2,234 368 225,488

$

18,647

FY 12 Q1 $ 55,785 317 1,585 588 124 $ 58,399 $

7,669

Non-GAAP adjustments: Stock-based compensation included in: Costs of Goods Sold Research & Development Selling, general and administrative Amortization of intangible assets included in: Costs of Goods Sold Selling, general and administrative Other non-GAAP adjustments: Acquisition termination fee gain Restructuring charges Accelerated depreciation on test equipment Settlement charge Transaction costs - mergers and acquisitions Release of goods received liability Impact of inventory write-off (Symwave) Impact of inventory write-up on acquisitions Executive transition costs Impact of revaluation of contingent acquisition liabilities Gain on equity investment in Canesta Impairment loss on equity investment (Symwave) Compensation expense on acquisitions Impairment loss on intangibles Income (loss) from operations – non-GAAP basis

$

Net (loss) income – GAAP basis Non-GAAP adjustments (as scheduled above)

550 1,482 3,393

904 2,384 5,698

(342) (559) (1,889)

281 968 1,717

1,394 4,274 8,918

782 2,224 4,639

(491) (1,546) (3,395)

1,980 5,370 11,528

290 701 1,300

2,561 6,748 14,074

317 1,042 1,971

5,425

8,986

(2,790)

2,966

14,586

7,645

(5,432)

18,878

2,291

23,383

3,330

1,112 395

1,058 496

941 478

1,140 691

4,304 2,007

1,078 687

1,376 701

1,432 809

1,545 837

5,431 3,034

1,585 806

1,507

1,554

1,419

1,831

6,311

1,765

2,077

2,241

2,382

8,465

2,391

649 1,699 2,832

393 2,233 (31) 141 $ 10,804 $

821 182 45 429 $ 12,689

47 173 160 457 $ 19,828

(9,196)

(6,534)

6,806

627

12,902

(4,574)

9,203

12,888

1,365

(2,518)

24,028

221 2,050 (5,394) $

Net income (loss) – non-GAAP basis

$

(3,313) (3,306) $

Net income (loss) per share – diluted GAAP

$

(0.42) $

$

(0.15) $

Tax effect of non-GAAP adjustments

Non-GAAP Weighted average common shares outstanding - diluted: GAAP Non-GAAP

21,901 21,901 21,901

860 2,123 3,932 2,019 339 480 (1,022) (1,022) 6,201 $ 14,442 946 4,974

(4,640) 1,714 $

7,680

$

4,129

(0.30) $

0.30

$

0.34

$

0.08

$

(7,978)

(491)

(1,791)

28,429

10,887

(3,919) 1,198 7,595 $ 11,582

146 477 100 (1,083) (249) 3,208 310 $ 15,842 $

(10,234) $ 10,217

$

0.04

$

(0.36)

$

0.03

$

0.57

$

0.18

$

0.46

$

0.33

$

0.51

$

(7,700) 4,703 4,203 2,234 368 920 (4,206) (320) 3,208 310 3,531 57,746

1,672

(0.20) $ $

49

6,177

39,099

(2,344) 6,031 $

(12,548) 37,178

6,990 (2,145) $ 11,022

0.07

$

0.46

$

0.26

0.26

$

1.61

$

0.47

22,054

22,442

22,579

22,133

22,787

22,756

22,679

23,158

23,108

23,557

22,191

22,442

22,579

22,310

22,787

22,756

23,081

23,158

23,108

23,557

Management believes that non-GAAP financial measures assist it in evaluating operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate SMSC's financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures. (a)

343 118 588 124 17 79 $ 14,659

10,627

6,703

(7,484) $ 11,970 $

0.52

(7,700) 3,689 3,371 2,234 65 491 (3,580) (71) 3,531 9,388 $

To eliminate compensation expense for Stock Appreciation Rights (“SARs”), employee stock purchase plan, restricted stock units and stock options as recorded under GAAP applicable in each period presented. The amount of cash paid in connection with the exercise of SARs is contained in the earnings release for each applicable period, which can be found on the Company's website. The Company does not include charges related to restricted stock awards in these non-GAAP adjustments, as they were issued primarily in connection with the Company’s prior annual employee incentive compensation program.


2011 Analyst Day Slides