##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
    Form 10-Q
    þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    May 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number 0-7422
      STANDARD MICROSYSTEMS
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
   DELAWARE

11-2234952(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)80 Arkay Drive, Hauppauge, New
    York

11788-3728(Address of principal executive
    offices)

(Zip Code)    Registrants telephone number, including area code:
 (631) 435-6000
  þ o
  Rule 12b-2
 Large
    accelerated filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o  Rule 12b-2 o þ




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##### 



TABLE OF
    CONTENTS
  
  Part
    I  FINANCIAL INFORMATIONItem 1.


Financial
    Statements


1Condensed
    Consolidated Balance Sheets as of May 31, 2007 and
    February 28, 2007


1Condensed
    Consolidated Income Statements for the Three Month Periods Ended
    May 31, 2007 and 2006


2Condensed
    Consolidated Statements of Cash Flows for the Three Month
    Periods Ended May 31, 2007 and 2006


3Notes to Condensed
    Consolidated Financial Statements


4Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


13Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


18Item 4.


Controls and
    Procedures


19Part
    II  OTHER INFORMATIONItem 1.


Legal
    Proceedings


19Item 1A.


Risk
    Factors


19Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


19Item 3.


Defaults Upon
    Senior Securities


20Item 4.


Submission of
    Matters to a Vote of Security Holders


20Item 5.


Other
    Information


20Item 6.


Exhibits


20Signatures


21302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of CEO and CFO   i




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##### Table of Contents



PART I  Item 1. 
    Financial
    Statements  STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
 (in thousands)
  May 31,


February 28,2007


2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
30,060


$
36,255Short-term investments


139,750



123,768Accounts receivable, net


47,735



48,014Inventories


49,816



50,873Deferred income taxes


19,047



19,312Other current assets


9,205



8,751Total current assets


295,613



286,973Property, plant and equipment,
    net


57,844



58,020Goodwill


99,386



98,259Intangible assets,
    net


39,190



40,256Deferred income taxes


7,256



7,094Other assets


3,088



3,037TOTAL ASSETS

$
502,377


$
493,639LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
22,246


$
25,617Deferred income on shipments to
    distributors


16,653



12,752Accrued expenses, income taxes and
    other liabilities


32,351



36,378Total current
    liabilities


71,250



74,747Deferred income taxes


9,859



10,100Other liabilities


14,755



16,850Commitments and
    contingenciesShareholders
    equity:Preferred stock






Common stock


2,542



2,511Additional paid-in capital


284,835



276,701Retained earnings


144,347



139,657Treasury stock, at cost


(32,038
)


(32,038
)Accumulated other comprehensive
    income


6,827



5,111Total shareholders
    equity


406,513



391,942TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
502,377


$
493,639    1




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES



CONDENSED
    CONSOLIDATED INCOME STATEMENTS

(in
    thousands, except per share amounts)  Three Months EndedMay 31,2007


2006(Unaudited)Product sales

$
78,513


$
83,292Intellectual property revenues


3,033



2,85281,546



86,144Costs and expenses:Costs of goods sold (exclusive of
    amortization shown below)


38,851



44,914Research and development


17,989



15,168Amortization of intangible assets


1,641



1,569Selling, general and administrative


20,271



13,803Income from operations


2,794



10,690Interest income


1,402



1,146Interest expense


(85
)


(32
)Other income (expense), net


358



(63
)Income before provision for income
    taxes


4,469



11,741Provision for income taxes


1,267



3,108Net income

$
3,202


$
8,633Basic net income per share:

$
0.14


$
0.40Diluted net income per share:

$
0.13


$
0.37Weighted average common shares
    outstanding:Basic


22,790



21,824Diluted


23,852



23,147    2




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES



CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS

(in
    thousands)  May 31,2007


2006(Unaudited)Cash flows from operating
    activities:Net income

$
3,202


$
8,633Adjustments to reconcile net
    income to net cash provided by (used for) operating
    activities:Depreciation and amortization


5,013



4,084Excess tax benefits associated
    with stock-based compensation


(271
)


(126
)Stock-based compensation


4,109



(2,559
)Deferred income taxes


(137
)


2,602Changes in operating assets and
    liabilities, net of business acquisition impact:Accounts receivable


595



(6,183
)Inventories


1,211



(7,278
)Accounts payable, accrued expenses
    and other liabilities


(6,376
)


(1,529
)Deferred income


3,901



1,803Income taxes payable


(3,285
)


4,126Other changes, net


437



(3,401
)Net cash provided by operating
    activities


8,399



172Cash flows from investing
    activities:Capital expenditures


(3,174
)


(10,201
)Acquisition of OASIS
    SiliconSystems Holding AG, net of cash acquired






(12,555
)Purchases of short-term investments


(164,252
)


(97,932
)Sales of short-term investments


148,270



104,010Net cash used in investing
    activities


(19,156
)


(16,678
)Cash flows from financing
    activities:Excess tax benefits associated
    with stock-based compensation


271



126Proceeds from issuance of common
    stock


4,972



1,462Purchases of treasury stock






(4,326
)Repayments of obligations under
    capital leases and notes payable


(637
)


(142
)Net cash provided by (used in)
    financing activities


4,606



(2,880
)Effect of foreign exchange rate
    changes on cash and cash equivalents


(44
)


(46
)Net decrease in cash and cash
    equivalents


(6,195
)


(19,432
)Cash and cash equivalents at
    beginning of period


36,255



43,932Cash and cash equivalents at end
    of period

$
30,060


$
24,500    3




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STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
    BASIS OF
    PRESENTATION      Form 10-K,
      2.
    STOCK-BASED
    COMPENSATION    Share-Based Payments
 Three Months


Three MonthsEnded


EndedMay 31, 2007


May 31, 2006Costs of goods sold

$
377


$
(451
)Research and development


1,843



(322
)Selling, general and administrative


2,587



(1,786
)Stock-based compensation expense
    (benefit) under SFAS 123R, before income tax benefit
    (provision)


4,807



(2,559
)Tax benefit (provision)


1,731



(921
)Stock-based compensation expense
    (benefit) under SFAS 123R, after income tax benefit
    (provision)

$
3,076


$
(1,638
)  4




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employee
    and Director Stock Option Plans
    (shares in
    thousands):
  WeightedAverage


WeightedFiscal


Exercise


Average2008


Prices


Contractual


AggregateShares


per Share


Term


Intrinsic ValueOptions outstanding, March 1,
    2007


4,302


$
20.81Granted


65


$
32.82Exercised


(292
)

$
17.29Canceled or expired


(51
)

$
21.54Options outstanding, May 31,
    2007


4,024


$
21.25



6.8


$
39,695,510Options exercisable, May 31,
    2007


1,761


$
18.54



5.4


$
22,013,628         Three Months


Three MonthsEnded


EndedMay 31,


May 31,2007


2006Dividend yield






Expected volatility


52
%


59
%Risk-free interest rates


4.59
%


4.59
%Expected lives (in years)


4.46



4.42   Restricted
    Stock Awards
   5




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STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Number of


Grant-DateShares


Fair ValueRestricted stock shares
    outstanding, March 1, 2007


231


$
22.71Granted


21


$
32.05Canceled or expired


(1
)

$
24.74Vested


(49
)

$
20.55Restricted stock shares
    outstanding, May 31, 2007


202


$
24.20     Stock
    Appreciation Rights Plans
      WeightedAverage


WeightedExercise


AverageFiscal 2008


Prices


Contractual


AggregateShares


per Share


Term


Intrinsic ValueSARs outstanding, March 1,
    2007


2,775


$
25.54Granted


158


$
32.99Exercised


(57
)

$
18.35Canceled or expired


(19
)

$
29.07SARs outstanding, May 31, 2007


2,857


$
26.07



8.6


$
14,940,045SARs exercisable, May 31, 2007


305


$
19.50



7.1


$
3,536,991    6




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months


Three MonthsEnded


EndedMay 31,


May 31,2007


2006Dividend yield






Expected volatility


52
%


59
%Risk-free interest rates


4.59
%


4.97
%Expected lives (in years)


1.79-4.34



2.75-4.31   3.
    INVESTMENTS      4.
    BALANCE
    SHEET DATA  first-in,
  May 31,


February 28,2007


2007Raw materials

$
2,154


$
2,307Work-in-process


18,117



20,861Finished goods


29,545



27,705$
49,816


$
50,873     May 31,


February 28,2007


2007Land

$
578


$
578Buildings and improvements


32,487



32,303Machinery and equipment


108,482



104,281141,547



137,162Less: accumulated depreciation


(83,703
)


(79,142
)$
57,844


$
58,020  7




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    NET
    INCOME PER SHARE      Three Months EndedMay 31,2007


2006Average shares outstanding for
    basic net income per share


22,790



21,824Dilutive effect of stock options
    and unvested restricted stock awards


1,062



1,323Average shares outstanding for
    diluted net income per share


23,852



23,147     6.
    COMPREHENSIVE
    INCOME      Three MonthsEnded May 31,2007


2006Net income

$
3,202


$
8,633Other comprehensive income:Change in foreign currency
    translation adjustments


1,666



4,228Change in unrealized gain (loss)
    on marketable equity securities, net of taxes


3



(8
)Change in minimum pension
    liability adjustment, net of taxes


47



Total comprehensive income

$
4,918


$
12,853     May 31,


February 28,2007


2007Unrealized gains and losses on
    investments

$
(18
)

$
(21
)Foreign currency items


7,302



5,636Minimum pension liability
    adjustment


(457
)


(504
)Total accumulated other
    comprehensive income

$
6,827


$
5,111  8




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STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    BUSINESS
    RESTRUCTURING      8.
    GOODWILL
    AND INTANGIBLE ASSETS    Goodwill and Other Intangible Assets
      May 31, 2007


February 28, 2007Accumulated





AccumulatedCost


Amortization


Cost


AmortizationPurchased technologies

$
39,204


$
14,094


$
38,846


$
12,718Customer relationships and
    contracts


11,205



3,109



10,988



2,709Total  finite-lived
    intangible assets


50,409



17,203



49,834



15,427Trademark and other


5,984







5,849



$
56,393


$
17,203


$
55,683


$
15,427    9




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STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Period

AmountRemainder of fiscal 2008

$
4,913Fiscal 2009

$
5,776Fiscal 2010

$
5,521Fiscal 2011

$
5,521Fiscal 2012

$
5,521Fiscal 2013 and thereafter

$
5,954   9.
    INCOME
    TAXES  Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109
        10.
    RETIREMENT
    PLANS   10




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STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEndedMay 31,2007


2006Components of net periodic
    benefit costs:Service cost  benefits
    earned during the period

$
133


$
92Interest cost on projected benefit
    obligations


87



110Amortization of net obligation


65



76Net periodic pension expense

$
285


$
278   May 31,


February 28,2007


2007Amounts recognized in
    accumulated other comprehensive loss:Transition obligation

$
539


$
603Net loss


190



190Prior service cost


5



5Total amount recognized in
    accumulated other comprehensive loss

$
734


$
798       11.
    COMMON
    STOCK REPURCHASE PROGRAM    12.
    OPERATING
    SEGMENT INFORMATION    13.
    COMMITMENTS
    AND CONTINGENCIES  United
    States Customs Liability Payment
   11




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    RECENT
    ACCOUNTING PRONOUNCEMENTS  Fair Value Measurements
    (SFAS No. 157)
  The
    Fair Value Option for Financial Assets and Financial Liabilities
 12




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##### Table of Contents



STANDARD
    MICROSYSTEMS CORPORATION AND SUBSIDIARIES
    QUARTERLY REPORT ON
    FORM 10-Q
    FOR THE QUARTERLY PERIOD ENDED MAY 31, 2007
  Item 2. 
    Managements
    Discussion and Analysis of Financial Conditions and Results of
    Operations  GENERAL
  Financial Statements Form 10-Q
  Forward-Looking
    Statements
    Form 10-K Form 10-Q Risk Factors
  Description
    of Business
  ®
   13




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##### Table of Contents



CRITICAL
    ACCOUNTING POLICIES & ESTIMATES
      
    Revenue Recognition
    Inventory Valuation
    Determination of the Allowance for Doubtful Accounts Receivable
    Valuation of Long-Lived Assets
    Valuation of Share-Based Payments
    Accounting for Deferred Income Taxes
    Accounting for Uncertain Tax Positions
    Legal Contingencies  Form 10-K Accounting for
    Income Tax Uncertainties Financial
    Statements
 14




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RESULTS
    OF OPERATIONS
  Sales and
    Revenues
    Three Months Ended May 31,2007


2006Amount


Percent


Amount


PercentConsumer Electronics &
    Infotainment

$
30.8



39
%

$
31.0



37
%Mobile & Desktop PC


31.6



40
%


37.4



45
%Industrial & Other


16.1



21
%


14.9



18
%Total Product Sales


78.5



100
%


83.3



100
%Intellectual Property Revenues


3.0







2.8Total Sales and Revenues

$
81.5






$
86.1             Costs of
    Goods Sold
   15




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##### Table of Contents



Research
    and Development Expenses
    Selling,
    General and Administrative Expenses
    Amortization
    of Intangible Assets
    Interest
    and Other Income (Expense)
    Provision
    for Income Taxes
        LIQUIDITY &
    CAPITAL RESOURCES
     16




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COMMITMENTS
    AND CONTINGENCIES
  United
    States Customs Liability Payment
   17




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##### Table of Contents



RECENT
    ACCOUNTING PRONOUNCEMENTS
  Fair Value Measurements
    (SFAS No. 157)
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Item 3. 
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
        Equity
    Price Risk
    Foreign
    Currency Risk
   18




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##### Table of Contents



Item 4. 
    Controls
    and Procedures     PART II   Item 1.
    Legal
    Proceedings   Item 1.A. 
    Risk Factors  Form 10-Q Forms 10-K, 10-Q 8-K,
  Form 10-K,
  Item 2. 
    Unregistered
    Sales of Equity Securities and Use of Proceeds     19




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##### Table of Contents



Item 3. 
    Defaults
    Upon Senior Securities    Item 4. 
    Submission
    of Matters to a Vote of Security Holders    Item 5. 
    Other
    Information    Item 6. 
    Exhibits  31
.1



Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)
    (17 CFR 240.13a-14(a)), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2



Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)
    (17 CFR 240.13a-14(a)), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1



Certifications of Chief Executive
    Officer and Chief Financial Officer pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.   *
    
    Indicates a management or compensatory plan or arrangement. 20




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##### Table of Contents



SIGNATURE      By:
    /s/  Joseph
    S. Durko         21




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.



Description31
.1



Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)
    (17 CFR 240.13a-14(a)), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2



Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)
    (17 CFR 240.13a-14(a)), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1



Certifications of Chief Executive
    Officer and Chief Financial Officer pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.     *
    
    indicates a management or compensatory plan or arrangement.