Trident Microsystems, Inc. Files Annual Report on Form 10-K
Tuesday August 7, 10:14 am ET
Trident Microsystems to Record Non-Cash Net Charge of $56 million
SANTA CLARA, Calif., Aug. 7 /PRNewswire-FirstCall/ — Trident Microsystems, Inc. (Nasdaq:
target=_blank>TRID –
target=_blank>News) a leading provider of digital TV technology for the consumer digital video marketplace, announced that today it filed its Annual Report on Form 10-K for the fiscal year ended June 30, 2006, with the Securities and Exchange Commission. This filing had been delayed pending the completion of an independent investigation by the Special Committee of the Board of Directors of Trident Microsystems into its historical stock option grant practices and related issues.
Summary of Restatement
Based on the results of its investigation, the Special Committee found evidence that it previously used incorrect measurement dates when accounting for stock option grants pursuant to Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees, or APB 25, and related interpretations. Trident Microsystems determined that it was necessary to modify the accounting measurement dates for approximately 57% of the stock option grants awarded during the period from its initial public offering in December 1992 through June 2006, covering options to purchase approximately 38.0 million shares of common stock. In addition, Trident Microsystems identified modifications to certain stock options that increased or decreased the number of shares comprising the grant, and these modifications should have been accounted for by applying variable accounting. As a result, revised measurement dates and variable accounting, where applicable, were applied to the affected option grants and Trident Microsystems has recorded a total of approximately $ 34 million in additional pre-tax, non-cash, stock-based compensation expense for the years 1993 through 2005 and approximately $ 3 million for fiscal 2006.
Trident Microsystems also adjusted its accounting for all of the options granted by its Taiwanese and Chinese subsidiaries that should have been accounted for by applying variable accounting, resulting in additional compensation expense totaling approximately $24 million. This additional expense was the result of not applying related accounting literature and did not stem primarily from inappropriate stock option administration practices. After related income tax and minority interest adjustments, the restatement resulted in total net adjustments of approximately $52 million for the years 1993 through 2005 and approximately $ 4 million for fiscal 2006. This amount is net of forfeitures of stock options related to employee terminations. The additional stock-based compensation expense is being amortized over the service period relating to each option, which is typically four years.
Trident Microsystems previously announced that it had expected to record additional non-cash stock-based compensation expense in connection with the investigation of its historical stock option practices in the range of $33 to $35 million. Our parent level adjustments which are primarily the result of stock option administration issues totaled $ 37 million. In addition, as noted above, we identified certain issues with the accounting for our subsidiary option programs that added another approximately $ 24 million to the cumulative accounting charge resulting in gross pre tax accounting adjustments of $ 61 million. Directly relating to these charges and offsetting this amount are the benefits of a reversal of minority interest charges of approximately $ 2 million and a reversal of income tax expense of approximately $ 3 million resulting in a net cumulative charge of approximately $ 56 million.
As a consequence of all of these adjustments, Trident Microsystem's audited consolidated financial statements and related disclosures as of June 30, 2005 and for the years ended June 30, 2005 and 2004, and its selected consolidated statements of operations and consolidated balance sheet data as of and for the four years ended June 30, 2005, have been restated. In addition, the unaudited quarterly financial information for interim periods of 2005 and the first three quarters of 2006, have been restated. The adjustments did not affect Trident Microsystem's previously-reported revenues, cash and cash equivalents or investment balances in any of the restated periods. Further information on these matters is contained in our 10-K for the period ended June 30, 2006, filed today.
Further SEC Filings and Status of Nasdaq Listing
Trident Microsystems expects to complete and file its Quarterly Reports on Form 10-Q for the first, second and third quarters of fiscal 2007, which have also been delayed pending the conclusion of the investigation into its historical stock option grant practices and related issues, within the next two weeks. Once these quarterly reports have been filed, Trident Microsystems expects to regain compliance with its filing requirements with the Securities and Exchange Commission, as well as the requirements for continued listing on the Nasdaq Global Select Market, other than the requirement to hold an annual meeting of stockholders, which Trident expects to accomplish as soon a possible and for which Trident has requested an extension of time within which to comply from Nasdaq.
The Department of Justice and the Securities and Exchange Commission are conducting formal investigations into Trident Microsystems stock option grant practices, and we have been cooperating with, and will continue to cooperate with, those investigations.
About Trident Microsystems, Inc.
Trident Microsystems, Inc., with headquarters in Santa Clara, California, designs, develops and markets digital media for the masses in the form of integrated circuits (ICs) for HDTV, LCD TV, PDP TV, DLP TV, DCRT and digital set-top boxes. Trident's products are sold to a network of OEMs, original design manufacturers and system integrators worldwide. For further information about Trident and its products, please consult the company's web site: http://www.tridentmicro.com.
Forward Looking Statements
This press release contains forward-looking statements regarding Trident Microsystem's plans to become current in its periodic report filing requirements, and its efforts to comply with Nasdaq listing requirements, including holding an annual meeting of stockholders. These forward looking statements are subject to risks and uncertainties, and actual results could differ materially from those projected. These risks and uncertainties include, but are not limited to, the results of the of Trident Microsystem's appeal to the Nasdaq Board of Directors; its ability to complete and file its further periodic reports, and its request for an extension of time within which to hold an annual meeting of stockholders as well as actions by other regulatory authorities. Information regarding other risks and uncertainties can be found in Trident Microsystem's most recently filed annual report on Form 10-K and other filings that have been made with the Securities and Exchange Commission.
NOTE: Trident is a registered trademark of Trident Microsystems, Inc. DPTV(TM), SVP(TM) WX, SVP(TM) UX, SVP(TM) PXP and SVP(TM) CX are trademarks of Trident Microsystems, Inc. All other company and product names are trademarks and/or registered trademarks of their respective owners. Features, pricing, availability and specifications are subject to change without notice.