SUNNYVALE, Calif., May 5, 2010 — Trident Microsystems, Inc. (Nasdaq: TRID), a leader in high-performance semiconductor system solutions for the connected home, today announced results for its quarter ended Mar. 31, 2010. Results for the quarter include approximately eight weeks of contribution from product lines acquired from NXP B.V., a transaction that closed on Feb. 8, 2010.
For the quarter, the company reported net revenues of $90.4 million, which compares with $31.9 million in the prior sequential quarter and $6.9 million in the quarter ended Mar. 31, 2009. The company reported a net loss for the quarter of $3.9 million, or $0.03 per share, on a generally accepted accounting principles (“GAAP”) basis. Net loss for the quarter includes a net benefit of $33.5 million related to the NXP transaction, consisting of negative goodwill of $48.5 million offset by $15.0 million of intangibles amortization and acquisition-related expenses. Net loss for the quarter also includes $8.4 million of restructuring charges related to previously announced integration plans. The net loss for the first quarter of 2010 compares with a net loss of $23.4 million, or $0.34 per share in the prior sequential quarter and a net loss of $16.6 million, or $0.27 per share, in the quarter ended Mar. 31, 2009.
Non-GAAP Results
Non-GAAP net loss for the quarter was $25.8 million, or $0.20 per share, which compares with a non-GAAP net loss of $15.6 million, or $0.22 per share, in the prior sequential quarter and a non-GAAP net loss of $14.4 million, or $0.23 per share, in the quarter ended Mar. 31, 2009. A detailed reconciliation between GAAP and non-GAAP net loss is provided in a table following the non-GAAP consolidated statements of operations.
Sylvia Summers, Trident’s chief executive officer, said, “We accomplished the first phase of a significant integration in the first quarter, successfully closing the NXP transaction and completing approximately eight weeks of combined operations. We are on track to deliver a June quarter in line with earlier guidance and to achieve non-GAAP operating breakeven as early as the end of the year.”
Outlook
For the quarter ending June 30, 2010 (the first full quarter reflecting the contribution of the acquired NXP product lines) Trident is providing the following outlook. The company’s outlook for any period is based on current expectations and is subject to various factors, including those set forth in the Forward-Looking Information statement below. Actual results may differ materially.
- Quarter ending June 30, 2010:
- Net revenues are expected to be in the range of $150 million to $165 million.
- Non-GAAP gross margins are expected to be in the range of 27% to 28%.
- Non-GAAP operating expenses are expected to be in the range of $67 million to $70 million, with research and development expenses in the range of $47 million to $49 million and selling, general and administrative expenses of approximately $20 million to $21 million.
- Non-GAAP operating loss is expected to be in the range of $23 million to $26 million.
- Provision for income taxes is expected to be approximately $1 million.
- Restructuring charges are expected to be in the range of $3 million to $6 million. These charges are not included in the guidance for non-GAAP operating loss.
- Cash as of the end of the quarter is expected to be in the range of $95 million to $105 million.
Investor Conference Call
Date: Wednesday, May 5, 2010
Time: 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time)
Domestic Dial-In: 866-761-0748
International Dial-In: 617-614-2706
Passcode: 74564440
A replay of the conference call will be available for two weeks, beginning on May 5, 2010 and will be accessible by calling 888-286-8010 (domestic) or +1-617-801-6888 (international) using access code 27096394. This call is being webcast by Thomson/CCBN and can be accessed at Trident’s web site at: www.tridentmicro.com. The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson’s password-protected event management site, StreetEvents (www.streetevents.com).
Use of Non-GAAP Financial Information
To supplement the consolidated financial results prepared under GAAP, Trident uses a non-GAAP conforming, or non-GAAP, measure of net loss that is GAAP net loss adjusted to exclude certain costs, expenses and gains. Non-GAAP net loss gives an indication of Trident’s baseline performance before gains, losses or other charges that are considered by management to be outside the company’s core operating results. In addition, non-GAAP net loss is among the primary indicators management uses as a basis for planning and forecasting future periods. These measures are not in accordance with, or an alternative for, GAAP and may be materially different from non-GAAP measures used by other companies. Trident computes non-GAAP net loss by adjusting GAAP net loss for acquisition-related expenses, stock-based compensation expense, expenses related to the stock option investigation and related matters, restructuring charges, expenses related to software license fees adjustment, amortization and impairment of intangible assets from acquisitions, impairment loss, backlog amortization, capital gains and losses and dividend income. A detailed reconciliation between net loss on a GAAP basis and non-GAAP net loss is provided in a table following non-GAAP Consolidated Statements of Operations.
Forward-Looking Information
This press release contains forward-looking statements, including statements regarding financial expectations for the second quarter of fiscal year 2010, expected restructuring activity, and our ability to breakeven by the end of 2010. The forward-looking statements made above are subject to certain risks and uncertainties, and actual results could vary materially depending on a number of factors. These risks include, in particular, our ability to realize the benefits from our acquisition of product lines from NXP, our ability to build upon our core strengths, including our technology, engineering team, competitive cost structure and strong balance sheet, the timing of product introductions, the ability to obtain design wins among major OEMs for Trident’s products, the availability of wafers from our suppliers, and competitive pressures, including pricing and competitors’ new product introductions, the impact of the uncertain global macroeconomic environment, the increasingly competitive DTV market and our ability to retain key employees. Additional factors that may affect Trident’s business are described in detail in Trident’s filings with the Securities and Exchange Commission available at http://www.sec.gov.
About Trident Microsystems, Inc.
Trident Microsystems, Inc., with headquarters in Sunnyvale, California, is a leading force in the digital home entertainment market, delivering an extensive range of innovative multimedia semiconductor solutions for digital televisions and set-top boxes — at the heart of today’s digital home. Trident has been making bold moves to expand its market, deepen and more fully leverage its Intellectual Property (IP) portfolio, and drive the evolution of the “connected home.” Its acquisition of NXP Semiconductors’ set-top box and television product lines in 2010 establishes Trident as one of the top three semiconductor providers to both the TV and set-top box markets. For further information about Trident and its products, please consult the Company’s web site: www.tridentmicro.com.
NOTE: Trident is a trademark 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.
TRID-IR
TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(In thousands) 2010 2009
---- ----
ASSETS
Current assets
Cash and cash equivalents $129,983 $147,995
Accounts receivable, net 84,553 4,582
Inventories 26,631 14,536
Note receivable from related party 10,126
Prepaid expenses and other current assets 33,945 13,962
------ ------
Total current assets 285,238 181,075
Property and equipment, net 36,014 26,168
Intangible assets, net 127,180 5,635
Goodwill 7,851 7,851
Long-term note receivable from related
party 20,348
Other assets 19,428 7,764
Total assets $496,059 $228,493
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $20,278 $18,883
Accounts payable to related party 34,887 2,401
Accrued expenses and other current
liabilities 66,852 27,068
Income taxes payable 4,372 1,696
----- -----
Total current liabilities 126,389 50,048
Long-term income taxes payable 21,597 22,262
Deferred income tax liabilities 94 94
Other long-term liabilities 4,870
Total liabilities 152,950 72,404
------- ------
Stockholders' equity
Preferred stock - -
Common stock 175 71
Additional paid-in capital 428,621 237,827
Accumulated deficit (85,687) (81,809)
------- -------
Total stockholders' equity 343,109 156,089
Total liabilities and stockholders' equity $496,059 $228,493
======== ========
TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
(In thousands, except per share
data) 2010 2009 2009
---- ---- ----
Net revenues $90,404 $31,918 $6,852
Cost of revenues 76,618 26,673 6,391
------ ------ -----
Gross profit 13,786 5,245 461
% of net revenues 15.2% 16.4% 6.7%
Research and development
expenses 37,215 16,162 11,434
% of net revenues 41.2% 50.6% 166.9%
Selling, general and
administrative expenses 20,136 11,143 3,626
% of net revenues 22.3% 34.9% 52.9%
Goodwill impairment - - 1,432
% of net revenues - - 20.9%
Restructuring charges 8,395 50 41
% of net revenues 9.3% 0.2% 0.6%
--- --- ---
Operating loss (51,960) (22,110) (16,072)
% of net revenues (57.5)% (69.3)% (234.6)%
Loss on investment (209) - -
Gain on acquisition 48,490 - -
Interest and other income
(expense), net 526 (561) 1,287
--- ---- -----
Loss before income taxes (3,152) (22,671) (14,785)
% of net revenues (3.5)% (71.0)% (215.8)%
Provision for (benefit from)
income taxes 726 700 1,819
% of net revenues 0.8% 2.2% 26.5%
---
Net loss ($3,878) ($23,371) ($16,604)
======= ======== ========
% of net revenues (4.3)% (73.2)% (242.3)%
Basic and diluted net loss per
share $(0.03) $(0.34) $(0.27)
Shares used in basic and
diluted per share computation 129,969 69,506 61,829
TRIDENT MICROSYSTEMS, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------
December
March 31, 31, March 31,
(In thousands, except per share data) 2010 2009 2009
---- ---- ----
Net revenues $90,404 $31,918 $6,852
Cost of revenues 65,068 25,579 5,321
------ ------ -----
Gross profit 25,336 6,339 1,531
% of net revenues 28.0% 19.9% 22.3%
Research and development expenses 35,850 15,217 10,382
% of net revenues 39.7% 47.7% 151.5%
Selling, general and administrative
expenses 15,117 5,437 5,004
% of net revenues 16.7% 17.0% 73.0%
---- ---- ----
Operating loss (25,630) (14,315) (13,855)
% of net revenues (28.4)% (44.8)% (202.2)%
Interest and other income (expense), net 508 (561) 1,280
--- ---- -----
Loss before income taxes (25,122) (14,876) (12,575)
% of net revenues (27.8)% (46.6)% (183.5)%
Provision for income taxes 726 700 1,819
% of net revenues 0.8% 2.2% 26.5%
Net loss ($25,848) ($15,576) ($14,394)
======== ======== ========
(28.6)% (48.8)% (210.1)%
Basic and diluted net loss per share $(0.20) $(0.22) $(0.23)
Shares used in basic and diluted per
share computation 129,969 69,506 61,829
TRIDENT MICROSYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
(In thousands, except per share
data) 2010 2009 2009
---- ---- ----
GAAP gross profit $13,786 $5,245 $461
Amortization of acquisition-
related intangible assets (1) 10,216 974 628
Stock-based compensation
expense (2) 104 120 145
Impairment of goodwill and
intangible assets (3) 1,230 - 294
Restructuring Charges (7) - - 3
Non-GAAP gross profit $25,336 $6,339 $1,531
======= ====== ======
GAAP Research and development
expenses $37,215 $16,162 $11,434
Amortization of acquisition-
related intangible assets (1) 485 - -
Stock-based compensation
expense (2) 880 945 1,340
Software license fees (4) - - (288)
Non-GAAP Research and
development expenses $35,850 $15,217 $10,382
======= ======= =======
GAAP Selling, general and
administrative expenses $20,136 $11,143 $5,058
Amortization of acquisition-
related intangible assets (1) 755 51 76
Stock-based compensation
expense (2) (320) 1,146 1,318
Impairment of goodwill and
intangible assets (3) - - 1,735
Stock options related
professional fees (5) 226 (66) (3,075)
Acquisition-related expenses
(6) 4,358 4,575 -
Non-GAAP Selling, general and
administrative expenses $15,117 $5,437 $5,004
======= ====== ======
GAAP net loss $(3,878) $(23,371) $(16,604)
Gross profit reconciliation 11,550 1,094 1,070
Research and development
expenses reconciliation 1,365 945 1,052
Selling, general and
administrative expenses
reconciliation 5,019 5,706 54
Restructuring Charges (7) 8,395 50 41
(Gain) loss on investment 209 - (7)
(Gain) on acquisition (8) (48,508) - -
Non-GAAP net loss $(25,848) $(15,576) $(14,394)
======== ======== ========
GAAP basic and diluted net loss
per share $(0.03) $(0.34) $(0.27)
====== ====== ======
Non-GAAP basic and diluted net
loss per share $(0.20) $(0.22) $(0.23)
====== ====== ======
Shares used in basic and
diluted per share computation 129,969 69,506 61,829
======= ====== ======
(1) Amortization of acquisition-related intangible assets represents
the amortization of identifiable intangible assets. Management
deemed that these acquisition-related charges are not related to
Trident's core operating performance and it is appropriate to
exclude those charges from Trident's non-GAAP financial measures,
as it enhances the ability of investors to compare Trident's period-
over-period operating results.
(2) Stock-based compensation expense relates primarily to the equity
awards such as stock options and restricted stock. This is non-cash
expense that varies in amount from period to period and is dependent
on market forces that are often beyond Trident's control. Hence,
management excludes this item from the non-GAAP financial measures.
(3) Charges for impairment of goodwill and intangible assets incurred
as a result of their carrying value exceeding the fair value.
Management believes that these charges are not directly associated
with the Company's core operating performance.
(4) Software license fees represent an adjustment for prior years'
software usage.
(5) Stock options related professional fees are excluded from the
non-GAAP net loss calculation. Management believes that these
professional fees are not related to the Company's ongoing business
and operating performance of Trident.
(6) Acquisition-related expenses represent external costs incurred
in connection with our acquisition, which we generally would not
have incurred in the normal course of business.
(7) Management believes that restructuring charges are not directly
associated with the Company's core operating performance.
(8) Management believes that Gain on acquisition is not directly
associated with the Company's core operating performance.