Trident Microsystems Reports Results for Fourth Quarter and Fiscal Year 2008
Names Pete J. Mangan as Chief Financial Officer
SANTA CLARA, Calif., July 28 /PRNewswire-FirstCall/ — Trident Microsystems, Inc. (Nasdaq: TRID – News), a leader in high-performance semiconductor system solutions for the multimedia and digital television markets, today announced results for the fourth quarter and full fiscal year 2008, which ended June 30, 2008.
For the fourth quarter of fiscal year 2008, the company reported net revenues of $39.5 million, representing a sequential decrease of 29% compared with net revenues of $55.3 million in the quarter ended March 31, 2008 and a 44% year-over-year decrease from the $70.6 million reported in the quarter ended June 30, 2007. The company announced $257.9 million in net revenues for fiscal year 2008, a year-over-year decrease of 5% from the $270.8 million reported in fiscal year 2007.
GAAP Results
For the fourth quarter of fiscal year 2008, a net loss of $6.9 million, or $0.11 per diluted share, was recorded on a generally accepted accounting principles ("GAAP") basis, which included $13.9 million of GAAP adjustments. This compares to a net loss of $0.2 million, or $0.00 per diluted share, in the quarter ended March 31, 2008, which included $5.3 million of GAAP adjustments, and to a net income of $6.8 million, or $0.11 per diluted share, in the quarter ended June 30, 2007, which included $9.9 million in GAAP adjustments.
GAAP net income of $10.2 million, or $0.16 per diluted share, was recorded for the fiscal year ended June 30, 2008, which included $45.5 million of GAAP adjustments. This compares to GAAP net income of $30.1 million, or $0.48 per diluted share for the fiscal year ended June 30, 2007, which included $38.8 million of GAAP adjustments.
Non-GAAP Results
Non-GAAP net income for the fourth quarter of fiscal year 2008 was $7.0 million or $0.11 per diluted share. This compares with non-GAAP net income of $5.1 million or $0.08 per diluted share, in the third quarter of fiscal year 2008, and with net income of $16.6 million or $0.26 per diluted share in the fourth quarter of fiscal year 2007.
For the fiscal year ended June 30, 2008, non-GAAP net income was $55.6 million, or $0.87 per diluted share, compared with non-GAAP net income of $68.9 million, or $1.07 per diluted share, for the fiscal year ended June 30, 2007.
A detailed reconciliation between GAAP and non-GAAP net income/loss is provided in a table following the non-GAAP consolidated statement of operations.
"Fiscal 2008 was a year of significant change for Trident, during which we realigned our business and organization to begin turning the company in a new direction and addressing our changing market," said Sylvia D. Summers, Trident's Chief Executive Officer and President.
"Fiscal 2009 will be a year of investment. Our financial results will be impacted by the combination of the difficult macroeconomic environment and the evolving market for our new products. We remain committed to recapturing our customer base and intend to utilize our engineering talent to position the company for strategic growth. We are up to the challenge ahead of us and believe we have the resources, talent, strategy and determined management team to successfully drive change, achieve our long-term goals and win in the multimedia and digital television markets," added Summers.
Names Pete J. Mangan as Chief Financial Officer
On Tuesday, July 22, 2008, Trident appointed Pete J. Mangan as Senior Vice President and Chief Financial Officer, effective immediately. Mr. Mangan joined Trident in January 2008 as Interim Chief Financial Officer and Vice President of Finance.
Summers said, "Pete has been an invaluable member of the Trident executive team since joining the company earlier this year and we are excited to formalize his position as the company's Chief Financial Officer as we navigate the company through a challenging market and invest in our long-term opportunities."
Current Outlook
Trident's outlook for the first quarter and fiscal year 2009, described below, 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.
First Quarter Fiscal Year 2009
-- Trident expects net revenues to be in the range of approximately $32-
$36 million.
-- Non-GAAP gross margins are projected to be in the 40-42% range.
-- Non-GAAP operating expenses are projected to be approximately $12-$13
million for R&D expenses, driven primarily by additional spending on
labor, NRE, and CAD tools in Trident's China development centers, and
approximately $6-$7 million for SG&A expenses.
-- Non-GAAP Operating loss is projected at $4-$6 million.
-- Provision for income taxes is projected to be approximately $3 million.
Full Fiscal Year 2009
-- Trident expects net revenues to be in the range of approximately
$115-$135 million.
-- Non-GAAP gross margins are projected to be in the 37-39% range.
-- Non-GAAP Operating Loss is projected to be in the range of $23-$27
million.
-- Trident expects to use between $28-$32 million in cash.
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 income that is GAAP net income adjusted to exclude certain costs, expenses and gains. Non-GAAP net income 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 income 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 income by adjusting GAAP net income for stock-based compensation expense, expenses related to the stock option investigation and related matters, expenses related to software license fees adjustment, amortization of intangible assets from the acquisition of Trident's Tiside subsidiary and the purchase of the minority interests of Trident's TTI subsidiary, impairment loss, capital gains and losses and dividend income. A detailed reconciliation between net income on a GAAP basis and non-GAAP net income is provided in a table following non-GAAP Consolidated Statements of Operations.
Investor Conference Call
Trident will host a conference call today, July 28, 2008, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss these quarterly and annual results. Shareholders may participate in the call by calling 888-679-8040 or 617-213-4851 and entering passcode 78481873. This call is being webcasted by Thomson/CCBN and can be accessed at http://phx.corporate-ir.net/playerlink.zhtml?c=63155&s=wm&e=1880795. The webcast is also being distributed through the Thomsom 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 (http://www.streetevents.com). A replay of the conference call will be available from 5:00 p.m. Pacific Time July 30, 2008 until midnight Pacific Time, on August 4, 2008 and can be accessed by calling 888-286-8010 (domestic) or 617-801-6888 (international) using access code 77201136.
Forward-Looking Information
This press release contains forward-looking statements, including statements regarding financial expectations for the first quarter and fiscal year of 2009, the status of the market, Trident's market share, Trident's ability to develop and deliver SoC solutions and win in the multimedia and digital television markets, Trident's ability to leverage its technology leadership and engineering talent to take advantage of market changes and achieve its aggressive plan for strategic growth in 2009 including recapturing its customer base, challenges and competition that Trident faces in its markets, and Trident's expectations regarding the market for its products and product introductions. 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, the timing of product introductions, the ability to obtain design wins among major OEMs for Trident's products, and competitive pressures, including pricing and competitors' new product introductions. 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 Santa Clara, California, designs, develops and markets digital media for the masses in the form of multimedia integrated circuits (ICs) for PCs and digital processing ICs for TVs and TV monitors. 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.
NOTE: Trident is a registered trademark of Trident Microsystems, Inc., HiDTV(TM), 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.
For More Information
The Blueshirt Group for Trident Microsystems
Suzanne Craig or Maria Riley
Tel: +1-415-217-7722
Email: Suzanne@blueshirtgroup.com
Web site: http://www.tridentmicro.com
Trident Microsystems, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
June 30, March 31, June 30,
(In thousands) 2008 2008 2007
ASSETS
Current assets
Cash and cash equivalents $213,296 $200,316 $147,562
Investments 26,704 36,117 51,744
Accounts receivable, net 4,510 15,144 9,161
Inventories 8,680 11,300 16,263
Prepaid expenses and
other current assets 12,863 16,505 13,668
Total current assets 266,053 279,382 238,398
Property and equipment, net 23,425 23,086 19,581
Intangible assets, net 8,428 9,671 12,845
Goodwill 1,432 1,372 -
Other assets 9,977 9,000 13,055
Total assets $309,315 $322,511 $283,879
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable(1) $10,889 $14,531 $19,313
Accrued expenses and
other(1) 22,910 25,742 24,605
Income taxes payable 16,309 21,633 36,171
Total current
liabilities 50,108 61,906 80,089
Long-term income taxes
payable(2) 21,579 23,602 -
Deferred income tax
liabilities 370 247 1,942
Total liabilities 72,057 85,755 82,031
Stockholders' equity
Capital stock 208,360 203,290 179,448
Retained earnings 28,950 35,880 18,798
Accumulated other
comprehensive income (loss) (52) (2,414) 3,602
Total stockholders'
equity 237,258 236,756 201,848
Total liabilities
and stockholders'
equity $309,315 $322,511 $283,879
(1) Certain Balance Sheet items have been reclassified to conform to the
current year's format. These classifications had no impact on
previously reported net income.
(2) On July 1, 2007, the Company adopted FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes" ("FIN 48").
Implementation of FIN 48 resulted in the reclassification of $21.4
million to "Long-term income taxes payable".
Trident Microsystems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
June 30, March 31, June 30,
(In thousands, except per 2008 2008 2007
share data)
Net revenues $39,496 $55,284 $70,593
Cost of revenues(1) 22,736 29,972 38,577
Gross profit 16,760 25,312 32,016
Gross margin 42.4% 45.8% 45.4%
Research and development
expenses(2) 13,223 14,407 11,751
% of net revenues 33.5% 26.1% 16.6%
Selling, general and
administrative expenses
(SG&A) 10,207 7,120 11,604
% of net revenues 25.8% 12.9% 16.4%
Income (loss) from operations (6,670) 3,785 8,661
% of net revenues (16.9)% 6.8% 12.3%
Impairment loss on investment
in UMC (6,480) - -
Interest and other income
(expense), net 1,328 (796) 1,585
Income (loss) before income
taxes (11,822) 2,989 10,246
% of net revenue (29.9)% 5.4% 14.5%
Provision for (benefit from)
income taxes (3) (4,892) 3,216 3,485
% of net revenues (12.4)% 5.8% 4.9%
Income (loss) before cumulative
effect of change in accounting
principle (6,930) (227) 6,761
% of net revenues (17.5)% (0.4)% 9.6%
Cumulative effect of change
in accounting principle - - -
% of net revenues 0.0% 0.0% 0.0%
Net income (loss) ($6,930) ($227) $6,761
% of net revenues (17.5)% (0.4)% 9.6%
Basic net income (loss) per
share
Prior to cumulative effect
of change in accounting
principle ($0.11) $0.00 $0.12
Cumulative effect of change
in accounting principle - - -
Basic net income (loss) per
share ($0.11) $0.00 $0.12
Common shares used in
computing basic per share
amounts 60,390 59,369 57,748
Diluted net income (loss)
per share
Prior to cumulative effect
of change in accounting
principle ($0.11) ($0.00) $0.11
Cumulative effect of change
in accounting principle - - -
Diluted net income (loss) per
share ($0.11) ($0.00) $0.11
Common and common equivalent
shares used in computing
diluted per share amounts
under GAAP basis 60,390 59,369 63,571
Fiscal Year Ended
June 30, June 30,
(In thousands, except per
share data) 2008 2007
Net revenues $257,938 $270,795
Cost of revenues (1) 137,912 141,688
Gross profit 120,026 129,107
Gross margin 46.5% 47.7%
Research and development
expenses (2) 52,608 40,970
% of net revenues 20.4% 15.1%
Selling, general and
administrative expenses (SG&A) 48,598 47,993
% of net revenues 18.8% 17.7%
Income (loss) from operations 18,820 40,144
% of net revenues 7.3% 14.8%
Impairment loss on investment in UMC (6,480) -
Interest and other income (expense),
net 6,611 6,837
Income (loss) before income taxes 18,951 46,981
% of net revenue 7.3% 17.3%
Provision for (benefit from) income
taxes (3) 8,799 16,673
% of net revenues 3.4% 6.2%
Income (loss) before cumulative effect
of change in accounting principle 10,152 30,308
% of net revenues 3.9% 11.2%
Cumulative effect of change in
accounting principle - (190)
% of net revenues 0.0% (0.1)%
Net income (loss) $10,152 $30,118
% of net revenues 3.9% 11.1%
Basic net income (loss) per share
Prior to cumulative effect of
change in accounting principle $0.17 $0.52
Cumulative effect of change in
accounting principle - -
Basic net income (loss) per share $0.17 $0.52
Common shares used in computing basic
per share amounts 59,367 57,637
Diluted net income (loss) per share
Prior to cumulative effect of
change in accounting principle $0.16 $0.48
Cumulative effect of change in
accounting principle - -
Diluted net income (loss) per share $0.16 $0.48
Common and common equivalent shares
used in computing diluted per share
amounts under GAAP basis 62,751 63,380
(1) & (2) -- Based on management's judgment, the Company has reclassified
certain prior period balances from "Research and development"
to "Cost of revenues" to conform to the current year
presentation. These reclassifications did not impact any
prior amounts of reported net income (loss), total assets,
total liabilities, stockholders' equity, and results of
operations or cash flows. See the reconciliation for such
reclassifications in the following table:
Reconciliation for R&D
expenses reclassification:
Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
Cost of revenues (1): 21,710 29,105 37,471
Balance before
reclassification 1,026 867 1,106
Reclassification from
research and development 22,736 29,972 38,577
Balance after
reclassification
Research and development
expenses (2): 14,249 15,274 12,857
Balance before
reclassification (1,026) (867) (1,106)
Reclassification to
cost of revenues 13,223 14,407 11,751
Balance after reclassification
Reconciliation for R&D
expenses reclassification: Fiscal Year Ended
June 30, June 30,
2008 2007
Cost of revenues (1): 134,452 138,142
Balance before
reclassification 3,460 3,546
Reclassification from
research and development 137,912 141,688
Balance after
reclassification
Research and development
expenses (2): 56,068 44,516
Balance before
reclassification (3,460) (3,546)
Reclassification to cost of
revenues 52,608 40,970
Balance after reclassification
(3) Amounts for each quarter and fiscal year ended, included the
amortization of foreign taxes associated with intercompany profit on
assets remaining within Trident's group.
Trident Microsystems, Inc.
Non-GAAP Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
(In thousands, except per June 30, March 31, June 30,
share data) 2008 2008 2007
Net revenues $39,496 $55,284 $70,593
Cost of revenues (1) 21,446 28,750 36,818
Gross profit 18,050 26,534 33,775
Gross margin 45.7% 48.0% 47.8%
Research and development
expenses (2) 10,717 10,542 9,297
% of net revenues 27.1% 19.1% 13.2%
Selling, general and
administrative expenses 6,584 6,690 5,941
% of net revenues 16.7% 12.1% 8.4%
Income from operations 749 9,302 18,537
% of net revenues 1.9% 16.8% 26.3%
Interest and other income
(expense), net (3) 1,322 (1,000) 1,585
Income before income taxes 2,071 8,302 20,122
% of net revenues 5.2% 15.0% 28.5%
Provision for (benefit from)
income taxes (4) (4,892) 3,216 3,485
% of net revenues (12.4)% 5.8% 4.9%
Net income $6,963 $5,086 $16,637
% of net revenues 17.6% 9.2% 23.6%
Basic net income per share $0.12 $0.09 $0.29
Common shares used in computing
basic per share amounts 60,390 59,369 57,748
Diluted net income per share $0.11 $0.08 $0.26
Common and common equivalent
shares used in computing
diluted per share amounts
under non-GAAP basis (5) 63,541 63,067 64,516
Fiscal Year Ended
June 30, June 30,
(In thousands, except per share data) 2008 2007
Net revenues $257,938 $270,795
Cost of revenues (1) 132,011 135,051
Gross profit 125,927 135,744
Gross margin 48.8% 50.1%
Research and development expenses (2) 38,803 31,999
% of net revenues 15.0% 11.8%
Selling, general and administrative
expenses 26,555 24,762
% of net revenues 10.3% 9.1%
Income from operations 60,569 78,983
% of net revenues 23.5% 29.2%
Interest and other income (expense),
net (3) 3,859 6,621
Income before income taxes 64,428 85,604
% of net revenues 25.0% 31.6%
Provision for (benefit from) income
taxes (4) 8,799 16,673
% of net revenues 3.4% 6.2%
Net income $55,629 $68,931
% of net revenues 21.6% 25.5%
Basic net income per share $0.94 $1.20
Common shares used in computing
basic per share amounts 59,367 57,637
Diluted net income per share $0.87 $1.07
Common and common equivalent shares
used in computing diluted per share
amounts under non-GAAP basis (5) 63,840 64,520
(1) & (2) - Based on management's judgment, the Company has reclassified
certain prior period balances from "Research and development"
to "Cost of revenues" to conform to the current year
presentation. These reclassifications did not impact any prior
amounts of reported net income (loss), total assets, total
liabilities, stockholders' equity, and results of operations
or cash flows. See the reconciliation for such
reclassifications in the following table:
Reconciliation for R&D
expenses reclassification:
Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
Cost of revenues (1):
Balance before
reclassification 20,536 28,014 35,826
Reclassification from
research and development
(excluding stock-based
compensation expense) 910 736 992
Balance after
reclassification 21,446 28,750 36,818
Research and development
expenses (2):
Balance before
reclassification 11,627 11,278 10,289
Reclassification to cost
of revenues (excluding
stock-based compensation
expense) (910) (736) (992)
Balance after
reclassification 10,717 10,542 9,297
Fiscal Year Ended
June 30, June 30,
2008 2007
Cost of revenues (1):
Balance before reclassification 129,015 131,874
Reclassification from research
and development (excluding
stock-based compensation
expense) 2,996 3,177
Balance after reclassification 132,011 135,051
Research and development expenses (2):
Balance before reclassification 41,799 35,176
Reclassification to cost of
revenues (excluding stock-based
compensation expense) (2,996) (3,177)
Balance after reclassification 38,803 31,999
(3) Amounts in the fiscal year ended June 30, 2008 included a $2.7 million
foreign currency remeasurement loss related to income taxes payable in
foreign jurisdictions, which resulted from the relative weakness of
the U.S. dollar.
(4) Amounts for each quarter and fiscal year ended, included the
amortization of foreign taxes associated with intercompany profit on
assets remaining within Trident's group.
(5) Common and common equivalent shares used to calculate non-GAAP diluted
net income per share excluded all the unamortized stock compensation
of stock options and restricted shares when determining whether the
awards are anti-dilutive. We also excluded unamortized stock
compensation from the assumed proceeds under the treasury stock
method. Non-GAAP results for the three months and fiscal year ended
June 30, 2007 have been adjusted to reflect such exclusion.
Trident Microsystems, Inc.
Reconciliation between net income (loss) on a GAAP basis and a non-GAAP
basis:
(In thousands, except Three Months Ended Fiscal Year Ended
per share data, June 30, March 31, June 30, June 30, June 30,
unaudited) 2008 2008 2007 2008 2007
GAAP net income (loss) $(6,930) $(227) $6,761 $10,152 $30,118
Amortization of
intangibles
Cost of revenues 1,127 1,040 1,486 5,138 5,742
Selling, general and
administrative
expenses 146 108 167 588 603
Total amortization of
intangibles (1) 1,273 1,148 1,653 5,726 6,345
Stock-based compensation
expense
Cost of revenues 163 182 273 763 895
Research and
development 2,596 2,388 2,454 12,418 8,901
Selling, general and
administrative
expenses 1,608 2,822 1,740 15,424 5,810
Total stock-based
compensation expense (2) 4,367 5,392 4,467 28,605 15,606
Software license fees (3) (90) 1,477 - 1,387 -
Impairment loss on
investment in UMC (4) 6,480 - - 6,480 -
Capital gain on
investments, net (5) (6) (204) - (2,752) (216)
Section 409A stock
compensation - - - - 127
Stock options related
professional fees (6) 1,869 (2,500) 3,756 6,031 16,761
Cumulative effect of
change in accounting
principle (7) - - - - 190
Non-GAAP net income $6,963 $5,086 $16,637 $55,629 $68,931
Basic net income per
share $0.12 $0.09 $0.29 $0.94 $1.20
Common shares used in
computing basic per share
amounts 60,390 59,369 57,748 59,367 57,637
Diluted net income per
share $0.11 $0.08 $0.26 $0.87 $1.07
Common and common
equivalent shares used
in computing diluted per
share amounts under
non-GAAP basis 63,541 63,067 64,516 63,840 64,520
(1) Amortization of intangible assets represents the amortization of
identifiable intangible assets from the acquisition of Tiside and the
purchase of the minority interests of the Company's TTI subsidiary.
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. Stock-based
compensation is a 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, as it enhances the ability of investors to
compare Trident's period-over-period operating results.
(3) Software license fees represent an adjustment for prior software
usage.
(4) At June 30, 2008, based on the guidance prescribed in FSPs No. FAS
115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments, the Company determined
that the decline in value of its investment in UMC was other than
temporary. As a result, the Company recorded an impairment loss in the
fourth quarter of fiscal year 2008 for this decline in value. This
impairment loss has been excluded from non-GAAP net income.
(5) The capital gain are excluded from the non-GAAP net income
calculation. Management believes that such gains/losses on the sale of
Trident's investments are not related to the ongoing business and
operating performance of Trident. As such, management believes that it
is appropriate to exclude investment-related gains/losses from
Trident's non-GAAP financial measures. Management deemed that it can
enhance the ability of investors to compare Trident's
period-over-period operating results.
(6) Stock options related professional fees are excluded from the non-GAAP
net income calculation. Management believes that these professional
fees are not related to the Company's ongoing business and operating
performance. Amounts in the three months ended March 31, 2008 and
fiscal year ended June 30, 2008 include insurance reimbursements for
the Directors' and Officers' insurance, which partially offset the
stock options related professional fees incurred.
(7) The adoption of EITF 06-2 , Accounting for Sabbatical Leave and Other
Similar Benefits Pursuant to FASB Statement No. 43, Accounting for
Compensated Absences, resulted in a cumulative effect from an
accounting change of $0.2 million on sabbatical expenses for which
expenses had already been recorded. Management deemed that those
charges from the initial adoption of EITF 06-2 are not related to the
Company's ongoing business and operating performance.