SANTA CLARA, Calif., Feb. 8, 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 Dec. 31, 2009. The company also separately announced that effective today it has completed its acquisition of the TV and Set-Top Box product lines from NXP Semiconductors.
For the quarter, the company reported net revenues of $31.9 million, which compares with net revenues of $31.1 million in the prior sequential quarter and $19.2 million in the same quarter a year ago. The company reported a net loss for the quarter of $23.4 million, or $0.34 per share, on a generally accepted accounting principles (“GAAP”) basis. This compares with a net loss of $17.2 million, or $0.25 per share in the prior sequential quarter and a net loss of $14.6 million, or $0.24 per share, in the same quarter one year ago.
Non-GAAP Results
Non-GAAP net loss for the quarter was $15.6 million, or $0.22 per share, which includes the impact of a $2.8 million write-off of pre-production inventory. This compares with a non-GAAP net loss of $11.6 million, or $0.17 per share, in the prior sequential quarter and a non-GAAP net loss of $6.6 million, or $0.11 per share, in the same quarter a year ago. 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, “Results for the quarter, excluding the disappointing inventory write-off, were in line with our guidance. With the closing today of our acquisition of the NXP product lines, we are ready to look forward to the opportunities we are creating as a result of this transaction. We are now a leading provider in both the digital TV and set-top box markets, with a much larger and more diversified revenue and customer base, a broad and powerful patent portfolio, and two-thirds of our employee base in Asia on day one. We have integration plans, key management, and a vision in place for how we will move ahead as one company from this day forward. We remain committed to the substantial restructuring and crisp execution that will be required to break even by the end of this year, and we already are aligning product roadmaps and account strategies to win new business for 2011 and beyond.”
Outlook
As previously announced, Trident has changed its fiscal year end to December 31. For its new fiscal first quarter ending Mar. 31, 2010, which will include approximately eight weeks of operating results for the newly acquired 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 Mar. 31, 2010:
- Net revenues are expected to be in the range of $85 million to $90 million. Non-GAAP gross margins are expected to be in the range of 21% to 24%.
- Non-GAAP operating expenses are expected to be in the range of $57 million to $60 million, with research and development expenses in the range of $38 million to $40 million and selling, general and administrative expenses of approximately $19 to $20 million.
- Non-GAAP operating loss is expected to be in the range of $36 million to $40 million.
- Provision for income taxes is expected to be approximately $1.0 million.
- The company expects to restructure its operations over the next several quarters, and anticipates that it will incur $1 to $2 million of related restructuring charges in the fiscal first quarter. 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 $120 million to $130 million.
Because the fiscal second quarter ending June 30, 2010 will be the first quarter reflecting the full impact of the acquired product lines, the company also provided updated guidance for that quarter.
- Quarter ending June 30, 2010:
- Net revenues are expected to be in the range of $140 million to $160 million.
- Non-GAAP gross margins are expected to be in the range of 23% to 26%.
- Non-GAAP operating expenses are expected to be in the range of $65 million to $68 million, with research and development expenses in the range of $44 million to $46 million and selling, general and administrative expenses of approximately $21 to $22 million.
- Non-GAAP operating loss is expected to be in the range of $23 million to $27 million.
- Provision for income taxes is expected to be approximately $1 million.
- Restructuring charges are expected to be in the range of $18 million to $22 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 $90 million to $100 million.
Investor Conference Call
Management will host a conference call at 2:00 pm Pacific Time today. The domestic dial in is 866-202-3048; the international dial-in is 617-213-8843. Passcode: 96447383. A replay of the conference call will be available for two weeks and will be accessible by calling 888-286-8010 (domestic) or 617-801-6888 (international) using access code 75194851. This call is being webcast by Thomson/CCBN and can be accessed at Trident’s web site at: http://www.tridentmicro.com. The webcast also is being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com; 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 first and second quarters 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, 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 Santa Clara, 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: http://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
For More Information
John Swenson
Director, Corporate Finance & Investor Relations
Tel: 408-764-8899
Email: john.swenson@tridentmicro.com
Web site: http://www.tridentmicro.com
TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, September 30,
(In thousands) 2009 2009
---- ----
ASSETS
Current assets
Cash and cash equivalents $147,995 $160,955
Accounts receivable, net 4,917 17,789
Inventories 14,536 10,611
Prepaid expenses and other current assets 13,627 11,047
------ ------
Total current assets 181,075 200,402
Property and equipment, net 26,168 26,696
Intangible assets, net 5,635 6,660
Goodwill 7,851 7,848
Other assets 7,764 9,312
-------- --------
Total assets $228,493 $250,918
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $18,883 $13,060
Accrued expenses and other current
liabilities 29,469 24,993
Income taxes payable 1,696 13,511
----- ------
Total current liabilities 50,048 51,564
Long-term income taxes payable 22,262 22,098
Deferred income tax liabilities 94 81
------ ------
Total liabilities 72,404 73,743
------ ------
Stockholders' equity
Capital stock 237,898 235,613
(Accumulated deficit) (81,809) (58,438)
------- -------
Total stockholders' equity 156,089 177,175
-------- --------
Total liabilities and stockholders'
equity $228,493 $250,918
======== ========
TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
(In thousands, December September December December December
except per 31, 30, 31, 31, 31,
share data) 2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Net revenues $31,918 $31,093 $19,215 $63,011 $53,997
Cost of
revenues 26,673 20,592 13,045 47,265 35,752
------ ------ ------ ------ ------
Gross profit 5,245 10,501 6,170 15,746 18,245
% of net
revenues 16.4% 33.8% 32.1% 25.0% 33.8%
Research and
development
expenses 16,162 16,350 12,715 32,512 25,780
% of net
revenues 50.6% 52.6% 66.2% 51.6% 47.7%
Selling,
general and
administrative
expenses 11,143 8,837 8,465 19,980 18,570
% of net
revenues 34.9% 28.4% 44.1% 31.7% 34.4%
Restructuring
charges 50 1,508 761 1,558 761
% of net
revenues .2% 4.8% 4.0% 2.5% 1.4%
-- --- --- --- ---
Operating loss (22,110) (16,194) (15,771) (38,304) (26,866)
% of net
revenues (69.3)% (52.1)% (82.1)% (60.8)% (49.8)%
Loss on
investment in /
dividend
income from
UMC stock - - - - (8,187)
Interest and
other income
(expense), net (561) (533) 2,057 (1,094) 5,231
---- ---- ----- ------ -----
Loss before
income taxes (22,671) (16,727) (13,714) (39,398) (29,822)
% of net
revenues (71.0)% (53.8)% (71.4)% (62.5)% (55.2)%
Provision for
(benefit from)
income taxes 700 429 870 1,129 2,731
% of net
revenues 2.2% 1.4% 4.5% 1.8% 5.1%
--- --- --- --- ---
Net loss $(23,371) $(17,156) $(14,584) $(40,527) $(32,553)
======== ======== ======== ======== ========
% of net
revenues (73.2)% (55.2)% (75.9)% (64.3)% (60.3)%
Basic and
diluted net
loss per share $(0.34) $(0.25) $(0.24) $(0.58) $(0.53)
Shares used in
basic and
diluted per
share
computation 69,506 69,237 61,612 69,372 61,382
TRIDENT MICROSYSTEMS, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
(In thousands, December September December December December
except per share 31, 30, 31, 31, 31,
data) 2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Net revenues $31,918 $31,093 $19,215 $63,011 53,997
Cost of revenues 25,579 19,614 11,835 45,193 32,479
------ ------ ------ ------ ------
Gross profit 6,339 11,479 7,380 17,818 21,518
% of net revenues 19.9% 36.9% 38.4% 28.3% 39.9%
Research and
development
expenses 15,217 15,631 10,169 30,848 21,890
% of net revenues 47.7% 50.3% 52.9% 49.0% 40.5%
Selling, general and
administrative expenses 5,437 6,444 5,199 11,881 12,170
% of net revenues 17.0% 20.7% 27.1% 18.9% 22.5%
---- ---- ---- ---- ----
Operating loss (14,315) (10,596) (7,988) (24,911) 12,542)
% of net revenues (44.8)% (34.1)% (41.6)% (39.5)% (23.2)%
Interest and other
income (expense), net (561) (533) 2,230 (1,094) 5,346
---- ---- ----- ------ -----
Loss before income taxes (14,876) (11,129) (5,758) (26,005) (7,196)
% of net revenues (46.6)% (35.8)% (30.0)% (41.3)% (13.3)%
Provision for income
taxes 700 429 870 1,129 2,731
% of net revenues 2.2% 1.4% 4.5% 1.8% 5.1%
--- --- --- --- ---
Net loss (15,576) (11,558) (6,628) (27,134) (9,927)
======= ======= ====== ======= ======
(48.8)% (37.2)% (34.5)% (43.1)% (18.4)%
Basic and diluted
net loss per share $(0.22) $(0.17) $(0.11) $(0.39) $(0.16)
Shares used in basic and
diluted per share
computation 69,506 69,237 61,612 69,372 61,382
TRIDENT MICROSYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
(In thousands, December September December December December
except per share 31, 30, 31, 31, 31,
data) 2009 2009 2008 2009 2008
---- ---- ---- ---- ----
GAAP gross profit $5,245 $10,501 $6,170 $15,746 $18,245
Amortization of
acquisition-
related
intangible
assets (1) 974 975 1,065 1,949 2,171
Stock-based
compensation
expense (2) 120 3 138 123 293
Impairment of
goodwill and
intangible
assets (3) - - - - 383
Restructuring
Charges - - 7 - 7
Prepaid
royalties
adjustment - - - - 419
--- --- --- --- ---
Non-GAAP gross
profit $6,339 $11,479 $7,380 $17,818 $21,518
====== ======= ====== ======= =======
GAAP Research
and development
expenses $16,162 $16,350 $12,715 $32,512 $25,780
Stock-based
compensation
expense (2) 945 719 2,736 1,664 4,489
Software license
fees (4) - - (190) - (599)
--- --- ---- --- ----
Non-GAAP
Research and
development
expenses $15,217 $15,631 $10,169 $30,848 $21,890
======= ======= ======= ======= =======
GAAP Selling,
general and
administrative
expenses $11,143 $8,837 $8,465 $19,980 $18,570
Amortization of
acquisition-
related
intangible
assets (1) 51 51 134 102 271
Stock-based
compensation
expense (2) 1,146 521 1,054 1,667 1,828
Impairment of
goodwill and
intangible
assets (3) - - - - 4
Stock options
related
professional
fees (5) (66) (979) 2,078 (1,045) 4,297
Acquisition-
related expenses
(6) 4,575 2,800 - 7,375 -
----- ----- --- ----- ---
Non-GAAP
Selling, general
and
administrative
expenses $5,437 $6,444 $5,199 $11,881 $12,170
====== ====== ====== ======= =======
GAAP net loss $(23,371) $(17,156) $(14,584) $(40,527) $(32,553)
Gross profit
reconciliation 1,094 978 1,210 2,072 3,273
Research and
development
expenses
reconciliation 945 719 2,546 1,664 3,890
Selling, general
and
administrative
expenses
reconciliation 5,706 2,393 3,266 8,099 6,400
Restructuring
Charges 50 1,508 761 1,558 761
Loss of sale of
UMC stock and
other (7) - - 173 - 8,302
Non-GAAP net loss $(15,576) $(11,558) $(6,628) $(27,134) $(9,927)
======== ======== ======= ======== =======
GAAP basic and
diluted net loss
per share $(0.34) $(0.25) $(0.24) $(0.58) $(0.53)
====== ====== ====== ====== ======
Non-GAAP basic
and diluted net
loss per share $(0.22) $(0.17) $(0.11) $(0.39) $(0.16)
====== ====== ====== ====== ======
Shares used in
basic and
diluted per
share
computation 69,506 69,237 61,612 69,372 61,382
====== ====== ====== ====== ======
(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 the capital loss on the sale of UMC stock
and the dividend income received from UMC are not directly related
to the ongoing business and operating performance of Trident.