Trident Microsystems Reports Results for Fourth Quarter Ended Dec. 31, 2010

News provided by

Trident Microsystems, Inc.

Feb 03, 2011, 04:00 ET

SUNNYVALE, Calif., Feb. 3, 2011 /PRNewswire/ -- Trident Microsystems, Inc. (Nasdaq: TRID), a leader in high-performance semiconductor system solutions for the connected home, today announced results for its fourth quarter ended Dec. 31, 2010.

For the quarter, the company reported net revenues of $118.6 million, which compares with $176.6 million in the prior sequential quarter and $31.9 million in the quarter ended Dec. 31, 2009.  On a generally accepted accounting principles ("GAAP") basis, the company reported a net loss for the quarter of $53.8 million, or $0.31 per share.  This compares with a net loss of $17.5 million, or $0.10 per share in the prior sequential quarter and a net loss of $23.4 million, or $0.34 per share, in the quarter ended Dec. 31, 2009.  

Non-GAAP Results

Non-GAAP net loss for the quarter was $25.4 million, or $0.15 per share, which compares with a non-GAAP net loss of $0.0 million, or $0.00 per share, in the prior sequential quarter and a non-GAAP net loss of $15.6 million, or $0.22 per share, in the quarter ended Dec. 31, 2009.  A detailed reconciliation between GAAP and non-GAAP net income (loss) is provided as a supplement to the attached financial statements.

Philippe Geyres, Trident's interim chief executive officer and board member, said, "The disappointing results for the quarter reflected the industry-wide inventory correction in LCD TV, which particularly impacted the mid-range and high-end of our product line, as well as softness in our legacy standard definition retail set-top box products and delayed customer ramps of certain new set-top box programs.  These same factors are expected to negatively impact our revenues in the first quarter of 2011, which is seasonally our weakest period."

Mr. Geyres continued, "In the near term, we are focused on serving customers, securing designs for 2012 revenues, and continuing our integration activities to lower the breakeven point.  At the same time, we are assessing how best to leverage Trident's technology assets and market presence for profitable growth.  The first half of 2011 will be very challenging.  We expect to ramp new products and customer programs in the second half and continue ongoing cost reductions, with the goal of positioning the company for cash flow positive operations in the second half of the year and greater success in 2012."

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.  For the quarter ending Mar. 31, 2011, the company offered the following guidance:

  • Net revenues are expected to be in the range of $75 million to $85 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 $50 million to $54 million, with research and development expenses in the range of $34 million to $37 million and selling, general and administrative expenses in the range of $16 million to $17 million.  
  • Non-GAAP operating loss is expected to be in the range of $27 million to $32 million.
  • Provision for income taxes is expected to be approximately $1 million.
  • Adjustments to GAAP net income are expected to be in the range of $20 million to $23 million, including cash restructuring charges in the range of $6 million to $8 million.  
  • Cash balance as of the end of the quarter is expected to be in the range of $55 million to $65 million.

Investor Conference Call

Date:   Thursday, Feb. 3, 2011

Time:   2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)

Domestic Dial-In:   866-788-0547

International Dial-In:  857-350-1685

Passcode: 70497357

A replay of the conference call will be available for two weeks following the call and will be accessible by calling 888-286-8010 (domestic) or +1-617-801-6888 (international) using access code 98007998.  This call is being webcast by Thomson/CCBN and can be accessed at Trident's web site at: http://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 income (loss) that is GAAP net income (loss) adjusted to exclude certain costs, expenses and gains.  Non-GAAP net loss, non-GAAP gross margin and non-GAAP expenses give 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, these non-GAAP measures as a percentage of net revenues are used to identify key trends in performance and measure key results against objectives.  These non-GAAP measures are 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 (loss) by adjusting GAAP net income (loss) for acquisition-related expenses, stock-based compensation expense, expenses related to the stock option investigation and related matters, legal settlements, restructuring charges, expenses related to software license fees, 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 income (loss) is provided in an attached table.

Forward-Looking Information  

This press release contains forward-looking statements, including statements regarding financial expectations for the fourth quarter of fiscal year 2010, expected restructuring activity, and our outlook for 2011. 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 and IP from NXP, our ability to reduce expenses, the timing of new 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 TV and Set Top Box semiconductor markets and our ability to retain key employees globally. 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 platform solutions that enhance the consumer experience in the Connected Home.  As one of the top-three semiconductor providers to both the TV and set-top box markets, Trident's solutions can be found in the products of leading OEMs and channel partners worldwide.  The company's extensive IP portfolio of more than 2,000 patents has been driving key innovations in image quality, 3D TV, low power consumption, and 45nm designs. 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 STATEMENTS OF OPERATIONS

(Unaudited)













Three Months Ended

Twelve Months Ended


December 31,

September 30,

December 31,

December  31,

December  31,

(In thousands, except per share data)

2010

2010

2009

2010

2009

Net revenues

$118,578

$176,568

$31,918

$557,198

$84,775

Cost of revenues

95,872

128,398

26,673

439,635

63,946

Gross profit

22,706

48,170

5,245

117,563

20,829

% of net revenues

19.1%

27.3%

16.4%

21.1%

24.6%

Research and development expenses

43,575

44,709

16,162

175,001

59,748

% of net revenues

36.7%

25.3%

50.6%

31.4%

70.5%

Selling, general and administrative expenses

17,278

19,459

11,143

79,161

31,027

% of net revenues

14.6%

11.0%

34.9%

14.2%

36.6%

In-process research and development

-

-

-

-

697

% of net revenues

0.0%

0.0%

0.0%

0.0%

0.8%

Goodwill impairment

0

0

0

7,851

1,432

% of net revenues

0.0%

0.0%

0.0%

1.4%

1.7%

Restructuring charges

13,095

2,301

50

28,261

1,607

% of net revenues

11.0%

1.3%

0.2%

5.1%

1.9%

Operating loss

(51,242)

(18,299)

(22,110)

(172,711)

(73,682)

% of net revenues

(43.2)%

(10.4)%

(69.3)%

(31.0)%

(86.9)%

Loss on investment


0

(94)

-

(303)

-

Gain on acquisition


-

-

-

43,402

-

Interest and other income (expense), net

(1,660)

2,628

(561)

1,819

(613)

Loss before income taxes

(52,902)

(15,765)

(22,671)

(127,793)

(74,295)

% of net revenues

(44.6)%

(8.9)%

(71.0)%

(22.9)%

(87.6)%

Provision for (benefit from) income taxes


877

1,749

700

1,096

3,911

% of net revenues

0.7%

1.0%

2.2%

0.2%

4.6%

Net loss

($53,779)

($17,514)

($23,371)

($128,889)

($78,206)

% of net revenues

(45.4)%

(9.9)%

(73.2)%

(23.1)%

(92.3)%











Basic and diluted net loss per share

($0.31)

($0.10)

($0.34)

($0.79)

($1.18)

Shares used in basic and diluted per share computation

174,772

174,553

69,506

163,438

66,482

TRIDENT MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)











December 31,

September 30,

December 31,

(In thousands)

2010

2010

2009
















ASSETS





Current assets





Cash and cash equivalents

$  93,224

$  102,711

$  147,995

Accounts receivable, net

62,328

96,106

4,582

Accounts receivable from related parties

7,337

9,085

-

Inventories

23,025

26,998

14,536

Note receivable from related party

20,884

20,884

-

Prepaid expenses and other current assets

18,330

15,419

7,357










Total current assets

225,128

271,203

174,470








Property and equipment, net

31,566

30,776

26,168

Goodwill

-

-

7,851

Intangible assets, net

82,921

94,330

5,635

Long-term note receivable from related party

-

2,500

-

Other assets

31,326

25,064

14,369










Total assets

$370,941

$423,873

$228,493








LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities





Accounts payable

$  7,828

$  12,494

$  18,883

Accounts payable to related parties

26,818

28,364

2,401

Accrued  expenses and other current liabilities

79,305

74,907

27,068

Income taxes payable

2,077

2,651

1,696










Total current liabilities

116,028

118,416

50,048

Long-term income taxes payable

25,476

23,495

22,262

Deferred income tax liabilities

200

94

94

Other long-term liabilities

4,933

6,024

-










Total liabilities

146,637

148,029

72,404








Stockholders' equity





Preferred stock

-

-

-

Common stock

177

177

71

Additional paid-in capital

434,825

432,586

237,827

Accumulated deficit

(210,698)

(156,919)

(81,809)










Total stockholders' equity

224,304

275,844

156,089










Total liabilities and stockholders' equity

$370,941

$423,873

$228,493

TRIDENT MICROSYSTEMS, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)









Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December  31,

(In thousands, except per share data)

2010

2010

2009

2010

2009











GAAP Gross profit

$  22,706

$  48,170

$    5,245

$  117,563

$  20,829

 Amortization of acquisition-related intangible assets (1)

9,407

11,612

974

48,207

3,359

 Stock-based compensation expense (2)

100

82

120

372

417

 Impairment of intangible assets other than goodwill (3)

761

(337)

-

2,517

-

Non-GAAP Gross profit

$  32,974

$  59,527

$    6,339

$  168,659

$  24,605

% of Net revenues

27.8%

33.7%

19.9%

30.3%

29.0%











GAAP Research and development expenses (R&D)

$  43,575

$  44,709

$  16,162

$  175,001

$  59,748

 Amortization of acquisition-related intangible assets (1)

(734)

(775)

-

(2,818)

(719)

 Stock-based compensation expense (2)

(927)

(841)

(945)

(3,550)

(3,995)

 Impairment of intangible assets other than goodwill (3)

-

-

-

-

(1,706)

 Software license fees (4)

-

-

-

-

788

Non-GAAP Research and development expenses

$  41,914

$  43,093

$  15,217

$  168,633

$  54,116

% of Net revenues

35.3%

24.4%

47.7%

30.3%

63.8%











GAAP Selling, general and administrative expenses (SG&A)

$  17,278

$  19,459

$  11,143

$    79,161

$  31,027

 Amortization of acquisition-related intangible assets (1)

(1,268)

(1,329)

(51)

(4,690)

(229)

 Stock-based compensation expense (2)

(1,124)

(938)

(1,146)

(2,987)

(4,386)

 Stock options related professional fees (5)

(989)

(471)

66

(2,211)

4,016

 Acquisition-related expenses (6)

44

(188)

(4,575)

(5,293)

(7,375)

Non-GAAP Selling, general and administrative expenses

$  13,941

$  16,533

$    5,437

$    63,980

$  23,053

% of Net revenues

11.8%

9.4%

17.0%

11.5%

27.2%











GAAP Operating Loss

$ (51,242)

$ (18,299)

$ (22,110)

$ (172,711)

$ (73,682)

Total of above adjustments to Gross profit, R&D and SG&A

15,266

15,899

7,745

72,645

17,382

 In-process research and development

-

-

-

-

697

 Restructuring Charges (7)

13,095

2,301

50

28,261

1,607

 Impairment of goodwill (3)

-

-

-

7,851

1,432

Non-GAAP Operating Loss

$ (22,881)

$        (99)

$ (14,315)

$   (63,954)

$ (52,564)

% of Net revenues

-19.3%

-0.1%

-44.8%

-11.5%

-62.0%






















GAAP Net loss

$ (53,779)

$ (17,514)

$ (23,371)

$ (128,889)

$ (78,206)

Total operating loss adjustments

28,361

18,200

7,795

108,757

20,421

 Legal settlements (10)

-

(817)

-

(2,491)

-

(Gain) loss on investment (9)

-

94

-

303

(19)

(Gain) on acquisition (8)

-

-

-

(43,402)

-

Non-GAAP Net loss

$ (25,418)

$        (37)

$ (15,576)

$   (65,722)

$ (57,804)

% of Net revenues

-21.4%

0.0%

-48.8%

-11.8%

-68.2%






















GAAP basic and diluted net loss per share

$     (0.31)

$     (0.10)

$     (0.34)

$       (0.79)

$     (1.18)

GAAP shares - basic and dilutive

174,772

174,553

69,506

163,438

66,482

































(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) The preliminary purchase price allocation assigned $48.5 million to gain on acquisition. Subsequently, in accordance with applicable

accounting guidance, the preliminary estimate was reduced by $5.1 million as a result of new information received by the Company

subsequent to March 31, 2010.  Management believes that gain on acquisition is not related to the ongoing business and operating performance of Trident.  

(9)  Management believes that (Gain) loss on investments are not related to the ongoing business and operating performance of Trident.  

(10)  Management believes that legal settlements are not related to the ongoing business and operating performance of Trident.  

SOURCE Trident Microsystems, Inc.

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