Names Pete J. Mangan as Chief Financial Officer
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.
Web site: http://www.tridentmicro.com/