SANTA CLARA, Calif.,
For the second quarter of fiscal 2008, net income of
Non-GAAP net income for the second quarter of fiscal 2008 was
"Our second quarter results mark a period of solid financial performance
for Trident. We exceeded the top end of our revenue guidance, held gross
margins flat with the previous quarter, delivered non-GAAP net income of
"Going forward, Trident will be in a period of product transition as we move to develop and deliver more SoC solutions. We foresee a more competitive environment ahead and expect our results to be impacted in calendar year 2008. Our intention is to leverage our technology leadership and focus our resources on implementing an aggressive plan for strategic growth in 2009."
Current Outlook
Trident's outlook for the second half of fiscal 2008 is based on current expectations and subject to various factors, including those set forth in the Forward-Looking Statement below.
-- Trident expects net revenues for the second half of fiscal 2008 to be in the range of approximately $100-110 million. -- Non-GAAP gross margins are projected to decrease to the 45-47% range for this period. As the company's SoC products ramp and the market matures, in the future, gross margins are projected to reach a level closer to 40%. -- Non-GAAP R&D expenses, for the second half of fiscal 2008, are projected to be approximately $11-14 million per quarter driven primarily by increased spending on NRE and further investing in engineering resources in the company's China development centers. -- Non-GAAP SG&A expenses are projected to remain flat at approximately $6-7 million per Quarter in the second half of fiscal 2008.
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 compensation expense, expenses related to the stock option investigation and related matters and those related to the acquisition of Trident's minority interest held in its Taiwanese subsidiary ("TTI"), including amortization of intangible assets, capital gains and dividend income. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in a table following non-GAAP Consolidated Statements of Income.
Investor Conference Call
Trident will host a conference call today,
Forward-Looking Information
This press release contains forward-looking statements, including statements regarding financial expectations for the second half of fiscal year 2008, the status of the market, Trident's market share, Trident's ability to develop and deliver SoC solutions, Trident's ability to leverage its technology leadership to take advantage of the market changes and achieve its aggressive plan for strategic growth in 2009, 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 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 failure 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
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.
Trident Microsystems, Inc. Condensed Consolidated Statements of Income (Unaudited) Three Months Ended (In thousands, except per December 31, September 30, December 31, share data) 2007 2007 2006 Net revenues $74,984 $88,174 $68,260 Cost of revenues 38,602 45,035 33,647 Gross profit 36,382 43,139 34,613 Gross margin 48.5% 48.9% 50.7% Research and development expenses 12,633 13,912 10,973 % of net revenues 16.8% 15.8% 16.1% Selling, general and administrative expenses 13,970 17,301 12,864 % of net revenues 18.6% 19.6% 18.8% Income from operations 9,779 11,926 10,776 % of net revenues 13.0% 13.5% 15.8% Interest and other income, net 2,387 3,692 1,301 Income before income taxes 12,166 15,618 12,077 % of net revenues 16.2% 17.7% 17.7% Provision for income taxes 4,916 5,559 4,848 % of net revenues 6.6% 6.3% 7.1% Income before cumulative effect of change in accounting principle 7,250 10,059 7,229 % of net revenues 9.7% 11.4% 10.6% Cumulative effect of change in accounting principle - - - % of net revenues 0.0% 0.0% 0.0% Net income $7,250 $10,059 $7,229 % of net revenues 9.7% 11.4% 10.6% Basic net income per share Prior to cumulative effect of change in accounting principle $0.12 $0.17 $0.13 Cumulative effect of change in accounting principle - - - Basic net income per share $0.12 $0.17 $0.13 Common shares used in computing basic per share amounts 59,269 58,851 57,748 Diluted net income per share Prior to cumulative effect of change in accounting principle $0.12 $0.16 $0.11 Cumulative effect of change in accounting principle - - - Diluted net income per share $0.12 $0.16 $0.11 Common and common equivalent shares used in computing diluted per share amounts under GAAP basis 62,747 63,605 63,501 Six Months Ended (In thousands, except per December 31, December 31, share data) 2007 2006 Net revenues $163,158 $139,623 Cost of revenues 83,637 69,678 Gross profit 79,521 69,945 Gross margin 48.7% 50.1% Research and development expenses 26,545 20,376 % of net revenues 16.3% 14.6% Selling, general and administrative expenses 31,271 25,523 % of net revenues 19.2% 18.3% Income from operations 21,705 24,046 % of net revenues 13.3% 17.2% Interest and other income, net 6,079 3,593 Income before income taxes 27,784 27,639 % of net revenues 17.0% 19.8% Provision for income taxes 10,475 9,707 % of net revenues 6.4% 7.0% Income before cumulative effect of change in accounting principle 17,309 17,932 % of net revenues 10.6% 12.8% Cumulative effect of change in accounting principle - (190) % of net revenues 0.0% (0.1)% Net income $17,309 $17,742 % of net revenues 10.6% 12.7% Basic net income per share Prior to cumulative effect of change in accounting principle $0.30 $0.31 Cumulative effect of change in accounting principle - - Basic net income per share $0.30 $0.31 Common shares used in computing basic per share amounts 58,617 57,527 Diluted net income per share Prior to cumulative effect of change in accounting principle $0.28 $0.28 Cumulative effect of change in accounting principle - - Diluted net income per share $0.28 $0.28 Common and common equivalent shares used in computing diluted per share amounts under GAAP basis 62,924 63,316 Trident Microsystems, Inc. Non-GAAP Condensed Consolidated Statements of Income (Unaudited) Three Months Ended (In thousands, except per December 31, September 30, December 31, share data) 2007 2007 2006 Net revenues $74,984 $88,174 $68,260 Cost of revenues 37,067 43,398 32,127 Gross profit 37,917 44,776 36,133 Gross margin 50.6% 50.8% 52.9% Research and development expenses 9,036 9,858 8,659 % of net revenues 12.1% 11.2% 12.7% Selling, general and administrative expenses 6,144 7,135 5,829 % of net revenues 8.2% 8.1% 8.5% Income from operations 22,737 27,783 21,645 % of net revenues 30.3% 31.5% 31.7% Interest and other income, net 1,628 1,909 1,301 Income before income taxes 24,365 29,692 22,946 % of net revenues 32.5% 33.7% 33.6% Provision for income taxes 4,916 5,559 4,848 % of net revenues 6.6% 6.3% 7.1% Net income 19,449 24,133 18,098 % of net revenues 25.9% 27.4% 26.5% Basic net income per share $0.33 $0.41 $0.31 Common shares used in computing basic per share amounts 59,269 58,851 57,748 Diluted net income per share $0.30 $0.37 $0.28 Common and common equivalent shares used in computing diluted per share amounts under non-GAAP basis (a) 63,988 65,148 64,661 Six Months Ended (In thousands, except per December 31, December 31, share data) 2007 2006 Net revenues $163,158 $139,623 Cost of revenues 80,465 66,672 Gross profit 82,693 72,951 Gross margin 50.7% 52.2% Research and development expenses 18,894 15,885 % of net revenues 11.6% 11.4% Selling, general and administrative expenses 13,279 12,805 % of net revenues 8.1% 9.2% Income from operations 50,520 44,261 % of net revenues 31.0% 31.7% Interest and other income, net 3,537 3,593 Income before income taxes 54,057 47,854 % of net revenues 33.1% 34.3% Provision for income taxes 10,475 9,707 % of net revenues 6.4% 7.0% Net income 43,582 38,147 % of net revenues 26.7% 27.3% Basic net income per share $0.74 $0.66 Common shares used in computing basic per share amounts 58,617 57,527 Diluted net income per share $0.68 $0.59 Common and common equivalent shares used in computing diluted per share amounts under non-GAAP basis (a) 64,075 64,603 (a) 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 in the prior periods have been adjusted to reflect such exclusion. Trident Microsystems, Inc. A reconciliation between net income on a GAAP basis and a non-GAAP basis is as follows: Three Months Ended (In thousands, except per December 31, September 30, December 31, share data, unaudited) 2007 2007 2006 GAAP net income $7,250 $10,059 $7,229 Amortization of intangibles Cost of revenues 1,485 1,486 1,385 Selling, general and administrative expenses 167 167 134 Total amortization of intangibles (1) 1,652 1,653 1,519 Stock-based compensation expense Cost of revenues 50 151 135 Research and development 3,597 4,054 2,314 Selling, general and administrative expenses 4,756 6,238 1,179 Total stock-based compensation expense (2) 8,403 10,443 3,628 Interest and other income, net (3) (759) (1,783) - Stock options related professional fees 2,903 3,761 5,722 Cumulative effect of change in accounting principle (4) - - - Non-GAAP net income 19,449 24,133 18,098 Basic net income per share $0.33 $0.41 $0.31 Common shares used in computing basic per share amounts 59,269 58,851 57,748 Diluted net income per share $0.30 $0.37 $0.28 Common and common equivalent shares used in computing diluted per share amounts under non-GAAP basis 63,988 65,148 64,661 Six Months Ended (In thousands, except per December 31, December 31, share data, unaudited) 2007 2006 GAAP net income $17,309 $17,742 Amortization of intangibles Cost of revenues 2,971 2,770 Selling, general and administrative expenses 334 268 Total amortization of intangibles (1) 3,305 3,038 Stock-based compensation expense Cost of revenues 201 236 Research and development 7,651 4,491 Selling, general and administrative expenses 10,994 2,501 Total stock-based compensation expense (2) 18,846 7,228 Interest and other income, net (3) (2,542) - Stock options related professional fees 6,664 9,949 Cumulative effect of change in accounting principle (4) - 190 Non-GAAP net income 43,582 38,147 Basic net income per share $0.74 $0.66 Common shares used in computing basic per share amounts 58,617 57,527 Diluted net income per share $0.68 $0.59 Common and common equivalent shares used in computing diluted per share amounts under non-GAAP basis 64,075 64,603 (1) Amortization of intangible assets represents the amortization of identifiable intangible assets, acquired from the purchase of the minority interests of the Company's TTI subsidiary during fiscal year ended June 30, 2005. 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 an 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) Capital gain and dividend income are excluded from the non-GAAP net income calculation. Management believes that such dividend income and 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 and dividend income 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. (4) 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 ongoing business and operating performance of Trident. Trident Microsystems, Inc. Condensed Consolidated Balance Sheets (Unaudited) December 31, September 30, December 31, (In thousands) 2007 2007 2006 ASSETS Current assets Cash and cash equivalents $185,512 $160,261 $137,554 Short-term investment - UMC 36,233 41,960 51,990 Short-term investment - Others 717 1,435 - Accounts receivable, net 15,747 29,131 8,665 Inventories 12,092 19,150 12,648 Prepaid expenses and other current assets 17,594 22,790 12,640 Deferred income taxes 83 83 622 Total current assets 267,978 274,810 224,119 Property and equipment, net 23,143 22,441 6,772 Intangible assets, net 9,540 11,192 16,152 Investments - other 2,079 2,597 4,280 Deferred income taxes 338 338 947 Other assets 5,940 8,573 12,979 Total assets $309,018 $319,951 $265,249 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $13,704 $27,474 $14,608 Accrued expenses 21,608 28,383 32,621 Income taxes payable 19,618 17,516 37,224 Total current liabilities 54,930 73,373 84,453 Long-term income taxes payable (1) 21,937 21,404 - Deferred income tax liabilities 83 1,557 1,604 Total liabilities 76,950 96,334 86,057 Stockholders' equity Capital stock 197,907 191,851 169,238 Retained earnings 36,107 28,857 6,422 Accumulated other comprehensive income/(loss) (1,946) 2,909 3,532 Total stockholders' equity 232,068 223,617 179,192 Total liabilities and stockholders' equity $309,018 $319,951 $265,249 (1) 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 $21.9 million to "Long-term income taxes payable".
SOURCE Trident Microsystems, Inc.