EX-99.1 2 d312569dex991.htm QUARTERLY AND ANNUAL OPERATING REPORTS FOR THE PERIOD ENDED DECEMBER 31, 2011 Quarterly and Annual Operating Reports for the period ended December 31, 2011

Exhibit 99.1

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)    2011     2011     2010     2011     2010  

Net revenues

    $ 60,359      $ 80,088      $ 118,578      $ 298,349      $ 557,198   

Cost of revenues (1)

      51,940        61,957        95,872        233,920        439,635   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      8,419        18,131        22,706        64,429        117,563   

% of net revenues

      13.9 %      22.6 %      19.1 %      21.6 %      21.1 % 

Research and development expenses

      31,015        36,607        43,575        138,972        175,001   

% of net revenues

      51.4 %      45.7 %      36.7 %      46.6 %      31.4 % 

Selling, general and administrative expenses

      12,173        16,707        17,278        65,263        79,161   

% of net revenues

      20.2 %      20.9 %      14.6 %      21.9 %      14.2 % 

Goodwill impairment

      —          —          —          —          7,851   

% of net revenues

      0.0 %      0.0 %      0.0 %      0.0 %      1.4 % 

Restructuring charges

      1,894        3,496        13,095        10,042        28,261   

% of net revenues

      3.1 %      4.4 %      11.0 %      3.4 %      5.1 % 

Operating loss

      (36,663 )      (38,679 )      (51,242 )      (149,848 )      (172,711 ) 

% of net revenues

      (60.7 )%      (48.3 )%      (43.2 )%      (50.2 )%      (31.0 )% 

Gain (loss) on investment

      —          —          —          2,098        (303 ) 

Gain on acquisition

      —          —          —          —          43,402   

Interest and other income (expense), net

      (1,223 )      435        (1,660 )      5,089        1,819   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loss before income taxes

      (37,886 )      (38,244 )      (52,902 )      (142,661 )      (127,793 ) 

% of net revenues

      (62.8 )%      (47.8 )%      (44.6 )%      (47.8 )%      (22.9 )% 

Provision for income taxes (2)

      6,314        874        877        7,689        1,096   

% of net revenues

      10.5 %      1.1 %      0.7 %      2.6 %      0.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loss

    $ (44,200 )    $ (39,118 )    $ (53,779 )    $ (150,350 )    $ (128,889 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of net revenues

      (73.2 )%      (48.8 )%      (45.4 )%      (50.4 )%      (23.1 )% 

Basic and diluted net loss per share

    $ (0.25 )    $ (0.22 )    $ (0.31 )    $ (0.85 )    $ (0.79 ) 

Shares used in basic and diluted per share computation

      178,905        178,237        174,772        177,393        163,438   

 

(1) Cost of revenues includes inventory related write-downs of $5,195, $6,336, $2,147, $14,442, and $4,771 for the periods shown left to right, respectively.
(2) Provision for income taxes includes deferred tax asset valuation allowances of $4,260 for the three and twelve months ended December 31, 2011.

TRIDENT MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

     December 31,     September 30,     December 31,  
(In thousands)    2011     2011     2010  

ASSETS

       

Current assets

       

Cash and cash equivalents

    $ 54,208      $ 35,928      $ 93,224   

Accounts receivable, net

      25,998        39,475        62,328   

Accounts receivable from related parties

      2,713        5,052        7,337   

Inventories

      12,783        19,018        23,025   

Note receivable from related party

      20,884        20,884        20,884   

Prepaid expenses and other current assets

      11,005        11,463        18,330   
  

 

 

    

 

 

    

 

 

  

Total current assets

      127,591        131,820        225,128   

Property and equipment, net (1,2)

      9,236        25,962        31,566   

Intangible assets, net (2)

      43,913        52,001        82,921   

Long-term receivable from related party

      —          —          1,500   

Other assets

      21,148        27,057        29,826   
  

 

 

    

 

 

    

 

 

  

Total assets

    $ 201,888      $ 236,840      $ 370,941   
  

 

 

    

 

 

    

 

 

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

       

Current liabilities

       

Accounts payable

    $ 13,152      $ 15,365      $ 7,828   

Accounts payable to related parties

      23,395        21,443        26,818   

Accrued expenses and other current liabilities

      49,857        48,438        79,305   

Income taxes payable

      3,085        3,523        2,077   
  

 

 

    

 

 

    

 

 

  

Total current liabilities

      89,489        88,769        116,028   

Long-term income taxes payable

      23,471        22,764        25,476   

Deferred income tax liabilities

      301        200        200   

Other long-term liabilities (1)

      7,878        1,055        4,933   
  

 

 

    

 

 

    

 

 

  

Total liabilities

      121,139        112,788        146,637   
  

 

 

    

 

 

    

 

 

  

Stockholders’ equity

       

Common stock

      183        183        177   

Additional paid-in capital

      441,614        440,717        434,825   

Accumulated deficit

      (361,048 )      (316,848 )      (210,698 ) 
  

 

 

    

 

 

    

 

 

  

Total stockholders’ equity

      80,749        124,052        224,304   
  

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 201,888      $ 236,840      $ 370,941   
  

 

 

    

 

 

    

 

 

  

 

(1) During the three months ended December 31, 2011, Trident entered into an agreement to sell and leaseback its property in Shanghai, China. Property and equipment, net reflects the removal of the net book value of the building, $14,984. Other long-term liabilities includes the deferred gain on the sale of $7,177.
(2) The Company is currently performing the necessary analysis to determine whether its long-lived assets were impaired as of December 31, 2011.

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)    2011     2011     2010     2011     2010  

GAAP Gross profit (1)

    $ 8,419      $ 18,131      $ 22,706      $ 64,429      $ 117,563   

Amortization of acquisition-related intangible assets (2)

      7,498        7,915        9,407        33,290        48,207   

Stock-based compensation expense (3)

      55        82        100        287        372   

Impairment of intangible assets other than goodwill (4)

      —          —          761        —          2,517   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP Gross profit

    $ 15,972      $ 26,128      $ 32,974      $ 98,006      $ 168,659   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of Net revenues

      26.5 %      32.6 %      27.8 %      32.8 %      30.3 % 

GAAP Research and development expenses (R&D)

    $ 31,015      $ 36,607      $ 43,575      $ 138,972      $ 175,001   

Amortization of acquisition-related intangible assets (2)

      (589 )      (627 )      (734 )      (2,576 )      (2,818 ) 

Stock-based compensation expense (3)

      (559 )      (698 )      (927 )      (2,868 )      (3,550 ) 

Impairment of intangible assets other than goodwill (4)

      —          (729 )      —          (1,427 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP Research and development expenses

    $ 29,867      $ 34,553      $ 41,914      $ 132,101      $ 168,633   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of Net revenues

      49.5 %      43.1 %      35.3 %      44.3 %      30.3 % 

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

    $ 12,173      $ 16,707      $ 17,278      $ 65,263      $ 79,161   

Amortization of acquisition-related intangible assets (2)

      —          (318 )      (1,268 )      (2,442 )      (4,690 ) 

Stock-based compensation expense (3)

      (284 )      (763 )      (1,124 )      (2,682 )      (2,987 ) 

Impairment of intangible assets other than goodwill (4)

      112        (4,025 )      —          (3,913 )      —     

Stock options related professional fees (5)

      (15 )      (185 )      (989 )      (553 )      (2,211 ) 

Acquisition-related expenses (6)

      —          —          44        (18 )      (5,293 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP Selling, general and administrative expenses

    $ 11,986      $ 11,416      $ 13,941      $ 55,655      $ 63,980   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of Net revenues

      19.9 %      14.3 %      11.8 %      18.7 %      11.5 % 

GAAP Operating Loss

    $ (36,663 )    $ (38,679 )    $ (51,242 )    $ (149,848 )    $ (172,711 ) 

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

      8,888        15,342        15,266        50,056        72,645   

Restructuring Charges (7)

      1,894        3,496        13,095        10,042        28,261   

Impairment of goodwill (4)

      —          —          —          —          7,851   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP Operating Loss

    $ (25,881 )    $ (19,841 )    $ (22,881 )    $ (89,750 )    $ (63,954 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of Net revenues

      -42.9 %      -24.8 %      -19.3 %      -30.1 %      -11.5 % 

GAAP Net loss

    $ (44,200 )    $ (39,118 )    $ (53,779 )    $ (150,350 )    $ (128,889 ) 

Total operating loss adjustments

      10,782        18,838        28,361        60,098        108,757   

Legal settlements (10)

      —          —          —          (5,412 )      (2,491 ) 

(Gain) loss on investment (9)

      1,153        —          —          (945 )      303   

Gain on acquisition (8)

      —          —          —          —          (43,402 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP Net loss

    $ (32,265 )    $ (20,280 )    $ (25,418 )    $ (96,609 )    $ (65,722 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of Net revenues

      -53.5 %      -25.3 %      -21.4 %      -32.4 %      -11.8 % 

GAAP basic and diluted net income (loss) per share

    $ (0.25 )    $ (0.22 )    $ (0.31 )    $ (0.85 )    $ (0.79 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

GAAP shares - basic and dilutive

      178,905        178,237        174,772        177,393        163,438   

 

(1) Gross profit includes inventory related write-downs of $5,195, $6,336, $2,147, $14,442, and $4,771 for the periods shown left to right, respectively.
(2) 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.
(3) Stock-based compensation expense relates primarily to equity awards such as stock options and restricted stock. This 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.
(4) Charges for impairment of goodwill and intangible assets were $729 for impairment of licenses and $4,025 for impairment of an enterprise resource planning system for the three months ended September 30, 2011. The charges related to the impairment of the enterprise resource planning system were recalculated and reduced in the three months ended December 31, 2011 by $112. Management believes that these charges are not directly associated with the Company’s core operating performance.
(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 purchase price allocation assigned $43,402 to gain on acquisition. Management believes that gain on acquisition is not related to the ongoing business and operating performance of Trident.
(9) (Gain) loss on investments includes $1,153 of taxes related to the sale of Trident’s Shanghai property. 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.