1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205490
FORM 10-Q
(Mark one)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to ____________
Commission file number: 0-20784
TRIDENT MICROSYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 77-0156584
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
2450 Walsh Ave. Santa Clara, California 95051-1303
--------------------------------------------------
(Address of principal executive offices) (Zip code)
(408) 496-1085
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of the registrant's $0.001 par value Common Stock
outstanding at March 31, 2000 was 13,812,301.
This document (including exhibits) contains 22 pages.
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TRIDENT MICROSYSTEMS, INC.
INDEX
Page
----
PART I: FINANCIAL INFORMATION
Item 1: Unaudited Financial Information
Condensed Consolidated Balance Sheet - March 31, 2000 (Unaudited) and
June 30, 1999 3
Condensed Consolidated Statement of Operations for the Three Months and Nine Months
Ended March 31, 2000 and 1999 (Unaudited) 4
Condensed Consolidated Statement of Cash Flows for the Nine Months
Ended March 31, 2000 and 1999 (Unaudited) 5
Notes to the Condensed Consolidated Financial Statements (Unaudited) 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3: Quantitative and Qualitative Disclosures About Market Risk Not Applicable
PART II: OTHER INFORMATION
Item 1: Legal Proceedings 18
Item 2: Changes in Securities Not Applicable
Item 3: Defaults upon Senior Securities Not Applicable
Item 4: Submission of Matters to Vote by Security Holders Not Applicable
Item 5: Other Information 20
Item 6: Exhibits and Reports on Form 8-K 21
Signatures 22
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TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, UNAUDITED)
ASSETS
March 31, June 30,
2000 1999
--------- ---------
Current assets:
Cash, cash equivalents $ 36,632 $ 32,469
Short-term investments 117,830 --
Accounts receivable, net 10,047 11,029
Inventories 8,199 4,681
Prepaid expenses and other assets 2,105 4,416
--------- ---------
Total current assets 174,813 52,595
========= =========
Property and equipment, net 4,239 6,113
Long-term investment 57,658 49,289
Other assets 4,046 2,913
--------- ---------
Total assets $ 240,756 $ 110,910
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,326 $ 6,267
Accrued expenses and other liabilities 12,318 7,153
Current portion of obligation under capital lease 91 384
Income taxes payable 50,972 1,293
--------- ---------
Total current liabilities 69,707 15,097
Deferred income taxes 2,350 2,350
Obligations under capital lease 55 82
Minority interest in subsidiary 726 --
--------- ---------
Total liabilities 72,838 17,529
Stockholders' equity:
Common stock and additional paid-in capital 49,936 46,977
Retained earnings 116,690 50,529
Accumulated other comprehensive: gain 5,417 --
Treasury stock, at cost (4,125) (4,125)
--------- ---------
Total stockholders' equity 167,918 93,381
--------- ---------
Total liabilities and stockholders' equity $ 240,756 $ 110,910
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
--------- -------- --------- --------
Net sales $ 32,144 $ 23,253 $ 91,033 $ 67,781
Cost of sales 22,867 16,126 63,246 45,640
--------- -------- --------- --------
Gross profit 9,277 7,127 27,787 22,141
Research and development expenses 6,927 7,244 19,960 20,074
Sales, general and administrative expenses 4,406 4,142 12,258 11,872
--------- -------- --------- --------
Income (loss) from operations (2,056) (4,259) (4,431) (9,805)
Gain on investments, net 115,135 -- 115,135 --
Interest income, net 475 472 1,529 1,552
--------- -------- --------- --------
Income (loss) before income taxes 113,554 (3,787) 112,233 (8,253)
Provision for income taxes 46,068 -- 46,072 --
--------- -------- --------- --------
Net income (loss) $ 67,486 $ (3,787) $ 66,161 $ (8,253)
========= ======== ========= ========
Basic earnings (loss) per share $ 4.94 $ (0.29) $ 4.94 $ (0.64)
========= ======== ========= ========
Shares used in computing
per share amounts 13,669 12,998 13,386 12,961
========= ======== ========= ========
Diluted earnings (loss) per share $ 4.28 $ (0.29) $ 4.29 $ (0.64)
========= ======== ========= ========
Shares used in computing diluted
per share amounts 15,782 12,998 15,438 12,961
========= ======== ========= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
March 31,
------------------------
2000 1999
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 66,161 $ (8,253)
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 2,606 3,119
Provision for doubtful accounts and sales returns 1,602 126
Non-cash gain on investments (115,135) --
Changes in assets & liabilities:
Accounts receivable (620) (4,000)
Inventories (3,518) 6,309
Prepaid expenses and other current assets 2,312 (150)
Other assets 513 (73)
Accounts payable 59 2,537
Accrued expenses and other liabilities 5,164 117
Income taxes payable 46,072 437
--------- --------
Net cash provided by (used in) operating activities 5,216 169
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of short-term investments, net -- 7,831
Purchases of investments (3,646)
Purchase of property and equipment (772) (1,784)
--------- --------
Net cash provided by (used in) investing activities (4,418) 6,047
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 2,959 566
Repayment of capital leases (320) (275)
Minority interest in subsidiary 726 --
Purchase of treasury stock -- (302)
--------- --------
Net cash provided by financing activities 3,365 (11)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,163 6,205
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32,469 22,916
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 36,632 $ 29,121
========= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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TRIDENT MICROSYSTEMS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
In the opinion of Trident Microsystems, Inc. (the "Company"), the
condensed consolidated financial statements reflect all adjustments, consisting
only of normal recurring adjustments necessary for a fair presentation of the
financial position, operating results and cash flows for those periods
presented. The condensed consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and are not audited. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the year ended June 30, 1999 included in the Company's annual report on Form
10-K filed with the Securities and Exchange Commission.
The results of operations for the interim periods presented are not
necessarily indicative of the results that may be expected for any other period
or for the entire fiscal year which ends June 30, 2000.
NOTE 2 REVENUE RECOGNITION
Revenue from product sales is recognized upon shipment. Provision is
made for expected sales returns and allowances when revenue is recognized. The
Company has limited control over the extent to which products sold to
distributors are sold through to end users. Accordingly, a portion of the
Company's sales may from time to time result in increased inventory at its
distributors. The Company provides reserves for returns and allowances for
distributor inventories. These reserves are based on the Company's estimates of
inventory held by its distributors and the expected sell through of its products
by its distributors. Actual results could differ from these estimates.
NOTE 3 INVENTORIES
Inventories consisted of the following (in thousands):
March 31, 2000 June 30, 1999
-------------- -------------
Work in process $ 933 $ 850
Finished goods 7,266 3,831
------ ------
$8,199 $4,681
====== ======
NOTE 4 EARNINGS PER SHARE
Basic Earnings Per Share (EPS) is computed by dividing net income
available to common stockholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period and excludes the
dilutive effect of stock options. Diluted Earnings Per Share (EPS) gives effect
to all dilutive potential common shares outstanding during a period. In
computing Diluted
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from exercise of stock options.
Following is a reconciliation of the numerators and denominators of the
Basic and Diluted EPS computations for the periods presented below.
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ---------------------
(in thousands, except per share data) 2000 1999 2000 1999
------- -------- ------- --------
BASIC NET INCOME (LOSS) PER SHARE
Net income (loss) available to Common
Shareholders $67,486 $ (3,787) $66,161 $ (8,253)
======= ======== ======= ========
Weighted average common shares 13,669 12,998 13,386 12,961
======= ======== ======= ========
Basic net income (loss) per share $ 4.94 $ (0.29) $ 4.94 $ (0.64)
======= ======== ======= ========
DILUTED NET INCOME (LOSS) PER SHARE
Net income (loss) available to Common
Shareholders $67,486 $ (3,787) $66,161 $ (8,253)
======= ======== ======= ========
Weighted average common shares 13,669 12,998 13,386 12,961
Dilutive common stock equivalents 2,113 -- 2,052 --
------- -------- ------- --------
Weighted average common shares
and equivalents 15,782 12,998 15,438 12,961
======= ======== ======= ========
Diluted net income (loss) per share $ 4.28 $ (0.29) $ 4.29 $ (0.64)
======= ======== ======= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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NOTE 5 LITIGATION
On December 14, 1998, NeoMagic Corporation ("NeoMagic") filed a patent
infringement lawsuit against the Company. We believe we have meritorious
defenses against NeoMagic's action and we intend to defend ourselves vigorously.
However, given the nature of litigation and inherent uncertainties associated
with litigation, management cannot predict with certainty the ultimate outcome
of this litigation.
On July 22, 1999, we filed a lawsuit against VIA Technologies Inc.
("VIA") for breach of contract, fraud, misappropriation of trade secrets, breach
of fiduciary duty, specific performance, breach of confidence, inducement of
breach of contract, intentional interference with economic relations, recission
and unfair competition, patent infringement and copyright infringement. In
response to our lawsuit, VIA filed a counter lawsuit against us. On April 19,
2000, VIA Technologies, Inc. and Trident Microsystems, Inc. announced that they
have agreed to resolve all pending lawsuits. Under the terms of the agreement,
we will receive USD $10.17 million payable in two installments from VIA for a
desktop software driver license fee, contingent on the dismissal of all pending
lawsuits in the US and Taiwan, which is not in complete control of Trident and
VIA. The first installment of $6.17 million will be paid seven days after the
dismissal of the Lawsuit and the Taiwan Action. The second installment of $4.0
million will be paid ninety days after the first installment. The agreement also
continues the right of each party to distribute a jointly developed product with
Trident retaining the exclusive right to distribute products in the notebook
market and VIA having the exclusive right to distribute products in the desktop
market. However, given the nature of litigation and inherent uncertainties
associated with litigation, management cannot predict with certainty the
ultimate outcome of this litigation.
NOTE 6 GAIN ON INVESTMENTS
In August 1995 we made an investment of $49.3 million in United
Integrated Circuits Corporation (UICC). On January 3, 2000, United
Microelectronics Corporation (UMC) acquired UICC. As a result of this merger we
now own approximately 46.5 million shares of UMC. Accordingly, we reported a
pretax gain of $117 million as "other income" in our Statement of Operations for
the quarter end March 31, 2000. The gain represents the difference between the
cost of our previous investment in UICC, and the quoted market price of the UMC
shares on the Taiwan Stock Exchange as of the date that UMC acquired UICC. On
April 7, 2000, UMC announced a 20% stock dividend payable to shareholders of
record May 16, 2000, pending approval of government authorities. During the
quarter ended March 31, 2000, an investment in Rise Technology in the amount of
$2 million was deemed unrecoverable by our management and written off.
Therefore, net gain on investments for the nine months ended March 31, 2000,
equals $115 million.
Under SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130") any
unrealized gains or losses on our short-term investments are to be reported as a
separate adjustment to equity. "Accumulated other comprehensive income" on our
UMC investment for the three months ended March 31, 2000, was an unrealized gain
of $5.4 million. "Other comprehensive income" on our UMC investment will be
recomputed quarterly, and will fluctuate with market and industry conditions,
and therefore could result in material losses or gains in any quarter.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
RESULTS OF OPERATIONS
The following table sets forth the results of operations expressed as
percentages of net sales for the three and nine months ended March 31, 2000 and
1999:
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales 100% 100% 100% 100%
Cost of sales 71 69 69 67
--- --- --- ---
Gross margin 29 31 31 33
Research and development 21 31 22 30
Selling, general and administrative 14 18 14 18
--- --- --- ---
Income (loss) from operations (6) (18) (5) (15)
Other income 358 -- 127 --
Interest income, net 1 2 2 2
--- --- --- ---
Income (loss) before income taxes 353 (16) 124 (13)
Provision for income taxes 143 -- 51 --
--- --- --- ---
Net income (loss) 210% (16)% 73% (13)%
--- --- --- ---
Net Sales
Net sales for the three months ended March 31, 2000 were $32.1 million,
an increase of 38% over the $23.3 million reported in the three months ended
March 31, 1999. Net sales for the nine months ended March 31, 2000 were $91.0
million, an increase of 34% from the $67.8 million reported in the nine months
ended March 31, 1999. The sales increase from the three months ended March 31,
1999 and nine months ended March 31, 1999 was predominantly due to increased
sales of 3D portable products. Portable and desktop products accounted for 83%
and 15% of net sales, respectively, in the three months ended March 31, 2000,
and 65% and 31% of net sales, respectively, for the three months ended March 31,
1999. In the nine months ended March 31, 2000, portable and desktop products
accounted for 77% and 20% of net sales, respectively. In the nine months ended
March 31, 1999, portable and desktop products accounted for 54% and 42% of net
sales, respectively. Net sales during the three month period ended, and nine
months period ended were also, negatively impacted by a dispute with VIA which
prevented us from recording income that we believe we were entitled and by an
inability to begin volume production of certain product developments. The
dispute with VIA has been resolved and will result in a one time gain for the
settlement in the June quarter. The foundry responsible for production of a key
product has now commenced production, however, we can not be certain that such
product will result in significant sales.
Sales to Asian customers, primarily in Taiwan, Japan, and Hong Kong,
accounted for almost all of our net sales in the three and nine months ended
March 31, 2000, up from approximately 64% and 75% in the three months ended
March 31, 1999, and nine months ended March 31, 1999, respectively. We expect
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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Asian customers will continue to account for a significant portion of our sales.
Sales to North American and European customers represented 0.5% of net sales in
the three months ended March 31, 2000, a decrease from approximately 36% in the
three months ended March 31, 1999. Sales to North American and European
customers represented 1.2% of net sales in the nine months ended March 31, 2000,
a decrease from approximately 25% in the nine months ended March 31, 1999. This
decrease is primarily due to a decrease in desktop sales in North America and
Europe. In the three months ended March 31, 2000, sales to three customers,
Arima, Compal, and Inno Micro accounted for 24%, 14%, and 14% of net sales,
respectively. In the three months ended March 31, 1999, sales to three customers
Fujitsu, Innoquest, and Toshiba accounted for 19%, 17%, and 10% of net sales. In
the nine months ended March 31, 2000, sales to four customers Arima, Inno Micro,
Toshiba, and Fujitsu accounted for 17%, 19%, 13%, and 10% of net sales,
respectively. In the nine months ended March 31, 1999, sales to two customers
Fujitsu and Jaton accounted for 16%, and 10% of net sales, respectively.
We plan from time to time to introduce new and higher performance
graphics controller, multimedia products, and non-PC graphics products which we
will seek to sell to existing customers as well as new customers in Asia, North
America and Europe. We are also expanding our product focus into markets outside
the PC area including digital TV applications. Our future success depends upon
the regular and timely introduction of these and other new products and upon
those products meeting customer requirements, and in significant part upon the
results of our expansion into new product markets. There can be no assurance
that we will be able to successfully complete the development of these products
or to commence shipments of these products in a timely manner, or that product
specifications will not be changed during the development period. In addition,
even if regularly and timely developed and shipped, there can be no assurance
that the products described above will be well accepted in the market place, or
that we will experience success in the new product markets.
Gross Profit
Gross profit increased to $9.3 million for the three months ended March
31, 2000, up from $7.1 million in the three months ended March 31, 1999. The
increase was primarily the result of higher sales volume in 3D portable
products. The gross margin as a percentage of net sales for the three months
ended March 31, 2000, decreased to 29% of net sales as compared to 31% for the
three months ended March 31, 1999. The decrease in gross margin as a percentage
of sales can be primarily attributed to an increase in the cost to us of 3D
notebook chips. Gross profit increased to $27.8 million for the nine months
ended March 31, 2000, up from $22.1 million in the nine months ended March 31,
1999. The gross margin as a percentage of net sales for the nine months period
ended March 31, 2000, decreased to 31% of net sales as compared to 33% for the
nine months ended March 31, 1999. The nine month decrease was primarily a result
of an increase in the cost to us of 3D notebook chips, which was greater than
the slight increase in average selling prices.
We believe that prices of semiconductor products will decline over time
as availability and competition increase and advanced products are introduced.
We expect to see continued competitive pressure on gross margins in the desktop
and notebook business in the foreseeable future. We continue to maintain a
strategy based on maintaining gross margins through the introduction of new
products with higher margins, reducing manufacturing costs accomplished through
our custom design methodology and the migrating to the newest process
technology. As a result, we depend upon the success of new product development
and the timely introduction of new products, as well as upon the achievement of
our manufacturing cost reduction efforts. There can be no assurance that we can
successfully or timely develop
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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and introduce new products, that such products will gain market acceptance, or
that we can continue to successfully reduce manufacturing costs.
Research and Development
Research and development expenses for the three months ended March 31,
2000 decreased to $6.9 million from $7.2 million for the March 31, 1999 three
month period. As a percent of net sales, research and development expenses
decreased to 21% for the three months ended March 31, 2000, from 31% of net
sales for the three months ended March 31, 1999. Research and development
expenses for the nine months ended March 31, 2000 decreased to $20.0 million
from $20.1 million for the March 31, 1999 nine month period. As a percent of net
sales, research and development expenses decreased to 22% for the nine months
ended March 31, 2000, from 30% of net sales for the nine months ended March 31,
1999. The decrease in research and development expenses in actual dollars for
both the three and nine months ended March 31, 2000 from March 31, 1999, can be
attributed primarily to a shift in our research and development workforce from
our main facility in Santa Clara, California, to our Shanghai, China facility
whose employee costs are substantially lower.
Selling, General and Administrative
Selling, general and administrative expenses increased to $4.4 million
in the three months ended March 31, 2000, from $4.1 million in the three months
ended March 31, 1999. As a percent of net sales, selling, general and
administrative expenditures decreased to 14% of net sales for the three months
ended March 31, 2000, from 18% of net sales in the three months ended March 31,
1999. Selling, general and administrative expenses increased to $12.3 million in
the nine months ended March 31, 2000, from $11.9 million in the nine months
ended March 31, 1999. As a percent of net sales, selling, general and
administrative expenditures decreased to 14% of net sales for the nine months
ended March 31, 2000, from 18% of net sales in the nine months ended March 31,
1999. The increase in selling, general and administrative expenditures in actual
dollars is attributed primarily to the incurrence of legal expenses for both the
three and nine month periods ending March 31, 2000. The Company will continue to
monitor and control its selling, general and administrative expenses.
Interest Income, Net
The amount of interest income earned by us varies directly with the
amount of our cash, cash equivalents and short-term investments and the
prevailing interest rates. Interest income increased to $475,000 in the three
months ended March 31, 2000, from $472,000 in the same prior year period.
Interest income decreased to $1,529,000 in the nine months ended March 31, 2000,
from $1,552,000 in the same prior year period. The decrease from the nine months
ended March 31, 1999 is primarily the result of lower average cash levels
invested during the nine months ended March 31, 2000.
Other income
In August 1995 we made an investment of $49.3 million in United
Integrated Circuits Corporation (UICC). On January 3, 2000, United
Microelectronics Corporation (UMC) acquired UICC. As a result of this merger we
now own approximately 46.5 million shares of UMC. Accordingly, we reported a
pretax gain of $117 million as "other income" in our Statement of Operations for
the quarter end March 31, 2000. The gain represents the difference between the
cost of our previous investment in
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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UICC, and the quoted market price of the UMC shares on the Taiwan Stock Exchange
as of the date that UMC acquired UICC. On April 7, 2000, UMC announced a 20%
stock dividend payable to shareholders of record May 16, 2000, pending approval
of government authorities. During the quarter ended March 31, 2000, an
investment in Rise Technology in the amount of $2 million was deemed
unrecoverable by our management and written off. Therefore, net gain on
investments for the nine months ended March 31, 2000, equals $115 million.
Under SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130") any
unrealized gains or losses on our short-term investments are to be reported as a
separate adjustment to equity. "Accumulated other comprehensive income" on our
UMC investment for the three months ended March 31, 2000, was an unrealized gain
of $5.4 million. "Other comprehensive income" on our UMC investment will be
recomputed quarterly, and will fluctuate with market and industry conditions,
and therefore could result in material losses or gains in any quarter.
Provision for Income Taxes
Provision for income taxes increased to $46.1 million in the three
months ended March 31, 2000, due to the recording of tax provision for the UMC
non-recurring gain in the long-term investment in UMC.
Year 2000
We believe that we have successfully rendered our products, internal
management and other administrative systems and external information systems
year 2000 compliant. In addition, we surveyed the vendors of the third-party
technologies we incorporate into our products and services and applied updates
or arrangements to correct potential year 2000 compliance problems. Since
January 1, 2000, we have experienced no disruptions in our business operations
as a result of year 2000 compliance problems or otherwise, and we have received
no reports of any year 2000 compliance problems with our products and services.
We are continuing to monitor third-party vendors of incorporated technologies
for additional recommended year 2000 upgrades, which we will apply as soon as
they become available. To date, the total cost of our efforts to address year
2000 compliance has not been material.
Nonetheless, some problems related to year 2000 risks may not appear
until several months after January 1, 2000. Year 2000 issues could include
problems with our own products and services or with third-party products or
technology that we use or with which our products exchange data. Any problems
that are not identified and corrected successfully and completely could
adversely affect our business. We expect that the cost to fix any year 2000
problems that may be identified, however, will involve internal labor-hours and
will not be material.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, our principal sources of liquidity included cash
and cash equivalents of $36.6 million as well as short-term investments of
$117.8 million. In the nine months ended March 31, 2000, $5.2 million of cash
was provided by operations, compared to the nine months ended March 31, 1999, in
which $0.2 million of cash was provided by operations. The increase for the nine
months ended March 31, 2000 was mainly the result of a decrease in prepaid
expenses and other current assets, and an increase in accrued expenses and other
liabilities, offset in part by an increase in inventories. Capital expenditures
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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were $0.7 million for the nine months ended March 31, 2000, compared to $1.8
million for the nine months ended March 31, 1999.
In August 1995 we made an investment of $49.3 million in United
Integrated Circuits Corporation (UICC). On January 3, 2000, United
Microelectronics Corporation (UMC) acquired UICC. As a result of this merger we
now own approximately 46.5 million shares of UMC. Accordingly, we reported a
pretax gain of $117 million as other income in our Statement of Operations for
the quarter end March 31, 2000.
The gain represents the difference between the cost of our previous
investment in UICC, and the quoted market price of the UMC shares on the Taiwan
Stock Exchange as of the date that UMC acquired UICC. At such time as we choose
to sell any UMC shares our gain or loss on such portion of the investment will
be revalued. As of today, a portion of the UMC shares received by us as a result
of the merger may now be sold at our discretion, however, in order to preserve
the 12.5% wafer capacity guarantee of the UICC facility, there are certain
limitations on our ability to sell the shares. During the quarter ended March
31, 2000, an investment in Rise Technology in the amount of $2.0 million was
deemed unrecoverable by our management and written off. Therefore, net gain on
investments for the nine months ended March 31, 2000, equals $115.0 million.
We believe our current resources are sufficient to meet our needs for at
least the next twelve months. We regularly consider transactions to finance our
activities, including debt and equity offerings and new credit facilities or
other financing transactions. We believe our current reserves are adequate.
In April 1998, our Board of Directors approved a $20 million stock
repurchase program over a twelve month period. During fiscal year 1999, 161,000
shares of common stock were repurchased for $0.9 million under this Plan. During
fiscal year 1998, 274,500 shares of common stock were repurchased for $2.1
million under this Plan. During fiscal year 1997, we repurchased 100,000 shares
of common stock for $1.1 million. On April 13, 2000, our Board of Directors
approved to extend the stock repurchase period for another twelve months
starting from April 30, 2000 to April 30, 2001.
In October 1999, our Board of Directors authorized a one year budget of
$20.0 million allowing our President and executive officers to may make
investments, with no more than $3.0 million in any one company or technology.
Investments can be made on terms and agreements as the officers consider
appropriate, within this authorization without further approval by the Board.
The President of the Company is to report at each Board meeting on such
activities. During the nine months ended March 31, 2000 the cumulative purchases
of investments totaled $3.6 million. On April 13, 2000, subject to the closing
of the investment in Trident described in the paragraph immediately below, our
Board of Directors approved an increase in the annual budget of investments to
$50.0 million.
On February 10, 2000, we entered into an agreement with UMC affiliates,
Unipac Optoelectronics Corp. and Hsun Chieh Investment Co., Ltd., to sell
1,057,828 shares of the Company's common stock to Unipac and 3,173,484 shares of
the Company's common stock to Hsun Chieh representing approximately 23.5% of the
common stock that will be outstanding after the new issuance. On April 13, 2000,
the Trident board of directors approved an amendment to the existing agreement
upon the request of these corporate investors. Under the terms of amended
agreement, the Company agreed to adjust the stock purchase price due to the
recent stock market volatility, aiming to continue the long term strategic
relationship and further strengthen the Company's cash position for future
strategic expansion. We expect that the proceeds of the stock purchase from the
sale of the Company's stock to Unipac and Hsun Chieh will be approximately USD
$42 million, with a per share price equal to the five-day average closing price
of Trident stock preceding April 17, 2000, plus a ten-percent premium on such
average. Closing of this
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-13-
14
transaction is contingent upon regulatory approval, including early termination
or expiration of the Hart-Scott-Rodino waiting period, and other customary
closing conditions.
On April 19, 2000, VIA Technologies, Inc. and Trident Microsystems, Inc.
announced that they have agreed to resolve all pending lawsuits. Both parties
agreed to enter a settlement agreement in order to better focus on respective
businesses and avoid the costs, time and distractions of the lengthy legal
process. Under the terms of the agreement, Trident will receive USD $10.17
million payable in two installments from VIA for a desktop software driver
license fee, contingent on the dismissal of all pending lawsuits in US and
Taiwan, which is not in complete control of Trident and VIA. The first
installment of $6.17 million will be paid seven days after the dismissal of the
Lawsuit and the Taiwan Action. The second installment of $4.0 million will be
paid ninety days after the first installment.
Factors That May Affect Our Results
LOSS IN FISCAL YEAR 1999
We have experienced operating losses for the fiscal year ending June 30,
1999, and for the nine months ending March 31, 2000. Future performance will
substantially depend upon numerous factors, such as:
- timely introducing new products and product enhancements to the
marketplace;
- whether customers successfully incorporate our technologies into end
products with high levels of customer acceptance;
- fluctuating price levels for our products;
- availability of additional funding needed for research and
development; and
- management's ability to bring operating expenses in line with revenues
Trident's management is trying to expedite new product launching and to
control operating expenses. However, there is no guarantee that management's
efforts will be successful. Sales and marketing, product development and general
and administrative expenses may increase as a result of shifts in the market
place and the company's need to respond to these shifts, which could result in
the need to generate significantly higher revenue to achieve and sustain
profitability.
FLUCTUATIONS IN QUARTERLY RESULTS
We plan to control our operating expenses related to any expansion of
our sales and marketing activities, broadening of our customer support
capabilities, developing new distribution channels, and any increase in our
research and development capabilities. However, our quarterly revenue and
operating results have varied in the past and may fluctuate in the future due to
a number of factors including:
- fluctuations in demand for our products, including seasonality;
- unexpected product returns or the cancellation or rescheduling of
significant orders;
- our ability to develop, introduce, ship and support new products and
product enhancements and to manage product transitions;
- new product introductions by our competitors;
- our ability to achieve required cost reductions;
- our ability to attain and maintain production volumes and quality
levels for our products;
- delayed new product introductions;
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-14-
15
- unfavorable responses to new products;
- adverse economic conditions, particularly in Asia;
- the mix of products sold and the mix of distribution channels through
which they are sold; and
- availability of foundry and assembly capacities.
RELIANCE ON FEW KEY ACCOUNTS
To date, a limited number of distributors and customers have accounted
for a significant portion of our revenue. If any of our large distributors or
customers stops or delays purchases, our revenue and profitability would be
adversely affected. Although our largest customers may vary from
period-to-period, we anticipate that our operating results for any given period
will continue to depend to a significant extent on large orders from a small
number of customers, particularly in light of the high sales price per unit of
our portable products and the length of our sales cycles.
Our Original Equipment Manufacturer (OEM) customers seldom release
quarterly purchase orders and six-month rolling forecasts. In addition our
financial performance depends on large orders from a few key distributors and
other significant customers, we do not have binding long term commitments from
any of them. For example:
- our OEM customers can stop purchasing and our distributors can stop
marketing our products with thirty days notice;
- our distributor agreements generally are not exclusive and the
distributors have no obligation to renew agreements; and
- our distributor agreements generally do not require minimum purchases.
We have established a reserve program, which, under specified
conditions, enables distributors to return products to us. The amount of
potential product returns is estimated and provided for in the period of the
sale. Actual returns could differ from our estimates.
RELIANCE ON INTERNATIONAL SALES
Because our distributors sell our products worldwide, changes in the
global graphics marketplace, such as the shift in market share from Asian clone
makers to leading North American PC systems manufacturers, have affected and
will continue to affect our operating results. Although our revenues have
historically been generated primarily from Asian customers, particularly those
of Taiwan, Hong Kong, and Japan, we will continue to exert efforts to expand our
revenue base among the leading North American OEMs. Our ability to grow will
depend in part on this expansion in North America but will continue to be
heavily based on international sales and operations which have and are expected
to constitute a significant portion of our sales. The failure of our
distributors to sell our products internationally would limit our ability to
sustain and grow our revenue. In addition, there are a number of risks arising
from our international business, including:
- potentially longer accounts receivable collection cycles;
- import or export licensing requirements; - potential adverse tax
consequences; and
- unexpected changes in regulatory requirements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-15-
16
Our international sales currently are U.S. dollar-denominated. As a result, an
increase in the value of the U.S. dollar relative to foreign currencies could
make our products less competitive in international markets.
INTENSE COMPETITION IN THE MARKET FOR GRAPHICS CONTROLLERS
The graphics controller industry in the sub-$1,000 PC segment has
experienced reduced margins due to a number of factors including: competitive
pricing pressures, increasing wafer cost and rapid technological change. We
anticipated that the discrete graphics controller demand from sub-$1,000 PC's
will decrease in the future, while the demand for integrated graphics
controllers will increase. Therefore, to maintain our revenue and gross margin,
we must develop and introduce on a timely basis new products and product
enhancements and continually reduce our product cost. Our failure to do so would
cause our revenue and gross margins to decline, which could have a materially
adverse affect on our operating results.
The market for graphics controllers is intensely competitive. Many of
our current competitors in graphics have longer operating histories and
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and market share than we do. To
remain competitive, we believe we must, among other things, invest significant
resources in developing new products, including products for new markets,
increasing the ability of our products to integrate various functions and
enhancing quality product performance. If we fail to do so, our products may not
compete favorably with those of our competitors, which could have a materially
adverse affect on our revenue and future profitability.
VULNERABLE TO UNDETECTED PRODUCT PROBLEMS
Although we establish and implement test specifications, impose quality
standards upon our suppliers and perform separate application-based
compatibility and system testing, our products may contain undetected defects,
which may or may not be material, and which may or may not have a feasible
solution. We have experienced such errors in the past, and we can't ensure that
such errors will be found from time to time in new or enhanced products after
commencement of commercial shipments. These problems may materially adversely
affect our business by causing us to incur significant warranty and repair
costs, diverting the attention of our engineering personnel from our product
development efforts and causing significant customer relations problems.
In part due to pricing and other pressures in the PC graphics market and
in the desktop market in particular, we are developing products for introduction
in non-PC markets. However, there can be no assurance that we will be successful
in eliminating undetected defects in these new products which may or may not be
material.
DEPENDANCE ON INDEPENDENT FOUNDRIES
If the demand for our products grows, we will need to increase our
material purchases, contract manufacturing capacity and internal test and
quality functions. Any disruptions in product flow could
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-16-
17
limit our revenue, adversely affect our competitive position and reputation and
result in additional costs or cancellation of orders under agreements with our
customers.
We currently rely on a limited number of third-party foundries to
manufacture our products either in finished form or wafer form. Generally, these
foundries are not obligated to manufacture our products on a long term fixed
price base, however, due to the company's investment in one foundry, a certain
level of guaranteed wafer capacity does exist. If we encounter shortages and
delays in obtaining components, our ability to meet customer orders could be
materially adversely affected.
We have experienced a delay in product shipments from a contract
manufacturer in the past, which in turn delayed product shipments to our
customers. Such delays often result in purchasing at a higher per unit product
cost from other foundries or the payment of expediting charges so that we can
obtain the required supply in a timely manner. We may in the future experience
delays in shipments from foundries or other problems, such as inferior quality
and insufficient quantity of product, any of which could materially adversely
affect our business and operating results. There can be no assurance that these
manufacturers will meet our future requirements for timely delivery of products
of sufficient quality and quantity. The inability of our contract manufacturers
to provide us with adequate supplies of high-quality products would cause a
delay in our ability to fulfill orders while we obtain a replacement
manufacturer and would have a material adverse effect on our business, operating
results and financial condition.
UNSTABLE STOCK PRICE
The market price of our common stock has been, and may continue to be
volatile. Factors such as new product announcements by Trident or our
competitors, quarterly fluctuations in our operating results and unfavorable
conditions in the graphics controller market may have a significant impact on
the market price of our common stock. These conditions, as well as factors that
generally affect the market for stocks in general and stock in high-technology
companies in particular, could cause the price of Trident's stock to fluctuate
from time to time.
WE MY ENGAGE IN FUTURE ACQUISITIONS THAT DILUTE THE OWNERSHIP INTERESTS OF OUR
STOCKHOLDERS.
As part of our business strategy, we review acquisition and strategic
investment prospects that would complement our current product offerings,
augment our market coverage or enhance our technical capabilities, or that may
otherwise offer growth opportunities. We are reviewing investments in new
businesses, and we expect to make investments in and may acquire businesses,
products or technologies in the future. In the event of any future acquisitions,
we could issue equity securities which would dilute current stockholders'
percentage ownership.
These actions by us could materially adversely affect our operating
results and/or the price of our common stock. Acquisitions and investment
activities also entail numerous risks, including: difficulties in the
assimilation of acquired operations, technologies or products; unanticipated
costs associated with the acquisition or investment transaction; diversion of
management's attention from other business concerns; adverse effects on existing
business relationships with suppliers and customers; risk associated with
entering markets in which we have no or limited prior experience; and potential
loss of key employees of acquired organizations.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-17-
18
We cannot assure you that we will be able to successfully integrate any
businesses, products, technologies or personnel that we might acquire in the
future, and our failure to do so could materially adversely affect our business,
operation results and financial condition.
We are exposed to fluctuations in the market values of our investments.
We have invested in numerous privately held companies, many of which can still
be considered in the startup or development stages. These investments are
inherently risky as the market for the technologies or products they have under
development are typically in the early stages and may never materialize. We
could lose our entire initial investment in these companies. Our exposure to
fluctuating market conditions could materially adversely affect our business,
operating results and financial condition.
WE ARE IN THE PROCESS OF RESTRUCTURING OUR BUSINESS.
We have begun a process of restructuring our business into two units,
the videographics/communications business unit and the digital media business
unit. We believe that such a restructuring will permit us to rapidly grow our
digital television product offerings, and continue to expand our graphics chip
markets by efficiently allocating resources between the two divisions. However,
there is no assurance that this strategy, and the related reorganization to
spin-off some of our overseas subsidiaries, will be successful. Our failure to
complete this reorganization could materially adversely affect our business,
operating results and financial condition.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
On December 14, 1998, NeoMagic Corporation (NASDAQ: NMGC), filed suit in
the United States District Court for the District of Delaware against the
Company. The suit alleges that the Company's embedded DRAM graphics accelerators
infringe certain patents held by NeoMagic Corporation. The Company intends to
defend vigorously the litigation which was filed against it, and the Company
will take every step possible to protect the interests of its customers and
shareholders. On January 25, 1999, the Company filed a counter claim in the
United States District Court for the District of Delaware against NeoMagic
Corporation. The counter claim alleges an attempted monopolization in violation
of the antitrust laws, arising from NeoMagic's patent infringement filing
against the Company. On March 25, 1999, NeoMagic Corporation filed a motion for
summary judgement requesting that the Company's counter claim be dismissed. That
motion has not been ruled on. The case is currently set for trial in August,
2000 in Delaware.
In 1998 and 1999 Trident Microsystems, Inc. and VIA Technologies, Inc.
entered into written agreements for the joint development of integrated 3D
graphics and core logic devices for notebook and desktop personal computers. On
July 22, 1999, Trident Microsystems, Inc. and Trident Technologies, Inc. filed a
lawsuit against VIA Technologies, Inc., among other defendants, in the United
States District Court for the Northern District of California. On July 30, 1999,
Trident filed a first amended complaint alleging patent infringement, copyright
infringement, breach of contract, fraud, misappropriation of trade secrets,
breach of fiduciary duty, specific performance, breach of confidence, inducement
of breach of
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-18-
19
contract, intentional interference with economic relations, recission and unfair
competition. Trident's complaint requests actual damages sustained by Trident,
which are yet to be determined, as well as $200,000,000 in punitive damages. On
August 23, 1999, VIA Technologies, Inc. filed an answer and counterclaim against
Trident Microsystems, Inc., Trident Technologies, Inc. and Frank Lin seeking a
declaratory judgment on Trident's patent and copyright infringement claims,
damages for breach of contract, intentional interference with contractual
relations, intentional interference with prospective economic relations,
misappropriation of trade secrets and unfair competition.
Due to the fast pace of the PC graphics industry and in order to protect
its intellectual property, on August 11, 1999, Trident Microsystems, Inc. and
Trident Technologies, Inc. filed a motion for a preliminary injunction seeking
to prevent the shipment of any VIA products, including but not limited to any
products containing Trident's proprietary software technology. On August 31,
1999, VIA Technologies, Inc. filed its opposition and a counter-motion for a
preliminary injunction seeking to force Trident to provide software drivers and
software support to VIA Technologies, Inc.'s customers. A hearing on these
motions has been continued pending settlement discussions between the parties.
On April 19, 2000, VIA Technologies, Inc. and Trident Microsystems, Inc.
announced that they have agreed to resolve all pending lawsuits. Both parties
agreed to enter a settlement agreement in order to better focus on respective
businesses and avoid the costs, time and distractions of the lengthy legal
process. Under the terms of the agreement, Trident will receive USD $10.17
million payable in two installments from VIA for a desktop software driver
license fee, contingent on the dismissal of all pending lawsuits in US and
Taiwan, which is not in complete control of Trident and VIA. The first
installment of $6.17 million will be paid seven days after the dismissal of the
Lawsuit and the Taiwan Action. The second installment of $4.0 million shall be
paid ninety days after the first installment. The agreement also continues the
right of each party to distribute a jointly developed product with Trident
retaining the exclusive right to distribute products in the notebook market and
VIA having the exclusive right to distribute products in the desktop market.
In July of 1999 Trident filed a Declaratory Judgement action in the
Federal District Court of Delaware against Real 3D Corporation seeking a ruling
by the court which would declare invalid and/or not infringed certain Real 3D
patents being asserted against major Trident notebook PC customers. This filing
of a Declaratory Judgement action follows a complaint filed by Real 3D against a
number of other graphics companies for alleged infringement of three Real 3D
patents which relate to graphics acceleration technology. Real 3D has also
asserted these patents against major OEM PC manufacturers. Currently Trident is
not a party to that litigation.
Statements regarding the possible outcome of litigation and the
Company's actions are forward looking statements and actual outcomes could vary
based upon future developments on the litigation.
ITEM 2: CHANGES IN SECURITIES
Not applicable
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Not applicable
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-19-
20
ITEM 4: SUBMISSIONS OF MATTERS TO VOTE BY SECURITY HOLDERS
Not applicable
ITEM 5: OTHER INFORMATION
Continuing the strategic expansion into the internet appliance and
digital TV marketplace, Trident is now structured into two business units: the
videographics/communications business unit and the digital media business unit.
The videographics/communications business unit continues the Company's entire 3D
videographics business with worldwide PC OEMs and internet appliances, and
intends to expand into System-On-Chip (SOC) solutions for broadband streaming
media. It is under the management of Dr. Gerry Liu as business unit president.
On the other hand, the Company's digital media business unit focuses on the
System-On-Chip (SOC) opportunities for the TV-centric digital appliance market
including internet-ready digital TVs and digital set-top boxes. Its immediate
revenue ramp will come from the Company's single-chip digital television video
processor DPTV entering production by this summer. The digital media business
unit is under the management of Dr. Jung-Herng Chang as its president.
On February 10, 2000, we entered into an agreement with UMC affiliates,
Unipac Optoelectronics Corp. and Hsun Chieh Investment Co., Ltd., to sell
1,057,828 shares of the Company's common stock to Unipac and 3,173,484 shares of
the Company's common stock to Hsun Chieh representing approximately 23.5% of the
common stock that will be outstanding after the new issuance. On April 13, 2000,
the Trident board of directors approved an amendment to the existing agreement
upon receiving the request of the same corporate investors. Under the terms of
amended agreement, the Company agreed to adjust the stock purchase price due to
the recent stock market volatility, aiming to continue the long term strategic
relationship and further strengthen the Company's cash position for future
strategic expansion. We expect that the proceeds from the sale of the Company's
stock will be approximately USD $42 million, with the new stock purchase price
being the preceding five-day average with a ten-percent premium.
On January 18, 2000, our Board of Directors approved a spin-off of our
Trident Technology Incorporated subsidiary and our Trident Multimedia
Technologies (Shanghai) Co. Ltd. subsidiary. These spin-offs are to be completed
after March 31, 2000. As of March 31, 2000, we currently own a majority interest
in both Trident Technology Incorporated and Trident Multimedia Technologies
(Shanghai) Co. Ltd. Trident Technology Incorporated and Trident Multimedia
Technologies (Shanghai) Co. Ltd. have total assets equal to $3.3 million and
$1.4 million respectively.
In August 1995, we made an investment of $49.3 million in United
Integrated Circuits Corporation (UICC). On January 3, 2000, United
Microelectronics Corporation (UMC) acquired UICC. As a result of this merger we
now own approximately 46.5 million shares of UMC. Accordingly, we reported a
pretax gain of $117 million as other income in our Statement of Operations for
the quarter end March 31, 2000. The gain represents the difference between the
cost of our previous investment in UICC, and the quoted market price of the UMC
shares on the Taiwan Stock Exchange as of the date that UMC acquired UICC.
During the quarter ended March 31, 2000, an investment in Rise Technology in the
amount of $2.0 million was deemed unrecoverable by our management and written
off.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-20-
21
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Description
------- -----------
3.1 Restated Certificate of Incorporation.(1)
3.2 Bylaws of Trident Delaware Corporation, a Delaware
corporation.(2)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.(2)
4.3 Form of Rights Agreement between the Company and ChaseMellon
Shareholder Services, LLC, as Rights Agent (including as Exhibit
A the form of Certificates of Designation, Preferences and
Rights of the Terms of the Series A Preferred Stock, as Exhibit
B the form of Right Certificate, and as Exhibit C the Summary of
Terms of Rights Agreement).(3)
10.5(*) 1990 Stock Option Plan, together with forms of Incentive Stock
Option Agreement and Non-statutory Stock Option Agreement.(2)
10.6(*) Form of the Company's Employee Stock Purchase Plan.(2)
10.7(*) Summary description of the Company's Fiscal 1992 Bonus Plan.(2)
10.8(*) Form of the Company's Fiscal 1993 Bonus Plan.(2)
10.9(*) Summary description of the Company's 401(k) plan.(2)
10.10(*) Form of Indemnity Agreement for officers, directors and
agents.(2)
10.12(*) Form of Non-statutory Stock Option Agreement between the Company
and Frank C. Lin.(4)
10.13(*) Form of 1992 Stock Option Plan amending and restating the 1990
Stock Option Plan included as Exhibit 10.5.(2)
10.14 Sublease Agreement dated November 23, 1998 between the Company
and Applied Materials, Inc. for the Company's principal offices
located at 2450 Walsh Avenue, Santa Clara, California.(4)
10.16 Foundry Venture Agreement dated August 18, 1995 by and between
the Company and United Microelectronics Corporation.(5)(8)
10.17(*) Form of 1998 Stock Option Plan which replaces the 1992 Stock
Option Plan.(6)
27.1 Financial Data Schedule (EDGAR version only)(7)
- ---------------
(1) Incorporated by reference from exhibit of the same number to the Company's
Annual Report on Form 10-K for the year ended June 30, 1993.
(2) Incorporated by reference from exhibit of the same number to the Company's
Registration Statement on Form S-1 (File No. 33-53768), except that Exhibit
3.2 is incorporated from Exhibit 3.4.
(3) Incorporated by reference from exhibit 99.1 to the Company's Report on Form
8-K filed August 21, 1998.
(4) Incorporated by reference from exhibit of the same number to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
(5) Incorporated by reference from exhibit of the same number to the Company's
Annual Report on Form 10-K for the year ended June 30, 1995.
(6) Incorporated by reference to the Company's 1998 Employee Stock Purchase Plan
Individual Stock Option Agreements and 1996 Nonstatutory Stock Option Plan
on Form S-8 filed April 23, 1999 (File No. 333-76895).
(7) Filed herewith.
(8) Confidential treatment has been requested for a portion of this document.
(*) Management contracts or compensatory plans or arrangements covering
executive officer directors of the Company.
(b) Reports on Form 8-K
Not Applicable
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-21-
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on May 12, 2000, on its
behalf by the undersigned thereunto duly authorized.
Trident Microsystems, Inc.
- --------------------------
(Registrant)
/s/ Frank C. Lin
- -----------------------------------
Frank C. Lin
President, Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
/s/ Peter Jen
- -----------------------------------
(Peter Jen)
Senior Vice President, Asia Operations and Chief
Accounting Officer (Principal Financial and
Accounting Officer)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-22-
23
EXHIBITS INDEX
Exhibit Description
------- -----------
3.1 Restated Certificate of Incorporation.(1)
3.2 Bylaws of Trident Delaware Corporation, a Delaware
corporation.(2)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.(2)
4.3 Form of Rights Agreement between the Company and ChaseMellon
Shareholder Services, LLC, as Rights Agent (including as Exhibit
A the form of Certificates of Designation, Preferences and
Rights of the Terms of the Series A Preferred Stock, as Exhibit
B the form of Right Certificate, and as Exhibit C the Summary of
Terms of Rights Agreement).(3)
10.5(*) 1990 Stock Option Plan, together with forms of Incentive Stock
Option Agreement and Non-statutory Stock Option Agreement.(2)
10.6(*) Form of the Company's Employee Stock Purchase Plan.(2)
10.7(*) Summary description of the Company's Fiscal 1992 Bonus Plan.(2)
10.8(*) Form of the Company's Fiscal 1993 Bonus Plan.(2)
10.9(*) Summary description of the Company's 401(k) plan.(2)
10.10(*) Form of Indemnity Agreement for officers, directors and
agents.(2)
10.12(*) Form of Non-statutory Stock Option Agreement between the Company
and Frank C. Lin.(4)
10.13(*) Form of 1992 Stock Option Plan amending and restating the 1990
Stock Option Plan included as Exhibit 10.5.(2)
10.14 Sublease Agreement dated November 23, 1998 between the Company
and Applied Materials, Inc. for the Company's principal offices
located at 2450 Walsh Avenue, Santa Clara, California.(4)
10.16 Foundry Venture Agreement dated August 18, 1995 by and between
the Company and United Microelectronics Corporation.(5)(8)
10.17(*) Form of 1998 Stock Option Plan which replaces the 1992 Stock
Option Plan.(6)
27.1 Financial Data Schedule (EDGAR version only)(7)
- ---------------
(1) Incorporated by reference from exhibit of the same number to the Company's
Annual Report on Form 10-K for the year ended June 30, 1993.
(2) Incorporated by reference from exhibit of the same number to the Company's
Registration Statement on Form S-1 (File No. 33-53768), except that Exhibit
3.2 is incorporated from Exhibit 3.4.
(3) Incorporated by reference from exhibit 99.1 to the Company's Report on Form
8-K filed August 21, 1998.
(4) Incorporated by reference from exhibit of the same number to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
(5) Incorporated by reference from exhibit of the same number to the Company's
Annual Report on Form 10-K for the year ended June 30, 1995.
(6) Incorporated by reference to the Company's 1998 Employee Stock Purchase Plan
Individual Stock Option Agreements and 1996 Nonstatutory Stock Option Plan
on Form S-8 filed April 23, 1999 (File No. 333-76895).
(7) Filed herewith.
(8) Confidential treatment has been requested for a portion of this document.
(*) Management contracts or compensatory plans or arrangements covering
executive officer directors of the Company.
The accompanying notes are an integral part of these condensed consolidated
financial statements.