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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X ] Quarterly report pursuant to section 13 or 15(d) of the Securities Act
of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities 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)
189 North Bernardo Avenue, Mountain View, CA 94043-5216
(Address of principal executive offices) (Zip code)
(415) 691-9211
(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, 1996 was 12,516,981
This document (including exhibits) contains 18 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, 1996 and
June 30, 1995 3
Condensed Consolidated Statement of Operations for the Three Months and Nine Months
Ended March 31, 1996 and 1995 4
Condensed Consolidated Statement of Cash Flows for the Nine Months
Ended March 31, 1996 and 1995 5
Notes to the Unaudited Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
PART II: OTHER INFORMATION:
Item 1: Legal Proceedings Not Applicable
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 15
Item 6: Exhibits and Reports on Form 8-K 16
Signatures 17
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TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
MARCH 31
1996 JUNE 30,
(UNAUDITED) 1995
----------- ----
Current assets:
Cash and cash equivalents $ 28,492 $ 30,609
Short-term investments 17,771 30,027
Accounts receivable, net 18,796 8,767
Inventories 27,713 11,636
Deferred income taxes 1,796 1,796
Prepaid expenses & other assets 1,306 1,228
--------- ---------
Total current assets 95,874 84,063
Property and equipment, net 5,000 3,679
Investment, prepayments and other assets 30,776 923
--------- ---------
Total assets $ 131,650 $ 88,665
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,067 $ 11,527
Accrued expenses & other liabilities 9,133 7,030
Income taxes payable 6,753 3,967
--------- ---------
Total current liabilities 46,953 22,524
--------- ---------
Stockholders' equity:
Capital stock 34,489 31,398
Deferred compensation (78) (253)
Notes receivable from stockholders (585) (634)
Retained earnings 50,871 35,630
--------- ---------
Total stockholders' equity 84,697 66,141
--------- ---------
Total liabilities and stockholders' equity $ 131,650 $ 88,665
========= =========
See accompanying notes to the 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,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Net sales $ 46,007 $ 29,801 $123,921 $ 75,684
Cost of sales 28,730 18,831 77,572 51,557
-------- -------- -------- --------
Gross margin 17,277 10,970 46,349 24,127
Research and development expenses 5,367 3,465 13,522 9,586
Selling, general and administrative expenses 4,245 2,985 12,028 7,904
-------- -------- -------- --------
Income from operations 7,665 4,520 20,799 6,637
Interest income, net 542 500 1,615 1,326
-------- -------- -------- --------
Income before provision for income taxes 8,207 5,020 22,414 7,963
Provision for income taxes 2,626 1,606 7,172 2,547
-------- -------- -------- --------
Net income $ 5,581 $ 3,414 $ 15,242 $ 5,416
======== ======== ======== ========
Net income per share $ 0.42 $ 0.26 $ 1.14 $ 0.42
======== ======== ======== ========
Common and common equivalent shares used in
computing per share amount 13,370 13,134 13,424 12,995
======== ======== ======== ========
See accompanying notes to the condensed consolidated financial statements.
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TRIDENT MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS, UNAUDITED)
NINE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,242 $ 5,416
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation & amortization 1,321 1,131
Provision for doubful accounts and sales returns 48 (11)
Loss on disposal of fixed assets (112) 3
Amortization of deferred compensation 175 201
Changes in assets & liabilities:
Accounts receivable (10,077) (3,425)
Inventories (16,077) 3,343
Prepaid expenses and other current assets (78) (229)
Other assets 663 (726)
Accounts payable 19,540 (2,410)
Accrued expenses & other liabilities 2,103 851
Income tax payable 2,786 1,061
-------- --------
Net cash provided by operating activities 15,534 5,205
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to vendor under capacity agreement (16,800) -
Sales of short-term investments, net 12,256 386
Payment on equity investment (13,716) -
Purchases of long-term investments, net - (7,852)
Purchase of property and equipment, net (2,531) (1,379)
-------- --------
Net cash used in investing activities (20,791) (8,845)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 3,091 502
Principal repayment by stockholder of note receivable 49 -
-------- --------
Net cash provided by financing activities 3,140 502
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,117) (3,138)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 30,609 25,194
-------- --------
CASH AND CASH EQUIVALENT AT END OF PERIOD $ 28,492 $ 22,056
======== ========
See accompanying notes to the 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
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, 1995 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, 1996.
NOTE 2: INVENTORIES
Inventories consisted of the following (in thousands):
March 31, 1996 June 30, 1995
-------------- -------------
Finished goods $ 8,498 $ 8,334
Work in process 19,215 3,302
------- -------
$27,713 $11,636
======= =======
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ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentages that statement of
operations items are to net sales for the three months and nine months ended
March 31, 1996 and 1995:
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Net sales 100% 100% 100% 100%
Cost of sales 62 63 63 68
--- --- --- ---
Gross margin 38 37 37 32
Research and development 12 12 11 13
Selling, general and administrative 9 10 9 10
--- --- --- ---
Income from operations 17 15 17 9
Interest income, net 1 2 1 1
--- --- --- ---
Income before income taxes 18 17 18 10
Provision for income taxes 6 5 6 3
--- --- --- ---
Net income 12% 12% 12% 7%
=== === === ===
Net Sales
Net sales for the three months ended March 31, 1996 were $46.0 million
or 54% over the $29.8 million reported in the three months ended March 31, 1995.
Net sales for the nine months ended March 31, 1996 were $123.9 million or 64%
over the $75.7 million reported in the nine months ended March 31, 1995. The
increases in net sales were attributable to increases in unit volume and higher
average selling prices (ASPs) of higher performance graphical user interface
(GUI) accelerator products both for desktop and mobile computers. The increase
in ASPs was primarily attributable to the introduction of new higher priced GUI
accelerators and the increase of percentage of sales of GUI accelerator products
to approximately 75% and 68% of the Company's net sales in the three months and
nine months ended March 31, 1996, respectively, from approximately 69% and 61%
in the three months and nine months ended March 31, 1995, respectively. Sales
increased in all regions including North America, Europe and Asia.
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The Company continues to make major efforts to design products to fill
the needs of leading PC systems manufacturers and adapter card manufacturers.
Sales to North American and European customers increased to 28% in the three
months ended March 31, 1996 from 22% in the three months ended March 31, 1995.
The Company expects Asian customers will continue to account for a significant
portion of the Company's sales. Sales to Asian customers, primarily in Hong
Kong, Taiwan, Korea and Japan, accounted for approximately 72% in the three
months ended March 31, 1996, down from 78% in the same quarter of fiscal 1995.
Sales to two customers and their affiliates accounted for approximately 21% and
12% of net sales for the three months ended March 31, 1996. Sales to three
customers and their affiliates accounted for approximately 27%, 19% and 10% of
net sales, respectively, for the same period of the prior fiscal year.
Substantially all of the sales transactions were denominated in U.S. dollars
during both periods.
The Company plans to continuously introduce new and higher performance
GUI accelerators, graphics controller and multimedia video products which it
will seek to sell to existing customers as well as new customers in Asia, North
America and Europe. The Company's future success depends upon the regular and
timely introduction of these and other new products and upon those products
meeting customer requirements. There can be no assurance that the Company 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.
Gross Margin
Trident's gross margin increased from 37% and 32% of net sales for the
three months and nine months ended March 31, 1995, respectively, to 38% and 37%
for the three months and nine months ended March 31, 1996, respectively. The
increase in the gross margin was primarily the result of increased volume
shipments of new GUI accelerator products with higher gross margins during the
current periods and reductions in the manufacturing costs of certain products.
The Company believes that it is common for the prices of high
technology products to decline over time as availability and competition
increase and new, advanced products are introduced. The Company expects ASPs of
existing products to continue to decline although average ASPs may remain
constant or increase as a result of introductions of new higher performance
products with higher gross margin. The Company's strategy is to maintain gross
margins through the introduction of new products with higher margins, the
reduction in manufacturing costs accomplished through the Company's custom
design methodology and the migration to the newest process technology and taking
advantage of the economies of scale of volume production. As a result, the
Company depends upon the success of new product development and the timely
introduction of new products, as well as upon the achievement of its
manufacturing cost reduction efforts. There can be no assurance that the Company
can successfully or timely develop and introduce new products or that it can
successfully reduce manufacturing costs.
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Research and Development
Research and development expenditures increased from $3.5 million in
the three months ended March 31, 1995 to $5.4 million in the three months ended
March 31, 1996. Research and development expenditures increased from $9.6
million in the nine months ended March 31, 1995 to $13.5 million in the nine
months ended March 31, 1996. Research and development expenditures as a
percentage of net sales remained constant at 12% in both the three months ended
March 31, 1995 and 1996. Research and development expenditures as a percentage
of net sales decreased from 13% in the nine months ended March 31, 1995 to 11%
in nine months ended March 31, 1996 due to the increase in the net sales at a
faster rate than the increase in expenditures. The increases in expenditures in
the three months and nine months ended March 31, 1996 were primarily due to the
increase in headcount and associated personnel-related costs, increased
depreciation, increased outside engineering services, increased non-recurring
engineering expenses and costs associated with the acquisition of new technology
during the three months and nine months ended March 31, 1996. The Company has
increased its research and development efforts to introduce new products and
intends to continue making substantial investments in research and development.
Selling, General and Administrative
Selling, general and administrative expenditures increased from $3.0
million in the three months ended March 31, 1995 to $4.2 million in the three
months ended March 31, 1996. Selling, general and administrative expenditures
increased from $7.9 million in the nine months ended March 31, 1995 to $12.0
million in the nine months ended March 31, 1996. The increases in selling costs
were primarily due to increased personnel-related costs for increased sales
staff in the U.S. and Asia, additional commissions due to distributors and sales
representatives as a result of higher sales through such channels and increased
promotional activities. Selling, general and administrative expenditures as a
percentage of net sales decreased from 10% in both the three months and the nine
months ended March 31, 1995 to 9% in the three months and flat in the nine
months ended March 31, 1996 due to the increase in the net sales at a faster
rate than the increase in expenditures.
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Interest Income, Net
The amount of interest income earned by the Company varies directly
with the amount of its cash, cash equivalents, short-term investments and
long-term investments and the prevailing interest rates. Interest income
increased slightly in the three months ended March 31, 1996 from the three
months ended March 31, 1995 as a result of increased prevailing interest rates
offset by the decrease of cash, cash equivalents, short-term and long-term
investments available. Interest income increased from $1.3 million in the nine
months ended March 31, 1995 to $1.6 million in the nine months ended March 31,
1996 primarily due to increased amount of cash, cash equivalents and short-term
investments available and increased prevailing interest rates during the current
period. A significant amount of the interest earned by the Company was not
subject to federal income taxes. The Company expects interest income to decline
from the current level because of the lower balance of cash, cash equivalent,
short-term investments and long-term investments, as it made payments of $13.7
million to UMC during the quarter ended March 31, 1996.
Provision for Income Taxes
As a percentage of income before income taxes, the provision for income
taxes was 32% for both the three months and nine months ended March 31, 1996 and
1995. The effective income tax rates were below the statutory rate primarily
because operations in foreign countries were subject to lower income tax rates
and a significant portion of earned interest was not subject to federal income
tax.
Future Results
The Company's statements regarding expected increases in the percentage
of sales to leading PC systems manufacturers, plans regarding introduction of
new products, and expected increases in research and development and selling,
general and administrative expenses are forward looking statements and actual
results might vary materially from the results expected by the Company. A number
of factors could affect such results, including those identified above and the
factors discussed below.
The Company's business is influenced by a variety of factors which
include the overall market for desktop and notebook PC computers, the success of
the Company's customers and their resultant net orders, seasonal customer
demand, timing of new product introductions, marketplace acceptance of new
product offerings, overall product mix, competitors' activities and the
availability of foundry and assembly capacities. The Company's future operating
results are also influenced by its dynamic product area and by its planned
growth in expenditures and the relation of planned increased expenses to future
operating results as well as by a variety of global, political, regulatory and
foreign exchange factors. These factors will all affect the Company's results
and there can be no assurance of Company's future operating results.
The Company supplies components to a variety of OEM customers that in
turn sell their products into the overall PC marketplace. Their success
influences the overall net orders that the Company may receive and attempt to
fill. Should there be a downturn in the overall PC business or should the
existing customers not be in a position to place orders or to accept order
fulfillment, the Company's performance could be adversely impacted and there can
be no assurance that the Company would be successful in achieving offsetting
orders. The success of the Company's marketing and sales efforts can also be
affected by changes in the global graphics marketplace. Because the Company's
customers distribute their products
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worldwide, such factors as shifts in market share from Asian clone makers to
other manufacturers have in the past affected the Company's operating results.
It is likely that future shifts would continue to influence the Company's
business. Since a substantial portion of the Company's revenues has been and are
expected to continue to be generated from customers in Asia, it is likely that
the Company's operating results will fluctuate with changes in the Asian
economies, particularly those of Taiwan and Hong Kong. Past performance has
indicated that seasonal performance variations should be expected with the
historic slowest PC sales occurring during the summer. This factor influences
when the Company's customers place their orders and when delivery is required.
Because the Company operates in the increasingly highly competitive
graphics controller product area, timely introductions of new products are
required. In order to be able to timely introduce new products a number of risk
factors have to be overcome. A fundamental business risk is whether or not the
Company can continue to develop products that will be accepted by a
fast-changing marketplace. The Company attempts to determine which products have
a high likelihood of marketplace acceptance and attempts to create functional
and manufacturable designs for those products. However the Company can not
assure that product development, the timing of the product introductions or the
marketplace acceptance of current products or of products to be developed will
be successful. The Company continues to invest in research and development and
in the personnel required to support new product introductions and new customers
including leading PC systems manufacturers. Should there be a shortfall in the
Company's business performance, the Company's financial results would be
adversely impacted by the planned growth in expenditures. Additional influences
on the Company's performance will be the actions of existing or future
competitors, the development of new technologies, the incorporation of graphics
functionality into other PC system components and possible claims by third
parties of infringement of patent or similar intellectual property rights.
The Company relies upon several independent foundries to manufacture
its products either in finished or in wafer form, and orders production either
on contract or spot basis. The Company's ability to supply product to its
customers is thus dependent upon its continuing relationships with those
foundries and in turn upon their uninterrupted ability to supply the Company's
product. Recently, there has been a worldwide shortage of advanced process
technology foundry capacity. To respond to this shortage, the Company has
entered into a number of contracts providing for additional capacity. Certain of
such contracts require substantial advance payments. There can be no assurance
that the Company will obtain sufficient foundry capacity to meet customer
demands in the future, particularly if that demand should increase, or that the
additional capacity from current foundries and new foundry sources will be
available and will satisfy the Company's requirements on timely basis or at
acceptable quality or per unit prices.
The Company's products are assembled and tested by a variety of
independent subcontractors. The Company's reliance on independent assembly and
testing houses to provide these services involves a number of risks, including
the absence of guaranteed capacity and reduced control over delivery schedules,
quality assurance and costs.
Constraints or delays in the supply of the Company's products, whether
due to the factors above or to other unanticipated factors, could have adverse
effects on the Company's results. These could be caused by the Company electing
to purchase products from higher cost sources and could result in the loss of
orders.
The market price of the Company's Common Stock has been, and may
continue to be, extremely volatile. Factors such as new product announcements by
the Company or its competitors, quarterly fluctuations in the Company's
operating results and general conditions in the high technology and in the
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graphics controller market may have a significant impact on the market price of
the Company's Common Stock.
The Company has recently experienced a period of significant growth,
which has and could continue to strain its limited personnel, financial and
other resources. In particular, the sale and distribution of products to
numerous leading PC systems manufacturers in diverse markets and the
requirements of such manufacturers for design support would place substantial
demands on the Company's research and development and sales functions. An
expansion of sales and distribution of products to numerous diverse large system
manufacturing customers, should they occur, would require expansion of the
Company's research and development, production and marketing and sales
capabilities. Sales growth, should it occur, will require additional foundry
capacity and the Company has contracted to expand available foundry capacity.
Future results will in part depend upon and could be significantly impacted by
the Company's ability to manage its resources to support future activities and
upon its ability to finance expanded foundry capitalization and production
costs.
The Company's future operating results also may be affected by various
factors which are beyond the Company's control. These include adverse changes in
general economic conditions, political instability, governmental regulation or
intervention affecting the personal computer industry, government regulation
resulting from U.S. foreign and trade policy, fluctuations in foreign exchange
rates particularly with regard to the relationship of the U.S. dollar and Asian
currencies. The Company is unable to predict future economic, political,
regulatory and foreign exchange changes and cannot determine their impact on
future performance.
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LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company's principal sources of liquidity
included cash and cash equivalents of $28.5 million and short-term investments
of $17.8 million. Cash and cash equivalents and short-term investments have
decreased $2.1 million and $12.2 million, respectively, from the beginning of
the fiscal year primarily due to the investing activities during the nine months
period ended March 31, 1996.
In the nine months ended March 31, 1996, $15.5 million of cash were
provided by operating activities mainly as a result of profitable operations and
adjustment of non-cash expenses, an increase in the outstanding accounts payable
to vendors, accrued expenses and other liabilities and income tax payable;
offset in part by an increase in outstanding accounts receivable balances,
inventories and other assets. In the nine months ended March 31, 1995, $5.2
million of cash were provided by operating activities mainly due to decreased
requirements for working capital as a result of profitable operations and
adjustment of non-cash expenses, a decrease of inventory level, an increase in
income taxes payable; offset in part by an increase in outstanding accounts
receivable balances and a decrease in the outstanding accounts payable to
vendors.
Capital expenditures in the nine months ended March 31, 1996 and 1995
were $2.5 million and $1.4 million, respectively.
In order to obtain a supply of wafers sufficient to meet possible
increased demand, and especially to obtain wafers manufactured using advanced
process technologies, the Company entered into an agreement in June 1995 with
Taiwan Semiconductor Manufacturing Company ("TSMC"), the Company's major
foundry, under which the Company is committed to purchase and TSMC is committed
to provide a certain number of wafers each year through December 31, 1999. In
addition, the Company has the option to purchase an additional amount of wafers
each year during the period. The Company made a prepayment of $16.8 million in
August 1995. The payment can be applied to partially offset the price of wafers
purchased under the option, but is not refundable except in certain
circumstances. Based on the timing specified in the supply agreement, the
prepayment will be applied at a rate of $4.8 million per year for fiscal years
ending June 30, 1997 through 1999 and $2.4 million for the fiscal year ending
June 30, 2000. If the Company expects to purchase fewer units specified in the
supply agreement, then the Company will use the guideline of FAS 121 to assess
whether the value of the prepayment is impaired.
In August 1995, the Company also entered into a joint venture agreement
with United Microelectronics Corporation ("UMC"), one of the Company's current
foundries, under which the Company is committed to invest $60 million over the
next three years for certain equity ownership in a joint venture with UMC and
other venture partners to establish a new foundry. Under the agreement, the new
foundry guarantees to Trident a certain percentage of its total wafer supply.
Committed equity contributions under the joint venture agreement were estimated
at $15 million, $30 million and $15 million during fiscal year 1996, 1997 and
1998, respectively. The Company made the first payment amounting to $13.7
million in January 1996.
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These investments with TSMC and UMC are intended to secure capacity so
that the Company can meet expected increased demand, should it occur, and are an
investment in the future of Trident. However, there are certain risks associated
with these methods including the ability of the Company to utilize the capacity
for which it has made substantial investments and the ability of UMC, together
with its partners, to successfully build the new foundry. These agreements and
the risks associated with these and other foundry relationships, are described
under the caption "Business-Manufacturing" of the Form 10-K Annual Report.
The Company will continue to consider possible transactions to secure
additional foundry capacity as long as circumstances warrant. The aforementioned
agreements with TSMC and UMC have utilized a significant amount of the Company's
available funds. However, the Company believes its current resources are
sufficient to meet its needs for at least the next twelve months. In addition to
the $15 million line of credit as discussed below, the Company regularly
considers transactions to finance its activities, including debt and equity
offerings and new credit facilities or other financing transaction.
SUBSEQUENT EVENT
In May 1996, the Company obtained a credit facility of an unsecured
revolving line of credit of $15 million with a maturity date of December 31,
1997. Under the terms of the line of credit , the Company may elect to convert a
portion or the total credit into a three-year term loan. The facility requires
the Company to comply with certain covenants regarding financial ratios and
reporting requirements.
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PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
Not applicable
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
In January 1996, the Company adopted the 1996 Non-statutory Stock Option
Plan under which 1,500,000 shares of Common Stock are reserved for
issuance as of January 17, 1996 to key employees and consultants. Under
the 1996 Non-statutory Stock Option Plan, non-statutory stock options
may be granted at prices not less than 85% of the fair market value at
the date of grant, as determined by the Board of Directors. Options
generally become exercisable and vest cumulatively in 25% increments
upon the anniversary of the date of grant.
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ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are filed with this Form:
Exhibit Description
- - ------- -----------
3.1 Restated Certificate of Incorporation.(1)
3.2 Bylaws of Trident Delaware Corporation, a Delaware corporation.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.(1)
10.1 Loan Agreement and Revolving Credit Note dated December 17, 1991,
between the Company and First Interstate Bank of California, together with a
Security Agreement executed in connection therewith.(1)
10.2 Form of Loan and Option Agreement between the Company and
certain of its employees executed in connection with the
Series E Preferred Stock Purchase Agreement dated December
26, 1991, together with form of Promissory Note and form of
Non-Recourse Pledge Agreement, each executed by such
employees in connection with such Loan and Option
Agreement.(1)
10.3(*) Form of the Company's Employee Stock Purchase Plan.(1)
10.4(*) Summary description of the Company's 401(k) plan.(1)
10.5(*) Form of Indemnity Agreement for officers, directors and agents.(1)
10.6(*) Form of Non-statutory Stock Option Agreement between the Company and
Frank C. Lin.(1)
10.7(*) Form of 1992 Stock Option Plan amending and restating the 1990 Stock
Option Plan included as Exhibit 10.5.(1)
10.8 Lease Agreement dated March 23, 1994 between the Company and Chan-
Paul Partnership for the Company's principal offices located at 189 North
Bernardo Avenue, Mountain View, California(2)
10.9 Option Agreement between the Company and Taiwan Semiconductor
Manufacturing Company dated June 25, 1995.(3)(4)
10.10 Foundry Venture Agreement dated August 18, 1995 by and between the
Company and United Microelectronics Corporation.(3)(4)
10.11 1996 Non-statutory Stock Option Plan together with form of Non-statutory
Stock Option Agreement. (5)
11.1 Statement Re Computation of Per Share Earnings. (5)
(1) Previously filed on October 27, 1992 as an exhibit to Registrant's
Registration Statement on S-1 (File No. 33-53768).
(2) Previously filed on May 13, 1994 as an exhibit to Registrant's
Quarterly Report on Form 10-Q.
(3) Previously filed on September 28, 1995 as an exhibit to Registrant's
Annual Report in Form 10-K.
(4) Confidential treatment has been requested for a portion of this
document.
(5) Filed herewith.
(*) Management contracts or compensatory plans or arrangements covering
executive officer or directors of the Company.
The Company did not file any reports on Form 8-K during the quarter ended March
31, 1996.
16
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on May 14, 1996 on its
behalf by the undersigned thereunto duly authorized.
Trident Microsystems, Inc.
(Registrant)
- - --------------------------------------
Frank C. Lin
President, Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
- - --------------------------------------
James T. Lindstrom
Vice President, Finance and Administration,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
17
18
EXHIBIT INDEX
Exhibit Description
- - ------- -----------
3.1 Restated Certificate of Incorporation.(1)
3.2 Bylaws of Trident Delaware Corporation, a Delaware corporation.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.(1)
10.1 Loan Agreement and Revolving Credit Note dated December 17, 1991,
between the Company and First Interstate Bank of California, together with a
Security Agreement executed in connection therewith.(1)
10.2 Form of Loan and Option Agreement between the Company and
certain of its employees executed in connection with the
Series E Preferred Stock Purchase Agreement dated December
26, 1991, together with form of Promissory Note and form of
Non-Recourse Pledge Agreement, each executed by such
employees in connection with such Loan and Option
Agreement.(1)
10.3(*) Form of the Company's Employee Stock Purchase Plan.(1)
10.4(*) Summary description of the Company's 401(k) plan.(1)
10.5(*) Form of Indemnity Agreement for officers, directors and agents.(1)
10.6(*) Form of Non-statutory Stock Option Agreement between the Company and
Frank C. Lin.(1)
10.7(*) Form of 1992 Stock Option Plan amending and restating the 1990 Stock
Option Plan included as Exhibit 10.5.(1)
10.8 Lease Agreement dated March 23, 1994 between the Company and Chan-
Paul Partnership for the Company's principal offices located at 189 North
Bernardo Avenue, Mountain View, California(2)
10.9 Option Agreement between the Company and Taiwan Semiconductor
Manufacturing Company dated June 25, 1995.(3)(4)
10.10 Foundry Venture Agreement dated August 18, 1995 by and between the
Company and United Microelectronics Corporation.(3)(4)
10.11 1996 Non-statutory Stock Option Plan together with form of Non-statutory
Stock Option Agreement. (5)
11.1 Statement Re Computation of Per Share Earnings. (5)
(1) Previously filed on October 27, 1992 as an exhibit to Registrant's
Registration Statement on S-1 (File No. 33-53768).
(2) Previously filed on May 13, 1994 as an exhibit to Registrant's
Quarterly Report on Form 10-Q.
(3) Previously filed on September 28, 1995 as an exhibit to Registrant's
Annual Report in Form 10-K.
(4) Confidential treatment has been requested for a portion of this
document.
(5) Filed herewith.
(*) Management contracts or compensatory plans or arrangements covering
executive officer or directors of the Company.