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Trident Microsystems Inc. Reports Operating Results (10-Q)

May 08, 2009 | About:

Trident Microsystems Inc. (TRID) filed Quarterly Report for the period ended 2009-03-31.

Trident Microsystems Inc. designs develops and markets very large scale integrated circuit videographics and audio products for the desktop and portable personal computer market. The company's graphics video and audio controllers typically are sold with software drivers a BIOS and related system integration support. Trident Microsystems Inc. has a market cap of $91.2 million; its shares were traded at around $1.45 with and P/S ratio of 0.3.

Highlight of Business Operations:

The decrease in research and development expenses for the three months ended March 31, 2009 compared to March 31, 2008 was primarily due to (i) a $1.9 million decrease resulted from mask tooling fees, (ii) a $1.5 million less expense incurred for the prior years software license fees, (iii) a $0.3 million decrease in stock-based compensation expense, partially offset by (iv) a $1.3 million increase in third-party IP licenses.

The decrease in research and development expenses for the nine months ended March 31, 2009 compared to the nine months ended March 31, 2008 was primarily due to (i) a $3.3 million decrease in stock-based compensation expense principally due to certain options modifications and contingent liabilities associated with vested options of certain terminated employees that occurred only during the nine months ended March 31, 2008, (ii) a $2.1 million less expense incurred for prior years software license fees, (iii) a $0.6 million decrease resulted from the mask tooling fees, partially offset by (iii) a $3.9 million increase in third-party IP licenses and hiring of additional employees.

The decrease in selling, general and administrative expenses for the three month period ended March 31, 2009 compared to the three month period ended March 31, 2008, resulted primarily from (i) a $1.5 million decrease in stock-based compensation expense, (ii) a $1.3 million decrease in sales commission paid to distributors representatives due to the decrease in revenues for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, (iii) a $1.0 million decrease in legal and professional fees due to the completion of the investigation into our stock option granting process in September 2007, partially offset by (iv) a $0.3 million increase in IP amortization due to the write down of acquisition-related IP.

During the three months ended March 31, 2009 and March 31, 2008, we received $4.3 million and $4.1 million, respectively, in reimbursements from our directors and officers insurance carriers for certain expenses we incurred in connection with the investigation of our historical stock option grant practices. These reimbursements are reflected as an offset to legal fees. The increase in IP amortization is due to the write down of the acquisition-related intangible assets. Based on the results of the intangible assets impairment analysis performed in accordance with SFAS 144, we recognized intangible assets impairment charges of $0.6 million on acquisition-related intangible assets for TMBJ, of which $0.3 million related to tradename was included as Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2009. Refer to Note 4, Goodwill and Intangible Assets, of Notes to Condensed Consolidated Financial Statements in Item 1 of this report for further information.

The decrease in selling, general and administrative expenses for the nine month period ended March 31, 2009 compared to the nine month period ended March 31, 2008, resulted primarily from a $10.6 million decrease in stock-based compensation expense primarily related to the extension of the option exercise period and contingent liabilities associated with vested options of certain terminated employees and a $3.9 million decrease in legal and professional fees due to the completion of our investigation into our stock option granting prices in September 2007. The legal and professional fees related to the cost of the investigation into our historical stock option grant practices were $4.3 million for the nine month period ended March 31, 2009 compared to $6.7 million for the nine month period ended March 31, 2008. During the three and nine months ended March 31, 2009, we capitalized $1.7 million of legal and professional fees related to due diligence in connection with the acquisition of Micronas in accordance with SFAS 141. We anticipate that our selling, general and administrative expenses will remain relatively flat for the fourth quarter of fiscal year 2009 compared to the prior quarter.

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