UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K/A
 (Amendment No. 1)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2009
 OR
 o
    
    TRANSITION REPORTING 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.
  Delaware
(State or other jurisdiction of 
Incorporation or Organization)
    
    77-0156584
(I.R.S. Employer
Identification Number)3408 Garrett Drive, Santa Clara, California
(Address of principal executive offices)
    
    95054-2803
(Zip Code)
 (408) 764-8808
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.001 par value
    
    NASDAQ Global Market
 Securities registered pursuant to Section 12(g) of the Act: None
 Yes o No þ
 Yes o No þ
 þ o
 Yes o No o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Small Reporting Company o
 o þ




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##### 



TRIDENT MICROSYSTEMS, INC.
TABLE OF CONTENTS
 PageExplanatory Note
    
    
    3PART IIItem 8. Financial Statements and Supplementary Data
    
    
    4Item 9A.
Controls and Procedures
    
    
    39PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    41Item 11. Executive Compensation
    
    
    47Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    68Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    72Item 14. Principal Accounting Fees and Services
    
    
    75PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    76Signatures
    
    
    78
  2




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##### 



EXPLANATORY NOTE
     3




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##### 



PART II
 
 Item 8.
    
    Financial Statements and Supplementary Data.
 TRIDENT MICROSYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended June 30,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007Net revenues
    
    $
    75,761
    
    
    $
    257,938
    
    
    $
    270,795Cost of revenues
    
    
    52,433
    
    
    
    137,912
    
    
    
    141,688Gross profit
    
    
    23,328
    
    
    
    120,026
    
    
    
    129,107Operating expenses:Research and development
    
    
    53,016
    
    
    
    52,608
    
    
    
    40,970Selling, general and administrative
    
    
    29,617
    
    
    
    48,598
    
    
    
    47,993Goodwill impairment
    
    
    1,432
    
    
    
    
    
    
    
    In-process research and development
    
    
    697
    
    
    
    
    
    
    
    Restructuring charges
    
    
    810
    
    
    
    
    
    
    
    Total operating expenses
    
    
    85,572
    
    
    
    101,206
    
    
    
    88,963Income (loss) from operations
    
    
    (62,244
    )
    
    
    18,820
    
    
    
    40,144Loss on sale of short-term investments
    
    
    (8,940
    )
    
    
    
    
    
    
    Impairment loss on short-term investments
    
    
    (556
    )
    
    
    (6,480
    )
    
    
    Interest income
    
    
    2,968
    
    
    
    6,166
    
    
    
    4,890Other income, net
    
    
    4,053
    
    
    
    445
    
    
    
    1,947Income (loss) before provision for income taxes and
cumulative effect of change in accounting principle
    
    
    (64,719
    )
    
    
    18,951
    
    
    
    46,981Provision for income taxes
    
    
    5,513
    
    
    
    8,799
    
    
    
    16,673Income (loss) before cumulative
effect of change in accounting principle
    
    
    (70,232
    )
    
    
    10,152
    
    
    
    30,308Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (190
    )Net income (loss)
    
    $
    (70,232
    )
    
    $
    10,152
    
    
    $
    30,118Net income (loss) per share  Basic:Income (loss) before change in accounting principle
    
    $
    (1.12
    )
    
    $
    0.17
    
    
    $
    0.52Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.00
    )Net income (loss) per share  Basic
    
    $
    (1.12
    )
    
    $
    0.17
    
    
    $
    0.52Net income (loss) per share  Diluted:Income (loss) before change in accounting principle
    
    $
    (1.12
    )
    
    $
    0.16
    
    
    $
    0.48Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.00
    )Net income (loss) per share  Diluted
    
    $
    (1.12
    )
    
    $
    0.16
    
    
    $
    0.48Shares used in computing net income (loss) per share  Basic
    
    
    62,535
    
    
    
    59,367
    
    
    
    57,637Shares used in computing net income (loss) per share  Diluted
    
    
    62,535
    
    
    
    62,751
    
    
    
    63,380
 The accompanying notes are an integral part of these consolidated financial statements.
  4




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##### 



TRIDENT MICROSYSTEMS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 As of June 30,(In thousands, except par values)
    
    2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    187,937
    
    
    $
    213,296Short-term investments
    
    
    
    
    
    
    26,704Accounts receivable, net of allowances for sales returns of $56 and $300 at
June 30, 2009 and 2008, respectively
    
    
    4,086
    
    
    
    4,510Accounts receivable from related party
    
    
    5,289
    
    
    
    Inventories
    
    
    6,828
    
    
    
    8,680Prepaid expenses and other current assets
    
    
    9,425
    
    
    
    12,863Total current assets
    
    
    213,565
    
    
    
    266,053Property and equipment, net
    
    
    27,587
    
    
    
    23,425Goodwill
    
    
    7,708
    
    
    
    1,432Intangible assets, net
    
    
    7,685
    
    
    
    8,428Other assets
    
    
    6,767
    
    
    
    9,977Total assets
    
    $
    263,312
    
    
    $
    309,315LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    10,485
    
    
    $
    10,889Accounts payable to related party
    
    
    5,513
    
    
    
    Accrued expenses and other current liabilities
    
    
    19,546
    
    
    
    22,910Income taxes payable
    
    
    13,107
    
    
    
    16,309Total current liabilities
    
    
    48,651
    
    
    
    50,108Long-term income taxes payable
    
    
    21,658
    
    
    
    21,579Deferred income tax liabilities
    
    
    81
    
    
    
    370Total liabilities
    
    
    70,390
    
    
    
    72,057Commitments and contingencies (Notes 6 and 8)Stockholders equity:Preferred stock, $0.001 par value; 500 shares authorized;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 95,000 shares authorized; 69,920 and
61,238 shares issued and outstanding at June 30, 2009 and 2008, respectively
    
    
    70
    
    
    
    61Additional paid-in capital
    
    
    234,134
    
    
    
    208,299Retained earnings (accumulated deficit)
    
    
    (41,282
    )
    
    
    28,950Accumulated other comprehensive loss
    
    
    
    
    
    
    (52
    )Total stockholders equity
    
    
    192,922
    
    
    
    237,258Total liabilities and stockholders equity
    
    $
    263,312
    
    
    $
    309,315
 The accompanying notes are an integral part of these consolidated financial statements.
  5




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##### 



TRIDENT MICROSYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended June 30,(In thousands)
    
    2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    (70,232
    )
    
    $
    10,152
    
    
    $
    30,118Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating activities:Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    190Stock-based compensation expense
    
    
    12,673
    
    
    
    24,270
    
    
    
    15,607Excess tax benefit from stock-based compensation
    
    
    (96
    )
    
    
    (561
    )
    
    
    (855
    )Depreciation and amortization
    
    
    9,544
    
    
    
    5,354
    
    
    
    1,501In-process research and development
    
    
    697
    
    
    
    
    
    
    
    Amortization of acquisition-related intangible assets
    
    
    3,985
    
    
    
    5,725
    
    
    
    6,345Loss on disposal of property and equipment
    
    
    83
    
    
    
    52
    
    
    
    59Impairment loss on investment in UMC
    
    
    556
    
    
    
    6,480
    
    
    
    Impairment of goodwill
    
    
    1,432
    
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    2,689
    
    
    
    
    
    
    
    Loss (gain) on sales of investments
    
    
    8,966
    
    
    
    (969
    )
    
    
    (216
    )Deferred income taxes
    
    
    63
    
    
    
    (722
    )
    
    
    1,179Changes in assets and liabilities, net of effect of acquisitions:Accounts receivable
    
    
    (4,677
    )
    
    
    4,665
    
    
    
    (4,883
    )Inventories
    
    
    1,852
    
    
    
    7,583
    
    
    
    (1,622
    )Prepaid expenses and other current assets
    
    
    5,885
    
    
    
    6,088
    
    
    
    5,742Accounts payable
    
    
    (577
    )
    
    
    (8,902
    )
    
    
    384Accrued expenses and other liabilities
    
    
    (1,796
    )
    
    
    (3,574
    )
    
    
    2,398Income taxes payable
    
    
    (2,897
    )
    
    
    2,273
    
    
    
    6,145Net cash provided by (used in) operating activities
    
    
    (31,850
    )
    
    
    57,914
    
    
    
    62,092Cash flows from investing activities:Purchases of property and equipment
    
    
    (3,189
    )
    
    
    (6,246
    )
    
    
    (17,690
    )Purchases of stock of privately held companies
    
    
    
    
    
    
    
    
    
    
    (500
    )Proceeds from the capital reduction of UMC investment
    
    
    
    
    
    
    7,829
    
    
    
    Proceeds from sale of available-for-sale investments
    
    
    17,234
    
    
    
    6,079
    
    
    
    Proceeds from sale of investments in private companies
    
    
    
    
    
    
    1,056
    
    
    
    1,228Acquisition of businesses, net of cash acquired
    
    
    (2,531
    )
    
    
    (1,960
    )
    
    
    Other assets
    
    
    (6,471
    )
    
    
    (5,070
    )
    
    
    (748
    )Proceeds from sale of property, plant and equipment
    
    
    294
    
    
    
    48
    
    
    
    Net cash provided by (used in) investing activities
    
    
    5,337
    
    
    
    1,736
    
    
    
    (17,710
    )Cash flows from financing activities:Proceeds from issuance of common stock to employees
    
    
    1,058
    
    
    
    5,523
    
    
    
    805Excess tax benefit from stock-based compensation
    
    
    96
    
    
    
    561
    
    
    
    855Net cash settlements of stock options in connection with IRC Section 409A
    
    
    
    
    
    
    
    
    
    
    (1,526
    )Net cash provided by financing activities
    
    
    1,154
    
    
    
    6,084
    
    
    
    134Net (decrease) increase in cash and cash equivalents
    
    
    (25,359
    )
    
    
    65,734
    
    
    
    44,516Cash and cash equivalents at beginning of year
    
    
    213,296
    
    
    
    147,562
    
    
    
    103,046Cash and cash equivalents at end of year
    
    $
    187,937
    
    
    $
    213,296
    
    
    $
    147,562Supplemental disclosure of cash flow information:Cash paid for income taxes
    
    $
    1,588
    
    
    $
    1,219
    
    
    $
    2,080Supplemental schedule of non-cash investing and financing activities:Issuance of common stock warrants and common stock for Micronas acquisition
    
    $
    (12,087
    )
    
    $
    
    
    
    $
    Accrued expense for building
    
    $
    
    
    
    $
    (208
    )
    
    $
    Prepaid taxes in connection with intercompany profit on assets remaining within consolidated group
    
    $
    
    
    
    $
    
    
    
    $
    20,583
 The accompanying notes are an integral part of these consolidated financial statements.
  6




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##### 



TRIDENT MICROSYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME (LOSS)
 Additional
    
    
    Retained
    
    
    AccumulatedPaid-in
    
    
    Earnings
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Capital
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Stockholders(In thousands)
    
    Shares
    
    
    Amount
    
    
    (Common Stock)
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    EquityBalance at June 30, 2006
    
    
    57,206
    
    
    $
    57
    
    
    $
    162,801
    
    
    $
    (11,320
    )
    
    $
    2,119
    
    
    $
    153,657Income before cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,308
    
    
    
    
    
    
    
    30,308Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190
    )
    
    
    
    
    
    
    (190
    )Unrealized gains on investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,483
    
    
    
    1,483Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,601Shares issued pursuant to stock awards, net
    
    
    542
    
    
    
    1
    
    
    
    804
    
    
    
    
    
    
    
    
    
    
    
    805Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    15,607
    
    
    
    
    
    
    
    
    
    
    
    15,607Tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,704
    
    
    
    
    
    
    
    
    
    
    
    1,704Net cash settlement of stock options in
connection with IRC Section 409A
    
    
    
    
    
    
    
    
    
    
    (1,526
    )
    
    
    
    
    
    
    
    
    
    
    (1,526
    )Balance at June 30, 2007
    
    
    57,748
    
    
    
    58
    
    
    
    179,390
    
    
    
    18,798
    
    
    
    3,602
    
    
    
    201,848Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,152
    
    
    
    
    
    
    
    10,152Unrealized losses on investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,654
    )
    
    
    (3,654
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,498Shares issued pursuant to stock awards, net
    
    
    3,490
    
    
    
    3
    
    
    
    5,520
    
    
    
    
    
    
    
    
    
    
    
    5,523Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    24,270
    
    
    
    
    
    
    
    
    
    
    
    24,270Net cash settlement of stock options
    
    
    
    
    
    
    
    
    
    
    (1,274
    )
    
    
    
    
    
    
    
    
    
    
    (1,274
    )Tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    
    
    
    
    393Balance at June 30, 2008
    
    
    61,238
    
    
    
    61
    
    
    
    208,299
    
    
    
    28,950
    
    
    
    (52
    )
    
    
    237,258Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,232
    )
    
    
    
    
    
    
    (70,232
    )Unrealized gain on short-term investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    52Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,180
    )Shares issued pursuant to stock awards, net
    
    
    1,682
    
    
    
    2
    
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    1,058Shares and warrant issued in connection
with the aquistion of Micronas assets
    
    
    7,000
    
    
    
    7
    
    
    
    12,080
    
    
    
    
    
    
    
    
    
    
    
    12,087Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    12,673
    
    
    
    
    
    
    
    
    
    
    
    12,673Net cash settlement for TMTs stock options
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26Balance at June 30, 2009
    
    
    69,920
    
    
    $
    70
    
    
    $
    234,134
    
    
    $
    (41,282
    )
    
    $
    
    
    
    $
    192,922
 The accompanying notes are an integral part of these consolidated financial statements.
  7




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TRIDENT MICROSYSTEMS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business and Business Combination
 Business
    Business Combination
  Basis of Consolidation and Presentation
  Use of Estimates
  Foreign Currency Remeasurement
   8




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Cash and Cash Equivalents
  Investments
   Fair Value of Financial Instruments
 Fair Value
Measurements (
 Concentrations of Credit Risk and Other Risk
      9




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Inventories
  Long-lived Assets
 Property and Equipment
  Amortizable Intangible Assets
  Accounting for the Impairment or Disposal of Long-lived Assets
  10




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Goodwill
 Goodwill and Other Intangible
Assets
 
    
    significant underperformance relative to historical or projected future operating results;
    
    significant adverse change in the extent or manner in which a long-lived asset is being
used or in its physical condition;
    
    significant negative industry or economic trends; and
    
    significant decline in the Companys market capitalization.
  Revenue Recognition
 Revenue
Recognition (SAB 104),
  Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendors Products)
   11




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Stock-based Compensation
 Share-Based Payment
  Shipping and Handling Costs
  Research and Development
  Income Taxes
 Accounting for Income Taxes
  Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
  12




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Net Income (loss) per Share
 Earnings per
Share.
 Comprehensive Income
  Reclassifications
  Product Warranty
  Advertising Expense
  Recent Accounting Pronouncements
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting The FASB Accounting Standards Codification.
 Subsequent Events
 Interim Disclosures about Fair Value of
Financial Instruments
  13




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That
Are Not Orderly Fair Value Measurements
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies Business Combinations Business Combinations Accounting for Contingencies
 Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active
  Determination of the Useful Life of
Intangible Assets
 Effective Date of FASB Statement 157
  14




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51
 2. INVESTMENTS
  Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    Estimated Fair(Dollars in thousands)
    
    Historical cost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort-term investments:Marketable equity securities  as of June 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Marketable equity securities  as of June 30, 2008
    
    $
    26,756
    
    
    $
    
    
    
    $
    (52
    )
    
    $
    26,704
 Short-term investments
 United Microelectronics Corporation
  Miscellaneous Accounting, The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments
  15




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3. BALANCE SHEET COMPONENTS
 June 30,(Dollars in thousands)
    
    2009
    
    
    2008Cash and cash equivalents:Cash
    
    $
    48,712
    
    
    $
    37,295U.S. Treasuries
    
    
    111,773
    
    
    
    Certificates of deposit
    
    
    27,452
    
    
    
    43,582Money market funds
    
    
    
    
    
    
    132,419Total cash and cash equivalents
    
    $
    187,937
    
    
    $
    213,296Inventories:Work in process
    
    $
    4,935
    
    
    $
    4,170Finished goods
    
    
    1,893
    
    
    
    4,510Total inventories
    
    $
    6,828
    
    
    $
    8,680Property and equipment, net:Building and leasehold improvements
    
    $
    19,467
    
    
    $
    18,738Machinery and equipment
    
    
    15,454
    
    
    
    8,773Software
    
    
    3,925
    
    
    
    3,319Furniture and fixtures
    
    
    2,277
    
    
    
    1,465Construction in progress
    
    
    
    
    
    
    10341,123
    
    
    
    32,398Accumulated depreciation and amortization
    
    
    (13,536
    )
    
    
    (8,973
    )Total property and equipment, net
    
    $
    27,587
    
    
    $
    23,425Accrued expenses and current liabilities:Compensation and benefits
    
    $
    4,449
    
    
    $
    5,927Contingent liabilities on certain option modifications (1)
    
    
    4,336
    
    
    
    4,336Professional fees
    
    
    2,687
    
    
    
    1,572Royalties
    
    
    796
    
    
    
    1,014Deferred revenues less cost of revenues
    
    
    344
    
    
    
    1,274Others
    
    
    6,934
    
    
    
    7,400Prior software usage (2)
    
    
    
    
    
    
    1,387Total accrued expenses
    
    $
    19,546
    
    
    $
    22,910
 (1)
    
    See Note 8, Employee Stock Plans, of Notes to Consolidated Financial Statements(2)
    
    See Note 6, Commitments and Contingencies, of Notes to Consolidated Financial Statements  16




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 4. GOODWILL AND INTANGIBLE ASSETS
 Goodwill and impairment
  (In thousands)Balance as of June 30, 2007
    
    $
    Goodwill acquired
    
    
    1,432Balance as of June 30, 2008
    
    $
    1,432Goodwill acquired
    
    
    7,708Impairment charge
    
    
    (1,432
    )Balance as of June 30, 2009
    
    $
    7,708
    Intangible assets and impairment
   17




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Acquisition-related intangible assets
   Third-party purchased intangible assets
   June 30, 2009
    
    
    June 30, 2008Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedAmortization and
    
    
    
    
    
    
    
    
    
    
    Amortization and(Dollars in thousands)
    
    Gross
    
    
    Write-off
    
    
    Net
    
    
    Gross
    
    
    Write-off
    
    
    NetCore and developed technologies
    
    $
    28,646
    
    
    $
    (21,382
    )
    
    $
    7,264
    
    
    $
    24,587
    
    
    $
    (17,129
    )
    
    $
    7,458Customer relationships
    
    
    2,521
    
    
    
    (2,247
    )
    
    
    274
    
    
    
    2,521
    
    
    
    (1,561
    )
    
    
    960Backlog
    
    
    166
    
    
    
    (19
    )
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    Tradename
    
    
    14
    
    
    
    (14
    )
    
    
    
    
    
    
    14
    
    
    
    (4
    )
    
    
    10Total
    
    $
    31,347
    
    
    $
    (23,662
    )
    
    $
    7,685
    
    
    $
    27,122
    
    
    $
    (18,694
    )
    
    $
    8,428
  (Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Reported as:Cost of revenues
    
    $
    4,254
    
    
    $
    5,138
    
    
    $
    5,742Selling, general and administrative
    
    
    696
    
    
    
    587
    
    
    
    603Net revenues
    
    
    18
    
    
    
    
    
    
    
    Total
    
    $
    4,968
    
    
    $
    5,725
    
    
    $
    6,345
  18




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  5. GUARANTEES
 Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others,
 (Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Accrued product warranty, beginning
of fiscal year
    
    $
    256
    
    
    $
    800
    
    
    $
    1,082Charged to (reversal of) cost of revenues
    
    
    (256
    )
    
    
    (372
    )
    
    
    1,171Actual product warranty expenses
    
    
    
    
    
    
    (172
    )
    
    
    (1,453
    )Accrued product warranty, end of fiscal
year
    
    $
    
    
    
    $
    256
    
    
    $
    800
 6. COMMITMENTS AND CONTINGENCIES
 Commitments
 Lease Commitments
  Purchase Commitments
  Contingencies
 Shareholder Derivative Litigation
 In re
Trident Microsystems Inc. Derivative Litigation Limke v. Lin et al
  19




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Regulatory Actions
  Indemnification Obligations
  Prior Software Usage
  General
   20




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 7. STOCKHOLDERS EQUITY
 Preferred Shares Rights
   Comprehensive Income (Loss)
 Reporting Comprehensive Income
 8. EMPLOYEE BENEFIT PLANS
 Equity Incentive Plans
    21




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Share-Based Payment Accounting for Stock Based Compensation
 Valuation Assumptions
    Equity Incentive Plans for Years EndedJune 30,2009
    
    
    2008
    
    
    2007Expected terms (in years)
    
    
    3.94
    
    
    
    4.20
    
    
    
    4.25Volatility
    
    
    62.68
    %
    
    
    52.25
    %
    
    
    61.92
    %Risk-free interest rate
    
    
    2.83
    %
    
    
    3.97
    %
    
    
    4.77
    %Expected dividend rate
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value
    
    $
    1.27
    
    
    $
    5.04
    
    
    $
    10.65
   22




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Stock-Based Compensation Expense
  Year Ended June 30,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Cost of revenues
    
    $
    587
    
    
    $
    763
    
    
    $
    896Research and development
    
    
    7,539
    
    
    
    12,418
    
    
    
    8,901Selling, general and administrative
    
    
    4,547
    
    
    
    15,424
    
    
    
    5,810Total stock-based compensation expense
    
    $
    12,673
    
    
    $
    28,605
    
    
    $
    15,607
 Accounting for Contingencies
  23




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Options OutstandingShares Available for
    
    
    
    
    
    
    Weighted Average(Shares in thousands, except per share amounts)
    
    Grant
    
    
    Number of Shares
    
    
    Exercise PriceBalance at June 30, 2006
    
    
    5,335
    
    
    
    9,594
    
    
    $
    4.49Plan shares expired
    
    
    (622
    )
    
    
    
    
    
    
    Restricted stock granted (1)
    
    
    (380
    )
    
    
    
    
    
    
    Options granted
    
    
    (1,553
    )
    
    
    1,553
    
    
    
    20.17Options exercised
    
    
    
    
    
    
    (541
    )
    
    
    1.49Options canceled
    
    
    804
    
    
    
    (804
    )
    
    
    8.34Balance at June 30, 2007
    
    
    3,584
    
    
    
    9,802
    
    
    $
    6.82Options increase under 2006 Plan
    
    
    4,000Plan shares expired
    
    
    (594
    )
    
    
    
    
    
    
    Restricted stock granted (1)
    
    
    (1,273
    )
    
    
    
    
    
    
    Restricted stock cancellation (1)
    
    
    192
    
    
    
    
    
    
    
    Options granted
    
    
    (1,870
    )
    
    
    1,870
    
    
    
    10.60Options exercised
    
    
    
    
    
    
    (2,778
    )
    
    
    2.01Options cancelled, forfeited or expired
    
    
    1,369
    
    
    
    (1,369
    )
    
    
    10.58Balance at June 30, 2008
    
    
    5,408
    
    
    
    7,525
    
    
    $
    8.94Plan shares expired
    
    
    (594
    )
    
    
    
    
    
    
    Restricted stock granted (1)
    
    
    (1,512
    )
    
    
    
    
    
    
    Restricted stock cancellation (1)
    
    
    424
    
    
    
    
    
    
    
    Options granted
    
    
    (1,859
    )
    
    
    1,859
    
    
    
    2.57Options exercised
    
    
    
    
    
    
    (1,062
    )
    
    
    1.23Options cancelled, forfeited or expired
    
    
    1,454
    
    
    
    (1,454
    )
    
    
    9.90Balance at June 30, 2009
    
    
    3,321
    
    
    
    6,868
    
    
    $
    8.21Vested and expected to vest at June 30, 2009
    
    
    
    
    
    
    6,628
    
    
    $
    8.28
 (1)
    
    Restricted stock is deducted from shares available for grant under the 2006 Plan at a 1 to 1.38
ratio.   24




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Options Outstanding
    
    
    Options ExercisableWeighted Average
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    WeightedNumber of
    
    
    Contractual Term
    
    
    Exercise
    
    
    Number of
    
    
    AverageRange of Exercise Prices
    
    Shares
    
    
    (in Years)
    
    
    Price
    
    
    Shares
    
    
    Exercise Price$0.78    $1.69
    
    
    1,840
    
    
    
    5.3
    
    
    $
    1.16
    
    
    
    1,515
    
    
    $
    1.12$1.70    $5.22
    
    
    1,830
    
    
    
    8.6
    
    
    $
    3.18
    
    
    
    270
    
    
    $
    4.55$5.34    $15.23
    
    
    1,834
    
    
    
    7.1
    
    
    $
    11.45
    
    
    
    894
    
    
    $
    11.56$15.34    $28.15
    
    
    1,364
    
    
    
    7.5
    
    
    $
    20.15
    
    
    
    733
    
    
    $
    20.15Total
    
    
    6,868
    
    
    
    7.1
    
    
    $
    8.21
    
    
    
    3,412
    
    
    $
    8.22
    Restricted Stock Awards and Restricted Stock Units
  Weighted AverageGrant-Date Fair(Shares in thousands, except per share amounts)
    
    Shares
    
    
    Value per ShareNonvested balance at June 30, 2006
    
    
    
    
    
    $
    Granted
    
    
    275
    
    
    
    19.98Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested balance at June 30, 2007
    
    
    275
    
    
    $
    19.98Granted
    
    
    923
    
    
    
    12.20Vested
    
    
    (50
    )
    
    
    19.64Forfeited
    
    
    (140
    )
    
    
    13.92Nonvested balance at June 30, 2008
    
    
    1,008
    
    
    $
    13.71Granted
    
    
    1,096
    
    
    
    3.33Vested
    
    
    (247
    )
    
    
    3.85Forfeited
    
    
    (307
    )
    
    
    10.86Nonvested balance at June 30, 2009
    
    
    1,551
    
    
    $
    7.02
  25




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Employee 401(k) Plan
   Employee Stock Purchase Plan
  Modification of Certain Options
 Extended Exercise
   26




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Contingent Liabilities
  Changing Employment Status from Employee to Consultant
   27




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 9. INCOME TAXES
  Years Ended June 30,(Dollars in thousands)
    
    2009
    
    
    2008Balance at beginning of year
    
    $
    42,987
    
    
    $
    40,708Increases related to current year tax positions
    
    
    4,486
    
    
    
    3,093(Decreases) increases related to prior year tax positions
    
    
    (4,767
    )
    
    
    1,515Expiration of the statute of limitations for the assessment of taxes
    
    
    (340
    )
    
    
    (2,329
    )Balance at end of year
    
    $
    42,366
    
    
    $
    42,987
     Year Ended June 30,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007United States
    
    $
    (20,374
    )
    
    $
    (34,419
    )
    
    $
    (20,358
    )Foreign
    
    
    (44,345
    )
    
    
    53,370
    
    
    
    67,339$
    (64,719
    )
    
    $
    18,951
    
    
    $
    46,981
  Year Ended June 30,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    181
    
    
    $
    311
    
    
    $
    180State
    
    
    1
    
    
    
    1
    
    
    
    2Foreign
    
    
    5,268
    
    
    
    9,209
    
    
    
    15,312$
    5,450
    
    
    $
    9,521
    
    
    $
    15,494Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    63
    
    
    
    (722
    )
    
    
    1,17963
    
    
    
    (722
    )
    
    
    1,179$
    5,513
    
    
    $
    8,799
    
    
    $
    16,673
  28




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  June 30,(Dollars in thousands)
    
    2009
    
    
    2008Deferred income tax assets:Research and development credits
    
    $
    13,557
    
    
    $
    12,709Net operating loss carryforwards
    
    
    5,665
    
    
    
    2,743Capital loss
    
    
    9,424
    
    
    
    Reserves and accruals
    
    
    733
    
    
    
    2,945Other
    
    
    5,091
    
    
    
    5,435Deferred income tax assets
    
    
    34,470
    
    
    
    23,832Valuation allowance
    
    
    (30,010
    )
    
    
    (20,820
    )Deferred income tax assets, net
    
    
    4,460
    
    
    
    3,012Total deferred income tax liabilities:Amortization
    
    
    
    
    
    
    (198
    )Unremitted earnings of foreign subsidiaries
    
    
    (3,981
    )
    
    
    (2,220
    )Total deferred income tax liabilities
    
    
    (3,981
    )
    
    
    (2,418
    )Net deferred income tax assets
    
    $
    479
    
    
    $
    594
    Year Ended June 30,2009
    
    
    2008
    
    
    2007Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State taxes, net of federal tax benefit
    
    
    7.0
    
    
    
    11.7
    
    
    
    5.8Research and development credit
    
    
    1.2
    
    
    
    (3.5
    )
    
    
    1.4Foreign rate differential
    
    
    (32.2
    )
    
    
    (53.8
    )
    
    
    (15.1
    )Valuation allowance
    
    
    (28.7
    )
    
    
    19.7
    
    
    
    8.0Permanent differences
    
    
    7.4
    
    
    
    35.7
    
    
    
    0.2Other
    
    
    1.8
    
    
    
    1.6
    
    
    
    0.2Effective income tax rate
    
    
    (8.5
    )%
    
    
    46.4
    %
    
    
    35.5
    %
  29




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  10. NET INCOME (LOSS) PER SHARE
  Year Ended June 30,(Dollars in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    (70,232
    )
    
    $
    10,152
    
    
    $
    30,118Shares used in computing basic per share amounts
    
    
    62,535
    
    
    
    59,367
    
    
    
    57,637Dilutive potential common shares
    
    
    
    
    
    
    3,384
    
    
    
    5,743Shares used in computing diluted per share amounts
    
    
    62,535
    
    
    
    62,751
    
    
    
    63,380Net income (loss) per share:Basic
    
    $
    (1.12
    )
    
    $
    0.17
    
    
    $
    0.52Diluted
    
    $
    (1.12
    )
    
    $
    0.16
    
    
    $
    0.48Potentially dilutive securities (1)
    
    
    6,868
    
    
    
    4,916
    
    
    
    751
 (1)
    
    Dilutive potential common shares consist of stock options, restricted stock awards and
restricted stock units. The potentially dilutive common shares are excluded from the computation
of diluted net income (loss) per share for the above periods because their effect would have been
anti-dilutive. 11. BUSINESS COMBINATIONS
 Frame Rate Converter, Demodulator and Audio Decoder product lines of the Consumer Division of
Micronas Semiconductor Holding AG
  Fair value of common stock
    
    $
    10,668Estimated acquisition-related costs
    
    
    4,136Fair value of common stock warrants
    
    
    1,419In-process research and development
    
    
    697Value added taxes
    
    
    336Cash paid in exchange for outstanding shares of Micronas Netherlands B.V.
    
    
    10Total estimated purchase price
    
    $
    17,266
  30




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Preliminary Estimated Purchase Price Allocation
  Tangible assets acquired:Cash and cash equivalents
    
    
    
    
    
    $
    142Accounts receivable
    
    
    
    
    
    
    259Other current assets
    
    
    
    
    
    
    97Property and equipment, net
    
    
    
    
    
    
    4,818Deferred tax assets
    
    
    
    
    
    
    175Liabilities assumed:Accounts payable
    
    
    
    
    
    
    (133
    )Accrued liabilities
    
    
    
    
    
    
    (366
    )Above market lease liability
    
    
    
    
    
    
    (356
    )Net tangible assets acquired
    
    
    
    
    
    
    4,636Amortizable intangible assets acquired:
    
    Estimated useful lifeCore technology
    
    3 years
    
    
    4,059Backlog
    
    13 months
    
    
    166Goodwill
    
    Indefinite
    
    
    7,708In-process research and development
    
    
    
    
    
    
    697Total estimated purchase price allocation
    
    
    
    
    
    $
    17,266
    31




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Years Ended June 30,
    
    Amount2010
    
    $
    1,5012011
    
    
    1,3532012
    
    
    1,184
 Unaudited Pro Forma Financial Information
  Year Ended June 30,2009
    
    
    2008Pro forma net revnues
    
    $
    197,604
    
    
    $
    430,998Pro forma net income (loss)
    
    
    (91,928
    )
    
    
    (12,402
    )Pro forma net income (loss) per share- basic
    
    
    (1.32
    )
    
    
    (0.19
    )- diluted
    
    
    (1.32
    )
    
    
    (0.19
    )
 Beijing Tiside Electronics Design Co., Ltd.,
    32




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 12. FAIR VALUE REMEASUREMENTS
    Level 1
 Level 2
 Level 3
 Assets Measured at Fair Value on a Recurring Basis
  (Dollars in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3U.S. Treasury (1)
    
    $
    111,773
    
    
    $
    111,773
    
    
    
    
    
    
    
    Certificates of deposit (1)
    
    
    27,452
    
    
    
    27,452
    
    
    
    
    
    
    
    Total cash equivalents as of June 30, 2009
    
    $
    139,225
    
    
    $
    139,225
    
    
    $
    
    
    
    $
    
 (1)
    
    Included in Cash and cash equivalents on the Companys Consolidated Balance Sheet. (Dollars in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Money market funds (1)
    
    $
    132,419
    
    
    
    132,419
    
    
    
    
    
    
    
    Certificates of deposit (1)
    
    
    43,582
    
    
    
    43,582
    
    
    
    
    
    
    
    Total cash equivalents as of June 30, 2008
    
    $
    176,001
    
    
    $
    176,001
    
    
    $
    
    
    
    $
    
 (1)
    
    Included in Cash and cash equivalents on the Companys Consolidated Balance Sheet. 13. RESTRUCTURING
   33




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 14. SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
 Segment and Geographic Information
   Years Ended June 30,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007Revenues:Japan
    
    $
    41,615
    
    
    $
    91,306
    
    
    $
    91,721Europe
    
    
    13,841
    
    
    
    53,801
    
    
    
    17,421Asia Pacific
    
    
    14,061
    
    
    
    32,618
    
    
    
    45,725South Korea
    
    
    5,819
    
    
    
    79,608
    
    
    
    115,513Americas
    
    
    425
    
    
    
    605
    
    
    
    415Total revenues
    
    $
    75,761
    
    
    $
    257,938
    
    
    $
    270,795
  June 30,(Dollars in thousands)
    
    2009
    
    
    2008Long-lived assets:China
    
    $
    21,733
    
    
    $
    21,265Europe
    
    
    3,881
    
    
    
    Americas
    
    
    1,399
    
    
    
    1,749Taiwan
    
    
    519
    
    
    
    411Asia Pacific
    
    
    55
    
    
    
    Total
    
    $
    27,587
    
    
    $
    23,425
 Major Customers
  2009
    
    
    2008
    
    
    2007Revenue:Midoriya
    
    
    38
    %
    
    
    28
    %
    
    
    25
    %Sharp
    
    
    11
    %
    
    
    *
    
    
    
    *Philips
    
    
    10
    %
    
    
    19
    %
    
    
    *Samsung
    
    
    *
    
    
    
    29
    %
    
    
    41
    %
 *
    
    Less than 10% of net revenues.   34




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##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 15. RELATED PARTY TRANSACTIONS
  
    
    On May 14, 2009, the Company entered into a Service Level Agreement or (SLA) with
Micronas. Under the SLA, Micronas agreed to provide to the Company specified transition
services and support, including intellectual property transitional services for a limited
period of time to assist the Company in achieving a smooth transition of the acquired products
and product lines. The transition services include certain manufacturing design, maintenance
and support services, sales of inventory and newly-manufactured products and certain finance
and administration, IT, infrastructure, warehousing and similar services, to be provided
pursuant to specified service level agreements. Moreover, on May 14, 2009, the Company
entered into an exclusive Distributor Agreement with Micronas. Under the Distributor
Agreement, Micronas served as the exclusive supplier and OEM to the Company on the FRC, DRX,
and Audio Decoder product lines from May 15, 2009 to June 15, 2009. As of June 30, 2009, the
outstanding accounts payable to Micronas was $5.5 million, and the outstanding accounts
receivable from Micronas was $5.3 million.
 
    
    On May 14, 2009, the Company entered into a Cross License Agreement (the Cross
License) with Micronas, pursuant to which Micronas has granted to the Company a
royalty-free, perpetual, irrevocable, fully assignable and transferable worldwide license,
including the right to sublicense, to patents that are relevant to, but not exclusive to,
the FRC line of frame rate converters, the DRX line of demodulators and all of the audio
processing product lines acquired in the acquisition. Ownership of these patents remains
with Micronas following completion of the acquisition. The license is exclusive for the
first three years, subject to certain exceptions, and is non-exclusive thereafter. The
Company has granted to Micronas a royalty-free, perpetual, irrevocable, non-exclusive,
fully assignable and transferable worldwide license, including the right to sublicense, to
patents exclusively relevant to the FRC line of frame rate converters, the DRX line of
demodulators and all of the audio processing product lines acquired in the acquisition.
During the first three years, the license granted by the Company to Micronas is limited to
use for products that are not a DRX, Audio or FRC Product. Following this three year
period, Micronas may use the licensed rights on any product.
 
    
    On May 14, 2009, the Company entered into a Stockholder Agreement (the Stockholder
Agreement) with Micronas, setting forth specified registration rights associated with the
 shares, including demand and piggyback registration rights, restrictions on transfer of the
Shares and provides Micronas certain pre-emptive rights to acquire additional shares of its
Common Stock. Under the Stockholders Agreement, Micronas has agreed to vote the Shares in
support of acquisition proposals approved by the disinterested members of its Board of
Directors, and together with the recommendation of the disinterested members of the Board
of Directors on other stockholder proposals, and Micronas ability to engage in certain
solicitations and activities encouraging support for or against proposals inconsistent with
its voting agreements is restricted.
 
    
    On May 14, 2009, the Company and Micronas entered into a lease agreement. Micronas
agreed to sublease 17,000 square footage of the office spaces located in Munich, Germany to
the Company. The Company is currently using the office spaces for general and
administration, research and engineering services. The lease expires on May 31, 2012. For
detail, please refer to Item 2 Properties of this Annual Report on Form 10-K.
 16. REVISION TO PREVIOUSLY REPORTED FINANCIAL STATEMENTS
  17. SUBSEQUENT EVENTS
   18. TRANSACTION WITH NXP (UNAUDITED)
     35




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 19. QUARTERLY FINANCIAL DATA (UNAUDITED)
  Fiscal 2009First
    
    
    Second
    
    
    Third
    
    
    Fourth(Dollars in thousands, except per share amounts)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Total(1)
    
    
    
    
    
    
    
    (2)
    
    
    
    (3)Net revenues
    
    $
    34,782
    
    
    $
    19,215
    
    
    $
    6,852
    
    
    $
    14,912
    
    
    $
    75,761Gross profit
    
    $
    12,075
    
    
    $
    6,170
    
    
    $
    461
    
    
    $
    4,622
    
    
    $
    23,328Net loss
    
    $
    (17,969
    )
    
    $
    (14,584
    )
    
    $
    (16,604
    )
    
    $
    (21,075
    )
    
    $
    (70,232
    )Net loss per share  Basic:
    
    $
    (0.29
    )
    
    $
    (0.24
    )
    
    $
    (0.27
    )
    
    $
    (0.32
    )
    
    $
    (1.12
    )Net loss per share  Diluted:
    
    $
    (0.29
    )
    
    $
    (0.24
    )
    
    $
    (0.27
    )
    
    $
    (0.32
    )
    
    $
    (1.12
    )Shares used in computing net loss per share  Basic
    
    
    61,152
    
    
    
    61,612
    
    
    
    61,829
    
    
    
    65,565
    
    
    
    62,535Shares used in computing net loss per share  Diluted
    
    
    61,152
    
    
    
    61,612
    
    
    
    61,829
    
    
    
    65,565
    
    
    
    62,535
 (1)
    
    Includes $9.0 million loss on sale of UMC investment that was recorded in the quarter ended
September 30, 2008. See United Microelectronics Corporation under Note 2, Investments, of
Notes to Consolidated Financial Statements.(2)
    
    Includes $1.4 million goodwill impairment that was recorded in the quarter ended March 31,
2009. See Goodwill and impairment under Note 4, Goodwill and Intangible Assets,
of Notes to Consolidated Financial Statements.(3)
    
    Includes $1.7 million third-party purchased intangible assets that were recorded in the
quarter ended June 30, 2009. See Third-party purchased intangible assets under Note 4,
Goodwill and Intangible Assets, of Notes to Consolidated Financial Statements.  36




---



##### 



TRIDENT MICROSYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Fiscal 2008First
    
    
    Second
    
    
    Third
    
    
    Fourth(Dollars in thousands, except per share amounts)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Total(1)
    
    

    (2)
    
    
    
    
    
    

    (3)Net revenues
    
    $
    88,174
    
    
    $
    74,984
    
    
    $
    55,284
    
    
    $
    39,496
    
    
    $
    257,938Gross profit
    
    $
    42,166
    
    
    $
    35,788
    
    
    $
    25,312
    
    
    $
    16,760
    
    
    $
    120,026Net income (loss)
    
    $
    10,059
    
    
    $
    7,250
    
    
    $
    (227
    )
    
    $
    (6,930
    )
    
    $
    10,152Net income (loss) per share  Basic:
    
    $
    0.17
    
    
    $
    0.12
    
    
    $
    (0.00
    )
    
    $
    (0.11
    )
    
    $
    0.17Net income (loss) per share  Diluted:
    
    $
    0.16
    
    
    $
    0.12
    
    
    $
    (0.00
    )
    
    $
    (0.11
    )
    
    $
    0.16Shares used in computing net income (loss) per share  Basic
    
    
    58,851
    
    
    
    59,269
    
    
    
    59,369
    
    
    
    60,390
    
    
    
    59,367Shares used in computing net income (loss) per share  Diluted
    
    
    63,605
    
    
    
    62,747
    
    
    
    59,369
    
    
    
    60,390
    
    
    
    62,751
 (1)
    
    Includes $4.9 million of stock-based compensation expense recorded in
the quarter ended September 30, 2007 related to certain stock option
modifications. See Modification of Certain Options under Note 8,
Employee Benefit Plans, of Notes to Consolidated Financial
Statements.(2)
    
    Includes $3.7 million of stock-based compensation expense recorded in
the quarter ended December 31, 2007 related to the decision of the
Companys Special Litigation Committee not to allow the Companys
former CEO and two former non-employee directors to exercise their
vested options until March 31, 2008. See Modification of Certain
Options under Note 8, Employee Benefit Plans, of Notes to
Consolidated Financial Statements.(3)
    
    Includes a $6.5 million impairment charge for loss on UMC investment
that was recorded in the quarter ended June 30, 2008. See United
Microelectronics Corporation under Note 2, Investments and Related
Party Transactions, of Notes to Consolidated Financial Statements.  37




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
     
  38




---



##### 



Item 9A.
    
    Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
     39




---



##### 



Managements Report on Internal Control over Financial Reporting
 Internal ControlIntegrated Framework
   Changes in Internal Control over Financial Reporting
  Inherent Limitations on Effectiveness of Controls
   40




---



##### 



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance.
 Executive Officers
  Name
    
    Position(s) with Trident
    
    AgeSylvia Summers Couder
    
    Chief Executive Officer and President
    
    56Pete J. Mangan
    
    Senior Vice President and Chief Financial Officer
    
    50Dr. Hungwen Li
    
    Senior Vice President and Chief Marketing Officer
    
    58David L. Teichmann
    
    Senior Vice President, General Counsel and Corporate Secretary
    
    53Christophe Chene
    
    Senior Vice President of Worldwide Sales
    
    43Dr. Donna M. Hamlin
    
    Vice President, Human Resources and Administration
    
    55Uri Kreisman
    
    Vice President of Worldwide Operations
    
    43Richard H. Janney
    
    Vice President and Corporate Controller
    
    51
 Sylvia Summers Couder
 Pete J. Mangan
 Dr. Hungwen Li
  41




---



##### 



David L. Teichmann
 Christophe Chene
 Dr. Donna M. Hamlin
 Uri Kreisman
 Richard H. Janney
  42




---



##### 



Directors
  DirectorName
    
    Position with Trident
    
    Age
    
    
    SinceGlen M. Antle
    
    Director
    
    
    71
    
    
    
    1992Brian R. Bachman
    
    Director
    
    
    64
    
    
    
    2007David H. Courtney
    
    Chairman of the Board*
    
    
    50
    
    
    
    2008Hans Geyer
    
    Director
    
    
    58
    
    
    
    2007Dr. J. Carl Hsu
    
    Director
    
    
    67
    
    
    
    2008Raymond K. Ostby
    
    Director
    
    
    62
    
    
    
    2006Sylvia Summers Couder
    
    Director, President and Chief Executive Officer
    
    
    56
    
    
    
    2007
 *
    
    Effective as of October 20, 2009, Mr. Antle stepped down as Chairman of the Board and Mr. Courtney
was elected to serve as his successor. Glen M. Antle
 Brian R. Bachman
 David H. Courtney
 Hans Geyer
  43




---



##### 



Dr. J. Carl Hsu
 Raymond K. Ostby
 Sylvia Summers Couder
 Audit Committee, Audit Committee Financial Expert
   
    
    Maintains responsibility for the appointment, compensation, retention and oversight of
our independent registered public accounting firm;
 
    
    Approves in advance the engagement of the independent registered public accounting firm
for all audit and non-audit services, and approves the fees and other terms of the
engagement;
 
    
    Reviews, with our independent registered public accounting firm, any significant
difficulties, disagreements, or restrictions encountered during the course of the audit,
and reviews any management letters issued by the independent registered public accounting
firm;
 
    
    Reviews the critical accounting policies and all alternative treatments of financial
information discussed by the independent registered public accounting firm with management,
and reviews with management significant judgments made in the preparation of financial
statements;
  44




---



##### 




    
    Reviews, with our independent registered public accounting firm, management and the
Board of Directors, our financial reporting processes and internal control over financial
reporting;
 
    
    Reviews the annual audited financial statements and recommends to the Board of Directors
their inclusion in our annual report;
 
    
    Reviews the quarterly financial statements and earnings press releases;
 
    
    Reviews with management its assessment of the effectiveness and adequacy of our internal
controls and procedures for financial reporting, and any significant deficiencies in the
design or operation of our internal controls, and reviews with the independent registered
public accounting firm their attestation to and report on our internal controls;
 
    
    Reviews and approves any related party transactions;
 
    
    Establishes and oversees procedures for the receipt, retention and treatment of
complaints received regarding accounting, internal controls or auditing matters; reviews
changes in, or waivers of, our Code of Conduct, and as requested by the Board, reviews and
investigates any conduct alleged to be in violation of the Code of Conduct; and
 
    
    Periodically reviews and discusses with the independent registered public accounting
firm the matters required to be discussed by Statement on Accounting Standards 61
(Codification of Statements on Auditory Standards No. 380) and any formal written
statements received from the registered independent public accounting firm.
 Director Nominations
  
    
    The appropriate size of our Board of Directors and its Committees;
 
    
    The perceived needs of the Board of Directors for particular skills, background and
business experience;
 
    
    The skills, background, reputation, and business experience of nominees compared to the
skills, background, reputation, and business experience already possessed by other members
of the Board of Directors;
 
    
    Nominees independence from management;
 
    
    Applicable regulatory and listing requirements, including independence requirements and
legal considerations, such as antitrust compliance;
 
    
    The benefits of a constructive working relationship among directors; and
 
    
    The desire to balance the considerable benefit of continuity with the periodic injection
of the fresh perspective provided by new members.
   45




---



##### 



Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
    46




---



##### 



Item 11.
    
    Executive Compensation.
 Compensation Discussion and Analysis
 Compensation Philosophy and Objectives
    
    
    Attract, retain, and motivate talented executives responsible for the success of the
organization;
 
    
    Provide compensation to executives that is externally competitive, internally equitable
and performance-based;
 
    
    Provide affordable levels of compensation for each executive in exchange for expected
levels of performance and results; and
 
    
    Ensure that total compensation levels are reflective of company performance and provide
executives with the opportunity to receive above market total compensation for exceptional
business performance.
  The Compensation Process
 Operation of the Compensation Committee; Role of Its Advisers
   47




---



##### 



Radford Consulting
  Compensia
 Role of Management and the Chief Executive Officer in Setting Executive Compensation
  Peer Group Selection and Benchmarking
    48




---



##### 




    
    Actel Corp.
 
    
    AMIS Holdings Inc.
 
    
    Atheros Communications
 
    
    Cirrus Logic Inc.
 
    
    DSP Group Inc.
 
    
    Genesis Mircochip Inc.
 
    
    Hittite Microwave Corp.
 
    
    Ikanos Communications Inc.
 
    
    Integrated Device Tech Inc.
 
    
    Integrated Silicon Solution
 
    
    Intersil Corp.
 
    
    Microsemi Corp.
 
    
    Mindspeed Technologies Inc.
 
    
    PMC-Sierra Inc.
 
    
    RF Micro Devices Inc.
 
    
    Semtech Corp.
 
    
    Silicon Image Inc.
 
    
    Silicon Laboratories Inc.
 
    
    SIRF Technology Holdings Inc.
 
    
    Smart Modular Technologies (WWH), Inc.
 
    
    Standard Microsystems Corp.
 
    
    Zoran Corp.
    49




---



##### 



Elements of Compensation and How Each Element is Chosen
 th th th
   Base Salaries
 th th th
  Annual Incentive Compensation
 th th Bonus Plan
  50




---



##### 



th
  Name
    
    Individual Bonus PercentageSylvia Summers
    
    100%Hungwen Li
    
    60%Pete J. Mangan
    
    60%David L. Teichmann
    
    75%Donna Hamlin
    
    50%
  NXP Acquisition
  51




---



##### 



Equity Compensation Awards
   New Hire Grants
   52




---



##### 



Annual Merit Grants
   th th
  Internal Pay Equity.
 Stock Ownership Guidelines.
  53




---



##### 



Change in Control and Severance Agreements
 Potential Payments upon Termination or Change in Control
  Other Benefits
  Tax Considerations
   54




---



##### 



Award Granting Procedures
   Report of the Compensation Committee
   Brian R. Bachman (Chairman)
J. Carl Hsu
Raymond K. Ostby
  55




---



##### 



Summary Compensation Information
  SUMMARY COMPENSATION TABLE
 Non-EquityIncentivePlan
    
    
    All OtherStock
    
    
    Option
    
    
    Compensa-
    
    
    Compensa-Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    tion
    
    
    tion
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($) (1)
    
    
    ($) (2)
    
    
    ($) (3)
    
    
    ($) (4)
    
    
    ($) (2)(5)
    
    
    ($)
    
    
    ($)Sylvia Summers Couder (6)
    
    
    2009
    
    
    
    495,000
    
    
    
    
    
    
    
    524,334
    
    
    
    389,588
    
    
    
    
    
    
    
    23,625
    (7)
    
    
    1,432,547President and Chief Executive Officer
    
    
    2008
    
    
    
    348,906
    
    
    
    
    
    
    
    414,262
    
    
    
    146,054
    
    
    $
    185,031
    
    
    
    18,895
    (8)
    
    
    1,113,148Pete J. Mangan (9)
    
    
    2009
    
    
    
    255,718
    
    
    
    
    
    
    
    27,694
    
    
    
    107,020
    
    
    
    
    
    
    
    22,670
    (7)
    
    
    413,102Senior Vice President and Chief Financial
Officer
    
    
    2008
    
    
    
    101,891
    
    
    
    62,000
    (10)
    
    
    
    
    
    
    21,043
    
    
    
    22,086
    
    
    
    9,591
    (8)
    
    
    216,611David L. Teichmann (11)
    
    
    2009
    
    
    
    285,000
    
    
    
    

    
    
    
    195,158
    
    
    
    649,257
    
    
    
    
    
    
    
    37,220
    (7)
    
    
    1,166,635Senior Vice President, General Counsel and Corporate Secretary
    
    
    2008
    
    
    
    283,904
    
    
    
    
    
    
    
    156,019
    
    
    
    555,979
    
    
    
    114,143
    
    
    
    38,024
    (8)
    
    
    1,148,0692007
    
    
    
    71,250
    
    
    
    50,000
    (12)
    
    
    21,740
    
    
    
    75,859
    
    
    
    60,000
    
    
    
    4,000
    (13)
    
    
    282,849Dr. Hungwen Li (14)
    
    
    2009
    
    
    
    278,333
    
    
    
    
    
    
    
    363,875
    
    
    
    378,136
    
    
    
    
    
    
    
    20,398
    (7)
    
    
    1,040,742Senior Vice President, Strategic Marketing
    
    
    2008
    
    
    
    220,000
    
    
    
    
    
    
    
    334,208
    
    
    
    350,779
    
    
    
    58,740
    
    
    
    21,538
    (8)
    
    
    985,265Donna Hamlin (15)
    
    
    2009
    
    
    
    227,000
    
    
    
    

    
    
    
    40,734
    
    
    
    52,265
    
    
    
    
    
    
    
    24,057
    (7)
    
    
    344,056Vice President, Human Resources and
Administration
    
    
    2008
    
    
    
    103,583
    
    
    
    5,000
    (10)
    
    
    11,283
    
    
    
    16,176
    
    
    
    27,608
    
    
    
    10,923
    (8)
    
    
    174,573
 
 (1)
    
    Includes amounts (if any) deferred at the named executive officers option under Tridents
401(k) plan.(2)
    
    Performance-based bonuses are generally paid under our Executive Bonus Plan and reported as
Non-Equity Incentive Plan Compensation. Except as otherwise noted, amounts reported as Bonus
represent discretionary bonuses awarded by the Compensation Committee in addition to the
amount (if any) earned under the Executive Bonus Plan.(3)
    
    The amounts shown are the compensation costs recognized in our financial statements for
fiscal year 2007, fiscal year 2008 and fiscal year 2009 related to shares of restricted stock
awarded to the executive officer, to the extent we recognized compensation cost in fiscal year
2007, fiscal year 2008 or fiscal year 2009 for such awards in accordance with the provisions
of SFAS 123R, excluding the impact of estimated forfeitures related to service-based vesting
conditions. The fair values of the shares of restricted stock awarded were calculated based on
the fair market value of our common stock on the respective grant dates.(4)
    
    The amounts shown are the compensation costs recognized in our financial statements for
fiscal year 2007, fiscal year 2008 and fiscal year 2009 related to grants of stock options to
each named executive officer in fiscal year 2007, fiscal year 2008 and fiscal year 2009 and
prior years, to the extent we recognized compensation cost in fiscal year 2007, fiscal year
2008 and fiscal year 2009 for such awards in accordance with the provisions of SFAS 123R,
excluding the impact of estimated forfeitures related to service-based vesting conditions. For
a discussion of valuation assumptions used in the SFAS 123R calculations, see Note 1 of Notes
to Consolidated Financial Statements, Description of Business and Summary of Significant
Accounting PoliciesStock-Based Compensation and Note 9, Employee Benefit PlansEquity
Incentive Plans, included in Part IV, Item 15 of our Annual Report on Form 10-K for the year
ended June 30, 2009.(5)
    
    We award bonuses pursuant to an annual Executive Bonus Plan, which provides for the award of
annual cash bonuses based upon threshold, target and maximum payout amounts set by the Board
of Directors at the beginning of each fiscal year. See Compensation Discussion and Analysis 
Elements of Compensation and How Each Element is Chosen, Annual Incentive Compensation. The
actual amount paid to each named executive officer for the fiscal years ended June 30, 2007,
and June 30, 2008 is set forth in the Summary Compensation Table under the heading,
Non-Equity Incentive Plan Compensation. No amounts were paid to our named executive
officers for the fiscal year ended June 30, 2009. A description of the terms of the
Executive Bonus Plan is set forth below under Grants of Plan-Based Awards and in the
Compensation Discussion and Analysis, above.  56




---



##### 



(6)
    
    Ms. Summers joined as Chief Executive Officer and President on October 17, 2007.(7)
    
    Includes matching contributions to the Trident Microsystems, Inc, 401(K) plan, premiums paid
for term life insurance, and car allowance, as follows: 401(K) Match
    
    
    Insurance Premiums
    
    
    Car AllowanceSylvia Summers Couder
    
    
    
    
    
    $
    23,625
    
    
    
    Dr. Hungwen Li
    
    $
    2,875
    
    
    $
    17,523
    
    
    
    Pete J. Mangan
    
    $
    2,875
    
    
    $
    19,795
    
    
    
    David L. Teichmann
    
    $
    2,875
    
    
    $
    24,345
    
    
    $
    10,000Dr. Donna Hamlin
    
    $
    2,875
    
    
    $
    21,182
    
    
    
    
 (8)
    
    Includes matching contributions to the Trident Microsystems, Inc, 401(K) plan, premiums paid
for term life insurance, and car allowance, as follows: 401(K) Match
    
    
    Insurance Premiums
    
    
    Car AllowanceSylvia Summers Couder
    
    
    
    
    
    $
    18,895
    
    
    
    Dr. Hungwen Li
    
    $
    2,813
    
    
    $
    18,725
    
    
    
    Pete J. Mangan
    
    
    
    
    
    $
    9,591
    
    
    
    David L. Teichmann
    
    $
    2,813
    
    
    $
    25,211
    
    
    $
    10,000Dr. Donna Hamlin
    
    $
    1,295
    
    
    $
    9,628
    
    
    
    
 (9)
    
    Mr. Mangan joined as Vice President, Finance and Interim Chief Financial Officer on January
11, 2008 and was appointed Senior Vice President, Chief Financial Officer on July 22, 2008.(10)
    
    Represents sign on bonus in the amount of $42,000 paid upon Mr. Mangans initial hire and
$20,000 discretionary bonus paid in addition to the bonus earned under the 2008 Bonus Plan.(11)
    
    Mr. Teichmann joined as General Counsel, Vice President of Human Resources and Corporate
Secretary on April 2, 2007, and became Senior Vice President, General Counsel and Corporate
Secretary in January 2008, upon the hiring of Dr. Donna Hamlin as Vice President, Human
Resources.(12)
    
    Represents a sign-on bonus of $50,000 paid to Mr. Teichmann upon his joining Trident as
General Counsel, Vice President of Human Resources and Corporate Secretary.(13)
    
    Consists of $2,500 for car allowance and $1,500 of matching contributions to the Trident
Microsystems, Inc. 401(k) Plan.(14)
    
    Dr. Li was appointed Senior Vice President of Strategic Marketing effective January 2007, and
as Chief Marketing Officer effective August 28, 2008.(15)
    
    Dr. Hamlin joined as Vice President, Human Resources and Administration on January 11, 2009.  57




---



##### 



Grant of Plan-Based Awards
  2009 GRANTS OF PLAN-BASED AWARDS
 All OtherAll Other
    
    
    OptionStock
    
    
    Awards:
    
    
    Exercise
    
    
    Grant DateAwards:
    
    
    Number of
    
    
    or Base
    
    
    Fair ValueEstimated Future Payouts Under Non-
    
    
    Number of
    
    
    Securities
    
    
    Price of
    
    
    of StockEquity Incentive Plan Awards (1)(2)
    
    
    Shares of
    
    
    Underlying
    
    
    Option
    
    
    and OptionGrant
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    Stock or
    
    
    Options
    
    
    Awards
    
    
    AwardsName
    
    Date
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    Units (#) (3)
    
    
    (#)(4)
    
    
    ($)
    
    
    ($)(5)Sylvia
Summers Couder
    
    
    07/25/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,93707/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461,307
    
    
    $
    2.90
    
    
    $
    658,206.7807/25/08
    
    
    
    309,375
    
    
    $
    495,000
    
    
    $
    618,750Dr. Hungwen Li
    
    
    07/25/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,00007/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,000
    
    
    $
    2.90
    
    
    $
    82,070.0010/21/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,85211/05/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,630
    
    
    $
    1.48
    
    
    $
    17,763.1607/25/08
    
    
    
    112,500
    
    
    $
    180,000
    
    
    $
    225,000Pete J. Mangan
    
    
    07/25/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,27907/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,929
    
    
    $
    2.90
    
    
    $
    226,107.2707/25/08
    
    
    
    101,562
    
    
    $
    162,000
    
    
    $
    203,125David L. Teichmann
    
    
    07/25/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,40007/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    $
    2.90
    
    
    $
    120,275.0007/25/08
    
    
    
    133,594
    
    
    $
    213,750
    
    
    $
    267,187Dr. Donna Hamlin
    
    
    07/25/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,55007/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    
    
    $
    2.90
    
    
    $
    33,960.0007/25/08
    
    
    
    70,938
    
    
    $
    113,500
    
    
    $
    141,875
 
 (1)
    
    We award bonuses pursuant to an annual Executive Bonus Plan, which provides for the award
of annual cash bonuses based upon threshold, target and maximum payout amounts set by the
Board of Directors at the beginning of each fiscal year. See Compensation Discussion and
Analysis  Elements of Compensation and How Each Element is Chosen, Annual Incentive
Compensation. No bonuses were paid to our named executive officer for the fiscal year ended
June 30, 2009.(2)
    
    The threshold amounts included in the table above reflect the minimum payment level under the
2009 Bonus Plan; the 2009 Bonus Plan required the attainment of a minimum threshold target
revenue that had to be reached before payments are triggered. The target and maximum amounts
are reflected on an annualized basis.(3)
    
    Amounts shown represent shares of restricted stock awarded under our 2006 Equity Incentive
Plan that vest in four successive annual installments upon the executives completion of each
year of service over a four-year service period, measured from the grant date.(4)
    
    Except as provided below, amounts shown represent options issued under our 2006 Equity
Incentive Plan that vest and become exercisable in four successive annual installments upon
the executives completion of each year of service over a four-year service period, measured
from the grant date. The exercise price for the options equals the closing price of our
common stock on the date of grant. Each option has a maximum term of ten years.Options to purchase 277,024 shares granted to Ms. Summers and 133,895 shares granted to Mr.
Mangan vest over four years in a single cliff vest at the end of four years, with a vesting
commencement date of July 25, 2008.The options granted to all of our named executive officers will vest on an accelerated basis
upon the executives termination of employment under certain prescribed circumstances.
Additional information regarding the vesting acceleration provisions applicable to equity awards
granted to our named executive officers is included in this Amendment under the heading
Potential Payments Upon Termination or Change in Control.(5)
    
    The dollar value of the options shown represents the grant date fair value estimated using
the Black-Scholes option pricing model to determine grant date fair value, in accordance with
the provisions of SFAS 123R, excluding the impact of estimated forfeitures related to
service-based vesting conditions. For a discussion of valuation assumptions used in the
SFAS 123R calculations, see Note
1 of Notes to Consolidated Financial Statements, Description of Business and Summary of
Significant Accounting PoliciesStock-Based Compensationand Note 8, Employee Benefit
PlansEquity Incentive Plans,included in Part IV, Item 15 of our Annual Report on Form 10-K
for the year ended June 30, 2009. The actual value, if any, that an executive may realize on
each option will depend on the excess of the stock price over the exercise price on the date the
option is exercised and the shares underlying such option are sold. There is no assurance that
the actual value realized by an executive will be at or near the value estimated by the
Black-Scholes model.The dollar value of restricted stock shown represents the grant date fair value calculated based
on the fair market value of our common stock on the respective grant dates. The actual value
that an executive will realize on each share of restricted stock award will depend on the price
per share of our common stock at the time the shares of restricted stock are sold. There can be
no assurance that the actual value realized by an executive will be at or near the grant date
fair value of the restricted stock awarded.  58




---



##### 



Outstanding Equity Awards at Fiscal Year-End
  OUTSTANDING EQUITY AWARDS AT JUNE 30, 2009
 OPTION AWARDS (1)
    
    
    STOCK AWARDS (2)Number of
    
    
    Number ofSecurities
    
    
    SecuritiesUnderlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Number of Shares
    
    
    Market Value ofUnexercised
    
    
    Unexercised
    
    
    Option
    
    
    Option
    
    
    or Units of Stock
    
    
    Shares or Units of StockOptions (#)
    
    
    Options (#)
    
    
    Exercise
    
    
    Expiration
    
    
    That Have Not
    
    
    That Have NotName
    
    Exercisable
    
    
    Unexercisable
    
    
    Price ($)
    
    
    Date
    
    
    Vested (#)
    
    
    Vested ($)(3)Sylvia
Summers Couder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,437
    (5)
    
    $
    294,8200
    
    
    
    277,024
    (4)
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    0
    
    
    
    184,283
    
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    55,000
    
    
    
    165,000
    
    
    $
    7.42
    
    
    
    10/29/2017
    
    
    
    
    
    
    
    Dr. Hungwen Li
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,352
    
    
    $
    108,4920
    
    
    
    24,630
    
    
    $
    1.48
    
    
    
    11/5/2018
    
    
    
    
    
    
    
    0
    
    
    
    58,000
    
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    65,000
    
    
    
    65,000
    
    
    $
    20.37
    
    
    
    1/26/2017
    
    
    
    
    
    
    
    Pete J. Mangan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,279
    
    
    $
    37,0250
    
    
    
    133,895
    (4)
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    0
    
    
    
    24,034
    
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    18,750
    
    
    
    56,250
    
    
    $
    5.34
    
    
    
    2/4/2018
    
    
    
    
    
    
    
    David L. Teichmann
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,400
    (6)
    
    $
    78,9960
    
    
    
    85,000
    
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    34,222
    
    
    
    53,778
    (7)
    
    $
    4.34
    
    
    
    4/30/2018
    
    
    
    
    
    
    
    108,334
    
    
    
    91,666
    (8)
    
    $
    20.22
    
    
    
    5/10/2017
    
    
    
    
    
    
    
    Dr. Donna Hamlin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,550
    
    
    $
    44,4570
    
    
    
    24,000
    
    
    $
    2.90
    
    
    
    7/30/2018
    
    
    
    
    
    
    
    15,000
    
    
    
    45,000
    
    
    $
    5.34
    
    
    
    2/4/2018
    
    
    
    
    
    
    
    
 (1)
    
    Except as provided below, amounts shown represent options issued under our 2006 Equity
Incentive Plan that vest and become exercisable in four successive annual installments upon
the executives completion of each year of service over a four-year service period, measured
from the grant date. The exercise price for the options equals the closing price of our
common stock on the date of grant. Each option has a maximum term of ten years.The options granted to all of our named executive officers will vest on an accelerated basis
upon the executives termination of employment under certain prescribed circumstances.
Additional information regarding the vesting acceleration provisions applicable to equity awards
granted to our named executive officers is included in this Amendment under the heading
Potential Payments Upon Termination or Change in Control.  59




---



##### 



(2)
    
    Restricted stock awards vest over a four-year period at the rate of 25% upon each of the
first four anniversaries of the date of grant, and are subject to automatic forfeiture if the
recipients performance of services with the Company terminates prior to the date on which the
shares vest.The restricted stock awarded to all of our named executive officers will vest on an accelerated
basis upon the executives termination of employment under certain prescribed circumstances.
Additional information regarding the vesting acceleration provisions applicable to equity awards
granted to our named executive officers is included in this Amendment under the heading
Potential Payments Upon Termination or Change in Control.(3)
    
    Represents the fair market value per share of our common stock on June 30, 2009 ($1.74)
multiplied by the number of shares that had not vested as of June 30, 2009.(4)
    
    Options to purchase 277,024 shares granted to Ms. Summers and 133,895 shares granted
to Mr. Mangan vest over four years in a single cliff vest at the end of four years, with a
vesting commencement date of July 25, 2008.(5)
    
    Includes a performance-based restricted stock award consisting of 110,000 shares of Trident
common stock. This award will vest, if at all, in four components, with the vesting of each
component requiring that a Trident common stock price target, established by the Compensation
Committee, be achieved on or after one of the first four anniversaries of her employment start
date. This target stock price must be achieved prior to the tenth anniversary of Ms. Summers
employment start date. An amount equal to 25% of the shares subject to this restricted stock
award will vest on the date that the applicable price target is achieved on or after the
specified anniversary of her employment start date, provided that her service with Trident has
not terminated.(6)
    
    Includes 15,000 shares of restricted stock vesting in two equal installments upon the third
and fourth anniversary of commencement of employment.(7)
    
    These options vest at the rate of 1/36th per month over the thirty-six months
following the first anniversary of his employment start date.(8)
    
    These options vest at the rate of 1/48th each month over the thirty-six month
period following the first anniversary of his employment start date. Option Exercises and Stock Vested
  OPTION EXERCISES AND STOCK VESTED
 Option Awards
    
    
    Stock AwardsNumber of
    
    
    
    
    
    
    Number ofShares
    
    
    
    
    
    SharesAcquired
    
    
    Value Realized
    
    
    Acquired
    
    
    Value Realizedon Exercise
    
    
    on Exercise
    
    
    on Vesting
    
    
    on VestingName
    
    (#)
    
    
    ($) (1)
    
    
    (#)
    
    
    ($) (2)Sylvia Summers Couder
    
    
    
    
    
    
    
    
    
    
    7,500
    
    
    $
    14,475Dr. Hungwen Li
    
    
    
    
    
    
    
    
    
    
    16,250
    
    
    $
    30,713Pete J. Mangan
    
    
    
    
    
    
    
    
    
    
    0
    
    
    $
    0David L. Teichmann
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    $
    23,850Dr. Donna Hamlin
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    $
    10,550
 
 (1)
    
    Based on the difference between the market price of Tridents common
stock on the date of exercise and the exercise price.(2)
    
    Based on the market price of Tridents common stock on the vesting
date. Compensation Committee Interlocks and Insider Participation
   60




---



##### 



Potential Payments Upon Termination or Change in Control
  Terms of Equity Awards
 Option Plans
 2006 Plan
  Directors Plan
 Change in Control Severance Plan
   61




---



##### 



Definition of Change in Control.
 
    
    Any person or group (other than an employee benefit plan) becomes the beneficial
owner, directly or indirectly, of more than 50% of the total combined voting power of
its outstanding securities.
 
    
    Merger or consolidation in which the stockholders before the transaction fail to
retain direct or indirect beneficial ownership of more than 50% of the total combined
voting power of the voting securities of the company or the surviving entity.
 
    
    Sale of all or substantially all of the assets of the company (other than to a
subsidiary).
 
    
    Change in the composition of the Board within any 12-month period as a result of
which less than a majority of the directors are Incumbent Directors. Incumbent
Directors are those who either were directors on the effective date of the plan or were
elected or nominated by at least a majority of the Incumbent Directors (except any such
election or nomination in connection with an actual or threatened proxy contest).
 Definition of Termination for Cause.
 
    
    Theft, dishonesty, misconduct, breach of fiduciary duty for personal profit, or
falsification of any documents or records.
 
    
    Material failure to abide by the code of conduct or other policies (including
policies relating to confidentiality and reasonable workplace conduct).
 
    
    Misconduct leading to a restatement of earnings.
 
    
    Unauthorized use, misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity (including improper use or disclosure of
confidential or proprietary information).
 
    
    Intentional act which has a material detrimental effect on reputation or business of
the company.
 
    
    Repeated failure or inability to perform any reasonable assigned duties after
written notice and a reasonable opportunity to cure such failure or inability.
 
    
    Material breach of any employment, non-disclosure, non-competition, non-solicitation
or other similar agreement.
 
    
    Conviction (including any plea of guilty or nolo contender) of any criminal act
involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the
participants ability to perform his or her duties.
  62




---



##### 



Definition of Good Reason.
 
    
    Material, adverse change in the participants authority, duties or responsibilities
as measured against the participants authority, duties or responsibilities immediately
prior to the change in control.
 
    
    Material, adverse change in the authority, duties or responsibilities of the officer
to whom the participant is required to report, including a requirement that the
participant report to a corporate officer or employee instead of reporting directly to
the board of directors of a corporation.
 
    
    Material decrease in annual base salary or target bonus amount (subject to
applicable performance requirements with respect to the actual amount of bonus
compensation earned).
 
    
    Material decrease in the budget over which the participant has authority.
 
    
    Relocation of work place to a location that increases the participants regular
commute distance between the participants residence and work place by more than 30
miles (one-way).
 
    
    Material breach of the plan by the company or its successor.
   Sylvia Summers Couder
           63




---



##### 



David L. Teichmann
      Base Capital
Stock
  Incumbent Board
   64




---



##### 



Calculation of Potential Payments Upon Termination or Change in Control
    65




---



##### 



Value ofValue of
    
    
    RestrictedContinuation
    
    
    Option
    
    
    Stockof Benefits
    
    
    Acceleration
    
    
    Acceleration
    
    
    Total ValueName
    
    Trigger
    
    Salary
    
    
    Bonus
    
    
    (1)
    
    
    (2)
    
    
    (2)
    
    
    (3)Sylvia Summers Couder
    
    Change in Control
    
    $
    990,000
    
    
    $
    990,000
    
    
    $
    24,295.95
    
    
    
    
    
    
    $
    294,820.38
    
    
    $
    2,299,116.33Termination without Cause or for
Good Reason
    
    $
    495,000
    
    
    $
    495,000
    
    
    $
    24,295.95
    
    
    
    
    
    
    $
    294,820.38
    
    
    $
    1,309,116.33Dr. Hungwen Li
    
    Change in Control
    
    $
    300,000
    
    
    $
    180,000
    
    
    $
    14,400.19
    
    
    $
    6,403.80
    
    
    $
    108,492.48
    
    
    $
    609,296.47Pete J. Mangan
    
    Change in Control
    
    $
    270,000
    
    
    $
    162,000
    
    
    $
    20,465.95
    
    
    
    
    
    
    $
    37,025.46
    
    
    $
    489,491.41David L. Teichmann
    
    Change in Control
    
    $
    285,000
    
    
    $
    213,750
    
    
    $
    25,015.95
    
    
    
    
    
    
    $
    78,996.00
    
    
    $
    602,761.95Termination without Cause or for Good Reason
    
    $
    142,500
    
    
    $
    106,875
    
    
    $
    25,015.95
    
    
    
    
    
    
    $
    78,996.00
    
    
    $
    353,386.95Termination for Cause
    
    $
    71,250
    
    
    $
    53,437
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    124,687.00Dr. Donna Hamlin
    
    Change in Control
    
    $
    227,000
    
    
    $
    113,500
    
    
    $
    20,690.95
    
    
    
    
    
    
    $
    44,457.00
    
    
    $
    405,647.95
 
 (1)
    
    Represents the aggregate value of reimbursement of COBRA benefits after the date of
termination. For the purposes of this calculation, expected costs have not been adjusted for
any actuarial assumptions related to mortality, likelihood that the executives will find other
employment, or discount rates for determining present value.(2)
    
    Represents the aggregate value of the accelerated vesting of the executive officers unvested
stock options and shares of restricted stock.The amounts shown as the value of the accelerated stock options are based solely on the
intrinsic value of the options as of June 30, 2009. For options, this was calculated by
multiplying (i) the difference between the fair market value of our common stock on June 30,
2009 (being the last trading day of the fiscal year), $1.74, and the applicable exercise price
by (ii) the assumed number of option shares vesting on an accelerated basis on June 30, 2009.
Since the exercise price of all outstanding unvested options held by the named executive
officers was greater than $1.74, other than options to purchase 24,630 shares held by Mr. Li, no
additional value is represented by the acceleration of outstanding unvested options.The amount shown as the value of the accelerated shares of restricted stock represents the fair
value calculated based on the fair market value of our common stock on June 30, 2009 (being the
last trading day of the fiscal year), $1.74, multiplied by the assumed number of shares of
restricted stock vesting on an accelerated basis on June 30, 2009.(3)
    
    Excludes the value to the executive of the continuing right to indemnification and continuing
coverage under our directors and officers liability insurance (if applicable).   66




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##### 



Director Compensation
   Annual Cash PaymentAnnual Retainer Fees
    
    
    Quarterly PaymentsAll Board Members (Base)
    
    $
    35,000.00
    
    
    $
    8,750.00Chairman of the Board
    
    $
    25,000.00
    
    
    $
    6,250.00Audit CommitteeChair Fee
    
    $
    20,000.00
    
    
    $
    5,000.00Member
    
    $
    10,000.00
    
    
    $
    2,500.00Compensation CommitteeChair Fee
    
    $
    12,000.00
    
    
    $
    3,000.00Member
    
    $
    6,000.00
    
    
    $
    1,500.00Nominating and CorporateGovernance CommitteeChair Fee
    
    $
    8,000.00
    
    
    $
    2,000.00Member
    
    $
    4,000.00
    
    
    $
    1,000.00Strategy CommitteeChair Fee
    
    $
    12,000.00
    
    
    $
    3,000.00Member
    
    $
    6,000.00
    
    
    $
    1,500.00
   67




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##### 



Fees Earned or
    
    
    Stock
    
    
    Option
    
    
    OtherName
    
    Paid in Cash ($)
    
    
    Awards($)(1)
    
    
    Awards($)(1)
    
    
    Compensation($)
    
    
    Total($)Glen Antle
    
    $
    94,000
    
    
    $
    107,526
    
    
    
    
    
    
    
    
    
    
    $
    201,526Brian Bachman
    
    $
    81,000
    
    
    $
    68,813
    
    
    $
    183,198
    
    
    
    
    
    
    $
    333,011David Courtney
    
    $
    89,000
    
    
    $
    21,800
    
    
    $
    23,091
    
    
    
    
    
    
    $
    133,891Hans Geyer
    
    $
    147,000
    (2)
    
    $
    68,813
    
    
    $
    183,198
    
    
    
    
    
    
    $
    399,011J. Carl Hsu
    
    $
    77,000
    
    
    $
    21,800
    
    
    $
    26,055
    
    
    
    
    
    
    $
    124,855Raymond Ostby
    
    $
    151,000
    (2)
    
    $
    68,813
    
    
    $
    148,498
    
    
    
    
    
    
    $
    368,311
 
 (1)
    
    The amounts shown in the Stock Awards and Option Awards columns are the compensation
costs recognized in our financial statements for fiscal year 2009 related to restricted stock
grants and grants of stock options to our non-employee directors in fiscal year 2009 and prior
years, to the extent we recognized compensation costs in fiscal year 2009 for such awards in
accordance with the provisions of SFAS 123R, excluding the impact of estimated forfeitures related
to service-based vesting conditions. For a discussion of the valuation assumptions used in the
SFAS 123R calculations, see Note 1 of Notes to Consolidated Financial Statements, Description of
Business and Summary of Significant Accounting Policies  Stock-Based Compensation and Note 8,
Employee Benefit Plans  Equity Incentive Plans, included in Part IV, Item 15 of our Annual
Report on Form 10-K for the year ended June 30, 2009.(2)
    
    Includes a one-time payment in the amount of $60,000, for service on the Special Litigation
Committee. 
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
 Security Ownership of Certain Beneficial Owners and Management
   68




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##### 



Number of SharesBeneficiallyBeneficial Owner(1)
    
    Owned(2)
    
    
    Percent(3)Beneficial Owners of in Excess of 5%Micronas Semiconductor Holding AG(4)
Technoparkestrasse 1
Zurich, V8 CH-8005
    
    
    7,000,000
    
    
    
    9.93
    %Cavalry Asset Management LP(5)
One California Street 
San Francisco, CA 94111
    
    
    5,234,792
    
    
    
    7.42
    %Renaissance Technologies LLC(6)
800 Third Ave 33th Fl 
New York, NY 10022
    
    
    5,139,280
    
    
    
    7.29
    %Artis Capital Management, L.P.(7)
One Market Plaza Spear St Tower 
San Francisco, CA 94105
    
    
    4,634,748
    
    
    
    6.57
    %Barclays
Global Investors UK Holdings
LTD(8)
1 Churchill Place 
London, E14 5HP
    
    
    3,710,237
    
    
    
    5.26
    %Executive Officers(9)Sylvia Summers Couder(10)
    
    
    388,164
    
    
    
    *Pete J. Mangan(11)
    
    
    70,141
    
    
    
    *David L. Teichmann(12)
    
    
    282,822
    
    
    
    *Christophe Chene(13)
    
    
    61,100
    
    
    
    *Donna M. Hamlin(14)
    
    
    59,150
    
    
    
    *Hungwen Li(15)
    
    
    174,454
    
    
    
    *Uri Kreisman(16)
    
    
    45,560
    
    
    
    *Richard Janney(17)
    
    
    25,000
    
    
    
    **Directors
    
    
    
    
    
    
    **Glen M. Antle(18)
    
    
    141,838
    
    
    
    *Brian R. Bachman(19)
    
    
    76,172
    
    
    
    *David Courtney(20)
    
    
    32,334
    
    
    
    *Hans Geyer(21)
    
    
    76,172
    
    
    
    *Raymond K. Ostby(22)
    
    
    92,838
    
    
    
    *J. Carl Hsu(23)
    
    
    32,334
    
    
    
    *Directors and executive officers as a group
(14 persons)(24)
    
    
    1,558,079
    
    
    
    2.21
    %
 
 *
    
    Less than 1%.(1)
    
    Except as otherwise indicated, the persons named in this table have sole voting and
investment power with respect to all shares of common stock shown as beneficially owned by
them, subject to community property laws where applicable and to the information contained in
the footnotes to this table.(2)
    
    Under the rules of the Securities and Exchange Commission, a person is deemed to be the
beneficial owner of shares that can be acquired by such person within 60 days upon the
exercise of options.  69




---



##### 



(3)
    
    Calculated on the basis of 70,514,503 shares of common stock outstanding as of September 30,
2009, provided that any additional shares of common stock that a stockholder has the right to
acquire within 60 days after September 30, 2009 pursuant to grants of stock options or awards
of restricted stock are deemed to be outstanding and beneficially owned by the person holding
such options or restricted stock for the purpose of computing the number of shares
beneficially owned and the percentage ownership of such person, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any other person.(4)
    
    Based on a Schedule 13G filed with the Securities and Exchange Commission on May 21, 2009 by
Micronas Semiconductor Holding AG.(5)
    
    Based on a Schedule 13F filed with the Securities and Exchange Commission on August 14, 2009
by Cavalry Asset Management LP, Cavalry Asset Management LP has sole investment discretion
over all of such shares and sole voting authority over all of such shares.(6)
    
    Based on a Schedule 13F filed with the Securities and Exchange Commission on August 13, 2009
by Renaissance Technologies LLC, Renaissance Technologies LLC has sole investment discretion
over all of such shares, sole voting authority over 4,881,842 shares and no voting authority
over 257,438 shares.(7)
    
    Based on a Schedule 13F filed with the Securities and Exchange Commission on August 14, 2009
by Artis Capital Management, L.P., Artis Capital Management, L.P. has sole investment
discretion over all of such shares and sole voting authority over all of such shares.(8)
    
    Based on a Schedule 13F/A filed with the Securities and Exchange Commission on September 11,
2009 by Barclays Global Investors UK Holdings LTD, Barclays Global Investors, N.A. has defined
investment discretion over 2,308,409 shares, sole voting authority over 1,924,139 shares, and
no voting authority over 384,270 shares. Barclays Global Fund Advisors has defined investment
discretion over 1,401,828 shares and sole voting authority over all of such shares.(9)
    
    The address of the executive officers and directors is c/o Trident Microsystems, Inc., 3408
Garrett Drive, Santa Clara, California 95054.(10)
    
    Includes 171,428 shares subject to options exercisable by Ms. Summers within sixty days of
September 30, 2009. Also includes 201,324 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Ms. Summers employment terminate prior to
vesting.(11)
    
    Includes 26,762 shares subject to options exercisable by Mr. Mangan within sixty days of
September 30, 2009. Also includes 36,286 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Mangans employment terminate prior to
vesting.(12)
    
    Includes 203,944 shares subject to options exercisable by Mr. Teichmann within sixty days of
September 30, 2009. Also includes 57,366 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Teichmanns employment terminate prior to
vesting.(13)
    
    Includes 61,100 shares of restricted stock that have not yet vested and are subject to
repurchase by Trident should Mr. Chenes employment terminate prior to vesting.(14)
    
    Includes 23,000 shares subject to options exercisable by Dr. Hamlin within sixty days of
September 30, 2009. Also includes 27,633 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Dr. Hamlins employment terminate prior to
vesting.(15)
    
    Includes 90,492 shares subject to options exercisable by Mr. Li within sixty days of
September 30, 2009. Also includes 59,001 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Lis employment terminate prior to
vesting.(16)
    
    Includes 15,800 shares subject to options exercisable by Mr. Kreisman within sixty days of
September 30, 2009. Also includes 29,760 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Kreismans service terminate prior to
vesting.(17)
    
    Includes 25,000 shares of restricted stock that have not yet vested and are subject to
repurchase by Trident should Mr. Janneys service terminate prior to vesting.(18)
    
    Includes 90,000 shares subject to options exercisable by Mr. Antle within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Antles service terminate prior to
vesting.(19)
    
    Includes 33,334 shares subject to options exercisable by Mr. Bachman within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Bachmans service terminate prior to
vesting.(20)
    
    Includes 8,334 shares subject to options exercisable by Mr. Courtney within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Courtneys service terminate prior to
vesting.  70




---



##### 



(21)
    
    Includes 33,334 shares subject to options exercisable by Mr. Geyer within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Geyers service terminate prior to
vesting.(22)
    
    Includes 50,000 shares subject to options exercisable by Mr. Ostby within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Ostbys service terminate prior to
vesting.(23)
    
    Includes 8,334 shares subject to options exercisable by Mr. Hsu within sixty days of
September 30, 2009. Also includes 24,000 shares of restricted stock that have not yet vested
and are subject to repurchase by Trident should Mr. Hsus service terminate prior to vesting.(24)
    
    Includes 754,762 shares subject to options that are currently exercisable or will become
exercisable within 60 days after September 30, 2009 beneficially owned by executive officers
and directors, and 641,470 shares of restricted stock that have not yet vested and are subject
to repurchase by Trident should the employees employment terminate prior to vesting. Equity Compensation Plan Information
   Number ofsecurities to be
    
    
    
    
    
    
    Number of securitiesissued upon
    
    
    
    
    
    
    remaining available forexercise of
    
    
    Weighted-average
    
    
    future issuance underoutstanding
    
    
    exercise price of
    
    
    equity compensationoptions,
    
    
    outstanding
    
    
    plans (excludingwarrants and
    
    
    options, warrants
    
    
    securities reflected inPlan Category
    
    rights
    
    
    and rights
    
    
    column AEquity compensation
plans approved by
security holders
    
    
    5,416,058
    (1)
    
    $
    8.43
    
    
    
    3,321,035
    (2)Equity compensation
plan not approved
by security holders
    
    
    1,451,803
    (3)
    
    $
    7.42
    
    
    
    Total
    
    
    6,867,861
    
    
    $
    8.21
    
    
    
    3,321,035
 (1)
    
    Includes 40,000 shares that are reserved and issuable upon exercise of options outstanding
under the 1994 Plan, which expired on January 13, 2004, 1,045,400 shares that are reserved and
issuable upon exercise of options outstanding under the 2002 Plan and 988,655 shares that are
reserved and issuable upon exercise of options outstanding under the TT1 Plan, and 3,342,003
shares that are reserved and issuable upon exercise of options outstanding under the 2006
Plan.(2)
    
    Includes 861,266 shares reserved for future issuance under the 2002 Stock Option Plan, and
2,459,769 shares reserved for future issuance under the 2006 Stock Option Plan, which has
already included the 1.38 ratio for restricted stock.(3)
    
    Consists of shares subject to options that are outstanding pursuant to the 1996 Plan, which
plan was terminated on June 19, 2007.  71




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##### 



Material Features of the 1996 Nonstatutory Stock Option Plan
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence.
   
    
    On May 14, 2009, we entered into a Service Level Agreement or (SLA) with Micronas.
Under the SLA, Micronas agreed to provide to us specified transition services and support,
including intellectual property transitional services for a limited period of time to
assist us in achieving a smooth transition of the acquired products and product lines. The
transition services include certain manufacturing design, maintenance and support services,
sales of inventory and newly-manufactured products and certain finance and administration,
IT, infrastructure, warehousing and similar services, to be provided pursuant to specified
service level agreements. Moreover, on May 14, 2009, we entered into an exclusive
Distributor Agreement with Micronas. Under the Distributor Agreement, Micronas served as
the exclusive supplier and OEM to us on the FRC, DRX, and Audio Decoder product lines from
May 15, 2009 to June 15, 2009. As of June 30, 2009, the outstanding accounts payable to
Micronas was $5.5 million, and the outstanding accounts receivable from Micronas was $5.3
million.
    
    We entered into a Cross License Agreement (the Cross License) with Micronas, pursuant
to which Micronas has granted to us a royalty-free, perpetual, irrevocable, fully
assignable and transferable worldwide license, including the right to sublicense, to
patents that are relevant to, but not exclusive to, the FRC line of frame rate converters,
the DRX line of demodulators and all of the audio processing product lines acquired in the
acquisition. Ownership of these patents remains with Micronas following completion of the
acquisition. The license is exclusive for the first three years, subject to certain
exceptions, and is non-exclusive thereafter. We have granted to Micronas a royalty-free,
perpetual, irrevocable, non-exclusive, fully assignable and transferable worldwide license,
including the right to sublicense, to patents exclusively relevant to the FRC line of frame
rate converters, the DRX line of demodulators and all of the audio processing product lines
acquired in the acquisition. During the first three years, the license granted by us to
Micronas is limited to use for products that are not a DRX, Audio or FRC Product. Following
this three year period, Micronas may use the licensed rights on any product.
    
    We entered into a Stockholder Agreement (the Stockholder Agreement) with Micronas,
setting forth specified registration rights associated with the shares, including demand
and piggyback registration rights, restrictions on transfer of the Shares and provides
Micronas certain pre-emptive rights to acquire additional shares of our Common Stock.
Under the Stockholders Agreement, Micronas has agreed to vote the Shares in support of
acquisition proposals approved by the disinterested members of its Board of Directors, and
together with the recommendation of the disinterested members of the Board of Directors on
other stockholder proposals, and Micronas ability to engage in certain solicitations and
activities encouraging support for or against proposals inconsistent with its voting
agreements is restricted.
    
    Micronas agreed to sublease 17,000 square footage of the office spaces located in
Munich, Germany to us. We are currently using the office spaces for general and
administration, research and engineering services. The lease expires on May 31, 2012.
  72




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##### 



Procedures for Approval of Related Person Transactions
   Independence of the Board of Directors
 http://www.tridentmicro.com/investors
   (i)
    
    compensation for board or board committee service;(ii)
    
    payments arising solely from investments in the Companys securities;(iii)
    
    compensation paid to a family member who is a non-executive employee of
the Company or a parent or subsidiary of the Company; or(iv)
    
    benefits under a tax-qualified retirement plan or nondiscretionary
compensation;
   73




---



##### 



(i)
    
    payments arising solely from investments in the Companys securities; or(ii)
    
    payments under non-discretionary charitable contribution matching funds;
       74




---



##### 



Item 14.
    
    Principal Accounting Fees and Services.
  Year Ended
    
    
    Year EndedJune 30, 2009
    
    
    June 30, 2008Audit fees (1)
    
    $
    1,708,000
    
    
    $
    3,183,000Audit-related fees (2)
    
    $
    15,000
    
    
    $
    43,000Tax fees (3)
    
    $
    114,000
    
    
    $
    133,000All other fees (4)
    
    $
    2,000
    
    
    $
    7,000Total
    
    $
    1,839,000
    
    
    $
    3,366,000
 
 (1)
    
    Audit Fees. Consist of fees billed for professional services rendered for the audit of our
consolidated financial statements and review of the interim consolidated financial statements
included in quarterly reports and services that are normally provided by
PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements.(2)
    
    Audit-related Fees. Consists of fees, billed for assurance and related services that are
reasonably related to the performance of the audit or review of our consolidated financial
statements and are not reported under Audit Fees. These services include accounting
consultations in connection with acquisitions and attest services that are not required by
state or regulation and consultations concerning financial accounting and reporting standards.(3)
    
    Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice
and tax planning. These services include assistance regarding federal, state and international
tax compliance, tax audit defense, customs and duties, mergers and acquisitions, and
international tax planning.(4)
    
    Other Fees. The nature of other services includes subscription to an online accounting,
auditing and reporting library and other miscellaneous services.  Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting Firm.
   75




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##### 



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
  Page Number1. Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    38Consolidated Statements of Operations  For the Years Ended June 30, 2009, 2008 and 2007
    
    
    4Consolidated Balance Sheets  As of June 30, 2009 and 2008
    
    
    5Consolidated Statements of Cash Flows For the Years Ended June 30, 2009, 2008 and 2007
    
    
    6Consolidated Statements of Changes in Stockholders Equity For the Years Ended June 30, 2009, 2008 and 2007
    
    
    7Notes to Consolidated Financial Statements
    
    
    82. Financial Statement Schedules:II  Valuation and Qualifying Accounts for each of the Years Ended June 30, 2009, 2008 and 2007
    
    
    78
  76




---



##### 



3. Exhibits:
  Exhibit
    
    Description23.1
    
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    
    Rule 13a  14(a) Certification of Chief Executive Officer.31.2
    
    
    Rule 13a  14(a) Certification of Chief Financial Officer.32.1
    
    
    Section 1350 Certification of Chief Executive Officer.32.2
    
    
    Section 1350 Certification of Chief Financial Officer.
  77




---



##### 



SIGNATURES
   TRIDENT MICROSYSTEMS, INC.By:
    /s/Sylvia Summers CouderSylvia  Summers CouderChief Executive Officer and President  78




---



##### 



Schedule II
 TRIDENT MICROSYSTEMS, INC.
VALUATION AND QUALIFYING ACCOUNTS
 Write-offs orBalance at
    
    
    Charged as a
    
    
    AdjustmentsFiscal
    
    
    
    
    
    Beginning of
    
    
    Reduction (Credit) to
    
    
    Charged to
    
    
    Balance atYear
    
    Description
    
    
    Period
    
    
    Revenue
    
    
    Allowance
    
    
    End of Period(In thousands)2009
    
    Allowance for sales returns
    
    
    $
    300
    
    
    $
    (244
    )
    
    $
    
    
    
    $
    562008
    
    Allowance for sales returns
    
    
    $
    1,101
    
    
    $
    (801
    )
    
    $
    
    
    
    $
    3002007
    
    Allowance for sales returns
    
    
    $
    1,475
    
    
    $
    (374
    )
    
    $
    
    
    
    $
    1,101
 Balance atFiscal
    
    
    
    
    
    Beginning of
    
    
    Increase
    
    
    Balance at EndYear
    
    Description
    
    
    Period
    
    
    (decrease)
    
    
    of Period(In thousands)2009
    
    Valuation allowance for deferred tax assets
    
    
    $
    20,820
    
    
    $
    9,190
    
    
    $
    30,0102008
    
    Valuation allowance for deferred tax assets
    
    
    $
    23,641
    
    
    $
    (2,821
    )
    
    $
    20,8202007
    
    Valuation allowance for deferred tax assets
    
    
    $
    24,151
    
    
    $
    (510
    )
    
    $
    23,641
  79




---



##### 



EXHIBIT INDEX
 Exhibit
    
    Description23.1
    
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    
    Rule 13a  14(a) Certification of Chief Executive Officer.31.2
    
    
    Rule 13a  14(a) Certification of Chief Financial Officer.32.1
    
    
    Section 1350 Certification of Chief Executive Officer.32.2
    
    
    Section 1350 Certification of Chief Financial Officer.
  80