8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 26, 2006

TRIDENT MICROSYSTEMS, INC.

(Exact name of registrant as specified in its charter)

0-20784
(Commission File Number)

Delaware
(State or other jurisdiction of incorporation) 77-0156584
(I.R.S. Employer Identification No.)

1090 E. Arques Avenue
Sunnyvale, California 94085
(Address of principal executive offices, with zip code)

(408) 991-8800
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

TABLE OF CONTENTS

EXHIBIT 99.1

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition.

     On April 26, 2006, Trident Microsystems, Inc. (the “Company”) issued a press release announcing financial results for the quarter ended March 31, 2006. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

     The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

     (c) Exhibits.

Exhibit	Description
99.1	Press Release issued by Trident Microsystems, Inc., dated April 26, 2006, announcing financial results for the quarter ended March 31, 2006.

2

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 26, 2006

TRIDENT MICROSYSTEMS, INC.

/s/ Frank Lin

Frank C. Lin

President, Chief Executive Officer

and Chairman of the Board

(Principal Executive Officer)

/s/ John S. Edmunds John S. Edmunds

Chief Financial Officer

3

Exhibit Index

Exhibit	Description
99.1	Press Release issued by Trident Microsystems, Inc., dated April 26, 2006, announcing financial results for the quarter ended March 31, 2006.

4

EX-99.1

EXHIBIT 99.1

TRIDENT MICROSYSTEMS REPORTS FINANCIAL RESULTS FOR
Third QUARTER of FISCAL YEAR 2006

March quarter revenue grew 10% sequentially
June quarter revenue expected to be up 10-12% sequentially

Sunnyvale, Calif., — April 26, 2006: Trident Microsystems, Inc. (NASDAQ: TRID) a leading provider of digital TV semiconductor technology today announced for the third quarter of fiscal 2006, ended March 31, 2006, the company achieved net revenues of $44,743,000, a sequential increase of 10% from the $40,614,000 reported in the immediately preceding quarter, and a year over year increase of 177% from $16,136,000 reported in the third fiscal quarter one year ago.

Net income of $6,982,000 was recorded in the third quarter ended March 31, 2006, on a generally accepted accounting principles (GAAP) basis, or $0.11 per share on a diluted basis, which included $2,309,000 in amortized stock compensation expense relating to option expense under FAS 123(R) and $1,517,000 charged to cost of revenue and operating expenses relating to amortization of intangibles. This compares to net income of $8,542,000 which was recorded in the second quarter ended December 31, 2005, on a generally accepted accounting principles (GAAP) basis, or $0.14 per share on a diluted basis, which included $2,209,000 in amortized stock compensation expense relating to option expense under FAS 123(R), $1,200,000 charged to cost of revenue and operating expenses relating to amortization of intangibles, and a credit to income tax expense of $414,000, as well as a credit of $1,951,000 relating to the booking of a deferred tax asset for our TTI subsidiary. For the third quarter ended March 31, 2005, the company has a net loss of $ 4,515,000 on a generally accepted accounting principles (GAAP) basis, or $0.10 per share on a diluted basis, which included $4,586,000 of in-process research and development expenses relating to the acquisition of the minority interest in the Company’s TTI subsidiary, and $820,000 in deferred compensation amortization relating to TTI options.

Pro forma net income in the quarter ended March 31, 2006, was $11,050,000, or $0.18 per share on a diluted basis and excludes the items noted above. This compares to pro forma net income of $10,167,000 or $0.17 per diluted share in the quarter ended December 31, 2005 and to pro forma net income in the quarter ended March 31, 2005 of $891,000, or $0.02 per diluted share. A reconciliation between net income on a GAAP basis and pro forma net income/loss is provided in a table following the pro forma consolidated statement of operations.

“We are very pleased with the continuing strong momentum and our good sequential growth rate of 10% in what traditionally has been a seasonally down quarter” said Mr. Frank Lin, Trident’s CEO. In March quarter, there were some conflicting market information and confusion about market trends. We believe this has been the result of a slow down among suppliers to the second and third tier TV manufacturers caused by a dynamic market demand shift to favor first tier world class manufacturers. This trend bodes well for Trident. In particular, we believe we are benefiting from a strong replenishment rate at two of our largest tier one OEM customers who

respectively grew sequentially by 18% and 19% in the quarter as they both appear to be gaining market share at present. In addition, we are also experiencing strong product cycles and increased customer penetration which have combined to lead to a broad based growth across the entire flat panel customer base,” continued Mr. Lin. Digital CRT which now represents 8% of our revenues was more than seasonally off due to slower than expected sell through during the Chinese New Year holiday season in late January and February. In addition we believe a significant portion of the digital CRT market is continuing to convert into LCD TV business.”

“In this quarter, we witnessed top-tier OEM customers successfully making the transition from their previous SVP EX based product lines into the new 2006 SVP PX based models which they recently launched worldwide. The SVP-PX represented more than 30% of our flat panel volumes shipped in the quarter” said Mr. Lin.

The current product transition to our SVP-PX signifies the maturity of our product for worldwide platforms and demonstrates the benefits to our customers from our strong product continuity/compatibility between generations from a hardware and software perspective. This product greatly enhances the productivity and competitiveness of our customers in the highly competitive TV market space.

On the HDTV front, in the March quarter, the company also saw its first generation HiDTV based products starting to sell in the U.S. Market. We expect more models by various OEM’s to be launched in the June quarter. The Company believes it is well on the way to achieving its goal to deliver more than $10 million in revenue by the end of calendar 2006. Production starts with our customers mark our entry into the HDTV market and also signal a level of maturity for our HDTV technology. In addition this quarter, the Company has successfully show-cased at CES and started to sample its second HDTV Pro product which is the world’s first SOC product that has integrated both mature HDTV technology and field proven superior display technology (SVP PX/LX) into a single chip. Furthermore, we have continued to develop and introduce a next follow-on generation of HiDTV PRO SOC which will integrate our seventh and latest generation image processing technologies in the HiDTV family by early summer.

As the SVP-PX/LX continues to ramp into production and our customers continue to do well in the market , we now expect to generate approximately 10-12% sequential revenue growth in the June quarter.

About Pro Forma adjustments

To supplement the consolidated financial results prepared under generally accepted accounting principles (“GAAP”), Trident uses a non-GAAP conforming, or pro forma, measure of net income that is GAAP net income adjusted to exclude certain costs, expenses and gains. Pro forma net income gives an indication of Trident’s baseline performance before gains, losses or other charges that are considered by management to be outside the company’s core operating results. In addition, pro forma net income is among the primary indicators management uses for planning purposes.

Management also believes the exclusion of amortization of stock option expense may be useful in comparing the Company’s results with past results and with companies who are not

yet subject to FAS 123R. However, the Company’s pro forma measures are not in accordance with, or an alternative for, GAAP and may be materially different from pro forma measures used by other companies. Trident computes pro forma net income by adjusting GAAP net income for the impact of certain investment gains (or losses) and excluding various items related to the acquisition of the TTI minority interest, including amortization of deferred stock compensation, amortization of intangible assets and charges for in–process research and development costs. A reconciliation between net income/loss on a GAAP basis and pro forma net income is provided in a table following pro forma consolidated financial statements.

Webcast, Teleconference and Taped Replay

The Company also announced that it will hold a conference call to discuss the earnings, which will be held on Wednesday, April 26, 2006 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Shareholders may participate in the call by calling 617-614-3925 passcode 94021917. The conference call will also be webcast by Thomson/CCBN and can be accessed at Trident’s web site at: http://www.tridentmicro.com. A replay of the conference call will be available from 5:00 p.m. Pacific Time April 26, 2006 until midnight Pacific Time May 3, 2006, and can be accessed by calling 617-801-6888 using passcode 19399331.

Forward-Looking Information

This press release contains forward-looking statements, including statements which use the words “expect,” “should,” “hope,” “anticipate,” “believe,” “potential” and similar words, including our statements regarding financial expectations and our expectations regarding market leadership, product introductions and design-wins. The forward-looking statements above are subject to certain risks, and actual results could vary materially depending on a number of factors. These risks include, in particular, changes in trends in the DPTV industries, whether the Company is able to achieve timely product introductions, the failure to obtain design wins among major OEMs for the Company’s products, and competitive pressures, including pricing and competitors’ new product introductions. Additional factors that may affect the Company’s business are described in detail in the Company’s filings with the Securities and Exchange Commission.

Special Stockholder’s Meeting

The Company also announced that it intends to hold a special stockholder’s meeting to consider the adoption of a 2006 Equity Incentive Plan. The meeting is scheduled to occur on May 25, 2006. Proxy statements regarding the proposal will be mailed on or around April 27, 2006.

About Trident Microsystems, Inc.

Trident Microsystems, Inc., with headquarters in Sunnyvale, California, designs, develops and markets digital media for the masses in the form of integrated circuits (ICs) for HDTV, LCD TV, PDP TV, DLP TV, and DCRT. Trident’s products are sold to a network of OEMs, original design manufacturers and system integrators worldwide. For further information about Trident and its products, please consult the company’s web site: http://www.tridentmicro.com.

Trident is a registered trademark of Trident Microsystems, Inc. All other company and product names are trademarks and/or registered trademarks of their respective owners. Features, pricing, availability and specifications are subject to change without notice.

For Press Releases:
Trident Microsystems, Inc.
John Edmunds
Chief Financial Officer
	Tel: (408) 991-8800
Email: Investor@tridentmicro.com		Web site: http://www.tridentmicro.com

Trident Microsystems, Inc.
Consolidated Statement of Operations

	Three Months Ended									Nine Months Ended
	March 31,			December 31,			March 31,			March 31,			March 31,
(in thousands, except per share data, unaudited)	2006			2005			2005			2006			2005
Net revenue	$	44,743		$	40,614		$	16,136		$	118,561		$	48,125
Cost of revenue		20,531			18,533			7,170			53,518			21,476
Cost of revenues — amortization of intangibles		1,383			1,164			—			3,739			—
Gross profit		22,829			20,917			8,966			61,304			26,649
% of net revenue		51.0	%		51.5	%		55.6	%		51.7	%		55.4	%
Research and development expenses		8,644			8,166			5,481			24,167			15,778
% of net revenue		19.3	%		20.1	%		34.0	%		20.4	%		32.8	%
Selling, general and administrative expenses		5,612			5,098			2,940			15,527			8,031
% of net revenue		12.5	%		12.6	%		18.2	%		13.1	%		16.7	%
In-process research and development expenses		—			—			4,586			—			5,171
% of net revenue		—			—			28.4	%		—			10.7	%
Income (loss) from operations		8,573			7,653			(4,041	)		21,610			(2,331	)
% of net revenue		19.2	%		18.8	%		(25.0	)%		18.2	%		(4.8	)%
(Loss) gain on investments, net		(242	)		(167	)		—			(510	)		331
Interest and other income, net		570			642			209			1,724			436
Minority interests in subsidiaries		—			—			(263	)		—			(1,179	)
Income (loss) before income taxes		8,901			8,128			(4,095	)		22,824			(2,743	)
% of net revenue		19.9	%		20.0	%		(25.4	)%		19.3	%		(5.7	)%
Provision (benefit) for income taxes		1,919			(414	)		420			2,706			936
% of net revenue		4.3	%		(1.0	)%		2.6	%		2.3	%		1.9	%
Net income (loss) before cumulative effect of change in accounting principle		6,982			8,542			(4,515	)		20,118			(3,679	)
% of net revenue		15.6	%		21.0	%		(28.0	)%		17.0	%		(7.6	)%
Cumulative effect of change in accounting principle		—			—			—			171			—
% of net revenue		0.0	%		0.0	%		0.0	%		0.1	%		0.0	%
Net income (loss)	$	6,982		$	8,542		$	(4,515	)	$	20,289		$	(3,679	)
% of net revenue		15.6	%		21.0	%		(28.0	)%		17.1	%		(7.6	)%
Basic net income (loss) per share
Prior to cumulative effect of change in accounting principle	$	0.12		$	0.16		$	(0.10	)	$	0.37		$	(0.08	)
Cumulative effect of change in accounting principle		—			—			—			—			—
Basic net income (loss) per share	$	0.12		$	0.16		$	(0.10	)	$	0.37		$	(0.08	)
Common shares used in computing basic per share amounts		56,025			53,591			46,680			54,042			46,190
Diluted net income (loss) per share
Prior to cumulative effect of change in accounting principle	$	0.11		$	0.14		$	(0.10	)	$	0.33		$	(0.08	)
Cumulative effect of change in accounting principle		—			—			—			—			—
Diluted net income (loss) per share	$	0.11		$	0.14		$	(0.10	)	$	0.33		$	(0.08	)
Common and common equivalent shares used in computing diluted per share amounts		62,729			60,842			46,680			61,446			46,190

Trident Microsystems, Inc.
Pro Forma Consolidated Statement of Operations

	Three Months Ended									Nine Months Ended
	March 31,			December 31,			March 31,			March 31,			March 31,
(in thousands, except per share data, unaudited)	2006			2005			2005			2006			2005
Net revenue	$	44,743		$	40,614		$	16,136		$	118,561		$	48,125
Cost of revenue		20,531			18,533			7,170			53,518			21,476
Gross profit		24,212			22,081			8,966			65,043			26,649
% of net revenue		54.1	%		54.4	%		55.6	%		54.9	%		55.4	%
Research and development expenses		7,023			6,671			4,938			20,050			14,665
% of net revenue		15.7	%		16.4	%		30.6	%		16.9	%		30.5	%
Selling, general and administrative expenses		4,790			4,348			2,663			13,352			7,387
% of net revenue		10.7	%		10.7	%		16.5	%		11.3	%		15.3	%
Income from operations		12,399			11,062			1,365			31,641			4,597
% of net revenue		27.7	%		27.2	%		8.5	%		26.7	%		9.6	%
Interest and other income, net		570			642			209			1,724			436
Minority interests in subsidiaries		—			—			(263	)		—			(1,179	)
Income before income taxes		12,969			11,704			1,311			33,365			3,854
% of net revenue		29.0	%		28.8	%		8.1	%		28.1	%		8.0	%
Provision (benefit) for income taxes		1,919			1,537			420			4,657			936
% of net revenue		4.3	%		3.8	%		2.6	%		3.9	%		1.9	%
Net income		11,050			10,167			891			28,708			2,918
% of net revenue		24.7	%		25.0	%		5.5	%		24.2	%		6.1	%
Basic net income per share	$	0.20		$	0.19		$	0.02		$	0.53		$	0.06
Common shares used in computing basic per share amounts		56,025			53,591			46,680			54,042			46,190
Diluted net income per share	$	0.18		$	0.17		$	0.02		$	0.47		$	0.06
Common and common equivalent shares used in computing diluted per share amounts		62,729			60,842			51,286			61,446			50,832

A reconciliation between net income (loss) on a GAAP basis
and pro forma net income is as follows:

	Three Months Ended								Nine Months Ended
	March 31,		December 31,			March 31,			March 31,			March 31,
(in thousands, except per share data, unaudited)	2006		2005			2005			2006			2005
GAAP net income (loss)	$	6,982	$	8,542		$	(4,515	)	$	20,289		$	(3,679	)
Amortization of intangibles		1,517		1,200			—			3,945			—
In-process research and development expenses		—		—			4,586			—			5,171
Amortization of stock-based compensation		2,309		2,209			820			6,086			1,757
Loss (gain) on investments, net		242		167			—			510			(331	)
Benefit for income taxes		—		(1,951	)		—			(1,951	)		—
Cumulative effect of change in accounting principle (1)		—		—			—			(171	)		—
Pro forma net income	$	11,050	$	10,167		$	891		$	28,708		$	2,918
Basic net income per share	$	0.20	$	0.19		$	0.02		$	0.53		$	0.06
Common shares used in computing basic per share amounts		56,025		53,591			46,680			54,042			46,190
Diluted net income per share	$	0.18	$	0.17		$	0.02		$	0.47		$	0.06
Common and common equivalent shares used in computing diluted per share amounts		62,729		60,842			51,286			61,446			50,832

(1) The adoption of SFAS 123R resulted in a cumulative benefit from an accounting change of $171,000 on unvested awards for which an expense had already been recorded.

Trident Microsystems, Inc.
Consolidated Balance Sheet

	March 31,		December 31,		March 31,
(in thousands, unaudited)	2006		2005		2005
ASSETS
Current assets
Cash and cash equivalents	$	83,388	$	68,665	$	32,971
Short-term investment — UMC		52,295		46,916		45,454
Accounts receivable, net		7,325		4,430		3,959
Inventories		6,635		4,369		2,838
Deferred income taxes		2,158		2,158		—
Prepaid expenses and other current assets		3,550		2,892		2,401
Total current assets		155,351		129,430		87,623
Property and equipment, net		2,943		2,831		1,990
Intangible assets, net		20,714		22,231		26,029
Investments — other		3,830		4,072		3,200
Other assets		1,890		1,872		1,562
Total assets	$	184,728	$	160,436	$	120,404
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	13,252	$	11,493	$	5,583
Accrued liabilities		16,768		14,331		8,950
Deferred income taxes		2,485		334		—
Income taxes payable		10,007		8,517		5,187
Total current liabilities		42,512		34,675		19,720
Minority interests in subsidiaries		2		2		58
Total liabilities		42,514		34,677		19,778
Stockholders’ equity
Capital stock		103,782		97,536		123,444
Deferred stock-based compensation		—		—		(43,099	)
Retained earnings		34,704		27,722		20,480
Accumulated other comprehensive income (loss)		3,728		501		(199	)
Total stockholders’ equity		142,214		125,759		100,626
Total liabilities and stockholders’ equity	$	184,728	$	160,436	$	120,404