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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
dated April 14, 1998
GENESIS MICROCHIP INC.
200 Town Centre Boulevard, Suite #400
Markham, Ontario, Canada L3R 8G5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [ ].
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934
Yes [ ] No [X].
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
_________________
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Genesis Microchip Inc.
Form 6-K
Genesis Microchip Inc. (the "Company") reported its results for the
quarter ended February 28, 1998 in a press release dated as of March 24, 1998.
Such press release is attached as Exhibit 1.(A) hereto and is incorporated by
reference herein.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Nine Month Results
Total revenues for the nine months ended February 28, 1998 were $10.2 million,
an increase of 237.9% over total revenues of $3.0 million in the same period in
the previous year. Net income for the nine month period was $1.8 million,
compared with a loss of $2.9 million in the corresponding period in the
previous year. Fully diluted earnings per share for the nine month period was
$0.16 on 12.1 million shares, compared with a loss of $0.38 on 7.4 million
shares in the corresponding period in the previous year.
Revenues and Gross Profit - Three Month Results
Total revenues for the three months ended February 28, 1998 were $4.8 million,
an increase of 297.7% over total revenues of $1.2 million in the same period in
the previous year. This growth is primarily attributable to increased revenues
from the Company's AIM product line since its introduction in the third quarter
of fiscal 1997.
Gross profit in the three months ended February 28, 1998 was 70.6%, compared
with 61.5% in the same period in the previous year. Gross profit for the nine
months ended February 28, 1998 was 71.2%, compared with 47.2% in the same
period in the previous year. The gross profit in the previous year was
negatively impacted by provisions for declines in value of inventory and for
write-downs of excess inventory. Gross profit in the current year reflects
improved margins on the Company's newer products over its more mature products.
Gross margins may decline in future periods as the Company enters higher volume
markets.
Operating Expenses
Gross research and development expenses for the three months ended February 28,
1998 were $1.3 million, an increase of 47.5% over gross research and development
expenses of $878,000 in the same period in the previous year, reflecting an
increase in research and development staff levels from 38 personnel at February
28, 1997 to 60 personnel at February 28, 1998. Investment tax credits and
government assistance for the three months ended February 28, 1998 were
$226,000, an increase of 1.3% over investment tax credits and government
assistance of $223,000 in the same period in the previous year. No grants were
recorded in the three months ended February 28, 1998 compared to $95,000 in
grants recorded in the same period in the previous year. This decline in grants
was offset by an increase in tax credits earned as a result of the Company's
increased research and development costs.
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Selling and marketing expenses for the three months ended February 28, 1998
were $935,000, an increase of 35.9% over selling and marketing expenses of
$688,000 in the same period in the previous year. This increase was primarily
as a result of increased staffing levels and increased commission expense on
increased revenues.
General and administrative expenses for the three months ended February 28,
1998 were $304,000, an increase of 9.7% over general and administrative
expenses of $277,000 in the same period in the previous year. This increase
was as a result of increased staff levels.
There was no provision for income taxes in the three month period ended
February 28, 1998 because the Company had investment tax credits, non-capital
losses and unclaimed research and development expenditures available for
carry-forward against taxes payable or taxable income. In the three month
period ended February 28, 1997 there was no provision for income taxes because
the Company had a net loss.
Balance Sheet
Cash and cash equivalents at February 28, 1998 increased to $31.6 million from
$3.7 million at May 31, 1997, reflecting proceeds received on February 27, 1998
from an initial public offering of the Company's common shares.
Accounts receivable trade and inventory at February 28, 1998 increased to $2.5
million and $2.8 million, respectively from $915,000 and $1.8 million,
respectively at May 31, 1997 as a result of increases in revenues. Accounts
payable and accrued liabilities increased as a result of the inclusion of $1.5
million in costs relating to the initial public offering as well as general
growth in the Company's business.
Shareholders' equity at February 28, 1998 reflects the conversion of all
preference shares, common share purchase warrants and special and bonus
warrants into common shares in the period, together with an initial public
offering of the Company's common shares. Total common shares issued increased
to 13.4 million at February 28, 1998 from 7.5 million at May 31, 1997 as a
result of these transactions.
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EXHIBIT INDEX
Exhibit 1.(A) Press release, dated March 24, 1998, announcing
the results of Genesis Microchip Inc. for the quarter
ended February 28, 1998.
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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, thereunto duly authorized.
GENESIS MICROCHIP INC.
By: /s/ I. ERIC ERDMAN
-------------------------------------
I. Eric Erdman
Secretary and Chief Financial Officer
Date: April 6, 1998
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EXHIBIT A
GENESIS MICROCHIP'S THIRD QUARTER REVENUES MORE THAN TRIPLE
EARNINGS DOUBLE OVER PREVIOUS QUARTER
COMPANY BEGINS COMMERCIAL SHIPMENTS INTO LCD MONITOR MARKET
TORONTO, ON (Mar. 24, 1998) -- Genesis Microchip Inc. [NASDAQ: GNSSF], a leader
in imaging, digital video and graphics processing integrated circuits (ICs),
today reported record revenues and earnings for its first public reporting
period ended February 28, 1998.
Revenues for the quarter increased 298 percent to $4.8 million compared to $1.2
million for the third quarter fiscal 1997. Total revenues for the nine-month
period ended February 28, 1998 increased 238 percent to $10.2 million compared
to $3.0 million for the year-ago period. The increase in revenues reflects
growth in all geographical markets, with the strongest growth in the Asian
market.
Net income for the third quarter fiscal 1998 increased to $1.1 million, or $.13
per share, compared to a loss of $804,000, or $.11 per share for the prior year
quarter. Net income for the nine months ended February 28, 1998 was $1.8
million or $.22 per share, compared to a loss of $2.9 million, or $.38 per
share, for the year-ago period, primarily due to growth in revenues from high
end and projection system markets. Fully diluted earnings per share for the
nine month period was $0.16 on 12.1 million shares, compared with a loss of
$0.38 on 7.4 million shares in the corresponding period in the previous year.
Financial information in this release is expressed in United States dollars and
is prepared in accordance with generally accepted accounting principles as
applied in Canada.
"We are pleased with our growth for the first three quarters of 1998," said Paul
M. Russo, Genesis Microchip's Chairman and Chief Executive Officer. "Our
leadership in the digital projection market translated into robust growth in the
third quarter. Also during the quarter, new markets opened for our technology.
We began shipping commercial quantities of our Advanced Image Magnification
(AIM) products into the LCD monitor market. Fujitsu and Apple both currently
offer LCD monitor products with Genesis chips and several other companies are in
pre-production. The improved picture quality and multi-scan capabilities
provided by our chips make our technology compelling for LCD monitor
applications. This market provides Genesis with a unique opportunity for growth
going forward."
During the quarter, Genesis closed on an initial public offering. The IPO was
managed by an underwriting group consisting of NationsBanc Montgomery
Securities LLC, CIBC Oppenheimer Corp., SoundView Financial Group, Inc., and
Yorkton Capital Inc. The $26.7 million raised by the IPO will be used as
working capital. On March 23, 1998, the underwriters exercised their
overallotment option which will provide Genesis with an additional $4.6 million
of working capital.
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Genesis Microchip's financial performance has been recognized in each of the
last two years with awards from the Fabless Semiconductor Association (FSA).
On November 13, 1997, the FSA recognized Genesis as an Outstanding Financial
Performer for the period ending September 30, 1997. The Outstanding Financial
Performer award acknowledges companies that double their annual revenues.
Genesis Microchip's financial data was reviewed and deemed eligible by Ernst &
Young LLP. The FSA is a trade organization dedicated to promoting the fabless
semiconductor business model.
Parts of this release contain "forward looking" information within the meaning
of the United States securities laws that involve risks and uncertainties that
could cause actual results to differ materially from those in the forward
looking statements. Potential risks and uncertainties include, without
limitation, the growth rate of the markets into which the company sells its
products; market acceptance of and demand for the products of the company and
those of the company's customers; unanticipated delays or problems in the
introduction of the company's products; the company's ability to introduce new
products in accordance with OEM design requirements and design cycles; new
product announcements or product introductions by the company and the company's
competitors; availability and cost of manufacturing sources for the company's
products; supply constraints for components incorporated into the company's
customers' products; changes in the mix of sales to OEMs and distributors;
incorrect forecasting of future revenues; the volume of orders that are
received and can be filled in a quarter; the rescheduling or cancellation of
orders by customers; costs associated with protecting the company's
intellectual property; changes in product mix; changes in product costs and
pricing; and currency exchange rate fluctuations.
Genesis Microchip - an ISO9001-registered company - is a leader in imaging and
digital video/graphics processing technologies. Customers include Apple
Computer, Dolch Computer Systems, In Focus Systems, Intergraph Computer
Systems, nView Corp., Philips Multimedia, Silicon Graphics Inc., Tatung Co.,
Texas Instruments and more than 180 other companies. The company's
headquarters is in Markham, Ontario, and its worldwide sales office is located
in Mountain View, California.
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GENESIS MICROCHIP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
Feb. 28, Feb. 28, Feb. 28, Feb. 28,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Products .................................................. $ 4,439 $ 1,112 $ 9,440 $ 2,912
Design services and other ................................. 337 89 766 108
-------- -------- -------- --------
Total revenues ....................................... 4,776 1,201 10,206 3,020
Cost of revenues .......................................... 1,402 462 2,936 1,595
-------- -------- -------- --------
Gross profit .............................................. 3,374 739 7,270 1,425
-------- -------- -------- --------
OPERATING EXPENSES:
Research and development .................................. 1,295 878 3,171 2,412
Less investment tax credits and government assistance ..... (226) (223) (649) (580)
-------- -------- -------- --------
1,069 655 2,522 1,832
Selling and marketing ..................................... 935 688 2,302 1,622
General and administrative ................................ 304 277 873 920
-------- -------- -------- --------
Total operating expenses ............................. 2,308 1,620 5,697 4,374
-------- -------- -------- --------
Income (loss) from operations ............................. 1,066 (881) 1,573 (2,949)
Interest income ........................................... 60 77 188 81
-------- -------- -------- --------
Income (loss) before income taxes ......................... 1,126 (804) 1,761 (2,868)
Provision for income taxes ................................ -- -- -- --
-------- -------- -------- --------
Net income (loss) ......................................... $ 1,126 $ (804) $ 1,761 $ (2,868)
======== ======== ======== ========
EARNINGS PER SHARE:
Basic ..................................................... $ 0.13 $ (0.11) $ 0.22 $ (0.38)
======== ======== ======== ========
Fully diluted ............................................. $ 0.10 $ (0.11) $ 0.16 $ (0.38)
======== ======== ======== ========
AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic ..................................................... 8,800 7,498 8,168 7,450
======== ======== ======== ========
Fully diluted ............................................. 12,381 7,498 12,138 7,450
======== ======== ======== ========
</TABLE>
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CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
<TABLE>
<CAPTION>
FEB. 28, MAY 31,
1998 1997
-------- --------
ASSETS: (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ........... $ 31,624 $ 3,687
Accounts receivable trade ........... 2,518 915
Employee loan receivable ............ 70 72
Investment tax credits receivable ... 1,481 1,516
Inventory ........................... 2,824 1,753
Other ............................... 248 158
-------- --------
Total current assets ..................... 38,765 8,101
Capital assets ........................... 1,716 1,432
Other .................................... 80 80
-------- --------
Total assets ............................. $ 40,561 $ 9,613
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable .................... 2,088 646
Accrued liabilities ................. 1,881 488
Current portion of loans payable .... 99 64
-------- --------
Total current liabilities ................ 4,068 1,198
Longterm liability:
Loan payable ........................ 733 794
-------- --------
Total liabilities ........................ 4,801 1,992
-------- --------
SHAREHOLDERS' EQUITY:
Share capital:
Preference shares ................... -- 901
Common shares ....................... 50,953 12,627
Common share purchase warrants ........... -- 1
Special and bonus warrants ............... -- 10,809
Share purchase loans receivable .......... (126) (36)
Cumulative translation adjustment ........ (116) 31
Deficit .................................. (14,951) (16,712)
-------- --------
Total shareholders' equity ............... 35,760 7,621
-------- --------
Total liabilities and shareholders' equity $ 40,561 $ 9,613
======== ========
</TABLE>
