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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 February 8, 1999
GENESIS MICROCHIP INCORPORATED
200 Town Center Blvd.
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 .
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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 .
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82- N.A.
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GENESIS MICROCHIP INCORPORATED
FORM 6-K
AGREEMENT TO MERGER WITH PARADISE ELECTRONICS, INC.
Genesis Microchip Incorporated (the "COMPANY") has agreed to acquire
Paradise Electronics, Inc., a Delaware corporation ("PARADISE") pursuant to an
Agreement and Plan of Reorganization dated as of January 22, 1999 by and among
the Company, Rainbow Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of the Company and Paradise. The acquisition was announced in a
press release dated as of January 22, 1999 which announced among other things,
that 4.5 million shares of the Company's Common Stock will be exchanged for all
outstanding shares and options of Paradise. Such press release is attached as
EXHIBIT A hereto and is incorporated by reference herein.
CHANGE IN CORPORATE JURISDICTION
On January 20, 1999, Genesis Microchip Inc. was continued from the
provincial corporate jurisdiction of Ontario, Canada to the provincial corporate
jurisdiction of Nova Scotia, Canada under the name Genesis Microchip
Incorporated. This change was pursuant to approvals received from the Company's
shareholders at its last annual meeting held on October 27, 1998, and upon
receiving permission from both the provinces of Ontario and Nova Scotia.
FINANCIAL RESULTS FOR THE FISCAL QUARTER ENDED NOVEMBER 30, 1998
The Company also reported its results for its fiscal quarter ended
November 30, 1998 in a press release dated December 15, 1998 Such press release
is attached as EXHIBIT B hereto and is incorporated by reference herein.
CHANGE IN OFFICERS
The Company reported that Stephen J. Solari, formerly Executive Vice
President, was promoted to President in a press release dated as of December 15,
1998. Such press release is attached as EXHIBIT B hereto and is incorporated by
reference herein.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Six Month Results
Total revenues for the six months ended November 30, 1998 were $14.9
million, an increase of 174.6% over total revenues of $5.4 million in the same
period in the previous year. Net income for the six months ended November 30,
1998 was $4.1 million, an increase of 541.3% over net income of $635,000 in the
corresponding period in the previous year. Fully diluted earnings per share for
the six months ended November 30, 1998 was $0.28 on 15.7 million shares,
compared with $0.06 on 12.0 million shares in the corresponding period in the
previous year.
Three Month Results
Revenues and Gross Profit
Total revenues for the three months ended November 30, 1998 were $8.7
million, an increase of 169.5% from $3.2 million in the same period in the
previous year and from total revenues of $6.2 million in the three months ended
August 31, 1998, an increase of 40.0%. This growth is attributable to increased
revenues from the flat panel LCD monitor market, as well as from increased
revenues from the projection systems market.
Overall gross profit in the three months ended November 30, 1998 was
57.2%, compared with 67.2% for the three months ended August 31, 1998 and
compared with 70.6% in the same period in the previous year. Gross profit on
product sales has declined as a result of increased volume purchases by
customers. The decrease in gross profit in the three month period ended November
30, 1998 from the three month period ended August 31, 1998 was a result of a
decrease in higher margin development contracts, and an increase in the volume
of revenues of lower-margin parts. These parts included both the Company's gmFC1
product as well as resale products. The Company does not intend to continue
offering these resale products beyond the end of the current fiscal year and
intends to introduce a lower-cost replacement for the gmFC1 product towards the
end of the current fiscal year. Because of this anticipated reduction in product
costs, gross margins are expected to remain flat or increase in the balance of
the fiscal year.
Operating Expenses
Gross research and development expenses for the three months ended
November 30, 1998 were $1.7 million, an increase of 65.7% over gross research
and development expenses of $1.0 million in the same period in the previous
year, reflecting an increase in research and development staff. Investment tax
credits and government assistance for the three months ended November 30, 1998
were $416,000, an increase of 90.8% over investment tax credits and government
assistance of $218,000 in the same period in the previous year. This increase
was a result of the increase in gross research and development expenses, as well
as the final review and settlement of the Company's
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federal investment tax credit claims for fiscal 1996 and 1997. Selling and
marketing expenses for the three months ended November 30, 1998 were $1.4
million, an increase of 105.2% over selling and marketing expenses of $706,000
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 November
30, 1998 were $581,000, an increase of 101.0% over general and administrative
expenses of $289,000 in the same period in the previous year. This increase was
as a result of increased staff levels and the increased costs associated with
being a public company.
There was no provision for income taxes in the three month periods ended
November 30, 1998 and November 30, 1997 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.
Balance Sheet
Cash and cash equivalents at November 30, 1998 decreased to $35.4
million from $35.9 million at May 31, 1998. This decrease was primarily a result
of increased investments in accounts receivable and inventory offset by
increases in accounts payable and accrued liabilities.
Accounts receivable trade and inventory at November 30, 1998 increased
to $6.2 million and $6.1 million, respectively from $2.5 million and $3.3
million, respectively at May 31, 1998 as a result of increases in revenue
levels. Accounts payable and accrued liabilities increased as a result of the
increased levels of operating expenses and the increase in inventory levels.
Total common shares outstanding increased to 14.1 million at November
30, 1998 from 13.8 million at May 31, 1998 as a result of the exercise of stock
options and the exercise of all outstanding compensation options.
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EXHIBIT INDEX
EXHIBIT A Press release, dated January 22, 1999, announcing the acquisition
by Genesis Microchip Incorporated of Paradise Electronics, Inc.
EXHIBIT B Press release, dated December 15, 1998, announcing the quarter
results for Genesis Microchip Incorporated for the fiscal quarter
ended November 30, 1998 and the appointment of Stephen J. Solari as
president.
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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 INCORPORATED
By:/s/ I. Eric Erdman
------------------------------------
I. Eric Erdman
Chief Financial Officer
Date: February 8, 1999
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EXHIBIT A
FOR MORE INFORMATION, CONTACT:
Eric Erdman
[GENESIS LOGO] Chief Financial Officer
Genesis Microchip Inc.
(905) 470-2742
http://www.genesis-microchip.com
GENESIS MICROCHIP TO MERGE WITH PARADISE ELECTRONICS
TORONTO (Jan. 22, 1999) - Genesis Microchip Inc. (Nasdaq: GNSSF)
announced today it has signed a definitive agreement to merge with privately
held Paradise Electronics, Inc. of San Jose, CA, thereby strengthening its
position as the leading supplier of integrated circuits for digital displays
such as flat panel monitors for personal computers.
Under the terms of the merger, 4.5 million shares of Genesis Microchip
common stock will be exchanged for all outstanding shares and options of
Paradise Electronics. The merger is expected to be accounted for as a pooling of
interests and to qualify as a tax-free reorganization. The transaction has been
approved by the board of directors of each company and its completion is subject
to customary conditions, including approval by stockholders of Paradise
Electronics and Genesis Microchip. The merger is expected to close in the fourth
quarter of Genesis Microchip's fiscal 1999.
"In addition to strengthening our technology, product portfolio and
customer base for the flat panel monitor market, the combination will give us
the technology and resources to aggressively pursue emerging opportunities in
the consumer video market, such as HDTV," said Paul M. Russo, Genesis
Microchip's Chairman and CEO.
"Our capability to integrate large scale digital and precise analog
circuitry on a single VLSI chip complements nicely the imaging expertise that
Genesis has cultivated," observed Alexander S. Lushtak, Chairman of Paradise
Electronics. Under terms of the agreement, Mr. Lushtak and another Paradise
board member will join the Genesis board of directors.
"We have a great deal of respect for what Paradise has accomplished and
we look forward to working with this talented team," said Stephen Solari,
Genesis President and COO. "By combining
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the two companies' intellectual property in future products, we'll be able to
offer our customers superior features and performance."
Founded in 1996, Paradise Electronics designs and manufactures highly
integrated mixed-mode integrated circuits for the flat panel monitor market.
Paradise President Jeff Diamond will serve as Genesis Microchip's Executive Vice
President.
Genesis designs, manufactures and markets the ImEngine line of highly
integrated semiconductors for a variety of imaging and digital display
applications.
The chips can be found in flat panel monitors from Acer, Apple Computer,
Dell, Fujitsu Ltd., IBM, LG Electronics, Philips, Samsung Electronics, and Sony
Corp., and digital projectors from Hitachi, Ltd., In Focus Systems, Sharp Corp.
and Texas Instruments. Further information on these products is available at
http://www.imengine.com.
Genesis Microchip Inc. (Nasdaq: GNSSF) - an ISO9001-registered
company - is a global leader in imaging and digital video/graphics
processing technologies. The company is headquartered in Markham, Ontario,
Canada, while its U.S. subsidiary and worldwide sales office is located in
Mountain View, California. Further information is available at
http://www.genesis-microchip.com.
The forward looking statements contained in this news release, which
reflect management's best judgment based on factors currently known, involve
risks and uncertainties, including the potential inability to complete the
described transactions as scheduled, or at all, risks involving the ability to
successfully integrate Genesis Microchip and Paradise Electronics, the ability
to successfully develop new products, market acceptance of existing and new
products of the combined companies, variances between actual and estimated costs
and expenses related to the proposed merger, the potential for fluctuations on
quarterly operating results, rapid technological change, and intense competition
from current and potential competitors who may be able to respond more quickly
to new or emerging technologies and changes in customer requirements. Actual
results may differ materially.
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- ImEngine is a trademark of Genesis Microchip Inc
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EXHIBIT B
FOR IMMEDIATE RELEASE
CONTACT: Vickie Gorton Eric Erdman
Jodi Shelton Chief Financial Officer
Shelton Communications Group Genesis Microchip Inc.
972-239-5119 905-470-2742
GENESIS MICROCHIP ANNOUNCES RECORD REVENUES AND EARNINGS FOR
SECOND QUARTER FISCAL 1999
REVENUES INCREASE 40% SEQUENTIALLY
(TORONTO, Dec. 15, 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 second quarter fiscal
1999, which ended on November 30, 1998.
Second quarter revenues grew 169% to $8.7 million from $3.2 million in
the year-ago period. Sequentially, revenues increased 40% over $6.2 million the
previous quarter. The increase is due primarily to continued growth in the flat
panel LCD monitor market augmented by resumed growth in the digital projection
market.
Net income in the second quarter was $2.2 million, up 16% from the first
quarter and up substantially from $0.5 million in the year-ago period. Fully
diluted earnings per share were $0.15, up from $0.13 in the previous quarter and
from $0.05 in the year-ago period. No provision for income taxes has been
reflected in the above amounts as a result of available tax loss carryforwards.
"We are pleased with our performance and our results for the second
quarter," said Paul M. Russo, Chairman and Chief Executive Officer. "Growth in
the LCD monitor market continues to offer Genesis tremendous opportunities. In
order to capitalize on these opportunities, we must continue to offer newer
cost-effective chips with additional features like the gmZ2 and gmZ3. In
addition, we are continuing the process of strengthening our organization and
management team to ensure that we are able to meet our aggressive growth plans."
The Company announced today that Stephen J. Solari has been named as
President and will assume those responsibilities in addition to his role as
Chief Operating Officer.
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.
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
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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. These and other
important risk factors are more fully detailed in the company's SEC filings.
Statements contained herein are made as of the date hereof and the company
assumes no responsibility for updating such information.
Genesis Microchip Inc. - an ISO9001-registered company - is a leader in
imaging and digital video/graphics processing technologies. Customers include
Acer, Apple Computer, Hitachi, Ltd., IBM, In Focus Systems, LG Electronics,
Philips, Samsung Electronics, Sharp Corp., Silicon Graphics Inc., Sony Corp.,
Texas Instruments and more than 200 other companies.
XXX
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GENESIS MICROCHIP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
<TABLE>
<CAPTION>
MAY 31, 1998 NOV. 30, 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 35,904 $ 35,352
Accounts receivable trade 2,523 6,206
Employee loan receivable 69 --
Investment tax credits receivable 1,735 1,263
Inventory 3,278 6,118
Other 135 697
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Total current assets 43,644 49,636
Capital assets 2,080 2,589
Deferred income taxes 1,642 1,642
Other 80 80
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Total assets $ 47,446 $ 53,947
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,498 2,995
Accrued liabilities 1,045 1,256
Current portion of loan payable 97 92
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Total current liabilities 2,640 4,343
Longterm liability:
Loan payable 655 623
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Total liabilities 3,295 4,966
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SHAREHOLDERS' EQUITY
Share capital 57,688 58,322
Share purchase loans receivable (124) --
Cumulative translation adjustment (109) (109)
Deficit (13,304) (9,232)
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Total shareholders' equity 44,151 48,981
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Total liabilities and shareholders' equity $ 47,446 $ 53,947
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</TABLE>
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GENESIS MICROCHIP INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS, EXCEPT PER
SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
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NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1997 1998 1997 1998
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<S> <C> <C> <C> <C>
Revenues:
Products $ 2,940 $ 8,140 $ 5,001 $ 13,953
Design services and other 288 559 429 959
Total revenues 3,228 8,699 5,430 14,912
Cost of revenues 949 3,723 1,534 5,762
Gross profit 2,279 4,976 3,896 9,150
Operating expenses:
Research and development 1,036 1,717 1,876 3,078
Investment tax credits and government
assistance (218) (416) (423) (594)
818 1,301 1,453 2,484
Selling and marketing 706 1,449 1,367 2,567
General and administrative 289 581 569 979
Total operating expenses 1,813 3,331 3,389 6,030
Income from operations 466 1,645 507 3,120
Interest income 68 541 128 952
Income before income taxes 534 2,186 635 4,072
Income tax provision -- -- -- --
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Net income $ 534 $ 2,186 $ 635 $ 4,072
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Earnings per share:
Basic $ 0.07 $ 0.16 $ 0.08 $ 0.29
Fully diluted $ 0.05 $ 0.15 $ 0.06 $ 0.28
Weighted average number of common shares
outstanding (in thousands):
Basic 8,164 14,106 7,857 14,049
Fully diluted 12,086 15,743 12,019 15,664
</TABLE>
