GENESIS MICROCHIP INC /DE - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________________ TO __________________

COMMISSION FILE NUMBER:
000-33477

GENESIS MICROCHIP INC.
(Exact name of registrant as specified in its charter)

DELAWARE		77-0584301
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2150 GOLD STREET P.O. BOX 2150 ALVISO, CALIFORNIA		95002
(Address of principal executive offices)		(Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 262-6599

Former name, former address and former fiscal year if changed since last report.

Former address: N/A

Former Fiscal Year: N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

There were 31,259,621 shares of the registrant’s common shares issued and outstanding as of September 30, 2002.

GENESIS MICROCHIP INC.
FORM 10-Q
THREE MONTHS ENDED SEPTEMBER 30, 2002

Index

Item Number				Page

Part I: Financial Information
	Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets at September 30, 2002 and March 31, 2002		1
		Condensed Consolidated Statements of Operations for the three and six month periods ended September 30, 2002 and September 30, 2001		2
		Condensed Consolidated Statements of Cash Flows for the six month periods ended September 30, 2002 and September 30, 2001		3
		Notes To Condensed Consolidated Financial Statements		4

	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	8

	Item 3.		Quantitative and Qualitative Disclosures About Market Risk	21
	Item 4.		Controls and Procedures	21
Part II: Other Information
	Item 1.		Legal Proceedings	22
	Item 2.		Changes in Securities	*
	Item 3.		Defaults Upon Senior Securities	*
	Item 4.		Submission of Matters to a Vote of Security Holders	23
	Item 5.		Other Information	*
	Item 6.		Exhibits and Reports on Form 8-K	23
Signature				24
Certifications				25

* No information has been provided because this item is not applicable.

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

GENESIS MICROCHIP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)

				September 30, 2002			March 31, 2002
				(unaudited)

ASSETS
Current assets:
	Cash and cash equivalents			$	104,805		$	106,564
	Short-term investments				300			4,802
	Accounts receivable trade, net of allowance for doubtful accounts of $429 at September 30 and $391 at March 31				20,132			32,326
	Inventories				21,683			20,046
	Other				6,089			6,185

		Total current assets			153,009			169,923
Property and equipment					13,110			11,733
Acquired intangibles					41,979			47,248
Goodwill					193,546			198,909
Other					300			578

			Total assets	$	401,944		$	428,391

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	5,789		$	14,318
	Accrued liabilities				8,218			14,272
	Income taxes payable				1,896			571
	Current portion of lease liability				1,018			1,040
	Current portion of loan payable				90			89

		Total current liabilities			17,011			30,290
Long-term liabilities:
	Deferred income taxes				2,363			5,183
	Lease liability				8,635			9,019
	Loan payable				237			328

		Total liabilities			28,246			44,820
Stockholders’ equity:
Capital Stock:
	Preferred stock:
	Authorized – 5,000 preferred shares, $0.001 par value Issued and outstanding - none at September 30 or March 31
	Common shares:
	Authorized – 100,000 common shares, $0.001 par value Issued and outstanding – 31,260 at September 30 and 31,133 at March 31				31			31
	Additional paid-in capital				380,285			388,467
	Cumulative other comprehensive loss				(94	)		(94	)
	Deferred stock-based compensation				(10,650	)		(17,587	)
	Retained earnings				4,126			12,754

		Total stockholders’ equity			373,698			383,571

			Total liabilities and stockholders’ equity	$	401,944		$	428,391

See accompanying notes to condensed consolidated financial statements.

GENESIS MICROCHIP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
(unaudited)

			Three Months Ended					Six months ended

			September 30, 2002			September 30, 2001		September 30, 2002			September 30, 2001

Revenues			$	46,304		$	36,137	$	87,863		$	57,443
Cost of revenues				30,169			19,465		55,660			30,910

Gross profit				16,135			16,672		32,203			26,533
Operating expenses:
	Research and development			9,992			5,161		19,421			9,385
	Selling, general and administrative			9,113			4,538		17,810			8,754
	Amortization of acquired intangibles			2,654			—		5,319			—

		Total operating expenses		21,759			9,699		42,550			18,139

Income (loss) from operations				(5,624	)		6,973		(10,347	)		8,394
Interest income				444			399		832			753
Imputed interest on lease liability				(165	)		—		(330	)		—

		Net interest income		279			399		502			753

Income (loss) before income taxes				(5,345	)		7,372		(9,845	)		9,147
Provision for (recovery of) income taxes				(754	)		740		(1,217	)		918

Net income (loss)			$	(4,591	)	$	6,632	$	(8,628	)	$	8,229

Earnings (loss) per share:
		Basic	$	(0.15	)	$	0.32	$	(0.28	)	$	0.41
		Diluted	$	(0.15	)	$	0.29	$	(0.28	)	$	0.37
Weighted average number of common shares outstanding (in thousands):
		Basic		31,238			20,697		31,365			20,211
		Diluted		31,238			22,617		31,365			22,024

See accompanying notes to condensed consolidated financial statements.

GENESIS MICROCHIP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)

			Six Months Ended

			September 30, 2002			September 30, 2001

Cash flows from operating activities:
	Net income (loss)		$	(8,628	)	$	8,229
	Adjustments to reconcile net income (loss) to cash used in operating activities:
		Depreciation and amortization		2,750			1,418
		Amortization of acquired intangible assets		5,319			—
		Non-cash stock-based compensation		3,942			60
		Deferred income taxes		(2,820	)		356
		Other		359			2
	Change in operating assets and liabilities:
		Accounts receivable trade		12,194			(2,834	)
		Inventories		(1,637	)		2,867
		Other current assets		96			(409	)
		Accounts payable		(8,529	)		(3,019	)
		Accrued liabilities		(6,054	)

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