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Press Release Source: Genesis Microchip Inc.
Genesis Microchip Reports Second Quarter 2003 Financial Results
Wednesday October 23, 4:58 pm ET
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 23, 2002--Genesis Microchip Inc. (Nasdaq:GNSS - News), a world leader in the development of display technologies, today announced its financial results for the second quarter of its 2003 fiscal year, which ended September 30, 2002.
Highlights of the Quarter
Revenues for the quarter were $46.3 million, up 28% from revenues of $36.1 million in the year-ago September quarter and up 11% sequentially;
Loss in accordance with generally accepted accounting principles (GAAP) was ($4.6 million), or ($0.15) per share, compared to a loss of ($4.0 million), or ($0.13) per share in the June 2002 quarter;
Pro forma net income(1) of $1.5 million or $0.05 per share compared with pro forma net income(1) of $1.7 million or $0.05 per share in the June 2002 quarter;
Included in arriving at the September 2002 quarter operating results are additional pre-tax inventory reserves of $827,000, as previously identified in the Company's mid-quarter update. Excluding these reserves, pro forma net income(1) would have been $2.2 million or $0.07 per share;
The company filed a patent infringement complaint with the U.S. International Trade Commission (ITC) against Media Reality Technologies, Inc., SmartASIC, Inc., and Trumpion Microelectronics Inc., and in mid-October, the ITC voted to institute an investigation into the complaint;
The Genesis Microchip Board of Directors approved a stock repurchase program, authorizing the repurchase of up to $25 million of Genesis Microchip's common stock;
The company added Tim Christoffersen and Robert Kidd as two independent directors to its Board;
Gateway, Inc., selected Genesis Microchip's gmZAN2 and gm2120 display image processors for its newly-announced Profile®4 All-in-One PC solutions;
Samsung Electronics Co. Ltd. selected Genesis Microchip's FLI2301 video deinterlacer for use in its DVD-HD1000 models; and
InFocus Corporation selected Genesis Microchip's FLI2310 for their ScreenPlay 7200 home cinema projector.
(1) Pro forma net income differs from loss according to generally accepted accounting principles. A schedule reconciling these amounts is included in this news release. Differences include the exclusions of operating costs of VM Labs operations, severance costs, the amortization of acquired intangible assets and of deferred stock compensation expense, imputed interest on lease obligations and related income tax adjustments.
"Genesis is meeting the challenge of translating unit growth into revenue growth while maintaining our leadership in the flat panel monitor market," said Genesis Microchip Chairman and CEO James E. Donegan. "Our customers see robust consumer demand for flat panel monitors extending into next year and beyond, and we believe that Genesis is well-positioned to benefit from this anticipated increase in demand."
Our strategy is to maintain our position of strength in the flat panel market, while continuing to diversify into the flat panel television, digital television and DVD markets. We believe that these markets are comparable to the flat panel monitor market of two years ago: ready to soar," added Mr. Donegan. "We intend to capitalize on the growth of these new markets, just as we did in the monitor market."
Business Outlook
The following statements are based on current expectations. These statements are forward-looking, subject to risks and uncertainties, and actual results might differ materially. These statements do not include the potential impact of any investments outside the ordinary course of business, or mergers or acquisitions that may be completed after September 30, 2002. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The inclusion of any statement in this release does not constitute a suggestion by the company or any other person that the events or circumstances described in such statements are material. The company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in this release will not be realized.
Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters.
The company estimates that revenue will be in the range of $46 to $47 million in its fiscal quarter ending December 31, 2002. Revenue is highly dependent on a number of factors including, but not limited to, the growth rate of the flat panel monitor and video markets, the rate of decline in product pricing, the company's ability to maintain design wins with customers, timely new product introductions, supply of products from the company's third party foundries and general economic conditions.
The company expects overall gross profit margins in the fiscal quarter ending December 31, 2002 to be in the range of 35 to 36 percent and then to increase modestly in the quarter ending March 31, 2003. Gross profit margins might be higher or lower than expected due to many factors including, but not limited to: competitive pricing actions; changes in estimated product costs or manufacturing yields; revenue levels; and changes in estimated product mix.
The company expects total operating expenses on a GAAP basis of approximately $20.5 to $21.0 million in the fiscal quarter ending December 31, 2002. This includes estimated non-cash charges to operating expenses for the amortization of deferred stock compensation and acquired intangibles of approximately $4.8 million. This amount also includes costs for patent litigation and intellectual property protection, which are currently estimated to be $1.0 to $1.5 million.
About Genesis
Genesis Microchip Inc. (Nasdaq:GNSS - News) is a leading provider of image processing systems enabling superior picture quality for a variety of consumer and PC-display products. Featuring Genesis Display Perfection(TM) technologies and Emmy-award winning Faroudja video technology, Genesis system-on-a-chip solutions are used worldwide by display manufacturers to produce visibly better images across a broad set of devices including flat-panel displays, digital TVs, digital CRTs, projectors and DVD players. Genesis boasts a technology portfolio that features 135 patents, including analog and mixed signal System-on-a-chip design, DCDi(TM) deinterlacing, TrueLife(TM) video enhancement and IntelliComb(TM) video decoding. Founded in 1987, Genesis supports its leading-brand name customers with offices in the U.S., Canada, India, Taiwan, Korea, China and Japan. For more information about Genesis Microchip Inc. or Genesis Display Perfection(TM) technologies, please visit www.genesis-microchip.com.
Safe Harbor Statement
This press release contains forward-looking statements, including, without limitation, forward-looking statements regarding the company's financial performance in the third quarter of its fiscal year 2003, including anticipated revenues, gross margins, operating and other expenses and tax losses and credits. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
The risks and uncertainties include those mentioned above, including the growth rates of the flat panel monitor, flat panel television, video, digital television and DVD markets; the company's ability to expand into new markets; the rate of decline in product pricing and competitive pricing pressure; the company's ability to maintain design wins with customers and make timely new product introductions; supply of products from the company's third party foundries; changes in estimated product costs, manufacturing yields or product mix; the company's ability to manage inventory; costs and outcome of legal proceedings; and general economic conditions. Other risk factors are listed in the company's SEC reports, including but not limited to Genesis's report on Form 10-K for the fiscal year ended March 31, 2002 and its Quarterly report on Form 10-Q for the quarter ended June 30, 2002.
The forward-looking statements in this press release are the company's targets, not predictions of actual performance. The company's performance has deviated, often materially, from its targets as of the beginning of a quarter. The company plans to update these targets during the quarter. Any statements by persons outside the company speculating on the progress of the quarter, or other aspects of the Company's business, will not be based on internal company information and should be assessed accordingly by investors.
Editor note:
Genesis is a registered trademark of Genesis Microchip Inc.
Genesis Display Perfection, DCDi, TrueLife and IntelliComb are trademarks of Genesis Microchip Inc.
Financial Statements attached:
Consolidated statements of operations
Pro forma consolidated statements of operations
Reconciliation of pro forma adjustments
Consolidated balance sheets
GENESIS MICROCHIP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
(unaudited)
Three months ended Six months ended
30-Sep-02 30-Sep-01 30-Sep-02 30-Sep-01
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 7,294 5,161 14,233 9,385
Selling, general and
administrative 7,567 4,538 14,790 8,754
VM Labs operating and other
restructuring costs 2,087 - 4,266 -
Amortization of acquired
intangibles 2,654 - 5,319 -
Amortization of deferred
stock-based compensation 2,157 - 3,942 -
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:
Basic 31,238 20,697 31,365 20,211
Diluted 31,238 22,617 31,365 22,024
GENESIS MICROCHIP INC.
PRO FORMA STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
(unaudited)
Three months ended
September 30, 2002 Sep. 30, 2001
LCD Other Total Total
Monitor
---------------------------------------------
Revenues $37,267 $9,037 $46,304 $36,137
Cost of revenues 25,521 4,313 29,834 19,465
---------------------------------------------
Gross profit 11,746 4,724 16,470 16,672
---------------------------------------------
31.5% 52.3% 35.6% 46.1%
---------------------------------------------
Operating
expenses:
Research and
development 3,144 4,150 7,294 5,161
Selling,
general and
administrative 4,926 2,641 7,567 4,538
--------------------------------------------
8,070 6,791 14,861 9,699
--------------------------------------------
Income (loss)
from operations $3,676 $(2,067) 1,609 6,973
=======================================
Interest income 444 399
------------------
Income before
income taxes 2,053 7,372
Provision for
income taxes 521 740
------------------
Net income $1,532 $6,632
==================
Earnings per
share:
Basic $0.05 $0.32
Diluted $0.05 $0.29
Weighted average number
of common shares
outstanding:
Basic 31,238 20,697
Diluted 31,344 22,617
Six months ended
September 30, 2002 Sep. 30, 2001
LCD Other Total Total
Monitor
---------------------------------------------
Revenues $71,202 $16,661 $87,863 $57,443
Cost of revenues 46,860 8,465 55,325 30,910
------------------------------------------
Gross profit 24,342 8,196 32,538 26,533
------------------------------------------
34.2% 49.2% 37.0% 46.2%
------------------------------------------
Operating expenses:
Research and
development 6,293 7,940 14,233 9,385
Selling, general
and administrative 9,685 5,105 14,790 8,754
------------------------------------------
15,978 13,045 29,023 18,139
------------------------------------------
Income (loss) from
operations $8,364 $(4,849) 3,515 8,394
==========================================
Interest income 832 753
-------------------
Income before
income taxes 4,347 9,147
Provision for
income taxes 1,094 918
--------------------
Net income $3,253 $8,229
====================
Earnings per share
Basic $0.10 $0.41
Diluted $0.10 $0.37
Weighted average number of
common shares outstanding:
Basic 31,365 20,211
Diluted 32,060 22,024
GENESIS MICROCHIP INC.
PRO FORMA FINANCIAL RECONCILIATIONS
(amounts in thousands, except per
share amounts)
(unaudited)
Three months ended Six months ended
30-Sep-02 30-Sep-01 30-Sep-02 30-Sep-01
------------------- -------------------
Income (loss) from
operations (GAAP) $(5,624) $6,973 $(10,347) $8,394
Pro forma adjustments
Amortization of
acquired intangibles 2,654 - 5,319 -
Amortization of deferred
stock-based
compensation 2,157 - 3,942 -
VM Labs inventory reserve 335 - 335 -
VM Labs operating and
restructuring
costs 2,087 - 4,266 -
------------------ -----------------
Income from
operations (pro forma) 1,609 6,973 3,515 8,394
------------------ -----------------
Net interest income 279 399 502 753
Imputed interest on
lease liability 165 - 330 -
------------------ -----------------
Interest income (pro forma) 444 399 832 753
------------------ -----------------
Income before tax (pro forma) 2,053 7,372 4,347 9,147
------------------ -----------------
Provision for (recovery of)
income taxes (GAAP) (754) 740 (1,217) 918
Tax effect of pro
forma adjustments 1,275 - 2,311 -
------------------ -----------------
Provision for income taxes
(pro forma) 521 740 1,094 918
------------------ -----------------
Net income (pro forma) $1,532 $6,632 $3,253 $8,229
=================== =================
Fully diluted EPS (GAAP) $(0.15) $0.29 $(0.28) $0.37
Fully diluted EPS (Pro Forma) $0.05 $0.29 $0.10 $0.37
Effective tax rate (GAAP) 14% 10% 12% 10%
Effective tax rate (Pro Forma) 25% 10% 25% 10%
GENESIS MICROCHIP INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands of dollars)
(unaudited)
ASSETS
Sep. 30, June 30, March 31,
2002 2002 2002
---------------------------
Current assets:
Cash and short-term investments $105,105 $107,029 $111,366
Accounts receivable trade 20,132 22,652 32,326
Inventory 21,683 30,780 20,046
Investment held for resale 1,100 1,100 1,100
Other 4,989 6,385 5,085
---------------------------
Total current assets 153,009 167,946 169,923
Capital assets 13,110 13,474 11,733
Acquired intangibles 41,979 44,638 47,248
Goodwill 193,546 193,546 198,909
Other 300 100 578
---------------------------
Total assets $401,944 $419,704 $428,391
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,789 $15,147 $14,318
Accrued liabilities 8,218 10,838 14,272
Income taxes payable 1,896 1,286 571
Current portion of lease liability 1,018 967 1,040
Current portion of loans payable 90 94 89
---------------------------
Total current liabilities 17,011 28,332 30,290
Long-term liabilities:
Deferred income taxes 2,363 3,915 5,183
Lease liability 8,635 8,678 9,019
Loans payable 237 273 328
---------------------------
Total liabilities 28,246 41,198 44,820
---------------------------
Stockholders' equity:
Capital stock 380,316 384,061 388,498
Cumulative other comprehensive loss (94) (94) (94)
Deferred stock-based compensation (10,650) (14,178) (17,587)
Retained earnings 4,126 8,717 12,754
---------------------------
Total stockholders' equity 373,698 378,506 383,571
---------------------------
Total liabilities and
stockholders' equity $401,944 $419,704 $428,391
=========================== |
