8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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)

January 26, 2005

GENESIS MICROCHIP INC.

(Exact name of registrant as specified in its charter)

Delaware	000-33477	77-0584301
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

2150 Gold Street

Alviso, California 95002

(Address of principal executive offices, including zip code)

(408) 262-6599

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

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 (see General Instruction A.2. below):

¨ Written communications 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))

Item 2.02. Results of Operations and Financial Condition

On January 26, 2005, Genesis Microchip Inc. (the “Registrant”) issued a press release announcing its financial results for its fiscal quarter ended December 31, 2004, the text of which is furnished herewith as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits.

Exhibit No.	Description
99.1	Press Release of Genesis Microchip Inc. dated January 26, 2005

The information in this Current Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SIGNATURE

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

	GENESIS MICROCHIP INC.
Date: January 26, 2005	By:	/s/ Michael Healy
	Name:	Michael Healy
	Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Document
99.1	Press Release of Genesis Microchip Inc. dated January 26, 2005

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contacts:

Frank Nagle or Bob Ferri

Nagle & Ferri Investor Relations

(415) 575-1999

Genesis Microchip Reports

Third Quarter Fiscal 2005 Financial Results

Record Flat Panel TV Controller Shipments

SAN JOSE, Calif., January 26, 2005 – Genesis Microchip Inc. (Nasdaq: GNSS), a world leader in the development of image processing technologies for flat-panel monitors, TVs and other consumer display products, today announced its financial results for the third quarter of its fiscal year 2005, which ended December 31, 2004.

Financial results for the quarter ended December 31, 2004 were:

• Total revenues were $48.3 million, compared with $50.1 million for the quarter ended September 30, 2004;

• Prepared in accordance with generally accepted accounting principles or GAAP, the company’s net loss was $1.0 million, or $0.03 per share, compared with a net loss of $0.3 million, or $0.01 per share reported in the quarter ended September 30, 2004;

• On a non-GAAP (1) basis, net income was $3.2 million, or $0.09 per share, compared with net income of $2.1 million, or $0.06 per share in the quarter ended September 30, 2004.

“The transition from analog CRT displays to digital flat-panel technologies in the PC monitor and television markets is placing a premium on image quality,” said Elie Antoun, president and CEO of Genesis Microchip. “As the widely recognized enabler of the best image quality for flat-panel displays, I believe Genesis is well-positioned to take advantage of this transition.

“In the December quarter, we shipped a record number of flat-panel TV controllers,” continued Antoun. “We also shipped production volumes of our Cortez and Hudson integrated video controllers to our tier-one TV customers. In the LCD monitor space, our Phoenix product line continued its ramp into volume production.

“Going forward, we intend to leverage the activity in the customer base surrounding Cortez and Hudson into continued design wins and production ramps in the March quarter and throughout the year,” concluded Antoun.

Other Financial Details

Flat-panel TV controller shipments were a record 2.1 million units, an increase of 10% over the September 2004 quarter. Gross margins increased to 44.9% from 42.5% in the quarter ended September 30, 2004 due in part to improved product costs.

GAAP-based operating expenses were $26.2 million, including $2.7 million for the amortization of acquired intangibles and $2.5 million for non-cash stock-based compensation expenses. Included in stock-based compensation is a non-cash charge of approximately $1.9 million principally resulting from the departure of former executive officers. Included in selling, general and administrative expenses are approximately $1 million of cash severance and other related costs associated with departure of certain employees, including former executive officers.

The company recorded a higher than anticipated tax recovery of $3.0 million on a GAAP basis and $2.1 million on a non-GAAP basis, primarily related to the impact of foreign exchange rate fluctuations on its Canadian dollar denominated tax attributes.

Business Outlook

The following are the company’s financial targets for the quarter ending March 31, 2005:

• Revenues are expected to be in the range of $47 million to $52 million.

• Overall gross margins are expected to be in the range of 41 to 43 percent.

• GAAP-based operating expenses are expected to be in the range of $22 to $24 million. The company expects that non-GAAP operating expenses will be lower than GAAP-based operating expenses because of the exclusion of charges for stock-based compensation and acquired intangibles, which are estimated to be $3.2 million.

• The company’s effective tax rate may continue to fluctuate in the short term due to the impact of foreign exchange fluctuations, research and development tax credits and other factors. Furthermore, if the company decides to implement certain provisions of the “American Jobs Creation Act of 2004”, the tax provision in the period such a decision is made could be affected. Therefore, it is difficult to provide an expected tax rate for the March 2005 quarter. The company expects that its long term effective tax rate will be approximately 20% on a non-GAAP basis.

Earnings Conference Call

Genesis Microchip will host a conference call, which is open to all interested investors, today at 5:30 p.m. (ET) to discuss its December quarter results. The dial-in number for the call is: (719) 457-2654. A replay of the conference call will be available through February 9, 2005, and it can be heard by dialing (719) 457-0820. The replay access code is: 5043339. A live, audio Web broadcast of the conference call also will be available at: http://www.gnss.com/webcast.phtml. A replay will also be available at the same website address until February 9, 2005.

(1) Use of Non-GAAP, or Pro Forma, Financial Information

Non-GAAP, or pro forma, net income differs from net income determined according to generally accepted accounting principles, or GAAP. A schedule reconciling these amounts is included in this news release. Differences between GAAP and non-GAAP or pro forma results for the three and nine months ended December 31, 2004 and December 31, 2003 include certain operating costs, such as the amortization of acquired intangible assets, stock-based compensation expenses, gain on the sale of investments and related income tax adjustments. Genesis Microchip’s management presents these non-GAAP financial measures to allow investors to better evaluate ongoing business performance. Genesis Microchip’s management also uses these non-GAAP financial measures internally to monitor performance of the business. However, Genesis Microchip cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including, without limitation, statements by Elie Antoun, and statements in the Business Outlook section regarding the company’s anticipated revenues, gross margins, operating expenses, tax rate in its fiscal quarter ending March 31, 2005 and long term effective tax rate. 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 the growth rate of the LCD monitor and flat-panel TV markets; the company’s ability to gain design wins with customers, make timely new product introductions, and ramp new designs into production volumes; changes in expected product mix and product pricing; customer order patterns, inventory levels and manufacturing schedules; availability of other components for LCD monitors and flat-panel TVs; actions of competitors; changes in product costs or manufacturing yields; foreign exchange fluctuations, research and development tax credits and other factors that impact tax rates; and other risk factors set forth in the company’s SEC reports, including but not limited to its reports on Form 10-K for the fiscal year ended March 31, 2004 and Form 10-Q for the quarter ended September 30, 2004. Genesis Microchip assumes no obligation to update the forward-looking statements included in this release.

About Genesis Microchip

Genesis Microchip Inc. (Nasdaq: GNSS) is a leading provider of image processing systems enabling superior picture quality in flat-panel TVs and a variety of consumer and PC-display products. Featuring Genesis Display Perfection^™ technologies and Emmy award-winning Faroudja^® video technologies, Genesis system-on-a-chip solutions are used worldwide by display manufacturers to produce visibly better images across a broad array of devices including flat-panel displays, digital TVs, projectors and DVD players/recorders. The Genesis technology portfolio features analog and mixed signal system-on-a-chip design, DCDi^® by Faroudja deinterlacing, TrueLife^™ video enhancement, IntelliComb^™ video decoding and includes over 135 patents. Founded in 1987, Genesis supports its leading brand-name customers with offices in the U.S., Canada, India, Taiwan, South Korea, China and Japan. For more information about Genesis Microchip Inc. or Genesis Display Perfection technologies, please visit www.gnss.com.

Note to Editors: Genesis, Genesis Display Perfection, Faroudja, DCDi by Faroudja, TrueLife, and IntelliComb are trademarks or registered trademarks of Genesis Microchip Inc. All other trademarks are the property of their respective owners.

Financial Statements attached:

• Consolidated statements of operations

• Non-GAAP consolidated statements of operations

• Non-GAAP financial reconciliation

• Consolidated balance sheets

GENESIS MICROCHIP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts)

(unaudited)

	Three months ended						Nine months ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Revenues	$	48,286		$	56,498		$	151,210		$	158,548
Cost of revenues		26,609			34,146			87,116			94,013
Gross profit		21,677			22,352			64,094			64,535
		44.9	%		39.6	%		42.4	%		40.7	%
Operating expenses:
Research and development		7,520			6,694			23,072			20,360
Selling, general and administrative		12,568			9,308			34,114			28,218
Provision for costs associated with patent litigation		989			3,529			2,356			9,583
Amortization of acquired intangibles		2,654			2,654			7,962			7,962
Stock-based compensation		2,465			930			4,062			2,770
Total operating expenses		26,196			23,115			71,566			68,893
Loss from operations		(4,519	)		(763	)		(7,472	)		(4,358	)
Interest income		534			314			1,253			786
Gain on sale of investment		—			663			—			663
Income (loss) before income taxes		(3,985	)		214			(6,219	)		(2,909	)
Provision for (recovery of) income taxes		(2,985	)		35			(3,616	)		(643	)
Net income (loss)	$	(1,000	)	$	179		$	(2,603	)	$	(2,266	)
Earnings (loss) per share:
Basic	$	(0.03	)	$	0.01		$	(0.08	)	$	(0.07	)
Diluted	$	(0.03	)	$	0.01		$	(0.08	)	$	(0.07	)
Weighted average number of common shares outstanding:
Basic		33,151			31,948			32,969			31,655
Diluted		33,151			33,201			32,969			31,655

GENESIS MICROCHIP INC.

NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands of dollars, except per share amounts)

(unaudited)

	Three months ended						Nine months ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Revenues	$	48,286		$	56,498		$	151,210		$	158,548
Cost of revenues		26,609			34,146			87,116			94,013
Gross profit		21,677			22,352			64,094			64,535
		44.9	%		39.6	%		42.4	%		40.7	%
Operating expenses:
Research and development		7,520			6,694			23,072			20,360
Selling, general and administrative		12,568			9,308			34,114			28,218
Provision for costs associated with patent litigation		989			3,529			2,356			9,583
Total operating expenses		21,077			19,531			59,542			58,161
Income from operations		600			2,821			4,552			6,374
Interest income		534			314			1,253			786
Income before income taxes		1,134			3,135			5,805			7,160
Provision for (recovery of) income taxes		(2,069	)		639			(1,134	)		1,440
Net income	$	3,203		$	2,496		$	6,939		$	5,720
Earnings per share:
Basic	$	0.10		$	0.08		$	0.21		$	0.18
Diluted	$	0.09		$	0.08		$	0.20		$	0.17
Weighted average number of common shares outstanding:
Basic		33,151			31,948			32,969			31,655
Diluted		34,581			33,201			34,201			32,849

GENESIS MICROCHIP INC.

NON-GAAP FINANCIAL RECONCILIATION

(amounts in thousands, except per share amounts)

(unaudited)

This press release includes non-GAAP (referred to in prior quarters as pro forma) operating results that are not in accordance with generally accepted accounting principles, or GAAP. A reconciliation of the presentation of historical non-GAAP results to GAAP results is provided in the following table. As described in the tables, for the three and nine months ended December 31, 2004 and 2003, non-GAAP net income excludes charges related to the amortization of acquired intangible assets, stock-based compensation expense, gain on the sale of investments and related income tax adjustments.

	Three months ended						Nine months ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Loss from operations	$	(4,519	)	$	(763	)	$	(7,472	)	$	(4,358	)
Adjustments
Amortization of acquired intangibles		2,654			2,654			7,962			7,962
Stock-based compensation		2,465			930			4,062			2,770
Income from operations (Non-GAAP)		600			2,821			4,552			6,374
Net interest and other income		534			977			1,253			1,449
Gain on sale of investment		—			(663	)		—			(663	)
Income before tax (Non-GAAP)		1,134			3,135			5,805			7,160
Provision for (recovery of) income taxes		(2,985	)		35			(3,616	)		(643	)
Tax effect of Non-GAAP adjustments		916			604			2,482			2,083
Provision for (recovery of) income taxes (Non-GAAP)		(2,069	)		639			(1,134	)		1,440
Net income (Non-GAAP)	$	3,203		$	2,496		$	6,939		$	5,720
Net income (loss)	$	(1,000	)	$	179		$	(2,603	)	$	(2,266	)
Diluted earnings (loss) per share:
Non-GAAP	$	0.09		$	0.08		$	0.20		$	0.17
GAAP	$	(0.03	)	$	0.01		$	(0.08	)	$	(0.07	)

GENESIS MICROCHIP INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands of dollars)

(unaudited)

	December 31, 2004			March 31, 2004
ASSETS
Current assets:
Cash and short term investments	$	131,319		$	118,222
Accounts receivable trade		26,428			28,325
Inventory		16,438			18,503
Other		5,902			6,472
Total current assets		180,087			171,522
Capital assets		17,132			17,257
Acquired intangibles		19,659			26,731
Goodwill		189,997			189,152
Deferred income taxes		9,639			3,402
Other		3,581			2,662
Total assets	$	420,095		$	410,726
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,647		$	9,848
Accrued liabilities		13,728			11,503
Income taxes payable		5,216			2,520
Total current liabilities		26,591			23,871
Stockholders’ equity:
Capital stock		402,952			395,869
Cumulative other comprehensive loss		(94	)		(94	)
Stock-based compensation		(664	)		(2,833	)
Deficit		(8,690	)		(6,087	)
Total stockholders’ equity		393,504			386,855
Total liabilities and stockholders’ equity	$	420,095		$	410,726