MOSAID Technologies Inc.
TSX : MSD

MOSAID Technologies Inc.

August 27, 2010 09:16 ET

MOSAID Reports Results for First Quarter Fiscal 2011 and Dividend

Quarterly dividend of $0.25 per share payable on October 8, 2010

OTTAWA, ONTARIO--(Marketwire - Aug. 26, 2010) -

Editors note: An image and a video will be included with this press release.

MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the first quarter of fiscal 2011, ended July 31, 2010. 

Q1 Fiscal 2011 Results

  • Q1 revenues of $18.5 million, up 14% from $16.2 million in Q1 fiscal 2010 

  • Q1 pro forma net income of $8.6 million, up 29% from $6.6 million in Q1 fiscal 2010. Pro forma diluted EPS of $0.73, based on 11.84 million diluted shares, compared to $0.65 per diluted share in Q1 fiscal 2010, based on 10.25 million diluted shares

  • Q1 GAAP net income of $5.2 million, compared to $6.4 million in Q1 fiscal 2010. GAAP diluted EPS of $0.44, compared to $0.63 per diluted share in Q1 fiscal 2010

"MOSAID delivered a very strong first quarter to begin the new fiscal year," said John Lindgren, President and CEO. "Revenue growth was healthy and met our expectations. Pro forma net income growth was better than we anticipated, aided partially by lower expenses. During a period of economic uncertainty, our business is robust. Looking ahead, we are on track to meet our targets for fiscal 2011." 

"Operationally, the early renewal of our patent license agreement with Nanya Technology – for a term that is two years longer than the current agreement – testifies to the strength of MOSAID's semiconductor patent portfolio. We also introduced a prototype Solid State Drive that uses our innovative HLNAND™ interface technology to achieve significantly improved performance. MOSAID's commitment to R&D is also generating a continuous flow of new patent applications." 

MOSAID had cash and marketable securities of $103.6 million at the end of the first quarter of fiscal 2011, compared to $100.8 million at the end of the fourth quarter of fiscal 2010. In Q1 fiscal 2011, MOSAID returned $2.9 million to shareholders in quarterly dividend payments. 

On August 26, 2010, MOSAID declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on October 8, 2010 to shareholders of record as of September 24, 2010.

A reconciliation of pro forma net income to Canadian generally accepted accounting principles (GAAP) net income is included in the pro forma financial statements accompanying this press release.

First Quarter Operational Highlights 

Semiconductor memory patent licensing: MOSAID signed a seven-year royalty bearing patent portfolio license agreement with Nanya Technology Corporation of Taiwan. Nanya's new agreement begins on October 1, 2010, following the expiration of its current five-year agreement on September 30, 2010. The new agreement grants Nanya a license under MOSAID's patents for all Dynamic Random Access Memory (DRAM) products sold worldwide under Nanya's brand name. MOSAID has licensed virtually 100% of the companies that make commodity DRAM chips to its semiconductor memory patents. Since 2007, MOSAID has had four opportunities to sign existing term licensees to new licenses: the Company has successfully signed new deals each time. 

Innovation: MOSAID introduced a Solid State Drive (SSD) prototype that uses the Company's HyperLink NAND (HLNAND™) Flash architecture and interface. The HLNAND™ SSD, designed by MOSAID and its development partner INDILINX of Korea, demonstrates sustained per-channel input/output bandwidths an order of magnitude higher than SSD based on conventional NAND Flash interfaces. MOSAID inventors have filed 375 Flash patent applications, with 19 now issued as United States patents.

HLNAND™ license: MOSAID granted Scanimetrics Inc. of Alberta, a royalty bearing license to develop, manufacture and market MOSAID's HLNAND™ Flash memory chip and module, alone or designed into Scanimetrics' products

Patent portfolio development: MOSAID had 2,050 patents and applications at the end of Q1 fiscal 2011, up 15% from 1,788 patents and applications one year ago. In late fiscal 2010, MOSAID purchased from Samsung Electronics Co. a large number of semiconductor patents, which will be added to MOSAID's portfolio when the selection process is completed. 

Litigation update: MOSAID served LSI Corporation and Agere Systems, Inc. with a breach of contract complaint. The suit was originally filed on March 9, 2010 in the United States District Court for the District of Delaware, but only served on June 10, 2010. 

Subsequent to the quarter-end, Cisco Systems Inc. on August 23, 2010, filed and served MOSAID with a Complaint for Declaratory Judgment in the United States District Court for the District of Delaware. In its complaint, Cisco is seeking a declaration of non-infringement and invalidity with respect to nine U.S. patents and one patent application owned by MOSAID, and which relate generally to Power-over-Ethernet technology.

Q2 and Fiscal 2011 Guidance

Management offers the following guidance for the second quarter of fiscal 2011:

  • Q2 revenues of $18.5 million to $20.0 million

  • Q2 pro forma net income of $7.0 million to $7.5 million, or $0.59 to $0.63 per diluted share, based on 11.9 million diluted shares

The Company is maintaining its previously announced guidance for fiscal 2011:

  • Fiscal 2011 revenues in the range of $77.0 million to $80.0 million 

  • Fiscal 2011 pro forma net income of $27.8 million to $29.3 million, or $2.33 to $2.45 per diluted share, based on 11.95 million diluted shares

MOSAID's revenues result primarily from intellectual property agreements, which by their nature may actually close on dates other than those projected. MOSAID's priority and focus is on obtaining the best terms possible under its agreements, rather than on the particular timing of agreement closure. MOSAID's revenues depend upon, among other items, the continued ability of its licensees to pay amounts as they become due. The Company takes steps, including monitoring the creditworthiness of its licensees, in order to manage this risk.

Conference Call and Webcast

Management will hold a conference call and webcast on Thursday, August 26, 2010 at 5:00 p.m. ET. The webcast will be live at www.mosaid.com and may also be accessed by dialing 1-800-272-0419. The webcast will be available on mosaid.com for 90 days following the event.

About MOSAID

MOSAID Technologies Inc. is one of the world's leading intellectual property companies. MOSAID licenses patented intellectual property in the areas of semiconductors and telecommunications systems and develops semiconductor memory technology. MOSAID counts many of the world's largest technology companies among its licensees. Founded in 1975, MOSAID is based in Ottawa, Ontario, Canada. Please visit www.mosaid.com and InvestorChannel.mosaid.com for more information. 

Pro forma net income, a non-GAAP measure, is GAAP net income adjusted for stock-based compensation, patent amortization and imputed interest, foreign exchange gains and losses on "Other long-term liabilities," and any other non-recurring items. The Company uses pro forma measures internally to evaluate and manage operating performance, and to forecast and plan. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. 

Forward Looking Information

This document and certain other public documents incorporated by reference in this document, contain forward-looking statements to the extent they relate to MOSAID or its management, including those identified by the expressions "anticipate," "believe," "could," "estimate," "expect," "foresee," "intend," "may," "plan," "will," "would" and similar expressions. Similarly, statements in this document that describe MOSAID's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. These forward-looking statements are not historical facts, but rather reflect MOSAID's current expectations regarding future events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially from those in such forward-looking statements. Assumptions made in preparing forward-looking statements and financial guidance include, but are not limited to, the following: MOSAID's continued expansion of its patent portfolio and of its opportunities for future patent licensing revenue as a result of MOSAID's acquisition of patents from third parties and from development of new inventions; semiconductor and telecommunications product vendors continuing to infringe MOSAID's patents; the timing and amount of MOSAID's litigation expenses; MOSAID's ability to sign new patent licensees; current assumptions as to the identification of products that are unlicensed to MOSAID's wireless patents; and the timing and amount of MOSAID's Research & Development expenses.

Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following: MOSAID's ability to negotiate settlements with licensees; legal rulings and/or regulatory investigations, audits or complaints having an adverse impact on the validity, enforceability, royalty rates, potential royalty rates, and strength or breadth of coverage of MOSAID's essential and/or nonessential patents (including, but not limited to, adverse results from litigation or proceedings in patent offices and government regulatory agencies in various countries around the world); judicial, legislative or regulatory changes that impair the ability of patent holders to earn licensing revenues; worldwide economic conditions and demand for technology products; economic, social, and political conditions both globally and in the countries in which MOSAID or patent licensees operate, including conflict, war and, other security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates; non-payment or delays in payment by or insolvency of licensees or other debtors; variability in patent licensees' sales of licensed products; failure to maintain and enforce MOSAID's existing patent portfolio, or failure to obtain valuable patents as a result of R&D activities, or failure to acquire valuable patents from third parties; MOSAID's ability to recruit and retain skilled personnel; change in MOSAID's financial position; consolidation of MOSAID's licensees; natural events, such as severe weather and earthquakes in the locations in which MOSAID or patent licensees operate; and changes in the tax rate applicable to MOSAID as the result of changes in the tax law in the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets.

Except as may be required by applicable law or stock exchange regulation, we undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements. If we do update one or more forward-looking statements, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements. Additional information identifying risks and uncertainties affecting MOSAID's business and other factors that could cause MOSAID's financial results to fluctuate are contained in MOSAID's Annual Information Form, under the section entitled "Risk Factors," and in MOSAID's other public filings available online at www.sedar.com.

FINANCIAL STATEMENTS AND NOTES TO FOLLOW

To view the video associated with this press release, please visit the following link: http://www.youtube.com/user/MOSAIDTechnologies

Contact Information

  • MOSAID Technologies Inc.
    Michael Salter
    Director, Investor Relations and Corporate Communications
    613-599-9539 x1205
    salter@mosaid.com