MOSAID Technologies Inc.

MOSAID Technologies Inc.

June 16, 2011 16:02 ET

MOSAID Reports Results for Fourth Quarter and Year-End Fiscal 2011, and Dividend

Quarterly dividend of $0.25 per share payable on July 21, 2011

OTTAWA, ONTARIO--(Marketwire - June 16, 2011) -

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MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the fourth quarter and fiscal year ended April 30, 2011. The Company is pleased to report that revenues and pro forma net income for both the fourth quarter and for the full fiscal year exceeded guidance.

Q4 Fiscal 2011 Financial Highlights

  • Q4 revenues of $21.9 million were up 10% from $19.9 million in Q4 fiscal 2010

  • Q4 pro forma net income of $7.3 million compared to $8.6 million in Q4 fiscal 2010. Pro forma diluted EPS of $0.60 compared to $0.74 per diluted share in Q4 fiscal 2010

  • Q4 GAAP net income of $5.9 million compared to $8.0 million in Q4 fiscal 2010. GAAP diluted EPS of $0.49, compared to $0.69 per diluted share in Q4 fiscal 2010

Fiscal Year 2011 Results

  • Fiscal year 2011 revenues of $80.5 million rose 13% from $71.1 million in fiscal year 2010

  • Fiscal year 2011 pro forma net income of $34.6 million was up 13% from $30.5 million in fiscal year 2010. Pro forma diluted EPS of $2.89 compared to $2.87 per diluted share in fiscal year 2010

  • Fiscal year 2011 GAAP net income of $25.0 million increased 15% from $21.7 million in fiscal year 2010. GAAP diluted EPS of $2.09 per diluted share, compared to $2.04 per diluted share in fiscal year 2010

"I'm very proud to report that we achieved the highest levels of revenues and pro forma net income in our 36-year history, making fiscal 2011 a banner year for our Company," said John Lindgren, President and CEO, MOSAID. "Our record financial results demonstrate the strength and sustainability of the Company's intellectual property licensing and innovation business. We delivered a third consecutive year of double-digit revenue growth and record profits, despite the headwinds of a strong Canadian dollar. Looking ahead, our goal is to achieve higher rates of revenue growth by increasing our investments in high-quality patents, establishing new licensing programs, and through the vigorous defense of our intellectual property rights."

"During fiscal 2011 we met key operational goals that drove results," said Lindgren. "Our patent portfolio – the foundation for our long-term success – grew by more than 40%. We secured significant long-term revenue streams by renewing our patent license agreements with Hynix and Nanya, and signing first-time deals with a leading Wi-Fi chip supplier, IBM, LG Electronics and other global companies. Signaling our resolve to protect our patent rights, we intensified our litigation activities."

"Conducting R&D that contributes to the development of innovative technology is integral to our identity as a world-class intellectual property company," stated Lindgren. "MOSAID's R&D activity is currently focused on our HLNAND™ Flash memory technology. In fiscal 2011, we attracted considerable attention with the introduction of an HLNAND-based prototype solid state drive, and HLNAND2, our second-generation Flash memory specification."

MOSAID had cash and marketable securities of $114.8 million at the end of the fourth quarter of fiscal 2011, compared to $118.9 million at the end of the third quarter of fiscal 2011. In Q4 fiscal 2011, MOSAID returned $3.0 million to shareholders in quarterly dividend payments.

On June 16, 2011, MOSAID declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on July 21, 2011 to shareholders of record as of July 7, 2011.

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.

Fourth Quarter Operational Highlights

Patent licensing: MOSAID granted Hynix a six-year term license to certain semiconductor patents and a life-of-patents license to certain other semiconductor patents covering all Hynix semiconductor products. In a separate purchase agreement, MOSAID acquired a portfolio of several hundred patents and patent applications relating to semiconductor general manufacturing process and memory technologies.

During the fourth quarter, MOSAID signed microcomponents patent license agreements with LG Electronics Inc. and MediaTek Inc. The Company granted LG Electronics an eight-year, non-exclusive license to certain microcomponents patents covering all LG branded products. MOSAID granted MediaTek a five-year license under its microcomponents patents covering certain MediaTek semiconductor products.

MOSAID also signed a worldwide, non-exclusive wireless patent portfolio license agreement with HTC Corporation of Taiwan. MOSAID granted HTC a 10-year, royalty bearing license under its wireless patents covering all HTC wireless networking products that comply with the IEEE 802.11 Wi-Fi family of communications standards, and that contain Wi-Fi chips that are not already licensed. All other details of the patent license agreement are confidential.

Patent portfolio growth: MOSAID had 2,822 patents and applications at the end of Q4 fiscal 2011, up 7% from 2,647 patents and applications at the end of Q3 fiscal 2011, and up 41% from 2,001 patents and applications one year ago.

During the quarter, MOSAID purchased four separate patent portfolios, totaling 70 patents and applications. The acquired portfolios relate to wireless handsets, sensor networks, distributed processing and cloud computing, and network routing and management. There are no revenue sharing arrangements related to any of these acquisitions. The patents and patent applications acquired from Hynix will be recorded following the completion of the selection process.

Litigation update: On March 17, 2011, MOSAID initiated wireless patent infringement litigation against 17 companies – including Atheros Communications, Inc., Marvell Semiconductor, Inc., Ralink Technology Corporation, Realtek Semiconductor, CSR plc, Intel Corporation and some of their customers – which MOSAID believes are infringing six of its standards-essential Wi-Fi patents.

On April 7, 2011, MOSAID filed a patent infringement suit against NVIDIA Corporation, Freescale Semiconductor Inc. and Interphase Corporation, alleging infringement of seven patents related to power management techniques and microprocessor architectures.

Subsequent to quarter end, MOSAID initiated two further litigation actions. On May 10, 2011, the Company commenced patent infringement litigation against Elpida Memory, Inc., Buffalo Inc. and Axiontech. MOSAID believes that the defendants are infringing six patents related to Dynamic Random Access Memory (DRAM) circuit and process technology.

On May 16, 2011, MOSAID filed a complaint against Cisco Systems before the International Trade Commission (ITC). The complaint alleges that Cisco is infringing six patents relating primarily to Power-over-Ethernet technology.

Research and development: MOSAID announced HLNAND2, the next step in the development of its HLNAND (HyperLink NAND) Flash memory technology. HLNAND2 provides simultaneous read and write data at 800MB/s (megabytes per second), far exceeding the performance of any other NAND Flash memory currently available or announced.

Q1 and Fiscal 2012 Financial Guidance

Management offers the following guidance for the first quarter of fiscal 2012:

  • Q1 revenues of $17.5 million to $19.8 million

  • Q1 pro forma net income of $5.3 million to $5.9 million, or $0.43 to $0.48 per diluted share, based on 12.2 million diluted shares

Management is providing the following guidance for fiscal 2012:

  • Fiscal 2012 revenues are expected to be in the range of $85.0 million to $90.0 million

  • Fiscal 2012 pro forma net income is expected to be in the range of $24.6 million to $26.1 million, or $2.00 to $2.12 per diluted share, based on 12.3 million diluted shares

The above information is considered material forward-looking information. Financial guidance is provided to assist investors and other interested parties in understanding the Company's business. The reader is cautioned that using this information for any other purpose may be inappropriate.

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.

Due to the nature of the expense, patent licensing and litigation expense can vary significantly quarter-to-quarter.

The "Forward-Looking Information" section of this document provides information on various risks and uncertainties faced by the Company.

Conference Call and Webcast

Management will hold a conference call and webcast on Thursday, June 16, 2011 at 5:00 p.m. ET. The webcast will be live at and may also be accessed by dialing 1-800-446-1671. Please provide confirmation number 29919114. The webcast will be available on for 90 days following the event.


MOSAID Technologies Inc. is one of the world's leading intellectual property companies. MOSAID licenses patented intellectual property in the areas of semiconductors and communications technologies 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. Visit and 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

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Contact Information

  • Investor and Media Inquiries
    Michael Salter, Senior Director IR
    613-599-9539 x 1205

    Joe Brown, Vice President and CFO
    613-599-9539 x 1206