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News & Events > 2004 News Releases > November 18 |
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2004 News Releases "FOR IMMEDIATE RELEASE" MOSAID Announces Second Quarter Results for Fiscal Year 2005 OTTAWA, Ontario, Canada – November 18, 2004 – MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the second quarter of fiscal 2005, ended October 22, 2004. Revenues for the second quarter of fiscal year 2005 were $7,049,000 compared to $7,092,000 in the second quarter of fiscal year 2004. Net loss for the quarter was $1,159,000 or $0.11 per diluted share, compared to a net loss of $6,175,000 or $0.60 per diluted share a year ago. Before discontinued operations, related to the termination of the Semiconductor Division in September 2003, loss for the quarter was $1,366,000 or $0.13 per diluted share compared with a net loss of $261,000 or $0.03 per diluted share a year ago. Revenues for the year to date were $16,304,000 compared to revenues of $12,240,000 reported for the same period last year. Net loss for the first six months of fiscal 2005 was $1,067,000 or $0.10 per diluted share, compared to a net loss of $9,888,000 or $0.96 per diluted share reported in the first half of fiscal 2004. The year to date loss for fiscal 2005 before discontinued operations was $1,294,000 or $0.12 per diluted share compared to a net loss before discontinued operations of $1,799,000 or $0.18 a year ago. The Company's cash balance and short-term marketable securities at the end of the second quarter was $39.7 million, compared to $41.5 million at the end of the first quarter of fiscal 2005. Following the quarter end, the Company successfully raised an additional $13.7 million by way of a private placement of common shares. "Results for the second quarter are in line with our preliminary estimates announced October 29, 2004," said George Cwynar, President & CEO of MOSAID. "Revenues and earnings were lower than expected for the quarter due to higher than planned legal expenses related to expedited pre-trial proceedings in the Samsung litigation and the delay in closing a tester sale within our Systems Division. This coupled with a minimal backlog for Systems is indicative of a softness in the memory ATE market." "This has been a very busy quarter for the Company," said Cwynar. "We have been asserting our patents in both the courtroom and the boardroom; we have tapped into the financial markets for additional capital, and our engineers have been developing new IP and tester products." Operating Highlights · Trial Date Set in Lawsuit Against Samsung As previously announced in July 2004, Magistrate Judge Hedges granted the majority of MOSAID's requested sanctions relating to Samsung's failure to deliver documentation, as required by law, in the discovery phase of the case. On September 1, 2004, he further addressed two of the sanctions imposed, setting the language of the adverse instuction to be given to the jury and awarding MOSAID US$567,000 in attorneys' fees and costs. All four sanctions were subsequently appealed by Samsung on September 17, 2004. On October 1, 2004, Judge Martini denied Samsung's appeal of two of the sanctions ordered by Judge Hedges. First, he affirmed that MOSAID is permitted to choose any Samsung DRAMs as representative parts, so long as at least one NMOS DRAM is identified as a representative part. Second, he affirmed that Samsung is precluded from challenging MOSAID's expert evidence as to the operation of the representative parts insofar as such challenges rest on any assumptions made as part of performing simulations or other analyses of representative DRAMs. The Court advised that it would rule on Samsung's appeal of the remaining two sanctions, the adverse inference and attorney's fees, in a subsequent opinion. On October 1, 2004, Judge Martini also set a schedule for pre-trial proceedings and an early trial date of February 1, 2005 for MOSAID's patent infringement case against Samsung. · Design Licensing Group Announced Availability of BIST Engine During the quarter, the BIST (built in self-test) controller was announced as available for general license and it has already been generating customer interest. The BIST is a highly advanced, fully programmable engine, which includes a user-friendly test program instruction compiler, and is for use with all types of embedded memories, including SRAM and DRAM. With the BIST solution, the essential functions of an external tester are placed within the device, allowing for full control and observation of the memories. MOSAID's programmable BIST product combines the advantage of detailed analysis capabilities normally obtained with a MOSAID test system or other ATE platforms, with GHz test frequencies. · Systems Division Continued to Record Strong Profitability While results were lower than expected due to the delayed closing of a tester sale, the Division reported another quarter of healthy profitability and continued to achieve good progress in its development of new tester products. Next generation products will address expanding market requirements including increased data width and pin count, larger bitmap capacity and more logic test capability. Conference Call and Webcast About MOSAID Founded in 1975, MOSAID is based in Ottawa, Ontario, Canada, with offices in Santa Clara, California; Newcastle upon Tyne, U.K; and Tokyo, Japan. For more information, visit the Company's web site at www.mosaid.com. Forward Looking Information For more information, please contact:
FINANCIAL STATEMENTS AND NOTES FOLLOW
MOSAID TECHNOLOGIES INCORPORATED
See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 26 weeks ended October 22, 2004 (tabular dollar amounts in thousands, except per share amounts) 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the interim period presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the full fiscal year ending April 22, 2005. The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements, except as follows: Hedging Relationships Effective April 24, 2004, the Company adopted Accounting Guideline 13, Hedging Relationships ("AcG-13"). AcG-13 establishes new criteria for hedge accounting and applies to all hedging relationships in effect for fiscal years beginning on or after July 1, 2003. To qualify for hedge accounting, the hedging relationships must be appropriately documented at the inception of the hedge and there must be reasonable assurance, both at the inception and throughout the term of the hedge, that the hedging relationship will be effective. Effectiveness requires a high correlation of changes in fair values or cash flows between the hedged item and the hedging item. The Company will complies with the requirements of AcG-13, such that any hedging relationships entered into will qualify for hedge accounting. All outstanding hedges that previously qualified for hedge accounting continue to qualify for hedge accounting. Stock-based compensation and other stock-based payments Effective April 24, 2004, the Company adopted the fair value provisions in CICA Handbook Section 3870, Stock-based compensation and other stock-based payments, on a retroactive basis. The recommendation requires the use of fair value methods for all awards to both employees and non-employees. Using the Black-Scholes option pricing model and amortizing the fair value on a straight-line basis, over the vesting period, the impact on previously published results is:
These statements should be read in conjunction with the Company’s audited consolidated financial statements prepared for the fiscal year ended April 23, 2004. Segmented disclosure As a result of reclassifying interest expense from operating expense to net interest income for both the current and comparative periods, the expense has been removed from segment profit and into the unallocated amounts.
2. Net Interest Income Net interest income comprises the following:
3. Discontinued Operations The results of operations of the Semiconductor Division have been segregated in the accompanying interim consolidated financial statements. The results of discontinued operations are as follows:
The reversal of restructuring expense during the 13 weeks ended October 22, 2004 represents a one-time favourable settlement regarding final in-process inventory purchases. The remaining unpaid liability at October 22, 2004 was $62,000 (2004 - $1,544,000) comprised primarily of lease payments on unused premises. 4. Earnings per Share The following is a reconciliation of the numerator and denominator of the basic and diluted per share computations:
For the 13 weeks ended October 22, 2004, and the 13 weeks ended October 24 2003, all of the options were excluded from the calculation of diluted earnings per share as they were anti-dilutive. There were 871,458 and 745,059 options issued and outstanding as at October 22, 2004 and October 24, 2003 respectively. 5. Cashflow from Discontinued Operations Cashflow from discontinued operations is comprised as follows:
6. Stock-based Compensation The Company has an employee stock purchase plan program whereby employees may elect to designate up to 5% of their annual salary to purchase shares of the Company at a 10% discount from the fair market value. The purchase price is deducted over a six month period via payroll. Also, the Company has an Employee and Director Stock Option Plan. The exercise price is no lower than the market price on the date of grant. Options granted under the Plan expire within a period of six years of granting, with vesting periods determined by the Compensation Committee. The Company employs a fair value method of accounting for all options issued to employees or directors on or after April 27, 2002. The fair value of options issued in the quarter was calculated using the Black-Scholes option pricing model and the following assumptions:
7. Business Segment Information Based upon the Company’s internal reporting structure, the following operating segments have been assigned:
The significant accounting policies of the above segments are the same as those described in Note 1. Intersegment sales are recorded at cost. General and administrative costs are allocated to the operating segments based upon estimates of usage. The Company has not included net interest income, foreign exchange gains or losses, unusual items, gains or losses of long-term assets or income tax expense in the determination of operating segment profit.
8. Comparative Amounts Certain of the comparative amounts have been reclassified to conform to the presentation adopted in the current year. |
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