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News & Events > 2005 News Releases > Febuary 17 |
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2005 News Releases "FOR IMMEDIATE RELEASE" MOSAID Announces Third Quarter Results for Fiscal Year 2005 OTTAWA, Ontario, Canada – February 17, 2005 – MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the third quarter of fiscal 2005, ended January 21, 2005. Revenues for the third quarter of fiscal year 2005 were $16,897,000 compared to $7,398,000 in the third quarter of fiscal year 2004. Net earnings were $34,106,000 or $2.96 per diluted share, compared to net earnings of $320,000 or $0.03 per diluted share for the third quarter a year ago. Revenues for the year-to-date were $33,201,000 compared to revenues of $19,638,000 reported for the same period last year. Net earnings for the first nine months of fiscal 2005 were $33,039,000 or $3.05 per diluted share, compared to a net loss of $9,568,000 or $0.93 per diluted share reported in the same period last year. The year-to-date earnings for fiscal 2005 before discontinued operations were $32,812,000 or $3.03 per diluted share, compared to a net loss before discontinued operations of $1,537,000 or $0.15 a year ago. Discontinued operations relate to those of the Semiconductor Division, which was closed in September 2003. Results for the third quarter and year-to-date fiscal 2005 include a one-time income tax recovery of $28.3 million in the Consolidated Statement of Operations and Retained Earnings. The recovery is due to the Company's assessment that the future income tax asset is more likely than not to be used against future profits over a reasonable time frame. This increased expectation of profitability is directly related to the licensing of the Company's patent portfolio to Samsung Electronics Co., Ltd., and its expected beneficial impact on the licensing program. Without the one-time tax recovery amount, net earnings and earnings before discontinued operations were $5.7 million or $0.50 per diluted share for the quarter. Year-to-date, without the recovery, net earnings were $4.7 million, or $0.43 per diluted share and earnings before discontinued operations were $4.5 million, or $0.41 per diluted share. The Company's cash balance and short-term marketable securities at the end of the third quarter were $48.4 million, compared to $39.7 million at the end of the second quarter of fiscal 2005. Cash balances were augmented by a $14.0 million issue of common shares by way of private placement during the quarter. "This period of time is marked by major patent licensing achievements for MOSAID - the signing of license agreements with two of the largest DRAM manufacturers in the world: Samsung Electronics in the third quarter and now Hynix Semiconductor," said George Cwynar, President and Chief Executive Officer for MOSAID. "These licenses have changed MOSAID as a company. Samsung and Hynix have agreed to five and six-year license terms, respectively, permitting their renewal at the end of the term and an opportunity to negotiate new licenses for their ongoing sale of semiconductors. Payments under these licenses are spread over the term of the licenses, resulting in a strong base of revenues to support the pursuit of additional patent licensees and the future growth of MOSAID." "We also saw a resurgence in tester bookings in our Systems business during the quarter. The resulting backlog will support solid Systems financial performance into the new fiscal year. However, we remain cautious about tester sales in the latter part of our next fiscal year as industry analysts are still anticipating minimal growth in DRAM revenues in 2005, a decline in 2006 and constrained capital expenditures throughout," said Cwynar. Guidance Guidance for the Company's financial performance in Q4 fiscal 2005 has been raised as a result of the improvement in the Company's backlog in both the Intellectual Property and Systems Divisions. The Company now forecasts revenues in fiscal Q4 of $15.5 to $16 million and net earnings of $4.5 to $5 million. Thus, for fiscal 2005, revenues are expected to be $48.7 to $49.2 million and net earnings $37.5 to $38 million. Excluding the effects of the $28.3 million increase in the valuation of the income tax assets in Q3, net earnings for the year are expected to be $9.2 to $9.7 million. The Company is also tabling its guidance for fiscal 2006, where it is expected that revenues will range between $58 to $62 million and net earnings between $13 to $15 million. It is expected that roughly 70% of the fiscal 2006 revenues will stem from the Intellectual Property Division, and of these, the vast majority have already been committed. For operational efficiency reasons the Company is changing its year-end to a static date of April 30, effective fiscal 2005. As a result, the current fiscal year will have an additional eight days. Interim reporting dates in the Company's fiscal 2006 year, and thereafter, will be July 31, October 31 and January 31. Operating Highlights · World's Largest DRAM Suppliers License Patent Portfolio On January 18, 2005, MOSAID announced that it had signed a patent license agreement with Samsung, the world's largest DRAM supplier, settling its patent litigation which had been ongoing since 2001. Under the terms of the agreement, Samsung was granted a five-year, renewable license to the MOSAID patent portfolio as well as a license to four MOSAID patent families for the lives of the patents. On February 8, 2005, the summary judgement hearing in the case against Infineon was held in the District Court of New Jersey. Following the summary judgement ruling, the Infineon case will then be transferred back to the District of Northern California for trial. Effective today, and the subject of another news release, MOSAID has announced the completion of a patent license agreement with another world leading DRAM manufacturer, Hynix Semiconductor Inc. This agreement settles a patent infringement lawsuit initiated by MOSAID against Hynix on January 19, 2005. Hynix has been granted a six-year, renewable license to MOSAID's entire patent portfolio, bringing the Company's total number of patent licensees to twelve. MOSAID has 14 further semiconductor manufacturers on notice for patent infringement and is in discussions with a number of these companies. · Semiconductor IP Featured in Giga Scale Electronic Design Automation Tool Recently, MOSAID announced the inclusion of its semiconductor intellectual property (SIP) within the InCyte™ electronic design automation (EDA) tool developed by Giga Scale Integration Corporation. InCyte, a chip estimation tool, helps developers of complex integrated circuits (ICs) evaluate the cost of their ICs and associated design tradeoffs at the design architecture stage. Developers can now easily evaluate the cost and power benefits of MOSAID's leading embedded DRAM SIP, as applied in many typical modern designs displayed within InCyte. The tool also includes ChipEstimate.com, a portal offering designers free access to InCyte. · Latest Version of Test Control Software Doubles Bitmap Capacity During the third quarter, the Systems Division began developing its Tester Control Software (TCS) Version 8 for the MS4205 family of memory chip testers. This latest version of TCS is expected to be available for shipping to customers early in Q4. With TCS Version 8, tester bitmap capacity is doubling to 8Gb as required by the latest high capacity NAND Flash chips being developed for media storage in products such as digital cameras and MP3 players. Mirroring the growth in Flash memory chip density, MOSAID will have doubled its MS4205 tester's bitmap capacity three times within the last two years. TCS Version 8 will also deliver a variety of new features that increase flexibility and ease of use. 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 39 weeks ended January 21, 2005 (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 30, 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 remaining unpaid liability at January 21, 2005, related to restructuring activities, was $75,000 (2004 - $568,000) 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 January 21, 2005 and January 23, 2004, 9,000 and 261,391 options respectively were excluded from the calculation for diluted earnings per share as they exceeded the average market price of the Company’s common stock during the respective period and were therefore anti-dilutive. For the 39 weeks ended January 21, 2005, 9,000 options were excluded from the calculation of diluted earnings per share as they exceeded the average market price of the Company’s common stock during the period and were therefore anti-dilutive. For the 39 weeks ended January 23, 2004, all options were excluded from the calculation of dilutive earnings per share as they were anti-dilutive due to the loss before discontinued operations. There were 815,317 and 1,025,455 options issued and outstanding as at January 21, 2005 and January 23, 2004 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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