OTTAWA, Ontario – August 30, 2007 - MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the first quarter of fiscal year 2008, ended July 31, 2007.
- Q1 revenues: $12.6 million
- Q1 pro forma income: $4.9 million or $0.44 per diluted share
- Q1 GAAP net income: $9.5 million or $0.85 per diluted share
Revenues for the first quarter of fiscal 2008 were $12.6 million, compared to $19.1 million in the first quarter of fiscal 2007. Revenues in the first quarter a year ago were higher primarily as a result of a one-time fixed payment of $8.9 million from PortalPlayer, Inc.
Pro forma income was $4.9 million or $0.44 per diluted share in the first quarter of fiscal 2008, compared to $9.8 million or $0.86 per diluted share in the first quarter of fiscal 2007. A reconciliation of pro forma income to Canadian generally accepted accounting principles (GAAP) net income is included in the notes to the financial statements accompanying this press release.
GAAP income before discontinued operations for the first quarter fiscal 2008 was $3.7 million or $0.33 per diluted share, compared to $8.5 million or $0.74 per diluted share for the same period a year ago. Income before discontinued operations declined primarily because of higher expenses for patent amortization and imputed interest related to acquired patents, and increased patent licensing and litigation costs, partially offset by foreign exchange gains and lower General and Administration costs.
GAAP discontinued operations contributed a net profit of $5.8 million in the first quarter of fiscal 2008. Included in this result was a pre-tax gain of $9.3 million related to the sale of Semiconductor IP product assets to Synopsys, Inc., partially offset by a pre-tax loss on discontinued operations of $2.2 million.
GAAP net income for the first quarter of fiscal 2008 was $9.5 million or $0.85 per diluted share, up 43% from net income of $6.7 million or $0.58 per diluted share reported in the same quarter last year.
"We had a very active first quarter, marked by a number of important achievements that advanced our goal of re-positioning MOSAID as a pure-play intellectual property company focused on patent licensing and innovation," said John Lindgren, President and Chief Executive Officer, MOSAID.
"The Company achieved solid financial results, with pro forma earnings within guidance. We sold our Semiconductor IP product assets to Synopsys, signed a patent licensing agreement with a fabless semiconductor company, Etron Technology, and entered into an exclusive patent licensing agreement with LSI Corporation that opens up new licensing opportunities," stated Lindgren. "As well, we introduced a breakthrough Flash memory architecture that is generating dozens of patent applications, and completed the strengthening of our management team and board."
"The expansion of our patent portfolio over the last two quarters has created many new licensing opportunities and we are vigorously pursuing them. We are now in communication with more than 50 companies regarding licensing MOSAID's patent portfolio," said Lindgren, "although the timing of closing individual license agreements continues to be difficult to predict."
The Company's balance of cash and marketable securities at the end of the first quarter of fiscal 2008 was $62.5 million, compared with $50.3 million at the end of the fourth quarter of fiscal 2007. MOSAID's cash and marketable securities are invested primarily in high quality, investment-grade financial instruments and the Company has no exposure to sub-prime mortgage, asset-backed commercial paper. The key factors contributing to the increase in cash and marketable securities in the first quarter of fiscal 2008 were the sale of assets to Synopsys, Inc. and the collection of receivables related to the final sale of memory test systems in the fourth quarter of fiscal 2007, partially offset by the payment of $2.8 million in dividends to shareholders.
On August 30, 2007, MOSAID Technologies declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on October 19, 2007 to shareholders of record as of October 1, 2007.
First Quarter Business Highlights
Operating highlights during the first quarter of fiscal 2008 included:
- signing a 10-year patent licensing agreement with LSI Corporation, giving MOSAID the exclusive right to sub-license more than 50 LSI patents relating to memories, digital signal processors (DSPs), microprocessors, application specific integrated circuits (ASICs), and semiconductor processing technology;
- the sale of Semiconductor IP product assets to Synopsys, Inc. for US$15.3 million in cash, subject to a US$2 million holdback for one year;
- licensing MOSAID's patent portfolio to Etron Technology, Inc. of Taiwan for a five-year term;
- the introduction of a breakthrough Flash memory architecture and interface, Hyperlink NAND (HLNAND™), that will improve the performance of products using Flash memory, including solid state drives;
- the appointments of Norm Paquette and Barry Reiter to MOSAID's Board of Directors; and
- strengthening MOSAID's management team with the appointments of Jin-Ki Kim as Vice President, Research and Development; Phillip Shaer as Vice President, General Counsel and Corporate Secretary; and Michael Vladescu as Vice President, Licensing and Intellectual Property.
Guidance
Guidance for the second quarter of fiscal 2008 is as follows:
- Q2 revenues of between $11.3 million and $11.8 million
- Q2 pro forma income of between $3.4 million and $3.8 million
- Q2 GAAP net income of between $900,000 and $1.2 million
MOSAID is maintaining its guidance for fiscal 2008 as follows:
- Fiscal 2008 revenues in the range of $55 million
- Fiscal 2008 pro forma income of approximately $20.0 million to $22.0 million
- Fiscal 2008 GAAP net income of $16.0 million to $17.0 million
Conference Call and Webcast
Management will hold a conference call and webcast on Thursday, August 30, 2007 at 5:00 p.m. (EST). Participants wishing to access the conference call should dial
1-800-633-8692. The webcast will be live at www.mosaid.com will be available on MOSAID's web sit for 90 days following the event.
About MOSAID
MOSAID Technologies Inc. is one of the world's leading intellectual property companies. MOSAID develops semiconductor memory technology and licenses patented intellectual property in the areas of semiconductors, and wired and wireless communications systems. MOSAID counts many of the world's largest semiconductor companies among its customers. Founded in 1975, MOSAID is based in Ottawa, Ontario. For more information, visit www.mosaid.com.
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," "foresee," "estimate," "expect," "intend," "could," "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; DRAM manufacturers continuing to infringe MOSAID's patents; the timing and amount of MOSAID's litigation expenses; MOSAID's ability to sign new patent licensees; the value proposition associated with MOSAID's products relative to its competition in the market; the timing and amount of MOSAID's Research & Development expenses; the timing of MOSAID's new product introductions; MOSAID's ability to develop, manufacture, and market innovative products in a rapidly changing technological environment; and MOSAID's ability to maintain and enhance existing customer relationships.
Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following: declines or unexpected variations in market growth rates for MOSAID's products; the extent of embedded DRAM proliferation in the System-on-a-Chip markets; variability in customer deployment schedules from quarter to quarter; shifts in the mix of MOSAID products sold; unfavorable legal rulings in MOSAID's patent litigations; economic, social, and political conditions in the countries in which MOSAID, its customers, suppliers, or patent licensees operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates; non-payment or delays in payment by customers/licensees; failure to maintain and enforce MOSAID's existing patent portfolio, or failure to obtain valuable patents as a result of research and development 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; obsolescence of products or inappropriate targeting to markets that fail to materialize; inability to transition to new technologies to meet customer demand; variations in average sales cycles; key component supply restrictions and/or cost increases; critical industry transitions; consolidation of MOSAID's customers and/or licensees; natural events, such as severe weather and earthquakes in the locations in which MOSAID, its customers, suppliers, 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.
MOSAID assumes no obligation to update or revise any 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.
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