MOSAID Technologies Incorporated (
-- Q3 revenues of $17.7 million exceeded guidance. Revenues in Q3 fiscal 2009 were $18.1 million -- Q3 pro forma net income of $7.3 million exceeded guidance and was up 36% from $5.3 million in Q3 fiscal 2009. Q3 pro forma earnings per share (EPS) of $0.70 per diluted share were up 32% from $0.53 in Q3 fiscal 2009 -- Q3 GAAP net income was $2.2 million or $0.21 per diluted share, compared with $2.3 million or $0.23 per diluted share in Q3 fiscal 2009"This has been an outstanding period for the Company both operationally and financially," said John Lindgren, President and CEO, MOSAID. "The landmark semiconductor licensing deal we announced in January with Samsung helps secure our current revenue stream for many years, significantly strengthens our patent portfolio, and offers new R&D opportunities. Also, the wireless patent license agreements we signed recently with Samsung and Sony demonstrates our continued success in licensing MOSAID's wireless patents into multiple markets - mobile handsets, notebook computers, wireless infrastructure and now, gaming consoles."
"The financial impact of meeting these key operational targets has been positive and significant," said Lindgren. "Concurrent with the Samsung semiconductor deal, MOSAID raised guidance for annual revenues and pro forma net income. Subsequent to quarter end, we announced a bought deal financing, with gross proceeds of $31.1 million to be used primarily for strategic patent acquisitions that will assist in driving future growth."
MOSAID had cash and marketable securities of $70.2 million at the end of the third quarter of fiscal 2010, compared to $55.2 million at the end of the second quarter of fiscal 2010. In Q3 fiscal 2010, MOSAID returned $2.6 million to shareholders in quarterly dividend payments.
On March 3, 2010, MOSAID declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on April 19, 2010 to shareholders of record as of April 7, 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.
Third Quarter Operational Highlights
Semiconductor patent licensing: MOSAID announced a comprehensive arrangement with Samsung Electronics Co. Ltd., comprised of a patent license agreement, a patent purchase agreement, and a Memorandum of Understanding (MOU). Under the terms of the semiconductor patent license agreement, Samsung has licensed MOSAID memory and microcomponent patents, and will make a series of fixed payments to MOSAID. Under the patent purchase agreement, MOSAID has purchased from Samsung a significant number of semiconductor patents, and will make a series of fixed payments to Samsung in 2014. Under the MOU, Samsung and MOSAID will explore the potential joint development of a new high-performance NAND Flash device incorporating MOSAID's HLNAND™ memory technology.
Wireless patent licensing: MOSAID signed three wireless patent license agreements during the third quarter. MOSAID signed a fixed-payment term license agreement with Samsung Electronics Co., Ltd., covering products sold globally by Samsung, including Wi-Fi enabled mobile handsets, notebook computers, and system-level communications products. MOSAID also entered into a fixed-payment term license with Sony Corporation, covering all Sony Wi-Fi enabled products. In addition, MOSAID signed a five-year, royalty bearing wireless patent license agreement with an unnamed, U.S.-based telecommunications equipment provider. With these three deals, MOSAID has now signed 13 wireless patent license agreements.
Equity offering: Subsequent to quarter end, on February 23, 2010, MOSAID announced the completion of a previously announced bought deal financing, which resulted in the sale of 1,437,500 common shares, for gross proceeds to the Company of $31,211,875. Proceeds of the offering will be used to fund patent acquisitions and for general corporate purposes.
Patent portfolio development: MOSAID had1,915 patents and applications at the end of the Q3 fiscal 2010, up 37% from 1,397 patents and applications one year ago. Subsequent to quarter end, MOSAID purchased a portfolio of Power Control and Memory Management patents from Allied Security Trust of New Jersey. The portfolio consists of five U.S. patents and foreign counterparts. MOSAID received full title to the portfolio for an undisclosed non- material amount, paid immediately. Licensing revenues are not subject to revenue sharing arrangements with the seller. The primary licensing markets for the patents, which teach fundamental concepts in Power Control and Memory Management, are microprocessors, Graphic Processing Units (GPUs) and Digital Signal Processors (DSPs).
Q4 and Fiscal 2010 Guidance
Management offers the following guidance for the fourth quarter and full year fiscal 2010:
-- Q4 revenues of $17.5 million to $18.5 million -- Q4 pro forma net income of $5.7 million to $6.5 million, or $0.49 to $0.56 per diluted share, based on 11.7 million diluted shares -- Fiscal 2010 revenues in the range of $68.0 million to $70.0 million -- Fiscal 2010 pro forma net income of $27.5 million to $28.5 million, or $2.55 to $2.64 per diluted share, based on 10.8 million diluted sharesMOSAID'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 Wednesday, March 3, 2010 at 5:00 p.m. ET. The webcast will be live at www.mosaid.com and may also be accessed by dialing 1-800-954- 0627. The webcast will be available on mosaid.com for 90 days following the event.
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 telecommunications systems. MOSAID counts many of the world's largest semiconductor companies among its licensees. Founded in 1975, MOSAID is based in Ottawa, Ontario.
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.