MOSAID Technologies Incorporated (
Q2 Fiscal 2011 Results
-- Q2 revenues of $20.0 million, up 15% from $17.3 million in Q2 fiscal 2010 -- Q2 pro forma net income of $9.3 million, up 16% from $8.0 million in Q2 fiscal 2010. Pro forma diluted EPS of $0.78, based on 11.89 million diluted shares, compared to $0.78 per diluted share in Q2 fiscal 2010, based on 10.33 million diluted shares -- Q2 GAAP net income of $6.6 million, up 32% from $5.0 million in Q2 fiscal 2010. GAAP diluted EPS of $0.55, compared to $0.49 per diluted share in Q2 fiscal 2010"I am very pleased with the financial results and the operational progress we achieved during the second quarter," said John Lindgren, President and CEO, MOSAID. "We reported another quarter of double-digit revenue growth, with revenues coming in at the top end of guidance. Pro forma net income exceeded guidance."
"During the second quarter, we signed our first wireless patent license agreement with a leading supplier of semiconductor integrated circuit products, opening up another significant source of revenue for our wireless patents," said Lindgren. "MOSAID's wireless patents are currently driving the Company's revenue growth, and with the high rate of Wi-Fi adoption, we anticipate announcing new deals in the near future."
MOSAID had cash and marketable securities of $110.6 million at the end of the second quarter of fiscal 2011, compared to $103.6 million at the end of the first quarter of fiscal 2011. In Q2 fiscal 2011, MOSAID returned $2.9 million to shareholders in quarterly dividend payments.
On November 24, 2010, MOSAID declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on January 20, 2011 to shareholders of record as of January 6, 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.
Second Quarter Operational Highlights
Wireless patent licensing: MOSAID signed a five-year, royalty bearing patent portfolio license agreement with a top-ranked, U.S.-based semiconductor supplier. Under the terms of the non- exclusive agreement, MOSAID granted the company a license under MOSAID's wireless patent portfolio covering semiconductor products sold worldwide that operate in compliance with the IEEE 802.11 standard (known as Wi-Fi). MOSAID also granted the company a license under its microcomponents patent portfolio, covering worldwide sales of 802.11-compliant products.
Patent portfolio development: MOSAID had 2,381 patents and applications at the end of Q2 fiscal 2011, up from 2,050 patents and applications at the end of Q1 fiscal 2011, and up from 1,840 patents and applications one year ago. In January 2010, MOSAID purchased from Samsung Electronics Co. a portfolio of semiconductor patents. The Samsung patents were added to MOSAID's portfolio in Q2 FY11, following the completion of the selection and assignment process.
Litigation update: On August 23, 2010, Cisco Systems Inc. served MOSAID with a Complaint for Declaratory Judgment in the United States District Court for the District of Delaware. In its complaint, Cisco sought a declaration of non-infringement and invalidity with respect to nine U.S. patents and one patent application owned by MOSAID, all of which relate generally to Power-over- Ethernet technology.
Q3 and Fiscal 2011 Guidance
Management offers the following guidance for the third quarter of fiscal 2011:
-- Q3 revenues of $19.0 million to $21.0 million -- Q3 pro forma net income of $7.4 million to $8.1 million, or $0.62 to $0.68 per diluted share, based on 11.95 million diluted sharesThe Company is offering the following updated guidance for fiscal 2011:
-- Fiscal 2011 revenues in the range of $77.0 million to $80.0 million -- Fiscal 2011 pro forma net income of $31.2 million to $32.6 million, or $2.62 to $2.74 per diluted share, based on 11.9 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.
Due to the nature of the expense, patent licensing and litigation expense can vary significantly quarter-to-quarter.
Conference Call and Webcast
Management will hold a conference call and webcast on Wednesday, November 24, 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- 446-1671. Please provide confirmation number 28421889. 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 licenses patented intellectual property in the areas of semiconductors and telecommunications systems 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 www.mosaid.com and InvestorChannel.mosaid.com 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.