A Watershed Year for MOSAID;
Revenues Increased 75% Year-Over-Year; Declaration of Quarterly Dividends
OTTAWA, Ontario, Canada – June 23, 2004 – MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the fourth quarter and the fiscal year ended April 30, 2005.
Revenues for the fourth quarter of fiscal year 2005 were $16,542,000, compared to $8,779,000 in the fourth quarter of fiscal year 2004. Net income for the quarter was $4,546,000 or $0.39 per diluted share, compared to a net income of $661,000 or $0.06 per diluted share a year ago. Before discontinued operations, earnings for the quarter were $4,316,000 or $0.37 per diluted share, compared with net earnings of $302,000 or $0.03 per diluted share a year ago. The Company's fourth quarter results reflect a $670,000 write-down of its investment in Acuid Corporation Limited, a development stage company providing high-speed data transfer technology.
Revenues for the fiscal year were $49,743,000, compared to revenues of $28,417,000 reported for the same period last year. Net income for fiscal year 2005 was $37,585,000 or $3.39 per diluted share, compared to net loss of $8,907,000 or $0.86 per diluted share reported for fiscal 2004. The earnings for fiscal 2005 before discontinued operations were $37,128,000 or $3.35 per diluted share, compared to a loss before discontinued operations of $1,235,000 or $0.12 per diluted share a year ago. Results for the year include a one-time income tax asset revaluation of $28,300,000 in the Consolidated Statement of Operations and Retained Earnings. The revaluation 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.
The Company's cash balance and short-term marketable securities at the end of fiscal 2005 were $65.9 million, compared with $38.2 million at the end of fiscal 2004. Cash balances were augmented by a $14.0 million issue of common shares through a private placement in the third quarter of fiscal year 2005.
Strongest Financial Performance Recorded in Three Years
"Fiscal year 2005 was a pivotal year for MOSAID," said George Cwynar, President and Chief Executive Officer of MOSAID. "As a result of signing patent licenses with Samsung and Hynix we have recorded our highest annual revenues in three years, and we expect to have a growing and highly profitable IP business for the foreseeable future. With this change in our financial position we are investing again to grow MOSAID's businesses, through both internal development and acquisition."
"In a separate news release issued today, we announced that MOSAID will begin issuing dividends to our shareholders," said Cwynar. "The Board of Directors has approved a quarterly cash dividend of $0.125 per share of common stock. The first dividend will be paid on July 15, 2005 to shareholders of record on July 8, 2005. We have also announced today our plan to seek regulatory approval for a normal course issuer bid, stating our intention to purchase up to 4% of MOSAID's total shares outstanding in the coming year."
• Major Success with Samsung and Hynix Patent Licenses
Early in the calendar year, MOSAID announced the signing of major patent license agreements with Samsung Electronics and Hynix Semiconductor, the largest DRAM suppliers in the world. These two agreements settled patent infringement lawsuits initiated by MOSAID against Samsung in 2001, and Hynix in January 2005. The licenses represent a watershed event for MOSAID's patent licensing business. The terms of the licenses offer the opportunity to have an ongoing and renewable future revenue stream. The completion of these agreements is also important as it confirms the strength of the patent portfolio, and clearly validates that MOSAID can successfully use the court system, when required, to secure fair licensing terms from the largest manufacturers.
On April 1, 2005, Judge Martini issued summary judgement rulings in MOSAID's New Jersey patent infringement case against Infineon Technologies. The rulings yielded mixed results for MOSAID but the Company remains committed to bringing this case to a successful conclusion. The Judicial Panel on Multidistrict Litigation has now transferred the case back to the Northern District of California. Trial is expected in the Spring of 2006.
On April 7, 2005, MOSAID sued Infineon in the state of Texas for infringement of three new patent families. The key reason for launching this additional litigation was to demonstrate to Infineon, and other prospective licensees, that MOSAID has great depth in its patent portfolio. The Eastern District of Texas is typically known as a fast jurisdiction for patent cases. Therefore, MOSAID expects that a trial will be concluded in this particular case in approximately 16 months.
• Semiconductor IP Focused on High-Speed Memory Controllers
In the past year, the Design Licensing group evolved its business model to focus on the development and marketing of IP blocks as standard off-the-shelf products, rather than providing custom design services and solutions. Now known as the Semiconductor IP Products group, within the Company's IP Division, this group is primarily focused on delivering high-performance memory controllers and interface products to System-on-Chip manufacturers. MOSAID's memory controllers integrate all of the elements required to interface to standard memory components such as DRAM or SRAM.
• Systems Division Meets Memory Manufacturers' Growing Demands
In fiscal year 2005, the Systems Division completed a worldwide release of its latest Test Control Software (TCS), doubling its tester bitmap capacity to 8 Gigabits. This third doubling of bit-map capacity in less than two years tracks the explosive growth of NAND Flash memory chips used for media storage in the thriving markets for consumer products such as camera phones, MP3 players and digital cameras. MOSAID believes it is currently the only provider of full bit-map capture, display and analysis for 8 Gigabit memories. TCS is the test program development and run-time software for MOSAID's MS4205 and MS4205ex test systems operating at data rates of up to 832 Mbps.
During the year, the Division focused the majority of its development efforts on next generation products that will meet customers' requirements for testing tomorrow's larger and more complex memory devices and embedded memory.
Guidance for the Company's revenues in Q1 of fiscal year 2006 is $14.3 to $14.7 million and net earnings of $3.3 to $3.7 million. Revenues for fiscal year 2006 are forecast to range between $58 to $62 million and net earnings between $13 to $15 million. It is expected that approximately 70% of the fiscal 2006 revenues will stem from the Intellectual Property Division. Financial tablesClick here to read financial tables
Conference Call and Webcast
Management will hold a conference call and webcast on Thursday, June 23, 2005 at 5:00 p.m.(EDT). Participants wishing to access the conference call should dial 1-800-814-4859. The conference call will also be webcast live at www.mosaid.com and www.newswire.ca, and subsequently archived on MOSAID’s web site. A rebroadcast of the conference call will be available until midnight on Thursday, June 30, 2005. To access the rebroadcast, please dial 1-877-289-8525 and enter the passcode 21126977#.
MOSAID Technologies Incorporated makes memory better through the development and licensing of intellectual property and the supply of memory test and analysis systems to semiconductor manufacturers, foundries and fabless semiconductor companies around the world.
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
This document may contain forward-looking statements relating to the Company’s operations or to the environment in which the Company operates. Such statements are based on current expectations that are subject to a variety of risks and uncertainties that are difficult to predict and/or beyond MOSAID’s control. Actual results may differ materially from those expressed in any forward-looking statements, due to factors such as customer demand and timing of purchasing decisions, product and business mix, competitive products, pricing pressures as well as general economic and industry conditions. MOSAID assumes no obligation to update these forward-looking statements, or to update the reasons why actual results could differ from those reflected in any forward-looking statements. Additional information identifying risks and uncertainties is contained in other public filings with the Ontario Securities Commission.