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 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.
• 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
Management will hold a conference call and webcast on Thursday, February 17, 2005 at 5:00 p.m. (EST). 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 February 24, 2005. To access the rebroadcast, please dial 1-877-289-8525 and enter the passcode 21112525#.
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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.