MOSAID Technologies Incorporated
Unaudited Adjusted Consolidated Financial Statements
For the Quarter Ended October 31, 2011
The attached consolidated financial statements have been prepared by
Management of
MOSAID Technologies Incorporated and have not been reviewed by an auditor.
Adjusted net income, which is not an International Financial Reporting Standard (IFRS) measure, is IFRS net income adjusted for stock-based compensation, patent amortization, imputed interest, foreign exchange gains and losses on "other long-term liabilities," and non-recurring items as reconciled below. The Company uses adjusted measures internally to evaluate and manage operating performance as well as to forecast and plan. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED ADJUSTED STATEMENTS OF INCOME
(In thousands of Canadian Dollars, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
October 31, October 31,
2011 2010 2011 2010
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Revenues $20,224 $19,962 $38,474 $38,450
Operating expenses
Patent portfolio management 2,622 2,248 4,753 4,434
Patent licensing and
litigation 7,180 2,328 11,732 4,821
Research and development 929 509 1,792 984
General and administration 1,264 961 2,470 2,016
Foreign exchange (gain) loss (249) 209 (308) 135
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11,746 6,255 20,439 12,390
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Adjusted income from
operations 8,478 13,707 18,035 26,060
Investment income 389 275 787 617
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Adjusted income before income
tax expense 8,867 13,982 18,822 26,677
Income tax expense 2,483 4,195 5,270 8,003
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Adjusted net income $ 6,384 $ 9,787 $13,552 $18,674
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Adjusted earnings per share
Basic $0.54 $0.83 $1.14 $1.59
Diluted $0.52 $0.82 $1.11 $1.57
Weighted average number of
shares
Basic 11,918,488 11,790,143 11,911,419 11,779,049
Diluted 12,246,825 11,898,957 12,191,297 11,860,073
Adjusted net income is reconciled to IFRS net income as follows:
(Dollar amounts in thousands)
Quarter ended Six Months Ended
October 31, October 31,
2011 2010 2011 2010
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IFRS net (loss) income $(4,899) $6,310 $(2,323) $11,393
Add (deduct):
Share-based compensation 2,389 1,341 3,696 2,212
Patent amortization 4,467 3,380 8,308 6,760
Imputed interest 1,143 747 1,778 1,493
Special committee 4,195 - 4,195 -
Foreign exchange loss (gain) 2,392 (390) 2,589 228
Income tax expense - for the
above items (3,303) (1,601) (4,691) (3,412)
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Adjusted net income $ 6,384 $9,787 $13,552 $18,674
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Adjusted foreign exchange (gain) loss is reconciled to IFRS foreign exchange
loss (gain) as follows:
(Dollar amounts in thousands)
Quarter ended Six Months ended
October 31, October 31,
2011 2010 2011 2010
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IFRS foreign exchange loss
(gain) $2,143 $(181) $2,281 $363
Less: foreign exchange loss
(gain) on long-term debt 2,392 (390) 2,589 228
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Adjusted foreign exchange
(gain) loss $ (249) $ 209 $ (308) $135
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MOSAID Technologies Incorporated
Unaudited Consolidated Condensed Financial Statements
For the Period Ended October 31, 2011
The attached consolidated financial statements have been prepared by Management of MOSAID Technologies Incorporated and have not been reviewed by an auditor.
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of Canadian Dollars)
(Unaudited)
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October 31, April 30, May 1,
2011 2011 2010
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Current Assets
Cash and cash equivalents $106,999 $ 97,809 $ 70,732
Marketable securities (Note 11) 8,940 17,021 30,096
Accounts receivable 7,232 13,301 4,880
Prepaid expenses 867 542 698
Other asset (Note 11) - 1,136 2,053
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124,038 129,809 108,459
Property and equipment 505 321 257
Acquired intangible assets (Note
5) 129,569 71,292 80,685
Deferred income tax asset 3,694 1,990 4,818
Investment tax credits receivable 16,380 16,118 15,748
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$274,186 $219,530 $209,967
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Current Liabilities
Accounts payable and accrued
liabilities $ 16,695 $ 12,893 $ 8,221
Deferred revenue - - 4,400
Other liability (Note 11) 724 - 992
Current portion of other long-
term liabilities 11,306 9,896 8,294
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28,725 22,789 21,907
Other long-term liabilities 83,702 26,911 33,132
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112,427 49,700 55,039
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Shareholders' Equity
Share capital (Note 6) 130,846 129,021 126,573
Contributed surplus 4,300 4,526 4,153
Retained earnings 27,156 35,435 22,588
Accumulated other comprehensive
income (543) 848 1,614
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161,759 169,830 154,928
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$274,186 $219,530 $209,967
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See accompanying Notes to the Condensed Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of Canadian Dollars, except per share amounts)
(Unaudited)
Quarter ended Six Months ended
October 31, October 31,
2011 2010 2011 2010
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Revenues $20,224 $19,962 $38,474 $38,450
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Operating expenses
Patent portfolio management 2,622 2,248 4,753 4,434
Patent licensing and
litigation 7,180 2,328 11,732 4,821
Research and development 929 509 1,792 984
General and administration 1,264 961 2,470 2,016
Foreign exchange loss 2,143 (181) 2,281 363
Share-based compensation
(Note 7) 2,389 1,341 3,696 2,212
Special committee 4,195 - 4,195 -
Patent amortization 4,467 3,380 8,308 6,760
Imputed interest 1,143 747 1,778 1,493
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26,332 11,333 41,005 23,083
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(Loss) income from operations (6,108) 8,629 (2,531) 15,367
Investment income 389 275 787 617
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(Loss) income before income
tax expense (5,719) 8,904 (1,744) 15,984
Income tax (recovery) expense (820) 2,594 579 4,591
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Net(loss) income $(4,899) $ 6,310 $(2,323) $11,393
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Earnings per share (Note 9)
Basic - net (loss) earnings $(0.41) $0.54 $(0.20) $0.97
Diluted - net (loss) earnings $(0.40) $0.53 $(0.19) $0.96
Weighted average number of
shares
Basic 11,918,488 11,790,143 11,911,419 11,779,049
Diluted 12,246,825 11,898,957 12,191,297 11,860,073
See accompanying Notes to the Condensed Consolidated Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of Canadian Dollars)
(Unaudited)
Quarter ended Six Months ended
October 31, October 31,
2011 2010 2011 2010
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Net (loss) income $(4,899) $6,310 $(2,323) $11,393
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Other comprehensive income,
net of tax:
Gains (losses) on
derivatives designated as
cash flow hedges (1,403) 240 (968) (127)
Gains (losses) on
derivatives designated as
cash flow hedges in prior
periods transferred to
earnings in the current
period 91 (303) (423) (809)
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Other comprehensive (loss) (1,312) (63) (1,391) (936)
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Comprehensive (loss) income $(6,211) $6,247 $(3,714) $10,457
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See accompanying Notes to the Consolidated Condensed Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands of Canadian Dollars)
(Unaudited)
Accumu-
lated
Other
Contri- Compreh-
Common Common buted Retained ensive
Share Shares Surplus earnings Income Total
(Number) ($) ($) ($) ($) ($)
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Balance at May
1, 2010 $11,763,626 $126,573 $4,153 $22,588 $1,614 $154,928
Net income - - - 11,393 - 11,393
Dividends - - - (5,887) - (5,887)
Employee and
Director Stock
Option Plan 77,040 2,164 (668) - - 1,496
Employee and
Director Stock
Purchase Plan 6,448 31 (23) - - 8
Restricted share
unit plan - (1,831) (238) - - (2,069)
Stock-based
compensation - - 1,034 - - 1,034
Dividend
reinvestment
plan - - - - - -
Other
comprehensive
income - - - - (936) (936)
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Balance at
October 31,
2010 11,847,114 $126,937 $4,258 $28,094 $678 $159,967
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Balance at April
30, 2011 $11,900,198 $129,021 $4,526 $35,435 $848 $169,830
Net (loss)
income - - - (2,323) - (2,323)
Dividends - - - (5,956) - (5,956)
Employee and
Director Stock
Option Plan 4,750 139 (50) - - 89
Employee and
Director Stock
Purchase Plan 3,503 132 (46) - - 86
Restricted share
unit plan - 1,180 (1,180) - - -
Stock-based
compensation - - 1050 - - 1,050
Dividend
reinvestment
plan 11,958 374 - - - 374
Other
comprehensive
income - - (1,391) (1,391)
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Balance at
October 31,
2011 $11,920,409 $130,846 $4,300 $27,156 $(543)$161,759
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See accompanying Notes to the Condensed Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of Canadian Dollars)
(unaudited)
Quarter ended Six Months ended
October 31, October 31,
2011 2010 2011 2010
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Operating
Net (loss) income $ (4,899) $ 6,310 $ (2,323) $11,393
Items not affecting cash
Amortization and imputed
interest 5,213 3,417 9,264 6,828
Stock-based compensation 490 548 1,050 1,034
Loss on disposal of assets 34 - 34 -
Unrealized foreign exchange
loss on other long-term
liabilities 2,392 (390) 2,589 228
Deferred income taxes and
investment tax credits (1,807) 1,046 (1,497) 1,261
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1,423 10,931 9,117 20,744
Change in non-cash working
capital items (Note 10) 6,043 (1,012) 9,546 (5,849)
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7,466 9,919 18,663 14,895
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Investing
Acquisition of property and
equipment and acquired
intangibles (11,965) (67) (13,072) (141)
Acquisition of marketable
securities (2,500) (17,596) (8,198) (27,505)
Proceeds on disposal and
maturity of marketable
securities 4,997 14,210 16,279 24,702
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(9,468) (3,453) (4,991) (2,944)
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Financing
Increase in other long-term
liabilities 468 747 925 1,494
Dividends paid (2,959) (2,944) (5,582) (5,887)
Funding of restricted share
unit plan - (2,068) - (2,068)
Issuance of common shares 36 1,426 175 1,504
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(2,455) (2,839) (4,482) (4,957)
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Net cash (outflow) inflow (4,457) 3,627 9,190 6,994
Cash and cash equivalents,
beginning of period 111,456 74,099 97,809 70,732
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Cash and cash equivalents, end
of period $106,999 $77,726 $106,999 $77,726
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Supplementary Information:
Cash on hand and bank balances $106,999 $74,707 $106,999 $74,707
Short-term investments - 3,019 - 3,019
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Total cash and cash equivalents $106,999 $77,726 $106,999 $77,726
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See accompanying Notes to the Condensed Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Periods ended October 31, 2011 and 2010 (tabular dollar amounts in thousands of Canadian Dollars, except per share amounts) (unaudited)1. Nature of Operations
