Q4 Fiscal 2011 Financial Highlights
-- Q4 revenues of $21.9 million were up 10% from $19.9 million in Q4 fiscal
2010
-- Q4 pro forma net income of $7.3 million compared to $8.6 million in Q4
fiscal 2010. Pro forma diluted EPS of $0.60 compared to $0.74 per
diluted share in Q4 fiscal 2010
-- Q4 GAAP net income of $5.9 million compared to $8.0 million in Q4 fiscal
2010. GAAP diluted EPS of $0.49, compared to $0.69 per diluted share in
Q4 fiscal 2010
Fiscal Year 2011 Results
-- Fiscal year 2011 revenues of $80.5 million rose 13% from $71.1 million
in fiscal year 2010
-- Fiscal year 2011 pro forma net income of $34.6 million was up 13% from
$30.5 million in fiscal year 2010. Pro forma diluted EPS of $2.89
compared to $2.87 per diluted share in fiscal year 2010
-- Fiscal year 2011 GAAP net income of $25.0 million increased 15% from
$21.7 million in fiscal year 2010. GAAP diluted EPS of $2.09 per diluted
share, compared to $2.04 per diluted share in fiscal year 2010
"I'm very proud to report that we achieved the highest levels of revenues and pro forma net income in our 36-year history, making fiscal 2011 a banner year for our Company," said John Lindgren, President and CEO, MOSAID. "Our record financial results demonstrate the strength and sustainability of the Company's intellectual property licensing and innovation business. We delivered a third consecutive year of double-digit revenue growth and record profits, despite the headwinds of a strong Canadian dollar. Looking ahead, our goal is to achieve higher rates of revenue growth by increasing our investments in high-quality patents, establishing new licensing programs, and through the vigorous defense of our intellectual property rights."
"During fiscal 2011 we met key operational goals that drove results," said Lindgren. "Our patent portfolio - the foundation for our long-term success - grew by more than 40%. We secured significant long-term revenue streams by renewing our patent license agreements with Hynix and Nanya, and signing first-time deals with a leading Wi-Fi chip supplier, IBM, LG Electronics and other global companies. Signaling our resolve to protect our patent rights, we intensified our litigation activities."
"Conducting R&D that contributes to the development of innovative technology is integral to our identity as a world-class intellectual property company," stated Lindgren. "MOSAID's R&D activity is currently focused on our HLNAND™ Flash memory technology. In fiscal 2011, we attracted considerable attention with the introduction of an HLNAND-based prototype solid state drive, and HLNAND2, our second-generation Flash memory specification."
MOSAID had cash and marketable securities of $114.8 million at the end of the fourth quarter of fiscal 2011, compared to $118.9 million at the end of the third quarter of fiscal 2011. In Q4 fiscal 2011, MOSAID returned $3.0 million to shareholders in quarterly dividend payments.
On June 16, 2011, MOSAID declared a quarterly dividend of $0.25 per share. The dividend, which is an eligible dividend, is payable on July 21, 2011 to shareholders of record as of July 7, 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.
Fourth Quarter Operational Highlights
Patent licensing: MOSAID granted Hynix a six-year term license to certain semiconductor patents and a life-of-patents license to certain other semiconductor patents covering all Hynix semiconductor products. In a separate purchase agreement, MOSAID acquired a portfolio of several hundred patents and patent applications relating to semiconductor general manufacturing process and memory technologies.
During the fourth quarter, MOSAID signed microcomponents patent license agreements with LG Electronics Inc. and MediaTek Inc. The Company granted LG Electronics an eight-year, non-exclusive license to certain microcomponents patents covering all LG branded products. MOSAID granted MediaTek a five-year license under its microcomponents patents covering certain MediaTek semiconductor products.
MOSAID also signed a worldwide, non-exclusive wireless patent portfolio license agreement with HTC Corporation of Taiwan. MOSAID granted HTC a 10-year, royalty bearing license under its wireless patents covering all HTC wireless networking products that comply with the IEEE 802.11 Wi-Fi family of communications standards, and that contain Wi-Fi chips that are not already licensed. All other details of the patent license agreement are confidential.
Patent portfolio growth: MOSAID had 2,822 patents and applications at the end of Q4 fiscal 2011, up 7% from 2,647 patents and applications at the end of Q3 fiscal 2011, and up 41% from 2,001 patents and applications one year ago.
During the quarter, MOSAID purchased four separate patent portfolios, totaling 70 patents and applications. The acquired portfolios relate to wireless handsets, sensor networks, distributed processing and cloud computing, and network routing and management. There are no revenue sharing arrangements related to any of these acquisitions. The patents and patent applications acquired from Hynix will be recorded following the completion of the selection process.
Litigation update: On March 17, 2011, MOSAID initiated wireless patent infringement litigation against 17 companies - including Atheros Communications, Inc., Marvell Semiconductor, Inc., Ralink Technology Corporation, Realtek Semiconductor, CSR plc, Intel Corporation and some of their customers - which MOSAID believes are infringing six of its standards-essential Wi-Fi patents.
On April 7, 2011, MOSAID filed a patent infringement suit against NVIDIA Corporation, Freescale Semiconductor Inc. and Interphase Corporation, alleging infringement of seven patents related to power management techniques and microprocessor architectures.
Subsequent to quarter end, MOSAID initiated two further litigation actions. On May 10, 2011, the Company commenced patent infringement litigation against Elpida Memory, Inc., Buffalo Inc. and Axiontech. MOSAID believes that the defendants are infringing six patents related to Dynamic Random Access Memory (DRAM) circuit and process technology.
On May 16, 2011, MOSAID filed a complaint against Cisco Systems before the International Trade Commission (ITC). The complaint alleges that Cisco is infringing six patents relating primarily to Power-over-Ethernet technology.
Research and development: MOSAID announced HLNAND2, the next step in the development of its HLNAND (HyperLink NAND) Flash memory technology. HLNAND2 provides simultaneous read and write data at 800MB/s (megabytes per second), far exceeding the performance of any other NAND Flash memory currently available or announced.
Q1 and Fiscal 2012 Financial Guidance
Management offers the following guidance for the first quarter of fiscal 2012:
-- Q1 revenues of $17.5 million to $19.8 million
-- Q1 pro forma net income of $5.3 million to $5.9 million, or $0.43 to
$0.48 per diluted share, based on 12.2 million diluted shares
Management is providing the following guidance for fiscal 2012:
-- Fiscal 2012 revenues are expected to be in the range of $85.0 million to
$90.0 million
-- Fiscal 2012 pro forma net income is expected to be in the range of $24.6
million to $26.1 million, or $2.00 to $2.12 per diluted share, based on
12.3 million diluted shares
The above information is considered material forward-looking information. Financial guidance is provided to assist investors and other interested parties in understanding the Company's business. The reader is cautioned that using this information for any other purpose may be inappropriate.
MOSAID'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.
The "Forward-Looking Information" section of this document provides information on various risks and uncertainties faced by the Company.
Conference Call and Webcast
Management will hold a conference call and webcast on Thursday, June 16, 2011 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 29919114. The webcast will be available on mosaid.com for 90 days following the event.
