MOSAID Announces First Quarter Results for Fiscal 2008 and Dividend



    Quarterly dividend of $0.25 per share payable on October 19, 2007

    OTTAWA, Aug. 30 /CNW Telbec/ - MOSAID Technologies Incorporated (TSX:MSD)
today announced financial results for the first quarter of fiscal year 2008,
ended July 31, 2007.

    - Q1 revenues: $12.6 million
    - Q1 pro forma income: $4.9 million or $0.44 per diluted share
    - Q1 GAAP net income: $9.5 million or $0.85 per diluted share

    Revenues for the first quarter of fiscal 2008 were $12.3 million,
compared to $19.1 million in the first quarter of fiscal 2007. Revenues in the
first quarter a year ago were higher primarily as a result of a one-time fixed
payment of $8.9 million from PortalPlayer, Inc.
    Pro forma income was $4.9 million or $0.44 per diluted share in the first
quarter of fiscal 2008, compared to $9.8 million or $0.86 per diluted share in
the first quarter of fiscal 2007. A reconciliation of pro forma income to
Canadian generally accepted accounting principles (GAAP) net income is
included in the notes to the financial statements accompanying this press
release.
    GAAP income before discontinued operations for the first quarter fiscal
2008 was $3.7 million or $0.33 per diluted share, compared to $8.5 million or
$0.74 per diluted share for the same period a year ago. Income before
discontinued operations declined primarily because of higher expenses for
patent amortization and imputed interest related to acquired patents, and
increased patent licensing and litigation costs, partially offset by foreign
exchange gains and lower General and Administration costs.
    GAAP discontinued operations contributed a net profit of $5.8 million in
the first quarter of fiscal 2008. Included in this result was a pre-tax gain
of $9.3 million related to the sale of Semiconductor IP product assets to
Synopsys, Inc., partially offset by a pre-tax loss on discontinued operations
of $2.2 million.
    GAAP net income for the first quarter of fiscal 2008 was $9.5 million or
$0.85 per diluted share, up 43% from net income of $6.7 million or
$0.58 per diluted share reported in the same quarter last year.
    "We had a very active first quarter, marked by a number of important
achievements that advanced our goal of re-positioning MOSAID as a pure-play
intellectual property company focused on patent licensing and innovation,"
said John Lindgren, President and Chief Executive Officer, MOSAID.
    "The Company achieved solid financial results, with pro forma earnings
within guidance. We sold our Semiconductor IP product assets to Synopsys,
signed a patent licensing agreement with a fabless semiconductor company,
Etron Technology, and entered into an exclusive patent licensing agreement
with LSI Corporation that opens up new licensing opportunities," stated
Lindgren. "As well, we introduced a breakthrough Flash memory architecture
that is generating dozens of patent applications, and completed the
strengthening of our management team and board."
    "The expansion of our patent portfolio over the last two quarters has
created many new licensing opportunities and we are vigorously pursuing them.
We are now in communication with more than 50 companies regarding licensing
MOSAID's patent portfolio," said Lindgren, "although the timing of closing
individual license agreements continues to be difficult to predict."
    The Company's balance of cash and marketable securities at the end of the
first quarter of fiscal 2008 was $62.5 million, compared with $50.3 million at
the end of the fourth quarter of fiscal 2007. MOSAID's cash and marketable
securities are invested primarily in high quality, investment-grade financial
instruments and the Company has no exposure to sub-prime mortgage,
asset-backed commercial paper. The key factors contributing to the increase in
cash and marketable securities in the first quarter of fiscal 2008 were the
sale of assets to Synopsys, Inc. and the collection of receivables related to
the final sale of memory test systems in the fourth quarter of fiscal 2007,
partially offset by the payment of $2.8 million in dividends to shareholders.
    On August 30, 2007, MOSAID Technologies declared a quarterly dividend of
$0.25 per share. The dividend, which is an eligible dividend, is payable on
October 19, 2007 to shareholders of record as of October 1, 2007.

    First Quarter Business Highlights
    ---------------------------------

    Operating highlights during the first quarter of fiscal 2008 included:

    
    - signing a 10-year patent licensing agreement with LSI Corporation,
      giving MOSAID the exclusive right to sub-license more than 50 LSI
      patents relating to memories, digital signal processors (DSPs),
      microprocessors, application specific integrated circuits (ASICs), and
      semiconductor processing technology;
    - the sale of Semiconductor IP product assets to Synopsys, Inc. for
      US$15.3 million in cash, subject to a US$2 million holdback for
      one year;
    - licensing MOSAID's patent portfolio to Etron Technology, Inc. of Taiwan
      for a five-year term;
    - the introduction of a breakthrough Flash memory architecture and
      interface, Hyperlink NAND (HLNAND(TM)), that will improve the
      performance of products using Flash memory, including solid state
      drives;
    - the appointments of Norm Paquette and Barry Reiter to MOSAID's Board of
      Directors; and
    - strengthening MOSAID's management team with the appointments of
      Jin-Ki Kim as Vice President, Research and Development; Phillip Shaer
      as Vice President, General Counsel and Corporate Secretary; and
      Michael Vladescu as Vice President, Licensing and Intellectual
      Property.

    Guidance
    --------

    Guidance for the second quarter of fiscal 2008 is as follows:

    - Q2 revenues of between $11.3 million and $11.8 million
    - Q2 pro forma income of between $3.4 million and $3.8 million
    - Q2 GAAP net income of between $900,000 and $1.2 million

    MOSAID is maintaining its guidance for fiscal 2008 as follows:

    - Fiscal 2008 revenues in the range of $55 million
    - Fiscal 2008 pro forma income of approximately $20.0 million to
      $22.0 million
    - Fiscal 2008 GAAP net income of $16.0 million to $17.0 million

    -------------------------------------------------------------------------
    Conference Call and Webcast

    Management will hold a conference call and analyst webcast on Thursday,
    August 30, 2007 at 5:00 p.m. (ET). Analysts may access the conference
    call by dialing 1-800-633-8692. The webcast will be live at
    www.mosaid.com and will be available on MOSAID's web site for 90 days
    following the event.
    -------------------------------------------------------------------------

    About MOSAID

    MOSAID Technologies Inc. is one of the world's leading intellectual
property companies. MOSAID develops semiconductor memory technology and
licenses patented intellectual property in the areas of semiconductors, and
wired and wireless communications systems. MOSAID counts many of the world's
largest semiconductor companies among its customers. Founded in 1975, MOSAID
is based in Ottawa, Ontario. For more information, visit www.mosaid.com.

    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," "foresee," "estimate," "expect," "intend," "could,"
"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; DRAM manufacturers 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: the extent of embedded
DRAM proliferation in the System-on-a-Chip markets; legal rulings and/or
regulatory investigations or complaints having an adverse impact on the
validity, enforceability, 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; economic, social, and political conditions
in the countries in which MOSAID or patent licensees operate, including
security risks, health conditions, possible disruptions in transportation
networks and fluctuations in foreign currency exchange rates; non-payment or
delays in payment by licensees; 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 research and
development 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.
    MOSAID assumes no obligation to update or revise any forward-looking
statements. Additional information identifying risks and uncertainties
affecting MOSAID's business and other factors that could cause MOSAID's
financial results to fluctuate are contained in MOSAID's Annual Information
Form, under the section entitled "Risk Factors," and in MOSAID's other public
filings available online at www.sedar.com.


                   FINANCIAL STATEMENTS AND NOTES TO FOLLOW


    MOSAID TECHNOLOGIES INCORPORATED
    CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
    (In thousands of Canadian dollars, except per share amounts)
    (Unaudited)

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
    -------------------------------------------------------------------------

    Revenues                                            $ 12,595    $ 19,109

    Operating expenses
      Patent portfolio management                            962         891
      Patent licensing and litigation                      2,438       1,503
      Research and development                               492         260
      General and administration                           1,213       1,804
      Foreign exchange loss                                  188         134
      Special committee                                       11           -
    -------------------------------------------------------------------------
                                                           5,304       4,592
    -------------------------------------------------------------------------

    Pro forma income from operations                       7,291      14,517
    Net interest income                                      398         586
    -------------------------------------------------------------------------
    Pro forma income before income tax                     7,689      15,103
    Income tax expense                                     2,779       5,268
    -------------------------------------------------------------------------
    Pro forma income (Note 6)                           $  4,910    $  9,835
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Pro forma earnings per share
      Basic                                             $   0.44    $   0.87
      Diluted                                           $   0.44    $   0.86

    Weighted average number of shares
      Basic                                           11,110,854  11,295,626
      Diluted                                         11,240,124  11,482,139

    See accompanying Notes to the Consolidated Financial Statements


    MOSAID TECHNOLOGIES INCORPORATED
    CONSOLIDATED STATEMENT OF OPERATIONS
    (In thousands of Canadian dollars, except per share amounts)
    (unaudited)

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
    -------------------------------------------------------------------------

    Revenues                                            $ 12,595    $ 19,109

    Operating expenses
      Patent portfolio management                            962         891
      Patent licensing and litigation                      2,438       1,503
      Research and development                               492         260
      General and administration                           1,213       1,804
      Foreign exchange (gain) loss                        (1,490)        134
      Restructuring                                           19           -
      Special committee                                       11           -
      Stock-based compensation                                98         149
      Patent amortization and imputed interest             3,400         139
    -------------------------------------------------------------------------
                                                           7,143       4,880
    -------------------------------------------------------------------------

    Income from operations                                 5,452      14,229
    Net interest income (Note 3)                             398         586
    -------------------------------------------------------------------------
    Income before income tax expense and
     discontinued operations                               5,850      14,815
    Income tax expense                                     2,115       6,337
    -------------------------------------------------------------------------
    Income before discontinued operations                  3,735       8,478
    Discontinued operations (net of tax) (Note 5)          5,800      (1,821)
    -------------------------------------------------------------------------
    Net income                                          $  9,535    $  6,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share (Note 4)
      Basic - before discontinued operations            $   0.34    $   0.75
      Diluted - before discontinued operations          $   0.33    $   0.74

      Basic - net earnings                              $   0.86    $   0.59
      Diluted - net earnings                            $   0.85    $   0.58

    Weighted average number of shares
      Basic                                           11,110,854  11,295,626
      Diluted                                         11,240,124  11,482,139

    See accompanying Notes to the Consolidated Financial Statements


    MOSAID TECHNOLOGIES INCORPORATED
    (Subject to the Canada Business Corporations Act)
    CONSOLIDATED BALANCE SHEETS
    (In thousands of Canadian dollars)

                                                           As at       As at
                                                         July 31,   April 30,
                                                            2007        2007
                                                      (unaudited)   (audited)
    -------------------------------------------------------------------------

    Current Assets
      Cash and cash equivalents                         $ 25,164    $ 23,396
      Marketable securities                               37,330      26,876
      Accounts receivable                                  8,219      12,626
      Prepaid expenses                                       771         618
      Future income taxes recoverable                     10,278      10,278
      Other asset                                            984           -
    -------------------------------------------------------------------------
                                                          82,746      73,794

    Capital assets                                         1,170       1,067
    Acquired intangibles                                  77,189      76,823
    Long-term receivable                                   1,734       1,734
    Goodwill                                                   -       1,786
    Long-term assets held for sale                         5,355       7,028
    Future income taxes recoverable                       22,567      24,468
    -------------------------------------------------------------------------
                                                        $190,761    $186,700
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Current Liabilities
      Accounts payable and accrued liabilities          $ 10,812    $ 16,091
      Deferred revenue                                       584         542
      Mortgage payable                                     4,281       4,346
      Current portion of other long-term liabilities       6,164       5,239
    -------------------------------------------------------------------------
                                                          21,841      26,218
    Other long-term liabilities                           37,075      38,313
    -------------------------------------------------------------------------

                                                          58,916      64,531
    -------------------------------------------------------------------------

    Shareholders' Equity (Note 2)
      Share capital                                      104,026     102,276
      Contributed surplus                                  3,178       2,992
      Retained earnings                                   23,657      16,901
      Accumulated other comprehensive income                 984           -
    -------------------------------------------------------------------------
                                                         131,845     122,169
    -------------------------------------------------------------------------

                                                        $190,761    $186,700
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to the Consolidated Financial Statements


    MOSAID TECHNOLOGIES INCORPORATED
    CONSOLIDATED STATEMENT OF CASH FLOWS
    (In thousands of Canadian dollars)
    (unaudited)

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
    -------------------------------------------------------------------------

    Operating
      Income before discontinued operations             $  3,735    $  8,478
      Items not affecting cash
        Amortization                                       2,319         219
        Stock option expense                                  98         336
        Future income tax recoverable                      1,901       3,646
    -------------------------------------------------------------------------
                                                           8,053      12,679
    Change in non-cash working capital items
     from continuing operations                           (4,195)     (5,928)
    -------------------------------------------------------------------------
                                                           3,858       6,751
    -------------------------------------------------------------------------

    Investing
      Acquisition of capital assets and
       acquired intangibles                               (2,664)    (13,534)
      Acquisition of short-term marketable securities    (46,901)    (34,069)
      Proceeds on disposal/maturity of short-term
       marketable securities                              36,447      39,864
    -------------------------------------------------------------------------
                                                         (13,118)     (7,739)
    -------------------------------------------------------------------------

    Financing
      Repayment of mortgage                                  (65)        (59)
      Long-term liabilities                                 (313)      9,566
      Repurchase of shares                                     -      (1,913)
      Dividends                                           (2,779)     (2,831)
      Issue of common shares                               1,750         464
    -------------------------------------------------------------------------
                                                          (1,407)      5,227
    -------------------------------------------------------------------------

    Net cash (outflow) inflow from
     continuing operations                               (10,667)      4,239
    Net cash inflow (outflow) from discontinued
     operations                                           12,435      (1,101)
    -------------------------------------------------------------------------
    Net cash inflow                                        1,768       3,138
    Cash and cash equivalents, beginning of period        23,396      15,542
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period            $ 25,164    $ 18,680
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to the Consolidated Financial Statements


    MOSAID TECHNOLOGIES INCORPORATED
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Quarter ended July 31, 2007
    (tabular dollar amounts in thousands of Canadian Dollars,
    except per share amounts)

    1. Basis of Presentation

    The accompanying unaudited financial statements have been prepared in
accordance with Canadian generally accounting principles (GAAP) for interim
financial information. Accordingly, they do not include all of the information
and notes required by GAAP for annual financial statements.
    In the opinion of management, all adjustments consisting of normal
recurring adjustments, considered necessary for a fair presentation of the
Company's financial position, results of operations and cash flows have been
included. Operating results for the interim period presented are not
necessarily indicative of the results to be expected for any subsequent
quarter or for the full fiscal year ending April 30, 2008.
    The accounting policies used in preparing these interim financial
statements are consistent with those used in preparing the annual financial
statements, except as follows:

    Comprehensive Income
    --------------------

    The CICA issued section 1530 of the CICA Handbook, Comprehensive Income.
The section is effective for fiscal years beginning on or after October 1,
2006. It describes how to report and disclose comprehensive income and its
components.
    Comprehensive income is the change in a company's net assets that results
from transactions, events and circumstances from sources other than the
company's shareholders. It includes items that would not normally be included
in net earnings, such as:

    - Changes in the currency translation adjustment relating to self-
      sustaining foreign operations; and
    - Unrealized gains or losses on available-for-sale investments.

    The CICA also made changes to section 3250 of the CICA Handbook, Surplus,
and reissued it as section 3251, Equity. The section is also effective for
fiscal years beginning on or after October 1, 2006. The changes in how to
report and disclose equity and changes in equity are consistent with the new
requirements of section 1530, Comprehensive Income.

    Financial Instruments - Recognition and Measurement
    ---------------------------------------------------

    The CICA issued section 3855 of the CICA Handbook, Financial Instruments -
Recognition and Measurement. The section is effective for fiscal years
beginning on or after October 1, 2006. It describes the standards for
recognizing and measuring financial assets, financial liabilities and
non-financial derivatives. This section requires that:

    - All financial assets be measured at fair value, with some exceptions
      such as loans and investments that are classified as held to maturity;
    - All financial liabilities be measured at fair value if they are
      derivatives or classified as held for trading purposes. Other financial
      liabilities are measured at their carrying value; and
    - All derivative financial instruments be measured at fair value, even
      when they are part of a hedging relationship.

    The CICA has also reissued section 3860 of the CICA Handbook as section
3861, Financial Instruments - Disclosure and Presentation, which establishes
standards for presentation of financial instruments and non-financial
derivatives, and identifies the information that should be disclosed about
them. These revisions come into effect for fiscal years beginning on or after
October 1, 2006.

    Hedges
    ------

    The CICA issued section 3865 of the CICA Handbook, Hedges. The section is
effective for fiscal years beginning on or after October 1, 2006, and
describes when and how hedge accounting can be used.
    Hedging is an activity used by a company to change an exposure to one or
more risks by creating an offset between:

    - Changes in the fair value of a hedged item and a hedging item;
    - Changes in the cash flows attributable to a hedged item and a hedging
      item; or
    - Changes resulting from a risk exposure relating to a hedged item and a
      hedging item.

    Hedge accounting makes sure that all gains, losses, revenues and expenses
from the derivative and the item it hedges are recorded in the statement of
operations in the same period.
    As a result of adopting the above, the Company has:

    - Recorded its foreign exchange risk management derivatives at fair value
      as at the reporting date on the balance sheet as "Other assets";
    - Recorded the effective portion of its derivatives on the balance sheet
      in "Accumulated other comprehensive income";
    - Classified all of its cash equivalents and marketable securities as
      "Held-for trading" and recorded those securities at their fair value as
      at the reporting date, with changes in fair value being recognized in
      income immediately;
    - Classified its long-term liabilities as "Other liabilities" which are
      recorded at amortized cost using the effective interest method; and
    - Reported comprehensive income and its components and accumulated other
      comprehensive income and its components in the Notes to the
      consolidated financial statements.

    As a result of adoption of the above policies, there was no material
impact on the Statement of Operations.

    2. Shareholders' equity and other comprehensive income

    The following are the changes in shareholders' equity for the three months
ended July 31, 2007:

    -------------------------------------------------------------------------
                                                            Accumu-
                                                             lated
                                                             other
                    Common    Common    Contri-             compre-
                    shares    shares     buted  Retained   hensive
                   (number)       ($)  surplus  earnings    income     Total
    -------------------------------------------------------------------------
    Balance at
     April 30,
     2007       11,055,376  $102,276  $  2,992  $ 16,901  $      -  $122,169
    -------------------------------------------------------------------------
    Net income           -         -         -     9,535         -     9,535
    -------------------------------------------------------------------------
    Dividends            -         -         -    (2,779)        -    (2,779)
    -------------------------------------------------------------------------
    Employee
     Stock
     Option
     Program       129,133     1,726         -         -         -     1,726
    -------------------------------------------------------------------------
    Employee
     Share
     Purchase
     Program         2,910        24         -         -         -        24
    -------------------------------------------------------------------------
    Stock-based
     compensation        -         -       186         -         -       186
    -------------------------------------------------------------------------
    Unrealized
     derivative
     gains on
     cash flow
     hedges -
     net                 -         -         -         -       984       984
    -------------------------------------------------------------------------
    Balance at
     July 31,
     2007       11,187,419  $104,026  $  3,178  $ 23,657  $    984  $131,845
    -------------------------------------------------------------------------


    The following are the components of comprehensive income (net of taxes):

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    Net income                                          $  9,535    $  6,657
    Other comprehensive income adjustments:
      Unrealized derivative gains on cash flow hedges,
       net of taxes                                          620           -
                                                      -----------------------
                                                        $ 10,155    $  6,657
                                                      -----------------------
                                                      -----------------------

    During the three months ended July 31, 2007 and July 31, 2006, $263,000
and nil net derivative gains were reclassified into net income. The Company
estimates that all net derivative gains included in accumulated other
comprehensive income will be reclassified into net income within the next 12
months.


    3. Net Interest Income

    Net interest income comprises the following:

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    Interest income                                     $    485    $    678
    Interest expense                                          87          92
                                                      -----------------------
                                                        $    398    $    586
                                                      -----------------------
                                                      -----------------------


    4. Earnings per Share

    The following is a reconciliation of the numerator and denominator of the
basic and diluted per share computations:

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    Income before discontinued operations               $  3,735    $  8,478
    Discontinued operations (net of tax)                   5,800      (1,821)
                                                      -----------------------
    Net income                                          $  9,535    $  6,657
                                                      -----------------------
                                                      -----------------------

    Weighted average number of common shares
     outstanding                                      11,110,854  11,295,626
    Net effect of stock options                          129,270     186,513
                                                      -----------------------
    Weighted average diluted number of common
     shares outstanding                               11,240,124  11,482,139
                                                      -----------------------
                                                      -----------------------

    Earnings per share
      Basic - before discontinued operations            $   0.34    $   0.75
      Diluted - before discontinued operations          $   0.33    $   0.74

      Basic - net income                                $   0.86    $   0.59
      Diluted - net income                              $   0.85    $   0.58


    For the quarter ended July 31, 2007, 15,500 options were excluded from the
calculation of diluted earnings per share as the exercise price of these
options exceeded the average market price of the Company's common stock during
this period and were therefore anti-dilutive.
    For the quarter ended July 31, 2006, 11,000 options were excluded from the
calculation of diluted earnings per share as the exercise price of these
options exceeded the average market price of the Company's common stock during
this period and were therefore anti-dilutive.
    There were 406,541 and 634,923 options issued and outstanding as at
July 31, 2007 and July 31, 2006 respectively.

    5. Discontinued operations

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    Revenues                                            $    382    $  3,873

    Expenses
      Labour and materials                                     -       1,222
      Research and development                             1,446       3,494
      Selling and marketing                                1,008       1,702
      Bad debts                                                -          88
      Restructuring                                          154           -
                                                      -----------------------
                                                           2,608       6,506
                                                      -----------------------

      Loss from operations                                (2,226)     (2,633)
      Gain on sale of assets                               9,304           -
                                                      -----------------------
      Earnings before tax                                  7,078      (2,633)
      Income tax expense (recovery)                        1,278        (812)
                                                      -----------------------
    Discontinued operations (net of tax)                $  5,800   ($  1,821)
                                                      -----------------------
                                                      -----------------------


    6. Reconciliation of pro forma income with GAAP net income

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    GAAP net income                                     $  9,535    $  6,657
    Add (deduct):
      Stock-based compensation                                98         149
      Patent amortization and imputed interest             3,400         139
      Other                                                   19           -
      Discontinued operations (net of tax)                (5,800)      1,821
      Foreign exchange gain                               (1,678)          -
      Income tax expense  - continuing operations           (664)      1,069
                                                      -----------------------
    Pro forma income                                    $  4,910    $  9,835
                                                      -----------------------
                                                      -----------------------

    7. Stock-based Compensation

    The Company has an employee stock purchase plan program whereby employees
may elect to designate up to 5% of their annual salary to purchase shares of
the Company at a 10% discount from the fair market value. The purchase price
is deducted over a six month period via payroll.
    Also, the Company has an Employee and Director Stock Option Plan. The
exercise price is no lower than the market price on the date of grant. Options
granted under the Plan expire within a period of six years of granting, with
vesting periods determined by the Compensation Committee.
    The Company employs a fair value method of accounting for all options
issued to employees or directors on or after April 27, 2002. The fair value of
options issued in the quarter was calculated using the Black-Scholes option
pricing model and the following assumptions:

                                                         Quarter     Quarter
                                                           ended       ended
                                                         July 31,    July 31,
                                                            2007        2006
                                                      -----------------------

    Risk free interest rate                                 4.26%       4.49%
    Expected life in years                                   5.5         5.5
    Expected dividend yield                                  3.7%        4.0%
    Volatility                                             56.33%      67.37%


    8. Business Segment Information

    The Company operates in one business segment as a developer and licensor
of semiconductor intellectual property.
    
    %SEDAR: 00002240E




For further information:

For further information: Investor Inquiries: Michael Salter, Director,
Investor Relations and Corporate Communications, (613) 599-9539, x1205, 
salter@mosaid.com; Media Inquiries: Colleen McGuire, Communications
Specialist, (613) 599-9539, x1228, mcguire@mosaid.com

Organization Profile

MOSAID TECHNOLOGIES INCORPORATED

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