MOSAID Technologies Incorporated
Unaudited Consolidated Financial Statements
For the Quarter Ended October 31, 2008
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
(Subject to the Canada Business Corporations Act)
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(In thousands of Canadian Dollars, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
October 31, October 31,
2008 2007 2008 2007
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Revenues $13,795 $11,526 $26,447 $24,121
Operating expenses
Patent portfolio
management 1,203 1,356 2,326 2,318
Patent licensing and
litigation 6,528 2,711 10,945 5,149
Research and development 508 599 1,075 1,091
General and
administration 885 945 2,034 2,158
Foreign exchange (gain)
loss (874) 487 (935) 675
Special committee - 101 - 112
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8,250 6,199 15,445 11,503
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Pro forma income from
operations 5,545 5,327 11,002 12,618
Net interest income 613 565 1,135 963
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Pro forma income before
income tax 6,158 5,892 12,137 13,581
Income tax expense 2,032 2,096 4,005 4,875
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Pro forma income
(Note 6) $4,126 $3,796 $8,132 $8,706
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Pro forma earnings
per share
Basic $0.40 $0.34 $0.78 $0.78
Diluted $0.40 $0.34 $0.77 $0.76
Weighted average
number of shares
Basic 10,242,692 11,125,423 10,465,510 11,118,138
Diluted 10,261,537 11,125,423 10,494,342 11,489,775
See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(In thousands of Canadian Dollars, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
October 31, October 31,
2008 2007 2008 2007
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Revenues $13,795 $11,526 $26,447 $24,121
Operating expenses
Patent portfolio
management 1,203 1,356 2,326 2,318
Patent licensing and
litigation 6,528 2,711 10,945 5,149
Research and development 508 599 1,075 1,091
General and
administration 885 945 2,034 2,158
Foreign exchange
loss (gain) 6,002 (4,253) 6,520 (5,743)
Other 168 238 315 366
Patent amortization
and imputed interest 3,301 3,436 6,561 6,836
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18,595 5,032 29,776 12,175
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(Loss) income from
operations (4,800) 6,494 (3,329) 11,946
Net interest income 613 565 1,135 963
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(Loss) income before
income tax expense
and discontinued
operations (4,187) 7,059 (2,194) 12,909
Income tax (recovery)
expense (191) 2,561 610 4,676
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(Loss) income before
discontinued operations (3,996) 4,498 (2,804) 8,233
Discontinued operations
Income (net of tax)
(Note 5) 569 236 737 6,036
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Net (loss) income (3,427) 4,734 (2,067) 14,269
Dividends 2,544 2,779 5,228 5,558
Normal course issuer bid 1,837 2,418 3,215 2,418
Retained earnings,
beginning of period 16,595 23,657 19,297 16,901
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Retained earnings,
end of period $8,787 $23,194 $8,787 $23,194
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Earnings per share
(Note 4)
Basic - before
discontinued
operations ($0.39) $0.40 ($0.27) $0.74
Diluted - before
discontinued
operations ($0.39) $0.40 ($0.27) $0.72
Basic - net earnings ($0.33) $0.43 ($0.20) $1.28
Diluted - net earnings ($0.33) $0.43 ($0.20) $1.24
Weighted average number
of shares
Basic 10,242,692 11,125,423 10,465,510 11,118,138
Diluted 10,261,537 11,125,423 10,494,342 11,489,775
See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian Dollars)
As at As at
October 31, 2008 April 30, 2008
(unaudited) (audited)
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Current Assets
Cash and cash equivalents $25,390 $22,133
Marketable securities 34,362 36,246
Accounts receivable 4,951 12,304
Prepaid expenses 732 486
Future income taxes recoverable 11,015 11,015
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76,540 82,184
Capital assets 852 957
Acquired intangibles 66,699 70,130
Future income taxes recoverable 19,331 16,988
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$163,332 $170,259
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Current Liabilities
Accounts payable and accrued liabilities $9,052 $7,723
Income tax payable 1,432 356
Deferred revenue 843 1,146
Other liability 1,116 318
Current portion of other long-term liabilities 8,063 5,345
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20,506 14,888
Deferred gain on sale-leaseback 1,393 1,797
Other long-term liabilities 35,768 31,195
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57,667 47,880
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Shareholders' Equity
Share capital (Note 3) 94,745 100,403
Contributed surplus 3,249 2,997
Retained earnings 8,787 19,297
Accumulated other comprehensive income (1,116) (318)
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105,665 122,379
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$163,332 $170,259
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See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands of Canadian Dollars)
(Unaudited)
Quarter Ended Six Months Ended
October 31, October 31,
2008 2007 2008 2007
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Operating
(Loss) income before
discontinued
operations ($3,996) $4,498 ($2,804) $8,233
Items not affecting
cash Amortization 2,473 2,431 4,930 4,750
Stock-based
compensation 168 137 315 235
Unrealized foreign
exchange loss (gain)
on other long-term
liabilities 6,876 (4,740) 7,455 (6,418)
Future income tax
recoverable (832) 1,366 (2,343) 3,267
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4,689 3,692 7,553 10,067
Change in non-cash
working capital items
from continuing
operations (1,614) (1,823) 4,509 (6,018)
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3,075 1,869 12,062 4,049
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Investing
Acquisition of
capital assets and
acquired
intangibles (57) (3) (1,394) (2,667)
Acquisition of
short-term marketable
securities (14,408) (34,506) (47,114) (81,407)
Proceeds on disposal/
Maturity of short-
term marketable
securities 21,860 34,108 48,998 70,555
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7,395 (401) 490 (13,519)
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Financing
Repayment of mortgage - (65) - (130)
Long-term liabilities 169 249 (164) 1,614
Repurchase of shares (4,597) (4,501) (8,415) (4,501)
Dividends (2,544) (2,779) (5,228) (5,558)
Funding of RSU plan (718) - (718) -
Issue of common shares 24 176 167 1,926
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(7,666) (6,920) (14,358) (6,649)
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Net cash inflow (outflow)
from continuing
operations 2,804 (5,452) (1,806) (16,119)
Net cash inflow (outflow)
from discontinued
operations 5,371 (662) 5,063 11,773
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Net cash inflow (outflow) 8,175 (6,114) 3,257 (4,346)
Cash and cash
equivalents, beginning
of period 17,215 25,164 22,133 23,396
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Cash and cash
equivalents, end of
period $25,390 $19,050 $25,390 $19,050
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See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of Canadian Dollars)
(Unaudited)
Quarter Ended Six Months Ended
October 31, October 31,
2008 2007 2008 2007
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Net (loss) income ($3,427) $4,734 ($2,067) $14,269
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Other comprehensive
income, net of tax:
Gains and losses on
derivatives designated
as cash flow hedges (1,212) 871 (1,387) 1,657
Gains and losses on
derivatives designated
as cash flow hedges
in prior periods
transferred to revenue
in the current period 423 (276) 589 (442)
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Other comprehensive
(loss) income (789) 595 (798) 1,215
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Comprehensive (loss)
income ($4,216) $5,329 ($2,865) $15,484
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See accompanying Notes to the Consolidated Financial Statements
MOSAID TECHNOLOGIES INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Quarter ended October 31, 2008
(tabular dollar amounts in thousands of Canadian Dollars, except per share
amounts)
1. Basis of Presentation
