MOSAID Reports Results for Second Quarter Fiscal 2012

Adjusted net income, a non-IFRS measure, is IFRS net income adjusted for share-based compensation, patent amortization, imputed interest, foreign exchange gains and losses on "Other long-term liabilities," and any other non-recurring items. The Company uses adjusted measures internally to evaluate and manage operating performance, and 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                      

            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

----------------------------------------------------------------------------


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
----------------------------------------------------------------------------
                                   11,746       6,255     20,439      12,390
----------------------------------------------------------------------------

Adjusted income from                                                        
 operations                         8,478      13,707     18,035      26,060
Investment income                     389         275        787         617
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
Adjusted net income               $ 6,384     $ 9,787    $13,552     $18,674
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------

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)
----------------------------------------------------------------------------
Adjusted  net  income                          $  6,384            $9,787          $13,552          $18,674  
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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
----------------------------------------------------------------------------

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
----------------------------------------------------------------------------
Adjusted  foreign  exchange                                                                                                      
  (gain)  loss                                            $  (249)            $  209            $  (308)              $135
----------------------------------------------------------------------------
----------------------------------------------------------------------------



                                            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)                                                                                                                                  

----------------------------------------------------------------------------
                                                                        October  31,            April  30,                May  1,
                                                                                      2011                      2011                    2010
----------------------------------------------------------------------------

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
----------------------------------------------------------------------------
                                                                                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
----------------------------------------------------------------------------
                                                                              $274,186              $219,530            $209,967
----------------------------------------------------------------------------
----------------------------------------------------------------------------


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
----------------------------------------------------------------------------
                                                                                  28,725                  22,789                21,907
Other  long-term  liabilities                            83,702                  26,911                33,132
----------------------------------------------------------------------------
                                                                                112,427                  49,700                55,039
----------------------------------------------------------------------------

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
----------------------------------------------------------------------------
                                                                                161,759                169,830              154,928
----------------------------------------------------------------------------
                                                                              $274,186              $219,530            $209,967
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------

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  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
----------------------------------------------------------------------------
                                                                    26,332            11,333            41,005            23,083
----------------------------------------------------------------------------

(Loss)  income  from  operations          (6,108)            8,629            (2,531)          15,367
Investment  income                                        389                  275                  787                  617
----------------------------------------------------------------------------
(Loss)  income  before  income                                                                                                  
  tax  expense                                            (5,719)            8,904            (1,744)          15,984
Income  tax  (recovery)  expense              (820)            2,594                  579              4,591
----------------------------------------------------------------------------
Net(loss)  income                                  $(4,899)        $  6,310          $(2,323)        $11,393
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------

Net  (loss)  income                              $(4,899)          $6,310          $(2,323)        $11,393  
----------------------------------------------------------------------------

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)
----------------------------------------------------------------------------
Other  comprehensive  (loss)              (1,312)                (63)          (1,391)              (936)
----------------------------------------------------------------------------

Comprehensive  (loss)  income          $(6,211)          $6,247          $(3,714)        $10,457  
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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)            ($)            ($)              ($)              ($)            ($)  
----------------------------------------------------------------------------

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)
----------------------------------------------------------------------------
Balance  at                                                                                                                                    
  October  31,                                                                                                                                
  2010                          11,847,114  $126,937      $4,258      $28,094            $678  $159,967  
----------------------------------------------------------------------------
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)
----------------------------------------------------------------------------
Balance  at                                                                                                                                    
  October  31,                                                                                                                                
  2011                        $11,920,409  $130,846      $4,300      $27,156          $(543)$161,759  
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------
                                                                          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)
----------------------------------------------------------------------------
                                                                          7,466            9,919          18,663          14,895  
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------
                                                                        (9,468)        (3,453)        (4,991)        (2,944)
----------------------------------------------------------------------------

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  
----------------------------------------------------------------------------
                                                                        (2,455)        (2,839)        (4,482)        (4,957)
----------------------------------------------------------------------------
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  
----------------------------------------------------------------------------
Cash  and  cash  equivalents,  end                                                                                            
  of  period                                                $106,999        $77,726      $106,999        $77,726  
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplementary  Information:                                                                                                    

Cash  on  hand  and  bank  balances        $106,999        $74,707      $106,999        $74,707  
Short-term  investments                                      -            3,019                    -            3,019  
----------------------------------------------------------------------------
Total  cash  and  cash  equivalents      $106,999        $77,726      $106,999        $77,726  
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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
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