The accompanying unaudited financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles 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, 2007.
The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements.
2. Other long-term liabilities
During Q1 fiscal 2007 the Company settled its patent litigations with Infineon Technologies AG (Infineon) and announced that both Infineon and its memory products spin-off, Qimonda AG (Qimonda), licensed the Company's patent portfolio.
Under the settlement terms, Infineon and Qimonda each receive a six-year license to the Company's entire patent portfolio. In addition, Infineon and Qimonda received a 'lives of the patents' license to the Company's patent families in dispute. Payments will be spread over the six-year term of the licenses. Under the terms of the settlement, financial details will be kept confidential.
The Company also purchased 50 patents from Infineon and Qimonda, ranked as one of the world's largest DRAM companies. The portfolio includes patents related to a range of technologies including DRAM memory, power management ICs, semiconductor process technology and digital radio applications. Payments by the Company for these patents will be spread over six years.
The amount on the Consolidated Balance Sheets represents amounts due by the Company as a result of the patents purchased by the Company, net of any current amounts due by Infineon and Qimonda as a result of the patent license arrangement with the Company.
3. Net Interest Income
Net interest income comprises the following:
Quarter Quarter Six months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2006 2005 2006 2005
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Interest income $ 766 $ 417 $ 1,443 $ 797
Interest expense 91 96 183 193
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$ 675 $ 321 $ 1,260 $ 604
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4. Earnings per Share
The following is a reconciliation of the numerator and denominator of the basic and diluted per share computations:
Quarter Quarter Six months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2006 2005 2006 2005
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Net income $ 4,715 $ 4,292 $ 11,372 $ 8,725
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Weighted average number
of common shares
outstanding 11,053,768 11,495,689 11,174,697 11,493,056
Net effect of stock
dilutions 186,513 170,350 205,780 196,475
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Weighted average diluted
number of common shares
outstanding 11,240,281 11,666,039 11,380,477 11,689,531
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Earnings per share
Basic $ 0.43 $ 0.37 $ 1.02 $ 0.76
Diluted $ 0.42 $ 0.37 $ 1.00 $ 0.75
