Wi-LAN Inc.
TSX : WIN

Wi-LAN Inc.

January 10, 2008 08:35 ET

Wi-LAN Reports Fourth Quarter Fiscal Year 2007 Financial Results

Company generates record revenues and earnings(1) in fiscal year 2007

OTTAWA, CANADA--(Marketwire - Jan. 10, 2008) - Wi-LAN Inc. (TSX:WIN) ("Wi-LAN" or the "Company"), a leading technology innovation and licensing company, today announced financial results for the fourth quarter and fiscal year ended October 31, 2007. All financial amounts are expressed in Canadian dollars.



Operating & Financial Review
(in thousands except per share amounts)

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Three months ended Years ended
October October October October
31/07 31/06 31/07 31/06
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Revenues $7,169 $12 $61,270 $2,108
Pro forma
earnings/(loss)(1) 4,865 (912) 53,225 10,684
GAAP earnings 1,231 16,295 27,617 14,109

Pro forma diluted
earnings/(loss)per share $0.05 $- $0.66 $0.22
GAAP diluted
earnings per share $0.01 $0.27 $0.34 $0.29
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Fourth quarter revenues were $7.2 million, which included both cash and in-kind consideration consisting of patents valued at $4.6 million. Management valued these patents based in part on a valuation report prepared by a major accounting firm. Pro forma earnings amounted to $4.9 million or $0.05 per diluted share. Operating expenses were $4.2 million, reflecting growth in the Company's workforce and increased legal expenses. Total expenses were $8.1 million, which included $0.8 million of stock-based compensation expense and $3.9 million of depreciation and amortization expense resulting from increases in Wi-LAN's patent portfolio, both non-cash charges. Interest income amounted to $1.1 million during the quarter. Net earnings on a GAAP basis amounted to $1.2 million or $0.01 per diluted share.

Cash payments from a number of license agreements that were signed in the third and fourth quarters of fiscal 2007, including agreements with Fujitsu Limited and a licensee announced in a press release dated June 28, 2007, will begin in the first quarter of 2008. Accordingly, these payments are not included in fourth quarter revenues.

In fiscal 2007, Wi-LAN generated revenues of $61.3 million. Pro forma earnings amounted to $53.2 million or $0.66 per diluted share. Operating expenses amounted to $13.4 million. Total expenses were $36.8 million, which included $2.2 million of stock-based compensation expense, $7.8 million of deprecation and amortization expense and a provision for income tax of $15.6 million, all non-cash charges. Interest income amounted to $3.2 million. Net earnings on a GAAP basis amounted to $27.6 million or $0.34 per diluted share.



Financial Position
(in thousands of Canadian dollars except shares outstanding)

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Fiscal quarter Q4/07 Q3/07 Q2/07 Q1/07 Q4/06
As at Oct 31/07 July 31/07 Apr 30/07 Jan 31/07 Oct 31/06
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Cash and cash
equivalents $91,542 $100,515 $94,967 $57,756 $16,680
Future tax asset - - - - 16,726
Patents and other
intangibles, net 146,955 138,684 42,295 43,047 9,787
Goodwill 16,400 17,683 - - -
Total assets 262,505 263,574 140,087 103,396 44,775

Future income
tax liability 24,575 25,721 - - -
Total liabilities 29,464 33,384 2,587 1,790 1,501

Shareholders'
equity $233,041 $230,190 $137,500 $101,606 $43,274

Shares outstanding
(end of period) 93,470 93,255 75,167 69,038 61,099
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In the fourth quarter of fiscal 2007, cash and cash equivalents decreased by $9.0 million to $91.5 million at October 31 2007, due mainly to costs associated with the purchase of patents.

For the fiscal year ending October 31, 2007, Wi-LAN's cash position increased by a total of $74.9 million, including $66 million from the sale of shares in December 2006 and March 2007, $12.2 million generated from continuing operations, and $5.8 million received upon the acquisition of Tri-Vision. The Company's cash equivalents include term deposits, GICs and other similar financial instruments. The Company's cash equivalents do not include any Asset Backed Commercial Paper.

The Company's patents and other intangibles have grown from a net book value of $9.8 million at October 31, 2006 to a net book value of $147.0 million at October 31, 2007 including V-chip patents and other intangibles acquired in the purchase of Tri-Vision, patents received in licensing agreements with Nokia, Fujitsu and an unnamed licensee valued at $42.1 million as well as other patents acquired during the fiscal year.

Results for fiscal year 2006 are generally not comparable to those of fiscal 2007, as Wi-LAN was in the process of transforming itself into a licensing business, and discontinuing its products manufacturing and engineering services businesses in the 2006 periods.

Management Comments

"Wi-LAN achieved significant operating and financial accomplishments in fiscal year 2007," said Jim Skippen, President & CEO. "In the fiscal year we generated record revenue and record earnings and acquired Tri-Vision International. We signed 20 wireless and V-chip licensing agreements, many of which strengthen our recurring revenue base and demonstrate Wi-LAN's ability to monetize, through negotiation, our portfolio of patented innovations. In addition, we strengthened our team and completed a number of strategic patent acquisitions."

"In 2008, we look to build on our accomplishments of 2007. We hope that a growing momentum for negotiated licenses, particularly in the Wi-Fi, WiMAX and V-chip markets, along with the determined efforts of our licensing teams will generate additional license agreements. Building upon Wi-LAN's rich history of research and development, we hope continuing efforts in this area will result in important innovations. We are confident that our activities in 2008 will enhance long-term shareholder value."

Operating Expense "Guidance"

It has been Wi-LAN's practice not to provide guidance on the range of expected future revenues and earnings, given the relatively early stage of its development in licensing as well as the difficulty in predicting the timing and value of patent acquisition opportunities and possible future litigation, both of which could require significant investment. In order to assist investors and other interested parties in their understanding of Wi-LAN's performance, management believes that operating expenses for the fiscal year 2008 will likely be in the range of $22.0-27.0 million, based on current plans and expectations including staff-related and legal expenses.

Conference Call Information - January 10, 2008 - 10 AM EST

Wi-LAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Standard Time. Wi-LAN CEO, Jim Skippen and acting CFO, Phil Martin, will be on the call.

- Callers from Canada or the United States: 1.866.585.6398 (Toll Free)

- Callers from other locations: 1.416.849.9626 (International)

- To join by webcast: www.wi-lan.com

About Wi-LAN

Wi-LAN, founded in 1992, is a leading technology innovation and licensing company. Our portfolio of patented inventions applies to a wide range of electronics and communications products. Some of the fundamental technologies covered by Wi-LAN's patents include: CDMA, DOCSIS, DSL, GSM/EDGE, V-chip, Wi-Fi and WiMAX. Wi-LAN has licensed its intellectual property to a growing number of companies around the world. For more information: www.wi-lan.com.

Note

(1) Wi-LAN follows Canadian generally accepted accounting principles ("GAAP") in preparing its interim and annual financial statements. To assist readers in further understanding its operating performance, it is reporting pro forma earnings. Pro forma earnings is a non-GAAP financial term. Pro forma earnings represents earnings/(loss) from continuing operations before stock-based compensation, depreciation & amortization and provision for income taxes.

Forward-looking Information

Certain statements in this release, other than statements of historical fact, may include forward-looking information that involves various risks and uncertainties. These may include, without limitation, statements based on current assumptions and expectations involving a number of risks and uncertainties related to all aspects of the wireless and wireline communications industry and the global economy. These risks and uncertainties include, but are not restricted to: the almost exclusive reliance of the Company on licensing its patent portfolio to generate revenues and cash flows; that the Company may be required to establish the enforceability of its patents in court to obtain material licensing revenues; that the Company will need to acquire or develop new patents to continue to grow its business; that the Company requires investment to translate its intellectual property position into sustainable profit in the market; that the Company is dependent on the performance of its key officers and employees; that changes in patent legislation or in the interpretation or application of patent litigation could materially adversely affect the Company; and that the Company has and may make acquisitions of products, technologies or businesses which could materially adversely affect the Company. These risks and uncertainties may cause actual results to differ from information contained herein, when estimates and assumptions have been used to measure and report results. There can be no assurance that such forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral forward-looking statements are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. The Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.



Wi-LAN Inc.
Consolidated Statements of Operations and Deficit
(in thousands of Canadian dollars, except per share amounts)

Years ended October 31 2007 2006
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Revenues $61,270 $2,108

Income/(expenses) from the following
Operating expenses
Stock-based compensation (2,222) (447)
Other operating expenses (11,198) (5,274)
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Total operating expenses (13,420) (5,721)
Depreciation & amortization (7,766) (676)
Settlement - 9,635
Gain on sale of property - 1,145
Gain on debt settlement - 2,919
Other income - 29
Interest
Interest income 3,153 219
Interest expense on long-term debt - (97)
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Earnings from continuing operations
before income taxes 43,237 9,561

Provision for income tax
recovery/(expense)
Current (16,766) -
Future 1,146 16,726
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(15,620) 16,726
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Earnings from continuing operations 27,617 26,287
Loss from discontinued operations - (12,178)
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Net and comprehensive earnings 27,617 14,109

Deficit, beginning of period (165,592) (179,701)
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Deficit, end of period $(137,975) $(165,592)
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Earnings/(loss) per share - basic and diluted
Continuing operations
Basic $0.36 $0.54
Diluted $0.34 $0.54

Discontinued operations
Basic $- $(0.25)
Diluted $- $(0.25)

Net earnings
Basic $0.36 $0.29
Diluted $0.34 $0.29

Weighted average number of shares
Basic 77,784,956 48,447,178
Diluted 80,090,229 48,777,982
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Wi-LAN Inc.
Consolidated Balance Sheets
(in thousands of Canadian dollars)

As at October 31 2007 2006
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Assets
Current assets
Cash and cash equivalents $91,542 $16,680
Accounts receivable 2,916 400
Future tax asset - 16,726
Prepaid expenses and deposits 211 387
Assets held for sale 3,696 -
Assets of discontinued businesses - 621
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Current assets 98,365 34,814
Furniture and equipment, net 785 174
Patents and other intangibles, net 146,955 9,787
Goodwill 16,400 -
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Assets $262,505 $44,775
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $4,371 $814
Mortgage payable related to
assets held for sale 518 -
Liabilities of discontinued businesses - 687
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Current liabilities 4,889 1,501

Future income tax liability 24,575 -
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Liabilities 29,464 1,501
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Shareholders' equity
Common shares 362,094 202,396
Contributed surplus 8,922 6,470
Deficit (137,975) (165,592)
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Shareholders' equity 233,041 43,274
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Liabilities and Shareholders' Equity $262,505 $44,775
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Wi-LAN Inc.
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)

Years ended October 31 2007 2006
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Cash provided by/(used in)

Operations
Earnings from continuing operations $27,617 $26,287
Non-cash items
License revenue settled by
receipt of patents (42,096) -
Stock-based compensation 2,222 447
Depreciation & amortization 7,766 676
Non-cash settlement - (9,635)
Gain on sale of property - (1,145)
Gain on sale of patents - (429)
Income taxes 15,580 (16,726)
Other non-cash items - (4,403)
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11,089 (4,928)

Change in non-cash working capital balances
Accounts receivable (1,019) (400)
Prepaid expenses and deposits 691 66
Net assets held for sale (162) -
Accounts payable and accrued liabilities 1,595 (892)
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Cash generated from /(used in)
continuing operations 12,194 (6,154)
Cash used in
discontinued operations (66) (7,800)
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Cash generated from /(used in) operations 12,128 (13,954)
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Financing
Mortgage repayment (37)
Proceeds on sale of common shares, net 65,914 14,738
Share capital issued for cash on the
exercise of options 1,674 479
Share capital issued for cash on the exercise
of warrants 765 233
Loan proceeds - 2,000
Loan repayment - (2,000)
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Cash generated from continuing operations 68,316 15,450
Cash used in discontinued operations - (61)
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Cash generated from financing 68,316 15,389
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Investing
Transaction costs incurred on acquisition
of Tri-Vision (1,771) -
Cash received on acquisition of Tri-Vision 5,782 -
Purchase of furniture and equipment (672) (107)
Purchase of patents for cash (8,921) (6)
Proceeds from settlement, net - 9,635
Proceeds from sale of patents - 1,510
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Cash generated from /(used in)
continuing operations (5,582) 11,032
Cash generated from discontinued operations - 523
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Cash generated from /(used in) investing (5,582) 11,555
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Net cash and cash equivalents
generated in the period 74,862 12,990
Cash and cash equivalents, beginning of period 16,680 3,690
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Cash and cash equivalents, end of period $91,542 $16,680
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Contact Information

  • Wi-LAN Inc.
    Phil Martin
    Acting CFO
    O: 1-613-688-4895
    C: 1-613-867-4895
    pmartin@wi-lan.com
    or
    Wi-LAN Inc.
    Tyler Burns
    Director, Investor Relations & Communications
    O: 1-613-688-4330
    C: 1-613-697-0367
    tburns@wi-lan.com