Wi-LAN Inc.
TSX : WIN

Wi-LAN Inc.

March 03, 2010 07:00 ET

WiLAN Reports Fiscal Year 2009 Financial Results

Company's annual revenues increase 33 percent over last year

OTTAWA, CANADA--(Marketwire - March 3, 2010) - Wi-LAN Inc. ("WiLAN" or the "Company") (TSX:WIN), a leading technology innovation and licensing company, today announced financial results for the fourteen month fiscal year ended December 31, 2009. All financial amounts are expressed in Canadian dollars.

On June 4, 2009, the Company announced that it would change its fiscal year end from October 31 to December 31. This change was intended to provide better alignment with the royalty reporting periods of the Company's licensees, which generally report on a calendar quarter basis, and to better align with industry peers for comparison purposes. As a result, the Company's fiscal year 2009 became the fourteen month period ended December 31, 2009.

Readers are cautioned that the Company generally records revenues within thirty days of a calendar quarter end therefore revenues for the fourteen month period are not significantly different from those of the twelve month period ended October 31, 2009. Expenses for the fourteen month fiscal year ended December 31, 2009 are appreciably higher than those of the twelve month period ended October 31, 2009 because this period includes two months of additional operating expense.

Fourteen Month Fiscal Year 2009 Highlights:

  • Revenues of $35.4 million as compared to $26.6 million in the twelve month fiscal year 2008, representing a sequential increase of $8.8 million or 33 percent.

  • Pro forma earnings* of $2.5 million or 3 cents per share as compared to pro forma earnings of $11.0 million or 12 cents per share in the twelve month fiscal year 2008.

  • Net loss of $1.7 million or 2 cents per share as compared to a net loss of $9.2 million or 10 cents per share in the twelve month fiscal year 2008.

  • Signed licenses with over 59 companies bringing the total number of companies licensed to over 210.

  • More than doubled the size of the Company's patent portfolio to over 800 issued and pending patents.

  • Returned $3.4 million to shareholders in share buyback and dividend payments.

  • Declared 2.25 cents per common share dividend for fourth quarter of 2009 which includes a special one-time 1 cent per common share dividend.

  • Raised gross proceeds of $18.0 million in a bought deal financing.

"In fiscal 2009, WiLAN continued to deliver solid operational and financial results while making significant investments in the future of our business," said Jim Skippen, Chairman & CEO. "In fiscal 2009, a year of significant economic uncertainty, WiLAN negotiated license agreements with 59 companies and generated cash revenues 33 percent higher than last year. These achievements are a testament to the strength of our licensing program and the growth of our recurring revenue base. In a fiscal year that saw WiLAN make significant investments in litigation, research and development and the acquisition of valuable patented inventions, careful management of our expenses enabled WiLAN to generate positive pro forma earnings."

Skippen added, "Our fiscal 2010 financial guidance forecasts a significant increase in revenues and positive pro forma earnings in a year that will see us continue to make significant investments in our business. Fiscal 2010 is shaping up to be a pivotal year for WiLAN, a year in which the enforcement and defense of our rights as patent owners will complete critical steps. To this end, we remain confident about our position going into the first Markman hearing of the year which is just over a week away. Looking to the future, the strength of our business and ongoing investment has positioned WiLAN well for continued long-term growth."

The Board of Directors has declared an eligible quarterly dividend of 2.25 cents per common share. This dividend is comprised of 1.25 cents representing the Company's current customary quarterly dividend plus 1 cent representing a one-time additional dividend relating to the two additional months in the Company's fourth quarter of fiscal 2009. This dividend will be paid on April 6, 2010 to shareholders of record on March 15, 2010. The Company expects to return to its normal quarterly dividend program of 1.25 cents per common share in the next fiscal quarter.

Revenue Review

In the fourteen month fiscal year ended December 31, 2009, WiLAN generated revenues of $35.4 million as compared to $26.6 million in the twelve month fiscal year ended October 31, 2008. For the fourteen month period ended December 31, 2009 the top ten licensees accounted for slightly more than 72% of revenues, whereas the top ten accounted for more than 85% of revenues for the twelve month period ended October 31, 2008.

Operating Expense Review

In the fourteen month fiscal year ended December 31, 2009, patent licensing expenses totaled $4.1 million as compared to $3.0 million in the twelve month fiscal year ended October 31, 2008. During fiscal 2009, WiLAN signed license agreements with 59 companies of which 39 companies signed licenses for wireless technologies, 16 for V-Chip technologies and four for wireline technologies. Companies that licensed WiLAN's technologies during the year included Samsung Electronics Co. Ltd., Nikon Corporation, NEC Corporation, Westinghouse Digital Electronics, and Cyberlink Corporation. In addition, Buffalo Technologies, Conexant Systems, Inc., and Infineon Technologies AG negotiated settlements to end patent infringement litigation.

Litigation expenses amounted to $21.3 million in the fourteen month fiscal year ended December 31, as compared to $7.5 million in the twelve month fiscal year ended October 31, 2008. The sequential increase in yearly litigation expenses is due to the additional two months in the 2009 reporting periods, the Company's ongoing response to declaratory judgment (DJ) claims filed by Intel Corporation and a number of other companies, a one-time $2.8 million payment to McKool Smith to terminate a success fee payment arrangement and extensive preparations required for the claims construction hearing in the Company's handset, laptop and router litigations, involving U.S. Patent Nos. 5,282,222 ("the 222 patent") and RE37802 (the "802 patent"). The joint claims construction hearing concerning the 222 and 802 patents will be held on March 11, 2010 for all three cases.

Research and development expenses in the fourteen month fiscal period ended December 31, 2009 were $4.1 million as compared to $3.2 million in the twelve month fiscal year ended October 31, 2008. During fiscal 2009, WiLAN filed over 25 patent applications that could yield hundreds of patents in the future. The majority of the patent applications filed cover technologies that enable White Space wireless data networking.

General and administrative expenses in the fourteen month fiscal year ended December 31, 2009, totaled $7.2 million as compared to $5.2 million in the twelve month fiscal year ended October 31, 2008.

In the fourteen month fiscal year ended December 31, 2009, depreciation and amortization expense totaled $20.3 million as compared to $16.5 million in the twelve month fiscal year ended October 31, 2008. These increases related to the patent purchases completed in the year. During the 2009 fiscal year, the Company acquired patents with a cost of $28.9 million whereas acquisitions in the fiscal 2008 year amounted to $1.4 million.

Investment income for the fourteen month fiscal year ended December 31, 2009 was $2.7 million as compared to $3.2 million in the twelve month fiscal year ended October 31, 2008.

Foreign exchange gain for the fourteen month fiscal year ended December 31, 2009 was $1.1 million as compared to a gain on foreign exchange of $0.1 million in the twelve month fiscal year ended October 31, 2008.

At December 31, 2009, the Company's net cash, comprised of cash, cash equivalents and short- term investments totaled $94.8 million, representing a decrease of $6.7 million from the net cash position at October 31, 2008. During the 2009 fiscal year, WiLAN invested $28.9 million in acquiring patented inventions and a total of $3.4 million in dividend payments and the repurchase of the Company's common shares through a Normal Course Issuer Bid. This investment was partially offset by cash generated by operations and proceeds from a bought deal financing totaling $16.9 million. The Company's cash equivalents and short-term investments include T bills, term deposits, GICs and other marketable securities.

Earnings Review

In the fourteen month fiscal year ended December 31, 2009, WiLAN generated pro forma earnings of $2.5 million or 3 cents per share as compared to $11.0 million or 12 cents per share in the twelve month fiscal year ended October 31, 2008. The difference in pro forma earnings between the reporting periods is due primarily to the Company incurring two additional months of operating expenses.

The Company generated a net loss of $1.7 million or 2 cents per share in the fourteen month fiscal year ended December 31, 2009, as compared to a net loss of $9.2 million or 10 cents per share in the twelve month fiscal year ended October 31, 2008. The 2009 results benefited from a one-time tax gain of $19.6 million generated by a corporate restructuring that took place on October 1, 2009.

Financial Guidance

Revenues for the fiscal year ended December 31, 2010 are expected to be within the range of $40.0 million to $45.0 million. Operating expenses, excluding stock based compensation, depreciation & amortization and unrealized gains or losses on foreign exchange contracts, all non-cash charges, are expected to be in the range of $36.0 million to $40.0 million. Pro forma earnings are expected to be within the range of $5.0 million to $8.0 million.

The above statements are forward-looking and actual results may differ materially. The "Forward- looking Information" section at the end of this news release provides information on various risks and uncertainties that the Company faces. Additional information identifying risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in WiLAN's current Annual Information Form and its other filings with the various Canadian securities regulators which are available online at www.sedar.com. Annual financial guidance for fiscal 2010 is provided to assist investors and other interested parties in understanding WiLAN's performance. The reader is cautioned that using this information for any other purpose may be inappropriate.

The Company's revenues result from the licensing of intellectual property which, by its very nature, is directly affected by the timing of the closure of license agreements, the nature and extent of specific licenses including actual rates, product sales by licensees which can be subject to seasonality as well as overall market demands and the timeliness of the receipt of licensee royalty reports. In addition, certain revenues may be of a one-time nature. Thus, quarter-to-quarter fluctuations in revenue are normal and should be expected. Management believes that the strength of its business should be measured by annual revenues.

The above guidance for the twelve month period ended December 31, 2010 reflects our current business indicators and expectations and is subject to fluctuations in foreign currency exchange rates. Due to their nature, certain income and expense items, such as significant settlements from companies involved in current enforcement actions, new significant litigation or defense actions that could arise during the course of the year, losses on asset impairments or realized foreign exchange losses cannot be accurately forecast. Accordingly, we exclude forecasts of such items from our guidance. WiLAN's imperative is to negotiate the best possible license as measured over the long- term and accordingly, the timing of actual license signings may vary from that forecasted. Actual results may vary materially from the guidance provided as a consequence of the above noted factors.

Conference Call Information – March 3, 2010 – 10 AM EST

WiLAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Standard Time. WiLAN CEO, Jim Skippen and CFO, Shaun McEwan, will be on the call.

Calling Information

A live audio webcast will be available at http://www.investorcalendar.com/IC/CEPage.asp?ID=155020.

  • To access the call from Canada and U.S., dial 1.877.407.0778 (Toll Free)
  • To access the call from other locations, dial 201.689.8565 (International)

Replay Information

The call will be available at http://www.investorcalendar.com/IC/CEPage.asp?ID=155020 and accessible by telephone until 11:59 PM on March 10, 2010.

Replay Number (Toll Free): 1.877.660.6853

Replay Number (International): 201.612.7415

Replay passcodes (both required for playback)

  • Account #: 286
  • Conference ID #:344839

About WiLAN

WiLAN, founded in 1992, is a leading technology innovation and licensing company. WiLAN has licensed its intellectual property to over 210 companies worldwide. Inventions in our portfolio have been licensed by companies that manufacture or sell a wide range of communication and consumer electronics products including 3G cellular handsets, Wi-Fi-enabled laptops, Wi-Fi/DSL routers, xDSL infrastructure equipment, WiMAX base stations and V-Chip-enabled digital television receivers. WiLAN has a large and growing portfolio of more than 800 issued or pending patents. For more information: www.wilan.com.

Note

(*) WiLAN follows Canadian generally accepted accounting principles ("GAAP") in preparing its interim and annual financial statements. To assist readers in further understanding its operating performance, WiLAN is reporting "pro forma earnings" which is a non-GAAP financial term. WiLAN's pro forma earnings represent earnings from continuing operations before stock-based compensation, unrealized gain or loss on foreign exchange contracts, 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 that face the Company; such statements may contain such words as "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, and may be based on management's current assumptions and expectations related to all aspects of the wireless and wireline telecommunications industries and the global economy. Risks and uncertainties that may face the Company include, but are not restricted to: licensing of the Company's patents can take an extremely long time and may be subject to variable cycles; the Company is currently reliant on licensees paying royalties under existing licensing agreements and additional licensing of its patent portfolio to generate future revenues and increased cash flows; the Company may be required to establish the enforceability of its patents in court in order to obtain material licensing revenues; changes in patent laws or in the interpretation or application of patent laws could materially adversely affect the Company; a court may determine that certain of the Company's patents are not infringed by certain standards or products or may disagree with management with respect to whether one or more of the Company's patents apply to certain standards or products, which could adversely affect the Company; the Company will need to acquire or develop new patents to continue and grow its business; fluctuations in foreign exchange rates impact and may continue to impact the Company's revenues and operating expenses, potentially adversely affecting financial results; the Company has made and may make acquisitions of technologies or businesses which could materially adversely affect the Company; the Company may require investment to translate its intellectual property position into sustainable profit in the market; the generation of future V-Chip revenues and the likelihood of the Company signing additional V-Chip licenses could be negatively impacted by changes in government regulation; the Company is dependent on its key officers and employees; the price of the Company's common shares is volatile and subject to market fluctuation; and the Company may be negatively affected by reduced consumer spending due to the uncertainty of economic and geopolitical conditions.
These risks and uncertainties may cause actual results to differ from information contained in this release, when estimates and assumptions have been used to measure and report results. There can be no assurance that any statements of forward-looking information contained in this release 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 statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by applicable laws, the Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in WiLAN's current Annual Information Form and its other filings with the various Canadian securities regulators which are available online at www.sedar.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States.

All trademarks and brands mentioned in this release are the property of their respective owners.

Wi-LAN Inc.          
Consolidated Statements of Operations and Deficit        
(in thousands of Canadian dollars, except per share amounts)    
   
  Fourteen Months Ended   Twelve Months Ended  
  December 31, 2009   October 31, 2008  
   
Revenues $ 35,425   $ 26,564  
   
Operating expenses            
  Patent licensing   4,143     2,960  
  Litigation   21,275     7,502  
  Research and development   4,084     3,197  
  General and administration   7,163     5,204  
  Foreign exchange gain   (1,092 )   (85 )
  Stock-based compensation   3,024     2,024  
  Depreciation & amortization   20,310     16,496  
  Total operating expenses   58,907     37,298  
  Investment income   2,710     3,228  
Loss before income taxes   (20,772 )   (7,506 )
   
Provision for income tax (recovery) expense            
  Current   2,632     2,672  
  Future   (21,736 )   (992 )
    (19,104 )   1,680  
Net and comprehensive loss   (1,668 )   (9,186 )
   
Deficit, beginning of period   (147,161 )   (137,975 )
Dividends   (2,434 )   -  
Reduction of stated capital   147,161     -  
Deficit, end of period $ (4,102 ) $ (147,161 )
   
Loss per share            
  Basic $ (0.02 ) $ (0.10 )
  Diluted $ (0.02 ) $ (0.10 )
   
Weighted average number of common shares            
  Basic   97,011,499     93,505,899  
  Diluted   97,011,499     93,505,899  
   
Wi-LAN Inc.          
Consolidated Balance Sheets        
(in thousands of Canadian dollars)        
   
  As at December 31,     As at October 31,  
    2009     2008  
Assets            
Current assets            
  Cash and cash equivalents $ 72,763   $ 38,768  
  Short-term investments   22,025     62,679  
  Accounts receivable   485     3,441  
  Prepaid expenses and deposits   149     110  
  Assets held for sale   2,188     2,229  
Current assets   97,610     107,227  
   
Furniture and equipment, net   703     816  
Patents and other intangibles, net   141,132     132,111  
Goodwill   13,449     13,449  
Assets $ 252,894   $ 253,603  
   
Liabilities and Shareholders' equity            
Current liabilities            
  Accounts payable and accrued liabilities $ 11,774   $ 6,530  
Current liabilities   11,774     6,530  
   
Future income tax liability   -     21,408  
Liabilities   11,774     27,938  
   
Shareholders'equity            
  Common shares   228,421     362,041  
  Contributed surplus   16,801     10,785  
  Retained deficit   (4,102 )   (147,161 )
Shareholders' equity   241,120     225,665  
Liabilities and Shareholders' equity $ 252,894   $ 253,603  
   
Wi-LAN Inc.            
Consolidated Statements of Cash Flows        
(in thousands of Canadian dollars)        
             
  Fourteen Months Ended   Twelve Months Ended  
  December 31, 2009   October 31, 2008  
   
Cash generated from (used in)            
Operations            
Net and comprehensive loss $ (1,668 ) $ (9,186 )
  Non-cash items            
    Stock-based compensation   3,024     2,024  
    Depreciation & amortization   20,310     16,496  
    Provision for income tax recovery   (21,736 )   (216 )
    (70 )   9,118  
  Change in non-cash working capital balances            
    Accounts receivable   2,956     (525 )
    Prepaid expenses and deposits   (39 )   101  
    Net assets held for sale   41     1,467  
    Accounts payable and accrued liabilities   (2,762 )   2,051  
  Cash generated from continuing operations   126     12,212  
Cash generated from operations   126     12,212  
Financing            
  Mortgage repayment   -     (518 )
  Proceeds on sale of common shares   16,899     -  
  Common shares repurchased in Normal Course Issuer Bid   (944 )   (266 )
  Dividends   (2,434 )   -  
  Common shares issued for cash on the exercise of options   712     109  
  Common shares issued for cash from Employee Share Purchase Plan   118     51  
Cash generated from (used in) financing   14,351     (624 )
Investing            
  Sale (purchase) of short-term investments   40,654     (62,679 )
  Purchase of furniture and equipment   (319 )   (320 )
  Purchase of patents   (20,817 )   (1,363 )
Cash generated from (used in) investing   19,518     (64,362 )
   
Net cash and cash equivalents generated (used) in the period   33,995     (52,774 )
Cash and cash equivalents, beginning of period   38,768     91,542  
Cash and cash equivalents, end of period $ 72,763   $ 38,768  

Contact Information

  • Wi-LAN Inc.
    Shaun McEwan
    Chief Financial Officer
    O: 613-688-4898 / C: 613-697-7159
    smcewan@wilan.com
    or
    Wi-LAN Inc.
    Tyler Burns
    Director, Investor Relations & Communications
    O: 613-688-4330 / C: 613-697-0367
    tburns@wilan.com
    www.wilan.com