Wi-LAN Inc.
TSX : WIN

Wi-LAN Inc.

September 05, 2007 07:00 ET

Wi-LAN Reports Third Quarter 2007 Results

Company delivers revenues of $4.8 million, GAAP net earnings of $91 thousand and adjusted earnings(1) of $2.3 million

OTTAWA, CANADA--(Marketwire - Sept. 5, 2007) - Wi-LAN Inc. (TSX:WIN) ("Wi-LAN" or the "Company"), a leading technology licensing company, today announced financial results for the third quarter of fiscal 2007 ended July 31, 2007. All financial amounts are expressed in Canadian dollars, except the numbers of shares, or unless otherwise noted.

Highlights

- $4.8 million in licensing revenues, GAAP earnings of $91 thousand and adjusted earnings(1) of $2.3 million for the third quarter.

- $54.1 million in licensing revenues, GAAP earnings of $26.4 million and adjusted earnings(1) of $46.3 million year-to-date.

- Completed acquisition of Tri-Vision International Ltd ("Tri-Vision") on June 29, 2007, following the approval by Tri-Vision's shareholders. Wi-LAN and Tri-Vision are integrating their licensing teams and activities.



Operating & Financial Review
(in thousands of Canadian dollars, except per share amounts)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three months ended Nine months ended
July July July July
31/07 31/06 31/07 31/06
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Revenues $4,761 $2,096 $54,101 $2,096
Earnings/(loss)
From continuing operations 91 432 26,386 10,720
From discontinued operations - (832) - (12,906)
--------------------------------------------------------------------------
Net earnings/(loss) $91 $(400) $26,386 $(2,186)
--------------------------------------------------------------------------
Adjusted earnings(1) $2,261 $901 $46,291 $11,637
--------------------------------------------------------------------------

Earnings/(loss) per share -
basic and diluted
Continuing operations
Basic $- $0.01 $0.36 $0.24
Diluted $- $0.01 $0.35 $0.24
Discontinued operations
Basic $- $(0.02) $- $(0.29)
Diluted $- $(0.02) $- $(0.29)
Net earnings
Basic $- $(0.01) $0.36 $(0.05)
Diluted $- $(0.01) $0.35 $(0.05)
Weighted average number of
shares
Basic 81,421 48,976 72,546 44,670
Diluted 83,665 48,976 75,172 44,670
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Third quarter revenues were $4.8 million. As partial payment, the Company received patents valued at $3.5 million. Management's value of the patents was substantiated by a valuation obtained from a major independent accounting firm. The remaining revenues were primarily generated by Wi-LAN's V-chip IP, acquired with Tri-Vision on June 29, 2007. Operating expenses and depreciation & amortization ("D&A") amounted to $5.7 million, reflecting growth in the Company's workforce and significant additions to Wi-LAN's patent portfolio and other intangible items. Third quarter expenses included $1.1 million of stock-based compensation expense, a non-cash charge. Interest income amounted to $999 thousand during the quarter. Net earnings amounted to $91 thousand and EPS rounded to nil for the quarter. Adjusted earnings(1)amounted to $2.3 million.


In the first nine months of fiscal 2007, Wi-LAN generated $54.1 million of revenues. $37.5 million was received in the form of patents that were substantiated by independent valuations. Operating expenses and D&A amounted to $13.0 million during the period, including $1.4 million of stock-based compensation. Net of an income tax provision of $16.7 million, net earnings amounted to $26.4 million, or $0.35 per common share on a diluted basis. Adjusted earnings(1)amounted to $46.3 million in the period.

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



Financial Position
(in thousands of Canadian dollars, except per share amounts)

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

Future income taxes 25,721 - - -
Total liabilities 33,384 2,587 1,790 1,501

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

Shares outstanding (end of
period) 93,255 75,167 69,038 61,099
---------------------------------------------------------------------------
---------------------------------------------------------------------------


In the third quarter of fiscal 2007, cash and short-term investments increased by $5.5 million to $100.5 million at July 31, 2007, due mainly to $5.8 million of cash and equivalents acquired in the purchase of Tri-Vision. Wi-LAN issued common shares and assumed Tri-Vision's warrants in completing the acquisition.

For the nine months ending July 31, 2007, Wi-LAN's cash position increased by a total of $83.8 million, including net cash of $65.9 million from the sale of shares in December 2006 and March 2007, $13.6 million of cash generated from continuing operations, and $5.8 million of Tri-Vision cash. The Company's cash equivalents include treasury bills, term deposits, GICs and bank-sponsored short term paper.

The Company's patents and other IP portfolio has grown significantly to a net of $138.9 million at July 31, 2007, including the V-chip patents and license agreements acquired in the purchase of Tri-Vision, $34.0 million of patents received from Nokia, and other acquisitions of IP in Wi-LAN's markets of communications and consumer electronics.

Management Comments

"The third quarter was a solid period for Wi-LAN, during which we achieved significant operating and financial accomplishments," said Jim Skippen, President & CEO. "In the space of three months, we generated $2.5 million in positive cash flow from operations, acquired Tri-Vision International, signed additional licensing deals, completed several strategic patent acquisitions and added key hires to advance our licensing and patent acquisition programs."

"The acquisition of Tri-Vision brings many benefits and synergies to our Company. These include an immediate revenue stream, expanded licensing opportunities to the growing V-chip market and further momentum to our ongoing licensing efforts. As a result of our licensing activities during the quarter, many companies have come forward to discuss taking a license to our portfolio. These early discussions are continuing in the current quarter."

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 2007 will likely be in the range of $13.0-14.0 million, based on current plans and expectations, including the impact of the acquisition of Tri-Vision and growth in other staff-related and legal expenses. The increase from previous guidance is due mainly to the additional compensation and expenses of the V-chip licensing team and higher stock-based compensation expenses.

Conference Call Information - September 5, 2007 - 10AM EDT

Wi-LAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Daylight Time. Wi-LAN CEO, Jim Skippen and CFO, Steve Bower, 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, licenses intellectual property applicable to a full range of products providing access in the communications and consumer electronics markets. Some of the fundamental technologies covered by Wi-LAN's patents include: CDMA, DOCSIS, DSL, V-chip, Wi-Fi and WiMAX. Wi-LAN has already licensed its intellectual property to a number of the world's largest companies. 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 adjusted earnings, which it has calculated as: net earnings, less interest income and expense, income tax expense, depreciation & amortization and stock-based compensation. Adjusted earnings is a non-GAAP financial term. Wi-LAN's definition of adjusted earnings will be applied consistently in its reporting, but other companies may define adjusted earnings differently than Wi-LAN.

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
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)

Three Months Ended Nine Months Ended
July 31, July 31,
2007 2006 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Revenues $4,761 $2,096 $54,101 $2,096
Income/(expenses) from
the following
Operating expenses
Stock-based compensation (1,141) (288) (1,418) (416)
Other operating expenses (2,500) (1,195) (7,811) (4,188)
--------------------------------------------------------------------------
Total operating expenses (3,641) (1,483) (9,229) (4,604)
Depreciation &
amortization (2,028) (187) (3,830) (460)
Settlement - - - 9,635
Gain on sale of property - - - 1,145
Gain on debt settlement - - - 2,919
Other income - - - 30
Interest - -
Interest income 999 6 2,070 56
Interest expense on
long-term debt - - - (97)
--------------------------------------------------------------------------
Earnings from continuing
operations before income taxes 91 432 43,112 10,720

Provision for income taxes - - (16,726) -
--------------------------------------------------------------------------

Earnings from continuing
operations 91 432 26,386 10,720
Loss from discontinued
operations - (832) - (12,906)
--------------------------------------------------------------------------
Net and comprehensive
earnings/(loss) 91 (400) 26,386 (2,186)

Deficit, beginning of
period (139,297) (181,487) (165,592) (179,701)
--------------------------------------------------------------------------
Deficit, end of period $(139,206) $(181,887) $(139,206) $(181,887)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings/(loss) per share
basic and diluted
Continuing operations
Basic $- $0.01 $0.36 $0.24
Diluted $- $0.01 $0.35 $0.24
Discontinued operations
Basic $- $(0.02) $- $(0.29)
Diluted $- $(0.02) $- $(0.29)
Net earnings
Basic $- $(0.01) $0.36 $(0.05)
Diluted $- $(0.01) $0.35 $(0.05)
Weighted average number
of shares
Basic 81,420,904 48,975,539 72,546,484 44,670,333
Diluted 83,665,228 48,975,539 75,171,518 44,670,333
--------------------------------------------------------------------------
--------------------------------------------------------------------------



Wi-LAN Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands of Canadian dollars)

July 31, 2007 October 31, 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Assets
Current assets
Cash and cash equivalents $100,515 $16,680
Accounts receivable 1,980 400
Future tax asset - 16,726
Prepaid expenses and deposits 622 387
Assets held for sale 3,796 -
Assets of discontinued businesses - 621
--------------------------------------------------------------------------
Current assets 106,913 34,814

Furniture and equipment, net 294 174
Patents and other intangibles, net 138,684 9,787
Goodwill 17,683 -
--------------------------------------------------------------------------
Assets $263,574 $44,775
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $6,935 $814
Government grants payable 173 -
Mortgage payable related to assets held
for sale 555 -
Liabilities of discontinued businesses - 687
--------------------------------------------------------------------------
Current liabilities 7,663 1,501

Future income taxes 25,721 -
--------------------------------------------------------------------------
Liabilities 33,384 1,501
--------------------------------------------------------------------------
Shareholders' equity
Common shares 361,698 202,396
Contributed surplus 7,698 6,470
Deficit (139,206) (165,592)
--------------------------------------------------------------------------
Shareholders' equity 230,190 43,274
--------------------------------------------------------------------------
Liabilities and Shareholders' Equity $263,574 $44,775
--------------------------------------------------------------------------



Wi-LAN Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)

Three Months Ended Nine Months Ended
July 31, July 31,
2007 2006 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Cash provided by/(used in)
Operations
Earnings from continuing
operations $91 $432 $26,386 $10,720
Non-cash items
License revenue settled by
receipt of patents (3,515) - (37,515) -
Stock-based compensation 1,141 288 1,418 416
Depreciation & amortization 2,028 187 3,830 460
Non-cash settlement - - - (9,635)
Gain on sale of property - - - (1,145)
Gain on sale of patents - - - (429)
Future income tax - - 16,726 -
Other non-cash items - 105 - (4,403)
--------------------------------------------------------------------------
(255) 1,012 10,845 (4,016)
Change in non-cash working
capital balances
Accounts receivable 1,628 - (83) -
Prepaid expenses and deposits 320 (55) 231 67
Accounts payable and accrued
liabilities 815 (1,250) 2,589 (1,333)
--------------------------------------------------------------------------
Cash generated from/(used in)
continuing operations 2,508 (293) 13,582 (5,282)
Cash used in discontinued
operations - (1,117) (66) (8,206)
---------------------------------------------------------------------------
Cash generated from/(used in)
operations 2,508 (1,410) 13,516 (13,488)
---------------------------------------------------------------------------
Financing
Proceeds on sale of common
shares - 7,395 65,914 7,395
Share capital issued for cash
on the exercise of options 397 353 1,511 353
Share capital issued for cash
on the exercise of warrants 8 - 633 -
Cash received from loan payable - - - 2,000
Repayment of loan payable - - - (2,000)
--------------------------------------------------------------------------
Cash generated from continuing
operations 405 7,748 68,058 7,748
Cash used in discontinued
operations - (7) - (40)
--------------------------------------------------------------------------
Cash generated from financing 405 7,741 68,058 7,708
--------------------------------------------------------------------------
Investing
Purchase of net assets
including transaction costs (1,460) - (1,460) -
Cash received on acquisitions 5,782 - 5,782 -
Purchase of furniture and
equipment (114) (14) (190) (16)
Purchase of patents for cash (1,573) - (1,871) (6)
Proceeds from settlement, net - - - 9,635
Proceeds from sale of patents - - - 1,510
--------------------------------------------------------------------------
Cash generated from/(used in)
continuing operations 2,635 (14) 2,261 11,123
Cash generated from
discontinued operations - - - 523
--------------------------------------------------------------------------
Cash generated from/(used in)
investing 2,635 (14) 2,261 11,646
--------------------------------------------------------------------------
Net cash and cash equivalents
generated in the period 5,548 6,317 83,835 5,866
Cash and cash equivalents,
beginning of period 94,967 3,239 16,680 3,690
--------------------------------------------------------------------------
Cash and cash equivalents,
end of period $100,515 $9,556 $100,515 $9,556
---------------------------------------------------------------------------

Contact Information

  • Wi-LAN
    Steve Bower
    CFO
    C: 1-613-697-7159
    O: 1-613-688-4330
    sbower@wi-lan.com
    or
    Wi-LAN
    David Ward
    Director, IR & Communications
    C: 1-613-697-0367
    O: 1-613-688-4898
    dward@wi-lan.com