News Release Details

Wi-LAN ANNOUNCES 2000 ANNUAL FINANCIAL RESULTS

02/07/2001


Calgary, Canada
February 7, 2001

Wi-LAN Inc. (TSE:WIN), a leading innovator of wireless data/Internet communications, today announced financial results for the quarter and fiscal year ending October 31, 2000.

For the twelve months ended October 31, 2000, Wi-LAN saw an increase in consolidated revenue of 970% to $63.4 million compared with $5.9 million for the previous twelve months ending October 31, 1999. This increase can be attributed to:

  • The contribution of US subsidiaries Digital Transmission Systems (DTS) for ten months and Telcor Communications Inc. (Telcor) for seven months;
  • An increase in broadband wireless product sales of 127% to $13.4 million, compared to $5.9 million in the twelve months ended October 31, 1999;
  • Initial fees of $1.1 million from the company's W-OFDM licensing agreement with Philips Semiconductors; and
  • Four months of antenna revenues from TIL-TEK Limited.

Wi-LAN gross product margin, excluding DTS, decreased 13 percentage points from 46% to 33% due to a $0.8 million reserve for technological obsolescence of certain raw material components taken in the third and fourth quarters, as well as selected discounted pricing for volume and strategic customer orders to accelerate market penetration. Sales and marketing expenses increased by $12.0 million from $1.8 to $13.8 million, and research and development expenses increased $7.0 million from $2.8 to $9.8 million in the twelve months ended October 31, 2000, compared with the twelve months ended October 31, 1999. These increases reflect the addition of TIL-TEK, the consolidation of DTS and Telcor expenses and Wi-LAN's continued effort to accelerate product development, improve its sales and marketing efforts, expand product awareness and develop emerging market opportunities. 

The company's loss from operations increased by $18.8 million from $4.2 to $23.0 million. This increased operating loss reflects the consolidation of DTS and Telcor operations and the increased investment the parent company has made to research and develop new and expanding product lines, accelerate its sales and marketing, and expand its management team and infrastructure.

Wi-LAN's consolidated cash outflow used for operations increased by $31.0 million from $2.6 to $33.6 million reflecting the consolidation of DTS and Telcor operations and increased operating expenditures and increased non-cash working capital balances (accounts receivable, inventories, prepaid expenses and deposits) associated with increased sales. Wi-LAN's cash balance decreased by $1.2 million from $15.0 to $13.8 million as net cash outflows of $33.6 million and $10.9 million, used for operations and investments respectively, were largely offset by cash inflows from financing activities of $43.3 million.

Operating achievements in the 2000 fiscal year have been set out in previous releases and quarterly reports, and will be summarized in the 2000 Annual Report.

2001 First Quarter Broadband Wireless Revenue and Operational Highlights

Wi-LAN's broadband wireless revenue for the three months ended January 31, 2001 was $5.2 million, an increase of 94% over the first quarter of 2000. This amount is 91% of the $5.7 million that was expected, due to slower than expected customer equipment roll-outs, caused largely by difficult credit conditions in a slowing North American economy.

The company's first quarter highlights include:

Wi-LAN was selected as the sole provider of broadband wireless access solutions for the Alberta Government SUPERNET project. Wi-LAN is the wireless equipment member of a consortium, led by Bell Intrigna, which includes Cisco Systems, Microsoft, Nortel Networks, 360 Networks, AXIA Netmedia, TotalTelcom and Netricom. SUPERNET will connect all communities throughout the province that have either a hospital, school, library or government facility, within three years. The total cost of the project is estimated to be $300 million. The value of the wireless equipment component is yet to be determined.

Wi-LAN signed a three-year supply agreement with T-Speed Broadband Communications Inc., a fixed wireless high-speed broadband Internet service provider for the business-to-business (B2B) marketplace. Wi-LAN will supply equipment that will form the foundation of T-Speed's planned US nationwide broadband network. T-Speed intends to purchase US$1.5 million of Wi-LAN equipment in the first year for network expansion, and is now directing its efforts to 23 markets.

Wi-LAN commenced its first legal action in Canada to defend and enforce the company's patent claims regarding IEEE 802.11a devices. On November 17, Wi-LAN filed a lawsuit against Radiata Communications Inc. in the Federal Court of Canada alleging infringement of Wi-LAN's Canadian OFDM patent by Radiata products. In reply to the claim, Radiata has filed a motion requesting the court to dismiss the action on the basis that the court lacks jurisdiction to hear the case. Radiata says that it has not sold or offered to sell the products in Canada, and has no present intention to do so. The motion is scheduled to be heard on February 19th. Wi-LAN believes that any devices that implement the IEEE 802.11a standard in Canada infringe Wi-LAN's Canadian patent no. 2,064,975.

Wi-LAN closed a public offering of 2.1 million units at a price of $7.75 per unit for gross proceeds of $16.3 million. The offering was sold to a syndicate of underwriters led by Research Capital Corporation and included CIBC World Markets Inc. The net proceeds of the offering ($15.1 million) will be used to further the commercialization of Wi-LAN's W-OFDM products and technology and to enhance working capital. Each unit consists of one common share and one-half of one common share purchase warrant. Each full warrant will entitle the holder to acquire one common share of Wi-LAN at an exercise price of $10.00 at any time on or before January 24, 2003.

Wi-LAN continued to strengthen its management team with the addition of two senior officers. Graham H. Smith was appointed chief sales and marketing officer, effective Nov. 29, 2000. Mr. Smith brings to Wi-LAN 25 years of wireless industry experience, including 15 years at Motorola, and is responsible for all of Wi-LAN's sales and marketing activities. Dr. Sayed-Amr (Sisso) El-Hamamsy was appointed chief operating officer , effective January 8, 2001. With a PhD in Electrical Engineering and 15 years of high technology industry experience in several high-level management positions at General Electric (GE) in New York, he is responsible for maintaining product delivery schedules across all of Wi-LAN's product lines.

Financial Outlook:
Wi-LAN's management continues to support the company's $50 million broadband revenue guidance for fiscal 2001 and is targeting broadband wireless revenue of approximately $7 million in the second quarter. The vesting of a significant number of employee stock options is dependent on Wi-LAN attaining our $50 million annual target, which represents growth of approximately 3.5 times 2000 broadband wireless revenue. This revenue target continues to be attainable, but the risk associated with it has increased with our revenue shortfall in the first quarter and the slowing of the North American economy, which may cause continued difficult financing conditions for some of our customers. Meeting our revenue goals is subject to various other risk factors, some of which are set out under the title "Forward Looking Information" at the end of this release.

In the first quarter of fiscal 2001, Wi-LAN, exclusive of DTS, raised a net amount of $15.1 million from its recent financing, and realized $3.6 million on disposition of non-core assets, resulting in a cash balance on January 31, 2001 of approximately $20 million. In addition, Wi-LAN, exclusive of DTS, had significant positive non-cash working capital and anticipates having adequate financial resources, including a potential modest positive cash contribution from dispositions of non-core assets, to sustain operations at planned levels into calendar 2002. Any additional financing in 2001 is expected to be performance-based, in that growing sales shall require additional working capital, which would require financing. Wi-LAN's management is confident in the Company's ability to attract performance-based financing, based on business prospects and recent experience in raising significant capital in adverse market conditions.

All financial information in this document is reported in Canadian dollars, unless otherwise indicated. 

Conference Call Information:
The Wi-LAN annual results conference call will be held on February 8, 2000 at 9 a.m. Mountain Time (11 a.m. Eastern). The call-in number is 416-695-5806 in Toronto or 800-273-9672. A replay of the call will be available until 10:00 p.m. MST (12 a.m. EST) on February 13 at 416-695-5800 / 800-408-3053 (passcode: 675681). The call will also be audio webcast from Wi-LAN's website (www.wi-lan.com) and will be archived there.

Forward Looking Information:
Certain statements in this release, other than statements of historical fact, are forward-looking information that involve various risks and uncertainties. These can include, without limitation, statements based on current expectations involving a number of risks and uncertainties related to all aspects of the wireless data communications industry. These risks and uncertainties include, but are not restricted to, continued increased demand for the Company's products, the Company's ability to maintain its technological leadership in the field of high-speed data communications, the Company's ability to attract and retain key employees, the enforceability of the Company's patents, the availability of key components, competition in the wireless industry, technological change, risk of third party claims of infringement, inability to protect the Company's intellectual property against unauthorized or infringing uses, management of growth and expansion, limited financial resources and the need for future financing, and the Company's ability to raise capital on acceptable terms when needed.

These uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such 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.

With our Interactive Analyst Center (IAC), historical financial data, both quarterly and annual, is available in an easy to access spreadsheet format. View and export our financial statements, non-GAAP reconciliations as well as share information.

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Non-GAAP Information

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The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.

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