News Release Details

Wi-LAN Announces 2001 First Quarter Results

03/21/2001


Calgary, Canada
March 21, 2001

Wi-LAN Inc. (TSE:WIN), a leading innovator of wireless data/Internet communications, today announced financial results for the quarter ending January 31, 2001.

Wi-LAN's broadband wireless revenue for the three months ended January 31, 2001 was $5.2 million, approximately the same as broadband wireless revenue for the previous quarter ended October 31, 2000. This amount represents 91% of the expected $5.7 million for the quarter; the difference between the estimated and actual results is attributed to slower than expected customer equipment roll-outs, caused largely by difficult credit conditions in a slowing North American economy. The $5.2 million reported in the 3 months ended October 31, 2000 was 121% of the expected broadband wireless revenue for that quarter.

For the three months ended January 31, 2001, Wi-LAN saw a decrease in consolidated revenue of 25% to $20.8 million compared with $27.8 million for the previous three months ending October 31, 2000. This decrease can be attributed to a reduction in the revenue contribution of US subsidiary Digital Transmission Systems (DTS).


Wi-LAN gross product margin, excluding DTS, increased 10 percentage points from 28% to 38% due to higher broadband antenna sales, offsetting continued selected discounted pricing for volume and strategic customer broadband equipment orders to accelerate market penetration. Sales and marketing expenses decreased by $1.0 million from $5.7 to $4.7 million, and research and development expenses decreased $0.6 million from $4.4 to $3.8 million in the three months ended January 31, 2001, compared with the three months ended October 31, 2000. These decreases reflect decreased bad debt expense and personnel related costs, as well as reduced expenditures for external development contractors. 

The company's loss from operations increased by $1.5 million from $7.8 to $9.3 million primarily due to increased operating losses experienced by DTS. Wi-LAN's standalone operating loss for the quarter ended January 31, 2001, excluding DTS, decreased by 12% to $7.1 million from $8.1 million for the three months ended October 31, 2000 primarily due to reduced expenditures. DTS' operating loss increased by $2.5 million to a loss of $2.2 million compared to a profit of $0.3 million for the prior three months primarily due to reduced sales and gross margins.

2001 First Quarter Operational Highlights:

Despite difficult market conditions, 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 on January 24, 2001. 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 commenced its first legal action in Canada to defend and enforce the company's patent claims regarding IEEE 802.11a devices. On November 17, 2000 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. The motion is expected to be heard towards the end of March. Wi-LAN believes that any devices that implement the IEEE 802.11a standard infringe Wi-LAN's Canadian patent no. 2,064,975.

Wi-LAN announced that it is part of a consortium chosen by the Alberta Government for the Alberta SUPERNET project. The consortium, led by Bell Intrigna, 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 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.

Subsequent Events:

On February 7, 2001, Wi-LAN announced a two-year supply agreement with NetCom AB (which has since changed its name to Tele2AB-Nasdaq: TLTO), a leading alternative pan-European telecommunications company. Under terms of the agreement, NetCom AB will purchase Wi-LAN's broadband wireless access systems, based on its patented Wide-band Orthogonal Frequency Division Multiplexing (W-OFDM) technology, which will be used to build wireless networks initially in Poland, Finland, Sweden, Denmark, Norway, and the Czech Republic.

On February 19, at the Broadband Wireless World Forum (BWWF) in San Francisco, Wi-LAN demonstrated the new BWS Series 2000 broadband wireless access system operating in the 2.5 GHz frequency band. This system features Wi-LAN's patented Wide-band Orthogonal Frequency Division Multiplexing (W-OFDM) technology, which enhances multi-path capabilities for superior signal reception. The Wi-LAN BWS Series 3000 broadband wireless access system will be available in August 2001 and the Wi-LAN BWS Series 2000 broadband wireless access system will be available in September 2001.

In addition to its W-OFDM based product demonstrations, Wi-LAN also demonstrated the capabilities of its Multi-code Direct Sequence Spread Spectrum (MC-DSSS) technology at BWWF. In its sponsorship of a wireless café, the company launched and used its Wi-LAN AWE 120-58 advanced wireless Ethernet bridges for the 5.8 GHz unlicensed frequency band to host a contest inviting people to guess whether their laptop connection was wired or wireless. The results of the demonstration/contest were that users were unable to distinguish between the wired and wireless connections.

As well, Wi-LAN furthered its technology leadership position at BWWF; Hatim Zaghloul, the company's chairman and CEO, participated in a panel discussion on non-line-of-site technologies.

On February 27, Wi-LAN announced that its 12-megabit-per-second (Mbps) advanced wireless Ethernet bridge (AWE 120-24), and the company's W-OFDM based broadband wireless access point (BWS 300-24 Access Point) have been approved for use in the 2.4 GHz ISM Frequency band in China by the State Regulatory Radio Commission (SRRC), the government agency that regulates spectrum allocation licensing.

On March 19, Wi-LAN that it had agreed to purchase California-based UC Wireless, a privately-held fixed wireless access company. UC Wireless offers an established portfolio of wireless WAN products that are complementary to Wi-LAN's product lines, a customer base to extend Wi-LAN's international reach and significant resources in the areas of DSP, software and RF engineering. This strategic move will give Wi-LAN access to UC Wireless' proprietary Versatile Intelligent Network Environment (VINE) technology and their expertise in anypoint-to-multipoint network architectures, which are used to solve non-line-of-sight challenges. 

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

Conference Call Information:

The Wi-LAN first quarter conference call will be held on March 22, 2001 at 9 a.m. Mountain Time (11 a.m. Eastern). The call-in number is 416-695-5801 in Toronto or 1-800-478-9326. A replay of the call will be available until 10:00 p.m. MST (12 a.m. EST) on March 29 at 416-695-5800 / 1-800-408-3053 (passcode: 720238)). 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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