News Release Details

Wi-LAN Announces 2001 Second Quarter Results

06/13/2001


CALGARY, Canada - June 13, 2001

Wi-LAN Inc. (TSE:WIN), an innovator of wireless data/Internet communications, today announced financial results for the quarter and six months ended April 30, 2001.

Wi-LAN’s broadband wireless revenue for the six months ended April 30, 2001 was $10.7 million, approximately 23% greater than the $8.7 million of broadband wireless revenue for the previous six months ended October 31, 2000, and 84% of the estimated $12.7 million for the six months ended April 30, 2001. The $2.0 million shortfall between the estimated and actual broadband wireless revenue is attributed to slower than expected customer equipment roll-outs, caused largely by slowing macro-economic conditions in North America.

For the six months ended April 30, 2001, Wi-LAN saw a decrease in consolidated revenue of 11% to $44.1 million compared with $48.7 million for the previous six months ending October 31, 2000. This decrease can be attributed to a reduction in the revenue contribution of Wi-LAN’s U.S. subsidiary Digital Transmission Systems (DTS), partly offset by increased broadband wireless equipment sales and increased narrowband antenna sales.


Included in cost of sales for the second quarter ended April 30, 2001 is a $0.7 million reserve for technological obsolescence of certain raw material components. Wi-LAN gross product margin excluding such reserve was 34% for the six-month period ended April 30, 2001. Wi-LAN gross product margin, excluding DTS and the aforementioned reserve, increased seven percentage points from 27% to 34% 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 $0.5 million from $10.4 to $9.9 million, and research and development expenses increased $0.8 million from $7.0 to $7.8 million in the six months ended April 30, 2001, compared with the six months ended October 31, 2000. These changes reflect decreased sales and marketing expenditures by DTS, as well as increased spending on new product development.

The company’s loss from operations increased by $0.4 million from $18.5 to $18.9 million primarily due to increased operating losses experienced by DTS. Wi-LAN’s standalone operating loss for the six months ended April 30, 2001, excluding DTS, was essentially unchanged at $15.3 million, compared to $15.4 million for the six months ended October 31, 2000. DTS’ operating loss for the six months ended April 30, 2001 increased by $0.4 million to $3.6 million, compared to a loss of $3.2 million for the prior six months, primarily due to reduced sales.


2001 First Quarter Operational Highlights:

Wi-LAN accomplished several significant strategic initiatives in the second quarter that will contribute to the company’s future growth.

Customer Supply Agreement: Wi-LAN signed a two-year supply agreement with NetCom AB (NASDAQ: NECSA and NECSB) a leading alternative pan-European telecommunications company and the parent company of Tele2. 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.

Original Equipment Manufacturing (OEM) Agreement: Wi-LAN signed a three-year OEM agreement with Symbol Technologies, Inc (NYSE: SBL), the leader in wireless and mobile data transactions and systems. Under the terms of agreement, Wi-LAN will provide Wi-LAN AWE advanced wireless Ethernet bridges and TIL-TEK antenna systems to Symbol. Wi-LAN’s products will be used to complement Symbol’s wireless LAN and POS product offerings for several growth market segments including retail, healthcare, education, manufacturing and government. Additional Wi-LAN products may be added to this agreement as they become available.

Contract Manufacturing Agreement: Wi-LAN signed a one-year renewable supply agreement with Solectron Corporation (NYSE: SLR) the world’s leading provider of electronics manufacturing and supply-chain management services, to produce Wi-LAN’s W-OFDM broadband wireless access systems. Solectron’s state-of-the-art manufacturing facilities in North America, Europe, Asia and Latin America will provide Wi-LAN with the ability to manufacture its products in close proximity to its growing global customer base.

Acquisition: Wi-LAN acquired UC Wireless, a privately held fixed wireless access equipment supplier, which will operate as a wholly owned subsidiary of Wi-LAN. This acquisition provides Wi-LAN with increased reach and access to worldwide customers. In addition, Wi-LAN gained control of UC Wireless’ established portfolio of wireless WAN products that are complementary to Wi-LAN’s product lines as well as significant resources in the areas of DSP, software and RF engineering. Wi-LAN also gained access to UC Wireless’ proprietary Versatile Intelligent Network Environment (VINE) technology, an anypoint-to-multipoint network architecture that is used to economically solve non-line-of-sight (NLOS) challenges. Wi-LAN acquired substantially all of UC Wireless' assets in exchange for approximately 1.7 million shares of Wi-LAN common stock. Wi-LAN plans to continue UC Wireless’ operations out of Santa Barbara, California.

Product Launch: At the Broadband World Wireless Forum in San Francisco, Wi-LAN launched the AWE 120-58, a new 12-megabit-per-second advanced wireless Ethernet bridge for use in the 5.8 GHz unlicensed frequency band that uses Wi-LAN’s patented MC-DSSS technology.

Product Certifications: Wi-LAN received product certification for the AWE 120-24 and the Broadband Wireless System (BWS) 300-24 by the Chinese State Regulatory Radio Commission (SRRC), for the AWE 120-58 by the United States Federal Communications Commission (FCC) and by Industry Canada, and for the BWS Series 3000 by the European Telecommunications Standards Institute (ETSI).

Financing: Wi-LAN initiated a financing in the form of a public offering of 937,500 units at a price of $8.00 per unit for gross proceeds of $7.5 million. The offering was sold to Research Capital Corporation with an option to purchase up to an additional 625,000 units for total potential proceeds of $12.5 million. With the filing of the final prospectus, the underwritten portion of the financing was increased to 1,175,000 units (gross proceeds of $9.4 million), and the underwriter’s option was adjusted to keep total potential proceeds at $12.5 million. When the offering closed on May 15, total gross proceeds were $11.6 million. The net proceeds of the offering will be used to provide additional funding for product development, to support sales growth and for general corporate purposes. 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 $9.50 at any time on or before May 15, 2003.

Subsequent Events:

On May 10, 2001, Wi-LAN announced that at an open commission meeting, the Federal Communications Commission (FCC) granted Wi-LAN an interim waiver to permit the sale and use of W-OFDM products in the United States while the FCC reviews proposed changes to the rules affecting spread spectrum devices in the 2.4 GHz band. On June 5, 2001, the OFDM-based BWS 300-24 product was certified by the FCC for use in the 2.4 GHz band in the United States. Wi-LAN is the first company to receive certification from the FCC for the use of OFDM technology in the 2.4 GHz band.

Wi-LAN was recognized by Profit 100 Magazine’s PROFIT 100 - Canada’s Fastest Growing Companies competition as the fourth fastest-growing company in Canada, and first in the Prairie region, on the basis of revenue. Wi-LAN was also recognized as one of the country’s best-performing publicly traded high-technology companies for 2001 according to Canadian Business Magazine’s annual Tech 100 listing. Wi-LAN received top rankings in numerous categories, leading to an overall ranking of fifth across Canada.

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

Conference Call Information:

The Wi-LAN second quarter conference call will be held on June 14, 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 June 20 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 involves 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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