News Release Details

WI-LAN ANNOUNCES 2003 FIRST QUARTER REVENUE AND CASH

02/12/2003

Conference Call Scheduled for February 13

CALGARY, Canada - February 12, 2003 - Wi-LAN Inc. (TSE:WIN), a global provider of broadband wireless communications products and technologies, today announced its unaudited revenue for the three months ended January 31, 2003 was $5.4 million, which is a $0.6 million or 13% improvement over first quarter sales in 2002. First quarter revenue from the company's core broadband fixed wireless access products was $4.6 million, which is $1.2 million or 35% more than the $3.4 million for the same period in 2002. First quarter revenue is on target with the Company's fiscal year 2003 revenue guidance of $25 to $30 million, which requires an annual revenue growth rate of at least 8%. Wi-LAN continues to tighten spending controls, liquidate product inventory and improve product gross margins. These improvements, along with continued sales growth in line with the Company's fiscal year 2003 revenue guidance, are expected to generate positive cash flow from continuing operations for the third quarter of 2003. All financial amounts are expressed in Canadian dollars unless otherwise noted.

"Our first quarter sales showed good progress over last year's first quarter. In addition, more large volume customers are showing interest in Wi-LAN's broadband wireless products and antennas, and sales visibility is improving," said Dr. Sayed-Amr El-Hamamsy, President and Chief Operating Officer, Wi-LAN Inc. "Wi-LAN has achieved much over the past few quarters, and we expect our efforts will continue to result in improved sales and product gross margins, and significantly reduced quarterly operating expenses."

Wi-LAN's cash balance as of January 31, 2003 was $3.4 million, a reduction of $2.2 million compared with $5.6 million as of October 31, 2002. Seasonally low sales, a lengthening sales cycle, and a large proportion of the quarterly sales in the last month in the quarter (the proceeds of which will not be collected until the second quarter) contributed to the increased cash usage in the three months ended January 31, 2003.

Management believes the Company's cash resources are adequate to sustain the company's operations because operations are expected to generate positive cash flow beginning in the third quarter of 2003. This expectation is supported by the following factors:

  • Product revenue growth: Sales prospects for fiscal 2003 are positive and Wi-LAN's fiscal year 2003 revenue guidance of $25 to $30 million is achievable:

      o In January, the Chinese Ministry of Information Industry (MII) initiated the process to issue licenses for the 3.5 GHz frequencies in an additional 32 major Chinese cities, and Wi-LAN is well placed to participate in LIBRA 3000 series equipment sales to many of the companies that are bidding on the licenses. These sales may begin as early as the third quarter, but are more likely in the fourth quarter.

      o Other national regulators are also moving to license 3.5 GHz spectrum, further improving sales prospects for Wi-LAN's W-OFDM based LIBRA 3000 series.

      o Equipment sales for the license-exempt 2.4 GHz and 5.8 GHz frequencies are gaining momentum worldwide, and new, high-margin license-exempt products are expected to be launched over the next six months.

      o New broadband wireless global sales prospects are growing both in size and quality, and existing distributor, value-added reseller (VAR) and original equipment manufacturer (OEM) relationships are gaining traction.

      o Sales visibility is showing signs of improvement in Wi-LAN's TIL-TEK Antennas Division.
  • Standards and licensing progress: The Institute of Electrical and Electronics Engineers (IEEE) "WirelessMAN" Standard 802.16a was announced on January 30, 2003. This standard incorporates Wi-LAN's patented W-OFDM (Wide-band Orthogonal Frequency Division Multiplexing) technology. Wi-LAN is first to market with Standard 802.16a-like products and is dedicated to advancing the implementation of this standard. Wi-LAN has a non-exclusive agreement with Fujitsu Microelectronics America (FMA) to develop Standard 802.16a System-on-Chip solutions, and has offered to assist all interested parties, including semiconductor companies, intellectual property providers and other broadband wireless equipment providers, in the implementation of IEEE Standard 802.16a. This issue is generating growing interest from the broadband wireless industry and is expected to result in a growing revenue stream for the company beginning in the second half of fiscal year 2003.
  • Product gross margin improvements: Wi-LAN expects product gross margins to continue to improve as its broadband wireless product mix shifts more toward its new, cost-reduced, second and third generation products, and as sales visibility improves for its TIL-TEK antenna products. Product gross margins in the 40% to 45% range are expected in the third quarter of the current fiscal year.
  • Operating expense reductions: Wi-LAN has taken action to further reduce quarterly expenses and improve operational efficiency by closing its office in California and consolidating the California operations into its lower cost Calgary head office. This action is expected to reduce the company's quarterly expenses by approximately $0.6 million, effective in the third quarter of the current fiscal year. Expenses at Wi-LAN's remaining operations will continue to be tightly controlled and monitored. Immediate steps to reduce costs further will be taken as necessary to size expenses with expected revenues, while ensuring that the technical and administrative competencies required to grow the business are retained.
  • Improved cash contribution from TIL-TEK Antennas Division: Wi-LAN's TIL-TEK Antennas division, which has been cash flow neutral over the past several quarters, has committed to contributing at least $0.3 million cash flow from operations per quarter, effective immediately. Revenue and expenses of the division will be closely monitored and steps will be taken as necessary to ensure the achievement of this goal.
  • Working capital management: The cash balance as of January 31, 2003 was reduced due to growth in receivables as a large proportion of the Company's sales occurred in January, and cash collections on these sales are expected in the second quarter. Expected revenue growth in the second quarter should generate larger cash collections in the third quarter. As well, inventory of legacy 2.4 GHz products will continue to be reduced and converted to cash.

  • "We are making progress on all fronts to ensure our ability to continue to sustain our ongoing operations with our current cash and working capital resources," said Keith Bittner, Acting Chief Financial Officer. "We will continue to monitor our revenue, product gross margins, expenses and cash relative to our budget plan and take whatever further action is required to ensure our success."

    Financial Highlights:
  • Quarterly revenue: Revenue for the three months ended January 31, 2003 was $5.4 million, which is $0.6 million or 13% more than the $4.8 million revenue for the same period in 2002 and $0.8 million or 13% less than the $6.2 million revenue for the prior three months ended October 31, 2002. Revenue for the three months ended January 31, 2003 is in line with the company's revenue guidance for fiscal year 2003 of $25 to $30 million.
  • Segmented revenue:
      o Revenue from the company's core broadband fixed wireless access products was $4.6 million, which is $1.2 million or 35% more than the $3.4 million for the same period in 2002 and $0.6 million or 12% less than the $5.2 million for the prior three months ended October 31, 2002. Over the past twelve months, competitors in the fixed wireless access sector have typically seen declining revenues. As a result Wi-LAN believes it has significantly increased its market share in this sector. This positions the company well for future growth as telecom carriers begin to divert spending from wireline applications to broadband fixed wireless access.

      o Revenue from the company's antenna products was $0.8 million, which is $0.6 million less than the $1.4 million for the same period in 2002 and $0.2 million less than the $1.0 million for the prior three months ended October 31, 2002. Early indications are that the antenna market appears to be improving, but the situation is being closely monitored and changes will be made to control costs of the antenna division if and as required.

  • Revenue guidance: Wi-LAN expects revenue for the twelve months ended October 31, 2003 to be in the range of $25 million to $30 million. Achieving or exceeding the upper end of this range depends largely on the timing of events such as the award of additional contracts for 3.5 GHz broadband wireless equipment in various global markets and the signing of additional technology licensing agreements.
  • Cash: Wi-LAN's cash balance as of January 31, 2003 is $3.4 million, a reduction of $2.2 million compared with $5.6 million reported as of October 31, 2002. Wi-LAN continues to tighten spending controls, liquidate product inventory and improve product gross margins. These improvements, along with continued sales growth in line with the Company's fiscal year 2003 revenue guidance of $25 to $30 million, are expected to generate positive cash flow from continuing operations for the three months ended July 31, 2003. The cash balance is expected to be adequate to sustain the company's current operations for the 2003 fiscal year.

  • First Quarter Operations Highlights
    Several significant strategic initiatives were accomplished in the first quarter, including:
  • Major sales agreement: Wi-LAN announced it has sold $1.1 million (US$745,000) of Wi-LAN's W-OFDM based LIBRA fixed wireless access products and accessories to Cameroon Telecommunications B.P. (Camtel), the national telecommunications carrier for the Republic of Cameroon. The contract is for Wi-LAN to provide and install its industry-leading non-line-of-sight LIBRA products and accessories for Camtel's wireless telecommunications networks in the Cameroon cities of Douala and Yaounde. Additional sales of Wi-LAN products are expected to follow as Camtel moves into further phases of its network buildout.
  • New product launch: Wi-LAN launched LIBRA, the latest in its series of Non-Line-of-Sight (NLOS) Fixed Wireless Access products. The LIBRA product series is the third generation of Wi-LAN's highly reliable, field-proven, commercial W-OFDM products, which have been deployed in networks in more than 20 countries. LIBRA provides NLOS capability that increases fixed wireless access subscriber coverage, from conventional levels of 50% or less, to levels that can exceed 90%. LIBRA's flexible architecture supports full or half duplex operation, is fully redundant, supports T1 and E1 voice networks, and has tiered service management and user-friendly network management, all in an easy to install, weatherproof, single unit design.
  • Executive and board changes:
      o Dr. Sayed-Amr (Sisso) El-Hamamsy, Chief Operating Officer of the Company, accepted the additional position of President.

      o Dr. Hatim Zaghloul, formerly Chairman, President and Chief Executive Officer, passed the role of President to Dr. El-Hamamsy, but retained the responsibilities of Chairman and Chief Executive Officer. o Steven Bellamy resigned his position of Chief Financial Officer to pursue other opportunities. He will be available to assist the Company through a transition period.

      o Keith Bittner, CMA, formerly Vice President, Finance of the Company, assumed the responsibilities of Acting Chief Financial Officer.

      o Frank King, a member of the Board of Directors, was appointed Independent Lead Director.
  • Product awards:
      o Wi-LAN's Ultima3 RD product outperformed competing products in various categories of a 5 GHz product comparison conducted by Network Computing magazine. The Ultima3 RD (Rapid Deployment) was ranked first for range, advanced features and functionality, and monitoring and management capabilities were the best of any system tested.

      o Wi-LAN received a Wireless Communications Association (WCA) International "Wemmie" Award. The award is for the Banco Del Pichincha non-line-of-sight network in Ecuador. This is Wi-LAN's second Wemmie Award.

  • TIL-TEK ISO 9001 QMS upgrade: Wi-LAN's TIL-TEK Antennas Division met the requirements for upgrading its Quality Management System (QMS) from the ISO (International Standards Organization) 9001:1994 standard to the ISO 9001:2000 standard. The new ISO 9001:2000 standard creates a basis for a higher level of senior management involvement in an organization's QMS. It ensures that TIL-TEK's QMS is aligned around its business objectives and is designed to ensure that improved customer satisfaction and ultimately increased profitability is achieved.


  • Subsequent Events
    The following events were announced after the January 31, 2003 end of the first quarter:

  • Wireless Standards and Technology Licensing Progress: On February 4, 2003, Wi-LAN announced that the recently finalized Institute of Electrical and Electronics Engineers (IEEE) "WirelessMAN" Standard 802.16a incorporates Wi-LAN's patented W-OFDM (Wide-band Orthogonal Frequency Division Multiplexing) technology. Wi-LAN is first to market with Standard 802.16a-like products and is dedicated to advancing the implementation of this standard. Wi-LAN has a non-exclusive agreement with Fujitsu Microelectronics America (FMA) to develop Standard 802.16a System-on-Chip solutions, and the experience Wi-LAN has gained in implementing W-OFDM based LIBRA products makes Wi-LAN the leader in Standard 802.16a implementation. Wi-LAN's proprietary LIBRA Broadband Wireless Access (BWA) products provide a working commercial model of the W-OFDM based physical layer of Standard 802.16a. LIBRA has been deployed in networks in almost 30 countries and is designed for a seamless transition to Standard 802.16a. Wi-LAN encouraged all interested parties, including semiconductor companies, intellectual property providers and other broadband wireless equipment providers, to join Wi-LAN in the implementation of IEEE Standard 802.16a.
  • Consolidation of operations and expense reductions: On February 11, 2003, Wi-LAN announced the closing of its office in California and consolidation of the California operations into its lower cost Calgary head office to improve operational efficiency and reduce the company's quarterly expenses by approximately $0.6 million. Wi-LAN is managing a seamless transfer of sales channels and technology to the Calgary head office and no adverse effects are anticipated from the office closure.


  • Conference Call
    Wi-LAN will hold a conference call on February 13, 2003 at 9:00 a.m. MST (11:00 a.m. EST, 8:00 a.m. PST). The call-in number is 1-800-650-8824 (North America) or 703-736-7228. The confirmation number is 6390012. Participants are advised to call in 10 minutes early. The call will be audio webcast from Wi-LAN's website at www.wi-lan.com and will be archived there.

    A replay of the call will be available until 9:59 p.m. MST (11:59 p.m. EST, 8:59 p.m. PST) on February 20, 2003 at 1-888-266-2081 (North America) or 703-925-2533 (passcode: 6390012). Wi-LAN participants will be:
    Dr. Sayed-Amr El-Hamamsy - President and Chief Operating Officer
    Mr. Keith Bittner - Acting Chief Financial Officer
    Mr. Ken Wetherell - Vice President, Corporate Communications & Investor Relations
    Dr. Hatim Zaghloul, Chairman and Chief Executive Officer, will not be available for the call because he is on a religious pilgrimage.

    About Wi-LAN Inc.
    Wi-LAN is a global provider of broadband wireless communications products and technologies, specializing in solutions for secure wireless provision of high-speed data and telephone over distance for enterprises and telecom service providers. Wi-LAN's broadband wireless access products are known worldwide for their high quality and industry-leading technology. Wi-LAN believes its W-OFDM patents are necessary for the implementation of devices using the IEEE standards 802.16a, 802.11a or 802.11g, the ETSI BRAN HiperLAN/2 standard or the current draft of the ETSI BRAN HiperMAN proposed standard. Wi-LAN licenses its W-OFDM technology and has executed non-exclusive W-OFDM license agreements with semiconductor companies. Wi-LAN is the Chair Company of the OFDM Forum (www.ofdm-forum.com). Wi-LAN's common shares trade on The Toronto Stock Exchange under the symbol "WIN." Detailed information on Wi-LAN can be found at www.wilan.com.

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