News Release Details

Wi-LAN Announces 2005 Consolidated Results

12/14/2005

CALGARY, Canada - December 14, 2005 - Wi-LAN Inc. (TSX:WIN) today announced financial results for the three months and twelve months ended October 31, 2005. All financial amounts are expressed in thousands of Canadian dollars, except per share amounts or unless otherwise noted.

Financial Highlights ($000’s)

Wi-LAN’s consolidated revenue for the three months and twelve months ended October 31, 2005 was $4,933 and $25,744 respectively, compared with $6,148 and $25,336 for the comparable periods ended October 31, 2004. OFDM-based products sales were $1,759 and $5,927 for the 2005 fourth quarter and fiscal year respectively, compared to $1,402 and $6,604 in the three months and twelve months ended October 31, 2004. License, technology and engineering services revenues were $439 and $444 in the 2005 fourth quarter and fiscal year respectively, compared to $nil and $330 in the fourth quarter and fiscal year 2004. Fourth quarter sales of Wi-LAN’s established broadband wireless products were $1,666 and $15,399 in the 2005 fourth quarter and fiscal year respectively, compared to $3,741 and $14,370 in the three months and twelve months ended October 31, 2004. This fourth quarter decline was largely due to reduced network deployments by a major customer, causing a reduction in expected sales of approximately $1 million. TIL-TEK Antenna Division sales were $1,069 and $3,974 respectively for the three and twelve months ended October 31, 2005, compared to $1,005 and $4,032 respectively for the comparable periods ended October 31, 2004.

Gross profit for the fourth quarter was $36 or 0.7% of revenue, and was $8,601 or 33.4% of revenue for the 2005 fiscal year, compared to $2,895 or 47.1% of revenue in the 2004 fourth quarter and $12,326 or 48.7% in the 2004 fiscal year. Gross profit was impacted negatively in the fourth quarter and the 2005 fiscal year by $266 of costs associated with deferred revenue and by inventory adjustments of $1,635 in the quarter and $2,181 in the 2005 fiscal year.

Net loss for the fourth quarter was $16,881 or $0.40 per share, compared with a net loss of $2,861 or $0.07 per share in the 2004 fourth quarter. Net loss for the 2005 fiscal year was $25,778 or $0.61 per share, compared with net loss of $7,049 or $0.17 per share in the 2004 fiscal year. The net loss in the 2005 fourth quarter and fiscal year included the following items, which accounted for $11,107 and $14,415 of the net loss for the 2005 fourth quarter and fiscal year respectively:

  • Costs associated with deferred revenue of $266 in the 2005 fourth quarter;
  • Inventory adjustments of $1,635 in the 2005 fourth quarter and $2,181 in the 2005 fiscal year;
  • Charges of $6,364 and $70 in the fourth quarter for impairment of goodwill and investments respectively;
  • Charges of $211 and $843, for the three months and year ended October 31, 2005, to research and development expense to accrue the Company’s obligation to issue warrants to Technology Partnerships Canada;
  • Accrued retention bonuses, severance costs, bad debt expense and warranty accruals that accounted for $2,519 and $3,883 of operating expenses in the fourth quarter and fiscal year 2005 respectively; and
  • Total fair value of stock based compensation, included in fiscal year 2005 but not in fiscal year 2004, in the amount of $42 and $808 for the 2005 fourth quarter and fiscal year respectively.

"This has been a difficult transition year for Wi-LAN and the year’s results reflect it. We have been adjusting and realigning resources and priorities to improve our business performance," said Bill Dunbar, President and CEO, Wi-LAN Inc. "We continued to make substantive investments in Libra MX and our IP solutions. The work we started later in the year to increase our focus on intellectual property opportunities, and to partner with other industry players on our product development, positions us well going forward. We have been reallocating and leveraging our resources accordingly. Our IP revenue growth in the fourth quarter and our recent settlement with Cisco, wherein Cisco has taken a license for our patent portfolio, are early indicators of the value of emphasizing our IP strength."

The Company’s cash balance on October 31, 2005 was $3,690, compared to $7,489 three months prior on July 31, 2005 and $13,768 on October 31, 2004. The reduction in cash in the fourth quarter of $(3,799) was due primarily to cash used in operations before changes in non-cash working capital of $(9,957), partly offset by changes in non-cash working capital of $6,215, primarily due to reductions in accounts receivable and inventories of $4,768 and $934 respectively, and deferred revenue of $694. Cash from financing and cash from investing in the quarter was $(57) combined.

The Company is evaluating various financing and strategic alternatives, in light of the requirement to continue to invest in research and development for Wi-MAX Forum Certified (1) products, the need for working capital related to sales activity, and management’s belief that Wi-LAN’s strengths in broadband wireless intellectual property and product development can be significantly augmented through building partnerships with other industry participants. The Company retained GMP Securities Ltd. to advise on alternatives which currently include, but are not limited to, seeking investment from industry partners, strategic investors, existing shareholders or other investors, and selling of assets. Subsequent to Wi-LAN’s fiscal year end of October 31, 2005, the Company resolved an outstanding lawsuit with Cisco Systems Inc. As well, On December 5, 2005 the Company signed a term sheet to enter into an agreement to borrow up to $2 million for a term of up to 4 months. For further information, refer to Note 11 to the unaudited Consolidated Financial Statements attached to this release.

Additional financial information is available in the unaudited Consolidated Financial Statements and Notes attached to this release.

Operations Highlights

Corporate Restructuring
On August 11, 2005, Wi-LAN announced the creation of two separate divisions within the Company to focus on maximizing the value of its intellectual property (IP) portfolio and its wireless broadband equipment business. The formation of separate IP and Product divisions is designed to promote greater customer focus and drive improved business performance from the two key value areas within Wi-LAN.

Agreement and Lawsuit Settlement with Cisco
On December 2, 2005, subsequent to Wi-LAN’s October 31 fiscal year end, Wi-LAN announced that it has signed an agreement with Cisco Systems Inc. (NASDAQ:CSCO) in which the companies have agreed to terminate all legal actions pending between them. Under the agreement, Cisco purchased from Wi-LAN several issued and pending patents relating to WiMAX and antenna technology, and has granted Wi-LAN a license to use these patents in its products. Wi-LAN will retain ownership of its remaining patent portfolio, including its W-OFDM patents and the majority of its other patents that relate to implementation of WiMAX and other broadband wireless systems. As part of the agreement, Cisco also received a license to Wi-LAN's patent portfolio.

IP Joint Marketing Partnership with Altera
On October 26, 2005, Altera Corporation (NASDAQ:ALTR) and Wi-LAN announced the formation of a partnership to deliver the first programmable, low-cost WiMAX-compliant base transceiver station ( BTS )modem solution supporting the IEEE 802.16-2004 standard. The solution allows base station developers to deliver WiMAX-compliant products that can be upgraded in the field by service providers in response to changing customer requirements and market conditions. The programmability of Altera’s Field Programmable Gate Arrays (FPGA’s), which form an integral part of the solution, also provides developers with the flexibility to rapidly make changes to their design and still meet their time to market goals.

Product Development Agreement for Libra MX
On October 19, 2005, Wi-LAN announced that, as part of its ongoing emphasis on partnering to reduce costs and improve performance, Wi-LAN and Trans-World Communications Group (TWC), a broadband service provider in the Ukraine, have agreed on terms to develop a specialized version of Wi-LAN’s Libra MX WiMAX platform. The agreement is backed by a purchase order from TWC, for Wi-LAN’s Libra MX products, that is part of TWC’s initial deployment of a nation-wide broadband wireless network in the Ukraine. TWC, in collaboration with the IITP, a research and development institute of the Russian Academy of Sciences, intends to accelerate the development of Wi-LAN’s Libra MX and Libra MAX product lines optimized for the Ukraine and the Eastern Europe region. TWC is currently certifying Wi-LAN’s Libra MX for operation in the Ukraine and TWC’s broadband wireless network, expected to be complete by 2007, is planned to provide high-speed data, voice and video services to businesses and residences of rural towns and villages. Additional orders are expected over the next two years as the network is expanded throughout the Ukraine.

Significant Product Deployments
On Oct. 24, 2005, Wi-LAN announced receipt of $1.6 million in orders for its broadband wireless solutions from customers in Saudi Arabia, Lebanon and the Gulf Region, including $500,000 of orders for the Libra MX WiMAX platform. The products are being used for large-scale data, voice and video surveillance networks throughout the region. In addition to repeat orders for Libra MX from existing customers, a new Libra MX order for a video surveillance application in Lebanon is included.

Conference Call Information

Wi-LAN will hold a conference call to discuss the 2005 consolidated results today at 5:30 p.m. Eastern time (3:30 p.m. Calgary time). The call-in number will be 1-800-275-2442 (toll free North America) or (973) 409-9258. Participants are advised to call in 10 minutes early. The call will be webcast from Wi-LAN’s website at www.wilan.com and will be archived there.

Wi-LAN participants will be:

Mr. Bill Dunbar - President and Chief Executive Officer
Mr. Keith Bittner - Chief Financial Officer
Mr. Dave King - Senior Vice President & General Manager - Product Division
Mr. John Seliga - Senior Vice President & General Manager - IP Division
Mr. Ken Wetherell - Vice President, Corporate Communications & Investor Relations

A replay of the call will be available until 11:59 p.m. Eastern time on December 21, 2005 by calling 1-877-519-4471 (toll free North America) or (973) 341-3080. The access code for the replay is 6801280.

Consolidated Finanical Statements and Notes
Q4 2005 Finanical Statements and Notes

About Wi-LAN Inc.
Wi-LAN is a global provider of broadband wireless communications products and technologies, offering effective, economic and secure wireless high-speed communications solutions. Wi-LAN believes its portfolio of patents is necessary for the implementation of WiMAX Forum Certified (1) devices and devices using the IEEE standards 802.11a and 802.11g (the 2nd generation Wi-Fi Alliance (1) standards). Wi-LAN is a charter member of the WiMAX Forum (www.wimaxforum.org). Detailed information on Wi-LAN can be found at www.wilan.com.

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 expectations involving a number of risks and uncertainties related to all aspects of the wireless 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 wireless communications, the Company's ability to attract and retain key employees, the enforceability of the Company's patents, and the availability of key components.

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.

(1) All trademarks and brands mentioned in this release are the property of their respective owners.

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.

Disclaimer

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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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