News Release Details

Wi-LAN Reports Fourth Quarter Fiscal Year 2007 Financial Results

01/10/2008

Company generates record revenues and earnings(1) in fiscal year 2007

OTTAWA, Canada – January 10, 2008 Wi-LAN Inc. (TSX: WIN) (“Wi-LAN” or the “Company”), a leading technology innovation and licensing company, today announced financial results for the fourth quarter and fiscal year ended October  31, 2007. All financial amounts are expressed in Canadian dollars.

Operating & Financial Review
(in thousands except per share amounts)

 

Fourth quarter revenues were $7.2 million, which included both cash and in-kind consideration consisting of patents valued at $4.6 million. Management valued these patents based in part on a valuation report prepared by a major accounting firm. Pro forma earnings amounted to $4.9 million or $0.05 per diluted share. Operating expenses were $4.2 million, reflecting growth in the Company’s workforce and increased legal expenses.  Total expenses were $8.1 million, which included $0.8 million of stock-based compensation expense and $3.9 million of depreciation and amortization expense resulting from increases in Wi-LAN’s patent portfolio, both non-cash charges. Interest income amounted to $1.1 million during the quarter. Net earnings on a GAAP basis amounted to $1.2 million or $0.01 per diluted share.

Cash payments from a number of license agreements that were signed in the third and fourth quarters of fiscal 2007, including agreements with Fujitsu Limited and a licensee announced in a press release dated June 28, 2007, will begin in the first quarter of 2008.  Accordingly, these payments are not included in fourth quarter revenues.

In fiscal 2007, Wi-LAN generated revenues of $61.3 million. Pro forma earnings amounted to $53.2 million or $0.66 per diluted share. Operating expenses amounted to $13.4 million.  Total expenses were $36.8 million, which included $2.2 million of stock-based compensation expense, $7.8 million of deprecation and amortization expense and a provision for income tax of $15.6 million, all non-cash charges.  Interest income amounted to $3.2 million.  Net earnings on a GAAP basis amounted to $27.6 million or $0.34 per diluted share.

Financial Position
(in thousands of Canadian dollars except shares outstanding)

In the fourth quarter of fiscal 2007, cash and cash equivalents decreased by $9.0 million to $91.5 million at October 31 2007, due mainly to costs associated with the purchase of patents.

For the fiscal year ending October 31, 2007, Wi-LAN’s cash position increased by a total of $74.9 million, including $66 million from the sale of shares in December 2006 and March 2007, $12.2 million generated from continuing operations, and $5.8 million received upon the acquisition of Tri-Vision. The Company's cash equivalents include term deposits, GICs and other similar financial instruments. The Company’s cash equivalents do not include any Asset Backed Commercial Paper.

The Company’s patents and other intangibles have grown from a net book value of $9.8 million at October 31, 2006 to a net book value of $147.0 million at October 31, 2007 including V-chip patents and other intangibles acquired in the purchase of Tri-Vision, patents received in licensing agreements with Nokia, Fujitsu and an unnamed licensee valued at $42.1 million as well as other patents acquired during the fiscal year.

Results for fiscal year 2006 are generally not comparable to those of fiscal 2007, as Wi-LAN was in the process of transforming itself into a licensing business, and discontinuing its products manufacturing and engineering services businesses in the 2006 periods.

Management Comments

“Wi-LAN achieved significant operating and financial accomplishments in fiscal year 2007,” said Jim Skippen, President & CEO. “In the fiscal year we generated record revenue and record earnings, and acquired Tri-Vision International. We signed 20 wireless and V-chip licensing agreements, many of which strengthen our recurring revenue base and demonstrate Wi-LAN’s ability to monetize, through negotiation, our portfolio of patented innovations.  In addition, we strengthened our team and completed a number of strategic patent acquisitions.”

“In 2008, we look to build on our accomplishments of 2007. We hope that a growing momentum for negotiated licenses, particularly in the Wi-Fi, WiMAX and V-chip markets, along with the determined efforts of our licensing teams will generate additional license agreements.  Building upon Wi-LAN’s rich history of research and development, we hope continuing efforts in this area will result in important innovations. We are confident that our activities in 2008 will enhance long-term shareholder value.”

Operating Expense “Guidance”
It has been Wi-LAN’s practice not to provide guidance on the range of expected future revenues and earnings, given the relatively early stage of its development in licensing as well as the difficulty in predicting the timing and value of patent acquisition opportunities and possible future litigation, both of which could require significant investment. In order to assist investors and other interested parties in their understanding of Wi-LAN’s performance, management believes that operating expenses for the fiscal year 2008 will likely be in the range of $22.0-27.0 million, based on current plans and expectations including staff-related and legal expenses.

Conference Call Information – January 10, 2008 – 10 AM EST
Wi-LAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Standard Time. Wi-LAN CEO, Jim Skippen and acting CFO, Phil Martin, will be on the call.

  • Callers from Canada or the United States: 1.866.585.6398 (Toll Free)
  • Callers from other locations: 1.416.849.9626 (International)
  • To join by webcast: www.wilan.com


About Wi-LAN

Wi-LAN, founded in 1992, is a leading technology innovation and licensing company. Our portfolio of patented inventions applies to a wide range of electronics and communications products.  Some of the fundamental technologies covered by Wi-LAN’s patents include: CDMA, DOCSIS, DSL, GSM/EDGE, V-chip, Wi-Fi and WiMAX.   Wi-LAN has licensed its intellectual property to a growing number of companies around the world.  For more information: www.wilan.com.

Note
(1) Wi-LAN follows Canadian generally accepted accounting principles (“GAAP”) in preparing its interim and annual financial statements. To assist readers in further understanding its operating performance, it is reporting pro forma earnings. Pro forma earnings is a non-GAAP financial term. Pro forma earnings represents earnings/(loss) from continuing operations before stock-based compensation, depreciation & amortization and provision for income taxes.  

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 assumptions and expectations involving a number of risks and uncertainties related to all aspects of the wireless and wireline communications industry and the global economy. These risks and uncertainties include, but are not restricted to: the almost exclusive reliance of the Company on licensing its patent portfolio to generate revenues and cash flows; that the Company may be required to establish the enforceability of its patents in court to obtain material licensing revenues; that the Company will need to acquire or develop new patents to continue to grow its business; that the Company requires investment to translate its intellectual property position into sustainable profit in the market; that the Company is  dependent on the performance of its key officers and employees; that changes in patent legislation or in the interpretation or application of patent litigation could materially adversely affect the Company; and that the Company has and may make acquisitions of products, technologies or businesses which could materially adversely affect the Company. These risks and uncertainties may cause actual results to differ from information contained herein, when estimates and assumptions have been used to measure and report results. There can be no assurance that such forward-looking 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.

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For more information, please contact:

Phil Martin, acting CFO
O: 1.613.688.4895
C: 1.613.867.4895
Email: pmartin@wi-lan.com

 Tyler Burns, Director, Investor Relations & Communications
O: 1.613.688.4330
C: 1.613.697.0367
Email: tburns@wi-lan.com

 

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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If in any jurisdiction, any part of this disclaimer is held to be unenforceable by a court of competent jurisdiction, such part of this disclaimer shall be restricted or eliminated to the minimum extent and the remaining disclaimer shall otherwise remain in full force and effect.

Please note the information presented is deemed representative at the time of its original release. Changes in historical information may occur due to adjustments in accounting and reporting standards & procedures.

Non-GAAP Information

In addition to disclosing results determined in accordance with GAAP, WIN may also disclose certain non-GAAP and pro forma non-GAAP results of operations, including certain ratios, operational and miscellaneous data, as well as net income, diluted earnings per share, operating expenses, and operating income that make certain adjustments or exclude certain charges and gains that are outlined in the schedules included in this website. Management believes that this non-GAAP and pro forma non-GAAP information provides investors with additional information to assess WIN operating performance by making certain adjustments or excluding costs or gains and assists investors in comparing WIN's operating performance to prior periods. Management uses this non-GAAP and pro forma non-GAAP information, along with GAAP information, in evaluating its historical operating performance. WIN and Virtua also take no responsibility for third party pricing data provided for informational purposes and certain ratio results formulated from the provided third party pricing data.

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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