Stocks & Investing 
Stocks and Investing
Stocks and Investing 
Tue, January 13, 2009
Wi-LAN Inc.: Wi-LAN Reports Fourth Quarter and Fiscal Year 2008 Financial Results
OTTAWA, CANADA--(Marketwire - Jan. 13, 2009) - Wi-LAN Inc. ("Wi-LAN" or the "Company")(TSX:WIN), a leading technology innovation and licensing company, today announced financial results for the fourth quarter and fiscal year ended October 31, 2008. All financial amounts are expressed in Canadian dollars.
Fourth Quarter 2008 Highlights:
- Q4 revenues of $13.7 million as compared to $7.2 million in Q4 2007.
- Q4 pro forma earnings of $9.1 million or 10 cents per share as compared to pro forma earnings of $4.9 million or 5 cents per share in Q4 2007.
- GAAP net earnings of $277 thousand or $nil per share as compared to $1.2 million or 1 cent per share in Q4 2007.
- Signed agreements with 25 companies including 12 wireless, 9 V-chip and 4 wireline licenses.
- Leading wireless handset vendor, Research In Motion Limited, licenses wireless technologies.
Fiscal 2008 Highlights:
- Cash revenues of $26.6 million as compared to $19.2 million in fiscal 2007, representing a sequential increase of $7.4 million or 39 percent.
- Pro forma earnings of $11.0 million or 12 cents per share as compared to pro forma earnings of $53.2 million or 66 cents per share in fiscal 2007.
- GAAP net loss of $9.2 million or 10 cents per share.
- Cash, cash equivalents and short-term investments of $101.4 million represent an increase of $9.9 million over fiscal 2007 ended October 31, 2007.
- Signed agreements with 79 companies including 35 wireless, 39 V-chip and 5 wireline licenses.
- Initiated a patent infringement lawsuit in the Eastern District of Texas involving wireless handset vendors including Motorola Inc. and LG Electronics.
Fourth quarter revenues were $13.7 million as compared to $7.2 million in the fourth quarter of 2007. Pro forma earnings amounted to $9.1 million or $0.10 per diluted share. Operating expenses were $5.4 million. Total expenses were $10.1 million, which included $0.5 million of stock-based compensation expense and $4.2 million of depreciation and amortization expense, both non-cash charges. Interest income amounted to $0.7 million during the quarter. Income tax expense amounted to $4.0 million for the quarter. Net earnings amounted to a profit of $277 thousand or $nil per diluted share.
In fiscal 2008, Wi-LAN generated revenues of $26.6 million. Pro forma earnings amounted to $11.0 million or $0.12 per diluted share. Operating expenses amounted to $18.8 million. Total expenses were $37.3 million, which included $2.0 million of stock-based compensation expense and $16.5 million of depreciation and amortization expense, both non-cash charges. Interest income amounted to $3.2 million for the year. Income taxes expense amounted to $1.7 million for the year. Net earnings amounted to a loss of $9.2 million or $0.10 per diluted share.
Wi-LAN initiated a share purchase program on October 15, 2008, which is ongoing, pursuant to which Wi-LAN expects to purchase up to 5 percent of its outstanding common shares. During the month ended October 31, 2008, the Company repurchased 215,000 shares for cancellation at an average price of $1.24.
In the fourth quarter of fiscal 2008, cash, cash equivalents and short-term investments increased by $8.9 million to $101.4 million. For the fiscal year ending October 31, 2008, Wi-LAN's cash position increased by a total of $9.9 million. The Company's cash equivalents include T-bills, term deposits and GICs while its short-term investment consists of a banker's acceptance issued by a large Canadian financial institution.
Management Comments
"Wi-LAN delivered solid operational and financial accomplishments in fiscal 2008," said Jim Skippen, Chairman & CEO. "In fiscal 2008, Wi-LAN negotiated license agreements with 79 companies, which is a five-fold increase over 2007. Fiscal 2008 cash revenues, which were almost 40 percent higher than 2007, signal the growing strength of our licensing program. Our cash earnings, at over 40 percent of revenues, demonstrate the potential of our business to generate very favourable margins. Ending the year with a net cash position exceeding $101 million, gives us the ability to aggressively pursue our strategic plan."
Mr. Skippen added, "Our fiscal 2009 financial guidance, which contemplates top line improvements and solid bottom line performance, reflects the cautious optimism that we have for our business despite the current uncertain economic conditions. In fiscal 2009, we will continue to make the investments we believe are necessary and desirable to position the company for future success. One such exciting investment is our research and development effort, which will focus on solving technology challenges facing next-generation femtocell and whitespace networks. All in all, we believe that 2009 will be another strong year for Wi-LAN, with the potential for a number of exciting developments."
2009 Financial Guidance
Revenues for the fiscal year ended October 31, 2009 are expected to be within the range of $30.0 million to $34.0 million. Operating expenses, excluding stock based compensation, are expected to be in the range of $23.0 million to $26.0 million. Pro forma earnings are expected to be within the range of $9.5 million to $13.0 million.
The above statements are forward-looking and actual results may differ materially. The "Forward-looking Information" section at the end of this news release provides information on various risks and uncertainties that the Company faces. Additional information identifying risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in Wi-LAN's current Annual Information Form and its other filings with the various Canadian securities regulators which are available online at [ www.sedar.com ]. Annual financial guidance for fiscal 2009 is provided to assist investors and other interested parties in understanding Wi-LAN's performance. The reader is cautioned that using this information for any other purpose may be inappropriate.
The Company's revenues result from the licensing of intellectual property which, by its very nature, is directly affected by the timing of the closure of license agreements, the nature and extent of specific licenses including actual rates, product sales by licensees which can be subject to seasonality as well as overall market demands and the timeliness of the receipt of licensee royalty reports. In addition, certain revenues may be of a one-time nature. Thus, quarter-to-quarter fluctuations in revenue are normal and should be expected.
The above guidance for the fiscal year ending October 31, 2009 reflects our current business indicators and expectations. Due to their nature, certain income and expense items, such as significant settlements from companies involved in current enforcement actions, new significant litigation or defense actions that could arise during the course of the year, losses on asset impairments or realized foreign exchange losses cannot be accurately forecast. Accordingly, we exclude forecasts of such items from our guidance. Additionally, the Company's revenues result from the licensing of intellectual property which, by its very nature, is directly affected by the timing of the closure of license agreements, the nature and extent of the license including actual rates, the product sales by licensees which can be subject to seasonality and overall market demands as well as the timeliness of the receipt of licensee royalty reports. Wi-LAN's imperative is to negotiate the best possible license as measured over the long-term and accordingly, the timing of actual license signings may vary from that forecasted. Actual results may vary materially from the guidance provided as a consequence of the above noted factors.
Conference Call Information - January 13, 2009 - 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 CFO, Shaun McEwan, will be on the call.
Calling Information
- A live audio webcast will be available at [ http://www.investorcalendar.com/IC/CEPage.asp?ID=139019 ]
- To access the call from Canada and US, dial 1.877.407.8033 (Toll Free)
- To access the call from other locations, dial 201.689.8033 (International)
Replay Information
- The call will be available at [ http://www.investorcalendar.com/IC/CEPage.asp?ID=139019 ] and accessible by telephone until 11:59 PM on January 20, 2009
- Replay Number (Toll Free): 1.877.660.6853
- Replay Number (International): 201.612.7415
- Replay passcodes (both required for playback)
- Account #: 286
- Conference ID #: 307513
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 consumer 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 a large and growing portfolio of more than 300 issued or pending patents. Wi-LAN has licensed its intellectual property to over 160 companies. For more information: [ www.wi-lan.com ].
Note
(i) 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, Wi-LAN is reporting "pro forma earnings" which is a non-GAAP financial term. Wi-LAN's pro forma earnings represent earnings 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 that face the Company; such statements may contain such words as "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, and may be based on management's current assumptions and expectations related to all aspects of the wireless and wireline telecommunications industries and the global economy. Risks and uncertainties that may face the Company include, but are not restricted to: licensing of the Company's patents can take an extremely long time and may be subject to variable cycles; the Company is currently almost exclusively reliant on additional licensing of its patent portfolio to generate future revenues and cash flows; the Company may be required to establish the enforceability of its patents in court in order to obtain material licensing revenues; changes in patent laws or in the interpretation or application of patent laws could materially adversely affect the Company; a court may determine that certain of the Company's patents are not infringed by certain standards or products or may disagree with management with respect to whether one or more of the Company's patents apply to certain standards or products, which could adversely affect the Company; the Company will need to acquire or develop new patents to continue and grow its business; the Company has made and may make acquisitions of technologies or businesses which could materially adversely affect the Company; the Company may require investment to translate its intellectual property position into sustainable profit in the market; the viability of the Company's V-chip technology may be subject to continued government support; the Company is dependent on its key officers and employees; the price of the Company's common shares is volatile and subject to market fluctuation; and the Company may be negatively affected by reduced consumer spending due to the uncertainty of economic and geopolitical conditions.
These risks and uncertainties may cause actual results to differ from information contained in this release, when estimates and assumptions have been used to measure and report results. There can be no assurance that any statements of forward-looking information contained in this release 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 statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by applicable laws, the Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in Wi-LAN's current Annual Information Form and its other filings with the various Canadian securities regulators which are available online at [ www.sedar.com ].
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States.
All trademarks and brands mentioned in this release are the property of their respective owners.
Wi-LAN Inc.
Consolidated Statements of Operations and Deficit
(in thousands of Canadian dollars, except per share amounts)
Years ended October 31 2008 2007
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Revenues $26,564 $61,270
Income/(expenses)from the following
Operating expenses
Stock-based compensation (2,024) (2,222)
Other operating expenses (18,778) (11,198)
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Total operating expenses (20,802) (13,420)
Depreciation & amortization (16,496) (7,766)
Interest income, net 3,228 3,153
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Earnings/(loss)before income taxes (7,506) 43,237
Provision for income tax recovery/(expense)
Current (2,672) (16,766)
Future 992 1,146
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(1,680) (15,620)
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Net and comprehensive earnings/(loss) (9,186) 27,617
Deficit, beginning of period (137,975) (165,592)
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Deficit, end of period $(147,161) $(137,975)
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Earnings/(loss) per share - basic and diluted
Basic $(0.10) $0.36
Diluted $(0.10) $0.34
Weighted average number of common shares
Basic 93,505,899 77,784,956
Diluted 93,505,899 80,092,485
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Wi-LAN Inc.
Consolidated Balance Sheets
(in thousands of Canadian dollars)
As at October 31 2008 2007
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Assets
Current assets
Cash and cash equivalents $39,254 $91,542
Short-term investments 62,193 -
Accounts receivable 3,441 2,916
Prepaid expenses and deposits 110 211
Assets held for sale 2,229 3,696
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Current assets 107,227 98,365
Furniture and equipment, net 816 785
Patents and other intangibles, net 132,111 146,955
Goodwill 13,449 16,400
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Assets $253,603 $262,505
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Liabilities and Shareholders' equity
Current liabilities
Accounts payable and accrued liabilities $6,530 $4,371
Mortgage payable related to assets held for sale - 518
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Current liabilities 6,530 4,889
Future income tax liability 21,408 24,575
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Liabilities 27,938 29,464
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Shareholders' equity
Common shares 362,041 362,094
Contributed surplus 10,785 8,922
Deficit (147,161) (137,975)
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Shareholders' equity 225,665 233,041
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Liabilities and Shareholders' equity $253,603 $262,505
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Wi-LAN Inc.
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
Years ended October 31 2008 2007
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Cash provided by/(used in)
Operations
Net and comprehensive earnings/(loss) $(9,186) $27,617
Non-cash items
License revenue settled by receipt of patents - (42,096)
Stock-based compensation 2,024 2,222
Depreciation & amortization 16,496 7,766
Future income taxes (216) 15,580
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9,118 11,089
Change in non-cash working capital balances
Accounts receivable (525) (1,201)
Prepaid expenses and deposits 101 873
Net assets held for sale 1,467 (162)
Accounts payable and accrued liabilities 2,051 1,595
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Cash generated from continuing operations 12,212 12,194
Cash used in discontinued operations - (66)
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Cash generated from operations 12,212 12,128
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Financing
Mortgage repayment (518) (37)
Proceeds on sale of common shares - 65,929
Common shares purchased in Normal Course
Issuers Bid (266) -
Common shares issued for cash on the
exercise of options 109 1,659
Common shares issued for cash from Employee
Share Purchase Plan 51 -
Common shares issued for cash on the exercise
of warrants - 765
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Cash generated from /(used in)financing (624) 68,316
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Investing
Short-term investments (62,193) -
Purchase of net assets including
transaction costs - (1,771)
Cash received on acquisitions - 5,782
Purchase of furniture and equipment (320) (672)
Purchase of patents for cash (1,363) (8,921)
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Cash used in investing (63,876) (5,582)
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Net cash and cash equivalents generated/
(used) in the period (52,288) 74,862
Cash and cash equivalents, beginning of period 91,542 16,680
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Cash and cash equivalents, end of period $39,254 $91,542
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