Science & Technology
Science and Technology
Science and Technology
Fri, September 4, 2009
Thu, September 3, 2009
Wi-LAN Inc.: WiLAN Reports Third Quarter 2009 Financial Results
OTTAWA, CANADA--(Marketwire - Sept. 3, 2009) - Wi-LAN Inc. ("WiLAN" or the "Company") (TSX:WIN), a leading technology innovation and licensing company, today announced financial results for the third quarter ended July 31, 2009. All financial amounts are expressed in Canadian dollars.
Third Quarter 2009 Highlights:
- Revenues of $9.6 million as compared to $4.8 million in Q3 2008.
- Pro forma earnings(i) of $3.5 million or 4 cents per share as compared to pro forma earnings of $495 thousand or 1 cent per share in Q3 2008.
- GAAP net loss of $1.3 million or 1 cent per share as compared to a GAAP net loss of $3.5 million or 4 cents per share in Q3 2008.
- Signed 15 agreements during the quarter including 11 wireless, 3 V-Chip and 1 wireline license.
- Raised $18.0 million in bought deal financing.
"In the third quarter we delivered solid performance and made important investments in the future of our business," said Jim Skippen, Chairman & CEO. "Our teams signed license agreements with 15 companies, including agreements with Infineon, Casio and Agilent generating a strong top line. We invested in the acquisition of valuable patented technologies, including the purchase of a 4G wireless portfolio from Nextwave Broadband. Also during the quarter, we completed a bought deal financing for $18 Million that strengthened our balance sheet and replenishes funds used in recent patent purchases. Our strong balance sheet gives us the ability to continue to purchase high quality technology portfolios, should they become available."
Added Skippen, "We are pleased that the Court in Texas has set an accelerated schedule for our handset litigation, including a claims construction or Markman hearing, in early March 2010. Meeting this schedule will increase our investment in litigation over the next few quarters, however, we believe this investment will generate a significant return for the company."
The Board of Directors has declared a dividend of 1.25 cents per common share. This dividend will be paid on November 4, 2009 to shareholders of record on October 14, 2009.
Investment income in the third quarter of 2009 was $730 thousand as compared to $763 thousand in the same period last year. Investment income for the nine months ended July 31, 2009 was $2.4 million as compared to $2.5 million in the comparable period in fiscal 2008.
During the third quarter of 2009, the Company reported a foreign exchange gain of $0.9 million which consisted of a realized foreign exchange gain of $0.6 million and an unrealized gain of $0.3 million on outstanding forward contracts at the end of the quarter. Foreign exchange gain for the nine months ended July 31, 2009 was $0.2 million as compared to a gain on foreign exchange of $0.3 million in the comparable 2008 fiscal period.
Patent licensing expenses represent the expenses incurred by the Company in the execution of its patent licensing programs which includes staffing and travel-related costs. During the third quarter of 2009, the Company signed wireless license agreements with eleven companies including Infineon Technologies AG, Casio Computer Co Ltd., and Agilent Technologies, Inc. This brings the total number of companies that have signed wireless licenses, as of July 31, 2009, to 73. During the quarter, WiLAN signed V-Chip license agreements with three companies. The addition of these three companies brings the total number of companies that have signed V-Chip licenses, as of July 31, 2009, to 115. The Company also signed a wireline license agreement during the third quarter of 2009.
Litigation expenses consist primarily of expenses related to enforcing and defending WiLAN's intellectual property ownership rights in court. Litigation expenses in the third quarter of 2009 were $4.0 million representing an increase of $1.6 million over the same period last year. The increase is due to the Company's ongoing response to declaratory judgment (DJ) claims filed by Intel Corporation and a number of other companies involving a number of WiLAN's wireless patents including U.S. Patent No. 6,549,759 (the "759 patent"), and activities supporting the addition of the 759 patent to our notebook litigation in the Federal Court of the Eastern District of Texas.
At July 31, 2009, the Company's net cash, comprised of cash, cash equivalents and short-term investments totaled $102.1 million, representing an increase of $3.5 million from the net cash position at April 30, 2009. The Company's cash equivalents and short-term investments include T-bills, term deposits, GICs and other marketable securities.
Financial Guidance
The Company is refining its financial guidance for the 12 month period ending October 31, 2009. Revenues are expected to be within the range of $34 million to $36 million. Operating expenses, excluding stock-based compensation, are expected to be in the range of $28 million to $29 million. Pro forma earnings(i) are expected to be within the range of $9.5 million to $10.5 million. Although operating expenses increased as a result of a greater investment in litigation, the revised guidance remains within the ranges originally provided on June 4, 2009.
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 WiLAN'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 WiLAN'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. Management believes that the strength of its business should be measured by annual revenues and growth in estimated revenue backlog.
The above guidance for the 12 month period end October 31, 2009 reflects our current business indicators and expectations and is subject to fluctuations in foreign currency exchange rates. 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. WiLAN'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.
Fiscal Year End Change Financial Reporting
As previously announced, the Company has changed its fiscal year end to December 31. The Company will report unaudited financial results for its fourth quarter, ended October 31, 2009, in a press release and conference call, on December 15, 2009. The Company will report audited financial results for the 14 month period ending December 31, 2009, within the first three months of 2010. The date of the release of the audited financial results for the 14 month period ending December 31, 2009 will be announced on December 15, 2009.
Conference Call Information - September 3, 2009 - 10 AM EDT
WiLAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Daylight Savings Time. WiLAN 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=148846 ]
- To access the call from Canada and U.S., dial 1.877.407.0778 (Toll Free)
- To access the call from other locations, dial 201.689.8565 (International)
Replay Information
The call will be available at [ http://www.investorcalendar.com/IC/CEPage.asp?ID=148846 ] and accessible by telephone until 11:59 PM on September 10, 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 #:330947
About WiLAN
WiLAN, founded in 1992, is a leading technology innovation and licensing company. WiLAN has licensed its intellectual property to over 190 companies worldwide. Inventions in our portfolio have been licensed by companies that manufacture or sell a wide range of communication and consumer electronics products including 3G cellular handsets, Wi-Fi-enabled laptops, Wi-Fi/DSL routers, xDSL infrastructure equipment, WiMAX base stations and digital televisions. WiLAN has a large and growing portfolio of more than 720 issued or pending patents. For more information: [ www.wilan.com ].
Note
(i) WiLAN follows Canadian generally accepted accounting principles ("GAAP") in preparing its interim and annual financial statements. To assist readers in further understanding its operating performance, WiLAN is reporting "pro forma earnings" which is a non-GAAP financial term. WiLAN's pro forma earnings represent earnings from continuing operations before stock-based compensation, unrealized gain or loss on foreign exchange contracts, 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 reliant on licensees paying royalties under existing licensing agreements and additional licensing of its patent portfolio to generate future revenues and increased 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; fluctuations in foreign exchange rates impact and may continue to impact the Company's revenues and operating expenses, potentially adversely affecting financial results; 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 generation of future V-chip revenues and the likelihood of the Company signing additional V-chip licenses could be negatively impacted by changes in government regulation; 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 WiLAN'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
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Three months ended July 31, Nine months ended July 31,
------------------------------------------------------------------------
------------------------------------------------------------------------
2009 2008 2009 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues $9,636 $4,829 $25,970 $12,815
Operating expenses
Patent licensing 983 824 2,680 2,250
Litigation 4,011 2,420 10,856 5,235
Research and
development 737 838 2,309 2,525
General and admin 1,774 1,118 4,942 3,698
Foreign exchange
loss (gain) (948) (103) (243) (312)
Stock-based
compensation 511 483 1,476 1,500
Depreciation &
amortization 4,451 4,055 12,803 12,259
------------------------------------------------------------------------
Total operating
expenses 11,519 9,635 34,823 27,155
Investment income 730 763 2,385 2,543
------------------------------------------------------------------------
Loss before income
taxes (1,153) (4,043) (6,468) (11,797)
Provision for income
tax expense
(recovery) 163 (584) (288) (2,334)
------------------------------------------------------------------------
Net and
comprehensive loss (1,316) (3,459) (6,180) (9,463)
Deficit, beginning
of period (4,864) (143,979) (147,161) (137,975)
Dividends (1,164) - (1,164) -
Reduction of
stated capital - - 147,161 -
------------------------------------------------------------------------
Deficit, end of
period $(7,344) $(147,438) $(7,344) $(147,438)
------------------------------------------------------------------------
------------------------------------------------------------------------
Loss per share -
basic and diluted
Basic $(0.01) $(0.04) $(0.07) $(0.10)
Diluted $(0.01) $(0.04) $(0.07) $(0.10)
Weighted average
number of common
shares
Basic 94,375,558 93,505,167 93,408,528 93,492,765
Diluted 94,375,558 93,505,167 93,408,528 93,492,765
------------------------------------------------------------------------
------------------------------------------------------------------------
Wi-LAN Inc.
Consolidated Balance Sheets
(in thousands of Canadian dollars)
------------------------------------------------------------------------
------------------------------------------------------------------------
As at July 31, 2009 October 31, 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $76,054 $38,768
Short-term investments 26,092 62,679
Accounts receivable 3,793 3,441
Prepaid expenses and deposits 371 110
Assets held for sale (Note 5) 2,353 2,229
------------------------------------------------------------------------
Current assets 108,663 107,227
Furniture and equipment, net 821 816
Patents and other intangibles, net 147,414 132,111
Goodwill 13,449 13,449
------------------------------------------------------------------------
Assets $270,347 $253,603
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities and Shareholders' equity
Current liabilities
Accounts payable and accrued liabilities $14,657 $6,530
------------------------------------------------------------------------
Current liabilities 14,657 6,530
Future income tax liability 19,637 21,408
------------------------------------------------------------------------
Liabilities 34,294 27,938
------------------------------------------------------------------------
Shareholders' equity
Common shares (Note 6(C)) 231,324 362,041
Contributed surplus 12,073 10,785
Deficit (7,344) (147,161)
------------------------------------------------------------------------
Shareholders' equity 236,053 225,665
------------------------------------------------------------------------
Liabilities and Shareholders' equity $270,347 $253,603
------------------------------------------------------------------------
Wi-LAN Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)
Three Months Ended July 31, Nine Months Ended July 31,
------------------------------------------------------------------------
------------------------------------------------------------------------
2009 2008 2009 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
Cash generated
by (used in)
Operations
Net and
comprehensive loss $(1,316) $(3,459) $(6,180) $(9,463)
Non-cash items
Stock-based
compensation 511 483 1,476 1,500
Depreciation &
amortization 4,451 4,055 12,803 12,259
Provision for
income tax
recovery (728) (1,146) (2,098) (3,438)
------------------------------------------------------------------------
2,918 (67) 6,001 858
Change in non-cash
working capital
balances
Accounts
receivable (745) (1,053) (352) (464)
Prepaid expenses
and deposits (185) (110) (261) 54
Net assets held
for sale (65) - (124) 1,468
Accounts payable
and accrued
liabilities (7,872) 1,954 184 1,039
------------------------------------------------------------------------
Cash generated
from (used in)
operations (5,949) 724 5,448 2,955
------------------------------------------------------------------------
Financing
Mortgage repayment - - - (518)
Proceeds on sale
of common shares 16,899 - 16,899 -
Common shares
repurchased in
Normal Course
Issuer Bid - - (944) -
Dividends (1,164) - (1,164) -
Common shares
issued for cash
on the exercise
of options 408 - 430 72
Common shares
issued for cash
from Employee
Share Purchase
Plan 60 - 60 -
------------------------------------------------------------------------
Cash generated
from (used in)
financing 16,203 - 15,281 (446)
------------------------------------------------------------------------
Investing
Short-term
investments 2,722 (62,193) 36,587 (62,193)
Purchase
of furniture and
equipment (55) (91) (277) (220)
Purchase of
patents (6,629) - (19,753) (1,363)
------------------------------------------------------------------------
Cash (used in)
generated from
investing (3,962) (62,284) 16,557 (63,776)
------------------------------------------------------------------------
Net cash and cash
equivalents
generated (used)in
the period 6,292 (61,560) 37,286 (61,267)
Cash and cash
equivalents,
beginning of period 69,762 91,835 38,768 91,542
------------------------------------------------------------------------
Cash and cash
equivalents, end
of period $76,054 $30,275 $76,054 $30,275
------------------------------------------------------------------------
