CALGARY, Canada – August 24, 2005 – Wi-LAN Inc. (TSX:WIN) today announced financial results for the three months and nine months ended July 31, 2005. All financial amounts are expressed in thousands of Canadian dollars, except per share amounts or unless otherwise noted.
Financial Highlights ($000’s)
Contrary to recent industry trends, in the three months ended July 31, 2005 Wi-LAN continued to achieve sequential growth in consolidated revenue. Revenue in the quarter was $7,727, an increase of $1,583 or 25.8% compared with $6,144 for the three months ended July 31, 2004, and an increase of $148 or 2.0% compared with $7,579 for the preceding three months ended April 30, 2005. The Company maintained its prior quarter sales in the Americas and the Asia Pacific regions, and started to show growth in the Europe, Middle East and Africa (EMEA) region.
EMEA growth was fueled by initial orders for Wi-LAN’s WiMAX platform Libra MX systems from customers in the Middle East. Initial customer reaction to Libra MX has been positive and the Company is working with a number of large customers who are currently going through product evaluation and acceptance processes. Libra MX is expected to be the Company’s engine for revenue growth in the fourth quarter.
Orders for other broadband wireless products remained strong in the third quarter, supported by the deployment by Bushcom Wireless Broadband Communications PTY Ltd.
With the launch in April of the WiMAX system-on-chip (SoC) co-developed by Wi-LAN and Fujitsu Microelectronics America (Fujitsu), opportunities for the generation of license, technology and engineering services revenue are improving and the Company’s intellectual property (IP) business is expected to begin to contribute meaningful financial results in 2006.
TIL-TEK Antenna Division sales declined in the quarter and the Company has taken action to reduce expenses of the division.
Gross profit improved to $3,185 or 41.2% of revenue, compared to $2,940 in the prior quarter and $2,900 in the third quarter of the 2004 fiscal year. Wi-LAN is continuing to take measures to cost-reduce its products to improve profit margins, including offshore manufacturing of high-volume products, product re-design, and introducing new higher-margin products.
Net loss for the third quarter was $(3,481) or $(0.08) per share, compared with net loss of $(2,168) or $(0.05) per share in the 2004 third quarter, and a net loss of $(2,968) or $(0.07) per share in the preceding three months ended April 30, 2005.
Cash used in operations improved to $(1,924), compared with $(4,002) for the 2004 third quarter, and $(4,252) in the preceding three months ended April 30, 2005.
Cash from financing and cash from investing in the quarter was $(53) 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. The Company believes its current financial resources are sufficient to meet its requirements in the near-term.
Additional financial information is available in the financial statements and notes attached to this release and in Wi-LAN’s Management Discussion and Analysis, available at www.sedar.com.
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.
As well, the Company has taken action to reduce expenses of its TIL-TEK Antennas division. The head-count of the division has been reduced by ten, including two vice presidents, with 34 employees remaining.
Significant Product Deployments
On July 25, 2005 Wi-LAN and Bushcom Wireless Broadband Communications PTY Ltd. announced that Bushcom recently signed up its 3000 th customer in its broadband wireless network utilizing Wi-LAN’s VIP and Libra products. Bushcom’s network, by far the largest of its kind in Australia, is being used to provide high-speed data and voice services to residents of rural towns and villages.
On July 20, 2005 Wi-LAN, Radionet OY, Ltd. and WebNet Converged Wireless Network Ltd. (WebNet) announced the launch of WebNet’s first urban hot zone deployment in Abbotsford, British Columbia, Canada. Owned and operated by WebNet, the network uses a combination of Wi-LAN high-capacity broadband wireless equipment for backhaul and Radionet’s Wi-Fi equipment for last mile connections to enable uninterrupted Wi-Fi connectivity.
On July 6, 2005 Wi-LAN announced receipt of $2 million in orders for its broadband wireless solutions, of which over $1 million is initial orders for its Libra MX TM systems. The orders are from customers in Libya, UAE, Saudi Arabia, Oman, Pakistan and Turkey. Libra MX is Wi-LAN’s WiMAX platform with a guaranteed seamless upgrade path to WiMAX Forum Certified systems.
Product Development Agreement for Public Transit Applications
On June 27, 2005 Wi-LAN and G7 Soft Co. Ltd. (G7 Soft) announced an agreement to advance the development of Wi-LAN's Libra Mobilis TM products for public transit applications. Once it completes further development of the products, G7 Soft will be the exclusive seller of the products in South Korea, and Wi-LAN will retain exclusive rights to sell Libra Mobilis products elsewhere. The agreement includes profit-sharing provisions for product sales.
Conference Call Information
Wi-LAN will hold a conference call to discuss the third quarter consolidated results on August 24, 2005 at 5:00 p.m. Eastern time (3 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.wi-lan.com and will be archived there.
A replay of the call will be available until 11:59 p.m. Eastern time on August 31, 2005 by calling 1-877-519-4471 (toll free North America) or (973) 341-3080. The access code for the replay is 6253380.
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
About Wi-LAN Inc.
Wi-LAN is a global provider of broadband wireless communications products and technologies, offering businesses, including telecom service providers, and government enterprises effective, economic and secure wireless high-speed communications solutions. Wi-LAN specializes in high-speed Internet access, data network extension, wireless Voice-over-IP, and wireless data and telephony backhaul, utilizing its high quality products and industry-leading technologies. Wi-LAN’s broadband wireless solutions feature an all-inclusive 2-year parts and labor warranty and are supported by 24/7 customer service.
Wi-LAN believes its portfolio of patents, including its core W-OFDM patents and 17 patents and patent applications acquired from Ensemble Communications in May 2004, are necessary for the implementation of devices using the IEEE 802.16 WirelessMAN Standard (1) and the ETSI BRAN HiperMAN(1) standard (the WiMAX Forum(1) standards). As well, Wi-LAN’s W-OFDM patents are believed to be required for the implementation of devices using the IEEE standards 802.11a and 802.11g (the 2nd generation Wi-Fi Alliance(1) standards), and the ETSI BRAN HiperLAN/2(1) standard. Wi-LAN licenses its patented technology and has executed non-exclusive W-OFDM license agreements with semiconductor and broadband wireless equipment companies.
Wi-LAN is the chair company of the OFDM Forum and a charter member of the WiMAX Forum (www.wimaxforum.org). 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.wi-lan.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.