Company delivers revenues of $4.8 million, GAAP net earnings of $91 thousand and adjusted earnings (1) of $2.3 million
OTTAWA, Canada – September 5, 2007 – Wi-LAN Inc. (TSX: WIN) (“Wi-LAN” or the “Company”), a leading technology licensing company, today announced financial results for the third quarter of fiscal 2007 ended July 31, 2007. All financial amounts are expressed in Canadian dollars.
- $4.8 million in licensing revenues, GAAP earnings of $91 thousand and adjusted earnings(1) of $2.3 million for the third quarter.
- $54.1 million in licensing revenues, GAAP earnings of $26.4 million and adjusted earnings(1) of $46.3 million year-to-date.
- Completed acquisition of Tri-Vision International Ltd. (“Tri-Vision”) on June 29, 2007, following the approval by Tri-Vision’s shareholders. Wi-LAN and Tri-Vision are integrating their licensing teams and activities.
Operating & Financial Review (see table in .pdf)
Third quarter revenues were $4.8 million. As partial payment, the Company received patents valued at $3.5 million. Management’s value of the patents was substantiated by a valuation obtained from a major independent accounting firm. The remaining revenues were primarily generated by Wi-LAN’s V-chip IP, acquired with Tri-Vision on June 29, 2007. Operating expenses and depreciation & amortization (“D&A”) amounted to $5.7 million, reflecting growth in the Company’s workforce and significant additions to Wi-LAN’s patent portfolio and other intangible items. Third quarter expenses included $1.1 million of stock-based compensation expense, a non-cash charge. Interest income amounted to $999 thousand during the quarter. Net earnings amounted to $91 thousand and EPS rounded to nil for the quarter. Adjusted earnings(1)amounted to $2.3 million.
In the first nine months of fiscal 2007, Wi-LAN generated $54.1 million of revenues. $37.5 million was received in the form of patents that were substantiated by independent valuations. Operating expenses and D&A amounted to $13.0 million during the period, including $1.4 million of stock-based compensation. Net of an income tax provision of $16.7 million, net earnings amounted to $26.4 million, or $0.35 per common share on a diluted basis. Adjusted earnings(1)amounted to $46.3 million in the period.
Results for the third quarter and year-to-date periods of fiscal 2006 are generally not comparable to those of fiscal 2007, as Wi-LAN was in the process of transforming itself into a “pure play” licensing business, and discontinuing its products manufacturing and engineering services businesses in the 2006 periods.
See table in .pdf
In the third quarter of fiscal 2007, cash and short-term investments increased by $5.5 million to $100.5 million at July 31, 2007, due mainly to $5.8 million of cash and equivalents acquired in the purchase of Tri-Vision. Wi-LAN issued common shares and assumed Tri-Vision’s warrants in completing the acquisition.
For the nine months ending July 31, 2007, Wi-LAN’s cash position increased by a total of $83.8 million, including net cash of $65.9 million from the sale of shares in December 2006 and March 2007, $13.6 million of cash generated from continuing operations, and $5.8 million of
Tri-Vision cash. The Company's cash equivalents include treasury bills, term deposits, GICs, and bank-sponsored short term paper.
The Company’s patents and other IP portfolio has grown significantly to a net of $138.9 million at July 31, 2007, including the V-chip patents and license agreements acquired in the purchase of Tri-Vision, $34.0 million of patents received from Nokia, and other acquisitions of IP in Wi-LAN’s markets of communications and consumer electronics.
“The third quarter was a solid period for Wi-LAN, during which we achieved significant operating and financial accomplishments,” said Jim Skippen, President & CEO. “In the space of three months, we generated $2.5 million in positive cash flow from operations, acquired Tri-Vision International, signed additional licensing deals, completed several strategic patent acquisitions and added key hires to advance our licensing and patent acquisition programs.”
“The acquisition of Tri-Vision brings many benefits and synergies to our Company. These include an immediate revenue stream, expanded licensing opportunities to the growing V-chip market and further momentum to our ongoing licensing efforts. As a result of our licensing activities during the quarter, many companies have come forward to discuss taking a license to our portfolio. These early discussions are continuing in the current quarter.”
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 2007 will likely be in the range of $13.0-14.0 million, based on current plans and expectations, including the impact of the acquisition of Tri-Vision and growth in other staff-related and legal expenses. The increase from previous guidance is due mainly to the additional compensation and expenses of the V-chip licensing team and higher stock-based compensation expenses.
Wi-LAN, founded in 1992, licenses intellectual property applicable to a full range of products in the communications and consumer electronics markets. The fundamental technologies covered by Wi-LAN’s patents include: CDMA, DOCSIS, DSL, V-chip, Wi-Fi and WiMAX. Wi-LAN has already licensed its intellectual property to a number of the world’s largest companies. For more information: www.wi-lan.com.