WiLAN Reports First Quarter 2013 Financial Results

WiLAN Reports First Quarter 2013 Financial Results 
OTTAWA, CANADA -- (Marketwired) -- 05/08/13 -- Wi-LAN Inc. ("WiLAN"
or the "Company") (TSX:WIN) (NASDAQ:WILN) today announced financial
results for the first quarter of fiscal year 2013 ended March 31,
2013. All financial information in this press release is reported in
U.S. dollars, unless otherwise indicated. 
First Quarter 2013 Highlights 


 
--  Revenues of $18.4 million, exceeding guidance of $18.1 million. 
--  Adjusted earnings(i) of $1.3 million or 1 cent per share, exceeding
    guidance of between a loss of $2.2 million and breakeven. 
--  Returned $4.9 million to shareholders in dividend and share buyback
    payments. 
--  Signed licensing partnerships with British Telecommunications Plc and
    Espial Group. 
--  Announced license agreements with three companies including MediaTek
    Inc. 
--  Held cash and cash equivalents and short-term investments of $167.2
    million at March 31, 2013. 
--  Subsequent to quarter end, signed broad digital TV and display license
    with Panasonic Corporation.

 
"In the first quarter of 2013, our revenues, expenses and adjusted
earnings all came in better than our guidance for the quarter," said
Jim Skippen, President & CEO. "Working within our capital allocation
model, WiLAN returned $4.9 million to shareholders in dividend and
share buyback payments."  
Added Skippen, "We advanced negotiations with many companies and
signed, in the second quarter, a broad TV and digital TV display
license with Panasonic Corporation." 
Eligible Dividend  
The Board of Directors has declared an eligible dividend of CDN $0.04
per common share to be paid on July 5, 2013 to shareholders of record
on June 14, 2013. 
First Quarter 2013 Revenue Review  
In the three month period ended March 31, 2013, WiLAN generated
revenues of $18.4 million, as compared to $24.7 million in the three
month period ended March 31, 2012. The decrease in revenues is
primarily attributable to the timing of fixed payment amounts as a
result of the timing and amount of various payments under our license
agreements. 
First Quarter 2013 Operating Expense Review  
In the three month period ended March 31, 2013, cost of revenue
totaled $19.8 million as compared to $11.3 million in the three month
period ended March 31, 2012. The increase in expenses is primarily
attributable to an increase in litigation expense.  


 
                                                   Three months ended       
                                            --------------------------------
                                            --------------------------------
                                              March 31, 2013  March 31, 2012
                                            --------------------------------
                                            --------------------------------
                                                                            
Patent licensing                                       $ 898         $ 1,292
Litigation                                            12,200           3,858
Amortization of patents                                6,505           5,929
Stock-based compensation                                 158             224
                                            --------------------------------
                                                    $ 19,761        $ 11,303
                                            --------------------------------

 
For the three months ended March 31, 2013, litigation expenses
amounted to $12.2 million compared to $3.9 million for the same
period last year. The increase in litigation expense over the prior
year period is attributable to an increased level of effort in
ongoing patent infringement litigations including preparation for
three Markman hearings, one of which took place in March 2013, and
preparation for multiple trials scheduled to take place in 2013, of
which the first trial is scheduled to commence in July 2013. 
In the first quarter ended March 31, 2013, MG&A expenses amounted to
$2.9 million as compared to $3.2 million in the first quarter ended
March 31, 2012. The decrease in spending for the three months ended
March 31, 2013 is primarily attributable to a decrease in the accrued
variable compensation costs related to employee restricted share
units. 


 
                                                   Three months ended       
                                            --------------------------------
                                            --------------------------------
                                              March 31, 2013  March 31, 2012
                                            --------------------------------
                                            --------------------------------
                                                                            
Marketing, general and administration costs          $ 2,130         $ 2,458
Depreciation                                             124             135
Stock-based compensation                                 675             567
                                            --------------------------------
                                                     $ 2,929         $ 3,160
                                            --------------------------------

 
First Quarter 2013 Earnings Review  
In the first quarter ended March 31, 2013, WiLAN generated adjusted
earnings of $1.3 million or 1 cent per share as compared to $15.4
million, or 13 cents per share, in the comparative period. The
decrease in adjusted earnings as compared to last year is primarily
attributable to the decrease in revenue and an increase in litigation
expenses. 
The Company generated a GAAP loss of $6.4 million, or 5 cents per
share on a basic level, in the three month period ended March 31,
2013, as compared to a GAAP loss of $14.4 million, or 12 cents per
share on a basic level, in the same period last year. In the three
month period ended March 31, 2012 the Company incurred $31.1 million
in expenses related to the Debenture financing. In addition, the
Company recorded an income tax recovery of $0.9 million in the first
quarter of 2013 compared to an income tax recovery of $4.3 million
recorded in the same period last year. 
First Quarter 2013 Balance Sheet and Cash Flow Review  
At March 31, 2013, the Company's net cash, comprised of cash and cash
equivalents and short-term investments, totaled $167.2 million,
representing a decrease of $9.7 million from the net cash position at
December 31, 2012. The decrease is primarily attributable to $5.0
million cash utilized in operations, the payment of dividends
totaling $4.2 million and the repurchase of common shares totaling
$0.7 million. The Company's cash equivalents and short-term
investments include T-bills, term deposits and GICs. 
Second Quarter 2013 Financial Guidance  
For the second quarter 2013 ending June 30, 2013, the Company expects
revenue to be at least $17.5 million. This revenue guidance does not
include the potential impact of any new agreements that may be signed
during the balance of the second quarter of 2013 or the potential
impact of any royalties identified in audits conducted by the
Company. Operating expenses for the second quarter are expected to be
in the range of $16.6 million to $18.2 million of which $10.0 million
to $12.0 million is expected to be litigation expense. For the second
quarter of 2013, and assuming no additional agreements are signed,
adjusted earnings are expected to be between a loss of $1.0 million
and earnings of $1.0 million. 
The above statements are forward-looking and actual results may
differ materially. The "Forward-looking Information" section at the
end of this press 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 discussed in greater detail in the "Risk Factors"
section of WiLAN's annual information form for the 2012 fiscal year
dated March 7, 2013 (copies of which may be obtained at www.sedar.com
or www.sec.gov). Financial guidance 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 primarily 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.  
The above guidance for the three month period ended June 30, 2013
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,
brokerage opportunities, new significant litigation or defense
actions that could arise during the quarter, losses on asset
impairments or realized foreign exchange losses cannot be accurately
forecast. Accordingly, we exclude forecasts of such items from our
guidance. Actual revenues reported may exceed the guidance provided
due to the receipt of royalty reports, signing of new license
agreements and completion of licensee audits, all after the guidance
is provided. 
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. 
Conference Call Information - May 8, 2013 - 10:00 AM ET  
WiLAN will conduct a conference call to discuss its financial results
today at 10:00 AM Eastern Time (ET). 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=170698 


 
--  To access the call from Canada and U.S., dial 1.877.407.0782 (Toll Free)
--  To access the call from other locations, dial 1.201.689.8567
    (International) 

 
Replay Information  
The call will be available at
http://www.investorcalendar.com/IC/CEPage.asp?ID=170698 and
accessible by telephone until 11:59 PM ET on August 8, 2012.  
Replay Number (Toll Free): 1.877.660.6853  
Replay Number (International): 201.612.7415  
Conference ID #: 412825 
About WiLAN  
WiLAN, founded in 1992, is a leading technology innovation and
licensing company. WiLAN has licensed its intellectual property to
over 265 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 and 4G
handsets, Wi-Fi-enabled laptops, Wi-Fi and broadband routers, xDSL
infrastructure equipment, cellular base stations and digital
television receivers. WiLAN has a large and growing portfolio of more
than 3,000 issued or pending patents. For more information:
www.wilan.com. 
Note  
((i)) WiLAN follows GAAP in preparing its interim and annual
financial statements. Adjusted Earnings are earnings from continuing
operations before stock-based compensation expense, depreciation and
amortization expense, interest expense, unrealized foreign exchange
gains or losses, provision for income taxes and certain other
non-cash, one-time, or non-recurring charges.  
Forward-looking Information  
This news release contains forward-looking statements and
forward-looking information within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and other United States and
Canadian securities laws. The phrases "will be", "to build", "to be",
"potential impact", "may be", "are expected", "is expected", "may
exceed", "to negotiate", "may vary" and similar terms and phrases are
intended to identify these forward-looking statements.
Forward-looking statements and forward-looking information are based
on estimates and assumptions made by WiLAN in light of its experience
and its perception of historical trends, current conditions and
expected future developments, as well as other factors that WiLAN
believes are appropriate in the circumstances. Many factors could
cause WiLAN's actual performance or achievements to differ materially
from those expressed or implied by the forward-looking statements or
forward-looking information. Such factors include, without
limitation, the risks described in WiLAN's March 7, 2013 annual
information form for the year ended December 31, 2012 (the "AIF").
Copies of the AIF may be obtained at www.sedar.com or www.sec.gov.
WiLAN recommends that readers review and consider all of these risk
factors and notes that readers should not place undue reliance on any
of WiLAN's forward-looking statements. WiLAN has no intention and
undertakes no obligation to update or revise any forward-looking
statements or forward-looking information, whether as a result of new
information, future events or otherwise, except as required by law. 
All trademarks and brands mentioned in this release are the property
of their respective owners. 


 
Wi-LAN Inc.                                                                 
Condensed Consolidated Statements of Operations                             
(Unaudited)                                                                 
(in thousands of United States dollars, except share and per share amounts) 
                                                                            
                                              Three months     Three months 
                                                     ended            ended 
                                            March 31, 2013   March 31, 2012 
                                          ----------------------------------
Revenue                                                                     
  Royalties                                       $ 18,369         $ 24,693 
                                                                            
Operating expenses                                                          
  Cost of revenue                                   19,761           11,303 
  Research and development                           2,151            2,771 
  Marketing, general and administration              2,929            3,160 
  Realized foreign exchange loss                        89                6 
  Unrealized foreign exchange loss (gain)              944           (5,376)
                                          ----------------------------------
  Total operating expenses                          25,874           11,864 
                                          ----------------------------------
Earnings (loss) from operations                     (7,505)          12,829 
  Investment income                                    195              722 
  Interest expense                                       -           (1,126)
  Debenture financing, net                               -          (31,138)
                                          ----------------------------------
Loss before income taxes                            (7,310)         (18,713)
                                                                            
Provision for (recovery of) income tax                                      
 expense                                                                    
  Current                                            1,301            1,225 
  Deferred                                          (2,177)          (5,527)
                                          ----------------------------------
                                                      (876)          (4,302)
                                          ----------------------------------
Net and comprehensive loss                          (6,434)         (14,411)
                                          ----------------------------------
                                          ----------------------------------
                                                                            
Loss per share                                                              
  Basic                                            $ (0.05)         $ (0.12)
  Diluted                                          $ (0.05)         $ (0.12)
                                                                            
Weighted average number of common shares                                    
  Basic                                        121,545,062      121,816,678 
  Diluted                                      121,545,062      121,816,678 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
                                                                            
                                                                            
Wi-LAN Inc.                                                                 
Condensed Consolidated Balance Sheets                                       
(Unaudited)                                                                 
(in thousands of United States dollars)                                     
                                                                            
                                                               December 31, 
As at                                       March 31, 2013             2012 
                                          ----------------------------------
                                          ----------------------------------
Current assets                                                              
  Cash and cash equivalents                      $ 165,603        $ 175,246 
  Short-term investments                             1,565            1,617 
  Accounts receivable                                6,465            1,139 
  Prepaid expenses and deposits                        849              314 
                                          ----------------------------------
                                                   174,482          178,316 
                                                                            
Loan receivable                                        950              911 
Furniture and equipment, net                         1,091            1,272 
Patents and other intangibles, net                 110,360          116,846 
Deferred tax asset                                  22,994           20,817 
Goodwill                                            12,623           12,623 
                                          ----------------------------------
                                                 $ 322,500        $ 330,785 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
Current liabilities                                                         
  Accounts payable and accrued liabilities        $ 26,208         $ 22,406 
  Current portion of patent finance                                         
   obligation                                        2,577            2,547 
                                          ----------------------------------
                                                    28,785           24,953 
                                                                            
Patent finance obligation                            2,014            2,670 
Success fee obligation                               9,937           10,900 
                                          ----------------------------------
                                                    40,736           38,523 
                                          ----------------------------------
                                                                            
Commitments and contingencies                                               
                                                                            
Shareholders' equity                                                        
  Capital stock                                    431,091          431,067 
  Additional paid-in capital                        11,726           11,074 
  Accumulated other comprehensive income            16,225           16,225 
  Deficit                                         (177,278)        (166,104)
                                          ----------------------------------
                                                   281,764          292,262 
                                          ----------------------------------
                                                 $ 322,500        $ 330,785 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
                                                                            
                                                                            
Wi-LAN Inc.                                                                 
Condensed Consolidated Statements of Cash Flow                              
(Unaudited)                                                                 
(in thousands of United States dollars)                                     
                                                                            
                                              Three months     Three months 
                                                     ended            ended 
                                            March 31, 2013   March 31, 2012 
                                          ----------------------------------
                                          ----------------------------------
Cash generated from (used in)                                               
Operations                                                                  
Net loss                                           $(6,434)        $(14,411)
  Non-cash items                                                            
    Stock-based compensation                           971            1,055 
    Depreciation and amortization                    6,703            6,167 
    Foreign exchange (gain) loss                      (581)             333 
    Deferred financing costs                             -            1,746 
    Accretion of debt discount                           -           25,175 
    Disposal of patents                                 46                - 
    Deferred income tax recovery                    (2,177)          (5,527)
    Accrued investment income                          (39)               - 
                                          ----------------------------------
                                                    (1,511)          14,538 
  Change in non-cash working capital                                        
   balances                                                                 
    Accounts receivable                             (5,326)            (636)
    Prepaid expenses and deposits                      (84)            (662)
    Payments associated with success fee                                    
     obligation                                     (1,512)               - 
    Due to related party                                 -           (7,102)
    Accounts payable and accrued                                            
     liabilities                                     3,391             (140)
                                          ----------------------------------
Cash (used in) generated from operations            (5,042)           5,998 
                                          ----------------------------------
Financing                                                                   
  Dividends paid                                    (4,234)          (3,041)
  Repayment of convertible debentures                    -         (233,247)
  Common shares repurchased under normal                                    
   course issuer bid                                  (656)         (11,467)
  Common shares issued for cash on the                                      
   exercise of options                                 361            1,016 
                                          ----------------------------------
Cash used in financing                              (4,529)        (246,739)
                                          ----------------------------------
Investing                                                                   
  Sale (purchase) of short-term                                             
   investments                                          52              (70)
  Purchase of furniture and equipment                  (17)            (109)
  Purchase of patents and other                                             
   intangibles                                        (688)            (687)
                                          ----------------------------------
Cash used in investing                                (653)            (866)
                                          ----------------------------------
Foreign exchange gain on cash held in                                       
 foreign currency                                      581            3,854 
                                          ----------------------------------
                                                                            
Net cash and cash equivalents used in the                                   
 period                                             (9,643)        (237,753)
Cash and cash equivalents, beginning of                                     
 period                                            175,246          432,186 
                                          ----------------------------------
Cash and cash equivalents, end of period         $ 165,603        $ 194,433 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
                                                                            
                                                                            
Wi-LAN Inc.                                                                 
Reconciliation of GAAP Net Earnings to Adjusted Earnings                    
(Unaudited)                                                                 
(in thousands of United States dollars, except share and per share amounts) 
                                                                            
                                              Three months     Three months 
                                                     ended            ended 
                                            March 31, 2013   March 31, 2012 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
Net loss under GAAP                                $(6,434)        $(14,411)
                                                                            
Adjusted for:                                                               
  Unrealized foreign exchange (gain) loss              944           (5,376)
  Depreciation and amortization                      6,703            6,167 
  Stock based compensation                             971            1,055 
  Gain of disposal of assets                            (7)               - 
  Interest expense                                       -            1,126 
  Debenture financing, net                               -           31,138 
  Income tax expense (recovery)                       (876)          (4,302)
                                          ----------------------------------
Adjusted earnings                                  $ 1,301         $ 15,397 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
                                                                            
Adjusted earnings per basic share                   $ 0.01           $ 0.13 
                                                                            
Weighted average number of common shares                                    
  Basic                                        121,545,062      121,816,678 

Contacts:
Shaun McEwan
Chief Financial Officer
O: 613.688.4898
C: 613.697.7159
smcewan@wilan.com 
Tyler Burns
Director, Investor Relations
O: 613.688.4330
C: 613.697.0367
tburns@wilan.com
www.wilan.com
 
 
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