OTTAWA, CANADA--(Marketwired - May 8, 2013) - 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* 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
(*) 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 ended | Three months 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) | |||||
| As at | March 31, 2013 | December 31, 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 ended | Three months 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 ended | Three months 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 | |||
