Cash operating expenses for the third quarter 2016 are expected to be in the range of $9.7 million to $11 million, of which $2.7 million to $3.1 million is expected to be litigation expense. These expenses exclude any contingent partner payments and contingent legal fees.
Conference Call Information - July 28, 2016 - 10:00 AM ET
WiLAN will conduct a conference call to discuss its financial results today at 10:00 AM Eastern Time. WiLAN CEO, Jim Skippen and CFO, Shaun McEwan will host the call.
Webcast
A live audio webcast will be available at: http://www.gowebcasting.com/events/wilan/2016/07/28/second-quarter-2016-results/play
Dial-in
-- To access the call from Canada and U.S., dial 1.866.393.4306 (Toll Free)
-- To access the call from other locations, dial 1.734.385.2616
(International)
Replay Information
A replay of the call will be available at http://www.gowebcasting.com/events/wilan/2016/07/28/second-quarter-2016-results/play
A replay will also be accessible by telephone until 11:59 PM ET on August 5, 2016.
-- Replay Number: 1.855.859.2056 (Toll Free) or 1.404.537.3406
(International)
-- Conference ID #: 48918876
About WiLAN
WiLAN is one of the most successful patent licensing companies in the world and helps companies unlock the value of intellectual property by managing and licensing their patent portfolios. The Company operates in a variety of markets including automotive, digital television, Internet, medical, semiconductor and wireless communication technologies. Founded in 1992, WiLAN is listed on the TSX and NASDAQ. For more information: www.wilan.com.
Non-GAAP Disclosure(i)
WiLAN follows U.S.GAAP in preparing its interim and annual financial statements. We use the term "EBITDA" to reference Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA are earnings from continuing operations before interest income, interest expense, depreciation expense, amortization expense, and the provision for (recovery of) income taxes as disclosed in the reconciliation of GAAP net earnings to EBITDA included in this press release. We report EBITDA in the belief that it may be useful for certain investors and readers of the financial statements as a measure of our performance. EBITDA IS NOT A MEASURE OF FINANCIAL PERFORMANCE UNDER U.S. GAAP. IT DOES NOT HAVE ANY STANDARDIZED MEANING PRESCRIBED BY U.S. GAAP AND IS THEREFORE UNLIKELY TO BE COMPARABLE TO SIMILARLY TITLED MEASURES USED BY OTHER COMPANIES. EBITDA SHOULD NOT BE INTERPRETED AS AN ALTERNATIVE TO NET EARNINGS AND CASH FLOWS FROM OPERATIONS AS DETERMINED IN ACCORDANCE WITH U.S. GAAP OR AS A MEASURE OF LIQUIDITY.
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 "reflect the scalability and profitability in our model and its ability to deliver results over the long-term", "should be expected to increase", "we expect a decrease", "the Company is actively working to reduce", "we do not expect", "are expected to be", "is expected to be" 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, expected future developments and the expected effects of new business strategies, 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 February 8, 2016 annual information form for the year ended December 31, 2015 (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.
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 above targets reflect our current business indicators and expectations and are subject to fluctuations in foreign currency exchange rates. Due to their nature, certain expense items, such as new litigation actions, contingent payments to licensing partners and litigation counsel that may be required from certain licenses signed in any particular 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 expenses incurred may exceed the expense guidance provided due, in part, to contingent payments to licensing partners and litigation counsel that may be required from certain licenses signed during the quarter.
Actual results may vary materially from the guidance provided as a consequence of the above noted factors.
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 Six months Six months
Three months ended June 30, ended ended
June 30, 2016 2015June 30, 2016 June 30, 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 15,961 $ 34,990 $ 46,121 $ 55,400
Operating expenses
Cost of revenue 16,143 16,131 34,135 35,597
Research and
development - 713 - 1,432
Marketing, general
and administration 2,752 2,212 5,399 4,463
Foreign exchange
(gain) loss (114) 8 (277) 2,294
------------------------------------------------------
Total operating
expenses 18,781 19,064 39,257 43,786
------------------------------------------------------
Earnings (loss) from
operations (2,820) 15,926 6,864 11,614
Interest income 120 119 238 241
------------------------------------------------------
Earnings (loss) before
income taxes (2,700) 16,045 7,102 11,855
Provision for
(recovery of) income
tax expense
Current 837 1,031 3,860 2,034
Deferred (385) 4,056 1,474 3,621
------------------------------------------------------
452 5,087 5,334 5,655
------------------------------------------------------
Net and comprehensive
earnings (loss) (3,152) 10,958 1,768 6,200
------------------------------------------------------
------------------------------------------------------
Earnings (loss) per
share
Basic $ (0.03) $ 0.09 $ 0.01 $ 0.05
Diluted $ (0.03) $ 0.09 $ 0.01 $ 0.05
Weighted average
number of common
shares
Basic 119,255,090 120,747,848 119,768,540 120,610,828
Diluted 119,255,090 120,749,618 119,768,540 120,647,995
------------------------------------------------------
------------------------------------------------------
Wi-LAN Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands of United States dollars)
June 30, December 31,
As at 2016 2015
------------------------------
------------------------------
Current assets
Cash and cash equivalents $ 102,518 $ 93,431
Short-term investments 1,200 1,120
Accounts receivable 7,612 8,436
Prepaid expenses and deposits 1,467 1,607
------------------------------
112,797 104,594
Loan receivable 1,625 1,497
Furniture and equipment, net 1,427 1,614
Patents and other intangibles, net 135,901 155,213
Deferred tax asset 16,202 17,677
Goodwill 12,623 12,623
------------------------------
$ 280,575 $ 293,218
------------------------------
------------------------------
Current liabilities
Accounts payable and accrued liabilities $ 16,727 $ 23,205
Current portion of patent finance obligation 7,207 8,085
------------------------------
23,934 31,290
Patent finance obligation 18,407 19,895
Success fee obligation 140 655
------------------------------
42,481 51,840
------------------------------
Shareholders' equity
Capital stock 421,675 427,781
Additional paid-in capital 19,848 16,549
Accumulated other comprehensive income 16,225 16,225
Deficit (219,654) (219,177)
------------------------------
238,094 241,378
------------------------------
$ 280,575 $ 293,218
------------------------------
------------------------------
Wi-LAN Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of United States dollars)
Three
months Six months Six months
Three months ended ended ended ended
June 30, June 30, June 30, June 30,
2016 2015 2016 2015
---------------------------------------------------
---------------------------------------------------
Cash generated from (used
in)
Operations
Net earnings (loss) $ (3,152) $ 10,958 $ 1,768 $ 6,200
Non-cash items
Stock-based
compensation 46 210 154 482
Depreciation and
amortization 9,956 9,242 20,086 18,230
Foreign exchange
(gain) loss (105) (79) (390) 674
Disposal of assets - - 13 -
Deferred income tax
expense (recovery) (385) 4,056 1,474 3,621
Accrued investment
income (64) (55) (128) (110)
Change in non-cash
working capital
balances
Accounts receivable 3,399 (15,512) 824 (14,215)
Prepaid expenses and
deposits 114 (252) 140 (973)
Payments associated
with success fee
obligation (877) (971) (1,732) (2,145)
Accounts payable and
accrued liabilities (678) (407) 853 (2,212)
---------------------------------------------------
Cash generated from
operations 8,254 7,190 23,062 9,552
---------------------------------------------------
Financing
Dividends paid (1,151) (5,005) (2,242) (10,188)
Common shares
repurchased under
normal course issuer
bid (852) - (3,123) (329)
Common shares issued
for cash on the
exercise of options 11 - 11 1,269
Common shares issued
for cash from Employee
Share Purchase Plan 35 81 35 81
---------------------------------------------------
Cash used in financing (1,957) (4,924) (5,319) (9,167)
---------------------------------------------------
Investing
Purchase of furniture
and equipment (24) (86) (39) -
Repayment of patent
finance obligations (1,389) (5,532) (2,777) (114)
Purchase of patents (3,150) (1,099) (6,150) (13,164)
---------------------------------------------------
Cash used in investing (4,563) (6,717) (8,966) (13,278)
---------------------------------------------------
Foreign exchange gain
(loss) on cash held in
foreign currency 99 62 310 (579)
---------------------------------------------------
Net cash and cash
equivalents generated
(used) in the period 1,833 (4,389) 9,087 (13,472)
Cash and cash
equivalents, beginning
of period 100,685 117,228 93,431 126,311
---------------------------------------------------
Cash and cash
equivalents, end of
period $ 102,518 $ 112,839 $ 102,518 $ 112,839
---------------------------------------------------
---------------------------------------------------
Wi-LAN Inc.
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
(in thousands of United States dollars)
Accumulated
Additional Other
Capital Paid-in Comprehensive Total
Stock Capital Income Deficit Equity
------------------------------------------------------------
------------------------------------------------------------
Balance -
December 31,
2014 $ 426,037 $ 16,375 $ 16,225 $ (212,880) $ 245,757
Comprehensive
earnings:
Net earnings - - - 6,200 6,200
Shares and
options issued:
Stock-based
compensation
expense - 482 - - 482
Exercise of
stock options 2,056 (787) - - 1,269
Shares
repurchased
under normal
course issuer
bid (443) 114 - - (329)
Dividends
declared - - - (10,313) (10,313)
------------------------------------------------------------
Balance - June
30, 2015 $ 427,650 $ 16,184 $ 16,225 $ (216,993) $ 243,066
Balance -
December 31,
2015 $ 427,781 $ 16,549 $ 16,225 $ (219,177) $ 241,378
Comprehensive
earnings:
Net earnings - - - 1,768 1,768
Shares and
options issued:
Stock-based
compensation
expense - 154 - - 154
Conversion of
deferred
stock units
to common
shares 116 - - - 116
Exercise of
options 17 (6) - - 11
Sale of shares
under
Employee
Share
Purchase Plan 35 - - - 35
Shares
repurchased
under normal
course issuer
bid (6,274) 3,151 - - (3,123)
Dividends
declared - - - (2,245) (2,245)
------------------------------------------------------------
Balance - June
30, 2016 $ 421,675 $ 19,848 $ 16,225 $ (219,654) $ 238,094
------------------------------------------------------------
------------------------------------------------------------
Wi-LAN Inc.
Reconciliation of GAAP Net Earnings to EBITDA
(in thousands of United States dollars, except share and per share amounts)
Three months ended Six months ended
--------------------------------------------------------
June 30, June 30, June 30, June 30,
2016 2015 2016 2015
--------------------------------------------------------
--------------------------------------------------------
Net earnings (loss)
under GAAP $ (3,152) $ 10,958 $ 1,768 $ 6,200
Adjusted for:
Interest income (120) (119) (238) (241)
Depreciation and
amortization 9,956 9,242 20,086 18,230
Income tax expense 452 5,087 5,334 5,655
--------------------------------------------------------
EBITDA $ 7,136 $ 25,168 $ 26,950 $ 29,844
--------------------------------------------------------
--------------------------------------------------------
Weighted average
number of common
shares (1)
Basic 119,255,090 120,747,848 119,768,540 120,610,828
Earnings (loss) per
basic share under
GAAP $ (0.03) $ 0.09 $ 0.01 $ 0.05
Adjusted for:
Interest income (0.00) (0.00) (0.00) (0.00)
Depreciation and
amortization 0.08 0.08 0.17 0.15
Income tax expense 0.00 0.04 0.04 0.05
--------------------------------------------------------
EBITDA per basic
share $ 0.06 $ 0.21 $ 0.23 $ 0.25
1. Weighted average number of commons shares used in the calculation of
EBITDA per basic share and earnings per basic share under GAAP.
