WiLAN Reports 2016 Second Quarter Financial Results

Fiscal 2016 Financial Guidance

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.                          

 

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