EX-99.3 4 v344922_ex99-3.htm EXHIBIT 99.3

  

Exhibit 99.3

 

 

 

 

Wi-LAN Inc.

 

2013 First Quarter

 

Condensed Unaudited Consolidated

 

Financial Results

 

Interim Report

 

 
 

 

Financial statements

 

 

 

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 (Note 4)          
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 

 

See accompanying notes to condensed consolidated financial statements

 

2013 First Quarter Financial Results1
 

 

Financial statements

 

 

 

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 (Note 5)  $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 (Note 6)          
           
Shareholders' equity          
Capital stock (Note 4)   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 

 

See accompanying notes to condensed consolidated financial statements

 

2013 First Quarter Financial Results2
 

 

Financial statements

 

 

 

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 
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 

 

See accompanying notes to condensed consolidated financial statements

 

2013 First Quarter Financial Results3
 

 

Financial statements

 

 

 

Wi-LAN Inc.

Condensed Consolidated Statement of Shareholders' Equity

(Unaudited)

(in thousands of United States dollars)

 

   Capital Stock   Additional Paid-in
Capital		   Accumulated Other
Comprehensive Income		   Deficit   Total Equity 
                     
Balance - December 31, 2012   431,067    11,074    16,225    (166,104)   292,262 
                          
Comprehensive loss:                         
Net loss   -    -    -    (6,434)   (6,434)
Shares issued:                         
Stock-based compensation expense   -    971    -    -    971 
Exercise of stock options   538    (177)   -    -    361 
Shares repurchased under normal course issuer bid (Note 4)   (514)   (142)   -    -    (656)
Dividends declared (Note 4)   -    -    -    (4,740)   (4,740)
Balance - March 31, 2013  $431,091   $11,726   $16,225   $(177,278)  $281,764 

 

See accompanying notes to condensed consolidated financial statements

 

2013 First Quarter Financial Results4
 

 

NOTES

 

 

 

Wi-LAN Inc.
NOTES TO condensed Unaudited CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 2013 and 2012
(in thousands of United States dollars, except share and per share amounts, unless otherwise stated)
 

 

1.nature of business

Wi-LAN Inc. (“WiLAN” or the “Company”) is an intellectual property licensing company which develops, acquires, and licenses and otherwise enforces a range of patented technologies which are utilized in products in the communications and consumer electronics markets. The Company generates revenue by licensing its patents to companies that sell products utilizing technologies including: Wi-Fi, WiMAX, LTE, CDMA, DSL, DOCSIS, Bluetooth and V-Chip. The Company also generates revenue by licensing patent portfolios on behalf of third-party patent holders and, if necessary, the enforcement of their patented technologies.

 

2.basis of presentation

The condensed unaudited consolidated financial statements of WiLAN include the accounts of WiLAN and its subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, including all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, operations and cash flows for the interim periods. As the interim financial statements do not contain all the disclosures required in annual financial statements, they should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2012 and the accompanying notes. All inter-company transactions and balances have been eliminated.

 

3.Significant accounting policies

These condensed consolidated interim unaudited financial statements have been prepared following the same accounting policies disclosed in Note 2 of the Company’s audited consolidated financial statements and notes for the year ended December 31, 2012.

 

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued final guidance on the presentation of reclassifications out of other comprehensive income. The amendments require an entity to provide information about the amounts reclassified out of other comprehensive income by component. In addition, an entity is required to present, either on the face of the income statement or in a footnote, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, only if the amount reclassified is required by U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide detail about those amounts. This amendment is effective for interim and fiscal years beginning after December 15, 2012. The amended standard will not impact the Company's financial position or results of operations.     

 

4.share capital

The Company paid quarterly cash dividends as follows:

 

   2013   2012 
   Per Share   Total   Per Share   Total 
1st Quarter  $0.035   $4,234   $0.025   $3,041 

 

The Company declared quarterly dividends as follows:

  

   2013   2012 
1st Quarter  $0.040   $0.030 

 

2013 First Quarter Financial Results5
 

 

NOTES

 

 

 

Wi-LAN Inc.
NOTES TO condensed Unaudited CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 2013 and 2012
(in thousands of United States dollars, except share and per share amounts, unless otherwise stated)
 

 

On March 7, 2013, the Company received regulatory approval to make a normal course issuer bid (“NCIB”) through the facilities of the TSX. Under the NCIB, the Company is permitted to purchase up to 11,846,843 common shares. The NCIB commenced on March 11, 2013 and is expected to be completed on March 10, 2014. The Company repurchased 145,000 common shares under the NCIB during the three months ended March 31, 2013 for a total of $656.

 

The weighted average number of common shares outstanding used in the basic and diluted earnings per share (“EPS”) computation was:

  

   Three months ended
March 31, 2013		   Three months ended
March 31, 2012		 
Basic weighted average common shares outstanding   121,545,062    121,816,678 
Effect of stock options   -    - 
Diluted weighted average common shares outstanding   121,545,062    121,816,678 

 

For the three months ended March 31, 2013, the effect of stock options totaling 621,849 were anti-dilutive (three months ended March 31, 2012 – 1,269,533).

 

5.financial instruments

The Company’s loan receivable is a term loan facility which is collateralized by a general security agreement. Management does not expect the borrower to fail to meet its obligations.

 

As of March 31, 2013, the Company held foreign exchange forward contracts totaling approximately $29,937 which mature at various dates through to January 2014. During the three months ended March 31, 2013, the Company recorded an unrealized foreign exchange loss of approximately $346 related to the foreign exchange forward contracts held as at March 31, 2013. The Company uses quoted market prices for similar instruments in an active market and, therefore, the foreign exchange forward contracts are classified as Level 2 in the fair value hierarchy.

 

Cash and cash equivalents, short-term investments, accounts receivables, accounts payable and accrued liabilities are short term financial instruments whose carrying value approximates their fair value.

 

The Company considers the rates used to determine the carrying value of the patent finance obligation and loan receivable to be reflective of current rates and therefore their carrying value approximates their fair value.

 

6.Commitments and contingencies

The Company, in the course of its normal operations, is subject to claims, lawsuits and contingencies. Although it is possible that liabilities may be incurred in instances for which no accruals have been made, WiLAN has no reason to believe that the ultimate outcome of these matters would have a significant impact on its consolidated financial position. Management has evaluated the likelihood of an unfavourable outcome and determined that no amount should be accrued with respect to any outstanding matters.

 

2013 First Quarter Financial Results6
 

 

Wi-LAN Inc.

11 Holland Avenue, Suite 608

Ottawa, ON Canada

K1Y 4S1

 

Tel: 1.613.688.4900
Fax: 1.613.688.4894
  www.wilan.com