annual needham growth conference
TRANSCRIPT
14th Annual Needham Growth Conference
January 11, 2012
Jim Skippen, Chairman & CEO
SAFE HARBOUR
This presentation may include predictions, estimates or other information relating to Wi-LAN Inc and its affiliates that might be considered forward-looking, including statements constituting “forward-looking statements” or “forward-looking information” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other United States and Canadian laws. These forward-looking statements and forward-looking information are based upon current g g pexpectations and assumptions regarding anticipated developments and other factors affecting Wi-LAN Inc. and its affiliates. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements and forward-looking information involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements and forward-looking information. There can be no assurance that any forward-looking statements and forward-looking information
t i d i thi d t ill t b t A t l lt d f t t ld diff t i ll f thcontained in this document will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements.
These and all subsequent written and oral statements containing forward-looking statements and forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice Except as required by applicable laws Wi-LAN Inc assumes no obligation toqualified in their entirety by this notice. Except as required by applicable laws, Wi-LAN Inc. assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this presentation. Additional information identifying risks and uncertainties relating to Wi-LAN Inc.’s business are contained under the heading “Risk Factors” in Wi-LAN Inc.’s August 3, 2011 Management’s Discussion and Analysis and its other filings with the various Canadian securities regulators which are available online at www.sedar.com and g gwith the U.S. Securities and Exchange Commission available at www.sec.com. Throughout today’s presentation, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our SEDAR and SEC filings for a more complete discussion of our risk factors.
Unless otherwise noted, all dollar amounts are in U.S. currency.
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PATENTS AS AN ASSET CLASS
• Growing awareness of the value of patents
C i l i h t l k l
July 2, 2011, Wall Street Journal August 15, 2011, National Post
• Companies exploring how to unlock value
July 19, 2011, ReutersJuly 21, 2011, Wall Street Journal
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ABOUT WiLAN
• US $730M market capitalization (Jan. 6, 2012)
• Revenues: licensing large patent portfolio
• Established business modelAnnual Revenues
Qualcomm$4B
Qualcomm$4B
IBM$2BIBM$2B
InterDigital$300M
InterDigital$300M
Tessera$300M
Tessera$300M
WiLAN $105M*WiLAN $105M*
RPX$100MRPX
$100MAcacia$130MAcacia$130M
Rambus$300M
Rambus$300M
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* Fiscal 2011 financial guidance in US$
WORLD CLASS TEAM – LEADERSHIP
• 25 years licensing, $1B patent licensing• Mosaid, Borden Elliot
Jim SkippenCEO
• 20 years financial and executive leadership Shaun McEwan• Breconridge, CalianCFO• 25 years IP law and licensing • GPC, Black & Decker, ABB
Paul LernerSenior Legal Counsel
• 17 years engineering, marketing and licensing• SIGE Semiconductor, Nortel
Andrew Parolin SVP Licensing
• 15 years IP business and litigation• ICAP Altitude Capital Baker Botts
Daniel HenryVP Business Development • ICAP, Altitude Capital, Baker BottsVP Business Development
• 14 years corporate and IP law • AGA Medical, Sikorsky Aircraft, Martin Marietta
Matt PasulkaVP Patent Litigation
• 15 years international patent lawRob Scott • 15 years international patent law• Registered U.S. Patent Attorney
Rob ScottVP Patent Administration
• 15 years engineering, marketing and licensing• Nortel, Communications Research Centre
Christian Dubuc VP Licensing Technologies
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WORLD CLASS TEAM – MULTIPLE DISCIPLINES
Education and Designations* Engineers 32Engineers 32Masters/PhDs 27Lawyers 9Lawyers 9MBAs 2Patent Agents 6Patent Agents 6Accountants 2
• 55 employees, highest revenue/employee of any Canadian public high-tech company ($2M+)
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* Indicates # of employees with given education/designation not # of employees serving in specific role, at October 25, 2011
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GROWING & DIVERSE PATENT PORTFOLIO3000
Technology Patents*
750970
Technology PatentsWireless Communication 1000+
Wireline Communication 300+
20280 300
750
2006 2007 2008 2009 2010 2011
Digital TV & Display 1500+
Other 2002006 2007 2008 2009 2010 2011
* Issued and pending patents
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LICENSING EXCELLENCE
• Over 250 companies licensed
• Major litigations settled in early 2011• Signed license agreements worth 100s of $M
WiLAN h d t t d it liti ti t• WiLAN has demonstrated it can use litigation to enforce its rights
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STRONG REVENUE GROWTH
$105M* 30%+30%+ Annual Cash RevenueGrowth
50.7
Growth
M$
19.226.6
35.4
M+M
M
$$
$
2006 2011
2.1M$
2007 2008 2009 2010
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+ Cash revenues* Fiscal 2011 financial guidance in US$
POSITIVE EARNINGS
$70M*
Dramatic earnings+ growth in 2011 due to litigation settlements
$4.8M $9M$2 5M $5M
($5.9M) ($1.4M!)
$4.8M $2.5M $5M
! Continuing operations* Fiscal 2011 financial guidance in US$
2004 2005 2006 2007 2008 2009 2010 2011
($23.9M)
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Fiscal 2011 financial guidance in US$+ Adjusted Earnings are earnings from continuing operations before stock-based compensation expense, depreciation & 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.
STRONG FINANCIAL POSITION
Net cash* $ 197 M
Long-term debt+ $ 0Long term debt $ 0
Deferred tax asset $25 M
Annual dividend CDN $0.10Listed on NASDAQ Global Select Market
Annual dividend CDN $0.10
All figures in $US unless otherwise indicated* At September 30, 2011
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+ Excludes net proceeds from convertible debenture scheduled to be repaid 01/31/12 which was listed as long-term debt in Wi-LAN Inc. 2011 Third Quarter Consolidated Financial Results Interim Report
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WILAN HAS JUST BEGUN – FIVE YEAR STRATEGY
• Increase revenue to $200M+• Current programs• Current programs• Gladios IP – licensing partnerships• New programs (acquisitions R&D)• New programs (acquisitions, R&D)
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WILAN HAS JUST BEGUN – FIVE YEAR STRATEGY
• Deliver strong earnings while investing in:• Enforcement• Enforcement• Portfolio growth• Operations and team• Operations and team• Research and development• Licensing programs and capability• Licensing programs and capability
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REVENUE DRIVERS - CURRENT PROGRAMSToday Future
2010 Device Sales: Over $100B (WW)
2010 Device Sales: Over $140B (WW)
2014 Device Sales: Over $25B (WW)Over $100B (WW) Over $140B (WW)
3G
2010 Device Sales: Over $26B (NA)
2010 Device Sales: Over $100B (WW)
Incremental Revenue Opportunity: $700M to $1.3B*
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Sources: Display Search, Dell’Oro, Strategy Analytics, IDC, WiLAN* Estimate considers unit volumes of infringing products, wholesale value of infringing products, fair royalty rates, remaining patent lives. Not an estimate of potential annual revenues
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REVENUE DRIVERS - LICENSE OPPORTUNITIES
New Licenses Products
Cellular infrastructure
Renewed/Expanded Licenses Products
Digital televisions
Cellular handsets
g
Cellular handsets
Cellular handsetsCellular infrastructure
Cellular handsets
Cellular handsets
Cellular handsets
Digital televisionsCellular handsets
Cellular handsets
Digital televisions
DSL infrastructure
Digital televisions
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SIGNIFICANT LITIGATIONS
Technology Devices RemainingDefendants
Agreements / Settlements
Phase Timeline
2011 2012 2013 2014
V-Chip DTV LGSummary Judgment
-
(Expected June 2012)
3GPP CellularBaseStations
Alcatel-Lucent,Ericsson, Sony Ericsson, HTC
LG Discovery
(April 8, 2013)
Wi-Fi, CDMA Cellular Handsets
Apple, Alcatel-Lucent, Dell, HP, HTC, Kyocera,Novatel Wireless
Initial Pleadings (March 10, 2014)
Novatel Wireless, Sierra Wireless
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REVENUE DRIVERS – GLADIOS IP
• WiLAN subsidiary
• Partnerships to generate additional revenue with limited risk and investmentwith limited risk and investment
S• Six partnerships to date Remote Access Internet Advertising
On-line Gambling Networking Technology
On-line Gaming Internet Connectivity
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NEW PROGRAMS - PATENT ACQUISITIONS
• Significant financial resources on hand – $190M+
• Proven ability to acquire undervalued assets
DOCSIS patent
Bluetooth patents
Wireless patents
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PATENT ACQUISITIONS
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RESEARCH AND DEVELOPMENT
• R&D drives future revenue prospects and business opportunitiesand business opportunities
Next generation wireless technology• Next generation wireless technology • Spectrum sensing in Whitespace
• LTE in picocell networks
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Q3 2011 – HIGHLIGHTS
• Revenue of $27.8M, up 147% year-over-year
• Adjusted earnings* of $22.8M, compared to $0.9M in Q3 2010
• Quarterly dividend of CDN $0.025 per share
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* Adjusted Earnings are earnings from continuing operations before stock-based compensation expense, depreciation & 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.
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ANALYST COVERAGE
All analysts have buy recommendationsAnalyst Rating TargetByron Capital Markets Buy CDN$7
C d G it B CDN$10
All analysts have buy recommendations
Canaccord Genuity Buy CDN$10
Craig-Hallum Capital Buy $15
CIBC Sector Outperform CDN$10
Davenport & Co Buy $11
Fraser Mackenzie Strong Buy CDN$14
Northland Capital Sector Outperform CDN$11
Paradigm Capital Buy CDN$11
Versant Partners Buy CDN$8 40
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Versant Partners Buy CDN$8.40
CONCLUSION
• Significant value generated over last five years
• Just beginning to realize business potential
• Five year growth strategy to drive long-term and sustained increase in shareholder value
VALUEVALUE GROWTHGROWTHTSX:WIN / NASD:WILN 23