Sierra Wireless Reports First Quarter 2005 Results.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- Sierra Wireless Sierra Wireless (NASDAQ: SWIR, TSX: SW) is a wireless communications equipment designer and manufacturer, founded in 1993 and currently headquartered in Richmond, BC, Canada. Sierra's products are sold through indirect channels, such as wireless operators (e.g. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : WIR WIR Wilhelm Imaging Research, Inc. WIR When It's Ready (Borland) WIR Walk in Robe (real estate ads, Australia) WIR World In Review (news magazine) WIR Weekly Intelligence Review )(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : SW) is reporting first quarter results, including revenue of $20.2 million and a loss of $7.6 million. Our results are reported in US dollars and are prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . "Our financial results for the first quarter were modestly better than our guidance, however, we are not satisfied with reporting a loss for the quarter," said David Sutcliffe David Sutcliffe (born June 8, 1969 in Saskatoon, Saskatchewan, Canada) is a Canadian actor. He is best known for playing Christopher Hayden, the father of Rory Gilmore, on the CW show Gilmore Girls. , Chairman and Chief Executive Officer. "We are carefully controlling costs while investing in developing new products with expected commercial release dates spread over the next several quarters. As these products come on-line, we expect them to contribute significantly to a resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of growth." Results for the first quarter of 2005, relative to company guidance provided on January January: see month. 26, 2005: First quarter revenue for 2005 of $20.2 million was slightly better than our guidance range of approximately $18.0 to $20.0 million. Gross margin was 35.3%, slightly better than our guidance range of 34% to 35%. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $15.2 million, better than our guidance range of $16.5 to $17.0 million. Our net loss of $7.6 million, or loss per share of $0.30, was better than our guidance range of a loss of approximately $9.2 to $9.9 million, or loss per share of $0.35 to $0.38. Our cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was negative $7.7 million, consistent with our guidance of negative cash flow. Results for the first quarter of 2005, compared to the first quarter of 2004: First quarter revenue decreased by 51.5% to $20.2 million in 2005, from $41.6 million for the same period in 2004. Gross margin decreased to 35.3%, compared to 40.3%. Operating expenses were $15.2 million in the first quarter of 2005, compared to $11.6 million for the same period in 2004. Net loss for the first quarter of 2005 was $7.6 million, or loss per share of $0.30, compared to net earnings of $4.6 million, or diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.18, in the first quarter of 2004. Operating expenses of $11.6 million for the first quarter of 2004 included net funding of $1.1 million attributable to prior periods that was recognized as a reduction of research and development expense. Results for the first quarter of 2005, compared to the fourth quarter of 2004: Revenue for the three months ended March 31, 2005 amounted to $20.2 million, compared to $58.8 million in the fourth quarter of 2004. Gross margins were 35.3%, in the first quarter of 2005, compared to 38.8%, in the fourth quarter of 2004. Operating expenses were $15.2 million in the first quarter of 2005, compared to $15.8 million in the fourth quarter of 2004. Net loss was $7.6 million for the first quarter of 2005, or loss per share of $0.30, compared to net earnings of $7.3 million, or diluted earnings per share of $0.28, for the fourth quarter of 2004. First Quarter Highlights Included: Progress on products for CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. 2000 networks and channels: - We launched the Sierra Wireless EM5625, an embedded Inserted into. See embedded system. module for CDMA 1xEV-DO networks that incorporates QUALCOMM's MSM MSM - Micronetics Standard MUMPS 6500(TM) Mobile Station Modem(TM) chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). . The new module will provide a high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. , high capacity wireless data solution supporting the CDMA 1X and CDMA 1xEV-DO standards. The EM5625 is scheduled for delivery in the second quarter of 2005, and has been selected by Panasonic
- Together with Sprint, we announced that the Sprint PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. Connection Card by Sierra Wireless (AirCard(R) 580) is now available for sale through Sprint business sales channels. Designed to operate on CDMA 1xEV-DO and 1xRTT networks, the AirCard 580 by Sierra Wireless will support broadband-like speeds when Sprint launches EV-DO (EVolution-Data Only) A 3G high-speed digital data service provided by cellular carriers worldwide that use the CDMA technology, including Verizon and Sprint in the U.S. EV-DO works on EV-DO cellphones as well as laptops and portable devices that have EV-DO modems. service later this year and is backwards compatible See backward compatible. backwards compatible - backward compatibility to 1xRTT speeds in areas where Sprint EV-DO coverage is not available. - Intermec Technologies Corp., which designs and provides automatic data collection and mobile computing Using a computing device while in transit. Mobile computing implies wireless transmission, but wireless transmission does not necessarily imply mobile computing. Fixed wireless applications use satellites, radio systems and lasers to transmit between permanent objects such as buildings systems to companies around the world, has selected the Sierra Wireless EM3420 embedded module to connect its new Intermec 761 rugged mobile computer to CDMA 1x networks for voice and data transmission. - Falcom (Falcom USA, Inc. and Falcom GmbH) is utilizing the Sierra Wireless EM5625 embedded module in its SAMBA 3G USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. wireless modem A modem and antenna that transmits and receives over the air. Wireless modems support several technologies, including 802.11, Bluetooth, CDPD, DataTAC, Mobitex and Ricochet. There are wireless modems for laptops, handhelds and cellphones. for CDMA 1xEV-DO networks. The SAMBA is a plug-and-play device that, with the integrated EM5625 module, offers 1xEV-DO connectivity with a USB port A USB socket on a computer or peripheral device into which a USB cable is plugged. See USB. , making it ideal for those who want to access wireless networks from computers without PCMCIA card See PC Card. slots. Progress on products for GSM/GPRS/EDGE/HSDPA networks and channels: - We have selected QUALCOMM's MSM6275(TM) Mobile Station Modem(TM) chipset and system software solution for the development of Sierra Wireless products supporting High-Speed Downlink Packet Access High-Speed Downlink Packet Access (HSDPA) is a 3G (third generation) mobile telephony communications protocol in the High-Speed Packet Access (HSPA) family, which allows networks based on Universal Mobile Telecommunications System (UMTS) to have higher data (HSDPA (High Speed Downlink Packet Access) See HSPA. ) networks, the next generation of the WCDMA (Wideband CDMA) A 3G high-speed digital data service provided by cellular carriers that use the TDMA or GSM technology worldwide, including AT&T (formerly Cingular) and T-Mobile in the U.S. (UMTS (Universal Mobile Telecommunications System) The GSM implementation of the 3G wireless phone system. Part of IMT-2000, UMTS provides service in the 2 GHz band and offers global roaming and personalized features. ) technology standard. - Together with Nokia Networks, we expect to develop and promote an end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. HSDPA WCDMA (UMTS) solution. Under the agreement, Nokia's Networks business group and Sierra Wireless will work together to conduct early technical and market trials for their respective HSDPA products - the Sierra Wireless AirCard 850 and AirCard 860 wireless wide area network cards, Nokia's HSDPA infrastructure equipment, and related software - with the purpose of jointly marketing the HSDPA solution to key global network operator customers. - Together with Nortel, we provided live HSDPA demonstrations at 3GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. World Congress in Cannes, France. Using the AirCard 850 wireless wide area network card and commercial UMTS infrastructure equipment from Nortel, the two companies collaborated to demonstrate the increased speed and efficiency of the HSDPA standard in delivering data rich content such as streaming video A one-way video transmission over a data network. It is widely used on the Web as well as company networks to play video clips and video broadcasts. Computers in home networks stream video to digital media hubs connected to a home theater. and audio to mobile users. - We announced the availability of the Sierra Wireless AirCard 775 wireless wide area network card from Bouygues Telecom in France. In addition, we signed a distribution agreement with Leaf Wireless (Pty) Ltd to distribute the AirCard 775 in South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. and surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. regions. With quad-band operation for global roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. , the AirCard 775 provides mobile users with data rates up to three times faster than on GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. networks, providing quick, wireless connectivity to the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , e-mail and corporate applications. - CellStar Corporation, a value-added wireless logistics services leader, will add three new products to its Sierra Wireless product lineup A criminal investigation technique in which the police arrange a number of individuals in a row before a witness to a crime and ask the witness to identify which, if any, of the individuals committed the crime. for distribution in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . CellStar will begin distributing the Sierra Wireless AirCard 580 for use on CDMA 1x EV-DO networks, the AirCard 775 for use on EDGE networks and the Sierra Wireless MP 775 GPS, a rugged in-vehicle modem for use in public safety, field service, and transportation industries. Corporate Developments: - We appointed Kent Thexton, Co-Chief Executive Officer of SEVEN Networks, Inc., to our Board of Directors. Mr. Thexton has been instrumental in building wireless data solutions and services for business and consumers for some of the world's leading operators, and this experience will be invaluable to our team. Financial Guidance The following guidance for the second quarter of 2005 reflects our current business indicators and expectations. Inherent in this guidance are risk factors that are described in detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management's current beliefs and assumptions.
Q2 2005 Guidance
----------------
Revenue $20 - $21 million
Gross margin 34%
Operating expenses $16.0 - $16.2 million
Net loss $(8.5) million
Loss per share $(0.33)
Cash flow from operations Negative
Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements that are not promises or guarantees but are only predictions that relate to future events or our future performance or state other forward-looking information and are subject to substantial risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed, anticipated or implied by the forward-looking statements. These forward-looking statements relate to, among other things, our revenue, earnings, and other financial guidance for the second quarter of fiscal 2005, plans, objectives and timing for the introduction or enhancement of our services and products, statements concerning strategies, developments, statements about future market conditions, supply conditions, channel and end customer demand conditions, projected or future revenues, gross margins, operating expenses, profits and other statements of expectations, intentions, objectives and plans that are not statements of historical facts. When used in this press release, the words "may", "plan", "expect", "believe", "intends", "anticipates", "estimates", "predicts" and similar expressions generally identify forward-looking statements. Forward-looking statements reflect our current expectations. The risks and uncertainties that may affect our actual results, performance or achievements are many and include, among others, our ability to develop, manufacture, supply and market new products that we do not produce today and that may gain commercial acceptance, our reliance on the deployment of next generation networks by major wireless operators, and intense competition. These risk factors and others are discussed in our Annual Information Form which may be found on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review at www.sedar.com and in our other regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada. These factors should be reviewed carefully and you should not place undue reliance on any forward-looking statements. Unless otherwise required by applicable securities laws, Sierra Wireless disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. About Sierra Wireless Sierra Wireless is a leader in delivering highly differentiated wireless solutions that enable our customers to improve their productivity and lifestyle. Sierra Wireless develops and markets AirCard, the industry-leading wireless PC card line for portable computers; embedded modules for OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and wireless applications; the MP line of rugged vehicle-mounted connectivity solutions and Voq, a line of professional phones with easy-to-use, secure software solutions for mobile professionals. For more information about Sierra Wireless, please visit www.sierrawireless.com. For more information on Voq professional phones, please visit www.voq.com. "AirCard" and "Voq" are trademarks of Sierra Wireless, Inc. Other product or service names mentioned herein may be the trademarks of their respective owners.
Conference Call and Instant Replay
We will host a conference call to review our results on April 21,
2005 at 2:30 PM PDT, 5:30 PM EDT. To participate in this conference
call, please dial the following toll free number approximately ten
minutes prior to the commencement of the call:
1-800-440-1782 Passcode: Not required
or
1-416-620-8834 Passcode: Not required
Should you be unable to participate, Instant Replay will be
available for seven business days following the conference call by
dialing:
1-800-558-5253 Passcode: 21234991
or
1-416-626-4100 Passcode: 21234991
We look forward to having you participate in our call.
SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in thousands of United States dollars,
except per share amounts)
(Prepared in accordance with United States generally accepted
accounting principles (GAAP))
(Unaudited)
Three months ended March 31, 2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue $ 20,180 $ 41,641
Cost of goods sold 13,055 24,839
--------- ---------
Gross margin 7,125 16,802
--------- ---------
Expenses
Sales and marketing 4,289 4,173
Research and development, net 7,261 4,739
Administration 2,935 2,064
Amortization 691 636
--------- ---------
15,176 11,612
--------- ---------
Earnings (loss) from operations (8,051) 5,190
Other income 535 84
--------- ---------
Earnings (loss) before income taxes (7,516) 5,274
Income tax expense 78 704
--------- ---------
Net earnings (loss) (7,594) 4,570
Deficit, beginning of period (46,389) (71,309)
--------- ---------
Deficit, end of period $ (53,983) $ (66,739)
--------- ---------
--------- ---------
Earnings (loss) per share for
the period
Basic $ (0.30) $ 0.18
Diluted $ (0.30) $ 0.18
--------- ---------
--------- ---------
Weighted average number of shares
(in thousands)
Basic 25,358 24,986
Diluted 25,358 26,027
--------- ---------
--------- ---------
SIERRA WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
March 31, December 31,
2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 94,898 $ 131,846
Short-term investments 25,838 -
Accounts receivable 15,583 22,506
Inventories 18,691 11,090
Prepaid expenses 4,622 5,021
--------- ---------
159,632 170,463
Fixed assets 11,176 10,044
Intangible assets 13,920 14,208
Goodwill 19,227 19,227
Deferred income taxes 500 500
Other assets 1,039 1,152
--------- ---------
$ 205,494 $ 215,594
--------- ---------
--------- ---------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 4,307 $ 4,122
Accrued liabilities 31,414 33,890
Deferred revenue and credits 664 461
Current portion of long-term
obligations 559 758
Current portion of obligations
under capital lease 619 664
--------- ---------
37,563 39,895
Long-term obligations 1,680 1,747
Obligations under capital lease 182 287
Shareholders' equity
Share capital 218,827 218,805
Additional paid-in capital 440 440
Warrants 1,538 1,538
Deficit (53,983) (46,389)
Accumulated other comprehensive
loss (753) (729)
--------- ---------
166,069 173,665
--------- ---------
$ 205,494 $ 215,594
--------- ---------
--------- ---------
SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
(Unaudited)
Three months ended March 31, 2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash flows from operating activities:
Net earnings (loss) for
the period $ (7,594) $ 4,570
Adjustments to reconcile net
earnings (loss) to net
cash provided by operating
activities
Amortization 2,120 1,630
Loss on disposal - (14)
Changes in operating assets and
liabilities
Accounts receivable 6,924 (998)
Inventories (7,601) (585)
Prepaid expenses 512 267
Accounts payable 185 (3,332)
Accrued liabilities (2,477) 3,922
Deferred revenue 203 (149)
--------- ---------
Net cash provided by (used in)
operating activities (7,728) 5,311
Cash flows from investing activities:
Purchase of fixed assets (2,456) (1,503)
Increase in intangible assets (508) (1,246)
Purchase of long-term investments - (17,011)
Proceeds on disposal of
long-term investments - 3,217
Purchase of short-term
investments (25,862) (7,226)
Proceeds on maturity of
short-term investments - 7,892
--------- ---------
Net cash used in investing
activities (28,826) (15,877)
Cash flows from financing activities:
Issue of common shares 22 3,194
Repayment of long-term
obligations (416) (385)
--------- ---------
Net cash provided by (used in)
financing activities (394) 2,809
--------- ---------
Net decrease in cash and cash
equivalents (36,948) (7,757)
Cash and cash equivalents,
beginning of period 131,846 70,358
--------- ---------
Cash and cash equivalents,
end of period $ 94,898 $ 62,601
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--------- ---------
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