UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 

Report of Foreign issuer

 

Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934

 


 

For the Month of January 2005

 


 

(Commission File.  No 0-30718).

 


 

SIERRA WIRELESS, INC., A CANADA CORPORATION

(Translation of registrant’s name in English)

 

13811 Wireless Way

Richmond, British Columbia, Canada V6V 3A4

(Address of principal executive offices and zip code)

 

Registrant’s Telephone Number, including area code: 604-231-1100

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F    o     40-F    ý

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

 

Yes:    o    No:    ý

 

 



 

NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR:   Sierra Wireless, Inc.

 

TSX:  SW

Nasdaq:  SWIR

 

January 26, 2005

 

Sierra Wireless Reports Fourth Quarter and Fiscal Year 2004 Results

 

VANCOUVER, BRITISH COLUMBIA – Sierra Wireless, Inc. (NASDAQ:  SWIR, TSX:  SW) is reporting fourth quarter results, including revenue of $58.8 million, a profit of $7.3 million and positive cash flow from operations.  The company is also reporting 2004 revenues of $211.2 million and net earnings of $24.9 million.

 

Our results are reported in US dollars and are prepared in accordance with United States generally accepted accounting principles.

 

“2004 was a year of extraordinary growth and profitability for Sierra Wireless.  Revenues for the year of $211.2 million were up 108% over 2003, while earnings were $24.9 million, up from $2.3 million the previous year.  We have enjoyed strong demand for our PC card and embedded module products, particularly in North America.  Revenues for the fourth quarter were up 70%, compared to the same quarter in 2003, while earnings were $7.3 million, up from $1.9 million.  Our channel partners reported a record level of sell through to end customers for the fourth quarter”, said David Sutcliffe, Chairman and Chief Executive Officer.  “After more than doubling revenues in 2004, we expect 2005 sales to get off to a considerably slower start.  We continue to make aggressive investments in product and market development to provide the foundation for further profitable growth.  Our major product and market development investments include UMTS/HSDPA PC Cards, CDMA EVDO embedded modules and PC Cards, and Voq Professional Phones.”

 

Results for the fourth quarter of 2004, relative to company guidance provided on October 27, 2004:

 

Fourth quarter revenue for 2004 of $58.8 million was below our guidance of approximately $63.0 million.  Gross margin was 38.8%, below our guidance range of 39.0% to 40.0%.  Operating expenses were $15.8 million, better than our guidance range of $16.0 to $16.9 million.  Our net earnings of $7.3 million, or diluted earnings per share of $0.28, were below our guidance of net earnings of approximately $7.7 million, or diluted earnings per share of $0.29.  Our cash flow from operations was $5.8 million, consistent with our guidance of positive cash flow.

 

Our revenue in the fourth quarter relative to guidance was affected by lower than expected, although still robust, demand for PC cards.  This was partially offset by better than expected results in our embedded modules business.  Our gross margin percentage varied principally as a result of product mix.

 

Results for the fourth quarter of 2004, compared to the fourth quarter of 2003:

 

Fourth quarter revenue increased by 70% to $58.8 million in 2004, from $34.6 million for the same period in 2003.  Gross margin decreased to 38.8%, compared to 41.1%.  Operating expenses were $15.8 million in the fourth quarter of 2004, compared to $13.0 million for the same period in 2003.  Net earnings for the fourth quarter of 2004 were $7.3 million, or diluted earnings per share of $0.28, compared to net earnings of $1.9 million, or diluted earnings per share of $0.08, in the fourth quarter of 2003.

 

2



 

Results for the fourth quarter of 2004, compared to the third quarter of 2004:

 

Revenue for the three months ended December 31, 2004 amounted to $58.8 million, compared to $59.1 million in the third quarter of 2004.  Gross margins were $22.8 million, or 38.8%, in the fourth quarter of 2004, compared to $23.0 million, or 39.0%, in the third quarter of 2004.  Operating expenses were $15.8 million in the fourth quarter of 2004, compared to $15.4 million in the third quarter of 2004.  Net earnings were $7.3 million for the fourth quarter of 2004, or diluted earnings per share of $0.28, compared to net earnings of $7.1 million, or diluted earnings per share of $0.27, for the third quarter of 2004.

 

Results for fiscal year 2004, compared to fiscal year 2003:

 

Revenue for the year ended December 31, 2004 increased by 108% to $211.2 million, compared to $101.7 million in 2003.  Gross margin for 2004 was 39.6%, compared to 40.5% for 2003.  Operating expenses were $56.3 million in 2004, compared to $39.7 million in 2003.  Net earnings were $24.9 million in 2004, or $0.96 per diluted share, compared to $2.3 million in 2003, or $0.12 per diluted share.

 

Fourth Quarter Highlights Included:

 

Progress on products for CDMA 2000 networks and channels:

 

                  We announced a distribution agreement with Premier Wireless Solutions, a distributor of wireless machine-to-machine fixed and mobile communications services and products, for our embedded CDMA modules. Under the agreement, Premier Wireless will distribute and offer integration support services for the Sierra Wireless EM3420 embedded module.

 

                  We announced that the Sierra Wireless AirCard® 580 wireless wide area network card is now available in Australia for use on Telstra’s CDMA 1xEV-DO network, offering mobile professionals high speed wireless connectivity on one of the most advanced wireless networks available.

 

Progress on products for GSM/GPRS/EDGE networks and channels:

 

                  We announced that the quad-band AirCard 775 for EDGE networks is available for purchase from AT&T Wireless (now part of Cingular). The AirCard 775 provides mobile users with data rates up to three times faster than on GPRS networks, providing fast, wireless connectivity to the Internet, e-mail, and corporate applications.

 

                  We announced the introduction of AirCard Manager, a web-based software solution for the Sierra Wireless AirCard product line, designed to support enterprise customers that require an automated, seamless approach to software installation and end-user configuration.

 

                  We announced that the MP 775 GPS rugged wireless modem is now available in the United States for use on the Cingular Wireless EDGE network. With quad-band functionality for worldwide connectivity and data transfer rates averaging 100 to 130 kbps, the MP 775 offers fast, secure wireless access to mission critical corporate and government applications.

 

3



 

Progress on the Voq Professional Phone™:

 

                  Together with USA.NET, we announced that the Voq Professional Phone is now available from USA.NET through an initiative to offer an end-to-end voice, data, and email solution to mobile professionals. The Voq Professional Phone, a tri-band Windows Mobile-based Smartphone designed for mobile professionals, is available from USA.NET for $299, when bundled with a voice and data service plan from AT&T Wireless (now part of Cingular) and a hosted Microsoft Exchange 2003 or POP3 eMessaging service plan from USA.NET.

 

Corporate Developments:

 

                  Subsequent to quarter end, we announced two new appointments to our senior management team. Dan Schieler has been promoted to Senior Vice President of Worldwide Sales, responsible for global sales, distribution, and pre-sales technical support functions. In addition, Trent Punnett joins us as Vice President, Marketing.  Mr. Punnett will be responsible for our global marketing initiatives, including strategic marketing, product management and corporate marketing and communications.

 

Financial Guidance

 

The following guidance for the first 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 and are subject to change.

 

Following our considerable revenue and earnings growth in 2004, we expect a significant reduction in our business in early 2005.  We expect revenue in the first quarter of 2005 to be approximately $40 million less than in Q4 2004.  This is partially a result of lower sales from embedded modules that will not include further shipments to palmOne for the Treo600.  We also expect that Q1 demand for PC cards will be lower as a result of channel inventory levels at some of our channel partners that is already sufficient to meet their short term customer demand and the near term impact of increased competition, and resulting loss of market share, in the EVDO PC card market.

 

During 2005, we expect to increase our research and development efforts to ensure we are well positioned with new products that will take advantage of market opportunities associated with the deployment of 3G networks.

 

 

 

Q1 2005 Guidance

 

 

 

Revenue

 

$18 - $20 million

Gross margin

 

34% - 35%

Operating expenses

 

$16.5 – $17.0 million

Net loss

 

$(9.2) – (9.9) million

Loss per share

 

$(0.35) - $(0.38)

 

 

 

Cash flow from operations

 

Negative

 

4



 

Forward-Looking Statements

 

This press release contains forward-looking statements that involve risks and uncertainties.  These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement of our services and products, statements about future market conditions, supply conditions, channel and end customer demand conditions, revenues, gross margins, operating expenses, profits, and other expectations, intentions, and plans contained in this press release that are not historical fact.  Our expectations regarding future revenues and earnings depend upon our ability to develop, manufacture, supply and market new products that we do not produce today and that meet defined specifications.  When used in this press release, the words “plan”, “expect”, “believe”, and similar expressions generally identify forward-looking statements.  These statements reflect our current expectations.  They are subject to a number of risks and uncertainties, including, but not limited to, changes in technology and changes in the wireless data communications market.  In light of the many risks and uncertainties surrounding the wireless data communications market, you should understand that we cannot assure you that the forward-looking statements contained in this press release will be realized.

 

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 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 January 26, 2005 at 2:30 PM PST, 5:30 PM EST.  To participate in this conference call, please dial the following toll free number approximately ten minutes prior to the commencement of the call:

 

1-800-404-8949   Passcode:  Not required

or

1-416-641-6452   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:  21216148

or

1-416-626-4100   Passcode:  21216148

 

We look forward to having you participate in our call.

 

5



 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Sierra Wireless, Inc.

David G. McLennan

Chief Financial Officer

(604) 231-1185

Website: www.sierrawireless.com

Email: dmclennan@sierrawireless.com

INDUSTRY : CMT

SUBJECT : ERN

 

6



 

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))

 

 

 

Three months ended
December 31,

 

Year ended
December 31,

 

 

 

2004

 

2003

 

2004

 

2003

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

58,820

 

$

34,573

 

$

211,205

 

$

101,709

 

Cost of goods sold

 

35,974

 

20,370

 

127,600

 

60,551

 

Gross margin

 

22,846

 

14,203

 

83,605

 

41,158

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Sales and marketing

 

5,866

 

3,613

 

20,029

 

11,585

 

Research and development, net

 

7,231

 

5,621

 

24,527

 

15,994

 

Administration

 

2,041

 

2,198

 

8,993

 

6,597

 

Restructuring and other charges

 

 

 

289

 

1,220

 

Integration costs

 

 

921

 

 

1,947

 

Amortization

 

651

 

638

 

2,438

 

2,327

 

 

 

15,789

 

12,991

 

56,276

 

39,670

 

Earnings from operations

 

7,057

 

1,212

 

27,329

 

1,488

 

 

 

 

 

 

 

 

 

 

 

Other income

 

1,251

 

768

 

1,989

 

965

 

Earnings before income taxes

 

8,308

 

1,980

 

29,318

 

2,453

 

Income tax expense

 

1,042

 

55

 

4,398

 

198

 

Net earnings

 

7,266

 

1,925

 

24,920

 

2,255

 

Deficit, beginning of period

 

(53,655

)

(73,234

)

(71,309

)

(73,564

)

Deficit, end of period

 

$

(46,389

)

$

(71,309

)

$

(46,389

)

$

(71,309

)

 

 

 

 

 

 

 

 

 

 

Earnings per share for the period:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.29

 

$

0.09

 

$

0.99

 

$

0.12

 

Diluted

 

$

0.28

 

$

0.08

 

$

0.96

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares (in thousands)

 

 

 

 

 

 

 

 

 

Basic

 

25,339

 

22,563

 

25,212

 

18,442

 

Diluted

 

25,891

 

23,383

 

26,064

 

18,989

 

 

7



 

SIERRA WIRELESS, INC.

 

Consolidated Balance Sheets

(Expressed in thousands of United States dollars)

(Prepared in accordance with United States GAAP)

(Audited)

 

 

 

December 31,
2004

 

December 31,
2003

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

131,846

 

$

70,358

 

Short-term investments

 

 

14,760

 

Accounts receivable

 

22,506

 

21,566

 

Inventories

 

11,090

 

1,511

 

Prepaid expenses

 

5,021

 

2,223

 

 

 

170,463

 

110,418

 

 

 

 

 

 

 

Long-term investments

 

 

24,639

 

Fixed assets

 

10,044

 

5,985

 

Intangible assets

 

14,208

 

14,620

 

Goodwill

 

19,227

 

19,706

 

Deferred income taxes

 

500

 

500

 

Other assets

 

1,152

 

 

 

 

$

215,594

 

$

175,868

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

4,122

 

$

5,966

 

Accrued liabilities

 

33,890

 

22,221

 

Deferred revenue and credits

 

461

 

399

 

Current portion of long-term liabilities

 

758

 

1,328

 

Current portion of obligations under capital lease

 

664

 

141

 

 

 

39,895

 

30,055

 

 

 

 

 

 

 

Long-term liabilities

 

1,747

 

2,266

 

Obligations under capital lease

 

287

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Share capital

 

218,805

 

214,047

 

Additional paid-in capital

 

440

 

 

Warrants

 

1,538

 

1,538

 

Deficit

 

(46,389

)

(71,309

)

Accumulated other comprehensive loss

 

(729

)

(729

)

 

 

173,665

 

143,547

 

 

 

$

215,594

 

$

175,868

 

 

8



 

SIERRA WIRELESS, INC.

 

Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Prepared in accordance with United States GAAP)

 

 

 

Three months ended
December 31,

 

Year ended
December 31,

 

 

 

2004

 

2003

 

2004

 

2003

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net earnings for the period

 

$

7,266

 

$

1,925

 

$

24,920

 

$

2,255

 

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities

 

 

 

 

 

 

 

 

 

Amortization

 

1,937

 

1,276

 

6,915

 

5,669

 

Non-cash restructuring and other charges

 

 

 

289

 

895

 

Loss (gain) on disposal

 

1

 

 

(66

)

2

 

Accrued warrants

 

 

57

 

 

386

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

Accounts receivable

 

7,166

 

(2,823

)

(1,384

)

(5,360

)

Inventories

 

(2,475

)

1,418

 

(9,579

)

5,878

 

Prepaid expenses

 

(869

)

(1,375

)

(2,798

)

(1,087

)

Accounts payable

 

(6,740

)

4,276

 

(1,844

)

225

 

Accrued liabilities

 

(580

)

(1,395

)

12,588

 

5,296

 

Deferred revenue and credits

 

131

 

(31

)

62

 

101

 

Net cash provided by operating activities

 

5,837

 

3,328

 

29,103

 

14,260

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Business acquisitions

 

 

159

 

 

33

 

Proceeds on disposal

 

2

 

 

69

 

4

 

Purchase of fixed assets

 

(1,584

)

(997

)

(7,120

)

(1,972

)

Increase in intangible assets

 

(441

)

(149

)

(2,123

)

(4,077

)

Decrease (increase) in other assets

 

574

 

 

(1,152

)

 

Purchase of long-term investments

 

 

(24,639

)

(21,369

)

(24,639

)

Proceeds on disposal of long-term investments

 

 

 

46,186

 

 

Purchase of short-term investments

 

(51

)

(14,933

)

(21,305

)

(25,103

)

Proceeds on maturity of short-term investments

 

1,683

 

9,075

 

36,247

 

10,492

 

Net cash provided by (used in) investing activities

 

183

 

(31,484

)

29,433

 

(45,262

)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Issue of common shares, net of share issue costs

 

326

 

68,263

 

4,758

 

68,623

 

Repayment of long-term obligations

 

(439

)

(439

)

(1,806

)

(2,104

)

Net cash provided by (used in) financing activities

 

(113

)

67,824

 

2,952

 

66,519

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

5,907

 

39,668

 

61,488

 

35,517

 

Cash and cash equivalents, beginning of period

 

125,939

 

30,690

 

70,358

 

34,841

 

Cash and cash equivalents, end of period

 

$

131,846

 

$

70,358

 

$

131,846

 

$

70,358

 

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Sierra Wireless, Inc.

 

 

 

 

 

By:

/s/ David G. McLennan

 

 

David G. McLennan, Chief Financial Officer and
Secretary

 

 

 

 

Date: January 28, 2005

 

 

10