SW Sierra Wireless Inc

VANCOUVER, Aug. 4, 2011 /CNW/ -- TSX:  SW NASDAQ:  SWIR -- Revenue in the second quarter 2011 of $139.9 million, in-line with guidance -- Non-GAAP loss from operations of $0.8 million and diluted loss per share of $0.03 -- Core M2M revenue up 14% year-over-year -- Mobile Computing business launching new 4G LTE AirCard(®) products in Q3 -- Company expects significant sequential revenue growth in the second half VANCOUVER, Aug. 4, 2011 /CNW/ - Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported second quarter 2011 results. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles ("GAAP"), except as otherwise indicated below. Revenue for the second quarter of 2011 was $139.9 million, a decrease of 12% compared to $159.1 million in the second quarter of 2010, and a decrease of 3% compared to $144.3 million in the first quarter of 2011. The year-over-year revenue decrease was principally driven by the loss of revenue from Barnes & Noble and Clearwire, which together accounted for nearly $25 million in revenue in the second quarter of 2010.   Mobile Computing revenue was $66.0 million, down 13% compared to $75.5 million in the second quarter of 2010.  Machine-to-Machine ("M2M") revenue was $73.9 million, down 12% compared to $83.6 million in the second quarter of 2010.  Excluding sales to Barnes & Noble, the company's core M2M business increased 14% in the second quarter of 2011 on a year-over-year basis.  "Notwithstanding a slower than expected start to 2011, Sierra Wireless remains well positioned in our two target markets.  In Mobile Computing, we are launching several new 4G LTE products with key operators and PC OEMs.  In M2M, we continue to build on our global leadership position and successfully drive value chain expansion," said Jason Cohenour, President and Chief Executive Officer.  "Our growth drivers remain intact and despite some product launch delays, we expect significant sequential revenue and earnings growth in the second half of 2011." On a GAAP basis, gross margin was $39.1 million, or 28.0% of revenue, in the second quarter of 2011 compared to $46.2 million, or 29.0% of revenue, in the second quarter of 2010.  Operating expenses were $45.4 million and loss from operations was $6.3 million in the second quarter of 2011, compared to operating expenses of $49.7 million and a loss from operations of $3.5 million in the second quarter of 2010.  Net loss was $6.8 million, or $0.22 per diluted share, in the second quarter of 2011, compared to a net loss of $8.6 million, or $0.28 per diluted share, in the second quarter of 2010. On a non-GAAP basis, gross margin was 28.0% in the second quarter of 2011, compared to 29.1% in the second quarter of 2010. Operating expenses were $40.0 million and loss from operations was $0.8 million in the second quarter of 2011, compared to operating expenses of $41.7 million and earnings from operations of $4.7 million in the second quarter of 2010.  Net loss was $1.0 million, or $0.03 per diluted share, in the second quarter of 2011 compared to net earnings of $4.4 million, or $0.14 per diluted share, in the second quarter of 2010. Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, integration costs, restructuring costs, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments.  We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information on actual operating results and assist in comparisons from one period to another.  The reconciliation between our GAAP and non-GAAP results of operations is provided in the accompanying schedules. Financial Guidance The following guidance for the third quarter of 2011 reflects current business indicators and expectations. In the third quarter of 2011, we expect revenue to improve significantly relative to the second quarter, driven by the launch of new 4G AirCard products, as well as continued steady year-over-year growth in our core M2M product lines. Inherent in this guidance are risk factors that are described in greater 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.  VANCOUVER, Aug. 4, 2011 /CNW/ -- Q3 2011 Consolidated Guidance Non-GAAP $150 to 155 Revenue million Earnings $1.0 to $2.0 from million operations $0.8 to $1.6 Net million earnings $0.03 to Earnings $0.05 per per share share Conference Call, Webcast and Instant Replay Details We will host a conference call to review our results on Thursday, August  4, 2011 at 3:00 p.m. PDT, 6:00 p.m. EDT. You can participate in the conference call either via telephone or webcast. To participate in this conference call, please dial the following number approximately ten minutes prior to the commencement of the call. Telephone participation: VANCOUVER, Aug. 4, 2011 /CNW/ -- Toll free (Canada Passcode: Not and U.S.): 1-888-231-8191 required or Outside Canada and 1-647-427-7450 Passcode: Not the U.S.: required Webcast: We will also broadcast our conference call over the Internet. To access the web broadcast, please follow the link below and choose one of the following options: -- If you are following the conference call on the phone, please choose the "Non-Streaming" version -- If you would prefer to follow online only, with streaming audio, select any of the other options according to your preferred format http://event.on24.com/r.htm?e=320350&s=1&k=27E9B717B77398D8964785B3B2661291 Should you be unable to participate, Instant Replay (audio) will be available following the conference call for 7 business days. The webcast will be available at the above link for 90 days following the call. Audio only dial: 1-800-642-1687 or 1-416-849-0833 Passcode:  73603290 # We look forward to having you participate in our call. Cautionary Note Regarding Forward-Looking Statements Certain statements and information in this press release are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws ("forward-looking statements") including statements and information relating to our financial guidance for the second quarter of 2011 and our fiscal year 2011, our business outlook for the short and longer term and our strategy, plans and future operating performance.  Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We will not update or revise our forward-looking statements unless we are required to do so by securities laws. Forward-looking statements: -- Typically include words and phrases about the future such as "outlook", "may", "estimates", "intends", "believes", "plans", "anticipates" and "expects" -- Are not promises or guarantees of future performance. They represent our current views and may change significantly; -- Are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect: o Our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; o Our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; o Expected transition period to our 4G products; o Expected cost of goods sold; o Expected component supply constraints; o Our ability to "win" new business; o That wireless network operators will deploy next generation networks when expected; o Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and o Expected tax rates and foreign exchange rates. -- Are subject to substantial known and unknown material risks and uncertainties. Many factors could cause our actual results, achievements and developments in our business to differ significantly from those expressed or implied by our forward-looking statements, including without limitation, the following factors, most of which are discussed in greater detail. These risk factors and others are discussed in our Annual Information Form and Management's Discussion and Analysis of Financial Condition and Results of Operations, which may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and in our other regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada. o Actual sales volumes or prices for our products and services may be lower than we expect for any reason including, without limitation, the continuing uncertain economic conditions, price and product competition, different product mix, the loss of any of our significant customers, competition from new or established wireless communication companies; o The cost of products sold may be higher than planned or necessary component supplies may not be available, are delayed or are not available on commercially reasonable terms; o We may be unable to enforce our intellectual property rights or may be subject to litigation that has an adverse outcome; o The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed. o Transition periods associated with the migration to new technologies may be longer than we expect. About Sierra Wireless Sierra Wireless (NASDAQ: SWIR) (TSX: SW) offers industry-leading mobile computing and machine-to-machine (M2M) communications products and solutions that connect people, devices, and applications over cellular networks. Wireless service providers, equipment manufacturers, enterprises and government organizations around the world depend on us for reliable wireless technology. We offer 2G, 3G and 4G wireless modems, routers and gateways as well as a comprehensive suite of software, tools, and services that ensure our customers can successfully bring wireless applications to market.  For more information about Sierra Wireless, visit www.sierrawireless.com.  "AirCard" is a registered trademark of Sierra Wireless. "AirPrime," "AirLink," and "AirVantage" are also trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners. VANCOUVER, Aug. 4, 2011 /CNW/ -- SIERRA WIRELESS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of U.S. dollars, except where otherwise stated) (unaudited) Three months ended Six months ended June 30 June 30 2011 2010 2011 2010 Revenue $ 139,888 $ 159,116 $ 284,163 $ 310,433 Cost of goods sold 100,788 112,906 205,599 217,889 Gross margin 39,100 46,210 78,564 92,544 Expenses Sales and 11,326 13,183 23,594 27,339 marketing 22,025 21,534 45,537 42,075 Research and 8,810 8,835 18,195 18,419 development (350) 1,581 (25) 3,192 Administration 765 1,631 1,305 3,477 Restructuring 2,794 2,919 5,642 6,025 Integration Amortization 45,370 49,683 94,248 100,527 Loss from operations (6,270) (3,473) (15,684) (7,983) Foreign exchange (221) (5,460) 201 (9,118) gain (loss) (13) (103) (53) (233) Other expense, net Loss before income (6,504) (9,036) (15,536) (17,334) taxes 275 (399) (924) (1,088) Income tax expense (recovery) Net loss (6,779) (8,637) (14,612) (16,246) Net loss (13) (82) (57) (170) attributable to non-controlling interest Net loss $ (6,766) $ (8,555) $ $ attributable to the (14,555) (16,076) Company Basic and diluted net loss per share attributable to the Company's common shareholders (in dollars) $ (0.22) $ (0.28) $ (0.47) $ (0.52) Weighted average number of Company common shares outstanding (in thousands) 31,267 31,054 31,252 31,053 SIERRA WIRELESS, INC. CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) (unaudited) June 30, December 31, 2011 2010 Assets Current assets Cash and cash equivalents Short-term investments Accounts receivable, net of allowance for doubtful accounts $ 101,685 $ 85,443 of $4,020 (2010 - 17,470 26,405 $4,606) Inventories 97,029 117,397 Deferred income taxes 41,984 22,134 Prepaid expenses and 11,805 9,577 other 23,541 24,542 293,514 285,498 Property, plant and equipment 23,289 22,635 Intangible assets 66,096 69,024 Goodwill 93,137 90,953 Deferred income taxes 433 836 Other assets 675 622 $ 477,144 $ 469,568 Liabilities Current liabilities Accounts payable and accrued liabilities Deferred revenue and credits Current portion of $ 150,045 $ 138,940 obligations under capital 932 987 leases 290 324 151,267 140,251 Long-term obligations 27,742 24,724 Obligations under capital 343 263 leases 740 1,143 Deferred income taxes 180,092 166,381 Equity Shareholders' equity Common stock: no par value; unlimited shares authorized; issued and outstanding: 31,294,724 shares (December 31, 2010 - 31,222,786 shares) Preferred stock: no par value; unlimited shares authorized; issued and outstanding: nil shares Treasury stock: at cost 296,542 shares (December 31, 328,361 327,668 2010 - 643,042 shares) - Additional paid-in - capital (1,886) (3,908) Deficit 17,209 16,926 Accumulated other (47,722) (33,167) comprehensive income (loss) 1,090 (5,471) 297,052 302,048 Non-controlling interest - 1,139 (deficit) 297,052 303,187 $ 477,144 $ 469,568 SIERRA WIRELESS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) (unaudited) Three months ended Six months ended June 30 June 30 2011 2010 2011 2010 Cash flows provided (used) by: Operating activities Net earnings (loss) Items not requiring (providing) cash Amortization Stock-based compensation Non-cash restructuring and other Deferred income taxes Loss (gain) on disposal of property, $ $ plant and equipment $ (6,779) $ (8,637) (14,612) (16,246) Changes in non-cash working capital 8,456 8,763 17,068 17,484 Accounts 1,697 1,750 3,329 3,444 receivable - (901) - (897) Inventories (2,219) (690) (2,219) (698) Prepaid 41 (11) 33 (11) expenses and other Accounts 9,447 (5,016) 21,667 (17,343) payable and accrued 665 (7,106) 1,999 (6,511) liabilities 3,624 6,169 2,503 6,120 Deferred 2,302 6,880 (11,016) 7,881 revenue and credits (50) 57 (92) 127 Cash flows provided 17,184 (used) by operating activities 1,258 18,660 (6,650) Investing activities Purchase of (1,505) Wavecom S.A. shares (6,600) Additions to 2 property, plant and (1,216) equipment 7,089 Proceeds from sale of property, plant and equipment (1,553) (1,505) (1,553) Increase in (3,803) (8,562) (5,718) intangible assets 6 15 6 Net change in (1,022) (1,957) (1,999) short-term investments (2,326) 8,935 13,470 Cash flows (2,230) provided (used) by investing activities (8,698) (3,074) 4,206 Financing activities Issuance of common 259 shares, net of share 11 issue costs Repayment of 7 465 28 long-term obligations (1,675) (627) (2,097) Cash flows 270 provided (used) by financing activities (1,668) (162) (2,069) Effect of foreign 264 exchange rate changes on cash and cash equivalents (140) 818 (969) Cash and cash 15,488 equivalents, increase 86,197 (decrease) in the period Cash and cash equivalents, beginning (9,248) 16,242 (5,482) of period 111,257 85,443 107,491 Cash and cash $ 101,685 equivalents, end of period $ 102,009 $ 101,685 $ 102,009 Supplemental disclosures: $ (2,212) Net Income taxes 54 paid (received) Net interest paid 0 (received) Non-cash purchase of property, plant and $ 478 $ (1,911) $ 501 equipment (funded by (9) (53) 238 obligation under capital lease) 151 0 151 SIERRA WIRELESS, INC. RECONCILLIATION OF GAAP AND NON-GAAP RESULTS (Unaudited) VANCOUVER, Aug. 4, 2011 /CNW/ -- (in thousands of U.S. dollars) 2011 2010 YTD Q2 Q1 YTD Q2 Q1 Revenue - GAAP $ $ $ $ $ $ and Non-GAAP 284,163 139,888 144,275 310,433 159,116 151,317 Gross Margin - $ $ $ $ $ $ GAAP 78,564 39,100 39,464 92,544 46,210 46,334 Stock-based 210 97 113 259 124 135 compensation Gross Margin - $ $ $ $ $ $ Non-GAAP 78,774 39,197 39,577 92,803 46,334 46,469 Loss from $ $ $ $ $ $ operations - (15,684) (6,270) (9,414) (7,983) (3,473) (4,510) GAAP Stock-based 3,329 1,697 1,632 3,446 1,751 1,695 compensation Restructuring (25) (350) 325 3,192 1,581 1,611 and other Integration 1,305 765 540 3,477 1,631 1,846 Acquisition related 6,600 3,312 3,288 6,679 3,194 3,485 amortization Earnings (loss) $ $ $ $ $ from operations (4,475) (846) (3,629) $ 8,811 4,684 4,127 - Non-GAAP Net loss - GAAP $ $ $ $ $ $ (14,555) (6,766) (7,789) (16,076) (8,555) (7,521) Stock -based compensation, restructuring and other, integration, and acquisition related 11,228 5,503 5,725 15,594 7,518 8,076 amortization, net of tax Unrealized foreign (97) 238 (335) 9,118 5,460 3,658 exchange loss (gain) Non-controlling (32) - (32) (125) (40) (85) interest Net earnings $ $ $ $ $ (loss) - (3,456) (1,025) (2,431) $ 8,511 4,383 4,128 Non-GAAP Loss per share $ $ $ $ $ $ - GAAP (0.47) (0.22) (0.25) (0.52) (0.28) (0.24) Diluted earnings (loss) $ $ $ $ 0.27 $ 0.14 $ 0.13 per share - (0.11) (0.03) (0.08) Non-GAAP  SIERRA WIRELESS, INC. REVENUE BY SEGMENT AND PRODUCT LINE (Unaudited) VANCOUVER, Aug. 4, 2011 /CNW/ -- (in thousands of U.S. dollars) Three months ended June Six months ended June 30 30 2011 2010 2011 2010 M2M AirPrime Embedded Wireless $ 62,759 $ 69,529 $ 122,454 $ 145,206 Modules (excludes PC OEMs) AirLink Intelligent 8,886 12,217 18,982 22,728 Gateways and Routers AirVantage M2M Cloud 2,263 1,865 5,200 4,344 Platform and Other $ 73,908 $ 83,611 $ 146,636 $ 172,278 Mobile Computing Aircard Mobile 53,135 68,994 116,989 125,965 Broadband Devices AirPrime Embedded Wireless 11,857 5,253 18,604 10,100 Modules for PC OEMs Other 988 1,258 1,934 2,090 $ 65,980 $ 75,505 $ 137,527 $ 138,155 To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/04/c9502.html p Sierra Wireless, Inc.br/ David G. McLennanbr/ Chief Financial Officerbr/ (604) 231-1181br/ Website: a href="http://www.sierrawireless.com"www.sierrawireless.com/abr/ Email: a href="mailto:investor@sierrawireless.com"investor@sierrawireless.com/a /p

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