UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
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For the Month of October 2003
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(Commission File. No 0-30718).
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SIERRA WIRELESS, INC., A CANADA CORPORATION
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(Translation of registrant's name in English)
13811 Wireless Way
Richmond, British Columbia, Canada V6V 3A4
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(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 X 40-F
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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: No: X
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NEWS RELEASE TRANSMITTED BY CCN DISCLOSURE
FOR: Sierra Wireless, Inc.
TSX: SW
Nasdaq: SWIR
October 22, 2003
SIERRA WIRELESS REPORTS THIRD QUARTER 2003 RESULTS
VANCOUVER, BRITISH COLUMBIA - Sierra Wireless, Inc. (NASDAQ: SWIR, TSX: SW)
is reporting better than expected third quarter results, including revenue of
$26.2 million, a lower-than-expected loss and positive cash flow.
Our results are reported in US dollars and are prepared in accordance with
United States generally accepted accounting principles. For the three months
ended September 30, 2003, our revenue was $26.2 million, operating expenses
were $11.5 million, our net loss was $0.9 million and our loss per share was
$0.05. During the third quarter of 2003, we incurred restructuring and
integration costs of $2.2 million related to the acquisition of AirPrime;
these costs were lower than expected. In addition, we received and recorded
an additional recovery of $0.2 million from Metricom. Our results, where
described as adjusted, exclude these amounts.
"We are pleased to report that, for the fifth consecutive quarter, we grew
revenues over the comparable quarter, generated positive cash flow and
produced an operating profit. During the third quarter, we closed on the
AirPrime acquisition and commenced integration activities. Sales of AirCards
and embedded modules were strong and North American revenues were up
significantly during the quarter", said David Sutcliffe, Chairman and Chief
Executive Officer. "Looking ahead, we have strong fourth quarter demand for
2.5G AirCards and embedded modules, we plan to complete the AirPrime business
integration and to bring our recently-announced Voq professional phone to
market. We expect overall economic and industry conditions to continue to be
challenging. Our business operating premise is profitable growth and our
priorities remain expansion of our distribution channels, sell through to end
customers and investment in new products for future growth."
Results for the third quarter of 2003, relative to company guidance provided
on July 17, 2003:
Third quarter revenue for 2003 of $26.2 million was better than our
guidance range of $24.0 to $25.0 million. Gross margin was 40.8%, better
than our guidance of approximately 39.0%. Our adjusted operating expenses
were $9.5 million, higher than our guidance range of $8.4 to $8.7 million.
Our net loss of $0.9 million, or loss per share of $0.05, was better than
our guidance range of a net loss of $2.9 to $3.0 million, or loss per share
of $0.17. Our adjusted net earnings were $1.1 million, better than our
guidance range of adjusted net earnings of $0.9 to $1.0 million. We had a
positive cash flow of $1.4 million that was better than our guidance of
negative cash flow of $4 million.
Results for the third quarter of 2003, compared to the third quarter of 2002:
Our revenue for the third quarter of 2003 increased by 24.2% to $26.2
million, from $21.1 million for the same period in 2002. Gross margin
improved to 40.8% from 39.2%. Operating expenses increased to $11.5 million
and adjusted operating expenses increased to $9.5 million, in each case
compared to $7.9 million in 2002. Net loss for the third quarter of 2003
was $0.9 million or loss per share of $0.05, compared to net earnings of
$0.5 million, or diluted earnings per share of $0.03, in the third quarter
of 2002. Adjusted net earnings for the third quarter of 2003 increased to
$1.1 million or adjusted diluted earnings per share of $0.06.
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Results for the third quarter of 2003, compared to the second quarter of 2003:
Revenue for the three months ended September 30, 2003 amounted to $26.2
million, compared to $20.7 million in the second quarter of 2003, an
increase of 26.6%.
Gross margins were $10.7 million or 40.8% in the third quarter of 2003,
compared to $8.3 million or 40.3% in the second quarter of 2003. Our gross
margin percentage improved slightly compared to the previous quarter due to
product cost reductions which were partially offset by changes in product
mix.
Adjusted operating expenses were $9.5 million, compared to $7.8 million in
the previous quarter. This increase is a result of the addition of staff
and projects related to the AirPrime acquisition, development and marketing
costs of the Voq professional phone and decreased funding from research and
development funding agreements. Our gross research and development
investments were $4.7 million in the third quarter of 2003 compared to $3.1
million in the second quarter of 2003.
Adjusted net earnings were $1.1 million for the three months ended
September 30, 2003, compared to $0.6 million for the three months ended
June 30, 2003. Our adjusted diluted earnings per share were $0.06 for the
third quarter of 2003, compared to adjusted diluted earnings per share of
$0.04 for the second quarter of 2003.
Acquisition of AirPrime, Inc.
On August 12, 2003, we completed our acquisition of AirPrime, Inc., a
privately-held supplier of high-speed CDMA wireless products located in
Carlsbad, California. The results of AirPrime's operations have been included
in our consolidated financial results since that date. The combined entity is
expected to be a well-positioned market leader with a broad product line,
innovative engineering, blue chip customers, global channels and a strong
balance sheet.
Third Quarter Highlights Included:
o In July, AirPrime announced that Handspring, an innovator in personal
communication products, had selected the EM3400 series as the CDMA
wireless engine to power their recently announced Treo 600 product
line.
o Together with Citrix Systems, Inc., QUALCOMM, Sprint and Trio
Teknologies, we announced the launch of a four-city series of Mobile
Access Technology Workshops designed to instruct enterprise
organizations on how to improve anytime, anywhere, any-application,
any-device wireless access for field professionals. The program
represents one of the largest free pilots of 3G CDMA2000 1X technology
for enterprise users to date.
o We signed a distribution agreement with Cedros, a specialist for
communication, web and groupware solutions. Cedros will distribute our
products to the German marketplace including the Sierra Wireless
AirCard(R) 750, a wide area wireless PC Card, and the new MP 750 rugged
wireless modem for GSM/GPRS cellular networks.
o Lucent Technologies demonstrated third-generation (3G) mobile
applications with several of the industry's leading companies at the
Association of Public Safety Communications Officials' (APCO) 2003
Conference & Symposium. Lucent is collaborating with companies such as
Padcom(R) and Sierra Wireless to highlight how 3G mobile high-speed
data networks can be utilized by public safety personnel.
o We announced the commercial availability of the MP 555 GPS rugged
wireless modem, the second product available in our next generation MP
Series. We also announced the first North American implementation of
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the new MP 555 GPS with the Ontario Provincial Police in Canada. By
outfitting its patrol cars with a new wireless system that combines
the MP 555 GPS wireless modem and Panasonic Toughbook notebook
computers, officers will have the ability to access provincial and
national databases and improve the efficiency of the dispatch and
arrest process.
o Dr. Norman Toms, our Chief Technical Officer, won the Cecil Green Award
for Technology Entrepreneurship, which is awarded by The Science
Council of BC to an individual who has started or developed a
knowledge-based company that has demonstrated ability to profitably
create and sell world-class products over time.
o Along with CompassCom Inc., we were selected by the City of Aurora in
Colorado to migrate its Public Works Department to next generation
technology. CompassCom Inc.'s Automatic Vehicle Location suite of
products and our new rugged wireless modem, the MP 750 GPS, have been
implemented to help the city track, monitor, and dispatch its vehicles
over a broader coverage area with high-speed mobility.
o In October 2003, we announced the Voq line of professional phones and
value-added software for business users. New Voq-branded professional
phones will be based on Microsoft Windows Mobile software for
Smartphones and will feature both a familiar phone keypad and a unique
flip-open QWERTY thumbpad. The first Voq model will support global
markets by operating over the GSM and GPRS wireless networks and is
expected to be commercially available in the first half of 2004.
Financial Guidance
We first provided guidance for the fourth quarter ending December 31, 2003 on
July 17, 2003. We are updating our fourth quarter guidance to reflect our
current business indicators and expectations. Inherent in this guidance is
higher than normal risk resulting from uncertainty associated with the
integration of AirPrime, the timing of volume shipments to channels and with
the rate of end customer adoption of newer products. All figures are
estimates based on management's current beliefs and assumptions and are
subject to change. Our actual results could differ materially from those
presented below.
We expect to continue to incur AirPrime related integration costs in Q4 2003.
We expect integration activities and costs to be substantially completed by
year-end.
Q4 2003 Q4 2003
Previous Guidance Updated Guidance
----------------------- -----------------------
Revenue $28 - $30 million $30 - $32 million
Gross margin 38% - 39% 39% - 40%
Operating expenses $9.8 - $10.4 million $10.5 - $11.8 million
Restructuring and other charges Nil Nil
Integration costs $1.1 - $1.5 million $1.4 - $1.6 million
Net earnings (loss) $(0.2) - $(0.3) million $(0.2) - $(0.3) million
Diluted earnings (loss) per share $(0.01) $(0.01)
Net earnings (loss), excluding
restructuring and integration costs $0.8 - $1.3 million $1.0 - $1.3 million
Diluted earnings (loss) per share,
excluding restructuring and
integration costs $0.04 - $0.06 $0.05 - $0.06
Cash flow Neutral Positive $1 million
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Management Retirement
Dr. Norman Toms, 59, will be retiring from his role as Chief Technical
Officer and will transition to an ongoing, part time advisory role. We expect
that this transition will be completed by March 2004 and that other members
of the management team will assume Dr. Toms' responsibilities. Dr. Toms
founded Sierra Wireless in May 1993, served as its first Chief Executive
Officer, became the Chief Technical Officer in May 1995 following the
appointment of David Sutcliffe as Chief Executive Officer. Dr. Toms deferred
earlier retirement plans in order to provide technical guidance to the
development of the first Voq professional phone.
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 in part upon our
ability to successfully integrate AirPrime into our business and our ability
to develop, manufacture, and supply 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 on Sierra
Wireless, visit our web site at www.sierrawireless.com. For more information
on Voq professional phones, visit our web site at 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 October 22, 2003 at
2:30 PM PDT, 5:30 PM EDT. To participate in this conference call, please dial
the following toll free number approximately five minutes prior to the
commencement of the call:
1-888-458-1598 Passcode: 38226#
Should you be unable to participate, Instant Replay will be available for
seven business days following the conference call by dialing:
1-877-653-0545 Passcode: 188344#
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We look forward to having you participate in our call.
FOR FURTHER INFORMATION PLEASE CONTACT:
Sierra Wireless, Inc.
Peter W. Roberts, CA, CPA
Chief Financial Officer
(604) 231-1192
Website: www.sierrawireless.com
Email: proberts@sierrawireless.com
INDUSTRY: CMT
SUBJECT: ERN
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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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2003 2002 2003 2002
-------- -------- -------- --------
Revenue............................................ $ 26,170 $ 21,068 $ 66,930 $ 54,623
Cost of goods sold................................. 15,486 12,802 39,975 53,185
-------- -------- -------- --------
Gross margin....................................... 10,684 8,266 26,955 1,438
-------- -------- -------- --------
Expenses
Sales and marketing.............................. 2,653 2,801 7,972 8,431
Research and development, net ................... 4,677 3,217 10,373 12,633
Administration................................... 1,331 1,331 4,399 5,141
Restructuring and other charges ................. 1,220 -- 1,220 13,093
Integration costs ............................... 1,026 -- 1,026 --
Amortization..................................... 590 529 1,689 1,776
-------- -------- -------- --------
11,497 7,878 26,679 41,074
-------- -------- -------- --------
Earnings (loss) from operations.................... (813) 388 276 (39,636)
Other income (expense)............................. (74) 124 197 98
-------- -------- -------- --------
Earnings (loss) before income taxes................ (887) 512 473 (39,538)
Income tax expense................................. 54 9 143 3,433
-------- -------- -------- --------
Net earnings (loss)................................ (941) 503 330 (42,971)
Deficit, beginning of period....................... (72,293) (75,375) (73,564) (31,901)
-------- -------- -------- --------
Deficit, end of period............................. $(73,234) $(74,872) $(73,234) $(74,872)
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (loss) per share for the period:
Basic............................................ $ (0.05) $ 0.03 $ 0.02 $ (2.64)
Diluted.......................................... $ (0.05) $ 0.03 $ 0.02 $ (2.64)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of shares (in thousands)
Basic............................................ 18,409 16,314 17,054 16,294
Diluted.......................................... 18,409 16,539 17,564 16,294
-------- -------- -------- --------
-------- -------- -------- --------
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SIERRA WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
September 30, December 31,
2003 2002
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(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents..................................... $ 30,690 $ 34,841
Short-term investments........................................ 8,753 --
Accounts receivable........................................... 18,891 13,865
Inventories................................................... 2,929 6,673
Prepaid expenses.............................................. 848 864
-------- --------
62,111 56,243
Fixed assets.................................................... 5,752 7,198
Deferred income taxes........................................... 500 500
Intangible assets............................................... 18,477 6,907
Goodwill........................................................ 16,057 --
Other........................................................... 241 241
-------- --------
$103,138 $ 71,089
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................. $ 1,690 $ 3,017
Accrued liabilities........................................... 23,831 12,431
Deferred revenue and credits.................................. 429 297
Current portion of long-term liabilities...................... 3,114 2,803
Current portion of obligations under capital lease............ 228 831
-------- --------
29,292 19,379
Long-term liabilities........................................... 1,998 2,896
Obligations under capital lease................................. 27 60
Shareholders' equity
Share capital................................................. 145,784 123,047
Deficit....................................................... (73,234) (73,564)
Accumulated other comprehensive income
Cumulative translation adjustments.......................... (729) (729)
-------- --------
71,821 48,754
-------- --------
$103,138 $ 71,089
-------- --------
-------- --------
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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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2003 2002 2003 2002
-------- -------- -------- --------
Cash flows from operating activities:
Net earnings (loss) for the period.................... $ (941) $ 503 $ 330 $(42,971)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Amortization........................................ 1,672 1,280 4,393 5,430
Non-cash restructuring and other charges............ 895 -- 895 25,905
Loss on disposal.................................... -- 2 2 122
Deferred income taxes............................... -- -- -- 3,754
Accrued warrants.................................... -- 41 329 384
Changes in operating assets and liabilities
Accounts receivable................................. (453) 509 (2,537) (2,859)
Inventories......................................... 2,146 146 4,460 3,257
Prepaid expenses.................................... 167 157 288 626
Accounts payable.................................... (6,432) 694 (4,051) (301)
Accrued liabilities................................. 6,873 (790) 6,691 107
Deferred revenue and credits........................ 201 (467) 132 (732)
------- ------- -------- --------
Net cash provided by (used in) operating activities... 4,128 2,075 10,932 (7,278)
Cash flows from investing activities:
Business acquisitions............................... 666 -- (126) --
Proceeds on disposal................................ -- -- 4 31
Purchase of fixed assets............................ (618) (388) (975) (1,984)
Increase in intangible assets....................... (2,614) (167) (3,928) (1,003)
Purchase of short-term investments.................. 52 (3,031) (10,170) (14,662)
Proceeds on maturity of short-term investments...... 1,417 5,521 1,417 40,533
------- ------- -------- --------
Net cash provided by (used in) investing activities... (1,097) 1,935 (13,778) 22,915
Cash flows from financing activities:
Issue of common shares.............................. 319 16 360 346
Repayment of long-term liabilities.................. (507) (301) (1,665) (1,210)
------- ------- -------- --------
Net cash used in financing activities................. (188) (285) (1,305) (864)
Net increase (decrease) in cash and cash equivalents.... 2,843 3,725 (4,151) 14,773
Cash and cash equivalents, beginning of period.......... 27,847 23,133 34,841 12,085
------- ------- -------- --------
Cash and cash equivalents, end of period................ $30,690 $26,858 $ 30,690 $ 26,858
------- ------- -------- --------
------- ------- -------- --------
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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/ Peter W. Roberts
-----------------------------------------
Peter W. Roberts, Chief Financial Officer
Date: October 23, 2003
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