Sierra Wireless Reports Fourth Quarter and Fiscal Year 2007 Results



    TSX: SW
    Nasdaq:   SWIR

    VANCOUVER, Jan. 31 /CNW/ - Sierra Wireless, Inc. (NASDAQ:   SWIR, TSX: SW)
is reporting fourth quarter and fiscal year 2007 results.
    Our results are reported in US dollars and are prepared in accordance
with United States generally accepted accounting principles.
    "In the fourth quarter of 2007, we experienced continued strong momentum
in our business and achieved record quarterly revenue and earnings, in spite
of a challenging component supply environment" said Jason Cohenour, President
and Chief Executive Officer. "Our fourth quarter revenue was up 22% from the
third quarter and up 98% on a year over year basis. Our strong sequential
growth was driven primarily by the launch and early shipments of our new HSUPA
AirCard products to customers around the world. Our momentum with these new
products helped lead the way to record revenue in each of our three main
business regions: The Americas, Asia and Europe.
    Overall, 2007 was a year of continued strong revenue growth and improving
profitability for the company. In 2007, we grew revenue by 99% to a record
$439.9 million and grew our earnings from operations by almost seven fold
compared to 2006. While driving significantly improved operating results, we
also diversified our business with the acquisition of AirLink and bolstered
our strategic transaction capacity with a new equity issue.
    As we look forward to 2008, we are encouraged by the continued strong
growth in our market segments, our proven ability to execute in a competitive
environment and the strategic opportunities that lay ahead. Our expectations
for 2008 are for continued revenue growth, improving profitability and further
business diversification."

    Q4 2007 Financial Results

    Our revenue for the fourth quarter of 2007 amounted to a record $135.6
million, gross margin was $37.8 million, or 27.9% of revenue, operating
expenses were $24.5 million and net earnings were $11.5 million, or diluted
earnings per share of $0.37. We generated $17.7 million of cash from
operations during the fourth quarter and our balance sheet remains strong,
with $196.4 million of cash and short and long-term investments.

    
    Results for the fourth quarter of 2007, relative to guidance provided on
October 25, 2007 are as follows:

        Fourth quarter revenue for 2007 of $135.6 million was better than our
        guidance of $125.0 million. Our earnings from operations were
        $13.3 million, better than our guidance of $12.8 million. Our net
        earnings of $11.5 million, or diluted earnings per share of $0.37,
        were also better than our guidance of net earnings of $11.1 million,
        or diluted earnings per share of $0.35.

    Results for the fourth quarter of 2007, compared to the fourth quarter of
2006 are as follows:

        Fourth quarter revenue increased by 98% to $135.6 million in 2007
        from $68.3 million for the same period in 2006. Gross margin for the
        fourth quarter of 2007 was 27.9% of revenue, compared to 26.0% for
        the same period in 2006. Operating expenses were $24.5 million in the
        fourth quarter of 2007, compared to $16.4 million in the same period
        of 2006. Net earnings for the fourth quarter of 2007 were $11.5
        million, or diluted earnings per share of $0.37, compared to net
        earnings of $2.4 million, or diluted earnings per share of $0.09, in
        the same period of 2006.

        Products acquired from the AirLink acquisition contributed revenue of
        $9.5 million at a gross margin of 50.1% in the fourth quarter of
        2007.

        Included in our results are stock-based compensation expense and
        amortization resulting from the acquisitions of AirPrime, Inc. in
        2003 and AirLink in May 2007. Adjusting for these amounts, our
        non-GAAP results are as follows:


        (in millions of U.S. dollars)                     Q4 2007    Q4 2006
                                                          --------   --------

        Earnings from operations - GAAP                    $ 13.3     $  1.4
          Stock-based compensation                            1.6        0.9
          Acquisition related amortization                    0.8        0.3
                                                          --------   --------
        Earnings from operations - Non-GAAP                $ 15.7     $  2.6

        Net income - GAAP                                  $ 11.5     $  2.4
        Net income - Non-GAAP                                13.3        3.4

        Diluted earnings per share - GAAP                  $ 0.37     $ 0.09
        Diluted earnings per share - Non-GAAP                0.42       0.13

    Results for the fourth quarter of 2007, compared to the third quarter of
2007 are as follows:

        Revenue for the fourth quarter of 2007 increased by 22% to
        $135.6 million, compared to $111.5 million in the third quarter of
        2007. Gross margin was 27.9% of revenue in the fourth quarter of
        2007, compared to 29.7% in the third quarter of 2007. Operating
        expenses were $24.5 million in the fourth quarter of 2007, compared
        to $21.4 million in the third quarter of 2007. Net earnings for the
        fourth quarter of 2007 were $11.5 million, or diluted earnings per
        share of $0.37, compared to net earnings of $9.0 million, or diluted
        earnings per share of $0.33, in the third quarter of 2007.

    Results for the fiscal year 2007, compared to the fiscal year 2006 are as
follows:

        Revenue for the year ended December 31, 2007 increased by 99% to
        $439.9 million, compared to $221.3 million in 2006. Gross margin was
        28.0% of revenue in 2007, compared to 31.3% in 2006. Operating
        expenses were $84.6 million, or 19.2% of revenue, in 2007, compared
        to $63.6 million, or 28.7% of revenue, in 2006. Net earnings in 2007
        were $32.5 million, or diluted earnings per share of $1.16, compared
        to net earnings of $9.8 million, or diluted earnings per share of
        $0.38 in 2006.

    Fourth Quarter Highlights Included:

        -  AT&T Inc. launched two of our new HSUPA (High Speed Uplink Packet
           Access) AirCard products - the AirCard 881 LaptopConnect card and
           the USBConnect 881.

        -  @Road, a Trimble Company and provider of end-to-end solutions
           for Mobile Resource Management (MRM), selected our MC8775 embedded
           module for integration into @Road's HSDPA solutions for MRM.

        -  We introduced our Apex(TM) 880 USB modem for HSUPA networks. The
           Apex 880 is smaller than previous models and features a new,
           innovative design and features. We expect the Apex 880 USB modem
           to be available for shipping in the first quarter of 2008.

        -  We announced the commercial availability of our AirCard 597E
           ExpressCard for EVDO Rev A from TELUS.

        -  Together with Bouygues Telecom, we launched our AirCard 880E
           ExpressCard on Bouygues' newly announced high-speed 3G+ network in
           France.

        -  We introduced the AirLink(TM) Raven XT, the newest addition to our
           line of Mobile and M2M devices. Commercial shipments for North
           American CDMA and GSM networks are expected to begin in the first
           quarter of 2008.

        -  We closed our previously announced bought deal common share
           offering of 3,800,000 common shares at a price of US$22.40 per
           share. Gross proceeds of this offering were US$85.1 million. We
           will use the net proceeds from the offering for general corporate
           purposes, working capital and potential future acquisitions.
    

    Financial Guidance

    The following guidance for the first quarter of 2008 reflects our current
business indicators and expectations.
    Our revenue expectations for the first quarter of 2008 reflect strong
demand and good revenue visibility, constrained by expected continuing supply
shortages on key components.
    For the first quarter of 2008, we expect our gross margin percentage to
be stable compared to the fourth quarter of 2007. As a result of our
anticipated new product launch activity in the first half of 2008, as well as
increased sales and marketing expense, we expect our 2008 first quarter
operating expenses to increase relative to the fourth quarter of 2007.
    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.

    
                                         Non-GAAP Adjustments
                                     ----------------------------
                                     Stock      Acquisition
    Q1 2008 Guidance      GAAP        Comp     Amortization(1)      Non-GAAP
    -----------------     -----      ------    ----------------     ---------

    Revenue          $136 million                               $136 million
    Earnings from
     operations     $11.3 million  $1.6 million  $0.9 million  $13.8 million
    Net earnings     $9.4 million  $1.1 million  $0.6 million  $11.1 million
    Diluted earnings
     per share       $ 0.30/share                                $0.35/share

    (1) Represents purchase price amortization associated with the
        acquisition of AirLink Communications, Inc. in May 2007 and the
        acquisition of AirPrime, Inc. in 2003.

    Conference Call, Webcast and Instant Replay

    We will host a conference call to review our results on Thursday, January
31, 2008 at 2:30 pm PST, 5:30 PM EST. You can participate in the conference
call either via telephone or webcast. To participate in this conference call,
please connect approximately ten minutes prior to the commencement of the
call.

    Telephone participation:

        Please dial the following number:
        1-800-733-7571 Passcode: Not required
        or
        1-416-644-3414 Passcode: Not required

    Webcast (to listen):

        The Company will also broadcast its conference call over the
        Internet. To access the web broadcast, click on this URL or enter
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2101000

        This webcast event will be optimized for Microsoft Windows Media
        Player version 9. To download go to:
        http://www.microsoft.com/windows/windowsmedia/download.

    Should you be unable to participate, Instant Replay (audio and webcast)
will be available following the conference call.

        -   Audio only dial (available for 7 business days): 1-877-289-8525
            or 1-416-640-1917 Passcode: 21254290 followed by the number sign.

    Webcast (available for 90 days)
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1973620
    No Passcode is required.

    We look forward to having you participate in our call.
    

    Forward-Looking Statements

    Certain statements in this press release that are not based on historical
facts constitute forward-looking statements or forward-looking information
within the meaning of applicable securities laws ("forward-looking
statements"). These forward-looking statements are not promises or guarantees
of future performance but are only predictions that relate to future events,
conditions or circumstances or our future results, performance, achievements
or developments and are subject to substantial known and unknown risks,
assumptions, uncertainties and other factors that could cause our actual
results, performance, achievements or developments in our business or in our
industry to differ materially from those expressed, anticipated or implied by
such forward-looking statements. Forward-looking statements include all
financial guidance for the first quarter of 2008, disclosure regarding
possible events, conditions, circumstances or results of operations that are
based on assumptions about future economic conditions, courses of action and
other future events. We caution you not to place undue reliance upon any such
forward-looking statements, which speak only as of the date they are made.
These forward-looking statements appear in a number of different places in
this press release and can be identified by words such as "may", "estimates",
"projects", "expects", "intends", "believes", "plans", "anticipates", or their
negatives or other comparable words. Forward-looking statements include
statements regarding the outlook for our future operations, plans and timing
for the introduction or enhancement of our services and products, statements
concerning strategies or developments, statements about future market
conditions, supply conditions, end customer demand conditions, channel
inventory and sell through, revenue, gross margin, operating expenses,
profits, forecasts of future costs and expenditures, the outcome of legal
proceedings, and other expectations, intentions and plans that are not
historical fact. The risk factors and uncertainties that may affect our actual
results, performance, achievements or developments are many and include,
amongst others, our ability to develop, manufacture, supply and market new
products that we do not produce today that meet the needs of customers and
gain commercial acceptance, our reliance on the deployment of next generation
networks by major wireless operators, the continuous commitment of our
customers, and increased competition. These risk factors and others are
discussed in our Annual Information Form, which may be found on SEDAR 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. Many of these factors and uncertainties are beyond the
control of the Company. Consequently, all forward-looking statements in this
press release are qualified by this cautionary statement and there can be no
assurance that actual results, performance, achievements or developments
anticipated by the Company will be realized. Forward-looking statements are
based on management's current plans, estimates, projections, beliefs and
opinions and the Company does not undertake any obligation to update
forward-looking statements should the assumptions related to these plans,
estimates, projections, beliefs and opinions change.

    About Sierra Wireless

    Sierra Wireless modems and software connect people all over the world
with mobile broadband networks that keep them in touch, informed and
productive from wherever they need to be. The Company offers a diverse product
portfolio addressing enterprise, consumer, original equipment manufacturer,
machine-to-machine, and specialized vertical industry markets and provides
professional services to customers requiring expertise in wireless design,
integration and carrier certification. Sierra Wireless is headquartered in
Richmond, British Columbia, Canada with additional offices in Carlsbad and
Hayward, California; London; and Hong Kong. For more information about Sierra
Wireless, visit www.sierrawireless.com.

    "AirCard" is a registered trademark and "AirCard Enabled" is a trademark
of Sierra Wireless. Other product or service names mentioned herein may be the
trademarks of their respective owners.

    
                            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             Year ended
                             ------------------             ----------
                                December 31,               December 31,
                                ------------               ------------
                              2007         2006         2007         2006
                             ------       ------       ------       ------
    Revenue............... $  135,581   $   68,303   $  439,903   $  221,285
    Cost of goods sold....     97,821       50,524      316,761      152,108
                           -----------  -----------  -----------  -----------
    Gross margin..........     37,760       17,779      123,142       69,177
                           -----------  -----------  -----------  -----------
    Expenses
      Sales and
       marketing..........      7,237        3,418       22,220       13,714
      Research and
       development........     11,865        8,824       43,048       34,087
      Administration......      4,281        3,404       15,378       12,879
      Amortization........      1,092          705        3,920        2,909
                           -----------  -----------  -----------  -----------
                               24,475       16,351       84,566       63,589
                           -----------  -----------  -----------  -----------
    Earnings from
     operations...........     13,285        1,428       38,576        5,588

    Other income..........      2,045        1,627        4,795        5,254
                           -----------  -----------  -----------  -----------
    Earnings before
     income taxes.........     15,330        3,055       43,371       10,842
    Income tax expense....      3,833          684       10,912        1,046
                           -----------  -----------  -----------  -----------
    Net earnings..........     11,497        2,371       32,459        9,796
    Deficit, beginning of
     period...............    (52,099)     (75,432)     (73,061)     (82,857)
                           -----------  -----------  -----------  -----------
    Deficit, end of
     period...............  $ (40,602)   $ (73,061)   $ (40,602)   $ (73,061)
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    Earnings per share
     for the period:
      Basic...............  $    0.37    $    0.09    $    1.17    $    0.38
      Diluted.............  $    0.37    $    0.09    $    1.16    $    0.38
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    Weighted average
     number of shares
     (in thousands)
      Basic...............     31,217       25,681       27,696       25,609
      Diluted.............     31,389       25,856       27,956       25,857
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------



                            SIERRA WIRELESS, INC.

                         Consolidated Balance Sheets
              (Expressed in thousands of United States dollars)
               (Prepared in accordance with United States GAAP)

    December 31,                                           2007         2006
                                                      ----------   ----------
    Assets
    Current assets:
      Cash and cash equivalents...................... $  83,624    $  46,438
      Short-term investments.........................    92,980       40,554
      Accounts receivable, net of allowance for
       doubtful accounts of $1,939 (2006 - $1,867)...    83,015       57,441
      Inventories....................................    24,989       18,889
      Deferred income taxes..........................     3,556          118
      Prepaid expenses...............................     9,229        6,032
                                                      ----------   ----------
                                                        297,393      169,472

    Long-term investments............................    19,757            -
    Fixed assets.....................................    15,274       13,400
    Intangible assets................................    17,418        9,892
    Goodwill.........................................    32,541       18,409
    Deferred income taxes............................     1,156            -
    Other............................................     1,482          435
                                                      ----------   ----------
                                                      $ 385,021    $ 211,608
                                                      ----------   ----------
                                                      ----------   ----------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable............................... $  31,163    $  16,608
      Accrued liabilities............................    53,691       39,543
      Deferred revenue and credits...................       534          633
      Current portion of long-term liabilities.......       277          847
                                                      ----------   ----------
                                                         85,665       57,631

    Long-term liabilities............................       581        1,145
    Deferred income taxes............................     3,451            -

    Shareholders' equity:
      Share capital..................................   328,323      221,861
      Additional paid-in capital.....................     6,374        3,240
      Warrants.......................................     1,538        1,538
      Deficit........................................   (40,602)     (73,061)
      Accumulated other comprehensive loss...........      (309)        (746)
                                                      ----------   ----------
                                                        295,324      152,832
                                                      ----------   ----------
                                                      $ 385,021    $ 211,608
                                                      ----------   ----------
                                                      ----------   ----------



                            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             Year ended
                             ------------------             ----------
                                December 31,               December 31,
                                ------------               ------------
                              2007         2006         2007         2006
                             ------       ------       ------       ------

    Cash flows from
     operating activities:
      Net earnings for
       the period......... $   11,497   $    2,371   $   32,459   $    9,796
      Adjustments to
       reconcile net
       earnings to net
       cash provided by
       (used in) operating
       activities
        Amortization......      3,346        2,658       13,791        9,665
        Stock-based
         compensation.....      1,568          952        5,182        3,796
        Tax benefit
         related to
         stock option
         deduction........        657         (114)       1,292            -
        Utilization of
         pre-acquisition
         tax losses.......          -          818          802          818
        Deferred income
         taxes............       (236)        (118)         178         (118)
        Loss (gain) on
         disposal.........          7          (49)         (13)         (35)

    Changes in operating
     assets and liabilities
      Accounts
       receivable.........    (11,748)     (18,980)     (21,067)     (38,196)
      Inventories.........      3,413        9,119       (2,493)     (15,573)
      Prepaid expenses
       and other assets...     (7,853)      (4,684)      (4,212)      (2,007)
      Accounts payable....      4,710       (5,180)      11,347       12,637
      Accrued
       liabilities........     12,524        7,249       11,816       10,899
      Deferred revenue
       and credits........       (220)          41         (244)         211
                           -----------  -----------  -----------  -----------
    Net cash provided
     by (used in)
     operating
     activities...........     17,665       (5,917)      48,838       (8,107)

    Cash flows from
     investing activities:
      Business
       acquisition........         64            -      (12,093)           -
      Proceeds on
       disposal...........         31           64           52           92
      Purchase of fixed
       assets.............     (3,494)      (1,520)     (10,286)      (9,102)
      Increase in
       intangible assets..       (546)        (343)      (1,307)      (1,646)
      Purchase of
       long-term
       investments........    (23,743)           -      (28,053)           -
      Purchase of
       short-term
       investments........    (70,546)     (17,898)    (171,182)     (71,943)
      Proceeds on
       maturity
       of short-term
       investments........     26,030       22,749      126,826       72,318
                           -----------  -----------  -----------  -----------
    Net cash provided by
     (used in) investing
     activities...........    (72,204)       3,052      (96,043)     (10,281)

    Cash flows from
     financing activities:
      Issue of common
       shares, net of
       share issue costs..     82,232          179       85,525        1,351
      Decrease in
       long-term
       liabilities........       (653)        (319)      (1,134)      (1,136)
                           -----------  -----------  -----------  -----------
    Net cash provided by
     (used in) financing
     activities...........     81,579         (140)      84,391          215
                           -----------  -----------  -----------  -----------

    Net increase
     (decrease) in
     cash and cash
     equivalents..........     27,040       (3,005)      37,186      (18,173)
    Cash and cash
     equivalents,
     beginning
     of period............     56,584       49,443       46,438       64,611
                           -----------  -----------  -----------  -----------
    Cash and cash
     equivalents, end
     of period ...........
                            $  83,624    $  46,438    $  83,624    $  46,438
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    
    %SEDAR: 00011917E




For further information:

For further information: Sierra Wireless, Inc., David G. McLennan, Chief
Financial Officer, (604) 231-1185, Website: www.sierrawireless.com, Email:
dmclennan@sierrawireless.com

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