Regulatory News:
Wavecom S.A. (Paris:AVM) (NASDAQ:WVCM) today announced financial
results for its first quarter 2008 ending March 31, 2008.
Ron Black, Wavecom Chief Executive Officer, commented: "During the
first quarter of 2008, we made a key strategic acquisition of Anyware
Technologies, a dynamic company recognized for creating advanced
software solutions that optimize enterprise processes. Its
M2M-specific solutions perfectly complement Wavecom´s secure and
scalable Intelligent Device Services (IDS) platform, with the
combination creating the most advanced end-to-end software solution in
the industry. This acquisition is a significant milestone in the
implementation of our strategy with a key focus on the development of
services." He added, "Facing an overall uncertain global economic
environment our sales teams have redoubled their efforts to bring in
new design-wins that should stimulate sales."
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In millions of euros (Under US GAAP)
Consolidated Group Results
----------------------------------------------------------------------
Q1 2007
Q4 2007 Q1 2008
----------------------------------------------------------------------
Revenues
48.1
45.7
38.1
----------------------------------------------------------------------
Gross profit
20.5
23.2
19.6
----------------------------------------------------------------------
Operating expenses
19.0
20.9
22.7
----------------------------------------------------------------------
Operating income/(loss)
1.6
2.3
(3.1)
----------------------------------------------------------------------
Net income/(loss)
1.9
7.1
(2.3)
----------------------------------------------------------------------
Additional information
----------------------------------------------------------------------
Operating income/(loss)
1.6
2.3
(3.1)
----------------------------------------------------------------------
Stock based related expenses
(0.7)
(1.7)
(4.9)
----------------------------------------------------------------------
Amortization expense related to
acquisitions:
(1.1)
(0.8)
(0.9)
----------------------------------------------------------------------
Operating income before stock based
compensation and amortization expense
related to acquisitions:
3.4
4.8
2.7
----------------------------------------------------------------------
*T
First Quarter 2008 Highlights:
All figures are unaudited and reported in accordance with U.S.
generally accepted accounting principles (U.S. GAAP), unless otherwise
noted. Condensed and consolidated financial tables are provided at the
end of this release.
Revenues: Revenues for the first quarter 2008 were EUR 38.1
million, declining 21% year-on-year (15% at constant currencies, i.e.
using the Q1 2007 exchange rate for the U.S. dollar to the euro), as
the weak U.S. dollar had a negative impact of approximately EUR 3
million. Revenues declined 17% versus fourth quarter 2007 or 15% at
constant currencies. Services revenue accounted for EUR 1.2 million
and was mainly generated by two months of revenues from Anyware
Technologies.
As a result of the uncertain worldwide economic situation, sales
have slowed in all of our regions as some customers have pushed out
new product development plans and are taking a conservative position
on placing orders. In addition, one major project from a US customer
came to an end in the 3rd quarter of 2007 which had been part of the
revenue in Q1 2007.
In the first quarter 2008, the breakdown of product revenues by
region was as follows: EMEA 52%, Americas 31% and APAC 17%.
Revenues from the top ten customers represented 56%, seven of
which were (indirect) distributor accounts in Q1 2008, flat to the
previous quarter.
Backlog: The 12-month product backlog at March 31, 2008 was EUR
37.5 million compared to EUR 41.7 million at December 31, 2007. The
reduction of backlog is largely coming from the US as some large
customers are keeping their inventories to a minimum. Backlog as of
any given date may not be an accurate indicator of sales for any
future period.
Gross Margin: For the first quarter 2008 gross profit amounted to
EUR 19.6 million, representing 51.5% of sales compared to 50.7% in the
fourth quarter 2007 and 42.7% in Q1 2007. The gross margin from
products also increased incrementally to 52.8% of sales compared to
51.6% the previous quarter and 45.6% in Q1 2007, mainly explained by a
continued positive operational performance.
Operating Expenses: Total operating expenses for the first quarter
2008 of EUR 22.7 million increased as compared to the previous quarter
of EUR 20.9 million and EUR 19.0 million in Q1 2007. In order to
reduce the cost structure for the future, the Board of Directors
decided to propose to the beneficiaries of one stock option plan to
cancel the grants. Consequently, under SFAS123R, this cancellation
(which was approved by a majority of the beneficiaries of the plan)
has resulted in additional expenses in the first quarter of 2008
bringing the stock-based related expenses to a total EUR 4.9 million
versus EUR 1.7 million in fourth quarter 2007. Excluding stock-based
related expenses, operating expenses amounted to EUR 17.9 million
versus EUR 19.2 million in fourth quarter 2007 a reduction of 7% and
EUR 18.3 million a year ago. At March 31, 2008, headcount (salaried
employees) stood at 485 increasing from 418 at December 31, 2007, due
mainly to the acquisition of Anyware Technologies.
Profit: Operating result for the first quarter 2008 was a loss of
EUR 3.1 million, decreasing from a EUR 2.3 million profit in the
previous quarter. This decline is mainly due to the additional stock
based related expenses. In Q1 2007, Wavecom reported an operating
profit of EUR 1.6 million.
The Company reported a net loss of EUR 2.3 million for the first
quarter 2008, compared to EUR 7.1 million of profit recorded in the
previous quarter and a profit of EUR 1.9 million for the same period
the year before.
As shown in the above table (on page one), on a non-GAAP basis
excluding stock-based related expenses and expenses related to our
acquisitions, the operating income was EUR 2.7 million for the first
quarter 2008, compared to EUR 4.8 million for the previous quarter and
EUR 3.4 million a year ago.
Balance sheet: Wavecom´s cash and marketable securities position
decreased quarter-on-quarter from EUR 139.3 million to EUR 127.5
million at March 31, 2008 mainly due to the acquisition of Anyware
Technologies in January 2008. Inventory decreased incrementally to EUR
4.9 million compared with EUR 6.0 million the previous quarter as the
Company continues to carefully monitor its inventory levels to meet
customer demand. DSOs (Days Sales Outstanding) were 67 days compared
with 58 days the previous quarter mainly due to the timing of the
sales.
Chantal Bourgeat, Wavecom CFO, concluded: "This quarter we had a
significant one-time additional expense related to the cancellation of
one stock option plan, aimed at reducing expenses for the future.
Given the macro economic environment, we will continue to focus on
cost control. We are seeking strategic acquisition opportunities in
order to enhance our product and services offer to meet future market
evolution, and our solid balance sheet puts us in a position to be
able to move quickly once identified candidates are evaluated."
Business Highlights:
Wavecom S.A. acquired Anyware Technologies, an industry leader in
machine-to-machine (M2M) client-server software solutions located in
Toulouse, France. Anyware Technologies is a recognized leader in
developing M2M software solutions for customers who use wireless
technology to enhance business processes.
Wavecom and ORBCOMM, announced a joint marketing agreement whereby
the two companies will work together to address the growing demand for
devices that combine both satellite and terrestrial wireless
communications. This agreement allowed us access technology behind a
groundbreaking new device that combines cellular, satellite and GPS
technology (select models) on a single device: the Wavecom Q52 Omni
Wireless CPU(R). Based on Wavecom Wireless Microprocessor(R)
technology, the Q52 Omni embodies unprecedented integration by
embedding control of all three technologies on a single processor
enabling significant cost savings over existing multiprocessor
solutions. The powerful, built-in ARM9 processor and included Open
AT(R) Software Suite allow developers to develop, embed and execute
their applications directly on the device.
Wavecom received the distinction of being awarded the 2008 trophy
for innovation at a ceremony organized by the group Automotive Design
(ADN) Center of PSA in Velizy (France), March 10. This year´s award
for innovation was given to Wavecom in recognition of its
revolutionary inSIM(R) embedded SIM concept.
Conference Call:
Today at 3:00 p.m. (Paris time) Wavecom management will host a
conference call in English reserved for financial professionals
commenting on its first quarter 2008 results. To access this call
please use the following numbers: +33 (0) 1 70 99 4295 in France, +44
(0) 20 7806 1966 in the U.K. and +1 718 354 1385 in the U.S. Visit the
Wavecom corporate website: www.wavecom.com investors section to listen
to the conference call commentary webcast (in English).
Wavecom will announce its second quarter 2008 results on July 23
2008 at 7:00 a.m. Paris time.
About Wavecom
Wavecom is a worldwide leader in embedded industrial wireless
communication solutions for automotive, machine-to-machine and mobile
professional applications. Wavecom´s solutions include the Open AT(R)
software platform encompassing the Wavecom Open AT(R) Operating
System, a wide range of Plug-Ins, the Open AT(R) Integrated
Development Environment (IDE) along with a market-leading range of
Wireless CPUs (Central Processing Units), and an expanding portfolio
of services. These complete embedded solutions enable makers of all
types of machines to develop a new breed of intelligent wireless
applications, without the need of external processors and other ASICs
(Application Specific Integrated Circuits) and components.
Founded in 1993 and headquartered in Paris, Wavecom has
subsidiaries in Hong Kong (PRC), Research Triangle Park, NC (USA), and
Farnborough (UK). Wavecom is publicly traded on Euronext Paris
(Eurolist) in France and on the NASDAQ (WVCM) exchange in the U.S.
This press release contains forward-looking statements that relate
to the Company´s future business performance, operating expenses and
financial results and objectives. Such forward-looking statements are
based on the current expectations and assumptions of the Company´s
management only and involve risk and uncertainties. Potential risks
and uncertainties include, without limitation, whether the company
will be commercially successful in implementing its strategies
whether there will be continued growth in the vertical markets and
demand for the Company´s products, the Company´s reliance on a single
contract manufacturer in China for all production requirements; an
unanticipated decrease in orders from one of the Company´s principal
customers or customer cancellation or scale-down of a major project
changes in foreign currency exchange rates, dependence on third
parties, new products or technological developments introduced by
competitors, customer and supplier concerns regarding the company´s
overall financial position, and risks associated with managing growth.
Unfavorable developments in connection with these and other risks and
uncertainties described in the Company´s reports on file with the
Securities and Exchange Commission could cause the Company to fail to
achieve the anticipated or targeted performance or results. As a
consequence, the Company´s actual performance and results may be
materially different from those expressed by the forward-looking
statements above.
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WAVECOM S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
Prepared in accordance with U.S. generally accepted accounting
principles.
Three months ended
March 31
December 31, March 31
2007
2007
2008
---------- ------------ ----------
Euro
Euro
Euro
Revenues :
Product sales
47,785
44,543
36,907
Services revenue
332
1,205
1,196
---------- ------------ ----------
48,117
45,748
38,103
Cost of revenues :
Cost of goods sold
26,012
21,543
17,427
Cost of services
1,559
1,009
1,054
---------- ------------ ----------
27,571
22,552
18,481
---------- ------------ ----------
Gross profit
20,546
23,196
19,622
Operating expenses :
Research and development
7,758
9,132
9,724
Sales and marketing
5,413
5,896
7,198
General and administrative
5,784
5,911
5,823
---------- ------------ ----------
Total operating expenses
18,955
20,939
22,745
---------- ------------ ----------
Operating income (loss)
1,591
2,257
(3,123)
---------- ------------ ----------
Interest income and other financial
income, net
417
871
825
Foreign exchange loss, net
(48)
(512)
(44)
---------- ------------ ----------
Total financial income
369
359
781
---------- ------------ ----------
Income (loss) before income taxes
1,960
2,616
(2,342)
Income tax expense (benefit)
12
(4,461)
(7)
---------- ------------ ----------
Net income (loss)
1,948
7,077
(2,335)
========== ============ ==========
Basic net income (loss) per share
0.13
0.46
(0.15)
========== ============ ==========
Diluted net income (loss) per share
0.12
0.39
(0.15)
========== ============ ==========
Number of shares used for computing
:
- basic
15,401,390
15,221,619 15,254,603
- diluted
16,230,460
18,916,763 15,254,603
*T
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WAVECOM S.A.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
Prepared in accordance with U.S. generally accepted accounting
principles.
At December 31, At March 31
2007
2008
--------------- ------------
Euro
Euro
ASSETS
Current assets :
Cash and cash equivalents
4,677
5,537
Marketable securities
134,610
121,975
Accounts receivable, net
29,467
27,631
Inventory
6,032
4,925
Value added tax recoverable
1,124
962
Prepaid expenses and other current
assets
3,141
3,794
Deferred tax assets
4,514
4,514
--------------- ------------
Total current assets
183,565
169,338
Other assets :
Long-term investments
3,731
5,648
Other assets and Interest in
associates
4,517
4,372
Research tax credit
2,049
2,590
Income tax receivable
13,083
13,083
Intangible and tangible assets, net
16,336
19,560
Goodwill
8,117
16,629
--------------- ------------
Total assets
231,398
231,220
=============== ============
LIABILITIES AND SHAREHOLDERS´ EQUITY
Current liabilities :
Accounts payable
27,612
24,697
Accrued compensation
8,584
6,117
Current portion of other accrued
expenses
3,572
3,649
Current portion of convertible bonds
664
351
Current portion of capitalized lease
obligations
207
292
Deferred revenue and advances received
from customers
307
1,210
Deferred tax liabilities
-
306
Other liabilities
3,652
5,756
--------------- ------------
Total current liabilities
44,598
42,378
Long-term liabilities :
Long-term portion of other accrued
expenses
16,636
15,799
Long-term portion of convertible bonds
80,500
80,500
Long-term portion of capitalized lease
obligations
340
365
Other long-term liabilities
616
762
--------------- ------------
Total long-term liabilities
98,092
97,426
Shareholders´ equity :
Shares, euro 1 nominal value, 15,800,131
shares authorized, issued
and outstanding at March 31, 2008
(15,796,591 at December 31, 2007)
15,797
15,800
Additional paid-in capital
146,052
150,962
Treasury stock at cost (544,322 shares at
March 31, 2008 and December 31, 2007)
(8,823)
(8,823)
Accumulated deficit
(62,548)
(64,883)
Accumulated other comprehensive income
(loss)
(1,770)
(1,640)
--------------- ------------
Total shareholders´ equity
88,708
91,416
--------------- ------------
Total liabilities and shareholders´
equity
231,398
231,220
=============== ============
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WAVECOM S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Prepared in accordance with U.S. generally accepted accounting
principles.
Three months ended March 31
2007
2008
------------- -------------
Euro
Euro
Cash flows from operating activities :
Net income (loss)
1,948
(2,335)
Adjustments to reconcile net income
(loss) to net cash provided (used) by
operating activities:
Amortization and impairment of
intangible and tangible assets
2,254
2,147
Amortization of debt issue costs
-
140
Share-based compensation
692
4,876
Loss (gain) on sales and retirement of
tangible assets
4
(23)
Disposal of marketable securities, net
-
12,682
Deferred tax
-
(24)
Net decrease in cash from working
capital items
(5,127)
(1,915)
------------- -------------
Net cash provided (used) by
operating activities
(229)
15,548
------------- -------------
Cash flows from investing activities :
Acquisition (disposal) of long-term
investments
18
(1,917)
Purchases of intangible and
tangible assets
(924)
(1,655)
Acquisition of certain assets, net
of cash acquired
-
(10,750)
Proceeds from sale of intangible
and tangible assets
-
35
------------- -------------
Net cash used by investing
activities
(906)
(14,287)
------------- -------------
Cash flows from financing activities :
Principal payments on capital lease
obligations
(90)
(73)
Proceeds from exercise of stock
options and founders´ warrants
284
37
------------- -------------
Net cash provided (used) by
financing activities
194
(36)
Effect of exchange rate changes on cash
and cash equivalents
(107)
(365)
------------- -------------
Net increase (decrease) in cash and cash
equivalents
(1,048)
860
Cash and cash equivalents, beginning of
period
54,776
4,677
------------- -------------
Cash and cash equivalents, end of period
53,728
5,537
============= =============
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