6-K 1 f6kwavecom.htm WAVECOM FORM 6-K Securities and Exchange Commission










FORM 6-K


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549



Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934




For the month of April 2005



WAVECOM S.A.


3, esplanade du Foncet

F-92442 Issy-Les-Moulineaux Cedex, France

Tel:  00 33 1 46 29 08 00

 (Address of principal executive offices)


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


Form 20-F   X  Form 40-F   ___


[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  


[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____.]








[f6kwavecom001.jpg]


     Press Release


Wavecom Announces First Quarter 2005 Results

Reports Operating Profit of €1.8 million, Improved Cash Position



Issy-les-Moulineaux, France – April 28, 2005 – Wavecom SA (NASDAQ: WVCM; Euronext Eurolist: AVM; ISIN: FR0000073066), a leader in pre-packaged wireless communications solutions for automotive, industrial (machine-to-machine) and mobile professional applications, today announced financial results for its first quarter ended March 31, 2005.  


Ron Black, chief executive officer commented “We are extremely pleased to announce a first quarter 2005 operating profit of €1.8 million and an improvement in the Company’s cash position.  This is tangible evidence of the Company’s successful efforts to turn the business around and move toward sustained growth in the industrial wireless sector.”


First Quarter 2005 Financial Highlights:


All figures are unaudited and reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP).  Condensed consolidated financial tables are provided at the end of this release.


Profit:  The Company reported operating income for the first quarter 2005 of €1.8 million as compared to a €17.3 million operating loss for the previous quarter, and net income of €3.1 million compared to a net loss of €20.5 million for the previous quarter.


Revenues:  Total first quarter 2005 revenues were €38.4 million, increasing 2% from the previous quarter.  Revenues for vertical applications of €31.9 million (83% of total) increased from the previous quarter by 2% and by 26% compared to the same period in 2004.  Revenues for the handset business of €3.1 million (8% of total) decreased from €6.2 million in the fourth quarter, an expected decline following the strategic shift away from this market.  During the first quarter 2005, revenues generated from a new source, the licensing of software and technology, accounted for €3.4 (9% of total).  The company plans to continue licensing as a core part of its business.  


Sales by region were as follows:  EMEA (Europe, Middle-east and Africa):  50%, APAC (Asia-Pacific):  44% and The Americas:  6%.


The customer portfolio remained balanced with no single customer representing more than 14% of total revenues in the first quarter. The top ten customers combined represented 65% of revenues as compared to 71% in the fourth quarter 2004.  


Backlog:  Backlog as of March 31, 2005 stood at €30 million, compared to €32 million at the end of the previous quarter and was made up of 78% vertical applications, compared to  90% at December 31, 2004.  Working closely with its contract manufacturer, the Company has been able to significantly shorten delivery schedules giving customers increased confidence that orders can be quickly filled.  As a result, there was more business from orders placed and delivered within the quarter in the first quarter than has typically been seen in the past.  As this trend is likely to continue, backlog alone at the beginning of a quarter, may not be an accurate indicator of sales for that quarter.





Gross Margin:  Total gross margin was 45% compared to 32% in the previous quarter exceeding our previously-stated target range of 33% to 35%, even without the high margin licensing revenue.  This improvement in gross margin is a result the Company refining its product portfolio to exit low-margin products, and improving product launch and end of life to limit charges for excess and obsolete products.   


Operating Expenses:  Total operating expenses for the first quarter 2005 were €15.5 million, compared to €29.3 million in the fourth quarter 2004 and down 38% compared to the first quarter 2004.  This significant decline in operating expenses is a direct result of the restructurings that took place throughout 2004.  Restructuring costs of €2.1 million were charged in the first quarter 2005.  Operating expenses for R&D, Sales and Marketing and G&A all declined as compared to the fourth quarter of 2004 by 30%, 23% and 22% respectively.  


Cash: Wavecom’s cash position was €54 million at March 31, 2005, increasing from December 31, 2004 of €53 million.  


Business news:


·

Launch of Wavecom’s next generation operating system, OS 6.60, embedded on Wavecom’s newest family of hardware platforms, the Quik Q26 series. The first in the series, the Q2686, was introduced in March, 2005.  This long-life, lead-free platform is designed to take customers into the future with many new features including expanded Download-over-the-air capabilities.

·

Release of Wavecom’s Open AT, version 3.0, allowing a greater degree of customization for all types of wireless applications.

·

Products sold to equip a major German automobile manufacturer with wireless capabilities.

·

Wavecom joined the European Union’s “eCall” initiative, aimed at reducing accident-related fatalities on European roads using in-vehicle communication devices.

·

A new distributor in Brazil, IP Componentes, joined the Wavecom distributor network.

·

Shipments for new wireless local loop applications began in APAC and Americas regions.


Outlook:  The view for the second quarter of 2005 is cautiously optimistic, although revenue will likely decline, as one major customer is having technical difficulties unrelated to Wavecom.  For the second half of the year the Company believes revenues will grow as new customers and new products ramp.  Gross margin for the second quarter could exceed the previously announced target range of 33% to 35%.  On the expense side, there may be some one-time expenses in the second quarter for converting the existing product line to meet lead-free compliance levels.  At the same time, charges related to restructuring will be less than in the first quarter.  Management also pointed out that cash payments related to headcount reductions resulting from the restructuring plans implemented in 2004 are expected to continue in the second and third quarters of 2005.


Annual Meeting:  Wavecom will host its annual general shareholders’ meeting on May 26, 2005 in its corporate headquarters offices located in Issy-les-Moulineaux (near Paris).  Shareholders interested in attending the meeting should check with their financial institution to obtain details for attending the meeting.  




Conference Call:


Today at 3:00 p.m. Paris time, Wavecom management will host a conference call commenting on its first quarter 2005 results.  Visit the Wavecom corporate website: www.wavecom.com investors section to listen to this conference call commentary webcast (in English).  


Wavecom will announce its second quarter 2005 results on July 26, 2005 at 7:00 a.m. Paris time to be followed in the afternoon by a conference call hosted by management commenting on the results.


About Wavecom

Wavecom is a leading worldwide leader in pre-packaged wireless communication solutions for automotive, industrial and mobile professional applications. Wavecom's solutions include all the software and hardware elements that are necessary to develop truly innovative wireless devices, as well as the development tools and services needed to bring them to market quickly and easily.


Founded in 1993 and headquartered near Paris in Issy-les-Moulineaux, Wavecom has subsidiaries in Hong Kong (PRC), San Diego (USA), and Darmstadt (Germany). Wavecom is publicly traded on Euronext Paris (Eurolist) in France and on the NASDAQ (WVCM) in the U.S.


www.wavecom.com


For further information please contact:


Lisa Ann Sanders

John D. Lovallo

Director, Communications and

Lovallo Communications Group, LLC

    Investor Relations

Tel:  + 1 203-431-0587

Tel. +33 1 46 29 41 81

johnlovalloirpr@aol.com

lisaann.sanders@wavecom.com




This press release contains forward-looking statements that relate to the company's future business performance, operating expenses and financial results and objectives.  The company's business is subject to numerous risks and uncertainties, including whether it will be commercially successful in implementing its strategic reorientation, whether there will be continued growth in the vertical markets and demand for the company’s products, an unanticipated decrease in orders from one of the company’s principal customers or customer cancellation or scale-down of a major project, the company’s reliance on a single contract manufacturer in China for all production requirements, dependence on third parties, changes in foreign currency exchange rates, new products or technological developments introduced by competitors, customer and supplier concerns regarding the company’s overall weakened 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 not 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.


-- Financial Tables Follow –





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,

  

2004

 

2004

 

2005

  

Euro

 

Euro

 

Euro

Revenues :

      

   Product sales

 

38 298

 

36 881

 

34 868

   Technology development and other services

 

437

 

564

 

110

   Licensing revenue

 

                     -   

 

                     -   

 

3 391

  

38 735

 

37 445

 

38 369

Cost of revenues :

      

     Cost of goods sold

 

30 095

 

22 581

 

21 037

     Cost of services

 

1 444

 

2 901

 

60

  

31 539

 

25 482

 

21 097

Gross profit

 

7 196

 

11 963

 

17 272

Operating expenses :

      

   Research and development

 

14 102

 

8 441

 

5 869

   Sales and marketing

 

3 339

 

3 964

 

3 048

   General and administrative

 

6 318

 

5 799

 

4 514

   Restructuring costs

 

1 078

 

11 054

 

2 086

      Total operating expenses

 

24 837

 

29 258

 

15 517

Operating income (loss

 

(17 641)

 

(17 295)

 

1 755

Interest income and other financial income, net

 

479

 

195

 

254

Foreign exchange gain (loss), net

 

2 239

 

(3 424)

 

1 447

     Total financial income (loss)

 

2 718

 

(3 229)

 

1 701

Gain (loss) before minority interests and income taxes

 

(14 923)

 

(20 524)

 

3 456

Minority interests

 

                     -   

 

                     -   

 

                          -   

Gain (loss) before income taxes

 

(14 923)

 

(20 524)

 

3 456

Income tax expense (benefit)

 

(117)

 

(33)

 

378

Net income (loss

 

(14 806)

 

(20 491)

 

3 078

Basic net gain (loss) per share

 

(0.97)

 

(1.34)

 

0.20

Diluted net gain (loss) per share

 

(0.97)

 

(1.34)

 

0.20

Number of shares used for computing :

      

   - basic net income (loss) per share

 

15 240 894

 

15 342 940

 

15 349 945

   - diluted net income (loss) per share

 

15 240 894

 

15 342 940

 

15 412 776






WAVECOM S.A.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

     

Prepared in accordance with U.S. generally accepted accounting principles.

     
 

At December 31,

 

At March 31,

  

2004

 

2005

  

Euro

 

Euro

ASSETS

    
     

Current assets :

    

   Cash and cash equivalents

 

53 318

 

54 372

   Accounts receivable, net

 

22 864

 

23 328

   Inventory, net

 

16 409

 

12 298

   Value added tax recoverable

 

1 102

 

1 033

   Prepaid expenses and other current assets

 

5 481

 

4 462

      Total current assets

 

99 174

 

95 493

Other assets :

    

   Other intangible and tangible assets, net

 

12 617

 

9 944

   Long-term investments

 

9 017

 

7 135

   Other assets

 

5 295

 

4 538

   Research tax credit

 

1 486

 

1 502

   Deferred tax assets

 

9 617

 

9 617

      Total assets

 

137 206

 

128 229

     

LIABILITIES AND SHAREHOLDERS' EQUITY

    
     

Current liabilities :

    

   Accounts payable

 

36 393

 

31 181

   Accrued compensation

 

8 089

 

7 176

   Other accrued expenses

 

32 217

 

27 560

   Current portion of capitalized lease obligations

 

466

 

386

   Deferred revenue and advances received from customers

 

820

 

749

   Other liabilities

 

731

 

275

      Total current liabilities

 

78 716

 

67 327

     

Long-term liabilities :

    

Long-term portion of capitalized lease obligations

 

302

 

227

Other long-term liabilities

 

1 732

 

1 282

      Total long-term liabilities

 

2 034

 

1 509

     

Minority interests

 

            -   

 

 -

     

Shareholders' equity :

    

Shares, Euro 1 nominal value, 15,506,290 shares authorized, issued and outstanding at

    

   March 31, 2005 (15,506,290 at December 31, 2004)

 

15 506

 

15 506

Additional paid-in capital

 

137 039

 

137 039

Treasury stock at cost (156,345 shares at March 31, 2005 and December 31, 2004

 

(1 312)

 

(1 312)

Retained deficit

 

(93 344)

 

(90 266)

Accumulated other comprehensive loss

 

(1 433)

 

(1 574)

      Total shareholders' equity

 

56 456

 

59 393

      Total liabilities and shareholders' equity

 

137 206

 

128 229

     









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,

  

2004

 

2005

 
  

 

 

 

 
  

Euro

 

Euro

 

Cash flows from operating activities :

     

Net income (loss

 

(14 806)

 

3 078

 

Adjustments to reconcile net income (loss) to net cash provided from

     

operating activities :

     

   Amortization of intangible and tangible assets

 

3 458

 

2 175

 

   Reversal of impairment of tangible assets

 

 -

 

(236)

 

   Loss on sales and retirement of tangible assets

 

48

 

883

 

   Reversal of long term investment depreciation

 

(306)

 

 -

 

   Amortization of deferred stock-based compensation

 

23

 

 -

 

   Net decrease in cash from working capital items

 

(10 173)

 

(6 682)

 

          Net cash used by operating activities

 

(21 756)

 

(782)

 

Cash flows from investing activities :

     

      Disposal of long term investments

 

452

 

1 882

 

      Purchases of intangible and tangible assets

 

(1 391)

 

(539)

 

      Proceeds from sale of intangible and tangible assets

 

13

 

530

 

          Net cash provided by (used in) investing activities

 

(926)

 

1 873

 

Cash flows from financing activities :

     

   Principal payments on capital lease obligations

 

(231)

 

(155)

 

   Proceeds from exercise of stock options and founders' warrants

 

712

 

 -

 

          Net cash provided by (used in) financing activities

 

481

 

(155)

 

Effect of exchange rate changes on cash and cash equivalents

 

(203)

 

118

 

Net increase (decrease) in cash and cash equivalents

 

(22 404)

 

1 054

 

Cash and cash equivalents, beginning of period

 

110 705

 

53 318

 

Cash and cash equivalents, end of period

 

88 301

 

54 372

 

  

     














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.





  

WAVECOM S.A.

   

Date:  April 28, 2005

 

By:     /s/ Chantal Bourgeat

  

___________________________

  

Chantal Bourgeat

Chief Financial Officer