6-K 1 wavecom6k.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 July 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 [cover002.gif] Form 40-F [cover004.gif]

[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 [cover006.gif] No [cover008.gif]

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

 






 




[f6k001.jpg]


MEDIA RELEASE

Wavecom Announces Second Quarter 2005 Results

Second consecutive quarter of profit and increase in cash position.

Issy-les-Moulineaux, France – July 26, 2005 – Wavecom SA (NASDAQ: WVCM; Euronext Eurolist compartment C: 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 second quarter ended June 30, 2005.  

Ron Black, chief executive officer commented “We are pleased to report our second consecutive quarter of profitability, ahead of our previously-stated expectations,” he continued “we are also proud of the recent announcements, particularly the introduction of our newest operating system, and the customer wins over the past several months.  The combination of our improved financial performance, new design wins, and new products indicates that we are building momentum. We continue to be optimistic about the long-term growth opportunities for Wavecom and the industrial wireless communication sector.”    

Second 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.

Revenues:  Second quarter 2005 revenues were €30.7 million, which is a decline of 20% from the previous quarter.  This decrease in revenue was related to one significant customer who continues to have technical difficulties unrelated to Wavecom, as well as no further revenue from software and technology licensing, which was a new revenue source last quarter and something that management explained would be irregular for some time. Revenues for vertical applications were €26.6 million, or 87% of total, while that from handsets was €4.1 million or 13%.  Excluding the customer issue and licensing, revenues increased marginally quarter over quarter.  

Sales by region were as follows:  EMEA (Europe, Middle-east and Africa):  57%, APAC (Asia-Pacific):  32% and The Americas:  11%.

The customer portfolio remained balanced with no single customer representing more than 11% of total revenues in the second quarter. The top ten customers combined represented 62% of revenues as compared to 65% in the previous quarter.

Backlog:  Backlog as of June 30, 2005 stood at €30.8 million, compared to €29.9 million at the end of the previous quarter, and was made up of 77% vertical applications, compared to 78% at March 31, 2005.  As noted previously by management, backlog is not necessarily predictive of revenue in the quarter as we have significantly reduced our manufacturing cycle time and can, therefore, deliver product much more quickly than in the past.  As such, customers continue to place orders later in the quarter so that we now see more “turns” business, meaning orders are placed and fulfilled within the quarter.  





Gross Margin:  Total gross margin was 47% compared to 45% in the previous quarter.  The gross margin once again exceeded our previously estimated range of 33% to 35%.  This continued improvement in gross margin is the result of the Company refining its product management process, eliminating low-margin products from the portfolio, improving manufacturing yields on a specific product, and the sale of some previously-considered obsolete products.

Operating Expenses:  Total operating expenses for the second quarter 2005 were €12.7 million, compared to €15.5 million in the first quarter 2005, down 18% compared to the first quarter 2005, which mainly reflects completion of the final phase of the 2004 restructuring plan.  There were no restructuring costs in the quarter, and in fact there was a reversal of restructuring costs of €711 thousand, which was related to the timing of the departures of some employees in the restructuring plan.  Operating expenses for R&D, Sales and Marketing and G&A remained flat as compared to the first quarter of 2005.

Profit:  Operating profit for the second quarter was €1.6 million compared to €1.8 million of operating profit in the first quarter.  Net profit for the second quarter was €3.8 million, or €0.25 per share, up 23% as compared to €3.1 million, or €0.20 per share, in the first quarter 2005.  Wavecom recorded a net foreign exchange gain of €2.0 million for the second quarter 2005 compared to €1.4 million in previous quarter.

Cash: Wavecom’s cash position was €57.4 million at June 30, 2005, increasing from €54.4 million at March 31, 2005.  This increase was a result of continued excellent performance on inventory reduction and accounts receivable.

Business news:

·

Introduction of operating system O.S. 6.55 with download-over-the-air capabilities for updating both the operating system and application software, as well as Bluetooth functionality;

·

Download over-the-air was successfully demonstrated by DTC fleet management in Thailand using Wavecom Open AT™ software;  

·

Internet plug-in (TCP/IP) was made a standard feature on all Wavecom solutions;

·

Wavecom was chosen by Iskraemeco for their automatic electricity meter reading devices;

·

Chinese software developers at the Petroleum University of China chose Wavecom Open AT™ software for developing their solutions;

·

Guidepoint announced use of Wavecom solutions in its anti-theft device;  

·

Delta Mobile was chosen as the first North American-based, Wavecom-certified design house.

Outlook:  

With the stable backlog, increasing “turns” business within the quarter, and new designs beginning to ramp at customers, we remain cautiously optimistic that revenue will grow in the second half.  However, as the third quarter is traditionally slow in Europe, revenue this quarter will likely be flat to a modest increase, while we expect fourth quarter top-line growth to be stronger.  We expect the gross margin for the second half of 2005 to exceed 35% of revenues, continuing to be above the model range of 33% to 35%.  With virtually all restructuring-related expenses now accounted for, the steady-state total operating expenses should be on the order of €13.5 million to €14.0 million, although there may be periodic one-time expenses for product qualifications of up to €1 million.





Conference Call:

Today at 3:00 p.m. Paris time, Wavecom management will host a conference call commenting on its second quarter 2005 results, followed by a presentation to the financial community in Paris at 5:30 pm.  Visit the Wavecom corporate website: www.wavecom.com investors section to listen to the conference call commentary webcast (in English).  

Wavecom will announce its third quarter 2005 results on October 27, 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 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 Table 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

  

June 30,

 

March 31,

 

June 30,

  

2004

 

2005

 

2005

  

Euro

 

Euro

 

Euro

Revenues :

      

Product sales

 

38 559

 

34 868

 

30 306

Technology development and other services

 

395

 

110

 

420

Licensing revenue

 

-   

 

3 391

 

-   

  

38 954

 

38 369

 

30 726

Cost of revenues :

      

Cost of goods sold

 

26 956

 

21 037

 

16 050

Cost of services and licensing

 

2 221

 

60

 

334

  

29 177

 

21 097

 

16 384

Gross profit

 

9 777

 

17 272

 

14 342

Operating expenses :

      

Research and development

 

14 352

 

5 869

 

6 034

Sales and marketing

 

4 274

 

3 048

 

2 910

General and administrative

 

11 739

 

4 514

 

4 513

Impairment of intangible assets

 

1 768

 

-   

 

-   

Restructuring costs

 

5 170

 

2 086

 

(711)

Total operating expenses

 

37 303

 

15 517

 

12 746

Operating income (loss)

 

(27 526)

 

1 755

 

1 596

Gain on sales of long-term investments

 

1 166

 

-   

 

-   

Interest income and other financial income, net

 

696

 

254

 

235

Foreign exchange gain, net

 

218

 

1 447

 

1 981

Total financial income

 

2 080

 

1 701

 

2 216

Gain (loss) before minority interests and income taxes

 

(25 446)

 

3 456

 

3 812

Minority interests

 

-   

 

-   

 

-   

Gain (loss) before income taxes

 

(25 446)

 

3 456

 

3 812

Income tax expense (benefit)

 

(145)

 

378

 

21

Net income (loss)

 

(25 301)

 

3 078

 

3 791

Basic net gain (loss) per share

 

(1.65)

 

0.20

 

0.25

Diluted net gain (loss) per share

 

(1.65)

 

0.20

 

0.24

Number of shares used for computing :

      

- basic net income (loss) per share

 

15 342 435

 

15 349 945

 

15 349 945

- diluted net income (loss) per share

 

15 342 435

 

15 412 776

 

15 491 724






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.

     
     
  

Six months ended June 30,

  

2004

 

2005

  

Euro

 

Euro

Revenues :

    

Product sales

 

76 857

 

65 174

Technology development and other services

 

832

 

530

Licensing revenue

 

-   

 

3 391

  

77 689

 

69 095

Cost of revenues :

    

Cost of goods sold

 

57 051

 

37 087

Cost of services and licensing

 

3 665

 

394

  

60 716

 

37 481

Gross profit

 

16 973

 

31 614

Operating expenses :

    

Research and development

 

28 454

 

11 903

Sales and marketing

 

7 613

 

5 958

General and administrative

 

18 057

 

9 027

Impairment of intangible assets

 

1 768

 

-   

Restructuring costs

 

6 249

 

1 375

Total operating expenses

 

62 141

 

28 263

Operating income (loss)

 

(45 168)

 

3 351

Gain on sales of long-term investments

 

1 166

 

-   

Interest income and other financial income, net

 

1 175

 

489

Foreign exchange gain, net

 

2 457

 

3 428

Total financial income

 

4 798

 

3 917

Gain (loss) before minority interests and income taxes

 

(40 370)

 

7 268

Minority interests

 

-   

 

-   

Gain (loss) before income taxes

 

(40 370)

 

7 268

Income tax expense (benefit)

 

(263)

 

399

Net income (loss)

 

(40 107)

 

6 869

Basic net gain (loss) per share

 

(2.62)

 

0.45

Diluted net gain (loss) per share

 

(2.62)

 

0.44

Number of shares used for computing :

    

- basic net income (loss) per share

 

15 292 223

 

15 349 945

- diluted net income (loss) per share

 

15 292 223

 

15 446 100





WAVECOM S.A.

      

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
      

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

 
      
 

At December 31,

 

At June 30,

 
  

2004

 

2005

 
  

Euro

 

Euro

 

ASSETS

     
      

Current assets :

     

Cash and cash equivalents

 

53 318

 

57 403

 

Accounts receivable, net

 

22 864

 

22 304

 

Inventory, net

 

16 409

 

9 495

 

Value added tax recoverable

 

1 102

 

498

 

Prepaid expenses and other current assets

 

5 481

 

4 132

 

Total current assets

 

99 174

 

93 832

 

Other assets :

     

Other intangible and tangible assets, net

 

12 617

 

7 830

 

Long-term investments

 

9 017

 

3 596

 

Other assets

 

5 295

 

4 291

 

Research tax credit

 

1 486

 

1 517

 

Deferred tax assets

 

9 617

 

9 617

 

Total assets

 

137 206

 

120 683

 
      

LIABILITIES AND SHAREHOLDERS' EQUITY

     
      

Current liabilities :

     

Accounts payable

 

36 393

 

26 331

 

Accrued compensation

 

8 089

 

6 282

 

Other accrued expenses

 

32 217

 

22 758

 

Current portion of capitalized lease obligations

 

466

 

334

 

Deferred revenue and advances received from customers

 

820

 

642

 

Other liabilities

 

731

 

180

 

Total current liabilities

 

78 716

 

56 527

 
      

Long-term liabilities :

     

Long-term portion of capitalized lease obligations

 

302

 

166

 

Other long-term liabilities

 

1 732

 

1 293

 

      Total long-term liabilities

 

2 034

 

1 459

 
      

Minority interests

 

-   

 

 -

 
      

Shareholders' equity :

     

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

     

June 30, 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 June 30, 2005 and December 31, 2004)

 

(1 312)

 

(1 312)

 

Retained deficit

 

(93 344)

 

(86 475)

 

Accumulated other comprehensive loss

 

(1 433)

 

(2 061)

 

Total shareholders' equity

 

56 456

 

62 697

 

Total liabilities and shareholders' equity

 

137 206

 

120 683

 

 



WAVECOM S.A.

      

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
      

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

      
      
      
 

Six months ended June 30,

  

2004

 

2005

 
  

 

 

 

 
  

Euro

 

Euro

 

Cash flows from operating activities :

     

Net income (loss)

 

(40 107)

 

6 869

 

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

     

operating activities :

     

Amortization of intangible and tangible assets

 

7 300

 

4 171

 

Reversal of impairment of tangible assets

 

 -

 

(236)

 

Loss on sales and retirement of tangible assets

 

48

 

1 117

 

Reversal of long term investment depreciation

 

(306)

 

 -

 

Impairment of intangible assets

 

1 768

 

 -

 

Amortization of deferred stock-based compensation

 

350

 

 -

 

Net decrease in cash from working capital items

 

(16 364)

 

(13 401)

 

Net cash used by operating activities

 

(47 311)

 

(1 480)

 

Cash flows from investing activities :

     

Disposal of long term investments

 

442

 

5 421

 

Purchase of minority interest in Arguin

 

(1 768)

 

 -

 

Purchases of intangible and tangible assets

 

(2 119)

 

(839)

 

Proceeds from sale of intangible and tangible assets

 

15

 

753

 

Net cash provided by (used in) investing activities

 

(3 430)

 

5 335

 

Cash flows from financing activities :

     

Principal payments on capital lease obligations

 

(466)

 

(260)

 

Proceeds from exercise of stock options and founders' warrants

 

712

 

 -

 

Net cash provided by (used in) financing activities

 

246

 

(260)

 

Effect of exchange rate changes on cash and cash equivalents

 

(19)

 

490

 

Net increase (decrease) in cash and cash equivalents

 

(50 514)

 

4 085

 

Cash and cash equivalents, beginning of period

 

110 705

 

53 318

 

Cash and cash equivalents, end of period

 

60 191

 

57 403

 








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:  July 26, 2005

By:

/s/ Chantal Bourgeat

   
  

Chantal Bourgeat

  

Chief Financial Officer