6-K 1 wavecomform6k.htm WAVECOM FORM 6-K Wavecom Form 6-K
 


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 October 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    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   

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


 




 


MEDIA RELEASE


Wavecom Announces Third Quarter 2005 Results


· Revenues up 4% quarter-on-quarter  

· Third consecutive quarter of positive operating and net profit


Issy-les-Moulineaux, France – October 27, 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 third quarter ended September 30, 2005.  

Ron Black, chief executive officer commented “We are especially pleased to report a 4% growth in revenues quarter-on-quarter, for what is traditionally the slowest quarter of the year.  The core vertical applications business grew in each region, indicating that we are continuing to win business across the board.  In addition, we reported our third consecutive profitable quarter, continuation of high gross margins, and an improved cash position over the previous quarter.  On the product front we announced our next generation Open AT® software, supporting EDGE and many new functions tailored to industrial markets.  We believe our growing emphasis on software for industrial wireless communication is becoming a clear market differentiator.”    


Third 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:  Third quarter 2005 revenues were €31.9 million which is an increase of 4% from the previous quarter.  This increase reflects a strong performance from our core vertical markets business which was €28.6 million, or 90% of total revenues.  


Sales increased in each of our three geographic regions, with a breakdown of regions as follows:  EMEA (Europe, Middle-east and Africa):  59%, APAC (Asia-Pacific):  29% and The Americas:  12%.


The customer portfolio remained balanced with no single customer representing more than 9% of total revenues in the third quarter. The top ten customers, 4 of which are distributors, combined represented 56% of revenues as compared to 62% in the previous quarter.


Backlog:  Backlog as of September 30, 2005 increased 19% to reach €36.6 million, compared to €30.8 million at the end of the previous quarter, and was made up of 90% vertical applications, compared to 77% at June 30, 2005.  As noted previously by management, backlog consists of orders on hand for the next 12 months, but is not necessarily predictive of revenue in the quarter to come as we have significantly reduced our manufacturing cycle time and are able to deliver product much more quickly than in the past.  For this quarter, however, we have begun to see signs of lead-times increasing for some components, such as flash memories, and therefore have communicated to customers that they need to place orders in a more timely manner in order to ensure delivery schedules.




1



Gross Margin:  Gross margin was 48%, one percentage point higher as compared to the previous quarter.  As in the past two quarters, gross margin exceeded our previously-stated model range of 33% to 35%.  This continued high gross margin is the result of a number of factors, the most important being the Company’s refining its product management process, eliminating low-margin products from the portfolio, and the sale of some previously-considered obsolete products.


Operating Expenses:  Total operating expenses for the third quarter 2005 were €13.1 million, compared to €12.7 million in the second quarter 2005.  The restructuring plans undertaken in 2004 were completed during the third quarter and accounted for expenses of €0.2 million.  Operating expenses for R&D, Sales and Marketing and G&A remained flat as compared to the second quarter of 2005.


Profit:  Operating profit for the third quarter was €2.1 million, compared to €1.6 million of operating profit in the second quarter.  Net profit for the third quarter was €2.8 million, or €0.19 per share, as compared to €3.8 million, or €0.25 per share, in the second quarter 2005.  Wavecom recorded a net foreign exchange gain of €0.4 million for the third quarter 2005, compared to a €2.0 million gain in previous quarter.


Cash: Wavecom’s cash position was €60 million at September 30, 2005, increasing from €57 million at June 30, 2005.  This increase was a result of continued excellent operating performance in inventory reduction and supply chain management.


Business news:


·

Introduction of our latest OpenAT® software, which includes EDGE for the Q2687 module, as well as real-time OS, 9 power modes, memory expansion capabilities and multiple peripheral interfaces -- features  that are all tailored for industrial wireless solutions.

·

Commerciant, a US-based company selected Wavecom technology as the base for its newest point of sale payment terminals, a growing market in the U.S.

·

Extension of Wavecom’s distributor network to include Acal for all of Northern Europe, now including the UK and Arrow Dicopel in Mexico.  

·

Wavecom signed a joint marketing agreement with US-based Airbiquity, to address the growing wireless market for automobiles.  


Outlook:  


Wavecom management has identified numerous variables that can influence revenues in the current quarter including higher demand, potential licensing deals, a changing product mix and a tightening component supply.  Based on current information, we expect revenues to increase moderately to strongly versus last quarter.  Management added that gross margin for the fourth quarter of 2005 should continue to exceed 40%. Total operating expenses should be on the order of €13.5 million to €14.5 million.


General Assembly:


Wavecom plans to call a General Assembly of the shareholders shortly, in order to increase the cap price on the share buy-back program from €10 to € 22.50 per share, given the current market price.  In addition, approval will be sought to authorize various types of employee share equity programs as management intends to use equity as a key element of employee compensation.





2



Conference Call:


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


Wavecom will announce its fourth quarter/full year 2005 results on February 9, 2006 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 Investor Relations

Lovallo Communications Group, LLC

Tel. +33 1 46 29 41 81

Tel:  + 1 203-431-0587

lisaann.sanders@wavecom.com

Johnlovalloirpr@sbcglobal.com


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 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 Tables Follow –




3




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

 
  

September 30,

 

June 30,

 

September 30,

 
  

2004

 

2005

 

2005

 
  

Euro

 

Euro

 

Euro

 

Revenues :

       

Product sales

 

36,235

 

30,306

 

31,289

 

Technology development and other services

 

184

 

420

 

614

 
  

36,419

 

30,726

 

31,903

 

Cost of revenues :

       

Cost of goods sold

 

27,264

 

16,050

 

16,442

 

Cost of services and licensing

 

1,825

 

334

 

220

 
  

29,089

 

16,384

 

16,662

 

Gross profit

 

7,330

 

14,342

 

15,241

 

Operating expenses :

       

Research and development

 

10,187

 

6,034

 

5,646

 

Sales and marketing

 

4,108

 

2,910

 

2,757

 

General and administrative

 

6,266

 

4,513

 

4,463

 

Restructuring costs

 

5,182

 

(711)

 

233

 

Total operating expenses

 

25,743

 

12,746

 

13,099

 

Operating income (loss)

 

(18,413)

 

1,596

 

2,142

 

Interest income and other financial income, net

 

174

 

235

 

271

 

Foreign exchange gain, net

 

389

 

1,981

 

441

 

Total financial income

 

563

 

2,216

 

712

 

Gain (loss) before minority interests and income taxes

 

(17,850)

 

3,812

 

2,854

 

Minority interests

 

-   

 

-   

 

-   

 

Gain (loss) before income taxes

 

(17,850)

 

3,812

 

2,854

 

Income tax expense (benefit)

 

309

 

21

 

8

 

Net income (loss)

 

(18,159)

 

3,791

 

2,846

 

Basic net gain (loss) per share

 

(1.18)

 

0.25

 

0.19

 

Diluted net gain (loss) per share

 

(1.18)

 

0.24

 

0.18

 

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

 

15,491,724

 

15,774,128

 
        




4




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.

     
     
  

Nine months ended September 30,

  

2004

 

2005

  

Euro

 

Euro

Revenues :

    

Product sales

 

113,092

 

96,463

Technology development and other services

 

1,017

 

1,144

Licensing revenue

 

-   

 

3,391

  

114,109

 

100,998

Cost of revenues :

    

Cost of goods sold

 

84,315

 

53,530

Cost of services and licensing

 

5,490

 

613

  

89,805

 

54,143

Gross profit

 

24,304

 

46,855

Operating expenses :

    

Research and development

 

38,641

 

17,549

Sales and marketing

 

11,721

 

8,715

General and administrative

 

24,323

 

13,491

Impairment of intangible assets

 

1,768

 

-   

Restructuring costs

 

11,431

 

1,607

Total operating expenses

 

87,884

 

41,362

Operating income (loss)

 

(63,580)

 

5,493

Gain on sales of long-term investments

 

1,166

 

-   

Interest income and other financial income, net

 

1,349

 

761

Foreign exchange gain, net

 

2,846

 

3,869

Total financial income  

 

5,361

 

4,630

Gain (loss) before minority interests and income taxes

 

(58,219)

 

10,123

Minority interests

 

-   

 

-   

Gain (loss) before income taxes

 

(58,219)

 

10,123

Income tax expense (benefit)

 

47

 

408

Net income (loss)

 

(58,266)

 

9,715

Basic net gain (loss) per share

 

(3.81)

 

0.63

Diluted net gain (loss) per share

 

(3.81)

 

0.62

Number of shares used for computing :

    

- basic net income (loss) per share

 

15,309,144

 

15,349,945

- diluted net income (loss) per share

 

15,309,144

 

15,571,751




5




WAVECOM S.A.

      

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
      

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

 
      
 

At December 31,

 

At September 30,

 
  

2004

 

2005

 
  

Euro

 

Euro

 

ASSETS

     

Current assets :

     

Cash and cash equivalents

 

53,318

 

60,012

 

Accounts receivable, net

 

22,864

 

23,678

 

Inventory, net

 

16,409

 

7,577

 

Value added tax recoverable

 

1,102

 

546

 

Prepaid expenses and other current assets

 

5,481

 

5,074

 

Total current assets

 

99,174

 

96,887

 

Other assets :

     

Other intangible and tangible assets, net

 

12,617

 

7,123

 

Long-term investments

 

9,017

 

3,566

 

Other assets

 

5,295

 

4,237

 

Research tax credit

 

1,486

 

1,532

 

Deferred tax assets

 

9,617

 

9,617

 

Total assets

 

137,206

 

122,962

 
      

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Current liabilities :

     

Accounts payable

 

36,393

 

28,091

 

Accrued compensation

 

8,089

 

5,674

 

Other accrued expenses

 

32,217

 

21,649

 

Current portion of capitalized lease obligations

 

466

 

282

 

Deferred revenue and advances received from customers

 

820

 

334

 

Other liabilities

 

731

 

283

 

Total current liabilities

 

78,716

 

56,313

 
      

Long-term liabilities :

     

Long-term portion of capitalized lease obligations

 

302

 

115

 

Other long-term liabilities

 

1,732

 

1,406

 

Total long-term liabilities

 

2,034

 

1,521

 
      

Minority interests

 

-   

 

 -

 
      

Shareholders' equity :

     

Shares, Euro 1 nominal value, 15,511,518 shares authorized, issued and outstanding at

     

September 30, 2005 (15,506,290 at December 31, 2004)

 

15,506

 

15,512

 

Additional paid-in capital

 

137,039

 

137,057

 

Treasury stock at cost (156,345 shares at September 30, 2005 and December 31, 2004)..

 

(1,312)

 

(1,312)

 

Retained deficit

 

(93,344)

 

(83,629)

 

Accumulated other comprehensive loss

 

(1,433)

 

(2,500)

 

Total shareholders' equity

 

56,456

 

65,128

 

Total liabilities and shareholders' equity

 

137,206

 

122,962

 
      




6




WAVECOM S.A.

      

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
      

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

      
      
      
 

Nine months ended September 30,

  

2004

 

2005

 
  

 

 

 

 
  

Euro

 

Euro

 

Cash flows from operating activities :

     

Net income (loss)

 

(58,266)

 

9,715

 

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

     

operating activities :

     

Amortization of intangible and tangible assets

 

12,503

 

5,430

 

Reversal of impairment of tangible assets

 

(716)

 

(236)

 

Loss on sales and retirement of tangible assets

 

19

 

1,057

 

Reversal of long term investment depreciation

 

(550)

 

-   

 

Impairment of intangible assets

 

1,768

 

-   

 

Amortization of deferred stock-based compensation

 

350

 

-   

 

Net decrease in cash from working capital items

 

(7,364)

 

(13,766)

 

Net cash providied (used) by operating activities

(52,256)

 

2,200

 

Cash flows from investing activities :

     

Acquisition (disposal) of long term investments

 

(79)

 

5,451

 

Purchase of minority interest in Arguin

 

(1,768)

 

 -

 

Purchases of intangible and tangible assets

 

(3,185)

 

(1,429)

 

Proceeds from sale of intangible and tangible assets

 

28

 

851

 

Proceeds from sale of long term investments

 

1,638

 

-   

 

Net cash provided by (used in) investing activities

 

(3,366)

 

4,873

 

Cash flows from financing activities :

     

Principal payments on capital lease obligations

 

(704)

 

(363)

 

Proceeds from exercise of stock options and founders' warrants

 

712

 

24

 

Net cash provided by (used in) financing activities

 

8

 

(339)

 

Effect of exchange rate changes on cash and cash equivalents

 

(93)

 

(40)

 

Net increase (decrease) in cash and cash equivalents

 

(55,707)

 

6,694

 

Cash and cash equivalents, beginning of period

 

110,705

 

53,318

 

Cash and cash equivalents, end of period

 

54,998

 

60,012

 

  

     




7





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:  October 27, 2005

By:

/s/ Chantal Bourgeat

     
   

Chantal Bourgeat

   

Chief Financial Officer