UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
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 2008
Commission File Number: 000-30078
WAVECOM S.A.
3, esplanade du Foncet
F-92442 Issy-Les-Moulineaux Cedex, France
Tel: + 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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
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- .
Press Release
Wavecom Third Quarter 2008 Financial Results
and Strategic Update
Issy-les-Moulineaux (France) – October 22, 2008 – Wavecom S.A. today announced financial results for its third quarter 2008 ending September 30, 2008 and a strategic review of its business.
• | Third Quarter 2008 Financial Results weakened by global economic slowdown |
• | Longer term, Wavecom’s core business promising |
• | Wavecom’s board considers Gemalto’s offer inadequate , as it “fails to deliver sufficient value to merit support” |
Third quarter 2008 ending September 30, 2008 financial results summary:
• | Wavecom posted sales of€28.9 million in the context of a global economic slowdown |
• | Product gross margin remains strong at 50.8% |
• | Backlog has increased from last quarter |
• | A cost reduction program is in place, leading to targeted future savings between€12-16 million per annum |
• | Net loss of€4 million. |
Over the longer term however, Wavecom’s management remains confident, given the Company’s strong position in the very promising M2M market and the Company’s key strengths:
• | A strong traditional product pipeline serving all key M2M industries |
• | A leading position with inSIM® (embedding SIM chips directly into modules) coupled with Anyware Technologies software, to provide high margin and recurring revenue potential |
Gemalto’s offer fails to value this unique position of Wavecom and its prospects for growth, and is highly opportunistic given current stock market volatility. For Gemalto, Wavecom represents a strategic opportunity to maintain leadership in the telecom market
Michel Alard, Chairman of the board of directors of Wavecom commented: “Wavecom has significant future value and the Company’s board of directors is united in their determination to maximise value to all stakeholders.”
1. | Third Quarter 2008 Overview: |
In millions of euros (Under US GAAP) | Consolidated Group Results | |||||
Q3 2007 | Q2 2008 | Q3 2008 | ||||
Revenues | 52.4 | 34.9 | 28.9 | |||
Gross profit | 23.7 | 18.3 | 14.0 | |||
Operating expenses | 19.6 | 18.9 | 19.3 | |||
Operating income/(loss) | 4.1 | (0.5) | (5.3) | |||
Net income/(loss) | 3.3 | 0.6 | (4.1) | |||
Additional information | ||||||
Operating income/(loss) | 4.1 | (0.5) | (5.3) | |||
Stock based related expenses: | (1.7) | (0.7) | (0.6) | |||
Amortization expense related to acquisitions | (0.8) | (1.0) | (1.0) | |||
Operating income before stock based compensation and amortization expense related to acquisitions | 6.6 | 1.1 | (3.7) |
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.
• | The Company’s third quarter financial results reflect the global economic slowdown that continues to decrease revenues particularly in two key vertical markets – automobiles and alarms. The overall macro automotive market has experienced a slowdown and, specific to Wavecom, as previously stated, two major contracts came to an end with final shipments delivered in Q3 2007 for the first project and in Q2 2008 for the second project. The demand for alarm systems, particularly in the U.S. has been negatively impacted by the sluggish real estate market. |
• | Other factors impacting the year-on-year decline include price erosion and unfavorable foreign exchange fluctuations as well as some difficulties in product transitions which have now been resolved. |
• | New products such as the Wireless Microprocessor®, Q2686 and Q2687 have begun to gain traction and customers are beginning to shift towards these products. |
• | The backlog (twelve-month rolling confirmed orders) of€32.0 million, as of September 30, 2008, increased from€30.2 million the previous quarter. |
• | Wavecom’s gross product margins remained strong at€14 million or 50.8% of product revenues which management believes is the highest rate in the industry. |
• | At an operating level, management has identified areas for expense reduction, targeting future per annum savings between€12 and€16 million taking into account the current difficult economic environment and the Company’s current reduced revenue level. |
2. | Wavecom’s positioning and long-term prospects |
• | As the telephone handset sector begins reaching maturity and consequently slows down, M2M (machine to machine communication) is a promising growth area. |
• | Wavecom is uniquely positioned in wireless M2M with its complement of wireless modules that function as wireless central processing units hosting a robust software platform including remote device management capabilities. It also has the internal expertise to build subsystems such as telematics boxes for cars and trucks or wirelessly-connected alarm panels. |
• | Among all of the unique attributes described above, inSIM® (embedded SIM) is a key element of future market growth. The current SIM card remains a point of weakness for M2M while the embedded SIM technology increases the ability to meet industrial application conditions. An embedded SIM also simplifies logistics and improves subscriber security. |
• | In addition to the strategic importance of inSIM®, the complete service platform that Wavecom’s subsidiary Anyware Technologies brings to the Company is equally critical. This technology allows for remote management and diagnostics of all machines equipped with wireless communication and is highly secure. |
• | As a result of the strategic attributes described above – Wavecom has built a strong and promising three-year pipeline of 289 current projects, 291 new designs and 280 additional promising new business opportunities. |
3. | Gemalto’s offer |
On October 6, 2008 Gemalto announced a unsolicited offer for Wavecom. The Wavecom board of directors responded in a public announcement on October 9, 2008 that after due and careful consideration of Gemalto’s unsolicited offer to take control of Wavecom, it had reached the conclusion that Gemalto’s unsolicited offer is not in the best interests of Wavecom, its shareholders and employees.
Anthony Maher, independent director and Chairman of Wavecom’s M&A sub-committee summarized the position of the board, saying “While Wavecom is always interested in any transaction that benefits shareholders and other stakeholders, we have concluded that the proposed acquisition by Gemalto fails to deliver sufficient value to merit support.”
The board will issue a more detailed opinion on Gemalto’s offer together with its formal response, in accordance with AMF (French Stock Market Authorities) and SEC (US Securities and Exchange Commission) regulations within the designated timeframe.
4. | Conference Call: |
A conference call, reserved for the financial community, will take place at 2:30 pm (Paris time) today (in English). To access this call, please use the following numbers:+33 (0)1 70 99 43 04 in France, +44 (0)20 7806 1968 in the U.K. and +1 718 354 1390 in the U.S. Visit the Wavecom corporate website: www.wavecom.com investors section to listen to the conference call commentary webcast (in English).
Conference call replay available until October 24 by dialing-in to the following numbers:+33 (0)1 71 23 02 48 in France, +44 (0)20 7806 1970 in the UK and +1 718 354 1112 in the US with access code: 3801714#.
Wavecom will announce its fourth quarter 2008 results on February 5, 2009 at 7:00 a.m. Paris time.
Wavecom – the wireless M2M experts
Wavecom is a leading provider of embedded wireless technology for M2M (machine-to-machine) communication. We provide a range of GSM/GPRS, CDMA, EDGE and 3G Wireless CPUs; programmable processors which also act as wireless modules or wireless modems. These are backed by a C and Lua-based cellular wireless software suite which includes a real-time operating system (RTOS), a software development environment based on Eclipse™, and several Plug-Ins (GPS, TCP/IP, security, Bluetooth™, Lua script and more). We also offer a wide range of professional and operated services. Our solutions are used for automotive telematics, smart metering, fleet management, GSM/GPS/satellite tracking, wireless alarms, wireless POS (point of sales), WLL (fixed voice), remote monitoring and many other M2M applications.
Founded in 1993 and headquartered in Issy-les-Moulineaux (France) near Paris, Wavecom has subsidiaries in Hong Kong (PRC), Research Triangle Park, NC (USA), Farnborough (UK), Munich (Germany) and Sao Paolo (Brazil). Wavecom is publicly traded on Euronext Paris (Eurolist) in France and on the NASDAQ (WVCM) exchange in the U.S.
http://www.wavecom.com
Contact Wavecom Lisa Ann Sanders Director Communications and Investor Relations Tel: +33 (0)1 46 29 41 81 e-mail: lisaann.sanders@wavecom.com | Contact Brunswick : Andrew Dewar Jérôme Biscay Tel: +33 (0) 153 96 83 83 e-mail: wavecom@brunswickgroup.com
Contact Lovallo IR PR: US Investor Relations John D. Lovallo, President Lovallo Communications Group, LLC Tel: +1 203 431 0587 e-mail: johnlovalloirpr@sbcglobal.net |
This release contains forward-looking statements that relate to the Company’s plans, objectives, estimates and goals. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes” and “estimates,” and variations of such words and similar expressions identify such forward-looking statements. The Company’s business is subject to numerous risks and uncertainties, including probable variability in the Company’s quarterly operating results, nascent vertical markets, a long sales cycle, the uncertain rate of development of the M2M market for wireless communications, success of the Company’s new services line, technological changes, vertical integration by other market participants, failure to protect the Company’s intellectual property, possible quality issues on our products, dependence on third parties, in particular its manufacturing partner and other third party suppliers, currency rate fluctuations and other risks associated with managing growth or associated with the Company’s global operations. These and other risks and uncertainties, which are described in more detail in the Company’s most recent filings with the U.S.Securities and Exchange Commission, could cause the Company’s actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.
Wavecom shareholders are urged to read Wavecom’s Note en réponse when it is filed with the Autorité des Marchés (the “AMF”) and its Solicitation/Recommendation Statement on Schedule 14D-9 when it is filed with the U.S. Securities and Exchange Commission (the “SEC”), as they will contain important information. The Note en réponse and the Solicitation/Recommendation Statement and other public filings made from time to time by the Company are available without charge from, respectively, the AMF’s website at www.amf-france.org or the SEC’s website at www.sec.gov, and at www.wavecom.com.
Abbreviated consolidated 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 | ||||||||||
September 30, 2007
| June 30, 2008
| September 30, 2008
| ||||||||
Euro | Euro | Euro | ||||||||
Revenues : | ||||||||||
Product sales | 50 405 | 33 401 | 27 504 | |||||||
Services revenue | 1 958 | 1 499 | 1 411 | |||||||
52 363 | 34 900 | 28 915 | ||||||||
Cost of revenues : | ||||||||||
Cost of goods sold | 26 956 | 15 141 | 13 529 | |||||||
Cost of services | 1 666 | 1 425 | 1 352 | |||||||
28 622 | 16 566 | 14 881 | ||||||||
Gross profit | 23 741 | 18 334 | 14 034 | |||||||
Operating expenses : | ||||||||||
Research and development | 8 493 | 9 319 | 7 687 | |||||||
Sales and marketing | 5 689 | 5 810 | 6 095 | |||||||
General and administrative | 5 461 | 3 733 | 5 520 | |||||||
Total operating expenses | 19 643 | 18 862 | 19 302 | |||||||
Operating income (loss) | 4 098 | (528) | (5 268) | |||||||
Interest income and other financial income, net | 127 | 870 | 1 014 | |||||||
Foreign exchange gain (loss), net | (832) | 171 | 142 | |||||||
Total financial income (loss) | (705) | 1 041 | 1 156 | |||||||
Income (loss) before income taxes | 3 393 | 513 | (4 112) | |||||||
Income tax expense (benefit) | 49 | (38) | (45) | |||||||
Net income (loss) | 3 344 | 551 | (4 067) | |||||||
Basic net income (loss) per share | 0.22 | 0.04 | (0.27) | |||||||
Diluted net income (loss) per share | 0.18 | 0.04 | (0.27) | |||||||
Number of shares used for computing : | ||||||||||
- basic | 15 199 624 | 15 259 641 | 15 185 200 | |||||||
- diluted | 18 785 143 | 18 329 375 | 15 185 200 |
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 | ||||
Sept 30, 2007
| Sept 30, 2008
| |||
Euro | Euro | |||
Revenues : | ||||
Product sales | 153 967 | 97 813 | ||
Services revenue | 2 623 | 4 105 | ||
156 590 | 101 918 | |||
Cost of revenues : | ||||
Cost of goods sold | 83 107 | 46 096 | ||
Cost of services | 4 825 | 3 831 | ||
87 932 | 49 927 | |||
Gross profit | 68 658 | 51 991 | ||
Operating expenses : | ||||
Research and development | 24 430 | 26 729 | ||
Sales and marketing | 16 844 | 19 104 | ||
General and administrative | 16 944 | 15 078 | ||
Total operating expenses | 58 218 | 60 911 | ||
Operating income (loss) | 10 440 | (8 920) | ||
Interest income and other financial income, net | 963 | 2 710 | ||
Foreign exchange gain (loss), net | (930) | 268 | ||
Total financial income | 33 | 2 978 | ||
Income (loss) before income taxes | 10 473 | (5 942) | ||
Income tax expense (benefit) | 151 | (90) | ||
Net income (loss) | 10 322 | (5 852) | ||
Basic net income (loss) per share | 0.68 | (0.38) | ||
Diluted net income (loss) per share | 0.64 | (0.38) | ||
Number of shares used for computing : | ||||
- basic | 15 092 060 | 15 253 071 | ||
- diluted | 16 186 995 | 15 253 071 |
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, 2007 | At Sept 30, 2008 | |||
Euro | Euro | |||
ASSETS | ||||
Current assets : | ||||
Cash and cash equivalents | 4 677 | 3 359 | ||
Marketable securities | 134 610 | 122 189 | ||
Accounts receivable, net | 29 467 | 20 872 | ||
Inventory | 6 032 | 5 458 | ||
Value added tax recoverable | 1 124 | 684 | ||
Prepaid expenses and other current assets | 3 141 | 2 221 | ||
Deferred tax assets | 4 514 | 4 514 | ||
Total current assets | 183 565 | 159 297 | ||
Other assets : | ||||
Long-term investments | 3 731 | 5 968 | ||
Other assets and Interest in associates | 4 517 | 4 138 | ||
Research tax credit | 2 049 | 2 677 | ||
Income tax receivable | 13 083 | 13 083 | ||
Intangible and tangible assets, net | 16 336 | 18 617 | ||
Goodwill | 8 117 | 16 721 | ||
Total assets | 231 398 | 220 501 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Current liabilities : | ||||
Accounts payable | 27 612 | 21 392 | ||
Accrued compensation | 8 584 | 5 105 | ||
Current portion of other accrued expenses | 3 572 | 3 320 | ||
Current portion of convertible bonds | 664 | 1 055 | ||
Current portion of capitalized lease obligations | 207 | 260 | ||
Deferred revenue and advances received from customers | 307 | 1 097 | ||
Deferred tax liabilities | - | 154 | ||
Other liabilities | 3 652 | 6 829 | ||
Total current liabilities | 44 598 | 39 212 | ||
Long-term liabilities : | ||||
Long-term portion of other accrued expenses | 16 636 | 14 739 | ||
Long-term portion of convertible bonds | 80 500 | 80 500 | ||
Long-term portion of capitalized lease obligations | 340 | 245 | ||
Other long-term liabilities | 616 | 478 | ||
Total long-term liabilities | 98 092 | 95 962 | ||
Shareholders’ equity : | ||||
Shares, euro 1 nominal value, 15,820,442 shares authorized, issued and outstanding at September 30, 2008 (15,796,591 at December 31, 2007) | 15 797 | 15 820 | ||
Additional paid-in capital | 146 052 | 152 264 | ||
Treasury stock at cost (1,091,861 shares at September 30, 2008 and 544,322 at December 31, 2007) | (8 823) | (10 777) | ||
Accumulated deficit | (62 548) | (69 681) | ||
Accumulated other comprehensive income (loss) | (1 770) | (2 299) | ||
Total shareholders’ equity | 88 708 | 85 327 | ||
Total liabilities and shareholders’ equity | 231 398 | 220 501 | ||
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, | ||||||||||
2007
| 2008
| |||||||||
Euro | Euro | |||||||||
Cash flows from operating activities : | ||||||||||
Net income (loss) | 10 322 | (5 852) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||||||||||
Amortization and impairment of intangible and tangible assets | 6 254 | 6 559 | ||||||||
Amortization of debt issue costs | - | 280 | ||||||||
Share-based compensation | 3 073 | 6 114 | ||||||||
Loss on sales and retirement of tangible assets | 13 | 31 | ||||||||
Disposal (acquisition) of marketable securities, net | (102 140) | 12 421 | ||||||||
Deferred tax | - | (151) | ||||||||
Net increase (decrease) in cash from working capital items | (4 581) | 986 | ||||||||
Net cash provided (used) by operating activities | (87 059) | 20 388 | ||||||||
Cash flows from investing activities : | ||||||||||
Acquisition of long-term investments | (55) | (2 236) | ||||||||
Purchases of intangible and tangible assets | (3 873) | (5 090) | ||||||||
Acquisition of certain assets, net of cash acquired | - | (10 746) | ||||||||
Proceeds from sale of intangible and tangible assets | - | 57 | ||||||||
Purchase of interets in associates | (7) | 4 | ||||||||
Net cash used by investing activities | (3 935) | (18 011) | ||||||||
Cash flows from financing activities : | ||||||||||
Proceeds from convertible bonds (net of debt issue cost of€2,501) | 77 998 | - | ||||||||
Principal payments on capital lease obligations | (207) | (225) | ||||||||
Purchases of treasury stock | (7 510) | (3 235) | ||||||||
Proceeds from exercise of stock options and founders’ warrants | 1 843 | 122 | ||||||||
Net cash provided (used) by financing activities | 72 124 | (3 338) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (525) | (357) | ||||||||
Net decrease in cash and cash equivalents | (19 395) | (1 318) | ||||||||
Cash and cash equivalents, beginning of period | 54 776 | 4 677 | ||||||||
Cash and cash equivalents, end of period | 35 381 | 3 359 | ||||||||
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 22, 2008 | By: | /s/ Chantal Bourgeat
| ||||||
Chantal Bourgeat | ||||||||
Chief Financial Officer |