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 2007
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-_____.]
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MEDIA RELEASE |
Wavecom Announces Second Quarter 2007 Financial Results
Continued quarter-on-quarter and year-on-year revenue growth with another Strong quarter-end 12-month backlog |
Issy-les-Moulineaux (France) – July 25, 2007 – Wavecom S.A., today announced financial results for its second quarter ending June 30, 2007.
Ron Black, Wavecom Chief Executive Officer, commented, “Our second quarter and first half 2007 financial results confirmed the solid progress that Wavecom has achieved over the past three years, illustrating once again growth, both organic and external. Furthermore, in early July the issue of convertible bonds (OCEANE) in the European market, raising €80.5 million, confirmed market confidence in our long-term strategies. We see Wavecom’s role as one of market consolidator and are actively seeking out opportunies for growth among businesses that have natural adjacencies with our current activities.”
In millions of euros Under US GAAP | Consolidated Group Results | |||||||
Q2 2006* | Q1 2007 | Q2 2007 | H1 2007 | |||||
Revenues | 49.9 | 48.1 | 56.1 | 104.2 | ||||
Gross profit | 20.4 | 20.5 | 24.4 | 44.9 | ||||
Operating expenses | 19.8 | 19.0 | 19.6 | 38.6 | ||||
Operating income | 0.7 | 1.6 | 4.8 | 6.3 | ||||
Net income | 0.2 | 1.9 | 5.0 | 7.0 |
*Note: Q2 2006 results included 2 months of an acquired business. |
Additional information | ||||||||
Operating income | 0.7 | 1.6 | 4.8 | 6.3 | ||||
Stock option-related expenses | (0.4 | ) | (0.7 | ) | (0.6 | ) | (1.3 | ) |
Acquired technology | (1.4 | ) | — | — | — | |||
Amortization expense related to acquisition | (0.8 | ) | (1.1 | ) | (0.8 | ) | (1.9 | ) |
Operating income before stock-option compensation and amortization expense related to acquisition | 3.3 | 3.4 | 6.2 | 9.5 |
Second Quarter 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: Second quarter 2007 consolidated revenues were €56.1 million, an increase of 12% versus second quarter 2006 or 16% at constant exchange rates. This year-on-year increase reflects solid organic growth. The second quarter 2007 revenues also increased by 17% versus the previous quarter (or 18% at constant currencies), where the largest increase in value came from the Americas region (+ €4 million or +25%) and the largest quarter-on-quarter increase in percentage came from the Asia-Pacific region (+44% or + €2.7 million). These strong performances were offset somewhat by slower sequential growth in the EMEA region (+5% or + €1.3 million).
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Sales of new generation products, based on a more powerful ARM9 processor and Wavecom’s own Open AT Software Suite are taking hold. Successful migration to these new products is progressing, in large part due to their flexibility and forward compatibility with existing product lines.
In the second quarter, the breakdown by region was as follows: EMEA 49%; Americas 35%; and APAC 16%. The customer portfolio remained balanced in the second quarter, with the top ten customers representing 51% of revenues as compared to 53% in the previous quarter. No single customer represented more than 8%.
Backlog: As expected, our 12-month backlog on June 30, 2007, declined from the extremely strong Q1 total of €82.4 million to €70.9 million as of June 30, 2007. It should be noted that the reported average quarter-end for the first two quarters of 2007 of €76.7 million is significantly higher than the average quarter-end post-acquisition backlog in 2006 of €50.8 million.
Gross Margin: For the second quarter 2007, gross margin of €24.4 million represented 43.4% of sales compared to 42.7% in Q1 2007. The gross margin from products remained virtually flat at 46.0% compared to 45.6% in Q1 2007.
Operating Expenses: Total operating expenses for the second quarter 2007 were €19.6 million, a flat to the first quarter 2007 level of €19.0 million. At June 30, 2007 headcount (salaried employees) stood at 410 increasing slightly from 401 at March 31, 2007.
Profit: Operating income for the second quarter 2007 was €4.8 million (8% operating margin as a percentage of revenues), increasing from €1.6 million (3% operating margin as a percentage of sales) in the previous quarter, mainly due to the higher revenues. On a year-over-year basis, this result was significantly better than the operating profit of €0.7 million in the second quarter 2006. Net income for the second quarter 2007 was €5.0 million compared to €1.9 million in previous quarter, and €0.2 million a year ago. |
As shown in the above table, on a non-GAAP basis, which excludes stock option expenses and expenses related to our acquisition, the operating income would have been €6.2 million for the second quarter 2007, compared to €3.4 million for the previous quarter. It should be noted that stock options that were awarded at the end of the second quarter 2007 had a higher strike price due to Wavecom’s stock price appreciation which is expected to put pressure on the operating results in the second half of the year. We expect to see an impact of €1.8 million per quarter for Q3 and Q4 versus € 0.6 million in Q2.
Balance sheet: Wavecom’s cash position increased quarter-on-quarter from €53.7 million to €56.1 million at June 30, 2007 while inventory remained virtually flat at €9.2 million compared to the previous quarter and DSO (Day sales outstanding) improved by 5 days.
OCEANE (Convertible Bond issue): Wavecom announced the successful completion of a convertible bond issue on July 17, 2007. The issue raised a total of €80.5 million which will be used for future growth including possible acquisitions of companies along the value chain.
Business news: |
Recent announcements: |
• | Wavecom named Microteck as its primary distributor in Japan for the entire range of machine-to-machine (M2M) and automotive wireless communication solutions including GSM/GPRS and CDMA. Microtek is well-positioned to tap into the rapidly-expanding Japanese market. Microtek will now provide Wavecom’s leading-edge wireless communications solutions to Japanese OEMs that make a wide range of products from security and alarm systems to fleet management and automotive telematics applications. |
• | Wavecom and Sunlink announced a strategic alliance. Sunlink International Holdings Limited and Wavecom S.A. announced the creation of Sunlink Wavecom Limited, a strategic alliance to develop and support wireless machine-to-machine applications based on Wavecom’s OpenAT® Software suite and Wireless CPU® hardware. The new company, Sunlink Wavecom Limited (90.5% – 9.5%, respectively) was formed with an initial investment of $1 million US. It will provide support, maintenance and application-design services specifically using Open AT® Software Suite and reference designs from Wavecom. Sunlink Wavecom Limited will be incorporated in Hong Kong with its operations located in Shen-Zhen, China, and will initially employ a staff of 20 engineers and technical support specialists. |
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• | Wavecom announced the launch of the Q26 Ultra its fully programmable 3G Wireless CPU®, the Q26Ultra, using high bandwidth cellular capabilities to address the growing automotive and alarm/security markets. With wideband CDMA functionality, it bridges the entire spectrum of bearers from 2G, 2.5G, 2.75G and 3G. It targets two growing markets for connected machine-to-machine applications: automotive and security. With this new product, Wavecom is the only wireless provider today to offer an automotive-grade design and qualification that will allow car makers to meet the demand for in-vehicle infotainment. For the security market, the high band-with capacity makes it ideal for video cameras in sophisticated alarm and security systems. |
Chantal Bourgeat, Wavecom CFO commented: “We are pleased by both our second quarter and first half-year performance and the long-term outlook for the business is positive. The recent addition of financial resources now positions us for targeted external growth.” Ms. Bourgeat reiterated, “The underlying business is generated from diverse markets and customers’ adoption rates differ, implying possible fluctuations in revenues from one quarter to the next. Additional factors impacting quarterly sales and performance are seasonality and exchange rate fluctuations.”
Conference Call: |
Today at 2:30 p.m. Paris time, Wavecom management will host a conference call in English reserved for financial professionals commenting on its second quarter 2007. To access this call, please use the following numbers: +33 (0) 1 70 99 42 67 in France, +44 (0) 20 7138 0845 in the U.K. and +1 718 354 1152 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 Q3 2007 results on October 24, 2007 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® software platform encompassing the Wavecom Open AT® Operating System, a wide range of Plug-Ins, the Open AT® 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 y (UK). Wavecom is publicly traded on Euronext Paris (Eurolist) in France and on the NASDAQ (WVCM) exchange in the U.S.
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@sbcglobal.net |
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. 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, 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, the company’s reliance on a single contract manufacturer in China for all production requirements, dependence on second parties, new products or technological developments introduced by competitors, customer and suppli er 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.
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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 | ||||||
June 30, | March 31, | June 30, | ||||
2006 | 2007 | 2007 | ||||
Euro | Euro | Euro | ||||
Revenues: | ||||||
Product sales | 49,187 | 47,785 | 55,776 | |||
Services revenue | 216 | 332 | 334 | |||
Licensing revenue | 484 | — | — | |||
49,887 | 48,117 | 56,110 | ||||
Cost of revenues: | ||||||
Cost of goods sold | 28,762 | 26,012 | 30,139 | |||
Cost of services | 697 | 1,559 | 1,600 | |||
29,459 | 27,571 | 31,739 | ||||
Gross profit | 20,428 | 20,546 | 24,371 | |||
Operating expenses: | ||||||
Research and development | 8,119 | 7,758 | 8,179 | |||
Sales and marketing | 4,405 | 5,413 | 5,740 | |||
General and administrative | 5,847 | 5,784 | 5,700 | |||
Acquired in process technology | 1,400 | — | — | |||
Total operating expenses | 19,771 | 18,955 | 19,619 | |||
Operating income | 657 | 1,591 | 4,752 | |||
Interest income and other financial income, net | 176 | 417 | 419 | |||
Foreign exchange loss, net. | (647 | ) | (48 | ) | (50 | ) |
Total financial income (loss) | (471 | ) | 369 | 369 | ||
Income before minority interests and income taxes | 186 | 1,960 | 5,121 | |||
Minority interests | — | — | — | |||
Income before income taxes | 186 | 1,960 | 5,121 | |||
Income tax expense | 19 | 12 | 91 | |||
Net income | 167 | 1,948 | 5,030 | |||
Basic net income per share | 0.01 | 0.13 | 0.33 | |||
Diluted net income per share | 0.01 | 0.12 | 0.30 | |||
Number of shares used for computing: | ||||||
– basic | 15,384,077 | 15,401,390 | 15,447,796 | |||
– diluted | 15,946,575 | 16,230,460 | 16,645,446 |
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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. |
Six months ended | ||||
June 30, | June 30, | |||
2006 | 2007 | |||
Euro | Euro | |||
Revenues: | ||||
Product sales | 76,648 | 103,562 | ||
Services revenue | 486 | 665 | ||
Licensing revenue | 969 | — | ||
78,103 | 104,227 | |||
Cost of revenues: | ||||
Cost of goods sold | 41,828 | 56,152 | ||
Cost of services | 873 | 3,158 | ||
42,701 | 59,310 | |||
Gross profit | 35,402 | 44,917 | ||
Operating expenses: | ||||
Research and development | 14,020 | 15,937 | ||
Sales and marketing | 7,291 | 11,154 | ||
General and administrative | 11,415 | 11,484 | ||
Acquired in process technology | 1,400 | — | ||
Total operating expenses | 34,126 | 38,575 | ||
Operating income | 1,276 | 6,342 | ||
Interest income and other financial income, net | 496 | 836 | ||
Foreign exchange loss, net | (1,328 | ) | (98 | ) |
Total financial income (loss) | (832 | ) | 738 | |
Income before minority interests and income taxes | 444 | 7,080 | ||
Minority interests | — | — | ||
Income before income taxes | 444 | 7,080 | ||
Income tax expense | 73 | 102 | ||
Net income | 371 | 6,978 | ||
Basic net income per share | 0.02 | 0.45 | ||
Diluted net income per share | 0.02 | 0.42 | ||
Number of shares used for computing: | ||||
– basic | 15,379,790 | 15,424,475 | ||
– diluted | 15,781,745 | 16,515,843 |
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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 June 30, | |||
2006 | 2007 | |||
Euro | Euro | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | 54,776 | 56,054 | ||
Accounts receivable, net | 28,727 | 33,939 | ||
Inventory | 6,631 | 9,184 | ||
Value added tax recoverable | 602 | 745 | ||
Prepaid expenses and other current assets | 2,361 | 3,522 | ||
Total current assets | 93,097 | 103,444 | ||
Other assets: | ||||
Long-term investments | 3,639 | 3,656 | ||
Other assets | 3,166 | 2,708 | ||
Research tax credit | 1,771 | 1,895 | ||
Income tax recoverable | 9,617 | 9,617 | ||
Intangible and tangible assets, net | 19,770 | 18,198 | ||
Goodwill | 8,117 | 8,117 | ||
Total assets | 139,177 | 147,635 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Current liabilities: | ||||
Accounts payable | 36,254 | 36,607 | ||
Accrued compensation | 9,367 | 6,947 | ||
Current portion of other accrued expenses | 3,713 | 3,541 | ||
Current portion of capitalized lease obligations | 233 | 203 | ||
Deferred revenue and advances received from customers | 98 | 1,011 | ||
Other liabilities | 653 | 583 | ||
Total current liabilities | 50,318 | 48,892 | ||
Long-term liabilities : | ||||
Long-term portion of other accrued expenses | 15,957 | 16,259 | ||
Long-term portion of capitalized lease obligations | 385 | 355 | ||
Other long-term liabilities | 858 | 737 | ||
Total long-term liabilities | 17,200 | 17,351 | ||
Commitments and contingencies | ||||
— | — | |||
Shareholders’ equity: | ||||
Shares, euro 1 nominal value, 15,703,450 shares authorized, issued and outstanding at | ||||
June 30, 2007 (15,554,153 at December 31, 2006) | 15,554 | 15,703 | ||
Additional paid-in capital | 139,393 | 141,919 | ||
Treasury stock at cost (156,345 shares at June 30, 2007 and December 31, 2006) | (1,312 | ) | (1,312 | ) |
Accumated deficit | (79,947 | ) | (72,968 | ) |
Accumulated other comprehensive income (loss) | (2,029 | ) | (1,950 | ) |
Total shareholders’ equity | 71,659 | 81,392 | ||
Total liabilities and shareholders’ equity | 139,177 | 147,635 | ||
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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. |
Six months ended June 30, | ||||
2006 | 2007 | |||
Euro | Euro | |||
Cash flows from operating activities: | ||||
Net income | 372 | 6,978 | ||
Adjustments to reconcile net income to net cash provided from operating activities: | ||||
Amortization and impairment of intangible and tangible assets | 2,754 | 4,257 | ||
Share-based compensation | 663 | 1,348 | ||
Loss on sales and retirement of tangible assets | 6 | 4 | ||
Net increase (decrease) in cash from working capital items | 345 | (9,579 | ) | |
Net cash provided by operating activities | 4,140 | 3,008 | ||
Cash flows from investing activities: | ||||
Disposal (acquisition) of long-term investments | 4 | (17 | ) | |
Purchases of intangible and tangible assets | (1,785 | ) | (2,652 | ) |
Proceeds from sale of intangible and tangible assets | (25,772 | ) | — | |
Proceeds from sale of intangible and tangible assets | 155 | — | ||
Net cash used by investing activities | (27,398 | ) | (2,669 | ) |
Cash flows from financing activities: | ||||
Principal payments on capital lease obligations | (184 | ) | (147 | ) |
Proceeds from exercise of stock options and founders’ warrants | 62 | 1,327 | ||
Net cash provided (used) by financing activities | (122 | ) | 1,180 | |
Effect of exchange rate changes on cash and cash equivalents | (77 | ) | (241 | ) |
Net increase (decrease) in cash and cash equivalents | (23,457 | ) | 1,278 | |
Cash and cash equivalents, beginning of period | 60,663 | 54,776 | ||
Cash and cash equivalents, end of period | 37,206 | 56,054 | ||
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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 25, 2007 | By: /s/ Chantal Bourgeat | |
Chantal Bourgeat Chief Financial Officer |
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