Sierra Wireless Reports Fourth Quarter and Full Year 2012 Results

  Sierra Wireless Reports Fourth Quarter and Full Year 2012 Results

Business Wire

VANCOUVER, British Columbia -- February 6, 2013

Sierra Wireless, Inc.:

Fourth Quarter 2012

  *Total revenue, including revenue from AirCard^® related discontinued
    operations, of $163.8 million and non-GAAP net earnings of $10.3 million,
    or $0.33 per diluted share
  *Revenue from continuing operations of $109.4 million, 32.8 percent
    year-over-year growth, and non-GAAP operating earnings from continuing
    operations of $3.7 million

Full Year 2012

  *Total revenue, including revenue from AirCard related discontinued
    operations, of $644.2 million and non-GAAP net earnings of $33.4 million,
    or $1.08 per diluted share
  *Revenue from continuing operations of $397.3 million, 19.3 percent
    year-over-year growth, and non-GAAP operating earnings from continuing
    operations of $0.9 million

Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported fourth quarter
and full year 2012 results. All results are reported in U.S. dollars and are
prepared in accordance with United States generally accepted accounting
principles (GAAP), except as otherwise indicated below.

On January 28, 2013, the company announced a definitive agreement for the sale
of substantially all of the assets and operations related to its AirCard
business to Netgear, Inc. In accordance with GAAP, assets and liabilities
associated with the sale have been recorded as “held for sale” and the results
of operations of the AirCard business as discontinued operations. The
consolidated statements of operations and related selected financial
information have been retrospectively modified to distinguish between
continuing operations and discontinued operations.

“Our fourth quarter results highlight our continued solid revenue growth and
improving earnings,” said Jason Cohenour, President and Chief Executive
Officer. “As the global leader in M2M and connected device solutions, we
believe that we are exceptionally well positioned to drive profitable growth
both organically and through strategic acquisitions.”

Fourth Quarter 2012
Revenue from continuing operations in the fourth quarter of 2012 was $109.4
million, compared to $82.4 million in the fourth quarter of 2011, and $100.2
million in the third quarter of 2012. The 32.8 percent year-over-year revenue
increase was driven by better than expected growth in Machine-to-Machine
(“M2M”) sales, including a $15.5 million contribution from the recently
acquired M2M business of Sagemcom, along with solid growth in sales to PC
OEMs.

On a GAAP basis, gross margin from continuing operations was $36.2 million, or
33.1 percent of revenue, in the fourth quarter of 2012, compared to $25.2
million, or 30.6 percent of revenue, in the fourth quarter of 2011. Operating
expenses from continuing operations were $37.7 million and loss from
continuing operations was $1.5 million in the fourth quarter of 2012, compared
to operating expenses of $45.2 million and a loss from operations of $20.0
million in the fourth quarter of 2011. Fourth quarter of 2011 operating
expenses included an intangible asset impairment charge of $11.2 million,
primarily related to a software development program that was acquired through
the purchase of Wavecom, S.A. in 2009 and which we abandoned during the fourth
quarter of 2011. Net earnings from continuing operations were $15.5 million,
or $0.50 per diluted share, in the fourth quarter of 2012, compared to net
loss of $20.4 million, or $0.65 per diluted share, in the fourth quarter of
2011. Net earnings from continuing operations in 2012 included an income tax
recovery that was the result of the recognition of certain tax assets that
will be realizable as a result of the sale of the AirCard business. Net
earnings, including discontinued operations, were $19.6 million, or $0.64 per
diluted share, in the fourth quarter of 2012, compared to net loss, including
discontinued operations, of $13.8 million, or $0.44 per diluted share, in the
fourth quarter of 2011.

On a non-GAAP basis, gross margin from continuing operations was 33.2 percent
of revenue in the fourth quarter of 2012, compared to 30.7 percent of revenue
in the fourth quarter of 2011. Operating expenses from continuing operations
were $32.6 million and operating earnings from continuing operations were $3.7
million in the fourth quarter of 2012, compared to operating expenses of $29.7
million and an operating loss of $4.4 million in the fourth quarter of 2011.
Net earnings from continuing operations were $4.5 million, or $0.15 per
diluted share, in the fourth quarter of 2012 compared to net loss of $4.4
million, or $0.14 per diluted share, in the fourth quarter of 2011.

The cash, cash equivalents, and short-term investments balance at the end of
the fourth quarter of 2012 was $63.6 million, up from $59.5 million at the end
of the third quarter of 2012.

Full Year 2012
Revenue from continuing operations for the year ended December 31, 2012 was
$397.3 million, compared to $333.2 million for the year ended December 31,
2011. The 19.3 percent year-over-year revenue increase was driven by
significant growth in M2M sales, including a $20.1 million contribution from
the recently acquired M2M business of Sagemcom, along with strong growth in
sales to PC OEMs.

On a GAAP basis, gross margin from continuing operations was $125.3 million,
or 31.5 percent of revenue, in 2012, compared to $101.7 million, or 30.5
percent of revenue, in 2011. Operating expenses from continuing operations
were $147.5 million and loss from operations was $22.2 million in 2012,
compared to operating expenses of $156.0 million and a loss from operations of
$54.2 million in 2011. The operating loss in 2011 included an intangible asset
impairment charge of $11.2 million, primarily related to a software
development program that was acquired through the purchase of Wavecom, S.A. in
2009 and which we abandoned during the fourth quarter of 2011. Net loss from
continuing operations was $4.2 million, or $0.14 per diluted share, in 2012,
compared to $50.7 million, or $1.62 per diluted share, in 2011. Net earnings,
including discontinued operations, were $27.2 million, or $0.88 per diluted
share, in 2012, compared to net loss, including discontinued operations, of
$29.3 million, or $0.94 per diluted share, in 2011.

On a non-GAAP basis, gross margin from continuing operations was 31.6 percent
of revenue in 2012, compared to 30.7 percent of revenue in 2011. Operating
expenses from continuing operations were $124.7 million and operating earnings
from continuing operations were $0.9 million in 2012, compared to operating
expenses of $124.5 million and an operating loss of $22.4 million in 2011. Net
loss from continuing operations was $0.4 million, or $0.01 per diluted share,
in 2012, compared to net loss of $18.7 million, or $0.60 per diluted share, in
2011.

Non-GAAP results exclude the impact of stock-based compensation expense,
acquisition costs, restructuring costs, integration costs, disposition costs,
acquisition amortization, foreign exchange gains or losses on foreign currency
contracts and translation of balance sheet accounts, and certain tax
adjustments. We disclose non-GAAP amounts as we believe that these measures
provide our shareholders with useful information about operating results and
assist in comparisons from one period to another. The reconciliation between
our GAAP and non-GAAP results is provided in the accompanying schedules.

Financial guidance
The Company provides the following guidance for the first quarter of 2013 for
its continuing operations.

In the first quarter of 2013, we expect revenue from our continuing operations
to be down sequentially following the exceptionally strong fourth quarter of
2012. We expect gross margin to be similar or slightly lower than fourth
quarter 2012 levels, and operating expenses to increase as a result of higher
new product certification costs combined with the negative impact of a
strengthening euro.

Looking forward to the second quarter of 2013, we expect a return to solid
sequential and year-over-year revenue growth and modest profitability.

Q1 2013 Guidance                            Non-GAAP - Continuing Operations
Revenue                                      $98.0 to $102.0 million
Earnings (loss) from operations              ($2.5) to ($1.5) million
Net earnings (loss) from continuing          ($2.5) to ($1.5) million
operations
Earnings (loss) per share from continuing    ($0.08) to ($0.05) per share
operations

This Non-GAAP guidance for the first quarter of 2013 reflects current business
indicators and expectations. Inherent in this guidance are risk factors that
are described in greater detail in our regulatory filings. Our actual results
could differ materially from those presented above. All figures are
approximations based on management’s current beliefs and assumptions.

Conference call, webcast and instant replay details
Sierra Wireless President and CEO, Jason Cohenour, and CFO, David McLennan,
will host a conference call and webcast with analysts and investors to review
the results on Wednesday, February 6, 2013, at 5:30 PM Eastern Time (2:30 PM
PT). A live slide presentation will be available for viewing during the call
from the link provided below.

To participate in this conference call, please dial the following number
approximately ten minutes prior to the commencement of the call:

  *Toll-free (Canada and US): 1-877-201-0168
  *Alternate number: 1-647-788-4901
  *Conference ID: 87240990

For those unable to participate in the live call, a replay will be available
until February 27, 2013. Dial 1-855-859-2056 or 1-800-585-8367 and enter the
Conference ID number above to access the replay.

To access the webcast, please follow the link below:
Sierra Wireless Q4 and FY2012 Financial Results Webcast

If the above link does not work, please copy and paste the following URL into
your browser:
http://www.snwebcastcenter.com/custom_events/sierrawireless-20130206/site/

The webcast will remain available at the above link for one year following the
call.

We look forward to having you participate in our call.

Cautionary Note Regarding Forward-Looking Statements
Certain statements and information in this press release are not based on
historical facts and constitute forward-looking statements or forward-looking
information within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995 and Canadian securities laws (“forward-looking statements”)
including statements and information relating to our financial guidance for
the first quarter of 2013 and our fiscal year 2013, our business outlook for
the short and longer term and our strategy, plans and future operating
performance. Forward-looking statements are provided to help you understand
our views of our short and longer term prospects. We caution you that
forward-looking statements may not be appropriate for other purposes. We will
not update or revise our forward-looking statements unless we are required to
do so by securities laws.

Forward-looking statements:

  *Typically include words and phrases about the future such as “outlook”,
    “may”, “estimates”, “intends”, “believes”, “plans”, “anticipates” and
    “expects”.
  *Are not promises or guarantees of future performance. They represent our
    current views and may change significantly.
  *Are based on a number of material assumptions, including those listed
    below, which could prove to be significantly incorrect:

  *Our ability to develop, manufacture and sell new products and services
    that meet the needs of our customers and gain commercial acceptance;
  *Our ability to continue to sell our products and services in the expected
    quantities at the expected prices and expected times;
  *Expected cost of goods sold;
  *Expected component supply situation;
  *Our ability to “win” new business;
  *Expected deployment of next generation networks by wireless network
    operators;
  *Our operations are not adversely disrupted by component shortages or other
    development, operating or regulatory risks; and
  *Expected tax rates relative mix of earnings amongst the tax jurisdictions
    in which we operate, along with foreign exchange rates.

  *Are subject to substantial known and unknown material risks and
    uncertainties. Many factors could cause our actual results, achievements
    and developments in our business to differ significantly from those
    expressed or implied by our forward-looking statements, including without
    limitation, the following factors. These risk factors and others are
    discussed in our Annual Information Form and Management’s Discussion and
    Analysis of Financial Condition and Results of Operations, which may be
    found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and in our
    other regulatory filings with the Securities and Exchange Commission in
    the United States and the Provincial Securities Commissions in Canada.

  *We may experience higher than anticipated costs; disruption of, and
    demands on, our ongoing business; diversion of management’s time and
    attention; adverse effects on existing business relationships with
    suppliers and customers and employee issues in connection with the
    divestiture of the AirCard assets and operations;
  *Actual sales volumes or prices for our products and services may be lower
    than we expect for any reason including, without limitation, the
    continuing uncertain economic conditions, competition, different product
    mix, the loss of any of our significant customers;
  *The cost of products sold may be higher than planned or necessary
    component supplies may not be available, are delayed or are not available
    on commercially reasonable terms;
  *We may be unable to enforce our intellectual property rights or may be
    subject to claims and litigation that have an adverse outcome;
  *The development and timing of the introduction of our new products may be
    later than we expect or may be indefinitely delayed;
  *Transition periods associated with the migration to new technologies may
    be longer than we expect.

About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) offers industry-leading mobile
computing and machine-to-machine (M2M) communications products and solutions
that connect people, devices, and applications over cellular networks.
Wireless service providers, equipment manufacturers, enterprises and
government organizations around the world depend on us for reliable wireless
technology. We offer 2G, 3G and 4G wireless modems, routers and gateways as
well as a comprehensive suite of software, tools, and services that ensure our
customers can successfully bring wireless applications to market. For more
information about Sierra Wireless, visit www.sierrawireless.com.

“AirCard” and “AirLink” are registered trademarks of Sierra Wireless.
“AirPrime” and “AirVantage” are also trademarks of Sierra Wireless. Other
product or service names mentioned herein may be the trademarks of their
respective owners.

                            SIERRA WIRELESS, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
        (in thousands of U.S. dollars, except where otherwise stated)

                             Three months ended        Year ended
                                                    
                             December 31,              December 31,
                             2012       2011        2012       2011
Revenue                      $ 109,405    $ 82,391     $ 397,321    $ 333,175
Cost of goods sold            73,172      57,206      272,047     231,435
Gross margin                  36,233      25,185      125,274     101,740
Expenses
Sales and marketing            10,176       8,886        37,067       37,188
Research and development       16,294       14,801       61,785       60,903
Administration                 7,743        7,694        32,777       33,716
Acquisition costs              387          –            3,182        –
Restructuring                  42           (19)         2,251        837
Integration                    –            –            –            1,426
Impairment of intangible       –            11,214       –            11,214
asset
Amortization                  3,107       2,620       10,418      10,709
                             37,749      45,196      147,480     155,993
Loss from operations           (1,516)      (20,011)     (22,206)     (54,253)
Foreign exchange gain          1,608        (507)        3,326        (460)
(loss)
Other income (expense)        35          20          (196)       35
Earnings (loss) before         127          (20,498)     (19,076)     (54,678)
income taxes
Income tax recovery           (15,396)    (68)        (14,874)    (3,968)
Net earnings (loss) from       15,523       (20,430)     (4,202)      (50,710)
continuing operations
Net earnings from             4,083       6,668       31,401      21,338
discontinued operations
Net earnings (loss)            19,606       (13,762)     27,199       (29,372)
Net loss attributable to      –           –           –           (57)
non-controlling interest
Net earnings (loss)
attributable to the          $ 19,606     $ (13,762)   $ 27,199     $ (29,315)
Company
Basic and diluted net
earnings (loss) per share
attributable to the
Company’s common             $ 0.50       $ (0.65)     $ (0.14)     $ (1.62)
shareholders (in dollars)

Continuing operations
Discontinued operations      $ 0.14       $ 0.21       $ 1.02       $ 0.68
                             $ 0.64       $ (0.44)     $ 0.88       $ (0.94)
Weighted average number of
shares outstanding

(in thousands)
Basic                          30,591       31,298       30,788       31,275
Diluted                       30,774      31,298      30,788      31,275

                            SIERRA WIRELESS, INC.
 SELECTED FINANCIAL INFORMATION FOR THREE MONTHS AND YEAR ENDED DECEMBER 31,
                                     2012
        (in thousands of U.S. dollars, except where otherwise stated)

                                               2012                       
               Three months ended December 31            Year ended December 31
               Discontinued Continuing   Total           Discontinued Continuing   Total
               Operations   Operations                   Operations   Operations
                                                                                   
Revenue -
GAAP and       $  54,416    $ 109,405    $ 163,821       $  246,845   $ 397,321    $ 644,166
Non-GAAP
                                                                                   
                                                                                   
Gross margin   $  14,781    $ 36,233     $ 51,014        $  69,698    $ 125,274    $ 194,972
- GAAP
Stock-based      -          61          61              -          304         304
compensation
Gross margin   $  14,781    $ 36,294     $ 51,075        $  69,698    $ 125,578    $ 195,276
- Non-GAAP
                                                                                   
                                                                                   
Gross margin      27.2%       33.1%        31.1%            28.2%       31.5%        30.3%
% - GAAP
Gross margin      27.2%       33.2%        31.2%            28.2%       31.6%        30.3%
% - Non-GAAP
                                                                                   
                                                                                   
Earnings
(loss) from    $  4,741     $ (1,516)    $ 3,225         $  33,045    $ (22,206)   $ 10,839
operations -
GAAP
Stock-based       233         1,470        1,703            932         5,781        6,713
compensation
Acquisition       -           387          387              -           3,182        3,182
Disposition       1,463       -            1,463            1,463       -            1,463
Restructuring     -           42           42               -           2,251        2,251
Integration       -           -            -                -           -            -
Acquisition
related          -          3,338       3,338           -          11,890      11,890
amortization
Earnings from
operations -   $  6,437     $ 3,721      $ 10,158        $  35,440    $ 898        $ 36,338
Non-GAAP
                                                                                   
                                                                                   
Net earnings   $  4,083     $ 15,523     $ 19,606        $  31,401    $ (4,202)    $ 27,199
(loss) - GAAP
Stock-based
compensation,
acquisition,
disposition,
restructuring,
integration,      1,696       5,162        6,858            2,395       22,241       24,636
and
acquisition
related
amortization,
net of tax
Unrealized
foreign           -           (1,655)      (1,655)          -           (3,139)      (3,139)
exchange loss
(gain)
Income tax       -          (14,540)    (14,540)        -          (15,344)    (15,344)
adjustments
Net earnings
(loss) -       $  5,779     $ 4,490      $ 10,269        $  33,796    $ (444)      $ 33,352
Non-GAAP
                                                                                   
                                                                                   
Diluted
earnings
(loss) per     $  0.14      $ 0.50       $ 0.64          $  1.02      $ (0.14)     $ 0.88
share (in
dollars) -
GAAP
Diluted
earnings
(loss) per     $  0.18      $ 0.15       $ 0.33          $  1.09      $ (0.01)     $ 1.08
share (in
dollars) -
Non-GAAP

                            SIERRA WIRELESS, INC.
 SELECTED FINANCIAL INFORMATION FOR THREE MONTHS AND YEAR ENDED DECEMBER 31,
                                     2011
        (in thousands of U.S. dollars, except where otherwise stated)

                                                 2011                       
                 Three months ended December 31            Year ended December 31
                 Discontinued Continuing   Total           Discontinued Continuing   Total
                 Operations   Operations                   Operations   Operations
                                                                                     
Revenue - GAAP   $  64,804    $ 82,391     $ 147,195       $  245,010   $ 333,175    $ 578,185
and Non-GAAP
                                                                                     
                                                                                     
Gross margin -   $  16,367    $ 25,185     $ 41,552        $  61,710    $ 101,740    $ 163,450
GAAP
Stock-based        -          86          86              -          385         385
compensation
Gross margin -   $  16,367    $ 25,271     $ 41,638        $  61,710    $ 102,125    $ 163,835
Non-GAAP
                                                                                     
                                                                                     
Gross margin %      25.3%       30.6%        28.2%            25.2%       30.5%        28.3%
- GAAP
Gross margin %      25.3%       30.7%        28.3%            25.2%       30.7%        28.3%
- Non-GAAP
                                                                                     
                                                                                     
Earnings (loss)
from operations  $  7,546     $ (20,011)   $ (12,465)      $  24,341    $ (54,253)   $ (29,912)
- GAAP
Stock-based         225         1,308        1,533            951         5,498        6,449
compensation
Restructuring       -           (19)         (19)             -           837          837
Integration         -           -            -                -           1,426        1,426
Impairment of
intangible          -           11,214       11,214           -           11,214       11,214
assets
Acquisition
related            -          3,090       3,090           -          12,888      12,888
amortization
Earnings from
operations -     $  7,771     $ (4,418)    $ 3,353         $  25,292    $ (22,390)   $ 2,902
Non-GAAP
                                                                                     
                                                                                     
Net earnings     $  6,668     $ (20,430)   $ (13,762)      $  21,338    $ (50,653)   $ (29,315)
(loss) - GAAP
Stock-based
compensation,
acquisition,
disposition,
restructuring,      225         15,690       15,915           951         31,762       32,713
integration, and
acquisition
related
amortization,
net of tax
Unrealized
foreign             -           330          330              -           267          267
exchange loss
(gain)
Non-controlling    -          -           -               -          (32)        (32)
interest
Net earnings
(loss) -         $  6,893     $ (4,410)    $ 2,483         $  22,289    $ (18,656)   $ 3,633
Non-GAAP
                                                                                     
                                                                                     
Diluted
earnings (loss)  $  0.21      $ (0.65)     $ (0.44)        $  0.68      $ (1.62)     $ (0.94)
per share (in
dollars) - GAAP
Diluted
earnings (loss)
per share (in    $  0.22      $ (0.14)     $ 0.08          $  0.71      $ (0.59)     $ 0.12
dollars) -
Non-GAAP

                            SIERRA WIRELESS, INC.
                             PRODUCT LINE REVENUE
                        (in thousands of U.S. dollars)

                                   2012                                              2011               
               Q1          Q2          Q3          Q4          YTD         Q1          Q2          Q3          Q4          YTD
Continuing
operations
AirPrime
Embedded
Wireless
Modules
M2M            $ 62,944    $ 63,768    $ 73,249    $ 79,363    $ 279,324   $ 59,695    $ 62,759    $ 63,635    $ 56,702    $ 242,791
PC OEM          15,273     17,828     14,018     14,014     61,133     6,747      11,857     9,771      11,047     39,422
                 78,217      81,596      87,267      93,377      340,457     66,442      74,616      73,406      67,749      282,213
                                                                                                                           
AirLink
Intelligent      10,622      11,407      11,262      13,408      46,699      10,096      8,886       9,928       10,103      39,013
Gateways and
Routers
AirVantage
M2M Cloud       3,496      2,395      1,654      2,620      10,165     3,020      2,361      2,029      4,539      11,949
Platform and
Other
                92,335     95,398     100,183    109,405    397,321    79,558     85,863     85,363     82,391     333,175
                                                                                                                           
                                                                                                                           
Discontinued                                                                                                      
operations
AirCard
Mobile          57,931     72,043     62,455     54,416     246,845    64,717     54,025     61,464     64,804     245,010
Broadband
Devices
                                                                                                                  
Total           150,266    167,441    162,638    163,821    644,166    144,275    139,888    146,827    147,195    578,185

Contact:

Sierra Wireless, Inc.
Media Contact:
Sharlene Myers, +1 (604) 232 1445
Manager, Global Public Relations
smyers@sierrawireless.com
or
Investor Contact:
David G. McLennan, +1 (604) 231-1181
Chief Financial Officer
investor@sierrawireless.com