|[January 28, 2013]
Sierra Wireless Enters into Agreement to Sell Assets of AirCard® Business to NETGEAR
VANCOUVER, British Columbia --(Business Wire)--
(All amounts included are in U.S. dollars unless otherwise stated.)
Sierra Wireless (News - Alert), Inc. (NASDAQ: SWIR) (TSX: SW) today announced it has
executed a definitive agreement for the sale of substantially all of the
assets and operations related to its AirCard® business to NETGEAR®, Inc.
(NASDAQGM: NTGR) for $138 million in cash plus approximately $6.5
million in assumed liabilities as of December 31, 2012. NETGEAR is a
global networking company that delivers innovative products to
consumers, businesses, and service providers. Sierra Wireless expects to
realize net cash proceeds of approximately $100 million from the asset
sale, after related taxes, expenses, and funds held in escrow. The
transaction is expected to close in March 2013, subject to customary
Under the transaction, NETGEAR will acquire the assets and operations of
the AirCard business, including customer relationships, products,
intellectual property, inventory, and fixed assets, and assume certain
liabilities, including warranty commitments and other customer
obligations. Approximately 160 employees, primarily in sales, marketing,
and R&D, will be transferred to NETGEAR, as well as certain facilities
in Carlsbad, CA (News - Alert) and Richmond, BC.
"This transaction is the next step in our transformation into a company
focused on enabling the 'Internet of Things' - a strategy we have been
pursuing with great success since 2007," said Jason Cohenour, President
and CEO of Sierra Wireless. "We are the world leader in this dynamic
market, with the industry's broadest product lineup, solutions across
the value chain and an extensive, blue-chip customer base. In addition
to realizing a solid return for the AirCard business, this transaction
will provide significant financial resources and capacity to accelerate
our growth in M2M and connected device solutions."
Mr. Cohenour added, "Our AirCard business has become the technology
leader in the mobile broadband market, and has earned a global
reputation for strong R&D execution and high quality products. The
acquisition by NETGEAR offers this product line and superb team a
natural home and excellent growth prospects, as the strategy, product
line and channel alignment is very strong. Under the ownership of
NETGEAR, our AirCard customers can expect continued high service levels
and technology innovation."
Upon completion of the transaction, Sierra Wireless's retained business
will include its AirPrime™ embedded modules for M2M and Mobile
Computing, AirLink (News - Alert)® intelligent gateways and routers, and AirVantage™
M2M cloud product lines. Going forward, Sierra Wireless will be an M2M
and connected device pure play company, focused on providing innovative
hardware, software, and cloud-based solutions that work together to
enable customers across a broad range of markets to connect their
machines to the "Internet of Things."
Use of funds
Sierra Wireless intends to use net proceeds
from the transaction to continue its acquisition strategy in the M2M
market, with theobjective of accelerating revenue and earnings growth
by strengthening its leadership in existing markets and expanding its
position in the M2M value chain.
Sierra Wireless is also exploring alternatives to return a portion of
the proceeds to shareholders and will seek approval of the Toronto Stock
Exchange ("TSX") to undertake a normal course issuer bid ("NCIB"). The
terms of the proposed NCIB will be subject to TSX review and approval,
and Sierra Wireless expects to provide further details in the coming
Financial highlights for the fourth quarter and full year 2012
Wireless expects consolidated fourth quarter 2012 results to be solidly
in line with guidance provided on November 1, 2012. Preliminary revenue
for the full year is $644 million.
With respect to the retained business, preliminary fourth quarter and
full year 2012 revenues were $109 and $397 million, respectively,
including $14.0 million and $61.1 million, respectively, in revenue from
the sale of AirPrime embedded wireless modules to Mobile Computing
customers. Non-GAAP gross margin for the retained business was 33.2
percent in the fourth quarter of 2012 and 31.6 percent for the full
year. Non-GAAP earnings from operations for the retained business were
modestly positive in the fourth quarter, showing a steady improvement
throughout the year.
"Upon closing this transaction, we will be highly focused on driving
profitable revenue growth in our M2M business," said David McLennan,
Chief Financial Officer of Sierra Wireless. "As a stand-alone business,
we will have a cost structure that supports considerably higher revenue
levels, which will initially be reflected in modest operating margins.
However, because we will be fully invested for growth, as we increase
our revenues we expect to see greater operating leverage from the
Sierra Wireless will release fourth quarter and fiscal 2012 financial
results after market close on February 6, 2013. Management will provide
additional financial detail at that time.
BMO Capital Markets is acting as exclusive financial advisor to Sierra
Wireless, and Blake, Cassels & Graydon LLP and Paul Hastings (News - Alert) LLP are
acting as legal counsel to Sierra Wireless.
Conference Call / Webcast to discuss the announcement
Wireless President and CEO, Jason Cohenour, and CFO, David McLennan,
will host a conference call and webcast with analysts and investors
today, January 28, 2013, at 6:30 PM Eastern Time (3:30 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 (888) 231-8191
• Alternate number: 1 (647) 427-7450
• Conference ID: 5233068
For those unable to participate in the live call, a replay will be
available for one year following the call. Dial 1 (855) 859-2056 or
(416) 849-0833 and enter Conference ID number 93560618 to access the
To access the webcast, please follow the link below:
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.
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," "AirPrime," "AirLink," and "AirVantage" are trademarks of
Sierra Wireless. Other product or service names mentioned herein may be
the trademarks of their respective owners.
Forward Looking Statements
This press release contains
forward-looking statements that involve risks and uncertainties. These
forward-looking statements relate to, among other things, plans and
timing for the introduction or enhancement of our services and products,
statements about future market conditions, supply conditions, channel
and end customer demand conditions, revenues, gross margins, operating
expenses, profits, and other expectations, intentions, and plans
contained in this press release that are not historical fact. Our
expectations regarding future revenues and earnings depend in part upon
our ability to successfully develop, manufacture, and supply products
that we do not produce today and that meet defined specifications. When
used in this press release, the words "plan", "expect", "believe", and
similar expressions generally identify forward-looking statements. These
statements reflect our current expectations. They are subject to a
number of risks and uncertainties, including, but not limited to,
changes in technology and changes in the wireless data communications
market. In light of the many risks and uncertainties surrounding the
wireless data communications market, you should understand that we
cannot assure you that the forward-looking statements contained in this
press release will be realized.
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