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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sierra Wireless Inc | NASDAQ:SWIR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.99 | 30.98 | 31.00 | 0 | 01:00:00 |
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Form 20-F
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40-F
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ý
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Yes:
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No:
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ý
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Sierra Wireless, Inc.
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By:
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/s/ David G. McLennan
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David G. McLennan, Chief Financial Officer and Secretary
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Date: May 8, 2017
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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OVERVIEW
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Business Overview
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First Quarter Overview
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Outlook
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CONSOLIDATED RESULTS OF OPERATIONS
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SEGMENTED INFORMATION
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SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
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LIQUIDITY AND CAPITAL RESOURCES
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NON-GAAP FINANCIAL MEASURES
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OFF-BALANCE SHEET ARRANGEMENTS
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TRANSACTIONS BETWEEN RELATED PARTIES
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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OUTSTANDING SHARE DATA
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IMPACT OF ACCOUNTING PRONOUNCEMENTS AFFECTING FUTURE PERIODS
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INTERNAL CONTROL OVER FINANCIAL REPORTING
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LEGAL PROCEEDINGS
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RISKS AND UNCERTAINTIES
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CONSOLIDATED FINANCIAL STATEMENTS
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•
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our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance;
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•
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our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times;
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•
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expected cost of goods sold;
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•
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expected component supply constraints;
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•
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our ability to win new business;
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•
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our ability to integrate acquired businesses and realize expected benefits;
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•
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expected deployment of next generation networks by wireless network operators;
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•
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our operations not being adversely disrupted by component shortages or other development, operating or regulatory risks; and
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•
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expected tax rates and foreign exchange rates.
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•
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competition from new or established cloud and connectivity service providers or from those with greater resources;
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•
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disruption of, and demands on, our ongoing business and diversion of management's time and attention in connection with acquisitions or divestitures;
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•
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the loss of any of our significant customers;
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•
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cyber-attacks or other breaches of our information technology security;
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•
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difficult or uncertain global economic conditions;
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•
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our financial results being subject to fluctuation;
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•
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our ability to attract or retain key personnel;
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•
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risks related to infringement on intellectual property rights of others;
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•
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our ability to obtain necessary rights to use software or components supplied by third parties;
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•
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our ability to enforce our intellectual property rights;
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•
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our ability to respond to changing technology, industry standards and customer requirements;
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•
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our reliance on single source suppliers for certain components used in our products;
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•
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failures of our products or services due to design flaws and errors, component quality issues, manufacturing defects or other quality issues;
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•
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our dependence on a limited number of third party manufacturers;
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•
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unanticipated costs associated with litigation or settlements;
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•
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our dependence on wireless network carriers to offer and promote acceptable wireless service programs;
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•
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risks related to contractual disputes with counterparties;
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•
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risks related to governmental regulation;
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•
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risks related to the transmission, use and disclosure of user data and personal information; and
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•
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risks inherent in foreign jurisdictions.
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•
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Revenue was
$161.8 million
, up
13.3%
, compared to
$142.8 million
in the first quarter of 2016.
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•
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Gross margin was
34.4%
, compared to
32.8%
in the first quarter of 2016.
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•
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Loss from operations was
$1.5 million
, compared to loss from operations of
$1.3 million
in the first quarter of 2016. The loss from operations in the first quarter of 2017 included a $3.7 million impairment charge on an intangible asset.
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•
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Net loss was
$0.2 million
, or
$0.01
per share, compared to net earnings of
$0.7 million
, or
$0.02
per share, in the first quarter of 2016.
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•
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Cash and cash equivalents were $92.5 million at the end of the first quarter of 2017, a decrease of $10.3 million, compared to the end of the fourth quarter of 2016.
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•
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Gross margin was
34.5%
, compared to
32.9%
in the first quarter of 2016.
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•
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Earnings from operations were
$9.1 million
, compared to
$3.6 million
in the first quarter of 2016.
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•
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Adjusted EBITDA was
$12.4 million
, compared to
$6.7 million
in the first quarter of 2016.
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•
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Net earnings were
$7.7 million
or
$0.24
per share, compared to net earnings of
$2.6 million
, or
$0.08
per share, in the first quarter of 2016.
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(in thousands of U.S. dollars, except where otherwise stated)
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|
2017
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2016
|
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||||||||||||||||
|
Q1
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Total
|
Q4
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Q3
|
Q2
|
Q1
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|||||||||||||
Statement of Operations data:
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|||||||||
Revenue
|
|
$
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161,793
|
|
|
|
$
|
615,607
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|
$
|
163,021
|
|
$
|
153,560
|
|
$
|
156,229
|
|
$
|
142,797
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||||||||||||
Gross Margin
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||||||||||||
- GAAP
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$
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55,661
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|
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$
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217,743
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$
|
68,796
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$
|
49,368
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$
|
52,764
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|
$
|
46,815
|
|
|
- Non-GAAP (1)
|
|
55,769
|
|
|
|
205,118
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|
55,850
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|
49,476
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|
52,871
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|
46,921
|
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||||||
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||||||||||||
Gross Margin %
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||||||||||||
- GAAP
|
|
34.4
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%
|
|
|
35.4
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%
|
42.2
|
%
|
32.1
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%
|
33.8
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%
|
32.8
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%
|
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||||||
- Non-GAAP (1)
|
|
34.5
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%
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33.3
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%
|
34.3
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%
|
32.2
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%
|
33.8
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%
|
32.9
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%
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||||||
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||||||||||||
Earnings (loss) from operations
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||||||||||||
- GAAP
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|
$
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(1,487
|
)
|
|
|
$
|
21,348
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|
$
|
19,245
|
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$
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(53
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)
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$
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3,411
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$
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(1,255
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)
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- Non-GAAP (1)
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|
9,070
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30,127
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|
11,729
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6,326
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8,430
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3,642
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Adjusted EBITDA
(1)
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$
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12,426
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$
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43,919
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$
|
15,464
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$
|
9,697
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$
|
12,078
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$
|
6,680
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||||||||||||
Net earnings (loss)
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||||||||||||
- GAAP
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|
$
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(211
|
)
|
|
|
$
|
15,385
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|
$
|
15,718
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|
$
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(1,769
|
)
|
$
|
718
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|
$
|
718
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|
|
- Non-GAAP (1)
|
|
7,661
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|
|
|
21,969
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|
8,831
|
|
4,141
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|
6,376
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|
2,621
|
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||||||
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||||||||||||
Revenue by Segment:
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OEM Solutions
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$
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133,000
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$
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516,517
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$
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135,211
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$
|
127,765
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$
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132,667
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$
|
120,874
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Enterprise Solutions
|
|
21,718
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|
|
|
71,486
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|
20,976
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|
18,938
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|
16,577
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|
14,995
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||||||
Cloud and Connectivity Services
|
|
7,075
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|
|
|
27,604
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|
6,834
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|
6,857
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|
6,985
|
|
6,928
|
|
|
||||||
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||||||||||||
Share and per share data:
|
|
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|
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|
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||||||||||||
Basic net earnings (loss) per share (in dollars)
|
|
|
|
|
|
|
|
|
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|
||||||||||||
- GAAP
|
|
$
|
(0.01
|
)
|
|
|
$
|
0.48
|
|
$
|
0.49
|
|
$
|
(0.06
|
)
|
$
|
0.02
|
|
$
|
0.02
|
|
|
- Non-GAAP (1)
|
|
$
|
0.24
|
|
|
|
$
|
0.68
|
|
$
|
0.27
|
|
$
|
0.13
|
|
$
|
0.20
|
|
$
|
0.08
|
|
|
Diluted net earnings (loss) per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
- GAAP
|
|
$
|
(0.01
|
)
|
|
|
$
|
0.48
|
|
$
|
0.49
|
|
$
|
(0.06
|
)
|
$
|
0.02
|
|
$
|
0.02
|
|
|
- Non-GAAP
(1)
|
|
$
|
0.24
|
|
|
|
$
|
0.68
|
|
$
|
0.27
|
|
$
|
0.13
|
|
$
|
0.20
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Common shares (in thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
At period-end
|
|
32,157
|
|
|
|
31,860
|
|
31,860
|
|
32,051
|
|
32,035
|
|
31,906
|
|
|
||||||
Weighted average - basic
|
|
31,909
|
|
|
|
32,032
|
|
31,962
|
|
32,043
|
|
31,966
|
|
32,156
|
|
|
||||||
Weighted average - diluted
|
|
31,909
|
|
|
|
32,335
|
|
32,367
|
|
32,043
|
|
32,430
|
|
32,500
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
•
|
Volkswagen selected our AirPrime AR Series modules and our Legato platform for its next generation of connected cars. Our automotive solutions will deliver high-speed cellular connectivity for the Volkswagen Car-Net platform.
|
•
|
We were selected by Nauto as the wireless connectivity solution for the North American launch of Nauto's flagship artificial intelligence-powered auto network.
|
•
|
We launched the world's first 'plug-and-play' cellular modules and routers with pre-integrated global connectivity, IoT operation management and security.
|
•
|
We delivered early modules for Telstra's upcoming LTE Cat-M1 network to Landis+Gyr, enabling their industry-first live Cat-M1 smart meter trial.
|
•
|
the strength of our competitive position in the market;
|
•
|
the timely ramp up of sales of our new products recently launched or currently under development;
|
•
|
contributions to our operating results from the acquisitions we completed in 2015, 2016 and year-to-date 2017;
|
•
|
the level of success our customers achieve with sales of connected solutions;
|
•
|
fluctuations in customer demand and inventory levels, particularly large customers;
|
•
|
the timely launch and ramp up of new customer programs;
|
•
|
our ability to secure future design wins with both existing and new customers;
|
•
|
the end-of-life of existing customer programs;
|
•
|
the availability of components from key suppliers;
|
•
|
manufacturing capacity at our various manufacturing sites;
|
•
|
our ability to manage component and product quality compliance;
|
•
|
fluctuations in foreign exchange rates;
|
•
|
general economic conditions in the markets we serve; and
|
•
|
seasonality in demand.
|
|
Three months ended March 31
|
||||||||||
(in thousands of U.S. dollars, except where otherwise stated)
|
2017
|
|
2016
|
||||||||
|
$
|
% of
Revenue
|
|
|
$
|
% of
Revenue
|
|
||||
Revenue
|
161,793
|
|
100.0
|
%
|
|
142,797
|
|
100.0
|
%
|
||
Cost of goods sold
|
106,132
|
|
65.6
|
%
|
|
95,982
|
|
67.2
|
%
|
||
Gross margin
|
55,661
|
|
34.4
|
%
|
|
46,815
|
|
32.8
|
%
|
||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Sales and marketing
|
18,167
|
|
11.2
|
%
|
|
15,629
|
|
10.9
|
%
|
||
Research and development
|
19,477
|
|
12.0
|
%
|
|
18,778
|
|
13.2
|
%
|
||
Administration
|
10,386
|
|
6.4
|
%
|
|
9,527
|
|
6.7
|
%
|
||
Restructuring
|
373
|
|
0.2
|
%
|
|
—
|
|
—
|
%
|
||
Acquisition-related and integration
|
451
|
|
0.3
|
%
|
|
374
|
|
0.3
|
%
|
||
Impairment
|
3,668
|
|
2.3
|
%
|
|
—
|
|
—
|
%
|
||
Amortization
|
4,626
|
|
2.9
|
%
|
|
3,762
|
|
2.6
|
%
|
||
|
57,148
|
|
35.3
|
%
|
|
48,070
|
|
33.7
|
%
|
||
Loss from operations
|
(1,487
|
)
|
(0.9
|
)%
|
|
(1,255
|
)
|
(0.9
|
)%
|
||
Foreign exchange gain
|
1,099
|
|
|
|
2,292
|
|
|
||||
Other income
|
9
|
|
|
|
26
|
|
|
||||
Earnings (loss) before income taxes
|
(379
|
)
|
|
|
1,063
|
|
|
||||
Income tax expense (recovery)
|
(168
|
)
|
|
|
345
|
|
|
||||
Net earnings (loss)
|
(211
|
)
|
|
|
718
|
|
|
||||
|
|
|
|
|
|
||||||
Basic and diluted net earnings (loss) per share (in dollars)
|
$
|
(0.01
|
)
|
|
|
$
|
0.02
|
|
|
||
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
% change
|
|||||||
|
Q1, 2017
|
|
|
Q1, 2016
|
|
|
Q1, 2017 vs Q1, 2016
|
|
|||
Revenue
|
|
133,000
|
|
|
120,874
|
|
|
10.0
|
%
|
||
Cost of goods sold
|
|
90,922
|
|
|
86,584
|
|
|
5.0
|
%
|
||
Gross margin
|
|
$
|
42,078
|
|
|
$
|
34,290
|
|
|
22.7
|
%
|
Gross margin %
|
|
31.6
|
%
|
|
28.4
|
%
|
|
|
|||
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
% change
|
|||||||
|
Q1, 2017
|
|
|
Q1, 2016
|
|
|
Q1, 2017 vs Q1, 2016
|
|
|||
Revenue
|
|
21,718
|
|
|
14,995
|
|
|
44.8
|
%
|
||
Cost of goods sold
|
|
11,233
|
|
|
5,243
|
|
|
114.2
|
%
|
||
Gross margin
|
|
$
|
10,485
|
|
|
$
|
9,752
|
|
|
7.5
|
%
|
Gross margin %
|
|
48.3
|
%
|
|
65.0
|
%
|
|
|
|||
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
% change
|
|||||||
|
Q1, 2017
|
|
|
Q1, 2016
|
|
|
Q1, 2017 vs Q1, 2016
|
|
|||
Revenue
|
|
7,075
|
|
|
6,928
|
|
|
2.1
|
%
|
||
Cost of goods sold
|
|
3,977
|
|
|
4,155
|
|
|
(4.3
|
)%
|
||
Gross margin
|
|
$
|
3,098
|
|
|
$
|
2,773
|
|
|
11.7
|
%
|
Gross margin %
|
|
43.8
|
%
|
|
40.0
|
%
|
|
|
|||
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
2017
|
2016
|
2015
|
|||||||||||||||||||||
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
|||||||||||||||||
Revenue
|
$
|
161,793
|
|
$
|
163,021
|
|
$
|
153,560
|
|
$
|
156,229
|
|
$
|
142,797
|
|
$
|
144,846
|
|
$
|
154,581
|
|
$
|
157,965
|
|
Cost of goods sold
|
106,132
|
|
94,225
|
|
104,192
|
|
103,465
|
|
95,982
|
|
99,783
|
|
105,572
|
|
107,018
|
|
||||||||
Gross margin
|
55,661
|
|
68,796
|
|
49,368
|
|
52,764
|
|
46,815
|
|
45,063
|
|
49,009
|
|
50,947
|
|
||||||||
Gross margin %
|
34.4
|
%
|
42.2
|
%
|
32.1
|
%
|
33.8
|
%
|
32.8
|
%
|
31.1
|
%
|
31.7
|
%
|
32.3
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing
|
18,167
|
|
17,048
|
|
15,519
|
|
16,046
|
|
15,629
|
|
14,315
|
|
13,856
|
|
12,828
|
|
||||||||
Research and development
|
19,477
|
|
18,047
|
|
18,015
|
|
18,237
|
|
18,778
|
|
18,539
|
|
17,987
|
|
18,402
|
|
||||||||
Administration
|
10,386
|
|
9,708
|
|
11,435
|
|
10,286
|
|
9,527
|
|
9,393
|
|
9,416
|
|
11,092
|
|
||||||||
Restructuring
|
373
|
|
—
|
|
—
|
|
—
|
|
—
|
|
201
|
|
39
|
|
711
|
|
||||||||
Acquisition-related and integration
|
451
|
|
376
|
|
34
|
|
59
|
|
374
|
|
(616
|
)
|
443
|
|
1,015
|
|
||||||||
Impairment
|
3,668
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Amortization
|
4,626
|
|
4,372
|
|
4,418
|
|
4,725
|
|
3,762
|
|
3,905
|
|
3,066
|
|
2,787
|
|
||||||||
|
57,148
|
|
49,551
|
|
49,421
|
|
49,353
|
|
48,070
|
|
45,737
|
|
44,807
|
|
46,835
|
|
||||||||
Earnings (loss) from operations
|
(1,487
|
)
|
19,245
|
|
(53
|
)
|
3,411
|
|
(1,255
|
)
|
(674
|
)
|
4,202
|
|
4,112
|
|
||||||||
Foreign exchange gain (loss)
|
1,099
|
|
(3,547
|
)
|
590
|
|
(1,071
|
)
|
2,292
|
|
(1,398
|
)
|
(102
|
)
|
1,550
|
|
||||||||
Other income (expense)
|
9
|
|
2
|
|
23
|
|
32
|
|
26
|
|
(16
|
)
|
13
|
|
13
|
|
||||||||
Earnings (loss) before income tax
|
(379
|
)
|
15,700
|
|
560
|
|
2,372
|
|
1,063
|
|
(2,088
|
)
|
4,113
|
|
5,675
|
|
||||||||
Income tax expense (recovery)
|
(168
|
)
|
(18
|
)
|
2,329
|
|
1,654
|
|
345
|
|
(1,705
|
)
|
827
|
|
1,599
|
|
||||||||
Net earnings (loss)
|
$
|
(211
|
)
|
$
|
15,718
|
|
$
|
(1,769
|
)
|
$
|
718
|
|
$
|
718
|
|
$
|
(383
|
)
|
$
|
3,286
|
|
$
|
4,076
|
|
Earnings (loss) per share - in dollars
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
0.49
|
|
$
|
(0.06
|
)
|
$
|
0.02
|
|
$
|
0.02
|
|
$
|
(0.01
|
)
|
$
|
0.10
|
|
$
|
0.13
|
|
Diluted
|
$
|
(0.01
|
)
|
$
|
0.49
|
|
$
|
(0.06
|
)
|
$
|
0.02
|
|
$
|
0.02
|
|
$
|
(0.01
|
)
|
$
|
0.10
|
|
$
|
0.12
|
|
Weighted average number of shares (in thousands)
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
31,909
|
|
31,962
|
|
32,043
|
|
31,966
|
|
32,156
|
|
32,282
|
|
32,231
|
|
32,166
|
|
||||||||
Diluted
|
31,909
|
|
32,367
|
|
32,043
|
|
32,430
|
|
32,500
|
|
32,282
|
|
32,823
|
|
32,915
|
|
||||||||
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars)
|
|
Three months ended March 31
|
||||||||
|
2017
|
|
2016
|
|
Change
|
|
||||
Cash flows provided (used) before changes in non-cash working capital:
|
|
$
|
11,730
|
|
$
|
8,325
|
|
$
|
3,405
|
|
Changes in non-cash working capital
|
|
|
|
|
||||||
Accounts receivable
|
|
14,925
|
|
(434
|
)
|
15,359
|
|
|||
Inventories
|
|
(6,625
|
)
|
7,080
|
|
(13,705
|
)
|
|||
Prepaid expense and other
|
|
(1,908
|
)
|
771
|
|
(2,679
|
)
|
|||
Accounts payable and accrued liabilities
|
|
(19,448
|
)
|
(7,868
|
)
|
(11,580
|
)
|
|||
Deferred revenue and credits
|
|
(796
|
)
|
(274
|
)
|
(522
|
)
|
|||
|
|
(13,852
|
)
|
(725
|
)
|
(13,127
|
)
|
|||
Cash flows provided by (used in):
|
|
|
|
|
||||||
Operating activities
|
|
(2,122
|
)
|
7,600
|
|
(9,722
|
)
|
|||
|
|
|
|
|
||||||
Investing activities
|
|
(6,879
|
)
|
(3,135
|
)
|
(3,744
|
)
|
|||
Acquisitions
|
|
(3,192
|
)
|
—
|
|
(3,192
|
)
|
|||
Capital expenditures and increase in intangible assets
|
|
(3,687
|
)
|
(3,138
|
)
|
(549
|
)
|
|||
|
|
|
|
|
||||||
Financing activities
|
|
(241
|
)
|
(10,245
|
)
|
10,004
|
|
|||
Issue of common shares
|
|
4,621
|
|
528
|
|
4,093
|
|
|||
Repurchase of common shares for cancellation
|
|
(2,779
|
)
|
(6,144
|
)
|
3,365
|
|
|||
Purchase of treasury shares for RSU distribution
|
|
—
|
|
(4,214
|
)
|
4,214
|
|
|||
Taxes paid related to net settlement of equity awards
|
|
(1,027
|
)
|
(352
|
)
|
(675
|
)
|
|||
Payment for contingent consideration
|
|
(960
|
)
|
—
|
|
(960
|
)
|
|||
|
|
|
|
|
||||||
Free Cash Flow
(1)
|
|
$
|
(5,809
|
)
|
$
|
4,462
|
|
(10,271
|
)
|
|
|
|
|
|
|
Payments due by period
(in thousands of U.S. dollars)
|
Total
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
|||||||
Operating lease obligations
|
$
|
23,168
|
|
$
|
3,165
|
|
$
|
4,169
|
|
$
|
3,811
|
|
$
|
3,607
|
|
$
|
3,521
|
|
$
|
4,895
|
|
Capital lease obligations
|
714
|
|
220
|
|
258
|
|
174
|
|
50
|
|
12
|
|
—
|
|
|||||||
Purchase obligations
(1)
|
126,085
|
|
125,785
|
|
300
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Acquisition contingent consideration
(2)
|
1,753
|
|
773
|
|
980
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Other obligations
|
861
|
|
92
|
|
349
|
|
50
|
|
16
|
|
12
|
|
342
|
|
|||||||
Total
|
$
|
152,581
|
|
$
|
130,035
|
|
$
|
6,056
|
|
$
|
4,035
|
|
$
|
3,673
|
|
$
|
3,545
|
|
$
|
5,237
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|||||||||||||||||
(in thousands of U.S. dollars)
|
|
Mar 31
|
|
|
Dec 31
|
|
Sep 30
|
|
Jun 30
|
|
Mar 31
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
92,545
|
|
|
|
$
|
102,772
|
|
|
$
|
112,054
|
|
|
$
|
98,433
|
|
|
$
|
86,120
|
|
|
Unused credit facilities
|
|
10,000
|
|
|
|
10,000
|
|
|
10,000
|
|
|
10,000
|
|
|
10,000
|
|
|
|||||
Total
|
|
$
|
102,545
|
|
|
|
$
|
112,772
|
|
|
$
|
122,054
|
|
|
$
|
108,433
|
|
|
$
|
96,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
2017
|
|
|
2016
|
|
||||||||||||||||
|
Q1
|
|
|
Total
|
Q4
|
Q3
|
Q2
|
Q1
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross margin - GAAP
|
|
$
|
55,661
|
|
|
|
$
|
217,743
|
|
$
|
68,796
|
|
$
|
49,368
|
|
$
|
52,764
|
|
$
|
46,815
|
|
|
Stock-based compensation and related social taxes
|
|
108
|
|
|
|
420
|
|
99
|
|
108
|
|
107
|
|
106
|
|
|
||||||
Other nonrecurring costs (recoveries)
|
|
—
|
|
|
|
(13,045
|
)
|
(13,045
|
)
|
—
|
|
—
|
|
—
|
|
|
||||||
Gross margin - Non-GAAP
|
|
$
|
55,769
|
|
|
|
$
|
205,118
|
|
$
|
55,850
|
|
$
|
49,476
|
|
$
|
52,871
|
|
$
|
46,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) from operations - GAAP
|
|
$
|
(1,487
|
)
|
|
|
$
|
21,348
|
|
$
|
19,245
|
|
$
|
(53
|
)
|
$
|
3,411
|
|
$
|
(1,255
|
)
|
|
Stock-based compensation and related social taxes
|
|
2,148
|
|
|
|
7,596
|
|
1,845
|
|
1,856
|
|
1,902
|
|
1,993
|
|
|
||||||
Acquisition-related and integration
|
|
451
|
|
|
|
843
|
|
376
|
|
34
|
|
59
|
|
374
|
|
|
||||||
Restructuring
|
|
373
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||
Other nonrecurring costs (recoveries)
|
|
276
|
|
|
|
(11,762
|
)
|
(13,045
|
)
|
1,283
|
|
—
|
|
—
|
|
|
||||||
Impairment
|
|
3,668
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||
Acquisition-related amortization
|
|
3,641
|
|
|
|
12,102
|
|
3,308
|
|
3,206
|
|
3,058
|
|
2,530
|
|
|
||||||
Earnings from operations - Non-GAAP
|
|
$
|
9,070
|
|
|
|
$
|
30,127
|
|
$
|
11,729
|
|
$
|
6,326
|
|
$
|
8,430
|
|
$
|
3,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net earnings (loss) - GAAP
|
|
$
|
(211
|
)
|
|
|
$
|
15,385
|
|
$
|
15,718
|
|
$
|
(1,769
|
)
|
$
|
718
|
|
$
|
718
|
|
|
Stock-based compensation and related social taxes, restructuring, impairment, acquisition-related, integration and other nonrecurring costs (recoveries)
|
|
6,916
|
|
|
|
(3,323
|
)
|
(10,824
|
)
|
3,173
|
|
1,961
|
|
2,367
|
|
|
||||||
Amortization
|
|
6,997
|
|
|
|
25,894
|
|
7,043
|
|
6,577
|
|
6,706
|
|
5,568
|
|
|
||||||
Interest and other, net
|
|
(9
|
)
|
|
|
(83
|
)
|
(2
|
)
|
(23
|
)
|
(32
|
)
|
(26
|
)
|
|
||||||
Foreign exchange loss (gain)
|
|
(1,099
|
)
|
|
|
1,736
|
|
3,547
|
|
(590
|
)
|
1,071
|
|
(2,292
|
)
|
|
||||||
Income tax expense (recovery)
|
|
(168
|
)
|
|
|
4,310
|
|
(18
|
)
|
2,329
|
|
1,654
|
|
345
|
|
|
||||||
Adjusted EBITDA
|
|
12,426
|
|
|
|
43,919
|
|
15,464
|
|
9,697
|
|
12,078
|
|
6,680
|
|
|
||||||
Amortization (exclude acquisition-related amortization)
|
|
(3,356
|
)
|
|
|
(13,792
|
)
|
(3,735
|
)
|
(3,371
|
)
|
(3,648
|
)
|
(3,038
|
)
|
|
||||||
Interest and other, net
|
|
9
|
|
|
|
83
|
|
2
|
|
23
|
|
32
|
|
26
|
|
|
||||||
Income tax expense - Non-GAAP
|
|
(1,418
|
)
|
|
|
(8,241
|
)
|
(2,900
|
)
|
(2,208
|
)
|
(2,086
|
)
|
(1,047
|
)
|
|
||||||
Net earnings - Non-GAAP
|
|
$
|
7,661
|
|
|
|
$
|
21,969
|
|
$
|
8,831
|
|
$
|
4,141
|
|
$
|
6,376
|
|
$
|
2,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted net earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP - (in dollars)
|
|
$
|
(0.01
|
)
|
|
|
$
|
0.48
|
|
$
|
0.49
|
|
$
|
(0.06
|
)
|
$
|
0.02
|
|
$
|
0.02
|
|
|
Non-GAAP - (in dollars)
|
|
$
|
0.24
|
|
|
|
$
|
0.68
|
|
$
|
0.27
|
|
$
|
0.13
|
|
$
|
0.20
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
|||||
(in thousands of U.S. dollars)
|
|
2017
|
|
2016
|
|
||
Cash flows from operating activities
|
|
$
|
(2,122
|
)
|
$
|
7,600
|
|
Capital expenditures and increase in intangible assets
|
|
(3,687
|
)
|
(3,138
|
)
|
||
Free Cash Flow
|
|
$
|
(5,809
|
)
|
$
|
4,462
|
|
|
|
|
|
•
|
Competition from more established and larger companies with strong brands and greater financial, technical and marketing resources or companies with different business models;
|
•
|
Business combinations or strategic alliances by our competitors which could weaken our competitive position;
|
•
|
Introduction of new products or services by us that put us in direct competition with major new competitors;
|
•
|
Existing or future competitors who may be able to respond more quickly to technological developments and changes and introduce new products before we do; and
|
•
|
Competitors who may independently develop and patent technologies and products that are superior to ours or achieve greater acceptance due to factors such as more favorable pricing, more desired or better quality features or more efficient sales channels.
|
•
|
exposure to unknown liabilities or risks of acquired companies, including unknown litigation related to acts or omissions of an acquired company and/or its directors and officers prior to the acquisition, deficiencies in disclosure controls and procedures of the acquired company and deficiencies in internal controls over financial reporting of the acquired company;
|
•
|
higher than anticipated acquisition and integration costs and expenses;
|
•
|
the difficulty and expense of integrating the operations and personnel of the acquired companies;
|
•
|
use of cash to support the operations of an acquired business;
|
•
|
increased foreign exchange translation risk depending on the currency denomination of the revenue and expenses of the acquired business;
|
•
|
disruption of, and demands on, our ongoing business as a result of integration activities including diversion of management's time and attention from the ongoing business;
|
•
|
failure to maximize our financial and strategic position by the successful incorporation of acquired technology;
|
•
|
the inability to implement uniform standards, disclosure controls and procedures, internal controls over financial reporting and other procedures and policies in a timely manner;
|
•
|
the potential loss of key employees and customers;
|
•
|
decrease in our share price if the market perceives that an acquisition does not fit our strategy, the price paid is excessive in light of other similar transactions or that the terms of the acquisition are not favorable to our earnings growth;
|
•
|
litigation and settlement costs if shareholders bring lawsuits triggered by acquisition or divestiture activities;
|
•
|
decrease in our share price, if, as a result of our acquisition strategy or growth, we decide to raise additional capital through an offering of securities; and
|
•
|
dilution to our shareholders if the purchase price is paid in common shares or securities convertible into common shares.
|
•
|
price and product competition which may result in lower selling prices for some of our products or lost market share;
|
•
|
price and demand pressure on our products from our customers as they experience pressure in their businesses;
|
•
|
demand fluctuation based on the success of our customers in selling their products and solutions which incorporate our wireless products and software;
|
•
|
development and timing of the introduction of our new products including the timing of sales orders, OEM and distributor customer sell through and design win cycles in our embedded wireless module business;
|
•
|
transition periods associated with the migration to new technologies;
|
•
|
potential commoditization and saturation in certain markets;
|
•
|
our ability to accurately forecast demand in order to properly align the purchase of components and the appropriate level of manufacturing capability;
|
•
|
product mix of our sales (our products have different gross margins — for example the embedded wireless module product line has lower gross margins than the higher margin rugged mobile product line);
|
•
|
possible delays or shortages in component supplies;
|
•
|
possible delays in the manufacture or shipment of current or new products;
|
•
|
possible product quality or factory yield issues that may increase our cost of goods sold;
|
•
|
concentration in our customer base;
|
•
|
seasonality in demand;
|
•
|
amount of inventory held by our channel partners;
|
•
|
possible fluctuations in certain foreign currencies relative to the U.S. dollar that may affect foreign denominated revenue, cost of goods sold and operating expenses;
|
•
|
impairment of our goodwill or intangible assets which may result in a significant charge to earnings in the period in which an impairment is determined;
|
•
|
achievement of milestones related to our professional services contracts; and
|
•
|
operating expenses that are generally fixed in the short-term and therefore difficult to rapidly adjust to different levels of business.
|
•
|
we may be found to be liable for potentially substantial damages, liabilities and litigation costs, including attorneys' fees;
|
•
|
we may be prohibited from further use of intellectual property as a result of an injunction and may be required to cease selling our products that are subject to the claim;
|
•
|
we may have to license third party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms; in addition, there is no assurance that we will be able to successfully negotiate and obtain such a license from the third party;
|
•
|
we may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales; in addition, there is no assurance that we will be able to develop such a non-infringing alternative;
|
•
|
management attention and resources may be diverted;
|
•
|
our relationships with customers may be adversely affected; and
|
•
|
we may be required to indemnify our customers for certain costs and damages they incur in such a claim.
|
•
|
non-recognition of the proprietary nature or inadequate protection of our methodologies in the United States, Canada, France or other foreign countries;
|
•
|
undetected misappropriation of our intellectual property;
|
•
|
the substantial legal and other costs of protecting and enforcing our rights in our intellectual property; and
|
•
|
development of similar technologies by our competitors.
|
•
|
our ability to design and manufacture products or implement solutions and services at an acceptable cost and quality;
|
•
|
our ability to attract and retain skilled technical employees;
|
•
|
the availability of critical components from third parties;
|
•
|
our ability to successfully complete the development of products in a timely manner; and
|
•
|
the ability of third parties to complete and deliver on outsourced product development engagements.
|
•
|
potential business interruption due to unexpected events such as natural disasters, labor unrest or geopolitical events;
|
•
|
the absence of guaranteed or adequate manufacturing capacity;
|
•
|
potential violations of laws and regulations by our manufacturers that may subject us to additional costs for duties, monetary penalties, seizure and loss of our products or loss of our import privileges, and damage to our reputation;
|
•
|
reduced control over delivery schedules, production levels, manufacturing yields, costs and product quality;
|
•
|
the inability of our contract manufacturers to secure adequate volumes of components in a timely manner at a reasonable cost; and
|
•
|
unexpected increases in manufacturing costs.
|
•
|
compliance with the laws of the United States, Canada and other countries that apply to our international operations, including import and export legislation, lawful access and privacy laws;
|
•
|
compliance with existing and emerging anti-corruption laws, including the Foreign Corrupt Practices Act of the United States, the
Corruption of Foreign Public Officials Act
of Canada and the UK Bribery Act;
|
•
|
increased reliance on third parties to establish and maintain foreign operations;
|
•
|
the complexities and expense of administering a business abroad;
|
•
|
complications in compliance with, and unexpected changes in, foreign regulatory requirements, including requirements relating to content filtering and requests from law enforcement authorities;
|
•
|
trading and investment policies;
|
•
|
consumer protection laws that impose additional obligations on us or restrict our ability to provide limited warranty protection;
|
•
|
instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;
|
•
|
foreign currency fluctuations;
|
•
|
foreign exchange controls and cash repatriation restrictions;
|
•
|
tariffs and other trade barriers;
|
•
|
difficulties in collecting accounts receivable;
|
•
|
potential adverse tax consequences;
|
•
|
uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;
|
•
|
litigation in foreign court systems;
|
•
|
cultural and language differences;
|
•
|
difficulty in managing a geographically dispersed workforce in compliance with local laws and customs that vary from country to country; and
|
•
|
other factors, depending upon the country involved.
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
|
2016
|
|
||
Revenue
|
$
|
161,793
|
|
|
$
|
142,797
|
|
Cost of goods sold
|
106,132
|
|
|
95,982
|
|
||
Gross margin
|
55,661
|
|
|
46,815
|
|
||
|
|
|
|
||||
Expenses
|
|
|
|
||||
Sales and marketing
|
18,167
|
|
|
15,629
|
|
||
Research and development
|
19,477
|
|
|
18,778
|
|
||
Administration
|
10,386
|
|
|
9,527
|
|
||
Restructuring (note 5)
|
373
|
|
|
—
|
|
||
Acquisition-related and integration
|
451
|
|
|
374
|
|
||
Impairment (note 6)
|
3,668
|
|
|
—
|
|
||
Amortization
|
4,626
|
|
|
3,762
|
|
||
|
57,148
|
|
|
48,070
|
|
||
Loss from operations
|
(1,487
|
)
|
|
(1,255
|
)
|
||
Foreign exchange gain
|
1,099
|
|
|
2,292
|
|
||
Other income
|
9
|
|
|
26
|
|
||
Earnings (loss) before income taxes
|
(379
|
)
|
|
1,063
|
|
||
Income tax expense (recovery)
|
(168
|
)
|
|
345
|
|
||
Net earnings (loss)
|
$
|
(211
|
)
|
|
$
|
718
|
|
Other comprehensive earnings:
|
|
|
|
||||
Foreign currency translation adjustments, net of
taxes of $nil
|
1,582
|
|
|
5,132
|
|
||
Comprehensive earnings
|
$
|
1,371
|
|
|
$
|
5,850
|
|
|
|
|
|
|
|
||
Net earnings (loss) per share (in dollars) (note 8)
|
|
|
|
|
|
||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.02
|
|
Diluted
|
(0.01
|
)
|
|
0.02
|
|
||
Weighted average number of shares outstanding (in thousands) (note 8)
|
|
|
|
||||
Basic
|
31,909
|
|
|
32,156
|
|
||
Diluted
|
31,909
|
|
|
32,500
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
92,545
|
|
|
$
|
102,772
|
|
Accounts receivable, net of allowance for doubtful accounts of $2,482 (December 31, 2016 - $2,486)
|
129,782
|
|
|
143,798
|
|
||
Inventories (note 9)
|
48,328
|
|
|
40,913
|
|
||
Prepaids and other (note 10)
|
6,134
|
|
|
6,530
|
|
||
|
276,789
|
|
|
294,013
|
|
||
Property and equipment
|
34,254
|
|
|
34,180
|
|
||
Intangible assets
|
69,005
|
|
|
74,863
|
|
||
Goodwill
|
157,971
|
|
|
154,114
|
|
||
Deferred income taxes
|
16,014
|
|
|
16,039
|
|
||
Other assets
|
7,610
|
|
|
5,250
|
|
||
|
$
|
561,643
|
|
|
$
|
578,459
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities (note 11)
|
$
|
147,095
|
|
|
$
|
167,500
|
|
Deferred revenue and credits
|
4,591
|
|
|
5,263
|
|
||
|
151,686
|
|
|
172,763
|
|
||
Long-term obligations (note 12)
|
33,470
|
|
|
32,654
|
|
||
Deferred income taxes
|
10,591
|
|
|
11,458
|
|
||
|
195,747
|
|
|
216,875
|
|
||
Equity
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Common stock: no par value; unlimited shares authorized; issued and
outstanding: 32,157,057 shares (December 31, 2016 - 31,859,960 shares)
|
348,528
|
|
|
342,450
|
|
||
Preferred stock: no par value; unlimited shares authorized;
issued and outstanding: nil shares
|
—
|
|
|
—
|
|
||
Treasury stock: at cost: 241,915 shares (December 31, 2016 – 355,471 shares)
|
(3,493
|
)
|
|
(5,134
|
)
|
||
Additional paid-in capital
|
21,152
|
|
|
24,976
|
|
||
Retained earnings
|
12,553
|
|
|
13,718
|
|
||
Accumulated other comprehensive loss (note 13)
|
(12,844
|
)
|
|
(14,426
|
)
|
||
|
365,896
|
|
|
361,584
|
|
||
|
$
|
561,643
|
|
|
$
|
578,459
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
# of shares
|
|
|
$
|
|
# of shares
|
|
|
$
|
|
Additional paid-in capital
|
|
|
Retained earnings (deficit)
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
Total
|
|
||||||||
Balance as at December 31, 2015
|
32,337,201
|
|
|
$
|
346,453
|
|
|
240,613
|
|
|
$
|
(4,017
|
)
|
|
$
|
23,998
|
|
|
$
|
(160
|
)
|
|
$
|
(7,978
|
)
|
|
$
|
358,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common share cancellation (note 14)
|
(809,872
|
)
|
|
(8,696
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,507
|
)
|
|
—
|
|
|
(10,203
|
)
|
||||||
Stock option exercises (note 7)
|
231,704
|
|
|
2,906
|
|
|
—
|
|
|
—
|
|
|
(858
|
)
|
|
—
|
|
|
—
|
|
|
2,048
|
|
||||||
Stock-based compensation (note 7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,629
|
|
|
—
|
|
|
—
|
|
|
7,629
|
|
||||||
Purchase of treasury shares for RSU distribution
|
—
|
|
|
—
|
|
|
305,629
|
|
|
(4,214
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,214
|
)
|
||||||
Distribution of vested RSUs
|
100,927
|
|
|
1,787
|
|
|
(190,771
|
)
|
|
3,097
|
|
|
(5,793
|
)
|
|
—
|
|
|
—
|
|
|
(909
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,385
|
|
|
—
|
|
|
15,385
|
|
||||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,448
|
)
|
|
(6,448
|
)
|
||||||
Balance as at December 31, 2016
|
31,859,960
|
|
|
$
|
342,450
|
|
|
355,471
|
|
|
$
|
(5,134
|
)
|
|
$
|
24,976
|
|
|
$
|
13,718
|
|
|
$
|
(14,426
|
)
|
|
$
|
361,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common share cancellation (note 14)
|
(170,217
|
)
|
|
(1,825
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(954
|
)
|
|
—
|
|
|
(2,779
|
)
|
||||||
Stock option exercises (note 7)
|
398,253
|
|
|
6,426
|
|
|
—
|
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
—
|
|
|
4,621
|
|
||||||
Stock-based compensation (note 7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,126
|
|
|
—
|
|
|
—
|
|
|
2,126
|
|
||||||
Distribution of vested RSUs
|
69,061
|
|
|
1,477
|
|
|
(113,556
|
)
|
|
1,641
|
|
|
(4,145
|
)
|
|
—
|
|
|
—
|
|
|
(1,027
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(211
|
)
|
|
—
|
|
|
(211
|
)
|
||||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,582
|
|
|
1,582
|
|
||||||
Balance as at March 31, 2017
|
32,157,057
|
|
|
$
|
348,528
|
|
|
241,915
|
|
|
$
|
(3,493
|
)
|
|
$
|
21,152
|
|
|
$
|
12,553
|
|
|
$
|
(12,844
|
)
|
|
$
|
365,896
|
|
|
Three months ended
March 31,
|
||||||
|
2017
|
|
|
2016
|
|
||
Cash flows provided by (used in):
|
|
|
|
||||
Operating activities
|
|
|
|
||||
Net earnings (loss)
|
$
|
(211
|
)
|
|
$
|
718
|
|
Items not requiring (providing) cash
|
|
|
|
||||
Amortization
|
6,997
|
|
|
5,568
|
|
||
Stock-based compensation (note 7)
|
2,126
|
|
|
2,035
|
|
||
Deferred income taxes
|
(914
|
)
|
|
—
|
|
||
Impairment
|
3,668
|
|
|
—
|
|
||
Other
|
64
|
|
|
4
|
|
||
Changes in non-cash working capital
|
|
|
|
||||
Accounts receivable
|
14,925
|
|
|
(434
|
)
|
||
Inventories
|
(6,625
|
)
|
|
7,080
|
|
||
Prepaids and other
|
(1,908
|
)
|
|
771
|
|
||
Accounts payable and accrued liabilities
|
(19,448
|
)
|
|
(7,868
|
)
|
||
Deferred revenue and credits
|
(796
|
)
|
|
(274
|
)
|
||
Cash flows provided by (used in) operating activities
|
(2,122
|
)
|
|
7,600
|
|
||
Investing activities
|
|
|
|
||||
Additions to property and equipment
|
(2,887
|
)
|
|
(2,843
|
)
|
||
Additions to intangible assets
|
(800
|
)
|
|
(295
|
)
|
||
Proceeds from sale of property and equipment
|
—
|
|
|
3
|
|
||
Acquisition of GNSS business (note 3 (a))
|
(3,192
|
)
|
|
—
|
|
||
Cash flows used in investing activities
|
(6,879
|
)
|
|
(3,135
|
)
|
||
Financing activities
|
|
|
|
||||
Issuance of common shares
|
4,621
|
|
|
528
|
|
||
Repurchase of common shares for cancellation (note 14)
|
(2,779
|
)
|
|
(6,144
|
)
|
||
Purchase of treasury shares for RSU distribution
|
—
|
|
|
(4,214
|
)
|
||
Taxes paid related to net settlement of equity awards
|
(1,027
|
)
|
|
(352
|
)
|
||
Payment for contingent consideration
|
(960
|
)
|
|
—
|
|
||
Decrease in other long-term obligations
|
(96
|
)
|
|
(63
|
)
|
||
Cash flows used in financing activities
|
(241
|
)
|
|
(10,245
|
)
|
||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(985
|
)
|
|
(2,036
|
)
|
||
Cash and cash equivalents, decrease in the period
|
(10,227
|
)
|
|
(7,816
|
)
|
||
Cash and cash equivalents, beginning of period
|
102,772
|
|
|
93,936
|
|
||
Cash and cash equivalents, end of period
|
$
|
92,545
|
|
|
$
|
86,120
|
|
1.
|
BASIS OF PRESENTATION
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
3.
|
ACQUISITIONS
|
|
|
$
|
|
Assets acquired
|
|
|
|
Inventory
|
|
604
|
|
Property and equipment
|
|
175
|
|
Intangible assets and goodwill
|
|
2,413
|
|
Fair value of net assets acquired
|
|
3,192
|
|
|
OEM
Solutions
|
|
Enterprise
Solutions
|
|
Cloud and
Connectivity
Services
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
133,000
|
|
|
$
|
21,718
|
|
|
$
|
7,075
|
|
|
$
|
161,793
|
|
Cost of goods sold
|
90,922
|
|
|
11,233
|
|
|
3,977
|
|
|
106,132
|
|
||||
Gross margin
|
$
|
42,078
|
|
|
$
|
10,485
|
|
|
$
|
3,098
|
|
|
$
|
55,661
|
|
Gross margin %
|
31.6
|
%
|
|
48.3
|
%
|
|
43.8
|
%
|
|
34.4%
|
|
||||
Expenses
|
|
|
|
|
|
|
57,148
|
|
|||||||
Loss from operations
|
|
|
|
|
|
|
$
|
(1,487
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
120,874
|
|
|
$
|
14,995
|
|
|
$
|
6,928
|
|
|
$
|
142,797
|
|
Cost of goods sold
|
86,584
|
|
|
5,243
|
|
|
4,155
|
|
|
$
|
95,982
|
|
|||
Gross margin
|
$
|
34,290
|
|
|
$
|
9,752
|
|
|
$
|
2,773
|
|
|
$
|
46,815
|
|
Gross margin %
|
28.4
|
%
|
|
65.0
|
%
|
|
40.0
|
%
|
|
32.8%
|
|
||||
Expenses
|
|
|
|
|
|
|
48,070
|
|
|||||||
Loss from operations
|
|
|
|
|
|
|
$
|
(1,255
|
)
|
5.
|
RESTRUCTURING
|
6.
|
IMPAIRMENT
|
7.
|
STOCK-BASED PAYMENTS
|
|
Three months ended
March 31,
|
||||||
|
2017
|
|
|
2016
|
|
||
Cost of goods sold
|
$
|
108
|
|
|
$
|
106
|
|
Sales and marketing
|
511
|
|
|
403
|
|
||
Research and development
|
430
|
|
|
358
|
|
||
Administration
|
1,077
|
|
|
1,168
|
|
||
|
$
|
2,126
|
|
|
$
|
2,035
|
|
|
|
|
|
||||
Stock option plan
|
$
|
691
|
|
|
$
|
526
|
|
Restricted stock plan
|
1,435
|
|
|
1,509
|
|
||
|
$
|
2,126
|
|
|
$
|
2,035
|
|
|
Three months ended
March 31, |
||||
Number of Options
|
2017
|
|
|
2016
|
|
Outstanding, beginning of period
|
1,315,623
|
|
|
965,911
|
|
Granted
|
650,599
|
|
|
598,895
|
|
Exercised
|
(398,253
|
)
|
|
(64,212
|
)
|
Forfeited / expired
|
(13,760
|
)
|
|
(9,424
|
)
|
Outstanding, end of period
|
1,554,209
|
|
|
1,491,170
|
|
Exercisable, beginning of period
|
494,938
|
|
|
418,522
|
|
Exercisable, end of period
|
298,145
|
|
|
471,459
|
|
|
Three months ended
March 31, |
||
|
2017
|
|
2016
|
Risk-free interest rate
|
1.36%
|
|
0.72%
|
Annual dividends per share
|
Nil
|
|
Nil
|
Expected stock price volatility
|
55%
|
|
51%
|
Expected option life (in years)
|
4.0
|
|
4.0
|
Average fair value of options granted (in dollars)
|
$10.78
|
|
$4.24
|
|
Three months ended
March 31, |
||||
Number of RSUs
|
2017
|
|
|
2016
|
|
Outstanding, beginning of period
|
745,974
|
|
|
778,233
|
|
Granted
|
388,275
|
|
|
297,989
|
|
Vested / settled
|
(228,208
|
)
|
|
(241,329
|
)
|
Forfeited
|
(28,847
|
)
|
|
(792
|
)
|
Outstanding, end of period
|
877,194
|
|
|
834,101
|
|
|
|
|
|
||
Outstanding – vested and not settled
|
169,409
|
|
|
189,428
|
|
Outstanding – unvested
|
707,785
|
|
|
644,673
|
|
Outstanding, end of period
|
877,194
|
|
|
834,101
|
|
8.
|
EARNINGS (LOSS) PER SHARE
|
|
Three months ended
March 31,
|
||||||
|
2017
|
|
|
2016
|
|
||
Net earnings (loss)
|
$
|
(211
|
)
|
|
$
|
718
|
|
|
|
|
|
||||
Weighted average shares used in computation of:
|
|
|
|
||||
Basic
|
31,909
|
|
|
32,156
|
|
||
Assumed conversion
|
—
|
|
|
344
|
|
||
Diluted
|
31,909
|
|
|
32,500
|
|
||
|
|
|
|
||||
Net earnings (loss) per share (in dollars):
|
|
|
|
||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.02
|
|
Diluted
|
(0.01
|
)
|
|
0.02
|
|
9.
|
INVENTORIES
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
||
Electronic components
|
$
|
34,426
|
|
|
$
|
29,043
|
|
Finished goods
|
13,902
|
|
|
11,870
|
|
||
|
$
|
48,328
|
|
|
$
|
40,913
|
|
10.
|
PREPAIDS AND OTHER
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
||
Inventory advances
|
$
|
636
|
|
|
$
|
902
|
|
Insurance and licenses
|
530
|
|
|
634
|
|
||
Deposits
|
1,544
|
|
|
1,667
|
|
||
Other
|
3,424
|
|
|
3,327
|
|
||
|
$
|
6,134
|
|
|
$
|
6,530
|
|
11.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
||
Trade payables
|
$
|
85,578
|
|
|
$
|
109,236
|
|
Inventory commitment reserve
|
3,497
|
|
|
3,850
|
|
||
Accrued royalties
|
13,224
|
|
|
13,042
|
|
||
Accrued payroll and related liabilities
|
15,596
|
|
|
12,572
|
|
||
Taxes payable (including sales taxes)
|
4,723
|
|
|
4,922
|
|
||
Product warranties (note 16 (a)(ii))
|
8,088
|
|
|
7,637
|
|
||
Other
|
16,389
|
|
|
16,241
|
|
||
|
$
|
147,095
|
|
|
$
|
167,500
|
|
12.
|
LONG-TERM OBLIGATIONS
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
||
Accrued royalties
|
$
|
23,241
|
|
|
$
|
22,763
|
|
Other
|
10,229
|
|
|
9,891
|
|
||
|
$
|
33,470
|
|
|
$
|
32,654
|
|
13.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
Three months ended March 31,
|
|||||
|
2017
|
|
2016
|
|
||
Balance, beginning of period
|
$
|
(14,426
|
)
|
$
|
(7,978
|
)
|
Foreign currency translation adjustments
|
907
|
|
2,891
|
|
||
Gain (loss) on long term intercompany balances
|
675
|
|
2,241
|
|
||
Balance, end of period
|
$
|
(12,844
|
)
|
$
|
(2,846
|
)
|
14.
|
SHARE CAPITAL
|
15.
|
FINANCIAL INSTRUMENTS
|
Level 1 -
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2 -
|
Observable inputs other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3 -
|
Inputs that are generally unobservable and are supported by little or no market activity and that are significant to the fair value determination of the assets or liabilities.
|
16.
|
COMMITMENTS AND CONTINGENCIES
|
(i)
|
Under license agreements, we are committed to make royalty payments based on the sales of products using certain technologies. We recognize royalty obligations as determinable in accordance with agreement terms. Where agreements are not finalized, we have recognized our current best estimate of the obligation. When the agreements are finalized or the obligation becomes statute barred, the estimate will be revised accordingly.
|
(ii)
|
We are a party to a variety of agreements in the ordinary course of business under which we may be obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts for sale of our products to customers where we provide indemnification against losses arising from matters such as potential intellectual property infringements and product liabilities. The impact on our future financial results is not subject to reasonable estimation because considerable uncertainty exists as to whether claims will be made and the final outcome of potential claims. To date, we have not incurred material costs related to these types of indemnifications.
|
(iii)
|
We accrue product warranty costs, when we sell the related products, to provide for the repair or replacement of defective products. Our accrual is based on an assessment of historical experience and on management’s estimates. Changes in the liability for product warranties were as follows:
|
|
Three months ended
March 31, 2017 |
||
Balance, beginning of period
|
$
|
7,637
|
|
Provisions
|
1,333
|
|
|
Expenditures
|
(882
|
)
|
|
Balance, end of period
|
$
|
8,088
|
|
17.
|
COMPARATIVE FIGURES
|
1 Year Sierra Wireless Chart |
1 Month Sierra Wireless Chart |
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