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**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

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**FORM 40-F**

** **

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**o****  REGISTRATIONSTATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**OR**

 

**x****  ANNUALREPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the fiscal year ended December 31,2008**

**Commission File No.:  0-30718**

 

**SIERRA WIRELESS, INC.**

(Exactname of Registrant as specified in its charter)

 

**Canada**

(Jurisdictionof incorporation or organization)

 

Primary Standard IndustrialClassification Doe (if applicable):**3663**

 

I.R.S. EmployerIdentification Number (if applicable):**94-3338019**

 

**13811 Wireless Way, Richmond**

**British Columbia, Canada  V6V 3A4**

**(604) 231-1100**

(Addressand telephone number of principal executive offices)

 

**CT Corporation111 Eighth AvenueNew York, New York 10011**

(Agentfor service in the United States)

 

Securities registered or to be registered pursuant to Section 12(b) ofthe Act:  **None**

 

Securities registered or to be registered pursuant to Section 12(g) ofthe Act:

 

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**Common Shares**

(Title of Class)

 

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Name ofexchange on which securities are registered:

**TorontoStock Exchange, The Nasdaq Global Market**

 

Securities for which there is a reporting obligationpursuant to Section 15(d) of the Act: **None**

 

Indicateby check mark the information filed with this Form:

x  Annual Information Form   x  Audited Annual FinancialStatements

 

Indicate thenumber of outstanding shares of each of the issuer’s classes of capital commonstock as of the close of the period covered by the annual report:  **31,031,954****Common Shares without par value as at December 31,2008**

 

Indicateby check mark whether the Registrant, by filing the information contained inthis Form, is also thereby furnishing the information to the Commissionpursuant to Rule 12g3-2(b) under the *SecuritiesExchange Act of 1934*, If “yes”, is marked, indicate the filingnumber assigned to the Registrant in connection with such Rule.  o  Yes        82-             x No

 

Indicateby check mark whether the Registrant:  (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the *Securities Exchange Act of 1934* during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.   Yes  x      No  o

 

 

** **

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**INCORPORATION BY REFERENCE**

 

The Registrant’s Management’s Discussion and Analysis of FinancialCondition and Results of Operation and the Registrant’s financial statementsfor the year ended December 31, 2008 may be found on SEDAR atwww.sedar.com and on Form 6-K, furnished to the Securities Exchange Commission (“Commission”)on March 27, 2009, at www.sec.gov and are incorporated by referenceherein.

 

**UNDERTAKING AND CONSENT TO SERVICE OF PROCESS**

 

A.           Undertaking

 

The Registrant undertakes to make available, in person or by telephone,representatives to respond to inquiries made by the Commission staff, and tofurnish promptly, when requested to do so by the Commission staff, informationrelating to: the securities registered pursuant to Form 40-F; thesecurities in relation to which the obligation to file an annual report on Form 40-Farises; or transactions in said securities.

 

B.             Consent to Service of Process

 

A Form F-X, as amended, signed by the Registrant and theRegistrant’s agent for service of process with respect to the Common Shares hasbeen filed with the Commission.

 

**SIGNATURES**

 

Pursuant to the requirements of the *ExchangeAct*, the Registrant certifies that it meets all of the requirementsfor filing on Form 40-F and has duly caused this annual report to besigned on its behalf by the undersigned, thereto duly authorized.

 

 
| ** ** | **SIERRA WIRELESS, INC.**             |
|------------|---------------------------------------|
|       | *(Registrant)*                        |
|       | * *                              |
|       |                                  |
|       | /s/ DAVID G. MCLENNAN                 |
|       | David G. McLennan,                    |
|       | Chief Financial Officer and Secretary |

 

 

Date:  March 27,2009

 

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Annual Information Form****March 25, 2009

 

**TABLE OFCONTENTS**

 
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1      |
|------------------------------------------------------|--------|
|                                                 |   |
| CURRENCY                                             | 1      |
|                                                 |   |
| CORPORATE  STRUCTURE                                 | 1      |
|                                                 |   |
| GENERAL DEVELOPMENT OF THE BUSINESS                  | 2      |
|                                                 |   |
| **General**                                          | 2      |
| **Significant  Acquisitions**                        | 4      |
| **Industry  Background and Future Trends**           | 5      |
| ** **                                           |   |
| NARRATIVE DESCRIPTION OF THE BUSINESS                | 6      |
|                                                 |   |
| **Our  Solution**                                    | 6      |
| **Our  Products**                                    | 6      |
| **Product  Development**                             | 10     |
| **Distribution**                                     | 11     |
| **Marketing**                                        | 12     |
| **Manufacturing**                                    | 13     |
| **Employees**                                        | 13     |
| **Competition**                                      | 13     |
| **Intellectual  Property**                           | 14     |
| **Governmental  Regulation**                         | 14     |
| **Additional Information Concerning Our Business**   | 15     |
| ** **                                           |   |
| RISK  FACTORS                                        | 15     |
|                                                 |   |
| DIVIDENDS                                            | 15     |
|                                                 |   |
| DESCRIPTION OF CAPITAL STRUCTURE                     | 15     |
|                                                 |   |
| **Normal  Course Issuer Bid**                        | 16     |
| **Credit  Facilities**                               | 16     |
| ** **                                           |   |
| MARKET FOR SECURITIES                                | 17     |
|                                                 |   |
| DIRECTORS AND EXECUTIVE OFFICERS                     | 18     |
|                                                 |   |
| **Directors**                                        | 18     |
| **Executive  Officers**                              | 20     |
| ** **                                           |   |
| CODE OF BUSINESS CONDUCT AND ETHICS                  | 20     |
|                                                 |   |
| AUDIT COMMITTEE                                      | 20     |
|                                                 |   |
| **Mandate of the Audit Committee**                   | 20     |
| **Composition of the Audit Committee**               | 25     |
| **Relevant Education and Experience**                | 25     |
| **Reliance on Certain Exemptions**                   | 26     |

 

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| **Audit  Committee Oversight**                   | 26                       |
|--------------------------------------------------|--------------------------|
| **Pre-approval Policies and Procedures**         | 26                       |
| **Auditor  Independence**                        | 27                       |
| **Auditors’  Fees**                         | 27                       |
| ** **                                       |                     |
| EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES | 27                       |
|                                             |                     |
| **Disclosure  Controls**                         | 27                       |
| **Internal Control Over Financial Reporting**    | 28                       |
| ** **                                       |                     |
| LEGAL PROCEEDINGS                                | 29                       |
|                                             |                     |
| OFF-BALANCE SHEET ARRANGEMENTS                   | 29                       |
|                                             |                     |
| CONTRACTUAL OBLIGATIONS                          | 30                       |
|                                             |                     |
| QUORUM EXEMPTION                                 | 30                       |
|                                             |                     |
| REGISTRAR AND TRANSFER AGENT                     | 30                       |
|                                             |                     |
| MATERIAL CONTRACTS                               | 30                       |
|                                             |                     |
| EXPERTS                                          | 31                       |
|                                             |                     |
| ADDITIONAL INFORMATION                           | 31                       |
|                                             |                     |
| CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM    | EXHIBIT 23.1             |
|                                             |                     |
| CERTIFICATIONS                                   | EXHIBIT 31.1 – 32.2 |

 

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## ***CAUTIONARY NOTE REGARDING FORWARD-LOOKINGSTATEMENTS***

## *** ***

Certain statements in this Annual Information Form, or incorporated byreference herein, that are not based on historical facts, constituteforward-looking statements or forward-looking information within the meaning ofthe U.S. Private Securities Litigation Reform Act of 1995 and applicableCanadian securities laws (“forward-looking statements”).  These forward-looking statements are notpromises or guarantees of future performance but are only predictions thatrelate to future events, conditions or circumstances or our future results, performance,achievements or developments and are subject to substantial known and unknownrisks, assumptions, uncertainties and other factors that could cause our actualresults, performance, achievements or developments in our business or in ourindustry to differ materially from those expressed, anticipated or implied bysuch forward-looking statements. Forward-looking statements include all disclosure regarding possibleevents, conditions, circumstances or results of operations that are based onassumptions about future economic conditions, courses of action and otherfuture events.  We caution you not toplace undue reliance upon any such forward-looking statements, which speak onlyas of the date they are made.  Theseforward-looking statements appear in a number of different places in thisAnnual Information Form, and the documents incorporated by reference herein,and can be identified by words such as “may”, “estimates”, “projects”, “expects”,“intends”, “believes”, “plans”, “anticipates”, “continue”, “growing”, “expanding”or their negatives or other comparable words. Forward-looking statements include statements regarding the outlook forour future operations, plans and timing for the introduction or enhancement ofour services and products, statements concerning strategies or developments,statements about future market conditions, supply conditions, end customerdemand conditions, channel inventory and sell through, revenue, gross margin,operating expenses, profits, forecasts of future costs and expenditures, theoutcome of legal proceedings, and other expectations, intentions and plans thatare not historical fact.  The riskfactors and uncertainties that may affect our actual results, performance,achievements or developments are many and include, amongst others, our abilityto develop, manufacture, supply and market new products that we do not producetoday that meet the needs of customers and gain commercial acceptance, ourreliance on the deployment of next generation networks by major wirelessoperators, the continuous commitment of our customers, increased competitionand other risks detailed herein under the heading “*Risk Factors*”.  Manyof these factors and uncertainties are beyond the control of the Company.  Consequently, all forward-looking statementsin this Annual Information Form, or the documents incorporated by referenceherein, are qualified by this cautionary statement and we cannot assure youthat actual results, performance, achievements or developments anticipated bythe Company will be realized.  Forward-lookingstatements are based on management’s current plans, estimates, projections,beliefs and opinions and the Company does not undertake any obligation toupdate forward-looking statements should the assumptions related to theseplans, estimates, projections, beliefs and opinions change, except as requiredby law.

 

## ***CURRENCY***

## *** ***

Unless otherwise indicated, all figures are stated in U.S. dollars.

 

## ***CORPORATE STRUCTURE***

## *** ***

Unless the context otherwise indicates, references to “we”, “our”, “us”,“the Company”, “the Corporation” or “Sierra Wireless” in this AnnualInformation Form means Sierra Wireless, Inc. and its subsidiaries.

 

Sierra Wireless was incorporated under the *Canada Business Corporations Act* on May 31, 1993.  The Articles of Sierra Wireless were amendedby a Certificate of Amendment issued March 29, 1999 to remove the privatecompany provisions and restrictions on share transfer.  The Articles of the Company were furtheramended by Certificates of Amendment issued May 13, 1999 and May 14,1999 to: (i) re-designate 

 

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and change all existing common shares in the capital of the Company tonew common shares in the capital of the Company (the “Common Shares”); (ii) changethe rights attached to all preference shares in the capital of the Company (the“Preference Shares”) and to remove each existing series of Preference Shares;and (iii) consolidate the Common Shares on the basis of one post-consolidationCommon Share for 1.5 pre-consolidation Common Shares.

 

The Company’s registered and records office is located at Suite 2600,Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, Canada,V7X 1L3 and its head office and principal place of business is located at 13811Wireless Way, Richmond, British Columbia, Canada, V6V 3A4.

 

The following table lists subsidiaries of Sierra Wireless and theirjurisdictions of incorporation or organization. All such entities are 100% owned, directly or indirectly, by SierraWireless.

 
| **Name**                                   | ** ** | **Jurisdiction of Incorporation or Organization** |
|--------------------------------------------|------------|---------------------------------------------------|
| Sierra Wireless America, Inc.         |       | Delaware, U.S.A.                                  |
| Sierra Wireless (UK) Limited               |       | United Kingdom                                    |
| Sierra Wireless (Asia-Pacific) Limited     |       | Hong Kong                                         |
| Sierra Wireless (Australia) Pty Limited    |       | Australia                                         |
| Sierra Wireless Technology (Shenzhen) Ltd. |       | China                                             |
| Sierra Wireless Japan KK                   |       | Japan                                             |
| Sierra Wireless France SAS                 |       | France                                            |
| Sierra Wireless Luxembourg S.à.r.l.   |       | Luxembourg                                        |

 

***GENERALDEVELOPMENT OF THE BUSINESS***

 

**General**

 

We provide leading edge wireless wide area modem solutions for themobile computing, rugged mobile and machine-to-machine (“M2M”) markets. Wedevelop and market a range of products that include wireless modems for mobilecomputers, embedded modules for original equipment manufacturers (“OEMs”), andhigh value fixed and mobile wireless solutions for industrial, commercial andpublic safety applications. We also offer professional services to OEMcustomers during their product development and launch, leveraging our expertisein wireless design, integration and certification to provide built-in wirelessconnectivity for mobile computing devices and other vertical market solutions.Our products and solutions connect people, their mobile computers and fixedterminals to wireless voice and mobile broadband networks around the world.

 

We believe that mobile broadband for the mobile computing market hasstrong growth prospects.  We believe thatthe key growth enablers for this market include the continued deployment ofmobile broadband networks around the world, aggressive promotion of mobilebroadband services by wireless operators, attractive mobile broadband rateplans and growing customer awareness of mobile broadband.

 

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Our mobile computing products are used by businesses, consumers andgovernment organizations to enable high speed wireless access to a wide rangeof applications, including the Internet, e-mail, corporate intranet, remotedatabases and corporate applications.

 

Our rugged mobile and M2M products are used primarily in the publicsafety, energy, industrial, transportation and transaction processingmarkets.  We believe the mobile and M2Mmarkets we serve offer attractive opportunities for long term profitablegrowth.  We also believe that there aremany mobile and M2M segments and customers, as well as a fragmented base ofcompetitors, giving us opportunity to expand our market position and share.

 

We sell our products primarily through indirect channels, includingwireless operators, value added resellers and OEMs.

 

During 2006, our launch of several new Universal MobileTelecommunications System (“UMTS”)/High Speed Downlink Packet Access (“HSDPA”)and Code Division Multiple Access Evolution-Data Optimized Revision A (“CDMAEV-DO Rev A”) products resulted in strong revenue growth. We also expanded ourglobal channels of distribution, adding important wireless operator channelslike Orange, O2, Telefonica and Telstra, while solidifying our position withkey existing customers such as AT&T Inc. (“AT&T”), Sprint Nextel (“Sprint”)and Verizon Wireless (“Verizon”).  Wealso expanded our OEM channels and by the end of 2006 had design wins withtwelve portable computing OEM (“PC OEM”) customers across multiple airlinks.

 

In 2007, we achieved annual revenue of $439.9 million, driven by thelaunch of nine new mobile computing products for both High Speed Packet Access(“HSPA”) and CDMA EV-DO Rev A networks. We expanded our product footprint with key existing customers such asAT&T and Sprint, and significantly grew our European and Asia-Pacificbusiness, while increasing profitability.

 

On May 25, 2007, we completed the acquisition of AirLinkCommunications, Inc. (“AirLink”), a privately held developer and supplierof high value fixed and mobile wireless solutions in the M2M segment.  The acquisition is consistent with ourstrategy of strengthening our position in the rugged mobile and M2M segmentsand expanding our high gross margin product lines.  The aggregate purchase price was $31.2million, including cash consideration of $12.0 million, the issuance ofapproximately 1.3 million Common Shares of Sierra Wireless to the shareholdersof AirLink and $1.6 million in transaction costs.

 

In 2008, we achieved record annual revenue of$567.3 million, an increase of 29% compared to $439.9 million in 2007, drivenby sales of our newest HSPA and CDMA EV-DO Rev A products.  Gross margin was 27.6% in 2008, compared to28.0% in 2007.  Earnings from operationswere $44.6 million in 2008, compared to $38.6 million in 2007.  Net earnings were $62.6 million, or dilutedearnings per share of $2.00 in 2008, compared to $32.5 million, or dilutedearnings per share of $1.16, in 2007. Net earnings for 2008 include an after-tax unrealized foreign exchangegain of $18.4 million on Euros held for the Wavecom transaction that isdescribed below.  In addition, we reducedour valuation allowance by $6.5 million which reduced our income tax expenseand increased net earnings.

 

During the second quarter of 2008, wereceived regulatory approval that allows us to purchase up to 1,567,378 of ourCommon Shares (approximately 5% of our Common Shares outstanding as of May 21,2008) by way of a normal course issuer bid (“the Bid”) on the Toronto StockExchange (“TSX”) and the NASDAQ Global Market (“Nasdaq”).  As of December 31, 2008, we hadpurchased and cancelled 407,700 shares under the Bid.

 

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Subsequent to year end, on January 29,2009, we implemented an expense reduction program that is expected to reducelabor costs by approximately $5.5 million on an annualized basis.  The program included the elimination ofapproximately 56 positions, representing approximately 10% of ourworkforce.  The actions related to thisprogram are expected to be completed during the first quarter of 2009.  We expect to incur a pre-tax charge ofapproximately $1.3 million in the first quarter of 2009 for severance and othercosts related to this program. The organizational changes included theresignation of Mr. Trent Punnett, Senior Vice-President, Marketing andCorporate Development.

 

See “Narrative Description of Business - Our Products” for discussionof specific product development initiatives.

 

**Significant Acquisitions**

 

On December 2, 2008, we announced an allcash offer to purchase the common shares and OCEANE convertible bonds (“OCEANEs”)of Wavecom S.A. (“Wavecom”), a global leader in wireless M2M solutions.  The total value of the transaction isapproximately €218 million.  We made acash offer of €8.50 per ordinary share of Wavecom, and €31.93 per OCEANE.  The transaction was implemented by way ofconcurrent but separate public tender offers in both France and the UnitedStates for all Wavecom shares, all American Depository Shares (“ADSs”)representing Wavecom’s ordinary shares and all OCEANEs issued by Wavecom.  On February 27, 2009, we completed ouracquisition of 84.32% of the outstanding Wavecom shares and 99.97% of theOCEANEs, representing 90.57% of the voting rights of Wavecom.  On March 11, 2009, we announced theopening of a subsequent offering period of the all cash tender offer forWavecom securities in France and the United States.  The subsequent offering period will close on March 31,2009.  The offer price for the Wavecomordinary shares is €8.50 per share and the offer price for the OCEANEs is€31.93 plus unpaid accrued interest, per OCEANE.  Shortly after closing of the subsequentoffering period and provided applicable legal requirements are satisfied, weintend to implement a squeeze-out of the Wavecom shares and OCEANEs that havenot been tendered to the offer and to request the delisting of Wavecom sharesand OCEANEs from Euronext and ADSs from Nasdaq.

 

We used cash available on our balance sheetto fund the purchase of the ordinary shares of Wavecom and utilized our creditfacilities to fund the purchase of the OCEANEs of Wavecom.  On December 1, 2008, we had drawn aletter of credit in the amount of €218 million issued under a €218 millionsecured term facility with The Toronto-Dominion Bank and Canadian Imperial Bankof Commerce as lenders.  The term facilitywas secured by cash of €136.8 million and a pledge against all of ourassets.  On February 26, 2009, weborrowed €80.473 million under the term facility to facilitate the purchase of99.97% of the outstanding OCEANEs, which completed on February 27,2009.  On February 27, 2009, we alsocompleted the purchase of 84.32% of the outstanding Wavecom shares with €115.3million of the cash that secured the term facility.  As of February 27, 2009, the letter ofcredit was reduced from €218 million to €22.2 million. On March 13, 2009the term loan of €80.473 million was repaid with proceeds from the redemptionof the OCEANEs.

 

We expect the combination will create aglobal leader that will be uniquely positioned to benefit from the anticipatedgrowth in wireless for mobile computing and M2M markets.  We expect the acquisition to significantlyexpand our position in the global M2M market and increase our scale andcapabilities in Europe and Asia.  We havenot yet filed a business acquisition report for the acquisition of Wavecom.

 

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**Industry Background andFuture Trends**

 

***Wireless Data Growth***

 

We provide a broad range of products, including wireless modems formobile computers, embedded modules for laptop and vertical OEM wirelessapplications and high value fixed and mobile wireless data solutions forindustrial, commercial and public safety applications.  We believe that wide area wireless for mobilecomputing and wireless M2M are both rapidly growing markets.  We believe that the key growth enablers forthese markets include the continued deployment of mobile broadband networksaround the world, aggressive promotion of mobile broadband services by wirelessoperators, attractive mobile broadband rate plans, growing customer awarenessof mobile broadband and compelling return on investment rationale forusers.  Cellular network technologiessuch as CDMA EV-DO Rev A and UMTS/HSDPA/High Speed Uplink Packet Access (“HSUPA”)/HighSpeed Packet Access Plus (“HSPA+”) are expected to support much of this growth.

 

Market segments for wireless data consist of corporations, publicorganizations and individuals seeking to improve customer service andproductivity.  Increased cellular networkcoverage and speeds, significant technological improvements to wireless datanetworks, devices and software, and price reductions for data communicationsservices have also contributed to growth in the wireless data communicationsindustry. The ability to meet the demand for anytime, anyplace communicationsis made possible by the convergence of trends in mobile computing, the growthof the Internet, and wireless communications.

 

*Mobile Computing. *Many business professionals and individualsutilize laptops as their primary computing device.  Smaller handheld computers or personaldigital assistants (“PDAs”) continue to be popular, as are newer mobile phonesthat offer more advanced capabilities, such as access to personal information,Internet, multi-media and email.

 

*The Internet. *The Internet has become an indispensable toolfor many business professionals and individuals, and the volume of Internettraffic continues to grow rapidly. Telecommunications carriers continue to make significant investments inInternet protocol-based networks to handle the expected growth in the volume ofdata traffic.

 

*Wireless Communications. *While wireline communications networks werehistorically dominated by voice traffic, data now comprises more than half ofthe traffic on these networks. A similar evolution is now occurring on wirelessnetworks as wireless service providers address the growing demand for datacommunications with additional technical and commercial offerings.

 

***Existing Digital Technologies***

 

Data communications over cellular networks are currently supported byvarious digital technologies.  Newer,high-speed technologies include CDMA EV-DO Rev A and Global System for Mobilecommunications (“GSM”) based HSDPA, HSUPA and HSPA+.

 

CDMA is a digital technology that improves the capacity and quality ofboth voice and data communications and supports a broad range of applications,including voice, wireless Internet and multimedia.  The deployment of CDMA EV-DO Rev A commercialservice, the next generation of EV-DO, continues to expand the market forwireless data products and services. CDMA EV-DO Rev A offers theoretical downlink speeds of 3.1 Mbps, andtheoretical uplink speeds of 1.8 Mbps. In North America, Sprint and Verizon are widely deploying CDMA EV-DO RevA.

 

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Leading GSM carriers in North America,Europe and Asia are deploying third generation (“3G”) networks to offeradvanced services, including high-speed data, to their customers.  3G systems have been developed and launchedto replace and/or complement second generation and 2.5G digital cellularsystems.

 

In late 2005, the first network to upgradeto HSDPA, was AT&T in North America. In 2007, AT&T in North America, Telstra in Australia and BouyguesTelecom in France also announced their new high-speed 3G networks that offeruplink data speeds that are significantly faster than earlier networktechnologies.

 

## ***NARRATIVE DESCRIPTION OF THE BUSINESS***

## *** ***

### **Our Solution**

###  

We provide leading edge wireless wide areamodem solutions for the mobile computing, rugged mobile and M2M markets. Wedevelop and market a range of products that include wireless modems for mobilecomputers, embedded modules for OEMs, and high value fixed and mobile wirelessdata solutions for industrial, commercial, public safety and M2M applications.We also offer professional services to OEM customers during their productdevelopment, leveraging our expertise in wireless design and integration toprovide built-in wireless connectivity for notebook computers and other mobilecomputing devices. Our products and solutions connect people, their mobilecomputers and fixed terminals to wireless voice and mobile broadband networksaround the world.

 

### **Our Products**

###  

Our current product line of wireless modemsolutions includes wide-area wireless AirCard products, embedded modules fornotebook computers and other electronic devices, vehicle-mounted modems, M2Mmodems and enabling software.  We have anumber of new products under development within these product lines.

 

Our professional services team provides OEMcustomers with wireless product development support to integrate our wirelesswide-area products into their products.

 

***Sierra Wireless AirCard Products***

 

**PC Adapter Products**: PC adapter products include ourAirCard branded PC cards, and our USB modems. In 2008, sales of our PC adapter products increased 29% to $408.8million, compared to $315.9 million in 2007. USB wireless modems dominate the composition of our PC adapter productline, generating approximately $288.5 million of revenue in 2008, compared to$141.0 million in 2007.  Continuedsuccess with our PC adapter products will depend in part on our ability tocontinue to develop products that meet our customers’ evolving technology,design, schedule and price requirements.

 

Our USB wireless modems plug into the USB ports of notebook and desktopcomputers, as well as other products such as network routers.  In the first half of 2007, we begancommercial shipments of our USB modems for HSDPA and CDMA EV-DO Rev A networksand began shipping our HSUPA USB modems during the fourth quarter of 2007.During 2008, we continued to have a strong position with AT&T and Telstrawith shipments of our HSUPA USB modems and with Sprint with shipments of ourCDMA EV-DO Rev A USB modems.

 

During the third quarter of 2008, we began shipping our new USB modemfor HSUPA networks, the Compass 885, to AT&T in the United States, O2 inthe United Kingdom, Telstra in Australia and Swisscom and sunrise inSwitzerland.   We also commencedshipments of our CDMA EV-DO Rev A 

 

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USB modem, the Compass 597, to Telus in Canada and Telecom NewZealand.   During the fourth quarter of2008, we began shipping our latest USB modems, the Compass 888 for HSPAnetworks and the USB 598 for CDMA EV-DO Rev A networks.  We believe that form factor and industrialdesign are important differentiators among USB products.  Our new USB wireless modems are smaller thanour previous models and have an innovative new industrial design and featureset.  We expect that the timing of theintroduction of new USB form factors by ourselves and our competitors may leadto volatility in our revenue on a quarterly basis, as new form factors enterthe market at different times.

 

During the fourth quarter of 2008, we introduced our new HSPAExpressCards, the AirCard 501 and AirCard 502, that provide 3G mobile broadbandin a compact, durable design.  TheseExpressCards are expected to commence shipping during the first quarter of2009.

 

***Sierra Wireless Embedded Module Products***

 

We have two categories of embedded module customers, PC OEMs, whomanufacture notebook computers and related mobile computing devices andvertical OEMs who provide solutions for a variety of applications, includingnetworking, industrial handhelds, emergency services, energy management andtransaction processing.

 

In 2008, sales of our embedded module products increased 8% to $120.2million, compared to $91.2 million in 2007. Of the $120.2 million, approximately $66.5 million was from sales to PCOEMs and $53.7 million was from sales to vertical OEMs.

 

We currently have embedded module design wins with several PC OEMs. During 2008, Fujitsu Siemens Computers selected our HSPA modules to providenetwork connectivity for selected models in its LIFEBOOK product line ofprofessional notebook computers.  Inaddition, NEC integrated our HSPA embedded module in its LaVie G type Jnotebook computer that operates on the NTT DoCoMo network in Japan.  While we have been successful in securingdesign wins, we are not guaranteed future design wins.  The PC OEM market became more competitiveduring 2008 with the entrance of both the Ericsson and Qualcomm solutions forPC OEMs.  Both Ericsson and Qualcomm have secured PC OEM design wins,including PC OEMs with whom we have had design wins.  We expect this increase in competition willcontinue to put pressure on our revenue from PC OEMs during 2009.  Our ability to secure new design wins willdepend on being successful in developing products and offering services thatmeet our customers’ technology, design, schedule and price requirements.

 

We continue to have a solid position with vertical OEM customers.  In the first quarter of 2008, we announcedthat LANCOM Systems selected our embedded module to provide broadbandconnectivity for its UMTS router and that Becker Marine Systems Communicationhas integrated our embedded modules into its communication server.  During 2008, Alcatel-Lucent selected ourembedded module for its wireless laptop security, management and trackingsystem.  ERCO & GENER, a makerof communication systems for the French and export markets, also selected ourembedded modules to provide HSPA network connectivity for their GenPro 30emodem.   Netcomm launched two wirelessgateway devices that use our embedded module on Telstra’s Next G network andCalAmp integrated our embedded modules in their new wireless meter readingcommunication platform.  We also havedesign wins with Cisco, Ericsson, Digi and others for networkingsolutions.  We believe that there aregood growth opportunities in the vertical OEM market and are investing toexpand our position.

 

During 2008, we introduced five new embeddedmodules, the MC8785V, the MC8790 and the MC8790V for HSUPA networks, and theMC5727 for CDMA EV-DO Rev A networks.  Wealso introduced our MC8792V for HSPA networks, which is our first embeddedmodule to offer UMTS 900MHz frequency band support in a feature rich, costeffective product.

 

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The following tableoutlines our current product offerings for wireless wide-area network PC cardsand embedded modules:

 
| **Product    Type**          | ** **                                     | **Product Class**                                | ** **                                                                                                                                                                                                                                           | **Description**                                                                                                                                                                                                                              | ** **                             | **Products**                                                   |
|------------------------------|------------------------------------------------|--------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|----------------------------------------------------------------|
| **Wireless  Network  Cards** |                                           | AirCard**®**** **800  and 500 Series   |                                                                                                                                                                                                                                                 | Wide-area wireless modems providing wireless broadband connectivity for  computer users on HSUPA/HSDPA/UMTS/EDGE/GPRS networks.                                                                                                              |                                   | AirCard 501/502   AirCard 880/881   AirCard 880E/881E          |
|                         |                                           |                                             |                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                         |                                   |
|                         | AirCard**®**** **400  and 500 Series |                                             | Wide-area wireless modems providing wireless broadband connectivity for  computer users on EV-DO Revision A networks.                                                                                                                                |                                                                                                                                                                                                                                         | AirCard 402  AirCard 595  AirCard 597E |
|                         |                                           |                                             |                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                         |                                   |                                                           |
| **USB  Modems**              |                                           | USB 300, Apex 800, and CompassTM 800, Series |                                                                                                                                                                                                                                                 | USB wireless modems providing wireless broadband connectivity for users  on HSPA+/HSUPA/HSDPA/ UMTS/EDGE/GPRS networks.                                                                                                                      |                                   | USB 306/307  Compass 885/ 888/889  Apex 880                    |
|                         |                                           |                                             |                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                         |                                   |
|                         | USB****and  Compass 500 Series                 |                                             | USB wireless modems providing wireless broadband connectivity for users  on EV-DO Revision A networks.                                                                                                                                               |                                                                                                                                                                                                                                         | USB 598  Compass 597                   |
|                         |                                           |                                             |                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                         |                                   |                                                           |
| **Embedded  Modules **  |                                           | MC8700 Series PCI Express Mini Cards        |                                                                                                                                                                                                                                                 | Embedded 3G wireless modules based on the PCI Express Mini Card form  factor and interface specification. The MC8700 series delivers  HSUPA/HSDPA/UMTS/EDGE/GPRS wireless voice and data capability to laptop OEMs  and other manufacturers. |                                   | MC8700  MC8792V  MC8790/MC8790V  MC8780/MC8781  MC8775/MC8775V |
|                         |                                           |                                             |                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                         |                                   |
|                         | MC5700 Series PCI Express Mini Cards      |                                             | Embedded 3G wireless modules based on the PCI Express Mini Card form  factor and interface specification. The MC5700 series delivers CDMA EV-DO Rev  A and CDMA 1X EV-DO wireless voice and data capability to laptop OEMs and  other manufacturers. |                                                                                                                                                                                                                                         | MC5727  MC5725/MC5725V                 |

 

***SierraWireless Rugged Mobile and M2M Product Line***

 

The Sierra Wireless rugged mobile and M2M product line consists of intelligentmodems that are sold into a variety of markets and applications including lawenforcement, emergency services, field service, financial, energy andindustrial controls.

 

Our rugged mobile and M2Mgateways are sold to public safety, transportation, field service, energy,industrial and financial organizations and are among our highest gross marginproducts.  We strengthened our positionin these high margin segments by adding AirLink’s high value fixed and mobilewireless data solutions to our product portfolio, following the completion ofthe AirLink acquisition on May 25, 2007. In addition, in August 2008 we purchased the assets of Junxion, Inc.,a provider of mobile broadband enabled WiFi routers and remote devicemanagement software.  During the firstquarter of 2008, we introduced and shipped the AirLink Raven XT in NorthAmerica.  We also introduced our line ofAirLink intelligent fixed and mobile gateways into the European market.  During the second quarter of 2008, the RavenX, PinPoint X and MP881W were certified for use on the AT&TBroadbandConnect network.  We alsocommenced our first shipments of AirLink products into the EMEA region.  In the third quarter of 2008, our MP595Wmobile gateway WiFi access point was certified on the Verizon 

 

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Wireless, Bell Mobility and Alltelnetworks.  In addition, HSUPA variants ofour PinPoint X mobile gateway and Raven X fixed terminal gateway were certifiedon Rogers Wireless and our Raven XT fixed terminal gateway was certified on theBell Mobility and Telus networks.  Duringthe fourth quarter of 2008 we strengthened our position in Europe, Middle Eastand Africa (“EMEA”) with shipments of additional AirLink solutions into theregion.  We also released a new version of ALEOS, the embedded devicemanagement software that differentiates our fixed and mobile gateways andcommenced shipments of an HSPA version of our Raven XE gateway.

 

In 2008, revenuefrom mobile and M2M products increased to $30.8 million from $25.7 million in2007.

 

***EnablingSoftware***

 

Our line of softwareallows our modems and devices to work with laptop and handheld computers andother devices:

 

·                  *Sierra Wireless WatcherTM**Software*is a graphical user interface designed for everyday use with our modems. Whilethe modem is in use, the Watcher program provides ongoing information onregistration status and signal strength and allows the user to switch operatingmodes where applicable. Sierra Wireless Watcher supports all major PC andhandheld Windows-based  operatingsystems.  In addition, for certainproducts, Sierra Wireless Watcher supports Mac operating systems.

 

·                  *ALEOS*provides reliable andfeature-rich embedded intelligence.  Withextensive capabilities like remote monitoring and configuration, packet-leveldiagnostics and over-the-air firmware updates, ALEOS simplifies integration,installation, operation and maintenance of any AirLink wireless data solution.ALEOS now includes an Events Reporting Engine that allows users to manage theamount and type of data they send over-the-air and configure reports to providecustomized, relevant information based on pre-set triggers.

 

·                  *Wireless Ace*is adevice configuration and monitoring tool included with every Sierra WirelessAirLink modem that enables customers to control their AirLink modems fromanywhere.

 

·                  *AceNet*is anenterprise-grade device management tool that allows customers to monitor andmanage their fleet of AirLink modems from a central location.  Coupled with ALEOSTM, AceNet enables customers to perform full deviceintegration, poll modems and chart performance statistics.

 

·                  *AceView* is alow-profile dashboard that monitors local connectivity with AirLink in-vehiclemodems, displaying RF and GPS signal strength andlocation.

 

·                  *MP Modem Manager* is afeature-rich, web based diagnostic software management tool allowing networkadministrators access to remote monitoring and configuration of a fleet of MPmodems.

 

***Professional Services***

 

Our professional services team offers avariety of product development and integration support services including thefollowing:

 

·                  Software and hardware integration

 

·                  Platform RF testing and optimization

 

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·                  Regulatory approvals services

 

·                  Mobile operator certification services

 

·                  Project management

 

·                  Sales and technical support training

 

***Customer Support***

 

We provide customers,wireless operators and other channel partners with product and technicalsupport in several languages using telephone, e-mail and our Web site. Onlineresources include product documentation, technical specifications, frequentlyasked questions, application notes, troubleshooting notes, troubleshootingtools, and software downloads.

 

***Product Revenue***

 

Our revenue by product for the years ended December 31,2008 and 2007 is as follows:

 
| ** **       | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------|------------|----------|------------|----------|------------|
| Adapters         |       | 73       | %          | 71       | %          |
| Embedded modules |       | 21       |       | 21       |       |
| Mobile and M2M   |       | 5        |       | 6        |       |
| Other            |       | 1        |       | 2        |       |
|             |       | 100      | %          | 100      | %          |

 

***Future Products***

 

We continuallyevaluate and develop new products and technologies that will allow us to takeadvantage of the ever expanding and dynamic wireless market.  Emerging wireless standards that are areas ofsignificant new product development interest for us include:

 

·                  HSPA+, also known asHSPA Evolution or Evolved HSPA (“eHSPA”), offers theoreticalspeeds of up to 21 Mbps downlink.  In 2008, we began working withTelstra, Qualcomm and Ericsson to develop the world’s first PC adapter devicessupporting HSPA+.  In February 2009,together with Telstra, Ericsson and Qualcomm, we announced a new 21Mbps peakrated mobile broadband modem, the Telstra Turbo 21 that would be available onTelstra’s HSPA+ network, the Next G network. These devices will support data speeds up to 3X that of any HSPAproducts on the market today.

 

### **Product Development**

###  

We havebuilt a reputation in the wireless data industry for creating state-of-the-art,high-quality products within aggressive timeframes. Our development team ofapproximately 276 full time employees, located in Richmond, BC, Carlsbad, CA,Newark, CA and Shenzhen, China are skilled in the areas of radio frequency,hardware, embedded software, host software and mechanical design. Combined,this team has several thousand person years of experience in the design ofsmall form factor wireless data and voice devices. Our product development teamcombines leaders with extensive experience in their fields, with youngergraduates from leading universities.

 

We take a “core team”approach to product development.  Ourgoal is to develop a “whole” product and to ensure products are managed closelythroughout their entire life cycle. As part of this approach, 

 

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individuals from our product development group form product-specificteams with staff from other functional areas, including product management,operations, technical support and quality. These teams work closely to bring new products through the development phase,while balancing the market requirements of performance, time to market andproduct cost. Concepts and prototypes are validated by working with leadcustomers, channel partners and industry consultants.  From time to time, projects are outsourced tothird parties, which provide product development leverage for our core teams.

 

Products that resultfrom this process are designed and tested to cellular industry standards andintroduced to our high-volume contract manufacturing partners for productionand delivery to our customers. Included in the development effort is thecertification of our products with industry and regulatory standards bodies andwireless operators.

 

A group of seniorengineers develops and monitors our development processes within an ISO-9001approved framework. These processes are applied across all development projectsto ensure uniformity. For example, we have adopted a core-wireless enginedesign approach to leverage development efforts across multiple differentproducts. This is also intended to help our customers to utilize our differentproducts with moderate additional integration effort on their part.

 

Our productdevelopment staff stays current in technology by participating in industrygroups such as the Personal Computer Communications Association, the Cellular TelecommunicationsIndustry Association, the Mobile Advisory Council, the USB Forum, the PCISpecial Interest Group, the European Telecommunications Standards Institute,the PCS Type Certification Review Board, the Third Generation PartnershipProject, the Third Generation Partnership Project 2, the WiMAX Forum and theInternational Wireless Packaging Consortium, and through ongoing technicaleducation.  We maintain closerelationships with local universities by hiring co-op students, givinglectures, supporting visiting professorships and participating in regularinformal meetings with faculty members.

 

### **Distribution**

###  

Our products are usedby a variety of end-users, ranging from sales people and mobile executives, topolice officers and utility workers. We have built a distribution channel thatresponds to the unique purchasing and usage requirements of our customerbase.  Historically, a substantialmajority of our sales have come from North American markets.  As our wireless technology platforms havediversified, we have built sales and distribution teams to focus on developingour business outside of North America. Currently, we have dedicated sales and distribution teams for the EMEA,Asia-Pacific and North American regions. Our approach to distribution takes advantage of our existingrelationships with wireless operators, resellers and OEMs in order to maximizethe productivity of our sales team.

 

***Wireless Operators***

 

Wireless operatorsplay two key roles in our distribution strategy.  First, wireless operators are resellers forus, purchasing our products and then reselling them to end-user customersthrough their business and retail channels. Second, the wireless operator sales team often works with our sales teamto jointly sell wireless solutions and our equipment to corporate andgovernment end-user customers.  Thewireless operator channel provides us with extended customer reach, while theoperators are able to leverage our wireless data expertise to help sell theirproducts and services.  We have investeda great deal of time and resources in cultivating our relationships withwireless operators and view these relationships as a critical success factor.

 

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***Resellers***

 

Resellers purchaseour products either directly from us or from a distributor and resell them tocarriers and end-user customers.  Inorder to support resellers who prefer to purchase through a distributor, wehave selectively formed distribution relationships.  Distributors ensure that our products areavailable to a large number of resellers.

 

Resellers generallycombine our products with other elements of an overall solution, such ascomputer hardware, application software and bundled communication services anddeliver a complete solution to the end-user customer. Resellers includecomputer resellers, wide-area network resellers, application developers andsystem integrators.

 

***Original Equipment Manufacturers***

 

Original equipmentmanufacturers are companies that integrate our embedded modules into devicesthey manufacture and sell to end-user customers through their own direct salesforce and indirect distribution channels. Our embedded modules have been integrated into a range of devices, suchas laptops, industrial handheld computers, wireless routers, PDAs andSmartphones.

 

### **Marketing**

###  

Our marketing team isresponsible for providing product management, strategic marketing and marketingcommunications for our products on a global basis.  Members of the product management team playan active role in our core team approach to developing and managing individualproducts through their entire product life cycle.  Emphasis is placed on understanding customerneeds, developing the business case, determining competitive positioning andpricing, and ensuring product completeness, which includes documentation,packaging, collateral, promotional material and marketing programs.

 

***Marketing Communications***

 

We communicate ourcorporate and product positioning to channels and customers in our globalmarkets in several ways, including:

 

·                  Supporting products with artwork,collateral and packaging;

 

·                  Managing the web site content;

 

·                  Supporting the retail activities of ourcustomers and our sales team;

 

·                  Actively seeking editorial coverage andplacing advertisements in industry, business and trade publications;

 

·                  Activelyparticipating in industry associations;

 

·                  Meetingwith opinion leaders and industry analysts; and

 

·                  Participating in targeted conferences andtrade shows.

 

We work with our channel partners to develop programs to encouragecustomer adoption and promotion of our brand. Through marketing strategies including market analysis, branding,design, packaging and promotions, we launch products into the marketplace thatcomplement customer launch timelines.

 

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### **Manufacturing**

###  

We outsource most ofour manufacturing services, including parts procurement, kitting, logistics,assembly and repair. We believe that outsourcing allows us to:

 

·                  Focus onour core competencies, including research and development, sales and marketing;

 

·                  Participatein contract manufacturer economies of scale;

 

·                  Accesshigh quality, lower cost manufacturing resources;

 

·                  Achieverapid production scalability; and

 

·                  Reduce equipment capital costs andequipment obsolescence risk.

 

In addition, weperform certain manufacturing related functions in-house, including keycomponent sourcing, manufacturing engineering, and development of manufacturingtest procedures and fixtures.

 

We use Flextronics, alarge global electronics manufacturing services (“EMS”) provider, as ourprimary contract manufacturer and logistics partner to provide an end-to-endsupply chain solution.  This includesdesign support, procurement, low cost manufacturing and repair in China andfulfillment services from Zalaegerszeg, Hungary.  By using its fully integrated supply chainservices, we expect to optimize product costs, improve alignment with ourincreasingly international customer base and achieve increased operatingefficiencies and scalability.  Our morecomplex, lower volume products are manufactured by other EMS partners.

 

### **Employees**

###  

As of December 31,2008 we had a total of 542 full time employees, 274 of whom are at our headoffice in Richmond, B.C., with the balance being located across the UnitedStates, Canada, Europe and Asia. Of the 542 employees, 276 are involved inproduct development, 102 are involved in manufacturing, 57 are sales andsupport personnel, 46 are marketing personnel and 61 are in finance andadministration. Employees have access to corporate-funded ongoing training andprofessional development opportunities, both on-the-job and through outsideeducational programs. Cash compensation, our employee stock option plan, ouremployee restricted share unit plan and our retirement plan contributionprogram are complemented by internal recognition programs and careeradvancement opportunities. We believe our relationships with our employees arepositive.

 

We have entered intonon-disclosure agreements and confidentiality agreements with key managementpersonnel and with substantially all of our employees.

 

See “GeneralDevelopment of the Business - General” discussion for information on changes toour workforce subsequent to December 31, 2008.

 

### **Competition**

###  

Mobilebroadband technology is penetrating the mainstream population.  Mobile broadband advertisements are appearingon television, in magazines, newspapers, train stations and airports around theworld.  Adoption is reaching a level suchthat more competitors are entering the market and some of these competitors arelarge corporations with strong manufacturing scale and financial resources attheir disposal.  The technology is stillevolving with faster and more efficient airlink technologies being released bychipset and infrastructure manufacturers. This evolution creates an opportunity for us to differentiate ourselvesby being early to market with quality implementations of these new airlinks.

 

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*PC Cards and USB Devices*:  We have established a technology leadershipposition by being early to market with our HSPA PC cards and USB devices inNorth America, Europe and Asia.  In NorthAmerica, we sell both EV-DO and HSPA PC cards and USB modems.  Our competitors include Kyocera Wireless Corp.,Novatel Wireless, Inc., Option N.V., Pantech and Sony Ericsson.  In Europe, we sell HSPA PC cards and USBmodems and our main competitors include Huawei, Novatel Wireless, Inc.,Option N.V. and Sony Ericsson.  In Asia,we sell EV-DO and HSPA PC cards and USB modems and our main competitors includeHuawei, Option N.V. and ZTE.

 

*Embedded Modules:*  We expect that competition in the PC OEMmarket will continue to intensify in 2009 with continued competition withEricsson and Qualcomm’s Gobi solution for the tier 1 PC OEMs.  We expectto work with the Gobi solution from Qualcomm in our tier 2 PC OEM customerbase.  Our ability to secure new designwins will depend on being successful in developing products and offeringservices that meet our customers’ design, schedule and price requirements. Wecontinue to have a solid position with our vertical OEM customers and expect tosee growth in this segment in 2009.

 

*Mobile and M2M:*  We have bolstered our presence in this spacewith the acquisition of AirLink in May 2007.  Ourinstalled base includes all primary M2M vertical market segments, but we have astronger presence within energy, public safety and transportation.  We are focusing ourefforts on expanding our presence in North America and entering Europe.  Ourcompetitors include Digi International Inc., BlueTree Wireless Data Inc., Enfora,Multi-Tech Systems, Inc., Sarian Systems, Top Global USA, Inc. andvarious embedded applications.  Wecontinue to differentiate ourselves through superior design, embeddedintelligence, elegant management tools and customer support.

 

### **Intellectual Property**

###  

We protect our intellectual propertythrough a combination of patent protection, copyright, trademarks, tradesecrets, licenses, non-disclosure agreements and contractual provisions. Weenter into a non-disclosure and confidentiality agreement with each of ouremployees, consultants and third parties that have access to our proprietarytechnology.  Pursuant to assignment ofinventions agreements, all of our employees and consultants assign allintellectual property rights in the inventions created during such person’semployment or contract with Sierra Wireless to Sierra Wireless.

 

We currently hold 65 United States patents and 137international patents. Additional patent applications are pending. Whenwe consider it to be advantageous, we utilize our intellectual propertyportfolio and access the intellectual property of third parties by enteringinto commercial licenses and cross-licenses.

 

### **Governmental Regulation**

###  

Our products are subject to certainmandatory regulatory approvals in the United States, Canada, the European Union(“EU”) and other regions in which we operate. In the United States, the FederalCommunications Commission regulates many aspects of communications devices,including radiation of electromagnetic energy, biological safety and rules fordevices to be connected to the telephone network. In Canada, similarregulations are administered by the Ministry of Industry, through IndustryCanada. EU directives provide the comparable regulatory guidance in Europe.

 

Wireless modems must be approved underthese regulations by the relevant government authority prior to these productsbeing offered for sale. We have obtained all necessary Federal CommunicationsCommission, Industry Canada, EU and other required regulatory approvals for theproducts we currently sell.

 

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**Additional InformationConcerning Our Business**

 

Our operationsdo not have a significant impact on the environment.  We have not made, and are not required to make,any significant capital expenditures to comply with environmentalregulations.  Working with the contractmanufacturers who build our products and relevant component suppliers, weintend to ensure that our products that are sold in the EU comply with the EUdirectives that restrict the use of certain hazardous substances in electronicequipment sold in the EU after July 1, 2006.

 

***RISKFACTORS***

 

Our businessis subject to significant risks and uncertainties and past performance is noguarantee of future performance. These risks and uncertainties are described inour Management Discussion and Analysis for the year ended December 31,2008, which can be found on our website at www.sierrawireless.com or atwww.sedar.com and are incorporated herein by reference.

 

***DIVIDENDS***

 

Sinceincorporation, we have not paid any dividends on our common shares.  Our current intention is to reinvest earningsto finance the growth of our business. We do not anticipate that we will pay any dividends on our common sharesin the immediate or foreseeable future.

 

***DESCRIPTIONOF CAPITAL STRUCTURE***

 

Our authorizedcapital consists of an unlimited number of common shares, of which, atMarch 25, 2009, 31,031,954 are issued and outstanding, including 695,538treasury shares, and an unlimited number of preference shares, issuable inseries, of which none are issued and outstanding.  Our board of directors is authorized todetermine the designation, rights and restrictions to be attached to thepreference shares upon issuance.

 

Holders of common shares are entitled toreceive notice of any meeting of shareholders and to attend and vote at thosemeetings, except those meetings at which only the holders of shares of anotherclass or of a particular series are entitled to vote.  Each common share entitles its holder to onevote.  Subject to the rights of theholders of preference shares, the holders of common shares are entitled toreceive on a proportionate basis such dividends as our board of directors maydeclare out of funds legally available there for.  In the event of the dissolution, liquidation,winding up or other distribution of our assets, the holders of the commonshares are entitled to receive on a proportionate basis all of our assetsremaining after payment of all of our liabilities, subject to the rights ofholders of preference shares.

 

The commonshares carry no pre-emptive or conversion rights other than rights granted toholders of common shares under the Shareholders Rights Plan implemented andratified by our shareholders on April 27, 2000 and re-adopted by ourshareholders on April 28, 2003 and April 25, 2006.  The Shareholder Rights Plan is designed toencourage the fair treatment of our shareholders in connection with anytake-over offer for our outstanding common shares.  The Shareholder Rights Plan provides ourboard of directors and shareholders with 60 days, which is longer than providedby applicable laws, to fully consider any unsolicited take-over bid withoutundue pressure, to allow our board of directors, if appropriate, to considerother alternatives to maximize shareholder value and to allow additional timefor competing bids to emerge.  If a bidis made to all shareholders, is held open for at least 60 days and is acceptedby shareholders holding more than 50% of the outstanding common shares, or isotherwise approved by our board of directors, then the Shareholder Rights Planwill not affect the rights of shareholders. Otherwise, all shareholders, except the parties making a take-over bid,will be able to acquire a number of additional common shares equal to 100% oftheir existing outstanding holdings at half the market price.  Thus, any party making a take-over bid notpermitted by the Shareholder Rights 

 

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Plan could suffer significant dilution.  The Shareholder Rights Plan will expire inaccordance with its terms upon the termination of our 2009 annual meeting ofshareholders.  The directors haveresolved to continue the Shareholder Rights Plan with certain minor amendments,by approving an amended and restated shareholder rights plan proposed to bedated May 5, 2009, subject to regulatory approval and approval of the shareholders.

 

**Normal Course Issuer Bid**

 

On May 21, 2008, we receivedregulatory approval to purchase up to 1,567,378 of our common shares by way ofa normal course issuer bid (the “Bid”) on the TSX and the Nasdaq, representingapproximately 5% of the common shares outstanding as of May 21, 2008.  The Bid commenced on May 26, 2008 andwill terminate no later than May 25, 2009.

 

Purchases of our common shares, if any, areat our discretion, will be made at open market prices and will be subject todaily restrictions in compliance with the rules of the respectivesecurities exchanges and applicable securities laws.  As of December 31, 2008, 407,700 commonshares have been purchased, for an aggregate purchase price of $5.0 million,and subsequently cancelled.  The amountpaid to acquire the shares in excess of the average carrying value has beencharged to retained earnings.

 

**Credit Facilities**

 

During 2007, we obtained letters of credit to ensurethe performance of a third party in accordance with specified terms andconditions.  Our obligations under thesefinancial instruments expired in February 2008 and were replaced by astandby irrevocable letter of credit, which was terminated duringDecember 2008.

 

Until December 2008, we had an unsecuredrevolving demand facility with a Canadian chartered bank for $10.0 million thatbore interest at prime per annum.  Thefacility was terminated on December 1, 2008.

 

In connection with our tender offer to acquireWavecom, we signed a credit agreement on December 1, 2008, thatincorporates a one-year revolving term credit facility (“Revolving Facility’)and a one-year non-revolving term credit facility (“Term Facility”) with twoCanadian chartered banks.

 

The Revolving Facility, not to exceed $55 million, isto be used for working capital requirements. The Term Facility, not to exceed €218 million, is to be used to completethe acquisition of Wavecom ordinary shares and OCEANEs.  The Term Facility is secured by cash of€136.8 million, which is disclosed in our consolidated financial statements asrestricted cash, and both facilities are secured by a pledge against all of ourassets.  On December 1, 2008, weissued a letter of credit in the amount of €218 million under the secured TermFacility.  At December 31, 2008, wehave no borrowings under the Revolving Facility and were in compliance with thecovenants associated with the credit facilities.  On February 26, 2009, we borrowed€80.473 million under the Term Facility to facilitate the purchase of 99.97% ofthe outstanding OCEANEs, which completed on February 27, 2009.  On February 27, 2009, we also completedthe purchase of 84.32% of the outstanding Wavecom shares with €115.3 million ofthe cash that secured the term facility.  As of February 27, 2009, the letter of credit was reduced from €218million to €22.2 million. On March 13, 2009 the term loan of €80.473million was repaid with proceeds from the redemption of the OCEANEs.

 

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***MARKETFOR SECURITIES***

 

Our common shares have been listed on theTSX since May 17, 1999, and currently trade under the symbol “SW”.  Our common shares are also listed on Nasdaqunder the symbol “SWIR”.

 

Set out below are the price ranges andvolume of common shares of Sierra Wireless, Inc. that traded on the TSXfor the year ended December 31, 2008.

 
| **2008**  | ** ** | **Low  Cdn $** | ** ** | **High  Cdn $** | ** ** | **Total Monthly  Volume** | ** ** |
|-----------|------------|---------------------|------------|----------------------|------------|--------------------------------|------------|
|      |       |                |       |                 |       |                           |       |
| January   |       | 12.40               |       | 15.25                |       | 7,327,200                      |       |
| February  |       | 14.10               |       | 17.35                |       | 8,649,800                      |       |
| March     |       | 12.73               |       | 16.76                |       | 5,568,600                      |       |
| April     |       | 16.45               |       | 21.25                |       | 10,045,000                     |       |
| May       |       | 16.20               |       | 19.68                |       | 5,365,100                      |       |
| June      |       | 14.87               |       | 17.38                |       | 4,195,000                      |       |
| July      |       | 12.29               |       | 16.35                |       | 6,394,900                      |       |
| August    |       | 12.21               |       | 13.58                |       | 3,200,200                      |       |
| September |       | 9.75                |       | 14.22                |       | 3,537,000                      |       |
| October   |       | 8.22                |       | 10.75                |       | 4,133,200                      |       |
| November  |       | 9.06                |       | 10.60                |       | 2,530,700                      |       |
| December  |       | 6.02                |       | 10.30                |       | 3,072,000                      |       |

 

Set out below are the price ranges andvolume of common shares of Sierra Wireless, Inc. that traded on Nasdaq forthe year ended December 31, 2008.

 
| **2008**  | ** ** | **Low  US $** | ** ** | **High  US $** | ** ** | **Total Monthly  Volume** | ** ** |
|-----------|------------|--------------------|------------|---------------------|------------|--------------------------------|------------|
|      |       |               |       |                |       |                           |       |
| January   |       | 11.98              |       | 15.25               |       | 19,842,500                     |       |
| February  |       | 14.32              |       | 17.33               |       | 22,403,900                     |       |
| March     |       | 12.80              |       | 16.47               |       | 13,326,100                     |       |
| April     |       | 15.99              |       | 21.18               |       | 22,796,100                     |       |
| May       |       | 16.38              |       | 19.31               |       | 12,954,600                     |       |
| June      |       | 14.60              |       | 17.39               |       | 9,454,100                      |       |
| July      |       | 12.00              |       | 16.24               |       | 23,269,300                     |       |
| August    |       | 11.76              |       | 12.75               |       | 7,646,200                      |       |
| September |       | 9.42               |       | 13.30               |       | 8,394,200                      |       |
| October   |       | 7.00               |       | 10.03               |       | 8,571,700                      |       |
| November  |       | 7.09               |       | 9.05                |       | 5,734,100                      |       |
| December  |       | 4.97               |       | 8.28                |       | 9,575,800                      |       |

 

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***DIRECTORSAND EXECUTIVE OFFICERS***

 

The tables set forth below list thedirectors and executive officers of the Company as at March 25, 2009,indicating their name, municipalities of residence, their respective positionsand offices held with the Company, the length of service and their principaloccupations within the five preceding years.

 

Each director is elected at our annualmeeting of shareholders to serve until the next annual meeting or until asuccessor is elected or appointed, unless such director resigns or is removedearlier.  To the knowledge of SierraWireless, the directors and executive officers as a group, beneficially own,directly or indirectly, or exercise control or discretion over, 339,172 commonshares (not including common shares issuable upon the exercise of stock optionsor unvested restricted stock units), representing as of March 25, 2009approximately 1.09% of the issued and outstanding common shares.

 

**Directors**

 
| **Name, Position and  Residence**                                            | ** ** | **Principal Occupation or Employment in the  Preceding Five Years (1)**                                                                                                                                                                                                                                                                                                                           | ** ** | **Director  Since** |
|----------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|
|                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |                |
| **Jason W. Cohenour**  President, CEO and Director  Washington, U.S.A.                 |       | President and Chief Executive Officer of the Company  from October 2005 to present; Chief Operating Officer of the Company from  August 2004 to October 2005; Senior Vice President, Worldwide Sales  of the Company from 2000 to August 2004                                                                                                                                                                              |       | October 2005   |
|                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |                |
| **Gregory D. Aasen (3)**  Director  British Columbia, Canada                           |       | Independent Outside Director; Chief Strategy Officer  of PMC-Sierra, Inc. (a broadband communications company) from  September 2005 to June 2007; Vice-President and General Manager,  Communication Products Division of PMC-Sierra, Inc. from 2004 to  September 2005; Chief Operating Officer of PMC-Sierra, Inc. from  1997 to 2004 and Chief Technology Officer of PMC-Sierra, Inc. from 2003  to 2004 |       | December 1997  |
|                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |                |
| **Paul G. Cataford (2) (4)**  Director  Alberta, Canada                           |       | Independent Outside Director; President and Chief  Executive Officer of University Technologies International Inc. (a technology  transfer and commercialization company) from 2004 to March 2009;  Managing Partner of HorizonOne Asset Management from December 2002 to  2004                                                                                                                                                 |       | July 1998      |
|                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |                |
| **Peter Ciceri (2) (3) (5)**  Director  British Columbia, Canada             |       | President of Custom House Global Foreign Exchange  from January 2007 to present; Corporate Director and principal of Peter Ciceri &  Associates Executive Coaching and Business Counselling Services from 2001 to  present                                                                                                                                                                                                       |       | February 2000  |
|                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |                |
| **Charles E. Levine (2) (3) (4)**  Chairman and Director  California, U.S.A. |       | Independent Outside Director                                                                                                                                                                                                                                                                                                                                                                                                              |       | May 2003       |

 

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| **Name, Position and  Residence**                    | ** ** | **Principal Occupation or Employment in the  Preceding Five Years (1)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** ** | **Director  Since** |
|----------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|
|                                                           |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |                |
| **S. Jane Rowe (2)**  Director  Ontario, Canada                |       | Executive Vice-President, Executive Offices,  Scotiabank from August 2008 to present; Executive Vice-President, Domestic  Personal Lending and Insurance and President and CEO of Scotia Mortgage  Corporation from May 2006 to July 2007, Vice Chairman of Maple  Trust Company from May 2006 to July 2007; Vice Chairman of  Travelers Leasing Corporation from February 2007 to July 2007;  President and Chief Executive Officer of Roynat Capital from August 2004  to May 2006; Senior Vice President, Corporate Credit, Global Risk  Management Division of Scotiabank from 2002 to August 2004 |       | March 1998     |
|                                                           |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |                |
| **David B. Sutcliffe (4)**  Director  British Columbia, Canada |       | Corporate Director from October 2005 to  present; Chief Executive Officer of the Company from May 1995 through  October 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | June 1995      |
|                                                           |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |                |
| **Kent Thexton (3)**  Director  British Columbia, Canada       |       | Managing Partner, i-wireless LLC (US based MVNO)  from November 2006 to present; Chairman of Redknee (a billing software  company) from 2004 to present; Chairman of SEVEN Networks, Inc. (an  application software company) from November 2006 to present; President  and Chief Executive Officer of SEVEN Networks, Inc. from April 2004  to October 2006; Chief Data and Marketing Officer of O2 PLC and  President of O2 Online from 2001 to 2004                                                                                                                                                                           |       | March 2005     |

 

----

Notes:
| (1) |   | The information as to “principal occupation” has  been furnished by the respective directors                                                     |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Member of the Audit Committee                                                                                                                              |
| (3) |   | Member of the Human Resources Committee                                                                                                                    |
| (4) |   | Member of the Governance and Nominating Committee                                                                                                          |
| (5) |   | Mr. Ciceri does not intend to stand for  re-election at the Company’s annual and special meeting of shareholders to be  held on May 5, 2009 |

 

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**Executive Officers**

 
| **Name, Position and  Province or State and  Country of Residence (1)** | ** ** | **Principal Occupation in the Preceding  Five Years**                                                                                                                                                                     | ** ** | **Length of Service** |
|-----------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|
|                                                                                                            |       |                                                                                                                                                                                                                                               |       |                            |
| **Jason W. Cohenou**r  President and Chief Executive Officer  Washington, U.S.A.                                |       | President and Chief Executive Officer of the Company  since October 2005; Chief Operating Officer of the Company from  August 2004 to October 2005; Senior Vice President, Worldwide Sales  of the Company from 2000 to August 2004 |       | 13 years                        |
|                                                                                                            |       |                                                                                                                                                                                                                                               |       |                            |
| **David G. McLennan**  Chief Financial Officer and Secretary  British Columbia, Canada                          |       | Chief Financial Officer of the Company from  March 2004 to present                                                                                                                                                                            |       | 5 years                         |
|                                                                                                            |       |                                                                                                                                                                                                                                               |       |                            |
| **James B. Kirkpatrick**  Chief Technical Officer  California, U.S.A.                                           |       | Chief Technical Officer of the Company from  September 2004 to present; Senior Vice-President, Engineering of the Company  from August 2003 to August 2004                                                                                    |       | 6 years                         |

 

----

Note:
| (1) |   | Trent Punnett, Senior Vice President, Marketing and  Corporate Development was an executive officer of the Company in 2008. On  January 29, 2009, Mr. Punnett resigned from the Company. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

***CODEOF BUSINESS CONDUCT AND ETHICS***

 

In 2003, the Board of Directors adopted aCode of Business Conduct and Ethics applying to all directors, officers andemployees of the Company to ensure that the Company conducts its business inaccordance with the highest standards of business conduct and ethics.  The Board of Directors approved an updatedversion of the Code of Business Conduct and Ethics in December 2005 andOctober 2008.  There have been nowaivers granted from the Code of Business Conduct and Ethics since itsadoption.  The Code of Business Conductand Ethics is available on the Company’s website at www.sierrawireless.com oron SEDAR at www.sedar.com.

 

***AUDITCOMMITTEE***

 

**Mandate of the AuditCommittee**

 

The full text of the Mandate of the AuditCommittee is set out below.

 

**“1.****       Purposeand Scope**

 

The audit committee (**the “AC”**)was established by the Board of Directors (**“Board”**) ofSierra Wireless Inc. (**“Company”**) toassist the Board in all issues relating to the oversight of the following:

 
| · |   | the Company’s systems of internal and disclosure  controls regarding finance, accounting and legal compliance;                              |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                             |
| · |   | the Company’s auditing, accounting and financial  reporting processes, including adherence to US generally accepted accounting  principles; |

 

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| · |   | the Company’s financial statements and other  financial information provided by the Company to its shareholders, the public  and others;                                            |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                     |
| · |   | the Company’s compliance with legal and regulatory  requirements;                                                                                                                   |
|   |   |                                                                                                                                                                                     |
| · |   | the appointment, compensation, independence,  oversight, communication with, performance and change of the Company’s  external and independent auditors (the “Auditors”); |
|   |   |                                                                                                                                                                                     |
| · |   | the Company’s whistleblower process; and                                                                                                                                            |
|   |   |                                                                                                                                                                                     |
| · |   | the fulfillment of the other responsibilities set  forth in this Mandate.                                                                                                                |

 

**2.****              Organization,Membership and Meetings**

 
| · |   | Committee members shall meet the requirements of the  Toronto Stock Exchange, the NASDAQ Exchange, the Securities and Exchange  Commission, the securities commissions of each of the Provinces of Canada in  which the Company is a reporting issuer and any other regulatory agency that  may have jurisdiction over the operations of the Company from time to time. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | The Committee shall consist of three or more  directors who are “independent” as defined by applicable law, regulations,  guidelines and policies, and as determined by the Governance and Nominating  Committee (“GNC”) of the Board.                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | All members of the Committee shall be “financially  literate”, and at least one member of the Committee shall be a “financial  expert”. “Financially literate” and “financial expert” will have the  respective meanings set out in applicable law, regulations, guidelines and policies.                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | Members of the Committee shall be appointed annually  by the Board on the recommendation of the GNC. Members may be replaced by the  Board at any time, but shall otherwise serve until a successor has been  named.                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | No director shall serve on the compensation  committee of another company that employs such directors.                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | No member shall be affiliated with the Company or  any subsidiary.                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | The Committee shall meet from time to time, as it  deems necessary, but at least four times per year.                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | The Committee may include management at its  meetings, but shall also hold an executive session at each meeting at which  only independent directors are present.                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                    |
| · |   | The Committee shall maintain written minutes of its  meetings, which minutes will be filed in the corporate minute book.                                                                                                                                                                                                                                                |

 

**3.****              Authorityand Responsibilities**

 
| **3.1.  With  respect to the Auditors:** |
|-----------------------------------------------|
|                                          |   |   |
| ·                                        |   | Be directly responsible for recommending to the  Board the appointment and compensation of the Auditor. Oversee the work of  the Auditors (including resolution of disagreements between Management and  the Auditors regarding financial reporting) for the purpose of preparing or  issuing an audit report or performing other audit, review or attest services  for the Company. |
|                                          |   |   |
| ·                                        |   | Have the sole authority to review in advance and  pre-approve all non-audit services to be provided to the Company or its  subsidiaries by the Auditors, as permitted by applicable |

 

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|                                                  |   | governance rules and in particular  Section 10A of the Securities Exchange Act of 1934 and, in connection  therewith, to approve all fees and other terms of engagement. The Committee  shall also review and pre-approve all disclosures required to be included in  any public filings with respect to non-audit services.  The Committee may delegate to one or more  members the authority to pre-approve non-audit services, provided a report is  made to the Committee at its next scheduled meeting.  The Committee may consult with Management  but shall not delegate these responsibilities to Management.              |
|-------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Have the authority to communicate directly with the  Auditors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Review the performance of the Auditors on at least  an annual basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | On an annual basis, review and discuss with the  Auditors all relationships the Auditors have with the Company in order to  evaluate the Auditors’ continued independence. The Committee: (i) shall  ensure that the Auditors submit to the Committee on an annual basis a written  statement delineating all relationships and services that may impact the  objectivity and independence of the Auditors; (ii) shall discuss with  the Auditors any disclosed relationship or services that may impact the  objectivity and independence of the Auditors; and (iii) shall satisfy  itself as to the Auditors’ independence. |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | At least annually, obtain and review an annual  report from the Auditors describing (i) the Auditors’ internal quality  control procedures and (ii) any material issues raised by the most  recent internal quality control review, or peer review, of the Auditors, or  by any inquiry or investigation by governmental or professional authorities,  within the preceding five years, respecting one or more independent audits  carried out by the Auditors, and any steps taken to deal with any such  issues.                                                                                                                      |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Confirm that the rotation of the lead audit partner,  or the lead audit partner responsible for reviewing the audit, for the  Company’s Auditors complies with the requirements of the Canadian and US  regulatory authorities.                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Review all reports required to be submitted by the  Auditors to the Committee particularly including those required by  Section 10A of the Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Review, based upon the recommendation of the  Auditors and Management, the scope and plan of the work to be done by the  Auditors for each fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **3.2.   With respect to financial statements:** |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Review and discuss with Management and the Auditors  the Company’s quarterly financial statements (including disclosures made in  Management’s Discussion and Analysis, as defined in Multilateral Instrument  51-102, and interim earnings press releases) prior to submission to  shareholders, any governmental body, any stock exchange or disclosure to the  public. Subject to delegation from the Board, approve the interim financial  statements and footnotes, MD&A and interim earnings press release.                                                                                                                        |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Review and discuss with Management and the Auditors  the Company’s annual audited financial statements (including disclosures made  in Management’s Discussion and Analysis and annual earnings press releases)  prior to submission to shareholders, any governmental body, any stock  exchange or disclosure to the public. Recommend to the Board approval of the  annual audited financial statements and footnotes, MD&A and annual  earnings press release.                                                                                                                                                                        |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ·                                                |   | Recommend to the Board, if appropriate, that the  Company’s annual audited financial statements be included in the Company’s  annual report for filing with appropriate securities regulatory agencies.                                                                                                                                                                                                                                                                                                                                                                                                                                      |

 

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| ·                                                       |   | Prepare any reports required to be included in the  Company’s annual meeting materials and any other Committee reports required  by applicable securities laws or stock exchange listing requirements or  rules.                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **3.3.   With respect to periodic and annual reviews:** |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Periodically review separately with each of  Management and the Auditors (i) any significant disagreement between  Management and the Auditors in connection with the preparation of the  financial statements, (ii) any difficulties encountered during the  course of the audit or review (including any restrictions on the scope of  work or access to required information), and (iii) Management’s response  to each.                                           |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Periodically discuss with the Auditors, without  Management being present (i) their judgments about the quality,  appropriateness, and acceptability of the Company’s accounting principles and  financial disclosure practices, as applied in its financial reporting, and  (ii) the completeness and accuracy of the Company’s financial statements.                                                                                                                |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Consider and approve, if appropriate, significant  changes to the Company’s accounting principles and financial disclosure  practices as suggested by the Auditors or Management. Review with the  Auditors and Management, at appropriate intervals, the extent to which any  changes or improvements in accounting or financial practices, as approved by  the Committee, have been implemented.                                                                                   |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Review with Management, the Auditors and the  Company’s counsel, as appropriate, any legal, regulatory or compliance matters  that could have a significant impact on the Company’s financial statements,  including significant changes in accounting standards or rules as  promulgated by the Canadian Institute of Chartered Accountants, the  securities regulators having jurisdiction over the Company or other  regulatory authorities with relevant jurisdiction. |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Obtain and review an annual report from Management  relating to the accounting principles used in preparation of the Company’s  financial statements (including those policies for which Management is  required to exercise discretion or judgments regarding the implementation  thereof).                                                                                                                                                                                         |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **3.4.   Discussions with Management:**                 |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Review and discuss with Management the Company’s  annual and interim earnings press releases (including the use of “pro forma”  or “adjusted” non-GAAP information), financial information and earnings  guidance provided to analysts and rating agencies as well as all other  material public disclosure documents such as the Company’s AIF, management  information circular and any prospectuses.                                                     |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Review and discuss with Management all material  off-balance sheet transactions, arrangements, obligations (including  contingent obligations) and other relationships of the Company with  unconsolidated entities or other persons, that may have a material current or  future effect on financial condition, changes in financial condition, results  of operations, liquidity, capital resources, capital reserves or significant  components of revenues or expenses.               |
|                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ·                                                       |   | Inquire about the application of the Company’s  accounting policies and its consistency from period to period, and the  compatibility of these accounting policies with generally accepted accounting  principles, and (where appropriate) the Company’s provisions for future  occurrences that may have a material impact on the financial statements of  the Company.                                                                                                        |

 

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| ·                                                            |   | Review and discuss with Management the Company’s  major financial risk exposures and the steps Management has taken to monitor  and control such exposures (including Management’s risk assessment and risk  management policies).                                                                                                                                                                                                                                                                                          |
|-------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Review and discuss with Management all disclosures  made by the Company concerning any material changes in the financial  condition or operations of the Company.                                                                                                                                                                                                                                                                                                                                                                     |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | The Committee will meet periodically and separately  with the Company’s counsel to review material legal affairs of the Company  and the Company’s compliance with applicable law and listing standards.                                                                                                                                                                                                                                                                                                                    |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Obtain explanations from Management for unusual  variances in the Company’s annual financial statements from year to year, and  review annually the Auditors’ letter of the recommendations to Management and  Management’s response.                                                                                                                                                                                                                                                                                  |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **3.5.   With respect to internal controls and disclosure:** |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | In consultation with the Auditors and Management:  (a) review the adequacy of the Company’s internal control structure and  system, and the procedures designed to ensure compliance with laws and  regulations, (b) discuss the responsibilities, budget and staffing needs  of the Company’s internal accounting department, and (c) review and  consider whether there is any need for the Company to establish an internal  audit department.                                                            |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Establish whistleblowing procedures for (i) the  receipt, retention and treatment of complaints received by the Company  regarding accounting, internal accounting controls or auditing matters,  (ii) the confidential, anonymous submission by employees of the Company  of concerns regarding questionable accounting or auditing matters, and  (iii) referring any whistleblower matters that fall outside of the scope  of the Committee to the Chair of the appropriate Committee or to the Chair of  the Board. |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Be satisfied that adequate procedures are in place  for the review of the Company’s public disclosure of financial information  extracted or derived from the Company’s financial statements and periodically  assess the adequacy of those procedures.                                                                                                                                                                                                                                                                     |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **3.6.   With respect to reporting obligations:**            |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Ensure that all reporting obligations related to the  AIF (Form 40-F for US purposes) and management information circular  under Part 5 of Multilateral Instrument 52-110 are fully complied  with.                                                                                                                                                                                                                                                                                                                    |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **3.7.   Other:**                                            |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Review and approve all related-party transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Review and approve the Company’s hiring policies  regarding partners, employees, and former partners and employees of the  present and former external auditor of the Company.                                                                                                                                                                                                                                                                                                                                                   |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Review any Management decision to seek a second opinion  from Auditors other than the Company’s regular Auditors with respect to any  significant accounting issue.                                                                                                                                                                                                                                                                                                                                                              |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                            |   | Review with Management and the Auditors the  sufficiency and quality of the financial and accounting personnel of the  Company.                                                                                                                                                                                                                                                                                                                                                                                                       |

 

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| · |   | Monitor and ensure compliance with legal and regulatory requirements  and corporate policy relating to audit, internal controls, financial matters  and any other matters within the scope of this mandate.                                                                                                                                              |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | Review and reassess the adequacy of this Mandate not less than  annually, and recommend any proposed changes to the Board for approval. The  Committee will also review its own performance, at least annually, for  purposes of self-evaluation and to encourage the continuing improvement of  the Committee in the execution of its responsibilities. |
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | The Committee may delegate its authority where permitted and  appropriate.                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | As necessary to carry out its duties, to retain and release  independent legal, accounting or other advisors to advise the Committee and  set and cause the Company to pay the compensation for any such advisors  employed by the Committee.                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | Perform any other activities consistent with this Mandate, the  Company’s By-laws and governing law as the Committee or the Board deems  necessary or appropriate.                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | The Committee will have full access to all books, records, facilities  and personnel of the Company.                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                     |
| · |   | To honour the spirit and intent of applicable law as it evolves,  authority to make minor technical amendments to this Mandate, on request of  the Chair of the Committee , is delegated to the Chair of the Governance and  Nominating Committee, who will report any amendments to the Board at its next  meeting.                                     |

 

**4.****              Externaland Internal Linkages**

 
| · |   | The Board                                               |
|--------|--------|---------------------------------------------------------|
|   |   |                                                    |
| · |   | The CEO and Senior Management                           |
|   |   |                                                    |
| · |   | Outside Consultants and Advisors                        |
|   |   |                                                    |
| · |   | The Corporate Governance and Nominating Committee” |

 

### **Composition of the Audit Committee**

###  

S. Jane Rowe (Chair), Paul G. Cataford, Peter Ciceri and Charles E.Levine are the current members of the Audit Committee.  Each of them is an independent director andis financially literate. The Board of Directors has determined that Ms. Roweis the Audit Committee’s financial expert within the meaning of General InstructionB(8)(a) of Form 40-F.

 

### **Relevant Education and Experience**

###  

S. Jane Rowe is an independent director.  Ms. Rowe is currently the ExecutiveVice-President, Executive Offices of Scotiabank.  Previously she was the ExecutiveVice-President, Domestic Personal Lending and Insurance and President and CEOof Scotia Mortgage Corporation, the mortgage subsidiary of Scotiabank from May 2006until July 2007.  Ms. Rowe wasalso Vice Chairman of Maple Trust Company and Travelers Leasing Corporation,both of which are wholly-owned subsidiaries of Scotiabank.  Prior to May 2006, Ms. Rowe was thePresident and Chief Executive Officer of Roynat Capital.  Ms. Rowe has an extensive background inthe financial services and banking industry with over 20 years of experience withthe Scotiabank Group.  Ms. Roweholds a Bachelor of Commerce degree with honours from Memorial University ofNewfoundland and an MBA from York University.

 

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Paul G. Cataford is an independent director.  Mr. Cataford was most recently thePresident and Chief Executive Officer of University Technologies Inc., awholly-owned subsidiary of the University of Calgary that is responsible forthe university’s technology commercialization, from 2004 until March 2009.  Mr. Cataford’s other experience includesconsulting, Managing Director of BMO Nesbitt Burns Equity Partners Inc. from2001 to 2002 and Managing Director and President of BCE Capital Inc. from 1997to 2001.  Mr. Cataford has extensiveknowledge of venture capital investing and technology.  Mr. Cataford completed a MechanicalEngineering Degree at Queen’s University and an MBA at York University.

 

Peter Ciceri is the President of Custom House Global Foreign Exchange,the largest non-bank foreign exchange company in North America.  He is also the principal of Peter Ciceri &Associates Executive Coaching and Business Counselling Service offeringmentoring and counselling services to senior executives.  Mr. Ciceri’s other experience includesCEO of Compaq Canada Inc., and he has held other senior positions with TandemAsia Pacific Ltd., Hewlett Packard Asia Pacific Ltd., and Japan Unisys.  Mr. Ciceri is an authority ininternational business (emphasis on Asia Pacific) and in 1999 he was named oneof Canada’s top 10 “IT Influencers” and one of the country’s top 100 businessexecutives.  Mr. Ciceri holds anEconomics Degree at University of Victoria, and a MA in counselling psychologyfrom the University of British Columbia. Mr. Ciceri does not intend tostand for re-election at the Company’s annual and special meeting ofshareholders to be held on May 5, 2009, and the Board of Directors doesnot consider it necessary to appoint another member of the Board to serve onthe Audit Committee at this time.

 

Charles E. Levine is an independent director of technology focusedcompanies, including Openwave Systems and RCN Corporation, and a managementconsultant.  He has a track record ofdeveloping brands into large businesses, most notably when he was President andChief Operating Officer of Sprint PCS (now Sprint Nextel) where he oversawrevenue growth to over $10 billion in four and a half years and at AT&T,where he turned around the Consumer Products and Small Business Markets,winning Popular Electronics Product of the Year for one video conferencingproduct.  He has held senior managementpositions at CAD Forms Technology and Octel Communications (now part ofLucent).  Mr. Levine was namedMarketer of the Year in 1999 by MC Magazine and CEO of the Year in 2001 byFrost & Sullivan for his notable achievements at Sprint PCS.  He holds an MBA (Marketing) from the J.L.Kellogg Graduate School of Management-Northwestern University, and a bachelor’sdegree in Economics from Trinity College.

 

### **Reliance on Certain Exemptions**

###  

At no time since the commencement of the Company’s most recentlycompleted financial year has the Company relied upon any exemption from NI52-110 provided therein.

 

### **Audit Committee Oversight**

###  

At no time since the commencement of the Company’s most recentlycompleted financial year was a recommendation of the Audit Committee tonominate or compensate an external auditor not adopted by the board ofdirectors of the Company.

 

### **Pre-approval Policies andProcedures**

###  

The Audit Committee has the sole authority to review in advance andpre-approve all non-audit services to be provided to the Company or itssubsidiaries by the Auditor, as well as all fees and other terms ofengagement.  The Audit Committee maydelegate to one or more members the authority to pre-approve non-auditservices, provided a report is made to the Audit Committee at its nextscheduled 

 

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meeting.  All of theaudit-related, tax and all other fees below were pre-approved by the AuditCommittee.

 

### **Auditor Independence**

###  

Sierra Wireless’s Audit Committee has concluded that the Auditors areindependent under applicable rules and guidelines and, in particular, thatthe Auditors are free from conflicts of interest that could impair theirobjectivity in conducting the audit of the Company’s financial statements.  The Audit Committee is required to approveall audit and non-audit related services performed by our Auditors, and ourAuditors are not permitted to perform services for us prohibited for anindependent auditor under applicable Canadian and United States regulations,including the Sarbanes-Oxley Act.

 

### **Auditors’ Fees**

 
| ** **              | ** ** | **2007** | ** ** | **2008** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|
| Audit  services         |       | $        | 792,000    |     | $          | 586,000 |   |
| Tax  services           |       | 226,000  |       | 207,000  |       |
| Audit-related  services |       | 41,000   |       | 39,000   |       |
| All  other fees         |       | nil      |       | nil      |       |
|                         |            |          |            |          |            |  |  |

 

***Audit Fees***

 

Audit fees for 2008 includefees related to the audit of our year-end financial statements, audit of ourinternal control over financial reporting and review of our interim financialstatements. Audit fees for 2007 include fees related to the audit of ouryear-end financial statements, audit of our internal controls over financialreporting, review of our interim financial statements, review of the AirLinkbusiness acquisition report and review of our short-form prospectus.

 

***Tax Fees***

 

Tax fees for 2008 and 2007are primarily for the preparation of our Canadian and U.S. tax returns,assistance with tax planning and completion of transfer pricing studies.

 

***Audit-Related Fees***

 

Audit-related fees for 2008include assistance in relation to the Corporation’s business combination with Wavecom.Audit-related fees for 2007 include fees related to due diligence servicesrelating to the Corporation’s acquisition of AirLink.

 

***EVALUATION OF DISCLOSURE CONTROLSAND PROCEDURES***

 

**Disclosure Controls**

###  

The Company’s management is responsible forestablishing and maintaining adequate disclosure controls and procedures forthe Company.  Our disclosure controls andprocedures are designed to ensure that information required to be disclosed inour reports filed with securities regulatory authorities is recorded,processed, summarized and reported within prescribed time periods and isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and our Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure.

 

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An evaluation was carried out under the supervision of, and with theparticipation of, our management, including our Chief Executive Officer and ourChief Financial Officer, of the effectiveness of our disclosure controls andprocedures as of December 31, 2008. Based on that evaluation, our Chief Executive Officer and our ChiefFinancial Officer have concluded that our disclosure controls and procedureswere effective to ensure that information required to be disclosed by theCompany in the reports it files or submits under applicable securities laws andregulations is recorded, processed, summarized, and reported within the timeperiods specified thereby.

 

The Company does not expect that its disclosure controls and procedureswill prevent all error and all fraud, if any. A control procedure, no matterhow well conceived and operated, can provide only reasonable, not absolute,assurance that the objectives of the control procedure are met. Because of theinherent limitations in all control procedures, no evaluation of controls canprovide absolute assurance that all control issues and instances of fraud, ifany, within the Company have been detected. These inherent limitations includethe realities that judgments in decision-making can be faulty, and thatbreakdowns can occur because of simple errors or mistakes. Additionally,controls can be circumvented by the individual acts of some persons, bycollusion of two or more people, or by management override of the control. TheCompany considered these limitations during the development of its disclosurecontrols and procedures and will continually re-evaluate them to ensure theyprovide reasonable assurance that such controls and procedures are effective.

 

### **Internal Control Over FinancialReporting**

###  

***Management’s Annual Report onInternal Control Over Financial Reporting***

 

Our management is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in Rules 13a-15(f) and15d-15(f) under the U.S.*SecuritiesExchange Act of 1934*.

 

Our internal control over financial reporting includes those policiesand procedures that: (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions anddispositions of our assets; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financialstatements in accordance with GAAP, and that our receipts and expenditures arebeing made only in accordance with authorizations of our management anddirectors; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of our assetsthat could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

 

Under the supervision and with the participation of our Chief ExecutiveOfficer and our Chief Financial Officer, management conducted an evaluation ofthe effectiveness of our internal control over financial reporting, as of December 31,2008, based on the framework set forth in *InternalControl-Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). Based on its evaluation underthis framework, management concluded that our internal control over financialreporting was effective as of that date.

 

KPMG LLP (“KPMG”), an independent registered public accounting firm,who audited and reported on our consolidated financial statements has issued anattestation report on the effectiveness of our internal control over financialreporting as of December 31, 2008. The attestation report is included in 

 

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our consolidated financial statements which can be found on our websiteat www.sierrawireless.com or at www.sedar.com and is incorporated herein byreference.

 

***Changes in Internal Controls OverFinancial Reporting***

 

There have been no changes in our internal controls over financialreporting during 2008 that have materially affected, or are reasonably likelyto materially affect, our internal controls over financial reporting.  The design of any system of controls andprocedures is based in part upon certain assumptions about the likelihood ofcertain events. There can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions, regardless ofhow remote.

 

***LEGAL PROCEEDINGS***

 

During the first quarter of 2009, the Company was advised that two ofits customers had been sued for alleged patent infringement by DNT, LLC andDataScape, Inc. in two separate complaints. The complaints allege that thepatent in the suit has been infringed by products that the Company sells tothose customers. The Company is assessing the complaints and its obligations tothose customers. Although there can be no assurance that an unfavorable outcomewould not have a material adverse effect on its operating results, liquidity orfinancial position, the Company believes the claims are without merit and willvigorously defend the lawsuits. The Company has determined that it is notpossible to establish a reasonable estimate of the possible loss, or range ofpossible loss, if any.

 

The Company is engaged in certain legal actions in the ordinary courseof business and believe that the ultimate outcome of these actions will nothave a material adverse effect on our operating results, liquidity or financialposition.

 

*** OFF-BALANCE SHEET ARRANGEMENTS***

 

During 2007, the Company obtained letters ofcredit to ensure the performance of a third party in accordance with specifiedterms and conditions. At December 31, 2008, the Company had no amountsoutstanding (2007 - $6,028,000) under the letters of credit.  The Company’s obligations under thesefinancial instruments expired in February 2008 and were replaced by astandby irrevocable letter of credit, which was terminated during December 2008.

 

On December 1, 2008, we issued a letterof credit in the amount of €218 million under the secured Term Facility of €218million.

 

As of December 31, 2008, the Company did not have any off-balancesheet finance or special purpose entities.

 

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***CONTRACTUALOBLIGATIONS***

** **

The following table specifies our known contractual obligations as of December 31,2008:

 
| ** **                                                                             | ** ** | **Payments due by period** | ** ** |
|----------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| **Contractual Obligations****(in thousands of U.S. dollars)** | ** ** | **Total**                                 | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **More  than  5 years** | ** ** |
| *** ***                                                                           |       |                                      |       |   |   |   |   |   |   |   |   |
| Operating  lease obligations                                                           |       | $                                         | 13,545     |   | 3,663 |   | 6,028 |   | 2,494 |   | 1,360 |   |
| Purchase  commitments (1)                                                              |       | 86,500                                    |       | 86,500 |   | — |   | — |   | — |   |
| Other  long-term liabilities                                                           |       | 5,906                                     |       | 193 |   | 3,607 |   | 2,106 |   | — |   |
| Total                                                                                  |       | $                                         | 100,554    |   | $ | 90,356 |   | $ | 12,372 |   | $ | 4,600 |   | $ | 1,360 |   |
|                                                                                        |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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Note
| (1) |   | Purchase commitments represent obligations with certain contract  manufacturers to buy a minimum amount of designated products between  January 2009 and March 2009. In certain of these arrangements, we  may be required to acquire and pay for such products up to the prescribed  minimum or forecasted purchases. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

***QUORUMEXEMPTION***

 

The rules and regulations of the Nasdaq Global Market applicableto the Company require each listed issuer to provide that a quorum for itsshareholders’ meetings be at least 33 1/3 percent of the issuer’s outstandingshares.  The Company has been granted anexemption from this requirement because it is contrary to generally acceptedbusiness practices in Canada, the Company’s country of domicile.  The Company has had the benefit of thisexemption in the current and prior year.

 

In determining whether a requirement is contrary to generally acceptedbusiness practices, the Nasdaq rules generally look to the requirements ofthe primary market in the issuer’s country of domicile.  The rules and policies of the TorontoStock Exchange, the primary market in Canada, do not contain quorumrequirements, and the *Canada BusinessCorporations Act*, the Corporation’s governing statute, defers to thequorum requirements contained in an issuer’s By-laws.  Under the Company’s By-laws, a quorum for ameeting of the Company’s shareholders is two persons present in person, eachbeing a shareholder entitled to vote thereat or a duly appointed proxyholder orrepresentative for a shareholder so entitled.

 

***REGISTRAR AND TRANSFER AGENT***

 

The Registrar and Transfer Agent for the common shares in Canada isComputershare Investor Services Inc., 510 Burrard Street, Vancouver, BritishColumbia, and in the United States is Computershare Trust Company, N.A., 350Indiana Street, Suite 800, Golden, Colorado.  These offices and the principal offices ofComputershare Investor Services Inc. in the City of Toronto maintain theregister of common shares and can effect transfers and make deliveries ofcertificates for common shares.

 

***MATERIALCONTRACTS***

 

On December 2, 2008, we announced an allcash offer to purchase the common shares and OCEANE convertible bonds (“OCEANEs”)of Wavecom S.A. (“Wavecom”), a global leader in wireless M2M solutions.  The total value of the transaction isapproximately €218 million.  We made acash offer of €8.50 per ordinary share of Wavecom, and €31.93 per OCEANE.  The transaction was implemented by way ofconcurrent but separate public tender offers in both France and the UnitedStates for all Wavecom shares, all American Depository Shares (“ADSs”)representing Wavecom’s ordinary shares and all OCEANEs issued by Wavecom.  On February 27, 2009, we completed ouracquisition of 84.32% of the 

 

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outstanding Wavecom shares and 99.97% of the OCEANEs, representing90.57% of the voting rights of Wavecom. On March 11, 2009, we announced the opening of a subsequentoffering period of the all cash tender offer for Wavecom securities in Franceand the United States.  The subsequentoffering period will close on March 31, 2009.  The offer price for the Wavecom ordinaryshares is €8.50 per share and the offer price for the OCEANEs is €31.93 plusunpaid accrued interest, per OCEANE. Shortly after closing of the subsequent offering period and providedapplicable legal requirements are satisfied, we intend to implement asqueeze-out of the Wavecom shares and OCEANEs that have not been tendered tothe offer and to request the delisting of Wavecom shares and OCEANEs fromEuronext and ADSs from Nasdaq.

 

We used cash available on our balance sheetto fund the purchase of the ordinary shares of Wavecom and utilized our creditfacilities to fund the purchase of the OCEANEs of Wavecom.  On December 1, 2008, we had drawn aletter of credit in the amount of €218 million issued under a €218 millionsecured term facility with The Toronto-Dominion Bank and Canadian Imperial Bankof Commerce as lenders.  The termfacility was secured by cash of €136.8 million and a pledge against all of ourassets.  On February 26, 2009, weborrowed €80.473 million under the term facility to facilitate the purchase of99.97% of the outstanding OCEANEs, which completed on February 27,2009.  On February 27, 2009, we alsocompleted the purchase of 84.32% of the outstanding Wavecom shares with €115.3million of the cash that secured the term facility.  As of February 27, 2009, the letter ofcredit was reduced from €218 million to €22.2 million. On March 13, 2009the term loan of €80.473 million was repaid with proceeds from the redemptionof the OCEANEs.

 

We expect the combination will create aglobal leader that will be uniquely positioned to benefit from the anticipatedgrowth in wireless for mobile computing and M2M markets.  We expect the acquisition to significantlyexpand our position in the global M2M market and increase our scale andcapabilities in Europe and Asia.  We havenot yet filed a business acquisition report for the acquisition of Wavecom.

 

***EXPERTS***

 

KPMG LLP, independent chartered accountants, have audited the Company’sconsolidated financial statements as at December 31, 2008 and 2007, andfor each of the years in the three year period ended December 31, 2008 asset forth in their reports.  KPMG LLP hasadvised the Company that they are independent with respect to the Companywithin the meaning of the Rules of Professional Conduct of the Instituteof Chartered Accountants of British Columbia and the U.S. Securities ExchangeAct of 1934, as amended.

 

***ADDITIONALINFORMATION***

 
| Additional information relating to the Company: |
|-------------------------------------------------|
|                                            |   |   |
| (a)                                             |   | may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov; |
|                                            |   |   |
| (b)                                             |   | including directors’ and officers’ remuneration and indebtedness,  principal holders of the Company’s securities and securities authorized for  issuance under equity compensation plans, is contained in the Company’s  Information Circular for its most recent annual meeting of shareholders; and |
|                                            |   |   |
| (c)                                             |   | is provided in the Company’s audited financial statements and  management discussion and analysis for the years ended December 31, 2008  and 2007. |

 

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