Glenayre Announces Third Quarter 2003 Results Progress continues
towards short-term goal of breakeven operating results ATLANTA,
Oct. 27 /PRNewswire-FirstCall/ -- Glenayre Technologies, Inc. ,
today reported revenue of $14.7 million for the third quarter of
2003 compared to $14.6 million for the second quarter of 2003 and
$14.5 million for the third quarter of 2002. Gross margins
(exclusive of depreciation) from continuing operations were 52
percent for the third quarter of 2003 compared to 43 percent for
the second quarter of 2003 and 51 percent for the third quarter of
2002. As of September 30, 2003, Glenayre reported a total cash and
short-term investments balance of $94.4 million, compared to $97.7
million at June 30, 2003. The Company expects to use these funds
for capital and operating expenses related to continuing
operations, liabilities related to discontinued operations as
described below, research and development of new products,
development of new markets and potential complementary
acquisitions. The Company reported a loss from continuing
operations of ($1.7) million for the third quarter of 2003, or
($0.03) per share, which compares to a loss of ($5.4) million, or
($0.08) per share, for the second quarter of 2003 and a loss of
($4.2) million, or ($0.06) per share, for the third quarter of
2002. Including discontinued operations, the Company reported net
income of $0.5 million, or $0.01 per share, for the third quarter
of 2003, compared to a net loss of ($6.5) million, or ($0.10) per
share, for the second quarter of 2003 and a net loss of ($1.8)
million, or ($0.03) per share, for the third quarter of 2002.
During the third quarter of 2003, the Company reported income from
the discontinued paging operations of $2.2 million, as a result of
the Company's ongoing review of the estimated asset values and
liabilities and future commitments related to the discontinued
operations. These further adjustments to the original estimates
were primarily due to better than expected operating costs, net of
recoveries, required to support the on-going obligations. The
Company had assets of $10.4 million relating to discontinued
operations at September 30, 2003. The assets are comprised of two
facilities that the Company has been actively marketing for sale.
Subsequent to September 30, 2003 the Company closed on the sale of
its Singapore facility. The Company anticipates closing on the sale
of the second facility in Vancouver in the fourth quarter of this
year. The Company anticipates receiving approximately $10.4 million
in net proceeds as a result of the sale of both these facilities
during the fourth quarter. The Company also had liabilities of
$21.3 million related to the discontinued operations at September
30, 2003. These liabilities consist of employee severance, lease
commitments, and other estimated costs associated with exiting the
paging business and meeting customer contractual commitments. The
Company anticipates that approximately $2 million of the remaining
$21.3 million of liabilities related to discontinued operations
will be disbursed in the fourth quarter of 2003, approximately $7
to $10 million during 2004, and the remainder in 2005 and beyond.
The Company also reported in a press release earlier today that it
had entered into a license and settlement agreement with BellSouth
Intellectual Property Marketing Corporation, a subsidiary of
BellSouth Corporation, to resolve a patent infringement lawsuit
filed previously by BellSouth. The Company reported that the
settlement did not have a material financial impact during the
third quarter, and that the Company does not anticipate that the
settlement and license agreement will have any material adverse
impact on its future results. On August 4, 2003 the Company
announced that Eric Doggett, the Company's president and chief
executive officer would be leaving the Company during the second
half of 2003. The Company confirmed today that Mr. Doggett would
depart on October 31, 2003. The Company's chairman, Clarke Bailey,
will assume the responsibilities of chief executive officer at that
time. Eric Doggett commented, "Although this marks my last quarter
as Glenayre's president and CEO, I am confident that the Company
has in place one of the best teams in the industry. I remain a
strong believer in the opportunities for Glenayre. I would like to
thank the Company's investors, customers, board members, and above
all, Glenayre's employees, for their support and commitment over
the last four years." Clarke Bailey, chairman of Glenayre, stated,
"I am pleased with the progress the Company continues to make. Our
order backlog is up sequentially and year over year. We've reduced
our quarterly operating loss from continuing operations by over 60
percent on both a sequential and year over year basis. We continue
to maintain a strong balance sheet, with over $94 million in cash
and short-term investments at the end of the third quarter, and
continue to carry no debt. This balance does not include the
approximately $10.4 million in cash we expect to receive in the
fourth quarter from the sale of our discontinued operations
facilities. Further, we continue to progress towards our short-term
goal of breakeven operating results." During the second half of
2003, Glenayre made a number of significant announcements relating
to its products and sales, including: - A four-year, $8 million OEM
agreement to supply a major US wireless carrier - A direct sale to
a major US wireless carrier valued at over $8.3 million for
deliveries in the third and fourth quarter of 2003 - Approval from
Nortel Networks for the interoperability of Glenayre's Versera
MMSc, HDMu and UCS products with Nortel's GSM and GPRS wireless
infrastructure Bailey explained, "These successes have provided us
with a stronger backlog for the fourth quarter. While this is a
positive indicator, the fact that our fourth quarter has typically
experienced slower sales due to seasonality, coupled with continued
volatility in the market, makes it somewhat difficult to predict
the actual timing of sales." About Glenayre Glenayre is a global
provider of enhanced services and messaging solutions for service
providers including wireless, fixed network, ISP and broadband.
Glenayre systems are designed on open platforms with a
standards-based architecture supporting IP and traditional
telephony networks for an evolution from 2G to 2.5G and 3G
services. More than 200 service providers in over 60 countries have
deployed Glenayre messaging solutions for voice, fax and e-mail
messaging, including one number services, voice navigation and
voice dialing, mailbox out-dialing and one-button call return.
Glenayre, headquartered in Atlanta, Georgia, has been providing
carrier-grade communications solutions for the global market for
over 40 years. For more information, please visit
http://www.glenayre.com/ . Safe Harbor Statement This news release
contains statements that may be forward looking within the meaning
of applicable securities laws. The statements may include
projections regarding future revenues and earnings results, and are
based upon the Company's current forecasts, expectations and
assumptions, which are subject to a number of risks and
uncertainties that could cause the actual outcomes and results to
differ materially. These results and uncertainties are discussed in
the Company's most recently filed Annual Report on Form 10-K and
quarterly report on Form 10-Q. These factors include, but are not
limited to, restructuring activities; effective convergence of
technologies; potential market changes resulting from rapid
technological advances; competition; variability of quarterly
results and dependence on key customers; volatility of stock price
and risk of delisting from the NASDAQ National Market; ability to
attract and retain key personnel; proprietary technologies;
potential changes in government regulation; potential acquisitions
and strategic investments; continuation and expansion of third
party agreements; litigation; international business risks and
continued terrorist attacks, war or other civil disturbances.
Glenayre, Versera and the Glenayre logo are trademarks of Glenayre
Electronics, Inc. Glenayre Technologies, Inc. Condensed
Consolidated Balance Sheets (Dollars in thousands) September 30,
December 31, 2003 2002 (Unaudited) ASSETS Current Assets: Cash and
cash equivalents $52,644 $64,116 Short-term investments 38,567
43,884 Restricted Cash 3,148 217 Accounts receivable, net 10,983
5,584 Inventories, net 6,657 6,943 Assets, net, discontinued
operations 10,431 11,709 Prepaid expenses and other current assets
2,608 6,698 Total Current Assets 125,038 139,151 Property, plant
and equipment, net 8,339 5,858 Other assets 774 795 TOTAL ASSETS
$134,151 $145,804 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable $3,451 $3,226 Accrued liabilities
24,990 22,497 Accrued liabilities, discontinued operations 10,492
10,574 Total Current Liabilities 38,933 36,297 Other liabilities
6,016 6,416 Accrued liabilities, discontinued operations -
noncurrent 10,780 15,299 Stockholders' Equity: Preferred stock,
$.01 par value; authorized: 5,000,000 shares, no shares issued and
outstanding --- --- Common stock, $.02 par value; authorized:
200,000,000 shares, outstanding: 2003 - 66,035,449 shares; 2002 -
65,448,353 shares 1,320 1,308 Contributed capital 362,002 361,485
Accumulated deficit (285,488) (275,001) Cumulative Translation
Adjustment 588 --- Total Stockholders' Equity 78,422 87,792 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $134,151 $145,804 Glenayre
Technologies, Inc. Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited) Three Months
Ended September 30, 2003 2002 REVENUES: Product sales $10,199
$9,466 Service revenues 4,508 4,989 Total Revenues 14,707 14,455
COST of REVENUES (exclusive of depreciation shown separately
below): Cost of sales 4,684 4,720 Cost of services 2,370 2,348
Total Cost of Revenues 7,054 7,068 GROSS MARGIN (exclusive of
depreciation shown separately below): 7,653 7,387 OPERATING
EXPENSES: Selling, general and administrative expense 4,802 5,948
Provision for doubtful receivables, net of recoveries (56) (510)
Research and development expense 4,148 4,143 Restructuring expense
333 199 Depreciation expense 325 2,537 Total Operating Expenses
9,552 12,317 OPERATING LOSS (1,899) (4,930) OTHER INCOME
(EXPENSES): Interest income, net 273 709 Gain (loss) on disposal of
assets, net --- (20) Other (loss), net (36) (115) Total Other
Income 237 574 LOSS FROM OPERATIONS BEFORE INCOME TAXES (1,662)
(4,356) Provision (benefit) for income taxes 11 (190) LOSS FROM
CONTINUING OPERATIONS (1,673) (4,166) INCOME FROM DISCONTINUED
OPERATIONS 2,184 2,371 NET INCOME (LOSS) $511 $(1,795) INCOME
(LOSS) PER WEIGHTED AVERAGE COMMON SHARE(A): Loss from continuing
operations $(0.03) $(0.06) Income from discontinued operations 0.03
0.04 Net income (loss) per weighted average common share $0.01
$(0.03) INCOME (LOSS) PER COMMON SHARE --- ASSUMING DILUTION(A):
Loss from continuing operations $(0.03) $(0.06) Income from
discontinued operations 0.03 0.04 Net income (loss) per weighted
average common share $0.01 $(0.03) (A) Income (loss) per weighted
average common share amounts are rounded to the nearest $.01;
therefore, such rounding may slightly impact amounts presented.
Glenayre Technologies, Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share amounts) (Unaudited)
Nine Months Ended September 30, 2003 2002 REVENUES: Product sales
$30,026 $42,549 Service revenues 12,652 13,447 Total Revenues
42,678 55,996 COST of REVENUES (exclusive of depreciation shown
separately below): Cost of sales 13,993 17,163 Cost of services
7,700 7,102 Total Cost of Revenues 21,693 24,265 GROSS MARGIN
(exclusive of depreciation shown separately below): 20,985 31,731
OPERATING EXPENSES: Selling, general and administrative expense
18,321 21,242 Provision for doubtful receivables, net of recoveries
(271) (851) Research and development expense 14,131 12,585
Restructuring expense 2,137 566 Depreciation expense 733 7,047
Total Operating Expenses 35,051 40,589 OPERATING LOSS (14,066)
(8,858) OTHER INCOME (EXPENSES): Interest income, net 1,158 1,708
Gain on disposal of assets, net 14 13 Realized and unrealized loss
on securities, net --- (250) Other gain (loss), net 60 (16) Total
Other Income 1,232 1,455 LOSS FROM OPERATIONS BEFORE INCOME TAXES
(12,834) (7,403) Provision (benefit) for income taxes 39 (2,603)
LOSS FROM CONTINUING OPERATIONS (12,873) (4,800) INCOME FROM
DISCONTINUED OPERATIONS 2,386 18,229 NET INCOME (LOSS) $(10,487)
$13,429 INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE(A): Loss
from continuing operations $(0.20) $(0.07) Income from discontinued
operations 0.04 0.28 Net income (loss) per weighted average common
share $(0.16) $0.21 INCOME (LOSS) PER COMMON SHARE --- ASSUMING
DILUTION(A): Loss from continuing operations $(0.20) $(0.07) Income
from discontinued operations 0.04 0.28 Net income (loss) per
weighted average common share $(0.16) $0.21 (A) Income (loss) per
weighted average common share amounts are rounded to the nearest
$.01; therefore, such rounding may slightly impact amounts
presented. Glenayre Technologies, Inc. Condensed Consolidated
Statements of Cash Flows (Dollars in thousands) (Unaudited) Three
Months Ended Nine Months Ended September 30, September 30, 2003
2002 2003 2002 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$(6,183) $4,822 $(14,102) $14,257 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of property, plant and equipment (410) (561)
(3,216) (2,011) Proceeds from sale of building and equipment --- 43
--- 4,560 Maturities (investment in) short- term securities, net
11,158 (30,862) 5,317 (35,862) Proceeds from sale of available-
for-sale securities --- --- --- 406 NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 10,748 (31,380) 2,101 (32,907) CASH FLOWS FROM
FINANCING ACTIVITIES: Issuance of common stock 328 139 563 466
Purchase of treasury stock --- --- (34) --- NET CASH PROVIDED BY
FINANCING ACTIVITIES 328 139 529 466 NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 4,893 (26,419) (11,472) (18,184) CASH AND
CASH EQUIVALENTS AT BEGINNING OF PERIOD 47,751 97,384 64,116 89,149
CASH AND CASH EQUIVALENTS AT END OF PERIOD $52,644 $70,965 $52,644
$70,965 SUPPLEMENTAL DATA: Reconciliation of Cash and Cash
Equivalents to Cash, Short-Term Investments and Restricted Cash:
Cash and cash equivalents $52,644 $70,965 $52,644 $70,965
Short-term investments 38,567 35,862 38,567 35,862 Restricted Cash
3,148 217 3,148 217 Cash and Short-Term Investments $94,359
$107,044 $94,359 $107,044 DATASOURCE: Glenayre Technologies Inc.
CONTACT: Debra Ziola of Glenayre Technologies Inc.,
+1-770-283-2569, or Web site: http://www.glenayre.com/ Company News
On-Call: http://www.prnewswire.com/comp/111723.html
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