EX-99.1 3 g82411exv99w1.txt EX-99.1 NEWS RELEASE DATED APRIL 28, 2003 EXHIBIT 99.1 [GLENAYRE LOGO] NEWS RELEASE contact: Elizabeth Dolcourt 770 283 2569 Elizabeth.Dolcourt@Glenayre.com (NASDAQ: GEMS) GLENAYRE ANNOUNCES FIRST QUARTER 2003 RESULTS Quarterly Revenue Increased 17% Sequentially ATLANTA, GA -- APRIL 28, 2003 -- Glenayre Technologies, Inc., today reported revenue of $13.3 million for the first quarter of 2003 compared to $11.4 million for the fourth quarter of 2002, and $23.4 million for the first quarter of 2002. As of March 31, 2003, Glenayre reported a total cash and short-term investments balance of $97.8 million, compared to $108.2 million at December 31, 2002. The Company also reported that it had received an income tax refund of $2.7 million subsequent to March 31, 2003. The accompanying schedules include a table showing the reconciliation of income (loss) from continuing operations, as determined in accordance with accounting principles generally accepted in the United States, to 1) Income (loss) from continuing operations before certain one-time gains and charges, and 2) EBITDA from continuing operations before certain one-time gains and charges. THE FOLLOWING DISCUSSION OF OPERATING RESULTS FROM CONTINUING OPERATIONS EXCLUDES CERTAIN ONE-TIME GAINS AND CHARGES FOR ALL COMPARABLE PERIODS MENTIONED. Glenayre reported a loss from continuing operations of ($5.8) million, or ($0.09) per share, for the first quarter of 2003, compared to a loss of ($7.4) million, or ($0.11) per share, for the fourth quarter of 2002 and income of $0.5 million, or $0.01 per share, for the first quarter of 2002. EBITDA for the first quarter of 2003 was negative ($6.1) million, compared to negative ($5.6) million for the fourth quarter of 2002 and positive $2.3 million for the first quarter of 2002. Gross margins from continuing operations were 53 percent for the first quarter of 2003 compared to 41 percent for the fourth quarter of 2002 and 63 percent for the first quarter of 2002. The Company attributed the improvement in gross margins during the first quarter of 2003, compared to the fourth quarter of 2002, to both a higher volume of revenue as well as to the product mix. THE FOLLOWING DISCUSSION OF OPERATING RESULTS INCLUDES ALL ONE-TIME GAINS AND CHARGES FOR ALL COMPARABLE PERIODS MENTIONED. With one-time gains and charges included for each of the comparable periods, Glenayre reported a loss from continuing operations of ($5.8) million for the first quarter of 2003, or ($0.09) per share, which compares to a loss of ($28.7) million, or ($0.44) per share, for the fourth quarter of 2002 and income of $3.0 million, or $0.04 per share, for the first quarter of 2002. Including discontinued operations, the Company reported a net loss of ($4.5) million, or ($0.07) per share, for the first quarter of 2003, compared to a net loss of ($21.2) million, or ($0.32) per share, for the fourth quarter of 2002 and net income of $3.1 million, or $0.04 per share, for the first quarter of 2002. During the first quarter of 2003, the Company reported income from the discontinued paging operations of $1.3 million. This was primarily due to the collection of accounts receivable previously reserved for as well as to changes in estimates of ongoing wind-down liabilities, partially offset by an additional write-down of its Singapore facility. At March 31, 2003, the Company had remaining assets of $11.2 million and liabilities of $22.8 million relating to the discontinued operations. The assets are primarily comprised of two facilities that are actively being marketed for sale. The liabilities consist of employee severance, lease commitments, warranty reserves and other estimated costs associated with exiting the paging business and meeting customer contractual commitments. The Company anticipates that approximately $4 to $7 million of the remaining $22.8 million of liabilities will be disbursed in 2003 and the remainder in 2004 and beyond. "Glenayre continues to execute its focused business plan," said Eric Doggett, president and chief executive officer for Glenayre. "As I stated in our last earnings release, we expect first half of 2003 revenue to be higher than the second half of 2002 levels. We believe our 17% sequential revenue growth for the first quarter of 2003 demonstrates our continued ability to grow faster than the overall market." Doggett continued, "During the first quarter, our Selling, General, and Administrative expenses were slightly higher than originally anticipated. Although Glenayre typically experiences higher SG&A expenses in the first quarter of the year due to the timing of major trade shows, this quarter we also had an increase in legal expenses associated primarily with our defense of the Jackson patent infringement case, which went to trial at the end of March 2003. We remain focused on reducing our overall expense levels and anticipate lower operating expenses for the remainder of the year." Glenayre has continued to aggressively invest in new solutions designed to reduce service providers' operating expenses and support valuable messaging applications. During the first quarter, Glenayre: - Introduced the Versera(TM) High Density Messaging (HDMu) and shipped a total of 19 units to 6 customers. The Versera HDMu provides a smaller footprint and lower operational costs for service providers. - Announced a partnership with Teltier Technologies to integrate presence and availability management and applications to Glenayre's Versera(TM) solutions portfolio. Presence applications include dynamic mobile conferencing and intelligent availability alerts linked to user preferences and accessibility. "I am very pleased with the progress of our efforts and the increase in sales activities," concluded Doggett. "The market is validating our Versera open application framework approach. Though the timing of some deals is difficult to predict, we anticipate continued sequential revenue growth in the second quarter." ABOUT GLENAYRE: Glenayre is a global provider of enhanced services and messaging solutions for service providers including wireless, fixed network, ISP and broadband. Glenayre has approximately 400 employees in 14 locations worldwide. 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 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. 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; international business risks and continued terrorist attacks, war or other civil disturbances. # # # Glenayre and the Glenayre logo are trademarks of Glenayre Electronics, Inc. GLENAYRE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MARCH 31, 2003 DECEMBER 31, 2002 ------------------------- ------------------------- (UNAUDITED) ASSETS Current Assets: Cash and cash equivalents $ 47,268 $ 64,333 Short-term investments 50,569 43,884 Accounts receivable, net 10,850 5,584 Inventories, net 7,884 6,943 Assets, net, discontinued operations 11,204 11,709 Prepaid expenses and other current assets 5,960 6,698 ------------------------- ------------------------- Total Current Assets 133,735 139,151 Property, plant and equipment, net 7,141 5,858 Other assets 679 795 ------------------------- ------------------------- TOTAL ASSETS $ 141,555 $ 145,804 ========================= ========================= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 4,925 $ 3,226 Accrued liabilities 24,421 22,497 Accrued liabilities, discontinued operations 9,547 10,574 ------------------------- ------------------------- Total Current Liabilities 38,893 36,297 Other liabilities 6,080 6,416 Accrued liabilities, discontinued operations - noncurrent 13,227 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 - 65,548,321 shares; 2002 - 65,448,353 shares 1,310 1,308 Contributed capital 361,573 361,485 Accumulated deficit (279,528) (275,001) ------------------------- ------------------------- Total Stockholders' Equity 83,355 87,792 ------------------------- ------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 141,555 $ 145,804 ========================= =========================
GLENAYRE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, --------------------------- 2003 2002 -------- -------- REVENUES: Product sales $ 9,407 $ 19,336 Service revenues 3,936 4,098 -------- -------- Total Revenues 13,343 23,434 -------- -------- COST OF REVENUES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN SEPARATELY BELOW): Cost of sales 3,716 6,294 Cost of services 2,601 2,284 -------- -------- Total Cost of Revenues 6,317 8,578 -------- -------- GROSS MARGIN (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN SEPARATELY BELOW): 7,026 14,856 OPERATING EXPENSES: Selling, general and administrative expense 7,956 7,966 Provision for doubtful receivables, net of recoveries (168) 61 Research and development expense 5,209 4,332 Restructuring expense (credit) 222 (210) Depreciation expense 144 2,229 -------- -------- Total Operating Expenses 13,363 14,378 -------- -------- OPERATING INCOME (LOSS) (6,337) 478 -------- -------- OTHER INCOME (EXPENSES): Interest income, net 425 479 Gain (loss) on disposal of assets, net 14 (68) Realized and unrealized loss on securities, net -- (372) Other, net 93 71 -------- -------- Total Other Income 532 110 -------- -------- INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES (5,805) 588 Provision (benefit) for income taxes 28 (2,413) -------- -------- INCOME (LOSS) FROM CONTINUING OPERATIONS (5,833) 3,001 INCOME FROM DISCONTINUED OPERATIONS 1,306 77 -------- -------- NET INCOME (LOSS) $ (4,527) $ 3,078 ======== ======== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE: Income (loss) from continuing operations $ (0.09) $ 0.05 Discontinued operations 0.02 0.00 -------- -------- Net income (loss) per weighted average common share $ (0.07) $ 0.05 ======== ======== INCOME (LOSS) PER COMMON SHARE --- ASSUMING DILUTION: Income (loss) from continuing operations $ (0.09) $ 0.04 Discontinued operations 0.02 0.00 -------- -------- Net income (loss) per weighted average common share $ (0.07) $ 0.04 ======== ========
GLENAYRE TECHNOLOGIES, INC. SUMMARY SCHEDULE OF PRO FORMA (NON-GAAP) FINANCIAL DATA (IN THOUSANDS) UNAUDITED The following summary of pro forma (non-GAAP) financial data shows the reconciliation of income (loss) from continuing operations, as determined in accordance with accounting principles generally accepted in the United States (GAAP), to pro forma income (loss) from continuing operations and pro forma earnings before interest, taxes, depreciation and amortization from continuing operations (pro forma EBITDA) which exclude one-time gains and charges. Pro forma income (loss) from continuing operations, which represents income (loss) from continuing operations, excluding one-time gains and charges, and pro forma EBITDA which represents pro forma income (loss) from continuing operations before net interest income, income taxes and depreciation and amortization are presented because the Company believes that these non-GAAP operating performance measures are useful to management and investors because they enhance the ability to analyze trends in the Company's business and compare the Company's operating performance to the performance of the Company's peers. Pro forma income (loss) from continuing operations and pro forma EBITDA from continuing operations are not determined in accordance with GAAP. Pro forma EBITDA is not indicative of cash provided by operating activities, should not be used as a measure of operating income and cash flows from operations as determined under GAAP and should not be considered in isolation or as an alternative to, or to be more meaningful than, measures of performance determined in accordance with GAAP. Pro Forma EBITDA, as calculated by the Company, may not be comparable to similarly titled measures reported by other companies and could be misleading unless all companies and analysts calculated EBITDA in the same manner.
THREE MONTHS ENDED MARCH 31, 2003 MARCH 31, 2002 DECEMBER 31, 2002 ------------------------------------------------------------- INCOME (LOSS) FROM CONTINUING OPERATIONS $(5,833) $ 3,001 $(28,701) Tax benefit from NOL carryback(1) -- (2,480) -- Impairment of long-lived assets, net of taxes(2) -- -- 21,298 ------------------------------------------------------------- PRO FORMA INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE ONE-TIME GAINS AND CHARGES (5,833) 521 (7,403) Provision for income taxes 28 67 -- Interest, net (425) (479) (539) Depreciation 144 2,229 2,333 ------------------------------------------------------------- PRO FORMA EBITDA FROM CONTINUING OPERATIONS BEFORE ONE-TIME GAINS AND CHARGES $(6,086) $ 2,338 $ (5,609) =============================================================
(1) Represents tax benefit associated with the alternative minimum taxes paid in 1996, 1997 and 1998 which were refunded to the Company in August 2002. In March 2002, the Internal Revenue Service suspended the 90% limitation on the use of net operating loss carrybacks which permitted the Company to obtain this refund. (2) During the fourth quarter of 2002, the Company recorded an impairment charge of $21.3 million related to the write-down of continuing operations long-lived assets based on the evaluation of recoverability in accordance with Statement of Financial Accounting Standard No. 144.