EX-99.1 3 g87521exv99w1.txt EX-99.1 PRESS RELEASE DATED MARCH 1, 2004 [GLENAYRE LOGO] News Release Contact: Debra Ziola 770 283 2569 Investor.Relations@Glenayre.com (NASDAQ: GEMS) Glenayre Announces Fourth Quarter 2003 Results ATLANTA, GA -- MARCH 1, 2004 -- Glenayre Technologies, Inc. (NASDAQ: GEMS), today reported revenue of $15.5 million for the fourth quarter of 2003 compared to $14.7 million for the third quarter of 2003 and $11.4 million for the fourth quarter of 2002. Gross margins (exclusive of depreciation) from continuing operations were 41 percent for the fourth quarter of 2003 compared to 52 percent for the third quarter of 2003 and 41 percent for the fourth quarter of 2002. The Company attributed the decline in gross margins from the third quarter of 2003 to the fourth quarter of 2003 primarily to recording a charge of $1.6 million relating to a loss on an unfavorable multi-year contract with one of the Company's major customers. As of December 31, 2003, Glenayre reported a total cash and short-term investments balance of $98.9 million, compared to $91.2 million at September 30, 2003 and $108.0 million at December 31, 2002. The Company expects to use these funds for a variety of purposes including 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 acquisitions. The Company reported a loss from continuing operations of ($1.6) million for the fourth quarter of 2003, or ($0.02) per share, which compares to a loss of ($1.7) million, or ($0.03) per share, for the third quarter of 2003 and a loss of ($28.7) million, or ($0.44) per share, for the fourth quarter of 2002. Including discontinued operations, the Company reported net income of $12.1 million, or $0.18 per share, for the fourth quarter of 2003, compared to net income of $0.5 million, or $0.01 per share, for the third quarter of 2003 and a net loss of ($21.2) million, or ($0.32) per share, for the fourth quarter of 2002. During the fourth quarter of 2003, the Company reported income from its discontinued paging operations of $13.7 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. The income was primarily due to the Company's earlier than anticipated reduction in work force and facility expense related liabilities as a result of entering into agreements with subcontracting companies to provide support and manufacturing services on the Company's behalf to meet customer contractual obligations. The income from discontinued operations also included a reduction of its tax liability relating to the discontinued operations of $2.6 million due to the anticipated utilization of a Canadian tax loss generated by the sale of the Vancouver facility. The Company also reported that it had completed the sale of its Singapore and Vancouver facilities during the fourth quarter of 2003, for net proceeds of $11.5 million. To clear a lien filed against the Vancouver facility in connection with certain litigation related to the facility, the Company placed $3.4 million of the proceeds from the sale of the Vancouver facility with the court as security until the conclusion of the litigation. This $3.4 million is included in other current assets on the Company's balance sheet as of December 31, 2003. The Company had remaining liabilities of $10.9 million related to the discontinued operations at December 31, 2003. These liabilities consist of lease commitments, litigation costs related to the Vancouver facility and other estimated costs associated with exiting the paging business and meeting customer contractual commitments. The Company anticipates that approximately $5.0 to $7.5 million of the remaining $10.9 million of liabilities related to discontinued operations will be disbursed in 2004, and the remainder in 2005 and beyond. "The Company continues to make progress on its strategic goals," commented Clarke Bailey, chairman and chief executive officer of Glenayre. "We ended the year with $98.9 million in cash and short term investments, and our revenue for the fourth quarter of 2003 grew 5% sequentially." Bailey continued, "Our Versera ICE next generation messaging platform is currently being tested by one of our wireless customers and is anticipated to become commercially available during the second quarter of 2004. Interest is strong in our previously announced Multimedia Message Service center and Missed Call Notification products as well as our recently announced MessageMe application to forward voice mail to e-mail or MMS phones." "The Company anticipates that revenues for the first quarter of 2004 may decline to $11 to $12 million due to slower than expected spending by our customers," Bailey added. "However, the Company expects that its new products will contribute towards a return to revenue growth in the second quarter of 2004." Continued Bailey, "We also recently announced that Kris Wood had joined Glenayre as chief acquisitions officer. This key addition to our management team will allow us to accelerate our search for strategic acquisition opportunities. We also continue to focus on cost control, new product deliveries and developing new distribution channels." 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 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. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- ASSETS Current Assets: Cash and cash equivalents $ 65,853 $ 64,116 Short-term investments 33,007 43,884 Restricted cash 3,148 217 Accounts receivable, net 9,769 5,584 Inventories, net 5,828 6,943 Assets held for sale, discontinued operations, net -- 11,709 Other current asset, discontinued operations 3,374 -- Prepaid expenses and other current assets 3,180 6,698 --------- --------- Total Current Assets 124,159 139,151 Property, plant and equipment, net 8,365 5,858 Other assets 831 795 --------- --------- TOTAL ASSETS $ 133,355 $ 145,804 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 3,142 $ 3,226 Deferred Revenue 4,369 1,699 Accrued liabilities 20,695 20,798 Accrued liabilities, discontinued operations 7,567 10,574 --------- --------- Total Current Liabilities 35,773 36,297 Other liabilities 4,000 6,416 Accrued liabilities, discontinued operations - noncurrent 3,350 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 - 66,384,928 shares; 2002 - 65,448,353 shares 1,327 1,308 Contributed capital 362,273 361,485 Accumulated deficit (273,368) (275,001) Accumulated other comprehensive income -- -- --------- --------- Total Stockholders' Equity 90,232 87,792 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 133,355 $ 145,804 ========= =========
GLENAYRE TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, ------------------------- 2003 2002 -------- -------- REVENUES: Product sales $ 10,769 $ 7,076 Service revenues 4,712 4,296 -------- -------- Total Revenues 15,481 11,372 -------- -------- COST OF REVENUES (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): Cost of sales 6,499 4,348 Cost of services 2,569 2,401 -------- -------- Total Cost of Revenues 9,068 6,749 -------- -------- GROSS MARGIN (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): 6,413 4,623 OPERATING EXPENSES: Selling, general and administrative expense 4,485 5,738 Provision for doubtful receivables, net of recoveries (20) (59) Research and development expense 3,399 4,400 Restructuring expense 64 107 Depreciation and amortization expense 371 2,333 Impairment of long-lived assets -- 21,298 -------- -------- Total Operating Expenses 8,299 33,817 -------- -------- OPERATING LOSS (1,886) (29,194) -------- -------- OTHER INCOME (EXPENSES): Interest income, net 270 539 Gain (loss) on disposal of assets, net 12 (92) Realized and unrealized loss on available-for-sale securities, net (25) -- Other gain (loss), net (8) 46 -------- -------- Total Other Income 249 493 -------- -------- LOSS FROM OPERATIONS BEFORE INCOME TAXES (1,637) (28,701) Benefit for income taxes (12) -- -------- -------- LOSS FROM CONTINUING OPERATIONS (1,625) (28,701) INCOME FROM DISCONTINUED OPERATIONS (NET OF INCOME TAX/BENEFIT) 13,745 7,522 -------- -------- NET INCOME (LOSS) $ 12,120 $(21,179) ======== ======== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1): Loss from continuing operations $ (0.02) $ (0.44) Income from discontinued operations 0.21 0.12 -------- -------- Net income (loss) per weighted average common share $ 0.18 $ (0.32) ======== ======== INCOME (LOSS) PER COMMON SHARE --- ASSUMING DILUTION (1): Loss from continuing operations $ (0.02) $ (0.44) Income from discontinued operations 0.21 0.12 -------- -------- Net income (loss) per weighted average common share $ 0.18 $ (0.32) ======== ========
(1) 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. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, ----------------------------- 2003 2002 -------- -------- REVENUES: Product sales $ 40,795 $ 49,625 Service revenues 17,364 17,743 -------- -------- Total Revenues 58,159 67,368 -------- -------- COST OF REVENUES (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): Cost of sales 20,492 21,511 Cost of services 10,269 9,503 -------- -------- Total Cost of Revenues 30,761 31,014 -------- -------- GROSS MARGIN (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): 27,398 36,354 OPERATING EXPENSES: Selling, general and administrative expense 22,806 26,980 Provision for doubtful receivables, net of recoveries (291) (910) Research and development expense 17,530 16,985 Restructuring expense 2,201 673 Depreciation and amortization expense 1,104 9,380 Impairment of long-lived assets -- 21,298 -------- -------- Total Operating Expenses 43,350 74,406 -------- -------- OPERATING LOSS (15,952) (38,052) -------- -------- OTHER INCOME (EXPENSES): Interest income, net 1,428 2,247 Gain (loss) on disposal of assets, net 26 (79) Realized and unrealized (loss) on available-for-sale securities, net (25) (250) Other gain, net 52 30 -------- -------- Total Other Income 1,481 1,948 -------- -------- LOSS FROM OPERATIONS BEFORE INCOME TAXES (14,471) (36,104) Provision (benefit) for income taxes 27 (2,603) -------- -------- LOSS FROM CONTINUING OPERATIONS (14,498) (33,501) INCOME FROM DISCONTINUED OPERATIONS (NET OF INCOME TAX/BENEFIT) 16,131 25,751 -------- -------- NET INCOME (LOSS) $ 1,633 $ (7,750) ======== ======== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1): Loss from continuing operations $ (0.22) $ (0.51) Income from discontinued operations 0.25 0.39 -------- -------- Net income (loss) per weighted average common share $ 0.02 $ (0.12) ======== ======== INCOME (LOSS) PER COMMON SHARE --- ASSUMING DILUTION (1): Loss from continuing operations $ (0.22) $ (0.51) Income from discontinued operations 0.25 0.39 -------- -------- Net income (loss) per weighted average common share $ 0.02 $ (0.12) ======== ========
(1) 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)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ---------------------- ---------------------- 2003 2002 2003 2002 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (424) $ 1,627 $ (14,526) $ 15,884 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of buildings, discontinued operations 8,164 -- 8,164 -- Proceeds from sale of building and equipment, continuing operations 44 7 44 4,567 Purchases of property, plant and equipment (413) (478) (3,629) (2,489) Maturities of (investment in) short-term securities 5,560 (8,022) 10,877 (43,884) Proceeds from sale of available-for-sale securities -- -- -- 406 --------- --------- --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 13,355 (8,493) 15,456 (41,400) --------- --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 278 17 841 483 Purchase of treasury stock -- -- (34) -- --------- --------- --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 278 17 807 483 --------- --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,209 (6,849) 1,737 (25,033) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 52,644 70,965 64,116 89,149 --------- --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 65,853 $ 64,116 $ 65,853 $ 64,116 ========= ========= ========= ========= SUPPLEMENTAL DATA: RECONCILIATION OF CASH AND CASH EQUIVALENTS TO CASH AND SHORT-TERM INVESTMENTS: Cash and cash equivalents $ 65,853 $ 64,116 $ 65,853 $ 64,116 Short-term investments 33,007 43,884 33,007 43,884 --------- --------- --------- --------- CASH AND SHORT-TERM INVESTMENTS $ 98,860 $ 108,000 $ 98,860 $ 108,000 ========= ========= ========= =========