Glenayre Technologies Reports Second Quarter Results
Despite Strong Orders, Late Receipt of Orders and Manufacturing Problems Negatively Impact Earnings
CHARLOTTE, N.C., July 16 /PRNewswire/ -- Because of the unexpected shortfall in sales, Glenayre Technologies Inc.
(Nasdaq: GEMS - news) today announced results for the second quarter ended June 30, 1998, earlier than planned. Results
were highlighted by receipt of approximately $120 million in orders that increased backlog $38 million. However, multiple
factors, including manufacturing problems and disappointing Asian and mobile/fixed network orders, negatively impacted
earnings.
Several factors prevented Glenayre from shipping booked orders in the quarter, including: 1) a significant amount of paging
infrastructure orders arrived late in the quarter and could not be produced because of manufacturing constraints in late June; 2)
mobile/fixed network product revenues suffered from slow rollout of the new MVP platform; 3) the new AccessMate pager
was introduced to manufacturing late in the quarter and encountered some startup manufacturing problems; and 4)
implementation of a new business system hampered the procurement of parts. These four factors delayed production until late
in the second quarter and prevented $30-$40 million of orders from being shipped during the quarter.
Net sales for the second quarter of 1998 decreased 26% to $81.9 million from $110.2 million for the second quarter of 1997.
Loss from operations for the second quarter of 1998 was $1.4 million compared to a profit of $21.0 million for the second
quarter of 1997. Income from operations decreased primarily as a result of lower net sales. In addition, operating costs
increased primarily in research and development, depreciation and amortization primarily related to cost additions from recent
acquisitions. Earnings per share decreased to zero cents per share on a diluted basis for the second quarter of 1998 from $0.24
per share on a diluted basis for the second quarter of 1997.
Net sales for the six months ended June 30, 1998, decreased 18% to $176.4 million from $215.9 million for the same period
of 1997. Income from operations for the six months decreased 96% to $1.5 million from $39.6 million for the six months ended
June 30, 1997. Earnings per share decreased 89% to $0.05 per share on a diluted basis for the six months ended June 30,
1998, from $0.45 per share on a diluted basis for the same period of 1997.
Commenting on the results, Gary Smith, president and CEO, said, ''Our manufacturing issues have been addressed and we've
taken action to increase peak manufacturing capacity. The new MVP platform has begun shipping and our new business system
is operational. Pager production continues to increase and we remain confident that pager revenues should hit analyst estimates
for 1998.
Smith continued, ''Looking at the rest of 1998, we are lowering our estimates for Asia and mobile/fixed network product
revenues. This will result in decreased earnings potential for the company in the second half of the year, causing a shortfall from
the current second half analyst consensus earnings estimates. However, we believe that overall sales will increase over 40% in
the second half over the first half of 1998.''
Glenayre's second quarter 1998 earnings teleconference will be held Friday, July 17, 1998, at 8:30 a.m. EDT. To listen to the
call, dial (719) 457-2653. Replay of the teleconference will be available from noon, Friday, July 17, 1998, through
Wednesday, July 22, 1998, by calling (719) 457-0820. Reference access code 507560.
For over 30 years, Glenayre Technologies Inc. has been developing and providing leading edge personal telecommunication
systems, including products for paging and cellular networks. With over 2,000 employees and with products installed in over
100 countries, Glenayre's net sales exceeded $451 million in 1997. Additional information about Glenayre is available on the
company's Web site at: glenayre.com.
This news release contains statements, which may be forward looking within the meaning of applicable securities laws. The
statements may include projections regarding future earnings results, and are based upon the company's current expectations
and assumptions, which are subject to a number of risks and uncertainties. Factors that could cause actual results to differ are
discussed in the company's most recently filed Form 10-K and Form 10-Q.
GLENAYRE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended Six Months Ended
6/30/98 6/30/97 6/30/98 6/30/97
Net Sales $ 81,881 $110,172 $176,414 $215,943
Cost of Sales 40,255 50,571 86,019 101,121
Selling, General
& Administrative 24,229 24,513 49,542 47,957
Research & Development 11,864 9,369 26,057 18,018
Depreciation & Amortization 6,978 4,750 13,310 9,285
Income (Loss) from Operations (1,445) 20,969 1,486 39,562
Interest Income (Expense), Net 1,780 2,861 3,971 5,008
Other Income (Expense), Net (215) (814) (311) (743)
Income before Income Taxes 120 23,016 5,146 43,827
Provision for Income Taxes 43 8,056 1,903 15,421
Net Income $77 $14,960 $3,243 $28,406
Diluted Income Per Common Share $0.00 $0.24 $0.05 $0.45
Number of Shares used to compute
Diluted per share data 63,869 62,705 63,592 62,922
BALANCE SHEET DATA
(In thousands)
(Unaudited)
6/30/98 12/31/97
Cash & Cash Equivalents $ 21,430 $ 21,076
Working Capital 169,564 161,454
Total Assets 500,647 505,818
Stockholders' Equity 416,987 408,016
ESTIMATED NET SALES BREAKOUTS
(In millions)
(Unaudited)
By Strategic Marketing Unit
Second Quarter Ended
6/30/98 6/30/97
Paging
U.S. $ 35.0 $ 41.6
International 28.6 40.1
Subtotal 63.6 81.7
Mobile/Fixed Network
U.S. 7.0 10.8
International 4.6 9.9
Subtotal 11.6 20.7
Microwave Communication
U.S. 5.9 6.7
International 0.8 1.0
Subtotal 6.7 7.7
Total $81.9 $110.2
SOURCE: Glenayre Technologies Inc. |
