FAT CATS

[CheezyTang]

GEMS financials:

http://finance.yahoo.com/q/is?s=gems


http://biz.yahoo.com/prnews/070306/nytu162.html?.v=72

Glenayre Technologies Announces Fourth Quarter and Full Year 2006 Results
Tuesday March 6, 4:15 pm ET
- Announces Intention to Convert EDC LLC Profits Interests -


NEW YORK, March 6 /PRNewswire-FirstCall/ -- Glenayre Technologies, Inc. (Nasdaq: GEMS - News), a global provider of entertainment products and services through Entertainment Distribution Company, LLC ("EDC"), today reported fourth quarter and full year financial results for the periods ending December 31, 2006.
On December 31, 2006, the Company completed the sale of substantially all of the assets comprising its Messaging business to IP Unity for $25 million in cash, less approximately $2.0 million in closing costs, and as such Messaging has been reported as discontinued operations for both the current and prior year periods.


Highlights:
* Revenue of $119.8 million for the fourth quarter compared to $93.7
million for the same quarter last year.
* Revenue of $348.5 million for the full year 2006 compared to pro forma
revenue of $305.6 in 2005.
* Net income of $7.8 million for the fourth quarter compared to $5.7
million for the same quarter last year.
* Net income of $4.0 million for the full year 2006 compared to pro forma
2005 net income of $6.0 million.
* Fourth quarter EBITDA of $16.6 million, compared to $13.5 million in the
fourth quarter 2005.
* Full year 2006 EBITDA of $29.5 million compared to pro forma 2005 EBITDA
of $27.0 million, excluding one-time acquisition and compensation
related costs.
* Recorded an extraordinary gain of $7.7 million on Blackburn acquisition.
* As of December 31, 2006, the Company had total unrestricted cash and
short-term investments of $96.1 million.
* Paid down indebtedness by $15.5 million in 2006.

Glenayre's President and Chief Executive Officer Jim Caparro stated, "In 2006, we successfully executed on our strategic, financial and operating goals. We completed the sale of Messaging, acquired Blackburn in the U.K., realigned and strengthened our management team and made prudent investments to transition EDC into an entrepreneurial, results-driven company. We also achieved our annual financial guidance at EDC and once again exceeded our execution goals for the peak holiday period. We continue to capitalize on our growth opportunities as we aggressively pursue new third party customers, capture our remaining reversionary business, and seek to broaden our service offerings to our clients. As we expand our capacity, we are also benefiting from our efforts to manage costs and drive process improvements across our organization."

"We have entered 2007 solely focused on EDC and the execution of our business plan," added Caparro. "In addition to excelling in the physical market, we are also committed to developing a digital capability and we have identified a number of opportunities to expand into the digital content services market, which in many respects parallels our current physical offerings. With a solid foundation from our long-term partnership with Universal Music Group and a strong balance sheet, we believe we are well positioned to deliver value for shareholders in 2007 and beyond."

Management will host a conference call to discuss its fourth quarter 2006 financial results today at 4:30 p.m. ET. To access the conference call, please dial 973-409-9261 and reference pass code 8391944. A live webcast of the conference call will also be available on the Company's corporate Web site, located at www.glenayre.com. A replay of the conference call will be available through Tuesday, March 13, 2007, at midnight ET. The replay can be accessed by dialing 973-341-3080. The pass code for the replay is 8391944.

Summary of Fourth Quarter 2006

For the fourth quarter of 2006, the Company reported revenue of $119.8 million compared to $93.7 million for the fourth quarter of 2005. The increase was primarily attributed to revenues from the Blackburn facility acquired in July 2006 and improved pricing at our German manufacturing facility.

The Company generated EBITDA of $16.6 million in the fourth quarter of 2006 as compared to $13.5 million in the fourth quarter of 2005. EBITDA is a non-GAAP financial measure. A reconciliation between EBITDA and the most directly comparable GAAP financial measure is provided following the Consolidated Financial Statements included in this release. The reconciliation also includes a description of how the Company calculates EBITDA.

The Company reported net income from continuing operations of $5.1 million for the fourth quarter of 2006, or $0.07 per diluted share, which compares to $5.5 million, or $0.08 per diluted share, for the fourth quarter of 2005.

Including discontinued operations, gain on the sale of the Messaging business and an extraordinary gain associated with the Blackburn facility acquisition, the Company reported net income of $7.8 million, or $0.11 per diluted share, for the fourth quarter of 2006, compared to net income of $5.7 million, or $0.08 per diluted share, for the fourth quarter of 2005.

In the fourth quarter of 2006, the Company reported discontinued operations losses of $4.1 million, or a loss of $0.06 per diluted share, gain on the sale of the Messaging business of $6.0 million, or $0.09 per diluted share and an extraordinary gain associated with the Blackburn facility acquisition of $0.7 million, or $0.01 per diluted share. In the fourth quarter of 2005, the Company reported income from discontinued operations of $0.2 million, or $0.00 per diluted share.

Summary of the Full Year 2006

Since the EDC acquisition of Universal Music Group's (UMG) U.S. and central European CD and DVD manufacturing and distribution operations closed on May 31, 2005, the Company has presented certain results on a pro forma basis for the 2005 full-year period, which assumes the Company acquired the UMG assets on January 1, 2005. The Company is providing pro forma results for the prior full-year period so that the comparisons between the periods will be meaningful. Additional information regarding this pro forma information is included in the Company's August 15, 2005 press release which can be found on the Company's Web site www.glenayre.com. A table reconciling certain non-GAAP measures to their most directly comparable GAAP financial measure is provided following the Consolidated Financial Statements included in this release.

For the full year 2006, the Company reported revenue of $348.5 million compared to pro forma 2005 revenues of $305.6 million. The increase was attributed to revenues from the Blackburn facility acquired in 2006 and improved manufacturing pricing and volume in Germany.

The Company generated EBITDA of $29.5 million for the full-year 2006 as compared to pro forma 2005 EBITDA of $27.0 million. See the reconciliation of EBITDA to the most directly comparable GAAP financial measure which is provided following the Consolidated Financial Statements included in this release.

The Company reported 2006 net loss from continuing operations of $1.6 million, or a loss of $0.02 per diluted share, which compares to net income from continuing operations of $1.8 million, or $0.03 per diluted share, in 2005.

Including discontinued operations, gain on the sale of the Messaging business and an extraordinary gain associated with the Blackburn facility acquisition, the Company reported 2006 net income of $4.0 million, or $0.06 per diluted share, compared to net income of $8.0 million, or $0.11 per diluted share, in 2005.

In 2006, the Company reported discontinued operations losses of $8.1 million or a loss of $0.12 per diluted share, gain on the sale of the Messaging business of $6.0 million, or $0.09 per diluted share and extraordinary gain associated with the Blackburn facility acquisition of $7.7 million, or $0.11 per diluted share. In 2005, the Company reported income from discontinued operations of $6.2 million, or $0.09 per diluted share.

As of December 31, 2006, the Company had approximately $96 million in unrestricted cash, including $29.4 million in the EDC subsidiary with the remainder being held at the parent company level. During 2006, the Company reduced its outstanding debt from $76.6 million to $66.1 million. Scheduled debt payments of $15.5 million were partially offset by the exchange rate increases on foreign denominated debt. The Company had no outstanding borrowings under its revolving credit facility at December 31, 2006.

Guidance

For 2007, the Company expects EBITDA to grow at roughly the same rate as 2006. While the Company is focused on cost reduction initiatives, EDC is directly impacted by the trend in sales of CD's and DVD's. The Company's assumptions are that CD sales globally will decline by roughly 7%. There has been an acceleration in the rate of decline since 2006 and the Company is closely monitoring these trends as a further deterioration in the month over month sales of CD's and DVD's will certainly impact EBITDA expectations for the year.

On March 6, 2007, the Company filed a Form 8-K reporting that it would restate financials for certain prior periods and that these restated financials will be included in the Form 10-K for the period ended December 31, 2006. Therefore, the Company's prior financial statements and the related reports from the Company's independent registered public accountants, earnings statements and press releases, and similar communications issued by the Company relating to the fiscal periods commencing on or after January 1, 2000 should no longer be relied upon.

The Company also announced today that its Board of Directors has approved commencement of a reorganization of EDC pursuant to which the EDC profit interests and Class B units that are owned by management, Universal Music Group and Morgan Joseph would be converted into equity of Glenayre with similar valuation, rights and restrictions. The Company expects to complete this reorganization during the second quarter of 2007.

Additional financial details and materials may be found on the Company's Web site www.glenayre.com.

About Glenayre Technologies

Glenayre Technologies (Nasdaq: GEMS - News) is a global provider of entertainment products through Entertainment Distribution Company, LLC (EDC). EDC is the largest provider of pre-recorded entertainment products, including CDs and DVDs, for Universal Music Group, the world leader in music sales. Headquartered in New York, EDC's operations include manufacturing and distribution facilities throughout North America and in Hanover, Germany, and a manufacturing facility in Blackburn, UK. 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. Some of these results and uncertainties are discussed in the Company's most recently filed Annual Report on Form 10-K and the Company's most recently filed Quarterly Reports on Form 10-Q. These factors include, but are not limited to potential intellectual property infringement claims; internal control deficiencies, litigation; potential acquisitions and strategic investments; environmental laws and regulations; ability to attract and retain key personnel; volatility of stock price; competition; variability of quarterly results and dependence on key customers; international business risks; sensitivity to economic trends and consumer preferences; increased costs or shortages of raw materials or energy; advances in technology and changes in customer demands; development of digital distribution alternatives including copying and distribution of music and video files; continuation and expansion of fourth-party agreements; proprietary technology; potential changes in government regulation; potential market changes resulting from rapid technological advances; restructuring activities; variability in production levels; and compliance with Senior Secured Credit Facility covenants. The Company assumes no obligation to update any forward-looking statements and does not intend to do so except where legally required.




GLENAYRE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

Quarter Ended December 31,
2006 2005
REVENUES:
Product sales $96,500 $69,146
Service revenues 23,326 24,525
Total Revenues 119,826 93,671
COST of REVENUES:
Cost of sales 76,797 56,303
Cost of services 16,068 15,957
Total Cost of Revenues 92,865 72,260

GROSS PROFIT 26,961 21,411

OPERATING EXPENSES:
Selling, general and administrative
expense 13,241 10,619
Amortization of intangible assets 2,042 1,453
Total Operating Expenses 15,283 12,072

OPERATING INCOME 11,678 9,339

OTHER INCOME (EXPENSE):
Interest income 1,036 1,084
Interest expense (1,504) (1,570)
Gain (loss) on currency swap, net (1,152) 402
Transaction gain (loss), net 878 (464)
Other income (expense), net 51 41
Total Other Expense (691) (507)

INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, MINORITY INTEREST,
DISCONTINUED OPERATIONS, GAIN ON SALE OF
MESSAGING BUSINESS AND EXTRAORDINARY ITEM 10,987 8,832
Provision for income taxes 5,673 3,191
Minority interest 208 114
INCOME FROM CONTINUING OPERATIONS BEFORE
DISCONTINUED OPERATIONS, GAIN ON SALE OF
MESSAGING BUSINESS AND EXTRAORDINARY ITEM 5,106 5,527

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAX (4,090) 205

GAIN ON SALE OF MESSAGING BUSINESS,
NET OF TAXES OF $0 6,044 -

INCOME BEFORE EXTRAORDINARY ITEM 7,060 5,732
Extraordinary gain - net of taxes 748 -
NET INCOME $7,808 $5,732

INCOME (LOSS) PER WEIGHTED AVERAGE
COMMON SHARE:
Income from continuing operations $0.07 $0.08
Income (loss) from discontinued
operations (0.06) -
Gain on sale of messaging business 0.09 -
Extraordinary gain 0.01 -
Income per weighted average common
share $0.11 $0.08

INCOME (LOSS) PER COMMON SHARE -
ASSUMING DILUTION:
Income from continuing operations $0.07 $0.08
Income (loss) from discontinued
operations (0.06) -
Gain on sale of messaging business 0.09 -
Extraordinary gain 0.01 -
Income per weighted average common
share $0.11 $0.08



GLENAYRE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

Twelve Months Ended December 31,
2006 2005
REVENUES:
Product sales $267,067 $137,838
Service revenues 81,461 51,750
Total Revenues 348,528 189,588
COST of REVENUES:
Cost of sales 221,792 114,843
Cost of services 60,783 36,443
Total Cost of Revenues 282,575 151,286

GROSS PROFIT 65,953 38,302

OPERATING EXPENSES:
Selling, general and administrative
expense 48,648 27,461
Amortization of intangible assets 7,860 3,729
Total Operating Expenses 56,508 31,190

OPERATING INCOME 9,445 7,112

OTHER INCOME (EXPENSE):
Interest income 4,187 2,914
Interest expense (6,045) (3,631)
Gain (loss) on currency swap, net (3,211) 789
Transaction gain (loss), net 2,130 (1,857)
Other income (expense), net (41) 76
Total Other Expense (2,980) (1,709)

INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, MINORITY INTEREST,
DISCONTINUED OPERATIONS, GAIN ON SALE OF
MESSAGING BUSINESS AND EXTRAORDINARY ITEM 6,465 5,403
Provision for income taxes 7,921 3,504
Minority interest 94 114
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE DISCONTINUED OPERATIONS, GAIN ON
SALE OF MESSAGING BUSINESS AND EXTRAORDINARY
ITEM (1,550) 1,785

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAX (8,132) 6,190

GAIN ON SALE OF MESSAGING BUSINESS,
NET OF TAXES OF $0 6,044 -

INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM (3,638) 7,975
Extraordinary gain - net of taxes 7,668 -
NET INCOME $4,030 $7,975

INCOME (LOSS) PER WEIGHTED AVERAGE
COMMON SHARE:
Income (loss) from continuing
operations $(0.02) $0.03
Income (loss) from discontinued operations (0.12) 0.09
Gain on sale of messaging 0.09 -
Extraordinary gain 0.11 -
Income (loss) per weighted average
common share $0.06 $0.12

INCOME (LOSS) PER COMMON SHARE ---
ASSUMING DILUTION:
Income (loss) from continuing
operations $(0.02) $0.03
Income (loss) from discontinued operations (0.12) 0.09
Gain on sale of messaging 0.09 -
Extraordinary gain 0.11 -
Income (loss) per weighted average
common share $0.06 $0.11



Glenayre Technologies, Inc.
Summary Schedule of Non-GAAP Financial Data
(In thousands) Unaudited


The following summary of financial data shows the reconciliation of loss
from continuing operations, as determined in accordance with accounting
principles generally accepted in the United States (GAAP), to income
(loss) from continuing operations before one-time gains and charges and
earnings before interest, taxes, and depreciation and amortization from
continuing operations before one-time gains and charges.

EBITDA is income (loss) from continuing operations, excluding one-time
gains and charges, before net interest income, income taxes, and
depreciation and amortization and is presented because the Company
believes that such information is commonly used in the entertainment
industry as one measure of a company's operating performance. EBITDA from
continuing operations is not determined in accordance with generally
accepted accounting principles, it 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. 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 Twelve Months Ended
December 31, December 31,
Pro Forma
2006 2005 2006 2005 2005

Income (loss) from continuing
operations $5,106 $5,527 $(1,550) $(593) $1,785
Indirect acquisition and
employment costs (1) - - - 1,618 1,618
One-time exchange loss
related to EDC acquisition - - - 1,051 1,051
Income (loss) from continuing
operations before one-time
gains and charges 5,106 5,527 (1,550) 2,076 4,454

Income tax provision 5,673 3,191 7,921 3,504 3,504
Transaction (gain) loss, net (878) 464 (2,130) 801 806
Loss (gain) on currency swap,
net 1,152 (402) 3,211 (789) (789)
Interest expense (income),
net 468 486 1,858 2,359 717
Depreciation and amortization 5,170 4,289 20,100 19,127 10,678
Other (income) expense, net (51) (41) 41 (70) (76)

EBITDA from continuing
operations $16,640 $13,514 $29,451 $27,008 $19,294


(1) In connection with the acquisition of the CD/DVD manufacturing and
distribution operations of Universal Music Group, the company incurred
certain indirect acquisition costs and one-time employment related
costs.




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Source: Glenayre Technologies, Inc.