EXHIBIT 99
CAUTIONARY STATEMENT UNDER SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Glenayre Technologies, Inc. ("Glenayre" or the "Company"), from time to time,
makes "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements reflect the expectations of
management of the Company at the time such statements are made. Glenayre is
filing this cautionary statement to identify important factors that could cause
Glenayre's actual results to differ materially from those in any forward-looking
statements made by or on behalf of Glenayre.
Potential Decline in the Paging Infrastructure Market
Over the last two years, the paging infrastructure market, which has
historically been Glenayre's core business, has contracted by approximately 50%.
While Glenayre believes that the market for paging infrastructure will not
continue to decline, there can be no assurance of this. If the paging
infrastructure market contracts further, it may result in decreased sales of
Glenayre's products, which would have a material adverse effect on Glenayre's
business.
Effective Convergence of Technologies
In recent years, the markets for each of wireless services, Internet services
and prepaid technologies has grown significantly. Glenayre is dependent on the
continued growth of these markets as well as the effective and successful
convergence of these technologies for its Enhanced Services Platform, such as
the Modular Voice Processing system and Intelligis LSP, and related applications
and solutions such as voice, fax and data messaging, short message services, one
touch call return, continuous calling, voice activated dialing, unified
messaging and CONSTANT TOUCH(TM). The markets for these technologies are still
emerging and continued growth in demand and market acceptance of these
converging services is uncertain. If the commercial market for these services
and related bundled or converged technologies is lower than Glenayre
anticipates, or grows more slowly than Glenayre anticipates, it will have a
material adverse effect on Glenayre's business. There can be no assurance that
these technologies will be successfully integrated or that a significant
commercial market for the integrated services will continue and/or develop.
Potential Market Changes Resulting from Rapid Technological Advances
Glenayre's business has historically focused primarily on paging and is subject
to competition from alternative forms of communication. Glenayre's business is
also focused on the wireless telecommunications industry. The wireless
telecommunications industry is characterized by rapid technological change,
including digital cellular telephone systems, which compete, directly or
indirectly, with certain of Glenayre's products or the services provided by
certain of Glenayre's customers. While the introduction of more advanced forms
of telecommunication may provide opportunities to Glenayre for the development
of new products, these advanced forms of telecommunication may reduce the demand
for pagers and thus the type of paging systems and related software designed and
sold by Glenayre. In addition, Glenayre has been focusing its efforts on growing
its Enhanced Services Platform products, such as the Modular Voice Processing
system and Intelligis LSP, and enhanced services solutions such as voice, fax
and data messaging, short message services, one touch call return, continuous
calling, voice activated dialing, unified messaging and CONSTANT TOUCH(TM).
Demand for these products and services may be affected by changes in technology
as well as the development of substitute products and services by competitors.
If changing technology negatively affects demand for Glenayre's paging and
Enhanced Services Platform products, it could have a material adverse effect on
Glenayre's business.
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Growth of Two-Way Wireless Messaging Market
The market for two-way interactive wireless messaging products is emerging, and
the continued growth of the market is uncertain. The Company has focused
significant efforts on developing products and strategic alliances. The
development of the Company's business in this area is dependent upon its ability
to deliver adequate quantities of its advanced two-way interactive wireless
messaging devices. The development of the two-way interactive wireless messaging
device market will also be affected by other technological changes in wireless
messaging services, governmental regulatory activities and general economic
conditions. If the market for interactive devices does not continue to grow or
grows slower than anticipated by Glenayre, it would negatively affect demand for
Glenayre's products. Currently there are a limited number of two-way interactive
communications service providers. The growth of sales of two-way interactive
wireless messaging device systems by Glenayre to those customers may be delayed
depending upon delays in the market acceptance of two-way interactive wireless
messaging devices by the consumers of such wireless messaging device service
providers. Since the Company's two-way interactive wireless messaging devices
are produced by a third party manufacturer, manufacturing delays and component
part delays or shortages could adversely affect the Company's delivery of
two-way interactive wireless messaging devices impacting sales both of the
devices, wireless messaging and paging infrastructure products.
Competition
In the market for wireless messaging infrastructure, Glenayre currently faces
competition from a number of alternative wireless telecommunications
technologies, including cellular-based telephone and messaging services, mobile
satellite systems, specialized and private mobile radio systems, digital
cellular telephone systems and broadband personal communications services.
Although these technologies are generally higher priced than traditional paging
services, technological improvements could result in increased capacity and
efficiency for wireless two-way communication and could result in increased
competition for Glenayre. Additionally, Glenayre currently faces competition for
its Enhanced Services Platform from a number of companies, including: Comverse
Technologies, Inc., Lucent/Octel Communications Corporation, Unisys Corporation
and Centigram Communications Corporation. Lastly, Glenayre also faces
competition for prepaid wireless products and services from several domestic and
foreign competitors, including: Brite Voice Systems, Inc., Comverse
Technologies, Inc., Precision Systems, Inc., Logica-Aldiscon LHS and Sixbell.
Many of the Company's competitors have substantially greater financial,
technical, marketing and distribution resources than Glenayre and Glenayre may
be unable to successfully compete with these companies for the sale of its
messaging products and Enhanced Services Platform.
Variability of Quarterly Results
The Company's financial results in any single quarter are highly dependent upon
the timing and size of customer orders and the shipment of products for large
orders. Large orders from customers can account for a significant portion of
products shipped in any quarter. No one customer accounted for 10% or greater of
net sales for the years ended December 31, 1999 or for three and six months
ended June 30, 2000. Sales to a single customer, which has a significant United
States market presence, totaled approximately 11% in 1998 net sales. An
additional United States customer accounted for 13% of net sales in 1998. Beyond
1999, the customers with whom the Company does the largest amount of business
are expected to vary from year to year as a result of the timing for development
and expansion of customers' communications networks and systems, the continued
expansion into international markets and changes in the proportion of revenues
generated by Glenayre's newly developed products and services. Furthermore, if a
customer delays or accelerates its delivery requirements or a product's
completion is delayed or accelerated, revenues expected in a given quarter may
be deferred or accelerated into subsequent or earlier quarters. Therefore,
annual financial results are more indicative of the Company's performance than
quarterly results, and results of operations in any quarterly period may not be
indicative of results likely to be realized in the following quarterly periods.
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Volatility of Stock Price
The market price of Glenayre Common Stock is volatile. The market price of
Glenayre Common Stock could be subject to significant fluctuations in response
to variations in Glenayre's quarterly operating results and other factors such
as announcements of technological developments or new products by Glenayre,
developments in Glenayre's relationships with its customers, strategic alliances
and partnerships, technological advances by existing and new competitors,
general market conditions in the industry and changes in government regulations.
In addition, in recent years conditions in the stock market in general and
shares of technology companies in particular have experienced significant price
and volume fluctuations that have often been unrelated to the operating
performance of these specific companies.
Proprietary Technology
Glenayre owns or licenses numerous patents used in its operations. Glenayre
believes that while these patents are useful to Glenayre, they are not critical
or valuable on an individual basis. The collective value of the intellectual
property of Glenayre is comprised of its patents, blueprints, specifications,
technical processes and cumulative employee knowledge. Although Glenayre
attempts to protect its proprietary technology through a combination of trade
secrets, patent law, nondisclosure agreements and technical measures, such
protection may not preclude competitors from developing products with features
similar to Glenayre's products. The laws of certain foreign countries in which
Glenayre sells or may sell its products, including The Republic of Korea, The
People's Republic of China, Saudi Arabia, Thailand, Dubai, India and Brazil, do
not protect Glenayre's proprietary rights in the products to the same extent as
do the laws of the United States. Though the Company believes its technology
does not infringe any third party rights, the Company is currently party to
certain infringement claims. In addition, there can be no assurance that other
parties will not assert future infringement claims. An adverse decision in an
infringement claim asserted against the Company could result in the Company
being prohibited from using the allegedly infringing technology. In such an
instance, the Company might need to expend substantial resources to develop
alternative technology or to license the allegedly infringing technology. There
can be no assurance that these efforts would be successful. Regardless, with
respect to currently pending claims, the Company does not believe that an
adverse resolution would have a materially adverse effect on the Company.
Potential Changes in Government Regulation
Many of Glenayre's products operate on radio frequencies. Radio frequency
transmissions and emissions and certain equipment used in connection therewith
are regulated in the United States, Canada and internationally. Regulatory
approvals generally must be obtained by Glenayre in connection with the
manufacture and sale of certain of its products, and by Glenayre's
telecommunications service provider customers to operate the systems that
utilize certain Glenayre products. The enactment by federal, state, local or
international governments of new laws or regulations or a change in the
interpretation of existing regulations could affect the market for Glenayre's
products. Although recent deregulation of international telecommunications
industries along with recent radio frequency spectrum allocations made by the
Federal Communications Commission ("FCC") in the United States have increased
the demand for Glenayre's products by providing users of those products with
opportunities to establish new personal communications services, the trend
toward deregulation and current regulatory developments favorable to the
promotion of new and expanded personal communications services may not continue
and future regulatory changes may not have a positive impact on Glenayre. The
issuance of radio frequency licenses generally stimulates demand for Glenayre's
products. However, delays in the issuance of licenses may adversely affect sales
and the timing of sales of Glenayre's products. Additionally, many of Glenayre's
current Enhanced Services Platform solutions are not directly subject to
regulation; however, there can be no assurance that the government will not
regulate these services in the future.
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Financing Customer Purchases
In the past, Glenayre has financed customer purchases of its products for
development of the two-way interactive wireless messaging market for the
build-out of two-way networks by its customers who acquired two-way licenses
auctioned by the FCC (the "Two-Way License Holders"). Glenayre does not expect
to enter into significant additional customer financing arrangements. In
general, since June 30, 1999, it has been the Company's policy not to offer
customer financing or guarantees. As of June 30, 2000, the Company has a prior
financing commitment to one customer for paging infrastructure and voicemail
products of up to $30 million of which there are currently no borrowings.
Accordingly, there is a risk of default of the customer financing arrangements
Glenayre has entered into previous to June 30, 2000. The Company generally
retains a security interest in equipment for which it provides financing.
International Business Risks
Approximately 47% of 1999 fiscal year net sales were generated in markets
outside of the United States. International sales are subject to the customary
risks associated with international transactions, including political risks,
local laws and taxes, the potential imposition of trade or currency exchange
restrictions, tariff increases, transportation delays, difficulties or delays in
collecting accounts receivable, exchange rate fluctuations and the effects of
prolonged currency destabilization in major international markets. Although a
substantial portion of the international sales of Glenayre's products and
services for fiscal year 1999 was negotiated in United States dollars, Glenayre
may not be able to maintain such a high percentage of United States dollar
denominated international sales. The Company seeks to mitigate its currency
exchange fluctuation risk by entering into currency hedging transactions. The
Company also acts to mitigate certain risks associated with international
transactions through the purchase of political risk insurance and the use of
letters of credit. However, there can be no assurance that these efforts will
successfully limit Glenayre's currency exchange fluctuation risk.
Continuation and Expansion of Strategic Alliances and Partnerships
Glenayre has entered into numerous strategic alliances, some of these include
Loc8.net, InfoWave, Handspring, Aether Systems, Inc., JP Systems, Inc., DigiNet,
Communications Network, Ltd., Inciscent, Inc., GoSMS.com, Datalink.net, Inc.,
Notify Technology Corporation, Office Domain, Inc., PCS Innovations, Inc.,
WirelessMD, Inc. and HiddenMind Technology, Inc. Additionally, Glenayre has
entered into several Original Equipment Manufacturer ("OEM") agreements with
companies that market and distribute Glenayre's products and Glenayre intends to
enter into service reseller arrangements. Glenayre is dependent upon these
alliances to augment its research and development efforts as well as to
distribute Glenayre's products and services. If these strategic alliances or
partnerships are not successful or are terminated, it may have a material
adverse effect on Glenayre's business. Glenayre intends to continue entering
into strategic alliances and partnerships; however, there can be no assurance
that additional arrangements with suitable partners on acceptable terms will be
available. The inability of Glenayre to grow its current strategic alliances and
partnerships or enter into arrangements with additional partners on acceptable
terms may have a material adverse effect on Glenayre's business.
