x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
DELAWARE
|
26-2694280
|
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
|
Incorporation
or Organization)
|
Identification
No.)
|
11
East 44th
Street, New York, NY
|
10017
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Part
I – Financial Information:
|
|||
Item
1. Financial Statements
|
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
3
|
||
Condensed
Consolidated Balance Sheets as of September 30, 2009 (Unaudited) and
December 31, 2008
|
4
|
||
Condensed
Consolidated Statements of Operations for the three months ended September
30, 2009 and 2008 (Unaudited)
|
5
|
||
Condensed
Consolidated Statements of Operations for the nine months ended September
30, 2009 and 2008 (Unaudited)
|
6
|
||
Condensed
Consolidated Statement of Stockholders’ Equity and Comprehensive Loss for
the nine months ended September 30, 2009 (Unaudited)
|
7
|
||
Condensed
Consolidated Statements of Cash Flows for the nine months ended September
30, 2009 and 2008 (Unaudited)
|
8
|
||
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
9
|
||
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
|
21
|
||
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
|
28
|
||
Item 4.
Controls and Procedures
|
28
|
||
Part
II – Other Information:
|
|||
Item 1.
Legal Proceedings
|
28
|
||
Item
1A. Risk Factors
|
28
|
||
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
32
|
||
Item 6.
Exhibits
|
34
|
||
EX-15.1
LETTER REGARDING UNAUDITED FINANCIAL INFORMATION
EX-31.1
SECTION 302, CERTIFICATION OF THE CEO
EX-31.2
SECTION 906, CERTIFICATION OF THE CEO
EX-32.1
SECTION 302, CERTIFICATION OF THE CAO
EX-32.2
SECTION 906, CERTIFICATION OF THE CAO
|
EDCI
HOLDINGS, INC. AND SUBSIDIARIES
|
|||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||
September
30,
|
December
31,
|
||||
2009
|
2008
|
||||
(unaudited)
|
|||||
(In
thousands, except share data)
|
|||||
ASSETS
|
|||||
Current
Assets:
|
|||||
Cash
and cash equivalents
|
$ 78,357
|
$ 75,112
|
|||
Restricted
cash
|
2,452
|
7,258
|
|||
Accounts
receivable, net of allowances for doubtful accounts of
|
|||||
$2,913
and $3,008 for September 30, 2009 and December 31, 2008,
respectively
|
14,541
|
19,129
|
|||
Current
portion of long-term receivable
|
1,256
|
599
|
|||
Inventories,
net
|
6,424
|
4,845
|
|||
Prepaid
expenses and other current assets
|
13,065
|
12,513
|
|||
Deferred
income taxes
|
108
|
105
|
|||
Assets
held for sale
|
7,000
|
7,154
|
|||
Current
assets, discontinued operations
|
203
|
8,691
|
|||
Total
Current Assets
|
123,406
|
135,406
|
|||
Restricted
cash
|
25,396
|
25,439
|
|||
Property,
plant and equipment, net
|
17,763
|
21,186
|
|||
Long-term
receivable
|
2,276
|
3,066
|
|||
Long-term
investments
|
870
|
1,020
|
|||
Deferred
income taxes
|
1,507
|
1,694
|
|||
Other
assets
|
3,954
|
4,739
|
|||
TOTAL
ASSETS
|
$ 175,172
|
$ 192,550
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||
Current
Liabilities:
|
|||||
Accounts
payable
|
$ 13,174
|
$ 15,930
|
|||
Accrued
expenses and other liabilities
|
32,139
|
24,435
|
|||
Loans
from employees
|
1,021
|
1,142
|
|||
Current
portion of long-term debt
|
7,467
|
2,281
|
|||
Current
liabilities, discontinued operations
|
2,049
|
10,226
|
|||
Total
Current Liabilities
|
55,850
|
54,014
|
|||
Other
non-current liabilities
|
3,936
|
8,353
|
|||
Loans
from employees
|
1,526
|
2,490
|
|||
Long-term
debt
|
1,928
|
7,996
|
|||
Pension
and other defined benefit obligations
|
35,677
|
35,052
|
|||
Non-current
liabilities, discontinued operations
|
-
|
41
|
|||
Total
Liabilities
|
98,917
|
107,946
|
|||
Commitments
and contingencies
|
|||||
Stockholders'
Equity:
|
|||||
Preferred
stock, $.01 par value; authorized: 1,000,000 shares, no
shares
|
|||||
issued
and outstanding
|
-
|
-
|
|||
Common
stock, $.02 par value; authorized: 15,000,000 shares
|
|||||
September
30, 2009 -- 7,019,436 shares issued; December 31, 2008 -- 7,019,436 shares
issued
|
140
|
140
|
|||
Additional
paid in capital
|
371,338
|
371,091
|
|||
Accumulated
deficit
|
(305,027)
|
(294,988)
|
|||
Accumulated
other comprehensive income
|
6,350
|
4,583
|
|||
Treasury
stock at cost:
|
|||||
September
30, 2009 -- 333,299 shares; December 31, 2008 -- 324,794
shares
|
(1,657)
|
(1,427)
|
|||
Total
EDCI Holdings, Inc. Stockholders' Equity
|
71,144
|
79,399
|
|||
Noncontrolling
interest in subsidiary company
|
5,111
|
5,205
|
|||
Total
Stockholders' Equity
|
76,255
|
84,604
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ 175,172
|
$ 192,550
|
|||
See
Notes to Condensed Consolidated Financial
Statements.
|
EDCI
HOLDINGS, INC. AND SUBSIDIARIES
|
||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||
(Unaudited)
|
||||
Three
Months Ended September 30,
|
||||
2009
|
2008
|
|||
(In
thousands, except per share amounts)
|
||||
REVENUES:
|
||||
Product
revenues
|
$ 30,849
|
$ 43,634
|
||
Service
revenues
|
11,933
|
14,583
|
||
Total
Revenues
|
42,782
|
58,217
|
||
COST
OF REVENUES:
|
||||
Cost
of product revenues
|
27,467
|
37,888
|
||
Cost
of service revenues
|
8,340
|
9,558
|
||
Total
Cost of Revenues
|
35,807
|
47,446
|
||
GROSS
PROFIT
|
6,975
|
10,771
|
||
OPERATING
EXPENSES:
|
||||
Selling,
general and administrative expense
|
7,526
|
8,243
|
||
Amortization
of intangible assets
|
-
|
1,598
|
||
Total
Operating Expenses
|
7,526
|
9,841
|
||
OPERATING
INCOME (LOSS)
|
(551)
|
930
|
||
OTHER
INCOME (EXPENSE):
|
||||
Interest
income
|
47
|
846
|
||
Interest
expense
|
(161)
|
(501)
|
||
Gain
on currency swap, net
|
-
|
3,474
|
||
Gain
(loss) on currency transaction, net
|
50
|
(1,371)
|
||
Other
expense, net
|
(32)
|
(351)
|
||
Total
Other Income (Expense)
|
(96)
|
2,097
|
||
INCOME
(LOSS) FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES
|
(647)
|
3,027
|
||
Income
tax provision
|
722
|
485
|
||
INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
(1,369)
|
2,542
|
||
DISCONTINUED
OPERATIONS, NET OF TAX:
|
||||
INCOME
(LOSS) FROM DISCONTINUED OPERATIONS
|
56
|
(1,491)
|
||
GAIN
ON SALE OF EDC U.S. OPERATIONS
|
409
|
-
|
||
NET
INCOME (LOSS)
|
$ (904)
|
1,051
|
||
Noncontrolling
interest in subsidiary company
|
(4)
|
39
|
||
NET
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ (900)
|
$ 1,012
|
||
INCOME
(LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1):
|
||||
Income
(loss) from continuing operations attributable to common
stockholders
|
$ (0.20)
|
$ 0.37
|
||
Discontinued
operations attributable to common stockholders:
|
||||
Income
(loss) from discontinued operations attributable to common
stockholders
|
0.01
|
(0.22)
|
||
Gain
on sale of EDC U.S. Operations
|
0.06
|
-
|
||
Net
income (loss) per weighted average common share
|
$ (0.13)
|
$ 0.15
|
||
INCOME
(LOSS) PER WEIGHTED AVERAGE DILUTED COMMON SHARE (1):
|
||||
Income
(loss) from continuing operations attributable to common
stockholders
|
$ (0.20)
|
$ 0.37
|
||
Discontinued
operations attributable to common stockholders:
|
||||
Income
(loss) from discontinued operations attributable to common
stockholders
|
0.01
|
(0.22)
|
||
Gain
on sale of EDC U.S. Operations
|
0.06
|
-
|
||
Net
income (loss) per weighted average common share
|
$ (0.13)
|
$ 0.15
|
||
AMOUNTS
ATTRIBUTABLE TO EDCI HOLDINGS, INC. COMMON STOCKHOLDERS
|
||||
Income
(loss) from continuing operations
|
$ (1,359)
|
$ 2,536
|
||
Income
(loss) from discontinued operations
|
50
|
(1,524)
|
||
Gain
on sale of EDC U.S. Operations
|
409
|
-
|
||
Net
Income (Loss)
|
$ (900)
|
$ 1,012
|
||
(1) Income
(loss) per weighted average common share amounts are rounded to the
nearest $.01; therefore, such rounding may
|
||||
impact
individual amounts presented.
|
||||
See
Notes to Condensed Consolidated Financial
Statements.
|
EDCI
HOLDINGS, INC. AND SUBSIDIARIES
|
||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||
(Unaudited)
|
||||
Nine
Months Ended September 30,
|
||||
2009
|
2008
|
|||
(In
thousands, except per share amounts)
|
||||
REVENUES:
|
||||
Product
revenues
|
$ 89,201
|
$ 128,475
|
||
Service
revenues
|
32,248
|
44,133
|
||
Total
Revenues
|
121,449
|
172,608
|
||
COST
OF REVENUES:
|
||||
Cost
of product revenues
|
79,375
|
111,268
|
||
Cost
of service revenues
|
23,788
|
30,003
|
||
Total
Cost of Revenues
|
103,163
|
141,271
|
||
GROSS
PROFIT
|
18,286
|
31,337
|
||
OPERATING
EXPENSES:
|
||||
Selling,
general and administrative expense
|
21,217
|
27,049
|
||
Severance
costs for UK facility closure
|
7,152
|
-
|
||
Amortization
of intangible assets
|
-
|
4,843
|
||
Total
Operating Expenses
|
28,369
|
31,892
|
||
OPERATING
LOSS
|
(10,083)
|
(555)
|
||
OTHER
INCOME (EXPENSE):
|
||||
Interest
income
|
310
|
2,893
|
||
Interest
expense
|
(569)
|
(1,759)
|
||
Gain
on currency swap, net
|
2,111
|
881
|
||
Gain
(loss) on currency transaction, net
|
537
|
(1,965)
|
||
Other
expense, net
|
(18)
|
(343)
|
||
Total
Other Income (Expense)
|
2,371
|
(293)
|
||
LOSS
FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES
|
(7,712)
|
(848)
|
||
Income
tax provision
|
414
|
853
|
||
LOSS
FROM CONTINUING OPERATIONS
|
(8,126)
|
(1,701)
|
||
DISCONTINUED
OPERATIONS, NET OF TAX:
|
||||
LOSS
FROM DISCONTINUED OPERATIONS
|
(2,596)
|
(9,194)
|
||
GAIN
ON SALE OF EDC U.S. OPERATIONS
|
589
|
-
|
||
NET
LOSS
|
$ (10,133)
|
(10,895)
|
||
Noncontrolling
interest in subsidiary company
|
(94)
|
(203)
|
||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ (10,039)
|
$ (10,692)
|
||
LOSS
PER WEIGHTED AVERAGE COMMON SHARE (1):
|
||||
Loss
from continuing operations attributable to common
stockholders
|
$ (1.20)
|
$ (0.24)
|
||
Discontinued
operations attributable to common stockholders:
|
||||
Loss
from discontinued operations attributable to common
stockholders
|
(0.38)
|
(1.31)
|
||
Gain
on sale of EDC U.S. Operations
|
0.08
|
-
|
||
Net
loss per weighted average common share
|
$ (1.50)
|
$ (1.55)
|
||
LOSS
PER WEIGHTED AVERAGE DILUTED COMMON SHARE (1):
|
||||
Loss
from continuing operations attributable to common
stockholders
|
$ (1.20)
|
$ (0.24)
|
||
Discontinued
operations attributable to common stockholders:
|
||||
Loss
from discontinued operations attributable to common
stockholders
|
(0.38)
|
(1.31)
|
||
Gain
on sale of EDC U.S. Operations
|
0.08
|
-
|
||
Net
loss per weighted average common share
|
$ (1.50)
|
$ (1.55)
|
||
AMOUNTS
ATTRIBUTABLE TO EDCI HOLDINGS, INC. COMMON STOCKHOLDERS
|
||||
Loss
from continuing operations
|
$ (8,078)
|
|
$ (1,641)
|
|
Loss
from discontinued operations
|
(2,550)
|
(9,051)
|
||
Gain
on sale of EDC U.S. Operations
|
589
|
-
|
||
Net
Loss
|
$ (10,039)
|
$ (10,692)
|
||
(1) Income
(loss) per weighted average common share amounts are rounded to the
nearest $.01; therefore, such rounding may
|
||||
impact
individual amounts presented.
|
||||
See
Notes to Condensed Consolidated Financial
Statements.
|
EDCI
HOLDINGS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||
AND
COMPREHENSIVE LOSS
|
||||||||
(In
thousands)
|
||||||||
(Unaudited)
|
||||||||
Accumulated
|
||||||||
Common Stock
|
Additional
|
Accumulated
|
Other Comprehensive
|
Treasury Stock
|
Noncontrolling
|
|||
Shares
|
|
Paid-in Capital
|
Deficit
|
Income
|
Shares
|
|
Interest
|
|
Balances,
January 1, 2009
|
7,019
|
$ 140
|
$ 371,091
|
$ (294,988)
|
$ 4,583
|
325
|
$
(1,427)
|
$ 5,205
|
Net
loss
|
-
|
-
|
-
|
(10,133)
|
-
|
-
|
-
|
|
Foreign
currency translation
|
-
|
-
|
-
|
-
|
1,746
|
-
|
-
|
-
|
Post-retirement
and pension
|
||||||||
benefit
obligation adjustment
|
-
|
-
|
-
|
-
|
(84)
|
-
|
-
|
-
|
Net
unrealized investment gains
|
-
|
-
|
-
|
-
|
105
|
-
|
-
|
-
|
Shares
issued for restricted stock awards
|
-
|
-
|
-
|
-
|
-
|
(11)
|
-
|
-
|
Stock
based compensation
|
-
|
-
|
247
|
-
|
-
|
(27)
|
-
|
-
|
Acquisition
of treasury stock
|
-
|
-
|
-
|
-
|
-
|
46
|
(230)
|
-
|
Noncontrolling
interest in subsidiary company
|
-
|
-
|
-
|
94
|
-
|
-
|
-
|
(94)
|
Balances,
September 30, 2009
|
7,019
|
$ 140
|
$ 371,338
|
$ (305,027)
|
$ 6,350
|
333
|
$
(1,657)
|
$ 5,111
|
See
Notes to Condensed Consolidated Financial
Statements.
|
EDCI
HOLDINGS, INC. AND SUBSIDIARIES
|
|||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||
(Unaudited)
|
|||
Nine
Months Ended September 30,
|
|||
2009
|
2008
|
||
(In
thousands)
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
Net
loss attributable to common shareholders
|
$ (10,039)
|
$ (10,692)
|
|
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
|||
Gain
on sale of EDC U.S. Operations
|
(589)
|
-
|
|
Depreciation
and amortization
|
4,941
|
17,853
|
|
Stock
compensation expense
|
247
|
118
|
|
Gain
on currency swap
|
(2,111)
|
(881)
|
|
Foreign
currency transaction (gain) loss
|
(537)
|
1,965
|
|
Severance
cost for UK facility closure
|
6,725
|
-
|
|
Gain
on adjustment to discontinued operations tax payable
|
(205)
|
(1,169)
|
|
Deferred
income tax provision
|
318
|
(220)
|
|
Non-cash
interest expense
|
384
|
783
|
|
Noncontrolling
interest in subsidiary company
|
(94)
|
(203)
|
|
Other
|
(346)
|
114
|
|
Changes
in operating assets and liabilities, net of effects of business
dispositions:
|
|||
Restricted
cash
|
971
|
(456)
|
|
Accounts
receivable
|
11,337
|
4,505
|
|
Inventories
|
(680)
|
(800)
|
|
Prepaid
and other current assets
|
762
|
(1,940)
|
|
Long-term
receivables
|
245
|
414
|
|
Other
assets
|
854
|
265
|
|
Accounts
payable
|
(6,914)
|
(830)
|
|
Accrued
liabilities and income taxes payable
|
(6,035)
|
(8,974)
|
|
Other
liabilities
|
519
|
1,985
|
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(247)
|
1,837
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||
Purchases
of property, plant and equipment
|
(1,017)
|
(2,375)
|
|
Cash
restricted under long-term borrowing agreement
|
4,770
|
-
|
|
Proceeds
from sale of equipment from U.S. operations
|
2,796
|
-
|
|
Purchase
of available-for-sale securities
|
-
|
(12,615)
|
|
Proceeds
from the sale of short-term securities
|
150
|
38,523
|
|
Settlement
of cross-currency swap
|
(2,093)
|
-
|
|
NET
CASH PROVIDED BY INVESTING ACTIVITIES
|
4,606
|
23,533
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||
Repayment
of employee loans
|
(1,041)
|
(1,277)
|
|
Repayment
of capital lease obligations
|
(68)
|
(362)
|
|
Proceeds
from revolving credit facility
|
-
|
7,500
|
|
Repayment
of long-term borrowing
|
(1,023)
|
(15,212)
|
|
Acquisitions
of treasury stock
|
(230)
|
(1,396)
|
|
NET
CASH USED IN FINANCING ACTIVITIES
|
(2,362)
|
(10,747)
|
|
EFFECT
OF EXCHANGE RATE CHANGES ON CASH
|
1,248
|
(879)
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
3,245
|
13,744
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
75,112
|
63,850
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ 78,357
|
$ 77,594
|
|
See
Notes to Condensed Consolidated Financial
Statements.
|
1.
|
Business,
Liquidity and Continuing Operations
|
2.
|
Use
of Estimates
|
3.
|
Reclassifications
|
4.
|
Inventories
|
September
30,
|
December
31,
|
||
2009
|
2008
|
||
Raw
materials
|
$ 4,714
|
$ 3,859
|
|
Finished
goods
|
306
|
426
|
|
Work
in process
|
1,404
|
560
|
|
Total
|
$ 6,424
|
$ 4,845
|
5.
|
Cash
and Cash Equivalents
|
6.
|
Currency
Rate Swap
|
7.
|
Fair
Value Measurements
|
●
|
Quoted
prices for similar assets or liabilities in active
markets;
|
●
|
Quoted
prices for identical or similar assets in non-active
markets;
|
●
|
Inputs
other than quoted prices that are observable for the asset or liability;
and
|
●
|
Inputs
that are derived principally from or corroborated by other observable
market data.
|
|
|
Fair
Value Measurements at Reporting Date Using
|
||||||||
Quoted
Prices in Active
|
Significant
Other
|
Significant
Unobservable
|
||||||
September
30,
|
Markets
for Identical Assets
|
Observable
Inputs
|
Inputs
|
|||||
Description
|
2009
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||
Assets
|
||||||||
Available-for-sale
securities
|
$ 870
|
$ 870
|
||||||
Deferred
Comp Trust Plan
|
602
|
602
|
||||||
Total
|
$ 1,472
|
$ 602
|
$ -
|
$ 870
|
Fair
Value Measurements
|
||||
Using
Significant
|
||||
Unobservable
Inputs
|
||||
(Level
3)
|
||||
Auction-Rate
Securities
|
||||
Beginning
balance
|
$ 1,020
|
|||
Purchases,
sales and settlements, net
|
(150)
|
|||
Total
gains or losses (realized/unrealized)
|
||||
included
in earnings
|
-
|
|||
Ending
Balance
|
$ 870
|
8.
|
Long-Term
Debt
|
September
30,
|
December
31,
|
||
2009
|
2008
|
||
Senior
Secured Credit Facility
|
$ 7,000
|
$ 8,000
|
|
Payable
to Universal - undiscounted
|
2,845
|
2,749
|
|
Capital
Lease
|
-
|
74
|
|
Employee
Loans
|
2,547
|
3,632
|
|
Subtotal
|
12,392
|
14,455
|
|
Less:
Unamortized Discount
|
(450)
|
(546)
|
|
Total
Debt
|
$ 11,942
|
$ 13,909
|
|
Less:
Current Portion
|
(8,488)
|
(3,423)
|
|
Total
Long Term Debt
|
$ 3,454
|
$ 10,486
|
9.
|
Income
Taxes
|
10.
|
Employee
Benefit Plans
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||
2009
|
2008
|
2009
|
2008
|
|||||||
Service
cost
|
$ 212
|
$ 215
|
$ 595
|
$ 684
|
||||||
Interest
cost on APBO
|
425
|
387
|
1,170
|
1,235
|
||||||
Amortization
of prior service costs
|
3
|
(5)
|
10
|
(14)
|
||||||
Amortization
of prior service costs due to curtailment
|
-
|
-
|
(248)
|
-
|
||||||
Curtailment
gain
|
-
|
-
|
(280)
|
-
|
||||||
Amortization
of actuarial loss
|
-
|
4
|
-
|
7
|
||||||
$ 640
|
$ 601
|
$ 1,247
|
$ 1,912
|
11.
|
UK
Facility Closure and Germany
Restructuring
|
12.
|
Noncontrolling
Interests
|
13.
|
Discontinued
Operations
|
December
31, 2008
|
Adjustments
|
September
30, 2009
|
|||||
Assets
Sold and Liabilities Assumed
|
|||||||
Accounts
receivable
|
$ (381)
|
$ -
|
$ (381)
|
||||
Inventory
|
(820)
|
-
|
(820)
|
||||
Other
current assets
|
(198)
|
-
|
(198)
|
||||
Fixed
assets
|
(7,532)
|
-
|
(7,532)
|
||||
Intangible
assets
|
(6,368)
|
-
|
(6,368)
|
||||
Accounts
payable
|
163
|
-
|
163
|
||||
Accrued
liabilities
|
878
|
-
|
878
|
||||
$ (14,258)
|
$ -
|
$ (14,258)
|
|||||
Other
expenses
|
(10,488)
|
-
|
(10,488)
|
||||
Transaction
costs
|
(600)
|
-
|
(600)
|
||||
$ 25,346
|
$ -
|
$ 25,346
|
|||||
Proceeds
|
28,058
|
589
|
28,647
|
||||
Gain
on sale
|
$ 2,712
|
$ 589
|
$ 3,301
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||
2009
|
2008
|
2009
|
2008
|
||||
Net
sales
|
$ -
|
$ 29,594
|
$ -
|
$ 77,749
|
|||
Loss
from discontinued operations:
|
|||||||
Loss
from operations before income taxes
|
(126)
|
(1,638)
|
(2,885)
|
(10,363)
|
|||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
|||
Loss
from operations
|
$ (126)
|
$ (1,638)
|
$ (2,885)
|
$ (10,363)
|
|||
Gain
on disposal before income taxes
|
409
|
-
|
589
|
-
|
|||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
|||
Gain
on disposal of discontinued operations
|
409
|
-
|
589
|
-
|
|||
Gain
(loss) from discontinued operations
|
$ 283
|
$ (1,638)
|
$ (2,296)
|
$ (10,363)
|
September
30,
|
December
31,
|
||
2009
|
2008
|
||
Current
Assets
|
|||
Accounts
receivable
|
$ -
|
$ 5,093
|
|
Inventory
|
-
|
515
|
|
Prepaid
and other current assets
|
202
|
3,082
|
|
$ 202
|
$ 8,690
|
||
Current
Liabilities
|
|||
Accounts
payable
|
$ 13
|
$ 3,268
|
|
Accrued
employee wages and benefits
|
-
|
1,651
|
|
Accrued
income and other taxes
|
122
|
2
|
|
Accrued
other
|
1,515
|
4,759
|
|
$ 1,650
|
$ 9,680
|
||
Non-Current
Liabilities
|
|||
Other
|
-
|
41
|
|
$ -
|
$ 41
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||
2009
|
2008
|
2009
|
2008
|
||||
Net
sales
|
$ -
|
$ -
|
$ -
|
$ -
|
|||
Income
(loss) from discontinued operations:
|
|||||||
Income
(Loss) from operations before income taxes
|
118
|
71
|
84
|
5
|
|||
Benefit
for income taxes
|
(64)
|
(76)
|
(205)
|
(1,164)
|
|||
Income
from operations
|
$ 182
|
$ 147
|
$ 289
|
$ 1,169
|
|||
Gain
on disposal before income taxes
|
-
|
-
|
-
|
-
|
|||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
|||
Gain
on disposal of discontinued operations
|
-
|
-
|
-
|
-
|
|||
Income
from discontinued operations
|
$ 182
|
$ 147
|
$ 289
|
$ 1,169
|
14.
|
Segment
Reporting
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||
2009
|
2008
|
2009
|
2008
|
||||
Revenues
|
Revenues
|
||||||
United
Kingdom
|
6,227
|
15,562
|
22,393
|
44,335
|
|||
Germany
|
35,066
|
41,079
|
94,565
|
122,814
|
|||
Other
|
1,489
|
1,576
|
4,491
|
5,459
|
|||
Consolidated
|
$ 42,782
|
$ 58,217
|
$ 121,449
|
$ 172,608
|
15.
|
Comprehensive
Loss
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||
2009
|
2008
|
2009
|
2008
|
||||
Net
income (loss)
|
$ (904)
|
$ 1,051
|
$ (10,133)
|
$ (10,895)
|
|||
Foreign
currency translation
|
561
|
(3,984)
|
1,746
|
(410)
|
|||
Post-retirement
and pension benefit obligation
|
62
|
(1)
|
(84)
|
(7)
|
|||
Net
unrealized investment gains (losses)
|
66
|
(213)
|
105
|
(239)
|
|||
Comprehensive
Loss
|
$ (215)
|
$ (3,147)
|
$ (8,366)
|
$ (11,551)
|
16.
|
Loss
per Common Share
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||
2009
|
2008
|
2009
|
2008
|
|||||
Numerator:
|
||||||||
Income
(loss) from continuing operations attributable to common
shareholders
|
$ (1,359)
|
$ 2,536
|
$ (8,078)
|
$ (1,641)
|
||||
Income
(loss) from discontinued operations, net of tax attributable to common
shareholders
|
50
|
(1,524)
|
(2,550)
|
(9,051)
|
||||
Gain
on sale of EDC U.S. Operations
|
409
|
-
|
589
|
-
|
||||
Net
income (loss) attributable to common shareholders
|
$ (900)
|
$ 1,012
|
$ (10,039)
|
$ (10,692)
|
||||
Denominator:
|
||||||||
Denominator
for basic income (loss) per share - weighted average
shares
|
6,702
|
6,797
|
6,704
|
6,889
|
||||
Effect
of dilutive securities: restricted stock awards
|
-
|
2
|
-
|
-
|
||||
Denominator
for diluted income (loss) per share-adjusted weighted average shares and
assumed conversions
|
6,702
|
6,799
|
6,704
|
6,889
|
||||
Income
(loss) per weighted average common share (2):
|
||||||||
Income
(loss) from continuing operations attributable to common
shareholders
|
$ (0.20)
|
$ 0.37
|
$ (1.20)
|
$ (0.24)
|
||||
Income
(loss) from discontinued operations, net of tax attributable to common
shareholders
|
0.01
|
(0.22)
|
(0.38)
|
(1.31)
|
||||
Gain
on sale of EDC U.S. Operations
|
0.06
|
-
|
0.08
|
-
|
||||
Income
(loss) attributable to common shareholders
|
$ (0.13)
|
$ 0.15
|
$ (1.50)
|
$ (1.55)
|
||||
Income
(loss) per weighted average diluted common share (2):
|
||||||||
Income
(loss) from continuing operations attributable to common
shareholders
|
$ (0.20)
|
$ 0.37
|
$ (1.20)
|
$ (0.24)
|
||||
Income
(loss) from discontinued operations, net of tax attributable to common
shareholders
|
0.01
|
(0.22)
|
(0.38)
|
(1.31)
|
||||
Gain
on sale of EDC U.S. Operations
|
0.06
|
-
|
0.08
|
-
|
||||
Income
(loss) attributable to common shareholders
|
$ (0.13)
|
$ 0.15
|
$ (1.50)
|
$ (1.55)
|
||||
Dilutive
securities not included above due anti-dilutive effect as a result of the
net loss position
|
8
|
-
|
3
|
1
|
||||
Anti-dilutive
securities not included above: stock options
|
139
|
140
|
142
|
140
|
||||
(1) All
shares and per share amounts displayed in the above table reflect the
effect of the reorganization
|
||||||||
as
disclosed in the Company's Annual Report on 10-K for the year ended
December 31, 2008
|
||||||||
(2) Income
(loss) per weighted average common share amounts are rounded to the
nearest $.01; therefore,
|
||||||||
such
rounding may impact individual amounts presented.
|
17.
|
Commitments
and Contingencies
|
18.
|
New
Accounting Pronouncements
|
|
September
30, 2008
|
Volume
|
Price/Mix
|
Exchange
Rate
|
September
30, 2009
|
|||||
Product
Revenues
|
$ 43.6
|
$ (7.9)
|
$ (2.7)
|
$ (2.1)
|
$ 30.9
|
|||||
Service
Revenues
|
14.6
|
(2.0)
|
(0.1)
|
(0.6)
|
11.9
|
|||||
Total
Revenue
|
$ 58.2
|
$ (9.9)
|
$ (2.8)
|
$ (2.7)
|
$ 42.8
|
|
September
30, 2008
|
Volume
|
Cost/Mix
|
Exchange
Rate
|
September
30, 2009
|
||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
||||||
Product
Revenues
|
$ 5.8
|
13.2%
|
$
(2.4)
|
-2.1%
|
$ -
|
0.0%
|
$ -
|
0.0%
|
$ 3.4
|
11.0%
|
|||||
Service
Revenues
|
5.0
|
34.5%
|
(1.2)
|
-3.9%
|
-
|
0.0%
|
(0.2)
|
-0.6%
|
3.6
|
30.1%
|
|||||
Total
Gross Profit
|
$
10.8
|
18.5%
|
$
(3.6)
|
-2.0%
|
$ -
|
0.0%
|
$
(0.2)
|
-0.1%
|
$ 7.0
|
16.3%
|
September
30, 2008
|
Volume
|
Price/Mix
|
Exchange
Rate
|
September
30, 2009
|
||||||
Product
Revenues
|
$ 128.5
|
$ (19.6)
|
$ (5.9)
|
$ (13.8)
|
$ 89.2
|
|||||
Service
Revenues
|
44.1
|
(8.0)
|
(0.1)
|
(3.7)
|
32.3
|
|||||
Total
Revenue
|
$ 172.6
|
$ (27.6)
|
$ (6.0)
|
$ (17.5)
|
$ 121.5
|
September
30, 2008
|
Volume
|
Cost/Mix
|
Exchange
Rate
|
September
30, 2009
|
|||||||||||
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
$
|
%
|
||||||
Product
Revenues
|
$
17.2
|
13.4%
|
$ (6.3)
|
-2.0%
|
$ 0.1
|
0.0%
|
$ (1.2)
|
-0.4%
|
$ 9.8
|
11.0%
|
|||||
Service
Revenues
|
14.1
|
32.0%
|
(4.9)
|
-5.0%
|
0.2
|
0.2%
|
(0.9)
|
-0.9%
|
8.5
|
26.2%
|
|||||
Total
Gross Profit
|
$
31.3
|
18.2%
|
$
(11.2)
|
-2.7%
|
$ 0.3
|
0.1%
|
$ (2.1)
|
-0.5%
|
$
18.3
|
15.1%
|
●
|
A
decrease of $11.3 million in accounts receivable in the nine months ended
September 30, 2009 compared to a decrease of $4.5 million in the nine
months ended September 30, 2008.
The overall decrease in accounts receivable reflects the collection of
significant accounts receivable balances related to our now discontinued
U.S. operations, which were outstanding at year end and the decrease in
sales volumes in the nine months ended September 30, 2009
compared to the nine months ended September 30, 2008,
including the wind down of our UK
operations.
|
●
|
A
decrease of $6.9 million in accounts payable in the nine months ended
September 30, 2009
compared to a decrease of $0.8 million in the nine months ended September
30, 2008.
The nine months ended September 30, 2009
reflects the payment of accounts payable balances related to our now
discontinued U.S. operations, which were outstanding at year
end, lower purchasing levels in our continuing operations as volumes
have declined and the wind down of our UK
operations.
|
●
|
A
decrease of $6.0 million in accrued liabilities and income taxes payable
in the nine months ended September 30, 2009 compared to a decrease of $9.0
million in the nine months ended September 30, 2008. The
decrease in the 2009 period reflects the settlement of approximately $5.0
million in liabilities related to our now discontinued U.S. operations.
|
●
|
We
have made estimates regarding the expense of personnel required and other
operating expenses (including board expenses, legal, accounting and other
professional fees) necessary to dissolve and liquidate EDCIH. Our actual
expenses could vary significantly and depend on the timing and manner of
the sale of our non-cash assets, the satisfaction of any contingent or
conditional claims and liabilities, the timing of and ability to limit
public company expenses, and EDC’s ability to continue to support its
allocation of shared expenses, among other factors. As a result, we may
incur additional expenses above our current estimates, which could
substantially reduce funds available for distribution to our stockholders;
and
|
●
|
We
have made estimates regarding the appropriate reserves required to satisfy
all current, contingent or conditional claims and liabilities, including
unknown claims that are likely to arise or to become known to EDCIH within
10 years after the effective date of our dissolution (the “Effective
Date”). It is extremely difficult to anticipate our reserve for currently
unknown liabilities. Our actual costs of defending and resolving any
asserted claims (and the amount and nature of future claims) could vary
significantly from those estimates, which could substantially reduce funds
available for distribution to our stockholders and potentially result in
liabilities to our stockholders up to the amount of liquidating
distributions received by such stockholders. For a discussion
of those liabilities, please see “Risk Factors- If the amount of
our contingency reserve is insufficient to satisfy the aggregate amount of
our liabilities and other obligations, each stockholder may be liable to
our creditors for the amount of liquidating distributions received by such
stockholder under the Plan of Dissolution, which could also have adverse
tax consequences.”
|
●
|
the
preparation, review, filing and dissemination of SEC
filings;
|
●
|
maintenance
of effective internal controls over financial reporting;
and
|
●
|
audits
and reviews conducted by our independent registered public
accountants.
|
Total
number
|
Average
price
|
Total
number of shares
|
Maximum
number of shares that
|
of
shares
|
paid
per
|
purchased
as part of publicly
|
may
yet be purchased under the
|
|
Period
|
purchased
|
share
|
announced
plans or programs
|
plans
or programs
|
July
1 through July 31
|
3,872
|
$ 5.04
|
3,872
|
804,405
|
August
1 through August 31
|
14,415
|
$ 5.04
|
14,415
|
789,990
|
September
1 through September 30
|
10,600
|
$ 4.99
|
10,600
|
779,390
|
Total
|
28,887
|
$ 5.02
|
28,887
|
779,390
|
3.1
|
Composite
Certificate of Incorporation of the Registrant reflecting the Certificate
of Amendment filed December 8, 1995 was filed as Exhibit 3.1 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31,
1995 and is incorporated herein by reference.
|
|
3.2
|
Restated
by-laws of the Registrant effective June 7, 1990, as amended September 21,
1994 was filed as Exhibit 3.5 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and is incorporated herein by
reference.
|
|
3.3
|
Certificate
of Ownership and Merger of Entertainment Distribution Company Merger Sub,
Inc. into Glenayre Technologies, Inc. dated May 10, 2007 was filed May 10,
2007 as Exhibit 3.1 to the Registrant’s current report on Form 8-K and is
incorporated herein by reference.
|
|
15.1
|
Letter
regarding unaudited financial information.
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a – 14(a)/15d – 14(a),
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of Chief Accounting Officer pursuant to Rule 13a – 14(a)/15d – 14(a),
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|