UMG TO SELL MANUFACTURING AND DISTRIBUTION FACILITIES TO GLENAYRE TECHNOLOGIES

Universal Music Group has become even leaner and meaner with the sale of its CD/DVD manufacturing and physical distribution facilities in North America and Central Europe to messaging company Glenayre Technologies. These facilities include plants in Hanover, Germany, and Grover, NC, as well as three distribution centers in the U.S. and one in Europe. The price tag is $122 million, according to sources.

In a closely related move, Glenayre has acquired Entertainment Distribution Company, the firm founded by former IDJ and WEA chief Jim Caparro in 2003. As part of this agreement, EDC has inked a long-term deal to manufacture CDs and DVDs for UMG in North America and Europe. EDC will use these facilities and their current employees as the core of its operation, thus making the transition orderly and seamless.

The members of the board of directors of Glenayre will serve as directors of EDC, specifically with Thomas Costabile will lead EDC as Executive Vice President/CEO, reporting to Clarke Bailey, who will serve as Chairman and interim CEO. Costabile was formerly President of WEA, and before that he served as SVP Operations for Sony Music.

Said UMG Chairman/CEO Doug Morris of the deal, "We are pleased to have reached an agreement with Glenayre that not only ensures our employees with an exciting new home but will provide UMG with the highest quality of uninterrupted manufacturing and physical distribution services in the business. Like many well run businesses, we are constantly seeking more efficient ways to operate. And this agreement will allow us to invest even more resources in such core functions as artist signings and development."

Commented Bailey, "This acquisition allows Glenayre to become a significant participant in the manufacture and distribution of entertainment products. The CD market recovered in 2004 after several years of decline due in part to significant progress made in battling piracy and illegal digital downloads. The sale of CDs is believed to be complementary to the growth of MP3 and iPod users, and new formats such as DualDiscs are predicted to contribute to increased demand for CDs. Universal Music is the largest music company in the world, and we are proud and honored to be their partner."

Caparro, who has been President/CEO of Atari for the last two years, states, “My vision for EDC has not changed. Universal's well-managed facilities provide the perfect springboard to rapidly grow EDC into the premier manufacturer and distributor of entertainment products and services. Moving forward, we will actively seek new customers while expanding our services abroad."