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Press release from Business Wire

PGi Reports Fourth Quarter and Fiscal 2010 Results: Q4 Revenues $108.8M, Non-GAAP Diluted EPS from Continuing Operations $0.10*

<p class='bwalignc'> <i>Company Provides 2011 Financial Outlook</i> </p>

Thursday, February 24, 2011

PGi Reports Fourth Quarter and Fiscal 2010 Results: Q4 Revenues $108.8M, Non-GAAP Diluted EPS from Continuing Operations $0.10*16:05 EST Thursday, February 24, 2011 ATLANTA (Business Wire) -- Premiere Global Services, Inc. (NYSE: PGI), a global leader in virtual meetings, today announced results for the fourth quarter and fiscal year ended December 31, 2010. In the fourth quarter of 2010, net revenues totaled $108.8 million, diluted EPS from continuing operations was ($0.01) and non-GAAP diluted EPS from continuing operations was $0.10.* In the fourth quarter of 2009, net revenues totaled $108.0 million, diluted EPS from continuing operations was $0.07, and non-GAAP diluted EPS from continuing operations was $0.15.* Results for 2009 are reclassified to reflect the PGiSend business, which was sold in October 2010, as discontinued operations. (See our current report on Form 8-K, filed this afternoon, for pro forma results from continuing operations, excluding the PGiSend business.) “We exited 2010 as a singularly focused virtual meetings company, with a return to revenue growth,” said Boland T. Jones, PGi founder, chairman and CEO. “We are pleased with the early response to our new iMeet® and GlobalMeet® solutions. With good momentum in customer orders and solid pipelines developing for both products, along with improving trends in our base business, we remain optimistic about the year ahead.” 2010 Results In 2010, net revenues totaled $441.8 million, diluted EPS from continuing operations totaled $0.15 and non-GAAP diluted EPS from continuing operations was $0.51.* In 2009, net revenues totaled $454.0 million, diluted EPS from continuing operations totaled $0.43 and non-GAAP diluted EPS from continuing operations was $0.78.* 2011 Financial Outlook The following statements are based on PGi's current expectations. These statements contain forward-looking statements and company estimates, and actual results may differ materially. The company assumes no duty to update any forward-looking statements made in this press release. Based on current trends and foreign currency exchange rates, the company anticipates net revenues from continuing operations in 2011 will be in the range of $450-$460 million and non-GAAP diluted EPS from continuing operations will be in the range of $0.56-$0.60*, including marketing and advertising costs associated with the launch of its new virtual meetings solutions. PGi will host a conference call this afternoon at 5:00 p.m., Eastern Time, to discuss these results. To participate in the call, please dial-in to the appropriate number 5-10 minutes prior to the scheduled start time: (800) 406-6465 (U.S. and Canada) or (913) 312-0727 (International). The conference call will simultaneously be webcast. Please visit www.pgi.com for webcast details and conference call replay information, as well as the webcast archive and the text of the earnings release, including the financial and statistical information to be presented during the call. * Non-GAAP Financial Measures To supplement the company's consolidated financial statements presented in accordance with GAAP, we have included the following non-GAAP measures of financial performance: non-GAAP operating income, non-GAAP net income from continuing operations, non-GAAP diluted net income per share (EPS) from continuing operations and organic growth. The company has also included these non-GAAP measures, as well as net revenues and segment net revenues, on a constant currency basis. Management uses these measures internally as a means of analyzing the company's current and future financial performance and identifying trends in our financial condition and results of operations. We have provided this information to investors to assist in meaningful comparisons of past, present and future operating results and to assist in highlighting the results of ongoing core operations. Please see the table attached for calculation of these non-GAAP financial measures and for reconciliation to the most directly comparable GAAP measures. These non-GAAP financial measures may differ materially from comparable or similarly titled measures provided by other companies and should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. About Premiere Global Services, Inc. │PGi PGi is a global leader in virtual meetings. For nearly 20 years, we have innovated technologies that help companies and individuals meet and collaborate in more enjoyable and productive ways. Every month, we bring together over 15 million people in nearly 4 million virtual meetings. Headquartered in Atlanta, PGi has a presence in 24 countries worldwide. For more information, visit us at www.pgi.com. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in Premiere Global Services, Inc.'s forward-looking statements, including, but not limited to, the following factors: competitive pressures, including pricing pressures; technological changes; the development of alternatives to our services; general domestic and international economic, business or political conditions; risks associated with challenging global economic conditions or a prolonged recession, including customer consolidations, restructuring, bankruptcies or payment defaults; market acceptance of our new services and enhancements, including iMeet® and GlobalMeet®; our ability to complete acquisitions and successfully integrate acquired operations; concerns regarding the security of sending information over the Internet and public networks; our ability to upgrade our equipment or increase our network capacity; service interruptions; our dependence on telecommunications supply agreements; our financial leverage; our dependence on our subsidiaries for cash flow; future write-downs of goodwill or other intangible assets; assessments of income, sales and other taxes for which we have not accrued; our ability to attract and retain key personnel; our ability to protect our proprietary technology and intellectual property rights; our ability to successfully manage the post-sale aspects of the divestiture of our PGiSend business, including any financial effect from the loss of PGiSend revenue or earnings; possible adverse results of pending or future litigation or infringement claims; federal, state or international legislative or regulatory changes, including further government regulations applicable to traditional telecommunications service providers; risks associated with international operations and fluctuations in currency exchange rates; changes in and the successful execution of restructuring and cost reduction initiatives and the market reaction thereto; and other factors described from time to time in our press releases, reports and other filings with the SEC, including but not limited to the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2009, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement. PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)           Three Months EndedTwelve Months EndedDecember 31,December 31,2010200920102009(Unaudited)(Unaudited)   Net revenues $ 108,824 $ 107,989 $ 441,753 $ 453,962 Operating expenses: Cost of revenues (exclusive of depreciation and amortization shown  separately below) 44,434 42,958 178,699 178,917 Selling and marketing 31,773 29,646 122,034 118,386 General and administrative (exclusive of expenses  shown separately below) 14,621 14,871 58,576 56,286 Research and development 3,541 2,796 14,136 11,307 Excise and sales tax expense - - 439 - Depreciation 7,064 5,998 25,980 22,159 Amortization 1,616 2,357 7,386 10,517 Restructuring costs 5,350 2,280 12,257 9,427 Asset impairments 114 42 290 684 Net legal settlements and related expenses 244 182 659 297 Acquisition-related costs   -     -     316     612   Total operating expenses   108,757     101,130     420,772     408,592     Operating income   67     6,859     20,981     45,370     Other (expense) income: Interest expense (1,649 ) (1,935 ) (10,785 ) (11,308 ) Unrealized gain on change in fair value of interest rate swaps - 494 1,228 3,366 Interest income 48 153 157 419 Other, net   (369 )   114     (1,075 )   311   Total other expense   (1,970 )   (1,174 )   (10,475 )   (7,212 )   Income (loss) from continuing operations before income taxes (1,903 ) 5,685 10,506 38,158 Income tax (benefit) expense   (1,078 )   1,848     1,540     12,400   Net income (loss) from continuing operations   (825 )   3,837     8,966     25,758     Income (loss) on discontinued operations, net of taxes (10,126 ) 4,379 (4,135 ) (12,149 )         Net income (loss) $ (10,951 ) $ 8,216   $ 4,831   $ 13,609     BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING   56,910     58,576     58,009     58,823     Basic net income (loss) per share Continuing operations $ (0.01 ) $ 0.07 $ 0.15 $ 0.44 Discontinued operations   (0.18 )   0.07     (0.07 )   (0.21 ) Net income (loss) per share $ (0.19 ) $ 0.14   $ 0.08   $ 0.23     DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING   56,910     58,880     58,355     59,310     Diluted net income (loss) per share Continuing operations $ (0.01 ) $ 0.07 $ 0.15 $ 0.43 Discontinued operations   (0.18 )   0.07     (0.07 )   (0.20 ) Net income (loss) per share $ (0.19 ) $ 0.14   $ 0.08   $ 0.23     PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share data)       December 31,December 31,20102009(Unaudited)ASSETSCURRENT ASSETS Cash and equivalents $ 15,101 $ 41,402 Accounts receivable (less allowances of $930 and $1,702, respectively) 64,243 89,906 Prepaid expenses and other current assets 19,941 10,735 Income taxes receivable 2,870 3,313 Deferred income taxes, net 5,337 7,261 Assets of a disposal group held for sale   4,319     -   Total current assets   111,811     152,617     PROPERTY AND EQUIPMENT, NET 107,238 137,235   OTHER ASSETS Goodwill 296,681 354,609 Intangibles, net of amortization 16,967 24,840 Deferred income taxes, net 1,442 2,703 Restricted cash - 103 Other assets   7,518     9,432   TOTAL ASSETS $ 541,657   $ 681,539     LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES Accounts payable $ 42,282 $ 51,502 Income taxes payable 768 7,820 Accrued taxes, other than income taxes 4,671 6,947 Accrued expenses 27,585 28,543 Current maturities of long-term debt and capital lease obligations 3,577 3,596 Accrued restructuring costs 7,273 7,765 Liabilities of a disposal group held for sale   3,143     -   Total current liabilities   89,299     106,173     LONG-TERM LIABILITIES Long-term debt and capital lease obligations 180,167 262,927 Accrued restructuring costs 2,321 5,392 Accrued expenses 18,032 17,133 Deferred income taxes, net   9,823     8,872   Total long-term liabilities   210,343     294,324     SHAREHOLDERS' EQUITY Common stock, $0.01 par value; 150,000,000 shares authorized,  52,253,125 and 59,392,311 shares issued and outstanding, respectively 523 594 Additional paid-in capital 491,833 544,896 Notes receivable, shareholder - (1,814 ) Accumulated other comprehensive gain 13,679 6,217 Accumulated deficit   (264,020 )   (268,851 ) Total shareholders' equity   242,015     281,042   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 541,657   $ 681,539     PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)       Years EndedDecember 31,20102009(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,831 $ 13,609 Loss from discontinued operations, net of taxes   4,135     12,149   Net income from continuing operations 8,966 25,758 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 25,980 22,159 Amortization 7,386 10,517 Amortization of debt issuance costs 917 614 Write-off of unamortized debt issuance costs 161 - Net legal settlements and related expenses 659 297 Payments for legal settlements and related expenses (417 ) (132 ) Deferred income taxes, net of effect of acquisitions (3,448 ) 1,180 Restructuring costs 12,257 9,427 Payments for restructuring costs (9,537 ) (4,326 ) Asset impairments 290 684 Equity-based compensation 8,597 10,495 Excess tax benefits from share-based payment arrangements - (1,716 ) Unrealized gain on change in fair value of interest rate swaps (1,228 ) (3,366 ) Provision for doubtful accounts 855 209 Changes in assets and liabilities, net of effect of acquisitions and dispositions: Accounts receivable, net 1,493 4,493 Other assets and liabilities (5,752 ) 8,389 Accounts payable and accrued expenses   738     (8,555 ) Net cash provided by operating activities from continuing operations   47,917     76,127   Net cash provided in operating activities from discontinued operations   17,901     13,275   Net cash provided by operating activities   65,818     89,402     CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (32,868 ) (26,856 ) Other investing activities 10 101 Business dispositions 51,281 1,000 Business acquisitions, net of cash acquired   (591 )   (8,421 ) Net cash provided by (used in) investing activities from continuing operations   17,832     (34,176 ) Net cash used in investing activities from discontinued operations   (6,009 )   (14,577 ) Net cash provided by (used in) investing activities   11,823     (48,753 )     CASH FLOWS FROM FINANCING ACTIVITIES Principal payments under borrowing arrangements (200,586 ) (201,657 ) Proceeds from borrowing arrangements 158,756 186,019 Payment of debt issuance costs (1,165 ) (147 ) Repayment of shareholder notes 1,904 93 Excess tax benefits from share-based payment arrangements - 1,716 Purchase of treasury stock, at cost (61,603 ) (14,491 ) Exercise of stock options   -     563   Net cash used in financing activities from continuing operations   (102,694 )   (27,904 ) Net cash used in financing activities from discontinued operations   (90 )   (108 ) Net cash used financing activities   (102,784 )   (28,012 )   Effect of exchange rate changes on cash and equivalents   (1,158 )   1,230     NET INCREASE IN CASH AND EQUIVALENTS   (26,301 )   13,867   CASH AND EQUIVALENTS, beginning of period   41,402     27,535   CASH AND EQUIVALENTS, end of period $ 15,101   $ 41,402       PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(in thousands, except per share data)           Three Months EndedTwelve Months EndedDecember 31,December 31,2010200920102009(Unaudited)(Unaudited)Non-GAAP Operating Income (1) Operating income, as reported $ 67 $ 6,859 $ 20,981 $ 45,370 Restructuring costs 5,350 2,280 12,257 9,427 Excise and sales tax expense - - 439 - Asset impairments 114 42 290 684 Net legal settlements and related expenses 244 182 659 297 Equity-based compensation 1,619 2,372 8,597 10,495 Acquisition-related costs - - 316 612 Amortization   1,616     2,357     7,386     10,517   Non-GAAP operating income $ 9,010   $ 14,092   $ 50,925   $ 77,402     Non-GAAP Net Income from Continuing Operations (1) Net income (loss) from continuing operations, as reported $ (825 ) $ 3,837 $ 8,966 $ 25,758 Elimination of non-recurring tax adjustments 86 74 (1,192 ) 495 Unrealized gain on change in fair value of interest rate swaps - (340 ) (909 ) (2,316 ) Restructuring costs 3,959 1,569 9,070 6,487 Excise and sales tax expense - - 325 - Excise and sales tax and uncertain tax position interest (145 ) - 336 - Asset impairments 84 29 215 471 Net legal settlements and related expenses 181 125 488 204 Equity-based compensation 1,198 1,632 6,362 7,221 Acquisition-related costs - - 234 421 Amortization 1,196 1,622 5,466 7,236 Foreign exchange losses 21 - 241 - Debt refinance costs   -     -     290     -   Non-GAAP net income from continuing operations $ 5,755   $ 8,548   $ 29,892   $ 45,977     Non-GAAP Diluted EPS from Continuing Operations (1) (2) Diluted net income (loss) per share from continuing operations, as reported $ (0.01 ) $ 0.07 $ 0.15 $ 0.43 Elimination of non-recurring tax adjustments - - (0.02 ) 0.01 Unrealized gain on change in fair value of interest rate swaps - (0.01 ) (0.02 ) (0.04 ) Restructuring costs 0.07 0.03 0.16 0.11 Excise and sales tax expense - - 0.01 - Excise and sales tax and uncertain tax position interest - - 0.01 - Asset impairments - - - 0.01 Net legal settlements and related expenses - - 0.01 - Equity-based compensation 0.02 0.03 0.11 0.12 Acquisition-related costs - - - 0.01 Amortization 0.02 0.03 0.09 0.12 Foreign exchange losses - - - - Debt refinance costs   -     -     -     -   Non-GAAP diluted EPS from continuing operations $ 0.10   $ 0.15   $ 0.51   $ 0.78       (1) Management believes that presenting non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information regarding underlying trends in the company's continuing operations. Management expects equity-based compensation and amortization expenses to be recurring costs and presents non-GAAP diluted EPS from continuing operations to exclude these non-cash items as well as non-recurring items that are unrelated to the company's ongoing operations, including tax adjustments, unrealized gain on change in fair value of interest rate swaps, restructuring costs, excise and sales tax and uncertain tax position expense and interest, asset impairments, net legal settlements and related expenses, acquisition-related costs, foreign exchange losses and debt refinance costs. These non-cash and non-recurring items are presented net of taxes for non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations.   (2) For the three months ended December 31, 2010, diluted net loss per share from continuing operations, as reported, is calculated using basic weighted- average shares outstanding of 56,910. The effect of share-based awards is excluded from the shares used in this calculation because such effect is anti-dilutive. However, non-GAAP diluted EPS from continuing operations is calculated using diluted weighted-average shares outstanding of 57,222. The effect of share-based awards is included in the shares used in the calculation of non-GAAP diluted EPS from continuing operations because such effect is dilutive.   PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAPCONSTANT CURRENCY ADJUSTMENTS AND ORGANIC GROWTH     Prior Year Quarter Constant Currency Adjustments (3)     Q4 - 10(Constantcurrency)Impact offluctuations inforeign currencyexchange ratesQ4 - 10(Actual)(Unaudited, in thousands, except per share data)   Net Revenues $ 108,715 $ 109 $ 108,824 North America Net Revenue $ 73,543 $ 179 $ 73,722 Europe Net Revenue $ 23,077 $ (918 ) $ 22,159 Asia Pacific Net Revenue $ 12,095 $ 848 $ 12,943 Non-GAAP Operating Income $ 8,881 $ 129 $ 9,010 Non-GAAP Net Income from Continuing Operations $ 5,970 $ (215 ) $ 5,755 Non-GAAP Diluted EPS from Continuing Operations $ 0.10 $ - $ 0.10   (3) Management also presents these non-GAAP financial measures, as well as net revenues and segment net revenue on a constant currency basis compared to the same quarter in the previous year to exclude the effects of foreign currency exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q4 - 09) average exchange rates.   Sequential Quarter Constant Currency Adjustments (4)     Q4 - 10(Constantcurrency)Impact offluctuations inforeign currencyexchange ratesQ4 - 10(Actual)(Unaudited, in thousands)   Net Revenues $ 107,421 $ 1,403 $ 108,824   (4) Management also presents net revenues on a constant currency basis compared to the prior quarter to exclude the effects of foreign currency exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q3 - 10) average exchange rates.   Organic Growth (5)       December 31,2009Impact offluctuations inforeign currencyexchange ratesImpact ofacquisitionsOrganic netrevenuegrowthDecember 31,2010Organic netrevenuegrowth rate(Unaudited, in thousands, except percentages)   Net Revenues, Three Months Ended $ 107,989 $ 109 $ - $ 726 $ 108,824 0.7 %   Net Revenues, Twelve Months Ended $ 453,962 $ 4,062 $ 346 $ (16,617 ) $ 441,753 -3.7 %   (5) Management defines "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations and acquisitions made during the periods presented and presents this non-GAAP financial measure to exclude the effect of these items that are not completely within management's control, such as foreign currency exchange rate fluctuations, or do not reflect the company's ongoing core operations or underlying growth, such as acquisitions.   Premiere Global Services, Inc.Investor CallsSean O?Brien, 404-262-8462Senior Vice PresidentStrategy & Communications