0000891092-11-007514.txt : 20111109 0000891092-11-007514.hdr.sgml : 20111109 20111109163922 ACCESSION NUMBER: 0000891092-11-007514 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20110930 FILED AS OF DATE: 20111109 DATE AS OF CHANGE: 20111109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIERE GLOBAL SERVICES, INC. CENTRAL INDEX KEY: 0000880804 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 593074176 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13577 FILM NUMBER: 111192139 BUSINESS ADDRESS: STREET 1: 3280 PEACHTREE RD NW STREET 2: THE TERMINUS BUILDING, SUITE 1000 CITY: ATLANTA STATE: GA ZIP: 30305-2422 BUSINESS PHONE: 4042628400 MAIL ADDRESS: STREET 1: 3280 PEACHTREE RD NW STREET 2: THE TERMINUS BUILDING, SUITE 1000 CITY: ATLANTA STATE: GA ZIP: 30305-2422 FORMER COMPANY: FORMER CONFORMED NAME: PTEK HOLDINGS INC DATE OF NAME CHANGE: 20000306 FORMER COMPANY: FORMER CONFORMED NAME: PREMIERE TECHNOLOGIES INC DATE OF NAME CHANGE: 19951219 10-Q 1 e46065_10q.htm 3RD QUARTER REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2011.

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ___________________ to ____________________

COMMISSION FILE NUMBER: 001-13577

PREMIERE GLOBAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

GEORGIA

(State or other jurisdiction of incorporation or organization)

59-3074176

(I.R.S. Employer Identification No.)

3280 PEACHTREE ROAD NE

THE TERMINUS BUILDING, SUITE 1000

ATLANTA, GEORGIA 30305

(Address of principal executive offices, including zip code)

(404) 262-8400

(Registrant’s telephone number including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes S No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	o			Accelerated filer	S
Non-accelerated filer	o	(Do not check if a smaller reporting company)		Smaller reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No S

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 1, 2011
Common Stock, $0.01 par value	50,129,426 Shares

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

Page

PART I FINANCIAL INFORMATION
	Item 1	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010	1
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010	2
		Condensed Consolidated Statement of Shareholders’ Equity for the Nine Months Ended September 30, 2011	3
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
	Item 4	Controls and Procedures	32
PART II OTHER INFORMATION
	Item 1	Legal Proceedings	33
	Item 1A.	Risk Factors	33
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 6	Exhibits	34
SIGNATURE			35
EXHIBIT INDEX			36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2011			December 31, 2010
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and equivalents	$	29,014		$	15,101
Accounts receivable (net of allowances of $755 and $930, respectively)		73,556			64,243
Prepaid expenses and other current assets		15,100			19,941
Income taxes receivable		1,961			2,870
Deferred income taxes, net		1,344			5,337
Assets of a disposal group held for sale		3,489			4,319
Total current assets		124,464			111,811

PROPERTY AND EQUIPMENT, NET		104,239			107,238

OTHER ASSETS
Goodwill		295,155			296,681
Intangibles, net of amortization		12,088			16,967
Deferred income taxes, net		2,523			1,442
Other assets		7,738			7,518
Total assets	$	546,207		$	541,657

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	45,126		$	42,282
Income taxes payable		995			768
Accrued taxes, other than income taxes		4,202			4,671
Accrued expenses		23,715			27,585
Current maturities of long-term debt and capital lease obligations		3,864			3,577
Accrued restructuring costs		2,044			7,273
Liabilities of a disposal group held for sale		3,193			3,143
Total current liabilities		83,139			89,299

LONG-TERM LIABILITIES
Long-term debt and capital lease obligations		200,382			180,167
Accrued restructuring costs		1,723			2,321
Accrued expenses		16,670			18,032
Deferred income taxes, net		374			9,823
Total long-term liabilities		219,149			210,343

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS’ EQUITY
Common stock, $.01 par value; 150,000,000 shares authorized, 50,066,012 and 52,253,125 shares issued and outstanding, respectively		501			523
Additional paid-in capital		475,972			491,833
Accumulated other comprehensive income		11,119			13,679
Accumulated deficit		(243,673	)		(264,020	)
Total shareholders’ equity		243,919			242,015
Total liabilities and shareholders’ equity	$	546,207		$	541,657

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010


Net revenues	$	119,184		$	109,497		$	355,099		$	332,929
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)		49,938			44,834			146,595			134,265
Selling and marketing		32,167			28,502			102,526			90,261
General and administrative (exclusive of expenses shown separately below)		14,411			14,955			42,409			43,955
Research and development		2,934			3,660			8,737			10,595
Excise and sales tax expense		331			—			352			439
Depreciation		7,737			6,375			23,172			18,916
Amortization		1,612			1,658			5,061			5,770
Restructuring costs		38			4,824			38			6,907
Asset impairments		62			47			116			176
Net legal settlements and related expenses		24			35			36			415
Acquisition-related costs		19			—			79			316
Total operating expenses		109,273			104,890			329,121			312,015

Operating income		9,911			4,607			25,978			20,914

Other (expense) income
Interest expense		(2,192	)		(2,814	)		(6,381	)		(9,136	)
Unrealized gain on change in fair value of interest rate swaps		—			254			—			1,228
Interest income		7			38			34			109
Other, net		143			(790	)		(235	)		(706	)
Total other expense		(2,042	)		(3,312	)		(6,582	)		(8,505	)

Income from continuing operations before income taxes		7,869			1,295			19,396			12,409
Income tax expense		2,047			273			5,789			2,618
Net income from continuing operations		5,822			1,022			13,607			9,791

Income from discontinued operations, net of taxes		6,735			2,788			6,740			5,991

Net income	$	12,557		$	3,810		$	20,347		$	15,782

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING		49,033			58,548			49,982			58,380

Basic net income per share
Continuing operations	$	0.12		$	0.02		$	0.27		$	0.17
Discontinued operations		0.14			0.05			0.13			0.10
Net income per share	$	0.26		$	0.07		$	0.41		$	0.27

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		49,366			58,898			50,308			58,737

Diluted net income per share
Continuing operations	$	0.12		$	0.02		$	0.27		$	0.17
Discontinued operations		0.14			0.05			0.13			0.10
Net income per share	$	0.25		$	0.06		$	0.40		$	0.27

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited, in thousands)

	Common Stock Issued			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
BALANCE, December 31, 2010	$	523		$	491,833		$	(264,020	)	$	13,679		$	242,015

Comprehensive income, net of taxes:
Net income		—			—			20,347			—			20,347
Translation adjustments, net of taxes		—			—			—			(2,560	)		(2,560	)
Comprehensive income, net of taxes														17,787

Issuance of common stock:
Equity-based compensation		—			5,107			—			—			5,107
Treasury stock purchase and retirement		(27	)		(19,360	)		—			—			(19,387	)
Tax withholding related to vesting of restricted stock, net		5			(1,318	)		—			—			(1,313	)
Income tax deficiency from equity awards		—			(290	)		—			—			(290	)

BALANCE, September 30, 2011	$	501		$	475,972		$	(243,673	)	$	11,119		$	243,919

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Nine Months Ended
	September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	20,347		$	15,782
Income from discontinued operations, net of taxes		(6,740	)		(5,991	)
Net income from continuing operations		13,607			9,791
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		23,172			18,916
Amortization		5,061			5,770
Amortization of debt issuance costs		702			667
Write-off of unamortized debt issuance costs		—			161
Net legal settlements and related expenses		36			415
Payments for legal settlements and related expenses		(36	)		(213	)
Deferred income taxes		9,465			(1,680	)
Restructuring costs		38			6,907
Payments for restructuring costs		(5,673	)		(5,421	)
Asset impairments		116			176
Equity-based compensation		5,209			6,978
Unrealized gain on change in fair value of interest rate swaps		—			(1,228	)
Provision for doubtful accounts		456			608
Changes in working capital		(12,582	)		(11,182	)
Net cash provided by operating activities from continuing operations		39,571			30,665
Net cash (used in) provided by operating activities from discontinued operations		(591	)		18,444
Net cash provided by operating activities		38,980			49,109

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(23,304	)		(25,341	)
Business dispositions		1,903			—
Business acquisitions, net of cash acquired		(1,222	)		(491	)
Net cash used in investing activities from continuing operations		(22,623	)		(25,832	)
Net cash used in investing activities from discontinued operations		—			(5,381	)
Net cash used in investing activities		(22,623	)		(31,213	)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing arrangements		(50,067	)		(120,522	)
Proceeds from borrowing arrangements		68,971			110,844
Payments of debt issuance costs		—			(1,165	)
Purchase of treasury stock, at cost		(20,911	)		(1,638	)
Net cash used in financing activities from continuing operations		(2,007	)		(12,481	)
Net cash used in financing activities from discontinued operations		—			(81	)
Net cash used in financing activities		(2,007	)		(12,562	)

Effect of exchange rate changes on cash and equivalents		(437	)		583

NET INCREASE IN CASH AND EQUIVALENTS		13,913			5,917
CASH AND EQUIVALENTS, beginning of period		15,101			41,402
CASH AND EQUIVALENTS, end of period	$	29,014		$	47,319

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

Premiere Global Services, Inc., or PGi, is a global leader in virtual meetings. For 20 years, we have innovated technologies that help people meet and collaborate in more enjoyable and productive ways. PGi has a global presence in 24 countries in our three segments in North America, Europe and Asia Pacific.

Our unaudited condensed consolidated financial statements and related footnotes have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, for interim financial information and Rule 10-01 of Regulation S-X issued by the Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe that these condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the results for interim periods shown. All significant intercompany accounts and transactions have been eliminated in consolidation. Our results of operations for the three and nine months ended September 30, 2011 are not indicative of the results that may be expected for the full fiscal year of 2011 or for any other interim period. The financial information presented herein should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2010, which includes information and disclosures not included in this quarterly report.

Unless otherwise stated, current and prior period results in our condensed consolidated statements of operations and cash flows and these notes reflect our results from continuing operations and exclude the effect of discontinued operations. See Note 4.

2. SIGNIFICANT ACCOUNTING POLICIES

Foreign Currency Translation

The assets and liabilities of subsidiaries with a functional currency other than the U.S. Dollar are translated at rates of exchange existing at our condensed consolidated balance sheet dates. Revenues and expenses are translated at average rates of exchange prevailing during the year. The resulting translation adjustments are recorded in the “Accumulated other comprehensive income” component of shareholders’ equity in our condensed consolidated balance sheets. In addition, intercompany loans with foreign subsidiaries generally are considered to be permanently invested for the foreseeable future. Therefore, all foreign currency exchange gains and losses related to these permanently invested balances are recorded in the “Accumulated other comprehensive income” component in shareholders’ equity in our condensed consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts

Included in accounts receivable at September 30, 2011 and December 31, 2010 was earned but unbilled revenue of $10.6 million and $6.5 million, respectively, which results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Earned but unbilled revenue is billed within 30 days. Provision for doubtful accounts was $0.1 million and $0.2 million for the three months ended September 30, 2011 and 2010, respectively, and was $0.5 million and $0.6 million for the nine months ended September 30, 2011 and 2010, respectively. Write-offs against the allowance for doubtful accounts were $0.3 million and $0.2 million in the three months ended September 30, 2011 and 2010, respectively, and were $0.6 million and $0.7 million in the nine months ended September 30, 2011 and 2010, respectively. Our allowance for doubtful accounts represents reserves for receivables that reduce accounts receivable to amounts expected to be collected. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as historical and anticipated customer payment performance and industry-specific economic conditions. Using these factors, management assigns reserves for uncollectible amounts by accounts receivable aging categories to specific customer accounts.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Revenue Recognition

We recognize revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenues consist primarily of usage fees generally based on per minute and per transaction methods. To a lesser extent, we charge subscription fees and have fixed-period minimum revenue commitments. Unbilled revenue consists of earned but unbilled revenue that results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Deferred revenue consists of payments made by customers in advance of the time services are rendered. Incremental direct costs incurred related to deferred revenue are deferred over the life of the contract and are recorded in “Prepaid expense and other current assets” in our condensed consolidated balance sheets. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

USF Charges

In accordance with Federal Communications Commission rules, we are required to contribute to the federal Universal Service Fund, or USF, for some of our solutions, which we recover from our applicable customers and remit to the Universal Service Administration Company. We present the USF charges that we collect and remit on a net basis, with charges to our customers netted against the amounts we remit.

Sales Tax and Excise Tax

In certain jurisdictions, we have not collected and remitted state sales tax from our customers. In addition, some of our solutions may be subject to telecommunications excise tax statutes in certain states. During the nine months ended September 30, 2011 and 2010, we made aggregate payments of $0.3 million and $1.2 million, respectively, related to the settlement of certain of these state sales tax contingencies.

We have reserves for certain sales and state excise tax contingencies based on the likelihood of obligation. At September 30, 2011 and December 31, 2010, we had reserved $1.6 million and $1.3 million, respectively, for certain sales and state excise tax contingencies and interest. These contingencies are included in “Accrued taxes, other than income taxes” in our condensed consolidated balance sheets. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. In addition, states may disagree with our method of assessing and remitting such taxes, or additional states may subject us to inquiries regarding such taxes.

Income Taxes

Our unrecognized net tax benefit of $3.5 million at September 30, 2011 and $3.7 million at December 31, 2010, if recognized, would affect our annual effective tax rate. The unrecognized net tax benefit at September 30, 2011 is included in “Other assets” and “Accrued expenses” under “Long-Term Liabilities” in our condensed consolidated balance sheets. If the statutes of limitations expire on certain unrecognized tax benefits the balance could change significantly.

As we file our remaining international tax returns, we may record additional provision to return adjustments.

Treasury Stock

All treasury stock transactions are recorded at cost, and all shares of treasury stock repurchased are retired. During the nine months ended September 30, 2011, we repurchased 2,627,164 shares of our common stock for $19.4 million in the open market pursuant to our board-approved stock repurchase program. During the nine months ended September 30, 2010, we did not repurchase any of our common stock in the open market.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

During the nine months ended September 30, 2011 and 2010, we redeemed 179,141 and 217,901 shares, respectively, of our common stock to satisfy certain of our employees’ tax withholdings due upon the vesting of their restricted stock grants and remitted $1.5 million and $1.6 million, respectively, to the Internal Revenue Service on our employees’ behalf.

Preferred Stock

We have 5.0 million shares of authorized $0.01 par value preferred stock, none of which are issued or outstanding. Under the terms of our amended and restated articles of incorporation, our board of directors is empowered to issue preferred stock without shareholder action.

Comprehensive Income

Comprehensive income represents the change in equity of a business during a period, except for investments by, and distributions to, owners. Comprehensive income was $5.3 million and $17.4 million for three months ended September 30, 2011 and 2010, respectively, and $17.8 million and $17.9 million for the nine months ended September 30, 2011 and 2010, respectively. The primary differences between net income, as reported, and comprehensive income are foreign currency translation adjustments, net of taxes.

Software Development Costs

We capitalize certain costs incurred to develop software features used as part of our service offerings within “Property and Equipment, Net” on our condensed consolidated balance sheets. We capitalized approximately $3.7 million and $4.6 million of these costs for the three months ended September 30, 2011 and 2010, respectively, and $11.2 million and $12.2 million of these costs for the nine months ended September 30, 2011 and 2010, respectively. We amortize these capitalized costs on a straight-line basis over the estimated life of the related software, not to exceed five years. Depreciation expense recorded for the developed software was $2.4 million and $1.6 million for the three months ended September 30, 2011 and 2010, respectively, and was $7.1 million and $4.3 million for the nine months ended September 30, 2011 and 2010, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is recorded under the straight-line method over the estimated useful lives of the assets, commencing when the assets are placed in service. The estimated useful lives are five to seven years for furniture and fixtures, two to five years for software and three to ten years for computer servers and Internet and telecommunications equipment. Accumulated depreciation was $107.7 million and $86.1 million as of September 30, 2011 and December 31, 2010, respectively. The cost of installation of equipment is capitalized, as applicable. Amortization of assets recorded under capital leases is included in depreciation. Assets recorded under capital leases and leasehold improvements are depreciated over the shorter of their useful lives or the term of the related lease.

Fair Value Measurements

Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The fair value amounts for cash and equivalents, accounts receivable, net, and accounts payable and accrued expenses approximate carrying amounts due to the short maturities of these instruments. The estimated fair value of our long-term debt and capital lease obligations at September 30, 2011 and December 31, 2010 was based on expected future payments discounted using current interest rates offered to us on debt of the same remaining maturity and characteristics, including credit quality, and did not vary materially from carrying value.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Goodwill

Summarized below is the carrying value of goodwill and any changes to the carrying value of goodwill from December 31, 2010 to September 30, 2011 (in thousands):

	North America			Europe			Asia Pacific			Total
Goodwill:
Gross value at December 31, 2010	$	364,457		$	19,334		$	5,313		$	389,104
Accumulated impairment losses		(92,423	)		—			—			(92,423	)
Carrying value at December 31, 2010		272,034			19,334			5,313			296,681
Impact of currency fluctuations		(1,093	)		(159	)		(274	)		(1,526	)
Change in impairment losses		—			—			—			—
Carrying value at September 30, 2011	$	270,941		$	19,175		$	5,039		$	295,155

Goodwill is not subject to amortization, but is subject to periodic reviews for impairment.

Other Intangible Assets

Summarized below are the carrying value and accumulated amortization, if applicable, by intangible asset class (in thousands):

	September 30, 2011							December 31, 2010
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Other Intangible assets:
Customer lists	$	66,979	$	(58,062	)	$	8,917	$	67,386	$	(54,307	)	$	13,079
Non-compete agreements		5,805		(5,002	)		803		5,825		(4,494	)		1,331
Developed technology		1,000		(1,000	)		—		1,000		(1,000	)		—
Other		2,731		(363	)		2,368		2,637		(80	)		2,557
Total other intangible assets	$	76,515	$	(64,427	)	$	12,088	$	76,848	$	(59,881	)	$	16,967

We record fees incurred in connection with our patents and trademarks in “Prepaid expenses and other current assets” in our condensed consolidated balance sheets until the patents and trademarks are granted or abandoned. We have $1.2 million and $0.8 million of these assets recorded as of September 30, 2011 and December 31, 2010, respectively.

Other intangible assets are amortized over an estimated useful life between one and ten years. Estimated annual amortization expense related to our other intangible assets for 2011 through 2015 is as follows (in thousands):

Year	Estimated Annual Amortization Expense

2011	$	6,313
2012	$	3,846
2013	$	1,488
2014	$	1,107
2015	$	1,103

Cost Method Investments

During June 2011, we invested approximately $1.0 million in a privately held conferencing company. The investment is accounted for under the cost method and is periodically assessed for other-than-temporary impairment using financial results, economic data and other quantitative and qualitative factors deemed applicable. In the event

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

an other-than-temporary impairment occurs, an impairment loss equal to the difference between the cost basis and the fair value will be recognized. The $1.0 million cost of this investment is carried on our condensed consolidated balance sheet at September 30, 2011 as a component of “Other assets”.

New and Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2011-08 “Goodwill and Other (Topic 350): Testing Goodwill for Impairment,” which modifies the process of testing goodwill for impairment. The update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity would not be required to calculate the fair value of a reporting unit unless the entity determines it is more likely than not, based on a qualitative assessment, the fair value of goodwill is less than its carrying amount. The guidance also includes a number of events and circumstances to consider in conducting the qualitative assessment. This guidance is effective for public companies for fiscal years beginning on or after December 15, 2011. ASU No. 2011-08 is not expected to have a material impact on our consolidated financial position or results of operations.

In June 2011, the FASB issued ASU No. 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which modifies the requirements for presenting net income and other comprehensive income and requires that all non-owner changes in shareholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment requires presentation of each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. This guidance is effective for public companies for fiscal years and interim periods beginning on or after December 15, 2011. ASU No. 2011-05 is not expected to have a material impact on our consolidated financial position or results of operations.

In May 2011, the FASB issued ASU No. 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards,” to conform existing guidance regarding fair value measurement and disclosure between GAAP and International Financial Reporting Standards. The clarifying changes relate to the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and disclosure of quantitative information about unobservable inputs used for Level 3 fair value measurements. The amendments relate to measuring the fair value of financial instruments that are managed within a portfolio and application of premiums and discounts in a fair value measurement. The amendments also require additional disclosures concerning the valuation processes used, sensitivity of the fair value measurement to changes in unobservable inputs for those items categorized as Level 3, a reporting entity’s use of a nonfinancial asset in a way that differs from the asset’s highest and best use and the categorization by level in the fair value hierarchy for items required to be measured at fair value for disclosure purposes only. This guidance is effective for public companies for fiscal years and interim periods beginning on or after December 15, 2011. ASU No. 2011-04 is not expected to have a material impact on our consolidated financial position or results of operations.

In December 2010, the FASB issued ASU No. 2010-28 “Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. Goodwill of a reporting unit is required to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This guidance is effective for public companies for fiscal years beginning on or after December 15, 2010. The adopted provisions of ASU No. 2010-28 did not have any effect on our consolidated financial position or results of operations.

In December 2010, the FASB issued ASU No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations,” which amends the FASB Accounting Standards Codification, or ASC, to require any public entity that enters into business combinations that are material on an individual or aggregate basis and presents comparative financial statements, to disclose revenue and earnings

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of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We plan to implement these provisions for all acquisitions completed beginning in 2011 and provide the appropriate disclosures for any material acquisitions.

In April 2010, the FASB issued ASU No. 2010-13 “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” which amends the ASC to provide guidance on share-based payment awards to employees with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trade. The ASU states that if such awards meet all the criteria for equity they should be classified as such and not as a liability based solely on the currency they are denominated in. This guidance is effective for fiscal years beginning on or after December 15, 2010. The adopted provisions of ASU No. 2010-13 did not have any effect on our consolidated financial position or results of operations.

In October 2009, the FASB issued ASU No. 2009-13 “Revenue Recognition, Multiple-Deliverable Revenue Arrangements,” an amendment to its accounting guidance on revenue arrangements with multiple deliverables. This new accounting guidance addresses the unit of accounting for arrangements involving multiple deliverables and how consideration should be allocated to separate units of accounting, when applicable. In the same month, the FASB also issued ASU No. 2009-14, “Software, Certain Revenue Arrangements That Include Software Elements,” which changes revenue recognition for tangible products containing software and hardware elements. This update excludes from software revenue recognition all tangible products containing both software and non-software components that function together to deliver the product’s essential functionality and includes such products in the multiple-deliverable revenue guidance discussed above. This guidance is effective for fiscal years beginning on or after June 15, 2010. The adoption of the relevant provisions of ASU No. 2009-13 and ASU No. 2009-14 did not have a material impact on our consolidated financial position or results of operations.

3. RESTRUCTURING COSTS

Below is a reconciliation of the beginning and ending balances of our accrued restructuring costs for the nine months ended September 30, 2011. All expenses associated with these activities are reflected in “Restructuring costs” in our condensed consolidated statements of operations. Cash payments for restructuring costs from continuing operations were $5.7 million and $5.4 million during the nine months ended September 30, 2011 and 2010, respectively. The components included in the reconciliation of the liability balances include activity for our continuing and discontinued operations (in thousands):

	Balance at December 31, 2010		Provisions		Cash Payments			Non-cash			Balance at September 30, 2011
Accrued restructuring costs:
Severance and exit costs	$	5,797	$	43	$	(4,673	)	$	(293	)	$	874
Contractual obligations		3,797		257		(1,307	)		146			2,893
Total restructuring costs	$	9,594	$	300	$	(5,980	)	$	(147	)	$	3,767

Realignment of Workforce – 2011

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approximately 20 positions. On a segmented basis, these restructuring costs totaled $0.5 million in North America, $0.1 million in Europe and $0.3 million in Asia Pacific. Our remaining accrual for the 2011 restructuring costs was $0.3 million at September 30, 2011, including $0.2 million for lease termination costs and $0.1 million for severance costs. We anticipate the severance costs will be paid this year, and the lease termination costs will be paid through August 31, 2013.

Realignment of Workforce – 2010

During the year ended 2010, we recorded $10.2 million of severance costs and $0.6 million of lease termination costs associated with efforts to consolidate and streamline various functions of our work force. We also recorded $1.8 million of asset impairments in connection with these restructuring efforts. In addition, we recorded $0.9 million of exit costs related to marketing efforts abandoned during the year and $0.5 million of exit costs related to the reorganization of our operating structure subsequent to the sale of our PGiSend messaging business as restructuring costs. As part of these consolidations, we eliminated approximately 165 positions. On a segment basis, these restructuring costs totaled $8.5 million in North America, including accelerated vesting of restricted stock with a fair market value of $0.2 million, $2.5 million in Europe and $1.2 million in Asia Pacific. Our remaining accrual for the 2010 restructuring costs was $0.9 million at September 30, 2011, including $0.2 million for lease termination costs and $0.7 million for severance costs. We anticipate the severance costs will be paid this year, and the lease termination costs will be paid through March 31, 2013.

Realignment of Workforce – 2009

During the year ended December 31, 2009, we executed a restructuring plan to consolidate and streamline various functions of our work force. As part of these consolidations, we eliminated approximately 500 positions. During the year ended December 31, 2009, we recorded total severance and exit costs of $14.8 million, including accelerated vesting of restricted stock with a fair market value of $0.2 million. Additionally, during the year ended December 31, 2009, we recorded $4.4 million of lease termination costs associated with office locations in North America and Europe. On a segment basis, these restructuring costs totaled $12.0 million in North America, $6.6 million in Europe and $0.6 million in Asia Pacific. Our remaining accrual for the 2009 restructuring costs, representing lease termination costs, was $2.6 million at September 30, 2011. We anticipate the lease termination costs will be paid through August 31, 2018.

4. DISCONTINUED OPERATIONS

PGiSend

On October 21, 2010, we completed the sale of our PGiSend messaging business to EasyLink Services International Corporation, or EasyLink, for an aggregate purchase price of $105.0 million, with a working capital target that was finalized in the first quarter of 2011, resulting in an additional payment from EasyLink of $1.8 million. Prior period operating results have been reclassified to present this business as discontinued operations.

Maritime Notification and Reminder Solutions

During the year ended December 31, 2010, we classified our Maritime Notification and Reminder solutions operations as a disposal group held for sale. This disposal group consists of all customers using these non-conferencing, ship-to-shore communication services targeted specifically towards shipping vessels that we resell through our Japanese subsidiary. All assets and liabilities of this disposal group have been classified separately as of December 31, 2010. At September 30, 2011 and December 31, 2010, assets of the disposal group held for sale consisted of accounts receivable of $3.5 million and $4.3 million, respectively, net of allowances of $0.3 million. At September 30, 2011 and December 31, 2010, liabilities of the disposal group held for sale consisted of $3.2 million and $3.1 million of accounts payable, respectively. We expect this disposal to be completed prior to December 31, 2011. Prior period operating results have been reclassified to present this business as discontinued operations.

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PGiMarket

On November 5, 2009, we completed the sale of our PGiMarket business. During the nine months ended September 30, 2011, we received $0.7 million in cash for the achievement of certain revenue targets in 2010 under an earn-out provision in the sale agreement.

Components of Discontinued Operations

We allocated interest expense related to our $50.0 million Term A loan, which was required to be repaid as a result of our PGiSend sale, to discontinued operations in 2010. The following amounts associated with our discontinued businesses have been segregated from continuing operations and are reflected as discontinued operations for the three and nine months ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Net revenue from discontinued operations	$	1,174		$	32,757		$	8,735		$	100,317

Income (loss) from operations		(540	)		4,595			(486	)		11,632
Interest expense		(9	)		(370	)		(70	)		(1,171	)
Income (loss) from disposal		(9	)		—			9			—
Income tax benefit (expense)		7,293			(1,437	)		7,287			(4,470	)
Income from discontinued operations, net of taxes	$	6,735		$	2,788		$	6,740		$	5,991

The results of discontinued operations include an income tax benefit of $7.3 million. This benefit includes approximately $6 million relating to changes in estimates of the tax provision that resulted from the finalization of the actual tax basis purchase price allocation received in the third quarter from EasyLink in connection with our PGiSend sale and $1 million for a correction of a valuation allowance previously recorded in 2011.

5. INDEBTEDNESS

Long-term debt and capital lease obligations at September 30, 2011 and December 31, 2010 are as follows (in thousands):

	September 30, 2011			December 31, 2010
Borrowings on credit facility	$	196,277		$	173,338
Capital lease obligations		7,969			10,406
Subtotal		204,246			183,744
Less current portion		(3,864	)		(3,577	)
Total long-term debt and capital lease obligations	$	200,382		$	180,167

During 2010, we entered into a new credit facility expiring in May 2014 and repaid and terminated our then existing credit facility. Following the retirement of our Term A loan in connection with our PGiSend sale, our facility consists of a $275.0 million revolver and an uncommitted $75.0 million accordion feature. Our subsidiary, American Teleconferencing Services, Ltd., or ATS, is the borrower under our credit facility, with PGi and certain of our material domestic subsidiaries guaranteeing the obligations of ATS under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries. Proceeds drawn under our credit facility can be used for working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under our new credit facility, at our option, is (1) the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or one-month LIBOR plus one and one-half percent) plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end, or (2) LIBOR for one, two, three, nine or 12 months adjusted for a percentage that represents the Federal Reserve Board’s reserve percentage plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end. The applicable percentages for base rate loans and LIBOR loans were 2.0% and 3.0%, respectively, at September 30, 2011. Our interest rate on LIBOR loans, which comprised substantially all of our outstanding borrowings as of September 30, 2011, was 3.2%. Our

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credit facility contains customary restrictive covenants, including financial covenants, and otherwise contains terms substantially similar to the terms in our prior credit facility.

At September 30, 2011, we were in compliance with the covenants under our credit facility. At September 30, 2011, we had $196.3 million of borrowings and $5.5 million in letters of credit outstanding under our credit facility.

Until its expiration in August 2010, we had a $100.0 million interest rate swap outstanding. This swap was designated as a cash flow hedge in 2008. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with this interest rate swap. Any changes in fair value prior to designation as a hedge, subsequent to dedesignation as a hedge, and any ineffectiveness while designated were recognized as “Unrealized gain on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our condensed consolidated statements of operations and amounted to $0.5 million and $1.0 million during the three and nine months ended September 30, 2010, respectively. As of December 31, 2010, our swaps had all expired, and no related balance is carried on our condensed consolidated balance sheets.

6. EQUITY-BASED COMPENSATION

We may issue restricted stock awards, stock options, stock appreciation rights, restricted stock units and other stock-based awards to employees, directors, non-employee consultants and advisors under our amended and restated 2004 long-term incentive plan and our amended and restated 2000 directors stock plan, each plan as amended. Options issued under our 2004 plan may be either incentive stock options, which permit income tax deferral upon exercise of options, or non-qualified options not entitled to such deferral. We may only issue non-qualified options under our directors stock plan. The compensation committee of our board of directors administers these stock plans.

Equity-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized over the applicable vesting periods. The following table presents total equity-based compensation expense for restricted stock awards included in the line items below in our condensed consolidated statements of operations (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Cost of revenues	$	60		$	64		$	128		$	218
Selling and marketing		137			446			683			1,315
Research and development		112			186			437			659
General and administrative		1,313			1,462			3,961			4,786
Equity-based compensation expense		1,622			2,158			5,209			6,978
Income tax benefits		(568	)		(755	)		(1,823	)		(2,442	)
Total equity-based compensation expense, net of tax	$	1,054		$	1,403		$	3,386		$	4,536

Restricted Stock Awards

The fair value of restricted stock awards is the market value of the stock on the date of grant. The effect of vesting conditions that apply only during the requisite service period is reflected by recognizing compensation cost only for the restricted stock awards for which the requisite service is rendered. As a result, we are required to estimate an expected forfeiture rate, as well as the probability that performance conditions that affect the vesting of certain stock-based awards will be achieved and only recognize expense for those shares expected to vest. We estimate that forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and voluntarily cancelled. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. Our estimated forfeiture rate for restricted stock awards is 1.5%.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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The following table summarizes the activity of restricted stock awards under our stock plans from December 31, 2010 to September 30, 2011:

	Shares			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2010		1,474,834		$	8.74
Granted		668,992			7.56
Vested/released		(595,773	)		9.01
Forfeited		(49,800	)		10.56
Unvested at September 30, 2011		1,498,253		$	8.05

The weighted-average grant date fair value of restricted stock awards granted during the nine months ended September 30, 2011 and 2010 was $7.56 and $7.52, respectively. The aggregate fair value of restricted stock vested was $0.8 million and $4.4 million for the three and nine months ended September 30, 2011, respectively, and $2.2 million and $5.6 million for the three and nine months ended September 30, 2010, respectively. As of September 30, 2011, we had $9.0 million of unvested restricted stock, which we will recognize over a weighted-average recognition period of 2.2 years.

Stock Options

The fair value of stock options is estimated at the date of grant with the Black-Scholes option pricing model using various assumptions such as expected life, volatility, risk-free interest rate, dividend yield and forfeiture rates. The expected life of stock-based awards granted represents the period of time that they are expected to be outstanding and is estimated using historical data. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. We have not historically paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model. Finally, we use historical data to estimate pre-vesting option forfeitures. Stock-based compensation is recorded for only those awards that are expected to vest. No stock options have been issued since the year ended December 31, 2005.

The following table summarizes the stock options activity under our stock plans from December 31, 2010 to September 30, 2011:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2010		459,836		$	9.61
Granted		—			—
Exercised		—			—
Expired		(73,667	)		10.82
Options outstanding at September 30, 2011		386,169			9.38		0.70		—
Options exercisable at September 30, 2011		386,169		$	9.38		0.70		—

As of September 30, 2011 and 2010, we had no remaining unvested stock options to be recorded as an expense for future periods.

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7. EARNINGS PER SHARE

Basic and Diluted Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding at September 30, 2011 and September 30, 2010, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings per share calculation until the shares are vested.

Diluted earnings per share includes the effect of all potentially dilutive securities on earnings per share. Our unvested restricted shares, stock options and warrants are potentially dilutive securities. The difference between basic and diluted weighted-average shares outstanding was the dilutive effect of unvested restricted shares, stock options and warrants for the three months ended September 30, 2011 and 2010. Unvested shares of our restricted stock do not contain nonforfeitable rights to dividends or dividend equivalents.

The following table represents a reconciliation of the shares used in the calculation of basic and diluted net income per share from continuing operations computations contained in our condensed consolidated financial statements (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Net income from continuing operations	$	5,822	$	1,022	$	13,607	$	9,791
Weighted-average shares outstanding - basic and diluted:
Weighted-average shares outstanding - basic		49,033		58,548		49,982		58,380
Add effect of dilutive securities:
Unvested restricted shares		333		350		326		351
Stock options		—		—		—		6
Warrants		—		—		—		—
Weighted-average shares outstanding - diluted		49,366		58,898		50,308		58,737
Basic net income per share from continuing operations	$	0.12	$	0.02	$	0.27	$	0.17
Diluted net income per share from continuing operations	$	0.12	$	0.02	$	0.27	$	0.17

The weighted-average diluted common shares outstanding for the three and nine months ended September 30, 2011 excludes the effect of an aggregate of 563,693 and 718,552 restricted shares, out-of-the-money options and warrants, respectively, because their effect would be anti-dilutive. The weighted-average diluted common shares outstanding for the three and nine months ended September 30, 2010 excludes the effect of an aggregate of 1,626,789 and 926,360 restricted shares, out-of-the-money options and warrants, respectively, because their effect would be anti-dilutive.

8. COMMITMENTS AND CONTINGENCIES

State Corporate Tax Matter

On August 6, 2010, one of our former subsidiaries, Xpedite Systems, LLC, or Xpedite, which was included in the sale of our PGiSend messaging business to EasyLink completed on October 21, 2010, received a final determination from the New Jersey Division of Taxation upholding a corporate business tax audit assessment for the tax years ended December 31, 1998 through December 31, 2000 and December 31, 2002. The assessment totaled approximately $6.2 million as of August 15, 2010, including approximately $2.4 million in taxes and $3.8 million in accrued interest and penalties. The assessment relates to the sourcing of Xpedite’s receipts for purposes of

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determining the amount of its income that is properly attributable to, and therefore taxable by, New Jersey. We are vigorously contesting the determination and filed a timely appeal with the Tax Court of New Jersey on November 2, 2010. We believe we are adequately reserved for this matter. However, if the New Jersey Division of Taxation’s final determination is sustained, the amount assessed could result in an adjustment to our condensed consolidated financial statements and could impact our financial condition and results of operations. We agreed to indemnify EasyLink for this matter in connection with our PGiSend sale.

Other Litigation and Claims

We are involved from time to time in other legal proceedings that we do not believe will have a material adverse effect upon our business, financial condition or results of operations, although we can offer no assurance as to the ultimate outcome of any such proceedings.

9. DERIVATIVE INSTRUMENTS

We have used derivative instruments from time to time to manage risks related to interest rates. During the three and nine months ended September 30, 2011, we did not have any derivative instruments. During the three and nine months ended September 30, 2010, our derivative instruments were limited to interest rate swaps. We are exposed to one-month LIBOR interest rate risk on our credit facility. In August 2007, we entered into two $100.0 million pay fixed, receive floating interest rate swaps to hedge the variability in our cash flows associated with changes in one-month LIBOR interest rates. One of these interest rate swaps expired in August 2009 and the other expired in August 2010, so there is no associated asset or liability on our condensed consolidated balance sheet as of September 30, 2011.

Cash-Flow Hedges

For a derivative instrument designated as a cash-flow hedge, the effective portion of the derivative’s gain (loss) is initially reported as a component of other comprehensive income and is subsequently recognized in earnings in the same period or periods during which the hedged exposure is recognized in earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings. Monthly settlements with the counterparties are recognized in the same line item, “Interest expense,” as the interest costs associated with our credit facility. Accordingly, cash settlements are included in operating cash flows and were $3.0 million for the nine months ended September 30, 2010. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with our remaining interest rate swap, which expired in August 2010. Consequently, we did not have any such cash settlements during the nine months ended September 30, 2011.

During the three and nine months ended September 30, 2010, we recognized the following gains and interest expense related to interest rate swaps (in thousands):

	Three Months Ended September 30, 2010			Nine Months Ended September 30, 2010
Effective portion:
Gain recognized in other comprehensive income, net of tax effect of $0.1 million and $0.5 million in 2010	$	211		$	1,009
Ineffective portion:
Unrealized gain on change in fair value of interest rate swaps recognized in other expense	$	254		$	1,228
Interest expense related to monthly cash settlements:
Interest expense	$	(575	)	$	(2,828	)

For further disclosure on our policy for accounting for derivatives and hedges, see Note 5.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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10. SEGMENT REPORTING

We manage our operations on a geographic regional basis, with reportable segments in North America, Europe and Asia Pacific. The accounting policies as described in the summary of significant accounting policies are applied consistently across our segments. Our North America segment is comprised of operations in the United States and Canada. We present “Operating income” for each of our reportable segments as a measure of segment profit. Our chief operating decision makers use operating income internally as a means of analyzing segment performance and believe that it more clearly represents our segment profit without the impact of income taxes and other non-operating items. Information concerning our operations in our reportable segments is as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
Net revenues:
North America	$	79,350	$	76,469		$	237,714	$	230,185
Europe		23,751		19,636			72,501		63,183
Asia Pacific		16,083		13,392			44,884		39,561
Consolidated	$	119,184	$	109,497		$	355,099	$	332,929

Operating income (loss):
North America	$	1,914	$	(354	)	$	909	$	511
Europe		5,962		3,882			19,553		16,153
Asia Pacific		2,035		1,079			5,516		4,250
Consolidated	$	9,911	$	4,607		$	25,978	$	20,914

11. CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

Supplemental disclosures of cash flow information are as follows (in thousands):

	Nine Months Ended September 30,
	2011		2010
Cash paid for interest	$	4,895	$	6,194
Income tax payments	$	5,092	$	9,224
Income tax refunds	$	1,226	$	1,616
Capital lease additions	$	1,080	$	4,086
Capitalized interest	$	141	$	308

At September 30, 2011 and 2010, we had capital expenditures in “Total current liabilities” of $2.5 million and $2.7 million, respectively.

On May 10, 2010, we refinanced our prior credit facility as discussed in Note 5. We used the initial borrowings of $230.4 million under the new credit facility and $50.0 million of proceeds from the Term A loan to satisfy $268.0 million of outstanding borrowings under the prior credit facility, $2.8 million of certain transaction fees and closing costs and $0.4 million of interest expense related to the prior credit facility, all of which were non-cash transactions. The residual $9.2 million was received in cash. We paid an additional $1.0 million in cash for certain fees and expenses related to the transaction.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

PGi is a global leader in virtual meetings. For 20 years, we have innovated technologies that help people meet and collaborate in more enjoyable and productive ways. We have a global presence in 24 countries in our three segments in North America, Europe and Asia Pacific.

During 2010, we continued our strategy to transition PGi to a pure play meetings company. To that end, we sold our PGiSend messaging business in the fourth quarter of 2010. Also during 2010, we classified our Maritime Notification and Reminder solutions operations as a disposal group held for sale. Prior period results in the following discussion and analysis have been reclassified to present these businesses as discontinued operations. Our continuing operations reflect only our meetings solutions. As a result, and except as provided herein, the following discussion and analysis reflects our results from continuing operations.

Key highlights of our financial and strategic accomplishments for the third quarter and the nine months ended September 30, 2011 include:

Released upgrades and enhancements to our New iMeet^® and GlobalMeet^®virtual meeting solutions.

Generated 8.8% and 6.7% growth in our net revenues for the three and nine months ended September 30, 2011, respectively, compared to the same periods in 2010; and

Repurchased approximately 2.6 million shares of our common stock in the open market under our board approved stock repurchase plan.

Our primary corporate objectives for the remainder of 2011 are focused on continuing to:

Expand the awareness and adoption of our new iMeet and GlobalMeet services worldwide and introduce enhancements and upgrades to these applications that increase their addressable market opportunities; and

Transition our audio-only customers to more integrated, online collaboration solutions that provide a richer, more productive user experience.

In the first nine months of 2011, approximately 36% of our net revenues were generated in countries outside the United States. Because we generate a significant portion of our net revenues from our international operations, movements in foreign currency exchange rates affect our reported results. We estimate that changes in foreign currency exchange rates during the first nine months of 2011 favorably affected our net revenues by approximately $8.2 million, compared to the same period in 2010.

We have historically generated net revenue growth in our meeting solutions. Revenue growth is driven primarily by the increase of total minutes sold, partially offset by the decrease of the average rate per minute. We believe that this trend is consistent with the industry, and we expect it to continue in the foreseeable future. Our business trends and revenue growth continue to be affected by the challenging economic climate, higher global unemployment and lower global business activity. Net revenues increased to $355.1 million in the first nine months of 2011 as compared to $332.9 million in 2010 primarily as a result of volume growth, despite price compression that continues to have a negative impact on our net revenues.

We have historically used our cash flows from operating activities for debt repayments, acquisitions, capital expenditures and stock repurchases. As of September 30, 2011, borrowings under our credit facility were $196.3 million. The availability on our credit facility at September 30, 2011 is $350.0 million, including the uncommitted $75.0 million accordion feature. See “—Capital resources” for a description of our credit facility.

In addition, we intend to continue to invest in our meetings solutions, specifically in technology innovation and platform development, as well as new market strategies to better meet the needs of our existing customers and to better attract, engage and acquire new customers. Our selling and marketing expense in 2011 will increase as compared to 2010 as a result of increased costs related to the commercial releases of our iMeet and GlobalMeet services.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenues and expenses during the reporting period. Actual results could differ from the estimates. See “—Critical Accounting Policies.” The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The results of operations for the three and nine months ended September 30, 2011 are not indicative of the results that may be expected for the full fiscal year of 2011 or for any other interim period. The financial information and discussion presented herein should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2010, which includes information and disclosures not included in this quarterly report. All significant intercompany accounts and transactions have been eliminated in consolidation.

RESULTS OF OPERATIONS

Net Revenues

The following table presents certain financial information about our segments for the periods presented (in thousands, except percentages):

	Three Months Ended
	September 30,						Change
	2011			2010			$		%
Net revenues:
North America	$	79,350		$	76,469			2,881		3.8
Europe		23,751			19,636			4,115		21.0
Asia Pacific		16,083			13,392			2,691		20.1
Consolidated	$	119,184		$	109,497			9,687		8.8

Operating income:
North America	$	1,914		$	(354	)		2,268
Europe		5,962			3,882			2,080
Asia Pacific		2,035			1,079			956
Consolidated	$	9,911		$	4,607			5,304

Percent of net revenues:
North America		66.6	%		69.9	%
Europe		19.9	%		17.9	%
Asia Pacific		13.5	%		12.2	%
Consolidated		100.0	%		100.0	%

	Nine Months Ended
	September 30,						Change
	2011			2010			$		%
Net revenues:
North America	$	237,714		$	230,185			7,529		3.3
Europe		72,501			63,183			9,318		14.7
Asia Pacific		44,884			39,561			5,323		13.5
Consolidated	$	355,099		$	332,929			22,170		6.7


Operating income:
North America	$	909		$	511			398
Europe		19,553			16,153			3,400
Asia Pacific		5,516			4,250			1,266
Consolidated	$	25,978		$	20,914			5,064

Percent of net revenues:
North America		67.0	%		69.1	%
Europe		20.4	%		19.0	%
Asia Pacific		12.6	%		11.9	%
Consolidated		100	%		100.0	%

Consolidated Net Revenues

The following table details the changes in consolidated net revenues from the three and nine months ended
September 30, 2010 to the three and nine months ended September 30, 2011 (in thousands):

	Three Months Ended
		Consolidated			North America			Europe			Asia Pacific

September 30, 2010	$	109,497		$	76,469		$	19,636		$	13,392
Change in volume		25,343			11,730			10,015			3,598
Change in average selling prices		(18,443	)		(9,032	)		(7,080	)		(2,331	)
Impact of fluctuations in foreign
currency exchange rates		2,787			183			1,180			1,424
September 30, 2011	$	119,184		$	79,350		$	23,751		$	16,083


	Nine Months Ended
		Consolidated			North America			Europe			Asia Pacific

September 30, 2010	$	332,929		$	230,185		$	63,183		$	39,561
Change in volume		65,349			30,554			25,961			8,834
Change in average selling prices		(51,380	)		(23,631	)		(20,074	)		(7,675	)
Impact of fluctuations in foreign
currency exchange rates		8,201			606			3,431			4,164
September 30, 2011	$	355,099		$	237,714		$	72,501		$	44,884

Net revenues increased in each of our operating segments during the three and nine months ended September 30, 2011 from the comparable prior year period due to increased volume and positive fluctuations in foreign currency exchange rates, partially offset by decreased average selling prices. These trends in volume and selling prices are primarily due to volume growth in our large enterprise customer base and continued price reductions from existing customers.

Cost of Revenues

	Three Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Cost of revenues:
North America	$	35,765	$	34,117		1,648		4.8
Europe		7,427		5,719		1,708		29.9
Asia Pacific		6,746		4,998		1,748		35.0
Consolidated	$	49,938	$	44,834		5,104		11.4


	Nine Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Cost of revenues:
North America	$	105,593	$	101,280		4,313		4.3
Europe		22,545		17,672		4,873		27.6
Asia Pacific		18,457		15,313		3,144		20.5
Consolidated	$	146,595	$	134,265		12,330		9.2

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Cost of revenue expense as a percent of net revenues:
North America		45.1	%		44.6	%		44.4	%		44.0	%
Europe		31.3	%		29.1	%		31.1	%		28.0	%
Asia Pacific		41.9	%		37.3	%		41.1	%		38.7	%
Consolidated		41.9	%		40.9	%		41.3	%		40.3	%

Our cost of revenue as a percentage of net revenues has increased during the three and nine months ended September 30, 2011 compared to the same periods during 2010. These increases were attributable primarily to volume growth in our large enterprise customer base and price reductions from existing customers. Fluctuations in foreign currency exchange rates did not have a material impact on North America cost of revenue during the three and nine months ended September 30, 2011 compared to the same periods in 2010. Fluctuations in foreign currency exchange rates during the three and nine months ended September 30, 2011 compared to the same periods in 2010 resulted in an increase in cost of revenue in Europe of $0.4 million and $1.0 million, respectively, and in Asia Pacific of $0.5 million and $1.6 million, respectively.

Selling and Marketing Expenses

	Three Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Selling and marketing expenses:
North America	$	20,511	$	17,949		2,562		14.3
Europe		7,216		6,203		1,013		16.3
Asia Pacific		4,440		4,350		90		2.1
Consolidated	$	32,167	$	28,502		3,665		12.9

	Nine Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Selling and marketing expenses:
North America	$	68,145	$	58,224		9,921		17.0
Europe		20,935		19,208		1,727		9.0
Asia Pacific		13,446		12,829		617		4.8
Consolidated	$	102,526	$	90,261		12,265		13.6


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Selling and marketing expense as a percent of net revenues:
North America		25.8	%		23.5	%		28.7	%		25.3	%
Europe		30.4	%		31.6	%		28.9	%		30.4	%
Asia Pacific		27.6	%		32.5	%		30.0	%		32.4	%
Consolidated		27.0	%		26.0	%		28.9	%		27.1	%

Selling and marketing expenses increased during the three and nine months ended September 30, 2011 from the same periods in the previous year due primarily to costs recognized in our North America operating segment related to the launch of our iMeet and GlobalMeet services. Fluctuations in foreign currency exchange rates did not have a material impact on North America selling and marketing expenses in the three and nine months ended September 30, 2011 compared to the same periods in 2010. Fluctuations in foreign currency exchange rates during the three and nine months ended September 30, 2011 compared to the same periods in 2010 resulted in increased

selling and marketing expenses in Europe of $0.5 million and $1.3 million, respectively, and in Asia Pacific of $0.4 million and $1.3 million, respectively.

General and Administrative Expenses

	Three Months Ended September 30,				Change
	2011		2010		$			%
	(in thousands)
General and administrative expenses:
North America	$	10,203	$	11,064		(861	)		(7.8	)
Europe		1,957		2,156		(199	)		(9.2	)
Asia Pacific		2,251		1,735		516			29.7
Consolidated	$	14,411	$	14,955		(544	)		(3.6	)


	Nine Months Ended September 30,				Change
	2011		2010		$			%
	(in thousands)
General and administrative expenses:
North America	$	30,607	$	32,236		(1,629	)		(5.1	)
Europe		6,052		6,671		(619	)		(9.3	)
Asia Pacific		5,750		5,048		702			13.9
Consolidated	$	42,409	$	43,955		(1,546	)		(3.5	)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
General and administrative expense as a percent of net revenues:
North America		12.9	%		14.5	%		12.9	%		14.0	%
Europe		8.2	%		11.0	%		8.3	%		10.6	%
Asia Pacific		14.0	%		13.0	%		12.8	%		12.8	%
Consolidated		12.1	%		13.7	%		11.9	%		13.2	%

General and administrative expenses in our North America operating segment decreased in the three and nine months ended September 30, 2011 compared to the same periods in 2010 primarily as a result of decreased personnel-related costs. General and administrative expenses in our Europe operating segment decreased during the three and nine months ended September 30, 2011 compared to the same periods in 2010 primarily as a result of decreases in professional fees and employee wages. General and administrative expenses in our Asia Pacific operating segment increased during the three and nine months ended September 30, 2011 compared to the same periods in 2010 primarily as a result of fluctuations in foreign currency exchange rates partially offset by decreases in professional fees. Fluctuations in foreign currency exchange rates did not have a material impact on North America general and administrative expenses in the three and nine months ended September 30, 2011 compared to the same periods in 2010. Fluctuations in foreign currency exchange rates during the three and nine months ended September 30, 2011 compared to the same periods in 2010 resulted in increased general and administrative expenses in Europe of $0.1 million and $0.3 million, respectively, and in Asia Pacific of $0.2 million and $0.6 million, respectively.

Research and Development Expenses

Consolidated research and development expense as a percentage of net revenues was 2.5% and 3.3% for the three months ended September 30, 2011 and 2010, respectively, and was 2.5% and 3.2% for the nine months ended September 30, 2011 and 2010, respectively. Consolidated research and development expenses decreased $0.7 million and $1.9 million to $2.9 million and $8.7 million for the three and nine months ended September 30, 2011,

respectively, compared with $3.7 million and $10.6 million for the same periods in 2010. We incurred the majority of research and development costs in North America.

Equity-Based Compensation Expense

Equity-based compensation expense for restricted stock awards was included in operating expenses. The expense was recorded in the line items below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Cost of revenues	$	60	$	64	$	128	$	218
Selling and marketing		137		446		683		1,315
Research and development		112		186		437		659
General and administrative		1,313		1,462		3,961		4,786
Equity-based compensation expense	$	1,622	$	2,158	$	5,209	$	6,978

Depreciation Expense

	Three Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Depreciation expense:
North America	$	6,444	$	5,449		995		18.3
Europe		766		562		204		36.3
Asia Pacific		527		364		163		44.8
Consolidated	$	7,737	$	6,375		1,362		21.4

	Nine Months Ended September 30,				Change
	2011		2010		$		%
	(in thousands)
Depreciation expense:
North America	$	19,515	$	16,121		3,394		21.1
Europe		2,196		1,673		523		31.3
Asia Pacific		1,461		1,122		339		30.2
Consolidated	$	23,172	$	18,916		4,256		22.5

	Three Months Ended						Nine Months Ended
	September 30,							September 30,
	2011			2010			2011			2010
Depreciation expenses as a percent of net revenues:
North America		8.1	%		7.1	%		8.2	%		7.0	%
Europe		3.2	%		2.9	%		3.0	%		2.6	%
Asia Pacific		3.3	%		2.7	%		3.3	%		2.8	%
Consolidated		6.5	%		5.8	%		6.5	%		5.7	%

Consolidated depreciation expense increased for the three and nine months ended September 30, 2011 as compared to the same periods in 2010 as a result of increases in our productive asset base.

Amortization Expense

	Three Months Ended September 30,				Change
	2011		2010		$			%
	(in thousands)
Amortization expense:
North America	$	1,117	$	1,210		(93	)		(7.7	)
Europe		416		380		36			9.5
Asia Pacific		79		68		11			16.2
Consolidated	$	1,612	$	1,658		(46	)		(2.8	)

	Nine Months Ended September 30,				Change
	2011		2010		$			%
	(in thousands)
Amortization expense:
North America	$	3,585	$	4,408		(823	)		(18.7	)
Europe		1,243		1,161		82			7.1
Asia Pacific		233		201		32			15.9
Consolidated	$	5,061	$	5,770		(709	)		(12.3	)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Amortization expenses as a percent of net revenues:
North America		1.4	%		1.6	%		1.5	%		1.9	%
Europe		1.8	%		1.9	%		1.7	%		1.8	%
Asia Pacific		0.5	%		0.5	%		0.5	%		0.5	%
Consolidated		1.4	%		1.5	%		1.4	%		1.7	%

Consolidated amortization expense decreased for the three and nine months ended September 30, 2011 as compared to the same periods in 2010 as a result of the decrease in amortization expense in North America related to customer lists and non-compete intangible assets from acquisitions made in 2005 that have become fully amortized.

Restructuring Costs

Consolidated restructuring costs were $4.8 million, or 4.4% of net revenues, for the three months ended September 30, 2010, and were $6.9 million, or 2.1% of net revenues, for the nine months ended September 30, 2010 with immaterial corresponding consolidated restructuring costs for the same periods in 2011.

Realignment of Workforce – 2011

During the quarter ended September 30, 2011, we recorded $0.7 million of severance costs, including $0.3 million recorded in discontinued operations, and $0.2 million of lease termination costs associated with efforts to consolidate and streamline various functions of our work force. As part of these consolidations, we eliminated approximately 20 positions. On a segmented basis, these restructuring costs totaled $0.5 million in North America, $0.1 million in Europe and $0.3 million in Asia Pacific. Our remaining accrual for the 2011 restructuring costs was $0.3 million at September 30, 2011, including $0.2 million for lease termination costs and $0.1 million for severance costs. We anticipate the severance costs will be paid this year, and the lease termination costs will be paid through August 31, 2013.

Realignment of Workforce – 2010

Realignment of Workforce – 2009

Net Legal Settlements and Related Expenses

Net legal settlements and related expenses for the nine months ended September 30, 2010 were $0.4 million, with no significant corresponding net legal settlements and related expenses for the same period in 2011, and were attributable to legal fees incurred during the defense of a state income tax matter, which was settled in February 2011.

Acquisition-Related Costs

During the nine months ended September 30, 2011 and 2010, we expensed $0.1 million and $0.3 million in acquisition-related costs, respectively. We allocated similar costs in years prior to 2009 to the assets acquired and liabilities assumed in such acquisitions.

Interest Expense

Interest expense was $2.2 million and $2.8 million in the three months ended September 30, 2011 and 2010, respectively, and was $6.4 million and $9.1 million in the nine months ended September 30, 2011 and 2010, respectively. Interest expense decreased during the three and nine months ended September 30, 2011 compared to the same periods in the prior year due to the expiration of our only outstanding interest rate swap in August 2010, $0.2 million of debt issuance costs written off in the second quarter of 2010 in connection with the refinancing of our credit facility and $0.6 million of excise tax interest incurred in the second quarter of 2010, partially offset by $0.2 million of excise tax interest incurred during the third quarter of 2011 and increased interest rates on our new credit facility due to general credit market conditions. We had $196.3 million and $252.9 million of outstanding borrowings on our credit facility subject to interest rate risk at September 30, 2011 and 2010, respectively. Our effective interest rate on the U.S. Dollar amount of this portion of our credit facility was 3.2% and 3.0% at September 30, 2011 and 2010, respectively. Our $100.0 million interest rate swap, which had a fixed rate of 4.75%, expired in August 2010. As of September 30, 2011, we do not have any outstanding interest rate swaps. The weighted-average outstanding balance on our credit facility was $200.6 million and $268.2 million for the three months ended September 30, 2011 and 2010, respectively, and $195.2 million and $268.3 million in the nine months ended September 30, 2011 and 2010, respectively. The decrease in our weighted-average debt outstanding is

attributable to our continued efforts to reduce our debt. To that end, we used a portion of the net proceeds from our PGiSend sale to retire our Term A loan in the fourth quarter of 2010.

Income Tax Expense

Income tax expense for the three and nine months ended September 30, 2011 was $2.0 million and $5.8 million, respectively, compared to income tax expense of $0.3 million and $2.6 million for the three and nine months ended September 30, 2010, respectively. The increase in income tax expense during the three and nine months ended September 30, 2011 compared to the same periods in the prior year was primarily related to the increase in pre-tax net income, shifts in income between jurisdictions and discrete taxes recorded related to North America and Asia Pacific.

As we file our remaining international tax returns, we may record additional provision to return adjustments.

Discontinued Operations

PGiSend

On October 21, 2010, we completed the sale of our PGiSend messaging business to EasyLink for an aggregate purchase price of $105.0 million, with a working capital target that was finalized in the first quarter of 2011, resulting in an additional payment from EasyLink of $1.8 million. Prior period operating results have been reclassified to present this business as discontinued operations.

Maritime Notification and Reminder Solutions

PGiMarket

Components of Discontinued Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Net revenue from discontinued operations	$	1,174		$	32,757		$	8,735		$	100,317

Income (loss) from operations		(540	)		4,595			(486	)		11,632
Interest expense		(9	)		(370	)		(70	)		(1,171	)
Income (loss) from disposal		(9	)		—			9			—
Income tax benefit (expense)		7,293			(1,437	)		7,287			(4,470	)
Income from discontinued operations, net of taxes	$	6,735		$	2,788		$	6,740		$	5,991

Liquidity and Capital Resources

At September 30, 2011, we had utilized $201.8 million of our credit facility, with $196.3 million in borrowings and $5.5 million in letters of credit outstanding. On October 21, 2010, a portion of the proceeds from our PGiSend sale were used to retire our $50.0 million Term A loan. Following the retirement of our Term A loan, our $350.0 million credit facility consists of a $275.0 million revolver and an uncommitted $75.0 million accordion feature. From time to time, we may enter into interest rate swaps to reduce our exposure to market risk from changes in interest rates on interest payments associated with our credit facility. However, our $100.0 million interest rate swap, which had a fixed rate of 4.75%, expired in August 2010. As of September 30, 2011, we have no outstanding interest rate swaps.

At the scheduled maturity of our credit facility in May 2014 or in the event of an acceleration of the indebtedness under the credit facility following an event of default, the entire outstanding principal amount of the indebtedness under the facility, together with all other amounts payable thereunder, will become due and payable. We may not have sufficient funds to pay such obligations in full at maturity or upon such acceleration. If we default and are not able to pay any such obligations due, our lenders have liens on substantially all of our assets and could foreclose on our assets in order to satisfy our obligations.

As of September 30, 2011, we had $29.0 million in cash and equivalents compared to $15.1 million as of December 31, 2010. Cash balances residing outside of the United States as of September 30, 2011 were $27.1 million compared to $14.0 million as of December 31, 2010. We receive cash for repayment of royalties and management fees charged to international locations from the United States. Therefore, we record foreign currency exchange gains and losses resulting from these transactions in “Other, net” in our condensed consolidated statements of operations. We generally consider intercompany loans with foreign subsidiaries to be permanently invested for the foreseeable future. Therefore, we record foreign currency exchange fluctuations resulting from these transactions in the cumulative translation adjustment account on our condensed consolidated balance sheets. Based on our potential cash position and potential conditions in the capital markets, we could require repayment of these intercompany loans despite the long-term intention to hold them as permanent investments.

Cash provided by operating activities

Consolidated operating cash flows were $39.6 million and $30.7 million for the nine months ended September 30, 2011 and 2010, respectively. The increase in net cash provided by operating activities was primarily attributable to an increase in deferred income taxes in 2011 compared to 2010.

Cash used in investing activities

Consolidated investing activities used cash of $22.6 million and $25.8 million for the nine months ended September 30, 2011 and 2010, respectively. The principal use of cash in investing activities for the nine months ended September 30, 2011 related to $23.3 million of capital expenditures and $1.2 million of cash used primarily for our investment described in Note 2, partially offset by $1.9 million of cash provided by working capital and earn-out provisions related to our PGiSend and PGiMarket sales. The principal uses of cash in investing activities for the nine months ended September 30, 2010 related to $25.3 million of capital expenditures.

Cash used in financing activities

Consolidated financing activities used cash of $2.0 million and $12.5 million for the nine months ended September 30, 2011 and 2010, respectively. The primary source of cash from financing activities in the nine months ended September 30, 2011 included $18.9 million of net borrowings on our credit facility partially offset by $20.9 million in treasury stock purchases. The primary use of cash for financing activities in the nine months ended September 30, 2010 included $9.7 million of net payments on our credit facility, $1.2 million of payments of debt issuance costs and $1.6 million in treasury stock purchases.

Off-balance sheet arrangements

At September 30, 2011, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Capital resources

During 2010, we entered into a new credit facility expiring in May 2014 and repaid and terminated our then existing credit facility. Following the retirement of our Term A loan in connection with our PGiSend sale, our facility consists of a $275.0 million revolver and an uncommitted $75.0 million accordion feature. Our subsidiary, ATS, is the borrower under our credit facility, with PGi and certain of our material domestic subsidiaries guaranteeing the obligations of ATS under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries. Proceeds drawn under our credit facility can be used for working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under our new credit facility, at our option, is (1) the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or one-month LIBOR plus one and one-half percent) plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end, or (2) LIBOR for one, two, three, nine or 12 months adjusted for a percentage that represents the Federal Reserve Board’s reserve percentage plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end. The applicable percentages for base rate loans and LIBOR loans were 2.0% and 3.0%, respectively, at September 30, 2011. Our interest rate on LIBOR loans, which comprised substantially all of our outstanding borrowings as of September 30, 2011, was 3.2%. Our credit facility contains customary restrictive covenants, including financial covenants, and otherwise contains terms substantially similar to the terms in our prior credit facility.

Until its expiration in August 2010, we had a $100.0 million interest rate swap outstanding. This swap was designated as a cash flow hedge in 2008. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with this interest rate swap. Any changes in fair value prior to designation as a hedge, subsequent to dedesignation as a hedge, and any ineffectiveness while designated were recognized as “Unrealized gain on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our condensed consolidated statements of operations and amounted to $0.3 million and $1.2 million during the three and nine months ended September 30, 2010, respectively. As of December 31, 2010, our swaps had all expired, and no related balance is carried on our condensed consolidated balance sheets.

Liquidity

At September 30, 2011, we had $29.0 million in cash and equivalents compared to $15.1 million as of December 31, 2010. Cash and cash equivalents held by our foreign subsidiaries at September 30, 2011 were $27.1 million compared to $14.0 million as of December 31, 2010. As we generated positive operating cash flows from each of our geographic business segments for the nine months ended September 30, 2011, we currently do not foresee a need to repatriate the cash and cash equivalents held by our foreign subsidiaries to fund domestic operations or repay domestic obligations. However, if these funds are needed for our operations in the United

States, we could be required to pay additional U.S. taxes to repatriate these funds. We utilize a variety of tax planning and financing strategies with the objective of having our worldwide cash and cash equivalents available in the locations where they are needed, and, when advantageous, may access foreign cash or cash equivalents in a tax efficient manner.

Each geographic business segment had sufficient cash flows from operations to service existing debt obligations, to fund capital expenditure requirements (which historically have been 6% to 8% of annual net revenues) and to fund research and development expenses for new services and enhancements to existing services (which historically have been 2% to 3% of annual net revenues). We anticipate no material changes in these costs and, therefore, believe that we will generate adequate operating cash flows for capital expenditures and contractual commitments and to satisfy our indebtedness and fund our liquidity needs for at least the next 12 months. At September 30, 2011, we had $73.2 million of available credit on our credit facility, without regard to the uncommitted $75.0 million accordion feature. We have historically borrowed on our credit facility in order to fund acquisitions and stock repurchases. In October 2010, a portion of the proceeds from our PGiSend sale was used to retire our $50.0 million Term A loan, to fund our $58.8 million tender offer and to pay certain transactions fees and closing costs related to the sale and tender offer.

We regularly review our capital structure and evaluate potential alternatives in light of current conditions in the capital markets. Depending upon conditions in these markets, cash flows from our operating segments and other factors, we may engage in other capital transactions. These capital transactions include, but are not limited to, debt or equity issuances or credit facilities with banking institutions.

CRITICAL ACCOUNTING POLICIES

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon our condensed consolidated financial statements and the notes thereto, which have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We review the accounting policies used in reporting our financial results on a regular basis and review critical accounting policies and related disclosures with the audit committee of our board of directors. We have identified the policies below as critical to our business operations and the understanding of our financial condition and results of operations:

Revenue recognition;

Allowance for uncollectible accounts receivable;

Goodwill and other intangible assets;

Income taxes;

Restructuring costs;

Legal contingencies; and

Derivative instruments.

For a detailed discussion on the application of these accounting policies, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our annual report on Form 10-K for the fiscal year ended December 31, 2010.

FORWARD LOOKING STATEMENTS

When used in this quarterly report on Form 10-Q and elsewhere by us or by management from time to time, the words “believes,” “anticipates,” “expects,” “will,” “may,” “should,” “intends,” “plans,” “estimates,” “predicts,” “potential,” “continue” and similar expressions are intended to identify forward-looking statements concerning our operations, economic performance and financial condition. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, many of which are beyond our control and reflect future business decisions which are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in our forward-looking statements, including, but not limited to, the following factors:

•

Competitive pressures, including pricing pressures;

•

Technological changes and the development of alternatives to our services;

•

Market acceptance of new services, including our iMeet and GlobalMeetservices;

•

Our ability to attract new customers and to retain and further penetrate our existing customer base;

•

Risks associated with challenging global economic conditions;

•

Costs or difficulties related to the integration of any new technologies;

•

Service interruptions and network downtime;

•

Price increases from our telecommunications service providers;

•

Technological obsolescence and our ability to upgrade our equipment or increase our network capacity;

•

Concerns regarding the security of transactions;

•

Our level of indebtedness;

•

Future write-downs of goodwill or other intangible assets;

•

Assessment of income, state sales and other taxes;

•

Restructuring and cost reduction initiatives and the market reaction thereto;

•

Risks associated with acquisitions and market expansion;

•

The impact of the sale of our PGiSend messaging business;

•

Our ability to protect our intellectual property rights, including possible adverse results of litigation or infringement claims;

•

Regulatory or legislative changes, including further government regulations applicable to traditional telecommunications service providers;

•

Risks associated with international operations, including political instability and fluctuations in foreign currency exchange rates;

•

Factors described under the caption Part I, Item 1A. “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010; and

•

Factors described from time to time in our press releases, reports and other filings made with the SEC.

We caution that these factors are not exclusive. Consequently, all of the forward-looking statements made in this quarterly report on Form 10-Q and in other documents filed with the SEC are qualified by these cautionary statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Form 10-Q or the date of the statement, if a different date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates and foreign currency exchange rates. We manage our exposure to these market risks through our regular operating and financing activities and the timing of intercompany payable settlements. From time to time, we may enter into interest rate swaps to reduce our exposure to market risk from changes in interest rates on interest payments associated with our credit facility. However, our $100.0 million interest rate swap, which had a fixed rate of 4.75%, expired in August 2010. As of September 30, 2011, we have no outstanding swaps.

At September 30, 2011, we had borrowings of $196.3 million outstanding under our credit facility that were subject to interest rate risk. Each 100 basis point increase in interest rates relative to these borrowings would impact our annual pre-tax earnings and cash flows by approximately $1.9 million based on our September 30, 2011 debt level.

We generated approximately 36% of our consolidated net revenues and 30% of our operating expenses in countries outside of the United States in the nine months ended September 30, 2011. Additionally, we have foreign currency denominated debt as part of our credit facility. At September 30, 2011, we had debt outstanding of CAD $0.4 million and £2.5 million. As a result, fluctuations in exchange rates impact the amount of our reported consolidated net revenues, operating income and debt. A hypothetical positive or negative change of 10% in foreign currency exchange rates would positively or negatively change our consolidated net revenues, operating expenses and outstanding debt for the nine months ended September 30, 2011 by approximately $12.8 million, $10.0 million and $0.4 million, respectively. Our principal exposure has been related to local currency sales and operating costs in Australia, Canada, the Euro Zone, Japan, Norway and the United Kingdom. We have not used derivatives to manage foreign currency exchange risk, and we did not have any foreign currency exchange derivatives outstanding at September 30, 2011.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of September 30, 2011. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2011, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), were effective and designed to ensure that (a) information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and instructions, and (b) information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

State Corporate Tax Matter

On August 6, 2010, one of our former subsidiaries, Xpedite, which was included in the sale of our PGiSend messaging business to EasyLink completed on October 21, 2010, received a final determination from the New Jersey Division of Taxation upholding a corporate business tax audit assessment for the tax years ended December 31, 1998 through December 31, 2000 and December 31, 2002. The assessment totaled approximately $6.2 million as of August 15, 2010, including approximately $2.4 million in taxes and $3.8 million in accrued interest and penalties. The assessment relates to the sourcing of Xpedite’s receipts for purposes of determining the amount of its income that is properly attributable to, and therefore taxable by, New Jersey. We are vigorously contesting the determination and filed a timely appeal with the Tax Court of New Jersey on November 2, 2010. We believe we are adequately reserved for this matter. However, if the New Jersey Division of Taxation’s final determination is sustained, the amount assessed could result in an adjustment to our condensed consolidated financial statements and could impact our financial condition and results of operations. We agreed to indemnify EasyLink for this matter in connection with our PGiSend sale.

Other Litigation and Claims

ITEM 1A. RISK FACTORS.

Part I, Item 1A. “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010 includes a detailed discussion of risk factors that could materially affect our business, financial condition or results of operations. There have been no material changes from the risk factors disclosed in that report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

July 1 - 31, 2011		9,503	$	8.77		—		5,279,800
August 1 - 31, 2011		1,157,264	$	7.14		1,157,264		4,122,536
September 1 - 30, 2011		24,560	$	6.42		—		4,122,536
Total		1,191,327	$	7.44		1,157,264		4,122,536

(1)		The total number of shares purchased includes shares purchased pursuant to the 2006 plan described below and shares surrendered by employees to the company to satisfy tax withholding obligations in connection with the vesting of restricted stock totaling 9,503 shares and 24,560 shares for the months of July and September 2011, respectively.

(2)

In June 2006, our board of directors authorized, and we announced, a stock repurchase program under which we could purchase up to 7.0 million shares of our common stock. Through September 30, 2011, we had repurchased all 7.0 million shares pursuant to this stock repurchase program.

In July 2011, our board approved a new stock repurchase program authorizing the repurchase of up to 5.0 million shares of our common stock. Through September 30, 2011, we had repurchased 877,464 shares pursuant to our new stock repurchase program.

ITEM 6. EXHIBITS

(a) Exhibits

The exhibits filed with this report are listed on the “Exhibit Index” following the signature page of this Form 10-Q, which are incorporated by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 9, 2011	PREMIERE GLOBAL SERVICES, INC.

	By:	/s/ David E. Trine
		David E. Trine Chief Financial Officer (principal financial and accounting officer and duly authorized signatory of the registrant)

EXHIBIT INDEX

Exhibit Number		Description
3.	1	Amended and Restated Articles of Incorporation of the Registrant dated March 15, 2006 (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
3.	2	Third Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated and filed on October 21, 2010).
4.	1	See Exhibits 3.1 and 3.2. for provisions of the Articles of Incorporation and Bylaws defining the rights of the holders of common stock of the Registrant.
4.	2	Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
10.	1	Form of Restricted Stock Agreement under the Registrant’s Amended and Restated 2004 Long-Term Incentive Plan, as amended.
31.	1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.	2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.	1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.	2	Certification of Chief Financial Officer, as required by Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.	INS	XBRL Instance Document*
101.	SCH	XBRL Taxonomy Extension Schema Document*
101.	CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.	DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.	LAB	XBRL Taxonomy Extension Label Document*
101.	PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under these sections.

EX-10.1 2 e46065ex10-1.htm RESTRICTED STOCK AGREEMENT

EXHIBIT 10.1

R E S T R I C T E D S T O C K A G R E E M E N T

Non-transferable

G R A N T T O

NAME

(“Grantee”)

by Premiere Global Services, Inc. (the “Company”) of

# OF SHARES

shares of its common stock, $0.01 par value (the “Shares”)

pursuant to and subject to the provisions of the Premiere Global Services, Inc. Amended and Restated 2004 Long-Term Incentive Plan, as amended (the “Plan”) and to the terms and conditions set forth on the following page (the “Terms and Conditions”). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

Unless sooner vested in accordance with Section 3 of the Terms and Conditions, the restrictions imposed under Section 2 of the Terms and Conditions will expire as to the following percentages of the Shares awarded hereunder, on the following respective dates; provided that Grantee is then still employed by the Company or any of its Affiliates:

Percentage of Shares	Date of Expiration of Restrictions
10%	VEST DATE
20%	VEST DATE
30% 40%	VEST DATE VEST DATE

IN WITNESS WHEREOF, Premiere Global Services, Inc., acting by and through its duly authorized officers, has caused this Agreement to be executed as of the Grant Date.

	Premiere Global Services, Inc.


	By:
	Scott Askins Leonard Its: SVP – Legal and General Counsel


	Grant Date: GRANT DATE

	Accepted by Grantee:

TERMS AND CONDITIONS

1. Grant of Shares. The Company hereby grants to the Grantee, subject to the restrictions and the other terms and conditions set forth in the Plan and in this award agreement (this “Agreement”), the number of Shares indicated on Page 1 hereof.

2. Restrictions. The Shares are subject to each of the following restrictions. “Restricted Shares” mean those Shares that are subject to the restrictions imposed hereunder which restrictions have not then expired or terminated. Restricted Shares may not be sold, transferred, exchanged, assigned, pledged, encumbered or hypothecated to or in favor of any party other than the Company or an Affiliate, or be subjected to any lien, obligation or liability of Grantee to any other party other than the Company or an Affiliate. If Grantee’s employment with the Company or any Affiliate terminates for any reason other than as set forth in paragraphs (b) or (c) of Section 3 hereof, then Grantee shall forfeit all of Grantee’s right, title and interest in and to the Restricted Shares as of the date of employment termination and such Restricted Shares shall revert to the Company immediately following the event of forfeiture. The restrictions imposed under this Section 2 shall apply to all Shares or other securities issued with respect to Restricted Shares hereunder in connection with any merger, reorganization, consolidation, recapitalization, stock dividend or other change in corporate structure affecting the Stock of the Company.

3. Expiration and Termination of Restrictions. The restrictions imposed under Section 2 will expire on the earliest to occur of the following (the period prior to such expiration being referred to herein as the “Restricted Period”):

(a) As to the percentages of the Shares specified on page 1 hereof, on the respective dates specified on page 1 hereof; provided Grantee is then still employed by the Company or an Affiliate;

(b) As to all of the unvested Shares, on the date of termination of Grantee’s employment by reason of death or Disability; or

(c) As to all of the unvested Shares, upon termination of Grantee’s employment (i) by the Company without “Cause” (as such term is defined in the Plan) or (ii) by Grantee with “Good Reason” (as such term is defined below) within twelve (12) months after the occurrence of a “Change in Control” of the Company (as such term is defined in the Plan).

For purposes of this Agreement, “Good Reason” shall mean, without Grantee’s consent, any of the following: (i) a material reduction in Grantee’s base salary; (ii) a material diminution in Grantee’s authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Grantee; or (iii) a material change in the geographic location at which Grantee must perform his or her services. However, no such event described hereunder shall constitute Good Reason unless Grantee has given written notice to the Company specifying the event relied upon for such determination within ninety (90) days after the occurrence of such event and the Company has not remedied such situation within thirty (30) days of receipt of such notice. The Company shall notify Grantee of the timely cure of any claimed event of Good Reason and the manner in which such cure was effected, and any notice of termination delivered by Grantee based on such claimed Good Reason that has been cured shall be deemed withdrawn and shall not be effective to accelerate the vesting of the Shares hereunder. Further, no such event described hereunder shall constitute Good Reason if six (6) months or longer have passed since the occurrence of an uncured event of Good Reason.

4. Delivery of Shares. The Shares will be registered in the name of Grantee as of the Grant Date and will be held by the Company during the Restricted Period in certificated or uncertificated form. If a certificate for Restricted Shares is issued during the Restricted Period with respect to such Shares, such certificate shall be registered in the name of Grantee and shall bear a legend in substantially the following form (in addition to any legend required under applicable state securities laws):

“This certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in a Restricted Stock Agreement between the registered owner of the shares represented hereby and Premiere Global Services, Inc. Release from such terms and conditions shall be made only in accordance with the provisions of such Agreement, copies of which are on file in the offices of Premiere Global Services, Inc.”

Stock certificates for the Shares without the first above legend shall be delivered to Grantee or Grantee’s designee upon request of Grantee after the expiration of the Restricted Period, but delivery may be postponed for such period as may be required for the Company with reasonable diligence to comply, if deemed advisable by the Company, with registration requirements under the Securities Act of 1933, as amended, listing requirements under the rules of any stock exchange, and requirements under any other law or regulation applicable to the issuance or transfer of the Shares.

5. Voting Rights. Grantee, as beneficial owner of the Shares, shall have full voting rights with respect to the Shares during and after the Restricted Period.

6. Dividend Rights. Grantee shall accrue cash and non-cash dividends, if any, paid with respect to the Restricted Shares, but the payment of such dividends shall be deferred and held (without interest) by the Company for the account of Grantee until the expiration of the Restricted Period. During the Restricted Period, such dividends shall be subject to the same vesting restrictions imposed under Section 2 as the Restricted Shares to which they relate. Accrued dividends deferred and held pursuant to the foregoing provision shall be paid by the Company to the Grantee promptly upon the expiration of the Restricted Period (and in any event within thirty (30) days of the date of such expiration).

7. Changes in Capital Structure. The provisions of the Plan shall apply in the case of a change in the capital structure of the Company.

8. No Right of Continued Employment. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in the employ of the Company or any Affiliate.

9. Payment of Taxes. Upon issuance of the Shares hereunder, Grantee may make an election to be taxed upon such award under Section 83(b) of the Code. To effect such election, Grantee may file an appropriate election with the Internal Revenue Service within thirty (30) days after award of the Shares and otherwise in accordance with applicable Treasury Regulations. Grantee will, no later than the date as of which any amount related to the Shares first becomes includable in Grantee’s gross income for federal income tax purposes, pay to the Company, or make other arrangements satisfactory to the Committee regarding payment of, any federal, state and local taxes of any kind required by law to be withheld with respect to such amount. The obligations of the Company under this Agreement will be conditional on such payment or arrangements and the Company and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee.

10. Amendment. The Committee may amend, modify or terminate this Agreement without approval of Grantee; provided, however, that such amendment, modification or termination shall not, without Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested (i.e., as if all restrictions on the Shares hereunder had expired) on the date of such amendment or termination.

11. Plan Controls. The terms contained in the Plan are incorporated into and made a part of this Agreement and this Agreement shall be governed by and construed in accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling and determinative.

12. Successors. This Agreement shall be binding upon any successor of the Company, in accordance with the terms of this Agreement and the Plan.

13. Severability. If any one or more of the provisions contained in this Agreement is deemed to be invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

14. Notice. Notices and communications under this Agreement must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to:

Premiere Global Services, Inc.

3280 Peachtree Road, N.E.

The Terminus Building, Suite 1000

Atlanta, Georgia 30305

Attn: Director, Stock Plan Management

or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.

EX-31.1 3 e46065ex31-1.htm CERTIFICATION

EXHIBIT 31.1

CERTIFICATION

I, Boland T. Jones, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Premiere Global Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: November 9, 2011	By:	/s/ Boland T. Jones
		Boland T. Jones Chief Executive Officer Premiere Global Services, Inc

EX-31.2 4 e46065ex31-2.htm CERTIFICATION

EXHIBIT 31.2

CERTIFICATION

I, David E. Trine, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Premiere Global Services, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: November 9, 2011	By:	/s/ David E. Trine
		David E. Trine Chief Financial Officer Premiere Global Services, Inc.

EX-32.1 5 e46065ex32-1.htm CERTIFICATION

EXHIBIT 32.1

Statement of Chief Executive Officer

of PREMIERE GLOBAL SERVICES, INC.

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

§ 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Premiere Global Services, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Boland T. Jones, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



November 9, 2011	By:	/s/ Boland T. Jones
		Boland T. Jones Chief Executive Officer Premiere Global Services, Inc

EX-32.2 6 e46065ex32-2.htm CERTIFICATION

EXHIBIT 32.2

Statement of Chief
FINANCIAL Officer

of PREMIERE GLOBAL SERVICES, INC.

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

§ 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Premiere Global Services, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned David E. Trine, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



November 9, 2011	By:	/s/ David E. Trine
		David E. Trine Chief Financial Officer Premiere Global Services, Inc.

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PREMIERE GLOBAL SERVICES, INC. 10-Q --12-31 50129426 false 0000880804 Yes No Accelerated Filer No 2011 Q3 2011-09-30

<a id="a_007" name="a_007"></a>1. BASIS OF PRESENTATION Premiere Global Services, Inc., or PGi, is a global leader in virtual meetings. For 20 years, we have innovated technologies that help people meet and collaborate in more enjoyable and productive ways. PGi has a global presence in 24 countries in our three segments in North America, Europe and Asia Pacific. Our unaudited condensed consolidated financial statements and related footnotes have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, for interim financial information and Rule 10-01 of Regulation S-X issued by the Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe that these condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the results for interim periods shown. All significant intercompany accounts and transactions have been eliminated in consolidation. Our results of operations for the three and nine months ended September 30, 2011 are not indicative of the results that may be expected for the full fiscal year of 2011 or for any other interim period. The financial information presented herein should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2010, which includes information and disclosures not included in this quarterly report. Unless otherwise stated, current and prior period results in our condensed consolidated statements of operations and cash flows and these notes reflect our results from continuing operations and exclude the effect of discontinued operations. See Note 4.

2. SIGNIFICANT ACCOUNTING POLICIES Foreign Currency Translation The assets and liabilities of subsidiaries with a functional currency other than the U.S. Dollar are translated at rates of exchange existing at our condensed consolidated balance sheet dates. Revenues and expenses are translated at average rates of exchange prevailing during the year. The resulting translation adjustments are recorded in the “Accumulated other comprehensive income” component of shareholders’ equity in our condensed consolidated balance sheets. In addition, intercompany loans with foreign subsidiaries generally are considered to be permanently invested for the foreseeable future. Therefore, all foreign currency exchange gains and losses related to these permanently invested balances are recorded in the “Accumulated other comprehensive income” component in shareholders’ equity in our condensed consolidated balance sheets. Accounts Receivable and Allowance for Doubtful Accounts Included in accounts receivable at September 30, 2011 and December 31, 2010 was earned but unbilled revenue of $10.6 million and $6.5 million, respectively, which results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Earned but unbilled revenue is billed within 30 days. Provision for doubtful accounts was $0.1 million and $0.2 million for the three months ended September 30, 2011 and 2010, respectively, and was $0.5 million and $0.6 million for the nine months ended September 30, 2011 and 2010, respectively. Write-offs against the allowance for doubtful accounts were $0.3 million and $0.2 million in the three months ended September 30, 2011 and 2010, respectively, and were $0.6 million and $0.7 million in the nine months ended September 30, 2011 and 2010, respectively. Our allowance for doubtful accounts represents reserves for receivables that reduce accounts receivable to amounts expected to be collected. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as historical and anticipated customer payment performance and industry-specific economic conditions. Using these factors, management assigns reserves for uncollectible amounts by accounts receivable aging categories to specific customer accounts. Revenue Recognition We recognize revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenues consist primarily of usage fees generally based on per minute and per transaction methods. To a lesser extent, we charge subscription fees and have fixed-period minimum revenue commitments. Unbilled revenue consists of earned but unbilled revenue that results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Deferred revenue consists of payments made by customers in advance of the time services are rendered. Incremental direct costs incurred related to deferred revenue are deferred over the life of the contract and are recorded in “Prepaid expense and other current assets” in our condensed consolidated balance sheets. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected. USF Charges In accordance with Federal Communications Commission rules, we are required to contribute to the federal Universal Service Fund, or USF, for some of our solutions, which we recover from our applicable customers and remit to the Universal Service Administration Company. We present the USF charges that we collect and remit on a net basis, with charges to our customers netted against the amounts we remit. Sales Tax and Excise Tax In certain jurisdictions, we have not collected and remitted state sales tax from our customers. In addition, some of our solutions may be subject to telecommunications excise tax statutes in certain states. During the nine months ended September 30, 2011 and 2010, we made aggregate payments of $0.3 million and $1.2 million, respectively, related to the settlement of certain of these state sales tax contingencies. We have reserves for certain sales and state excise tax contingencies based on the likelihood of obligation. At September 30, 2011 and December 31, 2010, we had reserved $1.6 million and $1.3 million, respectively, for certain sales and state excise tax contingencies and interest. These contingencies are included in “Accrued taxes, other than income taxes” in our condensed consolidated balance sheets. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. In addition, states may disagree with our method of assessing and remitting such taxes, or additional states may subject us to inquiries regarding such taxes. Income Taxes Income tax expense for the three and nine months ended September 30, 2011 was $2.0 million and $5.8 million, respectively, compared to income tax expense of $0.3 million and $2.6 million for the three and nine months ended September 30, 2010, respectively. Our unrecognized net tax benefit of $3.5 million at September 30, 2011 and $3.7 million at December 31, 2010, if recognized, would affect our annual effective tax rate. The unrecognized net tax benefit at September 30, 2011 is included in “Other assets” and “Accrued expenses” under “Long-Term Liabilities” in our condensed consolidated balance sheets. If the statutes of limitations expire on certain unrecognized tax benefits the balance could change significantly. As we file our remaining international tax returns, we may record additional provision to return adjustments. Treasury Stock All treasury stock transactions are recorded at cost, and all shares of treasury stock repurchased are retired. During the nine months ended September 30, 2011, we repurchased 2,627,164 shares of our common stock for $19.4 million in the open market pursuant to our board-approved stock repurchase program. During the nine months ended September 30, 2010, we did not repurchase any of our common stock in the open market. During the nine months ended September 30, 2011 and 2010, we redeemed 179,141 and 217,901 shares, respectively, of our common stock to satisfy certain of our employees’ tax withholdings due upon the vesting of their restricted stock grants and remitted $1.5 million and $1.6 million, respectively, to the Internal Revenue Service on our employees’ behalf. Preferred Stock We have 5.0 million shares of authorized $0.01 par value preferred stock, none of which are issued or outstanding. Under the terms of our amended and restated articles of incorporation, our board of directors is empowered to issue preferred stock without shareholder action. Comprehensive Income Comprehensive income represents the change in equity of a business during a period, except for investments by, and distributions to, owners. Comprehensive income was $5.3 million and $17.4 million for three months ended September 30, 2011 and 2010, respectively, and $17.8 million and $17.9 million for the nine months ended September 30, 2011 and 2010, respectively. The primary differences between net income, as reported, and comprehensive income are foreign currency translation adjustments, net of taxes. Software Development Costs We capitalize certain costs incurred to develop software features used as part of our service offerings within “Property and Equipment, Net” on our condensed consolidated balance sheets. We capitalized approximately $3.7 million and $4.6 million of these costs for the three months ended September 30, 2011 and 2010, respectively, and $11.2 million and $12.2 million of these costs for the nine months ended September 30, 2011 and 2010, respectively. We amortize these capitalized costs on a straight-line basis over the estimated life of the related software, not to exceed five years. Depreciation expense recorded for the developed software was $2.4 million and $1.6 million for the three months ended September 30, 2011 and 2010, respectively, and was $7.1 million and $4.3 million for the nine months ended September 30, 2011 and 2010, respectively. Property and Equipment Property and equipment are recorded at cost. Depreciation is recorded under the straight-line method over the estimated useful lives of the assets, commencing when the assets are placed in service. The estimated useful lives are five to seven years for furniture and fixtures, two to five years for software and three to ten years for computer servers and Internet and telecommunications equipment. Accumulated depreciation was $107.7 million and $86.1 million as of September 30, 2011 and December 31, 2010, respectively. The cost of installation of equipment is capitalized, as applicable. Amortization of assets recorded under capital leases is included in depreciation. Assets recorded under capital leases and leasehold improvements are depreciated over the shorter of their useful lives or the term of the related lease. Fair Value Measurements Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The fair value amounts for cash and equivalents, accounts receivable, net, and accounts payable and accrued expenses approximate carrying amounts due to the short maturities of these instruments. The estimated fair value of our long-term debt and capital lease obligations at September 30, 2011 and December 31, 2010 was based on expected future payments discounted using current interest rates offered to us on debt of the same remaining maturity and characteristics, including credit quality, and did not vary materially from carrying value. Goodwill Summarized below is the carrying value of goodwill and any changes to the carrying value of goodwill from December 31, 2010 to September 30, 2011 (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> North America </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Europe </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Asia Pacific </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 5.4pt"> Goodwill: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 40%; padding-left: 5.4pt"> Gross value at December 31, 2010 </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 364,457 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 19,334 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 5,313 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 389,104 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> Accumulated impairment losses </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (92,423 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (92,423 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Carrying value at December 31, 2010 </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 272,034 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 19,334 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 5,313 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 296,681 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Impact of currency fluctuations </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (1,093 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (159 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (274 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (1,526 </td> <td style="text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> Change in impairment losses </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> Carrying value at September 30, 2011 </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 270,941 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 19,175 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 5,039 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 295,155 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> Goodwill is not subject to amortization, but is subject to periodic reviews for impairment. Other Intangible Assets Summarized below are the carrying value and accumulated amortization, if applicable, by intangible asset class (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December 31, 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Gross Carrying Value </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Accumulated Amortization </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Net Carrying Value </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Gross Carrying Value </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Accumulated Amortization </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Net Carrying Value </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 1.45pt"> Other Intangible assets: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 40%; padding-left: 1.45pt">    Customer lists </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> 66,979 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> (58,062 </td> <td style="width: 1%; text-align: left"> ) </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> 8,917 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> 67,386 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> (54,307 </td> <td style="width: 1%; text-align: left"> ) </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 6%; text-align: right"> 13,079 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 1.45pt">    Non-compete agreements </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 5,805 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (5,002 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 803 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 5,825 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (4,494 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 1,331 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 1.45pt">    Developed technology </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 1,000 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (1,000 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 1,000 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (1,000 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 1.45pt">    Other </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,731 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (363 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,368 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,637 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (80 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,557 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 1.45pt">        Total other intangible assets </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 76,515 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (64,427 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 12,088 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 76,848 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (59,881 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 16,967 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> We record fees incurred in connection with our patents and trademarks in “Prepaid expenses and other current assets” in our condensed consolidated balance sheets until the patents and trademarks are granted or abandoned. We have $1.2 million and $0.8 million of these assets recorded as of September 30, 2011 and December 31, 2010, respectively. Other intangible assets are amortized over an estimated useful life between one and ten years. Estimated annual amortization expense related to our other intangible assets for 2011 through 2015 is as follows (in thousands): <table cellpadding="0" cellspacing="0" align="center" style="width: 3in; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center"> Year </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Estimated Annual Amortization Expense </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 5.4pt">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 18%; text-align: center; padding-left: 5.4pt"> 2011 </td> <td style="width: 10%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 18%; text-align: center; vertical-align: bottom"> 6,313 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 5.4pt"> 2012 </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: center; vertical-align: bottom"> 3,846 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 5.4pt"> 2013 </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: center; vertical-align: bottom"> 1,488 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 5.4pt"> 2014 </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: center; vertical-align: bottom"> 1,107 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 5.4pt"> 2015 </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: center; vertical-align: bottom"> 1,103 </td> <td style="text-align: left">   </td> </tr> </table> Cost Method Investments During June 2011, we invested approximately $1.0 million in a privately held conferencing company. The investment is accounted for under the cost method and is periodically assessed for other-than-temporary impairment using financial results, economic data and other quantitative and qualitative factors deemed applicable. In the event an other-than-temporary impairment occurs, an impairment loss equal to the difference between the cost basis and the fair value will be recognized. The $1.0 million cost of this investment is carried on our condensed consolidated balance sheet at September 30, 2011 as a component of “Other assets”.  New and Recently Adopted Accounting Pronouncements In September 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2011-08 “Goodwill and Other (Topic 350): Testing Goodwill for Impairment,” which modifies the process of testing goodwill for impairment. The update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity would not be required to calculate the fair value of a reporting unit unless the entity determines it is more likely than not, based on a qualitative assessment, the fair value of goodwill is less than its carrying amount. The guidance also includes a number of events and circumstances to consider in conducting the qualitative assessment. This guidance is effective for public companies for fiscal years beginning on or after December 15, 2011. ASU No. 2011-08 is not expected to have a material impact on our consolidated financial position or results of operations. In June 2011, the FASB issued ASU No. 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which modifies the requirements for presenting net income and other comprehensive income and requires that all non-owner changes in shareholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment requires presentation of each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. This guidance is effective for public companies for fiscal years and interim periods beginning on or after December 15, 2011. ASU No. 2011-05 is not expected to have a material impact on our consolidated financial position or results of operations. In May 2011, the FASB issued ASU No. 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards,” to conform existing guidance regarding fair value measurement and disclosure between GAAP and International Financial Reporting Standards. The clarifying changes relate to the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and disclosure of quantitative information about unobservable inputs used for Level 3 fair value measurements. The amendments relate to measuring the fair value of financial instruments that are managed within a portfolio and application of premiums and discounts in a fair value measurement. The amendments also require additional disclosures concerning the valuation processes used, sensitivity of the fair value measurement to changes in unobservable inputs for those items categorized as Level 3, a reporting entity’s use of a nonfinancial asset in a way that differs from the asset’s highest and best use and the categorization by level in the fair value hierarchy for items required to be measured at fair value for disclosure purposes only. This guidance is effective for public companies for fiscal years and interim periods beginning on or after December 15, 2011. ASU No. 2011-04 is not expected to have a material impact on our consolidated financial position or results of operations. In December 2010, the FASB issued ASU No. 2010-28 “Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. Goodwill of a reporting unit is required to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This guidance is effective for public companies for fiscal years beginning on or after December 15, 2010. The adopted provisions of ASU No. 2010-28 did not have any effect on our consolidated financial position or results of operations. In December 2010, the FASB issued ASU No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations,” which amends the FASB Accounting Standards Codification, or ASC, to require any public entity that enters into business combinations that are material on an individual or aggregate basis and presents comparative financial statements, to disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We plan to implement these provisions for all acquisitions completed beginning in 2011 and provide the appropriate disclosures for any material acquisitions.  In April 2010, the FASB issued ASU No. 2010-13 “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” which amends the ASC to provide guidance on share-based payment awards to employees with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trade. The ASU states that if such awards meet all the criteria for equity they should be classified as such and not as a liability based solely on the currency they are denominated in. This guidance is effective for fiscal years beginning on or after December 15, 2010. The adopted provisions of ASU No. 2010-13 did not have any effect on our consolidated financial position or results of operations. In October 2009, the FASB issued ASU No. 2009-13 “Revenue Recognition, Multiple-Deliverable Revenue Arrangements,” an amendment to its accounting guidance on revenue arrangements with multiple deliverables. This new accounting guidance addresses the unit of accounting for arrangements involving multiple deliverables and how consideration should be allocated to separate units of accounting, when applicable. In the same month, the FASB also issued ASU No. 2009-14, “Software, Certain Revenue Arrangements That Include Software Elements,” which changes revenue recognition for tangible products containing software and hardware elements. This update excludes from software revenue recognition all tangible products containing both software and non-software components that function together to deliver the product’s essential functionality and includes such products in the multiple-deliverable revenue guidance discussed above. This guidance is effective for fiscal years beginning on or after June 15, 2010. The adoption of the relevant provisions of ASU No. 2009-13 and ASU No. 2009-14 did not have a material impact on our consolidated financial position or results of operations.

3. RESTRUCTURING COSTS Below is a reconciliation of the beginning and ending balances of our accrued restructuring costs for the nine months ended September 30, 2011. All expenses associated with these activities are reflected in “Restructuring costs” in our condensed consolidated statements of operations. Cash payments for restructuring costs from continuing operations were $5.7 million and $5.4 million during the nine months ended September 30, 2011 and 2010, respectively. The components included in the reconciliation of the liability balances include activity for our continuing and discontinued operations (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Balance at December 31, 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Provisions </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Cash Payments </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Non-cash </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Balance at September 30, 2011 </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 5.4pt"> Accrued restructuring costs: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 35%; text-indent: 10pt; padding-left: 5.4pt"> Severance and exit costs </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 5,797 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 43 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> (4,673 </td> <td style="width: 1%; text-align: left"> ) </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> (293 </td> <td style="width: 1%; text-align: left"> ) </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 874 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: 10pt; padding-left: 5.4pt"> Contractual obligations </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,797 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 257 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (1,307 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 146 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,893 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 10pt; padding-left: 5.4pt"> Total restructuring costs </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 9,594 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 300 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (5,980 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (147 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 3,767 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> Realignment of Workforce – 2011 During the quarter ended September 30, 2011, we recorded $0.7 million of severance costs, including $0.3 million recorded in discontinued operations, and $0.2 million of lease termination costs associated with efforts to consolidate and streamline various functions of our work force. As part of these consolidations, we eliminated approximately 20 positions. On a segmented basis, these restructuring costs totaled $0.5 million in North America, $0.1 million in Europe and $0.3 million in Asia Pacific. Our remaining accrual for the 2011 restructuring costs was $0.3 million at September 30, 2011, including $0.2 million for lease termination costs and $0.1 million for severance costs. We anticipate the severance costs will be paid this year, and the lease termination costs will be paid through August 31, 2013.  Realignment of Workforce – 2010 During the year ended 2010, we recorded $10.2 million of severance costs and $0.6 million of lease termination costs associated with efforts to consolidate and streamline various functions of our work force. We also recorded $1.8 million of asset impairments in connection with these restructuring efforts. In addition, we recorded $0.9 million of exit costs related to marketing efforts abandoned during the year and $0.5 million of exit costs related to the reorganization of our operating structure subsequent to the sale of our PGiSend messaging business as restructuring costs. As part of these consolidations, we eliminated approximately 165 positions. On a segment basis, these restructuring costs totaled $8.5 million in North America, including accelerated vesting of restricted stock with a fair market value of $0.2 million, $2.5 million in Europe and $1.2 million in Asia Pacific. Our remaining accrual for the 2010 restructuring costs was $0.9 million at September 30, 2011, including $0.2 million for lease termination costs and $0.7 million for severance costs. We anticipate the severance costs will be paid this year, and the lease termination costs will be paid through March 31, 2013. Realignment of Workforce – 2009 During the year ended December 31, 2009, we executed a restructuring plan to consolidate and streamline various functions of our work force. As part of these consolidations, we eliminated approximately 500 positions. During the year ended December 31, 2009, we recorded total severance and exit costs of $14.8 million, including accelerated vesting of restricted stock with a fair market value of $0.2 million. Additionally, during the year ended December 31, 2009, we recorded $4.4 million of lease termination costs associated with office locations in North America and Europe. On a segment basis, these restructuring costs totaled $12.0 million in North America, $6.6 million in Europe and $0.6 million in Asia Pacific. Our remaining accrual for the 2009 restructuring costs, representing lease termination costs, was $2.6 million at September 30, 2011. We anticipate the lease termination costs will be paid through August 31, 2018.

4. DISCONTINUED OPERATIONS PGiSend On October 21, 2010, we completed the sale of our PGiSend messaging business to EasyLink Services International Corporation, or EasyLink, for an aggregate purchase price of $105.0 million, with a working capital target that was finalized in the first quarter of 2011, resulting in an additional payment from EasyLink of $1.8 million. Prior period operating results have been reclassified to present this business as discontinued operations. Maritime Notification and Reminder Solutions During the year ended December 31, 2010, we classified our Maritime Notification and Reminder solutions operations as a disposal group held for sale. This disposal group consists of all customers using these non-conferencing, ship-to-shore communication services targeted specifically towards shipping vessels that we resell through our Japanese subsidiary. All assets and liabilities of this disposal group have been classified separately as of December 31, 2010. At September 30, 2011 and December 31, 2010, assets of the disposal group held for sale consisted of accounts receivable of $3.5 million and $4.3 million, respectively, net of allowances of $0.3 million. At September 30, 2011 and December 31, 2010, liabilities of the disposal group held for sale consisted of $3.2 million and $3.1 million of accounts payable, respectively. We expect this disposal to be completed prior to December 31, 2011. Prior period operating results have been reclassified to present this business as discontinued operations. PGiMarket On November 5, 2009, we completed the sale of our PGiMarket business. During the nine months ended September 30, 2011, we received $0.7 million in cash for the achievement of certain revenue targets in 2010 under an earn-out provision in the sale agreement. Components of Discontinued Operations We allocated interest expense related to our $50.0 million Term A loan, which was required to be repaid as a result of our PGiSend sale, to discontinued operations in 2010. The following amounts associated with our discontinued businesses have been segregated from continuing operations and are reflected as discontinued operations for the three and nine months ended September 30, 2011 and 2010 (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Three Months Ended </td> <td style="font-weight: bold">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Nine Months Ended </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 41%; padding-left: 5.4pt"> Net revenue from discontinued operations </td> <td style="width: 2%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 1,174 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 32,757 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 8,735 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 100,317 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Income (loss) from operations </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (540 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 4,595 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (486 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 11,632 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Interest expense </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (9 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (370 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (70 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (1,171 </td> <td style="text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Income (loss) from disposal </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (9 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 9 </td> <td style="text-align: left"> </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> Income tax benefit (expense) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 7,293 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (1,437 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 7,287 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (4,470 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> Income from discontinued operations, net of taxes </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 6,735 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 2,788 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 6,740 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 5,991 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> The results of discontinued operations include an income tax benefit of $7.3 million. This benefit includes approximately $6 million relating to changes in estimates of the tax provision that resulted from the finalization of the actual tax basis purchase price allocation received in the third quarter from EasyLink in connection with our PGiSend sale and $1 million for a correction of a valuation allowance previously recorded in 2011.

5. INDEBTEDNESS Long-term debt and capital lease obligations at September 30, 2011 and December 31, 2010 are as follows (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December 31, 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 56%; padding-left: 5.4pt"> Borrowings on credit facility </td> <td style="width: 8%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 12%; text-align: right"> 196,277 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 8%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 12%; text-align: right"> 173,338 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> Capital lease obligations </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 7,969 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 10,406 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: justify; padding-left: 36pt"> Subtotal </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 204,246 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 183,744 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt"> Less current portion </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (3,864 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (3,577 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 36pt"> Total long-term debt and capital lease obligations </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 200,382 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 180,167 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> During 2010, we entered into a new credit facility expiring in May 2014 and repaid and terminated our then existing credit facility. Following the retirement of our Term A loan in connection with our PGiSend sale, our facility consists of a $275.0 million revolver and an uncommitted $75.0 million accordion feature. Our subsidiary, American Teleconferencing Services, Ltd., or ATS, is the borrower under our credit facility, with PGi and certain of our material domestic subsidiaries guaranteeing the obligations of ATS under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries. Proceeds drawn under our credit facility can be used for working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under our new credit facility, at our option, is (1) the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or one-month LIBOR plus one and one-half percent) plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end, or (2) LIBOR for one, two, three, nine or 12 months adjusted for a percentage that represents the Federal Reserve Board’s reserve percentage plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end. The applicable percentages for base rate loans and LIBOR loans were 2.0% and 3.0%, respectively, at September 30, 2011. Our interest rate on LIBOR loans, which comprised substantially all of our outstanding borrowings as of September 30, 2011, was 3.2%. Our credit facility contains customary restrictive covenants, including financial covenants, and otherwise contains terms substantially similar to the terms in our prior credit facility.  At September 30, 2011, we were in compliance with the covenants under our credit facility. At September 30, 2011, we had $196.3 million of borrowings and $5.5 million in letters of credit outstanding under our credit facility. Until its expiration in August 2010, we had a $100.0 million interest rate swap outstanding. This swap was designated as a cash flow hedge in 2008. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with this interest rate swap. Any changes in fair value prior to designation as a hedge, subsequent to dedesignation as a hedge, and any ineffectiveness while designated were recognized as “Unrealized gain on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our condensed consolidated statements of operations and amounted to $0.5 million and $1.0 million during the three and nine months ended September 30, 2010, respectively. As of December 31, 2010, our swaps had all expired, and no related balance is carried on our condensed consolidated balance sheets.

6. EQUITY-BASED COMPENSATION We may issue restricted stock awards, stock options, stock appreciation rights, restricted stock units and other stock-based awards to employees, directors, non-employee consultants and advisors under our amended and restated 2004 long-term incentive plan and our amended and restated 2000 directors stock plan, each plan as amended. Options issued under our 2004 plan may be either incentive stock options, which permit income tax deferral upon exercise of options, or non-qualified options not entitled to such deferral. We may only issue non-qualified options under our directors stock plan. The compensation committee of our board of directors administers these stock plans. Equity-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized over the applicable vesting periods. The following table presents total equity-based compensation expense for restricted stock awards included in the line items below in our condensed consolidated statements of operations (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Three Months Ended </td> <td style="font-weight: bold">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Nine Months Ended </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 42%; padding-left: 5.4pt"> Cost of revenues </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 60 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 64 </td> <td style="width: 3%; text-align: left">   </td> <td style="width: 1%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 128 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 218 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Selling and marketing </td> <td style="text-align: left">   </td> <td style="text-align: right"> 137 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 446 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 683 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 1,315 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Research and development </td> <td style="text-align: left">   </td> <td style="text-align: right"> 112 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 186 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 437 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 659 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> General and administrative </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 1,313 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 1,462 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,961 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,786 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Equity-based compensation expense </td> <td style="text-align: left">   </td> <td style="text-align: right"> 1,622 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 2,158 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 5,209 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 6,978 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; padding-left: 5.4pt"> Income tax benefits </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (568 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (755 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (1,823 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (2,442 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 8.75pt; padding-left: 5.4pt"> Total equity-based compensation expense, net of tax </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 1,054 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 1,403 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 3,386 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 4,536 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> Restricted Stock Awards The fair value of restricted stock awards is the market value of the stock on the date of grant. The effect of vesting conditions that apply only during the requisite service period is reflected by recognizing compensation cost only for the restricted stock awards for which the requisite service is rendered. As a result, we are required to estimate an expected forfeiture rate, as well as the probability that performance conditions that affect the vesting of certain stock-based awards will be achieved and only recognize expense for those shares expected to vest. We estimate that forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and voluntarily cancelled. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. Our estimated forfeiture rate for restricted stock awards is 1.5%. The following table summarizes the activity of restricted stock awards under our stock plans from December 31, 2010 to September 30, 2011: <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Shares </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted-Average Grant Date Fair Value </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 56%; padding-left: 5.4pt"> Unvested at December 31, 2010 </td> <td style="width: 15%">   </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 8%; text-align: right"> 1,474,834 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 5%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 12%; text-align: right"> 8.74 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 20pt; padding-left: 5.4pt"> Granted </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 668,992 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 7.56 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 20pt; padding-left: 5.4pt"> Vested/released </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> (595,773 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 9.01 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: 20pt; padding-left: 5.4pt"> Forfeited </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (49,800 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 10.56 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> Unvested at September 30, 2011 </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 1,498,253 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 8.05 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> The weighted-average grant date fair value of restricted stock awards granted during the nine months ended September 30, 2011 and 2010 was $7.56 and $7.52, respectively. The aggregate fair value of restricted stock vested was $0.8 million and $4.4 million for the three and nine months ended September 30, 2011, respectively, and $2.2 million and $5.6 million for the three and nine months ended September 30, 2010, respectively. As of September 30, 2011, we had $9.0 million of unvested restricted stock, which we will recognize over a weighted-average recognition period of 2.2 years. Stock Options The fair value of stock options is estimated at the date of grant with the Black-Scholes option pricing model using various assumptions such as expected life, volatility, risk-free interest rate, dividend yield and forfeiture rates. The expected life of stock-based awards granted represents the period of time that they are expected to be outstanding and is estimated using historical data. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. We have not historically paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model. Finally, we use historical data to estimate pre-vesting option forfeitures. Stock-based compensation is recorded for only those awards that are expected to vest. No stock options have been issued since the year ended December 31, 2005. The following table summarizes the stock options activity under our stock plans from December 31, 2010 to September 30, 2011:   <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Options </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted-Average Exercise Price </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted-Average Remaining Contractual Life (in years) </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Aggregate Intrinsic Value </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 40%; padding-left: 5.4pt"> Options outstanding at December 31, 2010 </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 10%; text-align: right"> 459,836 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 9.61 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 10%; text-align: right">   </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 10%; text-align: right">   </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 20pt; padding-left: 5.4pt"> Granted </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 20pt; padding-left: 5.4pt"> Exercised </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: 20pt; padding-left: 5.4pt"> Expired </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (73,667 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 10.82 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> Options outstanding at September 30, 2011 </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 386,169 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 9.38 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.70 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> —   </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> Options exercisable at September 30, 2011 </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 386,169 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 9.38 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.70 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> —   </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> As of September 30, 2011 and 2010, we had no remaining unvested stock options to be recorded as an expense for future periods.

7. EARNINGS PER SHARE Basic and Diluted Earnings Per Share Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding at September 30, 2011 and September 30, 2010, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings per share calculation until the shares are vested. Diluted earnings per share includes the effect of all potentially dilutive securities on earnings per share. Our unvested restricted shares, stock options and warrants are potentially dilutive securities. The difference between basic and diluted weighted-average shares outstanding was the dilutive effect of unvested restricted shares, stock options and warrants for the three months ended September 30, 2011 and 2010. Unvested shares of our restricted stock do not contain nonforfeitable rights to dividends or dividend equivalents. The following table represents a reconciliation of the shares used in the calculation of basic and diluted net income per share from continuing operations computations contained in our condensed consolidated financial statements (in thousands, except per share data): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 8pt; text-align: center">   </td> <td style="font-size: 9pt; font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-size: 9pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Three Months Ended September 30, </td> <td style="font-size: 9pt; font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-size: 9pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Nine Months Ended September 30, </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 8pt; text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 40%; padding-bottom: 2.5pt; text-indent: 10pt; padding-left: 5.4pt"> Net income from continuing operations </td> <td style="width: 3%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 10%; border-bottom: Black 2.5pt double; text-align: right"> 5,822 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> <td style="width: 3%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 10%; border-bottom: Black 2.5pt double; text-align: right"> 1,022 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> <td style="width: 3%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 10%; border-bottom: Black 2.5pt double; text-align: right"> 13,607 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> <td style="width: 3%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 10%; border-bottom: Black 2.5pt double; text-align: right"> 9,791 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 10pt; padding-left: 5.4pt"> Weighted-average shares outstanding - basic            and diluted: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 20pt; padding-left: 5.4pt"> Weighted-average shares outstanding - basic </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 49,033 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 58,548 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 49,982 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 58,380 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: -13.4pt; padding-left: 41.2pt"> Add effect of dilutive securities: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: -13.4pt; padding-left: 41.2pt">     Unvested restricted shares </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 333 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 350 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 326 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 351 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: -13.4pt; padding-left: 41.2pt">     Stock options </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> —   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 6 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: -13.4pt; padding-left: 41.2pt">     Warrants </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> —   </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 20pt; padding-left: 5.4pt"> Weighted-average shares outstanding - diluted </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 49,366 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 58,898 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 50,308 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left">   </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 58,737 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 10pt; padding-left: 5.4pt"> Basic net income per share from continuing           operations </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.12 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.02 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.27 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.17 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 10pt; padding-left: 5.4pt"> Diluted net income per share from continuing           operations </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.12 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.02 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.27 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 0.17 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table> The weighted-average diluted common shares outstanding for the three and nine months ended September 30, 2011 excludes the effect of an aggregate of 563,693 and 718,552 restricted shares, out-of-the-money options and warrants, respectively, because their effect would be anti-dilutive. The weighted-average diluted common shares outstanding for the three and nine months ended September 30, 2010 excludes the effect of an aggregate of 1,626,789 and 926,360 restricted shares, out-of-the-money options and warrants, respectively, because their effect would be anti-dilutive.

8. COMMITMENTS AND CONTINGENCIES State Corporate Tax Matter On August 6, 2010, one of our former subsidiaries, Xpedite Systems, LLC, or Xpedite, which was included in the sale of our PGiSend messaging business to EasyLink completed on October 21, 2010, received a final determination from the New Jersey Division of Taxation upholding a corporate business tax audit assessment for the tax years ended December 31, 1998 through December 31, 2000 and December 31, 2002. The assessment totaled approximately $6.2 million as of August 15, 2010, including approximately $2.4 million in taxes and $3.8 million in accrued interest and penalties. The assessment relates to the sourcing of Xpedite’s receipts for purposes of determining the amount of its income that is properly attributable to, and therefore taxable by, New Jersey. We are vigorously contesting the determination and filed a timely appeal with the Tax Court of New Jersey on November 2, 2010. We believe we are adequately reserved for this matter. However, if the New Jersey Division of Taxation’s final determination is sustained, the amount assessed could result in an adjustment to our condensed consolidated financial statements and could impact our financial condition and results of operations. We agreed to indemnify EasyLink for this matter in connection with our PGiSend sale.  Other Litigation and Claims We are involved from time to time in other legal proceedings that we do not believe will have a material adverse effect upon our business, financial condition or results of operations, although we can offer no assurance as to the ultimate outcome of any such proceedings.

9. DERIVATIVE INSTRUMENTS We have used derivative instruments from time to time to manage risks related to interest rates. During the three and nine months ended September 30, 2011, we did not have any derivative instruments. During the three and nine months ended September 30, 2010, our derivative instruments were limited to interest rate swaps. We are exposed to one-month LIBOR interest rate risk on our credit facility. In August 2007, we entered into two $100.0 million pay fixed, receive floating interest rate swaps to hedge the variability in our cash flows associated with changes in one-month LIBOR interest rates. One of these interest rate swaps expired in August 2009 and the other expired in August 2010, so there is no associated asset or liability on our condensed consolidated balance sheet as of September 30, 2011. Cash-Flow Hedges For a derivative instrument designated as a cash-flow hedge, the effective portion of the derivative’s gain (loss) is initially reported as a component of other comprehensive income and is subsequently recognized in earnings in the same period or periods during which the hedged exposure is recognized in earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings. Monthly settlements with the counterparties are recognized in the same line item, “Interest expense,” as the interest costs associated with our credit facility. Accordingly, cash settlements are included in operating cash flows and were $3.0 million for the nine months ended September 30, 2010. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with our remaining interest rate swap, which expired in August 2010. Consequently, we did not have any such cash settlements during the nine months ended September 30, 2011. During the three and nine months ended September 30, 2010, we recognized the following gains and interest expense related to interest rate swaps (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Three Months Ended September 30, 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Nine Months Ended September 30, 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: left"> Effective portion: </td> <td style="font-weight: bold">   </td> <td colspan="3" style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold">   </td> <td colspan="3" style="font-weight: bold; text-align: center">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 56%; padding-bottom: 2.5pt; text-indent: -27pt; padding-left: 27pt">       Gain recognized in other comprehensive income, net of  tax effect of $0.1 million and $0.5 million in 2010 </td> <td style="width: 8%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right"> 211 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> <td style="width: 8%; padding-bottom: 2.5pt">   </td> <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right"> 1,009 </td> <td style="width: 1%; padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 1.45pt"> Ineffective portion: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 1.45pt"> Unrealized gain on change in fair value of interest rate          swaps recognized in other expense </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 254 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 1,228 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 1.45pt"> Interest expense related to monthly cash settlements: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; padding-left: 1.45pt">       Interest expense </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (575 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (2,828 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> </tr> </table> For further disclosure on our policy for accounting for derivatives and hedges, see Note 5.

10. SEGMENT REPORTING We manage our operations on a geographic regional basis, with reportable segments in North America, Europe and Asia Pacific. The accounting policies as described in the summary of significant accounting policies are applied consistently across our segments. Our North America segment is comprised of operations in the United States and Canada. We present “Operating income” for each of our reportable segments as a measure of segment profit. Our chief operating decision makers use operating income internally as a means of analyzing segment performance and believe that it more clearly represents our segment profit without the impact of income taxes and other non-operating items. Information concerning our operations in our reportable segments is as follows (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Three Months Ended </td> <td style="font-weight: bold">   </td> <td colspan="7" style="font-weight: bold; text-align: center"> Nine Months Ended </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> September 30, </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: center">   </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="font-weight: bold; padding-bottom: 1pt">   </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 5.4pt"> Net revenues: </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 40%; text-indent: 10pt; padding-left: 5.4pt"> North America </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 79,350 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 76,469 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 237,714 </td> <td style="width: 1%; text-align: left">   </td> <td style="width: 3%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right"> 230,185 </td> <td style="width: 1%; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 10pt; padding-left: 5.4pt"> Europe </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 23,751 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 19,636 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 72,501 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 63,183 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: 10pt; padding-left: 5.4pt"> Asia Pacific </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,083 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 13,392 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 44,884 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 39,561 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 30pt; padding-left: 5.4pt"> Consolidated </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 119,184 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 109,497 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 355,099 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 332,929 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; padding-left: 5.4pt"> Operating income (loss): </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right">   </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 10pt; padding-left: 5.4pt"> North America </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> 1,914 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> (354 </td> <td style="text-align: left"> ) </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> 909 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> 511 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="text-indent: 10pt; padding-left: 5.4pt"> Europe </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 5,962 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 3,882 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 19,553 </td> <td style="text-align: left">   </td> <td>   </td> <td style="text-align: left">   </td> <td style="text-align: right"> 16,153 </td> <td style="text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-indent: 10pt; padding-left: 5.4pt"> Asia Pacific </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 2,035 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 1,079 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 5,516 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> <td style="padding-bottom: 1pt">   </td> <td style="border-bottom: Black 1pt solid; text-align: left">   </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,250 </td> <td style="padding-bottom: 1pt; text-align: left">   </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 2.5pt; text-indent: 30pt; padding-left: 5.4pt"> Consolidated </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 9,911 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 4,607 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 25,978 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> <td style="padding-bottom: 2.5pt">   </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 20,914 </td> <td style="padding-bottom: 2.5pt; text-align: left">   </td> </tr> </table>

11. CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION Supplemental disclosures of cash flow information are as follows (in thousands): <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; font-weight: bold"> <td style="padding-left: 5.4pt; padding-bottom: 1pt">   </td> <td style="padding-bottom: 1pt">   </td> <td colspan="5" style="text-align: center; border-bottom: Black 1pt solid"> Nine Months Ended September 30, </td> </tr> <tr style="vertical-align: bottom; font-weight: bold"> <td style="padding-left: 5.4pt; padding-bottom: 1pt">   </td> <td style="padding-bottom: 1pt">   </td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"> 2011 </td> <td style="text-align: left; padding-bottom: 1pt">   </td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"> 2010 </td> </tr> <tr style="vertical-align: bottom"> <td style="width: 56%; padding-left: 5.4pt"> Cash paid for interest </td> <td style="width: 17%">   </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 10%; text-align: right; padding-right: 6pt"> 4,895 </td> <td style="width: 4%; text-align: left">   </td> <td style="width: 1%"> $ </td> <td style="text-align: right; padding-right: 6pt"> 6,194 </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Income tax payments </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right; padding-right: 6pt"> 5,092 </td> <td style="text-align: left">   </td> <td> $ </td> <td style="text-align: right; padding-right: 6pt"> 9,224 </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Income tax refunds </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right; padding-right: 6pt"> 1,226 </td> <td style="text-align: left">   </td> <td> $ </td> <td style="text-align: right; padding-right: 6pt"> 1,616 </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Capital lease additions </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right; padding-right: 6pt"> 1,080 </td> <td style="text-align: left">   </td> <td> $ </td> <td style="text-align: right; padding-right: 6pt"> 4,086 </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 5.4pt"> Capitalized interest </td> <td>   </td> <td style="text-align: left"> $ </td> <td style="text-align: right; padding-right: 6pt"> 141 </td> <td style="text-align: left">   </td> <td> $ </td> <td style="text-align: right; padding-right: 6pt"> 308 </td> </tr> </table> At September 30, 2011 and 2010, we had capital expenditures in “Total current liabilities” of $2.5 million and $2.7 million, respectively. On May 10, 2010, we refinanced our prior credit facility as discussed in Note 5. We used the initial borrowings of $230.4 million under the new credit facility and $50.0 million of proceeds from the Term A loan to satisfy $268.0 million of outstanding borrowings under the prior credit facility, $2.8 million of certain transaction fees and closing costs and $0.4 million of interest expense related to the prior credit facility, all of which were non-cash transactions. The residual $9.2 million was received in cash. We paid an additional $1.0 million in cash for certain fees and expenses related to the transaction.

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Cost of revenues (exclusive of depreciation and amortization shown separately below) Selling and marketing The aggregate total of expenses, exclusive of those expenses shown seperately on the consolidated statements of operations, of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product, service, service line or product line. General and administrative (exclusive of expenses shown separately below) Research and development Excise and sales tax expense Depreciation Amortization Restructuring costs Asset impairments Net legal settlements and related expenses Acquisition-related costs Total operating expenses Operating income Other (expense) income Other (expense) income [Abstract] Interest expense Unrealized gain on change in fair value of interest rate swaps Interest income Other, net Total other expense Income from continuing operations before income taxes Income tax expense Net income from continuing operations Income from discontinued operations, net of taxes Net income BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING (in Shares) Basic net income per share Basic net income per share [Abstract] Continuing operations (in Dollars per share) Discontinued operations (in Dollars per share) Net income per share (in Dollars per share) DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING (in Shares) Diluted net income per share Diluted net income per share [Abstract] Continuing operations (in Dollars per share) Discontinued operations (in Dollars per share) Net income per share (in Dollars per share) CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY [Abstract] Balance Balance Comprehensive income, net of taxes: Comprehensive income, net of taxes: [Abstract] Net income Translation adjustments, net of taxes Comprehensive income, net of taxes Issuance of common stock: Issuance of common stock: [Abstract] Equity-based compensation Treasury stock purchase and retirement Tax withholding related to vesting of restricted stock, net Income tax deficiency from equity awards CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM OPERATING ACTIVITIES [Abstract] Income from discontinued operations, net of taxes Net income from continuing operations Adjustments to reconcile net income to net cash provided by operating activities Adjustments to reconcile net income to net cash provided by operating activities [Abstract] Depreciation Amortization Amortization of debt issuance costs Write-off of unamortized debt issuance costs Payments for legal settlements and related expenses Deferred income taxes Payments for restructuring costs Equity-based compensation Unrealized gain on change in fair value of interest rate swaps Provision for doubtful accounts Changes in working capital Net cash provided by operating activities from continuing operations Net cash (used in) provided by operating activities from discontinued operations Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES [Abstract] Capital expenditures Business dispositions Business acquisitions, net of cash acquired Net cash used in investing activities from continuing operations Net cash used in investing activities from discontinued operations Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES [Abstract] Principal payments under borrowing arrangements Proceeds from borrowing arrangements Payments of debt issuance costs Purchase of treasury stock, at cost Net cash used in financing activities from continuing operations Net cash used in financing activities from discontinued operations Net cash used in financing activities Effect of exchange rate changes on cash and equivalents NET INCREASE IN CASH AND EQUIVALENTS CASH AND EQUIVALENTS, beginning of period CASH AND EQUIVALENTS, end of period 1. 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CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) In Thousands, except Share data	Sep. 30, 2011	Dec. 31, 2010
Allowance for Doubtful Accounts of $755 and $930, respectively (in Dollars)	$ 755	$ 930
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	50,066,012	52,253,125
Common stock, shares outstanding	50,066,012	52,253,125

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Net revenues	$ 119,184	$ 109,497	$ 355,099	$ 332,929
Operating expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)	49,938	44,834	146,595	134,265
Selling and marketing	32,167	28,502	102,526	90,261
General and administrative (exclusive of expenses shown separately below)	14,411	14,955	42,409	43,955
Research and development	2,934	3,660	8,737	10,595
Excise and sales tax expense	331		352	439
Depreciation	7,737	6,375	23,172	18,916
Amortization	1,612	1,658	5,061	5,770
Restructuring costs	38	4,824	38	6,907
Asset impairments	62	47	116	176
Net legal settlements and related expenses	24	35	36	415
Acquisition-related costs	19		79	316
Total operating expenses	109,273	104,890	329,121	312,015
Operating income	9,911	4,607	25,978	20,914
Other (expense) income
Interest expense	(2,192)	(2,814)	(6,381)	(9,136)
Unrealized gain on change in fair value of interest rate swaps		254		1,228
Interest income	7	38	34	109
Other, net	143	(790)	(235)	(706)
Total other expense	(2,042)	(3,312)	(6,582)	(8,505)
Income from continuing operations before income taxes	7,869	1,295	19,396	12,409
Income tax expense	2,047	273	5,789	2,618
Net income from continuing operations	5,822	1,022	13,607	9,791
Income from discontinued operations, net of taxes	6,735	2,788	6,740	5,991
Net income	$ 12,557	$ 3,810	$ 20,347	$ 15,782
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING (in Shares)	49,033	58,548	49,982	58,380
Basic net income per share
Continuing operations (in Dollars per share)	$ 0.12	$ 0.02	$ 0.27	$ 0.17
Discontinued operations (in Dollars per share)	$ 0.14	$ 0.05	$ 0.13	$ 0.10
Net income per share (in Dollars per share)	$ 0.26	$ 0.07	$ 0.41	$ 0.27
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING (in Shares)	49,366	58,898	50,308	58,737
Diluted net income per share
Continuing operations (in Dollars per share)	$ 0.12	$ 0.02	$ 0.27	$ 0.17
Discontinued operations (in Dollars per share)	$ 0.14	$ 0.05	$ 0.13	$ 0.10
Net income per share (in Dollars per share)	$ 0.25	$ 0.06	$ 0.40	$ 0.27

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Document And Entity Information	9 Months Ended
Document And Entity Information	Sep. 30, 2011	Nov. 01, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	PREMIERE GLOBAL SERVICES, INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		50,129,426
Amendment Flag	false
Entity Central Index Key	0000880804
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

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6. EQUITY-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

6. EQUITY-BASED COMPENSATION

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Cost of revenues	$	60		$	64		$	128		$	218
Selling and marketing		137			446			683			1,315
Research and development		112			186			437			659
General and administrative		1,313			1,462			3,961			4,786
Equity-based compensation expense		1,622			2,158			5,209			6,978
Income tax benefits		(568	)		(755	)		(1,823	)		(2,442	)
Total equity-based compensation expense, net of tax	$	1,054		$	1,403		$	3,386		$	4,536

Restricted Stock Awards

The following table summarizes the activity of restricted stock awards under our stock plans from December 31, 2010 to September 30, 2011:

	Shares			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2010		1,474,834		$	8.74
Granted		668,992			7.56
Vested/released		(595,773	)		9.01
Forfeited		(49,800	)		10.56
Unvested at September 30, 2011		1,498,253		$	8.05

Stock Options

The following table summarizes the stock options activity under our stock plans from December 31, 2010 to September 30, 2011:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2010		459,836		$	9.61
Granted		—			—
Exercised		—			—
Expired		(73,667	)		10.82
Options outstanding at September 30, 2011		386,169			9.38		0.70		—
Options exercisable at September 30, 2011		386,169		$	9.38		0.70		—

As of September 30, 2011 and 2010, we had no remaining unvested stock options to be recorded as an expense for future periods.

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11. CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

6 Months Ended

Jun. 30, 2011

Cash Flow, Supplemental Disclosures [Text Block]

11. CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

Supplemental disclosures of cash flow information are as follows (in thousands):

	Nine Months Ended September 30,
	2011		2010
Cash paid for interest	$	4,895	$	6,194
Income tax payments	$	5,092	$	9,224
Income tax refunds	$	1,226	$	1,616
Capital lease additions	$	1,080	$	4,086
Capitalized interest	$	141	$	308

At September 30, 2011 and 2010, we had capital expenditures in “Total current liabilities” of $2.5 million and $2.7 million, respectively.

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2. SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES

Foreign Currency Translation

Accounts Receivable and Allowance for Doubtful Accounts

Revenue Recognition

USF Charges

Sales Tax and Excise Tax

Income Taxes

As we file our remaining international tax returns, we may record additional provision to return adjustments.

Treasury Stock

Preferred Stock

Comprehensive Income

Software Development Costs

Property and Equipment

Fair Value Measurements

Goodwill

Summarized below is the carrying value of goodwill and any changes to the carrying value of goodwill from December 31, 2010 to September 30, 2011 (in thousands):

	North America			Europe			Asia Pacific			Total
Goodwill:
Gross value at December 31, 2010	$	364,457		$	19,334		$	5,313		$	389,104
Accumulated impairment losses		(92,423	)		—			—			(92,423	)
Carrying value at December 31, 2010		272,034			19,334			5,313			296,681
Impact of currency fluctuations		(1,093	)		(159	)		(274	)		(1,526	)
Change in impairment losses		—			—			—			—
Carrying value at September 30, 2011	$	270,941		$	19,175		$	5,039		$	295,155

Goodwill is not subject to amortization, but is subject to periodic reviews for impairment.

Other Intangible Assets

Summarized below are the carrying value and accumulated amortization, if applicable, by intangible asset class (in thousands):

	September 30, 2011							December 31, 2010
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Other Intangible assets:
Customer lists	$	66,979	$	(58,062	)	$	8,917	$	67,386	$	(54,307	)	$	13,079
Non-compete agreements		5,805		(5,002	)		803		5,825		(4,494	)		1,331
Developed technology		1,000		(1,000	)		—		1,000		(1,000	)		—
Other		2,731		(363	)		2,368		2,637		(80	)		2,557
Total other intangible assets	$	76,515	$	(64,427	)	$	12,088	$	76,848	$	(59,881	)	$	16,967

Year	Estimated Annual Amortization Expense

2011	$	6,313
2012	$	3,846
2013	$	1,488
2014	$	1,107
2015	$	1,103

Cost Method Investments

New and Recently Adopted Accounting Pronouncements

XML 20 R14.htm IDEA: XBRL DOCUMENT

8. COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

8. COMMITMENTS AND CONTINGENCIES

State Corporate Tax Matter

Other Litigation and Claims

XML 21 R15.htm IDEA: XBRL DOCUMENT

9. DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Text Block]

9. DERIVATIVE INSTRUMENTS

Cash-Flow Hedges

During the three and nine months ended September 30, 2010, we recognized the following gains and interest expense related to interest rate swaps (in thousands):

	Three Months Ended September 30, 2010			Nine Months Ended September 30, 2010
Effective portion:
Gain recognized in other comprehensive income, net of tax effect of $0.1 million and $0.5 million in 2010	$	211		$	1,009
Ineffective portion:
Unrealized gain on change in fair value of interest rate swaps recognized in other expense	$	254		$	1,228
Interest expense related to monthly cash settlements:
Interest expense	$	(575	)	$	(2,828	)

For further disclosure on our policy for accounting for derivatives and hedges, see Note 5.

XML 22 R13.htm IDEA: XBRL DOCUMENT

7. EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Text Block]

7. EARNINGS PER SHARE

Basic and Diluted Earnings Per Share

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Net income from continuing operations	$	5,822	$	1,022	$	13,607	$	9,791
Weighted-average shares outstanding - basic and diluted:
Weighted-average shares outstanding - basic		49,033		58,548		49,982		58,380
Add effect of dilutive securities:
Unvested restricted shares		333		350		326		351
Stock options		—		—		—		6
Warrants		—		—		—		—
Weighted-average shares outstanding - diluted		49,366		58,898		50,308		58,737
Basic net income per share from continuing operations	$	0.12	$	0.02	$	0.27	$	0.17
Diluted net income per share from continuing operations	$	0.12	$	0.02	$	0.27	$	0.17

XML 23 R6.htm IDEA: XBRL DOCUMENT

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 20,347	$ 15,782
Income from discontinued operations, net of taxes	(6,740)	(5,991)
Net income from continuing operations	13,607	9,791
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	23,172	18,916
Amortization	5,061	5,770
Amortization of debt issuance costs	702	667
Write-off of unamortized debt issuance costs		161
Net legal settlements and related expenses	36	415
Payments for legal settlements and related expenses	(36)	(213)
Deferred income taxes	9,465	(1,680)
Restructuring costs	38	6,907
Payments for restructuring costs	(5,673)	(5,421)
Asset impairments	116	176
Equity-based compensation	5,209	6,978
Unrealized gain on change in fair value of interest rate swaps		(1,228)
Provision for doubtful accounts	456	608
Changes in working capital	(12,582)	(11,182)
Net cash provided by operating activities from continuing operations	39,571	30,665
Net cash (used in) provided by operating activities from discontinued operations	(591)	18,444
Net cash provided by operating activities	38,980	49,109
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(23,304)	(25,341)
Business dispositions	1,903
Business acquisitions, net of cash acquired	(1,222)	(491)
Net cash used in investing activities from continuing operations	(22,623)	(25,832)
Net cash used in investing activities from discontinued operations		(5,381)
Net cash used in investing activities	(22,623)	(31,213)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing arrangements	(50,067)	(120,522)
Proceeds from borrowing arrangements	68,971	110,844
Payments of debt issuance costs		(1,165)
Purchase of treasury stock, at cost	(20,911)	(1,638)
Net cash used in financing activities from continuing operations	(2,007)	(12,481)
Net cash used in financing activities from discontinued operations		(81)
Net cash used in financing activities	(2,007)	(12,562)
Effect of exchange rate changes on cash and equivalents	(437)	583
NET INCREASE IN CASH AND EQUIVALENTS	13,913	5,917
CASH AND EQUIVALENTS, beginning of period	15,101	41,402
CASH AND EQUIVALENTS, end of period	$ 29,014	$ 47,319

XML 24 R9.htm IDEA: XBRL DOCUMENT

3. RESTRUCTURING COSTS

6 Months Ended

Jun. 30, 2011

Restructuring and Related Activities Disclosure [Text Block]

3. RESTRUCTURING COSTS

	Balance at December 31, 2010		Provisions		Cash Payments			Non-cash			Balance at September 30, 2011
Accrued restructuring costs:
Severance and exit costs	$	5,797	$	43	$	(4,673	)	$	(293	)	$	874
Contractual obligations		3,797		257		(1,307	)		146			2,893
Total restructuring costs	$	9,594	$	300	$	(5,980	)	$	(147	)	$	3,767

Realignment of Workforce – 2011

Realignment of Workforce – 2010

Realignment of Workforce – 2009

XML 25 R10.htm IDEA: XBRL DOCUMENT

4. DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2011

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. DISCONTINUED OPERATIONS

PGiSend

Maritime Notification and Reminder Solutions

PGiMarket

Components of Discontinued Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Net revenue from discontinued operations	$	1,174		$	32,757		$	8,735		$	100,317

Income (loss) from operations		(540	)		4,595			(486	)		11,632
Interest expense		(9	)		(370	)		(70	)		(1,171	)
Income (loss) from disposal		(9	)		—			9			—
Income tax benefit (expense)		7,293			(1,437	)		7,287			(4,470	)
Income from discontinued operations, net of taxes	$	6,735		$	2,788		$	6,740		$	5,991

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5. INDEBTEDNESS
6 Months Ended
Jun. 30, 2011
Debt Disclosure [Text Block]
5. INDEBTEDNESS

Long-term debt and capital lease obligations at September 30, 2011 and December 31, 2010 are as follows (in thousands):

September 30,
2011 December 31,
2010

Borrowings on credit facility $ 196,277 $ 173,338

Capital lease obligations 7,969 10,406

Subtotal 204,246 183,744

Less current portion (3,864 ) (3,577 )

Total long-term debt and capital lease obligations $ 200,382 $ 180,167

During 2010, we entered into a new credit facility expiring in May 2014 and repaid and terminated our then existing credit facility. Following the retirement of our Term A loan in connection with our PGiSend sale, our facility consists of a $275.0 million revolver and an uncommitted $75.0 million accordion feature. Our subsidiary, American Teleconferencing Services, Ltd., or ATS, is the borrower under our credit facility, with PGi and certain of our material domestic subsidiaries guaranteeing the obligations of ATS under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries. Proceeds drawn under our credit facility can be used for working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under our new credit facility, at our option, is (1) the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or one-month LIBOR plus one and one-half percent) plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end, or (2) LIBOR for one, two, three, nine or 12 months adjusted for a percentage that represents the Federal Reserve Board’s reserve percentage plus an applicable percentage that varies based on our consolidated leverage ratio at quarter end. The applicable percentages for base rate loans and LIBOR loans were 2.0% and 3.0%, respectively, at September 30, 2011. Our interest rate on LIBOR loans, which comprised substantially all of our outstanding borrowings as of September 30, 2011, was 3.2%. Our

credit facility contains customary restrictive covenants, including financial covenants, and otherwise contains terms substantially similar to the terms in our prior credit facility.

At September 30, 2011, we were in compliance with the covenants under our credit facility. At September 30, 2011, we had $196.3 million of borrowings and $5.5 million in letters of credit outstanding under our credit facility.

Until its expiration in August 2010, we had a $100.0 million interest rate swap outstanding. This swap was designated as a cash flow hedge in 2008. Concurrent with the refinancing of our credit facility on May 10, 2010, we dedesignated the cash flow hedge associated with this interest rate swap. Any changes in fair value prior to designation as a hedge, subsequent to dedesignation as a hedge, and any ineffectiveness while designated were recognized as “Unrealized gain on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our condensed consolidated statements of operations and amounted to $0.5 million and $1.0 million during the three and nine months ended September 30, 2010, respectively. As of December 31, 2010, our swaps had all expired, and no related balance is carried on our condensed consolidated balance sheets.

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) In Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Total
Balance at Dec. 31, 2010	$ 523	$ 491,833	$ (264,020)	$ 13,679	$ 242,015
Comprehensive income, net of taxes:
Net income			20,347		20,347
Translation adjustments, net of taxes				(2,560)	(2,560)
Comprehensive income, net of taxes					17,787
Issuance of common stock:
Equity-based compensation		5,107			5,107
Treasury stock purchase and retirement	(27)	(19,360)			(19,387)
Tax withholding related to vesting of restricted stock, net	5	(1,318)			(1,313)
Income tax deficiency from equity awards		(290)			(290)
Balance at Sep. 30, 2011	$ 501	$ 475,972	$ (243,673)	$ 11,119	$ 243,919

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1. BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. BASIS OF PRESENTATION

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10. SEGMENT REPORTING

6 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

10. SEGMENT REPORTING

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
Net revenues:
North America	$	79,350	$	76,469		$	237,714	$	230,185
Europe		23,751		19,636			72,501		63,183
Asia Pacific		16,083		13,392			44,884		39,561
Consolidated	$	119,184	$	109,497		$	355,099	$	332,929

Operating income (loss):
North America	$	1,914	$	(354	)	$	909	$	511
Europe		5,962		3,882			19,553		16,153
Asia Pacific		2,035		1,079			5,516		4,250
Consolidated	$	9,911	$	4,607		$	25,978	$	20,914

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	9 Months Ended
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
CURRENT ASSETS
Cash and equivalents	$ 29,014	$ 15,101
Accounts receivable (net of allowances of $755 and $930, respectively)	73,556	64,243
Prepaid expenses and other current assets	15,100	19,941
Income taxes receivable	1,961	2,870
Deferred income taxes, net	1,344	5,337
Assets of a disposal group held for sale	3,489	4,319
Total current assets	124,464	111,811
PROPERTY AND EQUIPMENT, NET	104,239	107,238
OTHER ASSETS
Goodwill	295,155	296,681
Intangibles, net of amortization	12,088	16,967
Deferred income taxes, net	2,523	1,442
Other assets	7,738	7,518
Total assets	546,207	541,657
CURRENT LIABILITIES
Accounts payable	45,126	42,282
Income taxes payable	995	768
Accrued taxes, other than income taxes	4,202	4,671
Accrued expenses	23,715	27,585
Current maturities of long-term debt and capital lease obligations	3,864	3,577
Accrued restructuring costs	2,044	7,273
Liabilities of a disposal group held for sale	3,193	3,143
Total current liabilities	83,139	89,299
LONG-TERM LIABILITIES
Long-term debt and capital lease obligations	200,382	180,167
Accrued restructuring costs	1,723	2,321
Accrued expenses	16,670	18,032
Deferred income taxes, net	374	9,823
Total long-term liabilities	219,149	210,343
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS’ EQUITY
Common stock, $.01 par value; 150,000,000 shares authorized, 50,066,012 and 52,253,125 shares issued and outstanding, respectively	501	523
Additional paid-in capital	475,972	491,833
Accumulated other comprehensive income	11,119	13,679
Accumulated deficit	(243,673)	(264,020)
Total shareholders’ equity	243,919	242,015
Total liabilities and shareholders’ equity	$ 546,207	$ 541,657