EX-99.1 2 a5083101ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Premiere Global Services Reports 2005 Results: Revenues $497.5M up 11%; Normalized Operating Income $80.6M up 13%; $117.2M in Revenues and $0.13 Normalized Diluted EPS from Continuing Operations in Q4 ATLANTA--(BUSINESS WIRE)--Feb. 16, 2006--Premiere Global Services, Inc. (NYSE: PGI), a global outsource provider of business process solutions, today announced results for the fourth quarter and fiscal year ended December 31, 2005. Revenues in the fourth quarter of 2005 were $117.2 million, flat compared to $117.3 million in the fourth quarter of 2004. Excluding a $2.0 million pre-tax legal settlement and a nominal restructuring costs adjustment, normalized operating income totaled $14.5 million.(a) In the fourth quarter of 2005, excluding charges for legal settlements, restructuring and one-time tax adjustments, normalized income from continuing operations totaled $9.1 million and normalized diluted EPS from continuing operations was $0.13.(a) Over the same period in accordance with GAAP, operating income totaled $12.5 million, income from continuing operations totaled $12.5 million and diluted EPS from continuing operations totaled $0.17. In the fourth quarter of 2004, normalized operating income totaled $19.2 million and, excluding a gain on prepayment of a note receivable, normalized income from continuing operations totaled $11.9 million and normalized diluted EPS from continuing operations was $0.17.(a) Over the same period in accordance with GAAP, operating income totaled $19.2 million, income from continuing operations totaled $17.1 million and diluted EPS from continuing operations totaled $0.24. Fourth Quarter 2005 Revenue Detail Conferencing & Collaboration revenue totaled $61.2 million, up 13.2% from $54.0 million in the comparable prior year quarter. As expected, revenue from the Company's largest customer declined by $8.3 million, totaling $2.7 million versus $11.0 million in the fourth quarter of 2004. Excluding revenue contribution from this customer in both quarters, Conferencing & Collaboration revenue increased 35.8% in the fourth quarter of 2005 versus the fourth quarter of 2004.(a) Data Communications revenue totaled $56.0 million, down 11.5% from $63.2 million in the comparable prior year quarter. Revenue from legacy broadcast fax services declined $7.2 million dollars, totaling $24.6 million versus $31.8 million in the fourth quarter of 2004. Excluding revenue contribution from legacy broadcast fax services in both quarters, Data Communications revenue remained flat in the fourth quarter of 2005 versus the fourth quarter of 2004.(a) 2005 Results Revenues in 2005 totaled $497.5 million, up 10.7% from $449.4 million in 2004. Excluding pre-tax restructuring charges of $3.3 million and legal settlements of $2.0 million, normalized operating income totaled $80.6 million.(a) In 2005, excluding charges for legal settlements, restructuring and one-time tax adjustments, normalized income from continuing operations totaled $48.2 million and normalized diluted EPS from continuing operations totaled $0.67.(a) In accordance with GAAP, operating income totaled $75.3 million, income from continuing operations totaled $48.7 million and diluted EPS from continuing operations totaled $0.67. In 2004, normalized operating income was $71.4 million, normalized income from continuing operations was $43.9 million and normalized diluted EPS from continuing operations was $0.61.(a) In 2004 in accordance with GAAP, operating income was $71.4 million, income from continuing operations was $40.7 million and diluted EPS from continuing operations was $0.58. 2005 Accomplishments -- Increased Conferencing & Collaboration revenue for the year by 44.0% from 2004, excluding revenue contribution from its largest customer in both periods (a) -- Unified our brands under one name, Premiere Global Services, and transferred the listing of our shares to the New York Stock Exchange -- Improved our focus and go to market strategy by segmenting our sales and marketing efforts into four core business practices: Conferencing Solutions, Document Solutions, Alerts & Notifications Solutions and Marketing Automation Solutions -- Grew cash flows from operating activities by nearly 10%, despite becoming a federal tax payer during the year -- Repurchased 2.1 million shares of common stock in the open market -- Further consolidated our industries with the acquisitions of Netspoke and the conferencing services division of Citizens Communications "I am excited about our success last year in raising Premiere Global's profile in the market and increasing our value to our customers by transitioning to a solutions-based sales model, delivering innovative communication technologies that simplify our customers' critical business processes," said Boland T. Jones, Founder, Chairman and CEO of Premiere Global Services, Inc. "By focusing our resources in four core business practices based on how our customers buy solutions from us, I believe we can better replicate at Data Communications the success we have achieved at Conferencing & Collaboration, where our investment in international expansion, product innovation and accretive acquisitions has positioned this unit as an industry leader with the global scale necessary to continue to increase its market share. We established business objectives for 2006 that I believe will help us build upon the momentum we are experiencing in core services. Our focus in the year ahead will be to continue to innovate new solutions and to improve our customer experience with the development of a customer-centric portal that will provide direct access to our platform and suite of services directly from the desktop. We also look to improve the effectiveness of our global selling efforts with lead generation and appointment setting, as well as marketing initiatives to increase our brand awareness. Finally, we plan to attack the exploding wireless marketplace with innovative products that increase the productivity of mobile professionals. We also made the decision at the end of last year to stop reacting to the declines in our legacy broadcast fax business and to proactively manage it to a level where it becomes a smaller, but more consistent contributor to our overall business. To that end, this January we began an aggressive campaign to migrate our broadcast fax customers to email, or other new technologies, or into long-term contractual pricing plans that include minimum monthly commitments. These actions are expected to reduce near-term revenues and earnings, as the market price for email services is substantially below that of fax services, and we are extending price incentives to accelerate customer adoption of long-term contractual pricing plans. However, we are convinced that our success in these actions will make us a much stronger company in the long run. As we execute against our plan to change the shape of our business, we are committed to producing strong cash flows, and we plan to reinvest these cash flows and our available liquidity to retire shares of our stock and to reinvest for growth by further consolidating the industries in which we compete. We believe Premiere Global Services is uniquely positioned as the only provider of end-to-end communication technologies solutions to global enterprise customers. We believe the strength of our core solutions, coupled with continuous innovation, will deliver consistent, organic growth and increase value for our customers, associates and shareholders." Financial Outlook The following statements are based on Premiere Global Services' current expectations as of February 16, 2005. These statements are forward-looking statements and actual results may differ materially. The Company assumes no duty to update any forward-looking statements made in this press release. A discussion concerning forward-looking statements is included at the end of this press release and in the Company's filings with the Securities and Exchange Commission. Premiere Global's Conferencing & Collaboration business unit is currently performing better than expected. However, because of Management's initiatives with regard to its legacy broadcast fax business as described above and potentially longer sales cycles in the Company's new solutions sales relative to its previous business model, the Company anticipates revenues in 2006 will be at the low end of its previous guidance of $480 to $500 million and GAAP diluted EPS from continuing operations will be in the range of $0.50 to $0.58. The Company anticipates cash flows from operating activities from continuing operations will be in the range of $83 to $90 million in 2006. This estimate does not include potential restructuring charges that may result from contemplated initiatives to bring costs in the Company's legacy broadcast fax business in-line with lower revenue expectations from this business. Excluding equity based compensation and amortization, pro forma diluted EPS from continuing operations in 2006 is expected to be in the range of $0.70 to $0.78.(a) (a) To supplement the Company's consolidated financial statements presented in accordance with GAAP, we have included the following non-GAAP measures of financial performance: normalized operating income, normalized income from continuing operations, normalized diluted EPS from continuing operations and pro forma diluted EPS from continuing operations. Management uses these measures internally as a means of analyzing the Company's current and future financial performance and identifying trends in our financial condition and results of operations. We have provided this information to investors to assist in meaningful comparisons of past, present and future operating results and to assist in highlighting the results of ongoing core operations. In addition, we present certain business segment revenue growth statistics that are derived from non-GAAP financial measures. Please see the table attached for calculation of these non-GAAP financial measures and for reconciliation to the most directly comparable GAAP measures. These non-GAAP financial measures may differ materially from comparable or similarly titled measures provided by other companies and should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. Conference Call The Company will hold a conference call at 5:00 p.m. Eastern this afternoon to discuss these results. To participate in the call, please dial-in to the appropriate number 5-10 minutes prior to the scheduled start time: (800) 289-0572 (US & Canada) or (913) 981-5543 (International). The conference call will be simultaneously broadcast over the Internet via SoundCast(R), a Premiere Global service, and can be accessed at http://ir.premiereglobal.com. You may also follow this link for details on the Internet replay, podcast and for the text of the earnings release, including the financial and statistical information to be presented in the call. A replay will be available following the call at 8:00 p.m. Eastern through midnight Eastern February 24, 2006, and can be accessed by calling (888) 203-1112 (US & Canada) or (719) 457-0820 (International). The confirmation code is 7181245. The Webcast of this call will be archived on the Company's Website at http://ir.premiereglobal.com. About Premiere Global Services, Inc. Premiere Global Services, Inc. is a global outsource provider of business process solutions that enable enterprise customers to automate and simplify their critical business processes and to communicate more effectively with their constituents. We innovate communication technologies and deliver solutions in four core business practices: Conferencing Solutions, Document Solutions, Marketing Automation Solutions and Alerts & Notifications Solutions. We deliver these solutions via our global, on-demand platforms to an established customer base of greater than 60,000 corporate accounts, including a majority of the Fortune 500. Customers apply our solutions in order to increase efficiency, to improve productivity and to raise customer satisfaction levels. With global presence in 19 countries, Premiere Global Services' corporate headquarters is located at 3399 Peachtree Road NE, Suite 700, Atlanta, GA 30326. Additional information can be found at www.premiereglobal.com. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in Premiere Global Services' forward-looking statements, including, but not limited to, the following factors: competitive pressures, including pricing pressures; technological change; the development of alternatives to our services; market acceptance of our new services and enhancements; integration of acquired companies; service interruptions; increased financial leverage; our dependence on our subsidiaries for cash flow; continued weakness in our legacy broadcast fax business; foreign currency exchange rates; possible adverse results of pending or future litigation or infringement claims; federal or state legislative or regulatory changes; general domestic and international economic, business or political conditions; and other factors described from time to time in our press releases, reports and other filings with the SEC, including but not limited the "Risk Factors Affecting Future Performance" section of our Annual Report on Form 10-K for the year ended December 31, 2004. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement. PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2005 AND 2004 (IN THOUSANDS, UNAUDITED, EXCEPT PER SHARE DATA) Three Months Twelve Months Ended Ended December 31, December 31, 2005 2004 2005 2004 -------- -------- -------- -------- REVENUES $117,207 $117,266 $497,473 $449,371 OPERATING EXPENSES: Cost of revenues (exclusive of depreciation shown separately below) 44,260 40,558 180,720 160,690 Selling and marketing 30,605 30,619 127,610 117,711 General and administrative (exclusive of net legal settlements shown separately below) 12,781 13,230 52,377 50,082 Research and development 2,963 2,816 10,699 10,970 Depreciation 6,433 7,070 24,757 26,372 Amortization 3,228 2,660 13,243 8,891 Restructuring costs (29) - 3,256 - Equity based compensation 2,391 1,078 7,484 3,261 Net legal settlements and related expenses 2,048 - 2,048 - -------- -------- -------- -------- Total operating expenses 104,680 98,031 422,194 377,977 -------- -------- -------- -------- OPERATING INCOME 12,527 19,235 75,279 71,394 -------- -------- -------- -------- OTHER INCOME (EXPENSE): Interest expense (1,625) (810) (5,552) (4,687) Interest income 101 149 582 633 Debt conversion costs - - - (17,027) Loss on sale of marketable securities - 71 (116) (16) Gain on prepayment of note receivable - 8,520 - 8,520 Other, net (23) 606 103 2,433 -------- -------- -------- -------- Total other income (expense) (1,547) 8,536 (4,983) (10,144) -------- -------- -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,980 27,771 70,296 61,250 INCOME TAX (BENEFIT) EXPENSE (1,565) 10,654 21,610 20,565 -------- -------- -------- -------- INCOME FROM CONTINUING OPERATIONS $ 12,545 $ 17,117 $ 48,686 $ 40,685 ======== ======== ======== ======== DISCONTINUED OPERATIONS: (Loss) gain from operations of Voicecom - - (1,952) 1,956 Income tax (benefit) expense - - (683) 761 -------- -------- -------- -------- (Loss) gain on discontinued operations - - (1,269) 1,195 -------- -------- -------- -------- NET INCOME $ 12,545 $ 17,117 $ 47,417 $ 41,880 ======== ======== ======== ======== BASIC EARNINGS PER SHARE: Income from continuing operations $ 12,545 $ 17,117 $ 48,686 $ 40,685 -------- -------- -------- -------- Net Income $ 12,545 $ 17,117 $ 47,417 $ 41,880 -------- -------- -------- -------- BASIC WEIGHTED AVERAGE SHARES OUTSTANDING: 70,241 69,759 70,392 64,086 ======== ======== ======== ======== Basic earnings per share: Continuing operations $ 0.18 $ 0.25 $ 0.69 $ 0.63 Discontinued operations $ 0.00 $ 0.00 $ (0.02)$ 0.02 -------- -------- -------- -------- Net Income $ 0.18 $ 0.25 $ 0.67 $ 0.65 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE: Income from continuing operations for purposes of computing diluted net income per share $ 12,545 $ 17,117 $ 48,686 $ 42,071 -------- -------- -------- -------- Net Income for purposes of computing diluted net income per share $ 12,545 $ 17,117 $ 47,417 $ 43,266 -------- -------- -------- -------- DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING: 71,948 72,097 72,366 72,280 ======== ======== ======== ======== Diluted earnings per share: Continuing operations $ 0.17 $ 0.24 $ 0.67 $ 0.58 Discontinued operations $ 0.00 $ 0.00 $ (0.01)$ 0.02 -------- -------- -------- -------- Net Income $ 0.17 $ 0.24 $ 0.66 $ 0.60 ======== ======== ======== ======== PREMIERE GLOBAL SERVICES, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND 2004 (IN THOUSANDS, EXCEPT SHARE DATA) December 31, December 31, 2005 2004 ------------ ------------ ASSETS CURRENT ASSETS Cash and equivalents $ 20,508 $ 25,882 Marketable securities, available for sale - 576 Accounts receivable (less allowances of $7,560 and $5,706, respectively) 79,417 72,055 Prepaid expenses and other 5,209 5,148 Deferred income taxes, net 12,392 17,706 --------- --------- Total current assets 117,526 121,367 PROPERTY AND EQUIPMENT, NET 75,742 74,050 OTHER ASSETS Goodwill 257,565 192,147 Intangibles, net 39,662 40,590 Deferred income taxes, net 837 3,461 Other assets 3,958 3,861 --------- --------- $ 495,290 $ 435,476 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 37,745 $ 37,337 Income taxes payable 4,394 8,968 Accrued taxes 6,148 6,700 Accrued expenses 34,439 40,192 Current maturities of long-term debt and capital lease obligations 799 37 Accrued restructuring costs 1,800 1,071 --------- --------- Total current liabilities 85,325 94,305 LONG-TERM LIABILITIES Long-term debt and capital lease obligations 99,675 68,147 Other accrued expenses 6,540 6,094 --------- --------- Total long-term liabilities 106,215 74,241 SHAREHOLDERS' EQUITY Common stock $0.01 par value; 150,000,000 shares authorized, 71,703,933 and 71,301,577 shares issued and outstanding at December 31, 2005 and 2004, respectively 717 713 Unrealized loss on marketable securities - 6 Additional paid-in capital 694,304 694,284 Unearned restricted stock compensation (12,585) (4,187) Note receivable, shareholder (1,896) (5,662) Cumulative translation adjustment (3,554) 2,429 Accumulated deficit (373,236) (420,653) --------- --------- Total shareholders' equity 303,750 266,930 --------- --------- $ 495,290 $ 435,476 ========= ========= PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWELVE MONTHS ENDED DECEMBER 31, 2005 AND 2004 (IN THOUSANDS, UNAUDITED) 2005 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 47,417 $ 41,880 Adjustments to reconcile net income to net cash provided by operating activities: Loss (gain) on discontinued operation 1,269 (1,195) Debt conversion costs - 17,027 Depreciation 24,757 26,372 Amortization 13,243 8,891 Amortization of deferred financing costs 453 659 Loss on sale of marketable securities, available for sale 116 16 Deferred income taxes 8,746 10,095 Gain on disposal of assets (45) 118 Gain on note receivable and other liabilities - (10,968) Net legal settlements and related expenses 2,048 - Restructuring costs 3,256 77 Payments for restructuring costs (3,210) (4,051) Equity based compensation 7,484 3,568 Changes in assets and liabilities: - - Accounts receivable, net (3,834) (1,761) Prepaid expenses and other current assets 317 2,738 Accounts payable and accrued expenses (9,694) (8,890) --------- --------- Total adjustments 44,906 42,696 --------- --------- Total cash provided by operating activities from continuing operations 92,323 84,576 --------- --------- Payments for discontinued operations (2,025) (2,081) --------- --------- Total cash provided by operating activities 90,298 82,495 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (28,174) (24,783) Business acquisitions (79,915) (98,227) Sale of marketable securities 755 1,835 Purchase of marketable securities (306) (1,663) Proceeds from note receivable - 11,720 --------- --------- Net cash used in investing activities (107,640) (111,118) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Principal proceeds under borrowing arrangements 104,100 62,993 Principal payments under borrowing arrangements (74,676) (15,000) Payments received on shareholder note 3,953 - Make whole interest payment - convertible notes - (16,255) Purchase of treasury stock, at cost (26,192) (12,811) Exercise of stock options 8,521 11,554 --------- --------- Total cash provided by financing activities 15,706 30,481 --------- --------- Effect of exchange rate changes on cash and equivalents (3,738) 78 --------- --------- NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS (5,374) 1,936 --------- --------- CASH AND EQUIVALENTS, beginning of period $ 25,882 $ 23,946 --------- --------- CASH AND EQUIVALENTS, end of period $ 20,508 $ 25,882 ========= ========= PREMIERE GLOBAL SERVICES, INC AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 -------- -------- -------- -------- Normalized Operating Income (1) Operating income, as reported $ 12,527 $ 19,235 $ 75,279 $ 71,394 Net legal settlements and related expenses 2,048 - 2,048 - Restructuring costs (29) - 3,256 - -------- -------- -------- -------- Normalized operating income $ 14,546 $ 19,235 $ 80,583 $ 71,394 -------- -------- -------- -------- Normalized Income from Continuing Operations (1) Income from continuing operations for purposes of computing diluted income per share $ 12,545 $ 17,117 $ 48,686 $ 42,071 Elimination of one-time tax adjustments (4,693) - (3,826) (3,086) Net legal settlements and related expenses 1,272 - 1,272 Restructuring costs (18) - 2,022 - Elimination of gain on prepayment of note receivable (tax effected at 38.4%) (5,248) (5,248) Elimination of discounted early retirement of an acquisition payable (tax effected at 38.9%) - - - (260) Debt conversion costs (tax effected at 38.9%) - - - 10,403 -------- -------- -------- -------- Normalized income from continuing operations $ 9,106 $ 11,869 $ 48,154 $ 43,880 -------- -------- -------- -------- Normalized Diluted EPS from Continuing Operations (1) Diluted EPS from continuing operations $ 0.17 $ 0.24 $ 0.67 $ 0.58 Elimination of one-time tax adjustments (0.06) - (0.05) (0.04) Net legal settlements and related expenses 0.02 - 0.02 - Restructuring costs (0.00) - 0.03 - Elimination of gain on prepayment of note receivable (tax effected at 38.4%) - (0.07) - (0.07) Elimination of discounted early retirement of an acquisition payable (tax effected at 38.9%) - - - (0.00) Debt conversion costs (tax effected at 38.9%) - - - 0.14 -------- -------- -------- -------- Normalized diluted EPS from continuing operations $ 0.13 $ 0.17 $ 0.67 $ 0.61 Segment Revenues Excluding Certain Items (2) Revenues, as reported Conferencing & Collaboration $ 61,233 $ 54,106 Data Communications 55,974 63,239 Eliminations - (79) -------- -------- $117,207 $117,266 Conferencing & Collaboration $ 61,233 $ 54,106 $251,901 $202,776 Excluding largest customer revenue 2,712 11,001 28,808 47,622 -------- -------- -------- -------- Conferencing & Collaboration excluding largest customer revenue $ 58,521 $ 43,105 $223,093 $155,155 -------- -------- -------- -------- Data Commincations $ 55,974 $ 63,239 Excluding broadcast fax revenue 24,587 31,834 -------- -------- Data Communications excluding legacy broadcast fax revenue $ 31,387 $ 31,405 -------- -------- (1) Management believes that normalized operating income, normalized income from continuing operations and normalized diluted EPS from continuing operations provide useful information regarding underlying trends in our continuing operations by excluding non- recurring items that are unrelated to our ongoing operations. (2) The Company has previously announced Conferencing & Collaboration's largest customer's intention to insource most of its automated conferencing needs, as well as the acceleration in the decline of revenues generated by Data Communications legacy broadcast fax business in North America. The Company has presented business segment revenue excluding these items because management believes that that these events or trends particular to each business segment may be deemed to be so significant to obscure patterns and trends of our core business in total. PREMIERE GLOBAL SERVICES, INC AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES IN FINANCIAL OUTLOOK (amounts are estimates) (1) (UNAUDITED) Year ended December 31, 2006 -------------- Projected pro forma diluted EPS from continuing operations (2) Projected diluted EPS from continuing operations $0.50 - $0.58 Excluding non-cash equity based compensation $0.09 Excluding amortization $0.11 -------------- Projected pro forma diluted EPS from continuing operations $0.70 - $0.78 (1) The Company has made a number of assumptions in preparing our projections, including assumptions as to the components of these financial metrics. The following reconciliations of projected non-GAAP financial measures include forward-looking information with respect to the information identified as a projection. These EPS projections assume a projected weighed average diluted share count of approximately 71.9 million shares. (2) The Company expects equity based compensation expense to be a recurring cost and presents pro forma diluted EPS from continuing operations to exclude this item and amortization expense to eliminate these significant non-cash charges to earnings to help investors better understand the operating performance of our business. CONTACT: Premiere Global Services, Inc. Investor Calls Sean O'Brien, 404-262-8462