Pegasus (NASDAQ:PEGS)
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Pegasus Solutions, Inc. (Nasdaq:PEGS) today announced
that it has reached a mutual agreement with InterContinental Hotels
Group to discontinue the use of the PegasusCentral Property Management
System (PMS). The PMS product will no longer be used in the Holiday
Inn Express properties currently using the system, and there will be
no new installations.
"After a careful evaluation with IHG, we concluded that we could
not meet their needs with PegasusCentral and generate the kind of
revenues and profitability that we expect from our products and
services," said John F. Davis III, president and CEO of Pegasus. The
company will continue to support PegasusCentral during a short
transition period.
"It's been our pleasure to work with Pegasus over the last four
years, and we look forward to continuing our relationship as they
serve our distribution and financial services needs," said Angela
Brav, IHG's senior vice president of Applied Technology.
Pegasus also announced its intention to exit the property
management system business. The company's PMS products have both chain
and independent hotel customers, including a private-label PMS for
Best Western hotels. The company further commented that it is
currently in discussions with potential buyers to sell all or parts of
its PMS business. The PMS business is expected to be sold within one
year.
"We've had a long run in the property management system business,"
said Davis, "and while we will no longer develop our own system, we
intend to work closely with a number of property management companies
to ensure their products integrate with our central reservation and
distribution products." The integration of these products will pave
the way for delivery of the Next Generation Hospitality Engine, an
effort which Pegasus has been leading for the last year with a number
of hotel chains.
As a result of the company's termination of its property
management system agreement with IHG and the company's plans to
discontinue its PMS business, Pegasus anticipates that it will incur a
substantially non-cash after-tax charge in the range of $10 to $12
million in the second quarter of 2005 to write down the carrying value
of PMS assets to their estimated realizable value. This charge
includes an estimated $1.1 million (pre-tax) of cash expenditures for
transition costs. Pegasus expects to classify the PMS business as a
discontinued operation in accordance with SFAS 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets."
With its four service lines -- representation services, including
Utell by Pegasus(TM) and Unirez by Pegasus(TM); reservation services;
financial services; and, distribution services -- Pegasus provides the
most comprehensive set of technology solutions and services to hotels
and travel distributors around the world. Every product is designed to
streamline customers' end-to-end processes, maximize their revenue and
profitability, and help them capitalize on opportunity.
About Pegasus
Dallas-based Pegasus Solutions, Inc. (Nasdaq:PEGS) is a global
leader in providing technology and services to hotels and travel
distributors. Founded in 1989, Pegasus' customers include a majority
of the world's travel agencies and nearly 60,000 hotel properties
around the globe. Pegasus' services include central reservation
systems, electronic distribution services, commission processing and
payment services, and marketing representation services. The company's
representation services, including Utell by Pegasus(TM) and Unirez by
Pegasus(TM), are used by more than 7,000 member hotels in 140
countries, making Pegasus the hotel industry's largest third-party
marketing and reservations provider. Pegasus has 18 offices in 13
countries, including regional hubs in London, Scottsdale and
Singapore. For more information, please visit www.pegs.com.
Some statements made in this press release are forward-looking
statements within the meaning of the federal securities laws,
including statements using terminology such as "may," "will,"
"expects," "plans," "intends," "anticipates," "believes," "estimates,"
"potential," or "continue," or a similar negative phrase or other
comparable terminology regarding beliefs, hopes, plans, expectations
or intentions for the future. Forward-looking statements involve
various risks and uncertainties. The company's ability to predict
results or the actual effect of future plans or strategies is
inherently uncertain and the actual results and timing of certain
events could differ materially from current expectations. Factors that
could cause or contribute to such a difference include, but are not
limited to, the inability of the company to sell the PMS operations,
risks associated with a sale transaction and the inability of the
Company to terminate the service as expected, as well as other factors
detailed in the company's Securities and Exchange Commission filings.
The company disclaims any intention or obligation to update publicly
or review such statements whether as a result of new information,
future events or otherwise.