Pegasus (NASDAQ:PEGS)
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Pegasus Solutions, Inc. (Nasdaq:PEGS):
Q4 2005 Results
-- Revenues (GAAP): $41.5 million
-- Net income per share (GAAP): Basic and Diluted: $0.04
-- Diluted income from continuing operations per share (GAAP):
$0.03
-- Diluted income from continuing operations per share
(adjusted): $0.11
Pegasus Solutions, Inc. (Nasdaq:PEGS), a global leader in
providing technology and services to hotels and travel distributors,
today reported its financial results for the fourth quarter and year
ended December 31, 2005.
"In December Pegasus announced that it had executed a definitive
merger agreement with an equity group led by Prides Capital Partners,
LLC, following a review of strategic alternatives for the company
conducted with the assistance of Bear Stearns," said John F. Davis
III, president, chief executive officer and chairman of Pegasus
Solutions. "We expect the merger transaction to close in the first
half of this year. Now and after the closing, our focus will continue
to be on delivering technology and business process solutions that
assist hotels and travel distributors in maximizing revenue and
profitability." The transaction, which is subject to stockholder
approval, is valued at approximately $275 million. Under the terms of
the merger agreement, Pegasus stockholders not affiliated with the
investment group will receive $9.50 in cash for each share of Pegasus
common stock they hold. For further information, please refer to our
proxy statement and Schedule 13E-3 filed with the Securities and
Exchange Commission.
Fourth Quarter Overview (See tables included with this release for
reconciliation of non-GAAP measures to GAAP measures.)
-- On a GAAP basis, revenues were $41.5 million for the quarter,
compared to $44.4 million in the fourth quarter of 2004.
-- Income from continuing operations per diluted share was $0.03
for the quarter, including merger related costs, compared to
$0.14 in the fourth quarter of 2004.
-- Adjusted income from continuing operations per diluted share
was $0.11 for the quarter, compared to $0.20 in the year ago
quarter. In addition to the exclusion of amortization of
software and identifiable assets obtained through acquisitions
in both quarters, fourth quarter 2005 adjusted per share
results also exclude an after tax charge of $1.2 million
primarily related to the transaction costs.
-- Adjusted EBITDA was $8.4 million or 20 percent of revenues for
the quarter, compared to adjusted EBITDA of $9.6 million, or
22 percent of revenues, in the same quarter last year.
-- The cash balance (including auction rate securities) increased
to $38.0 million at year end versus $30.2 million at September
30, 2005 as a result of positive operating cash flows and the
timing of capital expenditures.
Fiscal Year 2005 Financial Results (See tables included with
release for reconciliation of non-GAAP measures.)
-- Operating cash flows increased 2 percent to $30.6 million
compared to $30.2 million in 2004.
-- Revenues decreased 5 percent to $175.5 million compared to
$185.4 million in 2004.
-- Income from continuing operations per diluted share was $0.25,
including merger related costs, compared to $0.53 in 2004.
-- Adjusted income per diluted share decreased to $0.48 compared
to $0.64 in 2004.
-- Adjusted EBITDA was $32.7 million compared to adjusted EBITDA
of $39.4 million in 2004 with an associated adjusted EBITDA
margin of 18 percent, compared to 21 percent in 2004.
Fourth Quarter Service Line Review
-- For Pegasus' distribution services, revenues were $6.0
million, up 3 percent from the year-ago quarter. During the
fourth quarter, switch transactions increased 14 percent in
total compared to the same quarter last year.
-- Representation services revenues were $15.3 million for the
quarter. Due to reduced pricing and the transition of a
significant Unirez by Pegasus(TM) customer to the company's
central reservation service (CRS), revenue is down 12 percent
compared to the prior year quarter. The company's Utell by
Pegasus(TM) service was negatively impacted by a 7 percent
decrease in reservation volume, a 6 percent decrease in the
average commission earned and an approximate 7 percent
decrease in the exchange rates of the British pound and the
euro against the U.S. dollar, as compared to the prior year
quarter. On a sequential quarter basis, the Utell by
Pegasus(TM) average commission earned has stabilized and the
representation portfolio count has increased more than 3
percent. Pegasus fourth quarter initiatives included
representation product showcases and customer-focused revenue
and yield management programs.
-- Reservation services revenues were $7.3 million, down 23
percent compared to the same period last year. The loss of a
CRS customer was partially offset by the positive impact from
a significant representation customer converting to the CRS
service. Excluding the reservations attributable to those two
customers, CRS transactions increased 6 percent. However,
reduced pricing on contract renewals that took effect in early
2005 resulted in the year-over-year decrease in revenue.
-- Revenues for the company's financial services were $8.6
million, up 8 percent year-over-year, due to increased
transactions and improved average daily room rates in the
United States.
Financial Results
"Fourth quarter revenues of $41.5 million came in at the high end
of our previous guidance," said Susan K. Conner, executive vice
president and chief financial officer. "Our adjusted EPS for the
fourth quarter was $0.11 and it excludes an after-tax charge of $1.2
million for costs primarily related to the merger transaction. A
definitive agreement had not been signed at the time of our last
conference call, and the fourth quarter guidance we provided did not
exclude these costs. Accordingly, for our guidance we treated these
after-tax costs as operating expenses. Had we excluded these
transaction costs, our adjusted EPS guidance would have ranged from
$0.08 to $0.11."
Davis concluded: "Pegasus has a rich heritage of providing
services and technology solutions for hotels and travel distributors
throughout the world. Our ability to anticipate industry trends and
respond to customer needs is how we built this company. Moving
forward, we plan to intensify our efforts on what we do best --
helping our customers grow by providing our leading solutions to the
market."
About Pegasus Solutions, Inc.
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 more than 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, including the
consumer Web site, www.hotelbook.com. 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 more than 130 countries,
making Pegasus the hotel industry's largest third-party marketing and
reservations provider. Pegasus has 17 offices in 12 countries,
including regional hubs in London, Singapore and Scottsdale, Arizona.
For more information, please visit www.pegs.com.
Forward-Looking Statements
Some statements made in this press release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include statements
regarding future events, financial projections, estimated transaction
volumes and expected average daily room rates, as well as management's
expectations, beliefs, hopes, intentions or strategies regarding the
future. Because such statements deal with future events, they are
subject to various risks and uncertainties, and actual results could
differ materially from current expectations. Factors that could cause
or contribute to such difference include, but are not limited to
Pegasus' failure to complete the acquisition of the company as
contemplated by the Agreement and Plan of Merger dated December 19,
2005 among Perseus Holding Corp., 406 Acquisition Corp. and the
company, or delays with respect to such closing, terrorist acts or
war, global health epidemics, variation in demand for and acceptance
of the company's products and services, the level of product and price
competition from existing and new competitors, delays in developing,
marketing and deploying new products and services, the inability of
the company to sell the PMS operations, risks associated with a PMS
sale transaction and the inability of the company to terminate the PMS
services as expected, as well as other risks identified in the
company's Securities and Exchange Commission filings, including those
appearing under the caption Risk Factors in the company's Annual
Report on Form 10-K for the year ended December 31,2004. For further
information regarding the merger agreement, please refer to the
company's filings with the SEC.
Use of Non-GAAP Financial Measures
Pegasus provides financial measures and terms not calculated in
accordance with generally accepted accounting principles in the United
States (GAAP). We believe that presentation of non-GAAP measures such
as adjusted revenues, adjusted income from continuing operations per
share, EBITDA and adjusted EBITDA provide investors with an
alternative method for assessing our operating results in a manner
that enables investors to more thoroughly evaluate our current
performance as compared to past performance. We also believe these
non-GAAP measures provide investors with a better baseline for
assessing the company's future earnings expectations. Our management
uses these non-GAAP measures for the same purpose. The non-GAAP
measures included in this release are provided to give investors
access to the types of measures that we use in analyzing our results.
Adjusted revenues consist of GAAP revenues adjusted for the items
included in the accompanying reconciliation. Adjusted income from
continuing operations per share consists of GAAP income from
continuing operations per share adjusted for the items included in the
accompanying reconciliation. We believe these measures enable
management and investors to more thoroughly evaluate our current
performance as compared to past performance and provide a better
baseline for assessing the company's future earnings expectations.
However, these measures do not provide a complete picture of our
operations. Therefore net income (loss) per share and revenues and
income from continuing operations per share on both a non-GAAP basis
and GAAP basis may need to be considered to get a comprehensive view
of our results.
EBITDA consists of GAAP net income (loss) adjusted for the items
included in the accompanying reconciliation. We believe that EBITDA
provides useful information to investors about the company's
performance because it eliminates the effects of period to period
changes in taxes, discontinued operations, cost associated with
capital investments and interest income (expense). Adjusted EBITDA
consists of EBITDA adjusted for the items included in the accompanying
reconciliation. EBITDA and adjusted EBITDA do not give effect to the
cash the company must use to service its debt or pay its income taxes
and thus do not reflect the funds generated from operations or
actually available for capital expenditures.
Pegasus' calculation of adjusted revenues, adjusted income from
continuing operations per share, EBITDA and adjusted EBITDA are not
necessarily comparable to similarly titled measures reported by other
companies. These non-GAAP measures may be considered in addition to
results prepared in accordance with GAAP, but should not be considered
a substitute for or superior to GAAP results. Schedules that reconcile
adjusted revenues and adjusted income from continuing operations per
share to their most directly comparable GAAP measure and EBITDA and
adjusted EBITDA to GAAP net income (loss) are included with this
release.
Availability of Information
Pegasus Solutions, Inc. has filed a preliminary Proxy Statement on
Schedule 14A and Schedule 13E-3 with the SEC and intends to file a
definitive Proxy Statement on Schedule 14A and Schedule 13E-3 with the
SEC. Investors and security holders are advised to read Pegasus
Solutions' definitive Proxy Statement and Schedule 13E-3 when they
become available, because they will contain important information.
Investors and security holders may obtain a copy of the definitive
Proxy Statement on Schedule 14A (when filed) and Schedule 13E-3 from
the SEC's Web site at www.sec.gov. Pegasus Solutions also will provide
a copy of these materials without charge on its Web site at
www.pegs.com.
Pegasus Solutions, Inc. and its directors and executive officers
may be deemed to be participants in the solicitation of proxies from
stockholders of Pegasus Solutions. Information regarding the names of
Pegasus Solutions' directors, executive officers and their respective
interests in Pegasus Solutions by security holding or otherwise is set
forth in Pegasus' proxy statement relating to the 2005 Annual Meeting
of Stockholders, which may be obtained free of charge from the SEC's
Web site at www.sec.gov and from Pegasus Solutions' Web site at
www.pegs.com.
-0-
*T
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Year Ended
Ended
December 31, December 31,
----------------- -------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Revenues:
Service revenues $37,244 $40,740 $158,127 $170,159
Customer reimbursements 4,244 3,704 17,355 15,253
-------- -------- --------- ---------
Total revenues 41,488 44,444 175,482 185,412
-------- -------- --------- ---------
Costs of services (exclusive of
depreciation and amortization
shown separately below):
Cost of services 18,455 19,739 81,385 85,968
Customer reimbursements 4,244 3,704 17,355 15,253
-------- -------- --------- ---------
Total costs of services 22,699 23,443 98,740 101,221
-------- -------- --------- ---------
Research and development 929 637 3,391 3,676
General and administrative
expenses 5,967 5,655 23,688 23,878
Marketing and promotion expenses 5,312 5,109 21,121 19,618
Depreciation and amortization 5,073 4,069 18,963 17,516
-------- -------- --------- ---------
Operating income 1,508 5,531 9,579 19,503
Other income (expense):
Gain on sale -- -- -- 1,961
Interest expense, net (244) (339) (1,294) (1,862)
Other (138) 948 130 814
-------- -------- --------- ---------
Income from continuing
operations before income taxes 1,126 6,140 8,415 20,416
Income tax expense (539) (2,883) (3,186) (7,956)
-------- -------- --------- ---------
Income from continuing
operations 587 3,257 5,229 12,460
Discontinued operations, net of
tax 199 (1,482) (12,884) (4,475)
-------- -------- --------- ---------
Net income (loss) $786 $1,775 $(7,655) $7,985
======== ======== ========= =========
Basic income (loss) per share:
Continuing operations $0.03 $0.15 $0.25 $0.54
Discontinued operations 0.01 (0.07) (0.62) (0.19)
-------- -------- --------- ---------
Net income (loss) $0.04 $0.08 $(0.37) $0.35
======== ======== ========= =========
Diluted income (loss) per share:
Continuing operations $0.03 $0.14 $0.25 $0.53
Discontinued operations 0.01 (0.05) (0.62) (0.17)
-------- -------- --------- ---------
Net income (loss) $0.04 $0.09 $(0.37) $0.36
======== ======== ========= =========
Weighted average shares
outstanding:
Basic 20,766 21,556 20,749 22,903
======== ======== ========= =========
Diluted (See Note 1) 20,890 25,556 20,952 26,941
======== ======== ========= =========
Note
(1) The company's fourth quarter and full year 2004 diluted per share
data include approximately 3.7 million additional shares,
applicable to its contingently convertible debt, in the weighted
average share base used in the diluted per share computations. See
attached reconciliation of per share computations.
Subject to certain conditions, the company's convertible debt is
convertible into common stock at a conversion price of
approximately $20.13 per share.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF PER SHARE COMPUTATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Year Ended
Ended
December 31, December 31,
--------------- -----------------
2005 2004 2005 2004
------- ------- -------- --------
Income from continuing
operations (a) $587 $3,257 $5,229 $12,460
Discontinued operations, net
of tax (b) 199 (1,482) (12,884) (4,475)
------- ------- -------- --------
Net income (loss) (c) $786 $1,775 $(7,655) $7,985
======= ======= ======== ========
Income from continuing
operations (a) $587 $3,257 $5,229 $12,460
Adjustment for interest on
convertible debt,
net of tax -- 406 -- 1,789
------- ------- -------- --------
Income from continuing
operations, as adjusted (d) $587 $3,663 $5,229 $14,249
======= ======= ======== ========
Net income (loss) (c) $786 $1,775 $(7,655) $7,985
Adjustment for interest on
convertible debt,
net of tax -- 406 -- 1,789
------- ------- -------- --------
Net Income (loss), as adjusted (e) $786 $2,181 $(7,655) $9,774
======= ======= ======== ========
Basic income (loss) per share:
Continuing operations (a)/(f) $0.03 $0.15 $0.25 $0.54
Discontinued operations (b)/(f) 0.01 (0.07) (0.62) (0.19)
------- ------- -------- --------
Net income (loss) (c)/(f) $0.04 $0.08 $(0.37) $0.35
======= ======= ======== ========
Diluted income (loss) per
share:
Continuing operations (d)/(g) $0.03 $0.14 $0.25 $0.53
Discontinued operations (b)/(g) 0.01 (0.05) (0.62) (0.17)
------- ------- -------- --------
Net income (loss) (e)/(g) $0.04 $0.09 $(0.37) $0.36
======= ======= ======== ========
Basic weighted average
shares outstanding (f) 20,766 21,556 20,749 22,903
Dilutive effect of stock
options 124 274 203 312
Dilutive effect of
convertible debt (See Note
1) -- 3,726 -- 3,726
------- ------- -------- --------
Diluted weighted average
shares outstanding (g) 20,890 25,556 20,952 26,941
------- ------- -------- --------
Note
(1) Subject to certain conditions, the company's convertible debt is
convertible into common stock at a conversion price of
approximately $20.13 per share.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 31, 2005
----------------------------------
As Adjustments Adjusted
Reported
--------- ----------- --------
Revenues:
Service revenues $37,244 $-- $37,244
Customer reimbursements 4,244 -- 4,244
--------- ----------- --------
Total revenues 41,488 -- 41,488
--------- ----------- --------
Costs of services (exclusive of
depreciation and amortization shown
separately below):
Cost of services 18,455 (231) (1) 18,224
Customer reimbursements 4,244 -- 4,244
--------- ----------- --------
Total costs of services 22,699 (231) 22,468
--------- ----------- --------
Research and development 929 (19) (1) 910
General and administrative expenses 5,967 (1,282) (1) 4,685
Marketing and promotion expenses 5,312 (268) (1) 5,044
Depreciation and amortization 5,073 (788) (2) 4,285
--------- ----------- --------
Operating income 1,508 2,588 4,096
Other income (expense):
Interest expense, net (244) -- (244)
Other (138) -- (138)
--------- ----------- --------
Income from continuing operations
before income taxes 1,126 2,588 3,714
Income tax expense (539) (798) (3) (1,337)
--------- ----------- --------
Income from continuing operations 587 $1,790 $2,377
=========== ========
Discontinued operations, net of tax 199
---------
Net income $786
=========
Diluted income (loss) per share:
Continuing operations $0.03 $0.11
========
Discontinued operations 0.01
---------
Net income $0.04
=========
Diluted weighted average shares
outstanding 20,890 -- 20,890
========= =========== ========
Notes
(1) To adjust for the impact of costs related to the merger agreement
and severance.
(2) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(3) To adjust income tax expense for assumed 36% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 31, 2004
----------------------------------
As Adjustments Adjusted
Reported
--------- ----------- --------
Revenues:
Service revenues $40,740 $-- $40,740
Customer reimbursements 3,704 -- 3,704
--------- ----------- --------
Total revenues 44,444 -- 44,444
--------- ----------- --------
Costs of services (exclusive of
depreciation and amortization shown
separately below):
Cost of services 19,739 19,739
Customer reimbursements 3,704 -- 3,704
--------- ----------- --------
Total costs of services 23,443 -- 23,443
--------- ----------- --------
Research and development 637 -- 637
General and administrative expenses 5,655 5,655
Marketing and promotion expenses 5,109 -- 5,109
Depreciation and amortization 4,069 (766) (1) 3,303
--------- ----------- --------
Operating income 5,531 766 6,297
Other income (expense):
Interest expense, net (339) -- (339)
Other 948 -- 948
--------- ----------- --------
Income from continuing operations
before income taxes 6,140 766 6,906
Income tax expense (2,883) 259 (2) (2,624)
--------- ----------- --------
Income from continuing operations 3,257 $1,025 $4,282
=========== ========
Discontinued operations, net of tax (1,482)
---------
Net income $1,775
=========
Diluted income (loss) per share:
Continuing operations $0.14 $0.20
========
Discontinued operations (0.05)
---------
Net income $0.09
=========
Diluted weighted average shares
outstanding 25,556 (3,726) (3) 21,830
========= =========== ========
Notes
(1) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(2) To adjust income tax expense for assumed 38% tax rate.
(3) To exclude the dilutive effect of convertible debt -- convertible
at $20.13 per share.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share amounts)
(Unaudited)
Year Ended
December 31, 2005
-------------------------------------
As Adjustments Adjusted
Reported
--------- ----------- ---------
Revenues:
Service revenues $158,127 $1,500 (1) $159,627
Customer reimbursements 17,355 -- 17,355
--------- ----------- ---------
Total revenues 175,482 1,500 176,982
--------- ----------- ---------
Costs of services (exclusive of
depreciation and amortization
shown separately below):
Cost of services 81,385 (470)(1),(2) 80,915
Customer reimbursements 17,355 -- 17,355
--------- ----------- ---------
Total costs of services 98,740 (470) 98,270
--------- ----------- ---------
Research and development 3,391 (65) (2) 3,326
General and administrative
expenses 23,688 (1,749) (2) 21,939
Marketing and promotion expenses 21,121 (351) (2) 20,770
Depreciation and amortization 18,963 (3,133) (3) 15,830
--------- ----------- ---------
Operating income 9,579 7,268 16,847
Other income (expense):
Interest expense, net (1,294) -- (1,294)
Other 130 -- 130
--------- ----------- ---------
Income from continuing operations
before income taxes 8,415 7,268 15,683
Income tax expense (3,186) (2,460) (4) (5,646)
--------- ----------- ---------
Income from continuing operations 5,229 $4,808 $10,037
=========== =========
Discontinued operations, net of
tax (12,884)
---------
Net loss $(7,655)
=========
Diluted income (loss) per share:
Continuing operations $0.25 $0.48
=========
Discontinued operations (0.62)
---------
Net loss $(0.37)
=========
Diluted weighted average shares
outstanding 20,952 -- 20,952
========= =========== =========
Notes
(1) To adjust for the impact of converting from monthly to weekly
commission processing.
(2) To adjust for the impact of costs related to the merger agreement,
severance and facility closure costs.
(3) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(4) To adjust income tax expense for assumed 36% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share amounts)
(Unaudited)
Year Ended
December 31, 2004
-----------------------------------
As Adjustments Adjusted
Reported
--------- ----------- ---------
Revenues:
Service revenues $170,159 $-- $170,159
Customer reimbursements 15,253 -- 15,253
--------- ----------- ---------
Total revenues 185,412 -- 185,412
--------- ----------- ---------
Costs of services (exclusive of
depreciation and amortization
shown separately below):
Cost of services 85,968 (1,915) (1) 84,053
Customer reimbursements 15,253 -- 15,253
--------- ----------- ---------
Total costs of services 101,221 (1,915) 99,306
--------- ----------- ---------
Research and development 3,676 -- 3,676
General and administrative expenses 23,878 (465) (1) 23,413
Marketing and promotion expenses 19,618 -- 19,618
Depreciation and amortization 17,516 (3,067) (2) 14,449
--------- ----------- ---------
Operating income 19,503 5,447 24,950
Other income (expense):
Gain on sale 1,961 (1,961) (3) --
Interest expense, net (1,862) -- (1,862)
Other 814 -- 814
--------- ----------- ---------
Income from continuing operations
before income taxes 20,416 3,486 23,902
Income tax expense (7,956) (1,127) (4) (9,083)
--------- ----------- ---------
Income from continuing operations 12,460 $2,359 $14,819
=========== =========
Discontinued operations, net of tax (4,475)
---------
Net income $7,985
=========
Diluted income (loss) per share:
Continuing operations $0.53 $0.64
=========
Discontinued operations (0.17)
---------
Net income $0.36
=========
Diluted weighted average shares
outstanding 26,941 (3,726) 23,215
========= =========== =========
Notes
(1) To adjust for severance and other non-recurring costs related to
the company's information technology organization.
(2) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(3) To adjust for gain on sale of Travelweb LLC.
(4) To adjust income tax expense for assumed 38% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands)
(Unaudited)
Three Months Ended
December 31,
--------------------
2005 2004
--------- ----------
Total revenues $41,488 $44,444
========= ==========
Net income (loss) $786 $1,775
Reconciling items:
Discontinued operations, net of tax (199) 1,482
Income tax expense 539 2,883
Gain on sale -- --
Interest expense, net 244 339
Other income 138 (948)
Depreciation and amortization 5,073 4,069
--------- ----------
EBITDA $6,581 $9,600
========= ==========
EBITDA margin 16% 22%
========= ==========
Adjustments:
Costs related to the merger agreement and
severance 1,800 --
--------- ----------
Adjusted EBITDA $8,381 $9,600
========= ==========
Adjusted EBITDA margin 20% 22%
========= ==========
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands)
(Unaudited)
Year Ended December
31,
-------------------
2005 2004
--------- ---------
Total revenues $175,482 $185,412
Adjustment:
Impact of converting from monthly to weekly
commission processing 1,500 --
--------- ---------
Adjusted revenues $176,982 $185,412
========= =========
Net income (loss) $(7,655) $7,985
Reconciling items:
Discontinued operations, net of tax 12,884 4,475
Income tax expense 3,186 7,956
Gain on sale -- (1,961)
Interest expense, net 1,294 1,862
Other income (expense) (130) (814)
Depreciation and amortization 18,963 17,516
--------- ---------
EBITDA $28,542 $37,019
========= =========
EBITDA margin 16% 20%
========= =========
Adjustments:
Net impact of converting from monthly to weekly
commission processing 1,350 --
Costs related to the merger agreement, severance
and facility closure 2,785 2,380
--------- ---------
Adjusted EBITDA $32,677 $39,399
========= =========
Adjusted EBITDA margin 18% 21%
========= =========
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Cash and cash equivalents $32,315 $17,599
Auction rate securities 5,700 5,650
Short-term investments -- 6,001
Accounts receivable, net 23,786 28,551
Other current assets 9,971 9,061
------------ ------------
Total current assets 71,772 66,862
Goodwill 163,156 163,585
Intangible assets, net 4,357 5,827
Property and equipment, net 59,067 80,326
Other noncurrent assets 16,769 12,614
------------ ------------
Total assets $315,121 $329,214
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $31,478 $29,531
Unearned revenue 6,519 6,763
Other current liabilities 4,547 5,621
------------ ------------
Total current liabilities 42,544 41,915
Noncurrent uncleared commission checks 5,915 5,576
Other noncurrent liabilities 17,535 19,407
Convertible debt 75,000 75,000
Commitments and contingencies
Stockholders' equity:
Common stock 208 211
Additional paid-in capital 237,596 242,112
Unearned compensation (273) (408)
Accumulated other comprehensive loss (2,145) (995)
Accumulated deficit (61,259) (53,604)
------------ ------------
Total stockholders' equity 174,127 187,316
------------ ------------
Total liabilities and stockholders'
equity $315,121 $329,214
============ ============
*T