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Exhibit 99.1

 

 

Press Release

 

TNS, Inc. Announces Third Quarter 2009 Financial Results

 

- Q3 Adjusted Earnings Reach $0.65 per Share Excluding $0.05 in Severance Charges -

- Generates $34 Million in Cash from Operations, Repays $20 Million in Debt -

- Expects to Achieve Annualized Synergies Related to CSG Acquisition of $0.24-$0.30 in Adjusted Earnings per Share -

- Updates 2009 Revenue and Adjusted Earnings Outlook -

 

RESTON, Va. — November 2, 2009 —TNS, Inc. (NYSE: TNS), a leading provider of business-critical, cost-effective data communications services for transaction-oriented applications, today reported its third quarter 2009 results.

 

Henry H. Graham, Jr., CEO, commented, “TNS’ execution in the third quarter of 2009 remained solid despite a challenging environment, resulting in adjusted earnings per share, excluding severance charges, above our outlook range.  The Communication Services Group acquisition continues to contribute strongly to the performance of our Telecommunication Services Division, with the expanded product suite enhancing our competitive position and enabling us to win new business.  Our Financial Services Division completed a large customer migration and added new endpoints as we continued to expand our growing community of interest.  Our POS Division revenues increased for the second consecutive quarter, and while our International Services Division’s revenues decreased from last year in local currency, revenues in this division increased on a sequential basis.  In the fourth quarter, the step-down from last year in global POS transaction volumes, which we attribute to the global economic downturn, will reach its first anniversary.  We remain focused on our growth strategies in all divisions, strict cost control and cash generation, and investing selectively to further strengthen our global competitive positioning.”

 

TNS acquired the Communication Services Group on May 1, 2009 and has included its results in the Telecommunication Services Division from that date.  Therefore, third quarter 2009 results are not comparable to those of prior periods.

 

Total revenue for the third quarter of 2009 increased 58.1% to $140.1 million from third quarter 2008 revenue of $88.6 million.

 

Third quarter 2009 GAAP net income was $3.2 million, or $0.12 per share, versus third quarter 2008 GAAP net income of $1.9 million, or $0.07 per share.  Included in third quarter 2009 and 2008 results are pre-tax charges associated with severance of $1.7 million, or $0.05 per share, and $0.7 million, or $0.02 per share, respectively.  Excluding these charges, third quarter 2009 GAAP net income was $4.4 million, or $0.17 per share, versus $2.4 million, or $0.09 per share, in third quarter 2008.

 

Earnings before interest, taxes, depreciation, and amortization (EBITDA) before stock compensation expense for the third quarter of 2009 increased 63.9% to $36.8 million versus $22.5 million for the third quarter of 2008.  Excluding the above-mentioned pretax severance charges from third quarter 2009 and 2008 results, EBITDA before stock compensation expense increased 66.9% to $38.6 million from $23.1 million.  On a constant dollar basis and excluding the pre-tax charges, EBITDA before stock compensation expense for the third quarter of 2009 increased 72.5% to $39.9 million.

 

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Adjusted earnings increased 45.9% to $15.5 million, or $0.60 per share, for the third quarter of 2009 compared to adjusted earnings of $10.6 million, or $0.42 per share, for the third quarter of 2008.  Excluding the above-mentioned pretax severance charges from third quarter 2009 and 2008 results, adjusted earnings for the third quarter of 2009 increased 51.6% to $16.9 million, or $0.65 per share.  On a constant dollar basis excluding pretax charges, adjusted earnings for the third quarter of 2009 increased 59.9% to $17.8 million, or $0.68 per share.  (EBITDA before stock compensation expense, adjusted earnings and adjusted earnings per share are non-GAAP measures.  See “Financial Measures” below for a discussion of these metrics.)

 

The table below discloses adjusted earnings and adjusted earnings per share, excluding severance charges, at currency exchange rates reported for third quarter 2009 and at the 2008 rate.

 

(In millions, except per share and share amounts)

 

 

 

Third
 Quarter
2009

 

Third
Quarter
2008

 

%
Change

 

Third Quarter
2009 @ 2008
FX Rates

 

%
Change@
2008 FX Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

140.1

 

$

88.6

 

58.1

%

$

143.8

 

62.3

%

 

 

 

 

 

 

 

 

 

 

 

 

After tax adjusted earnings

 

$

16.9

 

$

11.2

 

51.6

%

$

17.8

 

59.9

%

Earnings per share

 

$

0.65

 

$

0.44

 

47.7

%

$

0.68

 

54.6

%

Shares Outstanding

 

26.1

 

25.5

 

2.3

%

26.1

 

2.3

%

 

Financial Review:

 

Third Quarter 2009

 

·                  Third quarter 2009 total revenue increased 58.1% to $140.1 million from third quarter 2008 revenue of $88.6 million. Included in revenue are the following components:

 

·                  Revenue from the International Services Division decreased 14.0% to $35.9 million from third quarter 2008 revenue of $41.7 million.  The adverse affect of foreign currency translation was $3.7 million.  On a constant dollar basis, ISD revenue decreased 5.3% primarily due to lower transaction volumes in key markets and to a lesser extent from a reduction in software development revenue for our card-not-present payment gateway and the loss of two customers in TNS’ UK processing business, partially offset by continued market share gains in other geographies, similar to last quarter.

 

·                  Revenue from the Financial Services Division increased 2.4% to $12.0 million from third quarter 2008 revenue of $11.7 million.  Revenues increased primarily through continued growth in the number of customer endpoints connected to our network, partially offset by a lower number of logical virtual connections and to a lesser extent a decrease in market data access revenue.

 

·                  Revenue from the Telecommunication Services Division increased $55.9 million to $72.4 million from third quarter 2008 revenue of $16.5 million due primarily to the inclusion of the acquired CSG business.  This was partially offset by a loss of revenue from TNS’ former caller ID partner which, as the Company disclosed last quarter, occurred primarily as a result of the CSG acquisition.

 

·                  Revenue from the POS Division increased 5.7% to $19.8 million from $18.7 million in third quarter 2008, due to a $1.2 million increase in revenue from sales of managed broadband services and a $1.2 million increase in ATM processing revenue.  This was partially offset by a $1.3 million decrease in dial revenue attributable to a 6.0% decrease in transaction volumes, which the Company believes is primarily due to softness in the economy, and a decrease in revenue per transaction mainly resulting from the renewal of certain customer contracts at reduced rates.

 

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Third quarter 2009 gross margin increased 30 basis points to 53.7% from 53.4% in the third quarter of 2008.  On a constant dollar basis, third quarter gross margin increased 50 basis points to 53.9% compared with third quarter 2008’s level.

 

Outlook:

 

TNS is updating its Full Year 2009 outlook as follows:

 

·                  Revenue outlook moderated slightly to $474 - $478 million from $478 - $486 million , reflecting the following assumptions:

 

·                  In TSD, pass-through revenues, which are recorded at cost and therefore carry no gross margin, estimated to be $3 million lower than previously forecast;

·                  In TSD and ISD, slight delays in the timing of customer implementations, causing approximately $2 million in revenues to shift into early 2010 from fourth quarter 2009

·                  In FSD, some further rationalization in LVCs and  market data access estimated at $1 million

·                  In global POS, a more conservative view of seasonal fluctuations in dial-up POS transaction volumes

·                  Adjusted earnings per share outlook increased slightly to $2.12 - $2.18  from $2.05 - $2.15, reflecting primarily the anticipated CSG integration synergies as described below as well as the outperformance from TNS’ third quarter outlook.

 

TNS expects to realize annualized pretax integration synergies of $1 million, or $0.03 per share in the fourth quarter of 2009, $5 million to $6 million annualized, or $0.15 - $0.18 per share, in 2010, and $2 million to $3 million annualized, or $0.06 and $0.09 per share, in 2011, for total anticipated annualized pretax synergies of $8 million to $10 million, or $0.24 - $0.30 per share. TNS anticipates that these savings will be fully implemented on a run rate basis by the beginning of the fourth quarter of 2010.

 

The tables below disclose TNS’ revised outlook for adjusted earnings and adjusted earnings per share for 2009.

 

Full Year 2009

(In millions, except per share amounts)

 

 

 

Full Year 2009

 

Full Year
2008

 

%
Change

 

 

 

 

 

 

 

 

 

Revenues

 

$474 - $478

 

$

344.0

 

38% - 39%

 

 

 

 

 

 

 

 

 

After tax adjusted earnings

 

$55.1 - $56.7

 

$

40.2

 

37% - 41%

 

Earnings per share

 

$2.12 - $2.18

 

$

1.60

 

33% - 36%

 

Shares Outstanding

 

26.0

 

25.2

 

3%

 

 

Fourth Quarter 2009

(In millions, except per share amounts)

 

 

 

Fourth
 Quarter
2009

 

Fourth
Quarter
2008

 

%
Change

 

 

 

 

 

 

 

 

 

Revenues

 

$137 - $141

 

$

81.1

 

69% - 74%

 

 

 

 

 

 

 

 

 

After tax adjusted earnings

 

$16.4 - $18.0

 

$

10.6

 

55% - 70%

 

Earnings per share

 

$0.62 - $0.68

 

$

0.42

 

48% - 62%

 

Shares Outstanding

 

26.5

 

25.3

 

5%

 

 

Please note that 2008 and 2009 Full Year results exclude the non-recurring items previously disclosed.

 

3



 

Dennis L. Randolph, Jr., Executive Vice President and CFO, commented, “TNS’ focus on execution combined with our business model’s high operating leverage generated $34 million in cash from operations in the third quarter, an increase of 80% over last year’s level.  In keeping with our discipline, we applied $20 million of this cash to debt repayment, and have, to date, repaid a total of $45 million or 11% of our total outstanding debt since the closing date of the CSG acquisition.  We are moving smoothly through the CSG integration plan and have identified $0.24-0.30 per share in annualized network, database and operational synergies that we expect to fully realize on a run rate basis by the fourth quarter of next year.  We have updated our revenue outlook to primarily reflect lower pass-through revenues and timing changes in the implementation of certain new customer wins.  For the remainder of the year, we continue to focus on execution.”

 

Financial Measures

 

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, in this press release, the company presents EBITDA before stock compensation expense, adjusted earnings and adjusted earnings per share, which are non-GAAP measures. The company believes that these measures, viewed in addition to and not in lieu of the company’s reported GAAP results, provide additional useful information to investors regarding the company’s performance and overall operating results exclusive of selected significant non-cash items, as described below.  These metrics are frequently requested by investors and are also an integral part of the Company’s internal reporting to measure the performance of reportable segments and the overall effectiveness of senior management. EBITDA is determined by taking income from operations and adding back certain non-cash items, including amortization of intangible assets, depreciation and amortization of property and equipment and stock compensation expense. Adjusted earnings is determined by taking pretax income or loss after equity in net loss of unconsolidated affiliates and adding back certain non-cash items, including amortization of intangible assets, stock compensation expense and the amortization of debt issuance costs, and the result is tax effected at a 20% rate.  A reconciliation to comparable GAAP measures is provided in the accompanying schedule. These non-GAAP measures may not be comparable to similarly titled measures presented by other companies.

 

Conference Call

 

TNS will hold a conference to discuss third quarter 2009 results today, November 2, 2009, at 5:00 p.m. Eastern Time.  The dial-in number for the conference call is 617-847-8704, passcode # 52805026. The call is also being webcast, and there will be an accompanying slide presentation, which can be accessed at www.tnsi.com.

 

For those who cannot listen to the live broadcast, a replay of the call will be available from November 2, 2009 at 8:00 p.m. Eastern Time through November 9, 2009, and can be accessed by dialing 617-801-6888, passcode # 14762620.

 

About TNS

 

Transaction Network Services (TNS) is an international data communications company that enables payments, money and voices to move around the world.

 

TNS’ mission is to enable the world to transact. It does this through a broad range of networking, data communications and value added services, which it provides to many of the world’s leading retailers, banks/processors, telecommunications companies and financial markets.

 

Since its inception in 1990, TNS has designed and implemented multiple data networks, each designed specifically for the transport of transaction-oriented data. TNS’ networks support a variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods. Today, TNS has offices throughout the world serving customers in 28 countries with the ability to provide services in other countries. For further information about TNS, please visit www.tnsi.com.

 

Forward-Looking Statements

 

The statements contained in this release that are not historical facts are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on current expectations,

 

4



 

forecasts and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, the forward-looking statements. The company has attempted, whenever possible, to identify these forward-looking statements using words such as “may,” “will,” “should,” “projects,” “estimates,” “expects,” “plans,” “intends,” “anticipates,” “believes,” and variations of these words and similar expressions.  Similarly, statements herein that describe the company’s business strategy, prospects, opportunities, outlook, objectives, plans, intentions or goals are also forward-looking statements.  Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including:  the company’s reliance upon a small number of customers for a significant portion of its revenue; competitive factors such as pricing pressures; uncertainties related to the updated international tax planning strategy implemented by the company; the company’s ability to grow its business domestically and internationally by generating greater transaction volumes, acquiring new customers or developing new service offerings; fluctuations in the company’s quarterly results because of the seasonal nature of the business and other factors outside of the company’s control, including fluctuations in foreign exchange rates and the continuing impact of the current economic recession; the company’s ability to identify, execute or effectively integrate acquisitions, including the acquisition of CSG; increases in the prices charged by telecommunication providers for services used by the company; the company’s ability to adapt to changing technology; the Company’s ability to refinance its senior secured credit facility and its ability to borrow funds in amounts sufficient to enable it to service its debt or meet its working capital and capital expenditure requirements; additional costs related to compliance with the Sarbanes-Oxley Act of 2002, any revised New York Stock Exchange listing standards, Securities and Exchange Commission (SEC) rule changes or other corporate governance issues; and other risk factors described in the company’s annual report on Form 10-K filed with the SEC on March 16, 2009.  In addition, the statements in this press release are made as of November 2, 2009.  The company expects that subsequent events or developments will cause its views to change.

 

The company undertakes no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectations or otherwise.  These forward-looking statements should not be relied upon as representing the company’s views as of any date subsequent to November 2, 2009.

 

CONTACT:

 

TNS, Inc. Investor Relations

 

Lippert/Heilshorn & Associates

 

 

703-453-8459

 

Jody Burfening/Carolyn Capaccio

 

 

investorrelations@tnsi.com

 

212-838-3777

 

(tables follow)

 

5



 

TNS, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except for share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Revenues

 

$

140,105

 

$

88,629

 

$

337,322

 

$

262,903

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of network services

 

64,940

 

41,274

 

160,044

 

124,206

 

Engineering and development

 

10,379

 

7,252

 

27,294

 

22,120

 

Selling, general, and administrative

 

30,942

 

20,965

 

72,870

 

61,364

 

Depreciation and amortization of property and equipment

 

9,013

 

6,140

 

22,841

 

18,201

 

Amortization of intangible assets

 

9,102

 

5,869

 

22,859

 

18,327

 

Total operating expenses(1),(2)

 

124,376

 

81,500

 

305,908

 

244,218

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

15,729

 

7,129

 

31,414

 

18,685

 

Interest expense (3)

 

(11,952

)

(2,390

)

(24,821

)

(8,730

)

Other income (expense)

 

583

 

(688

)

370

 

(582

)

Income before income taxes, and equity in net loss of unconsolidated affiliates

 

4,360

 

4,051

 

6,963

 

9,373

 

Income tax provision

 

(1,129

)

(2,141

)

(3,250

)

(4,766

)

Equity in net loss of unconsolidated affiliates

 

(27

)

(23

)

(80

)

(94

)

Net income

 

$

3,204

 

$

1,887

 

$

3,633

 

$

4,513

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.13

 

$

0.08

 

$

0.14

 

$

0.18

 

Diluted net income per common share

 

$

0.12

 

$

0.07

 

$

0.14

 

$

0.18

 

Basic weighted average common shares outstanding

 

25,481,084

 

24,989,865

 

25,279,307

 

24,667,442

 

Diluted weighted average common shares outstanding

 

26,149,432

 

25,549,865

 

25,624,200

 

25,141,792

 

 


FOOTNOTES:

 

(1)         Included in operating expenses for the nine months ended September 30, 2008 is a pretax benefit related to the settlement of a state sales tax liability of $0.9 million, or $0.03 per share. Included in the three and nine months ended September 30, 2008 were pretax severance charges of $0.7 million, or $0.02 per share.

(2)         Included in operating expense for the nine months ended September 30, 2009 is a pretax charge of $1.6 million, or $0.04 per share, relating to professional fees for the CSG acquisition, which were expensed in accordance with SFAS 141(r). Included in the three and nine months ended September 30, 2009 are pretax charges of $1.7 million, or $0.05 per share, relating to severance.

(3)         Included in interest expense for the nine months ended September 30, 2009 was a $1.7 million pretax charge, or $0.04 per share, related to the write off of deferred finance fees on the 2007 credit facility, following the completion of the 2009 Credit Facility.

 

6



 

TNS, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30,

 

December 31,

 

 

 

2009

 

2008

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

28,674

 

$

38,851

 

Accounts receivable, net

 

95,314

 

69,501

 

Other current assets

 

19,640

 

12,121

 

Total current assets

 

143,628

 

120,473

 

 

 

 

 

 

 

Property and equipment, net

 

113,380

 

58,795

 

Goodwill

 

16,534

 

10,954

 

Identifiable intangible assets, net

 

278,282

 

151,811

 

Other assets

 

18,476

 

19,881

 

Total assets

 

$

570,300

 

$

361,914

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

77,742

 

$

59,424

 

Deferred revenue

 

13,673

 

16,360

 

Current portion of long-term debt (1)

 

11,063

 

 

Total current liabilities

 

102,478

 

75,784

 

 

 

 

 

 

 

Long-term debt, net of current portion and discount (1)

 

339,057

 

178,500

 

Other liabilities

 

4,133

 

4,815

 

Total liabilities

 

445,668

 

259,099

 

 

 

 

 

 

 

Total stockholders’ equity

 

124,632

 

102,815

 

Total liabilities and stockholders’ equity

 

$

570,300

 

$

361,914

 

 


FOOTNOTES:

 

(1)                      Reconciliation of long —term debt balance:

 

Current portion of long-term debt

 

11,063

 

Long-term debt, net of current portion and discount

 

339,057

 

 

 

350,120

 

Unamortized Original Issue Discount

 

18,380

 

2009 Credit Facility outstanding at September 30, 2009

 

368,500

 

 

7



 

TNS, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Net income

 

$

3,204

 

$

1,887

 

$

3,633

 

$

4,513

 

Non-cash items

 

27,161

 

17,657

 

66,712

 

45,473

 

Working capital changes

 

3,241

 

(860

)

3,919

 

(1,498

)

Net cash provided by operating activities:

 

33,606

 

18,684

 

74,264

 

48,488

 

Purchases of property and equipment, net

 

(12,668

)

(11,551

)

(23,804

)

(25,269

)

Cash paid for business acquisitions, net of cash acquired

 

(3,805

)

 

(230,002

)

 

Net cash used in investing activities:

 

(16,473

)

(11,551

)

(253,806

)

(25,269

)

Proceeds from issuance of long-term debt, net (1)

 

 

 

201,612

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of long-term debt

 

(20,000

)

(7,000

)

(40,000

)

(25,000

)

Payment of long-term debt financing costs

 

 

 

(175

)

(75

)

Proceeds from stock option exercise

 

7,020

 

643

 

7,401

 

9,589

 

Purchase of treasury stock

 

(646

)

(358

)

(1,458

)

(1,919

)

Net cash (used in) provided by financing activities:

 

(13,626

)

(6,715

)

167,380

 

(17,405

)

Effect of exchange rates on cash and cash equivalents

 

2,041

 

(104

)

1,985

 

(603

)

Net increase (decrease) in cash and cash equivalents

 

5,548

 

523

 

(10,177

)

5,211

 

Cash and cash equivalents, beginning of period

 

23,126

 

22,493

 

38,851

 

17,805

 

Cash and cash equivalents, end of period

 

$

28,674

 

$

23,016

 

$

28,674

 

$

23,016

 

 


FOOTNOTES:

 

(1)                                 Reconciliation of proceeds from issuance of long-term debt and 2009 Credit Facility

 

Proceeds from issuance of long-term debt

 

201,612

 

Original Issue Discount

 

23,000

 

Financing fees related to issuance of debt

 

5,388

 

2009 Credit Facility

 

230,000

 

 

8



 

TNS, Inc.

Reconciliation of Non-GAAP Information

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

EBITDA before stock compensation expense:

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

 

$

15,729

 

$

7,129

 

$

31,414

 

$

18,685

 

Add back the following items:

 

 

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

9,013

 

6,140

 

22,841

 

18,201

 

Amortization of intangible assets

 

9,102

 

5,869

 

22,859

 

18,327

 

Stock compensation expense

 

2,985

 

3,326

 

7,517

 

9,374

 

EBITDA before stock compensation expense(1),(2)

 

$

36,829

 

$

22,464

 

$

84,630

 

$

64,587

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings:

 

 

 

 

 

 

 

 

 

Income before income taxes and equity in net loss of unconsolidated affiliates(GAAP)

 

$

4,360

 

$

4,051

 

$

6,963

 

$

9,373

 

 

 

 

 

 

 

 

 

 

 

Add back the following items: Equity in net loss of unconsolidated affiliates

 

(27

)

(23

)

(80

)

(94

)

Amortization of intangible assets

 

9,102

 

5,859

 

22,859

 

18,327

 

Other debt related costs

 

2,977

 

69

 

7,715

 

215

 

Stock compensation expense

 

2,985

 

3,326

 

7,517

 

9,374

 

Adjusted earnings before income taxes

 

19,397

 

13,292

 

44,973

 

37,195

 

Income tax provision at 20%

 

(3,879

)

(2,658

)

(8,995

)

(7,439

)

Adjusted earnings(3)

 

$

15,518

 

$

10,634

 

$

35,978

 

$

29,756

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares — diluted

 

26,149,432

 

25,549,865

 

25,624,200

 

25,141,792

 

Adjusted earnings per common share — diluted

 

$

0.60

 

$

0.42

 

$

1.40

 

$

1.18

 

 


FOOTNOTES:

 

(1)         Excluding the $0.9 million benefit from the settlement of the state sales tax liability and $0.7 million severance charge, EBITDA before stock compensation expense for the three and nine months ended September 30, 2008 was $23.1 million and $64.4 million, respectively.

(2)         Excluding the $1.6 million charge related to the acquisition of CSG and the $1.7 million charge related to severance, EBITDA before stock compensation expense for the three and nine months ended September 30, 2009 was $38.6 million and $88.0 million, repectively.

(3)         Excluding the $0.9 million pretax benefit from the settlement of the state sales tax liability and the $0.7 million pretax severance charges, adjusted earnings for the three and nine months ended September 30, 2008 were $11.2 million or $0.44 per share, and $29.5 million, or $1.17 per share, respectively. Excluding the $1.6 million pretax charge for professional fees related to the acquisition of CSG and $1.7 million pretax, charge related to severance, adjusted earnings for the three and nine months ended September 30, 2009 were $16.9 million, or $0.65 per share, and $38.7 million, or $1.50 per share, respectively.

 

# # #

 

9