PREMIERE GLOBAL SERVICES, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 20, 2011

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Exhibit 99.1

PGi Reports Third Quarter 2011 Results: Revenues Grew Nearly 9% to $119.2M, Non-GAAP Diluted EPS from Continuing Operations $0.18*

Company Raises 2011 Financial Outlook

ATLANTA--(BUSINESS WIRE)--October 20, 2011--Premiere Global Services, Inc. (NYSE: PGI), a global leader in virtual meetings, today announced results for the third quarter ended September 30, 2011.

In the third quarter of 2011, net revenues increased 8.8% to $119.2 million, compared to $109.5 million in the third quarter of 2010. Diluted EPS from continuing operations was $0.12 and non-GAAP diluted EPS from continuing operations was $0.18* in the third quarter of 2011, compared to diluted EPS from continuing operations of $0.02 and non-GAAP diluted EPS from continuing operations of $0.12* in the third quarter of 2010. Results for 2010 are reclassified to reflect the PGiSend business as discontinued operations, as it was sold in October 2010.

“We remain pleased with the overall performance of our global business,” said Boland T. Jones, PGi founder, chairman and CEO, who is leading the company’s next-generation product innovation. “We’ve seen increasing enterprise momentum with our new products, iMeet® and GlobalMeet®, and our sales pipelines continue to grow. Despite renewed global economic uncertainty, our outlook for the remainder of the year remains strong.”

Nine Month Results

In the first nine months of 2011, net revenues increased 6.7% to $355.1 million, compared to $332.9 million in the first nine months of 2010. Diluted EPS from continuing operations was $0.27 and non-GAAP diluted EPS from continuing operations was $0.44* in the first nine months of 2011, compared to diluted EPS from continuing operations of $0.17 and non-GAAP diluted EPS from continuing operations of $0.41* in the first nine months of 2010.

Financial Outlook

The following statements are based on PGi’s current expectations. These statements contain forward-looking statements and company estimates, and actual results may differ materially. PGi assumes no duty to update any forward-looking statements made in this press release.

Based on the strength of its third quarter results and current trends in its business, PGi increased its financial outlook for 2011. Based on current trends and foreign currency exchange rates, PGi now anticipates net revenues from continuing operations in 2011 will be in the range of $469-$472 million and non-GAAP diluted EPS from continuing operations will be in the range of $0.61-$0.62*, including marketing and advertising costs associated with the launch of our new virtual meetings solutions.

PGi will host a conference call today at 5:00 p.m., Eastern Time, 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: (888) 256-9022 (U.S. and Canada) or (913) 312-1483 (International). The conference call will simultaneously be webcast. Please visit www.pgi.com for webcast details and conference call replay information, as well as the webcast archive and the text of the earnings release, including the financial and statistical information to be presented during the call.

* Non-GAAP Financial Measures

To supplement the company’s consolidated financial statements presented in accordance with GAAP, we have included the following non-GAAP measures of financial performance: non-GAAP operating income, non-GAAP net income from continuing operations, non-GAAP diluted net income per share (EPS) from continuing operations and organic growth. The company has also included these non-GAAP measures, as well as net revenues and segment net revenues, on a constant currency basis. 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. 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.

About Premiere Global Services, Inc. │ PGi

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. Every month, we bring together over 15 million people in nearly 4 million virtual meetings. Headquartered in Atlanta, PGi has a presence in 24 countries worldwide. For more information, visit us at http://www.pgi.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, Inc.’s 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 GlobalMeet® services; 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 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; and other factors described from time to time in our press releases, reports and other filings with the Securities and Exchange Commission, including but not limited to the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2010. 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                   
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010 2011 2010
(Unaudited) (Unaudited)
 
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  
 
PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
           
 
September 30, December 31,
2011 2010
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 29,014 $ 15,101
Accounts receivable (less 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  
 
SHAREHOLDERS' EQUITY

Common stock, $0.01 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 gain 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  
 
PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
         
 
Nine Months Ended
September 30,
2011 2010
(Unaudited)
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  
 
PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
                   
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
(Unaudited) (Unaudited)
Non-GAAP Operating Income (1)
Operating income, as reported $ 9,911 $ 4,607 $ 25,978 $ 20,914
Restructuring costs 38 4,824 38 6,907
Excise and sales tax expense 331 - 352 439
Asset impairments 62 47 116 176
Net legal settlements and related expenses 24 35 36 415
Equity-based compensation 1,622 2,158 5,209 6,978
Acquisition-related costs 19 - 79 316
Amortization   1,612   1,658     5,061   5,770  
Non-GAAP operating income $ 13,619 $ 13,329   $ 36,869 $ 41,915  
 
Non-GAAP Net Income from Continuing Operations (1)
Net income from continuing operations, as reported $ 5,822 $ 1,022 $ 13,607 $ 9,791
Elimination of non-recurring tax adjustments - (90 ) 451 (857 )
Unrealized gain on change in fair value of interest rate swaps - (183 ) - (884 )
Restructuring costs 28 3,473 28 4,973
Excise and sales tax expense 245 - 255 316
Excise and sales tax interest 118 - 116 468
Asset impairments 46 34 84 127
Net legal settlements and related expenses 18 25 26 299
Equity-based compensation 1,200 1,554 3,775 5,024
Acquisition-related costs 14 - 57 228
Amortization 1,193 1,194 3,668 4,154
Non-recurring foreign exchange losses - 214 - 214
Debt refinance costs   -   -     -   282  
Non-GAAP net income from continuing operations $ 8,684 $ 7,243   $ 22,067 $ 24,135  
 
Non-GAAP Diluted EPS from Continuing Operations (1) (2)
Diluted net income per share from continuing operations, as reported $ 0.12 $ 0.02 $ 0.27 $ 0.17
Elimination of non-recurring tax adjustments - - 0.01 (0.01 )
Unrealized gain on change in fair value of interest rate swaps - - - (0.02 )
Restructuring costs - 0.06 - 0.08
Excise and sales tax expense 0.01 - 0.01 0.01
Excise and sales tax interest - - - 0.01
Asset impairments - - - -
Net legal settlements and related expenses - - - 0.01
Equity-based compensation 0.02 0.03 0.08 0.09
Acquisition-related costs - - - -
Amortization 0.02 0.02 0.07 0.07
Non-recurring foreign exchange losses - - - -
Debt refinance costs   -   -     -   -  
Non-GAAP diluted EPS from continuing operations $ 0.18 $ 0.12   $ 0.44 $ 0.41  
 
 
(1 ) Management believes that presenting non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information regarding underlying trends in the company's continuing operations. Management expects equity-based compensation and amortization expenses to be recurring costs and presents non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations to exclude these non-cash items as well as non-recurring items that are unrelated to the company's ongoing operations, including non-recurring tax adjustments, unrealized gain on change in fair value of interest rate swaps, restructuring costs, excise and sales tax expense and interest, asset impairments, net legal settlements and related expenses, acquisition-related costs, non-recurring foreign exchange losses and debt refinance costs. These non-cash and non-recurring items are presented net of taxes for non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations.
 
(2 ) Column totals do not sum due to the effect of rounding on EPS.
PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSTANT CURRENCY ADJUSTMENTS AND ORGANIC GROWTH
                 
 
Prior Year Quarter Constant Currency Adjustments (3)
 

 

Q3 - 11
(Constant
currency)

Impact of
fluctuations in
foreign currency
exchange rates

Q3 - 11
(Actual)

(Unaudited, in thousands, except per share data)
 
Net Revenues $ 116,397 $ 2,787 $ 119,184
North America Net Revenue $ 79,167 $ 183 $ 79,350
Europe Net Revenue $ 22,571 $ 1,180 $ 23,751
Asia Pacific Net Revenue $ 14,659 $ 1,424 $ 16,083
Non-GAAP Operating Income $ 13,261 $ 358 $ 13,619
Non-GAAP Net Income from Continuing Operations $ 8,008 $ 676 $ 8,684
Non-GAAP Diluted EPS from Continuing Operations $ 0.16 $ 0.02 $ 0.18
 

(3)

Management also presents the non-GAAP financial measures described under note 1 above, as well as net revenues and segment net revenue, on a constant currency basis compared to the same quarter in the previous year to exclude the effects of foreign currency exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q3 - 10) average exchange rates.
 
 
 
 
 
Sequential Quarter Constant Currency Adjustments (4)
 

 

Q3 - 11
(Constant
currency)

Impact of
fluctuations in
foreign currency
exchange rates

Q3 - 11
(Actual)

(Unaudited, in thousands)
 
Net Revenues $ 119,326 $ (142 ) $ 119,184
 
(4) Management also presents net revenues on a constant currency basis compared to the prior quarter to exclude the effects of foreign currency exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q2 - 11) average exchange rates.
 
 
 
 
Organic Growth (5)
 
 

 

September 30,
2010

Impact of
fluctuations in
foreign currency
exchange rates

Organic net
revenue growth

 

September 30,
2011

Organic net
revenue
growth rate

(Unaudited, in thousands, except percentages)
 
Net Revenues, Three Months Ended $ 109,497 $ 2,787 $ 6,900 $ 119,184 6.3 %
 
Net Revenues, Nine Months Ended $ 332,929 $ 8,201 $ 13,969 $ 355,099 4.2 %
 
(5) Management defines "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations and acquisitions made during the periods presented and presents this non-GAAP financial measure to exclude the effect of these items that are not completely within management's control, such as foreign currency exchange rate fluctuations, or do not reflect the company's ongoing core operations or underlying growth, such as acquisitions.

CONTACT:
Premiere Global Services, Inc.
Sean O’Brien, 404-262-8462
Executive Vice President
Strategy & Communications

PREMIERE GLOBAL SERVICES, INC. Reports