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8-K - EASYLINK SERVICES INTERNATIONAL CORPa8-kesic20120430.htm


EXHIBIT 99.1

EasyLink Services International Corporation
Announces Fiscal Third Quarter 2012 Financial Results



NORCROSS, GA, May 30, 2012 - (BUSINESS WIRE) - EasyLink Services International Corporation ("EasyLink" or "Company") (NasdaqCM: ESIC, www.easylink.com), a global provider of comprehensive messaging services and e-commerce solutions, reported fiscal third quarter 2012 revenue of $45.4 million, net income of $4.3 million and adjusted EBITDA of $10.5 million.

Financial Review

Revenue for the third quarter of fiscal 2012 was approximately $45.4 million compared to $47.8 million in the third quarter of fiscal 2011, down $2.4 million or 5%. Net income for the third quarter of fiscal 2012 was approximately $4.3 million, or $0.14 per basic share and $0.13 per diluted share, which is flat compared to the same results for third quarter of fiscal 2011.

Adjusted EBITDA, which includes non-cash compensation expense and acquisition and integration related charges, was approximately $10.5 million for the third quarter of fiscal 2012 compared to approximately $12.1 million in the third quarter of fiscal 2011. The acquisition and integration related charges in the third quarter of fiscal 2012 were related to the Company's previously announced planned merger with Open Text Corporation.

Nine month comparisons to prior year are less meaningful as the result of the timing of the purchase of the Xpedite entities at the end of the first quarter of fiscal 2011.

Non-GAAP Presentation
This press release contains non-GAAP financial measures that are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. This press release should be read in conjunction with the Company's Form 8-K earnings release filed with the Securities and Exchange Commission for the third fiscal quarter ended April 30, 2012.
In addition, these non-GAAP measures: (i) are not based on any comprehensive set of accounting rules or principles; and (ii) have limitations in that they do not reflect all of the amounts associated with EasyLink's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate EasyLink's results of operations in conjunction with the corresponding GAAP measures.
EasyLink believes that the presentation of non-GAAP financial measures, when shown in conjunction with the corresponding GAAP measures, provides useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations because they exclude certain non-cash charges or items that it does not believe are reflective of its ongoing operating results when assessing the performance of its business.
EasyLink believes that these non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among its peer companies. However, our peer companies may calculate similar non-GAAP financial measures differently than EasyLink, limiting their usefulness as comparative measures.

Forward-Looking and Cautionary Statements

Except for the historical information and discussion contained herein, statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated by such forward-looking statements. These and other risk factors are set forth under the caption “Risk Factors” in the Company's Annual Report on Form 10-K, the Company's quarterly reports on Form 10-Q and the Company's other filings with the Securities and Exchange Commission. These filings are available on a website maintained by the Securities and Exchange Commission at www.sec.gov.

The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein as a result of new information, future events or otherwise.






About EasyLink Services International Corporation

EasyLink Services International Corporation (EasyLink) (NasdaqCM: ESIC), headquartered in Norcross, GA, offers a comprehensive portfolio of “any to any” cloud-based messaging and transaction services that can bridge the most challenging technology gaps while creating significant cost efficiencies across an organization. From Desktop Fax and Production Messaging to EDI, Managed File Transfer, Document Capture and Management, Notifications and Secure Messaging we help companies drive costs out of their operations. With over two decades of servicing customers around the globe, EasyLink has established a proven track record for providing effective, reliable and secure communications. For more information on EasyLink, visit www.easylink.com.

Contact:
EasyLink Services International Corporation
Glen Shipley
678-533-8004
gshipley@easylink.com







EASYLINK SERVICES INTERNATIONAL CORPORATION
Consolidated Statements of Income
for the three and nine months ended April 30, 2012 and 2011
(Unaudited)
(in thousands, except per share data)

 
Three Months
 
Nine Months
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Service revenues, net
$
45,405

 
$
47,782

 
$
136,924

 
$
117,942

Cost of services
15,317

 
16,388

 
45,591

 
40,473

Gross profit
30,088

 
31,394

 
91,333

 
77,469

 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 
 
 
Product development and enhancement
3,261

 
3,338

 
9,298

 
8,833

Selling and marketing
6,726

 
6,750

 
19,639

 
16,483

General and administrative
12,583

 
12,841

 
39,461

 
32,829

Acquisition and integration related
1,033

 

 
1,480

 
2,415

Total Operating expenses
23,603

 
22,929

 
69,878

 
60,560

 
 
 
 
 
 
 
 
Operating income
6,485

 
8,465

 
21,455

 
16,909

 
 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 
 
 
Interest (expense)
(1,262
)
 
(1,651
)
 
(4,250
)
 
(4,063
)
Other non-operating income (expense)
(643
)
 
163

 
(1,060
)
 
498

Total Other income (expense)
(1,905
)
 
(1,488
)
 
(5,310
)
 
(3,565
)
 
 
 
 
 
 
 
 
Income before income taxes
4,580

 
6,977

 
16,145

 
13,344

Provision for income taxes
251

 
2,637

 
5,645

 
5,098

Net Income
4,329

 
4,340

 
10,500

 
8,246

 
 
 
 
 
 
 
 
Dividends on preferred stock

 

 

 
(2,012
)
Net income attributable to common stockholders
$
4,329

 
$
4,340

 
$
10,500

 
$
6,234

 
 
 
 
 
 
 
 
Basic net income per common share
$
0.14

 
$
0.14

 
$
0.33

 
$
0.21

 
 
 
 
 
 
 
 
Diluted net income per common share
$
0.13

 
$
0.13

 
$
0.32

 
$
0.20

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – basic
32,040

 
30,184

 
31,882

 
29,625

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – diluted
33,360

 
32,296

 
33,190

 
31,353







EASYLINK SERVICES INTERNATIONAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
(in thousands)

 
April 30,
2012
 
July 31,
2011
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
22,535

 
$
30,178

Accounts receivable, net
28,087

 
29,752

Other current assets
5,437

 
7,665

Total current assets
56,059

 
67,595

 
 
 
 
Property and equipment, net
9,432

 
10,127

Goodwill and other intangible assets, net
134,867

 
142,109

Other long term assets
23,094

 
23,228

Total assets
$
223,452

 
$
243,059

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable and accrued expenses
$
21,559

 
$
24,577

Notes payable
15,978

 
28,088

Other current liabilities
1,889

 
3,360

Total current liabilities
39,426

 
56,026

 
 
 
 
Notes payable, net of current portion
63,654

 
80,174

Deferred income taxes, net
7,279

 
6,940

Other liabilities
741

 
814

Total liabilities
111,100

 
143,954

 
 
 
 
Stockholders' Equity:
 

 
 
Preferred stock

 

Common Stock
331

 
324

Additional paid-in capital
140,876

 
137,467

Treasury Stock
(2,122
)
 
(2,122
)
Accumulated other comprehensive loss
(3,458
)
 
(2,789
)
Accumulated deficit
(23,275
)
 
(33,775
)
Total stockholders' equity
112,352

 
99,105

Total liabilities and stockholders' equity
$
223,452

 
$
243,059


 







EASYLINK SERVICES INTERNATIONAL CORPORATION
Reconciliation of GAAP Net Income to Adjusted EBITDA
for the three and nine months ended April 30, 2012 and 2011
(Unaudited)
(in thousands)
 
Three Months
 
Nine Months
 
2012
 
2011
 
2012
 
2011
Net Income
$
4,329

 
$
4,340

 
$
10,500

 
$
8,246

Adjustments:
 
 
 
 
 
 
 
Interest expense
1,262

 
1,651

 
4,250

 
4,063

Provision for income taxes
251

 
2,637

 
5,645

 
5,098

Depreciation and amortization
3,182

 
3,032

 
9,634

 
9,955

Stock compensation
445

 
487

 
2,093

 
927

Acquisition and integration related
1,033

 

 
1,480

 
2,415

 
 
 
 
 
 
 
 
Adjusted EBITDA
$
10,502

 
$
12,147

 
$
33,602

 
$
30,704