SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ___________________ to ____________________

COMMISSION FILE NUMBER: 0-27778

PTEK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

GEORGIA
(State or other jurisdiction of incorporation or organization)

59-3074176
(I.R.S. Employer Identification No.)

3399 PEACHTREE ROAD NE
THE LENOX BUILDING, SUITE 600
ATLANTA, GEORGIA 30326
(Address of principal executive offices, including zip code)

(404) 262-8400
(Registrant's telephone number including area code)

N/A
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

(1) Yes [X] No [_] (2) Yes [X] No [_]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class Outstanding at May 9, 2001
- ----------------------------- --------------------------
Common Stock, $0.01 par value 49,702,353 Shares

PTEK HOLDINGS, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

Page
----
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2001
and December 31, 2000...................................... 3

Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and 2000................. 4

Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and 2000................. 5

Notes to Condensed Consolidated Financial Statements....... 6

Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 13

Item 3 Quantitative and Qualitative Disclosures About Market Risk. 21

PART II OTHER INFORMATION

Item 1 Legal Proceedings.......................................... 22

Item 2 Changes in Securities...................................... 24

Item 3 Defaults Upon Senior Securities............................ 24

Item 4 Submission of Matters to a Vote of Security Holders........ 24

Item 5 Other Information.......................................... 24

Item 6 Exhibits and Reports on Form 8-K........................... 24

SIGNATURES.......................................................... 25

ITEM 1. FINANCIAL STATEMENTS

PTEK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
MARCH 31, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS EXCEPT SHARE AND PER SHAER DATA)

March 31, December 31,
2001 2000
---------- ------------
(Unaudited)

ASSETS
CURRENT ASSETS
Cash and equivalents.............................................................. $ 12,840 $ 22,991
Marketable securities, available for sale......................................... 3,641 6,725
Accounts receivable, net.......................................................... 72,336 66,927
Notes receivable - sale of revenue base........................................... 6,552 6,552
Prepaid expenses and other........................................................ 11,297 8,904
Deferred income taxes, net........................................................ 20,138 18,998
--------- ---------
Total current assets........................................................ 126,804 131,097

PROPERTY AND EQUIPMENT, NET........................................................ 115,314 117,106

OTHER ASSETS
Investments....................................................................... 24,424 27,066
Intangibles, net.................................................................. 330,063 344,782
Other assets...................................................................... 10,662 10,882
--------- ---------
$607,267 $ 630,933
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.................................................................. $ 41,625 $ 32,057
Deferred revenue.................................................................. 2,401 540
Accrued taxes..................................................................... 9,235 12,276
Accrued liabilities............................................................... 51,902 60,966
Deferred gain - sale of revenue base.............................................. 6,552 6,552
Current maturities of long-term debt and capital lease obligations................ 2,900 1,676
Accrued restructuring, merger costs and other special charges..................... 792 1,081
--------- ---------
Total current liabilities................................................... 115,407 115,148
--------- ---------

LONG-TERM LIABILITIES
Convertible subordinated notes.................................................... 172,500 172,500
Long-term debt and capital lease obligations...................................... 6,738 4,586
Other accrued liabilities......................................................... 480 1,429
Deferred income taxes, net........................................................ 24,060 23,864
--------- ---------
Total long-term liabilities................................................. 203,778 202,379
--------- ---------

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS' EQUITY
Common stock, $0.01 par value; 150,000,000 shares authorized, 52,532,353 and
51,316,880 shares issued in 2001 and 2000 and 49,827,353 and 49,067,244 shares
outstanding in 2001 and 2000, respectively...................................... 525 513
Unrealized gain on marketable securities, available for sale...................... 554 2,316
Additional paid-in capital........................................................ 583,388 581,474
Treasury stock, at cost........................................................... (13,675) (12,398)
Note receivable, shareholder...................................................... (3,834) (3,834)
Cumulative translation adjustment................................................. (7,023) (6,363)
Accumulated deficit............................................................... (271,853) (248,302)
--------- ---------
Total shareholders' equity.................................................. 288,082 313,406
--------- ---------
$ 607,267 $ 630,933
========= =========

Accompanying notes are integral to these condensed consolidated financial
statements.

PTEK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)

2001 2000
--------- --------
(Unaudited)

REVENUES....................................... $108,377 $115,713
TELECOMMUNICATIONS COSTS....................... 27,424 31,463
-------- --------
GROSS PROFIT................................... 80,953 84,250
DIRECT OPERATING COSTS......................... 17,530 16,970
-------- --------
CONTRIBUTION MARGIN............................ 63,423 67,280
OTHER OPERATING EXPENSES
Selling and marketing......................... 23,191 23,643
General and administrative.................... 20,526 21,757
Research and development...................... 4,099 3,591
Depreciation.................................. 9,105 9,963
Amortization.................................. 24,094 25,760
-------- --------
Total operating expenses.................... 81,015 84,714
-------- --------

OPERATING LOSS................................. (17,592) (17,434)
-------- --------

OTHER INCOME (EXPENSE)
Interest, net................................. (2,610) (2,711)
Gain on sale of marketable securities......... 1,604 46,016
Asset impairment - investments................ (4,755) -
Amortization of goodwill - equity investments. (1,612) -
Other, net.................................... (371) (416)
-------- --------
Total other income (expense)................ (7,744) 42,889
-------- --------

INCOME/(LOSS) BEFORE INCOME TAXES.............. (25,336) 25,455
INCOME TAX EXPENSE/(BENEFIT)................... (1,785) 17,160
-------- --------

NET INCOME/(LOSS).............................. $(23,551) $ 8,295
======== ========

BASIC NET INCOME/(LOSS) PER SHARE.............. $ (0.48) $ 0.17
======== ========
DILUTED NET INCOME/(LOSS) PER SHARE............ $ (0.48) $ 0.17
======== ========

WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC......................................... 49,563 47,455
======== ========
DILUTED....................................... 49,563 49,868
======== ========

Accompanying notes are integral to these condensed consolidated financial
statements.

PTEK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS)

2001 2000
--------- ----------
(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)........................................................... $(23,551) $ 8,295
Adjustments to reconcile net income (loss) to cash flows
from operating activities:
Depreciation and amortization............................................. 33,199 35,723
Gain on sale of marketable securities..................................... (1,604) (46,016)
Loss on disposal of property and equipment................................ 247 415
Income tax expense/(benefit).............................................. (1,785) 17,160
Payments for restructuring, merger costs and other special charges........ (289) (2,211)
Asset impairment - investments............................................ 4,755 -
Amortization of goodwill - investments.................................... 1,612 -
Payments related to accrued legal settlements............................. (863) -
Income taxes paid......................................................... (100) (11,789)
Changes in assets and liabilities:
Accounts receivable, net................................................ (5,409) (8,731)
Prepaid expenses and other.............................................. (1,108) (450)
Accounts payable and accrued expenses................................... 2,000 (10,779)
Deferred gain on legal settlement....................................... - 12,000
-------- --------

Total adjustments.......................................................... 30,655 (14,678)
-------- --------

Net cash provided by (used in) operating activities....................... 7,104 (6,383)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................................................ (9,318) (6,021)
Sale of marketable securities............................................... 1,804 47,646
Payments made for certain business assets................................... (3,628) (495)
Investments................................................................. (3,525) (13,305)
Other....................................................................... - (1,932)
-------- --------

Net cash (used in) provided by investing activities........................ (14,667) 25,893
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Payments under borrowing arrangements....................................... (501) (653)
Purchase of treasury stock, at cost......................................... (1,277) -
Exercise of stock options, net of tax withholding payments.................. 61 3,487
-------- --------

Net cash (used in) provided by financing activities........................ (1,717) 2,834
-------- --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH....................................... (871) (317)
-------- --------

NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS............................... (10,151) 22,027
CASH AND EQUIVALENTS, beginning of period..................................... 22,991 15,366
-------- --------
CASH AND EQUIVALENTS, end of period........................................... $ 12,840 $ 37,393
======== ========

Income taxes paid............................................................. $ 100 $ 11,789
======== ========
Interest paid................................................................. $ 5,145 $ 5,225
======== ========

Accompanying notes are integral to these condensed consolidated financial
statements.

PTEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial
statements have been prepared by management of PTEK Holdings, Inc. and its
subsidiaries (collectively, the "Company" or "PTEK") in accordance with rules
and regulations of the Securities and Exchange Commission ("SEC"). Accordingly,
certain information and footnote disclosures usually found in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. In the opinion of management of the Company, all
adjustments (consisting only of normal recurring adjustments, except as
disclosed herein) considered necessary for a fair presentation of the condensed
consolidated financial statements have been included. Preparing financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. Examples include
provisions for bad debts, carrying values and useful lives assigned to goodwill
and other long-lived assets and accruals for restructuring costs and employee
benefits. Actual results could differ from those estimates. These interim
condensed consolidated financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 2000,
which was filed with the Securities and Exchange Commission on April 2, 2001.

2. NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," in June 1998, SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of the FASB Statement No. 133," in June 1999 and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities - an amendment of
FASB Statement No. 133," in June 2000. SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting. SFAS No. 137
defers the effective date of SFAS No. 133 by one year to fiscal years beginning
after June 15, 2000. SFAS No. 138 amends the accounting and reporting standards
of SFAS No. 133 for certain derivative instruments and certain hedging
activities. The Company's required adoption date was January 1, 2001. The
Company adopted these three statements with no material impact to its results of
operations or financial position.

3. NET INCOME (LOSS) PER SHARE

The Company follows SFAS No. 128, "Earnings per Share." That statement
requires the disclosure of basic earnings per share and diluted earnings per
share. Basic earnings per share is computed by dividing net income (loss)
available to common shareholders by the weighted-average number of common shares
outstanding during the period and does not include any other potentially
dilutive securities. Diluted net income (loss) per share gives effect to all
potentially dilutive securities. The Company's convertible subordinated notes
and stock options are potentially dilutive securities. For the three-month
period ended March 31, 2001, both potentially dilutive securities were
antidilutive and therefore are not included in diluted net loss per share. For
the three-month period ended March 31, 2000, the difference between basic and
diluted earnings per common share was the dilutive effect of employee stock
options.

4. COMPREHENSIVE INCOME

Comprehensive income represents the change in equity of a business
during a period, except for investments by owners and distributions to owners.
Foreign currency translation adjustments and unrealized gain on available-for-
sale marketable securities represent the Company's components of other
comprehensive income. For the three-month periods ended March 31, 2001 and 2000,
total comprehensive (loss) was approximately $(26.0) million and $(16.1)
million, respectively.

5. MARKETABLE SECURITIES, AVAILABLE FOR SALE

"Marketable securities, available for sale" at March 31, 2001 and December
31, 2000, are principally common stock investments carried at fair value based
on quoted market prices and mutual funds carried at amortized cost.

During the three months ended March 31, 2001, the Company sold investments
with aggregate proceeds less commissions of approximately $1.8 million and
realized gains of approximately $1.6 million. At March 31, 2001, the Company
held investments in public companies with an aggregate market value of
approximately $3.6 million and unrealized gains of approximately $0.6 million.
The deferred tax liability on unrealized gains related to these investments was
approximately $347,000 at March 31, 2001.

6. INVESTMENTS

The Company has made investments in various companies that are engaged in
emerging technologies related to the Internet. These investments are classified
as either cost or equity investments in accordance with APB Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock."

The Company continually evaluates the carrying value of its ownership
interests in investments in the PtekVentures portfolio that are accounted for
using the cost or equity method of accounting for possible impairment based on
achievement of business plan objectives and current market conditions. The
business plan objectives the Company considers include, among others, those
related to financial performance such as achievement of planned financial
results or completion of capital raising activities, and those that are not
primarily financial in nature such as the development of technology or the
hiring of key employees.

The Company's portfolio companies operate in industries that are rapidly
evolving and extremely competitive. Recently, many Internet based businesses
have experienced difficulty in raising additional capital necessary to fund
operating losses and make continued investments that their management teams
believe are necessary to sustain operations. Valuations of public companies
operating in the Internet sector declined significantly during 2000. The
Company's accounting estimates with respect to the useful life and ultimate
recoverability of its carrying basis including goodwill in portfolio companies
could change in the near term and the effect of such changes on the financial
statements could be material. While the Company believes that the recorded
amount of carrying basis including goodwill as of March 31, 2001 is not
impaired, there can be no assurance that future results will confirm this
assessment or that a significant write-down of certain investments will not be
required in the future. During the first quarter of 2001, the Company determined
that certain of these investments were impaired and that the impairment was not
temporary. Accordingly, the Company recorded an impairment charge of
approximately $4.8 million, which is included in the accompanying condensed
consolidated statements of operations as "Asset impairment - investments."

The following summarizes the investment activity during the three-month period
ended March 31, 2001 (in thousands):

Equity Cost Total
--------- --------- ---------

Carrying value at December 31, 2000 $14,681 $12,385 $27,066
Additional investment - cash 2,474 1,051 3,525
Additional investment commitment - 200 200
Amortization of goodwill (1,612) - (1,612)
Asset impairment (731) (4,024) (4,755)
------- ------- -------
Carrying value at March 31, 2001 $14,812 $ 9,612 $24,424
======= ======= =======

7. RESTRUCTURING, MERGER COSTS AND OTHER SPECIAL CHARGES

Reorganization of Company into EES and CES Business Segments

The balance of severance and exit costs at December 31, 2000 and March 31,
2001 represents the remaining severance reserve for former executive management.
In the 3-month period ended March 31, 2001, cash severance payments made to one
former executive were $0.2 million. The Company expects to pay the remaining
severance reserve balance of $0.5 million to the former executive over the 13-
month period following March 31, 2001.

Exit of the Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $1.4
million for costs associated with Xpedite's decision to exit its legacy real-
time fax and real-time telex business in Asia. This service depended on
significant price disparities between regulated incumbent telecommunications
carriers and Xpedite's cost of delivery over its fixed-cost network. With the
deregulation of most Asian telecommunications markets, Xpedite's cost advantage
dissipated, and the Company decided to exit this service and concentrate on
higher value-added services such as transactional messaging and messageREACH.

Payments made for severance and exit costs during the first quarter of 2001
represent the remaining severance obligations to 67 employees, which obligations
were accrued at December 31, 2000. The Company does not expect any further
severance payments under this plan.

Contractual and other obligations paid during the first quarter of 2001
were the result of lease commitments from idle facilities that were exited.
These commitments are expected to expire in the first quarter of 2002.

Accrued costs for restructuring, merger costs and other special charges at
December 31, 2000 and March 31, 2001 are as follows (in thousands):

Accrued Costs at
Reorganization of Company into EES and December 31, Accrued Costs at
CES Business Segments 2000 Payments March 31, 2001
- ------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 639 $166 $473
------------------------------------------------------
Accrued restructuring, merger costs and
other special charges $ 639 $166 $473
------------------------------------------------------

Accrued Costs at
December 31, Accrued Costs at
Exit of the Asia Real-Time Fax and Telex Business 2000 Payments March 31, 2001
- ------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 59 $ 59 $ -
Contractual obligations 290 49 241
Other 93 15 78
------------------------------------------------------
Accrued restructuring, merger costs and other
special charges $ 442 $123 $319
------------------------------------------------------

Accrued Costs at
December 31, Accrued Costs at
Consolidated 2000 Payments March 31, 2001
- ------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 698 $225 $473
Contractual obligations 290 49 241
Other 93 15 78
------------------------------------------------------
Accrued restructuring, merger costs and other
special charges $1,081 $289 $792
------------------------------------------------------

8. COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company has several litigation matters pending, as described below,
which it is pursuing or defending vigorously. Due to the inherent uncertainties
of the litigation process and the judicial system, the Company is unable to
predict the outcome of such litigation matters. If the outcome of one or more of
such matters is adverse to the Company, it could have a material adverse effect
on the Company's business, financial condition and results of operations.

The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia. Plaintiffs seek to
represent a class of individuals (including a subclass of former Voice-Tel
franchisees and a subclass of former Xpedite Systems, Inc. ("Xpedite")
shareholders) who purchased or otherwise acquired the Company's common stock
from as early as February 11, 1997 through June 10, 1998. Plaintiffs allege the
Company admitted it had experienced difficulty in achieving its anticipated
revenue and earnings from voice messaging services due to difficulties in
consolidating and integrating its sales function. Plaintiffs allege, among other
things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange
Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. We filed a
motion to dismiss this complaint on April 14, 1999. On December 14, 1999, the
court issued an order that dismissed the claims under Sections 10(b) and 20 of
the Exchange Act without prejudice, and dismissed the claims under Section
12(a)(1) of the Securities Act with prejudice. The effect of this order was to
dismiss from this lawsuit all open-market purchases by the plaintiffs. The
plaintiffs filed an amended complaint on February 29, 2000. The defendants filed
a motion to dismiss on April 14, 2000, which was granted in part and denied in
part on December 8, 2000. The defendants filed an answer on January 8, 2001.

A lawsuit was filed on November 4, 1998 against the Company and certain of
its officers and directors in the Southern District of New York. Plaintiffs are
shareholders of Xpedite who acquired common stock of the Company as a result of
the merger between the Company and Xpedite in February 1998. Plaintiffs'
allegations are based on the representations and warranties made by the Company
in the prospectus and the registration statement related to the merger, the
merger agreement and other documents incorporated by reference, regarding the
Company's acquisitions of Voice-Tel and VoiceCom Systems, the Company's roll-out
of Orchestrate, the Company's relationship with customers Amway Corporation and
DigiTEC, 2000, and the Company's 800-based calling card service. Plaintiffs
allege causes of action against the Company for breach of contract, against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 and against the individual defendants for
violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed
damages together with pre- and post-judgment interest, recission or recissory
damages as to violation of Section 12(a)(2) of the Securities Act, punitive
damages, costs and attorneys' fees. The defendants' motion to transfer venue to
Georgia has been granted. The defendants' motion to dismiss has been granted in
part and denied in part. The defendants filed an answer on March 30, 2000.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint
in the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments with
Equitable Life Assurance Society of the United States and/or Equico Securities,
Inc. (collectively "Equitable"). The complaint asserts wrongdoing in connection
with the plaintiffs' investment in securities of Xpedite and in unrelated
investments involving insurance-related products. The defendants include
Equitable and certain of its current or former representatives. The allegations
in the complaint against Xpedite are limited to plaintiffs' investment in
Xpedite. The plaintiffs have alleged that two of the named defendants, allegedly
acting as officers, directors, agents or representatives of Xpedite, induced the
plaintiffs to make certain investments in Xpedite but that the plaintiffs failed
to receive the benefits that they were promised. Plaintiffs allege that Xpedite
knew or should have known of alleged wrongdoing on the part of other defendants.
Plaintiffs seek an accounting of the corporate stock in Xpedite, compensatory
damages of approximately $4.85 million, plus $200,000 in "lost investments,"
interest and/or dividends that have accrued and have not been paid, punitive
damages in an unspecified amount, and for certain equitable relief, including a
request for Xpedite to issue 139,430 shares of common stock in the plaintiffs'
names, attorneys' fees and costs and such other and further relief as the court
deems just and equitable. This case has been dismissed without prejudice and
compelled to NASD arbitration, which has commenced. In August 2000, the
plaintiffs filed a statement of claim with the NASD against 12 named
respondents, including Xpedite (the "Nobis Respondents"). The claimants allege
that the 12 named respondents engaged in wrongful activities in connection with
the management of the claimants' investments with Equitable.The statement of
claim asserts wrongdoing in connection with the claimants' investment in
securities of Xpedite and in unrelated investments involving insurance-related
products. The allegations in the statement of claim against Xpedite are limited
to claimants' investment in Xpedite. Claimants

seek, among other things, an accounting of the corporate stock in Xpedite,
compensatory damages of not less than $415,000, a fair conversion rate on stock
options, losses on the investments, plus interest and all dividends, attorneys'
fees and costs.

A lawsuit was filed on November 1, 1999 by Donald H. Turner, a former
officer of the Company, against the Company, Boland T. Jones and Jeffrey A.
Allred in the Superior Court of Fulton County, Georgia. Against the Company the
plaintiff alleges breach of contract and promissory estoppel relating to the
termination of his employment, and against all defendants the plaintiff alleges
fraudulent inducement relating to his hiring by the Company. The plaintiff seeks
compensatory damages of $875,000, forgiveness of a $100,000 loan, interest,
attorneys' fees and punitive damages in an unspecific amount. The defendants
filed an answer and counterclaim, claiming that the plaintiff owes the Company
the principal amount of the $100,000 loan plus interest as of January 1, 2001,
plus costs and attorneys' fees, and that the plaintiff defrauded the Company and
owes the Company approximately $400,000 in fraudulently attained pay and
benefits, including the $100,000 loan. In March 2001, the parties entered into a
settlement agreement and general release, which settled and disposed of all
claims in this litigation. This settlement will not have a material adverse
affect on the Company's business, financial condition or results of operations.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior
Court of New Jersey Law Division, Union County, against 17 named defendants
including the company and Xpedite, and various alleged current and former
officers, directors, agents and representatives of Xpedite. Plaintiff alleges
that the defendants engaged in wrongful activities in connection with the
management of the plaintiff's investments, including investments in Xpedite. The
allegations against Xpedite and the Company are limited to plaintiff's
investment in Xpedite. Plaintiff's claims against Xpedite and the Company
include breach of contract, breach of fiduciary duty, unjust enrichment,
conversion, fraud, interference with economic advantage, liability for ultra
vires acts, violation of the New Jersey Consumer Fraud Act and violation of New
Jersey RICO. Plaintiff seeks an accounting of the corporate stock of Xpedite,
compensatory damages of approximately $1.3 million, accrued interest and/or
dividends, a constructive trust on the proceeds of the sale of any Xpedite or
PTEK stock, shares of Xpedite and/or PTEK to satisfy defendants' obligations to
plaintiff, attorneys' fees and costs, punitive and exemplary damages in an
unspecified amount, and treble damages. On February 25, 2000, Xpedite filed its
answer, as well as cross claims and third party claims. This case has been
dismissed without prejudice and compelled to NASD arbitration, which has
commenced. In August 2000, a statement of claim was also filed with the NASD
against all but one of the Nobis Respondents making virtually the same
allegations on behalf of claimant Elizabeth Tendler. Claimant seeks an
accounting of the corporate stock in Xpedite, compensatory damages of not less
than $265,000, a fair conversion rate on stock options, losses on other
investments, interest and/or unpaid dividends, attorneys fees and costs.

On or about May 19, 2000, the Company was served with a Complaint filed by
Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims
for breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of duty of good faith and fair dealings, unjust
enrichment, and violation of Georgia and Missouri blue sky laws. Plaintiff's
claims arise out of the Company's acquisition of American Teleconferencing
Services, Ltd. ("ATS") in April 1998. Plaintiff was a shareholder of ATS who
received shares of PTEK stock in the transaction. The Company removed the case
to the United States District Court for the Western District of Missouri, and
filed a Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint. Plaintiff has filed a Motion to Remand
the case back to state court. By order dated March 28, 2001, the court granted
plaintiff's Motion to Remand and dismissed as moot the Company's Motion to
Compel Arbitration, or Alternatively to Transfer Venue, or Alternatively to
Dismiss the Compliant.

In 1999, we received separate letters from Ronald A. Katz Technology
Licensing, L.P. ("Katz") and Aerotel Limited/Aerotel USA, Inc., and in 2000 from
Nortel Networks, Inc., informing us of the existence of their respective patents
or patent portfolios and the potential applicability of those patents on our
products and services. We are currently considering each of these matters.
However, we currently lack sufficient information to assess the potential
outcomes of these matters. Due to the inherent uncertainties of litigation,
however, we are unable to predict the outcome of any potential litigation, and
any adverse outcome could have a material effect on our business, financial
condition and results of operations. Even if we were to prevail in this type of
challenge, our business could be adversely affected by the diversion of
management attention and litigation costs.

Certain of our customers have alleged that we are obligated to indemnify
them against patent infringement claims made by Katz against said customers. We
do not believe that we have an obligation to indemnify such customers; however,
due to the inherent uncertainties of litigation, we are unable to predict the
outcome of any potential litigation, and any adverse outcome could have a
material effect on our business, financial condition and results of operations.
Even if we were to prevail in this type of challenge, our business could be
adversely affected by the diversion of management attention and litigation
costs.

The Company is also involved in various other legal proceedings that the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.

9. SEGMENT REPORTING

The Company's reportable segments align the Company into areas of focus
driven by product offering and corporate services. The Company's reportable
business segments are Xpedite, Voicecom, Premiere Conferencing and Corporate.
Xpedite offers a full range of value-added multimedia messaging services through
its worldwide proprietary dedicated IP network for electronic information
delivery. Xpedite's customers are primarily global Fortune 1000 companies.
Voicecom offers a suite of integrated communications solutions including voice
messaging, interactive voice response ("IVR") services and unified
communications. Voicecom's initial customers came from direct selling
organizations, but Voicecom now targets key vertical markets such as financial
services, telecom providers, real estate and healthcare. Premiere Conferencing
offers a full range of enhanced, automated and Web conferencing services for all
forms of group communications activities, primarily to Fortune 1000 customers.
Corporate focuses on being a holding company with minimal headcount leaving the
day-to-day management of the businesses at the operating business units.
Corporate also includes PtekVentures, the Company's Internet investment arm. In
addition, the Company previously had one other reportable business segment,
Retail Calling Card Services, which the Company exited through the sale of its
revenue base effective August 1, 2000. The business segment consisted primarily
of the Premiere Worldlink calling card product, which was marketed primarily
through direct response advertising and co-branding relationships to individual
retail users. Discontinued operations treatment of this business segment was not
obtainable as the Company continued using the legacy platform for its profitable
wholesale line of business and its corporate calling card bundled within its
800-based messaging offerings within the Voicecom operating segment. Adjusted
EBITDA is management's primary measure of segment profit and loss. Adjusted
EBITDA is defined by the Company as operating income or loss before depreciation
and amortization. In its earnings releases, the Company discloses Adjusted
EBITDA before certain stock-based compensation and related expenses that are
included in "General and administrative" expenses.

Information concerning the operations in these reportable segments is as
follows (in millions):

Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
-------------- --------------

Revenues
Premiere Conferencing $ 25.4 $ 15.8
Xpedite 57.0 62.6
Voicecom 26.0 30.9
Retail Calling Card Services - 6.4
-------------- --------------
$108.4 $115.7
============== ==============

Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
-------------- --------------
Adjusted EBITDA
Premiere Conferencing $ 5.1 $ 2.4
Xpedite 13.9 17.6
Voicecom 1.0 4.6
Retail Calling Card Services - 0.6
Corporate (4.4) (6.9)
-------------- --------------
$ 15.6 $ 18.3
============== ==============

March 31, 2001 December 31, 2000
-------------- --------------
Identifiable assets
Xpedite $362.9 $391.6
Voicecom 92.1 90.2
Premiere Conferencing 75.3 75.0
Corporate 77.0 74.1
-------------- --------------
$607.3 $630.9
============== ==============

A reconciliation of Adjusted EBITDA to operating loss and income (loss)
before income taxes is as follows (in millions):

Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
-------------- --------------

Adjusted EBITDA $ 15.6 $ 18.3
Less: Depreciation (9.1) (10.0)
Less: Amortization (24.1) (25.7)
-------------- --------------
Operating loss (17.6) (17.4)
-------------- --------------
Less: Interest, net (2.6) (2.7)
Plus: Gain on sale of marketable equity securities 1.6 46.0
Less: Asset impairment - investments (4.8) -
Less: Amortization of goodwill - equity investments (1.6) -
Plus: Other income (expense), net (0.3) (0.4)
-------------- --------------
Income (loss) before income taxes $(25.3) $ 25.5
============== ==============

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW
- --------

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries
(collectively the "Company" or "PTEK") is a global provider of communications
and data services, including conferencing (audio conference calling and Web-
based collaboration), multimedia messaging (high-volume fax, e-mail, wireless
messaging and voice message delivery), and unified communications (personal
communications management systems that handle voice mail, e-mail and personal
content from the Web or the telephone). The Company's reportable segments align
the Company into areas of focus that are driven by product offering and
corporate services. These segments are Xpedite, Voicecom, Premiere Conferencing
and Corporate. Xpedite offers a full range of value-added multimedia messaging
services through its worldwide proprietary IP network for electronic information
delivery. Xpedite's customers are primarily global Fortune 1000 companies.
Voicecom offers a suite of integrated communications solutions including voice
messaging, interactive voice response ("IVR") services and unified
communications. Voicecom's initial customers came from direct selling
organizations, but Voicecom now targets key vertical markets such as financial
services, telecom providers, real estate and healthcare. Premiere Conferencing
offers a full range of enhanced, automated and Web conferencing services for all
forms of group communications activities, primarily to Fortune 1000 customers.
Corporate focuses on being a holding company with minimal headcount leaving the
day-to-day management of the businesses at the three operating business units.
In addition, Corporate includes PtekVentures, the Company's Internet investment
arm. Retail Calling Card Services is a business segment that the Company exited
through the sale of its revenue base effective August 1, 2000. It primarily
consisted of the Premiere WorldLink calling card product, which was marketed
primarily through direct response advertising and co-branding relationships to
individual retail users. Adjusted EBITDA is management's primary measure of
segment profit and loss.

The Company's revenues are based on usage in the Xpedite and Premiere
Conferencing business segments and a mix of both usage and monthly fixed fees in
the Voicecom business segment.

Telecommunications costs consist primarily of the cost of metered and fixed
telecommunications related costs incurred in providing the Company's services.

Direct operating costs consist primarily of salaries and wages, travel,
consulting fees and facility costs associated with maintaining and operating the
Company's various revenue generating platforms and telecommunications networks,
regulatory fees and non-telecommunications costs directly associated with
providing services.

Selling and marketing costs consist primarily of salaries and wages, travel
and entertainment, advertising, commissions and facility costs associated with
the functions of selling or marketing the Company's services.

Research and development costs consist primarily of salaries and wages,
travel, consulting fees and facilities costs associated with developing product
enhancements and new product development.

General and administrative costs consist primarily of salaries and wages
associated with billing, customer service, order processing, executive
management and administrative functions that support the Company's operations.
Bad debt expense associated with customer accounts is also included in this
caption.

Depreciation and amortization includes depreciation of computer and
telecommunications equipment, furniture and fixtures, office equipment,
leasehold improvements and amortization of intangible assets. The Company
provides for depreciation using the straight-line method of depreciation over
the estimated useful lives of property and equipment, generally two to five
years, with the exception of leasehold improvements which are depreciated on a
straight-line basis over the shorter of the term of the lease or the useful life
of the assets. Intangible assets being amortized include goodwill, customer
lists, developed technology and assembled work force. Intangible assets are
amortized over periods generally ranging from three to seven years.

"Adjusted EBITDA" is defined by the Company as operating income or loss
before depreciation and amortization. In its earnings releases, the Company
discloses Adjusted EBITDA before certain stock-based compensation and related
expenses that are included in "General and administrative" expenses.

Adjusted EBITDA is considered a key financial management performance
indicator because it excludes the effects of goodwill and intangible
amortization attributable to acquisitions primarily acquired using the Company's
common stock, the effects of prior years' cash investing and financing
activities that affect current period profitability and the effects of sales of
marketable securities, the write-down of investments, and special cash or non-
cash charges associated with acquisitions and internal exit activities. Adjusted
EBITDA provides each segment's management team with a consistent measurement
tool for evaluating the operating profit of the business before investing
activities, taxes and special charges. Adjusted EBITDA may not be comparable to
similarly titled measures presented by other companies and could be misleading
unless all companies and analysts calculate them in the same manner.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates. The
following discussion and analysis provides information which management believes
is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition. This discussion should be read in
conjunction with the unaudited condensed consolidated financial statements and
notes thereto.

RESULTS OF OPERATIONS
- ---------------------

The following table presents selected financial information regarding the
Company's operating segments for the periods presented (in millions):

Three Months Three Months
Ended Ended
March 31, March 31,
2001 2000
----------- -----------

Revenues
Premiere Conferencing $ 25.4 $ 15.8
Xpedite 57.0 62.6
Voicecom 26.0 30.9
Retail Calling Card Services - 6.4
----------- -----------
$108.4 $115.7
=========== ===========

Adjusted EBITDA
Premiere Conferencing $ 5.1 $ 2.4
Xpedite 13.9 17.6
Voicecom 1.0 4.6
Retail Calling Card Services - 0.6
Corporate (4.4) (6.9)
----------- -----------
$ 15.6 $ 18.3
=========== ===========

ANALYSIS
- --------

Consolidated revenues decreased 6.3% to $108.4 million in the three months
ended March 31, 2001 compared with the same period in 2000. On a segment basis,
the increases and/or decreases were caused by the following factors:

. Premiere Conferencing experienced a 60.3% increase to $25.4 million
for the three months ended March 31, 2001 compared with the same
period in 2000. The overall growth in revenue at Premiere
Conferencing results primarily from growth in its
unattended/automated conferencing product offering which has
exhibited significant growth over the past two years. Also
contributing to the growth in revenue was approximately $1.1 million
of international conferencing revenue. Management responsibility for
international conferencing was transferred from Xpedite to the
Premiere Conferencing segment effective January 1, 2001, and prior to
that date international conferencing revenue was reported within the
Xpedite segment.

. Xpedite experienced an 8.9% decrease to $57.0 million for the three
months ended March 31, 2001 compared with the same period in 2000.
The decrease in revenue for the three-month period can be attributed
to the fourth quarter 2000 exit of real-time fax and real-time telex
services in certain Asian markets, the shift of international
conferencing and voice messaging revenues to Premiere Conferencing
and Voicecom, and the continued strength of the U.S. dollar. After
adjusting for these impacts, totaling approximately $7.8 million,
Xpedite would have experienced an increase in revenue of
approximately 4.1% for the three months ended March 31, 2001 when
compared to the same period in 2000. Management responsibility for
international conferencing and voice messaging was transferred from
Xpedite to those segments effective January 1, 2001. The revenue
decrease of $5.6 million was offset, to some degree, by significant
year-over-year increases in new service revenues, particularly for
messageREACH, which experienced an increase in revenue from virtually
zero in the first quarter of 2000 to $2.9 million in the first
quarter of 2001.

. Voicecom experienced a 16.0% decrease to $26.0 million in the three
months ended March 31, 2001 compared with the same period in 2000.
The decrease in revenue is primarily driven by declines in messaging
revenue, offset in part by increases in Voicecom's IVR and wholesale
calling card revenue. The decline in messaging revenue is principally
due to weakness in direct selling organizations ("DSOs") and the exit
of selling into the small office/home office sales channels. In
particular, Voicecom has experienced continued attrition in its
largest DSO customer, Amway Corporation. This attrition has resulted
in large part from Voicecom's inability to selectively solicit or
otherwise engage in promotional activities directly with Amway's
independent business owners ("IBOs"), which is not permitted by the
current agreement. Amway has indicated its intent to terminate the
current agreement. Voicecom is currently engaged in discussions with
Amway to reach a new agreement that will allow Voicecom to deal
directly with the IBOs sooner; however, there can be no assurance
that such a new agreement will be reached. Increases in IVR and
wholesale calling card revenue are due primarily to increased minutes
of use with existing customers. Management responsibility for
international voice messaging was transferred from Xpedite to the
Voicecom segment effective January 1, 2001, and prior to that date
international voice messaging revenue was reported within the Xpedite
segment. Revenues from international voice messaging were not
significant in the first quarter of 2001.

. Retail Calling Card Services experienced a 100% decrease in revenue
for the three months ended March 31, 2001 compared with the same
period in 2000, due to PTEK's sale of this operating segment's
revenue base effective August 1, 2000.

Consolidated gross profit margins were 74.7% and 72.8% for the three months
ended March 31, 2001 and 2000, respectively, an improvement of 1.9 percentage
points. Gross profit margin for the Premiere Conferencing segment improved to
81.0% for the three months ended March 31, 2001 from 76.2% for the comparable
period in 2000. Premiere Conferencing has benefited from lower
telecommunications costs primarily resulting from aggressive negotiations with
telecommunications carriers. Gross profit margins for the Xpedite segment
improved to 72.9% for the three months ended March 31, 2001 from 69.5% for the
comparable period in 2000. This improvement is due, in part, to the exit of
real-time fax and real-time telex services in certain Asian markets where
Xpedite's margins were eroding as telecommunications costs decreased as a result
of deregulation, as well as revenue increases in higher margin products such as
transactional fax and messageREACH email services. Gross profit margin for the
Voicecom segment declined to 72.5% for the three months ended March 31, 2001
from 80.1% for the comparable period in 2000. This decrease is caused primarily
by the decline in voice messaging revenues, which are mainly provided by a fixed
cost local telephone network. In addition, as part of the sale of Retail Calling
Card Services, Voicecom agreed to provide wholesale platform and transmission
services to the acquiring company. Gross profit margins are significantly lower
for this type of service than for Voicecom's traditional wholesale offerings.

Consolidated direct costs of operations were 16.2% of revenues for the
three months ended March 31, 2001 as compared with 14.7% for the same period of
2000. The increase in these costs as a percentage of revenue is attributable
primarily to the Premiere Conferencing operating segment representing a higher
percentage of consolidated revenues. Direct costs of operations as a percentage
of revenue are higher at Premiere Conferencing than at PTEK's other

operating segments. At Premiere Conferencing, direct costs of operations as a
percentage of revenue declined to 29.7% for the three months ended March 31,
2001 as compared with 35.1% for the same period of 2000, reflecting the growth
in this segment's automated conferencing services relative to its total revenue
base. At Xpedite, direct costs of operations as a percentage of revenue
increased slightly in the three months ended March 31, 2001 as compared to the
same period in 2000, from 7.0% to 7.8%. The Voicecom segment also experienced an
increase in direct costs of operations as a percentage of revenue, to 21.4% from
20.1% in the comparable 2000 period.

Consolidated selling and marketing costs increased to 21.4% of revenues for
the three months ended March 31, 2001 from 20.4% of revenues for the comparable
2000 period. This increase as a percentage of revenue is primarily driven by
increases within both the Premiere Conferencing and Xpedite segments. The
increase at Premiere Conferencing, from 15.7% of revenues for the three months
ended March 31, 2000 to 19.1% for the comparable 2001 period, is primarily
attributable to increased sales and marketing expenses associated with this
segment's international expansion activities. The increase at Xpedite, from
20.5% of revenues for the three months ended March 31, 2000 to 24.0% for the
comparable 2001 period, is primarily attributable to increased sales and
marketing expenses associated with the growth of this segment's new service
offerings, messageREACH and voiceREACH, as well as these costs being spread over
a lower revenue base. The decrease at Voicecom, from 20.3% of revenues for the
three months ended March 31, 2000 to 17.0% for the comparable 2001 period, is
primarily the result of sales force reductions that were made in the third
quarter of 2000. Also helping to offset the overall increase was the absence of
these costs within the Retail Calling Card operating segment, resulting from
PTEK's sale of the segment's revenue base effective August 1, 2000.

Consolidated research and development costs were 3.8% of revenues for the
three months ended March 31, 2001 compared with 3.1% of revenues for the
comparable period in 2000. The increase in these costs as a percentage of
revenue relates primarily to the development of new service offerings in each of
PTEK's operating segments. New service offerings at Premiere Conferencing
include ReadyConference and VisionCast, while Xpedite's new service offerings
include messageREACH and voiceREACH. Voicecom's development activities are
principally focused on Orchestrate.

Consolidated general and administrative costs increased slightly to 18.9%
of revenues for the three months ended March 31, 2001 from 18.8% of revenues for
the same period in 2000. Overall, these costs decreased by $1.2 million for the
three months ended March 31, 2001 compared to the comparable 2000 period. At
Premiere Conferencing, general and administrative costs increased as a
percentage of revenue from 8.5% of revenue for the three months ended March 31,
2000 to 10.2% of revenues for the comparable period in 2000, driven primarily by
the significant year-over-year growth experienced in this operating segment as
well as by increased costs associated with this operating segment's
international expansion activities. At Xpedite, general and administrative costs
increased as a percentage of revenue from 11.0% of revenue for the three months
ended March 31, 2000 to 13.1% of revenues for the comparable period in 2000,
driven primarily by the lower revenue in the 2001 period compared to the 2000
period. At Voicecom, general and administrative costs increased as a percentage
of revenue from 19.8% of revenue for the three months ended March 31, 2000 to
24.4% of revenues for the comparable period in 2000, driven primarily by the
lower level of revenue in the 2001 period compared to the 2000 period. These
increases were offset, to a degree, by reductions within the Corporate and
Retail Calling Card operating segments. The decrease within the Retail Calling
Card operating segment resulted from PTEK's sale of this segment's revenue base
effective August 1, 2000.

Consolidated depreciation expense was 8.4% of revenues for the three months
ended March 31, 2001 compared with 8.6% of revenues for the same period in 1999,
and these costs decreased by $0.9 million. The decrease in these costs as a
percentage of revenues is attributable to decreases in depreciation expense
associated with the assets in the Company's enhanced calling card platform,
local voice messaging network and legacy fax delivery network.

Consolidated amortization was 23.7% of revenues for the three months ended
March 31, 2001 compared with 22.3% for the comparable 2000 period. Overall,
these costs remained relatively flat for the three months ended March 31, 2001
compared to the comparable 2000 period. The lives assigned to these intangible
assets range from three to seven years. The Company amortizes goodwill created
by investments that are accounted for under the equity method of accounting.
Companies in which the Company owns 50% or less of the equity ownership, but
over which significant influence is exercised, are accounted for under the
equity method. The amount by which the Company's investment exceeds its share of
the underlying net assets is considered to be goodwill, and is amortized over a
three-year period. Amortization related to equity investments totaled $1.6
million for the three months ended March 31, 2000 compared to zero for the
comparable period in 2000.

Adjusted EBITDA was $15.6 million or 14.4% of revenue for the three months
ended March 31, 2001 compared with $18.3 million or 15.8% of revenues for the
comparable period in 2000. On a segment basis, the increases and/or decreases
were caused by the following factors:

. Adjusted EBITDA for the Premiere Conferencing operating segment was
$5.1 million or 20.0% of revenues for the three months ended March
31, 2001, compared to $2.4 million or 15.4% of revenue for the
comparable 2000 period. The improvement in this operating segment's
Adjusted EBITDA is primarily driven by the growth in its
unattended/automated conferencing product offering and the impact of
lower telecommunications costs. The improvement in Adjusted EBITDA is
offset, to some degree, by costs associated with this operating
segment's international expansion activities.

. Adjusted EBITDA for the Xpedite operating segment was $13.9 million
or 24.4% of revenues for the three months ended March 31, 2001,
compared to $17.6 million or 28.2% of revenue for the comparable 2000
period. The decrease in Adjusted EBITDA for the three-month period
can be attributed in large part to the fourth quarter 2000 exit of
real-time fax and real-time telex services in certain Asian markets,
as well as the continued strength of the U.S. dollar. Management
responsibility for international conferencing and voice messaging
operations was transferred from Xpedite to Premiere Conferencing and
Voicecom effective January 1, 2001. As a result, approximately $1.5
million of revenues and $1.8 million of associated expenses were not
reported within the Xpedite operating segment for the three months
ended March 31, 2001, which positively affected Adjusted EBITDA for
this period by approximately $0.3 million. The decrease in Adjusted
EBITDA was offset, to a degree, by growth in Xpedite's new services,
messageREACH and voiceREACH.

. Adjusted EBITDA at the Voicecom operating segment was $1.0 million or
3.9% of revenues for the three months ended March 31, 2001, compared
to $4.6 million or 14.8% of revenue for the comparable 2000 period.
This decline is principally the result of the decline in revenues
within this segment, as the cost associated with much of Voicecom's
local based voice messaging network is fixed in nature. Voicecom has
taken several steps to improve its Adjusted EBITDA, including a
reduction in its employee base by approximately 10% in May 2001, and
it plans to consolidate certain real estate starting in the second
quarter of 2001. When combined with normal attrition, the Company
believes that these actions should result in estimated annualized
cost savings in excess of $5 million. Management responsibility for
international voice messaging operations was transferred from Xpedite
to Voicecom effective January 1, 2001. As a result, revenues and
associated expenses of $0.4 million and $0.3 million, respectively,
were reported by Voicecom in the three months ended March 31, 2001,
which resulted in Adjusted EBITDA contribution of approximately $0.1
million from international voice messaging activities.

. Retail Calling Card Services experienced a 100% decrease in Adjusted
EBITDA for the three months ended March 31, 2001 compared with the
same period in 2000, due to PTEK's sale of this operating segment's
revenue base effective August 1, 2000.

. Adjusted EBITDA for the Corporate operating segment was $(4.4)
million for the three months ended March 31, 2001, compared to $(6.9)
million for the comparable 2000 period. The improvement of $2.5
million can be partially attributed to reduced expenses for salaries
and related benefits resulting from a reduction in headcount in the
first quarter of 2000, reduced deferred compensation expense relating
to certain restricted stock grants made in 1999 that were fully
amortized by December 31, 2000, and lower levels of spending for
advertising and other professional fees. Also contributing to the
improvement was a reduction in expenses associated with PtekVentures.

Net interest expense remained relatively flat at $2.6 million for the three
months ended March 31, 2001 compared to $2.7 million for the comparable 2000
period. Interest expense, net in the first quarter of 2001 is primarily
comprised of interest on the Company's convertible subordinated notes.

During the three months ended March 31, 2001, the Company determined that
certain of its investments in the PtekVentures portfolio were impaired and that
the impairment was not temporary. Accordingly, the Company recorded an
impairment charge of approximately $4.8 million, which is included in the
accompanying condensed consolidated statements of operations under "Asset
impairment-investments." The Company continually evaluates the carrying value of
its ownership interests in investments in the PtekVentures portfolio that are
accounted for using the cost or equity method of accounting for possible
impairment based on achievement of business plan objectives and current market
conditions. The business plan objectives the Company considers include, among
others, those related to financial performance such as achievement of planned
financial results or completion of capital raising activities, and those that
are not primarily financial in nature such as the development of technology or
the hiring of key employees.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $7.1 million for the
three months ended March 31, 2001, compared to cash used in operations of $6.4
million for the comparable 2000 period. The improvement in cash provided by
operating activities can be attributed to reduced payments for income taxes, as
well as increases in accounts payable and accrued expenses in the first quarter
of 2001 compared to significant decreases in the comparable period 2000. Also
contributing to the improvement were reduced payments associated with
restructuring, merger costs and other special charges. The Company made semi-
annual interest payments of approximately $5.0 million relating to its
convertible subordinated notes during each of the first quarters of 2001 and
2000. Offsetting these improvements were increases in net accounts receivable
of $5.4 million for the three months ended March 31, 2001, primarily
attributable to the Premiere Conferencing and Xpedite operating segments.

Investing activities used cash totaling $14.7 million for the three months
ended March 31, 2001, compared to cash provided by investing activities totaling
$25.9 million for the same period in 2000. The principal source of cash from
investing activities in the first quarter of 2001 was the sale of investments.
See note 5- "Marketable Securities, Available for Sale" for a further
discussion. The primary uses of cash for investing activities during the first
quarter of 2001 included capital expenditures, follow-on investment activity in
the PtekVentures investment portfolio, and payments made for certain revenue
generating business assets by the Xpedite operating segment. Capital
expenditures for the first quarter of 2001 related primarily to expansion of the
capacity of Premiere Conferencing's conference calling network, improvements and
enhancements to Xpedite's fax delivery platform and its new service offerings,
messageREACH and voiceREACH, expenditures for Xpedite's new headquarters
location, and expenditures relating to the buildout of Voicecom's new voice
messaging network. The principal source of cash from investing activities in the
first quarter of 2000 was the sale of WebMD Corporation and S1 Corporation
shares owned by the Company. Proceeds of $47.6 million were used primarily to
invest in companies in the PtekVentures portfolio, pay income taxes from prior
year's sales of WebMD Corporation shares and pay semi-annual interest due on the
Company's convertible subordinated notes.

Cash used in financing activities for the three months ended March 31, 2001
totaled $1.7 million, compared with cash provided by financing activities of
$2.8 million for the comparable 2000 period. The principal uses of cash for
financing activities during the first quarter of 2001 were debt repayments on
capital lease obligations and the purchase of $1.3 million of treasury stock.
The primary sources of cash from financing activities in the first quarter of
2000 were proceeds from employee stock option exercises. Cash outflows for
financing activities in the first quarter of 2000 were primarily debt repayments
on capital lease and note obligations associated with the Voice-Tel acquisition
and debt assumed from the Xpedite France, S.A. acquisition.

At March 31, 2001, the Company's principal commitments involve minimum
purchase requirements under supply agreements with telecommunications providers,
severance payments to former executive management under the Company's various
restructuring plans, capital lease obligations, commitments under its strategic
alliance with WebMD, and semi-annual interest on the Company's convertible
subordinated notes.

Management believes that cash and equivalents, marketable securities
available for sale, and cash flows from operations should be sufficient to fund
the Company's capital expenditure requirements of its operating units. At March
31, 2001, approximately $11.5 million of cash and equivalents resided outside of
the United States compared to $16.0 million at December 31, 2000. The Company
routinely repatriates cash in excess of operating needs in certain countries
where the cost to repatriate does not exceed the economic benefits. Intercompany
loans with foreign subsidiaries generally are considered by management to be
permanently invested for the foreseeable future. Therefore, all foreign exchange
gains and losses are recorded in the cumulative translation adjustment account
on the balance sheet. Based on potential cash positions of PTEK and potential
conditions in the capital markets, management could require repayment of these
loans despite the long-term intention to hold them as permanent investments.
Foreign exchange gains or losses on intercompany loans deemed temporary in
nature are recorded in the determination of net income. Management regularly
reviews the Company's capital structure and evaluates potential alternatives in
light of current conditions in the capital markets. Depending upon conditions in
these markets, cash flows from the Company's operating segments and other
factors, PTEK may engage in other capital transactions. These capital
transactions include but are not limited to debt or equity issuances or credit
facilities with banking institutions.

RESTRUCTURING, MERGER COSTS AND OTHER SPECIAL CHARGES

Reorganization of Company into EES and CES Business Segments

The balance of severance and exit costs at December 31, 2000 and March 31,
2001 represents the remaining severance reserve for former executive management.
In the three-month period ended March 31, 2001, cash severance payments made to
one former executive was $0.2 million. The Company expects to pay the remaining
severance reserve balance of $0.5 million to the former executive over the 13-
month period following March 31, 2001.

Exit of the Asia Real-Time Fax and Telex Business

PROPOSED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS, BUSINESS COMBINATIONS AND
INTANGIBLE ASSETS - ACCOUNTING FOR GOODWILL

On February 14, 2001, the Financial Accounting Standards Board (the "FASB")
revised and issued for public comment its FASB Exposure Draft, Business
Combinations and Intangible Assets - Accounting for Goodwill. As currently
proposed goodwill already existing as of the effective date of this statement
will no longer be amortized but rather will be accounted for using an impairment
approach. The provisions of this proposed statement would begin the first
quarter following issuance of the final statement, which is currently expected
in the second or third quarter of 2001. If enacted in its currently proposed
form, the statement will significantly and favorably impact the Company's
results of operations after adoption because of the significant goodwill that
has resulted from the Company's previous acquisitions.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," in June 1998,
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of the FASB Statement No. 133," in June 1999 and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133," in June 2000. SFAS No.133
establishes accounting and reporting standards for derivatives and hedging. It
requires that all derivatives be recognized as either assets or liabilities at
fair value and establishes specific criteria for the use of hedge accounting.
SFAS No. 137 defers the effective date of SFAS No. 133 by one year to fiscal
years beginning after June 15, 2000. SFAS No. 138 amends the accounting and
reporting standards of SFAS No. 133 for certain derivative instruments and
certain hedging activities. The Company's required adoption date was January 1,
2001. The Company adopted these three statements with no material impact to its
financial position.

FORWARD-LOOKING STATEMENTS

When used in this Form 10-Q and elsewhere by management or PTEK from time
to time, the words "believes," "anticipates," "expects," "will" "may" "should"
"intends" "plans" "estimates" "predicts" "potential" "continue" and similar
expressions are intended to identify forward-looking statements concerning our
operations, economic performance and financial condition. These include, but are
not limited to, forward-looking statements about our business strategy and means
to implement the strategy, our objectives, the amount of future capital
expenditures, the likelihood of our success in developing and introducing new
products and services and expanding our business, and the timing of the
introduction of new and modified products and services. For those statements, we
claim the protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. These statements are
based on a number of assumptions and estimates that are inherently subject to
significant risks and uncertainties, many of which are beyond our control, and
reflect future business decisions that are subject to change. A variety of
factors could cause actual results to differ materially from those anticipated
in our forward-looking statements, including the following factors:

. Increased competitive pressures among communications and data
services providers, including pricing pressures;

. Our ability to respond to rapid technological change, the development
of alternatives to our products and services and risk of obsolescence
of its products, services and technology;

. Market acceptance of new products and services;

. Strategic investments in early stage companies, which are subject to
significant risks, may not be successful and returns on such
strategic investments, if any, may not match historical levels;

. Fluctuations in the value of our business because the value of some
of our strategic equity investments fluctuates;

. Our ability to manage our growth;

. Greater than expected costs or difficulties related to the
integration of businesses and technologies, if any, acquired or that
may be acquired by us;

. Expected cost savings from past or future mergers and acquisitions
may not be fully realized or realized within the expected time frame;

. Lower than expected revenues following past or future mergers and
acquisitions;

. Operating costs or customer loss and business disruption following
past or future mergers and acquisitions may be greater than expected;

. The success of our strategic relationships, including the amount of
business generated and the viability of the strategic partners, may
not meet expectations;

. Possible adverse results of pending or future litigation or adverse
results of current or future infringement claims;

. Risks associated with interruption in our services due to the failure
of the platforms and network infrastructure utilized in providing our
services;

. Risks associated with expansion of our international operations;

. Possible downturn in general economic or business conditions,
internationally, nationally or in the local jurisdictions in which we
are doing business;

. Negative impact on our business resulting from legislative or
regulatory changes;

. Negative impact on our business resulting from changes in the
securities markets; and

. Factors described from time to time in the Company's press releases,
reports and other filings made with the Securities and Exchange
Commission.

PTEK cautions that these factors are not exclusive. Consequently, all of
the forward-looking statements made in this Form 10-Q and in documents
incorporated in this Form 10-Q are qualified by these cautionary statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Form 10-Q. PTEK takes on no
obligation to publicly release the results of any revisions to these forward-
looking statements that may be made to reflect events or circumstances after the
date of this Form 10-Q, or the date of the statement, if a different date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates and
foreign currency exchange rates. The Company manages its exposure to these
market risks through its regular operating and financing activities. Derivative
instruments are not currently used and, if utilized, are employed as risk
management tools and not for trading purposes.

At March 31, 2001, no derivative financial instruments were outstanding to
hedge interest rate risk. A hypothetical immediate 10% increase in interest
rates would decrease the fair value of the Company's fixed rate convertible
subordinated notes outstanding at March 31, 2001, by approximately $6.4 million.

Approximately 26.9% of the Company's revenues and 17.6% of its operating
costs and expenses were transacted in foreign currencies for the three-month
period ended March 31, 2001. As a result, fluctuations in exchange rates impact
the amount of the Company's reported sales and operating income when translated
into U.S. dollars. A hypothetical positive or negative change of 10% in foreign
currency exchange rates would positively or negatively change revenue for the
three-month period ended March 31, 2001 by approximately $2.9 million and
operating costs and expenses for the three-month period ended March 31, 2001 by
approximately $1.4 million. The Company has not used derivatives to manage
foreign currency exchange translation risk and no foreign currency exchange
derivatives were outstanding at March 31, 2001.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

have not been paid, punitive damages in an unspecified amount, and for certain
equitable relief, including a request for Xpedite to issue 139,430 shares of
common stock in the plaintiffs' names, attorneys' fees and costs and such other
and further relief as the court deems just and equitable. This case has been
dismissed without prejudice and compelled to NASD arbitration, which has
commenced. In August 2000, the plaintiffs filed a statement of claim with the
NASD against 12 named respondents, including Xpedite (the "Nobis Respondents").
The claimants allege that the 12 named respondents engaged in wrongful
activities in connection with the management of the claimants' investments with
Equitable.The statement of claim asserts wrongdoing in connection with the
claimants' investment in securities of Xpedite and in unrelated investments
involving insurance-related products. The allegations in the statement of claim
against Xpedite are limited to claimants' investment in Xpedite. Claimants seek,
among other things, an accounting of the corporate stock in Xpedite,
compensatory damages of not less than $415,000, a fair conversion rate on stock
options, losses on the investments, plus interest and all dividends, attorneys'
fees and costs.

The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None.

(b) Reports on Form 8-K:

Date of Report Entities For Which Financial
(Date Filed) Items Reported Statements Filed
- -------------- ----------------------------------------------------- ----------------------------

02/21/01 Items 5 and 7 - Letter to shareholders, employees and None.
friends of PTEK (incorporated by reference).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

May 15, 2001 PTEK HOLDINGS, INC.
Date

/s/ PATRICK G. JONES
----------------------------------------
Patrick G. Jones
Executive Vice President and Chief
Financial Officer (principal Financial
and Accounting Officer and duly
authorized signatory of the Registrant)
and Chief Legal Officer