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 SEPTEMBER 30, 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 November 9, 2001
- ----------------------------- ---------------------------------
Common Stock, $0.01 par value 49,752,733 Shares

PTEK HOLDINGS, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

Page
----
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Consolidated Condensed Balance Sheets
as of September 30, 2001 and December 31, 2000..................... 3

Consolidated Condensed Statements of Operations
for the Three and Nine Months Ended September 30, 2001 and 2000.... 4

Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended September 30, 2001 and 2000.............. 5

Notes to Consolidated Condensed 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
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)

September 30, December 31,
2001 2000
------------ ------------
ASSETS (Unaudited)

CURRENT ASSETS
Cash and equivalents......................................................................... $ 43,032 $ 22,991
Marketable securities, available for sale.................................................... 1,083 6,725
Accounts receivable, net..................................................................... 67,982 66,927
Notes receivable - sale of revenue base...................................................... 6,552 6,552
Prepaid expenses and other................................................................... 11,103 8,904
Deferred income taxes, net................................................................... 20,454 18,998
--------- ---------
Total current assets..................................................................... 150,206 131,097

PROPERTY AND EQUIPMENT, NET................................................................... 110,672 117,106

OTHER ASSETS
Investments.................................................................................. - 27,066
Intangibles, net............................................................................. 281,738 344,782
Other assets................................................................................. 10,204 10,882
--------- ---------
$ 552,820 $ 630,933
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................................................................. $ 41,364 $ 32,057
Deferred revenue............................................................................. 1,096 540
Accrued taxes................................................................................ 9,272 12,276
Accrued liabilities.......................................................................... 55,282 60,966
Deferred gain - sale of revenue base......................................................... 6,552 6,552
Current maturities of long-term debt and capital lease obligations........................... 5,933 1,676
Accrued restructuring costs.................................................................. 3,007 1,081
--------- ---------
Total current liabilities................................................................ 122,506 115,148
--------- ---------

LONG-TERM LIABILITIES
Convertible subordinated notes............................................................... 172,500 172,500
Long-term debt and capital lease obligations................................................. 10,064 4,586
Other accrued liabilities.................................................................... - 1,429
Deferred income taxes, net................................................................... 15,801 23,864
--------- ---------
Total long-term liabilities.............................................................. 198,365 202,379
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS' EQUITY
Common stock, $0.01 par value; 150,000,000 shares authorized, 52,804,378 and
51,316,880 shares issued in 2001 and 2000 and 49,734,238 and 49,067,244 shares
outstanding in 2001 and 2000, respectively.................................................. 528 513
Unrealized gain on marketable securities, available for sale................................. 412 2,316
Additional paid-in capital................................................................... 584,535 581,474
Treasury stock, at cost...................................................................... (14,571) (12,398)
Note receivable, shareholder................................................................. (3,834) (3,834)
Cumulative translation adjustment............................................................ (2,711) (6,363)
Accumulated deficit.......................................................................... (332,410) (248,302)
--------- ---------
Total shareholders' equity............................................................... 231,949 313,406
--------- ---------
$ 552,820 $ 630,933
========= =========

Accompanying notes are integral to these consolidated condensed financial
statements.

PTEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
--------- --------- --------- ---------
(Unaudited) (Unaudited)

Revenue............................................. $103,912 $105,360 $321,557 $332,531
Telecommunications costs............................ 25,474 27,716 79,525 87,455
-------- -------- -------- --------
GROSS PROFIT........................................ 78,438 77,644 242,032 245,076
Direct operating costs.............................. 18,489 17,189 54,151 51,401
-------- -------- -------- --------
CONTRIBUTION MARGIN................................. 59,949 60,455 187,881 193,675
-------- -------- -------- --------
OTHER OPERATING EXPENSES
Selling and marketing.......................... 20,548 22,740 66,508 71,085
General and administrative..................... 19,333 19,227 59,943 60,280
Research and development....................... 3,741 3,252 11,935 10,331
Depreciation................................... 9,847 9,145 27,702 31,450
Amortization................................... 23,187 25,792 72,125 77,226
Restructuring costs............................ - (641) 6,714 (641)
Equity based compensation...................... 1,163 - 3,380 -
Gain on legal settlement....................... - - - (3,730)
-------- -------- -------- --------
Total other operating expenses............ 77,819 79,515 248,307 246,001

OPERATING LOSS...................................... (17,870) (19,060) (60,426) (52,326)
-------- -------- -------- --------

OTHER INCOME (EXPENSE)
Interest, net.................................. (2,775) (2,551) (8,285) (7,954)
Gain on sale of marketable securities.......... 102 6,423 2,665 59,482
Asset impairment - investments................. - - (29,195) -
Amortization of goodwill - equity investments.. - - (1,612) -
Other, net..................................... (444) 41 (1,354) (278)
-------- -------- -------- --------
Total other income (expense).............. (3,117) 3,913 (37,781) 51,250
-------- -------- -------- --------

LOSS BEFORE INCOME TAXES............................ (20,987) (15,147) (98,207) (1,076)
-------- -------- -------- --------
INCOME TAX EXPENSE/(BENEFIT)........................ (3,362) 1,093 (14,099) 19,801

NET LOSS............................................ $(17,625) $(16,240) $(84,108) $(20,877)
======== ======== ======== ========

BASIC NET LOSS PER SHARE............................ $ (0.35) $ (0.34) $ (1.69) $ (0.44)
======== ======== ======== ========
DILUTED NET LOSS PER SHARE.......................... $ (0.35) $ (0.34) $ (1.69) $ (0.44)
======== ======== ======== ========

WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC.......................................... 49,846 47,962 49,726 47,816
DILUTED........................................ 49,846 47,962 49,726 47,816

Accompanying notes are integral to these consolidated condensed financial
statements.

PTEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS)

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

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................................................. $(84,108) $(20,877)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization............................................................ 99,827 108,676
Asset impairment - investments........................................................... 29,195 -
Amortization of goodwill - equity investments............................................ 1,612 -
Equity based compensation................................................................ 3,380 -
Gain on sale of marketable securities.................................................... (2,665) (59,482)
Gain on legal settlement................................................................. - (3,730)
Deferred income taxes.................................................................... (14,099) 17,205
Restructuring costs...................................................................... 6,714 (641)
Payments for restructuring costs......................................................... (3,054) (4,292)
Proceeds/(payments) from legal settlement................................................ (863) 12,000
Changes in assets and liabilities:
Accounts receivable, net................................................................ (2,217) (7,952)
Prepaid expenses and other.............................................................. (250) (748)
Accounts payable and accrued expenses................................................... 11,263 (40,065)
-------- --------

Total adjustments........................................................................ 128,843 20,971
-------- --------
Net cash provided by operating activities................................................ 44,735 94
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures...................................................................... (20,400) (25,078)
Sale of marketable securities............................................................. 4,277 63,126
Payments made for certain business assets................................................. (5,828) (495)
Investments............................................................................... (3,791) (31,517)
Other..................................................................................... (1,360) 1,039
-------- --------

Net cash (used in) provided by investing activities...................................... (27,102) 7,075
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments under borrowing arrangements.................................................... (1,816) (5,102)
Proceeds from borrowing arrangements..................................................... 6,500 -
Exercise of stock options................................................................ 61 3,499
Purchase of treasury stock, at cost...................................................... (2,173) (426)
-------- --------
Net cash provided by (used in) financing activities..................................... 2,572 (2,029)
-------- --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................................. (164) (960)
-------- --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS.......................................... 20,041 4,180
CASH AND EQUIVALENTS, beginning of period................................................ 22,991 15,366
-------- --------
CASH AND EQUIVALENTS, end of period...................................................... $ 43,032 $ 19,546
======== ========

Income taxes paid........................................................................ $ 495 $ 15,748
======== ========
Interest paid............................................................................. $ 10,189 $ 9,918
======== ========

Accompanying notes are integral to these consolidated condensed financial
statements.

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

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed 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 accounting principles generally accepted in the
United States 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 consolidated condensed financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.

2. NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets" in August 2001. SFAS No. 144 establishes accounting and
reporting standards for the impairment and disposition of long- lived assets.
SFAS No. 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company will be required to adopt SFAS
No. 144 for the fiscal year beginning January 1, 2002, and is currently
evaluating this standard and the impact it will have on the consolidated
financial statements.

The FASB issued SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets," on June 30, 2001. It requires that goodwill and certain intangible
assets will no longer be subject to amortization, but instead will be subject to
a periodic impairment assessment by applying a fair value based test. The
Company's required adoption date is January 1, 2002. Adoption of SFAS No. 142
will have a material effect on the Company's results of operations due to the
cessation of goodwill amortization on January 1, 2002. Goodwill amortization
for the nine months ended September 30, 2001 was approximately $51.0 million.
Amortization of other intangible assets for the nine months ended September 30,
2001 was approximately $21.1 million. The Company is reviewing certain of these
other intangible assets to determine whether they will be amortizable as of
January 1, 2002.

The FASB issued SFAS No. 141, "Accounting for Business Combinations," on June
30, 2001. It requires that all business combinations initiated after June 30,
2001, be accounted for using the purchase method. The Company adopted this
statement on June 30, 2001.

The 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 results of operations or financial position.

3. NET 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 and nine months
ended September 30, 2001 and 2000, both potentially dilutive securities were
antidilutive and therefore are not included in diluted net loss per share.

4. COMPREHENSIVE LOSS

Comprehensive loss for the three and nine months ended September 30, 2001 was
$(13.2) and $(80.7) million, respectively. This comprised net loss of $(17.6)
and $(84.1) million, changes in foreign currency translation of $4.9 and $3.7
million, and changes in unrealized gains on marketable securities of $(0.4) and
$(0.3) million, respectively. Comprehensive loss for the three and nine months
ended September 30, 2000 was $(16.1) and $(31.7) million, respectively. This
comprised net loss of $(16.2) and $(20.9) million, changes in foreign currency
translation of $(1.8) and $(2.1) million, and changes in unrealized gains on
marketable securities of $1.9 and $(8.7) million.

5. INVESTMENTS

The Company through its Ptek Ventures investment group has made investments in
various companies 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 has continually evaluated the
carrying value of its ownership interests in non-public investments in the Ptek
Ventures portfolio for possible impairment that is "other than temporary" 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, forecasted operating cash flows and 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 has
previously taken impairment charges on certain of these investments when it has
determined that an "other than temporary" decline in the carrying value of the
investment has occurred. 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 and 2001. During the second quarter
of 2001, market conditions worsened for the non-public companies in the Ptek
Ventures portfolio. In the second quarter the financial performance and updated
financial forecasts for the near term of such portfolio along with the Company's
decision to exit the venture business led management to the conclusion that
there was an "other than temporary" decline in the carrying value of such
portfolio. Accordingly, during the second quarter the Company recorded an
impairment charge of approximately $24.4 million for the remaining carrying
value of its non-public portfolio.

6. RESTRUCTURING COSTS

Realignment of Workforce and Facilities

During the second quarter of 2001, management committed to a plan to reduce
annual operating expenses by approximately $14.6 million through the elimination
of certain operating activities in its Voicecom, Xpedite and Corporate operating
segments, and the corresponding reductions in personnel costs relating to the
Company's operations, sales and administration. The plan will eliminate through
involuntary separation approximately 190 employees or 8% of the workforce and
exit duplicative facilities in the Voicecom and Xpedite business segments.
Accordingly, the Company accrued restructuring costs of approximately $6.7
million associated with this plan commitment. The Company expects to incur
approximately $5.0 million of cash payments related to severance, exit costs and
contractual obligations associated with the $6.7 million plan costs.
Approximately $4.0 million of the cash payments are expected to occur by
December 31, 2001 and are primarily related to severance and exit cost
activities. The remaining $1.0 million of cash payments are associated with
contractual obligations not expected to expire until December 31, 2003. For the
nine months ended September 30, 2001, approximately $2.5 million of cash
payments were made as a result of this plan. Approximately $1.7 million of non-
cash charges are related to certain executive management severance costs from
employee stock option modifications. Accordingly, this portion of the
restructuring costs was recorded as additional paid-in-capital.

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 plan 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 messageREACHSM. Payments
made for severance and exit costs represent the remaining severance obligations
to 67 employees. The Company does not expect any further severance payments
under this plan. Contractual and other obligations paid were the result of
lease commitments from facilities that were exited. These commitments are
expected to expire in the first quarter of 2002.

Reorganization of Company into EES and CES Business Segments

The balance of severance and exit costs at December 31, 2000 and September 30,
2001 represents the remaining severance reserve for a former executive manager.
Cash severance payments in 2001 were $0.4 million. The Company expects to pay
the remaining severance reserve balance of $0.2 million over a seven-month
period ending April 30, 2002.

Accrued restructuring costs at December 31, 2000 and September 30, 2001 are as
follows (in thousands):

Reorganization of Company into Accrued Costs at Restructuring Non Cash Accrued Costs at
EES and CES Business Segments December 31, 2000 Costs Costs Payments September 30, 2001
- ------------------------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 639 $ - $ - $ 428 $ 211
-------------------------------------------------------------------------------------------------
Accrued restructuring costs $ 639 $ - $ - $ 428 $ 211
-------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
Exit of the Asia Real-Time Fax Accrued Costs at Restructuring Non Cash Accrued Costs at
and Telex Business December 31, 2000 Costs Costs Payments September 30, 2001
- ------------------------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 59 $ - $ - $ 59 $ -
Contractual obligations 290 - $ - 49 241
Other 93 - 3 15 75
-------------------------------------------------------------------------------------------------
Accrued restructuring costs $ 442 $ - 3 $ 123 $ 316
-------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
Realignment of Workforce and Accrued Costs at Restructuring Non Cash Accrued Costs at
Facilities December 31, 2000 Costs Costs Payments September 30, 2001
- ------------------------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ - $4,977 $1,345 $2,201 $1,431
Contractual obligations - 1,515 386 252 877
Other - 222 - 50 172
-------------------------------------------------------------------------------------------------
Accrued restructuring costs $ - $6,714 $1,731 $2,503 $2,480
-------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
Consolidated Accrued Costs at Restructuring Non Cash Accrued Costs at
December 31, 2000 Costs Costs Payments September 30, 2001
- ------------------------------------------------------------------------------------------------------------------------------------

Severance and exit costs $ 698 $4,977 $1,345 $2,688 $1,642
Contractual obligations 290 1,515 386 301 1,118
Other 93 222 3 65 247
-------------------------------------------------------------------------------------------------
Accrued restructuring costs $1,081 $6,714 $1,734 $3,054 $3,007
-------------------------------------------------------------------------------------------------

7. COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company has several litigation matters pending, as described below, which it
is 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.

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. On October 3, 2001, the court approved an
agreement among the parties to allow mediation, which is scheduled for December
4 - 5, 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 hearing before the NASD panel is scheduled for November 27 - 29, 2001.

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. A hearing before the NASD panel is
scheduled for November 27 - 29, 2001.

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.

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. By Order dated July 25, 2001, the state court denied the
Company's Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint. This case is in discovery.

On November 3, 2000, a complaint was filed by BGL Development, Inc. d/b/a The
Bristol Group in the United States District Court for the Southern District of
New York. Plaintiff alleges that it had a contract with Xpedite whereby Xpedite
would pay certain commissions for new customers that plaintiff brought to
Xpedite. Plaintiff claims back commissions are due and that they have not been
paid in breach of the contract. Plaintiff claims damages of not less than
$185,000. On November 20, 2000, the Company filed its answer and affirmative
defenses. On October 2, 2001, Xpedite filed a request with the court for leave
to file its Motion for Summary Judgment. The trial is scheduled to commence on
December 11, 2001.

On May 14, 2001, Voice-Tel Enterprises, Inc. ("Voice-Tel") filed two complaints
against Quixtar, Inc. and Alticor Inc., f/k/a Amway Corporation, and Amway
Corporation, in the State Court of Fulton County, Georgia, which were
subsequently removed to the U.S. District Court for the Northern District of
Georgia. Voice-Tel alleged, among other things, fraud in the inducement of a
contract to market voice messaging services and sought a declaratory judgment
that contractual provisions which alleged trade secrets and restrictions on
competition were null and void. In response to these lawsuits, Alticor and
Quixtar asserted certain counterclaims for breach of contract and to enjoin
competitive behavior by PTEK and its affiliates. On November 6, 2001, Joba,
Inc., a Voice-Tel franchisee, filed an Application to Intervene in the Quixtar
and Alticor lawsuits. Joba, Inc. seeks to file a Complaint which would include,
among other things, claims against not only Quixtar and Alticor but also against
Voice-Tel for an alleged breach of a franchise agreement and other alleged
agreements, and against PTEK for alleged tortuous interference of contract.

The Company filed a complaint against Qwest Communications Corporation ("Qwest")
in the State Court of Fulton County, Georgia on June 1, 2001. The case was
subsequently removed to the U.S. District Court for the Northern District of
Georgia. This complaint alleges a breach of contract by Qwest to purchase voice
conferencing services. In response to PTEK's breach of contract claim, Qwest
asserted a counterclaim for alleged breach of a contract to purchase certain
software licenses. The Company filed a Motion for Partial Summary Judgment on
October 19, 2001.

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.

8. SEGMENT REPORTING

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 is a holding company with minimal
headcount leaving the day-to-day management of the businesses at the operating
business units. 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. 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, amortization,
restructuring costs, equity based compensation and gain on legal settlement.
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. On January 1, 2001, management responsibility
for international conferencing and voice messaging services was transferred from
Xpedite to Premiere Conferencing and Voicecom, respectively. These international
revenues were reported in the Xpedite operating segment for fiscal year 2000 and
in the Premiere Conferencing and Voicecom operating segments beginning on
January 1, 2001. In order to report comparable operating segment financial
results, revenue and Adjusted EBITDA for the three and nine month periods ended
September 30, 2000, have been reclassified to reflect the proforma effect of
this management change.

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

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
---------------------------------------------------------------

Revenues
Xpedite $ 51.6 $ 55.1 $164.1 $174.9
Voicecom 22.8 29.9 74.1 92.1
Premiere Conferencing 29.6 18.7 83.6 51.9
Retail Calling Card Services - 1.8 - 13.7
Eliminations (0.1) (0.1) (0.2) (0.1)
---------------------------------------------------------------
$103.9 $105.4 $321.6 $332.5
===============================================================

ADJUSTED EBITDA
Xpedite $ 10.7 $ 11.5 $ 38.2 $ 43.1
Voicecom 1.2 2.6 3.3 12.1
Premiere Conferencing 8.0 4.4 20.2 9.2
Retail Calling Card Services - 0.4 - 1.6
Corporate (3.5) (3.5) (11.9) (13.9)
Eliminations (0.1) (0.1) (0.3) (0.1)
---------------------------------------------------------------
$ 16.3 $ 15.2 $ 49.5 $ 52.0
===============================================================

Sept. 30, December 31,
2001 2000
------------------------------
Identifiable assets
Xpedite $350.1 $391.6
Voicecom 77.8 90.2
Premiere Conferencing 79.0 75.0
Corporate 45.9 74.1
------------------------------
$552.8 $630.9
==============================

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

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 Sept. 30, 2000
-------------------------------------------------------------------

Adjusted EBITDA $ 16.3 $ 15.2 $ 49.5 $ 52.0
Less depreciation (9.8) (9.1) (27.7) (31.5)
Less amortization (23.2) (25.8) (72.1) (77.2)
Less restructuring costs - 0.6 (6.7) 0.6
Less equity based compensation (1.2) - (3.4) -
Plus gain on legal settlement - - - 3.8
------------------------------------------------------------------
Operating loss (17.9) (19.1) (60.4) (52.3)
Less interest expense, net (2.8) (2.5) (8.3) (8.0)
Plus gain on sale of marketable equity
securities 0.1 6.4 2.7 59.5
Less asset impairment - investments - - (29.2) -
Less amortization of goodwill - equity
investments - - (1.6) -
Plus other income (expense), net (0.4) 0.1 (1.4) (0.3)
------------------------------------------------------------------
Loss before income taxes $(21.0) $(15.1) $(98.2) $ (1.1)
==================================================================

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.

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.

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.

Equity based compensation relates primarily to notes receivable from certain
executive officers of the Company for the taxes owed by such officers with
respect to certain restricted stock grants made by the Company in May 1999. In
addition, it includes the non-cash cost of Company stock warrants issued to
vendors for services rendered, as determined using the Black-Scholes option
model.

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 that 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, amortization, restructuring costs, equity based compensation and
gain on legal settlement.

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, equity based compensation 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 certain financial information about the Company's
operating segments for the periods presented (amounts in millions):

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
-------------------------------------------------------------

Revenues
Xpedite $ 51.6 $ 55.1 $164.1 $174.9
Voicecom 22.8 29.9 74.1 92.1
Premiere Conferencing 29.6 18.7 83.6 51.9
Retail Calling Card Services - 1.8 - 13.7
Eliminations (0.1) (0.1) (0.2) (0.1)
-------------------------------------------------------------
$103.9 $105.4 $321.6 $332.5
=============================================================

EBITDA
Xpedite $10.7 $ 11.5 $ 38.2 $ 43.1
Voicecom 1.2 2.6 3.3 12.1
Premiere Conferencing 8.0 4.4 20.2 9.2
Retail Calling Card Services - 0.4 - 1.6
Corporate (3.5) (3.5) (11.9) (13.9)
Eliminations (0.1) (0.1) (0.3) (0.1)
-------------------------------------------------------------
$ 16.3 $ 15.2 $ 49.5 $ 52.0
=============================================================

ANALYSIS

Consolidated revenues decreased 1.4% to $103.9 million in the three months ended
September 30, 2001, as compared with $105.4 million the same period in 2000 and
decreased 3.3% to $321.6 million in the nine months ended September 30, 2001 as
compared with $332.5 million in the same period in 2000. As discussed in
footnote 8, "Segment Reporting," the three and nine months ended September 30,
2000 have been restated on a segment basis to reflect the movement of
international conferencing and voice messaging results of operations from
Xpedite to Premiere Conferencing and Voicecom, respectively, due to the change
in management responsibility on January 1, 2001. On a segment basis these
changes in revenue were caused by the following:

. Xpedite experienced a 6.4% decrease to $51.6 million in the three months
ended September 30, 2001 and a 6.2% decrease to $164.1 million in the nine
months ended September 30, 2001, compared with the same periods in 2000,
respectively. The declines in both periods is primarily attributable to
weakness in the financial services, hospitality and travel industries, exit
of the real time fax and telex business in Xpedite's Asia/Pacific regions,
pricing pressures in the broadcast fax service offering and the strengthening
of the U.S. dollar against foreign currencies in Europe and Asia/Pacific in
the comparable periods.

Real time fax and telex business revenues in Asia Pacific for the three and
nine months ended September 30, 2000 were $5.1 and $17.2 million,
respectively.

. Voicecom experienced a 23.7% decrease to $22.8 million in the three months
ended September 30, 2001 and a 19.5% decrease to $74.1 million in the nine
months ended September 30, 2001, compared with the same periods in 2000,
respectively. The decrease in revenue is primarily driven by declines in
messaging revenue, offset in part by increases in Voicecom's IVR and platform
services 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 associated with its largest DSO marketing
agent, Alticor Inc., f/k/a Amway Corporation, and its affiliates
(collectively "Amway"). Voicecom believes the attrition has resulted in large
part from (i) Amway's refusal to honor the terms of its marketing agreement
with Voicecom, and (ii) Voicecom's reluctance to selectively solicit or
otherwise engage in promotional activities directly with Voicecom's
customers, which are also Amway's independent business owners ("IBOs"), due
to restrictive language in the current marketing agreements with Amway. Amway
has indicated an intent to terminate the current marketing agreements.
Voicecom has filed two lawsuits against Amway and an affiliated entity. See
footnote 7, "Commitments and Contingencies." Voicecom is currently engaged in
settlement discussions with Amway that would clarify Voicecom's right to deal
directly with the IBOs; however, there can be no assurance that such a
settlement will be reached or that the IBOs will select Voicecom as their
messaging provider. Voicecom's second largest DSO customer, Primerica, did
not renew its agreement with Voicecom, which expired on August 23, 2001. In
addition, Voicecom's largest corporate voice messaging customer, Abbott
Laboratories, has given Voicecom notice that it is not going to renew its
current agreement with Voicecom, which expires on December 31, 2001. Amway,
Primerica and Abbott Laboratories represented approximately 21%, 6% and 5%,
respectively, of Voicecom's revenue for the nine months ended September 30,
2001. Increases in IVR and platform services revenue are due primarily to
increased minutes of use with existing customers.

. Premiere Conferencing experienced a 58.3% increase to $29.6 million in the
three months ended September 30, 2001 and a 61.2% increase to $83.6 million
in the nine months ended September 30, 2001, compared with the same periods
in 2000, respectively. The overall growth in revenue at Premiere Conferencing
resulted primarily from continued growth in its unattended/automated
conferencing product offering.

. Retail Calling Card Services was an operating segment whose customer base was
sold on August 1, 2000. The Company ceased recognizing revenue on this
customer base subsequent to its sale. The Company provides administrative
support services and sells on a wholesale basis its network management
services to the acquirer. Accordingly, revenues from the network management
services are recognized in the Voicecom operating segment.

Consolidated gross profit margins were 75.5% and 73.7% for the three months
ended September 30, 2001 and 2000, respectively, and 75.3% and 73.7% for the
nine months ended September 30, 2001 and 2000, respectively. In general, the
Company has experienced favorable trends in per unit telecommunications costs in
each of its operating segments by aggressively negotiating lower
telecommunications costs with various providers. The Company also has
experienced favorable telecommunications costs by benefiting from the general
industry trend of decreased costs from increased capacity among the various long
distance carriers.

Consolidated direct costs of operations increased to 17.8% of revenues in the
three months ended September 30, 2001, as compared with 16.3% for the same
period of 2000 and increased to 16.8% of revenues in the nine months ended
September 30, 2001, as compared with 15.4% for the same period of 2000. The
increase for both periods compared is primarily attributable to the growth in
Premiere Conferencing as a percentage of the overall Company revenue mix.
Premiere Conferencing has inherently higher direct operating costs as a
percentage of its overall costs structure compared to the other two operating
units due to the live operator conferencing aspect of its business.

Consolidated selling and marketing costs decreased to 19.7% of revenues in the
three months ended September 30, 2001, from 21.6% of revenues in the same period
in 2000 and decreased to 20.7% of revenues in the nine months ended September
30, 2001, from 21.4% of revenues in the same period in 2000. This decline is
attributable to cost reductions in the direct sales force at the Voicecom
operating segment during the second half of 2000 and cessation of commission
costs associated with the Amway contract termination in 2001, offset in part by
increased sales force costs at Premiere Conferencing as part of an investment to
foster future growth.

Research and development costs increased to 3.6% of revenues for the three
months ended September 30, 2001 compared with 3.1% of revenues for the same
period in 2000, and increased to 3.7% of revenues in the nine months ended June
30, 2001, from 3.1% of revenues in the same period in 2000. The increase in
these costs as a percentage of revenue is primarily from increased product
development at both the Xpedite and Premiere Conferencing operating segments.

General and administrative costs were 18.6% of revenues for the three months
ended September 30, 2001, compared with 18.2% of revenues for the same period in
2000, and were 18.6% of revenues for the nine months ended September 30, 2001,
compared

with 18.1% of revenues in the same period in 2000. General and administrative
costs as a percentage of revenue have increased for both comparable periods due
to increased provisions for doubtful accounts at Premiere Conferencing and
increased administrative support costs at Xpedite. As part of Premiere
Conferencing's periodic assessment of its accounts receivable aging, various
increases in the overall age of its receivable portfolio has warranted
additional provisions for doubtful accounts. The Company assigns overall reserve
percentages to its various accounts receivable aging categories. From this
calculation the Company determines its requirement for an allowance for doubtful
accounts. This does not mean that the Company has written off the receivable or
ceased collection efforts.

Depreciation was 9.5% of revenues for the three months ended September 30, 2001,
compared with 8.7% of revenues for the same period in 2000, and was 8.6% of
revenues for the nine months ended September 30, 2001, compared with 9.5% of
revenues for the same period in 2000. The increase in depreciation as a
percentage of revenue for the comparable three months ended is due primarily to
placing into service approximately $9.0M of construction in progress at Voicecom
during the third quarter of 2001. During the third quarter of 2001, Voicecom
made operational new switching and voice messaging equipment that will become
the backbone of a more efficient operating network. Voicecom is currently
consolidating its 150-site network to three sites that house this new equipment.
Significant network operating cost savings are expected by Voicecom as this
network consolidation progresses. In addition, increased capital expenditures
at Premiere Conferencing were incurred to provide additional capacity, ahead of
anticipated growth. The decline in depreciation as a percentage of revenue for
the comparable nine months ended is due to the growth in Premiere Conferencing's
revenue base, which has utilized more of the available capacity of its operating
platform. Also contributing to this decline was the shortening of the estimated
useful life of various legacy-operating platforms in the Voicecom operating
segment. These lives were estimated not to extend beyond December 31, 2000.

Amortization was $23.2 million for the three months ended September 30, 2001,
compared with $25.8 million for the same period in 2000, and $72.1 million for
the nine months ended September 30, 2001, compared with $77.2 million for the
same period in 2000. The decline in both comparable periods is attributable to
the shortening of the useful lives of various intangibles tied to contractual
obligations in the Voicecom operating segment in 2000 and the expiration of the
useful life of the assembled workforce intangible related to the Xpedite
acquisition in 1998. The useful lives of the Voicecom assets were estimated not
to extend beyond December 31, 2000.

Equity based compensation relates primarily to notes receivable from certain
executive officers of the Company for the taxes owed by such officers with
respect to certain restricted stock grants made by the Company in May 1999,
which notes total approximately $5.5 million. One fourth of the principal
amount of these notes, plus accrued interest, will be cancelled on each January
1 of 2002 through 2005, provided such executive officers are employed by the
Company on January 1 of each of such years. The Company will also make "tax
gross-up" payments to or on behalf of the executive officers in connection with
any taxes that may be due as a result of the cancellation of these notes.
Assuming these executives are employed by the Company on each anniversary date,
future equity based compensation related to these notes would be approximately
$1.0 million in the last three months of 2001, $3.0 million in 2002, $2.8
million in 2003, and $2.6 million in 2004. In addition, equity based
compensation includes the non-cash cost of Company stock warrants issued to
vendors for services rendered, as determined using the Black-Scholes option
model.

The gain on legal settlement of $3.7 million for the nine months ended September
30, 2000 is attributable to the Company's favorable settlement of a contractual
dispute with WorldCom. As part of the settlement, the Company received $12
million in cash for terminating the strategic alliance contract with WorldCom.
Accordingly, the Company expensed the net book value of this contract of
approximately $7 million against the initial gain of $12 million during the
second quarter of 2000. In addition, the Company expensed approximately $1.3
million in legal costs incurred during the second quarter of 2000 associated
with this settlement.

EBITDA was $16.3 million or 15.7% of revenues for the three months ended
September 30, 2001, compared with $15.5 million or 14.7% of revenues for the
same period in 2000 and $49.5 million or 15.4% of revenues for the nine months
ended September 30, 2001, compared with $52.9 million or 15.9% of revenues for
the same period in 2000. On a segment basis this change was caused by the
following:

. Xpedite's EBITDA was $10.7 million or 20.8% of segment revenues for the three
months ended September 30, 2001, compared with $11.5 million or 20.8% of
segment revenues for the same period in 2000, and $38.2 million or 23.3% of
segment revenues for the nine months ended September 30, 2001, compared with
$43.1 million or 24.6% of segment revenues for the same period in 2000. These
decreases in EBITDA are primarily a result of increased pricing pressure in
the market for certain of Xpedite's legacy fax services and weakness in the
financial, travel and hospitality industries of the economy that are a
significant portion of revenues. As a result of declining EBITDA yields in
Asia/Pacific and Europe, the Company has approved a plan of headcount
reductions. As part of the Company's $6.7 million restructuring reserve to
rationalize its workforce and facilities in the second quarter of 2001,
Xpedite has committed to a plan that reduces headcount by 75 employees. The
expected before-tax annualized savings from this plan are $2.6 million. The
primary area for costs savings will be the exit of its operations in
Indonesia and the consolidation of operations in the Asia/Pacific region.

. Voicecom's EBITDA was $1.2 million or 5.4% of segment revenues for the three
months ended September 30, 2001, compared with $2.6 million or 8.6% of
segment revenues for the same period in 2000, and $3.3 million or 4.4% of
segment revenues for the nine months ended September 30, 2001, compared with
$12.1 million or 13.1% of segment revenues for the same period in 2000. The
significant decline in EBITDA is primarily related to the declines in revenue
over a primarily fixed cost structure delivery network. In response to these
significant declines in EBITDA, the Company has rationalized the workforce
and facilities attributable to the Voicecom operating segment. As a result of
this, the Company has approved a plan of headcount reductions and facility
closures in response to the revenue declines. As part of the Company's $6.7
million restructuring reserve in the second quarter of 2001, Voicecom has
committed to a plan that reduces headcount by 111 employees, the exit of a
research and development facility in Atlanta and a reduction in portions of
its fixed cost delivery network. Expected before-tax annualized savings from
this plan are $11.3 million.

. Premiere Conferencing's EBITDA was $8.0 million or 27.1% of segment revenues
for the three months ended September 30, 2001, compared with $4.4 million or
23.6% of segment revenues for the same period in 2000, and $20.2 million or
24.1% of segment revenues for the nine months ended September 30, 2001,
compared with $9.2 million or 17.8% of segment revenues for the same period
in 2000. This increase is primarily attributable to growth in unattended
conferencing products and reductions in telecommunications costs.

. Corporate EBITDA was $(3.5) million for the three months ended September 30,
2001 and 2000, and $(11.9) million for the nine months ended September 30,
2001, compared to $(13.9) million for the same period in 2000. The
improvement in EBITDA for the nine-month comparable period is related
primarily to headcount reductions of the corporate staff over the past twelve
months. As part of the Company's rationalization of workforce and facilities
in the second quarter of 2001, Corporate committed to a plan to reduce the
headcount by 4 employees or 14% of its workforce. These reductions were
related to the exit of the venture business and a reduction of finance and
administration personnel within Corporate. Annualized before-tax savings are
expected to be approximately $0.8 million.

Interest expense, net was $2.8 million for the three months ended September 30,
2001 compared with $2.6 million for the same period in 2000 and $8.3 million for
the nine months ended September 30, 2001, compared with $8.0 million for the
same period in 2001. The slight increase in interest expense, net for all
comparable periods is attributable to several capital lease obligations entered
into during the early fourth quarter 2000 and the first quarter of 2001 in the
Voicecom operating unit. These leases are financing the equipment needed to
consolidate and streamline the cost structure of Voicecom's operating network.
The primary financing vehicle that generates interest expense for the Company is
the convertible subordinated notes of $172.5 million, which bear interest at
5.75% and are due on July 1, 2004.

Outlook of service offerings

Management periodically evaluates carrying values of long-lived assets,
including goodwill, other intangibles, property and equipment. The Company is
currently assessing the outlook of various service offering revenues at Voicecom
and Xpedite. This assessment is part of its 2002 planning process, periodic
forecasting process and continuing evaluation of the external factors that
contributed to the rationalization of the Company's workforce in the second
quarter of 2001. The Company's confidence in Voicecom's ability to retain or
replace lost revenues from Amway, Primerica, Abbott Laboratories, various other
key corporate voice messaging accounts, and its remaining small office and home
office voice messaging customers was lower at the end of the third quarter of
2001 than it was at the end of the second quarter of 2001. In addition, its
confidence in Voicecom's ability to successfully establish a market for its
Orchestrate product was lower at the end of the third quarter of 2001 than it
was at the end of the second quarter of 2001. As part of this assessment, the
Company is currently evaluating the the carrying value of various assets
associated with customer lists and goodwill from the Voice-Tel acquisition in
1997, developed technology from the Intellivoice acquisition in 1999 and the
operating equipment that supports the Orchestrate product. The Company's
confidence in Xpedite's ability to maintain various broadcast fax business in
North Ameica, certain parts of Europe and the remaining real time fax and telex
business in Asia/Pacific was lower at the end of the third quarter of 2001 than
it was at the end of the second quarter of 2001. Xpedite is currently
experiencing growth in its transactional based services, messageReach and
voiceReach, and declines in various of its traditional broadcast fax delivery
products. Xpedite anticipates that future market growth will be in
transactional-based services, messageReach and voiceReach. Declines in its
traditional broadcast fax, real time fax and telex products have been greater in
parts of Europe and Asia/Pacific. Accordingly, the Company is evaluating the
carrying value of various customer lists and goodwill related to the acquisition
of Xpedite and subsequent acquisitions made from 1998 and 1999 in Europe and
Asia/Pacific that relate to real time fax, telex and traditional broadcast fax
services.

RESTRUCTURING COSTS

Realignment of Workforce and Facilities

Exit of the Asia Real-Time Fax and Telex Business

Reorganization of Company into EES and CES Business Segments

INVESTMENTS

The Company through its Ptek Ventures investment group has made investments in
various companies 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 has continually evaluated the
carrying value of its ownership interests in non-public investments in the Ptek
Ventures portfolio for possible impairment that is "other than temporary" 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, forecasted operating cash flows and 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 has
previously taken impairment charges on certain of these investments when it has
determined that an "other than temporary" decline in the carrying value of the
investment has occurred. 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 and 2001. During the second quarter
of 2001, market conditions worsened for the non-public companies in the Ptek
Ventures portfolio. In the second quarter the financial performance and updated
financial forecasts for the near term of the portfolio along with the Company's
decision to exit funding the venture business portfolio has led management to
the conclusion that there was an "other than temporary" decline in the carrying
value of its non-public portfolio. Accordingly, during the second quarter the
Company recorded an impairment charge of approximately $24.4 million for the
remaining carrying value of its non-public portfolio.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities for the nine months ended September
30, 2001 and 2000 totaled $44.5 million and $0.1 million, respectively. The
improvement in cash provided by operating activities can be attributed to
reduced payments for income taxes, as well as improvements in working capital
changes in accounts payable. Also contributing to the improvement were reduced
payments associated with restructuring, merger costs and other special charges.
Included in operating cash flows for the nine months ended September 30, 2001
and 2000 were semi-annual interest payments of approximately $10.0 million on
the Company's convertible subordinated notes.

Investing activities used cash totaling $27.1 million for the nine months ended
September 30, 2001, compared to cash provided by investing activities totaling
$7.1 million for the same period in 2000. The principal source of cash from
investing activities for the nine months ended September 30, 2001 was the sale
of marketable securities. The primary uses of cash for investing activities for
the nine months ended September 30, 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 nine months ended September 30, 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,
and expenditures relating to the build out of Voicecom's new voice messaging
network. The principal source of cash from investing activities for the nine
months ended September 30, 2000 was the sale of marketable securities. The
primary uses of cash for investment activities for the nine months ended
September 30, 2001 included capital expenditures in the three operating units
and investments into the PtekVentures portfolio.

Financing activities provided cash totaling $2.6 million for the nine months
ended September 30, 2001, compared to cash used in financing activities totaling
$2.0 million for the same period in 2000. The principal uses of cash for
financing activities for the nine months ended September 30, 2001 were debt
repayments on capital lease obligations and the purchase of treasury stock. The
primary source of cash from financing activities were $6.5 million of proceeds
from an extended line of credit entered into by the Premiere Conferencing
operating unit with United Missouri Bank. This extended line of credit has a
term of thirty months and an interest rate of 6%. The primary use of proceeds
will be to fund the capital needs of the Premiere Conferencing operating unit.
The primary uses of cash from financing activity for the nine months ended
September 30, 2000 were debt repayments associated with assumed obligations from
prior year's acquisitions. The primary sources of cash from financing
activities for the six months ended June 30, 2000 were proceeds from employee
stock option exercises.

At September 30, 2001, the Company renewed for a twelve-month term its line of
credit with ABN AMRO. The line of credit has a maximum availability of $13.5
million and an interest rate of LIBOR plus 2%. The maximum availability
provided by this line of credit in the prior year term was $20.0 million. The
maximum availability for the renewed twelve-month term was reduced by the amount
of the extended line of credit entered into with United Missouri Bank. At
September 30, 2001, there were no amounts outstanding on the ABN AMRO line of
credit.

At September 30, 2001, the Company's principal commitments involve minimum
purchase requirements under supply agreements with telecommunications providers,
severance payments under the Company's various restructuring plans, capital
lease obligations 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 and financing obligations of its
operating units. At September 30, 2001, approximately $22.0 million of cash and
equivalents resided outside of the United States compared to $16.6 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.

NEW ACCOUNTING PRONOUNCEMENTS

issued for fiscal years beginning after December 15, 2001. The Company will be
required to adopt SFAS No. 144 for the fiscal year beginning January 1, 2002,
and is currently evaluating this standard and the impact it will have on the
consolidated financial statements.

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;

. We may not realize the full extent of the cost savings expected from
announced workforce reductions;

. 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 September 30, 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 September 30, 2001, by approximately $2.5
million.

Approximately 27% of the Company's revenues and 19.3% of its operating costs and
expenses were transacted in foreign currencies for the nine months ended
September 30, 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
nine months ended September 30, 2001 by approximately $8.7 million and operating
costs and expenses for the nine months ended September 30, 2001 by approximately
$7.4 million. The Company has not used derivatives to manage foreign currency
exchange translation risk and no foreign currency exchange derivatives were
outstanding at September 30, 2001.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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. On October 3, 2001, the court approved an agreement among the parties
to allow mediation, which is scheduled for December 4 - 5, 2001.

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
------------ -------------- ----------------

7/11/01 Items 5 and 7 - Letter to None.
shareholders, employees and
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.

November 13, 2001 PTEK HOLDINGS, INC.
Date

/s/ William E. Franklin
-----------------------
William E. Franklin
Executive Vice President and Chief
Financial Officer (principal Financial
and Accounting Officer and duly
authorized signatory of the Registrant)