UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 2005
____________________
Commission File Number 0-22935
PEGASUS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2605174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CAMPBELL CENTRE I, 8350 NORTH CENTRAL EXPRESSWAY, SUITE 1900, DALLAS, TEXAS
75206
(Address of principal executive office)
(Zip Code)
Registrant's telephone number, including area code: (214) 234-4000
Item 2.02 Results of Operations and Financial Condition
On February 8, 2005, Pegasus Solutions, Inc. issued a press release announcing
its unaudited financial results for the fourth quarter and fiscal year ended
December 31, 2004 as well as other business matters. Attached to this current
report on Form 8-K is a copy of the related press release dated February 8,
2005.
The information included herein and in Exhibit 99.1 shall not be deemed "filed"
for purposes of Section 18 of the Securities and Exchange Act of 1934, nor shall
it be incorporated by reference in any filing under the Securities Act of 1933.
Exhibit Number Description
- --------------- -----------
99.1 Press release issued February 8, 2005
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
PEGASUS SOLUTIONS, INC.
February 8, 2005 /s/ SUSAN K. COLE
---------------------
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
--------------- -----------
99.1 Press release issued February 8, 2005
Contacts:
Pegasus Solutions
Marcie Hyder 214-234-4120
Press: Cindy Foor 214-234-4129
PEGASUS SOLUTIONS REPORTS FOURTH QUARTER AND FISCAL YEAR 2004 RESULTS
GAAP EPS GREW FROM ($0.07) IN FY 2003 TO $0.34 IN FY 2004
ADJUSTED EPS INCREASED 55 PERCENT YEAR-OVER-YEAR
- - Revenues - Q4 2004 $45.3 million; FY 2004 $190.1 million
- - Diluted EPS (GAAP) - Q4 2004 $0.08; FY 2004 $0.34
- - Diluted EPS (adjusted) - Q4 2004 $0.14; FY 2004 $0.51
- - Estimated revenue
- - Q1 2005 $45 million to $47 million; FY 2005 $199 million to $207 million
- - Estimated diluted EPS (GAAP) - Q1 2005 $0.01 to $0.03; FY 2005 $0.27 to
$0.37
- - Estimated diluted EPS (adjusted) - Q1 2005 $0.06 to $0.08; FY 2005 $0.55
to $0.65
DALLAS, FEBRUARY 8, 2005 - Pegasus Solutions, Inc. (Nasdaq: PEGS), a global
leader in providing technology and services to hotels and travel distributors,
today reported its financial results for the fourth quarter and year ended
December 31, 2004. Pegasus reported year-over-year revenue growth of 5 percent
and 10 percent for the fourth quarter and fiscal year, respectively, and
significant earnings per share growth year-over-year.
"As I mentioned in December, we accomplished what we set out to do in 2004 -
focus and deliver," said John F. Davis III, president, chief executive officer
and chairman of Pegasus Solutions. Davis continued: "We had leadership changes
in key functions during 2004, and established or enhanced processes throughout
the company with the goal of expediting the time to market on new products and
improving customer satisfaction. During this transition, we still met our
financial goals and made solid progress on product development priorities
established at the beginning of the year."
FOURTH QUARTER 2004 FINANCIAL HIGHLIGHTS (See tables included with this release
- -----------------------------------------
for reconciliation of non-GAAP measures.)
- - Revenues increased 5 percent to $45.3 million compared to $43.1 million in
the fourth quarter of 2003.
- - On a GAAP basis, net income per diluted share was $0.08 compared to $0.02
in the same quarter in 2003.
- - Adjusted net income per diluted share more than doubled from $0.06 in the
fourth quarter of 2003 to $0.14.
- - Net income was $1.8 million compared to $615,000 in the year-ago quarter.
- - EBITDA was $8.4 million, or 19 percent of revenues, compared to EBITDA of
$7.3 million, or 17 percent of revenues, in the year-ago quarter. Adjusted
EBITDA margin was 19 percent, compared to 22 percent in the fourth quarter
of 2003.
- - Pegasus repurchased 661,000 shares of common stock at an aggregate cost of
$7.7 million during the fourth quarter.
- - Operating cash flows increased 57 percent to $9.7 million compared to $6.2
million in the fourth quarter of 2003.
FISCAL YEAR 2004 FINANCIAL HIGHLIGHTS (See tables included with release for
- -----------------------------------------
reconciliation of non-GAAP measures.)
- - Revenues increased 10 percent to $190.1 million compared to $172.7 million
in 2003.
- - On a GAAP basis, net income per diluted share was $0.34 compared to a net
loss per share of $0.07 in 2003.
- - Adjusted net income per diluted share increased 55 percent to $0.51
compared to $0.33 in 2003.
- - Net income was $8.0 million in 2004 compared to a net loss of $1.8 million
in 2003.
- - EBITDA was $34.6 million, or 18 percent of revenues, compared to EBITDA of
$25.1 million, or 15 percent of revenues in 2003. Adjusted EBITDA margin
was 19 percent, compared to 20 percent in 2003.
- - Pegasus repurchased 4.7 million shares of common stock at an aggregate cost
of $55.7 million during 2004.
- - Operating cash flows increased 22 percent to $29.4 million compared to
$24.1 million in 2003.
- - Pegasus sold its stake in Travelweb LLC for a $2.0 million gain, realizing
a return on investment of more than 60 percent.
"In 2004, we consistently generated strong operating cash flow despite price
competition and planned expense increases, primarily related to sales and
marketing and other activities with a focus on increasing revenues," said Susan
K. Cole, executive vice president and chief financial officer. "We utilized the
cash through disciplined capital investment and a share repurchase program with
the target to increase shareholder value."
SERVICE LINE REVIEW
- ---------------------
The following table presents service line revenues for the fourth quarter and
fiscal year 2004 as well as the percentage change from the respective period in
2003 (dollars in thousands):
Q4 2004 % CHANGE FY 2004 % CHANGE
------- -------- ------- --------
Representation $17,458 13.8% $71,855 25.2%
Reservation 9,481 7.6% 37,275 -2.8%
Financial 7,995 6.8% 33,699 11.4%
Distribution 5,805 -11.7% 27,329 -5.0%
Property 847 -49.3% 4,707 -27.3%
------- -------- ------- --------
Service revenues 41,586 4.3% 174,865 8.4%
Customer reimbursements 3,704 14.2% 15,253 32.8%
------- -------- ------- --------
Total revenues $45,290 5.0% $190,118 10.1%
------- ---- -------- -----
- - The company's December 2003 acquisition of Unirez, Inc. continued to
favorably impact representation services revenues. The Unirez by PegasusTM
service, a high-tech reservation and distribution toolkit for independent
hotels, provided incremental revenues of $2.5 million and $13.9 million for
the fourth quarter and fiscal year 2004, respectively. Service revenues
from Utell by PegasusTM, which includes additional marketing and revenue
management, experienced a 3 percent decline for the quarter and a 1 percent
increase for the year. Increased reservation volume and average daily room
rates were offset by a decrease in non-reservation revenues and the average
commission earned percentage.
- - Net reservations for the company's central reservation service increased 4
percent and 6 percent for the fourth quarter and fiscal year 2004,
respectively. Pegasus has been successful at renewing central reservation
system (CRS) contracts in a competitive marketplace and did not lose an
existing CRS customer in 2004. However, lower unit pricing on contract
renewals negatively impacted year-over-year revenue comparisons during
2004. Concurrent with the completion of a contract, Pegasus recognized
approximately $700,000 of revenue in the fourth quarter that was deferred
earlier in the year. This resulted in a positive year-over-year variance
for the quarter.
- - Pegasus reached a milestone for its commission processing service by
processing more than half a billion dollars in commissions during 2004. The
company's financial services revenues continued to benefit from improved
average daily room rates.
- - For Pegasus' distribution services, GDS transactions increased 5 percent
and 10 percent for the fourth quarter and fiscal year 2004, respectively.
However, fourth quarter Internet transactions decreased 9 percent. For
fiscal year 2004, Internet transactions were flat year-over-year. Internet
transaction volumes reflect an increase in the percentage of Internet
bookings made at hotel companies' proprietary Web sites; these transactions
do not utilize Pegasus' Internet distribution service. In addition, reduced
pricing resulting from priceline.com's purchase of Travelweb LLC negatively
affected year-over-year comparisons beginning in the third quarter 2004, as
expected.
- - Property services revenues were negatively impacted by the lack of revenues
from PegasusCentralTM and declining revenues from an acquired property
management system, which Pegasus plans to sunset in 2005. The company
remains committed to bringing PegasusCentral back on line and expects to
resume billing the InterContinental Hotel Group properties currently using
PegasusCentral in the next few months.
FINANCIAL OUTLOOK
- ------------------
- - Estimated revenue - Q1 2005 $45 million to $47 million; FY 2005 $199
million to $207 million
- - Estimated diluted EPS (GAAP) - Q1 2005 $0.01 to $0.03; FY 2005 $0.27 to
$0.37 (includes approximately $0.10 of estimated stock option expense
associated with a new accounting pronouncement expected to take effect in
the third quarter of 2005)
- - Estimated diluted EPS (adjusted) - Q1 2005 $0.06 to $0.08; FY 2005 $0.55 to
$0.65
- - The company does not anticipate any dilutive impact to full year 2005 GAAP
or adjusted EPS as a result of accounting changes applicable to its
convertible debt.
Davis concluded: "Building on the progress we made in 2004, we remain committed
to our focus on activities and investments that will deliver value to our
customers and shareholders."
CONFERENCE CALL
- ----------------
Pegasus will host a conference call today at 5:00 p.m. Eastern Time and will
simultaneously broadcast it live over the Internet. To access the webcast, go
to www.pegs.com and click "Investor." The online archive of the webcast will be
------------
available two hours after the call for 30 days.
ABOUT PEGASUS SOLUTIONS, INC.
- --------------------------------
Dallas-based Pegasus Solutions, Inc. (Nasdaq: PEGS) is a global leader in
providing technology and services to hotels and travel distributors. Founded in
1989, Pegasus' customers include a majority of the world's travel agencies and
more than 60,000 hotel properties around the globe. Pegasus' services include
central reservation systems, electronic distribution services, commission
processing and payment services, property management systems, and marketing
representation services. The company's representation services, including Utell
by Pegasus and Unirez by Pegasus, are used by nearly 8,000 member hotels in 140
countries, making Pegasus the hotel industry's largest third-party marketing and
reservations provider. Pegasus has 17 offices in 12 countries, including
regional hubs in London, Scottsdale and Singapore. For more information, please
visit www.pegs.com.
------------
Some statements made in this press release are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding future events, financial
projections, estimated transaction volumes and expected average daily room
rates, as well as management's expectations, beliefs, hopes, intentions or
strategies regarding the future. Because such statements deal with future
events, they are subject to various risks and uncertainties, and actual results
could differ materially from current expectations. Factors that could cause or
contribute to such difference include, but are not limited to, terrorist acts or
war, global health epidemics, variation in demand for and acceptance of the
company's products and services, the level of product and price competition from
existing and new competitors, delays in developing, marketing and deploying new
products and services, as well as other risks identified in the company's
Securities and Exchange Commission filings, including those appearing under the
caption Risk Factors in the company's Annual Report on Form 10-K for the year
ended December 31, 2003.
The conference call may include other forward-looking statements related to
transaction volume and average daily room rates. Such information can be found
in the presentation accompanying the conference call webcast. To access the
webcast, go to www.pegs.com and click "Investor."
------------
USE OF NON-GAAP FINANCIAL MEASURES
- --------------------------------------
Pegasus provides financial measures and terms not calculated in accordance with
generally accepted accounting principles in the United States (GAAP). We
believe that presentation of non-GAAP measures such as adjusted net income per
share, EBITDA and adjusted EBITDA provide investors with an alternative method
for assessing our operating results in a manner that enables investors to more
thoroughly evaluate our current performance as compared to past performance. We
also believe these non-GAAP measures provide investors with a better baseline
for assessing the company's future earnings expectations. Our management uses
these non-GAAP measures for the same purpose. The non-GAAP measures included in
this release are provided to give investors access to the types of measures that
we use in analyzing our results.
Adjusted net income per share consists of GAAP net income (loss) per share
adjusted for the items included in the accompanying reconciliation. We believe
this measure enables management and investors to more thoroughly evaluate our
current performance as compared to past performance and provides a better
baseline for assessing the company's future earnings expectations. However,
adjusted net income per share does not provide a complete picture of our
operations. Therefore net income per share on both a non-GAAP basis and GAAP
basis may need to be considered to get a comprehensive view of our results.
EBITDA consists of GAAP net income (loss) adjusted for the items included in the
accompanying reconciliation. We believe that EBITDA provides useful information
to investors about the company's performance because it eliminates the effects
of period to period changes in taxes, cost associated with capital investments
and interest income (expense). Adjusted EBITDA consists of EBITDA adjusted for
the items included in the accompanying reconciliation. EBITDA and adjusted
EBITDA do not give effect to the cash the company must use to service its debt
or pay its income taxes and thus do not reflect the funds generated from
operations or actually available for capital expenditures.
Pegasus' calculation of adjusted net income per share, EBITDA and adjusted
EBITDA is not necessarily comparable to similarly titled measures reported by
other companies. These non-GAAP measures may be considered in addition to
results prepared in accordance with GAAP, but should not be considered a
substitute for or superior to GAAP results. Schedules that reconcile adjusted
net income per share, EBITDA and adjusted EBITDA to GAAP net income (loss) per
share are included with this release and the presentation accompanying the
company's conference call webcast.
# # #
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2004 2003 2004 2003
-------- -------- --------- ---------
Revenues:
Service revenues $41,586 $39,883 $174,865 $161,245
Customer reimbursements 3,704 3,243 15,253 11,485
-------- -------- --------- ---------
Total revenues 45,290 43,126 190,118 172,730
-------- -------- --------- ---------
Costs of services (exclusive of depreciation
and amortization shown separately below):
Cost of services 21,682 20,924 92,693 85,207
Customer reimbursements 3,704 3,243 15,253 11,485
-------- -------- --------- ---------
Total costs of services 25,386 24,167 107,946 96,692
-------- -------- --------- ---------
Research and development 737 1,654 4,026 5,199
General and administrative expenses 5,655 5,423 23,948 23,348
Marketing and promotion expenses 5,109 4,538 19,618 16,484
Depreciation and amortization 5,285 5,570 22,362 28,029
Restructure costs - - - 5,949
-------- -------- --------- ---------
Operating income (loss) 3,118 1,774 12,218 (2,971)
Other income (expense):
Gain on sale - - 1,961 -
Interest expense, net (339) (475) (1,862) (129)
Other 948 93 814 363
-------- -------- --------- ---------
Income (loss) before income taxes 3,727 1,392 13,131 (2,737)
Income tax benefit (expense) (1,952) (777) (5,146) 905
-------- -------- --------- ---------
Net income (loss) $ 1,775 $ 615 $ 7,985 $ (1,832)
======== ======== ========= =========
Net income (loss) per share:
Basic $ 0.08 $ 0.02 $ 0.35 $ (0.07)
======== ======== ========= =========
Diluted $ 0.08 $ 0.02 $ 0.34 $ (0.07)
======== ======== ========= =========
Weighted average shares outstanding:
Basic 21,556 25,044 22,903 24,864
======== ======== ========= =========
Diluted 21,830 25,404 23,215 24,864
======== ======== ========= =========
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
December 31, 2004
--------------------------------------
As Reported Adjustments Adjusted
------------- ------------- ----------
Revenues:
Service revenues $ 41,586 $ - $ 41,586
Customer reimbursements 3,704 - 3,704
------------- ------------- ----------
Total revenues 45,290 - 45,290
------------- ------------- ----------
Costs of services (exclusive of depreciation
and amortization shown separately below):
Cost of services 21,682 - 21,682
Customer reimbursements 3,704 - 3,704
------------- ------------- ----------
Total costs of services 25,386 - 25,386
------------- ------------- ----------
Research and development 737 - 737
General and administrative expenses 5,655 - 5,655
Marketing and promotion expenses 5,109 - 5,109
Depreciation and amortization 5,285 (1,369) (1) 3,916
------------- ------------- -------
Operating income 3,118 1,369 4,487
Other income (expense):
Gain on sale - - -
Interest expense, net (339) - (339)
Other 948 - 948
------------- ------------- ----------
Income before income taxes 3,727 1,369 5,096
Income tax benefit (expense) (1,952) 16 (2) (1,936)
------------- ------------- -------
Net income $ 1,775 $ 1,385 $ 3,160
============= ============= ==========
Diluted net income per share $ 0.08 $ 0.06 $ 0.14
============= ============= ==========
Diluted weighted average shares outstanding 21,830 - 21,830
============= ============= ==========
Notes:
------
(1) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(2) To adjust income tax benefit (expense) for assumed 38% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
December 31, 2003
---------------------------------------
As Reported Adjustments Adjusted
------------- ------------- ----------
Revenues:
Service revenues $ 39,883 $ - $ 39,883
Customer reimbursements 3,243 - 3,243
------------- ------------- ----------
Total revenues 43,126 - 43,126
------------- ------------- ----------
Costs of services (exclusive of depreciation
and amortization shown separately below):
Cost of services 20,924 - 20,924
Customer reimbursements 3,243 - 3,243
------------- ------------- ----------
Total costs of services 24,167 - 24,167
------------- ------------- ----------
Research and development 1,654 - 1,654
General and administrative expenses 5,423 - 5,423
Marketing and promotion expenses 4,538 - 4,538
Depreciation and amortization 5,570 (1,005) (1) 4,565
------------- ------------- ------
Operating income 1,774 1,005 2,779
Other income (expense):
Interest expense, net (475) - (475)
Other 93 - 93
------------- ------------- ----------
Income before income taxes 1,392 1,005 2,397
Income tax expense (777) (134) (2) (911)
------------- ------------- ------
Net income $ 615 $ 871 $ 1,486
============= ============= ==========
Diluted net income per share $ 0.02 $ 0.04 $ 0.06
============= ============= ==========
Diluted weighted average shares outstanding 25,404 - 25,404
============= ============= ==========
Notes:
------
(1) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(2) To adjust income tax expense for assumed 38% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Year Ended
December 31, 2004
--------------------------------------
As Reported Adjustments Adjusted
------------- ------------- ----------
Revenues:
Service revenues $ 174,865 $ - $ 174,865
Customer reimbursements 15,253 - 15,253
------------- ------------- ----------
Total revenues 190,118 - 190,118
------------- ------------- ----------
Costs of services (exclusive of depreciation
and amortization shown separately below):
Cost of services 92,693 (1,915) (1) 90,778
Customer reimbursements 15,253 - 15,253
------------- ------------- ----------
Total costs of services 107,946 (1,915) 106,031
------------- ------------- ----------
Research and development 4,026 - 4,026
General and administrative expenses 23,948 (465) (1) 23,483
Marketing and promotion expenses 19,618 - 19,618
Depreciation and amortization 22,362 (5,549) (2) 16,813
------------- ------------- -------
Operating income 12,218 7,929 20,147
Other income (expense):
Gain on sale 1,961 (1,961) (3) -
Interest expense, net (1,862) - (1,862)
Other 814 - 814
------------- ------------- ----------
Income before income taxes 13,131 5,968 19,099
Income tax expense (5,146) (2,112) (4) (7,258)
------------- ------------- -------
Net income $ 7,985 $ 3,856 $ 11,841
============= ============= ==========
Diluted net income per share $ 0.34 $ 0.16 $ 0.51
============= ============= ==========
Diluted weighted average shares outstanding 23,215 - 23,215
============= ============= ==========
Notes:
------
(1) To adjust for severance and other costs related to the company's
information technology organization.
(2) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(3) To adjust for gain on sale of Travelweb LLC.
(4) To adjust income tax expense for assumed 38% tax rate.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Year Ended
December 31, 2003
---------------------------------------
As Reported Adjustments Adjusted
------------- ------------- ----------
Revenues:
Service revenues $ 161,245 $ - $ 161,245
Customer reimbursements 11,485 - 11,485
------------- ------------- ----------
Total revenues 172,730 - 172,730
------------- ------------- ----------
Costs of services (exclusive of depreciation
and amortization shown separately below):
Cost of services 85,207 - 85,207
Customer reimbursements 11,485 - 11,485
------------- ------------- ----------
Total costs of services 96,692 - 96,692
------------- ------------- ----------
Research and development 5,199 - 5,199
General and administrative expenses 23,348 - 23,348
Marketing and promotion expenses 16,484 - 16,484
Depreciation and amortization 28,029 (10,429) (1) 17,600
Restructure costs 5,949 (5,949) (2) -
------------- ------------- -------
Operating income (loss) (2,971) 16,378 13,407
Other income (expense):
Interest expense, net (129) - (129)
Other 363 - 363
------------- ------------- ----------
Income (loss) before income taxes (2,737) 16,378 13,641
Income tax benefit (expense) 905 (6,089) (3) (5,184)
------------- ------------- -------
Net income (loss) $ (1,832) $ 10,289 $ 8,457
============= ============= ==========
Diluted net income (loss) per share $ (0.07) $ 0.40 $ 0.33
============= ============= ==========
Diluted weighted average shares outstanding 24,864 522 (4) 25,386
============= ============= =======
Notes:
------
(1) To adjust for amortization of software and identifiable intangible
assets obtained through acquisitions.
(2) To adjust for restructure costs.
(3) To adjust income tax benefit (expense) for assumed 38% tax rate.
(4) Represents shares issuable upon the exercise of stock options.
PEGASUS SOLUTIONS, INC.
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended December 31,
-------------------------------
2004 2003
--------- ---------
Total revenues $ 45,290 $ 43,126
========= =========
Net income 1,775 615
Reconciling items:
Income tax expense 1,952 777
Interest expense, net 339 475
Other income (948) (93)
Depreciation and amortization 5,285 5,570
--------- ---------
EBITDA $ 8,403 $ 7,344
========= =========
EBITDA margin 19% 17%
Adjustments:
Other - 2,343 (1)
--------- ---------
Adjusted EBITDA $ 8,403 $ 9,687
========= =========
Adjusted EBITDA margin 19% 22%
Year Ended December 31,
------------------------------
2004 2003
--------- ---------
Total revenues $190,118 $172,730
========= =========
Net income (loss) 7,985 (1,832)
Reconciling items:
Gain on sale (1,961) -
Income tax benefit (expense) 5,146 (905)
Interest expense, net 1,862 129
Other income (814) (363)
Depreciation and amortization 22,362 28,029
--------- ---------
EBITDA $ 34,580 $ 25,058
========= =========
EBITDA margin 18% 15%
Adjustments:
Restructure costs - 5,949
Other 2,380 (2) 3,771 (1), (3), (4)
--------- ------
Adjusted EBITDA $ 36,960 $ 34,778
========= =========
Adjusted EBITDA margin 19% 20%
(1) Amount represents severance and expenses related to PegasusCentral, the
company's information technology organization and product management
inititatives.
(2) Amount represents severance and other costs related to changes in the
company's information technology organization.
(3) Amount includes transition-related activities resulting from the company's
strategic integration. These costs cannot be classified as restructure
costs because they provide some future benefit to ongoing operations.
(4) Amount includes costs related to moving the company's Phoenix facilities.
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
DECEMBER 31, DECEMBER 31,
2004 2003
--------- ---------
ASSETS
Cash and cash equivalents $ 23,249 $ 58,983
Short-term investments 6,001 4,046
Accounts receivable, net 28,551 22,298
Other current assets 9,061 11,092
--------- ---------
Total current assets 66,862 96,419
Goodwill, net 163,585 164,120
Intangible assets, net 5,827 7,831
Property and equipment, net 80,326 75,474
Other noncurrent assets 12,614 22,716
--------- ---------
Total assets $329,214 $366,560
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 29,531 $ 24,672
Unearned income 6,763 7,213
Other current liabilities 5,621 5,477
--------- ---------
Total current liabilities 41,915 37,362
Noncurrent uncleared commission checks 5,576 4,545
Other noncurrent liabilities 19,407 20,997
Convertible debt 75,000 75,000
Commitments and contingencies
Stockholders' equity:
Common stock 211 251
Additional paid-in capital 242,112 290,828
Unearned compensation (408) -
Accumulated other comprehensive loss (995) (834)
Accumulated deficit (53,604) (61,589)
--------- ---------
Total stockholders' equity 187,316 228,656
--------- ---------
Total liabilities and stockholders' equity $329,214 $366,560
========= =========