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): June 28, 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 2.05 Costs Associated with Exit or Disposal Activities.
On June 28, 2005, the Board of Directors of Pegasus Solutions, Inc. approved and
committed to a formal plan to exit the property management systems (PMS)
business by selling the company's PMS operations. These operations include the
PegasusCentral PMS and two other private-label property management products,
Guestview and NovaPlus, that support both hotel chains and independent
customers. The company expects to sell the PMS business within one year in a
single transaction or a series of transactions, some of which may occur at an
earlier date.
Pegasus has also reached an agreement with its primary PegasusCentral customer,
InterContinental Hotels Group (IHG), to discontinue the use of PegasusCentral.
Accordingly, the PegasusCentral PMS will no longer be used in the Holiday Inn
Express properties currently using the system, and there will be no new
installations. The decision to exit the PMS business was made considering the
termination of the IHG agreement and the overall expected profitability of the
remaining PMS operations.
Pegasus expects to incur a substantially non-cash after-tax charge in the range
of $10 to $12 million in the second quarter of 2005 to write down the carrying
value of PMS assets to their estimated realizable value. This charge includes
an estimated $1.1 million (pre-tax) of cash expenditures for transition costs.
Pegasus expects to classify the property management business as a discontinued
operation in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
This Current Report on Form 8-K includes forward-looking statements within the
meaning of the federal securities laws, including statements using terminology
such as "may," "will," "expects," "plans," "intends," "anticipates," "believes,"
"estimates," "potential," or "continue," or a similar negative phrase or other
comparable terminology regarding beliefs, hopes, plans, expectations or
intentions for the future. Forward-looking statements involve various risks and
uncertainties. The company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain and the actual results and
timing of certain events could differ materially from current expectations.
Factors that could cause or contribute to such a difference include, but are not
limited to, the inability of the company to sell the PMS operations, risks
associated with a sale transaction and the inability of the Company to terminate
the service as expected, as well as other factors detailed in the company's
Securities and Exchange Commission filings. The registrant disclaims any
intention or obligation to update publicly or review such statements whether as
a result of new information, future events or otherwise.
Item 2.06 Material Impairments.
The information provided in Item 2.05 is hereby incorporated herein by
reference. As described in Item 2.05, in connection with the planned
disposition of the company's PMS business that was approved by the Board of
Directors on June 28, 2005, Pegasus expects to incur a substantially non-cash
after-tax charge in the range of $10 to $12 million in the second quarter of
2005 to write down the carrying value of PMS assets to their estimated
realizable value. This charge includes an estimated $1.1 million (pre-tax) of
cash expenditures for transition costs.
Item 7.01 Regulation FD Disclosure.
The registrant hereby furnishes the information set forth in its press release
issued on June 29, 2005, a copy of which is attached hereto as Exhibit 99.1 and
incorporated into this Item 7.01 by reference.
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.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
- --------------- -----------
99.1 Press release issued June 29, 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.
July 1, 2005 /s/ SUSAN K. CONNER
-----------------------
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
--------------- -----------
99.1 Press release issued June 29, 2005
Exhibit 99.1 Press release issued June 29, 2005
FOR IMMEDIATE RELEASE
Investor Contact:
Susan K. Cole-Conner
(214) 234-4140
Media Contact:
Cindy Foor
(214) 234-4129
PEGASUS SOLUTIONS ANNOUNCES IT IS ENDING
PROPERTY MANAGEMENT SYSTEM AGREEMENT WITH IHG
COMPANY ALSO ANNOUNCES IT IS EXITING PROPERTY MANAGEMENT SYSTEM BUSINESS
DALLAS (June 29, 2005) - Pegasus Solutions, Inc. (Nasdaq: PEGS) today announced
that it has reached a mutual agreement with InterContinental Hotels Group to
discontinue the use of the PegasusCentral Property Management System (PMS). The
PMS product will no longer be used in the Holiday Inn Express properties
currently using the system, and there will be no new installations.
"After a careful evaluation with IHG, we concluded that we could not meet their
needs with PegasusCentral and generate the kind of revenues and profitability
that we expect from our products and services," said John F. Davis III,
president and CEO of Pegasus. The company will continue to support
PegasusCentral during a short transition period.
"It's been our pleasure to work with Pegasus over the last four years, and we
look forward to continuing our relationship as they serve our distribution and
financial services needs," said Angela Brav, IHG's senior vice president of
Applied Technology.
Pegasus also announced its intention to exit the property management system
business. The company's PMS products have both chain and independent hotel
customers, including a private-label PMS for Best Western hotels. The company
further commented that it is currently in discussions with potential buyers to
sell all or parts of its PMS business. The PMS business is expected to be sold
within one year.
"We've had a long run in the property management system business," said Davis,
"and while we will no longer develop our own system, we intend to work closely
with a number of property management companies to ensure their products
integrate with our central reservation and distribution products." The
integration of these products will pave the way for delivery of the Next
Generation Hospitality Engine, an effort which Pegasus has been leading for the
last year with a number of hotel chains.
As a result of the company's termination of its property management system
agreement with IHG and the company's plans to discontinue its PMS business,
Pegasus anticipates that it will incur a substantially non-cash after-tax charge
in the range of $10 to $12 million in the second quarter of 2005 to write down
the carrying value of PMS assets to their estimated realizable value. This
charge includes an estimated $1.1 million (pre-tax) of cash expenditures for
transition costs. Pegasus expects to classify the PMS business as a discontinued
operation in accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets."
With its four service lines-representation services, including Utell by Pegasus
and Unirez by Pegasus ; reservation services; financial services; and,
distribution services-Pegasus provides the most comprehensive set of technology
solutions and services to hotels and travel distributors around the world. Every
product is designed to streamline customers' end-to-end processes, maximize
their revenue and profitability, and help them capitalize on opportunity.
ABOUT PEGASUS
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
nearly 60,000 hotel properties around the globe. Pegasus' services include
central reservation systems, electronic distribution services, commission
processing and payment services, and marketing representation services. The
company's representation services, including Utell by Pegasus and Unirez by
Pegasus , are used by more than 7,000 member hotels in 140 countries, making
Pegasus the hotel industry's largest third-party marketing and reservations
provider. Pegasus has 18 offices in 13 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 federal securities laws, including statements using
terminology such as "may," "will," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "potential," or "continue," or a similar negative
phrase or other comparable terminology regarding beliefs, hopes, plans,
expectations or intentions for the future. Forward-looking statements involve
various risks and uncertainties. The company's ability to predict results or
the actual effect of future plans or strategies is inherently uncertain and the
actual results and timing of certain events could differ materially from current
expectations. Factors that could cause or contribute to such a difference
include, but are not limited to, the inability of the company to sell the PMS
operations, risks associated with a sale transaction and the inability of the
Company to terminate the service as expected, as well as other factors detailed
in the company's Securities and Exchange Commission filings. The company
disclaims any intention or obligation to update publicly or review such
statements whether as a result of new information, future events or otherwise.