OVERVIEW

We develop and market a comprehensive suite of applied communication technologies. Our PGi Communications Operating System, or PGiCOS, supports business applications within the following solution sets -PGiMeet, PGiSend, PGiNotify and PGiMarket - in our three segments in North America, Europe and Asia Pacific.

Key highlights of our financial and strategic accomplishments for the first quarter of 2009 include:

º Grew revenue from our PGiMeet solutions, the largest solution set within PGiCOS, by 12.2% compared to the same period in 2008;

º Generated organic consolidated net revenue growth, excluding impacts from changes in foreign currency exchange rates and acquisitions, of 5.1% compared to the same period in 2008 (see "-Net Revenues" and "-Non-GAAP Financial Measures");

º Grew cash flows provided by operating activities by greater than 17% compared to the three months ended March 31, 2008; and

º Repurchased 375,800 shares of our common stock in the open market.

Our primary corporate objectives for the remainder of 2009 are focused on continuing to enhance our customer value and to differentiate our products and our company from our competitors.

Specifically, in 2009, our strategic plan includes our continued focus on:

º Developing and launching innovative products and customer self-service tools that improve our user experience;

º Crafting pricing strategies aimed at enhancing the overall quality and consistency of our revenues;

º Migrating our network architecture to a global delivery platform of media servers to improve the quality, reliability and cost-effectiveness of our services; and

º Building a brand that is a sustainable asset for us.

In the first quarter of 2009, nearly 39% of our consolidated net revenues were generated outside of the United States. Consequently, movements in foreign currency exchange rates affect our reported results. We estimate that changes in foreign currency exchange rates during the first quarter of 2009 negatively affected our consolidated net revenues by $8.2 million as compared to the first quarter of 2008. We anticipate movements in foreign currency exchange rates will continue to negatively affect our reported results for the remainder of 2009 compared to 2008.

We have experienced revenue growth in our PGiMeet solutions through increases in minutes of use, offset in part by declines in average selling prices per minute for this solution. Traditional pricing for these services is on a per-minute basis. During 2008, we introduced a subscription-based pricing model similar to that of other on-demand service providers. Revenues from subscription-based pricing have been approximately 5% of total revenues for our PGiMeet solutions. Revenues from our PGiMeet solutions for the three months ended March 31, 2009 and 2008 were $117.9 million and $105.0 million, respectively.

We have experienced revenue volume declines in our broadcast fax and transactional fax services. Pricing for these services are on a per-minute or per-page delivered basis. Revenue from these services for the three months ended March 31, 2009 and 2008 were $19.0 million and $25.2 million, respectively. Declines in these fax

We expect that our projected continued growth in revenues and operating cash flows will be associated with growth in the remainder of our solutions, including continued volume growth in our audio conferencing PGiMeet solutions. We expect this growth will offset declines in our broadcast fax, transactional fax and e-mail delivery services.

We have made acquisitions of businesses, particularly conferencing and collaboration providers, which have increased our revenues and operating cash flows. The primary purpose of these acquisitions has been to expand our customer base, distribution channels and geographic presence. We are able to realize synergies by integrating these acquisitions into our own operating infrastructure. Historically, these acquisitions have generally been accretive to our revenues, operating cash flows and earnings per share.

We have used our cash flows from operations less capital expenditures, or free cash flow, for debt repayments, acquisitions and stock repurchases. At March 31, 2009, borrowings under our credit facility were $274.1 million. During the three months ended March 31, 2009 and 2008, our free cash flow was $6.1 million and $2.2 million, respectively (see "-Non-GAAP Financial Measures"). Based on our historical free cash flow, we anticipate extending the tenure of, or refinancing, our existing credit facility prior to maturity. In 2009, we anticipate continuing to use our free cash flow to pay down our debt, while still continuing to evaluate possible acquisitions and share repurchases.

The preparation of financial statements in conformity with GAAP requires us 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 net revenues and expenses during the reporting period. Actual results could differ from the estimates. See the section in this quarterly report entitled "Critical Accounting Policies." The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The results of operations for the three months ended March 31, 2009 are not indicative of the results that may be expected for the full fiscal year of 2009 or for any other interim period. The financial information and discussion presented herein should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2008, which includes information and disclosures not included herein. All significant intercompany accounts and transactions have been eliminated in consolidation.

RESULTS OF OPERATIONS

Net Revenues

   The following table presents certain financial information about our segments
for the periods presented (in millions, except percentages):

                                            Three Months Ended
                                                March 31,                    Change
                                      ------------------------------    -----------------
                                          2009             2008           $          %
                                      -------------   --------------    ------    -------
      Net revenues:
         North America
                 PGiMeet solutions       $  83.4          $  74.4        9.0       12.1
                 Broadcast fax
      solutions                              2.4              3.6       (1.2 )    (33.3 )
                 Other solutions            14.1             17.0       (2.9 )    (17.1 )
                                         - -----          - -----       ---- -    ----- -
                         Total North
      America                            $  99.9          $  95.0        4.9        5.2
                                         - -----          - -----       ---- -    ----- -

         Europe
                 PGiMeet solutions       $  21.6          $  17.8        3.8       21.3
                 Broadcast fax
      solutions                              1.9              4.0       (2.1 )    (52.5 )
                 Other solutions             5.4              8.2       (2.8 )    (34.1 )
                                         - -----          - -----       ---- -    ----- -
                         Total Europe    $  28.9          $  30.0       (1.1 )     (3.7 )
                                         - -----          - -----       ---- -    ----- -

           Asia Pacific
                 PGiMeet solutions       $  12.9          $  12.8        0.1        0.8
                 Broadcast fax
      solutions                              7.2              8.2       (1.0 )    (12.2 )
                 Other solutions             7.0              6.9        0.1        1.4
                                         - -----          - -----       ---- -    ----- -
                         Total Asia
      Pacific                            $  27.1          $  27.9       (0.8 )     (2.9 )
                                         - -----          - -----       ---- -    ----- -

           Consolidated
                 PGiMeet solutions       $ 117.9          $ 105.0       12.9       12.3
                 Broadcast fax
      solutions                             11.5             15.8       (4.3 )    (27.2 )
                 Other solutions            26.5             32.1       (5.6 )    (17.4 )
                                         - -----          - -----       ---- -    ----- -
                         Total
      consolidated                       $ 155.9          $ 152.9        3.0        2.0
                                         - -----          - -----       ---- -    ----- -

      Operating income
           North America                 $   6.3          $   8.6       (2.3 )    (26.7 )
           Europe                            5.7              5.0        0.7       14.0
           Asia Pacific                      6.0              6.0        0.0        0.0
                                         - -----          - -----       ---- -    ----- -
                         Total
      operating income                   $  18.0          $  19.6       (1.6 )     (8.2 )
                                         - -----          - -----       ---- -    ----- -

      Percent of net revenues:
           North America                    64.1 %           62.2 %
           Europe                           18.5 %           19.6 %
           Asia Pacific                     17.4 %           18.2 %
                                         - -----          - -----
                         Consolidated
      net revenues                         100.0 %          100.0 %
                                         - -----          - -----

Organic growth

We define "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations, using the average exchange rates from the prior year period and applying them to current period results, and acquisitions made during the periods presented. We present this non-GAAP financial measure for our segments to exclude the effect of those items that are not completely within management's control, such as foreign currency exchange rate fluctuations, or that do not reflect our ongoing core operations or underlying growth, such as acquisitions. Organic growth is further discussed in our "-Non-GAAP Financial Measures." The following table