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| PGI > SEC Filings for PGI > Form 10-Q on 9-Nov-2009 | All Recent SEC Filings |
9-Nov-2009
Quarterly Report
OVERVIEW
We are in the business of innovating, developing and providing on-demand, applied communication technologies. Enterprise customers use our advanced data solutions and next-generation collaboration platforms to work, collaborate and make meaningful connections. We are a global company with operations in 24 countries in our three segments - North America, Europe and Asia Pacific.
During the three months ended September 30, 2009, we initiated a plan to divest our e-mail marketing business. On November 5, 2009, we completed the sale of this business. Prior period results in the following discussions and tables have been reclassified to present this business as discontinued operations. As a result, and except as provided herein, the following discussion and analysis reflects our results from continuing operations.
Key highlights of our financial accomplishments for the third quarter and first nine months of 2009 include:
º Generated net cash provided by operating activities from continuing operations of $70.6 million for the nine months ended September 30, 2009;
º Decreased capital expenditures by 8.5% from $35.1 million in the nine months ended September 30, 2008 to $32.1 million in the nine months ended September 30, 2009; and
º Decreased our total debt less cash and equivalents by 5.6% from $244.0 million at December 31, 2008 to $230.3 million at September 30, 2009.
For the remainder of 2009, we are continuing to focus on sharpening our business strategy, building our brand, advancing our technology innovation and refreshing our go-to-market strategy in order to build a foundation for accelerated growth and profitability.
In the first nine months of 2009, approximately 40% 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 negatively affected our consolidated net revenues by $1.4 million and $17.4 million during the three and nine months ended September 30, 2009, respectively, as compared to the same periods in 2008.
We have historically generated net revenue growth in our PGiMeet Solutions through increases in volume, offset in part by declines in average selling prices. Our business trends and revenue growth in our PGiMeet Solutions continue to be affected by the challenging economic climate, higher global unemployment and lower global business activity. Net revenue from our PGiMeet Solutions for the three months ended September 30, 2009 and 2008 was $111.4 million and $112.9 million, respectively.
We have experienced revenue declines in our broadcast fax services, primarily as a result of decreased volume. Net revenue from these services for the three months ended September 30, 2009 and 2008 was $10.6 million and $13.8 million, respectively. Although we intend to continue to convert such customers to our alternative solutions, we expect this overall revenue decline to continue.
We have historically used our cash flows from operating activities for capital expenditures, debt repayments, acquisitions and stock repurchases. At September 30, 2009, borrowings under our credit facility were $255.2 million. We anticipate extending the tenor of, or refinancing, our existing credit facility prior to its maturity in April 2011. In 2009, we anticipate using a portion of our cash flows from operating activities to pay down our debt or to build cash balances, while still continuing to evaluate possible acquisitions and share repurchases.
In addition, we intend to continue to prudently invest in our PGiMeet Solutions, specifically in technology innovation and platform development, as well as new market strategies to better meet the needs of our large, global
enterprise customers and to better attract, engage and acquire small- and mid-size business customers. We will continue to evaluate our cost structure for the remainder of 2009, and we expect to incur additional restructuring costs in the fourth quarter primarily associated with lease abandonments contemplated in connection with our third quarter restructuring efforts.
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 "-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 and nine months ended September 30, 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 tables present certain financial information about our segments
for the periods presented (in thousands, except percentages):
Three Months Ended
---------------------------------------------------
September 30, Change
-------------------------- ---------------------
2009 2008 $ %
----------- ----------- --------- --------
Net revenues:
North America
PGiMeet Solutions $ 76,620 $ 77,799 (1,179 ) (1.5 )
Broadcast fax solutions 1,637 2,954 (1,317 ) (44.6 )
Other solutions 13,047 15,547 (2,500 ) (16.1 )
- ------- - ------- ------- ------
Total North America $ 91,304 $ 96,300 (4,996 ) (5.2 )
- ------- - ------- ------- ------
Europe
PGiMeet Solutions $ 20,807 $ 20,574 233 1.1
Broadcast fax solutions 1,715 2,942 (1,227 ) (41.7 )
Other solutions 5,506 7,245 (1,739 ) (24.0 )
- ------- - ------- ------- ------
Total Europe $ 28,028 $ 30,761 (2,733 ) (8.9 )
- ------- - ------- ------- ------
Asia Pacific
PGiMeet Solutions $ 13,977 $ 14,565 (588 ) (4.0 )
Broadcast fax solutions 7,256 7,917 (661 ) (8.3 )
Other solutions 7,437 6,989 448 6.4
- ------- - ------- ------- ------
Total Asia Pacific $ 28,670 $ 29,471 (801 ) (2.7 )
- ------- - ------- ------- ------
Consolidated
PGiMeet Solutions $ 111,404 $ 112,938 (1,534 ) (1.4 )
Broadcast fax solutions 10,608 13,813 (3,205 ) (23.2 )
Other solutions 25,990 29,781 (3,791 ) (12.7 )
- ------- - ------- ------- ------
Total consolidated $ 148,002 $ 156,532 (8,530 ) (5.4 )
- ------- --------- ------- ------
Operating income:
North America $ (10,587 ) $ 8,565 (19,152 ) (223.6 )
Europe 4,032 6,467 (2,435 ) (37.7 )
Asia Pacific 5,332 6,687 (1,355 ) (20.3 )
- ------- - ------- ------- ------
Total operating
income $ (1,223 ) $ 21,719 (22,942 ) (105.6 )
- ------- - ------- ------- ------
Percent of net revenues:
North America 61.7 % 61.5 %
Europe 18.9 % 19.7 %
Asia Pacific 19.4 % 18.8 %
------- - -------
Consolidated net
revenues 100.0 % 100.0 %
------- - -------
|
Nine Months Ended
--------------------------------------------------
September 30, Change
-------------------------- --------------------
2009 2008 $ %
----------- ----------- --------- -------
Net revenues:
North America
PGiMeet Solutions $ 241,193 $ 229,370 11,823 5.2
Broadcast fax solutions 5,856 9,671 (3,815 ) (39.4 )
Other solutions 39,841 47,887 (8,046 ) (16.8 )
- ------- - ------- ------- -----
Total North America $ 286,890 $ 286,928 (38 ) (0.0 )
- ------- --------- ------- -----
Europe
PGiMeet Solutions $ 64,396 $ 59,593 4,803 8.1
Broadcast fax solutions 5,401 10,884 (5,483 ) (50.4 )
Other solutions 16,331 23,350 (7,019 ) (30.1 )
- ------- - ------- ------- -----
Total Europe $ 86,128 $ 93,827 (7,699 ) (8.2 )
- ------- - ------- ------- -----
Asia Pacific
PGiMeet Solutions $ 40,384 $ 42,717 (2,333 ) (5.5 )
Broadcast fax solutions 21,696 24,499 (2,803 ) (11.4 )
Other solutions 21,919 20,915 1,004 4.8
- ------- - ------- ------- -----
Total Asia Pacific $ 83,999 $ 88,131 (4,132 ) (4.7 )
- ------- - ------- ------- -----
Consolidated
PGiMeet Solutions $ 345,973 $ 331,680 14,293 4.3
Broadcast fax solutions 32,953 45,054 (12,101 ) (26.9 )
Other solutions 78,091 92,152 (14,061 ) (15.3 )
- ------- - ------- ------- -----
Total consolidated $ 457,017 $ 468,886 (11,869 ) (2.5 )
- ------- --------- ------- -----
Operating income:
North America $ 2,753 $ 21,809 (19,056 ) (87.4 )
Europe 13,675 17,064 (3,389 ) (19.9 )
Asia Pacific 17,317 18,954 (1,637 ) (8.6 )
- ------- - ------- ------- -----
Total operating income $ 33,745 $ 57,827 (24,082 ) (41.6 )
- ------- - ------- ------- -----
Percent of net revenues:
North America 62.8 % 61.2 %
Europe 18.8 % 20.0 %
Asia Pacific 18.4 % 18.8 %
------- -------
Consolidated net
revenues 100.0 % 100.0 %
------- -------
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