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PGI > SEC Filings for PGI > Form 10-Q on 8-Nov-2012All Recent SEC Filings

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Form 10-Q for PREMIERE GLOBAL SERVICES, INC.


8-Nov-2012

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

PGi has been a global leader in virtual meetings for more than 20 years. Our cloud-based solutions deliver multi-point, real-time virtual collaboration using video, voice and file sharing technologies. PGi solutions are available via desktops, tablets or mobile devices, helping businesses worldwide to be more productive, mobile and green. We have a global presence in 25 countries in our three segments in North America, Europe and Asia Pacific.

With the launch of our iMeetŪ and GlobalMeetŪ solutions, the sale of our PGiSend business and the disposal of our Maritime Notification and Reminder solutions, we have positioned PGi as a focused virtual meetings company. Our continuing operations reflect only our meeting solutions. As a result and except as provided herein, the following discussion and analysis reflects our results from continuing operations.

During 2012, we have continued our strategy to transition PGi to a software as a service company, focusing our sales and marketing efforts on growing the market awareness and adoption of our next-generation virtual meeting solutions, iMeet and GlobalMeet. Key highlights of our financial and strategic accomplishments for the third quarter ended September 30, 2012 include:

· Generated 5.6% growth in our net revenues for the three months ended September 30, 2012 compared to the same period in 2011, despite a 1.4% negative impact from fluctuations in foreign currency exchange rates;

· Grew total meetings hosted by over 30% as compared to the third quarter of 2011;

· Repurchased nearly 800,000 shares, or approximately 1.7% of our outstanding common stock, in the open market under our board-approved stock repurchase plan at an average price of $9.39 per share; and

· Released additional upgrades and enhancement to iMeet and GlobalMeet, including iMeet 2.0.

Our primary corporate objectives for the remainder of 2012 are focused on continuing to:

· Expand our global distribution in order to further our market reach and accelerate customer awareness and adoption of iMeet and GlobalMeet;

· Develop and release additional upgrades and enhancements to iMeet and GlobalMeet to increase their functionality, improve their competitive positioning and grow their market opportunities; and

· Transition our audio-only customers to iMeet and GlobalMeet, which provide a richer, more productive user experience.

In the first nine months of 2012, 35.6% of our net revenues was generated in countries outside the United States. Because we generate a significant portion of our net revenues from our international operations, movements in foreign currency exchange rates affect our reported results. We estimate that changes in foreign currency exchange rates during the first nine months of 2012 negatively affected our net revenues by approximately $3.9 million as compared to the same period in 2011.

We have historically generated net revenue growth in our meeting solutions. Revenue growth is driven primarily by the increase of total minutes sold, partially offset by the decrease of the average rates per minute. We believe that this trend is consistent with the industry, and we expect it to continue in the foreseeable future. Our business trends and revenue growth continue to be affected by the challenging economic climate, higher global unemployment and lower global business activity. Despite these economic headwinds and continued price compression, our net revenues increased to $379.5 million in the first nine months of 2012 as compared to $355.1 million in the same period in 2011, primarily as a result of volume growth.

We have historically used our cash flows from operating activities for debt repayments, capital expenditures, stock repurchases, acquisitions and strategic investments. As of September 30, 2012, borrowings under our $375.0 million credit facility, including the uncommitted $75.0 million accordion feature, were $198.0 million, with an additional $5.4 million in letters of credit. See "-Capital resources" for a description of our credit facility.

In addition, we intend to continue to invest in our virtual meetings solutions, specifically in technology innovation and platform development, as well as new market strategies to better meet the needs of our existing customers and to better attract, engage and acquire new customers.

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 condensed consolidated results of operations and financial condition. The results of operations for the nine months ended September 30, 2012 are not indicative of the results that may be expected for the full fiscal year of 2012 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, 2011, which includes information and disclosures not included in this quarterly report. All significant intercompany accounts and transactions have been eliminated in consolidation.

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