Fourth Quarter 2014 Results*

($ in millions, except per share data)

4Q13

4Q14

Constant
Currency ^**

Adjusted
Growth ^**

Non-GAAP revenue

$134.6

$139.6

$142.2

6%

SaaS revenue

$9.7

$17.4

$17.7

82%

Gross margin

57.3%

59.7%

59.7%

240 BPs

Adjusted EBITDA

$24.1

$24.4

$24.7

2%

Non-GAAP diluted EPS from continuing operations

$0.20

$0.22

$0.22

10%

2014 Results*

($ in millions, except per share data)

2013

2014

Constant
Currency ^**

Adjusted
Growth ^**

Non-GAAP revenue

$526.9

$567.5

$568.7

8%

SaaS revenue

$33.6

$53.2

$53.0

58%

Gross margin

57.1%

59.0%

58.9%

180 BPs

Adjusted EBITDA

$92.5

$101.6

$101.4

10%

Non-GAAP diluted EPS from continuing operations

$0.78

$0.88

$0.88

13%

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 Three Months Ended  

 Twelve Months Ended  

 December 31, 

 December 31, 

2014

2013

2014

2013

Net revenue

$ 139,162

$  134,625

$ 567,071

$  526,865

Operating expenses: 

Cost of revenue (exclusive of depreciation and

amortization shown separately below)

56,055

57,428

232,563

225,994

Selling and marketing

36,956

32,502

149,198

134,426

General and administrative (exclusive of expenses

shown separately below)

19,429

17,935

74,244

65,219

Research and development

5,712

4,875

20,367

16,574

Depreciation

8,978

8,729

35,226

33,758

Amortization

3,686

1,787

11,235

3,496

Excise and sales tax expense

385

1,891

385

1,969

Restructuring costs

675

3,065

743

3,506

Asset impairments

40

980

4,978

1,196

Net legal settlements and related expenses

8

7

180

598

Acquisition-related costs

2,324

2,348

8,162

5,392

Total operating expenses

134,248

131,547

537,281

492,128

Operating income

4,914

3,078

29,790

34,737

Other (expense) income:

Interest expense

(2,760)

(2,225)

(9,378)

(7,152)

Interest income

4

24

29

117

Other, net

302

84

1,298

214

Total other expense, net

(2,454)

(2,117)

(8,051)

(6,821)

Income from continuing operations before income taxes

2,460

961

21,739

27,916

Income tax (benefit) expense

(934)

2,241

4,296

9,062

Net income (loss) from continuing operations

3,394

(1,280)

17,443

18,854

Loss from discontinued operations, net of taxes

(96)

(120)

(379)

(538)

Net income (loss)

$    3,298

$     (1,400)

$   17,064

$    18,316

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

44,986

46,328

45,593

46,214

Basic net income (loss) per share (1)

Continuing operations

$      0.08

$       (0.03)

$      0.38

$        0.41

Discontinued operations

-

-

(0.01)

(0.01)

Net income (loss) per share

$      0.07

$       (0.03)

$      0.37

$        0.40

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

45,762

46,328

46,303

46,727

Diluted net income (loss) per share

Continuing operations

$      0.07

$       (0.03)

$      0.38

$        0.40

Discontinued operations

-

-

(0.01)

(0.01)

Net income (loss) per share

$      0.07

$       (0.03)

$      0.37

$        0.39

(1)

Column totals may not sum due to the effect of rounding on EPS.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share data)

December 31, 

December 31, 

2014

2013

ASSETS

CURRENT ASSETS

Cash and equivalents

$           40,220

$           44,955

Accounts receivable (less allowances of $557 and $760, respectively)

77,334

78,481

Prepaid expenses and other current assets

13,536

22,645

Income taxes receivable

1,897

2,316

Deferred income taxes, net

10,518

4,390

Total current assets

143,505

152,787

PROPERTY AND EQUIPMENT, NET

100,954

105,724

OTHER ASSETS

Goodwill

386,416

341,382

Intangibles, net of amortization

102,350

78,637

Deferred income taxes, net

2,342

1,957

Other assets

20,734

17,621

TOTAL ASSETS

$         756,301

$         698,108

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$           57,211

$           51,994

Income taxes payable

2,217

2,648

Accrued taxes, other than income taxes

17,562

11,190

Accrued expenses

37,807

34,402

Current maturities of long-term debt and capital lease obligations 

1,971

1,719

Accrued restructuring costs

958

2,104

Deferred income taxes, net

17

171

Total current liabilities

117,743

104,228

LONG-TERM LIABILITIES

Long-term debt and capital lease obligations 

332,825

272,467

Accrued restructuring costs

-

77

Accrued expenses

26,906

29,570

Deferred income taxes, net

23,837

20,790

Total long-term liabilities

383,568

322,904

SHAREHOLDERS' EQUITY

Common stock, $0.01 par value; 150,000,000 shares authorized,

475

483

Additional paid-in capital

442,585

457,913

Accumulated other comprehensive gain (loss)

(6,545)

11,169

Accumulated deficit

(181,525)

(198,589)

Total shareholders' equity

254,990

270,976

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$         756,301

$         698,108

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited, in thousands)

Twelve Months Ended

December 31, 

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net income 

$       17,064

$       18,316

Loss from discontinued operations, net of taxes

379

538

 Net income from continuing operations 

17,443

18,854

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

35,226

33,758

Amortization

11,235

3,496

Amortization of debt issuance costs 

673

611

Net legal settlements and related expenses

180

598

Payments for legal settlements and related expenses

(249)

(510)

Deferred income taxes

1,827

3,068

Restructuring costs

743

3,506

Payments for restructuring costs 

(1,916)

(2,469)

Asset impairments

4,978

1,196

Equity-based compensation

10,460

7,872

Excess tax benefits from share-based payment arrangements

(588)

(525)

Provision for doubtful accounts

456

514

Acquisition-related costs

8,162

5,392

Cash paid for acquisition-related costs

(7,581)

(3,863)

Changes in working capital, net of business acquisitions

(2,149)

4,178

Net cash provided by operating activities from continuing operations

78,900

75,676

Net cash used in operating activities from discontinued operations

(313)

(554)

Net cash provided by operating activities

78,587

75,122

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(35,195)

(31,774)

Business acquisitions, net of cash acquired 

(80,402)

(101,963)

Other investing activities, net

1,700

(452)

Net cash used in investing activities from continuing operations

(113,897)

(134,189)

Net cash used in investing activities from discontinued operations

-

-

Net cash used in investing activities

(113,897)

(134,189)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments under borrowing arrangements

(146,040)

(78,847)

Proceeds from borrowing arrangements

205,000

166,750

Payments of debt issuance costs

(1,060)

(1,258)

Excess tax benefits of share-based payment arrangements

588

525

Purchases and retirement of treasury stock, at cost

(27,138)

(4,066)

Exercise of stock options

963

-

Net cash provided by financing activities from continuing operations

32,313

83,104

Net cash provided by financing activities from discontinued operations

-

-

Net cash provided by financing activities

32,313

83,104

Effect of exchange rate changes on cash and equivalents

(1,738)

(58)

NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS

(4,735)

23,979

CASH AND EQUIVALENTS, beginning of period

44,955

20,976

CASH AND EQUIVALENTS, end of period

$       40,220

$       44,955

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share data)

Three Months Ended 

Twelve Months Ended 

December 31,

December 31,

2014

2013

2014

2013

Non-GAAP Revenue (1)

Net revenue, as reported

$   139,162

$  134,625

$  567,071

$  526,865

Impact of purchase accounting adjustments related to deferred revenue (2)

435

-

435

-

Non-GAAP revenue

$   139,597

$  134,625

$  567,506

$  526,865

Non-GAAP Operating Income & Adjusted EBITDA (1)

Operating income, as reported 

$     4,914

$     3,078

$    29,790

$   34,737

Impact of purchase accounting adjustments related to deferred revenue (2)

435

-

435

-

Equity-based compensation

2,916

2,178

10,460

7,872

Amortization

3,686

1,787

11,235

3,496

Excise and sales tax expense

385

1,891

385

1,969

Restructuring costs 

675

3,065

743

3,506

Asset impairments

40

980

4,978

1,196

Net legal settlements and related expenses

8

7

180

598

Acquisition-related costs

2,324

2,348

8,162

5,392

Non-GAAP operating income

$    15,383

$    15,334

$    66,368

$   58,766

Depreciation

8,978

8,729

35,226

33,758

Adjusted EBITDA

$    24,361

$    24,063

$  101,594

$   92,524

Non-GAAP Net Income from Continuing Operations (1)

Net income (loss) from continuing operations, as reported

$     3,394

$    (1,280)

$    17,443

$   18,854

Impact of purchase accounting adjustments related to deferred revenue (2)

334

-

308

-

Elimination of non-recurring tax adjustments and related interest

(1,426)

1,939

(1,927)

687

Equity-based compensation

2,242

1,493

7,400

5,510

Amortization

2,834

1,225

7,949

2,447

Excise and sales tax expense

296

1,296

272

1,378

Excise and sales tax interest

-

127

-

130

Restructuring costs

519

2,101

526

2,454

Asset impairments

31

672

3,522

837

Net legal settlements and related expenses

6

5

127

419

Acquisition-related costs

1,787

1,610

5,775

3,774

Foreign exchange transaction (gain)/loss (3)

(140)

(75)

(490)

(268)

Non-GAAP net income from continuing operations

$     9,877

$     9,113

$    40,905

$   36,222

Non-GAAP Diluted EPS from Continuing Operations (1) (4)

Diluted net income (loss) per share from continuing operations, as reported

$       0.07

$      (0.03)

$       0.38

$       0.40

Impact of purchase accounting adjustments related to deferred revenue (2)

0.01

-

0.01

-

Elimination of non-recurring tax adjustments and related interest

(0.03)

0.04

(0.04)

0.01

Equity-based compensation

0.05

0.03

0.16

0.12

Amortization

0.06

0.03

0.17

0.05

Excise and sales tax expense

0.01

0.03

0.01

0.03

Excise and sales tax interest

-

-

-

-

Restructuring costs

0.01

0.04

0.01

0.05

Asset impairments

-

0.01

0.08

0.02

Net legal settlements and related expenses

-

-

-

0.01

Acquisition-related costs

0.04

0.03

0.12

0.08

Foreign exchange transaction (gain)/loss (3)

-

-

(0.01)

(0.01)

Non-GAAP diluted EPS from continuing operations

$       0.22

$       0.20

$       0.88

$       0.78

(1)

Management believes that presenting non-GAAP revenue, non-GAAP operating income, adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information regarding underlying trends in the company's continuing operations.  Management expects  equity-based compensation and amortization expenses to be recurring costs and presents non-GAAP operating income, adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations to exclude these non-cash items, as well as non-recurring items that are unrelated to the company's ongoing operations, including the impact of purchase accounting adjustments related to deferred revenue, non-recurring tax adjustments and related interest, excise and sales tax expense, excise and sales tax interest, restructuring costs, asset impairments, net legal settlements and related expenses, acquisition-related costs and foreign exchange transaction gains and losses. These non-cash and non-recurring items are presented net of taxes for non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. 

(2)

Business combination accounting principles require us to write-down the deferred revenue associated with software licenses and related support contracts assumed in our acquisitions. The revenue for these support contracts is deferred and typically recognized over a one-year period, so our GAAP revenue for the one-year period after an acquisition does not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down.  We believe this adjustment to the revenue from these contracts is useful to investors as an additional means to reflect revenue trends of our business.

(3)

Represents the impact of foreign exchange transaction gains and losses included in the Statements of Operations in "Other, net".

(4)

Column totals may not sum due to the effect of rounding on EPS.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share data)

(continued)

Prior Year Quarter Constant Currency Adjustments (5)

Impact of

Impact of

Q4 - 14 (Constant currency)

fluctuations in
foreign currency
exchange rates

Q4 - 14 (Actual)

2014
(Constant currency)

fluctuations in
foreign currency
exchange rates

2014
 (Actual)

(Unaudited, in thousands, except per share data)

(Unaudited, in thousands, except per share data)

Net Revenue

$       141,754

$                (2,592)

$       139,162

$       568,227

$             (1,156)

$       567,071

North America Net Revenue

$         89,050

$                   (283)

$         88,767

$       356,845

$             (1,049)

$       355,796

Europe Net Revenue

$         37,061

$                (1,431)

$         35,630

$       145,001

$               2,127

$       147,128

Asia Pacific Net Revenue

$         15,643

$                   (878)

$         14,765

$         66,381

$             (2,234)

$         64,147

Non-GAAP Operating Income

$         15,588

$                   (205)

$         15,383

$         65,995

$                  373

$         66,368

Adjusted EBITDA

$         24,695

$                   (334)

$         24,361

$       101,353

$                  241

$       101,594

Non-GAAP Net Income from Continuing Operations

$           9,965

$                     (88)

$           9,877

$         40,429

$                  476

$         40,905

Non-GAAP Diluted EPS from Continuing Operations

$             0.22

$                         -

$             0.22

$             0.88

$                       -

$             0.88

(5)

Management also presents the non-GAAP financial measures described under note 1 above, as well as net revenue and segment net revenue, on a constant currency basis 

compared to the same period in the previous year (Q4-13 or FY-2013) to exclude the effects of foreign currency exchange rates, which are not completely within management's 

control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations.  These constant currency adjustments 

convert current quarter results using prior period (Q4-13) average exchange rates and current year results using prior year (FY-2013) average exchange rates. 

Sequential Quarter Constant Currency Adjustments (6)

Impact of 

Q4 - 14 (Constant currency)

fluctuations in foreign currency exchange rates

Q4 - 14 (Actual)

Net Revenue

$       141,562

$               (2,400)

$       139,162

(6)

Management also presents net revenue on a constant currency basis compared to the prior quarter (Q3-14) to exclude the effects of foreign currency

exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial

results without the distortion of these fluctuations.  These constant currency adjustments convert current quarter results using prior period (Q3-14)

average exchange rates.

Organic Growth (7)

Impact of

December 31,
2013

fluctuations in foreign currency exchange rates

Acquisitions

Organic net revenue growth

December 31,
2014

Organic net revenue growth rate

(Unaudited, in thousands, except percentages)

Net Revenue, Three Months Ended

$       134,625

$               (2,590)

$         10,586

$          (3,459)

$          139,162

-2.6%

 Net Revenue, Twelve Months Ended

$       526,865

$               (2,484)

$         56,165

$        (13,475)

$          567,071

-2.6%

(7)

Management defines "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations and acquisitions made during the periods presented and presents this non-GAAP financial measure to exclude the effect of these items that are not completely within management's control, such as foreign currency exchange rate fluctuations, or do not reflect the company's ongoing core operations or underlying growth, such as acquisitions. 

Normalized Free Cash Flow (8)

Twelve Months Ended 

December 31,

2014

2013

Net cash provided by operating activities from continuing operations, as reported

$         78,900

$             75,676

Plus: Payments for restructuring costs, as reported

1,916

2,469

Plus: Cash paid for acquisition-related costs, as reported

7,581

3,863

Less: Capital expenditures, as reported

(35,195)

(31,774)

Free cash flow

$         53,202

$             50,234

Free cash flow per share

$             1.15

$                 1.08

(8)

Management defines "normalized free cash flow" as net cash provided by operating activities from continuing operations, before the impact of payments for restructuring costs and cash payments for acquisition-related costs, less capital expenditures. Management believes that this non-GAAP measure provides a relevant measure of the company's liquidity in evaluating its financial performance and ability to generate cash without additional external financing in order to repay debt obligations, fund acquisitions and repurchase shares. Management utilizes diluted weighted-average shares outstanding in calculating free cash flow per share.