Press Release: Pegasus Solutions, Inc.
October 1, 2001
DALLAS, TX -- Pegasus Solutions, Inc. (Nasdaq: PEGS), a leading provider of transaction processing and electronic
commerce solutions to the hotel industry worldwide, Friday announced that as a result of the tragic events that
occurred on September 11, the Company is revising its financial guidance for the third quarter 2001. Due to the
negative impact of these events, Pegasus now expects third quarter revenue to be in the range of $42 million to
$44 million, and cash earnings per share (EPS), excluding one-time restructuring costs and consulting fees associated
with the restructuring, to be in the range of $0.12 to $0.14.
``Until September 11, we were on track to meet previous third quarter estimates, as our July and August revenue
contributed approximately $0.14 to cash EPS,'' stated John F. Davis, III, chairman and chief executive officer
of Pegasus Solutions. ``However, our key performance indicators declined significantly in the days immediately
following the attacks. I'm encouraged to see that the daily transaction volumes for the Pegasus Technology and
Utell businesses have begun to improve since then and are currently running at approximately 70 percent of pre-September
11 volumes.''
Pegasus originally projected revenue for September to be $16 million. The near absence of reservations processed
on September 11 and the days immediately thereafter had a substantial impact on Pegasus, as the Company's revenue
is primarily reservation-transaction based. Accordingly, the Company now estimates its September revenue will be
approximately $11 million. The loss of approximately $5 million in revenue represents a loss of approximately $0.11
in cash EPS.
Commenting on the Company's financial outlook, Susan K. Cole, chief financial officer of Pegasus said, ``We are
currently unable to predict when the travel industry will fully recover from these events, or if the current volumes
will be sustained. Accordingly, we cannot currently provide reliable guidance for the fourth quarter. We will continue
to assess the impact of these events and expect to provide revised fourth quarter guidance during our quarterly
conference call scheduled for October 30, 2001.''
``While we grieve with the rest of America over the lives lost due to the tragic events on September 11, we remain
focused on implementing the organizational changes announced earlier this month,'' Davis said. ``We believe the
cost savings resulting from our reorganization, combined with our strong balance sheet, will sustain us through
these uncertain times. In addition, we are taking further steps to control daily operating costs and other variable
costs during this time of uncertainty for the travel industry.''
On September 4, 2001, Pegasus announced a reorganization of operations and reduction of its workforce, which are
expected to significantly improve its operating efficiencies. These actions are scheduled to be completed by early
2002, and once fully implemented, are estimated to result in annual cost savings in the range of $9 million to
$11 million.
Company Information
Dallas-based Pegasus Solutions, Inc. (http://www.pegs.com) is a leading global
provider of hotel reservation technologies. Its services include central reservations systems; electronic distribution
services that connect more than 41,000 hotels to the Internet and to the global distribution systems (GDS); travel
agent commission processing and payment services; the consumer Internet site TravelWeb.com (http://www.travelweb.com);
the Utell marketing and reservation representation service (http://www.Utell.com);
and PegasusCentral(TM), a Web-based enterprise solution with property management applications. Pegasus' customers
comprise more than 100,000 travel agencies around the world, including nine of the 10 largest U.S.-based travel
agencies(1); more than 44,000 hotel properties around the globe, including 48 of the 50 largest hotel brands in
the world based on total number of guest rooms(2); and more than a thousand Web sites/services have their hotel
reservations Powered by Pegasus(TM). In addition to its corporate headquarters in Dallas, Pegasus has 23 offices
in 16 countries, including regional hubs in Phoenix, London and Singapore. The company's stock is traded on the
Nasdaq National Market under the symbol PEGS.
This statement contains references to future events and projected results, including anticipated transactions involving
the Company and its service offerings. There can be no assurance that the referenced future events or projected
results will actually occur or that the future financial performance of the Company will be as projected. Actual
occurrences, results and performance may differ substantially and materially from those projected as a result of
risks and uncertainties mentioned in this statement or detailed in the Company's periodic reports and registration
statements filed with the Securities and Exchange Commission including its Form 10-K for the year ended December
31, 2000.
(1) Travel Weekly, June 25, 2001, "Top 50 Travel Agencies"
(2) Hotel Business, February 7, 2001, "The Top Hotel Brands"
SOURCE: Pegasus Solutions, Inc.