PTEK HOLDINGS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K
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[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2000.

Commission file number: 0-27778

PTEK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Georgia 59-3074176
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

3399 Peachtree Road, N.E., The Lenox Building, Suite 600, Atlanta, Georgia 30326
(address of principal executive office)

(Registrant's telephone number, including area code): (404) 262-8400

Securities registered pursuant to Section 12(b) of the Act:

None None
(Title of each class) (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $0.01 Per Share
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the closing sale price of common stock on March 26, 2001
as reported by The Nasdaq Stock Market's National Market, was approximately
$123,387,231.

As of March 26, 2001 there were 50,275,353 shares of the registrant's common
stock outstanding.

List hereunder the documents incorporated by reference and the part of the
Form 10-K (e.g., Part I. Part II, etc.) into which the document is incorporated:
Portions of the registrant's Proxy Statement for its 2001 meeting of
shareholders are incorporated by reference in Part III.

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INDEX

Page
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Part I
Item 1. Business.................................................................................. 3
Item 2. Properties................................................................................ 9
Item 3. Legal Proceedings......................................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders....................................... 12

Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters..................... 13
Item 6. Selected Financial Data................................................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..... 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk................................ 46
Item 8. Financial Statements and Supplementary Data............................................... 46
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...... 78

Part III
Item 10. Directors and Executive Officers of the Registrant........................................ 79
Item 11. Executive Compensation.................................................................... 79
Item 12. Security Ownership of Certain Beneficial Owners and Management............................ 79
Item 13. Certain Relationships and Related Transactions............................................ 79

Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K........................... 80
Signatures.............................................................................................. 88
Exhibits

FORWARD LOOKING STATEMENTS

When used in this Form 10-K and elsewhere by management or PTEK Holdings,
Inc. ("PTEK" or the "Company") from time to time, the words "believes,"
"anticipates," "expects," "will" "may," "should," "intends," "plans,"
"estimates," "predicts," "potential," "continue" and similar expressions are
intended to identify forward-looking statements concerning our operations,
economic performance and financial condition. These include, but are not limited
to, forward-looking statements about our business strategy and means to
implement the strategy, our objectives, the amount of future capital
expenditures, the likelihood of our success in developing and introducing new
products and services and expanding our business, and the timing of the
introduction of new and modified products and services. For those statements, we
claim the protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. These statements are
based on a number of assumptions and estimates that are inherently subject to
significant risks and uncertainties, many of which are beyond our control, and
reflect future business decisions which are subject to change. A variety of
factors could cause actual results to differ materially from those anticipated
in PTEK's forward-looking statements, including the following factors:

. Competitive pressures among communications services providers, including
pricing pressures, may increase significantly;

. Our ability to respond to rapid technological change, the development of
alternatives to our products and services and the risk of obsolescence of
our products, services and technology;

. Market acceptance of new products and services;

. Strategic investments in early stage companies, which are subject to
significant risks, may not be successful and returns on such strategic
investments, if any, may not match historical levels;

. The value of our business may fluctuate because the value of some of our
equity investments fluctuates;

. Our ability to manage our growth;

. Costs or difficulties related to the integration of businesses and
technologies, if any, acquired or that may be acquired by us may be greater
than expected;

. Expected cost savings from past or future mergers and acquisitions may not
be fully realized or realized within the expected time frame;

. Revenues following past or future mergers and acquisitions may be lower
than expected;

. Operating costs or customer loss and business disruption following past or
future mergers and acquisitions may be greater than expected;

. The success of our strategic relationships, including the amount of
business generated and the viability of the strategic partners, may not
meet expectations;

. Possible adverse results of pending or future litigation or adverse results
of current or future infringements claims;

. Risks associated with interruption in our services due to failure of the
platforms and network infrastructure utilized in providing our services;

. Risks associated with expansion of our international operations;

. General economic or business conditions, internationally, nationally or in
the local jurisdiction in which we are doing business, may be less
favorable than expected;

1

. Legislative or regulatory changes may adversely affect the business in
which we are engaged;

. Changes in the securities markets may negatively impact us;

. Factors described under the caption "Factors Affecting Future Performance"
in this Form 10-K; and

. Factors described from time to time in our press releases, reports and
other filings made with the Securities and Exchange Commission.

PTEK cautions that these factors are not exclusive. Consequently, all of the
forward-looking statements made in this Form 10-K and in documents incorporated
in this Form 10-K are qualified by these cautionary statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Form 10-K. PTEK takes on no obligation to
publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date of
this Form 10-K, or the date of the statement, if a different date.

2

PART I

Item 1. Business

Overview

PTEK Holdings, Inc. ("PTEK" or the "Company") is a global provider of
communications and data services, including conferencing (audio conference
calling and Web-based collaboration), multimedia messaging (high-volume fax, e-
mail, wireless messaging and voice message delivery), and unified communications
(personal communications management systems that handle voice mail, e-mail and
personal content from the Web or the telephone). The Company's services are
directed primarily at the enterprise marketplace and its current customer base
contains more than 80,000 corporations, including almost 70% of the Fortune 500.
PTEK believes that corporate customers will increasingly rely on outsource
providers for these communications and data services because these tasks are too
complex and/or costly to handle internally and do not represent a core
competency. In messaging communications alone, the Gartner Group projects that
by the end of 2001, 65% of U.S.-based corporations will outsource all or part of
their messaging needs.

In 1997 and 1998, the Company focused on acquiring market leaders in
communications and data service categories, which are now operated as separate
business units. They include Premiere Conferencing, an industry leader for
enhanced, automated and Web conferencing solutions; Xpedite, the global leader
in multimedia messaging; and Voicecom, a leading provider of integrated
messaging and unified communications solutions. The Company also has an
investment arm, PtekVentures, which has ownership interests in various new
technology companies. In 2000, PTEK exited its original business, retail calling
card services.

To better serve PTEK's global corporate customer base, over the last few years
the Company has funded new technology development in each of its business units
to help position them in larger market categories. Premiere Conferencing has
expanded into automated and Web conferencing; Xpedite has developed a suite of
e-mail, wireless and voice-based messaging services; and Voicecom has broadened
its offering to include Web-based voice mail and other personal communications
management tools.

PTEK conducts business worldwide with 76 offices in 18 countries. The
corporate headquarters for PTEK are located at 3399 Peachtree Road, NE, Lenox
Building, Suite 600, Atlanta, GA 30326, and the telephone number is (404) 262-
8400.

Industry Background

Nearly everywhere in the world, the bulk of business communication is done
through e-mail, fax, voice mail and telephone conferencing. This explosion of
communications in various forms has forced more and more companies to outsource
their managed group communications needs. PTEK provides solutions for all of
these communications categories.

Conferencing and Web collaboration is projected to be a $17.7 billion market
by 2003. (Source: Collaborative Strategies.) The multimedia messaging segment,
which combines fax, e-mail and voice and video distribution, is projected to be
a $10.5 billion market within three years. (Source: IDC, Forrester and Internet
Research Group.) The unified communications and voice messaging market is
projected to be $8.95 billion by 2004. (Source: MMTA and IDC.) PTEK has taken a
leadership position in each of these categories, often providing multiple
integrated services. Overall, PTEK services are positioned in markets that
represent close to $40 billion in potential business.

Today, PTEK's services, combined with its global infrastructure, are the
primary conduits for literally billions of business communications each year.

3

Service Offerings

PTEK's communications and data service offerings are provided through its
three business units -- Premiere Conferencing, Xpedite and Voicecom, and include
the following:

Premiere Conferencing provides a full range of enhanced, automated and Web
conferencing services for all forms of group communications activities.
Customers use Premiere Conferencing for a wide range of communications from very
large events such as investor relations calls, press conferences and training
seminars with hundreds or thousands of participants, to smaller four-to-six
person conference calls. Premiere Conferencing provides group communications
services for leading companies in a variety of vertical industries, including
technology, healthcare, financial services, public relations and market
research. Premiere Conferencing hosted approximately 750,000 calls using over
283 million minutes in 2000.

Through its own proprietary software technology, Premiere Conferencing
offers ReadyConference/SM/, its automated service that does not require hands-on
involvement from an operator. These automated services allow users to begin and
conduct their conference calls without the assistance of an operator, via a
dedicated dial-in number and passcode available for use anytime. ReadyConference
can be used for a variety of group communications, including any meeting
requiring instant access to a number of participants.

Premiere Conferencing's enhanced services, PremiereCall, include assistance
from an operator to ensure participants are on line, to begin the conference and
conduct a roll call. In addition, complete event management services that
include a dedicated team and professional announcer to work more closely with
the client throughout the event are available. Typical applications include
sales meetings, earnings releases, press conferences, customer seminars and
product rollouts. Premiere Conferencing's client services team understands the
importance of professional, secure communications and works closely with its
customers to ensure a successful conference.

Premiere Conferencing also offers Web-based services called VisionCast(R) that
combine the power of the Internet with its audio conferencing offerings to
provide a real-time, multimedia presentation solution. VisionCast gives
customers the interactivity and collaborative nature of an in-person meeting
while maintaining the cost and time savings of a traditional conference call.
Customers use VisionCast to conduct distance learning, training, seminars,
company meetings, focus groups and media conferences. VisionCast includes
features such as chat, Web tours, polling, white boarding functions, record and
playback capabilities, roll call and live demo options. As part of its Web-based
services, Premiere Conferencing also offers SoundCast(R), an audio streaming
technology that provides live Internet streaming to simulcast a live conference
call or recorded presentation over the Web.

Premiere Conferencing services are available in nine countries with bridging
and sales infrastructure in the United States, Canada, Australia, China,
Singapore, Japan, France, Germany and the United Kingdom, and Premiere
Conferencing plans to actively expand its global presence in 2001.

Xpedite offers a full range of value-added multimedia messaging services that
manage and facilitate the electronic distribution of information to all types of
electronic addresses including fax, e-mail, wireless and voice. Customers use
Xpedite to manage critical information distribution for transaction-based
services such as bank statements, subscription renewals, promotional offers,
purchase orders, newsletters, research reports, rate sheets and pricing/product
announcements. Xpedite provides services to almost half of the global Fortune
500 companies across nearly every business sector, including financial services,
professional associations, travel, hospitality, publishing, technology and
manufacturing. Xpedite processed approximately 1.6 billion messages in 2000
through its worldwide proprietary IP network for electronic information
delivery.

In 2000, Xpedite launched messageREACH/SM/, an outsourced e-mail service that
provides control, tracking, security, personalization and automated
administration for high volume e-mail and e-commerce applications. Late in the
year, Xpedite added several significant service enhancements to messageREACH
including improved HTML message support, transactional message support for
applications such as trade and account balance confirmations, billing and
invoicing, as well as campaign management capabilities for large scale e-
marketing applications. Among the advanced features built into the service are
support for the distribution and collection of forms, multiple layers of
encryption and levels of password protection, anti-spam, "opt-out" protection,
automated personalization of messages with text and graphical inserts and the
hosting of customer databases for campaign management.

4

messageREACH customers can access a proprietary software tool, intelliSEND/SM/
Wizard, to help with the creation of graphically rich HTML documents for e-mail,
and for the insertion of trackable hyperlinks to documents or Web sites. The
proprietary messageREACH delivery engine and infrastructure operate solely for
the support of messageREACH customers and were custom designed by Xpedite's
technical team, incorporating leading Internet technology. Xpedite also provides
Short Message Services (SMS) for wireless users in Europe and South Asia, which
allows text messages to be delivered to GSM phones using existing Xpedite access
methods.

In 2000, Xpedite also launched voiceREACH/SM/, a new automated service that
simultaneously delivers large volumes of prerecorded voice messages to any size
list of phone numbers, voice mailboxes or other answering devices. Typical users
of voiceREACH services include associations, political organizations, securities
firms and trade show operators.

Xpedite supports multiple protocols and can be accessed through a variety of
methods including ftp, TCP/IP, PC-Xpedite software, or Simple Mail Transfer
Protocol (SMTP). Xpedite services are available throughout the world with local
sales and customer support available in 18 countries throughout Europe, Asia,
Australia and North America.

Voicecom offers a suite of integrated communications solutions including
voice messaging, interactive voice response (IVR) services and unified
communications. Voicecom services are used by geographically dispersed companies
to increase communications and to improve productivity and customer care.
Voicecom's services support a variety of applications including customer care,
interpersonal messaging and enterprise communications, in a variety of
industries including financial services, healthcare, marketing and real estate.
Voicecom processed over 40 million messages and handled over 175 million calls
in 2000.

Voicecom's network voice messaging services allow a user to record a voice
message and send it to one voice mailbox or many voice mailboxes on the network.
Users can respond to a network voice message and messages can also be easily
forwarded or copied. Voicecom's network is effectively a "voice intranet."
Voicecom is able to provide its voice messaging service via local numbers in
more than 4,500 cities throughout North America. This network-based solution is
well suited for geographically dispersed companies such as direct selling
organizations, real estate and insurance.

In addition to its local based network voice messaging services, Voicecom
also offers centralized, 800-based corporate voice messaging services. For
certain large corporate customers, Voicecom purchases and installs voice
messaging equipment on the customers' premises. In those cases, Voicecom
provides full facilities management, including equipment maintenance and end-
user service and support. All of Voicecom's central voice messaging services
(800-based, premise-based and pure facilities management) include end-user
support services, such as development and distribution of voice mail
directories, generation and maintenance of large voice mail distribution lists,
administration services (adds, deletes and changes) and customer or end-user
training.

Voicecom's IVR service is a 24/7 automated system that answers all incoming
calls to a location or central phone number and presents callers with a brief
menu of choices to meet their needs. The choices typically include location
hours, directions, account information and emergency services. Voicecom supports
a variety of IVR applications using custom voice prompts and commands from a
caller's telephone keypad to retrieve, process and route certain information or
telephone calls. For instance, financial institutions can use this service to
allow bank customers to access existing account information, open new accounts,
apply for loans, use online financial services and receive directions to banking
and ATM locations. IVR services are primarily designed for financial
institutions, retail outlets and property management companies.

In September 2000, Voicecom launched Orchestrate/R/ 2000, which is a personal
communications and content portal that combines unified communications and Web
content delivery functions. Orchestrate 2000 combines desktop personal
information systems like Microsoft/R/ Outlook/R/, and content services for news
and stocks like My Yahoo!/R/, and long-distance and other telecom services like
WorldCom, into one convenient communications system. Orchestrate subscribers are
able to access their voice, fax and e-mail messages, communications tools
including conference calling, and personalized information such as stock quotes,
weather reports, and leading news stories, at a single Web page or via any
touch-tone telephone.

5

Voicecom services are available in North America, Australia, Taiwan, New
Zealand and the United Kingdom.

Customer Base

PTEK customers represent nearly every major industry, serving almost 70% of
the Fortune 500. Millions of business people worldwide depend on PTEK services
everyday.

Premiere Conferencing has approximately 4,200 domestic and international
corporate accounts, supporting almost 50,000 moderators. The business unit has
successfully penetrated key accounts in various industries including technology,
healthcare, investor relations, financial services, public relations and market
research. Premiere Conferencing has long-term customer relationships with well-
respected companies and organizations such as IBM Corporation, HCA The
Healthcare Company, Novell, SGI, Hewlett Packard, Merck, Charles Schwab & Co.,
Merrill Lynch, PaineWebber, the NCAA and the National Institutes of Health.

Xpedite has more than 78,000 domestic and international corporate accounts,
representing 173,000 users. Xpedite serves almost half of the Fortune 500
companies. The business unit has successfully targeted industries such as
securities, banking, mortgage, publishing, healthcare, associations, investor
relations, public relations, travel and hospitality. Xpedite's diverse customer
base includes globally recognized companies such as Boeing, Bank One, Marriott,
Merck, Xerox, Chase Manhattan, Nippon Life Insurance, Sam's Club, Bertelesmann,
Dell Computer, United Airlines, British Airways, Bank of America, McGraw Hill,
Toyota, Federal Express and Salomon Smith Barney.

Voicecom has approximately 1,200 corporate accounts and nearly 500,000 users.
The business unit initially was successful in penetrating direct selling
organizations such as Amway, Mary Kay, Primerica, Avon and others. Voicecom now
targets key vertical markets such as financial services with existing customers
including Bank of America, Key Bank and PNC Bank; telecom providers with
existing customers including Sprint PCS, Verizon and Talk.com; real estate with
existing customers such as Prudential Northwest; and healthcare with existing
customers including WebMD and Abbott Labs.

Sales and Marketing

Each of PTEK's business units markets its services through direct sales
employing a regional reporting structure and a centrally managed national and
global accounts program. The Company's sales force targets large and mid-size
enterprises. The centrally managed national and global accounts program focuses
on multi-location businesses that are better served by dedicated representatives
with responsibility across different geographic regions. The direct sales force
is organized by services and by industry on a global scale. The company employs
740 sales professionals in 76 offices in 18 countries.

In addition to direct sales, the Company has a significant network of third-
party distributors and implements indirect marketing programs for various
services via affiliate and co-branded relationships. Indirect sales activities
are used with various companies to resell PTEK's services through their sales
force, Web site or as part of their product offerings.

As a service organization, PTEK's customer service teams play a major role
in managing customer relationships, as well as selling additional value-added
services to existing accounts. PTEK employs more than 800 customer service
professionals.

6

Platforms and Network Infrastructure

The Company, through its three business units, operates global Internet and
telecom-based networks that allow customers access to the Company's various
services through the Internet and through local and/or 800 telephone numbers.

Premiere Conferencing services are provided from full-service operations
centers in Colorado Springs, Colorado and Lenexa, Kansas and automated bridging
nodes in Canada, Australia, China, Singapore, Japan, France, Germany and the
United Kingdom Complex, operator-assisted calls are supported on various
commercially available bridging platforms. Internally developed conference
bridges are used to support automated conferencing services. Customers access
the conferencing platform through direct inward dialing, 800 numbers, the
Internet and virtual network access.

Xpedite services are provided primarily through an electronic messaging
platform that uses servers to perform all primary processing and switching
functions. This platform supports multiple input methods including, but not
limited to, fax-to-fax, priority PC-based software, e-mail gateways and high
speed IP based interconnects. Outgoing fax- and voice-based messages are
delivered through line group controllers, which are deployed in a decentralized
fashion to exploit local delivery costs. The remote line group controllers are
connected to the servers over a wide area network via either private lines or
Xpedite's global TCP/IP based network. Messages are transported in bulk from one
location domain to another using MCP to MCP protocol. The current domains
include Australia, Hong Kong, Japan, Korea, Singapore, Switzerland, United
Kingdom, United States, Germany and France. Remote nodes on the network are
located in Belgium, Canada, Denmark, Italy, Malaysia, Netherlands, New Zealand
and Taiwan.

Voicecom offers advanced network-based voice messaging services through most
of our 200 platforms located in the United States, Canada, Taiwan, Australia and
the United Kingdom. The telephony service platforms are interconnected via
Voicecom's highly available data network infrastructure. This network transports
the subscriber messages between the distributed systems. Voicecom is conducting
a network consolidation project with the objective of reducing to just three the
number of data centers in the United States. The local numbers will be routed
back from the local markets to these three hubs over leased fixed facilities.
Voicecom also offers outsourced voice messaging services to large corporate
clients via toll-free access to voice messaging platforms located in Atlanta,
Georgia; Reno, Nevada; Arlington, Virginia; and Oakbrook, Illinois. In addition,
certain corporate voice messaging services are provided using equipment that is
installed on the customers' premises. Voicecom's Orchestrate 2000 service is
provided on a highly available and highly scaleable platform that includes
servers and third-party software integrated and enhanced with Voicecom's unified
communications middleware. The primary Orchestrate 2000 service hubs are located
in Atlanta, Georgia and Dallas, Texas. Voicecom's IVR services are provided on a
variety of platforms. The platform utilized for any particular application is
determined by the specific requirements for that application.

Research and Development

PTEK's ability to design, develop, test and support new software technology
for product enhancements in a timely manner is an important ingredient to its
future success. Next generation services such as VisionCast, messageREACH and
Orchestrate are critical additions to the suite of communications and data
services PTEK provides to its customers, not only to position the operating
units in larger market segments, but more importantly to meet changing customer
needs and respond to the overall technological changes in the marketplace.

Each PTEK operating unit includes research, development and engineering
personnel who are responsible for designing, developing, testing and supporting
proprietary software applications, as well as creating and improving enhanced
system features and services. The Company's research and development strategy is
to focus its efforts on enhancing its proprietary software and integrating it
with readily available industry standard software and hardware when feasible.
Research, development and engineering personnel also engage in joint development
efforts with the Company's strategic partners and vendors.

7

PTEK employs 120 research and development professionals and plans to spend $16
million on research and development in 2001.

Competition

PTEK competes with major communications service providers around the world
such as AT&T, WorldCom, Sprint, and the international PTTs. The Company also
competes with smaller companies in each of its service categories, including
Intercall, Evoke, ACT Teleconferencing, WebEx and Genesys in conferencing;
Mail.com, AVT, Critical Path, MessageMedia and Responsys in multimedia
messaging; and J2 Global Communications, Webley, General Magic and Net2Phone in
unified communications. In all cases, PTEK's strategy is to gain a competitive
advantage in winning and keeping customers by enabling its business units to
deliver leading technology-driven solutions to its customers and support them
with superior customer service.

The markets for the Company's services are intensely competitive, quickly
evolving and subject to rapid technological change. The Company expects
competition to increase in the future. Many of the Company's current and
potential competitors have longer operating histories, greater name recognition,
larger customer bases and substantially greater financial, personnel, marketing,
engineering, technical and other resources than the Company. The Company
believes that existing competitors are likely to expand their product and
service offerings and that new competitors are likely to enter the Company's
markets. Such competition could materially adversely affect the Company's
business, financial condition and results of operations.

Financial Information About Reportable Segments and Geographic Areas

For financial information about the Company's reportable segments and
geographic areas for the years ended December 31, 2000, 1999 and 1998, see Note
21 to the Consolidated Financial Statements.

Government Regulation

Premiere Communications, Inc. ("PCI"), which is part of the Company's Voicecom
business unit, provides both telecommunications and information services.
Consequently, PCI is, and certain other PTEK subsidiaries may be, subject to
federal, state and local regulation in the United States. Various international
authorities may also seek to regulate the services provided by PCI and possibly
other PTEK subsidiaries.

The FCC classifies PCI as a non-dominant carrier for its domestic interstate
and international common carrier telecommunications services. Generally, common
carriers that provide domestic interstate and international telecommunications
services must maintain tariffs on file with the FCC, describing rates, terms and
conditions of service, must comply with federal regulatory programs such as
universal service, telecommunications relay service, and payphone compensation,
and must comply with decisions and policies adopted or enforced by the FCC.
Currently, PCI has filed tariffs with the FCC to provide domestic interstate and
international telecommunications services, and PCI exercises reasonable efforts
to comply with the various FCC decisions, policies and regulatory programs. Most
state public utility commissions ("PUCs") also subject carriers such as PCI that
provide intrastate, common carrier telecommunications services to various
compliance and approval requirements, such as those in connection with entry
certification, tariff filings, transfers of control, mergers or other
acquisitions, issuance of debt instruments, periodic reporting and payment of
regulatory fees, as well as others. PCI either has applied for and received, or
is in the process of applying for and receiving, the necessary certificates or
authorizations to provide intrastate, long distance services. FCC or state PUC
authorizations can generally be conditioned, modified or revoked for failure to
comply with applicable laws, rules, regulations or regulatory policies. Fines or
other penalties also may be imposed for such violations. There can be no
assurance that PCI is currently in compliance with, or remitting all necessary
fees in connection with, all applicable FCC or state PUC requirements, or that
the FCC, state PUCs or third parties will not raise issues in the future with
regard to PCI's compliance with applicable laws or regulations.

8

A number of states have adopted laws restricting the distribution of
unsolicited commercial e-mails, or spam. The Company monitors such legislation
and regulatory development to minimize the risk of its participation in
activities that violate anti-spam legislation. In addition, a number of
legislative and regulatory proposals are under consideration by federal and
state lawmakers and regulatory bodies and may be adopted with respect to the
Internet. Some of the issues that such laws or regulations may cover include
user privacy, obscenity, fraud, pricing and characteristics and quality of
products and services. The adoption of any such laws or regulations may decrease
the growth of the Internet, which could in turn decrease the projected demand
for the Company's products and services or increase its cost of doing business.
Moreover, the applicability to the Internet of existing U.S. and international
laws governing issues such as property ownership, copyright, trade secret,
libel, taxation and personal privacy is uncertain and developing. Any new
legislation or regulation, or application or interpretation of existing laws,
could have a material adverse effect on the Company's business, financial
condition and results of operations.

In conducting its business, the Company is subject to various laws and
regulations relating to commercial transactions generally, such as the Uniform
Commercial Code and is also subject to the electronic funds transfer rules
embodied in Regulation E promulgated by the Federal Reserve. It is possible that
Congress, the states or various government agencies could impose new or
additional requirements on the electronic commerce market or entities operating
therein. If enacted, such laws, rules and regulations could be imposed on the
Company's business and industry and could have a material adverse effect on the
Company's business, financial condition or results of operations. The Company's
proposed international activities also will be subject to regulation by various
international authorities and the inherent risk of unexpected changes in such
regulation.

Proprietary Rights and Technology

The Company's ability to compete is dependent in part upon its proprietary
technology. The Company relies primarily on a combination of intellectual
property laws and contractual provisions to protect its proprietary rights and
technology. These laws and contractual provisions provide only limited
protection of the Company's proprietary rights and technology. The Company's
proprietary rights and technology include confidential information and trade
secrets which the Company attempts to protect through confidentiality and
nondisclosure provisions in its agreements. The Company typically attempts to
protect its confidential information and trade secrets through these contractual
provisions for the terms of the applicable agreement and, to the extent
permitted by applicable law, for some negotiated period of time following
termination of the agreement. PTEK currently has seven patents, ten patent
applications pending, numerous worldwide registrations of trademarks and service
marks, and numerous worldwide trademark and service mark registrations pending.
Despite the Company's efforts to protect its proprietary rights and technology,
there can be no assurance that others will not be able to copy or otherwise
obtain and use the Company's proprietary technology without authorization, or
independently develop technologies that are similar or superior to the Company's
technology. However, the Company believes that, due to the rapid pace of
technological change in communications and data services, factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements and the timeliness and quality of support services
are of equal or greater importance to establishing and maintaining a competitive
advantage in the industry.

Employees

As of December 31, 2000, PTEK employed 2,480 people. PTEK employees are not
represented by a labor union or covered by any collective bargaining agreements.

Item 2. Properties

PTEK Holdings' corporate headquarters occupy approximately 21,000 square feet
of office space in Atlanta, Georgia under a lease expiring August 31, 2007. The
headquarters of the Company's Voicecom business unit occupies approximately
74,000 square feet of office space in the same building under leases expiring
August 31, 2007 and August 31, 2006 plus approximately 19,000 square feet in a
nearby building whose lease expires

9

December 31, 2003. Xpedite occupies approximately 61,500 square feet of office
space in Eatontown, New Jersey under three separate leases expiring on June 15,
2001, October 31, 2001 and December 31, 2001, respectively. Xpedite has signed a
10-year lease for approximately 90,000 square feet of office space in Tinton
Falls, New Jersey and expects to move into these premises on or about June 1,
2001. Premiere Conferencing occupies approximately 105,000 square feet of office
space in Colorado Springs, Colorado under a lease expiring August 31, 2006, and
approximately 46,000 square feet of office space in Lenexa, Kansas under a lease
expiring August 31, 2009.

The Company also has data and switching centers and sales offices within and
outside the United States. The Company believes that its current facilities and
office space are sufficient to meet its present needs and does not anticipate
any difficulty securing additional space, as needed, on terms acceptable to the
Company.

Item 3. Legal Proceedings

The Company has several litigation matters pending, as described below, which
it is pursuing or defending vigorously. Due to the inherent uncertainties of the
litigation process and the judicial system, the Company is unable to predict the
outcome of such litigation matters. If the outcome of one or more of such
matters is adverse to the Company, it could have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia. Plaintiffs seek to
represent a class of individuals (including a subclass of former Voice-Tel
franchisees and a subclass of former Xpedite Systems, Inc. ("Xpedite")
shareholders) who purchased or otherwise acquired the Company's common stock
from as early as February 11, 1997 through June 10, 1998. Plaintiffs allege the
Company admitted it had experienced difficulty in achieving its anticipated
revenue and earnings from voice messaging services due to difficulties in
consolidating and integrating its sales function. Plaintiffs allege, among other
things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange
Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. We filed a
motion to dismiss this complaint on April 14, 1999. On December 14, 1999, the
court issued an order that dismissed the claims under Sections 10(b) and 20 of
the Exchange Act without prejudice, and dismissed the claims under Section
12(a)(1) of the Securities Act with prejudice. The effect of this order was to
dismiss from this lawsuit all open-market purchases by the plaintiffs. The
plaintiffs filed an amended complaint on February 29, 2000. The defendants filed
a motion to dismiss on April 14, 2000, which was granted in part and denied in
part on December 8, 2000. The defendants filed an answer on January 8, 2001.

A lawsuit was filed on November 4, 1998 against the Company and certain of its
officers and directors in the Southern District of New York. Plaintiffs are
shareholders of Xpedite who acquired common stock of the Company as a result of
the merger between the Company and Xpedite in February 1998. Plaintiffs'
allegations are based on the representations and warranties made by the Company
in the prospectus and the registration statement related to the merger, the
merger agreement and other documents incorporated by reference, regarding the
Company's acquisitions of Voice-Tel and VoiceCom Systems, the Company's roll-out
of Orchestrate, the Company's relationship with customers Amway Corporation and
DigiTEC, 2000, and the Company's 800-based calling card service. Plaintiffs
allege causes of action against the Company for breach of contract, against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 and against the individual defendants for
violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed
damages together with pre- and post-judgment interest, recission or recissory
damages as to violation of Section 12(a)(2) of the Securities Act, punitive
damages, costs and attorneys' fees. The defendants' motion to transfer venue to
Georgia has been granted. The defendants' motion to dismiss has been granted in
part and denied in part. The defendants filed an answer on March 30, 2000.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in
the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments with
Equitable Life Assurance Society of the United States and/or Equico Securities,
Inc. (collectively "Equitable"). More specifically, the complaint asserts
wrongdoing in connection with the plaintiffs' investment in securities of
Xpedite and in unrelated investments involving insurance-related products. The

10

defendants include Equitable and certain of its current or former
representatives. The allegations in the complaint against Xpedite are limited to
plaintiffs' investment in Xpedite. The plaintiffs have alleged that two of the
named defendants, allegedly acting as officers, directors, agents or
representatives of Xpedite, induced the plaintiffs to make certain investments
in Xpedite but that the plaintiffs failed to receive the benefits that they were
promised. Plaintiffs allege that Xpedite knew or should have known of alleged
wrongdoing on the part of other defendants. Plaintiffs seek an accounting of the
corporate stock in Xpedite, compensatory damages of approximately $4.85 million,
plus $200,000 in "lost investments," interest and/or dividends that have accrued
and have not been paid, punitive damages in an unspecified amount, and for
certain equitable relief, including a request for Xpedite to issue 139,430
shares of common stock in the plaintiffs' names, attorneys' fees and costs and
such other and further relief as the court deems just and equitable. This case
has been dismissed without prejudice and compelled to NASD arbitration, which
has commenced. In August 2000, the plaintiffs filed a statement of claim with
the NASD against 12 named respondents, including Xpedite (the "Nobis
Respondents"). The claimants allege that the 12 named respondents engaged in
wrongful activities in connection with the management of the claimants'
investments with Equitable. More specifically, the statement of claim asserts
wrongdoing in connection with the claimants' investment in securities of Xpedite
and in unrelated investments involving insurance-related products. The
allegations in the statement of claim against Xpedite are limited to claimants'
investment in Xpedite. Claimants seek, among other things, an accounting of the
corporate stock in Xpedite, compensatory damages of not less than $415,000, a
fair conversion rate on stock options, losses on the investments, plus interest
and all dividends, attorneys' fees and costs.

A lawsuit was filed on November 1, 1999 by Donald H. Turner, a former officer
of the Company, against the Company, Boland T. Jones and Jeffrey A. Allred in
the Superior Court of Fulton County, Georgia. Against the Company the plaintiff
alleges breach of contract and promissory estoppel relating to the termination
of his employment, and against all defendants the plaintiff alleges fraudulent
inducement relating to his hiring by the Company. The plaintiff seeks
compensatory damages of $875,000, forgiveness of a $100,000 loan, interest,
attorneys' fees and punitive damages in an unspecific amount. The defendants
filed an answer and counterclaim, claiming that the plaintiff owes the Company
the principal amount of the $100,000 loan plus interest as of January 1, 2001,
plus costs and attorneys' fees, and that the plaintiff defrauded the Company and
owes the Company approximately $400,000 in fraudulently attained pay and
benefits, including the $100,000 loan. In March 2001, the parties entered into a
settlement agreement and general release, which settled and disposed of all
claims in this litigation. This settlement will not have an material adverse
effect on the Company's business, financial condition or results of operations.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior
Court of New Jersey Law Division, Union County, against 17 named defendants
including the company and Xpedite, and various alleged current and former
officers, directors, agents and representatives of Xpedite. Plaintiff alleges
that the defendants engaged in wrongful activities in connection with the
management of the plaintiff's investments, including investments in Xpedite. The
allegations against Xpedite and the Company are limited to plaintiff's
investment in Xpedite. Plaintiff's claims against Xpedite and the Company
include breach of contract, breach of fiduciary duty, unjust enrichment,
conversion, fraud, interference with economic advantage, liability for ultra
vires acts, violation of the New Jersey Consumer Fraud Act and violation of New
Jersey RICO. Plaintiff seeks an accounting of the corporate stock of Xpedite,
compensatory damages of approximately $1.3 million, accrued interest and/or
dividends, a constructive trust on the proceeds of the sale of any Xpedite or
PTEK stock, shares of Xpedite and/or PTEK to satisfy defendants' obligations to
plaintiff, attorneys' fees and costs, punitive and exemplary damages in an
unspecified amount, and treble damages. On February 25, 2000, Xpedite filed its
answer, as well as cross claims and third party claims. This case has been
dismissed without prejudice and compelled to NASD arbitration, which has
commenced. In August 2000, a statement of claim was also filed with the NASD
against all but one of the Nobis Respondents making virtually the same
allegations on behalf of claimant Elizabeth Tendler. Claimant seeks, among other
things, an accounting of the corporate stock in Xpedite, compensatory damages of
not less than $265,000, a fair conversion rate on stock options, losses on other
investments, interest and/or unpaid dividends, attorneys fees and costs.

On or about May 19, 2000, the Company was served with a Complaint filed by
Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims
for breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of duty of good faith and fair dealings, unjust
enrichment, and violation of Georgia and Missouri blue sky laws. Plaintiff's
claims arise out of the Company's acquisition of American Teleconferencing
Services, Ltd. ("ATS") in April 1998. Plaintiff was a shareholder of ATS who
received shares of PTEK stock in the transaction. The Company removed the case
to the United States District Court for the Western District of Missouri,

11

and filed a Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint. Plaintiff has filed a Motion to Remand
the case back to state court. By order dated March 28, 2001, the court granted
plaintiff's Motion to Remand and dismissed as moot the Company's Motion to
Compel Arbitration, or Alternatively to Transfer Venue, or Alternatively to
Dismiss the Complaint.

On June 9, 2000, the Company and Premiere Communications, Inc. filed a lawsuit
in the United States District Court for the Middle District of Florida, seeking
unspecified damages and equitable, including injunctive, relief against Z-Tel
Technologies, Inc., Z-Tel Communications, Inc. (collectively, "Z-Tel"), David
Gregory Smith, James Kitchen and Eduard Mayer for patent infringement, breach of
contract, unfair competition, conversion, misappropriation of corporate
opportunities, conspiracy to misappropriate corporate opportunities, tortious
interference with contractual relations, tortious interference with actual and
prospective business relations, and misappropriation of trade secrets. On June
29, 2000, Z-Tel filed an answer and counterclaims against the Company and Boland
T. Jones ("Jones") seeking unspecified damages for tortious interference with
actual and prospective business relations, trade defamation, and compelled self-
defamation. Jones and the Company filed a timely motion to dismiss Z-Tel's
counterclaims, which is pending before the court. On November 14, 2000, the
parties to the lawsuit agreed to resolve in full all claims asserted by each
party against the other. In connection with the settlement, Z-Tel agreed to
issue a warrant to PTEK to purchase 175,000 shares of Z-Tel's common stock at a
exercise price of $12.00, which price is subject to certain adjustments.

The Company is also involved in various other legal proceedings that the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year covered by this report.

12

Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's common stock, $.01 par value per share (the "Common Stock"), has
traded on the Nasdaq National Market under the symbol "PTEK" since its initial
public offering on March 5, 1996. The following table sets forth the high and
low sales prices of the Common Stock as reported on the Nasdaq National Market
for the periods indicated. Such prices are based on inter-dealer bid and asked
prices without markup, markdown, commissions or adjustments and may not
represent actual transactions.

2000 High Low
---- ------- ------
First Quarter............................. $11.438 $6.000
Second Quarter............................ 7.125 3.125
Third Quarter............................. 4.188 2.625
Fourth Quarter............................ 3.438 0.906

1999 High Low
---- --------- ----------
First Quarter ............................ $13.000 $6.000
Second Quarter............................ 20.875 11.000
Third Quarter............................. 11.875 5.688
Fourth Quarter............................ 8.625 4.375

The closing price of the Common Stock as reported on the Nasdaq National
Market on March 26, 2001 was $2.6875. As of March 26, 2001 there were
approximately 491 record holders of the Company's Common Stock.

The Company has never paid cash dividends on its Common Stock, and the current
policy of the Company's Board of Directors is to retain any available earnings
for use in the operation and expansion of the Company's business. The payment of
cash dividends on the common stock is unlikely in the foreseeable future. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will depend upon the Company's earnings, capital
requirements, financial condition and any other factors deemed relevant by the
Board of Directors.

During the year ended December 31, 2000, certain current and former employees,
directors and investors exercised options to purchase an aggregate of 50,909
shares of Common Stock at prices ranging from $0.52 to $1.61 per share in
transactions exempt from registration pursuant to Section 4(2) and Rule 701 of
the Securities Act.

Item 6. Selected Financial Data

The following selected consolidated balance sheet and statement of operations
data as of and for the years ended December 31, 2000, 1999, 1998, 1997 and 1996,
and the consolidated balance sheet data as of December 31, 2000, 1999, 1998,
1997 and 1996 have been derived from the audited consolidated financial
statements of the Company, which give retroactive effect to the acquisitions of
Voice-Tel and VoiceCom Systems, both of which were accounted for as poolings-of-
interests, and are qualified by reference to such consolidated financial
statements including the related notes thereto. The selected consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
consolidated financial statements and the notes thereto.

"Adjusted EBITDA" is defined by the Company as operating income or loss before
depreciation, amortization, net legal settlements, acquired research and
development costs, and restructuring, merger costs and other special charges.
The Company in its earnings releases discloses Adjusted EBITDA before stock-
based compensation expense that is included in general and administrative
expenses. See Note 17--"Related Party Transactions" of the Notes to the
Consolidated Financial Statements for additional information concerning the
stock-based compensation.

13

Adjusted EBITDA is considered a key management performance indicator of
financial condition because it excludes the effects of goodwill and intangible
amortization attributable to acquisitions primarily acquired using the Company's
common stock, the effects of prior years' cash investing and financing
activities that affect current period profitability and the effects of sales of
marketable securities, the write-down of investments, and special cash or
noncash charges associated with acquisitions and internal exit activities.
Adjusted EBITDA is used as an indicator of operating cash flow before payments
for interest and taxes, and may not be comparable to similarly titled measures
presented by other companies and could be misleading unless all companies and
analysts calculate them in the same manner.

Year Ended December 31
--------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- --------- -------- --------- --------
(in thousands, except per share data)

Statement of Operations Data:
Revenues........................................... $436,935 $ 458,448 $444,818 $ 229,352 $197,474
Gross profit....................................... 321,495 328,757 309,782 165,378 141,873
Operating income (loss)(1)......................... (76,357) (138,081) (91,053) (16,714) 6,806
Net income (loss).................................. (58,866) (33,491) (84,254) (18,428) 3,458
Net income (loss) attributable to common and
common equivalent shares for shareholders for:
--basic net income (loss) per share............... $(58,866) $ (33,491) $(84,254) $ (18,428) $ 3,429
--diluted net income (loss) per share............. (58,866) (33,491) (84,254) (18,428) 3,429
Net income (loss) per common and common
equivalent shares for:
--basic(2)........................................ $(1.22) $(0.72) $(1.90) $(0.57) $0.12
--diluted(2)...................................... $(1.22) $(0.72) $(1.90) $(0.57) $0.11
Shares used in computing net income (loss) per
common and common equivalent shares for
--basic........................................... 48,106 46,411 44,325 32,443 27,670
--diluted......................................... 48,106 46,411 44,325 32,443 31,288

Balance Sheet Data (at period end):
Cash, cash equivalents and marketable securities... $ 29,716 $ 101,981 $ 40,609 $ 176,339 $ 83,836
Working capital.................................... 15,949 34,746 (92,628) 132,906 45,377
Total assets....................................... 630,933 770,481 796,416 379,593 201,541
Total debt......................................... 178,762 179,625 299,673 181,698 47,975
Total shareholders' equity......................... 313,406 422,220 397,793 107,761 104,533

Statement of Cash Flow Data:
Cash provided by operating activities.............. 17,929 9,927 22,248 27,159 36,889
Cash (used in) provided by investing activities.... (6,466) 107,216 21,292 (160,055) (96,112)
Cash (used in) provided by financing activities.... (2,394) (120,924) (46,115) 138,730 66,196

- ---------------
(1) Adjusted EBITDA would have been $66.6 million in 2000, $38.8 million in
1999, $61.8 million in 1998, $60.1 million in 1997 and $33.3 million in
1996.

(2) Basic net income (loss) per share is computed using the weighted average
number of shares of common stock outstanding during the period. Diluted net
income (loss) per share is computed using the weighted average

14

number of shares of common stock and dilutive common stock equivalents
outstanding during the period from convertible preferred stock, convertible
subordinated notes (using the if-converted method) and from stock options
(using the treasury stock method).

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Overview

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries (collectively
the "Company" or "PTEK") is a global provider of communications and data
services, including conferencing (audio conference calling and Web-based
collaboration), multimedia messaging (high-volume fax, e-mail, wireless
messaging and voice message delivery), and unified communications (personal
communications management systems that handle voice mail, e-mail and personal
content from the Web or the telephone). The Company's reportable segments align
the Company into two areas of focus that are driven by product offering and
corporate services. These segments are Xpedite, Voicecom, Premiere Conferencing,
Retail Calling Card Services and Corporate. Xpedite offers a full range of
value-added multimedia messaging services through its worldwide proprietary IP
network for electronic information delivery. Xpedite's customers are primarily
global Fortune 1000 companies. Voicecom offers a suite of integrated
communications solutions including voice messaging, interactive voice response
("IVR") services and unified communications. Voicecom's initial customers came
from direct selling organizations, but Voicecom now targets key vertical markets
such as financial services, telecom providers, real estate and healthcare.
Premiere Conferencing offers a full range of enhanced, automated and Web
conferencing services for all forms of group communications activities,
primarily to Fortune 1000 customers. Retail Calling Card Services is a business
segment that the Company exited through the sale of its revenue base effective
August 1, 2000. It primarily consisted of the Premiere WorldLink calling card
product, which was marketed primarily through direct response advertising and
co-branding relationships to individual retail users. Corporate focuses on being
a holding company with minimal headcount leaving the day-to-day management of
the businesses at the three operating business units. In addition, Corporate
includes PtekVentures, the Company's Internet investment arm. Adjusted EBITDA is
management's primary measure of segment profit and loss.

The Company has grown organically and through various acquisitions that have
expanded the company's service offerings, customer base, geographic reach and
technology. In 1996, The Company acquired TeleT Communications, LLC, which
became the foundation for the Company's Orchestrate product offering. In 1997,
PTEK acquired the franchise network of Voice-Tel, which provided local access
voice mail and voice messaging. The Company also acquired VoiceCom Systems in
1997, which provided 800-based corporate voice mail and calling card services.
Both the Voice-Tel and VoiceCom Systems acquisitions, as well as the Orchestrate
product offering, provide the basis of the Voicecom business unit. In 1998, PTEK
acquired Xpedite, a provider of domestic and international fax services. Also in
1998, the Company acquired the international affiliates of Xpedite and other
complementary international fax service providers. The Company acquired ATS in
1998, which, along with the conferencing business from the VoiceCom Systems
acquisition, forms the basis of the Premiere Conferencing business unit. In 1999
the Company acquired Intellivoice, a company that was previously a consultant in
developing the next generation Orchestrate product offering, Orchestrate 2000,
which is marketed by the Voicecom business unit. During 1998, 1999 and 2000,
the Company invested in Internet-based companies, and the Company has formed
PtekVentures with dedicated resources to manage its portfolio of investments.

The Company's revenues are based on usage in the Xpedite, Premiere
Conferencing and Retail Calling Card Services business segments and a mix of
both usage and monthly fixed fees in the Voicecom business segment.

Telecommunications costs consist primarily of the cost of metered and fixed
telecommunications related costs incurred in providing the Company's services.

Direct operating costs consist primarily of salaries and wages, travel,
consulting fees and facility costs associated with maintaining and operating the
Company's various revenue generating platforms and telecommunications networks,
regulatory fees and non-telecommunications costs directly associated with
providing services.

15

Selling and marketing costs consist primarily of salaries and wages, travel
and entertainment, advertising, commissions and facility costs associated with
the functions of selling or marketing the Company's services.

Research and development costs consist primarily of salaries and wages,
travel, consulting fees and facilities costs associated with developing product
enhancements and new product development.

General and administrative costs consist primarily of salaries and wages
associated with billing, customer service, order processing, executive
management and administrative functions that support the Company's operations.
Bad debt expense associated with customer accounts is also included in this
caption.

Depreciation and amortization includes depreciation of computer and
telecommunications equipment, furniture and fixtures, office equipment,
leasehold improvements and amortization of intangible assets. The Company
provides for depreciation using the straight-line method of depreciation over
the estimated useful lives of property and equipment, generally two to five
years, with the exception of leasehold improvements which are depreciated on a
straight-line basis over the shorter of the term of the lease or the useful life
of the assets. Intangible assets being amortized include goodwill, customer
lists, developed technology and assembled work force. Intangible assets are
amortized over periods generally ranging from three to seven years.

"Adjusted EBITDA" is defined by the Company as operating income or loss before
depreciation, amortization, net legal settlements, acquired research and
development costs, and restructuring, merger costs and other special charges.
The Company in its earnings releases discloses Adjusted before stock-based
compensation expense that is included in general and administrative expenses.
See Note 17--"Related Party Transactions" of the Notes to the Consolidated
Financial Statements for additional information concerning the stock-based
compensation.

Adjusted EBITDA is considered a key financial management performance indicator
because it excludes the effects of goodwill and intangible amortization
attributable to acquisitions primarily acquired using the Company's common
stock, the effects of prior years' cash investing and financing activities that
affect current period profitability and the effects of sales of marketable
securities, the write-down of investments, and special cash or noncash charges
associated with acquisitions and internal exit activities. Adjusted EBITDA
provides each segment's management team with a consistent measurement tool for
evaluating the operating profit of the business before investing activities,
taxes and special charges. Adjusted EBITDA may not be comparable to similarly
titled measures presented by other companies and could be misleading unless all
companies and analysts calculate them in the same manner.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires management
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 revenues and expenses during
the reporting period. Actual results could differ from the estimates. The
following discussion and analysis provides information which management believes
is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition. This discussion should be read in
conjunction with the condensed consolidated financial statements and notes
thereto.

16

Results Of Operations

The following table presents the percentage relationship of certain statements
of operations items to total revenues for the Company's consolidated operating
results for the periods indicated:

Year Ended December 31,
--------------------------------
2000 1999 1998
------ ----- ------

REVENUES..................................................................... 100.0% 100.0% 100.0%
TELECOMMUNICATIONS COSTS..................................................... 26.4 28.3 30.4
------ ----- ------
GROSS PROFIT................................................................. 73.6 71.7 69.6
------ ----- ------
Direct operating costs...................................................... 15.6 15.1 12.1
------ ----- ------
CONTRIBUTION MARGIN.......................................................... 58.0 56.6 57.5
------ ----- ------

OPERATING EXPENSES
Selling and marketing....................................................... 21.5 23.5 24.6
General and administrative.................................................. 18.1 21.9 17.8
Research and development.................................................... 3.2 2.6 1.2
Depreciation................................................................ 9.2 15.3 10.4
Amortization................................................................ 23.6 21.6 14.7
Restructuring, merger costs and other special charges....................... 0.2 1.7 5.4
Acquired research and development........................................... -- -- 3.5
Legal settlements, net...................................................... (0.3) -- 0.3
------ ----- ------
Total operating expenses................................................... 75.5 86.6 77.9
------ ----- ------

OPERATING LOSS............................................................... (17.5) (30.0) (20.4)
------ ----- ------

OTHER INCOME (EXPENSE)
Interest, net............................................................... (2.4) (5.4) (3.3)
Gain on sale of marketable securities....................................... 13.6 33.2 --
Asset impairment - investments.............................................. (3.4) -- --
Amortization of goodwill - equity investments............................... (1.1) -- --
Other, net.................................................................. (0.1) 2.7 0.1
------ ----- ------
Total other income (expense)............................................... 6.6 30.5 (3.2)
------ ----- ------

INCOME (LOSS) BEFORE INCOME TAXES............................................ (10.9) 0.5 (23.6)
INCOME TAX PROVISION (BENEFIT)............................................... 2.6 7.7 (4.8)
------ ----- ------
NET LOSS..................................................................... (13.5)% (7.2)% (18.8)%
====== ===== ======

17

The following table presents certain financial information about the Company's
operating segments for the periods presented (amounts in millions), with
amortization expense allocated to the appropriate operating segment:

Year Ended December 31,
-------------------------------
2000 1999 1998
------ ------- ------

REVENUES:
Xpedite....................................................................... $233.9 $ 242.0 $197.0
Voicecom...................................................................... 117.9 125.7 152.9
Premiere Conferencing......................................................... 71.6 53.8 36.9
Retail Calling Card Services.................................................. 13.7 37.2 58.0
Eliminations.................................................................. (0.2) (0.3) --
------ ------- ------
Totals........................................................................ $436.9 $ 458.4 $444.8
====== ======= ======
OPERATING PROFIT (LOSS):
Xpedite..................................................................... $(37.7) $ (30.4) $(19.7)
Voicecom.................................................................... (16.5) (9.8) 23.7
Premiere Conferencing....................................................... (0.4) (3.8) 1.8
Retail Calling Card Services................................................ (1.0) (43.8) (27.3)
Corporate................................................................... (21.3) (42.4) (28.5)
Eliminations................................................................ (0.2) (0.3) --
Restructuring, merger costs and other special charges....................... (0.7) (7.6) (24.1)
Acquired research and development........................................... -- -- (15.5)
Legal settlements, net...................................................... 1.4 -- (1.5)
------ ------- ------
Totals...................................................................... $(76.4) $(138.1) $(91.1)
====== ======= ======
ADJUSTED EBITDA:
Xpedite..................................................................... $ 55.0 $ 61.2 $ 54.1
Voicecom.................................................................... 13.1 13.9 51.0
Premiere Conferencing....................................................... 14.7 9.0 7.0
Retail Calling Card Services................................................ 1.6 (5.8) (22.1)
Corporate................................................................... (17.6) (39.2) (28.2)
Eliminations................................................................ (0.2) (0.3) --
------ ------- ------
Totals...................................................................... $ 66.6 $ 38.8 $ 61.8
====== ======= ======

Analysis

The Company's financial statements reflect the results of operations of
Xpedite, Xpedite international affiliates, ATS and Intellivoice from the date of
their respective acquisition. These acquisitions have been accounted for under
the purchase method of accounting.

Revenues

Consolidated revenues decreased 4.7% to $436.9 million in 2000 from $458.4
million in 1999, and increased 3.1% in 1999 when compared to consolidated
revenues of $444.8 million in 1998. Revenues in the Company's operating segments
increased as follows:

. Xpedite revenues decreased 3.3% to $233.9 million in 2000 versus $242.0
million in 1999, and increased 22.8% in 1999 compared to $197.0 million in
1998. The decrease in 2000 was primarily attributable to the strength of
the U.S. dollar relative to other global currencies, revenue declines in
Xpedite's real-time product offering in the Asia/Pacific region, as well as
continued pricing pressure in the market for certain of Xpedite's legacy
fax services. The reduction in the Asia/Pacific region is directly related
to the deregulation of telecommunications services in that region. Xpedite
began the exit from the real-time fax

18

and telex business in certain Asian markets during the fourth quarter of
2000. The revenue decrease in 2000 was partially offset by growth in
Xpedite's new service offerings. The increase in 1999 was attributable to
(1) twelve months of revenue in 1999 versus ten months in 1998 from Xpedite
Systems which was acquired in 1998 and accounted for under the purchase
method of accounting, (2) growth in this unit's Asia/Pacific region and (3)
acquisitions made in this segment's European region during the second
quarter of 1999.

. Voicecom revenues decreased 6.2% to $117.9 million in 2000 and decreased
17.8% to $125.7 million in 1999. The decrease in 2000 was due to declines
in the voice messaging product line. Declines in this product line were
attributable to the exit of selling into the small office/home office
market and weakness in Voicecom's largest multilevel marketing customer.
These declines were offset in part by the post-sale management services
agreement associated with the retail calling card customer base. See
footnote 6 for a further discussion of this sale. The decrease in 1999 was
attributable to the expiration of revenue commitments under the strategic
alliance agreement with WorldCom in September 1998, the bankruptcy of two
wholesale calling card customers in the second quarter of 1998, weakness in
Voicecom's largest multilevel marketing customer and customer attrition in
Voicecom's corporate voice messaging revenue channel. These decreases were
partially offset by increases in revenue from Voicecom's IVR services.

. Premiere Conferencing revenues increased 33.1% to $71.6 million in 2000 and
increased 45.8% to $53.8 million in 1999. The increase in 2000 is primarily
attributable to growth in Premiere Conferencing's automated conferencing
service, Ready Conference, which allows unscheduled and unattended
conferences calls 24 hours a day, 7 days a week. The increase in 1999 is
attributed to (1) twelve months of revenue in 1999 versus nine months in
1998 for ATS, which was acquired in the second quarter of 1998 and
accounted for under the purchase method of accounting, and (2) increases
from its unattended conferencing product.

. Retail Calling Card Services revenues decreased 63.2% to $13.7 million in
2000 and decreased 35.9% to $37.2 million in 1999. The decrease in 2000 is
primarily due to the sale of the customer base related to this segment in
August 2000. The Company had been seeking a sale since the third quarter of
1999 when it decided to discontinue actively acquiring new customers. See
footnote 6 for a further discussion of this sale. The decrease in 1999 was
attributable to (1) the exiting of unprofitable prepaid calling card
programs in the third quarter of 1998, (2) management's decision in the
first quarter of 1998 to discontinue its unprofitable direct response
advertising in in-flight magazines for its Premiere Worldlink calling card
and (3) management's decision in 1999 to discontinue unprofitable direct
response advertising of its Premiere Worldlink calling card program with
its co-branding partners.

Gross Margins

Consolidated gross profit margins were 73.6%, 71.7% and 69.6% in 2000, 1999,
and 1998, respectively. Gross margins in the Company's operating segments were
as follows:

Xpedite gross profit margins were 70.0%, 68.3%, and 64.9% in 2000, 1999, and
1998, respectively. Gross margins increased in 2000 due to decreases in per
minute telecommunications rates for the Xpedite worldwide network, as well as a
new agreement with a supplier in France which improved European
telecommunication rates in particular. Lower telecommunications costs have
become the general industry trend over the past two years.

Voicecom gross profit margins were 77.2%, 79.8% and 81.1% in 2000, 1999 and
1998, respectively. Gross margins declined in 2000 primarily due to increased
network costs associated with the development of Orchestrate, increases in lower
margin business associated with the post-sale management services agreement
related to the retail calling card customer base sale, and revenue declines in
the voice messaging product customer base which is operated primarily on a fixed
cost local access network. These declines were offset in part by decreases in

19

telecommunications delivery costs. Gross margins declined in 1999 primarily due
to the expiration of the WorldCom revenue commitments, offset by lower fixed
telecommunications costs.

Premiere Conferencing gross profit margins were 81.3%, 78.3%, and 77.0% in
2000, 1999, and 1998, respectively. Gross margins increased in 2000 and 1999
primarily due to decreases in telecommunications delivery costs.

Retail Calling Card Services gross profit margins were 61.9%, 56.2% and 48.1%
in 2000, 1999 and 1998, respectively. Gross margins increased in 2000 due to the
negotiation of lower per minute telecommunications rates with the providers of
these services. Gross margins increased in 1999 due to (1) the exit of the
prepaid calling card business in the third quarter of 1998, which had inherently
lower gross margins due to the mix of this business being primarily
international, and (2) lower per minute telecommunications rates offered by its
telecommunications providers.

Direct operating costs

Consolidated direct operating costs as a percent of revenues were 15.6%, 15.1%
and 12.1% in 2000, 1999, and 1998 respectively. While direct operating costs
fell by $1.2 million in 2000 compared to 1999, as a percentage of revenue these
costs increased slightly, from 15.1% of revenue in 1999 to 15.6% of revenue in
2000. The increase in direct operating costs in 2000 as a percent of revenue is
primarily attributable to growth in the Premiere Conferencing operating segment
which has inherently higher direct operating costs as a percentage of revenue
from its attended conferencing product offering.

Selling and marketing

Consolidated selling and marketing costs as a percent of revenues were 21.5%,
23.5% and 24.6% in 2000, 1999 and 1998, respectively. These costs fell by
approximately $14.0 million in 2000 when compared to 1999, with significant
decreases at both the Voicecom and Retail Calling Card operating segments ($12.9
million and $10.6 million, respectively). Xpedite and Premiere Conferencing
experienced increases of $5.8 million and $4.8 million, respectively, when
compared to 1999 levels. At Voicecom, the decrease in direct sales and marketing
costs as a percentage of revenues in 2000 is attributable in part to a reduction
of 122 employees in the latter half of 1999 that was undertaken as part of the
plan to decentralize the Company. In addition, further sales force reductions
were made at Voicecom in 2000, as Voicecom exited the small office/home office
direct sales channel. Significant reductions in direct advertising costs
associated with Orchestrate also contributed to the decrease at Voicecom. The
decrease within the Retail Calling Card operating segment is primarily
attributable to the discontinuance of efforts to acquire new customers. The
increase at Xpedite is primarily related to the ramp up of sales and marketing
efforts relating to this operating segment's new service offerings, while the
increase at Premiere Conferencing is principally due to the significant growth
in revenue in this operating segment from 1999 to 2000.

General and administrative

Consolidated general and administrative costs as a percent of revenues were
18.1%, 21.9% and 17.8% in 2000, 1999 and 1998, respectively. Excluding
approximately $16.1 million of one-time charges in 1998, $13.1 million in 1999
and $1.2 million in 2000, consolidated general and administrative costs as a
percent of revenues were 17.8%, 19.1% and 14.2% in 2000, 1999 and 1998,
respectively.

The one-time events in 1998 consisted of $8.4 million of bad debt expense
related to bankruptcies of two wholesale calling card customers, $2.3 million of
start-up costs, primarily executive compensation, incurred in the start-up of
Orchestrate, $1.5 million related to stay bonuses earned in connection with the
post-merger period of the Xpedite acquisition and $3.9 million of asset
impairment and other costs.

The one-time events in 1999 consisted of restricted stock grants to certain
executives of a limited number of Company-owned shares held in certain strategic
equity investments. These Company-owned shares included

20

168,000 shares of WebMD Series E Common Stock and 6,461 shares of WebMD Series F
Preferred Stock, and 70,692 shares of USA.NET Series C Preferred Stock. The
vesting periods for these shares ranged from immediately upon grant to three
years, contingent on the executive being employed by the Company. In connection
with this action the Company recorded $13.1 million of non-cash expense related
to the partial vesting of these grants. The Company recorded an additional non-
cash charge of $1.2 million in 2000 related to the vesting of the grants. In
2001 and 2002, the Company will be required to expense $38,000 and $12,000,
respectively, for the vesting period associated with the remaining unvested
grants.

General and administrative costs excluding one-time charges decreased to 17.8%
of revenues in 2000. The overall decrease in general and administrative costs of
$21.7 million is related to reduced corporate overhead stemming from the
Company's third quarter 1999 restructuring initiative. Revenue declines in the
Xpedite and Voicecom segments partially offset the improvement in general and
administrative costs as a percent of revenue. The significant increase in
general and administrative costs excluding one-time events in 1999 as a percent
of revenue from 14.2% to 19.1% was primarily driven by (1) significant revenue
reductions in the Voicecom and Retail Calling Card segments as outlined in the
revenue section of this discussion and (2) the continued build out of the
Company's corporate infrastructure in late 1998 and early 1999. Both of these
factors combined to outweigh gains made from the administrative reductions
realized as part of the restructuring plans of the Voice-Tel and VoiceCom
Systems acquisitions. Realizing this continued trend, management acted in the
third quarter of 1999 on an aggressive workforce reduction at its Corporate
operating segment to reverse this unfavorable trend. For a further outline of
this plan, see the restructuring, merger and other special charges section of
this discussion.

Research and development

Consolidated research and development costs as a percent of revenues were
3.2%, 2.6% and 1.2% in 2000, 1999 and 1998, respectively. From 1998 to 2000, the
Company's research and development activities focused on developing new products
and services in each of its operating segments. The increases in 2000 were
attributable to Xpedite's development of its new service offerings, messageREACH
and voiceREACH, Premiere Conferencing's continued development of ReadyConference
and VisionCast, and Voicecom's continued development of Orchestrate. Increases
in 1999 were primarily associated with Voicecom's development of Orchestrate.

Depreciation

Consolidated depreciation costs as a percent of revenues was 9.2%, 15.3% and
10.4% in 2000, 1999 and 1998, respectively. Depreciation costs in the Company's
operating segments were as follows:

. Xpedite depreciation costs were 5.1%, 5.9% and 8.4% of segment revenues in
2000, 1999 and 1998, respectively. The decrease in expense as a percent of
revenues resulted from the reduction in depreciation attributed to assets
becoming fully depreciated during the year. Increased depreciation
resulting from capital additions to Xpedite's network did not have a
significant impact on depreciation for 2000, as a large portion of these
additions occurred in the latter part of 2000. The decrease in expense as a
percent of revenues from 1998 to 1999 was primarily due to increased
business on existing capacity of Xpedite's network and the aging of the
network without significant capital additions to increase capacity.

. Voicecom depreciation costs were 15.2%, 17.4% and 12.6% of segment revenues
in 2000, 1999 and 1998, respectively. The increase in expense as a percent
of revenues from 1998 to 2000 is attributable to the revenue decreases
outlined in the revenue section of this discussion, maintaining the same
network capacity during this period of decline and placing into service the
Orchestrate network over this time period.

21

. Premiere Conferencing depreciation costs were 8.4%, 7.8% and 5.7% of
segment revenues in 2000, 1999 and 1998, respectively. The increase in
expense as a percentage of revenues in 2000 and 1999 is attributable to
capital additions required to build out the infrastructure necessary to
support the deployment and growth of its unattended conferencing service,
which management of this segment believes will continue to grow over the
next several years.

. Retail Calling Card depreciation costs were 19.0%, 87.6% and 14.1% of
segment revenues in 2000, 1999 and 1998, respectively. The decrease in
expense as a percent of revenues from 1999 to 2000 is attributable
primarily to the shortening of the useful life of telecommunications
equipment from five to seven years in the fourth quarter of 1998 to 15
months. The useful life of this substantial amount of equipment was related
to management's decision to cease actively acquiring customers in this
operating segment and eventually to sell its customer base. The increase in
expense as a percent of revenues from 1998 to 1999 is attributable to (1)
significant declines in the revenues base as outlined in the revenues
section of this discussion, and (2) management's decision in the fourth
quarter of 1998 to reduce the remaining useful lives of certain equipment
from two to five years to twelve to fifteen months, as a result of
management's decision in the third quarter of 1999 to cease acquiring new
customers in this segment and exit this business.

. Corporate depreciation costs were $2.1 million, $1.6 million and $0.2
million in 2000, 1999 and 1998, respectively. The increase in depreciation
from 1999 to 2000 resulted from shortening the useful lives of certain
purchased administrative software that was either outsourced or replaced
with less expensive alternatives. The increase in these costs from 1998 to
1999 was attributable primarily to the installation of new management
information systems, new financial management systems and increased
computer equipment purchases. The new computer equipment purchases were due
in part to the infrastructure build out at the corporate level during 1998
and early 1999. The new management information systems and financial
systems were put in place as an overall consolidation of the various legacy
systems acquired through the acquisitions of Voice-Tel, VoiceCom Systems,
Inc., ATS and Xpedite and to address Year 2000 concerns.

Amortization

Consolidated amortization as a percent of revenues was 23.6%, 21.6% and 14.7%
in 2000, 1999 and 1998, respectively. The increase in amortization expense as a
percent of revenues from 1999 to 2000 was primarily due to the shortening of the
estimated remaining useful life of Internet portal rights from three years to
one year from the WebMD co-marketing agreement. The increase in amortization
expense as a percent of revenues from 1998 to 1999 was due to (1) twelve months
in 1999 versus ten months in 1998 of amortization related to Xpedite, (2) twelve
months in 1999 versus nine months in 1998 of amortization related to ATS, in
addition to a full year of amortization under shortened lives in 1999 versus
three months in 1998, (3) a full year of amortization in 1999 under a shortened
life related to the WorldCom strategic alliance contract versus three months in
1998, (4) a full year of amortization of Voice-Tel goodwill and customer lists
under shortened lives versus three months in 1998 and (5) additional
amortization from the acquisitions of Xpedite's French affiliate in the second
quarter of 1999 and the acquisition of Intellivoice in the third quarter of
1999, both accounted for under the purchase method of accounting. The increase
in amortization expense as a percent of revenues in 2000 resulted from the
acquisition of customer lists by Xpedite and declines in revenue in both the
Xpedite and Voicecom segments.

In 2000, the Company amortized goodwill created by investments that were
accounted for under the equity method of accounting. Companies in which the
Company owns 50% or less of the equity ownership, but over which significant
influence is exercised, are accounted for under the equity method. The amount by
which the Company's investment exceeds its share of the underlying net assets is
considered to be goodwill, and is amortized over a three-year period.
Amortization related to equity investments totaled $4.9 million in 2000 and is
included in the statement of operations as amortization of goodwill-equity
investment.

Net interest expense

Net interest expense was $10.6 million, $24.7 million and $14.7 million in
2000, 1999 and 1998, respectively. Net interest expense decreased in 2000 versus
1999 primarily due to the following factors:

22

. In December 1999, PTEK utilized proceeds from the sale of a portion of its
holdings in WebMD to pay off obligations under a credit facility totaling
approximately $142.8 million. This credit facility was terminated at the
time of the pay off.

. Interest income on the average balance of marketable securities that the
Company held increased during 2000 versus 1999.

Net interest expense increased in 1999 versus 1998 primarily due to the
following factors:

. Increased average borrowings in 1999 versus 1998 under the Company's credit
facility that was assumed as part of the Xpedite acquisition in 1998. The
increase in average borrowings in 1999 was principally related to certain
international acquisitions made by Xpedite in 1999, and for capital
expenditures related to product development.

. Interest income on the average balance of marketable securities in debt and
mutual funds that the Company held decreased during 1999 versus 1998. The
reduced interest income on marketable securities was due to the Company's
liquidation of certain debt and mutual fund holdings in the early part of
1998, which was used, in part, to fund investments and general capital
expenditure needs.

Legal settlements, net

Legal settlements, net were $(1.4) million, $0.0 million and $1.5 million in
2000, 1999 and 1998, respectively. See Note 18--"Commitments and Contingencies"
of the Notes to the Consolidated Financial Statements and "Legal Proceedings"
under Item 3 of Part I of this document.

Acquired research and development costs

Acquired research and development costs of $15.5 million expensed in 1998 were
associated with the acquisition of Xpedite. This cost represents the value
assigned to research and development projects in the developmental stage, which
had not reached technological feasibility at the date of the acquisition. The
acquired research and development was valued using the income approach, which
consisted of estimating the expected after-tax cash flows attributable to this
asset over its life and converting this after-tax cash flow to present value
through discounting. See Note 8--"Acquisitions" in Notes to Consolidated
Financial Statements for additional information.

Asset Impairment-Investments

The Company continually evaluates the carrying value of its ownership
interests in investments in the PtekVentures portfolio that are accounted for
using the cost or equity method of accounting for possible impairment based on
achievement of business plan objectives and current market conditions. The
business plan objectives the Company considers include, among others, those
related to financial performance such as achievement of planned financial
results or completion of capital raising activities, and those that are not
primarily financial in nature such as the launching of technology or the hiring
of key employees.

The Company's portfolio companies operate in industries that are rapidly
evolving and extremely competitive. Recently, many Internet based businesses
have experienced difficulty in raising additional capital necessary to fund
operating losses and make continued investments that their management teams
believe are necessary to sustain operations. Valuations of public companies
operating in the Internet sector declined significantly during 2000. The
Company's accounting estimates with respect to the useful life and ultimate
recoverability of its carrying basis including goodwill in portfolio companies
could change in the near term and the effect of such changes on the financial
statements could be material. While the Company currently believes that the
recorded amount of carrying basis including goodwill as of December 31, 2000 is
not impaired, there can be no assurance that future results will

23

confirm this assessment. During the fourth quarter of 2000, the Company
determined that certain of these investments were impaired and that the
impairment was not temporary. Accordingly, the Company recorded an impairment
charge of approximately $15.0 million, which is included in the accompanying
consolidated statements of operations under "Asset impairment-investments."

Adjusted EBITDA

Consolidated Adjusted EBITDA was $66.6 million or 15.2% of revenues in 2000,
$38.8 million or 8.5% of revenues in 1999, and $61.8 million or 13.9% of
revenues in 1998.

. Xpedite Adjusted EBITDA was $55.0 or 23.5% of segment revenues, $61.2
million or 25.3% of segment revenues, and $54.1 million or 27.5% of segment
revenues in 2000, 1999, and 1998, respectively. The decrease in Adjusted
EBITDA from 1999 to 2000 was primarily due to the strength of the U.S.
dollar relative to other global currencies, increased pricing pressure in
the market for certain of Xpedite's legacy fax services, and increased
investment in sales and marketing efforts associated with the launch of new
service offerings. Additionally, pricing for certain of Xpedite's products
(real-time fax in particular) in the Asia/Pacific region deteriorated
dramatically in 2000 compared to 1999, contributing to the Adjusted EBITDA
decline. These pricing reductions were directly related to the deregulation
of telecommunications services in that region. Xpedite began the exit from
the real-time fax and telex business in certain Asian markets during the
fourth quarter of 2000. The increase in Adjusted EBITDA to $61.2 million in
1999 was related to twelve months of operating results for Xpedite versus
ten months in 1998. The decline as a percent of revenue was primarily
driven by lower Adjusted EBITDA acquisitions made in Europe in the latter
half of 1998 and the first half of 1999, along with start up costs
associated with the acquisition of a customer list in the Asia/Pacific
region of this business unit.

. Voicecom Adjusted EBITDA was $13.1 million or 11.1% of segment revenues,
$13.9 million or 11.1% of segment revenues and $51.0 million or 33.4% of
segment revenues in 2000, 1999 and 1998, respectively. EBITDA margin
remained flat as a percentage of revenue primarily due to personnel cost
reductions in the sales force during late 1999 and 2000. Also contributing
were declines in direct advertising costs associated with Orchestrate. The
decrease in Adjusted EBITDA in 1999 is attributable to (1) the expiration
of revenue commitments from the Worldcom strategic alliance contract in
which little or no telecommunications or selling, general or administrative
costs existed in this high margin offering, (2) increased research and
development costs associated with Orchestrate, (3) decreases in high margin
messaging revenues with very little or no selling, general or
administrative costs associated, such as the Amway distribution channel and
certain corporate messaging customers in which Voicecom provides only
maintenance services and (4) the bankruptcy of two significant high margin
wholesale calling card customers in which Voicecom incurred very little or
no telecommunications costs or selling, general or administrative costs.
These decreases were offset, in part, by administrative and customer
service workforce reductions as part of the restructuring plan associated
with the reorganization of the Company into CES and EES during the fourth
quarter of 1998. For a further discussion of this reorganization plan, see
the restructuring, merger and other special charges section of this
discussion. The decrease in Adjusted EBITDA in 1999 was, to a lesser
extent, caused by the same conditions which drove the decrease in 1999,
along with bad debt expenses associated with the bankruptcy of two
wholesale calling card customers.

. Premiere Conferencing Adjusted EBITDA was $14.7 million or 20.5% of segment
revenues, $9.0 million or 16.7% of segment revenues and $7.0 million or
19.0% of segment revenues in 2000, 1999 and 1998, respectively. The
increase in Adjusted EBITDA in 2000 was primarily driven by growth in
automated conferencing services, ReadyConference, which carry higher
margins than fully attended conferencing services. The increase in Adjusted
EBITDA in 1999 was primarily driven from twelve months of operations for
ATS versus nine months of operations in 1998. The decline in Adjusted
EBITDA as a percent of revenue in 1999 is due to start-up costs associated
with sales and marketing efforts in growing the segment's unattended
conferencing product offering.

24

. Retail Calling Card Adjusted EBITDA was $1.6 million or 11.7% of segment
revenues, $(5.8) million or (15.6)% of revenues and $(22.1) million or
(38.1)% of segment revenues in 2000, 1999 and 1998, respectively. The trend
to positive Adjusted EBITDA in 2000 is attributable mainly to all of the
initiatives mentioned below that improved Adjusted EBITDA between the years
1998 and 1999. The decrease in negative Adjusted EBITDA in 1999 is
attributable (1) the exiting of unprofitable prepaid calling card programs
in the third quarter of 1998, (2) management's decision in the first
quarter of 1998 to discontinue its unprofitable direct response advertising
in in-flight magazines for its Premiere Worldlink calling card and (3)
management's decision in 1999 to discontinue unprofitable direct response
advertising of its Premiere Worldlink calling card program with its co-
branding partners. In the third quarter of 1999, management decided not to
actively seek to acquire any new customers in this segment because it
determined that the cost of acquiring such customers outweighed the
revenues that these customers could generate for the Company. PTEK sold the
revenue base associated with this operating segment effective August 1,
2000.

. Corporate Adjusted EBITDA was $(17.6) million or (4.0)% of consolidated
revenues, $(39.2) million or (8.6)% of consolidated revenues, and $(28.2)
million or (6.3)% of consolidated revenues in 2000, 1999 and 1998,
respectively. Costs associated with this segment are personnel,
professional, legal and travel costs associated with managing the holding
company, managing PtekVentures' investment portfolio and exploring
strategic initiatives. Excluding one-time costs of $1.2 million in 2000,
$13.1 million in 1999 and $9.3 million in 1998, Adjusted EBITDA for those
three years would have been $(16.4) million or (3.8)% of consolidated
revenues, $(26.1) million or (5.7)% of consolidated revenues and $18.9
million or (4.2)% of consolidated revenues, respectively. One time costs in
2000 and 1999 were related to amortization and other costs associated with
the restricted stock granted in 1999, as discussed in Note 17--"Related
Party Transactions." One time costs in 1998 were associated with a note
receivable write-off associated with the bankruptcy of a strategic
wholesale calling card partner, start-up costs, primarily executive
compensation, incurred in the start-up of its Orchestrate.com, Inc.
subsidiary, stay bonuses earned in connection with the post-merger period
of the Xpedite acquisition and asset impairment and other costs. Adjusted
EBITDA improved by $21.6 million from 1999 to 2000 as a result of reduced
administrative overhead costs associated with the decentralized strategy
implemented in the third quarter of 1999. This strategy consisted of
reducing all nonstrategic overhead costs at Corporate and to push down
administrative duties to each operating segment where such costs could be
managed more efficiently. General and administrative costs related to
managing the PtekVentures investment portfolio reduced the improvement in
Adjusted EBIDTA from 1999 to 2000 by $2.0 million. The PtekVentures
investment portfolio generated gains from sales of marketable securities of
$59.7 million and $152.1 million, in 2000 and 1999, respectively, which are
not included in Adjusted EBITDA. The increase in negative Adjusted EBITDA
at the Corporate level in 1998 versus 1997 was primarily driven by the
build out of a corporate infrastructure in the latter half of 1998 and the
first half of 1999.

Effective income tax rate

In 2000, 1999 and 1998, the Company's effective income tax rate varied from
the statutory rate, primarily as a result of nondeductible goodwill amortization
associated with the Company's acquisitions in 1998 and 1999, which have been
accounted for under the purchase method of accounting. In 1998, the Company's
effective income tax rate varied from the statutory rate primarily as a result
of nondeductible goodwill amortization associated with the Company's
acquisitions, which have been accounted for under the purchase method of
accounting See Note 19--"Income Taxes" in the Notes to Consolidated Financial
Statements for additional information.

Liquidity and capital resources

Operating cash flows and working capital. Consolidated operating cash flows
were $17.9 million, $9.9 million and $22.2 million in 2000, 1999 and 1998,
respectively. Excluding payments for restructuring, mergers and other special
charge activities, operating cash flows would have been $22.3 million, $18.8
million and $37.2 million in 2000, 1999 and 1998, respectively.

25

Increased operating cash flows of $8.0 million are mainly attributable to a
decrease in interest paid and general and administrative expenses, proceeds from
the WorldCom settlement, and a decrease in restructuring payments. Offsetting
the increases to cash flow were tax payments of $17.1 million and an increase in
accounts receivable. The payment of approximately $17.1 million in income taxes
is associated primarily with the gain on the sale of WebMD and S1 shares in 1999
and 2000. The sale of these investments utilized substantially all of the
Company's domestic net operating loss carryforwards, causing the Company to be
subject to income taxes for the fiscal years ended December 31, 2000 and 1999.
Under accounting principles generally accepted in the United States, taxes paid
must be presented in the cash flows from operating activities regardless of
their sources. The Company anticipates future tax liabilities on subsequent
gains from the sale of its marketable securities.

Reduced operating cash flows from 1998 to 1999 of approximately $12.3 million
was attributable primarily to the decline in revenues from the Company's
WorldCom strategic alliance and increased interest paid on a revolving loan
facility due to increased borrowings outstanding during 1999. Increased interest
paid during 1999 versus 1998 was approximately $13.8 million.

Investing activities. Consolidated investing activities (used) provided cash
of approximately $(6.5) million, $107.2 and $21.3 million in 2000, 1999 and
1998, respectively. Investing activities in the Company's operating segments are
discussed below.

. Xpedite investing activities (used) cash of $(17.1) million, $(14.7) and
$(11.8) million in 2000, 1999 and 1998, respectively. Investing activities
in this unit for all three years were primarily expenditures related to
expansion of capacity on Xpedite's network.

. Voicecom investing activities (used) cash of $(10.1) million, $(9.5)
million and $(25.7) million in 2000, 1999 and 1998, respectively. Investing
activities in this unit for 2000 were primarily for equipment purchases to
replace dated equipment in the voice mail network, software and equipment
purchases for development of Orchestrate 2000 and expansion of its call
center IVR services with Bank of America. Investing activities in this unit
for 1999 were primarily for equipment and software purchases to develop the
latest version of Orchestrate, Orchestrate 2000, and replacement of dated
equipment in the voice mail network. In addition, this segment received
approximately $7.9 million of cash in connection with a note receivable
from a wholesale calling card customer.

. Premiere Conferencing investing activities (used) cash of $(7.1), $(9.7)
and $(7.3) million in 2000, 1999, and 1998, respectively. Investing
activities in 2000 and 1999 were primarily for the build out of the
infrastructure necessary to support the deployment and growth of its
unattended conferencing service and, in 1999, the build out of this
segment's new headquarters.

. Retail calling card investing activities (used) cash of $(11.2) million in
1998. Investing activities in 1998 were primarily for replacement of dated
switching equipment in the retail calling card network. No capital
expenditures were incurred in 2000 or 1999 due to management's decision to
exit major marketing channels in 1999 and the eventual sale of retail
calling card the third quarter of 2000.

. Corporate investing activities provided cash of $27.9 million, $141.0
million and $50.9 million in 2000, 1999 and 1998, respectively. Cash
provided in 2000 was primarily from sales of investments in Corporate's
PtekVentures investment portfolio of which a portion of those sale proceeds
were used to invest in additional PtekVentures portfolio companies and to
pay for taxes on prior and current year portfolio gains. Cash provided in
1999 was primarily from the sale of shares in WebMD. The proceeds from this
sale were used in part to pay off the Company's revolving loan facility in
December 1999. Cash provided in 1998 was from the sale of various
marketable securities, mutual fund investments and municipal obligations.
These sale proceeds were used primarily for various capital needs of the
operating segments, the acquisition of ATS and various international fax
businesses.

Financing activities. Consolidated financing activities (used) cash of
approximately $(2.4) million, $(120.9) and $(46.1) million in 2000, 1999 and
1998, respectively. Financing activities are managed in the Company's

26

Corporate operating segment. The Company's financing activities in 2000 included
$3.3 million from the Company's purchase of approximately 1.2 million shares of
its stock under a stock repurchase program, issuance of a shareholder note of
$2.8 million and reduction of $3.2 million of debt. The debt payments included
$1.2 million in foreign loans at Xpedite, $1.8 million in notes payable assumed
by the Company in connection with the Voice-Tel and VoiceCom Systems
acquisitions and $0.2 million in debt at Conferencing. Offsetting the cash used
in financing activities were proceeds from stock options totaling $6.9 million.
The Company's principal financing activity in 1999 was the repayment and
termination of its revolving loan facility on December 15, 1999. This loan
facility was paid off with proceeds from the sale of 3.5 million shares of its
investment in WebMD. The proceeds from this sale were approximately $154.4
million. Annualized interest savings from the loan facility repayment are
approximately $18.0 million. The Company's principal financing activities in
1998 were payments of $29.8 million on its revolving loan facility, $9.1 million
from the Company's purchase of approximately 1.1 million shares of its stock
under a stock repurchase program and the payment of $5.5 million of the proceeds
from the previous years employee stock options for employer taxes associated
with those employee options.

At December 31, 2000, the Company's principal commitments involve minimum
purchase requirements under supply agreements with telecommunications providers,
severance payments to former executive management under the Company's various
restructuring plans, capital lease obligations, commitments under its strategic
alliance with WebMD, and semiannual interest on the Company's convertible
subordinated notes.

On September 29, 2000 the Company entered into a credit agreement (the
"Agreement") for a one-year revolving credit facility with ABN AMRO Bank
N.V.(the "Bank" or "Agent"). The Agreement provides for borrowings of up to
$20.0 million, and is subject to certain covenants that are usual and customary
for credit agreements of this nature. The commitment to provide revolving credit
loans under the Agreement terminates 364 days from September 29, 2000, unless
the Agreement is extended. Amounts outstanding under the Agreement on the
expiration date may, at the option of the Company, either be paid in full or
converted to a one-year term loan payable in four equal quarterly installments.
Proceeds drawn under the Agreement may be used for capital expenditures, working
capital, acquisitions, investments, refinancing of existing indebtedness, and
other general corporate purposes. The annual interest rate applicable to
borrowings under the Agreement is, at the Company's option, (i) the Agent's Base
Rate plus 1.25 percent or (ii) the Euro Rate (LIBOR) plus 3.50 percent. Amounts
committed but not drawn under the Agreement are subject to a commitment fee
equal to 0.50 percent per annum. At December 31, 2000 no amounts were
outstanding under the Agreement.

Management believes that cash, marketable securities available for sale, and
cash flows from operations should be sufficient to fund the Company's capital
expenditure requirements of its operating units and investment initiatives of
PtekVentures for the foreseeable future. It is anticipated that cash flow needed
to support PtekVentures' investing activities will be significantly lower in
2001 than in 2000. At December 31, 2000, approximately $16.0 million of cash and
equivalents resided outside of the United States compared to $10.3 million at
December 31, 1999. The Company routinely repatriates cash in excess of operating
needs in certain countries where the cost to repatriate does not exceed the
economic benefits. Intercompany loans with foreign subsidiaries generally are
considered by management to be permanently invested for the foreseeable future.
Therefore, all foreign exchange gains and losses are recorded in the cumulative
translation adjustment account on the balance sheet. Based on potential cash
positions of PTEK and potential conditions in the capital markets, management
could require repayment of these loans despite the long-term intention to hold
them as permanent investments. Foreign exchange gains or losses on intercompany
loans deemed temporary in nature are recorded in the determination of net
income. Management regularly reviews the Company's capital structure and
evaluates potential alternatives in light of current conditions in the capital
markets. Depending upon conditions in these markets, the cash flows from the
operating segments and other factors, the Company may engage in other capital
transactions. These capital transactions include but are not limited to debt or
equity issuances or credit facilities with banking institutions.

Restructuring, Merger Costs And Other Special Charges

Reorganization of Company into EES and CES Business Segments

In the fourth quarter of 1998, the Company recorded a charge of $11.4 million
to reorganize the Company into two business segments that focus on specific
groups of customers. These segments were named Emerging Enterprise

27

Solutions and Corporate Enterprise Solutions. EES focused on small office/home
office and multi-level marketing organizations, and CES focused on large
corporate accounts. This charge was comprised of $4.9 million of severance
costs, $4.7 million of asset impairment charges, $0.4 million of contractual
obligation costs and $1.4 million of other costs, primarily to exit facilities
and certain activities.

As part of this reorganization, the Company identified 59 employees for
termination. These employees included administrative personnel from the
Company's Cleveland headquarters for the previous Voice-Tel and VoiceCom Systems
entities, personnel from customer service centers from eight locations and
executive management from the acquired companies that were not part of previous
restructuring plans. As of December 31, 1998, all 59 employees were terminated.

The balance at December 31, 2000 represents the remaining severance reserve
for former executive management. In the twelve month period ended December 31,
2000, cash severance payments made to eight former executives was $1.1 million.
The company expects to pay the remaining severance reserve balance of $0.6
million to one former executive over the next thirteen months.

The asset impairment charges of $4.7 million related to certain switching
equipment associated with the Company's enhanced calling services. This
switching equipment was determined to be no longer operational due to the
reduced volume of business associated with the enhanced calling services
product. These two switches were purchased by the Company in the second quarter
of 1998 but were never placed into service. They remained idle due to the
bankruptcy of two license customers that had significant volumes of business
with the Company. During the third quarter of 1998 management looked for
alternative uses for this equipment including the use in potential prepaid
calling card business and international calling card programs. During the fourth
quarter of 1998, management reorganized the Company into two business units, CES
and EES. The new management of these units decided at that time that forecasted
volume for the type of business used for these switches over the switches useful
lives would not justify the additional capacity that these switches brought to
the Company's network. Either potential buyers would be sought or the switches
would be used for spare parts on like switches in the Company's network.
Therefore the Company charged a valuation reserve in the fourth quarter of 1998
to reduce the asset carrying value to its estimated scrap value. The Company
sold these two switches for scrap value during 2000. No additional losses were
incurred.

The charge taken for contractual obligations for $0.4 million was associated
with management's plan to exit the Voice-Tel corporate headquarters and a
certain Xpedite operational site. The charge of $1.4 million in other costs
included increased estimates of exit costs associated with management's revised
plan to terminate approximately 11 managers associated with previous
acquisitions, the exit of the Voice-Tel corporate headquarters and the exit of
various Voice-Tel regional administrative functions.

The reversals in 1999 for contractual obligations and other costs resulted
from the fact that management's original estimate exceeded the actual payments.

Decentralization of Company

In the third quarter of 1999, the Company recorded restructuring, merger costs
and other special charges of approximately $8.2 million in connection with its
reorganization from the two EES and CES operating units into three operating
business units, a retail calling card business, and a holding company. The $8.2
million charge is comprised of $7.3 million of severance and exit costs, $0.7
million of lease termination costs and $0.2 million of facility exit costs.

Severance benefits provided for the termination of 203 employees, primarily
related to corporate administrative functions, direct sales force and operation
of under-performing operating segments in the former EES and CES groups. Of the
203 severed employees, 114 were from the Voicecom operating segment, 61 from the
Xpedite operating segment and 28 from Corporate headquarters. The reduction made
to the Voicecom and Xpedite operating segments allowed for the transfer to those
segments of approximately 70 employees who had performed centralized
administrative functions at Corporate. As of December 31, 1999, all 203
employees were terminated. Annual savings of approximately $13.1 million were
realized from these terminations. The balance at December 31, 1999

28

for severance and exit costs represents the remaining reserve for future cash
severance and exit payments to former corporate executive management and various
management in the former CES group that were terminated in 1999. These remaining
cash payments were disbursed during the first nine months of 2000. During 2000,
cash severance payments totaled $3.2 million. In the third quarter of 2000, the
Company recognized as income $0.6 million of accrued severance and exit payments
upon completion of the severance program associated with the decentralization of
the Company. This amount represents actual exit costs that were below planned
exit costs, relating to the decentralization plan for the European and
Asia/Pacific regions of the Company's Xpedite operating segment.

Lease termination costs are attributable to the abandonment of a facility
under the Retail Calling Card Services segment. Lease termination costs are cash
outlays. The Company incurred $0.7 million in costs in 1999 in terminating this
lease. Other costs were attributable to site clean up and exit team travel costs
to exit one facility in the Xpedite segment. The Company incurred $0.1 million
of costs that were cash outlays in the fourth quarter of 1999 to close this
facility. In the first quarter of 2000, the Company paid $82,000 in lease
termination and exit costs.

As the decentralization plan of the Company was completed and no further
payments are expected by management, the remaining balance of the reserve
totaling $0.6 million was reversed in the third quarter of 2000.

Exit of Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $1.4
million for costs associated with Xpedite's decision to exit its legacy real-
time fax and telex business in Asia. This service depended on significant price
disparities between regulated incumbent telecommunications carriers and
Xpedite's cost of delivery over its fixed-cost network. With the deregulation of
most Asian telecommunications markets, Xpedite's cost advantage dissipated, and
the Company decided to exit this service and concentrate on higher value-added
services such as transactional messaging and messageREACH. The $1.4 million
charge included asset impairments totaling $0.8 million, contractual and other
obligations totaling $0.4 million and severance costs of $0.2 million.

The asset impairments included the write-down of furniture and fixtures and
real-time fax equipment including autodialers, faxpads and computers. The
valuation was based on the net realizable value of the assets as of December 31,
2000. All equipment costs were incurred in conjunction with the closing of the
real-time fax operations in Malaysia, Singapore, Hong Kong, Taiwan and Korea.

Contractual and other obligations are mainly cash outlays for rent on office
space and telephone lines. Management anticipates the cash outlays to be
completed by the first quarter of 2002.

The severance charge includes cash severance payments made to 67 employees.
The Company expects to realize an annual savings of approximately $0.3 million
from these terminations. As of December 31, 2000, the Company paid all severance
benefits and does not expect any further payments.

New Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," in June 1998,
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of the FASB Statement No. 133," in June 1999 and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133," in June 2000. SFAS No.133
establishes accounting and reporting standards for derivatives and hedging. It
requires that all derivatives be recognized as either assets or liabilities at
fair value and establishes specific criteria for the use of hedge accounting.
SFAS No. 137 defers the effective date of SFAS No. 133 by one year to fiscal
years beginning after June 15, 2000. SFAS No. 138 amends the accounting and
reporting standards of SFAS No. 133 for certain derivative instruments and
certain hedging activities. The Company's required adoption date is January 1,
2001. Upon adoption of these three statements, the Company expects no material
impact to its financial position.

29

FACTORS AFFECTING FUTURE PERFORMANCE

YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES WE DESCRIBE BELOW
BEFORE INVESTING IN PTEK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT
THE ONLY RISKS AND UNCERTAINTIES THAT COULD DEVELOP. OTHER RISKS AND
UNCERTAINTIES THAT WE HAVE NOT PREDICTED OR EVALUATED COULD ALSO AFFECT OUR
COMPANY. IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATIONS COULD BE MATERIALLY HARMED, AND THE TRADING PRICE OF
OUR COMMON STOCK COULD DECLINE, RESULTING IN THE LOSS OF ALL OR PART OF YOUR
INVESTMENT.

Risks Related to Our Industry

The markets for our products and services are intensely competitive and we may
not be able to compete successfully against existing and future competitors,
which may make it difficult to maintain or increase our market share and
revenue.

The markets for our products and services are intensely competitive and we
expect competition to increase in the future. Many of our current and potential
competitors have longer operating histories, greater name recognition, more
robust product offerings, more comprehensive support organizations, larger
customer bases and substantially greater financial, personnel, marketing,
engineering, technical and other resources than we do. As a result, our
competitors may be able to respond more quickly than we can to new or emerging
technologies and changes in customer demands, and they may also be able to
devote greater resources than we can to the development, promotion and sale of
their products and services. We believe that our current competitors are likely
to expand their product and service offerings and that new competitors are
likely to enter our markets. Existing and new competitors may attempt to
integrate their products and services, resulting in greater competition.
Increased competition could result in price pressure on our products and
services and a decrease in our market share in the various markets in which we
compete, either of which could hinder our ability to grow our revenue.

The development of alternatives to our products and services may cause us to
lose customers and market share, and may hinder our ability to maintain or grow
our revenue.

The market for our products and services is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. We expect new products and services, and enhancements to existing
products and services, to be developed and introduced that will compete with our
products and services. Technological advances may result in the development and
commercial availability of alternatives to our products and services or new
methods of delivering our products and services. Companies may develop and offer
product features, service offerings or pricing options which are more attractive
to customers than those currently offered by us. These new products or services,
or methods of delivering these products or services could, among other things:

. cause our existing products and services to become obsolete;

. be more cost-effective, which could result in significant pricing pressure
on our products and services; or

. allow our existing and potential customers to meet their own
telecommunications needs without using our services.

Technological changes that make our products obsolete, or changes in
technology that allow competitors to offer products and services that replace
our existing products and services could cause us to lose customers, market
share and revenue.

30

If new products and services that we develop and introduce are not accepted in
the marketplace, we may lose market share and our revenue may decrease.

We must continually introduce new products and services in response to
technological changes, evolving industry standards and customer demands for
enhancements to our existing products and services. We will not be able to
increase our revenue if we are unable to develop new products and services, or
if we experience delays in the introduction of new products and services, or if
our new products and services do not achieve market acceptance. Our ability to
successfully develop and market new products and services and enhancements that
respond to technological changes, evolving industry standards or customer
demands, is dependent on our ability to:

. anticipate changes in industry standards;

. anticipate and apply advances in technologies;

. enhance our software, applications, equipment, systems and networks;

. attract and retain qualified and creative technical personnel;

. develop effective marketing, pricing and distribution strategies for new
products and services; or

. avoid difficulties that could delay or prevent the successful development,
introduction and marketing of new products and services or enhancements.

We are subject to pricing pressures for our products and services, which could
cause us to lose market share and revenue.

We compete for consumers based on price. A decrease in the rates charged for
communications services by our competitors could cause us to reduce the rates we
charge for our products and services. If we cannot compete based on price, we
may lose market share. If we reduce our rates without increasing our margins or
our market share, our revenue could decrease.

Consolidation in the telecommunications industry could lead to pricing pressure
on our products and services and could be disruptive to our licensing and
strategic relationships.

The telecommunications industry has experienced, and we believe it will
continue to experience, consolidation. Consolidation in the telecommunications
industry, including consolidations involving our customers, competitors,
strategic partners and licensing partners, could lead to pricing pressure on our
products and services and could be disruptive to our licensing and strategic
relationships.

Risks Related to Our Company

Our future success depends on market acceptance of our new products and
services, which includes Orchestrate, messageREACH and ReadyConference.

Market acceptance of our new products and services often requires that
individuals and enterprises accept new ways of communicating and exchanging
information. A decline in the demand for, or the failure to achieve broad market
acceptance of, our new products and services could hinder our ability to
maintain and increase our revenue. We believe that broad market acceptance of
our new products and services will depend on several factors, including:

. ease of use;

31

. price;

. reliability;

. access and quality of service;

. system security;

. product functionality; and

. the effectiveness of strategic marketing and distribution relationships.

If we do not met these challenges, our new products and services may not
achieve broad market acceptance or market acceptance may not occur quickly
enough to justify our investment in these products and services.

Concerns regarding security of transactions and transmitting confidential
information over the Internet may have an adverse impact on the market
acceptance of our Web-enabled products and services, including Orchestrate.

The concern regarding the security of confidential information transmitted
over the Internet may prevent many potential customers from using Internet
related products and services. If our Web-enabled services, such as Orchestrate
and messageREACH, do not include sufficient security features, our Web-enabled
products and services may not gain market acceptance, or there may be additional
legal exposure. Despite the measures we have taken, our infrastructure is
potentially vulnerable to physical or electronic break-ins, viruses or similar
problems. If a person circumvents our security measures, he or she could
misappropriate proprietary information or cause interruption in our operations.
Security breaches that result in access to confidential information could damage
our reputation and expose us to a risk of loss or liability. We may be required
to make significant investments in efforts to protect against a remedy of these
types of security breaches. Additionally, as electronic commerce becomes more
widespread, our customers will become more concerned about security. If we are
unable to adequately address these concerns, we may be unable to sell our Web-
enabled products and services.

If our quarterly results do not meet the expectations of public market analysts
and investors our stock price may decrease.

Quarterly revenue is difficult to forecast because the market for our services
is rapidly evolving. Our expense levels are based, in part, on our expectations
as to future revenue. If revenue levels are below expectations, we may be unable
or unwilling to reduce expenses proportionately and operating results would
likely be adversely affected. As a result, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Due to all of
the risk factors listed herein, it is likely that in some future quarter our
operating results will be below the expectations of public market analysts and
investors. In this event, the market price of our common stock will likely
decline.

Our operating results have varied significantly in the past and may vary
significantly in the future. Specific factors that may cause our future
operating results to vary include:

. the unique nature of strategic relationships into which we may enter in the
future;

. changes in operating expenses resulting from our strategic relationships
and other factors;

. the financial performance of our strategic partners;

. the performance of strategic equity investments;

32

. the reliability and performance of our products and services;

. the timing of new product and service announcements;

. market acceptance of new and enhanced versions of our products and
services, including Orchestrate;

. the success or failure of past or potential future acquisitions;

. changes in legislation and regulations that may affect the competitive
environment for our products and services; and

. general economic and seasonal factors.

We do not typically have long-term contractual agreements with our customers and
our customers may not transact business with us in the future.

We expect that the information and telecommunications services markets will
continue to attract new competitors and new technologies, possibly including
alternative technologies that are more sophisticated and cost effective than our
technologies. We do not typically have long-term contractual agreements with our
customers, and our customers may not continue to transact business with us in
the future if, among other things, any of the following occur:

. our products and services become obsolete;

. competitors develop products and services that are more sophisticated,
efficient or cost-effective; or

. technological advances allow our customers to satisfy their own
telecommunications needs.

We rely on Amway Corporation for significant revenue and any loss of business
from Amway may hurt our financial performance and cause our stock price to
decline.

We have historically relied on sales through Amway Corporation for a
substantial portion of our revenue. Sales to Amway accounted for approximately
23.7% of our revenue in 1996, 21.8% in 1997, 9.4% in 1998, 6.8% in 1999 and
6.8% in 2000. Although total revenue from Amway has decreased significantly,
Amway remains a significant customer. Our relationship with Amway and its
distributors may not continue at historical levels, and there is no long-term
price protection for services provided to Amway. Continued loss in total revenue
from Amway or diminution in the Amway relationship, or a decrease in average
sales price without an offsetting increase in volume, could hurt our financial
performance and cause our stock price to decline.

If we do not attract and retain highly qualified and creative technical and
support personnel we may not be able to sustain or grow our business.

We believe that to be successful we must hire and retain highly qualified and
creative engineering, product development and customer support personnel.
Competition in the recruitment of highly qualified and creative personnel in the
information and telecommunications services industry is intense. We have in the
past experienced, and we expect to continue to experience, difficulty in hiring
and retaining highly skilled technical employees with appropriate
qualifications. We may not be able to retain our key technical employees and we
may not be able to attract qualified personnel in the future. If we are not able
to locate, hire and retain qualified technical personnel, we may not be able to
sustain or grow our business.

33

Our business may suffer if we do not retain the services of our chief executive
officer.

We believe that our continued success will depend to a significant extent upon
the efforts and abilities of Boland T. Jones, our Chairman and Chief Executive
Officer. The familiarity of Mr. Jones with the markets in which we compete and
emerging technologies, such as the Internet, makes him especially critical to
our success. We maintain key man life insurance on Mr. Jones in the amount of
$3.0 million.

Downtime in our network infrastructure could result in the loss of significant
customers.

We currently maintain facilities with telecommunications equipment that routes
telephone calls and computer telephony equipment in approximately 200 locations
throughout the world. The delivery of our products and services is dependent, in
part, upon our ability to protect the equipment and data at our facilities with
telecommunications equipment that routes telephone calls against damage that may
be caused by fire, power loss, technical failures, unauthorized intrusion,
natural disasters, sabotage and other similar events. Despite taking a variety
of precautions, we have experienced downtime in our networks from time to time
and we may experience downtime in the future. These types of service
interruptions could result in the loss of significant customers, which could
cause us to lose revenue. We take substantial precautions to protect ourselves
and our customers from events that could interrupt delivery of our services.
These precautions include physical security systems, uninterruptible power
supplies, on-site power generators, upgraded backup hardware, fire protection
systems and other contingency plans. In addition, some of our networks are
designed so that the data on each network server is duplicated on a separate
network server. We also maintain business interruption insurance providing for
aggregate coverage of approximately $115 million per policy year. However, we
may not be able to maintain this insurance in the future, it may not continue to
be available at reasonable prices, and it may not be sufficient to compensate us
for losses that we experience due to our inability to provide services to our
customers.

If we fail to predict growth in our network usage and add needed capacity, then
the quality of our service offerings may suffer.

As network usage grows, we will need to add capacity to our hardware and
software, our facilities with telecommunications equipment that route telephone
calls and our private frame relay network. This means that we continuously
attempt to predict growth in our network usage and add capacity accordingly. If
we do not accurately predict and efficiently manage growth in our network usage,
the quality of our service offerings may suffer and we may lose customers.

Software failures or errors may result in failure of our platforms and/or
networks, which could result in increased costs and lead to interruptions in our
services and losses of significant customers and revenue.

The software that we have developed and utilized in providing our products and
services, including the Orchestrate software, may contain undetected errors.
Although we generally engage in extensive testing of our software prior to
introducing the software onto any of our networks and/or product equipment,
errors may be found in the software after the software goes into use. Any of
these errors may result in partial or total failure of our networks, additional
and unexpected expenses to fund further product development or to add
programming personnel to complete a development project, and loss of revenue
because of the inability of customers to use our networks or the cancellation of
services by significant customers. We maintain technology errors and omissions
insurance coverage of $55.0 million per policy aggregate. However, we may not be
able to maintain this insurance or it may not continue to be available at
reasonable prices. Even if we maintain this insurance, it may not be sufficient
to compensate us for losses we experience due to our inability to provide
services to our customers.

Interruption in long distance telecommunications services could result in
service interruptions and a loss of significant customers and revenue.

34

Our ability to maintain and expand our business depends, in part, on our
ability to continue to obtain telecommunication services on favorable terms from
long distance carriers. We do not own a transmission network. As a result, we
depend on WorldCom, Global Crossing and other long distance carriers for
transmission of our customers' long distance calls. These long distance
telecommunications services generally are procured under supply agreements with
multiyear terms, some of which are subject to various early termination
penalties and minimum purchase requirements. We have not experienced significant
losses in the past due to interruptions of long-distance service, but we might
experience these types of losses in the future.

The partial or total loss of our ability to receive or terminate telephone calls
could result in service interruptions and a loss of significant customers and
revenue.

We depend on local phone companies that provide local transmission services,
known as local exchange carriers, as well as companies that purchase and resell
local transmission services, known as competitive local exchange carriers, for
call origination and termination. The partial or total loss of the ability to
receive or terminate calls could result in service interruptions and a loss of
significant customers and revenue. We have not experienced significant losses in
the past due to interruptions of service at terminating carriers, but we might
experience these types of losses in the future.

If we have to relocate our equipment or change our network transmission
provider, we could experience interruptions in our services and increased costs,
which could cause us to lose customers.

We lease capacity on the WorldCom communications network to provide network
connections and data transmission within our private frame relay network. Our
telecommunications agreement with WorldCom expires on December 31, 2004. We have
equipment co-located at various WorldCom sites under co-location agreements that
are terminable by either party upon 30 days written notice. Our ability to
maintain network connections is dependent upon our access to transmission
facilities provided by WorldCom or an alternative provider. We may not be able
to continue our relationship with WorldCom beyond the terms of our current
agreements and we may not be able to find an alternative provider on terms as
favorable as those offered by WorldCom or on any other terms. If we have to
relocate our equipment or change our network transmission provider, we could
experience interruptions in our service and/or increased costs, which could
adversely effect our customer relationships and customer retention.

Any significant difficulty obtaining equipment could lead to interruption in
service and loss of customers and revenue, and technological obsolescence of our
equipment could result in substantial capital expenditures.

We do not manufacture equipment used in providing our products and services,
and this equipment is currently available from a limited number of sources.
Although we have not historically experienced any significant difficulty in
obtaining equipment required for our operations and believe that viable
alternative suppliers exist, shortages may arise in the future or alternative
suppliers may not be available. Our inability to obtain equipment in the future
could result in delays or reduced delivery of messages, which could lead to a
loss of customers and revenue. In addition, technological advances may result in
the development of new equipment and changing industry standards, which could
cause our equipment to become obsolete. These events could require us to invest
significant capital in upgrading or replacing our equipment.

Returned transactions or thefts of services could lead to a loss of revenue, and
could adversely effect customer relationships and perceptions of our business in
the markets in which we do business.

If our internal controls, risk management practices and bad debt reserve
practices are not adequate, returned transactions, unauthorized transactions or
thefts of services could lead to a loss of revenue, and could adversely effect
customer relationships and perceptions of our business in the markets in which
we do business.

We use two principal financial payment clearance systems in connection with
our enhanced calling services: the Federal Reserve's Automated Clearing House
for electronic fund transfers; and the national credit card systems

35

for electronic credit card settlement. In our use of these established payment
clearance systems, we generally bear credit risks similar to those normally
assumed by other users of these systems arising from returned transactions
caused by insufficient funds, stop payment orders, closed accounts, frozen
accounts, unauthorized use, disputes, theft or fraud. We could experience
material revenue losses due to these types of returned transactions.

From time to time, persons have gained unauthorized access to our network and
obtained services without rendering payment to us by unlawfully using the access
numbers and personal identification numbers of authorized users. In addition, in
connection with our wholesale prepaid telephone card relationships, we have
experienced unauthorized activation of prepaid telephone cards. We could
experience material revenue losses due to unauthorized use of access numbers and
personal identification numbers, unauthorized activation of prepaid calling
cards, activation of prepaid calling cards in excess of the prepaid amount, or
theft of prepaid calling cards.

We attempt to manage these risks through our internal controls and proprietary
billing systems. We attempt to prohibit a single access number and personal
identification number from establishing multiple simultaneous connections to our
telecommunications equipment, and generally we establish preset spending limits
for each subscriber. We also maintain reserves for these risks. However, past
experience in estimating and establishing reserves and our historical losses are
not necessarily accurate indicators of future losses or the adequacy of the
reserves we may establish in the future.

Our debt could harm our liquidity and our ability to obtain additional
financing, and could make us more vulnerable to economic downturns and
competitive pressures.

In 1997, we incurred $172.5 million in indebtedness by issuing convertible
notes to the public. We have significant interest payment obligations as result
of these convertible notes. Our debt could inhibit our ability to obtain
additional financing for working capital, acquisitions or other purposes and
could make us more vulnerable to economic downturns and competitive pressures.
Our debt could also harm our liquidity, because a substantial portion of
available cash from operations may have to be applied to meet debt service
requirements. In the event of a cash shortfall, we could be forced to reduce
other expenditures and forego potential acquisitions and investments to be able
to meet these debt repayment requirements.

An increase in the rate of amortization of goodwill or other intangible assets
or future write-downs could cause our financial performance to suffer in future
periods.

As of December 31, 2000, we had approximately $344.8 million of goodwill and
other intangible assets reflected on our financial statements. We are amortizing
the goodwill and other intangibles over a range of periods we believe
appropriate for the assets. If the amortization period for any of these assets
is accelerated due to a reevaluation of the useful life of these assets or for
any other reason, amortization expense may initially increase on a quarterly
basis or require a write-down of the goodwill or other intangible assets, which
could cause our financial performance to suffer in future quarters.

Our articles of incorporation and bylaws and Georgia corporate law may inhibit a
takeover, which may not be in the interests of shareholders.

There are several provisions in our articles of incorporation and bylaws and
Georgia corporate law that may inhibit a takeover, even when a takeover may be
in the interests of our shareholders. For example, our board of directors is
empowered to issue preferred stock without shareholder action. The existence of
this "blank-check" preferred stock could render more difficult or discourage an
attempt to obtain control of PTEK by means of a tender offer, merger, proxy
contest or otherwise. Our articles of incorporation also divide the board of
directors into three classes, as nearly equal in size as possible, with
staggered three-year terms. The classification of the board of directors could
make it more difficult for a third party to acquire control of PTEK because only
one-third of the board is up for election each year. We are also subject to
provisions of the Georgia Business Corporation Code that relate to business
combinations with interested shareholders, which can serve to inhibit a
takeover. In addition to considering the effects of any action on us and our
shareholders, our articles of incorporation permit our board of

36

directors and the committees and individual members of the board to consider the
interests of various constituencies, including employees, customers, suppliers,
and creditors, communities in which we maintain offices or operations, and other
factors which they deem pertinent, in carrying out and discharging their duties
and responsibilities and in determining what is believed to be our best
interests.

Our rights plan may also inhibit a takeover, which may not be in the interests
of shareholders.

In June 1998, our board of directors declared a dividend of one preferred
stock purchase right for each outstanding share of common stock. Each right
entitles the registered holder to purchase one one-thousandth of a share of
Series C junior participating preferred stock at a price of sixty dollars per
one-thousandth of a Series C preferred share, subject to adjustment. The rights
may have anti-takeover effects because they will cause substantial dilution to a
person or group that attempts to acquire us on terms not approved by our board
of directors. However, the rights should not interfere with any merger,
statutory share exchange or other business combination approved by the board of
directors since the rights may be terminated by the board of directors at any
time on or prior to the close of business ten business days after announcement
by us that a person has become an acquiring person. The rights are intended to
encourage persons who may seek to acquire control of us to initiate an
acquisition through negotiations with the board of directors. However, the
effect of the rights may be to discourage a third party from making a partial
tender offer or otherwise attempting to obtain a substantial equity position in
the equity securities of, or seeking to obtain control of, us.

One of our growth strategies is to make investments and form alliances with
early-stage companies involved in emerging technologies, and these strategic
investments and alliances may not be successful.

Part of our growth strategy is to make strategic equity investments in, and
form alliances with, companies involved in emerging technologies. These
strategic investments allow us to develop marketing and strategic alliances,
which serve as an important vehicle through which we market our own Web-enabled
services, such as Orchestrate. We made investments of approximately $33.8
million in 2000, $8.0 million in 1999 and $8.8 million in 1998 to acquire
initial interests, or increase existing interests, in companies engaged in
emerging technologies. Since many of the companies in which we make strategic
investments are small, early-stage companies, our investments are subject to the
significant risks faced by these companies, which could result in the loss of
our investment.

We may not have opportunities to acquire equity interests in additional
companies, which could impede our growth strategy.

Our equity investments, which are typically made through or held by a
subsidiary, have significant value on a stand-alone basis. In the future, we may
not be able to identify companies that complement our strategy, and even if we
identify a company that complements our strategy, we may not be able to acquire
an interest in the company. If we cannot acquire equity interests in attractive
companies, our growth strategy may not succeed. We may not be able to acquire
equity interests in attractive companies for many reasons, including:

. a failure to agree on the terms of the acquisition, such as the amount or
price of our acquired interest;

. incompatibility between us and management of the company;

. competition with other investors to make equity investments in the same
company;

. a lack of capital to acquire an interest in the company; and

. the unwillingness of the company to enter into a strategic agreement with
us or to provide us with an equity interest.

37

We may be unable to obtain maximum value for our equity investments.

We have significant positions in several public and private companies. We may
from time to time sell or otherwise monetize all or a portion of these
investments to provide working capital or for other business purposes. For
example, in November and December 1999 we sold a significant portion of our
WebMD holdings in open market transactions and used substantially all of the
proceeds to repay our revolving credit facility. If we divest all or part of any
equity interest, we may not receive maximum value for our position. For equity
investments in publicly traded stock, we may be unable to sell our interests at
then quoted market prices. Furthermore, for those equity interests that are not
publicly traded, the realizable value of our interest may ultimately prove to be
lower than the carrying value currently reflected in our consolidated financial
statements.

The value of our business may fluctuate because the value of some of our equity
investments fluctuates.

A portion of our assets includes the equity securities of both publicly traded
and non-publicly traded companies. In particular, we own a significant number of
shares of common stock of WebMD, S1 and WebEx, which are publicly traded
companies. The market price and valuations of the securities that we hold in
these and other companies may fluctuate due to market conditions and other
conditions over which we have no control. Fluctuations in the market price and
valuations of the securities that we hold in other companies may result in
fluctuations of the market price of our common stock and may reduce the amount
of working capital we have available.

We may incur significant costs and may be forced to make disadvantageous
business decisions to avoid investment company status, and we may suffer adverse
consequences if we are deemed to be an investment company.

We may incur significant costs and may be forced to make disadvantageous
business decisions to avoid investment company status. For example, we may be
forced to forego attractive investment opportunities or we may have to dispose
of investments before we might otherwise do so in order to avoid investment
company status. Furthermore, we may suffer other adverse consequences if we are
deemed to be an investment company under the Investment Company Act of 1940.
Some investments made by us may constitute investment securities under the 1940
Act. In some instances, a company may be deemed to be an investment company if
it owns investment securities with a value exceeding 40% of its total assets,
subject to various exclusions. In other instances, a company may be deemed to be
an investment company if more than 45% of its total assets consists of, and more
than 45% of its net income after taxes attributable to it over the last four
quarters is derived from, ownership interests in companies it does not control,
subject to various exclusions. Investment companies are subject to registration
under, and compliance with, the 1940 Act, unless a particular exclusion or safe
harbor applies. If we are deemed to be an investment company and we register as
one with the SEC, we would become subject to the requirements of the 1940 Act.
As a consequence, we could be prohibited from engaging in business or issuing
our securities in the manner we have in the past. If we are deemed to be an
unlawfully unregistered investment company, we might be subject to civil and
criminal penalties. In addition, some of our contracts might be voidable, and a
court appointed receiver could take control of us and liquidate our business.

If our strategic relationships are not successful we may not be able to increase
our sales and revenue.

A principal element of our strategic plan is the creation and maintenance of
strategic relationships that will enable us to offer our products and services
to a larger customer base than we could otherwise reach through our direct
marketing efforts. Relationships with our strategic partners have not always
been successful. Failure of one or more of our strategic partners to
successfully develop and sustain a market for our services, or the termination
of one or more of our relationships with a strategic partner, could hinder our
ability to increase our sales and our revenue. Although we view our strategic
relationships as a key factor in our overall business strategy and in the
development and commercialization of our products and services, our strategic
partners may not view their relationships with us as significant for their own
businesses and any one of them could reassess their commitment to us in the
future. The ability of our strategic partners to incorporate our products and
services into successful commercial ventures will

38

require us, among other things, to continue to successfully enhance our existing
products and services and develop new ones. Our inability to meet the
requirements of our strategic partners or to comply with the terms of our
strategic partner arrangements could result in our strategic partners failing to
market our services, seeking alternative providers of communications and
information services or canceling their contracts with us.

Financial difficulties of our strategic partners or licensees could adversely
impact our earnings.

Many of the companies that have chosen to outsource their communications
services to us are small or medium-sized telecommunications companies that may
be unable to withstand the intense competition in the telecommunications
industry. If any of our strategic partners or licensees suffer financial
difficulties, it could hurt our financial performance and adversely impact our
earnings. For example, during the second quarter of 1998, a licensing customer
and a strategic partner in our Voicecom business unit initiated proceedings
under Chapter 11 of the U.S. Bankruptcy Code. We recorded approximately $8.4
million of charges in the second quarter of 1998 associated with uncollectible
accounts receivable, primarily related to these financially distressed
customers. The financial difficulties of these two customers, as well as revenue
shortfalls in the voice and data messaging group and other unanticipated costs
and one-time charges, contributed to an after tax loss for the second quarter of
1998.

Risks Related to Past Acquisitions

If we cannot successfully integrate and consolidate the operations of acquired
businesses into our operations, we may not realize sufficient cost savings and
economies-of-scale.

We are continuing to integrate the operations of several businesses acquired
in 1997 and 1998 by attempting to eliminate duplicative and unnecessary costs.
The successful integration and consolidation of the operations of acquired
businesses into our operations is critical to our future performance. If we
cannot successfully integrate and consolidate the operations of acquired
businesses with our operations on schedule or at all, these acquisitions may not
result in sufficient cost savings or economies-of-scale and operational
synergies may not develop. Potential challenges to the successful integration
and consolidation of the operations of acquired businesses include:

. consolidation of service centers and work forces;

. elimination of unnecessary costs; and

. integration and retention of new personnel.

If we cannot successfully integrate technologies, products, services and systems
from acquired businesses with ours, we may not generate sufficient revenue and
operational synergies may not develop.

We are continuing to integrate previously acquired technologies, products,
service offerings and systems. We have experienced and may continue to
experience difficulty integrating incompatible systems of acquired businesses
into our networks. As a result, our integration plans may materially change in
the future. If we cannot successfully integrate technologies, products, services
and systems from acquired businesses with ours, we may not generate sufficient
revenue and operational synergies may not develop. Challenges to the successful
integration of acquired technologies, products, service offerings and systems
include, among other things, the following:

. localization of our products and services;

. integration of technologies, telecommunications equipment and networks;

. cross-selling of products and services to our customer base and customer
bases of acquired businesses; and

. compliance with regulatory requirements.

39

If we do not properly manage the growth we have experienced through
acquisitions, our administrative, technical and financial resources may be
strained, which could cause the quality of our products and services to suffer.

We have experienced substantial growth in revenue and personnel in recent
years, particularly in 1997 and early 1998, a substantial portion of which has
been accomplished through our acquisitions of Voice-Tel Enterprises, Inc. and
its related entities and franchisees, VoiceCom Systems, Inc., Xpedite Systems,
Inc. and American Teleconferencing Services Ltd. Our growth through acquisitions
has placed significant demands on all aspects of our business, including our
administrative, technical, and financial personnel and systems. Additional
expansion may further strain our administrative, technical, financial,
management and other resources. Our systems, procedures, controls and existing
space may not be adequate to support expansion of our operations. If we are
unable to do this, then the quality of our services may suffer, which will make
it difficult to grow or maintain our market share in the markets in which we
compete.

Risks Related to Possible Future Acquisitions

We intend to pursue future acquisitions and we may face risks in acquiring and
integrating other businesses, products and technologies.

We intend to pursue future acquisitions of businesses, products and
technologies that we believe will complement our business. As a result, we
regularly evaluate acquisition opportunities, frequently engage in acquisition
discussions, conduct due diligence activities in connection with possible
acquisitions, and, where appropriate, engage in acquisition negotiations. We may
not be able to successfully identify suitable acquisition candidates, complete
acquisitions, integrate acquired operations into our existing operations or
expand into new markets. In addition, we compete for acquisitions and expansion
opportunities with companies that have substantially greater resources and
competition with these companies for acquisition targets could result in
increased prices for possible targets. Acquisitions also involve numerous
additional risks to the company and investors, including:

. difficulties in the assimilation of the operations, services, products and
personnel of the acquired company;

. the diversion of our management's attention from other business concerns;

. entry into markets in which we have little or no direct prior experience;

. potentially dilutive issuances of equity securities;

. the assumption of known and unknown liabilities; and

. adverse financial impact from the write-off of software development costs
and the amortization of expenses related to goodwill and other intangible
assets.

If we fail to assimilate and retain key employees of future businesses we
acquire, it could jeopardize the success of the acquisition.

Assimilation and retention of the key employees of an acquired company are
generally important to the success of an acquisition. If we fail to assimilate
and retain any key employees of any business we acquire, the acquisition may not
result in revenue growth, operational synergies or product and service
enhancements, which could jeopardize the success of the acquisition.

40

Future acquisitions may involve restructuring and other special charges, which
may cause our financial performance to suffer during the period in which the
charge is taken.

We have taken, and in the future may take, charges in connection with
acquisitions, which may cause our financial performance to suffer during the
period in which the charge is taken. In addition, the costs and expenses
incurred may exceed the estimates upon which these charges are based. During the
second quarter of 1997, we took a pre-tax charge of approximately $40.0 million
in connection with the acquisition of Voice-Tel. During the third quarter of
1997, we took a pre-tax charge of approximately $14.1 million in connection with
the acquisition of VoiceCom Systems. We also recorded restructuring and other
special charges before income taxes of approximately $4.5 million in connection
with the acquisition of Xpedite.

Risks Related to Intellectual Property

We may not be able to protect our proprietary technology and intellectual
property rights, which could result in the loss of our rights or increased
costs.

We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology, brand
and marks. These laws and contractual provisions provide only limited protection
of our proprietary rights and technology. If we are not able to protect our
intellectual property and our proprietary rights and technology, we could lose
those rights and incur substantial costs policing and defending those rights.
Our proprietary rights and technology include confidential information and trade
secrets that we attempt to protect through confidentiality and nondisclosure
provisions in our licensing, services, reseller and other agreements. We
typically attempt to protect our confidential information and trade secrets
through these contractual provisions for the term of the applicable agreement
and, to the extent permitted by applicable law, for some negotiated period of
time following termination of the agreement, typically one to two years at a
minimum. Our means of protecting our intellectual property, proprietary rights
and technology may not be adequate and our competitors may independently develop
similar technology. In addition, the laws of some foreign countries do not
protect our proprietary rights to as great an extent as the laws of the U.S.
Furthermore, some of our systems, such as those used in our document
distribution business are not proprietary and, as a result, this information may
be acquired or duplicated by existing and potential competitors.

If claims alleging patent, copyright or trademark infringement are brought
against us and successfully prosecuted against us, it could result in
substantial costs.

Many patents, copyrights and trademarks have been issued in the general areas
of information services and telecommunications, computer telephony, the Internet
and unified messaging, which allows a person to access all of their messaging
devices from a computer or telephone. From time to time, in the ordinary course
of our business, we have been and expect to continue to be, subject to third
party claims that our current or future products or services infringe the
patent, copyright or trademark rights or other intellectual property rights of
third parties. Claims alleging patent, copyright or trademark infringement may
be brought against us with respect to current or future products or services. If
these types of actions or claims are brought we may not ultimately prevail and
any claiming parties may have significantly greater resources than we have to
pursue litigation of these types of claims. Any infringements claims, whether
with or without merit, could:

. be time consuming and a diversion to management;

. result in costly litigation;

. cause delays in introducing new products and services or enhancements,

. result in costly royalty or licensing agreements; or

41

. cause us to discontinue use of the challenged technology, tradename or
service mark at potentially significant expense associated with the
marketing of a new name or the development or purchase of replacement
technology.

Examples of prior and current infringement claims include the following:

In February 1997, we entered into a long-term nonexclusive license agreement
with AudioFAX IP LLC settling a patent infringement suit filed by AudioFAX in
June 1996. Effective April 1, 1998, this initial license agreement was amended
to include Xpedite within the coverage of the license. In September 1997, one of
our subsidiaries also entered into a long-term nonexclusive license agreement
with AudioFAX.

Prior to its acquisition by us, Xpedite received a letter from Cable &
Wireless, Inc. informing Xpedite that Cable & Wireless had received a demand
letter from AudioFAX claiming that some Cable & Wireless products and services
infringed AudioFAX's patent rights. Cable & Wireless initially sought
indemnification from Xpedite for this claim. Subsequent to our acquisition of
Xpedite, Cable & Wireless notified us of the AudioFAX claim and sought
indemnification directly from us. In 1999, Xpedite received an additional letter
from Cable & Wireless informing Xpedite of the existence of one of their patents
and the potential applicability of that patent on Xpedite's products and
services. In December 2000, we entered into a settlement agreement with Cable &
Wireless settling all disputes over the indemnification claim and potential
applicability of their patent to our products and services.

In 1999, we received separate letters from Ronald A. Katz Technology
Licensing, L.P. ("Katz") and Aerotel Limited/Aerotel USA, Inc., and in 2000 from
Nortel Networks, Inc., informing us of the existence of their respective patents
or patent portfolios and the potential applicability of those patents on our
products and services. We are currently considering each of these matters.
However, we currently lack sufficient information to assess the potential
outcomes of these matters. Due to the inherent uncertainties of litigation,
however, we are unable to predict the outcome of any potential litigation, and
any adverse outcome could have a material effect on our business, financial
condition and results of operations. Even if we were to prevail in this type of
challenge, our business could be adversely affected by the diversion of
management attention and litigation costs.

Certain of our customers have alleged that we are obligated to indemnify them
against patent infringement claims made by Katz against such customers. We do
not believe that we have an obligation to indemnify such customers; however, due
to the inherent uncertainties of litigation, we are unable to predict the
outcome of any potential litigation, and any adverse outcome could have a
material effect on our business, financial condition and results of operations.
Even if we were to prevail in this type of challenge, our business could be
adversely affected by the diversion of management attention and litigation
costs.

In March 1999, Aspect Telecommunications, Inc. ("Aspect"), the purported owner
of certain patents, filed suit against the Company and Premiere Communications,
Inc. ("PCI") alleging that they had violated claims in these patents and
requesting damages and injuncture relief. In the fourth quarter of 1999, the
Company and PCI entered into a settlement agreement with Aspect, which settled
and disposed of Aspect's claims in this litigation. This settlement did not and
will not have a material adverse effect on the Company's business, financial
condition or results of operations.

Risks Related to Pending Litigation

Our pending litigation could be costly, time consuming and a diversion to
management and, if adversely determined, could result in the loss of rights or
substantial liabilities for damages.

In the ordinary course of our business, we are subject to a variety of claims
and litigation from third parties, including allegations that our products and
services infringe the patents, trademarks and copyrights of these third parties.
We have several litigation matters pending, which we are defending vigorously.
Due to the inherent uncertainties of the litigation process and the judicial
system, we cannot predict the outcome of these litigation matters. Regardless of
the outcome, these litigation matters could be costly, time consuming and a
diversion of management and other resources. If the outcome of one or more of
these matters is adverse to us, it could result in a loss of material rights or
substantial liabilities for damages.

42

For detailed descriptions of our material pending litigation, see Item 3--
"Legal Proceedings."

Our pending shareholder litigation in the United States District Court for the
Northern District of Georgia could be costly, time consuming and a diversion to
management and, if adversely determined, could result in substantial
liabilities.

We and some of our officers and directors have been named as defendants in
multiple shareholder class action lawsuits filed in the United States District
Court for the Northern District of Georgia. Plaintiffs seek to represent a class
of individuals (including a subclass of former Voice-Tel franchisees and a
subclass of former Xpedite shareholders) who purchased or otherwise acquired our
common stock between February 11, 1997 through June 10, 1998. Plaintiffs allege,
among other things, violation of Sections 10(b), 14(a) and 20(a) of the
Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act
of 1933. We filed a motion to dismiss the complaint on April 14, 1999. On
December 14, 1999, the court issued an order that dismissed the claims under
Section 10(b) and 20 of the Exchange Act without prejudice, and dismissed the
claims under Section 12(a)(1) of the Securities Act with prejudice. The effect
of this order was to dismiss from this lawsuit all open-market purchases by the
plaintiffs. The plaintiffs filed an amended complaint on February 29, 2000. We
filed a motion to dismiss on April 14, 2000, which was granted in part and
denied in part. We filed our answer on January 8, 2001. Due to the inherent
uncertainties of the litigation process and the judicial system, we cannot
predict the outcome of this litigation. Regardless of the outcome, this matter
could be costly, time consuming and a diversion to management and other
resources. If the outcome of this matter is adverse to us, it could result in
substantial damages.

Our pending shareholder litigation in the United States District Court for the
Southern District of New York could be costly, time consuming and a diversion to
management and, if adversely determined, could result in substantial
liabilities.

A lawsuit was filed on November 4, 1998 against us, as well as individual
defendants Boland T. Jones, Patrick G. Jones, George W. Baker, Sr., Eduard J.
Mayer and Raymond H. Pirtle, Jr. in the Southern District of New York.
Plaintiffs were shareholders of Xpedite who acquired our common stock as a
result of the merger between Premiere and Xpedite in February 1998. Plaintiffs'
allegations are based on the representations and warranties made by us in the
prospectus and the registration statement related to the merger, the merger
agreement and other documents incorporated by reference, regarding our
acquisitions of Voice-Tel and VoiceCom Systems, our roll-out of Orchestrate, our
relationship with customers Amway Corporation and DigiTEC 2000, and our 800-
based calling card service. Plaintiffs allege causes of action against us for
breach of contract, against all defendants for negligent misrepresentation,
violations of Sections 11 and 12(a)(2) of the Securities Act of 1933, and
against the individual defendants for violation of Section 15 of the Securities
Act of 1933. Plaintiffs seek undisclosed damages together with pre- and post-
judgment interest, recission or recissory damages as to violation of Section
12(a)(2) of the Securities Act of 1933, punitive damages, costs and attorneys'
fees. The defendants' motion to transfer venue to Georgia has been granted. The
defendants' motion to dismiss has been granted in part and deemed in part. The
defendants filed an answer on March 30, 2000. Due to the inherent uncertainties
of the litigation process and the judicial system, we cannot predict the outcome
of this litigation. Regardless of the outcome, this matter could be costly, time
consuming and a diversion to management and other resources. If the outcome of
this matter is adverse to us, it could result in substantial damages.

Our pending shareholder litigation in the Circuit Court of Jackson County,
Missouri could be costly, time consuming and a diversion to management and if
adversely determined, could result in substantial liabilities.

A lawsuit was filed on or about May 19, 2000 against us in the Circuit Court
of Jackson County, Missouri, alleging claims for breach of contract, fraudulent
misrepresentation, negligent misrepresentation, breach of duty of good faith and
fair dealings, unjust enrichment, and violation of Georgia and Missouri blue sky
laws. Plaintiff's claims arise out of our acquisition of American
Teleconferencing Services, Ltd. ("ATS") in April 1998. Plaintiff was a
shareholder of ATS who received shares of PTEK stock in the transaction. We
removed the case to the United States District Court for the Western District of
Missouri, and filed a Motion to Compel Arbitration, or Alternatively

43

to Transfer Venue, or Alternatively to Dismiss the Complaint. Plaintiff has
filed a Motion to Remand the case back to state court. By order dated March 28,
2001, the court granted plaintiff's Motion to Remand and dismissed as moot the
Company's motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint. Due to the inherent uncertainties of the
litigation process and the judicial system, we cannot predict the outcome of
this litigation. Regardless of the outcome, this matter could be costly, time
consuming and a diversion to management and other resources. If the outcome of
this matter is adverse to us, it could result in substantial damages.

Risks Related to Government Regulation

U.S. or other government regulations and legal uncertainties related to the
Internet may place financial burdens on our business related to compliance.

Currently, there are few laws or regulations directed specifically at
electronic commerce and the Internet. However, because of the Internet's
popularity and increasing use, new laws and regulations may be adopted. These
laws and regulations may cover issues such as collection and use of data from
Web site visitors and related privacy issues, pricing, content, copyrights, on-
line gambling, distribution and quality of goods and services. The enactment of
any additional laws or regulations may impede the growth of the Internet, which
could impede the growth of our Web-enabled products and services and place
additional financial burdens on our business in order to comply with new laws
and regulations.

Laws and regulations directly applicable to electronic commerce or Internet
communications are becoming more prevalent. For example, the United States
Congress recently enacted laws regarding on-line copyright infringement and the
protection of information collected on-line from children. Although these laws
may not have a direct adverse effect on our business, they add to the legal and
regulatory uncertainty regarding the Internet and possible future costs of
regulatory compliance.

Our failure to comply with various government regulations related to long
distance and operator service could impair our ability to deliver our products
and services.

Premiere Communications, Inc. ("PCI"), our operating subsidiary that provides
regulated long distance telecommunications and operator services, is subject to
regulation by the FCC and by various state public service and public utility
commissions, and is affected by regulatory decisions, trends and policies made
by these agencies. Various international authorities may also seek to regulate
the long distance and operator services provided by PCI. If PCI fails to comply
with these various government regulations, we could be prohibited from providing
these services and we might be subject to fines or forfeitures and civil or
criminal penalties for non-compliance.

PCI uses reasonable efforts to ensure that its operations comply with these
regulatory requirements. However, PCI may not be currently in compliance with
all FCC and state regulatory requirements. Furthermore, PCI's facilities do not
prevent its customers from making long distance calls in any state, including
states in which it currently is not authorized to provide intrastate
telecommunications services and operator services. Premiere Communications'
provision of long distance telecommunications and operator services in states
where it is not in compliance with public utility commission requirements could
result in prohibitions on providing long distance service and subject us to
fines or forfeitures and civil or criminal penalties for noncompliance.

We may become subject to new laws and regulations involving services and
transactions in the areas of electronic commerce, which could increase costs of
compliance.

In conducting our business, we are subject to various laws and regulations
relating to commercial transactions generally, such as the Uniform Commercial
Code, and we are also subject to the electronic funds transfer rules embodied in
Regulation E promulgated by the Board of Governors of the Federal Reserve
System. Congress has held hearings regarding, and various agencies are
considering, whether to regulate providers of services and transactions in the
electronic commerce market. It is possible that Congress, the states or various
government agencies could impose new or additional requirements on the
electronic commerce market or entities operating

44

therein. If enacted, these laws, rules and regulations could be imposed on our
business and industry and could result in substantial compliance costs.

Risks Related to International Operations and Expansion

Our future success depends on our expansion into international markets and
revenue from international operations may not grow enough to offset the cost of
expansion.

A component of our strategy is our planned expansion into international
markets. Revenue from international operations may not grow enough to offset the
cost of establishing and expanding these international operations. We currently
deliver multimedia messaging services worldwide. We also operate voice messaging
service centers in Canada, Australia, New Zealand, Puerto Rico, the United
Kingdom, Italy and Taiwan. In addition, we have conferencing operations in
Canada, Australia, China, Singapore, Japan, France, Germany and the United
Kingdom. While we have significant international experience in the delivery of
our multimedia messaging services, we have only limited experience in marketing
and distributing our conferencing services and unified communications services
internationally. Accordingly, we may not be able to successfully market, sell
and deliver our conferencing and unified communications services in the new
international markets.

There are risks inherent in international operations that could hinder our
international growth strategy.

Our ability to achieve future success will depend in part on the expansion of
our international operations. There are difficulties and risks inherent in doing
business on an international level that could prevent us from selling our
products and services in other countries or hinder our expansion once we have
established international operations, including, among other things, the
following:

. burdensome regulatory requirements and unexpected changes in these
requirements;

. export restrictions and controls relating to technology;

. tariffs and other trade barriers;

. difficulties in staffing and managing international operations;

. longer payment cycles;

. problems in collecting accounts receivable;

. political and economic instability;

. fluctuations in currency exchange rates;

. seasonal reductions in business activity during the summer months in Europe
and other parts of the world; and

. potentially adverse tax consequences.

We could experience losses from fluctuations in currency exchange rates.

We conduct business outside the U.S. and some of our expenses and revenue are
derived in foreign currencies. In particular, a significant portion of our
multimedia messaging business is conducted outside the U.S. and a significant
portion of our revenue and expenses from that business are derived in foreign
currencies. Accordingly, we could experience material losses due to fluctuations
in foreign currencies. We have not experienced any material

45

losses from fluctuations in currency exchange rates, but we could in the future.
We typically denominate foreign transactions in foreign currency and have not
regularly engaged in hedging transactions, although we may engage in hedging
transactions from time to time in the future.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk from changes in interest rates and
foreign currency exchange rates. The Company manages its exposure to these
market risks through its regular operating and financing activities. Derivative
instruments are not currently used and, if utilized, are employed as risk
management tools and not for trading purposes.

At December 31, 2000, no derivative financial instruments were outstanding to
hedge interest rate risk. A hypothetical immediate 10% increase in interest
rates would decrease the fair value of the Company's fixed rate convertible
subordinated notes outstanding at December 31, 2000, by $6.2 million.

Approximately 27.6% of the Company's sales and 17.6% of its operating costs
and expenses were transacted in foreign currencies in 2000. As a result,
fluctuations in exchange rates impact the amount of the Company's reported sales
and operating income. A hypothetical positive or negative change of 10% in
foreign currency exchange rates would positively or negatively change revenue
for 2000 by approximately $12.4 million and operating expenses for 2000 by
approximately $10.9 million. Historically, the Company's principal exposure has
been related to local currency sales, operating costs and expenses in Europe and
Asia (principally the United Kingdom, Germany and Japan). The Company has not
used derivatives to manage foreign currency exchange risk and no foreign
currency exchange derivatives were outstanding at December 31, 2000.

Item 8. Financial Statements and Supplementary Data

PTEK Holdings, Inc. and Subsidiaries Index to Consolidated Financial Statements

Report of Independent Public Accountants................................ 47
Consolidated Balance Sheets, December 31, 2000 and 1999................. 48
Consolidated Statements of Operations, Years Ended December 31,
2000, 1999 and 1998................................................. 49
Consolidated Statements of Shareholders' Equity (Deficit), Years
Ended December 31, 2000, 1999 and 1998.............................. 50
Consolidated Statements of Cash Flows, Years Ended December 31, 2000,
1999 and 1998....................................................... 51
Notes to Consolidated Financial Statements.............................. 52

46

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To PTEK Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of PTEK HOLDINGS,
INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 2000 and 1999
and the related consolidated statements of operations, shareholders' equity
(deficit) and cash flows for the years ended December 31, 2000, 1999 and 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PTEK Holdings, Inc. and
subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for the years ended December 31, 2000, 1999 and
1998 in conformity with accounting principles generally accepted in the United
States.

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 27, 2001

47

PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
(in thousands, except share data)

2000 1999
--------- ---------

ASSETS
CURRENT ASSETS
Cash and equivalents............................................................................... $ 22,991 $ 15,366
Marketable securities, available for sale.......................................................... 6,725 86,615
Accounts receivable (less allowances of $15,076 and $11,421, respectively)......................... 66,927 67,652
Notes receivable - sale of revenue base............................................................ 6,552 --
Prepaid expenses and other......................................................................... 8,904 13,299
Deferred income taxes, net......................................................................... 18,998 --
--------- ---------
Total current assets........................................................................... 131,097 182,932

PROPERTY AND EQUIPMENT, NET........................................................................... 117,106 118,725

OTHER ASSETS
Strategic alliance contract, net................................................................... -- 8,036
Investments........................................................................................ 27,066 14,620
Intangibles, net................................................................................... 344,782 435,978
Other assets....................................................................................... 10,882 10,190
--------- ---------
$ 630,933 $ 770,481
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable................................................................................... $ 32,057 $ 33,512
Deferred revenue................................................................................... 540 1,586
Accrued taxes...................................................................................... 12,276 31,607
Accrued liabilities................................................................................ 60,966 57,686
Deferred gain-sale of revenue base................................................................. 6,552 --
Deferred income taxes, net......................................................................... -- 15,426
Current maturities of long-term debt and capital lease obligations................................. 1,676 2,671
Accrued restructuring, merger costs and other special charges...................................... 1,081 5,698
--------- ---------
Total current liabilities...................................................................... 115,148 148,186
--------- ---------

LONG-TERM LIABILITIES
Convertible subordinated notes..................................................................... 172,500 172,500
Long-term debt and capital lease obligations....................................................... 4,586 4,454
Other accrued liabilities.......................................................................... 1,429 7,419
Deferred income taxes, net......................................................................... 23,864 15,702
--------- ---------
Total long-term liabilities.................................................................... 202,379 200,075
--------- ---------

COMMITMENTS AND CONTINGENCIES (Note 17)

SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 150,000,000 shares authorized, 51,316,880 and 48,074,566 shares
issued in 2000 and 1999, respectively, and 49,067,244 and 46,977,566 shares outstanding in 2000
and 1999, respectively............................................................................ 513 481
Unrealized gain on marketable securities, available for sale....................................... 2,316 50,774
Additional paid-in capital......................................................................... 581,474 570,054
Treasury stock, at cost............................................................................ (12,398) (9,133)
Note receivable, shareholder....................................................................... (3,834) (1,047)
Cumulative translation adjustment.................................................................. (6,363) 527
Accumulated deficit................................................................................ (248,302) (189,436)
--------- ---------
Total shareholders' equity..................................................................... 313,406 422,220
--------- ---------
$ 630,933 $ 770,481
========= =========

Accompanying notes are integral to these consolidated financial statements.

48

PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2000, 1999 and 1998
(in thousands, except per share data)

2000 1999 1998
-------- --------- ---------

Revenues.................................................................... $436,935 $ 458,448 $ 444,818
Telecommunications Costs.................................................... 115,440 129,691 135,036
-------- --------- ---------
Gross Profit................................................................ 321,495 328,757 309,782
-------- --------- ---------

Direct Operating Costs...................................................... 68,197 69,436 53,992
-------- --------- ---------
Contribution Margin......................................................... 253,298 259,321 255,790
-------- --------- ---------

Operating Expenses
Selling and marketing.................................................... 93,901 107,872 109,382
General and administrative............................................... 78,933 100,594 79,314
Research and development................................................. 13,831 12,100 5,257
Depreciation............................................................. 40,499 69,944 46,252
Amortization............................................................. 103,174 98,912 65,588
Restructuring, merger costs and other special charges.................... 739 7,980 24,050
Acquired research and development........................................ -- -- 15,500
Legal settlements, net................................................... (1,422) -- 1,500
-------- --------- ---------
Total operating expenses............................................. 329,655 397,402 346,843
-------- --------- ---------

Operating Loss.............................................................. (76,357) (138,081) (91,053)

Other Income (Expense)
Interest, net............................................................ (10,619) (24,728) (14,664)
Gain on sale of marketable securities.................................... 59,550 152,094 --
Asset impairment - investments........................................... (14,984) -- --
Amortization of goodwill - equity investments............................ (4,930) -- --
Other, net............................................................... (289) 12,522 286
-------- --------- ---------
Total other income (expense)......................................... 28,728 139,888 (14,378)
-------- --------- ---------

Income (Loss) Before Income Taxes........................................... (47,629) 1,807 (105,431)
Income Tax Provision (Benefit).............................................. 11,237 35,298 (21,177)
-------- --------- ---------
Net Loss.................................................................... $(58,866) $ (33,491) $ (84,254)
======== ========= =========
Basic Net Loss Per Share.................................................... $ (1.22) $ (0.72) $ (1.90)
======== ========= =========
Diluted Net Loss Per Share.................................................. $ (1.22) $ (0.72) $ (1.90)
======== ========= =========
Weighted Average Shares Outstanding--Basic and Diluted...................... 48,106 46,411 44,325
======== ========= =========

Accompanying notes are integral to these consolidated financial statements.

49

PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Years Ended December 31, 2000, 1999, and 1998
(in thousands)

Unrealized Gain
On Marketable
Common Additional Note Securities, Cumulative Total
Stock Paid-In Receivable, Treasury Accumulated Available For Translation Shareholders'
Issued Capital Shareholder Stock Deficit Sale Adjustment Equity
------ ---------- ----------- -------- ----------- -------------- ----------- -----------

BALANCE, December 31, 1997....... $341 $180,084 $ (973) $ -- $ (71,691) $ -- $ -- $ 107,761
Comprehensive Loss:
Net loss........................ -- -- -- -- (84,254) -- -- (84,254)
Translation adjustments......... -- -- -- -- -- -- 1,269 1,269
---------
Comprehensive Loss:.............. (82,985)
---------
Treasury stock purchase.......... -- -- -- (9,133) -- -- -- (9,133)
Issuance of common stock:
Xpedite acquisition.............. 110 345,009 -- -- -- -- -- 345,119
ATS acquisition.................. 7 23,527 -- -- -- -- -- 23,534
Exercise of stock options........ 11 7,318 -- -- -- -- -- 7,329
Income tax benefit from exercise
of stock options............... -- 6,168 -- -- -- -- -- 6,168
---- -------- ------- --------- ----------- -------- ------- ---------
BALANCE, December 31, 1998....... $469 $562,106 $ (973) $ (9,133) $ (155,945) $ -- $ 1,269 $ 397,793

Comprehensive Income (Loss):
Net loss........................ -- -- -- -- (33,491) -- -- (33,491)
Translation adjustments......... -- -- -- -- -- -- (742) (742)
Unrealized gain on marketable
securities.................... -- -- -- -- -- 50,774 -- 50,774
---------
Comprehensive Income (Loss)...... 16,541
Issuance of common stock: ---------
Intellivoice acquisition......... 6 4,437 -- -- -- -- -- 4,443
Exercise of stock options........ 5 1,059 -- -- -- -- -- 1,064
Employee stock purchase plan..... 1 480 -- -- -- -- -- 481
Income tax benefit from exercise
of stock options............... -- 1,972 -- -- -- -- -- 1,972
Issuance of shareholder note
receivable.................... -- -- (74) -- -- -- -- (74)
---- -------- ------- --------- ----------- -------- ------- ---------
BALANCE, December 31, 1999....... $481 $570,054 $(1,047) $ (9,133) $ (189,436) 50,774 527 $ 422,220

Comprehensive Income (Loss):
Net loss........................ -- -- -- -- (58,866) -- -- (58,866)
Translation adjustments......... -- -- -- -- -- -- (6,890) (6,890)
Unrealized gain on marketable
securities.................... -- -- -- -- -- (48,458) -- (48,458)
---------
Comprehensive Income (Loss)...... (114,214)
---------
Issuance of common stock:
Exercise of stock options........ 24 6,869 -- -- -- -- -- 6,893
Treasury stock purchase.......... -- -- -- (3,265) -- -- -- (3,265)
401K plan match.................. 3 1,605 -- -- -- -- -- 1,608
Employee stock purchase plan..... 5 1,373 -- -- -- -- -- 1,378
Income tax benefit from exercise
of stock options............... -- 1,573 -- -- -- -- -- 1,573
Issuance of shareholder
note receivable................ -- -- (2,787) -- -- -- -- (2,787)
---- -------- ------- --------- ----------- -------- ------- ---------
BALANCE, December 31, 2000....... $513 $581,474 $(3,834) $ (12,398) $ (248,302) 2,316 (6,363) $ 313,406
==== ======== ======= ========= =========== ======== ======= =========

Accompanying notes are integral to these consolidated financial statements.

50

PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999 and 1998
(in thousands)

2000 1999 1998
-------- --------- --------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss........................................................................ $(58,866) $ (33,491) $(84,254)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation.................................................................... 40,499 69,944 46,252
Amortization.................................................................... 103,174 98,912 65,588
(Gain) on sale of marketable securities, available for sale..................... (59,550) (152,094) --
(Gain) loss on legal settlement................................................. (1,422) -- 1,500
Loss on disposal of property and equipment...................................... -- 597 13
Deferred income taxes........................................................... (9,162) 31,520 (26,467)
Restructuring, merger costs and other special charges........................... 739 7,980 24,050
Payments for restructuring, merger costs and other special charges.............. (4,556) (8,927) (14,954)
Acquired research and development............................................... -- -- 15,500
Asset impairment - investments.................................................. 14,984 -- --
Amortization of goodwill - investments.......................................... 4,930 -- --
Proceeds (payments) related to legal settlements................................ 12,000 -- (1,291)
Income taxes paid............................................................... (17,100) -- --
Changes in assets and liabilities:
Accounts receivable, net..................................................... (5,827) (7,251) 4,281
Prepaid expenses and other................................................... 4,395 (9,627) 6,067
Accounts payable and accrued expenses........................................ (6,309) 12,364 (14,037)
-------- --------- --------
Total adjustments......................................................... 76,795 43,418 106,502
-------- --------- --------
Net cash provided by operating activities................................. 17,929 9,927 22,248
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures............................................................ (35,046) (44,205) (61,335)
Proceeds from disposal of property and equipment................................ 1,937 -- 569
Sale of marketable securities................................................... 63,092 175,060 133,796
Acquisitions.................................................................... (2,623) (20,949) (43,644)
Investments..................................................................... (33,806) (10,089) (8,259)
Other........................................................................... (20) 7,399 165
-------- --------- --------
Net cash (used in) provided by investing activities.......................... (6,466) 107,216 21,292
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing arrangements, net............................ (3,236) (121,914) (29,848)
Purchase of treasury stock, at cost............................................. (3,265) -- (9,133)
Debt issue costs................................................................ -- -- (1,285)
Exercise of stock options, net of tax withholding payments...................... 6,894 1,064 (5,530)
Issuance of shareholder note receivable......................................... (2,787) (74) --
Other........................................................................... -- -- (319)
-------- --------- --------
Net cash used in financing activities........................................ (2,394) (120,924) (46,115)
-------- --------- --------
Effect of exchange rate changes on cash and equivalents............................ (1,444) (79) 31
-------- --------- --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS.................................... 7,625 (3,860) (2,544)
CASH AND EQUIVALENTS, beginning of period.......................................... 15,366 19,226 21,770
-------- --------- --------
CASH AND EQUIVALENTS, end of period................................................ $ 22,991 $ 15,366 $ 19,226
======== ========= ========

Accompanying notes are integral to these consolidated financial statements.

51

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND ITS BUSINESS

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries
(collectively the "Company" or "PTEK") is a global provider of communications
and data services, including conferencing (audio conference calling and Web-
based collaboration), multimedia messaging (high-volume fax, e-mail, wireless
messaging and voice message delivery), and unified communications (personal
communications management systems that handle voice mail, e-mail and personal
content from the Web or the telephone). Through a series of acquisitions from
September 1996 through September 1999, PTEK has assembled a suite of
communications and data services, an international private data network and
points-of-presence in regions covering North America, Asia/Pacific and Europe.
The Company has also invested in Internet companies that have developed their
own innovative service offerings. The Company operates three decentralized
operating business units -- Xpedite, Voicecom and Premiere Conferencing, and
makes investments in Internet companies through its investment arm,
PtekVentures. The Company also operated a fourth operating business unit, Retail
Calling Card Services, until its revenue base was sold effective August 1, 2000.
The Company's acquisitions and segments are more fully described in Note 8--
"Acquisitions" and Note 21--"Segment Reporting," respectively. The Company's
sale of its Retail Calling Card revenue base is more fully described in Note 6--
"Sale of Retail Calling Card Revenue Base."

2. SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Principles of Consolidation

The financial statements include the accounts of the Company and its wholly-
owned subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.

Cash and Equivalents

Cash and equivalents include cash on hand and highly liquid investments with a
maturity at date of purchase of three months or less.

Marketable Securities, Available for Sale

The Company follows Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 mandates that a
determination be made of the appropriate classification for equity securities
with a readily determinable fair value and all debt securities at the time of
purchase and a reevaluation of such designation as of each balance sheet date.
At December 31, 2000 and 1999, investments consisted primarily of common stock.
Management considers all such investments as "available for sale." Common stock
investments are carried at fair value based on quoted market prices. Debt
instruments are carried at amortized cost. Unrealized holding gains and losses,
net of the related income tax effect are excluded from earnings and are reported
as a separate component of shareholders' equity until realized. Realized gains
and losses are included in earnings and are derived using the specific
identification method for determining the cost of the securities sold.

52

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments

The Company has made investments in various companies that are engaged in
emerging technologies related to the Internet. Either the cost or equity method
is used to account for these investments in accordance with APB Opinion No. 18,
"The Equity Method of Accounting for Investments in Common Stock." Based on the
Company's ownership interest, the consolidation method is not used for any
investments.

Cost Method

The cost method of accounting is used for any investment in which the Company
owns less than 20% and does not exercise significant influence. Significant
influence is generally determined by, but not limited to, representation on the
affiliate's Board of Directors, voting rights associated with the Company's
holdings in common, preferred and other convertible instruments in the
affiliate, and any legal obligations. As there is no quoted market price for
these investments and the Company owns less than 20%, the investment is carried
at cost unless circumstances suggest that an impairment should be recognized.

Equity Method

Affiliated companies in which the Company owns 50% or less of the equity
ownership, but over which significant influence is exercised, are accounted for
using the equity method of accounting. The amount by which the Company's
investment exceeds its share of the underlying net assets is considered to be
goodwill, and is amortized over a three-year period.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided under
the straight-line method over the estimated useful lives of the assets,
commencing when the assets are placed in service. The estimated useful lives are
five years for furniture and fixtures, two years for software and three to five
years for computer and telecommunications equipment. The cost of installed
equipment includes expenditures for installation. Assets recorded under capital
leases and leasehold improvements are depreciated over the shorter of their
useful lives or the term of the related lease.

Goodwill

Goodwill represents the excess of the cost of businesses acquired over fair
value of net identifiable assets at the date of acquisition and has historically
been amortized using the straight line method over various lives up to 40 years.
In the fourth quarter of 1998 the Company shortened the life of all remaining
goodwill to seven years to better reflect rapidly changing technology and
increased competition in the enhanced telecommunications marketplace. The
Company amortizes the goodwill of equity investments in the PtekVentures'
portfolio over a three-year useful life. The goodwill related to PtekVentures'
investments is included in "Investments" in the accompanying consolidated
balance sheets and the amortization is included in "Amortization of goodwill-
equity investments" in the accompanying consolidated statements of operations.

Valuation of Long-Lived Assets

Management periodically evaluates carrying values of long-lived assets,
including property and equipment, strategic alliance contract, goodwill and
other intangible assets, to determine whether events and circumstances indicate
that these assets have been impaired. A long-lived asset is considered impaired
when undiscounted cash flows to be realized from such asset are less than its
carrying value. In that event, a loss is determined based on the amount the
carrying value exceeds undiscounted cash flows from such asset. Management
believes that long-lived assets in the accompanying consolidated balance sheets
are appropriately valued. The Company also continually evaluates the carrying
value of its equity and cost investments for possible impairment. See Note 5--
"Investments."

53

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation Plans

As permitted under the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company has elected to apply Accounting Principles Board
("APB") Opinion No. 25,"Accounting for Stock Issued to Employees." Accordingly,
no compensation expense is recorded for stock based awards issued at market
value at the date such awards are granted. The Company makes pro forma
disclosures of net loss and net loss per share as if the market value method was
followed. See Note 15--"Stock-Based Compensation Plans."

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement
exists, services have been rendered, the price to the buyer is fixed or
determinable, and collectibility is assured. Revenues consist of fixed monthly
fees, usage fees generally based on per minute or transaction rates, and service
initiation fees. Deferred revenue consists of billings made to customers in
advance of the time services are rendered. The Company's revenue recognition
policies are consistent with the guidance in Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements."

Income Taxes

Deferred income taxes are recorded using enacted tax laws and rates for the
years in which income taxes are expected to be paid. Deferred income taxes are
provided when there is a temporary difference between the recognition of items
in income for financial reporting and income tax purposes.

Net Loss Per Share

The Company follows SFAS No. 128, "Earnings per Share." That statement
requires the disclosure of basic earnings per share and diluted earnings per
share. Basic earnings per share is computed by dividing net income (loss)
available to common shareholders by the weighted-average number of common shares
outstanding during the period and does not include any other potentially
dilutive securities. Diluted net income (loss) per share gives effect to all
potentially dilutive securities. The Company's convertible subordinated notes
and stock options are potentially dilutive securities. In 2000, 1999 and 1998,
both potentially dilutive securities were antidilutive and therefore are not
included in diluted net loss per share.

Concentration of Credit Risk

Revenues through the Amway distribution channel in the Voicecom segment of the
Company represented approximately $33.0 million, $34.3 million and $41.9 million
of the Company's consolidated revenues for 2000, 1999 and 1998, respectively.

Foreign Currency Translation

The assets and liabilities of subsidiaries domiciled outside the United States
are translated at rates of exchange existing at the balance sheet date. Revenues
and expenses are translated at average rates of exchange prevailing during the
year. The resulting translation adjustments are recorded as a separate component
of shareholders' equity.

Treasury Stock

Treasury stock transactions are recorded at cost.

Comprehensive Income

In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
Comprehensive income represents the change in equity of a business during a
period, except for investments by owners and distributions to owners. Foreign
currency translation adjustments and unrealized gain on available-for-sale
marketable securities

54

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

represent the Company's components of other comprehensive income in 2000 and
1999. In 1998, foreign currency translation was the only component of
comprehensive income. For the years ended December 31, 2000, 1999 and 1998,
total comprehensive income/(loss) was approximately $(114.2) million, $16.5
million and $(83.0) million, respectively.

New Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," in June 1998,
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of the FASB Statement No. 133," in June 1999 and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133," in June 2000. SFAS No.133
establishes accounting and reporting standards for derivatives and hedging. It
requires that all derivatives be recognized as either assets or liabilities at
fair value and establishes specific criteria for the use of hedge accounting.
SFAS No. 137 defers the effective date of SFAS No. 133 by one year to fiscal
years beginning after June 15, 2000. SFAS No. 138 amends the accounting and
reporting standards of SFAS No. 133 for certain derivative instruments and
certain hedging activities. The Company's required adoption date is January 1,
2001. Upon adoption of the three statements, the Company expects no material
impact to its results of operations or financial position.

Reclassifications

Certain prior year amounts in the Company's consolidated financial statements
have been reclassified to conform to the 2000 presentation.

3. RESTRUCTURING, MERGER COSTS AND OTHER SPECIAL CHARGES

Reorganization of Company into EES and CES Business Segments

In the fourth quarter of 1998, the Company recorded a charge of $11.4 million
to reorganize the Company into two business segments that focused on specific
groups of customers. These segments were named Emerging Enterprise Solutions and
Corporate Enterprise Solutions. EES focused on small office/home office and
multi-level marketing organizations, and CES focused on large corporate
accounts. This charge was comprised of $4.9 million of severance costs, $4.7
million of asset impairment charges, $0.4 million of contractual obligation
costs and $1.4 million of other costs, primarily to exit facilities and certain
activities.

As part of this reorganization, the Company identified 59 employees for
termination. These employees included administrative personnel from the
Company's Cleveland headquarters for the previous Voice-Tel and VoiceCom Systems
entities, personnel from customer service centers from eight locations and
executive management from the acquired companies that were not part of previous
restructuring plans. As of December 31, 1998, all 59 employees were terminated.

The balance at December 31, 2000 represents the remaining severance reserve
for former executive management. In the 12-month period ended December 31, 2000,
cash severance payments made to eight former executives was $1.1 million. The
Company expects to pay the remaining severance reserve balance of $0.6 million
to one former executive over the 16-month period following December 31, 2000.

The asset impairment charges of $4.7 million related to certain switching
equipment associated with the Company's enhanced calling services. This
switching equipment was determined to be no longer operational due to the
reduced volume of business associated with the enhanced calling services
product. These two switches were purchased by the Company in the second quarter
of 1998 but were never placed into service. They remained idle due to the
bankruptcy of two license customers that had significant volumes of business
with the Company. During the third quarter of 1998 management looked for
alternative uses for this equipment including the use in potential prepaid
calling card business and international calling card programs. During the fourth
quarter of 1998,

55

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

management reorganized the Company into two business units, CES and EES. The new
management of these units decided at that time that forecasted volume for the
type of business used for these switches over the switches useful lives would
not justify the additional capacity that these switches brought to the Company's
network. Either potential buyers would be sought or the switches would be used
for spare parts on like switches in the Company's network. Therefore, the
Company charged a valuation reserve in the fourth quarter of 1998 to reduce the
asset carrying value to its estimated scrap value. The Company sold these two
switches for scrap value during 2000.

The charge taken for contractual obligations for $0.4 million was associated
with management's plan to exit the Voice-Tel corporate headquarters and an
Xpedite operational site. The charge of $1.4 million in other costs included
increased estimates of exit costs associated with management's revised plan to
terminate approximately 11 managers associated with previous acquisitions, the
exit of the Voice-Tel corporate headquarters and the exit of various Voice-Tel
regional administrative functions.

The reversals in 1999 for contractual obligations and other costs resulted
from the fact that management's original estimate exceeded the actual payments.

Decentralization of Company

In the third quarter of 1999, the Company recorded restructuring, merger costs
and other special charges of approximately $8.2 million in connection with its
reorganization from the Emerging Enterprise Solutions ("EES") and Corporate
Enterprise Solutions ("CES") operating units into six decentralized segments.
The $8.2 million charge was comprised of $7.3 million of severance and exit
costs, $0.7 million of lease termination costs and $0.2 million of facility exit
costs.

Severance benefits provided for the termination of 203 employees, primarily
related to corporate administrative functions, direct sales force and operation
of under-performing operating segments in the former EES and CES groups. Of the
203 severed employees, 114 were from the Voicecom operating segment, 61 from the
Xpedite operating segment and 28 from Corporate headquarters. As of December 31,
1999, all 203 employees were terminated. Annual savings of $13.1 million were
realized from these terminations. The balance at December 31, 1999 for severance
and exit costs represents the remaining reserve for future cash severance and
exit payments to former corporate executive management and various management in
the former CES group that were terminated in 1999. These remaining cash payments
were disbursed during the first nine months of 2000. During 2000, cash
severance payments totaled $3.2 million. In the third quarter of 2000, the
Company recognized as income $0.6 million of accrued severance and exit payments
upon completion of the severance program associated with the decentralization of
the Company. This amount represents actual exit costs that were below planned
exit costs, relating to the decentralization plan for the European and
Asia/Pacific regions of the Company's Xpedite operating segment.

Lease termination costs were attributable to the abandonment of a facility
under the Retail Calling Card Services segment. Lease termination costs are cash
outlays. The Company incurred $0.7 million in costs in 1999 in terminating this
lease. Other costs were attributable to site clean up and exit team travel costs
to exit one facility in the Xpedite segment. The Company incurred $0.1 million
of costs that were cash outlays in the fourth quarter of 1999 to close this
facility. In the first quarter of 2000, the Company paid $82,000 in lease
termination and exit costs.

As the decentralization plan of the Company was completed and no further
payments are expected by management, the remaining balance of the reserve
totaling $0.6 million was reversed in the third quarter of 2000.

Exit of the Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $1.4
million for costs associated with Xpedite's decision to exit its legacy real-
time fax and telex business in Asia. This service depended on significant price
disparities between regulated incumbent telecommunications carriers and
Xpedite's cost of delivery over its fixed-cost network. With the deregulation
of most Asian telecommunications markets, Xpedite's cost advantage dissipated,
and the Company decided to exit this service and concentrate on higher value-
added services such as

56

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

transactional messaging and messageREACH. The $1.4 million charge included asset
impairments totaling $0.8 million, contractual and other obligations totaling
$0.4 million and severance costs of $0.2 million.

The asset impairments included the write-down of furniture and fixtures and
real-time fax equipment including autodialers, faxpads and computers. The
valuation was based on the net realizable value of the assets as of December 31,
2000. All equipment costs were incurred in conjunction with the closing of the
real-time fax operations in Malaysia, Singapore, Hong Kong, Taiwan and Korea.

Contractual and other obligations are mainly cash outlays for rent on office
space and telephone lines. Management anticipates the cash outlays to be
completed by the first quarter of 2002.

The severance charge includes cash severance payments made to 67 employees.
The Company expects to realize an annual savings of approximately $0.3 million
from these terminations. As of December 31, 2000, the Company had paid all
severance benefits and does not expect any further payments.

Accrued costs for restructuring, merger costs and other special charges at
December 31, 1998, 1999 and 2000 are as follows (in thousands):

Accrued Reversal Accrued
Costs at 1999 of Costs at 2000
Reorganization of Company into EES and CES December 31, Charge To Costs Accrued December 31, Charge To Costs
Business Groups 1998 Operations Incurred Costs 1999 Operations Incurred
- ---------------------------------------------- ------------ ---------- -------- -------- ------------ ---------- --------

Valuation allowance--property and equipment... $ 4,722 $ -- $4,722 $ -- $ -- $ -- $ --
------- ------- ------ ----- ------ ------- ------
Accrued restructuring, merger costs and
other special charges........................
Severance and exit costs ................... 4,837 -- 3,106 -- 1,731 -- 1,091
Contractual obligations .................... 417 -- 298 (119) -- -- --
Other ...................................... 1,392 -- 1,263 (129) -- -- --
------- ------- ------ ----- ------ ------- ------
Accrued restructuring, merger costs and
other special charges ..................... 6,646 -- 4,667 (248) 1,731 -- --
------- ------- ------ ----- ------ ------- ------
Total restructuring, merger costs and other
special charges activity ................... $11,368 $ -- $9,389 $(248) $1,731 $ -- $1,091
======= ======= ====== ===== ====== ======== ======

Reversal Accrued
of Cost at
Reorganization of Company into EES and CES Accrued December 31,
Business Groups Costs 2000
- ---------------------------------------------- -------- ------------

Valuation allowance--property and equipment... -- $ --
-------- -----
Accrued restructuring, merger costs and
other special charges........................
Severance and exit costs ................... -- 640
Contractual obligations .................... -- --
Other ...................................... -- --
-------- -----
Accrued restructuring, merger costs and
other special charges ..................... -- --
-------- -----
Total restructuring, merger costs and other
special charges activity ................... -- $ 640
======== =====

Accrued Reversal Accrued
Costs at 1999 of Costs at 2000
December 31, Charge To Costs Accrued December 31, Charge To Costs
Decentralization of Company 1998 Operations Incurred Costs 1999 Operations Incurred
- ---------------------------------------------- ------------ ---------- -------- -------- ------------ ---------- --------

Valuation allowance--property and equipment... $ -- $ -- $ -- $ -- $ -- $ -- $ --
-------- ------ ------ -------- ------ ------- ------
Accrued restructuring, merger costs and other
special charges
Severance and exit costs ................... -- 7,320 3,434 -- 3,886 -- 3,245
Contractual obligations .................... -- 708 708 -- -- -- --
Other ...................................... -- 200 118 -- 82 -- 82
-------- ------ ------ -------- ------- ------- ------
Accrued restructuring, merger costs and
other special charges ..................... -- 8,228 4,260 -- 3,968 -- 3,327
-------- ------ ------ -------- ------- ------- ------
Total restructuring, merger costs and other
special charges activity ................... $ -- $8,228 $4,260 $ -- $3,968 $ -- $3,327
======== ====== ====== ======== ====== ======= ======

Reversal Accrued
of Costs at
Accrued December 31,
Decentralization of Company Costs 2000
- ---------------------------------------------- -------- -----------

Valuation allowance--property and equipment... $ -- $ --
----- -------
Accrued restructuring, merger costs and other
special charges
Severance and exit costs ................... (641) --
Contractual obligations .................... -- --
Other ...................................... -- --
----- -------
Accrued restructuring, merger costs and
other special charges ..................... (641) --
----- -------
Total restructuring, merger costs and other
special charges activity ................... $(641) $ --
===== =======

57

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Reversal Accrued
Costs at 1999 of Costs at 2000
Exit of the Asia Real-Time Fax and Telex December 31, Charge To Costs Accrued December 31, Charge To Costs
Business 1998 Operations Incurred Costs 1999 Operations Incurred
- ---------------------------------------------- ------------ ---------- -------- -------- ------------ ---------- --------

Valuation allowance--property and equipment... $ -- $ -- $ -- $ -- $ -- $ 800 $800
--------- -------- ------- -------- --------- ------ ----
Accrued restructuring, merger costs and other
special charges..............................
Severance and exit costs ................... -- -- -- -- -- 197 138
Contractual obligations .................... -- -- -- -- -- 290 --
Other ...................................... -- -- -- -- -- 93 --
--------- -------- ------- -------- --------- ------ ----
Accrued restructuring, merger costs and
other special charges ..................... -- -- -- -- -- 580 138
---------- -------- ------- -------- --------- ------ ----
Total restructuring, merger costs and other
special charges activity ................... $ -- $ -- $ -- $ -- $ -- $1,380 $938
========= ======== ======= ======== ========= ====== ====

Reversal Accrued
of Costs at
Exit of the Asia Real-Time Fax and Telex Accrued December 31,
Business Costs 2000
- ---------------------------------------------- -------- ------------

Valuation allowance--property and equipment... $ -- $ --
------- ----
Accrued restructuring, merger costs and other
special charges..............................
Severance and exit costs ................... -- 59
Contractual obligations .................... -- 290
Other ...................................... -- 93
------- ----
Accrued restructuring, merger costs and
other special charges ..................... -- 442
------- ----
Total restructuring, merger costs and other
special charges activity ................... $ -- $442
======= ====

Accrued Reversal Accrued
Costs at 1999 of Costs at 2000
December 31, Charge To Costs Accrued December 31, Charge To Costs
Consolidated 1998 Operations Incurred Costs 1999 Operations Incurred
- -------------------------------------- ------------ ---------- -------- ------- ------------ ---------- --------

Valuation allowance--property and
equipment............................ $ 4,722 $ -- $ 4,722 $ -- $ -- $ 800 $ 800
Accrued restructuring, merger costs ------- ------ ------- ----- ------ ------ ------
and other special charges
Severance and exit costs............. 4,836 7,320 6,540 -- 5,616 197 4,474
Contractual obligations.............. 417 708 1,006 (119) -- 290 --
Other................................ 1,392 200 1,381 (129) 82 93 82
------- ------ ------- ----- ------- ------ ------
Accrued restructuring, merger costs
and other special charges........... 6,645 8,228 8,927 (248) 5,698 580 4,556
------- ------ ------- ----- ------ ------ ------
Total restructuring, merger costs and
other special charges activity....... $11,367 $8,228 $13,649 $(248) $5,698 $1,380 $5,356
======= ======= ===== ====== ======
Reversal of Charge.................... $ (248) $ (641)
------ ------
Restructuring merger costs and other
special charges...................... $7,980 $ 739
====== ======

Reversal Accrued
of Costs at
Accrued December 31,
Consolidated Costs 2000
- -------------------------------------- ---------- ------------

Valuation allowance--property and $ -- $ --
equipment............................ ----- ------
Accrued restructuring, merger costs
and other special charges
Severance and exit costs............. (641) 698
Contractual obligations.............. -- 290
Other................................ -- 93
----- ------
Accrued restructuring, merger costs
and other special charges........... (641) 1,081
----- ------
Total restructuring, merger costs and
other special charges activity....... $(641) $1,081
===== ======
Reversal of Charge....................

Restructuring merger costs and other
special charges......................

4. MARKETABLE SECURITIES, AVAILABLE FOR SALE

Marketable securities, available for sale at December 31, 2000 and 1999, are
principally common stock investments carried at fair value based on quoted
market prices, municipal obligations carried at amortized cost and mutual funds
carried at amortized cost. Common stock investments carried at fair value
include minority equity interests in WebMD, S1 and WebEx.

The cost, gross unrealized gains, fair value, proceeds from sale and realized
gains and losses are as follows for the years ended December 31, 2000 and 1999
(in thousands):

Gross
Gross Realized
Unrealized Fair Proceeds Gains/
2000 Cost Gains Value From Sale (Losses)
- ---- ------- ---------- ------ --------- -------------

WebMD Corporation ...................................... $ 461 $2,754 $3,215 $37,679 $37,011
S1 Corporation ......................................... 437 28 465 25,093 23,290
WebEx, Inc. ............................................ 1,500 1,005 2,505 -- --
Other equity securities ................................ 540 -- 540 320 (751)
------ ------ ------ ------- -------
$2,938 $3,787 $6,725 $63,092 $59,550
====== ====== ====== ======= =======

58

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Gross
Gross Realized
Unrealized Fair Proceeds Gains/
1999 Cost Gains Value From Sale (Losses)
- ---- ------- ---------- ------- --------- --------------

WebMD Corporation ...................................... $1,079 $49,242 $50,321 $154,427 $152,094
S1 Corporation ......................................... 2,240 33,197 35,437 20,633 --
Mutual Funds ........................................... 141 -- 141 -- --
Other equity securities ................................ 716 -- 716 -- --
------ ------- ------- -------- --------
$4,176 $82,439 $86,615 $175,060 $152,094
====== ======= ======= ======== ========

In the fourth quarter of 1999, the Company sold approximately 3.5 million
shares of its investment in WebMD with proceeds less commissions and fees of
approximately $154.4 million. The proceeds from this sale were used primarily to
pay off outstanding borrowings on its revolving credit facility. See Note 11--
"Indebtedness" for further discussion.

During 2000, the Company sold 940,000 shares of its investment in WebMD and
365,000 shares of its investment in S1 Corporation, for aggregate proceeds less
commissions of approximately $62.8 million. At December 31, 2000, the Company
held 408,857 shares of WebMD, 88,597 shares of S1 and 120,000 shares of WebEx.
The deferred tax liability on unrealized gains related to these investments is
approximately $1.5 million and $31.7 million at December 31, 2000 and 1999,
respectively.

5. INVESTMENTS

The Company has made investments in various companies that are engaged in
emerging technologies related to the Internet. These investments are classified
as either cost or equity investments in accordance with APB Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock."

The Company continually evaluates the carrying value of its ownership
interests in investments in the PtekVentures portfolio that are accounted for
using the cost or equity method of accounting for possible impairment based on
achievement of business plan objectives and current market conditions. The
business plan objectives the Company considers include, among others, those
related to financial performance such as achievement of planned financial
results or completion of capital raising activities, and those that are not
primarily financial in nature such as the launching of technology or the hiring
of key employees.

The Company's portfolio companies operate in industries that are rapidly
evolving and extremely competitive. Recently, many Internet based businesses
have experienced difficulty in raising additional capital necessary to fund
operating losses and make continued investments that their management teams
believe are necessary to sustain operations. Valuations of public companies
operating in the Internet sector declined significantly during 2000. The
Company's accounting estimates with respect to the useful life and ultimate
recoverability of its carrying basis including goodwill in portfolio companies
could change in the near term and that the effect of such changes on the
financial statements could be material. While the Company believes that the
recorded amount of carrying basis including goodwill as of December 31, 2000 is
not impaired, there can be no assurance that future results will confirm this
assessment or that a significant write-down or write-off of certain investments
will not be required in the future. During the fourth quarter of 2000, the
Company determined that certain of these investments were impaired and that the
impairment was not temporary. Accordingly, the Company recorded an impairment
charge of approximately $15.0 million, which is included in the accompanying
consolidated statements of operations as Asset impairment - investments.

59

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes the principal components of investments at December
31, 2000 and 1999 (in thousands):

Basis Amortization Impairment Carrying Value
------------ ------------------ ---------------- ----------------------

2000
- ---------------------
Equity $27,800 $(4,930) $ (8,189) $14,681
Cost 19,180 -- (6,795) 12,385
------- ------- -------- -------
Total 46,980 $(4,930) $(14,984) $27,066
======= ======= ======== =======

1999
- ---------------------
Equity $ -- $ -- $ -- $ --
Cost 14,620 -- -- 14,620
------- ------- -------- -------
Total $14,620 $ -- $ -- $14,620
======= ======= ======== =======

6. SALE OF RETAIL CALLING CARD REVENUE BASE

Effective August 1, 2000, the Company sold its Retail Calling Card operating
segment's revenue base to Telecare, Inc. The sale was valued at approximately
$6.5 million and has been financed by the Company in the form of two promissory
notes with recourse to Telecare. The first note is in the amount of $4,162,000
and had a 180-day term, which has been extended until August 25, 2001. The
second note is in the amount of $2,390,000 and has a 360-day term. Upon payment
of the first note, this note will be extended until February 25, 2002. The
purpose of the two notes is to serve as a bridge loan while Telecare obtains
third party financing for the purchase of the revenue base. Accordingly, the
Company has recorded a note receivable and deferred the gain on sale. The
Company will record the gain on sale upon payment of the outstanding notes
receivable. The results of operations of this revenue base are not material to
the Company and are not considered a separate line of business which would
qualify for treatment as discontinued operations. Accordingly, the results of
operations of this revenue base ceased to be included in the consolidated
results of operations of the Company effective August 1, 2000 without
reclassification of prior periods as discontinued operations in the financial
statements.

Effective August 1, 2000, the Company entered into a management services
agreement with Telecare. This agreement ensures an effective transition of this
revenue base by both the Company and Telecare. Under the terms of this
agreement, the Company will provide telecommunications transport services,
operational support and administrative support for the revenue base. The
telecommunications transport services are provided on a wholesale basis similar
to other customers in the Voicecom operating segment. Accordingly, the Company
will recognize these services as revenue in the Voicecom operating segment.

7. STRATEGIC ALLIANCE CONTRACT

In November 1996, the Company entered into a strategic alliance agreement with
WorldCom, the second largest long-distance carrier in the United States. Under
the agreement, WorldCom was required, among other things, to provide the Company
with the right of first opportunity to provide enhanced computer telephony
products for a period of at least 25 years. In connection with this agreement,
the Company issued to WorldCom 2,050,000 shares of common stock valued at
approximately $25.2 million (based on the average closing price of the Company's
shares for the five days through the effective date of the transaction, adjusted
in consideration of the restrictions placed upon the shares), and paid WorldCom
approximately $4.7 million in cash.

In the fourth quarter of 1998, the Company recorded a noncash charge of $13.9
million to write-down the value of its strategic alliance intangible asset with
WorldCom. This charge was required based upon management's evaluation of revenue
levels expected from this alliance. The Company reevaluated the carrying value
and remaining life of the WorldCom strategic alliance in light of the expiration
of certain minimum revenue requirements under the strategic alliance agreement
and the level of revenues expected to be achieved from the

60

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

alliance following the merger of WorldCom and MCI in the third quarter of 1998.
Accordingly, The Company recorded a write-down in the carrying value of this
investment based on estimated future cash flows discounted at a rate of 12%. In
addition, the Company accelerated amortization of this asset effective in the
fourth quarter of 1998 by shortening its estimated useful life to 3 years as
compared with a remaining life of 23 years prior to the write-down.

In the second quarter of 2000, the Company expensed the remaining balance of
the strategic alliance intangible asset as a result of the Company's favorable
settlement of a contractual dispute with WorldCom. As part of the settlement,
the Company received $12.0 million in cash for terminating the strategic
alliance contract with WorldCom. Accordingly, the Company expensed the net book
value of this contract of approximately $6.9 million against the settlement
proceeds of $12.0 million. In addition, the Company expensed approximately $1.3
million in legal costs associated with this settlement.

8. ACQUISITIONS

Intellivoice Communications Inc. Acquisition

In August 1999, the Company acquired all remaining ownership interests it did
not already own in Intellivoice Communications, Inc. ("Intellivoice"), a company
engaged in developing Internet-enabled communications products. The Company
issued approximately 573,000 shares of its common stock and paid cash
consideration of approximately $870,000 in connection with this acquisition.
This transaction has been accounted for as a purchase. Excess purchase price
over fair value of net assets acquired of approximately $10.1 million has been
recorded as developed technology and is being amortized on a straight-line basis
over three years. The developed technology relates to work associated with Web-
based communications services.

American Teleconferencing Services, Ltd. Acquisition

In April 1998, the Company purchased all of the issued and outstanding common
stock of American Teleconferencing Services ("ATS"), a provider of full service
conference calling and group communication services. The shareholders of ATS
received an aggregate of approximately 712,000 shares of the Company's common
stock and cash consideration of approximately $22.1 million. Excess purchase
price over fair value of net assets acquired of approximately $47 million has
been recorded as goodwill and is being amortized on a straight-line basis over
seven years. This transaction has been accounted for as a purchase.

Xpedite Systems, Inc. Acquisition

On February 27, 1998, the Company acquired Xpedite Systems, Inc. ("Xpedite"),
a worldwide leader in the enhanced document distribution business including fax,
e-mail and telex services. The Company issued approximately 11.0 million shares
of its common stock in connection with this acquisition. This transaction has
been accounted for as a purchase. The purchase price of Xpedite has been
allocated as follows (in thousands):

Operating and other tangible assets ....................... $ 90,035
Customer lists ............................................ 35,700
Developed technology ...................................... 34,300
Acquired research and development ......................... 15,500
Assembled workforce ....................................... 7,500
Goodwill .................................................. 384,701
--------
Assets acquired ........................................... 567,736
Less liabilities assumed .................................. 203,487
--------
$364,249
========

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The customer lists, developed technology and acquired research and development
were valued using the income approach, which consisted of estimating the
expected after-tax cash flows to present values through discounting. The
discount rates used to value these assets were 20% for the customer lists, 15%
for the developed technology and 25% for the acquired research and development.
The assembled workforce was valued using a cost approach, which estimates the
cost to replace the asset. Acquired research and development costs represents
the value assigned to research and development projects in the development stage
which had not reached technological feasibility at the date of acquisition or
had no alternative future use. The acquired research and development costs were
expensed at the date of acquisition.

The acquired research and development related to a project to develop a new
job monitor. This project was 50% complete as of the acquisition date and had
not yet completed a successful beta test. The Company completed the job monitor
project during 1999 for approximately $350,000. The primary high risk at
valuation date involved identifying and correcting the design flaws that would
typically arise during beta testing. Fair value was determined using an income
approach. Revenues from this new job monitor began in 1999 and a discount rate
of 25% was used.

The developed technology is a software program called the job monitoring
system and related technologies that are primarily related to the Xpedite
document delivery system. This software and the related hardware is the basis
for Xpedite's enhanced facsimile delivery service.

International Acquisitions

During the second quarter of 1999, the Company purchased all remaining
ownership interests it did not already own in an affiliated electronic document
distribution company located in France for approximately $19.0 million in cash
and liabilities assumed. The Company held an approximate 18% ownership interest
in the affiliate prior to this transaction which has been accounted for as a
purchase. Excess purchase price over fair value of net assets acquired of
approximately $18 million has been recorded as goodwill and is being amortized
on a straight-line basis over seven years.

During the second quarter of 1998, the Company acquired two electronic
document distribution companies located in Germany and Singapore. The aggregate
purchase price of these acquisitions approximates $20.1 million in cash and
liabilities assumed. Both of the acquisitions were accounted for as purchases.
Excess purchase price over fair value of net assets acquired of approximately
$13.0 million has been recorded as goodwill and is being amortized on a
straight-line basis over seven years.

The following unaudited pro forma consolidated results of operations for the
years ended December 31, 1999 and 1998 assume that acquisitions completed during
1999 and 1998 were accounted for as purchases and occurred as of January 1, 1998
(in thousands, except per share data).

1999 1998
------------ -------------

Revenues............................................. $466,209 $ 515,543
Net loss............................................. $(37,443) $(111,350)
Basic net loss per share............................. $ (0.80) $ (2.32)
Diluted net loss per shares.......................... $ (0.80) $ (2.32)

62

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. PROPERTY AND EQUIPMENT

Property and equipment at December 31 is as follows (in thousands):

2000 1999
-------- --------
Computer and telecommunications equipment.......................................... $212,631 $237,325
Furniture and fixtures............................................................. 14,371 13,227
Office equipment................................................................... 6,770 9,304
Leasehold improvements............................................................. 22,434 26,285
Construction in progress........................................................... 7,254 40
Building........................................................................... 202 -
-------- --------
263,662 286,181
Less accumulated depreciation...................................................... 146,556 167,456
-------- --------
Property and equipment, net........................................................ $117,106 $118,725
======== ========

Assets under capital leases included in property and equipment at December 31
are as follows (in thousands):

2000 1999
------ ------
Construction in progress.......................................................... $4,017 $ --
Telecommunications and computer equipment......................................... 3,526 7,308
Less accumulated depreciation..................................................... 2,377 6,528
------ ------
Property and equipment, net.......................................................... $5,166 $ 780
====== ======

At December 31, 2000, construction in progress was approximately $7.3 million.
This balance represents voice mail telephony and telecommunications switching
equipment purchased by the Voicecom business segment which had not been placed
into service as of December 31, 2000. This equipment was purchased in connection
with a plan to consolidate into three sites approximately 140 sites of the
legacy Voice-Tel voice messaging network acquired by the Company in 1997. It
will also significantly upgrade and enhance the existing network. The equipment
costs to execute this consolidation plan will be funded primarily by capital
leases. At December 31, 2000, approximately $4.0 million of the $7.3 million of
equipment in construction in progress was under capital lease. In addition,
declines in computer and telecommunications equipment and accumulated
depreciation were a result of disposals of fully depreciated equipment taken out
of service in the Voicecom business segment.

For the years ended December 31, 2000 and 1999, depreciation totaled $40.5
million and $69.9 million, respectively. The significant decrease resulted from
accelerated depreciation in 1999 of computer and telecommunication equipment
associated with certain legacy calling card and voice mail technology systems.
These systems were fully depreciated as of December 31, 1999.

10. INTANGIBLE ASSETS

Intangible assets consist of the following amounts for December 31, 2000 and
1999 (in thousands):

2000 1999
-------- --------
Goodwill................................................................................ $482,204 $481,532
Customer lists ........................................................................ 65,946 57,579
Developed technology .................................................................. 48,396 47,113
Assembled work force .................................................................. 7,500 7,500
-------- --------
604,046 593,724
Less accumulated amortization ......................................................... 259,264 157,746
-------- --------
$344,782 $435,978
======== ========

63

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INDEBTEDNESS

On September 29, 2000 the Company entered into a credit agreement (the
"Agreement") for a one-year revolving credit facility with ABN AMRO Bank
N.V.(the "Bank" or "Agent"). The Agreement provides for borrowings of up to
$20.0 million, and is subject to certain covenants that are usual and customary
for credit agreements of this nature. The commitment to provide revolving credit
loans under the Agreement terminates 364 days from September 29, 2000, unless
the Agreement is extended. Amounts outstanding under the Agreement on the
expiration date may, at the option of the Company, either be paid in full or
converted to a one-year term loan payable in four equal quarterly installments.
Proceeds drawn under the Agreement may be used for capital expenditures, working
capital, acquisitions, investments, refinancing of existing indebtedness, and
other general corporate purposes. The annual interest rate applicable to
borrowings under the Agreement is, at the Company's option, (i) the Agent's Base
Rate plus 1.25 percent or (ii) the Euro Rate (LIBOR) plus 3.50 percent. Amounts
committed but not drawn under the Agreement are subject to a commitment fee
equal to 0.50 percent per annum. During 2000, the Company had made no borrowings
under this agreement. At December 31, 2000, no amounts were outstanding under
the Agreement.

Long-term debt at December 31 is as follows (in thousands):

2000 1999
------ ------

Notes payable to banks ................................................................... 959 5,534
Notes payable to shareholders and individuals ............................................ 0 102
Capital lease obligations.................................................................. 5,303 1,489
Less current portion ..................................................................... 1,676 2,671
------ ------
$4,586 $4,454
====== ======

Notes payable to shareholders and individuals in 1999 consisted principally of
indebtedness assumed by the Company in connection with the acquisitions of
Voice-Tel and VoiceCom Systems in 1997. Interest on borrowings under such notes
ranged from 5% to 16%. As of December 31, 2000, all debt associated with the
Voice-Tel and VoiceCom Systems acquisitions had been repaid. The remaining long-
term debt at December 31, 2000 consists of obligations at Xpedite and Premiere
Conferencing.

Maturities of long-term debt and capital leases are as follows (in thousands):

2001................................................. 1,676
2002................................................. 2,220
2003................................................. 1,432
2004................................................. 935

12. CONVERTIBLE SUBORDINATED NOTES

In July 1997, the Company issued convertible subordinated notes ("Convertible
Notes") of $172,500,000 which mature in 2004 and bear interest at 5-3/4%. The
Convertible Notes are convertible at the option of the holder into common stock
at a conversion price of $33 per share, through the date of maturity, subject to
adjustment in certain events. Beginning in July 2000, the Convertible Notes were
redeemable by the Company at a price equal to 103% of the conversion price,
declining to 100% at maturity with accrued interest. Debt issuance costs
consisting of investment banking, legal and other fees of approximately
$6,028,000 incurred in connection with the Convertible Notes are being amortized
on a straight-line basis over the life of the notes and are included in "Other
assets" in the

64

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accompanying consolidated balance sheets. Included in interest expense is
approximately $808,200, $808,200 and $785,000 of debt issuance cost amortization
for December 31, 2000, 1999, and 1998, respectively.

13. FINANCIAL INSTRUMENTS

The estimated fair value of certain financial instruments at December 31, 2000
and 1999 is as follows (in thousands):

2000 1999
--------------------- ---------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- ---------- --------- ----------

Cash and equivalents.................................................... $ 22,991 $22,991 $ 15,366 $ 15,366
Marketable securities, available for sale............................... 6,725 6,725 86,615 86,615
Convertible subordinated notes (see Note 11)............................ 172,500 74,399 172,500 100,913
Notes payable, long-term debt and capital leases (see Notes 10 and 17).. 6,262 6,262 7,125 7,125

The carrying amount of cash, marketable securities, accounts receivable and
payable, and accrued liabilities approximates fair value due to their short
maturities. The fair value of the Convertible Notes is estimated based on market
quotes. The carrying value of notes payable, long-term debt and capital lease
obligations does not vary materially from fair value at December 31, 2000 and
1999.

14. SHAREHOLDERS' EQUITY

In the second quarter of 2000, the Company's Board of Directors authorized a
stock repurchase program under which PTEK may purchase up to 10% of the then
outstanding shares of its common stock, or approximately 4.8 million shares.
During 2000, the Company repurchased approximately 1.2 million shares of its
common stock under this program for approximately $3.3 million. In addition to
the shares repurchased during 2000, the Company repurchased approximately 1.1
million shares for approximately $9.1 million during its 1998 stock repurchase
program. All of these shares are included in "Treasury stock, at cost" in the
accompanying consolidated balance sheets.

In the first quarter of 2000, the Company issued approximately 257,000 shares
of its common stock at a value of $1.6 million as part of its match under the
Company's 401(k) plan.

The Company offers an Associate Stock Purchase Plan to provide eligible
employees an opportunity to purchase shares of its common stock through payroll
deductions. See Note 15--Stock-Based Compensation Plans for plan details.
Approximately 479,000 and 103,000 shares of common stock valued at approximately
$1.4 million and $0.5 million were issued under this plan in 2000 and 1999,
respectively.

During 2000, 1999 and 1998, stock options were exercised under the Company's
stock option plans. None of the options exercised qualified as incentive stock
options, as defined in Section 422 of the Internal Revenue Code (the "Code").
Approximately $1,573,000, $1,972,000 and $6,168,000 were recorded as increases
in additional paid-in capital reflecting tax benefits to be realized by the
Company as a result of the exercise of such options during the years ended
December 31, 2000, 1999 and 1998, respectively.

The shareholder notes receivable relates to transactions in 2000 and 1999
where the Company advanced loans to an officer of the Company and to a limited
partnership in which he has an indirect interest in association with exercises
of options to purchase the Company's common stock. Such loans totaled $2.8
million and $73,480 in 2000 and 1999, respectively. See Note 17 - "Related-
Party Transactions" for more details on these transactions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. STOCK-BASED COMPENSATION PLANS

The Company has four stock-based compensation plans, the 1994 Stock Option
Plan, the Second Amended and Restated 1995 Stock Plan (the "1995 Plan"), the
Amended and Restated 1998 Stock Plan (the "1998 Plan") and the 2000 Directors
Stock Plan (the "Directors Plan"), which provide for the issuance of restricted
stock, stock options, warrants or stock appreciation rights to employees,
directors, non-employee consultants and advisors of the Company. These plans are
administered by committees consisting of members of the board of directors of
the Company.

Options for all 960,000 shares of common stock available under the 1994 Stock
Option Plan have been granted. All such options are non-qualified, provide for
an exercise price equal to fair market value at date of grant, vest ratably over
three years and expire eight years from date of grant.

The 1995 Plan provides for the issuance of stock options, stock appreciation
rights ("SARs") and restricted stock to employees. A total of 8,000,000 shares
of common stock has been reserved in connection with the 1995 Plan. Options
issued under the 1995 Plan may be either incentive stock options, which permit
income tax deferral upon exercise of options, or nonqualified options not
entitled to such deferral.

Sharp declines in the market price of the Company's common stock resulted in
many outstanding employee stock options being exercisable at prices that
exceeded the current market price of the Company's common stock, thereby
substantially impairing the effectiveness of such options as performance
incentives. Consistent with the Company's philosophy of using equity incentives
to motivate and retain management and employees, the Board of Directors
determined it to be in the best interests of the Company and its shareholders to
restore the performance incentives intended to be provided by employee stock
options by repricing such options. Consequently, on July 22, 1998 the Board of
Directors of the Company determined to reprice or regrant all employee stock
options which had exercise prices in excess of the closing price on such date
(other than those of Chief Executive Officer Boland T. Jones) to $10.25, which
was the closing price of the Company's common stock on such date. While the
vesting schedules remained unchanged, the repriced and regranted options were
generally subject to a twelve-month black-out period, during which the options
could not be exercised. If an optionee's employment was terminated during the
black-out period, he or she would forfeit any repriced or regranted options that
first vested during the twelve-month period preceding his or her termination of
employment. On December 14, 1998, the Board of Directors determined to reprice
or regrant at an exercise price of $5.50, all employee stock options which had
an exercise price in excess of $5.50, which was above the closing price of the
Company's common stock on such date. Again, the vesting schedules remained the
same and the repriced or regranted options were generally subject to a twelve-
month black-out period during which the options could not be exercised. If the
optionee's employment was terminated during the black-out period, he or she
would forfeit any repriced or regranted options that first vested during the
twelve-month period preceding his or her termination of employment. By imposing
the black-out and forfeiture provisions on the repriced and regranted options,
the Board of Directors intended to provide added incentive for the optionees to
continue service.

On July 22, 1998, the Board of Directors approved the 1998 Plan, which
essentially mirrors the terms of the 1995 Plan except that it is not intended to
be used for executive officers or directors. In addition, the 1998 Plan, because
it was not approved by the shareholders, does not provide for the grant of
incentive stock options. Under the 1998 Plan, 8,000,000 shares of common stock
are reserved for the grant of nonqualified stock options and other incentive
awards to employees and consultants of the Company.

On June 23, 1998, the Company's Board of Directors declared a dividend of one
preferred stock purchase right (a "Right") for each outstanding share of the
Company's Common Stock. The dividend was paid on July 6, 1998, to the
shareholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series C Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), at a price of sixty dollars ($60.00) per one-thousandth of a Preferred
Share, subject to adjustment. The description and terms of the Rights are set
forth in the Shareholder Protection Rights Agreement, as the same may

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be amended from time to time, dated as of June 23, 1998, between the Company and
SunTrust Bank, Atlanta, as rights agent. The Rights should not interfere with
any merger, statutory share exchange or other business combination approved by
the Board of Directors since the Rights may be terminated by the Board of
Directors at any time on or prior to the close of business ten business days
after announcement by the Company that a person has become an Acquiring Person.
Thus, the Rights are intended to encourage persons who may seek to acquire
control of the Company to initiate such an acquisition through negotiations with
the Board of Directors. However, the effect of the Rights may be to discourage a
third party from making a partial tender offer or otherwise attempting to obtain
control of the Company.

Effective June 1, 1999, the Company adopted an Associate Stock Purchase Plan
(the "ASPP") to provide all employees who regularly work at least 20 hours each
week and at least five months each calendar year and who have two months of
consecutive service an opportunity to purchase shares of its common stock
through payroll deductions. The purchase price of the stock is equal to 85% of
the fair market value of the common stock on either the first or last day of
each six month subscription period, whichever is lower. Purchases under the ASPP
are limited to 20% of an associate's base salary and a maximum of a calendar
year aggregate fair market value of $25,000. Approximately 479,000 and 103,000
shares of common stock valued at approximately $1.4 million and $0.5 million
were issued under the ASPP in 2000 and 1999, respectively. 1,000,000 shares of
common stock were initially reserved for issuance under the ASPP, and on March
2, 2001 the Board of Directors approved the reserve of an additional 1.5 million
shares for issuance under the ASPP, subject to shareholder approval at the
annual meeting.

On April 26, 2000, the Board of Directors approved the Directors Plan, subject
to shareholder approval at the annual meeting. The Directors Plan is very
similar to the 1998 Plan except that it is available only to non-employee
directors of the Company. The Directors Plan was approved by the shareholders on
June 7, 2000. Under the Directors Plan, 1,000,000 shares of common stock are
reserved for the grant of nonqualified stock options and restricted stock awards
to non-employee directors.

As permitted under the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", the Company has
elected to apply Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees." Accordingly, no compensation expense has been
recognized for awards issued under the Company's stock based compensation plans
since the exercise price of such awards is generally the market price of the
underlying common stock at date of grant. Had compensation cost been determined
under the market value method using Black-Scholes valuation principles, net loss
and net loss per share would have been reduced to the following pro forma
amounts:

2000 1999
-------- --------
(in thousands, except per
share data)

Net loss
As reported.......................................................................... $(58,866) $(33,491)
Pro forma............................................................................ $(76,988) $(52,979)
Net loss per share
As reported
Basic............................................................................. $ (1.22) $ (0.72)
Diluted........................................................................... $ (1.22) $ (0.72)
Pro forma.........................................................................
Basic............................................................................. $ (1.60) $ (1.14)
Diluted........................................................................... $ (1.60) $ (1.14)

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant assumptions used in the Black-Scholes option pricing model
computations are as follows:

2000 1999
------------ ----------

Risk-free interest rate.......................................................... 5.13% - 5.61% 4.73%-6.34%
Dividend yield................................................................... 0% 0%
Volatility factor................................................................ 99% 83%
Weighted average expected life................................................... 3.75 years 4.67 years

The pro forma amounts reflect options granted since January 1, 1996. Pro forma
compensation cost may not be representative of that expected in future years. A
summary of the status of the Company's stock plans is as follows:

Weighted Average
Fixed Options Shares Exercise Price
- --------------------------------------------------------------------------------- -------------- -----------------

Options outstanding at December 31, 1997......................................... 7,412,748 $13.29
Granted....................................................................... 9,062,589 16.44
Exercised..................................................................... (1,112,361) 7.06
Forfeited..................................................................... (1,413,120) 16.06
---------- ------
Options outstanding at December 31, 1998......................................... 13,949,856 $ 5.79
Granted....................................................................... 2,886,414 6.94
Exercised..................................................................... (519,904) 2.08
Forfeited..................................................................... (1,945,690) 5.99
---------- ------
Options outstanding at December 31, 1999......................................... 14,370,676 $ 6.13
Granted....................................................................... 3,906,375 5.90
Exercised..................................................................... (2,374,778) 2.55
Forfeited..................................................................... (1,410,991) 6.04
---------- ------
Options outstanding at December 31, 2000......................................... 14,491,282 $ 6.67
========== ======

The following table summarizes information about stock options outstanding at
December 31, 2000:

Weighted Weighted Average Weighted Average
Average Exercise Exercise
Range of Exercise Options Remaining Price of Options Options Price of Options
Prices Outstanding Life Outstanding Exercisable Exercisable
- ---------------------- ----------------- --------------- --------------------- --------------- -------------------

$0 - $4.99 685,126 4.16 $ 2.16 402,626 $ 1.45
$5.00 - $9.99 12,768,828 5.90 6.08 7,813,564 6.02
$10.00 - $14.99 495,401 4.16 10.37 463,980 10.38
$15.00 - $30.00 541,927 3.11 22.62 541,801 22.62
---------- ---- ------ --------- ------
14,491,282 5.65 6.67 9,221,971 7.02
========== ==== ====== ========= ======

16. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution retirement plan covering
substantially all full-time employees. This plan allows employees to defer a
portion of their compensation and associated income taxes pursuant to Section
401(k) of the Internal Revenue Code. The Company may make discretionary
contributions for the benefit of employees under this plan. The Company made
contributions of $1.6 million, $1.6 million and $0.4 million in 2000, 1999 and
1998, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. RELATED-PARTY TRANSACTIONS

The Company has in the past entered into agreements and arrangements with
certain officers, directors and principal shareholders of the Company involving
loans of funds, grants of options and warrants and the acquisition of a
business. Certain of these transactions may be on terms more favorable to
officers, directors and principal shareholders than they could acquire in a
transaction with an unaffiliated party. The Company has a policy that requires
all material transactions between the Company and its officers, directors or
other affiliates (i) be approved by a majority of the disinterested members of
the board of directors of the Company and (ii) be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.

The Company has advanced loans to an officer of the Company and to a limited
partnership in which such officer has an indirect interest in connection with
exercises of options to purchase the Company's common stock. During 2000, such
limited partnership purchased approximately 1.4 million shares of the Company's
common stock at an exercise price of $1.61 per share and such officer purchased
approximately 240,000 shares at an exercise price of $0.52 per share. The
Company loaned the officer and the limited partnership approximately $2.8
million to pay for the stock and related taxes. The loan is evidence by a
recourse promissory note that bears interest at 5.96% and is secured by the
common stock purchased. During 1999, the same officer exercised an option to
purchase 24,000 shares of the Company's common stock at an exercise price of
$0.71 a share. The Company loaned the officer $73,480 to pay for the stock and
related taxes. The loan is evidenced by a recourse promissory note that bears
interest at 6.5% and is secured by the common stock purchased. During 1997, the
same officer exercised an option to purchase 100,000 shares of the Company's
common stock at an exercise price of $.27 a share. The Company loaned the
officer $973,000 to pay for the stock and related taxes. The loan is evidenced
by a recourse promissory note that bears interest at 6% and is secured by the
common stock.

During 2000, 1999 and 1998, the Company leased the use of an airplane on an
hourly basis from a limited liability company that is owned 99% by the Company's
chief executive officer and 1% by the Company. In connection with this lease
arrangement, the Company advanced approximately $109,000 and $270,000 in 1999
and 1998, respectively, to the limited liability company to pay the expenses of
maintaining and operating the airplane. No advances were made during 2000.

During the second quarter of 1999, the Company made restricted stock grants to
certain executives of a limited number of Company-owned shares held in certain
investments in affiliates, at cost. These Company-owned shares included 168,000
shares of WebMD Series E Common Stock and 6,461 shares of WebMD Series F
Preferred Stock, and 70,692 shares of USA.NET Series C Preferred Stock. The
vesting periods for these shares ranged from immediately upon grant to three
years, contingent on the executive being employed by the Company. Excluding the
shares subject to these restricted stock grants, the Company owned an aggregate
of 1,932,000 shares of WebMD Series E Common Stock and 74,305 shares of WebMD
Series F Preferred Stock, which represent and were exchanged for 4,804,384
shares of common stock of WebMD, and 812,960 shares of USA.NET Series C
Preferred Stock. In connection with this action, the Company recorded a $13.9
million non-cash gain resulting from the write-up to fair market value of these
investments and an $13.1 million non-cash expense related to the partial vesting
of these grants. The gain reflects the difference between the Company's cost
basis and fair market value at date of grant of these investments. The Company
recorded an additional non-cash charge of $1.2 million in 2000 related to the
vesting of these grants. Additionally, 7,000 unvested WebMD shares and 1,200
unvested USA.NET shares related to an executive who left the Company were
transferred back to the Company during 2000. In association with this transfer,
the Company recoded a loss on investment of $100,000. In 2001 and 2002, the
Company will be required to expense $38,000 and $12,000, respectively for the
vesting period associated with the remaining unvested grants. In 1999 and 2000,
the Company loaned $6,315,209 with recourse to two of the executives to pay
taxes associated with the restricted stock grants. These loans are due on
December 31, 2006, bear interest at 6.20% and are secured by the restricted
stock granted. In March 2000, the Company agreed to forgive one-seventh of the
principal plus accrued interest on such loans as of December 31, 2000, provided
that the executives were employees of the Company on that date. Such amounts
were forgiven as of December 31, 2000.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has a strategic co-marketing arrangement with WebMD in which it
owns an equity interest. The terms of the agreement provide for WebMD to make an
annual minimum commitment of $2.5 million for four years to purchase the
Company's Orchestrate product. The Company in turn is obligated to purchase
portal rights from WebMD for $4 million over four years to assist in marketing
its Orchestrate product. Under this agreement, which expires on February 17,
2003, the Company recognized revenue of approximately $2.5 million and $2.1
million in 2000 and 1999, respectively. WebMD also subleased floor space in the
Company's headquarters for approximately $0.5 million in each of the three years
ended December 31, 2000, 1999 and 1998.

18. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases computer and telecommunications equipment, office space and
other equipment under noncancelable lease agreements. The leases generally
provide that the Company pays the taxes, insurance and maintenance expenses
related to the leased assets. Future minimum operating and capital lease
payments as of December 31, 2000 are as follows (in thousands):

Capital Operating
Leases Leases
--------- ------------

2001 ............................................................ $1,805 $10,298
2002 ............................................................ 1,656 8,095
2003 ............................................................ 1,534 7,010
2004 ............................................................ 948 5,836
2005 ............................................................ -- 5,276
Thereafter ...................................................... -- 8,802
------ -------
Net minimum lease payments ...................................... 5,943 $45,317
=======
Less amount representing interest ............................... 640
------
Present value of net minimum lease payments ..................... 5,303
Less current portion ............................................ 1,479
------
Obligations under capital lease, net of current portion ......... $3,824
======

Rent expense under operating leases was approximately $16.8 million, $16.8
million and $11.2 million for the years ended December 31, 2000, 1999 and 1998,
respectively. Future minimum payments for facilities rent are reduced by
scheduled sublease income of approximately $568,000, $731,000 and $501,000 for
the years ended December 31, 2000, 1999 and 1998, respectively. During 2000,
additions of computer and telecommunications equipment resulted in an increase
in capital lease obligations of $4.0 million.

Supply Agreements

The Company obtains long-distance telecommunications services pursuant to
supply agreements with suppliers of long-distance telecommunications
transmission services. These contracts generally provide fixed transmission
prices for terms of three to five years, but are subject to early termination in
certain events. No assurance can be given that the Company will be able to
obtain long-distance services in the future at favorable prices or at all, and
the unavailability of long-distance service, or a material increase in the price
at which the Company is able to obtain long-distance service, would have a
material adverse effect on the Company's business, financial condition and
results of operations. Certain of these agreements provide for minimum purchase
requirements. The Company is currently a party to two long-distance
telecommunications services contracts that require the Company to purchase a
minimum amount of services each month. The total amount of the minimum purchase
requirements in 2000 were approximately $9.0 million, of which the Company has
incurred metered telecommunications costs in excess of these minimums.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Litigation and Claims

The Company has several litigation matters pending, as described below, which
it is pursuing or defending vigorously. Due to the inherent uncertainties of the
litigation process and the judicial system, the Company is unable to predict the
outcome of such litigation matters. If the outcome of one or more of such
matters is adverse to the Company, it could have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia. Plaintiffs seek to
represent a class of individuals (including a subclass of former Voice-Tel
franchisees and a subclass of former Xpedite Systems, Inc. ("Xpedite")
shareholders) who purchased or otherwise acquired the Company's common stock
from as early as February 11, 1997 through June 10, 1998. Plaintiffs allege the
Company admitted it had experienced difficulty in achieving its anticipated
revenue and earnings from voice messaging services due to difficulties in
consolidating and integrating its sales function. Plaintiffs allege, among other
things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange
Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. We filed a
motion to dismiss this complaint on April 14, 1999. On December 14, 1999, the
court issued an order that dismissed the claims under Sections 10(b) and 20 of
the Exchange Act without prejudice, and dismissed the claims under Section
12(a)(1) of the Securities Act with prejudice. The effect of this order was to
dismiss from this lawsuit all open-market purchases by the plaintiffs. The
plaintiffs filed an amended complaint on February 29, 2000. The defendants filed
a motion to dismiss on April 14, 2000, which was granted in part and denied in
part on December 8, 2000. The defendants filed an answer on January 8, 2001.

A lawsuit was filed on November 4, 1998 against the Company and certain of its
officers and directors in the Southern District of New York. Plaintiffs are
shareholders of Xpedite who acquired common stock of the Company as a result of
the merger between the Company and Xpedite in February 1998. Plaintiffs'
allegations are based on the representations and warranties made by the Company
in the prospectus and the registration statement related to the merger, the
merger agreement and other documents incorporated by reference, regarding the
Company's acquisitions of Voice-Tel and VoiceCom Systems, the Company's roll-out
of Orchestrate, the Company's relationship with customers Amway Corporation and
DigiTEC, 2000, and the Company's 800-based calling card service. Plaintiffs
allege causes of action against the Company for breach of contract, against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 and against the individual defendants for
violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed
damages together with pre- and post-judgment interest, recission or recissory
damages as to violation of Section 12(a)(2) of the Securities Act, punitive
damages, costs and attorneys' fees. The defendants' motion to transfer venue to
Georgia has been granted. The defendants' motion to dismiss has been granted in
part and denied in part. The defendants filed an answer on March 30, 2000.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in
the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments with
Equitable Life Assurance Society of the United States and/or Equico Securities,
Inc. (collectively "Equitable"). More specifically, the complaint asserts
wrongdoing in connection with the plaintiffs' investment in securities of
Xpedite and in unrelated investments involving insurance-related products. The
defendants include Equitable and certain of its current or former
representatives. The allegations in the complaint against Xpedite are limited to
plaintiffs' investment in Xpedite. The plaintiffs have alleged that two of the
named defendants, allegedly acting as officers, directors, agents or
representatives of Xpedite, induced the plaintiffs to make certain investments
in Xpedite but that the plaintiffs failed to receive the benefits that they were
promised. Plaintiffs allege that Xpedite knew or should have known of alleged
wrongdoing on the part of other defendants. Plaintiffs seek an accounting of the
corporate stock in Xpedite, compensatory damages of approximately $4.85 million,
plus $200,000 in "lost investments," interest and/or dividends that have accrued
and have not been paid, punitive damages in an unspecified amount, and for
certain equitable relief, including a request for Xpedite to issue 139,430
shares of common stock in the plaintiffs' names, attorneys' fees and costs and
such other and further relief

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

as the court deems just and equitable. This case has been dismissed without
prejudice and compelled to NASD arbitration, which has commenced. In August
2000, the plaintiffs filed a statement of claim with the NASD against 12 named
respondents, including Xpedite (the "Nobis Respondents"). The claimants allege
that the 12 named respondents engaged in wrongful activities in connection with
the management of the claimants' investments with Equitable. More specifically,
the statement of claim asserts wrongdoing in connection with the claimants'
investment in securities of Xpedite and in unrelated investments involving
insurance-related products. The allegations in the statement of claim against
Xpedite are limited to claimants' investment in Xpedite. Claimants seek, among
other things, an accounting of the corporate stock in Xpedite, compensatory
damages of not less than $415,000, a fair conversion rate on stock options,
losses on the investments, plus interest and all dividends, attorneys' fees and
costs.

A lawsuit was filed on November 1, 1999 by Donald H. Turner, a former officer
of the Company, against the Company, Boland T. Jones and Jeffrey A. Allred in
the Superior Court of Fulton County, Georgia. Against the Company the plaintiff
alleges breach of contract and promissory estoppel relating to the termination
of his employment, and against all defendants the plaintiff alleges fraudulent
inducement relating to his hiring by the Company. The plaintiff seeks
compensatory damages of $875,000, forgiveness of a $100,000 loan, interest,
attorneys' fees and punitive damages in an unspecific amount. The defendants
filed an answer and counterclaim, claiming that the plaintiff owes the Company
the principal amount of the $100,000 loan plus interest as of January 1, 2001,
plus costs and attorneys' fees, and that the plaintiff defrauded the Company and
owes the Company approximately $400,000 in fraudulently attained pay and
benefits, including the $100,000 loan. In March 2001, the parties entered into a
settlement agreement and general release, which settled and disposed of all
claims in this litigation. This settlement will not have a material adverse
affect on the Company's business, financial condition or results of operations.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior
Court of New Jersey Law Division, Union County, against 17 named defendants
including the company and Xpedite, and various alleged current and former
officers, directors, agents and representatives of Xpedite. Plaintiff alleges
that the defendants engaged in wrongful activities in connection with the
management of the plaintiff's investments, including investments in Xpedite. The
allegations against Xpedite and the Company are limited to plaintiff's
investment in Xpedite. Plaintiff's claims against Xpedite and the Company
include breach of contract, breach of fiduciary duty, unjust enrichment,
conversion, fraud, interference with economic advantage, liability for ultra
vires acts, violation of the New Jersey Consumer Fraud Act and violation of New
Jersey RICO. Plaintiff seeks an accounting of the corporate stock of Xpedite,
compensatory damages of approximately $1.3 million, accrued interest and/or
dividends, a constructive trust on the proceeds of the sale of any Xpedite or
PTEK stock, shares of Xpedite and/or PTEK to satisfy defendants' obligations to
plaintiff, attorneys' fees and costs, punitive and exemplary damages in an
unspecified amount, and treble damages. On February 25, 2000, Xpedite filed its
answer, as well as cross claims and third party claims. This case has been
dismissed without prejudice and compelled to NASD arbitration, which has
commenced. In August 2000, a statement of claim was also filed with the NASD
against all but one of the Nobis Respondents making virtually the same
allegations on behalf of claimant Elizabeth Tendler. Claimant seeks an
accounting of the corporate stock in Xpedite, compensatory damages of not less
than $265,000, a fair conversion rate on stock options, losses on other
investments, interest and/or unpaid dividends, attorneys fees and costs.

On or about May 19, 2000, the Company was served with a Complaint filed by
Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims
for breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of duty of good faith and fair dealings, unjust
enrichment, and violation of Georgia and Missouri blue sky laws. Plaintiff's
claims arise out of the Company's acquisition of American Teleconferencing
Services, Ltd. ("ATS") in April 1998. Plaintiff was a shareholder of ATS who
received shares of PTEK stock in the transaction. The Company removed the case
to the United States District Court for the Western District of Missouri, and
filed a Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint. Plaintiff has filed a Motion to Remand
the case back to state court. By order dated March 28, 2001, the court granted
plaintiff's Motion to Remand and dismissed as moot the Company's Motion to
Compel Arbitration, or Alternatively to Transfer Venue, or Alternatively to
Dismiss the Compliant.

On June 9, 2000, the Company and Premiere Communications, Inc. filed a lawsuit
in the United States District Court for the Middle District of Florida, seeking
unspecified damages and equitable, including injunctive, relief against Z-Tel
Technologies, Inc., Z-Tel Communications, Inc. (collectively, "Z-Tel"), David
Gregory Smith, James

72

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Kitchen and Eduard Mayer for patent infringement, breach of contract, unfair
competition, conversion, misappropriation of corporate opportunities, conspiracy
to misappropriate corporate opportunities, tortious interference with
contractual relations, tortious interference with actual and prospective
business relations, and misappropriation of trade secrets. On June 29, 2000, Z-
Tel filed an answer and counterclaims against the Company and Boland T. Jones
("Jones") seeking unspecified damages for tortious interference with actual and
prospective business relations, trade defamation, and compelled self-defamation.
Jones and the Company filed a timely motion to dismiss Z-Tel's counterclaims,
which is pending before the court. On November 14, 2000, the parties to the
lawsuit agreed to resolve in full all claims asserted by each party against the
other. In connection with the settlement, Z-Tel agreed to issue a warrant to
PTEK to purchase 175,000 shares of Z-Tel's common stock at a exercise price of
$12.00, which price is subject to certain adjustments.

The Company is also involved in various other legal proceedings that the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.

19. INCOME TAXES

Income tax provision (benefit) for 2000, 1999 and 1998 is as follows (in
thousands):

2000 1999 1998
------- ------- --------

Current:
Federal .................................................................. $ 5,335 $11,599 $ --
State .................................................................... 1,328 2,411 1,200
International ............................................................ 2,788 2,304 4,090
------- ------- --------
9,451 16,314 5,290
------- ------- --------
Deferred:
Federal .................................................................. 1,745 15,247 (20,707)
State .................................................................... (163) 4,897 (4,734)
International ............................................................ 204 (1,160) (1,026)
------- ------- --------
1,786 18,984 (26,467)
------- ------- --------
$11,237 $35,298 $(21,177)
======= ======= ========

The difference between the statutory federal income tax rate and the
Company's effective income tax rate applied to income before income taxes for
2000, 1999 and 1998 is as follows (in thousands):

2000 1999 1998
-------- ------- --------

Income taxes at federal statutory rate...................................... $(16,466) $ 632 $(36,901)
State taxes, net of federal benefit......................................... (1,500) 1,688 (2,316)
Foreign taxes............................................................... 1,015 307 --
Change in valuation allowance............................................... 783 1,234 1,733
Non-deductible expenses, primarily goodwill amortization.................... 27,405 31,437 16,307
-------- ------- --------
Income taxes at the Company's effective rate................................ $ 11,237 $35,298 $(21,177)
======== ======= ========

Differences between financial accounting and tax bases of assets and
liabilities giving rise to deferred tax assets and liabilities are as follows at
December 31 (in thousands):

2000 1999
-------- --------
Deferred tax assets:
Net operating loss carryforwards..................................................... $ 19,302 $ 24,425
In-process research and development.................................................. 3,728 3,728
Restructuring, merger costs and other special charges................................ 723 2,222
Accrued liabilities.................................................................. 10,500 5,407
Depreciation and amortization........................................................ 5,757 5,748
-------- --------
40,010 41,530
Deferred tax liabilities:
Intangible assets.................................................................... (18,905) (26,047)
Unrealized gain on marketable equity securities...................................... (1,501) (31,739)
Other liabilities.................................................................... (17,980) (8,966)
-------- --------
(38,386) (66,752)
Valuation allowance.................................................................. (6,490) (5,906)
-------- --------
Deferred income taxes, net........................................................... $ (4,866) $(31,128)
======== ========

73

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. tax rules impose limitations on the use of net operating loss
carryforwards following certain changes in ownership. The Company's utilization
of tax benefits associated with loss carryforwards could be limited if such a
change were to occur. Management of the Company has recorded valuation
allowances for deferred tax assets based on their estimate regarding realization
of such assets.

At December 31, 2000, the Company had federal income tax net operating loss
carryforwards of approximately $13.4 million expiring in 2010 through 2018. Tax
benefits of approximately $1.6 million and $2.0 million in 2000 and 1999,
respectively, are associated with nonqualified stock option exercises, the
benefit of which was credited directly to additional paid-in capital.

20. STATEMENT OF CASH FLOW INFORMATION

Supplemental Disclosure of Cash Flow Information (in thousands):

2000 1999 1998
------- ------- --------

Cash paid during the year for:
Interest..................................................................... $11,324 $29,164 $ 15,415
Income taxes................................................................. $17,100 $ 4,527 $ 3,554

Cash paid for acquisitions accounted for as purchases are as follows:
2000 1999 1998
------- ------- --------
Fair value of assets acquired................................................ $ 2,623 $37,633 $633,671
Less liabilities assumed..................................................... -- 13,099 233,734
Less common stock issued to sellers.......................................... -- 4,443 372,283
Cash paid for transaction costs and liabilities assumed...................... -- 858 15,990
------- ------- --------
Net cash paid................................................................ $ 2,623 $20,949 $ 43,644
======= ======= ========

21. SEGMENT REPORTING

The Company's reportable segments align the Company into two areas of focus
driven by product offering and corporate services. The Company realigned into
this decentralized organization in the third quarter of 1999 from the previous
market segment focus of the Emerging Enterprise Solutions ("EES") and Corporate
Enterprise Solutions ("CES") business units. The new business segments are
Xpedite (formerly of CES), Voicecom (formerly of both EES and CES), Premiere
Conferencing (formerly of CES), Retail Calling Card Services (formerly of EES)
and Corporate. Xpedite offers a full range of value-added multimedia messaging
services through its worldwide proprietary dedicated IP network for electronic
information delivery. Xpedite's customers are primarily global Fortune 1000
companies. Voicecom offers a suite of integrated communications solutions
including voice messaging, interactive voice response ("IVR") services and
unified communications. Voicecom's initial customers come from direct selling
organizations, but Voicecom

74

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
now targets key vertical markets such as financial services, telecom providers,
real estate and healthcare. Premiere Conferencing offers a full range of
enhanced, automated and Web conferencing services for all forms of group
communications activities, primarily to Fortune 1000 customers. Retail Calling
Card Services is a business segment that the Company exited through the sale of
its revenue base effective August 1, 2000. It consists primarily of the Premiere
Worldlink calling card product, which was marketed primarily through direct
response advertising and co-branding relationships to individual retail users.
Discontinued operations treatment of this business unit was not obtainable as
the Company continued using the legacy platform for its profitable wholesale
line of business and its corporate calling card bundled within its 800-based
messaging offerings within the Voicecom operating segment. Corporate focuses on
being a holding company with minimal headcount leaving the day-to-day management
of the businesses at the operating business units. In addition, Corporate
includes PtekVentures, the Company's Internet investment arm. Adjusted EBITDA is
management's primary measure of segment profit and loss.

75

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information concerning the operations in these reportable segments is as
follows (in millions):

Year Ended
-----------------------------------
December 31
-----------------------------------
2000 1999 1998
------ ------- ------

REVENUES:
Xpedite....................................................................... $233.9 $ 242.0 $197.0
Voicecom...................................................................... 117.9 125.7 152.9
Premiere Conferencing......................................................... 71.6 53.8 36.9
Retail Calling Card Services.................................................. 13.7 37.2 58.0
Eliminations(1)............................................................... (0.2) (0.3) --
------ ------- ------
Totals........................................................................ $436.9 $ 458.4 $444.8
====== ======= ======
OPERATING PROFIT (LOSS):
Xpedite....................................................................... $(37.7) $ (30.4) $(19.7)
Voicecom...................................................................... (16.5) (9.8) 23.7
Premiere Conferencing......................................................... (0.4) (3.8) 1.8
Retail Calling Card Services.................................................. (1.0) (43.8) (27.3)
Corporate..................................................................... (21.3) (42.4) (28.5)
Eliminations(1)............................................................... (0.2) (0.3) --
Restructuring, merger costs and other special charges......................... (0.7) (7.6) (24.1)
Acquired research and development............................................. -- -- (15.5)
Legal settlements, net........................................................ 1.4 -- (1.5)
------ ------- ------
Totals........................................................................ $(76.4) $(138.1) $(91.1)
====== ======= ======
ADJUSTED EBITDA:
Xpedite....................................................................... $ 55.0 $ 61.2 $ 54.1
Voicecom...................................................................... 13.1 13.9 51.0
Premiere Conferencing......................................................... 14.7 9.0 7.0
Retail Calling Card Services.................................................. 1.6 (5.8) (22.1)
Corporate..................................................................... (17.6) (39.2) (28.2)
Eliminations(1)............................................................... (0.2) (0.3) --
------ ------- ------
Totals........................................................................ $ 66.6 $ 38.8 $ 61.8
====== ======= ======
IDENTIFIABLE ASSETS:
Xpedite....................................................................... $391.6 $ 455.8 $485.2
Voicecom...................................................................... 90.2 95.6 144.6
Premiere Conferencing......................................................... 75.0 76.2 73.7
Retail Calling Card Services.................................................. -- 10.9 30.0
Corporate..................................................................... 74.1 132.0 62.9
------ ------- ------
Total......................................................................... $630.9 $ 770.5 $796.4
------ ------- ------

(1) Eliminations is primarily comprised of revenue eliminations from business
transacted between Xpedite and Premiere Conferencing.

76

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of operating loss and Adjusted EBITDA to income (loss) before
income taxes is as follows (in millions):

2000 1999 1998
------- ------- -------

Adjusted EBITDA................................................................. $ 66.6 $ 38.8 $ 61.8
Less depreciation and amortization.............................................. (143.7) (168.9) (111.8)
Less restructuring, merger and other special charges............................ (0.7) (8.0) (24.1)
Less acquired research and development.......................................... -- -- (15.5)
Less legal settlements, net..................................................... 1.4 -- (1.5)
------- ------- -------
Operating loss.................................................................. $ (76.4) $(138.1) $ (91.1)
Less interest expense, net...................................................... (10.6) (24.7) (14.7)
Plus other income (expense), net................................................ 39.4 164.6 0.4
------- ------- -------
Income (loss) before income taxes............................................... $ (47.6) 1.8 $(105.4)
======= ======= =======

Information concerning revenues from groups of similar products and services
are as follows (in millions):

2000 1999 1998
------ ------ ------

E-mail, fax and messaging....................................................... $233.9 $232.4 $193.8
Voice and unified messaging..................................................... 99.5 117.4 120.2
Conferencing.................................................................... 71.4 53.9 36.9
Interactive voice response...................................................... 12.2 10.9 7.4
Wholesale calling card services................................................. 6.2 6.6 28.5
Retail calling card services.................................................... 13.7 37.2 58.0
------ ------ ------
Total........................................................................ $436.9 $458.4 $444.8
====== ====== ======

Information concerning depreciation expense for each reportable segment is as
follows (in millions):

2000 1999 1998
----- ----- -----

Xpedite.......................................................................... $11.8 $14.3 $16.6
Voicecom......................................................................... 17.9 17.2 19.2
Premiere Conferencing............................................................ 6.0 4.2 2.1
Retail Calling Card Services..................................................... 2.6 32.6 8.2
Corporate........................................................................ 2.2 1.6 0.2
----- ----- -----
Total......................................................................... $40.5 $69.9 $46.3
===== ===== =====

Information concerning capital expenditures for each reportable segment is as
follows (in millions):

2000 1999 1998
----- ----- -----

Xpedite............................................................................ $15.4 $12.4 $11.8
Voicecom........................................................................... 12.2 16.6 25.7
Premiere Conferencing.............................................................. 7.1 9.7 7.3
Retail Calling Card Services....................................................... -- -- 11.2
Corporate.......................................................................... 0.3 5.5 5.3
----- ----- -----
Total........................................................................... $35.0 $44.2 $61.3
===== ===== =====

The following table presents financial information based on the Company's
geographic segments for the years ended December 31, 2000, 1999 and 1998 (in
millions):

77

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents financial information based on the Company's
geographic segments for the years ended December 31, 2000, 1999 and 1998 (in
millions):

Operating Identifiable
Net Revenues Income (Loss) Assets
------------ ------------- ------------

2000
North America....................................................... $319.2 $ (88.5) $565.0
Asia Pacific........................................................ 66.9 0.4 30.8
Europe.............................................................. 50.8 11.7 35.1
------ ------- ------
Total............................................................. 436.9 $ (76.4) $630.9
====== ======= ======

1999
North America....................................................... $333.5 $(149.7) $673.6
Asia Pacific........................................................ 71.1 9.3 55.9
Europe.............................................................. 53.8 2.3 41.0
------ ------- ------
Total............................................................. $458.4 $(138.1) $770.5
====== ======= ======

1998
North America....................................................... $351.9 $(110.5) $737.5
Asia Pacific........................................................ 51.4 7.6 33.7
Europe.............................................................. 47.3 12.3 25.2
Eliminations........................................................ (5.8) (0.5) --
------ ------- ------
Total............................................................. $444.8 $ (91.1) $796.4
====== ======= ======

Item 9. Changes and Disagreements with Accountants on Accounting and Financial
Disclosure

There have been no disagreements with or change in the registrants's
independent accountant since the Company's inception.

78

PART III

Certain information required by Part III is omitted from this report in
that the Registrant will file a Definitive Proxy Statement pursuant to
Regulation 14A ("Proxy Statement") not later than 120 days after the end of the
fiscal year covered by this report.

Item 10. Directors and Executive Officers of the Registrant

The information required by this item is incorporated herein by reference
to the Company's Proxy Statement.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference
to the Company's Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is incorporated herein by reference
to the Company's Proxy Statement.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated herein by reference
to the Company's Proxy Statement.

79

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1. Financial Statements

The financial statements listed in the index set forth in Item 8 of
this report are filed as part of this report.

2. Financial Statement Schedules

Financial statement schedules required to be included in this report
are either shown in the financial statements and notes thereto,
included in Item 8 of this report or have been omitted because they
are not applicable.

3. Exhibits

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

2.1 Agreement and Plan of Merger, together with exhibits, dated as of April 2, 1997 by and among
Premiere Technologies, Inc., PTEK Merger Corporation and Voice-Tel Enterprises, Inc. and the
Stockholders of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).

2.2 Agreement and Plan of Merger, together with exhibits, dated as of April 2, 1997 by and among
Premiere Technologies, Inc., PTEK Merger Corporation II, VTN, Inc. and the Stockholders of VTN, Inc.
(incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated April
2, 1997 and filed April 4, 1997).

2.3 Purchase and Sale Agreement dated April 2, 1997 by and between Premiere Technologies, Inc. and
Merchandising Productions, Inc. (incorporated by reference to Exhibit 2.3 to the Registrant's
Current Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).

2.4 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Continuum,
Inc. and Owners of Continuum, Inc. (incorporated by reference to Exhibit 2.4 to the Registrant's
Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.5 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., DMG, Inc. and
Owners of DMG, Inc. and Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VTG, Inc. and Owners of VTG, Inc. (incorporated by reference to Exhibit 2.5 to
the Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.6 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Penta Group,
Inc. and Owners of Penta Group, Inc. and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Scepter Communications, Inc. and Owners of Scepter Communications, Inc.
(incorporated by reference to Exhibit 2.6 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).

2.7 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Premiere
Business Services, Inc. and Owners of Premiere Business Services, Inc. (incorporated by reference to
Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14,
1997).

2.8 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Dunes
Communications, Inc., Sands Communications, Inc., Sands Comm, Inc., SandsComm, Inc., and Owner of
Dunes Communications, Inc., Sands Communications, Inc., Sands Comm, Inc., and SandsComm, Inc.
(incorporated by reference to Exhibit 2.8 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).

80

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

2.9 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Shamlin, Inc.
and Owner of Shamlin, Inc. (incorporated by reference to Exhibit 2.9 to the Registrant's Current
Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.10 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., VT of Ohio,
Inc. and Owners of VT of Ohio, Inc.; Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Carter Voice, Inc. and Owners of Carter Voice, Inc.; Transfer Agreement
dated as of April 2, 1997 by and among Premiere Technologies, Inc., Widdoes Enterprises, Inc. and
Owners of Widdoes Enterprises, Inc.; and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Dowd Enterprises, Inc. and Owners of Dowd Enterprises, Inc.
(incorporated by reference to Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).

2.11 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., SDVT, Inc.
and Owners of SDVT, Inc. (incorporated by reference to Exhibit 2.11 to the Registrant's Current
Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.12 Amended and Restated Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Car Zee, Inc. and Owners of Car Zee, Inc. (incorporated by reference to Exhibit
2.12 to the Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.13 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the VTEC Franchisee: 1086236 Ontario, Inc. (incorporated by reference to Exhibit 2.13 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.14 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the Eastern Franchisees: 1139133 Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc., and
1063940 Ontario Inc. (incorporated by reference to Exhibit 2.14 to the Registrant's Current Report
on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.15 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc.,
Communications Concepts, Inc. and Owners of Communications Concepts, Inc. (incorporated by reference
to Exhibit 2.1 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).

2.16 Transfer Agreement dated as of May 20, 1997 by and among Premiere Technologies, Inc., DARP, Inc. and
Owners of DARP, Inc. (incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on
Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.17 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Hi-Pak
Systems, Inc. and Owners of Hi-Pak Systems, Inc. (incorporated by reference to Exhibit 2.3 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2. 1997).

2.18 Transfer Agreement dated as of May 29, 1997 by and among Premiere Technologies, Inc., MMP
Communications, Inc. and Owners of MW Communications, Inc. (incorporated by reference to Exhibit 2.4
to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.19 Transfer Agreement dated as of May 16, 1997 by and among Premiere Technologies, Inc., Lar-Lin
Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-Mail Solutions, Inc. and Owners of Lar-Lin
Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-Mail Solutions, Inc. (incorporated by
reference to Exhibit 2.5 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).

2.20 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Voice-Net
Communications Systems, Inc. and Owners of Voice-Net Communications Systems, Inc. and Transfer
Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., VT of Long Island Inc.
and Owners of VT of Long Island Inc. (incorporated by reference to Exhibit 2.6 to the Registrant's
Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

81

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

2.21 Transfer Agreement dated as of May 22, 1997 by and among Premiere Technologies, Inc., Voice Systems
of Greater Dayton, Inc. and Owner of Voice Systems of Greater Dayton, Inc. and Transfer Agreement
dated as of May 22, 1997 by and among Premiere Technologies, Inc., Premiere Acquisition Corporation,
L'Harbot, Inc. and the Owners of L'Harbot, Inc. (incorporated by reference to Exhibit 2.7 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.22 Transfer Agreement dated as of May 30, 1997 by and among Premiere Technologies, Inc., Audioinfo Inc.
and Owners of Audioinfo Inc. (incorporated by reference to Exhibit 2.8 to the Registrant's Current
Report on Form 8-K dated May 16, 1997 and filed June. 2, 1997).

2.23 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., D&K
Communications Corporation and Owners of D&K Communications Corporation (incorporated by reference
to Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).

2.24 Transfer Agreement dated as of May 19, 1997 by and among Premiere Technologies, Inc., Voice-Tel of
South Texas, Inc. and Owners of VoiceTel of South Texas, Inc. (incorporated by reference to Exhibit
2.11 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.25 Transfer Agreement dated as of May 31, 1997 by and among Premiere Technologies, Inc., Indiana
Communicator, Inc. and Owner of Indiana Communicator, Inc. (incorporated by reference to Exhibit
2.12 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.26 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Voice
Messaging Development Corporation of Michigan and the Owners of Voice Messaging Development
Corporation of Michigan (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report
on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).

2.27 Transfer Agreement dated as of June 13, 1997 by and among Premiere Technologies, Inc., Voice
Partners of Greater Mahoning Valley, Ltd. and the Owners of Voice Partners of Greater Mahoning
Valley, Ltd. (incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form
8-K/A dated May 16, 1997 and filed June 24, 1997).

2.28 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., In-Touch
Technologies, Inc. and the Owners of InTouch Technologies, Inc. (incorporated by reference to
Exhibit 2.3 to the Registrant's Current Report on Form 8-K/A dated May 16, 1997 and filed June 24,
1997).

2.29 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the Western Franchisees: 3325882 Manitoba Inc., 601965 Alberta Ltd., 3266622 Manitoba Inc., 3337821
Manitoba Inc. and 3266631 Manitoba Inc. (incorporated by reference to Exhibit 2.4 to the
Registrant's Current Report on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).

2.30 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and among Premiere Technologies,
Inc., Wave One Franchisees and Owners of Wave One Franchisees (incorporated by reference to Exhibit
A to Exhibit 2.4 to the Registrant's Current Report on Form 8-K dated April 2, 1997 and filed April
4, 1997).

2.31 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and among Premiere Technologies,
Inc., Wave Two Franchisees and owners of Wave Two Franchisees (incorporated by reference to Exhibit
2.14 to the Registrant's Current Report on dated May 16, 1997 and filed June 2, 1997).

2.32 Stock Purchase Agreement, together with exhibits, dated as of September 12, 1997, by and among
Premiere Technologies, Inc., VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings, Inc.
(incorporated by reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1997).

82

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

2.33 Agreement and Plan of Merger, dated as of November 13, 1997, together with exhibits, by and among
Premiere Technologies, Inc., Nets Acquisition Corp. and Xpedite Systems, Inc. (incorporated by
reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated November 13, 1997 and
filed December 5, 1997, as amended by Form 8-K/A filed December 23, 1997).

2.34 Agreement and Plan of Merger, dated April 22, 1998, by and among the Company,
AmericanTeleconferencing Services, Ltd. ("ATS"), PTEK Missouri Acquisition Corp. and the
shareholders of ATS (incorporated by reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K dated April 23, 1998, and filed with the Commission on April 28, 1998.)

3.1 Articles of Incorporation of Premiere Technologies, Inc., as amended, (incorporated by reference to
Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1998).

3.2 Articles of Amendment of Articles of Incorporation of Premiere Technologies, Inc. (changing the name
of the Registrant to PTEK Holdings, Inc.).

3.3 Amended and Restated Bylaws of Premiere Technologies, Inc., as amended (incorporated by reference to
Exhibit 3.1 to the Registrant's Amended Quarterly Report on Form 10-Q/A for the Quarter Ended March
31, 1999, as filed on May 27, 1999).

4.1 See Exhibits 3.1-3.3 for provisions of the Articles of Incorporation and Bylaws defining the rights
of the holders of common stock of the Registrant.

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).

4.3 Indenture, dated as of June 15, 1997, between Premiere Technologies, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated July 25, 1997 and filed August 5, 1997).

4.4 Form of Global Convertible Subordinated Note due 2004 (incorporated by reference to Exhibit 4.2 to
the Registrant's Current Report on Form 8-K dated July 25, 1997 and filed August 5, 1997).

4.5 Registration Rights Agreement, dated as of June 15, 1997, by and among the Registrant, Robertson,
Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K
dated July 25, 1997 and filed August 5, 1997).

4.6 Shareholder Protection Rights Agreement, dated June 23, 1998, between the Company and SunTrust Bank,
Atlanta, as Rights Agent (incorporated by reference to Exhibit 99.1 of the Company's Current Report
on Form 8-K dated June 23, 1998, and filed with the Commission on June 26, 1998).

10.1 Shareholder Agreement dated as of January 18, 1994 among the Registrant, NationsBanc Capital
Corporation, Boland T. Jones, D. Gregory Smith, Leonard A. DeNittis and Andrea L. Jones
(incorporated by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-1
(No. 33-80547)).

10.2 Amended and Restated Executive Employment Agreement and Incentive Option Agreement dated November 6,
1995 between the Registrant and David Gregory Smith (incorporated by reference to Exhibit 10.15 to
the Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.3 Amended and Restated Executive Employment Agreement dated November 6, 1995 between Premiere
Communications, Inc. and David Gregory Smith (incorporated by reference to Exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

83

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

10.4 Mutual Release dated December 5, 1997 by and among the Registrant, Premiere Communications, Inc. and
David Gregory Smith (incorporated by reference to Exhibit 10.6 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).

10.5 Amended and Restated Executive Employment and Incentive Option Agreement dated November 6, 1995
between the Registrant and Boland T. Jones (incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.6 Amended and Restated Executive Employment Agreement dated November 6, 1995 between Premiere
Communications, Inc. and Boland T. Jones (incorporated by reference to Exhibit 10.18 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.7 Executive Employment and Incentive Option Agreement dated November 1, 1995 between the Registrant
and Patrick G. Jones (incorporated by reference to Exhibit 10.19 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**

10.8 Executive Employment Agreement dated November 1, 1995 between Premiere Communications, Inc. and
Patrick G. Jones (incorporated by reference to Exhibit 10.20 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**

10.9 Executive Employment and Incentive Option Agreement, effective as of July 24, 1997, by and between
the Company and Jeffrey A. Allred (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998).**

10.10 Executive Employment and Incentive Option Agreement effective as of July 6, 1998, by and between the
Company and William Porter Payne (incorporated by reference to Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998).**

10.11 Memorandum of Understanding dated as of July 6, 1998, by and between the Company and William Porter
Payne (incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998).**

10.12 Restricted Stock Award Agreement between the Registrant and Boland T. Jones dated May 5, 1999.**

10.13 Restricted Stock Award Agreement between the Registrant and Jeffrey A. Allred dated May 5, 1999.**

10.14 Restricted Stock Award Agreement between the Registrant and Patrick G. Jones dated May 5, 1999.**

10.15 Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Boland T. Jones.**

10.16 Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Jeffrey A. Allred.**

10.17 Premiere Communications, Inc. 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.30
to the Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.18 Form of Director Indemnification Agreement between the Registrant and Non-employee Directors
(incorporated by reference to Exhibit 10.31 to the Registrant's Registration Statement on Form S-1
(No. 33- 80547)).**

10.19 Park Place Office Lease dated May 31, 1993 between Premiere Communications, Inc. and Mara-Met
Venture, as amended by First Amendment dated December 15, 1995 (incorporated by reference to Exhibit
10.34 to the Registrant's Registration Statement on Form S-1 (No. 33-80547)).

10.20 Second and Third Amendment to 55 Park Place Office Lease dated November 5, 1996 between Premiere
Communications, Inc. and Mara-Met Venture (incorporated by reference to Exhibit 10.49 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).

84

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

10.21 Office Lease Agreement dated May 12, 1996 between Premiere Communications, Inc. and Beverly Hills
Center LLC, as amended by the First Amendment dated August 1, 1996 (incorporated by reference to
Exhibit 10.50 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).

10.22 Second Amendment of Lease dated July 1, 1997, between Premiere Communications, Inc. and Beverly
Hills Center LLC (incorporated by reference to Exhibit 10.18 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).

10.23 Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc., dated as
of March 3, 1997, as amended by Modification of Lease dated August 4, 1997, as amended, by Second
Modification of Lease, dated October 30, 1997 (incorporated by reference to Exhibit 10.19 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).

10.24 Sublease Agreement dated as of December 16, 1997, by and between Premiere Communications, Inc. and
Endeavor Technologies, Inc. (incorporated by reference to Exhibit 10.20 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.25 Form of Officer Indemnification Agreement between the Registrant and each of the executive officers
(incorporated by reference to Exhibit 10.36 to the Registrant's Registration Statement on Form S-1
(No. 33- 80547)).**

10.26 Telecommunications Services Agreement dated December 1, 1995 between Premiere Communications, Inc.
and WorldCom Network Services, Inc. d/b/a WilTel (incorporated by reference to Exhibit 10.40 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).

10.27 Amended and Restated Program Enrollment Terms dated September 30, 1997 by and between Premiere
Communications, Inc. and WorldCom Network Services, Inc., d/b/a WilTel, as amended by Amendment No.
I dated November 1, 1997 (incorporated by reference to Exhibit 10.26 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1997).*

10.28 Service Agreement dated September 30, 1997, by and between VoiceCom Systems, Inc. and AT&T Corp.
(incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1997).*

10.29 Strategic Alliance Agreement dated November 13, 1996 by and between the Registrant and WorldCom,
Inc. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).*

10.30 Investment Agreement dated November 13, 1996 by and between the Registrant and WorldCom, Inc.
(incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).

10.31 Service and Reseller Agreement dated September 28, 1990 by and between Amway Corporation and
Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.33 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended June 30, 1997).*
10.32 Amendment to Service and Reseller Agreement dated as of May 13, 1999 by and between Amway
Corporation and Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 10.28 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1999).*

10.33 Form of Stock Purchase Warrant Agreement (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8 (No. 333-11281)).**

10.34 Form of Warrant Transaction Statement (incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-11281)).

85

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

10.35 Form of Director Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8 (No. 333-17593)).**

10.36 Purchase Agreement, dated June 25, 1997, by and among Premiere Technologies, Inc., Robertson,
Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form
8-K dated July 25, 1997 and filed August 5, 1997).

10.37 1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel Enterprises, Inc. (assumed by the
Registrant) (incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8 (No. 333-29787)).

10.38 1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc. (assumed by the Registrant)
(incorporated by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form S-8
(No. 333-29787)).

10.39 Form of Stock Option Agreement by and between the Registrant and certain current or former employees
of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-29787)).

10.40 Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference
to Exhibit A to the Registrant's Definitive Proxy Statement distributed in connection with the
Registrant's June 11, 1997 annual meeting of shareholders, filed April 30, 1997).**

10.41 First Amendment to Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan
(incorporated by reference to Exhibit 10.43 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).**

10.42 VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the Registrant) (incorporated by
reference to Exhibit 10.44 to Registrant's Annual Report on Form 10-K for the year ended December
31, 1997).

10.43 VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan (assumed by the Registrant)
(incorporated by reference to Exhibit 10.45 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).

10.44 Premiere Technologies, Inc., Amended and Restated 1998 Stock Plan (incorporated by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999.).

10.45 Amendment No. 1 to the Premiere Technologies, Inc. Amended and Restated 1998 Stock Plan.

10.46 Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by,
reference to Xpedite's Registration Statement on Form S-1 (No. 33-73258)).

10.47 Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by
reference to Xpedite's Registration Statement on Form S-I (No. 33-73258)).

10.48 Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by
reference to Xpedite's Annual Report on Form 10-K for the year ended December 31, 1995).

10.49 Xpedite Systems, Inc. Non-Employee Directors' Warrant Plan (assumed by the Registrant) (incorporated
by reference to Exhibit 10.31 to Xpedite's Annual Report on Form 10-K for the year ended December
31, 1996).

10.50 Xpedite Systems, Inc. Officer's Contingent Stock Option Plan (assumed by the Registrant)
(incorporated by reference to Exhibit 10.30 to Xpedite's Annual Report on Form 10-K for the year
ended December 31, 1996).

86

Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------------------

10.51 Associate Stock Purchase Plan (incorporated by reference to Appendix A to the Registrant's
Definitive Proxy Statement distributed in connection with the Registrant's June 22, 1999 annual
meeting, filed on May 19, 1999).

10.52 Intellivoice Communications, Inc. 1995 Incentive Stock Plan (assumed by the Registrant).

10.53 Employment Agreement dated as of January 1, 2000 by and between American Teleconferencing Services,
Ltd. And Tehordore P. Schrafft (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2000).

10.54 First Amendment to Sublease Agreement dated as of February 1, 2000 by and between Premiere
Communications, Inc. and Healtheon/WebMD Corporation (incorporated by reference to Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2000).

10.55 PTEK Holdings, Inc. 2000 Directors Stock Plan (incorporated by reference to Exhibit A to the
Registrant's Definitive Proxy Statement distributed in connection with the Registrant's June 7, 2000
annual meeting of shareholders, filed April 28, 2000).**

10.56 Settlement Agreement dated as of April 7, 2000 by and between PTEK Holdings, Inc. and MCI WorldCom,
Inc. (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 2000).*

10.57 Amendment No. 1 dated as of January 1, 2000 to Telecommunications Service Agreement dated October
29, 1999 by and between Premiere Technologies, Inc. and MCI WorldCom, Inc. (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 2000).

10.58 Addendum A dated as of January 1, 2000 to Carrier Services Agreement dated as of October 29, 1999 by
and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.3 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2000).

10.59 Credit Agreement dated as of September 29, 2000 by and among Xpedite Systems, Inc., PTEK Holdings,
Inc. and ABN Amro Bank, N.V. (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly
Report on Form 10-Q for the Quarter Ended September 30, 2000).

10.60 Asset Sale Agreement, together with exhibits, dated as of August 25, 2000 by and between Telecare,
Inc. and Premiere Communications, Inc. (incorporated by reference to Exhibit 10.2 to the Registrants
Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2000).

21.1 Subsidiaries of the Registrant.

23.1 Consent of Arthur Andersen LLP.

* Confidential treatment has been granted. The copy on file as an exhibit omits the information
subject to the confidentiality request. Such omitted information has been filed separately with the
Commission.

** Management contracts and compensatory plans and arrangements required to be filed as exhibits
pursuant to Item 14(c) of this report.

(b) The Registrant did not file any Current Reports on Form 8-K during the fourth quarter of 2001.

87

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

PTEK Holdings, Inc.

By: /s/ Boland T. Jones
--------------------------------------
Boland T. Jones, Chairman of the Board
and Chief Executive Officer

Date: March __, 2001

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Boland T. Jones Chairman of the Board and Chief March __, 2001
- ----------------------------------------- Executive Officer (principal
Boland T. Jones executive officer) and Director

/s/ Patrick G. Jones Executive Vice President March __, 2001
- ----------------------------------------- Chief Financial Officer
Patrick G. Jones (principal financial and
accounting officer) and Chief
Legal Officer

/s/ George W. Baker, Sr. Director March __, 2001
- -----------------------------------------
George W. Baker, Sr.

/s/ Raymond H. Pirtle, Jr. Director March __, 2001
- -----------------------------------------
Raymond H. Pirtle, Jr.

/s/ William P. Payne Vice Chairman and Director March __, 2001
- -----------------------------------------
William P. Payne

/s/ Jeffrey A. Allred President and Chief Operating March __, 2001
- ----------------------------------------- Officer and Director
Jeffrey A. Allred

/s/ Jackie M. Ward Director March __, 2001
- -----------------------------------------
Jackie M. Ward

/s/ Jeffrey T. Arnold Director March __, 2001
- -----------------------------------------
Jeffrey T. Arnold

/s/ Jeffrey M. Cunningham Director March __, 2001
- -----------------------------------------
Jeffrey M. Cunningham

88

EXHIBIT INDEX

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

2.1 Agreement and Plan of Merger, together with exhibits, dated as of April 2, 1997 by and among Premiere
Technologies, Inc., PTEK Merger Corporation and Voice-Tel Enterprises, Inc. and the Stockholders of
Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).

2.2 Agreement and Plan of Merger, together with exhibits, dated as of April 2, 1997 by and among Premiere
Technologies, Inc., PTEK Merger Corporation II, VTN, Inc. and the Stockholders of VTN, Inc.
(incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated April
2, 1997 and filed April 4, 1997).

2.3 Purchase and Sale Agreement dated April 2, 1997 by and between Premiere Technologies, Inc. and
Merchandising Productions, Inc. (incorporated by reference to Exhibit 2.3 to the Registrant's Current
Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).

2.4 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Continuum,
Inc. and Owners of Continuum, Inc. (incorporated by reference to Exhibit 2.4 to the Registrant's
Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.5 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., DMG, Inc. and
Owners of DMG, Inc. and Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VTG, Inc. and Owners of VTG, Inc. (incorporated by reference to Exhibit 2.5 to
the Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.6 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Penta Group,
Inc. and Owners of Penta Group, Inc. and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Scepter Communications, Inc. and Owners of Scepter Communications, Inc.
(incorporated by reference to Exhibit 2.6 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).

2.7 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Premiere
Business Services, Inc. and Owners of Premiere Business Services, Inc. (incorporated by reference to
Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14,
1997).

2.8 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Dunes
Communications, Inc., Sands Communications, Inc., Sands Comm, Inc., SandsComm, Inc., and Owner of
Dunes Communications, Inc., Sands Communications, Inc., Sands Comm, Inc., and SandsComm, Inc.
(incorporated by reference to Exhibit 2.8 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).

2.9 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Shamlin, Inc.
and Owner of Shamlin, Inc. (incorporated by reference to Exhibit 2.9 to the Registrant's Current
Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.10 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., VT of Ohio,
Inc. and Owners of VT of Ohio, Inc.; Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Carter Voice, Inc. and Owners of Carter Voice, Inc.; Transfer Agreement
dated as of April 2, 1997 by and among Premiere Technologies, Inc., Widdoes Enterprises, Inc. and
Owners of Widdoes Enterprises, Inc.; and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Dowd Enterprises, Inc. and Owners of Dowd Enterprises, Inc.
(incorporated by reference to Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).

2.11 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., SDVT, Inc. and
Owners of SDVT, Inc. (incorporated by reference to Exhibit 2.11 to the Registrant's Current Report on
Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.12 Amended and Restated Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies,
Inc., Car Zee, Inc. and Owners of Car Zee, Inc. (incorporated by reference to Exhibit 2.12 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

89

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

2.13 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the VTEC Franchisee: 1086236 Ontario, Inc. (incorporated by reference to Exhibit 2.13 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.14 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the Eastern Franchisees: 1139133 Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc., and
1063940 Ontario Inc. (incorporated by reference to Exhibit 2.14 to the Registrant's Current Report on
Form 8-K dated April 30, 1997 and filed May 14, 1997).

2.15 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Communications
Concepts, Inc. and Owners of Communications Concepts, Inc. (incorporated by reference to Exhibit 2.1
to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.16 Transfer Agreement dated as of May 20, 1997 by and among Premiere Technologies, Inc., DARP, Inc. and
Owners of DARP, Inc. (incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on
Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.17 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Hi-Pak
Systems, Inc. and Owners of Hi-Pak Systems, Inc. (incorporated by reference to Exhibit 2.3 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2. 1997).

2.18 Transfer Agreement dated as of May 29, 1997 by and among Premiere Technologies, Inc., MMP
Communications, Inc. and Owners of MW Communications, Inc. (incorporated by reference to Exhibit 2.4
to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.19 Transfer Agreement dated as of May 16, 1997 by and among Premiere Technologies, Inc., Lar-Lin
Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-Mail Solutions, Inc. and Owners of Lar-Lin
Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-Mail Solutions, Inc. (incorporated by
reference to Exhibit 2.5 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).

2.20 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Voice-Net
Communications Systems, Inc. and Owners of Voice-Net Communications Systems, Inc. and Transfer
Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., VT of Long Island Inc.
and Owners of VT of Long Island Inc. (incorporated by reference to Exhibit 2.6 to the Registrant's
Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.21 Transfer Agreement dated as of May 22, 1997 by and among Premiere Technologies, Inc., Voice Systems
of Greater Dayton, Inc. and Owner of Voice Systems of Greater Dayton, Inc. and Transfer Agreement
dated as of May 22, 1997 by and among Premiere Technologies, Inc., Premiere Acquisition Corporation,
L'Harbot, Inc. and the Owners of L'Harbot, Inc. (incorporated by reference to Exhibit 2.7 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.22 Transfer Agreement dated as of May 30, 1997 by and among Premiere Technologies, Inc., Audioinfo Inc.
and Owners of Audioinfo Inc. (incorporated by reference to Exhibit 2.8 to the Registrant's Current
Report on Form 8-K dated May 16, 1997 and filed June. 2, 1997).

2.23 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., D&K
Communications Corporation and Owners of D&K Communications Corporation (incorporated by reference to
Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).

2.24 Transfer Agreement dated as of May 19, 1997 by and among Premiere Technologies, Inc., Voice-Tel of
South Texas, Inc. and Owners of VoiceTel of South Texas, Inc. (incorporated by reference to Exhibit
2.11 to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.25 Transfer Agreement dated as of May 31, 1997 by and among Premiere Technologies, Inc., Indiana
Communicator, Inc. and Owner of Indiana Communicator, Inc. (incorporated by reference to Exhibit 2.12
to the Registrant's Current Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).

2.26 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., Voice
Messaging Development Corporation of Michigan and the Owners of Voice Messaging Development
Corporation of Michigan (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report
on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).

2.27 Transfer Agreement dated as of June 13, 1997 by and among Premiere Technologies, Inc., Voice Partners
of Greater Mahoning Valley, Ltd. And the Owners of Voice Partners of Greater Mahoning Valley, Ltd.
(incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K/A dated May
16, 1997 and filed June 24, 1997).

90

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

2.28 Transfer Agreement dated as of April 2, 1997 by and among Premiere Technologies, Inc., In-Touch
Technologies, Inc. and the Owners of InTouch Technologies, Inc. (incorporated by reference to Exhibit
2.3 to the Registrant's Current Report on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).

2.29 Transfer Agreement dated as of March 31, 1997 by and among Premiere Technologies, Inc. and Owners of
the Western Franchisees: 3325882 Manitoba Inc., 601965 Alberta Ltd., 3266622 Manitoba Inc., 3337821
Manitoba Inc. and 3266631 Manitoba Inc. (incorporated by reference to Exhibit 2.4 to the Registrant's
Current Report on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).

2.30 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and among Premiere Technologies,
Inc., Wave One Franchisees and Owners of Wave One Franchisees (incorporated by reference to Exhibit A
to Exhibit 2.4 to the Registrant's Current Report on Form 8-K dated April 2, 1997 and filed April 4,
1997).

2.31 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and among Premiere Technologies,
Inc., Wave Two Franchisees and owners of Wave Two Franchisees (incorporated by reference to Exhibit
2.14 to the Registrant's Current Report on dated May 16, 1997 and filed June 2, 1997).

2.32 Stock Purchase Agreement, together with exhibits, dated as of September 12, 1997, by and among
Premiere Technologies, Inc., VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings, Inc.
(incorporated by reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1997).

2.33 Agreement and Plan of Merger, dated as of November 13, 1997, together with exhibits, by and among
Premiere Technologies, Inc., Nets Acquisition Corp. and Xpedite Systems, Inc. (incorporated by
reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated November 13, 1997 and
filed December 5, 1997, as amended by Form 8-K/A filed December 23, 1997).

2.34 Agreement and Plan of Merger, dated April 22, 1998, by and among the Company, American
Teleconferencing Services, Ltd. ("ATS"), PTEK Missouri Acquisition Corp. and the shareholders of ATS
(incorporated by reference to Exhibit 99.1 of the Company's Current Report on Form 8-K dated April
23, 1998, and filed with the Commission on April 28, 1998.)

3.1 Articles of Incorporation of Premiere Technologies, Inc., as amended, (incorporated by reference to
Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1998).

3.2 Articles of Amendment of Articles of Incorporation of Premiere Technologies, Inc. (changing the name
of the Registrant to PTEK Holdings, Inc.).

3.3 Amended and Restated Bylaws of Premiere Technologies, Inc., as amended (incorporated by reference to
Exhibit 3.1 to the Registrant's Amended Quarterly Report on Form 10-Q/A for the Quarter Ended March
31, 1999, as filed on May 27, 1999).

4.1 See Exhibits 3.1-3.3 for provisions of the Articles of Incorporation and Bylaws defining the rights
of the holders of common stock of the Registrant.

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).

4.3 Indenture, dated as of June 15, 1997, between Premiere Technologies, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated July 25, 1997 and filed August 5, 1997).
4.4 Form of Global Convertible Subordinated Note due 2004 (incorporated by reference to Exhibit 4.2 to
the Registrant's Current Report on Form 8-K dated July 25, 1997 and filed August 5, 1997).

4.5 Registration Rights Agreement, dated as of June 15, 1997, by and among the Registrant, Robertson,
Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K
dated July 25, 1997 and filed August 5, 1997).

4.6 Shareholder Protection Rights Agreement, dated June 23, 1998, between the Company and SunTrust Bank,
Atlanta, as Rights Agent (incorporated by reference to Exhibit 99.1 of the Company's Current Report
on Form 8-K dated June 23, 1998, and filed with the Commission on June 26, 1998).

10.1 Shareholder Agreement dated as of January 18, 1994 among the Registrant, NationsBanc Capital
Corporation, Boland T. Jones, D. Gregory Smith, Leonard A. DeNittis and Andrea L. Jones (incorporated
by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-1 (No. 33-80547)).

10.2 Amended and Restated Executive Employment Agreement and Incentive Option Agreement dated November 6,
1995 between the Registrant and David Gregory Smith (incorporated by reference to Exhibit 10.15 to
the Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

91

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

10.3 Amended and Restated Executive Employment Agreement dated November 6, 1995 between Premiere
Communications, Inc. and David Gregory Smith (incorporated by reference to Exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.4 Mutual Release dated December 5, 1997 by and among the Registrant, Premiere Communications, Inc. and
David Gregory Smith (incorporated by reference to Exhibit 10.6 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).

10.5 Amended and Restated Executive Employment and Incentive Option Agreement dated November 6, 1995
between the Registrant and Boland T. Jones (incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.6 Amended and Restated Executive Employment Agreement dated November 6, 1995 between Premiere
Communications, Inc. and Boland T. Jones (incorporated by reference to Exhibit 10.18 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.7 Executive Employment and Incentive Option Agreement dated November 1, 1995 between the Registrant and
Patrick G. Jones (incorporated by reference to Exhibit 10.19 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**

10.8 Executive Employment Agreement dated November 1, 1995 between Premiere Communications, Inc. and
Patrick G. Jones (incorporated by reference to Exhibit 10.20 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**

10.9 Executive Employment and Incentive Option Agreement, effective as of July 24, 1997, by and between
the Company and Jeffrey A. Allred (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998).**

10.10 Executive Employment and Incentive Option Agreement effective as of July 6, 1998, by and between the
Company and William Porter Payne (incorporated by reference to Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998).**

10.11 Memorandum of Understanding dated as of July 6, 1998, by and between the Company and William Porter
Payne (incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998).**

10.12 Restricted Stock Award Agreement between the Registrant and Boland T. Jones dated May 5, 1999.**

10.13 Restricted Stock Award Agreement between the Registrant and Jeffrey A. Allred dated May 5, 1999.**

10.14 Restricted Stock Award Agreement between the Registrant and Patrick G. Jones dated May 5, 1999.**

10.15 Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Boland T. Jones.**

10.16 Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Jeffrey A. Allred.**

10.17 Premiere Communications, Inc. 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.30
to the Registrant's Registration Statement on Form S-1 (No. 33-80547)).**

10.18 Form of Director Indemnification Agreement between the Registrant and Non-employee Directors
(incorporated by reference to Exhibit 10.31 to the Registrant's Registration Statement on Form S-1
(No. 33- 80547)).**

10.19 Park Place Office Lease dated May 31, 1993 between Premiere Communications, Inc. and Mara-Met
Venture, as amended by First Amendment dated December 15, 1995 (incorporated by reference to Exhibit
10.34 to the Registrant's Registration Statement on Form S-1 (No. 33-80547)).

10.20 Second and Third Amendment to 55 Park Place Office Lease dated November 5, 1996 between Premiere
Communications, Inc. and Mara-Met Venture (incorporated by reference to Exhibit 10.49 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996).

10.21 Office Lease Agreement dated May 12, 1996 between Premiere Communications, Inc. and Beverly Hills
Center LLC, as amended by the First Amendment dated August 1, 1996 (incorporated by reference to
Exhibit 10.50 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).

10.22 Second Amendment of Lease dated July 1, 1997, between Premiere Communications, Inc. and Beverly Hills
Center LLC (incorporated by reference to Exhibit 10.18 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997).

10.23 Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc., dated as
of March 3, 1997, as amended by Modification of Lease dated August 4, 1997, as amended, by Second
Modification of Lease, dated October 30, 1997 (incorporated by reference to Exhibit 10.19 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).

10.24 Sublease Agreement dated as of December 16, 1997, by and between Premiere Communications, Inc. and
Endeavor Technologies, Inc. (incorporated by reference to Exhibit 10.20 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1997).

92

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

10.25 Form of Officer Indemnification Agreement between the Registrant and each of the executive officers
(incorporated by reference to Exhibit 10.36 to the Registrant's Registration Statement on Form S-1
(No. 33- 80547)).**

10.26 Telecommunications Services Agreement dated December 1, 1995 between Premiere Communications, Inc.
and WorldCom Network Services, Inc. d/b/a WilTel (incorporated by reference to Exhibit 10.40 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).

10.27 Amended and Restated Program Enrollment Terms dated September 30, 1997 by and between Premiere
Communications, Inc. and WorldCom Network Services, Inc., d/b/a WilTel, as amended by Amendment No. I
dated November 1, 1997 (incorporated by reference to Exhibit 10.26 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997).*

10.28 Service Agreement dated September 30, 1997, by and between VoiceCom Systems, Inc. and AT&T Corp.
(incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1997).*

10.29 Strategic Alliance Agreement dated November 13, 1996 by and between the Registrant and WorldCom, Inc.
(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).*

10.30 Investment Agreement dated November 13, 1996 by and between the Registrant and WorldCom, Inc.
(incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).

10.31 Service and Reseller Agreement dated September 28, 1990 by and between Amway Corporation and
Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.33 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended June 30, 1997).*

10.32 Amendment to Service and Reseller Agreement dated as of May 13, 1999 by and between Amway Corporation
and Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 10.28 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1999).*

10.33 Form of Stock Purchase Warrant Agreement (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8 (No. 333-11281)).**

10.34 Form of Warrant Transaction Statement (incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-11281)).

10.35 Form of Director Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-8 (No. 333-17593)).**

10.36 Purchase Agreement, dated June 25, 1997, by and among Premiere Technologies, Inc., Robertson,
Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K
dated July 25, 1997 and filed August 5, 1997).

10.37 1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel Enterprises, Inc. (assumed by the
Registrant) (incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8 (No. 333-29787)).

10.38 1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc. (assumed by the Registrant)
(incorporated by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form S-8 (No.
333-29787)).

10.39 Form of Stock Option Agreement by and between the Registrant and certain current or former employees
of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-29787)).

10.40 Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference to
Exhibit A to the Registrant's Definitive Proxy Statement distributed in connection with the
Registrant's June 11, 1997 annual meeting of shareholders, filed April 30, 1997).**

10.41 First Amendment to Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan
(incorporated by reference to Exhibit 10.43 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).**

10.42 VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the Registrant) (incorporated by reference
to Exhibit 10.44 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).

10.43 VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan (assumed by the Registrant)
(incorporated by reference to Exhibit 10.45 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).

93

Exhibit
Number Description
- --------- -------------------------------------------------------------------------------------------------------

10.44 Premiere Technologies, Inc., Amended and Restated 1998 Stock Plan (incorporated by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999.).

10.45 Amendment No. 1 to the Premiere Technologies, Inc. Amended and Restated 1998 Stock Plan.

10.46 Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by,
reference to Xpedite's Registration Statement on Form S-1 (No. 33-73258)).

10.47 Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by
reference to Xpedite's Registration Statement on Form S-I (No. 33-73258)).

10.48 Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by
reference to Xpedite's Annual Report on Form 10-K for the year ended December 31, 1995).

10.49 Xpedite Systems, Inc. Non-Employee Directors' Warrant Plan (assumed by the Registrant) (incorporated
by reference to Exhibit 10.31 to Xpedite's Annual Report on Form 10-K for the year ended December 31,
1996).

10.50 Xpedite Systems, Inc. Officer's Contingent Stock Option Plan (assumed by the Registrant)
(incorporated by reference to Exhibit 10.30 to Xpedite's Annual Report on Form 10-K for the year
ended December 31, 1996).

10.51 Associate Stock Purchase Plan (incorporated by reference to Appendix A to the Registrant's Definitive
Proxy Statement distributed in connection with the Registrant's June 22, 1999 annual meeting, filed
on May 19, 1999).

10.52 Intellivoice Communications, Inc. 1955 Incentive Stock Plan (assumed by the Registrant).

10.53 Employment Agreement dated as of January 1, 2000 by and between American Teleconferencing Services,
Ltd. And Tehordore P. Schrafft (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2000).

10.54 First Amendment to Sublease Agreement dated as of February 1, 2000 by and between Premiere
Communications, Inc. and Healtheon/WebMD Corporation (incorporated by reference to Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2000).

10.55 PTEK Holdings, Inc. 2000 Directors Stock Plan (incorporated by reference to Exhibit A to the
Registrant's Definitive Proxy Statement distributed in connection with the Registrant's June 7, 2000
annual meeting of shareholders, filed April 28, 2000).**

10.56 Settlement Agreement dated as of April 7, 2000 by and between PTEK Holdings, Inc. and MCI WorldCom,
Inc. (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for
the Quarter Ended June 30, 2000).*

10.57 Amendment No. 1 dated as of January 1, 2000 to Telecommunications Service Agreement dated October 29,
1999 by and between Premiere Technologies, Inc. and MCI WorldCom, Inc. (incorporated by reference to
Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2000).

10.58 Addendum A dated as of January 1, 2000 to Carrier Services Agreement dated as of October 29, 1999 by
and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.3 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2000).

10.59 Credit Agreement dated as of September 29, 2000 by and among Xpedite Systems, Inc., PTEK Holdings,
Inc. and ABN Amro Bank, N.V. (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly
Report on Form 10-Q for the Quarter Ended September 30, 2000).

10.60 Asset Sale Agreement, together with exhibits, dated as of August 25, 2000 by and between Telecare,
Inc. and Premiere Communications, Inc. (incorporated by reference to Exhibit 10.2 to the Registrants
Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2000).

21.1 Subsidiaries of the Registrant.

23.1 Consent of Arthur Andersen LLP.

94