Attached files
| file | filename |
|---|---|
| 8-K/A - EASYLINK SERVICES INTERNATIONAL CORP | v206749_8ka.htm |
| EX-99.1 - EX-99.1 - EASYLINK SERVICES INTERNATIONAL CORP | v206749_ex99-1.htm |
| EX-23.1 - EX-23.1 - EASYLINK SERVICES INTERNATIONAL CORP | v206749_ex23-1.htm |
| EX-99.3 - EX-99.3 - EASYLINK SERVICES INTERNATIONAL CORP | v206749_ex99-3.htm |
EXHIBIT
99.2
Unaudited Financial Statements of
PGISEND (A Carve-Out of Premiere Global Services, Inc.) as of and for the six months
ended June 30, 2010 and 2009.
The
unaudited financial statements of PGISEND (A Carve-Out of Premiere Global
Services, Inc.) were prepared by Premiere Global Services, Inc and represent the
Xpedite Business that was acquired on October 21, 2010 by the
Company.
PGISEND
(A Carve-Out of Premiere Global
Services, Inc.)
BALANCE
SHEETS
(unaudited,
in thousands)
|
June 30,
|
December 31,
|
|||||||
|
2010
|
2009
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and equivalents
|
$ | 12,637 | $ | 11,253 | ||||
|
Accounts
receivable (less allowances of $547 and $670,
respectively)
|
19,033 | 20,048 | ||||||
|
Prepaid
expenses and other current assets
|
2,959 | 1,930 | ||||||
|
Deferred
income taxes, net
|
3,450 | 3,450 | ||||||
|
Total
current assets
|
38,079 | 36,681 | ||||||
|
PROPERTY
AND EQUIPMENT, NET
|
41,116 | 47,841 | ||||||
|
OTHER
ASSETS
|
||||||||
|
Goodwill
|
465 | 465 | ||||||
|
Intangibles,
net of amortization
|
271 | 366 | ||||||
|
Deferred
income taxes, net
|
5,953 | 5,953 | ||||||
|
Restricted
cash
|
97 | 103 | ||||||
|
Other
assets
|
1,729 | 2,252 | ||||||
|
TOTAL
ASSETS
|
$ | 87,710 | $ | 93,661 | ||||
|
LIABILITIES
AND PARENT'S INVESTMENT
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 9,542 | $ | 12,343 | ||||
|
Income
taxes payable
|
1,072 | 1,059 | ||||||
|
Accrued
taxes, other than income taxes
|
526 | 604 | ||||||
|
Accrued
expenses
|
3,874 | 5,181 | ||||||
|
Current
maturities of capital lease obligations
|
209 | 247 | ||||||
|
Accrued
restructuring costs
|
4,060 | 4,423 | ||||||
|
Total
current liabilities
|
19,283 | 23,857 | ||||||
|
LONG-TERM
LIABILITIES
|
||||||||
|
Capital
lease obligations
|
264 | 382 | ||||||
|
Accrued
restructuring costs
|
1,743 | 3,230 | ||||||
|
Accrued
expenses
|
1,194 | 1,385 | ||||||
|
Deferred
income taxes, net
|
6,143 | 6,143 | ||||||
|
Total
long-term liabilities
|
9,344 | 11,140 | ||||||
|
PARENT'S
INVESTMENT
|
||||||||
|
Accumulated
other comprehensive income
|
2,643 | 5,454 | ||||||
|
Accumulated
transactions with Parent
|
56,440 | 53,210 | ||||||
|
Total
Parent's investment
|
59,083 | 58,664 | ||||||
|
TOTAL
LIABILITIES AND PARENT'S INVESTMENT
|
$
|
87,710 | $ | 93,661 | ||||
Accompanying
notes are integral to these financial statements
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
STATEMENTS
OF OPERATIONS
(unaudited,
in thousands)
|
Six Months Ended June 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Net
revenues
|
$ | 58,880 | $ | 66,037 | ||||
|
Operating
expenses:
|
||||||||
|
Cost
of revenues (exclusive of depreciation and amortization shown separately
below)
|
26,411 | 33,493 | ||||||
|
Selling
and marketing
|
11,384 | 13,739 | ||||||
|
General
and administrative (exclusive of expenses shown separately
below)
|
8,144 | 9,199 | ||||||
|
Research
and development
|
3,804 | 3,139 | ||||||
|
Depreciation
|
7,644 | 7,476 | ||||||
|
Amortization
|
45 | 82 | ||||||
|
Restructuring
costs
|
1,353 | 4,648 | ||||||
|
Asset
impairments
|
1,814 | — | ||||||
|
Net
legal settlements and related expenses
|
(154 | ) | 55 | |||||
|
Acquisition-related
costs
|
47 | 19 | ||||||
|
Total
operating expenses
|
60,487 | 71,850 | ||||||
|
Operating
loss
|
(1,607 | ) | (5,813 | ) | ||||
|
Other
(expense) income:
|
||||||||
|
Interest
income, net of interest expense
|
4 | 82 | ||||||
|
Intercompany
interest expense
|
(391 | ) | (300 | ) | ||||
|
Foreign
currency (loss) gain
|
(259 | ) | (702 | ) | ||||
|
Total
other (expense) income, net
|
(646 | ) | (920 | ) | ||||
|
(Loss)
income before income taxes
|
(2,253 | ) | (6,733 | ) | ||||
|
Income
tax expense
|
2,594 | 425 | ||||||
|
Net
loss
|
$ | (4,847 | ) | $ | (7,158 | ) | ||
Accompanying
notes are integral to these financial statements
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
STATEMENTS
OF CASH FLOWS
(unaudited,
in thousands)
|
Six Months Ended June 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net
loss
|
$ | (4,847 | ) | $ | (7,158 | ) | ||
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||||||
|
Depreciation
|
7,644 | 7,476 | ||||||
|
Amortization
|
45 | 82 | ||||||
|
Net
legal settlements and related expenses
|
(159 | ) | 55 | |||||
|
Deferred
income taxes
|
— | 1,725 | ||||||
|
Restructuring
costs
|
1,353 | 4,648 | ||||||
|
Payments
for restructuring costs
|
(3,014 | ) | (1,385 | ) | ||||
|
Asset
impairments
|
1,814 | — | ||||||
|
Equity-based
compensation
|
1,070 | 1,587 | ||||||
|
Provision
for doubtful accounts
|
514 | 302 | ||||||
|
Loss
on disposal of assets
|
— | — | ||||||
|
Changes
in accounts receivable, net
|
(20 | ) | 1,535 | |||||
|
Changes
in prepaid expenses and other current assets
|
(628 | ) | (64 | ) | ||||
|
Changes
in accounts payable and accrued expenses
|
(5,872 | ) | 954 | |||||
|
Net
cash provided by operating activities
|
(2,100 | ) | 9,757 | |||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
Capital
expenditures
|
(3,719 | ) | (7,131 | ) | ||||
|
Other
investing activities
|
— | (51 | ) | |||||
|
Net
cash used in investing activities
|
(3,719 | ) | (7,182 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
Principal
payments under capital lease obligations
|
(206 | ) | (915 | ) | ||||
|
Net
transactions with Parent
|
8,077 | (2,092 | ) | |||||
|
Net
cash provided by financing activities
|
7,871 | (3,007 | ) | |||||
|
Effect
of exchange rate changes on cash and equivalents
|
(668 | ) | (1 | ) | ||||
|
NET
INCREASE IN CASH AND EQUIVALENTS
|
1,384 | (433 | ) | |||||
|
CASH
AND EQUIVALENTS, beginning of period
|
11,253 | 11,358 | ||||||
|
CASH
AND EQUIVALENTS, end of period
|
$ | 12,637 | $ | 10,925 | ||||
Accompanying
notes are integral to these financial statements
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
|
1.
|
THE
COMPANY AND ITS BUSINESS
|
Premiere
Global Services, Inc. (the “Parent”) is a leading global provider of on-demand
communication technologies-based business process improvement
solutions. The Parent is headquartered in Atlanta, GA and has a
global presence in 24 countries. The Parent offers a broad suite of
business applications in two solution sets, including audio and web conferencing
and collaboration and webcasting services in its PGiMeet solutions (the “Meet
Business”) and digital fax, document delivery and notifications services in its
PGiSend solutions (“PGiSend,” the “Send Business” or “our”).
On
October 21, 2010, the parent completed the sale of Xpedite Systems, LLC and all
of the outstanding shares of Xpedite Systems (UK) Limited along with certain
assets and liabilities of Premiere Conferencing (Canada) Limited, which
collectively comprise the Parent’s Send Business for $105.0 million in cash,
subject to downward or a capped upward adjustment to the extent net working
capital is less than or greater than $6.4 million.
|
2.
|
NATURE
OF OPERATION AND BASIS OF
PRESENTATION
|
The
accompanying financial statements present the financial position, results of
operations, and cash flows of the Send Business as if the Send Business was
operated as a separate entity and have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). The financial position and results of operations of the
Send Business have been “carved-out” from the Parent’s consolidated financial
statements and presented herein as if the Send Business was a separate
entity.
The Send
Business includes fax and document delivery tools integrated with IP fax
technology and notifications and reminders between businesses and their
constituents delivered via automated speech, email, fax and SMS
technologies.
As
discussed further in Note 4, the accompanying financial statements include the
revenues, costs, assets and liabilities that are directly attributable to the
Send Business and have been prepared from the separate records maintained by the
Parent’s corporate accounting department that relate to the Send Business (the
“Direct Resources”). In addition, the financial statements include certain
costs, assets and liabilities related to (i) company resources that are shared
by the Send Business and the Meet Business (the “Shared Resources”) and (ii)
corporate overhead resources that are shared by the Send Business and the Meet
Business (the “Corporate Costs”). Amounts involving management’s
estimates, including Shared Resources and Corporate Costs, have been allocated
based on a percentage of headcount, personnel costs, revenue or estimates of use
relative to the Parent’s overall totals. The Parent believes the
allocations of these amounts were determined on a reasonable basis and,
therefore, approximate substantially all of the material incremental amounts
that would have been recognized had the Send
Business been operated on a stand-alone basis. These allocated amounts, however,
are not necessarily indicative of the actual amounts that might have been
incurred or realized had the Send Business operated as an unaffiliated entity
during the period presented. Moreover, no independent studies or third party
valuations have been obtained to validate the reasonableness of these allocated
amounts.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
The
financial statements have been prepared on the historical cost basis, and
present the Send Business’s financial position, results of operations and cash
flows as derived from the Parent’s historical financial statements.
Recently
Adopted Accounting Pronouncements
In
February 2010, the Financial Accounting Standards Board, or FASB, issued
Accounting Standards Update, or ASU, No. 2010-09, “Amendments to Certain
Recognition and Disclosure Requirements,” as an amendment to FASB Accounting
Standards Codification, or ASC, Topic 855, “Subsequent Events.” ASU
No. 2010-09 reinforced the requirement for non-SEC registrants to disclose the
date through which management evaluated subsequent events in the financial
statements and whether that date is the date the financial statements were
issued or were available to be issued. The management of the Send
Business has evaluated subsequent events through October 12, 2010, the date
these financial statements were available to be issued.
In
January 2010, the FASB issued ASU No. 2010-06 “Fair Value Measurements and
Disclosures,” which requires disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies as well
as in annual financial statements. The new disclosures are effective
for interim and annual reporting periods beginning after December 15,
2009. The adopted provisions of ASU No. 2010-06 are limited to
disclosures and did not have any effect on our consolidated financial position
or result of operations. Fair value approximated the carrying value
of assets and liabilities at June 30, 2010.
In
October 2009, the FASB issued ASU No. 2009-13, “Revenue Recognition,
Multiple-Deliverable Revenue Arrangements,” an amendment to its accounting
guidance on revenue arrangements with multiple deliverables. This new
accounting guidance addresses the unit of accounting for arrangements involving
multiple deliverables and how consideration should be allocated to separate
units of accounting, when applicable. In the same month, the FASB
also issued ASU No. 2009-14, “Software, Certain Revenue Arrangements That
Include Software Elements,” which changes revenue recognition for tangible
products containing software and hardware elements. This update
excludes from software revenue recognition all tangible products containing both
software and non-software components that function together to deliver the
product’s essential functionality and includes such products in the
multiple-deliverable revenue guidance discussed above. This guidance
will be effective for fiscal years beginning on or after June 15,
2010. Early adoption is permitted. All guidance contained within
these updates must be
adopted in the same period. We do not expect this guidance to have a
material impact on our consolidated financial position or results of
operations.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
|
3.
|
COMPREHENSIVE
LOSS
|
Comprehensive
loss represents the change in equity of a business during a period, except for
investments by owners and distributions to owners. Comprehensive loss
for the six months ended June 30, 2010 and 2009 was $7.7 million and $5.7
million, respectively. The differences between net income, as reported and
comprehensive loss are foreign currency translation adjustments. The changes in
the accumulated other comprehensive gain balance presented in the statements of
Parent’s investment were not impacted by taxes during the six months ended June
30, 2010 and 2009.
|
4.
|
INCOME
TAXES
|
Significant
judgment is required to determine our provision for income taxes, including
deferred tax assets, deferred tax liabilities and valuation
allowances. Deferred tax assets and liabilities reflect the tax
effect of temporary differences between asset and liability amounts recognized
for income tax purposes and the amounts recognized for financial reporting
purposes. Deferred tax assets and liabilities are measured by
applying enacted statutory tax rates applicable to future years in which the
deferred tax assets or liabilities are expected to be settled or
realized. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized on a more
likely than not basis.
The
change in income tax expense between the six months ended June 30, 2010 and 2009
was related to a fluctuation in operating loss, changes to the income mix
between international tax jurisdictions and changes in valuation allowances
against deferred tax assets for certain foreign subsidiaries. Our income tax
rate varied from federal rates during the six months ended June 30, 2010 and
2009 due to valuation allowances, the effects of income shifts between certain
foreign jurisdictions and certain tax credits.
|
5.
|
RELATED
PARTY TRANSACTIONS AND CORPORATE
ALLOCATIONS
|
As
discussed in Note 2, the accompanying financial statements include the revenues,
costs, assets and liabilities that are directly attributable to the Send
Business. Accordingly, certain amounts included in these financial
statements have been derived by the Parent based on actual amounts directly
attributable to the Send Business or management’s best estimate of the amounts
directly attributable to the Send Business.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
The
Accumulated transactions with Parent balances in the accompanying balance sheets
include the original investment in the Send Business, accumulated earnings of
the Send Business and contributions from and distributions to the Parent
and the Meet Business. Such contributions from and distributions to
the Parent and the Meet Business arise from shared resources, our centralized
approach to cash management within specific tax jurisdictions and the allocation
by the Parent of certain amounts incurred by them that are directly attributable
to supporting the Send Business.
The
following table details activity that impacted the Accumulated transactions with
Parent balances between December 31, 2009 and June 30, 2010 related to
contributions from and distributions to the Parent and the Meet Business from
the Send Business:
|
Balance
— December 31, 2009
|
$ | 53,210 | ||
|
Transactions
between the Send Business and Parent
|
(2,286 | ) | ||
|
Transactions
related to shared resources
|
7,254 | |||
|
Corporate
allocations for support costs
|
3,109 | |||
|
Net
loss
|
(4,847 | ) | ||
|
Balance
— June 30, 2010
|
$ | 56,440 |
There are
no intercompany purchase or sale transactions between the Parent or the Meet
business and the Send Business. Under the Parent’s centralized cash
management approach, in tax jurisdictions where it is possible, all excess cash
is remitted to the Parent. The net of transactions between the Parent
and the Send Business are reflected in Accumulated transactions with Parent in
the accompanying balance sheets. We have incurred interest charges on
certain intercompany loans which are classified as intercompany interest expense
in our statements of operations.
As
discussed in Note 2, the Send Business has been allocated a portion of expenses
related to (i) the Parent’s executive management and corporate personnel
salaries and related benefits; and (ii) the Parent’s corporate costs to operate
its corporate finance, accounts payable, internal audit, legal, tax, investor
relations, marketing and human resources functions. The allocations
of the Parent’s corporate costs were made based on estimates of the proportion
of corporate expenses related to the Send Business, utilizing such factors as
revenues, number of employees, salaries and wages expenses and other applicable
factors. In the opinion of management, these allocations have been
made on a reasonable basis. The costs of these services charged to
the Send Business may not reflect the actual costs the Send Business would have
incurred for similar services as a stand-alone company. Moreover, no
independent studies or third-party valuations have been obtained to validate the
reasonableness of these allocated amounts.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
Corporate
costs allocated to the Send Business are as follows (in thousands):
|
Six Months Ended
|
||||||||
|
June 30,
2010
|
June 30,
2009
|
|||||||
|
Cost
of revenues
|
$ | 2 | $ | 20 | ||||
|
General
and administrative expenses
|
2,103 | 2,392 | ||||||
|
Selling
and marketing expenses
|
135 | 795 | ||||||
|
Research
and development expenses
|
237 | 179 | ||||||
|
Depreciation
|
295 | 173 | ||||||
|
Restructuring
costs
|
249 | 49 | ||||||
|
Asset
impairment
|
1 | — | ||||||
|
Net
legal settlements and related expenses
|
28 | — | ||||||
|
Acquisition-related
costs
|
47 | 19 | ||||||
|
Foreign
currency loss
|
12 | 175 | ||||||
|
Total
corporate expenses, pre-tax
|
$ | 3,109 | $ | 3,802 | ||||
Included
within General and administrative expenses, selling and marketing expenses and
research and development expenses are (i) personnel related costs including
salaries, benefits, contract labor and equity-based compensation; (ii)
facilities related costs including utilities, taxes and operating expenses; and
(iii) general corporate overhead costs including insurance, legal and
professional fees, marketing costs and software and hardware costs.
|
6.
|
RESTRUCTURING
COSTS
|
Restructuring
costs for the six months ended June 30, 2010 are as follows (in
thousands):
|
Balance at
December
31, 2009
|
Provisions
|
Cash
payments
|
Non-cash
|
Balance at
June 30,
2010
|
||||||||||||||||
|
Accrued
restructuring costs:
|
||||||||||||||||||||
|
Severance
and exit costs
|
$ | 2,976 | $ | 785 | $ | (2,185 | ) | $ | (163 | ) | $ | 1,413 | ||||||||
|
Contractual
obligations
|
4,677 | 568 | (829 | ) | (26 | ) | 4,390 | |||||||||||||
|
Total
restructuring costs
|
$ | 7,653 | $ | 1,353 | $ | (3,014 | ) | $ | (189 | ) | $ | 5,803 | ||||||||
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
Realignment
of Workforce – 2010
During
the six months ended June 30, 2010, we executed a restructuring plan to
consolidate and streamline various functions of our work force. We
incurred restructuring costs of $1.4 million and asset impairment charges of
$1.8 million associated with these efforts. As part of these
consolidations, we eliminated approximately 20 positions. During the
six months ended June 30, 2010, we recorded total severance and exit costs of
$1.1 million. Additionally, during the six months ended June 30,
2010, we recorded $0.1 million of lease termination costs associated with an
office location in North America. The expenses associated with these
activities are reflected in “Restructuring costs” in our statements of
operations. Our reserve for the 2010 restructuring costs was $0.8
million at June 30, 2010. We anticipate these severance-related costs
will be paid over the next year and these lease termination costs will be paid
over the next 18 months.
Realignment
of Workforce – 2009
During
the year ended December 31, 2009, we executed a restructuring plan to
consolidate and streamline various functions of our work force. As
part of these consolidations, we eliminated approximately 160
positions. During the year ended December 31, 2009, we recorded total
severance and exit costs of $8.9 million. Additionally, during the
year ended December 31, 2009, we recorded $1.2 million of lease termination
costs associated with office locations in North America and
Europe. In the six months ended June 30, 2010, we adjusted the
initially recorded charges for severance-related costs and lease termination
costs by $(0.3) million and $0.1 million, respectively. The expenses
associated with these activities are reflected in “Restructuring costs” in our
statements of operations. Our reserve for the 2009 restructuring
costs was $1.3 million at June 30, 2010. We anticipate these
severance-related costs will be paid over the next year, and these lease
termination costs will be paid over the next nine years.
Realignment
of Workforce – Prior to 2008
Our
remaining reserve for restructuring costs incurred prior to 2008 is associated
with lease termination costs and totaled $3.7 million at June 30,
2010. During the year ended December 31, 2009, we revised assumptions
used in determining the estimated costs associated with these lease terminations
incurred prior to 2008. As a result, an additional $3.2 million of
lease termination costs was recorded. In the six months ended June
30, 2010, we adjusted the initially recorded charges for lease termination costs
by $0.4 million. The expenses associated with these activities are
reflected in “Restructuring costs” in our statements of operations. We
anticipate these remaining lease termination costs will be paid over the next
six years.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
|
7.
|
GOODWILL
AND INTANGIBLE ASSETS
|
Other
Intangible Assets
Summarized
below are the carrying value and accumulated amortization by intangible asset
class at June 30, 2010 and December 31, 2009 (in thousands):
|
June 30, 2010
|
December 31, 2009
|
|||||||||||||||||||||||
|
Gross
carrying
value
|
Accumulated
amortization
|
Net
carrying
value
|
Gross
carrying
value
|
Accumulated
amortization
|
Net
carrying
value
|
|||||||||||||||||||
|
Other
Intangible assets:
|
||||||||||||||||||||||||
|
Customer
lists
|
$ | 24,861 | $ | (24,841 | ) | $ | 20 | $ | 25,864 | $ | (25,831 | ) | $ | 33 | ||||||||||
|
Non-compete
agreements
|
269 | (269 | ) | — | 280 | (280 | ) | — | ||||||||||||||||
|
Developed
technology
|
330 | (275 | ) | 55 | 330 | (242 | ) | 88 | ||||||||||||||||
|
Other
|
242 | (46 | ) | 196 | 289 | (44 | ) | 245 | ||||||||||||||||
|
Total
other intangible assets
|
$ | 25,702 | $ | (25,431 | ) | $ | 271 | $ | 26,763 | $ | (26,397 | ) | $ | 366 | ||||||||||
Estimated
amortization expense related to other intangible assets for the full year 2010
and the next four years is as follows (in thousands):
|
Year
|
Estimated
Amortization
Expense
|
|||
|
2010
|
$ | 91 | ||
|
2011
|
$ | 36 | ||
|
2012
|
$ | 3 | ||
|
2013
|
$ | 3 | ||
|
2014
|
$ | 3 | ||
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
|
8.
|
CAPITAL
LEASE OBLIGATIONS
|
Capital
lease obligations at June 30, 2010 and December 31, 2009 are as follows (in
thousands):
|
June 30,
2010
|
December
31, 2009
|
|||||||
|
Capital
lease obligations
|
$ | 473 | $ | 629 | ||||
|
Less
current portion
|
(209 | ) | (247 | ) | ||||
|
Total
capital lease obligations
|
$ | 264 | $ | 382 | ||||
Future
minimum lease payments under capital leases consist of the following at June 30,
2010 (in thousands):
|
2010
|
$ | 121 | ||
|
2011
|
202 | |||
|
2012
|
187 | |||
|
2013
|
20 | |||
|
Total
minimum lease payments
|
530 | |||
|
Less
amounts representing interest
|
(57 | ) | ||
|
Present
value of minimum lease payments
|
473 | |||
|
Less
current portion
|
(209 | ) | ||
| $ | 264 |
|
9.
|
EQUITY-BASED
COMPENSATION
|
The
Parent has certain stock plans under which its restricted stock awards, stock
options, stock appreciation rights, restricted stock units and other stock-based
awards may be issued to employees, directors, non-employee consultants and
advisors. During the six months ended June 30, 2010 and 2009 only restricted
stock awards were issued. The compensation committee of the Parent’s board of
directors administers these stock plans.
The fair
value of restricted stock awards is the market value of the stock on the date of
grant. The effect of vesting conditions that apply only during the requisite
service period is reflected by recognizing compensation cost only for the
restricted stock awards for which the requisite service is rendered. As a
result, we are required to estimate an expected forfeiture rate, as well as the
probability that performance conditions that affect the vesting of certain
stock-based awards will be achieved, and only recognize expense for those shares
expected to vest.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
We
estimate that forfeiture rate based on historical experience of our stock-based
awards that are granted, exercised and voluntarily canceled. If our
actual forfeiture rate is materially different from our estimate, the
stock-based compensation expense could be significantly different from what we
have recorded in the current period. We use a forfeiture rate of 1.5%
for each of the six months ended June 30, 2010 and 2009.
The
following table presents total equity-based compensation expense for restricted
stock awards included in the line items below in our statements of operations
(in thousands):
|
Six Month Ended
June 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cost
of revenues
|
$ | 19 | $ | 22 | ||||
|
Selling
and marketing
|
212 | 365 | ||||||
|
Research
and development
|
209 | 303 | ||||||
|
General
and administrative
|
630 | 897 | ||||||
|
Equity-based
compensation expense
|
1,070 | 1,587 | ||||||
|
Income
tax benefits
|
(375 | ) | (555 | ) | ||||
|
Total
equity-based compensation expense, net of tax
|
$ | 695 | $ | 1,032 | ||||
Total
equity-based compensation expense includes cost related to stock awards of the
Parent granted to employees of the Send Business, Shared Resources and Corporate
Costs. The total amount of equity based compensation directly
attributable to the Send Business for employees and shared resources was $0.5
million and $1.0 million for the six months ended June 30, 2010 and 2009,
respectively. The total amount of equity based compensation allocated
to the Send Business as a Corporate Cost was $0.5 million and $0.6 million for
the six months ended June 30, 2010 and 2009, respectively. Costs
related to Shared Resources and Corporate Cost employees have been allocated, as
described in Notes 2 and 4.
PGISEND
(A
Carve-Out of Premiere Global Services, Inc.)
NOTES
TO FINANCIAL STATEMENTS
|
10.
|
ACCRUED
EXPENSES
|
Accrued
expenses at June 30, 2010 and December 31, 2009 are as follows (in
thousands):
|
June 30,
2010
|
December 31,
2009
|
|||||||
|
Short
Term Accrued Expenses
|
||||||||
|
Accrued
wages and wage related taxes
|
$ | 1,332 | $ | 1,980 | ||||
|
Accrued
sales commissions
|
646 | 848 | ||||||
|
Accrued
professional fees
|
702 | 784 | ||||||
|
Accrued
utilities
|
166 | 224 | ||||||
|
Deferred
rent
|
142 | 142 | ||||||
|
Other
|
886 | 1,203 | ||||||
| $ | 3,874 | $ | 5,181 | |||||
|
Long
Term Accrued Expenses
|
||||||||
|
Deferred
rent
|
$ | 718 | $ | 760 | ||||
|
Asset
retirement obligations
|
390 | 465 | ||||||
|
Other
|
86 | 160 | ||||||
| $ | 1,194 | $ | 1,385 | |||||