System Agreement with InterContinental Hotels Group
Pegasus Exiting Property Management System Business
|DALLAS (June 29, 2005) — Pegasus Solutions, Inc.
(Nasdaq: PEGS) today announced that it has reached a mutual agreement with
InterContinental Hotels Group to discontinue the use of the PegasusCentral
Property Management System (PMS). The PMS product will no longer be used
in the Holiday Inn Express properties currently using the system, and there
will be no new installations.
“After a careful evaluation with IHG, we concluded that we could not meet their needs with PegasusCentral and generate the kind of revenues and profitability that we expect from our products and services,” said John F. Davis III, president and CEO of Pegasus. The company will continue to support PegasusCentral during a short transition period.
“It’s been our pleasure to work with Pegasus over the last four years, and we look forward to continuing our relationship as they serve our distribution and financial services needs,” said Angela Brav, IHG’s senior vice president of Applied Technology.
Pegasus also announced its intention to exit the property management system business. The company’s PMS products have both chain and independent hotel customers, including a private-label PMS for Best Western hotels. The company further commented that it is currently in discussions with potential buyers to sell all or parts of its PMS business. The PMS business is expected to be sold within one year.
“We’ve had a long run in the property management system business,” said Davis, “and while we will no longer develop our own system, we intend to work closely with a number of property management companies to ensure their products integrate with our central reservation and distribution products.” The integration of these products will pave the way for delivery of the Next Generation Hospitality Engine, an effort which Pegasus has been leading for the last year with a number of hotel chains.
As a result of the company’s termination of its property management system agreement with IHG and the company’s plans to discontinue its PMS business, Pegasus anticipates that it will incur a substantially non-cash after-tax charge in the range of $10 to $12 million in the second quarter of 2005 to write down the carrying value of PMS assets to their estimated realizable value. This charge includes an estimated $1.1 million (pre-tax) of cash expenditures for transition costs. Pegasus expects to classify the PMS business as a discontinued operation in accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
With its four service lines—representation services, including Utell by Pegasus™ and Unirez by Pegasus™; reservation services; financial services; and, distribution services—Pegasus provides the most comprehensive set of technology solutions and services to hotels and travel distributors around the world. Every product is designed to streamline customers’ end-to-end processes, maximize their revenue and profitability, and help them capitalize on opportunity.
Dallas-based Pegasus Solutions, Inc. (Nasdaq: PEGS) is a global leader in providing technology and services to hotels and travel distributors. Founded in 1989, Pegasus’ customers include a majority of the world’s travel agencies and nearly 60,000 hotel properties around the globe. Pegasus’ services include central reservation systems, electronic distribution services, commission processing and payment services, and marketing representation services. The company’s representation services, including Utell by Pegasus™ and Unirez by Pegasus™, are used by more than 7,000 member hotels in 140 countries, making Pegasus the hotel industry’s largest third-party marketing and reservations provider. Pegasus has 18 offices in 13 countries, including regional hubs in London, Scottsdale and Singapore. For more information, please visit www.pegs.com.
Some statements made in this press release are forward-looking statements within the meaning of the federal securities laws, including statements using terminology such as “may,” “will,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue,” or a similar negative phrase or other comparable terminology regarding beliefs, hopes, plans, expectations or intentions for the future.
Susan K. Cole-Conner
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