Pegasus Solutions Announces it is Ending Property Management System Agreement with IHG; Company Also Announces It is Exiting Pro
June 29 2005 - 11:20AM
Business Wire
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(TM) and Unirez by Pegasus(TM);
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. About
Pegasus 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(TM) and Unirez by Pegasus(TM), 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.
Forward-looking statements involve various risks and uncertainties.
The company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain and the actual
results and timing of certain events could differ materially from
current expectations. Factors that could cause or contribute to
such a difference include, but are not limited to, the inability of
the company to sell the PMS operations, risks associated with a
sale transaction and the inability of the Company to terminate the
service as expected, as well as other factors detailed in the
company's Securities and Exchange Commission filings. The company
disclaims any intention or obligation to update publicly or review
such statements whether as a result of new information, future
events or otherwise.
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