Revenue for the fourth quarter of 1999 totaled $10.4 million, representing a 25.1% increase over the $8.3 million reported in the same period in 1998. Net income in the fourth quarter of 1999 was $3.2 million, or $0.15 per share, based on 21.1 million split-adjusted diluted shares outstanding. This result compares to net income of $2.3 million reported in the fourth quarter of 1998, or $0.14 per share based on 16.9 million split- adjusted diluted shares outstanding. 

The Pegasus board of directors declared a three-for-two stock split effected in the form of a stock dividend in January, 2000. On a pre-split basis, fourth quarter 1999 net income was $0.23 per share, compared to $0.21 per share for the same quarter in 1998. Net income in the fourth quarter of 1999 reflects an income tax rate of 33.1%, while net income for the fourth quarter of 1998 reflects a de minimis income tax rate as a result of net operating loss carryforwards. Adjusting fourth quarter 1998 net income to reflect a tax rate comparable to the tax rate included in net income for the fourth quarter 1999, fourth quarter 1998 net income would have been $0.10 per share based on split-adjusted diluted shares outstanding.

For the twelve months ending December 31, 1999, Pegasus reported revenue of $38.0 million, representing a 30.9% increase over revenues of $29.1 million in 1998. Net income for 1999 was $8.7 million, or $0.44 per share, based on 19.7 million split-adjusted diluted shares outstanding. This result compares to net income of $5.4 million, or $0.32 per share, reported for 1998, based on 16.8 million split-adjusted diluted shares outstanding. Net income in 1999 reflects an income tax rate of 35.1%, while 1998 reflects a de minimis income tax rate as a result of net operating loss carryforwards.

“We are extremely pleased with Pegasus’ fourth quarter financial performance as it represents our tenth consecutive quarter of record transaction volumes,” stated John F. Davis III, president and chief executive officer of Pegasus Systems. “Our revenue from Internet-based services more than doubled during the quarter. We now ‘power’ online hotel reservations for 70 Web sites, allowing customers to have access to more than 35,000 hotel properties worldwide. Our Internet bookings for the fourth quarter of 1999 increased 165% over the fourth quarter of 1998, representing an estimated $150 million in hotel room sales. For the year, Pegasus processed over 2.1 million online reservations, compared to 750,000 in 1998. The 2.1 million Internet reservations represents an
estimated $500 million in hotel room sales.”

Mr. Davis continued, “Pegasus Commission Processing remains the world’s leading provider of hotel commission payment processing. In 1999, Pegasus processed and paid over $320 million in commission payments to more than 85,000 member travel agencies worldwide, a 25.6% increase over 1998. With the addition of Carlson Wagonlit Travel in the fourth quarter, four of the five largest travel agencies in the U.S.(1) now use the Pegasus Commission Processing service.

“Pegasus Business Intelligence continued to make progress during the fourth quarter, signing on several more hotel customers for guest data warehouses and several more for strategic market information, including Bass Hotels and Resorts, Shangri-La Hotels and Resorts, and Choice Hotels International.

“Looking forward, we believe Pegasus is well-positioned in each of its businesses for strong growth in 2000. We are making progress in completing the acquisition of REZsolutions, and continue to believe that it represents a major strategic growth opportunity that complements Pegasus’ core technologies and solutions. We remain
focused on growing each of our business segments and expanding our central position in the transaction flow between hoteliers, travel agencies and consumers,” concluded Mr. Davis.

Except where otherwise stated, references to shares outstanding herein are split-adjusted diluted giving effect to the company’s three for two stock split (in the form of a dividend) effected January 7, 2000 for stockholders of record December 20, 1999.

Pegasus Systems, Inc. (http://www.pegsinc.com) provides electronic commerce and transaction processing solutions to hotels, travel agencies, meetings and convention planners, corporate travel departments and Internet businesses worldwide, as well as operates its own consumer travel reservations site, TravelWeb.com
(http://www.travelweb.com). Pegasus’ customers include more than 32,000 hotel properties around the globe and nine of the 10 largest hotel companies in the world based on total number of guest rooms(2). Pegasus Systems is headquartered in Dallas and has offices in London. The company’s stock is traded on the Nasdaq National
Market under the symbol PEGS.

This news release contains statements relating to future results, including services to be offered by Pegasus Systems, which are forward-looking statements regarding future events and the future financial performance of the company and for which no assurances can be made. 

1) Travel Management Convention Daily, July 18, 1999, “Top 25 U.S. Travel Agencies”
2) Business Travel News, May 31. 1999.