EasyLink Services International Corporation Announces Fiscal Fourth Quarter and Year End 2009 Financial Results

http://www.businesswire.com/news/home/20091029006395/en

NORCROSS, Ga.--(Business Wire)--
EasyLink Services International Corporation ("EasyLink" or the "Company")
(NASDAQ: ESIC) a global provider of business-to-business messaging services
reported fourth quarter and year end 2009 revenue of $20.7 million and $85.4
million, respectively, a net loss of $3.2 million and $11.2 million,
respectively, and adjusted EBITDA of $3.9 million and $19.0 million,
respectively.

"Despite the global economic downturn and the impact of foreign currency on our
business, we are pleased with our 2009 results," said Tom Stallings, CEO of
EasyLink. "We have continued to focus on operational excellence to drive value
to all stakeholders of EasyLink. In 2009, we made some significant changes in
our operations including, refinancing our debt in one of the toughest credit
environments in recent history, streamlining our operations and facilities,
enhancing our sales and marketing team and strategic investments in our
business."

Financial Review

Revenue for the fourth quarter was $20.7 million with $10.2 million coming from
On Demand Messaging and $10.5 million from Supply Chain Messaging. Revenue for
the full fiscal year 2009 was $85.4 million with $42.5 million coming from On
Demand Messaging and $42.9 million from Supply Chain Messaging.

Gross margin for the fourth quarter was 68.3% and was 70.0% for the full year
2009. Supply Chain Messaging gross margins were 69.5% in the fourth quarter and
71.7% for the full year 2009. On Demand Messaging gross margins were 67% in the
fourth quarter and 68.4% for the full year 2009.

Net loss in the fourth quarter was $3.2 million. For the full year 2009 the net
loss was $11.2 million and included onetime non-cash charges for a loss on
extinguishment of debt, write-off of goodwill and intangible assets as well as
recurring non-cash charges for stock based compensation totaling approximately
$10.7 million.

Adjusted EBITDA for the fourth quarter of fiscal 2009 was approximately $3.9
million and approximately $19.0 million for the full fiscal year 2009. EasyLink
provides adjusted EBITDA in this press release as additional information of its
operating results. This measure is not in accordance with, or an alternative
for, generally accepted accounting principles ("GAAP") and may be different from
non-GAAP EBITDA measures used by other companies. EasyLink believes that this
presentation of adjusted EBITDA facilitates investors' understanding of its
historical operating trends, because it provides an important supplemental
measurement in evaluating the operating results of our business. A
reconciliation of Adjusted EBITDA to net income is set forth below. This press
release should be read in conjunction with the Company's Form 8-K earnings
release filed with the Securities and Exchange Commission for the fiscal quarter
ended July 31, 2009.

Investor Conference Call

The Company plans to hold a conference call on Friday, October 30, 2009 at 8:30
a.m. EDT to discuss the fourth quarter and fiscal year end 2009 results in
detail.

To participate in the conference call, all callers should dial 1-888-239-5257.
Please plan to dial in 5-10 minutes before the start of the call to facilitate a
timely connection.

Forward-Looking and Cautionary Statements

Except for the historical information and discussion contained herein,
statements contained in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements. These and other risk factors are
set forth under the caption "Risk Factors" in the Company's Annual Report on
Form 10-K, the Company's quarterly reports on Form 10-Q and the Company's other
filings with the Securities and Exchange Commission. These filings are available
on a website maintained by the Securities and Exchange Commission at
www.sec.gov.

The Company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein as a result of new information, future events or otherwise.

About EasyLink Services International Corporation

EasyLink Services International Corporation ("EasyLink") (NASDAQ: ESIC) offers a
comprehensive portfolio of "any to any" business messaging and transaction
services that can bridge the most challenging technology gaps while creating
significant cost efficiencies across an organization. From Desktop Fax and
Production Messaging to EDI, Managed File Transfer, Document Capture and
Management, and Telex, we help companies drive costs out of their operations.
For more than two decades, we have had a proven track record of providing
effective, reliable and secure communications. We continue to advance our
technology so that our customers can benefit from improved messaging solutions.
For more information on EasyLink, visit www.easylink.com.

EASYLINK SERVICES INTERNATIONAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)

Three Months Ended Twelve Months Ended
July 31, July 31,
2009 2008 (audited) 2009 2008 (audited)
(unaudited) (unaudited)

Service revenue $ 20,656 $ 23,925 $ 85,366 $ 92,161
Cost of services 6,549 6,819 25,572 26,565
Gross Profit 14,107 17,106 59,794 65,596

Operating expenses:
Product development and enhancement 1,613 2,250 7,515 8,233
Selling and marketing 3,509 3,425 13,290 11,632
General and administrative 6,872 7,927 29,520 29,847
Goodwill and Intangible Impairment - - 4,246 -

Operating income 2,113 3,504 5,223 15,884

Other income (expense):
Interest income (expense) ,net (515 ) (2,220 ) (10,966 ) (12,089 )
Equity in Losses in Investment - - - (930 )
Loss on extinguishment of debt (5,502 ) - (5,502 ) -
Other income (expense) (959 ) (7 ) (555 ) 996

Income (loss) before income taxes (4,863 ) 1,277 (11,800 ) 3,861

(Benefit) provision for income taxes (1,616 ) (6,827 ) (621 ) (12,439 )

Net income (loss) (3,247 ) 8,104 (11,179 ) 16,300

Dividends on preferred stock (184 ) (50 ) (333 ) (200 )

Income (loss) attributable to common stockholders $ (3,431 ) $ 8,054 $ (11,512 ) $ 16,100

EASYLINK SERVICES INTERNATIONAL CORPORATION

Consolidated Balance Sheets
(in thousands)

July 31, July 31,
2009 2008
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,972 $ 32,091
Accounts receivable, net 11,509 13,576
Other current assets 3,836 5,414
Total current assets 26,317 51,081

Property and equipment, net 8,231 8,552
Goodwill and other intangible assets, net 56,248 67,953
Other long term assets 5,521 3,939
Total assets $ 96,317 $ 131,525

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 9,689 $ 13,504
Current portion of long term debt 9,495 7,052
Other current liabilities 1,848 1,862
Total current liabilities 21,032 22,418

Long term debt 17,512 47,497
Other liabilities 554 1,006
Total liabilities 39,098 70,921

Stockholders' Equity:
Preferred stock (a) (a)
Common Stock 273 251
Additional paid-in capital 138,463 125,457
Treasury Stock (2,122 ) (303 )
Accumulated other comprehensive loss (4,442 ) (1,063 )
Accumulated deficit (74,953 ) (63,738 )
Total stockholders' equity 57,219 60,604

Total liabilities and stockholders' equity $ 96,317 $ 131,525
(a) less than 1,000

EASYLINK SERVICES INTERNATIONAL CORPORATION

Calculation of Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (unaudited, includes non-cash compensation, intangible asset impairments and loss on extinguishment of debt)
(in thousands)

Three Months Ended July 31, Twelve Months Ended July 31,
2009 2008 2009 2008
Net Income $ (3,247 ) $ 8,104 $ (11,179 ) $ 16,300
Interest 533 2,379 11,137 12,844
Taxes (1,616 ) (6,827 ) (621 ) (12,439 )
Depreciation and amortization 1,961 2,152 8,429 8,457
Non-cash compensation 195 340 934 686
Asset Impairment/Other 6,081 - 10,326 -
Adjusted EBITDA $ 3,907 $ 6,148 $ 19,026 $ 25,848

EasyLink Services International Corporation
Glen Shipley, 678-533-8004
gshipley@easylink.com
or
Andrew Kaminsky, 917-842-2591
Investor Relations
andrew@edgewoodcap.com

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