PBIZ Private Business (MM)

Private Business, Inc. (NASDAQ:PBIZ), a leading provider of financial technology to community banks and middle-market businesses, today announced its operating results for the second quarter and first six months of 2005. Revenues for the three months ended June 30, 2005, totaled $9.5 million, compared with $10.2 million in the second quarter of the previous year. Operating income was $1.2 million for the second quarter of 2005 compared with operating income of $1.2 million for the second quarter of 2004. Net income available to common shareholders totaled $125,000, or $0.01 per diluted share, in the second quarter of 2005, versus net income available to common shareholders of $270,000, or $0.02 per diluted share, in the year-earlier quarter. For the six months ended June 30, 2005, revenues totaled $18.7 million, compared with $20.0 million in the corresponding period of the prior year. Operating income for the six months ended June 30, 2005, was $1.9 million, versus operating income of $192,000 in the first half of 2004. Net loss available to common shareholders totaled $(36,000), or $(0.00) per diluted share in the first half of 2005, compared with a net loss available to common shareholders of $(883,000), or $(0.06) in the year-earlier period. As previously reported, the Company's operating results for the first six months of 2004 reflected two one-time charges: a write-off of unamortized deferred financing costs related to the 1998 Credit Agreement and the expense for directors' and officers' insurance premiums, totaling $1.7 million. Operating income for the first six months of 2005 and 2004, excluding the one-time charges described above, would have been $1.9 million and $1.9 million, respectively, and net income, which excludes preferred stock dividends and a one-time gain related to recovery of non-trade receivables, would have been $1.0 million and $1.0 million, respectively. Diluted loss per share for the six months ended June 30, 2005 and 2004, excluding the one-time charges, would have been $(0.00) and $(0.00), respectively, versus the $(0.00) loss per share for the six months ended June 30, 2005, and the $(0.06) loss per share for the six months ended June 30, 2004, as reported. Revenues for the second quarter ended June 30, 2005, totaled $9.5 million compared with $9.2 million for first quarter 2005. Operating expenses for the second quarter ended June 30, 2005, totaled $8.3 million compared with $8.5 million for first quarter 2005. Operating income for the second quarter ended June 30, 2005, totaled $1.2 million compared with $693,000 for first quarter of 2005. Net income available to common shareholders for the second quarter ended June 30, 2005, totaled $125,000 or $0.01 per diluted share compared with a net loss of ($161,000) or ($0.01) per diluted share for the first quarter of 2005. Commenting on the second quarter and first six months of 2005 results, Henry M. Baroco, Private Business' Chief Executive Officer and Board member, stated, "We are continuing to work diligently to grow our top line by hiring top quality sales personnel and training them effectively. The first six months results do not meet our expectations from a revenue perspective. I am pleased to see quarter-over-quarter revenue growth, although the second quarter revenue decreased by 6.5% compared with the same period in 2004. I am also encouraged by our operating income results of $1.2 million, which is equal to the second quarter of 2004 on slightly lower revenues. "I am excited about the recently announced acquisition of KVI Capital, Inc. I have been a proponent of offering a leasing product to our customer base, and I believe KVI offers us a great opportunity to help us meet our long-term growth plans while providing a much needed financing product to the community-based financial institution market. "We will continue to explore other acquisitions that provide opportunities to leverage our existing market position and customer base." About PBiz Private Business, Inc. (PBiz) is a leading supplier of financial technology to community banks and middle-market businesses. The Company is headquartered in Brentwood, Tennessee, and its common stock trades on The Nasdaq Stock Market under the symbol PBIZ. PBiz provides information related to non-GAAP financial measurements from time to time that adjust for certain items outside of the ordinary course of its business. Such non-GAAP financial measures are not determined in accordance with generally accepted accounting principles and are susceptible to varying calculations. Accordingly, non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures of other companies. To enable interested parties to reconcile non-GAAP measures to the Company's GAAP financials, the Company clearly defines and quantifies all adjustments to GAAP measurements. The Company provides non-GAAP financial measurements that adjust for certain items outside of the ordinary course of business in order to assist in comparing the Company's current operating performance to its historical performance. These adjustments typically reflect non-recurring items but sometimes reflect items, such as dispositions of assets that are not technically non-recurring but are outside of the ordinary course of operations. Investors are encouraged to use this information in connection with the information contained in the Company's GAAP financial statements. Certain statements made in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual results or performance to materially differ from any future results or performance expressed or implied by such forward-looking statements. These statements involve risks and uncertainties, including, without limitation, risks and uncertainties associated with the company's ability to achieve its growth plans and to identify or complete acquisitions. These risks and uncertainties are in addition to other factors detailed from time to time in the company's filings with the Securities and Exchange Commission. The company cautions investors that any forward-looking statements made by the company are not necessarily indicative of future performance. The company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services. -0- *T PRIVATE BUSINESS, INC. Consolidated Financial Highlights (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30 June 30 -------------------- -------------------- 2005 2004 2005 2004 -------- -------- -------- -------- Operating Highlights: Revenue: Participation Fees $ 5,891 $ 6,541 $ 11,481 $ 12,838 Software license 42 60 236 113 Retail planning services 2,193 2,213 4,395 4,463 Maintenance and other 1,375 1,342 2,588 2,584 -------- -------- -------- -------- 9,501 10,156 18,700 19,998 Operating costs and expenses: General and administrative 3,420 3,969 7,357 8,406 Selling and marketing 4,647 4,581 8,947 8,829 Research and development 55 121 116 235 Amortization 202 290 410 616 Other operating expense, net 19 20 19 1,720 -------- -------- -------- -------- 8,343 8,981 16,849 19,806 Operating income 1,158 1,175 1,851 192 Other income 0 265 0 265 Interest expense, net (70) (99) (140) (289) -------- -------- -------- -------- Income before income taxes 1,088 1,341 1,711 168 Income tax provision 423 526 667 68 -------- -------- -------- -------- Net income 665 815 1,044 100 Preferred stock dividends (540) (545) (1,080) (983) -------- -------- -------- -------- Net income (loss) available to common shareholders $ 125 $ 270 $ (36) $ (883) ======== ======== ======== ======== Loss per share: Basic $ 0.01 $ 0.02 $ (0.00) $ (0.06) ======== ======== ======== ======== Diluted $ 0.01 $ 0.02 $ (0.00) $ (0.06) ======== ======== ======== ======== Weighted average shares outstanding: Basic 14,662 14,197 14,618 14,138 ======== ======== ======== ======== Diluted 14,954 14,786 14,618 14,138 ======== ======== ======== ======== As of -------------------- June 30 Dec. 31 2005 2004 -------- -------- Balance Sheet Highlights: Cash and Cash equivalents $ -- $ 7 Working capital (deficit) 1,111 (158) Total assets 20,556 21,336 Long-term debt, net of current portion 833 1,666 Stockholders' equity 13,650 13,396 PRIVATE BUSINESS, INC. Reconciliation of Reported Results to Effect of Lightyear Transaction Charges (in thousands, except per share amounts) Six Months Ended June 30, -------------------- 2005 2004 -------- -------- Operating income as reported $ 1,851 $ 192 Add: Write-off unamortized deferred financing costs related to 1998 Credit Agreement -- 780 Add: Directors and officers insurance premiums related to periods prior to Lightyear transaction closing -- 896 -------- -------- Adjusted operating income 1,851 1,868 Interest expense, net (140) (289) -------- -------- Adjusted income before income taxes 1,711 1,579 Adjusted income tax provision 667 616 -------- -------- Adjusted net income 1,044 963 Preferred stock dividends (1,080) (983) -------- -------- Adjusted net loss available to common shareholders $ (36) $ (20) ======== ======== Adjusted diluted loss per share $ (0.00) $ (0.00) ======== ======== Diluted weighted average shares outstanding 14,618 14,138 ======== ======== Note: In addition to the adjustments described above, adjusted income before income taxes for the six months ended June 30, 2004 excludes a $265,000 gain related to recovery of non-trade receivables, which has been included as other income in the operating highlights. Additional information on this Company can be found on the World Wide Web: http://www.pbizinc.com For further information, please contact: Michael Berman at (615) 565-7379 *T