PBIZ Private Business (MM)

Private Business, Inc. (NASDAQ:PBIZ), a leading provider of financial technology to community financial institutions and middle-market businesses, today announced its operating results for the third quarter and first nine months of 2005. Revenues for the three months ended September 30, 2005, totaled $9.5 million, compared with $10.0 million in the third quarter of the previous year. Operating income was $1.2 million for the third quarter of 2005 compared with operating income of $1.2 million for the third quarter of 2004. Net income available to common shareholders totaled $137,000, or $0.01 per diluted share, in the third quarter of 2005, versus $1.1 million, or $0.07 per diluted share, in the year-earlier quarter. For the nine months ended September 30, 2005, revenues totaled $28.2 million, compared with $30.0 million in the corresponding period of the prior year. Operating income for the nine months ended September 30, 2005, was $3.0 million, versus $1.4 million in the first nine months of 2004. Net income available to common shareholders totaled $101,000, or $0.01 per diluted share in the first nine months of 2005, compared with $231,000, or $0.02 in the year-earlier period. As previously reported, the Company's operating results for the first nine months of 2004 reflected two one-time charges, consisting of a write-off of unamortized deferred financing costs related to the 1998 Credit Agreement and a one-time expense for directors' and officers' insurance premiums, totaling $1.7 million. Additionally, the third quarter results for 2004 include the reversal of $972,000 of income tax contingency. Operating income for the first nine months of 2005 and 2004, excluding the one-time charges described above, would have been $3.0 million and $3.1 million, respectively, and net income, which excludes preferred stock dividends and the one-time gain related to recovery of non-trade receivables and the income tax contingency reversal, would have been $1.7 million and $1.6 million, respectively. Diluted earnings per share for the nine months ended September 30, 2005 and 2004, excluding the one-time charges, would have been $0.01 and $0.01, respectively. Revenues for the third quarter ended September 30, 2005, totaled $9.5 million compared with $9.5 million for the second quarter of 2005. Operating expenses for the third quarter ended September 30, 2005, totaled $8.3 million compared with $8.3 million for the second quarter of 2005. Operating income for the third quarter ended September 30, 2005, totaled $1.2 million compared with $1.2 million for the second quarter of 2005. Net income available to common shareholders for the third quarter ended September 30, 2005, totaled $137,000 or $0.01 per diluted share compared with net income of $125,000 or $0.01 per diluted share for the second quarter of 2005. Commenting on the third quarter and first nine months of 2005 results, Henry M. Baroco, Private Business' Chief Executive Officer and Board member, stated, "While I am not satisfied with the third quarter results, I am encouraged by the comparison of the third quarter results with those achieved in the second quarter of this year. Third quarter total revenues, operating income and net income were essentially equal with the second quarter of 2005, which demonstrates stabilization compared with the prior two years of decreases." "The Captiva merger, announced on October 21, 2005, is a significant step forward in the evolution of PBiz," Baroco continued. "This merger, which is expected to close on November 30, 2005, brings a new focus to the combined company while helping our efforts to increase revenues in the existing PBiz business. As we have discussed in prior press releases and SEC filings, we are committed to evaluating and pursuing strategic acquisitions. With the Captiva merger, we will have completed two such transactions in less than six months." "We will continue to explore other acquisitions that provide opportunities to leverage our existing market position and customer base," Baroco concluded. About PBiz Private Business, Inc. (PBiz) is a leading supplier of financial technology to community financial institutions 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. *T -0- PRIVATE BUSINESS, INC. Consolidated Financial Highlights (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2005 2004 2005 2004 --------- --------- --------- --------- Operating Highlights: Revenue: Participation Fees $ 5,776 $ 6,394 $ 17,257 $ 19,232 Software license 56 50 292 163 Retail planning services 2,176 2,272 6,571 6,736 Maintenance and other 1,484 1,282 4,072 3,866 --------- --------- --------- --------- 9,492 9,998 28,192 29,997 Operating costs and expenses: General and administrative 3,510 3,884 10,866 12,290 Selling and marketing 4,508 4,558 13,454 13,387 Research and development 49 58 167 292 Amortization 247 263 657 879 Other operating expense, net (11) 19 8 1,740 --------- --------- --------- --------- 8,303 8,782 25,152 28,588 Operating income 1,189 1,216 3,040 1,409 Other income -- -- -- 265 Interest expense, net (79) (93) (219) (382) --------- --------- --------- --------- Income before income taxes 1,110 1,123 2,821 1,292 Income tax provision (benefit) 433 (531) 1,100 (462) --------- --------- --------- --------- Net income 677 1,654 1,721 1,754 Preferred stock dividends 540 540 1,620 1,523 --------- --------- --------- --------- Net income available to common shareholders $ 137 $ 1,114 $ 101 $ 231 ========= ========= ========= ========= Earnings per share: Basic $ 0.01 $ 0.08 $ 0.01 $ 0.02 ========= ========= ========= ========= Diluted $ 0.01 $ 0.07 $ 0.01 $ 0.01 ========= ========= ========= ========= Weighted average shares outstanding: Basic 14,756 14,303 14,664 14,193 ========= ========= ========= ========= Diluted 15,011 14,795 14,996 14,675 ========= ========= ========= ========= As of --------------------- Sept. 30, Dec. 31, 2005 2004 --------- --------- Balance Sheet Highlights: Cash and Cash equivalents $ 144 $ 7 Working capital (deficit) 154 (158) Total assets 30,050 21,336 Long-term debt, net of current portion 417 1,666 Stockholders' equity 13,943 13,396 PRIVATE BUSINESS, INC. Reconciliation of Non-GAAP Financial Measurements to GAAP Financial Statements (in thousands, except per share amounts) Nine Months Ended September 30, --------------------- 2005 2004 --------- --------- Operating income as reported $ 3,040 $ 1,409 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 3,040 3,085 Interest expense, net (219) (382) --------- --------- Adjusted income before income taxes (1) 2,821 2,703 Adjusted income tax provision (2) 1,100 1,054 --------- --------- Adjusted net income 1,721 1,649 Preferred stock dividends (1,620) (1,523) --------- --------- Adjusted net income available to common shareholders $ 101 $ 126 ========= ========= Adjusted diluted earnings per share $ 0.01 $ 0.01 ========= ========= Diluted weighted average shares outstanding 14,996 14,675 ========= ========= Notes: (1) In addition to the adjustments described above, adjusted income before income taxes for the nine months ended September 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. (2) The adjusted income tax provision for the nine months ended September 30, 2004 was calculated using the Company's effective tax rate of 39% and excludes the $972,000 reversal of income tax contingency recorded during the period. *T 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