PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
           
           
      Three Months Ended
      March 31,
        2008       2007  
      (Unaudited)
           
Net revenues $ 152,854     $ 135,626  
Operating expenses      
  Cost of revenues (exclusive of depreciation and amortization shown separately below)   61,662       53,896  
  Selling and marketing   40,214       36,468  
  General and administrative   16,233       16,573  
  Research and development   3,696       3,431  
  Depreciation   7,247       7,089  
  Amortization   4,243       3,552  
  Restructuring costs   -       (130 )
    Total operating expenses   133,295       120,879  
           
Operating income   19,559       14,747  
           
Other (expense) income      
  Interest expense   (4,629 )     (2,302 )
  Interest income   213       100  
  Other, net   837       458  
    Total other (expense) income   (3,579 )     (1,744 )
           
Income before income taxes   15,980       13,003  
Income tax expense   3,960       4,056  
Net Income $ 12,020     $ 8,947  
           
           
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING:   59,331       67,697  
           
  Basic earnings per share from net income $ 0.20     $ 0.13  
           
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING:   60,497       68,776  
           
  Diluted earnings per share from net income $ 0.20     $ 0.13  

PREMIERE GLOBAL SERVICES, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
           
      March 31,   December 31,
        2008       2007  
      (Unaudited)
ASSETS      
CURRENT ASSETS      
  Cash and equivalents $ 22,753    

$

18,259

 
  Accounts receivable (less allowances of      
  $4,001 and $4,526, respectively)   101,939       89,683  
  Prepaid expenses and other current assets   9,256       13,066  
  Deferred income taxes, net   8,595       5,522  
    Total current assets   142,543       126,530  
           
PROPERTY AND EQUIPMENT, NET   119,713       110,767  
           
OTHER ASSETS      
  Goodwill   340,602       337,246  
  Intangibles, net of amortization   39,660       43,115  
  Deferred income taxes, net   -       1,018  
  Other assets   9,510       5,411  
      $ 652,028     $ 624,087  
           
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES      
  Accounts payable $ 55,831     $ 51,631  
  Income taxes payable   5,922       4,497  
  Accrued taxes   4,378       8,076  
  Accrued expenses   36,238       37,276  
  Current maturities of long-term debt and capital lease obligations   1,915       1,664  
  Accrued restructuring costs   1,006       1,717  
    Total current liabilities   105,290       104,861  
           
LONG-TERM LIABILITIES      
  Long-term debt and capital lease obligations   271,704       267,817  
  Accrued restructuring costs   1,385       1,575  
  Accrued expenses   9,747       7,627  
  Deferred income taxes, net   1,476       -  
    Total long-term liabilities   284,312       277,019  
           
SHAREHOLDERS' EQUITY      
  Common stock $0.01 par value; 150,000,000 shares authorized, 61,743,950 and 61,755,728 shares issued and outstanding in 2008 and 2007, respectively      
       
    617       618  
  Additional paid-in capital   551,247       548,418  
  Notes receivable, shareholder   (1,727 )     (1,702 )
  Cumulative translation adjustment   15,919       10,523  
  Accumulated deficit   (303,630 )     (315,650 )
    Total shareholders' equity   262,426       242,207  
      $ 652,028     $ 624,087  

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
               
               
               
          Three Months Ended
          March 31,
            2008       2007  
          (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income   $ 12,020     $ 8,947  
  Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation   7,247       7,089  
    Amortization   4,243       3,552  
    Amortization of deferred financing costs   141       128  
    Deferred income taxes, net of effect of acquisitions   178       (1,675 )
    Restructuring costs   -       (130 )
    Payments for restructuring costs   (929 )     (1,934 )
    Payments for discontinued operations   -       (244 )
    Equity-based compensation   3,462       2,775  
    Excess tax benefits from share-based payment arrangements   (23 )     (114 )
    Loss on disposal of assets   -       146  
    Changes in assets and liabilities, net of effect of acquisitions:      
      Accounts receivable, net   (10,664 )     (7,678 )
      Prepaid expenses and other current assets   51       919  
      Accounts payable and accrued expenses   153       7,473  
        Total adjustments   3,859       10,307  
        Net cash provided by operating activities   15,879       19,254  
               
CASH FLOWS FROM INVESTING ACTIVITIES      
    Capital expenditures   (13,692 )     (7,250 )
    Business acquisitions, net of cash acquired   (138 )     (412 )
        Net cash used in investing activities   (13,830 )     (7,662 )
               
CASH FLOWS FROM FINANCING ACTIVITIES      
    Principal payments under borrowing arrangements   (167,880 )     (94,364 )
    Proceeds from long-term borrowing arrangements   170,896       84,280  
    Excess tax benefits from share-based payment arrangements   23       114  
    Purchase of treasury stock, at cost   (1,027 )     (371 )
    Exercise of stock options   219       257  
        Net cash provided by (used in) financing activities   2,231       (10,084 )
               
Effect of exchange rate changes on cash and equivalents   214       (514 )
               
NET INCREASE IN CASH AND EQUIVALENTS   4,494       994  
CASH AND EQUIVALENTS, beginning of period $ 18,259     $ 18,977  
CASH AND EQUIVALENTS, end of period $ 22,753     $ 19,971  

PREMIERE GLOBAL SERVICES, INC AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
           
      Three Months Ended
      March 31,
        2008       2007  
      (Unaudited)
Pro Forma Operating Income (1)      
  Operating income, as reported $ 19,559     $ 14,747  
  Restructuring costs   -       (130 )
  Proxy-related costs   -       911  
  Equity-based compensation   3,462       2,775  
  Depreciation   (663 )     -  
  Amortization   4,243       3,552  
    Pro forma operating income $ 26,601     $ 21,855  
           
Pro Forma Income (1)      
  Income from net income as reported $ 12,020     $ 8,947  
  Elimination of one-time tax adjustments   (1,395 )     (615 )
  Restructuring costs, net of taxes   -       (84 )
  Proxy-related costs, net of taxes   -       586  
  Equity-based compensation, net of taxes   2,285       1,784  
  Depreciation, net of taxes   (438 )     -  
  Amortization, net of taxes   2,800       2,284  
    Pro forma income from net income $ 15,272     $ 12,902  
           
Pro Forma Diluted EPS (1)      
  Diluted EPS from net income, as reported $ 0.20     $ 0.13  
  Elimination of one-time tax adjustments   (0.02 )     (0.01 )
  Restructuring costs, net of taxes   -       (0.00 )
  Proxy-related costs, net of taxes   -       0.01  
  Equity-based compensation, net of taxes   0.04       0.03  
  Depreciation, net of taxes   (0.01 )     -  
  Amortization, net of taxes   0.04       0.03  
    Pro forma diluted EPS from net income $ 0.25     $ 0.19  
           
           

(1)

Management believes that pro forma operating income, pro forma income and pro forma diluted EPS provide useful information regarding underlying trends in our continuing operations. Management expects equity-based compensation and amortization expenses to be recurring costs and presents pro forma diluted EPS from continuing operations to exclude these items as well as non-recurring items that are unrelated to our ongoing operations, including one-time tax adjustments, restructuring costs and related expenses and proxy-related costs. The portion of depreciation expense excluded from the pro forma calculations reflects management's review and adjustment of the useful economic lives of depreciable assets.