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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 3, 2000
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PEGASUS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 000-22935 75-2605174
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) Number)
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3811 TURTLE CREEK BOULEVARD
SUITE 1100
DALLAS, TEXAS 75219
(Address of principal executive offices)
(214) 528-5656
(Registrant's telephone number)
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This Form 8-K/A amends Item 2 of the Form 8-K filed with the Commission on
April 18, 2000.
Item 2. Acquisition or Disposition of Assets
On November 16, 1999, Pegasus Systems, Inc., a Delaware corporation
("Pegasus") and its wholly owned subsidiary Pegasus Worldwide, Inc.
("PWI") entered into an Agreement and Plan of Merger ("Merger
Agreement") with REZ, Inc., a Delaware corporation ("REZ"), Reed
Elsevier Inc., a Massachusetts corporation ("Reed Elsevier"), and Utell
International Group, Ltd., a corporation organized under the laws of
England and Wales ("Utell"). Pursuant to the Merger Agreement, PWI
agreed to merge with and into REZ, with REZ being the surviving
corporation ("Merger").
The Merger was completed on April 3, 2000. REZ will operate as a wholly
owned subsidiary of Pegasus. The stockholders of REZ, including all REZ
option holders who have exercised their options within the prescribed
time period under the Merger Agreement, received the following merger
consideration on a pro rata basis:
1) An aggregate of 3.99 million shares of Pegasus common stock,
approximately 338,000 shares of which were placed in an
indemnification escrow account and approximately 123,000 shares of
which were placed in an escrow account pending the determination of
post-closing adjustments. The aggregate 3.99 million shares
constitute 16.4% of the total number of shares of Pegasus common
stock outstanding at March 31, 2000. No fractional shares will be
issued. REZ stockholders will receive a cash payment in lieu of any
fractional shares.
2) Approximately $89 million in cash, $5.5 million of which is in an
indemnification escrow account. The original purchase price included
$115 million in cash and was reduced by the amount of REZ's notes
payable outstanding and a working capital adjustment.
3) $20 million note payable to Utell, in lieu of cash consideration
otherwise receivable by Utell.
Pegasus utilized cash provided by operations and cash from the maturity
of short-term investments to fund the acquisition.
REZ is a leading provider of marketing and reservation services to the
hotel industry. The assets acquired primarily include furniture and
fixtures, computer and communication equipment, leasehold improvements,
intellectual property, and customer contracts. Pegasus intends to
continue to utilize the acquired assets in a manner consistent with
REZ's current operations. Pegasus also intends to utilize the acquired
assets to support other services offered to the hotel industry by the
combined company.
Prior Relationship of Pegasus and REZ
REZ managed and operated equipment owned by Pegasus at REZ's facilities.
REZ also provided equipment monitoring services, assurance of power
supply and communications link back up support for Pegasus. Pegasus
provided to REZ electronic distribution, commission processing and
Internet-based distribution services.
As consideration for a loan made to Pegasus which has since been repaid,
Pegasus granted to Reed Elsevier, the majority stockholder of REZ, a
license to use the Ultraswitch technology in connection with operations
unrelated to the hotel industry. As a part of this licensing
arrangement, Reed Elsevier agreed to not compete with the services
provided by Pegasus using the Ultraswitch technology.
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Several REZ directors and executives had previously served on the
Pegasus board of directors. REZ, its predecessors and several affiliates
of REZ, own Pegasus common stock.
Where You Can Find More Information
The Merger and the prior relationship between Pegasus and REZ are more
fully described in the Form S-4 filed by Pegasus and declared effective
by the Commission on March 31, 2000 (registration no. 333-92683).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of REZ required by this item are
incorporated by reference to the "Index to Financial Statements" in
the Form S-4 declared effective by the Commission on March 31, 2000
(registration no. 333-92683).
(b) Pro Forma Financial Information
The pro forma financial statements required by this item are
incorporated by reference to "Unaudited Pro Forma Financial
Information and Related Notes" in the Form S-4 declared effective by
the Commission on March 31, 2000 (registration no. 333-92683).
(c) Exhibits
Exhibit Number Description
2.1 Agreement and Plan of Merger by and among Pegasus Systems, Inc.,
Pegasus Worldwide, Inc., REZ, Inc. and the Majority Stockholder
of REZ, Inc. dated November 16, 1999, as amended and restated
(incorporated by reference to the Form S-4 declared effective by
the Commission on March 31, 2000 - registration no. 333-92683)
23.1 Consent of Deloitte & Touche LLP
99.1 REZ, Inc. Consolidated Financial Statements as of December 31,
1999 and 1998 and for years ended December 31, 1999, 1998 and
1997 (incorporated by reference to the Form S-4 declared
effective by the Commission on March 31,2000 - registration no.
333-92683)
99.2 Press release issued April 3, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
PEGASUS SYSTEMS, INC.
May 12, 2000 /s/ Jerome L. Galant
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Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number Description
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2.1 Agreement and Plan of Merger by and among Pegasus Systems, Inc.,
Pegasus Worldwide, Inc., REZ, Inc. and the Majority Stockholder
of REZ, Inc. dated November 16, 1999, as amended and restated
(incorporated by reference to the Form S-4 declared effective by
the Commission on March 31, 2000 - registration no. 333-92683)
23.1 Consent of Deloitte & Touche LLP
99.1 REZ, Inc. Consolidated Financial Statements as of December 31,
1999 and 1998 and for years ended December 31, 1999, 1998 and
1997 (incorporated by reference to the Form S-4 declared
effective by the Commission on March 31,2000 - registration no.
333-92683)
99.2 Press release issued April 3, 2000
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Current Report on Form
8-K/A under the Securities Exchange Act of 1934 of Pegasus Systems, Inc. dated
April 3, 2000 of our reports dated February 21, 2000 and contained in
Registration Statement No. 333-92683 of Pegasus Systems, Inc. on Form S-4 under
the Securities Act of 1933 insofar as such reports relate to the financial
statements and financial statement schedules of REZ, Inc. (previously
REZsolutions, Inc.) as of December 31, 1999 and 1998 and for the three years in
the period ended December 31, 1999.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
May 12, 2000
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EXHIBIT 99.2
PRESS RELEASE DATED APRIL 3, 2000
PEGASUS SYSTEMS, INC. COMPLETES ACQUISITION OF REZSOLUTIONS
DALLAS, TX - (APRIL 3, 2000) -- PEGASUS SYSTEMS, INC. (NASDAQ: PEGS), a leading
worldwide provider of hotel industry transaction processing and electronic
commerce services, today announced the completion of its acquisition of
Phoenix-based REZsolutions, the world's largest third party marketing and
reservation provider to the hotel industry(1). The agreement for the acquisition
was originally announced November 17, 1999.
The consideration paid in the transaction is $198 million based on Pegasus'
March 31, 2000 closing price of $15 13/16, and includes 3.99 million shares of
common stock and $135 million, consisting of $115 million in cash and a $20
million promissory note payable to Utell International Ltd., a subsidiary of
Reed Elsevier, PLC (NYSE: RUK and ENL) the majority stockholder in REZsolutions.
On a pro-forma combined basis for 1999, the new company had annualized revenues
of approximately $184 million.
Concurrently, the Company announced its plans to change its name to Pegasus
Solutions, Inc., in order to better represent the full service capabilities and
solutions offered by the Company. Its Nasdaq symbol will remain PEGS.
"Pegasus has long been recognized within the hotel industry as a leading
transaction processing and e-commerce service provider," said John F. Davis III,
president and chief executive officer of Pegasus Solutions. "This acquisition
will add significant technology capabilities and substantially increase our
ability to service our existing customers, as well as establish a strong
presence internationally. Pegasus emerges as the total solution provider for
reservations distribution, whether electronic or voice, for independent hotels
as well as for worldwide chains."
The Company also announced the reorganization of its business offerings into two
major groups: Technology and Hospitality. Executive Vice President Bill
Nicholson, who has been with Pegasus since 1989, will head Pegasus' Technology
Group, which will primarily consist of IT development; Pegasus Electronic
Distribution; Pegasus Business Intelligence; central reservation system (CRS)
software licensing and integration; and application server computing (ASP)
services.
Executive Vice President, Mark Wells, who brings over 30 years of hotel industry
experience, will lead Pegasus' Hospitality Group, which will include Pegasus
Financial Services (Pegasus Commission Processing); the hotel representation
services of Utell, Sterling Hotels and Resorts, and Summit Hotels and Resorts;
the Golden Tulip Worldwide brand; voice call center and electronic reservation
operations; and TravelWeb.com. Mac Highet, president and chief executive officer
of REZsolutions, will remain on board until May 31, 2000 to ensure a smooth
transition and integration of both businesses.
"As a result of the acquisition, Pegasus will be able to penetrate the global
marketplace by leveraging the complementary service offerings of our integrated
companies. The REZsolutions worldwide sales force has already completed training
in Pegasus products and services and is ready to hit the ground running by
targeting REZsolutions' vast customer base of more than 6,400 independent, and
small- and medium-sized international hotels," added Davis. "We are confident
that the strategy of combining the two companies is the right one for our
customers and shareholders, as well as the long-term growth of Pegasus
Solutions."
REZsolutions, Inc., was formed with the 1997 merger of Utell International and
Anasazi, Inc., which commenced operations in 1930 and 1979, respectively. Utell,
one of the world's leading hotel reservations and marketing companies with a
long-standing presence in Europe and Asia, merged with Anasazi, a leading
supplier of technology-based solutions to the global hospitality industry, to
offer a comprehensive portfolio of marketing services to hotels through its
hotel representation business. Through this service, independent hoteliers
gained
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access to global electronic reservations, both GDS and Internet, and a variety
of other solutions to market their properties to the travel agent trade
worldwide.
COMPANY INFORMATION
DALLAS-BASED PEGASUS SOLUTIONS (http://www.pegsinc.com) is a leading provider of
end-to-end reservation distribution solutions to the hotel industry worldwide.
Its services include the hotel industry's leading central reservation system;
the world's largest third-party marketing and reservation representation
service; the world's leading electronic distribution switching service that
connects more than 32,000 hotels to the Internet and to the global distribution
systems (GDS); the world's leading hotel commission processing service; one of
the leading consumer travel Web sites, TravelWeb.com (http://www/travelweb.com);
and data warehousing and database marketing and consulting services. Pegasus'
customers comprise more than 85,000 travel agencies around the world, including
eight of the 10 largest U.S.-based travel agencies(2); approximately 35,000
hotel properties around the globe and nine of the 10 largest hotel companies in
the world based on total number of guest rooms(3); and more than 85 Web
sites/services have their hotel reservations Powered by Pegasus(TM). In addition
to its corporate headquarters in Dallas, Texas, Pegasus has 40 offices in 39
countries, including regional hubs in Phoenix, Arizona, London and Singapore.
The company's stock is traded on the Nasdaq National Market under the symbol
PEGS.
1 Hotels magazine, July 1999, "Hotels' Consortia 25"
2 Travel Management Convention Daily, July 18,1999, "Top 25 U.S. Travel
Agencies"
3 Business Travel News, May 31,1999
This statement contains references to future events and results, including
anticipated transactions involving and services to be offered by Pegasus
Systems. These statements are forward-looking statements regarding future events
and the future financial performance of the company and no assurances can be
made regarding their eventual occurrence. Actual occurrences and results may
differ substantially and materially from those projected as a result of risks
and uncertainties detailed in the Company's periodic reports and registration
statements filed with the Securities and Exchange Commission including its Form
10-K for the year ended December 31, 1999, and its Registration Statement Form
S-4 (File No. 333-92685) filed on December 14, 1999, as amended.
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Pegasus Solutions, Inc. disclaims any proprietary interest in the trademarks or
names of unrelated companies listed.
Contact: Jerry Galant, Chief Financial Officer, or Karin Wacaser, VP, Corporate
Communications of Pegasus Systems, Inc., (214)523-0129; or Cheryl Olson, or
Press - Evan Goetz of Morgan-Walke Associates, (212)850-5600
