updated 12/13/2010 6:17:35 PM ET 2010-12-13T23:17:35

NORCROSS, Ga., Dec. 13, 2010 (GLOBE NEWSWIRE) -- EasyLink Services International Corporation ("EasyLink" or "Company") (Nasdaq:ESIC) ( www.easylink.com ), a global provider of comprehensive messaging services and e-commerce solutions, reported fiscal first quarter 2011 revenue of approximately $22.7 million, operating income of approximately $2.1 million, net income of approximately $967,000 and earnings per share of $.03 per share.

"We are very excited about our first quarter results and what the future holds for the new EasyLink," said Tom Stallings, CEO of EasyLink. "Even with the inclusion of $2 million in deal expenses from the Xpedite acquisition, our team generated $4.85 million in Adjusted EBITDA for the quarter."

Financial Review

Revenue for the first quarter of fiscal 2011 was approximately $22.7 million compared to $20.5 million in the first quarter of fiscal 2010, which includes ten days of operations for the newly acquired Xpedite entities. Gross margin was 71.0% in the first quarter of 2011 which is compared to 70.3% in the first quarter of fiscal 2010.  Gross margins are expected to remain in the 70% to 72% range for the rest of the fiscal year.

On Demand Messaging revenue for the first quarter of fiscal 2011, which includes fax, production messaging, document capture and management and e-mail services, was approximately $13.0 million compared to approximately $9.9 million in the first quarter of fiscal 2010. On Demand Messaging represented 57% of total revenue.

Supply Chain Messaging revenue for the first quarter of fiscal 2011, which includes electronic data interchange ("EDI") products and services and telex, was approximately $9.8 million compared to approximately $10.6 million in the first quarter of fiscal 2010. Supply Chain Messaging decreased on a year-over-year basis primarily as the result of declining telex revenue. This trend is expected to continue for the rest of fiscal 2011. Supply Chain Messaging in the first quarter represented 43% of total revenue.

Net income attributable to common shareholders for the first quarter of fiscal 2011 was approximately $917,000, or $0.03 per basic and diluted share. Adjusted EBITDA, which includes non-cash compensation expense, was approximately $4.8 million for the first quarter of fiscal 2011 compared to $4.7 million in the first quarter of fiscal 2010.

EasyLink provides adjusted EBITDA in this press release as additional information regarding 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. 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 October 31, 2011.

Investor Conference Call

The Company plans to hold a conference call on Tuesday, December 14, 2010, at 5:00 p.m. EST to discuss the first quarter fiscal year 2011 results in detail.

The Company invites all those interested in hearing management's discussion to join the call by dialing (877) 397-0250 (U.S. and Canada) or (719) 457-2620 (International), participant code 8217423. If you are unable to participate and would like to hear a replay of the call, an audio reply will be available on EasyLink's investor relations website at http://ir.easylink.com/events.cfm .

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), headquartered in Norcross, GA, 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, Secure Messaging and Telex we help companies drive costs out of their operations. With over two decades of servicing customers around the globe, EasyLink has established a proven track record for providing effective, reliable and secure communications. For more information on EasyLink, visit www.easylink.com .

The EasyLink Services International Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7889

EASYLINK SERVICES INTERNATIONAL CORPORATION
Consolidated Statements of Income 
(in thousands, except per share data)
     
  Three Months Ended
  October 31,
  2010 2009
  (unaudited) (unaudited)
     
Service revenue $ 22,736 $ 20,498
     
Cost of services 6,591 6,087
Gross Profit 16,145 14,411
     
Operating expenses:    
Product development and enhancement 1,938 1,859
Selling and marketing 2,958 3,269
General and administrative 9,187 7,223
     
Operating income 2,062 2,060
     
Other income (expense):    
Interest expense (net) (809) (486)
Other income (expense) 307 334
     
Income before income taxes 1,560 1,908
     
Provision for income taxes 593 544
     
Net income 967 1,364
     
Dividends on preferred stock (50) (216)
     
Net income attributable to common stockholders $ 917 $ 1,148
     
Basic income per common share $ 0.03 $ 0.04
     
Diluted income per common share $ 0.03 $ 0.04
     
Weighted average number of common shares

outstanding – basic
29,261 26,269
     
Weighted average number of common shares

outstanding – diluted
30,218 29,416
 
EASYLINK SERVICES INTERNATIONAL CORPORATION
Consolidated Balance Sheets
 (in thousands) 
     
  October 31, July 31,
  2010 (unaudited) 2010
ASSETS    
Current assets:    
Cash and cash equivalents  $ 18,085  $ 20,475
Accounts receivable, net  30,869  11,480
Other current assets  10,230  8,463
Total current assets  59,184  40,418
     
Property and equipment, net  20,895  5,521
Goodwill and other intangible assets, net  129,903  50,329
Other long term assets  8,239  8,218
Total assets  $ 218,221  $ 104,486
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and accrued expenses  $ 27,676  $ 11,051
Current portion of long term debt  27,902  15,258
Other current liabilities  1,623  1,497
Total current liabilities  57,201  27,806
     
Long term debt  92,114  9,684
Other liabilities  791  285
Total liabilities  150,106  37,775
     
Stockholders' Equity:    
Preferred stock (a) (a)
Common Stock  303  302
Additional paid-in capital  133,014  132,799
Treasury Stock  (2,122)  (2,122)
Accumulated other comprehensive loss  (5,576)  (5,797)
Accumulated deficit  (57,504)  (58,471)
Total stockholders' equity  68,115  66,711
Total liabilities and stockholders' equity  $ 218,221  $ 104,486
(a) less than 1,000    
   
EASYLINK SERVICES INTERNATIONAL CORPORATION  
Calculation of Adjusted Earnings before Interest, Taxes, Depreciation and

Amortization (unaudited, includes non-cash compensation)
 
(in thousands)  
   
  Three Months Ended October 31,
  2010 2009
Net income  $ 967  $ 1,364
Interest  813  494
Taxes  593  544
Depreciation and amortization  2,209  2,057
Non-cash compensation  266  236
Adjusted EBITDA  $ 4,848  $ 4,695
CONTACT:  EasyLink Services International Corporation
          Glen Shipley
          678-533-8004
          gshipley@easylink.com

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