DALLAS | Pegasus Solutions, Inc. (Nasdaq:PEGS), a leading global provider of hotel reservations-related services and technology, today announced that it recently sold its 14 percent stake in Travelweb, LLC to Priceline.com.

Under the purchase agreement, Pegasus received cash of approximately $4.2 million and potential shares of Priceline.com common stock valued at approximately $4.7 million as of the closing date. The shares are payable approximately one year from the closing date if certain transaction volumes are met. Additionally, the sale of these shares would be restricted for one year from the date of issuance.

During the second quarter of 2004, Pegasus expects to record a gain of approximately $2.0 million from the sale of its investment in Travelweb. As a result of this gain, the company now expects second quarter and full year GAAP earnings per diluted share to range from $0.12 to $0.14 and $0.33 and $0.40, respectively. Pegasus will exclude this gain for cash earnings purposes and reiterates its current revenue and cash earnings per diluted share guidance for the second quarter and full year 2004.

In conjunction with the purchase agreement, the company also extended its services agreement to process Travelweb's hotel reservations. The original three-year agreement was scheduled to end in 2005 but has now been extended through 2007.

"Two years ago, we joined forces with five hotel chains creating Travelweb to compete in the merchant hotel space. Travelweb has certainly exceeded our expectations, and I believe this transaction was a win-win for all parties involved," said John F. Davis III, president, chief executive officer and chairman of Pegasus Solutions. Davis continued: "Not only did we get a substantial return on our investment, but we also extended the term of our services agreement for an additional two years."

Reconciliation of Non-GAAP Financial Measures

Reconciling items between GAAP and cash earnings per diluted share primarily consist of purchase accounting amortization and non-recurring items.

Dallas-based Pegasus Solutions, Inc. (Nasdaq:PEGS) is a leading global provider of hotel reservations-related services and technology. Founded in 1989, Pegasus' customers include a majority of the world's travel agencies and more than 50,000 hotel properties around the globe. Pegasus' services include central reservation systems, electronic distribution services, commission processing and payment services, property management systems, and marketing representation services. The company's representation services, including Utell by Pegasus(TM) and Unirez by Pegasus(TM), are used by more than 7,300 member hotels in 140 countries, making Pegasus the hotel industry's largest third-party marketing and reservations provider. Pegasus has 17 offices in 12 countries, including regional hubs in London, Scottsdale and Singapore. For more information, please visit www.pegs.com.

Some statements made in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding future events, financial projections, estimated transaction volumes and expected average daily room rates, as well as management's expectations, beliefs, hopes, intentions or strategies regarding the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from current expectations. Factors that could cause or contribute to such difference include, but are not limited to, terrorist acts or war, global health epidemics, variation in demand for and acceptance of the company's products and services and timing of sales, general economic conditions including a slowdown in technology spending by the company's current and prospective customers, failure to maintain successful relationships with and to establish new relationships with customers, the success of the company's international operations, the level of product and price competition from existing and new competitors, changes in the company's level of operating expenses and its ability to control costs, delays in developing, marketing and deploying new products and services, as well as other risks identified in the company's Securities and Exchange Commission filings, including those appearing under the caption Risk Factors in the company's 2003 Annual Report on Form 10-K and Form S-3, as amended, declared effective in November 2003.

Management believes that presentation of non-GAAP financial measures such as cash earnings per share is useful because it allows investors and management to evaluate and compare the company's core cash-based operating results from ongoing operations from period to period in a more meaningful and consistent manner than relying exclusively on GAAP financial measures. Non-GAAP financial measures however should not be considered in isolation or as an alternative to financial measures calculated and presented in accordance with GAAP. In addition, Pegasus' calculation of cash earnings per share is not necessarily comparable to similarly titled measures reported by other companies.

Michael Brophy
(214) 234 4400

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