We should be hearing from the SEC again
The following is the text of the Wolk
article:
The SEC has required Premiere to restate its
acquisition of Xpedite as a purchase. It has been asked to
discontinue its use of pooling of interests accounting for
its February 27, 1998 acquisition of Expedite. The
SEC determined that Premiere's post- acquisition
share repurchase program of 1.1 million shares
completed September 1998 was not executed within the
limitations required for pooling treatment. Premiere
inadvertently purchased approximately 1400 excess shares,
beyond it's boards authorization, and had hoped the
subsequent sales of these shares would be sufficient.
Premiere's excess purchjase represented a vallue of
$10,000---immaterial to the $450 million paid for Xpedite. We have
been aware of the SEC's review since October, when
ther company voluntarily initiated discussions to
resolve the impact of its repurchase
program.
Under purchase accounting, Premiere is required to
amortize intangible assets of $350-375 million,
eliminating earnings for the next several years. Assuming a
seven year amortization period, we estimae additional
expenses of $53 million annually. As a result, reported
EPS could be closer to $(0.76) in 1999 and $(0.50) in
1998. There is no impact on cash flow and we are
maintaining EBITDA forecasts of $110 million in 1999, up from
$95 million in 1998---$2.39 and $2.06 per share
respectively.