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.