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As filed with the Securities and Exchange Commission on October 8, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PREMIERE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Georgia 59-3074176
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
3399 Peachtree Road, N.E., Suite 600
Atlanta, Georgia 30326
(404) 262-8400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Boland T. Jones
Chairman and Chief Executive Officer
Premiere Technologies, Inc.
3399 Peachtree Road, N.E., Suite 600
Atlanta, Georgia 30326
(404) 262-8400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Robert S. Vaters Joel J. Hughey, Esq.
Executive Vice President of Finance Alston & Bird LLP
and Administration and Chief One Atlantic Center
Financial Officer 1201 West Peachtree Street
Premiere Technologies, Inc. Atlanta, Georgia 30309-3424
3399 Peachtree Road, N.E., Suite (404) 881-7000
600
Atlanta, Georgia 30326
(404) 262-8400
Approximate date of commencement of proposed sale to the public: As soon as
practicable on or after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed maximum
maximum aggregate Amount of
Title of each class of securities to Amount to be offering price offering registration
be registered Registered per share(1) price(1) fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share
(including rights to purchase shares
of Series C Junior Participating
Preferred Stock)..................... 448,844 shares $5.8125 $2,608,906 $730
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</TABLE>
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(1) Estimated pursuant to Rule 457(c) solely for the purpose of computing the
amount of the registration fee. Based on the average of the high and low
prices of the Common Stock reported on the National Association of
Securities Dealers automated quotation system on October 7, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Subject to completion, dated October 8, 1999
PROSPECTUS
448,844 Shares
PREMIERE TECHNOLOGIES, INC.
Common Stock
The shareholders named in the table included in the "Selling Shareholders"
section of this prospectus, which begins on page 25, are offering all of the
shares of our common stock covered by this prospectus.
The selling shareholders will sell their shares as described in the "Plan of
Distribution" section, which begins on page 25. We will not receive any of the
proceeds from the sale of shares of our common stock by the selling
shareholders.
Our common stock is traded on the Nasdaq National Market System under the
symbol "PTEK." The last reported sales price of our common stock on October 7,
1999 was $5.75.
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This investment involves risks. See "Risk Factors" beginning on page 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is , 1999
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Table of Contents
<TABLE>
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Page
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<S> <C>
Forward-Looking Statements................................................. 3
Our Business............................................................... 5
Risk Factors............................................................... 6
Selling Shareholders....................................................... 25
Plan of Distribution....................................................... 25
Use of Proceeds............................................................ 26
Experts.................................................................... 26
Opinions................................................................... 26
Incorporation by Reference................................................. 26
Additional information..................................................... 28
</TABLE>
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FORWARD-LOOKING STATEMENTS
When used in this prospectus and elsewhere by management or Premiere from
time to time, the words "believes," "anticipates," "expects," "will" and
similar expressions are intended to identify forward-looking statements
concerning our operations, economic performance and financial condition. These
include, but are not limited to, forward-looking statements about our business
strategy and means to implement the strategy, our objectives, the amount of
future capital expenditures, the likelihood of our success in developing and
introducing new products and services and expanding its business, and the
timing of the introduction of new and modified products and services. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
These statements are based on a number of assumptions and estimates which are
inherently subject to significant risks and uncertainties, many of which are
beyond our control, and reflect future business decisions which are subject to
change. A variety of factors could cause actual results to differ materially
from those anticipated in our forward-looking statements, including the
following factors:
. factors described from time to time in our press releases, reports and
other filings made with the Securities and Exchange Commission;
. our ability to comply with the financial covenants and other conditions
of our revolving credit facility, as amended, and our ability to repay,
refinance or extend the revolving credit facility in December 1999;
. our ability to manage our growth and to respond to rapid technological
change and risk of obsolescence of our products, services and
technology;
. market acceptance of new products and services, including Orchestrate;
. development of effective marketing, pricing and distribution;
. strategies for new products and services, including Orchestrate;
. competitive pressures among communications services providers may
increase significantly;
. costs or difficulties related to the integration of businesses, if any,
acquired or that may be acquired by us may be greater than expected;
. expected cost savings from past or future mergers and acquisitions may
not be fully realized or realized within the expected time frame;
. revenues following past or future mergers and acquisitions may be lower
than expected;
. operating costs or customer loss and business disruption following past
or future mergers and acquisitions may be greater than expected;
. the success of our strategic relationships, including the amount of
business generated and the viability of the strategic partners, may not
meet expectations;
. possible adverse results of pending or future litigation;
. risks associated with interruption in our services due to the failure of
the platforms and network infrastructure utilized in providing our
services;
. risks associated with the Year 2000 issue, including Year 2000 problems
that may arise on the part of third parties which may effect our
operations;
. risks associated with expansion of our international operations;
. general economic or business conditions, internationally, nationally or
in the local jurisdiction in which we are doing business, may be less
favorable than expected;
. legislative or regulatory changes may adversely affect the business in
which we are engaged; and
. changes in the securities markets may negatively impact us.
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We caution you that these factors are not exclusive. Consequently, all of
the forward-looking statements made in this prospectus and in documents
incorporated in this prospectus are qualified by these cautionary statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. We take on no
obligation to publicly release the results of any revisions to these forward-
looking statements that may be made to reflect events or circumstances after
the date of this prospectus, or the date of the statement, if a different date.
All statements made herein regarding our state of readiness with respect to
the Year 2000 issue constitute "Year 2000 readiness disclosures" made pursuant
to the Year 2000 Information and Readiness Disclosure Act, Public Law No. 105-
271.
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OUR BUSINESS
We began doing business in 1991 with the vision to enhance telephone-based
communications. Our telephony solutions provide a virtual office for thousands
of mobile professionals worldwide. In 1996, we saw the opportunity to integrate
the Internet into everyday business and personal communications solutions.
Through our Orchestrate suite of Internet-based communications products, we are
Web-enabling our traditional network-based solutions, including Premiere
Document Distribution, Premiere Interactive Voice Response, Premiere
Conferencing, Premiere Voice and Data Messaging and Premiere Enhanced Calling
Services. Combining the power of the Internet with the reach of the telephone,
we offer an array of innovative solutions to simplify the communications people
rely on everyday at work and at home.
The shares of our common stock being offered by the selling shareholders
were issued in August 1999 in connection with our acquisition of Intellivoice
Communications, Inc. As part of this acquisition, we entered into a
registration rights agreement with some of the former Intellivoice
shareholders. The registration statement of which this prospectus forms a part
was filed pursuant to that registration rights agreement.
We are a Georgia corporation, incorporated in 1991, and our principal
executive offices are located at 3399 Peachtree Road, N.E., Lenox Building,
Suite 600, Atlanta, Georgia 30326, telephone number (404) 262-8400.
Our logo and certain titles of our product and service offerings mentioned
in this prospectus are our service marks and trademarks. All other brand names
or trademarks appearing in this prospectus are the property of their respective
holders.
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RISK FACTORS
You should carefully consider the following risks before deciding to
purchase shares of our common stock. If any of the following risks actually
occur, our business, financial condition or results of operations could be
seriously harmed. In that case, the trading price of our common stock could
decline, and you could lose all or part of your investment. You should also
refer to the other information in this prospectus and the information
incorporated herein by reference, including our financial statements and notes
related thereto.
If We Are Not Able to Successfully Integrate and Consolidate Acquired
Businesses, Products and Services Into Our Operations Our Future Performance
May Suffer.
We are in the process of continuing to integrate several businesses acquired
in 1997 and 1998 by attempting to eliminate duplicative and unnecessary costs
and to operate them under common management. There can be no assurance that the
acquired businesses will be successfully integrated with our operations on
schedule or at all, that the acquisitions of these businesses will result in
sufficient net sales or earnings to justify our investment in these
acquisitions or the expenses related thereto, or that operational synergies
will develop. The successful integration of the acquired businesses into our
operations is critical to our future performance. Failure to successfully
integrate the acquired businesses or to achieve operating synergies would have
a material adverse effect on our business, financial condition and results of
operations. Potential challenges to the successful integration of acquired
businesses include, but are not limited to:
. centralization and consolidation of financial, operational and
administrative functions;
. consolidation of service centers, networks and work forces;
. elimination of unnecessary costs; and
. realization of economies of scale.
We are continuing to integrate and consolidate previously acquired service
offerings, operations and systems with ours, and therefore, our integration
plans may materially change in the future. Challenges to the successful
integration of acquired service offerings, operations and systems include, but
are not limited to:
. localization of our products and services;
. integration of platforms and networks;
. cross-selling of products and services to our customer base and customer
bases of acquired businesses;
. integration and retention of new personnel; and
. compliance with regulatory requirements.
If We Are Not Able to Compete Successfully Due to Increased Competition and the
Development of Alternatives to Our Services Our Future Performance May Suffer.
The markets for our products and services are intensely competitive, quickly
evolving and subject to rapid technological change. Competitive pressures could
have a material adverse effect on our business, financial condition and results
of operations. We expect competition to increase in the future. Many of our
current and potential competitors have longer operating histories, greater name
recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than we do. We
believe that our current competitors are likely to expand their product and
service offerings and that new competitors are likely to enter the Company's
markets, and such competitors may attempt to integrate their products and
services, resulting in greater competition.
Our Document Distribution services compete with services provided by AT&T,
MCI WorldCom and Sprint, and many of the international postal, telephone and
telegraph companies, known as "PTTs", located
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around the world, as well as numerous smaller regional competitors. We cannot
predict whether AT&T, MCI WorldCom, Sprint, any Internet service provider or
PTT or any other competitor will expand its electronic document distribution
business, and there can be no assurance that these or other competitors will
not commence or expand their businesses. Moreover, our receiving, queuing,
routing and other systems logic and architecture are not proprietary, and as a
result, there can be no assurance that such information will not be acquired or
duplicated by existing and potential competitors. We do not typically have
long-term contractual agreements with our customers, and there can be no
assurance that our customers will continue to transact business with us in the
future. In addition, even if there is continued growth in the use of electronic
document distribution services, there can be no assurance that potential
customers will not elect to use their own equipment to fulfill their needs for
electronic document distribution services. There also can be no assurance that
customers will not elect to use alternatives to our Document Distribution
services, including the Internet, to carry their communications or that
companies offering such alternatives will not develop product features or
pricing which are more attractive to customers than those currently offered by
us.
Our Corporate Messaging and Voice and Data Messaging services compete with
voice mail services provided by AT&T, certain regional Bell operating
companies, known as "RBOCs", and other service bureaus, as well as by equipment
manufacturers, such as Octel Communications Corporation (which is owned by
Lucent Technologies), Northern Telecom, Siemens Business Communications
Systems, Centigram Communications, Boston Technology, and Digital Sound. Our
enhanced travel, concierge, news and e-mail services compete with services
provided by America Online, Prodigy and numerous Internet service providers.
Our Interactive Voice Response Services compete with IVR Services provided
by AT&T, MCI WorldCom, Lucent, West Teleservices, Call Interactive and
Syntellect.
Our Conferencing services compete with conference calling services provided
by AT&T, MCI WorldCom, Sprint, as well as numerous smaller regional
competitors.
Our Orchestrate service competes with unified communications products
offered by companies such as Octel/Lucent, Microsoft, Novell, Sun Microsystems,
Motorola, and numerous smaller entities, such as Jfax, General Magic and Webley
Systems. For example, Octel and Microsoft have announced a service, called
"Unified Messenger," which places all voice mail, e-mail and fax messages in a
single mailbox accessible by computer or telephone. In addition, Sun
MicroSystems and Cisco Systems recently announced a plan to offer unified
messaging for business customers. Motorola and General Magic have announced
similar products.
Our Enhanced Calling services and Premiere WorldLink Corporate Card compete
with services provided by companies such as AT&T, MCI WorldCom and Sprint, as
well as smaller interexchange long distance providers.
The Degree to Which We Are Leveraged Could Adversely Effect Our Liquidity and
Our Ability to Obtain Additional Financing, and Could Make Us More Vulnerable
to Economic Downturns and Competitive Pressures.
In connection with the issuance of our convertible notes to the public on
June 30 and July 30, 1997, we incurred $172.5 million in indebtedness.
Effective December 16, 1998, we amended and restated the revolving credit
facility we assumed in connection with the Xpedite acquisition for a period of
one year. Under our revolving credit facility, we are entitled to borrow up to
$150 million or, after the effectiveness of the merger of Healtheon Corporation
and WebMD, Inc., the lesser of such amount and an amount such that the market
value of our investment in WebMD, Inc. (or the surviving entity after the
merger) is not less than 125% of the amount borrowed under the credit facility.
As of June 30, 1999, the Company had unused borrowing capacity of approximately
$23.9 million under the revolving credit facility. Further, as of June 30,
1999, the Company was in compliance with the terms of the revolving credit
facility and no default existed. Our revolving loan facility matures on
December 16, 1999 and we will be required to refinance or repay this
indebtedness at that time. We cannot assure you that we will be able to
refinance or repay this indebtedness at that time, and any such failure would
have an adverse effect on our business.
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Our revolving credit facility limits our ability to incur additional
indebtedness, grant liens, pay dividends or distributions, make certain
acquisitions for cash, sell assets and repurchase our securities. As a result
of this increased leverage, our principal and interest obligations have
increased substantially. The degree to which we are leveraged and the
restrictions contained in the revolving credit facility could adversely affect
our ability to obtain additional financing for working capital, acquisitions or
other purposes and could make us more vulnerable to economic downturns and
competitive pressures. Our increased leverage could also adversely affect our
liquidity, as a substantial portion of available cash from operations may have
to be applied to meet debt service requirements, and in the event of a cash
shortfall, we could be forced to reduce other expenditures and forego potential
acquisitions to be able to meet such requirements.
The indenture related to our convertible notes does not contain any
financial covenants or any other agreements restricting the payments of
dividends, the repurchase of our securities, the issuance of additional equity
or the incurrence of additional indebtedness. We are in compliance with all of
the terms of indenture.
The Telecommunications Act of 1996 May Increase Competition Which Could
Adversely Effect Our Business.
The Telecommunications Act of 1996 (the "1996 Act") allows the RBOCs to
provide long distance telephone service between Local Access and Transport
Areas, known as "LATAs", outside of their local service territories. The
legislation also grants the Federal Communications Commission, or FCC, the
authority to deregulate other aspects of the telecommunications industry, which
in the future may, if authorized by the FCC, facilitate the offering of an
integrated suite of information and telecommunications services by the RBOCs in
competition with us. This increased competition could have a material adverse
effect on our business, financial condition and results of operations.
If We Are Not Able to Anticipate Advances In Technologies Our Future
Performance May Suffer.
The market for our products and services is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. Our future success will depend in significant part on our ability to
anticipate industry standards, continue to apply advances in technologies,
enhance our current services, develop and introduce new products and services
in a timely fashion, enhance our software and our platforms and compete
successfully with products and services based on evolving or new technologies.
We expect new products and services, and enhancements to existing products and
services, to be developed and introduced which will compete with our products
and services. Our Orchestrate product line is expected to compete within
markets where larger companies are working to provide a unified communications,
solution.
Technological advances may result in the availability of new services,
products or methods of electronic document distribution that could compete with
the electronic document distribution services currently provided by us or
decrease the cost of existing products or services which could enable our
established or potential customers to meet their own needs for electronic
document distribution services more cost efficiently than through the use of
our services.
The acquisitions of the Voice-Tel entities in 1997 constituted a significant
investment by us in a private frame relay network architecture. Alternative
architectures currently exist, and technological advances may result in the
development of additional network architectures. There can be no assurance that
the telecommunications industry will not standardize on a protocol other than
frame relay or that our frame relay architecture will not become obsolete. Such
events would require us to invest significant capital in upgrading or replacing
our private frame relay network and could have a material adverse effect on our
business, financial condition and results of operations.
In addition, we may experience difficulty integrating incompatible systems
of acquired businesses into our networks. There can be no assurance that we
will not be materially adversely affected in the event of such technological
change or difficulty, or that changes in technology will not enable additional
companies to offer services which could replace, or be more cost-effective
than, some or all of the services we now offer.
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If New Products and Services That We Develop Are Not Accepted in the
Marketplace Our Future Performance May Suffer.
We must continually introduce new products and services in response to
technological changes, evolving industry standards and customer demands for
enhancements to our existing products and services. One such product is
Orchestrate.
Delays in the introduction of new products and services, our inability to
develop such new products and services or the failure of such products and
services to achieve market acceptance could have a material adverse effect on
our business, financial condition and results of operations. There can be no
assurance that:
. we will successfully develop and market new products and services or
product and service enhancements that respond to these or other
technological changes, evolving industry standards or customer demands;
. we will develop effective marketing, pricing and distribution strategies
for new products and services, including Orchestrate;
. we will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of new products and
services; or
. our new products and services, including Orchestrate, and enhancements
to our existing products and services, will adequately meet the
requirements of the marketplace and achieve market acceptance.
Our Administrative, Technical and Financial Resources May Be Strained and Our
Future Performance May Suffer If We Are Not Able to Manage The Growth We Have
Experienced Through Acquisitions.
We regularly evaluate acquisition opportunities and, as a result, frequently
engage in acquisition discussions, conduct due diligence activities in
connection with possible acquisitions, and, where appropriate, engage in
acquisition negotiations. There can be no assurance that we will be able to
successfully identify suitable acquisition candidates, complete acquisitions,
integrate acquired operations into our existing operations or expand into new
markets. In addition, we compete for acquisitions and expansion opportunities
with companies that have substantially greater resources.
We have experienced substantial growth in revenue and personnel in recent
years, particularly in 1997 and early 1998. A substantial portion of such
growth has been accomplished through acquisitions, including the acquisitions
of Voice-Tel and its affiliate Voice-Tel Network Limited Partnership ("VTN")
and substantially all of Voice-Tel's franchisees (the "Franchisees") (Voice-
Tel, VTN and the Franchisees are collectively referred to as the "Voice-Tel
Entities" and such acquisitions are referred to collectively as the "Voice-Tel
Acquisitions"), the acquisition of VoiceCom, the merger with Xpedite and the
acquisition of American Teleconferencing Services. Our growth has placed
significant demands on all aspects of our business, including our
administrative, technical and financial personnel and systems. Additional
expansion may further strain our management, financial and other resources.
There can be no assurance that our systems, procedures, controls and existing
space are or will be adequate to support expansion of our operations.
Our future operating results will substantially depend on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our administrative, technical and financial control and
reporting systems. If we are unable to respond to and manage changing business
conditions, then the quality of our services, our ability to attract and retain
key personnel and our results of operations could be materially adversely
affected.
At certain stages of growth in network usage, we will be required to add
capacity to our platforms and our digital central office switches and we will
need to continually add capacity to our private frame relay network, thus
requiring that we continuously attempt to predict growth in its network usage
and add capacity
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accordingly. Difficulties in managing continued growth, including difficulties
in predicting the growth in our network usage, could have a material adverse
effect on our business, financial condition and results of operations.
Acquisitions also involve numerous additional risks, including difficulties
in the assimilation of the operations, services, products and personnel of the
acquired company, the diversion of our management's attention from other
business concerns, entry into markets in which we have little or no direct
prior experience and the. potential loss of key employees of the acquired
company. Assimilation and retention of the key employees of an acquired company
are generally important to the success of an acquisition and the failure to
assimilate and retain any such key employees could have a material adverse
effect on our business, financial condition and results of operations.
Acquisitions May Decrease Our Shareholders' Percentage Ownership and Require Us
to Incur Additional Debt, Which Could Adversely Effect Our Business.
Future acquisitions may result in potentially dilutive issuances of equity
securities, the incurrence of additional debt, the assumption of known and
unknown liabilities, the write-off of software development costs and the
amortization of expenses related to goodwill and other intangible assets, all
of which could have a material adverse effect on our business, financial
condition and results of operations. As of June 30, 1999, we had approximately
$476.4 million of goodwill and other intangible assets reflected on our
financial statements as a result of acquisitions. We are amortizing the
goodwill and other intangibles over a range of periods we believe appropriate
for the assets. If the amortization period is accelerated due to a reevaluation
of the useful life of these assets or otherwise, amortization expense may
initially increase on a quarterly basis or require a write-down of the goodwill
or other intangible assets. An increase in the rate of amortization of goodwill
or future write-downs and restructuring charges could have a material adverse
effect on our business, financial condition and results of operations.
Acquisitions May Involve Restructuring and Other Special Charges, Which May
Cause Our Financial Performance to Suffer.
We have taken, and in the future may take, charges in connection with
acquisitions. There can be no assurance that the costs and expenses incurred
will not exceed the estimates upon which such charges are based. During the
second quarter of 1997, we took a pre-tax charge of approximately $45.4 million
in connection with the acquisitions of the Voice-Tel entities. During the third
quarter of 1997, we took a pre-tax charge of approximately $28.2 million in
connection with the acquisition of VoiceCom. We also recorded restructuring and
other special charges before income taxes of approximately $7.5 million in
connection with the merger with Xpedite.
Long Distance Pricing Pressures Could Cause Us to Lose Revenue.
Telecommunications companies compete for consumers based on price, with
major long distance carriers conducting extensive advertising campaigns to
capture market share. There can be no assurance that a decrease in the rates
charged for communications services by the major long distance carriers or
other competitors, whether caused by general competitive pressures or the entry
of the RBOCs into the long distance market, would not have a material adverse
effect on our business, financial condition and results of operations.
If We Do Not Retain the Services of Our Key Management and Personnel Our
Business May Suffer.
Our success is largely dependent upon our executive officers and other key
personnel, the loss of one or more of whom could have a material adverse effect
on our performance. We believe that our continued success will depend to a
significant extent upon the efforts and abilities of Boland T. Jones, Chairman
and Chief Executive Officer, and certain other key executives. Mr. Jones has
entered into an employment agreement which expires in December 1999, and we
maintain key man life insurance on Mr. Jones in the amount of $3.0 million.
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If We Do Not Attract and Retain Highly Qualified Technical Personnel Our
Business May Suffer.
We believe that to be successful we must hire and retain highly qualified
engineering and product development personnel. Competition in the recruitment
of highly qualified personnel in the information and telecommunications
services industry is intense. If we are not able to locate, hire and retain
such personnel it may have a material adverse effect on our business, financial
condition and results of operations. No assurance can be given that we will be
able to retain our key technical employees or that we will be able to attract
qualified personnel in the future.
We Do Not Typically Have Long-Term Contractual Agreements With Our Customers
And There Can Be No Assurance That Our Customers Will Continue to Transact
Business With Us In The Future.
We expect that the information and telecommunications services markets will
continue to attract new competitors and new technologies, possibly including
alternative technologies that are more sophisticated and cost effective than
our technologies. We do not typically have long-term contractual agreements
with our customers, and there can be no assurance that our customers will
continue to transact business with us in the future.
We Rely on Amway for Significant Revenues and Any Loss of Business From Amway
May Adversely Effect Our Financial Performance.
We have historically relied on sales through Amway Corporation for a
substantial portion of our revenue. Such sales accounted for approximately
23.7%, 21.8% and 9.4% of our revenue for 1996, 1997 and 1998, respectively.
Total revenues from Amway have decreased significantly over the last two fiscal
years but Amway remains a significant customer. There can be no assurance that
our relationship with Amway and the Amway distributors will continue at
historical levels or at all, nor can there be any assurance of long-term price
protection for services provided to Amway. Continued loss in total revenues
from Amway or diminution in the Amway relationship, or a decrease in average
sales price without an offsetting increase in volume, could have a material
adverse effect on our business, financial condition and results of operations.
We have entered into a service and reseller agreement with Amway providing,
among other things, for the sale of voice messaging and network transmission
services on an exclusive basis to Amway in the United States, Canada, New
Zealand and Australia for resale by Amway to its independent distributors. The
Amway agreement does not bind the Amway distributors, who are free to acquire
messaging services from alternative vendors. The Amway agreement may be
canceled by either party upon 180 days prior written notice or upon shorter
notice in the event of a breach. The Amway agreement does not prohibit us from
continuing to provide voice messaging and network transmission services to
Amway's distributors following termination of the Amway agreement. However, in
the event that Amway recommended a voice messaging and network transmission
services provider other than ours, there can be no assurance that Amway's
distributors would not follow such recommendation. Amway has sold substantially
all of the common stock of Premiere that it acquired in the Voice-Tel
acquisitions. The sale of such stock may increase the possibility that Amway
will recommend a voice messaging and network transmission services provider
other than us.
Financial Difficulties of Licensees or Strategic Partners Could Adversely
Impact Our Earnings.
The telecommunications industry is intensely competitive and rapidly
consolidating. The majority of companies that have chosen to outsource
communications card services and other services to us are small or medium-sized
telecommunications companies that may be unable to withstand the intense
competition in the telecommunications industry. During the second quarter of
1998, a licensing customer and a strategic partner in our Enhanced Calling
Services group initiated proceedings under Chapter 11 of the United States
Bankruptcy Code. We recorded approximately $8.4 million of charges in the
second quarter of 1998 associated with uncollectible accounts receivable,
primarily related to these financially distressed customers. The financial
difficulties of these two customers, as well as revenue shortfalls in the Voice
and Data Messaging group and other unanticipated costs and one-time charges,
contributed to an after tax loss for the second quarter of 1998.
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There can be no assurance that one or more additional failures will not occur,
and any such additional failures could have a material adverse effect on our
business, financial condition and results of operations.
If Our Strategic Relationships Are Not Successful Our Future Financial
Performance May Suffer.
A principal element of our strategy is the creation and maintenance of
strategic relationships that will enable us to offer our services to a larger
customer base than we could otherwise reach through our direct marketing
efforts. Failure of one or more of our strategic partners to successfully
develop and sustain a market for our services, or the termination of one or
more of our relationships with a strategic partner, could have a material
adverse effect on our overall performance. We experienced growth in our
existing strategic relationships during 1996, 1997 and 1998 and entered into or
initiated new strategic relationships with several companies, including MCI
WorldCom, WebMD, USA.NET, and Webforia. Although we intend to continue to
expand our direct marketing channels, we believe that strategic partner
relationships may offer a potentially more effective and efficient marketing
channel. Consequently, our success depends in part on the ultimate success of
these relationships and on the ability of these strategic partners to market
our services effectively.
In connection with our strategic plan, we make investments and form
alliances with companies involved in emerging technologies, such as the
Internet, as well as marketing alliances and outsourcing programs designed to
reduce costs and develop new markets and distribution channels for our
products. In 1998, the Company made investments of approximately $8.3 million
to acquire initial or increase existing equity interests in companies engaged
in emerging technologies. Since many of the companies in which we make
investments are small, early-stage companies, our investments are subject to
the significant risks faced by these companies which could result in the loss
of our investment. In 1998, the Company took a net charge of $3.9 million
reflecting the write-down of an equity investment in a telecommunications
distribution partner, DigiTEC.
In November 1996, we entered into a strategic alliance agreement with
WorldCom, now known as MCI WorldCom, whereby MCI WorldCom is required, among
other things, to provide us with the right of first opportunity to provide
certain enhanced computer telephony services for a period of at least 25 years.
In connection with this agreement, we issued to MCI WorldCom 2,050,000 shares
of common stock valued at approximately $25.2 million (based on an independent
appraisal) and paid MCI WorldCom $4.7 million in cash. We recorded the value of
this agreement as an intangible asset. Subsequent to entering into this
strategic alliance agreement WorldCom completed a merger with MCI to form MCI
WorldCom. MCI was a competitor of ours with respect to certain services and the
total impact of the merger between MCI and WorldCom on our strategic alliance
with MCI WorldCom cannot be determined at this time. However, the minimum
payment levels under the strategic alliance agreement ceased at the end of
September 1998 and current activity levels are significantly below those prior
minimums. In addition, in June 1999, we filed a lawsuit against MCI WorldCom
alleging breach of this strategic alliance agreement. This lawsuit has been
stayed pending arbitration. See "--One or More Adverse Outcomes In Our Pending
Litigation Could Have a Material Adverse Effect On Our Business." We
periodically review this intangible asset for impairment and in 1998 we wrote
down the carrying value of the MCI WorldCom strategic alliance intangible asset
by approximately $13.9 million. In addition, we accelerated amortization of the
remaining carrying value of the asset starting in the fourth quarter of 1998 by
shortening its estimated remaining useful life to three years from 23 years.
Although we view our strategic relationships as a key factor in our overall
business strategy and in the development and commercialization of our services,
there can be no assurance that our strategic partners view their relationships
with us as significant for their own businesses or that they will not reassess
their commitment to us in the future. Our arrangements with our strategic
partners do not always establish minimum performance requirements for our
strategic partners, but instead rely on the voluntary efforts of these partners
in pursuing joint goals. Certain of these arrangements prevent us from entering
into strategic relationships with other companies in the same industry as our
strategic partners, either for specified periods of time or while the
arrangements remain in force. In addition, even when we are without contractual
restriction, we may be restrained by business considerations from pursuing
alternative arrangements. The ability of our strategic partners to incorporate
our services into successful commercial ventures will require us, among other
things, to
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continue to successfully enhance our existing products and services and develop
new products and services. Our inability to meet the requirements of our
strategic partners or to comply with the terms of our strategic partner
arrangements could result in our strategic partners failing to market our
services, seeking alternative providers of communications and information
services or canceling their contracts with us, any of which could have a
material adverse impact on our business, financial condition and results of
operations.
If We Are Unable to Establish and Maintain Licensing and Wholesale
Relationships Our Financial Performance May Suffer.
We have licensing and wholesale relationships with companies that have
chosen to outsource part or all of their communications card services. License
fees accounted for approximately 11.7% and 5.8% of our revenues in 1997 and
1998, respectively. MCI WorldCom accounted for approximately 66.9% of our 1997
license fees and 7.0% of our total 1997 revenues, and approximately 53.3% of
our license fees and 3.1% of our total revenues in 1998. Although we intend to
increase our number of licensees and our licensee transaction volume in the
future, our success depends in part upon the ultimate success or failure of our
licensees and our ability to establish and maintain licensing and strategic
relationships. There can be no assurance that the failure of one or more of our
licensees to develop and sustain a market for our services, or termination of
one or more of our licensing or strategic relationships, will not have a
material adverse effect on our business, financial condition and results of
operations.
Consolidation in the Telecommunications Industry Could Adversely Effect Our
Business.
The telecommunications industry is experiencing rapid consolidation. For
example, in 1998 WorldCom, a strategic partner of the Company, completed a
merger with MCI Communications Corp., a competitor of ours with respect to
certain services, to form MCIWorldCom. Consolidation in the communications
industry, including consolidations involving the Company's customers,
competitors and strategic partners, could have a material adverse effect on the
Company's business, financial condition and results of operations.
Our Future Success Depends on Market Acceptance of our Unified Messaging
Products and Services, Which Includes Orchestrate.
Market acceptance of unified messaging products and services generally
requires that individuals and enterprises accept new ways of communicating and
exchanging information. A decline in the demand for, or the failure to achieve
broad market acceptance of, our unified messaging product lines and services
would have a material adverse effect on our business, financial condition and
results of operations. We believe that broad market acceptance of our unified
messaging product lines and services will depend on several factors, including
ease of use, price, reliability, access and quality of service, system
security, product functionality and the effectiveness of strategic marketing
and distribution relationships. There can be no assurance that our unified
messaging products and services will achieve broad market acceptance or that
such market acceptance will occur at the rate which we currently anticipate.
Downtime in Our Platforms and Network Infrastructure Could Result in the Loss
of Significant Customers.
We currently maintain switching facilities and computer telephony platforms
in approximately 300 locations. Our network service operations are dependent
upon our ability to protect the equipment and data at our switching facilities
against damage that may be caused by fire, power loss, technical failures,
unauthorized intrusion, natural disasters, sabotage and other similar events.
We have taken precautions to protect ourselves and our customers from events
that could interrupt delivery of our services. These precautions include
physical
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security systems, uninterruptible power supplies, on-site power generators,
upgraded backup hardware, fire protection systems and other contingency plans.
In addition, certain of our networks are designed such that the data on each
network server is duplicated on a separate network server. Notwithstanding such
precautions, we have experienced downtime in our networks from time to time and
there can be no assurance that downtime will not occur in the future. In
addition, there can be no assurance that a fire, act of sabotage, technical
failure, natural disaster or a similar event would not cause the failure of a
network server and its backup server, other portions of our networks or one of
the switching facilities as a whole, thereby resulting in an interruption of
the our services. Such interruptions could result in the loss of significant
customers and could have a material adverse effect on our business, financial
condition and results of operations. Although we maintain business interruption
insurance providing for aggregate coverage of approximately $86.1 million per
policy year, there can be no assurance that we will be able to maintain our
business interruption insurance, that such insurance will continue to be
available at reasonable prices or that such insurance will be sufficient to
compensate us for losses we experience due to our inability to provide services
to our customers.
If We Are Not Able to Protect and Maintain the Competitive Advantage of Our
Proprietary Technology and Intellectual Property Rights Our Business May
Suffer.
We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology. These
laws and contractual provisions provide only limited protection of our
proprietary rights and technology. Our proprietary rights and technology
include confidential information and trade secrets which we attempt to protect
through confidentiality and nondisclosure provisions in our licensing,
services, reseller and other agreements. We typically attempt to protect our
confidential information and trade secrets through these contractual provisions
for the term of the applicable agreement and, to the extent permitted by
applicable law, for some negotiated period of time following termination of the
agreement, typically one to two years at a minimum. There can be no assurance
that our means of protecting our proprietary rights and technology will be
adequate or that our competitors will not independently develop similar
technology. In addition, the laws of some foreign countries do not protect our
proprietary rights to as great an extent as the laws of the United States.
If Claims Alleging Patent, Copyright or Trademark Infringement Are Brought
Against Us and Successfully Prosecuted It May Cause Our Business to Suffer.
Many patents, copyrights and trademarks have been issued in the general
areas of software, information and telecommunications services, computer
telephony and unified messaging. We believe that in the ordinary course of our
business third parties may claim that our current or future products or
services infringe the patent, copyright or trademark rights of such third
parties. No assurance can be given that if actions or claims alleging
infringement of such rights are brought against us that we will ultimately
prevail. Any such claiming parties may have significantly greater resources
than we have to pursue litigation of such claims. Any such claims, whether with
or without merit, could be time consuming, result in costly litigation, cause
delays in introducing new or improved products and services, requite us to
enter into royalty or licensing agreements, or cause us to discontinue use of
the challenged technology, tradename or service mark at potentially significant
expense associated with the marketing of a new name or the development or
purchase of replacement technology, all of which could have a material adverse
effect on our business, financial condition and results of operations.
We are aware of other companies that use the terms "WorldLink" or "Premiere"
in describing their products and services, including telecommunications
products and services. Some of those companies hold registered trademarks which
incorporate the names "WorldLink" or "Premiere." For example, we have received
correspondence from a provider of prepaid calling cards, which claims that our
use of the term "WorldLink" infringes upon its trademark rights. In addition,
we have received correspondence from a major
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bank, which is among the holders of registered trademarks incorporating the
term "WorldLink," inquiring as to the nature of our use of the term "WorldLink"
as part of our mark "Premiere WorldLink." Based on, among other things, the
types of businesses in which the other companies are engaged and the low
likelihood of confusion, we believe these claims are without merit.
In October 1996, one of our subsidiaries received a letter from a third
party claiming that aspects of our subsidiary's voice messaging products and
services may be infringing upon one or more of the third party's patents. We
have reviewed the patent claims of this third party and we do not believe that
any of our subsidiary's products or services infringe on the claims of the
third party. No patent infringement claims have been filed against us by the
third party at this time. Should this third party file patent infringement
claims against us, we believe that we would have meritorious defenses to any
such claims. However, due to the inherent uncertainties of litigation, we are
unable to predict the outcome of any potential litigation with the third party,
and any adverse outcome could have a material adverse effect on our business,
results of operations and financial condition. Even if we were to ultimately
prevail, our business could be adversely affected by the diversion of
management attention and litigation costs. Because of this risk, we withheld in
escrow approximately 123,000 shares of our common stock from the purchase price
paid to acquire one of our voice messaging subsidiaries. This escrow
arrangement terminates in April 2000. There can be no assurance that such
escrow will be sufficient to fully cover our exposure in the event of
litigation or an adverse outcome to the potential infringement claims.
In February 1997, we entered into a long-term nonexclusive license agreement
with AudioFAX IP LLC settling a patent infringement suit filed by AudioFAX in
June 1996. Effective April 1, 1998, this initial license agreement was amended
to include Xpedite Systems, Inc. within the coverage of the license. In
September 1997, one of our subsidiaries also entered into a long-term non-
exclusive license agreement with AudioFAX.
Prior to its acquisition by us, Xpedite received a letter from Cable &
Wireless, Inc. informing Xpedite that Cable & Wireless had received a demand
letter from AudioFax claiming that certain Cable & Wireless products and
services infringed AudioFax's patent rights. Cable & Wireless initially sought
indemnification from Xpedite for such claim. Subsequent to our acquisition of
Xpedite, Cable & Wireless notified us of the AudioFax claim and sought
indemnification directly from us. We have requested, but as yet are without,
sufficient information to evaluate the merits of this claim and we are unable
at this time to predict the outcome of this matter.
In May 1997, we received a letter from a provider of goods and services in
the telecommunications field objecting to our use of the phrase "personal
assistant" based on that company's federally registered "personal assistant"
service mark. In June 1997, we responded to the objections, noting that we did
not intend to use, nor would we use in the future, the words "personal
assistant" as a trademark or service mark, but instead would merely use these
words to describe the nature of our product. We have not heard anything further
from the potential claimant and we believe that the matter has been resolved.
In July 1997, we received a letter from counsel for a French publishing
company objecting to our use of the "Premiere" trademark. We have received
indications from such French company of a mutually acceptable resolution. Based
on, among other things, the type of business in which the French company is
engaged and the low likelihood that we will engage in competitive activities
using the Premiere mark in France, we believe that no action will be brought.
Due to the inherent uncertainties of litigation, however, we are unable to
predict the outcome of any potential litigation with the French company, and
any adverse outcome could have a material effect on our business, financial
condition and results of operations. Even if we were to prevail in such a
challenge, our business could be adversely affected by the diversion of
management attention and litigation costs.
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In 1999, we received separate letters from Ronald Katz, Aerotel
Limited/Aerotel USA, Inc. and Cable & Wireless informing us of the existence of
their respective patents or patent portfolios and the potential applicability
of those patents on our products and services. We are currently considering
each of these matters, but we currently lack sufficient information to assess
their potential outcomes. Due to the inherent uncertainties of litigation, we
are unable to predict the outcome of any potential litigation, and any adverse
outcome could have a material effect on our business, financial condition and
results of operations. Even if we were to prevail in such a challenge, our
business could be adversely affected by the diversion of management attention
and litigation costs.
In March 1999, Aspect Telecommunications, Inc., the purported current owner
of certain patents, filed suit against us alleging that we had violated claims
in these patents and requesting damages and injunctive relief. The suit asserts
that we are offering certain "calling card and related enhanced services,"
"single number service" and "call connecting services" covered by four patents
owned by Aspect Telecommunications. We have reviewed the subject patents and,
based on that review, we believe that our products and services currently being
marketed do not infringe them. In addition, we believe that certain licenses we
have from third-party vendors may insulate us from some or all of any damages.
On March 29, 1999 we filed an answer denying the allegations and a counterclaim
seeking to invalidate the patents. The matter is currently in discovery, with a
court mandated arbitration hearing presently being scheduled for later this
year. Due to the inherent uncertainties of litigation, we are unable to predict
the outcome of this litigation, and any adverse outcome could have a material
effect on our business, financial condition and results of operations. Even if
we prevail, our business could be adversely affected by the diversion of
management attention and litigation costs.
We May Lose Revenue or Incur Additional Costs Because of Failure to Adequately
Address the Year 2000 Issue.
It is possible that a portion of our currently installed computer systems,
software products, billing systems, telephony platforms, networks, database or
other business systems (hereinafter referred to collectively as "Systems"), or
those of our customers, vendors or resellers, working either alone or in
conjunction with other software or systems, will not accept input of, store,
manipulate and output dates for 2000 or thereafter without error or
interruption (commonly known as the "Year 2000" problem). Premiere believes it
is materially prepared for the move into the Year 2000. However, there can be
no assurance that we will identify all such Year 2000 problems in our Systems
or those of our customers or vendors, including network transmission providers,
in advance of their occurrence or that we will be able to successfully remedy
any problems that have been or may subsequently be discovered. In addition, we
are dependent upon third parties for transmission of its calls and other
communications. There can be no assurance that these third party providers will
identify and remedy any Year 2000 problems in their transmission facilities.
The expenses of our efforts to identify and address such problems, the expenses
or liabilities to which we may be subject as a result of such problems, or the
failure of third party providers of transmission facilities, could have a
material adverse effect on our business, financial condition and results of
operations. The financial stability of existing customers may be adversely
impacted by Year 2000 problems which could have a material adverse impact on
our revenues. In addition, any failure by us to identify and remedy Year 2000
problems could put us at a competitive disadvantage relative to companies that
have corrected Year 2000 problems.
One or More Adverse Outcomes In Our Pending Litigation Could Have a Material
Adverse Effect on Our Business.
In the ordinary course of our business, we are subject to claims and
litigation from third parties alleging that our products and services infringe
the patents, trademarks and copyrights of such third parties. We have several
litigation matters pending not involving infringement claims which we are
defending vigorously. Due to the inherent uncertainties of the litigation
process and the judicial system, we are unable to predict the outcome of such
litigation matters. If the outcome of one or more of such matters is adverse to
us, it could have a material adverse effect on our business, financial
condition and results of operations.
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The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia. Plaintiffs seek to
represent a class of individuals who purchased or otherwise acquired the
Company's common stock from as early as February 11, 1997 through June 10,
1998. Class members allegedly include those who purchased the Company's common
stock as well as those who acquired stock through the Company's acquisitions of
VoiceTel Enterprises, Inc. ("Voice-Tel"), Voice-Tel's franchisees and Xpedite.
Plaintiffs allege the defendants made positive public statements concerning the
Company's growth and acquisitions. In particular, plaintiffs allege the
defendants spoke positively about the Company's acquisitions of Voice-Tel,
Xpedite, American Teleconferencing Services, TeleT Telecommunications, LLC
("TeleT") and VoiceCom Holdings, Inc. ("VoiceCom"), as well as its venture with
UniDial Communications, its investment in USA.NET and the commercial release of
Orchestrate. Plaintiffs allege these public statements were fraudulent because
the defendants knowingly failed to disclose that the Company allegedly was not
successfully consolidating and integrating these acquisitions. Alleged evidence
of scienter include sales by certain individual defendants during the class
period and the desire to keep the common stock price high so that future
acquisitions could be made using the Company's common stock. Plaintiffs allege
the truth was purportedly revealed on June 10, 1998, when the Company announced
it would not meet analysts' estimates of second quarter 1998 earnings because,
in part, of the financial difficulties experienced by a licensing customer and
by a strategic partner with respect to the Company's Enhanced Calling Services,
revenue shortfalls from its Voice and Data Messaging services, as well as other
unanticipated costs and one-time charges totaling approximately $17.1 million
on a pre-tax basis. Plaintiffs allege the Company admitted it had experienced
difficulty in achieving its anticipated revenue and earnings from voice
messaging services due to difficulties in consolidating and integrating its
sales function. Plaintiffs allege violation of Sections 10(b), 14(a) and 20(a)
of the Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the
Securities Act of 1933. The Company filed a motion to dismiss this complaint in
April 1999, which is pending.
A lawsuit was filed on November 4, 1998 against the Company, as well as
individual defendants Boland T. Jones, Patrick G. Jones, George W. Baker, Sr.,
Eduard J. Mayer and Raymond H. Pirtle, Jr. in the Southern District of New
York. Plaintiffs were shareholders of Xpedite who acquired common stock of the
Company as a result of the merger between the Company and Xpedite in February
1998. Plaintiffs' allegations are based on the representations and warranties
made by the Company in the prospectus and the registration statement related to
the merger, the merger agreement and other documents incorporated by reference,
regarding the Company's acquisitions of Voice-Tel and VoiceCom, the Company's
roll-out of Orchestrate, the Company's relationship with customers Amway
Corporation and DigiTEC, 2000, Inc., and the Company's 800-based calling card
service. Based on these factual allegations, plaintiffs allege causes of action
against the Company for breach of contract, against all defendants for
negligent misrepresentation, violations of Sections 11 and 12(a)(2) of the
Securities Act of 1933 ("Securities Act"), and against the individual
Defendants for violation of Section 15 of the Securities Act. Plaintiffs seek
undisclosed damages together with pre- and post-judgment interest, recission or
recissory damages as to violation of Section 12(a)(2) of the Securities Act,
punitive damages, costs and attorneys' fees. Defendants motion to transfer
venue to Georgia has been granted and the defendants' motion to dismiss is
pending.
On November 26, 1997, Wael Al-Khatib ("Al-Khatib"), the sole shareholder and
former president of Communications Network Corporation ("CNC"), and his
company, Platinum NetworkCorp. ("Platinum"), filed a complaint against Premiere
Communications, Inc. ("PCI"), WorldCom Network Services, Inc. f/k/a WilTel,
Inc, ("WorldCom"), Bernard J. Ebbers, David F. Meyers, Robert Vetera, Joseph
Cusick, William Trower, Don Wilmouth, Digital Communications of America, Inc.,
Boland Jones, Patrick Jones, and John Does I-XX in the United States District
Court for the Eastern District of New York. Plaintiffs contend that PCI,
certain officers of PCI and the other defendants engaged in a fraudulent scheme
to restrain trade in the debit card market nationally and in the New York debit
card sub-market and made misrepresentations of fact in connection with the
scheme. The plaintiffs are seeking at least $250 million in compensatory
damages and $500 million in punitive damages from PCI and the other defendants.
This matter has been settled, pending
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payment of $250,000 by Khatib to WorldCom. The settlement does not require PCI
or Premiere to make any payments.
On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint
in the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments
with Equitable Life Assurance Society of the United States and/or Equico
Securities, Inc. (collectively "Equitable"). More specifically, the complaint
asserts wrongdoing in connection with the plaintiffs' investment in securities
of Xpedite and in unrelated investments involving insurance-related products.
The defendants include Equitable and certain of its current or former
representatives. The allegations in the complaint against Xpedite are limited
to plaintiffs' investment in Xpedite. The plaintiffs have alleged that two of
the named defendants, allegedly acting as officers, directors, agents or
representatives of Xpedite, induced the plaintiffs to make certain investments
in Xpedite but that the plaintiffs failed to receive the benefits that they
were promised. Plaintiffs allege that Xpedite knew or should have known of
alleged wrongdoing on the part of other defendants. Plaintiffs seek an
accounting of the corporate stock in Xpedite, compensatory damages of
approximately $4.85 million, plus $200,000 in "lost investments," interest
and/or dividends that have accrued and have not been paid, punitive damages in
an unspecified amount, and for certain equitable relief, including a request
for Xpedite to issue 139,430 shares of common stock in the plaintiffs' names,
attorneys' fees and costs and such other and further relief as the court deems
just and equitable. On or about November 16, 1998 the court entered an order
transferring all disputes between plaintiffs and certain defendants to
arbitration and dismissing without prejudice plaintiff's complaint against
those defendants. On or about December 23, 1998, Xpedite filed a motion to stay
the action pending the resolution of the arbitration or in the alternative to
compel plaintiffs to provide discovery. On or about January 22, 1999, the court
granted Xpedite's motion to stay further proceedings pending the arbitration.
On or about March 11, 1999, plaintiffs filed a motion for reconsideration of
the court's decision. On or about April 1, 1999, the Court vacated the January
22, 1999 Order and directed that the action be referred to the active case
list. Xpedite filed a Motion for Leave to Amend Answer and Assert Cross-Claims,
which was granted. Those third-parties have filed motions to dismiss, which are
presently pending.
On June 11, 1999, Premiere filed a complaint against MCI WorldCom in the
Superior Court of Fulton County for the State of Georgia. Premiere subsequently
filed an amended complaint on June 18, 1999. The amended complaint alleges that
MCI WorldCom breached the Strategic Alliance Agreement, dated November 13, 1996
between Premiere and MCI WorldCom by, inter alia, awarding various contracts to
vendors other than Premiere and to which Premiere was entitled either exclusive
or preferential consideration. In addition to injunctive relief, Premiere seeks
damages of not less than $10 million, pre- and post-judgment interest, costs
and expenses of litigation, including attorneys' fees. On July 1, 1999 the
Court entered an order staying all proceedings pending arbitration. In
connection with that order, MCI WorldCom agreed that it would not issue any
Requests for Information, Requests for Proposals or enter into any contracts
with respect to the proposals challenged by Premiere. Premiere intends to file
commence arbitration proceedings against MCI WorldCom in the near future.
The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.
If Our Quarterly Results Do Not Meet the Expectations of Public Market Analysts
and Investors Our Stock Price May Decrease.
Quarterly revenues are difficult to forecast because the market for our
services is rapidly evolving. Our expense levels are based, in part, on our
expectations as to future revenues. If revenue levels are below expectations,
we may be unable or unwilling to reduce expenses proportionately and operating
results would likely be adversely affected. As a result, we believe that
period-to-period comparisons of its results of
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operations are not necessarily meaningful and should not be relied upon as
indications of future performance. Due to all of the foregoing factors, it is
likely that in some future quarter our operating results will be below the
expectations of public market analysts and investors. In such event, the market
price of our common stock will likely be materially adversely affected.
Our operating results have varied significantly in the past and may vary
significantly in the future. Specific factors that may cause our future
operating results to vary include:
. the unique nature of strategic relationships into which we may enter in
the future;
. changes in operating expenses resulting from such strategic
relationships and other factors;
. the continued acceptance of our licensing program;
. the financial performance of our licensees and strategic partners;
. the timing of new service announcements;
. market acceptance of new and enhanced versions of our products and
services, including Orchestrate;
. acquisitions;
. performance of strategic investments;
. changes in legislation and regulations that may affect the competitive
environment for our communications services; and
. general economic and seasonal factors.
In the future, revenues from our strategic relationships may become an
increasingly significant portion of our total revenues. Due to the unique
nature of each strategic relationship, these relationships may change the mix
of our expenses relative to our revenues.
Software Failures or Errors May Result in Failure of Our Networks and/or
Platforms or Loss of Significant Customers.
The software that we have developed and utilized in providing our services,
including the Orchestrate software, may contain undetected errors. Although we
generally engage in extensive testing of our software prior to introducing the
software onto any of our networks and/or platforms, there can be no assurance
that errors will not be found in the software after the software goes into use.
Any such errors may result in partial or total failure of our networks,
additional and unexpected expenses to fund further product development or to
add programming personnel to complete a development project, and loss of
revenue because of the inability of customers to use our networks or the
cancellation by significant customers of their service with us, any of which
could have a material adverse effect on our business. We maintain technology
errors and omissions insurance coverage of $35.0 million per policy aggregate.
However, there can be no assurance that we will be able to maintain our
technology errors and omissions insurance, that such insurance will continue to
be available at reasonable prices or will be sufficient to compensate us for
losses we experience due to our inability to provide services to our customers.
Interruption In Long Distance Service Could Result In a Loss of Significant
Customers and Revenue.
We do not own a transmission network and, accordingly, depend on MCI
WorldCom, AT&T and other facilities-based and non-facilities based carriers for
transmission of our customers' long distance calls. These long distance
telecommunications services generally are procured pursuant to supply
agreements for terms of three to five years, subject to earlier termination in
certain events. Certain of these agreements provide for minimum purchase
requirements. Further, we are dependent upon local exchange carriers, or LECs,
and CLECs for call origination and termination. If there is an outage affecting
one of our terminating carriers, our platform automatically switches calls to
another terminating carrier if capacity is available. We have not experienced
significant losses in the past due to interruptions of service at terminating
carriers, but no assurance can be made in this regard in the future. Our
ability to maintain and expand our business depends, in part, on our ability to
continue to obtain telecommunication services on favorable terms from long
distance carriers and the cooperation of both interexchange carriers and LECs
or CLECs in originating and terminating service for our
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customers in a timely manner. The partial or total loss of the ability to
receive or terminate calls would result in a loss of revenues and could lead to
a loss of significant customers, which could have a material adverse effect on
our business, financial condition or results of operations.
We lease capacity on the MCI WorldCom backbone to provide connectivity and
data transmission within our private data network. The telecommunication
agreement expires in September 2000. Our hub equipment is co-located at various
MCI WorldCom sites pursuant to co-location agreements that are terminable by
either party upon 30 days written notice. Our ability to maintain network
connectivity is dependent upon our access to transmission facilities provided
by MCI WorldCom or an alternative provider. We have no assurance that we will
be able to continue our relationship with MCI WorldCom beyond the terms of our
current agreements with MCI WorldCom or that we will be able to find an
alternative provider on terms as favorable as those offered by MCI WorldCom or
on any other terms. If we were required to relocate our hub equipment or change
our network transmission provider, we could experience shutdowns in our service
and increase costs which could have a material adverse effect on our customer
relationships and customer retention and, therefore, our business, financial
condition and results of operations.
Any Significant Difficulty Obtaining Voice Messaging Equipment From Suppliers
Could Adversely Effect Our Business.
We do not manufacture voice messaging equipment used at our voice messaging
service centers, and such equipment is currently available from a limited
number of sources. Although we have not historically experienced any
significant difficulty in obtaining equipment required for our operations and
believe that viable alternative suppliers exist, no assurance can be given that
shortages will not arise in the future or that alternative suppliers will be
available. Our inability to obtain voice messaging equipment could result in
delays or reduced delivery of messages which would materially and adversely
affect our business, financial condition and results of operations. In
addition, technological advances may result in the development of new voice
messaging equipment and changing industry standards and there can be no
assurance that our voice messaging equipment will not become obsolete. Such
events would require us to invest significant capital in upgrading or replacing
our voice messaging equipment and could have a material adverse effect on our
business, financial condition and results of operations.
Various Regulatory Factors Affect Our Financial Performance and Our Ability to
Compete.
Our operating subsidiary, Premiere Communications, Inc., or PCI, that
provides regulated long distance telecommunications services is subject to
regulation by the FCC and by various state public service and public utility
commissions, or "PUCs", and is otherwise affected by regulatory decisions,
trends and policies made by these agencies. Various international authorities
may also seek to regulate the services provided by PCI.
Generally, FCC rules require interexchange carriers to permit resale of
their transmission services. FCC rules also require LECs to provide all
interexchange carriers with equal access to local exchange facilities for
purposes of origination and termination of long distance calls. If either or
both of these requirements were eliminated, our business could be adversely
affected. Moreover, the underlying carriers that provide services to both PCI
and our other operating subsidiaries or that originate or terminate either
PCI's or the other operating subsidiaries' traffic may increase rates or
experience disruptions in service due to factors outside our control, which
could cause both PCI and our other operating subsidiaries to experience
increases in rates for telecommunications services or, in the case of PCI,
disruptions in transmitting its subscribers' long distance calls.
PCI has made the requisite filings with the FCC to provide interstate and
international long distance services. As a condition of providing such
services, PCI must comply with various FCC requirements, including tariffing
requirements, reporting obligations, and payment of regulatory assessments in
connection with programs such as universal service, telecommunications relay
service and payphone compensation, and must submit to the FCC's jurisdiction
for resolution of complaints. PCI uses reasonable efforts to ensure that its
operations comply with these regulatory requirements. However, there can be no
assurance that PCI is currently in compliance with all FCC regulatory
requirements.
20
<PAGE>
In order to provide intrastate long distance service, PCI generally is
required to obtain certification from state PUCs, to register with such state
PUCs or to be found exempt from registration by such state PUCs. PCI has either
filed the applications necessary to provide intrastate long distance
telecommunications services throughout the United States or is in the process
of filing such applications. To date, PCI is authorized to provide long
distance telecommunications services in 46 states and in the District of
Columbia and is seeking authorization to provide long distance
telecommunications services in four states. With the exception of three states,
Colorado, Michigan and Arizona, in which PCI's applications to provide operator
service (i.e., "0+") are pending, PCI is authorized to provide operator service
in each state where PCI provides long distance telecommunications service. In
addition, as a condition of providing intrastate long distance services, PCI
generally is required to comply with PUC tariffing requirements, reporting
obligations and regulatory assessments, and to submit to PUC jurisdiction over
complaints, transfers of control and certain financing transactions. PCI uses
reasonable efforts to ensure that its operations comply with these regulatory
requirements. However, there can be no assurance that PCI is currently in
compliance with all PUC regulatory requirements. Further PCI's facilities do
not prevent subscribers from using the facilities to make long distance calls
in any state, including states in which PCI currently is not authorized to
provide intrastate telecommunications services and operator services. There can
be no assurance that PCI's provision of long distance telecommunications and
operator services in states where it is not in compliance with PUC requirements
will not have a material adverse effect on our business, financial condition
and results of operations.
The 1996 Act is intended to increase competition in the long distance and
local telecommunications markets. The 1996 Act opens competition in the local
services market and, at the same time, contains provisions intended to protect
consumers and businesses from unfair competition by incumbent LECs, such as the
RBOCs. The 1996 Act allows RBOCs to provide long distance service outside of
their local service territories but bars them from immediately offering in-
region interLATA long distance services until certain conditions are satisfied.
An RBOC must apply to the FCC to provide in-region interLATA long distance
services and must satisfy a set of pro-competitive criteria intended to ensure
that RBOCs open their own local markets to competition before the FCC will
approve such application. While the FCC has yet to grant any RBOC interLATA
application, we are unable to determine how the FCC will rule on any such
applications in the future.
As a result of the 1996 Act, we may experience increased competition from
others, including the RBOCs. In addition, both PCI and our other operating
subsidiaries may be subject to additional regulatory requirements and fees
resulting from the implementation of the 1996 Act.
In conducting its business, we are subject to various laws and regulations
relating to commercial transactions generally, such as the Uniform Commercial
Code and we are also subject to the electronic funds transfer rules embodied in
Regulation E promulgated by the Board of Governors of the Federal Reserve
System. Congress has held hearings regarding, and various agencies are
considering, whether to regulate providers of services and transactions in the
electronic commerce market. For example, the Federal Reserve has proposed
amendments to Regulation E that may affect how disclosures are made for
electronic funds transfers. The Department of Treasury has issued final rules
and proposed other rules that impose or would impose record keeping, reporting
and other requirements to a wide variety of entities involved in electronic
commerce. It is possible that Congress, the states or various government
agencies could impose new or additional requirements on the electronic commerce
market or entities operating therein. If enacted, such laws, rules and
regulations could be imposed on our business and industry and could have a
material adverse effect on our business, financial condition and results of
operations. Our proposed international activities also will be subject to
regulation by various international authorities and the inherent risk of
unexpected changes in such regulation.
If Expansion Into International Markets Is Not Successful Our Business May
Suffer.
A key component of our strategy is our planned expansion into international
markets. If international revenues are not adequate to offset the expense of
establishing and maintaining these international operations, it could have a
material adverse effect on our business, financial condition and results of
operations.
21
<PAGE>
We operate Voice and Data Messaging service centers in Canada, Australia,
New Zealand and Puerto Rico and new Voice and Data Messaging service centers
have recently been established in the United Kingdom, Germany, Italy, Japan,
Hong Kong and South Korea. In addition, Conferencing operations were recently
established in Canada. We also plan to establish Conferencing operations or
capability in the United Kingdom, Germany, France, Singapore, Australia and
Hong Kong.
While our Document Distribution subsidiary has significant international
experience, we only have limited experience in marketing and distributing our
Voice and Data Messaging and Conferencing services internationally. There can
be no assurance that we will be able to successfully:
. establish the proposed Conferencing operations or capabilities, or
. market, sell and deliver our Voice and Data Messaging and Conferencing
services in the new international markets.
There Are Certain Risks Inherent to International Operations Which Could Cause
Our Business to Suffer.
In addition to the uncertainty as to our ability to expand our international
presence, there are certain difficulties and risks inherent in doing business
on an international level, such as burdensome regulatory requirements and
unexpected changes in these requirements, export restrictions, export controls
relating to technology, tariffs and other trade barriers, difficulties in
staffing and managing international operations, longer payment cycles, problems
in collecting accounts receivable, political instability, fluctuations in
currency exchange rates, seasonal reductions in business activity during the
summer months in Europe and certain other parts of the world and potentially
adverse tax consequences.
We typically denominate foreign transactions in foreign currency and have
not regularly engaged in hedging transactions, although we may engage in
hedging transactions from time to time in the future. In connection with one
acquisition we borrowed funds denominated in the local currency. We have not
experienced any material losses from fluctuations in currency exchange rates,
but there can be no assurance that we will not incur material losses due to
currency exchange rate fluctuations in the future.
We Rely on International Operations for Significant Revenues From Enhanced
Document Distribution Services, Which May Be Adversely Affected By Fluctuations
in Foreign Currencies.
A significant portion of our Document Distribution business is conducted
outside the United States and a significant portion of our revenues and
expenses from that business are derived in foreign currencies. Accordingly, the
results of operations from our Document Distribution business may be materially
affected by fluctuations in foreign currencies. Many aspects of our
international operations and business expansion plans are subject to foreign
government regulations, currency fluctuations, political uncertainties and
differences in business practices. There can be no assurance that foreign
governments will not adopt regulations or take other actions that would have a
direct or indirect adverse impact on the business or market opportunities of
our Document Distribution business within such governments' countries,
including increased tariffs. Furthermore, there can be no assurance that the
political, cultural and economic climate outside the United States will be
favorable to our operations and growth strategy.
If We Are Not Able to Expand Our Document Distribution Services Our Business
May Suffer.
We intend to accelerate growth of our Document Distribution services
throughout the world by expansion of our proprietary private world-wide
document distribution network, the integration of that network with our private
frame relay network and computer telephony platforms and the acquisition of
entities engaged in the business of electronic document distribution services.
There can be no assurance that we will be able to expand our ability to provide
electronic document services at a rate or in a manner satisfactory to meet the
demands of existing or future customers, including, but not limited to,
increasing the capacity of our document distribution
22
<PAGE>
network to process increasing amounts of document traffic, integrating and
increasing the capability of our document distribution network to perform tasks
required by our customers or identifying and establishing alliances with new
partners in order to enable us to expand our network in new geographic regions.
Such inability may adversely affect customer relationships and perceptions of
our business in the markets in which we provide services, which could have a
material adverse effect on our business, financial condition and results of
operations. In addition, such growth will involve substantial investments of
capital, management and other resources. There can be no assurance that we will
generate sufficient cash for future growth of our document distribution
business through earnings or external financings, or that such external
financings will be available on terms acceptable to us or that we will be able
to employ any such resources in a manner that will result in accelerated
growth.
Returned Transactions or Thefts of Services Could Adversely Effect Our
Business.
Although we believe that our risk management and bad debt reserve practices
are adequate, there can be no assurance that our risk management practices,
including our internal controls, or reserves will be sufficient to protect us
from unauthorized or returned transactions or thefts of services which could
have a material adverse effect on our business, financial condition and results
of operations. We use two principal financial payment clearance systems in
connection with our Enhanced Calling Services: the Federal Reserve's Automated
Clearing House for electronic fund transfers; and the national credit card
systems for electronic credit card settlement. In our use of these established
payment clearance systems, we generally bear credit risks similar to those
normally assumed by other users of these systems arising from returned
transactions caused by insufficient funds, stop payment orders, closed
accounts, frozen accounts, unauthorized use, disputes, theft or fraud. From
time to time, persons have gained unauthorized access to our network and
obtained services without rendering payment to us by unlawfully using the
access numbers and Personal Identification Numbers, or "PINs", of authorized
users. In addition, in connection with our wholesale prepaid telephone card
relationships, we have experienced unauthorized activation of prepaid telephone
cards. No assurance can be given that losses due to unauthorized use of access
numbers and PINs, unauthorized activation of prepaid calling cards or
activation of prepaid calling cards in excess of the prepaid amount, or theft
of prepaid calling cards will not be material. We attempt to manage these risks
through our internal controls and proprietary billing systems. Our computer
telephony platform is designed to prohibit a single access number and PIN from
establishing multiple simultaneous connections to the platform, and generally
we establish preset spending limits for each subscriber. We also maintain
reserves for such risks. Past experience in estimating and establishing
reserves and our historical losses are not necessarily accurate indicators of
future losses or the adequacy of the reserves we may establish in the future.
Our Articles of Incorporation and Bylaws and Georgia Law May Inhibit a
Takeover, Which May Not Be In the Interests of Shareholders.
Our board of directors is empowered to issue preferred stock without
shareholder action. The existence of this "blank-check" preferred could render
more difficult or discourage an attempt to obtain control of Premiere by means
of a tender offer, merger, proxy contest or otherwise. Our Articles of
Incorporation, as amended, divide the board of directors into three classes, as
nearly equal in size as possible, with staggered three-year terms. One class
will be elected each year. The classification of the board of directors could
have the effect of making it more difficult for a third party to acquire
control of Premiere. We are also subject to certain provisions of the Georgia
Business Corporation Code which relate to business combinations with interested
shareholders. In addition to considering the effects of any action on us and
our shareholders, our Articles of Incorporation permit our board of directors
and the committees and individual members thereof to consider the interests of
various constituencies, including employees, customers, suppliers, and
creditors, communities in which we maintain offices or operations, and other
factors which such directors deem pertinent, in carrying out and discharging
the duties and responsibilities of such positions and in determining what is
believed to be our best interests.
On June 23, 1998, our board of directors declared a dividend of one
preferred stock purchase right (a "Right") for each outstanding share of common
stock. The dividend was paid on July 6, 1998, to the
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<PAGE>
shareholders of record on that date. Each Right entitles the registered holder
to purchase one one-thousandth of a share of Series C Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Shares"), at a price
of sixty dollars ($60.00) per one-thousandth of a Preferred Share, subject to
adjustment. The description and terms of the Rights are set forth in the
Shareholder Protection Rights Agreement, as the same may be amended from time
to time, dated as of June 23, 1998, between us and SunTrust Bank, Atlanta, as
rights agent. The Rights may have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
us on terms not approved by our board of directors. However, the Rights should
not interfere with any merger, statutory share exchange or other business
combination approved by the board of directors since the Rights may be
terminated by the board of directors at any time on or prior to the close of
business ten business days after announcement by us that a person has become an
acquiring person, as such term is defined in the Shareholder Protection Rights
Agreement. Thus, the Rights are intended to encourage persons who may seek to
acquire control of us to initiate such an acquisition through negotiations with
the board of directors. However, the effect of the Rights may be to discourage
a third party from making a partial tender offer or otherwise attempting to
obtain a substantial equity position in the equity securities of, or seeking to
obtain control of, us.
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<PAGE>
SELLING SHAREHOLDERS
The following table sets forth:
. the name of each of the selling shareholders;
. the number of shares beneficially owned by each selling shareholder
prior to the offering and being offered under this prospectus; and
. the number of shares of common stock beneficially owned by each selling
shareholder after the completion of the offering.
As of the date of this prospectus, none of the selling shareholders has had
a material relationship with us or any of our affiliates within the past three
years. The table has been prepared on the basis of information furnished to us
by or on behalf of the selling shareholders. Because the selling shareholders
may offer all or some of the shares pursuant to this offering, no estimate can
be given as to the amount of shares that will be held by the selling
shareholders upon the termination of this offering. Each Selling Shareholder
owns less than 1% of the total number of shares of Premiere common stock
outstanding.
The information in this table is as of the date of this prospectus.
Information concerning the selling shareholders may change from time to time
and any such changed information will be set forth in supplements to this
prospectus if and when necessary.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Beneficially
Owned Before Shares Owned After
Name the Offering Offered Hereby Offering(1)
- ---- ------------ -------------- ------------
<S> <C> <C> <C>
BancBoston Ventures, Inc............. 193,984 169,600 24,384
Southern Venture Fund, II, L.P....... 179,154 156,623 22,531
GSM Capital Limited Partnership...... 128,637 112,459 16,178
ARGC, LLC............................ 323 283 40
Anne G. and Peter R. Hennessy, as
joint tenants....................... 7,870 6,887 983
Douglas Warstler..................... 2,992 2,992 --
</TABLE>
- --------
(1) The shares of our common stock beneficially owned by the selling
shareholders after the offering are all held in escrow pursuant to an
escrow agreement entered into as part of our acquisition of Intellivoice
Communications.
PLAN OF DISTRIBUTION
Any or all of the shares of our common stock offered hereby may be sold from
time to time by the selling shareholders, or by pledgees, donees, transferees
or other successors in interest. The selling shareholders may sell their shares
in transactions through the Nasdaq National Market System, in negotiated
transactions, or by a combination of those methods of sale. The shares of our
common stock offered hereby may be offered at fixed prices that may be changed,
at market prices prevailing at the time of sale, at prices related to the
prevailing market prices, or at negotiated prices. Prices will be determined by
the selling shareholders or by agreement between the selling shareholders and
its underwriter, broker-dealer, or agent. The selling shareholders may sell
their shares directly to purchasers or through underwriters, agents or broker-
dealers by one or more of the following:
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. purchases by a broker or dealer as principal and resale by such broker
or dealer for their account pursuant to this prospectus;
. a block trade in which the broker or dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
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<PAGE>
. an exchange distribution in accordance with the rules of the exchange or
automated interdealer quotation system on which the shares are then
listed; and
. through the writing of options on the shares.
Underwriters, agents or broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling shareholders and or
the purchasers of the shares for which such underwriters, agents or broker-
dealers may act as agents or to whom they sell as principals, or both. The
compensation paid by the selling shareholders to an underwriter, agent or
particular broker-dealer will be negotiated prior to the sale and may be in
excess of customary compensation. If required by applicable law at the time a
particular offer of the shares is made, the terms and conditions of such
transaction will be set forth in a supplement to this prospectus. In addition,
any shares covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act of 1933, as amended, may be sold under Rule 144
rather than pursuant to this prospectus.
In connection with the distribution of the shares being sold pursuant to
this prospectus, the selling shareholders may enter into hedging transactions
with broker-dealers. In connection with these transactions, broker-dealers may
engage in short sales of the shares in the course of hedging the positions
they assume with the selling shareholders. The selling shareholders may also
sell the shares short and redeliver the shares to close out the short
positions. The selling shareholders may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-
dealer of the shares. The selling shareholders may also loan or pledge the
shares to a broker-dealer, and the broker-dealer may sell the shares so
loaned, or upon a default the broker-dealer may effect sales of the pledged
shares. In addition to the foregoing, the selling shareholders may from time
to time enter into other types of hedging transactions.
In addition, the selling shareholders and any underwriter, broker-dealer,
or agent that participates in the distribution of the shares of our common
stock may be deemed to be an underwriter under the Securities Act of 1933, as
amended, (although neither Premiere nor the selling shareholders so concedes),
and any profit on the sale of shares of our common stock and any discount,
concession, or commission received by any of such underwriter, broker-dealer,
or agent, may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933, as amended.
USE OF PROCEEDS
The shares of our common stock offered hereby are for the account of the
selling shareholders. We will not receive any of the proceeds from any sales
of the shares by the selling shareholders.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
OPINION
Kikpatrick Stockton LLP will pass upon the legality of the shares of our
common stock offered hereby.
INCORPORATION BY REFERENCE
The following documents which we have previously filed with the SEC are
hereby incorporated by reference herein:
(1) Premiere's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the Securities and Exchange Commission (the
"Commission") on March 31, 1999, as amended by Premiere's Form 10-K/A filed
with the Commission on April 1, 1999;
26
<PAGE>
(2) Premiere's Current Report on Form 8-K dated February 17, 1999 and filed
with the Commission on March 4, 1999, as amended by Premiere's Current Report
on Form 8-K/A filed with the Commission filed on May 3, 1999, as further
amended by Premiere's Current Report on Form 8-K/A filed with the Commission
filed on May 5, 1999;
(3) Premiere's Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1998, filed with the Commission on May 14, 1999;
(4) Premiere's Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed with the Commission on May 17, 1999, as amended by Premiere's Form
10-Q/A filed with the Commission on May 27, 1999;
(5) Premiere's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, filed with the Commission on August 16, 1999;
(6) the description of Premiere's Common Stock contained in Premiere's
Registration Statement on Form 8-A, declared effective on March 1, 1996, and
any amendment or report filed for the purpose of updating any such description;
(7) the description of the rights to purchase shares of Premiere's Series C
Junior Participating Preferred Stock contained in Premiere's Registration
Statement on Form 8-A, filed with the Commission on June 26, 1998, and any
amendment or report filed for the purpose of updating any such description; and
(8) the information set forth in Premiere's Proxy Statement, as revised,
under the heading "Security Ownership of Certain Beneficial Owners and
Management," the sub-headings "Nominees For Directors" and "Incumbent Directors
and Executive Officers," and the heading "Executive Compensation and Other
Information," but excluding the information under the sub-headings
"Compensation Committee Report" and "Performance Graphs," as filed with the
Commission on Schedule 14A on April 30, 1999, as revised on May 14 and May 19,
1999.
All other documents subsequently filed by the registrant pursuant to Section
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated or deemed incorporated
herein by reference shall be deemed to be modified or superseded for the
purpose of this registration statement to the extent that a statement contained
herein or in any subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this registration statement.
Subject to the foregoing, all information appearing in this registration
statement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
We will provide without charge, upon the written or oral request of any
person, including any beneficial owner, to whom this prospectus is delivered, a
copy of any and all information (excluding certain exhibits) relating to our
business or our common stock that has been incorporated by reference in the
Registration Statement. Such requests should be directed to:
Patrick G. Jones
Senior Vice President and Chief Legal Officer
Premiere Technologies, Inc.
3399 Peachtree Road, N.E.
The Lenox Building, Suite 600
Atlanta, Georgia 30326
(404) 262-8400
27
<PAGE>
HOW TO OBTAIN ADDITIONAL INFORMATION
We file annual, quarterly, and special reports, proxy statements, and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document that we file with the SEC at the SEC's public
reference rooms at the following locations: 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. The SEC also maintains a site on the World Wide
Web at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC.
Our common stock is listed and traded on the Nasdaq National Market System
under the symbol "PTEK." Reports, proxy and information statements, and other
information concerning Premiere also may be inspected at the offices of the
National Association of Securities Dealers; Inc. located at 1735 K Street,
N.W., Washington, D.C. 20006.
This prospectus constitutes part of the Registration Statement on Form S-3
of Premiere (including any exhibits and amendments thereto, the "Registration
Statement") filed with the SEC under the Securities Act of 1933, as amended,
relating to the shares of our common stock offered hereby. This prospectus does
not include all of the information in the Registration Statement. For further
information about our business and our common stock, please refer to the
Registration Statement. The Registration Statement may be inspected and copied,
at prescribed rates, at the SEC's public reference facilities at the addresses
set forth above.
The SEC allows us to "incorporate by reference" certain information we file
with the SEC. This means we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update this information. We incorporate by
reference the documents listed below, and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934, as amended, until the selling shareholders sells all the shares of our
common stock registered hereby.
28
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999
PREMIERE TECHNOLOGIES, INC.
448,844 Shares of Common Stock
----------------
PROSPECTUS
----------------
We have not authorized any dealer, salesperson or other person
to give you written information other than this prospectus or
to make representations as to matters not stated in this
prospectus. You must not rely on unauthorized information.
This prospectus is not an offer to sell these securities or
our solicitation of your offer to buy the securities in any
jurisdiction that would not be permitted or legal. Neither the
delivery of this prospectus nor any sales made pursuant to
this prospectus after the date of this prospectus shall create
an implication that the information contained in this
prospectus or the affairs of Premiere have not changed since
the date of this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Information Not Required In The Prospectus
Item 14. Other Expenses Of Issuance and Distribution.
The expenses in connection with the registration of the Securities are set
forth in the following table. All amounts except the Securities and Exchange
Commission registration fee are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................. $ 730
Printing Expenses................................................... 5,000
Accountants' Fees and Expenses...................................... 10,000
Legal Fees and Expenses............................................. 20,000
Miscellaneous....................................................... 4,270
-------
Total............................................................. $40,000
=======
</TABLE>
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. All selling expenses incurred in connection
with the registration of the shares being offered hereby up to $35,000 shall be
borne by the selling shareholders in proportion to the number of shares sold by
each selling shareholder. Premiere has agreed to bear all such expenses above
$35,000. Premiere has agreed to indemnify the selling shareholders against
certain liabilities, including liabilities under the Securities Act.
Item 15. Indemnification Of Directors And Officers.
The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty of care or other duty as a
director, provided that no provision shall eliminate or limit the liability of
a director: (i) for an appropriation, in violation of his duties, of any
business opportunity of the corporation; (ii) for acts or omissions which
involve intentional misconduct or a knowing violation of law; (iii) for
unlawful corporate distributions; or (iv) for any transaction from which the
director received an improper personal benefit. This provision related only to
breaches of duty by directors in their capacity as directors (and not in any
other corporate capacity, such as officers) and limits liability only for
breaches of fiduciary duties under Georgia corporate law (and not for violation
of other laws, such as the federal securities laws). Premiere's Articles of
Incorporation, as amended, exonerate Premiere's directors from monetary
liability to the extent described above.
In addition to such rights as may be provided by law, Premiere's Bylaws
provide broad indemnification rights to Premiere's directors and such officers,
employees and agents as may be selected by such directors, with respect to
various civil and criminal liabilities and losses which may be incurred by such
director, officer, agent or employee pursuant to any pending or threatened
litigation or other proceedings, except that such indemnification does not
apply in the same situations described above with respect to the exculpation
from liability of Premiere's directors. Premiere is also obligated to reimburse
such directors and other parties for expenses, including legal fees, court
costs and expert witness fees, incurred by such person in defending against any
such liabilities and losses, as long as such person in good faith believes that
he or she acted in accordance with the applicable standard of conduct with
respect to the underlying accusations giving rise to such liabilities or losses
and agrees to repay to Premiere any advances made under the Bylaws. Any
amendment or other modification to the Bylaws which limits or otherwise
adversely affects the rights to indemnification currently provided therein
shall apply only to proceedings based upon actions and events occurring after
such amendment and delivery of notice thereof to the indemnified parties. Such
amendments can only be made upon the affirmative vote of (i) the holders of at
least 75% of the shares entitled to vote to alter, amend or repeal the
provisions of the Bylaws or (ii) a majority of the Board of Directors present
at the meeting at which the votes are taken.
II-1
<PAGE>
Premiere has entered into separate indemnification agreements with each of
its directors and certain of its officers and employees, whereby Premiere
agreed, among other things, to provide for indemnification and advancement of
expenses in a manner and subject to terms and conditions similar to those set
forth in the Bylaws. These agreements may not be abrogated by action of the
shareholders. In addition, Premiere holds an insurance policy covering
directors and officers under which the insurer agrees to pay, subject to
certain exclusions, for any claim made against the directors and officers of
Premiere for a wrongful act that they may become legally obligated to pay or
for which Premiere is required to indemnify the directors or officers.
Premiere believes that the above protections are necessary in order to
attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Premiere pursuant to the foregoing provisions, or otherwise, Premiere has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Premiere of expenses
incurred or paid by a director, officer or controlling person of Premiere in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Premiere will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 16. Exhibits and Financial Statement Schedules
Exhibit Number Description
4.1 Articles of Incorporation of the registrant, as amended
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998, filed with the Commission on August 14, 1998).
4.2 Amended and Restated Bylaws of the registrant, as amended
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q/A for the Quarter
Ended March 31, 1999, filed with the Commission on May 27,
1999).
4.3 Shareholder Protection Rights Agreement, dated June 23, 1998,
between Premiere and SunTrust Bank, Atlanta, as Rights Agent
(incorporated herein by reference to Exhibit 99.1 to the
Registrant's Current Report on Form 8-K dated June 23, 1998,
filed with the Commission on June 26, 1998).
5.1 Opinion of Kilpatrick Stockton LLP, counsel to the registrant,
as to the legality of the securities being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on the signature pages of this
registration statement at p. II-7).
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i)To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
the Effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this Section do
not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this Registration Statement as of the time it
was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 7th day of
October, 1999.
PREMIERE TECHNOLOGIES, INC.
/s/ Boland T. Jones
By:_______________________________
Boland T. Jones
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Boland T. Jones and Robert S. Vaters, and each
of them, as true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all which said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Boland T. Jones Chairman of the Board and October 7, 1999
_________________________________ Chief Executive Officer
Boland T. Jones (Principal Executive
Officer) and Director
/s/ Robert S. Vaters Executive Vice President of October 7, 1999
_________________________________ Finance and Administration
Robert S. Vaters and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ George W. Baker, Sr. Director October 7, 1999
_________________________________
George W. Baker, Sr.
/s/ Raymond H. Pirtle, Jr. Director October 7, 1999
_________________________________
Raymond H. Pirtle, Jr.
/s/ Roy B. Andersen, Jr. Director October 7, 1999
_________________________________
Roy B. Andersen, Jr.
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ William P. Payne Vice Chairman and Director October 7, 1999
- -----------------------------
William P. Payne
/s/ Jeffrey A. Allred President and Chief October 7, 1999
- ----------------------------- Operating Officer and
Jeffrey A. Allred Director
/s/ Jackie M. Ward Director October 7, 1999
- -----------------------------
Jackie M. Ward
/s/ Jeffrey T. Arnold Director October 7, 1999
- -----------------------------
Jeffrey T. Arnold
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
4.1 Articles of Incorporation of the registrant, as amended
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998, filed with the Commission on August 14, 1998).
4.2 Amended and Restated Bylaws of the registrant, as amended
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q/A for the Quarter
Ended March 31, 1999, filed with the Commission on May 27,
1999).
4.3 Shareholder Protection Rights Agreement, dated June 23, 1998,
between Premiere and SunTrust Bank, Atlanta, as Rights Agent
(incorporated herein by reference to Exhibit 99.1 to the
Registrant's Current Report on Form 8-K dated June 23, 1998,
filed with the Commission on June 26, 1998).
5.1 Opinion of Kilpatrick Stockton LLP, counsel to the registrant,
as to the legality of the securities being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on the signature pages of this
registration statement at p. II-7).
1
<PAGE>
EXHIBIT 5-1
OPINION OF KILPATRICK STOCKTON LLP
KILPATRICK STOCKTON LLP
ATTORNEYS AT LAW
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530
Telephone: 404.815.6500
Facsimile: 404.815.6555
October 8, 1999
Premiere Technologies, Inc.
3399 Peachtree Rd. NE, Suite 600
Atlanta, Georgia 30326
Gentlemen:
At your request, we have examined the Registration Statement on Form S-3,
File No. 333-________ (the "Registration Statement"), to be filed by Premiere
Technologies, Inc., a Georgia corporation (the "Company"), with the Securities
and Exchange Commission with respect to the registration under the Securities
Act of 1933, as amended, of 448,844 shares of common stock, par value $0.01 per
share, of the Company (the "common stock"), proposed to be sold by certain
persons as shareholders of the Company.
We represented the Company in connection with the merger of the Company's
subsidiary with and into Intellivoice Communications, Inc. As merger
consideration, the Company has issued and sold shares of common stock to the
persons identified as Selling Shareholders in the Registration Statement. The
Company has entered into a registration rights agreement with the Selling
Shareholders. The Registration Statement will be filed pursuant to that
registration rights agreement.
In connection with the closing of the merger and the delivery of this
opinion, we have examined such documents, corporate records, and other
instruments related to the authorization and issuance of the common stock as we
deemed relevant or necessary.
Based upon the foregoing, it is our opinion that the shares of common stock
proposed to be sold by the Selling Shareholders in accordance with the
Registration Statement will be, when sold and paid for as contemplated by and
described generally in the Registration Statement, validly issued, fully paid
for, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Opinion" in the prospectus included therein.
Very truly yours,
KILPATRICK STOCKTON LLP
By: /s/ James Steinberg
----------------------------
James Steinberg, A Partner
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated March
15, 1999 included in Premiere Technologies, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1998 as amended by Form 10-K/A dated April 1,
1999.
/s/ Arthur Andersen LLP
Atlanta, Georgia
October 8, 1999
