UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from TO .
------------- ------------

Commission File Number:
0-27778

Premiere Technologies, Inc.
(Exact name of registrant as specified in its charter)

Georgia 59-3074176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3399 Peachtree Road NE
The Lenox Building, Suite 600
Atlanta, Georgia 30326
(Address of principal executive offices, including zip code)

(404) 262-8400
(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(1) Yes X No (2) Yes X No .
----- ----- ----- -----

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Class Outstanding at May 14, 1998
----------------------------- --------------------------------
Common Stock, $0.01 par value 45,701,679 shares

PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

PAGE
----
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 3

Condensed Consolidated Statements of Operations for the
Three Months ended March 31, 1998 and 1997 4

Condensed Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1998 and 1997 5

Notes to Condensed Consolidated Financial Statements 6

Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12

Item 3 Quantitative and Qualitative Disclosures About Market Risk 18

PART II OTHER INFORMATION

Item 1 Legal Proceedings 19

Item 2 Changes in Securities 20

Item 3 Defaults Upon Senior Securities 20

Item 4 Submission of Matters to a Vote of Security Holders 20

Item 5 Other Information 20

Item 6 Exhibits and Reports on Form 8-K 21

SIGNATURES 22

EXHIBIT INDEX 23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)

March 31, December 31,
1998 1997
----------- -----------
(Unaudited)

ASSETS
CURRENT ASSETS
Cash and equivalents........................................ $ 29,053 $ 43,731
Marketable securities....................................... 124,723 154,569
Accounts receivable (less allowances of
$6,274 and $7,248, respectively).......................... 60,756 55,040
Prepaid expenses and other.................................. 11,054 10,589
Deferred income taxes, net.................................. 33,837 27,957
--------- ---------
Total current assets...................................... 259,423 291,886
--------- ---------
PROPERTY AND EQUIPMENT, NET.................................... 102,181 87,428
--------- ---------
OTHER ASSETS
Deferred income taxes, net.................................. - 544
Strategic alliances and investments, net.................... 62,608 54,328
Goodwill, net............................................... 119,803 104,244
Intangibles and other....................................... 19,271 22,937
--------- ---------
$ 563,286 $ 561,367
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses......................... $ 103,990 $ 100,694
Revolving loan, net of issue costs............................ 129,733 128,456
Current maturities of long term debt.......................... 3,697 6,243
Accrued restructuring, rebranding and other special charges... 26,740 22,324
--------- ---------
Total current liabilities................................... 264,160 257,717
--------- ---------
LONG TERM LIABILITIES
Convertible subordinated notes, net of issue costs............ 167,431 167,270
Long term debt................................................ 2,819 3,562
Other accrued liabilities..................................... 13,000 11,879
Deferred income taxes, net.................................... 216 -
--------- ---------
Total long term liabilities................................. 183,466 182,711
--------- ---------
SHAREHOLDERS' EQUITY
Common stock, $0.01 par value; 150,000,000 shares authorized,
45,294,423 and 44,670,619 shares issued and outstanding,
respectively................................................ 453 447
Additional paid-in capital.................................... 250,346 246,255
Note receivable, shareholder.................................. (973) (973)
Cumulative translation adjustment............................. (2,839) (3,551)
Accumulated deficit........................................... (131,327) (121,239)
--------- ---------
Total shareholders' equity.................................. 115,660 120,939
--------- ---------
$ 563,286 $ 561,367
========= =========

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended
--------------------------
March 31, March 31,
1998 1997
--------------------------
(Unaudited)

REVENUES................................................................. $ 119,026 $ 92,573
COST OF SERVICES......................................................... 39,035 29,817
--------- ---------
GROSS PROFIT............................................................. 79,991 62,756
--------- ---------
OPERATING EXPENSES
Selling, general and administrative.................................... 48,163 41,274
Depreciation and amortization.......................................... 9,951 6,141
Restructuring, rebranding and other special charges.................... 24,845 -
Accrued settlement cost................................................ 2,850 -
--------- ---------
Total operating expenses............................................. 85,809 47,415
--------- ---------
OPERATING INCOME (LOSS).................................................. (5,818) 15,341
--------- ---------
OTHER INCOME (EXPENSE)
Interest, net.......................................................... (2,823) (901)
Other, net............................................................. (33) (121)
--------- ---------
Total other income (expense)......................................... (2,856) (1,022)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES........................................ (8,674) 14,319
PROVISION FOR INCOME TAXES............................................... 1,414 4,052
--------- ---------
NET INCOME (LOSS)........................................................ $ (10,088) $ 10,267
========= =========
BASIC NET INCOME (LOSS) PER SHARE........................................ $ (0.22) $ 0.24
========= =========
DILUTED NET INCOME (LOSS) PER SHARE...................................... $ (0.22) $ 0.22
========= =========

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(IN THOUSANDS)

1998 1997
------------ ------------
(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................................... $(10,088) $ 10,267
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................................ 9,951 6,141
Deferred income taxes................................................ (5,120) 1,893
Restructuring, rebranding and other special charges.................. 24,845 -
Accrued settlement cost.............................................. 2,850 -
Payments for restructuring, rebranding and other special charges..... (18,583) -
Changes in assets and liabilities:
Accounts receivable, net........................................... (9,926) (3,081)
Prepaid expenses and other......................................... (1,176) (7,001)
Accounts payable and accrued expenses.............................. 1,164 852
-------- --------
Total adjustments.................................................. 4,005 (1,196)
-------- --------
Net cash (used in) provided by operating activities............. (6,083) 9,071
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment................................... (15,073) (7,957)
Redemption of marketable securities, net............................. 29,846 2,154
Cash paid for acquired companies, net of cash acquired............... (13,090) -
Strategic investment................................................. (3,000) -
Other................................................................ (56) (480)
-------- --------
Net cash used in investing activities........................... (1,373) (6,283)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments under borrowing arrangements................................ (3,459) (6,573)
Proceeds from issuance of debt....................................... - 1,750
Proceeds from revolving loan, net.................................... 1,000 -
Shareholder distributions, primarily S-Corporation distributions..... - (2,943)
Net funds from exercise of stock options............................. (4,705) 13
Other................................................................ (392) 257
-------- --------
Net cash used in financing activities........................... (7,556) (7,496)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH................................ 334 (44)
-------- --------
NET DECREASE IN CASH AND EQUIVALENTS................................... (14,678) (4,752)
CASH AND EQUIVALENTS, beginning of period.............................. 43,731 22,616
-------- --------
CASH AND EQUIVALENTS, end of period.................................... $ 29,053 $ 17,864
======== ========

Accompanying notes are integral to these condensed consolidated financial statements.

PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements are unaudited and
have been prepared by management of Premiere Technologies, Inc. (the
"Company" or "Premiere") in accordance with rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, certain information and
footnote disclosures usually found in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. In the opinion of management of the Company, all adjustments
(consisting only of normal recurring adjustments) considered necessary for fair
presentation of the condensed consolidated financial statements have been
included, and the accompanying condensed consolidated financial statements
present fairly the financial position and results of operations for the
interim periods presented. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes included in the Company's Annual Report on Form 10-K, as filed
with the SEC on March 31, 1998.

2. NET INCOME (LOSS) PER SHARE

In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." That statement requires disclosure of
basic net income (loss) per share and diluted net income (loss) per share. Basic
net income (loss) per share is computed by dividing net income (loss) available
to common shareholders by the weighted-average number of common shares
outstanding during the period and does not include any other potentially
dilutive securities. Diluted net income (loss) per share gives effect to all
potentially dilutive securities. The Company's convertible subordinated notes,
issued June 30, 1997, and stock options are potentially dilutive securities. In
the first quarter of 1998, both potentially dilutive securities were anti-
dilutive and therefore are not included in diluted net income (loss) per share.
In the first quarter of 1997, stock options were dilutive. A reconciliation of
basic net income (loss) per share to diluted net income (loss) per share
follows:

THREE MONTHS ENDED MARCH 31
-------------------------------------------------------
1998 1997
---------------------------- --------------------------
WEIGHTED WEIGHTED NET
NET AVERAGE NET LOSS NET AVERAGE INCOME
LOSS SHARES PER SHARE INCOME SHARES PER SHARE
-------- -------- --------- ------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Basic net income
(loss)................. $(10,088) 44,986 $(0.22) $10,267 42,323 $0.24
======== ====== ====== ======= ====== =====
Dilutive Securities
Stock options.......... -- -- -- -- 3,998 --
-------- ------ ------ ------- ------ -----
Diluted net income
(loss) ................ $(10,088) 44,986 $(0.22) $10,267 46,321 $0.22
======== ====== ====== ======= ====== =====

3. NEW ACCOUNTING PRONOUNCEMENTS

During 1997 the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information" effective
for fiscal years beginning after December 15, 1997. Interim period reporting is
not required in the initial year of adoption. Management is currently studying
the impact that SFAS No. 131 will have on its financial statement disclosures.

4. COMPREHENSIVE INCOME

In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
Comprehensive income represents the change in equity of a business during a
period, except for investments by owners and distributions to owners. Foreign
currency translation adjustments represent the Company's only component of other
comprehensive income. For the three months ended March 31, 1998 and 1997 total
comprehensive income (loss) was approximately $(9.4) and $9.2 million,
respectively.

5. ACQUISITIONS

Xpedite Systems, GmbH Acquisition

During the first quarter of 1998, the Company acquired Xpedite Systems, GmbH
("XSG") for $13.1 million in cash, net of cash acquired. XSG provides enhanced
electronic document distribution services in Germany. Excess purchase price
over fair value of net assets acquired of approximately $12.9 million has been
recorded as goodwill based on a preliminary purchase price allocation and is
being amortized on a straight-line basis over 40 years. Such purchase price
allocation is subject to change within one year of the acquisition date under
certain circumstances as set forth in Accounting Principles Board Opinion
No. 16, "Business Combinations."

Xpedite Systems, Inc. Acquisition

On February 27, 1998, the Company completed its merger with Xpedite Systems,
Inc. (Xpedite). In connection with the merger, the Company exchanged
approximately eleven million shares of its common stock for all of the issued
and outstanding common shares of Xpedite. This transaction was accounted for as
a pooling-of-interests and the Company's financial statements have been restated
for all periods presented to include Xpedite.

Xpedite Systems Limited Acquisition

On December 17, 1997, Xpedite purchased substantially all of the outstanding
capital stock of Xpedite Systems Limited ("XSL") for $87.8 million in cash. XSL
is a leading supplier of enhanced electronic document distribution services in
the United Kingdom. Excess purchase price over fair value of net assets acquired
of approximately $79.1 million has been recorded as goodwill based on a
preliminary purchase price allocation and is being amortized on a straight-line
basis over 40 years. Such purchase price allocation is subject to change within
one year of the acquisition date under certain circumstances as set forth in
Accounting Principles Board Opinion No. 16, "Business Combinations."

VoiceCom Acquisition

During the third quarter of 1997, the Company completed its merger with VoiceCom
Holdings, Inc. ("VoiceCom"), a provider of voice messaging, interactive voice
response and other enhanced communications services. This transaction has been
accounted for as a pooling-of-interests and the Company's financial statements
have been restated for all periods presented to include VoiceCom. In connection
with the acquisition, the Company issued approximately 445,000 shares of its
common stock in exchange for all of the issued and outstanding common shares of
VoiceCom.

Voice-Tel Acquisitions

On June 12, 1997, the Company completed the acquisitions of Voice-Tel
Enterprises, Inc. ("VTE"), its affiliate Voice-Tel Network Limited Partnership
("VTN") and substantially all of the approximately 100 independently owned
Voice-Tel franchise businesses ("Franchisees") (collectively, the "Voice-Tel
Entities" and "Voice-Tel Acquisitions"). In connection with the acquisitions,
the Company issued approximately 7.4 million shares of its common stock, paid
approximately $16.2 million in cash and assumed approximately $21.3 million in
indebtedness, net of cash acquired. Most of the Voice-Tel Acquisitions were
structured as tax-free mergers or share exchanges and were accounted for under
the pooling-of-interests method of accounting. Accordingly, the financial
results of the Company have been restated for all periods presented to include
the results of the Voice-Tel Acquisitions accounted for using this method. The
Company purchased 15 of the Voice-Tel Entities for an aggregate of approximately
$15.5 million in cash and approximately 94,000 shares of its common stock.
Excess purchase price over fair value of net assets acquired has been recorded
as goodwill based on preliminary purchase price allocations and is being
amortized on a straight-line basis over 40 years. Such purchase price
allocations are subject to change within one year of the acquisition date under
certain circumstances as set forth in Accounting Principles Board Opinion
No. 16, "Business Combinations."

The following unaudited pro forma consolidated results of operations for the
three months ended March 31, 1997 assumes the acquisitions accounted for as
purchases (XSG, XSL and certain Voice-Tel Entities) occurred January 1, 1997.
Pro forma adjustments consist of amortization of intangible assets acquired and
interest expense associated with borrowings which funded the XSG and XSL
purchases.

(000's)
Three Months Ended
---------------------
March 31,
1997
-------------

Revenues $101,163
========

Net income $ 9,854
========

Basic net income per share $ 0.23
========

Diluted net income per share $ 0.21
========

6. RESTRUCTURING AND OTHER SPECIAL CHARGES

The Company recorded charges against income of approximately $27.7 million in
the first quarter of 1998 in connection with the Xpedite merger. Such charges
consist of transaction costs, principally investment banking and professional
fees, which must be expensed under the pooling of interests method of
accounting. In addition, the Company has accrued the estimated costs to exit
certain facilities and discontinue certain business processes and activities
which are duplicative or redundant in the combined operations of Premiere and
Xpedite. These costs consist of severance associated with workforce reduction,
lease termination costs resulting from exiting certain facilities and asset
impairments resulting from management's decision to upgrade certain network
based telecommunications equipment in order to more efficiently integrate the
Premiere and Xpedite telecommunication networks. The Company also recorded the
costs to settle a patent infringement claim made against Xpedite. This
settlement was paid in April 1998.

Xpedite recorded restructuring and other special charges of approximately $16.5
million before income taxes in the fourth quarter of 1997. Such amounts result
principally from transaction costs incurred by Xpedite in connection with its
merger with the Company, including legal and professional fees and a $9.5
million transaction "break-up" fee paid by Xpedite in connection with an
unsuccessful attempt to acquire Xpedite. In addition, Xpedite recorded charges
for severance and asset impairment costs associated with closing its existing
United Kingdom ("UK") based operation. This action resulted from Xpedite
management's plan to restructure its European operations by acquiring its UK
affiliate (XSL) in December 1997 and centralizing administration of European
business operations in the newly acquired organization.

In connection with the VoiceCom acquisition, the Company recorded restructuring
and other special charges of approximately $28.2 million before income taxes in
the third quarter of 1997. Such amounts consisted of transaction costs, asset
impairments, costs to terminate or restructure certain contractual obligations
and other costs.

Transaction costs associated with the VoiceCom acquisition were expensed as
required by the pooling-of-interests method of accounting. Other restructuring
and special charges recorded in the third quarter result principally from
management's plan to restructure VoiceCom's operations by reducing its
workforce, exiting certain facilities, discontinuing duplicative product
offerings and terminating or restructuring certain contractual obligations.

The Company recorded approximately $45.4 million of restructuring and other
special charges in the second quarter of 1997 in connection with the Voice-Tel
Acquisitions. Those charges result from management's plan to restructure the
operations of the Voice-Tel Entities under a consolidated business group model
and discontinue its franchise operations. This initiative involves substantial
reduction in the administrative workforce, abandoning duplicate facilities and
assets and other costs necessary to discontinue redundant business activities.
The Company also recorded a $1.5 million charge for anticipated legal and
settlement costs resulting from bankruptcy proceedings of a customer,
Communications Network Corporation. See Note 8 for further information.

Restructuring and other special charges against operations during the three
months ended March 31, 1998 are as follows:

Accrued Costs Accrued Costs
December 31, Charges to Costs March 31,
1997 Operations Incurred 1998
------------- --------------- -------- -------------

Severance $ 6,672 $ 1,803 $ 1,793 $ 6,682
Asset impairments 12,648 3,490 6,922 9,216
Restructure or terminate contractual
obligations 13,354 670 1,129 12,895
Transaction costs 6,948 11,388 12,226 6,110
Accrued settlement costs - 2,850 - 2,850
Rebranding costs - 2,710 70 2,640
Other costs, primarily to exit facilities
and certain activities 3,788 4,784 3,077 5,495
------- ------- ------- -------
$43,410 $27,695 $25,217 $45,888
======= ======= ======= =======

7. STRATEGIC ALLIANCES AND INVESTMENTS

Assets recorded as strategic alliances and investments represent intangible
assets and equity investments associated with initiatives funded by the Company
to further its strategic plan. The most individually significant asset in this
caption relates to the Company's strategic alliance agreement entered into with
WorldCom, Inc. ("WorldCom") in November 1996. Under the agreement, WorldCom is
required, among other things, to provide the Company with the right of first
opportunity to provide enhanced computer telephony products for a period at
least 25 years. In connection with the agreement, the Company issued WorldCom
2,050,000 shares of common stock valued at approximately $25.2 million (based on
an independent appraisal), and paid WorldCom approximately $4.7 million in cash.
Costs capitalized of approximately $29.9 million are being amortized over the
life of the agreement. The Company periodically reviews this asset for
impairment. Based on such reviews, management believes this asset is
appropriately valued. Management will continue to review this asset
periodically, and there can be no assurance that future reviews will not require
a write down in the carrying value of this asset.

8. COMMITMENTS AND CONTINGENCIES

Litigation

On January 21, 1997, two former employees and an affiliate of one of the former
employees filed a complaint against the Company seeking remuneration for alleged
work performed on behalf of the Company. In December 1997, the Company reached a
settlement with one of the claimants. The amount of this settlement was not
material to the Company's financial position. The remaining plaintiffs are
seeking an accounting of commissions allegedly due to them, options to purchase
72,000 shares of the Company's common stock and reasonable attorney's fees.
Management of the Company believes it has meritorious defenses to the remaining
allegations, but due to the inherent uncertainties of the litigation process,
the Company is unable to predict the outcome of this litigation and the effect,
if any, on its financial position or results of operations.

On June 28, 1996, AudioFAX IP LLC ("AudioFAX") filed a lawsuit against the
Company alleging that the Company infringed certain patents held by AudioFAX for
enhanced facsimile products. In the third quarter of 1996, the Company recorded
a charge to operations of $1,500,000 for the estimated legal fees and other
costs to resolve this matter. On February 11, 1997, the Company entered into a
long-term, non-exclusive license agreement with AudioFAX settling this
litigation. Costs accrued in the third quarter of 1996 were adequate to cover
the actual costs of litigation. The cost of the license is not expected to have
a material effect on the Company's future results of operations.

On August 6, 1996, Communications Network Corporation ("CNC"), a licensing
customer of the Company, was placed into bankruptcy (the "Bankruptcy Case")
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code").
On August 23, 1996, CNC filed a motion to intervene in a separate lawsuit
brought by a CNC creditor in the United States District Court for the Southern
District of New York against certain guarantors of CNC's obligations and to file
a third-party action against numerous entities, including such CNC creditor and
Premiere Communications, Inc. ("PCI") for alleged negligent misrepresentations
of fact in connection with an alleged fraudulent scheme designed to damage CNC
(the "Intervention Suit"). The District Court has denied CNC's request to
intervene and has transferred the remainder of the Intervention Suit to the
Bankruptcy Judge presiding over the Bankruptcy Case. Based upon the findings of
the bankruptcy examiner and an investigation by the bankruptcy trustee (the
"Trustee") of potential actions directed at PCI, including an avoidable
preference claim of approximately $950,000, the Trustee and PCI reached a
tentative settlement of all issues, subject to Bankruptcy Court approval. The
terms of the proposed settlement have been incorporated into a proposed plan of
reorganization (the "Plan") filed by the Trustee, which is also subject to
Bankruptcy Court approval. If only the settlement is approved, PCI will obtain a
release from the Trustee and the Trustee will dismiss the Intervention Suit in
consideration of PCI making a cash payment of $1,200,000 to the Trustee. If the
Plan is subsequently approved, PCI will make an additional cash payment of up to
$300,000 to the Trustee in consideration of PCI obtaining, among other things,
an injunction against possible nuisance suits relating to the CNC business. The
Company has previously taken a reserve for the settlement and Plan payments. If
the settlement is not approved and the Trustee successfully pursues possible
litigation against the Company, it could have a material adverse effect on the
Company's business, operating results or financial condition.

On November 26, 1997, Wael Al-Khatib ("Al-Khatib"), the sole shareholder and
former president of CNC, and his company, Platinum Network, Corp. ("Platinum")
(Al-Khatib and Platinum are collectively referred to herein as "Plaintiffs"),
filed a complaint against PCI, WorldCom Network Services, Inc. f/k/a WilTel,
Inc., 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 Eastern District of New York, United
States District Court. 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 alleged scheme. The Plaintiffs
are seeking at least $250 million in compensatory damages and $500 million in
punitive damages from PCI and the other defendants. Pursuant to the local rules
of the District Court, PCI has filed a letter stating the reasons it believes
the lawsuit should be dismissed. On May 1, 1998, the Company filed a motion to
dismiss for failure to state a claim. The individual PCI defendants, Boland
Jones and Patrick Jones, filed a separate motion to dismiss based upon lack of
personal jurisdiction. PCI believes that it has meritorious defenses to the
Plaintiffs' allegations and will vigorously defend the same. Due to the inherent
uncertainties of the judicial system, the Company is not able to predict the
outcome of this lawsuit. If this lawsuit is not resolved in PCI's favor, it
could have a material adverse effect on the Company's business, operating
results or financial condition.

On September 20, 1996, Peter Lucina ("Lucina") filed a complaint against the
Company, Donald B. Gasgarth ("Gasgarth") and Patrick G. Jones ("Jones") in the
United States District Court for the Eastern District of Illinois. As of
December 3, 1997, the Company, Gasgarth and Jones have entered into a settlement
agreement with Lucina for an immaterial amount settling and disposing of
Lucina's claims in connection with this litigation.

On July 8, 1997, various limited partners purporting to act on behalf of
Telentry Research Limited Partnership, Telentry Development Limited
Partnership, Telentry XL Limited Partnership, Telentry Research Limited
Partnership II and Telentry Development Limited Partnership II (collectively,
the "Telentry Partnerships") filed a complaint in the Superior Court of New
Jersey for Morris County against Xpedite and two other defendants. The
complaint alleges, inter alia, that Xpedite is in breach of its obligations to
make royalty payments under a series of license agreements between Xpedite and
the Telentry Partnerships. In this action, the plaintiff's seek, inter alia,
damages of $2,030,040 and an accounting of royalties. Premiere believes that
Xpedite has meritorious defenses to the plaintiffs' allegations, but due to the
inherent uncertainties of the litigation process, Premiere is unable to predict
the outcome of this litigation. If the outcome of this litigation is adverse to
Xpedite, it could have a material adverse effect on the Company's business,
operating results and financial condition.

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. 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 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. The plaintiffs allege that
Xpedite knew or should have known of alleged wrongdoing on the part of other
defendants. The plaintiffs seek an accounting of the corporate stock in Xpedite,
compensatory damages of approximately $4,846,000, 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. Xpedite intends to file an answer
denying the material allegations of the complaint and asserting various
affirmative defenses and a motion to dismiss the counts of the complaint against
it. Premiere believes that Xpedite has meritorious defenses to the plaintiffs'
allegations, but due to the inherent uncertainties of the litigation process,
Premiere is unable to predict the outcome of this litigation. If the outcome of
this litigation is adverse to Xpedite, it could have a material adverse effect
on the Company's business, operating results and financial condition.

9. SUBSEQUENT EVENTS

On April 22, 1998, the Company acquired American Teleconferencing Services, Ltd.
(ATS). ATS is a leading provider of full service conference call and group
communications services. The purchase price for the acquisition including
assumed debt and transaction costs was approximately $58.0 million consisting of
cash paid of approximately $29.2 million and issuance of approximately 712,000
shares of the Company's common stock. This transaction will be accounted for
under the purchase method of accounting.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

The Company operates in one industry segment, enhanced communications services.
The Company's services include 800-based services for mobile individuals, voice
messaging, full service conference calling, enhanced electronic document
distribution services and internet based communications. The Company's
principal competitive advantage is that it integrates these services through its
private network and provides its customers a single source solution for enhanced
communications. By offering a network-based solution, the Company's customers
can access and use its services through a telephone or computer anywhere in the
world and avoid costs associated with purchasing and maintaining technology and
equipment themselves.

Revenues from 800-based services consist of usage fees from individual
subscribers which are generally based on per minute rates. Also, license
fees from corporations, primarily telecommunication carriers, under outsourcing
arrangements by which the carriers license use of the company's network to offer
enhanced communications service to their customers. License fees are also
generally based on per minute rates. Voice messaging revenues generally consist
of fixed monthly fees and usage fees based on the number of messages initiated
by a subscriber. Enhanced document distribution services revenues generally
consist of per page or per minute fees sales of fax message handling systems and
royalties for the use of certain Company software from corporations and
individual subscribers. Although the Company does not currently derive any
revenues from its Internet-based services, management anticipates that revenues
from these products will consist of both fixed monthly and usage based
components.

Cost of services consists primarily of transmission costs. License customers
generally arrange for, and directly bear the cost of, transmission.
Consequently, while the per minute fees for licensee platform usage are lower
than those for individual subscriber services, the gross margin from license
arrangements is considerably higher than for subscriber services.

Selling, general and administrative expenses include direct and indirect
commissions, the cost of print advertisements, salaries and benefits, travel and
entertainment expenses, bad debt expense, rent and facility expense, accounting
and audit fees, legal fees, property taxes and other administrative expenses.

Depreciation and amortization include depreciation of computer and
telecommunications equipment and amortization of intangible assets. The Company
provides for depreciation using the straight-line method of depreciation over
the estimated useful lives of the assets, which range from five to ten years,
with the exception of leasehold improvements which are depreciated on a
straight-line basis over the shorter of the term of the lease or the estimated
useful life of the assets. Amortization of intangible assets includes deferred
software development costs, goodwill and strategic investments and alliances,
which are amortized over lives ranging from five to 40 years.

The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from estimates. The following discussion
and analysis provides information which management believes is relevant to an
assessment and understanding of the Company's consolidated results of operations
and financial condition. This discussion should be read in conjunction with the
consolidated condensed financial statements and notes thereto.

Overview

The Company has achieved substantial growth, particularly since its initial
public offering in the first quarter of 1996. This growth results from both
internal growth and from acquisitions. Excluding restatement effects in prior
years from pooling-of-interests transactions, revenues grew from $18.9 million
as originally reported in the first quarter of 1997 to $119.0 million in the
first quarter of 1998. Similarly, operating profits before restructuring and
other special charges grew from $1.3 million to $21.9 million. The Company has
achieved growth in revenues and operating profits before restructuring and other
special charges by pursuing its strategy to become the leading provider of
enhanced communication services. During 1998 and 1997 the Company did the
following:

. Pursued an aggressive acquisition strategy to broaden its enhanced
communications service offerings. In April 1998, the Company acquired ATS, a
leading provider of full service conference call and group communication
services. In the first quarter of 1998, the Company acquired Xpedite
Systems, Inc. ("Xpedite") a leading worldwide independent provider of
enhanced electronic document distribution services. In 1997, the Company
acquired Voice-Tel (voice messaging) and VoiceCom (voice messaging and 800-
based services) thereby acquiring technology necessary to offer voice
messaging on a local access basis and one of the largest private networks in
the world utilizing frame relay and internet protocols.

. Maintained strong internal growth in the Company's 800-based business.

. Reduced costs by efficiently integrating its acquisitions and containing
growth in other operating costs thereby enabling it to improve operating
leverage from increased revenues.

Analysis

The Company's financial statements for all periods presented have been restated
to include the operations of Xpedite, the Voice-Tel Acquisitions and VoiceCom
which were accounted for as poolings of interests. The following discussion and
analysis is prepared on that basis.

Revenues increased to $119.0 million in the first quarter of 1998 compared to
$92.6 million in the first quarter of 1997, a 28.6% increase. Revenue growth was
due principally to growth in the following areas:

. Strategic partner programs, particularly new programs such as American
Express and First USA, which experienced significant increases in new
subscribers,

. License programs, both from growth in revenue from existing customers and
new license customers,

. New 800-based services, including prepaid and enhanced feature calling
cards which offer new features such as voice messaging through local
access, call connect and call screening services and text-to-voice e-mail.

. European-based enhanced electronic document distribution services from the
acquisition of XSG and XSL.

Gross profit margins were 67.2% and 67.8% in the first quarter of 1998 and 1997,
respectively. Decline in gross margins resulted primarily from heavy
international mix in certain prepaid calling card programs in the first quarter
of 1998. Management took actions to reverse this decline by aggressively
resourcing transmission and implementing least cost routing practices for high
traffic countries. Management believes the Company will benefit from these
actions in future periods and from general industry trends in which long
distance transport and local access service costs have decreased as a result of
increased capacity and competition among long distance and local exchange
carriers.

Selling, general and administrative costs as a percent of revenues were 40.5%
and 44.6% in the first quarter of 1998 and 1997, respectively. These costs
declined as a percentage of revenues due to aggressive restructuring of acquired
businesses (Voice-Tel and VoiceCom) in the second half of 1997. Cost reduction
activities included substantially reducing the work force of acquired
businesses, exiting duplicative facilities and eliminating redundant business
activities.

Depreciation and amortization was $10.0 million or 8.4% of revenues in the first
quarter of 1998 and $6.1 million or 6.6% of revenues in the first quarter of
1997. Increased depreciation and amortization expense results mainly from
depreciation associated with increased purchases of computer telephony equipment
and other capital expenditures to support new business growth and amortization
of goodwill and other intangibles acquired in connection with the acquisitions
of XSL, XSG and Voice-Tel Entities.

Net interest expense increased to $2.8 million in the first quarter of 1998 from
$0.9 million in the first quarter of 1997. Increased interest expense results
primarily from borrowings associated with Xpedite's purchase of XSL and XSG in
the fourth quarter of 1997 and first quarter of 1998, respectively.

In the first quarter of 1998, the Company's effective income tax rate was higher
than the statutory rate due to non-deductible merger costs. In the first quarter
of 1997 the Company's effective income tax rate was less than the statutory rate
due to certain non-taxable investment income and income of Voice-Tel Entities
which had elected to be treated as S Corporations or partnerships under U.S.
tax law prior to their acquisition by the Company.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operations was $6.1 million in the first quarter of 1998.
Excluding payments made for restructuring, rebranding and other special charges
of $18.6 million, cash provided by operations was $12.5 million or 10.5% of
revenues in the first quarter of 1998. This compares with cash provided by
operations of $9.1 million or 9.8% of revenues in the first quarter of 1997.
Improving operating cash flow margins, excluding payments made for
restructuring, rebranding and other special charges, resulted mainly from the
Company's integration and cost reduction initiatives associated with the Voice-
Tel and VoiceCom acquisitions in 1997 which reduced operating costs of these
businesses. Also, the Company's increasing revenue base which, because of the
Company's relatively fixed cost structure, improved operating leverage.

The Company used cash in investing activities of approximately $1.4 million in
the first quarter of 1998 and $6.3 million in the first quarter of 1997. The
Company purchased property and equipment, primarily computer and
telecommunications equipment, of approximately $15.1 million in the first
quarter of 1998 and $8.0 million in the first quarter of 1997. First quarter
1998 expenditures were made in connection with the Company's ongoing programs to
expand its operational infrastructure including building new data centers in
London and Toronto, expanding existing data centers in Dallas and Atlanta to
support new business growth and upgrading voice messaging equipment on its
private network. Management anticipates that these expenditures will continue to
increase in the future as the Company upgrades and expands the operational
infrastructure of both its existing computer telephony network and integrates
the network of its recent acquisition, Xpedite. The Company paid approximately
$13.1 million net of cash acquired in connection with the acquisition of XSG in
the first quarter of 1998. See Note 5 -- "Acquisitions" in Notes to Condensed
Consolidated Financial Statements. The Company redeemed short-term investments
in marketable securities of approximately $29.8 million in the first quarter of
1998 to fund its investing and operating activities.

The Company also repaid approximately $3.5 million of indebtedness in the first
quarter of 1998 assumed in connection with the Voice-Tel and VoiceCom
acquisitions. Cash distributions to certain Voice-Tel companies, primarily S-
Corporations, used $2.9 million in the first quarter of 1997. Such distributions
were made in periods prior to the Voice-Tel acquisitions and were made primarily
to reimburse S-Corporation shareholders for taxes paid on the proportionate
share of taxable income of such companies they were required to report in their
individual income tax returns.

At March 31, 1998, the Company's principal commitments involve certain
indebtedness, lease obligations and minimum purchase requirements under supply
agreements with telecommunications providers. The Company is in compliance under
all such agreements at this date.

Management believes that cash and marketable securities on-hand of approximately
$153.8 million and cash generated by operating activities will be adequate to
fund growth in the Company's existing businesses for the forseeable future.
However, the Company will be required to repay or refinance certain indebtedness
assumed in connection with its acquisition on February 27, 1998 of Xpedite. Such
indebtedness approximates $130 million and management is currently evaluating
alternatives in this regard.

RESTRUCTURING AND OTHER SPECIAL CHARGES

The Company recorded charges against income of approximately $27.7 million in
the first quarter of 1998 in connection with the Xpedite merger. Such charges
consist of transaction costs, principally investment banking and professional
fees, which must be expensed under the pooling of interests method of
accounting. In addition, the Company has accrued the estimated costs to exit
certain facilities and discontinue certain business processes and activities
which are duplicative or redundant in the combined operations of Premiere and
Xpedite. These costs consist of severance associated with workforce reduction,
lease termination costs resulting from exiting certain facilities and asset
impairments resulting from management's decision to upgrade certain network
based telecommunications equipment in order to more efficiently integrate the
Premiere and Xpedite telecommunications networks. The Company also recorded the
costs to settle a patent infringement claim made against Xpedite. This
settlement was paid in April 1998.

Xpedite recorded restructuring and other special charges of approximately $16.5
million before income taxes in the fourth quarter of 1997. Such amounts result
principally from transaction costs incurred by Xpedite in connection with its
merger with the Company, including legal and professional fees and a $9.5
million transaction "break-up" fee paid by Xpedite to a company which was party
to an unsuccessful attempt to acquire Xpedite. In addition, Xpedite recorded
charges for severance and asset impairment costs associated with closing its
existing United Kingdom ("UK") based operation. These actions were an integral
part of Xpedite management's plan to restructure its European operations by
acquiring its UK affiliate, XSL, and centralizing administration of European
business operations in the newly acquired organization.

In connection with the VoiceCom Acquisition, the Company recorded restructuring
and other special charges of approximately $28.2 million in the third quarter of
1997. Such amounts consisted of transaction costs, asset impairments, costs to
terminate or restructure certain contractual obligations and other costs.

The Company recorded approximately $45.4 million of restructuring and other
special charges before income taxes in the second quarter of 1997 in connection
with the Voice-Tel Acquisitions. Those charges result from management's plan to
restructure the operations of the Voice-Tel Entities under a consolidated
business group model and discontinue its franchise operations. This initiative
involves substantial reduction in the administrative workforce, abandoning
duplicative facilities and assets and other costs necessary to discontinue
redundant business activities.
16

OTHER MATTERS

It is possible that a significant portion of the Company's 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 the Company's 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 the
years 1999, 2000 or thereafter without error or interruption (commonly known as
the "Year 2000" problem). The Company is currently in the process of evaluating
its Systems to determine whether or not modifications will be required to
prevent problems related to the Year 2000. There can be no assurance that the
Company will identify all such Year 2000 problems in its Systems or those of its
customers or vendors, including network transmission providers, in advance of
their occurrence or that the Company will be able to successfully remedy any
problems that are discovered. In addition, the Company is 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 the Company's
efforts to identify and address such problems, the expenses or liabilities to
which the Company 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 the Company's 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 the Company's
revenues. In addition, failure of the Company to identify and remedy Year 2000
problems could put the Company at a competitive disadvantage relative to
companies that have corrected Year 2000 problems.

NEW ACCOUNTING PRONOUNCEMENTS

In 1997 the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." Management is currently studying the impact
the new Standards will have on its financial statement disclosures.

FORWARD-LOOKING STATEMENTS

When used in this Quarterly Report on Form 10-Q, in documents incorporated
herein and elsewhere by management or the Company from time to time, the words
"believes," "anticipates," "expects," "will" and similar expressions are
intended to identify forward-looking statements concerning the Company's
operations, economic performance and financial condition, including in
particular, the Company's business strategy and means to implement the strategy,
goals, the amount of capital expenditures, and the likelihood of the Company's
success in developing and expanding its business. For those statements, the
Company claims 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 the control of the Company, 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 the Company's forward-looking statements,
including the following factors: (a) those set forth under the caption "Risk
Factors" in the Company's Registration Statement on Form S-3 (333-50003) and
elsewhere herein; (b) those set forth from time to time in the Company's press
releases and reports and other filings made with the Securities and Exchange
Commission; (c) expected cost savings from the merger (the "Xpedite Merger")
with Xpedite Systems, Inc. ("Xpedite") and any other acquisitions may not be
fully realized or realized within the expected time frame; (d) revenues
following the Xpedite Merger and other acquisitions may be lower than expected,
operating costs or customer loss and business disruption following the Xpedite
Merger and any other acquisitions may be greater than expected; (e) competitive
pressures among enhanced communications services providers may increase
significantly; (f) costs or difficulties related to the integration of the
businesses of Xpedite and Premiere and other businesses, if any, that may be
acquired by Premiere may be greater than expected; (g) general economic or
business conditions, internationally, nationally or in the local jurisdiction in
which Premiere is doing business, may be less favorable than expected; (h)
legislative or regulatory changes may adversely affect the business in which
Premiere is engaged; (i) changes may occur in the securities markets; and (j)
the Company's ability to manage the Company's growth and to respond to rapid
technological change and risk of obsolescence of the Company's products,
services and technology. The Company cautions that such factors are not
exclusive. Consequently, all of the forward-looking statements made in this
Prospectus are qualified by these cautionary statements and readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revisions to such forward-looking statements
that may be made to reflect events or circumstances after the date hereof, or
thereof, as the case may be, or to reflect the occurrence of unanticipated
events.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

PART II

OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

On January 21, 1997, Eric Bott, E.B. Elliott and Cost Recovery Systems, Inc.
("CRS") filed a complaint against the Company, PCI and the Company's
president, Boland T. Jones, in the Superior Court of Fulton County, Georgia
("Civil Action"). As of December 2, 1997, the Company, PCI and Mr. Jones
entered into a settlement agreement with Mr. Bott which settled and disposed
of Mr. Bott's claims in connection with this litigation. On December 12, 1997,
Mr. Elliott and CRS filed a Second Amended Complaint against Premiere and
Boland T. Jones in the Civil Action. The first count seeks an accounting of
commissions that Mr. Elliott and CRS allege may be due to them under a sales
commission agreement between CRS and Premiere. The second count seeks options
for 72,000 shares of Premiere Common Stock that Mr. Elliott and CRS claim are
due to them, or damages in the alternative. The third count seeks to recover
the Plaintiffs' reasonable attorneys' fees. In the Second Amended Complaint,
the remaining plaintiffs have dropped their prior request for punitive
damages. The Company believes it has meritorious defenses to Mr. Elliott's and
CRS' remaining allegations, but due to the inherent uncertainties of the
litigation process, the Company is unable to predict the outcome of this
litigation. If the outcome of this litigation is adverse to the Company, it
could have a material adverse effect on the Company's business, financial
condition and results of operations. The settlement with Mr. Bott will not
have a material adverse effect on the Company's business, financial condition
or results of operations.

On August 6, 1996, CNC, a licensing customer of the Company, was placed into
bankruptcy (the "Bankruptcy Case") under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code"). On August 23, 1996, CNC filed a
motion to intervene in a separate lawsuit brought by a CNC creditor in the
United States District Court for the Southern District of New York against
certain guarantors of CNC's obligations and to file a third-party action
against numerous entities, including such CNC creditor and PCI for alleged
negligent misrepresentations of fact in connection with an alleged fraudulent
scheme designed to damage CNC (the "Intervention Suit"). The District Court
has denied CNC's requests to intervene and to file a third party action and
has transferred the remainder of the Intervention Suit to the Bankruptcy Case.
Based upon the bankruptcy examiner's findings and the subsequently appointed
bankruptcy trustee's investigation of potential actions directed at PCI,
including an avoidable preference claim under the Bankruptcy Code of an amount
up to approximately $950,000, the bankruptcy trustee (the "Trustee") and PCI
have reached a tentative settlement on all issues between the parties, subject
to Bankruptcy Court approval. The terms of the proposed settlement have been
incorporated into a proposed plan of reorganization (the "Plan") filed by the
Trustee with the Bankruptcy Court, which is also subject to Bankruptcy Court
approval. Based upon hearings before the Bankruptcy Court, the Trustee filed
on November 18, 1997, a motion requesting approval of the settlement to
accompany the Plan. If only the settlement is approved, PCI will obtain a
release from the Trustee and the Trustee will dismiss the Intervention Suit in
consideration of PCI making a cash payment of $1,200,000 to the Trustee. If
the Plan is subsequently approved by the Court, PCI will make an additional cash
payment of up to $300,000 to the Trustee in consideration of PCI obtaining
certain allowed subordinated claims and the Court granting an injunction in
Premiere's favor against possible nuisance suits relating to the CNC business.
The Company has previously established a reserve for the settlement and Plan
payments. If the outcome of this matter is adverse to PCI, the settlement is not
approved and the Trustee successfully pursues possible litigation against the
Company, it could have a material adverse effect on the Company's business,
operating results or financial condition.

On November 26, 1997, Wael Al-Khatib ("Al-Khatib"), the sole shareholder and
former president of CNC, and his company, Platinum Network, Corp. ("Platinum")
(Al-Khatib and Platinum are collectively referred to herein as "Plaintiffs"),
filed a complaint against PCI, WorldCom Network Services, Inc. f/k/a WilTel,
Inc., 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 (the "Defendants") in the United
States District Court for the Eastern District of New York (the "Al-Khatib
lawsuit"). Plaintiffs contend that, during 1996, 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. Pursuant to the local
rules of the District Court, PCI has filed a letter stating the reasons it
believes the lawsuit should be dismissed. On May 1, 1998, the Company filed a
motion to dismiss for failure to state a claim. The individual PCI defendants,
Boland Jones and Patrick Jones, filed a separate motion to dismiss based upon
lack of personal jurisdiction. PCI believes that it has meritorious defenses to
the Plaintiffs' allegations and will vigorously defend the same. Due to the
inherent uncertainties of the judicial system, the Company is not able to
predict the outcome of the Al-Khatib lawsuit. If the Al-Khatib lawsuit is not
resolved in the Company's favor, it could have a material adverse effect on the
Company's business, financial condition and results of operations.

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 lawsuit is styled Rudolf R. Nobis and
Constance Nobis v. Edward Angrisani, et al., Civil Action File No. UNN-L-113698,
Superior Court of New Jersey Law Division: Union County. 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. The plaintiffs allege that
Xpedite knew or should have known of alleged wrongdoing on the part of other
defendants. The plaintiffs' claims against Xpedite include breach of contract,
breach of fiduciary duty, unjust enrichment, conversion, fraud, conspiracy,
interference with economic advantage and liability for ultra vires acts. The
plaintiffs seek an accounting of the corporate stock in Xpedite, compensatory
damages of $4,845,953.13, 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. Xpedite intends to file an answer denying the material
allegations of the complaint and asserting various affirmative defenses and a
motion to dismiss the counts of the complaint against it. Premiere believes that
Xpedite has meritorious defenses to the plaintiffs' allegations, but due to the
inherent uncertainties of the litigation process, Premiere is unable to predict
the outcome of this litigation. If the outcome of this litigation is adverse to
Xpedite, it could have a material adverse effect on the Company's business,
operating results and financial condition.

ITEM 2. CHANGES IN SECURITIES.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

A special meeting of the Comany's shareholders was held on February 27, 1998. At
the meeting the following matters were voted upon, with the following results:

1. Approval of Issuance of Shares Pursuant to Merger Agreement. Shareholders
voted upon the issuance of shares of common stock, par value $.01 per share, of
the Company, pursuant to an Agreement and Plan of Merger, dated as of November
13, 1997, by and among the Company, Nets Acquisition Corp., a wholly-owned
subsidiary of the Company, and Xpedite Systems, Inc. ("Xpedite"), pursuant to
which Xpedite became a wholly-owned subsidiary of the Company and each share of
Xpedite common stock was converted into the right to receive shares of the
Company's common stock. The results of the voting with respect to the issuance
of shares pursuant to the Merger Agreement were as follows:

Votes Votes
In Favor Against Abstentions
- ---------- ------- -----------
25,942,749 14,344 143,507

2. Approval of Amendment to 1995 Stock Plan. Shareholders voted upon an
amendment to the Company's Second Amended and Restated 1995 Stock Plan, which
increased the number of shares of the Company's common stock, par value $.01 per
share, reserved for issuance from 4,000,000 to 8,000,000. The results of the
voting with respect to this amendment were as follows:

Votes Votes
In Favor Against Abstentions
- ---------- --------- -----------
20,007,527 5,952,803 140,270

ITEM 5. OTHER INFORMATION.

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit Exhibit
Number Description
- ------- -----------

10.1 Credit Agreement dated as of December 17, 1997, among
Xpedite Systems, Inc. and Xpedite Systems Holdings (UK)
Limited, as Borrowers, the Guarantors party thereto, the
Banks listed on the signature pages thereto, NationsBank,
N.A., as Documentation Agent, and The Bank of New York, as
Administrative Agent.

10.2 Amendment No. 1 dated as of February 27, 1998, to Credit
Agreement dated as of December 17, 1997, among Xpedite
Systems, Inc., Xpedite Systems Holdings (UK) Limited,
Premiere Technologies, Inc., the Banks that are parties to
the Credit Agreement and The Bank of New York, as
Administrative Agent.

10.3 Share Purchase Agreement dated as of August 8, 1997, by and
among Xpedite Systems, Inc., Xpedite Systems Holdings (UK)
Limited, and the shareholders of Xpedite Systems Limited
(incorporated by reference to Exhibit 99.3 to the
Registrant's Current Report on Form 8-K dated November 13,
1997 and filed December 5, 1997, as amended by Form 8-K/A
filed December 23, 1997 and Form 8-K/A filed January 27,
1998).

10.4 Amendment to the Share Purchase Agreement, dated December
17, 1997, by and among Xpedite Systems, Inc., Xpedite
Systems Holdings (UK) Limited and the shareholders of
Xpedite Systems Limited.

10.5 Amended and Restated Employment Agreement, made as of April
30, 1997, by and between Xpedite Systems, Inc. and Roy B.
Andersen, Jr.

11.1 Statements re: computation of per share earnings.

27.1 Financial Data Schedule for the Three Months Ended March 31,
1998

27.2 Restated Financial Data Schedule for the Three Months Ended
March 31, 1997

(b) Reports on Form 8-K:

The following reports on Form 8-K were filed during the quarter for which this
report is filed:

Entities for Which
Date of Report Item(s) Reported Financial Statements Filed
- -------------- ---------------- --------------------------

January 27, 1998 Amendment of current report on Form 8-K Premiere Technologies, Inc.
dated November 13, 1997 to amend and
restate "Pro Forma Condensed Combined
Financial Information."

February 20, 1998 Announcement of unaudited operating results Premiere Technologies, Inc.
for the three and twelve months ended
December 31, 1997.

March 13, 1998 Announcement of consummation of the
acquisition of Xpedite Systems, Inc. by the
Company on February 27, 1998.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

May 15, 1998 Premiere Technologies, Inc.
- -----------------
Date

/s/ Boland T. Jones
--------------------------------
Boland T. Jones
Chairman of the Board and President

May 15, 1998 /s/ Harvey A. Wagner
- ----------------- --------------------------------
Date Harvey A. Wagner
Executive Vice President
Finance and Administration
and Chief Financial Officer

EXHIBIT INDEX

Exhibit Exhibit
Number Description Page
- ------- ----------- ----

10.4 Amendment to the Share Purchase Agreement, dated December
17, 1997, by and among Xpedite Systems, Inc., Xpedite
Systems Holdings (UK) Limited and the shareholders of
Xpedite Systems Limited.

10.5 Amended and Restated Employment Agreement, made as of April
30, 1997, by and between Xpedite Systems, Inc. and Roy B.
Andersen, Jr.

11.1 Statements re: computation of per share earnings.

27.1 Financial Data Schedule for the Three Months Ended
March 31, 1998.

27.2 Restated Financial Data Schedule for the Three Months
ended March 31, 1997.