================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] 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 : 0-27594
TRESCOM INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
FLORIDA 65-0454571
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
200 EAST BROWARD BOULEVARD,
FT. LAUDERDALE, FLORIDA 33301
(Address of Principal Executive Offices) (Zip Code)
(954) 763-4000
(Registrant's telephone number, including area code)
----------------------------------------------------------------
(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. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuers classes of
Common Stock, as of the latest practicable date.
CLASS OUTSTANDING
Common Stock, par value 11,986,505 shares on
$0.0419 per share November 10, 1997
================================================================================
<PAGE>
TRESCOM INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1997
(Unaudited) and December 31, 1996 ............................... 3
Unaudited Consolidated Statements of Operations for the
three and nine months ended September 30, 1997 and 1996 ........ 4
Unaudited Consolidated Statement of Shareholders'
Equity at September 30, 1997 ................................... 5
Unaudited Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1996 ................. 6
Notes to Unaudited Consolidated Financial Statements .......... 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................ 9
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk ..... 11
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ............................................... 12
ITEM 2. Changes in Securities and Use of Proceeds ....................... 12
ITEM 3. Default Upon Senior Securities .................................. 12
ITEM 4. Submission of Matters to a Vote of Security-Holders ............. 12
ITEM 5. Other Information ............................................... 12
ITEM 6. Exhibits and Reports on Form 8-K ................................ 12
SIGNATURES
2
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------------------------------------
(Unaudited)
(In thousands, except share and
per share data)
<S> <C> <C>
Current assets:
Cash............................................................................. $ 1,573 $ 6,020
Accounts and notes receivable, net of allowance for doubtful accounts of
$8,493 and $7,588, respectively............................................... 33,349 29,063
Other current assets............................................................. 3,370 3,441
---------------------------------------------
Total current assets.......................................................... 38,292 38,524
Property and equipment, at cost:
Transmission and communications equipment........................................ 27,864 24,691
Furniture, fixtures and other.................................................... 7,348 5,600
---------------------------------------------
35,212 30,291
Less accumulated depreciation and amortization................................... (8,624) (5,755)
---------------------------------------------
26,588 24,536
Other assets:
Customer bases, net of accumulated amortization of $2,117 and
$1,358, respectively........................................................... 3,542 3,806
Excess of cost over net assets of businesses acquired, net of
accumulated amortization of $3,191 and $2,368, respectively.................... 37,711 34,260
Other............................................................................ 1,494 484
---------------------------------------------
Total assets...................................................................... $ 107,627 $ 101,610
=============================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................. $ 594 $ 2,758
Accrued network costs............................................................ 20,460 19,546
Other accrued expenses........................................................... 7,024 5,395
Long-term obligations due within one year........................................ 1,070 817
Deferred revenue and other current liabilities................................... 1,677 1,807
--------------------------------------------
Total current liabilities..................................................... 30,825 30,323
Long-term obligations (Note 3).................................................... 13,051 3,965
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized; no shares issued
and outstanding.............................................................. --- ---
Common stock, $.0419 par value; 50,000,000 shares authorized; 11,986,505
shares issued and outstanding; 11,804,675 shares issued
and outstanding ............................................................ 501 493
Deferred compensation............................................................ (638) (808)
Additional paid-in capital....................................................... 107,419 106,140
Accumulated deficit.............................................................. (43,531) (38,503)
--------------------------------------------
Total shareholders' equity......................................................... 63,751 67,322
--------------------------------------------
Total liabilities and shareholders' equity......................................... $107,627 $101,610
============================================
See accompanying notes.
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1997 1996 1997 1996
-----------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues....................................... $ 40,163 $ 36,007 $ 116,395 $ 101,859
Cost of services............................... 31,592 27,188 90,463 77,446
-----------------------------------------------------------------------------------
Gross profit................................... 8,571 8,819 25,932 24,413
Selling, general and administrative............ 8,794 7,975 25,926 22,289
Depreciation and amortization.................. 1,751 1,236 4,824 3,493
-----------------------------------------------------------------------------------
Operating loss............................. (1,974) (392) (4,818) (1,369)
Interest expense, net...................... 103 (103) 211 808
-----------------------------------------------------------------------------------
Loss before extraordinary item................. (2,077) (289) (5,029) (2,177)
Extraordinary loss on early extinguishment of
debt........................................... -- -- -- 1,956
----------------------------------------------------------------------------------
Net loss....................................... $ (2,077) $ (289) $ (5,029) $ (4,133)
==================================================================================
Per share data (Pro forma prior to February 8,
1996)
Loss before extraordinary item............... $ (0.18) $ (0.02) $ (0.43) $ (0.20)
Extraordinary item........................... -- -- -- (0.18)
----------------------------------------------------------------------------------
Net loss per common share...................... $ (0.18) $ (0.02) $ (0.43) $ (0.38)
==================================================================================
Weighted average number of shares of common
stock outstanding ............................. 11,897 12,200 11,845 11,533
==================================================================================
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
Common Stock
------------------------------------
Additional Total
Paid-in Deferred Accumulated Stockholders'
Shares Amount Capital Compensation Deficit Equity
---------------------------------------------------------------------------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996............... 11,804,675 $ 493 $ 106,140 $(808) $ (38,503) $ 67,322
Exercise of stock options.................. 16,769 1 6 --- --- 7
Non-cash compensation expense.............. --- --- --- 162 --- 162
Net loss................................... --- --- --- --- (1,276) (1,276)
----------------------------------------------------------------------------------
Balance at March 31, 1997.................. 11,821,444 494 106,146 (646) (39,779) 66,215
Non-cash compensation expense.............. --- --- --- 3 --- 3
Net loss................................... --- --- --- --- (1,675) (1,675)
----------------------------------------------------------------------------------
Balance at June 30,1997.................... 11,821,444 494 106,146 (643) (41,454) 64,543
Common Stock issued in connection with
acquisitions............................. 165,061 7 1,273 --- --- 1,280
Non-cash compensation expense............... --- --- --- 5 --- 5
Net loss.................................... --- --- --- --- (2,077) (2,077)
-----------------------------------------------------------------------------------
Balance at September 30, 1997............... 11,986,505 $ 501 $ 107,419 $ (638) $ (43,531) $ 63,751
===================================================================================
See accompanying notes.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
-------------------------------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before extraordinary item...................................... $ (5,029) $ (2,177)
Extraordinary loss on early extinguishment of debt.................. --- (1,956)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization................................... 4,824 3,493
Non-cash interest expense ...................................... --- 599
Non-cash compensation .......................................... 170 1,195
Changes in operating assets and liabilities, net
of effects of acquisitions:
Accounts and notes receivable............................... (3,724) (11,002)
Other current assets........................................ 80 (2,608)
Accounts payable............................................ (2,321) 96
Accrued network costs....................................... 262 6,457
Other accrued expenses...................................... (1,638) 63
Deferred revenue and other current liabilities.............. (846) (112)
---------------------------------
Net cash used in operating activities............................... (8,222) (5,952)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................................. (4,517) (8,866)
Expenditures for line installations................................. (1,091) (60)
Cash acquired in purchases of businesses............................ 275 ---
---------------------------------
Net cash used in investing activities............................... (5,333) (8,926)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock.......................... --- 50,727
Costs relating to initial public offering .......................... --- (1,954)
Proceeds from debt.................................................. 4,350 ---
Proceeds from capital lease arrangements............................ 1,136 3,701
Proceeds from revolving credit agreement........................... 8,840 ---
Costs relating to revolving credit facility......................... (238) ---
Repayment of revolving credit facility ............................. --- (23,742)
Repayment of sellers' note ......................................... --- (1,000)
Repayment of notes payable to shareholder........................... --- (8,476)
Repayment of debt................................................... (4,362) (302)
Proceeds from stock option exercise ................................ 7 59
Principal payments on capital lease obligations..................... (625) (118)
----------------------------------
Net cash provided by financing activities........................... 9,108 18,895
----------------------------------
Net change in cash.................................................. (4,447) 4,017
Cash at beginning of period......................................... 6,020 2,052
----------------------------------
Cash at end of period............................................... $ 1,573 $ 6,069
==================================
Interest paid....................................................... $ 439 $ 424
==================================
See accompanying notes.
</TABLE>
6
<PAGE>
TRESCOM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1. GENERAL
ORGANIZATION AND BASIS OF PRESENTATION
TresCom International, Inc. (together with its subsidiaries
collectively referred to as the "Company") is a facilities based long distance
telecommunications carrier focused on international long distance traffic. The
Company offers telecommunications services, including long distance, calling
cards, prepaid debit cards, domestic and international toll-free calling, frame
relay and bilingual operator services.
These financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and
Securities and Exchange Commission regulations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such regulations. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the financial
position, results of operations and cash flows for the interim periods a fair
presentation. All such adjustments are of a normal recurring nature. The
preparation of financial statements in conformity with generally accepted
accounting principles 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
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates. These financial statements should be
read in conjunction with the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996. The results of operations for the interim periods
shown are not necessarily indicative of results of operations to be expected for
the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
References should be made to the Notes to Consolidated Financial
Statements in the Company's Form 10-K for the fiscal year ended December 31,
1996, specifically Note 2, for a summary of the Company's significant accounting
policies.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation and
amortization is provided for financial reporting purposes using the
straight-line method over the following estimated useful lives:
Transmission and communications equipment 3 to 20 years
Furniture, fixtures and other 3 to 7 years
During the first quarter of 1997, the Company changed the estimated
useful life of fiber optic underseas cables from 10 years to 20 years to conform
to the predominant industry standard. The change in depreciation expense
associated with the revised estimated useful life is currently immaterial.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with
current year presentation.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("SFAS 128"), which is required to be
adopted on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The Company
has not yet determined what the impact of SFAS 128 will be on the calculation of
fully diluted earnings per share.
7
<PAGE>
<TABLE>
<CAPTION>
3. LONG-TERM OBLIGATIONS
A summary of long-term obligations is as follows: SEPTEMBER 30, DECEMBER 31,
1997 1996
<S> <C> <C>
---------------------------------------
Revolving Credit Agreement..................................................... $ 8,840 $ ---
Loans payable to the Small Business Administration,
bearing interest at 4%, due in monthly principal and
interest payments of $3 through February 2015,
collateralized by a security agreement covering assets..................... 405 416
Capital leases bearing interest at rates ranging from 9% to
11% and payable in monthly installments totaling $129..................... 4,876 4,366
---------------------------------------
14,121 4,782
Less amounts due within one year............................................... 1,070 817
---------------------------------------
$ 13,051 $ 3,965
=======================================
</TABLE>
The Company had a $5,000 line of credit with a commercial bank (the "Credit
Facility"), secured by certain accounts receivable. The Credit Facility
contained standard debt covenants relating to financial position and
performance, as well as restrictions on the declaration and payment of
dividends. In July 1997, the Company entered into a new $25.0 million revolving
credit and security agreement (the "Revolving Credit Agreement") with a
commercial bank secured by the Company's accounts receivable. On July 31, 1997,
borrowings under the Revolving Credit Agreement were utilized to repay, in full,
all outstanding borrowings under the Credit Facility. As of September 30, 1997,
availability under the Revolving Credit Agreement was $15.5 million, of which
$9.5 million (including $0.6 million of letters of credit) has been utilized.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
4 STOCK OPTION PLAN
The following table summarizes all option activity for the nine months
ended September 30, 1997:
<TABLE>
<CAPTION>
Weighted
Number of Average
Options Exercisable Exercise
Granted Options Price
---------------------------------------------
<S> <C> <C> <C>
Outstanding as of December 31, 1996....... 496,263 23,713 $10.37
Granted................................... 414,000 --- 7.50
Forfeited................................. 21,000 --- 7.50
Exercised................................. 16,769 --- 0.42
---------------------------------------------
Outstanding as of March 31, 1997.......... 872,494 72,345 9.18
Granted................................... --- --- ---
Forfeited................................. 14,290 --- 11.39
Exercised................................. --- --- ---
---------------------------------------------
Outstanding as of June 30, 1997........... 858,204 81,907 10.40
Granted................................... 28,000 --- 11.04
Forfeited................................. 11,000 --- 9.95
Exercised................................. --- --- ---
---------------------------------------------
Outstanding as of September 30, 1997...... 875,204 88,007 $10.43
=============================================
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUMMARY
TresCom is a facilities based long distance telecommunications carrier
focused on international long distance traffic. The Company offers a broad array
of competitively priced services, including long distance, calling cards,
prepaid debit cards, domestic and international toll-free calling, frame relay
and bilingual operator services. The Company derives its revenues by providing
international and domestic long distance services on a wholesale basis to other
telecommunications carriers and resellers and on a retail basis to residential
and commercial customers, ranging in size from small businesses to Fortune 500
companies. Service revenues are based on minutes of use and charged at a rate
per minute which varies according to the termination point of the traffic and
time of day. All revenues are billed in United States dollars.
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 1996
REVENUES. Revenues increased 11.5%, or $4.2 million, from $36.0 million
in the third quarter of 1996 to $40.2 million in the third quarter of 1997, and
14.3%, or $14.5 million, from $101.9 million for the nine months ended September
30, 1996 to $116.4 million for the nine months ended September 30, 1997. This
increase is primarily due to an increased percentage of international traffic,
which is billed at a higher rate per minute than domestic traffic. Approximately
77% of the revenue generated in each of the three and nine months ended
September 30, 1996 was international revenue compared with approximately 80% of
the revenue generated for the three and nine months ended September 30, 1997.
Minutes of use increased 16.9%, or 20.2 million, from 119.2 million in
the third quarter of 1996 to 139.4 million in the third quarter of 1997, and
18.4%, or 61.3 million, from 332.9 million for the nine months ended September
30, 1996 to 394.2 million for the nine months ended September 30, 1997. The
blended rate per minute remained constant at approximately $0.30.
COSTS OF SERVICES. Costs of services increased 16.2%, or $4.4 million,
from $27.2 million in the third quarter of 1996 to $31.6 million in the third
quarter of 1997, and 16.8%, or $13.0 million, from $77.5 million for the nine
months ended September 30, 1996 to $90.5 million for the nine months ended
September 30, 1997. The increased costs are a factor of increased minutes of
use, the costs of which are variable in nature, partially offset by a slight
decrease in the overall cost per minute. The fractional cost per minute
reduction is a result of increased terminations to lower cost countries within
the international mix and the continued benefit derived from certain direct
operating agreements providing lower termination costs.
GROSS PROFIT. Gross profit decreased 2.8%, or $0.2 million, from $8.8
million in the third quarter of 1996 to $8.6 million in the third quarter of
1997, and increased 6.2%, or $1.5 million, from $24.4 million for the nine
months ended September 30, 1996 to $25.9 million for the nine months ended
September 30, 1997. As a percentage of revenues, gross profit decreased slightly
from approximately 24% of revenues for the three and nine months ended September
30, 1996 to approximately 22% for the three and nine months ended September 30,
1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased 10.3%, or $0.8 million, from $8.0 million in
the third quarter of 1996 to $8.8 million in the third quarter of 1997, and
16.3%, or $3.6 million, from $22.3 million for the nine months ended September
30, 1996 to $25.9 million for the nine months ended September 30, 1997. This
increase was primarily due to variable costs associated with growth in the
retail business, such as advertising, commissions and billing costs.
9
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 41.7%, or $0.5 million, from $1.2 million in the third quarter of 1996
to $1.7 million in the third quarter of 1997, and 38.1%, or $1.3 million, from
$3.5 million for the nine months ended September 30, 1996 to $4.8 million for
the nine months ended September 30, 1997. This increased expense is due to the
depreciation of assets acquired to support continued expansion of the Company's
network and amortization related to acquired businesses and customer bases.
INTEREST EXPENSE, NET. Interest expense, net, increased 200%, or $0.2
million, from $(0.1) million in the third quarter of 1996 to $0.1 million in the
third quarter of 1997, and decreased 73.9%, or $0.6 million, from $0.8 million
for the nine months ended September 30, 1996 to $0.2 million for the nine months
ended September 30, 1997. The income in the third quarter of 1996 was a result
of interest earned on investments made with the net proceeds received from the
Company's initial public offering in February 1996. Interest expense for the
nine months ended September 30, 1996 was associated with borrowings under the
Company's Credit Facility and a note payable to a former shareholder, each of
which was paid off with proceeds from the Company's initial public offering.
Interest expense for the third quarter of 1997 is associated with interest on
the Company's capital leases and borrowings under the Revolving Credit
Agreement.
EXTRAORDINARY ITEM. Extraordinary expense decreased 100%, or $2.0
million for the first nine months of 1996 compared to the first nine months of
1997. The extraordinary expense in 1996 was a result of the early extinguishment
of debt of $35.8 million in February. Approximately $1.5 million was
attributable to debt and warrants payable to a major shareholder of the Company
and approximately $0.4 million was related to the write-off of deferred
financing costs associated with borrowings under a bank facility between one of
the Company's subsidiaries and a commercial bank.
NET LOSS. Net loss increased 618.7%, or $1.8 million, from $0.3 million
in the third quarter of 1996 to $2.1 million in the third quarter of 1997, and
21.7%, or $0.9 million, from $4.1 million for the nine months ended September
30, 1996 to $5.0 million for the nine months ended September 30, 1997 due to the
above factors.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from working capital needs,
primarily the cost of services, selling, general and administrative expenses,
and capital costs associated with expansion of switching capacity. The Company
is a holding company the principal assets of which are the capital stock of its
direct subsidiaries and has no independent means of generating revenues. As a
holding company, the Company's internal sources of funds to meet its cash needs,
including payment of expenses, are dividends and other permitted payments from
its direct and indirect subsidiaries. Historically, the Company's working
capital requirements have been funded primarily from the sale of equity
securities, bank borrowings and loans from shareholders.
During the fourth quarter of 1996, the Company established the Credit
Facility. The Credit Facility, as amended on March 27, 1997, contained standard
debt covenants relating to financial position and performance, as well as
restrictions on the declaration and payment of dividends. Through July 31, 1997,
the Company was either in compliance with or received waivers with respect to
all covenants contained in the Credit Facility. On July 31, 1997, the Company
entered into the Revolving Credit Agreement. On such date, all borrowings under
the Credit Facility were repaid in full with borrowings under the Revolving
Credit Agreement and the Credit Facility was terminated. As of November 4, 1997,
availability under the Revolving Credit Agreement was $17.1 million, of which
$12.0 million (including $0.6 million of letters of credit) had been utilized.
The Company is currently in compliance with all covenants contained in the
Revolving Credit Agreement.
The Company currently has capital commitments of approximately $1.1
million. Pending available financing, the Company has identified approximately
$9.0 million of additional capital expenditures designed to expand the Company's
operations. The Company is currently reviewing various alternative financing
arrangements. There can be no assurance, however, that such alternative
financing arrangements will be available, or if available, on terms acceptable
to the Company.
10
<PAGE>
From time to time, the Company evaluates acquisitions of businesses and
customer bases which complement the business of the Company. Depending on the
cash requirements of potential transactions, the Company may finance
transactions with cash flow from operations, with funds from the Revolving
Credit Agreement, or the Company may raise additional funds by pursuing various
financing vehicles such as new bank financing or one or more public offerings or
private placements of the Company's securities. The Company, however, has no
present understanding, commitment or agreement with respect to any acquisition
and there can be no assurance that any such acquisition will occur, or that the
funds to finance any such acquisition will be available on reasonable terms or
at all.
Based on management's projections, the Company believes that cash from
operations and the available funds under the Revolving Credit Agreement will
provide sufficient funds for its operating needs for the foreseeable future. The
Company is seeking additional financing arrangements to fund the $9.0 million of
additional capital expenditures discussed above. There can be no assurance,
however, that such alternative financing arrangements will be available, or if
available, on terms acceptable to the Company. If additional funds are needed
and sources are not available, the Company's business and results of operations
could be materially adversely affected. The Company has retained the services of
an investment banking firm to assist in actively seeking alternative means of
financing or identifying strategic partners.
Reference is made to the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the Company's 1996
Annual Report on Form 10-K for a description of certain factors that may affect
the Company's future results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This requirement is not currently applicable to the Company.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
Item 3. DEFAULT UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None.
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1997.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Ft.
Lauderdale, State of Florida, on the 13th day of November, 1997.
TRESCOM INTERNATIONAL, INC.
---------------------------
(Registrant)
/s/ Wesley T. O'Brien
-----------------------------------------
Wesley T. O'Brien
President and Chief Executive Officer
/s/ William A. Paquin
----------------------------------------
William A. Paquin
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET OF TRESCOM INTERNATIONAL, INC. AT SEPTEMBER
30, 1997, AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,573
<SECURITIES> 0
<RECEIVABLES> 41,842
<ALLOWANCES> 8,493
<INVENTORY> 0
<CURRENT-ASSETS> 38,292
<PP&E> 35,212
<DEPRECIATION> 8,624
<TOTAL-ASSETS> 107,627
<CURRENT-LIABILITIES> 30,825
<BONDS> 0
0
0
<COMMON> 501
<OTHER-SE> 63,250
<TOTAL-LIABILITY-AND-EQUITY> 107,627
<SALES> 116,395
<TOTAL-REVENUES> 116,395
<CGS> 90,463
<TOTAL-COSTS> 25,926
<OTHER-EXPENSES> 4,824
<LOSS-PROVISION> (4,818)
<INTEREST-EXPENSE> 211
<INCOME-PRETAX> (5,029)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,029)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,029)
<EPS-PRIMARY> (0.43)
<EPS-DILUTED> (0.43)
</TABLE>
