<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 9, 1998
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
---------------------------------------------
(Exact name of issuer as specified in charter)
Delaware 0-29-092 54-1708481
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1700 Old Meadow Road
McLean, Virginia 22102
(Address of principal executive offices)
(703) 902-2800
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
On June 9, 1998, pursuant to an Agreement and Plan of Merger dated as
of February 3, 1998, as amended (the "Merger Agreement"), Taurus Acquisition
Corporation ("TAC") a Florida corporation and wholly-owned subsidiary of Primus
Telecommunications Group, Incorporated (the "Company" or "Primus"), merged with
and into TresCom International, Inc. ("TresCom"), a Florida corporation
(the "Merger"). Under the terms of the Merger Agreement, TresCom shareholders,
will receive 0.6147 shares of the Company's common stock in exchange for each
share of TresCom common stock outstanding at the effective time of the Merger,
other than shares beneficially owned by the Company or its affiliates. The
exchange ratio was determined
<PAGE>
pursuant to the Merger Agreement by dividing $12.00 by $19.5223, which was the
weighted average sales price of the Company's common stock during the 20-trading
day period ending on June 4, 1998. As a result of the consummation of the
Merger, TresCom has become a wholly-owned subsidiary of the Company. Based upon
the 12,748,277 shares of TresCom common stock outstanding as of the closing
date, Primus expects to issue approximately 7,836,365 shares of Primus common
stock in connection with the Merger.
As a result of the Merger, Warburg, Pincus Investors, LP ("Warburg,
Pincus"), which beneficially owned approximately 52% of TresCom's common stock,
will beneficially own approximately 14.3% of Primus's common stock. So long as
Warburg, Pincus beneficially owns at least 10% of the outstanding common stock
of Primus it will be entitled to nominate one person to serve on the Primus
Board of Directors. Incident to the Merger, Douglas Karp, Managing Director of
E. M. Warburg, Pincus & Co., LLC, was appointed as a member of Primus's Board of
Directors.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
-----------------------------------------------------------------
(a) Financial Statements of Business Acquired.
The financial statements of the business acquired, TresCom
International, Inc., as of December 31, 1997 and 1996, and for the
years then ended, required by this item were previously filed with the
Form S-4 Registration Statement (No. 333-51797), filed with the
Securities and Exchange Commission on May 4, 1998, and are not included
herein pursuant to General Instruction B.3. for Form 8-K. Included in
this report are the financial statements of TresCom International Inc.
as of March 31, 1998 and for the periods ended March 31, 1998 and 1997.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item are
contained in the financial statements and footnotes thereto listed in
the Index on page F-1.
(c) Exhibits.
2.1 Agreement and Plan of Merger by and among Primus, TresCom and TAC,
dated as of February 3, 1998, and as amended by Amendments No. 1 and 2
to Agreement and Plan of Merger dated as of April 8, 1998 and as of
April 16, 1998, respectively; Incorporated by reference to Appendix A
to the Joint Proxy Statement/Prospectus on Form S-4, No. 333-51797
dated May 4, 1998.
2.2 Amendment No. 1 to Agreement and Plan of Merger among Primus, TresCom
and TAC, dated as of April 8, 1998; Incorporated by reference to
Exhibit 2.1 of the Primus Current Report on Form 8-K dated April 10,
1998.
2
<PAGE>
2.3 Amendment No. 2 to Agreement and Plan of Merger among Primus, TresCom
and TAC, dated as of April 16, 1998; Incorporated by reference to
Exhibit 2.1 of the Primus Current Report on Form 8-K dated April 23,
1998 (the "Form 8-K for Amendments"), as amended by the Primus Current
Report on Form 8-K/A dated April 23, 1998.
10.1 Stockholder Agreement among Warburg, Pincus, K. Paul Singh and Primus,
dated as of February 3, 1998; Incorporated by reference to Exhibit 10.1
of the Primus Current Report on Form 8-K dated February 6, 1998 (the
"Form 8-K").
10.2 Voting Agreement between Primus and Wesley T. O'Brien, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.4 of the Form
8-K.
10.3 Voting Agreement between Primus and Rudy McGlashan, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.5 of the
Form 8-K.
10.4 Voting Agreement between TresCom and K. Paul Singh, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.2 of the Form
8-K.
10.5 Voting Agreement between TresCom and John F. DePodesta, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.3 of the Form
8-K.
10.6 Amendment No. 1 to Stockholder Agreement among Warburg, Pincus, K. Paul
Singh, Primus, and TresCom, dated as of April 16, 1998; Incorporated by
reference to Exhibit 10.1 of the Form 8-K for Amendments.
10.7 Amendment No. 1 to Voting Agreement between Wesley T. O'Brien and
Primus, dated as of April 16, 1998; Incorporated by reference to
Exhibit 10.2 of the Form 8-K for Amendments.
10.8 Amendment No. 1 to Voting Agreement between Rudolph McGlashan and
Primus, dated as of April 16, 1998; Incorporated by reference to
Exhibit 10.3 of the Form 8-K for Amendments.
3
<PAGE>
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 hereunto duly authorized.
PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED
/s/ Neil L. Hazard
---------------------------------
Date: June 23, 1998 By: Neil L. Hazard
Executive Vice President and
Chief Financial Officer
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- ---------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger by and among Primus, TresCom and TAC,
dated as of February 3, 1998, and as amended by Amendments No. 1 and 2 to
Agreement and Plan of Merger dated as of April 8, 1998 and as of April 16,
1998, respectively; Incorporated by reference to Appendix A to the Joint
Proxy Statement/Prospectus on Form S-4, No. 333-51797 dated May 4, 1998.
2.2 Amendment No. 1 to Agreement and Plan of Merger among Primus,
TresCom and TAC, dated as of April 8, 1998; Incorporated by reference to
Exhibit 2.1 of the Primus Current Report on Form 8-K dated April 10, 1998.
2.3 Amendment No. 2 to Agreement and Plan of Merger among Primus,
TresCom and TAC, dated as of April 16, 1998; Incorporated by reference to
Exhibit 2.1 of the Primus Current Report on Form 8-K dated April 23, 1998
(the "Form 8-K for Amendments"), as amended by the Primus Current Report
on Form 8-K/A dated April 23, 1998.
10.1 Stockholder Agreement among Warburg, Pincus, K. Paul Singh and Primus,
dated as of February 3, 1998; Incorporated by reference to Exhibit 10.1 of the
Primus Current Report on Form 8-K dated February 6, 1998 (the "Form
8-K").
10.2 Voting Agreement between Primus and Wesley T. O'Brien, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.4 of the Form 8-K.
10.3 Voting Agreement between Primus and Rudy McGlashan, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.5 of the Form 8-K.
10.4 Voting Agreement between TresCom and K. Paul Singh, dated as of February
3, 1998; Incorporated by reference to Exhibit 10.2 of the Form 8-K.
10.5 Voting Agreement between TresCom and John F. DePodesta, dated as of
February 3, 1998; Incorporated by reference to Exhibit 10.3 of the Form 8-K.
10.6 Amendment No. 1 to Stockholder Agreement among Warburg, Pincus, K.
Paul Singh, Primus, and TresCom, dated as of April 16, 1998; Incorporated
by reference to Exhibit 10.1 of the Form 8-K for Amendments.
10.7 Amendment No. 1 to Voting Agreement between Wesley T. O'Brien and
Primus, dated as of April 16, 1998; Incorporated by reference to Exhibit 10.2
of the Form 8-K for Amendments.
</TABLE>
5
<PAGE>
10.8 Amendment No. 1 to Voting Agreement between Rudolph McGlashan and
Primus, dated as of April 16, 1998; Incorporated by reference to
Exhibit 10.3 of the Form 8-K for Amendments.
6
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
FINANCIAL INFORMATION NO
- --------------------- --
<S> <C>
TresCom International, Inc. Consolidated Financial Statements:
Unaudited Consolidated Balance Sheet as of March 31, 1998...................... F-2
Unaudited Consolidated Statements of Operations
for the three months ended March 31, 1998 and 1997............................. F-3
Unaudited Consolidated Statement of Shareholders' Equity
for the three months ended March 31, 1998...................................... F-4
Unaudited Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1997........................................................ F-5
Notes to Unaudited Consolidated Financial Statements........................... F-6
Primus Telecommunications Group, Incorporated:
Unaudited Pro Forma Consolidated Statement of Operations for the Three
Months Ended March 31, 1998.................................................... F-8
Unaudited Pro Forma Consolidated Statement of Operations for the Year
Ended December 31, 1997........................................................ F-10
Unaudited Pro Forma Consolidated Balance Sheet
as of March 31, 1998........................................................... F-12
</TABLE>
F-1
<PAGE>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MARCH 31,
1998
----------------------------
(Unaudited)
(In thousands, except share
and per share data
<S> <C>
Current assets:
Cash........................................................................... $ 102
Accounts and notes receivable, net of allowance
for doubtful accounts of $7,918.............................................. 26,956
Other current assets........................................................... 2,492
--------
Total current assets............................................................. 29,550
Property and equipment, at cost:
Transmission and communications equipment...................................... 30,517
Furniture, fixtures and other.................................................. 10,272
--------
40,789
Less accumulated depreciation and amortization................................... (10,894)
--------
29,895
Other assets:
Customer bases, net of accumulated amortization of
$2,650....................................................................... 3,010
Excess of cost over net assets of businesses acquired,
net of accumulated amortization of $3,830.................................... 38,596
Other.......................................................................... 940
--------
Total assets..................................................................... $101,991
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 907
Accrued network costs.......................................................... 18,667
Other accrued expenses......................................................... 4,733
Long-term obligations due within one year...................................... 1,299
Deferred revenue and other current liabilities................................. 1,762
--------
Total current liabilities........................................................ 27,368
Long-term obligations............................................................ 19,842
Shareholders' 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; 12,161,844 shares issued and outstanding......................... 508
Deferred compensation.......................................................... (391)
Additional paid-in capital..................................................... 108,497
Accumulated deficit............................................................ (53,833)
--------
Total shareholders' equity....................................................... 54,781
--------
Total liabilities and shareholders' equity....................................... $101,991
========
</TABLE>
See accompanying notes.
F-2
<PAGE>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
----------------------------
(In thousands, except
per share data)
<S> <C> <C>
Revenues............................................................................ $ 38,137 $ 36,143
Cost of services.................................................................... 30,971 27,812
Gross profit........................................................................ 7,166 8,331
Selling, general and administrative................................................. 9,262 8,108
Depreciation and amortization....................................................... 1,944 1,501
--------- ---------
Operating loss.................................................................... (4,040) (1,278)
Interest expense (income), net.................................................... 415 (2)
Other expense, net................................................................ 20 --
--------- ---------
Net loss............................................................................ $ (4,475) $ (1,276)
========= =========
Basic and diluted net loss per share of
common stock...................................................................... $ (0.37) $ (0.11)
========= =========
Weighted average number of shares of common
stock outstanding................................................................. 12,146 11,816
========= =========
</TABLE>
See accompanying notes.
F-3
<PAGE>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
-------------------------------------
Additional
Paid-in Deferred
Shares Amount Capital Compensation
---------------------------------------------------
(in thousands, except share and per share data)
<S> <C> <C> <C> <C>
Balance at December 31, 1997........................ 12,104,960 $ 505 $ 108,354 $ (551)
Exercise of stock options........................... 56,884 3 143 --
Non-cash compensation expense....................... -- -- -- 160
Net loss............................................ -- -- -- --
===================================================
Balance at March 31, 1998........................... 12,161,844 $ 508 $ 108,497 $ (391)
===================================================
</TABLE>
See accompanying notes
F-4
<PAGE>
TRESCOM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
----------------------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................... $ (4,475) $ (1,276)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............... 1,944 1,501
Non-cash compensation....................... 160 162
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts and notes receivable............. 4,787 (1,770)
Other current assets...................... (117) (355)
Accounts payable.......................... (330) (1,195)
Accrued network costs..................... (830) 2,263
Other accrued expenses.................... (1,632) (1,142)
Deferred revenue and other current
liabilities.............................. (20) (1,611)
-------- ---------
Net cash used in operating activities.......... (513) (3,423)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (840) (1,080)
Expenditures for line installations............ (13) (72)
-------- ---------
Net cash used in investing activities.......... (853) (1,152)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt............................. -- 2,500
Proceeds from revolving credit agreement, net.. 162 --
Repayment of debt.............................. (4) (4)
Proceeds from stock option exercise............ 146 7
Principal payments on capital lease obligations (317) (176)
-------- ---------
Net cash (used in) provided by financing
activities.................................... (13) 2,327
-------- ---------
Net change in cash............................. (1,379) (2,248)
Cash at beginning of period.................... 1,481 6,020
-------- ---------
Cash at end of period.......................... $ 102 $ 3,772
-------- ---------
Interest paid................................... $ 466 $ 163
-------- --------
Capital lease obligations incurred............. $ 609 $ --
-------- --------
</TABLE>
See accompanying notes.
F-5
<PAGE>
TRESCOM INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
1. GENERAL
ORGANIZATION AND BASIS OF PRESENTATION
Trescom International, Inc. is a facilities-based long-distance
telecommunications carrier focused on international long-distance traffic.
TresCom offers telecommunications services, including direct dial "1 plus" and
toll-free long distance, calling and debit cards, international toll-free
service, 24-hour bilingual operator services, intra-island local service in
Puerto Rico, private lines, frame relay, international inbound service,
international country to country calling services and international callthrough
from selected markets.
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
effect the reported amounts of assets and liabilities and disclosures 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 Trescom's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997. 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
Reference should be made to the Notes to Consolidated Financial Statements
in Trescom's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, specifically Note 2, for a summary of Trescom's significant accounting
policies.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with current
year presentation.
NEW ACCOUNTING PRONOUNCEMENT
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share" ("SFAS 128"). SFAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform with SFAS 128.
F-6
<PAGE>
TRESCOM INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
3. LONG-TERM OBLIGATIONS
A Summary of long-term obligations is as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
-------------------------
<S> <C> <C>
Revolving Credit Agreement, interest payable
monthly at rates based upon the lender's
commercial lending rate plus 0.5%
(9.0% at March 31, 1998), maturing in
July 2002........................................ $ 15,808 $ 15,645
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 certain assets.......................... 396 401
Capital leases bearing interest at rates
ranging from 9% to 11% and payable in
monthly installments totalling $167.............. 4,937 4,645
--------- --------
21,141 20,691
Less amounts due within one year................... 1,299 1,098
--------- --------
$ 19,842 19,593
========= ========
</TABLE>
TresCom has a $25,000 revolving credit and security agreement (the
"Revolving Credit Agreement") with a commercial bank secured by TresCom's
accounts receivable. As of March 31, 1998, availability under the Revolving
Credit Agreement was approximately $19,400 of which approximately $16,494
(including approximately $686 of letters of credit) had been utilized. As of
March 31, 1998, TresCom was in compliance with all covenants contained in the
Revolving credit Agreement.
Assets totaling $609 were acquired via a capital lease during the first
quarter of 1998.
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
---------------------------
<S> <C> <C>
Numerator:
Numerator for basic and diluted
earnings per share - net loss
applicable to common stock............ $ (4,475) $ (1,276)
Denominator:
Denominator for basic and diluted
earnings per share - weighted average
shares................................ 12,146 11,816
======== ========
Basic and diluted net loss per share
of common stock....................... $ (0.37) $ (0.11)
========= =========
</TABLE>
F-7
<PAGE>
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
TresCom TresCom Pro Forma
Primus International, Inc. Adjustments As Adjusted
--------- -------------------- --------------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 80,051 $ 38,137 $ (1,817)(1) $ 114,664
(1,707)(2)
Cost of revenue 68,722 30,971 (1,707)(2) 97,986
--------- -------------- ------------ ------------
Gross margin 11,329 7,166 (1,817) 16,678
Operating expenses:
Selling, general and administrative 15,377 9,262 (1,817)(1) 22,822
Depreciation and amortization 3,478 1,944 (587)(3) 6,894
2,083 (4)
(24)(5)
------------ ------------
Total operating expenses 18,855 11,206 (345) 29,716
--------- -------------- ------------ ------------
Loss from operations (7,526) (4,040) (1,472) (13,038)
Interest expense (7,175) (415) 410 (6) (7,180)
Interest income 2,384 2,384
Other income (expense) -- (20) -- (20)
--------- -------------- ------------ ------------
Loss before income taxes (12,317) (4,475) (1,062) (17,854)
Income taxes -- -- -- (7) --
--------- -------------- ------------ ------------
Net Loss $(12,317) $ (4,475) $ (1,062) $ (17,854)
========= ============== ============ ============
Basic and diluted loss per common share $ (0.62) $ (0.65)
========= ============
Weighted average number of common 19,717 7,836 (8) 27,553
shares outstanding ========= ============ ============
</TABLE>
________________________________
(1) To reflect the reclassification of TresCom's bad debt costs from SG&A to a
reduction of revenue to conform to Primus's accounting policies.
(2) To eliminate the effects of intercompany transactions between Primus and
TresCom.
(3) To reverse amortization expense associated with TresCom's previously
acquired customer list and the excess of purchase price over the fair value
of assets acquired.
F-8
<PAGE>
(4) To record amortization expense associated with acquired customers list and
the excess of purchase price over the fair value of the net assets
acquired.
(5) To reflect reduction in amortization of deferred financing costs related to
the expected repayment of TresCom's credit line in connection with the
TresCom Merger.
(6) To reflect reduction in interest expense related to the expected repayment
of TresCom's credit line in connection with the TresCom Merger.
(7) The pro forma adjustment to the income tax provision is zero as a valuation
reserve was applied in full to the tax benefit associated with the pro
forma net loss before income taxes.
(8) To reflect the issuance of Primus Common Stock to purchase the outstanding
shares of TresCom.
F-9
<PAGE>
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION> Pro Forma as
Adjusted,
USFI/ TresCom TresCom and
USFI, TelePassport TelePassport International, TresCom USFI/
Primus Inc.(1) L.L.C.(1) Adjustments Inc. Adjustments TelePassport
--------- ---------- --------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $ 280,197 $ 27,040 $ 3,108 $ (9,673)(2) $ 157,641 $ (4,159)(5) $448,929
(5,225)(6)
Cost of revenue 252,731 20,907 2,704 (8,029)(2) 124,365 (5,225)(6) 387,453
--------- ---------- --------------- ---------------- --------------- --------------- ------------
Gross margin 27,466 6,133 404 (1,644) 33,276 (4,159) 61,476
Operating expenses:
Selling, general and
administrative 50,622 11,182 1,389 36,386 (4,159)(5) 95,420
Depreciation and 6,733 674 74 409 (3) 6,599 (2,167)(7)
amortization 8,109 (8) 20,230
(123)(9)
--------- ---------- --------------- ---------------- --------------- --------------- ------------
Total operating
expenses 57,355 11,856 1,463 409 42,985 1,660 115,728
--------- ---------- --------------- ---------------- --------------- --------------- ------------
Loss from operations (29,889) (5,723) (1,059) (2,053) (9,709) (5,819) (54,252)
Interest expense (12,914) (18) (1,146) 433 (10) (13,645)
Interest income 6,238 6,238
Other income (expense) 407 25 162 594
--------- ---------- --------------- ---------------- --------------- --------------- ------------
Loss before income (36,158) (5,698) (915) (2,053) (10,855) (5,386) (61,065)
taxes
Income taxes (81) -- -- -- (4) -- -- (11) (81)
--------- ---------- --------------- ---------------- --------------- --------------- ------------
Net Loss $ (36,239) $ (5,698) $ (915) $(2,053) $ (10,855) $ (5,386) $ (61,146)
========= ========== =============== ================ =============== =============== ============
Basic and diluted loss
per common share $ (1.99) $ (2.34)
========= ============
Weighted average
number of common
shares outstanding 18,250 7,836 26,087
========= =============== ============
</TABLE>
_______________________
(1) Represents the historical results of operations of USFI, Inc. and
TelePassport, L.L.C., for the period from January 1, 1998 through the
Company's acquisition on October 20, 1997.
F-10
<PAGE>
USFI/TelePassport adjustments:
(2) To eliminate net revenue and cost of revenue for a portion of the customer
base which was not purchased by Primus.
(3) To record amortization expense associated with acquired customer list and
the excess of purchase price over the fair value of net assets acquired.
(4) The pro forma adjustment to the income tax provision is zero because a
valuation reserve was applied in full to the tax benefit associated with
the pro forma loss before income taxes.
TresCom adjustments:
(5) To reflect the reclassification of TresCom's bad debt costs from selling,
general and administrative expense to a reduction of net revenue to conform
to Primus' accounting policies.
(6) To eliminate the effects of intercompany transactions between Primus and
TresCom.
(7) To reverse amortization expense associated with TresCom's previously
acquired customer list and the excess of purchase price over the fair value
of net assets acquired.
(8) To record amortization expense associated with acquired customer list and
the excess of purchase price over the fair value of net assets acquired.
(9) To reflect reduction in amortization of deferred financing costs resulting
from the expected repayment of credit line in connection with the
acquisition.
(10) To reflect reduction in interest expense related to the expected repayment
of TresCom's credit line in connection with the acquisition.
(11) The pro forma adjustment to the income tax provision is zero because a
valuation reserve was applied in full to the tax benefit associated with
the pro forma loss before income taxes.
F-11
<PAGE>
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1998
<TABLE>
<CAPTION>
TresCom
International TresCom Pro Forma
Primus Inc. Adjustments as Adjusted
-------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(in thousands, except share amounts)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 97,381 $ 102 $ (15,808)(1) $ 81,675
Restricted investments 23,795 -- -- 23,795
Accounts receivable, net 69,124 26,956 -- 96,080
Prepaid expenses and other current
assets 7,048 2,492 -- 9,540
-------- -------- --------- --------
Total current assets 197,348 29,550 (15,808) 211,090
RESTRICTED INVESTMENTS 37,683 -- -- 37,683
PROPERTY AND EQUIPMENT - Net 70,023 29,895 -- 99,918
INTANGIBLES - Net 36,436 41,606 100,808 (2) 178,850
DEFERRED INCOME TAXES 2,667 -- -- 2,667
OTHER ASSETS 11,406 940 -- 12,346
-------- -------- --------- --------
TOTAL ASSETS $355,563 $101,991 $ 85,000 $542,554
======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 69,116 $ 19,574 $ -- 88,690
Accrued expenses, interest and other
current liabilities 18,797 6,495 -- 25,292
Deferred income taxes 3,057 -- -- 3,057
Current portion of long-term
obligations 1,652 1,299 -- 2,951
-------- -------- --------- --------
</TABLE>
F-12
<PAGE>
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET-(continued)
March 31, 1998
<TABLE>
<CAPTION>
TresCom
International TresCom Pro Forma
Primus Inc Adjustments as Adjusted
-------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
(in thousands, except share amounts)
Total current liabilities 92,622 27,368 -- 119,990
LONG-TERM OBLIGATIONS 230,586 19,842 (15,808)(1) 234,620
OTHER LIABILITIES 527 -- -- 527
-------- -------- --------- --------
Total liabilities 323,735 47,210 (15,808) 355,137
-------- -------- --------- --------
COMMITMENTS AND CONTINGENCIES
TOTAL STOCKHOLDERS' EQUITY 31,828 54,781 100,808(3) 187,417
-------- -------- --------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $355,563 $101,991 $ 85,000 $542,554
======== ======== ========= ========
</TABLE>
_____________________________________
(1) To reflect the expected repayment of TresCom's credit line.
(2) To reflect the elimination of TresCom's intangibles and to establish
intangibles for customer list and excess of purchase price over the fair
value of net assets acquired.
(3) To eliminate the equity of TresCom and to reflect the issuance of
approximately 7.8 million shares of Common Stock based upon an exchange
ratio of 0.6147 for each share of TresCom common stock.
F-13
