<PAGE>
EXHIBIT 99.1
DESCRTPTION: PRESS RELEASE DATED NOVEMBER 2, 2000
[LOGO OF PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED]
FOR IMMEDIATE RELEASE
CONTACT:
Jordan Darrow, VP, Investor Relations
PRIMUS Telecommunications Group
(212) 703-0116
[email protected]
PRIMUS TELECOMMUNICATIONS REPORTS RECORD REVENUE AND GROSS MARGIN
DATA/INTERNET REVENUES RISE 275% FROM PRIOR YEAR; POSITIVE EBITDA FOR 6TH
CONSECUTIVE QUARTER
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McLean, Virginia -- November 2, 2000 -- PRIMUS Telecommunications
Group, Incorporated (Nasdaq: PRTL), a global facilities-based Total Service
Provider offering data, Internet, web hosting, enhanced application, e-commerce
and voice services on a bundled basis, today announced record revenue of $301
million and gross margin of $85 million in the third quarter of 2000. Revenue
for the third quarter 2000 would have been approximately $320 million had fourth
quarter 1999 exchange rates been in effect this quarter. Revenue and gross
margin have now reached record levels consecutively in each of the past fourteen
quarters. Data services revenue also reached a record level of $32 million in
the third quarter and now constitutes 11% of total revenue.
"This quarter witnessed substantial accomplishments to position PRIMUS
as a premier provider of global data services," said K. Paul Singh, Chairman and
Chief Executive Officer of PRIMUS. "Last fall, we projected that data services
would represent 20% of overall revenues in five years. We have now exceeded over
half of our goal in only one year. While this growth has exceeded our earlier
expectations, we are now poised -- with the recent deployment of our global data
network and web hosting centers -- to accelerate our data growth by targeting
our primary customer segment of small- and medium-sized enterprises and other
select retail customers with comprehensive communications solutions.
"During the third quarter, we executed one of the previously outlined
drivers for success -- deploying a network that will exploit the technology
enabling the convergence of voice, data, Internet and video applications. We
completed the first phase of the broadband asynchronous transfer mode (ATM) and
Internet protocol (IP) network component of our global Application-Intelligent
Network (AIN). The ATM+IP core backbone connects 18 PRIMUS sites in 17 cities in
Europe, Asia-Pacific and North America. We also launched three
`state-of-the-art' data centers in Australia, the US and the UK. PRIMUS now has
seven data centers in six countries throughout our operating regions that are
part of the AIN and connected by the Company's global network.
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"With the substantial network infrastructure in place, our focus will
now be on exploiting the assets we have deployed. Specifically, our primary
emphasis will be on selling data, Internet, hosting, applications, security and
voice services on a bundled basis to maximize the utilization and return on our
investment and to enable customers with our enhanced service solutions. We are
now in a position to gain traction with expanded and energized distribution
channels that will leverage our existing customer base and product suite."
Mr. Singh concluded, "Even in these turbulent times where pressure on
voice prices are driving some major players to restructure their businesses, and
the adverse impact of foreign currency exchange rates do not appear to be
abating, we expect PRIMUS to be able to grow its revenue modestly in the fourth
quarter and remain EBITDA positive. In December, we plan to announce our goals
for 2001 in a public statement."
THIRD QUARTER FINANCIAL RESULTS
PRIMUS's net revenue in the third quarter of 2000 grew to a record $301
million, compared with $250 million for the third quarter of 1999, an increase
of 20%, with an increase in each of the Company's major business regions.
"Record revenue was reported in the third quarter of 2000 despite an
approximately $19 million adverse impact of foreign currency exchange rates as
compared to fourth quarter 1999 rate levels," stated Neil L. Hazard, Executive
Vice President and Chief Financial Officer of PRIMUS. "On a year-over-year
basis, third quarter net revenue in Europe increased 47% to $92 million; in
North America net revenue increased 4% to $131 million; and in the Asia-Pacific
region net revenue increased 27% to $78 million. Data/Internet revenues,
including Voice-over-Internet Protocol (VoIP) revenues, totaled $32 million in
the third quarter, which represents an increase of 275% year-over-year.
"The geographic mix of the revenue base in the third quarter was 43%
from North America, 31% from Europe and 26% from Asia-Pacific," Mr. Hazard
added. "Europe showed strong regional growth in local currency while continuing
to increase its share of our reported revenue mix despite the negative currency
impact. North America revenues were flat from the previous quarter due to a
modest negative currency impact, lower revenue from other carriers and conscious
pruning of low revenue consumer customers in Canada. The mix of retail revenue
for the third quarter of 2000 was 73.9% (31.8% business and 42.1% residential),
as compared to 73.7% (31.2% business and 42.5% residential) in the second
quarter of 2000, showing relative growth of the retail sector and the business
segment in particular. In accordance with the Company's plan to focus on retail
customers, the carrier segment's share of total revenue declined in the third
quarter to 26.1% of revenues from 26.3% in the prior quarter. Half of carrier
revenue originated in international markets, which typically have higher margins
than in the US.
Gross margin for the third quarter of 2000 increased 30%, reaching a
record high of $85 million, compared with $66 million for the third quarter of
1999. As a percentage of net revenue, gross margin (which is computed after
accounting for bad debt) for the third quarter of 2000 was 28.3%, up from 26.2%
for the third quarter of 1999 and flat compared to the second quarter of 2000.
The gross margin percentage remained flat from the previous quarter primarily as
a result of declining prices in an increasingly competitive market for voice
services, offset by an increase in higher margin data services and on-net
revenues.
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Selling, general, and administrative (SG&A) expenses for the third
quarter of 2000 were $83 million, or 27.6% of net revenue, compared with $62
million, or 24.6% of net revenue, for the third quarter of 1999, and 27.8% for
the second quarter of 2000. The SG&A decrease from the second quarter reflects
the Company's integration and rationalization of acquisitions and operations,
including the implementation of automated systems for back office and support
functions. These reductions were partially off-set by additional spending to
grow the data business, including technical sales and engineering personnel
staffing to ramp up the Company's managed hosting and applications services.
PRIMUS has generated positive EBITDA for six consecutive quarters.
EBITDA for the third quarter of 2000 was $2.0 million, as compared to $1.5
million in the second quarter of 2000, and $4.0 million in the third quarter of
1999. The Company's operating loss for the third quarter of 2000 was $(29.3)
million, compared with $(10.5) million for the year-ago period. The net loss for
the third quarter of 2000 was $(56.4) million, or $(1.40) per basic and diluted
share, compared with a net loss of $(28.3) million, or $(0.98) per basic and
diluted share, for the third quarter of 1999. The increases in operating and net
losses are due to higher depreciation, amortization and interest expenses. The
weighted average number of basic and diluted common shares outstanding this
quarter was 40.3 million compared to 28.7 million for the third quarter of 1999.
Capital expenditures for the third quarter of 2000 were approximately
$60 million for continued network expansion, including deployment of the ATM+IP
network and data centers, fiber optic cable capacity, data servers, and back
office systems and software. PRIMUS's total investment in gross property, plant
and equipment reached approximately $500 million at the end of September 2000.
PRIMUS held cash and investments of $481 million at the end of September and,
subsequent to the end of the quarter, received the remaining $25 million
convertible debt investment from an existing strategic partner. "As previously
stated, we believe our level of liquidity will allow us to fund our business
plan through 2001," said Mr. Hazard. "In addition, we believe we have viable
near term options including vendor financing from technology partners and lines
of credit that could enhance our liquidity position by up to $100 million, which
we believe would fund the Company beyond 2001."
***
PRIMUS Telecommunications Group, Incorporated (Nasdaq: PRTL) is a global
facilities-based Total Service Provider offering bundled data, Internet, digital
subscriber line (DSL), e-commerce, web hosting, enhanced application, virtual
private network (VPN), voice and other value-added services. The Company owns
and operates an extensive global network of owned and leased transmission
facilities, including over 300 IP points-of-presence (POPs) and Internet peering
relationships throughout the world, ownership interests in over 23 undersea
fiber optic cable systems, 23 international gateway and domestic switches, a
satellite earth station and a variety of operation relationships that allow the
company to deliver traffic worldwide. PRIMUS has been expanding its e-commerce
and Internet capabilities with the deployment of a global state-of-the-art
broadband fiber optic ATM+IP network. Founded in 1994 and based in McLean, VA,
the Company serves corporate, small- and medium-sized business, residential and
data, ISP and telecommunication carrier customers primarily located in the North
America, Europe and Asia-Pacific regions of the world. News and information are
available at the Company's Web site at WWW.PRIMUSTEL.COM.
###
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The statements in this release that are forward looking statements are based on
current expectations and are not strictly historical statements, which may
differ materially from actual results. Not strictly historical statements
include, without limitation, those regarding management's plans, expectations,
objectives, strategy, and timing for future operations and products such as
roll-out of our network or data centers, product plans and performance,
predictions or expectations of future growth, management's assessment of market
factors, the availability of financing and future financial performance. Among
factors that could cause actual results to differ materially are changes in
business conditions; changes in the telecommunications or Internet industry or
the general economy or capital markets; DSL, Internet and telecom competition;
changes in service offerings or business strategies; inability to lease space
for data centers at commercially reasonable rates; difficulty in provisioning
Voice over IP services; changes in the regulatory schemes and regulatory
enforcement in the markets in which we operate; restrictions on our ability to
follow certain strategies or complete certain transactions as a result of our
capital structure or debt covenants; the possible inability to raise capital
when needed, or at all; risks associated with PRIMUS's limited DSL, Internet and
web-hosting experience and expertise, entry into developing markets, and
managing rapid growth; and risks associated with international operations
(including foreign currency translation risks); dependence on effective
information systems; dependence on third parties to enable us to expand and
manage our global network and operations; and dependence on the implementation
and performance of PRIMUS's global ATM+IP communications network. These factors
are discussed more fully in PRIMUS's public filings, including its most recent
10Q and 10K filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date these statements were made. PRIMUS undertakes no
obligation to update any forward-looking statements contained in this press
release.
(Tables to follow)
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PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------------- ----------------------------------
2000 1999 2000 1999
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
NET REVENUE $ 301,130 $ 250,320 $ 889,219 $ 567,174
COST OF REVENUE 215,932 184,762 638,617 432,218
---------------- ---------------- ---------------- ---------------
GROSS MARGIN 85,198 65,558 250,602 134,956
---------------- ---------------- ---------------- ---------------
OPERATING EXPENSES
Selling, general and administrative 83,150 61,553 245,781 132,402
Depreciation and amortization 31,299 14,534 80,544 36,024
---------------- ---------------- ---------------- ---------------
Total operating expenses 114,449 76,087 326,325 168,426
---------------- ---------------- ---------------- ---------------
LOSS FROM OPERATIONS (29,251) (10,529) (75,723) (33,470)
INTEREST EXPENSE (34,200) (19,423) (97,485) (53,716)
INTEREST AND OTHER INCOME 7,075 1,678 22,786 7,689
---------------- ---------------- ---------------- ---------------
LOSS BEFORE INCOME TAXES (56,376) (28,274) (150,422) (79,497)
INCOME TAXES - - - -
---------------- ---------------- ---------------- ---------------
NET LOSS $ (56,376) $ (28,274) $ (150,422) $ (79,497)
================ ================ ================ ===============
BASIC AND DILUTED NET
LOSS PER COMMON SHARE $ (1.40) $ (0.98) $ (3.82) $ (2.79)
================ ================ ================ ===============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 40,307 28,720 39,415 28,509
================ ================ ================ ===============
Other Data:
EBITDA $ 2,048 $ 4,005 $ 4,821 $ 2,554
================ ================ ================ ===============
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PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
CONDENSED CONSOLIDATED FINANCIAL DATA
BALANCE SHEET DATA
(UNAUDITED)
SEPTEMBER 30, 2000
(IN THOUSANDS)
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<S> <C>
Cash, cash equivalents, and marketable securities $ 480,694
Accounts receivable, net 211,447
Other current assets 52,873
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TOTAL CURRENT ASSETS 745,014
Property and equipment, net 409,263
Intangible assets 542,612
Other assets 52,360
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TOTAL ASSETS $ 1,749,249
====================
Accounts payable and accrued expenses $ 320,162
Current portion of long-term obligations 19,388
Accrued interest 34,362
Other current liabilities 31,621
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Total current liabilities 405,533
Non current portion of long-term obligations 1,248,164
Other liabilities 8,809
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TOTAL LIABILITIES 1,662,506
Stockholders' equity 86,743
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,749,249
====================
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OPERATIONAL DATA
(THREE MONTHS ENDED SEPTEMBER 30, 2000)
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Minutes of Long-Distance Use ('000s)
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Region Net Revenue ($000s) Total International Domestic
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<S> <C> <C> <C> <C>
North America $130,896 956,921 440,168 516,753
Europe 91,757 600,002 359,680 240,322
Asia-Pacific 78,477 201,420 40,720 160,700
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Total $301,130 1,758,343 840,568 917,775
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