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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): February 10, 2000
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 0-29092 54-1708481
(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation File Number) Identification No.)
1700 OLD MEADOW ROAD, SUITE 300, MCLEAN, VIRGINIA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 902-2800
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ITEMS 1-4. NOT APPLICABLE.
ITEM 5.
On February 10, 2000 Primus Telecommunications Group, Incorporated
announced its financial results for the quarter ended December 31, 1999.
Our net revenue in the fourth quarter of 1999 increased to $266 million
compared with $126 million for the fourth quarter of 1998, an increase of 111%.
On a year-over-year basis, net revenue in Europe increased 226% to $70 million;
in North America net revenue increased 108% to $127 million; and in the Asia-
Pacific region net revenue increased 58% to $69 million. Data and Internet
revenue totaled $12 million in the fourth quarter of 1999, which represented an
increase of 306% year-over-year and 38% sequentially from the third quarter. The
geographic mix of the revenue base in the fourth quarter was 48% from North
America, 26% from Europe an 26% from Asia-Pacific. The mix of retail revenue for
the fourth quarter of 1999 was 72.1% from business and residential customers
(28.2% business and 43.9% residential), and 27.9% from other carriers.
Gross margin for the fourth quarter of 1999 increased 226% to $73 million,
compared with $22 million for the fourth quarter of 1998. As a percentage of net
revenue, gross margin (which is computed after accounting for bad debt) for the
fourth quarter of 1999 was 27.6%, up from 17.8% for the fourth quarter of 1998
and up sequentially from 26.2% for the third quarter of 1999.
Selling, general and administrative expenses for the fourth quarter of 1999
were $67 million, or 25% of net revenue, compared with $22 million, or 18% of
net revenue, for the fourth quarter of 1998. The selling, general and
administrative increase reflected the impact of additional spending to grow the
data and Internet business as well as the impact of our recent retail and
Internet acquisitions.
EBITDA for the fourth quarter of 1999 was $6.0 million, as compared to
$302,000 in the fourth quarter of 1998. Our operating loss for the fourth
quarter of 1999 was $(12.9) million, compared with $(8.6) million for the fourth
quarter of 1998. The net loss for the fourth quarter of 1999 was $(33.2)
million, compared with a net loss of $(17.5) million for the fourth quarter of
1998. The increase in net loss was due to higher selling, general and
administrative spending, depreciation and amortization expense for our expanding
network and interest expense.
Net revenue for the year ended December 31, 1999 was $833 million, compared
with $422 million for the year ended December 31, 1998, or an increase of
nearly 100%. Gross margin was $208 million for the year ended December 31, 1999,
compared with $69 million for the year ended December 31, 1998, an increase of
over 200%. As a percentage of net revenue, gross margin for 1999 was 25.0% up
from 16.3% for 1998. 1999 marked the first full year of positive EBITDA at $8.6
million, compared with negative EBITDA of $(10.9) million in 1998.
As of December 31, 1999, we held cash and investments of $497 million which
included the proceeds from our equity offering of 8,000,000 shares of common
stock and private placement of $250 million principal amount of senior notes,
each completed during the fourth quarter.
Capital expenditures during the fourth quarter of 1999 were approximately
$49 million for continued network expansion including fiber optic cable
capacity, data and voice switches and equipment, and back office support systems
and software. Our total investment in gross property, plant and equipment was
$335 million as of the end of December 1999.
The following table sets forth certain consolidated statement of operations
and other information for the fourth quarters and the years ended December 31,
1999 and December 31, 1998.
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
December 31, December 31,
------------------- --------------------
1999 1998 1999 1998
-------- -------- --------- --------
(Dollars in thousands)
(unaudited)
<S> <C> <C> <C> <C>
Net revenue(1).......................... $265,565 $126,055 $ 832,739 $421,628
Cost of revenue......................... 192,381 103,610 624,599 353,016
-------- -------- --------- --------
Gross margin............................ 73,184 22,445 208,140 68,612
-------- -------- --------- --------
Operating expenses:
Selling, general and administrative... 67,179 22,143 199,581 79,532
Depreciation and amortization......... 18,933 8,863 54,957 24,185
-------- -------- --------- --------
Total operating expenses............ 86,112 31,006 254,538 103,717
-------- -------- --------- --------
Loss from operations.................... (12,928) (8,561) (46,398) (35,105)
Interest expense........................ (25,913) (11,812) (79,629) (40,047)
Interest and other income............... 5,602 2,870 13,291 11,504
-------- -------- --------- --------
Loss before income taxes................ (33,239) (17,503) (112,736) (63,648)
Income taxes............................ -- -- -- --
-------- -------- --------- --------
Net loss................................ $(33,239) $(17,503) $(112,736) $(63,648)
======== ======== ========= ========
Other Data:
EBITDA(2)............................... $ 6,005 $ 302 $ 8,559 $(10,920)
======== ======== ========= ========
</TABLE>
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(1) Net revenue is after provision for bad debt.
(2) As used herein, "EBITDA" is defined as income (loss) from operations plus
depreciation and amortization expense. While EBITDA should not be construed
as a substitute for operating income or a better measure of liquidity than
cash flow from operating activities, which are determined in accordance with
generally accepted accounting principles, it is included to provide
additional information regarding our ability to meet our future debt
service, capital expenditures and working capital requirements. EBITDA is
not necessarily a measure of our ability to fund our cash needs and is not
necessarily comparable to similarly titled measures of other companies.
The following table sets forth certain balance sheet information for the
years ended December 31, 1999 and December 31, 1998.
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
(Dollars in thousands)
(unaudited)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents............................................................... $ 471,542 $ 136,196
Restricted investments.................................................................. 25,932 25,729
Accounts receivable (net of allowance for doubtful accounts of $36,453 and $14,976)..... 165,384 92,531
Prepaid expenses and other current assets............................................... 56,994 13,505
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Total current assets 719,852 267,961
Restricted investments..................................................................... -- 24,894
Property and equipment--net................................................................ 285,390 158,873
Intangibles--net........................................................................... 402,030 205,039
Other assets............................................................................... 44,101 17,196
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Total assets......................................................................... $ 1,451,373 $ 673,963
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Liabilities and stockholders' equity:
Current liabilities:
Accounts payable........................................................................ $ 169,527 $ 82,520
Accrued expenses and other current liabilities.......................................... 123,453 42,958
Accrued interest........................................................................ 32,420 12,867
Current portion of long-term obligations................................................ 16,438 22,423
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Total current liabilities............................................................ 341,838 160,768
Long term obligations...................................................................... 913,506 397,751
Other liabilities.......................................................................... 4,543 527
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Total liabilities.................................................................... 1,259,887 559,046
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Stockholders' equity:
Preferred stock $.01 par value-- authorized 2,455,000 shares; none issued and
outstanding....................................................................... -- --
Common stock, $.01 par value--authorized 80,000,000 shares; issued and outstanding
37,101,464 and 28,059,063 shares.................................................. 371 281
Additional paid-in capital.............................................................. 417,060 234,549
Accumulated deficit..................................................................... (224,389) (111,653)
Accumulated other comprehensive loss.................................................... (1,556) (8,260)
------------ ------------
Total stockholders' equity........................................................... 191,486 114,917
------------ ------------
Total liabilities and stockholders' equity........................................... $ 1,451,373 $ 673,963
============ ============
</TABLE>
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ITEMS 6. NOT APPLICABLE.
ITEMS 7. c) Exhibits
NOT APPLICABLE.
ITEMS 8. NOT APPLICABLE.
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 hereunto duly authorized.
PRIMUS TELECOMMUNICATIONS
GROUP, INCORPORATED
By: /s/ David P. Slotkin
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Deputy General Counsel
and Secretary
Date: February 16, 2000
