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 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 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 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 EXHIBIT INDEX 5
EXHIBIT NUMBER DESCRIPTION OF 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. 2.3 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. 6 INDEX TO FINANCIAL STATEMENTS F-1
PAGE FINANCIAL INFORMATION NO - --------------------- -- 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 TRESCOM INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS See accompanying notes. F-2
ASSETS MARCH 31, 1998 ---------------------------- (Unaudited) (In thousands, except share and per share data 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 ======== TRESCOM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) See accompanying notes. F-3
THREE MONTHS ENDED MARCH 31, 1998 1997 ---------------------------- (In thousands, except per share data) 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 ========= ========= TRESCOM INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) See accompanying notes F-4
Common Stock ------------------------------------- Additional Paid-in Deferred Shares Amount Capital Compensation --------------------------------------------------- (in thousands, except share and per share data) 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) =================================================== TRESCOM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) See accompanying notes. F-5
THREE MONTHS ENDED MARCH 31, 1998 1997 ---------------------------- (In thousands) 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 $ -- -------- -------- 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 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: 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:
MARCH 31, DECEMBER 31, 1998 1997 ------------------------- 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 ========= ======== F-7
THREE MONTHS ENDED MARCH 31, 1998 1997 --------------------------- 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) ========= ========= 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) ________________________________ (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
TresCom TresCom Pro Forma Primus International, Inc. Adjustments As Adjusted --------- -------------------- --------------- ------------ 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 ========= ============ ============ (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 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (in thousands, except per share amounts) _______________________ (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
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 --------- ---------- --------------- --------------- --------------- --------------- ------------ 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 ========= =============== ============ 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 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET March 31, 1998 F-12
TresCom International TresCom Pro Forma Primus Inc. Adjustments as Adjusted -------- ------------- ------------- ------------- (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 -------- -------- --------- -------- PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET-(continued) March 31, 1998 _____________________________________ (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
TresCom International TresCom Pro Forma Primus Inc Adjustments as Adjusted -------- ------------- ----------- ------------ (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 ======== ======== ========= ========