===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
COMMISSION FILE NO. 0-21-265
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1708481
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
8180 GREENSBORO DR., MCLEAN, VA 22102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(703) 848-4625
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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. YES NO X
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
OUTSTANDING AS OF
CLASS NOVEMBER 30, 1996
----- -----------------
COMMON STOCK, $.01 PAR VALUE 17,778,746
===============================================================================
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
INDEX TO FORM 10-Q
Page No.
--------
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets.......................... 1
Consolidated Statements of Operations................ 2
Consolidated Statements of Cash Flows................ 3
Notes to Consolidated Financial Statements........... 4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................. 7
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS....................................11
Item 2. CHANGES IN SECURITIES................................11
Item 3. DEFAULTS UPON SENIOR SECURITIES......................11
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS..11
Item 5. OTHER INFORMATION....................................11
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.....................11
SIGNATURE.........................................................12
EXHIBIT INDEX.....................................................13
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands)
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................................... $20,637 $ 2,296
Accounts receivable (net of allowance of $2,130 (unaudited)
at September 30, 1996 and $132 at December 31, 1995 )..................... 28,377 665
Prepaid expenses and other current assets.................................... 1,259 388
------- -------
Total current assets.................................................... 50,273 3,349
PROPERTY AND EQUIPMENT - Net................................................... 7,224 949
INTANGIBLES - Net.............................................................. 21,624 --
DEFERRED INCOME TAXES.......................................................... 3,951 --
OTHER ASSETS................................................................... 701 744
------- -------
TOTAL ASSETS................................................................... $83,773 $ 5,042
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................................................. $30,803 $ 1,284
Accrued expenses and other current liabilities............................... 6,047 668
Deferred income taxes........................................................ 4,479 --
Current portion of long-term obligations..................................... 10,524 102
------- -------
Total current liabilities............................................... 51,853 2,054
LONG TERM OBLIGATIONS.......................................................... 6,747 426
------- -------
Total liabilities......................................................... 58,600 2,480
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value ---2,455,000 shares
authorized; issued and outstanding, 455,000 shares of
Series A Convertible (unaudited) at September 30, 1996.................... 5 --
Common stock, $.01 par value - authorized 40,000,000 (unaudited)
shares September 30, 1996; 16,905,000 shares
December 31, 1995; issued and outstanding, 10,490,391 shares (unaudited)
at September 30, 1996; 7,063,491 shares December 31, 1995................. 105 71
Additional paid-in capital................................................... 33,775 5,496
Accumulated deficit.......................................................... (8,656) (3,003)
Cumulative translation adjustment............................................ (56) (2)
------- -------
Total stockholders' equity................................................ 25,173 2,562
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................................... $83,773 $ 5,042
======= =======
See notes to consolidated financial statements.
1
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
1996 1995 1996 1995
---------- -------- ------------ ----------
NET REVENUE $51,819 $276 $117,234 $497
COST OF REVENUE 47,210 299 107,372 502
---------- -------- ------------ ----------
GROSS MARGIN (DEFICIT) 4,609 (23) 9,862 (5)
OPERATING EXPENSES
Selling, general and administrative 6,194 624 12,901 1,337
Depreciation and amortization 637 39 1,435 104
---------- -------- ------------ ----------
Total operating expenses 6,831 663 14,336 1,441
LOSS FROM OPERATIONS (2,222) (686) (4,474) (1,446)
INTEREST EXPENSE (258) (12) (593) (45)
INTEREST INCOME 158 9 243 10
OTHER INCOME (EXPENSE) (42) - (310) -
---------- -------- ------------ ----------
LOSS BEFORE INCOME TAXES (2,364) (689) (5,134) (1,481)
INCOME TAXES 57 - 519 -
---------- -------- ------------ ----------
NET LOSS ($2,421) ($689) ($5,653) ($1,481)
========== ======== ============ ==========
NET LOSS PER COMMON AND
COMMON SHARE EQUIVALENTS ($0.18) ($0.06) ($0.44) ($0.14)
========== ======== ============ ==========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON SHARE
EQUIVALENTS OUTSTANDING 13,442 11,011 12,807 10,816
========== ======== ============ ==========
See notes to consolidated financial statements.
2
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
--------- ---------
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($5,653) ($1,481)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,435 104
Sales allowance 1,162 47
Foreign currency transaction loss 310 -
Deferred income taxes 300 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (11,985) (352)
(Increase) decrease in prepaid expenses and
other current assets (168) (62)
(Increase) decrease in other assets (798) (74)
Increase (decrease) in accounts payable 10,061 193
Increase (decrease) in accrued expense and
other liabilities 3,129 496
--------- ---------
Net cash used in operating activities (2,207) (1,129)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,330) (191)
Cash used in business acquisition, net of cash acquired (1,700) -
--------- ---------
Net cash used in investing activities (5,030) (191)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease (73) (49)
Sale of common stock, net of transaction costs 23,177 2,679
Proceeds from notes payable 2,306 -
--------- ---------
Net cash provided by financing activities 25,410 2,630
--------- ---------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 168 -
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 18,341 1,310
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 2,296 221
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $20,637 $1,531
======== ========
See notes to consolidated financial statements.
3
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities Exchange Commission ("SEC")
regulations. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management,
the financial statements reflect all adjustments (of normal and
recurring nature) which are necessary to present fairly the financial
position, results of operations and cash flows for the interim periods.
The results for the three month and nine month periods ended September
30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996.
The financial statements should be read in conjunction with the
Company's audited consolidated financial statements included in the most
recently filed Registration Statement.
(2) Acquisition of Axicorp
----------------------
On March 1, 1996, the Company completed the acquisition of the
outstanding capital stock of Axicorp Pty., Ltd. ("Axicorp"). The
purchase price consisted of cash, Company stock, and seller
financing. The Company paid $5.7 million cash, including transaction
costs, and issued 455,000 shares of its Series A Convertible
Preferred Stock. The Company also issued notes to the sellers. One
note is for $4.1 million payable to Fujitsu Australia Limited which
is due in February 1997. The other notes are for a total of $4.0
million payable to the individual shareholder sellers and are due in
two equal installments in February 1997 and February 1998. These
notes have been recorded at their discounted value at the date of
acquisition at an interest rate of 10.18%. The portion of the notes
issued to the individual shareholder sellers due in February 1997 can
be extended for an additional year at the Company's option. If the
option is exercised, the notes will begin to accrue interest at the
prime rate plus 1%.
For accounting purposes, the Company has treated the acquisition as a
purchase. Accordingly, the results of Axicorp's operations are included
in the consolidated results of operations of the Company beginning March
1, 1996.
The following unaudited pro forma operating results give effect to the
March 1, 1996 acquisition of Axicorp in each case as if it had occurred
on January 1, 1995. The pro forma operating results for the three months
ended September 30, 1996 and the nine months ended September 30, 1996
and 1995, are as follows (in thousands, except per share):
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995
--------------------------- ------------- -------------
Net Revenue $ 37,469 $143,602 $ 85,399
Cost of Revenue $ 34,366 $131,128 $ 77,507
Gross Margin $ 3,103 $ 12,474 $ 7,892
Net Loss ($1,205) ($5,720) ($3,156)
Loss Per Share ($0.11) ($0.45) ($0.29)
4
(3) Private Equity Placements
-------------------------
On July 31, 1996, the Company completed the sale of 965,999 shares of
Common Stock to four investment funds affiliated with each other for
an aggregate purchase price of approximately $8 million, and for an
additional $8 million issued warrants for an additional $10 million
of common stock (measured on the basis of fair market value on the
date of exercise) plus up to another 627,899 shares of Common Stock.
In February 1996, the Company completed a private placement of 1,771,194
shares of Common Stock which raised approximately $4.7 million, net of
transaction costs. The Company also issued 278,899 shares of Common
Stock for services rendered in conjunction with this offering.
(4) Long Term Obligations
---------------------
Long-term obligations consist of the following (in thousands):
SEPTEMBER 30, DECEMBER 31,
---------------- ---------------
1996 1995
---------------- ---------------
(UNAUDITED)
Obligations under capital leases $ 609 $ 528
Equipment financing 2,681 --
Notes payable 2,000 --
Notes payable relating to Axicorp 8,420 --
acquisition
Settlement obligation 3,561 --
---------------- ---------------
Subtotal 17,271 528
Less: Current portion of long - term obligations (10,524) (102)
---------------- ---------------
$ 6,747 $ 426
================ ===============
Equipment financing represents vendor financing for the purchase of
network switching equipment for use in the Australian network. Beginning
in January 1997, 16 monthly payments of approximately $100,000 are due
to the vendor. In addition, a payment of approximately $788,000 plus
accrued interest is due in May 1998. Interest will accrue at the
Corporate Overdraft Reference Rate plus 1%. At September 30, 1996, the
Corporate Overdraft Reference Rate was 10.35%. The debt is secured by
all of the assets of the Company's Australian subsidiary.
In connection with an investment agreement, in February 1996, the
Company issued a $2,000,000 note payable to Teleglobe, Inc., due
February 9, 1998 which bears interest at 6.9% per annum payable
quarterly. The debt is secured by all the assets of the Company.
In connection with the acquisition of Axicorp on March 1, 1996, the
Company issued notes to the sellers for a total of $8.4 million which
have been recorded on a discounted basis at a rate of 10.18%.
In addition, in conjunction with the Axicorp acquisition, the Company
accrued approximately $3.6 million to settle a pre-acquisition
contingency between Axicorp and one of its competitors. In settlement of
the pre-acquisition contingency, $394,000 is payable November 1996 and
$1,583,000 is payable December 1996. Beginning in February 1997, 12
monthly payments of $132,000 are due.
(5) Subsequent Event
----------------
On November 7, 1996, the Company completed an initial public offering of
5,000,000 shares of its Common Stock and on November 21, 1996 sold an
additional 750,000 shares to satisfy the Underwriter's overallotment.
The net proceeds to the Company (after deducting Underwriter
5
discounts and offering expenses) from the offering were $54.4 million.
The Company expects to use the net proceeds from the offering to expand
its network, including purchasing transmission equipment facilities and
support systems, international fiber capacity and satellite earth
station facilities for new and existing routes, to fund operating
losses, and for working capital and other general corporate purposes.
In connection with the Company's initial public offering, effective
November 7, 1996 all outstanding Preferred Stock was converted into
Common Stock; the Company's Amended and Restated Certificate of
Incorporation was amended to increase the authorized shares of Common
Stock to 40 million shares; and all shares of Common Stock were split
at a ratio of 3.381 to one. All common shares have been restated to
give effect to the common stock split.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Primus is a multinational telecommunications company that focuses on the
provision of international and domestic long distance services. The
Company has targeted North America, Asia-Pacific and Europe as it primary
service regions. The Company currently provides services in the United
States, Australia and the United Kingdom. The Company was founded in
February 1994 and through the first half of 1995 was a development stage
enterprise involved in various start-up activities including raising
capital, obtaining licenses, acquiring equipment, leasing space, developing
markets and recruiting and training personnel. The Company began
generating revenue during March 1995. The Australian operations are the
result of the Company's March 1, 1996 acquisition of Axicorp. The Company
is making significant investments to build its own telecommunications
network. These include the purchase of telephone switches, transmission
equipment and international fiber cable capacity.
Net revenue is derived from the number of minutes billed by the Company and
is recorded upon completion of calls. The Company generally prices its
services at a savings compared to the major carriers operating in the
Company's service region, which allows the Company to offer competitive
pricing to its customers. In Australia, net revenue is currently derived
from the provision of long distance and from the provision of local and
cellular services, primarily to a broad mix of small- and medium- sized
businesses. The Company's net revenue in the United States is derived from
carrying a mix of business, consumer and wholesale carrier long distance
traffic. In the United Kingdom, net revenue is derived from the provision
of long distance services, primarily to ethnic residential consumers, as
well as to small- and medium- sized businesses. The Company intends to
generate net revenue from internal growth through focused sales and
marketing efforts on a retail basis toward small- and medium-sized
businesses with significant international long distance traffic and ethnic
residential consumers and, on a wholesale basis, to other
telecommunications carriers and resellers with international traffic in the
Company's service areas.
Cost of revenue is primarily comprised of costs incurred from other
domestic and foreign telecommunications carriers to access, transport and
terminate calls. The majority of the Company's cost of revenue is
variable, based upon the number of minutes of use, with transmission and
termination costs being the Company's most significant expense. As the
Company increases the portion of traffic transmitted over its own
facilities, cost of revenue increasingly will reflect lease, ownership and
maintenance costs of the network. In order to manage such costs, the
Company pursues a flexible approach with respect to network expansion. The
Company initially obtains transmission capacity on a variable-cost, per-
minute leased basis, next acquires additional capacity on a fixed-cost
basis when traffic volume makes such a commitment cost effective, and
ultimately purchases and operates its own facilities only when traffic
levels justify such investments.
Although the Company's functional currency is the U.S. dollar, a
significant portion of the Company's net revenue is derived from its sales
and operations outside the United States. In the future, the Company
expects to continue to derive a significant portion of its net revenue and
incur a significant portion of its operating costs outside the United
States and changes in exchange rates may have a significant effect on the
Company's results of operations. The Company historically has not engaged
in hedging transactions.
OTHER OPERATING DATA
The following information for the three months ended September 30, 1996 is
provided for informational purposes and should be read in conjunction with
the unaudited Consolidated Financial
7
Statements and Notes provided herein and the Consolidated Financial
Statements presented with the Company's most recently filed Registration
Statement. Net revenue is comprised of domestic and international long
distance for all geographical regions. Additionally, Australian net revenue
includes local, cellular, access and other services and dealership income.
(IN THOUSANDS)
Minutes of Long Distance Use
Net -------------------------------
Revenue International Domestic Total
--------- ------------- -------- ------
United States $ 4,895 9,199 3,972 13,171
United Kingdom 1,573 1,713 1,512 3,225
Australia 45,351 1,967 56,932 58,899
--------- ------------- -------- ------
Total $51,819 12,879 62,416 75,295
========= ============= ======== ======
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AS
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995
Net revenue increased $51.5 million, from $0.3 million for the three months
ended September 30, 1995 to $51.8 million for the three months ended
September 30, 1996. Of the increase, $45.4 million was associated with
Axicorp which was acquired as of March 1, 1996, and the remaining $6.1 was
associated primarily with the Company's operations in the United States and
the United Kingdom.
Cost of revenue increased $46.9 million, from $0.3 million for the three
months ended September 30, 1995 to $47.2 million for the three months ended
September 30, 1996 as a direct result of the increased net revenue.
Axicorp's cost of revenue for the three months ended September 30, 1996 was
$41.2 million, or 91% of Axicorp's net revenue during the period, while the
non-Australian cost of revenue for the three months ended September 30,
1996 was $6.0 million or 92% of the non-Australian net revenue. The
Australian cost of revenue as a percentage of net revenue reflects the
current status of the Company as a switchless reseller in the Australia
market.
Selling, general and administrative expenses increased from $0.6 million to
$6.2 million for the three months ended September 30, 1995 to September 30,
1996. Approximately $3.7 million of the increase was attributable to the
three months of activity associated with Axicorp and the remaining $1.9
million related to the non-Australia operations as a result of increased
staffing levels, increased sales and marketing activity and network
operations costs. The non-Australian selling, general and administrative
costs as a percentage of net revenue for the three months ended September
30, 1996 was 38%, which is reflective of the growth in the infrastructure
necessary to support future net revenue. The Australian selling, general
and administrative expense as a percentage of net revenue was 8% for the
three months ended September 30, 1996.
Depreciation and amortization increased from $0.04 million for the three
months ended September 30, 1995 to $0.6 million for the three months ended
September 30, 1996. The majority of the increase is a result of the
acquisition of Axicorp and is comprised of amortization of goodwill and
customer lists which totaled $0.4 million. The remaining depreciation is
related primarily to Axicorp's assets and increased depreciation expense
for the Company as a result of additional capital expenditures for
switching and network related equipment.
Other income (expense) for the three months ended September 30, 1996
related to foreign currency transaction losses on the Australian dollar-
denominated debt incurred by the Company payable to the sellers for its
acquisition of Axicorp as a result of the appreciation of the Australian
dollar against the U.S. dollar during the period.
Income taxes were fully attributable to the operations of Axicorp and
represents the amount of expense for Australian federal government taxes.
8
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AS
COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Net revenue increased $116.7 million, from $0.5 million for the nine months
ended September 30, 1995 to $117.2 million for the nine months ended
September 30, 1996. Of the increase, $104.6 million was associated with
Axicorp, while the remaining $12.1 million of net revenue growth was
associated primarily with the commencement and expansion of the Company's
operations in the United States and the United Kingdom.
Cost of revenue increased $106.9 million, from $0.5 million for the nine
months ended September 30, 1995 to $107.4 million for the nine months ended
September 30, 1996 as a direct result of the increased net revenue.
Axicorp's cost of revenue for the nine months ended September 30, 1996 was
$94.4 million, or 90% of Axicorp's net revenue during the period, while the
non-Australian cost of revenue for the nine months ended September 30, 1996
was $13.0 million.
Selling, general and administrative expenses increased $11.6 million, from
$1.3 million to $12.9 million for the nine months ended September 30, 1995
to September 30, 1996. Approximately $7.7 million of the increase was
attributable to the seven months of activity associated with Axicorp and
the remaining $3.9 million related to the non-Australia operations as a
result of increased staffing levels, increased sales and marketing activity
and network operations costs. The non-Australian selling, general and
administrative costs as a percentage of net revenue for the nine months
ended September 30, 1996 was 41% which is reflective of the growth in the
infrastructure necessary to support future net revenues. The Australian
selling, general and administrative expense as a percentage of net revenue
was 7% for the nine months ended September 30, 1996.
Depreciation and amortization increased from $0.1 million for the nine
months ended September 30, 1995 to $1.4 million for the nine months ended
September 30, 1996. The majority of the increase is a result of the
acquisition of Axicorp and is comprised of amortization of goodwill and the
customer lists which totaled $0.9 million. The remaining depreciation is
related primarily to Axicorp's assets and increased depreciation expense
for the Company as a result of additional capital expenditures for
switching and network related equipment.
Other income (expense) for the nine months ended September 30, 1996 related
to foreign currency transaction losses on the Australian dollar-denominated
debt incurred by the Company payable to the sellers for its acquisition of
Axicorp as a result of the appreciation of the Australian dollar against
the U.S. dollar during the period.
Income taxes were fully attributable to the operations of Axicorp for the
seven months from the date of purchase, and represents the amount of
expense for Australian federal government taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from net cash used in operating
activities; purchases of network equipment including switches, peripheral
equipment, and international fiber cable capacity; and interest and
principal payments on outstanding indebtedness, including capital leases.
The Company has historically financed its growth, including its capital
expenditures, through private placements of its common stock, and capital
lease financing. In November 1996, the Company completed an initial public
offering of its Common Stock and generated approximately $54.4 million
(after deducting Underwriters discounts and offering expenses).
Net cash used in operating activities was $2.2 million for the nine months
ended September 30, 1996 and $1.1million for the nine months ended
September 30, 1995. The increased cash usage was the result of an increase
in the net loss partially offset by increases in accounts payable and
accrued expenses.
9
Net cash used in investing activities was $5.0 million for the nine months
ended September 30, 1996 and $0.2 million for the nine months ended
September 30, 1995. The cash utilized during the nine months ended
September 30, 1996 includes $3.3 million for expansion of the network and
$1.7 million for the purchase of Axicorp net of cash acquired.
Net cash provided by financing activities was $25.4 million for the nine
months ended September 30, 1996 and $2.6 million for the nine months ended
September 30, 1995. Cash provided by financing activities resulted
primarily from private placements of its common stock.
The Company is currently negotiating a $25 million bank line of credit to
provide it with additional funding, and intends to continue to use capital
lease financings. The Company believes that the net proceeds from the
initial public offering, together with the net proceeds from the July 1996
private equity sale, borrowing capacity under the expected line of credit
and future capital lease financing, will be sufficient to fund the
Company's net cash used in operating activities, capital expenditures and
other cash needs for the next 18 months.
10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see index on page 13)
(b) Reports on Form 8-K
Not applicable.
11
SIGNATURE
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 thereunto duly authorized.
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
Date December 20, 1996 By: /s/ Neil L. Hazard
----------------- --------------------
Neil L. Hazard
(Executive Vice President and Chief Financial Officer)
12
EXHIBIT INDEX
Exhibit
Number Description Page
-------- ----------- ----
11.1 Statement re computation of per share earnings 14
27 Financial Data Schedule 15
13
Exhibit 11.1
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
COMPUTATIONS OF EARNINGS PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ------------ -----------
Weighted average common shares
outstanding:
Average shares outstanding during period 11,713,746 5,071,503 10,420,177 4,876,010
Cheap stock (1) 66,552 4,282,380 727,976 4,282,380
Cheap options (1) 1,661,733 1,657,372 1,658,836 1,657,371
----------- ----------- ------------ -----------
Total primary weighted average
common shares 13,442,031 11,011,255 12,806,989 10,815,761
=========== =========== =========== ===========
Non Cheap Options 86,216 78,608 86,216 78,608
----------- ----------- ------------ -----------
Total fully diluted weighted
average common shares 13,528,247 11,089,863 12,893,205 10,894,369
=========== =========== =========== ===========
Net loss applicable to common shares
Net loss ($2,421,000) ($689,000) ($5,653,000) ($1,481,000)
=========== =========== =========== ===========
Loss per common share and
common share equivalent - Primary ($0.18) ($0.06) ($0.44) ($0.14)
=========== =========== =========== ===========
Loss per common share and common
share equivalent - Fully Diluted ($0.18) ($0.06) ($0.44) ($0.14)
=========== =========== =========== ===========
(1) Pursuant to Staff Accounting Bulletin Number 83, stock options granted and
stock issued within one year of the initial public offering have been
included in the calculation of the weighted average common shares
outstanding using the treasury stock method based on an initial public
offering price of $10.50 and have been treated as outstanding for all
reported periods.
5
1,000
9-MOS
DEC-31-1996
JAN-01-1996
SEP-30-1996
20,637
0
30,507
2,130
0
50,273
8,167
943
83,773
51,853
0
0
5
105
25,063
83,773
0
117,234
0
107,372
0
1,162
593
(5,134)
519
(5,653)
0
0
0
(5,653)
(0.44)
(0.44)
